AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1997
File No. 333-25803
File No. 811-08189
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 1
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 1
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
(Formerly Fleming Capital Mutual Fund Group)
(Exact Name of Registrant as Specified in Charter)
c/o 320 Park Avenue
New York, New York 10022
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (212) 508-3600
Steven J. Paggioli
Investment Company Administration Corporation
479 West 22nd Street
New York, New York 10011
(Name and Address of Agent for Service)
Copies to:
RICHARD F. JACKSON, ESQUIRE
Morgan, Lewis & Bockius LLP
1800 M STREET, NW
WASHINGTON, DC 20036
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/X/ Approximate date of Proposed Public Offering:
As soon as practicable after the
effective date of this Registration Statement
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Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of units of beneficial interest is being registered
by this Registration Statement.
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FLEMING CAPITAL MUTUAL FUND GROUP, INC.
CROSS REFERENCE SHEET
PRE-EFFECTIVE AMENDMENT NO. 1
N-1A ITEM NO. LOCATION
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PART A -
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary; Expense Summary
Item 3. Condensed Financial Information *
Item 4. General Description of Registrant The Corporation and the Funds; Investment
Objectives; Investment Policies; Risk Factors;
Investment Limitations; General Information - The
Corporation; Description of Permitted Investments &
Risk Factors
Item 5. Management of the Fund The Adviser; The Administrator; The Transfer
Agent; The Distributor; Portfolio Transactions;
Expense Summary; General Information - Directors
of the Corporation
Item 5A. Management's Discussion of Fund *
Performance
Item 6. Capital Stock and Other Securities General Information - Voting Rights; General
Information - Shareholder Inquiries; General
Information - Dividends and Distributions; Taxes; General
Information - Beneficial Owners
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
PART B -
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History *
Item 13. Investment Objectives and Policies Investment Objectives (Prospectus); Investment
Policies (Prospectus); Investment Limitations;
Description of Permitted Investments
Item 14. Management of the Fund General Information - Directors of the Corporation
(Prospectus); Directors and Officers of the
Corporation
Item 15. Control Persons and Principal Holders of Directors and Officers of the Corporation
Securities
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Item 16. Investment Advisory and Other Services The Adviser (Prospectus and Statement of Additional
Information); The Administrator (Prospectus and
Statement of Additional Information); The Distributor
(Prospectus and Statement of Additional Information);
The Transfer Agent (Prospectus); General
Information - Counsel and Independent Auditors
(Prospectus); General Information -
Custodian (Prospectus)
Item 17. Brokerage Allocation Portfolio Transactions (Prospectus); Portfolio
Transactions
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption, and Pricing of Purchase and Redemption of Shares (Prospectus);
Securities Being Offered Purchase and Redemption of Shares; Determination of
Net Asset Value
Item 20. Tax Status Taxes (Prospectus); Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Performance Data Computation of Yield and Total Return
Item 23. Financial Statements Financial Information
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PART C -
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
* Not Applicable
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FLEMING CAPITAL MUTUAL FUND GROUP, INC.
Investment Adviser:
ROBERT FLEMING, INC.
Fleming Capital Mutual Fund Group, Inc. (the "Corporation") provides a
convenient and economical means of investing in professionally managed
portfolios of securities. This Prospectus offers shares of the following mutual
funds (each a "Fund" and, together, the "Funds"), each of which is a separate
series of the Corporation:
FLEMING FUND
FLEMING FLEDGLING FUND
This Prospectus concisely sets forth the information about the Corporation and
the Funds that a prospective investor should know before investing. Investors
are advised to read this Prospectus and retain it for future reference. A
Statement of Additional Information dated September 30, 1997 has been filed with
the Securities and Exchange Commission, and is available without charge by
calling 1-800-264-0592. The Statement of Additional Information is incorporated
into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
September 30, 1997
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TABLE OF CONTENTS
SUMMARY ......................................................................3
EXPENSE SUMMARY................................................................5
THE CORPORATION AND THE FUNDS..................................................6
INVESTMENT OBJECTIVES..........................................................6
INVESTMENT POLICIES............................................................6
RISK FACTORS...................................................................7
INVESTMENT LIMITATIONS.........................................................8
THE ADVISER....................................................................8
THE DISTRIBUTOR...............................................................10
THE ADMINISTRATOR.............................................................11
THE TRANSFER AGENT............................................................11
PORTFOLIO TRANSACTIONS........................................................11
PURCHASE AND REDEMPTION OF SHARES.............................................11
PERFORMANCE...................................................................16
TAXES .....................................................................17
GENERAL INFORMATION...........................................................18
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS.........................20
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SUMMARY
The following provides basic information about the Fleming Fund (the "Fleming
Fund") and Fleming Fledgling Fund (the "Fledgling Fund") (each a "Fund" and,
collectively, the "Funds"). The Funds are the two mutual funds comprising the
Fleming Capital Mutual Fund Group, Inc. (the "Corporation") and are advised by
Robert Fleming, Inc. (the "Adviser"). This summary is qualified in its entirety
by reference to the more detailed information provided elsewhere in this
Prospectus and in the Statement of Additional Information.
What is each Fund's investment objective and primary policies?
The Fleming Fund seeks growth from capital appreciation. It invests primarily in
a diversified portfolio of common stock and preferred stock of issuers the
Adviser believes have above average growth potential.
The Fledgling Fund seeks growth through capital appreciation. It invests
primarily in a diversified portfolio of common stock and preferred stock of
issuers with market capitalizations of not more than $3.0 billion that are
quoted on a stock exchange or traded on an over-the-counter market (OTC) that
the Adviser believes offer strong earnings growth potential.
What are the risks involved with investing in the Funds? The investment policies
of each Fund entail certain risks and considerations of which investors should
be aware. Each Fund invests in securities that fluctuate in value, and investors
should expect each Fund's net asset value per share to fluctuate in value. The
value of equity securities may be affected by the financial markets as well as
by developments impacting specific issuers. The Funds may enter into futures and
options transactions and may purchase zero coupon securities. Investments in
these instruments involve certain other risks.
For more information about each Fund, see "Investment Objectives," "Investment
Policies," "Risk Factors," and "Description of Permitted Investments and Risk
Factors."
Who is the Adviser? Robert Fleming, Inc. serves as the investment adviser to
each Fund. See "Expense Summary" and "The Adviser."
Who is the Administrator? Investment Company Administration Corporation (the
"Administrator") serves as the administrator for the Funds. See "Expense
Summary" and "The Administrator."
Who is the Distributor? First Fund Distributors, Inc. (the "Distributor") serves
as the distributor of the Funds' shares. See "The Distributor."
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Who is the Transfer Agent? Countrywide Fund Services, Inc. serves as the
transfer agent and dividend disbursing agent for the Corporation. See "The
Transfer Agent."
Is there a sales load? No, shares of each Fund are offered on a no-load basis.
Is there a minimum investment? The Funds require a minimum initial investment
for each Fund of $1,000,000, which the Adviser may waive at its discretion.
How do I purchase and redeem shares? Purchases and redemptions may be made
through the Transfer Agent on each day that the New York Stock Exchange is open
for business ("Business Day"). A purchase order will be effective as of the
Business Day received by the Transfer Agent if the Transfer Agent (or its
authorized agent) receives the order and payment, by check or in readily
available funds, prior to 4:00 p.m., Eastern time. Redemption orders received by
the Transfer Agent prior to 4:00 p.m., Eastern time on any Business Day will be
effective that day. The purchase and redemption price for shares is the net
asset value per share determined as of the end of the day the order is
effective. See "Purchase and Redemption of Shares."
How are distributions paid? Each Fund distributes substantially all of its net
investment income (exclusive of capital gains) in the form of periodic
dividends. Any capital gain is distributed at least annually. Distributions are
paid in additional shares unless the shareholder elects to receive the payment
in cash. See "Dividends and Distributions."
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EXPENSE SUMMARY
This table is designed to help a shareholder understand the costs of investing
in the Funds.
SHAREHOLDER TRANSACTION EXPENSES
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Sales Load Imposed on Purchases.............................................None
Sales Load Imposed on Reinvested Dividends..................................None
Deferred Sales Load.........................................................None
Redemption Fees ............................................................None
Exchange Fees...............................................................None
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ANNUAL FUND OPERATING EXPENSES (as a percentage of average net assets)
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Fleming Fund Fledgling Fund
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Advisory Fees .90% 1.00%
12b-1 Fees None None
Other Expenses (after reimbursements)(1) .35% .35%
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Total Fund Operating Expenses (after
fee waivers or reimbursements) (2) 1.25% 1.35%
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(1) "Other Expenses" are estimated for the current fiscal year. Absent
reimbursement, estimated "Other Expenses" for the Fleming and Fledgling
Funds would be 1.65% and 1.65%, respectively.
(2) Although not required to do so, the Adviser has agreed to waive its
advisory fee or reimburse expenses to each Fund to the extent necessary so
that the ratio of total operating expenses to average net assets will not
exceed 1.25% and 1.35% for the Fleming Fund and Fledgling Fund,
respectively. The Adviser reserves the right to terminate the waivers or
discontinue reimbursements at any time in its sole discretion. Absent fee
waivers and expense reimbursements, estimated "Total Fund Operating
Expenses" for the Fleming and Fledgling Funds would be 2.55% and 2.65%,
respectively.
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EXAMPLE
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Your would pay the following expenses on a $1,000 investment in a 1 year 3 years
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Fund assuming (1) a 5% annual return and (2) redemption at the
end of each time period.
Fleming Fund $13 $40
Fledgling Fund $14 $43
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THE EXAMPLE IS BASED UPON TOTAL OPERATING EXPENSES OF EACH FUND AFTER WAIVERS
AND REIMBURSEMENTS, IF ANY, AS SHOWN IN THE EXPENSE TABLE. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose of the expense table and
example is to assist the investor in understanding the various costs and
expenses that may be directly or indirectly borne by shareholders of the Funds.
Additional information may be found under "The Adviser" and "The Administrator."
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THE CORPORATION AND THE FUNDS
Fleming Capital Mutual Fund Group, Inc. (the "Corporation") offers shares in two
separately- managed mutual funds, each of which is a separate series of the
Corporation. Each share of each mutual fund represents an undivided,
proportionate interest in that mutual fund. This Prospectus offers shares of the
Corporation's Fleming Fund (the "Fleming Fund") and Fleming Fledgling Fund (the
"Fledgling Fund") (each a "Fund" and, together, the "Funds").
INVESTMENT OBJECTIVES
Fleming Fund -- The Fleming Fund seeks growth from capital appreciation.
Fledgling Fund -- The Fledgling Fund seeks growth through capital appreciation.
There can be no assurance that any Fund will achieve its investment objective.
INVESTMENT POLICIES
Fleming Fund
The Fleming Fund invests primarily (and, under normal conditions, at least 80%
of its total assets) in a diversified portfolio of common stocks and preferred
stock of issuers that the Adviser believes to have above average growth
potential. Any remaining assets may be invested in ADRs, warrants and rights,
securities convertible into common stock, debt securities, and other investment
companies. The Fund only will purchase securities that are traded on registered
exchanges or the over-the-counter market in the United States.
Fledgling Fund
The Fledgling Fund invests primarily (and, under normal conditions, at least 80%
of its total assets) in a diversified portfolio of common stocks of issuers with
market capitalizations of not more than $3.0 billion that the Adviser believes
to have strong earnings growth potential. The Fund may invest in warrants and
rights to purchase common stocks, securities convertible into common stock, debt
securities, other investment companies, and ADRs. The Fund only will purchase
securities that are traded on registered exchanges or the over-the-counter
market in the United States.
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All Funds
Each Fund may purchase securities on a when-issued basis.
Each Fund may enter into futures and options transactions.
Each Fund may invest up to 15% of its net assets in illiquid securities.
Each Fund may purchase convertible securities.
Each Fund may, for temporary defensive purposes, invest up to 100% of its total
assets in money market instruments (including certain U.S. Government and U.S.
Treasury securities, bank obligations, commercial paper and other short-term
debt securities rated at the time of purchase in the top two categories by a
nationally recognized statistical rating organization, repurchase agreements
involving the foregoing securities), shares of money market investment companies
and cash.
For a further description of these types of instruments see "Description of
Permitted Investments" in the Statement of Additional Information.
RISK FACTORS
Equity Securities -- Investments in equity securities in general are subject to
market risks that may cause their prices to fluctuate over time. The value of
securities convertible into equity securities, such as warrants or convertible
debt, is also affected by prevailing interest rates, the credit quality of the
issuer and any call provision. Fluctuations in the value of equity securities in
which a Fund invests will cause the net asset value of that Fund to fluctuate.
An investment in such Funds may be more suitable for long-term investors who can
bear the risk of short-term fluctuations.
The Fledgling Fund invests to a significant degree in equity securities of
smaller companies. The Fleming Fund may invest in the securities of small and
medium capitalization companies. Any investment in smaller or medium
capitalization companies involves greater risk than that customarily associated
with investments in larger, more established companies. This increased risk may
be due to the greater business risks of smaller size, limited markets and
financial resources, narrow product lines and lack of depth of management. The
securities of smaller companies are often traded in the over-the-counter market
and, if listed on a national securities exchange, may not be traded in volumes
typical for that exchange. Thus, the securities of smaller-sized companies are
likely to be less liquid, and subject to more abrupt or erratic market movements
than securities of larger, more established growth companies.
Portfolio Turnover -- Under normal circumstances, the portfolio turnover rate
for each Fund is not expected to exceed 75%. See "Taxes."
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INVESTMENT LIMITATIONS
The investment objective of each Fund and certain of the investment limitations
set forth here and in the Statement of Additional Information are fundamental
policies of that Fund. Fundamental policies cannot be changed without the
consent of the holders of a majority of that Fund's outstanding shares.
1. No Fund may (i) purchase securities of any issuer (except securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities and
repurchase agreements involving such securities) if, as a result, more than 5%
of the total assets of the Fund would be invested in the securities of such
issuer; or (ii) acquire more than 10% of the outstanding voting securities of
any one issuer. This restriction applies to 75% of each Fund's total assets.
2. No Fund may purchase any securities which would cause 25% or more of the
total assets of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry, provided
that this limitation does not apply to investments in obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities.
The foregoing percentages will apply at the time of the purchase of a security.
THE ADVISER
Robert Fleming, Inc. is a professional investment management firm and broker
dealer founded in 1968. The Adviser is an indirect, wholly-owned subsidiary of
Robert Fleming Holdings, a merchant bank based in London. As of June 30, 1997,
the Adviser had discretionary management authority with respect to approximately
$3.1 billion of assets. The Adviser has, since 1985, provided investment
advisory and subadvisory services to foreign investment companies and other
clients investing in securities in the U.S. The principal business address of
the Adviser is 320 Park Avenue, New York, New York 10022.
The Adviser serves as the investment adviser for each Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser makes the investment decisions for the assets of each Fund and
continuously reviews, supervises and administers each Fund's investment program,
subject to the supervision of, and policies established by, the Directors of the
Corporation.
For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate of .90% of the average daily net assets of
the Fleming Fund and 1.00% of those of the Fledgling Fund. Although not required
to do so, the Adviser has voluntarily agreed to waive all or a portion of its
fee and to reimburse expenses of the Fleming and Fledgling Funds in order to
limit their total operating expenses (as a percentage of average daily net
assets on an annualized basis) to not more than 1.25% and 1.35%, respectively.
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The Adviser reserves the right, in its sole discretion, to terminate these
voluntary fee waivers and reimbursements at any time.
Jonathan Kendrew Llewelyn Simon, serves as portfolio manager to the Fleming
Fund. Mr. Simon has worked with various affiliates of the Adviser since 1980 and
is currently Director of Robert Fleming Inc. Mr. Simon is head of the Adviser's
Large Cap Investment Team.
Christopher Mark Vyvyan Jones, serves as portfolio manager to the Fledgling
Fund. Mr. Jones has worked with various affiliates of the Adviser since 1982 and
is currently Director of Robert Fleming Inc. Mr. Jones is head of the Adviser's
Fledgling Investment Team.
THE DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"), 4455 E. Camelback Road, Suite
261E, Phoenix, Arizona 85018, an affiliate of the Administrator, acts as the
Corporation's distributor pursuant to a distribution agreement (the
"Distribution Agreement"). The Distribution Agreement provides the Distributor
with the right to distribute shares of Funds through other broker-dealers or
financial institutions with whom the Distributor has entered into selected
broker agreements.
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THE ADMINISTRATOR
Investment Company Administration Corporation (the "Administrator"), 2025 E.
Financial Way, Suite 101, Glendora, California 91741, an affiliate of the
Distributor, provides the Corporation with administrative services.
The Administrator, pursuant to an administration agreement with the Corporation,
supervises the overall administration of the Funds including, among other
responsibilities, the preparation and filing of all documents required for
compliance by the Corporation or the Funds with applicable laws and regulations,
arranging for the maintenance of books and records of the Corporation and the
Funds, and supervision of other organizations that provide services to the
Corporation and the Funds. Certain officers of the Funds may be provided by the
Administrator. Under the terms of the agreement, each Fund will pay the
Administrator an annual fee of 0.10% of the first $200 million of average daily
net assets, 0.05% of the next $300 million, and 0.03% of assets over $500
million, payable monthly and subject to an annual minimum of $40,000.
THE TRANSFER AGENT
Countrywide Fund Services, Inc. (the "Transfer Agent"), 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202, serves as the transfer agent and dividend
disbursing agent for the Corporation under a transfer agency agreement with the
Corporation.
PORTFOLIO TRANSACTIONS
Each Fund may execute brokerage or other agency transactions through the Adviser
or its affiliates for which the Adviser or its affiliates may receive usual and
customary compensation. The investment advisory agreement authorizes the Adviser
to select the brokers or dealers that will execute the purchases and sales of
investment securities for a Fund and directs the Adviser to use its best efforts
to obtain the best execution with respect to all transactions for the Fund. In
doing so, a Fund may pay higher commission rates than the lowest available when
the Adviser believes it is reasonable to do so in light of the value of the
research, statistical, and pricing services provided by the broker effecting the
transaction. The Adviser is not in the practice of allocating brokerage or
principal business on the basis of sales of the Funds' shares which may be made
through intermediary brokers or dealers. However, the Adviser may place Fund
orders with qualified broker-dealers who recommend a Fund or who act as agents
in the purchase of shares of a Fund for their clients.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on each day
that the New York Stock Exchange is open for business ("Business Day").
Investors may purchase and redeem shares of each Fund directly through the
Transfer Agent at: Countrywide Fund Services, Inc., 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202, by mail or wire transfer. Purchases and
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redemptions of shares of the Fund may be made on any Business Day. All
shareholders may place orders by telephone; when market conditions are extremely
busy, it is possible that investors may experience difficulties placing orders
by telephone and may wish to place orders by mail.
The minimum initial investment in each Fund is $1,000,000, and subsequent
purchases must be at least $10,000. The Adviser may waive these minimums at its
discretion. No minimum applies to subsequent purchases effected by dividend
reinvestment. Employees of the Adviser and certain of its affiliates may invest
in the Funds subject to certain conditions, including a lower minimum
investment, established by the Adviser.
Certain brokers assist their clients in the purchase or redemption of shares and
charge a fee for this service in addition to a Fund's public offering price.
Purchases by Mail
An account may be opened by mailing a check or other negotiable bank draft
(payable to the name of the appropriate Fund) for $1 million or more, together
with a completed Account Application to: Fleming Capital Mutual Fund Group,
Inc., P.O. Box 5354, Cincinnati, Ohio 45201-5354. When purchases are made by
check (including certified or cashier's checks), redemption proceeds will not be
forwarded until the investment being redeemed has been in the account for 15
days. Subsequent investments may also be mailed directly to the Transfer Agent.
Purchases by Wire Transfer
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to:
Fleming Capital Mutual Fund Group, Inc.
Star Bank
ABA #042000013
Credit The Fleming Funds 4864-84413
FFC: Shareholder's Name: _________________________
Shareholder's Account No.:___________________
The shareholder's name and account number must be specified in the wire.
Initial Purchases: Before making an initial investment by wire, an investor must
first telephone 1-800-264-0592 to be assigned an account number. The investor's
name, account number, taxpayer identification number or Social Security number,
and address must be specified in the wire. In addition, an Account Application
should be promptly forwarded to: Fleming Capital Mutual Fund Group, Inc., P.O.
Box 5354, Cincinnati, Ohio 45201-5354.
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Subsequent Purchases: Additional investments may be made at any time through the
wire procedures described above, which must include a shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.
Purchasing with Securities
Shares may be purchased by tendering payment in kind in the form of marketable
securities, including, but not limited to, shares of common stock and debt
securities, provided the acquisition of such securities is consistent with the
Funds' investment objective and otherwise acceptable to the Adviser.
Purchasing by Retirement Plan and Individual Retirement Accounts (IRAs)
Shares of the Funds are available for purchase by any retirement plan, including
401(k) plans, profit sharing plans, and IRAs. The minimum initial investment in
each Fund is $1,000,000, and subsequent purchases must be at least $10,000. The
Adviser may waive the minimums at its discretion.
Automatic Investment Plan ("AIP")
A shareholder or prospective shareholder may arrange for periodic investments in
a Fund through automatic deductions by ACH from a checking account by completing
the appropriate section on the application. The minimum initial investment
amount for AIPs is $1,000,000, and the minimum pre-authorized investment amount
is $1,000 per month per account. An Application Form may be obtained by calling
1-800-264-0592. To participate in the AIP complete the appropriate section on
the account application form.
General Information Regarding Purchases
A purchase request will be effective as of the day received by the Transfer
Agent if the Transfer Agent (or its authorized agent) receives the purchase
request in good order and payment before 4:00 p.m., Eastern time. A purchase
request is in good order if it is complete and accompanied by the appropriate
documentation, including an Account Application and any additional documentation
required. Purchase requests in good order received after 4:00 p.m., Eastern
time, will be effective the next Business Day. Payment may be made by check or
readily available funds. The purchase price of shares of any Fund is that Fund's
net asset value per share next determined after a purchase order is effective.
Purchases will be made in full and fractional shares of each Fund calculated to
three decimal places.
If a check received for the purchase of shares does not clear, the purchase will
be canceled, and the investor could be liable for any losses or fees incurred.
The Corporation reserves the right to reject a purchase order when the
Corporation determines that it is not in the best interest of the Corporation or
its shareholders to accept such order.
Exchanges
Shareholders of each Fund may exchange their shares for shares of the other Fund
if it is then offering its shares to the public. Exchanges are made at net asset
value. An exchange is considered a sale of shares and may result in capital gain
or loss for federal income tax purposes. The shareholder must have received a
current prospectus for the new Fund before any exchange will be effected. If the
Transfer Agent (or its authorized agent) receives exchange instructions in
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writing or by telephone (an "Exchange Request") in good order by 4:00 p.m.,
Eastern time, on any Business Day, the exchange will be effected that day. The
liability of the Fund or the Transfer Agent for fraudulent or unauthorized
telephone instructions may be limited as described below. The Corporation
reserves the right to modify or terminate this exchange offer on 60 days'
notice.
Redemptions
Shareholders may request redemptions from a Fund either by mail, by writing
Fleming Capital Mutual Fund Group, Inc., P.O. Box 5354, Cincinnati, Ohio
45201-5354, or by calling 1-800-264-0592.
The Transfer Agent may require that the signatures on the written request be
guaranteed. You should be able to obtain a signature guarantee from a bank,
broker, dealer, certain credit unions, securities exchange or association,
clearing agency or savings association. Notaries public cannot guarantee
signatures. The signature guarantee requirement will be waived if all of the
following conditions apply: (1) the redemption is for not more than $25,000
worth of shares, (2) the redemption check is payable to the shareholder(s) of
record, and (3) the redemption check is mailed to the shareholder(s) at his or
her address of record. The Corporation and the Transfer Agent reserve the right
to amend these requirements without notice.
Provided the telephone redemption option has been authorized by the shareholder
on the account registration form, a redemption of shares may be requested by
calling 1-800-264-0592 and requesting that the proceeds be mailed to the primary
registration address or wired per the authorized instructions designated on the
shareholder's account registration form. Shareholders may not close their
accounts by telephone.
Redemption requests in good order received by the Transfer Agent (or its
authorized agent) prior to 4:00 p.m., Eastern time, on any Business Day will be
effective that day. To redeem shares of the Fund, shareholders must place their
redemption orders with the Transfer Agent (or its authorized agent) prior to
4:00 p.m., Eastern time, on any Business Day. The redemption price of shares of
any Fund is the net asset value per share of that Fund next determined after the
redemption order is effective. Payment of redemption proceeds will be made as
promptly as possible and, in any event, within seven days after the redemption
order is received, provided, however, that redemption proceeds for shares
purchased by check (including certified or cashier's checks) will be forwarded
only upon collection of payment for such shares; collection of payment may take
up to 15 days.
Shareholders may receive redemption payments in the form of a check or by
Federal Reserve wire transfer. There is no charge for having a check for
redemption proceeds mailed. Shareholders cannot redeem shares of a Fund by
Federal Reserve wire on Federal holidays restricting wire transfers.
If the Board of Directors determines that it would be detrimental to the best
interests of the remaining shareholders of a Fund to make payment wholly or
partly in cash, the Fund may pay the redemption proceeds in whole or in part by
a distribution of in-kind of readily marketable securities held by the Fund in
lieu of cash in conformity with the applicable rules of the Securities and
Exchange Commission. Investors may incur brokerage charges on the sale of
portfolio securities received in such payments of redemptions.
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Neither the Corporation nor the Transfer Agent will be responsible for the
authenticity of instructions received by telephone if they reasonably believe
those instructions to be genuine. The Corporation and the Transfer Agent will
each employ reasonable procedures to confirm that telephone instructions are
genuine. Such procedures may include the taping of telephone conversations.
The right of redemption may be suspended or the date of payment of redemption
proceeds postponed during certain periods as set forth more fully in the
Statement of Additional Information.
Systematic Withdrawal Plan
The Corporation offers a Systematic Withdrawal Plan ("SWP") which may be
utilized by shareholders who wish to receive regular distributions from their
account. Upon commencement of the SWP, the account must have a current value of
$1,000,000 or more. Shareholders may elect to receive automatic payments via
check or ACH of $100 or more on a monthly, quarterly, semi-annual, or annual
basis. Automatic withdrawals are normally processed on the last day of the
applicable month or, if such day is not a business day, on the previous business
day, and are paid promptly thereafter. To arrange a SWP, complete the
appropriate section on the account application form. Shareholders should realize
that if withdrawals exceed income dividends, their invested principal in the
account will be depleted. Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net asset value per share,
their original investment could be exhausted entirely. To participate in the
SWP, shareholders must have their dividends automatically reinvested.
Shareholders may change or cancel the SWP at any time, upon written notice to
the Transfer Agent.
Share Price
Shares of a Fund are purchased at the net asset value after an order in proper
form is received by the Transfer Agent. An order in proper form must include all
correct and complete information, documents and signatures required to process
your purchase, as well as a check or bank wire payment properly drawn and
collectable. Payment should be made by check drawn on a U.S. bank, savings and
loan, or credit union. The net asset value per share is determined as of the
close of trading of the New York Stock Exchange on each day the Exchange is open
for normal trading. Orders received before 4:00 p.m., Eastern time on a day when
the Exchange is open for normal trading will be processed as of the close of
trading on that day. Otherwise, processing will occur on the next business day.
The Distributor reserves the right to reject any purchase order.
Net Asset Value
The net asset value of each Fund is determined as of the close of trading
(currently 4:00 p.m., Eastern time) on each day that the New York Stock Exchange
is open for trading (a "Business
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Day"). The net asset value per share of each Portfolio is the value of the
Fund's assets, less its liabilities, divided by the number of outstanding shares
of the Fund. Each Fund values its investments on the basis of the market value
of its securities. Securities and other assets for which market prices are not
readily available are valued at fair value as determined in good faith in
accordance with procedures approved by the Board of Directors (the "Board").
Debt securities with remaining maturities of 60 days or less are normally valued
at amortized cost, unless the Adviser in accordance with procedures approved by
the Board determines that amortized cost does not represent fair value. Cash and
receivables will be valued at their face amounts. Interest will be recorded as
accrued, and dividends will be recorded on their ex-dividend date.
Share Certificates
Shares are credited to your account and certificates are not issued. This
eliminates the costly problem of lost or destroyed certificates.
PERFORMANCE
From time to time, each Fund may advertise its total return and yield. These
figures will be based on historical earnings and are not intended to indicate
future performance. No representation can be made regarding actual future
returns or yields.
The total return of a Fund refers to the average compounded rate of return on a
hypothetical investment, for designated time periods (including but not limited
to the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital gain distributions.
The yield of a Fund refers to the annualized income generated by an investment
in the Fund over a specified 30-day period. The yield is calculated by assuming
that the same amount of income generated by the investment during that period is
generated in each 30-day period over one year and is shown as a percentage of
the investment.
A Fund may periodically compare its performance to that of other mutual funds as
reported by mutual fund rating services (such as Lipper Analytical Services,
Inc.), financial and business publications and periodicals, broad groups of
comparable mutual funds, unmanaged indices, which may assume investment of
dividends but generally do not reflect deductions for administrative and
management costs, or other investment alternatives. A Fund may quote
Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance, and Ibbotson Associates of Chicago, Illinois, which
provides historical returns of the capital markets in the U.S. A Fund may also
quote the Frank Russell Company or Wilshire Associates consulting firms that
compile financial characteristics of common stocks and fixed income securities,
regarding non- performance-related attributes of a Fund's portfolio. The Fund
may use long-term performance of these capital markets to demonstrate general
long-term risk versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The Fund may also
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quote financial and business publications and periodicals as they relate to fund
management, investment philosophy, and investment techniques.
A Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the federal income tax treatment of a Fund or its shareholders.
Shareholders are urged to consult their tax advisors regarding specific
questions as to federal, state and local income taxes. Further information
concerning taxes is set forth in the Statement of Additional Information.
Tax Status of the Funds:
Each Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Corporation's other portfolios. Each Fund intends to
qualify or to continue to qualify for the special tax treatment afforded
regulated investment companies as defined under Subchapter M of the Internal
Revenue Code of 1986, as amended. So long as a Fund qualifies for this special
tax treatment, it will be relieved of federal income tax on that part of its net
investment income and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) which it distributes to shareholders.
Tax Status of Distributions:
Each Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Distributions from net investment
income will qualify for the dividends-received deduction for corporate
shareholders only to the extent such distributions are derived from dividends
paid by domestic corporations; however, such distributions which do qualify for
the dividends-received deduction may be subject to the corporate alternative
minimum tax. Any net capital gains will be distributed annually and will be
taxed to shareholders as long-term capital gains, regardless of how long the
shareholder has held shares. Each Fund will mail annual reports to shareholders
of the federal income tax status of all distributions, including the amount of
dividends eligible for the dividends-received deduction.
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Certain securities purchased by a Fund are sold with original issue discount and
thus do not make periodic cash interest payments. Each Fund will be required to
include as part of its current income the accrued discount on such obligations
even though the Fund has not received any interest payments on such obligations
during that period. Because each Fund distributes all of its net investment
income to its shareholders, a Fund may have to sell portfolio securities to
distribute such accrued income, which may occur at a time when the Adviser would
not have chosen to sell such securities and which may result in a taxable gain
or loss.
Dividends declared by a Fund in October, November or December of any year and
payable to shareholders of record on a date in one of those months will be
deemed to have been paid by the Fund and received by the shareholders on
December 31 in the year declared, if paid by the Fund at any time during the
following January. Each Fund intends to make sufficient distributions prior to
the end of each calendar year to avoid liability for the federal excise tax
applicable to regulated investment companies.
Each sale, exchange or redemption of a Fund's shares is a taxable event to the
shareholder.
GENERAL INFORMATION
The Corporation
The Corporation, an open-end management investment company, was organized as a
Maryland corporation on August 19, 1997. The Articles of Incorporation permits
the Corporation to offer 100 million shares of common stock, with $.001 par
value per share. Pursuant to the Corporation's Articles of Incorporation, the
Board may increase the number of shares that the Corporation is authorized to
issue without the approval of the Corporation's shareholders. The Board has the
power to designate and redesignate any authorized by unissued shares of capital
stock into one or more classes of shares and separate series within each such
class, to fix the number of shares in any such class or series, and to classify
or reclassify any unissued shares with respect to such class or series. The
shares of common stock are currently classified into two series: the Fleming
Fund and the Fleming Fledgling Fund.
The shares of the Funds, when issued, will be fully paid, nonassessable, fully
transferable and redeemable at the option of the holder. The shares have no
preference as to conversion, exchange, dividends, retirement or other features
and have no pre-emptive rights. The shares of the Funds have non-cumulative
rights, which means that the holders of more than 50% of the shares voting for
the election of Directors can elect 100% of the Directors if they choose to do
so. Persons or organizations owning 25% or more of the outstanding shares of the
either of the Funds may be presumed to "control" (as that term is defined in the
1940 Act) that Fund. Under Maryland law, the Corporation is not required to hold
an annual meeting of its shareholders unless required to do so under the 1940
Act.
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The Corporation bears the costs of its operating expenses, including fees of its
service providers, audit and legal expenses, expenses of preparing prospectuses,
proxy solicitation material and reports to shareholders, costs of custodial
services and registering the shares under federal and state securities laws,
pricing and insurance expenses, and pays additional expenses including
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Directors of the Corporation
The management and affairs of the Corporation are supervised by the Directors
under the laws of the State of Maryland. The Directors have approved contracts
under which, as described above, certain companies provide essential management
services to the Corporation.
Voting Rights
Each share held entitles the shareholder of record to one vote. Shareholders of
each Fund will vote separately on matters pertaining solely to that Fund. As a
Maryland corporation, the Corporation is not required to hold annual meetings of
Shareholders, but approval will be sought for certain changes in the operation
of the Corporation and for the election of Directors under certain
circumstances.
Reporting
The Corporation will issue unaudited financial information semiannually and
audited financial statements annually for each Fund. The Corporation also may
furnish periodic reports and, as necessary, proxy statements to shareholders of
record.
Shareholder Inquiries
Shareholder inquiries should be directed to Fleming Capital Mutual Fund Group,
Inc., 320 Park Avenue, 11th Floor, New York, NY 10022, or by calling the
Transfer Agent at 1-800-264-0592. Purchases, exchanges and redemptions of shares
should be made through the Transfer Agent by calling 1-800-264-0592.
Dividends and Distributions
The Fleming Fund and Fledgling Fund intend to pay dividends annually. Each Fund
makes distributions of its net capital gains, if any, at least annually. The
Board may determine to declare dividends and make distributions more frequently.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares, unless the shareholder has elected to take
such payment in cash. Shareholders may change their election by providing
written notice to the Transfer Agent at least 15 days prior to the
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distribution. Shareholders may receive payments for cash distributions in the
form of a check or by Federal Reserve or ACH wire transfer.
Dividends and other distributions of each Fund are paid on a per share basis.
The value of each share will be reduced by the amount of the payment. If shares
are purchased shortly before the record date for a distribution of ordinary
income or capital gains, a shareholder will pay the full price for the shares
and receive some portion of the price back as a taxable distribution or
dividend.
Beneficial Owners
As of September 30, 1997, Robert Fleming, Inc. owned a controlling interest (as
that term is defined in the 1940 Act, as amended) of each Fund.
Counsel and Independent Auditors
Morgan, Lewis & Bockius LLP serves as counsel to the Corporation. Ernst & Young
LLP serves as the independent auditors for the Corporation.
Custodian
Star Bank, N.A. (the "Custodian") serves as the custodian of the Corporation.
The Custodian holds cash, securities and other assets of the Corporation as
required by the 1940 Act.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of permitted investments for one or more of the
Funds:
AMERICAN DEPOSITARY RECEIPTS ("ADRs") -- ADRs are securities, typically issued
by a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation by
the issuer of the underlying security. Holders of unsponsored depositary
receipts generally bear all the costs of the unsponsored facility. The
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.
CONVERTIBLE SECURITIES -- Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both
fixed-income and equity securities. Because of the conversion feature, the
market value of a convertible security tends to move with the market value of
the underlying stock. The value of a convertible security is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.
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FUTURES AND OPTIONS ON FUTURES -- Futures contracts provide for the future sale
by one party and purchase by another party of a specified amount of a specific
security at a specified future time and at a specified price. An option on a
futures contract gives the purchaser the right, in exchange for a premium, to
assume a position in a futures contract at a specified exercise price during the
term of the option. A Fund may use futures contracts and related options for
bona fide hedging purposes, to offset changes in the value of securities held or
expected to be acquired or be disposed of, to minimize fluctuations in foreign
currencies, or to gain exposure to a particular market or instrument. A Fund
will minimize the risk that it will be unable to close out a futures contract by
only entering into futures contracts that are traded on national futures
exchanges.
A stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the stocks comprising the index is
made; generally contracts are closed out prior to the expiration date of the
contract.
In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid securities equal to the market value of the futures positions held, less
margin deposits, in a segregated account with the Corporation's Custodian.
Collateral equal to the current market value of the futures position will be
marked to market on a daily basis.
A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
so long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of the Fund's net assets.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interests rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; (5) losses from investing in futures is potentially
unlimited; and (6) government regulations may restrict trading in futures
contracts and options on futures.
ILLIQUID SECURITIES -- Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven days, securities for
which there is no active secondary market, and repurchase agreements with
durations or maturities over 7 days in length.
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MONEY MARKET INSTRUMENTS -- Money market securities are high-quality, dollar-
denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government; (iii) high-quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a maturity of one year or less
issued by corporations with outstanding high-quality commercial paper ratings;
and (v) repurchase agreements involving any of the foregoing obligations entered
into with highly-rated banks and broker-dealers.
OPTIONS -- A put option gives the purchaser of the option the right to sell, and
the writer of the option the obligation to buy, the underlying security at any
time during the option period. A call option gives the purchaser of the option
the right to buy, and the writer of the option the obligation to sell, the
underlying security at any time during the option period. The premium paid to
the writer is the consideration for undertaking the obligations under the option
contract.
A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities.
All options written on indices must be covered. When a Fund writes an option on
an index or a foreign currency, it will establish a segregated account
containing cash or liquid securities with its Custodian in an amount at least
equal to the market value of the option and will maintain the account while the
option is open or will otherwise cover the transaction.
Risk Factors. Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements are considered loans under the 1940 Act. The Funds
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will enter into repurchase agreements with banks and other financial
institutions deemed creditworthy under procedures adopted by the Board.
U.S. GOVERNMENT AGENCY OBLIGATIONS -- Certain Federal agencies, such as the
Government National Mortgage Association ("GNMA"), have been established as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States (e.g., GNMA securities) or supported by the issuing agencies' right to
borrow from the Treasury. The issues of other agencies are supported by the
credit of the instrumentality (e.g., Fannie Mae securities).
U.S. GOVERNMENT SECURITIES -- Bills, notes and bonds issued by the U.S.
Government and backed by the full faith and credit of the United States.
U.S. TREASURY OBLIGATIONS -- Bills, notes and bonds issued by the U.S. Treasury,
and separately traded interest and principal component parts of such obligations
that are transferable through the Federal book-entry system known as Separately
Traded Registered Interested and Principal Securities ("STRIPS") and Coupon
Under Book Entry Safekeeping ("CUBES").
WARRANTS -- Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES -- When-issued or delayed delivery
transactions involve the purchase of an instrument with payment and delivery
taking place in the future. Delivery of and payment for these securities may
occur a month or more after the date of the purchase commitment. The Fund will
maintain with the Custodian a separate account with liquid securities or cash in
an amount at least equal to these commitments. The interest rate realized on
these securities is fixed as of the purchase date, and no interest accrues to
the Fund before settlement.
ZERO COUPON SECURITIES -- Zero coupon obligations are debt securities that do
not bear any interest, but instead are issued at a deep discount from par. The
value of a zero coupon obligation increases over time to reflect the interest
accreted. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at par and pay interest periodically.
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Corporation:
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
Funds:
FLEMING FUND
FLEMING FLEDGLING FUND
Adviser:
ROBERT FLEMING, INC.
Distributor:
FIRST FUND DISTRIBUTORS, INC.
Administrator:
INVESTMENT COMPANY ADMINISTRATION CORPORATION
Legal Counsel:
MORGAN, LEWIS & BOCKIUS LLP
Independent Auditors:
ERNST & YOUNG LLP
<PAGE>
Corporation:
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
Funds:
FLEMING FUND
FLEMING FLEDGLING FUND
Investment Adviser:
ROBERT FLEMING, INC.
This Statement of Additional Information is not a prospectus and relates only to
the Fleming Fund (the "Fleming Fund") and Fleming Fledgling Fund (the "Fledgling
Fund") (each a "Fund" and, together, the "Funds"). It is intended to provide
additional information regarding the activities and operations of the Fleming
Capital Mutual Fund Group, Inc. (the "Corporation") and should be read in
conjunction with the Funds' Prospectus dated September 30, 1997. The Prospectus
may be obtained without charge by calling 1-800-264-0592
TABLE OF CONTENTS
THE CORPORATION..............................................................S-
DESCRIPTION OF PERMITTED INVESTMENTS.........................................S-
INVESTMENT LIMITATIONS.......................................................S-
THE ADVISER..................................................................S-
THE ADMINISTRATOR............................................................S-
THE DISTRIBUTOR..............................................................S-
DIRECTORS AND OFFICERS OF THE CORPORATION....................................S-
COMPUTATION OF YIELD AND TOTAL RETURN........................................S-
PURCHASE AND REDEMPTION OF SHARES............................................S-
DETERMINATION OF NET ASSET VALUE.............................................S-
TAXES ....................................................................S-
PORTFOLIO TRANSACTIONS.......................................................S-
DESCRIPTION OF SHARES........................................................S-
LIMITATION OF DIRECTORS' LIABILITY...........................................S-
5% SHAREHOLDERS..............................................................S-
FINANCIAL INFORMATION........................................................S-
APPENDIX ....................................................................A-
September 30, 1997
<PAGE>
THE CORPORATION
This Statement of Additional Information relates only to the Fleming Fund (the
"Fleming Fund") and Fleming Fledgling Fund (the "Fledgling Fund") (each a "Fund"
and, together, the "Funds"). Each Fund is a separate series of the Fleming
Capital Mutual Fund Group, Inc. (the "Corporation"), a diversified, open-end
management investment company established as a Maryland corporation under its
Articles of Incorporation dated August 19, 1997. The Articles of Incorporation
permits the Corporation to offer separate series ("portfolios") of shares of
common stock ("shares"). Each portfolio is a separate mutual fund, and each
share of each portfolio represents an equal proportionate interest in that
portfolio. See "Description of Shares." Capitalized terms not defined herein are
defined in the Prospectus offering shares of the Funds.
DESCRIPTION OF PERMITTED INVESTMENTS
Futures Contracts and Options on Futures Contracts
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option. A
Fund may use futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. A Fund will minimize the
risk that it will be unable to close out a futures contract by only entering
into futures contracts which are traded on national futures exchanges. In
addition, a Fund will only sell covered futures contracts and options on futures
contracts.
Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond index
futures contracts obligate the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock or bond index at the close of the last trading day
of the contract and the price at which the agreement is made.
Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks or bonds
comprising the Index is made; generally contracts are closed out prior to the
expiration date of the contracts.
No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be
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made on a daily basis as the value of the futures position varies (a process
known as "marking to market"). The margin is in the nature of a performance bond
or good-faith deposit on a futures contract.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.
A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
as long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of a Fund's net assets. A Fund may buy and sell futures contracts and related
options to manage its exposure to changing interest rates and securities prices.
Some strategies reduce a Fund's exposure to price fluctuations, while others
tend to increase its market exposure. Futures and options on futures can be
volatile instruments and involve certain risks that could negatively impact a
Fund's return.
In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid securities, equal to the market value of the futures positions held, less
margin deposits, in a segregated account with its custodian. Collateral equal to
the current market value of the futures position will be marked to market on a
daily basis.
Investment Company Shares
Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, a Fund is prohibited from acquiring the
securities of another investment company if, as a result of such acquisition:
(1) the Fund owns more than 3% of the total voting stock of the other company;
(2) securities issued by any one investment company represent more than 5% of
the Fund's total assets; or (3) securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Fund. See also "Investment Limitations."
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Options
A put option gives the purchaser of the option the right to sell, and the writer
of the option the obligation to buy, the underlying security at any time during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer is
the consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, a Fund may enter into a "closing
transaction," which is simply the sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened. If a Fund is unable to effect a closing purchase
transaction with respect to an option it has written, it will not be able to
sell the underlying security until the option expires or the Fund delivers the
security upon exercise.
A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in
the market value of securities that the Fund may seek to purchase in the future.
A Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for the Fund, loss of the premium paid may be offset by
an increase in the value of the Fund's securities or by a decrease in the cost
of acquisition of securities by the Fund.
A Fund may write covered call options as a means of increasing the yield on its
fund and as a means of providing limited protection against decreases in its
market value. When a fund sells an option, if the underlying securities do not
increase or decrease to a price level that would make the exercise of the option
profitable to the holder thereof, the option generally will expire without being
exercised and the Fund will realized as profit the premium received for such
option. When a call option written by a Fund is exercised, the Fund will be
required to sell the underlying securities to the option holder at the strike
price, and will not participate in any increase in the price of such securities
above the strike price. When a put option written by a Fund is exercised, the
Fund will be required to purchase the underlying securities at the strike price,
which may be in excess of the market value of such securities.
A Fund may purchase and write options on an exchange or over-the-counter.
Over-the- counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.
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A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid securities in an amount equal to the
amount the Fund would be required to pay upon exercise of the put.
A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal to the difference
between the closing price of the index and the exercise price of the option,
expressed in dollars multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of a Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.
All options written on indices must be covered. When a Fund writes an option on
an index, it will establish a segregated account containing cash or liquid
securities with its custodian in an amount at least equal to the market value of
the option and will maintain the account while the option is open or will
otherwise cover the transaction.
Risk Factors: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.
Repurchase Agreements
Repurchase agreements are agreements by which a Fund obtains a security and
simultaneously commits to return the security to the seller (a member bank of
the Federal Reserve System or primary securities dealer as recognized by the
Federal Reserve Bank of New York) at an agreed upon price (including principal
and interest) on an agreed upon date within a number of days (usually not more
than seven) from the date of purchase. The resale price reflects the purchase
price plus an agreed upon market rate of interest which is unrelated to the
coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay
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the agreed upon price, which obligation is in effect secured by the value of the
underlying security.
Repurchase agreements are considered to be loans by a Fund for purposes of its
investment limitations. The repurchase agreements entered into by a Fund will
provide that the underlying security at all times shall have a value at least
equal to 102% of the resale price stated in the agreement (the Adviser monitors
compliance with this requirement). Under all repurchase agreements entered into
by a Fund, the Corporation's Custodian or its agent must take possession of the
underlying collateral. However, if the seller defaults, the Fund could realize a
loss on the sale of the underlying security to the extent that the proceeds of
sale, including accrued interest, are less than the resale price provided in the
agreement including interest. In addition, even though the Bankruptcy Code
provides protection for most repurchase agreements, if the seller should be
involved in bankruptcy or insolvency proceedings, a Fund may incur delay and
costs in selling the underlying security or may suffer a loss of principal and
interest if the Fund is treated as an unsecured creditor and is required to
return the underlying security to the seller's estate.
Securities Lending
In order to generate additional income, a Fund may lend its securities to
qualified broker-dealers or institutional investors, in an amount up to 33 1/3%
of the total assets taken at market value, pursuant to agreements that require
that the loan be continuously secured by collateral consisting of cash or
securities of the U.S. Government or its agencies equal to at least 100% of the
market value of the loaned securities. A Fund continues to receive interest on
the loaned securities while simultaneously earning interest on the investment of
cash collateral. Collateral is marked to market daily. There may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially or become insolvent.
When-Issued and Delayed Delivery Securities
When-issued or delayed delivery securities are subject to market fluctuations
due to changes in market interest rates and it is possible that the market value
at the time of settlement could be higher or lower than the purchase price if
the general level of interest rates has changed. Although a Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its investment portfolio, a Fund
may dispose of a when-issued security or forward commitment prior to settlement
if it deems appropriate.
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INVESTMENT LIMITATIONS
Fundamental Policies
The following investment limitations (and those set forth in the Prospectus) are
fundamental policies of each Fund which cannot be changed with respect to a Fund
without the consent of the holders of a majority of that Fund's outstanding
shares. The term "majority of the outstanding shares" means the vote of (i) 67%
or more of a Fund's shares present at a meeting, if more than 50% of the
outstanding shares of a Fund are present or represented by proxy, or (ii) more
than 50% of a Fund's outstanding shares, whichever is less.
No Fund may:
1. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate a Fund to purchase securities or
require a Fund to segregate assets are not considered to be borrowings.
Asset coverage of a least 300% is required for all borrowings, except
where a Fund has borrowed money for temporary purposes in amounts not
exceeding 5% of its total assets. A Fund will not purchase securities
while its borrowings exceed 5% of its total assets.
2. Make loans if, as a result, more than 33 1/3% of its total assets would
be lent to other parties, except that each Fund may (i) purchase or
hold debt instruments in accordance with its investment objective and
policies; (ii) enter into repurchase agreements; and (iii) lend its
securities.
3. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and
(ii) commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.
4. Issue senior securities (as defined in the Investment Company Act of
1940 (the "1940 Act")) except as permitted by rule, regulation or order
of the Securities and Exchange Commission (the "SEC").
5. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.
The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be considered
violated unless an excess or deficiency occurs immediately after or as a result
of a purchase of such security.
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Non-Fundamental Policies
The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Directors.
No Fund may:
1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing, provided,
such Fund may segregate assets without limit in order to comply with
the SEC's position regarding the asset segregation requirements of
Section 18 of the 1940 Act.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each
Fund may (i) obtain short-term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin
payments in connection with transactions involving futures contracts
and options on such contracts; and (iii) make short sales "against the
box" or in compliance with the SEC's position regarding the asset
segregation requirements of Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
5. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing
in more than seven days) if, in the aggregate, more than 15% of its net
assets would be invested in illiquid securities.
6. Each Fund may not enter into a futures contract or options transaction
if the Fund's total outstanding obligations resulting from such futures
contract or option transaction would exceed 10% of the Fund's total
assets, and will maintain assets sufficient to meet its obligations
under such contracts or transactions with the Fund's custodian or will
otherwise comply with the SEC's position regarding the asset
segregation requirements of Section 18 of the 1940 Act.
THE ADVISER
The Corporation and Robert Fleming, Inc. (the "Adviser") have entered into an
advisory agreement (the "Advisory Agreement"). The Advisory Agreement provides
that the Adviser shall not be protected against any liability to the Corporation
or its shareholders by reason of 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.
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The Adviser will not be required to bear expenses of any Fund to an extent which
would result in the Fund's inability to qualify as a regulated investment
company under provisions of the Internal Revenue Code of 1986, as amended (the
"Code").
The continuance of the Advisory Agreement as to any Fund after the first two
years must be specifically approved at least annually (i) by the vote of the
Directors or by a vote of the shareholders of that Fund, and (ii) by the vote of
a majority of the Directors who are not parties to the 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 Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Directors of the Corporation or, with respect to any
Fund, by a majority of the outstanding shares of that Fund, on not less than 30
days' nor more than 60 days' written notice to the Adviser, or by the Adviser on
90 days' written notice to the Corporation.
Although not required to do so, the Adviser has agreed to waive its
advisory fee or reimburse expenses to each Fund to the extent necessary so that
the ratio of total operating expenses to average net assets will not exceed
1.25% and 1.35% for the Fleming Fund and the Fledgling Fund, respectively. In
subsequent years, overall Fund operating expenses will not fall below the
applicable percentage limitation until the Adviser has been fully reimbursed for
fees foregone and expenses paid. Any reductions made by the Adviser in its fees
or payments or reimbursement of expenses which are a Fund's obligation are
subject to reimbursement by the Fund. The Adviser believes that it is likely
that the Funds will be of a sufficient size to permit the reimbursement of any
such reductions or payments. However, there is no assurance that any such
reimbursements will be made. Reimbursement is contingent upon the Adviser's
determination that it will seek reimbursement from the Fund. In addition, the
Board of Directors must approve any requested reimbursement. Further, any
expenses which cannot be recouped within three years will never be reimbursed by
the Fund. In other words, any unrecouped amount after the three year period
would not require payment either on liquidation of the Fund or termination of
the advisory agreement.
THE DISTRIBUTOR
First Fund Distributors, Inc. (the "Distributor"), a Delaware corporation, and
the Corporation are parties to a distribution agreement (the "Distribution
Agreement"). The Distributor receives no compensation for distribution of shares
of the Funds.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Directors who are not interested persons and have no financial interest
in the Distribution Agreement, or by a majority vote of the outstanding
securities of the Corporation upon not more than 60 days' written notice by
either party or upon assignment by the Distributor.
DIRECTORS AND OFFICERS OF THE CORPORATION
The management and affairs of the Corporation are supervised by the Directors
under the laws of the State of Maryland. The Directors and Executive Officers of
the Corporation and their principal occupations for the last five years are set
forth below. Each may have held other positions with the named companies during
that period. The Corporation pays the fees for unaffiliated Directors.
The Directors and Executive Officers of the Corporation, their respective dates
of birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with named companies during that
period. Unless otherwise noted, the business address of each Director and each
Executive Officer is 320 Park Avenue, New York, New York 10022.
*Jonathan K.L. Simon (Born 1/13/59) - Chairman of the Board of Directors and
President - Director of Robert Fleming, Inc. from 1991 to the present.
*Christopher M.V. Jones (Born 11/3/60) - Director and Vice President - Director
of Robert Fleming, Inc. from 1991 to the present.
Robert E. Marks (Born 1/12/52) - Director - President of Marks Ventures from
1995 to the present. Managing Director of Carl Marks & Co. from 1992 to 1995.
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Michael A. Petrino (Born 1/26/46) - Director - Investment Manager at Calport
Asset Management since 1991.
Dominic S. Solly (Born 5/21/52) - Director - Teacher for the New York City Board
of Education since 1996. Consultant for Kleinwort Benson Ltd. (investment
adviser) in 1996. Investment banker with Kleinwort Benson Ltd. from 1976 to
1994.
Arthur A. Levy (Born 11/4/42) - Treasurer - Director of Robert Fleming, Inc.
from 1985 to the present. Vice Chairman of Robert Fleming, Inc. since 1989.
Eric M. Banhazl (Born 8/5/57) - Assistant Treasurer - 2025 E. Financial Way,
Suite 101, Glendora, California 91741. Senior Vice President of The Wadsworth
Group, Senior Vice President of Investment Company Administration Corporation
and Vice President of First Fund Distributors, Inc. since 1990.
Rita Dam (Born 7/2/66) - Assistant Treasurer - Vice President of Investment
Company Administration Corporation. Employed by The Wadsworth Group since 1994.
Member of Coopers & Lybrand LLP from 1989 to 1994.
Clarissa Moore (Born 2/4/60) - Secretary - Director of Fleming Capital
Management from 1996 to the present. Registered representative of Seligman
Financial Services, Inc. and Vice President of Seligman Henderson Co. from 1994
to 1996. From 1991 to 1994, Ms. Moore was a Vice President and Director of
Calport Asset Management, and from 1993 to 1994, Ms. Moore was a registered
representative of Lafter Advisors Inc.
Steven J. Paggioli (Born 4/3/50) - Assistant Secretary - 479 West 22nd Street,
New York, New York 10011. Executive Vice President, The Wadsworth Group since
1986; Executive Vice President of Investment Company Administration Corporation,
and Vice President of First Fund Distributors, Inc. since 1990.
Dorothy Cali (Born 5/29/41) - Assistant Secretary - Vice President of The
Wadsworth Group. Employed by The Wadsworth Group since 1986.
*interested persons
It is estimated that for the first year of operations, the Directors of the
Corporation who are not interested persons will receive $5,000 per year as
compensation for serving on the Corporation's board.
COMPUTATION OF YIELD AND TOTAL RETURN
From time to time the Corporation may advertise yield and total return of the
Funds. These figures will be based on historical earnings and are not intended
to indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2[((a-b)/cd + 1)6 - 1] where a = dividends and interest earned during
the period; b = expenses accrued for the period (net of reimbursement); c = the
current daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.
The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In
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particular, total return will be calculated according to the following formula:
P (1 + T)n = ERV, where P = a hypothetical initial payment of $1,000; T =
average annual total return; n = number of years; and ERV = ending redeemable
value, as of the end of the designated time period, of a hypothetical $1,000
payment made at the beginning of the designated time period.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through the Transfer Agent on days when
the New York Stock Exchange is open for business. Currently, the weekdays on
which the Fund is closed for business are: New Year's Day, Presidents' Day,
Martin Luther King, Jr.'s Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.
Shares of each Fund are offered on a continuous basis.
It is currently the Corporation's policy to pay all redemptions in cash. The
Corporation retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of securities held by
a Fund in lieu of cash. The Corporation has made an election with the SEC
pursuant to Rule 18f-1 under the 1940 Act of to pay in cash all redemptions
requested by any shareholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the net assets of the Portfolio at the
beginning of such period. Such commitment is irrevocable without the prior
approval of the SEC. Redemptions in excess of the above limits may be paid in
whole or in part in investment securities or in cash, as the Directors may deem
advisable; however, payment will be made wholly in cash unless the Directors
believe that economic or market conditions exist which would make such a
practice detrimental to the best interests of the Fund. Shareholders may incur
brokerage charges on the sale of any such securities so received in payment of
redemptions.
The Corporation reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or valuation of a Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Corporation also
reserves the right to suspend sales of shares of any Fund for any period during
which the New York Stock Exchange, the Adviser, the Administrator, the Transfer
Agent and/or the Custodian are not open for business.
DETERMINATION OF NET ASSET VALUE
The portfolio securities of each Fund may be valued by an independent pricing
service. The pricing service relies primarily on prices of actual market
transactions as well as on trade quotations obtained from third parties. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Corporation under the general supervision of the Directors.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax
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planning. Shareholders are urged to consult their tax advisors with specific
reference to their own tax situations, including their state and local tax
liabilities.
Federal Income Tax
The following discussion of federal income tax consequences is based on the Code
and the regulations issued thereunder 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.
Each Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.
In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also 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, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (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 are
engaged in the same, similar or related trades or business if the Fund owns at
least 20% of the voting power of such issuer.
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),
each Fund will be subject to a nondeductible 4% federal excise tax to the extent
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.
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In certain cases, a Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.
If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions will generally be eligible for the corporate dividends-received
deduction.
State Taxes
No Fund is liable for any income or franchise tax in Maryland if it qualifies as
a RIC for federal income tax purposes. Distributions by any Fund to shareholders
and the ownership of shares may be subject to state and local taxes.
PORTFOLIO TRANSACTIONS
The Adviser is authorized to select brokers and dealers to effect securities
transactions for the Funds. The Adviser will seek to obtain the most favorable
net results by taking into account various factors, including price, commission,
if any, size of the transactions and difficulty of executions, the firm's
general execution and operational facilities and the firm's risk in positioning
the securities involved. While the Adviser generally seeks reasonably
competitive spreads or commissions, a Fund will not necessarily be paying the
lowest spread or commission available. The Adviser seeks to select brokers or
dealers that offer a Fund best price and execution or other services which are
of benefit to the Fund.
The Adviser may, consistent with the interests of the Fund, select brokers on
the basis of the research services they provide to the Adviser. Such services
may include analyses of the business or prospects of a company, industry or
economic sector, or statistical and pricing services. Information so received by
the Adviser will be in addition to and not in lieu of the services required to
be performed by the Adviser under the Advisory Agreement. If, in the judgment of
the Adviser, a Fund or other accounts managed by the Adviser will be benefitted
by supplemental research services, the Adviser is authorized to pay brokerage
commissions to a broker furnishing such services which are in excess of
commissions which another broker may have charged for effecting the same
transaction. These research services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; and providing portfolio
performance evaluation and technical market
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analyses. The expenses of the Adviser will not necessarily be reduced as a
result of the receipt of such supplemental information, such services may not be
used exclusively, or at all, with respect to the Fund or account generating the
brokerage, and there can be no guarantee that the Adviser will find all of such
services of value in advising that Fund.
It is expected that the Funds may execute brokerage or other agency transactions
through Robert Fleming, Inc. or its affiliates, (each an "affiliated broker")
each of which is a registered broker-dealer, for a commission in conformity with
the 1940 Act, the Securities Exchange Act of 1934 and rules promulgated by the
SEC. Under these provisions, an affiliated broker is permitted to receive and
retain compensation for effecting portfolio transactions for a Fund on an
exchange if a written contract is in effect between the Corporation and the
affiliated broker expressly permitting the affiliated broker to receive and
retain such compensation. These rules further require that commissions paid to
the affiliated broker by a Fund for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." The Directors, including those who are not "interested persons" of the
Corporation, have adopted procedures for evaluating the reasonableness of
commissions paid to the affiliated brokers and will review these procedures
periodically.
Because no Fund markets its shares through intermediary brokers or dealers, it
is not the Funds' practice to allocate brokerage or principal business on the
basis of sales of its shares which may be made through such firms. However, the
Adviser may place portfolio orders with qualified broker-dealers who recommend a
Fund's shares 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.
The Adviser serves as investment adviser to other clients and investment
vehicles which may invest in securities of the same issuers as those in which
the Funds invest. The Adviser also may invest for its own account and for the
accounts of its affiliates. Certain of the Adviser's activities may cause it to
come into possession of material, nonpublic information ("inside information")
about an issuer. When the Adviser is in possession of inside information about
an issuer, the Adviser may be unable to cause the Funds to purchase or sell
securities of that issuer until the information is released to the public or is
no longer material. As a result, the Funds may be unable to purchase certain
suitable securities, or sell certain securities that it already owns, at the
most opportune time. In particular, a Fund's inability to sell a security that
it already owns may require the Fund to treat the security as an illiquid
security and may have a negative effect on the Fund's valuation of the security.
Should the Fund already own a significant amount of illiquid securities, it
could be forced to sell other illiquid securities
S-14
<PAGE>
at inopportune times and at prices below what could theoretically be realized in
order to comply with the Fund's 15% limit on holding illiquid securities.
DESCRIPTION OF SHARES
The Articles of Incorporation authorizes the issuance of an unlimited number of
series and shares of each series. Each share of a series represents an equal
proportionate interest in that series with each other share. Shares are entitled
upon liquidation to a pro rata share in the net assets of the series.
Shareholders have no preemptive rights. All consideration received by the
Corporation for shares of any series and all assets in which such consideration
is invested would belong to that series and would be subject to the liabilities
related thereto. Share certificates representing shares will not be issued
unless specifically requested.
A Director may be removed by Shareholders at a special meeting called upon
written request of 25% of Shareholders entitled to cast votes at the meeting. If
such a meeting is requested, the Corporation will provide appropriate assistance
and information to the Shareholders requesting the meeting to the extent
required by law.
LIMITATION OF DIRECTORS' LIABILITY
The Articles of Incorporation provides that a Director shall be liable only for
his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or investment advisers, shall not be
liable for any neglect or wrongdoing of any such person. The Articles of
Incorporation also provides that the Corporation will indemnify its Directors
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 Corporation to the fullest extent permitted by law. However, nothing in
the Articles of Incorporation shall protect or indemnify a Director against any
liability for his willful misfeasance, bad faith, gross negligence or reckless
disregard of his duties.
5% SHAREHOLDERS
As of September 30, 1997, the following persons owned of record or beneficially
5% or more of the shares of a Fund:
Fleming Fund: Robert Fleming, Inc., New York, NY, 100%;
- -------------
Fleming Fledgling Fund: Robert Fleming, Inc., New York, NY, 100%
- -----------------------
The persons listed above as owning 25% or more of the outstanding shares of each
Fund may be presumed to "control" (as that term is defined in the Investment
Company Act of 1940, as amended) such Funds. As a result, those persons would
have the ability to vote a majority of the shares of the Funds on any matter
requiring the approval of shareholders of such Funds.
S-15
<PAGE>
APPENDIX
The following descriptions are summaries of published ratings.
DESCRIPTION OF CORPORATE BOND RATINGS
Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such a
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from AAA issues only in
small degree. Debt rated A by S&P has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher rated
categories.
Bonds rated BBB by S&P are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds rated Aaa by Moody's are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large, or an exceptionally stable,
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues. Bonds rated Aa by Moody's are
judged by Moody's to be of high quality by all standards. Together with bonds
rated Aaa, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than in Aaa securities.
Bonds rated A by Moody's possess many favorable investment attributes and are to
be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future. Debt rated
Baa by Moody's is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
Fitch uses plus and minus signs with a rating symbol to indicate the relative
position of a credit within the rating category. Plus and minus signs, however,
are not used in the AAA category. Bonds rated AAA by Fitch are considered to be
investment grade and of
A-1
<PAGE>
the highest credit quality. The obligor has an exceptionally strong ability to
pay interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA by Fitch are considered to be investment
grade and of very high credit quality. The obligor's ability to pay interest and
repay principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated F-1+. Bonds rated A by Fitch are considered to be investment
grade and of high credit quality. The obligor's ability to pay interest and
repay principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds with higher
ratings. Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic conditions
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
Bonds rated AAA by Duff are judged by Duff to be of the highest credit quality,
with negligible risk factors being only slightly more than for risk-free U.S.
Treasury debt. Bonds rated AA by Duff are judged by Duff to be of high credit
quality with strong protection factors and risk that is modest but that may vary
slightly from time to time because of economic conditions. Bonds rated A by Duff
are judged by Duff to have average but adequate protection factors. However,
risk factors are more variable and greater in periods of economic stress. Bonds
rated BBB by Duff are judged by Duff as having below average protection factors
but still considered sufficient for prudent investment, with considerable
variability in risk during economic cycles.
Obligations rated AAA by IBCA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial, such
that adverse changes in business, economic or financial conditions are unlikely
to increase investment risk significantly. Obligations for which there is a very
low expectation of investment risk are rated AA by IBCA. Capacity for timely
repayment of principal and interest is substantial. Adverse changes in business,
economic or financial conditions may increase investment risk albeit not very
significantly. Obligations for which there is a low expectation on investment
risk are rated A by IBCA. Capacity for timely repayment of principal and
interest is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk. Obligations for which there is
currently a low expectation of investment risk are rated BBB by IBCA. Capacity
for timely repayment of principal and interest is adequate, although adverse
changes in business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in higher categories.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Commercial paper rated A by Standard & Poor's Corporation ("S&P") is regarded by
S&P as having the greatest capacity for timely payment. Issues rated A are
further
A-2
<PAGE>
refined by use of the numbers 1, 1 +, and 2 to indicate the relative degree of
safety. Issues rated A-1+ are those with an "overwhelming degree" of credit
protection. Those rated A-1, the highest rating category, reflect a "very
strong" degree of safety regarding timely payment. Those rated A-2, the second
highest rating category, reflect a satisfactory degree of safety regarding
timely payment but not as high as A-1.
Commercial paper issues rated Prime-1 or Prime-2 by Moody's Investors Service,
Inc. ("Moody's") are judged by Moody's to be of "superior" quality and "strong"
quality respectively on the basis of relative repayment capacity.
F-1+ (Exceptionally Strong) is the highest commercial paper rating Fitch
assigns; paper rated F-1+ is regarded as having the strongest degree of
assurance for timely payment. Paper rated F-1 (Very Strong) reflects an
assurance of timely payment only slightly less in degree than paper rated F-1+.
The rating F-2 (Good) reflects a satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues rated F-1+ or
F-1.
The rating Duff-1 is the highest commercial paper rating assigned by Duff. Paper
rated Duff-1 is regarded as having very high certainty of timely payment with
excellent liquidity factors which are supported by good fundamental protection
factors. Risk factors are minor. Duff has incorporated gradations of 1+ and 1-
to assist investors in recognizing quality differences within this highest tier.
Paper rated Duff-1+ has the highest certainty of timely payment, with
outstanding short-term liquidity and safety just below risk-free U.S. Treasury
short-term obligations. Paper rated Duff-1- has high certainty of timely payment
with strong liquidity factors which are supported by good fundamental protection
factors. Risk factors are very small. Paper rated Duff-2 is regarded as having
good certainty of timely payment, good access to capital markets (although
ongoing funding may enlarge total financing requirements) and sound liquidity
factors and company fundamentals. Risk factors are small.
The designation A1, the highest rating by IBCA, indicates that the obligation is
supported by a strong capacity for timely repayment. Those obligations rated A1+
are supported by the highest capacity for timely repayment. Obligations rated
A2, the second highest rating, are supported by a satisfactory capacity for
timely repayment, although such capacity may be susceptible to adverse changes
in business, economic or financial conditions.
A-3
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Shareholder and Board of Directors
Fleming Capital Mutual Fund Group, Inc.
We have audited the accompanying statement of assets and liabilities of Fleming
Capital Mutual Fund Group, Inc. (comprised of Fleming Fund and Fleming Fledgling
Fund) as of September 26, 1997. This statement of assets and liabilities is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit included examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Fleming
Capital Mutual Fund Group, Inc. at September 26, 1997, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
September 29, 1997
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
Statements of Assets and Liabilities
September 26, 1997
<TABLE>
<CAPTION>
Fleming Fledgling
Fleming Fund Fund
---------------------- ---------------------------
<S> <C> <C>
ASSETS:
Cash $100,000 $100,000
Deferred organization expense (Note 3) 48,803 48,804
Prepaid registration fees 2,393 2,393
---------------------- ---------------------------
Total Assets 151,196 151,197
---------------------- ---------------------------
LIABILITIES:
Payable to Adviser for organization and
registration expenses (Note 3) 51,196 51,197
---------------------- ---------------------------
NET ASSETS $100,000 $100,000
====================== ===========================
Shares of common stock outstanding
($.001 par value; 50,000,000 shares authorized per
Fund) 10,000 10,000
---------------------- ---------------------------
Net asset value, offering and redemption
price per share $10.00 $10.00
====================== ===========================
</TABLE>
At September 26, 1997 the net assets of each series consisted entirely of
paid-in capital.
See Notes to Financial Statements.
<PAGE>
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
Notes of Financial Statement
September 26, 1997
Note 1. Organization
Fleming Capital Mutual Fund Group, Inc. (the "Funds") was
organized on August 19, 1997, as a Maryland Corporation and is
authorized to issue 100,000,000 shares of common stock, $.001
par value. The Funds are registered under the Investment
Company Act of 1940 as an open-end management investment
company comprised of two diversified series; the Fleming Fund
and Fleming Fledgling Fund. The Funds have had no operations
to date other than those relating to its organization and the
sale of 10,000 shares of common stock in each of the series
currently offered at $10.00 per share to Robert Fleming, Inc.
Note 2. Investment Management and Other Agreements
The Funds have entered into an investment management agreement
with Robert Fleming, Inc., (the "Investment Advisor"). Under
the terms of the agreement, the Funds will pay a fee equal to
the following annual percentages of average net assets:
Fleming Fund 0.90%
Fleming Fledgling Fund 1.00%
Although not required to do so, the Investment Advisor has
agreed to reimburse each Fund to the extent necessary so that
is ratio of operating expenses to average net assets will not
exceed the following levels. Overall operating expense for
each Fund will not fall below the applicable percentage
limitation until the Investment Advisor has been fully
reimbursed for fee foregone and expenses paid by the
Investment Advisor under this agreement:
Fleming Fund 1.25%
Fleming Fledgling Fund 1.35%
These percentages are based on the average net assets of the
Funds.
<PAGE>
Investment Company Administration Corporation is the
Administrator to the Funds pursuant to an administration
agreement. Each Fund will pay the Administrator an annual fee
equal to 0.10% of the first $200 million of average daily net
assets, 0.05% of the next $300 million, and 0.03% of assets
over $500 million, payable monthly and subject to a minimum
annual fee of $40,000 per fund.
First Fund Distributors, Inc. serves as the Distributor to the
Funds pursuant to a Distribution Agreement. The Distributor
receives no fee for its distribution services.
Note 3. Organizational Expenses
Organizational expenses of the Funds aggregating $97,607 will
be allocated to each of the series currently offered for sale
and will be amortized by each series using the straight line
method over a five year period from commencement of
operations. During the amortization period the proceeds of any
redemption of initial shares by any holder thereof will be
reduced by a pro rata portion of any then unamortized
organization expense, based on the ratio of shares redeemed to
the total initial shares outstanding immediately prior to the
redemption. The portion of the aggregate organization expenses
allocated to each of the Funds amounted to $ 48,803.
Prepaid registration fees will be amortized over the period of
benefit but not to exceed two years from commencement of
operations.
The Investment Advisor has agreed to advance the organization
costs and registration fees incurred by the Funds and will be
reimbursed for them after commencement of the Funds'
operations.
Note 4. Related Parties
Certain officers of the Adviser, Administrator and Distributor
are also officers and/or Directors of the Funds.
<PAGE>
PART C: OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Part A - Not applicable
Part B - Audited financial statements dated September 26,
1997 for the Fleming Fund and Fleming Fledgling
Fund are filed herewith.
(b) Additional Exhibits
1(a) Agreement and Declaration of Trust of Fleming Capital
Mutual Fund Group, dated April 21, 1997 (filed as
Exhibit 1 to the Registrant's Registration Statement on
April 24, 1997).
1(b) Articles of Incorporation of the Registrant, dated
August 15, 1997, filed herewith.
1(c) Articles of Merger between the Registrant and Fleming
Capital Mutual Fund Group, dated August 21, 1997, filed
herewith.
2(a) By-Laws of Fleming Capital Mutual Fund Group (filed as
Exhibit 2 to the Registrant's Registration Statement on
April 24, 1997).
2(b) By-Laws of the Registrant, filed herewith.
5 Form of Investment Advisory Agreement between the
Registrant and Robert Fleming, Inc., file herewith.
6 Form of Distribution Agreement between the Registrant
and First Fund Distributors, Inc., filed herewith.
8 Form of Custodian Agreement between the Registrant and
Star Bank, N.A., filed herewith.
9(a) Form of Administration Agreement between the Registrant
and Investment Company Administration Corporation,
filed herewith.
9(b) Form of Transfer Agent Agreement between the Registrant
and Countrywide Fund Services, Inc., filed herewith.
9(c) Form of Accounting Services Agreement between the
Registrant and Countrywide Fund Services, Inc., filed
herewith.
10 Opinion and Consent of Counsel, filed herewith.
11 Opinion and Consent of Independent Auditors, filed
herewith.
*16 Performance Calculations.
*24 Powers of Attorney.
27 Financial Data Schedules, filed herewith.
* To be filed by amendment
C-1
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant:
Not applicable.
Item 26. Number of Holders of Securities:
The number of record holders for each series as of September 26, 1997:
Name of Series Number of Record Holders
-------------- ------------------------
Fleming Fund 1
Fleming Fledgling Fund 1
Item 27. Indemnification:
Article VIII of the Articles of Incorporation, filed as Exhibit 1(b) to
the Registration Statement, is incorporated by reference. Insofar as
indemnification for liability arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the Articles of Incorporation 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 directors, officers or controlling persons of the Registrant in
connection with the successful defense of any act, suit or proceeding) is
asserted by such directors, officers or controlling persons in connection with
the shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser:
ADVISER
- -------
Robert Fleming, Inc. (the "Adviser") is the investment adviser for the
corporation. The principal address of the Adviser is 320 Park Avenue, New York,
New York 10022. The Adviser is an investment adviser registered under the
Advisers Act.
The list required by this Item 28 of officers and directors of the Adviser,
together with information as to any other business profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by the Adviser to the Advisers Act (SEC File No. 801- 26297).
C-2
<PAGE>
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment adviser.
Registrant's underwriter, First Fund Distributors, Inc. (the
"Distributor"), acts as distributor for:
Advisors Series Trust
Guinness Flight Investment Funds
Jurika & Voyles Fund Group
PIC Investment Trust
RNC Mutual Fund Group, Inc.
Kayne Anderson Mutual Funds
Masters Select Equity Fund
Professionally Managed Portfolios
O'Shaughnessy Funds, Inc.
Purisima Funds
Rainier Investment Management Mutual Funds
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named
in the answer to Item 21 of Part B.
<TABLE>
<CAPTION>
Name Principal Business Positions and Offices with Positions and Offices with
Address Principal Underwriter Registrant
<S> <C> <C> <C>
Robert W. Wadsworth 4455 E. Camelback Road President and Treasurer
Suite 261E
Phoenix, AZ 85018
Eric M. Banhazl 2025 E. Financial Way Vice President Asst. Treasurer
Glendora, CA 91741
Steven J. Paggioli 479 West 22nd Street Vice President and Asst. Secretary
New York, NY 10011 Secretary
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated
thereunder, are maintained as follows:
C-3
<PAGE>
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(i) and (ii); (3);
(6); (8); (12); and 31a-1(d), the required books and records will be
maintained at the offices of Registrant's Custodian:
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
(b) With respect to Rules 31a-1(a); 31a-1(b); (2)(iii) and (4), the
required books and records are maintained at the offices of
Registrant's Administrator:
Investment Company Administration Corporation
2025 E. Financial Way
Suite 101
Glendora, CA 11741
(c) With respect to Rules 31a-1(b)(5), (6), (7), (9), (10) and (11) and
31a-1(f), the required books and records are maintained at the
principal offices of the Registrant's Adviser:
Robert Fleming, Incorporated
320 Park Avenue
New York, NY 10022
(d) With respect to Rules 31a-1(b)(iv) and (8), the required books and
records are maintained at the offices of Registrant's Transfer Agent
and Accounting Services Agent:
Countrywide Fund Services, Inc.
312 Walnut Street
21st Floor
Cincinnati, Ohio 45202
(e) With respect to Rule 31a-1(d), certain required books and records
will be maintained at the offices of the Registrant's Principal
Underwriter:
First Fund Distributors, Inc.
4455 E. Camelback Road
Suite 261E
Phoenix, AZ 85018
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Directors of their desire to communicate with Shareholders of the
Corporation, the Directors will inform such Shareholders as to the approximate
number of Shareholders of record and the approximate costs of mailing or afford
said Shareholders access to a list of Shareholders.
Registrant hereby undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Director(s) when requested
in writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940.
Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be certified, within 4-6 months
from the effective date of the Registrant's 1933 Act Registration Statement.
C-4
<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
Pre-Effective Amendment No.1 to the Registration Statement (File No. 333-25803)
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York on this 29th day of September, 1997.
Fleming Capital Mutual Fund Group, Inc.
By: /s/ Jonathan K.L. Simon
------------------------------------
Jonathan K.L. Simon
President
Pursuant to the requirements of the Securities Act of 1933, this this
Pre-Effective Amendment No.1 to the Registration Statement has been signed below
by the following persons in the capacity on the dates indicated.
By: /s/ Jonathan K.L. Simon President and September 29, 1997
------------------------------------ Chairman of the
Jonathan K.L. Simon Board
By: /s/ Robert E. Marks Director September 29, 1997
------------------------------------
Robert E. Marks
By: /s/ Michael A. Petrino Director September 29, 1997
------------------------------------
Michael A. Petrino
By: /s/ Dominic S. Solly Director September 29, 1997
------------------------------------
Dominic S. Solly
By: Director September 29, 1997
------------------------------------
Christopher M.V. Jones
By: /s/ Arthur A. Levy Treasurer September 29, 1997
------------------------------------
Arthur A. Levy
C-5
<PAGE>
EXHIBIT INDEX
Name Exhibit Page
- ---- ------------
Agreement and Declaration of Trust of Fleming Ex-99.B1(a)
Capital Mutual Fund Group, dated April 21, 1997
(filed as Exhibit 1 to the Registrant's Registration
Statement on April 24, 1997).
Articles of Incorporation of the Registrant, dated Ex-99.B1(b)
August 15, 1997, filed herewith.
Articles of Merger between the Registrant and Ex-99.B1(c)
Fleming Capital Mutual Fund Group, dated August
21, 1997, filed herewith.
By-Laws of Fleming Capital Mutual Fund Group Ex-99.B2(a)
(filed as Exhibit 2 to the Registrant's Registration
Statement on April 24, 1997).
By-Laws of the Registrant, filed herewith. Ex-99.B2(b)
Form of Investment Advisory Agreement between Ex-99.B5
the Registrant and Robert Fleming, Inc., filed
herewith
Form of Distribution Agreement between the Ex-99.B6
Registrant and First Fund Distributors, Inc., filed
herewith.
Form of Custodian Agreement between the Ex-99.B8
Registrant and Star Bank, N.A., filed herewith.
Form of Administration Agreement between the Ex-99.B9(a)
Registrant and Investment Company Administration
Corporation, filed herewith.
Form of Transfer Agent Agreement between the Ex-99.B9(b)
Registrant and Countrywide Fund Services, Inc.,
filed herewith.
Form of Accounting Services Agreement between Ex-99.B9(c)
the Registrant and Countrywide Fund Services,
Inc., filed herewith.
Opinion and Consent of Counsel, filed herewith. Ex-99.B10
C-6
<PAGE>
Opinion and Consent of Independent Auditors, filed Ex-99.B11
herewith.
Financial Data Schedules, filed herewith.
Fleming Fund EX-27.1
Fleming Fledgling Fund EX-27.2
C-7
ARTICLES OF INCORPORATION
OF
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
ARTICLE I
THE UNDERSIGNED, Arthur A. Levy whose post office address is 320 Park
Avenue, New York, New York 10022, being at least eighteen years of age, does
hereby act as an incorporator, under and by virtue of the General Laws of the
State of Maryland authorizing the formation of corporations and with the
intention of forming a corporation.
ARTICLE II
The name of the Corporation is Fleming Capital Mutual Fund Group, Inc.
ARTICLE III
The purpose for which the Corporation is formed, as an open-end
management investment company under the Investment Company Act of 1940 (the
"1940 Act"), is to provide investors with one or more managed investment
portfolio(s) consisting primarily of securities, including debt instruments and
other instruments, and rights of a financial character.
ARTICLE IV
In furtherance and not in limitation of the powers conferred to the
Corporation under Article III herein, the Corporation is expressly empowered as
follows:
(1) To hold, invest and reinvest its assets in securities and other
investments including assets in cash.
(2) To issue and sell Shares of its capital stock in such amounts and
on such terms and conditions and for such purposes and for such amount or kind
of consideration as may now or hereafter be permitted by law.
- 1 -
<PAGE>
(3) To redeem, purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
Shareholders of the Corporation) Shares of its capital stock, in any manner and
to the extent now or hereafter permitted by law and by the Charter or the
By-Laws of the Corporation.
(4) To enter into a written contract or contracts with any person or
persons providing for a delegation of the management of all or part of this
Corporation's securities portfolio(s) and also for the delegation of the
performance of various administrative or corporate functions, subject to the
direction of the Board of Directors of the Corporation. Any such contract or
contracts may be made with any person even though such person may be an officer,
other employee, director or Shareholder of this Corporation or a corporation,
partnership, trust or association in which any such officer, other employee,
director or Shareholder may be interested.
(5) To enter into a written contract or contracts appointing one or
more underwriters, distributors or agents for the sale of the Shares of the
Corporation on such terms and conditions as the Board of Directors of the
Corporation may deem reasonable and proper, and to allow such person or persons
a commission on the sale of such Shares. Any such contract or contracts may be
made with any person even though such person may be an officer, other employee,
director or Shareholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
Shareholder may be interested.
(6) To enter into a written contract or contracts employing such
custodian or custodians for the safekeeping of the property of the Corporation
and of its Shares, such dividend disbursing agent or agents, and such transfer
agent or agents and registrar or registrars for its Shares, and such agent or
agents for accounting and other administrative services on such terms and
conditions as the Board of Directors of the Corporation may deem reasonable and
proper for the conduct of the affairs of the Corporation, and to pay the fees
and disbursements of such custodians, dividend disbursing agents, transfer
agents, registrars and accounting and administrative services agents out of the
income and/or any other property of the Corporation. Notwithstanding any other
provisions of the Charter or the By-Laws of the Corporation, the Board of
Directors of the Corporation may cause any or all of the property of the
Corporation to be transferred to, or to be acquired and held in the name of, a
custodian so appointed or any nominee or nominees of this Corporation or nominee
or nominees of such custodian satisfactory to the Board of Directors of the
Corporation.
(7) To employ the same person, partnership (general or limited),
association, trust or corporation in any multiple capacity under Sections (4),
(5) and (6) of this Article, who may receive compensation from the Corporation
in as many capacities in
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which such person, partnership (general or limited), association, trust or
corporation shall serve the Corporation.
(8) To do any and all such further acts or things and to exercise any
and all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of the purposes stated in Article III hereof.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE V
The post office address of the principal office of the Corporation in
the State of Maryland is 32 South Street, Baltimore, Maryland 21202. The name of
the resident agent of the Corporation in this State is The Corporation Trust
Incorporated, a Maryland corporation, and the post office address of the
resident agent is 32 South Street, Baltimore, Maryland 21202.
ARTICLE VI
Section 1. The total number of Shares of capital stock which the
Corporation shall have the authority to issue is one hundred million
(100,000,000) with par value of 1 mil ($.001) per Share and of the aggregate par
value of one hundred thousand dollars ($100,000) all of which Shares are
designated Common Stock. Unless otherwise prohibited by law, so long as the
Corporation is registered as an open-end investment company under the 1940 Act,
the Board of Directors of the Corporation shall have the power and authority,
without the approval of the holders of any outstanding Shares, to increase or
decrease the number of Shares of capital stock, or the number of Shares of
capital stock of any class or series, that the Corporation has authority to
issue.
Section 2. Any fractional Share shall carry proportionately all the
rights of a whole Share, including, without limitation, the right to vote and
the right to receive dividends.
Section 3. All persons who shall acquire stock in the Corporation
shall acquire the same subject to the provisions of the Charter and the By-Laws
of the Corporation. All Shares issued pursuant to the Charter of the Corporation
for which the
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price or consideration fixed thereon shall have been paid shall be deemed to be
fully paid and non-assessable.
Section 4. The Board of Directors of the Corporation shall have
authority to designate and redesignate any authorized but unissued Shares of
capital stock from time to time into one or more classes of Shares and separate
series within each such class, to fix the number of Shares in any such class or
series and to classify or reclassify any unissued Shares with respect to such
class or series. Any such class or series shall have such preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms, conditions of redemption or such other
characteristics as the Board of Directors may determine in the absence of
contrary determination set forth herein. Subject to applicable rule, regulation
or order of the Securities and Exchange Commission or other applicable law or
regulation, there may be variations fixed and determined by the Board of
Directors among different series and classes as to investment objectives,
purchase price, right of redemption, special rights as to dividends, and in
liquidation, with respect to assets belonging to a particular series or class,
voting powers and conversion rights. Pursuant to this Section 4 of Article VI,
the Board of Directors has designated two series of the Corporation. The names
of such series and the number of shares classified and allocated to these series
are as follows:
Name of Series Number of Shares Classified and Allocated
- -------------- -----------------------------------------
Fleming Fund 50,000,000
Fleming Fledgling Fund 50,000,000
Section 5. The Directors may from time to time, without Shareholder
approval:
(1) Divide or combine the Shares of a series or class into a greater
or lesser number without thereby changing their proportionate ownership
interests in assets allocated to such series or class;
(2) Create one or more series of the Corporation or create one or more
classes of Shares of any series or of the Corporation (in addition to any series
or classes already existing or otherwise) with such rights and preferences and
such eligibility requirements for investment therein as the Board of Directors
shall determine and reclassify any or all outstanding Shares as Shares of
particular series or classes in accordance with such eligibility requirements;
(3) Combine one or more series or classes of Shares into a single
series or class on such terms and conditions as the Board of Directors shall
determine;
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(4) Change or eliminate any eligibility requirements for investment in
Shares of any series or class, including without limitation the power to provide
for the issue of Shares of any series or class in connection with any merger or
consolidation of the Corporation with one or more corporations, trusts,
partnerships or associations or any acquisition by the Corporation of part or
all of the assets of one or more corporations, trusts, partnerships or
associations;
(5) Allocate any specific assets or liabilities of the Corporation or
any specific items of income or expense of the Corporation to one or more series
or classes of Shares; and
(6) Create one or more additional series or classes of Shares which
are preferred over all other series or classes of Shares in respect of assets
specifically allocated thereto or any dividends paid by the Corporation with
respect to any net income, however determined, earned from the investment and
reinvestment of any assets so allocated or otherwise provide for any special
voting or other rights with respect to such series or classes.
Subject to the provisions of Section 4 of this Article VI and
applicable law, the power of the Board of Directors of the Corporation to
classify or reclassify any of the Shares of capital stock shall include, without
limitation, authority to classify or reclassify any such stock into a class or
classes of capital stock and to divide and classify Shares of any class into one
or more series of such class, by determining, fixing or altering one or more of
the following:
(A) The distinctive designation of such class or series and the
number of Shares to constitute such class or series; provided that, unless
otherwise prohibited by the terms of such class or series, the number of
Shares of any class or series may be decreased by the Board of Directors of
the Corporation in connection with any classification or reclassification
of unissued Shares and the number of Shares of such class or series may be
increased by the Board of Directors of the Corporation in connection with
any such classification or reclassification, and any Shares of any class or
series which have been redeemed, purchased or otherwise acquired by the
Corporation shall remain part of the authorized capital stock and be
subject to classification and reclassification as provided herein. The
establishment and designation of any class or series of Shares shall be
effective upon the adoption of a resolution by a majority of the Directors
(or of a committee thereof) setting forth such establishment and
designation and the relative rights and preferences of the Shares of such
class or series. The Board of Directors (or a committee thereof) may by
majority vote amend such establishment and designation. At any time, if no
Shares are outstanding of a particular class or series previously so
established and designated, the Directors (or a committee thereof) may by
majority vote abolish such class or series and said establishment and
designation thereof.
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(B) Whether or not and, if so, the rates, amounts and times at
which, and the conditions under which, dividends shall be payable on Shares
of such class or series.
(C) Whether or not Shares of such class or series shall have
voting rights in addition to any general voting rights provided by law and
the Charter or the By-Laws of the Corporation and, if so, the terms of such
additional voting rights.
(D) The rights of the holders of Shares of such class or series
upon the liquidation, dissolution or winding up of the affairs, or upon any
distribution of the assets, of the Corporation.
(E) Any other rights, restrictions, including restrictions on
transferability, and qualifications of Shares of such class or series, not
inconsistent with law and the Charter of the Corporation.
Section 6. The Board of Directors of the Corporation shall have
authority to issue from time to time Shares of capital stock, whether now or
hereafter authorized at prices not less than the net asset value or par value
thereof, whichever is greater, for such consideration as the Board of Directors
of the Corporation may deem advisable, subject to such limitations as may be set
forth in the Charter or the By-Laws of the Corporation or in applicable law.
Section 7. No Shareholder of the Corporation shall, as such holder,
have any preemptive right to purchase or subscribe for any Shares of the capital
stock of the Corporation or any other security of the Corporation which it may
issue or sell (whether out of the number of Shares authorized by the Charter of
the Corporation, or out of any Shares of the capital stock of the Corporation
acquired by it after the issue thereof, or otherwise) other than such right, if
any, as the Board of Directors of the Corporation, in its discretion, may
determine.
Section 8. Shares of Common Stock of the Corporation shall have the
following preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption:
(A) Assets Belonging to a Series or Class. All consideration
received by the Corporation for the issue or sale of stock of any series or
class of Common Stock, together with all assets in which such consideration
is invested and reinvested, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, and any funds or payments derived from any reinvestment of such
proceeds in whatever form the same may be, shall irrevocably belong to the
series or class of Shares of Common Stock with
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respect to which such assets, payments or funds were received by the
Corporation for all purposes, subject only to the rights of creditors, and
shall be so handled upon the books of account of the Corporation. Such
consideration, assets, income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation
thereof, and any assets derived from any reinvestment of such proceeds in
whatever form, are herein referred to as "assets belonging to" such series
or class. Any assets, income, earnings, profits, and proceeds thereof,
funds or payments which are not readily attributable to any particular
series or class shall be allocable among any one or more of the series or
classes in such manner and on such basis as the Board of Directors of the
Corporation, in its sole discretion, shall deem fair and equitable.
(B) Liabilities Belonging to a Series or Class. The assets
belonging to any series or class of Common Stock shall be charged with the
liabilities in respect of such class, and shall also be charged with such
series' or class' share of the general liabilities of the Corporation
determined as hereinafter provided. The determination of the Board of
Directors of the Corporation shall be conclusive as to the amount of such
liabilities, including the amount of accrued expenses and reserves; as to
any allocation of the same to a given series or class; and as to whether
the same are allocable to one or more series or classes. The liabilities so
allocated to a series or class are herein referred to as "liabilities
belonging to" such series or class. Any liabilities which are not readily
attributable to any particular series or class shall be allocable among any
one or more of the series or classes in such manner and on such basis as
the Board of Directors of the Corporation, in its sole discretion, shall
deem fair and equitable.
The Directors are authorized to pay or to cause to be paid out of
the principal or income of the Corporation, or partly out of principal and
partly out of income, as they deem fair, all expenses, fees, charges, taxes
and liabilities incurred or arising in connection with the Corporation, or
in connection with the management thereof, including, but not limited to,
the Directors' compensation, as authorized pursuant to the By-Laws of the
Corporation, and reimbursement for expenses and disbursements and such
expenses and charges for the services of the Corporation's officers,
employees, investment adviser, administrator, principal underwriter,
auditor, counsel, custodian, transfer agent, shareholder servicing agent,
and such other agents or independent contractors and such other expenses
and charges as the Directors may deem necessary or proper to incur,
provided, however, that all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with a particular series or class as
determined by the Directors consistent with applicable law, shall be
payable solely out of the assets of that series or class. Any general
liabilities, expenses, costs, charges or reserves of the Corporation which
are not readily identifiable as belonging to any particular series or class
shall be allocated and charged by the Directors between or among any one or
more of the series or
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classes in such manner as the Directors in their sole discretion deem fair
and equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all series or classes for all purposes. Any creditor of
any series or class may look only to the assets of that series or class to
satisfy such creditor's debt.
The Directors shall have the power, as frequently as they may
determine, to cause each Shareholder, or each Shareholder of any particular
series or class, to pay directly, in advance or arrears, for any and all
expenses of the Corporation, an amount fixed from time to time by the
Directors, by setting off such charges due from such Shareholder from
declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such
charges due from such Shareholder.
(C) Dividends and Distributions. Shares of each series or class
of Common Stock shall be entitled to such dividends and distributions, in
stock or in cash or both, as may be declared from time to time by the Board
of Directors of the Corporation, acting in its sole discretion, with
respect to such series or class, provided, however, that dividends and
distributions on Shares of a series or class of Common Stock shall be paid
only out of the lawfully available "assets belonging to" such series or
class as such phrase is defined in Section 8(A) of this Article VI. Each
Share of a series or class shall have equal rights with each other Share of
that series or class with respect to the assets of the Corporation
pertaining to that series or class. The dividends payable to the holders of
any class or series (subject to any applicable rule, regulation or order of
the Securities and Exchange Commission or any other applicable law or
regulation) shall be determined by the Board and need not be individually
declared, but may be declared in accordance with a formula adopted by the
Board, whether or not the amount of dividend or distribution so declared
can be calculated at the time of such declaration.
The Board of Directors may from time to time declare and pay
dividends or distributions, in securities or in cash, on any or all classes
or series and to the Shareholders of record as of such date as the Board of
Directors may determine, provided such dividends or distributions on Shares
of any class or series shall be paid only out of earnings, surplus, or
other lawfully available assets belonging to such class or series. Subject
to the foregoing proviso, the amount of any dividends or distributions and
the payment thereof shall be wholly in the discretion of the Board of
Directors. The Directors may, but need not, distribute from time to time to
the Shareholders of each class or series such income and gains, accrued or
realized, as the Directors may determine, after providing for actual and
accrued expenses and liabilities (including such reserves as the Directors
may establish) determined in accordance with good accounting practices. The
Directors shall have
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full discretion to determine which items shall be treated as income and
which items as capital and their determination shall be binding upon the
Shareholders. Distributions of each year's income of each class or series,
if any be made, may be made in one or more payments, which shall be in
Shares, in cash, in securities or otherwise and on a date or dates
determined by the Directors. At any time and from time to time in their
discretion, the Directors may distribute to the Shareholders of any one or
more classes or series as of a record date or dates determined by the
Directors, in Shares, in cash, securities or otherwise, all or part of any
gains realized on the sale or disposition of property of the class, series
or otherwise, or all or part of any other principal of the Corporation
attributable to the class or series. Each distribution pursuant to this
Section 8(C) shall be made ratably according to the number of Shares of the
class or series held by the several Shareholders on the applicable record
date thereof, provided that no distributions need be made on Shares
purchased pursuant to orders received, or for which payment is made, after
such time or times as the Directors may determine. Any such distribution
paid in Shares will be paid at the net asset value thereof as determined in
accordance with the Charter of the Corporation.
(D) Liquidating Dividends and Distributions. In the event of the
liquidation or dissolution of the Corporation, Shareholders of each class
or series of Common Stock shall be entitled to receive, as a class or
series, out of the assets of the Corporation available for distribution to
Shareholders, but other than general assets not belonging to any particular
class of stock or series, the assets belonging to such class or series; and
the assets so distributable to the Shareholders of any class of Common
Stock or series shall be distributed among such Shareholders in proportion
to the number of Shares of such class or series held by them and recorded
on the books of the Corporation. In the event that there are any general
assets not belonging to any particular class of stock or series and
available for distribution, such distribution shall be made to the holders
of stock of all classes of Common Stock or series in proportion to the
asset value of the respective classes of Common Stock or series determined
as hereinafter provided.
(E) Voting. Each Shareholder shall be entitled to one vote for
each full Share and a proportional fractional vote for each fractional
Share of Common Stock, irrespective of the class, then standing in his name
on the books of the Corporation. On any matter submitted to a vote of
Shareholders, all Shares of Common Stock then issued and outstanding and
entitled to vote shall be voted in the aggregate and not by class or series
except that: (i) when expressly required by law, Shares of Common Stock
shall be voted by individual class or series and (ii) when the Directors
have determined that the matter affects only the interests of one or more
series or classes, then only Shares of Common Stock of the respective
series or classes affected by a matter shall be entitled to vote on such
matter.
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Shareholders shall not be entitled to cumulative voting in the election of
Directors or on any other matter.
At all meetings of the Shareholders, the holders of one-third of
the Shares of stock of the Corporation entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as otherwise provided by law or by the
Charter or the By-Laws of the Corporation. The absence of a quorum shall
not prevent action at such meeting upon any other matter or matters which
may properly come before the meeting, if there are present at the meeting,
in person or by proxy, holders of record of the number of Shares required
for action in respect of such other matter or matters. In addition, the
holders of a majority of the Shares of stock present in person or by proxy
and entitled to vote may adjourn the meeting from time to time, without
notice other than announcement at the meeting, except as otherwise required
by the By-Laws of the Corporation, until the holders of the requisite
amount of Shares of stock shall be so present. At any such adjourned
meeting at which a quorum may be present, any business may be transacted
which might have been transacted at the meeting as originally called. The
absence from any meeting, in person or by proxy, of holders of the number
of Shares of stock of the Corporation in excess of a majority thereof which
may be required by the laws of the State of Maryland, the 1940 Act, or any
other applicable statute, the Charter or the By-Laws of the Corporation,
for action upon any given matter shall not prevent action at such meeting
upon any other matter or matters which may properly come before the
meeting, if there shall be present at the meeting, in person or by proxy,
holders of the number of Shares of stock of the Corporation required for
action in respect of such other matter or matters.
Notwithstanding any provision or applicable law requiring any
action to be taken or authorized by the affirmative vote of a greater
proportion than the majority of the total number of Shares of any class of
stock of the Corporation, such action shall be effective and valid if taken
or authorized by the affirmative vote of the holders of a majority of the
total number of Shares outstanding of that class of stock entitled to vote
thereon, except as otherwise provided in the Charter of the Corporation.
(F) Redemption. All Shares now or hereafter authorized shall be
subject to redemption and redeemable at the option of the Corporation. The
Board of Directors may by resolution from time to time authorize the
Corporation to require the redemption of all or any part of any outstanding
Shares, without the vote or consent of Shareholders (including through the
establishment of uniform standards with respect to the minimum net asset
value of a Shareholder account) upon the sending of written notice thereof
to each Shareholder any of whose Shares are so
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redeemed and upon such terms and conditions as the Board of Directors shall
deem advisable, out of funds legally available therefore, at net asset
value per share determined in accordance with provisions of these Articles
and to take all other steps deemed necessary or advisable in connection
therewith. The Board of Directors may authorize the closing of those
accounts not meeting the specified minimum standards of net asset value by
redeeming all of the Shares in such accounts.
To the extent the Corporation has funds or other property legally
available therefor, each holder of Shares of Common Stock of the
Corporation shall be entitled to require the Corporation to redeem all or
any part of the Shares of Common Stock of the Corporation standing in the
name of such holder on the books of the Corporation upon request to the
Corporation in proper form for transfer, as determined from time to time by
the Board of Directors, and all Shares of Common Stock issued by the
Corporation shall be subject to redemption by the Corporation, at the
redemption price of such Shares as in effect from time to time as may be
determined by the Board of Directors of the Corporation in accordance with
the provisions hereof, subject to the right of the Board of Directors of
the Corporation to suspend the right of redemption of Shares of Common
Stock of the Corporation or postpone the date of payment of such redemption
price in accordance with provisions of applicable law. Without limiting the
generality of the foregoing, the Corporation shall, to the extent permitted
by applicable law, have the right at any time to redeem the Shares owned by
any holder of Common Stock of the Corporation (i) if such redemption is, in
the opinion of the Board of Directors of the Corporation, desirable in
order to prevent the Corporation from being deemed a "personal holding
company" within the meaning of the Internal Revenue Code, as now or
hereafter in force, (ii) subject to applicable laws, if the value of such
Shares in the account maintained by the Corporation or its transfer agent
for any class or series of Common Stock is less than the minimum investment
amount established by the Board of Directors of the Corporation for that
class or series, or (iii) if the net income with respect to any particular
series or class of Common Stock should be negative or it should otherwise
be appropriate to carry out the Corporation's responsibilities under the
1940 Act, in each case subject to such further terms and conditions as the
Board of Directors of the Corporation may from time to time adopt.
The redemption price of Shares of Common Stock of the Corporation
shall, except as otherwise provided in this Section 8(F), be the net asset
value thereof as determined by the Board of Directors of the Corporation
from time to time in accordance with the provisions of applicable law, less
such redemption fee or other charge, if any, as may be fixed by resolution
of the Board of Directors of the Corporation. Payment of the redemption
price may be made in whole or in part in securities or in cash, as the
Board shall deem advisable from time to time. In such
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event, the Corporation may make payment wholly or partly by securities or
other property included in the assets belonging or allocable to the series
or class of the Shares redemption of which is being sought, the value of
which shall be determined as provided herein. Subject to any generally
applicable limitation imposed by the Board of Directors, any payment on
redemption, purchase or repurchase by the Corporation of Shares may, if
authorized by the Directors, be made wholly or partly in kind, instead of
in cash. Such payment in kind shall be made by distributing securities or
other property, constituting, in the opinion of the Directors, a fair
representation of the various types of securities and other property then
held by the series which issued the Shares being redeemed, purchased or
repurchased (but not necessarily involving a portion of each of that
series' holdings) and taken at their value used in determining the net
asset value of the Shares in respect of which payment is made. No
Shareholder shall have the right, other than as determined by the Board of
Directors, to have Shares redeemed or repurchased for securities or other
property held by the class or series.
The Board of Directors may by resolution from time to time
authorize the repurchase by the Corporation, either directly or through an
agent, of Shares upon such terms and conditions and for such consideration
as the Board shall deem advisable, out of funds legally available therefor,
at prices per shares not in excess of the net asset value per share
determined in accordance with the Charter and to take all other steps
deemed necessary or advisable in connection therewith. In the absence of
any specification as to the purposes for which Shares are redeemed or
repurchased by the Corporation, all Shares so redeemed or repurchased shall
be deemed to be acquired for retirement in the sense contemplated by
Maryland General Corporation Law. Shares retired by redemption or
repurchase shall thereafter have the status or authorized but unissued
Shares.
(G) Conversion or Exchange. The Board may provide for a
Shareholder of any class or series of the Corporation, who delivers to the
Corporation a written request in good order signed by the Shareholder or
his or her duly authorized agent or attorney-in-fact, subject to such
procedures as may be established by the Board of Directors of the
Corporation, to convert or exchange the Shares in question at a time and at
a price and on such basis as the Board of Directors may provide from time
to time, into Shares of stock of any other class or series of the
Corporation. The Corporation shall determine the net asset value, as
provided herein, of the Shares to be converted and may deduct therefrom a
conversion or exchange cost, in an amount determined within the discretion
of the Board of Directors of the Corporation. Any amount representing a
fraction of a Share may be paid in cash at the option of the Corporation.
Any conversion or exchange cost may be paid and/or assigned by the
Corporation to the underwriter and/or to any other entity, as it may elect.
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(H) Restrictions on Transferability. If, in the opinion of the
Board of Directors of the Corporation, concentration in the ownership of
Shares of Common Stock might cause the Corporation to be deemed a personal
holding company within the meaning of the Internal Revenue Code, as now or
hereafter in force, the Corporation may at any time and from time to time
refuse to give effect on the books of the Corporation to any transfer or
transfers of any Share or Shares of Common Stock in an effort to prevent
such personal holding company status.
(I) Merger, Consolidation and Sale of Assets. Any one or more
series of the Corporation may, either as the successor, survivor or
non-survivor, (i) consolidate or merge with one or more other trusts,
partnerships, associations or corporations, including any series or class
thereof, organized under the laws of any state of the United States; or
(ii) transfer a substantial portion of its assets to one or more other
trusts, partnerships, associations or corporations, including any series or
class thereof, organized under the laws of any state of the United States,
any such consolidation, merger or transfer to be upon such terms and
conditions as are specified in an agreement and plan of reorganization
authorized and approved by the Board of Directors of the Corporation and
entered into by the relevant series in connection therewith.
(J) Incorporation, Reorganization. The Board of Directors of the
Corporation may cause to be organized or assist in organizing a corporation
or corporations under the laws of any jurisdiction, or any other trust,
unit investment trust, partnership, association or other organization to
take over the assets of any one or more series of the Corporation to carry
on any business in which such series of the Corporation shall directly or
indirectly have any interest, and to sell, convey and transfer such assets
to any such corporation, trust, partnership, association or organization in
exchange for the Shares or securities thereof or otherwise, and to lend
money to, subscribe for the Shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Corporation holds or is about to acquire Shares
or any other interest. Subject to Section 7, Subsection I of this Article
VI, the Directors may also cause a merger or consolidation between such
series of the Corporation or any successor thereto and any such
corporation, trust, partnership, association or other organization if and
to the extent permitted by law.
ARTICLE VII
The number of directors of the Corporation shall be five (5) which
number may be increased or decreased pursuant to the By-Laws of the Corporation
but shall never be less than three (3) except for any period during which Shares
of the Corporation are held by less than three Shareholders. The name of the
director who shall act until the directors
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are elected by the Corporation's Shareholders or until his successor is duly
elected and qualified is:
Arthur A. Levy
--------------------------------------
ARTICLE VIII
Section 1. To the fullest extent that limitations on the liability of
directors and officers are permitted by applicable law, no director or officer
of the Corporation shall have any liability to the Corporation or its
Shareholders for damages. This limitation on liability applies to events
occurring at the time a person serves as a director or officer of the
Corporation, whether or not such person is a director or officer at the time of
any proceeding in which liability is asserted.
Every note, bond, contract, instrument, certificate, share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Corporation or the Directors or any of them in connection with the
Corporation shall be conclusively deemed to have been executed or done only in
or with respect to their or his or her capacity as Directors or Director, and
such Directors or Director shall not be personally liable thereon.
Section 2. The Corporation shall indemnify and advance expenses to its
currently acting and its former directors to the fullest extent that
indemnification of directors is permitted by law. The Corporation shall
indemnify and advance expenses to its officers to the same extent as to its
directors and to such further extent as is consistent with law. The Board of
Directors of the Corporation may make further provision for indemnification of
directors, officers, employees and agents in the By-Laws of the Corporation or
by resolution or agreement to the fullest extent permitted by the Maryland
General Corporation Law.
Section 3. No provision of this Article VIII shall be effective to
protect or purport to protect any director or officer of the Corporation against
any liability to the Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office.
Section 4. No further amendment to the Charter of the Corporation
shall decrease, but may expand, any right of any person under this Article VIII
based on any event, omission or proceeding prior to such amendment.
ARTICLE IX
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<PAGE>
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practices by or pursuant to the
direction of the Board of Directors of the Corporation, as to the amount of
assets, obligations or liabilities of the Corporation, as to the amount of net
income of the Corporation from dividends and interest for any period or amounts
at any time legally available for the payment of dividends, as to the amount of
any reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged), as
to the value of any security owned by the Corporation or as to any other matters
relating to the issuance, sale, redemption or other acquisition or disposition
of securities or Shares of capital stock of the Corporation, and any reasonable
determination made in good faith by the Board of Directors of the Corporation as
to whether any transaction constitutes a purchase of securities on "margin," a
sale of securities "short," or an underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the public
distribution of, any securities, shall be final and conclusive, and shall be
binding upon the Corporation and all holders of its capital stock, past, present
and future, and Shares of the capital stock of the Corporation are issued and
sold on the condition and understanding, evidenced by the purchase of Shares of
capital stock, that any and all such determinations shall be binding as
aforesaid.
No provision of the Charter of the Corporation shall be effective (i)
to require a waiver of compliance with any provision of the Securities Act of
1933, as amended, or the 1940 Act, or of any valid rule, regulation or order of
the Securities and Exchange Commission thereunder or (ii) to protect or purport
to protect any director or officer of the Corporation against any liability to
the Corporation or its security holders to which he would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
ARTICLE X
The duration of this Corporation shall be perpetual.
ARTICLE XI
Section 1. So long as permitted by Maryland law, the books of the
Corporation may be kept outside of the State of Maryland at such place or places
as may be designated from time to time by the Board of Directors of the
Corporation or in the ByLaws of the Corporation.
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<PAGE>
Section 2. The Board of Directors shall have the management and
control of the property, business and affairs of the Corporation and is hereby
vested with all the power possessed by the Corporation itself so far as is not
inconsistent with applicable law or these Articles of Incorporation. In
furtherance, and not in limitation, of the powers conferred by applicable laws,
the Board of Directors of the Corporation is expressly authorized:
(A) To make, alter or repeal the By-Laws of the Corporation,
except where such power is reserved by the By-Laws of the Corporation to
the Shareholders, and except as otherwise required by the 1940 Act.
(B) From time to time to determine whether and to what extent and
at what times and places and under what conditions and regulations the
books and accounts of the Corporation, or any of them other than the stock
ledger, shall be open to the inspection of the Shareholders, and no
Shareholder shall have any right to inspect any account or book or document
of the Corporation, except as conferred by law or authorized by of the
Board of Directors or of the Shareholders of the Corporation.
(C) Without the assent or vote of the Shareholders, to authorize
the issuance from time to time of Shares of the stock of any series or
class of the Corporation, whether now or hereafter authorized, for such
consideration as the Board of Directors of the Corporation may deem
advisable.
(D) Without the assent or vote of the Shareholders, to authorize
and issue obligations of the Corporation, secured and unsecured, as the
Board of Directors of the Corporation may determine, and to authorize and
cause to be executed mortgages and liens upon the property of the
Corporation, real and personal.
(E) Notwithstanding anything in the Charter of the Corporation to
the contrary, to establish in its absolute discretion the basis or method
for determining the value of the assets belonging to any class or series,
and the net asset value of each Share of any class or series of the
Corporation for purposes of sales, redemptions, repurchases of Shares or
otherwise.
(F) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or
net assets in excess of capital, and to determine what accounting periods
shall be used by the Corporation for any purpose, whether annual or any
other period, including daily: (i) to set apart out of any funds of the
Corporation such reserves for such purposes as it shall determine and to
abolish the same; (ii) to declare and pay any dividends and distributions
in cash, securities or other property from surplus or
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<PAGE>
any funds legally available therefor, at such intervals (which may be as
frequently as daily) or on such other periodic basis, as it shall
determine; (iii) to declare such dividends or distributions by means of a
formula or other method of determination, at meetings held less frequently
than the frequency of the effectiveness of such declarations; (iv) to
establish payment dates for dividends or any other distributions on any
basis, including dates occurring less frequently than the effectiveness of
declarations thereof; and (v) to provide for the payment of declared
dividends on a date earlier or later than the specified payment date in the
case of Shareholders of the Corporation redeeming their entire ownership of
Shares of any class or series of the Corporation.
(G) Subject to the provisions of this Charter of the Corporation,
the Board of Directors of the Corporation shall manage the business of the
Corporation as an investment company, and they shall have all powers
necessary or convenient to carry out that responsibility. Without limiting
the foregoing, the Board of Directors of the Corporation may adopt By-Laws
not inconsistent with this Charter of the Corporation providing for the
conduct of the business of the Corporation and may amend and repeal them to
the extent that such By-Laws do not reserve that right to the Shareholders;
they may fill vacancies in their number, including vacancies resulting from
increases in their number, may remove from their number with or without
cause, and may elect and remove such officers and appoint and terminate
such agents as they consider appropriate; they may appoint from their own
number, and terminate, any one or more committees consisting of two or more
Board of Directors of the Corporation, including an executive committee
which may, when the Board of Directors of the Corporation are not in
session, exercise some or all of the powers and authority of the Board of
Directors of the Corporation as the Board of Directors of the Corporation
may determine; they may appoint an advisory board, the members of which
shall not be members of Board of Directors of the Corporation and need not
be Shareholders; they may employ one or more investment advisers or
administrators as provided in the By-Laws of the Corporation; they may
employ one or more custodians of the assets of the Corporation and may
authorize such custodians to employ subcustodians and to deposit all or any
part of such assets in a system or systems for the central handling of
securities, retain a transfer agent or a Shareholder servicing agent, or
both, provide for the distribution of Shares by the Corporation through one
or more principal underwriters or otherwise, set record dates for the
determination of Shareholders with respect to various matters, and in
general delegate such authority as they consider desirable to any officer
of the Corporation to any committee of the Board of Directors of the
Corporation and to any agent or employee of the Corporation or to any such
custodian or underwriter.
(H) In addition to the powers and authorities granted herein and
by law expressly conferred upon it, the Board of Directors is authorized to
exercise all such
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<PAGE>
powers and do all acts and things as may be exercised or done by the
Corporation, subject, nevertheless, to the provisions of applicable laws,
of these Articles, and of the By-Laws of the Corporation.
Without limiting the foregoing, the Board of Directors of the
Corporation shall have power and authority:
(1) To invest and reinvest cash, and to hold cash uninvested;
(2) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on, or lease any or all of the assets of the Corporation;
(3) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property, and to execute and
deliver proxies or powers of attorney to such person or persons as the
Board of Directors of the Corporation shall deem proper, granting to such
person or persons such power and discretion with relation to securities or
property as the Board of Directors of the Corporation shall deem proper;
(4) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(5) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Board of Directors of the Corporation of the Corporation or in
the name of a custodian, subcustodian or other depositary or a nominee or
nominees or otherwise;
(6) To establish and eliminate separate and distinct series of Shares
with separately defined investment objectives, policies and purposes, and
with separately defined relative powers, rights, privileges and
liabilities, and to allocate assets, liabilities and expenses of the
Corporation to a particular series of Shares or to apportion the same among
two or more series, provided that any liability or expense determined by
the Board of Directors of the Corporation to have been incurred by a
particular series of Shares shall be payable solely out of the assets of
that series and to establish separate classes of Shares of each series, all
in accordance with Article VI hereof;
(7) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or
property of which is or was held in the Corporation; to consent to any
contract, lease, mortgage, purchase or sale of property by such corporation
or issuer, and to pay calls or subscriptions with respect to any security
held in the Corporation;
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<PAGE>
(8) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority
with relation to any security (whether or not so deposited or transferred)
as the Board of Directors of the Corporation shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation of
such committee, depositary or director as the Board of Directors of the
Corporation shall deem proper;
(9) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Corporation or any matter in controversy, including but not
limited to claims for taxes;
(10) To enter into joint ventures, general or limited partnerships,
limited liability companies, and any other combinations or associations;
(11) To borrow funds;
(12) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Corporation's property or any part thereof to secure any or all of such
obligations;
(13) To purchase and pay for entirely out of Corporation property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Corporation and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Directors, officers, employees, agents, investment advisers, or
administrators, principal underwriters, or independent contractors of the
Corporation individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or
position, or by reason of any action alleged to have been taken or omitted
by any such person as Shareholder, Director, officer, employee, agent,
investment adviser, administrator, principal underwriter, or independent
contractor, including any action taken or omitted that may be determined to
constitute negligence, whether or not the Corporation would have the power
to indemnify such person against such liability;
(14) To pay pensions, as deemed appropriate by the Board of Directors
of the Corporation, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including
the purchasing of life insurance and annuity
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<PAGE>
contracts as a means of providing such retirement and other benefits, for
any or all of the Directors, officers, employees or agents of the
Corporation;
(15) To establish, from time to time, minimum total investments for
Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon giving notice
to such Shareholder;
(16) To enter into contracts of any kind and description;
(17) To name, or to change the name or designation of the Corporation
or any series or class of the Corporation;
(18) To take whatever action may be necessary to enable the
Corporation to comply with any applicable federal, state or local statute,
rule or regulation;
(19) To engage in any other lawful act or activity in which
corporations organized under the Maryland General Corporation Law may
engage; and
(20) In addition to the powers and authorities granted herein and by
statute expressly conferred upon it, the Board of Directors of the
Corporation is authorized to exercise all such powers and do all such acts
and things as may be exercised or done by the Corporation, subject,
nevertheless, to the provisions of Maryland law, the Charter and the
By-Laws of the Corporation.
The Board of Directors of the Corporation shall not in any way be
bound or limited by any present or future law or custom in regard to investments
by Board of Directors of the Corporation. The Board of Directors of the
Corporation shall not be required to obtain any court order to deal with any
assets of the Corporation or take any other action hereunder.
Section 6. The Corporation reserves the right from time to time to
make any amendments to its Charter which may now or hereafter be authorized by
law, including any amendments changing the terms or contract rights, as
expressly set forth in its Charter, of any of its outstanding stock by
classification, reclassification or otherwise. This Charter of the Corporation
may be amended at any time by an instrument in writing signed by a majority of
the then Directors when authorized to do so by a vote or written consent of
Shareholders, except that an amendment which shall affect the holders of one or
more series or classes of Shares but not the holders of all outstanding series
or classes shall be authorized by vote or written consent of the Shareholders of
each series or classes affected and no vote of Shareholders of a series or
classes not affected shall be required. Amendments having the purpose of
changing the name of the Corporation or of a class or
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<PAGE>
series of stock, of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision contained
herein or restatements of the Charter or of changing the designation of any
class or series shall not require authorization by Shareholder vote. In
addition, the Directors shall have the power to amend this Charter of the
Corporation, at any time and from time to time, in such manner as the Directors
may determine in their sole discretion, without the need for Shareholder action,
so as to add to, delete, replace or otherwise modify any provisions relating to
the Shares contained in this Charter of the Corporation for the purpose of
responding to or complying with any regulations, orders, rulings or
interpretations of any governmental agency or any laws, now or hereafter
applicable to the Corporation.
Section 7. All persons who shall acquire Shares in the Corporation
shall acquire the same subject to the provisions of these Articles of
Incorporation.
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<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator of Fleming
Capital Mutual Fund Group, Inc. has signed and acknowledged these Articles of
Incorporation on this 15th day of August, 1997.
/s/ Arthur A. Levy
------------------------------
Arthur A. Levy
Incorporator
WITNESS:
/s/ Richard F. Jackson
- -------------------------
Name: Richard F. Jackson
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<PAGE>
THE UNDERSIGNED incorporator of Fleming Capital Mutual Fund
Group, Inc. who executed the foregoing Articles of Incorporation of which this
Certificate is made a part, hereby acknowledges the same to be his act and
further acknowledges that, to the best of his knowledge, the matters and facts
set forth therein are true in all material respects under the penalties of
perjury.
/s/ Arthur A. Levy
------------------------------
Arthur A. Levy
Incorporator
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State of Maryland
State Department of Assessments and Taxation
-----------------
301 West Preston Street
Baltimore, Maryland 21201
-----------------
ARTICLES OF MERGER
MERGING
FLEMING CAPITAL MUTUAL FUND GROUP
INTO
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
These ARTICLES OF MERGER dated this 21st day of August, 1997, pursuant
to Section 3-109 of the Corporations and Associations Article of the Annotated
Code of Maryland, entered into by and between FLEMING CAPITAL MUTUAL FUND GROUP
(the "Trust"), a Massachusetts business trust, and FLEMING CAPITAL MUTUAL FUND
GROUP, INC. ("Fleming"), a Maryland corporation.
THIS IS TO CERTIFY:
FIRST: The Trust, a business trust organized and existing under the
laws of the Commonwealth of Massachusetts, and Fleming, a corporation organized
and existing under the laws of the State of Maryland, have agreed to merge. The
terms and conditions of the merger and the mode of carrying the same into effect
are as herein set forth in these Articles of Merger and in the Agreement and
Plan of Merger attached as Exhibit A.
SECOND: The parties to these Articles of Merger are Fleming, a
corporation organized on August 19, 1997 under the laws of the State of
Maryland, and the Trust, a business trust organized on April 23, 1997 under the
laws of the Commonwealth of Massachusetts.
THIRD: Fleming shall survive the merger and shall continue under the
name FLEMING CAPITAL MUTUAL FUND GROUP, INC.
FOURTH: Pursuant to the Agreement and Plan of Merger, the effective
time of the merger is the close of business on August 25, 1997, which is a date
not more than thirty (30) days after the filing of these Articles of Merger.
<PAGE>
FIFTH: No amendment is made to the Charter of the surviving corporation
as part of the merger.
SIXTH: The total number of shares of stock of all classes which Fleming
has authority to issue is one hundred million (100,000,000) shares of Common
Stock of the par value of $0.001 per share ("Common Stock"), of the aggregate
par value of one hundred thousand dollars ($100,000). The Trust has no units of
beneficial interest authorized, issued or outstanding.
SEVENTH: The number of outstanding shares of Fleming owned by the
Trust, being more than ninety per cent (90%) of the issued shares, is as
follows:
Total Shares Outstanding Shares Owned by the Trust
------------------------ -------------------------
Common Stock ($0.001 par value) one (1) one (1)
EIGHTH: The one (1) issued and outstanding share of Common Stock which
is owned by the Trust shall be canceled without consideration at the effective
time of the merger.
NINTH: The principal office of the Trust, organized under the laws of
the Commonwealth of Massachusetts, is located in Boston, Massachusetts.
TENTH: The location of the principal office of Fleming in the State of
Maryland is 32 South Street, Baltimore, Maryland, City of Baltimore, and the
name and post office address of the resident agent of Fleming in Maryland,
service of process upon whom shall bind Fleming in any action, suit or
proceeding pending at the time of filing these Articles of Merger thereafter
instituted or filed against it is The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland.
ELEVENTH: The sole director of Fleming, on August 21, 1997, duly
adopted a resolution declaring that a merger substantially upon the terms and
conditions set forth in these Articles of Merger was advised, authorized and
approved, as required by the Charter of Fleming and the laws of the State of
Maryland.
TWELFTH: The sole trustee of the Trust, on August 21, 1997, duly
adopted a resolution declaring that a merger substantially upon the terms and
conditions set forth in these Articles of Merger was advised, authorized and
approved, as required by the Declaration of Trust and By-Laws of the Trust and
the laws of the Commonwealth of Massachusetts.
THIRTEENTH: The Agreement and Plan of Merger has been approved by each
of the undersigned and by the sole shareholder of Fleming, and has been duly
authorized and approved by each party.
<PAGE>
IN WITNESS WHEREOF, FLEMING CAPITAL MUTUAL FUND GROUP, INC. and FLEMING
CAPITAL MUTUAL FUND GROUP, the parties to the merger, have caused these Articles
of Merger to be signed in their respective names and on their behalf by the
respective sole director and sole trustee and witnessed or attested by their
respective secretaries as of the day of August 21, 1997.
ATTEST: FLEMING CAPITAL MUTUAL FUND GROUP, INC.
/s/ Clarissa Moore By: /s/ Arthur A. Levy
- -------------------------- -------------------------------------
Clarissa Moore, Secretary Arthur A. Levy, Sole Director
ATTEST: FLEMING CAPITAL MUTUAL FUND GROUP
/s/ Clarissa Moore By: /s/ Arthur A. Levy
- -------------------------- -------------------------------------
Clarissa Moore, Secretary Arthur A. Levy, Sole Trustee
THE UNDERSIGNED, Sole Director of Fleming Capital Mutual Fund Group,
Inc., who executed on behalf of said corporation the foregoing Articles of
Merger, of which this certificate is made a part, hereby acknowledges, in the
name and on behalf of said corporation, the foregoing Articles of Merger to be
the corporate act of said corporation and further certified that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects, under
the penalties of perjury.
/s/ Arthur A. Levy
------------------------------
Arthur A. Levy, Sole Director
THE UNDERSIGNED, Sole Trustee of Fleming Capital Mutual Fund Group, who
executed on behalf of said trust the foregoing Articles of Merger, of which this
certificate is made a part, hereby acknowledges, in the name and on behalf of
said trust, the foregoing Articles of Merger to be the act of said trust and
further certifies that, to the best of his knowledge, information and belief,
the matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/ Arthur A. Levy
-------------------------------
Arthur A. Levy, Sole Trustee
BY-LAWS
OF
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
ARTICLE I
Charter of the Corporation and Principal Office
-----------------------------------------------
Section 1. Charter of the Corporation. These By-Laws shall be subject
to the Charter of the Corporation, as from time to time in effect, of Fleming
Capital Mutual Fund Group, Inc., a Maryland corporation established by the
Charter of the Corporation (the "Corporation").
Section 2. Principal Office. The principal office of the Corporation
shall be in the city of Baltimore, State of Maryland.
ARTICLE II
Meetings of Shareholders
------------------------
Section 1. Annual Meetings. An annual meeting of the Shareholders of
the Corporation shall not be required to be held in any year in which
Shareholders are not required to elect Directors under the Investment Company
Act of 1940, as amended (the "1940 Act") even if the Corporation is holding a
meeting of the Shareholders for a purpose other than the election of Directors.
If the Corporation is required by the 1940 Act to hold a meeting to elect
Directors, the meeting shall be designated as the Annual Meeting of Shareholders
for that year and shall be held within 120 days after the occurrence of an event
requiring the election of Directors. The Board of Directors may, in its
discretion, hold a meeting to be designated as the Annual Meeting of
Shareholders on any date in any year where an election of Directors by
Shareholders is not required under the 1940 Act. The date of an Annual Meeting
shall be set by appropriate resolution of the Board of Directors, and
Shareholders shall vote on the election of Directors and transact any other
business as may properly be brought before the Annual Meeting.
Section 2. Special Meetings. Special meetings of the Shareholders,
unless otherwise provided by law or by the Charter of the Corporation, may be
called for any purpose or purposes by a majority of the Board of Directors or
the President or such other person or persons may be specified in these By-Laws,
and shall be called by the President or Secretary on the
<PAGE>
written request of Shareholders entitled to cast a majority of all the votes
entitled to be cast at the meeting. Such request shall state the purpose or
purposes of the proposed meeting and the matters proposed to be acted on at it.
The Secretary shall inform the Shareholder who make the request of the
reasonably estimated cost of preparing and mailing a notice of the meeting and
on payment of these costs to the Corporation by the Shareholders requesting the
meeting, notify each Shareholder entitled to notice of the meeting.
Section 3. Place of Meetings. The regular meeting, if any, and any
special meeting of the Shareholders shall be held at such place within the
United States as the Board of Directors or the President may from time to time
determine. Except as provided by law, Shareholders may participate in a meeting
by means of a conference telephone or similar communications equipment if all
persons participating in the meeting can hear each other at the same time.
Participation by such means shall constitute presence in person at any meeting.
Section 4. Notice of Meetings; Waiver of Notice; Shareholder List. (a)
Notice of the place, date, time of the holding of each meeting of the
Shareholders and, if the meeting is a special meeting or notice of the purpose
of the meeting is otherwise required by law, the purpose or purposes of the
meeting shall be given personally or by mail, not less than ten (10) nor more
than ninety (90) days before the date of such meeting, to each Shareholder
entitled to vote at such meeting and to each other Shareholder entitled to
notice of the meeting. Notice by mail shall be deemed to be duly given when such
notice is left at the Shareholder's residence or usual place of business or
deposited in the United States mail addressed to the Shareholder at the address
appearing on the records of the Corporation, with postage thereon prepaid. The
notice of every meeting of Shareholders may be accompanied by a form of proxy
approved by the Board of Directors in favor of such actions or persons as the
Board of Directors may select.
(b) Notice of any meeting of Shareholders shall be deemed waived by
any Shareholder who shall attend such meeting in person or by proxy, or who
shall, either before or after the meeting, submit a signed waiver of notice
which is filed with the records of the meeting. A meeting of Shareholders
convened on the date for which it was called may be adjourned from time to time
without further notice to a date not more than 120 days after the original
record date.
Section 5. Organization. At each meeting of the Shareholders, the
Chairman of the Board (if one has been designated by the Board), or in his
absence or inability to act, the President, or in the absence or inability to
act of the Chairman of the Board and the President, a Vice President, or in the
absence or the inability to act of the Chairman of the Board, the President and
all the Vice Presidents, a chairman chosen by the Shareholders shall act as
chairman of the meeting. The Secretary, or in his absence or inability to act,
any person appointed by the chairman of the meeting, shall act as secretary of
the meeting and keep the minutes thereof.
Section 6. Voting. (a) Except as otherwise provided by law or the
Charter of the Corporation, each holder of record of Shares of stock of the
Corporation having voting power
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<PAGE>
shall be entitled at each meeting of the Shareholders to one vote for every
whole share and a proportionate fractional vote for every fractional share of
such stock standing in his name on the record of Shareholders of the Corporation
as of the record date determined pursuant to Section 5 of Article VI hereof or
if such record date shall not have been so fixed, then at the later of (i) the
close of business on the day on which notice of the meeting is mailed or (ii)
the thirtieth (30) day before the meeting. There shall be no cumulative voting
in the election of Directors.
(b) Each Shareholder entitled to vote at any meeting of
Shareholders may authorize another person or persons to act for him by a proxy
signed by such Shareholder or his or her attorney-in-fact. No proxy shall be
valid after the expiration of eleven months from the date thereof, unless
otherwise provided in the proxy. Every proxy shall be revocable at the pleasure
of the Shareholder executing it, except in those cases where such proxy states
that it is irrevocable and such proxy is coupled with an interest. Such a proxy
may be made irrevocable for as long as it is coupled with an interest. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting. A proxy with respect to
Shares held in the name of two or more persons shall be valid if executed by any
one of them unless at or prior to the exercise of the proxy the Corporation
receives a specific written notice to the contrary from any one of them. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger.
(c) Except as otherwise provided by law, the Charter of the
Corporation or these By-Laws, any corporate action to be taken by vote of the
Shareholders shall be authorized by a majority of the total votes cast at a
meeting of Shareholders at which a quorum is present by the holders of Shares
present in person or represented by proxy and entitled to vote on such action,
except that a plurality of all the votes cast at a meeting at which a quorum is
present is sufficient to elect a director. Where any provision of law, of the
Charter of the Corporation or of these By-Laws permits or requires that the
holders of any series or class shall vote as a series or class, then a majority
in interest of the Shares of that series or class voted on the matter shall
decide that matter insofar as that series or class is concerned.
(d) No ballot shall be required for any election unless requested
by a Shareholder present or represented at a meeting and entitled to vote in the
election. On a vote by ballot, each ballot shall be signed by the Shareholder
voting, or by his proxy, if there be such proxy, and shall state the number of
Shares voted. A proxy with respect to Shares held in the name of two (2) or more
persons shall be valid if executed by any one (1) of them, unless at or prior to
exercise of the proxy the Corporation receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on behalf
of a Shareholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger. At
any time when no Shares of a Series are outstanding, the Directors may exercise
all rights of Shareholders of that Series and may take any action required by
law, the Charter of the Corporation or these By-Laws to be taken by
Shareholders.
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<PAGE>
Section 7. Consent of Shareholders in Lieu of Meeting. Except as
otherwise provided by law any action required to be taken at any regular or
special meeting of Shareholders, or any action which may be taken at any annual
or special meeting of Shareholders, may be taken without a meeting, without
prior notice and without a vote, if the following are filed with the records of
Shareholders' meetings: (i) a unanimous written consent which sets forth the
action and is signed by each Shareholder entitled to vote on the matter and (ii)
a written waiver of any right to dissent signed by each Shareholder entitled to
notice of the meeting but not entitled to vote at it.
ARTICLE III
Board of Directors
------------------
Section 1. General Powers. Except as otherwise provided in the Charter
of the Corporation, the business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. All powers of the Corporation may
be exercised by or under authority of the Board of Directors except as conferred
on or reserved to the Shareholders by law or by the Charter of the Corporation
or these By-Laws.
Section 2. Number of Directors. The number of Directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the Directors then in office; provided, however, that the number of Directors
shall in no event be less than three (except for any period during which Shares
of the Corporation are held by fewer than three Shareholders) nor more than
fifteen. Any vacancy created by an increase in Directors may be filled in
accordance with Section 6 of this Article III. No reduction in the number of
Directors shall have the effect of removing any director from office prior to
the expiration of his term unless such director is specifically removed pursuant
to Section 5 of this Article III at the time of such decrease. Directors may be
officers of the Corporation, or officers or directors of its investment
adviser(s), but need not be Shareholders.
Section 3. Election and Term of Directors. Directors shall be elected
by majority vote of a quorum cast by written ballot at the regular meeting of
Shareholders, if any, or at a special meeting held for that purpose. The term of
office of each Director shall be from the time of his election and qualification
and until his successor shall have been elected and shall have qualified, or
until his death, or until he shall have resigned, or have been removed as
hereinafter provided in these By-Laws, or as otherwise provided by law or the
Charter of the Corporation.
Section 4. Resignation. A Director of the Corporation may resign at any
time by giving written notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its
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receipt; and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 5. Removal of Directors. Any Director of the Corporation may be
removed by the Shareholders by a vote of a majority of the votes entitled to be
cast for the election of Directors.
Section 6. Vacancies. The Shareholders may elect a successor to fill a
vacancy on the Board of Directors which results from the removal of a Director.
A majority of the remaining Directors, whether or not sufficient to constitute a
quorum, may fill a vacancy on the Board of Directors which results from any
cause except an increase in the number of Directors, and a majority of the
entire Board of Directors may fill a vacancy which results from an increase in
the number of Directors; provided, however, that no vacancies shall be filled by
action of the remaining Directors, if after the filling of said vacancy or
vacancies, fewer than two-thirds of the Directors then holding office shall have
been elected by the Shareholders of the Corporation. In the event that at any
time there is a vacancy in any office of a Director which vacancy may not be
filled by the remaining Directors, a special meeting of the Shareholders shall
be held as promptly as possible and in any event within sixty (60) days, for the
purpose of filling said vacancy or vacancies. A Director elected by the Board of
Directors of the Corporation to fill a vacancy serves until the next annual
meeting of Shareholders or until his or her successor is elected and qualifies.
A Director elected by the Shareholders of the Corporation to fill a vacancy
which results from the removal of a Director serves for the balance of the term
of the removed Director.
Section 7. Regular Meetings. Regular meetings of the Board may be held
with notice at such times and places as may be determined by the Board of
Directors.
Section 8. Special Meetings. Special meetings of the Board may be
called by the Chairman of the Board or the President on one day's notice to each
Director, and shall be called by the Chairman, President or Secretary in like
manner and on like notice on the request of two (2) or more Directors either in
writing or by vote at a meeting, and may be held at any place or any time.
Section 9. Notice of Meetings. Meetings of the Directors, or a
committee thereof, may be called orally or in writing by the Chairman of the
Directors, or of such committee, or by any two (2) other Directors or committee
members, as the case may be. Notice of each meeting of the Board shall be given
by the Secretary as hereinafter provided, in which notice shall be stated the
time and place of the meeting. Notice of each such meeting shall be delivered to
each Director or committee member, either personally or by telephone, telegraph,
cable, wireless, facsimile, electronic mail or other such means of communication
at least twenty-four (24) hours before the time at which such meeting is to be
held, or by first-class mail, postage prepaid, or by commercial delivery
services addressed to each Director or committee member at his or her
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residence or usual place of business, at least three (3) days before the day on
which such meeting is to be held.
Section 10. Waiver of Notice of Meetings. Notice of any meeting need
not be given to any Director (or committee member) who attends that meeting
without objecting to the lack of notice or who executes a written waiver of
notice before or after the meeting with respect to such meeting. Except as
otherwise specifically required by these By-Laws, a notice or waiver of notice
of any meeting need not state the purposes of such meeting.
Section 11. Quorum and Voting. Unless otherwise required by law,
one-third of the members of the entire Board shall be present in person at any
meeting of the Board in order to constitute a quorum for the transaction of
business at such meeting, and except as otherwise expressly required by law, the
Charter of the Corporation, these By-Laws, the 1940 Act or other applicable law,
the act of a majority of the Directors present at any meeting at which a quorum
is present shall be the act of the Board. In the absence of a quorum at any
meeting of the Board, a majority of the Directors present thereat may adjourn
the meeting from time to time, but not for a period greater than thirty (30)
days at any one time, to another time and place until a quorum shall attend.
Notice of the time and place of any adjourned meeting shall be given to the
Directors who were not present at the time of the adjournment and, unless such
time and place were announced at the meeting at which the adjournment was taken,
to the other Directors. At any adjourned meeting at which a quorum is present,
any business may be transacted which might have been transacted at the meeting
as originally called.
Any action to be taken by the Directors, or a committee thereof, may be
taken by a majority of the Directors present at a meeting of Directors, or of
the committee members present at a meeting of such committee (if in either case
a quorum be present), within or without Maryland. If a quorum is present when a
duly called or held meeting is convened, the Directors present at such meeting
may following the withdrawal of one or more Directors originally present,
continue to transact business until adjournment thereof, even though such
Directors would not otherwise constitute a quorum. Notice of the time, date and
place of all meeting of the Directors, or a committee thereof, shall be given to
each Director or committee member as provided herein. Subject to the
requirements of the 1940 Act, the Directors by majority vote may delegate to any
one of their number the authority to approve particular matters or take
particular actions on behalf of the Corporation.
Section 12. Chairman. The Board of Directors may at any time appoint
one of its members as Chairman of the Board, who shall serve at the pleasure of
the Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be deemed an
officer or employee of the Corporation.
Section 13. Organization. At every meeting of the Board of Directors,
the Chairman of the Board, if one has been selected and is present, shall
preside. In the absence or
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inability of the Chairman of the Board to preside at a meeting, the President,
or, in his absence or inability to act, another Director chosen by a majority of
the Directors present, shall act as chairman of the meeting and preside at it.
The Secretary (or, in his absence or inability to act, any person appointed by
the Chairman) shall act as secretary of the meeting and keep the minutes
thereof. Minutes shall be recorded in written form, but may be maintained in the
form of a reproduction.
Section 14. Written Consent of Directors in Lieu of a Meeting. Unless
otherwise required by law, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board or committee.
Section 15. Meeting by Conference Telephone. Except as provided by law,
members of the Board of Directors may participate in a meeting by means of a
conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time. Participation
by such means shall constitute presence in person at any meeting.
Section 16. Compensation. Any Director, whether or not he is a salaried
officer, employee or agent of the Corporation, may be compensated for his
services as Director or as a member of a committee, or as Chairman of the Board
or chairman of a committee, and in addition may be reimbursed for transportation
and other expenses, all in such manner and amounts as the Directors may from
time to time determine. Nothing herein shall in any way prevent the employment
of any Director for advisory, administration, legal accounting, investment
banking or other services and payment for the same by the Corporation.
Section 17. Investment Policies. It shall be the duty of the Board of
Directors to ensure that the purchase, sale, retention and disposal of portfolio
securities and the other investment practices of the Corporation are at all
times consistent with the investment policies and restrictions with respect to
securities investments and otherwise of the Corporation, as recited in the
current Prospectus of the Corporation filed from time to time with the
Securities and Exchange Commission and as required by the 1940 Act. The Board,
however, may delegate the duty of management of the assets and the
administration of its day-to-day operations to an individual or corporate
management company or investment adviser pursuant to a written contract or
contracts which have obtained the requisite approvals, including the requisite
approvals of renewals thereof, of the Board of Directors or the Shareholders of
the Corporation in accordance with the provisions of the 1940 Act.
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Section 18. Share Transactions. Any Director, officer or other agent of
the Corporation may acquire, own and dispose of Shares of the Corporation to the
same extent as if he or she were not a Director, officer or agent; and the
Directors may issue and sell or cause to be issued and sold Shares to, and buy
such Shares from, any such person or any firm or company in which he is
interested, subject only to the general limitations herein contained as to the
sale and purchase of such Shares; and all subject to any restrictions which may
be contained in the ByLaws.
ARTICLE IV
Committees
----------
Section 1. Committees of the Board. The Board may, by resolution
adopted by a majority of the entire Board, designate an Executive Committee,
Compensation Committee, Audit Committee, Nomination Committee, and other
committees, each of which shall consist of two (2) or more of the Directors of
the Corporation, which committee shall have and may exercise all the powers and
authority of the Board with respect to all matters other than as set forth in
Section 3 of this Article IV.
Section 2. Limitation of Committee Powers. No committee of the Board
shall have power or authority to:
(a) recommend to Shareholders any action requiring authorization of
Shareholders pursuant to law or the Charter;
(b) approve or terminate any contract with an investment adviser or
principal underwriter, as such terms are defined in the 1940 Act, or take any
other action required to be taken by the Board of Directors by the 1940 Act;
(c) amend or repeal these By-Laws or adopt new By-Laws;
(d) declare dividends or other distributions or issue capital stock
of the Corporation; or
(e) approve any merger or share exchange which does not require
Shareholder approval.
Section 3. General. Unless otherwise required by law, one-third of the
members of any committee shall be present in person at any meeting of such
committee in order to constitute a quorum for the transaction of business at
such meeting, and the act of a majority present shall be the act of such
committee. The Board may designate a chairman of any committee and such chairman
or any two (2) members of any committee may fix the time and
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place of its meetings unless the Board shall otherwise provide. In the absence
or disqualification of any member or any committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or not
he or they constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member. The Board shall have the power at any time to change the
membership of any committee, to fill all vacancies, to designate alternate
members, to replace any absent or disqualified member, or to dissolve any such
committee.
All committees shall keep written minutes of their proceedings and
shall report such minutes to the Board. All such proceedings shall be subject to
ratification, revision or alteration by the Board.
ARTICLE V
Officers, Agents and Employees
------------------------------
Section 1. Number and Qualifications. The officers of the Corporation
shall be a President, a Secretary and a Treasurer, each of whom shall be elected
by the Board of Directors. The Board of Directors may elect or appoint one or
more Vice Presidents and may also appoint such other officers, agents and
employees as it may deem necessary or proper. Any two or more offices may be
held by the same person, except the offices of President and Vice President, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity. The Board may from time to time elect or appoint, or delegate to the
President the power to appoint, such other officers (including one or more
Assistant Vice Presidents, one or more Assistant Treasurers and one or more
Assistant Secretaries) and such agents, as may be necessary or desirable for the
business of the Corporation. Such other officers and agents shall have such
duties and shall hold their offices for such terms as may be prescribed by the
Board or by the appointing authority.
Section 2. Resignations. Any officer of the Corporation may resign at
any time by giving written notice of his resignation to the Board, the Chairman
of the Board, the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time if the Board of Directors finds such removal in the
best interests of the Corporation, and the Board may delegate such power of
removal as to agents and employees not elected or appointed by the Board of
Directors. Such removal shall be without prejudice to such person's
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contract rights, if any, but the appointment of any person as an officer, agent
or employee of the Corporation shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office, whether arising from
death, resignation, removal or any other cause, may be filled at any time. Each
successor shall hold office for the unexpired portion of the term of the office
which shall be vacant, in the manner prescribed in these By-Laws for the regular
election or appointment to such office, until his or her successor is chosen and
qualified, or in each case until he or she sooner dies, resigns, is removed or
becomes disqualified.
Section 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any committee or to any officer in respect of other officers under
his control. No officer shall be precluded from receiving such compensation by
reason of the fact that he is also a Director of the Corporation.
Section 6. Bonds or Other Security. If required by the Board, any
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in such amount and with
such surety or sureties as the Board may require.
Section 7. President. The President shall be the chief executive
officer of the Corporation. In the absence of the Chairman of the Board (or if
there be none), he shall preside at all meetings of the Shareholders and of the
Board of Directors. He shall have, subject to the control of the Board of
Directors, general charge of the business and affairs of the Corporation. He may
employ and discharge employees and agents of the Corporation, except such as
shall be appointed by the Board, and he may delegate these powers.
Section 8. Vice Presidents. Each Vice President shall perform such
duties and have such powers as from time to time may be conferred upon or
assigned to him by the Board or the President.
Section 9. Chairman of the Board. If a Chairman of the Board of
Directors is elected, he or she shall have the duties and powers specified in
these By-Laws and have such other duties and powers as may be determined by the
Directors.
Section 10. Treasurer and Assistant. The Treasurer shall be the chief
financial officer of the Corporation and, subject to any arrangement made by the
Directors with a bank or trust company or other organization as custodian or
transfer or shareholder services agent, shall be in charge of its valuable
papers and shall have such other duties and powers as may be designated from
time to time by the Directors or by the President. The Treasurer shall also be
the chief accounting officer of the Corporation and shall be in charge of its
books of account and accounting records. The Treasurer shall be responsible for
preparation of financial statements of the Corporation and shall have such other
duties and powers as may be designated from time to
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time by the Directors or the President. Any Assistant Treasurer shall have such
duties and powers as shall be designated from time to time by the Directors.
Section 11. Secretary and Assistant Secretaries. The Secretary shall
record all proceedings of the Shareholders and the Directors in books to be kept
therefor, which books shall be kept at the principal office of the Corporation.
In the absence of the Secretary from any meeting of Shareholders or Directors,
an Assistant Secretary, or if there be none or he or she is absent, a temporary
clerk chosen at the meeting shall record the proceedings thereof in the
aforesaid books.
Section 12. Delegation of Duties. In case of the absence of any officer
of the Corporation, or for any other reason that the Board may deem sufficient,
the Board may confer for the time being the powers or duties, or any of them, of
such officer upon any other officer or upon any Director.
ARTICLE VI
Capital Stock
-------------
Section 1. Stock Certificates. No certificates representing Shares will
be issued. The Corporation shall cause a confirmation of purchase and prospectus
to be sent to each Shareholder in lieu of a certificate.
Section 2. Rights of Inspection. There shall be kept at the principal
office, which shall be available for inspection during usual business hours in
accordance with the General Laws of the State of Maryland, the following
corporate documents: (a) By-Laws, (b) minutes of proceedings of the
Shareholders, (c) annual statements of affairs, and (d) voting trust agreements,
if any. One or more persons who together are and for at least six (6) months
have been Shareholders of record of at least five percent of the outstanding
stock of any class may (a) inspect and copy during usual business hours the
Corporation's books of account and stock ledger in accordance with the General
Laws of the State of Maryland; (b) present to any officer or resident agent a
written request for a statement of the Corporation's affairs; and (c) present to
any officer or resident agent a written request for a list of the Corporation's
Shareholders.
Section 3. Transfer of Shares. Transfers of Shares of stock of the
Corporation shall be made on the stock records of the Corporation at the
direction of the person named on the Corporation's books or by his or her
attorney authorized by power of attorney duly executed and filed with the
Secretary or with a transfer agent or transfer clerk, for such Shares properly
endorsed or accompanied by a duly executed stock transfer power and the payment
of all taxes thereon. Except as otherwise provided by law, the Corporation shall
be entitled to recognize the exclusive right of a person in whose name any share
or Shares stand on the record of Shareholders as the owner of such share or
Shares for all purposes, including, without limitation, the rights to receive
dividends or other distributions, and to vote as such owner, and the
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Corporation shall not be bound to recognize any equitable or legal claim to or
interest in any such share or Shares on the part of any other person.
Section 4. Transfer Agents and Registrars. The Corporation may have one
or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. The
duties of Transfer Agent and Registrar may be combined. The ownership of Shares
shall be recorded on the books of the Corporation or its transfer or similar
agent, which books shall be maintained separately for the Shares of each series.
No certificates certifying the ownership of Shares shall be issued except as the
Directors may otherwise determine from time to time. The Directors may make such
rules as they consider appropriate for the issuance of Shares, the transfer of
Shares, certification of beneficial ownership and similar matters. The record
books of the Corporation as kept by the Corporation or any transfer or similar
agent of the Corporation, as the case may be, shall be conclusive as to who are
the Shareholders of each series or class and as to the number of Shares of each
series or class held from time to time by each Shareholder.
Section 5. Record Date. The Board of Directors may set a record date
for the purpose of making any proper determination with respect to Shareholders,
including which Shareholders are entitled to notice of a meeting, vote at a
meeting (or any adjournment thereof ), receive a dividend, or be allotted or
exercise other rights. The record date may not be more than ninety (90) days
before the date on which the action requiring the determination will be taken;
and, in the case of a meeting of Shareholders, the record date shall be at least
ten (10) days before the date of the meeting.
Section 6. Regulations. The Board may make such additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of Shares of stock of the
Corporation.
Section 7. Stock Ledgers. The Corporation shall maintain a stock ledger
which contains the name and address of each Shareholder and the number of Shares
of stock of each class which each Shareholder holds. The stock ledger may be
kept in written form or any form which can be converted within a reasonable time
into written form for visual inspection. The Corporation shall not be required
to keep original or duplicate stock ledgers at its principal office in the City
of Baltimore, Maryland, but stock ledgers shall be kept at the office(s) of the
Transfer Agent(s) of the Corporation's capital stock.
ARTICLE VII
Seal
----
The Board of Directors may provide a suitable seal, bearing the name of
the Corporation, which shall be in the charge of the Secretary. The Board of
Directors may authorize one or more duplicate seals and provide for the custody
thereof. If the Corporation is
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required to place its corporate seal on a document, it is sufficient to meet any
requirement of any law, rule, or regulation relating to a corporate seal to
place the word "Seal" adjacent to the signature of the person authorized to sign
the document on behalf of the Corporation.
ARTICLE VIII
Fiscal Year
-----------
The fiscal year of the Corporation shall end on such date in each year
as the Directors shall from time to time determine.
ARTICLE IX
Depositories and Custodians
---------------------------
Section 1. Depositories. The funds of the Corporation shall be
deposited with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
Section 2. Custodians. All securities and other investments owned by
the Corporation shall be deposited in the safekeeping of such banks or other
companies as the Board of Directors of the Corporation may from time to time
determine. Every arrangement entered into with any bank or other company for the
safekeeping of the securities and investments of the Corporation shall contain
provisions complying with the 1940 Act, and the general rules and regulations
thereunder.
ARTICLE X
Execution of Instruments
------------------------
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts,
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as the
Board of Directors by resolution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Stocks, bonds, money market
instruments or other securities at any time owned by the Corporation may be held
on behalf of the Corporation or sold, transferred or otherwise disposed of
subject to any limits imposed by
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these By-Laws, and pursuant to authorization by the Board and, when so
authorized to be held on behalf of the Corporation or sold, transferred or
otherwise disposed of, may be transferred from the name of the Corporation by
the signature of the President, a Vice President, the Treasurer or any other
person authorized, or pursuant to any procedure approved by the Board of
Directors, subject to applicable law.
Section 3. Advisory, Administration, and Distribution Services.
Directors may, at any time and from time to time, contract with respect to the
Corporation or any series thereof for exclusive or nonexclusive investment
advisory and/or administration services with any corporation, trust, association
or other organization, every such contract to comply with such requirements and
restrictions as may be set forth herein, and any such contract may contain such
other terms interpretive of or in addition to said requirements and restrictions
as the Directors may determine, including, without limitation, in the case of a
contract for investment advisory or sub-advisory services, authority to
determine from time to time what investments shall be purchased, held, sold or
exchanged and what portion, if any, of the assets of the Corporation or any
series thereof shall be held uninvested and to make changes in the investments
of the Corporation or any series thereof. Any contract for investment advisory
services shall be subject to such Shareholder approval as required by the 1940
Act. The Directors may also, at any time and from time to time, contract with
any corporation, trust, association or other organization, appointing it
exclusive or nonexclusive distributor or principal underwriter for the Shares,
every such contract to comply with such requirements and restrictions as may be
set forth herein; and any such contract may contain such other terms
interpretive of or in addition to said requirements and restrictions as the
Directors may determine. The fact that:
(i) any of the Shareholders, Directors or officers of the Corporation is a
Shareholder, director, officer, partner, trustee, employee,
administrator, investment adviser, principal underwriter, distributor
or affiliate or agent of or for any corporation, trust, association,
or other organization, or of or for any parent or affiliate of any
organization, with which an investment advisory or administration or
principal underwriter's or distributor's contract, or transfer,
shareholder servicing or other agency contract may have been or may
hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the
Corporation, or that
(ii) any corporation, trust, association or other organization with which
an investment advisory or administration or principal underwriter's or
distributor's contract, or transfer, shareholder servicing or other
agency contract may have been or may hereafter be made also has an
investment advisory or administration contract, or principal
underwriter's or distributor's contract, or transfer, shareholder
servicing or other agency contract with one or more other
corporations, trusts, associations, or other organizations, or has
other businesses or interests
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shall not affect the validity of any such contract or disqualify any
Shareholder, Director or officer of the Corporation from voting upon or
executing the same or create any liability or accountability to the Corporation
or its Shareholders.
ARTICLE XI
Independent Public Accountants
------------------------------
The firm of independent public accountants which shall sign or certify
the financial statements of the Corporation which are filed with the Securities
and Exchange Commission shall be selected annually by the Board of Directors and
ratified by the Board of Directors or the Shareholders in accordance with the
provisions of the 1940 Act.
ARTICLE XII
Annual Statements
-----------------
Section 1. Reports to Shareholders; Distributions from Realized Gains.
The Corporation shall send to each Shareholder of record at least annually a
statement ("Annual Statement") of the condition of the Corporation and of the
results of its operation, containing all information required by applicable laws
or regulations. Such annual statement shall also be placed on file at the
Corporation's principal office in the State of Maryland. Each such statement
shall show the assets and liabilities of the Corporation as of the close of the
annual of semi-annual period covered by the report and the securities in which
the funds of the Corporation were then invested. Such statement shall also show
the Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or semi-annual
period covered by the statement and any other information required by the 1940
Act, and shall set forth other matters as the Board shall determine.
ARTICLE XIII
Indemnification of Directors and Officers
-----------------------------------------
Section 1. Indemnification. Subject to the provisions in the Charter of
the Corporation, the Corporation shall indemnify its Directors and officers who
while serving as Directors or officers also serve at the request of the
Corporation as a Director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan to the fullest extent consistent with law.
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Section 2. Advances. Any current or former Director or officer of the
Corporation claiming indemnification within the scope of this Article XIII shall
be entitled to advances from the Corporation for payment of the reasonable
expenses incurred by him in connection with proceedings to which he is a party
in the manner and to the full extent permissible under the Maryland General
Corporation Law, the Securities Act of 1933 (the "1933 Act") and the 1940 Act,
as such laws are now or hereafter in force.
Section 3. Procedure. On the request of any current or former Director
or officer requesting indemnification or an advance under this Article XIII, the
Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the 1933 Act and the 1940
Act, as such laws are now or hereafter in force, whether the standards required
by this Article XIII have been met.
Section 4. Other Rights. The indemnification provided by this Article
XIII shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of Shareholders or
disinterested Directors or otherwise, both as to action by a Director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a Director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 5. Maryland Law. References to the Maryland General Corporation
Law in this Article XIII are to such law as from time to time amended.
ARTICLE XIV
Amendments
----------
These By-Laws may be amended, altered or repealed by the affirmative
vote of a majority of the Board of Directors at any regular or special meeting
of the Board of Directors or by one or more writings signed by such majority,
without the approval of the Shareholders.
- 16 -
INVESTMENT ADVISORY AGREEMENT
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
AGREEMENT made this _____ day of ______, 1997, by and between
Fleming Capital Mutual Fund Group, Inc., a Maryland corporation (the
"Corporation"), and Robert Fleming, Inc. (the "Adviser").
WHEREAS, the Corporation is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several portfolios of shares, each having its own
investment policies; and
WHEREAS, the Corporation desires to retain the Adviser to
render investment management services to the funds of the Corporation listed in
Schedule A to this Agreement and such other funds as the Corporation and the
Adviser, from time to time, may agree upon in writing and add to Schedule A of
this Agreement (the "Funds"), and the Adviser is willing to render such
services:
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
1. Duties of the Adviser. The Corporation hereby appoints the Adviser
to act as investment adviser to each of the Funds, for the period and on such
terms set forth in this Agreement. The Corporation employs the Adviser to manage
the investment and reinvestment of the assets of the Funds, to continuously
review, supervise and administer the investment program of each of the Funds, to
determine in its discretion the securities to be purchased or sold and the
portion of each such Fund's assets to be held uninvested, to provide the
Corporation with records concerning the Adviser's activities which the
Corporation is required to maintain, and to render regular reports to the
Corporation's officers and Board of Directors (the "Board") concerning the
Adviser's discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the officers and the Board, and in compliance with the objectives,
policies and limitations set forth in the Corporation's prospectus(es) and
statement(s) of additional information, as amended or supplemented from time to
time (referred to collectively as the "Prospectus"), and applicable laws and
regulations.
The Adviser accepts such employment and agrees to render the services and to
provide, at its own expense, the office space, furnishings and equipment and the
personnel required by it to perform the services on the terms and for the
compensation provided herein.
2. Fund Transactions. The Adviser is authorized to select the brokers
or dealers that will execute the purchases and sales the portfolio securities
for the Funds and is directed to use its best efforts to obtain the best net
results as described in the Corporation's Prospectus from time to time. The
Adviser agrees to promptly communicate to the officers and Directors of the
Corporation such information relating to portfolio transactions as they may
reasonably request.
It is understood that the Adviser will not be deemed to have acted unlawfully,
or to have breached a fiduciary duty to the Corporation or be in breach of any
obligation owing to the Corporation under this Agreement, or otherwise, by
reason of its having directed a securities transaction on behalf of the
Corporation to (i) a broker-dealer in compliance with the provisions of Section
28(e) of the Securities Exchange Act of 1934 or as
<PAGE>
described from time to time in the Prospectus or (ii) an affiliated
broker-dealer in compliance with applicable provisions of the 1940 Act, or the
rules and regulations thereunder, as described from time to time in the
Prospectus.
3. Compensation of the Adviser. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Corporation shall
pay to the Adviser at the end of each month, an advisory fee calculated by
applying a monthly rate, based on the annual percentage rates set forth opposite
each Fund's name on Schedule A hereto, to each Fund's average daily net assets
for the month. The Adviser may, in its discretion and from time to time, waive
all or a portion of its fee.
In the event of termination of this Agreement, the fee provided under this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current month as a percentage of the total
number of days in such month.
4. Other Services. At the request of the Corporation, the Adviser, in
its discretion, may make available to the Corporation office facilities,
equipment, personnel and other services. Such office facilities, equipment,
personnel and services shall be provided for or rendered by the Adviser and
billed to the Corporation at the Adviser's cost.
5. Reports. The Corporation and the Adviser agree to furnish to each
other current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.
6. Status of Adviser. The services of the Adviser to the Corporation
are not to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Corporation are not impaired
thereby. The Adviser shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided or authorized, have no authority to act for
or represent the Corporation in any way or otherwise be deemed an agent of the
Corporation.
7. Liability of Adviser. The Adviser shall not be liable for any error
of judgment or of law, as for any loss suffered by the Corporation in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith, or gross negligence on the part of the Adviser
in the performance of its obligations and duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
8. Permissible Interests. Subject to and in accordance with the
Articles of Incorporation of the Corporation and the Articles of Incorporation
(or other governing or organizational documents) of the Adviser, Directors,
agents and shareholders of the Corporation are or may be interested in the
Adviser (or any successor thereof) as officers, directors or otherwise;
officers, agents and directors of the Adviser are or may be interested in the
Corporation as Directors, officers, shareholders or otherwise; and the Adviser
(or any successor) is or may be interested in the Corporation as a shareholder
or otherwise. The effect of any such interrelationships shall be governed by
said Articles of Incorporation (or other governing or organizational documents)
and provisions of the 1940 Act. All such interests shall be fully disclosed
between the parties on an ongoing basis and in the Corporation's Prospectus to
the extent required by law. In addition, brokerage transactions for the
Corporation may be effected through the Adviser or affiliates of the Adviser,
acting as
2
<PAGE>
agent, if approved by the Board, subject to the rules and regulations of the
Securities and Exchange Commission.
9. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue until _________, 1999 and thereafter for
additional periods of one year from the anniversary thereof, but only so long as
such continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Corporation's Board who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Corporation's
Board or by vote of a majority of the outstanding voting securities of each Fund
of the Corporation; provided, however, that if the shareholders of any Fund fail
to approve the Agreement as provided herein, the Adviser may continue to serve
in such capacity with respect to that Fund in the manner and to the extent
permitted by the 1940 Act and rules thereunder. This Agreement may be terminated
by any Fund of the Corporation at any time, on 60 days' written notice to the
Adviser, without the payment of any penalty, by vote of a majority of the entire
Board of the Corporation or by vote of a majority of the outstanding voting
securities of the Fund. This Agreement may be terminated by the Adviser at any
time, without the payment of any penalty, upon 60 days' written notice to the
Corporation. This Agreement will automatically and immediately terminate in the
event of its assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid, to the other party at any
office of such party.
As used in this Section 9, the terms "assignment," "interested persons," and "a
vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.
10. Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Corporation must be approved (a) by a vote of a
majority of those members of the Corporation's Board who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such amendment, and (b) to the extent
required by the 1940 Act, by vote of a majority of the outstanding voting
securities of each Fund of the Corporation.
11. Governing Law. All questions concerning the validity, meaning and
effect of this Agreement shall be determined in accordance with the laws
(without giving effect to the conflict-of-law principles thereof) of the State
of Maryland applicable to contracts made and to be performed in that state.
12. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of this ____ day of _______, 1997.
FLEMING CAPITAL MUTUAL FUND GROUP, INC. ROBERT FLEMING, INC.
By ____________________ By ___________________________
Name: Name:
Title: Title:
3
<PAGE>
Schedule A
Fund Rate
- ---- ----
Fleming Fund 0.90%
Fledgling Fund 1.00%
4
DISTRIBUTION AGREEMENT
This Agreement, made as of the ____ day of _________ between Fleming
Capital Mutual Fund Group Inc., a Maryland corporation (the "Fund"), and the
First Fund Distributors, Inc. (the "Distributor"), a ___________ corporation.
WITNESSETH:
WHEREAS, the Fund proposes to engage in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "1940 Act") and its shares are registered under the
Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member in
good standing of the National Association of Securities Dealers, Inc. (the
"NASD"); and
WHEREAS, the Fund and the Distributor wish to enter into an agreement with
each other with respect to the continuous offering of the Fund's shares of
beneficial interest (the "Shares"), $0.001 par value, to commence on _________ ,
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the Fund and the Distributor hereby agree as follows:
1. Appointment of Distributor. The Fund hereby appoints the Distributor as
its exclusive agent to sell and to arrange for the sale of the Fund's shares of
beneficial interest ("Shares") at the net asset value per share plus any
applicable sales charges in accordance with the Fund's current prospectus(es),
on the terms and for the period set forth in this Agreement, and the Distributor
hereby accepts such appointment and agrees to act hereunder directly and/or
through the Fund's transfer agent using all reasonable efforts in connection
with the distribution of Shares of the Fund. It is understood and agreed that
the services of the Distributor hereunder are not exclusive, and the Distributor
may act as principal underwriter for the shares of any other registered
investment company.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares, as agent for the Fund,
from time to time during the term of this Agreement upon the terms described in
the Fund's current Prospectus(es). As used in this Agreement, the term
"Prospectus" shall mean the prospectus and statement of additional information
included as part of the Fund's Registration Statement, as such prospectus and
statement of additional information may be amended or supplemented from time to
time, and the term "Registration Statement" shall mean the registration
statement most recently filed from time to time by the Fund with the Securities
and Exchange Commission and effective under the
<PAGE>
1933 Act and the 1940 Act, as such Registration Statement is amended by any
amendments thereto at the time in effect. The Distributor shall not be obligated
to sell any certain number of Shares.
(b) The Distributor will hold itself available to receive orders, that
the Distributor reasonably believes to be in good order, for the purchase of the
Shares and will accept such orders and will transmit such orders as are so
accepted and funds received by it in payment for such Shares to the Fund's
transfer agent or custodian, as appropriate, as promptly as practicable.
Purchase orders shall be deemed effective at the time and in the manner set
forth in the Prospectus. The Distributor shall not make any short sales of
Shares.
(c) The offering price of the Shares shall be the net asset value per
share of the Shares plus any applicable sales charges, determined as set forth
in the Prospectus. The Fund shall furnish the Distributor, with all possible
promptness, an advice of each computation of net asset value and offering price.
3. Duties of the Fund.
(a) Maintenance of Federal Registration. The Fund shall, at its
expense, take, from time to time, all necessary action and such steps, including
payment of the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The Fund
agrees to file from time to time such amendments, reports and other documents as
may be necessary in order that there may be no untrue statement of a material
fact in a Registration Statement or Prospectus, or necessary in order that there
may be no omission to state a material fact in the Registration Statement or
Prospectus which omission would make the statements therein misleading.
(b) Maintenance of "Blue Sky" Qualifications. The Fund shall, at its
expense, use its best efforts to qualify and maintain the qualification of an
appropriate number of Shares for sale under the securities laws of such states
as the Distributor and the Fund may approve, and, if necessary or appropriate in
connection therewith, to qualify and maintain the qualification of the Fund as a
broker or dealer in such states; provided that the Fund shall not be required to
amend its Articles of Incorporation or By-Laws to comply with the laws of any
state, to maintain an office in any state, to change the terms of the offering
of the Shares in any state, to change the terms of the offering of the Shares in
any state from the terms set forth in its Registration Statement and Prospectus,
to qualify as a foreign corporation in any state or to consent to service of
process in any state other than with respect to claims arising out of the
offering and sale of the Shares. The Distributor shall furnish such information
and other material relating to its affairs and activities as may be required by
the Fund in connection with such qualifications.
(c) Copies of Reports and Prospectus. The Funds shall, at its expense,
keep the Distributor fully informed with regard to its affairs that reasonably
relate to the distribution of the Fund's Shares and in connection therewith
shall furnish to the Distributor copies of all information, financial statements
and other papers which the Distributor may reasonably request for use in
2
<PAGE>
connection with the distribution of Shares, including such reasonable number of
copies of its Prospectus and annual and interim reports as the Distributor may
request and shall cooperate fully in the efforts of the Distributor to sell and
arrange for the sale of the Shares and in the performance of the Distributor
under this Agreement.
4. Conformity with Applicable Law and Rules. The Distributor agrees that in
selling Shares hereunder it shall conform in all respects with the laws of the
United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the NASD.
5. Independent Contractor. In performing its duties hereunder, the
Distributor shall be an independent contractor and neither the Distributor, nor
any of its officers, directors, employees, or representatives is or shall be an
employee of the Fund in the performance of the Distributor's duties hereunder.
The Distributor shall be responsible for its own conduct and the employment,
control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employee taxes thereunder.
6. Indemnification.
(a) Indemnification of Fund. The Distributor agrees to indemnify and
hold harmless the Fund and each of its present or former directors, officers,
employees, representatives an each person, if any, who controls or previously
controlled the Fund within the meaning of Section 15 of the 1933 Act against any
and all losses, liabilities, damages, claims or expenses (including the
reasonable costs or investigating or defending any alleged loss, liability,
damage, claims or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Fund or any such person may become subject
under the 1933 Act, under any other statute, at common law, or otherwise,
arising out of the acquisition of any Shares by any person which (i) may be
based upon any wrongful act by the Distributor or any of the Distributor's
directors, officers, employees or representatives, or (ii) may be based upon any
untrue statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading if such statement or omission was made in reliance upon
information furnished to the Fund by the Distributor, it being understood that
the Fund will rely upon the information provided by the Distributor for use in
the preparation of the Registration Statement and Prospectus. In no case (i) is
the Distributor's indemnity in favor of the Fund, or any other person
indemnified, to be deemed to protect the Fund or such indemnified person against
any liability to which the Fund or such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of his obligations and
duties under this Agreement, or (ii) is the Distributor to be liable under its
indemnity agreement contained in this Paragraph with respect to any claim made
against the Fund or any person indemnified unless the Fund or such person, as
the case may be, shall have notified the Distributor in writing of the claim
within a reasonable time after the summons or
3
<PAGE>
other first written notification giving information of the nature of the claim
shall have been served upon the Fund or upon such person (or after the Fund or
such person shall have received notice to such service on any designated agent).
However, failure to notify the Distributor of any such claim shall not relieve
the Distributor from any liability which the Distributor may have to the Fund or
any person against whom such action is brought otherwise than on account of the
Distributor's indemnity agreement contained in this Paragraph.
The Distributor shall be entitled to participate, at its own expense, in
the defense, or, if the Distributor so elects, to assume the defense of any suit
brought to enforce any claim as to which it provides this indemnification, but,
if the Distributor elects to assume the defense, such defense shall be conducted
by legal counsel chosen by the Distributor and satisfactory to the Fund, whose
approval shall not be unreasonably withheld, and any other indemnified defendant
or defendants in the suit. In the event that the Distributor elects to assume
the defense of any such suit and retain such legal counsel, the Fund and any
other indemnified defendant or defendants in the suit shall bear the fees and
expenses of any additional legal counsel retained by them. If the Distributor
does not elect to assume the defense of any such suit, the Distributor will
reimburse the Fund and any other indemnified defendant or defendants in such
suit for the reasonable fees and expenses of any legal counsel retained by them.
The Distributor agrees to promptly notify the Fund of the commencement of any
litigation of proceedings against it or any of its officers, employees,
representatives or control persons in connection with the issue or sale of any
Shares.
(b) Indemnification of the Distributor. The Fund agrees to indemnify
and hold harmless the Distributor and each of its present or former officers,
employees, representatives and each person, if any, who controls or previously
controlled the Distributor within the meaning of Section 15 of the 1933 Act
against any and all losses, liabilities, damages, claims or expenses (including
the reasonable costs of investigating or defending any alleged loss, liability,
damage, claim or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Distributor or other indemnified person may
become subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the acquisition of any Shares by any person which (i)
may be based upon any wrongful act by the Fund or any of the Fund's directors,
officers, employees or representatives, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, shareholder report or other information
covering Shares filed or made public by the Fund or any amendment thereof or
supplement thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in reliance
upon information furnished to the Fund by the Distributor, it being understood
that the Fund will rely upon the information provided by the Distributor for use
in the preparation of the Registration Statement and Prospectus. In no case (i)
is the Fund's indemnity in favor of the Distributor, or any person indemnified
to be deemed to protect the Distributor or such indemnified person against any
liability to which the Distributor or such person would otherwise be subject by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of his duties or by reason of his reckless disregard of his obligations and
duties under this Agreement, or (ii) is the Fund to be liable under its
indemnity agreement contained in this Paragraph with respect
4
<PAGE>
to any claim made against Distributor, or person indemnified unless the
Distributor, or such indemnified person, as the case may be, shall have notified
the Fund in writing of the claim within a reasonable time after the summons or
other first written notification giving information of the nature of the claim
shall have been served upon the Distributor or upon such person (or after the
Distributor or such person shall have received notice of such service on any
designated agent). However, failure to notify the Fund of any such claim shall
not relieve the Fund from any liability which the Fund may have to the
Distributor or any person against whom such action is brought otherwise than on
account of the Fund's indemnity agreement contained in this Paragraph.
The Fund shall be entitled to participate, at its own expense, in the
defense, or, if the Fund so elects, to assume the defense of any suit brought to
enforce any claim as to which it provides this indemnification, but if the Fund
elects to assume the defense, such defense shall be conducted by legal counsel
chosen by the Fund and satisfactory to the Distributor whose approval shall not
be unreasonably withheld, and any other indemnified defendant or defendants in
the suit. In the event that the Fund elects to assume the defense of any such
suit and retain such legal counsel, the Distributor, and any other indemnified
defendant or defendants in the suit, shall bear the fees and expenses of any
additional legal counsel retained by them. If the Fund does not elect to assume
the defense of any such suit, the Fund will reimburse the Distributor and any
other indemnified defendant or defendants in such suit for the reasonable fees
and expenses of any legal counsel retained by them. The Fund agrees to promptly
notify the Distributor of the commencement of any litigation or proceedings
against it or any of its directors, officers, employees or representatives in
connection with the issue or sale of any Shares.
7. Authorized Representation. The Distributor is not authorized by the Fund
to give on behalf of the Fund any information or to make any representations in
connection with the sale of Shares other than the information and
representations contained in a registration statement filed with the Securities
and Exchange Commission ("SEC") under the 1933 Act and the 1940 Act, as such
registration statement may be amended from time to time, or contained in
shareholder reports or other material that may be prepared by or on behalf of
the Fund for the Distributor`s use. The Distributor may prepare and distribute
sales literature and other material as it may deem appropriate, provided that
such literature and materials have been prepared in accordance with applicable
laws, rules and regulations and further provided that the Fund be given notice
of such literature and materials prior to their first distribution. No person
other than the Distributor is authorized to act as principal underwriter (as
such term is defined in the 1940 Act) for the Fund.
8. Term of Agreement. This Agreement shall be effective upon its execution,
and unless terminated as provided, shall continue in force through
_________________, 1999 and thereafter from year to year, provided that such
annual continuance is approved by (i) either the vote of a majority of the
Directors of the Fund, or the vote of a majority of the outstanding voting
securities of the Fund, and (ii) the vote of a majority of those Directors of
the Fund who are not parties to this Agreement or interested persons of any such
party ("Qualified Directors") cast in person at a meeting called for the purpose
of voting on the approval. The Distributor shall furnish to the Fund, promptly
5
<PAGE>
upon its request, such information as may reasonably be necessary to evaluate
the terms of this Agreement or any extension, renewal or amendment hereof.
9. Amendment and Assignment of Agreement. This Agreement may not be amended
without the affirmative vote of a majority of the outstanding voting securities
of the Fund. This Agreement shall automatically and immediately terminate in the
event of its assignment.
10. Termination of Agreement. This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not more than upon 60 days'
nor less than 30 days' prior notice in writing to the other party; provided,
that in the case of termination by the Fund such action shall have been
authorized by resolution of a majority of the Qualified Directors of the Fund,
or by vote of a majority of the outstanding voting securities of the Fund.
11. Miscellaneous. The captions of this Agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Nothing herein contained shall be deemed to require the Fund to take any
action contrary to its Articles of Incorporation or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Directors of the Fund of its
responsibility for and control of the conduct of the affairs of the Fund.
12. Compliance with Securities Laws. The Fund represents that it is
registered as an open-end management investment company under the 1940 Act, and
agrees that it will comply with all applicable provisions of the 1940 Act, the
1933 Act and state securities laws and the rules and regulations thereunder. The
Distributor represents that it is a broker-dealer registered under the
Securities Exchange Act of 1934, is a member in good standing of the National
Association of Securities Dealers, Inc., and agrees to comply with all of the
applicable terms and provisions of the Securities Exchange Act of 1934, the 1940
Act, the 1933 Act, and state securities laws and the rules and regulations
thereunder and with applicable rules and regulations of the NASD.
13. Notices. Any notice required to be given pursuant to this Agreement
shall be deemed duly given if delivered or mailed by registered mail, postage
prepaid to the Distributor at 4455 E. Camelback Rd., Suite 261-E, Phoenix, AZ
85018 and to the Fund at 320 Park Avenue, New York, NY 10022.
14. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act, however, shall
be resolved by reference to such term or provision of the 1940 Act and to
6
<PAGE>
interpretation thereof, if any, by the United States courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission validly issued pursuant to the 1940
Act. Specifically, the terms "vote of a majority of the outstanding voting
securities", "interested persons", "assignment", and "affiliated person", as
used in this Agreement, shall have the meanings assigned to them by Section 2(a)
of the 1940 Act. Where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is relaxed by a rule, regulation or order of the
Securities and Exchange Commission, whether of special or of general
applications, such provision shall be deemed to incorporate the effect of such
rule, regulation or order. To the extent that the applicable laws of the State
of New York, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
15. Limitation of Liability. A copy of the Articles of Incorporation of the
Fund is on file with the State Department of Assessment and Taxation of the
State of Maryland, and notice is hereby given that this Agreement is executed on
behalf of the Directors of the Fund as Directors and not individually and that
the obligations of this instrument are not binding upon any of the Directors,
officers or Shareholders of the Fund individually but binding only upon the
assets and property of the Fund. Further, obligations of the Fund with respect
to any one Portfolio shall not be binding upon any other Portfolio.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their fully authorized representatives and their respective corporate
seals to be hereunto affixed, as of the day and year first above written.
Fleming Capital Mutual Fund Group
By:
-------------------------------------
Attest:
- -----------------------------------
Secretary
First Fund Distributors, Inc.
By:
-------------------------------------
Attest:
- -----------------------------------
Secretary
8
CUSTODY AGREEMENT
BETWEEN
STAR BANK, N.A.
AND
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
<PAGE>
TABLE OF CONTENTS
Description Page
- ----------- ----
ARTICLE I - DEFINITIONS........................................................1
ARTICLE II - APPOINTMENT; ACCEPTANCE;
AND FURNISHING OF DOCUMENTS..................................................5
Appointment of Custodian.....................................................5
Acceptance of Custodian......................................................5
Documents to be Furnished....................................................6
Notice of Appointment of Dividend and Transfer Agent.........................6
ARTICLE III - RECEIPT OF CORPORATION ASSETS....................................6
Delivery of Moneys...........................................................6
Delivery of Securities.......................................................6
Payments for Shares..........................................................7
Duties Upon Receipt..........................................................7
Validity of Title............................................................7
ARTICLE IV - DISBURSEMENT OF CORPORATION ASSETS................................7
Declaration of Dividends by Corporation......................................7
Segregation of Redemption Proceeds...........................................8
Disbursements of Custodian...................................................8
Payment of Custodian Fees....................................................9
ARTICLE V - CUSTODY OF CORPORATION ASSETS......................................9
Separate Accounts for Each Fund..............................................9
Segregation of Non-Cash Assets...............................................9
Securities in Bearer and Registered Form....................................10
Duties of Custodian As to Securities........................................10
Certain Actions Upon Written Instructions...................................11
Custodian to Deliver Proxy Materials........................................12
Custodian to Deliver Tender Offer Information...............................12
ARTICLE VI - PURCHASE AND SALE OF SECURITIES..................................13
Purchase of Securities......................................................13
Sale of Securities..........................................................14
Payment on Settlement Date..................................................15
Credit of Moneys Prior to Receipt...........................................15
Segregated Accounts.........................................................15
Advances for Settlement.....................................................17
<PAGE>
ARTICLE VII - CORPORATION INDEBTEDNESS........................................18
ARTICLE VIII - CONCERNING THE CUSTODIAN.......................................19
Limitations of Liability of Custodian.......................................19
Actions Not Required By Custodian...........................................20
No Duty to Collect Amounts Due From Dividend and
Transfer Agent.............................................................21
No Enforcement Actions......................................................21
Authority to Use Agents and Sub-Custodians..................................21
No Duty to Supervise Investments............................................22
All Records Confidential....................................................23
Compensation of Custodian...................................................23
Reliance Upon Instructions..................................................23
Books and Records...........................................................24
Internal Accounting Control Systems.........................................24
No Management of Assets By Custodian........................................24
Assistance to Corporation...................................................25
Grant of Security Interest..................................................25
ARTICLE IX - INITIAL TERM; TERMINATION........................................25
Initial Term................................................................25
Termination.................................................................25
Failure to Designate Successor Director.....................................26
ARTICLE X - FORCE MAJEURE.....................................................27
ARTICLE XI - MISCELLANEOUS....................................................28
Designation of Authorized Persons...........................................28
Limitation of Personal Liability............................................28
Authorization By Board......................................................29
Custodian's Consent to Use of Its Name......................................29
Notices to Custodian........................................................29
Notices to Corporation......................................................30
Amendments In Writing.......................................................30
Successors and Assigns......................................................30
Governing Law...............................................................30
Jurisdiction................................................................30
Counterparts................................................................31
Headings....................................................................31
<PAGE>
APPENDIX A - Authorized Signatures
APPENDIX B - Series of the Corporation
APPENDIX C - Agents of the Custodian
APPENDIX D - Standards of Service Guide
APPENDIX E - Schedule of Compensation
<PAGE>
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the ________ day of
______, 1997, by and between Fleming Capital Mutual Fund Group, Inc., (the
"Corporation") and Star Bank, National Association, (the "Custodian"), a
national banking association having its principal office at 425 Walnut Street,
Cincinnati, Ohio, 45202.
WHEREAS, the Corporation and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the
Corporation as required by the Act (as hereafter defined).
THEREFORE, in consideration of the mutual promises hereinafter set forth,
the Corporation and the Custodian agree as follows:
ARTICLE I
Definitions
-----------
The following words and phrases, when used in this Agreement, unless the
context otherwise requires, shall have the following meanings:
Act - the Investment Company Act of 1940, as amended.
1934 Act - the Securities and Exchange Act of 1934, as amended.
Authorized Person - any (i) Officer of the Corporation or (ii) any other
person, whether or not any such person is an officer or employee of the
Corporation, who is duly authorized by the Board of
<PAGE>
Directors of the Corporation to give Oral Instructions and Written Instructions
on behalf of the Corporation or any Fund, and named in Appendix A attached
hereto and as amended from time to time by resolution of the Board of Directors,
certified by an Officer, and received by the Custodian.
Board of Directors - the Directors from time to time serving under the
Corporation's Articles of Incorporation, as from time to time amended.
Book-Entry System - a federal book-entry system as provided in Subpart O of
Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFT Part 350, or in
such book-entry regulations of federal agencies as are substantially in the form
of Subpart O.
Business Day - any day recognized as a settlement day by The New York Stock
Exchange, Inc. and any other day for which the Corporation computes the net
asset value of Shares of any Fund.
Depository - The Depository Trust Company ("DTC"), a limited purpose trust
company, its successor(s) and its nominee(s). Depository shall include any other
clearing agency registered with the SEC under Section 17A of the 1934 Act which
acts as a system for the central handling of Securities where all Securities of
any particular class or series of an issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of the Securities provided that the Custodian shall
have received a copy of a resolution of the Board of Directors, certified by an
Officer, specifically approving the use of such clearing agency as a depository
for the Funds.
Dividend and Transfer Agent - the dividend and transfer agent appointed,
from time to time, pursuant to a written agreement between the dividend and
transfer agent and the Corporation.
Foreign Securities - a) securities issued and sold primarily outside of the
United States by a foreign government, a national of any foreign country, or a
trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or
<PAGE>
guaranteed by the government of the United States, by any state, by any
political subdivision or agency thereof, or by any entity organized under the
laws of the United States or of any state thereof, which have been issued and
sold primarily outside of the United States.
Fund - each series of the Corporation listed in Appendix B and any
additional series added pursuant to Proper Industries. A series is individually
referred to as a "Fund" and collectively referred to as the "Funds."
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
Officer - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Corporation.
Oral Instructions - instructions orally transmitted to and received by the
Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
<PAGE>
Proper Instructions - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
Prospectus - the Corporation's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock, preferred
stock, options, financial futures, bonds, notes, debentures, corporate debt
securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets that the Custodian
has the facilities to clear and to service.
SEC - the Securities and Exchange Commission of the United States of
America.
Shares - with respect to a Fund, the shares of common stock issued by the
Corporation on account of such Fund.
Corporation - a business corporation organized under the laws of Maryland
which is a open-end management investment company registered under the Act.
Written Instructions - communications in writing actually received by the
Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Directors and the resolution is certified by an Officer and delivered to
<PAGE>
the Custodian). All written communications shall be directed to the Custodian,
attention: Mutual Fund Custody Department.
ARTICLE II
Appointment; Acceptance; and Furnishing of Documents
----------------------------------------------------
A. Appointment of Custodian. The Corporation hereby constitutes and
appoints the Custodian as custodian of all Securities and cash owned by the
Corporation at any time during the term of this Agreement.
B. Acceptance of Custodian. The Custodian hereby accepts appointment as
such custodian and agrees to perform the duties thereof as hereinafter set
forth.
C. Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement, to the Custodian by the Corporation:
1. A copy of the Articles of Incorporation of the Corporation
certified by the Secretary.
2. A copy of the By-Laws of the Corporation certified by the
Secretary.
3. A copy of the resolution of the Board of Directors of the
Corporation appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
<PAGE>
5. A Certificate of the President and Secretary of the
Corporation setting forth the names and signatures of the current
Officers of the Corporation and other Authorized Persons.
D. Notice of Appointment of Dividend and Transfer Agent. The Corporation
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Corporation Assets
-----------------------------
A. Delivery of Moneys. During the term of this Agreement, the Corporation
will deliver or cause to be delivered to the Custodian all moneys to be held by
the Custodian for the account of any Fund. The Custodian shall be entitled to
reverse any deposits made on any Fund's behalf where such deposits have been
entered and moneys are not finally collected within 30 days of the making of
such entry.
B. Delivery of Securities. During the term of this Agreement, the
Corporation will deliver or cause to be delivered to the Custodian all
Securities to be held by the Custodian for the account of any Fund. The
Custodian will not have any duties or responsibilities with respect to such
Securities until actually received by the Custodian.
C. Payments for Shares. As and when received, the Custodian shall deposit
to the account(s) of a Fund any and all payments for Shares of that Fund issued
or sold from time to time as they are received from the Corporation's
distributor or Dividend and Transfer Agent or from the Corporation itself.
<PAGE>
D. Duties Upon Receipt. The Custodian shall not be responsible for any
Securities, moneys or other assets of any Fund until actually received by it.
E. Validity of Title. The Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto received or
delivered by it pursuant to this Agreement.
<PAGE>
ARTICLE IV
Disbursement of Corporation Assets
----------------------------------
A. Declaration of Dividends by Corporation. The Corporation shall furnish
to the Custodian a copy of the resolution of the Board of Directors of the
Corportion, certified by the Corporation's Secretary, either (i) setting forth
the date of the declaration of any dividend or distribution in respect of Shares
of any Fund of the Corporation, the date of payment thereof, the record date as
of which the Fund shareholders entitled to payment shall be determined, the
amount payable per share to Fund shareholders of record as of that date, and the
total amount to be paid by the Dividend and Transfer Agent on the payment date,
or (ii) authorizing the declaration of dividends and distributions in respect of
Shares of a Fund on a daily basis and authorizing the Custodian to rely on
Written Instructions setting forth the date of the declaration of any such
dividend or distribution, the date of payment thereof, the record date as of
which the Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Segregation of Redemption Proceeds. Upon receipt of Proper Instructions
so directing it, the Custodian shall segregate amounts necessary for the payment
of redemption proceeds to be made by the Dividend and Transfer Agent from moneys
held for the account of the Fund so that they are available for such payment.
<PAGE>
C. Disbursements of Custodian. Upon receipt of a Certificate directing
payment and setting forth the name and address of the person to whom such
payment is to be made, the amount of such payment, the name of the Fund from
which payment is to be made, and the purpose for which payment is to be made,
the Custodian shall disburse amounts as and when directed from the assets of
that Fund. The Custodian is authorized to rely on such directions and shall be
under no obligation to inquire as to the propriety of such directions.
D. Payment of Custodian Fees. Upon receipt of Written Instructions
directing payment, the Custodian shall disburse moneys from the assets of the
Corporation in payment of the Custodian's fees and expenses as provided in
Article VIII hereof.
ARTICLE V
Custody of Corporation Assets
-----------------------------
A. Separate Accounts for Each Fund. As to each Fund, the Custodian shall
open and maintain a separate bank account or accounts in the United States in
the name of the Corporation coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
<PAGE>
B. Segregation of Non-Cash Assets. All Securities and non-cash property
held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
C. Securities in Bearer and Registered Form. All Securities held which are
issued or issuable only in bearer form, shall be held by the Custodian in that
form; all other Securities held for the Fund may be registered in the name of
the Custodian, any sub-custodian appointed in accordance with this Agreement, or
the nominee of any of them. The Corporation agrees to furnish to the Custodian
appropriate instruments to enable the Custodian to hold, or deliver in proper
form for transfer, any Securities that it may hold for the account of any Fund
and which may, from time to time, be registered in the name of a Fund.
D. Duties of Custodian As to Securities. Unless otherwise instructed by the
Corporation, with respect to all Securities held for the Corporation, the
Custodian shall on a timely basis (concerning items 1 and 2 below, as defined in
the Custodian's Standards of Service Guide, as amended from time to time,
annexed hereto as Appendix D):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or retired, or
otherwise become payable;
<PAGE>
3.) Surrender interim receipts or Securities in temporary form
for Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the
laws or regulations of any other taxing authority, including any
foreign taxing authority, now or hereafter in effect.
E. Certain Actions Upon Written Instructions. Upon receipt of a Written
Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be designated in
such Written Instructions proxies, consents, authorizations, and any
other instruments whereby the authority of the Corporation as
beneficial owner of any Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation, or
recapitalization of any trust, or the exercise of any conversion
privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization,
or sale of assets of any trust, and receive and hold under the terms
of this Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to evidence such
delivery;
<PAGE>
4.) Make such transfers or exchanges of the assets of any Fund
and take such other steps as shall be stated in the Written
Instructions to be for the purpose of effectuating any duly authorized
plan of liquidation, reorganization, merger, consolidation or
recapitalization of the Corporation; and
5.) Deliver any Securities held for any Fund to the depository
agent for tender or other similar offers.
F. Custodian to Deliver Proxy Materials. The Custodian shall promptly
deliver to the Corporation all notices, proxy material and executed but unvoted
proxies pertaining to shareholder meetings of Securities held by any Fund. The
Custodian shall not vote or authorize the voting of any Securities or give any
consent, waiver or approval with respect thereto unless so directed by Written
Instructions.
G. Custodian to Deliver Tender Offer Information. The Custodian shall
promptly deliver to the Corporation all information received by the Custodian
and pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights. If the
Corporation desires to take action with respect to any tender offer, exchange
offer or other similar transaction, the Corporation shall notify the Custodian
at least five Business Days prior to the date on which the Custodian is to take
such action. The Corporation will provide or cause to be provided to the
Custodian all relevant information for any Security which has unique put/option
provisions at least five Business Days prior to the beginning date of the tender
period.
ARTICLE VI
<PAGE>
Purchase and Sale of Securities
-------------------------------
A. Purchase of Securities. Promptly after each purchase of Securities by
the Corporation, the Corporation shall deliver to the Custodian (i) with respect
to each purchase of Securities which are not Money Market Securities, Written
Instructions, and (ii) with respect to each purchase of Money Market Securities,
Proper Instructions, specifying with respect to each such purchase the;
1.) name of the issuer and the title of the Securities,
2.) the number of shares, principal amount purchased (and accrued
interest, if any) or other units purchased,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through which,
the purchase was made,
7.) the name of the person to whom such amount is payable, and
8.) the Fund for which the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the
Corporation, pay out of the moneys held for the account of such Fund the total
amount specified in the Written Instructions, or Oral Instructions, if
applicable, to the person named therein. The Custodian shall not be under any
obligation to pay out moneys to cover the cost of a purchase of Securities for a
Fund, if in the
<PAGE>
relevant Fund custody account there is insufficient cash available to the Fund
for which such purchase was made.
B. Sale of Securities. Promptly after each sale of Securities by a Fund,
the Corporation shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) number of shares, principal amount sold (and accrued
interest, if any) or other units sold,
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through which, the
sale was made,
7.) name of the person to whom such Securities are to be
delivered, and
8.) Fund for which the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
specified in the Written Instructions, or Oral Instructions, if applicable.
Notwithstanding any other provision of this Agreement, the Custodian, when
properly instructed as provided herein to deliver Securities against payment,
shall be entitled, if in accordance with generally accepted market practice, to
deliver such Securities prior to actual receipt of final payment therefor. In
any such case, the
<PAGE>
Fund for which the Securities were delivered shall bear the risk that final
payment for the Securities may not be made or that the Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any of the
foregoing.
C. Payment on Settlement Date. On contractual settlement date, the account
of the Fund will be charged for all purchased Securities settling on that day,
regardless of whether or not delivery is made. Likewise, on contractual
settlement date, proceeds from the sale of Securities settling that day will be
credited to the account of the Fund, irrespective of delivery. Any such credit
shall be conditioned upon actual receipt by Custodian of final payment and may
be reversed if final payment is not actually received in full.
D. Credit of Moneys Prior to Receipt. With respect to any credit given
prior to actual receipt of final payment, the Custodian may, in its sole
discretion and from time to time, permit a Fund to use funds so credited to its
Fund custody account in anticipation of actual receipt of final payment. Any
such funds shall be deemed a loan from the Custodian to the Corporation payable
on demand and bearing interest accruing from the date such loan is made up to
but not including the date on which such loan is repaid at the rate per annum
customarily charged by the Custodian on similar loans.
E. Segregated Accounts. The Custodian shall, upon receipt of Proper
Instructions so directing it, establish and maintain a segregated account or
accounts for and on behalf of a Fund. Cash and/or Securities may be transferred
into such account or accounts for specific purposes, to-wit:
<PAGE>
1.) in accordance with the provision of any agreement among the
Corporation, the Custodian, and a broker-dealer registered under the
1934 Act, and also a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to
compliance with the rules of the Options Clearing Corporation and of
any registered national securities exchange, the Commodity Futures
Trading Commission, any registered contract market, or any similar
organization or organizations requiring escrow or other similar
arrangements in connection with transactions by the Fund;
2.) for purposes of segregating cash or Securities in connection
with options purchased, sold, or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund;
3.) for the purpose of compliance by the Fund with the procedures
required for reverse repurchase agreements, firm commitment
agreements, standby commitment agreements, and short sales by Act
Release No. 10666, or any subsequent release or releases or rule of
the SEC relating to the maintenance of segregated accounts by
registered investment companies;
4.) for the purpose of segregating collateral for loans of
Securities made by the Fund; and
<PAGE>
5.) for other proper corporate purposes, but only upon receipt
of, in addition to Proper Instructions, a copy of a resolution of the
Board of Directors, certified by an Officer, setting forth the
purposes of such segregated account.
Each segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund involved.
F. Advances for Settlement. Except as otherwise may be agreed upon by the
parties hereto, the Custodian shall not be required to comply with any Written
Instructions to settle the purchase of any Securities on behalf of a Fund unless
there is sufficient cash in the account(s) pertaining to such Fund at the time
or to settle the sale of any Securities from such an account(s) unless such
Securities are in deliverable form. Notwithstanding the foregoing, if the
purchase price of such Securities exceeds the amount of cash in the account(s)
at the time of such purchase, the Custodian may, in its sole discretion, advance
the amount of the difference in order to settle the purchase of such Securities.
The amount of any such advance shall be deemed a loan from the Custodian to the
Corporation payable on demand and bearing interest accruing from the date such
loan is made up to but not including the date such loan is repaid at the rate
per annum customarily charged by the Custodian on similar loans.
ARTICLE VII
Corporation Indebtedness
------------------------
<PAGE>
In connection with any borrowings by the Corporation, the Corporation will
cause to be delivered to the Custodian by a bank or broker requiring Securities
as collateral for such borrowings (including the Custodian if the borrowing is
from the Custodian), a notice or undertaking in the form currently employed by
such bank or broker setting forth the amount of collateral. The Corporation
shall promptly deliver to the Custodian Written Instructions specifying with
respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note duly endorsed by the Corporation, or a
loan agreement, (c) the date, and time if known, on which the loan is to be
entered into, (d) the date on which the loan becomes due and payable, (e) the
total amount payable to the Corporation on the borrowing date, and (f) the
description of the Securities securing the loan, including the name of the
issuer, the title and the number of shares or other units or the principal
amount. The Custodian shall deliver on the borrowing date specified in the
Written Instructions the required collateral against the lender's delivery of
the total loan amount then payable, provided that the same conforms to that
which is described in the Written Instructions. The Custodian shall deliver, in
the manner directed by the Corporation, such Securities as additional
collateral, as may be specified in Written Instructions, to secure further any
transaction described in this Article VII. The Corporation shall cause all
Securities released 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.
The Custodian may, at the option of the lender, keep such collateral in its
possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require
<PAGE>
such reasonable conditions regarding such collateral and its dealings with
third-party lenders as it may deem appropriate.
ARTICLE VIII
Concerning the Custodian
------------------------
A. Limitations on Liability of Custodian. Except as otherwise provided
herein, the Custodian shall not be liable for any loss or damage resulting from
its action or omission to act or otherwise, except for any such loss or damage
arising out of its own gross negligence or willful misconduct. The Corporation
shall defend, indemnify and hold harmless the Custodian and its directors,
officers, employees and agents with respect to any loss, claim, liability or
cost (including reasonable attorneys' fees) arising or alleged to arise from or
relating to the Corporation's duties hereunder or any other action or inaction
of the Corporation or its Directors, officers, employees or agents, except such
as may arise from the grossly negligent action or omission, willful misconduct
or breach of this Agreement by the Custodian. The Custodian shall be entitled to
rely on and may act upon the advice and opinion of counsel on all matters, at
the expense of the Corporation, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice or opinion of counsel. The
provisions under this paragraph shall survive the termination of this Agreement.
B. Actions Not Required By Custodian. Without limiting the generality of
the foregoing, the Custodian, acting in the capacity of Custodian hereunder,
shall be under no obligation to inquire into, and shall not be liable for:
<PAGE>
1.) The validity of the issue of any Securities purchased by or
for the account of any Fund, the legality of the purchase thereof, or
the propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for the
account of any Fund, or the propriety of the amount for which the same
are sold;
3.) The legality of the issue or sale of any Shares of any Fund,
or the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any Shares of any Fund, or
the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend by
the Corporation in respect of Shares of any Fund;
6.) The legality of any borrowing by the Corporation on behalf of
the Corporation or any Fund, using Securities as collateral;
7.) Whether the Corporation or a Fund is in compliance with the
1940 Act, the regulations thereunder, the provisions of the
Corporation's charter documents or by-laws, or its investment
objectives and policies as then in effect.
C. No Duty to Collect Amounts Due From Dividend and Transfer Agent. The
Custodian shall not be under any duty or obligation to take action to effect
collection of any amount due to the Corporation from any Dividend and Transfer
Agent of the Corporation nor to take any action to effect payment or
distribution by any Dividend and Transfer Agent of the Corporation of any
<PAGE>
amount paid by the Custodian to any Dividend and Transfer Agent of the
Corporation in accordance with this Agreement.
D. No Enforcement Actions. Notwithstanding Section D of Article V, the
Custodian shall not be under any duty or obligation to take action, by legal
means or otherwise, 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 Written Instructions and (ii) it shall be assured to its satisfaction
(including prepayment thereof) of reimbursement of its costs and expenses in
connection with any such action.
E. Authority to Use Agents and Sub-Custodians. The Corporation acknowledges
and hereby authorizes the Custodian to hold Securities through its various
agents described in Appendix C annexed hereto. The Fund hereby represents that
such authorization has been duly approved by the Board of Directors of the
Corporation as required by the Act.
In addition, the Corporation acknowledges that the Custodian may appoint
one or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located in
foreign countries, for the purpose of holding Securities and moneys at any time
owned by the Fund. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such agents or sub-custodians. Any such agent or sub-custodian shall be
qualified to serve as such for assets of investment companies registered under
the Act. The Funds shall reimburse the Custodian for all costs incurred by the
Custodian in connection with opening accounts with any such agents or
sub-custodians. Upon request, the Custodian shall promptly forward to the
Corporation any documents
<PAGE>
it receives from any agent or sub-custodian appointed hereunder which may assist
trustees of registered investment companies to fulfill their responsibilities
under Rule 17f-5 of the Act.
F. No Duty to Supervise Investments. The Custodian shall not be under any
duty or obligation to ascertain whether any Securities at any time delivered to
or held by it for the account of the Trust are such as properly may be held by
the Corporation under the provisions of the Articles of Incorporation and the
Corporation's By-Laws.
G. All Records Confidential. The Custodian shall treat all records and
other information relating to the Corporation and the assets of all Funds as
confidential and shall not disclose any such records or information to any other
person unless (i) the Corporation shall have consented thereto in writing or
(ii) such disclosure is required by law.
H. Compensation of Custodian. The Custodian shall be entitled to receive
and the Corporation agrees to pay to the Custodian such compensation as shall be
determined pursuant to Appendix E attached hereto, or as shall be determined
pursuant to amendments to Appendix E. The Custodian shall be entitled to charge
against any money held by it for the account of any Fund, the amount of any of
its fees, any loss, damage, liability or expense, including counsel fees. The
expenses which the Custodian may charge against the account of a Fund include,
but are not limited to, the expenses of agents or sub-custodians incurred in
settling transactions involving the purchase and sale of Securities of the Fund.
I. Reliance Upon Instructions. The Custodian shall be entitled to rely upon
any Proper Instructions. The Corporation agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
telex, facsimile or otherwise, on the same Business Day
<PAGE>
on which such Oral Instructions were given. The Corporation agrees that the
failure of the Custodian to receive such confirming instructions shall in no way
affect the validity of the transactions or enforceability of the transactions
hereby authorized by the Corporation. The Corporation agrees that the Custodian
shall incur no liability to the Corporation for acting upon Oral Instructions
given to the Custodian hereunder concerning such transactions.
J. Books and Records. The Custodian will (i) set up and maintain proper
books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 3la-1 and 3la-2 thereunder and those records are the property
of the Corporation, and (ii) preserve for the periods prescribed by applicable
Federal statute or regulation all records required to be so preserved. All such
books and records shall be the property of the Corporation, and shall be
available, upon request, for inspection by duly authorized officers, employees
or agents of the Corporation and employees of the SEC.
K. Internal Accounting Control Systems. The Custodian shall send to the
Corporation any report received on the systems of internal accounting control of
the Custodian, or its agents or sub-custodians, as the Corporation may
reasonably request from time to time.
L. No Management of Assets By Custodian. The Custodian performs only the
services of a custodian and shall have no responsibility for the management,
investment or reinvestment of the Securities or other assets from time to time
owned by any Fund. The Custodian is not a selling agent for Shares of any Fund
and performance of its duties as custodian shall not be deemed to be a
recommendation to any Fund's depositors or others of Shares of the Fund as an
investment. The Custodian shall have no duties or obligations whatsoever except
such
<PAGE>
duties and obligations as are specifically set forth in this Agreement, and no
covenant or obligation shall be implied in this Agreement against the Custodian.
M. Assistance to Corporation. The Custodian shall take all reasonable
action, that the Corporation may from time to time request, to assist the
Corporation in obtaining favorable opinions from the Corporation's independent
accountants, with respect to the Custodian's activities hereunder, in connection
with the preparation of the Fund's Form N- IA, Form N-SAR, or other annual
reports to the SEC.
N. Grant of Security Interest. The Corporation hereby pledges to and grants
the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Corporation to the Custodian, whether acting
in its capacity as Custodian or otherwise, or on account of money borrowed from
the Custodian. This pledge is in addition to any other pledge of collateral by
the Corporation to the Custodian.
ARTICLE IX
Initial Term; Termination
-------------------------
A. Initial Term. This Agreement shall become effective as of its execution
and shall continue in full force and effect until terminated as hereinafter
provided.
B. Termination. Either party hereto may terminate this Agreement after the
Initial Term for any reason 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. If such notice is given by
the Corporation, it shall be accompanied by a copy of a resolution of the Board
of Directors of the Corporation, certified by the Secretary of the Corporation,
electing to terminate this Agreement and designating a successor custodian or
custodians. In the event such notice is given by the Custodian, the Corporation
shall, on or before the termination date, deliver to the Custodian a copy of a
<PAGE>
resolution of the Board of Directors of the Corporation, certified by the
Secretary, designating a successor custodian or custodians to act on behalf of
the Corporation. In the absence of such designation by the Corporation, the
Custodian may designate a successor custodian which shall be a bank or trust
company having not less than $100,000,000 aggregate capital, surplus, and
undivided profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian, provided that it has received a notice of
acceptance by the successor custodian, shall deliver, on that date, directly to
the successor custodian all Securities and moneys then owned by the Fund and
held by it as Custodian. Upon termination of this Agreement, the Corporation
shall pay to the Custodian on behalf of the Corporation such compensation as may
be due as of the date of such termination. The Corporation agrees on behalf of
the Corporation that the Custodian shall be reimbursed for its reasonable costs
in connection with the termination of this Agreement.
C. Failure to Designate Successor Director. If a successor custodian is not
designated by the Corporation, or by the Custodian in accordance with the
preceding paragraph, or the designated successor cannot or will not serve, the
Corporation shall, upon the delivery by the Custodian to the Corporation of all
Securities (other than Securities held in the Book-Entry System which cannot be
delivered to the Corporation) and moneys then owned by the Corporation, be
deemed to be the custodian for the Corporation, 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 Corporation, which shall be held by the Custodian in
accordance with this Agreement.
<PAGE>
ARTICLE X
Force Majeure
-------------
Neither the Custodian nor the Corporation shall be liable for any failure
or delay in performance of its obligations under this Agreement arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable
control, including, without limitation, acts of God; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian, in the event of a failure
or delay, shall use its best efforts to ameliorate the effects of any such
failure or delay.
ARTICLE XI
Miscellaneous
-------------
A. Designation of Authorized Persons. Appendix A sets forth the names and
the signatures of all Authorized Persons as of this date, as certified by the
Secretary of the Corporation. The Corporation agrees to furnish to the Custodian
a new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until such new Appendix
A shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement
<PAGE>
upon Oral Instructions or signatures of the then current Authorized Persons as
set forth in the last delivered Appendix A.
B. Limitation of Personal Liability. No recourse under any obligation of
this Agreement or for any claim based thereon shall be had against any
organizer, shareholder, officer, director, past, present or future as such, of
the Corporation or of any predecessor or successor, either directly or through
the Corporation or any such predecessor or successor, whether by virtue of any
constitution, statute or rule of law or equity, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Agreement and the obligations thereunder are enforceable solely
against the Corporation, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, the organizers, shareholders,
officers, or director of the Corporation or of any predecessor or successor, or
any of them as such. To the extent that any such liability exists, it is hereby
expressly waived and released by the Custodian as a condition of, and as a
consideration for, the execution of this Agreement.
C. Authorization By Board. The obligations set forth in this Agreement as
having been made by the Corporation have been made by the Board of Directors,
acting as such Directors for and on behalf of the Corporation, pursuant to the
authority vested in them under the laws of the State of Maryland, the Articles
of Incorporation and the By-Laws of the Corporation. This Agreement has been
executed by Officers of the Corporation as officers, and not individually, and
the obligations contained herein are not binding upon any of the Directors,
Officers, agents or holders of shares, personally, but bind only the
Corporation.
D. Custodian's Consent to Use of Its Name. The Corporation shall review
with the Custodian all provisions of the Prospectus and any other documents
(including advertising
<PAGE>
material) specifically mentioning the Custodian (other than merely by name and
address) and shall obtain the Custodian's consent prior to the publication
and/or dissemination or distribution thereof.
E. Notices to Custodian. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Custodian, shall be
sufficiently given if addressed to the Custodian and mailed or delivered to it
at its offices at Star Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati,
Ohio 45202, attention Mutual Fund Custody Department, or at such other place as
the Custodian may from time to time designate in writing.
F. Notices to Corporation. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Corporation shall be
sufficiently given when delivered to the Corporation or on the second Business
Day following the time such notice is deposited in the U.S. mail postage prepaid
and addressed to the Corporation at its office at 479 W. 22nd St. New York, NY
10011 or at such other place as the Corporation may from time to time designate
in writing.
G. Amendments In Writing. This Agreement, with the exception of the
Appendices, 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 authorized and approved by a resolution of the Board of Directors of the
Corporation.
H. Successors and Assigns. 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
Corporation or by the Custodian, and no attempted assignment by the Corporation
or the Custodian shall be effective without the written consent of the other
party hereto.
<PAGE>
I. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Ohio.
J. Jurisdiction. Any legal action, suit or proceeding to be instituted by
either party with respect to this Agreement shall be brought by such party
exclusively in the courts of the State of Ohio or in the courts of the United
States for the Southern District of Ohio, and each party, by its execution of
this Agreement, irrevocably (i) submits to such jurisdiction and (ii) consents
to the service of any process or pleadings by first class U.S. mail, postage
prepaid and return receipt requested, or by any other means from time to time
authorized by the laws of such jurisdiction.
K. Counterparts. 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.
L. Headings. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: TRUST: Fleming Capital Mutual Fund Group, Inc.
By:________________________
Title:_______________________
ATTEST: CUSTODIAN:
Star Bank, N.A.
<PAGE>
By:_________________________
Title:_______________________
APPENDIX A
Authorized Persons Specimen Signatures
------------------ -------------------
President: __________________ ___________________
Vice President: __________________ ___________________
Secretary: __________________ ___________________
Treasurer: __________________ ___________________
Assistant
Treasurer: __________________ ___________________
Adviser Employees: __________________ ___________________
<PAGE>
APPENDIX A Continued
Authorized Persons Specimen Signatures
------------------ -------------------
Transfer Agent/Fund Accountant
Employees: __________________ ___________________
__________________ ___________________
__________________ ___________________
__________________ ___________________
* Authority restricted; does not include:_____________________________________
_______________________________________________________________________________
<PAGE>
APPENDIX B
Series of the Corporation
Fleming Fund
Fleming Fledgling Fund
<PAGE>
APPENDIX C
Agents of the Custodian
The following agents are employed currently by Star Bank, N.A. for
securities processing and control ...
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible Securities)
<PAGE>
APPENDIX D
Standards of Service Guide
ADMINISTRATION AGREEMENT
AGREEMENT made this _________ day of ________, 1997 by and between
Fleming Capital Mutual Fund Group, Inc., a Maryland Corporation (the "Company"
or the "Fund"), and INVESTMENT COMPANY ADMINISTRATION CORPORATION, a Delaware
Corporation (the "Administrator").
W I T N E S S E T H
-------------------
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940 (the "1940 Act"), with shares
of beneficial interest organized into separate series; and
WHEREAS, the Fund wishes to retain the Administrator, and the
Administrator is willing, to provide management and administrative services to
such Portfolios of the Fund as the Fund and Administrator may agree upon
("Portfolios") and as listed on Schedule A attached hereto and made a part of
this agreement on the terms and conditions hereinafter set forth:
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby retains the Administrator to provide
certain management and administrative services, as set forth in Article 2 below.
The Administrator agrees to comply with all applicable requirements of the 1940
Act, the Securities Act of 1933, the Securities Exchange Act of 1934 and any
laws, rules and regulations of governmental or quasi-governmental authorities
having jurisdiction with respect to the duties to be performed by the
Administrator hereunder.
2. Services on a Continuing Basis. The Administrator shall perform the
following services on a regular basis which would be daily, weekly or as
otherwise appropriate or reasonably requested by the Fund:
(A) prepare and coordinate reports and other materials as the
Fund's Board of Directors may reasonably request of the Fund;
(B) prepare and/or supervise the preparation and filing of all
securities filings, periodic financial reports, prospectuses, statements of
additional information, marketing materials, tax returns, shareholder reports
and other regulatory reports or filings required of the Fund and the Portfolios;
<PAGE>
(C) prepare all required filings necessary to qualify the Fund's
shares with state securities authorities to sell shares in all states where the
Fund currently does, or intends to do business;
(D) coordinate the preparation, printing and mailing of all
communications required to be sent to shareholders, including the annual and
semi-annual reports to shareholders, proxy statements, notices and other reports
to Fund shareholders;
(E) coordinate the preparation and payment of Fund and Portfolio
related expenses;
(F) assist in the selection of, investigate, conduct relations
with, and monitor and oversee the activities of the transfer agent, custodians,
accountants, depositories, attorneys, underwriters, insurers, and such other
persons in any other capacity deemed by the Company to be necessary or desirable
for the Portfolios' operations and as requested by the Company;
(G) review and adjust as necessary the Portfolios' daily expense
accruals;
(H) maintain and keep such books and records of the Fund as
required by law and for the proper operation of the Fund and its Portfolios
other than those maintained and kept by the Fund's investment adviser and
servicing agents;
(I) provide the Fund with (i) the services of persons competent
to perform the administrative and clerical functions described herein, and (ii)
individuals acceptable to the Directors for nomination, appointment or election
as officers of the Fund, who will be responsible for the management of certain
of the Fund's affairs as determined by the Directors;
(J) provide the Fund with office space as well as administrative
offices, equipment and facilities as are necessary for the performance of the
Administrator's duties under this Agreement;
(K) monitor each Portfolio's compliance with investment policies
and restrictions as set forth in the Portfolio's currently effective prospectus
and statement of additional information; and
(L) perform such additional services as may be agreed upon by the
Fund and the Administrator.
3. Responsibility of the Administrator. The Administrator shall be
under no duty to take any action on behalf of the Fund or the Portfolios except
as set forth herein or as may be agreed to by the Administrator in writing. In
the performance of its duties hereunder, the Administrator shall be obligated to
exercise reasonable care and diligence and to act in good faith and to use its
best efforts. The Administrator shall have no liability for any loss or damage
resulting from
2
<PAGE>
the performance or non-performance of its duties hereunder unless solely caused
by or resulting from the gross negligence or willful misconduct of the
Administrator, its officers and employees.
4. Reliance Upon Instructions. The Fund agrees that the Administrator
shall be entitled to rely upon any instructions, oral or written, actually
received by the Administrator from the Fund and shall incur no liability to the
Fund in acting upon such oral or written instructions, provided such
instructions reasonably appear to have been received from a person duly
authorized by the Board of Directors of the Fund to give oral or written
instructions on behalf of the Fund or any Portfolio.
5. Confidentiality. The Administrator agrees on behalf of itself and
its employees to treat confidentiality all records and other information
relating to the Fund and Portfolios and all prior, present or potential
shareholders of any and all Portfolios, except after prior notification to, and
written approval of release of information by, the Fund, which approval shall
not be unreasonably withheld where the Administrator may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Fund.
6. Equipment Failures. In the event of equipment failures or the
occurrence of events beyond the Administrator's control which render the
performance of the Administrator's functions under this Agreement impossible,
the Administrator shall at no additional expense to the Fund, take reasonable
steps to minimize service interruptions. The Administrator shall develop and
maintain a plan for recovery from equipment failures which may include
contractual arrangements with appropriate third parties making reasonable
provision for emergency use of electronic data processing equipment to the
extent appropriate equipment is available.
7. Allocation of Charges and Expenses.
(A) The Administrator. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Fund as well as all Directors of the
Fund who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Fund retained by the Directors of the Fund
to perform services on behalf of the Fund.
(B) The Fund. The Fund assumes and shall pay or cause to be paid
all other expenses of the Fund not otherwise allocated herein, including,
without limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing shareholders, all expenses
incurred in connection with issuing and redeeming shares, the costs of pricing
services, the costs of custodial services, the cost of initial and ongoing
registration of the shares under federal and state securities
3
<PAGE>
laws, fees and out-of-pocket expenses of Directors who are not affiliated
persons of the Administrator or the investment adviser to the Fund or any
affiliated corporation of the Administrator or the investment Adviser, the costs
of Directors' meetings, insurance, interest, brokerage costs, litigation and
other extraordinary or nonrecurring expenses, and all fees and charges of
investment advisers to the Fund.
8. Compensation. As compensation for services rendered by the
Administrator during the term of this Agreement, the Fund shall pay to the
Administrator compensation at an annual rate as set forth in Schedule A.
9. Indemnification.
(A) The Fund and Portfolios agree to indemnify and hold harmless
the Administrator from all taxes, filing fees, charges, assessments, claims and
liabilities (including without limitation, liabilities arising under the
Securities Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, and
any state and foreign securities laws, all as amended from time to time) and
expenses, including (without limitation) reasonable attorneys fees and
disbursements, reasonably arising directly or indirectly from any action or
thing which the Administrator takes or does or omits to take or do at the
request of or in reliance upon the advice of the Board of Directors of the Fund,
provided that the Administrator will not be indemnified against any liability to
a Portfolio or to shareholders (or any expenses incident to such liability)
arising out of the Administrator's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties and obligations under this
Agreement. The Administrator agrees to indemnify and hold harmless the Fund and
each of its Directors from all taxes, filing fees, charges, assessments, claims
and liabilities (including without limitation, liabilities under the Securities
Act of 1933, the Securities Exchange Act of 1934, the 1940 Act, and any state
and foreign securities laws, all as amended from time to time) and expenses,
including (without limitation) reasonable attorneys fees and disbursements,
arising directly or indirectly from any action or thing which the Administrator
takes or does or omits to take or do which is in violation of this Agreement or
not in accordance with instructions properly given to the Administrator, or
arising out of the Administrator's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties and obligations under this
agreement.
(B) The rights of a party indemnified under this Section (an
"indemnified party") shall include the right to reasonable advances of defense
expenses in the event of any pending or threatened litigation with respect to
which indemnification hereunder may ultimately be merited. In order that the
indemnification provisions contained herein shall apply, however, it is
understood that if in any case one party (the "indemnifying party") may be asked
to indemnify or hold the indemnified party harmless, the indemnifying party
shall be fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the indemnified party
will use all reasonable care to identify and notify the indemnifying party
promptly concerning any situation which presents or appears likely to present
the probability of such a claim for indemnification against the indemnifying
party, but failure to do so in good faith shall not affect the rights hereunder.
4
<PAGE>
(C) The indemnifying party shall be entitled to participate at
its own expense or, if it so elects, to assume the defense of any suit brought
to enforce any claims subject to this indemnity provision. If the indemnifying
party elects to assume the defense of any such claim, the defense shall be
conducted by counsel chosen by the indemnifying party and satisfactory to the
indemnified party, whose approval shall not be unreasonably withheld. In the
event that the indemnifying party elects to assume the defense of any suit and
retain counsel, the indemnified party shall bear the fees and expenses of any
additional counsel retained by it. If the indemnifying party does not elect to
assume the defense of a suit, it will reimburse the indemnified party for the
reasonable fees and expenses of any counsel retained by the indemnified party.
10. Duration and Termination of this Agreement. This Agreement shall
continue until termination in accordance with the provisions of this Section.
This Agreement may be terminated only: (a) by the mutual written agreement of
the parties; (b) by either party on 60 days' written notice; or (c) by either
party in the event of a material breach of this Agreement by the other party,
provided the terminating party has notified the other party in writing of such
breach at least 45 days prior to the specified date of termination and the
breaching party has not remedied such breach by the specified date. This
Agreement shall not be assigned by either party without the prior written
consent of the other party.
11. Amendments and Assignment. This Agreement or any part hereof may
be changed or waived only by instrument in writing signed by both parties and
may not be assigned by either party without the written consent of the other.
12. Records. The Administrator shall, directly or through third
parties, maintain and preserve for the periods prescribed therein, records
relating to the services to be performed under this Agreement which are required
under the 1940 Act, and the rules and regulations thereunder. Any records
required to be maintained and preserved under the 1940 Act which are prepared or
maintained by the Administrator on behalf of the Fund shall be prepared and
maintained at the expense of the Administrator, but shall be the property of the
Fund, shall be readily accessible during normal business hours to the Fund and
its duly authorized agents, and shall be surrendered promptly to the Fund on
written request or upon termination of this Agreement. Records shall be
surrendered in usable machine readable form. In case of any request or demand
for the inspection of such records by another party, the Administrator shall
notify the Fund and follow the Fund's instructions as to permitting or refusing
such inspection; provided that the Administrator may exhibit such records to any
person in any case where it is advised by its counsel that it may be held liable
for failure to do so, unless (in cases involving potential exposure only to
civil liability) the Fund has agreed to indemnify the Administrator against such
liability.
13. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, to the following addresses or such other addresses
provided in writing: if to the Fund, at 320 Park Avenue, New York, New York; and
if to the Administrator at 2025 E. Financial Way, Suite 101, Glendora, CA 91741.
5
<PAGE>
14. Miscellaneous. This Agreement embodies the entire agreement and
understanding between the parties thereto with respect to the services to be
performed hereunder, and supersedes all prior agreements and understandings,
relating to the subject matter hereof. The captions in this Agreement are
included for convenience of reference only and in no way define or limit any of
the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in New York and governed by New
York law. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement will
not be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the date first written above.
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
By: _________________________________________
Name:
Title:
INVESTMENT COMPANY ADMINISTRATION CORPORATION
By: _________________________________________
Name:
Title:
6
<PAGE>
Schedule to the Administration Agreement
Dated as of __________, 1997
between
Fleming Capital Mutual Fund Group, Inc.
and
Investment Company Administration Corporation
Portfolios: Fleming Fund
Fleming Fledgling Fund
Fees: Pursuant to Section 12 of the Agreement, the Fund shall pay the
Administrator compensation for services rendered to the
Portfolios at the following annual rates for each Portfolio
listed above, with a minimum fee of $40,000 annual per Portfolio:
Average Daily Net Assets Rate
------------------------ ----
$0 - $200 million 0.10%
200,000,001 - 500,000,000 0.05%
500,000,001 and greater 0.03%
Term: This Agreement shall become effective on _______, 1997 and shall
remain in effect for an Initial Term of _______ year(s) from such
date and, thereafter, for successive Renewal Terms of _______
year(s) each, unless and until this Agreement is terminated in
accordance with the provisions of Section ____ of the Agreement.
7
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
--------------------------------------------------
AND PLAN AGENCY AGREEMENT
-------------------------
AGREEMENT dated as of ______________ , 1997 between Fleming Capital Mutual
Fund Group, Inc. (the "Corporation"), a Maryland corporation, and Countrywide
Fund Services, Inc. ("Countrywide"), an Ohio corporation.
WHEREAS, the Corporation is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Corporation wishes to employ the services of Countrywide to
serve as its transfer, dividend disbursing, shareholder service and plan agent;
and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Corporation and Countrywide agree as follows:
1. APPOINTMENT.
-----------
The Corporation hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Corporation.
Countrywide shall act under such appointment and perform the obligations thereof
upon the terms and conditions hereinafter set forth.
2. DOCUMENTATION.
-------------
The Corporation will furnish from time to time the following
documents:
A. Each resolution of the Board of Directors of the Corporation
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Articles of Incorporation of
the Corporation and the Bylaws of the Corporation;
<PAGE>
D. Certified copies of each resolution of the Board of Directors'
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by Board
of Directors' resolutions approving such forms;
F. Such other certificates, documents or opinions which Countrywide may,
in its discretion, deem necessary or appropriate in the proper
performance of its duties;
G. Copies of all Investment Advisory Agreements in effect; and
H. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the
Corporation and for which Countrywide is to act as plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
----------------------------
Countrywide shall record the issuance of shares of the Corporation and
maintain pursuant to applicable rules of the SEC a record of the total number of
shares of the Corporation which are authorized, issued and outstanding, based
upon data provided to it by the Corporation. Countrywide shall also provide the
Corporation on a regular basis or upon reasonable request the total number of
shares which are authorized, issued and outstanding, but shall have no
obligation when recording the issuance of the Corporation's shares, except as
otherwise set forth herein, to monitor the issuance of such shares or to take
cognizance of any laws relating to the issue or sale of such shares, which
functions shall be the sole responsibility of the Corporation.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
---------------------------------
Upon receipt of a proper request for transfer and upon surrender to
Countrywide of certificates, if any, in proper form for transfer, Countrywide
shall approve such transfer and shall
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<PAGE>
take all necessary steps to effectuate the transfer as indicated in the transfer
request. Upon approval of the transfer, Countrywide shall notify the Trust in
writing of each such transaction and shall make appropriate entries on the
shareholder records maintained by Countrywide.
5. SHARE CERTIFICATES.
------------------
If the Corporation authorizes the issuance of share certificates and
an investor requests a share certificate, Countrywide will countersign and mail,
by insured first class mail, a share certificate to the investor at his address
as set forth on the transfer books of the Corporation, subject to any other
instructions for delivery of certificates representing newly purchased shares
and subject to the limitation that no certificates representing newly purchased
shares shall be mailed to the investor until the cash purchase price of such
shares has been collected and credited to the account of the Corporation
maintained by the Custodian. The Corporation shall supply Countrywide with a
sufficient supply of blank share certificates and from time to time shall renew
such supply upon request of Countrywide. Such blank share certificates shall be
properly signed, manually or, if authorized by the Corporation, by facsimile;
and notwithstanding the death, resignation or removal of any officers of the
Corporation authorized to sign share certificates, Countrywide may continue to
countersign certificates which bear the manual or facsimile signature of such
officer until otherwise directed by the Corporation. In case of the alleged loss
or destruction of any share certificate, no new certificates shall be issued in
lieu thereof, unless there shall first be furnished an appropriate bond
satisfactory to Countrywide and the Corporation, and issued by a surety company
satisfactory to Countrywide and the Corporation.
6. RECEIPT OF FUNDS.
----------------
Upon receipt of any check or other instrument drawn or endorsed to it
as agent for, or identified as being for the account of, the Corporation,
Countrywide shall stamp the check or instrument with the date of receipt,
determine the amount thereof due the Corporation and shall forthwith process the
same for collection. Upon receipt of notification of receipt of funds eligible
for share purchases in accordance with the Corporation's then current prospectus
and statement of additional information,
- 3 -
<PAGE>
Countrywide shall notify the Corporation, at the close of each business day, in
writing of the amount of said funds credited to the Corporation and deposited in
its account with the Custodian.
7. PURCHASE ORDERS.
---------------
Upon receipt of an order for the purchase of shares of the
Corporation, accompanied by sufficient information to enable Countrywide to
establish a shareholder account, Countrywide shall, as of the next determination
of net asset value after receipt of such order in accordance with the
Corporation's then current prospectus and statement of additional information,
compute the number of shares due to the shareholder, credit the share account of
the shareholder, subject to collection of the funds, with the number of shares
so purchased, shall notify the Corporation in writing or by computer report at
the close of each business day of such transactions and shall mail to the
shareholder and/or dealer of record a notice of such credit when requested to do
so by the Corporation.
8. RETURNED CHECKS.
---------------
In the event that Countrywide is notified by the Corporation's
Custodian that any check or other order for the payment of money is returned
unpaid for any reason, Countrywide will:
A. Give prompt notification to the Corporation of the non- payment of said
check;
B. In the absence of other instructions from the Corporation, take such
steps as may be necessary to redeem any shares purchased on the basis of such
returned check and cause the proceeds of such redemption plus any dividends
declared with respect to such shares to be credited to the account of the
Corporation and to request the Corporation's Custodian to forward such returned
check to the person who originally submitted the check; and
C. Notify the Corporation of such actions and correct the Corporation's
records maintained by Countrywide pursuant to this Agreement.
9. DIVIDENDS AND DISTRIBUTIONS.
---------------------------
The Corporation shall furnish Countrywide with appropriate
- 4 -
<PAGE>
evidence of Director action authorizing the declaration of dividends and other
distributions. Countrywide shall establish procedures in accordance with the
Corporation's then current prospectus and statement of additional information
and with other authorized actions of the Corporation's Board of Directors under
which it will have available from the Custodian or the Corporation any required
information for each dividend and other distribution. After deducting any amount
required to be withheld by any applicable laws, Countrywide shall, as agent for
each shareholder who so requests, invest the dividends and other distributions
in full and fractional shares in accordance with the Corporation's then current
prospectus and statement of additional information. If a shareholder has elected
to receive dividends or other distributions in cash, then Countrywide shall
disburse dividends to shareholders of record in accordance with the
Corporation's then current prospectus and statement of additional information.
Countrywide shall, on or before the mailing date of such checks, notify the
Corporation and the Custodian of the estimated amount of cash required to pay
such dividend or distribution, and the Corporation shall instruct the Custodian
to make available sufficient funds therefor in the appropriate account of the
Corporation. Countrywide shall mail to the shareholders periodic statements, as
requested by the Corporation, showing the number of full and fractional shares
and the net asset value per share of shares so credited. When requested by the
Corporation, Countrywide shall prepare and file with the Internal Revenue
Service, and when required, shall address and mail to shareholders, such returns
and information relating to dividends and distributions paid by the Corporation
as are required to be so prepared, filed and mailed by applicable laws, rules
and regulations.
10. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
-----------------------------------------------------
Countrywide shall, at least annually, furnish in writing to the
Corporation the names and addresses, as shown in the shareholder accounts
maintained by Countrywide, of all shareholders for which there are, as of the
end of the calendar year, dividends, distributions or redemption proceeds for
which checks or share certificates mailed in payment of distributions have been
returned. Countrywide shall use its best efforts to contact the shareholders
affected and to follow any other written instructions received from the
Corporation concerning the disposition of any such unclaimed dividends,
distributions or redemption proceeds.
- 5 -
<PAGE>
11. REDEMPTIONS AND EXCHANGES.
-------------------------
A. Countrywide shall process, in accordance with the Corporation's then
current prospectus and statement of additional information, each order for the
redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Corporation, shall
mail to the shareholder and/or dealer of record a confirmation showing trade
date, number of full and fractional shares redeemed, the price per share and the
total redemption proceeds. For each such redemption, Countrywide shall either:
(a) prepare checks in the appropriate amounts for approval and verification by
the Corporation and signature by an authorized officer of Countrywide and mail
the checks to the appropriate person, or (b) in the event redemption proceeds
are to be wired through the Federal Reserve Wire System or by bank wire, cause
such proceeds to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Corporation's Board of Directors or its then current
prospectus and statement of additional information. The requirements as to
instruments of transfer and other documentation, the applicable redemption price
and the time of payment shall be as provided in the then current prospectus and
statement of additional information, subject to such supplemental instructions
as may be furnished by the Corporation and accepted by Countrywide. If
Countrywide or the Corporation determines that a request for redemption does not
comply with the requirements for redemptions, Countrywide shall promptly notify
the shareholder indicating the reason therefor.
B. If shares of the Corporation are eligible for exchange with shares of
any other investment company, Countrywide, in accordance with the then current
prospectus and statement of additional information and exchange rules of the
Corporation and such other investment company, or such other investment
company's transfer agent, shall review and approve all exchange requests and
shall, on behalf of the Corporation's shareholders, process such approved
exchange requests.
C. Countrywide shall notify the Corporation and the Custodian on each
business day of the amount of cash required to meet payments made pursuant to
the provisions of this Paragraph 11, and, on the basis of such notice, the
Corporation shall instruct the Custodian to
- 6 -
<PAGE>
make available from time to time sufficient funds therefor in the appropriate
account of the Corporation. Procedures for effecting redemption orders accepted
from shareholders or dealers of record by telephone or other methods shall be
established by mutual agreement between Countrywide and the Corporation
consistent with the Corporation's then current prospectus and statement of
additional information.
D. The authority of Countrywide to perform its responsibilities under
Paragraph 7, Paragraph 9, and this Paragraph 11 shall be suspended with respect
to any series of the Corporation upon receipt of notification by it of the
suspension of the determination of such series' net asset value.
12. AUTOMATIC WITHDRAWAL PLANS.
--------------------------
Countrywide will process automatic withdrawal orders pursuant to the
provisions of the withdrawal plans duly executed by shareholders and the current
prospectus and statement of additional information of the Corporation. Payments
upon such withdrawal order shall be made by Countrywide from the appropriate
account maintained by the Corporation with the Custodian on approximately the
last business day of each month in which a payment has been requested, and
Countrywide will withdraw from a shareholder's account and present for
repurchase or redemption as many shares as shall be sufficient to make such
withdrawal payment pursuant to the provisions of the shareholder's withdrawal
plan and the current prospectus and statement of additional information of the
Corporation. From time to time on new automatic withdrawal plans a check for a
payment date already past may be issued upon request by the shareholder.
13. WIRE-ORDER PURCHASES.
--------------------
Countrywide will send written confirmations to the dealers of record
containing all details of the wire-order purchases placed by each such dealer by
the close of business on the business day following receipt of such orders by
Countrywide. Upon receipt of any check drawn or endorsed to the Corporation (or
Countrywide, as agent) or otherwise identified as being payment of an
outstanding wire-order, Countrywide will stamp said check with the date of its
receipt and deposit the amount represented by such check to Countrywide's
deposit accounts maintained with
- 7 -
<PAGE>
the Custodian. Countrywide will cause the Custodian to transfer federal funds in
an amount equal to the net asset value of the shares so purchased to the
Corporation's account with the Custodian and will notify the Corporation before
noon of each business day of the total amount deposited in the Corporation's
deposit accounts, and in the event that payment for a purchase order is not
received by Countrywide or the Custodian on the tenth business day following
receipt of the order, prepare an NASD "notice of failure of dealer to make
payment."
14. OTHER PLANS.
-----------
Countrywide will process such accumulation plans, group programs and
other plans or programs for investing in shares of the Corporation as are now
provided for in the Corporation's current prospectus and statement of additional
information and will act as plan agent for shareholders pursuant to the terms of
such plans and programs duly executed by such shareholders.
15. RECORDKEEPING AND OTHER INFORMATION.
-----------------------------------
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Corporation. All such records shall be the property of the
Corporation at all times and shall be available for inspection and use by the
Corporation. Where applicable, such records shall be maintained by Countrywide
for the periods and in the places required by Rule 31a-2 under the 1940 Act. The
retention of such records shall be at the expense of the Corporation.
Countrywide shall make available during regular business hours all records and
other data created and maintained pursuant to this Agreement for reasonable
audit and inspection by the Corporation, any person retained by the Corporation,
or any regulatory agency having authority over the Corporation.
- 8 -
<PAGE>
16. SHAREHOLDER RECORDS.
-------------------
Countrywide shall maintain records for each shareholder account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each shareholder,
including dividends and distributions in cash or invested in shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term gains and
realized long-term gains;
F. Any instructions from a shareholder including all forms furnished by
the Corporation and executed by a shareholder with respect to (i)
dividend or distribution elections and (ii) elections with respect to
payment options in connection with the redemption of shares;
G. Any correspondence relating to the current maintenance of a
shareholder's account;
H. Certificate numbers and denominations for any shareholder holding
certificates;
I. Any stop or restraining order placed against a shareholder's account;
J. Information with respect to withholding in the case of a foreign
account or any other account for which withholding is required by the
Internal Revenue Code of 1986, as amended; and
K. Any information required in order for Countrywide to perform the
calculations contemplated under this Agreement.
- 9 -
<PAGE>
17. TAX RETURNS AND REPORTS.
-----------------------
Countrywide will prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies and, if required, mail
to shareholders of the Corporation such returns for reporting dividends and
distributions paid by the Corporation as are required to be so prepared, filed
and mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
18. OTHER INFORMATION TO THE CORPORATION.
------------------------------------
Subject to such instructions, verification and approval of the
Custodian and the Corporation as shall be required by any agreement or
applicable law, Countrywide will also maintain such records as shall be
necessary to furnish to the Corporation the following: annual shareholder
meeting lists, proxy lists and mailing materials, shareholder reports and
confirmations and checks for disbursing redemption proceeds, dividends and other
distributions or expense disbursements.
19. ACCESS TO SHAREHOLDER INFORMATION.
---------------------------------
Upon request, Countrywide shall arrange for the Corporation's
investment adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
20. COOPERATION WITH ACCOUNTANTS.
----------------------------
Countrywide shall cooperate with the Corporation's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Corporation.
- 10 -
<PAGE>
21. SHAREHOLDER SERVICE AND CORRESPONDENCE.
--------------------------------------
Countrywide will provide and maintain adequate personnel, records and
equipment to receive and answer all shareholder and dealer inquiries relating to
account status, share purchases, redemptions and exchanges and other investment
plans available to Corporation shareholders. Countrywide will answer written
correspondence from shareholders relating to their share accounts and such other
written or oral inquiries as may from time to time be mutually agreed upon, and
Countrywide will notify the Corporation of any correspondence or inquiries which
may require an answer from the Corporation.
22. PROXIES.
-------
Countrywide shall assist the Corporation in the mailing of proxy cards
and other material in connection with shareholder meetings of the Corporation,
shall receive, examine and tabulate returned proxies and shall, if requested by
the Corporation, provide at least one inspector of election to attend and
participate as required by law in shareholder meetings of the Corporation.
23. FURTHER ACTIONS.
---------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
24. COMPENSATION.
------------
For the performance of Countrywide's obligations under this Agreement,
each series of the Corporation shall pay Countrywide, on the first business day
following the end of each month, a monthly fee in accordance with the schedule
attached hereto as Schedule A. Countrywide shall not be required to reimburse
the Corporation or the Corporation's investment adviser for (or have deducted
from its fees) any expenses in excess of expense limitations imposed by certain
state securities commissions having jurisdiction over the Corporation. The
Corporation shall promptly reimburse Countrywide for any out-of-pocket expenses
and advances which are to be paid by the Corporation in accordance with
Paragraph 25.
- 11 -
<PAGE>
25. EXPENSES.
--------
Countrywide shall furnish, at its expense and without cost to the
Corporation (i) the services of its personnel to the extent that such services
are required to carry out its obligations under this Agreement and (ii) use of
data processing equipment. All costs and expenses not expressly assumed by
Countrywide under this Paragraph 25 shall be paid by the Corporation, including,
but not limited to, costs and expenses of officers and employees of Countrywide
in attending meetings of the Board of Directors and shareholders of the
Corporation, as well as costs and expenses for postage, envelopes, checks,
drafts, continuous forms, reports, communications, statements and other
materials, telephone, telegraph and remote transmission lines, use of outside
pricing services, use of outside mailing firms, necessary outside record
storage, media for storage of records (e.g., microfilm, microfiche, computer
tapes), printing, confirmations and any other shareholder correspondence and any
and all assessments, taxes or levies assessed on Countrywide for services
provided under this Agreement. Postage for mailings of dividends, proxies,
reports and other mailings to all shareholders shall be advanced to Countrywide
three business days prior to the mailing date of such materials.
26. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
--------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the
Corporation which services could cause Countrywide to be deemed an "investment
adviser" of the Corporation within the meaning of Section 2(a)(20) of the 1940
Act or to supersede or contravene the Corporation's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Corporation assumes
full responsibility for complying with all applicable requirements of the 1940
Act, the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
27. REFERENCES TO COUNTRYWIDE.
-------------------------
The Corporation shall not circulate any printed matter which
- 12 -
<PAGE>
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Corporation
will submit printed matter requiring approval to Countrywide in draft form,
allowing sufficient time for review by Countrywide and its counsel prior to any
deadline for printing.
28. EQUIPMENT FAILURES.
------------------
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
29. INDEMNIFICATION OF COUNTRYWIDE.
------------------------------
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Corporation in connection with any error of judgment, mistake of law, any
act or omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee, shareholder
or agent of Countrywide, or any of its affiliates, who may be or become an
officer, director, employee or agent of the Corporation, shall be deemed, when
rendering services to the Corporation or acting on any business of the
Corporation, to be rendering such services to or acting solely as an officer,
director, employee or agent of the Corporation and not as a director, officer,
employee, shareholder or agent of or one under the control or
- 13 -
<PAGE>
direction of Countrywide or any of its affiliates, even though paid by one of
these entities.
C. The Corporation shall indemnify and hold harmless Countrywide, its
directors, officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which Countrywide may sustain or incur or which may be asserted against
Countrywide by any person by reason of, or as a result of: (i) any action taken
or omitted to be taken by Countrywide in good faith in reliance upon any
certificate, instrument, order or share certificate reasonably believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an authorized
person of the Corporation or upon the opinion of legal counsel for the
Corporation or its own counsel; or (ii) any action taken or omitted to be taken
by Countrywide in connection with its appointment in good faith in reliance upon
any law, act, regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed. However,
indemnification under this subparagraph shall not apply to actions or omissions
of Countrywide or its directors, officers, employees, shareholders or agents in
cases of its or their own gross negligence, willful misconduct, bad faith, or
reckless disregard of its or their own duties hereunder.
30. TERMINATION
-----------
A. The provisions of this Agreement shall be effective on the date first
above written, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Corporation's Directors who
are not parties to this Agreement or interested persons (as defined in the 1940
Act) of any such party, and (3) by vote of a majority of the Corporation's Board
of Directors or a majority of the Corporation's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefore. Upon termination of this Agreement, the
Corporation shall pay to
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<PAGE>
Countrywide such compensation as may be due as of the date of such termination,
and shall likewise reimburse Countrywide for any out-of-pocket expenses and
disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this Agreement a
successor to any of Countrywide's duties or responsibilities under this
Agreement is designated by the Corporation by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Corporation, transfer all records maintained by Countrywide under this Agreement
and shall cooperate in the transfer of such duties and responsibilities,
including providing for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
31. SERVICES FOR OTHERS.
-------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Corporation under this Agreement.
32. LIMITATION OF LIABILITY.
-----------------------
It is expressly agreed that the obligations of the Corporation
hereunder shall not be binding upon any of the Directors, shareholders,
nominees, officers, agents or employees of the Corporation, personally, but bind
only the Corporation property of the Corporation. The execution and delivery of
this Agreement have been authorized by the Directors of the Corporation and
signed by an officer of the Corporation, acting as such, and neither such
authorization by such Directors nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose any
liability on any of them personally, but shall bind only the Corporation
property of the Corporation.
- 15 -
<PAGE>
33. SEVERABILITY.
------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
34. QUESTIONS OF INTERPRETATION.
---------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
35. NOTICES.
-------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Corporation: Fleming Capital Mutual Fund Group, Inc.
c/o Wadsworth Group
2025 East Financial Way, Suite 101
Glendora, California 91741
Attention: Emmy Butts
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
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<PAGE>
or to such other address as any party may designate by notice complying with the
terms of this Section 35. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
36. AMENDMENT.
---------
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
37. BINDING EFFECT.
--------------
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
38. COUNTERPARTS.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
39. FORCE MAJEURE.
-------------
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for
- 17 -
<PAGE>
performance in connection with this Agreement shall be extended to include the
period of such delay or non-performance.
40. MISCELLANEOUS.
-------------
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
By:
------------------------------
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:
------------------------------
Its: President
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<PAGE>
Schedule A
----------
COMPENSATION
------------
Services FEE
- -------- ---
(Per Account)
As Transfer, Dividend Disbursing,
Shareholder Service and Plan Agent:
Fleming Fund Payable monthly at
rate of $17.00/year
Fleming Fledgling Fund Payable monthly at
rate of $17.00/year
Each Fund will be subject to a minimum charge of $1,000 per month.
- 19 -
ACCOUNTING SERVICES AGREEMENT
-----------------------------
AGREEMENT dated as of ___________________, 1997 between Fleming Capital
Mutual Fund Group, Inc. (the "Corporation"), a Maryland corporation, and
Countrywide Fund Services, Inc. ("Countrywide"), an Ohio corporation.
WHEREAS, the Corporation is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Corporation wishes to employ the services of Countrywide to
provide the Corporation with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Corporation and Countrywide agree as follows:
1. APPOINTMENT.
-----------
The Corporation hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Corporation.
Countrywide shall act under such appointment and perform the obligations thereof
upon the terms and conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
------------------------------
Countrywide will calculate the net asset value of each series of the
Corporation and the per share net asset value of each series of the Corporation,
in accordance with the current prospectus and statement of additional
information of each series of the Corporation, once daily as of the time
selected by the Corporation's Board of Directors. Countrywide will prepare and
maintain a daily valuation of all securities and other assets of the Corporation
in accordance with instructions from a designated officer of the Corporation or
its investment adviser and in the manner set forth in the Corporation's current
prospectus and statement of additional information. In valuing securities of the
Corporation, Countrywide may contract with, and rely upon market quotations
provided by, outside services.
3. BOOKS AND RECORDS.
-----------------
<PAGE>
Countrywide will maintain and keep current the general ledger for each
series of the Corporation, recording all income and expenses, capital share
activity and security transactions of the Corporation. Countrywide will maintain
such further books and records as are necessary to enable it to perform its
duties under this Agreement, and will periodically provide reports to the
Corporation and its authorized agents regarding share purchases and redemptions
and trial balances of each series of the Corporation. Countrywide will prepare
and maintain complete, accurate and current all records with respect to the
Corporation required to be maintained by the Corporation under the Internal
Revenue Code of 1986, as amended (the "Code"), and under the rules and
regulations of the 1940 Act, and will preserve said records in the manner and
for the periods prescribed in the Code and the 1940 Act. The retention of such
records shall be at the expense of the Corporation.
All of the records prepared and maintained by Countrywide pursuant to
this Section 3 which are required to be maintained by the Corporation under the
Code and the 1940 Act will be the property of the Corporation. In the event this
Agreement is terminated, all such records shall be delivered to the Corporation
at the Corporation's expense, and Countrywide shall be relieved of
responsibility for the preparation and maintenance of any such records delivered
to the Corporation.
4. PAYMENT OF CORPORATION EXPENSES.
-------------------------------
Countrywide shall process each request received from the Corporation
or its authorized agents for payment of the Corporation's expenses. Upon receipt
of written instructions signed by an officer or other authorized agent of the
Corporation, Countrywide shall prepare checks in the appropriate amounts which
shall be signed by an authorized officer of Countrywide and mailed to the
appropriate party.
5. FORM N-SAR.
----------
Countrywide shall maintain such records within its control and shall
be requested by the Corporation to assist the Corporation in fulfilling the
requirements of Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
----------------------------
- 2 -
<PAGE>
Countrywide shall cooperate with the Corporation's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Corporation.
7. FURTHER ACTIONS.
---------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
8. FEES.
----
For the performance of the services under this Agreement, each series
of the Corporation shall pay Countrywide a monthly fee in accordance with the
schedule attached hereto as Schedule A. The fees with respect to any month shall
be paid to Countrywide on the last business day of such month. The Corporation
shall also promptly reimburse Countrywide for the cost of external pricing
services utilized by Countrywide. Countrywide shall not be required to reimburse
the Corporation or the Corporation's investment adviser for (or have deducted
from its fees) any expenses in excess of expense limitations imposed by certain
state securities commissions having jurisdiction over the Corporation.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
--------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Countrywide to perform any services for the
Corporation which services could cause Countrywide to be deemed an "investment
adviser" of the Corporation within the meaning of Section 2(a)(20) of the 1940
Act or to supersede or contravene the Corporation's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Corporation assumes
full responsibility for complying with all applicable requirements of the 1940
Act, the Securities
- 3 -
<PAGE>
Act of 1933, as amended, and any other laws, rules and regulations of
governmental authorities having jurisdiction.
10. REFERENCES TO COUNTRYWIDE.
-------------------------
The Corporation shall not circulate any printed matter which contains
any reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Dividend Disbursing, Shareholder
Service and Plan Agent and Accounting Services Agent. The Corporation will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
11. EQUIPMENT FAILURES.
------------------
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
12. INDEMNIFICATION OF COUNTRYWIDE.
------------------------------
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Corporation in connection with any error of judgment, mistake of law, any
act or omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee, shareholder,
or agent of Countrywide, or any of its affiliates, who may be or become an
officer, director, employee or
- 4 -
<PAGE>
agent of the Corporation, shall be deemed, when rendering services to the
Corporation or acting on any business of the Corporation, to be rendering such
services to or acting solely as an officer, director, employee or agent of the
Corporation and not as a director, officer, employee, shareholder or agent of or
one under the control or direction of Countrywide or any of its affiliates, even
though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Corporation
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Corporation
or upon the opinion of legal counsel for the Corporation or its own counsel; or
(ii) any action taken or omitted to be taken by Countrywide in connection with
its appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
13. TERMINATION.
-----------
A. The provisions of this Agreement shall be effective on the date first
above written, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for the purpose, of a majority of the Corporations's directors
who are not parties to this Agreement or interested Persons (as defined in the
1940 Act) of any such party, and (3) by vote of a
- 5 -
<PAGE>
majority of the Corporation's Board of Directors or a majority of the
Corporation's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefore. Upon termination of this Agreement, the
Corporation shall pay to Countrywide such compensation as may be due as of the
date of such termination, and shall likewise reimburse Countrywide for any
out-of-pocket expenses and disbursements reasonably incurred by Countrywide to
such date.
C. In the event that in connection with the termination of this Agreement a
successor to any of Countrywide's duties or responsibilities under this
Agreement is designated by the Corporation by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Corporation, transfer all records maintained by Countrywide under this Agreement
and shall cooperate in the transfer of such duties and responsibilities,
including providing for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
14. SERVICES FOR OTHERS.
-------------------
Nothing in this Agreement shall prevent Countrywide or any affiliated
person (as defined in the 1940 Act) of Countrywide from providing services for
any other person, firm or corporation (including other investment companies);
provided, however, that Countrywide expressly represents that it will undertake
no activities which, in its judgment, will adversely affect the performance of
its obligations to the Corporation under this Agreement.
15. LIMITATION OF LIABILITY.
-----------------------
It is expressly agreed that the obligations of the Corporation
hereunder shall not be binding upon any of the Directors, shareholders,
nominees, officers, agents or employees of the Corporation, personally, but bind
only the corporation property of the Corporation. The execution and delivery of
this Agreement have been authorized by the Directors of the Corporation and
signed by an officer of the Corporation, acting as such, and neither such
authorization by such Directors nor such execution and delivery by such officer
shall be deemed to have been made by any of them individually or to impose
-6-
<PAGE>
any liability on any of them personally, but shall bind only the corporation
property of the Corporation.
16. SEVERABILITY.
------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
17. QUESTIONS OF INTERPRETATION.
---------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said 1940 Act. In
addition, where the effect of a requirement of the 1940 Act, reflected in any
provision of this Agreement, is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
18. NOTICES.
-------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Corporation: Fleming Capital Mutual Fund Group, Inc.
c/o Wadsworth Group
2025 East Financial Way, Suite 101
Glendora, California 91741
Attention: Emmy Butts
To Countrywide: Countrywide Fund Services, Inc.
- 7 -
<PAGE>
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 18. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
19. AMENDMENT.
---------
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
20. BINDING EFFECT.
--------------
Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
21. COUNTERPARTS.
------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
22. FORCE MAJEURE.
-------------
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages
- 8 -
<PAGE>
of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
23. MISCELLANEOUS.
-------------
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
FLEMING CAPITAL MUTUAL FUND GROUP, INC.
By:_______________________________
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:_______________________________
Its: President
- 9 -
<PAGE>
Schedule A
----------
COMPENSATION
------------
Each series of the Corporation will pay Countrywide a monthly fee,
according to the average net assets of such series during such month, as
follows:
Average Monthly Net Assets Monthly Fee
-------------------------- -----------
0 - $ 25,000,000 $1,500
25 - 50,000,000 2,000
50 - 100,000,000 2,500
100 - 200,000,000 3,000
Over 200,000,000 4,000 plus .001%
of such assets in
excess of $200,000,000
- 10 -
[LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP]
September 29, 1997
Fleming Capital Mutual Fund Group, Inc.
32 South Street
Baltimore, Maryland 21202
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer and
sale from time to time of shares of common stock, with a par value of $.001 (the
"Shares"), of Fleming Capital Mutual Fund Group, Inc. (the "Corporation"), a
Maryland corporation, in registration under the Securities Act of 1933 by a
Registration Statement of Form N-1A (File No. 811-08189, 333-25803) as amended
from time to time (the "Registration Statement").
We have acted as counsel to the Corporation since its inception, and we
are familiar with the actions taken by its Directors to authorize the issuance
of the Shares. We have prepared the Articles of Incorporation and By-laws of the
Corporation and assisted in the preparation of the Corporation's Notification of
Registration on Form N-8A and Registration Statement under the Investment
Company Act of 1940.
In our review, we have assumed the genuineness of all signatures, the
authenticity and completeness of all documents purporting to be originals
(whether reviewed by us in original or in copy form), and the conformity to the
originals of all documents purporting to be copies. We have assumed the
appropriate action will be taken to register or qualify the sale of the Shares
under any applicable state and federal laws regulating sales and offerings of
securities.
Based upon the foregoing, we are of the opinion that:
1. The Corporation is a corporation validly existing under the laws of
the State of Maryland. The Corporation is authorized under its Articles of
Incorporation to issue one hundred million (100,000,000) Shares in classes
representing interests in the Fleming Fund and the Fleming Fledgling Fund, and
in such other classes or series as the Directors may hereafter duly authorize.
2. Upon the issuances of any Shares of any of the classes or series of
the Corporation for payment therefor as described in, and in accordance with the
Registration Statement and the Articles of Incorporation and By-laws of the
Corporation, the Shares so issued will be validly issued, fully paid and
non-assessable.
This opinion is intended only for your use in connection with the
offering of Shares and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as Exhibit 10 to the
Corporation's Registration Statement to be filed with the Securities and
Exchange Commission and to the reference to
<PAGE>
our firm under the caption "Counsel and Independent Auditors" in the
Prospectuses and Statement of Additional Information filed as part of such
Registration Statement.
Very truly yours,
/s/ Morgan Lewis & Bockius LLP
------------------------------
EXHIBIT 11
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Counsel and
Independent Auditors" and to the use of our report dated September 29, 1997, in
this Registration Statement (File N-1A Nos. 333-25803 and 811-9189) of Fleming
Capital Mutual Fund Group, Inc. (comprised of Fleming Fund and Fleming Fledgling
Fund)
ERNST & YOUNG LLP
New York, New York
September 29, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 01
<NAME> FLEMING FUND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-26-1997
<PERIOD-END> SEP-26-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 151,196
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 151,196
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,196
<TOTAL-LIABILITIES> 51,196
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 02
<NAME> FLEMING FLEDGLING FUND
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-26-1997
<PERIOD-END> SEP-26-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 151,197
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 151,197
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 51,197
<TOTAL-LIABILITIES> 51,197
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 0
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
