As filed with the Securities and Exchange Commission
on August 4, 1997.
Registration Nos. 33-XXXXX
811-XXXX
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. / /
SAMCO FUND, INC.
(Exact Name of Registrant as Specified in Charter)
600 Fifth Avenue
New York, New York 10020
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 332-5211
Christina Seix
Seix Investment Advisors Inc.
300 Tice Boulevard
Woodcliff Lake, NJ 07675-7633
(Name and Address of Agent for Service)
Copies to:
William Goodwin, Esq.
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, NY 10112
___________________
Approximate Date of Proposed Public Offering: As soon as practicable
after this Registration Statement becomes effective.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, the
Registrant hereby elects to register an indefinite number of shares of
Capital Stock, $.001 par value per share, of all series of the Registrant,
now existing or hereafter created.
The Registrant hereby amends this Registration Statement under the
Securities Act of 1933 on such date or dates as may be necessary to delay
its effective date until the Registrant shall file a further amendment
which specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to
said the provisions of Section 8(a), may determine.
SAMCO FUND, INC.
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 495(a)
Under the Securities Act of 1933
N-1A Item No. Location
Part A Prospectus Caption
Item 1. Cover Page Cover Page
Item 2. Synopsis The Fund's Expenses
Item 3. Condensed Financial
Information Not Applicable
Item 4. General Description of Registrant Additional
Information --
Organization of the
Fund;
Investment
Objectives and
Policies;
Investment
Limitations; Risk
Factors; Appendix
Item 5. Management of the Fund Management of the Fund
Item 5A. Management's Discussion of
Fund Performance Not Applicable
Item 6. Capital Stock and Other Securities Additional Information--
Organization of the
Fund;
Additional Information--
Dividends and
Distributions;
Additional Information--
Shareholder Inquiries;
Additional Information--
Taxes
Item 7. Purchase of Securities
Being Offered Additional Information--
Determination of
Net Asset Value;
Purchase of Shares
Item 8. Redemption or Repurchase Redemption of
Shares
Item 9. Legal Proceedings Not Applicable
Statement of
Additional
Part B Information Caption
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and
History Not Applicable
Item 13. Investment Objectives and
Policies Additional Information
on Portfolio
Instruments and
Investment Policies;
Investment Restrictions
Item 14. Management of the
Registrant Management of the Fund
Item 15. Control Persons and
Principal Holders of
Securities Not Applicable
Item 16. Investment Advisory and
Other Services Management of the Fund
Item 17. Brokerage Allocation Portfolio Transactions
and Brokerage
Item 18. Capital Stock and Other
Securities Not Applicable
Item 19. Purchase, Redemption and
Pricing of Securities
Being Offered Purchase of Shares;
Determination of
Net Asset Value
Item 20. Tax Status Taxation
Item 21. Underwriters Purchase of Shares
Item 22. Calculation of
Performance Data Performance Data
Item 23. Financial Statements Not Applicable
SAMCO Fixed Income Portfolio
SAMCO Fixed Income Portfolio (the "Fund") is a portfolio of
SAMCO Fund, Inc. an open-end management investment company. The
investment objective of the Fund is to provide investors with a
total return which consistently exceeds the total return of the
broad U.S. investment grade bond market. The Fund is
professionally managed and seeks to achieve its objective through
superior security selection and emphasis on current income, while
maintaining a duration neutral posture. There can be no assurance
that the Fund will achieve its investment objective. See "Risk
Factors."
Shares of the Fund may be purchased directly from AMT
Capital Services, Inc. (the "Distributor"), 600 Fifth Avenue, New
York, NY 10020 (800) 762-4848. The minimum initial purchase is
$1,000,000. See "Purchase of Shares." A shareholder may redeem
his or her shares at any time at net asset value of the shares.
See "Redemption of Shares."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
This Prospectus is a concise statement of information about
the Fund that is relevant to making an investment in the Fund.
This Prospectus should be retained for future reference. A
statement containing additional information about the Fund, dated
November 1, 1997 (the "Statement of Additional Information"), has
been filed with the Securities and Exchange Commission and can be
obtained, without charge, by calling or by writing the Distributor
at the above telephone number or address. The Statement of
Additional Information is hereby incorporated by reference into
this Prospectus.
SEIX INVESTMENT ADVISORS INC.--INVESTMENT ADVISER
AMT CAPITAL SERVICES, INC.--DISTRIBUTOR
The date of this Prospectus is November 1, 1997.
Table of Contents Page
PROSPECTUS SUMMARY
THE FUND'S EXPENSES
INVESTMENT OBJECTIVE AND POLICIES
DESCRIPTION OF INVESTMENTS
RISK FACTORS
INVESTMENT LIMITATIONS
MANAGEMENT OF THE FUND
PURCHASE OF SHARES
REDEMPTION OF SHARES
THE FUND'S PERFORMANCE
ADDITIONAL INFORMATION
SERVICE PROVIDERS
SAMCO FIXED INCOME PORTFOLIO
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
FUND, THE DISTRIBUTOR OR THE INVESTMENT ADVISER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed
information appearing elsewhere in this Prospectus and in the Statement
of Additional Information.
The Fund and Its Investment Objective
The Fund is a no-load investment portfolio of the SAMCO Fund,
Inc., an open-end management investment company (the "Company")
incorporated in the state of Maryland on August 4, 1997. The investment
objective of the Fund is to provide investors with a total return which
consistently exceeds the total return of the broad U.S. investment grade
bond market. The Fund is professionally managed and seeks to achieve
its objective through superior security selection and emphasis on
current income, while maintaining a duration neutral posture. There can
be no assurance that the Fund will achieve its investment objective. See
"Investment Objective and Policies."
The Investment Adviser
Seix Investment Advisors Inc. (the "Investment Adviser") serves as
the Fund's investment adviser. For its services as investment adviser,
the Fund pays the Investment Adviser a monthly fee at an annual rate of
0.25% of the Fund's average daily net assets. The Investment Adviser
believes the advisory fee is comparable to that of other investment
companies with similar investment objectives. See "Management of the
Fund."
Purchasing Shares
Shares of the Fund may be purchased without any sales charges at
its net asset value next determined after receipt of the order by
submitting an Account Application to the Distributor and wiring federal
funds to the Distributor's "Fund Purchase Account" at Investors Bank &
Trust Company (the "Transfer Agent"). Shares may be purchased directly
from the Distributor. The Fund is not available for sale in all states.
For information about the Fund's availability, contact an account
representative at the Distributor.
The minimum initial investment is $1,000,000. The Fund reserves
the right to waive the minimum initial investment amount. There are no
sales commissions (loads) or 12b-1 fees. For more information, refer to
"Purchase of Shares."
Redemption of Shares
Shares of the Fund may be redeemed, without charge, at the next
determined net asset value after receipt by either the Transfer Agent or
the Distributor of the redemption request. There is no redemption fee.
For more information, refer to "Redemption of Shares."
Dividends and Distributions
The Fund will distribute substantially all of its net investment
income to shareholders in the form of monthly dividends. Dividends are
reinvested on the last Business Day or paid in cash on the first Business Day
of the following month. If any net capital gains are realized from the sale
of the underlying securities, the Fund will distribute such gains with the
last dividend for the calendar year. All distributions are reinvested
automatically, unless otherwise specified in writing by the investor, in
shares of the Fund. See "Additional Information".
Risk Factors
Prospective investors should consider certain risks associated
with an investment in the Fund. See "Risk Factors."
THE FUND'S EXPENSES
The following expense table is provided to assist investors in
understanding the various costs and expenses that an investor will
incur, either directly or indirectly, as a shareholder in the Fund,
which are calculated as a percentage of average daily net assets. These
are the only fund related expenses that an investor bears.
Annual Fund Operating Expenses (as a percentage of average net assets)
Management fees 0.25%
Other expenses* 0.20%
Total Fund operating expenses* 0.45%
*After reimbursement of expenses.
See "Management of the Fund" for a description of fees and
expenses. "Other expenses" include fees for shareholder services,
custodial, administration, dividend disbursing and transfer agency fees,
legal and accounting fees, printing costs and registration fees. The
Investment Adviser and the Administrator have voluntarily agreed to
limit the total expenses of the Fund [(excluding interest, taxes, brokerage,
and extraordinary expenses)] to an annual rate of 0.45% of the Fund's
average daily net assets for an indefinite time period. As long as this
temporary expense limitation continues; it may lower the Fund's expenses
and increase its total return. In the event the Investment Adviser and
the Administrator remove such expense cap, the Fund's expenses may
increase and its total return may be reduced depending on the total
assets of the Fund. Without such cap, the total annual operating
expenses (on an annualized basis) are expected to be approximately ___.
Such figure is based on estimated amounts for the current fiscal year.
See "Management of the Fund."
Example: The following example demonstrates the projected dollar amount
of total cumulative expenses that would be incurred over various periods
with respect to a hypothetical investment in the Fund. These amounts
are based upon payments by the Fund of operating expenses set forth in
the table above, and are also based upon the following assumptions:
A shareholder would pay the following expenses on a $1,000,000
investment, assuming (1) 5% annual return and (2) redemption at the end
of each time period:
After 1 year $______
After 3 years $______
The purpose of this table is to assist the investor in
understanding the various costs and expenses that an investor in the
Fund will bear directly or indirectly. This example should not be
considered a representation of future expenses and actual expenses may
be greater or less than those shown. Moreover, while the example
assumes a 5% annual return, the Fund's performance will vary and may
result in a return greater or less than 5%.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to provide investors with
a total return which consistently exceeds the total return of the broad
U.S. investment grade bond market. The Fund is professionally managed
and seeks to achieve its objective through superior security selection
and emphasis on current income, while maintaining a duration neutral
posture. This is a fundamental investment objective and may not be
changed without the affirmative vote of the holders of a majority of the
Fund's outstanding voting securities, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"). The Fund seeks to
achieve its objective through investments in fixed income securities.
The Investment Adviser will manage the Fund based on its fixed
income approach which is founded upon four cornerstones: (1) Targeted
Duration; (2) Yield Tilt; (3) Comprehensive Sector Construction; and (4)
the use of Proprietary Analytics. Targeted Duration: The Fund will be
managed with a duration that is close to the duration of the Fund's
benchmark, the Lehman Brothers Aggregate Bond Index. Value is added
through sector, security, and yield curve decisions rather than maturity
management. Yield Tilt: Although the Fund is managed on a total
return basis, a premium is placed on yield. Income is considered the
most powerful contributor to fixed income returns. Non-Treasury sectors
generally play a dominant role in the Fund. The yield of the benchmark
is used as a performance goal in addition to its total return.
Comprehensive Sector Construction: Sector commitments are made based on
the duration contribution of each sector to the overall duration of the
Fund rather than the sector weighting. Proprietary Analytics: Because
of the growing complexity of the bond market, the firm believes that the
use of proprietary techniques is key to identifying value and to
adequately controlling risk.
The Fund will invest in the broad universe of available U.S.
dollar fixed income securities, including but not limited to: (1)
obligations issued or guaranteed by the United States Government, such
as United States Treasury securities; (2) obligations backed by the full
faith and credit of the United States, such as obligations of the
Government National Mortgage Association and the Export-Import Bank; (3)
obligations issued or guaranteed by United States Government agencies,
Government-Sponsored Enterprises (GSE's) or instrumentalities where the
Fund must look principally to the issuing or guaranteeing agency for
ultimate repayment; (4) obligations issued or guaranteed by a foreign
government, or any of its political subdivisions, authorities, agencies,
or instrumentalities or by supranational organizations; (5) obligations
of domestic or foreign corporations or other entities, including
securities issued under Rule 144A; (6) obligations of domestic or
foreign banks; (7) mortgage- and asset-backed securities (including
Commercial Mortgage Backed Securities and Collateralized Mortgage
Obligations); (8) short-term investments such as: time deposits,
certificates of deposit (including marketable variable rate certificates
of deposit), bankers' acceptances issued by a commercial bank or savings
and loan association; custodian's short-term investment fund (STIF); (9)
preferred stock; and (10) municipals (taxable and tax-exempt). The Fund
may only invest in investment grade securities that are those rated by
one or more nationally recognized statistical rating organization
(NRSRO) in one of the four highest rating categories at the time of
purchase (e.g. AAA, AA, A or BBB by Standard & Poor's Corporation
(Standard & Poor's), Duff & Phelps Credit Rating Co. ("Duff & Phelps"),
or Fitch Investors Service, Inc., (Fitch) or Aaa, Aa, A or Baa by
Moody's Investors Service, Inc. (Moody's) If the security is unrated,
it must meet, in the judgement of the Investment Adviser, the above
minimum credit quality standards.
The Fund's investment policies (other than its investment
objective) are not fundamental and may be changed by the Board of
Directors of the Fund without the approval of shareholders.
DESCRIPTION OF INVESTMENTS
The Fund may invest in the securities defined below in accordance
with their listing of allowable investments and any quality or policy
constraints.
Agencies
The Fund may invest in agencies which are securities that are not
guaranteed by the United States Government, but which are issued,
sponsored or guaranteed by a federal agency or federally sponsored
agency such as the Student Loan Marketing Association or any of several
other agencies.
Bank Obligations.
The Fund may invest in obligations of domestic and foreign banks,
including time deposits, certificates of deposit, bankers' acceptances,
bank notes, deposit notes, Eurodollar time deposits, Eurodollar
certificates of deposit, variable rate notes, loan participations,
variable amount master demand notes, and custodial receipts. Time
deposits are non-negotiable deposits maintained in a banking institution
for a specified period of time at a stated interest rate. Certificates
of deposit are negotiable short-term obligations issued by commercial
banks or savings and loan associations against funds deposited in the
issuing institution. Variable rate certificates of deposit are
certificates of deposit on which the interest rate is adjusted
periodically prior to their stated maturity based upon a specified
market rate. A bankers' acceptance is a time draft drawn on a
commercial bank by a borrower usually in connection with an
international commercial transaction (to finance the import, export,
transfer, or storage of goods). The Fund may, from time to time,
concentrate more than 25% of its assets in domestic bank obligations.
Domestic bank obligations include instruments that are issued by United
States (domestic) banks; United States branches of foreign banks, if
such branches are subject to the same regulations as United States
banks; and foreign branches of United States banks, if the Investment
Adviser determines that the investment risk associated with investing in
instruments issued by such branches is the same as that of investing in
instruments issued by the United States parent bank, in that the United
States parent bank would be unconditionally liable in the event that the
foreign branch fails to pay on its instruments. Bank obligations entail
varying amounts of interest rate and credit risk, with the lowest-rated
and longest-dated bank obligations entailing the greatest risk of loss
to the Fund.
CMOs--Collateralized Mortgage Obligations
The Fund may purchase collateralized mortgage obligations which
are derivatives that are collateralized by mortgage pass-through
securities. Cash flows from the mortgage pass-through securities are
allocated to various tranches (a "tranche" is essentially a separate
security) in a predetermined, specified order. Each tranche has a stated
maturity - the latest date by which the tranche can be completely
repaid, assuming no prepayments - and has an average life - the average
of the time to receipt of a principal payment weighted by the size of
the principal payment. The average life is typically used as a proxy for
maturity because the debt is amortized (repaid a portion at a time),
rather than being paid off entirely at maturity, as would be the case in
a straight debt instrument.
Corporates
The Fund may invest in corporates which are debt instruments
issued by private corporations. Bondholders, as creditors, have a prior
legal claim over common and preferred stockholders of the corporation as
to both income and assets for the principal and interest due to the
bondholder. The Fund will buy corporates subject to any quality
constraints. If a security held by the Fund is down-graded, the Fund may
retain the security if the Investment Adviser deems retention of the
security to be in the best interests of the Fund.
Floaters
Floaters--Floating and Variable Rate Obligations are debt
obligations with a floating or variable rate of interest, i.e. the rate
of interest varies with changes in specified market rates or indices,
such as the prime rate, or at specified intervals. Certain floating or
variable rate obligations may carry a demand feature that permits the
holder to tender them back to the issuer of the underlying instrument,
or to a third party, at par value prior to maturity.
Foreign Government and International and Supranational Agency Debt
Securities.
The Fund may purchase U.S. dollar denominated debt obligations
issued or guaranteed by foreign governments or their subdivisions,
agencies, and instrumentalities, and debt obligations issued or
guaranteed by international agencies and supranational entities.
Investment Grade Debt Securities
The Fund may invest in investment grade securities that are those
rated by one or more nationally recognized statistical rating
organization (NRSRO) in one of the four highest rating categories at the
time of purchase (e.g. AAA, AA, A or BBB by Standard & Poor's, Fitch,
Duff & Phelps, or Aaa, Aa, A or Baa by Moody's). Securities rated BBB or
Baa represent the lowest of four levels of investment grade securities
and are regarded as borderline between definitely sound obligations and
those in which the speculative element begins to predominate. Mortgage-
backed securities, including mortgage pass-throughs and collateralized
mortgage obligations (CMOs), deemed investment grade by the Investment
Adviser, will either carry a guarantee from an agency of the U.S.
Government or a private issuer of the timely payment of principal and
interest (such guarantees do not extend to the market value of such
securities or the net asset value per share of the Fund) or, in the case
of unrated securities, be sufficiently seasoned that they are considered
by the Investment Adviser to be investment grade quality. The Investment
Adviser may retain securities if their ratings fall below investment
grade if it deems retention of the security to be in the best interests
of the Fund. The Fund may hold unrated securities if the Investment
Adviser considers the risks involved in owning that security to be
equivalent to the risks involved in holding an Investment Grade
Security.
Mortgage-Backed Securities and Asset-Backed Debt Securities.
Mortgage-backed debt securities are secured or backed by mortgages
or other mortgage-related assets. Such securities may be issued by such
entities as Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation ("FHLMC"), commercial banks, savings and loan associations,
mortgage banks, or by issuers that are affiliates of or sponsored by
such entities. Other asset-backed securities are secured or backed by
assets other than mortgage-related assets, such as automobile and credit
card receivables, and are issued by such institutions as finance
companies, finance subsidiaries of industrial companies, and investment
banks. The Fund will purchase only asset-backed securities that the
Investment Adviser determines to be liquid. The Fund will not purchase
mortgage backed or asset-backed securities that do not meet the above
minimum credit standards.
An important feature of mortgage-and-asset-backed securities is
that the principal amount is generally subject to partial or total
prepayment at any time because the underlying assets (i.e., loans)
generally may be prepaid at any time. If an asset-backed security is
purchased at a premium to par, a prepayment rate that is faster than
expected will reduce yield to maturity, while a prepayment rate that is
slower than expected will have the opposite effect of increasing yield
to maturity. Conversely, if an asset-backed security is purchased at a
discount, faster than expected prepayments will increase, while slower
than expected prepayments will decrease, yield to maturity. It should also be
noted that these securities may not have any security interest in the
underlying assets, and recoveries on repossessed collateral may not, in some
cases, be available to support payments on these securities.
Municipal Debt Securities.
The Fund may, from time to time, purchase municipal debt
securities when, in the Investment Adviser's opinion, such instruments
will provide a greater return than taxable instruments of comparable
quality. It is not anticipated that such securities will ever represent
a significant portion of the Fund's assets. Fund distributions that are
derived from interest on municipal debt securities will be taxable to
shareholders in the same manner as distributions derived from taxable
debt securities.
Preferred Stock.
The Fund may invest in preferred stock which are non-voting
ownership shares in a corporation which pay a fixed or variable stream
of dividends.
Repurchase Agreements.
Repurchase agreements are transactions by which the Fund purchases
a security and simultaneously commits to resell that security to the
seller (a bank or securities dealer) at an agreed upon price on an
agreed upon date (usually within seven days of purchase). The resale
price reflects the purchase price plus an agreed upon market rate of
interest which is unrelated to the coupon rate or date of maturity of
the purchased security. Such agreements permit the Fund to keep all its
assets at work while retaining overnight flexibility in pursuit of
investments of a longer term nature. The Investment Adviser will
continually monitor the value of the underlying collateral to ensure
that its value, including accrued interest, always equals or exceeds the
repurchase price.
When-lssued and Forward Commitment Securities.
The Fund may purchase securities on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. In such
transactions, instruments are bought with payment and delivery taking
place in the future in order to secure what is considered to be an
advantageous yield or price at the time of the transaction. Delivery of
and payment for these securities may take more than a month after the
date of the purchase commitment, but will take place no more than 120
days after the trade date. No income accrues prior to delivery on
securities that have been purchased pursuant to a forward commitment or
on a when-issued basis. However, interest is generated on the short-
term investments that are segregated for the settlement of these
securities. At the time the Fund enters into a transaction on a when-
issued or forward commitment basis, a segregated account consisting of
cash or liquid securities equal to the value of the when-issued or
forward commitment securities will be established in the Fund and
maintained in the Fund and will be marked to market daily. A short term
investment in this segregated account may not have a duration that
exceeds 180 days. Forward commitments, or delayed deliveries, are
deemed to be outside the normal corporate settlement structure. They are
subject to segregation requirements; however, when a forward commitment
purchase is made to close a forward commitment sale, or vice versa, the
difference between the two may be netted for segregation purposes until
settlement date.
Zero Coupon Debt Securities.
The Fund may invest in zero coupon debt securities (bonds that pay
no interest but are originally sold at an original issue discount.
Because they do not pay interest until maturity, zero coupon securities
tend to be subject to greater fluctuation of market value in response to
changes in interest rates than interest-paying securities of similar
maturities.
RISK FACTORS
Interest Rate Risk.
Interest rate risk is the risk of fluctuations in bond prices due
to changing interest rates. As a rule, bond prices vary inversely with
market interest rates. For a given change in interest rates, longer
duration bonds fluctuate more in price than shorter-maturity bonds. To
compensate investors for these larger fluctuations, longer duration
bonds usually offer higher yields than shorter-maturity bonds, other
factors, including credit quality, being equal. As the fund's benchmark
is the Lehman Brothers Aggregate Bond Index, it is expected to be
subject to a moderate level of interest rate risk, consistent with that
of the index.
Prepayment Risk.
Prepayment risk is the possibility that, during periods of
declining interest rates, higher-yielding securities with optional
prepayment rights will be repaid before scheduled maturity, and the Fund
will be forced to reinvest the unanticipated payments at lower interest
rates. Debt obligations that can be prepaid (including most mortgage-
and asset-backed securities) will not enjoy as large a gain in market
value as other bonds when interest rates fall. In part to compensate
for prepayment risk, mortgage-and asset-backed securities generally
offer higher yields than bonds of comparable credit quality and
maturity.
Credit Risk.
Credit risk is the risk that an issuer of securities held by the
Fund will be unable to make payments of interest or principal. The
credit risk assumed by the Fund is a function of the credit quality of
its underlying securities. The average credit quality of the Fund is
expected to be high, and thus credit risk, in the aggregate, should be
low. The Fund will also be exposed to event risk, the risk that
corporate debt securities held by the Fund may suffer a substantial
decline in credit quality and market value due to a corporate
restructuring. Corporate restructurings, such as mergers, leveraged
buyouts, takeovers, or similar events, are often financed by a
significant increase in corporate debt. As a result of the added debt
burden, the credit quality and market value of a firm's existing debt
securities may decline significantly. While event risk may be high for
certain securities held by the Fund, event risk for the Fund in the
aggregate should be low because of the extensive diversification
expected in the Fund. For further discussion of credit risk, see
"Investment Grade Debt Securities". The ratings of fixed income securities by
S&P, Moody's, Duff & Phelps, and Fitch are a generally accepted barometer of
credit risk. They are, however, subject to certain limitations from an
investor's standpoint. The rating of an issuer is heavily weighted by past
developments and does not necessarily reflect probable future conditions.
There is frequently a lag between the time a rating is assigned and the time it
is updated. In addition, there may be varying degrees of difference in credit
risk of securities within each rating category.
Non-Diversified Status
The Fund is classified as a "non-diversified" investment company
under the 1940 Act, which means the Fund is not limited by the 1940 Act
in the proportion of its assets that may be invested in the securities
of a single issuer. However, the Fund intends to conduct its operations
so as to qualify as a regulated investment company for purposes of the
Internal Revenue Code of 1986, as amended (the "Code"), which generally
will relieve the Fund of any liability for federal income tax to the
extent its earnings are distributed to shareholders. See "Additional
Information - Taxes." To so qualify, among other requirements, the Fund
will limit its investments so that, at the close of each quarter of the
taxable year, (i) not more than 25% of the market value of the Fund's
total assets will be invested in securities of a single issuer, and (ii)
with respect to 50% of the market value of its total assets, not more
than 5% of the market value of its total assets will be invested in the
securities of a single issuer and the Fund will not own more than 10% of
the outstanding voting securities of a single issuer.
Under these investment requirements, the Fund must invest in at
least twelve securities positions. Ten of the positions may not exceed
5% of total assets each at the time of purchase; the remaining two
positions could each comprise 25% of total assets at the time of
purchase. Generally, it is anticipated that the portfolio will consist
of more than twelve positions. To the extent that the Fund is less
diversified, it may be more susceptible to adverse economic, political,
or regulatory developments affecting a single issuer than would be the
case if it were more broadly diversified.
INVESTMENT LIMITATIONS
The Fund may not:
(1) borrow money (including entering into reverse repurchase
agreements).;
(2) invest more than 25% of the total assets of the Fund in the
securities of issuers having their principal activities in any
particular industry, except for obligations issued or guaranteed by the
U.S. government, its agencies, GSE's, instrumentalities or by any
state, territory or any possession of the United States or any of their
authorities, agencies, instrumentalities or political subdivisions, or
with respect to repurchase agreements collateralized by any of such
obligations. For purposes of this restriction, supranational issuers
will be considered to comprise an industry as will each foreign
government that issues securities purchased by the Fund. In the case of
Asset Backed Securities, the industry will be defined by the underlying
assets in each trust. (For example, credit card receivables and auto
loans would each be considered separate industries); and
(3) invest the cash securing a forward commitment in mortgage
backed securities in investments that have a duration exceeding 180
days.
The limitations contained above may be changed only with the
affirmative vote of the holders of a majority of the Fund's outstanding
voting securities, as defined in the 1940 Act. The percentage
limitations contained above as well as elsewhere in this Prospectus and
in the Statement of Additional Information apply only at the time of
purchase and the Fund will not be required to dispose of securities upon
subsequent fluctuations in market value.
MANAGEMENT OF THE FUND
Board of Directors
The Board of Directors of the Company consists of five
individuals, two of whom are not "interested persons" of the Fund as
defined in the 1940 Act. The Directors of the Fund are responsible for
the overall supervision of the operations of the Fund and perform the
various duties imposed on the directors of investment companies by the
1940 Act. The Directors and officers of the Fund and their principal
occupations are set forth below.
Investment Adviser
Seix Investment Advisors Inc., established in 1992, is a
registered investment adviser that specializes in professional fixed
income management for corporations, public funds, endowments,
foundations and hospitals. The Investment Adviser currently has
approximately $1.5 billion in assets under management. The Investment
Adviser is located at 300 Tice Boulevard, Woodcliff Lake, NJ 07675.
Seix Investment Advisors Inc. acts as the investment adviser to
the Fund and provides the Fund with management and investment advisory
services. The advisory agreement with the Investment Adviser (the
"Advisory Agreement") provides that, subject to the direction of the
Board of Directors of the Fund, the Investment Adviser is responsible
for the actual management of the Fund. The responsibility for making
decisions to buy, sell or hold a particular security rests with the
Investment Adviser, subject to review by the Board of Directors. The
Investment Adviser also is obligated to provide all the office space,
facilities, equipment and personnel necessary to perform its duties
under the Advisory Agreement.
The Investment Adviser receives monthly compensation at the
annual rate of 0.25% of the average daily net assets of the Fund. The
Investment Adviser may waive all or part of its fee from time to time in
order to increase the Fund's net income available for distribution to
shareholders. The Fund will not be required to reimburse the Investment
Adviser for any advisory fees waived. In addition, the Investment
Adviser and the Administrator have voluntarily agreed to limit the total
expenses of the Fund [(excluding interest, taxes, brokerage, and extraordinary
expenses)] to an annual rate of 0.45% of the Fund's average daily net
assets for an indefinite time period. As long as this temporary expense
limitation continues, it may lower the Fund's expenses and increase its
total return. In the event the Investment Adviser and the Administrator
remove the expense cap, the Fund's expenses may increase and its total
return may be reduced depending on the total assets of the Fund.
The Fund is responsible for paying certain expenses incurred in
its operations including, among other things, the investment advisory
and administrative fees, legal and audit fees, unaffiliated Directors'
fees and expenses, custodian and transfer agency fees, certain insurance
premiums, accounting and pricing costs, federal and state registration
fees, the costs of issuing and redeeming shares, costs of shareholder
meetings, any extraordinary expenses and certain of the costs of
printing proxies, shareholders reports, prospectuses and statements of
additional information. The Fund also pays for brokerage fees and
commissions in connection with the purchase and sale of portfolio
securities.
Portfolio Managers
Christina Seix, CFA, Chairman, CEO & Chief Investment Officer
Formerly, Chairman & CEO, Head of Investment Policy, MacKay-Shields
Total Investment Experience: 24 years
BA, Fordham University, Mathematics
MA, SUNY, Mathematics
John Talty, CFA, President & Senior Portfolio Manager
Formerly, Chief Fixed Income Strategist, J.P. Morgan Securities
Total Investment Experience: 16 years
B.A., Connecticut College, Economics, Phi Beta Kappa, Magna Cum Laude
Barbara Hoffmann, Managing Director and Senior Portfolio Manager
Formerly, Senior Portfolio Manager, MetLife Investment Management Co.
Total Investment Experience: 18 years
BS, University of Maine, Education/Mathematics
Michael McEachern, CFA, Director and Senior Portfolio Manager
Formerly, Vice President, Fixed Income, American General Corp.
Total Investment Experience: 13 years
BA, University of California, Operations Research
MBA, Rice University, Accounting/Public Administration
Joseph Calabrese, Director and Senior Portfolio Manager
Formerly, Director, Fixed Income, MetLife Insurance Company
Total Investment Experience: 10 years
BS, New Jersey Institute of Technology, Industrial Engineering
MBA, New York University, Finance
Administrator
AMT Capital Services, Inc., (in its capacity as administrator,
the "Administrator") acts as the Fund's administrator pursuant to an
administration agreement (the "Administration Agreement"). Pursuant to
the Administration Agreement, the Administrator is responsible for
providing administrative services to the Fund and assists in managing
and supervising all aspects of the general day-to-day business
activities and operations of the Fund other than investment advisory
activities, including certain accounting, auditing, clerical,
bookkeeping, custodial, transfer agency, dividend disbursing, compliance
and related services, Blue Sky compliance, corporate secretarial
services and assistance in the preparation and filing of tax returns and
reports to shareholders and the SEC. The Fund pays the Administrator a
monthly fee at the annual rate of 0.15% of the Fund's average daily net
assets and the Administrator is entitled to reimbursement from the Fund
for its out-of-pocket expenses incurred under the Administration
Agreement.
Transfer Agent
The Transfer Agent, with offices located at 200 Clarendon Street,
Boston, Massachusetts 02116, acts as the Fund's transfer agent pursuant
to a transfer agency, dividend disbursing agency and shareholder
servicing agency agreement (the "Transfer Agent Agreement"). Pursuant
to the Transfer Agent Agreement, the Transfer Agent is responsible for
the issuance, transfer and redemption of shares and the opening and
maintenance of shareholder accounts. The Transfer Agent is entitled to
reimbursement from the Fund for out-of-pocket expenses incurred by the
Transfer Agent under the Transfer Agent Agreement.
PURCHASE OF SHARES
There is no sales charge imposed by the Fund. The minimum initial
investment in any Portfolio of the Fund is $1,000,000; additional
purchases may be of any amount.
The offering of shares of the Fund is continuous and purchases of
shares of the Fund may be made Monday through Friday, except for the
holidays declared by the Federal Reserve Banks of New York or Boston (a
"Business Day"). At the present time, these holidays are: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial Day, Fourth of
July, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas.
The Fund's shares are offered at a public offering price equal to the net
asset value next determined after a purchase order becomes effective.
In order to purchase shares on a particular Business Day, subject
to the offering dates described above, a purchaser must submit a
completed Account Application Form (and other required documents) and
call the Distributor at (800) 762-4848 [or within the City of New York,
(212) 332-5211] prior to 4:00 p.m. Eastern time to inform the Fund of
the incoming wire transfer. If Federal funds are received by the Fund
that same day, the order will be effective on that day. If the Fund
receives notification after 4:00 p.m. Eastern time, or if Federal funds
are not received by the Transfer Agent, such purchase order shall be
executed as of the date that Federal funds are received. Shares
purchased will begin accruing dividends on the day Federal funds are
received.
Purchases of shares must be made by wire transfer of Federal
funds. Please note that the shareholder's bank may impose a charge to
execute the wire transfer. The wiring instructions for purchasing
shares of the Fund are:
Investors Bank & Trust Company
Boston, MA
ABA # xx-xxxx-xxx
Acct: 999XXXXXXX
Benf: SAMCO Fixed Income Fund
F/F/C (Shareholder's Account at Fund)
REDEMPTION OF SHARES
The Fund will redeem all full and fractional shares of the Fund upon
request of shareholders. The redemption price is the net asset value per
share next determined after receipt by the Transfer Agent of proper notice
of redemption as described below. If such notice is received by the
Transfer Agent by 12:00 p.m. Eastern time on any Business Day, the
redemption will be effective on the date of receipt. If such notice of
redemption is received by the Transfer Agent after 12:00 p.m. Eastern time,
the redemption of the shareholder shall be effective on the following
Business Day. Payment will ordinarily be made by wire on the next Business
Day but within no more than seven Business Days from the date of receipt.
If the notice is received on a day that is not a Business Day or after the
above-mentioned cut-off times, the redemption notice will be deemed
received as of the next Business Day.
There is no charge imposed by the Fund to redeem shares of the Fund;
however, a shareholder's bank may impose its own wire transfer fee for
receipt of the wire. Redemptions may be executed in any amount requested
by the shareholder up to the amount such shareholder has invested in the
Fund.
To redeem shares, a shareholder or any authorized agent (so
designated on the Account Application Form) must provide the Transfer Agent
with the dollar or share amount to be redeemed, the account to which the
redemption proceeds should be wired (which account shall have been
previously designated by the shareholder on its Account Application Form),
the name of the shareholder and the shareholder's account number. Shares
redeemed receive dividends up to and including the day preceding the day
the redemption proceeds are wired.
A shareholder may change its authorized agent or the account
designated to receive redemption proceeds at any time by writing to the
Transfer Agent with an appropriate signature guarantee. Further
documentation may be required when deemed appropriate by the Transfer
Agent.
A shareholder may request redemption by calling the Transfer Agent
at (800) 247-0473. Telephone redemption is made available to shareholders
of the Fund on the Account Application Form. The Fund and the Transfer
Agent may employ reasonable procedures designed to confirm that
instructions communicated by telephone are genuine. If either the Fund or
the Transfer Agent does not employ such procedures, it may be liable for
losses due to unauthorized or fraudulent instructions. The Fund or the
Transfer Agent may require personal identification codes and will only wire
funds through pre-existing bank account instructions. No bank instruction
changes will be accepted via telephone.
THE FUND'S PERFORMANCE
Total Return
From time to time, the Fund may advertise certain information
about its performance. The Fund may present its "average annual total
return" over various periods of time. Such total return figures show
the average annual percentage change in value of an investment in the
Fund from the beginning date of the measuring period to the end of the
measuring period. These figures reflect changes in the price of the
Fund's shares and assume that any income dividends and/or capital gains
distributions made by the Fund during the period were reinvested in
shares of the Fund. Figures may be given for the most current one-,
five- and ten-year periods (or the life of the Fund, if it has not been
in existence for any such period) and may be given for other periods as
well. When considering "average" total return figures for periods
longer than one year, it is important to note that the Fund's annual
total return for any one year in the period might have been greater or
less than the average for the entire period. In addition, the Fund may
make available information as to its respective "yield" and "effective
yield" over a thirty-day period, as calculated in accordance with the
Securities and Exchange Commission's prescribed formula. The "effective
yield" assumes that the income earned by an investment in the Fund is
reinvested, and will therefore be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
Furthermore, in reports or other communications to shareholders
or in advertising material, the Fund may compare its performance with
that of other mutual funds as listed in the rankings prepared by Lipper
Analytical Services, Inc. or similar independent services which monitor
the performance of mutual funds, other industry or financial
publications or financial indices such as the Lehman Brothers Aggregate
Bond Index or a composite benchmark index. It is important to note that
the total return figures are based on historical returns and are not
intended to indicate future performance.
ADDITIONAL INFORMATION
Dividends and Distributions
Dividends are automatically reinvested in additional shares of the
Fund on the last day of each month at the net asset value per share on
the last Business Day of that month. Shareholders must indicate their
desire to receive dividends in cash (payable on the first Business Day
of the following month) on the Account Application Form. Otherwise all
dividends will be reinvested in additional shares as described above.
In the event that the Fund realizes net long-term capital gains (i.e.,
with respect to assets held more than one year), it will distribute them
at least annually by automatically reinvesting (unless a shareholder has
elected to receive cash) such long-term capital gains in additional
shares of the Fund at the net asset value on the date the distribution
is declared.
The net investment income (including accrued but unpaid interest
and amortization of original issue and market discount or premium) of
the Fund will be declared as a dividend payable daily to shareholders of
record as of the last Business Day of each month. The Fund will also
declare, to the extent necessary, a net short-term capital gain dividend
once per year. Dividends are paid on the first Business Day of the
month.
Determination of Net Asset Value
The net asset value per share of the Fund is determined each
Business Day the Fund is open. The net asset value per share is
computed by dividing the sum of the value of the securities held by the
Fund plus any cash or other assets (including interest and dividends
accrued but not yet received) minus all liabilities (including accrued
expenses) by the total number of shares outstanding at such time,
rounded to the nearest cent. Expenses, including the investment
advisory fees payable to the Investment Adviser, are accrued daily.
The following methods are used to calculate the value of the Fund's assets: (1)
all portfolio securities for which over-the-counter market quotations are
readily available (including asset-backed securities) are valued at the latest
bid price; (2) deposits and repurchase agreements are valued at their cost plus
accrued interest unless the Investment Adviser determines in good faith, under
procedures established by and under the general supervision of the Fund's Board
of Directors, that such value does not approximate the fair value of such
assets; (3) positions (e.g., futures and options) listed or traded on an
exchange are valued at their last sale price on that exchange (or if there were
no sales that day for a particular position, that position is valued at the
closing bid price); and (4) the value of other assets will be determined in good
faith by the Investment Adviser at Fair value under procedures established by
and under the general supervision of the Fund's Board of Directors.
Taxes
The following discussion is only a brief summary of some of the
important tax considerations affecting the Fund and its shareholders.
No attempt is made to present a detailed explanation of all federal,
state, local and foreign income tax considerations, and this discussion
is not intended as a substitute for careful tax planning. Accordingly,
potential investors are urged to consult their own tax advisers with
specific reference to their own tax situation.
The Fund intends to qualify and elect to be treated as
a "regulated investment company" for federal income tax purposes under
Subchapter M of the Code. If so qualified, the Fund will not be subject
to federal income taxes on its net investment income (i.e., its
investment company taxable income) as that term is defined in the Code,
determined without regard to the deduction for dividends paid) and net
capital gain (i.e., the excess of the Fund's net long-term capital gain
over its net short-term capital loss), if any, that it distributes to
its shareholders in each taxable year. To qualify as a regulated
investment company, the Fund must, among other things, distribute to its
shareholders at least 90% of its net investment company taxable income
for such taxable year. However, the Fund would be subject to corporate
federal income tax at a rate of 35% on any undistributed income or net
capital gain. The Fund will be subject to a 4% nondeductible excise tax
on its taxable income to the extent it does not meet certain
distribution requirements. If in any year the Fund should fail to
qualify as a regulated investment company, the Fund would be subject to
federal income tax in the same manner as an ordinary corporation and
distributions to shareholders would be taxable to such holders as
ordinary income to the extent of the earnings and profits of the Fund.
Such distributions would qualify for the dividends-received deduction
available to corporate shareholders. Distributions in excess of
earnings and profits would be treated as a tax-free return of capital,
to the extent of a holder's basis in its shares, and any excess, as a
long- or short-term capital gain.
Distributions paid by the Fund from net investment income are
designated by the Fund as "ordinary income dividends" and, whether paid
in cash or reinvested in additional shares, will be taxable to Fund
shareholders that are otherwise subject to tax as ordinary income. A
portion of the Fund's ordinary income dividends may be eligible for the
dividends-received deduction for corporations if certain requirements
are met. Distributions made from the Fund's net capital gain which are
designated by the Fund as "capital gains dividends" are taxable to
shareholders as long-term capital gains, regardless of the length of
time the shareholder has owned Fund shares. Shareholders receiving
distributions from the Fund in the form of additional shares will be
treated for federal income tax purposes as receiving a distribution in
an amount equal to the net asset value of the additional shares on the
date of such a distribution.
Gain or loss, if any, recognized on the sale or other disposition
of shares of the Fund will be taxed as capital gain or loss if the
shares are capital assets in the shareholder's hands. Generally, a
shareholder's gain or loss will be a long-term gain or loss if the
shares have been held for more than one year. If a shareholder sells or
otherwise disposes of a share of the Fund before holding it for more
than six months, any loss on the sale or other disposition of such share
shall be treated as a long-term capital loss to the extent of any
capital gain dividends received by the shareholder with respect to such
share. A loss realized on a sale or exchange of shares may be disallowed
if other shares are acquired within a 61-day period beginning 30 days
before and ending 30 days after the date that the shares are disposed
of.
Dividends and distributions by the Fund are generally taxable to
the shareholders at the time the dividend or distribution is made. Any
dividend declared in December of any year, however, that is payable to
shareholders of record on a specified date in such months will be deemed
to have been received by the shareholders and paid by the Fund on
December 31 of such year in the event such dividends are actually paid
during January of the following year.
The Fund may be required to withhold federal income tax at a rate
of 31% ("backup withholding") from dividends and redemption proceeds
paid to non-corporate shareholders. This tax may be withheld from
dividends if (i) the shareholder fails to furnish the Fund with the
shareholder's correct taxpayer identification number, (ii) the Internal
Revenue Service ("IRS") notifies the Fund that the shareholder has
failed to report properly certain interest and dividend income to the
IRS and to respond to notices to that effect, or (iii) when required to
do so, the shareholder fails to certify that he or she is not subject to
backup withholding.
Organization of the Fund
The Fund is a portfolio of SAMCO Fund, Inc., an open-end
management investment company, which was incorporated under Maryland law
on August 4, 1997. The Company has an authorized capital of
2,500,000,000 shares of Common Stock, par value $0.001 per share. The
Fund currently is the only organized series of the Company. The Board
of Directors may, in the future, authorize the issuance of additional
classes of capital stock representing shares of additional investment
portfolios. All shares of each fund will have equal voting rights and
each shareholder is entitled to one vote for each full share held and
fractional votes for fractional shares held and will vote on the
election of Directors and any other matter submitted to a shareholder
vote. The Company is not required and does not intend to hold meetings
of shareholders. The Fund has undertaken to call a meeting of
shareholders upon a written request of 10% of the Fund's outstanding
shares, for the purpose of voting on removal of one or more directors
and the Fund will assist shareholder communications with regard to such
a meeting, as provided under Section 16(c) of the 1940 Act. Shares of
the Fund will, when issued, be fully paid and non-assessable and have no
preemptive or conversion rights. Each share is entitled to participate
equally in dividends and distributions declared by the Fund and in the
net assets of the Fund on liquidation or dissolution after satisfaction
of outstanding liabilities.
SERVICE PROVIDERS
Custodian and Accounting Agent
Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, is Custodian and Accounting Agent for the Fund.
Transfer and Dividend Disbursing Agent
Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, is Transfer Agent for the shares of the Fund, and
Dividend Disbursing Agent for the Fund.
Legal Counsel
Dechert Price & Rhoads, 30 Rockefeller Plaza, New York, New York
10112, is legal counsel for the Fund.
Independent Auditors
To be decided.
Shareholder Inquiries
Shareholder inquiries may be addressed to the Fund or the
Distributor at the addresses or telephone numbers set forth on the cover
page of this Prospectus.
APPENDIX A
Description of Bond Ratings*
Duff & Phelps Credit Rating Co.
AAA: Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free U.S. Treasury debt.
AA+, AA, AA-: High credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because
of economic conditions.
A+, A, A-: Protection factors are average but adequate. However,
risk factors are more variable and greater in periods of economic
stress.
BBB+, BBB, BBB-: Below average protection factors but still
considered sufficient for prudent investment. Considerable variability
in risk during economic cycles.
Plus (+) Minus (-): Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating
category. Plus and minus signs are not used in the AAA category.
Fitch Investors Service, Inc.
AAA: Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated
AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term
debt of these issuers is generally rated F-1+.
A: Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes
in economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic
conditions and circumstances, however, are more likely to have adverse
impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
Moody's Investors Service, Inc.
Aaa: Bonds which are rated Aaa are judged to be of the best
quality and carry the smallest degree of investment risk. Interest
payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what generally
are known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact have speculative
characteristics as well.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
Standard & Poor's Corporation
AAA: Debt rated AAA has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely
strong.
AA: Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the higher rated issues only in small
degree.
A: Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than debt in
higher rated categories.
BBB: Debt rated BBB is regarded as having an adequate capacity
to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
APPENDIX B
Description of Commercial Paper Ratings
Moody's Investors Service, Inc.
Prime-1 Issuers (or related supporting institutions) rated
"P-1" have a superior ability for repayment of senior short-term
debt obligations. "Prime-1" repayment ability will often be
evidenced by many of the following characteristics: leading
market positions in well-established industries, high rates of
return on funds employed, conservative capitalization structures
with moderate reliance on debt and ample asset protection, broad
margins in earnings coverage of fixed financial charges and high
internal cash generation, and well-established access to a range
of financial markets and assured sources of alternate liquidity.
Prime-2 Issuers (or related supporting institutions) rated
"P-2" have a strong ability for repayment of senior short-term
debt obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample
alternative liquidity is maintained.
Standard & Poor's Corporation
A-1 This highest category indicates that the degree of
safety regarding timely payment is strong. Those issues
determined to possess extremely strong safety characteristics are
denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1."
* As described by the rating companies themselves.
STATEMENT OF ADDITIONAL INFORMATION
SAMCO FIXED INCOME PORTFOLIO
600 Fifth Avenue, 26th Floor
New York, New York 10020
(212) 332-5211
SAMCO Fixed Income Portfolio (the "Fund") is a portfolio of SAMCO
Fund, Inc. an open-end management investment company. Shares of the Fund
may be purchased through AMT Capital Services, Inc. (the "Distributor").
This Statement of Additional Information is not a prospectus and
should be read in conjunction with the Prospectus of the Fund, dated
November 1, 1997 (the "Prospectus"), which has been filed with the
Securities and Exchange Commission (the "Commission") and can be
obtained, without charge, by calling or writing the Distributor at the
telephone number or address stated below. This Statement of Additional
Information incorporates by reference the Prospectus.
Distributed by: AMT Capital Services, Inc.
600 Fifth Avenue, 26th Floor
New York, New York 10020
(212) 332-5211
(800) 762-4848 (outside New York City)
The date of this Statement of Additional Information is
November 1, 1997
TABLE OF CONTENTS Page
Organization of the Fund
Management of the Fund
Board of Directors and Officers
Investment Adviser
Administrator
Distribution of Fund Shares
Supplemental Descriptions of Investments
Supplemental Investment Techniques
Supplemental Discussion of Risks Associated With the
Fund's Investment Policies and Investment Techniques
Options
Futures Contracts and Options on Futures Contracts
Investment Restrictions
Portfolio Transactions
Tax Considerations
Shareholder Information
Calculation of Performance Data
Financial Statements
Appendix
Quality Rating Descriptions
ORGANIZATION OF THE FUND
The authorized capital stock of the Fund consists of 2,500,000,000
shares with $.001 par value. Every share issued by the Fund has equal
voting rights; shareholders receive one vote for each share held. All
shares issued and outstanding are fully paid and non-assessable,
transferable, and redeemable at net asset value at the option of the
shareholder. Shares have no preemptive or conversion rights.
The shares of the Fund have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the
election of Directors can elect 100% of the Directors if they choose to
do so, and, in such event, the holders of the remaining less than 50% of
the shares voting for the election of Directors will not be able to
elect any person or persons to the Board of Directors.
MANAGEMENT OF THE FUND
BOARD OF DIRECTORS AND OFFICERS
The Fund is managed by its Board of Directors. The Directors and
officers of the Fund and their principal occupations during the past
five years are set forth below. An asterisk (*) has been placed next to
the name of each director who is an "interested person" of the Fund, as
such term is defined in the Investment Company Act of 1940, as amended
(the "1940 Act"), by virtue of his affiliation with the Fund or the
Fund's investment adviser, Seix Investment Advisors Inc. (the
"Investment Adviser").
Name, Address and Age Office Principal Occupation During Past Five Years
DIRECTORS
No employee of the Investment Adviser nor the Distributor receives
any compensation from the Fund for acting as an officer or director of
the Fund. The Fund pays each director who is not a director, officer or
employee of the Investment Adviser or the Distributor or any of their
affiliates, a fee of $X,XXX for each meeting attended, and each of the
Directors receive an annual retainer of $X,XXX which is paid in
quarterly installments.
Estimated Director's Compensation Table
Fiscal Year Ended December 31, 1997
Director Aggregate Pension or Estimated Total
Compensation From Retirement Annual Compensation
Registrant Benefits benefits Upon from Registrant
Accrued As Retirement and Fund
Part of Fund Complex Paid
Expenses to Directors
DIRECTOR #1 $0 $0 $0 $0
DIRECTOR #2 $0 $0 $0 $0
DIRECTOR #3 $0 $0 $0 $0
DIRECTOR #4 $0 $0 $0 $0
By virtue of the responsibilities assumed by the Investment Adviser and
the Distributor and their affiliates under their respective agreements
with the Fund, the Fund itself requires no employees in addition to its
officers.
INVESTMENT ADVISER AND ADVISORY AGREEMENT
Seix Investment Advisors Inc., established in 1992, is a
registered investment adviser that specializes in professional fixed
income management for corporations, public funds, endowments,
foundations and hospitals. [ ] may be deemed
"controlling persons" of the Investment Adviser [on the basis of their
ownership of the Investment Adviser's stock].
Pursuant to the terms of the advisory agreement between the Fund
and the Investment Adviser (the "Advisory Agreement"), the Investment
Adviser, subject to the control and supervision of the Fund's Board of
Directors and in conformance with the stated investment objectives and
policies of the Fund, shall manage the investment and reinvestment of
the assets of the Fund. In this regard, it is the responsibility of the
Investment Adviser to make investment decisions for the Fund and to
place the Fund's purchase and sales orders for investment securities.
The Advisory Agreement shall remain in effect for two years
following their date of execution and thereafter will automatically
continue for successive annual periods, so long as such continuance is
specifically approved at least annually by (a) the Board of Directors or
(b) the vote of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding shares voting as a single class; provided, that in either
event the continuance is also approved by at least a majority of the
Board of Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund or the Investment Adviser by vote cast in person
at a meeting called for the purpose of voting on such approval.
The Advisory Agreement is terminable without penalty on not less
than 60 days' notice by the Board of Directors or by a vote of the
holders of a majority of the Fund's outstanding shares voting as a
single class, or upon not less than 60 days' notice by the Investment
Adviser. The Advisory Agreement will terminate automatically in the
event of its "assignment" (as defined in the 1940 Act).
The Investment Adviser pays all of its expenses arising from the
performance of its obligations under the Advisory Agreement, including
all executive salaries and expenses of the directors and officers of the
Fund who are employees of the Investment Adviser or its affiliates, and
office rent of the Fund. Subject to the expense reimbursement provisions
described in the Prospectus under "Fund Expenses", other expenses
incurred in the operation of the Fund are borne by the Fund, including,
without limitation, investment advisory fees, brokerage commissions,
interest, fees and expenses of independent attorneys, auditors,
custodians, accounting agents, transfer agents, taxes, cost of stock
certificates and any other expenses (including clerical expenses) of
issue, sale, repurchase or redemption of shares, expenses of registering
and qualifying shares of the Fund under federal and state laws and
regulations, expenses of printing and distributing reports, notices and
proxy materials to existing shareholders, expenses of printing and
filing reports and other documents filed with governmental agencies,
expenses of annual and special shareholders' meetings, fees and expenses
of Directors of the Fund who are not employees of the Investment Adviser
or its affiliates, membership dues in the Investment Company Institute,
insurance premiums and extraordinary expenses such as litigation
expenses.
As compensation for its services, the Investment Adviser receives
monthly compensation at the annual rate of 0.25% of the average daily
net assets of the Fund. The Investment Adviser may waive all or part of
its fee from time to time in order to increase the Fund's net income
available for distribution to shareholders. The Fund will not be
required to reimburse the Investment Adviser for any advisory fees
waived. In addition, the Investment Adviser and the Administrator have
voluntarily agreed to limit the total expenses of the Fund [(excluding
taxes, interest, brokerage, and extraordinary expenses)] to an annual
rate of 0.45% of the Fund's average daily net assets for an indefinite
time period. As long as this temporary expense limitation continues, it
may lower the Fund's expenses and increase its total return. In the
event the Investment Adviser and/or the Administrator remove the expense
cap, the Fund's expenses may increase and its total return may be
reduced depending on the total assets of the Fund.
The Advisory Agreement was approved on [ ] by the
Fund's Directors, including a majority of the Directors who are not
interested persons (as defined in the 1940 Act) of the Fund or the
Investment Adviser.
ADMINISTRATOR
The administration agreement (the "Administration Agreement")
between the Fund and AMT Capital Services, Inc. in such capacity, the
"Administrator" will remain in effect for a period of five successive
annual periods. The Administrator provides for, or assists in managing
and supervising all aspects of, the general day-to-day business
activities and operations of the Fund other than investment advisory
activities, including custodial, transfer agency, dividend disbursing,
accounting, auditing, compliance and related services. The Fund pays the
Administrator a monthly fee at the annual rate of 0.15% of the Fund's
average daily net assets and the Administrator is entitled to
reimbursement from the Fund for its out-of-pocket expenses incurred
under the Administration Agreement.
DISTRIBUTION OF FUND SHARES
Shares of the Fund are distributed by the Distributor pursuant to
the distribution agreement (the "Distribution Agreement") between the
Fund and the Distributor, which is subject to the approval of the Fund's
Board of Directors. No fees are payable by the Fund pursuant to the
Distribution Agreement, and the Distributor bears the expense of its
distribution activities. The Fund and the Distributor have agreed to
indemnify one another against certain liabilities.
SUPPLEMENTAL DESCRIPTIONS OF INVESTMENTS
The investment objective of the Fund is to provide investors with
a total return which consistently exceeds the total return of the broad
U.S. investment grade bond market. The different types of securities in
which the Fund may invest, subject to its investment objective, policies
and restrictions, are described in the Prospectus under "Descriptions of
Investments". Additional information concerning the characteristics of
certain of the Fund's investments are set forth below.
Bank Obligations. The Fund limits its investments in U.S. bank
obligations to obligations of U.S. banks that in the Investment
Adviser's opinion meet sufficient creditworthiness criteria.
The Fund limits its investments in foreign bank obligations to
obligations of foreign banks (including U.S. branches of foreign banks)
that, in the opinion of the Investment Adviser, are of an investment
quality comparable to obligations of U.S. banks in which the Fund may
invest.
Eurodollar and Yankee Obligations. Eurodollar bank obligations are
dollar-denominated certificates of deposit and time deposits issued
outside the U.S. capital markets by foreign branches of U.S. banks and
by foreign banks. Yankee bank obligations are dollar- denominated
obligations issued in the U.S. capital markets by foreign banks.
Mortgage-Backed Securities. Mortgage-backed securities are
securities which represent ownership interests in, or are debt
obligations secured entirely or primarily by, "pools" of residential or
commercial mortgage loans or other mortgage-backed securities (the
"Underlying Assets"). In the case of mortgage-backed securities
representing ownership interests in the Underlying Assets, the principal
and interest payments on the underlying mortgage loans are distributed
monthly to the holders of the mortgage-backed securities. In the case
of mortgage-backed securities representing debt obligations secured by
the Underlying Assets, the principal and interest payments on the
underlying mortgage loans, and any reinvestment income thereon, provide
the funds to pay debt service on such mortgage-backed securities.
Certain mortgage-backed securities represent an undivided
fractional interest in the entirety of the Underlying Assets (or in a
substantial portion of the Underlying Assets, with additional interests
junior to that of the mortgage-backed security), and thus have payment
terms that closely resemble the payment terms of the Underlying Assets.
In addition, many mortgage-backed securities are issued in
multiple classes. Each class of such multi-class mortgage-backed
securities ("MBS"), often referred to as a "traunche", is issued at a
specific fixed or floating coupon rate and has a stated maturity or
final distribution date. Principal prepayment on the Underlying Assets
may cause the MBSs to be retired substantially earlier than their stated
maturities or final distribution dates. Interest is paid or accrues on
all or most classes of the MBSs on a periodic basis, typically monthly
or quarterly. The principal of and interest on the Underlying Assets
may be allocated among the several classes of a series of a MBS in many
different ways. In a relatively common structure, payments of principal
(including any principal prepayments) on the Underlying Assets are
applied to the classes of a series of a MBS in the order of their
respective stated maturities so that no payment of principal will be
made on any class of MBSs until all other classes having an earlier
stated maturity have been paid in full.
Municipal Instruments. Municipal notes may include such
instruments as tax anticipation notes, revenue anticipation notes, and
bond anticipation notes. Municipal notes are issued by state and local
governments and public authorities as interim financing in anticipation
of tax collections, revenue receipts or bond sales. Municipal bonds,
which may be issued to raise money for various public purposes, include
general obligation bonds and revenue bonds. General obligation bonds
are backed by the taxing power of the issuing municipality and are
considered the safest type of bonds. Revenue bonds are backed by the
revenues of a project or facility such as the tolls from a toll bridge.
Industrial development revenue bonds are a specific type of revenue
bond backed by the credit and security of a private user. Revenue bonds
are generally considered to have more potential risk than general
obligation bonds.
Municipal obligations can have floating, variable or fixed rates.
The value of floating and variable rate obligations generally is more
stable than that of fixed rate obligations in response to changes in
interest rate levels. Variable and floating rate obligations usually
carry rights that permit the Fund to sell them at par value plus accrued
interest upon short notice. The issuers or financial intermediaries
providing rights to sell may support their ability to purchase the
obligations by obtaining credit with liquidity supports. These may
include lines of credit, which are conditional commitments to lend, and
letters of credit, which will ordinarily be irrevocable, both issued by
domestic banks or foreign banks which have a branch, agency or
subsidiary in the United States. When considering whether an obligation
meets the Fund's quality standards, the Investment Adviser will look at
the creditworthiness of the party providing the right to sell as well as
to the quality of the obligation itself.
Municipal securities may be issued to finance private activities,
the interest from which is an item of tax preference for purposes of the
federal alternative minimum tax. Such "private activity" bonds might
include industrial development revenue bonds, and bonds issued to
finance such projects as solid waste disposal facilities, student loans
or water and sewage projects
Other Asset-Backed Securities. The Fund may invest in other
asset-backed securities (unrelated to mortgage loans) including
securities backed by automobile loans and credit card receivables.
Repurchase Agreements. When participating in repurchase
agreements, the Fund buys securities from a vendor (e.g., a bank or
securities firm) with the agreement that the vendor will repurchase the
securities at the same price plus interest at a later date. Repurchase
agreements may be characterized as loans secured by the underlying
securities. Such transactions afford an opportunity for the Fund to
earn a return on available cash at minimal market risk, although the
Fund may be subject to various delays and risks of loss if the vendor
becomes subject to a proceeding under the U.S. Bankruptcy Code or is
otherwise unable to meet its obligation to repurchase. The securities
underlying a repurchase agreement will be marked to market every
business day so that the value of such securities is at least equal to
the value of the repurchase price thereof, including the accrued
interest thereon.
In addition, repurchase agreements may also involve the securities
of certain foreign governments in which there is an active repurchase
market. The Investment Adviser expects that such repurchase agreements
will primarily involve government securities of countries belonging to
the Organization for Economic Cooperation and Development ("OECD").
Transactions in foreign repurchase agreements may involve additional
risks.
U.S. Treasury and U.S. Government Agency Securities. U.S.
Government Securities include instruments issued by the U.S. Treasury,
including bills, notes and bonds. These instruments are direct
obligations of the U.S. Government and, as such, are backed by the full
faith and credit of the United States. They differ primarily in their
interest rates, the lengths of their maturities and the dates of their
issuances. In addition, U.S. Government Securities include securities
issued by instrumentalities of the U.S. Government, such as the
Government National Mortgage Association ("GNMA"), which are also backed
by the full faith and credit of the United States. U.S. Government
Agency Securities include instruments issued by instrumentalities
established or sponsored by the U.S. Government, such as the Student
Loan Marketing Association ("SLMA"), the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). While these securities are issued, in general, under the
authority of an Act of Congress, the U.S. Government is not obligated to
provide financial support to the issuing instrumentalities.
Variable Amount Master Demand Notes. Variable amount master
demand notes permit the investment of fluctuating amounts at varying
rates of interest pursuant to direct arrangements between the Fund (as
lender) and the borrower. These notes are direct lending arrangements
between lenders and borrowers, and are generally not transferable, nor
are they ordinarily rated by either Moody's Investors Service, Inc.,
Standard & Poor's Corporation, Fitch Investors Service, Inc., or Duff &
Phelps Credit Rating Co.
Zero Coupon Securities and Custodial Receipts. Zero coupon
securities include securities issued directly by the U.S. Treasury, and
U.S. Treasury bonds or notes and their unmatured interest coupons and
receipts for their underlying principal (the "coupons") which have been
separated by their holder, typically a custodian bank or investment
brokerage firm. A holder will separate the interest coupons from the
underlying principal (the "corpus") of the U.S. Treasury security. A
number of securities firms and banks have stripped the interest coupons
and receipts and then resold them in custodial receipt programs with a
number of different names, including "Treasury Income Growth Receipts"
("TIGRS") and "Certificate of Accrual on Treasuries" ("CATS"). The
underlying U.S. Treasury bonds and notes themselves are held in book-
entry form at the Federal Reserve Bank or, in the case of bearer
securities (i.e., unregistered securities which are owned ostensibly by
the bearer or holder thereof), in trust on behalf of the owners thereof.
Counsel to the underwriters of these certificates or other evidences of
ownership of the U.S. Treasury securities have stated that for Federal
tax and securities law purposes, in their opinion, purchasers of such
certificates, such as the Fund, most likely will be deemed the
beneficial holders of the underlying U.S. Treasury securities.
Recently, the Treasury has facilitated transfer of ownership of
zero coupon securities by accounting separately for the beneficial
ownership of particular interest coupon and corpus payments on Treasury
securities through the Federal Reserve book-entry record-keeping system.
The Federal Reserve program as established by the Treasury Department
is known as "Separate Trading of Registered Interest and Principal of
Securities" ("STRIPS"). Under the STRIPS program, the Fund can be able
to have its beneficial ownership of zero coupon securities recorded
directly in the book-entry record-keeping system in lieu of holding
certificates or other evidences of ownership of the underlying U.S.
Treasury securities.
When U.S. Treasury obligations have been stripped of their
unmatured interest coupons by the holder, the principal or corpus is
sold at a deep discount because the buyer receives only the right to
receive a future fixed payment on the security and does not receive any
rights to periodic interest (cash) payments. Once stripped or
separated, the corpus and coupons may be sold separately. Typically,
the coupons are sold separately or grouped with other coupons with like
maturity dates and sold in such bundled form. Purchasers of stripped
obligations acquire, in effect, discount obligations that are
economically identical to the zero coupon securities that the Treasury
sells itself.
SUPPLEMENTAL DISCUSSION OF RISKS ASSOCIATED WITH THE FUND'S INVESTMENT
POLICIES AND INVESTMENT TECHNIQUES
The risks associated with the different types of securities in
which the Fund may invest are described in the Prospectus under "Risks
Associated With the Fund's Investment Policies and Investment
Techniques". Additional information concerning risks associated with
certain of the Fund's investments is set forth below.
Eurodollar and Yankee Obligations. Eurodollar and Yankee
obligations are subject to the same risks that pertain to domestic
issues, notably credit risk, market risk and liquidity risk.
Additionally, Eurodollar (and to a limited extent, Yankee) obligations
are subject to certain sovereign risks. One such risk is the possibility
that a sovereign country might prevent capital, in the form of dollars,
from flowing across their borders. Other risks include: adverse
political and economic developments; the extent and quality of
government regulation of financial markets and institutions; the
imposition of foreign withholding taxes; and the expropriation or
nationalization of foreign issuers.
Futures contracts. The Fund may enter into contracts for the
purchase or sale for future delivery (a "futures contract") of fixed-
income securities or foreign currencies, or contracts based on financial
indices including any index of U.S. Government Securities, foreign
government securities or corporate debt securities. U.S. futures
contracts have been designed by exchanges which have been designated as
"contracts markets" by the CFTC, and must be executed through a futures
commission merchant, or brokerage firm, which is a member of the
relevant contract market. Futures contracts trade on a number of
exchange markets and, through their clearing corporations, the exchanges
guarantee performance of the contracts as between the clearing members
of the exchange. The Fund will enter into futures contracts that are
based on debt securities that are backed by the full faith and credit of
the U.S. Government, such as long-term U.S. Treasury Bonds, Treasury
Notes, GNMA-modified pass-through mortgage-backed securities and three-
month U.S. Treasury Bills.
The Fund would purchase or sell futures contracts to attempt to
protect the U.S. dollar-equivalent value of its securities from
fluctuations in interest or foreign exchange rates without actually
buying or selling securities or foreign currency. For example, if the
Fund expected the value of a foreign currency to increase against the
U.S. dollar, the Fund might enter into futures contracts for the sale of
that currency. Such a sale would have much the same effect as selling
an equivalent value of foreign currency. If the currency did increase,
the value of the securities in the portfolio would decline, but the
value of the futures contracts to the Fund would increase at
approximately the same rate, thereby keeping the net asset value of the
Fund from declining as much as it otherwise would have.
Although futures contracts by their terms call for the actual
delivery or acquisition of securities or currency, in most cases the
contractual obligation is fulfilled before the date of the contract
without having to make or take delivery of the securities or currency.
The offsetting of a contractual obligation is accomplished by buying (or
selling, as the case may be) on a commodities exchange an identical
futures contract calling for delivery in the same month. Such a
transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery of the securities or currency.
Since all transactions in the futures market are made, offset or
fulfilled through a clearinghouse associated with the exchange on which
the contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.
At the time a futures contract is purchased or sold, the Fund must
allocate cash or securities as a deposit payment ("initial margin"). It
is expected that the initial margin on U.S. exchanges may range from
approximately 3% to approximately 15% of the value of the securities or
commodities underlying the contract. Under certain circumstances,
however, such as periods of high volatility, the Fund may be required by
an exchange to increase the level of its initial margin payment.
Additionally, initial margin requirements may be increased generally in
the future by regulatory action. An outstanding futures contract is
valued daily and the payment in cash of "variation margin" may be
required, a process known as "marking to the market". Each day the Fund
will be required to provide (or will be entitled to receive) variation
margin in an amount equal to any decline (in the case of a long futures
position) or increase (in the case of a short futures position) in the
contract's value since the preceding day.
Futures contracts entail special risks. Among other things, the
ordinary spreads between values in the cash and futures markets, due to
differences in the character of these markets, are subject to
distortions relating to (1) investors' obligations to meet additional
variation margin requirements, (2) decisions to make or take delivery,
rather than entering into offsetting transactions and (3) the difference
between margin requirements in the securities markets and margin deposit
requirements in the futures market. The possibility of such distortion
means that a correct forecast of general market, foreign exchange rate
or interest rate trends by the Investment Adviser may still not result
in a successful transaction.
Although the Investment Adviser believes that use of such
contracts and options thereon will benefit the Fund, if the Investment
Adviser's judgment about the general direction of securities market
movements, foreign exchange rates or interest rates is incorrect, the
Fund's overall performance would be poorer than if it had not entered
into any such contracts or purchased or written options thereon. For
example, if the Fund had hedged against the possibility of an increase
in interest rates which would adversely affect the price of debt
securities held in its portfolio and interest rates decreased instead,
the Fund would lose part or all of the benefit of the increased value of
its assets which it had hedged because it would have offsetting losses
in its futures positions. In addition, particularly in such situations,
if the Fund has insufficient cash, it may have to sell assets from its
portfolio to meet daily variation margin requirements. Any such sale of
assets may, but will not necessarily, be at increased prices which
reflect the rising market. Consequently, the Fund may have to sell
assets at a time when it may be disadvantageous to do so.
The Fund's ability to establish and close out positions in futures
contracts and options on futures contracts will be subject to the
development and maintenance of a liquid market. Although the Fund
generally will purchase or sell only those futures contracts and options
thereon for which there appears to be a liquid market, there is no
assurance that a liquid market on an exchange will exist for any
particular futures contract or option thereon at any particular time.
Where it is not possible to effect a closing transaction in a contract
to do so at a satisfactory price, the Fund would have to make or take
delivery under the futures contract or, in the case of a purchased
option, exercise the option. In the case of a futures contract that the
Fund has sold and is unable to close out, the Fund would be required to
maintain margin deposits on the futures contract and to make variation
margin payments until the contract is closed.
Under certain circumstances, exchanges may establish daily limits
in the amount that the price of a futures contract or related option
contract may vary either up or down from the previous day's settlement
price. Once the daily limit has been reached in a particular contract,
no trades may be made that day at a price beyond that limit. The daily
limit governs only price movements during a particular trading day and
therefore does not limit potential losses because the limit may prevent
the liquidation of unfavorable positions. Futures or options contract
prices could move to the daily limit for several consecutive trading
days with little or no trading and thereby prevent prompt liquidation of
positions and subject some traders to substantial losses.
Buyers and sellers of foreign currency futures contracts are
subject to the same risks that apply to the use of futures generally.
In addition, there are risks associated with foreign currency futures
contracts and their use as hedging devices similar to those associated
with options on foreign currencies described above. Further, settlement
of a foreign currency futures contract must occur within the country
issuing the underlying currency. Thus, the Fund must accept or make
delivery of the underlying foreign currency in accordance with any U.S.
or foreign restrictions or regulations regarding the maintenance of
foreign banking arrangements by U.S. residents and may be required to
pay any fees, taxes or charges associated with such delivery that are
assessed in the country of the underlying currency.
Illiquid and Restricted Securities. Under the 1940 Act, the Fund
may invest up to 15% of the value of its assets in illiquid assets.
Illiquid assets are investments that are difficult to sell at the price
at which such assets are valued by the Fund within seven days of the
date a decision to sell them is made. Securities treated as illiquid
assets include: over-the-counter options; repurchase agreements, time
deposits, and dollar roll transactions maturing in more than seven days;
loan participations; securities without readily available market
quotations, including interests in private commingled investment
vehicles in which the Fund might invest; and certain restricted
securities. Iliiquid and restricted securities, including private
placements, are generally subject to legal or contractual restrictions
on resale. They can be eligible for purchase without SEC registration
by certain institutional investors known as "qualified institutional
buyers."
The Board of Directors of the Fund may consider certain restricted
securities, including but not limited to Rule 144A and Section 4(2)
commercial paper, liquid if such securities meet specified criteria
established by the Fund's Board of Directors.
Due to the absence of an organized market for such securities, interim
valuations of the market value of illiquid securities used in
calculating Fund net asset values for purchases and redemptions can
diverge substantially from their true value, notwithstanding the
application of appraisal methods deemed appropriate and prudent by the
Fund's Board and the Fund's independent accountants. Due to possible
restrictions on the transferability of illiquid securities, forced
liquidation of such securities to meet redemption requests could produce
large losses. Although, the 1940 Act permits the Fund to invest up to
15% of its assets in these securities; the Investment Adviser does not
anticipate investing over 5% of the Fund's assets in these securities.
Mortgage and Other Asset-Backed Securities. Prepayments on
securitized assets such as mortgages, automobile loans and credit card
receivables ("Securitized Assets") generally increase with falling
interest rates and decrease with rising interest rates; furthermore,
prepayment rates are influenced by a variety of economic and social
factors. In general, the collateral supporting non-mortgage
asset-backed securities is of shorter maturity than mortgage loans and
is less likely to experience substantial prepayments. In addition to
prepayment risk, borrowers on the underlying Securitized Assets may
default in their payments creating delays or loss of principal.
Non-mortgage asset-backed securities involve certain risks that
are not presented by mortgage-backed securities. Primarily, these
securities do not have the benefit of a security interest in assets
underlying the related mortgage collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which give
such debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of automobile
receivables permit the servicers to retain possession of the underlying
obligations. If the servicer were to sell these obligations to another
party, there is a risk that the purchaser would acquire an interest
superior to that of the holders of the related automobile receivables.
In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the
trustee for the holders of the automobile receivables may not have an
effective security interest in all of the obligations backing such
receivables. Therefore, there is a possibility that recoveries on
repossessed collateral may not, in some cases, be available to support
payments on these securities.
Some forms of asset-backed securities are relatively new forms of
investments. Although the Fund will only invest in asset-backed
securities that the Investment Adviser believes are liquid, because the
market experience in certain of these securities is limited, the
market's ability to sustain liquidity through all phases of a market
cycle may not have been tested.
Options on Foreign Currencies. The Fund may purchase and sell (or
write) put and call options on foreign currencies to protect against a
decline in the U.S. dollar-equivalent value of its portfolio securities
or payments due thereon or a rise in the U.S. dollar-equivalent cost of
securities that it intends to purchase. A foreign currency put option
grants the holder the right, but not the obligation, at a future date to
sell a specified amount of a foreign currency to its counterparty at a
predetermined price. Conversely, a foreign currency call option grants
the holder the right, but not the obligation, to purchase at a future
date a specified amount of a foreign currency at a predetermined price.
As in the case of other types of options, the benefit to the Fund
deriving from the purchase of foreign currency options will be reduced
by the amount of the premium and related transaction costs. In
addition, where currency exchange rates do not move in the direction or
to the extent anticipated, the Fund could sustain losses on transactions
in foreign currency options which would require them to forego a portion
or all of the benefits of advantageous changes in such rates.
The Fund may write options on foreign currencies for hedging
purposes. For example, where the Fund anticipates a decline in the
dollar value of foreign currency denominated securities due to adverse
fluctuations in exchange rates it could, instead of purchasing a put
option, write a call option on the relevant currency. If the expected
decline occurs, the option will most likely not be exercised, and the
decrease in value of portfolio securities will be offset by the amount
of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar costs of securities to be acquired,
the Fund could write a put option on the relevant currency which, if
rates move in the manner projected, will expire unexercised and allow
the Fund to hedge such increased costs up to the amount of the premium.
As in the case of other types of options, however, the writing of a
foreign currency option will constitute only a partial hedge up to the
amount of the premium, and only if rates move in the expected direction.
If this movement does not occur, the option may be exercised and the
Fund would be required to purchase or sell the underlying currency at a
loss which may not be fully offset by the amount of the premium.
Through the writing of options on foreign currencies, the Fund also may
be required to forego all or a portion of the benefits that might
otherwise have been obtained from favorable movements in exchange rates.
Options on Futures Contracts. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call
option on an individual security or currency. Depending on the pricing
of the option compared to either the price of the futures contract upon
which it is based or the price of the underlying securities or currency,
it may or may not be less risky than ownership of the futures contract
or the underlying securities or currency. As with the purchase of
futures contracts, when the Fund is not fully invested it may purchase a
call option on a futures contract to hedge against a market advance due
to declining interest rates or a change in foreign exchange rates.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign
currency which is deliverable upon exercise of the futures contract. If
the futures price at expiration of the option is below the exercise
price, the Fund will retain the full amount of the option premium which
provides a partial hedge against any decline that may have occurred in
the Fund's portfolio holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of the
security or foreign currency which is deliverable upon exercise of the
futures contract. If the futures price at expiration of the option is
higher than the exercise price, the Fund will retain the full amount of
the option premium which provides a partial hedge against any increase
in the price of securities which the Fund intends to purchase. If a put
or call option the Fund has written is exercised, the Fund will incur a
loss that will be reduced by the amount of the premium it receives.
Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its futures
positions, the Fund's losses from existing options on futures may to
some extent be reduced or increased by changes in the value of portfolio
securities.
The purchase of a put option on a futures contract is similar in
some respects to the purchase of protective put options on portfolio
securities. For example, the Fund may purchase a put option on a
futures contract to hedge its portfolio against the risk of rising
interest rates.
The amount of risk the Fund assumes when it purchases an option on
a futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that changes in
the value of the underlying futures contract will not be fully reflected
in the value of the option purchased.
Options on foreign currency futures contracts may involve certain
additional risks. Trading options on foreign currency futures contracts
is relatively new. The ability to establish and close out positions in
such options is subject to the maintenance of a liquid secondary market.
To mitigate this problem, the Fund will not purchase or write options
on foreign currency futures contracts unless and until, in the
Investment Adviser's opinion, the market for such options has developed
sufficiently that the risks in connection with such options are not
greater than the risks in connection with transactions in the underlying
foreign currency futures contracts. Compared to the purchase or sale of
foreign currency futures contracts, the purchase of call or put options
thereon involves less potential risk to the Fund because the maximum
amount at risk is the premium paid for the option (plus transaction
costs). However, there may be circumstances when the purchase of a call
or put option on a foreign currency futures contract would result in a
loss, such as when there is no movement in the price of the underlying
currency or futures contract, when use of the underlying futures
contract would not.
Options on Securities. The Fund may also enter into closing sale
transactions with respect to options it has purchased. A put option on
a security grants the holder the right, but not the obligation, at a
future date to sell the security to its counterparty at a predetermined
price. Conversely, a call option on a security grants the holder the
right, but not the obligation, to purchase at a future date the security
underlying the option at a predetermined price.
The Fund would normally purchase put options in anticipation of a
decline in the market value of securities in its portfolio or securities
it intends to purchase. If the Fund purchased a put option and the
value of the security in fact declined below the strike price of the
option, the Fund would have the right to sell that security to its
counterparty for the strike price (or realize the value of the option by
entering into a closing transaction), and consequently would protect
itself against any further decrease in the value of the security during
the term of the option.
Conversely, if the Investment Adviser anticipates that a security
that it intends to acquire will increase in value, it might cause the
Fund to purchase a call option on that security or securities similar to
that security. If the value of the security does rise, the call option
may wholly or partially offset the increased price of the security. As
in the case of other types of options, however, the benefit to the Fund
will be reduced by the amount of the premium paid to purchase the option
and any related transaction costs. If, however, the value of the
security fell instead of rose, the Fund would have foregone a portion of
the benefit of the decreased price of the security in the amount of the
option premium and the related transaction costs.
The Fund would purchase put and call options on securities indices
for the same purposes as it would purchase options on securities.
Options on securities indices are similar to options on securities
except that the options reflect the change in price of a group of
securities rather than an individual security and the exercise of
options on securities indices are settled in cash rather than by
delivery of the securities comprising the index underlying the option.
Transactions by the Fund in options on securities and securities
indices will be governed by the rules and regulations of the respective
exchanges, boards of trade or other trading facilities on which the
options are traded.
Considerations Concerning Options. The writer of an option
receives a premium which it retains regardless of whether the option is
exercised. The purchaser of a call option has the right, for a
specified period of time, to purchase the securities or currency subject
to the option at a specified price (the "exercise price"). By writing a
call option, the writer becomes obligated during the term of the option,
upon exercise of the option, to sell the underlying securities or
currency to the purchaser against receipt of the exercise price. The
writer of a call option also loses the potential for gain on the
underlying securities or currency in excess of the exercise price of the
option during the period that the option is open.
Conversely, the purchaser of a put option has the right, for a
specified period of time, to sell the securities or currency subject to
the option to the writer of the put at the specified exercise price.
The writer of a put option is obligated during the term of the option,
upon exercise of the option, to purchase securities or currency
underlying the option at the exercise price. A writer might, therefore,
be obligated to purchase the underlying securities or currency for more
than their current market price or U.S. dollar value, respectively.
The Fund may purchase and sell both exchange-traded and OTC
options. Currently, although many options on equity securities and
options on currencies are exchange-traded, options on debt securities
are primarily traded in the over-the-counter market. The writer of an
exchange-traded option that wishes to terminate its obligation may
effect a "closing purchase transaction". This is accomplished by buying
an option of the same series as the option previously written. Options
of the same series are options with respect to the same underlying
security or currency, having the same expiration date and the same
exercise price. Likewise, an investor who is the holder of an option
may liquidate a position by effecting a "closing sale transaction".
This is accomplished by selling an option of the same series as the
option previously purchased. There is no guarantee that either a
closing purchase or a closing sale transaction can be effected.
An exchange-traded option position may be closed out only where
there exists a secondary market for an option of the same series. For a
number of reasons, a secondary market may not exist for options held by
the Fund, or trading in such options might be limited or halted by the
exchange on which the option is trading, in which case it might not be
possible to effect closing transactions in particular options the Fund
has purchased with the result that the Fund would have to exercise the
options in order to realize any profit. If the Fund is unable to effect
a closing purchase transaction in a secondary market in an option the
Fund has written, it will not be able to sell the underlying security or
currency until the option expires or deliver the underlying security or
currency upon exercise or otherwise cover its position.
Exchange-traded options in the United States are issued by a
clearing organization affiliated with the exchange on which the option
is listed which, in effect, guarantees every exchange-traded option
transaction. In contrast, OTC options are contracts between the Fund
and its counterparty with no clearing organization guarantee. Thus,
when the Fund purchases OTC options, it relies on the dealer from which
it purchased the OTC option to make or take delivery of the securities
underlying the option. Failure by the dealer to do so would result in
the loss of the premium paid by the Fund as well as the loss of the
expected benefit of the transaction. The Investment Adviser will only
purchase options from dealers determined by the Investment Adviser to be
creditworthy.
Exchange-traded options generally have a continuous liquid market
whereas OTC options may not. Consequently, the Fund will generally be
able to realize the value of an OTC option it has purchased only by
exercising it or reselling it to the dealer who issued it. Similarly,
when the Fund writes an OTC option, it generally will be able to close
out the OTC option prior to its expiration only by entering into a
closing purchase transaction with the dealer to which the Fund
originally wrote the OTC option. Although the Fund will enter into OTC
options only with dealers that agree to enter into, and that are
expected to be capable of entering into, closing transactions with the
Fund, there can be no assurance that the Fund will be able to liquidate
an OTC option at a favorable price at any time prior to expiration.
Until the Fund is able to effect a closing purchase transaction in a
covered OTC call option the Fund has written, it will not be able to
liquidate securities used as cover until the option expires or is
exercised or different cover is substituted. In the event of insolvency
of the counterparty, the Fund may be unable to liquidate an OTC option.
In the case of options written by the Fund, the inability to enter into
a closing purchase transaction may result in material losses to the
Fund. For example, since the Fund must maintain a covered position with
respect to any call option on a security it writes, the Fund may be
limited in its ability to sell the underlying security while the option
is outstanding. This may impair the Fund's ability to sell the Fund
security at a time when such a sale might be advantageous.
There is no systematic reporting of last sale information for
foreign currencies or any regulatory requirement that quotations
available through dealers or other market sources be firm or revised on
a timely basis. Quotation information available is generally
representative of very large transactions in the interbank market and
thus may not reflect relatively smaller transactions (i.e., less than $1
million) where rates may be less favorable. The interbank market in
foreign currencies is a global, around-the-clock market. To the extent
that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements
may take place in the underlying markets that cannot be reflected in the
options market until they reopen. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts
than those that may be involved in the use of foreign currency options,
investors may be disadvantaged by having to deal in an odd lot market
(generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for
round lots.
The use of options to hedge the Fund's foreign currency-
denominated portfolio, or to enhance return raises additional
considerations. As described above, the Fund may, among other things,
purchase call options on securities it intends to acquire in order to
hedge against anticipated market appreciation in the price of the
underlying security or currency. If the market price does increase as
anticipated, the Fund will benefit from that increase but only to the
extent that the increase exceeds the premium paid and related
transaction costs. If the anticipated rise does not occur or if it does
not exceed the amount of the premium and related transaction costs, the
Fund will bear the expense of the options without gaining an offsetting
benefit. If the market price of the underlying currency or securities
should fall instead of rise, the benefit the Fund obtains from
purchasing the currency or securities at a lower price will be reduced
by the amount of the premium paid for the call options and by
transaction costs.
The Fund also may purchase put options on currencies or portfolio
securities when it believes a defensive posture is warranted.
Protection is provided during the life of a put option because the put
gives the Fund the right to sell the underlying currency or security at
the put exercise price, regardless of a decline in the underlying
currency's or security's market price below the exercise price. This
right limits the Fund's losses from the currency's or security's
possible decline in value below the exercise price of the option to the
premium paid for the option and related transaction costs. If the
market price of the currency or the Fund's securities should increase,
however, the profit that the Fund might otherwise have realized will be
reduced by the amount of the premium paid for the put option and by
transaction costs.
The value of an option position will reflect, among other things,
the current market price of the underlying currency or security, the
time remaining until expiration, the relationship of the exercise price
to the market price, the historical price volatility of the underlying
currency or security and general market conditions. For this reason,
the successful use of options as a hedging strategy depends upon the
ability of the Investment Adviser to forecast the direction of price
fluctuations in the underlying currency or securities market.
Options normally have expiration dates of up to nine months. The
exercise price of the options may be below, equal to or above the
current market values of the underlying securities or currency at the
time the options are written. Options purchased by the Fund that expire
unexercised have no value, and therefore a loss will be realized in the
amount of the premium paid (and related transaction costs). If an
option purchased by the Fund is in-the-money prior to its expiration
date, unless the Fund exercises the option or enters into a closing
transaction with respect to that position, the Fund will not realize any
gain on its option position.
The Fund's activities in the options market may result in a higher
portfolio turnover rates and additional brokerage costs. Nevertheless,
the Fund may also save on commissions and transaction costs by hedging
through such activities rather than buying or selling securities or
foreign currencies in anticipation of market moves or foreign exchange
rate fluctuations.
Repurchase Agreements. The use of repurchase agreements involves
certain risks. For example, if the seller of the agreements defaults on
its obligation to repurchase the underlying securities at a time when
the value of these securities has declined, the Fund may incur a loss
upon disposition of them. If the seller of the agreement becomes
insolvent and subject to liquidation or reorganization under the
Bankruptcy Code or other laws, a bankruptcy court may determine that the
underlying securities are collateral not within the control of the Fund
and therefore subject to sale by the trustee in bankruptcy. Finally, it
is possible that the Fund may not be able to substantiate its interest
in the underlying securities. While the Fund's management acknowledges
these risks, it is expected that they can be controlled through
stringent security selection criteria and careful monitoring procedures.
INVESTMENT RESTRICTIONS
The Fund has adopted the investment restrictions listed below
relating to the investment of the Fund's assets and its activities.
These are fundamental policies that may not be changed without the
approval of the holders of a majority of the outstanding voting
securities of the Fund (which for this purpose and under the 1940 Act
means the lesser of (i) 67% of the shares represented at a meeting at
which more than 50% of the outstanding shares are represented or (ii)
more than 50% of the outstanding shares). The Fund may not: (1) borrow
money, including entering into reverse repurchase agreements; (2) issue
senior securities; (3) purchase securities on margin (although deposits
referred to as "margin" will be made in connection with investments in
futures contracts, as explained above, and the Fund may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales of securities); (4) underwrite securities of other issuers;
(5) invest in companies for the purpose of exercising control or
management; (6) purchase or sell real estate (other than marketable
securities representing interests in, or backed by, real estate); or (7)
purchase or sell physical commodities or related commodity contracts.
Whenever an investment policy or limitation states a maximum
percentage of the Fund's assets that may be invested in any security or
other asset or sets forth a policy regarding quality standards, such
standard or percentage limitation shall be determined immediately after
and as a result of the Fund's acquisition of such security or other
asset. Accordingly, any later increase or decrease in a percentage
resulting from a change in values, net assets or other circumstances
will not be considered when determining whether that investment complies
with the Fund's investment policies and limitations.
The Fund's investment objectives and other investment policies not
designated as fundamental in this Statement of Additional Information
are non-fundamental and may be changed at any time by action of the
Board of Directors.
Illiquid Securities. The staff of the Commission has taken the
position that purchased OTC options and the assets used as cover for
written OTC options are illiquid securities. Therefore, the Fund has
adopted an investment policy pursuant to which it generally will not
purchase or sell OTC options if, as a result of such transaction, the
sum of the market value of OTC options currently outstanding that are
held by the Fund, the market value of the underlying securities covered
by OTC call options currently outstanding that were sold by the Fund and
margin deposits on the Fund's existing OTC options on futures contracts
exceed 15% of the net assets of the Fund, taken at market value,
together with all other assets of the Fund that are illiquid or are not
otherwise readily marketable. This policy as to OTC options is not a
fundamental policy of the Fund and may be amended by the Directors of
the Fund without the approval of the Fund's or the Fund's shareholders.
However, the Fund will not change or modify this policy prior to a
change or modification by the Commission staff of its position.
PORTFOLIO TURNOVER
The Fund may engage in portfolio trading when considered
appropriate, but short-term trading will not be used as the primary
means of achieving its investment objective. Although the Fund cannot
accurately predict its portfolio turnover rate, it is not expected to
exceed 400% in normal circumstances. However, there are no limits on
the rate of portfolio turnover, and investments may be sold without
regard to length of time held when, in the opinion of the Investment
Adviser, investment considerations warrant such actions. Higher
portfolio turnover rates, such as rates in excess of 400%, and short-
term trading involve correspondingly greater commission expenses and
transactions costs.
PORTFOLIO TRANSACTIONS
The debt securities in which the Fund invests are traded primarily
in the over-the-counter market by dealers who are usually acting as
principal for their own account. On occasion, securities may be
purchased directly from the issuer. Such securities are generally
traded on a net basis and do not normally involve either brokerage
commissions or transfer taxes. The Fund enters into financial futures
and options contracts which normally involve brokerage commissions.
The cost of executing transactions will consist primarily of
dealer spreads. The spread is not included in the expenses of the Fund
and therefore is not subject to the expense cap described above under
"Investment Adviser and Advisory Agreement"; nevertheless, the
incurrence of this spread, ignoring the other intended positive effects
of each such transaction, will decrease the total return of the Fund.
However, the Fund will buy one asset and sell another only if the
Investment Adviser believes it is advantageous to do so after
considering the effect of the additional custodial charges and the
spread on the Fund's total return.
All purchases and sales will be executed with major dealers and
banks on a best net price basis. No trades will be executed with the
Investment Adviser, their affiliates, officers or employees acting as
principal or agent for others, although such entities and persons may be
trading contemporaneously in the same or similar securities.
TAX CONSIDERATIONS
The following summary of tax consequences, which does not purport
to be complete, is based on U.S. federal tax laws and regulations in
effect on the date of this Statement of Additional Information, which
are subject to change by legislative or administrative action.
Qualification as a Regulated Investment Company. The Fund intends
to qualify annually and to elect in the future to be treated as a
regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended (the "Code"). To qualify as a RIC, the Fund must,
among other things, (a) derive at least 90% of its gross income each
taxable year from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from
options, futures or forward contracts) derived from its business of
investing in securities or foreign currencies (the "Qualifying Income
Requirement"); (b) diversify its
holdings so that, at the end of each quarter of the Fund's taxable year,
(i) at least 50% of the market value of the Fund's assets is represented
by cash and cash items (including receivables), U.S. Government
Securities, securities of other RICs and other securities, with such
other securities of any one issuer limited to an amount not greater than
5% of the value of the Fund's total assets and not greater than 10% of
the outstanding voting securities of such issuer and (ii) not more than
25% of the value of the Fund's total assets is invested in the
securities of any one issuer (other than U.S. Government Securities or
the securities of other RICs); and (c) distribute at least 90% of its
investment company taxable income (which includes, among other items,
interest and net short-term capital gains in excess of net long-term
capital losses). The U.S. Treasury Department has authority to
promulgate regulations pursuant to which gains from foreign currency
(and options, futures and forward contracts on foreign currency) not
directly related to a RIC's principal business of investing in stocks
and securities would not be treated as qualifying income for purposes of
the Qualifying Income Requirement. To date, such regulations have not
been promulgated.
If for any taxable year the Fund does not qualify as a RIC, all of
its taxable income will be taxed to the Fund at corporate rates. For
each taxable year that the Fund qualifies as a RIC, it will not be
subject to federal income tax on that part of its investment company
taxable income and net capital gains (the excess of net long-term
capital gain over net short-term capital loss) that it distributes to
its shareholders. In addition, to avoid a nondeductible 4% federal
excise tax, the Fund must distribute during each calendar year an amount
at least equal to the sum of 98% of its ordinary income (not taking into
account any capital gains or losses), determined on a calendar year
basis, 98% of its capital gains in excess of capital losses, determined
in general on an October 31 year-end basis, and any undistributed
amounts from previous years. The Fund intends to distribute all of its
net income and gains by automatically reinvesting such income and gains
in additional shares of the Fund. The 30% Limitation may require that
the Fund defer closing out certain positions beyond the time when it
otherwise would be advantageous to do so, in order not to be
disqualified as a RIC. The Fund will monitor its compliance with all of
the rules set forth in the preceding paragraph.
Distributions. The Fund's automatic reinvestment of its ordinary
income, net short-term capital gains and net long-term capital gains in
additional shares of the Fund and distribution of such shares to
shareholders will be taxable to the Fund's shareholders. In general,
such shareholders will be treated as if such income and gains had been
distributed to them by the Fund and then reinvested by them in shares of
the Fund, even though no cash distributions have been made to
shareholders. The automatic reinvestment of ordinary income and net
realized short-term capital gains of the Fund will be taxable to the
Fund's shareholders as ordinary income. The Fund's automatic
reinvestment of any net long-term capital gains designated by the Fund
as capital gain dividends will be taxable to the shareholders as
long-term capital gain, regardless of how long they have held their Fund
shares. None of the amounts treated as distributed to the Fund's
shareholders will be eligible for the corporate dividends received
deduction. A distribution will be treated as paid on December 31 of the
current calendar year if it is declared by the Fund in October, November
or December with a record date in such a month and paid by the Fund
during January of the following calendar year. Such distributions will
be taxable to shareholders in the calendar year in which the
distributions are declared, rather than in the calendar year in which
the distributions are received. The Fund will inform shareholders of
the amount and tax status of all amounts treated as distributed to them
not later than 60 days after the close of each calendar year.
Sale of Shares. Upon the sale or other disposition of shares of
the Fund, or upon receipt of a distribution in complete liquidation of
the Fund, a shareholder generally will realize a capital gain or loss
which will be long-term or short-term, generally depending upon the
shareholder's holding period for the shares. Any loss realized on the
sale or exchange will be disallowed to the extent the shares disposed of
are replaced (including shares acquired pursuant to a dividend
reinvestment plan) within a period of 61 days beginning 30 days before
and ending 30 days after disposition of the shares. In such a case, the
basis of the shares acquired will be adjusted to reflect the disallowed
loss. Any loss realized by the shareholder on a disposition of Fund
shares held by the shareholder for six months or less will be treated as
a long-term capital loss to the extent of any distributions of net
capital gains deemed received by the shareholder with respect to such
shares.
Zero Coupon Securities. Investments by the Fund in zero coupon
securities will result in income to the Fund equal to a portion of the
excess of the face value of the securities over their issue price (the
"original issue discount") each year that the securities are held, even
though the Fund receives no cash interest payments. This income is
included in determining the amount of income which the Fund must
distribute to maintain its status as a RIC and to avoid the payment of
Federal income tax and the 4% excise tax.
Hedging Transactions. Certain options, futures and forward
contracts in which the Fund may invest are "section 1256 contracts."
Gains and losses on section 1256 contracts are generally treated as 60
percent long-term and 40 percent short-term capital gains or losses
("60/40 treatment"), regardless of the Fund's actual holding period for
the contract. Also, a section 1256 contract held by the Fund at the end
of each taxable year (and generally, for the purposes of the 4% excise
tax, on October 31 of each year) must be treated as if the contract had
been sold at its fair market value on that day ("mark to market
treatment"), and any deemed gain or loss on the contract is subject to
60/40 treatment. Foreign currency gain or loss (discussed below)
arising from section 1256 contracts may, however, be treated as ordinary
income or loss.
The hedging transactions undertaken by the Fund may result in
"straddles" for federal income tax purposes. The straddle rules may
affect the character of gains or losses realized by the Fund. In
addition, losses realized by the Fund on positions that are part of a
straddle may be deferred under the straddle rules rather than being
taken into account in calculating the taxable income for the taxable
year in which such losses are realized. Further, the Fund may be
required to capitalize, rather than deduct currently, any interest
expense on indebtedness incurred or continued to purchase or carry any
positions that are part of a straddle. Because only a few regulations
implementing the straddle rules have been implemented, the tax
consequences to the Funds of engaging in hedging transactions are not
entirely clear. Hedging transactions may increase the amount of short-
term capital gain realized by the Funds which is taxed as ordinary
income when distributed to shareholders.
The Fund may make one or more of the elections available under the
Code that are applicable to straddles. If the Fund makes any of the
elections, the amount, character and timing of the recognition of gains
or losses from the affected straddle positions will be determined under
rules that vary according to the election(s) made. The rules applicable
under certain of the elections may accelerate the recognition of gains
or losses from the affected straddle positions.
Because the straddle rules may affect the amount, character and
timing of gains or losses from the positions that are part of a
straddle, the amount of Fund income that is distributed to shareholders
and that is taxed to them as ordinary income or long-term capital gain
may be increased or decreased as compared to a fund that did not engage
in such hedging transactions.
The distribution requirements applicable to the Fund's assets may limit the
extent to which the Fund will be able to engage in transactions in options,
futures and forward contracts.
Backup Withholding. The Fund may be required to withhold U.S.
federal income tax at the rate of 31% of all amounts deemed to be
distributed as a result of the automatic reinvestment by the Fund of its
income and gains in additional shares of the Fund and all redemption
payments made to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required
certifications, or who have been notified by the Internal Revenue
Service that they are subject to backup withholding. Backup withholding
is not an additional tax. Any amounts withheld will be credited against
a shareholder's U.S. federal income tax liability. Corporate
shareholders and certain other shareholders are exempt from such backup
withholding.
Foreign Shareholders. U.S. taxation of a shareholder who, as to
the United States, is a non-resident alien individual, a foreign trust
or estate, foreign corporation, or foreign partnership ("foreign
shareholder") depends on whether the income from the Fund is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from the Fund is not "effectively connected" with a
U.S. trade or business carried on by the foreign shareholder, deemed
distributions by the Fund of investment company taxable income will be
subject to a U.S. tax of 30% (or lower treaty rate), which tax is
generally withheld from such distributions. Deemed distributions of
capital gain dividends and any gain realized upon redemption, sale or
exchange of shares will not be subject to U.S. tax at the rate of 30%
(or lower treaty rate) unless the foreign shareholder is a nonresident
alien individual who is physically present in the U.S. for more than 182
days during the taxable year and meets certain other requirements.
However, this 30% tax on capital gains of non-resident alien individuals
who are physically present in the United States for more than the 182-
day period only applies in exceptional cases because any individual
present in the United States for more than 182 days during the taxable
year is generally treated as a resident for U.S. federal income tax
purposes. In that case, he or she would be subject to U.S. federal
income tax on his or her worldwide income at the graduated rates
applicable to U.S. citizens, rather than the 30% U.S. tax. In the case
of a foreign shareholder who is a non-resident alien individual, the
Fund may be required to withhold U.S. federal income tax at a rate of
31% of deemed distributions of net capital gains unless the foreign
shareholder certifies his or her non-U.S. status under penalties of
perjury or otherwise establishes an exemption. See "Backup Withholding"
above.
If the income from the Fund is effectively connected with a U.S.
trade or business carried on by a foreign shareholder, then deemed
distributions of investment company taxable income and capital gain
dividends and any gain realized upon the redemption, sale or exchange of
shares of the Fund will be subject to U.S. Federal income tax at the
graduated rates applicable to U.S. citizens or domestic corporations.
Such shareholders may also be subject to the branch profits tax at a 30%
rate.
The tax consequences to a foreign shareholder entitled to claim
the benefits of an applicable tax treaty may be different from those
described herein. Foreign shareholders are advised to consult their own
advisers with respect to the particular tax consequences to them of an
investment in the Fund.
SHAREHOLDER INFORMATION
Certificates representing shares of the Fund will not be issued to
shareholders. Investors Bank & Trust Company, the Fund's transfer agent
(the "Transfer Agent"), will maintain an account for each shareholder
upon which the registration and transfer of shares are recorded, and any
transfers shall be reflected by bookkeeping entry, without physical
delivery. Detailed confirmations of each purchase or redemption are
sent to each shareholder. Monthly statements of account are sent which
include shares purchased as a result of a reinvestment of the Fund's
distributions.
The Transfer Agent will require that a shareholder provide
requests in writing, accompanied by a valid signature guarantee form,
when changing certain information in an account (i.e., wiring
instructions, telephone privileges, etc.). Neither the Fund, the
Administrator, or the Transfer Agent will be responsible for the
validity of written or telephonic requests.
The Fund reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption of the Fund by
making payment in whole or in part in readily marketable securities
chosen by the Fund and valued as they are for purposes of computing the
Fund's net asset value (redemption-in-kind). If payment is made in
securities, a shareholder may incur transaction expenses in converting
the securities to cash.
ORGANIZATION AND DESCRIPTION OF CAPITAL STOCK
The Fund was incorporated on August 4, 1997 as a Maryland
corporation and is authorized to issue 2,500,000,000 shares of Common
Stock, $0.001 par value. The Fund's shares have no preemptive,
conversion, exchange or redemption rights. Each share has equal voting,
dividend, distribution and liquidation rights. All shares of the Fund,
when duly issued, will be fully paid and nonassessable. Shareholders
are entitled to one vote per share. All voting rights for the election
of directors are noncumulative, which means that the holders of more
than 50% of the shares can elect 100% of the Directors then nominated
for election if they choose to do so and, in such event, the holders of
the remaining shares will not be able to elect any Directors. The
foregoing description is subject to the provisions contained in the
Fund's Articles of Incorporation and By-laws.
The Board of Directors is authorized to reclassify and issue any
unissued shares of the Fund without shareholder approval. Accordingly,
in the future, the Directors may create additional series of shares with
different investment objectives, policies and restrictions. Any
issuance of shares of another class would be governed by the 1940 Act
and Maryland law.
CALCULATION OF PERFORMANCE DATA
The Fund may, from time to time, include the yield and total
return in reports to shareholders or prospective investors. Quotations
of yield for the Fund will be based on all investment income per share
during a particular 30-day (or one month) period (including dividends
and interest), less expenses accrued during the period ("net investment
income"), and are computed by dividing net investment income by the
maximum, offering price per share on the last day of the period,
according to the following formula which is prescribed by the
Commission:
YIELD = 2[( a - b + 1)6 - 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 of the Fund
outstanding during he period that were entitled
to receive dividends, and
d = the maximum offering price per share on the last
day of the period.
Quotations of average annual total return will be expressed
in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund over periods of 1, 5 and 10 years
(up to the life of the Fund), calculated pursuant to the following
formula which is prescribed by the SEC:
P(1 + T)n = ERV
Where P = a hypothetical initial payment of $1,000,
T = the average annual total return,
n = the number of years, and
ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the
beginning of the period.
All total return figures assume that all dividends are
reinvested when paid.
QUALITY RATING DESCRIPTIONS
Standard & Poors Corporation
AAA. Bonds rated AAA are highest grade debt obligations. This
rating indicates an extremely strong capacity to pay principal and
interest.
AA. Bonds rated AA also qualify as high-quality obligations.
Capacity to pay principal and interest is very strong, and in the
majority of instances they differ from AAA issues only in small degree.
A. Bonds rated A have a strong capacity to pay principal and
interest, although they are more susceptible to the adverse effects of
changes in circumstances and economic conditions.
BBB. Bonds rated BBB are regarded as having adequate capacity to
pay interest or principal. Although these bonds normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and principal.
The ratings AA to D may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Municipal notes issued since July 29, 1984 are designated "SP-1",
"SP-2", and "SP-3". The designation SP-1 indicates a very strong
capacity to pay principal and interest. A "+" is added to those issues
determined to possess overwhelming safety characteristics.
A-1. Standard & Poor's Commercial Paper ratings are current
assessments of the likelihood of timely payments of debts having
original maturity of no more than 365 days. The A-1 designation
indicates the degree of safety regarding timely payment is very strong.
A-2. Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for
issues designated A-1.
Moody's Investors Service, Inc.
Aaa. Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge". Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa. Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuations of protective elements may be of greater
amplitude or there may be other elements present which make the long-
term risks appear somewhat larger than the Aaa securities.
A. Bonds which are rated A possess many favorable investment
attributes and may be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa. Baa rated bonds are considered medium-grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest
payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Moody's applies numerical modifiers, 1, 2, and 3 in each generic
rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the issue ranks in the lower
end of its generic rating category.
Moody's ratings for state and municipal and other short-term
obligations will be designated Moody's Investment Grade ("MIG"). This
distinction is in recognition of the differences between short-term
credit risk and long-term risk. Factors affecting the liquidity of the
borrower are uppermost in importance in short-term borrowing, while
various factors of the first importance in long-term borrowing risk are
of lesser importance in the short run.
MIG-1. Notes bearing this designation are of the best quality
enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market
for refinancing, or both.
MIG-2. Notes bearing this designation are of favorable quality, with
all security elements accounted for, but lacking the undeniable strength of
the previous grade. Market access for refinancing, in particular, is
likely to be less well established.
P-1. Moody's Commercial Paper ratings are opinions of the ability
of issuers to repay punctually promissory obligations not having an
original maturity in excess of nine months. The designation "Prime-1"
or "P-1" indicates the highest quality repayment capacity of the rated
issue.
P-2. Issuers have a strong capacity for repayment of short-term
promissory obligations.
Thomson Bankwatch, Inc.
A. Company possess an exceptionally strong balance sheet and
earnings record, translating into an excellent reputation and
unquestioned access to its natural money markets. If weakness or
vulnerability exists in any aspect of the company's business, it is
entirely mitigated by the strengths of the organization.
A/B. Company is financially very solid with a favorable track
record and no readily apparent weakness. Its overall risk profile,
while low, is not quite as favorable as companies in the highest rating
category.
IBCA Limited
A1. Short-term obligations rated A1 are supported by a very strong
capacity for timely repayment. A plus sign is added to those issues
determined to possess the highest capacity for timely payment.
Part C
Information required to be included in Part C is set
forth under the appropriate Item, so numbered, in Part C to this
Registration Statement.
PART C. OTHER INFORMATION
24. Financial Statements and Exhibits.
(a) Financial Statements:
Statement of Assets and Liabilities*
Independent Auditors' Report*
(b) Exhibits:
Exhibit
Number Description
1 -- Registrant's Articles of Incorporation
(filed herewith).
2 -- By-Laws (filed herewith).
3 -- None.
4 -- None.
5 -- Form of Advisory Agreement between
Registrant and Seix Investment
Advisors, Inc. (filed herewith).
6 -- Form of Distribution Agreement between
Registrant and AMT Capital Services,
Inc. (filed herewith).
7 -- None.
8 -- Custodian Agreement between Registrant
and Investors Bank & Trust Company.*
9(a) -- Form of Administration Agreement
between Registrant and AMT Capital
Services, Inc. (filed herewith).
9(b) -- Transfer Agency and Service Agreement
between Registrant and Investors Bank &
Trust Company.*
10 -- Opinion and Consent of Dechert Price & Rhoads.*
11(a) -- Consent of Auditors.*
11(b) -- Powers of Attorney.*
12 -- None.
13(a) -- Share Purchase Agreement [between
Registrant and Seix Investment
Advisors, Inc.]*
14 -- None.
15-18 -- None.
* To Be Filed by Amendment.
25. Persons Controlled by or under Common Control with Registrant
Not Applicable. The Registrant is a recently organized
corporation and has no outstanding shares of common stock.
26. Number of Holders of Securities
The Registrant is a recently organized corporation and has
not issued any securities as of the date of this Registration
Statement.
27. Indemnification.
The Registrant shall indemnify directors, officers,
employees and agents of the Registrant against judgements, fines,
settlements and expenses to the fullest extent allowed, and in the
manner provided, by applicable federal and Maryland law, including
Section 17(h)and (i) of the Investment Company Act of 1940. In
this regard, the Registrant undertakes to abide by the provisions
of Investment Company Act Releases No. 11330 and 7221 until
amended or superseded by subsequent interpretation of legislative
or judicial action.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933, as amended (the "Securities
Act"), may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, Registrant understands that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by Registrant of expenses incurred or paid by a director, officer
or controlling person of Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
28. Business and Other Connections of Investment
Adviser.
Seix Investment Advisors, Inc. (the "Investment Adviser") is
a company organized under the laws of New Jersey State and it is
an investment adviser registered under the Investment Advisers Act
of 1940 (the "Advisers Act").
The list required by this Item 28 of officers and directors
of the Investment Adviser, together with information as to any
other business, profession, vocation or employment of a
substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by the Investment Adviser
pursuant to the Advisers Act (SEC File No. 801-42070).
29. Principal Underwriter.
(a) In addition to Registrant, AMT Capital Services,
Inc. currently acts as distributor to FFTW Fund, Inc., Harding
Loevner Fund, Inc., Holland Series Fund, Inc. and TIFF Investment
Program, Inc. AMT Capital Services, Inc. is registered with the
Securities and Exchange Commission as a broker/dealer and is a
member of the National Association of Securities Dealers, Inc.
(b) For each Director or officer of AMT Capital
Services, Inc.
Name and Principal
Business Address Positions & Officers
with Underwriter with Registrant Positions & Officers
Alan M. Trager Director, Chairman and None
600 Fifth Avenue Treasurer
26th Floor
New York, NY 10020
Carla E. Dearing Director, President None
600 Fifth Avenue
26th Floor
New York, NY 10020
Ruth L. Lanser Secretary
None
Gilbert, Segall & Young
430 Park Avenue
New York, NY 10022
Paul Brook Managing Director
None
600 Fifth Avenue
26th Floor
New York, NY 10020
William E. Vastardis Managing Director None
600 Fifth Avenue
26th Floor
New York, NY 10020
F. Michael Gozzillo Vice President
None
600 Fifth Avenue
26th Floor
New York, NY 10020
Gary Vogel Vice President
None
600 Fifth Avenue
26th Floor
New York, NY 10020
(c) Not applicable.
30. Location of Accounts and Records.
All accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940,
as amended (the "1940 Act"), and the rules thereunder will be
maintained at the offices of the Investment Adviser, the Custodian
and the Administrator.
Seix Investment Advisors Inc.
300 Tice Boulevard
Woodcliff Lake, NJ 07675-7633
AMT Capital Services, Inc.
600 Fifth Avenue
New York, New York 10020
Investors Bank & Trust Company
200 Clarendon Street
Boston, Massachusetts 02117-9130
31. Management Services.
Not applicable.
32. Undertakings.
(a) Not applicable
(b) Registrant hereby undertakes to file a post-
effective amendment, containing financial statements as of a
reasonably current date which need not be certified, within four
to six months from the effective date of the Fund's registration
statement.
(c) Registrant hereby undertakes to call a meeting of
shareholders for the purpose of voting upon the question of
removal of one or more of the Registrant's directors when
requested in writing to do so by the holders of at least 10% of
the Registrant's outstanding shares of common stock and, in
connection with such meeting, to assist in communications with
other shareholders in this regard, as provided under Section 16(c)
of the 1940 Act.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as
amended, the Registrant certifies that it has duly caused this
Registration Statement to be signed on its behalf by the
undersigned thereto duly authorized, in the City of Woodcliff Lake and
State of New Jersey on the 4th day of August 1997.
SAMCO FUND, INC.
By: /s/ Christina Seix
Christina Seix
President
Pursuant to the requirements of the Securities Act of
1933, as amended, this Registration Statement has been signed
below by the following person in the capacities indicated on the
4th day of August, 1997.
Signature Title
/s/ Christina Seix Director and President
Christina Seix (Principal Executive,
Financial and Accounting
Officer)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
EXHIBITS
TO
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AND THE
INVESTMENT COMPANY ACT OF 1940
_________________
SAMCO FUND, INC.
SAMCO FUND, INC.
INDEX TO EXHIBITS
Exhibit
Sequentially
Number Description of Exhibit
Numbered Page
1 Registrant's Articles of Incorporation
2 By-Laws
5 Form of Advisory Agreement between Registrant and Seix
Investment Advisors, Inc.
6 Form of Distribution Agreement between Registrant and
AMT Capital Services, Inc.
9 Form of Administration Agreement between Registrant
and AMT Capital Services, Inc.
ARTICLES OF INCORPORATION
SAMCO FIXED INCOME PORTFOLIO
FIRST: Formation.
The undersigned, Eric P. Nachimovsky, whose post office address is 600 Fifth
Avenue, 26th Floor New York, NY 10020, being at least eighteen years of age,
does under the general laws of the State of Maryland, associate himself as
incorporator with the intention of forming a corporation (hereinafter called
the "Corporation").
SECOND: Name.
The name of the Corporation is SAMCO Fund, Inc.
THIRD: Purpose.
The purpose for which the Corporation is formed is to act as an open-end
management investment company under the Investment Company Act of 1940, as
amended, as then in effect and the rules and regulations from time to time
promulgated and effective thereunder (referred to herein collectively as the
"Act") and to exercise and enjoy all of the powers, rights and privileges
granted to, or conferred upon, corporations by the Maryland General Corporation
Law now or hereafter in force.
FOURTH: Address and Resident Agent.
The post office address of the principal office of the Corporation in the State
of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, MD 21202. The name and address of the resident agent of the
Corporation in the State of Maryland is The Corporation Trust Incorporated, a
corporation of this State, 32 South Street, Baltimore, MD 21202.
FIFTH: Capital Stock.
(a) The total number of shares of capital stock of all classes that the
Corporation shall have authority to issue is Two Billion Five Hundred Million
(2,500,000,000), all of which capital stock shall have a par value of one-tenth
of one cent ($.001) per share to be known and designated as Common Stock, such
shares of Common Stock having an aggregate par value of $2,500,000.00. The Board
of Directors shall be authorized to increase or decrease the aggregate number of
authorized shares of Common Stock from time to time in accordance with the
provisions of the Maryland General Corporation Law.
(b) Subject to the provisions of these Articles of Incorporation, the
Board of Directors shall have the power to issue shares of Common Stock of the
Corporation from time to time, at prices not less than the par value thereof,
for such consideration as may be fixed from time to time pursuant to the
direction of the Board of Directors. All stock shall be issued on a fully paid
and non-assessable basis.
(c) Pursuant to Section 2-105 of the Maryland General Corporation Law, the
Board of Directors of the Corporation shall have the power to designate one or
more classes of shares of Common Stock, to fix the number of shares in any such
class and to classify or reclassify any unissued shares with respect to such
class. Any such class (subject to any applicable rule, regulation or order of
the Securities and Exchange Commission or other applicable law or regulation)
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 the Board may determine in the
absence of contrary determination set forth herein. The aforesaid power shall
include the power to create, by classifying or reclassifying unissued shares in
the aforesaid manner, one or more classes in addition to those initially
designated as named below. Subject to such aforesaid power, the Board of
Directors has initially designated two classes of shares of Common Stock of the
corporation.
The name of such classes and the number of shares of Common Stock initially
classified and allocated to these classes are as follows:
Number of Shares of Common Stock
Name of Class Initially Classified and Allocated
Fixed Income Fund 500,000,000
Unallocated Shares 2,000,000,000
(d) At any time when there are no shares outstanding or subscribed for a
particular class previously established and designated herein by the Board of
Directors, the class may be liquidated in accordance with applicable law or by
similar means. Each share of a class shall have equal rights with each other
share of that class with respect to the assets of the Corporation pertaining to
that class. The dividends payable to the holders of any class (subject to any
applicable rule, regulation or order of the Securities and Exchange Commission
or any other applicable law or regulation) shall be determined by the Board and
need not be individually declared, but may be declared and paid in accordance
with a formula adopted by the Board. Except as otherwise provided herein, all
references in these Articles of Incorporation to Common Stock or to a class of
stock shall apply without discrimination to the shares of each class of stock.
(e) The holder of each share of Common Stock of the Corporation shall be
entitled to one vote for each dollar, and a proportionate fraction of a vote
for each fraction of a dollar, of net asset value on the record date or the
date the stock transfer books of the Corporation are closed, as the case may
be, of each share of Common Stock of the Corporation, standing in his or her
name on the books of the Corporation on such date. On any matter submitted to
a vote of stockholders, all shares of the Corporation then issued and
outstanding and entitled to vote, irrespective of the class, shall be voted in
the aggregate and not by class except (1) when otherwise expressly provided by
the Maryland General Corporation Law, or when required by the Act, then shares
shall be voted by individual class; and (2) when the matter does not affect any
interest of a particular class, then only stockholders of such other class or
classes whose interests may be affected shall be entitled to vote thereon.
Holders of shares of stock of the Corporation shall not be entitled to
cumulative voting in the election of Directors or on any other matter.
(f) Each class of stock of the Corporation shall have the following
powers, preferences voting, or other special rights, and the qualifications,
restrictions, and limitations thereof shall be as follows:
1. All consideration received by the Corporation for the issue or sale
of stock of each class, together with all income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may
be, shall irrevocably belong to the class of shares of stock with
respect to which such assets, payments or funds were received by the
Corporation for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account of the
Corporation. Such assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation thereof and any assets derived from any reinvestment of
such proceeds, in whatever form the same may be, are herein referred
to as "assets belonging to" such class.
2. The Board of Directors may from time to time declare and pay
dividends or distributions, in stock or in cash, on any or all
classes of stock; provided, such dividends or distributions on
shares of any class of stock shall be paid only out of earnings,
surplus, or other lawfully available assets belonging to such class.
Subject to the foregoing proviso, the amount of any dividends or
distributions and the payment thereof shall be wholly in the
discretion of the Board of Directors.
3. The Board of Directors shall have the power in its discretion to
distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gain distributions,
amounts sufficient, in the opinion of the Board of Directors, to
enable the Corporation to qualify as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereof, and regulations promulgated
thereunder (collectively, the "IRC"), and to avoid liability for the
Corporation for Federal income tax in respect of that year and to
make other appropriate adjustments in connection therewith. The
Board of Directors shall have the power, in its discretion, to make
such elections as to the tax status of the Corporation or any class
of the Corporation as may be permitted or required by the IRC,
without the vote of stockholders of the Corporation or any class.
4. In the event of the liquidation or dissolution of the Corporation,
stockholders of each class shall be entitled to receive, as a class,
out of the assets of the Corporation available for distribution to
stockholders, but other than general assets, the assets belonging to
such class, and the assets so distributable to the stockholders of
any class shall be distributed among such stockholders in proportion
to the number of shares of such class held by them and recorded on
the books of the Corporation. In the event that there are any
general assets not belonging to any particular class of stock and
available for distribution, such distribution shall be made to the
holders of stock of all classes in proportion to the net asset value
of the respective class determined as hereinafter provided and
distributed to the holders of capital stock of each class in
proportion to the number of shares of that class held by the
respective holders.
5. The assets belonging to any class of stock shall be charged with the
liabilities in respect to such class, and shall also be charged with
its share of the general liabilities of the Corporation. General
liabilities shall be charged to classes in proportion to the net
asset value of the respective class determined as hereinafter
provided. The determination of the Board of Directors shall be
conclusive as to the amount of liabilities, including accrued
expenses and reserves, as to the allocation of the same as to a
given class, and as to whether the same or general assets of the
Corporation are allocable to one or more classes.
(g) The Board of Directors may provide for a holder of any class of stock
of the Corporation, who surrenders his certificate in good form for transfer to
the Corporation or, if the shares in question are not represented by
certificates, who delivers to the Corporation a written request in good order
signed by the shareholder, to convert the shares in question on such bases as
the Board may provide, into shares of stock of any other class of the
Corporation.
(h) No holder of any class of Common Stock of the Corporation or of any
other class of stock or securities which may hereafter be created shall be
entitled as such, as a matter of right, to subscribe for or purchase any part
of any new or additional issue of capital stock of any class, or of rights or
options to purchase any capital stock, or of securities convertible into, or
carrying rights or options to purchase, capital stock of any class, whether now
or hereafter authorized or whether issued for money, for consideration other
than money or by way of a dividend or otherwise, and all such rights are hereby
waived by each holder of Common Stock and of any other class of stock or
securities which may hereafter be created.
SIXTH: Board of Directors.
(a) Number and Election. The number of directors of the Corporation, so
long as there is no Common Stock outstanding, or, if there is Common Stock
outstanding, but there are less than three stockholders, shall be one. Except
as provided in the preceding sentence, the number of directors of the
Corporation shall initially be one (1) provided, however, that the number of
directors may be increased or decreased in accordance with the By-Laws so long
as the number is never less than three (3). Except as provided in the By-Laws,
the election of directors may be conducted in any way approved at the meeting
(whether stockholders or directors) at which the election is held, provided
that such election shall be by ballot whenever requested by any person entitled
to vote. The name of the director who shall act until the first annual
meeting or until her successor is duly elected and qualified is:
Christina Seix
(b) Removal of Directors. Subject to the limits of the Act and unless
otherwise provided by the By-Laws, a director may be removed with or without
cause, by the affirmative vote of a majority of (a) the Board of Directors, (b)
a committee of the Board of Directors appointed for such purpose, or (c) the
stockholders by vote of a majority of the outstanding shares of the Corporation.
(c) Responsibility and Liability. To the fullest extent permitted by
Maryland General Corporation Law, as it may be amended from time to time,
subject to the limitations imposed by the Act, no director or officer of the
Corporation shall be personally liable to the Corporation or its stockholders
for damages. This limitation on liability applies to events occurring at the
time a person serves as a director or officer of the Corporation, whether or
not such person is a director or officer at the time of any proceeding in which
liability is asserted. No amendment of the charter of the Corporation or
repeal of any of its provisions shall limit or eliminate any of the benefits
provided to directors and officers under this Article SIXTH in respect of any
act or omission that occurred prior to such amendment or repeal.
(d) Reliance on Books and Reports. Each director or officer or member of
any committee designated by the Board of Directors shall, in the performance of
his or her duties, be entitled to rely on any information, opinion, report, or
statement, including any financial statement or other financial data, prepared
or presented by (i) an officer or employee of the Corporation whom they
reasonably believe to be reliable and competent in the matters presented;
(ii) a lawyer, public accountant, or other person, as to a matter which they
believe to be within the person's professional or expert competence; and (iii)
a committee of the Board on which they do not serve, as to a matter within its
designated authority, if they reasonably believe the committee to merit
confidence.
(e) Indemnification. The Corporation, including its successors and
assigns, shall indemnify its directors and officers to the fullest extent
allowed, and in the manner provided, by Maryland General Corporation Law as it
may be amended from time to time and the Act, including the advancing of
reasonable expenses incurred in connection therewith. Such indemnification
shall be in addition to any other right or claim to which any director or
officer may otherwise been entitled. The Corporation may indemnify any other
persons permitted but not required to be indemnified by Maryland General
Corporation Law and the Act as they may be amended from time to time, if and to
the extent indemnification is authorized and determined to be appropriate in
each case in accordance with applicable law by the Board of Directors, the
stockholders, or special legal counsel appointed by the Board of Directors.
The Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee, or agent of the Corporation, or who,
while a director, officer, employee or agent of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
trustee, employee or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise or employee benefit plan,
against any liability asserted against and incurred by such person in any such
capacity or arising out of such person's position, whether or not the
Corporation would have had the power to indemnify such liability, but shall
not be required to purchase or maintain insurance on behalf of any such person.
No amendment of the Articles of Incorporation of the Corporation or repeal of
any of its provisions shall limit or eliminate any of the benefits provided
under this Article SIXTH in respect of any act or omission that occurred prior
to such amendment or repeal. The rights provided to any person by this
Article shall be enforceable against the Corporation by such person who shall
be presumed to have relied upon such rights in serving or continuing to serve
in the capacities indicated herein. No amendment of these Articles of
Incorporation shall impair the rights of any person arising at any time with
respect to events occurring prior to such amendment.
Nothing in these Articles of Incorporation shall be deemed to (i) require a
waiver of compliance with any provision of the Securities Act of 1933, as
amended, or the Act, or of any valid rule, regulation or order of the
Securities and Exchange Commission under those Acts or (ii) protect any
director or officer of the Corporation against any liability to the Corporation
or its stockholders to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of his or
her duties or by reason of his or her reckless disregard of his or her
obligations and duties hereunder.
(f) Severability. Each section or portion thereof of this Article SIXTH
shall be deemed severable from the remainder, and the invalidity of any such
section or portion shall not affect the validity of the remainder of this
Article
SEVENTH: Management of the Affairs of the Corporation.
The following provisions are inserted for the management of the business and
for the conduct of the affairs of the Corporation:
(a) The Board shall have power to fix an initial offering price for the
shares of any class which shall yield to the Corporation not less than the par
value thereof, at which price the shares of the Common Stock of the Corporation
shall be offered for sale, and to determine from time to time thereafter the
offering price which shall yield to the Corporation not less than the par value
thereof from sales of the shares of its Common Stock.
The net asset value of the property and assets of any class of the
Corporation shall be determined at such times as the Board of Directors may
direct, by deducting from the total appraised value of all of the property and
assets of the Corporation which constitute the assets belonging to the class,
determined in the manner hereinafter provided, all debts, obligations and
liabilities of the Corporation (including, but without limitation of the
generality of any of the foregoing, any or all debts, obligations, liabilities
or claims of any and every kind and nature, whether fixed, accrued, or
unmatured, and any reserves or charges, determined in accordance with generally
accepted accounting principles, for any or all thereof, whether for taxes,
including estimated taxes or unrealized book profits, expenses, contingencies
or otherwise) allocable to such class.
In determining the total appraised value of all the property and assets of
the Corporation or belonging to any class thereof:
1. Securities owned shall be valued at market value or, in the absence
of readily available market quotations, at fair value as determined
in good faith by or as directed by the Board of Directors in
accordance with applicable statutes and regulations.
2. Dividends declared but not yet received, or rights, in respect of
securities which are quoted ex-dividend or ex-rights, shall be
included in the value of such securities as determined by or
pursuant to the direction of the Board of Directors on the day the
particular securities are first quoted ex-dividend or ex-rights, and
on each succeeding day until the said dividends or rights are
received and become part of the assets of the Corporation.
3. The value of any other assets of the Corporation (and any of the
assets mentioned in paragraphs (1) or (2), in the discretion of the
Board of Directors in the event of national financial emergency, as
hereinafter defined) shall be determined in such manner as may be
approved from time to time by or pursuant to the discretion of the
Board of Directors.
The net asset value of each share of any class of the Common Stock of the
Corporation shall be determined by dividing the net asset value of the property
and assets of the relevant class of the Corporation, as defined above, by the
total number of shares of its Common Stock then issued and outstanding for such
class, including any shares of such class sold by the Corporation up to and
including the date as of which such net asset value is to be determined, whether
or not certificates therefor have actually been issued. In case the net asset
value of each share of any such class so determined shall include a fraction of
one cent, such net asset value of each share of that class shall be adjusted to
the nearer full cent.
For the purpose of these Articles of Incorporation, a "national financial
emergency" is defined as the whole or any part of any period (i) during which
the New York Stock Exchange is closed other than customary weekend and holiday
closing, (ii) during which trading on the New York Stock Exchange is restricted,
(iii) during which an emergency exists as a result of which disposal by the
Corporation of securities owned by such class is not reasonably practicable or
it is not reasonably practicable for the Corporation fairly to determine the
value for the net assets of such class, or (iv) during any other period when
the Securities and Exchange Commission (or any succeeding governmental
authority) may for the protection of security holders of the Corporation by
order permit suspension of the right of redemption or postponement of the date
of payment on redemption; provided that applicable rules and regulations of the
Securities and Exchange Commission (or any succeeding governmental authority)
shall govern as to whether the conditions prescribed in (ii), (iii), or (iv)
exist.
Notwithstanding any other provisions of this Article, the Board of
Directors may suspend the right of stockholders of any or all classes of shares
to require the Corporation to redeem shares held by them for such periods and to
the extent permitted by, or in accordance with, the Act. The Board of Directors
may, in the absence of a ruling by a responsible regulatory official, terminate
such suspension at such time as the Board of Directors, in its discretion,
shall deem reasonable, such determination to be conclusive.
(b) To the extent permitted by law, except in the case of a national
financial emergency or as otherwise permitted or required in this Article
SEVENTH, the Corporation shall redeem shares of its Common Stock from its
stockholders upon request of the holder thereof received by the Corporation or
its designated agent during business hours of any business day, provided that
such request must be accompanied by surrender of outstanding certificate or
certificates for such shares in form for transfer and must be in writing or,
subject to limitations established by the Board of Directors, received by
telephone and insofar as it may relate to shares for which no certificate has
been issued, together with such proof of the authenticity of signatures as may
reasonably be required with respect to such certificated shares (or, on such
request in the event no certificate is outstanding) by, or pursuant to the
direction of the Board of Directors of the Corporation, and accompanied by
proper stock transfer stamps. Shares redeemed upon written request shall be
redeemed by the Corporation at the net asset value of such shares determined in
the manner provided in Paragraph (a) of this Article SEVENTH, less the amount
of any applicable redemption charge or deferred sales charge imposed by the
Board of Directors (to the extent consistent with applicable law), as of the
close of business on the business day during which such request was received in
good order by the Corporation.
Payments of shares of its Common Stock so redeemed by the Corporation shall
be made only from assets of the applicable class lawfully available therefor
and out of such assets. Payment shall be in cash, except payment for such
shares may, at the option of the Board of Directors, or such officer or
officers as they may duly authorize for the purpose in their complete
discretion, be made from the assets of that class in kind, or partially in
cash and partially in kind. In case of any payment in kind the Board of
Directors, or its delegate, shall have absolute discretion as to what security
or securities constituting assets belonging to such class shall be distributed
in kind and the amount of the same; and the securities shall be valued for
purpose of distribution at the value at which they were appraised in computing
the current net asset value of the class of the Corporation's shares, provided
that any stockholder who cannot legally acquire securities so distributed in
kind by reason of the prohibitions of the Act shall receive cash.
Payments for shares of its Common Stock so redeemed by the Corporation
shall be made by the Corporation as provided above within seven days after the
date which the request for redemption of such shares has been received in good
order by the Corporation or its designated agent; provided, however, that if
payment shall be made by delivery of assets of the Corporation, as provided
above, any securities to be delivered as part of such payment shall be
delivered as promptly as any necessary transfers of such securities on the
books of the several issuers whose securities are to be delivered may be made,
but not necessarily within such seven day period.
The right of any holder of shares of the Common Stock of the Corporation to
receive dividends thereon and all other rights of such stockholder with respect
to the shares so redeemed by the Corporation shall cease and determine from and
after the time as of which the purchase price of such shares shall be fixed, as
provided above, except the right of such stockholder to receive payment for
such shares as provided for herein.
(c) The Board of Directors, may from time to time, without the vote or
consent of stockholders, establish uniform standards with respect to the
minimum net asset value of a stockholder account or minimum investment which
may be made by a stockholder. The Board of Directors may authorize the
closing of those stockholder accounts not meeting the specified minimum
standards of net asset value by redeeming all of the shares in such accounts,
provided there is mailed to each affected stockholder account, at least sixty
(60) days prior to the planned redemption date, a notice setting forth the
minimum account size requirement and the date on which the account will be
closed if the minimum size requirement is not met prior to said closing date.
EIGHTH: Determination Binding.
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practice by or pursuant to the
authority or the direction of the Board of Directors, as to the amount of
assets, obligations or liabilities of the Corporation from dividends and
interest for any period or amounts at any time legally available for the
payment of dividends, as to the amount of any reserves or charges set up and
the propriety thereof, as to the time of or purpose for creating reserves or as
to the use, alteration or cancellation of any reserves or charges (whether or
not any obligation or liability for which such reserves or charges shall have
been created, shall have been paid or discharged or shall be then or thereafter
required to be paid or discharged), as to the price of any security owned by
the Corporation or as to any other matters relating to the issuance, sale,
redemption or other acquisition or disposition of securities or shares of
capital stock of the Corporation, and any reasonable determination made in good
faith by the Board of Directors shall be final and conclusive, and shall be
binding upon the Corporation and all holders of its capital stock, past,
present, and future, and shares of the capital stock of the Corporation are
issued and sold on the condition and understanding, evidenced by the purchase
of shares of capital stock or acceptance of share certificates, that any and
all such determinations shall be binding as aforesaid. No provision of these
Articles of Incorporation shall be effective to require a waiver of
compliance with any provision of the Act or the Securities Act of 1933, or of
any valid rule, regulation or order of the Securities and Exchange Commission
thereunder.
NINTH: Contracts and Agreements.
The Corporation is expressly empowered as follows:
(a) The Corporation may enter into a written contract or contracts with
any person or organization, including any firm, corporation, trust or
association in which any officer, other employee, director or stockholder of the
Corporation may be interested, providing for a delegation of the management of
all of the Corporation's securities portfolios and also for the delegation of
the performance of administrative corporate functions subject always to the
direction of the Board of Directors. The compensation payable by the
Corporation under such contracts shall be such as is deemed fair and equitable
to both parties and by the Board of Directors. Each such contract shall in all
respects be consistent with and subject to the requirements of the Act as then
in effect and regulation of the Securities and Exchange Commission (or any
succeeding governmental authority) promulgated thereunder.
(b) The Corporation may appoint one or more distributors or agents or both
for the sale of the shares of the Corporation, may directly or indirectly
compensate such person or persons for the sale of such shares and may enter
into such contract or contracts with such person or persons as the Board of
Directors of the Corporation in its discretion may deem reasonable and proper.
(c) The Corporation may employ such custodian or custodians for the
safekeeping of the property of the Corporation and its shares, such dividend
disbursing agent or agents, and such transfer agent or agents and registrar or
registrars for its shares, and may make and perform such contracts for the
aforesaid purposes as in the opinion of the Board of Directors of the
Corporation may be reasonable, necessary, or proper for the conduct of the
affairs of the Corporation, and may pay the fees and disbursements of such
custodians, dividend disbursing agents, transfer agents, and registrars out of
the income and/or any other property of the Corporation.
Notwithstanding any other provision of these Articles of Incorporation or
the By-Laws of the Corporation, the Board of Directors may cause any or all of
the property of the Corporation to be transferred to or to be acquired and held
in the name of the Corporation or nominee or nominees of such custodian
satisfactory to the Board of Directors.
(d) All contracts entered into pursuant to subsections (a), (b), and (c),
of this Article NINTH shall in all respects be consistent with and subject to
the requirements of the Act as then in effect and regulations of the
Securities and Exchange Commission promulgated thereunder.
(e) The same person, partnership (general or limited), association, trust
or corporation may be employed in any multiple capacity under subsection (a),
(b) and (c) of this Article NINTH and may receive compensation from the
Corporation in as many capacities as such person, partnership (general or
limited), association, trust or corporation shall serve the Corporation. The
same person may be financially interested in or otherwise affiliated (as
defined in the Act) with persons who are parties to any or all of the contracts
entered into by the Corporation pursuant to this Article NINTH. Any contract
entered into pursuant to this Article NINTH may be made with any person even
though an officer, other employee, director or stockholder of the Corporation
may be such other person or may have an interest in such other person. No
contract entered into by the Corporation with any other party pursuant to
this Article NINTH shall be invalidated or rendered voidable because any
officer, other employee, director or stockholder of the Corporation is such
other party or has an interest in such other party. No person having an
interest in such other party shall be liable merely by reason of such
interest for any loss or expense to the Corporation under or by reason of
said contract or accountable for any profit realized directly therefrom,
provided that all provisions of applicable laws were complied with when the
Corporation entered into the contract.
TENTH: Other Powers.
In furtherance, and not in limitation, of the powers conferred by the laws of
the State of Maryland, the Board of Directors is expressly authorized:
(a) To make, alter or repeal the By-Laws of the Corporation, except where
such power is reserved by the By-Laws to the stockholders, and except as
otherwise required by the Act.
(b) From time to time to determine whether and to what extent and at what
times and places and under what conditions and regulations the books and
accounts of the Corporation or any of them other than the stock ledger, shall
be open to the inspection of the stockholders, and no stockholder shall have
any right to inspect any account or book or document of the Corporation,
except as conferred by law or authorized by resolution of the Board of
Directors or of the stockholders.
(c) Without the assent or vote of the stockholders, to authorize and issue
obligations of the Corporation, secured and unsecured, as the Board of
Directors may determine, and to authorize and cause to be executed mortgages
and liens upon the property of the Corporation, real or personal but only to
the extent permitted by the fundamental policies of the Corporation recited in
its registration statement filed pursuant to the Act.
(d) In addition to the powers and authorities granted herein and by
statute expressly conferred upon it, the Board of Directors is authorized to
exercise all such powers and do all acts and things as may be exercised or done
by the Corporation, subject, nevertheless, to the provisions of Maryland
General Corporation Law, of these Articles of Incorporation, and of the By-Laws
of the Corporation.
(e) To authorize from time to time the payment of compensation and
expenses to the Directors for services to the Corporation, including fees for
attendance at meetings of the Board of Directors and committees thereof.
(f) Subject to the requirements of applicable law, to establish, in its
absolute discretion, the basis or method, timing and frequency for determining
the value of assets belonging to each class or series and for determining the
net asset value of each share of each class or series for purposes of sales,
redemptions, repurchases or otherwise.
Without limiting the foregoing, the Board of Directors may determine that
the net asset value per share of any class or series should be maintained at a
designated constant value and may adopt procedures, not inconsistent with
applicable law, to accomplish that result. Such procedures may include a
requirement, in the event of a net loss with respect to the particular class or
series from time to time, for automatic pro rata capital contributions from
each stockholder of that class or series in amounts sufficient to maintain the
designated constant share value.
(g) To make such elections, in its discretion, as to the tax status of the
Corporation or any class of the Corporation's capital stock as may be permitted
or required by the IRC.
ELEVENTH: Location of Books and Records.
The books of the Corporation may be kept (subject to any provisions contained
in applicable statutes) outside the State of Maryland at such place or places
as may be designated from time to time by the Board of Directors or in the
By-Laws of the Corporation. Election of directors need not be by ballot unless
the By-Laws of the Corporation shall so provide.
TWELFTH: Reservation of Right to Amend.
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
THIRTEENTH: Shareholder Voting.
(a) Quorum. The presence in person or by proxy of the holders of Common
Stock of the Corporation entitled to cast one-third of the votes entitled to be
cast thereat, without regard to class, shall constitute a quorum at any meeting
of the stockholders, except with respect to any matter which, under applicable
statutes or regulatory requirements, requires approval by a separate vote of
one or more classes of stock, in which case the presence in person or by proxy
of the holders of Common Stock entitled to cast one-third of the votes of each
class required to vote as a class on the matter shall constitute a quorum.
If at any meeting of the stockholders there shall be less than a quorum
present, the stockholders present at such meeting may, without further notice,
adjourn the same from time to time until a quorum shall be present.
(b) Shareholder Majority. Notwithstanding any provision of Maryland
General Corporation Law requiring more than a majority vote of the Common
Stock, or any class thereof, in connection with any corporation action
(including, but not limited to, the amendment of these Articles of
Incorporation), unless otherwise provided in these Articles of Incorporation
the Corporation may take or authorize such action upon the favorable vote of
the holders of Common Stock entitled to cast a majority of the votes thereon.
FOURTEENTH: Duration.
The duration of the Corporation shall be perpetual.
FIFTEENTH: No Liability.
The stockholders of the Corporation shall not be liable for, and their private
property shall not be subject to, claim levy or other encumbrance on account of
the debts or liabilities of the Corporation, to any extent whatsoever.
SIXTEENTH: Owner of Record.
The Corporation shall be entitled to treat the person in whose name any share
of the capital stock of the Corporation is registered as the owner thereof for
purposes of dividends and other distributions in the course of business or in
the course of recapitalization, sale of the property and assets of the
Corporation, or otherwise, and for the purpose of votes, approvals and consents
by stockholders and for the purpose of notices to stockholders, and for all
other purposes whatsoever; and the Corporation shall not be bound to recognize
any equitable or other claim to or interest in such share, on the part of any
other person, whether or not the Corporation shall have notice thereof, save as
expressly required by law.
I acknowledge these Articles of Incorporation to be my act and further
acknowledge that, to the best of my knowledge the matters and facts set forth
therein are true in all material respects under the penalties of perjury, this
1 day of August, 1997.
/Eric P. Nachimovsky
Eric P. Nachimovsky
BY-LAWS OF
SAMCO FUND, INC.
ARTICLE I
Fiscal Year and Offices
Section 1
FISCAL YEAR. Unless otherwise provided by resolution of the Board of
Directors, the fiscal year of the Corporation shall begin on the first day of
January and end on the last day of December.
Section 2
REGISTERED OFFICE. The registered office of the Corporation in Maryland shall
be located at c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, MD 21202 and the name and address of its Resident Agent is The
Corporation Trust Incorporated, 32 South Street, Baltimore, MD 21202.
Section 3
OTHER OFFICES. The Corporation shall also have a place of business in New
York and the Corporation shall have the power to open additional offices for
the conduct of its business, either within or outside the States of New York
and Maryland as such places as the Board of Directors may from time to time
designate.
ARTICLE II
Meetings of Stockholders
Section 1
PLACE OF MEETINGS. All meetings of the stockholders of the Corporation (the
"Stockholders") shall be held at the office of the Corporation in the City of
New York or at such other place within the United States as may from time to
time be designated by the Board and stated in the notice of such meeting.
Section 2
ANNUAL MEETINGS. The First Annual Meeting of Stockholders shall be held at
such time and on such date during the first six months of the first fiscal
year of the Corporation as may be fixed by the Board of Directors by
resolution. At the Annual Meeting, the Stockholders shall elect a Board of
Directors and transact any other business which may properly be brought before
the meeting. Thereafter, annual meetings of Stockholders will not be held in
any years in which the election of directors is not required to be acted upon
under the Investment Company Act of 1940 (the "Act").
Section 3
SPECIAL MEETINGS. Special Meetings of the Stockholders may be called at any
time by the Chairman of the Board or the President, or by a majority of the
Board of Directors, and shall be called by the Chairman of the Board,
President or Secretary upon written request of the holders of shares entitled
to cast not less than ten percent of all the votes entitled to be cast at such
meeting provided that (a) such request shall state the purposes of such
meeting and the matters proposed to be acted on, and (b) the Stockholders
requesting such meeting shall have paid to the Corporation the reasonably
estimated cost of preparing and mailing the notice thereof, which the
Secretary shall determine and specify to such Stockholders. Unless requested
by Stockholders entitled to cast a majority of all the votes entitled to be
cast at the meeting, no Special Meeting needs be called to consider any matter
which is substantially the same as a matter voted on at any meeting of the
Stockholders held during the preceding twelve months.
Section 4
NOTICE. Not less than ten nor more than ninety days before the date of every
Annual or Special Stockholders' Meeting, the Secretary shall cause to be
personally delivered, left at his (her) residence or usual place of business,
or mailed to each Stockholder entitled to vote at such meeting at his (her)
address (as it appears on the records of the Corporation at the time of
mailing) written notice stating the time and place of the meeting and, in the
case of a Special Meeting of Stockholders, shall be limited to the purposes
stated in the notice. Notice of any Stockholders' meeting need not be given
to any Stockholder who shall sign a written waiver of such notice whether
before or after the time of such meeting, provided that such waiver of notice
shall be filed with the record of such meeting or to any Stockholder who shall
attend such meeting in person or by proxy. Notice of adjournment of a
Stockholders' meeting to another time or place need not be given, if such time
and place are announced at the meeting. Irregularities in the notice or in
the giving thereof as well as the accidental omission to give notice of any
meeting to, or the non-receipt of any such notice by, any of the Stockholders
shall not invalidate any action taken by or at any such meeting.
Section 5
RECORD DATE FOR MEETINGS. The Board of Directors may fix in advance a date
not more than ninety days, nor less than ten days, prior to the date of any
Annual or Special Meeting of the Stockholders as a record date for the
determination of the Stockholders entitled to receive notice of, and to vote
at any meeting and any adjournment thereof; and in such case such Stockholders
and only such Stockholders as shall be Stockholders of record on the date so
fixed shall be entitled to receive notice of and to vote at such meeting and
any adjournment thereof as the case may be, notwithstanding any transfer of
any stock on the books of the Corporation after any such record date fixed as
aforesaid.
Section 6
VOTING. Each Stockholder shall have one vote for each dollar, and a
proportionate fraction of a vote for each fraction of a dollar, of the net
asset value per share of each share of Common Stock of the Corporation held by
such stockholder on the record date set pursuant to Section 5 on each matter
submitted to a vote at a meeting of Stockholders. Such vote may be made in
person or by proxy. If no record date has been fixed for the determination of
stockholders, the record date for the determination of Stockholders entitled
to notice of or to vote at a meeting of Stockholders shall be at the close of
business (i) on the day on which notice of the meeting is mailed or (ii) on
the day 30 days before the meeting, whichever is the closer date to the
meeting. At all meetings of the Stockholders, a quorum being present, all
matters shall be decided by a majority of the votes cast in person or by
proxy, unless the question is one which by express provision of the laws of
the State of Maryland, the Act, as from time to time amended, or the Articles
of Incorporation, a different vote is required, in which case such express
provision shall control the decision of such question. At all meetings of
Stockholders, unless the voting is conducted by inspectors, all questions
relating to the qualification of voters and the validity of proxies and the
acceptance or rejection of votes shall be decided by the Chairman of the
meeting.
Section 7
VOTING - PROXIES. The right to vote by proxy shall exist only if the
instrument authorizing such proxy to act shall have been executed in writing
by the Stockholder himself (herself) or by his (her) attorney thereunto duly
authorized in writing. No proxy shall be voted on after eleven months from
its date unless it provides for a longer period. Each proxy shall be in
writing subscribed by the Stockholder or his (her) duly authorized attorney
and shall be dated, but need not be sealed, witnessed or acknowledged.
Proxies shall be delivered to the Secretary of the Corporation or person
acting as Secretary of the meeting before being voted. A proxy with respect
to stock held in the name of two or more persons shall be valid if executed by
one of them unless at or prior to exercise of such proxy the Corporation
receives a specific written notice to the contrary from any one of them. A
proxy purporting to be executed by or on behalf of a Stockholder shall be
deemed valid unless challenged at or prior to its exercise.
Section 8
CONDUCT AT STOCKHOLDERS MEETINGS. The Chairman of the Stockholders' meeting
shall be the President of the Corporation, or if he (she) is not present, a
director or officer of the Corporation to be elected at the meeting. The
Chairman of a Stockholders' meeting shall preside over such meeting. The
Secretary of the Corporation, if present, shall act as a Secretary of such
meeting, or if he (she) is not present, an Assistant Secretary shall so act;
if neither the Secretary nor any Assistant Secretary is present, then the
presiding officer at the meeting shall act as the Secretary of such meeting.
Section 9
INSPECTORS. At any election of directors, the Board of Directors prior
thereto may, or, if they have not so acted, the Chairman of the meeting may,
appoint one or more inspectors of election who shall first subscribe an oath
of affirmation to execute faithfully the duties of inspectors at such election
with strict impartiality and according to the best of their ability, and shall
after the election make a certificate of the result of the vote taken. No
candidate for the office of director shall be appointed such inspector.
Section 10
STOCK LEDGER AND LIST OF STOCKHOLDERS. It shall be the duty of the Secretary
or Assistant Secretary of the Corporation to cause an original or duplicate
stock ledger to be maintained at the office of the Corporation's transfer
agent. Such stock ledger may be in written form or any other form capable of
being converted into written form within a reasonable time for visual
inspection. Any one or more persons, each of whom has been a Stockholder of
record of the Corporation for more than six months next preceding such
request, who owns or own in the aggregate 5% or more of the outstanding Common
Stock of any class of the Corporation, may submit a written request to any
officer of the Corporation or its resident agent in Maryland for a list of the
Stockholders of the Corporation. Within 20 days after such a request, there
shall be prepared and filed at the Corporation's principal office a list
containing the names and address of all Stockholders of the Corporation and
the number of shares of each class held by each Stockholder, certified as
correct under oath by an officer of the Corporation, by its stock transfer
agent, or by its registrar.
Section 11
ACTION WITHOUT MEETING. Any action to be taken by Stockholders may be taken
without a meeting if all Stockholders entitled to vote on the matter consent
to the action in writing and if all Stockholders entitled to notice of the
meeting but not entitled to vote at it waive any right to dissent in writing
and the written consents and waivers are filed with the records of the
meetings of Stockholders. Such consent shall be treated for all purposes as a
vote at a meeting.
ARTICLE III
Directors
Section 1
GENERAL POWERS. The business of the Corporation shall be under the direction
of its Board of Directors, which may exercise all powers of the Corporation,
except such as are by statute, or the Articles of Incorporation, or by these
By-Laws conferred upon or reserved to the Stockholders. All acts done by any
meeting of the Board of Directors or by any person acting as a director, so
long as his (her) successor shall not have been duly elected or appointed,
shall, notwithstanding that it be afterwards discovered that there was some
defect in the election of the directors or of such person acting as aforesaid
or that they or any of them were disqualified, be as valid as if the directors
or such other person, as the case may be, had been duly elected and were or
was qualified to be directors or a director of the Corporation.
Section 2
NUMBER AND TERM OF OFFICE. The number of directors which shall constitute the
whole Board shall be determined from time to time by the Board of Directors,
but shall not be fewer than three , nor more than fifteen. Each director
elected shall hold office until his successor is elected and qualified.
Directors need not be Stockholders.
Section 3
INCREASE OR DECREASE IN NUMBER OF DIRECTORS. The directors, by the vote of a
majority of all the directors then in office, may increase the number of
directors and may elect directors to fill the vacancies created by such
increase in the number of directors. The Board of Directors, by the vote of a
majority of all the directors then in office, may likewise decrease the number
of directors to a number not less than three (3), provided that the tenure of
office of a director may not be changed by any such decrease. Any director
elected to fill a vacancy created by an increase in the number of directors
shall hold office until his (her) successor is elected and qualifies.
Section 4
ELECTION. Initially the directors shall be those persons named as such in the
Articles of Incorporation. Each director shall hold office for a tenure to be
set by resolution of the Board of Directors and until his (her) successor has
been duly elected and qualifies, until his (her) death, or until he (she) has
resigned or has been removed pursuant to the applicable provisions of these
By-Laws. To the extent that election of the members of the Board of Directors
is required by the Act and except as herein provided, the members of the Board
of Directors shall be elected by the vote of the holders of record of a
majority of the shares of stock present in person or by proxy and entitled to
vote at the applicable meeting of Stockholders. In the case of any vacancy or
vacancies in the office of director through death, resignation or otherwise,
other than an increase in the number of directors, a majority of the remaining
directors, although a majority is less than a quorum, by an affirmative vote,
or the sole remaining director, may elect a successor or successors, as the
case may be, to hold office until the next meeting of Stockholders and until
his (her) successor is chosen and qualifies. In the case of a vacancy which
results from an increase in the number of directors, a majority of the entire
Board of Directors may fill such a vacancy.
Section 5
REMOVAL OF DIRECTORS. At any Stockholders Meeting, provided a quorum is
present, any director may be removed (either with or without cause) by the
vote of the holders of a majority of the shares present or represented at the
meeting, and at the same meeting a duly qualified person may be elected in his
(her) stead by a majority of the votes validly cast.
Section 6
PLACE OF MEETING. Meetings of the Board of Directors, regular or special, may
be held at any place in or out of the States of Maryland or New York as the
Board may from time to time determine.
Section 7
QUORUM. One-third of the entire Board of Directors then in office shall
constitute a quorum for the transaction of business, provided that a quorum
for the transaction of business shall be no less than one-third of the total
number of directors fixed pursuant to Section 2 and in no case shall be less
than two directors . If at any meeting of directors there shall be less than
a quorum present, a majority of those present may adjourn the meeting from
time to time until a quorum shall have been obtained. The act of the majority
of the directors present at any meeting at which there is a quorum shall be
the act of the directors, except as otherwise specifically provided by law, by
the Corporation's Articles of Incorporation or by these By-Laws.
Section 8
REGULAR MEETINGS. Regular meetings of the Board of Directors may be held
without notice at such time and place as shall from time to time be determined
by the Board of Directors provided that notice of any change in the time or
place of such meeting shall be sent promptly to each director not present at
the meeting at which such change was made in the manner provided for notice of
special meetings. Members of the Board of Directors or any committee
designated thereby may participate in a meeting of such Board or committee by
means of a conference telephone or similar communications equipment by means
of which all persons participating in the meeting can hear each other at the
same time, and participation by such means shall constitute presence in person
at a meeting.
Section 9
SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by
the Chairman of the Board or the President on one day's oral, telegraphic or
written notice to each director; Special Meetings shall be called by the
Chairman of the Board, President or Secretary in like manner and on like
notice on the written request of two directors.
Section 10
INFORMAL ACTIONS. Any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if a written consent to such action is signed in one or
more counterparts by all members of the Board or of such committee, as the
case may be, and such written consent is filed within the minutes of
proceedings of the Board or committee.
Section 11
COMMITTEES. The Board of Directors, by the affirmative vote of a majority of
the directors then in office, may establish committees which shall in each
case consist of such number of directors (but not less than two) and shall
have and may exercise such powers, subject to any limitations in law or in the
Corporation's Articles of Incorporation, as the directors may determine in the
resolution appointing them. A majority of all the members of any such
committee may determine its action and fix the time and place of its meetings,
unless the directors shall otherwise provide. The directors shall have power
at any time to change the members and powers of any such committee, to fill
vacancies and to discharge any such committee.
Section 12
ACTION OF COMMITTEES. In the absence of an appropriate resolution of the
Board of Directors, each committee may adopt such rules and regulations
governing its proceedings, quorum and manner of acting as it shall deem proper
and desirable, provided that the quorum shall not be less than two directors.
The committees shall keep minutes of their proceedings and shall report the
same to the Board of Directors at the meeting next succeeding, and any action
by the committee shall be subject to revisions and alteration by the Board of
Directors, provided that no rights of these persons shall be affected by any
such revision or alteration. In the absence of any member of such committee
the members thereof present at any meeting, whether or not they constitute a
quorum, may appoint a member of the Board of Directors to act in the place of
such absent member.
Section 13
PRESUMPTION OF ASSENT. A director who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action taken unless he (she) announces his (her)
dissent at the meeting and his (her) dissent is entered in the minutes of the
meeting, or he (she) files his (her) written dissent to the action before the
meeting adjourns with the person acting as the Secretary of the meeting, or he
(she) forwards his (her) written dissent within 24 hours after the meeting is
adjourned to the Secretary of the Corporation. The right to dissent does not
apply to a director who voted in favor of the action or who failed to make his
(her) dissent known at the meeting. A director may abstain from voting on any
matter coming before the meeting by stating that he (she) is so abstaining at
the time the vote is taken and by causing his (her) abstention to be recorded
or stated in writing in the same manner as provided above for a dissent.
Section 14
COMPENSATION. Any director who is not an employee of Seix Investment
Advisors, Inc., AMT Capital Services, Inc., or any other entity providing
services to the Corporation, may be compensated for his (her) services as
director or as a member of a committee of directors, or as Chairman of the
Board or chairman of a committee by fixed periodic payments or by fees for
attendance at meetings or by both. All officers and directors of the
Corporation may be reimbursed for transportation and other expenses, all in
such manner and amounts as the Board of Directors may from time to time
determine.
ARTICLE IV
Notices
Section 1
FORM. Notices to Stockholders shall be in writing and delivered personally or
mailed to the Stockholders at their addresses appearing on the books of the
Corporation. Notices to directors shall be oral or by telephone or telegram
or in writing delivered personally or mailed to the directors at their
addresses appearing on the books of the Corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors need not state the purpose of a Regular or Special Meeting.
Section 2
WAIVER. Whenever any notice of the time, place or purpose of any meeting of
Stockholders, directors or a committee is required to be given under the
provisions of Maryland General Corporation Law or under the provisions of
Articles of Incorporation or the By-Laws, a waiver thereof in writing, signed
by the person or persons entitled to such notice and filed with the records of
the meeting, whether before or after the holding thereof, or actual attendance
at the meeting of Stockholders in person or by proxy, or at the meeting of
directors of committee in person, shall be deemed equivalent to the giving of
such notice to such persons.
ARTICLE V
Officers
Section 1
EXECUTIVE OFFICERS. The officers of the Corporation shall be chosen by the
Board of Directors and shall include a President who shall be a director, a
Vice President, a Secretary and a Treasurer. The Board of Directors, at its
discretion, may also appoint a director as Chairman of the Board who shall
perform and execute such executive and administrative duties and powers as the
Board of Directors shall from time to time prescribe. The same person may
hold two or more offices, except that no person shall be both President and
Vice President and no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by law,
the Articles of Incorporation or these By-Laws to be executed, acknowledged or
verified by two or more officers.
Section 2
ELECTION. The Board of Directors shall choose a President, a Secretary and a
Treasurer at its first meeting and thereafter at the next meeting following a
Stockholders' Meeting at which directors were elected.
Section 3
OTHER OFFICERS. The Board of Directors from time to time may appoint such
other officers and agents as it shall deem advisable, who shall hold their
offices for such terms and shall exercise powers and perform such duties as
shall be determined from time to time by the Board. The Board of Directors
from time to time may delegate to one or more officers or agents the power to
appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
Section 4
COMPENSATION. The salaries and other compensation of all officers and agents
of the Corporation shall be fixed by the Board of Directors, except that the
Board of Directors may delegate to any person or group of persons the power to
fix the salary or their compensation of any subordinate officers or agents
appointed pursuant to Section 3 of this Article V.
Section 5
TENURE. The officers of the corporation shall serve for one year and until
their successors are chosen and qualify. Any officer or agent may be removed
at any time, with or without cause, by the affirmative vote of a majority of
the Board of Directors. In addition, any officer or agent appointed pursuant
to Section 3 may be removed, either with or without cause, by any officer upon
whom such power of removal shall have been conferred by the Board of
Directors. Any officer may resign his (her) office at any time by delivering
a written resignation to the Board of Directors, the President, the Secretary,
or any Assistant Secretary, and, unless otherwise specified therein, such
resignation shall take effect upon delivery. Any vacancy occurring in any
office of the Corporation by death, resignation, removal or otherwise shall be
filled by the Board of Directors, unless pursuant to Section 3 the power of
appointment has been conferred by the Board of Directors on any other officer.
Section 6
PRESIDENT. The President shall be the Chief Executive Officer of the
Corporation; and unless the Chairman has been so designated, he (she) shall
preside at all meetings of the Stockholders and directors, and shall see that
all orders and resolutions of the Board are carried into effect. The
President, unless the Chairman has been so designated, shall also be the chief
administrative officer of the Corporation and shall perform such other duties
and have such other powers as the Board of Directors may from time to time
prescribe.
Section 7
CHAIRMAN OF THE BOARD. The Chairman of the Board, if one shall be chosen,
shall preside at all meetings of the Board of Directors and Stockholders, and
shall perform and execute such executive duties and administrative powers as
the Board of Directors shall from time to time prescribe.
Section 8
VICE PRESIDENT. The Vice President shall see that all orders and resolutions
of the Board are carried into effect. The Vice President shall also have
primary supervisory responsibility for the Fund's marketing and distribution
efforts as the Board of Directors shall from time to time prescribe.
Section 9
SECRETARY. The Secretary shall attend all meetings of the Board of Directors
and all meetings of the Stockholders and record all the proceedings thereof
and shall perform like duties for any committee when required. He (she) shall
give or cause to begin, notice of meetings of the Stockholders and of the
Board of Directors, shall have charge of the records of the Corporation,
including the stock books, and shall perform such other duties as may be
prescribed by the Board of Directors or Chief Executive Officer, under whose
supervision he (she) shall be. He (she) shall keep in safe custody the seal
of the Corporation and, when authorized by the Board of Directors, shall affix
and attest the same to any instrument requiring it. The Board of Directors
may give general authority to any other officer to affix the seal of the
Corporation and to attest the affixing by his (her) signature.
Section 10
ASSISTANT SECRETARY. The Assistant Secretaries in order of their seniority,
shall, in the absence or disability of the Secretary, perform the duties and
exercise the powers of the Secretary and shall perform such other duties as
the Board of Directors shall prescribe.
Section 11
TREASURER. The Treasurer, unless another officer has been so designated,
shall be the principal financial and accounting officer of the Corporation.
Except as otherwise provided by the Board of Directors, he (she) shall have
general supervision of the funds and property of the Corporation and of the
performance by the custodian of its duties with respect thereto. He (she)
shall render to the Board of Directors, whenever directed by the Board, an
account of the financial condition of the Corporation and of all his (her)
transactions as Treasurer; and as soon as possible after the close of each
financial year he (she) shall make and submit to the Board of Directors a like
report for such financial year. He (she) shall cause to be prepared annually
a full and correct statement of the affairs of the Corporation, including a
balance sheet and a financial statement of operations for the preceding fiscal
year, which shall be submitted to the Annual Meeting of Stockholders and filed
within sixty days thereafter at the principal office of the Corporation in the
State of New York. He (she) shall perform all the acts incidental to the
office of Treasurer, subject to the control of the Board of Directors.
Section 12
ASSISTANT TREASURER. The Assistant Treasurers, in the order of the seniority,
shall in the absence or disability of the Treasurer, perform the duties and
exercise the powers of the Treasurer and shall perform such other duties as
the Board of Directors may from time to time prescribe.
Section 13
SURETY BOND. The Board of Directors may require any officer or agent of the
Corporation to execute a bond (including, without limitation, any bond
required by the Investment Company Act of 1940, as amended, and the rules and
regulations of the Securities and Exchange Commission ) to the Corporation in
such sum and with such surety or sureties as the Board of Directors may
determine, conditioned upon the faithful performance of his (her) duties of
the Corporation, including responsibility for negligence and for the
accounting of any Corporation's property, funds or securities that may come
into his (her) hands.
ARTICLE VI
Stock
Section 1
CERTIFICATES. To the extent permitted by Maryland General Corporation Law
and if approved by resolution of the Board of Directors, Stockholders shall
not be entitled to a certificate or certificates. Any certificates issued
shall be in the form approved by the Board of Directors which shall certify
the class and the number of shares owned by him (her) in the Corporation.
Each certificate shall be signed by the President and counter-signed by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer.
Section 2
SIGNATURE. Where a certificate is signed (1) by a transfer agent or an
assistant transfer agent or (2) by a transfer clerk acting on behalf of the
Corporation and a registrar, the signature of any such President, Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary may be a facsimile. In
case any officer who has signed any certificate ceases to be an officer of the
Corporation before the certificate is issued, the certificate may nevertheless
be issued by the Corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue.
Section 3
TRANSFER OF SHARES. Shares of Common Stock of the Corporation shall be
transferable on the register of the Corporation by the holder thereof in
person or by his (her) agent duly authorized in writing, upon delivery to
the directors or the Transfer Agent of a duly executed instrument of
transfer, together with such evidence of the genuineness of each such
execution and authorization of such other matters as the Corporation or its
agents may reasonably require.
Section 4
RECORDING AND TRANSFER WITHOUT CERTIFICATES. Notwithstanding the foregoing
provisions of this Article VI, the Corporation shall have full power to
participate in any program approved by the Board of Directors providing for
the recording and transfer of ownership of shares of the Corporation's stock
by electronic or other means without the issuance of certificates.
Section 5
LOST CERTIFICATES. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Corporation alleged to have been stolen, lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to have been stolen, lost or destroyed, or upon other
satisfactory evidence of such theft, loss or destruction. When authorizing
such issuance of a new certificate or certificates, the Board of Directors
may, in its discretion and as a condition precedent to the issuance thereof,
require the owner of such stolen, lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and to give a bond with sufficient surety to the
Corporation to indemnify it against any loss or claim that may be made by
reason of the issuance of a new certificate.
Section 6
TRANSFER OF COMMON STOCK. Transfer of shares of the stock of the Corporation
shall be made on the books of the Corporation by the holder of record thereof
(in person or by his (her) attorney thereunto duly authorized by a power of
attorney duly executed in writing and filed with the Secretary of the
Corporation) (i) if a certificate or certificates have been issued, upon the
surrender of the certificate or certificates, properly endorsed or accompanied
by proper instruments of transfer, representing such shares, or (ii) as
otherwise prescribed by the Board of Directors. Every certificate exchanged,
surrendered for redemption or otherwise returned to the Corporation shall be
marked "Canceled" with the date of cancellation.
Section 7
REGISTERED STOCKHOLDERS. The Corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the Maryland
General Corporation Law.
Section 8
TRANSFER AGENT AND REGISTRAR. The Board of Directors may, from time to time,
appoint or remove transfer agents and or registrars of transfers of shares of
stock of the Corporation, and it may appoint the same person as both transfer
agent and registrar. Upon any such appointment being made, all certificates
representing shares of stock thereafter issued shall be countersigned by one
of such transfer agents or by one of such registrars of transfers or by both
and shall not be valid unless so countersigned. If the same person shall be
both transfer agent and registrar, only one countersignature by such person
shall be required.
Section 9
STOCK LEDGER. The Corporation shall maintain, or cause to maintain, an
original stock ledger containing the names and address of all Stockholders and
the number and class of shares held by each Stockholder. Such stock ledger
may be in written form or any other form capable of being converted into
written form within a reasonable time for visual inspection.
Section 10
RECORD DATES. The Board of Directors may fix, in advance, a date as the
record date for the purpose of determining those Stockholders who shall be
entitled to notice of, or to vote at, any meeting of Stockholders, or for the
purpose of determining those Stockholders or the allotment of any rights, or
for the purpose of making any other proper determination with respect to
Stockholders. Such date, in any case, shall be not more than ninety days and,
in the case of a meeting of Stockholders, not less than ten days prior to the
date on which the particular action, requiring such determination of
Stockholders, is to be taken. In lieu of fixing a record date, the Board of
Directors may provide that the stock transfer books shall be closed for a
stated period, not to exceed in any case 20 days.
ARTICLE VII
General Provisions
Section 1
RIGHTS IN SECURITIES. The Board of Directors, on behalf of the Corporation,
shall have the authority to exercise all of the rights of the Corporation as
owner of any securities which might be exercised by any individual owning such
securities in his (her) own right; including, but not limited to, the rights
to vote by proxy for any and all purposes, to consent to the reorganization,
merger or consolidation of any issuer or to consent to the sale, lease or
mortgage of all or substantially all of the property and assets of any issuer;
and to exchange any of the shares of stock of any issuer for the shares of
stock issued therefore upon any such reorganization, merger, consolidation,
sale, lease or mortgage. The Board of Directors shall have the right to
authorize any officer of the Corporation or the Corporation's investment
adviser to execute proxies and the right to delegate the authority granted by
this Section 1 to any officer of the Corporation.
Section 2
CUSTODIANSHIP. (a) The Corporation shall place and at all times maintain in
the custody of a custodian (including any sub-custodian for the custodian) all
funds, securities and similar investments owned by the Corporation. Subject
to the approval of the Board of Directors, the custodian may enter into
arrangements with securities depositories, as long as such arrangements comply
with the provisions of the Act and the rules and regulations promulgated
thereunder. (b) Upon termination of a custodian agreement or inability of
the custodian to continue to serve, the Board of Directors shall promptly
appoint a successor custodian. But in the event that no successor custodian
can be found who has the required qualifications and is willing to serve, the
Board of Directors shall call as promptly as possible a Special Meeting of
the Stockholders to determine whether the Corporation shall function without
a custodian or shall be liquidated. If so directed by vote of the holders of
a majority of the outstanding shares of stock of the Corporation, the
custodian shall deliver and pay over all property of the Corporation held by
it as specified in such vote. (c) The following provisions shall apply to the
employment of a custodian and to any contract entered into with the custodian
so employed: The Board of Directors shall cause to be delivered to the
custodian all securities owned by the Corporation or to which it may become
entitled, and shall order the same to be delivered by the custodian only in
completion of a sale, exchange, transfer, pledge, or other disposition
thereof, all as the Board of Directors may generally or from time to
time require or approve or to a successor custodian; and the Board of
Directors shall cause all funds owned by the Corporation or to which it
may become entitled to be paid to the custodian, and shall order the
same disbursed only for investment against delivery of the securities
acquired, or in payment of expenses, including management compensation,
and liabilities of the Corporation, including distributions to
shareholders or proper payments to borrowers of securities representing
partial return of collateral, or to a successor custodian.
Section 3
REPORTS. Not less often than semi-annually, the Corporation shall transmit to
the Stockholders a report of the operations of the Corporation based at least
annually upon an audit by independent public accounts, which report shall
clearly set forth, in addition to the information customarily furnished in a
balance sheet and profit and loss statement, a statement of all amounts paid
to security dealers, legal counsel, transfer agent, disbursing agent,
registrar or custodian or trustee, where such payments are made to a firm,
corporation, bank or trust company, having a partner, officer or director who
is also an officer or director of the Corporation. A copy, or copies, of all
reports submitted to the Stockholders of the Corporations shall also be sent,
as required, to the regulatory agencies of the United States and of the states
in which the securities of the Corporation are registered and sold.
Section 4
SEAL. The corporate seal shall have inscribed thereon the name of the
Corporation, the year of its organization and the words "Corporate Seal,
Maryland". The seal may be used by causing or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
Section 5
EXECUTION OF INSTRUMENTS. All deeds, documents, transfers, contracts,
agreements and other instruments requiring execution by the corporation shall
be signed by the Chairman or the President or by the Treasurer or Secretary or
an Assistant Treasurer or an Assistant Secretary, or as the Board of Directors
may otherwise, from time to time, authorize. Any such authorization may be
general or confined to specific instance. Except as otherwise authorized by
the Board of Directors, all requisitions or orders for the assignment of
securities standing in the name of the custodian or its nominee, or for the
execution of powers to transfer the same, shall be signed in the name of the
Corporation by the Chairman or the President or by the Secretary, Treasurer or
an Assistant Treasurer.
Section 6
ACCOUNTANT. The Corporation shall employ an independent public accountant or
a firm of independent public accountants as its Accountants to examine the
accounts of the Corporation and to sign and certify financial statements filed
by the Corporation. The employment of the Accountant shall be conditioned
upon the right of the Corporation to terminate the employment forthwith
without any penalty by vote of a majority of the outstanding voting securities
at any Stockholders' meeting called for that purpose. The Accountant's
certificates and reports should be addressed both to the Board of Directors
and to the Stockholders.
ARTICLE VIII
Indemnification
To the extent allowed and permitted under Maryland General Corporation
Law, a representative of the Corporation shall be indemnified by the
Corporation with respect to each proceeding against such representative for
all expenses (including attorneys' fees and disbursements), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such
representative in connection with such proceeding, provided that such
representative acted in good faith and in a manner he (she) reasonably
believed to be in or not opposed to the best interest of the Corporation and,
with respect to any criminal proceeding, had not reasonable cause to believe
his (her) conduct was unlawful; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such representative has
been adjudged to be liable by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard in the performance of his (her) duty to the
Corporation ("disabling conduct"), unless and only to the extent that the
court in which the proceeding was brought, or a court of equity in the county
in which the Corporation has its principal office, determines upon application
that, despite the adjudication of liability but in view of all circumstances
of the case, such corporate representative is fairly and reasonably entitled
to indemnity for the expenses which the court considers proper.
The termination of any proceeding by judgment, order, settlement, conviction
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption had the person did not act in good faith and in a manner
which he (she) reasonably believed to be in or not opposed to the best
interest of the Corporation and, with respect to any criminal proceeding, had
reasonable cause to believe that his (her) conduct was unlawful.
To the extent that the representative of the Corporation has been
successful on the merits or otherwise in defense of any proceeding referred to
in the preceding paragraph, or in defense of any claim, issue or matter
therein, it shall be presumed that the representative did not engage in
disabling conduct, whereupon the Corporation shall indemnify him (her) against
all expenses (including attorneys' fees and disbursements) actually and
reasonably incurred by him (her) in connection therewith.
In the absence of a final decision by a court or other body before which
the proceeding was brought that the representative was not liable by reason of
disabling conduct, indemnification may still be granted provided that a
reasonable determination, based upon review of the facts, that the
representative was not liable by reason of disabling conduct, by (i) the vote
of a majority of a quorum of directors who are neither "interested persons"
(as defined in Section 2(a) (19) of the Act) of the Corporation, nor parties
to the proceeding; or (ii) an independent legal counsel in a written opinion.
Expenses (including attorneys' fees and disbursements) incurred in
defending a proceeding may be paid by the Corporation in advance of the final
disposition thereof if the Corporation receives a written affirmation by the
representative of the Corporation of such representative's good faith belief
that the standard of conduct necessary for indemnification has been met; and
an undertaking by or on behalf of the representative of the Corporation to
repay the advance if it is ultimately determined that he (she) is not entitled
to be indemnified by the Corporation as authorized in this Article, and (x)
the representative shall provide a security for his (her) undertaking; or (y)
the Corporation shall be insured against losses arising by reason of any
lawful advances; or (z) a majority of a quorum of the disinterested, non-party
directors of the Corporation, or an independent legal counsel, in a written
opinion, shall determine, based on a review of readily available facts, that
there is reason to believe that the representative ultimately will be found
entitled to indemnification.
The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which a representative of the Corporation or
other person may be entitled under any agreement, vote of Stockholders or
disinterested directors or otherwise, both as to action in his (her) official
capacity and as to action in another capacity while holding the office, and
shall continue as to a person who has ceased to be a director, officer,
employee or agent and inure to the benefit of his (her) heirs and personal
representatives.
The Corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
trustee, director, officer, employee or agent of another trust, corporation,
partnership, joint venture or other enterprise against any liability asserted
against him (her) and incurred by him (her) in any such capacity or arising
out of his (her) status as such, regardless of whether the Corporation would
have the power to indemnify him (her) against the liability under the
provisions of this Article.
Nothing contained in this Article shall be construed to indemnify any
representative of the Corporation against any liability to the Corporation or
to its security holders to which he (she) would otherwise be subject by reason
of misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his (her) office.
As used in this Article "representative of the Corporation" means an
individual: (1) who is a present or former director, officer, agent or
employee of the Corporation or who serves or has
served another corporation, trust, partnership, joint venture or other
enterprise in one of such capacities at the request of the Corporation, and
(2) who by reason of his (her) position is, has been or is threatened to be
made a party to a proceeding; and "proceeding" includes any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative.
ARTICLE IX
Amendments
The By-Laws of the Corporation may be altered, amended or repealed
either by the affirmative vote of a majority of the votes entitled to be cast
by Stockholders or by proxy at any annual or special meeting of the
Stockholders, or by the Board of Directors at any regular or special meeting
of the Board of Directors; provided, that the Board of Directors may not amend
or repeal this Article IX and that the vote of Stockholders required for
alteration, amendment or repeal of any of such provisions shall be subject to
all applicable requirements of federal or state laws or of the Articles of
Incorporation. Notwithstanding anything to the contrary in these By-Laws, so
long as there is no Common Stock of the Corporation outstanding, or if there is
Common Stock of the Corporation outstanding, but there are less than three
stockholders, the number of Directors which shall constitute the whole Board
may be one. Notwithstanding anything to the contrary in these By-Laws, to
the extent that there is only one Director as set forth in Section 2 of this
Article III, the quorum for the transaction of business shall be One Director.
(If name remains the same remove section 10)
ADVISORY AGREEMENT
ADVISORY AGREEMENT, dated November 1, 1997, between SAMCO Fund, Inc., a
Maryland corporation (the "Fund"), and Seix Investment Advisors, Inc., a New
Jersey corporation (the "Adviser").
In consideration of the mutual agreements herein made, the parties hereto
agree as follows:
1. Attorney-in-Fact. The Fund appoints the Adviser as its attorney-in-
fact to invest and reinvest the assets of the Fixed Income Fund (the
"Portfolio"), as fully as the Fund itself could do. The Adviser hereby accepts
this appointment.
2. Duties of the Adviser. (a) The Adviser shall be responsible for
managing the investment assets of the Portfolio, including, without limitation,
providing investment research, advice and supervision, determining which
portfolio securities shall be purchased or sold by the Portfolio, purchasing
and selling securities on behalf of the Portfolio and determining how voting
and other rights with respect to portfolio securities of the Portfolio shall be
exercised, subject in each case to the control of the Board of Directors of the
Fund (the "Board") and in accordance with the objective, policies and
principles of the Portfolio set forth in the Registration Statement, as
amended, of the Fund, the requirements of the Investment Company Act of 1940,
as amended, (the "Act") and other applicable law. In performing such duties,
the Adviser shall provide such office space, and such executive and other
personnel as shall be necessary for the investment operations of the Portfolio.
In managing the Portfolio in accordance with the requirements set forth in
this paragraph 2, the Adviser shall be entitled to act upon advice of counsel
to the Fund or counsel to the Adviser.
(b) Subject to Section 36 of the Act, the Adviser shall not be liable to
the Fund for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the management of the
Portfolio and the performance of its duties under this Agreement except for
losses arising out of the Adviser's willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement. It is agreed
that the Adviser shall have no responsibility or liability for the accuracy or
completeness of the Fund's Registration Statement under the Act and the
Securities Act of 1933 except for information about the Adviser contained in
the Prospectus included as part of such Registration Statement supplied by the
Adviser for inclusion therein. The Fund agrees to indemnify and hold the
Adviser harmless from and against all claims, losses, costs, damages and
expenses, including reasonable fees and expenses for counsel, incurred by it
resulting from any claim, demand, action or suit in connection with or arising
out of any action or omission by the Adviser in the performance of this
Agreement except for those claims, losses, costs, damages and expenses
resulting from the Adviser's willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement.
(c) The Adviser and its officers may act and continue to act as investment
advisers and managers for others (including, without limitation, other
investment companies), and nothing in this Agreement will in any way be deemed
to restrict the right of the Adviser to perform investment management or other
services for any other person or entity, and the performance of such services
for others will not be deemed to violate or give rise to any duty or obligation
to the Fund.
(d) Except as provided in Section 5, nothing in this Agreement will limit
or restrict the Adviser or any of its officers, affiliates or employees from
buying, selling or trading in any securities for its or their own account or
accounts. The Fund acknowledges that the Adviser and its officers, affiliates
or employees, and its other clients may at any time have, acquire, increase,
decrease or dispose of positions in investments which are at the same time
being acquired or disposed of for the account of the Portfolio. The Adviser
will have no obligation to acquire for the Portfolio a position in any
investment which the Adviser, its officers, affiliates or employees may acquire
for its or their own accounts or for the account of another client, if in the
sole discretion of the Adviser, it is not feasible or desirable to acquire a
position in such investment for the account of the Portfolio, provided that the
Adviser shall have acted in good faith and in a manner deemed equitable to the
Portfolio. The Adviser represents that it has adopted a code of ethics
governing personal trading that complies in all material respects with the
recommendations contained in the Investment Company Institute "Report of the
Advisory Group on Personal Investing," dated May 9, 1994, and the Adviser
agrees to furnish a copy of such code of ethics to the Directors of the Fund.
(e) If the purchase or sale of securities consistent with the investment
policies of the Portfolio and one or more other clients serviced by the Adviser
is considered at or about the same time, transactions in such securities will
be allocated among the Portfolio and clients in a manner deemed fair and
reasonable by the Adviser. Although there is no specified formula for
allocating such transactions, the various allocation methods used by the
Adviser, and the results of such allocations, are subject to periodic review
by the Board.
3. Expenses. The Adviser shall pay all of its expenses arising from
the performance of its obligations under this Agreement. Except as provided
below, the Adviser shall not be required to pay any other expenses of the Fund
(including out-of-pocket expenses, but not including the Adviser's overhead or
employee costs), including without limitation, organization expenses of the
Fund; brokerage commissions; maintenance of books and records which are
required to be maintained by the Fund's custodian or other agents of the Fund;
telephone, telex, facsimile, postage and other communications expenses;
expenses relating to investor and public relations; freight, insurance and
other charges in connection with the shipment of the Fund's portfolio
securities; indemnification of Directors and officers of the Fund; travel
expenses (or an appropriate portion thereof) of Directors and officers of the
Fund to the extent that such expenses relate to attendance at meetings of the
Board of Directors of the Fund or any committee thereof or advisors thereto
held outside of the Adviser's offices; interest, fees and expenses of
independent attorneys, auditors, custodians, accounting agents, transfer
agents, dividend disbursing agents and registrars; payment for portfolio
pricing or valuation service to pricing agents, accountants, bankers and
other specialists, if any; taxes and government fees; cost of stock
certificates and any other expenses (including clerical expenses) of issue,
sale, repurchase or redemption of shares; expenses of registering and
qualifying shares of the Fund under Federal and state laws and regulations;
expenses of printing and distributing reports, notices, dividends and proxy
materials to existing stockholders; expenses of printing and filing reports and
other documents filed with governmental agencies, expenses of printing and
distributing prospectuses; expenses of annual and special stockholders'
meetings; costs of stationery, fees and expenses (specifically including travel
expenses relating to Fund business) of Directors of the Fund who are not
employees of the Adviser or its affiliates; membership dues in the Investment
Company Institute; insurance premiums and extraordinary expenses such as
litigation expenses.
4. Compensation. (a) As compensation for the services performed and
the facilities and personnel provided by the Adviser pursuant to this
Agreement, the Fund will pay to the Adviser promptly at the end of each
calendar month, a fee, calculated on each day during such month, at an annual
rate of 0.25% of the Portfolio's average daily net assets. The Adviser shall
be entitled to receive during any month such interim payments of its fee
hereunder as the Adviser shall request, provided that no such payment shall
exceed 50% of the amount of such fee then accrued on the books of the
Portfolio and unpaid.
(b) If the Adviser shall serve hereunder for less than the whole of any month,
the fee payable hereunder shall be prorated.
(c) For purposes of this Section 4, the "average daily net assets" of the
Portfolio shall mean the average of the values placed on the Portfolio's net
assets on each day pursuant to the applicable provisions of the Fund's
Registration Statement, as amended.
5. Purchase and Sale of Securities. The Adviser shall purchase
securities from or through and sell securities to or through such persons,
brokers or dealers as the Adviser shall deem appropriate in order to carry out
the policy with respect to the allocation of portfolio transactions as set
forth in the Registration Statement of the Fund, as amended, or as the Board
may direct from time to time. The Adviser will use its reasonable efforts to
execute all purchases and sales with dealers and banks on a best net price
basis. The Adviser will consider the full range and quality of services
offered by the executing broker or dealer when making these determinations.
Neither the Adviser nor any of its officers, affiliates or employees will act
as principal or receive any compensation from the Portfolio in connection
with the purchase or sale of investments for the Portfolio other than the fee
referred to in Paragraph 4 hereof.
6. Term of Agreement. This Agreement shall continue in full force and
effect until two years from the date hereof, and will continue in effect from
year to year thereafter if such continuance is approved in the manner required
by the Act, provided that this Agreement is not otherwise terminated. The
Adviser may terminate this Agreement at any time, without the payment of any
penalty, upon 60 days' written notice to the Fund. The Fund may terminate this
Agreement with respect to the Portfolio at any time, without the payment of any
penalty, on 60 days' written notice to the Adviser by vote of either the
majority of the non-interested members of the Board or a majority of the
outstanding voting securities (as defined in Section 2(a)(42) of the Act) of
the Portfolio. This Agreement will automatically terminate in the event of its
assignment (the term "assignment" for this purpose having the meaning defined
in Section 2(a)(4) of the Act).
7. Changes in Membership. The Adviser is a corporation duly existing
under the laws of the State of New Jersey. In the event the Adviser changes
ownership, the Adviser shall notify the Fund of such change within a reasonable
time after the change.
8. Notices. Any notice or other communication authorized or required
hereunder shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notice shall be addressed to the Fund at c/o AMT
Capital Services, Inc., 600 Fifth Avenue, 26th Floor, New York, NY 10020,
Attention: Mr. Paul Brook, Treasurer; and to Seix Investment Advisors, Inc.,
Whiteweld Corporate Centre 300 Tice Boulevard, Woodcliff Lake, NJ 07675-7633,
Attention: Ms. Christina Seix. Either party may designate a different
address by notice to the other party. Any such notice or other communication
shall be deemed given when actually received.
9. Amendment. This Agreement may be amended by the parties hereto
with respect to the Portfolio only if such amendment is specifically approved
(i) by the Board of Directors of the Fund or by the vote of a majority of
outstanding shares of the Portfolio ("Shares"), and (ii) by the Director(s)
who are not interested persons (the term "non interested" for this purpose
having the meaning defined in section 2 (a) (19) of the Act) of the Fund
("Non-Interested Director(s)"), which vote must be cast in person at a meeting
called for the purpose of voting on such approval.
10. Right of Adviser In Corporate Name. The Adviser and the Fund each
agree that the phrase "Seix" which comprises a component of the Fund's
corporate name, is a property right of the Adviser. The Fund agrees and
consents that (i) it will only use the phrase "Seix" as a component of its
corporate name and for no other purpose; (ii) it will not purport to grant to
any third party the right to use the phrase "Seix" for any purpose; (iii) the
Adviser or any corporate affiliate of the Adviser may use or grant to others
the right to use the phrase "Seix" or any combination or abbreviation thereof,
as all or a portion of a corporate or business name or for any commercial
purpose, including a grant of such right to any other investment company, and
at the request of the Adviser, the Fund will take such action as may be
required to provide its consent to such use or grant; and (iv) upon the
termination of any investment advisory agreement into which the Adviser and the
Fund may enter, the Fund shall, upon request by the Adviser, promptly take such
action, at its own expense, as may be necessary to change the Fund's
corporate name to one not containing the phrase "Seix" and following such a
change, shall not use the phrase "Seix" or any combination thereof, as part
of the Fund's corporate name or for any other commercial purpose, and shall
use its reasonable efforts to cause its officers, directors and stockholders
to take any and all actions which the Adviser may request to effect the
foregoing and recovery to the Adviser any and all rights to such phrase.
11. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey. Anything herein to the
contrary notwithstanding, this Agreement shall not be construed to require or
to impose any duty upon either of the parties to do anything in violation of
any applicable laws or regulations.
IN WITNESS WHEREOF, the Fund and the Adviser have caused this Agreement to
be executed by their duly authorized officers as of the date first written
above.
ATTEST SAMCO FUND, INC.
By:_______________________________ By:_____________________________
Carla E. Dearing, William E. Vastardis,
Secretary
ATTEST SEIX INVESTMENT ADVISORS, INC.
By:_______________________ By:___________________________
Ms. Christina Seix, Chairman & CIO
DISTRIBUTION AGREEMENT
AGREEMENT dated as of November 1, 1997 by and between SAMCO Fund,
Inc., an open-end management investment company organized as a corporation
under the laws of the State of Maryland (the "Fund"), and AMT Capital
Services, Inc., a Delaware corporation ("AMT Capital").
WHEREAS, the Fund desires that AMT Capital shall be, for the period
of this Agreement, the distributor of shares of the Fund (the "Shares");
WHEREAS, the Fund offers a series of shares of common stock par
value $.001 per share, and may offer additional series of common stock
in the future (individually, a "Series," and collectively, the
"Series"), which have or will be registered under the Securities Act of
1933, as amended (the "1933 Act");
WHEREAS, the Fund desires to appoint AMT Capital as the
distributor of the Shares, and AMT Capital wishes to become the
distributor of the Shares.
NOW, THEREFORE, in consideration of the above premises and of
other good and valuable consideration, the parties hereto, intending to
be legally bound, agree as follows:
1. Appointment of Distributor
The Fund hereby appoints AMT Capital as the distributor of the
Fund's Shares for the period and on the terms set forth in this
Agreement. This appointment applies to each existing Series of Shares,
as well as any future series provided (i) the Fund does not object to
AMT Capital in writing on any basis or (ii) AMT Capital does not object
to the Fund in writing on the basis of the capabilities of AMT Capital.
AMT Capital accepts such appointment and agrees to render the services
and provide, at its own expense, the office space, furnishings and
equipment, and the personnel required by it to perform the services on
the terms herein provided.
2. Representation and Warranties of AMT Capital
AMT Capital represents and warrants to the Fund that:
A. AMT Capital is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has full power and authority, corporate and otherwise, to consummate
the transactions contemplated by this Agreement. AMT Capital is duly
qualified to carry out its business, and is in good standing, in the
State of New York.
B. The Board of Directors and stockholders of AMT Capital have
taken all action required by law and AMT Capital's Certificate of
Incorporation and By-Laws to authorize the execution and delivery of
this Agreement by AMT Capital and the consummation on behalf of AMT
Capital of the transactions contemplated by this Agreement. This
Agreement constitutes a legal, valid and binding obligation of AMT
Capital enforceable in accordance with its terms. Neither the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will result in a breach of, or constitute a default
under, or with lapse of time or giving of notice or both will result in
a breach of or constitute a default under, or otherwise give any party
thereto the right to terminate (a) any mortgage, indenture, loan or
credit agreement or any other agreement or instrument evidencing
indebtedness for money borrowed to which AMT Capital is a party or by
which AMT Capital or any of its properties is bound or affected, or
pursuant to which AMT Capital has guaranteed the indebtedness of any
person, or (b) any lease, license, contract or other agreement to which
AMT Capital is a party or by which AMT Capital or any of its properties
is bound or affected. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will result in, or require, the creation or imposition of any mortgage,
deed or trust, pledge, lien, security interest, or other charge or
encumbrance of any nature upon or with respect to any of the properties
now or hereafter owned by AMT Capital.
C. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate any
provision of the Certificate of Incorporation or By-Laws of AMT Capital.
D. Except such as have been obtained and as are in full force
and effect and subject to no dispute, claim or challenge, no permit,
license, franchise, approval, authorization, qualification or consent
of, registration or filing with, or notice to, any governmental
authority is required in connection with the execution and delivery by
AMT Capital of this Agreement or in connection with the consummation by
AMT Capital of any transactions contemplated by this Agreement, and no
such permit, license, franchise, approval, authorization, qualification
or consent of, registration or filing with, or notice to any federal,
state or local governmental authority is required in connection with AMT
Capital's business or operations as currently conducted or as currently
contemplated to be conducted. AMT Capital has conducted its business
and operations in compliance with all applicable laws and regulations.
E. AMT Capital is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a
member of the National Association of Securities Dealers, Inc. (the
"NASD").
3. Duties of the Fund
The Fund shall use its reasonable efforts to cooperate in the
maintenance by the investment adviser or other service provider of the
registration of the Fund's securities under the Investment Company Act
of 1940 (the "1940 Act") and the 1933 Act, and the Fund and/or such
service providers shall bear all expenses in connection therewith. It
is understood that this Agreement shall not require AMT Capital to bear
any expenses related to the Fund's registration or maintenance of the
Fund's registration.
The Fund shall cooperate in the qualification by the investment
adviser or other service provider of the Fund of each Series of Shares
under the laws of such states and other jurisdictions of the United
States as the Fund shall determine and shall execute and deliver such
documents as may reasonably be required for such purpose, but the Fund
shall not be required to qualify as a foreign business entity in any
jurisdiction, nor effect any modification of its policies or practices
without prior approval of the Fund's Board of Directors. The Fund's
officers, subject to the direction of the Board of Directors of the Fund
and with the advice of AMT Capital, shall determine whether it is
desirable to qualify or continue to offer Shares of any Series in any
jurisdiction. AMT Capital shall have no obligation hereunder to assist
in the qualification of Shares of any Series in any jurisdiction or in
the maintenance of any qualification, other than its obligation to serve
as registered agent to the Fund and execute required filings.
The Fund will deliver to AMT Capital copies of each of the
following documents and will deliver to AMT Capital all future
amendments and supplements, if any:
A. a certified copy of the Articles of Incorporation of the
Fund as amended and currently in effect ("Charter");
B. a copy of the Fund's By-laws as amended and currently in
effect ("By-laws") certified by the Secretary of the Fund;
C. the Fund's prospectus and statement of additional
information (including supplements thereto) which relate to the Shares
(the "Prospectus" and "SAI"); and
D. the Fund's current Registration Statement on Form N-1A as
filed under the 1940 and 1933 Acts, as such shall be amended from time
to time (the "Registration Statement").
The Fund and/or other service providers to the Fund shall also
furnish AMT Capital, with respect to a Series or the Fund, as
applicable:
E. annual audit reports of the Fund's books and accounts made
by independent public accountants regularly retained by the Fund;
F. such additional copies of the Prospectus and SAI and annual,
semi-annual and other reports and communications to shareholders which
relate to the Shares as AMT Capital may reasonably require for sales
purposes;
G. a monthly itemized list of the securities held by each
Series;
H. monthly balance sheets of the Fund as soon as practicable
after the end of each month;
I. a survey indicating the states and jurisdictions in which
each Series is qualified for sale or exempt from the requirements of the
securities laws of such state or jurisdiction and the amounts of Shares
of such Series that may be sold in such states and jurisdictions, as
such may be amended from time to time ("Blue Sky Report"); and
J. from time to time such additional information regarding the
Fund's financial condition or the financial condition of a Series of
Shares as AMT Capital may reasonably request.
4. Duties of AMT Capital
AMT Capital shall act as agent for the distribution of, and shall
use appropriate efforts to solicit orders to purchase Shares of, each
Series. AMT Capital agrees that all solicitations of orders to purchase
and all sales of Shares of each Series shall be made in accordance with
the Charter, By-Laws, and the Registration Statement, to the extent such
documents have been provided to AMT Capital, and in accordance with the
Prospectus and the SAI, and shall not at any time or in any manner
violate any provisions of the laws of the United States or of any state
or other jurisdiction in which solicitations are then being made, or of
any rules and regulations made or adopted by duly authorized agencies
thereunder, including without limitation those promulgated by the U.S.
Securities and Exchange Commission (the "SEC") and the NASD; provided
that AMT Capital shall not be deemed to have violated any state
securities laws if it has acted in good faith and in accordance with the
Blue Sky Report.
AMT Capital will transmit any orders received by it for purchase
or redemption of Shares of any Series to the transfer agent and
custodian for that Series.
AMT Capital acknowledges that the only information provided to it
by the Fund is that contained in the Registration Statement, the
Prospectus, the SAI, and reports and financial information referred to
in Section 3 herein. Neither AMT Capital nor any other person is
authorized by the Fund to give any information or to make any
representations, other than those contained in such documents and any
sales literature or advertisements approved by appropriate
representatives of the Fund.
AMT Capital may undertake or arrange for such advertising and
promotion as it believes reasonable in connection with the solicitation
of orders to purchase Shares; provided, however, that it shall provide
the Fund with and obtain the Fund's approval of copies of any
advertising and promotional materials approved, produced or used by AMT
Capital prior to their use. AMT Capital shall file such materials with
the SEC and the NASD to the extent required by the 1934 Act and the 1940
Act and the rules and regulations thereunder, and by the rules of the
NASD.
In carrying out its obligations hereunder, AMT Capital shall take,
on behalf of the Fund, all actions which appear to the Fund necessary to
carry into effect the distribution of the Shares of each Series.
5. Distribution of Shares of each Series
The price at which Shares of each Series may be sold shall be the
net asset value per Share of such Series computed in the manner set
forth in the Fund's Prospectus and SAI in effect at the time of sale of
the Shares of such Series.
It is mutually understood and agreed that AMT Capital does not
undertake to sell all or any specific portion of the Shares of any
Series. The Fund shall not sell Shares of any Series except through AMT
Capital, except that the Fund may issue Shares of any Series at their
net asset value to any shareholder of the Fund (i) purchasing Shares
with dividends or other distributions received from the Fund pursuant to
an offer made to all shareholders, (ii) in connection with a pro rata
distribution directly to the shareholders of any Series, and (iii)
otherwise in accordance with any then-current Prospectus of the Fund.
In addition, the Fund may issue Shares in connection with the merger or
consolidation of any other investment company or series thereof with the
Fund or one of its Series, or in connection with its acquisition, by
purchase or otherwise, of all or substantially all of the assets of any
investment company or series thereof or all or substantially all of the
outstanding shares of any such company or series thereof. Without
limitation of the foregoing, the phrase "any investment company" as used
in this paragraph shall include any private investment company organized
as a limited partnership or other entity.
AMT Capital may, and when requested by the Fund shall, suspend its
efforts to effectuate sales of Shares of any Series at any time when in
the opinion of AMT Capital or of the Fund no sales should be made
because of market or other economic considerations or abnormal
circumstances of any kind. The Fund may withdraw the offering of Shares
of any Series at any time with or without the consent of AMT Capital and
shall withdraw the offering of Shares of any Series when so required by
the provisions of any statute or of any order, rule or regulation of any
governmental body having jurisdiction.
Whenever in the judgment of the Fund's officers such action is
warranted by unusual market, economic or political conditions, or by
abnormal circumstances of any kind, the Fund's officers may decline to
accept any orders for, or make any sales of the Shares of any Series
until such time as those officers deem it advisable to accept such
orders and to make such sales. In the event of such suspension of sales
and until AMT Capital receives written notification from the Fund that
AMT Capital may resume accepting orders for and making sales of the
Shares of such Series, AMT Capital's duty to distribute Shares of such
Series shall be suspended.
AMT Capital will act only on its own behalf as principal if it
chooses to enter into selling arrangements with selected dealers or
others.
6. Effectiveness of Registration
None of the Shares of any Series shall be offered by either AMT
Capital or the Fund under any of the provisions of this Agreement and no
orders for the purchase or sale of the Shares of any Series shall be
accepted by the Fund if and so long as the effectiveness of the
Registration Statement then in effect or any necessary amendments
thereto shall be suspended under any of the provisions of the 1933 Act
or if and so long as a current Prospectus as required by Section 5(b)(2)
of the 1933 Act is not on file with the SEC; provided, however, that
nothing contained in this paragraph shall in any way restrict or have
application to or bearing upon the Fund's obligation to repurchase
Shares of any Series from any shareholder in accordance with the
provisions of the Prospectus, SAI, or Charter.
The Fund agrees to advise AMT Capital as soon as reasonably
practicable in writing:
(a) of any request by the SEC for amendments to the Registration
Statement, Prospectus or SAI then in effect or for additional
information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement, Prospectus
or SAI then in effect or the initiation by service of process on the
Fund of any proceeding for that purpose; and
(c) of the happening of any event that makes untrue any statement
of a material fact made in the Registration Statement, Prospectus or SAI
then in effect or that requires the making of a change in such
Registration Statement, Prospectus or SAI in order to make the statement
therein not misleading in any material respect.
For the purpose of this Section, informal requests by or action of the
staff of the SEC shall not be deemed requests by or actions of the SEC.
7. Expenses
Expenses connected with the Fund, excluding marketing expenses
which are the sole responsibility of the investment adviser to the Fund,
shall be allocable between the Fund and AMT Capital as follows:
(a) AMT Capital shall furnish, at its expense and without cost to
the Fund, the services of personnel to the extent that such services are
required to carry out its obligations under this Agreement.
(b) The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including, with limitation: the fees of the
Fund's investment adviser; the charges and expenses of any registrar,
any custodian or depository appointed by the Fund for the safekeeping of
its cash, portfolio securities and other property, and any stock
transfer, dividend or accounting agent or agents appointed by the Fund;
the fees of any Fund administrator; brokers' commissions chargeable to
the Fund in connection with portfolio securities transactions to which
the Fund is a party; any fee paid pursuant to any distribution plan, if
and when adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act;
all taxes, including securities issuance and initial transfer taxes, and
corporate fees payable by the Fund to federal, state or other
governmental agencies; all costs and expenses in connection with the
organization of the Fund and the Series and the registration of the
Shares with the SEC and under state securities laws and in connection
with maintenance of registration of the Fund, Series and the Shares with
the SEC and various states and other jurisdictions (including filing
fees and legal fees and disbursements of counsel); the expenses of
printing, including printing setup charges, and distributing
Prospectuses and SAIs of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and Directors' meetings and
of preparing, printing and mailing of proxy statements and reports to
shareholders; fees and travel expenses of Directors who are not
interested persons (as such term is defined in the 1940 Act) of the Fund
("Non-Interested Directors") or members of any advisory board or
committee established by the Non-Interested Directors; all expenses
incident to the payment of any dividend, distribution, withdrawal or
redemption, whether in Shares or in cash; charges and expenses of any
outside service used for pricing of the Fund's Shares; charges and
expenses of legal counsel to the Fund and to the Non-Interested
Directors, and of independent accountants to the Fund, in connection
with any matter relating to the Fund; membership dues paid by the Fund
to industry associations; interest payable on Fund borrowings; postage;
insurance premiums on property or personnel (including officers and
directors) of the Fund which inure to its benefit; extraordinary
expenses of the Fund (including, but not limited to, legal claims and
liabilities and litigation costs and any indemnification related
thereto); and all other charges and costs of the Fund's operation unless
otherwise explicitly provided herein.
8. Indemnity by Fund
The Fund agrees to indemnify and hold AMT Capital, its officers
and directors and each person (if any) who controls AMT Capital within
the meaning of Section 15 of the 1933 Act harmless from and against any
losses, claims, damages or liabilities to which any of such persons may
become subject, under the 1933 Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement, the Prospectus,
or the SAI or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in any
material respect, and will reimburse such persons for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such action or claim; provided, however, that the Fund
shall not be liable in any case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission was made in
the Registration Statement, the Prospectus or the SAI in reliance upon
and in conformity with written information furnished to the Fund by AMT
Capital expressly for use therein. AMT Capital, its officers, directors
and control persons shall be entitled to advances from the Fund for
payment of the reasonable expenses incurred by it or them in connection
with the matter as to which it or they are seeking indemnification in
the manner and to the fullest extent permissible under the Maryland
General Corporation law.
AMT Capital agrees that, promptly upon its receipt of notice of
the commencement of any action against AMT Capital, its officers and/or
directors or against any person so controlling AMT Capital, in respect
of which indemnity or reimbursement may be sought from the Fund on
account of its agreement in the preceding paragraph, notice in writing
will be given to the Fund within 10 days after the summons or other
first legal process shall have been served. The failure to notify the
Fund of any such action shall not relieve the Fund from any liability
which the Fund may have to the person against whom such action is
brought other than by reason of the indemnity agreement contained in
this Section 8. Thereupon, the Fund shall be entitled to participate,
to the extent that it shall wish (including the selection of counsel
with AMT Capital's reasonable approval), in defense thereof. In the
event the Fund elects to assume the defense of any such suit and retain
counsel of good standing reasonably approved by AMT Capital, the
defendant or defendants in such suit shall bear the expense of any
additional counsel retained by any of them; but in the case the Fund
does not elect to assume the defense of any such suit or in the case AMT
Capital does not reasonably approve of counsel chosen by the Fund, the
Fund will reimburse AMT Capital, its officers and directors or the
controlling person or persons named as defendant or defendants in such
suit for the fees and expenses of any one counsel or firm which may be
retained on behalf of AMT Capital, its officers and directors and such
control persons.
In the event that any such claim for indemnification is made by
any director or person in control of AMT Capital who is also an officer
or director of the Fund, the Fund, at its expense to the extent
permitted by law, will submit to a court of appropriate jurisdiction the
question of whether or not indemnification by it is against public
policy as expressed in the 1933 Act, the 1934 Act, and the 1940 Act, and
the Fund and AMT Capital will be governed by the final adjudication of
such question.
The Fund's indemnification agreement contained in this Section 8
and the Fund's representations and warranties in this Agreement shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of AMT Capital, its officers and
directors or any control person and shall survive the sale of any of the
Shares made pursuant to this Agreement. This agreement of indemnity
will inure exclusively to the benefit of AMT Capital, its officers,
directors and control persons, and to the extent permitted by the 1940
Act to the benefit of any of their successors and assigns. The Fund
agrees promptly to notify AMT Capital of the commencement of any
litigation or proceeding against the Fund in connection with the issue
and sale of any Shares.
9. Indemnity by AMT Capital
AMT Capital agrees to indemnify and hold harmless the Fund, its
officers and directors and persons who control the Fund with the meaning
of Section 15 of the 1933 Act from and against any losses, claims,
damages or liabilities to which any of such persons may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof), arise out of or are
based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, the Prospectus, or the SAI
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading in any material respect,
in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was made in the Registration Statement, the Prospectus or the SAI in
reliance upon and in conformity with written information furnished to
the Fund by AMT Capital expressly for use therein; and will reimburse
such persons for any legal or other expenses reasonably incurred by such
persons in connection with investigating or defending any such action or
claim. AMT Capital also agrees to indemnify and hold harmless the Fund,
its officers and directors and control persons from and against any and
all losses, claims, damages and liabilities arising by reason of any
person acquiring any Shares, which may be based upon the 1933 Act or any
other statute or at common law, on account of any unauthorized or
wrongful sales activities of AMT Capital or any of its registered
representatives, as defined under the By-Laws of the NASD, including any
failure to conform with any requirement of any state and federal law
relating to the sale of such Shares. Notwithstanding anything contained
herein to the contrary, AMT Capital shall not be responsible to the Fund
for and shall not indemnify and hold harmless the Fund, its officers and
directors and control persons from and against any such losses, claims,
damages or liabilities arising solely as a result of actions taken or
omitted by AMT Capital in good faith reliance on, and in conformity
with, the Blue Sky Report.
AMT Capital shall also indemnify and hold harmless the Fund, its
officers and directors and control persons for any liability to the Fund
or to the holders of Shares by reason of AMT Capital's willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties under this Agreement.
The Fund, its officers, directors and control persons shall be
entitled to advances from AMT Capital for payment of the reasonable
expenses incurred by it or them in connection with the matters as to
which it or they are seeking indemnification in the manner and to the
fullest extent permissible under the Delaware General Corporation Law.
In case any action shall be brought against the Fund, its officers
and directors and control persons in respect of which it may seek
indemnity or reimbursement from AMT Capital on account of the agreement
of AMT Capital contained in this Section 9, AMT Capital shall have the
rights and duties given to the Fund, and the Fund, its officers and
directors and control persons shall have the rights and duties given to
AMT Capital in the second and third paragraphs of Section 9.
AMT Capital's indemnification agreement contained in this Section
and its representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of the Fund, its officers and directors or any
control person and shall survive the sale of any of the Shares made
pursuant to this Agreement. This agreement of indemnity will inure
exclusively to the benefit of the Fund, its officers, directors and
control persons, and to the extent permitted by the 1940 Act to the
benefit of any of their successors and assigns. AMT Capital agrees
promptly to notify the Fund of the commencement of any litigation or
proceeding against AMT Capital in connection with the issue and sale of
any Shares.
10. Services Not Exclusive
AMT Capital shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the
Fund from time to time, have no authority to act or represent the Fund
in any way or otherwise be deemed an agent of the Fund.
Nothing herein shall be deemed to limit or restrict AMT Capital's
right or that of any of its affiliates or employees, to engage in any
other business or to devote time and attention to the distribution or
other related aspects of any other registered investment company or to
render services of any kind to any other corporation, firm, individual
or association.
11. Term
This Agreement shall become effective at the close of business on
the date hereof and shall continue in full force and effect, subject to
Section 14 hereof, for two years and thereafter as provided in Section
12 hereof.
12. Renewal
This Agreement shall continue in full force and effect after the
initial two year period with respect to a Series, provided that such
continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a
majority of the outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act) that constitute Shares of such Series; and
(b) by the affirmative vote of a majority of the Non-Interested
Directors of the Fund by votes cast in person at a meeting specifically
called for the purpose of voting on such approval.
13. Amendment
This Agreement may be amended by the parties hereto with respect
to a Series only if such amendment is specifically approved (i) by the
Board of Directors of the Fund or by the vote of a majority of
outstanding Shares, and (ii) by a majority of the Non-Interested
Directors of the Fund, which vote must be cast in person at a meeting
called for the purpose of voting on such approval.
14. Termination
This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Fund's Board of Directors, by vote of a
majority of outstanding Shares (as defined in Section 2(a)(42) of the
1940 Act), or by AMT Capital, on sixty (60) days' written notice to the
other party. This Agreement shall automatically terminate in the event
of its assignment, the term "assignment" for this purpose having the
meaning defined in Section 2(a)(4) of the 1940 Act.
15. Confidentiality
AMT Capital agrees on behalf of itself and its directors, officers
and employees to treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and its
prior, present or potential shareholders, and not to use such records
and information for any purpose other than performance of its
responsibilities hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be
unreasonably withheld when requested to divulge such information by duly
constituted authorities and may not be withheld where AMT Capital would
be exposed to civil or criminal contempt proceedings for failure to
comply, and AMT Capital shall disclose all such records and information
to the investment adviser to the Fund when so requested by the adviser
or the Fund.
16. Notices
Any notice or other communication authorized or required hereunder
shall be in writing or by confirming telegram, cable, telex or facsimile
sending device. Notice shall be addressed to the Fund at c/o AMT
Capital Services, Inc., 600 Fifth Avenue, 26th Floor, New York, New York
10020, Attention: Mr. Paul Brook, Treasurer; and to AMT Capital
Services, Inc., 600 Fifth Avenue, 26th Floor, New York, New York 10020,
Attention: Carla E. Dearing, President. Either party may designate a
different address by notice to the other party. Any such notice or
other communication shall be deemed given when actually received.
17. Interpretation: Governing Law
Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the
United States courts or, in the absence of any controlling decision of
any such court, by rules, regulations or orders of the SEC issued
pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement
is revised by rule, regulation or order of the SEC, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
Otherwise, the provisions of this Agreement shall be governed by the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below as of the day and year
first above written.
ATTEST: SAMCO FUND, INC.
BY:___________________ BY:_______________________
Mr. Paul Brook Christina Seix
Treasurer President
ATTEST: AMT CAPITAL SERVICES, INC.
BY:___________________ BY:_______________________
William E. Vastardis Carla E. Dearing
Senior Vice President President
ADMINISTRATION AGREEMENT
AGREEMENT dated as of November 1, 1997 by and between SAMCO Fund, Inc.,
a Maryland corporation (the "Fund"), and AMT Capital Services, Inc., a
Delaware corporation ("AMT Capital").
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and offers shares of common stock, par value $.001 per share, which have been
registered under the Securities Act of 1933, as amended;
WHEREAS, AMT Capital is a service company which provides management,
administrative and other services to investment companies and other entities;
and
WHEREAS, the Fund desires to retain AMT Capital to render certain
management and administrative services, including supervision of certain third
party vendors to the Fund.
NOW, THEREFORE, in consideration of the above premises and of other good
and valuable consideration the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Appointment of Administrator
The Fund hereby appoints AMT Capital to act as administrator to the Fund
for the period and on the terms set forth in this Agreement. This appointment
applies to each existing series of the Fund, as well as any future series
provided (i) the Fund does not object to AMT Capital in writing on any basis
or (ii) AMT Capital does not object to the Fund in writing on the basis of the
capabilities of AMT Capital. AMT Capital accepts such appointment and agrees
to render the services and provide, at its own expense, the office space,
furnishings and equipment, and the personnel required by it to perform the
services on the terms and for the compensation herein provided.
As further delineated on Schedule A of this Agreement, which may be
amended by the parties from time to time, AMT Capital shall provide for, or
assist in managing and supervising all aspects of, the general day-to-day
business activities and operations of the Fund except for investment advisory
services, custodial, transfer agency, dividend disbursing, accounting,
auditing and legal services. AMT Capital shall discharge such
responsibilities subject to the supervision and direction of the Fund's
officers and Board of Directors, and in compliance with the objectives,
policies and limitations set forth in the Fund's registration statement,
Articles of Incorporation, By-Laws and applicable laws and regulations. All
agreements with third parties shall be subject to review and approval by the
Fund's executive officers or Board of Directors.
AMT Capital will perform all of its obligations under this Agreement in
accordance with applicable law, including without limitation laws against
discrimination.
2. Representation and Warranties of AMT Capital
AMT Capital represents and warrants to the Fund that:
A. AMT Capital is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full power
and authority, corporate and otherwise, to consummate the transactions
contemplated by this Agreement. AMT Capital is duly qualified to carry out
its business, and is in good standing, in the State of New York.
B. The Board of Directors and stockholders of AMT Capital have taken
all action required by law and AMT Capital's Certificate of Incorporation and
By-Laws to authorize the execution and delivery of this Agreement by AMT
Capital and the consummation on behalf of AMT Capital of the transactions
contemplated by this Agreement. This Agreement constitutes a legal, valid and
binding obligation of AMT Capital enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement, nor the consummation of
the transactions contemplated hereby, will result in a breach of, or
constitute a default under, or with lapse of time or giving of notice or both
will result in a breach of or constitute a default under, or otherwise give
any party thereto the right to terminate (a) any mortgage, indenture, loan or
credit agreement or any other agreement or instrument evidencing indebtedness
for money borrowed to which AMT Capital is a party or by which AMT Capital or
any of its properties is bound or affected, or pursuant to which AMT Capital
has guaranteed the indebtedness of any person, or (b) any lease, license,
contract or other agreement to which AMT Capital is a party or by which AMT
Capital or any of its properties is bound or affected. Neither the execution
and delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will result in, or require, the creation or imposition of
any mortgage, deed or trust, pledge, lien, security interest, or other charge
or encumbrance of any nature upon or with respect to any of the properties now
or hereafter owned by AMT Capital.
C. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will violate any
provision of the Certificate of Incorporation or By-Laws of AMT Capital.
D. Except such as have been obtained and as are in full force and
effect and subject to no dispute, claim or challenge, no permit, license,
franchise, approval, authorization, qualification or consent of, registration
or filing with, or notice to, any governmental authority is required in
connection with the execution and delivery by AMT Capital of this Agreement or
in connection with the consummation by AMT Capital of any transactions
contemplated by this Agreement, and no such permit, license, franchise,
approval, authorization, qualification or consent of, registration or filing
with, or notice to any federal, state or local governmental authority is
required in connection with AMT Capital's business or operations as currently
conducted or as currently contemplated to be conducted. AMT Capital has
conducted its business and operations in compliance with all applicable laws
and regulations.
3. Duties of the Fund
A. The Fund will deliver to AMT Capital copies of each of the
following documents and will deliver to AMT Capital all future amendments and
supplements, if any:
(1) A certified copy of the Articles of Incorporation of the Fund as
amended and currently in effect;
(2) A copy of the Fund's By-Laws as amended and currently in effect,
certified by the Secretary of the Fund;
(3) A copy of the resolution of the Fund's Board of Directors
authorizing this Agreement, certified by the Secretary of the Fund;
(4) The Fund's registration statement on Form N-1A as filed with, and
declared effective by, the U.S. Securities and Exchange Commission
("SEC"), and all amendments thereto;
(5) Each resolution of the Board of Directors of the Fund authorizing
the original issue of its shares, certified by the Secretary of the
Fund;
(6) Copies of the resolutions of the Fund's Board of Directors
authorizing: (i) certain officers and employees of AMT Capital to give
instructions to the Fund's custodian and transfer agent as required by
agreements with such parties, and (ii) certain officers and employees of
AMT Capital to sign checks and pay expenses on behalf of the Fund,
certified by the Secretary of the Fund;
(7) A copy of the current Investment Advisory Agreement between the
Fund and Seix Investment Advisors, Inc.;
(8) A copy of the Custodian Agreement and Transfer Agency Agreement
relating to the Fund; and
(9) Such other certificates, documents or opinions which AMT Capital
may, in its reasonable discretion, deem necessary or appropriate in the
proper performance of its duties.
B. The Fund will cooperate in providing AMT Capital with all
information reasonably necessary to permit AMT Capital to perform its duties
hereunder.
C. The Fund certifies to AMT Capital that, as of the close of
business on the date of this Agreement, it has authorized capitalization of
2,500,000,000 shares of its common stock, $.001 par value (the "Shares"), and
agrees that AMT Capital will be promptly notified from time to time when the
Fund takes corporate action to increase the number of authorized shares,
including restoring redeemed shares held in its treasury to the status of
authorized and unissued shares.
4. Services To Be Obtained Independently By the Fund
The Fund shall, at its own expense, provide for any of its own:
A. Organizational expenses;
B. Services of an independent accountant;
C. Services of outside legal counsel (including such counsel's review
of the Fund's registration statement, proxy materials and other reports and
materials prepared by AMT Capital under this Agreement);
D. Services contracted for by the Fund directly from parties other
than AMT Capital acting as administrator (or subcontracted for by AMT Capital
on behalf of the Fund, subject to review and approval by the Fund's executive
officers or Board of Directors);
E. Trading operations and brokerage fees, commissions and transfer
taxes in connection with the purchase and sale of securities for its
investment portfolio;
F. Investment advisory services;
G. Taxes, insurance premiums and other fees and expenses applicable
to its operation;
H. Costs incidental to any meeting of shareholders including, but not
limited to, legal and accounting fees, proxy filing fees and costs incidental
to the preparation, printing and mailing of any proxy materials;
I. Cost incidental to Directors' meetings, including fees and
expenses of Directors;
J. The salary and expenses of any officer or employee of the Fund who
is not also an officer or employee of AMT Capital;
K. Custodian and depository banks, and all services related thereto;
L. Costs incidental to the preparation, printing and distribution of
its registration statement and any amendments thereto, and shareholder
reports, including printing setup, printing and mailing costs;
M. All registration fees and filing fees required under the
securities laws of the United States and state regulatory authorities;
N. Fidelity bond and director's and officers' liability insurance;
O. Record retention costs of third parties;
P. Distribution fees pursuant to any distribution plan, if and when
adopted pursuant to Rule 12b-1 under the 1940 Act; and
Q. Litigation and indemnification expenses and other extraordinary
expenses not incurred in the ordinary course of the Fund's business.
5. Price, Charges and Instructions
In consideration of the services rendered and expenses assumed by AMT
Capital pursuant to this Agreement, the Fund will pay AMT Capital a monthly
fee at the annual rate of 0.15 % of the Fund's average daily net assets,
subject to a minimum fee of $50,000 for the first twelve (12) months after the
Fund commences investment operations. Such sum shall be paid in monthly
installments by the tenth day of each month for the previous month.
For purposes of this Section 5, the "average daily net assets" of the Fund
shall mean the average of the values placed on the Fund's net assets on each
day pursuant to the applicable provisions of the Fund's Registration Statement,
as amended.
In addition, AMT Capital shall be reimbursed for the reasonable cost of
any and all forms, including blank checks and proxies, used by it in
communicating with shareholders, directors, Fund management, Fund vendors, or
any regulatory agencies on behalf of the Fund, or especially prepared for use
in connection with its obligations hereunder, as well as the reasonable cost
of postage, telephone, telex and telecopy used in communicating with
shareholders, directors, Fund management, Fund vendors or any regulatory
agencies on behalf of the Fund, travel-related expenses when incurred on
official Fund business and microfilm used each year to record the previous
year's transactions in shareholder accounts and computer tapes used for
reasonable permanent storage of records, permanent storage costs for hard copy
Fund records and reasonable cost of insertion of materials in mailing
envelopes by outside firms. Prior to ordering any forms in such supply as it
estimates will be adequate for more than two years' use, AMT Capital shall
obtain the written consent of the Fund. All forms for which AMT Capital has
received reimbursement from the Fund shall be and remain the property of the
Fund until used.
At any time AMT Capital may apply to any executive officer of the Fund
or executive officer of the Fund's investment adviser for instructions, and
may consult with legal counsel for the Fund, if consented to by an executive
officer of the Fund at the expense of the Fund, with respect to any matter
arising in connection with the services to be performed by AMT Capital under
this Agreement and AMT Capital shall not be liable and shall be indemnified by
the Fund for any action taken or omitted by it in good faith in reliance upon
such instructions or upon the opinion of such counsel. AMT Capital shall be
protected and indemnified in acting upon any paper or document of the Fund
reasonably believed by it to be genuine and to have been signed by the proper
person or persons and shall not be held to have notice of any change of
authority of any representative of the Fund, until receipt of written notice
thereof from the Fund, unless an officer of AMT Capital shall have actual
knowledge of such change. AMT Capital shall also be protected and
indemnified, except where a stop order is in effect, in recognizing transfer
documents which AMT Capital reasonably believes to bear the proper manual or
facsimile signature of the officers of the Fund, and the proper counter-
signatures of any present or former transfer agent.
6. Limitation of Liability and Indemnification
A. AMT Capital shall provide its services in a professional manner
customarily provided by leading mutual fund administration companies. AMT
Capital shall be responsible for the performance of only such duties as are set
forth or contemplated herein or contained in instructions given to it by the
Fund which are not contrary to this Agreement. AMT Capital shall have no
liability for any loss or damage resulting from the performance or non-
performance of its duties hereunder unless caused by or resulting from the
gross negligence, bad faith or willful misconduct of AMT Capital, its officers
or employees or the violation by any of such persons of this Agreement. In no
event, however, shall AMT Capital be liable for any consequential damages
including, without limitation, any taxes, penalties, litigation expenses or
other loss or damage resulting from the failure by other persons providing
services to the Fund to conform to applicable legal or regulatory requirements,
or to the Fund's investment policies and restrictions as set forth in its
registration statement, notwithstanding that AMT Capital, in the course of
carrying out its monitoring duties hereunder, failed to discover such failure.
B. The Fund shall indemnify and hold AMT Capital harmless from all
loss, cost, damage and expense, including reasonable expenses for counsel,
incurred by it resulting from any claim, demand, action or suit in connection
with any action or omission by it in the performance of its duties hereunder,
or as a result of acting upon any instructions reasonably believed by it to
have been executed by a duly authorized officer of the Fund, provided that
this indemnification shall not apply to actions or omissions of AMT Capital,
its officers or employees in cases of its or their own gross negligence or
misconduct or the violation by any of such persons of this Agreement.
C. The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above, and if
the Fund elects to assume the defense, such defense shall be conducted by
counsel chosen by the Fund. In the event the Fund elects to assume the
defense of any such suit and retain such counsel, AMT Capital or any of its
affiliated persons, named as defendant or defendants in the suit, may retain
additional counsel at its or their own expense, except that, if the Fund shall
have specifically authorized the retaining of such counsel, then the
reasonable expenses for such counsel shall be reimbursed by the Fund.
7. Confidentiality
AMT Capital agrees on behalf of itself and its directors, officers and
employees to treat confidentially and as proprietary information of the Fund
all records and other information relative to the Fund and its prior, present
or potential shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities hereunder, except (i)
after prior notification to and approval in writing by the Fund, which
approval shall not be unreasonably withheld, when requested to divulge such
information by duly constituted authorities and may not be withheld where AMT
Capital may be exposed to civil or criminal contempt proceedings for failure
to comply, and AMT Capital shall disclose all such records and information to
the investment adviser to the Fund when so requested by the adviser or the
Fund.
8. Compliance With Governmental Rules and Regulations
The Fund assumes full responsibility for complying with all applicable
requirements of the Securities Act of 1933, the 1940 Act and the Securities
Exchange Act of 1934, all as amended, and any laws, rules and regulations of
governmental authorities having jurisdiction, except to the extent that AMT
Capital specifically assumes any such obligations under the terms of this
Agreement.
AMT Capital shall maintain and preserve for the period prescribed, such
records relating to the services to be performed by AMT Capital under this
Agreement as are required pursuant to the 1940 Act and the Securities Exchange
Act of 1934, all as amended, and the rules and regulations thereunder. All
such records shall at all times remain the respective properties of the Fund,
shall be readily accessible during normal business hours and shall be promptly
surrendered upon the termination of this Agreement or otherwise on written
request. Records shall be surrendered in usable machine readable form.
9. Status of AMT Capital
AMT Capital shall be deemed to be an independent contractor and shall,
unless otherwise expressly provided herein or authorized by the Fund from time
to time, have no authority to act or represent the Fund in any way or
otherwise be deemed an agent of the Fund.
Nothing herein shall be deemed to limit or restrict AMT Capital's right
or that of any of its affiliates or employees, to engage in any other business
or to devote time and attention to the administration or other related aspects
of any other registered investment company or to render services of any kind
to any other corporation, firm, individual or association.
10. Printed Matter Concerning the Fund or AMT Capital
Neither the Fund nor AMT Capital shall publish and circulate any printed
matter which contains any reference to the other party without its prior
written approval, excepting such printed matter as refers in accurate terms to
AMT Capital's appointment under this Agreement and/or any other agreement
between the Fund and AMT Capital, and excepting as may be required by
applicable laws or regulations.
11. Term, Amendment and Termination
This Agreement may be modified or amended from time to time by mutual
agreement between the parties hereto. The Agreement shall remain in effect
for a period of five (5) years from the date hereof, and shall automatically
continue in effect thereafter unless terminated by either party at the end of
such period or thereafter on 120 days' prior written notice. Upon termination
of the Agreement, the Fund shall pay to AMT Capital such compensation as may
be due under the terms hereof on the date of such termination.
12. Default
If either party materially breaches, materially neglects or materially
fails, in whole or in part, to perform its duties and/or observe its
obligations hereunder (a "Default"), that party is in Default hereunder (the
"Defaulting Party"). The other party hereto may give written notice to the
Defaulting Party and if such Default shall not have been remedied within
thirty (30) days after such written notice is given, then the party giving
such notice may terminate this Agreement by thirty (30) days' written notice
of such termination to the Defaulting Party, but such termination shall not
affect any rights or obligations of either party arising from or relating to
such Default under the terms hereof.
Not in limitation of the foregoing, the Fund may terminate this
Agreement prior to the end of the initial five (5) year term of this
Agreement, other than for a Default by AMT Capital, upon ninety (90) days'
written notice to AMT Capital and payment of liquidated damages to AMT Capital
as follows: The liquidated damages amount shall be equal to the aggregate of
monthly fees due or paid to AMT Capital under this Agreement for the last
three (3) months prior to receipt of notice of termination. Upon payment of
such sum, AMT Capital shall have no further claim to fees due under this
Agreement for periods after the termination date.
The provisions of this Section 12 shall not limit either party's
termination rights under Section 11 of this Agreement. The provisions of
Section 11 and this Section 12 shall govern the method of termination of this
Agreement, but shall not limit any other rights or remedies of either party in
the event of any breach of this Agreement by the other party.
13. Notices
Any notice or other communication authorized or required hereunder shall
be in writing or by confirming telegram, cable, telex or facsimile sending
device. Notice shall be addressed to the Fund at c/o AMT Capital Services,
Inc., 600 Fifth Avenue, 26th Floor, New York, NY 10020, Attention: Mr. Paul
Brook, Treasurer; and to AMT Capital Services, Inc., 600 Fifth Avenue,
26th Floor, New York, New York 10020, Attention: Carla E. Dearing, President.
Either party may designate a different address by notice to the other party.
Any such notice or other communication shall be deemed given when actually
received.
14. Non-Assignability
This Agreement shall not be assigned by either of the parties hereto
without the prior consent in writing of the other party. Any purported
assignment in violation of this Agreement shall be void and of no effect.
15. Successors
This Agreement shall be binding on and shall inure to the benefit of the
Fund and AMT Capital, and their respective successors and permitted assigns.
16. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: SAMCO FUND, INC.
By:
Paul Brook, William E. Vastardis,
Treasurer Secretary
ATTEST: AMT CAPITAL SERVICES, INC.
By:
William E. Vastardis, Carla E. Dearing,
Senior Vice President President
SCHEDULE A
to
ADMINISTRATION AGREEMENT
between
SAMCO FUND, INC.
and
AMT CAPITAL SERVICES, INC.
Pursuant to the attached Administration Agreement, AMT Capital Services, Inc.
("AMT Capital") will provide the following services to SAMCO Fund, Inc. (the
"Fund"):
1) Supervision of all third party vendors to the Fund - AMT Capital
will supervise the quality of service and competitiveness of fees
of all Fund vendors, except the investment adviser. AMT Capital
will develop day-to-day working relationships with existing
vendors as well as evaluate alternative vendor candidates, as
reasonably requested by the Fund's officers. The vendors that AMT
Capital will be responsible for include:
a) Transfer and Dividend Disbursing Agent, Fund Accounting
Agent and Custodian - AMT Capital will make necessary
efforts to ensure that all legally required functions are
performed at a high quality level and at a competitive fee.
AMT Capital will strive to enhance the service levels as
well as reporting capabilities.
b) Outside Counsel, Independent Accountant and Other Vendors -
AMT Capital will coordinate communications with all other
Fund vendors with a goal of enhancing service levels while
controlling costs.
c) Insurance Providers - AMT Capital will identify potential
insurance providers and evaluate the comparative terms and
costs of fidelity bond, E&O and D&O coverage. AMT Capital
will continually monitor the appropriateness of the chosen
providers and coverage.
2) Monitor and Report on Compliance - AMT Capital will monitor the
Fund's compliance with the regulations of Sub-Chapter M of the
Internal Revenue Code with particular emphasis on the asset
diversification, income and short-short tests. AMT Capital will
monitor the Fund's compliance with the securities laws,
particularly the Investment Company Act of 1940, with particular
emphasis on the diversification and voting stock tests. AMT
Capital will monitor all Prospectus, Statement of Additional
Information and Board-imposed compliance limitations. AMT Capital
will report compliance status in all required areas in a format
and at a frequency mutually agreed upon between Fund officers and
directors and AMT Capital, including a quarterly review and
reporting pursuant to the Fund's Code of Ethics policy.
3) Prepare and Monitor Annual Compliance and Administrative Calendar
- - - - AMT Capital will prepare an annual calendar which will include
key dates in the operations of the Fund, such as Board and Audit
Committee meetings and mailings, filing dates, compliance
monitoring and other mutually agreed upon events. AMT Capital
will monitor the calendar and report on status of activity on a
regular basis to Fund officers.
4) Board of Directors' Meetings - AMT Capital will prepare and mail
all necessary Resolutions, Agenda, Powers of Attorney and other
material in advance of each Board meeting, and will prepare and
mail all Board written consents. AMT Capital will do a
presentation to the Board of the status of all administrative and
operations functions at each meeting. AMT Capital will coordinate
other Vendor presentations to the Board when required. AMT
Capital will pay all required directors' fees and expenses, from
the Fund's accounts maintained with its custodian, on a timely and
accurate basis.
5) Monthly Fund Management Reporting - AMT Capital will collect,
review and summarize all Vendor reports. AMT Capital will prepare
a monthly administrative report which will include the financial
statements, a compliance summary, expense ratio calculations,
portfolio turnover ratio calculations and performance
calculations, and will prepare other reasonably requested activity
reports.
6) Shareholder Reports - AMT Capital will prepare the semi-annual and
annual financial reports and footnotes required by Securities and
Exchange Commission ("SEC") regulation for reporting to the
shareholders and the SEC. AMT Capital will coordinate with the
Investment Adviser and Independent Accountants to obtain the
appropriate letters to the shareholders. AMT Capital will
coordinate the printing of the reports and mail to the
shareholders as well as file copies with the appropriate
regulatory authorities. AMT Capital will respond to any
shareholder inquiries under the direction of the Fund's officers.
7) Tax Filings - AMT Capital will prepare for Fund officer review all
necessary tax returns and file such returns on a timely basis with
the appropriate regulatory authorities. These will include all
Federal corporate and excise tax returns, state returns, and 1099
MISC returns for directors fees, and if required, for fees to
third party vendors.
8) SEC Filings - AMT Capital will prepare for Fund officer review all
necessary filings and make such filings on a timely basis with the
SEC. These will include Form N-SAR, Rule 24e-2 and 24f-2 filings,
proxy materials, post-effective amendments to Form N-1A and any
other SEC filings.
9) Blue Sky Monitoring and Filings - AMT Capital will monitor Blue
Sky compliance in each jurisdiction and perform all administrative
functions, including the making of necessary filings on behalf of
the Fund, under the supervision of the Fund's Distributor. AMT
Capital will report the status of the Fund's registration of each
series of Shares on a regular basis to the Fund's directors and
officers.
10) Other Filings - On behalf of the Fund, AMT Capital will prepare
and file any other required documents with the appropriate
jurisdiction, including abandoned property reports and state
corporate law filings.
11) Holdings Reconciliations - AMT Capital will review holdings
reconciliations between the Investment Adviser and the
Custodian/Fund Accounting Agent. All discrepancies will be
researched and reported promptly to the Fund's officers or
directors.
12) Proxy Statement and Annual Meeting - AMT Capital will prepare with
the assistance of Fund counsel all proxy materials, file them with
the SEC and mail them to the shareholders. If it is necessary for
the Fund to have an Annual Meeting, AMT Capital will set up the
Annual Meeting, prepare the agenda and script, tabulate and
solicit votes if requested to do so by the Fund's officers or
directors and perform the duties of the inspector of elections.
13) Fund Expenses - AMT Capital will review all Fund expenses and
strive to create efficiencies and economies of scale wherever
possible. AMT Capital, under supervision and direction of Fund
officers, will pay all Fund bills in an accurate and timely manner
from the Fund's accounts maintained with its custodian.
14) New Series Registration - AMT Capital will assist management in
the preparation of and filing with the SEC of all new Series or
other changes to the Fund's prospectus and Statement of Additional
Information.
15) General - AMT Capital will make its staff available to Fund
management to assist in or to respond to any reasonable request
for Fund- or industry-related information. If requested, AMT
Capital will make its facilities available for meetings of the
Fund's officers or directors. AMT Capital will assist in any
examination of the Fund by the SEC, Internal Revenue Service or
any other regulatory agency.
