<PAGE> 1
1933 Act Registration No.
1940 Act Registration No.
As filed with the Securities and Exchange Commission on November 12, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Pre-Effective Amendment No. ____ []
Post-Effective Amendment No. ___ []
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
Amendment No. ___
BREMER INVESTMENT FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
P.O. Box 1956
St. Cloud, Minnesota 56302
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (320) 255-7174
Steven A. Laraway
P.O. Box 1956
St. Cloud, Minnesota 56302
(Name and Address of Agent for Service)
___________________
Copies to:
Christopher C. Cleveland, Esq.
Briggs and Morgan, P.A.
2400 IDS Center
Minneapolis, Minnesota 55402
__________________
Approximate Date of Proposed Public Offering: As soon as practicable after
effectiveness of this
Registration Statement.
It is proposed that this filing will become effective (check appropriate box)
[]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
If appropriate, check the following box:
[] this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the registrant
is hereby registering an indefinite number or amount of securities under the
Securities Act of 1933.
<PAGE> 2
BREMER INVESTMENT FUNDS, INC.
CROSS REFERENCE SHEET
Form N-1A Item
<TABLE>
<CAPTION>
Part A - Prospectus Heading in Prospectus
- ------------------- ---------------------
<S> <C>
1. Cover Page Outside Cover Page
2. Synopsis Fund Expenses
3. Condensed Financial Information Not Applicable
4. General Description of Registrant The Funds; Investment
Objectives and
Policies; Securities
and Techniques Used by
the Funds; Risk
Factors; Investment
Restrictions; Fund
Shares and
Organization
5. Management of the Fund Management of the Funds
5A. Management's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other Securities The Funds; Dividends,
Distributions and Tax
Consequences; Back
Cover Page
7. Purchase of Securities Being Offered Plan of Distribution;
Price of Shares;
Purchasing Shares;
Shareholder Services
8. Redemption or Repurchase Redeeming Shares
9. Pending Legal Proceedings Not Applicable
Heading in Statement
of Additional
Part B - Statement of Additional Information Information
- -------------------------------------------- -----------------------
10. Cover Page Outside Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives
and Policies;
Investment
Limitations; Portfolio
Turnover
14. Management of the Fund Officers and Directors
</TABLE>
<PAGE> 3
BREMER INVESTMENT FUNDS, INC.
CROSS REFERENCE SHEET
Form N-1A Item
<TABLE>
<CAPTION>
Heading in Statement
of Additional
Part B - Statement of Additional Information Information
- -------------------------------------------- ----------------------
<S> <C>
15. Control Persons and Principal Holders
of Securities Not Applicable
16. Investment Advisory and Other Services Investment Adviser;
Transfer Agent and
Custodian
17. Brokerage Allocation and Other Practices Portfolio Transactions
18. Capital Stock and Other Securities (Included in
Prospectus under "The
Funds" and "Fund
Shares and
Organization")
19. Purchase, Redemption and Pricing of (Included in
Securities Being Offered Prospectus under
"Price of Shares,"
"Purchasing Shares"
and "Redeeming
Shares")
20. Tax Status (Included in
Prospectus under
"Dividends,
Distributions and Tax
Consequences")
21. Underwriters Not Applicable
22. Calculation of Performance Data Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 4
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject to completion, dated November 12, 1996.
- -------------------------------------------------------------------------------
BREMER INVESTMENT FUNDS, INC.
- -------------------------------------------------------------------------------
PROSPECTUS
__________________, 1996
BREMER GROWTH STOCK FUND
BREMER BOND FUND
Bremer Investment Funds, Inc. ("BIFI") is an open-end, diversified
investment company which offers shares in several different mutual funds. This
prospectus provides information about two mutual funds, the Bremer Growth Stock
Fund and the Bremer Bond Fund, which have different investment portfolios and
objectives (each, a "Fund," and together, the "Funds").
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, NOR ARE THEY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. AN INVESTMENT IN
THE FUNDS INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL, DUE
TO FLUCTUATION IN EACH FUND'S NET ASSET VALUE.
This Prospectus, which you should retain for future reference, is designed
to set forth concisely the information you should know before you invest. A
Statement of Additional Information dated ______________, 1996, and
incorporated herein by reference, has been filed with the Securities and
Exchange Commission. A copy of the Statement may be obtained, without charge,
by writing to or calling the Funds.
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 THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Fund Expenses............................................................... 1
Historical Performance of Predecessor Funds ................................ 2
The Funds .................................................................. 3
Investment Objectives and Policies ......................................... 3
Securities and Techniques Used by the Funds ................................ 4
Risk Factors ............................................................... 7
Investment Restrictions .................................................... 9
Management of the Funds .................................................... 10
Plan of Distribution ....................................................... 11
Fund Shares and Organization ............................................... 12
Price of Shares ............................................................ 13
Purchasing Shares .......................................................... 14
Redeeming Shares ........................................................... 15
Dividends, Distributions and Tax Consequences .............................. 16
Performance Information .................................................... 16
Shareholder Services ....................................................... 18
</TABLE>
<PAGE> 6
FUND EXPENSES
The purpose of the following table is to assist investors in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly, and importantly, to compare the expense of an investment in the
Funds with other similar investments.
<TABLE>
<CAPTION>
Growth
Stock Bond
Fund Fund
-------- -------
Shareholder Transaction Expenses.
<S> <C> <C>
Maximum sales load imposed on purchases .. None None
Maximum sales load imposed on reinvested
dividends ............................... None None
Deferred sales load ...................... None None
Redemption fees .......................... None(1) None(1)
Exchange fee ............................. None None
Annual Fund Operating Expenses.
--------------------------------
(as a percentage of average net assets)
Management fees .......................... 0.70% 0.70%
12b-1 fees ............................... 0.00%(2) 0.00%(2)
Other expenses ........................... 0.37% 0.30%
----- ------
Total fund operating expenses ............ 1.07% 1.00%
</TABLE>
________________
(1) A fee of $10 is charged for each wire redemption. See "Redeeming
Shares."
(2) The Funds do not expect to pay any 12b-1 fees in the current year. The
12b-1 fees paid by a Fund may not exceed an annual rate of 0.25% of the
Fund's average daily net assets. If 12b-1 fees are paid in the future,
long-term shareholders may pay more than the economic equivalent of the
maximum front end sales charge permitted by the National Association of
Securities Dealers, Inc.
<PAGE> 7
Example
A shareholder would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
Growth
Stock Bond
Fund Fund
------ ----
<S> <C> <C>
One year $ 11 $ 10
Three years $ 34 $ 32
Five years $ 59 $ 55
Ten years $131 $122
</TABLE>
This example is based on the estimated annual operating expenses shown
above and should not be considered a representation of past or future expenses,
which may be more or less than those shown. Federal securities regulations
require the example to assume an annual rate of return of 5%, but the actual
return for each Fund may be more or less than 5%.
HISTORICAL PERFORMANCE OF PREDECESSOR FUNDS
The Funds will be successors to one or more common and collective
investment funds currently managed by the Investment Adviser. It is
anticipated that a substantial portion of the assets of the corresponding
common and collective investment funds will be transferred to the respective
Funds on or about _________, 1996 in connection with the Funds' commencement of
operations. Set forth below are certain performance data for the corresponding
predecessor common and collective investment funds. The Growth Stock Fund and
the Bond Fund are managed using substantially the same investment objectives,
policies and restrictions as the respective common and collective investment
funds. The following performance information is not necessarily indicative of
the future performance of the corresponding Funds. The Funds' investments will
vary from time to time and will not be identical to the past portfolio
investments of the corresponding common and collective investment funds.
The predecessor common and collective funds did not incur expenses that
correspond to the advisory, administrative, and other fees paid by the Funds
The following performance information has been adjusted by applying the
anticipated total expense ratios for the Funds, which reduces the actual
performance for the common and collective funds.
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<PAGE> 8
AVERAGE ANNUAL TOTAL RETURN
(ADJUSTED TO REFLECT ESTIMATED
FUND EXPENSES, NET OF VOLUNTARY
WAIVERS AND REIMBURSEMENTS)
FOR THE ONE-YEAR PERIOD ENDED DECEMBER 31, 1995
-----------------------------------------------
<TABLE>
<S> <C>
Growth Stock Common Fund ...... 32.83%
Growth Stock Collective Fund .. 32.06%
Bond Collective Fund .......... 14.63%
</TABLE>
THE FUNDS
BIFI is an open-end, diversified investment company which offers shares in
several different mutual funds, each of which evidences an interest in a
separate and distinct investment portfolio. Each share of a Fund represents an
undivided proportionate interest in that Fund. This Prospectus relates to the
Class A Common Stock (Growth Stock Fund) and Class B Common Stock (Bond Fund),
presently the only authorized classes of common stock. The Board of Directors
of BIFI may authorize additional series or classes of common stock in the
future.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Funds are described below.
There can be no assurance that any of these objectives will be achieved. The
investment objectives of the Funds are not fundamental and may be changed
without a vote of the shareholders, which could result in a Fund having
investment objectives different from those which a shareholder considered
appropriate for its investment needs at the time of its investment. A Fund
will provide its shareholders with written notification at least 30 days prior
to any change in the Fund's investment objectives.
If a Fund complies with a percentage limitation on investments at the time
an investment is made, a later increase or decrease in percentage resulting
from changes in asset value will not be deemed to violate the limitation,
except in the case of a limitation on illiquid investments. For information
about each Fund's investment limitations, see "Investment Restrictions."
GROWTH STOCK FUND
The Growth Stock Fund seeks long-term appreciation of capital by investing
primarily in a portfolio of equity securities of established companies with
above average prospects for growth or ones incurring significant fundamental
changes. Dividend income, if any, is a secondary consideration.
The Growth Stock Fund invests substantially all, but at least 75%, of its
total assets in common stocks, convertible securities, and other equity
securities of companies which
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<PAGE> 9
typically have an equity market capitalization of at least $1.0 billion.
Due to the exposure to equities, the Fund's net asset value may be
subject to greater fluctuations than a portfolio containing a majority of fixed
income securities.
The Growth Stock Fund invests primarily in common stocks chosen on the
basis of traditional research techniques, including the assessment of corporate
growth prospects, as well as risk and volatility characteristics. The Growth
Stock Fund may invest in common stocks, preferred stocks, warrants and put or
call options on stocks.
The Growth Stock Fund may also invest in the securities of foreign
companies which are traded on U.S. securities exchanges or on the OTC market in
depository receipt form. Such foreign corporate securities may present greater
risks in the form of nationalization, confiscation, domestic marketability or
other national or international political events.
For information about the securities and techniques used by the Growth
Stock Fund, see "Securities and Techniques Used by the Funds."
BOND FUND
The Bond Fund seeks to maximize total return, consistent with the
preservation of capital and prudent investment management, through investment
in an actively managed portfolio of fixed income securities.
The Bond Fund will invest in obligations issued or guaranteed by the U.S.
Government or its agencies; obligations issued or guaranteed by foreign
governments and obligations of domestic or foreign corporations (rated Baa or
better by Moody's, BBB or better by S&P, or unrated if determined by the
Investment Adviser to be of comparable quality); and mortgage-backed and other
asset backed securities. Mortgage-backed securities in which the Bond Fund may
invest include mortgage pass-through certificates and multiple class
pass-through certificates, real estate mortgage investment conduit pass-through
certificates, collateralized mortgage obligations and stripped mortgage-backed
securities.
The obligations in which the Bond Fund invests will have various
maturities depending upon current and forecasted levels of interest rates and
the shape of the yield curve. The Bond Fund will have a duration between two
and five years. Duration is a measure of the expected life of a fixed income
security having greater precision than the concept of "term to maturity."
Duration incorporates a bond's yield, coupon interest payments, final maturity
and call features into one measure. Duration is one of the fundamental tools
used by the Investment Adviser in portfolio selection for the Bond Fund.
SECURITIES AND TECHNIQUES USED BY THE FUNDS
The following provides a summary of the securities and investment
techniques used by the Funds. The Statement of Additional Information contains
more detailed information about these investments and the risks associated with
them.
4
<PAGE> 10
Convertible Securities. The Growth Stock Fund may invest in convertible
securities. Convertible securities are securities which may be exchanged or
converted into a predetermined number of shares of the issuer's underlying
common stock at the option of the holder during a specified time period.
Convertible securities may take the form of convertible preferred stock,
convertible bonds or debentures, units consisting of bonds and warrants, or a
combination of the features of several of these securities. The investment
characteristics of each convertible security varies greatly, which means
convertible securities can be utilized for varying investment objectives. In
choosing convertible securities, the Investment Adviser evaluates the
investment characteristics of the convertible securities as a fixed income
instrument and the investment potential of their underlying equity security for
capital appreciation. Factors considered include the economic and political
outlook, the relative value of various investment alternatives, the issuer's
financial condition, profitability and corporate management.
Restricted Securities. The Growth Stock Fund may acquire securities which
are subject to legal, contractual or other restrictions and costs which reduce
the liquidity of the security on resale. Because of time limitations the
Growth Stock Fund might not be able to dispose of these securities at
reasonable prices or at an advantageous time. The Growth Stock Fund intends to
limit the purchase of restricted or illiquid securities to not more than 10% of
its net assets.
When-Issued and Delayed Delivery Transactions. The Funds may purchase
securities on a when-issued or delayed delivery basis. These transactions are
arrangements in which the Funds purchase securities with payment and delivery
scheduled for a future time. The seller's failure to complete these
transactions may cause a Fund to miss a price or yield considered to be
advantageous. Settlement dates may be a month or more after entering into
these transactions, and the market values of the securities purchased may vary
from the purchase prices. Accordingly, a Fund may pay more or less than the
market value of the securities on the settlement date.
The Funds may dispose of a commitment prior to settlement if the
Investment Adviser deems it advantageous to do so. In addition, the Funds may
enter into transactions to sell their purchase commitments to third parties at
current market values and simultaneously acquire other commitments to purchase
similar securities at later dates. The Funds may realize short-term profits or
losses upon the sale of such commitments.
Temporary Investments. Prevailing market conditions may warrant
investments in the following securities:
- Short-term money market instruments;
- Securities issued and/or guaranteed as to payment of
principal and interest by the U.S. Government, its
agencies or instrumentalities; and
- Repurchase agreements. Repurchase agreements are
arrangements in which banks, broker-dealers and
other recognized financial institutions sell U.S.
5
<PAGE> 11
Government securities or other securities to a Fund and
agree at the time of sale to repurchase them at a mutually agreed
upon time and price. To the extent that the original seller does
not repurchase the securities from the Fund, the Fund could
receive less than repurchase price of any sale of such securities.
Put and Call Options. The Funds may purchase put options as a hedge to
attempt to protect securities which it holds against decreases in value. Fund
will purchase put options only if they are listed on a recognized options
exchange and the underlying securities are held in its portfolio.
Each Fund may also write call options on securities either held in its
portfolio, or which it has the right to obtain without payment of further
consideration, or for which it has segregated cash in the amount of any
additional consideration. The call options which a Fund writes and sells must
be listed on a recognized options exchange. Writing of calls is intended to
generate income and, thereby, protect against price movements in particular
securities in a Fund's portfolio. Prior to exercise or expiration, an option
position can only be terminated by entering into a closing purchase or sale
transaction. This requires a secondary market on an exchange which may or may
not exist for any particular call or put option at any specific time. The
absence of a liquid market to close options could have an adverse impact on a
Fund's ability to effectively hedge its portfolio.
Lending of Portfolio Securities. In order to generate additional income,
each Fund may lend up to one-third in net asset value of its portfolio
securities on a short-term or a long-term basis to broker-dealers, banks or
other institutional borrowers of securities. The Funds will only enter into
loan arrangements with broker-dealers, banks or other institutions which the
Investment Adviser has determined are creditworthy under guidelines established
by the Board of Directors and will receive collateral in the form of cash or
U.S. Government securities equal to at least 100% of the value of the
securities loaned.
Portfolio Turnover. Although the Funds do not intend to invest for the
purpose of seeking short-term profits, securities in their portfolios will be
sold whenever the Investment Adviser believes it is appropriate to do so in
light of each Fund's investment objective, without regard to the length of time
a particular security may have been held.
Additional Investment Techniques Used by the Bond Fund. The Bond Fund may
buy and sell interest rate futures contracts, futures contracts on securities
and fixed income securities indices and options on such contracts for the
purpose of hedging against changes in the value of securities which the Bond
Fund owns or anticipates purchasing due to anticipated changes in interest
rates.
For temporary defensive purposes, as determined by the Investment Adviser,
the Bond Fund may invest a substantial portion of its assets in cash or cash
equivalents, such as obligations of banks, commercial paper and short-term
obligations of U.S. or foreign issuers.
6
<PAGE> 12
The Bond Fund may enter into swap agreements for purposes of attempting to
obtain a particular investment return at a lower cost to the Bond Fund than if
it had invested directly in an instrument that provided the desired return.
The Bond Fund may also purchase "illiquid securities" so long as no more than
10% of its net assets would be invested in illiquid securities after giving
effect to the purchase.
RISK FACTORS
Although the Funds seek to moderate risk by investing in diversified
portfolios of securities, an investment in the Funds involves certain risks.
An investor in the Growth Stock Fund should consider the following:
Equity Securities. The market prices of equity securities, which include
common and preferred stocks and convertible securities, are generally subject
to greater volatility than prices of fixed income securities, such as bonds and
other debt obligations. The Growth Stock Fund is subject to the general risk
of adverse market conditions for equity securities. Although equity securities
in general have a history of long-term growth in value, their prices may
fluctuate dramatically in the short term due to changes in market conditions,
interest rates and various economic and political factors.
Fund Management. The Funds are actively managed by the Investment
Adviser. Fund performance depends on the ability of the Investment Adviser to
select and maintain a portfolio of securities which will achieve each Fund's
investment objectives. The Funds could under-perform compared with other funds
having similar investment objectives.
An investor in the Bond Fund should consider the following:
Credit Risk. The Bond Fund invests in debt securities and is subject to
credit risk, which is the risk that the issuer of a debt security will fail to
make payments when due.
Securities issued or guaranteed by the United States Government generally
are viewed as carrying minimal credit risk. Securities issued by governmental
entities but not backed by the full faith and credit of the United States, and
securities issued by private entities, are subject to higher levels of credit
risk. Shareholders in the Bond Fund bear the risk that payment defaults could
cause the value of the Bond Fund's investment portfolio to decline. The Bond
Fund's permitted investments are intended to limit the amount of credit risk
undertaken by the Bond Fund. The Bond Fund can invest in debt securities rated
as low as BBB by Standard & Poor's or Baa by Moody's, or which have been
assigned as equivalent rating by another nationally recognized statistical
rating organization, or which are of comparable quality in the judgment of the
Investment Adviser. Although these rating categories are investment grade,
obligations with these ratings are viewed as having speculative characteristics
and carry a somewhat higher risk of default than obligations rated in the
higher investment grade categories.
7
<PAGE> 13
Interest Rate Risk. The Bond Fund invests in fixed-rate debt securities
and is subject to interest rate risk, which is the risk that the value of a
fixed-rate debt security will decline due to changes in market interest rates.
In general, when interest rates rise, the value of a fixed-rate debt security
declines. When interest rates decline, the value of a fixed-rate debt security
generally increases. Therefore, Bond Fund shareholders bear the risk that
increases in market interest rates will cause the value of the investment
portfolio to decline. Although the Investment Adviser may engage in
transactions intended to hedge the value of the Bond Fund's portfolios against
changes in market interest rates, there is no assurance that such hedging
transactions will be undertaken or will successfully protect the value of the
portfolio.
Call Risk. The Bond Fund invests in corporate bonds, which are subject to
call risk. Corporate bonds and some securities issued by United States
agencies may be subject to redemption ("called") at the option of the issuer at
a specified price prior to their stated maturity date. It may be advantageous
for an issuer to call its bonds if they can be refinanced through the issuance
of new bonds bearing a lower interest rate than the called bonds. Call risk
increases during periods of declining market interest rates.
If a bond held by the Bond Fund is called during a period of declining
interest rates, the Bond Fund will likely invest the proceeds received by it at
a lower interest rate than that of the called bond, causing a decrease in the
Bond Fund's income.
Mortgage-Related and Other Asset Backed Securities. Mortgage-backed
securities are securities representing interest in "pools" of mortgage loans
secured by residential or commercial real property in which payments of both
interest and principal on the securities are generally made monthly, in effect
"passing through" monthly payments made by the individual borrowers on the
mortgage loans which underlie the securities (net of fees paid to the issuer or
guarantor of the securities). Early repayment of principal on some
mortgage-backed securities (arising from prepayments of principal due to sale
of the underlying property, refinancing, or foreclosure, net of
fees and costs which may be incurred) may expose the Bond Fund to a lower rate
of return upon reinvestment of principal. Also, if a security subject to
prepayment has been purchased at a premium, in the event of prepayment the
value of the premium would be lost. Like other fixed income securities, when
interest rates rise, the value of a mortgage-backed security generally will
decline; however, when interest rates are declining, the value of
mortgage-backed securities with prepayment features may not increase as much as
other fixed income securities.
Payment of principal and interest on some mortgage-backed securities (but
not the market value of the securities themselves) may be guaranteed by the
full faith and credit of the U.S. Government (in the case of securities
guaranteed by GNMA); or guaranteed by agencies or instrumentalities of the U.S.
Government (in the case of securities guaranteed by FNMA or the Federal Home
Loan Mortgage Corporation ("FHLMC"), which are supported only by the
discretionary authority of the U.S. Government to purchase the agency's
obligations). Mortgage-backed securities created by non-governmental issuers
(such as commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers) may
be supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance and
8
<PAGE> 14
letters of credit, which may be issued by governmental entities, private
insurers or the mortgage poolers.
Collateralized Mortgage Obligations ("CMOs") are hybrid mortgage-related
instruments. Interest and prepaid principal on a CMO are paid, in most cases,
monthly. CMOs may be collateralized by whole mortgage loans but are more
typically collateralized by portfolios of mortgage-backed securities guaranteed
by GNMA, FHLMC, or FNMA. CMOs are structured into multiple classes with each
class bearing a different stated maturity. Monthly payments of principal,
including prepayments, are first returned to investors holding the shortest
maturity class; investors holding the longer maturity classes receive principal
only after the first class has been retired. CMOs that are issued or
guaranteed by the U.S. Government or by any of its agencies or
instrumentalities will be considered U.S. Government securities by the Funds,
while other CMOs, even if collateralized by U.S. Government securities, will
have the same status as other privately issued securities for purposes of
applying the Funds' diversification tests.
INVESTMENT RESTRICTIONS
The Funds have adopted certain restrictions designed to ensure
diversification of investment and to reduce investment risk. Certain of these
investment restrictions are fundamental policies, and may not be changed
without shareholder approval. A Fund may not:
(i) With respect to 75% of its total assets, invest more
than 5% of its total assets (determined at the time of
investment) in securities of any one issuer (other than U.S.
Government securities);
(ii) With respect to 75% of its total assets, purchase more
than 10% of the outstanding voting securities of any one
issuer; or
(iii) Invest more than 25% of its total assets (determined
at the time of investment) in one or more issuers having
their principal business activities in a single industry.
Additional information about each Fund's investment restrictions is contained
in the Statement of Additional Information. It is the position of the
Securities and Exchange Commission that open-end investment companies such as
the Funds should not make certain investments if thereafter more than 15% of
the value of their net assets would be so invested. As a matter of operating
policy (though not a fundamental policy), the Funds limit such investments to
no more than 15% of the value of their net assets. The investments in this 15%
limit include (i) those which are restricted (securities which cannot freely be
sold for legal or contractual reasons); (ii) fixed time deposits subject to
withdrawal penalties (other than overnight deposits); and (iii) repurchase
agreements having a maturity of more than seven days. The 15% limitation does
not include obligations which are payable at principal amount plus accrued
interest within seven days after purchase.
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<PAGE> 15
MANAGEMENT OF THE FUNDS
The Board of Directors of BIFI has overall responsibility for overseeing
the management of the Funds. BIFI employs First American Trust Company of
Minnesota (the "Investment Adviser"), P.O. Box 1956, St. Cloud, Minnesota
56302, to manage the Funds' investment portfolios and certain other business
affairs under an agreement that compensates the Investment Adviser at the
annual rate of 0.7% of the average daily net assets of the Funds computed daily
and paid monthly.
The Investment Adviser has acted as investment adviser to BIFI since its
inception, but has not previously served as investment adviser to any other
registered investment company. As of September 30, 1996, the Investment
Adviser managed accounts with an aggregate value of approximately $675,000,000.
The Investment Adviser is a wholly owned subsidiary of Bremer Financial
Corporation, 445 Minnesota Street, Suite 2000, St. Paul, Minnesota 55101-2107,
a bank holding company.
The Glass-Steagall Act generally prohibits banks from engaging in the
business of underwriting, selling or distributing securities and from being
affiliated with companies principally engaged in those activities. In
addition, administrative and judicial interpretations of the Glass-Steagall Act
prohibit bank holding companies and their bank and nonbank subsidiaries from
organizing, sponsoring or controlling registered open-end investment companies
that are continuously engaged in distributing their shares. Bank holding
companies and their bank and nonbank subsidiaries may serve, however, as
investment advisers to registered investment companies, subject to a number of
terms and conditions. In the event of changes in federal or state
statutes or regulations or judicial and administrative interpretations or
decisions pertaining to permissible activities of bank holding companies and
their bank and nonbank subsidiaries, the Investment Adviser might be prohibited
from continuing these arrangements. In that event, it is expected that the
Board of Directors would make other arrangements and that shareholders would
not suffer adverse financial consequences.
Portfolio Managers. The Growth Stock Fund is managed by a team comprised
of David J. Erickson and Janet E. Vandendriessche. The Bond Fund is managed by
a team comprised of Paul W. Gifford, Jr. and David J. Erickson.
DAVID J. ERICKSON is Vice President/Chief Investment Officer of the
Investment Adviser and develops investment policies and procedures for the
Investment Company. He also serves as Chairman of the Investment Committee
which oversees the investment process for the Investment Adviser. Dave
conducts research on the economy, financial markets and specific investment
products. In addition, he oversees the management of seven internal funds. He
is heavily involved in stock selection and personally manages a key internal
stock fund. He has two decades of investment management experience as well as
BA and MBA degrees in finance from the University of Wisconsin, Madison.
JANET E. VANDENDRIESSCHE is Senior Vice President of the Investment
Adviser. She serves on the Investment Committee of the Investment Adviser.
Janet develops strategies,
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<PAGE> 16
conducts training, and manages portfolios to achieve performance
consistent with long-range objectives. She analyzes equities for the buy list
and manages an internal equity fund with total assets in excess of $6 million.
She serves on Bremer Financial Corporation's Corporate Investment Committee.
Janet administers Personal Trust accounts and manages portfolios in excess of
$200 million. She has 21 years of trust administration and investment
experience. Janet received her Bachelor of Arts degree in Mathematics from the
College of St. Benedict's. She received her Certified Financial Planner
designation in 1993.
PAUL W. GIFFORD, JR. is Trust Officer/Investment Manager of the Investment
Adviser. Paul's primary focus is on fixed income strategies including the
management of four internal bond funds. In addition, he assists in stock
selection for funds and accounts. Paul is an investment officer for the
Investment Adviser and serves on its Investment Committee. He has seven years
of investment experience since completing his Business Degree at Mankato State
University.
Firstar Trust Company, 615 East Michigan Street, P.O. Box 701, Milwaukee,
Wisconsin 53201-0701 (telephone 1-800-595-5552) acts as Transfer Agent,
Dividend Disbursing Agent and Custodian for the Funds. It controls all
securities and cash for the Funds, receives and pays for securities purchased,
delivers against payment for securities sold, receives and collects income from
investments, makes all payments for Fund expenses and performs other
administrative services. Firstar is not affiliated with BIFI or the Investment
Adviser.
PLAN OF DISTRIBUTION
The Funds have adopted a written plan of distribution (the "Plan") in
accordance with Rule 12b-1 under the Investment Company Act of 1940. The Plan
authorizes the Funds to make payments in connection with the distribution of
shares at an annual rate, as determined from time to time by the Board of
Directors, of up to 0.25% of a Fund's average daily net assets. Payments made
pursuant to the Plan may only be used to pay distribution expenses actually
incurred. Expenses incurred in one year may be carried forward and paid from
amounts available in future years. The Rule 12b-1 fees may be used to finance
any activity which is primarily intended to result in the sale of shares of a
Fund, including, but not limited to, advertising, compensation for sales and
marketing activities of financial institutions and others such as dealers and
distributors, shareholder account servicing, the printing and mailing of
prospectuses and the printing and mailing of sales literature. The Plan
permits the Funds to employ a distributor of shares, in which case payments
under the Plan will be made to the distributor and may be spent by the
distributor on any activities or expenses primarily intended to result in the
sale of the Funds' shares, including but not limited to, compensation to, and
expenses of, employees of the distributor who engage in or support distribution
of our shares, printing of prospectuses and reports, advertising and
preparation and distribution of sales literature. Overhead and salaries will
be allocated based on the percentage of time devoted to distribution
activities. Initially, all payments under the Plan will be made to the
Investment Adviser, which directly bears all sales and promotional expenses of
the Funds, other than expenses incurred to comply with laws
11
<PAGE> 17
regulating the issuance and sale of securities. The Investment Adviser
has voluntarily agreed to waive fees payable to it under the Plan during the
first year of each Fund's operations.
The Funds will pay all Fund expenses not assumed by the Investment
Adviser, including, but not limited to, the costs of preparing and printing
registration statements required under the Securities Act of 1933 and the
Investment Company Act of 1940 and any amendments thereto, the expenses of
qualifying shares for sale in various states, the printing and distribution
costs of prospectuses provided to existing shareholders, the cost of director
and officer liability insurance, reports to shareholders, reports to government
authorities and proxy statements, interest charges, brokerage commissions, and
expenses incurred in connection with portfolio transactions. The Funds will
also pay fees of directors who are not employees or interested persons of the
Funds, auditing and accounting services, fees and expenses of any custodian or
trustee having custody of the Funds' assets, expenses of calculating the net
asset value and repurchasing and redeeming shares, and charges and expenses of
dividend disbursing agents, registrars, and share transfer agents, including
the cost of keeping all necessary shareholder records and accounts.
The Funds have entered into an administration agreement (the
"Administration Agreement") with Firstar Trust Company (the "Administrator"),
615 East Michigan Street, Milwaukee, Wisconsin 53202. Under the Administration
Agreement, the Administrator maintains the books, accounts and
other documents required by the Investment Company Act of 1940, responds to
shareholder inquiries, prepares our financial statements and tax returns,
prepares certain reports and filings with the Securities and Exchange
Commission and with state regulatory authorities, furnishes statistical and
research data, clerical, accounting and bookkeeping services, keeps and
maintains the Funds' financial and accounting records and generally assists in
all aspects of the Funds' operations. The Administrator, at its own expense
and without reimbursement from the Funds, furnishes office space and all
necessary office facilities, equipment and executive personnel for performing
the services required to be performed by it under the Administration Agreement.
For its services during the first year of the Fund's operation, the Funds pay
the Administrator a fee, paid monthly, at an annual rate of 0.0425% of the
first $100,000,000 of each Fund's average net assets, 0.034% of the next
$400,000,000 of each Fund's average net assets, and 0.0255% of each Fund's net
assets in excess of $500,000,000. The Administrator's minimum annual fee,
regardless of net asset value, is $50,000.
Firstar Trust Company also provides custodial, transfer agency and
accounting services for the Funds. Information about the fees paid for these
services by the Funds to Firstar Trust Company is provided in the Statement of
Additional Information.
FUND SHARES AND ORGANIZATION
BIFI was incorporated under the laws of Maryland on August 26, 1996 and is
registered under the Investment Company Act of 1940 as an open-end management
company. The Articles of Incorporation authorize the Board of Directors to
issue up to 500 million shares of Common Stock, $.0001 par value per share. Of
these shares, 100 million have been authorized for each of the Growth Stock
Fund and the Bond Fund. Fund shares
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<PAGE> 18
are fully paid and non-assessable when issued; have no preference as to
conversion, exchange, dividends, redemption or other features; and have no
preemptive rights. The shares have no cumulative voting rights, meaning that
the holders of more than 50% of the shares voting for the election of directors
can elect 100% of the directors. Shares may be issued as either full or
fractional shares. Fractional shares have, pro rata, the same rights and
privileges as full shares.
Each share of a Fund has one vote. On certain matters, such as the
election of directors, all shares of all of the Funds vote together as one
series. On matters affecting only a particular Fund or class, the shares of
that Fund or class will vote as a separate series. An example of such a matter
would be a proposal to alter a fundamental investment restriction pertaining to
a Fund.
Under the laws of the State of Maryland and BIFI's Articles of
Incorporation, BIFI is not required to hold shareholder meetings unless they
are required by the Investment Company Act of 1940 or are requested in writing
by the holders of 25% or more of the outstanding shares of BIFI.
As of the date of this Prospectus, the Investment Adviser had provided the
initial seed capital for the Funds and owned all of the outstanding Common
Stock of the Funds. The ownership interest of the Investment Adviser will be
substantially diluted upon the issuance of shares to Fund investors. However,
so long as the Investment Adviser owns more than 25% of the outstanding voting
securities of a Fund, it may be deemed to be a controlling entity of that Fund.
PRICE OF SHARES
Shares of the Funds are sold and redeemed at net asset value. The net
asset value per share for purchase and redemption orders is determined once
daily, as of the close of regular trading hours (currently 3:00 p.m., Central
time) of the New York Stock Exchange (the "Exchange") on each day the Exchange
is open for trading. Net asset value per share of a Fund is calculated by
dividing the total market value of the Fund's investments and other assets,
less any liabilities, by the total outstanding shares of the Fund.
For the purpose of determining the aggregate net assets of the Funds, cash
and receivables will be valued at their face amounts. Interest will be recorded
as accrued and dividends will be recorded on the ex-dividend date. Investments
in equity securities which are traded on a national securities exchange or
reported on the Nasdaq National Market are stated at the last quoted sales
price if readily available for such equity securities on each business day;
other equity securities traded in the over-the-counter market and listed equity
securities for which no sale was reported on that date are stated at the last
quoted bid price. Debt obligations exceeding 60 days to maturity which are
actively traded are valued by an independent pricing service at the most
recently quoted bid price. Debt obligations with 60 days or less remaining
until maturity may be valued at their amortized cost, which approximates market
value. Options purchased or written by the Funds are valued at the average of
the current bid and asked prices. For securities where quotations are not
readily
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<PAGE> 19
available, or where the last quoted sale price is not considered
representative of the value of that security if it were to be sold on that day,
the security will be valued at fair value as determined in good faith by the
Investment Adviser.
PURCHASING SHARES
By Mail: Subscription for shares should be addressed to the Bremer Growth
Stock Fund or the Bremer Bond Fund, c/o Firstar Trust Company, Mutual Fund
Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. Express or registered
mail should be sent to the Bremer Growth Stock Fund or the Bremer Bond Fund,
c/o Firstar Trust Company, Third Floor, 615 East Michigan Street, Milwaukee,
Wisconsin 53202. The U.S. Postal Service or independent delivery services are
not agents of the Funds, and deposit in the mail or with a delivery service or
receipt at Firstar Trust Company's post office box of purchase applications
does not constitute receipt by Firstar or a Fund.
By Wire: To purchase by wire transfer, federal funds should be
transmitted to Firstar Bank Milwaukee, N.A., ABA #0750-00022/ For Credit to:
Firstar Trust Company, Account #112-952-137/For Further Credit: Bremer Growth
Stock Fund or Bremer Bond fund [shareholder account number], [name of account].
An Account Application Form must be on file with Firstar Trust Company before
purchasing shares by wire. Before wiring funds, an investor should call
Firstar Trust Company at 1-800-595-5552 to advise the bank that funds are being
wired.
The price per share will be the net asset value next computed after the
time the application and funds are received in proper order by the Transfer
Agent. The determination of net asset value for a particular day is applicable
to all applications for the purchase of shares received at or before the close
of trading on the Exchange. Accordingly, purchase orders received on a day the
Exchange is open for trading, prior to the close of trading on that day, will
be valued as of the close of trading on that day. Applications for purchase of
shares after the close of trading on the Exchange will be based upon the net
asset value as determined as of the close of trading on the next day the
Exchange is open.
An initial purchase must be at least $2,000 ($1,000 for IRA purchases) and
each subsequent purchase must be at least $100, although the Funds reserve the
right to waive or change these minimums at its discretion. All applications to
purchase capital stock are subject to acceptance or rejection by authorized
officers of the Funds and are not binding until accepted. Applications will
not be accepted unless accompanied by payment in U.S. funds. Payment should be
made by check or wire transfer drawn on a U.S. bank, savings and loan, or
credit union. The Funds will not accept payment in cash or third party checks
for the purchase of shares. The Transfer Agent will charge a $20 fee against
an investor's account for any check that does not clear. Additionally, the
investor may be responsible for certain expenses incurred by a Fund if a
purchase is cancelled due to non-payment.
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<PAGE> 20
REDEEMING SHARES
Shareholders may redeem for cash all or a portion of their shares by
instructing the Transfer Agent at its office in Milwaukee, Wisconsin. Shares
will be redeemed at the net asset value next computed after the receipt of a
redemption request and accepted by the Fund. The determination of net asset
value for a particular day is applicable to all requests for the redemption of
shares received at or before the close of trading on the Exchange on that day
(usually 3:00 p.m. Central time). Requests received for redemption on a day
the Exchange is open for trading, prior to the close of trading on that day,
will be valued as of the close of trading on that day. Requests for redemption
of shares received after the close of trading on the Exchange will be based
upon the net asset value as determined as of the close of trading on the next
day the Exchange is open. A redemption request must be in "good order" before
the proceeds can be released. This means the following will be required:
(i) A letter of instruction specifying the account number, number of
shares or dollar amount to be redeemed, signed by all owners of the
shares exactly as their names appear in the Fund's shareholder
records. If certificates have been issued representing shares to be
redeemed, they must accompany the letter and must be endorsed on the
back with the signature of the person whose name appears on the
certificate.
(ii) A guarantee of the signature of each owner by an eligible signature
guarantor such as a U.S. commercial bank, trust company, or member
of the New York Stock Exchange for redemption requests greater than
$10,000, if the address of record has been changed within the 15 days
preceding any liquidation, or if the proceeds of any redemption are
requested to be made payable to or sent to other than the address of
record.
(iii) In the case of estates, trusts, guardianships, custodianships,
corporations and pension and profit-sharing plans, other supporting
legal documents may be required.
If any portion of the shares to be redeemed represents an investment made
by check, the Fund may delay the payment of the redemption proceeds until the
transfer agent is reasonably satisfied that the check has been collected, which
may take up to twelve days from the purchase date.
Payment for shares redeemed will be mailed generally within two business
days, but no later than the seventh business day after receipt by the Transfer
Agent of the redemption request in good order, or within such shorter period as
may legally be required. If payment of liquidation proceeds is to be made by
federal wire transfer, a $10 wire fee will be applied.
No redemption request will become effective until all documents have been
received in proper form by Firstar Trust Company. The shareholder should
contact Firstar for
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<PAGE> 21
further information concerning documentation required for a redemption
of Fund shares. The U.S. Postal Service or independent delivery services are
not agents of the Funds, and deposit in the mail or with a delivery service or
receipt at Firstar Trust Company's post office box of redemption requests does
not constitute receipt by Firstar or a Fund.
Shareholders who have an IRA or other retirement plan must indicate on
their redemption request whether or not to withhold federal income tax.
Redemption requests failing to indicate an election not to have tax withheld
will be subject to withholding.
A redemption order may not be canceled or revoked by the shareholder
once it has been received and accepted by the Fund. Since the redemption price
is the net asset value per share determined at the same time and in the same
manner as for a purchase order received at that time, it reflects the market
value of the Fund's investments at the time of redemption. This value may be
more or less than the price originally paid for the shares, and the investor
may realize a gain or loss on redemption.
To redeem shares by telephone, an investor must check the appropriate box
on the account application. Proceeds redeemed by telephone will be mailed or
wired only to an investor's address or bank of record as shown on the records
of the Transfer Agent. In order to arrange for telephone redemptions after an
account has been opened or to change the bank, account, or address designated
to receive redemption proceeds, a written request must be sent to the Transfer
Agent. The request must be signed by each shareholder of the account with the
signatures guaranteed. Further documentation may be requested from
corporations, executors, administrators, trustees and guardians.
Neither the Funds nor the Transfer Agent will be responsible for the
authenticity of redemption instructions received by telephone. The Transfer
Agent has adopted certain procedures to safeguard against unauthorized
telephone instructions including recording all telephone transactions and
sending written confirmation of such transactions. The Funds reserve the right
to refuse a telephone redemption if they believe it is advisable to do so.
Procedures for redeeming shares by telephone may be modified or terminated by
the Funds at any time. During periods of substantial economic or market
change, telephone redemptions may be difficult to implement. If an investor is
unable to contact the Transfer Agent by telephone, shares may also be redeemed
by delivering the redemption request to the Transfer Agent in person or by mail
as described above.
DIVIDENDS, DISTRIBUTIONS AND TAX CONSEQUENCES
The Bond Fund will distribute all of its net investment income to
shareholders in the form of monthly dividends. The Growth Stock Fund will
distribute all of its net investment income to shareholders in the form of an
annual dividend, declared on the second to last business day of each calendar
year. If net capital gains are realized, the Fund will distribute them near
year-end in the year in which such gains are realized. The Funds intend to
comply with the special provisions of Subchapter M of the Internal Revenue Code
that relieve them from federal income tax on net investment income and capital
gains currently distributed to shareholders. The Internal Revenue Code
requires all regulated investment
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<PAGE> 22
companies to pay a nondeductible 4% excise tax if at least 98% of
ordinary income and 98% of capital gains are not paid out to shareholders
during the year in which they are earned or realized. The Funds intend to
distribute income and capital gains in such a manner as to avoid the imposition
of this excise tax.
Investors in a Fund may elect to have all income, dividends and capital
gains distributions reinvested in shares of the Fund or paid in cash, or to
have capital gains distributions reinvested and income dividends paid in cash.
Further information about dividend reinvestment is contained in the New Account
Application form accompanying this Prospectus. If an election is not specified,
all dividends and capital gains distributions will automatically be reinvested
in full and factional shares of the Fund, calculated to the nearest 1,000th of
a share. Shares are purchased at the net asset value in effect on the business
day after the dividend record date and are credited to the investor's account
on the dividend payment date. Cash dividends are also paid on the dividend
payment date. Investors will be informed of the number of shares purchased and
the price following each reinvestment. An election to reinvest or receive
dividends and distributions in cash will apply to all shares registered in an
investor's name, including those previously purchased through dividend
reinvestment. See "Tax Matters" for a discussion of certain tax consequences
relating to dividend reinvestment.
An investor may change an election at any time by notifying the Fund in
writing. If such notice is received between a dividend declaration date and
the corresponding payment date, it will become effective on the day following
the payment date. The Funds may modify or terminate the dividend reinvestment
program at any time on 30 days' notice to participants.
Fund shareholders will be subject to federal income tax at ordinary rates
on distributions of investment income and short-term capital gains.
Distributions of net long-term capital gains are taxable to Fund shareholders
as long-term capital gain regardless of the length of time shares of the Fund
are held. Short-term capital gains are taxed at the same rate as an
individual's ordinary income; long-term capital gains are taxed at a maximum
rate of 28%. Dividends and distributions will be taxable whether received in
cash or reinvested in additional shares of the Fund. Shareholders will be
advised annually as to the source of distributions for tax purposes.
Distributions may also be subject to state and local taxes. Shareholders not
subject to tax on income will not be required to pay tax on amounts distributed
from a Fund.
A Fund may be required to withhold federal income tax at a rate of 31%
(backup withholding) from dividend payments, distributions, and redemption
proceeds if a shareholder fails to furnish the Fund with a social security or
tax identification number. The shareholder also must certify that the number
is correct and that the shareholder is not subject to backup withholding. The
certification is included as part of the share purchase application form.
Dividends and distributions are paid on a per share basis. At the time of
such payment, therefore, the value of each share will be reduced by the amount
of the payment.
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<PAGE> 23
If shares are purchased shortly before the payment of a dividend or a
capital gains distribution, purchasers will pay the full price for the shares
and then receive some portion of the price back as a taxable dividend or
distribution.
The foregoing is a general summary of current federal income tax law
regarding the Funds. Investors should consult with their own tax adviser
regarding federal, state and local tax consequences of an investment in the
Funds.
PERFORMANCE INFORMATION
Either Fund may, from time to time, advertise information regarding its
performance. A Fund's average annual total rate of return will be expressed in
terms of the average annual compounded rate of return on a hypothetical
investment in the Fund over a specified period, will reflect the deduction of a
proportional share of Fund expenses (on an annual basis) and will assume that
all dividends and capital gains distributions are reinvested when paid. Total
return indicates the positive or negative rate of return that a shareholder
would have earned from reinvested dividends and distributions and changes in
net asset value per share during the period.
Performance information for the Funds may be compared, in reports and
promotional literature to: (i) the Standard & Poor's 500 Stock Index, the Dow
Jones Industrial Average, the Lehman Brothers Intermediate Government Corporate
Bond Index or various other unmanaged indices, and (ii) the performance of
other mutual funds. Unmanaged indices may assume the reinvestment of income
distributions, but generally do not reflect deductions for administrative and
management costs and expenses.
Performance information for a Fund reflects only the performance of
hypothetical investments in the Fund during the particular time periods on
which the calculations are based. Such information should not be considered as
representative of the performance of the Fund in the future. The performance
of a Fund will vary based not only on the current market value of the
securities held in its portfolio, but also on changes in the Fund's expenses
and in the asset size of the Fund. Performance information should be
considered in light of a Fund's investment objectives and policies, the types
and quality of the Fund's portfolio investments, market conditions during the
particular time period and operating expenses.
SHAREHOLDER SERVICES
Shareholder Reports. Shareholders will receive a confirmation statement
reflecting each purchase and redemption of Fund shares, as well as periodic
statements detailing distributions made by the Funds. In addition, the Funds
will send shareholders semi-annual reports showing its portfolio holdings and
will provide tax information annually.
Systematic Investments. Shareholders may arrange to make regular monthly
or quarterly investments in the Funds through automatic withdrawals from a bank
account. The minimum for each systematic investment in a Fund is $100 and a
shareholder must have
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<PAGE> 24
a minimum of $2,000 invested in the Fund before making systematic investments.
A shareholder may specify systematic investments on the initial account
application or by submitting a Systematic Investment application at a later
date.
Systematic Withdrawals. Shareholders may arrange to make regular monthly
or quarterly withdrawals of cash (minimum of $250 per withdrawal) from any Fund
that has a minimum balance of $50,000 at the time the systematic withdrawal
election is made. To activate systematic withdrawals, a shareholder must
submit a Systematic Withdrawal application to the Fund. There is no charge for
withdrawals. Withdrawal payments are derived from liquidation of sufficient
shares from a shareholder's account to make the designated payments. If
systematic withdrawals exceed reinvested dividends and capital gain
distributions, a shareholder's original investment will be reduced and
ultimately exhausted. Withdrawals are redemptions of shares and may cause a
shareholder to realize gains or losses for tax purposes. The withdrawal plan
may be terminated at any time by calling or writing to the Fund.
Telephone Exchange Privilege. Shareholders are generally permitted to
exchange their shares in one Fund for shares of the other Fund without charge
or commission by the Fund, provided that such other shares may be legally sold
in the state of the shareholder's residence. The minimum amount per transfer
is $2,000. Telephone exchange privileges automatically apply to each
shareholder of record and the representative of record unless and until the
transfer agent receives written instructions from the shareholder(s) of record
canceling the privilege.
In order to request an exchange by telephone, an investor must give the
account name, account number and the amount or number of shares to be
exchanged. During periods of significant economic or market change, telephone
exchanges may be difficult to implement. If a shareholder is unable to contact
the Fund by telephone, the shareholder may also deliver the exchange request to
the Transfer Agent in person or by mail at the addresses listed on the back
cover of this Prospectus.
Individual Retirement Accounts. Individuals who receive compensation or
earned income may establish their own tax-sheltered individual retirement
account (IRA), even if they are active participants in a qualified retirement
plan. The Funds offer a prototype IRA plan which may be adopted by
individuals. Earnings on amounts held in an IRA are not taxed until
withdrawal. The amount of deduction, if any, allowed for IRA contributions is
limited for individuals who participate in an employer sponsored retirement
plan and whose incomes exceed specified limits.
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<TABLE>
<S> <C>
NEW ACCOUNT INFORMATION: TRANSFER AGENT AND CUSTODIAN:
1-800-595-5552 Firstar Trust Company
P.O. Box 701
SHAREHOLDER ACCOUNT INFORMATION: Milwaukee, Wisconsin 53201-0701
(Regular Mail Address)
1-800-595-5552 Mutual Fund Services
615 East Michigan Street, 3rd Floor
INVESTMENT ADVISER: Milwaukee, Wisconsin 53202
(Overnight or Express Mail Address)
First American Trust Company
P.O. Box 986 PUBLIC ACCOUNTANTS:
St. Cloud, Minnesota 56302-0986
Arthur Andersen LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
LEGAL COUNSEL:
Briggs and Morgan,
Professional Association
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
</TABLE>
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<PAGE> 26
BREMER INVESTMENT FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
Dated ______________, 1996
Bremer Investment Funds, Inc. ("BIFI") is an open-end, diversified
investment company, which consists of two mutual funds, the Bremer Growth Stock
Fund and the Bremer Bond Fund, which have different investment portfolios and
objectives (each, a "Fund," and together, the "Funds").
This Statement of Additional Information is not a prospectus, but contains
information in addition to and more detailed than what is contained in the
Prospectus for the Funds. It should be read in conjunction with the
Prospectus, dated ______________, 1996, which has been filed with the
Securities and Exchange Commission and can be obtained, without charge, by
calling or 1-800-595-5552 or writing to Bremer Investment Funds, Inc., c/o
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701. This
Statement of Additional Information has been incorporated by reference into the
Prospectus.
Table of Contents
Investment Objectives and Policies ....................................... 2
Investment Limitations ................................................... 2
Portfolio Turnover ....................................................... 3
Purchasing and Redeeming Shares .......................................... 3
Officers and Directors ................................................... 3
Principal Holders of Securities .......................................... 4
Investment Adviser ....................................................... 4
Transfer Agent and Custodian ............................................. 5
Portfolio Transactions ................................................... 5
Financial Statements .................................................... 6
<PAGE> 27
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives, policies and limitations of the Funds are
described in the Prospectus under the heading "Investment Objectives and
Policies."
INVESTMENT LIMITATIONS
Each Fund is subject to certain fundamental investment restrictions
described in the Prospectus under the heading "Investment Restrictions." Such
investment restrictions may not be changed without the approval of a majority
of the shareholders of the Fund. The vote of a majority of the shareholders
means the vote, at a meeting of the shareholders, of holders representing (a)
67% or more of the voting securities present at such meeting, if the holders of
more than 50% of the outstanding voting securities are present or represented
by proxy; or (b) more than 50% of the outstanding voting securities, whichever
is less.
In addition, the Funds have adopted other investment limitations and will
not:
1) Purchase securities on margin, participate in a joint trading
account or sell securities short.
2) Lend money.
3) Purchase or sell real estate or interests in real estate,
commodities or commodity futures. The Growth Stock Fund may invest
in the securities of real estate investment trusts up to 10% of the
Growth Stock Fund's total net assets.
4) Borrow money except temporarily from a bank (5% of lower of
cost or market of total assets) for emergency or extraordinary
purposes.
5) Purchase securities of other regulated investment companies,
except in open market transactions limited to not more than 10% of
its total assets, or except as part of merger, consolidation or
other acquisition.
6) Invest more than 5% of its total assets in securities of
issuers that have less than three years of continuous operations or
in any equity or fixed income securities of any issuer which are not
readily marketable.
7) Invest more than 5% of its total assets in securities of any
one issuer (except cash, cash items, repurchase agreements and U.S.
Government obligations) or acquire more than 10% of any class of
voting shares of any one issuer.
8) Hold more than 25% of the Growth Stock Fund's total net
assets in companies of any one industry or group of related
industries.
9) Hold more than 10% of the Bond Fund's total net assets in
bonds rated Baa by Moody's or BBB by S&P.
2
<PAGE> 28
PORTFOLIO TURNOVER
The annual portfolio turnover rate is not expected to exceed 100% for the
Growth Stock Fund and 200% for the Bond Fund. No limit, however, has been
placed on the rate of portfolio turnover of the Funds, and securities may be
sold without regard to the time they have been held when, in the opinion of the
Investment Adviser, investment considerations warrant such action. Portfolio
turnover rate is calculated by dividing the lesser of a Fund's annual sales or
purchases of portfolio securities (exclusive of securities with maturities of
one year or less at the time the Fund acquired them) by the monthly average
value of the securities in the Fund's portfolio during the year.
PURCHASING AND REDEEMING SHARES
The purchase and redemption of shares of the Funds are subject to the
procedures described under the headings "Purchasing Shares" and "Redeeming
Shares" in the Prospectus, which is incorporated herein by reference.
OFFICERS AND DIRECTORS
The officers and directors of BIFI and their principal occupations for the
last five years are set forth below. Unless otherwise noted, the address for
each director and officer is Bremer Investment Funds, Inc., P.O. Box 1956, St.
Cloud, Minnesota 56302.
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation(s)
Name and Address With Registrant During Past Five Years
- ---------------- --------------- ----------------------
<S> <C> <C>
Steven A. Laraway* President and President/Chief
Director Executive Officer of
First American Trust
Company of Minnesota
since February 1992;
Vice President of Bank
One Ohio Trust Company
from March 1987 to
February 1992.
David J. Erickson* Vice President Vice President/Chief
Investment Officer of
First American Trust
Company of Minnesota
since January 1993;
Vice President -
Investments of North
Central Trust Company
from September 1987 to
January 1993.
Paul W. Gifford, Jr.* Secretary Investment
Manager/Trust Officer
of First American
Trust Company of
Minnesota. Mr.
Gifford has held
various positions with
First American Trust
Company since December
1990.
Richard A. DiNello* Treasurer Chief Financial
Officer of First
American Trust Company
of Minnesota. Mr.
DiNello has held
various positions with
First American Trust
Company since July
1986.
</TABLE>
3
<PAGE> 29
<TABLE>
<CAPTION>
Position(s) Held Principal Occupation(s)
Name and Address With Registrant During Past Five Years
- ---------------- --------------- ----------------------
<S> <C> <C>
John M. Bishop Director President of Bishop
Lakedale Telephone Company Communications
Highway 55 East Corp. for more than
Annadale, MN 55302 the past five
years.
John V. Botsford Director President of
Suite 300 Botsford & Rice,
3100 South Columbia Rd. Inc. for more than
P.O. Box 14388 the past five years
Grand Forks, ND 58208-4388 and Managing Partner
of Botsford & Rice
Cooperative
Securities, LLP.
John J. Feda Director Retired.
607 South First Street
Marshall, MN 56258
William H. Lipschultz* Director Chairman of Bremer
445 Minnesota St., Suite 2000 Financial Corporation
St. Paul, MN 55101-2107 since 1996 and Vice
President - Regional
Manager of Stone
Container Corporation
from January 1977 to
February 1996.
Daniel C. Reardon* Director Financial
U.S. Annuity Financial Group Representative with
Suite 145 U.S. Annuity
1565 Cliff Road Financial Group
Eagan, MN 55122 since May 1995 and
Financial
Representative with
Prudential
Securities from
January 1990 to May
1995.
- -------------------------------
</TABLE>
*Interested person of the Fund, as defined in the Investment Company Act of
1940.
BIFI does not pay any remuneration to its officers and directors other
than fees to directors who are not officers or otherwise interested
persons of BIFI.
PRINCIPAL HOLDERS OF SECURITIES
As of _______________, 1996, First American Trust Company of Minnesota, a
Minnesota corporation, held one share of Class A Common Stock (the Growth Stock
Fund) and 9,999 shares of Class B Common Stock (the Bond Fund), which
represented all of BIFI's capital stock outstanding on such date. Such shares
were issued in consideration of the initial capitalization of BIFI and will be
redeemed by BIFI over a period of 60 months. Upon the conversion of certain
common and collective trust funds into shares of BIFI, such shares of stock
will represent less than 5% of each class of outstanding Common Stock. First
American Trust Company of Minnesota is a wholly owned subsidiary of Bremer
Financial Corporation.
INVESTMENT ADVISER
First American Trust Company of Minnesota (the "Investment Adviser")
serves as the investment adviser of the Funds under the terms of an Investment
Advisory Agreement dated
4
<PAGE> 30
_______________, 1996. The Investment Advisory Agreement must be
approved annually by the Board of Directors of BIFI, including a majority of
those directors who are not parties to such contract or "interested persons" of
any such party as defined in the Investment Company Act of 1940, by vote cast
in person at a meeting called for such purpose. The Agreement may be
terminated at any time, without penalty, on 60 days' written notice by BIFI's
Board of Directors, by the holders of a majority of the Funds' outstanding
voting securities or by the Investment Adviser. The Agreement automatically
terminates in the event of its assignment (as defined in the Investment
Company Act of 1940 and the rules thereunder).
As compensation for its services to the Funds, the Investment Adviser
receives monthly compensation at the annual rate of 0.7% of the average daily
net assets of the Funds, computed daily and paid monthly. First American Trust
has agreed with the Funds that the expense ratio will not exceed the expense
limitation of any state in which the Funds' shares are sold.
BIFI bears all expenses of its operation, other than those assumed by the
Investment Adviser. Such expenses include payment for distribution, transfer
agent services, accounting services, certain administration services, legal
fees and payment of taxes. The expenses of organizing BIFI and registering and
qualifying its initial shares under federal and state securities laws will be
charged to BIFI's operations as an expense amortized over a period not to
exceed five years.
The Investment Adviser is a wholly owned subsidiary of Bremer Financial
Corporation, a bank holding company. The officers of BIFI also serve as officers
of the Investment Adviser, as described above in "Officers and Directors."
BIFI has adopted a written plan of distribution in accordance with Rule
12b-1 under the Investment Company Act of 1940. See "Plan of Distribution" in
the Prospectus.
TRANSFER AGENT AND CUSTODIAN
Firstar Trust Company, P.O. Box 701, Milwaukee, Wisconsin 53201-0701,
(telephone 1-800-595-5552), acts as administrator, custodian, transfer agent
and dividend disbursing agent and is reimbursed for all expenditures incurred
in the discharge of these responsibilities.
Firstar Trust Company and BIFI are parties to a Fund Administration
Servicing Agreement, Fund Accounting Servicing Agreement, Custodian Agreement
and Transfer Agent Agreement. Pursuant to such agreements, Firstar Trust
Company controls all securities and cash for the Funds, receives and pays for
securities purchased, delivers against payment for securities sold, receives
and collects income from investments, makes all payments for Fund expenses and
performs other administrative services, as directed in writing by authorized
officers of the Funds. Certain information regarding the administrative
services provided by Firstar Trust Company is contained in the Prospectus under
the heading "Plan of Distribution."
PORTFOLIO TRANSACTIONS
Subject to policies established by BIFI's Board of Directors, the
Investment Adviser is responsible for the Funds' portfolio decisions and the
placing of orders to effect the Funds' portfolio transactions. With respect to
such transactions, the Investment Adviser seeks to obtain the best net results
for the Funds, taking into account such factors as price (including the
applicable brokerage commission or dealer spread), size of order, difficulty of
execution and operational facilities of the firm involved. While the
Investment Adviser generally seeks reasonably competitive commission rates, the
Funds will not necessarily be paying the lowest commission or spread available.
BIFI has no obligation to deal with any broker or dealer in the execution of
its portfolio transactions. There is no affiliation between any broker-dealer
or affiliated persons of any broker-dealer who executes transactions for the
Funds and BIFI's officers and directors or the Investment Adviser.
Investment decisions for each Fund are made independently. When the Funds
are simultaneously engaged in the purchase or sale of the same securities, the
transactions are averaged
5
<PAGE> 31
as to price and allocated as to amount in accordance with a formula
deemed equitable to each Fund. In some cases this system could adversely
affect the price paid or received by a Fund, or the size of the position
obtainable for a Fund.
Decisions with respect to allocations of portfolio brokerage will be made
by the Investment Adviser. Portfolio transactions are normally placed with
broker-dealers which provide the Investment Adviser with research and
statistical assistance. Recognizing the value of these factors, a Fund may pay
brokerage commissions in excess of those which another broker might charge for
effecting the same transaction.
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
of Bremer Investment Funds, Inc.:
We have audited the statement of assets and liabilities of Bremer Investment
Funds, Inc. (the "Fund"), (a Maryland corporation comprised of the Bremer
Growth Stock Fund and the Bremer Bond Fund) as of _____________. This
financial statement is the responsibility of the Fund's management. Our
responsibility is to express an opinion on this financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the net assets of the Fund as of
____________, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
______________, 1996.
<PAGE> 32
BREMER INVESTMENT FUNDS, INC.
Statement of Assets and Liabilities
November 6, 1996
<TABLE>
<CAPTION>
Bremer Growth Bremer Bond
Stock Fund Fund
------------- -----------
<S> <C> <C>
ASSETS
Cash $ $
---------- ----------
Unamortized organizational costs
---------- ----------
Total Assets ---------- ----------
LIABILITIES
Payable to Adviser ---------- ----------
Total Liabilities ---------- ----------
NET ASSETS $ $
=========== ===========
Capital Stock
=========== ===========
Offering and redemption price/net asset value per share $ $
=========== ============
</TABLE>
The accompanying notes to financial statement are an integral part of this
statement.
NOTES TO FINANCIAL STATEMENT
1. Bremer Investment Funds, Inc. (the "Fund"), an open-end, diversified,
management investment company, was incorporated under the laws of the
state of Maryland on August 26, 1996, and consists of the Bremer Growth
Stock Fund and the Bremer Bond Fund. The Fund is authorized to issue up
to 500 million shares of $.0001 par value per share common stock. Of
these shares, 100 million have been authorized for each of the Bremer
Growth Stock Fund and the Bremer Bond Fund. The Bremer Growth Stock
Fund's investment objective is to seek long-term appreciation of capital
by investing primarily in a portfolio of equity securities of established
companies with above average prospects for growth or ones incurring
significant fundamental changes. The Bremer Bond Fund's investment
objective is to seek maximum total return, consistent with the
preservation of capital and prudent investment management, through
investment in an actively managed portfolio of fixed income securities.
The Fund has had no operations to date other than those relating to
organizational matters and the sale of 10,000 shares of common stock; one
for the Bremer Growth Stock Fund and 9,999 for the Bremer Bond Fund, to
its original stockholder, First American Trust Company of Minnesota.
2. The Fund has an agreement with First American Trust Company of Minnesota
(the "Adviser"), to furnish management services to the Fund. Under the
terms of this agreement, the Fund will pay the Adviser a monthly fee based
on the Fund's average daily net assets at the annual rate of .70%.
Under the management agreement, if the aggregate annual operating
expenses (excluding interest, taxes, brokerage commissions and other
costs incurred in connection with the purchase of sale or portfolio
securities, and extraordinary items) exceed the lowest limitations
imposed by state securities administrators, the Adviser will reduce its
annual management fee to the Fund by the amount of such excess.
3. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements. Actual results could differ from
those estimates.
4. Organizational costs are being deferred and amortized over the period of
benefit, but not to exceed 60 months from the Fund's commencement of
operations. These costs were advanced by the Adviser and will be
reimbursed by the Fund. The proceeds of any redemption of the initial
shares by the original stockholder or any transferee will be reduced by a
pro-rata portion of any then unamortized organizational expenses in the
same proportion as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of such redemption.
6
<PAGE> 33
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements
The financial statements below are contained in Part B of this
Registration Statement:
Balance Sheet as of November 6, 1996.
Report of Independent Auditors. (To be filed by amendment.)
(b) Exhibits
1. Articles of Incorporation.
2. Bylaws.
3. Not applicable.
4. Articles of Incorporation, Article IV and Article
VII. (See Exhibit 1).
5. Form of Investment Advisory Agreement between Registrant
and First American Trust Company of Minnesota dated
_____________, 1996. (Final to be filed by amendment.)
6. Not applicable.
7. Not applicable.
8. Custodian Agreement between the Registrant and
Firstar Trust Company dated November 5, 1996.
9.A. Fund Administration Servicing Agreement between
the Registrant and Firstar Trust Company dated November 5,
1996.
9.B. Fund Accounting Servicing Agreement between the
Registrant and Firstar Trust Company dated November 5,
1996.
9.C. Transfer Agent Agreement between the Registrant
and Firstar Trust Company dated November 5, 1996.
10. Opinion and consent of Briggs and Morgan, Professional
Association.
11. Consent of Arthur Andersen LLP. (To be filed by amendment.)
12. None.
8
<PAGE> 34
13. Subscription Agreement between Registrant and
First American Trust Company of Minnesota dated ____________,
1996. (To be filed by amendment.)
14.A. Form of Individual Retirement Custodial Account.
14.B. Form of Individual Retirement Account Disclosure Statement.
15. Plan of Distribution.
16. Not applicable.
17. Financial Data Schedule. (To be filed by amendment.)
18. Not applicable.
Item 25. Persons Controlled By or Under Common Control with Registrant
----------------------------------------------------------------
Not applicable.
Item 26. Number of Holders of Securities
----------------------------------------------------------------
Title of Class Number of Record Holders
------------------------------- -------------------------------
Class A Common Stock, par
value $.0001 per share One, as of ___________, 1996*
Class B Common Stock, par
value $.0001 per share One, as of ___________, 1996*
* Issued in consideration of initial seed capital.
Item 27. Indemnification
---------------
The Registrant's Articles of Incorporation state that each
present or former director, officer, agent and employee of the
Registrant or any predecessor or constituent corporation, and each
person, who, at the request of the Registrant, serves or has served
another business enterprise in any such capacity, and the heirs and
personal representatives of each of the foregoing shall be
indemnified by the Registrant to the fullest extent permitted by
Maryland law against all expenses, including without limitation
amounts of judgments, fines, amounts paid in settlement, attorneys'
and accountants' fees, and costs of litigation, which shall
necessarily or reasonably be incurred by him or her in connection
with any action, suit or proceeding to which he or she was, is or
shall be a party, or with which he or she may be threatened, by
reason of his or her being or having been a director, officer,
agent or employee of the Registrant or such predecessor or
constituent corporation or such business enterprise, whether or not
he or she continues to be such at the time of incurring such
expenses. Such indemnification may include without limitation the
purchase of insurance and advancement of any expenses, and the
Registrant shall be empowered to enter into agreements to limit the
liability of directors and officers of the Registrant. No
indemnification shall be made in violation of the Maryland General
Corporation Law or the Investment Company Act of 1940.
9
<PAGE> 35
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Not applicable.
Item 29. Principal Underwriters
----------------------
Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
Custodian: Firstar Trust Company
615 East Michigan Street
Milwaukee, WI 53202
Transfer Agent: Overnight Deliveries Firstar Trust Company
Mutual Fund Services
615 Michigan Street,
3rd Floor
Milwaukee, WI 53202
Transfer Agent: Mailing Address Firstar Trust Company
Mutual Fund Services
P.O. Box 701
Milwaukee, WI 53201-0701
Investment Adviser: First American Trust
Company of Minnesota
P.O. Box 986
St. Cloud, Minnesota 56302
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
The Registrant hereby undertakes to file a post-effective
amendment, using financial statements which need not be certified,
within four to six months from the effective date of this Registration
Statement.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
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, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
10
<PAGE> 36
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940 the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of St. Cloud, and State of Minnesota on the 12th day of November,
1996.
BREMER INVESTMENT FUNDS, INC.
By: /s/ Steven A. Laraway
---------------------------
Steven A. Laraway
President
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below hereby constitutes and appoints Steven A. Laraway and Richard A. DiNello
or either of them, with power to act one without the other, as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and all documents relating thereto, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
necessary or advisable to be done in connection therewith, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Steven A. Laraway President and Director November 4, 1996
- ------------------------- (Principal Executive Officer)
Steven A. Laraway
/s/ Richard A. Dinello Treasurer (Principal November 4, 1996
- ------------------------- Financial and Accounting
Richard A. DiNello Officer)
/s/ John M. Bishop Director November 5, 1996
- -------------------------
John M. Bishop
/s/ John V. Botsford Director November 7, 1996
- -------------------------
John V. Botsford
/s/ John J. Feda Director November 4, 1996
- -------------------------
John J. Feda
/s/ William H. Lipschultz Director November 4, 1996
- -------------------------
William H. Lipschultz
/s/ Daniel C. Reardon Director November 4, 1996
- -------------------------
Daniel C. Reardon
</TABLE>
<PAGE> 37
EXHIBIT INDEX
1. Articles of Incorporation.
2. Bylaws.
3. Not applicable.
4. Articles of Incorporation, Article IV and Article VII. (See Exhibit 1).
5. Form of Investment Advisory Agreement between Registrant and First
American Trust Company of Minnesota dated _____________, 1996. (Final to
be filed by amendment.)
6. Not applicable.
7. Not applicable.
8. Custodian Agreement between the Registrant and Firstar Trust Company
dated November 5, 1996.
9.A. Fund Administration Servicing Agreement between the Registrant and
Firstar Trust Company dated November 5, 1996.
9.B. Fund Accounting Servicing Agreement between the Registrant and Firstar
Trust Company dated November 5, 1996.
9.C. Transfer Agent Agreement between the Registrant and Firstar Trust Company
dated November 5, 1996.
10. Opinion and consent of Briggs and Morgan, Professional Association.
11. Consent of Arthur Andersen LLP. (To be filed by amendment.)
12. None.
13. Subscription Agreement between Registrant and First American Trust
Company of Minnesota dated ____________, 1996. (To be filed by
amendment.)
14.A. Form of Individual Retirement Custodial Account.
14.B. Form of Individual Retirement Account Disclosure Statement.
15. Plan of Distribution.
16. Not applicable.
17. Financial Data Schedule. (To be filed by amendment.)
18. Not applicable.
<PAGE> 1
EXHIBIT 1
ARTICLES OF INCORPORATION
OF
BREMER INVESTMENT FUNDS, INC.
The undersigned sole incorporator, being at least eighteen years of age,
hereby adopts the following Articles of Incorporation for the purpose of
forming a Maryland corporation under the general laws of the State of Maryland:
ARTICLE I
The name of the corporation (hereinafter called the "Corporation") is:
Bremer Investment Funds, Inc.
ARTICLE II
The period of existence of the Corporation shall be perpetual.
ARTICLE III
The purposes for which the Corporation is formed are to engage in any
lawful business for which corporations may be organized under the Maryland
General Corporation Law.
ARTICLE IV
A. The aggregate number of shares of capital stock which the Corporation
shall have authority to issue is Five Hundred Million (500,000,000) shares, all
with a par value of One Hundredth of a Cent ($.0001) per share, to be known and
designated as "Common Stock." The aggregate par value of the authorized shares
of the Corporation is Fifty Thousand Dollars ($50,000). The Board of Directors
of the Corporation (the "Board of Directors" or the "Board") may increase or
decrease the aggregate number of authorized shares of Common Stock pursuant to
Section 2-105 of the Maryland General Corporation Law or any successor
provision thereto. The Board of Directors of the Corporation may classify or
reclassify any unissued shares of Common Stock into a class or series thereof
and may designate or redesignate the name of any class or series of outstanding
Common Stock. The Board of Directors may fix the number of shares of Common
Stock in any such class and, except as specifically set forth in these Articles
of Incorporation, may set or change the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms or conditions of redemption of any class of unissued
shares of Common Stock. A total of One Hundred Million (100,000,000) shares
shall initially be classified as "Class A Common Stock" (the "Growth Stock
Fund" or such other name designated by the Corporation's Board of Directors)
and One Hundred Million (100,000,000) shares shall be classified as "Class B
Common Stock" (the "Bond Fund" or such
<PAGE> 2
other name designated by the Corporation's Board of Directors). The remaining
Three Hundred Million (300,000,000) shares shall initially be unclassified
shares.
B. The shares of each class of Common Stock may be further classified by
the Board of Directors into one or more series with such relative rights and
preferences as shall be contained in Articles Supplementary filed with the
State Department of Assessments and Taxation of the State of Maryland. All
series of a particular class of the Corporation shall represent the same
interest in the Corporation and have identical voting, dividend, liquidation,
and other rights of any other shares of such class, except that the shares of
each series within a class may be subject to such charges and expenses
(including by way of example, but not by way of limitation, such front-end and
deferred sales charges as may be permitted under the Investment Company Act of
1940, as amended (the "Act") and rules of the National Association of
Securities Dealers, Inc. ("NASD"), expenses under Rule 12b-1 plans,
administration plans, service plans, or other plans or arrangements, however
designated) adopted from time to time by the Board of Directors of the
Corporation in accordance, to the extent applicable, with the Act, which
charges and expenses may differ from those applicable to another series within
such class, and all the charges and expenses to which a series is subject shall
be borne by such series and shall be appropriately reflected (in the manner
determined by the Board of Directors) in determining the net asset value and
the amounts payable with respect to dividends and distributions on, and
redemptions or liquidations of, the shares of such series.
C. Notwithstanding the authority granted to the Board of Directors of the
Corporation with respect to the designation, classification and
reclassification of the unissued shares of Common Stock, each class of Common
Stock shall have the following preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms or
conditions of redemption:
1. Each holder of shares of Common Stock, irrespective of the class, shall
be entitled to one (1) vote for each full share (and a fractional vote for each
fractional share) then standing in his, her or its name on the books of the
Corporation; provided, however, that shares of any class of Common Stock owned,
other than in a fiduciary capacity, by the Corporation or by another
corporation in which the Corporation owns shares entitled to cast a majority of
all the votes entitled to be cast by all shares outstanding and entitled to
vote of such corporation, shall not be voted at any meeting of stockholders.
On any matter submitted to a vote of stockholders all shares of the
Corporation's Common Stock then issued and outstanding and entitled to vote,
irrespective of the class, shall be voted in the aggregate and not by class,
except that: (a) when otherwise expressly provided by the Maryland General
Corporation Law, the Act and the regulations thereunder, or other applicable
law, shares shall be voted by individual class; and (b) when the matter to be
acted upon does not affect any interest of a particular class of the
Corporation's Common Stock, then only shares of the affected class shall be
entitled to vote thereon. At all elections of directors of the Corporation,
each stockholder shall be entitled to vote the shares owned of record by him,
her or it for as many persons as there are directors to be elected, but shall
not be entitled to exercise any right of cumulative voting.
2
<PAGE> 3
2. All consideration received by the Corporation for the issue or sale of
shares of any class of the Corporation's Common Stock, together with all assets
in which such consideration is invested and reinvested, income, earnings,
profits and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any such funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to the class of the Corporation's Common Stock with respect
to which such assets, payments or funds were received by the Corporation for
all purposes, subject only to the rights of creditors, and shall be so handled
upon the books of account of the Corporation. Such consideration, assets,
income, earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form, are herein referred to as
"assets belonging to" such class. Any assets, income, earnings, profits and
proceeds thereof, funds or payments which are not readily attributable to any
particular class of the Corporation's Common Stock shall be allocable among any
one or more of the classes of the Corporation's Common Stock in such manner and
on such basis as the Board of Directors, in its sole discretion, shall deem
fair and equitable. The power to make such allocations may be delegated by the
Board of Directors from time to time to one or more of the officers of the
Corporation.
3. The assets belonging to any class of the Corporation's Common Stock
shall be charged with the liabilities in respect of such class of the
Corporation's Common Stock, and shall also be charged with the share of the
general liabilities of the Corporation allocated to such class determined as
hereinafter provided. The determination of the Board of Directors shall be
conclusive as to: (a) the amount of such liabilities, including the amount of
accrued expenses and reserves; (b) any allocation of the same to a given class;
and (c) whether the same are allocable to one or more classes. The liabilities
so allocated to a class are herein referred to as "liabilities belonging to"
such class. Any liabilities which are not readily attributable to any
particular class of the Corporation's Common Stock shall be allocable among any
one or more of the classes of the Corporation's Common Stock in such manner and
on such basis as the Board of Directors, in its sole discretion, shall deem
fair and equitable. The power to make such allocations may be delegated by the
Board of Directors from time to time to one or more of the officers of the
Corporation.
4. Shares of a class of the Corporation's Common Stock shall be entitled
to such dividends and distributions, in stock or in cash or both, as may be
declared from time to time by the Board of Directors, acting in its sole
discretion, with respect to such class; provided, however, that dividends and
distributions on shares of a class of the Corporation's Common Stock shall be
paid only out of the lawfully available assets belonging to such class and as
such phrase is defined in this Article IV.
5. In the event of the liquidation or dissolution of the Corporation,
stockholders of a class of the Corporation's Common Stock shall be entitled to
receive, as a class, out of the assets of the Corporation available for
distribution to stockholders, but other than general assets not belonging to
any particular class, the assets belonging to such class, and the assets so
distributable to the holders of any class of the Corporation's Common Stock
shall be distributed among such holders in proportion to the number of
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<PAGE> 4
shares of such class of the Corporation's Common Stock held by them and
recorded on the books of the Corporation. In the event that there are any
general assets not belonging to any particular class of the Corporation's
Common Stock and available for distribution, such distribution shall be made to
the holders of all classes of the Corporation's Common Stock in proportion to
the net asset value of the respective class of the Corporation's Common Stock
determined as set forth in the Bylaws of the Corporation (the "Bylaws").
6. Each share of each class of Common Stock of the Corporation now or
hereafter issued shall be subject to redemption by the stockholders of the
Corporation and, subject to the suspension of such right of redemption as
provided in the Bylaws, each holder of shares of any class of Common Stock of
the Corporation, upon request to the Corporation accompanied by surrender of
the appropriate stock certificate or certificates, if any, in proper form for
transfer and after complying with any other redemption procedures established
by the Board of Directors, shall be entitled to require the Corporation to
redeem all or any part of the shares of such class of Common Stock standing in
the name of such holder on the books of the Corporation at the net asset value
of such shares. In the event that no certificates have been issued to the
holder, the Board of Directors may require the submission of a stock power with
an appropriate signature guarantee. All shares of any class of its Common
Stock redeemed by the Corporation shall be deemed to be cancelled and restored
to the status of authorized but unissued shares. The method of computing the
net asset value of shares of each class of Common Stock of the Corporation for
purposes of the issuance and sale, or redemption thereof, as well as the time
as of which such net asset value shall be computed, shall be as set forth in
the Bylaws. Payment of the net asset value of each share of each class of
Common Stock of the Corporation surrendered to it for redemption shall be made
by the Corporation within seven (7) days after surrender of such stock to the
Corporation for such purpose, or within such other reasonable period as may be
determined from time to time by the Board of Directors. The Board of Directors
of the Corporation may, upon reasonable notice to the stockholders of the
Corporation, impose a fee for the privilege of redeeming shares, such fee to be
not in excess of one percent (1%) of the proceeds of any such redemption. The
Board shall have discretionary authority to rescind the imposition of any such
fee and to reimpose the redemption fee from time to time upon reasonable
notice. Any fee so imposed shall be uniform as to all stockholders.
7. All shares of Common Stock now or hereafter authorized shall be subject
to redemption and be redeemable at the option of the Corporation. The Board of
Directors may by resolution from time to time authorize the Corporation to
require the redemption of all or any part of the outstanding shares of any
class (or series thereof) upon the sending of written notice thereof to each
stockholder any of whose shares of that class (or series thereof) are so
redeemed and upon such terms and conditions as the Board of Directors shall
deem advisable, out of funds legally available therefor, at a redemption price
per share based on the net asset value per share of that class (or series
thereof) determined in accordance with the Bylaws and to take all other steps
deemed necessary or advisable in connection therewith. The Corporation shall
have the right to require the redemption of all shares owned or held by any one
stockholder and having an aggregate net asset value,
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as determined at any time in accordance with the Bylaws, of less than $500.00,
or such other minimum as the Board of Directors may from time to time establish
in its discretion.
8. The Board of Directors may by resolution from time to time authorize
the repurchase by the Corporation, either directly or through an agent, of
shares of any class upon such terms and conditions and for such consideration
as the Board of Directors shall deem advisable, out of funds legally available
therefor, at prices per share not in excess of the net asset value per share of
that class determined in accordance with the Bylaws and to take all other steps
deemed necessary or advisable in connection therewith.
9. Subject to compliance with the requirements of the Act, the Board of
Directors shall have the authority to provide that shares of any series shall
be convertible (automatically, optionally, or otherwise) into shares of one or
more other series in accordance with such requirements and procedures as may be
established by the Board of Directors.
10. Each holder of shares of the Corporation's Common Stock, irrespective
of the class, may, upon request to the Corporation accompanied by surrender of
the appropriate stock certificate or certificates, if any, in proper form for
transfer and after complying with any other conversion procedures established
by the Board of Directors, convert such shares into shares of any other class
of the Corporation's Common Stock on the basis of their relative net asset
values (determined in accordance with the Bylaws) less a conversion charge or
discount determined by the Board of Directors. Any fee so imposed shall be
uniform as to all stockholders.
11. No holder of shares of any class of Common Stock of the Corporation
shall, as such holder, have any right to purchase or subscribe for any shares
of any class of the Common Stock of the Corporation which it may issue or sell
(whether out of the number of shares authorized by these Articles of
Incorporation, or out of any shares of any class of Common Stock of the
Corporation acquired by it after the issue thereof, or otherwise) other than
such right, if any, as the Board of Directors, in its discretion, may
determine.
D. The Corporation shall not be obligated to issue certificates
representing shares of any class or series of capital stock. At the time of
issue or transfer of shares without certificates, the Corporation shall provide
the stockholder with such information as may be required under the Maryland
General Corporation Law.
ARTICLE V
The number of directors constituting the Board of Directors shall
initially be six (6) and the names of the initial directors are John M. Bishop,
John V. Botsford, John J. Feda, Steven A. Laraway, William H. Lipschultz and
Daniel C. Reardon. Thereafter, the number of directors shall be such number as
is fixed from time to time by the Bylaws.
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ARTICLE VI
The Corporation reserves the right to enter into, from time to time,
investment advisory and administration agreements providing for the management
and supervision of the investments of the Corporation, the furnishing of advice
to the Corporation with respect to the desirability of investing in, purchasing
or selling securities or other property and the furnishing of clerical and
administrative services to the Corporation. Such agreements shall contain such
other terms, provisions and conditions as the Board of Directors of the
Corporation may deem advisable and as are permitted by the Act.
The Corporation may designate custodians, transfer agents, registrars
and/or disbursing agents for the Common Stock and assets of the Corporation and
employ and fix the powers, rights, duties, responsibilities and compensation of
each such custodian, transfer agent, registrar and/or disbursing agent.
ARTICLE VII
The following provisions define, limit and regulate the powers of the
Corporation, the Board of Directors and the stockholders:
A. The Corporation may issue and sell shares of any class of its own
Common Stock in such amounts and on such terms and conditions, for such
purposes and for such amount or kind of consideration now or hereafter
permitted by the laws of the State of Maryland, the Bylaws and these Articles
of Incorporation, as its Board of Directors may determine; provided, however,
that the consideration per share to be received by the Corporation upon the
sale of any shares of any class of its Common Stock shall not be less than the
net asset value per share of such class of Common Stock outstanding at the time
as of which the computation of said net asset value shall be made.
B. The Board of Directors may, in its sole and absolute discretion, reject
in whole or in part orders for the purchase of shares of any class of Common
Stock and may, in addition, require such orders to be in such minimum amounts
as it shall determine.
C. The holders of any fractional shares of any class of Common Stock shall
be entitled to the payment of dividends on such fractional shares, to receive
the net asset value thereof upon redemption, to share in the assets of the
Corporation upon liquidation and to exercise voting rights with respect
thereto.
D. The Board of Directors shall have full power in accordance with good
accounting practice: (a) to determine what receipts of the Corporation shall
constitute income available for payment of dividends and what receipts shall
constitute principal and to make such allocation of any particular receipt
between principal and income as it may deem proper; and (b) from time to time,
in its discretion (i) to determine whether any and all expenses and other
outlays paid or incurred (including any and all taxes, assessments or
governmental charges which the Corporation may be required to pay or hold under
any present or future law of the United States of America or of any other
taxing authority
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therein) shall be charged to or paid from principal or income or both, and (ii)
to apportion any and all of said expenses and outlays, including taxes, between
principal and income.
E. The Board of Directors shall have the power to determine from time to
time whether and to what extent and at what time and places and under what
conditions and regulations the books, accounts and documents of the Corporation
or any of them, shall be open to the inspection of stockholders, except as
otherwise provided by applicable law; and except as so provided, no stockholder
shall have any right to inspect any book, account or document of the
Corporation unless authorized to do so by resolution of the Board of Directors.
ARTICLE VIII
A. Each present or former director, officer, agent and employee of the
Corporation or any predecessor or constituent corporation, and each person,
who, at the request of the Corporation, serves or has served another business
enterprise in any such capacity, and the heirs and personal representatives of
each of the foregoing shall be indemnified by the Corporation to the fullest
extent permitted by Maryland law against all expenses, including without
limitation amounts of judgments, fines, amounts paid in settlement, attorneys'
and accountants' fees, and costs of litigation, which shall necessarily or
reasonably be incurred by him or her in connection with any action, suite or
proceeding to which he or she was, is or shall be a party, or with which he or
she may be threatened, by reason of his or her being or having been a director,
officer, agent or employee of the Corporation or such predecessor or
constituent corporation or such business enterprise, whether or not he or she
continues to be such at the time of incurring such expenses. Such
indemnification may include without limitation the purchase of insurance and
advancement of any expenses, and the Corporation shall be empowered to enter
into agreements to limit the liability of directors and officers of the
Corporation. No indemnification shall be made in violation of the Maryland
General Corporation Law or the Act.
B. No director or officer of the Corporation shall be liable to the
Corporation or its stockholders for money damages, except (i) to the extent
that it is proved that such director or officer actually received an improper
benefit or profit in money, property or services, for the amount of the benefit
or profit in money, property or services actually received, or (ii) to the
extent that a judgment or other final adjudication adverse to such director or
officer is entered in a proceeding based on a finding in the proceeding that
such director's or officer's action, or failure to act, was the result of
active and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding. The foregoing shall not be construed to protect
or purport to protect any director or officer of the Corporation against any
liability to the Corporation or its stockholders to which such director or
officer would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
such office.
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ARTICLE IX
The address of the principal office of the Corporation in Maryland is
Bremer Investment Funds, Inc., c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.
ARTICLE X
The name and address of the resident agent of the Corporation in Maryland
is The Corporation Trust Incorporated, 32 South Street, Baltimore, Maryland
21202.
The resident agent is a corporation organized under the laws of the State
of Maryland.
ARTICLE XI
The name and address of the sole incorporator is:
Name Address
Christopher C. Cleveland Briggs and Morgan, Professional Association
2400 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
IN WITNESS WHEREOF, the undersigned incorporator who executed the
foregoing Articles of Incorporation hereby acknowledges the same to be his act
and further acknowledges that, to the best of his knowledge, the matters and
facts set forth therein are true in all material respects under the penalties
of perjury.
Dated this 23rd day of August 1996.
/s/ Christopher C. Cleveland
----------------------------
Christopher C. Cleveland
Sole Incorporator
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<PAGE> 1
EXHIBIT 2
BYLAWS
OF
BREMER INVESTMENT FUNDS, INC.
ARTICLE I
STOCKHOLDERS' MEETINGS
SECTION 1. Place of Meetings. All meetings of the stockholders of
Bremer Investment Funds, Inc. (the "Corporation") shall be held at such
location as the Corporation's Board of Directors (the "Board of Directors" or
the "Board") shall direct.
SECTION 2. Annual Meeting.
(a) The annual meeting of stockholders for the election of directors
and the transaction of such other business as may properly come before it, if
the annual meeting shall be held, shall be held during the month of January of
each year (or during such other month as the Board of Directors shall
determine), commencing in 1998, at such date and time as shall be fixed by the
Board of Directors and stated in the notice of such meeting, but in no event
more than one hundred twenty (120) days after the occurrence of the event
requiring the meeting to elect directors. Any business of the Corporation may
be transacted at the annual meeting without being specifically designated in
the notice, except such business as is specifically required by statute to be
stated in the notice.
(b) The Corporation shall not be required to hold an annual meeting in
any year in which the election of directors is not required to be acted on by
stockholders under the Investment Company Act of 1940, as amended (the "Act").
SECTION 3. Special Meeting. Special meetings of the Corporation's
stockholders may be called by the Board of Directors, the president, any vice
president, or the secretary, and shall be called by the secretary upon the
written request of the holders of shares entitled to not less than ten percent
(10%) of all the votes entitled to be cast at such meeting; provided that such
holders prepay the costs to the Corporation of preparing and mailing the notice
of the meeting. The business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
SECTION 4. Notice of Meeting. Not less than ten (10) nor more than
ninety (90) days before the date of every stockholders' meeting, the secretary
shall give to each stockholder entitled to vote at such meeting and to each
other stockholder entitled to notice of such meeting under applicable law,
written or printed notice stating the time and place of the meeting, and in the
case of a special meeting (or where required by applicable law) the purpose or
purposes for which the meeting is called, either by mail, by presenting it to
him or her personally or by leaving it at his or her residence or usual place
of business. If
<PAGE> 2
mailed, such notice shall be deemed to be given when deposited in the United
States mail addressed to the stockholder at his or her post office address as
it appears on the records of the Corporation, with postage thereon prepaid.
SECTION 5. Quorum. At any meeting of stockholders the presence in
person or by proxy of stockholders entitled to cast a majority of the votes
thereat shall constitute a quorum; but this section shall not affect any
requirement under statute or under the Corporation's Articles of Incorporation
(the "Charter") for the vote necessary for the adoption of any measure. If at
any meeting a quorum is not present or represented, the chairperson of the
meeting or the holders of a majority of the stock present or represented may
adjourn the meeting from time to time, without notice other than announcement
at the meeting, until a quorum is present or represented. At such adjourned
meeting at which a quorum is present or represented, any business may be
transacted which might have been transacted at the meeting as originally
called.
SECTION 6. Stock Entitled to Vote. Each issued share of each class of
stock of the Corporation shall be entitled to vote at any meeting of
stockholders except shares owned, other than in a fiduciary capacity, by the
Corporation or by another corporation in which the Corporation owns shares
entitled to cast a majority of all the votes entitled to be cast by all shares
outstanding and entitled to vote of such corporation.
SECTION 7. Voting. Each outstanding share of each class of stock
entitled to vote at a meeting of stockholders shall be entitled to one vote on
each matter submitted to a vote. In all elections for directors every
stockholder shall have the right to vote the shares of each class owned of
record by him or her for as many persons as there are directors to be elected,
but shall not be entitled to exercise any right of cumulative voting. A
stockholder may vote the shares owned of record by him or her either in person
or by proxy executed in writing by the stockholder or by his or her authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months from its
date unless otherwise provided in the proxy. At all meetings of stockholders,
unless the voting is conducted by inspectors, all questions relating to the
qualification of voters, the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairperson of the meeting. A
majority of the votes cast at a meeting of stockholders, duly called and at
which a quorum is present, shall be sufficient to take or authorize any action
which may properly come before the meeting, unless a greater number is required
by statute or by the Charter.
SECTION 8. Informal Action. Any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting as
authorized by law.
ARTICLE II
DIRECTORS
SECTION 1. Number. The initial number of directors of the Corporation
shall be six (6). By vote of a majority of the entire Board of Directors, the
number of directors fixed by the Charter or by these Bylaws may be increased or
decreased from time to time to not
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more than fifteen (15) nor less than three (3), but the tenure of office of a
director shall not be affected by any decrease in the number of directors so
made by the Board.
SECTION 2. Election and Qualification. Until the first annual meeting
of stockholders and until successors are duly elected and qualified, the Board
of Directors shall consist of the persons named as such in the Charter. At the
first annual meeting of stockholders, the stockholders shall elect directors to
hold office until their successors are elected and qualified. A director need
not be a stockholder of the Corporation, but must be eligible to serve as a
director of a registered investment company under the Act.
SECTION 3. Vacancies. Any vacancy on the Board of Directors occurring
between stockholders' meetings called for the purpose of electing directors may
be filled, if immediately after filling any such vacancy at least two-thirds
(2/3rds) of the directors then holding office shall have been elected to such
office at an annual or special meeting of stockholders, in the following
manner: (i) for a vacancy occurring other than by reason of an increase in
directors, by a majority of the remaining members of the Board, although such
majority is less than a quorum; and (ii) for a vacancy occurring by reason of
an increase in the number of directors, by action of a majority of the entire
Board. A director elected by the Board to fill a vacancy shall be elected to
hold office until the next annual meeting of stockholders or until his or her
successor is elected and qualified. If by reason of the death, disqualification
or bona fide resignation of any director or directors, more than sixty percent
(60%) of the members of the Board of Directors are interested persons of the
Corporation, as defined in the Act, such vacancy shall be filled within thirty
(30) days if it may be filled by the Board, or within sixty (60) days if a vote
of stockholders is required to fill such vacancy; provided that such vacancy
may be filled within such longer period as the United States Securities and
Exchange Commission (the "Commission") may prescribe by rules and regulations,
upon its own motion or by order upon application. In the event that at any
time less than a majority of the directors were elected by the stockholders,
the Board or a proper officer shall forthwith cause to be held as promptly as
possible, and in any event within sixty (60) days, a meeting of the
stockholders for the purpose of electing directors to fill any existing
vacancies in the Board, unless the Commission shall by order extend such
period.
SECTION 4. Powers. The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors, which may exercise
all of the powers of the Corporation, except such as are by law or by the
Charter or by these Bylaws conferred upon or reserved to the stockholders.
SECTION 5. Removal.
(a) At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may, by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any director or
directors from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of removed directors.
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(b) Notwithstanding any other provisions of these Bylaws, the secretary
of the Corporation shall promptly call a special meeting of stockholders for
the purpose of voting upon the question of removal of any director upon the
written request of the holders of shares entitled to not less than ten percent
(10%) of all the votes entitled to be cast at such meeting.
SECTION 6. Place of Meetings. Meetings of the Board of Directors,
regular or special, may be held at any place in or out of the State of Maryland
as the Board may from time to time determine or as may be specified in the
notice of meeting.
SECTION 7. First Meeting of Newly Elected Board. The first meeting of
each newly elected Board of Directors shall be held without notice immediately
after and at the same general place as the annual meeting of the stockholders,
for the purpose of organizing the Board, electing officers and transacting any
other business that may properly come before the meeting.
SECTION 8. Regular Meetings. Regular meetings of the Board of
Directors may be held without notice at such time and place as shall from time
to time be determined by the Board.
SECTION 9. Special Meetings. Special meetings of the Board of
Directors may be called at any time either by the Board, the president, a vice
president or a majority of the directors in writing with or without a meeting.
Notice of special meetings shall either be mailed by the secretary to each
director at least three (3) days before the meeting or shall be given
personally or telegraphed to each director at least one (1) day before the
meeting. Such notice shall set forth the time and place of such meeting but
need not, unless otherwise required by law, state the purposes of the meeting.
SECTION 10. Quorum and Vote Required for Action. At all meetings of
the Board of Directors a majority of the entire Board shall constitute a quorum
for the transaction of business, and the action of a majority of the directors
present at any meetings at which a quorum is present shall be the action of the
Board of Directors unless the concurrence of a greater proportion is required
for such action by statute, the Charter or these Bylaws. If at any meeting a
quorum is not present, a majority of the directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum is present. Members of the Board of Directors or a
committee of the Board may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear each other at the same time; provided, however, that a
director may not participate in a meeting by means of a conference telephone or
similar communications equipment if the purpose of the meeting is to approve
the Corporation's investment advisory agreement and/or to approve the selection
of the Corporation's auditors, or if participation in such a manner would
otherwise violate the Act or other applicable laws. Except as set forth in the
preceding sentence, participation in a meeting by these means constitutes
presence in person at the meeting.
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SECTION 11. Executive and Other Committees. The Board of Directors may
appoint from among its members an executive and other committees composed of
two (2) or more directors. The Board may delegate to such committees in the
intervals between meetings of the Board any of the powers of the Board to
manage the business and affairs of the Corporation, except the power to: (i)
declare dividends or distributions upon the stock of the Corporation; (ii)
issue stock of the Corporation; (iii) recommend to the stockholders any action
which requires stockholder approval; (iv) amend these Bylaws; (v) approve any
merger or share exchange which does not require stockholder approval; or (vi)
take any action required by the Act to be taken by the independent directors of
the Corporation or by the full Board.
SECTION 12. Informal Action. Except as set forth in the following
sentence, any action required or permitted to be taken at any meeting of the
Board of Directors or of a committee thereof may be taken without a meeting, if
a written consent to such action is signed by a majority of the Board or the
committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board or committee. Notwithstanding the
preceding sentence, no action may be taken by the Board of Directors pursuant
to a written consent with respect to the approval of the Corporation's
investment advisory agreement, the approval of the selection of the
Corporation's auditors, or any action required by the Act or other applicable
law to be taken at a meeting of the Board of Directors to be held in person.
ARTICLE III
OFFICERS AND EMPLOYEES
SECTION 1. Election and Qualification. At the first meeting of each
newly elected Board of Directors there shall be elected a president, one or
more vice presidents, a secretary and a treasurer. The Board may also elect
one or more assistant secretaries and assistant treasurers. No officer need be
a director. Any two or more offices, except the offices of president and vice
president, may be held by the same person but no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law, the Charter or these Bylaws to be executed,
acknowledged or verified by two or more officers. Each officer must be
eligible to serve as an officer of a registered investment company under the
Act. Nothing herein shall preclude the employment of other employees or agents
by the Corporation from time to time without action by the Board.
SECTION 2. Term, Removal and Vacancies. The officers shall be elected
to serve until the next first meeting of a newly elected Board of Directors and
until their successors are elected and qualified. Any officer may be removed
by the Board, with or without cause, whenever in its judgment the best
interests of the Corporation will be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
A vacancy in any office shall be filled by the Board for the unexpired term.
SECTION 3. Bonding. Each officer and employee of the Corporation who
singly or jointly with others has access to securities or funds of the
Corporation, either directly or
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through authority to draw upon such funds, or to direct generally the
disposition of such securities shall be bonded against larceny and embezzlement
by a reputable fidelity insurance company. Each such bond, which may be in the
form of an individual bond, a schedule or blanket bond covering the
Corporation's officers and employees and the officers and employees of the
investment adviser to the Corporation and other corporations to which said
investment adviser also acts as investment adviser, shall be in such form and
for such amount (determined at least annually) as the Board of Directors shall
determine in compliance with the requirements of Section 17(g) of the Act, and
the rules, regulations or orders of the Commission promulgated thereunder.
SECTION 4. President. The president shall be the principal executive
officer of the Corporation. He or she shall preside at all meetings of the
stockholders and directors, have general and active management of the business
of the Corporation, see that all orders and resolutions of the Corporation's
Board are carried into effect, and execute in the name of the Corporation all
authorized instruments of the Corporation, except where the signing shall be
expressly delegated by the Board to some other officer or agent of the
Corporation.
SECTION 5. Vice Presidents. The vice president, or if there be more
than one, the vice presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president, and shall have such other
duties and powers as the Board may from time to time prescribe or the president
delegate.
SECTION 6. Secretary and Assistant Secretaries. The secretary shall
give notice of, attend and record the minutes of meetings of stockholders and
directors, keep the corporate seal, and, when authorized by the Board, affix
the same to any instrument requiring it, attesting to the same by his or her
signature, and shall have such further duties and powers as are incident to his
or her office or as the Board may from time to time prescribe. The assistant
secretary, if any, or, if there be more than one, the assistant secretaries in
the order determined by the Board, shall in the absence or disability of the
secretary, perform the duties and exercise the powers of the secretary, and
shall have such other duties and powers as the Board may from time to time
prescribe or the secretary delegate.
SECTION 7. Treasurer and Assistant Treasurers. The treasurer shall be
the principal financial and accounting officer of the Corporation. He or she
shall be responsible for the custody and supervision of the Corporation's books
of account and subsidiary accounting records, and shall have such further
duties and powers as are incident to his or her office or as the Board of
Directors may from time to time prescribe. The assistant treasurer, if any,
or, if there be more than one, the assistant treasurers in the order determined
by the Board, shall in the absence or disability of the treasurer, perform all
duties and exercise the powers of the treasurer, and shall have such other
duties and powers as the Board may from time to time prescribe or the treasurer
delegate.
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ARTICLE IV
STOCK CERTIFICATES AND TRANSFERS
SECTION 1. Stock Certificates. Certificates, if any, representing
shares of stock of the Corporation shall be in such form consistent with the
laws of the State of Maryland as shall be determined by the Board of Directors.
All certificates for shares of stock shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares of
stock represented thereby are issued, with the number of shares and date of
issue, shall be entered on the stock transfer records of the Corporation.
SECTION 2. Redemption and Transfer. Any holder of stock of the
Corporation desiring to redeem or transfer shares of stock standing in the name
of such holder on the books of the Corporation shall deliver to the Corporation
or to its agent duly authorized for such purpose a written unconditional
request, in form acceptable to the Corporation, for such redemption or
transfer. If certificates evidencing such shares have been issued, such
certificates shall also be so delivered in transferable form duly endorsed or
accompanied by all necessary stock transfer stamps or currency or certified or
bank cashier's check payable to the order of the Corporation for the
appropriate price thereof. The Corporation or its duly authorized agent may
require that the signature of a redeeming stockholder on any or all of the
request, endorsement or stock power be guaranteed and that other documentation
in accordance with the custom of brokers be so delivered where appropriate,
such as proof of capacity and power to make request or transfer. All documents
and funds shall be deemed to have been delivered only when physically deposited
at such office or other place of deposit as the Corporation or its duly
authorized agent shall from time to time designate. At any time during which
the right of redemption is suspended or payment for such shares is postponed
pursuant to the Act, or any rule, regulation or order thereunder, any
stockholder may withdraw his or her request (and certificates and funds, if
any) or may leave the same on deposit, in which case the redemption price shall
be the net asset value next applicable after such suspension or postponement is
terminated.
SECTION 3. Lost, Mutilated, Destroyed or Wrongfully Taken Certificates.
Any person claiming a stock certificate to have been lost, mutilated, destroyed
or wrongfully taken, and who requests the issuance of a new certificate before
the Corporation has notice that the certificate alleged to have been lost,
mutilated, destroyed or wrongfully taken has been acquired by a bona fide
purchaser, shall make an affidavit of that fact and shall give the Corporation
and its transfer agents and registrars a bond, with sufficient surety, to
indemnify them against any loss or claim arising as a result of the issuance of
a new certificate. The form and amount of such bond and the surety thereon
shall in each case be deemed sufficient if satisfactory to the president or
treasurer of the Corporation.
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<PAGE> 8
ARTICLE V
SALES, REDEMPTION AND
NET ASSET VALUE OF SHARES
SECTION 1. Sales of Shares. Shares of any class of Common Stock of the
Corporation shall be sold by it for the net asset value per share of such class
of Common Stock outstanding at the time as of which the computation of said net
asset value shall be made as hereinafter provided in these Bylaws.
SECTION 2. Periodic Investment and Dividend Reinvestment Plans. The
Corporation acting by and through the Board of Directors shall have the right
to adopt and to offer to the holders of each class of stock and to the public a
periodic investment plan and an automatic reinvestment of dividend plan subject
to the limitations and restrictions imposed thereon and as set forth in the Act
and any rule or regulation adopted or issued thereunder.
SECTION 3. Shares Issued for Securities. In the case of shares of any
class of stock of the Corporation issued in whole or in part in exchange for
securities, there may, at the discretion of the Board of Directors of the
Corporation, be included in the value of said securities, for the purpose of
determining the number of shares of such class stock of the Corporation
issuable in exchange therefor, the amount, if any, of brokerage commissions
(not exceeding an amount equal to the rates payable in connection with the
purchase of comparable securities on the New York Stock Exchange) or other
similar costs of acquisition of such securities paid by the holder of said
securities in acquiring the same.
SECTION 4. Redemption of Shares. Each share of each class of Common
Stock of the Corporation now or hereafter issued shall be subject to
redemption, as provided in the Charter.
SECTION 5. Suspension of Right of Redemption. The Board of Directors
of the Corporation may suspend the right of the holders of any class of Common
Stock of the Corporation to require the Corporation to redeem shares of such
class:
(a) for any period (a) during which the New York Stock Exchange is
closed other than customary weekend and holiday closings, or (b) during which
trading on the New York Stock Exchange is restricted;
(b) for any period during which an emergency, as defined by rules of
the Commission or any successor thereto, exists as a result of which (a)
disposal by the Corporation of securities owned by it is not reasonably
practicable, or (b) it is not reasonably practicable for the Corporation fairly
to determine the value of its net assets; or
(c) for such other periods as the Commission or any successor thereto
may by order permit for the protection of security holders of the Corporation.
8
<PAGE> 9
SECTION 6. Computation of Net Asset Value. For purposes of these
Bylaws, the following rules shall apply:
(a) The net asset value of each share of each class of Common Stock of
the Corporation shall be determined at such time or times as may be disclosed
in the then currently effective Prospectus relating to such class of Common
Stock of this Corporation. The Board of Directors may also, from time to time
by resolution, designate a time or times intermediate of the opening and
closing of trading on the New York Stock Exchange on each day that said
Exchange is open for trading as of which the net asset value of each share of
each class of Common Stock of the Corporation shall be determined or estimated.
Any determination or estimation of net asset value as provided in this
subparagraph A shall be effective at the time as of which such determination or
estimation is made.
The net asset value of each share of each class of Common Stock of the
Corporation for purposes of the issue of such class of Common Stock shall be
the net asset value which becomes effective as provided in this Subparagraph
(a), next succeeding receipt of the subscription to such share of such class
Common Stock. The net asset value of each share of each class of Common Stock
of the Corporation tendered for redemption shall be the net asset value which
becomes effective as provided in this Subparagraph (a), next succeeding the
tender of such share of such class of Common Stock for redemption.
(b) The net asset value of each share of each class of Common Stock of
the Corporation, as of the close of business on any day, shall be the quotient
obtained by dividing the value at such close of the net assets belonging to
such class (meaning the assets belonging to such class and any other assets
allocated to such class less the liabilities belonging to such class and any
other liabilities allocated to such class excluding capital and surplus) of the
Corporation by the total number of shares of such class outstanding at such
close.
(i) The assets belonging to any class of Common Stock shall be that
portion of the total assets of the Corporation as determined in
accordance with the provisions of Article IV of the Charter of the
Corporation. The assets of the Corporation shall be deemed to include
(a) all cash on hand, on deposit, or on call, (b) all bills and notes
and accounts receivable, (c) all shares of stock and subscription
rights and other securities owned or contracted for by the Corporation,
other than its own Common Stock, (d) all stock and cash dividends and
cash distributions, to be received by the Corporation, and not yet
received by it but declared to stockholders of record on a date on or
before the date as of which the net asset value is being determined,
(e) all interest accrued on any interest-bearing securities owned by
the Corporation, and (f) all other property of every kind and nature
including prepaid expenses; the value of such assets to be determined
in accordance with the Corporation's registration statement filed with
the Commission.
(ii) The liabilities belonging to any class of Common Stock shall be
that portion of the total liabilities of the Corporation as determined
in accordance with
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<PAGE> 10
the provisions of Article IV of the Charter of the Corporation. The
liabilities of the Corporation shall be deemed to include (a) all bills
and notes and accounts payable, (b) all administration expenses payable
and/or accrued (including investment advisory fees), (c) all
contractual obligations for the payment of money or property including
the amount of any unpaid dividend declared upon the Corporation's stock
and payable to stockholders of record on or before the day as of which
the value of the Corporation's stock is being determined, (d) all
reserves, if any, authorized or approved by the Board of Directors for
taxes, including reserves for taxes at current rates based on any
unrealized appreciation in the value of the assets of the Corporation,
and (e) all other liabilities of the Corporation of whatever kind and
nature except liabilities represented by outstanding capital stock and
surplus of the Corporation.
(iii) For the purposes hereof: (a) shares of each class of Common
Stock subscribed for shall be deemed to be outstanding as of the time
of acceptance of any subscription and the entry thereof on the books of
the Corporation and the net price thereof shall be deemed to be an
asset belonging to such class; and (b) shares of each class of Common
Stock surrendered for redemption by the Corporation shall be deemed to
be outstanding until the time as of which the net asset value for
purposes of such redemption is determined or estimated.
(c) Net asset value of each share of each class of Common Stock of the
Corporation, as of any time other than the close of business on any day, may be
determined by applying to the net asset value as of the close of business on
the preceding business day, computed as provided in paragraph (b) of this
Section of these Bylaws, such adjustments as are authorized by or pursuant to
the direction of the Board of Directors and designed reasonably to reflect any
material changes in the market value of securities and other assets held and
any other material changes in the assets or liabilities of the Corporation and
in the number of its outstanding shares which shall have taken place since the
close of business on such preceding business day.
(d) In addition to the foregoing, the Board of Directors is empowered,
in its absolute discretion, to establish other bases or times, or both, for
determining the net asset value of each share of each class of the Common Stock
of the Corporation.
ARTICLE VI
GENERAL PROVISIONS
SECTION 1. Offices. The registered office of the Corporation in the
State of Maryland shall be in the City of Baltimore. The Corporation may also
have offices at such other places within and without the State of Maryland as
the Board of Directors may from time to time determine. Except as otherwise
required by statute, the books and records of the Corporation may be kept
outside the State of Maryland.
SECTION 2. Seal. The Corporation shall have no seal.
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<PAGE> 11
SECTION 3. Fiscal Year. The fiscal year of the Corporation shall be
fixed by the Board of Directors.
SECTION 4. Notice of Waiver of Notice. Whenever any notice of the
time, place or purpose of any meeting of stockholders or directors is required
to be given under the statute, the Charter or these Bylaws, a waiver thereof in
writing, signed by the person or persons entitled to such notice and filed with
the records of the meeting, either before or after the holding thereof, or
actual attendance at the meeting of stockholders in person or by proxy or at
the meeting of directors in person, shall be deemed equivalent to the giving of
such notice to such person. No notice need be given to any person with whom
communication is made unlawful by any law of the United States or any rule,
regulation, proclamation or executive order issued by any such law.
SECTION 5. Voting of Stock. Unless otherwise ordered by the Board of
Directors, the president shall have full power and authority, in the name and
on behalf of the Corporation, (i) to attend, act and vote at any meeting of
stockholders of any company in which the Corporation may own shares of stock of
record, beneficially (as the proxy or attorney-in-fact of the record holder) or
of record and beneficially, and (ii) to give voting directions to the record
stockholder of any such stock beneficially owned. At any such meeting, he or
she shall possess and may exercise any and all rights and powers incident to
the ownership of such shares which, as the holder or beneficial owner and proxy
of the holder thereof, the Corporation might possess and exercise if personally
present, and may delegate such power and authority to any officer, agent or
employee of the Corporation.
SECTION 6. Dividends. Dividends upon any class of stock of the
Corporation, subject to the provisions of the Charter, if any, may be declared
by the Board of Directors in any lawful manner. The source of each dividend
payment shall be disclosed to the stockholders receiving such dividend, to the
extent required by the laws of the State of Maryland and by Section 19 of the
Act and the rules and regulations of the Commission promulgated thereunder.
SECTION 7. Amendments.
(a) These Bylaws may be altered, amended or repealed and new Bylaws may
be adopted by the stockholders by affirmative vote of not less than a majority
of the shares of all classes of stock present or represented at any annual or
special meeting of the stockholders at which a quorum is in attendance.
(b) These Bylaws may also be altered, amended or repealed and new
Bylaws may be adopted by the Board of Directors by affirmative vote of a
majority of the number of directors present at any meeting at which a quorum is
in attendance; but no Bylaw adopted by the stockholders shall be amended or
repealed by the Board of Directors if the amended Bylaws so adopted so
provides.
(c) Any action taken or authorized by the stockholders or by the Board
of Directors, which would be inconsistent with the Bylaws then in effect but is
taken or
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authorized by affirmative vote of not less than the number of shares
or the number of directors required to amend the Bylaws so that the Bylaws
would be consistent with such action, shall be given the same effect as though
the Bylaws had been temporarily amended or suspended so far, but only so far,
as was necessary to permit the specific action so taken or authorized.
SECTION 8. Reports to Stockholders. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each annual fiscal period of the Corporation and at such other
times, if any, as may be directed by the Board of Directors of the Corporation.
A report to the stockholders based upon each such examination shall be mailed
to each stockholder of the Corporation of record on such date with respect to
each report as may be determined by the Board of Directors at his or her
address as the same appears on the books of the Corporation. Each such report
shall include the financial information required to be transmitted to
stockholders by rules or regulations of the Commission under the Act and shall
be in such form as the Board of Directors shall determine pursuant to rules and
regulations of the Commission.
SECTION 9. Information to Accompany Dividends. At the time of the
payment by the Corporation of any dividend to the holders of any class of stock
of the Corporation, each stockholder to whom such dividend is paid shall be
notified of the account or accounts from which it is paid and the amount
thereof paid from each such account.
[END OF BYLAWS]
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<PAGE> 1
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made this ___ day of ___________, 1996 between Bremer
Investment Funds, Inc., a Maryland corporation (the "Company"), and First
American Trust Company of Minnesota, a Minnesota corporation (the "Advisor").
WHEREAS, the Company shall become registered under the Investment
Company Act of 1940, as amended (the "Act"), as an open-end management
investment company; and
WHEREAS, the Company is initially authorized to issue shares of Class A
Common Stock (the Growth Stock Fund) and shares of Class B Common Stock (the
Bond Fund) (each, a Fund, and collectively, the "Funds"); and
WHEREAS, the Company desires to retain the Adviser, which is an
investment adviser registered under the Investment Advisers Act of 1940, as the
investment adviser for the Funds.
NOW, THEREFORE, the Company and the Adviser do mutually promise and
agree as follows:
1. Employment. The Company hereby employs the Adviser to manage the
investment and reinvestment of the assets of the Funds for the period and on
the terms set forth in this Agreement. The Adviser hereby accepts such
employment for the compensation herein provided and agrees during such period
to render the services and to assume the obligations herein set forth.
2. Authority of the Adviser. The Adviser shall supervise and manage
the investment portfolios of the Funds, and, subject to such policies as the
Board of Directors of the Company (the "Board") may determine, direct the
purchase and sale of investment securities in the day to day management of the
Funds. The Adviser shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have
no authority to act for or represent the Company or the Funds in any way or
otherwise be deemed an agent of the Company or the Funds. However, one or more
shareholders, officers, directors or employees of the Adviser may serve as
directors and/or officers of the Company, but without compensation or
reimbursement of expenses for such services from the Company. Nothing
contained herein shall be deemed to require the Company to take any action
contrary to its Articles of Incorporation, as amended, restated or supplemented
from time to time, or any applicable statute or regulation, or to relieve or
deprive the Board of its responsibility for and control of the affairs of the
Funds.
3. Expenses. The Adviser, at its own expense and without reimbursement
from the Company or the Funds, shall furnish office space, and all necessary
office facilities, equipment and executive personnel for managing the
investments of the Funds. The Adviser shall not be required to pay any
expenses of a Fund except as provided herein if the total expenses borne by the
Fund, including the Adviser's fee and the fees paid to the Fund's
<PAGE> 2
Administrator but excluding all federal, state and local taxes, interest,
brokerage commissions and extraordinary items, in any year (a) exceed that
percentage of the average net assets of the Fund for such year, as determined
by valuations made as of the close of each business day, which is the most
restrictive percentage provided by the state laws of the various states in
which the Fund's shares are qualified for sale or (b) if the states in which
the Fund's shares are qualified for sale impose no such restrictions, _______%.
The expenses of a Fund's operations borne by the Fund include by way of
illustration and not limitation, directors fees paid to those directors who are
not officers of the Company, the costs of preparing and printing registration
statements required under the Securities Act of 1933, as amended and the Act,
the expense of registering its shares with the Commission and in the various
states, the printing and distribution cost of prospectuses mailed to existing
shareholders, the cost of stock certificates (if any), director and officer
liability insurance, reports to shareholders, reports to government authorities
and proxy statements, interest charges, taxes, legal expenses, salaries of
administrative and clerical personnel, association membership dues, auditing
and accounting services, insurance premiums, brokerage and other expenses
connected with the execution of portfolio securities transactions, fees and
expenses of the custodian of the Fund's assets, expenses of calculating the net
asset value and repurchasing and redeeming shares, printing and mailing
expenses, charges and expenses of dividend disbursing agents, registrars and
stock transfer agents and the cost of keeping all necessary shareholder records
and accounts.
The Company shall monitor the expense ratios of the Funds on a monthly
basis. If the accrued amount of the expenses of a Fund exceeds the expense
limitation established herein, the Company shall create an account receivable
from the Adviser in the amount of such excess. In such a case, the monthly
payment of the Adviser's fee will be reduced by the amount of such excess,
subject to adjustment month by month during the balance of the Company's fiscal
year if accrued expenses thereafter fall below the expense limitation.
4. Compensation of the Adviser. For the services to be rendered by the
Adviser hereunder, the Company, through and on behalf of the Funds, shall pay
to the Adviser an advisory fee, paid monthly, based on the average net assets
of the Funds, as determined by valuations made as of the close of each business
day of the month. The monthly advisory fee shall be 1/12 of 0.7% (0.7% per
annum) on the average daily net assets of the Funds. For any month in which
this Agreement is not in effect for the entire month, such fee shall be reduced
proportionately on the basis of the number of calendar days during which it is
in effect and the fee computed upon the average net asset value of the business
days during which it is so in effect.
5. Ownership of Shares of the Fund. The Adviser shall not take an
ownership position in the Funds, and shall not permit any of its shareholders,
officers, directors or employees to take a long or short position in the shares
of the Funds, except for the purchase of shares of the Funds for investment
purposes at the same price as that available to the public at the time of
purchase or in connection with the initial capitalization of the Funds.
2
<PAGE> 3
6. Exclusivity. The services of the Adviser to the Funds hereunder are
not to be deemed exclusive and the Adviser shall be free to furnish similar
services to others as long as the services hereunder are not impaired thereby.
During the period that this Agreement is in effect, the Adviser shall be the
Funds' sole investment adviser.
7. Liability. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be subject to liability to the Funds or
to any shareholder of the Funds for any act or omission in the course of, or
connected with, rendering services hereunder, or for any losses that may be
sustained in the purchase, holding or sale of any security.
8. Brokerage Commissions. The Adviser, subject to the control and
direction of the Board, shall have authority and discretion to select brokers
and dealers to execute portfolio transactions for the Funds and for the
selection of the markets on or in which the transactions will be executed. The
Adviser may cause the Funds to pay a broker-dealer which provides brokerage and
research services, as such services are defined in Section 28(e)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), a commission
for effecting a securities transaction in excess of the amount another
broker-dealer would have charged for effecting such transaction, if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of brokerage and research services provided by the
executing broker-dealer, viewed in terms of either that particular transaction
or such broker-dealer's overall responsibilities with respect to the accounts
as to which such broker-dealer exercises investment discretion (as defined in
Section 3(a)(35) of the Exchange Act). The Adviser shall provide such reports
as the Board may reasonably request with respect to the Funds' total brokerage
commissions and the manner in which that brokerage commission was allocated.
9. Code of Ethics. The Adviser has adopted a written code of ethics
complying with the requirements of Rule 17j-1 under the Act and has provided
the Company with a copy of the code of ethics and evidence of its adoption.
Upon the written request of the Company, the Adviser shall permit the Company
to examine any reports required to be made by the Adviser pursuant to Rule
17j-1(c)(1) under the Act.
10. Amendments. This Agreement may be amended by the mutual consent of
the parties; provided, however, that in no event may it be amended without the
approval of the Board in the manner required by the Act, and by the vote of the
majority of the outstanding voting securities of the Funds, as defined in the
Act.
11. Termination. This Agreement may be terminated at any time, without
the payment of any penalty, by the Board or by a vote of the majority of the
outstanding voting securities of the Funds, as defined in the Act, upon giving
sixty (60) days' written notice to the Adviser. This Agreement may be
terminated by the Adviser at any time upon the giving of sixty (60) days'
written notice to the Company. This Agreement shall terminate automatically in
the event of its assignment (as defined in Section 2(a)(4) of the Act). Subject
to prior termination as hereinbefore provided, this Agreement shall continue in
effect for an initial period beginning as of the date hereof and ending
__________ __, 1997
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<PAGE> 4
and indefinitely thereafter, but only so long as the continuance after such
initial period is specifically approved annually by (i) the Board or by the
vote of the majority of the outstanding voting securities of the Funds, as
defined in the Act, and (ii) the Board in the manner required by the Act,
provided that any such approval may be made effective not more than sixty (60)
days thereafter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day first above written.
BREMER INVESTMENT FUNDS, INC.
By:_______________________________________
Steven A. Laraway
President
FIRST AMERICAN TRUST COMPANY OF MINNESOTA
By:_______________________________________
Richard A. DiNello
Vice President/Chief Financial Officer
4
<PAGE> 1
EXHIBIT 8
CUSTODIAN AGREEMENT
THIS AGREEMENT made on this 5th day of November, 1996, between Bremer
Investment Funds, Inc., a Maryland series company currently sponsoring the Bond
Fund and the Growth Stock Fund (each, a "Fund," and together, the "Funds"), and
Firstar Trust Company, a corporation organized under the laws of the State of
Wisconsin (hereinafter called "Custodian");
WHEREAS, the Funds desire that their securities and cash shall be
hereafter held and administered by Custodian pursuant to the terms of this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Funds and Custodian agree as follows:
1. DEFINITIONS
The word "securities" as used herein includes stocks, shares, bonds,
debentures, notes, mortgages or other obligations, and any certificates,
receipts, warrants or other instruments representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or in any property or assets.
The words "officers' certificate" shall mean a request or direction or
certification in writing signed in the name of the Funds by any two of the
President, a Vice President, the Secretary and the Treasurer of the Funds, or
any other persons duly authorized to sign by the Board of Directors.
The word "Board" shall mean Board of Directors of Bremer Investment Funds,
Inc.
2. NAMES, TITLES, AND SIGNATURES OF THE FUNDS'S OFFICERS
An officer of the Funds will certify to Custodian the names and signatures
of those persons authorized to sign the officers' certificates described in
Section 1 hereof, and the names of the members of the Board of Directors,
together with any changes which may occur from time to time.
3. ADDITIONAL SERIES. Bremer Investment Funds, Inc. is authorized to issue
separate classes of shares of beneficial interest representing interests in
separate investment portfolios. The parties intend that each portfolio
established by the Bremer Investment Funds, Inc., now or in the future, be
covered by the terms and conditions of this Agreement.
4. RECEIPT AND DISBURSEMENT OF MONEY
A. Custodian shall open and maintain a separate account or accounts in the
name of the Funds, subject only to draft or order by Custodian acting pursuant
to the terms of this Agreement. Custodian shall hold in such account or
accounts, subject to the provisions
<PAGE> 2
hereof, all cash received by it from or for the account of the Funds.
Custodian shall make payments of cash to, or for the account of, the Funds from
such cash only:
(a) for the purchase of securities for the portfolio of the Funds
upon the delivery of such securities to Custodian, registered in the name
of the Funds or of the nominee of Custodian referred to in Section 8 or
in proper form for transfer;
(b) for the purchase or redemption of shares of the common stock of
the Funds upon delivery thereof to Custodian, or upon proper instructions
from the Bremer Investment Funds, Inc.;
(c) for the payment of interest, dividends, taxes, investment
adviser's fees or operating expenses (including, without limitation
thereto, fees for legal, accounting, auditing and custodian services and
expenses for printing and postage);
(d) for payments in connection with the conversion, exchange or
surrender of securities owned or subscribed to by the Funds held by or to
be delivered to Custodian; or
(e) for other proper corporate purposes certified by resolution of
the Board of Directors of the Funds.
Before making any such payment, Custodian shall receive (and may rely
upon) an officers' certificate requesting such payment and stating that it is
for a purpose permitted under the terms of items (a), (b), (c), or (d) of this
Subsection A, and also, in respect of item (e), upon receipt of an officers'
certificate specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such payment is to
be made, provided, however, that an officers' certificate need not precede the
disbursement of cash for the purpose of purchasing a money market instrument,
or any other security with same or next-day settlement, if the President, a
Vice President, the Secretary or the Treasurer of the Funds issues appropriate
oral or facsimile instructions to Custodian and an appropriate officers'
certificate is received by Custodian within two business days thereafter.
B. Custodian is hereby authorized to endorse and collect all checks,
drafts or other orders for the payment of money received by Custodian for the
account of the Funds.
C. Custodian shall, upon receipt of proper instructions, make federal
funds available to the Funds as of specified times agreed upon from time to
time by the Funds and the custodian in the amount of checks received in payment
for shares of the Funds which are deposited into the Funds' account.
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<PAGE> 3
5. SEGREGATED ACCOUNTS
Upon receipt of proper instructions, the Custodian shall establish and
maintain a segregated account(s) for and on behalf of the portfolio, into which
account(s) may be transferred cash and/or securities.
6. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES
Custodian shall have sole power to release or deliver any securities of
the Funds held by it pursuant to this Agreement. Custodian agrees to transfer,
exchange or deliver securities held by it hereunder only:
(a) for sales of such securities for the account of the Funds upon
receipt by Custodian of payment therefore;
(b) when such securities are called, redeemed or retired or
otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for, or upon conversion into, other securities alone
or other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or
otherwise;
(e) upon conversion of such securities pursuant to their terms into
other securities;
(f) upon exercise of subscription, purchase or other similar rights
represented by such securities;
(g) for the purpose of exchanging interim receipts or temporary
securities for definitive securities;
(h) for the purpose of redeeming in kind shares of common stock of
the Funds upon delivery thereof to Custodian; or
(i) for other proper corporate purposes.
As to any deliveries made by Custodian pursuant to items (a), (b), (d),
(e), (f), and (g), securities or cash receivable in exchange therefore shall be
deliverable to Custodian.
Before making any such transfer, exchange or delivery, Custodian shall
receive (and may rely upon) an officers' certificate requesting such transfer,
exchange or delivery, and stating that it is for a purpose permitted under the
terms of items (a), (b), (c), (d), (e), (f), (g), or (h) of this Section 6 and
also, in respect of item (i), upon receipt of an officers'
3
<PAGE> 4
certificate specifying the securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to whom delivery of
such securities shall be made, provided, however, that an officers' certificate
need not precede any such transfer, exchange or delivery of a money market
instrument, or any other security with same or next-day settlement, if the
President, a Vice President, the Secretary or the Treasurer of the Funds issues
appropriate oral or facsimile instructions to Custodian and an appropriate
officers' certificate is received by Custodian within two business days
thereafter.
7. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS
Unless and until Custodian receives an officers' certificate to the
contrary, Custodian shall: (a) present for payment all coupons and other
income items held by it for the account of the Funds, which call for payment
upon presentation and hold the cash received by it upon such payment for the
account of the Funds; (b) collect interest and cash dividends received, with
notice to the Funds, for the account of the Funds; (c) hold for the account of
the Funds hereunder all stock dividends, rights and similar securities issued
with respect to any securities held by it hereunder; and (d) execute, as agent
on behalf of the Funds, all necessary ownership certificates required by the
Internal Revenue Code or the Income Tax Regulations of the United States
Treasury Department or under the laws of any state now or hereafter in effect,
inserting the Funds' name on such certificates as the owner of the securities
covered thereby, to the extent it may lawfully do so.
8. REGISTRATION OF SECURITIES
Except as otherwise directed by an officers' certificate, Custodian shall
register all securities, except such as are in bearer form, in the name of a
registered nominee of Custodian as defined in the Internal Revenue Code and any
Regulations of the Treasury Department issued hereunder or in any provision of
any subsequent federal tax law exempting such transaction from liability for
stock transfer taxes, and shall execute and deliver all such certificates in
connection therewith as may be required by such laws or regulations or under
the laws of any state. Custodian shall use its best efforts to the end that
the specific securities held by it hereunder shall be at all times identifiable
in its records.
The Funds shall from time to time furnish to Custodian appropriate
instruments to enable Custodian to hold or deliver in proper form for transfer,
or to register in the name of its registered nominee, any securities which it
may hold for the account of the Funds and which may from time to time be
registered in the name of the Funds.
9. VOTING AND OTHER ACTION
Neither Custodian nor any nominee of Custodian shall vote any of the
securities held hereunder by or for the account of the Funds, except in
accordance with the instructions contained in an officers' certificate.
Custodian shall deliver, or cause to be executed and delivered, to the
Corporation all notices, proxies and proxy soliciting materials with relation
to such securities, such proxies to be executed by the registered holder of
such securities (if
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<PAGE> 5
registered otherwise than in the name of the Funds), but without indicating the
manner in which such proxies are to be voted.
10. TRANSFER TAX AND OTHER DISBURSEMENTS
The Funds shall pay or reimburse Custodian from time to time for any
transfer taxes payable upon transfers of securities made hereunder, and for all
other necessary and proper disbursements and expenses made or incurred by
Custodian in the performance of this Agreement.
Custodian shall execute and deliver such certificates in connection with
securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state, to
exempt from taxation any exemptible transfers and/or deliveries of any such
securities.
11. CONCERNING CUSTODIAN
Custodian shall be paid as compensation for its services pursuant to this
Agreement such compensation as may from time to time be agreed upon in writing
between the two parties. Until modified in writing, such compensation shall be
as set forth in Exhibit A attached hereto.
Custodian shall not be liable for any action taken in good faith upon any
certificate herein described or certified copy of any resolution of the Board,
and may rely on the genuineness of any such document which it may in good faith
believe to have been validly executed.
The Funds agree to indemnify and hold harmless Custodian and its nominee
from all taxes, charges, expenses, assessments, claims and liabilities
(including counsel fees) incurred or assessed against it or by its nominee in
connection with the performance of this Agreement, except such as may arise
from its or its nominee's own negligent action, negligent failure to act or
willful misconduct. Custodian is authorized to charge any account of the Funds
for such items.
In the event of any advance of cash for any purpose made by Custodian
resulting from orders or instructions of the Funds, or in the event that
Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the performance
of this Agreement, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any property
at any time held for the account of the Funds shall be security therefore.
Custodian agrees to indemnify and hold harmless Funds from all charges,
expenses, assessments, and claims/liabilities (including counsel fees) incurred
or assessed against it in connection with the performance of this Agreement,
except such as may arise from the Funds' own negligent action, negligent
failure to act, or willful misconduct.
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<PAGE> 6
12. SUBCUSTODIANS
Custodian is hereby authorized to engage another bank or trust company as
a Subcustodian for all or any part of the Funds' assets, so long as any such
bank or trust company is a bank or trust company organized under the laws of
any state of the United States, having an aggregate capital, surplus and
undivided profit, as shown by its last published report, of not less than Two
Million Dollars ($2,000,000) and provided further that, if the Custodian
utilizes the services of a Subcustodian, the Custodian shall remain fully
liable and responsible for any losses caused to the Funds by the Subcustodian
as fully as if the Custodian was directly responsible for any such losses under
the terms of the Custodian Agreement.
Notwithstanding anything contained herein, if the Funds require the
Custodian to engage specific Subcustodians for the safekeeping and/or clearing
of assets, the Funds agree to indemnify and hold harmless Custodian from all
claims, expenses and liabilities incurred or assessed against it in connection
with the use of such Subcustodian in regard to the Funds' assets, except as may
arise from its own negligent action, negligent failure to act or willful
misconduct.
13. REPORTS BY CUSTODIAN
Custodian shall furnish the Funds periodically as agreed upon with a
statement summarizing all transactions and entries for the account of Funds.
Custodian shall furnish to the Funds, at the end of every month, a list of the
portfolio securities showing the aggregate cost of each issue. The books and
records of Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at reasonable times by officers of, and of
auditors employed by, the Funds.
14. TERMINATION OR ASSIGNMENT
This Agreement may be terminated by the Funds, or by Custodian, on sixty
(60) days notice, given in writing and sent by registered mail to Custodian at
P.O. Box 2054, Milwaukee, Wisconsin 53201, or to the Funds at P.O. Box 1956,
St. Cloud, Minnesota 56302, as the case may be. Upon any termination of this
Agreement, pending appointment of a successor to Custodian or a vote of the
shareholders of the Funds to dissolve or to function without a custodian of its
cash, securities and other property, Custodian shall not deliver cash,
securities or other property of the Funds to the Funds, but may deliver them to
a bank or trust company of its own selection, having an aggregate capital,
surplus and undivided profits, as shown by its last published report of not
less than Two Million Dollars ($2,000,000) as a Custodian for the Funds to be
held under terms similar to those of this Agreement, provided, however, that
Custodian shall not be required to make any such delivery or payment until full
payment shall have been made by the Funds of all liabilities constituting a
charge on or against the properties then held by Custodian or on or against
Custodian, and until full payment shall have been made to Custodian of all its
fees, compensation, costs and expenses, subject to the provisions of Section 10
of this Agreement.
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<PAGE> 7
This Agreement may not be assigned by Custodian without the consent of the
Funds, authorized or approved by a resolution of its Board of Directors.
15. DEPOSITS OF SECURITIES IN SECURITIES DEPOSITORIES
No provision of this Agreement shall be deemed to prevent the use by
Custodian of a central securities clearing agency or securities depository,
provided, however, that Custodian and the central securities clearing agency or
securities depository meet all applicable federal and state laws and
regulations, and the Board of Directors of the Funds approves by resolution the
use of such central securities clearing agency or securities depository.
16. RECORDS
To the extent that Custodian in any capacity prepares or maintains any
records required to be maintained and preserved by the Funds pursuant to the
provisions of the Investment Company Act of 1940, as amended, or the rules and
regulations promulgated thereunder, Custodian agrees to make any such records
available to the Funds upon request and to preserve such records for the
periods prescribed in Rule 31a-2 under the Investment Company Act of 1940, as
amended.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
Bremer Investment Funds, Inc. Firstar Trust Company
By: /s/ Steven A. Laraway By: /s/ James C. Tyler
------------------------------- ----------------------------------
Its: President Its: Vice President
----------------------------- --------------------------------
Attest: /s/ Richard A. DiNello Attest: Andrea McVoy
-------------------------- ------------------------------
Assistant Secretary
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<PAGE> 8
Exhibit A
Custodian Annual Fee Schedule
Bremer Funds
Annual fees based on market value of assets
2 basis points on the market value
15% discount for the first year
10% discount for the second year
Transaction charges
$12 per book entry security
$25 per physical
$75 per Euroclear
$ 8 per principal reduction on pass through certificates
$35 per option/future contract
<PAGE> 1
EXHIBIT 9A
FUND ADMINISTRATION SERVICING AGREEMENT
THIS AGREEMENT is made and entered into on this 5th day of November, 1996,
by and between Bremer Investment Funds, Inc., a Maryland series company
currently sponsoring the Bond Fund and the Growth Stock Fund (each, a "Fund,"
and together, the "Funds") and Firstar Trust Company, a corporation organized
under the laws of the State of Wisconsin (hereinafter referred to as "FTC").
WHEREAS, Bremer Investment Funds, Inc. is an open-ended management
investment company which shall be registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act");
WHEREAS, FTC is a trust company and, among other things, is in the
business of providing fund administration services for the benefit of its
customers;
NOW, THEREFORE, the Funds and FTC do mutually promise and agree as
follows:
I. APPOINTMENT OF ADMINISTRATOR
The Funds hereby appoint FTC as Administrator of the Funds on the terms
and conditions set forth in this Agreement, and FTC hereby accepts such
appointment and agrees to perform the services and duties set forth in this
Agreement in consideration of the compensation provided for herein.
II. DUTIES AND RESPONSIBILITIES OF FTC
A. General Fund Management
1. Act as liaison among all fund service providers
2. Coordinate board communication by:
a. Assisting fund counsel in establishing meeting agendas
b. Preparing board reports based on financial and administrative
data
c. Evaluating independent auditor
d. Securing and monitoring fidelity bond and director and officers
liability coverage, and making the necessary SEC filings
relating thereto
3. Audits
a. Prepare appropriate schedules and assist independent auditors
b. Provide information to SEC and facilitate audit process
c. Provide office facilities
<PAGE> 2
4. Assist in overall operations of the Funds
B. Compliance
1. Regulatory Compliance
a. Periodically monitor compliance with Investment Company Act
requirements
(1) Asset diversification tests
(2) Total return and SEC yield calculations
(3) Maintenance of books and records under Rule 31a-3
(4) Code of ethics
b. Periodically monitor Fund's compliance with the policies and
investment limitations of the Fund as set forth in its
prospectus and statement of additional information
2. Blue Sky Compliance
a. Prepare and file with the appropriate
state securities authorities any and all required
compliance filings relating to the registration of the
securities of the Fund so as to enable the Fund to make
a continuous offering of its shares
b. Monitor status and maintain registrations in each state
3. SEC Registration and Reporting
a. Assisting Funds' counsel in updating prospectus and statement
of additional information; and in preparing proxy statements,
and Rule 24f-2 notice,
b. Annual and semiannual reports
4. IRS Compliance
a. Periodically monitor Funds' status as a regulated investment
company under Subchapter M through review of the following:
(1) Asset diversification requirements
(2) Qualifying income requirements
(3) Distribution requirements
b. Monitor short short testing
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<PAGE> 3
c. Calculate required distributions (including excise tax
distributions)
C. Financial Reporting
1. Provide financial data required by fund prospectus and statement
of additional information
2. Prepare financial reports for shareholders, the board, the SEC,
and independent auditors
3. Supervise the Fund's Custodian and Fund Accountants in the
maintenance of the Fund's general ledger and in the preparation of
the Fund's financial statements including oversight of expense
accruals and payments, of the determination of net asset value of
the Fund's net assets and of the Fund's shares, and of the
declaration and payment of dividends and other distributions to
shareholders
D. Tax Reporting
1. Prepare and file on a timely basis appropriate federal and state
tax returns including forms 1120/8610 with any necessary schedules
2. Prepare state income breakdowns where relevant
3. File 1099 Miscellaneous for payments to directors and other
service providers
4. Monitor wash losses
5. Calculate eligible dividend income for corporate shareholders
III. COMPENSATION
The Funds agree to pay FTC for performance of the duties listed in this
Agreement and the fees and out-of-pocket expenses as set forth in the attached
Schedule A.
These fees may be changed from time to time, subject to mutual written
Agreement between the Funds and FTC.
The Funds agree to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
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<PAGE> 4
IV. ADDITIONAL SERIES
In the event that Bremer Investment Funds, Inc., establishes one or more
series of shares with respect to which it desires to have FTC render fund
administration services, under the terms hereof, it shall so notify FTC in
writing, and if FTC agrees in writing to provide such services, such series
will be subject to the terms and conditions of this Agreement, and shall be
maintained and accounted for by FTC on a discrete basis. The funds currently
covered by this Agreement are: the Bond Fund and the Growth Stock Fund.
V. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FTC shall exercise reasonable care in the performance of its duties
under this Agreement. FTC shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including
losses resulting from mechanical breakdowns or the failure of
communication or power supplies beyond FTC's control, except a loss
resulting from FTC's refusal or failure to comply with the terms of
this Agreement or from bad faith, negligence, or willful misconduct
on its part in the performance of its duties under this Agreement.
Notwithstanding any other provision of this Agreement, the Fund shall
indemnify and hold harmless FTC from and against any and all claims,
demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which FTC may sustain or incur or which may be
asserted against FTC by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder (i) in
accordance with the foregoing standards, or (ii) in reliance upon any
written or oral instruction provided to FTC by any duly authorized
officer of the Fund, such duly authorized officer to be included in a
list of authorized officers furnished to FTC and as amended from time
to time in writing by resolution of the Board of Directors of the
Fund.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FTC shall take all reasonable
steps to minimize service interruptions for any period that such
interruption continues beyond FTC's control. FTC will make every
reasonable effort to restore any lost or damaged data and correct any
errors resulting from such a breakdown at the expense of FTC. FTC
agrees that it shall, at all times, have reasonable contingency plans
with appropriate parties, making reasonable provision for emergency
use of electrical data processing equipment to the extent appropriate
equipment is available. Representatives of the Fund shall be
entitled to inspect FTC's premises and operating capabilities at any
time during regular business hours of FTC, upon reasonable notice to
FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
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<PAGE> 5
B. In order that the indemnification provisions contained in
this section shall apply, it is understood that if in any case the
Fund may be asked to indemnify or hold FTC harmless, the Fund shall
be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that FTC will
use all reasonable care to notify the Fund promptly concerning any
situation which presents or appears likely to present the
probability of such a claim for indemnification against the Fund.
The Fund shall have the option to defend FTC against any claim which
may be the subject of this indemnification. In the event that the
Fund so elects, it will so notify FTC and thereupon the Fund shall
take over complete defense of the claim, and FTC shall in such
situation initiate no further legal or other expenses for which it
shall seek indemnification under this section. FTC shall in no case
confess any claim or make any compromise in any case in which the
Fund will be asked to indemnify FTC except with the Fund's prior
written consent.
C. FTC shall indemnify and hold the Fund harmless from and
against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any
and every nature (including reasonable attorneys' fees) which may be
asserted against the Fund by any person arising out of any action
taken or omitted to be taken by FTC as a result of FTC's refusal or
failure to comply with the terms of this Agreement, its bad faith,
negligence, or willful misconduct.
VI. CONFIDENTIALITY
FTC shall handle, in confidence, all information relating to the Funds'
business which is received by FTC during the course of rendering any service
hereunder.
VII. DATA NECESSARY TO PERFORM SERVICE
The Funds or their agent, which may be FTC, shall furnish to FTC the data
necessary to perform the services described herein at times and in such form as
mutually agreed upon.
VIII. TERMS OF AGREEMENT
This Agreement shall become effective as of the date hereof and, unless
sooner terminated as provided herein, shall continue automatically in effect
for successive annual periods. The Agreement may be terminated by either party
upon giving sixty (60) days prior written notice to the other party or such
shorter period as is mutually agreed upon by the parties.
IX. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any of
FTC's duties or responsibilities hereunder is designated by the Funds by
written notice to FTC, FTC will
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<PAGE> 6
promptly, upon such termination and at the expense of the Funds, transfer to
such successor all relevant books, records, correspondence, and other data
established or maintained by FTC under this Agreement in a form reasonably
acceptable to the Funds (if such form differs from the form in which FTC has
maintained, the Funds shall pay any expenses associated with transferring the
data to such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FTC's personnel in
the establishment of books, records, and other data by such successor.
IX. CHOICE OF LAW
This Agreement shall be construed in accordance with the laws of the State
of Wisconsin.
X. NOTICES
Notices of any kind to be given by either party to the other party shall
be in writing and shall be duly given if mailed or delivered as follows:
Notice to FTC shall be sent to Mutual Fund Services, 615 E. Michigan Street,
Milwaukee, Wisconsin 53202, and notice to Funds shall be sent to P.O. Box
1956, St. Cloud, Minnesota 56302.
XI. RECORDS
FTC shall keep records relating to the services to be performed hereunder,
in the form and manner, and for such period as it may deem advisable and is
agreeable to the Funds but not inconsistent with the rules and regulations of
appropriate government authorities, in particular, Section 31 of the Investment
Company Act and the rules thereunder. FTC agrees that all such records
prepared or maintained by FTC relating to the services to be performed by FTC
hereunder are the property of the Funds and will be preserved, maintained, and
made available with such section and rules of the Investment Company Act and
will be promptly surrendered to the Funds on and in accordance with its
request.
In witness whereof, the parties have duly executed this Agreement as of
the day and year first above written.
Bremer Investment Funds, Inc. Firstar Trust Company
By: /s/ Steven A. Laraway By: /s/ James C. Tyler
---------------------------------- -----------------------------
Its: President Its: Vice President
------------------------------ ------------------------
Attest: /s/ Richard A. DiNello Attest: /s/ Andrea McVoy
------------------------------ ------------------------
6
<PAGE> 7
Exhibit A
Fund Administration Annual Fee Schedule
Bremer Funds
Annual fees based on market value of assets
5 basis points on the first $100 million
4 basis points on the next $400 million
3 basis points on the balance
$30,000 minimum annual fee on the first fund
$20,000 minimum annual fee on the second fund
15% discount for the first year
10% discount for the second year
<PAGE> 1
EXHIBIT 9B
FUND ACCOUNTING SERVICING AGREEMENT
This contract between Bremer Investment Funds, Inc., a Maryland series
company currently sponsoring the Bond Fund and the Growth Stock Fund, (each, a
"Fund," and together, the "Funds") and Firstar Trust Company, a Wisconsin
corporation, hereinafter called "FTC," is entered into on this 5th day of
November, 1996.
WHEREAS, Bremer Investment Funds, Inc. is an open-ended management
investment company which shall be registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act"); and
WHEREAS, FTC is in the business of providing, among other things, mutual
fund accounting services to investment companies;
NOW, THEREFORE, the parties do mutually promise and agree as follows:
1. SERVICES. FTC agrees to provide the following mutual fund accounting
services to the Funds:
A. Portfolio Accounting Services:
(1) Maintain portfolio records on a trade date +1 basis using
security trade information communicated from the investment manager
on a timely basis.
(2) For each valuation date, obtain prices from a pricing
source approved by the Board of Directors and apply those prices to
the portfolio positions. For those securities where market
quotations are not readily available, the Board of Directors shall
approve, in good faith, the method for determining the fair value
for such securities.
(3) Identify interest and dividend accrual balances as of each
valuation date and calculate gross earnings on investments for the
accounting period.
(4) Determine gain/loss on security sales and identify them as
to short-short, short- or long-term status; account for periodic
distributions of gains or losses to shareholders and maintain
undistributed gain or loss balances as of each valuation date.
B. Expense Accrual and Payment Services:
(1) For each valuation date, calculate the expense accrual
amounts as directed by the Funds as to methodology, rate or dollar
amount.
<PAGE> 2
(2) Record payments for Fund expenses upon receipt of written
authorization from the Funds.
(3) Account for fund expenditures and maintain expense accrual
balances at the level of accounting detail, as agreed upon by FTC
and the Funds.
(4) Provide expense accrual and payment reporting.
C. Fund Valuation and Financial Reporting Services:
(1) Account for fund share purchases, sales, exchanges,
transfers, dividend reinvestments, and other fund share activity as
reported by the transfer agent on a timely basis.
(2) Apply equalization accounting as directed by the Funds.
(3) Determine net investment income (earnings) for the Funds
as of each valuation date. Account for periodic distributions of
earnings to shareholders and maintain undistributed net investment
income balances as of each valuation date.
(4) Maintain a general ledger for the Funds in the form as
agreed upon.
(5) For each day the Funds are open as defined in the
prospectus, determine the net asset value of the according to the
accounting policies and procedures set forth in the prospectus.
(6) Calculate per share net asset value, per share net
earnings, and other per share amounts reflective of fund operation
at such time as required by the nature and characteristics of the
Funds.
(7) Communicate, at an agreed upon time, the per share price
for each valuation date to parties as agreed upon from time to
time.
(8) Prepare monthly reports which document the adequacy of
accounting detail to support month-end ledger balances.
D. Tax Accounting Services:
(1) Maintain accounting records for the investment portfolios
of the Funds to support the tax reporting required for IRS-defined
regulated investment companies.
(2) Maintain tax lot detail for the investment portfolio.
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<PAGE> 3
(3) Calculate taxable gain/loss on security sales using the
tax lot relief method designated by the Funds.
(4) Provide the necessary financial information to support the
taxable components of income and capital gains distributions to the
transfer agent to support tax reporting to the shareholders.
E. Compliance Control Services:
(1) Support reporting to regulatory bodies and support
financial statement preparation by making the fund accounting
records available to Bremer Investment Funds, Inc., the Securities
and Exchange Commission, and the outside auditors.
(2) Maintain accounting records according to the Investment
Company Act and regulations provided thereunder.
2. PRICING OF SECURITIES. For each valuation date, obtain prices from a
pricing source selected by FTC but approved by the Funds' Board and apply those
prices to the portfolio positions. For those securities where market
quotations are not readily available, the Funds' Board shall approve, in good
faith, the method for determining the fair value for such securities.
If the Funds desire to provide a price which varies from the pricing
source, the Funds shall promptly notify and supply FTC with the valuation of
any such security on each valuation date. All pricing changes made by the
Funds will be in writing and must specifically identify the securities to be
changed by CUSIP, name of security, new price or rate to be applied, and, if
applicable, the time period for which the new prices are effective.
3. CHANGES IN ACCOUNTING PROCEDURES. Any resolution passed by the Board
of Directors that affects accounting practices and procedures under this
Agreement shall be effective upon written receipt and acceptance by FTC.
4. CHANGES IN EQUIPMENT, SYSTEMS, SERVICE, ETC. FTC reserves the right to
make changes from time to time, as it deems advisable, relating to its
services, systems, programs, rules, operating schedules and equipment, so long
as such changes do not adversely affect the service provided to the Funds under
this Agreement.
5. COMPENSATION. FTC shall be compensated for providing the services set
forth in this Agreement in accordance with the Fee Schedule attached hereto as
Exhibit A and as mutually agreed upon and amended from time to time.
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<PAGE> 4
6. PERFORMANCE OF SERVICE.
A. FTC shall exercise reasonable care in the performance of its
duties under this Agreement. FTC shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in
connection with matters to which this Agreement relates, including losses
resulting from mechanical breakdowns or the failure of communication or
power supplies beyond FTC's control, except a loss resulting from FTC's
refusal or failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the performance
of its duties under this Agreement. Notwithstanding any other provision
of this Agreement, the Fund shall indemnify and hold harmless FTC from
and against any and all claims, demands, losses, expenses, and
liabilities (whether with or without basis in fact or law) of any and
every nature (including reasonable attorneys' fees) which FTC may sustain
or incur or which may be asserted against FTC by any person arising out
of any action taken or omitted to be taken by it in performing the
services hereunder (i) in accordance with the foregoing standards, or
(ii) in reliance upon any written or oral instruction provided to FTC by
any duly authorized officer of the Fund, such duly authorized officer to
be included in a list of authorized officers furnished to FTC and as
amended from time to time in writing by resolution of the Board of
Directors of the Fund.
In the event of a mechanical breakdown or failure of communication
or power supplies beyond its control, FTC shall take all reasonable steps
to minimize service interruptions for any period that such interruption
continues beyond FTC's control. FTC will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from
such a breakdown at the expense of FTC. FTC agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing
equipment to the extent appropriate equipment is available.
Representatives of the Fund shall be entitled to inspect FTC's premises
and operating capabilities at any time during regular business hours of
FTC, upon reasonable notice to FTC.
Regardless of the above, FTC reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the Fund may be
asked to indemnify or hold FTC harmless, the Fund shall be fully and
promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that FTC will use all reasonable
care to notify the Fund promptly concerning any situation which presents
or appears likely to present the probability of such a claim for
indemnification against the Fund. The Fund shall have the option to
defend FTC against any claim which may be the subject of this
indemnification. In the event that the Fund so elects, it will so notify
FTC and thereupon the Fund
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<PAGE> 5
shall take over complete defense of the claim, and FTC shall in such
situation initiate no further legal or other expenses for which it shall
seek indemnification under this section. FTC shall in no case confess any
claim or make any compromise in any case in which the Fund will be asked
to indemnify FTC except with the Fund's prior written consent.
C. FTC shall indemnify and hold the Fund harmless from and against
any and all claims, demands, losses, expenses, and liabilities (whether
with or without basis in fact or law) of any and every nature (including
reasonable attorneys' fees) which may be asserted against the Fund by any
person arising out of any action taken or omitted to be taken by FTC as a
result of FTC's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
7. RECORDS. FTC shall keep records relating to the services to be
performed hereunder, in the form and manner, and for such period as it may deem
advisable and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
the Investment Company Act and the rules thereunder. FTC agrees that all such
records prepared or maintained by FTC relating to the services to be performed
by FTC hereunder are the property of the Funds and will be preserved,
maintained, and made available with such section and rules of the Investment
Company Act and will be promptly surrendered to the Funds on and in accordance
with its request.
8. CONFIDENTIALITY. FTC shall handle in confidence all information
relating to the Funds' business, which is received by FTC during the course of
rendering any service hereunder.
9. DATA NECESSARY TO PERFORM SERVICES. The Funds or its agent, which
may be FTC, shall furnish to FTC the data necessary to perform the services
described herein at times and in such form as mutually agreed upon.
10. NOTIFICATION OF ERROR. The Funds will notify FTC of any balancing or
control error caused by FTC within three (3) business days after receipt of any
reports rendered by FTC to the Funds, or within three (3) business days after
discovery of any error or omission not covered in the balancing or control
procedure, or within three (3) business days of receiving notice from any
shareholder.
11. ADDITIONAL SERIES. In the event that the Bremer Investment Funds,
Inc. establishes one or more series of shares with respect to which it desires
to have FTC render accounting services, under the terms hereof, it shall so
notify FTC in writing, and if FTC agrees in writing to provide such services,
such series will be subject to the terms and conditions of this Agreement, and
shall be maintained and accounted for by FTC on a discrete basis. The
portfolios currently covered by this Agreement are: the Bond Fund and the
Growth Stock Fund.
5
<PAGE> 6
12. TERM OF AGREEMENT. This Agreement may be terminated by either party
upon giving sixty (60) days prior written notice to the other party or such
shorter period as is mutually agreed upon by the parties. However, this
Agreement may be replaced or modified by a subsequent agreement between the
parties.
13. DUTIES IN THE EVENT OF TERMINATION. In the event that in connection
with termination a Successor to any of FTC's duties or responsibilities
hereunder is designated by Bremer Investment Funds, Inc. by written notice to
FTC, FTC will promptly, upon such termination and at the expense of Bremer
Investment Funds, Inc., transfer to such Successor all relevant books, records,
correspondence and other data established or maintained by FTC under this
Agreement in a form reasonably acceptable to Bremer Investment Funds, Inc. (if
such form differs from the form in which FTC has maintained the same, Bremer
Investment Funds, Inc. shall pay any expenses associated with transferring the
same to such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FTC's personnel in
the establishment of books, records and other data by such successor.
14. NOTICES. Notices of any kind to be given by either party to the other
party shall be in writing and shall be duly given if mailed or delivered as
follows: Notice to FTC shall be sent to Mutual Fund Services, 615 E. Michigan
Street, Milwaukee, Wisconsin 53202, and notice to Funds shall be sent to P.O.
Box 1956, St. Cloud, Minnesota 56302.
15. CHOICE OF LAW. This Agreement shall be construed in accordance with
the laws of the State of Wisconsin.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
Bremer Investment Funds, Inc. Firstar Trust Company
By: /s/ Steven A. Laraway By: /s/ James C. Tyler
--------------------------------- ----------------------------------
Its: President Its: Vice President
-------------------------------- ------------------------------
Attest: /s/ Richard A. DiNello Attest: /s/ Andrea McVoy
----------------------------- ---------------------------
Assistant Secretary
6
<PAGE> 7
Exhibit A
Fund Accounting Annual Fee Schedule
Bremer Funds
Annual fees based on market value of assets
Stock Fund $22,000 for the first $40 million
1 basis point on the next $200 million
1/2 basis point on the balance
Bond Fund $25,000 for the first $40 million
2 basis points on the next $200 million
1 basis point on the balance
15% discount for the first year
10% discount for the second year
Daily pricing
Domestic & Canadian equities .15
Options .15
Corporate/Government/Agency bonds .50
CMOs .80
International equities & bonds .50
Municipal bonds .80
Money Market instruments .80
<PAGE> 1
EXHIBIT 9C
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into on this 5th day of November, 1996,
by and between Bremer Investment Funds, Inc., a series company currently
sponsoring the Bond Fund and the Growth Stock Fund (each, a "Fund", and
together, the "Funds") and Firstar Trust Company, a corporation organized under
the laws of the State of Wisconsin (hereinafter referred to as the "Agent").
WHEREAS, the Funds are open-ended management investment companies which
shall be registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"); and
WHEREAS, the Agent is a trust company and, among other things, is in the
business of administering transfer and dividend disbursing agent functions for
the benefit of its customers;
NOW, THEREFORE, the Funds and the Agent do mutually promise and agree as
follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE AGENT
Subject to the terms and conditions set forth in this Agreement, the Funds
hereby employ and appoint the Agent to act as transfer agent and dividend
disbursing agent.
The Agent shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders and issue the appropriate number of
certificated or uncertificated shares with such uncertificated shares being
held in the appropriate shareholder account;
C. Process redemption requests received in good order;
D. Pay monies in accordance with the instructions of redeeming
shareholders;
E. Process transfers of shares in accordance with the shareowner's
instructions;
F. Process exchanges between funds within the same family of funds;
G. Issue and/or cancel certificates as instructed; replace lost, stolen or
destroyed certificates upon receipt of satisfactory indemnification or surety
bond;
<PAGE> 2
H. Prepare and transmit payments for dividends and distributions declared
by the Funds;
I. Make changes to shareholder records, including, but not limited to,
address changes in plans (i.e., systematic withdrawal, automatic investment,
dividend reinvestment, etc.);
J. Record the issuance of shares of the Funds and maintain, pursuant to
Rule 17ad-10(e) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), a record of the total number of shares of the Funds which are
authorized, issued and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail, receive and
tabulate proxies;
L. Mail shareholder reports and prospectuses to current shareholders;
M. Prepare and file U.S. Treasury Department forms 1099 and other
appropriate information returns required with respect to dividends and
distributions for all shareholders;
N. Provide shareholder account information upon request and prepare and
mail confirmations and statements of account to shareholders for all purchases,
redemptions and other confirmable transactions as agreed upon with the Funds;
and
O. Provide a Blue Sky System which will enable the Funds to monitor the
total number of shares sold in each state. In addition, the Funds shall
identify to the Agent in writing those transactions and assets to be treated as
exempt from the Blue Sky reporting to the Funds for each state. The
responsibility of the Agent for the Funds' Blue Sky state registration status
is solely limited to the initial compliance by the Funds and the reporting of
such transactions to the Funds.
2. COMPENSATION
The Funds agree to pay the Agent for performance of the duties listed in
this Agreement; the fees and out-of-pocket expenses include, but are not
limited to the following: printing, postage, forms, stationery, record
retention, mailing, insertion, programming, labels, shareholder lists and proxy
expenses.
These fees and reimbursable expenses may be changed from time to time
subject to mutual written agreement between the Funds and the Agent.
The Funds agree to pay all fees and reimbursable expenses within ten (10)
business days following the mailing of the billing notice.
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<PAGE> 3
3. REPRESENTATIONS OF AGENT
The Agent represents and warrants to the Funds that:
A. It is a trust company duly organized, existing and in good standing
under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act;
C. It is duly qualified to carry on its business in the state of
Wisconsin;
D. It is empowered under applicable laws and by its charter and bylaws to
enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to authorize it to
enter and perform this Agreement; and
F. It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
G. It will comply with all applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), the Exchange Act, the Investment
Company Act, and any laws, rules, and regulations of governmental authorities
having jurisdiction.
4. REPRESENTATIONS OF THE FUNDS
Bremer Investment Funds, Inc. represents and warrants to the Agent that:
A. It is an open-ended diversified investment company under the Investment
Company Act;
B. It is a corporation organized, existing, and in good standing under the
laws of Maryland;
C. It is empowered under applicable laws and by its Articles of
Incorporation and Bylaws to enter into and perform this Agreement;
D. All necessary proceedings required by the Articles of Incorporation
have been taken to authorize it to enter into and perform this Agreement;
E. It will comply with all applicable requirements of the Securities Act,
the Exchange Act, the Investment Company Act, and any laws, rules and
regulations of governmental authorities having jurisdiction; and
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<PAGE> 4
F. A registration statement under the Securities Act will become effective
and will remain effective, and appropriate state securities law filings have
been made and will continue to be made, with respect to all shares of the Funds
being offered for sale.
5. COVENANTS OF FUNDS AND AGENT
The Funds shall furnish the Agent a certified copy of the resolution of
the Board of Directors of the Funds authorizing the appointment of the Agent
and the execution of this Agreement. The Funds shall provide to the Agent a
copy of the Articles of Incorporation and Bylaws of Bremer Investment Funds,
Inc. and all amendments thereto.
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act and the rules thereunder,
the Agent agrees that all such records prepared or maintained by the Agent
relating to the services to be performed by the Agent hereunder are the
property of the Funds and will be preserved, maintained and made available in
accordance with such section and rules and will be surrendered to the Funds on
and in accordance with their request.
6. INDEMNIFICATION; REMEDIES UPON BREACH
The Agent shall exercise reasonable care in the performance of its duties
under this Agreement. The Agent shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund in connection with
matters to which this Agreement relates, including losses resulting from
mechanical breakdowns or the failure of communication or power supplies beyond
the Agent's control, except a loss resulting from the Agent's refusal or
failure to comply with the terms of this Agreement or from bad faith,
negligence, or willful misconduct on its part in the performance of its duties
under this Agreement. Notwithstanding any other provision of this Agreement,
the Fund shall indemnify and hold harmless the Agent from and against any and
all claims, demands, losses, expenses, and liabilities (whether with or without
basis in fact or law) of any and every nature (including reasonable attorneys'
fees) which the Agent may sustain or incur or which may be asserted against the
Agent by any person arising out of any action taken or omitted to be taken by
it in performing the services hereunder (i) in accordance with the foregoing
standards, or (ii) in reliance upon any written or oral instruction provided to
the Agent by any duly authorized officer of the Fund, such duly authorized
officer to be included in a list of authorized officers furnished to the Agent
and as amended from time to time in writing by resolution of the Board of
Directors of the Fund.
Further, the Fund will indemnify and hold the Agent harmless against any
and all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim, demand, action, or suit as
a result of the negligence of the Fund or the principal underwriter (unless
contributed to by the Agent's breach of this Agreement or other Agreements
between the Fund and the Agent, or the Agent's own negligence or bad faith); or
as a result of the Agent acting upon telephone instructions relating to the
exchange or redemption of shares received by the Agent and reasonably
4
<PAGE> 5
believed by the Agent under a standard of care customarily used in the industry
to have originated from the record owner of the subject shares; or as a result
of acting in reliance upon any genuine instrument or stock certificate signed,
countersigned, or executed by any person or persons authorized to sign,
countersign, or execute the same.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, the Agent shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond the Agent's control. The Agent will make every reasonable effort to
restore any lost or damaged data and correct any errors resulting from such a
breakdown at the expense of the Agent. The Agent agrees that it shall, at all
times, have reasonable contingency plans with appropriate parties, making
reasonable provision for emergency use of electrical data processing equipment
to the extent appropriate equipment is available. Representatives of the Fund
shall be entitled to inspect the Agent's premises and operating capabilities at
any time during regular business hours of the Agent, upon reasonable notice to
the Agent.
Regardless of the above, the Agent reserves the right to reprocess and
correct administrative errors at its own expense.
In order that the indemnification provisions contained in this section
shall apply, it is understood that if in any case the Fund may be asked to
indemnify or hold the Agent harmless, the Fund shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Agent will use all reasonable care to notify the
Fund promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the Fund.
The Fund shall have the option to defend the Agent against any claim which may
be the subject of this indemnification. In the event that the Fund so elects,
it will so notify the Agent and thereupon the Fund shall take over complete
defense of the claim, and the Agent shall in such situation initiate no further
legal or other expenses for which it shall seek indemnification under this
section. The Agent shall in no case confess any claim or make any compromise
in any case in which the Fund will be asked to indemnify the Agent except with
the Fund's prior written consent.
The Agent shall indemnify and hold the Fund harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which may be asserted against the Fund by any person arising
out of any action taken or omitted to be taken by the Agent
as a result of the Agent's refusal or failure to comply with the terms of this
Agreement, its bad faith, negligence, or willful misconduct.
7. CONFIDENTIALITY
The Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Funds and
their shareholders and shall not be disclosed to any other party, except after
prior notification to and approval in writing by the Funds, which approval
shall not be unreasonably withheld and may not be withheld where
5
<PAGE> 6
the Agent may be exposed to civil or criminal contempt proceedings for failure
to comply after being requested to divulge such information by duly constituted
authorities.
8. ADDITIONAL SERIES
Bremer Investment Funds, Inc. is authorized to issue separate classes of
shares of beneficial interest representing interests in separate investment
portfolios. The parties intend that each portfolio established by the trust,
now or in the future, be covered by the terms and conditions of this agreement.
9. RECORDS
The Agent shall keep records relating to the services to be performed
hereunder, in the form and manner, and for such period as it may deem advisable
and is agreeable to the Funds but not inconsistent with the rules and
regulations of appropriate government authorities, in particular, Section 31 of
The Investment Company Act and the rules thereunder. The Agent agrees that all
such records prepared or maintained by the Agent relating to the services to be
performed by the Agent hereunder are the property of the Funds and will be
preserved, maintained, and made available with such section and rules of the
Investment Company Act and will be promptly surrendered to the Funds on and in
accordance with its request.
10. WISCONSIN LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the state of Wisconsin.
11. AMENDMENT, ASSIGNMENT, TERMINATION AND NOTICE
A. This Agreement may be amended by the mutual written consent of the
parties.
B. This Agreement may be terminated upon sixty (60) days' written notice
given by one party to the other.
C. This Agreement and any right or obligation hereunder may not be
assigned by either party without the signed, written consent of the other
party.
D. Any notice required to be given by the parties to each other under the
terms of this Agreement shall be in writing, addressed and delivered, or mailed
to the principal place of business of the other party. If to the Agent, such
notice should to be sent to Mutual Fund Services, 615 E. Michigan Street,
Milwaukee, Wisconsin 53202. If to the Funds, such notice should be sent to
P.O. Box 1956, St. Cloud, Minnesota 56302.
E. In the event that the Funds give to the Agent their written intention
to terminate and appoint a successor transfer agent, the Agent agrees to
cooperate in the
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<PAGE> 7
transfer of its duties and responsibilities to the successor, including any and
all relevant books, records and other data established or maintained by the
Agent under this Agreement.
F. Should the Funds exercise their right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be paid by
the Funds.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
Bremer Investment Funds, Inc.
By: /s/ Steven A. Laraway By: /s/ James C. Tyler
------------------------------- ---------------------------------
Its: President Its: Vice President
------------------------------- ---------------------------------
Attest: /s/ Richard A. DiNello Attest: /s/ Andrea McVoy
---------------------------- ------------------------------
Assistant Secretary
7
<PAGE> 8
Exhibit A
Transfer Agent Annual Fee Schedule
Bremer Funds
Annual fees based on market value of assets
$14 per shareholder account
$15,000 annual minimum fee applied to each fund
15% discount for the first year
10% discount for the second year
<PAGE> 1
Briggs and Morgan
Professional Association
2400 IDS Center
Minneapolis, Minnesota 55402
Telephone (612) 334-8400
November 12, 1996
Bremer Investment Funds, Inc.
P. O. Box 1956
St. Cloud, Minnesota 56302
Gentlemen:
We have acted as counsel to Bremer Investment Funds, Inc., a Maryland
corporation (the "Company"), in connection with the preparation and filing of a
registration statement on Form N-1A (the "Registration Statement") under the
Securities Act of 1933 and the Investment Company Act of 1940, relating to the
registration of an indefinite number of shares of the Company's Common Stock,
par value $.0001 per share (the "Shares").
We have examined and relied upon copies of the Registration Statement
and upon originals, or copies certified to our satisfaction, of such corporate
records, documents, certificates and other instruments as in our judgment were
necessary or appropriate to enable us to render the opinion set forth below.
Based on the foregoing, we are of the opinion that the Shares have been
duly authorized, and when issued by the Company in the manner set forth in the
Registration Statement, will be legally issued, fully paid and nonassessable,
provided that the aggregate number of Shares issued does not exceed the number
of shares of Common Stock authorized by the Company's Articles of
Incorporation.
<PAGE> 2
Bremer Investment Funds, Inc.
November 12, 1996
Page 2
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to our firm in the Prospectus and
Statement of Additional Information included in the Registration Statement.
Very truly yours,
BRIGGS AND MORGAN,
Professional Association
By: /s/ Christopher C. Cleveland
-------------------------------
Christopher C. Cleveland
CCC/dm
<PAGE> 1
EXHIBIT 14A
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following constitutes an agreement establishing an Individual
Retirement Account (under Section 408(a) of the Internal Revenue Code) between
the Depositor and the Custodian.
ARTICLE I.
The Custodian may accept additional cash contributions on behalf of
the Depositor for a tax year of the Depositor. The total cash contributions
are limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in Section 402(c) (but only after December 31, 1992),
403(a)(4),403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in Section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in Section 402(a)(5),
402(a)(6), 402(a)(7),403(a)(4), 403(b)(8), 408(d)(3), or an employer
contribution to a simplified employee pension plan as described in Section
408(k).
ARTICLE II.
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III.
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of Section 408(a)(5)).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of Section 408(m)) except as otherwise permitted by Section
408(m)(3) which provides an exception for certain gold and silver coins and
coins issued under the laws of any state.
ARTICLE IV.
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
Section 408(a)(6)and Proposed Regulations Section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations Section
1.401(a)(9)-2, the provisions of which are herein incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under Paragraph 3, or to the surviving spouse under
Paragraph 4, other than in the case of a life annuity, life expectancies shall
be recalculated annually. Such election shall
<PAGE> 2
be irrevocable as to the Depositor and the surviving spouse and shall apply to
all subsequent years. The life expectancy of a nonspouse beneficiary may not
be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor
lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in accordance
with Paragraph 3.
(b) If the Depositor dies before distribution of his or her interest
has begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries,either
(i) Be distributed by the December 31 of the year containing
the fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments
over the life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the year
of the Depositor's death. If, however, the beneficiary is the
Depositor's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
Depositor would have turned age 70 1/2.
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<PAGE> 3
(iii) Except where distribution in the form of an annuity
meeting the requirements of Section 408(b)(3) and its related
regulations has irrevocably commenced, distributions are treated as
having begun on the Depositor's required beginning date, even
though payments may actually have been made before that date.
(c) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted
in the account.
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the Depositor's entire interest in the custodial account
as of the close of business on December 31 of the preceding year by the life
expectancy of the Depositor (or the joint life and last survivor expectancy of
the Depositor and the Depositor's designated beneficiary, or the life
expectancy of the designated beneficiary, whichever applies). In the case of
distributions under Paragraph 3,determine the initial life expectancy (or joint
life and last survivor expectancy) using the attained ages of the Depositor and
designed beneficiary as of their birthdays in the year the Depositor reaches
age 70 1/2. In the case of a distribution in accordance with Paragraph
4(b)(ii), determine life expectancy using the attained age of the designated
beneficiary as of the beneficiary's birthday in the year distributions are
required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V.
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under Section
408(i) and Regulations Section 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor prescribed by the Internal Revenue Service.
ARTICLE VI.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with Section 408(a) and related
regulations will be invalid.
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ARTICLE VII.
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
ARTICLE VIII.
1. Investment of Account Assets.
(a) All contributions to the custodial account shall be invested in
shares of the_______________________________ or, if available, any other
series of ________________________ or other regulated investment
companies for which ____________________________ serves as investment
advisor or designates as being eligible for investment ("Investment
Company"). Shares of stock of an Investment Company shall be referred to
as "Investment Company Shares." To the extent that two or more funds are
available for investment, contributions shall be invested in accordance
with the Depositor's investment election.
(b) Each contribution to the custodial account shall identify the
Depositor's account number and be accompanied by a signed statement
directing the investment of that contribution. The Custodian may return
to the Depositor, without liability for interest thereon, any
contribution which is not accompanied by adequate account identification
or an appropriate signed statement directing investment of that
contribution.
(c) Contributions shall be invested in whole and fractional
Investment Company Shares at the price and in the manner such shares are
offered to the public. All distributions received on Investment Company
Shares, including both dividends and capital gains distributions, held in
the custodial account shall be reinvested in like shares. If any
distribution of Investment Company Shares may be received in additional
like shares or in cash or other property, the Custodian shall elect to
receive such distribution in additional like Investment Company Shares.
(d) All Investment Company Shares acquired by the Custodian shall be
registered in the name of the Custodian or its nominee. The Depositor
shall be the beneficial owner of all Investment Company Shares held in
the custodial account and the Custodian shall not vote any such shares,
except upon written direction of the Depositor, timely received, in a
form acceptable to the Custodian. The Custodian agrees to forward to the
Depositor each prospectus, report, notice, proxy and related proxy
soliciting materials applicable to Investment Company Shares held
in the custodial account received by the Custodian.
(e) The Depositor may, at any time, by written notice to the
Custodian, in a form acceptable to the Custodian, redeem any number of
shares held in the custodial account and reinvest the proceeds in the
shares of any other Investment
4
<PAGE> 1
EXHIBIT 14B
__________________________
INDIVIDUAL RETIREMENT ACCOUNT
DISCLOSURE STATEMENT
Please read the following information together with the Individual
Retirement Account Custodial Agreement and the Prospectus(es) for the fund(s)
you select for investment of your IRA contributions.
You may revoke this account any time within seven calendar days after it
is established by mailing or delivering a written request for revocation to:
____________________, c/o Firstar Trust Company, 615 East Michigan Street, 3rd
Floor, Milwaukee, Wisconsin 53202, Attention: Mutual Fund Department. If
your revocation is mailed, the date of the postmark (or the date of
certification if sent by certified or registered mail) will be considered your
revocation date. Upon proper revocation, you will receive a full refund of
your initial contribution, without any adjustments for items such as
administrative fees or fluctuations in market value.
1. General. Your IRA is a custodial account created for your exclusive
benefit, and ________________________ serves as custodian. Your interest in
the account is nonforfeitable.
2. Investments. Contributions made to your IRA will be invested in one
or more of the regulated investment companies for which ______________________
serves as investment advisor or any other regulated investment company
designated by _________________. No part of your account may be invested in
life insurance contracts; further, the assets of your account may not be
commingled with other property.
3. Eligibility. Employees and self-employed individuals are eligible to
contribute to an IRA. Employers may also contribute to employer-sponsored IRAs
established for the benefit of their employees. You may also establish an IRA
to receive rollover contributions and transfers from another IRA custodian or
trustee or from certain other retirement plans.
4. Time of Contribution. You may make regular contributions to your IRA
any time up to and including the due date for filing your tax return for the
year, not including extensions. You may continue to make regular contributions
to your IRA up to (but not including) the calendar year in which you reach
70-1/2. Employer contributions to a SEP - IRA plan may be continued after you
attain age 70-1/2. Rollover contributions and transfers may be made at any
time, including after you reach age 70-1/2.
5. Amount of Contribution. You may make annual regular contributions to
an IRA in any amount up to 100% of your compensation for the year or $2,000,
whichever is less. Qualifying rollover contributions and transfers are not
subject to this limitation.
6. Spousal IRA. If you are married and your spouse is not employed (or
if your employed spouse elects to be treated as having no compensation), you may
make contributions to a spousal IRA in addition to your own IRA. The maximum
amount
<PAGE> 2
contributed to both your own and to your spouse's IRA may not exceed 100% of
your compensation or $2,250, whichever is less. In no event, however, may the
annual contribution to either your account or your spouse's account exceed
$2,000.
7. Rollovers and Transfers. You are allowed to "roll over" a
distribution or transfer your assets from one individual retirement account to
another without any tax liability. Rollovers between IRAs may be made once per
year and must be accomplished within 60 days after the distribution. Also,
under certain conditions, you may roll over (tax free) all or a portion of a
distribution received from a qualified plan or tax-sheltered annuity in which
you participate or in which your deceased spouse participated. However, strict
limitations apply to such rollovers, and you should seek competent advice in
order to comply with all of the rules governing rollovers.
Most distributions from qualified retirement plans will be subject to a
20% withholding requirement. The 20% withholding can be avoided by directly
transferring the amount of the distribution to an individual retirement account
or to certain other types of retirement plans. You should receive more
information regarding these new withholding rules and whether your distribution
can be transferred to an IRA from the plan administrator prior to receiving
your distribution.
8. Tax Deductibility of Annual Contributions. Although you may make an
IRA contribution within the limitations described above, all or a portion of
your contribution may be nondeductible. No deduction is allowed for a rollover
contribution or transfer. If you are not married and are not an "active
participant" in an employer-sponsored retirement plan, you may make a fully
deductible IRA contribution in any amount up to $2,000 or 100% of your
compensation for the year, whichever is less. The same limits apply if you are
married and file a joint return with your spouse and neither you nor your
spouse is an "active participant" in an employer-sponsored retirement plan.
An employer-sponsored retirement plan includes any of the following types
of retirement plans:
- a qualified pension, profit-sharing, or stock bonus plan established
in accordance with IRC 401(a) or 401(k),
- a Simplified Employee Pension Plan (SEP) (IRC 408(k)),
- a deferred compensation plan maintained by a governmental unit or
agency,
- tax-sheltered annuities and custodial accounts (IRC 403(b) and
403(b)(7)),
- a qualified annuity plan under IRC Section 403(a).
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<PAGE> 3
Generally, you are considered an "active participant" in a defined
contribution plan if an employer contribution or forfeiture was credited to
your account during the year. You are considered an "active participant" in a
defined benefit plan if you are eligible to participate in a plan, even though
you elect not to participate. You are also treated as an "active participant"
if you make a voluntary or mandatory contribution to any type of plan, even if
your employer makes no contribution to the plan.
If you (or your spouse, if filing a joint tax return) are covered by an
employer-sponsored retirement plan, your IRA contribution is fully deductible
if your adjusted gross income (or combined income if you file a joint tax
return) does not exceed certain limits. For this purpose adjusted gross income
is not modified to take into account any deduction for IRA contributions, but
does take into account the passive loss limitations under Code Section 86 and
any taxable benefits under the Social Security Act and the Railroad Retirement
Act.
If you (or your spouse, if filing a joint tax return) are covered by an
employer-sponsored retirement plan, the deduction for your IRA contribution is
reduced proportionately for adjusted gross income which exceeds the applicable
dollar amount. The applicable dollar amount for an individual is $25,000 and
$40,000 for married couples filing a joint tax return. The applicable dollar
limit for married individuals filing separate returns if $0. If your adjusted
gross income exceeds the applicable dollar amount by $10,000 or less, you may
make a deductible IRA contribution. The deductible amount, however, will be
less than $2,000.
To determine the amount of your deductible contribution, use the following
calculations:
(a) Subtract the applicable dollar
amount from your adjusted gross income. If
the result is $10,000 or more, you can only
make a nondeductible contribution to your
IRA.
(b) Divide the above figure by
$10,000, and multiply that percentage by
$2,000.
(c) Subtract the dollar amount
(result from #2 above) from $2,000 to
determine the amount which is deductible.
If the deduction limit is not a multiple of $10 then it should be rounded
up to the next $10. There is a $200 minimum floor on the deduction limit if
your adjusted gross income does not exceed $35,000 (for a single taxpayer),
$50,000 (for married taxpayers filing jointly) or $10,000 (for a married
taxpayer filing separately).
Even if your income exceeds the limits described above, you may make a
contribution to your IRA up to the contribution limitations described in
Section 5 above. To the extent
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<PAGE> 4
that your contribution exceeds the deductible limits, it will be nondeductible.
However, earnings on all IRA contributions are tax deferred until distribution.
9. Excess Contributions. Contributions which exceed the allowable
maximum for federal income tax purposes are treated as excess contributions. A
nondeductible penalty tax of 6% of the excess amount contributed will be added
to your income tax for each year in which the excess contribution remains in
your account.
10. Correction of Excess Contribution. If you make a contribution in
excess of your allowable maximum, you may correct the excess contribution and
avoid the 6% penalty tax for that year by withdrawing the excess contribution
and its earnings on or before the date, including extensions, for filing your
tax return for the tax year for which the contribution was made. Any earnings
on the withdrawn excess contribution will be taxable in the year the excess
contribution was made and may be subject to a 10% early distribution penalty
tax if you are under age 59 1/2. In addition, in certain cases an excess
contribution may be withdrawn after the time for filing your tax return.
Finally, excess contributions for one year may be carried forward and applied
against the contribution limitation in succeeding years.
11. Simplified Employee Pension Plan. Your IRA may be used as part of a
Simplified Employee Pension Plan established by your employer. Your employer
may contribute to your IRA/SEP up to a maximum of 15% of your compensation or
$30,000, whichever is less. If your SEP Plan permits, you may also elect to
have your employer make salary reduction contributions of up to $9,500 for 1996
(adjusted periodically for cost of living increases) per year to your IRA.
However, the combination of the employer's contributions and your salary
reduction contributions may not exceed the lesser of 15% of your compensation
or $30,000. It is your responsibility and that of your employer to see that
contributions in excess of normal IRA limits are made under a valid Simplified
Employee Pension Plan and are, therefore, proper.
12. Form of Distributions. Distributions may be made in any one of three
methods:
(a) a lump-sum distribution,
(b) installments over a period not extending beyond your life
expectancy (as determined by actuarial tables), or
(c) installments over a period not extending beyond the joint life
expectancy of you and your designated beneficiary (as determined by
actuarial tables).
You may also use your account balance to purchase an annuity contract, in
which case your custodial account will terminate.
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<PAGE> 5
13. Latest Time to Withdraw. You must begin receiving the assets in your
account no later than April 1 following the calendar year in which you reach
age 70-1/2 (your "required beginning date"). In general, the minimum amount
that must be distributed each year is equal to the amount obtained by dividing
the balance in your IRA on the last day of the prior year (or the last day of
the year prior to the year in which you attain age 70-1/2) by your life
expectancy, the joint life expectancy of you and your beneficiary, or the
specified payment term, whichever is applicable. A federal tax penalty may be
imposed against you if the required minimum distribution is not made for the
year you reach age 70-1/2 and for each year thereafter. The penalty is equal
to 50% of the amount by which the actual distribution is less than the required
minimum.
Unless you or your spouse elects otherwise, your life expectancy and/or
the life expectancy of your spouse will be recalculated annually. An election
not to recalculate life expectancy(ies) is irrevocable and will apply to all
subsequent years. The life expectancy of a nonspouse beneficiary may not be
recalculated.
If you have two or more IRAs, you may satisfy the minimum distribution
requirements by receiving a distribution from one of your IRAs in an amount
sufficient to satisfy the minimum distribution requirements for your other
IRAs. You must still calculate the required minimum distribution separately
for each IRA, but then such amounts may be totalled and the total distribution
taken from one or more of your individual IRAs.
Distribution from your IRA must satisfy the special "incidental death
benefit" rules of the Internal Revenue Code. These provisions set forth
certain limitations on the joint life expectancy of you and your beneficiary.
If your beneficiary is not your spouse, your beneficiary will be generally
considered to be no more than 10 years younger than you for the purpose of
calculating the minimum amount that must be distributed.
14. Distribution of Account Assets After Death. If you die before
receiving the balance of your account, distribution of your remaining account
balance is subject to several special rules. If you die on or after your
required beginning date, distribution must continue in a method at least as
rapid as under the method of distribution in effect at your death. If you die
before your required beginning date, your remaining interest will, at the
election of your beneficiary or beneficiaries, (i) be distributed by December
31 of the year in which occurs the fifth anniversary of your death, or (ii)
commence to be distributed by December 31 of the year following your death over
a period not exceeding the life or life expectancy of your designated
beneficiary or beneficiaries.
Two additional distribution options are available if your spouse is the
beneficiary: (i) payments to your spouse may commence as late as December 31
of the year you would have attained age 70-1/2 and be distributed over a period
not exceeding the life or life expectancy of your spouse, or (ii) your spouse
can simply elect to treat your IRA as his or her own, in which case
distributions will be required to commence by April 1 following the calendar
year in which your spouse attains age 70-1/2.
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<PAGE> 6
15. Tax Treatment of Distributions. Amounts distributed to you are
generally includable in your gross income in the taxable year you receive them
and are taxable as ordinary income. To the extent, however, that any part of a
distribution constitutes a return of your nondeductible contributions, it will
not be included in your income. The amount of any distribution excludable from
income is the portion that bears the same ratio as your aggregate nondeductible
contributions bear to the balance of your IRA at the end of the year
(calculated after adding back distributions during the year). For this
purpose, all of your IRAs are treated as single IRA. Furthermore, all
distributions from an IRA during a taxable year are to be treated as one
distribution. The aggregate amount of distributions excludable from income for
all years cannot exceed the aggregate nondeductible contributions for all
calendar years.
No distribution to you or anyone else from your account can qualify for
capital gains treatment under the federal income tax laws. Similarly, you are
not entitled to the special five- or ten-year averaging rule for lump-sum
distributions available to persons receiving distributions from certain other
types of retirement plans. All distributions are taxed to the recipient as
ordinary income except the portion of a distribution which represents a return
of nondeductible contributions.
Any distribution which is properly rolled over will not be includable in
your gross income.
16. Early Distributions. Distributions from your IRA made before age
59-1/2 will be subject to a 10% nondeductible penalty tax unless the
distribution is a return of nondeductible contributions or is made because of
your death, disability, as part of a series of substantially equal periodic
payments over your life expectancy or the joint life expectancy of you and your
beneficiary, or the distribution is an exempt withdrawal of an excess
contribution. The penalty tax may also be avoided if the distribution is
rolled over to another individual retirement account.
17. Qualification of Plan. Your Individual Retirement Account Plan has
been approved as to form by the Internal Revenue Service. The Internal Revenue
Service approval is a determination only as to the form of the Plan and does
not represent a determination of the merits of the Plan as adopted by you. You
may obtain further information with respect to your Individual Retirement
Account from any district office of the Internal Revenue Service.
18. Prohibited Transactions. If you engage in a "prohibited transaction,"
as defined in section 4975 of the Internal Revenue Code, your account will be
disqualified, and the entire balance in your account will be treated as if
distributed to you and will be taxable to you as ordinary income. Examples of
prohibited transactions are:
(a) the sale, exchange, or leasing of any property between
you and your account,
6
<PAGE> 7
(b) the lending of money or other extensions of credit
between you and your account,
(c) the furnishing of goods, services, or facilities between
you and your account.
If you are under age 59-1/2, you may also be subject to the 10% penalty tax on
early distributions.
19. Penalty for Pledging Account. If you use (pledge) all or part of your
IRA as security for a loan, then the portion so pledged will be treated as if
distributed to you and will be taxable to you as ordinary income during the
year in which you make such pledge. The 10% penalty tax on early distributions
may also apply.
20. Reporting for Tax Purposes. Deductible contributions to your IRA may
be claimed as a deduction on your IRS form 1040 for the taxable year
contributed. If any nondeductible contributions are made by you during a tax
year, such amounts must be reported on Form 8606 and attached to your Federal
Income Tax Return for the year contributed. If you report a nondeductible
contribution to your IRA and do not make the contribution, you will be subject
to a $100 penalty for each overstatement unless a reasonable cause is shown for
not contributing. Other reporting will be required by you in the event that
special taxes or penalties described herein are due. You must also file
Treasury Form 5329 with the IRS for each taxable year in which the contribution
limits are exceeded, a premature distribution takes place, or less than the
required minimum amount is distributed from your IRA.
21. Allocation of Earnings. The method of computing and allocating annual
earnings is set forth in Article VIII, Section 1 of the Individual Retirement
Account Custodial Agreement. The growth in value of your IRA is neither
guaranteed or projected.
22. Income Tax Withholding. You must indicate on distribution requests
whether or not federal income taxes should be withheld. Redemption request not
indicating an election not to have federal income tax withheld will be subject
to withholding.
23. Other Information. Information about the shares of each mutual fund
available for investment by your IRA must be furnished to you in the form of a
prospectus governed by rules of the Securities and Exchange Commission. Please
refer to the prospectus for detailed information concerning your mutual fund.
You may obtain further information concerning IRAs from any District Office of
the Internal Revenue Service.
Fees and other expenses of maintaining your account may be charged to you
or your account. The Custodian's fee schedule as of the date you establish the
IRA is included as part of these materials.
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<PAGE> 1
EXHIBIT 15
PLAN OF DISTRIBUTION
OF
BREMER INVESTMENT FUNDS, INC.
WHEREAS, Bremer Investment Funds, Inc. (the "Fund") intends to register as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, the Fund intends to act as a distributor, as defined in Rule
12b-1 under the Act, of shares of its Common Stock, $.0001 par value ("Common
Stock"), of the portfolios of the Fund, as now in existence or hereinafter
created from time to time (each a "Portfolio") and desires to adopt a
distribution plan pursuant to Rule 12b-1, and the Board of Directors has
determined that there is a reasonable likelihood that adoption of this Plan of
Distribution will benefit the Fund and its shareholders; and
WHEREAS, the Fund may enter into agreements with dealers and other
financial service organizations to obtain various distribution and shareholder
services for the Fund, all as permitted and contemplated by Rule 12b-1 under
the Act; it being understood that any activity which the Fund may finance
without a Rule 12b-1 plan may be financed outside such a plan and not subject
to its limitations.
NOW, THEREFORE, the Fund hereby adopts this Plan of Distribution (the
"Plan") in accordance with Rule 12b-1 under the Act on the following terms and
conditions:
1. Distribution and Service Fee. The Fund may charge a distribution
expense and service fee on an annualized basis of 0.25% of the Fund's average
daily net assets. Such fee shall be calculated and accrued daily and paid at
such intervals as the Board of Directors of the Fund shall determine, subject
to any applicable restriction imposed by rules of the National Association of
Securities Dealers, Inc.
2. Permitted Expenditures. The amount set forth in paragraph 1 of this
Plan shall be paid for services or expenses primarily intended to result in the
sale of the Fund's shares. Expenses incurred in one year may be carried
forward and paid from amounts available in future years. The Fund may pay all
or a portion of this fee to any securities dealer, financial institution or any
other person who renders personal service to shareholders, assists in the
maintenance of shareholder accounts or who renders assistance in distributing
or promoting the sale of the Fund's shares pursuant to a written agreement
approved by the Board of Directors. To the extent such fee is not paid to such
persons, the Fund may use the fee for its expenses of distribution of its
shares including, but not limited to, payment by the Fund of the cost of
preparing, printing and distributing Prospectuses and Statements of Additional
Information to prospective investors and of implementing and operating the Plan
as well as payment of capital or other expenses of associated equipment, rent,
salaries, bonuses, interest and other overhead costs.
<PAGE> 2
3. Effective Date of Plan. This Plan shall not take effect with respect
to a Portfolio until (a) it has been approved by a vote of at least a majority
(as defined in the Act) of the outstanding shares of Common Stock of such
Portfolio and (b) (together with any related agreements) by votes of a majority
of both (i) the Board of Directors of the Fund and (ii) those Directors of the
Fund who are not "interested persons" of the Fund (as defined in the Act) and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it (the "Qualified Directors"), cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
4. Continuance. Unless otherwise terminated pursuant to paragraph 6
below, this Plan shall continue in effect for as long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in paragraph 3(b).
5. Reports. Any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to this Plan or any related agreement
shall provide to the Fund's Board of Directors and the Board shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
6. Termination. This Plan may be terminated at any time by vote of a
majority of the Qualified Directors, or by a vote of a majority of the
outstanding shares of Common Stock.
7. Related Agreements. All agreements with any person relating to
implementation of this Plan shall be in writing, and any agreement related to
this Plan shall provide (a) that such agreement may be terminated at any time
with respect to any Portfolio, without payment of any penalty, by a vote of a
majority of the Qualified Directors or by the vote of shareholders holding a
majority of the Portfolio's outstanding shares, on not more than 60 days'
written notice to any other party to the agreement; and (b) that such agreement
shall terminate automatically in the event of its assignment.
8. Amendments. This Plan may not be amended to increase materially the
amount of payments provided for in paragraph 1 hereof unless such amendment is
approved in the manner provided for initial approval in paragraph 3 hereof. No
other amendment to the Plan may be made unless approved in the manner provided
for approval of this Plan in paragraph 3(b).
9. Selection of Directors. While this Plan is in effect, the selection
and nomination of Directors who are not interested persons (as defined in the
Act) of the Fund shall be committed to the discretion of the Directors who are
not interested persons.
10. Records. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 5 hereof, for a period of
not less than six years from the date of this Plan, the agreements or such
report, as the case may be, the first two years in an easily accessible place.
[END OF PLAN]
2
