As filed with the Securities and Exchange Commission on May 12, 2000
Registration No. 333-29289
File No. 811-8255
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |__|
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Pre-Effective Amendment No. ______ |__|
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Post-Effective Amendment No. 11 | X|
and/or
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |__|
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Amendment No. 13 | X|
(Check appropriate box or boxes)
THE WORLD FUNDS, INC. (THE "COMPANY")
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(Exact Name of Registrant as Specified in Charter)
1500 Forest Avenue, Suite 223, Richmond, Virginia 23229
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(Address of Principal Executive Offices)(Zip Code)
(800)-527-9525
Registrant's Telephone Number, Including Area Code
Steven M. Felsenstein, Esq.
Greenberg Traurig
2050 One Commerce Square
Philadelphia, PA 19103
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(Name and Address of Agent for Service)Approximate Date of
Proposed Public Offering: Upon effectiveness of thisPost-Effective Amendment.It
is proposed that this filing will become effective (check appropriate box)
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|__ immediately upon filing pursuant to paragraph (b)
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|__| on (date) pursuant to paragraph (b)
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| | 60 days after filing pursuant to paragraph (a)(I)
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|__| on (date) pursuant to paragraph (a)(I)
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|_X| 75 days after filing pursuant to paragraph (a)(2)
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|__| on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
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|__| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered Common Stock of the Monument EuroNet Fund
series par value $.01 per share.
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TABLE OF CONTENTS
This Filing of a post-effective amendment to the Registrant's registration
statement on Form N-1A consists of the following:
1. Part A Prospectus of the Monument EuroNet Fund series of the
Registrant.
2. Part B Statement of Additional Information of the Monument
EuroNet Fund series of the Registrant.
3. Part C
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THE WORLD FUNDS, INC.
1500 Forest Avenue, Suite 223, Richmond, Va. 23229
804-285-8211 * 800-527-9500 * 804-285-8251 (fax)
VIA EDGAR
May 12, 2000
Filing Desk
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20049
RE: The World Funds, Inc.
File Numbers 333-29289 and 811-8255
Post Effective Amendment to Registration Statement
Dear Ladies and Gentlemen:
Transmitted herewith for electronic filing with the U.S. Securities and
Exchange Commission (the "Commission") on behalf of The World Funds, Inc. (the
"Registrant"), pursuant to Rule 485(a) (2) under the Securities Act of 1933, as
amended (the "1933 Act"), is Post-Effective Amendment No. 11 under the 1933 Act
and Amendment No. 13 under the Investment Company Act of 1940, as amended (the
"1940 Act"), referred to herein as the "485(a)(2) Amendment" to the registration
statement of the Registrant.
The 485(a)(2) Amendment contains a Prospectus and Statement of Additional
Information ("SAI") for the Monument EuroNet Fund, a new series of shares to be
added to the Registrant's Registration Statement. The Post-Effective Amendment
will become effective pursuant to paragraph (a)(2) seventy-five days after it is
filed. This Post-Effective Amendment does not amend the existing prospectuses
and statements of additional information of other series of the Registrant, and
is not an "amendment relating to the same prospectus" under paragraph (d)(3) of
Rule 485.
Please contact Steven M. Felsenstein, Esquire at 215-988-7837, should you have
any questions or comments concerning this filing.
Sincerely,
/s/ John Pasco, III
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John Pasco, III
Chairman
cc: Carolyn Gilheany, Esq.
Steven M. Felsenstein, Esq.
<PAGE>
Monument EuroNet Fund
THE WORLD FUNDS, INC.
PROSPECTUS
Prospectus Dated__________________,2000
This Prospectus describes Monument EuroNet Fund (the "Fund"), a series of The
World Funds, Inc. (the "Company"). A series fund offers you a choice of
investments, with each series having its own investment objective and a separate
portfolio. The Fund offers three classes of shares: Class A Shares with a
front-end sales charge, Class B Shares subject to a contingent deferred sales
charge, and Class C with a reduced front-end sales charge and a contingent
deferred sales charge. The Fund seeks to maximize long-term appreciation of
capital by investing primarily in a diversified portfolio of Internet company
equity securities.
As with all mutual funds, the U.S. Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the accuracy or
completeness of this Prospectus. It is a criminal offense to suggest otherwise.
<PAGE>
RISK RETURN SUMMARY
Investment Objective: The Fund's investment objective is to maximize
long-term appreciation of capital.
Principal Investment
Strategies: The Fund will seek to achieve its investment objective by
investing in a diversified portfolio consisting primarily
of equity securities, securities convertible into common
stock and warrants of companies principally engaged in
Internet and Internet-related businesses.
A company is considered principally engaged in Internet or
Internet-related business if it is engaged in the research,
design, development, manufacturing or is engaged to a
significant extent in the business of distributing
products, processes or services for use with the Internet
or Intranet related businesses.
Under normal market conditions, the Fund will invest at
least 65% of its assets in securities of companies located
in the European Union that are principally engaged in
Internet and Internet related businesses. The European
Union is a union of fifteen independent states based on the
European Communities and founded to enhance political,
economic and social cooperation. The member states include
Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal,
Spain, Sweden and the United Kingdom of Great Britain and
Northern Ireland. The Fund normally will have business
activities of not less than three (3) different states
represented in its portfolio.
Principal Risks: The principal risk of investing in the Fund is that
the value of its investments are subject to market,
economic and business risk that may cause the Net Asset
Value ("NAV") to fluctuate over time. Therefore, the value
of your investment in the Fund could decline. There is no
assurance that the investment Manager will achieve the
Fund's objective.
Investments in foreign countries may involve financial,
economic or political risks that are not ordinarily
associated with U. S. securities. Hence, the Fund's NAV may
be affected by changes in exchange rates between foreign
currencies and the U.S. dollar, different regulatory
standards, less liquidity and increased volatility, taxes
and adverse social or political developments. Foreign
companies are not generally subject to the same accounting,
auditing and financial reporting standards as are domestic
companies. Therefore, there may be less information
available about a foreign company than there is about a
domestic company. In addition, as investments may be made
utilizing foreign currencies, there is the risk of currency
devaluation that may effect this investment.
The Fund may invest in shares of closed-end investment
companies which invest in securities that are consistent
with the Fund's objective and strategies. By investing in
other investment companies the Fund indirectly pays a
portion of the expenses and brokerage costs of these
companies as well as its own expenses.
The Fund may invest in companies with small market
capitalization (i.e., less than $250 million) or companies
that have relatively small revenues, limited product lines,
and a small share of the market for their products or
services (collectively, "small companies"). Small companies
may suffer significant losses, as well as realize
substantial growth. Thus, securities of small companies
present greater risks than securities of larger, more
established companies.
Historically, stocks of small companies have been more
volatile than stocks of larger companies and are,
therefore, more speculative than investments in larger
companies.
An investment in the Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance
Corporation ("FDIC") or any other government agency.
Investor Profile: You may want to invest in the Fund if you are seeking
long-term appreciation of capital and are willing to
accept share prices that may fluctuate, sometimes
significantly, over the short-term. The Fund may be
particularly suitable for you if you wish to take
advantage of opportunities in the securities markets
located outside of the U.S. You should not invest in the
Fund if you are not willing to accept the risks
associated with investing in foreign countries. The Fund
will not be appropriate if you are seeking current income
or are seeking safety of principal.
Performance Data: Because the Fund is new, it does not have historical
performance data and is not presenting historical
information at this time.
FEES AND EXPENSES
The following table describes the fees and expenses that you may pay directly or
indirectly in connection with an investment in the Fund. The annual operating
expenses, which cover the costs of investment management, administration,
accounting and shareholder communications, are shown as an annual percentage of
the Fund's average daily net assets.
Shareholder Transaction Fees (fees paid directly from your investment)
Class Class Class
A B C
Maximum Sales Charge (Load)(1) 5.75% None 1.00%
Maximum Deferred Sales Charge (Load) None(2) 5.00%(3) 1.00%(4)
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends and Distributions None None None
Redemption Fees None None None
Exchange Fees None None None
Estimated Annual Operating Expenses (expenses that are deducted from Fund
assets)
Class A Class B Class C
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Advisory Fee 1.50% 1.50% 1.50%
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Distribution (12b-1) Fees 0.50% 1.00% 1.00%
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Other Expenses 1.49% 1.49% 1.49%
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Total Annual Fund Operating Expenses (5) 3.49% 3.99% 3.99%
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1) As a percentage of offering price. Reduced rates apply to purchases over
$50,000, and the sales charge is waived for certain classes of investors.
See "Buying Fund Shares-Public Offering Price" and "Buying Fund
Shares-Rights of Accumulation."
2) If you are in a category of investors who may purchase shares without a
sales charge, you will be subject to a 1% contingent deferred sales charge
if you redeem your shares within 1 year of purchase.
3) A 5.00% deferred sales charge as a percentage of the original purchase
price will apply to any redemption made within the first year.
During the second year, redeemed shares will incur a 4.00% sales charge.
During years three and four you will pay 3.00%, during year five
2.00%, and during year six 1.00%. The contingent deferred sales charge
is eliminated after the sixth year. Class B Shares Automatically
convert to Class A Shares eight years after the calendar month end in
which the Class B Shares were purchased.
4) A contingent deferred sales charge of 1% is imposed on the proceeds of
Class C Shares redeemed within one year. The charge is a percentage of the
net asset value at the time of purchase. The Fund retains this amount to
offset market effects, taxes and expenses created by short-term
investments in the Fund.
5) In the interest of limiting expenses of the Fund, Vernes Asset Management
LLC (the "Manager") has entered into a contractual expense limitation
agreement with the Company. Pursuant to the agreement, the Manager has
agreed to waive or limit its fees and to assume other expenses for the
first three years following commencement of operations so that the ratio
of total annual operating expenses of the Fund are limited to 3.49% for
Class A shares and 3.99% for Class B and Class C shares.
The Company has approved a Plan of Distribution Pursuant to Rule 12b-1 of the
1940 Act providing for the payment of distribution fees to the distributor for
the Fund ("12b-1 Plan"). Class A Shares pay a maximum distribution fee of 0.50%
of average daily net assets, and Class B and Class C Shares pay a maximum
distribution fee of 1.00% of average daily net assets. See "Rule 12b-1 Fees."
The higher 12b-1 fees borne by Class B Shares may cause long-term investors to
pay more than the economic equivalent of the maximum front end sales charge
permitted by the National Association of Securities Dealers.
The purpose of these tables is to assist investors in understanding the various
costs and expenses that they will bear directly or indirectly.
EXAMPLE:
The following expense example shows the expenses that you could pay over time.
It will help you compare the costs of investing in the Fund with the cost of
investing in other mutual funds. The example assumes that you invest $10,000 in
the Fund and then redeem all of your shares at the end of the periods indicated.
The example assumes that you earn a 5% annual return, with no change in Fund
expense levels. Because actual return and expenses will be different, the
example is for comparison only.
Based on these assumptions, your costs would be:
1 Year 3 Years
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Total Expenses - Class A Shares $906 $1,584
Total Expenses - Class B Shares $901 $1,515
Total Expenses - Class C Shares $597 $1,303
With respect to Class A Shares, the above examples assume payment of the maximum
initial sales charge of 5.75% at the time of purchase. The sales charge varies
depending upon the amount of Fund shares that an investor purchases.
Accordingly, your actual expenses may vary.
With respect to Class B and Class C shares, the above examples assume payment of
the deferred sales charge applicable at the time of redemption.
Costs are an important consideration in choosing a mutual fund. Shareholders
indirectly pay the costs of operating a fund, plus any transaction costs
associated with buying and selling the securities a fund holds. These costs will
reduce a portion of the gross income or capital appreciation a fund achieves.
Even small differences in these expenses can, over time, have a significant
effect on a fund's performance.
OBJECTIVES AND STRATEGIES
The Fund's investment objective is to maximize long-term appreciation of
capital. There is no assurance that the Manager will achieve the Fund's
investment objective.
The Fund seeks to achieve its investment objectives by investing primarily in
common stocks and securities convertible into common stocks of companies located
in the European Union that are engaged in the Internet and Internet-related
activities or services. The European Internet market is considered to be two or
three years younger than the US Internet market, thus offering favorable growth
potential over the next several years. The companies selected by the Manager
derive a substantial portion of their revenue from Internet or Internet-related
businesses or are developing and expanding their Internet and Internet-related
business operations. Under normal circumstances, at least 65% of its total
assets will be invested in such companies.
The Internet is an emerging global communication, information and distribution
system. The Manager believes that the Internet offers favorable investment
opportunities because of its ever growing popularity among business and personal
users alike. Consequently, there are opportunities for continued growth in
demand for components, products, media, services, and systems to assist,
facilitate, enhance, store, process, record, reproduce, retrieve and distribute
information, products and services for use by businesses, institutions and
consumers. However, older technologies such as telephone, broadcast and cable
have entered the Internet world with a strong presence and may also be
represented when the Manager believes that these companies may successfully
integrate existing technology with new technologies. Products and services
identified for investment include, but are not limited to, servers, routers,
search engines, portals, bridge and switches, network applications, software,
cable, satellite, fiber, modems, carriers, firewall and security, e-mail,
electronic commerce, video and publishing.
The Internet has exhibited and continues to demonstrate rapid growth, both
through increasing demand for existing products and services and the broadening
of the Internet market. This provides a favorable environment for investment in
small to medium capitalized companies. However, the Fund's investment policy is
not limited to any minimum capitalization requirement and the Fund may hold
securities without regard to the capitalization of the issuer. The Manager's
overall stock selection for the Fund is not based on the capitalization or size
of the company but rather on an assessment of the company's fundamental
prospects.
The Fund intends to invest its assets in many European Union states and normally
will have business activities of not less than three (3) different states
represented in its portfolio. The securities the Fund purchases may not always
be purchased on the principal market. For example, Depositary Receipts may be
purchased if trading conditions and liquidity make them more attractive than the
underlying security (please see "Depositary Receipts" below).
The Fund may invest in securities involving special circumstances, such as
initial public offerings, companies with new management or management reliant on
one or a few key people, special products and techniques, limited or cyclical
product lines, markets or resources or unusual developments, such as mergers,
liquidations, bankruptcies or leveraged buyouts. Investments in small or
unseasoned companies or companies with special circumstances often involve much
greater risk than are inherent in other types of investments, because securities
of such companies may be more likely to experience unexpected fluctuations in
prices.
Other Investments. In addition to the investment strategies described above, the
Fund may engage in other strategies such as derivatives. Investments in
derivatives, such as options, can significantly increase a Fund's exposure to
market risk or credit risk of the counterparty, as well as improper valuation
and imperfect correlation.
RISKS
Internet and Internet-related companies are particularly vulnerable to rapidly
changing technology and relatively high risks of obsolescence caused by
progressive scientific and technological advances. The economic prospects of
Internet and Internet-related companies can dramatically fluctuate due to the
competitive environment in which these companies operate. Therefore, the Fund
may experience greater volatility than funds whose portfolio are not subject to
these types of risks.
The Fund's investments in foreign securities may involve risks that are not
ordinarily associated with U.S. securities. Foreign companies are not generally
subject to the same accounting, auditing and financial reporting standards as
are domestic companies. Therefore, there may be less information available about
a foreign company than there is about a domestic company. Certain countries do
not honor legal rights enjoyed in the U.S. In addition, there is the possibility
of expropriation or confiscatory taxation, political or social instability, or
diplomatic developments, which could affect U.S. investments in those countries.
Investments in foreign companies often are made in the foreign currencies,
subjecting the investor to the risk of currency devaluation or exchange rate
risk. In addition, many foreign securities markets have substantially less
trading volume than the U.S. markets, and securities of some foreign issuers are
less liquid and more volatile than securities of domestic issuers. These factors
make foreign investment more expensive for U.S. investors. Mutual funds offer an
efficient way for individuals to invest abroad, but the overall expense ratios
of mutual funds that invest in foreign markets are usually higher than those of
mutual funds that invest only in U.S. securities.
The Fund is subject to stock market risk. Stock market risk is the possibility
that stock prices overall will decline over short or long periods. Because stock
prices tend to fluctuate, the value of your investment in the Fund may increase
or decrease. The Fund's investment success depends on the skill of the Manager
in evaluating, selecting and monitoring the portfolio assets. If the Manager's
conclusions about growth rates or securities values are incorrect, the Fund may
not perform as anticipated.
In addition to common stocks and securities that are convertible into common
stocks, the Fund may invest in shares of closed-end investment companies which
invest in securities that are consistent with the Fund's objective and
strategies. By investing in other investment companies the Fund indirectly pays
a portion of the expenses and brokerage costs of these companies as well as its
own expenses. Also, federal and state securities laws impose limits on such
investments, which may affect the ability of the Fund to purchase or sell these
shares.
The Fund may invest in companies with small market capitalization (i.e., less
than $250 million) or companies that have relatively small revenues, limited
product lines, and a small share of the market for their products or services
(collectively, "small companies"). Small companies are also characterized by the
following: (1) they may lack depth of management; (2) they may be unable to
internally generate funds necessary for growth or potential development or to
generate such funds through external financing on favorable terms; and (3) they
may be developing or marketing new products or services for which markets are
not yet established and may never become established. Due to these and other
factors, small companies may suffer significant losses, as well as realize
substantial growth. Thus, securities of small companies present greater risks
than securities of larger, more established companies.
Historically, stocks of small companies have been more volatile than stocks of
larger companies and are, therefore, more speculative than investments in larger
companies. Among the reasons for the greater price volatility are the following:
(1) the less certain growth prospects of smaller companies; (2) the lower degree
of liquidity in the markets for such stocks; and (3) the greater sensitivity of
small companies to changing economic conditions. Besides exhibiting greater
volatility, small company stocks may, to a degree, fluctuate independently of
larger company stocks. Small company stocks may decline in price as large
company stocks rise, or rise in price as large company stocks decline. You
should therefore expect that the value of Fund shares to be more volatile than
the shares of mutual fund investing primarily in larger company stocks.
OTHER PRINCIPAL RISKS
Depositary Receipts. The Fund may invest indirectly in securities through
sponsored and unsponsored American Depositary Receipts ("ADRs"), Global
Depositary Receipts ("GDRs"), European Depositary Receipts ("EDRs") and other
types of Depositary Receipts (collectively "Depositary Receipts"), to the extent
such Depositary Receipts become available. ADRs are Depositary Receipts
typically issued by a U.S. bank or trust company evidencing ownership of
underlying foreign securities. GDRs, EDRs and other types of Depositary Receipts
are typically issued by foreign banks or trust companies, although they also may
be issued by U.S. banks or trust companies, evidencing ownership of underlying
securities issued by either a foreign or a United States corporation. Depositary
Receipts may not necessarily be denominated in the same currency as the
underlying securities into which they may be converted. For purposes of the
Fund's investment policies, investments in Depositary Receipts will be deemed to
be investments in the underlying securities.
In addition to the risks of foreign investment applicable to the underlying
securities, unsponsored Depositary Receipts may also be subject to the risks
that the foreign issuer may not be obligated to cooperate with the U.S. bank,
may not provide additional financial and other information to the bank or the
investor, or that such information in the U.S. market may not be current. Please
refer to the Statement of Additional Information for more information on
Depositary Receipts.
European Currency. Several European countries are participating in the European
Economic and Monetary Union, which established a common European currency for
participating countries. This currency is commonly known as the "Euro". Each
participating country has pegged its existing currency with the Euro as of
January 1, 1999 and many transactions in these countries are valued and
conducted in the Euro. The majority of stock transactions in the major markets
now are made in Euros. Additional European countries may elect to participate in
the common currency in the future. The conversion presents unique uncertainties,
including, among others: (1) whether the payment and operational systems of
banks and other financial institutions will function properly; (2) how certain
outstanding financial contracts that refer to existing currencies rather than
the Euro will be treated legally; (3) how exchange rates for existing currencies
and the Euro will be established; and (4) how suitable clearing and settlement
payment systems for the Euro will be managed. The Fund invests in securities of
countries that have converted to the Euro or will convert in the future and
could be adversely affected if these uncertainties cause adverse effects on
these securities. To date the conversion of the Euro has had negligible impact
on the operations and investment returns of U.S. investment companies.
Portfolio Turnover. Although the Fund does not generally intend to invest for
the purpose of seeking short-term profits, the Fund's investments may be changed
when circumstances warrant, without regard to the length of time a particular
security has been held. It is expected that the Fund will have an annual
portfolio turnover rate that will exceed 100%. A 100% turnover rate would occur
if all the Fund's portfolio investments were sold and either repurchased or
replaced within a year. A high turnover rate (100% or more) results in
correspondingly greater brokerage commissions and other transactional expenses
which are borne by the Fund. High portfolio turnover may result in the
realization of net short-term capital gains by the Fund which, when distributed
to shareholders, will be taxable as ordinary income.
Temporary Defensive Positions. When the Manager believes that investments should
be deployed in a temporary defensive posture because of economic or market
conditions, the Fund may invest up to 100% of its assets in U.S. Government
securities (such as bills, notes, or bonds of the U.S. Government and its
agencies) or other forms of indebtedness such as bonds, certificates of deposits
or repurchase agreements (for the risks involved in repurchase agreements see
the Statement of Additional Information). For temporary defensive purposes, the
Fund may hold cash or debt obligations denominated in U.S. dollars or foreign
currencies. These debt obligations include U.S. and foreign government
securities and investment grade corporate debt securities, or bank deposits of
major international institutions. When a Fund is in a temporary defensive
position, it is not pursuing its stated investment policies. The Manager decides
when it is appropriate to be in a defensive position. It is impossible to
predict for how long such defensive strategies will be utilized.
MANAGEMENT ORGANIZATION AND CAPITAL STRUCTURE
The Company. The World Funds, Inc. (the "Company") was organized under the
laws of the State of Maryland in May, 1997. The Company is an open-end
management investment company registered under the Investment Company Act
of 1940, as amended, (the "1940 Act") and is commonly known as a "mutual
fund". The Company has retained a Manager to manage all aspects of the
investments of the Fund.
The Manager. Vernes Asset Management, LLC (the "Manager"), located at 993
Farmington Avenue, Suite 205, Hartford, CT 06107, manages the Fund. The
Manager is owned by: Vernes & Associates, of Geneva, Switzerland (50.5%); The
Monument Group, LLC, of Bethesda, Maryland (16%); Commonwealth Capital
Management, Inc. of Richmond, Virginia (16%); Cornerstone Partners, LLC, of
West Hartford, Connecticut (11.25%); Patrick Vernes, of Chappaqua, New York
(5%) and Norman A. Smith of Longmeadow, Massachusetts (1.25%)
Vernes & Associates, a Swiss Holding Company founded in 1982, wholly owns
investment management companies in Switzerland, France, and Luxembourg,
including SA Financiere Rembrandt in Paris, France. The collective assets under
management by Vernes & Associes exceed $2 billion. Vernes & Associes was founded
and is owned by Cyrille Vernes through his company Financiere C. Vernes, located
in Geneva, Switzerland. Cyrille Vernes serves as the Chairman and Senior Partner
of Vernes & Associes and Chairman of SA Financiere Rembrandt. Mr. Vernes
continues a long and distinguished history of asset management, investment
management, and banking by the Vernes Family. The Vernes Family first began
managing assets on behalf of select private investors over 250 years ago when
the family founded Vernes Private Bank. The Bank and its product offerings grew
in both stature and size for more than two centuries until the family sold the
principal operation in Paris in 1996. This tradition now continues through the
Vernes & Associes domiciled in Geneva, Switzerland with wholly owned
subsidiaries in Geneva, Paris, Luxembourg and Spain. Vernes Asset Management,
LLC, domiciled in the US, is majority owned and controlled by Vernes & Associes.
The Monument Group, LLC, a limited liability company, is owned by the
principals of Monument Advisors, Ltd., (investment adviser to Monument Series
Fund, an open-end investment company, and private clients); Monument
Distributors, Inc., a broker-dealer and distributor of Monument Series Trust;
and Monument Shareholder Services, Inc., a transfer agent. David A. Kugler
controls The Monument Group, LLC.
Commonwealth Capital Management, Inc. is a financial services firm.
Commonwealth is an associated company of Commonwealth Shareholder Services,
Inc., a full service fund administrator and First Dominion Capital Corp.
("FDCC"), a registered broker-dealer. John Pasco III controls Commonwealth
Capital Management, Inc.
Cornerstone Partners, LLC, is a financial services company located in West
Hartford, Connecticut. Cornerstone serves as a U.S. representative office for
international fund managers seeking to conduct business in the United States as
well as providing comprehensive administrative and strategic support to both
domestic and international fund managers. Cornerstone Partners, LLC is
controlled by Brian W. Clarke.
The Manager manages all aspects of the Fund, seeking at all times to maximize
capital appreciation of the Fund's investments on behalf of its
shareholders. The Manager is assisted in its management of the Fund's
portfolio by two sub-advisors: SA Financiere Rembrandt, of Paris, France; and
Monument Advisors, Ltd., of Bethesda, Maryland.
SA Financiere Rembrandt located at 4, rue Rembrandt, Paris, France was founded
in November, 1997, is wholly owned by Vernes Participations, a French holding
company, which in turn is wholly owned by Vernes & Associes. SA Financiere
Rembrandt, while established as an investment management operation under the
aegis of the Commission des Operation de Bourses (COB) in 1997, had previously
held a license from the Central Bank of France to invest in treasury securities.
In France, investment operations are able to hold only one license, either from
the Central Bank of France or from the COB. Although SA Financiere Rembrandt has
not previously served as the investment adviser of a US open-end investment
company, it serves as the adviser to FR Networld Fund, a Fund that invests in
the different sub sectors of the Internet in Europe and is marketed and sold in
Europe. FR Networld was the first-ever European Internet Fund launched in
Europe. In addition, SA Financiere Rembrandt manages 10 other European open-end
investment funds as well as numerous separately managed accounts in Europe. As
of May 30, 2000, SA Financiere Rembrandt managed approximately 0.4 billion Euros
or the equivalent of $0.36 billion U.S. Dollars.
Monument Advisors, Ltd. ("Monument Advisors"), located at 7920 Norfolk Avenue,
Suite 500, Bethesda, Maryland 20814, is a wholly owned subsidiary of The
Monument Group, Inc., which in turn is principally owned and controlled by David
A. Kugler, its President. Monument Advisors manages the assets of Monument
Series Fund, an open-end management investment company registered with the
Securities and Exchange Commission ("SEC"), including the Monument Internet
Fund, launched in November 1998. In addition, Monument Advisors manages
portfolios of investments of qualified individuals, retirement plans, and
trusts. As of May 30, 2000, Monument Advisors managed or supervised in excess of
$250 million in assets.
SA Financiere Rembrandt performs research and analysis on securities that are
potential investments in the Fund's portfolio and recommends to the Manager
which securities will be purchased and sold. Monument Advisors, Ltd. provides
timing advice, research, statistical and other analysis on Internet securities
to SA Financiere Rembrandt, and provides portfolio management oversight and
control. SA Financiere Rembrandt makes the final portfolio purchases and sales
recommendations. Pursuant to agreements between the Manager and its
sub-advisors, Financiere Rembrandt, S.A. and Monument Advisors, Ltd. each may
effect portfolio securities transactions for the Fund, under the management of
the Manager.
Although the Manager, as a new company, had no experience managing a mutual fund
prior to managing the Fund, collectively the owners of the Manager have had
significant experience in management of mutual funds and other pooled investment
vehicles in the U.S. and Europe.
The Fund pays the Manager a twice-monthly management fee at an annual rate equal
to 1.5% of the average daily net assets of the Fund. As stated above, the
Manager has entered into sub-advisory contracts with SA Financiere Rembrandt and
Monument Advisors, Ltd. To compensate these advisers appropriately the Manager
pays from its fee to SA Financiere Rembrandt 50% of the management fee and
Monument Advisors, Ltd. 16%. The management fee is higher than the fees paid by
some other investment companies, but is comparable to fees paid by investment
companies with investment objectives and policies similar to the Fund's
investment objective and policies. In the interest of limiting expenses of the
Fund, the Manager has entered into an expense limitation agreement with the
Fund. The Manager has agreed to waive or limit its fees and to assume other
expenses so that the total operating expenses of the Fund are limited to 3.49%
for Class A Shares and 3.99% for Class B and C Shares for the first three years
of operations. The limit does not apply to interest, taxes, brokerage
commissions, and other expenditures capitalized in accordance with generally
accepted accounting principles or other extraordinary expenses not incurred in
the ordinary course of business.
Portfolio Managers. The Manager uses a team approach to manage the Fund. The
team serves under the direction of Jean Fournier, the Managing Director of SA
Financiere Rembrandt. Prior to joining SA Financiere Rembrandt, Mr. Fournier
served as managing director of Morgan Stanley's Paris operations where he
oversaw extensive investment operations. He is joined by Ricaldo Zavala, who was
formerly the chief proprietary trader for Bank Paribas in Paris, France. The
principal portfolio manager of the Fund is Thierry Roussilhe, senior portfolio
manager at SA Financiere Rembrandt and manager of the FR Networld Fund. Bob
Grandhi, CFA, Chief Investment Officer of Monument Series Trust and principal
portfolio manager of the Monument Internet Fund, a U.S. open-ended investment
fund investing in U.S. Internet companies and Tyler Defibaugh, Head of Trading
and Administration at Monument, assist Mr. Roussilhe by providing guidance
regarding the management of the portfolio, execution of trades, and research and
analysis regarding security selection and sector analysis.
Under the Advisory Agreement, the twice-monthly compensation paid to the Manager
is accrued daily at an annual rate of 1.50% on the first $250 million of average
net assets; 1.25% of the average net assets between $250 and $500 million; 1.00%
of the average net assets between $500 million and $750 million; 0.875% of the
average net assets between $750 and $1 billion; and 0.75% of the average net
assets over $1 billion.
In the interest of limiting expenses of the Fund, the Manager has entered into
an expense limitation agreement with the Fund. The Manager has agreed to waive
or limit its fees and to assume other expenses so that the total operating
expenses of the Fund are limited to 3.49% for Class A Shares and 3.99% for Class
B and C Shares for the first three years of operations. The limit does not apply
to interest, taxes, brokerage commissions, other expenditures capitalized in
accordance with generally accepted accounting principles or other extraordinary
expenses not incurred in the ordinary course of business.
The Manager will be entitled to reimbursement of fees waived or remitted by the
Manager to the Fund. The total amount of reimbursement recoverable by the
Manager (the "Reimbursement Amount") is the sum of all fees previously waived or
remitted by the Manager to the Fund during any of the previous five (5) years,
less any reimbursement previously paid by the Fund to the Manager with respect
to any waivers, reductions, and payments made with respect to the Fund. The
Reimbursement Amount may not include any additional charges or fees, such as
interest accruable on the Reimbursement Amount. Such reimbursement will be
authorized by the Board of Directors.
SHAREHOLDER INFORMATION
The value of a Fund share, called its NAV per share, is determined as of the
close of trading on the New York Stock Exchange ("NYSE") (currently 4:00 p.m.
Eastern Time) on each business day ("Valuation Time") that the NYSE is open. As
of the date of this prospectus, the Fund is informed that the NYSE observes the
following holidays: New Year's Day, Martin Luther King Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. NAV per share is computed by adding the total value of the Fund's
investments and other assets, subtracting any liabilities and then dividing by
the total number of shares outstanding. Due to the fact that different expenses
may be charged against shares of different classes of the Fund, the NAV of
various classes of the Fund may vary.
Shares are bought at the public offering price per share next determined after a
request has been received in proper form. Shares held by you are sold or
exchanged at the NAV per share next determined after a request has been received
in proper form. Any request received in proper form before the Valuation Time,
will be processed the same business day. Any request received in proper form
after the Valuation Time, will be processed the next business day.
The Fund's securities are valued at current market prices. Investments in
securities traded on the national securities exchanges or included in the NASDAQ
National Market System are valued at the last reported sale price. Other
securities traded in the over-the-counter market and listed securities for which
no sales are reported on a date are valued at the last reported bid price.
Short-term debt securities (less than 60 days to maturity) are valued at their
fair market value using amortized cost. Other assets for which market prices are
not readily available are valued at their fair value as determined in good faith
under procedures set by the Board of Directors. Depositary receipts will be
valued at the closing price of the instrument last determined prior to the
Valuation Time unless the Company is aware of a material change in value.
Securities for which such a value cannot be readily determined on any day will
be valued at the closing price of the underlying security adjusted for the
exchange rate. The value of a foreign security is determined as of the close of
trading on the foreign exchange on which it is traded or as of the scheduled
close of trading on the NYSE, whichever is earlier. Portfolio securities that
are listed on foreign exchanges may experience a change in value on days when
shareholders will not be able to purchase or redeem shares of the Fund.
Generally, trading in corporate bonds, U.S. government securities and money
market instruments is substantially completed each day at various times before
the scheduled close of the NYSE. The value of these securities used in computing
the NAV is determined as of such times.
BUYING FUND SHARES
Share Class Alternatives. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities, but the classes are subject to different expenses and
may have different share prices. When you buy shares be sure to specify the
class of shares in which you choose to invest. If you do not select a class,
your money will be invested in Class A Shares. Because each share class has a
different combination of sales charges, expenses and other features, you should
consult your financial adviser to determine which class best meets your
financial objectives. Additional details about each of the share class
alternatives may be found below under "Distribution Arrangements."
Class A Shares Class B Shares Class C Shares
Max. initial 5.75% None 1%
sales charge. (Subject to
reductions
See "Distribution beginning with Arrangements" for investments of a schedule
$50,000) itemizing reduced sales charges.
Contingent None Year 1 5% Year 1 1%
deferred sales (Except for 1% Year 2 4% Year None
charge ("CDSC") on redemptions Year 3 3% 2+
imposed when with 1 year) Year 4 3% Year 2 +
shares are Year 5 2%
redeemed Year 6 1%
(percentage based Year 7 None
on purchase Year 8 None
price). Years
are based on a
twelve-month
period.
See below for information regarding applicable waivers of the CDSC.
Rule 12b-1 fees. 0.50% 1.00% 1.00%
See "Distribution
Arrangements" for
important
information about
Rule 12b-1 fees.
Conversion to N/A Automatically No conversion
Class A after about 8 feature. Rule
years, at which 12b-1 fees
time applicable remain higher
Rule 12b-1 fees than those of
are reduced. Class A shares
for the life of
account.
Appropriate for: All investors, Investors who Investors who
particularly plan to hold intend to hold
those who intend their shares at their shares for
to hold their least 6 years. at least 1 year,
shares for a but less than 6
long period of years.
time and/or
invest a
substantial
amount in the
Fund.
Share Transactions. You may purchase and redeem Fund shares, or exchange shares
of the Fund for those of another, by contacting any broker authorized by the
distributor to sell shares of the Fund or by contacting Fund Services, Inc., the
Company's transfer and dividend disbursing agent, at 1500 Forest Avenue, Suite
111, Richmond, VA 23229 or by telephoning (800) 628-4077. A sales charge may
apply to your purchase. Brokers may charge transaction fees for the purchase or
sale of Fund shares, depending on your arrangement with the broker.
Minimum Investments. The following table provides you with information on the
various investment minimums, sales charges and expenses that apply to each
class. Under certain circumstances the Fund may waive the minimum initial
investment for purchases by officers, directors and employees of the Company,
and its affiliated entities and for certain related advisory accounts,
retirement accounts, custodial accounts for minors and automatic investment
accounts as detailed below under "Waiver of Sales Charges."
Class A Class B Class C
---------------- ---------------------------------
Minimum Initial $1,000 $1,000 $1,000
Investment
Minimum Subsequent $250* $250* $250*
Investment
* For automatic investments made at least quarterly, the minimum subsequent
investment is $100.
By Mail. You may buy shares of the Fund by sending a completed application
along with a check drawn on a U.S. bank in U.S. funds, to "Monument EuroNet
Fund," c/o Fund Services, Inc., at 1500 Forest Avenue, Suite 111, Richmond,
VA 23229. Fund Services, Inc. is the Company's transfer and dividend
disbursing agent. See "Proper Form." Third party checks are not accepted for
the purchase of Fund shares.
By Wire. You may also wire payments for Fund shares to the wire bank account
for the Fund. Before wiring funds, please call (800) 527-9525 to advise the
Fund of your investment and to receive further instructions. Please remember
to return your completed and signed application to Fund Services, Inc., 1500
Forest Avenue, Suite 111, Richmond, VA 23229. See "Proper Form."
Public Offering Price. When you buy shares of the Fund, you will receive the
public offering price per share as determined after your order is received in
proper form, as defined below under the section entitled "Proper Form." The
public offering price of Class A and Class C Shares is equal to the Fund's net
asset value plus the initial sales charge. The public offering price of Class B
Shares is equal to the Fund's net asset value. The Fund reserves the right to
refuse to accept an order in certain circumstances, such as, but not limited to,
orders from short-term investors such as market timers, or orders without proper
documentation.
Net Asset Value. The Fund's share price is equal to the NAV per share of the
Fund. The Fund calculates its NAV per share by valuing and totaling its assets,
subtracting any liabilities, and dividing the remainder, called net assets, by
the number of Fund shares outstanding. The value of the Fund's portfolio
securities is generally based on market quotes if they are readily available. If
they are not readily available, the Manager will determine their market value in
accordance with procedures adopted by the Board. For information on how the Fund
values its assets, see "Valuation of Fund Shares" in the SAI.
DISTRIBUTION ARRANGEMENTS
The Fund is offered through financial supermarkets, investment advisers and
consultants, financial planners, brokers, dealers and other investment
professionals, and directly through the Distributors. Investment professionals
who offer shares may require payments of fees from their individual clients. If
you invest through a third party, the policies and fees may be different than
those described in the Prospectus. For example, third parties may charge
transaction fees or set different minimum investment amounts.
If you purchase your shares through a broker-dealer, the broker-dealer firm is
entitled to receive a percentage of the sales charge you pay in order to
purchase Fund shares. The following schedule governs the percentage to be
received by the selling broker-dealer firm.
Class A Sales Charge and Broker-Dealer Commission
and Service Fee
Sales Charge Broker-Dealer
Percentage
Less than $50,000 5.75% 5.00%
$50,000 but less than $100,000 4.50% 3.75%
$100,000 but less than $250,000 3.50% 2.75%
$250,000 but less than $500,000 2.50% 2.00%
$500,000 but less than $1,000,000 2.00% 1.75%
$1,000,000 or more 1.00% 1.00%
After a one-year holding period, broker-dealers will be entitled to receive an
ongoing service fee at an annual rate of 0.25%, payable quarterly.
Class B Broker-Dealer Commission and Service Fee
Broker-Dealer Percentage
Up to $250,000 4.00%
After a one-year holding period, broker-dealers will be entitled to receive an
ongoing service fee at an annual rate of 0.25%, payable quarterly.
Class C Broker-Dealer Commission and Service Fee
Sales Charge Broker-Dealer Percentage
All purchases 1% 1.00%
After a one-year holding period, broker-dealers will be entitled to receive an
ongoing service fee at an annual rate of 0.25%, payable quarterly.
Rule 12b-1 Fees. The Board of Directors has adopted a Plan of Distribution
pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1 Plan") for each class of
shares. Pursuant to the Rule 12b-1 Plans, the Fund may finance certain
activities or expenses that are intended primarily to result in the sale of its
shares. The Fund finances these distribution activities through payments made to
the distributors. The fee ("Rule 12b-1 fee") paid to the Distributors by each
class is computed on an annualized basis reflecting the average daily net assets
of a class, up to a maximum of 1.00% for Class B and Class C Shares, and 0.50%
for Class A Share expenses. Up to 0.25% of the total Rule 12b-1 fee may be used
to pay for certain shareholder services provided by institutions that have
agreements with a distributor of shares to provide those services. The Company
may pay Rule 12b-1 fees for activities and expenses borne in the past in
connection with the distribution of its shares as to which no Rule 12b-1 fee was
paid because of the maximum limitation. Because these fees are paid out of the
Fund's assets on an ongoing basis, over time these fees will increase the cost
of your investment and may cost more than paying other types of sales charges.
Right Of Accumulation. After making an initial purchase in the Fund, you may
reduce the sales charge applied to any subsequent purchases. Your shares in a
Fund previously purchased will be taken into account on a combined basis at the
current net asset value per share of a Fund in order to establish the aggregate
investment amount to be used in determining the applicable sales charge. Only
previous purchases of Fund shares that are still held in the Fund and that were
sold subject to the sales charge will be included in the calculation. To take
advantage of this privilege, you must give notice at the time you place your
initial order and subsequent orders that you wish to combine purchases. When you
send your payment and request to combine purchases, please specify your account
number.
Statement of Intention. A reduced sales charge as set forth above applies
immediately to all purchases where the investor has executed a Statement of
Intention calling for the purchase within a 13-month period of an amount
qualifying for the reduced sales charge. The investor must actually purchase the
amount stated in such statement to avoid later paying the full sales charge on
shares that are purchased. For a description of the Statement of Intention, see
the Statement of Additional Information.
Waiver of Front-End Sales Charges. No sales charge shall apply to:
(1) reinvestment of income dividends and capital gain distributions;
(2) exchanges of one Fund's shares for those of another Fund;
(3) purchases of Fund shares made by current or former directors, officers,
or employees, or agents of the Company, the Manager, First Dominion Capital
Corp, Monument Distributors, and by members of their immediate families, and
employees (including immediate family members) of a broker-dealer distributing
Fund shares;
(4) purchases of Fund shares by the Distributors for their own investment
account for investment purposes only;
(5) a "qualified institutional buyer," as that term is defined under Rule
144A of the Securities Act of 1933, including, but not limited to, insurance
companies, investment companies registered under the 1940 Act, business
development companies registered under the 1940 Act, and small business
investment companies;
(6) a charitable organization, as defined in Section 501(c)(3) of the
Internal Revenue Code ("Code"), as well as other charitable trusts and
endowments, investing $50,000 or more;
(7) a charitable remainder trust, under Section 664 of the Code, or a life
income pool, established for the benefit of a charitable organization as defined
in Section 501(c)(3) of the Code;
(8) investment advisers or financial planners who place trades for their own
accounts or the accounts of their clients and who charge a management,
consulting or other fee for their services; and clients of those investment
advisers or financial planners who place trades for their own accounts if the
accounts are linked to the master account of the investment adviser or financial
planner on the books and records of the broker or agent;
(9) institutional retirement and deferred compensation plans and trusts used
to fund those plans, including, but not limited to, those defined in section
401(a), 403(b) or 457 of the Code and "rabbi trusts"; and
(10) the purchase of Fund shares, if available, through certain third-party
fund "supermarkets." Some fund supermarkets may offer Fund shares without a
sales charge or with a reduced sales charge. Other fees may be charged by the
service-provider sponsoring the fund supermarket, and transaction charges may
apply to purchases and sales made through a broker-dealer.
Waiver Of Contingent Deferred Sales Charge. The contingent deferred sales
charge is waived for:
(1) certain post-retirement withdrawals from an IRA or other retirement plan
if you are over 70 1/2;
(2) redemptions by certain eligible 401 (a) and 401(k) plans and certain
retirement plan rollovers;
(3) withdrawals resulting from shareholder death or disability provided that
the redemption is requested within one year of death or disability; and
(4) withdrawals through Systematic Monthly Investment (systematic withdrawal
plan).
Additional information regarding the waiver of sales charges may be obtained by
calling 1-800-527-9525. All account information is subject to acceptance and
verification by the Distributors.
General. The Company reserves the right in its sole discretion to withdraw all
or any part of the offering of shares of the Fund when, in the judgment of the
Fund's management, such withdrawal is in the best interest of the Fund. An order
to purchase shares is not binding on, and may be rejected by, the Fund until it
has been confirmed in writing by the Fund and payment has been received.
REDEEMING SHARES
You may redeem your shares at any time and in any amount by mail or telephone.
For your protection, the Transfer Agent will not redeem your shares until it has
received all the information and documents necessary for your request to be
considered in proper order (see "Signature Guarantees"). You will be notified
promptly by the Transfer Agent if your redemption request is not in proper
order.
The Company's procedure is to redeem shares at the NAV determined after the
Transfer Agent receives the redemption request in proper order. Payment will be
made promptly, but no later than the seventh day following the receipt of the
request in proper order. The Company may suspend the right to redeem shares for
any period during which the NYSE is closed or the U.S. Securities and Exchange
Commission determines that there is an emergency. In such circumstances you may
withdraw your redemption request or permit your request to be held for
processing after the suspension is terminated.
If you sell shares through a securities dealer or investment professional, it is
such person's responsibility to transmit the order to the Fund in a timely
fashion. Any loss to you resulting from failure to do so must be settled between
you and such person.
Delivery of the proceeds of a redemption of shares purchased and paid for by
check shortly before the receipt of the request may be delayed until the Fund
determines that the Transfer Agent has completed collection of the purchase
check which may take up to 14 days. Also, payment of the proceeds of a
redemption request for an account for which purchases were made by wire may be
delayed until the Fund receives a completed application for the account to
permit the Fund to verify the identify of the person redeeming the shares, and
to eliminate the need for backup withholding.
Redemption by Mail. To redeem shares by mail, send a written request for
redemption, signed by the registered owner(s) exactly as the account is
registered. Certain written requests to redeem shares may require signature
guarantees. For example, signature guarantees may be required if you sell a
large number of shares, if your address of record on the account application has
been changed within the last 30 days, or if you ask that the proceeds to be sent
to a different person or address. Signature guarantees are used to help protect
you and the Fund. You can obtain a signature guarantee from most banks or
securities dealers, but not from a Notary Public. Please call the Transfer Agent
at 800-628-4077 to learn if a signature guarantee is needed or to make sure that
it is completed appropriately in order to avoid any processing delays.
Redemption by Telephone. You may redeem your shares by telephone provided that
you request this service on your initial Account Application. If you request
this service at a later date, you must send a written request along with a
signature guarantee to the Transfer Agent. Once your telephone authorization is
in effect, you may redeem shares by calling the Transfer Agent at 800-628-4077.
There is no charge for establishing this service, but the Transfer Agent will
charge your account a $10 service fee for each telephone redemption. The
Transfer Agent may change the amount of this service at any time without prior
notice.
Redemption by Wire. If you request that your redemption proceeds be wired to
you, please call your bank for instructions prior to writing or calling the
Transfer Agent. Be sure to include your name, Fund account number, your account
number at your bank and wire information from your bank in your request to
redeem by wire.
Signature Guarantees. To help protect you and the Fund from fraud, signature
guarantees are required for: (1) all redemptions ordered by mail if you require
that the check be payable to another person or that the check be mailed to an
address other than the one indicated on the account registration; (2) all
requests to transfer the registration of shares to another owner; and, (3) all
authorizations to establish or change telephone redemption service, other than
through your initial Account Application.
In the case of redemption by mail, signature guarantees must appear on either:
(a) the written request for redemption; or, (b) a separate instrument of
assignment (usually referred to as a "stock power") specifying the total number
of shares being redeemed. The Company may waive these requirements in certain
instances.
The following institutions are acceptable signature guarantors: (a) participants
in good standing of the Securities Transfer Agents Medallion Program ("STAMP");
(b) commercial banks which are members of the Federal Deposit Insurance
Corporation ("FDIC"); (c) trust companies; (d) firms which are members of a
domestic stock exchange; (e) eligible guarantor institutions qualifying under
Rule 17Ad-15 of the Securities Exchange Act of 1934, as amended, that are
authorized by charter to provide signature guarantees (e.g., credit unions,
securities dealers and brokers, clearing agencies and national securities
exchanges); and, (f) foreign branches of any of the above. In addition, the
Company will guarantee your signature if you personally visit its offices at
1500 Forest Avenue, Suite 223, Richmond, VA 23229. The Transfer Agent cannot
honor guarantees from notaries public, savings and loan associations, or savings
banks.
Proper Form. Your order to buy shares is in proper form when your completed and
signed shareholder application and check or wire payment is received. Your
written request to sell or exchange shares is in proper form when written
instructions signed by all registered owners, with a signature guarantee if
necessary, is received.
Small Accounts. Due to the relatively higher cost of maintaining small accounts,
the Fund may deduct $50 per year from your account or may redeem the shares in
your account, if it has a value of less than $1,000. The Fund will advise you in
writing thirty (30) days prior to deducting the annual fee or closing your
account, during which time you may purchase additional shares in any amount
necessary to bring the account back to $1,000. The Fund will not close your
account if it falls below $1,000 solely because of a market decline.
Automatic Investment Plan. Existing shareholders, who wish to make regular
monthly investments in amounts of $100 or more, may do so through the Automatic
Investment Plan. Under the Plan, your designated bank or other financial
institution debits a pre-authorized amount from your account on or about the
15th day of each month and applies the amount to the purchase of shares. To use
this service, you must authorize the transfer of funds by completing the Plan
section of the account application and sending a blank voided check.
Exchange Privileges. You may exchange all or a portion of your shares for the
shares of certain other funds having different investment objectives, provided
the shares of the fund you are exchanging into are registered for sale in your
state of residence. Your account may be charged $10 for a telephone exchange
fee. An exchange is treated as a redemption and a purchase and may result in
realization of a gain or loss on the transaction.
Modification or Termination. Excessive trading can adversely impact Fund
performance and shareholders. Therefore, the Company reserves the right to
temporarily or permanently modify or terminate the Exchange Privilege. The
Company also reserves the right to refuse exchange requests by any person or
group if, in the Company's judgment, a Fund would be unable to invest the money
effectively in accordance with its investment objective and policies, or would
otherwise potentially be adversely affected. The Company further reserves the
right to restrict or refuse an exchange request if the Company has received or
anticipates simultaneous orders affecting significant portions of a Fund's
assets or detects a pattern of exchange requests that coincides with a "market
timing" strategy. Although the Company will attempt to give you prior notice
when reasonable to do so, the Company may modify or terminate the Exchange
Privilege at any time.
Dividends and Capital Gain Distributions. Dividends from net investment
income, if any, are declared annually. The Fund intends to distribute
annually any net capital gains.
Distributions will automatically be reinvested in additional shares, unless you
elect to have the distributions paid to you in cash. There are no sales charges
or transaction fees for reinvested dividends and all shares will be purchased at
NAV. If the investment in shares is made within an IRA, all dividends and
capital gain distributions must be reinvested.
Unless you are investing through a tax deferred retirement account, such as an
IRA, it is not to your advantage to buy shares of a fund shortly before the next
distribution, because doing so can cost you money in taxes. This is known as
"buying a dividend". To avoid buying a dividend, check the Fund's distribution
schedule before you invest.
DISTRIBUTIONS AND TAXES
In general, Fund distributions are taxable to you as either ordinary income or
capital gains. This is true whether you reinvest your distributions in
additional shares of a Fund or receive them in cash. Any capital gains a fund
distributes are taxable to you as long-term capital gains no matter how long you
have owned your shares. Every January, you will receive a statement that shows
the tax status of distributions you received for the previous year.
Distributions declared in December but paid in January are taxable as if they
were paid in December.
When you sell shares of a Fund, you may have a capital gain or loss. For tax
purposes, an exchange of your shares of a Fund for shares of a different fund of
the Company is the same as a sale. The individual tax rate on any gain from the
sale or exchange of your shares depends on how long you have held your shares.
Fund distributions and gains from the sale or exchange of your shares will
generally be subject to state and local income tax. Non-U.S. investors may be
subject to U.S. withholding and estate tax. You should consult with your tax
adviser about the federal, state, local or foreign tax consequences of your
investment in a Fund.
By law, the Fund must withhold 31% of your taxable distribution and proceeds if
you do not provide your correct taxpayer identification number (TIN) or certify
that your TIN is correct, or if the IRS has notified you that you are subject to
backup withholding and instructs the Fund to do so.
Information about the Company, including the SAI, can be reviewed and copied at
the SEC's Public Reference Room, 450 Fifth Street NW, Washington, D.C.
Information about the operation of the Public Reference Room may be obtained by
calling the SEC at 202-942-8090. Reports and other information regarding the
Fund are available on the EDGAR Database on the SEC's Internet site at
http://www.sec.gov, and copies of this information may be obtained, after paying
a duplicating fee, by electronic request at the following e-mail address:
[email protected], or by writing the Commission's Public Reference Section,
Washington D.C. 20549-0102.
For more information about the Fund, you may wish to refer to the Company's SAI
dated ____________,2000 which is on file with the SEC and incorporated by
reference into this Prospectus. You can obtain a free copy of the SAI by writing
to The World Funds, Inc. , 1500 Forest Avenue, Suite 223, Richmond, Virginia
23229, by calling toll free (800) 527-9525 or by e-mail at:
[email protected]. General inquiries regarding the Fund may also be
directed to the above address or telephone number.
(Investment Company Act File No. 811-8255)
<PAGE>
THE WORLD FUNDS, INC.
(THE "COMPANY")
1500 FOREST AVENUE, SUITE 223, RICHMOND, VA 23229
1-800-527-9525
STATEMENT OF ADDITIONAL INFORMATION
Monument EuroNet Fund
This Statement of Additional Information ("SAI") is not a prospectus. It should
be read in conjunction with the current Prospectus of the Monument EuroNet Fund,
dated________________,2000. You may obtain the Prospectus of the Fund, free of
charge, by writing to World Funds, Inc. at 1500 Forest Avenue, Suite 223,
Richmond, VA 23229 or by calling 1-800-527-9525.
The date of this SAI is ________________,2000.
<PAGE>
TABLE OF CONTENTS PAGE
General Information
Additional Information About The Fund's Investments
Investment Objectives
Strategies and Risks
Investment Programs
Warrants
Illiquid Securities
Depositary Receipts
Temporary Defensive Positions
U.S. Government Securities
Repurchase Agreements
Restricted Securities
Options
Futures
Other Investments
Investment Restrictions
Management of the Company
Principal Securities Holders
Investment Manager and Advisory Agreement
Management-Related Services
Portfolio Transactions
Portfolio Turnover
Capital Stock and Dividends
Dividends and Distributions
Additional Information about Purchases and Sales
Eligible Benefit Plans
Tax Status
Investment Performance
Financial Information
<PAGE>
GENERAL INFORMATION
The World Funds, Inc. (the "Company") was organized under the laws of the State
of Maryland in May, 1997. The Company is an open-end management investment
company registered under the Investment Company Act of 1940, as amended, (the
"1940 Act") commonly known as a "mutual fund". This SAI relates to Monument
EuroNet Fund (the "Fund"). The Fund is a separate investment portfolio or series
of the Company. The Fund is authorized to issue three classes of shares: Class A
Shares imposing a front-end sales charge up to a maximum of 5.75%, and a sales
charge of 1% if shares are redeemed within the first year after purchase; Class
B Shares charging a maximum back-end sales charge of 5%, if redeemed within six
years of purchase, carrying a higher 12b-1 fee then Class A Shares, but
converting to Class A Shares in approximately eight years after purchase; and
Class C Shares charging a front-end sales charge of 1%, and a sales charge of 1%
if share are redeemed within the first year after purchase, and carrying a
higher rule 12b-1 fee than Class A Shares with no conversion feature. See
"Capital Stock and Dividends" in this SAI. The Fund is a "diversified" series as
that term is defined in the 1940 Act.
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS
The following information supplements the discussion of the Fund's investment
objectives and policies. The Fund's investment objective and fundamental
investment policies may not be changed without approval by vote of a majority of
the outstanding voting shares of the Fund. As used in this SAI, "majority of
outstanding voting shares" means the lesser of (1) 67% of the voting shares of
the Fund represented at a meeting of shareholders at which the holders of 50% or
more of the shares of the Fund are represented; or (2) more than 50% of the
outstanding voting shares of the Fund. The investment programs, restrictions and
the operating policies of the Fund that are not fundamental policies can be
changed by the Board of Directors of the Company (the "Directors") without
shareholder approval.
INVESTMENT OBJECTIVES
The Fund's investment objective is to maximize long-term appreciation of
capital. All investments entail some market and other risks and there is no
assurance that the Manager will achieve the Fund's investment objective. You
should not rely on an investment in the Fund as a complete investment program.
STRATEGIES AND RISKS
Under normal circumstances, the Fund invests in equity securities and securities
convertible into equity securities, such as warrants, convertible bonds,
debentures or convertible preferred.
The following discussion of investment techniques and instruments supplements,
and should be read in conjunction with, the investment information in the Fund's
Prospectus. In seeking to meet its investment objective, the Fund may invest in
any type of security whose characteristics are consistent with its investment
program described below.
INVESTMENT PROGRAMS
Warrants. The Fund may invest in warrants. Warrants are options to purchase
equity securities at a specific price for a specific period of time. They do not
represent ownership of the securities, but only the right to buy them. Hence,
warrants have no voting rights, pay no dividends and have no rights with respect
to the assets of the corporation issuing them. The value of warrants is derived
solely from capital appreciation of the underlying equity securities. Warrants
differ from call options in that the underlying corporation issues warrants,
whereas call options may be written by anyone.
Illiquid Securities. The Fund may invest up to 15% of its net assets in illiquid
securities. For this purpose, the term "illiquid securities" means securities
that cannot be disposed of within seven days in the ordinary course of business
at approximately the amount at which the Fund has valued the securities.
Illiquid securities include generally, among other things, certain written
over-the-counter options, securities or other liquid assets as cover for such
options, repurchase agreements with maturities in excess of seven days, certain
loan participation interests and other securities whose disposition is
restricted under the federal securities laws.
Depositary Receipts. American Depositary Receipts ("ADRs") are receipts
typically issued in the U.S. by a bank or trust company evidencing ownership of
an underlying foreign security. The Fund may invest in ADRs which are structured
by a U.S. bank without the sponsorship of the underlying foreign issuer. In
addition to the risks of foreign investment applicable to the underlying
securities, such unsponsored ADRs may also be subject to the risks that the
foreign issuer may not be obligated to cooperate with the U.S. bank, may not
provide additional financial and other information to the bank or the investor,
or that such information in the U.S. market may not be current.
Like ADRs, European Depositary Receipts ("EDRs") and Global Depositary Receipts
("GDRs") represent receipts for a foreign security. However, they are issued
outside of the U.S. The Fund may invest in ADRs, EDRs or GDRs. EDRs and GDRs
involve risks comparable to ADRs, as well as the fact that they are issued
outside of the U.S.
Temporary Defensive Positions. When the Manager believes that investments should
be deployed in a temporary defensive posture because of economic or market
conditions, the Fund may invest up to 100% of its assets in U.S. Government
securities (such as bills, notes, or bonds of the U.S. Government and its
agencies) or other forms of indebtedness such as bonds, certificates of deposits
or repurchase agreements. For temporary defensive purposes, the Fund may hold
cash or debt obligations denominated in U.S. dollars or foreign currencies.
These debt obligations include U.S. and foreign government securities and
investment grade corporate debt securities, or bank deposits of major
international institutions. When the Fund is in a temporary defensive position,
it is not pursuing its stated investment policies. The Manager decides when it
is appropriate to be in a defensive position. It is impossible to predict for
how long such alternative strategies will be utilized.
U.S. Government Securities. The Fund may invest in U.S. Government
Securities. The term "U.S. Government Securities" refers to a variety of
securities which are issued or guaranteed by the United States Treasury, by
various agencies of the U.S. Government, and by various instrumentalities
which have been established or sponsored by the U.S. Government. U.S.
Treasury securities are backed by the full faith and credit of the United
States. Securities issued or guaranteed by U.S. Government agencies or U.S.
Government sponsored instrumentalities may or may not be backed by the full
faith and credit of the United States. In the case of securities not backed
by the full faith and credit of the United States, the investor must
look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment, and may not be
able to assert a claim directly against the United States in the event
the agency or instrumentality does not meet its commitment. An
instrumentality of the U.S. Government is a government agency organized
under Federal charter with government supervision.
Repurchase Agreements. As a means of earning income for periods as short as
overnight, the Fund may enter into repurchase agreements that are collateralized
by U.S. Government Securities. The Fund may enter into repurchase commitments
for investment purposes for periods of 30 days or more. Such commitments involve
investment risks similar to those of the debt securities in which the Fund
invests. Under a repurchase agreement, the Fund acquires a security, subject to
the seller's agreement to repurchase that security at a specified time and
price. A purchase of securities under a repurchase agreement is considered to be
a loan by a fund. The Manager monitors the value of the collateral to ensure
that its value always equals or exceeds the repurchase price and also monitors
the financial condition of the seller of the repurchase agreement. If the seller
becomes insolvent, a fund's right to dispose of the securities held as
collateral may be impaired and the Fund may incur extra costs. Repurchase
agreements for periods in excess of seven days may be deemed to be illiquid.
Restricted Securities. The Fund may invest in restricted securities. Generally,
"restricted securities" are securities which have legal or contractual
restrictions on their resale. In some cases, these legal or contractual
restrictions may impair the liquidity of a restricted security; in others, the
legal or contractual restrictions may not have a negative effect on the
liquidity of the security. Restricted securities which are deemed by the
Investment Manager to be illiquid will be included in the Fund's policy which
limits investments in illiquid securities.
Options. The Fund may purchase put and call options and engage in the writing of
covered call options and put options on securities that meet the Fund's
investment criteria, and may employ a variety of other investment techniques,
such as options on futures. The Fund will engage in options transactions only to
hedge existing positions, and not for purposes of speculation or leverage. As
described below, the Fund may write "covered options" on securities in standard
contracts traded on national exchanges, or in individually-negotiated contracted
traded over-the-counter for the purpose of receiving the premiums from options
that expire and to seek net gains from closing purchase transactions with
respect to such options.
Buying Call and Put Options. The Fund may purchase call options. Such
transactions may be entered into in order to limit the risk of a substantial
increase in the market price of the security that the Fund intends to purchase.
Prior to its expiration, a call option may be sold in a closing sale
transaction. Any profit or loss from the sale will depend on whether the amount
received is more or less than the premium paid for the call option plus the
related transaction costs.
The Fund may purchase put options. By buying a put, the Fund has the right to
sell the security at the exercise price, thus limiting its risk of loss through
a decline in the market value of the security until the put expires. The amount
of any appreciation in the value of the underlying security will be partially
offset by the amount of the premium paid for the put option and any related
transaction costs. Prior to its expiration, a put option may be sold in a
closing sale transaction and any profit or loss from the sale will depend on
whether the amount received is more or less than the premium paid for the put
option plus the related transaction costs.
Writing (Selling) Call and Put Options. The Fund may write covered options on
equity and debt securities and indices. This means that, in the case of call
options, so long as the Fund is obligated as the writer of a call option, it
will own the underlying security subject to the option and, in the case of put
options, it will, through its custodian, deposit and maintain either cash or
securities with a market value equal to or greater than the exercise price of
the option.
Covered call options written by a Fund give the holder the right to buy the
underlying securities from the Fund at a stated exercise price. A call option
written by a Fund is "covered" if the Fund owns the underlying security that is
subject to the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian bank) upon
conversion or exchange of other securities held in its portfolio. A call option
is also covered if a Fund holds a call on the same security and in the same
principal amount as the call written where the exercise price of the call held
(a) is equal to or less than the exercise price of the call written or (b) is
greater than the exercise price of the call written if the difference is
maintained by the Fund in cash and high grade debt securities in a segregated
account with its custodian bank. The Fund may purchase securities which may be
covered with call options solely on the basis of considerations consistent with
the investment objectives and policies of the Fund. The Fund's turnover may
increase through the exercise of a call option; this will generally occur if the
market value of a "covered" security increases and the Fund has not entered in
to a closing purchase transaction.
As a writer of an option, the Fund receives a premium less a commission, and in
exchange foregoes the opportunity to profit from any increase in the market
value of the security exceeding the call option price. The premium serves to
mitigate the effect of any depreciation in the market value of the security. The
premium paid by the buyer of an option will reflect, among other things, the
relationship of the exercise price to the market price, the volatility of the
underlying security, the remaining term of the option, the existing supply and
demand, and the interest rates.
The writer of a call option may have no control over when the underlying
securities must be sold because the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Exercise of a call option
by the purchaser will cause the Fund to forego future appreciation of the
securities covered by the option. Whether or not an option expires unexercised,
the writer retains the amount of the premium. This amount may, in the case of a
covered call option, be offset by a decline in the market value of the
underlying security during the option period. If a call option is exercised, the
writer experiences a profit or loss from the sale of the underlying security.
Thus, during the option period, the writer of a call option gives up the
opportunity for appreciation in the market value of the underlying security or
currency above the exercise price. It retains the risk of loss should the price
of the underlying security or foreign currency decline. Writing call options
also involves risks relating to a Fund's ability to close out options it has
written.
The Fund may write exchange-traded call options on its securities. Call options
may be written on portfolio securities, securities indices, or foreign
currencies. With respect to securities and foreign currencies, the Fund may
write call and put options on an exchange or over-the-counter. Call options on
portfolio securities will be covered since the Fund will own the underlying
securities. Call options on securities indices will be written only to hedge in
an economically appropriate way portfolio securities that are not otherwise
hedged with options or financial futures contracts and will be "covered" by
identifying the specific portfolio securities being hedged. Options on foreign
currencies will be covered by securities denominated in that currency. Options
on securities indices will be covered by securities that substantially replicate
the movement of the index.
A put option on a security, security index, or foreign currency gives the
purchaser of the option, in return for the premium paid to the writer (seller),
the right to sell the underlying security, index, or foreign currency at the
exercise price at any time during the option period. When the Fund writes a
secured put option, it will gain a profit in the amount of the premium, less a
commission, so long as the price of the underlying security remains above the
exercise price. However, the Fund remains obligated to purchase the underlying
security from the buyer of the put option (usually in the event the price of the
security falls below the exercise price) at any time during the option period.
If the price of the underlying security falls below the exercise price, the Fund
may realize a loss in the amount of the difference between the exercise price
and the sale price of the security, less the premium received. Upon exercise by
the purchaser, the writer of a put option has the obligation to purchase the
underlying security or foreign currency at the exercise price. A put option on a
securities index is similar to a put option on an individual security, except
that the value of the option depends on the weighted value of the group of
securities comprising the index and all settlements are made in cash.
During the option period, the writer of a put option has assumed the risk that
the price of the underlying security or foreign currency will decline below the
exercise price. However, the writer of the put option has retained the
opportunity for an appreciation above the exercise price should the market price
of the underlying security or foreign currency increase. Writing put options
also involves risks relating to a Fund's ability to close out options it has
written.
The writer of an option who wishes to terminate his or her obligation may effect
a "closing purchase transaction" by buying an option of the same series as the
option previously written. The effect of the purchase is that the writer's
position will be cancelled by the clearing corporation. However, a writer may
not effect a closing purchase transaction after being notified of the exercise
of an option. There is also no guarantee that a Fund will be able to effect a
closing purchase transaction for the options it has written.
Effecting a closing purchase transaction in the case of a written call option
will permit a Fund to write another call option on the underlying security with
either a different exercise price, expiration date, or both. Effecting a closing
purchase transaction will also permit the Fund to use cash or proceeds from the
concurrent sale of any securities subject to the option to make other
investments. If a Fund desires to sell a particular security from its portfolio
on which it has written a call option, it will effect a closing purchase
transaction before or at the same time as the sale of the security.
A Fund will realize a profit from a closing purchase transaction if the price of
the transaction is less than the premium received from writing the option. A
Fund will realize a loss from a closing purchase transaction if the price of the
transaction is more than the premium received from writing the option. Because
increases in the market price of a call option will generally reflect increases
in the market price of the underlying security, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security owned by a Fund.
Writing Over-the-Counter ("OTC") Options. A Fund may engage in options
transactions that trade on the OTC market to the same extent that it intends to
engage in exchange traded options. Just as with exchange traded options, OTC
options give the holder the right to buy an underlying security from, or sell an
underlying security to, an option writer at a stated exercise price. However,
OTC options differ from exchange traded options in certain material respects.
OTC options are arranged directly with dealers and not, as is the case with
exchange traded options, through a clearing corporation. Thus, there is a risk
of non-performance by the dealer. Because there is no exchange, pricing is
typically done by reference to information from market makers. Since OTC options
are available for a greater variety of securities and in a wider range of
expiration dates and exercise prices, the writer of an OTC option is paid the
premium in advance by the dealer.
A writer or purchaser of a put or call option can terminate it voluntarily only
by entering into a closing transaction. There can be no assurance that a
continuously liquid secondary market will exist for any particular option at any
specific time. Consequently, a Fund may be able to realize the value of an OTC
option it has purchased only by exercising it or entering into a closing sale
transaction with the dealer that issued it. Similarly, when a Fund writes an OTC
option, it generally can close out that option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which it
originally wrote the option. If a covered call option writer cannot effect a
closing transaction, it cannot sell the underlying security or foreign currency
until the option expires or the option is exercised. Therefore, the writer of a
covered OTC call option may not be able to sell an underlying security even
though it might otherwise be advantageous to do so. Likewise, the writer of a
secured OTC put option may be unable to sell the securities pledged to secure
the put for other investment purposes while it is obligated as a put writer.
Similarly, a purchaser of an OTC put or call option might also find it difficult
to terminate its position on a timely basis in the absence of a secondary
market.
The staff of the Securities and Exchange Commission ("SEC") has been deemed to
have taken the position that purchased OTC options and the assets used to
"cover" written OTC options are illiquid securities. The Fund will adopt
procedures for engaging in OTC options transactions for the purpose of reducing
any potential adverse effect of such transactions on the liquidity of the Fund.
Futures Contracts. Even though the Fund has no current intention to invest in
Futures Contracts, the Fund may buy and sell stock index futures contracts
traded on domestic stock exchanges to hedge the value of its portfolio against
changes in market conditions. The Fund will amend its Prospectus before engaging
in such transactions.
A stock index futures contract is an agreement between two parties 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 the last trading day of
the contract and the price at which the futures contract is originally struck. A
stock index futures contract does not involve the physical delivery of the
underlying stocks in the index. Although stock index futures contracts call for
the actual taking or delivery of cash, in most cases the Fund expects to
liquidate its stock index futures positions through offsetting transactions,
which may result in a gain or a loss, before cash settlement is required.
A Fund will incur brokerage fees when it purchases and sells stock index futures
contracts, and at the time a Fund purchases or sells a stock index futures
contract, it must make a good faith deposit known as the "initial margin".
Thereafter, a Fund may need to make subsequent deposits, known as "variation
margin," to reflect changes in the level of the stock index. A Fund may buy or
sell a stock index futures contract so long as the sum of the amount of margin
deposits on open positions with respect to all stock index futures contracts
does not exceed 5% of the Fund's net assets.
To the extent a Fund enters into a stock index futures contract, it will
maintain with its custodian bank (to the extent required by the rules of the
SEC) assets in a segregated account to cover its obligations. Such assets may
consist of cash, cash equivalents, or high quality debt securities from its
portfolio in an amount equal to the difference between the fluctuating market
value of such futures contract and the aggregate value of the initial and
variation margin payments.
Risks Associated With Options and Futures. Although the Fund may write covered
call options and purchase and sell stock index futures contracts to hedge
against declines in market value of its portfolio securities, the use of these
instruments involves certain risks. As the writer of covered call options, a
Fund receives a premium but loses any opportunity to profit from an increase in
the market price of the underlying securities above the exercise price during
the option period. A Fund also retains the risk of loss if the price of the
security declines, though the premium received may partially offset such loss.
Although stock index futures contracts may be useful in hedging against adverse
changes in the value of a Fund's portfolio securities, they are derivative
instruments that are subject to a number of risks. During certain market
conditions, purchases and sales of stock index futures contracts may not
completely offset a decline or rise in the value of a Fund's Portfolio. In the
futures markets, it may not always be possible to execute a buy or sell order at
the desired price, or to close out an open position due to market conditions,
limits on open positions and/or daily price fluctuations. Changes in the market
value of a Fund's portfolio may differ substantially from the changes
anticipated by the Fund when it established its hedged positions, and
unanticipated price movements in a futures contract may result in a loss
substantially greater than a Fund's initial investment in such a contract.
Successful use of futures contracts depends upon Manager's ability to correctly
predict movements in the securities markets generally or of a particular segment
of a securities market. No assurance can be given that Manager's judgment in
this respect will be correct.
The CFTC and the various exchanges have established limits referred to as
"speculative position limits" on the maximum net long or net short position that
any person may hold or control in a particular futures contract. Trading limits
are imposed on the number of contracts that any person may trade on a particular
trading day. An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose sanctions or restrictions. These
trading and positions limits will not have an adverse impact on a Fund's
strategies for hedging its securities.
OTHER INVESTMENTS
The Directors may, in the future, authorize the Fund to invest in securities
other than those listed in this SAI and in the prospectus, provided such
investments would be consistent with Fund's investment objective and that such
investment would not violate the Fund's fundamental investment policies or
restrictions.
INVESTMENT RESTRICTIONS
Fundamental Investment Policies and Restrictions: The Fund has adopted the
following fundamental investment restrictions which cannot be changed without
approval by vote of a "majority of the outstanding voting securities" of the
Fund. As a matter of fundamental policy, the Fund may not:
1) Invest in companies for the purpose of exercising management or control;
2) Invest in securities of other investment companies except by purchase in
the open market involving only customary broker's commissions, or as
part of a merger, consolidation, or acquisition of assets;
3) Purchase or sell commodities or commodity contracts;
4) Invest in interests in oil, gas, or other mineral exploration or development
programs;
5) Purchase securities on margin, except for use of short-term credits as
necessary for the clearance of purchase of portfolio securities;
6) Issue senior securities, (except the Funds may engage in transactions
such as those permitted by the SEC release IC-10666 as applied by the
SEC from time to time);
7) Act as an underwriter of securities of other issuers, except that the Fund
may invest up to 10% of the value of its total assets (at the time of
investment) in portfolio securities which the Fund might not be free to
sell to the public without registration of such securities under the
Securities Act of 1933, as amended (the "1933 Act"), or any foreign law
restricting distribution of securities in a country of a foreign issuer;
8) Participate on a joint or a joint and several basis in any securities
trading account;
9) Purchase or sell real estate, provided that liquid securities of companies
which deal in real estate or interests therein would not be deemed to be
an investment in real estate;
10)Purchase any security if, as a result of such purchase less than 75% of
the assets of the Fund would consist of cash and cash items, U.S.
Government securities, securities of other investment companies, and
securities of issuers in which the Fund has not invested more than 5% of
its assets;
11)Purchase the securities of any issuer (other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities) if,
as a result, more than 10% of the outstanding voting securities of any
issuer would be held by the Fund;
12)Make loans, except that the Fund may lend securities, and enter into
repurchase agreements secured by U.S. Government Securities; and
13)Except as specified below, the Fund may only borrow money for temporary or
emergency purposes and then only in an amount not in excess of 5% of the
lower of value or cost of its total assets, in which case the Fund may
pledge, mortgage or hypothecate any of its assets as security for such
borrowing but not to an extent greater than 5% of its total assets. The
Fund may borrow money to avoid the untimely disposition of assets to meet
redemptions, in an amount up to 20% of the value of its assets, provided
that the Fund maintains asset coverage of 300% in connection with
borrowings, and the Fund does not make other investments while such
borrowings are outstanding.
Non-Fundamental Policies and Restrictions: In addition to the fundamental
policies and investment restrictions described above, and the various general
investment policies described in the Prospectus and elsewhere in the SAI, the
Fund will be subject to the following investment restrictions, which are
considered non-fundamental and may be changed by the Directors without
shareholder approval. As a matter of non-fundamental policy, the Fund may not:
1) Invest more than 15% of its net assets in illiquid securities; or
2) Engage in arbitrage transactions.
In applying the fundamental and policy concerning concentration:
The percentage restriction on investment or utilization of assets is adhered to
at the time an investment is made. A later change in percentage resulting from
changes in the value or the total cost of a Fund's assets will not be considered
a violation of the restriction; and
Investments in certain categories of companies will not be considered to be
investments in a particular industry. Examples of these categories include:
(i) financial service companies will be classified according to the end
users of their services, for example, automobile finance, bank
finance and diversified finance will each be considered a separate
industry;
(ii) technology companies will be divided according to their products and
services, for example, hardware, software, information services and
outsourcing, or telecommunications will each be a separate industry;
and
(iii)utility companies will be divided according to their services, for
example, gas, gas transmission, electric and telephone will each be
considered a separate industry.
MANAGEMENT OF THE COMPANY
Directors and Officers. The Company is governed by a Board of Directors, which
is responsible for protecting the interest of shareholders. The Directors are
experienced businesspersons who meet throughout the year to oversee the
Company's activities, review contractual arrangements with companies that
provide services to the Fund, and review performance. The names and addresses of
the Directors and officers of the Company, together with information as to their
principal occupations during the past five years, are listed below. The
Directors who are considered "interested persons" as defined in Section 2(a)(19)
of the 1940 Act, as well as those persons affiliated with the Investment Manager
and principal underwriter, and officers of the Company, are noted with an
asterisk (*).
Name, Address Position(s) Held Principal Occupation(s)
and Age With Registrant During the Past 5 Years
- ------- --------------- -----------------------
*John Pasco, III Chairman, Director Mr. Pasco is Treasurer and
1500 Forest Avenue and Treasurer Director of Commonwealth
Richmond, VA 23229 Shareholder Services, Inc., the
(55) Company's Administrator, since
1985; President and Director
of First Dominion Capital Corp.,
the Company's principal
underwriter. Director and
shareholder of Fund Services
Inc., the Company's Transfer and
Disbursing Agent, since 1987;
shareholder of Commonwealth Fund
Accounting, Inc. which provides
bookkeeping services to Star
Bank; and Chairman, Director and
Treasurer of Vontobel Funds,
Inc., a registered investment
company since March, 1997.
Mr. Pasco is also a
certified public accountant.
Samuel Boyd, Jr. Director Mr. Boyd is Manager of the
10808 Hob Nail Court Customer Services Operations
Potomac, MD 20854 and Accounting Division
(59) of the Potomac Electric Power
Company since August, 1978;
and Director of Vontobel Funds,
Inc., a registered investment
company since March, 1997. Mr.
Boyd is also a certified public
accountant.
William E. Poist Director Mr. Poist is a financial and tax
5272 River Road consultant through his firm,
Bethesda, MD 20816 Management Consulting for
(60) Professionals since 1968;
Director of Vontobel Funds, Inc.
a registered investment
company since March, 1997. Mr.
Poist is also a certified
public accountant.
Paul M. Dickinson Director Mr. Dickinson is President of
8704 Berwickshire Drive Alfred J. Dickinson, Inc.
Richmond, VA 23229 Realtors since April, 1971; and
(52) Director of Vontobel Funds,
Inc., a registered investment
company since March, 1997.
*Jane H. Williams Vice President of Ms. Williams is the Executive
3000 Sand Hill Road the Company Vice President of and Sand Hill
Suite 150 and President Advisors, Inc. since 1982.
Menlo Park, CA 94025 of the Sand Hill
(51) Portfolio Manager
Fund series
*Leland H. Faust President of the Mr. Faust is President of
One Montgomery St. CSI Equity Fund CSI Capital Management, Inc.
Suite 2525 and the CSI Fixed since 1978. Mr.Faust is also
San Francisco, CA 94104 Income Fund a Partner in the law firm
(53) Taylor & Faust since December,
1975.
*F. Byron Parker, Jr. Secretary Mr. Parker is Secretary of
810 Lindsay Court Commonwealth Shareholder
Richmond, VA 23229 Services, Inc., and First
(57) Dominion Capital Corp.since
1986; Secretary of
Vontobel Funds, Inc., a
registered investment company
since March, 1997; and
Partner in the law firm
Mustian & Parker.
*Franklin A. Trice, III Vice President of Mr. Trice is President
P.O. Box 8535 the Company and of Virginia Management
Richmond, VA 23226-0535 President of the Investment Corp.since May,
(36) New Market Fund 1998; and a registered
series representative of First
Dominion Capital Corp., the
Company's underwriter since
September, 1998. Mr.Trice was
a broker with Scott &
Stringfellow from March, 1996
to May, 1998 and with Craigie,
Inc. from March, 1992 to
January, 1996.
*John T. Connor, Jr. Vice President of Mr.Connor is President of Third
515 Madison Ave., the Company and Millennium Investment Advisors,
24th Floor President of the LLC since April, 1998; and
New York, NY 10022 Third Millennium Chairman of ROSGAL,
(58) Russia Fund series a Russian financial company
and of its affiliated
ROSGAL Insurance since 1993.
*Steven T. Newby Vice President of Mr. Newby is President of
555 Quince Orchard Rd. the Company and Newby & Co. Inc., a NASD
Suite 606 President of broker/dealer since July, 1990;
Gaithersburg, MD 20878 GenomicsFund.com President of xGENx, LLC
(53) series since November, 1999.
* Todd A. Boren President of the Mr. Boren joined International
250 Park Avenue, So. Global e-Fund Assets Advisory in May of
Suite 200 series 1994. In his six years
Winter Park, FL 32789 with IAAC he has served as a
(40) Financial Adviser, VP of Sales,
Branch Manager, Training
Manager, and currently as
Senior Vice President and
Managing Director of Private
Client Operations for both
International Assets
Advisory and Global Assets
Advisors. He is responsible for
overseeing its International
Headquarters in Winter Park
Florida as well as its New York
operation and joint venture.
*Brian W. Clarke President of the Mr.Clarke is President of
993 Farmington Avenue Monument EuroNet Fund Cornerstone Partners LLC, a
Suite 205 series financial services company,
West Hartford, CT 06197 since November, 1998 .
(42) Prior to founding Cornerstone,
Mr. Clarke worked for Lowrey
Capital management from 1997
to 1998. Mr. Clarke served
for 13 years as the
Vice President for
Advancement at St. Mary's
College of Maryland.
Prior to joining St.
Mary's, Mr. Clarke served as
Press Secretary to
Congressman Henry S. Reuss.
Compensation of Directors. The Company does not compensate the Directors who are
officers or employees of the Investment Manager. The "independent" Directors
receive an annual retainer of $1,000 and a fee of $200 for each meeting of the
Directors which they attend in person or by telephone. Directors are reimbursed
for travel and other out-of-pocket expenses. The Company does not offer any
retirement benefits for Directors.
For the fiscal period ended August 31, 1999, the Directors received the
following compensation from the Company:
Aggregate
Compensation Pension or Total
Name and From the Fund Retirement Compensation
Position Fiscal Year Benefits Accrued as from the
Held Ended August Part of Fund Company (1)
31, 1999 Expenses
John Pasco, III, 0 N/A 0
Director
Samuel Boyd, Jr., 0 N/A $9,000
Director
William E. Poist, 0 N/A $9,000
Director
Paul M. Dickinson, 0 N/A $9,000
Director
(1)This amount represents the aggregate amount of compensation paid to the
Directors for service on the Directors for the Fund's fiscal year ended
August 31, 1999.
POLICIES CONCERNING PERSONAL INVESTMENT ACTIVITIES
The Fund, Investment Manager, Advisers and Principal Underwriters have each
adopted a Codes of Ethics, as required by federal securities laws. Under the
Funds' Code of Ethics, persons who are designated as access persons may engage
in personal securities transactions, including transactions involving securities
that are being considered for the Funds or that are currently held by the Funds,
subject to general restrictions and procedures. The personal securities
transactions of access persons of the Funds, its Manager, Adviser and Principal
Underwriters will be governed by the Funds' Code of Ethics.
The Code of Ethics is on file with, and can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. In addition, the Code of Ethics are
also available on the EDGAR Database on the SEC's Internet website at
http://www.sec.gov.
CONTROL PERSONS AND PRINCIPAL SECURITIES PERSONS
The Directors and officers of the Company, as a group, do not own 1% or more of
the Fund.
INVESTMENT MANAGER AND ADVISORY AGREEMENT
Vernes Asset Management, LLC (the "Manager"), located at 993 Farmington Avenue,
Suite 205, West Hartford, CT 06197, manages the investments of the Fund pursuant
to an Investment Management Agreement (the "Management Agreement" ), dated
___________, 2000. After the initial term of two years, the Management Agreement
may be renewed annually provided such renewal is approved annually by: 1) the
Company's Directors; or 2) by a majority vote of the outstanding voting
securities of the Company and, in either case, by a majority of the Directors
who are not "interested persons" of the Company. The Management Agreement will
automatically terminate in the event of its "assignment," as that term is
defined in the 1940 Act, and may be terminated without penalty at any time upon
60 days' written notice to the other party by: (i) the majority vote of all the
Directors or by vote of a majority of the outstanding voting securities of the
Fund; or (ii) the Manager. The Investment Manager is registered as an investment
Manager under the Investment Advisers Act of 1940 as amended, the "Advisers
Act".
The Manager has entered into two Investment Advisory Agreements that delegate
portions of the investment management responsibility to SA Financiere Rembrandt
and Monument Advisors, Ltd. (collectively, the " Investment Advisers"). The
Investment Advisers provide the Manager with investment analysis and timing
advice, research and statistical analysis relating to the management of
portfolio securities of the Fund. The investment recommendations of the
Investment Advisers are subject to the review and approval of the Manager
(acting under the supervision of the Company's Board of Directors). The Manager,
from its management fee, pays the Investment Advisers 66% of the management fee
received from the Fund.
SA Financiere Rembrandt located at 4, rue Rembrandt, Paris, France, founded in
November, 1997, is held by Vernes & Associes, a Swiss holding company and was
founded in 1982 by Mister Cyrille Vernes, who is the first senior partner of
Vernes & Associes and Vernes Gestion, S. A., a Swiss asset management company
established in Geneva. Although SA Financiere Rembrandt has not previously
served as the investment adviser of a US open-end investment company, it serves
as the adviser to FR Networld Fund, a Fund that invests in the different sub
sectors of the internet in Europe and is marketed and sold in Europe. In
addition, SA Financiere Rembrandt manages 10 other European open-end investment
funds as well as numerous separately managed accounts in Europe. As of May 30,
2000, SA Financiere Rembrandt managed approximately 0.4 billion Euros or the
equivalent of $0.36 billion U.S. Dollars.
Monument Advisors, Ltd. ("Monument Advisors"), located at 7920 Norfolk Avenue,
Suite 500, Bethesda, Maryland 20814, is a wholly owned subsidiary of The
Monument Group, Inc., which in turn is principally owned and controlled by David
A. Kugler, its President. Monument Advisors also manages the assets of The
Monument Series Fund, Inc., an open-end management investment company registered
with the Securities and Exchange Commission ("SEC"). In addition, Monument
Advisors manages portfolios of investments of qualified individuals, retirement
plans, and trusts. As of May 30, 2000, Monument Advisors managed or supervised
in excess of $250 million in assets.
Under the Management Agreement, the Manager, subject to the supervision of the
Directors, provides a continuous investment program for the Fund, including
investment research and management with respect to securities, investments and
cash equivalents, in accordance with the Fund's investment objective, policies,
and restrictions as set forth in the Prospectus and this SAI. The Manager is
responsible for effecting all security transactions on behalf of the Fund,
including the allocation of principal business and portfolio brokerage and the
negotiation of commissions. The Manager also maintains books and records with
respect to the securities transactions of the Fund and furnishes to the
Directors such periodic or other reports as the Directors may request.
MANAGEMENT-RELATED SERVICES
ADMINISTRATION
Pursuant to an Administrative Services Agreement with the Company dated
___________________, 2000 (the "Administrative Agreement"), Commonwealth
Shareholder Services, Inc. ("CSS"), 1500 Forest Avenue, Suite 223, Richmond,
Virginia 23229, serves as administrator of the Fund and supervises all aspects
of the operation of the Fund except those performed by the Investment Manager.
John Pasco, III, Chairman of the Board of the Company, is the sole owner of CSS.
CSS provides certain administrative services and facilities for the Fund,
including preparing and maintaining certain books, records, and monitoring
compliance with state and federal regulatory requirements.
As administrator, CSS receives an asset-based administrative fee, computed daily
and paid monthly, at the annual rate of 0.20% on the first $250 million of
average net assets of the Fund; 0.175% of the average net assets between $250
and $500 million; 0.15% of the average net assets between $500 million and $750
million; 0.125% of the average net assets between $750 and $1 billion; and 0.10%
of the average net assets over $1 billion, subject to a minimum amount of
$30,000 per year. CSS receives an hourly rate, plus certain out-of-pocket
expenses, for shareholder servicing and state securities law matters.
CUSTODIAN AND ACCOUNTING SERVICES
Pursuant to the Custodian Agreement and Accounting Agency Agreement with the
Company dated ________________________, Brown Brothers Harriman & Co. ("BBH"),
40 Water Street, Boston Massachusetts, 02109, acts as the custodian of the
Fund's securities and cash and as the Fund's accounting services agent. With the
consent of the Company, BBH has designated The Depository Trust Company of New
York, as its agent to secure a portion of the assets of the Fund. BBH is
authorized to appoint other entities to act as sub-custodians to provide for the
custody of foreign securities acquired and held by the Fund outside the U.S.
Such appointments are subject to appropriate review by the Company's Directors.
As the accounting services agent of the Fund, BBH maintains and keeps current
the books, accounts, records, journals or other records of original entry
relating to the Fund's business.
TRANSFER AGENT
Pursuant to a Transfer Agent Agreement with the Company dated _____________,
Fund Services, Inc. ("FSI") acts as the Company's transfer and disbursing agent.
FSI is located at 1500 Forest Avenue, Suite 111, Richmond, VA 23229. John Pasco,
III, Chairman of the Board of the Company and an officer and shareholder of CSS
(the Administrator of the Funds), owns one-third of the stock of FSI; therefore,
FSI may be deemed to be an affiliate of the Company and CSS.
FSI provides certain shareholder and other services to the Company, including
furnishing account and transaction information and maintaining shareholder
account records. FSI is responsible for processing orders and payments for share
purchases. FSI mails proxy materials (and receives and tabulates proxies),
shareholder reports, confirmation forms for purchases and redemptions and
prospectuses to shareholders. FSI disburses income dividends and capital
distributions and prepares and files appropriate tax-related information
concerning dividends and distributions to shareholders.
DISTRIBUTOR
First Dominion Capital Corp. ("FDCC"), located at 1500 Forest Avenue, Suite
223, Richmond, Virginia 23229, and Monument Distributors, Inc. ("MDI"),
located at 7920 Norfolk Avenue, Suite 500, Bethesda, Maryland 20814, serve as
principal underwriters and national distributors for the shares of the
Fund pursuant to a Distribution Agreement dated _________, 2000, (the
"Distribution Agreement"). John Pasco, III, Chairman of the Board of the
Company, owns 100% of FDCC, and is its President, Treasurer and a
Director. MDI is a wholly-owned subsidiary of The Monument Group, Inc.,
which in turn is principally owned and controlled by David A. Kugler, its
President. FDCC and MDI are registered as a broker-dealer and are members of
the National Association of Securities Dealers, Inc. (the "NASD").
Mr. Pasco and Mr. Kugler each have an ownership interest in the Manager. The
offering of the Fund's shares is continuous.
INDEPENDENT ACCOUNTANTS
The Company's independent accountants, Tait, Weller & Baker, audit the Company's
annual financial statements, assists in the preparation of certain reports to
the U.S. Securities and Exchange Commission (the "SEC"), and prepares the
Company's tax returns. Tait, Weller & Baker is located at 8 Penn Center Plaza,
Suite 800, Philadelphia, PA 19103.
PORTFOLIO TRANSACTIONS
It is the policy of the Manager, in placing orders for the purchase and sale of
the Fund's securities, to seek to obtain the best price and execution for
securities transactions, taking into account such factors as price, commission,
where applicable, (which is negotiable in the case of U.S. national securities
exchange transactions but which is generally fixed in the case of foreign
exchange transactions), size of order, difficulty of execution and the skill
required of the executing broker/dealer. After a purchase or sale decision is
made by the Manager, the Manager arranges for execution of the transaction in a
manner deemed to provide the best price and execution for the Fund.
Exchange-listed securities are generally traded on their principal exchange,
unless another market offers a better result. Securities traded only in the
over-the-counter market may be executed on a principal basis with primary market
makers in such securities, except for fixed price offerings and except where the
Fund may obtain better prices or executions on a commission basis or by dealing
with other than a primary market maker.
The Manager, when placing transactions, may allocate a portion of a fund's
brokerage to persons or firms providing the Manager with investment
recommendations, statistical, research or similar services useful to the
Manager's investment decision-making process. The term "investment
recommendations or statistical, research or similar services" means (1) advice
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, and (2) furnishing analyses and reports concerning issuers,
industries, securities, economic factors and trends, and portfolio strategy.
Such services are one of the many ways the Manager can keep abreast of the
information generally circulated among institutional investors by
broker-dealers. While this information is useful in varying degrees, its value
is indeterminable. Such services received on the basis of transactions for a
fund may be used by the Manager for the benefit of other clients, and the Fund
may benefit from such transactions effected for the benefit of other clients.
While there is no formula, agreement or undertaking to do so, and when it can be
done consistent with the policy of obtaining best price and execution, the Fund
may consider sales of its shares as a factor in the selection of brokers to
execute portfolio transactions. The Manager may be authorized, when placing
portfolio transactions for the Fund, to pay a brokerage commission in excess of
that which another broker might have charged for executing the same transaction
solely on account of the receipt of research, market or statistical information.
Except for implementing the policy stated above, there is no intention to place
portfolio transactions with particular brokers or dealers or groups thereof.
The Board of Directors of the Company has adopted policies and procedures
governing the allocation of brokerage to affiliated brokers. The Manager has
been instructed not to place transactions with an affiliated broker-dealer,
unless that broker-dealer can demonstrate to the Company that the Fund will
receive (1) a price and execution no less favorable than that available from
unaffiliated persons, and (2) a price and execution equivalent to that which
that broker-dealer would offer to unaffiliated persons in a similar transaction.
The Board reviews all transactions which have been placed pursuant to those
policies and procedures at its Board meetings.
PORTFOLIO TURNOVER
Average annual portfolio turnover rate is the ratio of the lesser of sales or
purchases to the monthly average value of the portfolio securities owned during
the year, excluding from both the numerator and the denominator all securities
with maturities at the time of acquisition of one year or less. A higher
portfolio turnover rate involves greater transaction expenses to a fund and may
result in the realization of net capital gains, which would be taxable to
shareholders when distributed. The Manager makes purchases and sales for the
Fund's portfolio whenever necessary, in the Manager's opinion, to meet the
Fund's objective. The Manager anticipates that the average annual portfolio
turnover rate of the Fund will be greater than 100%.
CAPITAL STOCK AND DIVIDENDS
The Company is authorized to issue 500,000,000 shares of common stock, with a
par value of $0.01 per share. The Company has presently allocated 50,000,000
shares to the Fund, and has further reclassified those shares as follows: Twenty
Million (20,000,000) shares for Class A shares of the series; Fifteen Million
(15,000,000) shares for Class B shares of the series; and Fifteen Million
(15,000,000) shares for Class C shares of the series. Each share has equal
dividend, voting, liquidation and redemption rights and there are no conversion
or preemptive rights. Shares of the Funds do not have cumulative voting rights,
which means that the holders of more than 50% of the shares voting for the
election of Directors can elect all of the directors if they choose to do so. In
such event, the holders of the remaining shares will not be able to elect any
person to the Board of Directors. Shares will be maintained in open accounts on
the books of FSI.
If they deem it advisable and in the best interests of shareholders, the
Directors may create additional series and classes of shares, each of which
represents interests in a separate portfolio of investments and is subject to
separate liabilities. If the Directors create additional series or classes of
shares, shares of each series or class are entitled to vote as a series or class
only to the extent required by the 1940 Act or as permitted by the Directors.
Upon the Company's liquidation, all shareholders of a series would share
pro-rata in the net assets of such series available for distribution to
shareholders of the series, but, as shareholders of such series, would not be
entitled to share in the distribution of assets belonging to any other series.
A shareholder will automatically receive all income dividends and capital gain
distributions in additional full and fractional shares of the Fund at its net
asset value as of the date of payment unless the shareholder elects to receive
such dividends or distributions in cash. The reinvestment date normally precedes
the payment date by about seven days although the exact timing is subject to
change. Shareholders will receive a confirmation of each new transaction in
their account. The Company will confirm all account activity, transactions made
as a result of the Automatic Investment Plan described below. Shareholders may
rely on these statements in lieu of stock certificates.
DISTRIBUTION
The Distributors may from time to time offer incentive compensation to dealers
(which sell shares of the Fund subject to sales charges) allowing such dealers
to retain an additional portion of the sales load. A dealer who receives all of
the sales load may be considered an underwriter of the Fund's shares.
In connection with promotion of the sales of the Fund, the Distributors may,
from time to time, offer (to all broker dealers who have a sales agreement with
the Distributors) the opportunity to participate in sales incentive programs
(which may include non-cash concessions). These non-cash concessions are in
addition to the sales load described in the Prospectus. The Distributors may
also, from time to time, pay expenses and fees required in order to participate
in dealer sponsored seminars and conferences, reimburse dealers for expenses
incurred in connection with pre-approved seminars, conferences and advertising,
and may, from time to time, pay or allow additional promotional incentives to
dealers as part of pre-approved sales contests.
Statement of Intention. The reduced sales charges and public offering price set
forth in the prospectus apply to purchases of $50,000 or more made within a
13-month period pursuant to the terms of a written Statement of Intention in the
form provided by the Distributor and signed by the purchaser. The Statement of
Intention is not a binding obligation to purchase the indicated amount. Shares
equal to 4.50% (declining to 1% after an aggregate of $1,000,000 has been
purchased under the Statement) of the dollar amount specified in the Statement
will be held in escrow and capital gain distributions on these escrowed shares
will be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Distributor the difference
between the sales charge actually paid and the sales charge which would have
been paid if the total purchases had been made at a single time. If the
difference is not paid within 20 days after written request by the Distributor
or the securities dealer, the appropriate number of escrowed shares will be
redeemed to pay such difference.
In the case of purchase orders by the trustees of certain employee plans by
payroll deduction, the sales charge for the investments made during the 13-month
period will be based on the following: total investments made the first month of
the 13-month period times 13; as the period progresses the sales charge will be
based (1) on the actual investment made previously during the 13-month period,
plus (2) the current month's investments times the number of months remaining in
the 13-month period. There will be no retroactive adjustments in sales charge on
investments previously made during the 13-month period.
PLAN OF DISTRIBUTION
The Fund has a Plan of Distribution or "12b-1 Plan" under which it may finance
certain activities primarily intended to sell shares, provided the categories of
expenses are approved in advance by the Board of Directors of the Company and
the expenses paid under the Plan were incurred within the preceding 12 months
and accrued while the Plan is in effect.
The Plan provides that the Fund will pay a fee to the Distributor at an annual
rate of 0.50% for Class A shares and 1.00% for Class B and Class C shares of the
Fund's average daily net assets. The fee is paid to the Distributor as
reimbursement for expenses incurred for distribution-related activity.
RULE 18f-3 PLAN
At a meeting held on April 14, 2000, the Board adopted a Rule 18f-3 Multiple
Class Plan on behalf of the Fund for the benefit of each of its series. The key
features of the Rule 18f-3 Plan are as follows: (I) shares of each class of the
fund represent an equal pro rata interest in the Fund and generally have
identical voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations qualifications, terms and conditions, except that each
class bears certain specific expenses and has separate voting rights on certain
matters that relate solely to that class or in which the interests of
shareholders of one class differ from the interests of shareholders of another
class; (ii) subject to certain limitations described in the Prospectus, shares
of a particular class of the Fund may be exchanged for shares of the same class
of another Fund; and (iii) the Fund's Class B Shares will convert automatically
into Class A shares of the Fund after a period of eight years, based on the
relative net asset value of such shares at the time of conversion. At present,
the Fund offers Class A Shares charging a front-end sales charge, Class B Shares
imposing a back-end sales charge upon the sale of shares within six years of
purchase, and Class C Shares charging a reduced sales charge and a contingent
deferred sales charge.
ADDITIONAL INFORMATION ABOUT PURCHASES AND SALES
Redemptions In Kind.
The Company, on behalf of the Fund, will pay in cash (by check) all requests for
redemption by any shareholder of record of the Fund. The amount is limited,
however, during any 90-day period, to the lesser of $250,000 or 1% of the value
of the Fund's net assets at the beginning of the 90-day period. This commitment
is irrevocable without the prior permission of the SEC. If redemption requests
exceed these amounts, the Board of Directors reserves the right to make payments
in whole or in part using securities or other assets of a Fund (if there is an
emergency, or if a cash payment would be detrimental to the existing
shareholders of the Fund). In these circumstances, the securities distributed
would be valued at the price used to compute the fund's net asset and you may
incur brokerage fees as a result of converting the securities to cash. The
Company does not intend to redeem illiquid securities in kind. If this happens,
however, you may not be able to recover your investment in a timely manner.
Exchanging Shares.
If you request the exchange of the total value of your account from one Fund to
another, we will reinvest any declared by unpaid income dividends and capital
gain distributions in the new Fund at its net asset value. Backup withholding
and information reporting may apply. Information regarding the possible tax
consequences of an exchange appears in the tax section in this SAI.
If a substantial number of shareholder sell their share of a Fund under the
exchange privilege, within a short period, the Fund may have to sell portfolio
securities that it would otherwise have held, thus incurring additional
transactional costs. Increased use of the exchange privilege may also result in
periodic large inflows of money. If this occurs, it is the fund's general policy
to initially invest in short-term, interest-bearing money market instruments.
However, if the Manager believes that attractive investment opportunities
(consistent with the Fund's investment objective and policies) exist
immediately, then it will invest such money in portfolio securities in an
orderly a manner as is possible.
The proceeds from the sale of shares of the Fund may not be available until the
third business day following the sale. The Fund you are seeking to exchange into
may also delay issuing shares until that third business day. The sale of Fund
shares to complete an exchange will be effected at net asset value of the fund
next computed after your request for exchange is received in proper form. See
Buying, Redeeming, and Exchanging shares in the Prospectus.
Conversion of Class B Shares to Class A Shares.
Class B Shares of the Fund will automatically convert to Class A Shares of the
Fund, based on the relative net asset value per share of the aforementioned
classes, eight years after the end of the calendar month in which your Class B
share order was accepted. For the purpose of calculating the holding period
required for conversion of Class B Shares, order acceptance shall mean: (1) the
date on which such Class B Shares were issued, or (2) for Class B Shares
obtained through an exchange, or a series of exchanges, (subject to the exchange
privileges for Class B Shares) the date on which the original Class B Shares
were issued. For purposes of conversion of Class B Shares, Class B Shares
purchased through the reinvestment of dividends and capital gain distribution
paid in respect of Class B Shares, Class B Shares will be held in a separate
sub-account. Each time any Class B Shares in the shareholder's regular account
(other than those shares in the sub-account) convert to Class A shares, a pro
rata portion of the Class B Shares in the sub-account will also convert to Class
A Shares. The portion will be determined by the ratio that the shareholder's
Class B Shares converting to Class A Shares bears to the shareholder's total
Class B Shares not acquired through the reinvestment of dividends and capital
gain distributions. The conversion of Class B to Class A is not a taxable event
for federal income tax purposes.
Whether a Contingent Deferred Sales Charge Applies.
In determining whether a Contingent Deferred Sales Charge ("CDSC") is applicable
to a redemption, the calculation will be made in a manner that results in the
lowest possible rate. It will be assumed that the redemption is made first of
amounts representing (1) shares acquired by reinvestment of dividends and
capital gains distributions, (2) shares held for over six years, and (3) shares
held the longest during the six-year period.
Eligible Benefit Plans. An eligible benefit plan is an arrangement available to
the (1) employees of an employer (or two or more affiliated employers) having
not less than ten employees at the plan's inception (2) or such an employer on
behalf of employees of a trust or plan for such employees, their spouses and
their children under the age of 21 or a trust or plan for such employees, which
provides for purchases through periodic payroll deductions or otherwise. There
must be at least five initial participants with accounts investing or invested
in shares of one or more of the Fund and/or certain other funds.
The initial purchase by the eligible benefit plan along with prior purchases by
or for the benefit of the initial participants of the plan must aggregate not
less than $5,000. Subsequent purchases must be at least $50 per account and must
aggregate at least $250. The eligible benefit plan must make purchases using a
single order and a single check or federal funds wire. The eligible benefit plan
may not make purchases more often than monthly. The Company will establish a
separate account for each employee, spouse or child for which purchases are
made. The Company may modify the requirements for initiating or continuing
purchases or stop offering shares to such a plan at any time without prior
notice.
Selling Shares. You may redeem shares of the Fund at any time and in any amount
by mail or telephone. The Fund will use reasonable procedures to confirm that
instructions communicated by telephone are genuine and, if the procedures are
followed, will not be liable for any losses due to unauthorized or fraudulent
telephone transactions.
The Company's procedure is to redeem shares at the NAV determined after the
Transfer Agent receives the redemption request in proper order. Payment will be
made promptly, but no later than the seventh day following the receipt of the
request in proper order. The Company may suspend the right to redeem shares for
any period during which the NYSE is closed or the U.S. Securities and Exchange
Commission determines that there is an emergency. In such circumstances you may
withdraw your redemption request or permit your request to be held for
processing after the suspension is terminated.
Small Accounts. Due to the relatively higher cost of maintaining small accounts,
the Company may deduct $50 per year from your account or may redeem the shares
in your account, if it has a value of less than $1,000. The Company will advise
you in writing thirty (30) days prior to deducting the annual fee or closing
your account, during which time you may purchase additional shares in any amount
necessary to bring the account back to $1,000. The Company will not close your
account if it falls below $1,000 solely because of a market decline.
Special Shareholder Services
As described briefly in the Prospectus, the Fund offers the following
shareholder services:
Regular Account. A regular account allows a shareholder to make voluntary
investments and/or withdrawals at any time. Regular accounts are available to
individuals, custodians, corporations, trusts, estates, corporate retirement
plans and others. You may use the Account Application provided with the
Prospectus to open a regular account.
Telephone Transactions. You may redeem shares or transfer into another fund if
you request this service on your initial Account Application. If you do not
elect this service at that time, you may do so at a later date by sending a
written request and signature guarantee to FSI. The Fund employs reasonable
procedures designed to confirm the authenticity of your telephone instructions
and, if it does not, it may be liable for any losses caused by unauthorized or
fraudulent transactions. As a result of this policy, a shareholder that
authorizes telephone redemption bears the risk of losses, which may result from
unauthorized or fraudulent transactions which the Fund believes to be genuine.
When you request a telephone redemption or transfer, you will be asked to
respond to certain questions. The Company has designed these questions to
confirm your identity as a shareholder of record. Your cooperation with these
procedures will protect your account and the Fund from unauthorized
transactions.
Invest-A-Matic Account. Invest-A-Matic Accounts allow shareholders to make
automatic monthly investments into their account. Upon request, FSI will
withdraw a fixed amount each month from a shareholder's checking account and
apply that amount to additional shares. This feature does not require you to
make a commitment for a fixed period of time. You may change the monthly
investment, skip a month or discontinue your Invest-A-Matic Plan as desired by
notifying FSI. To receive more information, please call the offices of the
Company at 1-800-527-9525. Any shareholder may utilize this feature.
Individual Retirement Account ("IRA"). All wage earners under 70-1/2, even those
who participate in a company sponsored or government retirement plan, may
establish their own IRA. You can contribute 100% of your earnings up to $2,000
(or $2,250 with a spouse who is not a wage earner, for years prior to 1997). A
spouse who does not earn compensation can contribute up to $2,000 per year to
his or her own IRA. The deductibility of such contributions will be determined
under the same rules that govern contributions made by individuals with earned
income. A special IRA program is available for corporate employers under which
the employers may establish IRA accounts for their employees in lieu of
establishing corporate retirement plans. Known as SEP-IRA's (Simplified Employee
Pension-IRA), they free the corporate employer of many of the recordkeeping
requirements of establishing and maintaining a corporate retirement plan trust.
If you have received a lump sum distribution from another qualified retirement
plan, you may rollover all or part of that distribution into your Fund IRA. A
rollover contribution is not subject to the limits on annual IRA contributions.
By acting within applicable time limits of the distribution you can continue to
defer Federal Income Taxes on your rollover contribution and on any income that
is earned on that contribution.
Roth IRA. A Roth IRA permits certain taxpayers to make a non-deductible
investment of up to $2,000 per year. Provided an investor does not withdraw
money from his or her Roth IRA for a 5 year period, beginning with the first tax
year for which contribution was made, deductions from the investor's Roth IRA
would be tax free after the investor reaches the age of 59-1/2. Tax free
withdrawals may also be made before reaching the age of 59-1/2 under certain
circumstances. Please consult your financial and/or tax professional as to your
eligibility to invest in a Roth IRA. An investor may not make a contribution to
both a Roth IRA and a regular IRA in any given year. An annual limit of $2,000
applies to contributions to regular and Roth IRAs. For example, if a taxpayer
contributes $2,000 to a regular IRA for a year, he or she may not make any
contribution to a Roth IRA for that year.
How to Establish Retirement Accounts
Please call the Company to obtain information regarding the establishment of
individual retirement plan accounts. Each plan's custodian charges nominal fees
in connection with plan establishment and maintenance. These fees are detailed
in the plan documents. You may wish to consult with your attorney or other tax
adviser for specific advice concerning your tax status and plans.
Exchange Privilege
Shareholders may exchange their shares for shares of any other series of the
Monument Series Fund, Inc. ("MSF"). You should call MSF at 1-888-420-9950 and
obtain a Prospectus prior to initiating the exchange. Also, to make an exchange,
an exchange order must comply with the requirements for a redemption or
repurchase order and must specify the value or the number of shares to be
exchanged. Your exchange will take effect as of the next determination of the
Fund's NAV per share (usually at the close of business on the same day). FSI
will charge your account a $10 service fee each time you make such an exchange.
The Company reserves the right to limit the number of exchanges or to otherwise
prohibit or restrict shareholders from making exchanges at any time, without
notice, should the Company determine that it would be in the best interest of
its shareholders to do so. For tax purposes, an exchange constitutes the sale of
the shares of the Fund from which you are exchanging and the purchase of shares
of the Fund into which you are exchanging. Consequently, the sale may involve
either a capital gain or loss to the shareholder for federal income tax
purposes. The exchange privilege is available only in states where it is legally
permissible to do so.
TAX STATUS
DISTRIBUTIONS AND TAXES
Distributions of net investment income. The Fund receives income generally in
the form of dividends and interest on their investments. This income, less
expenses incurred in the operation of a fund, constitutes a fund's net
investment income from which dividends may be paid to you. Any distributions by
a fund from such income will be taxable to you as ordinary income, whether you
take them in cash or in additional shares.
Distributions of capital gains. The Fund may derive capital gains and losses in
connection with sales or other dispositions of their portfolio securities.
Distributions from net short-term capital gains will be taxable to you as
ordinary income.
Distributions from net long-term capital gains will be taxable to you as
long-term capital gain, regardless of how long you have held your shares in the
Fund. Any net capital gains realized by the Fund generally will be distributed
once each year, and may be distributed more frequently, if necessary, in order
to reduce or eliminate excise or income taxes on the Fund.
Effect of foreign investments on distributions. Most foreign exchange gains
realized on the sale of securities are treated as ordinary income by a fund.
Similarly, foreign exchange losses realized by a fund on the sale of securities
are generally treated as ordinary losses by the Fund. These gains when
distributed will be taxable to you as ordinary dividends, and any losses will
reduce a fund's ordinary income otherwise available for distribution to you.
This treatment could increase or reduce a fund's ordinary income distributions
to you, and may cause some or all of a fund's previously distributed income to
be classified as a return of capital.
A fund may be subject to foreign withholding taxes on income from certain of its
foreign securities. If more than 50% of a fund's total assets at the end of the
fiscal year are invested in securities of foreign corporations, a fund may elect
to pass-through to you your pro rata share of foreign taxes paid by the Fund. If
this election is made, the year-end statement you receive from a fund will show
more taxable income than was actually distributed to you. However, you will be
entitled to either deduct your share of such taxes in computing your taxable
income or (subject to limitations) claim a foreign tax credit for such taxes
against your U.S. federal income tax. A fund will provide you with the
information necessary to complete your individual income tax return if it makes
this election.
Information on the tax character of distributions. The Fund will inform you of
the amount of your ordinary income dividends and capital gains distributions at
the time they are paid, and will advise you of their tax status for federal
income tax purposes shortly after the close of each calendar year. If you have
not held Fund shares for a full year, a fund may designate and distribute to
you, as ordinary income or capital gain, a percentage of income that is not
equal to the actual amount of such income earned during the period of your
investment in the Fund.
Election to be taxed as a regulated investment company. The Fund has elected to
be treated as a regulated investment company under Subchapter M of the Internal
Revenue Code, has qualified as such for its most recent fiscal year, and intends
to so qualify during the current fiscal year. As a regulated investment company,
the Fund generally does not pay federal income tax on the income and gains they
distribute to you. The board reserves the right not to maintain the
qualification of a fund as a regulated investment company if it determines such
course of action to be beneficial to shareholders. In such case, a fund will be
subject to federal, and possibly state, corporate taxes on its taxable income
and gains, and distributions to you will be taxed as ordinary dividend income to
the extent of such Fund's earnings and profits.
Excise tax distribution requirements. To avoid federal excise taxes, the
Internal Revenue Code requires a fund to distribute to you by December 31 of
each year, at a minimum, the following amounts: 98% of its taxable ordinary
income earned during the calendar year; 98% of its capital gain net income
earned during the twelve month period ending October 31; and 100% of any
undistributed amounts from the prior year. The Fund intends to declare and pay
these amounts in December (or in January that are treated by you as received in
December) to avoid these excise taxes, but can give no assurances that its
distributions will be sufficient to eliminate all taxes.
Redemption of Fund shares. Redemptions and exchanges of Fund shares are taxable
transactions for federal and state income tax purposes. If you redeem your Fund
shares, or exchange your Fund shares for shares of a different series of the
Company, the IRS will require that you report a gain or loss on your redemption
or exchange. If you hold your shares as a capital asset, the gain or loss that
you realize will be capital gain or loss and will be long-term or short-term,
generally depending on how long you hold your shares. Any loss incurred on the
redemption or exchange of shares held for six months or less will be treated as
a long-term capital loss to the extent of any long-term capital gains
distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of your Fund
shares will be disallowed to the extent that you buy other shares in such Fund
(through reinvestment of dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under these rules will be added to
your tax basis in the new shares you purchase.
U.S. Government Obligations. Many states grant tax-free status to
dividends paid to you from interest earned on direct obligations of the
U.S. government, subject in some states to minimum investment
requirements that must be met by the Fund. Investments in Government
National Mortgage Association or Federal National Mortgage
Association securities, bankers' acceptances, commercial paper and
repurchase agreements collateralized by U.S. government securities do not
generally qualify for tax-free treatment. The rules on exclusion of this
income are different for corporations.
INVESTMENT PERFORMANCE
For purposes of quoting and comparing the performance of the Fund to that of
other mutual funds and to relevant indices in advertisements or in reports to
shareholders, performance will be stated in terms of total return or yield. Both
"total return" and "yield" figures are based on the historical performance of a
fund, show the performance of a hypothetical investment and are not intended to
indicate future performance.
Yield Information
From time to time, the Fund may advertise a yield figure. A portfolio's yield is
a way of showing the rate of income the portfolio earns on its investments as a
percentage of the portfolio's share price. Under the rules of the SEC, yield
must be calculated according to the following formula:
6
Yield = 2[(a-b +1) -1]
---
cd
where:
a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the
period.
A fund's yield, as used in advertising, is computed by dividing the Fund's
interest and dividend income for a given 30-day period, net of expenses, by the
average number of shares entitled to receive distributions during the period
dividing this figure by a fund's NAV at the end of the period and annualizing
the result (assuming compounding of income) in order to arrive at an annual
percentage rate. Income is calculated for purposes of yield quotations in
accordance with standardized methods applicable to all stock and bond mutual
funds. Dividends from equity investments are treated as if they were accrued on
a daily basis solely for the purposes of yield calculations. In general,
interest income is reduced with respect to bonds trading at a premium over their
par value by subtracting a portion of the premium from income on a daily basis,
and is increased with respect to bonds trading at a discount by adding a portion
of the discount to daily income. Capital gains and losses generally are excluded
from the calculation. Income calculated for the purpose of calculating a fund's
yield differs from income as determined for other accounting purposes. Because
of the different accounting methods used, and because of the compounding assumed
in yield calculations, the yield quoted for a fund may differ from the rate of
distributions the fund paid over the same period or the rate of income reported
in the Fund's financial statements.
Total Return Performance
Under the rules of the SEC, fund advertising performance must include total
return quotes, "T" below, calculated according to the following formula:
n
P(1+T) = ERV
where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1,5 or 10)
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year periods (or fractional portion
thereof).
The average annual total return will be calculated under the foregoing formula
and the time periods used in advertising will be based on rolling calendar
quarters, updated to the last day of the most recent quarter prior to submission
of the advertising for publication, and will cover prescribed periods. When the
period since inception is less than one year, the total return quoted will be
the aggregate return for the period. In calculating the ending redeemable value,
all dividends and distributions by a fund are assumed to have been reinvested at
NAV as described in the prospectus on the reinvestment dates during the period.
Total return, or "T" in the formula above, is computed by finding the average
annual compounded rates of return over the prescribed periods (or fractional
portions thereof) that would equate the initial amount invested to the ending
redeemable value.
The Fund may also from time to time include in such advertising an aggregate
total return figure or an average annual total return figure that is not
calculated according to the formula set forth above in order to compare more
accurately the Fund's performance with other measures of investment return. The
Fund may quote an aggregate total return figure in comparing the Fund's total
return with data published by Lipper Analytical Services, Inc. or with the
performance of various indices including, but not limited to, the Dow Jones
Industrial Average, the Standard & Poor's 500 Stock Index, Russell Indices, the
Value Line Composite Index, the Lehman Brothers Bond, Government Corporate,
Corporate and Aggregate Indices, Merrill Lynch Government & Agency Index,
Merrill Lynch Intermediate Agency Index, Morgan Stanley Capital International
Europe, Australasia, Far East Index or the Morgan Stanley Capital International
World Index. For such purposes, the Fund calculates its aggregate total return
for the specific periods of time by assuming the investment of $10,000 in shares
of the Fund and assuming the reinvestment of each dividend or other distribution
at NAV on the reinvestment date. Percentage increases are determined by
subtracting the initial value of the investment from the ending value and by
dividing the remainder by the beginning value. To calculate its average annual
total return, the aggregate return is then annualized according to the SEC's
formula for total return quotes outlined above.
The Fund may also advertise the performance rankings assigned by the various
publications and statistical services, including but not limited to, SEI, Lipper
Mutual Performance Analysis, Intersec Research Survey of non-U.S. Equity Fund
Returns, Frank Russell International Universe, and any other data which may be
reported from time to time by Dow Jones & Company, Morningstar, Inc., Chase
Investment Performance, Wilson Associates, Stanger, CDA Investment Technologies,
Inc., the Consumer Price Index ("CPI"), The Bank Rate Monitor National Index, or
IBC/Donaghue's Average U.S. Government and Agency, or as appears in various
publications, including but not limited to, The Wall Street Journal, Forbes,
Barron's, Fortune, Money Magazine, The New York Times, Financial World,
Financial Services Week, USA Today and other national or regional publications.
FINANCIAL INFORMATION
You can receive free copies of reports, request other information and discuss
your questions about the Fund by contacting the Fund directly at:
THE WORLD FUNDS, INC.
1500 Forest Avenue, Suite 223
Richmond, Virginia 23229
TELEPHONE: 1-800-527-9525
E-MAIL: [email protected]
The books of the Fund will be audited at least once each year by Tait, Weller
and Baker, of Philadelphia, PA, independent public accountants.
<PAGE>
PART C - OTHER INFORMATION
ITEM 23. EXHIBITS
(a) ARTICLES OF INCORPORATION.
(1) Articles of Incorporation of the Registrant are herein incorporated by
reference to the Registrant's Initial Registration Statement on Form N-1A
(File Nos. 333-29289 and 811-8255), as filed with the Securities and
Exchange Commission (the "SEC") on June 16,1997.
(2) Articles Supplementary.
a. Re: the creation of the CSI Equity Fund and CSI Fixed
Income Fund dated July 29, 1997 are herein incorporated by
reference to Post-Effective Amendment Nos. 1/1 to the Registrant's
Initial Registration Statement on Form N-1A (File Nos. 333-29289
Sand811-8255), as filed with the SEC on August 1, 1997.
b. Re: the creation of the Third Millennium Russia Fund and
New Market Fund dated June 19, 1998 are herein incorporated by
reference to Post-Effective Amendment Nos. 4/4 to the Registrant's
Registration Statement on Form N-1A (File Nos. 333-29289 and
811-8255), as filed with the SEC on July 8, 1998.
c. Re: increasing the amount of authorized shares are herein
incorporated by reference to Post-Effective Amendment Nos. 4/4 to
the Registrant's Registration Statement on Form N-1A(File Nos.
333-29289 and 811-8255), as filed with the SEC on July 8, 1998.
d. Re: The creation of the GenomicsFund.com dated December 9,
1999 are herein incorporated by reference to Post-Effective
Amendment Nos. 9/11 to the Registrant's Registration Statement on
Form N-1A (File Nos. 333-29289 and 811-8255), as filed with the SEC
on January 7, 2000.
e. Re: The creation of the Global e Fund dated April 14, 2000 are herein
incorporated by reference to Post-Effective Amendment Nos. 10/12 to
the Registrant's Registration Statement on Form N-1A (File Nos.
333-29289 and 811-8255), as filed with the SEC on February 24, 2000.
f. FORM OF Re: The creation of the Monument EuroNet Fund dated April
14, 2000 is filed herewith as Exhibit 23(a)(2)(f).
(b) BY-LAWS.
By-Laws of the Registrant are herein incorporated by reference to the
Registrant's Initial Registration Statement on Form N-1A (File Nos. 333-29289
and 811-8255), as filed with the SEC on June 16, 1997.
(c) INSTRUMENTS DEFINING RIGHTS OF SECURITY HOLDERS.
Specimen Share Certificates.
a. 1/ Re: Sand Hill Portfolio Manager Fund is herein
incorporated by reference to the Registrant's Initial
Registration Statement on Form N-1A (File Nos. 333-29289 and
811-8255) as filed with the SEC on June 16, 1997.
2/ Re: CSI Equity Fund and CSI Fixed Income Fund is herein
incorporated by reference to Post-Effective Amendment Nos. 1/1
to the Registrant's Initial Registration Statement on Form
N-1A (File Nos. 33-29289 and 811-8255), as filed with the SEC
on August 1, 1997.
3/ Re: Third Millennium Russia Fund and New Market Fund. is
herein incorporated by reference to Post-Effective Amendment
Nos. 4/4 of the Registrant's Registration Statement on Form
N-1A (File Nos. 333-29289 and 811-8255) as filed with the SEC
on July 8, 1998.
4/ Re: GenomicsFund.com is herein incorporated by reference to
Post-Effective Amendment Nos. 9/11 of the Registrant's
Registration Statement on Form N-1A (File Nos. 333-29289 and
811-8255) as filed with the SEC on January 7, 2000.
5/ Re: Global e-Fund is herein incorporated by reference to
Post-Effective Amendment Nos. 10/12 of the Registrant's
Registration Statement on Form N-1A (File Nos. 333-29289 and
811-8255) as filed with the SEC on February 24, 2000.
6/ Re: FORM OF Monument EuroNet Fund is filed herewith as
Exhibit 23(c)(a)(6)
b. Applicable sections of Articles and By-Laws to be referenced in
future Post-Effective Amendment.(d) INVESTMENT ADVISORY CONTRACTS.
(1) Re: Sand Hill Portfolio Manager Fund.
Agreement dated August 19, 1997 between Sand Hill Advisors, Inc. and
the Registrant is herein incorporated by reference to Post-Effective
Amendment Nos. 2/2 to the Registrant's Registration Statement on
Form N-1A (File Nos. 333-29289 and 811-8255), as filed with the SEC
on December 1, 1997.
(2) Re: CSI Equity Fund.
Agreement dated October 14, 1997 between CSI Capital Management,
Inc. and the Registrant is herein incorporated by reference to
Post-Effective Amendment Nos. 2/2 to the Registrant's Registration
Statement on Form N-1A (File Nos. 333-29289 and 811-8255), as filed
with the SEC on December 1, 1997.
(3) Re: CSI Fixed Income Fund.
Agreement dated October 14, 1997 between CSI Capital Management
Inc. and the Registrant is herein incorporated by reference to
Post-Effective Amendment Nos. 2/2 to the Registrant's Registration
Statement on Form N-1A (File Nos. 333-29289 and 811-8255), as filed
with the SEC on December 1, 1997.
(4) Re: Third Millennium Russia Fund.
Agreement dated September 21, 1998 between Third Millennium
Investment Advisors LLC and the Registrant is herein incorporated
by reference to Post Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A (File No. 811-8255), as
filed with the SEC on December 30, 1998.
(5) Re: New Market Fund.
a. Agreement dated September 21, 1998 between Virginia Management
Investment Corporation and the Registrant is herein incorporated by
reference to Post Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A (File No. 811-8255), as filed
with the SEC on December 30, 1998.
b. Agreement dated September 21, 1998 between Virginia Management
Investment Corporation and the London Company of Virginia is herein
incorporated by reference to Post Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File No.
811-8255), as filed with the SEC on December 30, 1998.
(6) Re: GenomicsFund.com.
Agreement between xGENx, LLC and the Registrant dated March 1, 2000
is filed herewith as Exhibit No. (23)(d)(6).
(7) Re: Global e-Fund.
Agreement between Global Assets Advisors and the Registrant dated May
1, 2000 is filed herewith as Exhibit No.(23)(d)(7).
(8) Re: Monument EuroNet Fund.
a. FORM OF Agreement dated ______________,2000 between Vernes Asset
Management, LLC and the Registrant is filed herewith as Exhibit
(23)(d)(8)(a).
b FORM OF Agreement dated ______________,2000 between Vernes Asset
Management, LLC and Financiere Rembrandt is filed herewith as Exhibit
(23)(d)(8)(b).
c. FORM OF Agreement dated ______________,2000 between Vernes Asset
Management, LLC and Monument Advisors, Ltd. is filed herewith as
Exhibit (23)(d)(8)(c).
(e) UNDERWRITING CONTRACTS.
(1) Distribution Agreements.
Distribution Agreement dated September 21, 1998 between First
Dominion Capital Corp. and the Registrant is
herein incorporated by reference to Post-Effective Amendment No.5
to the Registrant's Registration Statement on Form N-1A (File No.
811-8255), as filed with the SEC on December 30, 1998.
(2) Distribution Agreement dated May 1, 2000 between International Assets
Advisory Corporation and the Registrant is herein incorporated by
reference to Post-Effective Amendment No.10/12 to the Registrant's
Registration Statement on Form N-1A (File No. 811-8255), as filed
with the SEC on February 24, 2000.
(3) FORM OF Distribution Agreement, on behalf of the Monument EuroNet
Fund series of the Registrant, dated___________,2000 between the
Registrant, First Dominion Capital Corp. and Monument Distributors,
Inc. is filed herewith as Exhibit EX-99. (23)(e)(3).
(f) BONUS OR PROFIT SHARING CONTRACTS.
Not Applicable.
(g) CUSTODIAN AGREEMENTS.
(1) Re: Sand Hill Portfolio Manager Fund.
Agreement dated August 19, 1997 between Star Bank, N.A. and
the Registrant is herein incorporated by reference to
Post-Effective Amendment No. 2/2 to the Registrant's Registration
Statement on Form N-1A File Nos. 333-29289 and 811-8255), as filed
with the SEC on December 1, 1997.
(2) Re: CSI Equity Fund and CSI Fixed Income Fund.
Agreement dated October 14, 1997 between Star Bank, N.A.
and the Registrant is herein incorporated by reference to
Post-Effective Amendment No. 2/2 to the Registrant's Registration
Statement on Form N-1A (File Nos. 333-29289 and 811-8255), as filed
with the SEC on December 1, 1997.
(3) Re: Third Millennium Russia Fund.
Agreement dated October 28, 1998 between Brown Brothers Harriman &
Co. and the Registrant is herein incorporated by reference to
Post-Effective Amendment No. 5 to the Registrant's Registration
Statement on Form N-1A (File No. 811-8255), as filed with the SEC
on December 30, 1998.
(4) RE: The New Market Fund.
Letter agreement dated August 21, 1998 adding the New Market Fund
series to the agreement dated October 14,1997 with CSI Equity
Fund and CSI Fixed Income Fund series is hereby incorporated by
reference to Post-Effective Amendment No. 9 to the Registrant's
Registration Statement on Form N-1A (File No. 811-8255), as filed
with the SEC on December 29, 1999.
(5) FOREIGN CUSTODY ARRANGEMENTS.
a. Re: Third Millennium Russia Fund.
Foreign Custody Manager Delegation Agreement dated October 28,
1998 between Brown Brothers Harriman & Co. and the Registrant is
herein incorporated by reference to Post-Effective Amendment No. 5
to the Registrant's Registration Statement on Form N-1A (File No.
811-8255), as filed with the SEC on December 30, 1998.
(h) OTHER MATERIAL CONTRACTS.
(1) Transfer Agency.
a. Agreement dated August 19, 1997 between Fund Services,
Inc. and the Registrant is herein incorporated by reference to
Post-Effective Amendment Nos. 2/2 to the Registrant's Registration
Statement on Form N-1A (File Nos. 333-29289 and 811-8255), as filed
with the SEC on December 1, 1997.
(2) Administrative Services.
a. Re: Sand Hill Portfolio Manager Fund.
Agreement dated August 19, 1997 between Commonwealth
Shareholder Services, Inc. and the Registrant is herein
incorporated by reference to Post-Effective Amendment No. 2/2 to
the Registrant's Registration Statement on Form N-1A (File Nos.
333-29289 and 811-8255), as filed with the SEC on December 1, 1997.
b. Re: CSI Equity Fund.
Agreement dated October 14, 1997 between Commonwealth Shareholder
Services, Inc. and the Registrant is herein incorporated by
reference to Post-Effective Amendment Nos. 2/2 to the Registrant's
Registration Statement on Form N-1A(File Nos. 333-29289 and
811-8255), as filed with the SEC on December 1, 1997.
c. Re: CSI Fixed Income Fund.
Agreement dated October 14, 1997 between Commonwealth Shareholder
Services, Inc. and the Registrant is herein incorporated by
reference to Post-Effective Amendment Nos. 2/2 to the Registrant's
Registration Statement on Form N-1A (File Nos. 333-29289 and
811-8255), as filed with the SEC on December 1, 1997.
d. Re: Third Millennium Russia Fund.
Agreement dated September 21, 1998 between Commonwealth
Shareholder Services, Inc. and the Registrant is herein
incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File No.
811-8255), as filed with the SEC on December 30, 1998.
e. Re: New Market Fund.
Agreement dated September 21, 1998 between Commonwealth
Shareholder Services, Inc. and the Registrant is herein
incorporated by reference to Post Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File Nos.
333-29289 and 811-8255), as filed with the SEC on December 29, 1998.
f. Re: GenomicsFund.com.
Agreement dated March 1, 2000 between Commonwealth Shareholder
Services, Inc. and the Registrant is filed herewith as Exhibit
No.(23)(h)(2)(f).
g. Re: Global e-Fund.Agreement dated May 1, 2000, between Commonwealth
Shareholder Services, Inc. and the Registrant is filed herewith as
Exhibit No. (23)(h)(2)(g).
h. Re: Monument EuroNet Fund.
FORM OF Agreement between Commonwealth Shareholder Services, Inc.
and the Registrant is filed herewith as Exhibit 23(h)(2)(h).
(3) Fund Accounting Service.
a. Re: Sand Hill Portfolio Manager Fund.
Agreement dated August 18, 1997 between Star Bank,N.A. and the
Registrant is herein incorporated by reference to Post-Effective
Amendment Nos. 2/2 to Registrant's Registration Statement on Form
N-1A (File Nos. 333-29289 and 811-8255) as filed with the SEC on
December 1, 1997.
b. Re: CSI Equity Fund and CSI Fixed Income Fund.
Agreement dated October 14, 1997 between Star Bank N.A. and the
Registrant is herein incorporated by reference to Post-Effective
Amendment Nos. 2/2 to the Registrant's Registration Statement on
Form N-1A (File Nos. 333-29289 and 811-8255), as filed with the SEC
on December 1, 1997.
c. Re: New Market Fund.
Agreement dated August 21, 1998 adding the New Market Fund series to
the agreement dated October 14,1997 with CSI Equity Fund and CSI
Fixed Income Fund series is hereby incorporated by reference to
Post-Effective Amendment No. 9 to the Registrant's Registration
Statement on Form N-1A (File No. 811-8255), as filed with the SEC on
December 29, 1999.
(4) Accounting Agency.
a. Re: Third Millennium Russia Fund.
Agreement dated October 28, 1998 between Brown Brothers
Harriman & Co. and the Registrant is herein incorporated by
reference to Post-Effective Amendment Nos. 5/6 to the
Registrant's Registration Statement on Form N-1A (File Nos.
333-29289 and 811-8255), as filed with the SEC on January 29,
1999.
(5) IRA Service Agreement between Brown Brothers Harriman & Co.
and the Registrant is herein incorporated by reference to
Post-Effective Amendment Nos. 4/4 to the Registrant's Registration
Statement on Form N-1A (File Nos. 333-29289 and 811-8255), as filed
with the SEC on July 8, 1998.
(6) Expense Limitations Agreements.
a. Agreement dated October 1, 1998 between the New Market Fund series of
the Registrant and Virginia Management Investment Corporation is
attached herewith as Exhibit EX-99.(23)(h)(6)(a).
b. Agreement dated October 1, 1998 between the Third Millennium Russia
Fund series of the Registrant and Third Millennium Investment
Advisors LLC is attached herewith as Exhibit EX-99.(23)(h)(6)(b).
c. Agreement dated March 1, 2000 between the GenomicsFund.com Fund
series of the Registrant and xGENx, LLC is attached herewith as
Exhibit EX-99.(23)(h)(6)(c).
d. Agreement dated May 1, 2000 between the Global e Fund series of the
Registrant and Global Assets Advisors is attached herewith as Exhibit
EX-99.(23)(h)(6)(d).
e. FORM OF Agreement between the Monument EuroNet Fund series of the
Registrant and Vernes Asset Management, LLC is attached herewith as
Exhibit EX-99.(23)(h)(6)(e).`
(i) LEGAL OPINION.
(1) Opinion of Stradley, Ronon, Stevens & Young, LLP dated April
22,1998 is herein incorporated by reference to Post-Effective
Amendment Nos. 4/4 to the Registrant's Registration
Statement on Form N-1A (File Nos. 333-29289 and 811-8255),
as filed with the SEC on July 8, 1998.
(2) Opinion of Stradley, Ronon, Stevens & Young LLP dated January 7,
2000 is herein incorporated by reference to Post-Effective
Amendment Nos. 9/11 to the Registrant's Registration Statement on
Form N-1A (File Nos. 333-29289 and 811-8255), as filed with the
SEC on January 7, 2000.
(3) Opinion of Stradley, Ronon, Stevens & Young LLP dated February
24, 2000 is herein incorporated by reference to Post-Effective
Amendment Nos. 10/12 to the Registrant's Registration Statement on
Form N-1A (File Nos. 333-29289 and 811-8255), as filed with the SEC
on February 24, 2000.
(4) Opinion of Counsel dated May 12, 2000 is filed herewith as Exhibit
(23)(i)(4).
(k) OMITTED FINANCIAL STATEMENTS. Not Applicable.
(l) INITIAL CAPITAL AGREEMENTS.
Not applicable.
(m) RULE 12B-1 PLAN.
(1) Re: Third Millennium Russia Fund.
Plan of Distribution dated September 21, 1998 is herein
incorporated by reference to Post-Effective Amendment No. 5 to the
Registrant's Registration Statement on Form N-1A (File No.
811-8255), as filed with the SEC on December 30, 1998.
(2) Re: New Market Fund.
Plan of Distribution dated September 21, 1998 is herein incorporated
by reference to Post Effective Amendment No. 5 to the Registrant's
Registration Statement on Form N-1A (File No.811-8255), as filed with
the SEC on December 30, 1998.
(3) Re: GenomicsFund.com
Plan of Distribution dated March 1, 2000 is filed herewith as Exhibit
EX-99.(23)(m)(3).
(4) Re: Global e-Fund.
Plan of Distribution dated May 1, 2000 is filed herewith as Exhibit
EX-99.(23)(m)(4).
(5) Re: Monument EuroNet Fund.
a. FORM OF Plan of Distribution for Class A Shares dated
________________, 2000 is filed herewith as Exhibit
EX-99.(23)(m)(5)(a).
b. FORM OF Plan of Distribution for Class B Shares dated
________________, 2000 is filed herewith as Exhibit
EX-99.(23)(m)(5)(b).
c. FORM OF Plan of Distribution for Class C Shares dated
________________, 2000 is filed herewith as Exhibit
EX-99.(23)(m)(5)(c).
(n) RULE 18F-3 PLAN
Re: Monument EuroNet Fund.FORM OF Rule 18f-3 Multiple Class Plan
dated ____________,2000 is filed herewith as Exhibit EX-99.(23)(n)(1)
(o) POWERS-OF-ATTORNEY.
(1) Re: Samuel Boyd, Jr., William E. Poist and Paul M. Dickinson
are herein incorporated by reference to the Registrant's
Initial Registration Statement on Form N-1A (File Nos. 333-29289
and 811-8255), as filed with the SEC on June 16, 1997.
(p) CODES OF ETHICS.
(1) The Code of Ethics of the Registrant is filed herewith
as Exhibit EX-99.(23)(p)(1).
(2) The Code of Ethics of Vernes Asset Management, LLC is filed herewith
as Exhibit EX-99.(23)(p)(2).
(3) The Code of Ethics of First Dominion Capital Corp. is filed herewith
as Exhibit EX-99. (23)(p)(3).
(4) The Code of Ethics of Monument Distributors, Inc. is filed herewith
as Exhibit EX-99.(23)(p)(4).
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND.
None.
ITEM 25. INDEMNIFICATION.
The Registrant is incorporated under the General Corporation Law (the
"GCL") of the State of Maryland. The Registrant's Articles of
Incorporation provide the indemnification of directors, officers and
other agents of the corporation to the fullest extent permitted under
the GCL. The Articles limit such indemnification so as to comply with
the prohibition against indemnifying such persons under Section 17 of
the Investment Company Act of 1940, as amended, for certain conduct
set forth in that section ("Disabling Conduct"). Contracts between the
Registrant and various service providers include provisions for
indemnification, but also forbid the Registrant to indemnify
affiliates for Disabling Conduct.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
a.) Sand Hill Advisors, Inc., the investment Adviser to the Sand Hill
Portfolio Manager Fund series, provides investment advisory
services consisting of portfolio management for a variety of
individuals and institutions and as of December 21, 1999, had
approximately $500 million in assets under management.
b.) CSI Capital Management, Inc., ("CSI") the investment Adviser to the
CSI Equity Fund series and the CSI Fixed Income Fund series, provides
investment advisory services consisting of portfolio management for a
variety of individuals and institutions and as of December 21, 1999
had approximately $244 million in assets under management. A
principal of CSI acts as trustee supervising an additional $30
million in assets.
c.) Third Millennium Investment Advisors, LLC, the investment adviser to
the Third Millennium Russia Fund, is a newly formed adviser formed
for the purpose of advising Registered Investment Companies and as of
December 21, 1999, had approximately $1 million in assets under
management.
d.) Virginia Management Investment Corporation, the investment
manager to the New Market Fund is a newly formed Adviser
formed for the purpose of advising Registered Investment
Companies. The London Company of Virginia (The London Company")
is the investment Adviser to the New Market Fund pursuant to an
Investment Advisory Agreement between Virginia Management
Investment Corporation and The London Company and currently
has 3.7 million in assets under management.
(e) xGENx, LLC, the investment adviser to the GenomicsFund.com, is a
newly formed adviser for the purpose of advising Registered
Investment Companies.
(f) Global Assets Advisors, Inc., the investment adviser to the
Global e Fund series, provides investment advisory services
consisting of portfolio management for a variety of individuals and
institutions and currently has approximately $50 million in assets
under management.
(g) Vernes Asset Management, LLC, the investment manager to the Monument
EuroNet Fund series, is a newly formed manager for the purpose of
advising Registered Investment Companies.
For information as to any other business, profession, vocation or employment of
a substantial nature in which each of the foregoing investment Advisers, and
each director, officer or partner of such investment Advisers, is or has been
engaged within the last two fiscal years for his or her own account or in the
capacity of director, officer, employee, partner or trustee, reference is made
to the investment Adviser's Form ADV listed opposite the investment Adviser's
name below, which is currently on file with the SEC as required by the
Investment Advisors Act of 1940, as amended.
Name of Investment Adviser Form ADV File Number
Sand Hill Advisors, Inc. 801-17601
CSI Capital Management, Inc. 801-14549
Third Millennium Investment Advisors, LLC 801-55720
Virginia Management Investment Corporation 801-55697
The London Company of Virginia 801-46604
xGENx, LLC 801-57224
Global Assets Advisors, Inc. 801-46753
Vernes Asset Management, LLC PENDING, will be provided
with a later filing.
ITEM 27. PRINCIPAL UNDERWRITERS.(a)
(1) First Dominion Capital Corp., also acts as underwriter to Vontobel Funds,
Inc.
(2) International Assets Advisory Corp..................
(3) Monument Distributors, Inc. also acts as underwriter to Monument Series
Fund, Inc.
(b) (1) First Dominion Capital Corp.
Position and
Name and Principal Position and Offices Offices with
Business Address with Underwriter Fund
John Pasco, III President, Chief Chairman,
1500 Forest Avenue Financial Officer President
Suite 223 and Treasurer and Director
Richmond VA 23229
Mary T. Pasco Director Assistant
1500 Forest Avenue Secretary
Suite 223
Richmond, VA 23229
Darryl S. Peay Vice President Assistant
1500 Forest Avenue Assistant Compliance Secretary
Suite 223 Officer
Richmond, VA 23229
Lori J. Martin Vice President and None
1500 Forest Avenue Assistant Secretary
Suite 223
Richmond, VA 23229
F. Byron Parker, Jr. Secretary Secretary
Mustian & Parker
8002 Discovery Drive
Suite 101
Richmond, VA 23229
(b) (2) International Assets Advisory Corporation
Name and Positions and Positions and
Principal Business Offices with Offices with
Address Underwriter Fund
Diego J. Veitia Director, Chairman None
250 Park Ave., So. Of the Board,
Suite 200 President and Chief
Winter Park, FL 32789 Executive Officer
Stephen A. Saker Director and Exec. None
250 Park Ave., So. Vice President
Suite 200
Winter Park, FL 32789
Jerome F. Misceli Director None
250 Park Ave., So.
Suite 200
Winter Park, FL 32789
Jeffrey L. Rush, MD Director None
250 Park Ave., So.
Suite 200
Winter Park, FL 32789
Robert A. Miller Director None
250 Park Ave., So.
Suite 200
Winter Park, FL 32789
Jonathan C. Hinz Chief Financial None
250 Park Ave., So. Officer and Treasurer
Suite 200
Winter Park, FL 32789
Todd A. Boren Sr. Vice President None
250 Park Ave., So. & Managing Director
Suite 200 of Private Client
Winter Park, FL 32789 Operations
Gerard A. Mastrianni Sr. Vice President None
250 Park Ave., So.
Suite 200
Winter Park, FL 32789
Sheri Ann Cuff Vice President- None
250 Park Ave., So. Operations
Suite 200
Winter Park, FL 32789
Nancy M. McMurtry Vice President- None
250 Park Ave., So. Compliance
Suite 200
Winter Park, FL 32789
(b) (3) Monument Distributors, Inc.
Name and Positions and Positions and
Principal Business Offices with Offices with
Address Underwriter Fund
David A. Kugler President, Treasurer None
7920 Norfolk Avenue and Director
Suite 500
Bethesda, Maryland 20814
(c) Not Applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.The accounts, books or other documents
of the Registrant required to be maintained by Section 31 (a) of the Investment
Company Act of 1940, as amended, and the rules promulgated thereunder are kept
in several locations:
(a) Investment records, including research information, records relating
to the placement of brokerage transactions, memorandums regarding
investment recommendations for supporting and/or authorizing the
purchase or sale of assets, information relating to the placement of
securities transactions, and certain records concerning investment
recommendations of the Fund are maintained at each Fund's investment
Adviser, as follows:
Fund: Sand Hill Portfolio Manager Fund
Adviser: Sand Hill Advisors, Inc., located at:
Location: 3000 Sand Hill Road
Building 3, Suite 150
Menlo Park, CA 94025
Fund: CSI Equity Fund and CSI Fixed Income Fund
Adviser: CSI Capital Management
Location: 445 Bush Street, 5th Floor
San Francisco, CA 94108
Fund: Third Millennium Russia Fund
Adviser: Third Millennium Investment Advisors, LLC:
Location: 515 Madison Avenue, 24th Floor
New York, NY 10022
Fund: New Market Fund
Adviser: The London Company
Location: Riverfront Plaza, West Tower
901 E. Byrd Street, Suite 350A
Richmond, VA 23219
Fund: GenomicsFund.com
Adviser: xGENx, LLC
Location: 555 Quince Orchard Road, Suite 606
Gaithersburg, MD 20878
Fund: Global e-Fund
Adviser: Global Assets Advisors, Inc.
Location: 250 Park Avenue South, Suite 200
Winter Park, FL 32789
Fund: Monument EuroNet Fund
Adviser: Vernes Asset Management, LLC
Location: 993 Farmington Avenue, Suite 205
Hartford, CT 06107(b)
Accounts and records for portfolio securities and other investment assets,
including cash of each of the Funds, as well as applicable accounting records,
general ledgers, supporting ledgers, pricing computations, etc. are maintained
in the custody of each Fund's custodian bank and accounting services agent, as
follows:
Custodian Bank/Accounting
Services Agent: Star Bank, N.A.
Location: 425 Walnut Street
P.O. Box 1118
Cincinnati, OH 45201-1118.
Funds: Sand Hill Portfolio Manager Fund
CSI Equity Fund
CSI Fixed Income Fund
New Market Fund
GenomicsFund.com
Custodian Bank/Accounting
Services Agent: Brown Brothers Harriman & Co.
Location: 40 Water Street
Boston, MA 02109
Funds: Third Millennium Russia Fund
Global e-Fund
Monument EuroNet Fund
(c) Shareholder Account Records (including share ledgers, duplicate
confirmations, duplicate account statements and applications forms)
pertaining to each of the Funds are maintained by their transfer
agent, Fund Services, Inc.:
1500 Forest Avenue, Suite 111
Richmond, VA 23229
(d) Administrative records, including copies of the charter, by-laws,
minute books, agreements, compliance records and reports,
certain shareholder communications, etc. pertaining to each of
the Funds are kept at their administrator, Commonwealth
Shareholder Services, Inc., located at:
1500 Forest Avenue, Suite 223
Richmond, VA 23229
(e) Records relating to distribution of shares of Sand Hill Portfolio
Manager Fund, CSI Equity Fund, CSI Fixed Income Fund, New Market Fund
Third Millennium Russia Fund and GenomicsFund.com are kept at their
distributor, First Dominion Capital Corp., located at:
1500 Forest Avenue, Suite 223
Richmond, VA 23229.
(f) Records relating to distribution of shares of Global e-Fund are kept
at their distributor, International Assets Advisory Corporation,
located at:
250 Park Avenue, South
Suite 200
Winter Park, Florida 32789
ITEM 29. MANAGEMENT SERVICES.
There are no management-related service contracts not discussed in Parts
A or B of this Form.
ITEM 30. UNDERTAKINGS.The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund has duly caused this registration statement to be
signed on its behalf by the undersigned, duly authorized, in the City of
Richmond, and Commonwealth of Virginia on the 12th day of May, 2000.
THE WORLD FUNDS, INC.
By /s/ John Pasco, III
------------------------
(Signature and Title)
John Pasco, III,
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act, this registration statement
has been signed below by the following persons in the capacities and on the
date(s) indicated.
(Signature) (Title) (Date)
/s/ John Pasco, III Director, Chairman May 12, 2000
John Pasco, III Chief Executive
Officer and Chief
Financial Officer
/s/ SAMUEL BOYD, JR.* Director May 12, 2000
Samuel Boyd, Jr.
/s/ PAUL M. DICKENSON* Director May 12, 2000
Paul M. Dickinson
/s/ WILLIAM E. POIST* Director May 12, 2000
William E. Poist
/s/ John Pasco, III
- ------------------------
John Pasco, III
* By John Pasco, III, Attorney-in-Fact Pursuant to Powers-of-Attorney.
<PAGE>
EXHIBIT INDEX EDGAR EXHIBIT #
- -------------------- ---------------
Articles Supplementary EX-99.(23)(a)(2)(f)
Specimen Stock Certificate EX-99.(23)(c)(a)(6)
Investment Advisory Agreement
GenomicsFund.com EX-99.(23)(d)(6)
Global e Fund EX-99.(23)(d)(7)
Vernes Asset Management, LLC EX-99.(23)(d)(8)(a)
SA Financiere Rembrandt EX-99.(23)(d)(8)(b)
Monument Advisors, Ltd. EX-99.(23)(d)(8)(c)
Distribution Agreement EX-99.(23)(e)(3)
Administrative Services
GenomicsFund.com EX-99.(23)(h)(2)(f)
Global e Fund EX-99.(23)(h)(2)(g)
Monument EuroNet Fund EX-99.(23)(h)(2)(h)
Expense Limitation Agreements
New Market Fund EX-99.(23)(h)(6)(a)
Third Millennium Russia Fund EX-99.(23)(h)(6)(b)
GenomicsFund.com EX-99.(23)(h)96)(c)
Global e Fund EX-99.(23)(h)(6)(d)
Monument EuroNet Fund EX-99.(23)(h)(6)(e)
Opinion of Counsel EX-23.(i)(4)
Rule 12b-1 Plan
GenomicsFund.com EX-99.(23)(m)(3)
Global e Fund EX-99.(23)(m)(4)
Monument EuroNet Fund -
Class A Shares EX-99.(23)(m)(5)(a)
Monument EuroNet Fund -
Class B Shares EX-99.(23)(m)(5)(b)
Monument EuroNet Fund -
Class C Shares EX-99.(23)(m)(5)(c)
Rule 18f-3 Plan EX-99.(23)(n)(1)
Code of Ethics
Registrant EX-99.(23)(p)(1)
Vernes Asset Management, LLC EX-99.(23)(p)(2)
First Dominion Capital Corp. EX-99.(23)(p)(3)
Monument Distributors, Inc. EX-99.(23)(p)(4)
<PAGE>
EXHIBIT EX-99.23(a)(2)(f)
THE WORLD FUNDS, INC.
Articles Supplementary
The World Funds, Inc., a Maryland corporation having an office in
Baltimore, Maryland (the "Corporation") and an open-end investment company
registered under the Investment Company Act of 1940, as amended, hereby
certifies, in accordance with Section 2-208 of the Maryland General
Corporation Law, to the State Department of Assessments and Taxation of
Maryland that:
FIRST: The Board of Directors of the Corporation, at a meeting held on April 14,
2000, adopted resolutions classifying and allocating unallocated and unissued
Common Stock of the Corporation as follows: (i) Fifty Million (50,000,000)
shares of Common Stock with a par value of One Cent ($.01) per share to the
Monument EuroNet Fund series of the Corporation, and further reclassifies those
shares as follows: Twenty Million (20,000,000) shares for Class A shares of the
series; Fifteen Million (15,000,000) shares for Class B shares of the series;
and Fifteen Million (15,000,000) shares for Class C shares of the series.
SECOND: (a) The total number of shares of stock which the Corporation was
authorized to issue prior to the aforesaid action was Five Hundred Million
(500,000,000) shares of Common Stock, with a par value of One Cent ($.01) per
share, having an aggregate value of Five Million Dollars ($5,000,000):
One series of shares was designated as the Sand Hill Portfolio Manager Fund
series and Fifty Million (50,000,000) shares of Common Stock (par value $.01 per
share) were classified and allocated to such series, with an aggregate par value
of Five Hundred Thousand Dollars ($500,000); and
One series of shares was designated as the CSI Equity Fund series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) were
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000); and
One series of shares was designated as the CSI Fixed Income Fund series and
Fifty Million (50,000,000) shares of Common Stock (par value $.01 per share)
were classified and allocated to such series, with an aggregate par value of
Five Hundred Thousand Dollars ($500,000); and
One series of shares was designated as the Third Millennium Russia Fund series
and Fifty Million (50,000,000) shares of Common Stock (par value $.01 per share)
were classified and allocated to such series, with an aggregate par value of
Five Hundred Thousand Dollars ($500,000); and
One series of shares was designated as the New Market Fund series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share)were
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000); and
One series of shares was designated as the GenomicsFund.com series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) were
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000); and
One series of shares was designated as the Global e Fund series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) were
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000); and
(b) The total number of shares of stock which the Corporation is authorized to
issue, following the aforesaid actions, is Five Hundred Million (500,000,000)
shares of Common Stock, with a par value of One Cent ($.01) per share, having an
aggregate par value of Five Million Dollars ($5,000,000):
One series of shares is designated as the Sand Hill Portfolio Management Fund
series and Fifty Million (50,000,000) shares of Common Stock (par value $.01 per
share) are classified and allocated to such series, with an aggregate par value
of Five Hundred Thousand Dollars ($500,000).
One series of shares is designated as the CSI Equity Fund series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) are
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000);
One series of shares is designated as the CSI Fixed Income Fund series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) are
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000);
One series of shares is designated as the Third Millennium Russia Fund series
and Fifty Million (50,000,000) shares of Common Stock (par value $.01 per share)
are classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000);
One series of shares is designated as the New Market Fund series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) are
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000);
One series of shares is designated as the GenomicsFund.com series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) were
classified and allocated to such series, with an aggregate par value of Five
Hundred Thousand Dollars ($500,000); and
One series of shares is designated as the Global e Fund series and Fifty Million
(50,000,000) shares of Common Stock (par value $.01 per share) were classified
and allocated to such series, with an aggregate par value of Five Hundred
Thousand Dollars ($500,000); and
One series of shares is designated as the Monument EuroNet Fund series and Fifty
Million (50,000,000) shares of Common Stock (par value $.01 per share) were
classified and allocated to such series, and further reclassified those shares
as follows: Twenty Million (20,000,000) shares for Class A shares of the series;
Fifteen Million (15,000,000) shares for Class B shares of the series; and
Fifteen Million (15,000,000) shares for Class C shares of the series, with an
aggregate par value of Five Hundred Thousand Dollars ($500,000); and THIRD: The
shares of the Monument EuroNet Fund series shall have such preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, terms and conditions of redemption and other
characteristics as are stated in Article FIFTH of the Articles of Incorporation
of the Corporation.
FOURTH: With respect to the Monument EuroNet Fund series, at such times as may
be determined by the Board of Directors (or with the authorization of the Board
of Directors, the officers of the Corporation) in accordance with the Investment
Company Act of 1940, as amended, all other applicable rules and regulations, and
as reflected in the registration statement of the Monument EuroNet Fund, current
as of the time such shares are issued, shares of Class B and Class Y, to the
extent applicable, may be automatically converted into shares of another class
of capital stock of the Monument EuroNet Fund based on the relative net asset
values of such classes at the time of conversion, subject, however, to any
conditions of conversion that may be imposed by the Board of Directors (or with
the authorization of the Board of Directors, the officers and the Corporation)
and reflected in such current registration statement relating to the Monument
EuroNet Fund.
FIFTH: The aforesaid shares of the Monument EuroNet Fund series have been duly
classified and allocated by the Board of Directors pursuant to the authority and
power contained in the charter of the Corporation.
IN WITNESS WHEREOF, The World Funds, Inc., has caused these Articles
Supplementary to be signed in its name and on its behalf this 14th day of
April, 2000.
The World Funds, Inc.
By /s/ John Pasco, III
-------------------
John Pasco, III
Chairman and Chief Executive Officer
WITNESS:
/s/ Darryl S. Peay
- -------------------------------
Name: Darryl S. Peay
Title: Assistant Secretary
THE UNDERSIGNED, Chairman and Chief Executive Officer of The World Funds, Inc.,
who executed on behalf of said Corporation the foregoing Articles Supplementary
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, the foregoing Articles to be the corporate act of
said Corporation and further certifies, that, to the best of his knowledge,
information and belief, the matters and facts set forth herein with respect to
the approval thereof are true in all material respects, under the penalties of
perjury.
/s/ John Pasco, III
--------------------
John Pasco, III
Chairman and Chief Executive Officer
Attest:
/s/ Darryl S. Peay
- ---------------------
Darryl S. Peay
Assistant Secretary
<PAGE>
EXHIBIT EX-99.(23)(c)(a)(6)
Below is the text of a sample of the Stock Certificate for Monument EuroNet Fund
series of The World Funds, Inc.
CAPITAL STOCK OF CUSIP 981477-_____________
THE WORLD FUNDS, INC.
Monument EuroNet Fund series
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE PAR VALUE OF $.01
EACH OF THE CAPITAL STOCK OF
THE WORLD FUNDS, INC. Monument EuroNet Fund series
(hereinafter called the "Corporation") transferable on the books of the
Corporation in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be held subject to all of the provisions of the
Certificate of Incorporation and the bylaws of the Corporation and all
amendments thereto, to all of which the holder by acceptance hereof assents.
This certificate is not valid until countersigned by the Transfer Agent.
Witness the facsimile signatures of the duly authorized officers of the
Corporation
Dated Attest By
Secretary Chairman
<PAGE>
EXHIBIT EX-99.(23)(d)(6)
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement") dated this 1st day of
March, 2000 by and between THE WORLD FUNDS, INC., a Maryland corporation (herein
called the "Fund"), and xGENx, LLC, a Maryland Limited Liability Company (the
"Adviser") a registered investment adviser under the Investment Advisers Act of
1940, as amended.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Fund desires to retain the Adviser to furnish investment
advisory and management services to certain portfolios of the Fund, subject to
the control of the Fund's Board of Directors, and the Adviser is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be bound, it is agreed between the parties
hereto as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as the
Adviser to the GenomicsFund.com series of the Fund (the "Portfolio") for the
period and on the terms set forth in this Agreement. The Adviser accepts
such appointment and agrees to furnish the services herein set forth, for
the compensation herein
provided.
2. Duties of the Adviser. The Fund employs the Adviser to manage the
investments and reinvestment of the assets of the Portfolio, and to continuously
review, supervise, and administer the investment program of the Portfolio, to
determine in its discretion the securities to be purchased or sold, to provide
the Fund and Commonwealth Shareholder Services, Inc. (the "Administrator") with
records concerning the Adviser's activities which the Fund is required to
maintain, and to render regular reports to the Fund's Officers and Board of
Directors and to the Administrator concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Fund's Board of Directors and in compliance with such
policies as the Board may from time to time establish, and in compliance with
the objectives, policies, and limitations for the Portfolio as set forth in its
Prospectus and Statement of Additional Information, as amended from time to
time, and applicable laws and regulations.
The Fund will instruct each of its agents and contractors to
cooperate in the conduct of the business of the Portfolio.
The Adviser accepts such employment and agrees, at its own expense,
to render the services and to provide 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.
3. Portfolio Transactions. The Adviser is authorized to select the brokers
and dealers that will execute the purchases and sales of portfolio securities
for the Portfolio and is directed to use its best efforts to obtain the best
price and execution for the Portfolio's transactions in accordance with the
policies of the Fund as set forth from time to time in the Portfolio's
Prospectus and Statement of Additional Information. The Adviser will promptly
communicate to the Fund and to the Administrator 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 Fund or be in breach of
any obligation owing to the Fund under this Agreement, or otherwise, by reason
of its having directed a securities transaction on behalf of the Fund to an
unaffiliated broker-dealer in compliance with the provisions of Section 28(e) of
the Securities Exchange Act of 1934 or as described from time to time by the
Portfolio's Prospectus and Statement of Additional Information. Subject to the
foregoing, the Adviser may direct any transaction of the Portfolio to a broker
which is affiliated with the Adviser in accordance with, and subject to, the
policies and procedures approved by the Board of Directors of the Fund pursuant
to Rule 17e-1 under the 1940 Act. Such brokerage services are not deemed to be
provided under this Agreement.
4. Compensation of the Adviser. For the services to be rendered by the
Adviser under this Agreement, the Portfolio shall pay to the Adviser, and the
Adviser will accept as full compensation a fee, accrued daily and payable within
five (5) business days after the last business day of each month, at an annual
rate of 1.00% on the first $250 million of average net assets; 0.875% on assets
in excess of $250 million and not more than $500 million of average net assets;
and 0.75% on average net assets over $500 million.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of this
Agreement.
5. Expenses. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with the management of
the Fund. Notwithstanding the foregoing, the Portfolio shall pay the
expenses and costs of the Portfolio for the following:
a. Taxes;
b. Brokerage fees and commissions with regard to
portfolio transactions;
c. Interest charges, fees and expenses of the custodian
of the securities;
d. Fees and expenses of the Fund's transfer agent and the
Administrator;
e. Its proportionate share of auditing and legal expenses;
f. Its proportionate share of the cost of maintenance of
corporate existence;
g. Its proportionate share of compensation of
directors of the Fund who are not interested
persons of the Adviser as that term is defined by law;
h. Its proportionate share of the costs of corporate meetings;
i. Federal and State registration fees and expenses incident
to the sale of shares of the Portfolio;
j. Costs of printing and mailing Prospectuses for the
Portfolio's shares, reports and notices to
existing shareholders;
k. The Advisory fee payable to the Adviser, as provided
in paragraph 4 herein;
l. Costs of recordkeeping (other than investment records
required to be maintained by the Adviser), and daily pricing;
m. Distribution expenses in accordance with any
Distribution Plan as and if approved by the shareholders
of the Portfolio; and
n. Expenses and taxes incident to the failure of the Portfolio to
qualify as a regulated investment company under the provisions
of the Internal Revenue Code of 1986, as amended, unless such
expenses and/or taxes arise from the negligence of another party.
6. Reports. The Fund and the Adviser agree to furnish to each other, if
applicable, current information required for the preparation by such parties of
prospectuses, statements of additional information, proxy statements, reports to
shareholders, certified copies of their financial statements, and to furnish to
each other such other information and documents with regard to their affairs as
each may reasonably request.
7. Status of the Adviser. The services of the Adviser to the Fund 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 Fund are not impaired thereby.
Pursuant to comparable agreements, the Fund may also retain the
services of the Adviser to serve as the investment adviser of other series of
the Fund.
8. Books and Records. In compliance with the requirements of the 1940 Act,
the Adviser hereby agrees that all records which it maintains for the Fund are
the property of the Fund, and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request. The Adviser further agrees to
preserve for the periods prescribed by the 1940 Act, and the rules or orders
thereunder, the records required to be maintained by the 1940 Act.
9. Limitation of Liability of Adviser. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Adviser hereunder. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or negligence on the part of the Adviser in the performance of its duties
or from reckless disregard by it of its obligations and duties under this
Agreement. (As used in this Paragraph 9, the term "Adviser" shall include
directors, officers, employees and other corporate agents of the Adviser as well
as that corporation itself).
10. Permissible Interests. Directors, agents, and shareholders of the Fund
are or may be interested in the Adviser (or any successor thereof) as directors,
officers, or shareholders, or otherwise; directors, officers, agents, and
shareholders of the Adviser are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Fund as a shareholder or otherwise. In addition,
brokerage transactions for the Fund may be effected through affiliates of the
Adviser if approved by the Fund's Board of Directors, subject to the rules and
regulations of the Securities and Exchange Commission, and the policies and
procedures adopted by the Fund.
11. License of Adviser's Name. The Adviser hereby authorizes the Fund to
use the name "GenomicsFund.com" for the Portfolio. The Fund agrees that if this
Agreement is terminated it will promptly redesignate the name of the Portfolio
to eliminate any reference to the name "GenomicsFund.com" or any derivation
thereof unless the Adviser waives this requirement in writing.
12. Duration and Termination. This Agreement shall become effective on the
date first above written subject to its approval by the shareholders of the
Portfolio and unless sooner terminated as provided herein, shall continue in
effect for two (2) years from that date. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such continuance is
specifically approved annually (a) by the vote of a majority of those members of
the Fund's Board of Directors who are not parties to this Agreement or
interested persons of any such party (as that term is defined in the 1940 Act),
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by vote of either the Board of Directors or of a majority of the
outstanding voting securities (as that term is defined in the 1940 Act) of the
Portfolio. Notwithstanding the foregoing, this Agreement may be terminated by
the Portfolio or by the Fund at any time on sixty (60) days written notice,
without the payment of any penalty, provided that termination must be authorized
either by vote of the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Portfolio or by the Adviser on sixty (60)
days written notice. This Agreement will automatically terminate in the event of
its assignment (as that term is defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act).
14. Notice. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
address stated below, or at such other address as either party may advise in
writing:
(a) To the Fund at: 1500 Forest Avenue
Suite 223
Richmond, VA 23229
(b) To the Adviser at: 555 Quince Orchard Road
Suite 606
Gaithersburg, MD 20878
15. 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
16. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Maryland, and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
17. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
xGENx, LLC
BY:/s/ Steve Newby
---------------------------
Steve Newby
Chairman
THE WORLD FUNDS, INC.
BY: /s/ John Pasco, III
------------------------------
John Pasco, III
Chairman
<PAGE>
EXHIBIT EX-99.(23)(d)(7)
INVESTMENT ADVISORY AGREEMENT
Investment Advisory Agreement (the "Agreement")dated this 1st day of May,
2000 by and between THE WORLD FUNDS, INC., a Maryland corporation (herein called
the "Fund"), and GLOBAL ASSETS ADVISORS, INC., a Florida corporation (the
"Adviser") a registered investment adviser under the Investment Advisers Act of
1940, as amended.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Fund desires to retain the Adviser to furnish investment
advisory and management services to certain portfolios of the Fund, subject to
the control of the Fund's Board of Directors, and the Adviser is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be bound, it is agreed between the parties
hereto as follows:
1. Appointment. The Fund hereby appoints the Adviser to act as the Adviser
to the Global e-Fund series of the Fund (the "Portfolio") for the period and on
the terms set forth in this Agreement. The Adviser accepts such appointment and
agrees to furnish the services herein set forth, for the compensation herein
provided.
2. Duties of the Adviser. The Fund employs the Adviser to manage the
investments and reinvestment of the assets of the Portfolio, and to continuously
review, supervise, and administer the investment program of the Portfolio, to
determine in its discretion the securities to be purchased or sold, to provide
the Fund and Commonwealth Shareholder Services, Inc. (the "Administrator") with
records concerning the Adviser's activities which the Fund is required to
maintain, and to render regular reports to the Fund's Officers and Board of
Directors and to the Administrator concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Fund's Board of Directors and in compliance with such
policies as the Board may from time to time establish, and in compliance with
the objectives, policies, and limitations for the Portfolio as set forth in its
Prospectus and Statement of Additional Information, as amended from time to
time, and applicable laws and regulations.
The Fund will instruct each of its agents and contractors to
cooperate in the conduct of the business of the Portfolio.
The Adviser accepts such employment and agrees, at its own expense,
to render the services and to provide 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.
3. Portfolio Transactions. The Adviser is authorized to select the brokers
and dealers that will execute the purchases and sales of portfolio securities
for the Portfolio and is directed to use its best efforts to obtain the best
price and execution for the Portfolio's transactions in accordance with the
policies of the Fund as set forth from time to time in the Portfolio's
Prospectus and Statement of Additional Information. The Adviser will promptly
communicate to the Fund and to the Administrator 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 Fund or be in breach of
any obligation owing to the Fund under this Agreement, or otherwise, by reason
of its having directed a securities transaction on behalf of the Portfolio to an
unaffiliated broker-dealer in compliance with the provisions of Section 28(e) of
the Securities Exchange Act of 1934 or as described from time to time by the
Portfolio's Prospectus and Statement of Additional Information. Subject to the
foregoing, the Adviser may direct any transaction of the Portfolio to a broker
which is affiliated with the Adviser in accordance with, and subject to, the
policies and procedures approved by the Board of Directors of the Fund pursuant
to Rule 17e-1 under the 1940 Act. Such brokerage services are not deemed to be
provided under this Agreement.
4. Compensation of the Adviser. For the services to be rendered by the
Adviser under this Agreement, the Portfolio shall pay to the Adviser, and the
Adviser will accept as full compensation a fee, accrued daily and payable within
five (5) business days after the last business day of each month, at an annual
rate of 1.25% on the first $500 million of average net assets; 1.00% on assets
in excess of $500 million and not more than $1 billion of average net assets;
and 0.75% on average net assets over $1 billion.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of this
Agreement.
5. Expenses. During the term of this Agreement, the Adviser will pay
all expenses incurred by it in connection with the management of the Fund.
Notwithstanding the foregoing, the Portfolio shall pay the expenses and costs
of the Portfolio for the following:
a. Taxes;
b. Brokerage fees and commissions with regard to portfolio
transactions;
c. Interest charges, fees and expenses of the custodian of the
securities;
d. Fees and expenses of the Fund's transfer agent and the
Administrator;
e. Its proportionate share of auditing and legal expenses;
f. Its proportionate share of the cost of maintenance of
corporate existence;
g. Its proportionate share of compensation of directors of the
Fund who are not interested persons of the Adviser as
that term is defined by law;
h. Its proportionate share of the costs of corporate meetings;
i. Federal and State registration fees and expenses incident to
the sale of shares of the Portfolio;
j. Costs of printing and mailing Prospectuses for the
Portfolio's shares, reports and notices to existing
shareholders;
k. The Advisory fee payable to the Adviser, as provided in
paragraph 4 herein;
l. Costs of recordkeeping (other than investment records
required to be maintained by the Adviser), and daily pricing;
m. Distribution expenses in accordance with any Distribution
Plan as and if approved by the shareholders of the Portfolio; and
n. Expenses and taxes incident to the failure of the Portfolio to
qualify as a regulated investment company under the provisions of
the Internal Revenue Code of 1986, as amended, unless such
expenses and/or taxes arise from the negligence of another party.
6. Reports. The Fund and the Adviser agree to furnish to each other, if
applicable, current information required for the preparation by such parties of
prospectuses, statements of additional information, proxy statements, reports to
shareholders, certified copies of their financial statements, and to furnish to
each other such other information and documents with regard to their affairs as
each may reasonably request.
7. Status of the Adviser. The services of the Adviser to the Fund 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 Fund are not impaired thereby.
Pursuant to comparable agreements, the Fund may also retain the
services of the Adviser to serve as the investment adviser of other series of
the Fund.
8. Books and Records. In compliance with the requirements of the 1940 Act,
the Adviser hereby agrees that all records which it maintains for the Fund are
the property of the Fund, and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request. The Adviser further agrees to
preserve for the periods prescribed by the 1940 Act, and the rules or orders
thereunder, the records required to be maintained by the 1940 Act.
9. Limitation of Liability of Adviser. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Adviser hereunder. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or negligence on the part of the Adviser in the performance of its duties
or from reckless disregard by it of its obligations and duties under this
Agreement. (As used in this Paragraph 9, the term "Adviser" shall include
directors, officers, employees and other corporate agents of the Adviser as well
as that corporation itself).
10. Permissible Interests. Directors, agents, and shareholders of the Fund
are or may be interested in the Adviser (or any successor thereof) as directors,
officers, or shareholders, or otherwise; directors, officers, agents, and
shareholders of the Adviser are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Fund as a shareholder or otherwise. In addition,
brokerage transactions for the Fund may be effected through affiliates of the
Adviser if approved by the Fund's Board of Directors, subject to the rules and
regulations of the Securities and Exchange Commission, and the policies and
procedures adopted by the Fund.
11. License of Adviser's Name. The Adviser hereby authorizes the Fund to
use the name "Global e-Fund" for the Portfolio. The Fund agrees that if this
Agreement is terminated it will promptly redesignate the name of the Portfolio
to eliminate any reference to the name "Global e-Fund" or any derivation thereof
unless the Adviser waives this requirement in writing.
12. Duration and Termination. This Agreement shall become effective on the
date first above written subject to its approval by the shareholders of the
Portfolio and unless sooner terminated as provided herein, shall continue in
effect for two (2) years from that date. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such continuance is
specifically approved annually (a) by the vote of a majority of those members of
the Fund's Board of Directors who are not parties to this Agreement or
interested persons of any such party (as that term is defined in the 1940 Act),
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by vote of either the Board of Directors or of a majority of the
outstanding voting securities (as that term is defined in the 1940 Act) of the
Portfolio. Notwithstanding the foregoing, this Agreement may be terminated by
the Portfolio or by the Fund at any time on sixty (60) days written notice,
without the payment of any penalty, provided that termination must be authorized
either by vote of the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Portfolio or by the Adviser on sixty (60)
days written notice. This Agreement will automatically terminate in the event of
its assignment (as that term is defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act).
14. Notice. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
address stated below, or at such other address as either party may advise in
writing:
(a) To the Fund at: 1500 Forest Avenue
Suite 223
Richmond, Virginia 23229
(b) To the Adviser at: 250 Park Avenue South
Suite 200
Winter Park, Florida 32789
15. 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
16. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Maryland, and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
17. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
GLOBAL ASSETS ADVISORS, INC.
BY: /s/ Diego J. Veitia
--------------------
Diego J. Veitia
President
THE WORLD FUNDS, INC.
BY: John Pasco, III
-----------------
John Pasco, III
Chairman
<PAGE>
EXHIBIT EX-99.(23)(d)(8)(a)
INVESTMENT MANAGEMENT AGREEMENT
Investment Management Agreement (the "Agreement") dated this of
____________, 2000 by and between THE WORLD FUNDS, INC., a Maryland corporation
(herein called the "Fund"), and Vernes Asset Management, LLC a Delaware Limited
Liability Company (the "Manager") a registered investment manager under the
Investment Advisers Act of 1940, as amended.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several series of shares, each having its own investment policies;
and
WHEREAS, the Fund desires to retain the Manager to furnish investment
advisory and management services to certain portfolios of the Fund, subject to
the control of the Fund's Board of Directors, and the Manager is willing to so
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be bound, it is agreed between the parties
hereto as follows:
1. Appointment. The Fund hereby appoints the Manager to act as the Manager
to the Monument EuroNet Fund series of the Fund (the "Portfolio") for the period
and on the terms set forth in this Agreement. The Manager accepts such
appointment and agrees to furnish the services herein set forth, for the
compensation herein provided.
2. Duties of the Manager. The Fund employs the Manager to manage the
investments and reinvestment of the assets of the Portfolio, and to continuously
review, supervise, and administer the investment program of the Portfolio, to
determine in its discretion the securities to be purchased or sold, to provide
the Fund and Commonwealth Shareholder Services, Inc. (the "Administrator") with
records concerning the Manager's activities which the Fund is required to
maintain, and to render regular reports to the Fund's Officers and Board of
Directors and to the Administrator concerning the Manager's discharge of the
foregoing responsibilities.
The Manager shall discharge the foregoing responsibilities subject to
the control of the Fund's Board of Directors and in compliance with such
policies as the Board may from time to time establish, and in compliance with
the objectives, policies, and limitations for the Portfolio as set forth in its
Prospectus and Statement of Additional Information, as amended from time to
time, and applicable laws and regulations.
The Fund will instruct each of its agents and contractors to
cooperate in the conduct of the business of the Portfolio.
The Manager accepts such employment and agrees, at its own expense,
to render the services and to provide 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.
Notwithstanding the foregoing, the Manager may obtain the services of one
or more investment advisers to act as sub-adviser(s) to the Portfolio. The cost
of employing such sub-adviser(s) will be paid by the Manager and not by the
Portfolio.
3. Portfolio Transactions. The Manager is authorized to select the brokers
and dealers that will execute the purchases and sales of portfolio securities
for the Portfolio and is directed to use its best efforts to obtain the best
price and execution for the Portfolio's transactions in accordance with the
policies of the Fund as set forth from time to time in the Portfolio's
Prospectus and Statement of Additional Information. The Manager will promptly
communicate to the Fund and to the Administrator such information relating to
portfolio transactions as they may reasonably request.
It is understood that the Manager will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Fund or be in breach of
any obligation owing to the Fund under this Agreement, or otherwise, by reason
of its having directed a securities transaction on behalf of the Portfolio to an
unaffiliated broker-dealer in compliance with the provisions of Section 28(e) of
the Securities Exchange Act of 1934 or as described from time to time by the
Portfolio's Prospectus and Statement of Additional Information. Subject to the
foregoing, the Manager may direct any transaction of the Portfolio to a broker
which is affiliated with the Manager in accordance with, and subject to, the
policies and procedures approved by the Board of Directors of the Fund pursuant
to Rule 17e-1 under the 1940 Act. Such brokerage services are not deemed to be
provided under this Agreement.
4. Compensation of the Manager. For the services to be rendered by the
Manager under this Agreement, the Portfolio shall pay to the Manager, and the
Manager will accept as full compensation a fee, accrued daily and payable twice
monthly, at an annual rate of 1.50% on the first $250 million of average net
assets; 1.25% on assets in excess of $250 million and not more than $500 million
of average net assets; 1.00% on assets in excess of $500 million and not more
than $750 million of average net assets; 0.875% on assets in excess of $750
million and not more than $1 billion of average net assets; and, 0.75% on
average net assets over $1 billion.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the termination of this
Agreement.
5. Expenses. During the term of this Agreement, the Manager will pay
---------
all expenses incurred by it in connection with the management of the Fund.
Notwithstanding the foregoing, the Portfolio shall pay the expenses and costs
of the Portfolio for the following:
a. Taxes;
b. Brokerage fees and commissions with regard to portfolio
transactions;
c. Interest charges, fees and expenses of the custodian of the
securities;
d. Fees and expenses of the Fund's transfer agent and the
Administrator;
e. Its proportionate share of auditing and legal expenses;
f. Its proportionate share of the cost of maintenance of
corporate existence;
g. Its proportionate share of compensation of directors of the
Fund who are not interested persons of the Manager as that
term is defined by law;
h. Its proportionate share of the costs of corporate meetings;
i. Federal and State registration fees and expenses incident to
the sale of shares of the Portfolio;
j. Costs of printing and mailing Prospectuses for the Portfolio's
shares, reports and notices to existing shareholders;
k. The management fee payable to the Manager, as provided in
paragraph 4 herein;
l. Costs of recordkeeping (other than investment records required
to be maintained by the Manager), and daily pricing;
m. Distribution expenses in accordance with any Distribution Plan
as and if approved by the shareholders of the Portfolio; and
n. Expenses and taxes incident to the failure of the Portfolio to
qualify as a regulated investment company under the provisions
of the Internal Revenue Code of 1986, as amended, unless such
expenses and/or taxes arise from the negligence of another
party.
6. Reports. The Fund and the Manager agree to furnish to each other, if
applicable, current information required for the preparation by such parties of
prospectuses, statements of additional information, proxy statements, reports to
shareholders, certified copies of their financial statements, and to furnish to
each other such other information and documents with regard to their affairs as
each may reasonably request.
7. Status of the Manager. The services of the Manager to the Fund are not
to be deemed exclusive, and the Manager shall be free to render similar services
to others so long as its services to the Fund are not impaired thereby.
Pursuant to comparable agreements, the Fund may also retain the
services of the Manager to serve as the investment manager of other series of
the Fund.
8. Books and Records. In compliance with the requirements of the 1940 Act,
the Manager hereby agrees that all records which it maintains for the Fund are
the property of the Fund, and further agrees to surrender promptly to the Fund
any of such records upon the Fund's request. The Manager further agrees to
preserve for the periods prescribed by the 1940 Act, and the rules or orders
thereunder, the records required to be maintained by the 1940 Act.
9. Limitation of Liability of Manager. The duties of the Manager shall be
confined to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Manager hereunder. The Manager shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Fund in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or negligence on the part of the Manager in the performance of its duties
or from reckless disregard by it of its obligations and duties under this
Agreement. (As used in this Paragraph 9, the term "Manager" shall include
directors, officers, employees and other corporate agents of the Manager as well
as that corporation itself).
10. Permissible Interests. Directors, agents, and shareholders of the Fund
are or may be interested in the Manager (or any successor thereof) as directors,
officers, or shareholders, or otherwise; directors, officers, agents, and
shareholders of the Manager are or may be interested in the Fund as directors,
officers, shareholders or otherwise; and the Manager (or any successor) is or
may be interested in the Fund as a shareholder or otherwise. In addition,
brokerage transactions for the Fund may be effected through affiliates of the
Manager if approved by the Fund's Board of Directors, subject to the rules and
regulations of the Securities and Exchange Commission, and the policies and
procedures adopted by the Fund.
11. License of Manager's Name. The Manager hereby authorizes the Fund to
use the name "Monument EuroNet Fund" for the Portfolio. The Fund agrees that if
this Agreement is terminated it will promptly redesignate the name of the
Portfolio to eliminate any reference to the name "Monument EuroNet Fund" or any
derivation thereof unless the Manager waives this requirement in writing.
12. Duration and Termination. This Agreement shall become effective on the
date first above written subject to its approval by the shareholders of the
Portfolio and unless sooner terminated as provided herein, shall continue in
effect for two (2) years from that date. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such continuance is
specifically approved annually (a) by the vote of a majority of those members of
the Fund's Board of Directors who are not parties to this Agreement or
interested persons of any such party (as that term is defined in the 1940 Act),
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by vote of either the Board of Directors or of a majority of the
outstanding voting securities (as that term is defined in the 1940 Act) of the
Portfolio. Notwithstanding the foregoing, this Agreement may be terminated by
the Portfolio or by the Fund at any time on sixty (60) days written notice,
without the payment of any penalty, provided that termination must be authorized
either by vote of the Fund's Board of Directors or by vote of a majority of the
outstanding voting securities of the Portfolio or by the Manager on sixty (60)
days written notice. This Agreement will automatically terminate in the event of
its assignment (as that term is defined in the 1940 Act).
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No material amendment of this Agreement
shall be effective until approved by vote of the holders of a majority of the
Portfolio's outstanding voting securities (as defined in the 1940 Act).
14. Notice. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at the
address stated below, or at such other address as either party may advise in
writing:
(a) To the Fund at: 1500 Forest Avenue
Suite 223
Richmond, Virginia 23229
(b) To the Manager at: 993 Farmington Avenue
Suite 205
Hartford, Connecticut 06107
15. 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. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors.
16. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Maryland, and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the State
of Maryland, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
17. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
VERNES ASSET MANAGEMENT, LLC
BY: ____________________________
THE WORLD FUNDS, INC.
BY: _____________________________
John Pasco, III
Chairman
<PAGE>
EXHIBIT EX-99.(23)(d)(8)(b)
INVESTMENT ADVISORY AGREEMENT
between
Vernes Asset Management, LLC
and
SA Financiere Rembrandt
INVESTMENT ADVISORY AGREEMENT (the "Agreement") dated this ___ day of
_________, 2000, by and between Vernes Asset Management, LLC (hereinafter
referred to as the "Manager") and SA Financiere Rembrandt (hereinafter referred
to as the "Investment Adviser"), which Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one instrument.
WITNESSETH:
WHEREAS, the Board of Directors (the "Directors") of the Manager wishes to
enter into a contract with the Investment Adviser to render the following
services to the Manager:
To furnish research, analysis, advice and recommendations with respect to
the purchase and sale of securities and the making of investment commitments; to
place at the disposal of the Manager such statistical information and reports as
may be required and, in general, to superintend such portions of the investments
of the Monument EuroNet Fund series (hereinafter the "Fund") of The World Funds,
Inc. (hereinafter "TWF") as may be made subject to the oversight of the
Investment Adviser by the Manager.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and intending to be bound, the parties agree as follows:
1. During the term of this Agreement, or any extension thereof, the Investment
Adviser will, to the best of its ability, furnish the foregoing services.
2. As compensation, the Manager will pay the Investment Adviser for its services
an annual fee, which fee shall be payable twice monthly in accordance with the
following formula:
The amount of such fee shall be 50% of the investment management fee
received by the Manager (which starts at 1.50% of the average daily net
assets) on the assets which are subject to the supervision of the Investment
Adviser (which equates to monthly compensation accrued daily at an annual
rate of 0.75% on the first $250 million of average net assets; 0.625% of the
average net assets between $250 and $500 million; 0.50% of the average net
assets between $500 and $750 million; 0.4375% of the average net assets
between $750 and $1 billion, and 0.375% of the average net assets over $1
billion the "Base Fee") less 50% of any reduction in such Base Fee resulting
from:
a. Any reduction of the fee paid by the Fund on such assets pursuant to any
agreement relating to the reimbursement of organizational expenses of the
Fund initially advanced by and repayable to the Investment Manager; or
b. Any contractual and/or voluntary reduction of the fee paid by the Fund on
such assets, if the voluntary reduction is agreed to by the Investment
Adviser in writing in advance of such reduction.
3. Upon the approval of this agreement by TWF, this Agreement shall become
effective concurrently with the Investment Management Agreement between the
Manager and the Fund, pursuant to the approval of the shareholders of the Fund
according to the provisions of the Investment Company Act of 1940 (the "Act").
4. This Agreement shall continue for a two year period ending___________,
2000. It may be renewed thereafter for successive periods not exceeding one year
only so long as such renewal and continuance is specially approved at least
annually by the Director's of TWF or by a vote of the majority of the
outstanding voting securities of the Fund as prescribed by the Act and provided
further that such continuance is approved at least annually thereafter by a vote
of a majority of TWF's Directors, who are not parties to such Agreement or
interested persons of such a party, cast in person at a meeting called for the
purpose of voting on such approval. The Investment Adviser shall provide the
Manager such information as reasonably may be necessary to assist the Directors
of TWF to evaluate the terms of this Agreement. This Agreement will terminate
automatically without the payment of any penalty upon termination of the
Investment Management Agreement or upon sixty days' written notice by the Fund
to the Investment Adviser that the Directors of TWF or the shareholders, by vote
of a majority of the outstanding voting securities of the Fund, as provided by
the act, has terminated the Investment Management Agreement. This Agreement may
also be terminated by the Fund or the Investment Adviser without penalty upon
sixty days' written notice to the Fund.
This Agreement shall automatically terminate in the event of its assignment
or the assignment of the Investment Management Agreement unless its continuation
thereafter is approved by the Directors of TWF or the Shareholders of the Fund
as herein before provided or as otherwise permitted under applicable laws or
regulations unless an exemption is obtained from the U.S. Securities and
Exchange Commission from the provisions of the Act pertaining to the subject
matter of this paragraph.
5. Subject to the supervision of TWF's Board of Directors and the Manager, the
Investment Adviser will provide a continuous investment program for assets of
the Fund under its supervision, including investment research and management
with respect to all securities and investments and cash and cash equivalents.
The Investment Adviser will determine from time to time what securities and
other investments will be purchased, retained or sold by the Fund. The
Investment Adviser will provide the services under this Agreement in accordance
with the Fund's investment objective, policies and restrictions as stated in the
Prospectus. The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the SEC and will,
in addition, conduct its activities under this Agreement in accordance with
regulations of any other Federal and State agencies which may now or it the
future have jurisdiction over its activities;
(b) will place orders pursuant to its investment determinations for the Fund
either directly with the issuer or with any broker or dealer. In placing
orders with brokers or dealers, the Investment Adviser will attempt to
obtain the best net price and the most favorable execution of its orders.
Consistent with this obligation, when the execution and price offered by
two or more brokers or dealers are comparable, the Investment Adviser may,
in its discretion, purchase and sell portfolio securities to and from
brokers and dealers who provide the Fund with research advice and other
services, or who sell Fund shares. In no instance will portfolio securities
be purchased from or sold to the Investment Adviser or any affiliated
person of the Investment Adviser as principal. Notwithstanding the
foregoing sentence, the Investment Adviser may arrange for the execution of
brokered transactions through an affiliated broker dealer in conformity
with policies and procedures for such purpose if, when, and as established
by the Board of TWF;
(c) will provide, at its own cost, all office space and facilities necessary to
furnish the foregoing services to the Fund.
6. It is expressly understood and agreed that the services to be rendered
by the Investment Adviser to the Manager under the provisions of this Agreement
are not to be deemed exclusive, and the Investment Adviser shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby, and
provided further that the services to be rendered by the Investment Adviser to
the Manager under this Agreement and the compensation provided for in Paragraph
2 hereof shall be limited solely to services with reference to the Fund.
7. The Manager agrees that it will furnish currently to the Investment Adviser
all information reasonably necessary to permit the Investment Adviser to give
the advice called for under this Agreement and such information with reference
to the Fund that is reasonably necessary to permit the Investment Adviser to
carry out its responsibilities under this Agreement, and the parties agreed that
they will from time to time consult and make appropriate arrangements as to
specific information that is required under this paragraph and frequency and
manner with which it shall be supplied.
8. The Investment Adviser shall not be liable for any error of judgement or
mistake at law or for any loss suffered by the Manager or the Fund in connection
with any matters to which this Agreement relates except that nothing herein
contained shall be construed to protect the Investment Adviser against any
liability by reason of willful misfeasance, bad faith, or gross negligence in
the performance of duties or by reckless disregard of its obligations or duties
under this Agreement.
9. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall not
be affected thereby. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland.
10. Any notice to be given hereunder may be given by personal notification or by
first class mail, postage prepaid, to the party specified at the address stated
below:
a. To the Manager at: 993 Farmington Avenue
Suite 205
Hartford, Connecticut 06107
b. To the Investment Adviser: 4, rue Rembrandt
Paris, France
c. To the Fund: 1500 Forest Avenue
Suite 223
Richmond, Virginia 23229
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
VERNES ASSET MANAGEMENT, LLC
BY: ________________________
SA FINANCIERE REMBRANDT
BY: ________________________
Solely for the purpose of evidencing the approval of the effectiveness of
this Agreement by the Fund in accordance with Section 15 of the Investment
Company Act of 1940, as amended, the Fund has caused this instrument to be
executed by the officer designated below as of the day and year first above
written.
THE WORLD FUNDS, INC.
BY: _______________________
John Pasco, III
Chairman
<PAGE>
EXHIBIT EX-99.(23)(d)(8)(c)
INVESTMENT ADVISORY AGREEMENT
between
Vernes Asset Management, LLC
and
Monument Advisors, Ltd.
INVESTMENT ADVISORY AGREEMENT (the "Agreement") dated this ___ day of
_________, 2000, by and between Vernes Asset Management, LLC (hereinafter
referred to as the "Manager") and Monument Advisors, Ltd. (hereinafter referred
to as the "Investment Adviser"), which Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute but one instrument.
WITNESSETH
WHEREAS, the Board of Directors (the "Directors") of the Manager wishes to
enter into a contract with the Investment Adviser to render the following
services to the Manager:
To furnish research, analysis, advice and recommendations with respect to
the purchase and sale of securities and the making of investment commitments; to
place at the disposal of the Manager such statistical information and reports as
may be required and, in general, to superintend such portions of the investments
of the Monument EuroNet Fund series (hereinafter the "Fund") of The World Funds,
Inc. (hereinafter "TWF") as may be made subject to the oversight of the
Investment Adviser by the Manager.
NOW THEREFORE, in consideration of the mutual agreements herein contained,
and intending to be bound, the parties agree as follows:
1. During the term of this Agreement, or any extension thereof, the Investment
Adviser will, to the best of its ability, furnish the foregoing services.
2. As compensation, the Manager will pay the Investment Adviser for its
services an annual fee, which fee shall be payable twice monthly in
accordance with the following formula:
The amount of such fee shall be 16% of the investment management fee
received by the Manager (which starts at 1.50% of the average daily net
assets) on the assets which are subject to the supervision of the Investment
Adviser (which equates to monthly compensation accrued daily at an annual
rate of 0.24% on the first $250 million of average net assets; 0.20% of the
average net assets between $250 and $500 million; 0.16% of the average net
assets between $500 and $750 million; 0.14% of the average net assets
between $750 and $1 billion, and 0.12% of the average net assets over $1
billion the "Base Fee") less 16% of any reduction in such Base Fee resulting
from:
a. Any reduction of the fee paid by the Fund on such assets pursuant to any
agreement relating to the reimbursement of organizational expenses of the
Fund initially advanced by and repayable to the Investment Manager; or
b. Any contractual and/or voluntary reduction of the fee paid by the Fund on
such assets, if the voluntary reduction is agreed to by the Investment
Adviser in writing in advance of such reduction.
3. Upon the approval of this Agreement by TWF, this Agreement shall become
effective concurrently with the Investment Management Agreement between the
Manager and the Fund, pursuant to the approval of the shareholders of the
Fund according to the provisions of the Investment Company Act of 1940 (the
"Act").
4. This Agreement shall continue for a two year period ending___________, 2000.
It may be renewed thereafter for successive periods not exceeding one year
only so long as such renewal and continuance is specially approved at least
annually by the Director's of TWF or by a vote of the majority of the
outstanding voting securities of the Fund as prescribed by the Act and
provided further that such continuance is approved at least annually
thereafter by a vote of a majority of TWF's Directors, who are not parties
to such Agreement or interested persons of such a party, cast in person at a
meeting called for the purpose of voting on such approval. The Investment
Adviser shall provide the Manager such information as reasonably may be
necessary to assist the Directors of TWF to evaluate the terms of this
Agreement. This Agreement will terminate automatically without the payment
of any penalty upon termination of the Investment Management Agreement or
upon sixty days' written notice by the Fund to the Investment Adviser that
the Directors of TWF or the shareholders, by vote of a majority of the
outstanding voting securities of the Fund, as provided by the act, has
terminated the Investment Management Agreement. This Agreement may also be
terminated by the Fund or the Investment Adviser without penalty upon sixty
days' written notice to the Fund.
This Agreement shall automatically terminate in the event of its assignment
or the assignment of the Investment Management Agreement unless its
continuation thereafter is approved by the Directors of TWF or the
Shareholders of the Fund as herein before provided or as otherwise permitted
under applicable laws or regulations unless an exemption is obtained from
the U.S. Securities and Exchange Commission from the provisions of the Act
pertaining to the subject matter of this paragraph.
5. Subject to the supervision of TWF's Board of Directors and the Manager, the
Investment Adviser will provide a continuous investment program for assets of
the Fund under its supervision, including investment research and management
with respect to all securities and investments and cash and cash equivalents.
The Investment Adviser will determine from time to time what securities and
other investments will be purchased, retained or sold by the Fund. The
Investment Adviser will provide the services under this Agreement in
accordance with the Fund's investment objective, policies and restrictions as
stated in the Prospectus. The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the SEC and will,
in addition, conduct its activities under this Agreement in accordance with
regulations of any other Federal and State agencies which may now or it the
future have jurisdiction over its activities;
(b) will place orders pursuant to its investment determinations for the Fund
either directly with the issuer or with any broker or dealer. In placing
orders with brokers or dealers, the Investment Adviser will attempt to
obtain the best net price and the most favorable execution of its orders.
Consistent with this obligation, when the execution and price offered by
two or more brokers or dealers are comparable, the Investment Adviser may,
in its discretion, purchase and sell portfolio securities to and from
brokers and dealers who provide the Fund with research advice and other
services, or who sell Fund shares. In no instance will portfolio securities
be purchased from or sold to the Investment Adviser or any affiliated
person of the Investment Adviser as principal. Notwithstanding the
foregoing sentence, the Investment Adviser may arrange for the execution of
brokered transactions through an affiliated broker dealer in conformity
with policies and procedures for such purpose if, when, and as established
by the Board of TWF;
(c) will provide, at its own cost, all office space and facilities necessary to
furnish the foregoing services to the Fund.
6. It is expressly understood and agreed that the services to be rendered by the
Investment Adviser to the Manager under the provisions of this Agreement are
not to be deemed exclusive, and the Investment Adviser shall be free to
render similar or different services to others so long as its ability to
render the services provided for in this Agreement shall not be impaired
thereby, and provided further that the services to be rendered by the
Investment Adviser to the Manager under this Agreement and the compensation
provided for in Paragraph 2 hereof shall be limited solely to services with
reference to the Fund.
7. The Manager agrees that it will furnish currently to the Investment Adviser
all information reasonably necessary to permit the Investment Adviser to give
the advice called for under this Agreement and such information with
reference to the Fund that is reasonably necessary to permit the Investment
Adviser to carry out its responsibilities under this Agreement, and the
parties agreed that they will from time to time consult and make appropriate
arrangements as to specific information that is required under this paragraph
and frequency and manner with which it shall be supplied.
8. The Investment Adviser shall not be liable for any error of judgement or
mistake at law or for any loss suffered by the Manager or the Fund in
connection with any matters to which this Agreement relates except that
nothing herein contained shall be construed to protect the Investment Adviser
against any liability by reason of willful misfeasance, bad faith, or gross
negligence in the performance of duties or by reckless disregard of its
obligations or duties under this Agreement.
9. If any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Agreement shall
not be affected thereby. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Maryland.
10.Any notice to be given hereunder may be given by personal notification or by
first class mail, postage prepaid, to the party specified at the address
stated below:
a. To the Manager at: 993 Farmington Avenue
Suite 205
Hartford, Connecticut 06107
b. To the Investment Adviser: 7920 Norfolk Avenue
Suite 500
Bethesda, Maryland 20814
c. To the Fund: 1500 Forest Avenue
Suite 223
Richmond, Virginia 23229
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
VERNES ASSET MANAGEMENT, LLC
BY: ________________________
MONUMENT ADVISORS, LTD.
BY: ________________________
David Kugler
Solely for the purpose of evidencing the approval of the effectiveness of
this Agreement by the Fund in accordance with Section 15 of the Investment
Company Act of 1940, as amended, the Fund has caused this instrument to be
executed by the officer designated below as of the day and year first above
written.
THE WORLD FUNDS, INC.
BY: _______________________
John Pasco, III
Chairman
<PAGE>
EXHIBIT EX-99.(23)(e)(3)
The World Funds, Inc.
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, made this _______ day of _________, 2000, by and
between The World Funds, Inc., a Maryland corporation (the "Fund") for the
benefit of its Monument EuroNet Fund series, and First Dominion Capital Corp. a
Virginia corporation ("FDCC") and Monument Distributors, Inc. ("MDI"), a
Maryland corporation. FDCC and MDI are referred to herein collectively as the
"Distributors."
WITNESSETH:
1. DISTRIBUTION SERVICES
The Fund hereby engages the Distributors to assist the Fund in the
sale and distribution to investors of shares of common stock of the
Fund (the "Shares"). In connection therewith, the Distributors shall
promote the sale of Shares, act as underwriters of Shares of the
Fund, and otherwise assist the Fund in the distribution of Shares
directly to investors through dealers or otherwise. For this purpose
the Fund agrees to offer shares for sale at all times when, and in
such places as, such shares are to be made available for sale and may
lawfully be offered for sale and sold. As and when necessary in
connection therewith the Distributors may act as principal or agent
for the sale of such shares.
2. SALE OF FUND SHARES
Such shares are to be sold only on the following terms:
(a) All subscriptions, offers, or sales shall be subject to
acceptance or rejection by the Fund. Any offer or sale shall be
conclusively presumed to have been accepted by the Fund if the Fund
shall fail to notify the responsible Distributor of the rejection of
such offer or sale prior to the computation of the net asset value of
the Fund's shares next following receipt by the Fund of notice of
such offer or sale.
(b) No share of the Fund shall be sold for any consideration other
than cash or, except in instances otherwise provided for by the
Fund's currently effective Prospectus, for any amount less than the
public offering price per share, which shall be determined in
accordance with the Fund's currently effective Prospectus. No shares
may be sold for less than the net asset value thereof.
3. REGISTRATION OF SHARES; REGISTRATION OF DISTRIBUTORS
(a) The Fund agrees to make prompt and reasonable efforts to effect
and to keep in effect the registration or qualification of its shares
for sale in such jurisdictions as the Fund may designate. The
Distributors may serve as dealer of record to assist the Fund in
connection with any such registration or qualification.
(b) Each Distributor represents that it is registered as a
broker-dealer under all applicable Federal and State securities laws,
and each further represents that it is a member in good standing of
the National Association of Securities Dealers (the "NASD"). Each
dealer acknowledges that its registration is required for the
performance of the duties required hereunder, and that the absence of
such registration shall be grounds for the immediate termination of
this Agreement, provided, that termination of this Agreement shall
not relieve a party of its obligation to pay all amounts properly
payable by that party through the time of such termination.
4. INFORMATION TO BE FURNISHED TO THE DISTRIBUTORS
The Fund agrees that it will furnish to the Distributors such
information with respect to the affairs and accounts of the Fund as
the Distributors may from time to time reasonably require, and
further agrees that the Distributors, at all reasonable times, shall
be permitted to inspect books and records of the Fund relating to the
issuance and distribution of Shares, and to verify information
contained in the current registration statement of the Fund with
respect thereto.
5. INFORMATION TO BE FURNISHED TO THE FUND
(a) Each Distributor acknowledges that the Fund has adopted a Plan of
Distribution (the "Plan of Distribution") pursuant Rule 12b-1 ("Rule
12b-1") adopted under Investment Company Act of 1940, as amended.
Each Distributor agrees to abide by the terms of such Plan of
Distribution in marketing and distributing the Shares of the Fund,
and to comply with any budget or supervisory procedures required
under such Plan.
(b) Each Distributor agrees that it will provide to the Fund
reasonably detailed information concerning the use made of all funds
paid to that Distributor by the Fund pursuant to the Fund's Plan of
Distribution. MDI agrees to furnish such information to FDCC, and
FDCC agrees to assemble such information from MDI both separately and
together with comparable information from its own records, and to
promptly transmit the same to the Fund. When a Distributor applies
Rule 12b-1 payments for payment to an unaffiliated person, it
acknowledges its duty under that rule to identify the use made of
such funds. When a Distributor applies such funds to make a payment
to an affiliated person, it agrees to further identify both the use
and further recipient of such funds. Each Distributor hereby
acknowledges that it is familiar with the requirements of Rule 12b-1,
and will abide by the reporting requirements of that rule. Each
Distributor hereby authorizes the Fund to inspect books and records
of the Distributor relating to the issuance and distribution of
Shares of the Fund and the expenses of promoting and distributing the
Shares of the Fund, to verify that the 12b-1 payments of the Fund
have been applied in accordance with the Fund's Plan of Distribution
and requirements contained in the current registration statement of
the Fund with respect thereto.
6. ALLOCATION OF EXPENSES
During the period of this contract, the Fund shall pay or cause to be
paid all expenses, costs, and fees incurred by the Fund which are not
assumed by the Distributors or any investment manager, investment
advisor, or other service provider to the Fund. Each Distributor
shall pay advertising and promotional expenses incurred by that
Distributor in connection with the distribution of the Fund's shares
that are sold subject to the imposition of a sales or other
distribution charge, including paying for prospectuses for delivery
to prospective shareholders.
7. COMPENSATION TO THE DISTRIBUTORS
It is understood and agreed by the parties hereto that each
Distributor will receive compensation for the services it performs
hereunder in accordance with Schedule A hereto.
8. LIMITATION OF EACH DISTRIBUTOR'S AUTHORITY
Each Distributor shall be deemed to be an independent contractor and,
except as specifically provided or authorized herein, shall have no
authority to act for or represent the Fund. In the performance of its
duties hereunder, each Distributor may solicit and enter into selling
dealer agreements with other broker-dealers in a form approved by the
Fund. Such selling dealer agreements shall provide for the sale of
shares of the Fund (or any series of the Fund) on terms consistent
with the registration statement of the Fund as then if effect. Unless
otherwise provided in a selling dealer agreement, any selling dealer
agreement of a Distributor in effect as of the date of this
agreement, when approved as to form by the Fund, shall be deemed to
continue hereunder upon delivery to the selling dealer of any
amendment required to set forth the terms of the offering of the
affected Fund shares.
9. SUBSCRIPTION FOR SHARES - REFUND FOR CANCELLED ORDERS
If a Distributor elects to act as a principal, and not as agent, for
a sale of Fund shares, that Distributor agrees that it will subscribe
for Shares of the Fund only for the purpose of fulfilling purchase
orders already received by it or for the purpose of investment for
its own account. Whether acting as principal or agent, in the event
that an order for the purchase of shares of the Fund is placed with a
Distributor by a customer or dealer and subsequently cancelled, the
Distributor shall forthwith cancel the subscription for such shares
entered on the books of the Fund, and, if the Distributor has paid
the Fund for such shares, shall be entitled to receive from the Fund
in refund of such payments the lesser of:
(a) the consideration received by the Fund for said shares; or
(b) the net asset value of such shares at the time of cancellation
by the Distributor.
10. INDEMNIFICATION OF THE FUND
Each Distributor agrees to indemnify the Fund against any and all
litigation and other legal proceedings of any kind or nature and
against any liability, judgment, cost, or penalty imposed as a result
of such litigation or proceedings in any way arising out of or in
connection with the sale or distribution of the shares of the Fund by
the Distributor. In the event of the threat or institution of any
such litigation or legal proceedings against the Fund, the
Distributors shall defend such action on behalf of the Fund at their
own expense, and shall pay any such liability, judgment, cost, or
penalty resulting therefrom, whether imposed by legal authority on
agreed upon by way of compromise and settlement; provided, however,
the Distributors shall not be required to pay or reimburse the Fund
for any liability, judgment, cost, or penalty incurred as a result of
information supplied by, or as the result of the omission to supply
information by, the Fund or any director, officer, or employee of the
Fund who is not an interested person of the Distributors, unless the
information so supplied or omitted was available to the Distributors
or the Fund's investment adviser without recourse to the Fund or any
such person referred to above.
11. FREEDOM TO DEAL WITH THIRD PARTIES
Each Distributor shall be free to render to others services of a
nature either similar to or different from those rendered under this
contract, except such as may impair its performance of the services
and duties to be rendered by it hereunder.
12. EFFECTIVE DATE, DURATION AND TERMINATION OF AGREEMENT
The effective date of this Agreement shall be the date first set
forth above. Wherever referred to in this Agreement, the vote or
approval of the holders of a majority of the outstanding voting
securities of the Fund (or of any series of the Fund) shall mean the
vote of 67% or more of the securities of the Fund (or of any affected
series of the Fund) if the holders of more than 50% of such
securities are present in person or by proxy or the vote of more than
50% of the securities of the Fund (or an affected series of the Fund)
whichever is the lesser.
Unless sooner terminated as hereinafter provided, this Agreement
shall continue in effect from year to year but only so long as such
continuance is specifically approved at least annually by the Board
of Directors of the Fund, including the specific approval of a
majority of the directors who are not interested person of the
Distributors as defined by the Investment Company Act of 1940, as
amended, cast in person at a meeting called for the purpose of voting
on such approval, or by the vote of the holders of a majority of the
outstanding voting securities of the Fund or an affected series of
the Fund.
This Agreement may be terminated at any time without the payment of
any penalty by the vote of the Board of Directors of the Fund or by
the vote of the holders of a majority of the outstanding voting
securities of the Fund, or by the Distributors, upon 60 days' written
notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment (as defined by the provisions of the Investment Company
Act of 1940, as amended).
13. AMENDMENTS TO AGREEMENT
No material amendment to this Agreement shall be effective until
approved by the Distributors and by the affirmative vote of a
majority of the Board of Directors of the Fund (including a majority
of the directors who are not interested persons of the Distributors
or any affiliate of the Distributors).
14. NOTICES
Any notice under this Agreement shall be in writing, addressed,
delivered, or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for receipt of
such notice.
IN WITNESS WHEREOF, the Fund and the Distributors have caused this
Agreement to be executed by their duly authorized officers affixed hereto all as
of the day and year first above written.
THE WORLD FUNDS, INC.
By:___________________________
John Pasco, III
Chairman
Attested by: _______________________________
FIRST DOMINION CAPITAL CORP.
By:___________________________
Darryl Peay
Chief Financial Officer
Attested by: _______________________________
MONUMENT DISTRIBUTORS, INC.
By:___________________________
David A. Kugler
Chairman
Attested by: _______________________________
<PAGE>
SCHEDULE A
The Fund shall direct its Administrator to pay to the Distributors amounts
authorized to be expended for the promotion and distribution of the Shares of
the Fund. Such amounts include both compensation for services pursuant to this
Distribution Agreement, reimbursement of expenses authorized under this
Agreement and the Fund's Plan of Distribution. Such compensation and
reimbursement shall be computed separately as to each Distributor. Such
compensation or reimbursement shall be paid as and when approved by the Fund.
Each Distributor acknowledges that it has agreed to furnish to the Fund such
information as may be required under Rule 12b-1 to support the payment of
amounts derived under the Fund's Plan of Distribution, and the Fund is not
required to approve any payment that is not supported by records complying with
Rule 12b-1.
With respect to transmission of funds from the sale of Shares by the
Distributor the following shall apply:
(a) With respect to any shares of the Fund sold subject to a sales
charge, a Distributor shall be entitled to retain the underwriter's
portion of the sales charge for the investment in the Fund's shares,
computed as a percentage of the offering price determined in
accordance with the Fund's currently effective Prospectus and as
otherwise provided in the Fund's registration statement.
(b) With respect to sales of shares of the Fund sold subject to a sales
charge for which the Distributors is the selling dealer, the
Distributors shall retain the dealer's sales charge for each
investment in the Fund's shares, computed as a percentage of the
offering price determined in accordance with the Fund's currently
effective Prospectus and as otherwise provided in the Fund's
registration statement.
With respect to compensation to the Distributors payable from asset-based
sales charges, the Fund agrees to cause its Administrator to pay to each
Distributor such amounts as have been collected from the Fund for that purpose.
With respect to any amounts withheld from the proceeds of a redemption, such as
a contingent deferred sales charge, the Fund agrees that it will also cause the
payment to the Distributors of such amounts.
With respect to amounts to be paid to a Distributor by the Fund, the Fund
agrees to accept and honor any instruction that it may receive with respect to
the assignment of any payments called for hereunder as security for any loan
or advance obtained by the instructing Distributor
<PAGE>
EXHIBIT EX-99.(23)(h)(2)(f)
ADMINISTRATIVE SERVICES AGREEMENT
Administrative Services Agreement (the "Agreement") dated March 1, 2000, by and
between THE WORLD FUNDS, INC. (the "Fund"), a diversified, open-end management
investment company, duly organized as a corporation in accordance with the laws
of the State of Maryland, and COMMONWEALTH SHAREHOLDER SERVICES, INC. ("CSS"), a
corporation duly organized as a corporation in accordance with the laws of the
Commonwealth of Virginia.
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint CSS as its Administrative Services
Agent, for and on behalf of the GenomicsFund.com series (the "Portfolio"), to
perform certain recordkeeping and shareholder servicing functions required of a
duly registered investment company to comply with certain provisions of federal,
state and local law, rules and regulations, and, as is required, to assist the
Fund in preparing and filing certain financial reports, and further to perform
certain daily functions in connection with on-going operations of the Fund and
the Portfolio, and provide ministerial services to implement the investment
decisions of the Fund and the investment advisor of the Portfolio, xGENx, LLC
(the "Adviser"); and
WHEREAS, CSS is willing to perform such functions upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. CSS shall examine and review all records and documents of the
Portfolio pertaining to its duties under this Agreement in order to determine
and/or recommend how such records and documents shall be maintained.
Section 2. CSS shall, as necessary for such purposes, advise the Fund and its
agents of the information which is deemed to be "necessary" for the performance
of its duties under this Agreement, and upon receipt of necessary information
and Written or Oral Instructions from the Fund, shall maintain and keep current
such shareholder relations records.
Unless the information necessary to perform the above functions is furnished in
writing to CSS by the Fund or its agents (such as Custodians, Transfer Agents,
etc.), CSS shall incur no liability and the Fund shall indemnify and hold
harmless CSS from and against any liability arising from any discrepancy in the
information received by CSS and used in the performance by CSS of its duties.
It shall be the responsibility of the Fund to furnish CSS with the net asset
value per share, declaration, record and payment dates and amounts of any
dividends or income and any other special actions required concerning each of
its securities.
CSS shall maintain such shareholder records above mentioned as required by
regulation and as agreed upon between the Fund and CSS.
Section 3. The Fund shall confirm to the Fund's Transfer Agent all purchases and
redemptions of shares of the Portfolio effected through the Fund or its
distributor, as and when such orders are accepted by the Fund or an authorized
agent of the Fund designated for that purpose. CSS shall receive from the Fund's
Transfer Agent daily reports of share purchases, redemptions, and total shares
outstanding, and shall be accountable for the information contained in such
reports of purchases and redemptions when received. It is agreed by the parties
that the net asset value per share of the Fund will be calculated in accordance
with Rule 22c-1 under the Investment Company Act of 1940 and as otherwise
directed by the Board of Directors of the Fund.
CSS shall reconcile its records of outstanding shares and shareholder accounts
with the Fund's Transfer Agent periodically, and not less frequently than
monthly.
Section 4. CSS shall provide assistance to the Fund in the servicing of
shareholder accounts, which may include telephone and written conversations,
assistance in redemptions, exchanges, transfers and opening accounts as may be
required from time to time. CSS shall, in addition, provide such additional
administrative non-advisory management services as CSS and the Fund may from
time to time agree.
Section 5. The accounts and records maintained by CSS shall be the property of
the Fund, and shall be made available to the Fund, within a reasonable period of
time, upon demand. CSS shall assist the Fund's independent auditors, or any
other person authorized by the Fund or, upon demand, any regulatory body as
authorized by law or regulation, in any requested review of the Fund's accounts
and records but shall be reimbursed for all reasonable and documented expenses
and employee time invested in any such review outside of routine and normal
periodic reviews. Upon receipt from the Fund of any necessary information, CSS
shall assist the Fund in organizing necessary data for the Fund's completion of
any necessary tax returns, questionnaires, periodic reports to shareholders and
such other reports and information requests as the Fund and CSS shall agree upon
from time to time.
Section 6. CSS and the Fund may from time to time adopt procedures they agree
upon, and, absent knowledge to the contrary, CSS may conclusively assume that
any procedure approved by the Fund or directed by the Fund, does not conflict
with or violate any requirements of Fund's Prospectuses, Articles of
Incorporation, By-Laws, registration statements, orders, or any rule or
regulation of any regulatory body or governmental agency. The Fund (acting
through its officers or other agents) shall be responsible for notifying CSS of
any changes in regulations or rules which might necessitate changes in the
Fund's procedures.
Section 7. CSS may rely upon the advice of the Fund and upon statements of the
Fund's lawyers, accountants and other persons believed by it in good faith to be
expert in matters upon which they are consulted, and CSS shall not be liable for
any actions taken in good faith upon such statements.
Section 8. CSS shall not be liable for any actions taken in good faith reliance
upon any authorized Oral Instructions, any Written Instructions, and certified
copy of any resolution of the Board of Directors of the Fund or any other
document reasonably believed by CSS to be genuine and to have been executed or
signed by the proper person or persons.
CSS shall not be held to have notice of any change of authority of any officer,
employee or agent of the Fund until receipt of notification thereof by the Fund.
The Fund shall indemnify and hold CSS harmless from any and all expenses,
damages, claims, suits, liabilities, actions, demands and losses whatsoever
arising out of or in connection with any error, omission, inaccuracy or other
deficiency of any information provided to CSS by the Fund, or the failure of the
Fund to provide any information needed by CSS knowledgeably to perform its
functions hereunder. Also, the Fund shall indemnify and hold harmless CSS from
all claims and liabilities (including reasonable documented expenses for legal
counsel) incurred by or assessed against CSS in connection with the performance
of this Agreement, except such as may arise from CSS's own negligent action,
omission or willful misconduct; provided, however, that before confessing any
claim against it, CSS shall give the Fund reasonable opportunity to defend
against such claim in the name of the Fund or CSS or both.
Section 9. The Fund agrees to pay CSS compensation for its services and to
reimburse it for expenses, as set forth in the Schedule attached hereto, or as
shall be set forth in amendments to such schedule approved by the Fund's Board
of Directors and CSS.
Section 10. Except as required by laws and regulations governing investment
companies, nothing contained in this Agreement is intended to or shall require
CSS, in any capacity hereunder, to perform any functions or duties on any
holiday or other day of special observance on which CSS is closed. Functions or
duties normally scheduled to be performed on such days shall be performed on,
and as of, the next business day on which both the Fund and CSS are open. CSS
will be open for business on days when the Fund is open for business and/or as
otherwise set forth in the Fund's Prospectuses and Statements of Additional
Information.
Section 11. Either the Fund or CSS may give written notice to the other of the
termination of this Agreement, such termination to take effect at the time
specified in the notice, which time shall be not less than 90 days from the
giving of such notice. Such termination shall be without penalty.
Section 12. Any notice or other communication required by or permitted to be
given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first-class mail, postage prepaid, to the
respective parties at their last known address, except that Oral Instructions
may be given if authorized by the Board of the Fund and preceded by a
certificate from the Fund's secretary so attesting.
Notices to the Fund shall be directed to:
1500 Forest Ave.
Suite 223
Richmond, VA 23229
Notices to CSS shall be directed to:
1500 Forest Ave.
Suite 223
Richmond, VA 23229
Section 13. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 14. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of
CSS, or by CSS without the written consent of the Fund, authorized or approved
by a resolution of its Board of Directors.
Section 15. For purposes of this Agreement, the terms Oral Instructions and
Written Instructions shall mean:
Oral Instructions: The term Oral Instruction shall mean an authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to CSS in person or by telephone, telegram, telecopy, or other
mechanical or documentary means lacking a signature, by a person or persons
believed in good faith by CSS to be a person or persons authorized by a
resolution of the Board of Directors of the Fund, to give Oral Instructions on
behalf of the Fund.
Written Instructions: The term Written Instruction shall mean an authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to CSS in original writing containing original signatures or a copy
of such document transmitted by telecopy including transmission of such
signature believed in good faith by CSS to be the signature of a person
authorized by a resolution of the Board of Directors of the Fund to give Written
Instructions on behalf of the Fund.
The Fund shall file with CSS a certified copy of each resolution of its Board of
Directors authorizing execution of Written Instructions or the transmittal of
Oral Instructions as provided above.
Section 16. This Agreement shall be governed by the laws of the State of
Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
THE WORLD FUNDS, INC.
By: /s/ John Pasco, III
---------------------------
John Pasco, III
Chairman
COMMONWEALTH SHAREHOLDER SERVICES, INC.
By: /s/ John Pasco, III
----------------------------
John Pasco, III
President
<PAGE>
SCHEDULE A TO
ADMINISTRATIVE SERVICES AGREEMENT
BY AND BETWEEN
THE WORLD FUNDS, INC. AND
COMMONWEALTH SHAREHOLDER SERVICES, INC.
FOR THE
GenomicsFund.com
Pursuant to Section 9 of the Administrative Services Agreement, dated March 1,
2000, by and between The World Funds, Inc. (the "Fund"), and Commonwealth
Shareholder Services, Inc. ("CSS"), GenomicsFund.com series of the Fund shall
pay CSS a fee calculated and paid monthly as follows:
A. For the performance of Blue Sky matters, CSS shall be paid at the rate
of $30 per hour of actual time used.
B. For shareholder servicing, CSS shall be paid at the rate of $30 per
hour of actual time used.
C. For all other administration, CSS shall be paid a fee at the rate of 0.20%
per annum of the average daily net assets of GenomicsFund.com series of the
Fund, payable monthly, with a minimum fee of $30,000.
D. In addition to the foregoing, the Fund shall reimburse CSS, from the assets
of the Portfolio, for the Portfolio's proportionate share of general expenses
incurred for the Fund and for all expenses incurred by the Portfolio
individually. Such out-of-pocket expenses shall include, but not be limited to:
documented fees and costs of obtaining advice of counsel or accountants in
connection with its services to the Fund; postage; long distance telephone;
special forms required by the Fund; any travel which may be required in the
performance of its duties to the Fund; and any other extraordinary expenses it
may incur in connection with its services to the Fund.
<PAGE>
EXHIBIT EX-99.(23)(h)(2)(g)
ADMINISTRATIVE SERVICES AGREEMENT
Administrative Services Agreement (the "Agreement") dated May 1,2000, by and
between THE WORLD FUNDS, INC. (the "Fund"), a diversified, open-end management
investment company, duly organized as a corporation in accordance with the laws
of the State of Maryland, and COMMONWEALTH SHAREHOLDER SERVICES, INC. ("CSS"), a
corporation duly organized as a corporation in accordance with the laws of the
Commonwealth of Virginia.
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint CSS as its Administrative Services
Agent, for and on behalf of the Global e-Fund series (the "Portfolio"), to
perform certain recordkeeping and shareholder servicing functions required of a
duly registered investment company to comply with certain provisions of federal,
state and local law, rules and regulations, and, as is required, to assist the
Fund in preparing and filing certain financial reports, and further to perform
certain daily functions in connection with on-going operations of the Fund and
the Portfolio, and provide ministerial services to implement the investment
decisions of the Fund and the investment adviser of the Portfolio, Global Assets
Advisors, Inc. (the "Adviser"); and
WHEREAS, CSS is willing to perform such functions upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. CSS shall examine and review all records and documents of the
Portfolio pertaining to its duties under this Agreement in order to determine
and/or recommend how such records and documents shall be maintained.
Section 2. CSS shall, as necessary for such purposes, advise the Fund and its
agents of the information which is deemed to be "necessary" for the performance
of its duties under this Agreement, and upon receipt of necessary information
and Written or Oral Instructions from the Fund, shall maintain and keep current
such shareholder relations records.
Unless the information necessary to perform the above functions is furnished in
writing to CSS by the Fund or its agents (such as Custodians, Transfer Agents,
etc.), CSS shall incur no liability and the Fund shall indemnify and hold
harmless CSS from and against any liability arising from any discrepancy in the
information received by CSS and used in the performance by CSS of its duties.
It shall be the responsibility of the Fund to furnish CSS with the net asset
value per share, declaration, record and payment dates and amounts of any
dividends or income and any other special actions required concerning each of
its securities.
CSS shall maintain such shareholder records above mentioned as required by
regulation and as agreed upon between the Fund and CSS.
Section 3. The Fund shall confirm to the Fund's Transfer Agent all purchases and
redemptions of shares of the Portfolio effected through the Fund or its
distributor, as and when such orders are accepted by the Fund or an authorized
agent of the Fund designated for that purpose. CSS shall receive from the Fund's
Transfer Agent daily reports of share purchases, redemptions, and total shares
outstanding, and shall be accountable for the information contained in such
reports of purchases and redemptions when received. It is agreed by the parties
that the net asset value per share of the Fund will be calculated in accordance
with Rule 22c-1 under the Investment Company Act of 1940 and as otherwise
directed by the Board of Directors of the Fund.
CSS shall reconcile its records of outstanding shares and shareholder accounts
with the Fund's Transfer Agent periodically, and not less frequently than
monthly.
Section 4. CSS shall provide assistance to the Fund in the servicing of
shareholder accounts, which may include telephone and written conversations,
assistance in redemptions, exchanges, transfers and opening accounts as may be
required from time to time. CSS shall, in addition, provide such additional
administrative non-advisory management services as CSS and the Fund may from
time to time agree.
Section 5. The accounts and records maintained by CSS shall be the property of
the Fund, and shall be made available to the Fund, within a reasonable period of
time, upon demand. CSS shall assist the Fund's independent auditors, or any
other person authorized by the Fund or, upon demand, any regulatory body as
authorized by law or regulation, in any requested review of the Fund's accounts
and records but shall be reimbursed for all reasonable and documented expenses
and employee time invested in any such review outside of routine and normal
periodic reviews. Upon receipt from the Fund of any necessary information, CSS
shall assist the Fund in organizing necessary data for the Fund's completion of
any necessary tax returns, questionnaires, periodic reports to shareholders and
such other reports and information requests as the Fund and CSS shall agree upon
from time to time.
Section 6. CSS and the Fund may from time to time adopt procedures they agree
upon, and, absent knowledge to the contrary, CSS may conclusively assume that
any procedure approved by the Fund or directed by the Fund, does not conflict
with or violate any requirements of Fund's Prospectuses, Articles of
Incorporation, By-Laws, registration statements, orders, or any rule or
regulation of any regulatory body or governmental agency. The Fund (acting
through its officers or other agents) shall be responsible for notifying CSS of
any changes in regulations or rules which might necessitate changes in the
Fund's procedures.
Section 7. CSS may rely upon the advice of the Fund and upon statements of the
Fund's lawyers, accountants and other persons believed by it in good faith to be
expert in matters upon which they are consulted, and CSS shall not be liable for
any actions taken in good faith upon such statements.
Section 8. CSS shall not be liable for any actions taken in good faith reliance
upon any authorized Oral Instructions, any Written Instructions, and certified
copy of any resolution of the Board of Directors of the Fund or any other
document reasonably believed by CSS to be genuine and to have been executed or
signed by the proper person or persons.
CSS shall not be held to have notice of any change of authority of any officer,
employee or agent of the Fund until receipt of notification thereof by the Fund.
The Fund shall indemnify and hold CSS harmless from any and all expenses,
damages, claims, suits, liabilities, actions, demands and losses whatsoever
arising out of or in connection with any error, omission, inaccuracy or other
deficiency of any information provided to CSS by the Fund, or the failure of the
Fund to provide any information needed by CSS knowledgeably to perform its
functions hereunder. Also, the Fund shall indemnify and hold harmless CSS from
all claims and liabilities (including reasonable documented expenses for legal
counsel) incurred by or assessed against CSS in connection with the performance
of this Agreement, except such as may arise from CSS's own negligent action,
omission or willful misconduct; provided, however, that before confessing any
claim against it, CSS shall give the Fund reasonable opportunity to defend
against such claim in the name of the Fund or CSS or both.
Section 9. The Fund agrees to pay CSS compensation for its services and to
reimburse it for expenses, as set forth in the Schedule attached hereto, or as
shall be set forth in amendments to such schedule approved by the Fund's Board
of Directors and CSS.
Section 10. Except as required by laws and regulations governing investment
companies, nothing contained in this Agreement is intended to or shall require
CSS, in any capacity hereunder, to perform any functions or duties on any
holiday or other day of special observance on which CSS is closed. Functions or
duties normally scheduled to be performed on such days shall be performed on,
and as of, the next business day on which both the Fund and CSS are open. CSS
will be open for business on days when the Fund is open for business and/or as
otherwise set forth in the Fund's Prospectuses and Statements of Additional
Information.
Section 11. Either the Fund or CSS may give written notice to the other of the
termination of this Agreement, such termination to take effect at the time
specified in the notice, which time shall be not less than 90 days from the
giving of such notice. Such termination shall be without penalty.
Section 12. Any notice or other communication required by or permitted to be
given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first-class mail, postage prepaid, to the
respective parties at their last known address, except that Oral Instructions
may be given if authorized by the Board of the Fund and preceded by a
certificate from the Fund's secretary so attesting.
Notices to the Fund shall be directed to:
1500 Forest Ave.
Suite 223
Richmond, VA 23229
Notices to CSS shall be directed to:
1500 Forest Ave.
Suite 223
Richmond, VA 23229
Section 13. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 14. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of
CSS, or by CSS without the written consent of the Fund, authorized or approved
by a resolution of its Board of Directors.
Section 15. For purposes of this Agreement, the terms Oral Instructions and
Written Instructions shall mean:
Oral Instructions: The term Oral Instruction shall mean an authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to CSS in person or by telephone, telegram, telecopy, or other
mechanical or documentary means lacking a signature, by a person or persons
believed in good faith by CSS to be a person or persons authorized by a
resolution of the Board of Directors of the Fund, to give Oral Instructions on
behalf of the Fund.
Written Instructions: The term Written Instruction shall mean an authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to CSS in original writing containing original signatures or a copy
of such document transmitted by telecopy including transmission of such
signature believed in good faith by CSS to be the signature of a person
authorized by a resolution of the Board of Directors of the Fund to give Written
Instructions on behalf of the Fund.
The Fund shall file with CSS a certified copy of each resolution of its Board of
Directors authorizing execution of Written Instructions or the transmittal of
Oral Instructions as provided above.
Section 16. This Agreement shall be governed by the laws of the State of
Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
THE WORLD FUNDS, INC.
By:______________________________
John Pasco, III
Chairman
COMMONWEALTH SHAREHOLDER SERVICES, INC.
By: _____________________________
John Pasco, III
Chairman
<PAGE>
SCHEDULE A TO
ADMINISTRATIVE SERVICES AGREEMENT
BY AND BETWEEN
THE WORLD FUNDS, INC. AND
COMMONWEALTH SHAREHOLDER SERVICES, INC.
FOR THE Global e-Fund series
Pursuant to Section 9 of the Administrative Services Agreement, dated May 1,
2000, by and between The World Funds, Inc. (the "Fund"), and Commonwealth
Shareholder Services, Inc. ("CSS"), Global e-Fund series of the Fund shall pay
CSS a fee calculated and paid monthly as follows:
A. For the performance of Blue Sky matters, CSS shall be paid at the rate
of $30 per hour of actual time used.
B. For shareholder servicing, CSS shall be paid at the rate of $30 per
hour of actual time used.
For all other administration, CSS shall be paid a fee at the rate of 0.20% per
annum of the average daily net assets on the first $500 Million (with a minimum
fee of $30,000); 0.175% per annum of the average daily net assets from $500
Million to $1 Billion; and 0.15% per annum of the average daily net assets in
excess of 1 Billion.
D. In addition to the foregoing, the Fund shall reimburse CSS, from the assets
of the Portfolio, for the Portfolio's proportionate share of general expenses
incurred for the Fund and for all expenses incurred by the Portfolio
individually. Such out-of-pocket expenses shall include, but not be limited to:
documented fees and costs of obtaining advice of counsel or accountants in
connection with its services to the Fund; postage; long distance telephone;
special forms required by the Fund; any travel which may be required in the
performance of its duties to the Fund; and any other extraordinary expenses it
may incur in connection with its services to the Fund.
<PAGE>
EXHIBIT EX-99.(23)(h)(2)(h)
ADMINISTRATIVE SERVICES AGREEMENT
Administrative Services Agreement (the "Agreement") dated , 2000, by and
between THE WORLD FUNDS, INC. (the "Fund"), a diversified, open-end management
investment company, duly organized as a corporation in accordance with the laws
of the State of Maryland, and COMMONWEALTH SHAREHOLDER SERVICES, INC. ("CSS"), a
corporation duly organized as a corporation in accordance with the laws of the
Commonwealth of Virginia.
WITNESSETH THAT:
WHEREAS, the Fund desires to appoint CSS as its Administrative Services
Agent, for and on behalf of the Monument EuroNet Fund series (the "Portfolio"),
to perform certain recordkeeping and shareholder servicing functions required of
a duly registered investment company to comply with certain provisions of
federal, state and local law, rules and regulations, and, as is required, to
assist the Fund in preparing and filing certain financial reports, and further
to perform certain daily functions in connection with on-going operations of the
Fund and the Portfolio, and provide ministerial services to implement the
investment decisions of the Fund and the investment manager of the Portfolio,
Vernes Asset Management LLC (the "Manager"); and
WHEREAS, CSS is willing to perform such functions upon the terms and
conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. CSS shall examine and review all records and documents of the
Portfolio pertaining to its duties under this Agreement in order to determine
and/or recommend how such records and documents shall be maintained.
Section 2. CSS shall, as necessary for such purposes, advise the Fund and its
agents of the information which is deemed to be "necessary" for the performance
of its duties under this Agreement, and upon receipt of necessary information
and Written or Oral Instructions from the Fund, shall maintain and keep current
such shareholder relations records.
Unless the information necessary to perform the above functions is furnished in
writing to CSS by the Fund or its agents (such as Custodians, Transfer Agents,
etc.), CSS shall incur no liability and the Fund shall indemnify and hold
harmless CSS from and against any liability arising from any discrepancy in the
information received by CSS and used in the performance by CSS of its duties.
It shall be the responsibility of the Fund to furnish CSS with the net asset
value per share, declaration, record and payment dates and amounts of any
dividends or income and any other special actions required concerning each of
its securities.
CSS shall maintain such shareholder records above mentioned as required by
regulation and as agreed upon between the Fund and CSS.
Section 3. The Fund shall confirm to the Fund's Transfer Agent all purchases and
redemptions of shares of the Portfolio effected through the Fund or its
distributor, as and when such orders are accepted by the Fund or an authorized
agent of the Fund designated for that purpose. CSS shall receive from the Fund's
Transfer Agent daily reports of share purchases, redemptions, and total shares
outstanding, and shall be accountable for the information contained in such
reports of purchases and redemptions when received. It is agreed by the parties
that the net asset value per share of the Fund will be calculated in accordance
with Rule 22c-1 under the Investment Company Act of 1940 and as otherwise
directed by the Board of Directors of the Fund.
CSS shall reconcile its records of outstanding shares and shareholder accounts
with the Fund's Transfer Agent periodically, and not less frequently than
monthly.
Section 4. CSS shall provide assistance to the Fund in the servicing of
shareholder accounts, which may include telephone and written conversations,
assistance in redemptions, exchanges, transfers and opening accounts as may be
required from time to time. CSS shall, in addition, provide such additional
administrative non-advisory management services as CSS and the Fund may from
time to time agree.
Section 5. The accounts and records maintained by CSS shall be the property of
the Fund, and shall be made available to the Fund, within a reasonable period of
time, upon demand. CSS shall assist the Fund's independent auditors, or any
other person authorized by the Fund or, upon demand, any regulatory body as
authorized by law or regulation, in any requested review of the Fund's accounts
and records but shall be reimbursed for all reasonable and documented expenses
and employee time invested in any such review outside of routine and normal
periodic reviews. Upon receipt from the Fund of any necessary information, CSS
shall assist the Fund in organizing necessary data for the Fund's completion of
any necessary tax returns, questionnaires, periodic reports to shareholders and
such other reports and information requests as the Fund and CSS shall agree upon
from time to time.
Section 6. CSS and the Fund may from time to time adopt procedures they agree
upon, and, absent knowledge to the contrary, CSS may conclusively assume that
any procedure approved by the Fund or directed by the Fund, does not conflict
with or violate any requirements of Fund's Prospectuses, Articles of
Incorporation, By-Laws, registration statements, orders, or any rule or
regulation of any regulatory body or governmental agency. The Fund (acting
through its officers or other agents) shall be responsible for notifying CSS of
any changes in regulations or rules which might necessitate changes in the
Fund's procedures.
Section 7. CSS may rely upon the advice of the Fund and upon statements of the
Fund's lawyers, accountants and other persons believed by it in good faith to be
expert in matters upon which they are consulted, and CSS shall not be liable for
any actions taken in good faith upon such statements.
Section 8. CSS shall not be liable for any actions taken in good faith reliance
upon any authorized Oral Instructions, any Written Instructions, and certified
copy of any resolution of the Board of Directors of the Fund or any other
document reasonably believed by CSS to be genuine and to have been executed or
signed by the proper person or persons.
CSS shall not be held to have notice of any change of authority of any officer,
employee or agent of the Fund until receipt of notification thereof by the Fund.
The Fund shall indemnify and hold CSS harmless from any and all expenses,
damages, claims, suits, liabilities, actions, demands and losses whatsoever
arising out of or in connection with any error, omission, inaccuracy or other
deficiency of any information provided to CSS by the Fund, or the failure of the
Fund to provide any information needed by CSS knowledgeably to perform its
functions hereunder. Also, the Fund shall indemnify and hold harmless CSS from
all claims and liabilities (including reasonable documented expenses for legal
counsel) incurred by or assessed against CSS in connection with the performance
of this Agreement, except such as may arise from CSS's own negligent action,
omission or willful misconduct; provided, however, that before confessing any
claim against it, CSS shall give the Fund reasonable opportunity to defend
against such claim in the name of the Fund or CSS or both.
Section 9. The Fund agrees to pay CSS compensation for its services and to
reimburse it for expenses, as set forth in the Schedule attached hereto, or as
shall be set forth in amendments to such schedule approved by the Fund's Board
of Directors and CSS.
Section 10. Except as required by laws and regulations governing investment
companies, nothing contained in this Agreement is intended to or shall require
CSS, in any capacity hereunder, to perform any functions or duties on any
holiday or other day of special observance on which CSS is closed. Functions or
duties normally scheduled to be performed on such days shall be performed on,
and as of, the next business day on which both the Fund and CSS are open. CSS
will be open for business on days when the Fund is open for business and/or as
otherwise set forth in the Fund's Prospectuses and Statements of Additional
Information.
Section 11. Either the Fund or CSS may give written notice to the other of the
termination of this Agreement, such termination to take effect at the time
specified in the notice, which time shall be not less than 90 days from the
giving of such notice. Such termination shall be without penalty.
Section 12. Any notice or other communication required by or permitted to be
given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first-class mail, postage prepaid, to the
respective parties at their last known address, except that Oral Instructions
may be given if authorized by the Board of the Fund and preceded by a
certificate from the Fund's secretary so attesting.
Notices to the Fund shall be directed to:
1500 Forest Ave.
Suite 223
Richmond, VA 23229
Notices to CSS shall be directed to:
1500 Forest Ave.
Suite 223
Richmond, VA 23229
Section 13. This Agreement may be executed in two or more counterparts, each of
which, when so executed, shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 14. This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the written consent of
CSS, or by CSS without the written consent of the Fund, authorized or approved
by a resolution of its Board of Directors.
Section 15. For purposes of this Agreement, the terms Oral Instructions and
Written Instructions shall mean:
Oral Instructions: The term Oral Instruction shall mean an authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to CSS in person or by telephone, telegram, telecopy, or other
mechanical or documentary means lacking a signature, by a person or persons
believed in good faith by CSS to be a person or persons authorized by a
resolution of the Board of Directors of the Fund, to give Oral Instructions on
behalf of the Fund.
Written Instructions: The term Written Instruction shall mean an authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to CSS in original writing containing original signatures or a copy
of such document transmitted by telecopy including transmission of such
signature believed in good faith by CSS to be the signature of a person
authorized by a resolution of the Board of Directors of the Fund to give Written
Instructions on behalf of the Fund.
The Fund shall file with CSS a certified copy of each resolution of its Board of
Directors authorizing execution of Written Instructions or the transmittal of
Oral Instructions as provided above.
Section 16. This Agreement shall be governed by the laws of the State of
Maryland.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
THE WORLD FUNDS, INC.
By:______________________________
John Pasco, III
Chairman
COMMONWEALTH SHAREHOLDER SERVICES, INC.
By: _____________________________
John Pasco, III
President
<PAGE>
SCHEDULE A TO
ADMINISTRATIVE SERVICES AGREEMENT
BY AND BETWEEN
THE WORLD FUNDS, INC. AND
COMMONWEALTH SHAREHOLDER SERVICES, INC.
FOR THE
Monument EuroNet Fund series
Pursuant to Section 9 of the Administrative Services Agreement, dated , 2000, by
and between The World Funds, Inc. (the "Fund"), and Commonwealth Shareholder
Services, Inc. ("CSS"), Monument EuroNet Fund series of the Fund shall pay CSS a
fee calculated and paid twice monthly as follows:
A. For the performance of Blue Sky matters, CSS shall be paid at the rate
of $30 per hour of actual time used.
B. For shareholder servicing, CSS shall be paid at the rate of $30 per hour
of actual time used.
C. For all other administration, CSS shall be paid a fee at the rate of
0.20% per annum of the average daily net assets on the first $250
Million (with a minimum fee of $30,000); 0.175% per annum of the average
daily net assets from $250 Million to $500 Million; 0.15% per annum of
the average daily net assets from $500 Million to $750 Million; 0.125%
per annum of the average daily net assets from $750 Million to $1
Billion; and 0.10% per annum of the average daily net assets in excess
of 1 Billion.
D. In addition to the foregoing, the Fund shall reimburse CSS, from the
assets of the Portfolio, for the Portfolio's proportionate share of
general expenses incurred for the Fund and for all expenses incurred by
the Portfolio individually. Such out-of-pocket expenses shall include,
but not be limited to: documented fees and costs of obtaining advice of
counsel or accountants in connection with its services to the Fund;
postage; long distance telephone; special forms required by the Fund;
any travel which may be required in the performance of its duties to the
Fund; and any other extraordinary expenses it may incur in connection
with its services to the Fund.
<PAGE>
EXHIBIT EX-99.(23)(h)(6)(a)
EXPENSE LIMITATION AGREEMENT
THE WORLD FUNDS, INC.
This EXPENSE LIMITATIONAGREEMENT, effective as of October 1, 1998 is by
and between Virginia Management Investment Corporation (the "Adviser") and The
World Funds, Inc. (the "Fund"), on behalf of The New Market Fund series of the
Fund (the "Portfolio").
WHEREAS the Fund is a corporation organized under the Maryland General
Corporations Law, and is registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end management company of the series type (the
Portfolio being a series of the Fund); and
WHEREAS the Fund and the Adviser have entered into an Advisory Agreement,
as amended ("Advisory Agreement"), pursuant to which the Adviser provides
Advisory services to the Portfolio for compensation based on the value of the
average daily net assets of the Portfolio; and
WHEREAS the Fund and the Adviser have determined that it is appropriate
and in the best interests of the Portfolio and its shareholders to maintain the
expenses of the Portfolio at a level below the level to which the Portfolio
might otherwise be subject;
NOW, THEREFORE, the parties to this Agreement acknowledge and agree to the
following:
1. Expense Limitation
1.1 Operating Expense Limit. The maximum Operating Expense Limit in
any year with respect to the Portfolio is 1.99% of
the average daily net assets of the Portfolio.
1.2 Applicable Expense Limit. To the extent that the aggregate
expenses incurred by the Portfolio in any fiscal
year (referred to as "Portfolio Operating Expenses") exceed the Operating
Expense Limit, the excess amount ("Excess Amount") will be the liability of
the Adviser. Portfolio Operating Expenses may include, but are not limited
to, Advisory fees of the Adviser. Portfolio Operating expenses do not
include interest, taxes, brokerage commissions, other expenditures
capitalized in accordance with generally accepted accounting principles,
and other extraordinary expenses not incurred in the ordinary course of the
Portfolio's business.
1.3 Method of Computation. To determine the Adviser's liability with respect to
the Excess Amount, each month the Portfolio Operating Expenses for the
Portfolio will be annualized as of the last day of the month. If the
annualized Portfolio Operating expenses of the Portfolio exceed the
Operating Expense Limit of the Portfolio for the month, the Adviser will
remit to the Portfolio an amount sufficient to reduce the annualized
Portfolio Operating Expenses Limit.
1.4 Year-End Adjustment. If necessary, on or before the last day of the first
month of each fiscal year, an annual adjustment payment will be made by the
appropriate party in order that the amount of the Advisory fees waived or
reduced by the Adviser, as well as other payments remitted by the Adviser
to the Portfolio with respect to adjustments made to the Portfolio
Operating Expenses for the previous fiscal year, shall equal the Excess
Amount for the entire fiscal year.
2. Reimbursement of Fee Waivers and Expense Reimbursements
2.1 Reimbursement. If during any quarter in which the Advisory Agreement
is still in effect, the estimated aggregate Portfolio Operating
Expenses of the Portfolio for the quarter are less than the Operating
Expense Limit for that quarter, the Adviser will be entitled to
reimbursement of fees waived or remitted by the Adviser to the
Portfolio pursuant to Section 1 of this Agreement. The total amount
of reimbursement recoverable by the Adviser (the "Reimbursement
Amount") is the sum of all fees previously waived or remitted by the
Adviser to the Portfolio during any of the previous five (5) years,
pursuant to Section 1of this Agreement, less any reimbursement
previously paid by a Portfolio to the Adviser with respect to any
waivers, reductions, and payments made with respect to a Portfolio;
provided, that the amount payable to the Adviser pursuant to this
Section 2.1 is limited to not more than the difference between the
Operating Expense Limit for the quarter and the actual Portfolio
Operating Expenses for that quarter. The Reimbursement Amount may not
include any additional charges or fees, such as interest accruable on
the Reimbursement Amount.
2.2 Board Approval. No Reimbursement Amount will be paid to the Adviser
in any fiscal quarter unless the Fund's Board of Directors has
determined that a reimbursement is in the best interest
of the Portfolio and its shareholders. The Fund's Board of
Directors will determine quarterly in advance whether any
Reimbursement Amount may be paid to the Adviser during the quarter.
3. Term and Termination of Agreement.
This Agreement will continue in effect until October 1, 2001, and from
year to year thereafter provided that each continuance is specifically
approved by a majority of the Directors of the Fund who (i) are not
"interested persons" of the Fund or any other party to this Agreement, as
defined in the 1940 Act, and (ii) have no direct or indirect financial
interest in the operation of this Agreement ("Independent Directors").
Nevertheless, after the initial term of three years, this Agreement may be
terminated by either party to the Agreement, without payment of any
penalty, upon ninety (90) days prior written notice to the other party at
its principal place of business. Action to terminate the Agreement must be
authorized by resolution of a majority of the Independent Directors of the
Fund or by a vote of a majority of the outstanding voting securities of
the Fund.
4. Miscellaneous.
4.1 Captions. The captions in this Agreement are included for convenience of
reference only and do not define or delineate any of the provisions of the
Agreement, or otherwise affect their construction or effect.
4.2 Interpretation. Nothing in this Agreement requires the Fund or the
Portfolio to take any action contrary to the Fund's Articles of
Incorporation, Bylaws, or any applicable statutory or regulatory
requirement to which the Fund or Portfolio are subject, nor does this
Agreement relieve or deprive the Fund's Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund or
the Portfolio.
4.3 Definitions. Any questions of interpretation of any term or provision of
this Agreement has the same meaning and is to be resolved by reference to,
the 1940 Act and the Advisory Agreement between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers, and have caused their respective
corporate seals to be affixed to this Agreement as of the day and year first
above written.
THE WORLD FUNDS, INC.
By: _____________________________
John Pasco, III
Chairman
VIRGINIA MANAGEMENT INVESTMENT CORPORATION
By: ____________________________
President
<PAGE>
EXHIBIT EX-99.(23)(h)(6)(b)
EXPENSE LIMITATION AGREEMENT
THE WORLD FUNDS, INC.
This EXPENSE LIMITATIONAGREEMENT, effective as of October 1, 1998 is by
and between Third Millennium Investment Advisors, LLC (the "Adviser") and The
World Funds, Inc. (the "Fund"), on behalf of The Third Millennium Russia Fund
series of the Fund (the "Portfolio").
WHEREAS the Fund is a corporation organized under the Maryland General
Corporations Law, and is registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end management company of the series type (the
Portfolio being a series of the Fund); and
WHEREAS the Fund and the Adviser have entered into an Advisory Agreement,
as amended ("Advisory Agreement"), pursuant to which the Adviser provides
Advisory services to the Portfolio for compensation based on the value of the
average daily net assets of the Portfolio; and
WHEREAS the Fund and the Adviser have determined that it is appropriate
and in the best interests of the Portfolio and its shareholders to maintain the
expenses of the Portfolio at a level below the level to which the Portfolio
might otherwise be subject;
NOW, THEREFORE, the parties to this Agreement acknowledge and agree to the
following:
1. Expense Limitation
1.1 Operating Expense Limit. The maximum Operating Expense Limit in
any year with respect to the Portfolio is 2.75% of the average daily net
assets of the Portfolio.
1.2 Applicable Expense Limit. To the extent that the aggregate Expenses
incurred by the Portfolio in any fiscal year (referred to as "Portfolio
Operating Expenses") exceed the Operating Expense Limit, the excess amount
("Excess Amount") will be the liability of the Adviser. Portfolio Operating
Expenses may include, but are not limited to, Advisory fees of the Adviser.
Portfolio Operating expenses do not include interest, taxes, brokerage
commissions, other expenditures capitalized in accordance with generally
accepted accounting principles, and other extraordinary expenses not
incurred in the ordinary course of the Portfolio's business.
1.3 Method of Computation. To determine the Adviser's liability with respect to
the Excess Amount, each month the Portfolio Operating Expenses for the
Portfolio will be annualized as of the last day of the month. If the
annualized Portfolio Operating expenses of the Portfolio exceed the
Operating Expense Limit of the Portfolio for the month, the Adviser will
remit to the Portfolio an amount sufficient to reduce the annualized
Portfolio Operating Expenses Limit.
1.4 Year-End Adjustment. If necessary, on or before the last day of the first
month of each fiscal year, an annual adjustment payment will be made by the
appropriate party in order that the amount of the Advisory fees waived or
reduced by the Adviser, as well as other payments remitted by the Adviser
to the Portfolio with respect to adjustments made to the Portfolio
Operating Expenses for the previous fiscal year, shall equal the Excess
Amount for the entire fiscal year.
2. Reimbursement of Fee Waivers and Expense Reimbursements
2.1 Reimbursement. If during any quarter in which the Advisory Agreement is
still in effect, the estimated aggregate Portfolio Operating Expenses of
the Portfolio for the quarter are less than the Operating Expense Limit for
that quarter, the Adviser will be entitled to reimbursement of fees waived
or remitted by the Adviser to the Portfolio pursuant to Section 1 of this
Agreement. The total amount of reimbursement recoverable by the Adviser
(the "Reimbursement Amount") is the sum of all fees previously waived or
remitted by the Adviser to the Portfolio during any of the previous five
(5) years, pursuant to Section 1of this Agreement, less any reimbursement
previously paid by a Portfolio to the Adviser with respect to any waivers,
reductions, and payments made with respect to a Portfolio; provided, that
the amount payable to the Adviser pursuant to this Section 2.1 is limited
to not more than the difference between the Operating Expense Limit for the
quarter and the actual Portfolio Operating Expenses for that quarter. The
Reimbursement Amount may not include any additional charges or fees, such
as interest accruable on the Reimbursement Amount.
2.2 Board Approval. No Reimbursement Amount will be paid to the Adviser in any
fiscal quarter unless the Fund's Board of Directors has determined that a
reimbursement is in the best interest of the Portfolio and its
shareholders. The Fund's Board of Directors will determine quarterly in
advance whether any Reimbursement Amount may be paid to the Adviser during
the quarter.
3. Term and Termination of Agreement. This Agreement will continue in effect
until October 1, 2001, and from year to year thereafter provided that each
continuance is specifically approved by a majority of the Directors of the
Fund who (i) are not "interested persons" of the Fund or any other party to
this Agreement, as defined in the 1940 Act, and (ii) have no direct or
indirect financial interest in the operation of this Agreement
("Independent Directors"). Nevertheless, after the initial term of three
years, this Agreement may be terminated by either party to the Agreement,
without payment of any penalty, upon ninety (90) days prior written notice
to the other party at its principal place of business. Action to terminate
the Agreement must be authorized by resolution of a majority of the
Independent Directors of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund.
4. Miscellaneous.
4.1 Captions. The captions in this Agreement are included
for convenience of reference only and do not define or delineate any of the
provisions of the Agreement, or otherwise affect their construction or
effect.
4.2 Interpretation. Nothing in this Agreement requires the Fund or the
Portfolio to take any action contrary to the Fund's Articles of
Incorporation, Bylaws, or any applicable statutory or regulatory
requirement to which the Fund or Portfolio are subject, nor does this
Agreement relieve or deprive the Fund's Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund or
the Portfolio.
4.3 Definitions. Any questions of interpretation of any term or provision of
this Agreement has the same meaning and is to be resolved by reference to,
the 1940 Act and the Advisory Agreement between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers, and have caused their respective
corporate seals to be affixed to this Agreement as of the day and year first
above written.
THE WORLD FUNDS, INC.
By: _____________________________
John Pasco, III
Chairman
THIRD MILLENNIUM INVESTMENT ADVISORS LLC
By: ____________________________
John Connor
President
<PAGE>
EXHIBIT EX-99.(23)(h)(6)(c)
EXPENSE LIMITATION AGREEMENT
THE WORLD FUNDS, INC.
This EXPENSE LIMITATIONAGREEMENT, effective as of March 1, 2000 is by and
between xGENx, LLC (the "Adviser") and The World Funds, Inc. (the "Fund"), on
behalf of the GenomicsFund.com series of the Fund (the "Portfolio").
WHEREAS the Fund is a corporation organized under the Maryland General
Corporations Law, and is registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end management company of the series type (the
Portfolio being a series of the Fund); and
WHEREAS the Fund and the Adviser have entered into an Advisory Agreement,
as amended ("Advisory Agreement"), pursuant to which the Adviser provides
Advisory services to the Portfolio for compensation based on the value of the
average daily net assets of the Portfolio; and
WHEREAS the Fund and the Adviser have determined that it is appropriate
and in the best interests of the Portfolio and its shareholders to maintain the
expenses of the Portfolio at a level below the level to which the Portfolio
might otherwise be subject;
NOW, THEREFORE, the parties to this Agreement acknowledge and agree to the
following:
1. Expense Limitation
1.1 Operating Expense Limit. The maximum Operating Expense Limit in any year
with respect to the Portfolio is 1.90% of the average daily net assets of
the Portfolio.
1.2 Applicable Expense Limit. To the extent that the aggregate expenses
incurred by the Portfolio in any fiscal year (referred to as "Portfolio
Operating Expenses") exceed the Operating Expense Limit, the excess amount
("Excess Amount") will be the liability of the Adviser. Portfolio Operating
Expenses may include, but are not limited to, Advisory fees of the Adviser.
Portfolio Operating expenses do not include interest, taxes, brokerage
commissions, other expenditures capitalized in accordance with generally
accepted accounting principles, and other extraordinary expenses not
incurred in the ordinary course of the Portfolio's business.
1.3 Method of Computation. To determine the Adviser's liability with respect to
the Excess Amount, each month the Portfolio Operating Expenses for the
Portfolio will be annualized as of the last day of the month. If the
annualized Portfolio Operating expenses of the Portfolio exceed the
Operating Expense Limit of the Portfolio for the month, the Adviser will
remit to the Portfolio an amount sufficient to reduce the annualized
Portfolio Operating Expenses Limit.
1.4 Year-End Adjustment. If necessary, on or before the last day of the first
month of each fiscal year, an annual adjustment payment will be made by the
appropriate party in order that the amount of the advisory fees waived or
reduced by the Adviser, as well as other payments remitted by the Adviser
to the Portfolio with respect to adjustments made to the Portfolio
Operating Expenses for the previous fiscal year, shall equal the Excess
Amount for the entire fiscal year.
2. Reimbursement of Fee Waivers and Expense Reimbursements
2.1 Reimbursement. If during any quarter in which the Advisory Agreement is
still in effect, the estimated aggregate Portfolio Operating Expenses of
the Portfolio for the quarter are less than the Operating Expense Limit for
that quarter, the Adviser will be entitled to reimbursement of fees waived
or remitted by the Adviser to the Portfolio pursuant to Section 1 of this
Agreement. The total amount of reimbursement recoverable by the Adviser
(the "Reimbursement Amount") is the sum of all fees previously waived or
remitted by the Adviser to the Portfolio during any of the previous five
(5) years, pursuant to Section 1of this Agreement, less any reimbursement
previously paid by a Portfolio to the Adviser with respect to any waivers,
reductions, and payments made with respect to a Portfolio; provided, that
the amount payable to the Adviser pursuant to this Section 2.1 is limited
to not more than the difference between the Operating Expense Limit for the
quarter and the actual Portfolio Operating Expenses for that quarter. The
Reimbursement Amount may not include any additional charges or fees, such
as interest accruable on the Reimbursement Amount.
2.2 Board Approval. No Reimbursement Amount will be paid to the
Adviser in any fiscal quarter unless the Fund's Board of Directors has
determined that a reimbursement is in the best interest of the Portfolio
and its shareholders. The Fund's Board of Directors will determine
quarterly in advance whether any Reimbursement Amount may be paid to the
Adviser during the quarter.
3. Term and Termination of Agreement.
This Agreement will continue in effect until March 1, 2003 and from year
to year thereafter provided that each continuance is specifically approved
by a majority of the Directors of the Fund who (i) are not "interested
persons" of the Fund or any other party to this Agreement, as defined in
the 1940 Act, and (ii) have no direct or indirect financial interest in
the operation of this Agreement ("Independent Directors"). Nevertheless,
this Agreement may be terminated by either party to the Agreement, without
payment of any penalty, upon ninety (90) days prior written notice to the
other party at its principal place of business. Action to terminate the
Agreement must be authorized by resolution of a majority of the
Independent Directors of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund.
4. Miscellaneous.
4.1 Captions. The captions in this Agreement are included for convenience of
reference only and do not define or delineate any of the provisions of the
Agreement, or otherwise affect their construction or effect.
4.2 Interpretation. Nothing in this Agreement requires the Fund or the
Portfolio to take any action contrary to the Fund's Articles of
Incorporation, Bylaws, or any applicable statutory or regulatory
requirement to which the Fund or Portfolio are subject, nor does this
Agreement relieve or deprive the Fund's Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund or
the Portfolio.
4.3 Definitions. Any questions of interpretation of any term or provision of
this Agreement has the same meaning and is to be resolved by reference to,
the 1940 Act and the Advisory Agreement between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers, and have caused their respective
corporate seals to be affixed to this Agreement as of the day and year first
above written.
THE WORLD FUNDS, INC.
By: _____________________________
John Pasco, III
Chairman
xGENx, LLC
By: ____________________________
Steve Newby
President
<PAGE>
EXHIBIT EX-99.(23)(h)(6)(d)
EXPENSE LIMITATION AGREEMENT
THE WORLD FUNDS, INC.
This EXPENSE LIMITATIONAGREEMENT, effective as of May 1, 2000 is by and
between Global Assets Advisers, Inc. (the "Adviser") and The World Funds,
Inc. (the "Fund"), on behalf of The Global e-Fund series of the Fund (the
"Portfolio").
WHEREAS the Fund is a corporation organized under the Maryland General
Corporations Law, and is registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end management company of the series type (the
Portfolio being a series of the Fund); and
WHEREAS the Fund and the Adviser have entered into an Advisory Agreement,
as amended ("Advisory Agreement"), pursuant to which the Adviser provides
Advisory services to the Portfolio for compensation based on the value of the
average daily net assets of the Portfolio; and
WHEREAS the Fund and the Adviser have determined that it is appropriate
and in the best interests of the Portfolio and its shareholders to maintain the
expenses of the Portfolio at a level below the level to which the Portfolio
might otherwise be subject;
NOW, THEREFORE, the parties to this Agreement acknowledge and agree to the
following:
1. Expense Limitation
1.1 Operating Expense Limit. The maximum Operating Expense Limit in any year
with respect to the Portfolio is 3.49% of the average daily net assets of
the Portfolio.
1.2 Applicable Expense Limit. To the extent that the aggregate expenses
incurred by the Portfolio in any fiscal year (referred to as "Portfolio
Operating Expenses") exceed the Operating Expense Limit, the excess amount
("Excess Amount") will be the liability of the Adviser. Portfolio Operating
Expenses may include, but are not limited to, Advisory fees of the Adviser.
Portfolio Operating expenses do not include interest, taxes, brokerage
commissions, other expenditures capitalized in accordance with generally
accepted accounting principles, and other extraordinary expenses not
incurred in the ordinary course of the Portfolio's business.
1.3 Method of Computation. To determine the Adviser's liability with respect to
the Excess Amount, each month the Portfolio Operating Expenses for the
Portfolio will be annualized as of the last day of the month. If the
annualized Portfolio Operating expenses of the Portfolio exceed the
Operating Expense Limit of the Portfolio for the month, the Adviser will
remit to the Portfolio an amount sufficient to reduce the annualized
Portfolio Operating Expenses Limit.
1.4 Year-End Adjustment. If necessary, on or before the last day of the first
month of each fiscal year, an annual adjustment payment will be made by the
appropriate party in order that the amount of the Advisory fees waived or
reduced by the Adviser, as well as other payments remitted by the Adviser
to the Portfolio with respect to adjustments made to the Portfolio
Operating Expenses for the previous fiscal year, shall equal the Excess
Amount for the entire fiscal year.
2. Reimbursement of Fee Waivers and Expense Reimbursements
2.1 Reimbursement. If during any quarter in which the Advisory Agreement is
still in effect, the estimated aggregate Portfolio Operating Expenses of
the Portfolio for the quarter are less than the Operating Expense Limit for
that quarter, the Adviser will be entitled to reimbursement of fees waived
or remitted by the Adviser to the Portfolio pursuant to Section 1 of this
Agreement. The total amount of reimbursement recoverable by the Adviser
(the "Reimbursement Amount") is the sum of all fees previously waived or
remitted by the Adviser to the Portfolio during any of the previous five
(5) years, pursuant to Section 1of this Agreement, less any reimbursement
previously paid by a Portfolio to the Adviser with respect to any waivers,
reductions, and payments made with respect to a Portfolio; provided, that
the amount payable to the Adviser pursuant to this Section 2.1 is limited
to not more than the difference between the Operating Expense Limit for the
quarter and the actual Portfolio Operating Expenses for that quarter. The
Reimbursement Amount may not include any additional charges or fees, such
as interest accruable on the Reimbursement Amount.
2.2 Board Approval. No Reimbursement Amount will be paid to the Adviser in any
fiscal quarter unless the Fund's Board of Directors has determined that a
reimbursement is in the best interest of the Portfolio and its
shareholders. The Fund's Board of Directors will determine quarterly in
advance whether any Reimbursement Amount may be paid to the Adviser during
the quarter.
3. Term and Termination of Agreement.
This Agreement will continue in effect until May 1, 2003, and from year to
year thereafter provided that each continuance is specifically approved by
a majority of the Directors of the Fund who (i) are not "interested
persons" of the Fund or any other party to this Agreement, as defined in
the 1940 Act, and (ii) have no direct or indirect financial interest in
the operation of this Agreement ("Independent Directors"). Nevertheless,
this Agreement may be terminated by either party to the Agreement, without
payment of any penalty, upon ninety (90) days prior written notice to the
other party at its principal place of business. Action to terminate the
Agreement must be authorized by resolution of a majority of the
Independent Directors of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund.
4. Miscellaneous.
4.1 Captions. The captions in this Agreement are included for convenience of
reference only and do not define or delineate any of the provisions of the
Agreement, or otherwise affect their construction or effect.
4.2 Interpretation. Nothing in this Agreement requires the Fund or the
Portfolio to take any action contrary to the Fund's Articles of
Incorporation, Bylaws, or any applicable statutory or regulatory
requirement to which the Fund or Portfolio are subject, nor does this
Agreement relieve or deprive the Fund's Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund or
the Portfolio.
4.3 Definitions. Any questions of interpretation of any term or provision of
this Agreement has the same meaning and is to be resolved by reference to,
the 1940 Act and the Advisory Agreement between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers, and have caused their respective
corporate seals to be affixed to this Agreement as of the day and year first
above written.
THE WORLD FUNDS, INC.
By: _____________________________
John Pasco, III
Chairman
GLOBAL ASSETS ADVISERS, INC.
By: ____________________________
Diego J. Veitia
President
<PAGE>
EXHIBIT EX-99.(23)(h)(6)(e)
EXPENSE LIMITATION AGREEMENT
THE WORLD FUNDS, INC.
This EXPENSE LIMITATIONAGREEMENT, effective as of ___________, 2000 is by
and between Vernes Asset Management, LLC (the "Manager") and The World Funds,
Inc. (the "Fund"), on behalf of Monument EuroNet Fund series of the Fund (the
"Portfolio").
WHEREAS the Fund is a corporation organized under the Maryland General
Corporations Law, and is registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end management company of the series type (the
Portfolio being a series of the Fund); and
WHEREAS the Fund and the Manager have entered into an Advisory Agreement,
as amended ("Advisory Agreement"), pursuant to which the Manager provides
Advisory services to the Portfolio for compensation based on the value of the
average daily net assets of the Portfolio; and
WHEREAS the Fund and the Manager have determined that it is appropriate
and in the best interests of the Portfolio and its shareholders to maintain the
expenses of the Portfolio at a level below the level to which the Portfolio
might otherwise be subject;
NOW, THEREFORE, the parties to this Agreement acknowledge and agree to the
following:
1. Expense Limitation
1.1 Operating Expense Limit. The maximum Operating Expense Limit in any year
with respect to Class A shares of the Portfolio is 3.49% and 3.99% for
Class B and Class C shares of the Portfolio of the average daily net assets
of the Portfolio.
1.2 Applicable Expense Limit. To the extent that the aggregate expenses
incurred by the Portfolio in any fiscal year (referred to as "Portfolio
Operating Expenses") exceed the Operating Expense Limit, the excess amount
("Excess Amount") will be the liability of the Manager. Portfolio Operating
Expenses may include, but are not limited to, Advisory fees of the Manager.
Portfolio Operating expenses do not include interest, taxes, brokerage
commissions, other expenditures capitalized in accordance with generally
accepted accounting principles, and other extraordinary expenses not
incurred in the ordinary course of the Portfolio's business.
1.3 Method of Computation. To determine the Manager's liability with respect to
the Excess Amount, each month the Portfolio Operating Expenses for the
Portfolio will be annualized as of the last day of the month. If the
annualized Portfolio Operating expenses of the Portfolio exceed the
Operating Expense Limit of the Portfolio for the month, the Manager will
remit to the Portfolio an amount sufficient to reduce the annualized
Portfolio Operating Expenses Limit.
1.4 Year-End Adjustment. If necessary, on or before the last day of the first
month of each fiscal year, an annual adjustment payment will be made by the
appropriate party in order that the amount of the Advisory fees waived or
reduced by the Manager, as well as other payments remitted by the Manager
to the Portfolio with respect to adjustments made to the Portfolio
Operating Expenses for the previous fiscal year, shall equal the Excess
Amount for the entire fiscal year.
2. Reimbursement of Fee Waivers and Expense Reimbursements
2.1 Reimbursement. If during any quarter in which the Advisory Agreement is
still in effect, the estimated aggregate Portfolio Operating Expenses of
the Portfolio for the quarter are less than the Operating Expense Limit for
that quarter, the Manager will be entitled to reimbursement of fees waived
or remitted by the Manager to the Portfolio pursuant to Section 1 of this
Agreement. The total amount of reimbursement recoverable by the Manager
(the "Reimbursement Amount") is the sum of all fees previously waived or
remitted by the Manager to the Portfolio during any of the previous five
(5) years, pursuant to Section 1of this Agreement, less any reimbursement
previously paid by a Portfolio to the Manager with respect to any waivers,
reductions, and payments made with respect to a Portfolio; provided, that
the amount payable to the Manager pursuant to this Section 2.1 is limited
to not more than the difference between the Operating Expense Limit for the
quarter and the actual Portfolio Operating Expenses for that quarter. The
Reimbursement Amount may not include any additional charges or fees, such
as interest accruable on the Reimbursement Amount.
2.2 Board Approval. No Reimbursement Amount will be paid to the Manager in any
fiscal quarter unless the Fund's Board of Directors has determined that a
reimbursement is in the best interest of the Portfolio and its
shareholders. The Fund's Board of Directors will determine quarterly in
advance whether any Reimbursement Amount may be paid to the Manager during
the quarter.
3. Term and Termination of Agreement.
This Agreement will continue in effect for the first three years of
operations, and from year to year thereafter provided that each
continuance is specifically approved by a majority of the Directors of the
Fund who (i) are not "interested persons" of the Fund or any other party
to this Agreement, as defined in the 1940 Act, and (ii) have no direct or
indirect financial interest in the operation of this Agreement
("Independent Directors"). Nevertheless, after the initial term of three
years, this Agreement may be terminated by either party to the Agreement,
without payment of any penalty, upon ninety (90) days prior written notice
to the other party at its principal place of business. Action to terminate
the Agreement must be authorized by resolution of a majority of the
Independent Directors of the Fund or by a vote of a majority of the
outstanding voting securities of the Fund.
4. Miscellaneous.
4.1 Captions. The captions in this Agreement are included for convenience of
reference only and do not define or delineate any of the provisions of the
Agreement, or otherwise affect their construction or effect.
4.2 Interpretation. Nothing in this Agreement requires the Fund or the
Portfolio to take any action contrary to the Fund's Articles of
Incorporation, Bylaws, or any applicable statutory or regulatory
requirement to which the Fund or Portfolio are subject, nor does this
Agreement relieve or deprive the Fund's Board of Directors of its
responsibility for and control of the conduct of the affairs of the Fund or
the Portfolio.
4.3 Definitions. Any questions of interpretation of any term or provision of
this Agreement has the same meaning and is to be resolved by reference to,
the 1940 Act and the Advisory Agreement between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers, and have caused their respective
corporate seals to be affixed to this Agreement as of the day and year first
above written.
THE WORLD FUNDS, INC.
By: _____________________________
John Pasco, III
Chairman
VERNES ASSET MANAGEMENT, LLC
By: ____________________________
President
<PAGE>
EXHIBIT EX-23.(i)(4)
G R E E N B E R G
T R A U R I G
A T T O R N E Y S
AT
L A W
2050 One Commerce Square
Philadelphia, Pennsylvania 19103
(215) 988-7837
Direct Dial: (215) 988-7837
May 12, 2000
The World Funds, Inc.
Suite 223
1500 Forest Avenue
Richmond, Virginia 23226
Re: Legal Opinion - Securities Act of 1933
Ladies and Gentlemen:
I have previously provided to The World Funds, Inc. (the "Fund"), a
series corporation organized under Maryland law, an opinion respecting shares of
common stock of the Fund registered under the Securities Act of 1933, as amended
(the "Securities Act"). In connection with that opinion, I examined the Articles
of Incorporation (the "Articles") of the Fund, the By-Laws of the Fund, the
resolutions adopted by the Fund's Board of Directors organizing the business of
the Fund, and its proposed form of Share Certificates (if any), all as amended
to date, and the various pertinent corporate proceedings we deem material. I
also examined the Notification of Registration and the Registration Statements
filed under the Investment Company Act of 1940 (the "Investment Company Act")
and the Securities Act, all as amended to date, as well as other items we deemed
material to that opinion.
I noted that the Fund is authorized by the Articles to issue five
hundred million (500,000,000) shares of common stock at a par value of $0.01 per
share. The Articles designated the Sand Hill Portfolio Manager Fund series of
the Fund, and authorized the issuance of fifty million (50,000,000) shares of
common stock of such series. Articles Supplementary also authorized the issuance
of fifty million (50,000,000) shares of common stock of the CSI Fixed Income
Fund series, and the issuance of fifty million (50,000,000) shares of common
stock of the CSI Equity Fund series. Finally, Articles Supplementary also
authorized the issuance of fifty million (50,000,000) shares of common stock of
the New Market Fund series, the issuance of fifty million (50,000,000) shares of
common stock of the Third Millenium Russia Fund series, the issuance of fifty
million (50,000,000) shares of common stock of the GenomicsFund.com series. I
previously furnished an opinion with respect to the securities of the
GenomicsFund.com series so registered. The Fund also adopted Articles
Supplementary authorizing the issuance of of fifty million (50,000,000) shares
of common stock of a Globale Fund series, and I furnished an opinion with
respect to the registration of such securities. More recently, the Fund adopted
Articles Supplementary authorizing the issuance of of fifty million (50,000,000)
shares of common stock of a Monument EuroWeb Fund series.
The Fund has filed with the U.S. Securities and Exchange Commission,
a registration statement under the Securities Act, which registration statement
is deemed to register an indefinite number of shares of the Fund pursuant to the
provisions of Rule 24f-2 under the Investment Company Act. You have advised us
that the Fund each year hereafter will timely file, a Notice pursuant to Rule
24f-2 perfecting the registration of the shares sold by the Fund during each
fiscal year during which such registration of an indefinite number of shares
remains in effect.
You have also informed us that the shares of the Fund have been, and
will continue to be, sold in accordance with the Fund's usual method of
distributing its registered shares, under which prospectuses are made available
for delivery to offerees and purchasers of such shares in accordance with
Section 5(b) of the Securities Act.
Based upon the foregoing information and examination, so long as the
Fund remains a valid and subsisting entity under the laws of Maryland, and the
registration of an indefinite number of shares of the Fund remains effective,
the authorized shares of the series of the new Fund identified above, when
issued for the consideration set by the Board of Directors pursuant to the
Articles, and subject to compliance with Rule 24f-2, will be legally
outstanding, fully-paid, and non-assessable shares, and the holders of such
shares will have all the rights provided for with respect to such holding by the
Articles and the laws of the State of Maryland.
We hereby consent to the use of this opinion, in lieu of any other,
as an exhibit to the Registration Statement of the Fund, along with any
amendments thereto, covering the registration of the shares of the Fund under
the Securities Act and the applications, registration statements or notice
filings, and amendments thereto, filed in accordance with the securities laws of
the several states in which shares of the Fund are offered, and we further
consent to reference in the registration statement of the Fund to the fact that
this opinion concerning the legality of the issue has been rendered by us.
Very truly yours,
GREENBERG TRAURIG
By:/s/ Steven M. Felsenstein
---------------------------
Steven M. Felsenstein
<PAGE>
EXHIBIT EX-99.(23)(m)(3)
THE WORLD FUNDS, INC
Distribution Plan
Of
GenomicsFund.com
This Plan of Distribution (the "Plan") has been adopted pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act") by The World Funds, Inc. (the "Fund") for the shares of the Fund's
GenomicsFund.com series (the "Series"). The Plan has been approved by a majority
of the Fund's Board of Directors, including a majority of the Directors who are
not interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan (the "12b-1 Directors"), by votes cast in
person at a meeting called for the purpose of voting on the Plan.1 The Fund
contemplates that the Plan shall operate as a compensation Plan.
The Plan provides that:
1. Subject to the limits on payments under the Plan set forth herein,
or in any annual budget approved by the Fund and the Distributor, the
Fund shall pay to the Distributor, or others through the Distributor,
the amounts called for under the Plan. Such payments shall be applied
by the Distributor for all expenses incurred by such parties in the
promotion and distribution of the Series' shares. For this purpose,
expenses authorized under the Plan include, but are not limited to,
printing of prospectuses and reports used for sales purposes,
expenses of preparation of sales literature and related expenses,
advertisements, salaries and benefits of employees involved in sales
of shares, telephone expenses, meeting and space rental expenses,
underwriter's spreads, interest charges on funds used to finance
activities under this Plan, and other distribution-related expenses,
as well as any service fees paid to securities dealers or others who
have executed an agreement with the Fund or its affiliates.
2 The following agreements are deemed to be "agreements under the
Plan" and the form of each such agreement, and any material
amendments thereto, shall be approved as required under the Rule:
a. Any Distribution Agreement between the Fund and its
National Distributor, or any other distributor of shares in
privity with the Fund.
b. The National Distributor's Selling Dealer Agreement.
Purchase orders for goods and services acquired from persons who are not
affiliates of the Fund are not deemed to be agreements under this Plan.
3. The maximum aggregate amount which may be reimbursed by the Fund
under this Plan is 0.25% per annum of the average daily net assets of
the Series' shares. The amount so paid shall be accrued daily, and
payment thereon shall be made monthly by the Fund.
4. It is anticipated that amounts paid by the Fund under this Plan
shall be used to pay service and maintenance fees for shareholder
servicing and maintenance of shareholder accounts by other providers.
5. The Distributor shall collect and disburse payments made under
this Plan, and shall furnish to the Board of Directors of the Fund
for its review on a quarterly basis, a written report of the monies
reimbursed to the Distributor and others under the Plan, and shall
furnish the Board of Directors of the Fund with such other
information as the Board may reasonably request in connection with
the payments made under the Plan in order to enable the Board to make
an informed determination of whether the Plan should be continued.
6. The Plan shall continue in effect for a period of more than one
year only so long as such continuance is specifically approved at
least annually by the Fund's Board of Directors, including the
non-interested Directors, cast in person at a meeting called for the
purpose of voting on the Plan.
7. The Plan, or any agreements entered into pursuant to the Plan, may
be terminated at any time, without penalty, by vote of a majority of
the outstanding voting securities of the Fund, or by vote of a
majority of the non-interested Directors, on not more than sixty (60)
days' written notice, and shall terminate automatically in the event
of any act that constitutes an assignment of the management agreement
between the Fund and the Fund's investment adviser.
8. The Plan and any agreements entered into pursuant to the Plan may
not be amended to increase materially the amount to be spent by the
Fund for distribution pursuant to paragraph 3 of this Plan without
approval by a majority of the Fund's outstanding voting securities.
9. All material amendments to the Plan, or any agreements entered
into pursuant to the Plan, shall be approved by the Board, including
a majority of the 12b-1 Directors, cast in person at a meeting called
for the purpose of voting on any such amendment.
10. So long as the Plan is in effect, the selection and nomination of
the Fund's 12b-1 Directors shall be committed to the discretion of
such 12b-1 Directors.
11. This Plan shall take effect on the 1st day of March, 2000.
<PAGE>
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Fund and the Distributor as evidenced by their execution
hereof.
The World Funds, Inc.
By: /s/ John Pasco, III
-------------------------
John Pasco, III
Chairman
First Dominion Capital Corp.
By: /s/ John Pasco, III
--------------------------
John Pasco, III
President
<PAGE>
EXHIBIT EX-99.(23)(m)(4)
THE WORLD FUNDS, INC.
Distribution Plan
Of
Global e-Fund
This Plan of Distribution (the "Plan") has been adopted pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act") by The World Funds, Inc. (the "Fund") for the shares of the Fund's
Global e-Fund series (the "Series"). The Plan has been approved by a majority of
the Fund's Board of Directors, including a majority of the Directors who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan (the "12b-1 Directors"), by votes cast in
person at a meeting called for the purpose of voting on the Plan.1 The Fund
contemplates that the Plan shall operate as a compensation Plan.
The Plan provides that:
1. Subject to the limits on payments under the Plan set forth herein, or
in any annual budget approved by the Fund and the Distributor, the Fund shall
pay to the Distributor, or others through the Distributor, the amounts called
for under the Plan. Such payments shall be applied by the Distributor for all
expenses incurred by such parties in the promotion and distribution of the
Series' shares. For this purpose, expenses authorized under the Plan include,
but are not limited to, printing of prospectuses and reports used for sales
purposes, expenses of preparation of sales literature and related expenses,
advertisements, salaries and benefits of employees involved in sales of shares,
telephone expenses, meeting and space rental expenses, underwriter's spreads,
interest charges on funds used to finance activities under this Plan, and other
distribution-related expenses, as well as any service fees paid to securities
dealers or others who have executed an agreement with the Fund or its
affiliates.
2 The following agreements are deemed to be "agreements under the Plan"
and the form of each such agreement, and any material amendments thereto, shall
be approved as required under the Rule:
a. Any Distribution Agreement between the Fund and its
National Distributor, or any other distributor of shares
in privity with the Fund.
b. The National Distributor's Selling Dealer Agreement.
Purchase orders for goods and services acquired from persons who are not
affiliates of the Fund are not deemed to be agreements under this Plan.
3. The maximum aggregate amount which may be reimbursed by the Fund under
this Plan is 0.50% per annum of the average daily net assets of the Series'
shares. The amount so paid shall be accrued daily, and payment thereon shall be
made monthly by the Fund.
4. It is anticipated that amounts paid by the Fund under this Plan shall
be used to pay service and maintenance fees for shareholder servicing and
maintenance of shareholder accounts by other providers.
5. The Distributor shall collect and disburse payments made under this
Plan, and shall furnish to the Board of Directors of the Fund for its review on
a quarterly basis, a written report of the monies reimbursed to the Distributor
and others under the Plan, and shall furnish the Board of Directors of the Fund
with such other information as the Board may reasonably request in connection
with the payments made under the Plan in order to enable the Board to make an
informed determination of whether the Plan should be continued.
6. The Plan shall continue in effect for a period of more than one year
only so long as such continuance is specifically approved at least annually by
the Fund's Board of Directors, including the non-interested Directors, cast in
person at a meeting called for the purpose of voting on the Plan.
7. The Plan, or any agreements entered into pursuant to the Plan, may be
terminated at any time, without penalty, by vote of a majority of the
outstanding voting securities of the Fund, or by vote of a majority of the
non-interested Directors, on not more than sixty (60) days' written notice, and
shall terminate automatically in the event of any act that constitutes an
assignment of the management agreement between the Fund and the Fund's
investment adviser.
8. The Plan and any agreements entered into pursuant to the Plan may not
be amended to increase materially the amount to be spent by the Fund for
distribution pursuant to paragraph 3 of this Plan without approval by a majority
of the Fund's outstanding voting securities.
9. All material amendments to the Plan, or any agreements entered into
pursuant to the Plan, shall be approved by the Board, including a majority of
the 12b-1 Directors, cast in person at a meeting called for the purpose of
voting on any such amendment.
10. So long as the Plan is in effect, the selection and nomination of
the Fund's 12b-1 Directors shall be committed to the discretion of such
12b-1 Directors.
11. This Plan shall take effect on the 1st day of May, 2000.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Fund and the Distributor as evidenced by their execution
hereof.
The World Funds, Inc.
By: /s/ John Pasco, III
---------------------------
John Pasco, III
Chairman
International Assets Advisory Corporation
By: /s/ Todd Boren
----------------------------
Todd Boren
Vice President
1 In its consideration of the Plan, the Board of Directors considered the
proposed schedule and nature of payments under the Plan. The Board of Directors
concluded that the proposed reimbursement of the series' principal underwriter,
International Assets Advisory Corporation (the "Distributor"), for distribution
expenses under the Plan is fair and not excessive. Accordingly, the Board
determined that the Plan should provide for such reimbursement and that adoption
of the Plan would be prudent and in the best interests of the Fund and the
Series' shareholders. Such approval included a determination that in the
exercise of their reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Fund,
the Series and the Series' shareholders.
<PAGE>
EXHIBIT EX-99.(23)(m)(5)(a)
THE WORLD FUNDS, INC.
Distribution Plan
Of
Monument EuroNet Fund
Class A Shares
This Plan of Distribution (the "Plan") has been adopted pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act") by The World Funds, Inc. (the "Fund") for the Class A Shares of the
Fund's Monument EuroNet Fund series (the "Portfolio"). The Plan has been
approved by a majority of the Fund's Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan (the "12b-1
Directors"), by votes cast in person at a meeting called for the purpose of
voting on the Plan.2 The Fund contemplates that the Plan shall operate as a
compensation Plan.
The Plan provides that:
1. Subject to the limits on payments under the Plan set forth herein,
or in any annual budget approved by the Fund and the Distributors,
the Fund shall pay to the Distributors, or others through the
Distributors, the amounts called for under the Plan. Such payments
shall be applied by the Distributors for all expenses incurred by
such parties in the promotion and distribution of the Portfolio's
shares. For this purpose, expenses authorized under the Plan include,
but are not limited to, printing of prospectuses and reports used for
sales purposes, expenses of preparation of sales literature and
related expenses, advertisements, salaries and benefits of employees
involved in sales of shares, telephone expenses, meeting and space
rental expenses, underwriter's spreads, interest charges on funds
used to finance activities under this Plan, and other
distribution-related expenses, as well as any service fees paid to
securities dealers or others who have executed an agreement with the
Fund or its affiliates.
2 The following agreements are deemed to be "agreements under the
Plan" and the form of each such agreement, and any material
amendments thereto, shall be approved as required under the Rule:
a. Any Distribution Agreement between the Fund and its
National Distributors, or any other distributor of
shares in privity with the Fund.
b. The National Distributor's Selling Dealer Agreement.
Purchase orders for goods and services acquired from persons who are not
affiliates of the Fund are not deemed to be agreements under this Plan.
3. The maximum aggregate amount which may be reimbursed by the Fund
under this Plan is 0.50% per annum of the average daily net assets of
the Portfolio's shares. The amount so paid shall be accrued daily,
and payment thereon shall be made monthly by the Fund.
4. It is anticipated that amounts paid by the Fund under this Plan
shall be used to pay service and maintenance fees for shareholder
servicing and maintenance of shareholder accounts by other providers.
5. The Distributors shall collect and disburse payments made under
this Plan, and shall furnish to the Board of Directors of the Fund
for its review on a quarterly basis, a written report of the monies
reimbursed to the Distributors and others under the Plan, and shall
furnish the Board of Directors of the Fund with such other
information as the Board may reasonably request in connection with
the payments made under the Plan in order to enable the Board to make
an informed determination of whether the Plan should be continued.
6. The Plan shall continue in effect for a period of more than one
year only so long as such continuance is specifically approved at
least annually by the Fund's Board of Directors, including the
non-interested Directors, cast in person at a meeting called for the
purpose of voting on the Plan.
7. The Plan, or any agreements entered into pursuant to the Plan, may
be terminated at any time, without penalty, by vote of a majority of
the outstanding voting securities of the Fund, or by vote of a
majority of the non-interested Directors, on not more than sixty (60)
days' written notice, and shall terminate automatically in the event
of any act that constitutes an assignment of the management agreement
between the Fund and the Fund's investment adviser.
8. The Plan and any agreements entered into pursuant to the Plan may
not be amended to increase materially the amount to be spent by the
Fund for distribution pursuant to paragraph 3 of this Plan without
approval by a majority of the Fund's outstanding voting securities.
9. All material amendments to the Plan, or any agreements entered
into pursuant to the Plan, shall be approved by the Board, including
a majority of the 12b-1 Directors, cast in person at a meeting called
for the purpose of voting on any such amendment.
10. So long as the Plan is in effect, the selection and nomination of
the Fund's 12b-1 Directors shall be committed to the discretion of
such 12b-1 Directors.
11. This Plan shall take effect on the ___ day of _____, 2000.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Fund and the Distributors as evidenced by their execution
hereof.
The World Funds, Inc.
By:
---------------------------
John Pasco, III
Chairman
First Dominion Capital Corp.
By:
---------------------------
John Pasco, III
President
Monument Distributors, Inc.
By:
---------------------------
David A. Kugler
President
<PAGE>
EXHIBIT EX-99.(23)(m)(5)(b)
THE WORLD FUNDS, INC.
Distribution Plan
Of
Monument EuroNet Fund
Class B Shares
This Plan of Distribution (the "Plan") has been adopted pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act") by The World Funds, Inc. (the "Fund") for the Class B shares of the
Fund's Monument EuroNet Fund series (the "Portfolio"). The Plan has been
approved by a majority of the Fund's Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan (the "12b-1
Directors"), by votes cast in person at a meeting called for the purpose of
voting on the Plan.3 The Fund contemplates that the Plan shall operate as a
compensation Plan.
The Plan provides that:
1. Subject to the limits on payments under the Plan set forth herein,
or in any annual budget approved by the Fund and the Distributors,
the Fund shall pay to the Distributors, or others through the
Distributors, the amounts called for under the Plan. Such payments
shall be applied by the Distributors for all expenses incurred by
such parties in the promotion and distribution of the Portfolio's
shares. For this purpose, expenses authorized under the Plan include,
but are not limited to, printing of prospectuses and reports used for
sales purposes, expenses of preparation of sales literature and
related expenses, advertisements, salaries and benefits of employees
involved in sales of shares, telephone expenses, meeting and space
rental expenses, underwriter's spreads, interest charges on funds
used to finance activities under this Plan, and other
distribution-related expenses, as well as any service fees paid to
securities dealers or others who have executed an agreement with the
Fund or its affiliates.
2 The following agreements are deemed to be "agreements under the
Plan" and the form of each such agreement, and any material
amendments thereto, shall be approved as required under the Rule:
a. Any Distribution Agreement between the Fund and its
National Distributors, or any other distributor of
shares in privity with the Fund.
b. The National Distributor's Selling Dealer Agreement.
Purchase orders for goods and services acquired from persons who are not
affiliates of the Fund are not deemed to be agreements under this Plan.
3. The maximum aggregate amount which may be reimbursed by the Fund
under this Plan is 1.00% per annum of the average daily net assets of
the Portfolio's shares. Of the 1.00%, the Portfolio may pay a fee for
distribution of Class B Shares of 0.75%, and a service fee of 0.25%.
The amount so paid shall be accrued daily, and payment thereon shall
be made monthly by the Fund.
4. It is anticipated that amounts paid by the Fund under this Plan
shall be used to pay service and maintenance fees for shareholder
servicing and maintenance of shareholder accounts by other providers.
5. The Distributors shall collect and disburse payments made under
this Plan, and shall furnish to the Board of Directors of the Fund
for its review on a quarterly basis, a written report of the monies
reimbursed to the Distributors and others under the Plan, and shall
furnish the Board of Directors of the Fund with such other
information as the Board may reasonably request in connection with
the payments made under the Plan in order to enable the Board to make
an informed determination of whether the Plan should be continued.
6. The Plan shall continue in effect for a period of more than one
year only so long as such continuance is specifically approved at
least annually by the Fund's Board of Directors, including the
non-interested Directors, cast in person at a meeting called for the
purpose of voting on the Plan.
7. The Plan, or any agreements entered into pursuant to the Plan, may be
terminated at any time, without penalty, by vote of a majority of the
outstanding voting securities of the Fund, or by vote of a majority
of the non-interested Directors, on not more than sixty (60) days'
written notice, and shall terminate automatically in the event of any
act that constitutes an assignment of the management agreement
between the Fund and the Fund's investment adviser.
8. The Plan and any agreements entered into pursuant to the Plan may
not be amended to increase materially the amount to be spent by the
Fund for distribution pursuant to paragraph 3 of this Plan without
approval by a majority of the Fund's outstanding voting securities.
9. All material amendments to the Plan, or any agreements entered
into pursuant to the Plan, shall be approved by the Board, including
a majority of the 12b-1 Directors, cast in person at a meeting called
for the purpose of voting on any such amendment.
10. So long as the Plan is in effect, the selection and nomination of
the Fund's 12b-1 Directors shall be committed to the discretion of
such 12b-1 Directors.
11. This Plan shall take effect on the ___ day of _____, 2000.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Fund and the Distributors as evidenced by their execution
hereof.
The World Funds, Inc.
By:
----------------------------------
John Pasco, III
Chairman
First Dominion Capital Corp.
By:
---------------------------------------
John Pasco, III
President
Monument Distributors, Inc.
By:
--------------------------------------
David A. Kugler
President
<PAGE>
EXHIBIT EX-99.(23)(m)(5)(c)
THE WORLD FUNDS, INC.
Distribution Plan
Of
Monument EuroNet Fund
Class C Shares
This Plan of Distribution (the "Plan") has been adopted pursuant to Rule
12b-1 (the "Rule") under the Investment Company Act of 1940, as amended (the
"1940 Act") by The World Funds, Inc. (the "Fund") for the Class C Shares of the
Fund's Monument EuroNet Fund series (the "Portfolio"). The Plan has been
approved by a majority of the Fund's Board of Directors, including a majority of
the Directors who are not interested persons of the Fund and who have no direct
or indirect financial interest in the operation of the Plan (the "12b-1
Directors"), by votes cast in person at a meeting called for the purpose of
voting on the Plan.4 The Fund contemplates that the Plan shall operate as a
compensation Plan.
The Plan provides that:
1. Subject to the limits on payments under the Plan set forth herein,
or in any annual budget approved by the Fund and the Distributors,
the Fund shall pay to the Distributors, or others through the
Distributors, the amounts called for under the Plan. Such payments
shall be applied by the Distributors for all expenses incurred by
such parties in the promotion and distribution of the Portfolio's
shares. For this purpose, expenses authorized under the Plan include,
but are not limited to, printing of prospectuses and reports used for
sales purposes, expenses of preparation of sales literature and
related expenses, advertisements, salaries and benefits of employees
involved in sales of shares, telephone expenses, meeting and space
rental expenses, underwriter's spreads, interest charges on funds
used to finance activities under this Plan, and other
distribution-related expenses, as well as any service fees paid to
securities dealers or others who have executed an agreement with the
Fund or its affiliates.
2 The following agreements are deemed to be "agreements under the
Plan" and the form of each such agreement, and any material
amendments thereto, shall be approved as required under the Rule:
a. Any Distribution Agreement between the Fund and its
National Distributors, or any other distributor of
shares in privity with the Fund.
b. The National Distributor's Selling Dealer Agreement.
Purchase orders for goods and services acquired from persons who are not
affiliates of the Fund are not deemed to be agreements under this Plan.
3. The maximum aggregate amount which may be reimbursed by the Fund
under this Plan is 1.00% per annum of the average daily net assets of
the Portfolio's shares. Of the 1.00%, the Portfolio may pay a fee for
distribution of Class C Shares of 0.75%, and a service fee of 0.25%.
The amount so paid shall be accrued daily, and payment thereon shall
be made monthly by the Fund.
4. It is anticipated that amounts paid by the Fund under this Plan
shall be used to pay service and maintenance fees for shareholder
servicing and maintenance of shareholder accounts by other providers.
5. The Distributors shall collect and disburse payments made under
this Plan, and shall furnish to the Board of Directors of the Fund
for its review on a quarterly basis, a written report of the monies
reimbursed to the Distributors and others under the Plan, and shall
furnish the Board of Directors of the Fund with such other
information as the Board may reasonably request in connection with
the payments made under the Plan in order to enable the Board to make
an informed determination of whether the Plan should be continued.
6. The Plan shall continue in effect for a period of more than one
year only so long as such continuance is specifically approved at
least annually by the Fund's Board of Directors, including the
non-interested Directors, cast in person at a meeting called for the
purpose of voting on the Plan.
7. The Plan, or any agreements entered into pursuant to the Plan, may
be terminated at any time, without penalty, by vote of a majority of
the outstanding voting securities of the Fund, or by vote of a
majority of the non-interested Directors, on not more than sixty (60)
days' written notice, and shall terminate automatically in the event
of any act that constitutes an assignment of the management agreement
between the Fund and the Fund's investment adviser.
8. The Plan and any agreements entered into pursuant to the Plan may
not be amended to increase materially the amount to be spent by the
Fund for distribution pursuant to paragraph 3 of this Plan without
approval by a majority of the Fund's outstanding voting securities.
9. All material amendments to the Plan, or any agreements entered
into pursuant to the Plan, shall be approved by the Board, including
a majority of the 12b-1 Directors, cast in person at a meeting called
for the purpose of voting on any such amendment.
10. So long as the Plan is in effect, the selection and nomination of
the Fund's 12b-1 Directors shall be committed to the discretion of
such 12b-1 Directors.
11. This Plan shall take effect on the ___ day of _____, 2000.
This Plan and the terms and provisions thereof are hereby accepted and
agreed to by the Fund and the Distributors as evidenced by their execution
hereof.
The World Funds, Inc.
By:
------------------------------
John Pasco, III
Chairman
First Dominion Capital Corp.
By:
-------------------------------
John Pasco, III
President
Monument Distributors, Inc.
By:
------------------------------
David A. Kugler
President
<PAGE>
EXHIBIT EX-99.(23)(n)(1)
RULE 18f-3
MULTIPLE CLASS PLAN
WHEREAS, The World Funds, Inc. (the "Company"), a Maryland corporation,
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Company is authorized to create separate series, each with
its own separate investment portfolio, and the beneficial interest in each such
series will be represented by a separate series of shares (each series is
hereinafter individually referred to as a "Fund" and collectively, the "Funds");
WHEREAS, the Company, on behalf of the Funds listed on Schedule A, as such
Schedule A may be amended from time to time, desires to adopt a Multiple Class
Plan pursuant to Rule 18f-3 under the 1940 Act ("Plan");
WHEREAS, the Company, on behalf of the Funds, employs Vernes Asset
Management LLC ("the Manager") as its investment manager; Commonwealth
Shareholder Services, Inc. ("the Administrator") as its administrator; and
Fund Services, Inc.("the Transfer Agent") as its transfer agent; and First
Dominion Capital Corp. and Monument Distributors, Inc. (the "Distributors")
as distributors of the securities of the Funds; and
WHEREAS, the Board of Directors of the Company, including a majority of
the Directors of the Board who are not "interested persons", as defined in the
1940 Act, of the Company, the Manager, or the Distributors have found the Plan,
as proposed, to be in the best interests of each class of shares individually,
each Fund, and the Company as a whole;
NOW, THEREFORE, the Company, on behalf of the Funds, hereby adopts the
Plan, in accordance with Rule 18f-3 under the 1940 Act on the following terms
and conditions:
1. Features of the Classes. Each of the Funds shall offer, at the
discretion of the Board and as indicated on Schedule A, up to four
classes of shares: " Class A Shares," "Class B Shares," "Class C Shares"
and "Class Y Shares." Shares of each class of a Fund shall represent an
equal pro rata interest in such Fund and, generally, shall have
identical voting, dividend, distribution, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications, and
terms and conditions, except that: (a) each class shall have a different
designation; (b) each class of shares shall bear any Class Expenses, as
defined in Section 3 below; (c) each class shall have exclusive voting
rights on any matter submitted to shareholders that relates solely to
its distribution arrangements; and (d) each class shall have separate
voting rights on any matter submitted to shareholders in which the
interests of one class different from the interests of any other class.
In addition, Class A, Class B, Class C and Class Y Shares of a Fund
shall have the features described in Sections 2, 3, and 4 below.
2. Distribution Fee Structure.
(a) Class A Shares. Class A Shares of a Fund shall be offered at their
then current net asset value ("NAV") plus an initial sale charge as
set forth in the then-current prospectus. Pursuant to Rule 12b-1
under the 1940 Act, on behalf of the Funds, the Company has adopted a
distribution plan ("Distribution Plan"), as amended. The Distribution
Plan authorizes a Fund to make payments for distribution services at
an annual rate of up to .50% of the average daily net assets of a
Fund's Class A Shares, which may include a service fee up to 0.25%.
Certain Class A Shares are offered without an initial sales charge.
If shares are purchased without a sales charge and are redeemed
within one year, those shares are subject to a 1% charge upon
redemption.
(b) Class B Shares. Class B Shares of a Fund shall be offered at their
then current NAV without the imposition of an initial sales charge
but are subject to a contingent deferred sales charge ("CDSC")
payable upon certain redemptions as set forth in the Fund's
then-current prospectus. Class B Shares may be exchanged for Class B
Shares of another Fund of the company without the imposition of the
CDSC, but such shares will be subject to a CDSC in the new class as
though purchased at the time the shares of the original class were
issued. Class B Shares of a Fund will automatically convert to Class
A Shares of the Fund on the first business day of the month in which
the eighth anniversary of the issuance of the Class B Shares occurs.
The conversions will be effected at the relative net assets values
per share of the two classes. Class B Shares pay a Rule 12b-1 fee of
up to 0.75% (annualized) of the average daily net assets of a Fund's
Class B Shares, as described in the Distribution Plan, as amended.
Brokers, dealers and other institutions may maintain Class B
shareholder accounts and provide personal services to Class B
shareholders, and the Funds may pay up to 0.25% as a fee for such
services. Services related to the sale of Class B Shares may include,
but are not limited to, preparation, printing and distribution of
prospectuses, sales literature and advertising materials by the
Company's Distributors, or, as applicable, brokers, dealers or other
institutions; commissions, incentive compensation to, and expenses
of, account executives or other employees of the Company's
Distributors or brokers, dealers and other institutions; overhead and
other office expenses of the Company's Distributors attributable to
distribution or sales support activities; opportunity costs related
to the foregoing (which may be calculated as a carrying charge on the
Company's Distributors unreimbursed expenses) incurred in connection
with distribution or sales support activities. The overhead and other
office expenses referenced above may include, without limitation, (a)
the expenses of operating the Company's Distributors offices in
connection with the sale of the Class B Shares of the Funds,
including lease costs, the salaries and employee benefit costs of
administrative, operations and support activities, (b) the costs of
client sales seminars and travel related to distribution and sales
support activities, and (c) other expenses relating to distribution
and sales support activities.
(c) Class C Shares. Class C Shares of a Fund shall be offered at net
asset value ("NAV") plus an initial sale charge as set forth in the
then-current prospectus. Pursuant to Rule 12b-1 under the 1940 Act, a
Fund may make payments for distribution services at an annual rate of
up to 0.75% of the average daily net assets of a Fund's Class C
Shares, plus a service fee of up to 0.25%. Shares redeemed within one
year of purchase may be subject to a 1% charge upon redemption.
(d) Class Y Shares. Class Y Shares of a Fund shall be offered at their
then-current NAV without the imposition of an initial sales charge,
CDSC, asset-based sales or service fee under the Distribution Plan
(discussed above). Class Y Shares are only offered to certain
investors meeting the minimum investment as described in the
then-current prospectus offering the shares to Class Y Share
investors.
3. Allocation of Income and Expenses.
(a) The net asset value of all outstanding shares representing interests
in a Fund shall be computed on the same days and at the same time.
For purposes of computing net asset value, the gross investment
income of each Fund shall be allocated to each class on the basis of
the relative net assets of each class at the beginning of the day
adjusted for capital share activity for each class as of the prior
day as reported by the Fund's transfer agent. Realized and unrealized
gains and losses for each class will be allocated based on relative
net assets at the beginning of the day, adjusted for capital share
activity for each class of the prior day, as reported by the Fund's
transfer agent. To the extent practicable, certain expenses, (other
than Class Expenses as defined below, which shall be allocated more
specifically), shall be allocated to each class based on the relative
net assets of each class at the beginning of the day, adjusted for
capital share activity for each class as of the prior day, as
reported by the Fund's transfer agent. Allocated expenses to each
class shall be subtracted from allocated gross income. These expenses
include:
(1) Expenses incurred by the Company (for example, fees of
Directors, auditors, insurance costs, and legal counsel) that
are not attributable to a particular Fund or class of shares of
such Fund ("Company Level Expenses"); and
(2) Expenses incurred by each Fund that are not attributable to any
particular class of the Fund's shares (for example, advisory
fees, custodial fees, banking charges, organizational costs,
federal and Blue Sky registration fees, or other expenses
relating to the management of the Fund's assets) ("Fund
Expenses").
(b) Class Expenses. Expenses attributable to a particular class ("Class
Expenses") shall be limited to: (i) payments made pursuant to the
Distribution Plan; (ii) transfer agent fees attributable to a
specific class; (iii) printing and postage expenses related to
preparing and distributing materials such as shareholder reports,
prospectuses and proxies to current shareholders of a specific class;
(iv) the expense of administrative personnel and services to support
the shareholders of a specific class, including, but not limited to,
fees and expenses under an administrative service agreement; (v)
litigation or other legal expenses relating solely to one class; and
(vi) Directors' fees incurred as a result of issues relating to one
class. Expenses in category (i) above must be allocated to the class
for which such expenses are incurred. All other "Class Expenses"
listed in categories (ii)-(vi) above may be allocated to a class but
only if an officer of the Company has determined, subject to Board
approval or ratification, which of such categories of expenses will
be treated as Class Expenses consistent with applicable legal
principles under the 1940 Act and the Internal Revenue Code of 1986
("Code").
(c) Therefore, expenses of the Fund shall be apportioned to each class of
shares depending on the nature of the expense item. Company Level
Expenses and Fund Expenses shall be allocated among the classes of
shares based on their relative net asset values. Approved Class
Expenses shall be allocated to the particular class to which they are
attributable. In addition, certain expenses may be allocated
differently if their method of imposition changes. Thus, if a Class
Expense can no longer be attributed to a class, it shall be charged
to the Fund for allocation among the classes, as determined by the
Board of Directors. Any additional Class Expenses not specifically
identified above that are subsequently identified and determined to
be properly allocated to one class of shares shall not be so
allocated until approved by the Board of Directors of the Company in
light of the requirements of the 1940 Act and the Code.
4. Exchange Privileges. The Class A, Class B, Class C and Class Y Shares
of a Fund may be exchanged at their relative NAVs for: (i) Class A,
Class B, Class C or Class Y Shares within the same Class of another
Monument Series Fund or (ii) if the Monument Series Fund does not have
multiple classes of shares, the existing shares of another Monument
Series Fund. Purchases of Fund shares by exchange are subject to the
same minimum investment requirements and other criteria imposed for
purchases made in any other manner.
5. Conversion Features. Class B shares of the Fund will automatically convert
to Class A shares of the respective Fund, based on the relative net asset
values per share of the two classes, no later than the month following the
eighth anniversary of the initial issuance of such Class B shares of the
Fund. Class A, Class C and Class Y Shares do not have conversion features.
6. Quarterly and Annual Report. The Directors shall receive quarterly and
annual written reports concerning all allocated Class Expenses and
expenditures under the Distribution Plan complying with paragraph
(b)(3)(ii) of Rule 12b-1. The reports, including the allocations upon
which they are based, shall be subject to the review and approval of the
Independent Directors in the exercise of their fiduciary duties.
7. Waiver or Reimbursement of Expenses. Expenses may be waived or
reimbursed by the Manager or any other provider of services to the Funds
without the prior approval of the Company's Board of Directors.
8. Effectiveness of Plan. The Plan shall not take effect until it has been
approved by votes of a majority of both (a) the Directors of the Company
and (b) those Directors of the Company who are not "interested persons" of
the Company, the Manager, or the Distributors (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation of
this Plan, cast in person at a meeting (or meetings) called for the
purpose of voting on this Plan.
9. Material Modifications. This Plan may not be amended to materially
modify its terms unless such amendment is approved in the manner
provided for initial approval in Paragraph 8 hereof.
10. Limitation of Liability. The Directors and the shareholders of the Funds
shall not be liable for any obligations of the Funds under this Plan, and
any person in asserting any rights or claims under this Plan shall look
only to the assets and property of the Funds in settlement of such right
or claim and not to such Directors or shareholders.
IN WITNESS WHEREOF, the Company, on behalf of the Funds, has adopted this
Multiple Class Plan effective as of the 14th day of April, 2000.
The World Funds, Inc.
- ---------------------
By: John Pasco, III
Chairman
<PAGE>
SCHEDULE A
The Funds of the Company currently subject to this Multiple Class Plan are
as follows:
Date of Addition
Fund/Class to this Multiple Class Plan
Monument EuroNet Fund
* Class A June xx, 2000
* Class B June xx, 2000
* Class C June xx, 2000
* Class Y June xx, 2000
<PAGE>
EXHIBIT EX-99.(23)(p)(1)
THE WORLD FUNDS, INC.
CODE OF ETHICS
AND
STATEMENT ON INSIDER TRADING
<PAGE>
CODE OF ETHICS
THE WORLD Funds INC.
Rule 17j-1 under the Investment Company Act of 1940 (the "Act") requires
registered investment companies, ("investment companies") and their investment
advisors, and principal underwriters to adopt written codes of ethics designed
to prevent fraudulent trading by those persons covered under Rule 17j-1. Rule
17j-1 also makes it unlawful for certain persons, including any officer or
director of an investment company, in connection with the purchase or sale by
such person of a security held or to be acquired by an investment company to:
1. employ any device, scheme or artifice to defraud the investment
company;
2. make to the investment company any untrue statement of a material
fact or omit to state to the investment company a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
3. engage in any act, practice or course of business which operates or
would operate as a f fraud or deceit upon the investment company; or
4. engage in any manipulative practice with respect to the investment
company.
Rule 17j-1 also requires that each investment company and its affiliates
use reasonable diligence, and institute procedures reasonably necessary, to
prevent violations of its code of ethics.
In addition to Rule 17j-1 of the Act, the Insider Trading and Securities
Fraud Enforcement Act of 1988 ("ITSFEA") requires that all investment advisors
and broker-dealers establish, maintain, and enforce written policies and
procedures designed to detect and prevent the misuse of material non-public
information by such investment advisor and/or broker-dealer. Section 204A of the
Investment Advisors Act of 1940 (the "Advisors Act") states that an investment
advisor must adopt and disseminate written policies with respect to ITSFEA, and
an investment advisor must also vigilantly review, update, and enforce them.
Section 204A provides that every person subject to Section 204 of the Advisors
Act shall be required to establish procedures to prevent insider trading.
Attached to this Code of Ethics (the "Code"), as Exhibit A, is a Statement
on Insider Trading. Any investment advisor who acts as such for any series of
The World Funds, Inc. (the "Fund") and any broker-dealer who acts as the
principal underwriter for any series of the Fund must comply with the policy and
procedures outlined in the Statement on Insider Trading unless such investment
advisor or principal underwriter has adopted a similar policy and procedures
with respect to insider trading which are determined by the Fund's Board of
Directors to comply with ITSFEA's requirements.
This Code is being adopted by the Fund, (1) for implementation with
respect to covered persons of the Fund; and (2) for implementation by any
investment advisor to the Fund as that term is defined under the Act (each such
investment advisor being deemed
an "Investment Advisor" for purposes of this Code), and for any principal
underwriter for the Fund, unless such investment advisor or principal
underwriter has adopted a code of ethics and plan of implementation thereof
which is determined by the Fund's Board of Directors to comply with the
requirements of Rule 17j-1 and to be sufficient to effectuate the purpose and
objectives of Rule 17j-1.
STATEMENT OF GENERAL PRINCIPLES
This Code is based on the principle that the officers, directors, and
employees of the Fund and the officers, directors, and employees of the Fund's
investment advisor(s) owe a fiduciary duty to the shareholders of the Fund and,
therefore, the Fund's and investment advisor's personnel must place the
shareholders' interests ahead of their own. The Fund's and investment advisor's
personnel must also avoid any conduct which could create a potential conflict of
interest, and must ensure that their personal securities transactions do not in
any way interfere with the Fund's portfolio transactions and that they do not
take inappropriate advantage of their positions. Ail persons covered by this
Code must adhere to these general principles as well as the Code's specific
provisions, procedures, and restrictions.
DEFINITIONS
For purposes of this Code:
"Access Person" means any director officer, employee, or advisory person
of the Fund, or those persons who have an active part in the management,
portfolio selection, or underwriting functions of the Fund, or who, in the
course of their normal duties, obtain prior information about the Fund's
purchases or sales of securities (i.e. traders and analysts).
"Advisory Person". With respect to an Investment Advisor, an Advisory
Person means any director, officer, general partner, or employee who, in
connection with his/her regular functions or duties, makes, participates in, or
obtains current information regarding the purchase or sale of a security by the
Fund, or whose functions relate to the making of any recommendations with
respect to such purchases or sales, including any natural person in a control
relationship to the Fund who obtains current information concerning
recommendations made with regard to the purchase or sale of a security by the
Fund.
"Investment Personnel" shall mean any securities analyst, portfolio
manager, or a member of an investment committee who is directly involved in the
decision making process as to whether or not to purchase or sell a portfolio
security and those persons who provide information and advice to a Portfolio
Manager or who help execute a Portfolio Manager's decisions.
"Fund Personnel" shall mean an Access Person, Advisory Person, and/or
Investment Personnel.
"Portfolio Manager" shall mean an employee of an Investment Advisor
entrusted with the direct responsibility and authority to make investment
decisions affecting the Fund.
"Beneficial Ownership" shall be as defined in Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder, which, generally
speaking, encompass those situations where the beneficial owner has the right to
enjoy some economic benefits which are substantially equivalent to ownership
regardless of who is the registered owner. This would include:
(i) securities which a person holds for his or her own benefit either in
bearer form, registered in his or her
own name or otherwise, regardless of whether the securities are
owned individually or jointly;
(ii) securities held in the name of a member of his or her immediate
family sharing the same household;
(iii) securities held by a trustee, executor, administrator,
custodian or broker;
(iv) securities owned by a general partnership of which the person is a
member or a limited partnership of which such person is a general
partner;
(v) securities held by a corporation which can be regarded as a
personal holding company of a person; and
(vi) securities recently purchased by a person and awaiting transfer
into his or her name.
"Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include shares of registered open-end investment
companies, securities issued by the Government of the United States or by
Federal agencies which are direct obligations of the United States, bankers'
acceptances, bank certificates of deposits, and commercial paper. A future or an
option on a future will be deemed to be a security subject to this Code.
"Purchase or sale of a security" includes the writing of an option to
purchase or sell a security.
A security is "being considered for purchase or sale" or is "being
purchased or sold" when a recommendation to purchase or sell the security has
been made by an Investment Advisor and such determination has been communicated
to the Fund. With respect to the Investment Advisor making the recommendation, a
security is being considered for purchase or sale when an officer, director or
employee of such Investment Advisor seriously considers making such a
recommendation.
Solely for purposes of this Code, any agent of the Fund charged with
arranging the execution of a transaction shall be subject to the reporting
requirements of this Code as to any such security as and from the time the
security is identified to such agent as though such agent was an Investment
Advisor hereunder.
NOTE: An officer or employee of the Fund or an Investment Advisor whose
duties do not include the advisory functions described above, who does not
have access to the advisory information contemplated above, and whose
assigned place of employment is at a location where no investment advisory
services are performed for the Fund, is not an "Advisory Person" or an
"Access Person" unless actual advance knowledge of a covered transaction
is furnished to such person.
PROHIBITED TRANSACTIONS
Fund Personnel shall not engage in any act, practice or course of conduct
which would violate the provisions of Rule 17j-1 set forth above. No Access
Person or Advisory Person shall purchase or sell, directly or indirectly any
security in which he/she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which, to his/her actual knowledge,
at the time of such purchase or sale (i) is being considered for purchase or
sale by the Fund; or (ii) is being purchased or sold by the Fund; except that
the prohibitions of this section shall not apply to:
(1) purchases or sales affected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control;
(2) purchases or sales which are non-volitional on the part of either
the Access Person, the Advisory Person, or the Fund;
(3) purchases which are part of an automatic dividend reinvestment or
other plan established by Fund Personnel prior to the time the
security involved came within the purview of this Code; and
(4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its Securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired.
PROHIBITED TRANSACTIONS BY INVESTMENT PERSONNEL
No Investment Personnel shall:
(a) acquire any securities in an initial public offering; or
(b) acquire securities in a private placement without prior written approval
----------------------
of the Fund's compliance officer or other officer designated by the
Board of Directors.
In considering a request to invest in a private placement, the Fund's
compliance officer will take into account, among other factors, whether the
investment opportunity should be reserved for the Fund, and whether the
opportunity is being offered to Investment Personnel by virtue of their/his/her
position with the Fund. Should Investment Personnel be authorized to acquire
securities through a private placement, they/he/she shall, in addition to
reporting the transaction on the quarterly report to the Fund, disclose the
interest in that investment to other Investment Personnel participating in that
investment decision if and when they/he/she plays a part in the Fund's
subsequent consideration of an investment in that issuer. In such a case, the
Fund's decision to purchase securities of that issuer will be subject to an
independent review by Investment Personnel who have no personal interest in the
issuer.
BLACKOUT PERIODS
No Access Person or Advisory Person shall execute a securities transaction
on a day during which the Fund has a pending "buy" or "sell" order in that same
security until that order is executed or withdrawn. In addition, a Portfolio
Manager is expressly prohibited from purchasing or selling a security within
seven (7) calendar days before or after the Fund that he/she manages trades in
that security.
The foregoing prohibition of personal transactions during the seven day
period following the execution of a transaction for the Fund shall not apply
with respect to a security when the portfolio manager certifies in writing to
the Compliance Officer that the Fund's trading program in that security is
complete. Each transaction authorized by the Compliance Officer pursuant to this
provision shall be reported to the Board by the Compliance Officer at the
Board's next regular meeting.
Should Fund Personnel trade within the proscribed period, such trade
should be canceled if possible. If it is not possible to cancel the trade, all
profits from the trade must be disgorged and the profits will be paid to a
charity selected by the Fund Personnel and approved by the officers of the Fund.
The prohibitions of this section shall not apply to:
(1) purchases or sales affected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control if the person making the investment decision with respect to
such account has no actual knowledge about the Fund's pending "buy"
or "sell" order;
(2) purchases or sales which are non-volitional on the part of either
the Access Person, the Advisory Person, or the Fund;
(3) purchases which are part of an automatic dividend reinvestment or
other plan established by Fund Personnel prior to the time the
security involved came within the purview of this Code; and
(4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired.
SHORT-TERM TRADING
No Investment Personnel shall profit from the purchase and sale, or sale
and purchase, of the same (or equivalent) securities which are owned by the Fund
or which are of a type suitable for purchase by the Fund, within sixty (60)
calendar days. Any profits realized on such short-term trades must be disgorged
and the profits will be paid to a charity selected by the Investment Personnel
and approved by the officers of the Fund. The compliance officer or other
officer designated by the Board of Directors may Permit in writing exemptions to
the prohibition of this section, on a case-by-case basis, when no abuse is
involved and the equities of the circumstances support an exemption.
GIFTS
No Investment Personnel shall accept a gift or other thing of more than de
minimis value ("gift") from any person or entity that does business with or on
behalf of the Fund if such gift is in relation to the business of the employer
of the recipient of the gift. In addition, any Investment Personnel who receives
an unsolicited gift or a gift with an unclear status under this section shall
promptly notify the compliance officer and accept the gift only upon written
approval of the compliance officer.
SERVICE AS A DIRECTOR
No Investment Personnel shall serve as a director of a publicly traded
company absent prior written authorization from the Board of Directors based
upon a determination that such board service would not be inconsistent with the
interests of the Fund and its shareholders.
COMPLIANCE PROCEDURES
1. All Fund Personnel shall pre-clear their personal securities
transactions prior to executing an
order. A written request must be submitted to the Fund's compliance
officer, and the compliance officer must give his/her written
authorization prior to Fund Personnel placing a purchase or sell order
with a broker. Should the compliance officer deny the request, he/she will
give a reason for the denial.
Approved request will remain valid for two (2) business days from the
date of the approval.5
2. Fund Personnel shall instruct their broker(s) to supply the compliance
officer, on a timely basis, with duplicate copies of confirmations of all
personal securities transactions and copies of all periodic statements for
all securities accounts.
3. Fund Personnel, other than directors or officers required to report their
securities transactions to a registered investment advisor pursuant to
Rule 204-2(a)(12) or (13) under the Investment Advisors Act, shall submit
reports showing all transactions in securities as defined herein in which
the person has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership.
4. Each director, who is not an interested person of the Fund as defined in
the Act, shall submit reports as required under subparagraph 3 above,
but only for transactions in reportable securities where at the time of
the transaction the director knew, or in the ordinary course of
fulfilling his/her official duties as a director should have known, that
during the seven (7) day period immediately preceding the date of the
transaction by the director, such security was purchased or sold by the
Fund or was being considered for purchase or sale by the Fund.
5. Every report required to be made under subparagraphs 3 and 4 above shall
be made not later than ten (10) days after the end of the calendar quarter
in which the transaction to which the report relates was effected. The
report shall contain the following information concerning any transaction
required to be reported therein:
(a) the date of the transaction;
(b) the title and number of shares;
(c) the principal amount involved;
(d) the nature of the transaction (i.e. purchase, sale, or other type
of acquisition or disposition);
(e) the price at which the transaction was effected; and
(f) the name of the broker, dealer or bank with or through whom the
transaction was effected.
6. The compliance officer shall identify all Fund Personnel who have a duty
to make the reports required hereunder and shall inform each such person
of such duty, and shall receive all reports required hereunder.
7. The compliance officer shall promptly report to the Fund's Board of
Directors (a) any apparent violation of the prohibitions contained in this
Code, and (b) any reported transactions in a security which was purchased
or sold by the Fund within seven (7) days before or after the date of the
reported transaction.
8. The Fund's Board of Directors, or a Committee of Directors created by the
Board of Directors for that purpose, shall consider reports made to the
Board of Directors hereunder and shall determine whether or not this Code
has been violated and what sanctions, if any, should be imposed.
9. This Code, a list of all persons required to make reports hereunder from
time to time, a copy of each report made by Fund Personnel, each
memorandum made by the compliance officer hereunder, and a record of any
violation hereof and any action taken as a result of such violation, shall
be maintained by the Fund as required under Rule 17j-1.
10. Upon the commencement of employment of a person who would be deemed to
fall within the definition of "Fund Personnel", that person must disclose
all personal securities holdings to the compliance officer.
11. All Fund Personnel must report, on an annual basis, all personal
securities holdings.
12. At least annually, all Fund Personnel will be required to certify that
they (a) have read and understand the Code; (b) recognize that they are
subject to the requirements outlined therein; (c) have complied with the
requirements of the Code; (d) have disclosed and reported all personal
securities transactions required to be disclosed; and (e) have disclosed
all personal securities holdings.
13. The Fund's compliance officer shall prepare an annual report to the
Fund's Board of Directors. Such report shall (a) include a copy of the
Fund's Code; (b) summarize existing procedures concerning personal
investing and any changes in the Code's policies or procedures during
the past year; (c) identify any violations of the Code; and (d) identify
any recommended changes in existing restrictions, policies or procedures
based upon the Fund's experience under the Code, any evolving industry
practices, or developments in applicable laws or regulations.
<PAGE>
EXHIBIT A
STATEMENT ON INSIDER TRADING
The Insider Trading and Securities Fraud Enforcement Act of 1988
("ITSFEA") requires that all investment advisors and broker-dealers establish,
maintain, and enforce written policies and procedures designed to detect and
prevent the misuse of material non-public information by such investment advisor
and/or broker-dealer, or any person associated with the investment advisor
and/or broker-dealer.
Section 204A of the Investment Advisers Act of 1940 (the "Advisers Act")
states that an investment advisor must adopt and disseminate written policies
with respect to ITSFEA, and an investment advisor must also vigilantly review,
update, and enforce them. Section 204A provides that every person subject to
Section 204 of the Advisers Act shall be required to establish procedures to
prevent insider trading.
Each investment advisor who acts as such for any series of The World
Funds, Inc. (the "Fund") and each broker-dealer which acts as principal
underwriter to any series of the Fund has adopted the following policy,
procedures, and supervisory procedures in addition to the Fund's Code of Ethics.
Throughout this document the investment advisor(s) and principal underwriter(s)
shall collectively be called the "Providers".
SECTION I - POLICY
The purpose of this Section 1 is to familiarize the officers, directors,
and employees of the Providers with issues concerning insider trading and to
assist them in putting into context the policy and procedures on insider
trading.
Policy Statement:
No person to whom this Statement on Insider Trading applies, including
officers, directors, and employees, may trade, either personally or on behalf of
others (such as mutual funds and private accounts managed by a Provider) while
in possession of material, non-public information; nor may any officer,
director, or employee of a Provider communicate material, non-public information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." This policy applies to every officer, director, and employee
of a Provider and extends to activities within and outside their duties as a
Provider. It covers not only personal transactions of covered persons, but
indirect trading by family, friends and others, or the non-public distribution
of inside information from you to others. Every officer, director, and employee
must read and retain this policy statement. Any questions regarding the policy
and procedures should be referred to the compliance officer.
<PAGE>
The term "insider trading" is not defined in the Federal securities laws,
but generally is used to refer to the use of material non-public information to
trade in securities (whether or not one is an "insider") or the communications
of material nonpublic information to others who may then seek to benefit from
such information.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(a) trading by an insider, while in possession of material non-public
information, or
(b) trading by a non-insider, while in possession of material non-public
information, where the information either was disclosed to the
non-insider in violation of an insider's duty to keep it confidential
or was misappropriated, or
(c) communicating material non-public information to others.
The elements of insider trading and the penalties for such unlawful
conduct are discussed below.
1. Who is an Insider? The concept of "insider" is broad. It includes officers,
directors, and employees of a company. In addition, a person can be a "temporary
insider" if he or she enters into a special confidential relationship in the
conduct of a company's affairs and as a result is given access to information
solely for the company's purposes. A temporary insider can include, among
others, a company's attorneys, accountants, consultants, bank lending officers,
and the employees of such organizations. In addition, an investment advisor may
become a temporary insider of a company it advises or for which it performs
other services. According to the Supreme Court, the company must expect the
outsider to keep the disclosed non-public information confidential and the
relationship must at least imply such a duty before the outsider will be
considered an insider.
2. What is Material Information? Trading on inside information can be the basis
for liability when the information is material. In general, information is
"material" when there is a substantial likelihood that a reasonable investor
would consider it important in making his or her investment decisions, or
information that is reasonably certain to have a substantial effect on the price
of a company's securities. Information that officers, directors, and employees
should consider material includes, but is not limited to: dividend changes,
earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
3. What is Non-Public Information? Information is non-public until it has been
effectively communicated to the market place. One must be able to point to some
fact to show that the information is generally public. For example, information
found in a report filed with the SEC, or appearing in Dow Jones, Reuters
Economic Services, the Wall Street Journal or other publications of general
circulation would be considered public. (Depending on the nature of the
information, and the type and timing of the filing or other public release, it
may be appropriate to allow for adequate time for the information to be
"effectively" disseminated.)
4. Reason for Liability. (a) Fiduciary duty theory - in 1980 the Supreme Court
found that there is no general duty to disclose before trading on material
non-public information, but that such a duty arises only where there is a direct
or indirect fiduciary relationship with the issuer or its agents. That is, there
must be a relationship between the parties to the transaction such that one
party has a right to expect that the other party will disclose any material
non-public information or refrain from trading. (b) Misappropriation theory -
another basis for insider trading liability is the ,'misappropriation" theory,
where liability is established when trading occurs on material non-public
information that was stolen or misappropriated from any other person.
5. Penalties for Insider Trading. Penalties for trading on or communicating
---------------------------------
material non-public information are severe, both for individuals and their
employers. A person can be subject to some or all of the penalties below even
if he or she does not personally benefit from the violation. Penalties
include:
o civil injunctions
o treble damages
o disgorgement of profits
o jail sentences
<PAGE>
o fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
o fines for the employer or other controlling person of up to the greater of $1
million or three times the amount of the profit gained or loss avoided.
In addition, any violation of this policy statement can be expected to
result in serious sanctions by a Provider, including dismissal of the persons
involved.
SECTION II - PROCEDURES
The following procedures have been established to aid the officers,
directors, and employees of a Provider in avoiding insider trading, and to aid
in preventing, detecting, and imposing sanctions against insider trading. Every
officer, director, and employee of a Provider must follow these procedures or
risk serious sanctions, including dismissal, substantial personal liability,
and/or criminal penalties. If you have any questions about these procedures you
should consult the compliance officer.
1. Identifying Inside Information. Before trading for yourself or others,
-----------------------------------
including investment companies or private accounts managed by a Provider, in
the securities of a company about which you may have potential inside
information, ask yourself the following questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions?
Is this information that would substantially affect the market price
of the securities if generally disclosed?
ii. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in Reuters, The Wall Street Journal or
other publications of general circulation?
If, after consideration of the above, you believe that the information is
material and non-public, or if you have questions as to whether the information
is material and non-public, you should take the following steps:
(a) Report the matter immediately to the compliance officer.
(b) Do not purchase or sell the security on behalf of yourself or others,
including investment companies or private accounts managed by a
Provider.
(c) Do not communicate the information to anybody, other than to the
compliance official.
(d) After the compliance official has reviewed the issue, you will be
instructed to either continue the prohibitions against trading and
communication, or you will be allowed to communicate the information
and then trade.
2. Personal Security Trading. Ail officers, directors, and employees of a
Provider (other than officers, directors and employees who are required to
report their securities transactions to a registered investment company in
accordance with a Code of Ethics) shall submit to the compliance officer, on a
quarterly basis, a report of every securities transaction in which they, their
families (including the spouse, minor children, and adults living in the same
household as the officer, director, or employee), and trusts of which they are
trustees or in which they have a beneficial interest have participated, or at
such lesser intervals as may be required from time to time. The report shall
include the name of the security, date of the transaction, quantity, price, and
broker-dealer through which the transaction was effected. Ail officers,
directors and employees must also instruct their broker(s) to supply the
compliance officer, on a timely basis, with duplicate copies of confirmations of
all personal securities transactions and copies of all periodic statements for
all securities accounts.
3. Restricting Access to Material Non-public Information. Any information in
your possession that you identify as material and non-public may not be
communicated other than in the course of performing your duties to anyone,
including persons within your company, except as provided in paragraph I above.
In addition, care should be taken so that such information is secure. For
example, files containing material non-public information should be sealed;
access to computer files containing material non-public information should be
restricted.
4. Resolving Issues Concerning Insider Trading. If, after consideration of the
items set forth in paragraph 1, doubt remains as to whether information is
material or non-public, or if there is any unresolved question as to the
applicability or interpretation of the foregoing procedures, or as to the
propriety of any action, it must be discussed with the compliance officer before
trading or communicating the information to anyone.
SECTION III - SUPERVISION
The role of the compliance officer is critical to the implementation and
maintenance of this Statement on Insider Trading. These supervisory procedures
can be divided into two classifications, (1) the prevention of insider trading,
and (2) the detection of insider trading.
1. Prevention of Insider Trading:
------------------------------
To prevent insider trading the compliance official should:
(a) answer promptly any questions regarding the Statement on Insider
Trading;
(b) resolve issues of whether information received by an officer,
director, or employee is material and nonpublic;
(c) review and ensure that officers, directors, and employees review, at
least annually, and update as necessary, the Statement on Insider
Trading; and
(d) when it has been determined that an officer, director, or employee
has material non-public information, (i) implement measures to
prevent dissemination of such
information, and
(ii) if necessary, restrict officers, directors, and employees from
trading the securities.
2. Detection of Insider Trading:
-----------------------------
To detect insider trading, the Compliance Officer should:
(a) review the trading activity reports filed by each officer, director,
and employee, to ensure no trading took place in securities in which
the Provider has material non-public information;
(b) review the trading activity of the mutual funds managed by the
investment advisor and the mutual funds which the broker-dealer acts
as principal underwriter;
(c) coordinate, if necessary, the review of such reports with other
appropriate officers, directors, or employees of a Provider and The
World Funds, Inc.
3. Special Reports to Management:
------------------------------
Promptly, upon learning of a potential violation of the Statement on
Insider Trading, the Compliance Officer must prepare a written report to
management of the Provider, and provide a copy of such report to the Board of
Directors of The World Funds, Inc., providing full details and recommendations
for further action.
4. Annual Reports:
---------------
On an annual basis, the Compliance Officer of each Provider will prepare a
written report to the management of the Provider, and provide a copy of such
report to the Board of Directors of The World Funds, Inc., setting forth the
following:
(a) a summary of the existing procedures to detect and prevent insider
trading;
(b) full details of any investigation, either internal or by a
regulatory agency, of any suspected insider trading and the results
of such investigation;
(c) an evaluation of the current procedures and any recommendations for
improvement.
<PAGE>
EXHIBIT B
THE WORLD FUNDS, INC.
CODE OF ETHICS
INITIAL REPORT
To the Compliance Officer of The World Funds, Inc.:
1. I hereby acknowledged receipt of a copy of the Code of Ethics for The
World Funds, Inc.
2. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Fund Personnel."
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
the Fund, such as any economic relationship between my transactions and
securities held or to be acquired by the Fund.
4. As of the date below I had a direct or indirect beneficial ownership
in the following securities:
Name of Security Number of Shares Type of Interest
(Direct or Indirect)
Date:______________________________________
Signature:________________________________
___________________________________________ Print
Name:_______________________________
<PAGE>
EXHIBIT C
THE WORLD FUNDS, INC.
CODE OF ETHICS
ANNUAL REPORT
TO the Compliance Officer of The World Funds, Inc.:
1. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Fund Personnel."
2. I hereby certify that, during the year ended December 31, ___ , I have
complied with the requirements of the Code and I have reported all securities
transactions required to be reported pursuant to the Code.
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
the Fund, such as any economic relationship between my transactions and
securities held or to be acquired by the Fund.
4. As of December 31, ___ , I had a direct or indirect beneficial
ownership in the following securities:
Name of Security Number of Shares Type of Interest
(Direct or Indirect)
Date:___________________________________ Signature:___________________________
_________________________________________ Print
Name:___________________________
<PAGE>
EXHIBIT D
THE WORLD FUNDS, INC.
Securities Transactions Report
For the Calendar Quarter
Ended:___________________________________________________________
To the Compliance officer of The World Funds, Inc.:
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership and which are required to be
reported pursuant to the Code of Ethics adopted by The World Funds, Inc.
SECURITY DATE OF NO. OF DOLLAR NATURE
OF PRICE BROKER-DEALER
TRANS. SHARES AMOUNT OF
TRANSACTION OR BANK
TRANS.
(Purchase, THROUGH
Sale,
WHOM
Other)
EFFECTED
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) other transactions not required to
be reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that
I have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Fund, such as the existence of any economic
relationship between my transactions and securities held or to be acquired by
the Fund.
Date:________________________________
Signature:_______________________________________
____________________________________ Print
Name:______________________________________
<PAGE>
EXHIBIT EX-99.(23)(p)(2)
Vernes Asset Management LLC (the "Manager") hereby adopts the attached Code of
Ethics of The World Funds, Inc., and where there is reference to the Advisor it
shall also be deemed to refer to the Manager.
<PAGE>
EXHIBIT EX-99.(23)(p)(3)
First Dominion Capital Corp. ("FDCC" or the "Distributor) a registered
broker/dealer hereby adopts the attached Code of Ethics and where there is
reference to the Advisor it shall also be deemed to refer to FDCC.
John Pasco, III
President
THE WORLD FUNDS, INC.
CODE OF ETHICS
AND
STATEMENT ON INSIDER TRADING
<PAGE>
CODE OF ETHICS
THE WORLD Funds INC.
Rule 17j-1 under the Investment Company Act of 1940 (the "Act") requires
registered investment companies, ("investment companies") and their investment
advisors, and principal underwriters to adopt written codes of ethics designed
to prevent fraudulent trading by those persons covered under Rule 17j-1. Rule
17j-1 also makes it unlawful for certain persons, including any officer or
director of an investment company, in connection with the purchase or sale by
such person of a security held or to be acquired by an investment company to:
1. employ any device, scheme or artifice to defraud the investment
company;
2. make to the investment company any untrue statement of a material
fact or omit to state to the investment company a material fact
necessary in order to make the statements made, in light of the
circumstances under which they are made, not misleading;
3. engage in any act, practice or course of business which operates or
would operate as a f fraud or deceit upon the investment company; or
4. engage in any manipulative practice with respect to the investment
company.
Rule 17j-1 also requires that each investment company and its affiliates
use reasonable diligence, and institute procedures reasonably necessary, to
prevent violations of its code of ethics.
In addition to Rule 17j-1 of the Act, the Insider Trading and Securities
Fraud Enforcement Act of 1988 ("ITSFEA") requires that all investment advisors
and broker-dealers establish, maintain, and enforce written policies and
procedures designed to detect and prevent the misuse of material non-public
information by such investment advisor and/or broker-dealer. Section 204A of the
Investment Advisors Act of 1940 (the "Advisors Act") states that an investment
advisor must adopt and disseminate written policies with respect to ITSFEA, and
an investment advisor must also vigilantly review, update, and enforce them.
Section 204A provides that every person subject to Section 204 of the Advisors
Act shall be required to establish procedures to prevent insider trading.
Attached to this Code of Ethics (the "Code"), as Exhibit A, is a Statement
on Insider Trading. Any investment advisor who acts as such for any series of
The World Funds, Inc. (the "Fund") and any broker-dealer who acts as the
principal underwriter for any series of the Fund must comply with the policy and
procedures outlined in the Statement on Insider Trading unless such investment
advisor or principal underwriter has adopted a similar policy and procedures
with respect to insider trading which are determined by the Fund's Board of
Directors to comply with ITSFEA's requirements.
This Code is being adopted by the Fund, (1) for implementation with
respect to covered persons of the Fund; and (2) for implementation by any
investment advisor to the Fund as that term is defined under the Act (each such
investment advisor being deemed
an "Investment Advisor" for purposes of this Code), and for any principal
underwriter for the Fund, unless such investment advisor or principal
underwriter has adopted a code of ethics and plan of implementation thereof
which is determined by the Fund's Board of Directors to comply with the
requirements of Rule 17j-1 and to be sufficient to effectuate the purpose and
objectives of Rule 17j-1.
STATEMENT OF GENERAL PRINCIPLES
This Code is based on the principle that the officers, directors, and
employees of the Fund and the officers, directors, and employees of the Fund's
investment advisor(s) owe a fiduciary duty to the shareholders of the Fund and,
therefore, the Fund's and investment advisor's personnel must place the
shareholders' interests ahead of their own. The Fund's and investment advisor's
personnel must also avoid any conduct which could create a potential conflict of
interest, and must ensure that their personal securities transactions do not in
any way interfere with the Fund's portfolio transactions and that they do not
take inappropriate advantage of their positions. Ail persons covered by this
Code must adhere to these general principles as well as the Code's specific
provisions, procedures, and restrictions.
DEFINITIONS
For purposes of this Code:
"Access Person" means any director officer, employee, or advisory person
of the Fund, or those persons who have an active part in the management,
portfolio selection, or underwriting functions of the Fund, or who, in the
course of their normal duties, obtain prior information about the Fund's
purchases or sales of securities (i.e. traders and analysts).
"Advisory Person". With respect to an Investment Advisor, an Advisory
Person means any director, officer, general partner, or employee who, in
connection with his/her regular functions or duties, makes, participates in, or
obtains current information regarding the purchase or sale of a security by the
Fund, or whose functions relate to the making of any recommendations with
respect to such purchases or sales, including any natural person in a control
relationship to the Fund who obtains current information concerning
recommendations made with regard to the purchase or sale of a security by the
Fund.
"Investment Personnel" shall mean any securities analyst, portfolio
manager, or a member of an investment committee who is directly involved in the
decision making process as to whether or not to purchase or sell a portfolio
security and those persons who provide information and advice to a Portfolio
Manager or who help execute a Portfolio Manager's decisions.
"Fund Personnel" shall mean an Access Person, Advisory Person, and/or
Investment Personnel.
"Portfolio Manager" shall mean an employee of an Investment Advisor
entrusted with the direct responsibility and authority to make investment
decisions affecting the Fund.
"Beneficial Ownership" shall be as defined in Section 16 of the Securities
Exchange Act of 1934 and the rules and regulations thereunder, which, generally
speaking, encompass those situations where the beneficial owner has the right to
enjoy some economic benefits which are substantially equivalent to ownership
regardless of who is the registered owner. This would include:
(i) securities which a person holds for his or her own benefit either in
bearer form, registered in his or her
own name or otherwise, regardless of whether the securities are
owned individually or jointly;
(ii) securities held in the name of a member of his or her immediate
family sharing the same household;
(iii) securities held by a trustee, executor, administrator,
custodian or broker;
(iv) securities owned by a general partnership of which the person is a
member or a limited partnership of which such person is a general
partner;
(v) securities held by a corporation which can be regarded as a
personal holding company of a person; and
(vi) securities recently purchased by a person and awaiting transfer
into his or her name.
"Security" shall have the meaning set forth in Section 2(a)(36) of the
Act, except that it shall not include shares of registered open-end investment
companies, securities issued by the Government of the United States or by
Federal agencies which are direct obligations of the United States, bankers'
acceptances, bank certificates of deposits, and commercial paper. A future or an
option on a future will be deemed to be a security subject to this Code.
"Purchase or sale of a security" includes the writing of an option to
purchase or sell a security.
A security is "being considered for purchase or sale" or is "being
purchased or sold" when a recommendation to purchase or sell the security has
been made by an Investment Advisor and such determination has been communicated
to the Fund. With respect to the Investment Advisor making the recommendation, a
security is being considered for purchase or sale when an officer, director or
employee of such Investment Advisor seriously considers making such a
recommendation.
Solely for purposes of this Code, any agent of the Fund charged with
arranging the execution of a transaction shall be subject to the reporting
requirements of this Code as to any such security as and from the time the
security is identified to such agent as though such agent was an Investment
Advisor hereunder.
NOTE: An officer or employee of the Fund or an Investment Advisor whose
duties do not include the advisory functions described above, who does not
have access to the advisory information contemplated above, and whose
assigned place of employment is at a location where no investment advisory
services are performed for the Fund, is not an "Advisory Person" or an
"Access Person" unless actual advance knowledge of a covered transaction
is furnished to such person.
PROHIBITED TRANSACTIONS
Fund Personnel shall not engage in any act, practice or course of conduct
which would violate the provisions of Rule 17j-1 set forth above. No Access
Person or Advisory Person shall purchase or sell, directly or indirectly any
security in which he/she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which, to his/her actual knowledge,
at the time of such purchase or sale (i) is being considered for purchase or
sale by the Fund; or (ii) is being purchased or sold by the Fund; except that
the prohibitions of this section shall not apply to:
(1) purchases or sales affected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control;
(2) purchases or sales which are non-volitional on the part of either
the Access Person, the Advisory Person, or the Fund;
(3) purchases which are part of an automatic dividend reinvestment or
other plan established by Fund Personnel prior to the time the
security involved came within the purview of this Code; and
(4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of
---------
its Securities, to the extent such rights were acquired from such
issuer, and sales of such rights so acquired.
PROHIBITED TRANSACTIONS BY INVESTMENT PERSONNEL
No Investment Personnel shall:
(1) acquire any securities in an initial public offering; or (2) acquire
securities in a private placement without prior written approval
of the Fund's compliance officer or other officer designated by the
Board of Directors.
In considering a request to invest in a private placement, the Fund's
compliance officer will take into account, among other factors, whether the
investment opportunity should be reserved for the Fund, and whether the
opportunity is being offered to Investment Personnel by virtue of their/his/her
position with the Fund. Should Investment Personnel be authorized to acquire
securities through a private placement, they/he/she shall, in addition to
reporting the transaction on the quarterly report to the Fund, disclose the
interest in that investment to other Investment Personnel participating in that
investment decision if and when they/he/she plays a part in the Fund's
subsequent consideration of an investment in that issuer. In such a case, the
Fund's decision to purchase securities of that issuer will be subject to an
independent review by Investment Personnel who have no personal interest in the
issuer.
BLACKOUT PERIODS
No Access Person or Advisory Person shall execute a securities transaction
on a day during which the Fund has a pending "buy" or "sell" order in that same
security until that order is executed or withdrawn. In addition, a Portfolio
Manager is expressly prohibited from purchasing or selling a security within
seven (7) calendar days before or after the Fund that he/she manages trades in
that security.
The foregoing prohibition of personal transactions during the seven day
period following the execution of a transaction for the Fund shall not apply
with respect to a security when the portfolio manager certifies in writing to
the Compliance Officer that the Fund's trading program in that security is
complete. Each transaction authorized by the Compliance Officer pursuant to this
provision shall be reported to the Board by the Compliance Officer at the
Board's next regular meeting.
Should Fund Personnel trade within the proscribed period, such trade
should be canceled if possible. If it is not possible to cancel the trade, all
profits from the trade must be disgorged and the profits will be paid to a
charity selected by the Fund Personnel and approved by the officers of the Fund.
The prohibitions of this section shall not apply to:
(1) purchases or sales affected in any account over which the Access
Person or Advisory Person has no direct or indirect influence or
control if the person making the investment decision with respect to
such account has no actual knowledge about the Fund's pending "buy"
or "sell" order;
(2) purchases or sales which are non-volitional on the part of either
the Access Person, the Advisory Person, or the Fund;
(3) purchases which are part of an automatic dividend reinvestment or
other plan established by Fund Personnel prior to the time the
security involved came within the purview of this Code; and
(4) purchases effected upon the exercise of rights issued by an issuer
pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights
so acquired.
SHORT-TERM TRADING
No Investment Personnel shall profit from the purchase and sale, or sale
and purchase, of the same (or equivalent) securities which are owned by the Fund
or which are of a type suitable for purchase by the Fund, within sixty (60)
calendar days. Any profits realized on such short-term trades must be disgorged
and the profits will be paid to a charity selected by the Investment Personnel
and approved by the officers of the Fund. The compliance officer or other
officer designated by the Board of Directors may Permit in writing exemptions to
the prohibition of this section, on a case-by-case basis, when no abuse is
involved and the equities of the circumstances support an exemption.
GIFTS
No Investment Personnel shall accept a gift or other thing of more than de
minimis value ("gift") from any person or entity that does business with or on
behalf of the Fund if such gift is in relation to the business of the employer
of the recipient of the gift. In addition, any Investment Personnel who receives
an unsolicited gift or a gift with an unclear status under this section shall
promptly notify the compliance officer and accept the gift only upon written
approval of the compliance officer.
SERVICE AS A DIRECTOR
No Investment Personnel shall serve as a director of a publicly traded
company absent prior written authorization from the Board of Directors based
upon a determination that such board service would not be inconsistent with the
interests of the Fund and its shareholders.
COMPLIANCE PROCEDURES
1. All Fund Personnel shall pre-clear their personal securities
transactions prior to executing an
order. A written request must be submitted to the Fund's compliance
officer, and the compliance officer must give his/her written
authorization prior to Fund Personnel placing a purchase or sell order
with a broker. Should the compliance officer deny the request, he/she will
give a reason for the denial.
Approved request will remain valid for two (2) business days from the
date of the approval.6
2. Fund Personnel shall instruct their broker(s) to supply the compliance
officer, on a timely basis, with duplicate copies of confirmations of all
personal securities transactions and copies of all periodic statements for
all securities accounts.
3. Fund Personnel, other than directors or officers required to report their
securities transactions to a registered investment advisor pursuant to
Rule 204-2(a)(12) or (13) under the Investment Advisors Act, shall submit
reports showing all transactions in securities as defined herein in which
the person has, or by reason of such transaction acquires, any direct or
indirect beneficial ownership.
4. Each director, who is not an interested person of the Fund as defined in
the Act, shall submit reports as required under subparagraph 3 above,
but only for transactions in reportable securities where at the time of
the transaction the director knew, or in the ordinary course of
fulfilling his/her official duties as a director should have known, that
during the seven (7) day period immediately preceding the date of the
transaction by the director, such security was purchased or sold by the
Fund or was being considered for purchase or sale by the Fund.
5. Every report required to be made under subparagraphs 3 and 4 above shall
be made not later than ten (10) days after the end of the calendar quarter
in which the transaction to which the report relates was effected. The
report shall contain the following information concerning any transaction
required to be reported therein:
(a) the date of the transaction;
(b) the title and number of shares;
(c) the principal amount involved;
(d) the nature of the transaction (i.e. purchase, sale, or other type
of acquisition or disposition);
(g) the price at which the transaction was effected; and
(h) the name of the broker, dealer or bank with or through whom the
transaction was effected.
6. The compliance officer shall identify all Fund Personnel who have a duty
to make the reports required hereunder and shall inform each such person
of such duty, and shall receive all reports required hereunder.
7. The compliance officer shall promptly report to the Fund's Board of
Directors (a) any apparent violation of the prohibitions contained in this
Code, and (b) any reported transactions in a security which was purchased
or sold by the Fund within seven (7) days before or after the date of the
reported transaction.
8. The Fund's Board of Directors, or a Committee of Directors created by the
Board of Directors for that purpose, shall consider reports made to the
Board of Directors hereunder and shall determine whether or not this Code
has been violated and what sanctions, if any, should be imposed.
9. This Code, a list of all persons required to make reports hereunder from
time to time, a copy of each report made by Fund Personnel, each
memorandum made by the compliance officer hereunder, and a record of any
violation hereof and any action taken as a result of such violation, shall
be maintained by the Fund as required under Rule 17j-1.
10. Upon the commencement of employment of a person who would be deemed to
fall within the definition of "Fund Personnel", that person must disclose
all personal securities holdings to the compliance officer.
11. All Fund Personnel must report, on an annual basis, all personal
securities holdings.
12. At least annually, all Fund Personnel will be required to certify that
they (a) have read and understand the Code; (b) recognize that they are
subject to the requirements outlined therein; (c) have complied with the
requirements of the Code; (d) have disclosed and reported all personal
securities transactions required to be disclosed; and (e) have disclosed
all personal securities holdings.
13. The Fund's compliance officer shall prepare an annual report to the
Fund's Board of Directors. Such report shall (a) include a copy of the
Fund's Code; (b) summarize existing procedures concerning personal
investing and any changes in the Code's policies or procedures during
the past year; (c) identify any violations of the Code; and (d) identify
any recommended changes in existing restrictions, policies or procedures
based upon the Fund's experience under the Code, any evolving industry
practices, or developments in applicable laws or regulations.
<PAGE>
EXHIBIT A
STATEMENT ON INSIDER TRADING
The Insider Trading and Securities Fraud Enforcement Act of 1988
("ITSFEA") requires that all investment advisors and broker-dealers establish,
maintain, and enforce written policies and procedures designed to detect and
prevent the misuse of material non-public information by such investment advisor
and/or broker-dealer, or any person associated with the investment advisor
and/or broker-dealer.
Section 204A of the Investment Advisers Act of 1940 (the "Advisers Act")
states that an investment advisor must adopt and disseminate written policies
with respect to ITSFEA, and an investment advisor must also vigilantly review,
update, and enforce them. Section 204A provides that every person subject to
Section 204 of the Advisers Act shall be required to establish procedures to
prevent insider trading.
Each investment advisor who acts as such for any series of The World
Funds, Inc. (the "Fund") and each broker-dealer which acts as principal
underwriter to any series of the Fund has adopted the following policy,
procedures, and supervisory procedures in addition to the Fund's Code of Ethics.
Throughout this document the investment advisor(s) and principal underwriter(s)
shall collectively be called the "Providers".
SECTION I - POLICY
The purpose of this Section 1 is to familiarize the officers, directors,
and employees of the Providers with issues concerning insider trading and to
assist them in putting into context the policy and procedures on insider
trading.
Policy Statement:
No person to whom this Statement on Insider Trading applies, including
officers, directors, and employees, may trade, either personally or on behalf of
others (such as mutual funds and private accounts managed by a Provider) while
in possession of material, non-public information; nor may any officer,
director, or employee of a Provider communicate material, non-public information
to others in violation of the law. This conduct is frequently referred to as
"insider trading." This policy applies to every officer, director, and employee
of a Provider and extends to activities within and outside their duties as a
Provider. It covers not only personal transactions of covered persons, but
indirect trading by family, friends and others, or the non-public distribution
of inside information from you to others. Every officer, director, and employee
must read and retain this policy statement. Any questions regarding the policy
and procedures should be referred to the compliance officer.
<PAGE>
The term "insider trading" is not defined in the Federal securities laws,
but generally is used to refer to the use of material non-public information to
trade in securities (whether or not one is an "insider") or the communications
of material nonpublic information to others who may then seek to benefit from
such information.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
(a) trading by an insider, while in possession of material non-public
information, or
(b) trading by a non-insider, while in possession of material non-public
information, where the information either was disclosed to the
non-insider in violation of an insider's duty to keep it confidential
or was misappropriated, or
(c) communicating material non-public information to others.
The elements of insider trading and the penalties for such unlawful
conduct are discussed below.
1. Who is an Insider? The concept of "insider" is broad. It includes officers,
directors, and employees of a company. In addition, a person can be a "temporary
insider" if he or she enters into a special confidential relationship in the
conduct of a company's affairs and as a result is given access to information
solely for the company's purposes. A temporary insider can include, among
others, a company's attorneys, accountants, consultants, bank lending officers,
and the employees of such organizations. In addition, an investment advisor may
become a temporary insider of a company it advises or for which it performs
other services. According to the Supreme Court, the company must expect the
outsider to keep the disclosed non-public information confidential and the
relationship must at least imply such a duty before the outsider will be
considered an insider.
2. What is Material Information? Trading on inside information can be the basis
for liability when the information is material. In general, information is
"material" when there is a substantial likelihood that a reasonable investor
would consider it important in making his or her investment decisions, or
information that is reasonably certain to have a substantial effect on the price
of a company's securities. Information that officers, directors, and employees
should consider material includes, but is not limited to: dividend changes,
earnings estimates, changes in previously released earnings estimates,
significant merger or acquisition proposals or agreements, major litigation,
liquidation problems, and extraordinary management developments.
3. What is Non-Public Information? Information is non-public until it has been
effectively communicated to the market place. One must be able to point to some
fact to show that the information is generally public. For example, information
found in a report filed with the SEC, or appearing in Dow Jones, Reuters
Economic Services, the Wall Street Journal or other publications of general
circulation would be considered public. (Depending on the nature of the
information, and the type and timing of the filing or other public release, it
may be appropriate to allow for adequate time for the information to be
"effectively" disseminated.)
4. Reason for Liability. (a) Fiduciary duty theory - in 1980 the Supreme Court
found that there is no general duty to disclose before trading on material
non-public information, but that such a duty arises only where there is a direct
or indirect fiduciary relationship with the issuer or its agents. That is, there
must be a relationship between the parties to the transaction such that one
party has a right to expect that the other party will disclose any material
non-public information or refrain from trading. (b) Misappropriation theory -
another basis for insider trading liability is the ,'misappropriation" theory,
where liability is established when trading occurs on material non-public
information that was stolen or misappropriated from any other person.
5. Penalties for Insider Trading. Penalties for trading on or communicating
---------------------------------
material non-public information are severe, both for individuals and their
employers. A person can be subject to some or all of the penalties below even
if he or she does not personally benefit from the violation. Penalties
include:
o civil injunctions
o treble damages
o disgorgement of profits
o jail sentences
<PAGE>
o fines for the person who committed the violation of up to three times
the profit gained or loss avoided, whether or not the person actually
benefited, and
o fines for the employer or other controlling person of up to the greater of $1
million or three times the amount of the profit gained or loss avoided.
In addition, any violation of this policy statement can be expected to
result in serious sanctions by a Provider, including dismissal of the persons
involved.
SECTION II - PROCEDURES
The following procedures have been established to aid the officers,
directors, and employees of a Provider in avoiding insider trading, and to aid
in preventing, detecting, and imposing sanctions against insider trading. Every
officer, director, and employee of a Provider must follow these procedures or
risk serious sanctions, including dismissal, substantial personal liability,
and/or criminal penalties. If you have any questions about these procedures you
should consult the compliance officer.
1. Identifying Inside Information. Before trading for yourself or others,
-----------------------------------
including investment companies or private accounts managed by a Provider, in
the securities of a company about which you may have potential inside
information, ask yourself the following questions:
i. Is the information material? Is this information that an investor
would consider important in making his or her investment decisions?
Is this information that would substantially affect the market price
of the securities if generally disclosed?
ii. Is the information non-public? To whom has this information been
provided? Has the information been effectively communicated to the
marketplace by being published in Reuters, The Wall Street Journal or
other publications of general circulation?
If, after consideration of the above, you believe that the information is
material and non-public, or if you have questions as to whether the information
is material and non-public, you should take the following steps:
(a) Report the matter immediately to the compliance officer.
(b) Do not purchase or sell the security on behalf of yourself or others,
including investment companies or private accounts managed by a
Provider.
(c) Do not communicate the information to anybody, other than to the
compliance official.
(d) After the compliance official has reviewed the issue, you will be
instructed to either continue the prohibitions against trading and
communication, or you will be allowed to communicate the information
and then trade.
2. Personal Security Trading. Ail officers, directors, and employees of a
Provider (other than officers, directors and employees who are required to
report their securities transactions to a registered investment company in
accordance with a Code of Ethics) shall submit to the compliance officer, on a
quarterly basis, a report of every securities transaction in which they, their
families (including the spouse, minor children, and adults living in the same
household as the officer, director, or employee), and trusts of which they are
trustees or in which they have a beneficial interest have participated, or at
such lesser intervals as may be required from time to time. The report shall
include the name of the security, date of the transaction, quantity, price, and
broker-dealer through which the transaction was effected. Ail officers,
directors and employees must also instruct their broker(s) to supply the
compliance officer, on a timely basis, with duplicate copies of confirmations of
all personal securities transactions and copies of all periodic statements for
all securities accounts.
3. Restricting Access to Material Non-public Information. Any information in
your possession that you identify as material and non-public may not be
communicated other than in the course of performing your duties to anyone,
including persons within your company, except as provided in paragraph I above.
In addition, care should be taken so that such information is secure. For
example, files containing material non-public information should be sealed;
access to computer files containing material non-public information should be
restricted.
4. Resolving Issues Concerning Insider Trading. If, after consideration of the
items set forth in paragraph 1, doubt remains as to whether information is
material or non-public, or if there is any unresolved question as to the
applicability or interpretation of the foregoing procedures, or as to the
propriety of any action, it must be discussed with the compliance officer before
trading or communicating the information to anyone.
SECTION III - SUPERVISION
The role of the compliance officer is critical to the implementation and
maintenance of this Statement on Insider Trading. These supervisory procedures
can be divided into two classifications, (1) the prevention of insider trading,
and (2) the detection of insider trading.
1. Prevention of Insider Trading:
------------------------------
To prevent insider trading the compliance official should:
(a) answer promptly any questions regarding the Statement on Insider
Trading;
(b) resolve issues of whether information received by an officer,
director, or employee is material and nonpublic;
(c) review and ensure that officers, directors, and employees review, at
least annually, and update as necessary, the Statement on Insider
Trading; and
(d) when it has been determined that an officer, director, or employee
has material non-public information, (i) implement measures to
prevent dissemination of such
information, and
(ii) if necessary, restrict officers, directors, and employees from
trading the securities.
2. Detection of Insider Trading:
-----------------------------
To detect insider trading, the Compliance Officer should:
(a) review the trading activity reports filed by each officer, director,
and employee, to ensure no trading took place in securities in which
the Provider has material non-public information;
(b) review the trading activity of the mutual funds managed by the
investment advisor and the mutual funds which the broker-dealer acts
as principal underwriter;
(c) coordinate, if necessary, the review of such reports with other
appropriate officers, directors, or employees of a Provider and The
World Funds, Inc.
3. Special Reports to Management:
------------------------------
Promptly, upon learning of a potential violation of the Statement on
Insider Trading, the Compliance Officer must prepare a written report to
management of the Provider, and provide a copy of such report to the Board of
Directors of The World Funds, Inc., providing full details and recommendations
for further action.
4. Annual Reports:
---------------
On an annual basis, the Compliance Officer of each Provider will prepare a
written report to the management of the Provider, and provide a copy of such
report to the Board of Directors of The World Funds, Inc., setting forth the
following:
(a) a summary of the existing procedures to detect and prevent insider
trading;
(b) full details of any investigation, either internal or by a
regulatory agency, of any suspected insider trading and the results
of such investigation;
(c) an evaluation of the current procedures and any recommendations for
improvement.
<PAGE>
EXHIBIT B
THE WORLD FUNDS, INC.
CODE OF ETHICS
INITIAL REPORT
To the Compliance Officer of The World Funds, Inc.:
1. I hereby acknowledged receipt of a copy of the Code of Ethics for The
World Funds, Inc.
2. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Fund Personnel."
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
the Fund, such as any economic relationship between my transactions and
securities held or to be acquired by the Fund.
4. As of the date below I had a direct or indirect beneficial ownership
in the following securities:
Name of Security Number of Shares Type of Interest
(Direct or Indirect)
Date:______________________________________
Signature:________________________________
___________________________________________ Print
Name:_______________________________
<PAGE>
EXHIBIT C
THE WORLD FUNDS, INC.
CODE OF ETHICS
ANNUAL REPORT
TO the Compliance Officer of The World Funds, Inc.:
1. I have read and understand the Code and recognize that I am subject
thereto in the capacity of "Fund Personnel."
2. I hereby certify that, during the year ended December 31, ___ , I have
complied with the requirements of the Code and I have reported all securities
transactions required to be reported pursuant to the Code.
3. Except as noted below, I hereby certify that I have no knowledge of the
existence of any personal conflict of interest relationship which may involve
the Fund, such as any economic relationship between my transactions and
securities held or to be acquired by the Fund.
4. As of December 31, ___ , I had a direct or indirect beneficial
ownership in the following securities:
Name of Security Number of Shares Type of Interest
(Direct or Indirect)
Date:___________________________________ Signature:___________________________
_________________________________________ Print
Name:___________________________
<PAGE>
EXHIBIT D
THE WORLD FUNDS, INC.
Securities Transactions Report
For the Calendar Quarter
Ended:___________________________________________________________
To the Compliance officer of The World Funds, Inc.:
During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership and which are required to be
reported pursuant to the Code of Ethics adopted by The World Funds, Inc.
SECURITY DATE OF NO. OF DOLLAR NATURE
OF PRICE BROKER-DEALER
TRANS. SHARES AMOUNT OF
TRANSACTION OR BANK
TRANS.
(Purchase, THROUGH
Sale,
WHOM
Other)
EFFECTED
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) other transactions not required to
be reported, and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Except as noted on the reverse side of this report, I hereby certify that
I have no knowledge of the existence of any personal conflict of interest
relationship which may involve the Fund, such as the existence of any economic
relationship between my transactions and securities held or to be acquired by
the Fund.
Date:________________________________
Signature:_______________________________________
------------------------------------
<PAGE>
- --------
1 In its consideration of the Plan, the Board of Directors considered the
proposed schedule and nature of payments under the Plan. The Board of Directors
concluded that the proposed reimbursement of the Company's principal
underwriter, First Dominion Capital Corp. (the "Distributor"), for distribution
expenses under the Plan is fair and not excessive. Accordingly, the Board
determined that the Plan should provide for such reimbursement and that adoption
of the Plan would be prudent and in the best interests of the Fund and the
Series' shareholders. Such approval included a determination that in the
exercise of their reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Fund,
the Series and the Series' shareholders.
2 In its consideration of the Plan, the Board of Directors considered the
proposed schedule and nature of payments under the Plan. The Board of Directors
concluded that the proposed reimbursement of the Portfolio's principal
underwriters, First Dominion Capital Corp. and Monument Distributors, Inc. (the
"Distributors"), for distribution expenses under the Plan is fair and not
excessive. Accordingly, the Board determined that the Plan should provide for
such reimbursement and that adoption of the Plan would be prudent and in the
best interests of the Fund and the Portfolio's shareholders. Such approval
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund, the Portfolio and the
Portfolio's shareholders.
3 In its consideration of the Plan, the Board of Directors considered the
proposed schedule and nature of payments under the Plan. The Board of Directors
concluded that the proposed reimbursement of the Portfolio's principal
underwriters, First Dominion Capital Corp. and Monument Distributors, Inc. (the
"Distributors"), for distribution expenses under the Plan is fair and not
excessive. Accordingly, the Board determined that the Plan should provide for
such reimbursement and that adoption of the Plan would be prudent and in the
best interests of the Fund and the Portfolio's shareholders. Such approval
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund, the Series and the Portfolio's
shareholders.
4 In its consideration of the Plan, the Board of Directors considered the
proposed schedule and nature of payments under the Plan. The Board of Directors
concluded that the proposed reimbursement of the Portfolio's principal
underwriters, First Dominion Capital Corp. and Monument Distributors, Inc. (the
"Distributors"), for distribution expenses under the Plan is fair and not
excessive. Accordingly, the Board determined that the Plan should provide for
such reimbursement and that adoption of the Plan would be prudent and in the
best interests of the Fund and the Portfolio's shareholders. Such approval
included a determination that in the exercise of their reasonable business
judgment and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Fund, the Series and the Portfolio's
shareholders.
5 The Board has determined that placement of a limit order constitutes a
transaction requiring approval, and the limit order must be placed within two
days from the date of approval. Implementation of a limit order in accordance
with its approved terms is a ministerial act which occurs in the future by the
terms of the limit order, and does not require approval. A change of terms in,
or withdrawal of, a standing limit order is an investment decision for which
clearance must be obtained.
6 The Board has determined that placement of a limit order constitutes a
transaction requiring approval, and the limit order must be placed within two
days from the date of approval. Implementation of a limit order in accordance
with its approved terms is a ministerial act which occurs in the future by the
terms of the limit order, and does not require approval. A change of terms in,
or withdrawal of, a standing limit order is an investment decision for which
clearance must be obtained.
<PAGE>
EXHIBIT EX-99.(23)(p)(4)
CODE OF ETHICS
Monument Series Fund, Inc.
Monument Advisors, Ltd.
and
Monument Distributors, Inc.
Code of Ethics
1. Introduction
Monument Series Fund, Inc. ("Monument Funds"), Monument Advisors, Ltd.
("Advisors") and Monument Distributors, Inc. ("Distributors") recognize that
they have fiduciary duties to their shareholders and clients, and recognize the
importance of maintaining high ethical standards in the conduct of business.
2. Purpose
The purpose of this Code of Ethics is to make it clear what ethical
standards you, as an officer, director, or employee of Monument Funds, Advisors,
or Distributors, are expected to follow.
In addition, this Code of Ethics sets forth implementing procedures
designed to prevent Access Persons (defined below) of the Funds from engaging in
any conduct prohibited by this code.
3. Legal Background
Rule 17j-1 under the Investment Company Act of 1940 ("Act") makes it
unlawful for any affiliated person of or principal underwriter for an investment
company, or any affiliated person of an investment adviser of or principal
underwriter for an investment company, in connection with the purchase or sale,
directly or indirectly, by the person, relating to a security held or to be
acquired by an investment company:
a. To employ any device, scheme or artifice to defraud the investment
company;
b. To make any untrue statement of a material fact to the investment
company, or omit to state a material fact necessary in order to make the
statements made to the investment company, in light of the circumstances under
which they are made, not misleading;
c. To engage in any act, practice or course
of business that operates or would operate as a fraud or deceit on the
investment company; or d. To engage in any manipulative practice with respect to
an investment company.
4. Duties of Officer, Directors and Employees
a. General Fiduciary Duty. You, being in a position of trust, have a
fiduciary duty to the shareholders of the Monument Funds and to the clients of
Advisors and Distributors to maintain a standard of professional conduct higher
than that expected of the ordinary man or woman on the street.
The standards of such conduct are spelled out in a body of law, but they
may be expressed in one simple principal: a fiduciary must place his first duty
to another. In your case, your first duty is to the Monument Fund's
shareholders and the clients of Advisors and Distributors.
b. Conflicts of Interest. When there is a conflict of interest or a
potential conflict of interest between your own interests and the interests of
the Monument Funds' shareholders or the clients of Advisors or Distributors, you
must put their interests first. You have a fiduciary duty timely to disclose to
your supervisor and Monument Funds' compliance officer any financial interest or
other conflict of interest, direct or indirect, that you may have. You may not
make any arrangement with any third party, formal or informal, directly or
indirectly, in which you receive any financial benefit as a result of your
position with Monument Funds, Advisors, or
Distributors. You may not share in any profits, make any guarantees, or
promise any profits to any other person, based on your position as an officer,
director or employee of the Monument Funds, Advisors, or Distributors.
c. Gifts, Gratuities and the Like. You may not accept any payment, fee,
commission, gift, or services in lieu of payment, from any person or entity who
does or may do business with Monument Funds, Advisors, or Distributors. An
exception may be made in the case of a gift of nominal value (under $100) under
circumstances in which it would be awkward and inappropriate to decline.
d. Outside Employment. You may not accept any outside employment or accept
any outside remuneration without prior written clearance from Monument Funds'
compliance officer. You may not engage in any securities business, attempt to
sell any securities, limited offerings, insurance product, or otherwise, that is
not supervised by Advisors or Distributors. You may not be registered with or
employed by any broker-dealer other than Distributors, without the written
approval of Monument Funds' compliance officer.
e. Service as a Board Member. You may not serve on the board of a publicly
traded company unless prior authorization is obtained from the Monument
Funds' compliance officer, based on a determination that (i) the business
of such company does not conflict with the interests of the Monument Funds, (ii)
service would be consistent with the best interests of the Monument
Funds and their shareholders, and (iii) service is not prohibited by law.
If such service is authorized, procedures shall be put in place to isolate
you from those making investment decisions on behalf of Monument Funds and
Advisors' clients.
f. Pre-clearance of Personal Securities Transactions. You must obtain prior
written approval from the Monument Funds' compliance officer or a principal of
Advisors or Distributors before purchasing or selling, directly or indirectly,
any Restricted Security (defined below) in any account over which you exercise
beneficial ownership (defined below).
Approval will not be granted for purchase or sale of any Restricted
Security (or any related option or security convertible into any Restricted
Security) for which the Monument Funds or Advisors' clients have a pending
purchase or sale order, or have had a purchase or sale transaction within the
previous three business days.
A written record of any pre-clearance approval shall be maintained by
Monument Funds' compliance officer.
g. Pre-clearance of Personal Securities Transactions of Independent
Directors. A special provision applies to an Access Person who is also an
independent director (defined below) of the Monument Funds. Such independent
director must obtain prior written approval from Monument Funds' compliance
officer to effect a transaction in a Covered Security (defined below) in any
account over which he or she knew or, in the ordinary course of fulfilling his
or her official duties as a director of Monument Funds, should have
known, that during the 15-day period immediately preceding or after the
date of such transaction by the independent director, such security is or was
purchased or sold by a Monument Fund, or such purchase or sale is or was being
considered by a Monument Fund.
h. Initial Public Offerings. You may not participate in any initial public
offering (defined below) of any security in any account over which you exercise
beneficial ownership.
i. Limited Offerings. You may not engage in any transaction as a result of
which you acquire beneficial ownership in a limited offering (defined below),
without obtaining the prior written approval of Monument Funds' compliance
officer or of a principal of Advisors or Distributors.
If you have obtained prior approval and made an investment in a private
placement, you must disclose that investment to Advisors' officers and portfolio
managers when they consider an investment in the private placement issuer on
behalf of the Monument Funds or Advisors' or Distributors' clients.
j. Brokerage Accounts. You may open a personal brokerage account at one or
more broker-dealers. You are required to disclose to the broker-dealer that you
are an officer, director or employee of the Monument Funds, Advisors, or
Distributors. You are required to instruct the broker-dealer to send duplicate
confirmations and duplicate statements to your employer, in care of the Monument
Funds' compliance officer.
5. Definitions
a. "Access Person" means any director, officer, or Advisory Person (defined
below) of the Monument Funds, Advisors, or Distributors.
b. "Advisory Person" means any employee of the Monument Funds or Advisors
who, in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or sale of
Covered Securities (defined below) by a Fund, or whose functions relate to the
making of any recommendations with respect to the purchases or sales; and any
natural person in a control relationship to the Monument Funds or Advisors who
obtains information concerning recommendations made to the Monument Funds with
regard to the purchase or sale of Covered Securities by the Monument Funds.
c. "Beneficial Ownership" means ownership of securities or securities
accounts by or for the benefit of a person, or such person's family member
(defined below) including any account in which the employee or family member of
that person holds a direct or indirect beneficial interest, retains
discretionary investment authority or exercise a power of attorney. "Beneficial
Ownership" is interpreted in the same manner as it would be under Rule
16a-1(a)(2) under the Securities Exchange Act of 1934 ("Exchange Act") in
determining whether a person is the beneficial owner of a security for purposes
of section 16 of the Exchange Act and the rules thereunder. Any report required
by this Code of Ethics may contain a statement that the report will not be
construed as an admission that the person making the report has any direct or
indirect beneficial ownership in the Covered
Security to which the report relates.
d. "Compliance Officer" means the person appointed by the directors of the
Monument Funds to administer the Code of Ethics.
e. "Control" means the power to exercise a controlling influence over the
management of policies of a company, as defined in Section 2(a)(9) of the Act.
f. "Covered Security" means a security as defined in section 2(a)(36) of
the Act, except that it does not include: (i) direct obligations of the
Government of the United States; (ii) bankers' acceptances, bank certificates of
deposit, commercial paper and high quality short-term debt instruments,
including repurchase agreements; and (iii) shares issued by open-end investment
companies.
g. "Family member" means any person's spouse, child or other relative,
whether related by blood, marriage or otherwise, who either resides with, is
financially dependent upon, or whose investments are controlled by that person.
The term "family member" also includes any unrelated individual whose
investments are controlled and whose financial support is materially contributed
to by that person.
h. "Independent Director" means a director of the Monument Funds who is not
an "interested person" of Monument Funds within the meaning of Section 2(a)(19)
of the Act.
i. "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately before the
registration, was not subject to the reporting requirements of Sections 13 or
15(d) of the Securities Exchange Act of 1934.
j. "Investment Adviser" means any entity listed in the Monument Funds'
current prospectus that provides investment advice and investment management
services to Monument Funds.
k. "Investment Personnel" means any person who, in connection with his or
her regular duties makes, participates in, or recommends the purchase or sale of
a security for any of the Funds.
l. "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section 4(6) or
pursuant to Rule 504, Rule 505, or Rule 506 under the Securities Act of 1933.
m. "Portfolio Manager" means any person entrusted with the direct
responsibility and authority to make investment decisions affecting any of
Monument Funds.
n. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security and the exercise of a stock
option.
o. "Restricted Security" means any security for which Monument Funds or
Advisors' clients have a pending purchase or sale order. Advisors shall maintain
a daily list of restricted securities.
p. "Security held or to be acquired" means any security which, within the
most recent 15 days, (i) is or has been held by a Monument Fund or Advisors'
client, or (ii) is being or has been considered by a Monument
Fund or Advisors for purchase on behalf of a client.
q. "Security is being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and communicated or,
with respect to the person making the recommendation, when such person considers
making such a recommendation or when there is an outstanding order to purchase
or sell the security.
6. Reports by Access Persons
Monument Funds' Code of Ethics requires Access Persons to file four
reports:
initial holding reports, quarterly transaction reports, annual holding
reports, and annual certificates of compliance.
a. Initial Holding Reports
No later than 30 days after you have been informed that you are an Access
Person, you are required to submit a report to the Monument
Fund's compliance officer showing: (1) the name, (2) the number of shares
(if an equity security), and (3) the principal amount (if a bond or similar
instrument denominated in dollars) of each Covered Security
defined above) in which you had any direct or indirect beneficial
ownership when you became named an Access Person. Negative reports are
required. A truthful negative report is satisfactory if
you sign, date and submit a report marked "No Securities Holdings."
b. Quarterly Transactions Reports
No later than ten calendar days after the end of each calendar quarter, you
are required to submit a two-part report to the Monument Fund's compliance
officer showing:
(1) Part One. Transactions. With respect to any transaction during the
previous quarter in a Covered Security in which you had any direct or indirect
beneficial ownership: (a) the date of the transaction; (b) the title (name) of
the security; (c) the principal amount, interest rate and maturity date (if
applicable, for a non-equity, bond or similar security); (d) the number of
shares (if an equity security); (b) the nature of the transaction (i.e.
purchase, sale or any other type of acquisition or disposition); (c) the price
of the Covered Security at which the transaction was effected; (d) the name of
the broker, dealer or bank with or through which the transaction was effected;
and (e) the date you signed the report and transmitted it to the Monument Fund's
compliance officer. Negative reports are required. A truthful negative report
is satisfactory if you sign, date And submit a report marked "No Securities
Transactions."
(2) Part Two. Account Established. With respect to any account you
established in which any securities (note: not just Covered Securities) were
held during the previous quarter for your direct or indirect benefit: (a) the
name of the broker, dealer or bank with whom you established the account; (b)
the date the account was established; and (c) the date you signed the report and
transmitted it to the Monument Fund's compliance officer. A truthful negative
report is satisfactory if you sign, date and submit a report marked "No Accounts
Established."
Access Persons are not required to file quarterly reports for quarters
ending prior to December 31, 1999, for the purchase and sale of any Restricted
Security, provided that the Access Person caused the broker-dealer effecting any
such transaction to mail duplicate confirmations and brokerage statements to
the Monument Funds' compliance officer.
c. Annual Holdings Reports Holding Reports. Annually, no later than January
10th, you are required to submit a report, with information current no older
than 30 days before the report is submitted, showing for any Covered
Security in which you had any direct or indirect beneficial interest: (1)
the title or name of each security; (2) the name of any broker, dealer or bank
with whom you maintain such an account; and (3) the date you signed the report
and transmitted it to the Monument Fund's compliance officer. A truthful
negative report is satisfactory if you sign, date and submit a report marked "No
Covered Securities."
d. Annual Certificate of Compliance. Annually, no later than January 10,
you are required to submit a report certifying that you have a copy of the
Monument Funds' Code of Ethics a copy of the Monument Funds' Written
Supervisory Procedures that you understand them, and that you are in
compliance with their provisions.
6. Exceptions to Reports by Access Persons
a. A person need not make a report required under the immediately preceding
section of this Code of Ethics with respect to transactions effect for, and
Covered Securities held in, an account over which the person has no direct or
indirect influence or control.
b. A director of Monument Funds who is an independent director (defined
above) need not (1) file an initial holdings report; (2) need not file quarterly
transaction reports; and (3) need not direct his or her broker to provide
duplicate confirmations of personal securities transactions to Monument Funds'
compliance officer, unless the director knew, or, in the ordinary course of
fulfilling his or her official duties as a Monument Funds director, should have
known that during the 15 day period immediately before or after the director's
transaction in a Covered Security, a Monument Fund purchased or sold the Covered
Security, or the Monument Fund or Advisors considered purchasing or selling the
Covered Security.
However, each independent is required to file annual holdings reports and
annual certification of compliance, called for by this Code of Ethics.
7. Sanctions
Your employer wishes you success in your personal life and does not wish to
impose any unreasonable sanction. When in doubt about contemplated conduct, or
past conduct, it makes sense to discuss it frankly with your supervisor and/or
Monument Funds' compliance officer. They have a duty to treat you fairly. That
being said, violations of this Code of Ethics expose you to appropriate
sanctions, including, but not limited to, a letter of censure, suspension with
or without pay, or termination of employment. In addition, you shall be require
to disgorge any profits realized on personal securities transactions found to be
in violation of this Code of Ethics.
8. Notification of Reporting Obligation.
Monument Funds' compliance officer shall identify all Access Persons and
any other persons who may not meet the definition of Access Person but who,
nevertheless, are required to make the reports required by this Code of
Ethics. The Monument Funds' compliance officer shall inform those persons
of their reporting obligation.
9. Review of Reports
Monument Funds' compliance officer shall establish procedures to insure
that required reports are submitted timely; to notify persons whose reports are
late or otherwise do not meet the requirements of this Code of Ethics; and to
notify Monument Funds' management of any significant violation of this Code
of Ethics, together with recommendations of remedial actions
and sanctions, if appropriate.
10. Reports to Board of Directors
The Monument Funds' compliance officer shall prepare an annual report for
the Board for Directors which, at a minimum, summarizes the existing procedures
concerning personal investing any changes in the procedures made during that
year; identifies any violations requiring significant remedial action during the
past year; and identifies any recommended changes in existing restrictions or
procedures.
11. Recordkeeping
Monument Funds shall maintain the following records:
a. Code of Ethics. A copy of each Code of Ethics that is in effect, or at
any time within the past five years was in effect, shall be maintained in an
easily accessible place.
b. Record of Violations. A record of any violation of the Code of Ethics,
and of any action taken as a result of the violation, shall be maintained in an
easily accessible place for at least five years after the end of the fiscal year
in which the violation occurs.
c. Reports by Access Persons. A copy of each report made by an Access
Person, including any information provided in lieu of reports, shall be
maintained for at least five years after the end of the fiscal year in which the
report is made, the first two years in an easily accessible place.
d. Records of Persons. A record of all persons, currently or within the
past five years, who are or were required to make reports, or who are or were
responsible for reviewing these reports, shall be maintained in an easily
accessible place for at least five years.
e. Reports to Funds' Board of Directors. A copy of each report to Funds'
Board of Directors shall be maintained for at least five years after the end of
the fiscal year in which it is made, the first two years in an easily accessible
place.
f. Records of Decisions. A record of any decision, and the reasons
supporting the decision, to approve the acquisition by investment personnel of
investments in IPOs and Limited Offerings shall be maintained for at least five
years after the end of the fiscal year in which the approval is granted, the
first two years in an easily accessible place.
Attachments:
Initial Holding Report
Quarterly Transaction Report
Annual Holding Report
Annual Certification of Compliance
Securities Transaction Pre-clearance Form
Monument Series Fund, Inc.
Access Person Initial Holding Report
I certify that as of ____________ (date) the list below is a complete list of
Covered Securities in which I had any direct or indirect beneficial ownership
and includes each broker, dealer or bank at which I maintain an account in which
any securities (not just Covered Securities) were held for my direct or indirect
beneficial ownership when I became an Access Person:
- ----------------------------------------------------
Title or Name No. of Principal Broker,
of Security Shares Amount Dealer
(Bonds) or Bank
- ----------------------------------------------------
- -------------------------
Signature
- -------------------------
(Name printed legibly)
Date
Monument Series Fund, Inc.
Quarterly Transaction Report
Calendar quarter ended______________.
I certify that the transactions listed below are all of the securities
transactions in Covered Securities effected in all accounts in which I had any
direct or indirect beneficial ownership during the quarter.
- --------------------------------------------------------------
Trade Type of Name of No. of Princ. Price Broker/
Date of Trans-actSecurity Shares Amt/Rate/Mat Dealer
Trans-actiB/S (Bonds)
Other
P= Purchase
S= Sale
E= Exercise of option
O=Other
- -------------------------
Signature
- -------------------------
(Name printed legibly)
Date
Monument Series Fund, Inc.
Annual Securities Holding Report for the year ended December 31,
- --------
I certify that the securities listed below are all of the Securities of which I
had Beneficial Ownership:
- ----------------------------------------------------------
Title/Type of No. of shares Principal Amount
Security----------------------------------------------------------
- -------------------------
Signature
- -------------------------
(Name printed legibly)
Date
Monument Series Fund, Inc.
Annual Certification of Compliance with Written Supervisory
Procedures and Code of Ethics
I certify that I have received a copy of Monument Funds' Written Supervisory
Procedures ("Procedures") and Code of Ethics ("Code") and that I have read and
understood the Procedures and the Code to the best of my ability. I acknowledge
that I am subject to the Procedures and the Code and have complied with each of
the provisions to which I am subject.
I understand that I am obligated to ask Monument Funds' compliance officer
questions to clarify any matters set forth in the Procedures or Code that are
unclear to me. I understand that I am obligated to inform Monument Funds'
compliance officer in writing of any violation of the Procedures or Code for
which I am responsible.
- ---------------------
Signature
- ---------------------
(Name printed legibly)
- ---------------------
Date
Monument Series Fund, Inc.
Preclearance of Securities Transaction
I request preclearance of the following proposed securities transaction:
- --------- ------------ --------------- -----------------------
Buy/Sell No. Shares/ Security Name Name of Broker-dealer
or Princ Amt through whom to be(for
bonds, effected etc.)
Name ____________________________________
Name of Account in which Proposed Transaction
to be effected
Your name printed: _________________
Your signature: _________________
Date of request: ______________
Approved by:
Disapproved by: ________________
(Signature)
Printed name of
Approving Principal: _______________
Date of Approval: _______________
Notes of Approving ________________________
Principal As To Transactions ________________________
Of Affiliated Parties: ________________________
