UNITED STATES File No.333-16033
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 File No. 811-07921
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _2__
Post-Effective Amendment No. ___
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. _2__
The Bjurman Funds
(Exact name of Registrant as Specified in Charter)
10100 Santa Monica Boulevard, Suite 1200
Los Angeles, California 90067-4103
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code(310) 553-6577
G. Andrew Bjurman, Co-President
O. Thomas Barry, III, Co-President
The Bjurman Funds
10100 Santa Monica Boulevard, Suite 1200
Los Angeles, California 90067-4103
(Name and Address of Agent for Service)
COPIES TO:
Julie Allecta, Esq. Joseph M. O'Donnell, Esq.
Heller Ehrman White & McAuliffe FPS Services, Inc.
333 Bush Street 3200 Horizon Drive, P.O. Box 61503
San Francisco, CA 94104-2878 King of Prussia, PA 19406-0903
Approximate date of proposed public offering:
As soon as practicable after the effective date of this Registration
Statement.
________________________________________________________________
Registrant hereby elects to register an indefinite number of shares
of its securities under this Registration Statement pursuant to Rule
24f-2 of the Investment Company Act of 1940, as amended. Registrant
will file a Notice pursuant to Rule 24f-2 within two months after the
fiscal year end.
________________________________________________________________
Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until
this Registration Statement shall become effective on such date as
the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
As filed with the U.S. Securities and Exchange
Commission on March 26, 1997<PAGE>
TABLE OF CONTENTS
Registration Statement of The Bjurman Funds
Page
1. Cross-Reference Sheet. . . . . . . . . . . . . .
2. Bjurman Micro-Cap Growth Fund
Part A - Prospectus. . . . . . . . . . . . . . .
3. Bjurman Micro-Cap Growth Fund Part B-
Combined Statement of Additional Information .
4. Bjurman Micro-Cap Growth Fund-
Part C-Other Information . . . . . . . . . . .
5. Signature Page . . . . . . . . . . . . . . . .
6. Index to Exhibits. . . . . . . . . . . . . . .
<PAGE>
THE BJURMAN FUNDS
CROSS REFERENCE SHEET PURSUANT TO RULE 481a
Form N-1A Item Caption in Prospectus
Part A INFORMATION REQUIRED IN A PROSPECTUS
1. Cover Page Cover Page of Prospectus
2. Synopsis Prospectus Summary; Expense
Summary
3. Condensed Financial
Information *
4. General Description of
Registrant Investment Objective;
Investment Policies and
Strategies; Investment
Selection Process; Risk
Factors; Prospectus
Summary; General Information
5. Management of the Fund Prospectus Summary;
Management of the Fund;
Distribution Plan
5A. Management's Discussion
of Fund Performance *
6. Capital Stock and Other
Securities Prospectus Summary; General
Information; Dividends and
Taxes; Net Asset Value
7. Purchase of Securities Being
Offered Prospectus Summary; How to
Purchase Shares; Shareholder
Services
8. Redemption or Repurchase Prospectus Summary; How to
Redeem Shares
9. Pending Legal Proceedings *
Part B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION
10. Cover Page Cover Page of the Statement
of Additional Information
11. Table of Contents Table of Contents
12. General Information and
History *
13. Investment Objectives and
Policies Investment Policies and
Techniques; Investment
Restrictions; Portfolio
Transactions and Brokerage
Commissions
14. Management of the Fund The Trust and the
Fund; Investment
Advisory and Other Services;
Trustees and Officers
15. Control Persons and
Principal Holders of
Securities *
16. Investment Advisory Investment Advisory and Other
and Other Services Services
17. Brokerage Allocation
and Other Practices Portfolio Transactions and
Brokerage Commissions
18. Capital Stock and
Other Securities Other Information
19. Purchase, Redemption
and Pricing of
Securities Being
Offered Purchases; Redemptions
20. Tax Status Taxes
21. Underwriters Underwriter
22. Calculation of
Performance Data Performance Information
23. Financial Statements Financial Statements
Part C OTHER INFORMATION
Information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C of this
Registration Statement.
* Item is inapplicable at this time or answer is negative.
<PAGE>
Subject to Completion
Preliminary Prospectus Dated March 31, 1997
BJURMAN MICRO-CAP GROWTH FUND
10100 Santa Monica Boulevard, Suite 1200
Los Angeles, California 90067-4103
PROSPECTUS _____________, 1997
Bjurman Micro-Cap Growth Fund (the "Fund") seeks capital appreciation
through investments in the common stocks of smaller companies with
market capitalizations between $30 million and $300 million at the
time of investment.
The Fund is a separate series of shares of The Bjurman Funds (the
"Trust"), an open-end, management investment company commonly known
as a mutual fund. George D. Bjurman & Associates (the "Adviser")
serves as the investment adviser to the Fund. The Adviser's equity
selection process attempts to identify undervalued companies. See
"Investment Process."
The Fund is designed for long-term investors and not as a trading
vehicle, and is not intended to present a complete investment
program. Because the Fund invests in a limited number of smaller
companies, the net asset value or share price of the Fund may be more
volatile than that of other common stock funds.
This Prospectus sets forth concisely the information regarding the
Fund that an investor should know before investing in the Fund.
Please read this Prospectus carefully and retain it for future
reference. A Statement of Additional Information dated March 31,
1997, provides a further discussion of certain areas in this
prospectus which may be of interest to some investors. It has been
filed with the Securities and Exchange Commission and is incorporated
herein by reference. To receive a free copy call (800) 227-7264.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
TABLE OF CONTENTS
Page
Prospectus Summary . . . . . . . . . . . . . . . . . . . .
Expense Summary. . . . . . . . . . . . . . . . . . . . . .
Investment Objective . . . . . . . . . . . . . . . . . . .
Investment Policies and Strategies . . . . . . . . . . . .
Investment Selection Process . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . .
Management of the Fund . . . . . . . . . . . . . . . . . .
The Distribution Plan. . . . . . . . . . . . . . . . . . .
How to Purchase Shares . . . . . . . . . . . . . . . . . .
How to Redeem Shares . . . . . . . . . . . . . . . . . . .
Shareholder Services . . . . . . . . . . . . . . . . . . .
Net Asset Value. . . . . . . . . . . . . . . . . . . . . .
Dividends and Taxes. . . . . . . . . . . . . . . . . . . .
Performance Information. . . . . . . . . . . . . . . . . .
General Information. . . . . . . . . . . . . . . . . . . .
Underwriter: Adviser:
FPS Broker Services, Inc. George D. Bjurman & Associates
3200 Horizon Drive 10100 Santa Monica Boulevard
P.O. Box 61503 Suite 1200
King of Prussia, PA 19406-0903 Los Angeles, CA 90067-4103
(800) 227-7264 (310) 553-6577
(610) 239-4700
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED
IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS UNLAWFUL FOR THE
FUND TO MAKE SUCH AN OFFER OR SOLICITATION. NO SALES REPRESENTATIVE,
DEALER, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS.
<PAGE>
Prospectus Summary
What is the Fund's Investment Objective?
The Fund seeks to achieve capital appreciation through investments in
common stocks of smaller companies with market capitalizations
between $30 million and $300 million at the time of investment. There
can be no assurance that the Fund will be able to achieve its
investment objective. See "Investment Objective."
What are the Permitted Investments?
The Fund intends to invest, under normal market conditions,
substantially all of its assets in the equity securities of U.S.
companies whose total market capitalization at the time of purchase
typically is between $30 million and $300 million and that, in the
opinion of the Adviser, have superior earnings growth
characteristics. See "Investment Objective."
What are the Risks Involved with an Investment in the Fund?
The investment policies of the Fund have certain risks and
considerations of which investors should be aware. The Fund invests
in securities that will fluctuate in value, and therefore investors
should expect the Fund's net asset value per share to fluctuate.
Investing in the common stock of smaller companies within the target
market capitalization involves special risks and considerations not
typically associated with investing in the common stock of larger
companies. The securities of smaller companies are less liquid and
may experience more market price volatility than the securities of
larger companies, and are typically subject to a greater degree of
change in earnings and business prospects than larger, more
established companies. The Fund is a diversified mutual fund.
However, because the Fund's portfolio may contain securities of a
limited number of companies, the Fund may be more sensitive to
changes in the market value of a single issue or industry in its
portfolio and therefore, may present a greater risk than is usually
associated with a more widely diversified mutual fund. See
"Investment Policies and Strategies" and "Risk Factors."
Who is the Investment Adviser?
George D. Bjurman & Associates serves as the investment adviser to
the Fund. See "Expense Summary" and "Management of the Fund."
Who is the Administrator, Transfer Agent and Fund Accounting Agent?
FPS Services, Inc. serves as the administrator, transfer agent, and
fund accounting agent for the Fund. See "Management of the Fund."
Who is the Underwriter?
FPS Broker Services, Inc. serves as the underwriter of the Fund's
shares. See "Management of the Fund."
Is There a Sales Load?
Purchases of shares of the Fund are not subject to a sales charge,
but are subject to annual 12b-1 Plan expenses. See "The Distribution
Plan" and "How to Purchase Shares."
Is There a Minimum Investment?
The minimum initial investment is $5,000 (including IRA and SEP
accounts) and $500 for subsequent investments.
How do I Purchase Shares?
Contact your broker or FPS Services, Inc., listed above. Shares of
the Fund are offered at net asset value per share and are subject to
annual 12b-1 Plan expenses not to exceed 0.25%. See "How to Purchase
Shares."
How do I Sell Back my Shares?
Shares of the Fund may be redeemed at the current net asset value per
share next determined after receipt by FPS Services, Inc. of a
redemption request in proper form. Signature guarantees may be
required for certain redemption requests. See "How to Redeem Shares."
How are Distributions Paid?
Although the investment program is designed for capital appreciation,
some incidental investment income may be generated in the form of
dividends or interest. Substantially all of the net investment
income (exclusive of capital gains) of the Fund will be distributed
in the form of annual dividends. If any capital gains are realized,
substantially all of them will be distributed by the Fund at least
annually. All dividends and distributions are paid in additional
shares unless payment in cash is requested in writing. See
"Dividends and Taxes."<PAGE>
Expense Summary
Shareholder Transaction Expenses:
Maximum sales charge imposed on purchases
(as a percentage of offering price). . . . . . . None
Maximum sales charge imposed on reinvested
dividends (as a percentage of offering price). . None
Deferred sales charge (as a percentage of
original purchase price) . . . . . . . . . . . . None
Redemption fees (as a percentage of
amount redeemed) (1) . . . . . . . . . . . . . . None
(1) If you want to redeem shares by wire transfer, the Fund's
transfer agent charges a fee (currently $9.00) for each wire
redemption. Purchases and redemptions may also be made
through broker-dealers and others who may charge a commission
or other transaction fee for their services.
Annual Fund Operating Expenses:
(as a percentage of average net assets)
Advisory Fees (after fee waivers)(2) . . . . . . . . . . 0.00%
12b-1 Fees . . . . . . . . . . . . . . . . . . . . . . . 0.25%
Other Expenses (3) . . . . . . . . . . . . . . . . . . . 1.55%
Total Fund Operating Expenses (after fee waivers)(3). . 1.80%
(2) The Adviser has, on a voluntary basis, agreed to waive all or
a portion of its fees and to reimburse certain expenses of
the Fund necessary to limit the total operating expenses for
the first year of operations to 1.80% of the Fund's average
net assets. The Adviser reserves the right to terminate this
waiver or any reimbursement at any time after the Fund's
first year, in the Adviser's sole discretion. Absent such
waivers, and presuming first year assets at $20 million,
advisory fees for the Fund would be 1.00% and estimated total
operating expenses would be 2.52% of the Fund's average
daily net assets on an annualized basis. The Adviser has been
engaged in the investment advisory business and providing
investment advice to individuals, trusts and retirement plans
since 1970.
(3) The Fund did not commence operations until March 31, 1997 and
therefore the "Other Expenses" information is based on
estimated operating expenses.
Example
Based on the level of expenses listed above, a 5% annual return and
redemption at the end of each time period, the total expenses
relating to an investment of $1,000 would be as follows (as noted
above, the Fund does not charge any redemption fees):
1 Year $ 18
3 Years $ 57
The foregoing example should not be considered a representation of
past or future expenses. Actual expenses may be more or less than
those shown. The purpose of the expense tables and example is to
assist the investor in understanding the various costs and expenses
that may be directly or indirectly borne by shareholders of the Fund.
Additional information may be found under "Management of the Fund"
and "How to Purchase Shares."
Long-term holders of the Fund may eventually pay more than the
economic equivalent of the maximum front-end load sales charges
otherwise permitted by the Rules of Fair practice of the National
Association of Securities Dealers, Inc. (the "NASD").
INVESTMENT OBJECTIVE
The Fund seeks capital appreciation through investments in common
stocks of companies with market capitalizations typically between $30
million and $300 million at the time of investment. The Adviser
employs a growth-oriented approach to equity investment management
and seeks to outperform market averages over a complete market cycle
by investing in companies that the Adviser believes have above
average earnings prospects.
This objective is fundamental and may not be changed without a vote
of the holders of the majority of the outstanding voting securities
of the Fund. The Fund's investment policies and strategies described
below are not fundamental and may be changed without shareholder
approval. Additional investment policies and the Fund's investment
restrictions are described in the Statement of Additional
Information.
The Adviser believes that a micro-cap fund is best managed when the
fund size is limited; consequently, the Adviser currently intends to
close the Fund to new investors when total assets reach $250 million.
The Adviser may reopen and close the Fund after total assets reach
$250 million.
INVESTMENT POLICIES AND STRATEGIES
The Fund intends to invest, under normal circumstances, substantially
all of its assets in the equity securities of U.S. companies whose
total market capitalization at the time of purchase typically is
between $30 million and $300 million and which, in the opinion of the
Adviser, have superior earnings growth characteristics.
The Adviser may invest in or employ one or more of the following
investment techniques:
Equity Securities: Under normal market conditions, the Fund
will invest at least 80%, of its total assets in equity securities.
Equity securities in which the Fund may invest include common stocks,
preferred stocks, warrants for the purchase of common stock and debt
securities convertible into or exchangeable for common or preferred
stock. A warrant is a security that gives the holder the right, but
not the obligation, to subscribe for newly created securities of the
issuer or a related company at a fixed price either at a certain date
or during a set period.
Illiquid Securities: The Fund's policy is to limit its investment in
illiquid securities to a maximum of 15% of total assets at the time
of purchase. The Securities and Exchange Commission has adopted Rule
144A under the Securities Act of 1933, as amended (the "Securities
Act") which permits the Fund to sell restricted securities to
qualified institutional buyers without limitation. The Adviser,
pursuant to procedures adopted by the Trustees of the Fund, will make
a determination as to the liquidity of each restricted security
purchased by the Fund. If a restricted security is determined to be
"liquid", such security will not be included within the category
"illiquid securities".
Unseasoned Issuers: The Fund may invest in relatively new or
unseasoned companies, which are in their early stages of development,
or small companies positioned in new and emerging industries where
the opportunity for rapid growth is expected to be above average.
Securities of unseasoned companies or small companies present greater
risks than securities of larger, more established companies. See
"Risk Factors."
Futures: The Fund may buy and sell futures contracts to manage its
exposure to changes in securities prices, as an efficient means of
adjusting its overall exposure to certain markets, in an effort to
enhance income, and to protect the value of portfolio securities.
The Fund will not use futures contracts to leverage its assets.
Futures contracts deposits may not exceed 5% of the Fund's assets
(determined at the time of the transaction) and the Fund's total
investment in futures contracts may not exceed 20% of the Fund's
total assets.
Liquidity Management: Pending investment, to meet anticipated
redemption requests, or as a temporary defense measure if the Adviser
determines that market conditions warrant, the Fund may also invest
without limitation in short-term U.S. government obligations, money
market instruments, and repurchase agreements. The Fund may also
purchase bank obligations such as certificates of deposit, bankers'
acceptances, and interest-bearing savings and time deposits issued by
U.S. banks or savings institutions having total assets at the time of
purchase in excess of $1 billion. Short-term obligations will have
short-term debt ratings at the time of purchase in the top two
categories by one or more unaffiliated nationally recognized
statistical rating organizations ("NRSRO's"). Unrated instruments
purchased by the Fund will be of comparable quality as determined by
the Adviser.
Borrowing: The Fund may borrow as a temporary measure for
extraordinary purposes or to facilitate redemptions. The Fund will
not borrow money in excess of one-third of the value of its total
assets. The Fund has no intention of increasing its net income
through borrowing. Any borrowings will be from a bank and will have
asset coverage of at least 300%. In the event that such asset
coverage falls below 300%, the Fund shall, within three days
thereafter (not including Saturday, Sunday or holidays) or such
longer periods as the Securities and Exchange Commission may
prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such
borrowings shall be at least 300%. The Fund will not pledge more
than 10% of its net assets, or issue senior securities, as defined in
the Investment Company Act of 1940, as amended (the "1940 Act"), or
as described herein, except for notes to banks. Investment
securities will not be purchased while the Fund has outstanding
borrowings that exceed 5% of the Fund's net assets.
Lending of Portfolio Securities: The Fund may lend its portfolio
securities on a short-term basis to banks, broker/dealers and other
institutional investors pursuant to agreements requiring that the
loans be continuously secured by collateral equal at all times in
value to at least the market value of the securities loaned. The
Fund will not lend portfolio securities in excess of 33% of the value
of its total assets. There may be risks of delay in receiving
additional collateral or in recovering the securities loaned or even
a loss of rights in the collateral should the borrower of the
securities fail financially. However, loans will be made only to
borrowers deemed by the Adviser to be of good standing and when, in
its judgment, the income to be earned from the loan justifies the
attendant risks.
Repurchase Agreements: The Fund may enter into repurchase agreements
with banks or broker-dealers. Repurchase agreements are considered
under the 1940 Act to be collateralized loans by the Fund to the
seller, secured by the securities transferred to the Fund. In
accordance with requirements under the 1940 Act, repurchase
agreements will be fully collateralized by securities in which the
Fund may directly invest. Such collateral will be marked-to-market
daily. If the seller of the underlying security under the repurchase
agreement should default on its obligation to repurchase the
underlying security, the Fund may experience delay or difficulty in
recovering its cash. To the extent that, in the meantime, the value
of the security purchased has decreased, the Fund could experience a
loss. No more than 15% of the Fund's net assets will be invested in
illiquid securities, including repurchase agreements which have a
maturity of longer than seven days.
INVESTMENT SELECTION PROCESS
The Adviser's equity selection process attempts to identify
undervalued companies with superior earnings growth characteristics.
The selection process starts by screening a stock universe of
approximately 1,900 companies with market capitalizations ranging
from $30 million up to $300 million, using five models which
emphasize both growth and value attributes. The screening factors
include (1) earnings growth, (2) earnings strength, (3) earnings
revision, (4) price/earnings to growth ratio and (5) a price to cash
flow. The next step involves a top-down economic analysis designed
to identify the 10 to 15 most promising industries over the next 12
to 18 months.
Stocks are ranked according to the above five criteria in an attempt
to identify approximately 100 to 190 companies offering the best
growth prospects and selling at attractive prices. The highest
ranking stocks in the most promising industries are then subjected to
additional fundamental and technical research. Generally, the
Adviser attempts to identify profitable companies with capable
management teams, above average reinvestment rates, strong industry
positions, and productive research and development efforts. To
ensure a well diversified portfolio, commitments to any one issue or
industry are generally limited to 5% and 15%, respectively.
The Adviser may also buy unseasoned initial public offerings if the
Adviser has determined that the company's quantitative analysis fits
the above screening criteria.
The Adviser's Investment Policy Committee continually reviews
investment alternatives and implements portfolio changes as
attractive investment opportunities become available. The closing
prices of portfolio issues are reviewed daily. Any position that
has declined 15% from its cost or from its recent high is re-examined
as a potential sale candidate. Additionally, securities of companies
which in the Adviser's opinion have moved into an overvalued range,
or have lost earnings momentum, or are in industries no longer
expected to perform well, are continually evaluated for sale.
The Adviser expects the Fund's portfolio generally will be fully
invested in common stocks of micro-cap companies at all times, with
only minimal holdings in short-term investments.
RISK FACTORS
General
Every investment carries some market risk. In addition to the risks
described below, an investment in the Fund is subject to the inherent
risk that the market prices of the Fund's investments will not
correlate to the Adviser's estimation of fundamental security values
or market trends. Accordingly, the value of an investment in the
Fund will fluctuate over time. An investment in the Fund should be
part of an overall investment strategy. Before investing, please
consider the following special risks in determining the
appropriateness of an investment in the Fund. No assurance can be
given as to the success of the Adviser's investment strategy.
Micro-Cap Sized Companies
The Fund invests in relatively new or unseasoned companies, which are
in their early stages of development, or smaller companies positioned
in new or emerging industries where the opportunity for rapid growth
is expected to be above average. Such smaller companies may present
greater opportunities for capital appreciation but also may involve
greater risk than larger, mature issuers. Since smaller
capitalization companies are generally not as well-known to investors
and have less investor following than larger companies, they may
provide opportunities for greater gains as a result of inefficiencies
in the marketplace. Such smaller companies may have relatively small
revenues and limited product lines, markets, or financial resources,
and their securities may trade less frequently and in more limited
volume, than those of larger, more mature companies. Small companies
may lack depth of management, and may be unable to internally
generate funds necessary for growth or potential development or to
generate such funds through external financing on favorable terms.
In addition, small companies may be developing or marketing new
products or services for which markets are not yet established and
may never become established. As a result, the prices of their
securities may fluctuate more than those of larger issuers. Small
company stocks may exhibit volatile characteristics and may decline
in price as large company stocks rise, or rise in price as large
company stocks decline. An investment in shares of the Fund may be
more volatile than the shares of a fund that invests in larger
capitalization stocks. By maintaining a broadly diversified
portfolio, the Adviser will attempt to reduce this volatility.
Diversification: Diversifying a mutual fund's portfolio can reduce
the inherent risks of investing by limiting the portion of your
investment in any one issuer or industry. Less diversified mutual
funds may be more sensitive to changes in the market value of a
single issuer or industry. The Fund may present greater risk than is
usually associated with widely diversified mutual funds because it
typically invests in the securities of as few as 50-60 issuers.
Therefore, the Fund may not be appropriate as your sole investment.
The Fund should not be considered suitable for investors who are
unable or unwilling to assume the risks of loss inherent in such a
program, nor should investment in the Fund be considered a balanced
or complete investment program. The Fund cannot guarantee it will
achieve its objective.
MANAGEMENT OF THE FUND
The Board of Trustees
The Trust has a Board of Trustees that establishes the Fund's
policies and supervises and reviews the management of the Fund. The
day-to-day operations of the Fund are administered by the officers of
the Trust and by the Adviser pursuant to the terms of the Investment
Advisory Agreement with the Fund. The Trustees review the various
services provided by the Adviser to ensure that the Fund's general
investment policies and programs are followed and that administrative
services are provided to the Fund in a satisfactory manner.
Information pertaining to the Trustees and executive officers is set
forth in the Statement of Additional Information.
The Investment Adviser
George D. Bjurman & Associates serves as the Fund's investment
adviser and manager, and is an investment adviser registered as such
under the Investment Adviser's Act of 1940, as amended ("The Advisers
Act"). The Adviser has been engaged in the investment management
business since 1970, and provides investment advisory services to
individuals and institutional clients. In addition, the Adviser has
acted as sub-adviser to two mutual funds: Voyageur Aggressive
Growth Stock Fund from May 1994 until April 1995 and Mitchell
Hutchins/KP Small Cap Equity Fund from November 1994 until April
1996. The Adviser currently manages $2.5 billion in assets. The
principal business address of the Adviser is 10100 Santa Monica
Boulevard, Suite 1200, Los Angeles, California 90067-4103.
The Adviser makes the investment decisions concerning the assets of
the Fund and continuously reviews, supervises and administers the
Fund's investment programs, subject to the supervision of, and
policies established by, the Trustees of the Fund.
For providing investment advisory services, the Fund pays the Adviser
a monthly fee which is calculated daily by applying an annual rate of
1.00% to the average daily net assets of the Fund. From time to
time, the Adviser may voluntarily waive all or a portion of its
management fee and/or absorb certain expenses of the Fund without
further notification of the commencement or termination of any such
waiver or absorption. Any such waiver or absorption will have the
effect of lowering the overall expense ratio of the Fund and
increasing the Fund's overall return to investors at the time any
such amounts are waived and/or absorbed. The Adviser has voluntarily
agreed to waive all or a portion of its fee, and/or to reimburse
expenses of the Fund, to the extent necessary in order to limit net
operating expenses (including the investment advisory fee) for the
first fiscal year of operations to an annual rate of not more than
1.80% of the Fund's average daily net assets. The Adviser reserves
the right to terminate its voluntary fee waiver and reimbursement at
any time after the Fund's first year, in its sole discretion. Any
reductions in its fee that are made by the Adviser are subject to
reimbursement by the Fund within the following three years, provided
that the Fund is able to effect such reimbursement and remain in
compliance with applicable expense limitations. Any potential
management fee reimbursement will be disclosed in the footnotes to
the Fund's financial statements. The Adviser generally seeks
reimbursement for the oldest reductions and waivers before payment by
the Fund for fees and expenses for the current year. At such time as
it appears probable that the Fund is able to effect such
reimbursement, and such reimbursement is requested by the Adviser
and approved by the Board of Trustees, the amount of reimbursement
that the Fund is able to effect will be accrued as an expense of the
Fund for that current period.
Portfolio Management
Investment decisions for the Fund are made by the Investment
Policy Committee of the Adviser. Management of the Fund is done on a
team basis, and therefore no one member of the investment management
team is primarily responsible for making recommendations for
portfolio transactions.
The Underwriter
FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, P.O. Box
61503, King of Prussia, Pennsylvania 19406-0903, serves as statutory
underwriter pursuant to an Underwriting Agreement. FPSB serves the
limited purpose of facilitating the registration of shares of the
Fund under state securities laws and to assist in the sale of shares.
The Administrator, Transfer Agent and Fund Accountant
FPS Services, Inc. ("FPS"), which has its principal business address
at 3200 Horizon Drive, P.O. Box 61503, King of Prussia, Pennsylvania
19406-0903, serves as administrator pursuant to an Administrative
Services Agreement. Under this agreement, FPS provides the Fund with
administrative services, including regulatory reporting and all
necessary office space, equipment, personnel and facilities.
In addition, FPS serves as the Fund's transfer agent. As transfer
agent, it maintains the records of each shareholder's account,
answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
disbursing agent and performs other shareholder service functions.
FPS also serves as fund accountant and performs certain accounting
and pricing services for the Fund, including the daily calculation of
the Fund's net asset value per share.
The Custodian
The Bank of New York, 48 Wall Street, New York, New York, 10286,
serves as custodian for the safekeeping of securities, cash and other
assets of the Fund.
Fund Expenses
The Fund may incur expenses which may include, but are not limited
to: insurance premiums; Trustee's fees; audit fees; brokerage
commissions, Custodian, administrator, transfer agent or other
service provider's fees, costs of obtaining quotations of portfolio
securities, trade association membership fees, and pricing of Fund
shares.
Other expenses may include, but are not limited to, printing and
postage expenses related to preparing and distributing required
documents such as shareowner reports and prospectuses, SEC
registration fees and state blue sky fees, legal expenses, and
service and distribution fees.
Brokerage
The Adviser will use its best efforts to obtain the best available
price and most favorable execution with respect to all transactions
of the Fund. Most transactions will be effected on a net cost basis
through brokers who make markets in the stock being purchased or
sold. To the extent the Adviser selects a broker on an agency
commission basis, the Adviser generally will seek best price and
execution. Subject to policies established by the Board of Trustees,
however, the Adviser may cause the Fund to pay a broker-dealer a
commission in excess of the amount of commission another
broker-dealer would have charged if the Adviser determines in good
faith that the commission paid was reasonable in relation to the
brokerage or research services provided by such broker-dealer. In
selecting and monitoring broker-dealers, consideration will be given
to the broker-dealer's responsiveness to transaction requests,
execution capability, settlement and clearance capability, its
financial condition and its research capabilities. All commissions
paid are reviewed quarterly by the Board of Trustees of the Trust.
The Fund may invest in securities that are traded exclusively in the
over-the-counter market. When executing transactions in such market,
the Adviser will seek to execute transactions through brokers or
dealers that, in the Adviser's opinion, will provide the best overall
price and execution to the Fund.
Portfolio Turnover
Portfolio securities are sold whenever the Adviser believes it
appropriate, regardless of how long the securities have been held.
Portfolio turnover generally involves some expense to the Fund and a
portfolio turnover in excess of 100% is considered high and increases
the Fund's transaction costs, including brokerage commissions. The
annual portfolio turnover for the Fund is expected to be
approximately 100%, but this turnover rate may be exceeded in the
Adviser's discretion.
THE DISTRIBUTION PLAN
The Board of Trustees of the Fund has adopted a Distribution Plan
(the "Plan") for the shares pursuant to Rule 12b-1 under the 1940
Act. As provided in the Plan, the Fund will pay an annual fee of up
to 0.25% of the average daily net assets to FPSB. From this
amount, the Underwriter may make payments to financial institutions
and intermediaries such as banks, savings and loan associations,
insurance companies, investment counselors, and broker-dealers who
assist in the distribution of shares of the Fund or provide services
to the shareholders of the Fund pursuant to service agreements with
the Fund. The Plan is characterized as a compensation plan because
the distribution fee will be paid to FPSB without regard to the
distribution or shareholder service expenses incurred by the
Underwriter or the amount of payments made to financial institutions
and intermediaries.
The fees paid to FPSB under the Plan are subject to the review and
approval by the Trust's independent Trustees who may reduce the fees
or terminate the Plan at any time.
HOW TO PURCHASE SHARES
General
The Fund offers its shares to the general public on a continuous
basis subject to annual distribution expenses pursuant to Rule 12b-1.
See "The Distribution Plan". Shares of the Fund are offered only to
residents of states in which the shares are registered or qualified
for sale.
Purchase orders for shares of the Fund that are received by FPS in
proper form by the close of regular trading on the New York Stock
Exchange ("NYSE")(currently 4:00 p.m. Eastern time), on any day that
the NYSE is open for trading, will be purchased at the Fund's next
determined net asset value. Orders for Fund shares received
after 4:00 p.m. Eastern time will be purchased at the net asset value
determined on the following business day.
The Fund reserves the right to reject any purchase order and to
suspend the offering of shares of the Fund. The Fund reserves the
right to vary the initial and subsequent investment minimums, or to
waive the minimum investment requirements for any investor.
Purchases By Mail
Shares of the Fund may be purchased initially by completing the
application accompanying this Prospectus and mailing it to FPS,
together with a check payable to "Bjurman Micro-Cap Growth Fund."
The check or money order and application should be mailed to FPS
Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia,
Pennsylvania 19406-0903. If this is an initial purchase, please send
a minimum of $5,000 (including IRA and SEP accounts).
Subsequent investments in an existing account in the Fund may be made
at any time by sending a check payable to "Bjurman Micro-Cap Growth
Fund", c/o FPS Services, Inc., P.O. Box 412797, Kansas City, Missouri
64141-2797. Please enclose the bottom portion of your account
statement, and indicate the amount of the investment. The Fund will
not accept a check which has been endorsed by a third party.
Purchases By Wire Transfer
An investor may make purchases by wire, but, before making an initial
investment by wire, an investor must first telephone FPS at (800)
227-7264 or (610) 239-4600 in order to be assigned an account number.
The investor's name, account number, taxpayer identification number
or Social Security number and address must be specified in the wire.
In addition, an account application should be promptly forwarded to:
FPS Services, Inc., 3200 Horizon Drive, P.O. 61503, King of Prussia,
Pennsylvania 19406-0903. Shareholders that have an account with a
commercial bank that is a member of the Federal Reserve System may
purchase shares of the Fund by requesting their bank to transmit
funds by wire to:
United Missouri Bank KC NA
ABA #10-10-00695
For: FPS Services, Inc.
A/C 98-7037-071-9
FBO "Bjurman Micro-Cap Growth Fund"
Shareholder Name and Account Number
Additional investments may be made at any time through the wire
procedures described above, which must include a shareholder's name
and account number. The shareholder's bank may impose a fee for
investments by wire. The Fund will not be responsible for the
consequence of delays, including delays in the banking or Federal
Reserve wire systems.
Purchases Through Broker-Dealers
The Fund may accept telephone orders only from brokers, financial
institutions or service organizations which have been previously
approved by the Fund. It is the responsibility of such brokers,
financial institutions or service organizations to promptly forward
purchase orders and payments for the same to the Fund. Shares of the
Fund purchased through brokers, financial institutions, service
organizations, banks and bank trust departments, may charge the
shareholder a transaction fee or other fee for their services at the
time of purchase. In addition, the Fund or the Adviser may pay a
service or distribution fee to such financial intermediaries.
Wire orders for shares of the Fund received by dealers prior to 4:00
p.m. Eastern time, and received by FPS before 5:00 p.m. Eastern time
on the same day, are confirmed at that day's net asset value. Dealers
may place orders with the Fund's distributor by calling (800)
227-7264. Orders received by dealers after 4:00 p.m. Eastern time
are confirmed at the net asset value on the following business day.
It is the dealer's obligation to place the order with FPS before 5:00
p.m. Eastern time.
Purchases with Securities
Shares may be purchased by tendering payment in kind in the form of
marketable securities, including but not limited to shares of common
stock, provided the acquisition of such securities is consistent
with the Fund's investment objective and is otherwise acceptable to
the Adviser.
Subsequent Investments
Once an account has been opened, subsequent purchases may be made by
mail, bank wire, automatic investing or direct deposit. The minimum
for subsequent investments is $500. for all accounts. When making
additional investments by mail, please return the bottom portion of a
previous confirmation with your investment in the envelope that is
provided with each confirmation statement. Your check should be made
payable to "Bjurman Micro-Cap Growth Fund" and mailed to FPS
Services, Inc., P.O. Box 412797, Kansas City, Missouri 64141-2797.
Orders to purchase shares are effective on the day FPS receives your
check or money order.
All investments must be made in U.S. dollars, and, to avoid fees and
delays, checks must be drawn only on banks located in the United
States. A charge (minimum of $20) will be imposed if any check used
for the purchase of shares is returned. Investors who purchase Fund
shares by check or money order may not receive redemption proceeds
until there is reasonable belief that the check or money order
cleared, which may take up to 15 calendar days after the purchase
date. The Fund will only accept a check where the Fund is the payee.
The Fund and FPS each reserve the right to reject any purchase order
in whole or in part.
HOW TO REDEEM SHARES
Shareholders may redeem their shares of the Fund without any
redemption charge on any business day that the NYSE is open for
business. Redemptions will be effected at the current net
asset value per share next determined after the receipt by FPS
of a redemption request meeting the requirements
described below.
Redemption By Mail
Shareholders may redeem their shares by submitting a written request
for redemption to FPS Services, Inc., 3200 Horizon Drive, Box 61503,
King of Prussia, Pennsylvania 19406-0903.
A written redemption request to FPS must be in good order which means
that it must: (i) identify the shareholder's account name and account
number; (ii) state the number of shares (or dollar amount) and (iii)
be signed by each registered owner exactly as the shares are
registered. To prevent fraudulent redemptions, FPS requires a
signature guarantee for the signature of each person in whose name an
account is registered for any redemption requests exceeding $10,000
or where proceeds are to be mailed to an address other than the
address of record. A guarantee may be obtained from any commercial
bank, credit union, member firm of a national securities exchange,
registered securities association, clearing agency or savings and
loan association. A credit union must be authorized to issue
signature guarantees. Notary public endorsement will not be
accepted. Signature guarantees will be accepted from any eligible
guarantor institution that participates in a signature guarantee
program. FPS may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees
or guardians and retirement plans.
Redemption By Telephone
Shareholders who have so indicated on the application, or have
subsequently arranged in writing to do so, may redeem shares by
calling FPS at (800) 227-7264 or (610) 239-4600 during normal
business hours. In order to arrange for redemption by wire or
telephone after an account has been opened, or to change the bank or
account designated to receive redemption proceeds, a written request
with a signature guarantee must be sent to the Transfer Agent at the
address listed above, under the caption "Redemption By Mail."
The Fund reserves the right to refuse a wire or telephone redemption
if the Fund believes it is advisable to do so. Procedures for
redeeming Fund shares by wire or telephone may be modified or
terminated at any time.
During periods of unusual economic or market changes, telephone
redemptions may be difficult to implement. In such event,
shareholders should follow the procedures for redemption by mail.
General Redemption Information
A redemption request will not be deemed to be properly received until
FPS receives all required documents in proper form. If you have any
questions with respect to the proper form for redemption requests you
should contact FPS at (800) 227-7264 or (610) 239-4600.
Redemptions will be processed only on a day during which the NYSE is
open for business. Redemptions will be effective at the
current net asset value per share next determined after the receipt
by FPS of a redemption request meeting the requirements described
above. The Fund may, however, delay mailing the proceeds of a
redemption until it is reasonably satisfied that the check used to
pay for the shares has cleared, which may take up to 15 days after
the purchase date. Payment may also be made by wire directly to any
bank previously designated by an investor on his or her new account
application. There is a $9.00 charge for redemptions made by wire to
domestic banks. Wires to foreign or overseas banks may be charged at
higher rates. It should also be noted that banks may impose a fee
for wire services. In addition, there may be fees for redemptions
made through brokers, financial institutions and service
organizations.
Except as noted below, redemption requests received in proper form by
FPS prior to the close of regular trading hours on the NYSE on any
business day on which the Fund calculates its net asset value are
effective as of that day. Redemption requests received after the
close of the NYSE will be effected at the net asset value per share
determined on the next business day following receipt. If a
shareholder's tax identification has not yet been certified at the
time a redemption request is received by the Transfer Agent, the
redemption may be processed subject to a backup withholding tax.
The Fund will satisfy redemption requests for cash to the fullest
extent feasible, as long as such payments would not, in the opinion
of the Board of Trustees, result in the necessity of the Fund to sell
assets under disadvantageous conditions or to the detriment of the
remaining shareholders of the Fund.
Pursuant to the Fund's Trust Instrument, however, payment for shares
redeemed may also be made in kind, or partly in cash and partly
in-kind. The Fund has elected, pursuant to Rule 18f-1 under the 1940
Act, to redeem its shares solely in cash up to the lesser of $250,000
or 1% of the net asset value of the Fund, during any 90-day period
for any one shareholder. Any portfolio securities distributed
in-kind would be in readily marketable securities and valued in the
manner described below. See "Net Asset Value." In the event that an
in-kind distribution is made, a shareholder may incur additional
expenses, such as brokerage commissions, on the sale or other
disposition of the securities received from the Fund. In-kind
payments need not constitute a cross-section of the Fund's portfolio.
The Fund may suspend the right of redemption or postpone the date of
payment for more than seven days during any period when (1) trading
on the NYSE is restricted or the NYSE is closed, other than customary
weekend and holiday closings; (2) the Securities and Exchange
Commission has, by order, permitted such suspension; (3) an
emergency, as defined by rules of the Securities and Exchange
Commission, exists making disposal of portfolio investments or
determination of the value of the net assets of the Fund not
reasonably practicable.
Shares of the Fund may be redeemed through certain brokers, financial
institutions, service organizations, banks, and bank trust
departments who may charge the investor a transaction or other fee
for their services. Such additional transaction fees would not
otherwise be charged if the shares were redeemed directly from the
Fund.
Telephone Transactions
Shareholders who wish to redeem their shares by telephone must first
elect the option, as described above. Neither the Fund nor any of
its service contractors will be liable for any loss or expense in
acting upon telephone instructions that are reasonably believed to be
genuine. In this regard, the Fund and its Transfer Agent require
personal identification information before accepting a telephone
redemption. To the extent that the Fund or its Transfer Agent fail
to use reasonable procedures to verify the genuineness of telephone
instructions, the Fund may be liable for losses due to fraudulent or
unauthorized instructions. The Fund reserves the right to refuse a
telephone redemption if it is believed advisable to do so. Written
confirmation will be provided for all redemption transactions
initiated by telephone. Proceeds from a telephone redemption shall
only be sent to the shareholder's address of record or wired to the
shareholder's bank account.
No purchases of shares may be made by telephone unless made by a
licensed investment professional with whom an agreement has been
signed by the Underwriter.
Minimum Balances
Due to the relatively high cost of maintaining smaller accounts, the
Fund reserves the right to involuntarily redeem shares in any account
at their then-current net asset value (which will be promptly paid to
the shareholder) if at any time the total investment does not have a
value of at least $1,000 as a result of redemptions, but not market
fluctuations. A shareholder will be notified that the value of his
or her account is less than the required minimum and such shareholder
will be allowed at least 60 days to bring the value of his or her
account up to the minimum before the redemption is processed.
SHAREHOLDER SERVICES
The following special services are available to shareholders of the
Fund. There are no charges for the programs noted below and a
shareholder may change or stop these plans at any time by written
notice to the Fund.
Automatic Investment Plan
Once an account has been opened, a shareholder can make additional
monthly purchases of shares of the Fund through an automatic
investment plan. An investor may authorize the automatic withdrawal
of funds from his or her bank account by opening his or her account
with a minimum of $5,000 and completing the appropriate section
on the new account application enclosed with this Prospectus.
Subsequent monthly investments are subject to a minimum required
amount of $500.
Retirement Plans
The Fund is available for investment by pension and profit sharing
plans including Individual Retirement Accounts, SEP, Keogh, 401(k)
and 403(b) plans through which an investor may purchase Fund shares.
For details concerning any of these retirement plans, please call FPS
at (800) 227-7264 or (610) 239-4700.
NET ASSET VALUE
The net asset value per share is computed once daily as of the close
of regular trading on the NYSE, currently 4:00 p.m. Eastern time.
The net asset value per share is computed by adding the value of all
securities and other assets in the portfolio, deducting any
liabilities, and dividing by the total number of outstanding shares.
Expenses are accrued daily and applied when determining the net asset
value. The Fund's equity securities are valued based on market
quotations or, when no market quotations are available, at fair value
as determined in good faith by, or under the direction of, the Board
of Trustees. Market quotations are generally the last reported sales
price on the principal exchange on which the security trades, or if
no sale price is reported, the mean of the latest bid and asked price
is used. Securities traded over-the-counter are priced at the mean
of the latest bid and asked prices. When market quotations are not
readily available, securities and other assets are valued at fair
value as determined in good faith by the Board of Trustees.
Securities are valued through valuations obtained from a commercial
pricing service or at the most recent mean of the bid and asked
prices provided by investment dealers in accordance with procedures
established by the Board of Trustees.
Short-term investments having a maturity of 60 days or less are
valued at amortized cost, which the Board of Trustees believes
represents fair value. When a security is valued at amortized cost,
it is valued at its cost when purchased, and thereafter by assuming a
constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market
value of the instrument. In the event the amortized cost valuation
deviates from market quotations in excess of 1/4 of 1%, the Adviser
will immediately inform the chairman of the Trust's Audit Committee.
In the event that the deviation is greater than 1/2 of 1%, the
Adviser will immediately report to the Board of Trustees. All other
securities and other assets are valued at their fair value as
determined in good faith under procedures established by and under
the supervision of the Board of Trustees.
DIVIDENDS AND TAXES
Dividends
The Fund will distribute its net investment income each December.
Any net gain realized from the sale of portfolio securities and net
gains realized from foreign currency transactions are distributed at
least once each year unless losses carried forward from prior years
are used to offset them, in which case no such gain will be
distributed. Such income dividends and capital gain distributions
are reinvested automatically in additional shares at net asset value,
unless a shareholder elects to receive them in cash. Distribution
options may be changed at any time by writing to the Fund prior to a
dividend record date.
Any check tendered in payment of dividends or other distributions
which cannot be delivered by the post office or which remains
uncashed for a period of more than one year may be reinvested in the
shareholder's account at the then-current net asset value, and the
dividend option may be changed from cash to reinvest. Dividends are
reinvested on the ex-dividend date (the "ex-date") at the net asset
value determined at the close of business on that date. Dividends
and distributions are treated the same for tax purposes whether
received in cash or reinvested in additional shares. Please note
that dividend and distributions on shares purchased shortly before
the record date for a dividend or distribution may have the effect of
returning capital although such dividends and distributions are
subject to taxes.
Taxes
The Fund intends to conduct its operations so as to qualify as a
"regulated investment company" for purposes of the Internal Revenue
Code of 1986, a amended (the "Code"), which will relieve the Fund of
any liability for federal income tax to the extent that its earnings
and net realized capital gains are distributed to shareholders. To
so qualify, the Fund must meet certain tests regarding the nature if
its investments and the types of its income, including among other
things, limiting its investments so that, at the close of each
quarter of its taxable year, (i) with respect to 50% of the market
value of its total assets, not more than 5% of the market value of
its total assets will be invested in the securities of any single
issuer, and the Fund will not own more than 10% of the outstanding
voting securities of any single issuer and (ii) not more than 25% of
the market value of the Fund's total assets will be invested in the
securities of any single issuer. The Fund also intends to make
sufficient distributions prior to the end of each calendar year in
order to avoid liability for federal excise tax based on net income.
An investment in the Fund has certain tax consequences, depending on
the type of account. The Fund will distribute all of its net
investment income to shareholders. Distributions are subject to
federal income tax and may also be subject to state and local income
taxes. Distributions are generally taxable when they are paid,
whether in cash or by reinvestment in additional shares, except that
distributions declared in October, November or December and paid in
the following January are taxable as if they were paid on December
31. Taxes on distributions to a qualified retirement account are
generally deferred until distributions are made from the retirement
account.
For federal income tax purposes, income dividends and short-term
capital gain distributions are taxed as ordinary income.
Distributions of net long-term capital gains (the excess of net
long-term capital gain over net short-term capital loss) are usually
taxed as long-term capital gains, regardless of how long a
shareholder has held the Fund's shares. The tax treatment of
distributions of ordinary income or capital gains will be the same
whether the shareholder reinvests the distributions or elects to
receive them in cash.
Sale, exchange or redemption of the Fund's shares is a taxable event
to the shareholder.
A Shareholder may be subject to 31 percent back-up withholding on
reportable dividend and redemption payments ("back-up withholding")
if a certified taxpayer identification number is not on file with the
Fund, if the Internal Revenue Service notifies the Fund to implement
back-up withholding for the shareholder, or if to the Fund's
knowledge, an incorrect number has been furnished. An individual's
taxpayer identification number is his or her Social Security Number.
Shareholders will be advised annually of the source and tax status of
all distributions for federal income tax purposes. Information
accompanying a shareholder's statement will show the portion of those
distributions that are not taxable in certain states.
Further information regarding the tax consequences of investing in
the Fund is included in the Statement of Additional Information. The
above discussion is intended for general information only. Investors
should consult their own tax advisers for more specific information
on the tax consequences of particular types of distributions. Heller
Ehrman White & McAuliffe, legal counsel to the Fund, has expressed no
opinion in respect thereof.
PERFORMANCE INFORMATION
Performance information such as total return for the Fund may be
quoted in advertisements or in communications to shareholders. Such
performance information may be useful in reviewing the performance of
the Fund and for providing a basis for comparison with other
investment alternatives. However, because the net investment return
of the Fund changes in response to fluctuations in market conditions,
interest rates and Fund expenses, any given performance quotation
should not be considered representative of the Fund's performance for
any future period. The value of an investment in the Fund will
fluctuate and an investor's shares, when redeemed, may be worth more
or less than their original cost.
The Fund's total return is the change in value of an investment in
the Fund over a particular period, assuming that all distributions
have been reinvested. Thus, total return reflects not only income
earned, but also variations in share prices at the beginning and end
of the period. Average annual return reflects the average percentage
change per year in the value of an investment in the Fund. Aggregate
total return reflects the total percentage change over the stated
period. Please refer to the Statement of Additional Information for
more information on performance.
GENERAL INFORMATION
The Trust
The Trust is a diversified, open-end management investment company
organized as a business trust under the laws of the State of
Delaware. The Trust is organized to offer separate series of shares
and is currently offering a single series of shares called Bjurman
Micro-Cap Growth Fund. Each share of the Fund represents an
undivided proportionate interest in the Fund.
Trustees and Officers of the Fund
The Trustees of the Fund have overall responsibility for the
operation of the Fund. The officers of the Fund who are employees or
officers of the Adviser serve without compensation from the Fund.
Description of Shares
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with no par value. Shares of the Fund represent
equal proportionate interests in the assets of the Fund only, and
have identical voting, dividend, redemption, liquidation and other
rights. All shares issued are fully paid and non-assessable, and
shareholders have no preemptive or other right to subscribe to any
additional shares. The Fund may add additional classes of shares
without shareholder approval. The validity of shares of beneficial
interest offered by this prospectus will be passed on by Heller
Ehrman White & McAuliffe, 333 Bush Street, San Francisco, California
94104-2878. All accounts will be maintained in book entry form and
no share certificates will be issued.
Voting Rights
A shareholder is entitled to one vote for each full share held (and a
fractional vote for each fractional share held). All shares of the
Fund participate equally in regard to dividends, distributions, and
liquidations with respect to the Fund. Shareholders do not have
preemptive, conversion or cumulative voting rights.
Shareholder Meetings
The Trustees are not required, and do not intend, to hold annual
meetings of shareholders. The Trustees have undertaken to the
Securities and Exchange Commission, however, that they will promptly
call a meeting of shareholders for the purpose of voting upon the
question of removal of any Trustee when requested to do so by holders
of not less than 10% of the outstanding shares of the Fund. In
addition, subject to certain conditions, shareholders of the Fund may
apply to the Fund to communicate with other shareholders to request a
shareholders' meeting to vote upon the removal of a Trustee or
Trustees.
Shareholder Reports and Inquiries
The Trust issues unaudited financial information semiannually and
audited financial statements annually. Shareholder inquiries should
be addressed to the Fund c/o George D. Bjurman & Associates, 10100
Santa Monica Boulevard, Suite 1200, Los Angeles, California
90067-4103, or (310) 553-6577. Purchase and redemption transactions
should be made through FPS by calling (800) 227-7264 or (610)
239-4600.
<PAGE>
ACCOUNT APPLICATION FORM
BJURMAN MICRO-CAP GROWTH FUND
A. Initial Investment
Indicate amount of investment:
The minimum initial investment is $5,000 and subsequent purchases
must be at least $500. Amount of Investment: $____________
__ Enclosed is my check (payable to Bjurman Micro-Cap Growth Fund)
__ Bank wire sent (Instructions to be provided upon establishment of
account)
B. REGISTRATION (Please Print)
(Complete one)
__Individual (Use line 1) __Joint Account (use lines 1 & 2)
__Gift/Transfer to Minor (Use lines 3, 4, & 5)
__Corporations, Partnerships, Trusts and Others (Use lines 6 & 7)
1. Individual
First name Initial Last Name
Social Security # U.S. Citizen __ Yes __ No
2. Joint Tenant
First Name Initial Last Name
Social Security # U.S. Citizen __ Yes __ No
Country of Citizenship__________
Check one: __ Joint Tenancy (Right of Survivorship)
__ Tenants in Common
3. Uniform Gift/Transfer to Minors
Custodian's name
________________________ is the custodian for
4. Minor's Name
_________________________ under the
5. State
________________ Uniform Gift/Transfer to Minor Act
Minor's Social Security #
6. Corporations, Partnerships, Trusts and Others
Corporation or Entity name ___________________
Please attach a copy of a Corporate Resolution
Tax ID Number _________________
7. Type of Registration
__ Corporation __ Partnership __ Other sponsored IRA &
Retirement
Plans __ Other
C. MAILING ADDRESS
____________________________________________________________________
Street or P.O. Box City State Zip Code
_____________________________________________________________________
Home Telephone County of residence Daytime Telephone
Duplicate
___________________________________________________________________
Confirmation Street of P.O. Box City State Zip Code
Statement sent
to:_________________________________________________________
Home Telephone Daytime
Telephone
__ Please check here if this is a modification to an existing
account. Existing account number: ______________.
D. DIVIDEND OPTIONS
Check one only: if none are checked all dividend income and
capital gains, if any, will be reinvested.
[ ] All dividend income and capital gains reinvested.
[ ] All dividend income and capital gains paid by check.
[ ] Dividend income paid by check and capital gains reinvested.
E. TELEPHONE PRIVILEGE
Proceeds of telephone redemption requests are paid by check and
mailed to the address of record or wired to your bank account.
I (we)authorize FPS Services, Inc. to act upon instructions
received by telephone from me (us) to redeem shares. Neither the
Fund nor FPS Services. Inc. will be liable for properly acting upon
telephone instructions believed to be genuine. Please attach a voided
personal check and complete below.
Bank Name (Branch Office(if applicable)
_____________________________________________________________________
Bank Addresses City State Zip Code
____________________________________________________________________
Bank Wire Routing Number Bank Account Number
F. CUSTOMER AGREEMENT
1. I(we) have full right, power, authority and legal capacity, and
am(are) of legal age in my (our) state of residence to purchase
shares of the Fund. I (We) affirm that I (we) have received and read
the current prospectus of the Fund and agree to its terms. I(We)
understand the investment objectives and program, and have determined
that the Fund is a suitable investment, based upon my (our)
investment needs and financial situation. I(We) agree that FPS
Services, Inc. or any of their affiliate officers, directors or
employees will not be liable for any loss, expense or cost for acting
upon any instructions or inquiries believed genuine.
2. I(We) understand and acknowledge that a return on the selected
fund(s) is not guaranteed.
3. This Agreement shall be governed by the laws of the Commonwealth
of Pennsylvania.
G. SIGNATURES
Taxpayer Identification Number Certification. Under penalties of
perjury, I(we) certify the following:
1. I(We) certify that the number shown on this form is my(our)
correct tax identification number.
2. I(We) am not (are not) subject to back-up withholding as a result
of a failure to report all interest and dividends, or the Internal
Revenue Service has notified me (us) that I (we) are no longer
subject to back-up withholding.
The Internal Revenue Service does not require your consent to any
provisions of this document other than the certifications required to
avoid back-up withholding.
__________________________________________________ _____
Signature Date
And Back-up
_____________________________________________________________
Withholding Individual (or Custodian) Date Joint Registration,
if any
_______________________________________________________________
Corporate Officer, Partner, Trustee, etc. Date Title
__ Check box if you have been notified by the IRS that you are
subject to back-up withholding.
Mail completed application forms to:
Bjurman Micro-Cap Growth Fund
3200 Horizon Boulevard
P.O. Box 61503
King of Prussia, PA 19406-0903
For assistance call (800) 227-7264
<PAGE>
INVESTMENT ADVISER
George D. Bjurman & Associates
10100 Santa Monica Boulevard, Suite 1200
Los Angeles, California 90067-4103
(310) 553-6577
UNDERWRITER
FPS Broker Services, Inc.
3200 Horizon Drive, P.O. Box 61503
King of Prussia, Pennsylvania 19406-0903
(800) 227-7264
(610) 239-4700
SHAREHOLDER SERVICES
FPS Services, Inc.
3200 Horizon Drive, P.O. Box 61503
King Of Prussia, Pennsylvania 19406-0903
(800) 227-7264
(610) 239-4600
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
LEGAL COUNSEL
Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104-2878
AUDITORS
Deloitte & Touche, LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
For Additional Information about Bjurman Micro-Cap Growth Fund call:
(800) 227-7264
(610) 239-4600<PAGE>
Subject to Completion
Preliminary Statement of Additional Information dated
March 31, 1997
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 Statement of
Additional Information does not constitute a prospectus.
The Bjurman Funds
STATEMENT OF ADDITIONAL INFORMATION
March 31, 1997
This Statement of Additional Information dated March 31, 1997 is
not a prospectus but should be read in conjunction with the separate
Prospectus describing shares of the Bjurman Micro-Cap Growth Fund
(the "Fund") dated March 31, 1997. The Prospectus may be amended or
supplemented from time to time. No investment in shares should be
made without first reading the Prospectus. This Statement
of Additional Information is intended to provide additional
information regarding the activities and operations of the Fund . A
copy of the Prospectus may be obtained without charge from George D.
Bjurman & Associates (the "Adviser") at the address and telephone
numbers below.
Underwriter: Adviser:
FPS Broker Services, Inc. George D. Bjurman & Associates
3200 Horizon Drive 10100 Santa Monica Boulevard
P.O. Box 61503 Suite 1200
King of Prussia, PA 19406-0903 Los Angeles, CA 0067-4103
(610) 239-4700 (310) 553-6577
(800) 227-7264
No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional
Information or in the Prospectus in connection with the offering made
by the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by
the Trust or its distributor. The Prospectus does not constitute an
offering by the Trust or by the distributor in any jurisdiction in
which such offering may not lawfully be made.<PAGE>
TABLE OF CONTENTS
Page
The Trust and the Fund . . . . . . . . . . . . . . . . .
Investment Policies and Techniques
Bankers' Acceptances. . . . . . . . . . . . . . . . .
Certificates of Deposits. . . . . . . . . . . . . . .
Common Stock. . . . . . . . . . . . . . . . . . . . .
Preferred Stock . . . . . . . . . . . . . . . . . . .
Time Deposits . . . . . . . . . . . . . . . . . . . .
Loans of Portfolio Securities . . . . . . . . . . . .
Illiquid Securities . . . . . . . . . . . . . . . . .
Repurchase Agreements . . . . . . . . . . . . . . . .
Rule 144A Securities. . . . . . . . . . . . . . . . .
Other Investments . . . . . . . . . . . . . . . . . .
Investment Restrictions. . . . . . . . . . . . . . . . .
Investment Advisory and Other Services
Investment Adviser . . . . . . . . . . . .
Investment Advisory Agreement . . . . . . . . . . . .
Administrator . . . . . . . . . . . . . . . . . . . .
Underwriter . . . . . . . . . . . . . . . . . . . . .
Trustees and Officers. . . . . . . . . . . . . . . . . .
Net Asset Value. . . . . . . . . . . . . . . . . . . . .
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . .
Portfolio Transactions and Brokerage Commissions . . . .
Performance Information
In General. . . . . . . . . . . . . . . . . . . . . .
Total Return Calculation. . . . . . . . . . . . . . .
Performance and Advertisements . . . . . . . . . . .
Other Information
Limitations on Trustees' Liability. . . . . . . . . .
Independent Accountants . . . . . . . . . . . . . . .
Reports to Shareholders . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . .
<PAGE>
THE TRUST AND THE FUND
This Statement of Additional Information relates to Bjurman Micro-Cap
Growth Fund (the "Fund"), a separate series of The Bjurman Funds (the
"Trust"), an open-end management company established on September 26,
1996 under Delaware law as a Delaware business trust. The Trust
Instrument permits the Trust to offer separate series of shares of
beneficial interest. The Trust is a newly formed entity and has no
prior operating history.
INVESTMENT POLICIES AND TECHNIQUES
The following supplements the information contained in each
respective Prospectus for the Fund regarding the permitted
investments and risk factors and the investment objective and
policies of the Fund.
Bankers' Acceptances:
Negotiable bills of exchange or time drafts drawn on and accepted by
a commercial bank, meaning, in effect, that the bank unconditionally
agrees to pay the face value of the instrument on maturity. Bankers'
Acceptances are used by corporations to finance the shipment and
storage of goods and to furnish dollar exchanges. Banker's
Acceptances generally mature within six months.
Certificates of Deposit:
A negotiable interest-bearing instrument with a specific maturity
date. Certificates of deposit are issued by U.S. commercial banks
and savings and loan institutions in exchange for the deposit of
funds and normally can be traded in the secondary market prior to
maturity. Certificates of deposit generally carry penalties for
early withdrawal.
Common Stock:
Common stock is defined as shares of a corporation that entitle the
holder to a pro rata share of the profits of the corporation, if any,
without a preference over any other shareholder or class of
shareholders, including holders of the corporation's preferred stock
and other senior equity. Common stock usually carries with it the
right to vote, and frequently, an exclusive right to do so. Holders
of common stock also have the right to participate in the remaining
assets of the corporation after all other claims, including those of
debt securities and preferred stock, are paid.
Preferred Stock:
Generally, preferred stock receives dividends prior to distributions
on common stock and usually has a priority of claim over common
stockholders if the issuer of the stock is liquidated. Unlike common
stock, preferred stock does not usually have voting rights; preferred
stock, in some instances, is convertible into common stock. In order
to be payable, dividends on preferred stock must be declared by the
issuer's Board of Directors. Dividends on preferred stock typically
are cumulative, causing dividends to accrue even if not declared by
the Board of Directors. There is, however, no assurance that
dividends will be declared by the Board of Directors of issuers of
the preferred stocks in which the Fund invests.
Time Deposits:
A non-negotiable receipt issued by a bank in exchange for the deposit
of funds. Like a certificate of deposit, it earns a specified rate
of interest over a definite period of time; however, it cannot be
traded in the secondary market. Time deposits in excess of seven
days with a withdrawal penalty are considered to illiquid securities.
The Fund will not invest more than 15% of its net assets in illiquid
securities, including time deposits.
Loans of Portfolio Securities:
The Fund may lend portfolio securities to broker-dealers and
financial institutions provided that (1) the loan is secured
continuously by collateral marked-to-market daily and maintained in
an amount at least equal to the current market value of the
securities loaned; (2) the Fund may call the loan at any time and
receive the securities loaned; (3) the Fund will receive any interest
or dividends paid on the loaned securities and (4) the aggregate
market value of securities loaned by the Fund will not at any time
exceed 33% of the total assets of the Fund.
Collateral will consist of U.S. government securities, cash
equivalents or irrevocable letters of credit. Loans of securities
involve a risk that the borrower may fail to return the securities or
may fail to maintain the proper amount of collateral. Therefore, the
Fund will only enter into portfolio loans after a review by the
Adviser, under the supervision of the Board of Trustees, including a
review of the creditworthiness of the borrower. Such reviews will be
monitored on an ongoing basis.
Illiquid Securities:
The Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Adviser pursuant to guidelines
reviewed by the Board of Trustees. The Adviser will monitor the
liquidity of securities held by the Fund, and report periodically on
such determinations to the Board of Trustees.
Repurchase Agreements:
The financial institutions with whom the Fund may enter into
repurchase agreements are banks and non-bank dealers of U.S.
Government securities that are listed on the Federal Reserve Bank of
New York's list of reporting dealers and banks, if such banks and
non-bank dealers are deemed creditworthy by the Adviser. The Adviser
will continue to monitor the creditworthiness of the seller under a
repurchase agreement, and will require the seller to maintain during
the term of the agreement the value of the securities subject to the
agreement at not less than the repurchase price. The Fund will only
enter into a repurchase agreement where the market value of the
underlying security, including accrued interest, will at all times be
equal to or exceed the value of the repurchase agreement.
Rule 144A Securities:
The Fund may invest in securities that are exempt from the
registration requirements of the Securities Act of 1933, as amended
(the "Securities Act") pursuant to Securities and Exchange
Commission ("SEC") Rule 144A. Those securities, purchased pursuant
to Rule 144A, are traded among qualified institutional buyers, and
are subject to the Fund's limitation on illiquid investment.
Investing in securities under Rule 144A could have the effect of
increasing the levels of the Fund's illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in
purchasing these securities. The Fund will limit its investments in
illiquid securities including securities of issuers which the Fund is
restricted from selling to the public without registration under the
Securities Act to no more than 15% of the Fund's net assets
(excluding restricted securities eligible for resale pursuant to Rule
144A that have been determined to be liquid by the Fund's Board of
Trustees).
Other Investments:
Subject to prior disclosure to shareholders, the Board of Trustees
may, in the future, authorize the Fund to invest in securities other
than those listed here and in the prospectus, provided that such
investment would be consistent with the Fund's investment objective,
and that it would not violate any fundamental investment policies or
restrictions applicable to the Fund.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are only fundamental
restrictions and may not be changed without the approval of a
majority of the outstanding voting shares (as defined in the
Investment Company Act of 1940, as amended (the "1940 Act") of the
Fund. Unless otherwise indicated, all percentage limitations listed
below apply at the time of the transaction only. Accordingly, if a
percentage restriction is adhered to at the time of investment, a
later increase or decrease in the percentage which results from a
relative change in values or from a change in the Fund's total assets
will not be considered a violation.
The Adviser will use "FactSet" computer software to catagorize the
industries in which the Fund invests ("FactSet Codes"). The FactSet
Codes that are assigned may or may not correspond to the Standard
Industry Codes ("SIC Codes"); however, the Adviser feels that the
differences are not substantial enough to effect the percentage of
asset restrictions above. In most cases the SIC Codes will match the
FactSet Codes.
Except as set forth under "INVESTMENT OBJECTIVE" and "INVESTMENT
POLICIES and STRATEGIES" and "RISK FACTORS" in the Prospectus, the
Fund may not:
1. purchase securities of any one issuer if, as a result,
more than 5% of the Fund's total assets would be invested in
securities of that issuer or the Fund would own or hold more than 10%
of the outstanding voting securities of that issuer, except that up
to 15% of the Fund's total assets may be invested without regard to
this limitation, and except that this limit does not apply to
securities issued or guaranteed by the U.S. government, its agencies
and instrumentalities or to securities issued by other investment
companies;
2. purchase any security if, as a result of that purchase,
15% or more of the Fund's total assets would be invested in
securities of issuers having their principal business activities in
the same industry, except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its agencies
or instrumentalities;
3. issue senior securities or borrow money, except as
permitted under the 1940 Act and then not in excess of one-third of
the Fund's total assets (including the amount of the senior
securities issued but reduced by any liabilities not constituting
senior securities) at the time of the issuance or borrowing, except
that the Fund may borrow up to an additional 5% of its total assets
(not including the amount borrowed) for temporary or emergency
purposes. The Fund will not purchase securities when borrowings
exceed 5% of its total assets;
4. pledge, hypothecate, mortgage or otherwise encumber its
assets, except in an amount up to one-third of the value of its net
assets but only to secure borrowing for temporary or emergency
purposes, such as to effect redemptions;
5. make loans, except through loans of securities or through
repurchase agreements, provided that, for purposes of this
restriction, the acquisition of bonds, debentures, other debt
securities or instruments, or participations or other interest
therein and investments in government obligations, commercial paper,
certificates of deposit, bankers' acceptances or similar instruments
will not be considered the making of a loan;
6. engage in the business of underwriting the securities of
others, except to the extent that the Fund might be considered an
underwriter under the Federal securities laws in connection with its
disposition of securities; or
7. purchase or sell real estate, except that investments in
securities of issuers that invest in real estate or other instruments
supported by interests in real estate are not subject to this
limitation, and except that the Fund may exercise rights under
agreements relating to such securities, including the right to
enforce security interests to hold real estate acquired by reason of
such enforcement until that real estate can be liquidated in an
orderly manner.
The following investment limitations are not fundamental and may be
changed without shareholder approval. The Fund does not currently
intend to;
(i) engage in uncovered short sales of securities or maintain a
short position;
(ii) purchase securities on margin, except for short-term credit
necessary for clearance of
portfolio transactions;
(iii) purchase securities of other investment companies except as
permitted by the 1940 Act and the rules and regulations thereunder;
(iv) invest in companies for the purpose of exercising control or
management;
(v) invest in oil, gas or mineral exploration or development
programs or leases, except that investment in securities of issuers
that invest in such programs or leases and investments in
asset-backed securities supported by receivables generated by such
programs or leases are not subject to this prohibition; and
(vi) invest more than 5% of its net assets in warrants, including
within that amount no more than 2% in warrants which are not listed
on the New York or American Stock exchanges, except warrants
acquired as a result of its holdings of common stocks.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Adviser
George D. Bjurman & Associates serves as the Fund's investment
adviser and manager, and is an investment adviser registered as such
under the Investment Advisers Act of 1940, as amended. The Adviser
was founded in 1970 and is wholly owned by senior associates and the
Bjurman family. G. Andrew Bjurman and O. Thomas Barry, III own 40%
and 20%, respectively, of the Adviser and as a result may be deemed
to be "control persons" of the Adviser. The Adviser currently has
$2.5 billion in assets under management.
Investment Advisory Agreement
The Fund and the Adviser have entered into an investment advisory
agreement for a two-year period (the "Investment Advisory
Agreement"). The Investment Advisory Agreement provides that the
Adviser shall furnish advice to the Fund with respect to its
investments and shall determine what securities shall be purchased or
sold by the Fund. The prospectus describes the Adviser's duties,
compensation and the allocation of expenses between the Fund and the
Adviser.
The Investment Advisory Agreement provides that the Adviser shall not
be protected against any liability to the Fund or its shareholders by
reason of the Adviser's willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from
reckless disregard of its obligations or duties thereunder.
The continuance of the Investment Advisory Agreement, after the first
two years, must be specifically approved at least annually (i) by the
vote of the Trustees or by a vote of the shareholders of Fund, and
(ii) by the vote of a majority of the Trustees who are not parties to
the Investment Advisory Agreement or "interested persons" of any
party thereto, cast in person at a meeting called for the purpose of
voting on such approval. The Investment Advisory Agreement will
terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Fund,
or by a majority of the outstanding shares of the Fund on 60-days'
written notice to the Adviser.
Administrator
FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of
Prussia, Pennsylvania 19406-0903 (the "Administrator") provides
certain administrative services to the Fund pursuant to an
Administrative Services Agreement.
Under the Administrative Services Agreement, the Administrator: (1)
coordinates with the Custodian and Transfer Agent and monitors the
services they provide to the Fund; (2) coordinates with and monitors
any other third parties furnishing services to the Fund; (3) provides
the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform
administrative and clerical functions; (4) supervises the maintenance
by third parties of such books and records of the Fund as may be
required by applicable federal or state law; (5) prepares and, after
approval by the Fund, files and arranges for the distribution of
proxy materials and periodic reports to shareholders of the Fund as
required by applicable law; (6) prepares and, after approval by the
Fund, arranges for the filing of such registration statements and
other documents with the SEC and other federal and state regulatory
authorities as may be required by applicable law; (7) reviews and
submits to the officers of the Fund for their approval invoices or
other requests for payment of the Fund's expenses and instructs the
Custodian to issue checks in payment thereof; and (8) takes such
other action with respect to the Fund as may be necessary in the
opinion of the Administrator to perform its duties under the
agreement.
Pursuant to this Administrative Services Agreement, FPS receives a
fee computed at the annual rate of 0.15% of the first $50 million of
total average daily net assets, 0.10% of the next $50 million of
total average daily net assets and 0.05% of total net assets in
excess of $100 million. The minimum annual fees under the agreement
shall not be less than $55,000 for the initial series' first class of
shares and $12,000 for each additional separate series or class
thereof.
Underwriter
FPS Broker Services, Inc. ("FPSB"), 3200 Horizon Drive, P.O. Box
61503, King of Prussia, Pennsylvania 19406-0903, has been engaged
pursuant to an agreement for the limited purpose of acting as
statutory underwriter to facilitate the registration of shares of the
Fund under state securities laws and to assist in the sale of shares.
Shares of the Fund are subject to a distribution plan (the
"Distribution Plan") pursuant to Rule 12b-1 under the 1940 Act. As
provided in the Distribution Plan, the Fund will pay an annual fee of
0.25% of the Fund's average daily net assets to FPSB as compensation
for its services. From these amounts, FPSB may make payments to
financial institutions and intermediaries such as banks, savings and
loan associations, insurance companies, investment counselors and
broker-dealers as compensation for services, reimbursement of
expenses incurred in connection with distribution assistance or
provision of shareholder services. The Distribution Plan is
characterized as a compensation plan because the distribution fee
will be paid to FPSB as distributor without regard to the
distribution or shareholder service expenses incurred by FPSB
or the amount of payments made to financial institutions and
intermediaries. The Fund intends to operate the Distribution Plan
in accordance with their terms and within the rules of the National
Association of Securities Dealers, Inc. concerning sales charges.
Pursuant to such rules, the Distributor is required to limit
aggregate initial sales charges and asset-based sales charges to
6.25% of total gross sales of shares.
The Distribution Plan will continue in effect from year to year,
provided that each such continuance is approved at least annually by
a vote of the Board of Trustees, including a majority vote of the
Trustees, cast in person at a meeting called for the purpose of
voting on such continuance. The Distribution Plan may be terminated
at any time, without penalty, by vote of a majority of the
independent trustees or by vote of the holders of a majority of the
outstanding shares of the applicable class on not more than 60-days',
written notice to any other party to the Plan and shall terminate
automatically in the event of its assignment. The Plan may not be
amended to increase materially the amounts to be spent for the
services described herein without approval by the shareholders of the
applicable class, and all material amendments are required to be
approved by the Board of Trustees. The Plan will automatically
terminate in the event of its assignment. Pursuant to the Plan, the
Board of Trustees will review at least quarterly a written report of
the distribution expenses incurred on behalf of each class of shares
of the Fund. The report will include an itemization of the
distribution expenses and the purpose of such expenditures.
TRUSTEES AND OFFICERS
The Trustees and executive officers of the Fund and their principal
occupations for the last five years are set forth below. Each
Trustee who is an "interested person", as that term is defined in the
1940 Act, of the Fund is indicated by an asterisk.
G. Andrew Bjurman and O. Thomas Barry, III share the office of the
presidency of the Trust. They are jointly vested in full executive
authority under the Trust's By-Laws.
NAME AGE POSITION PRINCIPAL
WITH FUND OCCUPATION
G. Andrew
Bjurman* 48 Co-President Mr. Bjurman joined George
George D. Bjurman & Associates
Bjurman & ("GDBA") when it was
Associates founded in 1970 as Vice
10100 Santa Monica President and Portfolio
Boulevard, Suite Manager. At that time he
1200, Los Angeles assumed responsibility for
CA 90067-4103 The portfolio management of
institutional accounts.
From 1974 to 1978 he acted
as Executive Vice President
and Senior Portfolio Manager.
In 1978 he assumed his present
responsibilities as President and
Chief Executive Officer of the
firm. He is currently a member of
the GDBA Investment Policy
Committee. In 1977 he became both
a Chartered Investment
Counselor and Financial Analyst.
_____________________________________________________________________
O. Thomas Barry, 52 Co-President Mr. Barry joined GDBA
III* in 1978 as Vice President
George D. Bjurman and Senior Portfolio
Associates Manager. In 1979 he
10100 Santa Monica became Executive Vice
Boulevard President and he assumed
Suite 1200 the responsibility
Los Angeles, CA of Director of Research.
90067-4103 He is a member of the
Investment Policy Committee.
In 1982 he became the Senior
Executive Vice President and
in 1985 he also became
Director of
Investments. Prior to
joining the firm, Mr. Barry
acted as Senior Investment
Officer and Portfolio
Manager for Security Pacific
National Bank of Los
Angeles and was a member of
the Stock Selection
Committee.
In 1977 he became a
Chartered Financial Analyst
and in 1978 a Chartered
Investment Counselor.
_____________________________________________________________________
Donald W. Hudson, Jr. 51 Trustee Mr. Hudson has been Senior
CB Commercial Chairman Vice President of CB
Real Estate of Audit Commercial Real Estate since
533 South Fremont Committee 1993. Prior to that Mr.
Los Angeles, CA 90071 Hudson was Associate Vice
President of Cushman Realty,
a commercial real estate
firm.
_____________________________________________________________________
Joseph E. Maiolo 58 Trustee Mr. Maiolo is an industrial
INCO Commercial real estate broker/
Brokerage developer. He has been
14700 Firestone owner/broker of Joseph
Boulevard, #111 E. Maiolo & Associates,
La Mirda, CA 90638 Inc. since 1980 and owner/
broker of INCO Commercial
Brokerage and Penta Pacific
Properties, L.A. since
1995.
_____________________________________________________________________
William Wallace* 49 Trustee Mr. Wallace is Vice
Wallace Properties President and owner of
5288 South Franklin Wallace Properties, a
Circle residential real estate
Greenwood Village, business.
CO 80121
_____________________________________________________________________
COMPENSATION TABLE
Trustees and Officers
Estimated Aggregate Estimated total
Compensation from Compensation from
Name of Trust for Fiscal Trust and Fund
Trustee Year End 2/28/98 Complex Paid to Trustees(1)
Joseph E. Maiolo $4,500 $4,500
Donald W. Hudson, Jr. $4,500 $4,500
William Wallace** $4,500 $4,500
G. Andrew Bjurman* $ 0 $ 0
O. Thomas Barry, III* $ 0 $ 0
* This Trustee is considered an "Interested Person" of the Trust as
defined under the 1940 Act.
** This Trustee is considered an "Interested Person" of the Trust,
but not of other parties, as defined under the 1940 Act.
(1) This amount represents the estimated aggregate amount of
compensation paid to the Trustees for service on the Board of
Trustees for the calendar year ending December 31, 1997.
No officer or Trustee of the Trust who is also an officer or employee
of the Adviser receives any compensation from the Trust for services
to the Trust. The Trust pays each Trustee who is not affiliated with
the Adviser a fee of $4,500 per year, and reimburses each Trustee and
officer for out-of-pocket expenses in connection with travel and
attendance at such meetings.
NET ASSET VALUE
The net asset value per share is computed by dividing the value of
the assets of the Fund, less its liabilities, by the number of shares
outstanding.
Portfolio securities are valued and net asset value per share is
determined as of the close of regular trading on the New York Stock
Exchange ("NYSE") which currently is 4:00 p.m. (Eastern Time), on
each day the NYSE is open for trading. The NYSE is open for trading
every day except Saturdays, Sundays and the following holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving and Christmas Day. Additionally, if any
of the aforementioned holidays falls on a Saturday, the NYSE will not
be open for trading on the preceding Friday and when such holiday
falls on a Sunday, the NYSE will not be open for trading on the
succeeding Monday, unless unusual business conditions exist, such as
the ending of a monthly or the yearly accounting period.
TAXES
The following is only a summary of certain federal tax considerations
generally affecting the Fund and its shareholders that are not
described in the Prospectus, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax
advisers with specific reference to their own tax situations,
including their state and local tax liabilities. Heller Ehrman White
& McAuliffe, legal counsel to the Fund, has expressed no opinion in
respect thereof. Non U.S. investors should consult their tax
advisers concerning the tax consequences of ownership of shares of
the Fund, including the possibility that distributions may be subject
to a 30% United States withholding tax.
Federal Income Tax
The following discussion of federal income tax consequences is based
on The Internal Revenue Code of 1986, as amended ("the Code"), court
decisions and published administrative materials from the Internal
Revenue Service and as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative
changes or court decisions, may significantly change the conclusions
expressed herein, and may have a retroactive effect with respect to
the transactions contemplated herein.
The Fund intends to qualify and elect to be treated as a "regulated
investment company" ("RIC") as defined under Subchapter M of the
Code. By doing so, the Fund expects to eliminate or reduce to a
nominal amount the federal income taxes to which it may be subject.
In order to qualify for treatment as a RIC under the Code, the Fund
generally must distribute annually to its shareholders at least 90%
of its investment company taxable income (generally, net investment
income plus net short-term capital gain) (the "Distribution
Requirement") and must meet several additional requirements. Among
these requirements are the following: (i) at least 90% of the Fund's
gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, or certain
other income; (ii) the Fund must derive less than 30% of its gross
income each taxable year from the sale or other disposition of stocks
or securities and certain other assets held for less than three
months; (iii) at the close of each quarter of the Fund's taxable
year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other
securities limited, in respect to any one issuer, to an amount that
does not exceed 5% of the value of the Fund's assets and that does
not represent more than 10% of the outstanding voting securities of
such issuer and (iv) at the close of each quarter of the Fund's
taxable year, not more than 25% of the value of its assets may be
invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar or
related trades or businesses. Notwithstanding the Distribution
Requirement described above, which requires only that the Fund
distribute at least 90% of its annual investment company taxable
income and does not require any minimum distribution of net capital
gain (the excess of net long-term capital gain over net short-term
capital loss), the Fund will be subject to a nondeductible 4% federal
excise tax to the extent that it fails to distribute by the end of
any calendar year 98% of its ordinary income for that year and 98% of
its capital gain net income (the excess of short- and long-term
capital gains over short- and long-term capital losses) for the
one-year period ending on October 31 of that year, plus certain other
amounts. The Fund intends to make sufficient distributions of its
ordinary income and capital gain net income prior to the end of each
calendar year to avoid liability for federal excise tax.
In the case of corporate shareholders, distributions from the Fund
may qualify for the corporate dividends-received deduction to the
extent the Fund designates the amount distributed as a qualifying
dividend. Availability of the dividends-received deduction is
subject to certain holding period and debt-financing limitations.
Distributions of net capital gains (i.e, the excess of net long-term
capital gains over net short-term capital losses) by the Fund are
taxable to the recipient shareholders as a long-term capital gain,
without regard to the length of time a shareholder has held Fund
shares. Capital gain distributions are not eligible for the
dividends-received deduction referred to in the preceding paragraph.
Any gain or loss recognized on a sale, redemption or exchange of
shares of the Fund by a non-exempt shareholder who is not a dealer in
securities generally will be treated as a long-term capital gain or
loss if the shares have been held for more than one year and
otherwise generally will be treated as a short-term capital gain or
loss. If shares of the Fund on which a net capital gain distribution
has been received are subsequently sold, redeemed or exchanged and
such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent
of the long-term capital gain distribution received with respect to
such shares.
In certain cases, the Fund will be required to withhold, and remit to
the United States Treasury, 31% of any distributions paid to a
shareholder who (1) has failed to provide a correct taxpayer
identification number, (2) is subject to backup withholding by the
Internal Revenue Service or (3) has not certified to the Fund that
such shareholder is not subject to backup withholding.
If the Fund fails to qualify as a RIC for any taxable year, it will
be subject to tax on its taxable income at regular corporate rates.
In such an event, distributions from the Fund (to the extent of its
current and accumulated "earnings and profits") generally would be
eligible for the corporate dividends-received deduction for corporate
shareholders.
PORTFOLIO TRANSACTIONS AND BROKERAGE COMMISSIONS
The Fund does not have an obligation to place orders with any
broker/dealer or group of broker/dealers in the execution of
transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser is responsible for placing
the orders to execute transactions for the Fund. In placing orders,
it is the policy of the Fund to seek to obtain the best execution
taking into account such factors as price (including the applicable
dealer spread), the size, type and difficulty of the transaction
involved, the firm's general execution and operational facilities,
the firm's risk in positioning the securities involved, the Adviser's
past experience in placing orders through the firm, and the firm's
research capabilities. While the Adviser generally seeks reasonably
competitive spreads, the Fund will not necessarily be paying the
lowest spread available for a particular transaction.
The Fund and the Adviser may direct portfolio transactions to persons
or firms because of research and investment services provided by such
persons or firms if the commissions or spreads on the transactions
are reasonable in relation to the value of the investment information
provided. Among such research and investment services are those that
brokerage houses customarily provide to institutional investors and
include statistical and economic data and research reports on
companies and industries. Such research provides lawful and
appropriate assistance to the Adviser in the performance of its
investment decision-making responsibilities. The Adviser may use
these services in connection with all of its investment activities,
and some services obtained in connection with the Fund's transactions
may be used in connection with other investment advisory clients of
the Adviser, including other mutual funds and other series of the
Trust, if any.
The Fund may invest in securities that are traded exclusively in the
over-the-counter market. The Fund may also purchase securities
listed on a national securities exchange through the "third market"
(i.e., through markets other than the exchanges on which the
securities are listed). When executing transactions in the
over-the-counter market or the third market, the Adviser will seek to
execute transactions through brokers or dealers that, in the
Adviser's opinion, will provide the best overall price and execution
so that the resultant price to the Fund is as favorable as possible
under prevailing market conditions.
It is not the Fund's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made
through brokers or dealers. However, the Adviser may place portfolio
orders with qualified broker/dealers who recommend the Fund to
clients, and may, when a number of brokers and dealers can provide
best net results on a particular transaction, consider such
recommendations by a broker or dealer in selecting among
broker/dealers.
It is possible that purchases or sales of securities for the Fund
also may be considered for other clients of the Adviser or its
affiliates, including the other series of the Trust, if any. Any
transactions in such securities at or about the same time will be
allocated among the Fund and such other clients in a manner deemed
equitable to all by the Adviser, taking into account the respective
sizes of the Fund and the other clients' accounts, and the amount of
securities to be purchased or sold. It is recognized that it is
possible that in some cases this procedure could have a detrimental
effect on the price or volume of the security so far as the Fund is
concerned. However, in other cases, it is possible that the ability
to participate in volume transactions and to negotiate lower
commissions will be beneficial to the Fund.
PERFORMANCE INFORMATION
In General
From time to time, the Fund may include general comparative
information, such as statistical data regarding inflation, securities
indices or the features or performance of alternative investments, in
advertisements, sales literature and reports to shareholders. The
Fund may also include calculations, such as hypothetical compounding
examples or tax-free compounding examples, which describe
hypothetical investment results in such communications. Such
performance examples will be based on an express set of assumptions
and are not indicative of the performance of the Fund.
From time to time, the total return of the Fund may be quoted in
advertisements, shareholder reports or other communications to
shareholders.
Total Return Calculation
The Fund computes average annual total return by determining the
average annual compounded rate of return during specified periods
that equate the initial amount invested to the ending redeemable
value of such investment. This is done by dividing the ending
redeemable value of a hypothetical $1,000 initial payment by $1,000
and raising the quotient to a power equal to one divided by the
number of years (or fractional portion thereof) covered by the
computation and subtracting one from the result. This calculation
can be expressed as follows:
Average Annual Total Return = P (1 + T)n = ERV
Where: ERV = ending redeemable value at the end of the
period covered by the computation of a hypothetical $1,000 payment
made at the beginning of the period.
P = hypothetical initial payment of
$1,000.
n = period covered by the computation,
expressed in terms of years.
T = average annual total return.
The Fund computes the aggregate total return by determining the
aggregate compounded rate of return during specified periods that
likewise equate the initial amount invested to the ending redeemable
value of such investment. The formula for calculating aggregate
total return is as follows:
Aggregate Total Return = [ (ERV) - 1 ]
P
Where: ERV = ending redeemable value at the end of
the period covered by the computation of
a hypothetical $1,000 payment made at
the beginning of the period.
P = hypothetical initial payment of
$1,000.
The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain
distributions on the reinvestment dates during the period. The
ending redeemable value (variable "ERV" in each formula) is
determined by assuming complete redemption of the hypothetical
investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. Since performance will
fluctuate, performance data for the Fund should not be used to
compare an investment in the Fund's shares with bank deposits,
savings accounts and similar investment alternatives which often
provide an agreed-upon or guaranteed fixed yield for a stated period
of time. Shareholders should remember that performance is generally
a function of the kind and quality of the instruments held in a
portfolio, portfolio maturity, operating expenses and market
conditions.
Performance and Advertisements
From time to time, in marketing and other fund literature, the Fund's
performance may be compared to the performance of other mutual funds
in general or to the performance of particular types of mutual funds
with similar investment goals, as tracked by independent
organizations. Among these organizations, Lipper Analytical
Services, Inc. ("Lipper"), a widely used independent research firm
which ranks mutual funds by overall performance, investment
objectives and assets, may be cited. Lipper performance figures are
based on changes in net asset value, with all income and capital
gains dividends reinvested. Such calculations do not include the
effect of any sales charges imposed by other funds. The Fund will be
compared to Lipper's appropriate fund category, that is, by fund
objective and portfolio holdings. The Fund's performance may also be
compared to the average performance of its Lipper category.
The Fund's performance may also be compared to the performance of
other mutual funds by Morningstar, Inc. ("Morningstar") which ranks
funds on the basis of historical risk and total return.
Morningstar's rankings range from five stars (highest) to one star
(lowest) and represent Morningstar's assessment of the historical
risk level and total return of a fund as a weighted average for
three, five and ten year periods. Ranks are not absolute or
necessarily predictive of future performance.
In assessing such comparisons of yield, return or volatility, an
investor should keep in mind that the composition of the investments
in the reported indices and averages is not identical to those of the
Fund, that the averages are generally unmanaged, and that the items
included in the calculations of such averages may not be identical to
the formula used by the Fund to calculate its figures.
OTHER INFORMATION
Limitation of Trustees' Liability
The Trust Instrument provides that a Trustee shall be personally
liable only to the Trust for any act, omission or obligation of the
Trust or Trustee. A Trustee will not be liable for any act or
omission of any officer, employee, agent or investment advisor of the
Trust. The Trust Instrument also provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses
incurred in connection with actual or threatened litigation in which
they may be involved because of their offices with the Trust unless
it is determined in the manner provided in the Trust Instrument that
they have not acted in good faith in the reasonable belief that their
actions were in the best interests of the Trust. However, nothing in
the Trust Instrument shall protect or indemnify a Trustee against any
liability for his or her willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties. All Trustee's
liability is further subject to the limitations imposed by the 1940
Act.
Independent Accountants
Deloitte & Touche LLP, 1000 Wilshire Boulevard, Los Angeles,
California, 90017-2472, has been selected as the independent
accountants for the Fund. Deloitte & Touch LLP provides audit and tax
services. The books of the Fund will be audited at least once a year
by Deloitte & Touche LLP.
Reports to Shareholders
Shareholders will receive unaudited semi-annual reports describing
the Fund's investment operations and annual financial statements
audited by the Fund's independent certified public accountants.
Inquiries regarding the Fund may be directed to the Adviser at
(310) 553-6577 or FPS at (800) 227-7264.<PAGE>
BJURMAN MICRO-CAP GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
March 25, 1997
<PAGE>
BJURMAN MICRO-CAP GROWTH FUND
Statement of Assets and Liabilities
March 25, 1997
Assets
Cash $100,000
Deferred Organization Costs 65,000
Total Assets $165,000
Liabilities
Accrued Expenses $ 65,000
Net Assets $100,000
Net Assets consist of:
Portfolio shares (unlimited
authorization - no par value) 8,333.334
outstanding shares of beneficial interest
Net asset value, offering and redemption price $12.00
The accompanying notes are an integral part of this financial
statement.<PAGE>
BJURMAN MICRO-CAP GROWTH FUND
Statement of Assets and Liabilities
March 25 ,1997
1. Organization
Bjurman Micro-Cap Growth Fund (the "Fund") is a series of The
Bjurman Funds (the "Trust"). The Trust is organized as a
Delaware Business Trust under a Trust Instrument dated
September 26, 1996 and is registered under the Investment
Company Act of 1940, as amended, as an open-end investment
company offering shares in the Fund. The Trust Instrument
permits the Trust to offer separate classes of shares of
beneficial interest. The Fund has not yet commenced operations
except those related to organizational matters and the sale of
initial shares of beneficial interest to G. Andrew Bjurman and
O. Thomas Barry, III.
The Fund seeks capital appreciation through investments in the
common stocks of smaller companies with market capitalizations
between $30 million and $300 million at the time of investment.
It is the intention of the Fund to qualify and elect treatment
as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), by
complying with the provisions available to certain investment
companies as defined in applicable sections of the Code, and to
make distributions of taxable income to shareholders sufficient
to relieve the fund from all, or substantially all, federal
income tax.
The preparation of the accompanying financial statement in
conformance with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities at the
date of the financial statement. Actual results may differ
from the estimate.
2. Investment Advisory, Management, Distribution and Shareholder
Servicing Agreements
The Trust has entered into the following service agreements:
An Investment Advisory Agreement pursuant to which George D.
Bjurman & Associates (the "Adviser") will act as the
investment adviser to the Fund. For providing investment
advisory services, the Fund will pay the Adviser, monthly, a
fee that is calculated daily at an annual rate of 1% of
average net assets. The Adviser has, on a voluntary basis,
agreed to waive all or a portion of its fees and to reiburse
certain expenses of the Fund necessary to limit the total
operating expenses for the first year of operations to 1.80% of
the Fund's average net assets.
An Administration Agreement pursuant to which FPS Services,
Inc. ("FPS") will provide the Trust with overall management
services. The Trust agrees to pay FPS monthly an asset based
fee calculated at the annual rate of 0.15% on the first $50 million
of average net assets of the Trust, 0.10% on the next
$50 million, and 0.05% for those assets greater than $100
million, subject to a minimum annual fee of $55,000 for the
initial class of shares.
An Underwriting Agreement pursuant to which FPS Broker
Services, Inc. ("FPSB") will serve as the Fund's underwriter.
The Trustees of the Trust have adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended. The Distribution Plan provides for an annual
fee up to 0.25% of the average daily net assets. The Fund
intends to operate the Distribution Plan in accordance with
their terms and within NASD rules concerning sales charges.
A Transfer Agent Services Agreement and Accounting Services
Agreement pursuant to which FPS will act as the transfer agent
and fund accounting service provider for the Trust,
respectively.
3. Deferred Organizational Costs
Organizational costs have been capitalized by the Fund and are
being amortized on a straight line basis over 60 months
commencing with operations. In the event any of the initial
shares are redeemed by the holder thereof during the period
that the Fund is amortizing its organizational costs, the
redemption proceeds payable to the holder thereof by the Fund
will be reduced by the unamortized organizational costs in the
same ratio as the number of initial shares being redeemed bears
to the number of initial shares outstanding at the time of the
redemption.
4. Transactions with Affiliates
The Adviser paid $65,000 of organization costs on behalf of the
Fund.
Certain officers and/or trustees of the Trust are also officers
of the Adviser. The Trust pays each unaffiliated Trustee a fee
for attendance at quarterly, interim and committee meetings.
Compensation of officers and affiliated Trustees of the Trust
is paid by the Adviser.
5. Disclosure of Credit Risk
Cash is held at The Bank of New York. The Fund has a policy of
reviewing, as considered necessary, the credit standing of each
bank with which it conducts business.
<PAGE>
Independent Auditor's Report
To the Shareholders and Board of Trustees of Bjurman Micro-Cap Growth
Fund,
We have audited the accompanying statement of assets and liabilities
of Bjurman Micro-Cap Growth Fund, (the "Fund") of The Bjurman Funds
(the "Trust") as of March 25, 1997. This financial statement is the
responsibility of the Trust's management. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the 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 financial statement referred to above presents
fairly, in all material respects, the financial position of Bjurman
Micro-Cap Growth Fund as of March 25, 1997, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 25, 1997
<PAGE>
The Bjurman Funds
Form N-1A
Part C -- Other Information
Part C. Other Information
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
Included in Part A- None
Included in Part B-
(1) Independent Auditors Report relating to Statement
of Assets and Liabilities at March 25, 1997.
(2) Statement of Assets and Liabilities and related
notes as of March 25, 1997.
(b) Exhibits:
Exhibits filed pursuant to Form N-1A:
(1) Trust Instrument is incorporated by reference to
Exhibit Number (1) of Registration Statement No.333-16033
filed on November 13, 1996.
(2) By-Laws are incorporated by reference to
Exhibit Number (2) of Registration Statement No.333-16033
filed on November 13, 1996. Revised By-Laws reflecting
trust name change are incorporated by reference to Exhibit
Number (2) of Registrant's Pre-Effective Amendment 1 filed
on March 13, 1997.
(3) Voting Trust Agreement -- None
(4) All Instruments Defining the Rights of
Holders--None
(5) Investment Advisory Contracts --Incorporated by
reference to Exhibit Number (5) of Registrant's Pre-Effective
Amendment 1 filed on March 13, 1997.
(6) Underwriting Agreement -- Incorporated by
reference to Exhibit Number (6) of Registrant's Pre-Effective
Amendment 1 filed on March 13, 1997.
(7) Bonus, Profit Sharing, Pension or Other Similar
Contracts -- None
(8) (a) Custody Agreement -- filed herewith
(b) Custody Administration Agreement-Incorporated
by reference to Exhibit Number (8b) of Registrant's
Pre-Effective Amendment 1 filed on March 13, 1997.
(9) (a) Transfer Agent Services Agreement --
Incorporated by reference to Exhibit Number (9a) of Registrant's
Pre-Effective Amendment 1 filed on March 13, 1997.
(b) Administration Agreement --Incorporated
by reference to Exhibit Number (9b) of Registrant's Pre-Effective
Amendment 1 filed on March 13, 1997.
(c) Accounting Services Agreement
- --Incorporated by reference to Exhibit Number (9c) of Registrant's
Pre-Effective Amendment 1 filed on March 13, 1997.
(10) (a) Opinion and Consent of Heller Ehrman
White & McAuliffe regarding the legality of the securities
being issued --Incorporated by reference to Exhibit Number (10a) of
Registrant's Pre- Effective Amendment 1 filed on March 13,
1997.
(11) Consent of Independent Auditors -- filed herewith.
(12) Financial Statements Omitted from Item 23.--
None
(13) Agreements or Understandings Made in
Consideration for Providing the Initial
Capital-- None
(14) Model Plan -- None
(15) Plan of Distribution pursuant to Rule
12b-1 --Incorporated by reference
to Exhibit Number (15) of Registrant's Pre-Effective
Amendment 1 filed on March 13, 1997.
(16) Schedule for Computation of Performance
Quotations -- None.
(17) Financial Data Schedule -- None.
(18) Plan of Distribution pursuant to Rule 18f-3 with
respect to Multiple Class Shares -- None.
(19) Trustees' Powers of Attorney --Incorporated by
reference to Exhibit Number (19) of Registrant's Pre-Effective
Amendment 1 filed on March 13, 1997.
Item 25. Persons Controlled by or Under Common Control with
Registrant.
None.
Item 26. Number of Holders of Securities.
None.
Item 27. Indemnification.
Reference is made to Article X of the Registrant's Trust
Instrument (previously filed as Exhibit 1 of Registration Statement
No.333-16033 filed on November 13, 1996).
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to
the Trust's Trust Instrument, its By-Laws or otherwise, the
Registrant is aware that in the opinion of the Securities and
Exchange
Commission, such indemnification is against public policy as
expressed in the Act and, therefore, is 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
trustees, officers or controlling persons of the Registrant in
connection with the successful defense of any act, suit or
proceeding) is asserted by such trustees, officers or controlling
persons in connection with shares being registered, the Registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser.
George D. Bjurman & Associates, 10100 Santa Monica Boulevard,
Suite 1200, Los Angeles, California 90067-4103 provides investment
advisory services to individual and institutional investors, and as
of November, 1996 had approximately $2.5 billion in assets under
management.
For information as to any other business, vocation or
employment of a substantial nature in which each Trustee or officer
of the Registrant's investment adviser has been engaged for his own
account or in the capacity of Trustee, officer, employee, partner or
trustee, reference is made to Form ADV for George D. Bjurman &
Associates (File #801-06776) filed under the Investment Advisers Act
of 1940, and incorporated herein by reference.
Item 29. Principal Underwriter.
(a) FPS Broker Services, Inc. ("FPSB"), the principal
underwriter for the Registrant's securities, currently acts as
principal underwriter for the following entities:
The Brinson Funds, Inc.
Chicago Trust Funds
Fairport Funds
First Mutual Funds
Focus Trust, Inc.
IAA Trust Mutual Funds
Matthews International Funds
McM Funds
Polynous Trust
Sage/Tso Trust
Smith Breeden Series Fund
Smith Breeden Short Duration U.S. Government Fund
Smith Breeden Trust
The Stratton Funds, Inc.
The Japan Alpha Fund
Stratton Growth Fund, Inc.
Stratton Monthly Dividend Shares, Inc.
The Timothy Plan
(b) The table below sets forth certain information as to
the Underwriter's Directors, Officers and Control
Persons:
Position Position and
Name and Principal and Offices Offices with
Business Address with Underwriter Registrant
Kenneth J. Kempf Director and None
3200 Horizon Drive President
P.O. Box 61503
King of Prussia, PA 19406-0903
Lynne M. Cannon Vice President None
3200 Horizon Drive and Principal
P.O. Box 61503
King of Prussia, PA 19406-0903
Rocky C. Cavalieri Director and None
3200 Horizon Drive Vice President
P.O. Box 61503
King of Prussia, PA 19406-0903
Gerald J. Holland Director, Senior None
3200 Horizon Drive Vice President
P.O. Box 61503 and Principal
King of Prussia, PA 19406-0903
Joseph M. O'Donnell, Director and None
Esq. Vice President
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
Sandra L. Adams Assistant Vice None
3200 Horizon Drive President
P.O. Box 61503 and Principal
King of Prussia, PA 19406-0903
Mary P. Efstration Secretary None
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
John H. Leven Treasurer None
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903
James W. Stratton may be considered a control person of the
Underwriter due to his direct or indirect ownership of FPS Services,
Inc., the parent of the Underwriter.
(c) Not Applicable.
Item 30. Location of Accounts and Records.
All records described in Section 31(a) of the 1940 Act and the
Rules 17 CFR 270.31a-1 to 31a-3 promulgated thereunder, are
maintained by the Trust's Investment Adviser, George D. Bjurman &
Associates, 10100 Santa Monica Boulevard, Suite 1200, Los Angeles,
California 90067-4103, except for those maintained by the Fund's
Custodian, The Bank of New York, 277 Park Avenue, New York, New York
10172 and the Trust's Administrator, Transfer Agent and Fund
Accounting Services Agent, FPS Services Inc., 3200 Horizon Drive,
P.O. Box 61503, King of Prussia, PA 19428.
Item 31. Management Services.
There are no management-related service contracts not discussed in
Part A or Part B.
Item 32. Undertakings.
(a) Registrant hereby undertakes to file an amendment to this
Registration Statement with certified financial statements showing
the initial capital received before accepting subscriptions from any
person in excess of 25 if Registrant proposes to raise its initial
capital pursuant to Section 14(a)(3) of the 1940 Act.
(b) Registrant hereby undertakes to file a post-effective
amendment within four to six months from the effective date of this
Registration Statement under the Securities Act of 1933. Registrant
understands that such post-effective amendment will contain
reasonably current financial statements which need not be certified
by independent public accountants.
(c) Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered with a copy of the Registrant's latest
Annual Report to Shareholders upon request and without charge.
(d) The Registrant hereby undertakes to promptly call a meeting
of shareholders for the purpose of voting upon the question of
removal of any director or directors when requested in writing to do
so by the record holders of not less than 10 percent of the
Registrant's outstanding shares and to assist its shareholders in
accordance with the requirements of Section 16(c) of the Investment
Company Act of 1940 relating to shareholder communications.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, and State of
California on the 26th day of March 1997.
The Bjurman Funds
Registrant
By /s/ G. Andrew Bjurman
G. Andrew Bjurman
Trustee
By /s/ O. Thomas Barry, III
O. Thomas Barry, III
Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement of The Bjurman Funds has been signed below by
the following persons in the capacities and on the date indicated.
Signature Capacity Date
/s/ G. Andrew Bjurman Co-President & 03/26/97
Trustee
G. Andrew Bjurman
/s/ O. Thomas Barry, III Co-President & 03/26/97
Trustee
O. Thomas Barry, III
/s/ William Wallace Trustee 03/26/97
William Wallace
/s/ Donald W. Hudson, Jr. Trustee 03/26/97
Donald W. Hudson, Jr.
/s/ Joseph E. Maiolo Trustee 03/26/97
Joseph E. Maiolo
The Bjurman Funds
Index to Exhibits to Form N-1A
Exhibit Page
99.B8(a) Custody Agreement
99.B11 Consent of Independent Auditors
99.B13 Initial Capital Agreement
CUSTODY AGREEMENT
Agreement made as of this 25th day of March,
1997, between THE BJURMAN MICRO-CAP GROWTH FUND, a Delaware
business trust organized and existing under the laws of the State
of Delaware, having its principal office and place of business at
10100 Santa Monica Boulevard, Los Angeles, CA 90067-4103
(hereinafter called the "Fund"), and THE BANK OF NEW YORK, a
New York corporation authorized to do a banking business, hav-
ing its principal office and place of business at 48 Wall
Street, New York, New York 10286 (hereinafter called the "Cus-
todian").
W I T N E S S E T H :
WHEREAS, the Fund represents that pursuant to the Custody
Administration and Agency Agreement between FPS Services, Inc.
("FPS") and the Fund, FPS (a) has agreed to perform certain
administrative functions which may include the functions of
administrator, transfer agent and accounting services agent
and (b) has been appointed by the Fund to act as its agent in
respect of certain transactions contemplated in this
Agreement; and
WHEREAS, the Fund represents that (a) FPS has agreed to
act as Fund's agent in respect of certain transactions
contemplated in this Agreement and (b) the Custodian is au-
thorized and directed to rely upon and follow Certificates and
Instructions given by FPS, the Fund's agent, in respect of
transactions contemplated in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
hereinafter set forth, the Fund and the Custodian agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the
following meanings:
1. "Administrator" shall mean FPS and such successors
or permitted assigns as may succeed and perform its duties
under the Administration Agreement.
2. "Administration Agreement" shall mean that certain
separate agreement entitled "Custody Administration and Agency
Agreement" dated as of March 5, 1997 between the Fund
and the FPS.
3. "Book-Entry System" shall mean the Federal
Reserve/Treasury book-entry system for United States and fed-
eral agency securities, its successor or successors and its
nominee or nominees.
4. "Call Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and payment of the exercise
price, as specified therein, to purchase from the writer
thereof the specified underlying Securities.
5. "Certificate" shall mean any notice, instruction, or
other instrument in writing, authorized or required by this
Agreement to be given to the Custodian which is actually re-
ceived by the Custodian and signed on behalf of the Fund by
any two Officers, and the term Certificate shall also include
Instructions communicated to the Custodian by the
Administrator.
6. "Clearing Member" shall mean a registered
broker-dealer which is a clearing member under the rules of
O.C.C. and a member of a national securities exchange quali-
fied to act as a custodian for an investment company, or any
broker-dealer reasonably believed by the Custodian to be such
a clearing member.
7. "Collateral Account" shall mean a segregated account
so denominated which is specifically allocated to a Series and
pledged to the Custodian as security for, and in consideration
of, the Custodian's issuance of (a) any Put Option guarantee
letter or similar document described in paragraph 8 of Article
V herein, or (b) any receipt described in Article V or VIII
herein.
8. "Composite Currency Unit" shall mean the European
Currency Unit or any other composite unit consisting of the
aggregate of specified amounts of specified Currencies as such
unit may be constituted from time to time.
9. "Covered Call Option" shall mean an exchange traded
option entitling the holder, upon timely exercise and payment
of the exercise price, as specified therein, to purchase from
the writer thereof the specified underlying Securities (ex-
cluding Futures Contracts) which are owned by the writer
thereof and subject to appropriate restrictions.
10. "Currency" shall mean money denominated in a lawful
currency of any country or the European Currency Unit.
11. "Depository" shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and
Exchange Commission, its successor or successors and its nomi-
nee or nominees. The term "Depository" shall further mean and
include any other person authorized to act as a depository
under the Investment Company Act of 1940, its successor or
successors and its nominee or nominees, specifically identi-
fied in a certified copy of a resolution of the Fund's Board
of Trustees specifically approving deposits therein by the
Custodian.
12. "Financial Futures Contract" shall mean the firm
commitment to buy or sell fixed income securities including,
without limitation, U.S. Treasury Bills, U.S. Treasury Notes,
U.S. Treasury Bonds, domestic bank certificates of deposit,
and Eurodollar certificates of deposit, during a specified
month at an agreed upon price.
13. "Futures Contract" shall mean a Financial Futures
Contract and/or Stock Index Futures Contracts.
14. "Futures Contract Option" shall mean an option with
respect to a Futures Contract.
15. "FX Transaction" shall mean any transaction for the
purchase by one party of an agreed amount in one Currency
against the sale by it to the other party of an agreed amount
in another Currency.
16. "Instructions" shall mean instructions
communications transmitted by electronic or telecommunications
media including S.W.I.F.T., computer-to-computer interface,
dedicated transmission line, facsimile transmission (which may
be signed by an Officer or unsigned) and tested telex.
17. "Margin Account" shall mean a segregated account in
the name of a broker, dealer, futures commission merchant, or
a Clearing Member, or in the name of the Fund for the benefit
of a broker, dealer, futures commission merchant, or Clearing
Member, or otherwise, in accordance with an agreement between
the Fund, the Custodian and a broker, dealer, futures commis-
sion merchant or a Clearing Member (a "Margin Account Agree-
ment"), separate and distinct from the custody account, in
which certain Securities and/or money of the Fund shall be
deposited and withdrawn from time to time in connection with
such transactions as the Fund may from time to time deter-
mine. Securities held in the Book-Entry System or the Deposi-
tory shall be deemed to have been deposited in, or withdrawn
from, a Margin Account upon the Custodian's effecting an ap-
propriate entry in its books and records.
18. "Money Market Security" shall be deemed to include,
without limitation, certain Reverse Repurchase Agreements,
debt obligations issued or guaranteed as to interest and prin-
cipal by the government of the United States or agencies or
instrumentalities thereof, any tax, bond or revenue anticipa-
tion note issued by any state or municipal government or pub-
lic authority, commercial paper, certificates of deposit and
bankers' acceptances, repurchase agreements with respect to
the same and bank time deposits, where the purchase and sale
of such securities normally requires settlement in federal
funds on the same day as such purchase or sale.
19. "O.C.C." shall mean the Options Clearing Corpora-
tion, a clearing agency registered under Section 17A of the
Securities Exchange Act of 1934, its successor or successors,
and its nominee or nominees.
20. "Officers" shall be deemed to include the President,
any Vice President, the Secretary, the Clerk, the Treasurer,
the Controller, any Assistant Secretary, any Assistant Clerk,
any Assistant Treasurer, and any other person or persons, in-
cluding officers or employees of the Administrator, whether or
not any such other person is an officer of the Fund, duly au-
thorized by the Board of Trustees of the Fund to execute any
Certificate, instruction, notice or other instrument on behalf
of the Fund and listed in the Certificate annexed hereto as
Appendix A or such other Certificate as may be received by the
Custodian from time to time.
21. "Option" shall mean a Call Option, Covered Call Op-
tion, Stock Index Option and/or a Put Option.
22. "Oral Instructions" shall mean verbal instructions
actually received by the Custodian from an Officer or from a
person reasonably believed by the Custodian to be an Officer.
23. "Put Option" shall mean an exchange traded option
with respect to Securities other than Stock Index Options,
Futures Contracts, and Futures Contract Options entitling the
holder, upon timely exercise and tender of the specified un-
derlying Securities, to sell such Securities to the writer
thereof for the exercise price.
24. "Reverse Repurchase Agreement" shall mean an agree-
ment pursuant to which the Fund sells Securities and agrees to
repurchase such Securities at a described or specified date
and price.
25. "Security" shall be deemed to include, without limi-
tation, Money Market Securities, Call Options, Put Options,
Stock Index Options, Stock Index Futures Contracts, Stock In-
dex Futures Contract Options, Financial Futures Contracts,
Financial Futures Contract Options, Reverse Repurchase Agree-
ments, common stocks and other securities having characteris-
tics similar to common stocks, preferred stocks, debt obliga-
tions issued by state or municipal governments and by public
authorities, (including, without limitation, general obliga-
tion bonds, revenue bonds, industrial bonds and industrial
development bonds), bonds, debentures, notes, mortgages or
other obligations, and any certificates, receipts, warrants or
other instruments representing rights to receive, purchase,
sell or subscribe for the same, or evidencing or representing
any other rights or interest therein, or any property or as-
sets.
26. "Senior Security Account" shall mean an account
maintained and specifically allocated to a Series under the
terms of this Agreement as a segregated account, by recorda-
tion or otherwise, within the custody account in which certain
Securities and/or other assets of the Fund specifically al-
located to such Series shall be deposited and withdrawn from
time to time in accordance with Certificates received by the
Custodian in connection with such transactions as the Fund may
from time to time determine.
27. "Series" shall mean the various portfolios, if any,
of the Fund as described from time to time in the current and
effective prospectus for the Fund and listed on Appendix B
hereto as amended from time to time.
28. "Shares" shall mean the shares of beneficial inter-
est of the Fund, each of which is, in the case of a Fund hav-
ing Series, allocated to a particular Series.
29. "Stock Index Futures Contract" shall mean a bilat-
eral agreement pursuant to which the parties agree to take or
make delivery of an amount of cash equal to a specified dollar
amount times the difference between the value of a particular
stock index at the close of the last business day of the con-
tract and the price at which the futures contract is origi-
nally struck.
30. "Stock Index Option" shall mean an exchange traded
option entitling the holder, upon timely exercise, to receive
an amount of cash determined by reference to the difference
between the exercise price and the value of the index on the
date of exercise.
ARTICLE II
APPOINTMENT OF CUSTODIAN
1. The Fund hereby constitutes and appoints the Custo-
dian as custodian of the Securities and moneys at any time
owned by the Fund during the period of this Agreement.
2. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as herein-
after set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
1. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, the Fund will deliver or cause to
be delivered to the Custodian all Securities and all moneys
owned by it, at any time during the period of this Agreement,
and shall specify with respect to such Securities and money
the Series to which the same are specifically allocated. The
Custodian shall segregate, keep and maintain the assets of the
Series separate and apart. The Custodian will not be respon-
sible for any Securities and moneys not actually received by
it. The Custodian will be entitled to reverse any credits
made on the Fund's behalf where such credits have been previ-
ously made and moneys are not finally collected. The Fund
shall deliver to the Custodian a certified resolution of the
Board of Trustees of the Fund, substantially in the form of
Exhibit A hereto, approving, authorizing and instructing the
Custodian on a continuous and on-going basis to deposit in the
Book-Entry System all Securities eligible for deposit therein,
regardless of the Series to which the same are specifically
allocated and to utilize the Book-Entry System to the extent
possible in connection with its performance hereunder, includ-
ing, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities and
deliveries and returns of Securities collateral. Prior to a
deposit of Securities specifically allocated to a Series in
the Depository, the Fund shall deliver to the Custodian a cer-
tified resolution of the Board of Trustees of the Fund, sub-
stantially in the form of Exhibit B hereto, approving, autho-
rizing and instructing the Custodian on a continuous and ongo-
ing basis until instructed to the contrary by a Certificate
actually received by the Custodian to deposit in the Deposi-
tory all Securities specifically allocated to such Series eli-
gible for deposit therein, and to utilize the Depository to
the extent possible with respect to such Securities in connec-
tion with its performance hereunder, including, without limi-
tation, in connection with settlements of purchases and sales
of Securities, loans of Securities, and deliveries and returns
of Securities collateral. Securities and moneys deposited in
either the Book-Entry System or the Depository will be repre-
sented in accounts which include only assets held by the Cus-
todian for customers, including, but not limited to, accounts
in which the Custodian acts in a fiduciary or representative
capacity and will be specifically allocated on the Custodian's
books to the separate account for the applicable Series.
Prior to the Custodian's accepting, utilizing and acting with
respect to Clearing Member confirmations for Options and
transactions in Options for a Series as provided in this
Agreement, the Custodian shall have received a certified reso-
lution of the Fund's Board of Trustees, substantially in the
form of Exhibit C hereto, approving, authorizing and instruct-
ing the Custodian on a continuous and on-going basis, until
instructed to the contrary by a Certificate actually received
by the Custodian, to accept, utilize and act in accordance
with such confirmations as provided in this Agreement with
respect to such Series.
2. The Custodian shall establish and maintain separate
accounts, in the name of each Series, and shall credit to the
separate account for each Series all moneys received by it for
the account of the Fund with respect to such Series. Money
credited to a separate account for a Series shall be disbursed
by the Custodian only:
(a) as hereinafter provided;
(b) pursuant to Certificates setting forth the name
and address of the person to whom the payment is to be made,
the Series account from which payment is to be made and the
purpose for which payment is to be made; or
(c) in payment of the fees and in reimbursement of
the expenses and liabilities of the Custodian attributable to
such Series.
3. Promptly after the close of business on each day,
the Custodian shall furnish the Administrator with confirma-
tions and a summary, on a per Series basis, of all transfers
to or from the account of the Fund for a Series, either here-
under or with any co-custodian or sub-custodian appointed in
accordance with this Agreement during said day. Where Securi-
ties are transferred to the account of the Fund for a Series,
the Custodian shall also by book-entry or otherwise identify
as belonging to such Series a quantity of Securities in a fun-
gible bulk of Securities registered in the name of the Custo-
dian (or its nominee) or shown on the Custodian's account on
the books of the Book-Entry System or the Depository. At
least monthly and from time to time, the Custodian shall fur-
nish the Administrator with a detailed statement, on a per
Series basis, of the Securities and moneys held by the Custo-
dian for the Fund.
4. Except as otherwise provided in paragraph 7 of this
Article and in Article VIII, all Securities held by the Custo-
dian hereunder, which are issued or issuable only in bearer
form, except such Securities as are held in the Book-Entry
System, shall be held by the Custodian in that form; all other
Securities held hereunder may be registered in the name of the
Fund, in the name of any duly appointed registered nominee of
the Custodian as the Custodian may from time to time deter-
mine, or in the name of the Book-Entry System or the Deposi-
tory or their successor or successors, or their nominee or
nominees. The Fund agrees to furnish or cause to be furnished
to the Custodian appropriate instruments to enable the Custo-
dian to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee or in the name
of the Book-Entry System or the Depository any Securities
which it may hold hereunder and which may from time to time be
registered in the name of the Fund. The Custodian shall hold
all such Securities specifically allocated to a Series which
are not held in the Book-Entry System or in the Depository in
a separate account in the name of such Series physically seg-
regated at all times from those of any other person or per-
sons.
5. Except as otherwise provided in this Agreement and
unless otherwise instructed to the contrary by a Certificate,
the Custodian by itself, or through the use of the Book-Entry
System or the Depository with respect to Securities held here-
under and therein deposited, shall with respect to all Securi-
ties held for the Fund hereunder in accordance with preceding
paragraph 4:
(a) collect all income due or payable;
(b) present for payment and collect the amount pay-
able upon such Securities which are called, but only if either
(i) the Custodian receives a written notice of such call, or
(ii) notice of such call appears in one or more of the publi-
cations listed in Appendix C annexed hereto, which may be
amended at any time by the Custodian without the prior notifi-
cation or consent of the Fund;
(c) present for payment and collect the amount pay-
able upon all Securities which mature;
(d) surrender Securities in temporary form for de-
finitive Securities;
(e) execute, as custodian, any necessary declara-
tions or certificates of ownership under the Federal Income
Tax Laws or the laws or regulations of any other taxing au-
thority now or hereafter in effect; and
(f) hold directly, or through the Book-Entry System
or the Depository with respect to Securities therein depos-
ited, for the account of a Series, all rights and similar se-
curities issued with respect to any Securities held by the
Custodian for such Series hereunder.
6. Upon receipt of a Certificate and not otherwise, the
Custodian, directly or through the use of the Book-Entry Sys-
tem or the Depository, shall:
(a) execute and deliver to such persons as may be
designated in such Certificate proxies, consents, authoriza-
tions, and any other instruments whereby the authority of the
Fund as owner of any Securities held by the Custodian hereun-
der for the Series specified in such Certificate may be exer-
cised;
(b) deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate in ex-
change for other Securities or cash issued or paid in con-
nection with the liquidation, reorganization, refinancing,
merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege and receive and
hold hereunder specifically allocated to such Series any cash
or other Securities received in exchange;
(c) deliver any Securities held by the Custodian
hereunder for the Series specified in such Certificate to any
protective committee, reorganization committee or other person
in connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any cor-
poration, and receive and hold hereunder specifically al-
located to such Series such certificates of deposit, interim
receipts or other instruments or documents as may be issued to
it to evidence such delivery;
(d) make such transfers or exchanges of the assets
of the Series specified in such Certificate, and take such
other steps as shall be stated in such Certificate to be for
the purpose of effectuating any duly authorized plan of liqui-
dation, reorganization, merger, consolidation or recapitaliza-
tion of the Fund; and
(e) present for payment and collect the amount pay-
able upon Securities not described in preceding paragraph 5(b)
of this Article which may be called as specified in the Cer-
tificate.
7. Notwithstanding any provision elsewhere contained
herein, the Custodian shall not be required to obtain posses-
sion of any instrument or certificate representing any Futures
Contract, any Option, or any Futures Contract Option until
after it shall have determined, or shall have received a Cer-
tificate from the Fund stating, that any such instruments or
certificates are available. The Fund shall deliver to the
Custodian such a Certificate no later than the business day
preceding the availability of any such instrument or certifi-
cate. Prior to such availability, the Custodian shall comply
with Section 17(f) of the Investment Company Act of 1940, as
amended, in connection with the purchase, sale, settlement,
closing out or writing of Futures Contracts, Options, or Fu-
tures Contract Options by making payments or deliveries speci-
fied in Certificates received by the Custodian in connection
with any such purchase, sale, writing, settlement or closing
out upon its receipt from a broker, dealer, or futures commis-
sion merchant of a statement or confirmation reasonably be-
lieved by the Custodian to be in the form customarily used by
brokers, dealers, or future commission merchants with respect
to such Futures Contracts, Options, or Futures Contract Op-
tions, as the case may be, confirming that such Security is
held by such broker, dealer or futures commission merchant, in
book-entry form or otherwise, in the name of the Custodian (or
any nominee of the Custodian) as custodian for the Fund, pro-
vided, however, that notwithstanding the foregoing, payments
to or deliveries from the Margin Account and payments with
respect to Securities to which a Margin Account relates, shall
be made in accordance with the terms and conditions of the
Margin Account Agreement. Whenever any such instruments or
certificates are available, the Custodian shall, notwithstand-
ing any provision in this Agreement to the contrary, make pay-
ment for any Futures Contract, Option, or Futures Contract
Option for which such instruments or such certificates are
available only against the delivery to the Custodian of such
instrument or such certificate, and deliver any Futures Con-
tract, Option or Futures Contract Option for which such in-
struments or such certificates are available only against re-
ceipt by the Custodian of payment therefor. Any such instru-
ment or certificate delivered to the Custodian shall be held
by the Custodian hereunder in accordance with, and subject to,
the provisions of this Agreement.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
OTHER THAN OPTIONS, FUTURES CONTRACTS AND
FUTURES CONTRACT OPTIONS
1. Promptly after each purchase of Securities by the
Fund, other than a purchase of an Option, a Futures Contract,
or a Futures Contract Option, the Fund shall deliver or cause
the Administrator to deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Se-
curities, a Certificate, and (ii) with respect to each pur-
chase of Money Market Securities, a Certificate or Oral In-
structions, specifying with respect to each such purchase:
(a) the Series to which such Securities are to be specifically
allocated; (b) the name of the issuer and the title of the
Securities; (c) the number of shares or the principal amount
purchased and accrued interest, if any; (d) the date of pur-
chase and settlement; (e) the purchase price per unit; (f) the
total amount payable upon such purchase; (g) the name of the
person from whom or the broker through whom the purchase was
made, and the name of the clearing broker, if any; and (h) the
name of the broker to whom payment is to be made. The Custo-
dian shall, upon receipt of Securities purchased by or for the
Fund, pay to the broker specified in the Certificate out of
the moneys held for the account of such Series the total
amount payable upon such purchase, provided that the same con-
forms to the total amount payable as set forth in such Cer-
tificate or Oral Instructions.
2. Promptly after each sale of Securities by the Fund,
other than a sale of any Option, Futures Contract, Futures
Contract Option, or any Reverse Repurchase Agreement, the Fund
shall deliver or cause the Administrator to deliver to the
Custodian (i) with respect to each sale of Securities which
are not Money Market Securities, a Certificate, and (ii) with
respect to each sale of Money Market Securities, a Certificate
or Oral Instructions, specifying with respect to each such
sale: (a) the Series to which such Securities were specifi-
cally allocated; (b) the name of the issuer and the title of
the Security; (c) the number of shares or principal amount
sold, and accrued interest, if any; (d) the date of sale; (e)
the sale price per unit; (f) the total amount payable to the
Fund upon such sale; (g) the name of the broker through whom
or the person to whom the sale was made, and the name of the
clearing broker, if any; and (h) the name of the broker to
whom the Securities are to be delivered. The Custodian shall
deliver the Securities specifically allocated to such Series
to the broker specified in the Certificate against payment
upon receipt of the total amount payable to the Fund upon such
sale, provided that the same conforms to the total amount pay-
able as set forth in such Certificate or Oral Instructions.
ARTICLE V
OPTIONS
1. Promptly after the purchase of any Option by the
Fund, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying with respect
to each Option purchased: (a) the Series to which such Option
is specifically allocated; (b) the type of Option (put or
call); (c) the name of the issuer and the title and number of
shares subject to such Option or, in the case of a Stock Index
Option, the stock index to which such Option relates and the
number of Stock Index Options purchased; (d) the expiration
date; (e) the exercise price; (f) the dates of purchase and
settlement; (g) the total amount payable by the Fund in con-
nection with such purchase; (h) the name of the Clearing Mem-
ber through whom such Option was purchased; and (i) the name
of the broker to whom payment is to be made. The Custodian
shall pay, upon receipt of a Clearing Member's statement con-
firming the purchase of such Option held by such Clearing Mem-
ber for the account of the Custodian (or any duly appointed
and registered nominee of the Custodian) as custodian for the
Fund, out of moneys held for the account of the Series to
which such Option is to be specifically allocated, the total
amount payable upon such purchase to the Clearing Member
through whom the purchase was made, provided that the same
conforms to the total amount payable as set forth in such Cer-
tificate.
2. Promptly after the sale of any Option purchased by
the Fund pursuant to paragraph 1 hereof, the Fund shall de-
liver or cause the Administrator to deliver to the Custodian a
Certificate specifying with respect to each such sale: (a)
the Series to which such Option was specifically allocated;
(b) the type of Option (put or call); (c) the name of the
issuer and the title and number of shares subject to such
Option or, in the case of a Stock Index Option, the stock
index to which such Option relates and the number of Stock
Index Options sold; (d) the date of sale; (e) the sale price;
(f) the date of settlement; (g) the total amount payable to
the Fund upon such sale; and (h) the name of the Clearing
Member through whom the sale was made. The Custodian shall
consent to the delivery of the Option sold by the Clearing
Member which previously supplied the confirmation described in
preceding paragraph 1 of this Article with respect to such
Option against payment to the Custodian of the total amount
payable to the Fund, provided that the same conforms to the
total amount payable as set forth in such Certificate.
3. Promptly after the exercise by the Fund of any Call
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver or cause the Administrator to deliver
to the Custodian a Certificate specifying with respect to such
Call Option: (a) the Series to which such Call Option was
specifically allocated; (b) the name of the issuer and the
title and number of shares subject to the Call Option; (c) the
expiration date; (d) the date of exercise and settlement; (e)
the exercise price per share; (f) the total amount to be paid
by the Fund upon such exercise; and (g) the name of the
Clearing Member through whom such Call Option was exercised.
The Custodian shall, upon receipt of the Securities underlying
the Call Option which was exercised, pay out of the moneys
held for the account of the Series to which such Call Option
was specifically allocated the total amount payable to the
Clearing Member through whom the Call Option was exercised,
provided that the same conforms to the total amount payable as
set forth in such Certificate.
4. Promptly after the exercise by the Fund of any Put
Option purchased by the Fund pursuant to paragraph 1 hereof,
the Fund shall deliver or cause the Administrator to deliver
to the Custodian a Certificate specifying with respect to such
Put Option: (a) the Series to which such Put Option was spe-
cifically allocated; (b) the name of the issuer and the title
and number of shares subject to the Put Option; (c) the expi-
ration date; (d) the date of exercise and settlement; (e) the
exercise price per share; (f) the total amount to be paid to
the Fund upon such exercise; and (g) the name of the Clearing
Member through whom such Put Option was exercised. The Custo-
dian shall, upon receipt of the amount payable upon the exer-
cise of the Put Option, deliver or direct the Depository to
deliver the Securities specifically allocated to such Series,
provided the same conforms to the amount payable to the Fund
as set forth in such Certificate.
5. Promptly after the exercise by the Fund of any Stock
Index Option purchased by the Fund pursuant to paragraph 1
hereof, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying with respect
to such Stock Index Option: (a) the Series to which such
Stock Index Option was specifically allocated; (b) the type of
Stock Index Option (put or call); (c) the number of Options
being exercised; (d) the stock index to which such Option
relates; (e) the expiration date; (f) the exercise price; (g)
the total amount to be received by the Fund in connection with
such exercise; and (h) the Clearing Member from whom such
payment is to be received.
6. Whenever the Fund writes a Covered Call Option, the
Fund shall deliver or cause the Administrator to deliver to
the Custodian a Certificate specifying with respect to such
Covered Call Option: (a) the Series for which such Covered
Call Option was written; (b) the name of the issuer and the
title and number of shares for which the Covered Call Option
was written and which underlie the same; (c) the expiration
date; (d) the exercise price; (e) the premium to be received
by the Fund; (f) the date such Covered Call Option was writ-
ten; and (g) the name of the Clearing Member through whom the
premium is to be received. The Custodian shall deliver or
cause to be delivered, in exchange for receipt of the premium
specified in the Certificate with respect to such Covered Call
Option, such receipts as are required in accordance with the
customs prevailing among Clearing Members dealing in Covered
Call Options and shall impose, or direct the Depository to
impose, upon the underlying Securities specified in the Cer-
tificate specifically allocated to such Series such restric-
tions as may be required by such receipts. Notwithstanding
the foregoing, the Custodian has the right, upon prior written
notification to the Fund, at any time to refuse to issue any
receipts for Securities in the possession of the Custodian and
not deposited with the Depository underlying a Covered Call
Option.
7. Whenever a Covered Call Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall deliver or cause the Administrator
to deliver to the Custodian a Certificate instructing the Cus-
todian to deliver, or to direct the Depository to deliver, the
Securities subject to such Covered Call Option and specifying:
(a) the Series for which such Covered Call Option was written;
(b) the name of the issuer and the title and number of shares
subject to the Covered Call Option; (c) the Clearing Member to
whom the underlying Securities are to be delivered; and (d)
the total amount payable to the Fund upon such delivery. Upon
the return and/or cancellation of any receipts delivered pur-
suant to paragraph 6 of this Article, the Custodian shall de-
liver, or direct the Depository to deliver, the underlying
Securities as specified in the Certificate against payment of
the amount to be received as set forth in such Certificate.
8. Whenever the Fund writes a Put Option, the Fund
shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying with respect to such Put
Option: (a) the Series for which such Put Option was written;
(b) the name of the issuer and the title and number of shares
for which the Put Option is written and which underlie the
same; (c) the expiration date; (d) the exercise price; (e) the
premium to be received by the Fund; (f) the date such Put Op-
tion is written; (g) the name of the Clearing Member through
whom the premium is to be received and to whom a Put Option
guarantee letter is to be delivered; (h) the amount of cash,
and/or the amount and kind of Securities, if any, specifically
allocated to such Series to be deposited in the Senior Secu-
rity Account for such Series; and (i) the amount of cash
and/or the amount and kind of Securities specifically al-
located to such Series to be deposited into the Collateral
Account for such Series. The Custodian shall, after making
the deposits into the Collateral Account specified in the Cer-
tificate, issue a Put Option guarantee letter substantially in
the form utilized by the Custodian on the date hereof, and
deliver the same to the Clearing Member specified in the Cer-
tificate against receipt of the premium specified in said Cer-
tificate. Notwithstanding the foregoing, the Custodian shall
be under no obligation to issue any Put Option guarantee let-
ter or similar document if it is unable to make any of the
representations contained therein.
9. Whenever a Put Option written by the Fund and de-
scribed in the preceding paragraph is exercised, the Fund
shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying: (a) the Series to which
such Put Option was written; (b) the name of the issuer and
title and number of shares subject to the Put Option; (c) the
Clearing Member from whom the underlying Securities are to be
received; (d) the total amount payable by the Fund upon such
delivery; (e) the amount of cash and/or the amount and kind of
Securities specifically allocated to such Series to be with-
drawn from the Collateral Account for such Series and (f) the
amount of cash and/or the amount and kind of Securities, spe-
cifically allocated to such Series, if any, to be withdrawn
from the Senior Security Account. Upon the return and/or
cancellation of any Put Option guarantee letter or similar
document issued by the Custodian in connection with such Put
Option, the Custodian shall pay out of the moneys held for the
account of the Series to which such Put Option was specifi-
cally allocated the total amount payable to the Clearing Mem-
ber specified in the Certificate as set forth in such Certifi-
cate against delivery of such Securities, and shall make the
withdrawals specified in such Certificate.
10. Whenever the Fund writes a Stock Index Option, the
Fund shall deliver or cause the Administrator to deliver to
the Custodian a Certificate specifying with respect to such
Stock Index Option: (a) the Series for which such Stock Index
Option was written; (b) whether such Stock Index Option is a
put or a call; (c) the number of options written; (d) the
stock index to which such Option relates; (e) the expiration
date; (f) the exercise price; (g) the Clearing Member through
whom such Option was written; (h) the premium to be received
by the Fund; (i) the amount of cash and/or the amount and kind
of Securities, if any, specifically allocated to such Series
to be deposited in the Senior Security Account for such Se-
ries; (j) the amount of cash and/or the amount and kind of
Securities, if any, specifically allocated to such Series to
be deposited in the Collateral Account for such Series; and
(k) the amount of cash and/or the amount and kind of Securi-
ties, if any, specifically allocated to such Series to be de-
posited in a Margin Account, and the name in which such ac-
count is to be or has been established. The Custodian shall,
upon receipt of the premium specified in the Certificate, make
the deposits, if any, into the Senior Security Account speci-
fied in the Certificate, and either (1) deliver such receipts,
if any, which the Custodian has specifically agreed to issue,
which are in accordance with the customs prevailing among
Clearing Members in Stock Index Options and make the deposits
into the Collateral Account specified in the Certificate, or
(2) make the deposits into the Margin Account specified in the
Certificate.
11. Whenever a Stock Index Option written by the Fund
and described in the preceding paragraph of this Article is
exercised, the Fund shall deliver or cause the Administrator
to deliver to the Custodian a Certificate specifying with re-
spect to such Stock Index Option: (a) the Series for which
such Stock Index Option was written; (b) such information as
may be necessary to identify the Stock Index Option being ex-
ercised; (c) the Clearing Member through whom such Stock Index
Option is being exercised; (d) the total amount payable upon
such exercise, and whether such amount is to be paid by or to
the Fund; (e) the amount of cash and/or amount and kind of
Securities, if any, to be withdrawn from the Margin Account;
and (f) the amount of cash and/or amount and kind of Securi-
ties, if any, to be withdrawn from the Senior Security Account
for such Series; and the amount of cash and/or the amount and
kind of Securities, if any, to be withdrawn from the Col-
lateral Account for such Series. Upon the return and/or can-
cellation of the receipt, if any, delivered pursuant to the
preceding paragraph of this Article, the Custodian shall pay
out of the moneys held for the account of the Series to which
such Stock Index Option was specifically allocated to the
Clearing Member specified in the Certificate the total amount
payable, if any, as specified therein.
12. Whenever the Fund purchases any Option identical to
a previously written Option described in paragraphs, 6, 8 or
10 of this Article in a transaction expressly designated as a
"Closing Purchase Transaction" in order to liquidate its posi-
tion as a writer of an Option, the Fund shall deliver or cause
the Administrator to deliver to the Custodian a Certificate
specifying with respect to the Option being purchased: (a)
that the transaction is a Closing Purchase Transaction; (b)
the Series for which the Option was written; (c) the name of
the issuer and the title and number of shares subject to the
Option, or, in the case of a Stock Index Option, the stock
index to which such Option relates and the number of Options
held; (d) the exercise price; (e) the premium to be paid by
the Fund; (f) the expiration date; (g) the type of Option (put
or call); (h) the date of such purchase; (i) the name of the
Clearing Member to whom the premium is to be paid; and (j) the
amount of cash and/or the amount and kind of Securities, if
any, to be withdrawn from the Collateral Account, a specified
Margin Account, or the Senior Security Account for such Se-
ries. Upon the Custodian's payment of the premium and the
return and/or cancellation of any receipt issued pursuant to
paragraphs 6, 8 or 10 of this Article with respect to the Op-
tion being liquidated through the Closing Purchase Transac-
tion, the Custodian shall remove, or direct the Depository to
remove, the previously imposed restrictions on the Securities
underlying the Call Option.
13. Upon the expiration, exercise or consummation of a
Closing Purchase Transaction with respect to any Option pur-
chased or written by the Fund and described in this Article,
the Custodian shall delete such Option from the statements
delivered to the Fund pursuant to paragraph 3 Article III
herein, and upon the return and/or cancellation of any re-
ceipts issued by the Custodian, shall make such withdrawals
from the Collateral Account, and the Margin Account and/or the
Senior Security Account as may be specified in a Certificate
received in connection with such expiration, exercise, or con-
summation.
ARTICLE VI
FUTURES CONTRACTS
1. Whenever the Fund shall enter into a Futures Con-
tract, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying with respect
to such Futures Contract, (or with respect to any number of
identical Futures Contract(s)): (a) the Series for which the
Futures Contract is being entered; (b) the category of Futures
Contract (the name of the underlying stock index or financial
instrument); (c) the number of identical Futures Contracts
entered into; (d) the delivery or settlement date of the Fu-
tures Contract(s); (e) the date the Futures Contract(s) was
(were) entered into and the maturity date; (f) whether the
Fund is buying (going long) or selling (going short) on such
Futures Contract(s); (g) the amount of cash and/or the amount
and kind of Securities, if any, to be deposited in the Senior
Security Account for such Series; (h) the name of the broker,
dealer, or futures commission merchant through whom the Fu-
tures Contract was entered into; and (i) the amount of fee or
commission, if any, to be paid and the name of the broker,
dealer, or futures commission merchant to whom such amount is
to be paid. The Custodian shall make the deposits, if any, to
the Margin Account in accordance with the terms and conditions
of the Margin Account Agreement. The Custodian shall make
payment out of the moneys specifically allocated to such Se-
ries of the fee or commission, if any, specified in the Cer-
tificate and deposit in the Senior Security Account for such
Series the amount of cash and/or the amount and kind of Secu-
rities specified in said Certificate.
2. (a) Any variation margin payment or similar payment
required to be made by the Fund to a broker, dealer, or fu-
tures commission merchant with respect to an outstanding Fu-
tures Contract, shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
(b) Any variation margin payment or similar payment
from a broker, dealer, or futures commission merchant to the
Fund with respect to an outstanding Futures Contract, shall be
received and dealt with by the Custodian in accordance with
the terms and conditions of the Margin Account Agreement.
3. Whenever a Futures Contract held by the Custodian
hereunder is retained by the Fund until delivery or settlement
is made on such Futures Contract, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certifi-
cate specifying: (a) the Futures Contract and the Series to
which the same relates; (b) with respect to a Stock Index Fu-
tures Contract, the total cash settlement amount to be paid or
received, and with respect to a Financial Futures Contract,
the Securities and/or amount of cash to be delivered or re-
ceived; (c) the broker, dealer, or futures commission merchant
to or from whom payment or delivery is to be made or received;
and (d) the amount of cash and/or Securities to be withdrawn
from the Senior Security Account for such Series. The Custo-
dian shall make the payment or delivery specified in the Cer-
tificate, and delete such Futures Contract from the statements
delivered to the Fund pursuant to paragraph 3 of Article III
herein.
4. Whenever the Fund shall enter into a Futures Con-
tract to offset a Futures Contract held by the Custodian here-
under, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying: (a) the
items of information required in a Certificate described in
paragraph 1 of this Article, and (b) the Futures Contract be-
ing offset. The Custodian shall make payment out of the money
specifically allocated to such Series of the fee or commis-
sion, if any, specified in the Certificate and delete the Fu-
tures Contract being offset from the statements delivered to
the Fund pursuant to paragraph 3 of Article III herein, and
make such withdrawals from the Senior Security Account for
such Series as may be specified in such Certificate. The
withdrawals, if any, to be made from the Margin Account shall
be made by the Custodian in accordance with the terms and con-
ditions of the Margin Account Agreement.
5. Notwithstanding any other provision in this
Agreement to the contrary, the Custodian shall deliver cash
and Securities to a future commission merchant upon receipt of
a Certificate from the Fund or the Administrator specifying:
(a) the name of the future commission merchant; (b) the
specific cash and Securities to be delivered; (c) the date of
such delivery; and (d) the date of the agreement between the
Fund and such future commission merchant entered pursuant to
Rule 17f-6 under the Investment Company Act 1940, as amended.
Each delivery of such a Certificate by the Fund shall
constitute (x) a representation and warranty by the Fund that
the Rule 17f-6 agreement has been duly authorized, executed
and delivered by the Fund and the future commission merchant
and complies with Rule 17f-6, and (y) an agreement by the Fund
that the Custodian shall not be liable for the acts or
omissions of any such future commission merchant.
ARTICLE VII
FUTURES CONTRACT OPTIONS
1. Promptly after the purchase of any Futures Contract
Option by the Fund, the Fund shall deliver or cause the Admin-
istrator to deliver to the Custodian a Certificate specifying
with respect to such Futures Contract Option: (a) the Series
to which such Option is specifically allocated; (b) the type
of Futures Contract Option (put or call); (c) the type of Fu-
tures Contract and such other information as may be necessary
to identify the Futures Contract underlying the Futures Con-
tract Option purchased; (d) the expiration date; (e) the exer-
cise price; (f) the dates of purchase and settlement; (g) the
amount of premium to be paid by the Fund upon such purchase;
(h) the name of the broker or futures commission merchant
through whom such option was purchased; and (i) the name of
the broker, or futures commission merchant, to whom payment is
to be made. The Custodian shall pay out of the moneys spe-
cifically allocated to such Series, the total amount to be
paid upon such purchase to the broker or futures commissions
merchant through whom the purchase was made, provided that the
same conforms to the amount set forth in such Certificate.
2. Promptly after the sale of any Futures Contract Op-
tion purchased by the Fund pursuant to paragraph 1 hereof, the
Fund shall deliver or cause the Administrator to deliver to
the Custodian a Certificate specifying with respect to each
such sale: (a) Series to which such Futures Contract Option
was specifically allocated; (b) the type of Future Contract
Option (put or call); (c) the type of Futures Contract and
such other information as may be necessary to identify the
Futures Contract underlying the Futures Contract Option; (d)
the date of sale; (e) the sale price; (f) the date of settle-
ment; (g) the total amount payable to the Fund upon such sale;
and (h) the name of the broker of futures commission merchant
through whom the sale was made. The Custodian shall consent
to the cancellation of the Futures Contract Option being
closed against payment to the Custodian of the total amount
payable to the Fund, provided the same conforms to the total
amount payable as set forth in such Certificate.
3. Whenever a Futures Contract Option purchased by the
Fund pursuant to paragraph 1 is exercised by the Fund, the
Fund shall deliver or cause the Administrator to deliver to
the Custodian a Certificate specifying: (a) the Series to
which such Futures Contract Option was specifically allocated;
(b) the particular Futures Contract Option (put or call) being
exercised; (c) the type of Futures Contract underlying the
Futures Contract Option; (d) the date of exercise; (e) the
name of the broker or futures commission merchant through whom
the Futures Contract Option is exercised; (f) the net total
amount, if any, payable by the Fund; (g) the amount, if any,
to be received by the Fund; and (h) the amount of cash and/or
the amount and kind of Securities to be deposited in the Se-
nior Security Account for such Series. The Custodian shall
make, out of the moneys and Securities specifically allocated
to such Series, the payments, if any, and the deposits, if
any, into the Senior Security Account as specified in the Cer-
tificate. The deposits, if any, to be made to the Margin Ac-
count shall be made by the Custodian in accordance with the
terms and conditions of the Margin Account Agreement.
4. Whenever the Fund writes a Futures Contract Option,
the Fund shall deliver or cause the Administrator to deliver
to the Custodian a Certificate specifying with respect to such
Futures Contract Option: (a) the Series for which such
Futures Contract Option was written; (b) the type of Futures
Contract Option (put or call); (c) the type of Futures
Contract and such other information as may be necessary to
identify the Futures Contract underlying the Futures Contract
Option; (d) the expiration date; (e) the exercise price; (f)
the premium to be received by the Fund; (g) the name of the
broker or futures commission merchant through whom the premium
is to be received; and (h) the amount of cash and/or the
amount and kind of Securities, if any, to be deposited in the
Senior Security Account for such Series. The Custodian shall,
upon receipt of the premium specified in the Certificate, make
out of the moneys and Securities specifically allocated to
such Series the deposits into the Senior Security Account, if
any, as specified in the Certificate. The deposits, if any,
to be made to the Margin Account shall be made by the
Custodian in accordance with the terms and conditions of the
Margin Account Agreement.
5. Whenever a Futures Contract Option written by the
Fund which is a call is exercised, the Fund shall deliver or
cause the Administrator to deliver to the Custodian a Certifi-
cate specifying: (a) the Series to which such Futures
Contract Option was specifically allocated; (b) the particular
Futures Contract Option exercised; (c) the type of Futures
Contract underlying the Futures Contract Option; (d) the name
of the broker or futures commission merchant through whom such
Futures Contract Option was exercised; (e) the net total
amount, if any, payable to the Fund upon such exercise; (f)
the net total amount, if any, payable by the Fund upon such
exercise; and (g) the amount of cash and/or the amount and
kind of Securities to be deposited in the Senior Security
Account for such Series. The Custodian shall, upon its
receipt of the net total amount payable to the Fund, if any,
specified in such Certificate make the payments, if any, and
the deposits, if any, into the Senior Security Account as
specified in the Certificate. The deposits, if any, to be made
to the Margin Account shall be made by the Custodian in
accordance with the terms and conditions of the Margin Account
Agreement.
6. Whenever a Futures Contract Option which is written
by the Fund and which is a put is exercised, the Fund shall
deliver or cause the Administrator to deliver to the Custodian
a Certificate specifying: (a) the Series to which such Option
was specifically allocated; (b) the particular Futures Con-
tract Option exercised; (c) the type of Futures Contract un-
derlying such Futures Contract Option; (d) the name of the
broker or futures commission merchant through whom such Fu-
tures Contract Option is exercised; (e) the net total amount,
if any, payable to the Fund upon such exercise; (f) the net
total amount, if any, payable by the Fund upon such exercise;
and (g) the amount and kind of Securities and/or cash to be
withdrawn from or deposited in, the Senior Security Account
for such Series, if any. The Custodian shall, upon its re-
ceipt of the net total amount payable to the Fund, if any,
specified in the Certificate, make out of the moneys and Secu-
rities specifically allocated to such Series, the payments, if
any, and the deposits, if any, into the Senior Security Ac-
count as specified in the Certificate. The deposits to and/or
withdrawals from the Margin Account, if any, shall be made by
the Custodian in accordance with the terms and conditions of
the Margin Account Agreement.
7. Whenever the Fund purchases any Futures Contract
Option identical to a previously written Futures Contract Op-
tion described in this Article in order to liquidate its posi-
tion as a writer of such Futures Contract Option, the Fund
shall deliver or cause the Administrator to deliver to the
Custodian a Certificate specifying with respect to the Futures
Contract Option being purchased: (a) the Series to which such
Option is specifically allocated; (b) that the transaction is
a closing transaction; (c) the type of Future Contract and
such other information as may be necessary to identify the
Futures Contract underlying the Futures Option Contract; (d)
the exercise price; (e) the premium to be paid by the Fund;
(f) the expiration date; (g) the name of the broker or futures
commission merchant to whom the premium is to be paid; and (h)
the amount of cash and/or the amount and kind of Securities,
if any, to be withdrawn from the Senior Security Account for
such Series. The Custodian shall effect the withdrawals from
the Senior Security Account specified in the Certificate. The
withdrawals, if any, to be made from the Margin Account shall
be made by the Custodian in accordance with the terms and con-
ditions of the Margin Account Agreement.
8. Upon the expiration, exercise, or consummation of a
closing transaction with respect to, any Futures Contract Op-
tion written or purchased by the Fund and described in this
Article, the Custodian shall (a) delete such Futures Contract
Option from the statements delivered to the Fund pursuant to
paragraph 3 of Article III herein and, (b) make such withdraw-
als from and/or in the case of an exercise such deposits into
the Senior Security Account as may be specified in a Certifi-
cate. The deposits to and/or withdrawals from the Margin Ac-
count, if any, shall be made by the Custodian in accordance
with the terms and conditions of the Margin Account Agreement.
9. Futures Contracts acquired by the Fund through the
exercise of a Futures Contract Option described in this Ar-
ticle shall be subject to Article VI hereof.
10. Notwithstanding any other provision in this
Agreement to the contrary, the Custodian shall deliver cash
and Securities to a future commission merchant upon receipt of
a Certificate from the Fund or the Administrator specifying:
(a) the name of the future commission merchant; (b) the
specific cash and Securities to be delivered; (c) the date of
such delivery; and (d) the date of the agreement between the
Fund and such future commission merchant entered pursuant to
Rule 17f-6 under the Investment Company Act 1940, as amended.
Each delivery of such a Certificate by the Fund shall
constitute (x) a representation and warranty by the Fund that
the Rule 17f-6 agreement has been duly authorized, executed
and delivered by the Fund and the future commission merchant
and complies with Rule 17f-6, and (y) an agreement by the Fund
that the Custodian shall not be liable for the acts or
omissions of any such future commission merchant.
ARTICLE VIII
SHORT SALES
1. Promptly after any short sales by any Series of the
Fund, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying: (a) the
Series for which such short sale was made; (b) the name of the
issuer and the title of the Security; (c) the number of shares
or principal amount sold, and accrued interest or dividends,
if any; (d) the dates of the sale and settlement; (e) the sale
price per unit; (f) the total amount credited to the Fund upon
such sale, if any, (g) the amount of cash and/or the amount
and kind of Securities, if any, which are to be deposited in a
Margin Account and the name in which such Margin Account has
been or is to be established; (h) the amount of cash and/or
the amount and kind of Securities, if any, to be deposited in
a Senior Security Account, and (i) the name of the broker
through whom such short sale was made. The Custodian shall
upon its receipt of a statement from such broker confirming
such sale and that the total amount credited to the Fund upon
such sale, if any, as specified in the Certificate is held by
such broker for the account of the Custodian (or any nominee
of the Custodian) as custodian of the Fund, issue a receipt or
make the deposits into the Margin Account and the Senior Secu-
rity Account specified in the Certificate.
2. In connection with the closing-out of any short
sale, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying with respect
to each such closing out: (a) the Series for which such
transaction is being made; (b) the name of the issuer and the
title of the Security; (c) the number of shares or the princi-
pal amount, and accrued interest or dividends, if any, re-
quired to effect such closing-out to be delivered to the bro-
ker; (d) the dates of closing-out and settlement; (e) the pur-
chase price per unit; (f) the net total amount payable to the
Fund upon such closing-out; (g) the net total amount payable
to the broker upon such closing-out; (h) the amount of cash
and the amount and kind of Securities to be withdrawn, if any,
from the Margin Account; (i) the amount of cash and/or the
amount and kind of Securities, if any, to be withdrawn from
the Senior Security Account; and (j) the name of the broker
through whom the Fund is effecting such closing-out. The Cus-
todian shall, upon receipt of the net total amount payable to
the Fund upon such closing-out, and the return and/or cancel-
lation of the receipts, if any, issued by the Custodian with
respect to the short sale being closed-out, pay out of the
moneys held for the account of the Fund to the broker the net
total amount payable to the broker, and make the withdrawals
from the Margin Account and the Senior Security Account, as
the same are specified in the Certificate.
ARTICLE IX
REVERSE REPURCHASE AGREEMENTS
1. Promptly after the Fund enters a Reverse Repurchase
Agreement with respect to Securities and money held by the
Custodian hereunder, the Fund shall deliver or cause the Ad-
ministrator to deliver to the Custodian a Certificate, or in
the event such Reverse Repurchase Agreement is a Money Market
Security, a Certificate or Oral Instructions specifying: (a)
the Series for which the Reverse Repurchase Agreement is en-
tered; (b) the total amount payable to the Fund in connection
with such Reverse Repurchase Agreement and specifically al-
located to such Series; (c) the broker or dealer through or
with whom the Reverse Repurchase Agreement is entered; (d) the
amount and kind of Securities to be delivered by the Fund to
such broker or dealer; (e) the date of such Reverse Repurchase
Agreement; and (f) the amount of cash and/or the amount and
kind of Securities, if any, specifically allocated to such
Series to be deposited in a Senior Security Account for such
Series in connection with such Reverse Repurchase Agreement.
The Custodian shall, upon receipt of the total amount payable
to the Fund specified in the Certificate or Oral Instructions
make the delivery to the broker or dealer, and the deposits,
if any, to the Senior Security Account, specified in such Cer-
tificate or Oral Instructions.
2. Upon the termination of a Reverse Repurchase Agree-
ment described in preceding paragraph 1 of this Article, the
Fund shall deliver or cause the Administrator to deliver a
Certificate or, in the event such Reverse Repurchase Agreement
is a Money Market Security, a Certificate or Oral Instructions
to the Custodian specifying: (a) the Reverse Repurchase
Agreement being terminated and the Series for which same was
entered; (b) the total amount payable by the Fund in
connection with such termination; (c) the amount and kind of
Securities to be received by the Fund and specifically
allocated to such Series in connection with such termination;
(d) the date of termination; (e) the name of the broker or
dealer with or through whom the Reverse Repurchase Agreement
is to be terminated; and (f) the amount of cash and/or the
amount and kind of Securities to be withdrawn from the Senior
Securities Account for such Series. The Custodian shall, upon
receipt of the amount and kind of Securities to be received by
the Fund specified in the Certificate or Oral Instructions,
make the payment to the broker or dealer, and the withdrawals,
if any, from the Senior Security Account, specified in such
Certificate or Oral Instructions.
ARTICLE X
LOAN OF PORTFOLIO SECURITIES OF THE FUND
1. Promptly after each loan of portfolio Securities
specifically allocated to a Series held by the Custodian here-
under, the Fund shall deliver or cause the Administrator to
deliver to the Custodian a Certificate specifying with respect
to each such loan: (a) the Series to which the loaned Securi-
ties are specifically allocated; (b) the name of the issuer
and the title of the Securities, (c) the number of shares or
the principal amount loaned, (d) the date of loan and deliv-
ery, (e) the total amount to be delivered to the Custodian
against the loan of the Securities, including the amount of
cash collateral and the premium, if any, separately identi-
fied, and (f) the name of the broker, dealer, or financial
institution to which the loan was made. The Custodian shall
deliver the Securities thus designated to the broker, dealer
or financial institution to which the loan was made upon re-
ceipt of the total amount designated as to be delivered
against the loan of Securities. The Custodian may accept pay-
ment in connection with a delivery otherwise than through the
Book-Entry System or Depository only in the form of a certi-
fied or bank cashier's check payable to the order of the Fund
or the Custodian drawn on New York Clearing House funds and
may deliver Securities in accordance with the customs prevail-
ing among dealers in securities.
2. Promptly after each termination of the loan of Secu-
rities by the Fund, the Fund shall deliver or cause the Admin-
istrator to deliver to the Custodian a Certificate specifying
with respect to each such loan termination and return of Secu-
rities: (a) the Series to which the loaned Securities are
specifically allocated; (b) the name of the issuer and the
title of the Securities to be returned, (c) the number of
shares or the principal amount to be returned, (d) the date of
termination, (e) the total amount to be delivered by the Cus-
todian (including the cash collateral for such Securities mi-
nus any offsetting credits as described in said Certificate),
and (f) the name of the broker, dealer, or financial institu-
tion from which the Securities will be returned. The Custo-
dian shall receive all Securities returned from the broker,
dealer, or financial institution to which such Securities were
loaned and upon receipt thereof shall pay, out of the moneys
held for the account of the Fund, the total amount payable
upon such return of Securities as set forth in the Certifi-
cate.
ARTICLE XI
CONCERNING MARGIN ACCOUNTS, SENIOR SECURITY
ACCOUNTS, AND COLLATERAL ACCOUNTS
1. The Custodian shall, from time to time, make such
deposits to, or withdrawals from, a Senior Security Account as
specified in a Certificate received by the Custodian. Such
Certificate shall specify the Series for which such deposit or
withdrawal is to be made and the amount of cash and/or the
amount and kind of Securities specifically allocated to such
Series to be deposited in, or withdrawn from, such Senior Se-
curity Account for such Series. In the event the Certificate
fails to specify the Series, the name of the issuer, the title
and the number of shares or the principal amount of any par-
ticular Securities to be deposited by the Custodian into, or
withdrawn from, a Senior Securities Account, the Custodian
shall be under no obligation to make any such deposit or with-
drawal and shall so notify the Administrator.
2. The Custodian shall make deliveries or payments from
a Margin Account to the broker, dealer, futures commission
merchant or Clearing Member in whose name, or for whose ben-
efit, the account was established as specified in the Margin
Account Agreement.
3. Amounts received by the Custodian as payments or
distributions with respect to Securities deposited in any Mar-
gin Account shall be dealt with in accordance with the terms
and conditions of the Margin Account Agreement.
4. The Custodian shall have a continuing lien and secu-
rity interest in and to any property at any time held by the
Custodian in any Collateral Account described herein. In ac-
cordance with applicable law the Custodian may enforce its
lien and realize on any such property whenever the Custodian
has made payment or delivery pursuant to any Put Option guar-
antee letter or similar document or any receipt issued hereun-
der by the Custodian. In the event the Custodian should real-
ize on any such property net proceeds which are less than the
Custodian's obligations under any Put Option guarantee letter
or similar document or any receipt, such deficiency shall be a
debt owed the Custodian by the Fund within the scope of Ar-
ticle XIV herein.
5. On each business day the Custodian shall furnish the
Fund with a statement with respect to each Margin Account in
which money or Securities are held specifying as of the close
of business on the previous business day: (a) the name of the
Margin Account; (b) the amount and kind of Securities held
therein; and (c) the amount of money held therein. The Custo-
dian shall make available upon request to any broker, dealer,
or futures commission merchant specified in the name of a Mar-
gin Account a copy of the statement furnished the Fund with
respect to such Margin Account.
6. Promptly after the close of business on each busi-
ness day in which cash and/or Securities are maintained in a
Collateral Account for any Series, the Custodian shall furnish
the Administrator with a statement with respect to such Col-
lateral Account specifying the amount of cash and/or the
amount and kind of Securities held therein. No later than the
close of business next succeeding the delivery to the Fund of
such statement, the Fund shall deliver or cause the Adminis-
trator to deliver to the Custodian a Certificate specifying
the then market value of the Securities described in such
statement. In the event such then market value is indicated
to be less than the Custodian's obligation with respect to any
outstanding Put Option guarantee letter or similar document,
the Fund shall promptly specify or cause the Administrator to
promptly specify in a Certificate the additional cash and/or
Securities to be deposited in such Collateral Account to
eliminate such deficiency.
ARTICLE XII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. The Fund shall deliver or cause the Administrator to
deliver to the Custodian a copy of the resolution of the Board
of Trustees of the Fund, certified by the Secretary, the
Clerk, any Assistant Secretary or any Assistant Clerk, either
(i) setting forth with respect to the Series specified therein
the date of the declaration of a dividend or distribution, the
date of payment thereof, the record date as of which share-
holders entitled to payment shall be determined, the amount
payable per Share of such Series to the shareholders of record
as of that date and the total amount payable to the Dividend
Agent and any sub-dividend agent or co-dividend agent of the
Fund on the payment date, or (ii) authorizing with respect to
the Series specified therein the declaration of dividends and
distributions on a daily basis and authorizing the Custodian
to rely on Oral Instructions or a Certificate setting forth
the date of the declaration of such dividend or distribution,
the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the
amount payable per Share of such Series to the shareholders of
record as of that date and the total amount payable to the
Dividend Agent on the payment date.
2. Upon the payment date specified in such resolution,
Oral Instructions or Certificate, as the case may be, the Cus-
todian shall pay out of the moneys held for the account of
each Series the total amount payable to the Dividend Agent and
any sub-dividend agent or co-dividend agent of the Fund with
respect to such Series.
ARTICLE XIII
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares, it shall
deliver or cause the Administrator to deliver to the Custodian
a Certificate duly specifying:
(a) The Series, the number of Shares sold, trade
date, and price; and
(b) The amount of money to be received by the Cus-
todian for the sale of such Shares and specifically allocated
to the separate account in the name of such Series.
2. Upon receipt of such money from the Transfer Agent,
the Custodian shall credit such money to the separate account
in the name of the Series for which such money was received.
3. Upon issuance of any Shares of any Series described
in the foregoing provisions of this Article, the Custodian
shall pay, out of the money held for the account of such Se-
ries, all original issue or other taxes required to be paid by
the Fund in connection with such issuance upon the receipt of
a Certificate specifying the amount to be paid.
4. Except as provided hereinafter, whenever the Fund
desires the Custodian to make payment out of the money held by
the Custodian hereunder in connection with a redemption of any
Shares, it shall deliver or cause the Administrator to deliver
to the Custodian a Certificate specifying:
(a) The number and Series of Shares redeemed; and
(b) The amount to be paid for such Shares.
5. Upon receipt from the Transfer Agent of an advice
setting forth the Series and number of Shares received by the
Transfer Agent for redemption and that such Shares are in good
form for redemption, the Custodian shall make payment to the
Transfer Agent out of the moneys held in the separate account
in the name of the Series the total amount specified in the
Certificate delivered pursuant to the foregoing paragraph 4 of
this Article.
6. Notwithstanding the above provisions regarding the
redemption of any Shares, whenever any Shares are redeemed
pursuant to any check redemption privilege which may from time
to time be offered by the Fund, the Custodian, unless other-
wise instructed by a Certificate, shall, upon receipt of an
advice from the Fund or its agent setting forth that the re-
demption is in good form for redemption in accordance with the
check redemption procedure, honor the check presented as part
of such check redemption privilege out of the moneys held in
the separate account of the Series of the Shares being re-
deemed.
ARTICLE XIV
OVERDRAFTS OR INDEBTEDNESS
1. If the Custodian, should in its sole discretion ad-
vance funds on behalf of any Series which results in an over-
draft because the moneys held by the Custodian in the separate
account for such Series shall be insufficient to pay the total
amount payable upon a purchase of Securities specifically al-
located to such Series, as set forth in a Certificate or Oral
Instructions, or which results in an overdraft in the separate
account of such Series for some other reason, or if the Fund
is for any other reason indebted to the Custodian with respect
to a Series, including any indebtedness to The Bank of New
York under the Fund's Cash Management and Related Services
Agreement, (except a borrowing for investment or for temporary
or emergency purposes using Securities as collateral pursuant
to a separate agreement and subject to the provisions of para-
graph 2 of this Article), such overdraft or indebtedness shall
be deemed to be a loan made by the Custodian to the Fund for
such Series payable on demand and shall bear interest from the
date incurred at a rate per annum (based on a 360-day year for
the actual number of days involved) equal to 1/2% over
Custodian's prime commercial lending rate in effect from time
to time, such rate to be adjusted on the effective date of any
change in such prime commercial lending rate but in no event
to be less than 6% per annum, or at such other rate per annum,
if any, as the Fund and the Custodian may agree upon in
writing from time to time. In addition, the Fund hereby
agrees that the Custodian shall have a continuing lien and
security interest in and to any property specifically al-
located to such Series at any time held by it for the benefit
of such Series or in which the Fund may have an interest which
is then in the Custodian's possession or control or in posses-
sion or control of any third party acting in the Custodian's
behalf. The Fund authorizes the Custodian, in its sole dis-
cretion, at any time to charge any such overdraft or indebted-
ness together with interest due thereon against any balance of
account standing to such Series' credit on the Custodian's
books. In addition, the Fund hereby covenants that on each
Business Day on which either it intends to enter a Reverse
Repurchase Agreement and/or otherwise borrow from a third
party, or which next succeeds a Business Day on which at the
close of business the Fund had outstanding a Reverse Repur-
chase Agreement or such a borrowing, it shall prior to 9 a.m.,
New York City time, advise the Custodian, in writing, of each
such borrowing, shall specify the Series to which the same
relates, and shall not incur any indebtedness not so specified
other than from the Custodian.
2. The Fund will cause to be delivered to the Custodian
by any bank (including, if the borrowing is pursuant to a
separate agreement, the Custodian) from which it borrows money
for investment or for temporary or emergency purposes using
Securities held by the Custodian hereunder as collateral for
such borrowings, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such
bank will loan to the Fund against delivery of a stated amount
of collateral. The Fund shall promptly deliver to the Custo-
dian a Certificate specifying with respect to each such bor-
rowing: (a) the Series to which such borrowing relates; (b)
the name of the bank, (c) the amount and terms of the borrow-
ing, which may be set forth by incorporating by reference an
attached promissory note, duly endorsed by the Fund, or other
loan agreement, (d) the time and date, if known, on which the
loan is to be entered into, (e) the date on which the loan
becomes due and payable, (f) the total amount payable to the
Fund on the borrowing date, (g) the market value of Securities
to be delivered as collateral for such loan, including the
name of the issuer, the title and the number of shares or the
principal amount of any particular Securities, and (h) a
statement specifying whether such loan is for investment pur-
poses or for temporary or emergency purposes and that such
loan is in conformance with the Investment Company Act of 1940
and the Fund's prospectus. The Custodian shall deliver on the
borrowing date specified in a Certificate the specified col-
lateral and the executed promissory note, if any, against de-
livery by the lending bank of the total amount of the loan
payable, provided that the same conforms to the total amount
payable as set forth in the Certificate. The Custodian may,
at the option of the lending bank, keep such collateral in its
possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory
note or loan agreement. The Custodian shall deliver such Se-
curities as additional collateral as may be specified in a
Certificate to collateralize further any transaction described
in this paragraph. The Fund shall cause all Securities re-
leased from collateral status to be returned directly to the
Custodian, and the Custodian shall receive from time to time
such return of collateral as may be tendered to it. In the
event that the Fund fails to specify in a Certificate the Se-
ries, the name of the issuer, the title and number of shares
or the principal amount of any particular Securities to be
delivered as collateral by the Custodian, the Custodian shall
not be under any obligation to deliver any Securities.
ARTICLE XV
INSTRUCTIONS
1. With respect to any software provided by the
Custodian to the Administrator in order for the Administrator
to transmit Instructions to the Custodian (the "Software"),
the Custodian grants to the Administrator a personal,
nontransferable and nonexclusive license to use the Software
solely for the purpose of transmitting Instructions on behalf
of the Fund to, and receiving communications from, the
Custodian in connection with its account(s). The
Administrator agrees not to sell, reproduce, lease or
otherwise provide, directly or indirectly, the Software or any
portion thereof to any third party without the prior written
consent of the Custodian.
2. The Administrator shall obtain and maintain at its
own cost and expense all equipment and services, including but
not limited to communications services, necessary for it to
utilize the Software and transmit Instructions to the
Custodian. The Custodian shall not be responsible for the
reliability, compatibility with the Software or availability
of any such equipment or services or the performance or
nonperformance by any nonparty to this Custody Agreement.
3. The Administrator acknowledges for itself and the
Fund that the Software, all data bases made available to the
Administrator by utilizing the Software (other than data bases
relating solely to the assets of the Fund and transactions
with respect thereto), and any proprietary data, processes,
information and documentation (other than which are or become
part of the public domain or are legally required to be made
available to the public) (collectively, the "Information"),
are the exclusive and confidential property of the Custodian.
The Administrator shall keep the Information confidential by
using the same care and discretion that the Administrator uses
with respect to its own confidential property and trade
secrets and shall neither make nor permit any disclosure
without the prior written consent of the Custodian. Upon
termination of this Agreement or the Software license granted
hereunder for any reason, the Fund shall return to the
Custodian all copies of the Information which are in its
possession or under its control or which the Fund distributed
to third parties.
4. The Custodian reserves the right to modify the
Software from time to time upon reasonable prior notice and
the Administrator shall install new releases of the Software
as the Custodian may direct. The Administrator agrees not to
modify or attempt to modify the Software without the
Custodian's prior written consent. The Administrator
acknowledges that any modifications to the Software, whether
by the Administrator or the Custodian and whether with or
without the Custodian's consent, shall become the property of
the Custodian.
5. The Custodian makes no warranties or representations
of any kind with regard to the Software or the method(s) by
which the Administrator may transmit Instructions to the
Custodian, express or implied, including but not limited to
any implied warranties or merchantability or fitness for a
particular purpose.
6. Where the method for transmitting Instructions by
the Administrator on behalf of the Fund involves an automatic
systems acknowledgment by the Custodian of its receipt of such
Instructions, then in the absence of such acknowledgment the
Custodian shall not be liable for any failure to act pursuant
to such Instructions, neither the Administrator nor the Fund
may claim that such Instructions were received by the
Custodian, and the Administrator or the Fund shall deliver a
Certificate by some other means.
7. (a) The Administrator and the Fund agree that where
the Administrator delivers to the Custodian Instructions
hereunder, it shall be the Administrator's sole responsibility
to ensure that only persons duly authorized by the
Administrator transmit such Instructions to the Custodian.
The Administrator will cause all persons transmitting
Instructions to the Custodian to treat applicable user and
authorization codes, passwords and authentication keys with
extreme care, and irrevocably authorizes the Custodian to act
in accordance with and rely upon Instructions received by it
pursuant hereto.
(b) The Administrator hereby represents,
acknowledges and agrees that it is fully informed of the
protections and risks associated with the various methods of
transmitting Instructions to the Custodian and that there may
be more secure methods of transmitting instructions to the
Custodian than the method(s) selected by the Administrator on
behalf of the Fund. The Fund hereby agree that the security
procedures (if any) to be followed in connection with the
Fund's transmission of Instructions provide a commercially
reasonable degree of protection in light of its particular
needs and circumstances.
8. The Administrator and the Fund hereby represent,
warrant and covenant to the Custodian that this Agreement has
been duly approved by a resolution of the Fund's Board of
Directors Trustees, and that its transmission of Instructions
pursuant hereto shall at all times comply with the Investment
Company Act of 1940, as amended.
9. The Fund shall notify the Custodian of any errors,
omissions or interruptions in, or delay or unavailability of,
its ability to send Instructions as promptly as practicable,
and in any event within 24 hours after the earliest of (i)
discovery thereof, (ii) the Business Day on which discovery
should have occurred through the exercise of reasonable care
and (iii) in the case of any error, the date of actual receipt
of the earliest notice which reflects such error, it being
agreed that discovery and receipt of notice may only occur on
a business day. The Custodian shall promptly advise the
Administrator whenever the Custodian learns of any errors,
omissions or interruption in, or delay or unavailability of,
the Fund's ability to send Instructions.
ARTICLE XVI
DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY
OF ANY SERIES HELD OUTSIDE OF THE UNITED STATES
1. The Custodian is authorized and instructed to
employ, as sub-custodian for each Series' Foreign Securities
(as such term is defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, as amended) and
other assets, the foreign banking institutions and foreign
securities depositories and clearing agencies designated on
Schedule I hereto ("Foreign Sub-Custodians") to carry out
their respective responsibilities in accordance with the terms
of the sub-custodian agreement between each such Foreign Sub-
Custodian and the Custodian, copies of which have been
previously delivered to the Fund and receipt of which is
hereby acknowledged (each such agreement, a "Foreign Sub-
Custodian Agreement"). Upon receipt of a Certificate,
together with a certified resolution substantially in the form
attached as Exhibit E of the Fund's Board of Trustees, the
Fund may designate any additional foreign sub-custodian with
which the Custodian has an agreement for such entity to act as
the Custodian's agent, as its sub-custodian and any such
additional foreign sub-custodian shall be deemed added to
Schedule I. Upon receipt of a Certificate from the Fund, the
Custodian shall cease the employment of any one or more
Foreign Sub-Custodians for maintaining custody of the Fund's
assets and such Foreign Sub-Custodian shall be deemed deleted
from Schedule I.
2. Each Foreign Sub-Custodian Agreement shall be
substantially in the form previously delivered to the Fund and
will not be amended in a way that materially adversely affects
the Fund without the Fund's prior written consent.
3. The Custodian shall identify on its books as
belonging to each Series of the Fund the Foreign Securities of
such Series held by each Foreign Sub-Custodian. At the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claims by the
Fund or any Series against a Foreign Sub-Custodian as a
consequence of any loss, damage, cost, expense, liability or
claim sustained or incurred by the Fund or any Series if and
to the extent that the Fund or such Series has not been made
whole for any such loss, damage, cost, expense, liability or
claim.
4. Upon request of the Fund, the Custodian will,
consistent with the terms of the applicable Foreign Sub-
Custodian Agreement, use reasonable efforts to arrange for the
independent accountants of the Fund to be afforded access to
the books and records of any Foreign Sub-Custodian insofar as
such books and records relate to the performance of such
Foreign Sub-Custodian under its agreement with the Custodian
on behalf of the Fund.
5. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the
securities and other assets of each Series held by Foreign
Sub-Custodians, including but not limited to, an
identification of entities having possession of each Series'
Foreign Securities and other assets, and advices or
notifications of any transfers of Foreign Securities to or
from each custodial account maintained by a Foreign Sub-
Custodian for the Custodian on behalf of the Series.
6. The Custodian shall furnish annually to the Fund, as
mutually agreed upon, information concerning the Foreign Sub-
Custodians employed by the Custodian. Such information shall
be similar in kind and scope to that furnished to the Fund in
connection with the Fund's initial approval of such Foreign
Sub-Custodians and, in any event, shall include information
pertaining to (i) the Foreign Custodians' financial strength,
general reputation and standing in the countries in which they
are located and their ability to provide the custodial
services required, and (ii) whether the Foreign Sub-Custodians
would provide a level of safeguards for safekeeping and
custody of securities not materially different form those
prevailing in the United States. The Custodian shall monitor
the general operating performance of each Foreign Sub-
Custodian. The Custodian agrees that it will use reasonable
care in monitoring compliance by each Foreign Sub-Custodian
with the terms of the relevant Foreign Sub-Custodian Agreement
and that if it learns of any breach of such Foreign Sub-
Custodian Agreement believed by the Custodian to have a
material adverse effect on the Fund or any Series it will
promptly notify the Fund of such breach. The Custodian also
agrees to use reasonable and diligent efforts to enforce its
rights under the relevant Foreign Sub-Custodian Agreement.
7. The Custodian shall transmit promptly to the Fund
all notices, reports or other written information received
pertaining to the Fund's Foreign Securities, including without
limitation, notices of corporate action, proxies and proxy
solicitation materials.
8. Notwithstanding any provision of this Agreement to
the contrary, settlement and payment for securities received
for the account of any Series and delivery of securities
maintained for the account of such Series may be effected in
accordance with the customary or established securities
trading or securities processing practices and procedures in
the jurisdiction or market in which the transaction occurs,
including, without limitation, delivery of securities to the
purchaser thereof or to a dealer therefor (or an agent for
such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities
from such purchaser or dealer.
9. Notwithstanding any other provision in this
Agreement to the contrary, with respect to any losses or
damages arising out of or relating to any actions or omissions
of any Foreign Sub-Custodian the sole responsibility and
liability of the Custodian shall be to take appropriate action
at the Fund's expense to recover such loss or damage from the
Foreign Sub-Custodian. It is expressly understood and agreed
that the Custodian's sole responsibility and liability shall
be limited to amounts so recovered from the Foreign Sub-
Custodian.
ARTICLE XVII
FX TRANSACTIONS
1. Whenever the Fund shall enter into an FX
Transaction, the Fund shall promptly deliver or cause the
Administrator to deliver to the Custodian a Certificate or
Oral Instructions specifying with respect to such FX
Transaction: (c) the Series to which such FX Transaction is
specifically allocated; (b) the type and amount of Currency to
be purchased by the Fund; (c) the type and amount of Currency
to be sold by the Fund; (d) the date on which the Currency to
be purchased is to be delivered; (e) the date on which the
Currency to be sold is to be delivered; and (f) the name of
the person from whom or through whom such currencies are to be
purchased and sold. Unless otherwise instructed by a
Certificate or Oral Instructions, the Custodian shall deliver,
or shall instruct a Foreign Sub-Custodian to deliver, the
Currency to be sold on the date on which such delivery is to
be made, as set forth in the Certificate, and shall receive,
or instruct a Foreign Sub-Custodian to receive, the Currency
to be purchased on the date as set forth in the Certificate.
2. Where the Currency to be sold is to be delivered on
the same day as the Currency to be purchased, as specified in
the Certificate or Oral Instructions, the Custodian or a
Foreign Sub-Custodian may arrange for such deliveries and
receipts to be made in accordance with the customs prevailing
from time to time among brokers or dealers in Currencies, and
such receipt and delivery may not be completed simultaneously.
The Fund assumes all responsibility and liability for all
credit risks involved in connection with such receipts and
deliveries, which responsibility and liability shall continue
until the Currency to be received by the Fund has been
received in full.
3. Any FX Transaction effected by the Custodian in
connection with this Agreement may be entered with the
Custodian, any office, branch or subsidiary of The Bank of New
York Company, Inc., or any Foreign Sub-Custodian acting as
principal or otherwise through customary banking channels.
The Fund may issue a standing Certificate with respect to FX
Transaction but the Custodian may establish rules or
limitations concerning any foreign exchange facility made
available to the Fund. The Fund shall bear all risks of
investing in Securities or holding Currency. Without limiting
the foregoing, the Fund shall bear the risks that rules or
procedures imposed by a Foreign Sub-Custodian or foreign
depositories, exchange controls, asset freezes or other laws,
rules, regulations or orders shall prohibit or impose burdens
or costs on the transfer to, by or for the account of the Fund
of Securities or any cash held outside the Fund's jurisdiction
or denominated in Currency other than its home jurisdiction or
the conversion of cash from one Currency into another
currency. The Custodian shall not be obligated to substitute
another Currency for a Currency (including a Currency that is
a component of a Composite Currency Unit) whose
transferability, convertibility or availability has been
affected by such law, regulation, rule or procedure. Neither
the Custodian nor any Foreign Sub-Custodian shall be liable to
the Fund for any loss resulting from any of the foregoing
events.
ARTICLE XVIII
CONCERNING THE CUSTODIAN
1. Except as hereinafter provided, or as provided in
Article XVI neither the Custodian nor its nominee shall be
liable for any loss or damage, including reasonable counsel
fees, resulting from its action or omission to act or
otherwise, either hereunder or under any Margin Account
Agreement, except for any such loss or damage arising out of
its own negligence or willful misconduct. The Custodian
agrees to indemnify and hold harmless the Trust and Trust's
Trustees and officers to the extent described below against
any loss as a result of any breach or violation of this
Agreement by the Custodian or its officers, employees and
agents or its nominees, resulting from their negligence or
willful misconduct. The Custodian may, with respect to ques-
tions of law arising hereunder or under any Margin Account
Agreement, apply for and obtain the advice and opinion of
counsel to the Fund or of its own counsel, at the expense of
the Fund, and shall be fully protected with respect to any-
thing done or omitted by it in good faith in conformity with
such advice or opinion. The Custodian shall be liable to the
Fund for any loss or damage resulting from the use of the
Book-Entry System or any Depository arising by reason of any
negligence or willful misconduct on the part of the Custodian
or any of its employees or agents. Notwithstanding the
foregoing, or any other provision contained in this Agreement,
in no event shall the Custodian be liable to the Trust, its
Trustees or officers, or any third party, for special,
indirect or consequential damages, or lost profits or loss of
business, arising under or in connection with this Agreement,
even if previously informed of the possibility of such damages
and regardless of the form of action.
2. Without limiting the generality of the foregoing,
the Custodian shall be under no obligation to inquire into,
and shall not be liable for:
(a) The validity of the issue of any Securities
purchased, sold, or written by or for the Fund, the legality
of the purchase, sale or writing thereof, or the propriety of
the amount paid or received therefor;
(b) The legality of the sale or redemption of any
Shares, or the propriety of the amount to be received or paid
therefor;
(c) The legality of the declaration or payment of
any dividend by the Fund;
(d) The legality of any borrowing by the Fund using
Securities as collateral;
(e) The legality of any loan of portfolio Securi-
ties, nor shall the Custodian be under any duty or obligation
to see to it that any cash collateral delivered to it by a
broker, dealer, or financial institution or held by it at any
time as a result of such loan of portfolio Securities of the
Fund is adequate collateral for the Fund against any loss it
might sustain as a result of such loan. The Custodian spe-
cifically, but not by way of limitation, shall not be under
any duty or obligation periodically to check or notify the
Fund that the amount of such cash collateral held by it for
the Fund is sufficient collateral for the Fund, but such duty
or obligation shall be the sole responsibility of the Fund.
In addition, the Custodian shall be under no duty or obliga-
tion to see that any broker, dealer or financial institution
to which portfolio Securities of the Fund are lent pursuant to
Article XIV of this Agreement makes payment to it of any divi-
dends or interest which are payable to or for the account of
the Fund during the period of such loan or at the termination
of such loan, provided, however, that the Custodian shall
promptly notify the Fund in the event that such dividends or
interest are not paid and received when due; or
(f) The sufficiency or value of any amounts of
money and/or Securities held in any Margin Account, Senior
Security Account or Collateral Account in connection with
transactions by the Fund. In addition, the Custodian shall be
under no duty or obligation to see that any broker, dealer,
futures commission merchant or Clearing Member makes payment
to the Fund of any variation margin payment or similar payment
which the Fund may be entitled to receive from such broker,
dealer, futures commission merchant or Clearing Member, to see
that any payment received by the Custodian from any broker,
dealer, futures commission merchant or Clearing Member is the
amount the Fund is entitled to receive, or to notify the Fund
of the Custodian's receipt or non-receipt of any such pay-
ment.
3. The Custodian shall not be liable for, or considered
to be the Custodian of, any money, whether or not represented
by any check, draft, or other instrument for the payment of
money, received by it on behalf of the Fund until the Custo-
dian actually receives and collects such money directly or by
the final crediting of the account representing the Fund's
interest at the Book-Entry System or the Depository.
4. The Custodian shall have no responsibility and shall
not be liable for ascertaining or acting upon any calls, con-
versions, exchange offers, tenders, interest rate changes or
similar matters relating to Securities held in the Depository,
unless the Custodian shall have actually received timely no-
tice from the Depository. In no event shall the Custodian
have any responsibility or liability for the failure of the
Depository to collect, or for the late collection or late
crediting by the Depository of any amount payable upon Securi-
ties deposited in the Depository which may mature or be re-
deemed, retired, called or otherwise become payable. However,
upon receipt of a Certificate from the Fund of an overdue
amount on Securities held in the Depository the Custodian
shall make a claim against the Depository on behalf of the
Fund, except that the Custodian shall not be under any obliga-
tion to appear in, prosecute or defend any action suit or pro-
ceeding in respect to any Securities held by the Depository
which in its opinion may involve it in expense or liability,
unless indemnity satisfactory to it against all expense and
liability be furnished as often as may be required.
5. The Custodian shall not be under any duty or obliga-
tion to take action to effect collection of any amount due to
the Fund from the Transfer Agent of the Fund nor to take any
action to effect payment or distribution by the Transfer Agent
of the Fund of any amount paid by the Custodian to the Trans-
fer Agent of the Fund in accordance with this Agreement.
6. The Custodian shall not be under any duty or obliga-
tion to take action to effect collection of any amount if the
Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation,
unless and until (i) it shall be directed to take such action
by a Certificate and (ii) it shall be assured to its satisfac-
tion of reimbursement of its costs and expenses in connection
with any such action.
7. The Custodian may in addition to the employment of
Foreign Sub-Custodians pursuant to Article XVI appoint one or
more banking institutions as Depository or Depositories, as
Sub-Custodian or Sub-Custodians, or as Co-Custodian or
Co-Custodians including, but not limited to, banking institu-
tions located in foreign countries, of Securities and moneys
at any time owned by the Fund, upon such terms and conditions
as may be approved in a Certificate or contained in an agree-
ment executed by the Custodian, the Fund and the appointed
institution.
8. The Custodian shall not be under any duty or obliga-
tion (a) to ascertain whether any Securities at any time de-
livered to, or held by it or by any Foreign Sub-Custodian, for
the account of the Fund and specifically allocated to a Series
are such as properly may be held by the Fund or such Series
under the provisions of its then current prospectus, or (b) to
ascertain whether any transactions by the Fund, whether or not
involving the Custodian, are such transactions as may properly
be engaged in by the Fund.
9. The Custodian shall be entitled to receive and the
Fund agrees to pay to the Custodian all out-of-pocket expenses
and such compensation as may be agreed upon from time to time
between the Custodian and the Fund. The Fund represents that
the Administrator has agreed to pay such compensation and ex-
penses promptly upon receipt of statements therefor, and
hereby directs the Custodian to (i) send all statements for
compensation to its attention care of FPS at the following
address: FPS Services, Inc., 3200 Horizon Drive, King of
Prussia, PA 19406-0903, Attention: Mr. Elmer Gardner, Senior
Vice President, and (ii) accept all payments made by Fund/Plan
in the Fund's name as if such payments were made directly by
the Fund. The Fund shall pay to FPS fees for services
(including custodian services provided by the Custodian) in
accordance with the Administration Agreement. The Custodian's
compensation for services rendered hereunder is set forth in a
separate agreement between the Custodian and Fund/Plan.
Should Fund/Plan fail to pay or remit such compensation to the
Custodian within 20 days of the date the same is due and pay-
able, Custodian shall notify the Fund. If such payment or
remittance is not received from FPS within 15 days of such
notice, then the Custodian will be entitled to debit the
Custody Account directly for such compensation. The Custodian
may charge compensation with respect to which it has properly
sent a notice to the Fund, as provided in the preceding sen-
tence, and any expenses with respect to a Series incurred by
the Custodian in the performance of its duties pursuant to
such agreement against any money specifically allocated to
such Series. Unless and until the Fund or the Administrator
instructs the Custodian by a Certificate to apportion any
loss, damage, liability or expense among the Series in a
specified manner, the Custodian shall also be entitled to
charge against any money held by it for the account of a Se-
ries such Series' pro rata share (based on such Series net
asset value at the time of the charge to the aggregate net
asset value of all Series at that time) of the amount of any
loss, damage, liability or expense, including counsel fees,
for which it shall be entitled to reimbursement under the pro-
visions of this Agreement. The expenses for which the Custo-
dian shall be entitled to reimbursement hereunder shall in-
clude, but are not limited to, the expenses of sub-custodians
and foreign branches of the Custodian incurred in settling
outside of New York City transactions involving the purchase
and sale of Securities of the Fund.
10. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be a
Certificate. The Custodian shall be entitled to rely upon any
Oral Instructions actually received by the Custodian. The
Fund agrees to forward or cause the Administrator to forward
to the Custodian a Certificate or facsimile thereof confirming
such Oral Instructions in such manner so that such Certificate
or facsimile thereof is received by the Custodian, whether by
hand delivery, telecopier or other similar device, or other-
wise, by the close of business of the same day that such Oral
Instructions are given to the Custodian. The Fund agrees that
the fact that such confirming instructions are not received by
the Custodian shall in no way affect the validity of the
transactions or enforceability of the transactions hereby au-
thorized by the Fund. The Fund agrees that the Custodian
shall incur no liability to the Fund in acting upon Oral In-
structions given to the Custodian hereunder concerning such
transactions provided such instructions reasonably appear to
have been received from an Officer.
11. The Custodian shall be entitled to rely upon any
instrument, instruction or notice received by the Custodian
and reasonably believed by the Custodian to be given in ac-
cordance with the terms and conditions of any Margin Account
Agreement. Without limiting the generality of the foregoing,
the Custodian shall be under no duty to inquire into, and
shall not be liable for, the accuracy of any statements or
representations contained in any such instrument or other no-
tice including, without limitation, any specification of any
amount to be paid to a broker, dealer, futures commission mer-
chant or Clearing Member.
12. The books and records pertaining to the Fund which
are in the possession of the Custodian shall be the property
of the Fund. Such books and records shall be prepared and
maintained as required by the Investment Company Act of 1940,
as amended, and other applicable securities laws and rules and
regulations. The Fund, or the Fund's authorized representa-
tives, shall have access to such books and records during the
Custodian's normal business hours. Upon the reasonable re-
quest of the Fund, copies of any such books and records shall
be provided by the Custodian to the Fund or the Fund's autho-
rized representative, and the Fund shall reimburse the Custo-
dian its expenses of providing such copies. Upon reasonable
request of the Fund, the Custodian shall provide in hard copy
or on micro-film, whichever the Custodian elects, any records
included in any such delivery which are maintained by the Cus-
todian on a computer disc, or are similarly maintained, and
the Fund shall reimburse the Custodian for its expenses of
providing such hard copy or micro-film.
13. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting
control of the Book-Entry System, the Depository or O.C.C.,
and with such reports on its own systems of internal account-
ing control as the Fund may reasonably request from time to
time.
14. The Fund agrees to indemnify the Custodian against
and save the Custodian harmless from all liability, claims,
losses and demands whatsoever, including attorney's fees, how-
soever arising or incurred because of or in connection with
this Agreement, including the Custodian's payment or
non-payment of checks pursuant to paragraph 6 of Article XIII
as part of any check redemption privilege program of the Fund,
except for any such liability, claim, loss and demand arising
out of the Custodian's own negligence or willful misconduct.
For any legal proceeding giving rise to the indemnification
set forth above in this paragraph, the Fund shall be entitled
to defend or prosecute any claim in the name of the Custodian
at its own expense and through counsel of its own choosing
reasonably acceptable to the Custodian if it gives written
notice to the Custodian within ten (10) Business days of re-
ceiving notice of such claim. Notwithstanding the foregoing,
the Custodian may participate in the litigation at its own
expense and with counsel of its own choosing.
15. Subject to the foregoing provisions of this Agree-
ment, including, without limitation, those contained in Ar-
ticle XVI the Custodian may deliver and receive Securities,
and receipts with respect to such Securities, and arrange for
payments to be made and received by the Custodian in ac-
cordance with the customs prevailing from time to time among
brokers or dealers in such Securities. When the Custodian is
instructed to deliver Securities against payment, delivery of
such Securities and receipt of payment therefor may not be
completed simultaneously. The Fund assumes all responsibility
and liability for all credit risks involved in connection with
the Custodian's delivery of Securities pursuant to Certifi-
cates or instructions of the Fund or the Administrator which
responsibility and liability shall continue until final pay-
ment in full has been received by the Custodian.
16. In the event the Custodian is advised by the Fund
that the Fund is no longer utilizing the services of the Ad-
ministrator, then the Custodian shall furnish or give to the
Fund the statements or notices described above as to be fur-
nished or given to the Administrator.
17. The Custodian shall have no duties or responsibili-
ties whatsoever except such duties and responsibilities as are
specifically set forth in this Agreement, and no covenant or
obligation shall be implied in this Agreement against the Cus-
todian. Without limiting the generality of the foregoing, the
Custodian shall have no duties or responsibilities by reason
of any terms or provisions in the Administration Agreement,
and if such Administration Agreement shall cease to be in ef-
fect the Custodian shall have no additional duties hereunder.
ARTICLE XIX
TERMINATION
1. Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in writing
specifying the date of such termination, which shall be not
less than ninety (90) days after the date of giving of such
notice, provided, however, that if such notice is sent by the
Fund and recites that it is being given contemporaneously with
a termination of the Custody Administration any Agency
Agreement with FPS, such notice may specify any date of
termination selected by the Fund. In the event such notice is
given by the Fund, it shall be accompanied by a copy of a
resolution of the Board of Trustees of the Fund, certified by
the Secretary, the Clerk, any Assistant Secretary or any
Assistant Clerk, electing to terminate this Agreement and
designating a successor custodian or custodians, each of which
shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits.
In the event such notice is given by the Custodian, the Fund
shall, on or before the termination date, deliver to the Cus-
todian a copy of a resolution of the Board of Trustees of the
Fund, certified by the Secretary, the Clerk, any Assistant
Secretary or any Assistant Clerk, designating a successor cus-
todian or custodians. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian
which shall be a bank or trust company having not less than
$2,000,000 aggregate capital, surplus and undivided profits.
Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver
directly to the successor custodian all Securities and moneys
then owned by the Fund and held by it as Custodian, after de-
ducting all fees, expenses and other amounts for the payment
or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the
Fund or the Custodian in accordance with the preceding para-
graph, the Fund shall upon the date specified in the notice of
termination of this Agreement and upon the delivery by the
Custodian of all Securities (other than Securities held in the
Book-Entry System which cannot be delivered to the Fund) and
moneys then owned by the Fund be deemed to be its own custo-
dian and the Custodian shall thereby be relieved of all duties
and responsibilities pursuant to this Agreement, other than
the duty with respect to Securities held in the Book Entry
System which cannot be delivered to the Fund to hold such Se-
curities hereunder in accordance with this Agreement.
ARTICLE XX
MISCELLANEOUS
1. Annexed hereto as Appendix A is a Certificate signed
by two of the present Officers of the Fund under its seal,
setting forth the names and the signatures of the present Of-
ficers. The Fund agrees to furnish to the Custodian a new
Certificate in similar form in the event that any such present
Officer ceases to be an Officer or in the event that other or
additional Officers are elected or appointed. Until such new
Certificate shall be received, the Custodian shall be fully
protected in acting under the provisions of this Agreement
upon Oral Instructions or signatures of the present Officers
as set forth in the last delivered Certificate.
2. Any notice or other instrument in writing, autho-
rized or required by this Agreement to be given to the Custo-
dian, shall be sufficiently given if addressed to the Custo-
dian and mailed or delivered to it at its offices at 90 Wash-
ington Street, New York, New York 10286, or at such other
place as the Custodian may from time to time designate in
writing.
3. Any notice or other instrument in writing, autho-
rized or required by this Agreement to be given to the Fund
shall be sufficiently given if addressed to the Fund and
mailed or delivered to it at its office at the address for the
Fund first above written, or at such other place as the Fund
may from time to time designate in writing, and any notice or
other instrument in writing authorized or required to be given
to the Administrator shall be sufficiently given if addressed
to the Administrator at such address as the Administrator may
from time to time designate in writing.
4. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties
with the same formality as this Agreement and approved by a
resolution of the Board of Trustees of the Fund.
5. This Agreement shall extend to and shall be binding
upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be
assignable by the Fund without the written consent of the Cus-
todian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of the Fund's
Board of Trustees.
6. This Agreement shall be construed in accordance with
the laws of the State of New York without giving effect to
conflict of laws principles thereof. Each party hereby con-
sents to the jurisdiction of a state or federal court situated
in New York City, New York in connection with any dispute
arising hereunder and hereby waives its right to trial by
jury.
7. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one
instrument.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective Officers,
thereunto duly authorized and their respective seals to be
hereunto affixed, as of the day and year first above written.
THE BJURMAN MICRO-CAP GROWTH FUND
/s/G. Andrew Bjurman
/s/O. Thomas Barry, III
[SEAL] By:_______________________
Attest:
/s/ Marivic Jimiera
_______________________
THE BANK OF NEW YORK
/s/ Stephen E. Grunston
[SEAL] By:______________________
Attest:
/s/ Vincent M. Blazewicz
_______________________<PAGE>
APPENDIX A
I, G. Andrew Bjurman, Co-President and I, O. Thomas Barry,
III, Co-President of THE BJURMAN MICRO-CAP GROWTH FUND,
a Delaware business trust (the "Fund"), do hereby certify that:
The following individuals including officers and employ-
ees of the Administrator have been duly authorized by the
Board of Trustees of the Fund in conformity with the Fund's
Declaration of Trust and By-Laws to give Certificates or Oral
Instructions on behalf of the Fund, and the signatures set
forth opposite their respective names are their true and cor-
rect signatures:
Name Signature
G.Andrew Bjurman /s/ G. Andrew Bjurman
O. Thomas Barry, III /s/ O. Thomas Barry, III
<PAGE>
APPENDIX B
PORTFOLIO
BJURMAN MICRO-CAP GROWTH FUND <PAGE>
APPENDIX C
I, Vincent Blazewicz, a Vice President with THE BANK OF
NEW YORK do hereby designate the following publications:
The Bond Buyer
Depository Trust Company Notices
Financial Daily Card Service
JJ Kenney Municipal Bond Service
London Financial Times
New York Times
Standard & Poor's Called Bond Record
Wall Street Journal<PAGE>
EXHIBIT A
CERTIFICATION
The undersigned, G. Andrew Bjurman and O. Thomas Barry, III,
hereby certifies that he or she is the duly elected and acting
Co-Presidents of THE BJURMAN MICRO-CAP GROWTH FUND, a Delaware
business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on March 5 , 1997,
at which a quorum was at all times present and that such reso-
lution has not been modified or rescinded and is in full force
and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 25, 1997
(the "Custody Agreement") is authorized and instructed on
a continuous and ongoing basis to deposit in the Book-
Entry System, as defined in the Custody Agreement, all
securities eligible for deposit therein, regardless of
the Series to which the same are specifically allocated,
and to utilize the Book-Entry System to the extent pos-
sible in connection with its performance thereunder, in-
cluding, without limitation, in connection with settle-
ments of purchases and sales of securities, loans of se-
curities, and deliveries and returns of securities col-
lateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of THE BJURMAN MICRO-CAP GROWTH FUND, as of the 25th day
of March, 1997.
/s/ G. Andrew Bjurman
/s/ O. Thomas Barry, III
[SEAL]<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, G. Andrew Bjurman and O. Thomas Barry,II I,
hereby certifies that he or he is the duly elected and acting
Co-President of THE BJURMAN MICRO-CAP GROWTH FUND, a Delaware
business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on March 5, 1997,
at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 25, 1997 ,
(the "Custody Agreement") is authorized and instructed on
a continuous and ongoing basis until such time as it re-
ceives a Certificate, as defined in the Custody Agree-
ment, to the contrary to deposit in the Depository, as
defined in the Custody Agreement, all securities eligible
for deposit therein, regardless of the Series to which
the same are specifically allocated, and to utilize the
Depository to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
securities, loans of securities, and deliveries and re-
turns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of THE BJURMAN MICRO-CAP GROWTH FUND, as of the 25th
day of March, 1997.
/s/ G. Andrew Bjurman
/s/ O. Thomas Barry, III
[SEAL]<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, G. Andrew Bjurman and O. Thomas Barry, III,
hereby certifies that he or she is the duly elected and acting
Co-President of THE BJURMAN MICRO-CAP GROWTH FUND, a Delaware
business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on March 5, , 1997,
at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 25, 1997 ,
(the "Custody Agreement") is authorized and instructed on
a continuous and ongoing basis until such time as it re-
ceives a Certificate, as defined in the Custody Agree-
ment, to the contrary to deposit in the Participants
Trust Company as Depository, as defined in the Custody
Agreement, all securities eligible for deposit therein,
regardless of the Series to which the same are specifi-
cally allocated, and to utilize the Participants Trust
Company to the extent possible in connection with its
performance thereunder, including, without limitation, in
connection with settlements of purchases and sales of
securities, loans of securities, and deliveries and re-
turns of securities collateral.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of THE BJURMAN MICRO-CAP GROWTH FUND, as of the 25th day
of March, 1997.
/s/ G. Andrew Bjurman
/s/ O. Thomas Barry, III
[SEAL]<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, G. Andrew Bjurman and O. Thomas Barry, III,
hereby certifies that he or she is the duly elected and acting
Co-President of THE BJURMAN MICRO-CAP GROWTH FUND, a Delaware
business trust (the "Fund"), and further certifies that the
following resolution was adopted by the Board of Trustees of
the Fund at a meeting duly held on March 5,
1997, at which a quorum was at all times present and that such
resolution has not been modified or rescinded and is in full
force and effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to a Custody Agreement between The Bank of New
York and the Fund dated as of March 25, 1997 ,
(the "Custody Agreement") is authorized and instructed on
a continuous and ongoing basis until such time as it re-
ceives a Certificate, as defined in the Custody Agree-
ment, to the contrary, to accept, utilize and act with
respect to Clearing Member confirmations for Options and
transaction in Options, regardless of the Series to which
the same are specifically allocated, as such terms are
defined in the Custody Agreement, as provided in the Cus-
tody Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of THE BJURMAN MICRO-CAP FUND, as of the 25th day of
March, 1997 .
/s/ G. Andrew Bjurman
/s/ O. Thomas Barry, III
[SEAL]<PAGE>
EXHIBIT D
The undersigned, G. Andrew Bjurman and O. Thomas Barry, III,
hereby certifies that he or she is the duly elected and acting Co-
President of THE BJURMAN MICRO-CAP GROWTH FUND, a Delaware
business trust (the "Fund"), further certifies that the following
resolutions were adopted by the Board of Trustees of the Fund
at a meeting duly held on March 5, 1997, at which a
quorum was at all times present and that such resolutions have
not been modified or rescinded and are in full force and
effect as of the date hereof.
RESOLVED, that The Bank of New York, as Custodian
pursuant to the Custody Agreement between The Bank of New
York and the Fund dated as of March 25 , 1997 (the
"Custody Agreement") is authorized and instructed on a
continuous and ongoing basis to act in accordance with,
and to rely on Instructions (as defined in the Custody
Agreement).
RESOLVED, that the Fund shall establish access codes
and grant use of such access codes only to Officers of
the Fund as defined in the Custody Agreement, shall
establish internal safekeeping procedures to safeguard
and protect the confidentiality and availability of user
and access codes, passwords and authentication keys, and
shall use Instructions only in a manner that does not
contravene the Investment Company Act of 1940, as
amended, or the rules and regulations thereunder.
IN WITNESS WHEREOF, I have hereunto set my hand and the
seal of THE BJURMAN MICRO-CAP GROWTH FUND, as of the 25th day
of March, 1997.
/s/ G. Andrew Bjurman
/s/ O. Thomas Barry, III
[SEAL]<PAGE>
EXHIBIT E
The undersigned, G. Andrew Bjurman and O. Thomas Barry, III,
hereby certifies that he or she is the duly elected and acting
Co-President of THE BJURMAN MICRO-CAP GROWTH FUND, a Delaware
business trust (the "Fund"), further certifies that the fol-
lowing resolutions were adopted by the Board of Trustees of
the Fund at a meeting duly held on March 5,
1997, at which a quorum was at all times present and that such
resolutions have not been modified or rescinded and are in
full force and effect as of the date hereof.
RESOLVED, that the maintenance of the Fund's assets in
each country listed in Schedule I hereto be, and hereby is,
approved by the Board of Trustees as consistent with the best
interests of the Fund and its shareholders; and further
RESOLVED, that the maintenance of the Fund's assets with
the foreign branches of The Bank of New York (the "Bank")
listed in Schedule I located in the countries specified
therein, and with the foreign sub-custodians and depositories
listed in Schedule I located in the countries specified
therein be, and hereby is, approved by the Board of Directors
as consistent with the best interest of the Fund and its
shareholders; and further
RESOLVED, that the Sub-custodian Agreements presented to
this meeting between the Bank and each of the foreign
sub-custodians and depositories listed in Schedule I providing
for the maintenance of the Fund's assets with the applicable
entity, be and hereby are, approved by the Board of Trustees
as consistent with the best interests of the Fund and its
shareholders; and further
RESOLVED, that the appropriate officers of the Fund are
hereby authorized to place assets of the Fund with the afore-
mentioned foreign branches and foreign sub-custodians and de-
positories as hereinabove provided; and further
RESOLVED, that the appropriate officers of the Fund, or
any of them, are authorized to do any and all other acts, in
the name of the Fund and on its behalf, as they, or any of
them, may determine to be necessary or desirable and proper in
connection with or in furtherance of the foregoing resolu-
tions.
IN WITNESS WHEREOF, I hereunto set my hand and the seal
of THE BJURMAN MICRO-CAP GROWTH FUND, as of the 25th day of March,
1997.
/s/ G. Andrew Bjurman
/s/ O. Thomas Barry, III
[SEAL]
CONSENT OF INDEPENDENT AUDITORS
The Bjurman Funds:
We consent to (a) the use in this Pre-Effective Amendment No. 2 to
Registration Statement No. 333-16033 on Form N-1A of our report on
the statement of assets and liabilities of the Bjurman Micro-Cap
Growth Fund of The Bjurman Funds as of March 25, 1997 dated March 25,
1997 appearing in Part B, the Statement of Additional Information of
such Registration Statement, (b) the reference to us under the
heading "General Information" in the Prospectus which is part of such
Registration Statement, and (c) the reference to us under the heading
"Other Information" in Part B, the Statement of Additional
Information of such Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 25, 1997
LETTERHEAD
(George D. Bjurman & Associates)
(10100 Santa Monica Boulevard, Suite 1200)
(Los Angeles, CA 90067)
March 19, 1997
Securities & Exchange Commission
Division of Investment Management
Judiciary Plaza, 450 Fifth Street, N.W.
Washington, DC 20549
RE: The Bjurman Funds
File No. 811-07921
To whom it may concern:
I, G. Andrew Bjurman, president of George D. Bjurman & Associates,
propose to acquire as a separate series of shares:
4,166.667 shares of common stock (the "Shares") of Bjurman
Micro-Cap Growth Fund Shares at a purchase price of $12.00 per
share
These Shares will be issued in a private offering prior to the
effectiveness of the Registration Statement filed on Form N-1A by The
Bjurman Funds under the Securities Act of 1933. The Shares are being
purchased pursuant to Section 14 of the Investment Act of 1940 to
serve as the seed money for the Fund prior to the commencement of the
public offering of its shares.
In connection with such purchase, I understand that :(i) as the
purchaser, I intend to acquire the Shares for my own account as the
sole beneficial owner thereof and have no present intention of
redeeming or reselling the Shares so acquired; and (ii) in the event
any of the initial 4,166.667 shares are redeemed during the first
five years, the Fund may charge against my redemption proceeds a pro
rata portion of any unamortized organizational expenses which would
be borne by such Shares during the balance of the initial five year
period were they not to be redeemed.
I consent to the filing of this Investment Letter as an exhibit to
the Form N-1A Registration Statement of the Fund.
Sincerely,
/s/G. Andrew Bjurman
G. Andrew Bjurman
George D. Bjurman & Associates
10100 Santa Monica Boulevard, Suite 1200
Los Angeles, CA 90067<PAGE>
LETTERHEAD
(George D. Bjurman & Associates)
(10100 Santa Monica Boulevard, Suite 1200)
Los Angeles, CA 90067
March 19, 1997
Securities & Exchange Commission
Division of Investment Management
Judiciary Plaza, 450 Fifth Street, N.W.
Washington, DC 20549
RE: The Bjurman Funds
File No. 811-07921
To whom it may concern:
I, O. Thomas Barry, III, senior executive vice president of George D.
Bjurman & Associates, propose to acquire as a separate series of
shares:
4,166.667 shares of common stock (the "Shares") of Bjurman
Micro-Cap Growth Fund Shares at a purchase price of $12.00 per
share
These Shares will be issued in a private offering prior to the
effectiveness of the Registration Statement filed on Form N-1A by The
Bjurman Funds under the Securities Act of 1933. The Shares are being
purchased pursuant to Section 14 of the Investment Act of 1940 to
serve as the seed money for the Fund prior to the commencement of the
public offering of its shares.
In connection with such purchase, I understand that :(i) as the
purchaser, I intend to acquire the Shares for my own account as the
sole beneficial owner thereof and have no present intention of
redeeming or reselling the Shares so acquired; and (ii) in the event
any of the initial 4,166.667 shares are redeemed during the first
five years, the Fund may charge against my redemption proceeds a pro
rata portion of any unamortized organizational expenses which would
be borne by such Shares during the balance of the initial five year
period were they not to be redeemed.
I consent to the filing of this Investment Letter as an exhibit to
the Form N-1A Registration Statement of the Fund.
Sincerely,
/s/ O. Thomas Barry, III
O. Thomas Barry, III
George D. Bjurman & Associates
10100 Santa Monica Boulevard, Suite 1200
Los Angeles, CA 90067<PAGE>
