As filed with the U.S. Securities and Exchange Commission
on October 30, 1997 Registration Nos.: 333-16033
811-07921
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20546
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ 1 ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
X
Amendment No. [ 3 ]
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 including zip code)
(310) 553-6577
(Registrant's Telephone Number, including Area Code)
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.
Paul, Hastings, Janofsky & Walker LLP FPS Services, Inc.
345 California Street 3200 Horizon Drive, P.O. Box 61503
San Francisco, CA 94104-2635 King of Prussia, PA 19406-0903
It is proposed that this filing become effective:
[ X ] On October 30, 1997, pursuant to Paragraph (b) of Rule 485.
<PAGE>
THE BJURMAN FUNDS
CROSS-REFERENCE SHEET
[as required by 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 Financial Highlights
Information
4. General Description of Investment Objective;
Registrant 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 Prospectus Summary; General Information;
Securities Dividends and Taxes; Net Asset Value
7. Purchase of Securities Prospectus Summary;
Being Offered 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 Investment Policies and Techniques;
Policies 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
<PAGE>
15.Control Persons and Principal Principal Shareholders
Holders of Securities
16. Investment Advisory Investment Advisory and Other
and Other Services Services
17.Brokerage Allocation Portfolio Transactions and
and Other Practices Brokerage Commissions
18.Capital Stock and Other Information
Other Securities
19.Purchase, Redemption and Purchases; Redemptions
Pricing of Securities Being Offered
20.Tax Status Taxes
21. Underwriters Underwriter
22. Calculation of Performance Performance Information
Data
23.Financial Statements Incorporated by reference to the
Semi-Annual Report (unaudited)
dated September 30, 1997(/R)
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>
October 30, 1997
BJURMAN MICRO-CAP GROWTH FUND
The following information supplements the information contained in the
Fund's Prospectus dated March 31, 1997.
Financial Highlights
The following are unaudited "Financial Highlights" of the Bjurman
Micro-Cap Growth Fund for the period ended September 30, 1997. The
table below sets forth financial data for one share of capital stock
outstanding throughout the period presented.
For the Period
March 31, 1997*
through
September 30, 1997
(unaudited)
Net asset value, beginning of period $ 12.00
Income from investment operations:
Net investment loss (0.04)
Net realized and unrealized gain on investments
7.64
Total from investment operations 7.60
Net asset value, end of period $ 19.60
Total return 63.33% /1/
Ratios/Supplemental Data
Net assets, end of period (in 000s) $ 1,857
Ratio of expenses to average net assets:
Before expense reimbursement 39.91% /2/
After expense reimbursement 1.80% /2/
Ratio of net investment income to average net assets:
Before expense reimbursement (36.51%) /2/
After expense reimbursement (1.40%) /2/
Portfolio turnover rate 22.33% /1/
Average commission rate paid $ 0.0382
<R/>
* Commencement of investment operations
1 Not Annualized
2 Annualized
<PAGE>
BJURMAN MICRO-CAP FUND
PART A
The Prospectus for the Bjurman Micro-Cap Fund Prospectus (the "Fund")
dated March 31, 1997 is incorporated herein by reference to
the Pre-Effective Amendment No. 2 to Registration Statement on Form N-1A
(File No. 333-16033) filed with the U.S. Securities and Exchange Commission
on March 19, 1997. The Prospectus is supplemented by the Financial
Highlights as of September 30, 1997 filed herein to comply with the
Fund's undertaking to file a post-effective amendment containing
reasonably current financial statements which need not be certified
within four to six months of its effective date or commencement of
operations, whichever is later.<PAGE>
The Bjurman Funds
STATEMENT OF ADDITIONAL INFORMATION
March 31, 1997, as revised October 30, 1997
This Statement of Additional Information dated March 31, 1997, as
revised October 30, 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, as
supplemented October 30, 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 90067-4103
(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. . . . . . . . . . . . . . . . . . .
Principal Shareholders . . . . . . . . . . . . . .
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 <R/>. . . . . . . . . . . . . . . . .
<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 investment 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 be 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.
<PAGE>
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:
<PAGE>
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.
<PAGE>
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. As of September 30, 1997, the
Adviser had approximately $2.4 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 its terms and 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 its continuance is approved at least annually by
a vote of the Board of Trustees, including the Trustees
who are not "interested persons" of the Trust and have no
direct or indirect financial interest in the operation of the
Distribution Plan, 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. 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 WITH PRINCIPAL OCCUPATION
FUND
G. Andrew Bjurman/*/ 49 Co-President Mr. Bjurman joined George D.
George D. Bjurman & Bjurman & Associates when it
Assicates was founded in 1970 as Vice
10100 Santa Monica President and Portfolio
Boulevard, Suite 1200 Manager. At that time he
Los Angeles, CA assumed responsibility for the
90067-4103 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
Financial Analyst and a
Chartered Investment Counselor.
O. Thomas Barry, III /*/ 52 Co-President Mr. Barry, III, joined the firm
George D. Bjurman & in 1978 as Vice President and
Associates Senior Portfolio Manager. In
10100 Santa Monica 1979 he became Executive Vice
Boulevard, Suite 1200 President and assumed the
Los Angeles, CA responsibilities of Director of
90067-4103 Research. 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 in 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. 52 Trustee Mr. Hudson has been a Senior
CB Commercial Real Chairman of Vice-President of CB Commercial
Estate Audit Real Estate since 1993. Prior
21700 Oxnard Street Committee to that Mr. Hudson was
Suite 200 Associate Vice President of
Woodland Hills, CA Cushman Realty, a commercial
91367 real estate firm.
Joseph E. Maiolo 59 Trustee Mr. Maiolo is an industrial real
INCO Commercial estate broker/developer. He is
Brokerage a principal of INCO Commercial
14700 Firestone Brokerage, Joseph E. Maiolo &
Boulevard, #111 Associates, Inc. and Penta Pacific
La Mirda, CA Properties, Los Angeles.
90638
William Wallace 50 Trustee Mr. Wallace is involved in
Wallace Properties residential real estate. He is
5288 South Franklin Vice President of Wallace
Circle Properties.
Greenwood Village, CO
80121
COMPENSATION TABLE
Trustees and Officers
Estimated Aggregate Compensation Estimated total Compensation
from Trust for Fiscal Year Ending From Trust and Fund Complex
3/31/98 /1/ Paid to Trustees /2/
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
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.
* This Trustee is considered an "Interested Person" of the Trust as
defined under the 1940 Act.
/1/ For the period March 31, 1997 through September 30,
1997, Messrs. Maiolo, Hudson and Wallace were each paid $1,125.
/2/ This amount represents the estimated aggregate amount of
compensation to be paid to the Trustees for service on the Board of
Trustees for the calendar year ending December 31, 1997. There are no
other funds in the Fund Complex.
PRINCIPAL SHAREHOLDERS
As of October 7, 1997, the Trustees and officers, as a group,
beneficially owned 10,058 shares (10.2%) of the Fund.
As of October 7, 1997, the following persons owned of record or
beneficially more than 5% of the outstanding voting shares of the Fund:
Name & Address Percentage
Charles Schwab & Company, Inc. Household Account 12.5%
San Francisco, CA
Charles Schwab & Company, Inc. Household Account 7.0%
San Francisco, CA
Midway Ford Trust 18.5%
Los Angeles, CA
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, Martin Luther King 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. Paul, Hastings, Janofsky
and Walker, LLP, 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% U.S. withholding tax.
<PAGE>
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) 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 (iii) 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 addition, if necessary to
satisfy certain California State income tax requirements, the Fund
intends to 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.
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 U.S. 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.
<PAGE>
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 & Touche 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 accountants. Inquiries
regarding the Fund may be directed to the Adviser at (310) 553-6577 or
FPS at (800) 227-7264.
FINANCIAL STATEMENTS
The Fund's unaudited semi-annual financial statements, including the
notes thereto, dated September 30, 1997, are incorporated by reference
from the Fund's September 30, 1997 Semi-Annual Report to Shareholders.
<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 could 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
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.
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>
Delloitte &
Touche LLP 1000 Wilshire Boulevard
Los Angeles, CA 90017-2472
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
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
Included in Part A: Unaudited Financial Highlights, dated September
30, 1997, filed herewith electronically.
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.
Incorporated by reference in Part B to the Semi-Annual Report dated
September 30, 1997:
(1) Schedule of Investments at September 30, 1997 (unaudited).
(2) Statement of Assets and Liabilities at September 30, 1997
(unaudited).
(3) Statement of Operations for the period ended September 30,
1997 (unaudited).
(4) Statement of Changes in Net Assets for the period of March 31,
1997 (commencement of operations) to September 30, 1997
(unaudited).
(5) Notes to Financial Statements.
(6) Financial Highlights (unaudited).
(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 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 Pre-Effective
Amendment 1 filed on March 13, 1997.
(6) Underwriting Agreement -- Incorporated by reference to Exhibit
Number (6) of 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 electronically.
(b) Custody Administration Agreement-Incorporated by
reference to Exhibit Number (8b) of Pre-Effective
Amendment 1 filed on March 13, 1997.
(9) (a) Transfer Agent Services Agreement --
Incorporated by reference to Exhibit Number (9a)
of Pre-Effective Amendment 1 filed on March 13,
1997.
(b) Administration Agreement --Incorporated
by reference to Exhibit Number (9b) of
Pre-Effective Amendment 1 filed on March 13, 1997.
(c) Accounting Services Agreement --Incorporated by
reference to Exhibit Number (9c) of Pre-Effective
Amendment 1 filed on March 13, 1997.
(10) (a) Opinion and Consent of Heller Ehrman White & McAuliffe
regarding the legality of securities issued --Incorporated by
reference to Exhibit Number (10a) of Pre-Effective Amendment
1 filed on March 13, 1997.
(11) Consent of Independent Auditors -- filed herewith
electronically
(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 Pre-Effective Amendment 1
filed on March 13, 1997.
(16) Schedule for Computation of Performance Quotations --
None.
(17) Financial Data Schedule -- filed herewith electronically.
(18) Multiple Class Plan 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 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
Title of Class
Common Stock Number of Record Holders
(Par Value $.001) As of October 7, 1997
Bjurman Micro-Cap Growth Fund 40
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
September 30, 1997 had approximately $2.4 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 Bjurman Funds
Farrell Alpha Strategies
Focus Trust, Inc.
The Govett Funds, Inc.
IAA Trust Growth Fund, Inc.
IAA Trust Asset Allocation Fund, Inc.
IAA Trust Tax Exempt Bond Fund, Inc.
IAA Taxable Fixed Income Series Fund, Inc.
Matthews International Funds
McM Funds
Metropolitan West 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.
Stratton Growth Fund, Inc.
Stratton Monthly Dividend Shares, Inc.
Trainer, Wortham First Mutual Funds
(b) The table below sets forth certain information as to the
Underwriter's Directors, Officers and Control Persons:
Name and Principal Postion of Offices with Position and Offices
Business Address Distributor with Registrant
Kenneth J. Kempf Director and President None
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA
19406-0903
Lynne M. Cannon Vice President and None
3200 Horizon Drive Principal
P.O. Box 61503
King of Prussia, PA
19406-0903
Rocky C. Cavalieri Director and Vice None
3200 Horizon Drive President
P.O. Box 61503
King of Prussia, PA
19406-0903
Gerald J. Holland Director, Senior Vice None
3200 Horizon Drive President and Principal
P.O. Box 61503
King of Prussia, PA
19406-0903
Joseph M. O'Donnell, Esq. Director and Vice None
3200 Horizon Drive President
P.O. Box 61503
King of Prussia, PA
19406-0903
Sandra L. Adams Assistant Vice President None
3200 Horizon Drive and Principal
P.O. Box 61503
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
Bruno Di Stefano Principal 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.
<PAGE>
Item 32. Undertakings
(a) 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 30th day of October, 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 & 10/29/97
G. Andrew Bjurman Trustee
/s/ O. Thomas Barry, III Co-President & 10/29/97
O. Thomas Barry, III Trustee
/s/ William Wallace Trustee 10/29/97
William Wallace
/s/ Donald W. Hudson, Jr. Trustee 10/29/97
Donald W. Hudson, Jr.
/s/ Joseph E. Maiolo Trustee 10/29/97
Joseph E. Maiolo
/s/ Joseph M. O'Donnell
/*/By:/s/ Joseph M. O'Donnell, Esq., as Attorney-in-Fact
and Agent pursuant to Power of Attorney
<PAGE>
The Bjurman Funds
Index to Exhibits to Form N-1A
Exhibit
8(a) Custody Agreement
99B(11)(a) Consent of Independent Auditors
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001026968
<NAME> THE BJURMAN FUNDS
<SERIES>
<NUMBER> 1
<NAME> BJURMAN MICRO-CAP GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> MAR-31-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 1534616
<INVESTMENTS-AT-VALUE> 1878028
<RECEIVABLES> 22206
<ASSETS-OTHER> 9736
<OTHER-ITEMS-ASSETS> 58485
<TOTAL-ASSETS> 1968455
<PAYABLE-FOR-SECURITIES> 15736
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 95607
<TOTAL-LIABILITIES> 111343
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1517344
<SHARES-COMMON-STOCK> 94752
<SHARES-COMMON-PRIOR> 8333
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3644)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 343412
<NET-ASSETS> 1857112
<DIVIDEND-INCOME> 562
<INTEREST-INCOME> 602
<OTHER-INCOME> 0
<EXPENSES-NET> 5325
<NET-INVESTMENT-INCOME> (4161)
<REALIZED-GAINS-CURRENT> (3644)
<APPREC-INCREASE-CURRENT> 343412
<NET-CHANGE-FROM-OPS> 335607
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 86422
<NUMBER-OF-SHARES-REDEEMED> 3
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1757112
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2958
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 109176
<AVERAGE-NET-ASSETS> 593278
<PER-SHARE-NAV-BEGIN> 12.00
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> 7.64
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 19.6
<EXPENSE-RATIO> 1.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
CUSTODY AGREEMENT
Agreement made as of this day of ,
1997, between THE BJURMAN MICRO-CAP 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:<PAGE>
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 _______________, 199 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
- 2 -<PAGE>
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
- 3 -<PAGE>
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.
- 4 -<PAGE>
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.
- 5 -<PAGE>
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
- 6 -<PAGE>
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.
- 7 -<PAGE>
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
- 8 -<PAGE>
(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
- 9 -<PAGE>
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
- 10 -<PAGE>
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
- 11 -<PAGE>
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.
- 12 -<PAGE>
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.
- 13 -<PAGE>
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
- 14 -<PAGE>
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
- 15 -<PAGE>
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.
- 16 -<PAGE>
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,
- 17 -<PAGE>
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
- 18 -<PAGE>
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.
- 19 -<PAGE>
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
- 20 -<PAGE>
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
- 21 -<PAGE>
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
- 22 -<PAGE>
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
- 23 -<PAGE>
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),
- 24 -<PAGE>
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
- 25 -<PAGE>
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,
- 26 -<PAGE>
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
- 27 -<PAGE>
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
- 28 -<PAGE>
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
- 29 -<PAGE>
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
- 30 -<PAGE>
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.
- 31 -<PAGE>
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.
- 32 -<PAGE>
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
- 33 -<PAGE>
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
- 34 -<PAGE>
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
- 35 -<PAGE>
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
- 36 -<PAGE>
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
- 37 -<PAGE>
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
- 38 -<PAGE>
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
- 39 -<PAGE>
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
- 40 -<PAGE>
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
- 41 -<PAGE>
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.
- 42 -<PAGE>
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.
- 43 -<PAGE>
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 FUND
[SEAL] By:_______________________
Attest:
_______________________
THE BANK OF NEW YORK
[SEAL] By:_______________________
Attest:
_______________________<PAGE>
APPENDIX A
I, , President and I,
, of THE BJURMAN
MICRO-CAP 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
_____________________ _________________________<PAGE>
APPENDIX B
PORTFOLIO
BJURMAN MICRO-CAP 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, , hereby certifies
that he or she is the duly elected and acting
of THE BJURMAN MICRO-CAP 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 , 199 ,
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 , 199 ,
(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 FUND, as of the day of
, 199 .
[SEAL]<PAGE>
EXHIBIT B
CERTIFICATION
The undersigned, , hereby certifies
that he or she is the duly elected and acting
of THE BJURMAN MICRO-CAP 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 , 199 ,
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 , 199 ,
(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 FUND, as of the day of
, 199 .
[SEAL]<PAGE>
EXHIBIT B-1
CERTIFICATION
The undersigned, , hereby certifies
that he or she is the duly elected and acting
of THE BJURMAN MICRO-CAP 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 , 199 ,
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 , 199 ,
(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 FUND, as of the day of
, 199 .
[SEAL]<PAGE>
EXHIBIT C
CERTIFICATION
The undersigned, , hereby
certifies that he or she is the duly elected and acting
of THE BJURMAN MICRO-CAP 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 ,
199 , 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 , 199 ,
(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 day of
, 199 .
[SEAL]<PAGE>
EXHIBIT D
The undersigned, , hereby
certifies that he or she is the duly elected and acting
President of THE BJURMAN MICRO-CAP 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 , 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 , 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 FUND, as of the day of
, 1997.
[SEAL]<PAGE>
EXHIBIT E
The undersigned, , hereby cer-
tifies that he or she is the duly elected and acting
of THE BJURMAN MICRO-CAP 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 ,
199 , 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 FUND, as of the day of
, 199 .
[SEAL]
Exhibit 99B(11)(a)
CONSENT OF INDEPENDENT AUDITORS
The Bjurman Funds:
We hereby consent to (a) the use in this Post-Effective
Amendment No. 1 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 Fund of The Bjurman Funds as of
March 25, 1997 appearing in Part B, the Statement of Additional
Information of such Registration Statement, (b) the reference to us
the heading "General Information" in the Prospectus which is incorporated
by reference to such Registration Statement, and (c) the reference
to us under the heading "Other Information" appearing in Part B,
the Statement of Additional Information of such Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
October 24, 1997
