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Form N-1A
Securities and Exchange Commission
Washington, D.C. 20549
Form N-1A
Registration Statement Under the Securities Act of 1933 [ ]
Pre-Effective Amendment No. 2 [x]
Post-Effective Amendment No. [ ]
and/or
Registration Statement Under the Investment Company Act of 1940 [ ]
Amendment No. 2 [x]
(Check appropriate box or boxes.)
Empirical Investment Funds - File Nos. 333-40397 and 811-8493
(Exact Name of Registrant as Specified in Charter)
Empirical Investment Funds, 1521 Alton Road, Suite 364, Miami Beach, FL 33139
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (305) 535-1006
Kaye Anderson-Kerr, 1521 Alton Road, Suite 364, Miami Beach, FL 33139
(Name and Address of Agent for Service)
With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.,
3500 Carew Tower, 441 Vine Street, Cincinnati, OH 45202
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
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[ ] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i) of rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
Pursuant to Rule 24f-2, the Registrant hereby declares that an indefinite number
and amount of its securities are being registered by this Registration
Statement.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares.
Omit from the facing sheet reference to the other Act if the
Registration Statement or amendment is filed under only one of the Acts. Include
the "Approximate Date of Proposed Public Offering" and "Title of Securities
Being Registered" only where securities are being registered under the
Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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EMPIRICAL INVESTMENT FUNDS
CROSS REFERENCE SHEET
FORM N-1A
FOR EMPIRICAL GROWTH FUND
ITEM SECTION IN THE PROSPECTUS
1..............................Cover Page
2..............................Summary of Fund Expenses
3..............................Investment Performance
4..............................Fund Organization, Objective and Policies,
Management of the Fund, Fundamental Policies
5..............................Summary of Fund Expenses, Management of the Fund,
Investment Adviser, Transfer Agent
5A.............................None
6..............................Cover Page, Dividends, Distributions and Tax
Status, Shareholder Rights
7..............................Cover Page, How to Purchase Shares, Share
Valuation
8..............................How to Redeem Shares
9..............................None
13.............................Objective and Policies
19.............................Share Valuation
SECTION IN STATEMENT OF ADDITIONAL
ITEM INFORMATION
10.............................Cover Page
11.............................Table of Contents
12.............................None
13.............................Additional Information About Fund Investments and
Risk Considerations, Investment Limitations,
Management of the Fund
14.............................Trustees and Officers, Management of the Fund
15.............................None
16.............................Investment Adviser, Transfer Agent, Custodian,
Independent Accountants and Financial Statements
17.............................Portfolio Transactions and Brokerage
18.............................Capital Stock
19.............................None
20.............................None
21.............................Distributor
22.............................Investment Performance
23.............................Independent Accountants and Financial Statements
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EMPIRICAL GROWTH FUND
PROSPECTUS _______________, 1998
1521 Alton Rd., Suite 364
Miami Beach, Florida 33139
For Information, Shareholder Services and Requests:
(800) ___-____
The Empirical Growth Fund (the "Fund") is a diversified series of Empirical
Investment Funds, (the "Trust") a no-load, open-end, management investment
company. The Empirical Growth Fund's investment objective is to achieve superior
risk-adjusted capital appreciation on long term investment dollars.
The Fund is "no-load," which means that investors incur no sales charges,
commissions or deferred sales charges on the purchase or redemption of their
shares.
This Prospectus provides the information a prospective investor ought to know
before investing and should be retained for future reference.
A Statement of Additional Information dated ________, 1988 has been filed with
the Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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SUMMARY OF FUND EXPENSES
The tables below are provided to assist an investor in understanding the direct
and indirect expenses that an investor may incur as a shareholder in the Fund.
The expense information is based on estimated amounts for the current fiscal
year. The expenses are expressed as a percentage of average net assets. The
Example should not be considered a representation of future Fund performance or
expenses, both of which may vary.
Shareholders should be aware that the Fund is a no-load fund and, accordingly, a
shareholder does not pay any sales charge or commission upon purchase or
redemption of shares of the Fund. In addition, the Fund does not have a 12b-1
Plan. Unlike most other mutual funds, the Fund does not pay directly for
transfer agency, pricing, custodial, auditing or legal services, nor does it pay
directly any general administrative or other significant operating expenses. The
Adviser pays all of the operating expenses of the Fund except brokerage, taxes,
interest and extraordinary expenses. The fund pays its organizational expenses.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases.............................................NONE
Sales Load Imposed on Reinvested Dividends..................................NONE
Deferred Sales Load.........................................................NONE
Redemption Fees1............................................................NONE
Exchange Fees...............................................................NONE
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Annual Fund Operating Expenses (as a percentage of average net assets)2
Management Fees............................................................1.70%
12b-1 Charges..............................................................0.00%
Other Expenses.............................................................0.25%
Total Fund Operating Expenses..............................................1.95%
1 The Fund's Custodian imposes a $13 charge for wire redemptions.
2 The Adviser's fee is equal to 1.95% of the Fund's average daily net assets up
to and including $200 million, minus the amount by which the Fund's total
expenses (including organizational expenses, but excluding brokerage, taxes,
interest and extraordinary expenses) exceeds 1.95 %. This means that the Fund's
total operating expenses will be 1.95%. Because other expenses are estimated to
be 0.25%, the management fee is estimated to be 1.70%.
Example
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period:
1 Year 3 Years
------ -------
$ 20 $ 61
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FUND ORGANIZATION
The Empirical Growth Fund ("Fund") was organized as a series of Empirical
Investment Funds (the "Trust") on September 29, 1997. This prospectus offers
shares of the Fund and each share represents an undivided, proportionate
interest in the Fund. The investment adviser to the Fund is Worldwide Financial
Management Associates, Inc. (the "Adviser").
OBJECTIVE AND POLICIES
Empirical Growth Fund seeks to achieve superior risk-adjusted capital
appreciation on long term investment dollars. It is expected that the Fund will
generate current income in addition to long term capital appreciation. The Fund
is intended to be a core equity portfolio designed for investors with a long
term wealth-building horizon.
The Fund seeks to accomplish its objective by creating a portfolio with
significantly less risk relative to other growth funds or investment strategies.
Exposure to risk could jeopardize and increase the level of erosion of the
Fund's assets with no guarantee of higher returns. Although risk-adjusted
returns tend to be more stable than raw returns, there is no guarantee that
funds that have done well in the past will continue to do well in the future. A
certain amount of risk is inherent with any investment strategy (see "Risk
Factors").
The Fund will attempt to maintain a lower level of risk than other growth funds.
The Adviser seeks to achieve this by monitoring and decreasing the Fund's
exposure to risks that are associated with the market (also known as a
sensitivity to market movements), particular industries and particular
companies. The Adviser may consider a number of factors in making its investment
decisions, including a company's relative price volatility, price to earnings
ratio, return on equity, return on assets, inventory turnover and cash flow
levels, financial leverage, stability of management and other factors which the
Adviser deems helpful in assessing risk. The Adviser seeks to further limit risk
by diversifying the Fund's investments across a broad range of industries and
companies.
The Adviser employs a bottom-up stock selection process that is based on
intensive fundamental and technical research. While the Fund may invest in
companies of any size, it will emphasize medium capitalized companies. These
companies may include those that can sustain above average and consistent
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earnings growth as well as companies that the Adviser believes have new or
innovative products, services or processes which can enhance prospects for
growth in future earnings. The Fund's strategy does not preclude investment in
large, seasoned companies which, in the judgment of the Adviser, possess
superior potential returns similar to companies with formative growth profiles.
Under normal market conditions, the Fund expects to invest approximately 75% of
its net assets in equity securities, such as common stocks (including American
Depository Receipts) and securities that are convertible into common stocks. For
liquidity, diversity and flexibility, the Fund may invest the remainder of its
net assets in real estate investment trusts, short-term to intermediate-term
corporate and U.S. Government debt securities, cash, and money market
instruments. For temporary defensive purposes, the Fund may hold all or a
portion of its assets in money market instruments, securities of other no-load
registered investment companies or U.S. government repurchase agreements. The
Fund may also invest in such instruments at any time to maintain liquidity or
pending selection of investments in accordance with its policies. If the Fund
acquires securities of another investment company, the shareholders of the Fund
will be subject to duplicative management fees.
The Fund has chosen not to invest in illiquid securities such as restricted
issues. For liquidity purposes, the Adviser will monitor the number of shares
traded for each issue to ensure that, if need be, a market would be available in
which it could sell out of the position in a timely fashion.
As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. It should be noted that the Adviser has not previously managed
assets organized as a mutual fund and the Fund has no operating history. In
addition, Kaye Anderson-Kerr, the Fund's portfolio manager, is the sole employee
of the Adviser and, as a result, the success of the Fund is entirely dependent
on her. Rates of total return quoted by the Fund may be higher or lower than
past quotations, and there can be no assurance that any rate of total return
will be maintained.
Types of securities in which the Fund may invest. In pursuit of its objectives
and policies, the Fund may employ one or more of the following investment
strategies in order to enhance investment results (See "Risk Factors"):
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Common stocks. Common stocks are ownership shares and represent a proportionate
interest in the issuing companies. They are sold initially by the corporation to
raise cash for business purposes and then traded among investors. Therefore, the
Fund participates in the success or failure of any company in which it holds
common stock.
Convertible Securities. Convertibility refers to the ability of the holder of
the security to exchange it for another security, usually debt exchanged for
equity. The Fund may invest in convertible securities (bonds, notes, preferred
stock and other securities convertible into common stocks) which may offer
higher income than the common stocks into which they are convertible. The
convertible securities which the Fund may invest include bonds, preferred stock,
and warrants which may be converted or exchanged at a stated or determinable
exchange ratio into underlying shares of common stock. Prior to their
conversion, convertible securities may have characteristics similar to both
nonconvertible debt securities and equity securities.
Repurchase Agreements. As a means of earning income for periods as short as
overnight the Fund may enter into repurchase agreements with selected banks and
broker/dealers. Under a repurchase agreement, the Fund acquires securities,
subject to the seller's agreement to repurchase them at a mutually agreed upon
time and price.
Real estate investment trusts ("REITs"). REITs were created to give larger
numbers of Americans a means of investing in real estate projects that
previously were accessible to only the wealthy. REITs are designed to pass
through all income of the real estate properties and other assets managed by the
REIT to investors. Many REITs are common stocks.
American Depositary Receipts. The fund may also purchase U.S. denominated
American Depositary Receipts ("ADRs") for foreign securities, which are traded
in the U.S. on national securities exchanges or over-the-counter and are issued
by domestic banks.
Risk Factors. Risks associated with the Fund's performance will be those due to
broad market declines as well as business risks from difficulties which may
occur to particular companies while in the Fund's portfolio. As is true of
almost all securities, it must be realized that there can be no assurance that
the Fund will obtain its ongoing objective of superior risk-adjusted capital
appreciation. The following are descriptions of certain risks related to the
investments and techniques that the Fund may use from time to time. (See the
Statement of Additional Information for more information.)
Common Stocks. The market values of common stocks can fluctuate significantly,
reflecting the business performance of the issuing company, investor perception
and general economic or financial market movements. Despite the risk of price
volatility, however, common stocks have traditionally offered the greatest
potential for gain on investment, compared to other classes of financial assets
such as bonds or cash equivalents.
Convertible Securities. While convertible securities generally offer lower
yields than nonconvertible debt securities of similar quality, their prices may
reflect changes in the value of the underlying common stocks. Convertible
securities entail less credit risk than the issuer's common stock.
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Real estate investment trusts ("REITs"). Because the success of a REIT depends
on its management's ability to select potentially profitable assets and to
manage them well, the investment objective may or may not be reached. A risk
associated with certain mortgage-backed securities is the possibility that the
underlying borrowers will repay the mortgages faster than expected, thereby
depriving investors of the interest income they could have earned over a longer
repayment schedule.
American Depositary Receipts. While ADRs are not considered to be foreign
securities, they do not eliminate all the risk inherent in investing in the
securities of foreign issuers. However, by investing in ADRs the Fund avoids
currency risks during the settlement period. Also, generally the information
available on ADRs is subject to the accounting, auditing and financial reporting
standards of the domestic market or exchange on which they are traded; these
standards are more uniform and more exacting than those to which many foreign
issuers may be subject.
Portfolio Turnover Policy. The Fund will attempt to avoid incurring high
transaction costs (which can diminish assets and returns) by implementing a long
term investment strategy. Although the Fund generally seeks to invest for the
long term, it retains the right to sell securities regardless of how long they
have been held when such action appears advisable to management. High portfolio
turnover may involve greater brokerage commissions and other transaction costs
which will be born directly by the Fund. In addition, high portfolio turnover
may result in increased short term capital gains which, when distributed to
shareholders, are treated as ordinary income. The Fund's portfolio turnover rate
is not expected to exceed 100%.
MANAGEMENT OF THE FUND
The overall management and responsibility of the business and affairs of the
Fund is vested in the Trust's Board of Trustees. The Board of Trustees approves
all significant agreements between the Trust, on behalf of the Fund, and persons
or companies furnishing services to the Fund.
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Investment Adviser. The Fund retains Worldwide Financial Management Associates,
Inc., 1521 Alton Rd., Suite 364, Miami Beach, Florida 33139 (the "Adviser") to
manage the Fund's investments. The Fund's portfolio manager is Kaye
Anderson-Kerr. Ms. Anderson-Kerr, who is responsible for the day to day
management of the fund, is the Managing Director and President of the Adviser,
which she established in October 1996. Ms. Anderson-Kerr began her career as an
account executive with R.J. Steichen & Co. in Feb. 1994. In May of that year,
Ms. Anderson-Kerr went to Tuschner & Company where she became a Vice President.
From December, 1995 until June, 1996, she was a credit representative with
Dayton Hudson Corporation, and from June, 1996 until January, 1997, she was an
assistant with the managed asset group of Dain Bosworth, Inc., an investment
banker/brokerage firm. She has also served as a financial adviser and consultant
to many established and ongoing business operations. Prior to her employment
with R.J. Steichen & Co., Ms. Anderson-Kerr was an an associate with Jubilee
Investment Corp., a business development company. In addition, she has passed
the Series 7 - General Securities, Series 63 - Uniform Blue Sky, Series 24
- -General Principal, and the Series 65- Registered Investment Advisor NASD
licensing exams. Ms. Anderson-Kerr is also a level I candidate for the Chartered
Financial Analyst (CFA) designation.
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The Fund is authorized to pay the Adviser a fee equal to an annual average rate
of 1.95% of its average daily net assets up to and including $200 million, 1.90%
of its average daily net assets from $200 million up to and including $500
million, 1.85% of its average daily net assets from $500 million up to and
including $1 billion, and 1.80% of its average daily net assets in excess of $1
billion, minus the amount by which the Fund's total expenses (including
organizational expenses, but excluding brokerage, taxes, interest and
extraordinary expenses) exceeds 1.95 %. The Adviser pays all of the operating
expenses of the Fund except brokerage, taxes, interest and extraordinary
expenses. The Fund pays its organizational expenses. In this regard, it should
be noted that most investment companies pay their own operating expenses
directly, while the Fund's expenses, except those specified above, are paid by
the Adviser.
In order to increase the return to investors, the Adviser may voluntarily from
time to time, waive or reduce its fees on assets held by the Fund, which would
have the effect of lowering the Fund's overall expense ratio and increasing
yield to investors during the time such fees are waived or reduced. Fee waivers
or reductions, other than set forth in the management agreement or otherwise
described in this Prospectus, may be rescinded at any time without further
notice to investors.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Adviser may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions. The Adviser (not the Fund) may pay certain financial
institutions (which may include banks, brokers, securities dealers and other
industry professionals) a "servicing fee" for performing certain administrative
functions for Fund shareholders to the extent these institutions are allowed to
do so by applicable statute, rule or regulation.
Transfer Agent. Maxus Information Systems, Inc. (dba Mutual Shareholder
Services), 1301 East 9th Street, Suite 3600, Cleveland, Ohio 44114 (the
"Transfer Agent") will serve as the transfer agent and dividend disbursing agent
pursuant to the terms of the Transfer Agency Agreement. Services provided will
include (but are not limited to): maintaining records of shareholders; providing
confirmations of purchases and sales; aggregating, processing and recording
purchases and redemptions of shares; processing dividend and distribution
payments; and forwarding shareholder communications such as proxies, shareholder
reports and dividend notices.
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Administration. The Trust and Mutual Shareholder Services have entered into an
Accounting Services and Administration Agreement pursuant to which Mutual
Shareholder Services provides accounting and administrative services to the
Fund. Services furnished by Mutual Shareholder Services include, among others:
maintaining and preserving the records of the Fund, including financial and
corporate reports; computing net asset value, dividends, performance data and
financial information regarding the Fund; preparing reports; assisting with the
preparation and filing with the SEC and state securities regulators of
registration statements, notices, reports and other material required to be
filed under applicable laws; preparing compliance reports; providing routine
accounting services; and providing office facilities and clerical support as
well as providing general oversight of other service providers. For its
administrative services, Mutual Shareholder Services receives from the Adviser a
monthly fee of approximately $225.
Custodian. Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202 (the
"Custodian"), is custodian of the Fund's investments. As custodian, Star Bank,
N.A. acts as the Fund's depository, safekeeps its portfolio securities, collects
all income and other payments with respect thereto, disburses funds at the
Fund's request and maintains records in connection with its duties.
Distributor. The Trust retains Maxus Securities Corporation, The Tower at
Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio 44114, to act as
the distributor of the Fund's shares in certain states.
HOW TO PURCHASE SHARES
The Fund is "no-load" and shares of the Fund are sold directly to investors on a
continuous basis, subject to a minimum initial investment of $5,000 ($2,000 for
IRAs and custodial accounts) and minimum subsequent investments of $500. These
minimums may be waived at the discretion of the Fund.
Initial Purchase.
By Mail - You may purchase shares of the Fund by completing and signing the
investment application form which accompanies this Prospectus and mailing it, in
proper form, together with a check (subject to the above minimum amounts) made
payable to Empirical Growth Fund, and mailed to: Mutual Shareholder Services,
The Tower at Erieview, 36th floor, 1301 East Ninth St., Cleveland, OH 44114.
Your purchase of shares of the Fund will be effected at the next share price
calculated after receipt of your investment.
By Wire - You may also purchase shares of the Fund by wiring federal funds from
your bank, which may charge you a fee for doing so. If money is to be wired, you
must call the Transfer Agent at (800) ___-____ to set up your account and obtain
an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:
Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Empirical Growth Fund
D.D.A. #[_________]
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Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)
You are required to mail a signed application to the Transfer Agent at the above
address in order to complete your initial wire purchase. Wire orders will be
accepted only on a day on which the Fund, Custodian and Transfer Agent are open
for business. A wire purchase will not be considered made until the wired money
is received and the purchase is accepted by the Fund. Any delays which may occur
in wiring money, including delays which may occur in processing by the banks,
are not the responsibility of the Fund or the Transfer Agent. The investor's
bank may charge a fee for the wire transfer of funds.
Subsequent Purchases. Investors may make additional purchases in the following
manner:
By Check. Checks made payable to the Fund should be sent, along with the stub
from a previous purchase or sale confirmation, to Mutual Shareholder Services,
The Tower at Erieview, 36th Floor, 1301 East Ninth Street, Cleveland, Ohio
44114.
By Wire. Funds may be wired by following the previously discussed wire
instructions for an initial purchase.
[By Telephone. Investors may purchase additional shares [up to an amount equal
to 3 times the market value of shares held in the shareholder's account in a
Fund on the preceding day for which payment has been received,] by telephoning
the Transfer Agent, Inc., at 800-___-_____ and identifying their account by
number. Shareholders wishing to use this privilege must complete a Telephone
Purchase Authorization Form which is available from the Transfer Agent. A
confirmation will be mailed and payment must be received within 3 business days
of date of purchase. This telephone purchase option may be discontinued without
notice.]
Systematic Investment Plan. The Systematic Investment Plan permits investors to
purchase shares of the Fund at monthly intervals ($100 minimum per month).
Provided the investor's bank or other financial institution allows authomatic
withdrawals, shares may be purchased by transferring funds from the account
designated by the investor. At the investor's option, the account designated
will be debited in the specified amount, and shares will be purchased once a
month, on or about the 15th day. Only an account maintained at a domestic
financial institution which is an Automated Clearing House member may be so
designated. Investors desiring to participate in the Systematic Investment Plan
should call the Transfer Agent at 800 ___-____ to obtain the appropriate forms.
The Systematic Investment Plan does not assure a profit and does not protect
against loss in declining markets.
Other Purchase Information. Dividends begin to accrue after you become a
shareholder. The Fund does not issue share certificates. All shares are held in
non-certificate form registered on the books of the Fund and the Fund's Transfer
Agent for the account of the shareholder. The rights to limit the amount of
purchases and to refuse to sell to any person are reserved by the Fund. If your
check or wire does not clear, you will be responsible for any loss incurred by
the Fund. If you are already a shareholder, the Fund can redeem shares from any
identically registered account in the Fund as reimbursement for any loss
incurred. You may be prohibited or restricted from making future purchases in
the Fund.
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HOW TO REDEEM SHARES
All redemptions will be made at the net asset value next determined after the
redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. The Fund's Custodian presently
charges $13 for each wire redemption. Any charges for wire redemptions will be
deducted from the shareholder's Fund account by redemption of shares. Investors
choosing to purchase or redeem their shares through a securities dealer may be
charged a fee by that institution.
By Mail. You may redeem any part of your account in the Fund at no charge by
mail. Your request should be addressed to: Empirical Investment Funds, c/o
Mutual Shareholder Services, The Tower at Erieview, 36th Floor, 1301 East Ninth
Street, Cleveland, Ohio 44114.
"Proper order" means your request for a redemption must include your letter of
instruction, including the Fund name, account number, account name(s), the
address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. At the discretion of the Fund
or Mutual Shareholder Services, a shareholder, prior to redemption, may be
required to furnish additional legal documents to insure proper authorization.
By Telephone. You may redeem any part of your account in the Fund by calling the
Transfer Agent at (800) ___-____. You must first complete the Optional Telephone
Redemption and Exchange section of the investment application to institute this
option. The Fund, the Transfer Agent and the Custodian are not liable for
following redemption or exchange instructions communicated by telephone that
they reasonably believe to be genuine. However, if they do not employ reasonable
procedures to confirm that telephone instructions are genuine, they may be
liable for any losses due to unauthorized or fraudulent instructions. Procedures
employed may include recording telephone instructions and requiring a form of
personal identification from the caller.
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The telephone redemption and exchange procedures may be terminated at any time
by the Fund or the Transfer Agent. During periods of extreme market activity it
is possible that shareholders may encounter some difficulty in telephoning the
Fund, although neither the Fund nor the Transfer Agent has ever experienced
difficulties in receiving and in a timely fashion responding to telephone
requests for redemptions or exchanges. If you are unable to reach the Fund by
telephone, you may request a redemption or exchange by mail.
Additional Information. If you are not certain of the requirements for a
redemption please call the Transfer Agent at (800) ___-____. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, the Fund may suspend redemptions or
postpone payment dates.
Because the Fund incurs certain fixed costs in maintaining shareholder accounts,
the Fund reserves the right to require any shareholder to redeem all of his or
her shares in the Fund on 30 days' written notice if the value of his or her
shares in the Fund is less than $5,000 due to redemption, or such other minimum
amount as the Fund may determine from time to time. An involuntary redemption
constitutes a sale. You should consult your tax advisor concerning the tax
consequences of involuntary redemptions. A shareholder may increase the value of
his or her shares in the Fund to the minimum amount within the 30 day period.
Each share of the Fund is subject to redemption at any time if the Board of
Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.
SHARE VALUATION
The net asset value of the Fund's shares is determined as of the close of
business of the New York Stock Exchange on each business day of which that
Exchange is open (presently 4:00 p.m. EST) Monday through Friday exclusive of
President's Day, Martin Luther King, Jr. Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, Christmas & New Year's Day. The value
of an individual share in the Fund (the net asset value) is calculated by
dividing the total value of the Fund's investments and other assets (including
accrued income), less any liabilities (including estimated accrued expenses), by
the number of shares outstanding, rounded to the nearest cent. The net asset
value per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ over-the-counter
market are valued at the last quoted sale price. Lacking a last sale price, a
security is valued at its last bid price except when, in the Adviser's opinion,
the last bid price does not accurately reflect the current value of the
security. All other securities for which over-the-counter market quotations are
readily available are valued at their last bid price. When market quotations are
not readily available, when the Adviser determines the last bid price does not
accurately reflect the current value or when restricted securities are being
valued, such securities are valued as determined in good faith by the Adviser,
subject to review of the Board of Trustees of the Trust.
<PAGE>
Fixed income securities generally are valued by using market quotations, but may
be valued on the basis of prices furnished by a pricing service when the Adviser
believes such prices accurately reflect the fair market value of such
securities. A pricing service utilizes electronic data processing techniques
based on yield spreads relating to securities with similar characteristics to
determine prices for normal institutional-size trading units of debt securities
without regard to sale or bid prices. When prices are not readily available from
a pricing service, or when restricted or illiquid securities are being valued,
securities are valued at fair value as determined in good faith by the Adviser,
subject to review of the Board of Trustees. Short term investments in fixed
income securities with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued by using the amortized
cost method of valuation, which the Board has determined will represent fair
value.
INVESTMENT PERFORMANCE
The Fund may periodically advertise "average annual total return." The "average
annual total return" of the Fund refers to the average annual compounded rate of
return over the stated period that would equate an initial amount invested at
the beginning of a stated period to the ending redeemable value of the
investment. The calculation of "average annual total return" assumes the
reinvestment of all dividends and distributions.
The Fund may also periodically advertise its total return over various periods
in addition to the value of a $10,000 investment (made on the date of the
initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for the Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.
<PAGE>
The Fund may also include in advertisements data comparing performance with
other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Russell
Mid-Cap Index and the S&P 500 Index.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
The policy of the Fund is to pay dividends from net investment income and
distributions of realized capital gains, if any, annually. However, provisions
in the Internal Revenue Code of 1986, as amended (the "Code"), may result in
additional net investment income and capital gains distributions by the Fund.
When you open your account, you should specify on your application how you want
to receive your distributions.
Under the provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as
amended, the Fund intends to pay out substantially all of its investment income
and realized capital gains, and intends to be relieved of federal income tax on
the amounts distributed to shareholders. Distribution of any net long term
capital gains realized by the Fund will be taxable to the shareholder as long
term capital gains, regardless of the length of time Fund shares have been held
by the investor. All income realized by the Fund, including short term capital
gains, will be taxable to the shareholder as ordinary income. Dividends from net
income will be made annually or more frequently at the discretion of the Fund's
Board of Trustees.
Dividends received shortly after purchase of shares by an investor will have the
effect of reducing the per share net asset value of his shares by the amount of
such dividends or distributions and, although in effect a return of capital, are
subject to federal income taxes.
The Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gains, distributions and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, you must certify on a W-9 tax form supplied by the
Fund that your Social Security or Taxpayer Identification Number provided is
correct and that you are not currently subject to back-up withholding, or that
you are exempt from back-up withholding.
<PAGE>
FUNDAMENTAL POLICIES
The investment limitations set forth in the Statement of Additional Information
as fundamental policies may not be changed without the affirmative vote of the
majority of the outstanding shares of the Fund. The investment objective of the
Fund may be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. Any such change may result in the Fund having an
investment objective different from the objective which the shareholders
considered appropriate at the time of investment in the Fund.
SHAREHOLDER RIGHTS
Any Trustee of the Trust may be removed by vote of the shareholders holding not
less than two-thirds of the outstanding shares of the Trust. The Trust does not
hold annual meetings of shareholders. When matters are submitted to shareholders
for a vote, each shareholder is entitled to one vote for each whole share he
owns and fractional votes for fractional shares he owns. All shares of the Fund
have equal voting rights and liquidation rights. The Adviser, as of the date of
this Prospectus, owns all outstanding shares of the Fund. As a result, the
Adviser (and Kaye Anderson-Kerr, because she controls the Adviser) may be deemed
to control the Fund.
<PAGE>
DISCLAIMER
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and in the Fund's
official sales literature in connection with the offer of the Fund's shares, and
if given or made, such other information or representation must not be relied
upon as having been authorized by the Fund. This Prospectus does not constitute
an offer in any state in which, or to any person to whom, such offering may not
lawfully be made.
<PAGE>
TABLE OF CONTENTS
SUMMARY OF FUND EXPENSES..................................................... 1
FUND ORGANIZATION............................................................ 2
OBJECTIVE AND POLICIES....................................................... 2
MANAGEMENT OF THE FUND....................................................... 4
HOW TO PURCHASE SHARES....................................................... 6
HOW TO REDEEM SHARES......................................................... 8
SHARE VALUATION.............................................................. 10
INVESTMENT PERFORMANCE....................................................... 10
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS...................................... 11
FUNDAMENTAL POLICIES......................................................... 11
SHAREHOLDER RIGHTS........................................................... 11
DISCLAIMER................................................................... 12
<PAGE>
The Empirical Growth Fund
1521 Alton Rd., Suite 364
Miami Beach, FL 33139
800-________________
STATEMENT OF ADDITIONAL INFORMATION
This Statement is not a prospectus, but should be read in conjunction with the
Fund's current prospectus dated ______________. To obtain the Prospectus, please
write the Fund or call the telephone number that is shown above.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
Fund Organization..............................................................1
Capital Stock..................................................................1
Additional Information About Fund Investments and Risk Considerations..........2
Investment Limitations.........................................................4
Management of the Fund.........................................................4
Investment Adviser.............................................................6
Trustees & Officers............................................................7
Portfolio Transactions and Brokerage...........................................7
Custodian.....................................................................10
Distributor...................................................................10
Investment Performance........................................................10
Independent Accountants and Financial Statements..............................11
Auditor's Report..............................................................12
<PAGE>
FUND ORGANIZATION
The Fund is a diversified series of Empirical Investment Funds (the "Trust") a
no-load, open-end, diversified, management investment company registered under
the Investment Company Act of 1940 (the "1940 Act") and organized under Delaware
law as a business trust under a Declaration of Trust dated September 29, 1997.
The Declaration of Trust permits the Trust to offer separate series ("Series")
of shares. All consideration received by the Trust for shares of any Series and
all assets of such Series belong to that portfolio and would be subject to
liabilities related thereto. There is currently one Series of the Trust: The
Empirical Growth Fund (the "Fund").
CAPITAL STOCK
The Trust has authorized capital of an indefinite number of shares of $.001 par
value common stock of all Series in the aggregate. The shares of each Series
have equal rights and privileges with all other shares of the Trust. The Board
of Trustees is authorized to classify un-issued shares of the Trust by assigning
them to a Series for issuance. Additional Series may be offered in the future,
but such additional offerings would not affect the interests of current
shareholders in the existing Series.
<PAGE>
The assets received by each Series on the sale of shares of such Series and all
income, earnings, profits and proceeds thereof, subject only to the rights of
creditors, are allocated to such Series, and constitute assets of such Series.
The assets of each Series are required to be segregated on the Series' books of
account.
Each share of a Series represents an equal proportionate interest in that Series
with each other share and is entitled to its proportionate share of such
dividends and distributions out of the income or assets belonging to such Series
as are declared by the Board of Trustees. Upon liquidation of any Series, Series
shareholders are entitled to share pro rata in the net assets belonging to that
Series available for distribution.
Shares of the Fund are fully paid, non-assessable, redeemable and fully
transferable. Shares do not have preemptive rights or subscription rights. Each
shareholder has one vote for each share held. Voting rights are non-cumulative,
which means that holders of a majority of shares can elect all Trustees of the
Trust if they so choose.
ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS
This section contains a more detailed discussion of some of the investments the
Fund may make and some of the techniques it may use, as described in the
Prospectus (see "Objective and Policies").
A.Repurchase Agreements. A repurchase agreement is a short-term investment
in which the purchaser (i.e., the Fund) acquires ownership of a U.S. Government
obligation (which may be of any maturity) and the seller agrees to repurchase
the obligation at a future time at a set price, thereby determining the yield
during the purchaser's holding period (usually not more than seven days from the
date of purchase). Any repurchase transaction in which the Fund engages will
require full collateralization of the seller's obligation during the entire term
of the repurchase agreement. In the event of a bankruptcy or other default of
the seller, the Fund could experience both delays in liquidating the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements only with the Custodian, other banks with assets of $1 billion or
more and registered securities dealers determined by the Adviser (subject to
review by the Board of Trustees) to be creditworthy. The Adviser monitors the
creditworthiness of the banks and securities dealers with which the Fund engages
in repurchase transactions.
B.American Depository Receipts. American Depository Receipts are
dollar-denominated receipts that are generally issued in registered form by
domestic banks, and represent the deposit with the bank of a security of a
foreign issuer. To the extent that the Fund invests in foreign securities, such
investments may be subject to special risks. For example, there may be less
information publicly available about a foreign company than about a U.S.
company, and foreign companies are not generally subject to accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks associated with investments in foreign securities include changes in
restrictions on foreign currency transactions and rates of exchanges, changes in
the administrations or economic and monetary policies of foreign governments,
the imposition of exchange control regulations, the possibility of expropriation
decrees and other adverse foreign governmental action, the imposition of foreign
taxes, less liquid markets, less government supervision of exchanges, brokers
and issuers, difficulty in enforcing contractual obligations, delays in
settlement of securities transactions and greater price volatility. In addition,
investing in foreign securities will generally result in higher commissions than
investing in similar domestic securities.
<PAGE>
INVESTMENT LIMITATIONS
Fundamental. The investment limitations described below have been adopted by the
Trust with respect to the Fund and are fundamental ("Fundamental"), i.e., they
may not be changed without the affirmative vote of a majority of the outstanding
shares of the Fund. As used in the Prospectus and the Statement of Additional
Information, the term "majority" of the outstanding shares of the Fund means the
lesser of (1) 67% or more of the outstanding shares of the Fund present at a
meeting, if the holders of more than 50% of the outstanding shares of the Fund
are present or represented at such meeting; or (2) more than 50% of the
outstanding shares of the Fund. Other investment practices which may be changed
by the Board of Trustees without the approval of shareholders to the extent
permitted by applicable law, regulation or regulatory policy are considered
non-fundamental ("Non-Fundamental").
<PAGE>
1. Borrowing Money. The Fund will not borrow money, except (a) from a bank,
provided that immediately after such borrowing there is an asset coverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is consistent with or permitted by the Investment
Company Act of 1940, as amended, the rules and regulations promulgated
thereunder or interpretations of the Securities and Exchange Commission or its
staff.
3. Underwriting. The Fund will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
<PAGE>
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
7. Concentration. The Fund will not invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.
<PAGE>
With respect to the percentages adopted by the Trust as maximum limitations
on its investment policies and limitations, an excess above the fixed percentage
will not be a violation of the policy or limitation unless the excess results
immediately and directly from the acquisition of any security or the action
taken. This paragraph does not apply to the borrowing policy set forth in
paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).
i. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.
ii. Borrowing. The Fund will not borrow money or enter into reverse
repurchase agreements.
<PAGE>
iii. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.
iv. Short Sales. The Fund will not effect short sales of securities.
v. Options. The Fund will not purchase or sell puts, calls, options or
straddles.
<PAGE>
vi. Illiquid Investments. The Fund will not invest in securities for which
there are legal or contractual restrictions on resale and other illiquid
securities.
MANAGEMENT OF THE FUND
The overall management and responsibility of the business and affairs of
the Fund is vested in the Trust's Board of Trustees. The Board of Trustees
approves all significant agreements between the Trust, on behalf of the Fund,
and persons or companies furnishing services to the Fund, including the
Management Agreement. The Trust is not required to hold and has no current
intentions of holding annual shareholders meetings, although special meetings
may be called for purposes such as changing fundamental policies.
INVESTMENT ADVISER
Responsibility for overall management of the Fund rests with its Board of
Trustees in accordance with Delaware law. Professional investment supervision is
provided by the Investment Adviser, Worldwide Financial Management Associates,
Inc., 300 South Pointe Drive, Suite 4306, Miami Beach, FL 33139.
Under the terms of the Management Agreement (the "Agreement"), the Adviser
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the operating expenses of the Fund except brokerage, taxes, interest
and extraordinary expenses. The Fund pays its organizational expenses. As
compensation for its management services and agreement to pay the Fund's
expenses, the Fund is obligated to pay the Adviser a fee, payable monthly, equal
to an annual average rate of 1.95% of its average daily net assets up to and
including $200 million, 1.90% of its average daily net assets from $200 million
up to and including $500 million, 1.85% of its average daily net assets from
$500 million up to and including $1 billion, and 1.80% of its average daily net
assets in excess of $1 billion, minus the amount by which the Fund's total
expenses (including organizational expenses, but excluding brokerage, taxes,
interest and extraordinary expenses) exceeds 1.95%. The Adviser may waive all
or part of its fee, at any time, and at its sole discretion, but such action
shall not obligate the Adviser to waive any fees in the future.
The Adviser retains the right to use the name "Empirical" in connection with
another investment company or business enterprise with which the Adviser is or
may become associated. The Trust's right to use the name "Empirical"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Adviser on ninety days written notice.
<PAGE>
The Adviser may make payments to banks or other financial institutions that
provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Fund believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Fund believes that there would be no material impact on the Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.
<PAGE>
TRUSTEES AND OFFICERS
The names of the Trustees and executive officers of the Trust are shown below.
Each Trustee who is an "interested person" of the Trust, a defined in the
Investment Company Act of 1940, is indicated by an asterisk.
<PAGE>
- --------------------------------------------------------------------------------
Name, Age & Address Position Principal Occupations During Past 5 Years
- --------------------------------------------------------------------------------
*Kaye Anderson-Kerr President, President and Trustee of Worldwide
Age: 27 Treasurer, Financial Management Associates, Inc.,
1521 Alton Rd., Suite 364 Trustee the Fund's Advisor; Managed Asset Group
Miami Beach, FL 33139 Assistant at Dain Bosworth, Inc.,
an investment banker/brokerage firm, from
1996 to 1997; Credit Representative at
Dayton Hudson Corp., a retail operator,
from 1995 to 1996; Vice President and
Account Executive at Tuschner & Company,
Inc., an investment banker/brokerage
firm, from 1994 to 1995; Account
Executive at R.J. Steichen & Co., an
investment banker/brokerage firm,
from February, 1994 to June,
1994; New Business Development
Associate at Jubilee Investment
Corp., a business development
company, from 1993 to 1994.
<PAGE>
Reza Jalali Bidgoli Trustee President of Sabet Investment Corp., a
Age: 34 real estate holding company, since 1987.
7213 NW 12th Street
Miami, FL 33126
David A. Shea III Trustee President of Shea Architects since 1978;
Age: 51 Partner of Genesis Architects from 1995
100 N. Sixth St., Suite 650C to 1998.
Minneapolis, MN 55403
Diana Sosa-Gonzalez Secretary Vice President of Hotels Ocean Drive,
Age: 34 Inc., a development corporation;
436 Ocean Drive Department Manager with the Federal
Miami Beach, FL 33139 Reserve Bank of Atlanta.
Trustee fees are Trust expenses and each series of the Trust is responsible
for a portion of the Trustee fees. The following table estimates the Trustees'
compensation for the first fiscal year of the Trust ending January 31, 1999.
Name Total Compensation from Trust
(the Trust is not in a Fund Complex)
Kaye Anderson-Kerr $0
Reza Jalali Bidgoli $2,000
David A. Shea III $2,000
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Trustees of the Trust, the
Adviser is responsible for the Fund's portfolio decisions and the placing of the
Fund's portfolio transactions. In placing portfolio transactions, the Adviser
seeks the best qualitative execution for the Fund, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Adviser generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.
The Adviser is specifically authorized to select brokers or dealers who also
provide brokerage and research services to the Fund and/or the other accounts
over which the Adviser exercises investment discretion and to pay such brokers
or dealers a commission in excess of the commission another broker or dealer
would charge if the Adviser determines in good faith that the commission is
reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Adviser's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.
Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the availability
of securities or purchasers or sellers of securities and analyses of reports
concerning performance of accounts. The research services and other information
furnished by brokers through whom the Fund effects securities transactions may
also be used by the Adviser in servicing all of its accounts. Similarly,
research and information provided by brokers or dealers serving other clients
may be useful to the Adviser in connection with its services to the Fund.
Although research services and other information are useful to the Fund and the
Adviser, it is not possible to place a dollar value on the research and other
information received. It is the opinion of the Board of Trustees and the Adviser
that the review and study of the research and other information will not reduce
the overall cost to the Adviser of performing its duties to the Fund under the
Agreement.
Over-the-counter transactions will be placed either directly with principal
market makers or with broker-dealers, if the same or a better price, including
commissions and executions, is available. Fixed income securities are normally
purchased directly from the issuer, an underwriter or a market maker. Purchases
include a concession paid by the issuer to the underwriter and the purchase
price paid to a market maker may include the spread between the bid and asked
prices.
To the extent that the Trust and another of the Adviser's clients seek to
acquire the same security at about the same time, the Trust may not be able to
acquire as large a position in such security as it desires or it may have to pay
a higher price for the security. Similarly, the Trust may not be able to obtain
as large an execution of an order to sell or as high a price for any particular
portfolio security if the other client desires to sell the same portfolio
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one client, the resulting participation in
volume transactions could produce better executions for the Trust. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be made by random client selection.
<PAGE>
CUSTODIAN
Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is Custodian of the
Fund's investments. As Custodian, Star Bank, N.A. acts as the Fund's depository,
safekeeps its portfolio securities, collects all income and other payments with
respect thereof, disburses funds at the Fund's request and maintains records in
connection with its duties.
<PAGE>
DISTRIBUTOR
Maxus Securities Corporation, 1301 East 9th Street, Suite 3600, Cleveland, Ohio
44114, is an agent for distribution of shares of the Fund in certain states. The
distributor is obligated to sell the shares of the Fund on a best efforts basis
only against purchase orders for the shares. Shares of the Fund are offered to
the public on a continuous basis.
<PAGE>
INVESTMENT PERFORMANCE
"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
(over the one and five year periods and the period from initial public offering
through the end of the Fund's most recent fiscal year) that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T)n=ERV
Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the applicable
period of the hypothetical $1,000 investment made at the
beginning of the applicable period.
The computation assumes that all dividends and distributions are reinvested at
the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.
The Fund's investment performance will vary depending upon market conditions,
the composition of the Fund's portfolio and operating expenses of the Fund.
These factors and possible differences in the methods and time periods used in
calculating non-standardized investment performance should be considered when
comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information furnished
to present or prospective shareholders, the performance of the Fund may be
compared to indices of broad groups of unmanaged securities considered to be
representative of or similar to the portfolio holdings of the Fund or considered
to be representative of the stock market in general. The Fund may use the
Russell Midcap Index.
In addition, the performance of the Fund may be compared to other groups of
mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.
<PAGE>
INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS
McCurdy & Associates C.P.A's, Inc. serves as the Trust's independent
accountants. The Trust's statement of assets and liabilities as of April 22,
1998, have been audited by McCurdy & Associates CPA's, Inc., whose address is
27955 Clemens Road Westlake, Ohio 44145. Such statement and accompanying notes
are set forth below.
<PAGE>
[Letterhead-McCurdy & Associates CPA's, Inc.]
To The Shareholders and Trustees
The Empirical Investment Funds
We have audited the accompanying statement of assets and liabilities of the
Empirical Investment Funds (comprised of the Empirical Growth Fund) as of April
22, 1998. This financial statement is the responsibility of the Company's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
statement of assets and liabilities presentation. Our procedures included
confirmation of cash held by the custodian as of April 22, 1998, by
correspondence with the custodian. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the
Empirical Growth Fund as of April 22, 1998, in conformity with generally
accepted accounting principles.
/s/
McCurdy & Associates CPA's, Inc.
Westlake, Ohio 44145
April 22, 1998
<PAGE>
EMPIRICAL INVESTMENT FUNDS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 22, 1998
Empirical
Growth Fund
ASSETS:
Cash in Bank $100,000
Organization Costs 44,552
--------
Total Assets 144,552
--------
LIABILITIES:
Note Payable 44,552
--------
Total Liabilities 44,552
--------
NET ASSETS $100,000
--------
NET ASSETS CONSIST OF:
Capital Paid In $100,000
--------
OUTSTANDING SHARES
Unlimited Number of Shares
Authorized Without Par Value 10,000
NET ASSET VALUE PER SHARE $10
OFFERING PRICE PER SHARE $10
See Accountants' Audit Report
<PAGE>
EMPIRICAL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS
April 22, 1998
1. ORGANIZATION
Empirical Investment Funds (the "Trust") is an open-end management
investment company organized as a business trust under the laws of the State
of Delaware by a Declaration of Trust dated September 29, 1997. The
Declaration of Trust provides for an unlimited number of authorized shares
of beneficial interest, which may, without shareholder approval, be divided
into an unlimited number of series of such shares, and which presently
consist of one series of shares for the Empirical Growth Fund.
The Fund uses an independent custodian and transfer agent. No transactions
other than those relating to organizational matters and the sale of 10,000
Shares of the Empirical Growth Fund have taken place to date.
2. RELATED PARTY TRANSACTIONS
As of April 22, 1998, all of the outstanding shares of the Fund were owned
by Worldwide Financial Management Associates, Inc. A shareholder who
beneficially owns, directly or indirectly, more than 25% of the Fund's
voting securities may be deemed a "control person" (as defined in the 1940
Act) of the Fund. Worldwide Financial Management Associates, Inc. is
controlled by Kaye Anderson-Kerr the President and Treasurer of the Fund.
Worldwide Financial Management Associates, Inc., the Fund's investment
adviser, is registered as an investment adviser under the Investment
Advisers Act of 1940.
As compensation for Worldwide Financial Management Associates, Inc.'s
services rendered to the Fund, such Fund pays a fee, computed and paid
monthly, at an annual rate of 1.95% on up to and including $200 million of
assets; 1.90% from $200 million to $500 million of assets; 1.85% from $500
million to $1 billion of assets; and 1.80% on all assets in excess of $1
billion minus the amount by which the Fund's total expenses (excluding
brokerage, taxes, interest, and extraordinary expenses) exceeds 1.95%.
3. CAPITAL STOCK AND DISTRIBUTION
At April 22, 1998, an unlimited number of shares were authorized and paid in
capital amounted to $100,000 for the Empirical Growth Fund. Transactions in
capital stock were as follows:
Shares Sold:
The Empirical Growth Fund 10,000
Shares Redeemed:
The Empirical Growth Fund 0
Net Increase:
The Empirical Growth Fund 10,000
Shares Outstanding:
The Empirical Growth Fund 10,000
<PAGE>
4. NOTE PAYABLE
The note payable consists of a 6% demand note payable to Worldwide Financial
Management Associates, Inc.
This note is stated at cost. The Fund does not believe it is practicable to
estimate fair value as the cost to provide such value would exceed the
benefit.
5. ORGANIZATION COSTS
Organization costs are being amortized on a straight line basis over a
five-year period.
In the event the initial shareholders redeem their funds prior to the time
that the organization costs have been fully amortized, the redemptions will
be reduced by an amount equal to the unamortized portion of the organization
costs.
<PAGE>
Empirical Investment Funds
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
Included in Part A: None
Included in Part B: Statement of Assets and
Liabilities as of April 22, 1998 and Report of
Independent Public Accountants for the Empirical
Growth Fund.
(b) Exhibits
(1) Copy of Registrant's Amended and Restated
Declaration of Trust, which was filed as an
exhibit to Registrant's Registration
Statement, is hereby incorporated by
reference.
(2) Copy of Registrant's By-Laws, which was
filed as an Exhibit to Registrant's
Registration Statement, is hereby
incorporated by reference.
(3) Voting Trust Agreements - None.
(4) Specimen of Share Certificates - None.
(5) Copy of Registrant's Management Agreement
with its Adviser, Worldwide Financial
Management Associates, Inc., is filed
herewith.
(6) Copy of Registrant's Underwriting Agreement
with Maxus Securities Corporation is filed
herewith.
(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.
(8) Copy of Registrant's Custody Agreement with
Star Bank, N.A. is filed herewith.
(9) Copy of Registrant's Administration
Agreement with Maxus Information Systems,
Inc. is filed herewith.
(10) Opinion and Consent of Richards, Layton &
Finger P.A. is filed herewith.
(11) Consent of McCurdy & Associates CPA's, Inc.
is filed herewith.
(12) Financial Statements Omitted from Item 23 -
None.
(13) Copy of Letter of Initial Stockholders is
filed herewith.
(14) Model Plan used in Establishment of any
Retirement Plan - None.
<PAGE>
(15) 12b-1 Distribution Expense Plan - None.
(16) Schedule for Computation of Each Performance
Quotation - None.
(17) Financial Data Schedule is filed herewith.
(18) Rule 18f-3 Plan - None.
(19) (i) Power of Attorney for Registrant and
Certificate with respect thereto are filed
herewith.
(ii) Powers of Attorney for Trustees and
Officers are filed herewith.
Item 25. Persons Controlled by or Under Common Control with the Registrant
As of April 15, 1998, Worldwide Financial Management
Associates, Inc., the Fund's Adviser, owned all of the
outstanding shares of the Fund. As sole shareholder of the
Adviser, Kaye Anderson-Kerr may be deemed to control the
Registrant and the Adviser.
Item 26. Number of Holders of Securities (as of April 15, 1998)
Title of Class Number of Record Holders
Empirical Growth Fund 1
Item 27. Indemnification
(a) Article VII of Registrant's Amended and Restated
Declaration of Trust and Article VI of Registrant's
By-Laws provide for indemnification of officers and
Trustees as follows:
Article VII of Registrant's Amended and Restated
Declaration of Trust:
Section 2. Indemnification and
Limitation of Liability. The Trustees shall
not be responsible or liable in any event
for any neglect or wrong-doing of any
officer, agent, employee, Manager or
Principal Underwriter of the Trust, nor
shall any Trustee be responsible for the act
or omission of any other Trustee, and the
Trust out of its assets shall indemnify and
hold harmless each and every Trustee from
and against any and all claims and demands
whatsoever arising out of or related to each
Trustee's performance of his or her duties
as a Trustee of the Trust; provided that
nothing herein contained shall indemnify,
hold harmless or protect any Trustee from or
against any liability to the Trust or any
Shareholder to which he or she would
otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in
the conduct of his or her office.
<PAGE>
Every note, bond, contract, instrument,
certificate or undertaking and every other
act or thing whatsoever issued, executed or
done by or on behalf of the Trust or the
Trustees or any of them in connection with
the Trust shall be conclusively deemed to
have been issued, executed or done only in
or with respect to their or his or her
capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally
liable thereon.
Article VI of Registrant's By-Laws:
Section 2. Actions Other Than By Trust. This
Trust shall indemnify any person who was or
is a party or is threatened to be made a
party to any proceeding (other than an
action by or in the right of this Trust) by
reason of the fact that such person is or
was an agent of this Trust, against
expenses, judgments, fines, settlements and
other amounts actually and reasonably
incurred in connection with such proceeding,
if it is determined that person acted in
good faith and reasonably believed: (a) in
the case of conduct in his official capacity
as a Trustee of the Trust, that his conduct
was in the Trust's best interests and (b) in
all other cases, that his conduct was at
least not opposed to the Trust's best
interests and (c) in the case of a criminal
proceeding, that he had no reasonable cause
to believe the conduct of that person was
unlawful. 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 that the person did not act in
good faith and in a manner which the person
reasonably believed to be in the best
interests of this Trust or that the person
had reasonable cause to believe that the
person's conduct was unlawful.
Section 3. Actions By The Trust. This Trust
shall indemnify any person who was or is a
party or is threatened to be made a party to
any threatened, pending or completed action
by or in the right of this Trust to procure
a judgment in its favor by reason of the
fact that the person is or was an agent of
this Trust, against expenses actually and
reasonably incurred by that person in
connection with the defense or settlement of
that action if that person acted in good
faith, in a manner that person believed to
be in the best interests of this Trust and
with such care, including reasonable
inquiry, as an ordinarily prudent person in
a like position would use under similar
circumstances.
Section 7. Advance of Expenses. Expenses
incurred in defending any proceeding may be
advanced by this Trust before the final
disposition of the proceeding provided (a)
receipt of a written affirmation by the
Trustee of his good faith belief that he has
met the standard of conduct necessary for
indemnification under this Article and a
written undertaking by or on behalf of the
agent, such undertaking being an unlimited
general obligation to repay the amount of
the advance if it is ultimately determined
that he has not met those requirements, and
(b) a determination that the facts then
known to those making the determination
would not preclude indemnification under
this Article. Determinations and
authorizations of payments under this
Section must be made in the manner specified
in Section 6 of this Article for determining
that the indemnification is permissible.
<PAGE>
(b) The Registrant may maintain a standard mutual fund and
investment advisory professional and directors and
officers liability policy. The policy, if maintained,
would provide coverage to the Registrant, its Trustees
and officers, and could cover its Adviser, among
others. Coverage under the policy would include losses
by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Delaware law
and the Amended and Restated Declaration of the
Registrant or the By-Laws of the Registrant, or
otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnifications against public policy as expressed in
the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such
liabilities (other than the payment by the Registrant
of expenses incurred or paid by a trustee, officer or
controlling person of the Trust in the successful
defense of any action, suit or proceeding) is asserted
by such trustee, 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 act and will be
governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
(a) Worldwide Financial Management Associates, Inc., 1521
Alton Rd., Suite 364, Miami Beach, FL 33139
("Worldwide"), adviser to Empirical Investment Funds,
is a registered investment adviser.
(1) Worldwide has engaged in no other business during
the past two fiscal years.
(2) The following list sets forth other substantial
business activities of the directors and officers
of Worldwide during the past two years:
(i) Kaye Anderson-Kerr, President of
Worldwide, was a Managed Asset Group
Assistant for Dain Bosworth, Inc.
from 1996-1997.
Item 29. Principal Underwriters
(a) Maxus Securities Corp., the Registrant's underwriter,
acts as underwriter for Maxus Income Fund, Maxus Ohio
Heartland Fund, Maxus Aggressive Value Fund, Maxus
Equity Fund and Maxus Laureate Fund, 28601 Chagrin
Blvd., Suite 500, Cleveland, Ohio 44122, and Jhaveri
Value Fund, 18820 High Parkway, Cleveland, Ohio 44116.
(b) The following list sets forth the business address,
and positions with the Underwriter and Registrant, of
each director and officer of the Underwriter.
(1) Richard A. Barone, 28601 Chagrin Blvd., Suite 500,
Cleveland, Ohio 44122.
(a) President, Treasurer and a Director
of Maxus Securities Corp.
(b) No positions with the Registrant.
<PAGE>
(2) Robert W. Curtin, 28601 Chagrin Blvd., Suite 500,
Cleveland, Ohio 44122.
(a) Secretary and a Director of Maxus
Securities Corp.
(b) No positions with the Registrant.
(3) Robert F. Pincus, 28601 Chagrin Blvd., Suite 500,
Cleveland, Ohio 44122.
(a) Vice President and Director of Maxus
Securities Corp.
(b) No positions with the Registrant.
Item 30. Location of Accounts and Records
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at 1521 Alton Rd., Suite 364, Miami Beach, FL 33139
and/or by the Registrant's Custodian, Star Bank, N.A., 425
Walnut Street, Cincinnati, Ohio 45202, and/or transfer and
shareholder service agent, Maxus Information Systems, Inc.,
28601 Chagrin Blvd., Suite 500, Cleveland, Ohio 44122.
Item 31. Management Services Not Discussed in Parts A or B
None.
Item 32. Undertakings
(a) Not Applicable.
(b) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati, State of Ohio, on the 30th day of April,
1998.
Empirical Investment Funds
By: /s/
Donald S. Mendelsohn,
Attorney-in-fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Kaye Anderson-Kerr, By: /s/
President, Treasurer and Trustee Donald S. Mendelsohn,
Attorney-in-fact
David A. Shea, III, April 30, 1998
Trustee
Reza Jalali Bidgoli,
Trustee
<PAGE>
EXHIBIT INDEX
1. Management Agreement...........................................EX-99.B5
2. Underwriting Agreement.........................................EX-99.B6
3. Custody Agreement..............................................EX-99.B8
4. Administration Agreement.......................................EX-99.B9
5. Opinion of Richards, Layton & Finger P.A......................EX-99.B10
6. Consent of McCurdy & Associates CPA's, Inc....................EX-99.B11
7. Letter of Initial Stockholders................................EX-99.B13
8. Financial Data Schedule.......................................EX-99.B17
9. Powers of Attorney............................................EX-99.POA
<PAGE>
MANAGEMENT AGREEMENT
TO: Worldwide Financial Management Associates, Inc.
1521 Alton Road, Suite 364
Miami Beach, FL 33139
Dear Sirs:
Empirical Investment Funds (the "Trust") herewith confirms our
agreement with you.
The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is the Empirical Growth Fund (the "Fund").
You have been selected to act as the sole investment adviser of the
Fund and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.
1. ADVISORY SERVICES
You will regularly provide the Fund with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Fund consistent with the Fund's investment objectives
and policies. You will determine the securities to be purchased for the Fund,
the portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.
2. ALLOCATION OF CHARGES AND EXPENSES
You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, excluding expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian, transfer agent, dividend
disbursing agent, shareholder service agent, plan agent, administrator,
accounting and pricing services agent and underwriter of the Fund; expenses,
including clerical expenses, of issue, sale, redemption or repurchase of shares
<PAGE>
of the Fund; the cost of preparing and distributing reports and notices to
shareholders, the cost of printing or preparing prospectuses and statements of
additional information for delivery to the Fund's current and prospective
shareholders; the cost of printing or preparing stock certificates or any other
documents, statements or reports to shareholders; expenses of shareholders'
meetings and proxy solicitations; advertising, promotion and other expenses
incurred directly or indirectly in connection with the sale or distribution of
the Fund's shares; trustee fees and expenses; and all other operating expenses
not specifically assumed by the Fund.
The Fund will pay all brokerage fees and commissions, taxes,
interest, and such extraordinary or non-recurring expenses as may arise,
including organizational expenses, and litigation to which the Fund may be a
party and indemnification of the Trust's trustees and officers with respect
thereto. You may obtain reimbursement from the Fund, at such time or times as
you may determine in your sole discretion, for any of the expenses advanced by
you, which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.
3. COMPENSATION OF THE ADVISER
For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
Fund will pay you a fee at the annual rate of 1.95% of the average value of its
daily net assets up to and including $200 million, 1.90% of such assets from
$200 million up to and including $500 million, 1.85% of such assets from $500
million up to and including $1 billion, and 1.80% of such assets in excess of $1
billion, minus the amount by which the Fund's total expenses (including
organizational expenses, but excluding brokerage, taxes, interest and
extraordinary expenses) exceeds 1.95%.
The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
4. EXECUTION OF PURCHASE AND SALE ORDERS
In connection with purchases or sales of portfolio securities
for the account of the Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers selected by you, subject to review of this
selection by the Board from time to time. You will be responsible for the
negotiation and the allocation of principal business and portfolio brokerage. In
the selection of such brokers or dealers and the placing of such orders, you are
directed at all times to seek for the Fund the best qualitative execution,
taking into account such factors as price (including the applicable brokerage
commission or dealer spread), the execution capability, financial responsibility
and responsiveness of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
<PAGE>
You should generally seek favorable prices and commission
rates that are reasonable in relation to the benefits received. In seeking best
qualitative execution, you are authorized to select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Fund and/or the other
accounts over which you exercise investment discretion. You are authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a Fund portfolio transaction which is in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction if you determine in good faith that the amount of the
commission is reasonable in relation to the value of the brokerage and research
services provided by the executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or your overall
responsibilities with respect to the Fund and to accounts over which you
exercise investment discretion. The Fund and you understand and acknowledge
that, although the information may be useful to the Fund and you, it is not
possible to place a dollar value on such information. The Board shall
periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits to the Fund.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc., and subject to seeking best qualitative
execution as described above, you may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the Investment Company Act of
1940, as amended, and other applicable law, you, any of your affiliates or any
affiliates of your affiliates may retain compensation in connection with
effecting the Fund's portfolio transactions, including transactions effected
through others. If any occasion should arise in which you give any advice to
clients of yours concerning the shares of the Fund, you will act solely as
investment counsel for such client and not in any way on behalf of the Fund.
Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.
5. LIMITATION OF LIABILITY OF ADVISER
You may rely on information reasonably believed by you to be
accurate and reliable. Except as may otherwise be required by the Investment
Company Act of 1940 or the rules thereunder, neither you nor your shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under, or payments made pursuant to, this Agreement or any other matter
to which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
your duties under this Agreement, or by reason of reckless disregard by any of
such persons of your obligations and duties under this Agreement.
<PAGE>
Any person, even though also a director, officer, employee,
shareholder or agent of you, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even though
paid by you.
6. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall take effect on the date of its execution,
and shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.
If the shareholders of the Fund fail to approve the Agreement
in the manner set forth above, upon request of the Board, you will continue to
serve or act in such capacity for the Fund for the period of time pending
required approval of the Agreement, of a new agreement with you or a different
adviser or other definitive action; provided that the compensation to be paid by
the Fund to you for your services to and payments on behalf of the Fund will be
equal to the lesser of your actual costs incurred in furnishing such services
and payments or the amount you would have received under this Agreement for
furnishing such services and payments.
This Agreement may, on sixty days written notice, be
terminated with respect to the Fund, at any time without the payment of any
penalty, by the Board, by a vote of a majority of the outstanding voting
securities of the Fund, or by you. This Agreement shall automatically terminate
in the event of its assignment.
7. USE OF NAME
The Trust and you acknowledge that all rights to the name
"Empirical" belongs to you, and that the Trust is being granted a limited
license to use such words in its Fund name or in any class name. In the event
you cease to be the adviser to the Fund, the Trust's right to the use of the
name "Empirical" shall automatically cease on the ninetieth day following the
termination of this Agreement. The right to the name may also be withdrawn by
you during the term of this Agreement upon ninety (90) days' written notice by
you to the Trust. Nothing contained herein shall impair or diminish in any
respect, your right to use the name "Empirical" in the name of, or in connection
with, any other business enterprises with which you are or may become
associated. There is no charge to the Trust for the right to use these names.
8. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived,
discharged or terminated orally, and no amendment of this Agreement shall be
effective until approved by the Board, including a majority of the trustees who
are not interested persons of you or of the Trust, cast in person at a meeting
called for the purpose of voting on such approval, and (if required under
current interpretations of the Act by the Securities and Exchange Commission) by
vote of the holders of a majority of the outstanding voting securities of the
series to which the amendment relates.
<PAGE>
9. LIMITATION OF LIABILITY TO TRUST PROPERTY
The term "Empirical Investment Funds" means and refers to the
Trustees from time to time serving under the Trust's Declaration of Trust as the
same may subsequently thereto have been, or subsequently hereto be, amended. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Delaware.
10. SEVERABILITY
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
11. QUESTIONS OF INTERPRETATION
(a) This Agreement shall be governed by the laws of the State
of Florida.
(b) 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 Investment Company Act of 1940, as amended (the "Act") shall be
resolved by reference to such term or provision of the Act and to interpretation
thereof, if any, by the United States courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders of the
Securities and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
12. NOTICES
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust is
1521 Alton Road, Suite 364, Miami Beach, Florida 33139, and your address for
this purpose shall be 1521 Alton Road, Suite 364, Miami Beach, Florida 33139.
<PAGE>
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
14. BINDING EFFECT
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
15. CAPTIONS
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
If you are in agreement with the foregoing, please sign the
form of acceptance on the accompanying counterpart of this letter and return
such counterpart to the Trust, whereupon this letter shall become a binding
contract upon the date thereof.
Yours very truly,
ATTEST: Empirical Investment Funds
By /s/
Name/Title: Kaye Anderson-Kerr, President
Dated: April 28, 1998
ACCEPTANCE
The foregoing Agreement is hereby accepted.
ATTEST: Worldwide Financial Management Associates,
Inc.
By /s/
Name/Title: Kaye Anderson-Kerr, President
Dated: April 28, 1998
<PAGE>
UNDERWRITING AGREEMENT
THIS AGREEMENT is made as of April 26, 1998, by and between Empirical
Investment Funds, a Delaware business trust (the "Trust"), and Maxus Securities
Corp., an Ohio corporation ("Underwriter").
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities
and Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of the Empirical Growth Fund series of shares of the
Trust (the "Series") in certain states.
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment. The Trust hereby appoints Underwriter as its exclusive
agent for the distribution of the Shares in the states listed in Exhibit A
hereto, and Underwriter hereby accepts such appointment under the terms of this
Agreement, which shall apply only with respect to the states listed in Exhibit
A. Notwithstanding any other provision hereof, the Trust may terminate, suspend
or withdraw the offering of Shares of any Series whenever, in its sole
discretion, it deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Underwriter, as agent for the Fund, will sell Shares to
the public against orders therefor at the net asset value, all such sales to
comply with the provisions of the Act and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
<PAGE>
(b) Underwriter will also have the right to take, as agent for
the Trust, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
(c) The net asset value of the Shares of each Series (or Class
of a Series) shall be determined in the manner provided in the Registration
Statement, and when determined shall be applicable to transactions as provided
for in the Registration Statement. The net asset value of the Shares of each
Series (or each Class of a Series) shall be calculated by the Trust or by
another entity on behalf of the Trust. Underwriter shall have no duty to inquire
into or liability for the accuracy of the net asset value per share as
calculated.
(d) On every sale, the Trust shall receive the applicable net
asset value of the Shares promptly, but in no event later than the third
business day following the date on which Underwriter shall have received an
order for the purchase of the Shares.
(e) Upon receipt of purchase instructions, Underwriter will
transmit such instructions to the Trust or its transfer agent for registration
of the Shares purchased.
(f) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
<PAGE>
(g) Underwriter, as agent of and for the account of the Trust,
may repurchase the Shares at such prices and upon such terms and conditions as
shall be specified in the Registration Statement. At the end of each business
day, the Underwriter shall notify the Trust and the Trust's transfer agent of
the number of shares redeemed, and the identity of the shareholders or dealers
offering Shares for repurchase. Upon such notice, the Trust shall pay the
Underwriter the net asset value of the redeemed shares in cash or in the form of
a credit against monies due the Trust from the Underwriter as proceeds from the
sale of Shares. The Trust reserves the right to suspend such repurchase right
upon written notice to the Underwriter. The Underwriter further agrees to act as
agent for the Trust to receive and transmit promptly to the Trust's transfer
agent, shareholder and dealer requests for redemption of Shares.
3. Sales of Shares by the Trust. The Trust reserves the right to
issue or sell any Shares directly to the public at any time.
4. Basis of Sale of Shares. Underwriter does not agree to sell any
specific number of Shares. Underwriter, as agent for the Trust, undertakes to
sell Shares on a best efforts basis only against orders therefor.
5. Compliance with NASD and Government Rules.
(a) Underwriter will conform to the Rules of Fair Practice of
the NASD and the securities laws of any jurisdiction in which it sells, directly
or indirectly, any Shares.
(b) Underwriter agrees to furnish to the Trust sufficient
copies of any agreements, plans or other materials it intends to use in
connection with any sales of Shares in adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not to
use them until so filed and cleared.
<PAGE>
(c) Underwriter, at its own expense, will qualify as dealer or
broker, or otherwise, under all applicable State or federal laws required in
order that Shares may be sold in such States as may be mutually agreed upon by
the parties, provided however, that the expenses described in Exhibit A hereto
will be paid by the Trust.
(d) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those contained
in the then current prospectus and statement of additional information covering
the Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Trust. The Trust shall furnish to
Underwriter copies of all information, financial statements and other papers
which Underwriter may reasonably request for use in connection with the
distribution of the Shares.
7. Expenses to be Borne by Trust. The Trust will bear the following
expenses:
(a) preparation, setting in type, printing of sufficient
copies of the prospectus and statement of additional information for
distribution to shareholders, and the distribution to shareholders of the
prospectus and statement of additional information;
(b) preparation, printing and distribution of reports and
other communications to shareholders;
<PAGE>
(c) registration of the Shares under the federal securities
law;
(d) qualification of the Shares for sale in the jurisdictions
designated by Underwriter;
(e) maintaining facilities for the issue and transfer of the
Shares;
(f) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and
(g) any original issue taxes or transfer taxes applicable to
the sale or delivery of the Shares of certificates therefor.
8. Indemnification.
(a) The Trust agrees to indemnify, defend and hold the
Underwriter, its officers, and directors, and any person who controls the
Underwriter within the meaning of Section 15 of the 1933 Act (the "1933 Act") or
Section 20 of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
free and harmless from and against any and all claims, demands or liabilities
and expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the Underwriter, its officers, directors or any such controlling persons
may incur under the 1933 Act, the 1934 Act, or under common law or otherwise,
arising out of or based upon any untrue statement of a material fact contained
in the Registration Statement or Prospectus or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not misleading,
except insofar as such claims, demands, liabilities or expenses arise out of or
are based upon any such untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with information furnished
in writing by the Underwriter to the Trust for use in the Registration
Statement. The Underwriter agrees to comply with all of the applicable terms and
provisions of the 1934 Act.
<PAGE>
(b) The Underwriter agrees to indemnify, defend, and hold the
Trust, its officers, trustees, employees, shareholders and agents, and any
person who controls the Trust within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act, free and harmless from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending against such claims, demands or liabilities and any counsel fees
incurred in connection therewith) which the Trust, its trustees, officers,
employees, shareholders and agents, or any such controlling person may incur
under the 1933 Act, the 1934 Act or under common law or otherwise arising out of
or based upon any untrue statement of a material fact or alleged untrue
statement of a material fact contained in information furnished in writing by
the Underwriter to the Trust for use in the Registration Statement, or arising
out of or based upon any omission or alleged omission to state a material fact
in connection with such information required to be stated in the Registration
Statement necessary to make such information not misleading.
(c) A party seeking indemnification hereunder (the
"Indemnitee") shall give prompt written notice to the party from whom
indemnification is sought ("Indemnitor") of a written assertion or claim of any
threatened or pending legal proceeding which may be subject to indemnity under
this Section; provided, however, that failure to notify the Indemnitor of such
written assertion or claim shall not relieve the Indemnitor of any liability
arising from this Section. The Indemnitor shall be entitled, if it so elects, to
assume the defense of any suit brought to enforce a claim subject to this
Agreement and such defense shall be conducted by counsel chosen by the
Indemnitor and satisfactory to the Indemnitee; provided, however, that if the
defendants include both the Indemnitee and the Indemnitor, and the Indemnitee
shall have reasonably concluded that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnitor ("conflict of interest"), the Indemnitor shall not have the right to
elect to defend such claim on behalf of the Indemnitee, and the Indemnitee shall
have the right to select separate counsel to defend such claim on behalf of the
<PAGE>
Indemnitee. In the event that the Indemnitor elects to assume the defense of any
suit pursuant to the preceding sentence and retains counsel satisfactory to the
Indemnitee, the Indemnitee shall bear the fees and expenses of additional
counsel retained by it except for reasonable investigation costs which shall be
borne by the Indemnitor. If the Indemnitor (i) does not elect to assume the
defense of a claim, (ii) elects to assume the defense of a claim but chooses
counsel that is not satisfactory to the Indemnitee or (iii) has no right to
assume the defense of a claim because of a conflict of interest, the Indemnitor
shall advance or reimburse the Indemnitee, at the election of the Indemnitee,
reasonable fees and disbursements of any counsel retained by Indemnitee,
including reasonable investigation costs.
9. Advances of Expenses. The Trust shall advance attorneys' fees or
other expenses incurred by a Covered Person in defending a proceeding only to
the extent permitted by the 1933 Act and the Act.
10. Termination and Amendment of this Agreement. This Agreement shall
automatically terminate, without the payment of any penalty, in the event of its
assignment. This Agreement may be amended only if such amendment is approved (i)
by Underwriter, (ii) either by action of the Board of Trustees of the Trust or
at a meeting of the Shareholders of the Trust by the affirmative vote of a
majority of the outstanding Shares, and (iii) by a majority of the Trustees of
the Trust who are not interested persons of the Trust or of Underwriter, by vote
cast in person at a meeting called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this Agreement on
sixty (60) days' written notice delivered or mailed by registered mail, postage
prepaid, to the other party.
<PAGE>
11. Effective Period of this Agreement. This Agreement shall take
effect upon its execution and shall remain in full force and effect for a period
of two years from the date of its execution (unless terminated automatically as
set forth in Paragraph 10 and from year to year thereafter), subject to annual
approval (i) by Underwriter, (ii) by the Board of Trustees of the Trust or a
vote of a majority of the outstanding Shares, and (iii) by a majority of the
Trustees of the Trust who are not interested persons of the Trust or of
Underwriter, by vote cast in person at a meeting called for the purpose of
voting on such approval.
12. Limitation of Trust's Liability. The term "Empirical Investment
Funds" means and refers to the Trustees from time to time serving under the
Trust's Amended and Restated Declaration of Trust as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, Shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust, as provided in the
Amended and Restated Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the Trustees and Shareholders
of the Trust and signed by the officers of the Trust, acting as such, and
neither such authorization by such Trustees and Shareholders nor such execution
and delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on them personally, but shall bind only
the trust property of the Trust as provided in its Amended and Restated
Declaration of Trust. A copy of the Amended and Restated Declaration of Trust of
the Trust is on file with the Secretary of State of Delaware.
<PAGE>
13. Successor Investment Company. Unless this Agreement has been
terminated in accordance with Paragraph 10, the terms and provisions of this
Agreement shall become automatically applicable to any investment company which
is a successor to the Trust as a result of a reorganization, recapitalization or
change of domicile.
14. Severability. In the event any provision of this Agreement is
determined to be void or unenforceable, such determination shall not affect the
remainder of this Agreement, which shall continue to be in force.
15. Questions of Interpretation.
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) 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 1933 Act or the 1934 Act shall be resolved by reference to such
term or provision of the applicable Act and to interpretation thereof, if any,
by the United States courts or in the absence of any controlling decision of any
such court, by rules, regulations or orders of the Securities and Exchange
Commission issued pursuant to the applicable Act. In addition, where the effect
of a requirement of the applicable Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
16. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that for this purpose the
address of the Trust shall be 1521 Alton Rd., Suite 364, Miami Beach, Florida
33139 and of the Underwriter shall be 1301 East 9th St., Suite 550, Cleveland,
Ohio 44114.
<PAGE>
17. Counterparts. This Agreement may be in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
18. Binding Effect. Each of the undersigned expressly warrants and
represents that he has the full power and authority to sign this Agreement on
behalf of the party indicated, and that his signature will operate to bind the
party indicated to the foregoing terms.
19. Force Majeure. If Underwriter shall be delayed in its performance
of services or prevented entirely or in part from performing services due to
causes or events beyond its control, including and without limitation, acts of
God, interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
<PAGE>
IN WITNESS WHEREOF, the Trust and Underwriter have each caused this
Agreement to be signed on its behalf, all as of the day and year first above
written.
ATTEST: Empirical Investment Funds
_____________________________ By:_/s/_____________________________
Kaye Anderson-Kerr, President
ATTEST: Maxus Securities Corp.
____________________________ By:_/s/_____________________________
Name: Robert W. Curtin
Title: Senior Vice President
<PAGE>
CUSTODY AGREEMENT
BETWEEN
STAR BANK, N.A.
AND
EMPIRICAL INVESTMENT FUNDS
<PAGE>
TABLE OF CONTENTS
APPENDIX A
APPENDIX B
APPENDIX C
APPENDIX D
APPENDIX E
<PAGE>
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the 28th day of
April, 1998, by and between Empirical Investment Funds, an Ohio business trust
(the "Trust") an open-end diversified investment business trust organized under
the laws of Delaware and having its office at 1521 Alton Road, Suite 364, Miami
Beach, Florida 33139 and Star Bank, National Association, (the "Custodian"), a
national banking association having its principal office at 425 Walnut Street,
Cincinnati, Ohio, 45202.
WHEREAS, the Trust and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the Trust
as required by the Act (as hereafter defined).
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Trust and the Custodian agree as follows:
sefinition
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Act - the Investment Company Act of 1940, as amended.
1934 Act - the Securities and Exchange Act of 1934, as amended.
Authorized Person - any person, whether or not any such person is an
officer or employee of the Trust, who is duly authorized by the Board of
Trustees of the Trust to give Oral Instructions and Written Instructions on
behalf of the Trust or any Fund, and named in Appendix A attached hereto and as
amended from time to time by resolution of the Board of Trustees, certified by
an Officer, and received by the Custodian.
<PAGE>
Board of Trustees - the Trustees from time to time serving under the
Trust's Agreement and Declaration of Trust, as from time to time amended.
Book-Entry System - a federal book-entry system as provided in Subpart
O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFT Part 350, or
in such book-entry regulations of federal agencies as are substantially in the
form of Subpart O.
Business Day - any day recognized as a settlement day by The New York
Stock Exchange, Inc. and any other day for which the Trust computes the net
asset value of Shares of any fund.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company, its successor(s) and its nominee(s). Depository shall include any
other clearing agency registered with the SEC under Section 17A of the 1934 Act
which acts as a system for the central handling of Securities where all
Securities of any particular class or series of an issuer deposited within the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry without physical delivery of the Securities provided that the Custodian
shall have received a copy of a resolution of the Board of Trustees, certified
by an Officer, specifically approving the use of such clearing agency as a
depository for the Funds.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Trust.
Foreign Securities - a) securities issued and sold primarily outside of
the United States by a foreign government, a national of any foreign country, or
a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
<PAGE>
Fund - each series of the Trust listed in Appendix B and any additional
series added pursuant to Proper Instructions. A series is individually referred
to as a "Fund" and collectively referred to as the "Funds."
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
NASD - the National Association of Securities Dealers, Inc.
Officer - the Chairman, President, Secretary, Treasurer, any Vice
President, Assistant Secretary or Assistant Treasurer of the Trust.
Oral Instructions - instructions orally transmitted to and received by
the Custodian from an Authorized Person (or from a person that the Custodian
reasonably believes in good faith to be an Authorized Person) and confirmed by
Written Instructions in such a manner that such Written Instructions are
received by the Custodian on the Business Day immediately following receipt of
such Oral Instructions.
<PAGE>
Proper Instructions - Oral Instructions or Written Instructions. Proper
Instructions may be continuing Written Instructions when deemed appropriate by
both parties.
Prospectus - the Trust's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, bank certificates of deposit, bankers' acceptances,
mortgage-backed securities or other obligations and any certificates, receipts,
warrants, or other instruments or documents representing rights to receive,
purchase, or subscribe for the same or evidencing or representing any other
rights or interest therein, or any similar property or assets, including
securities of any registered investment company, that the Custodian has the
facilities to clear and to service.
SEC - the Securities and Exchange Commission of the United States of
America.
Shares - with respect to a Fund, the units of beneficial interest
issued by the Trust on account of such Fund.
Trust - the business trust organized under the laws of Delaware which
is an open-end diversified investment company registered under the Act.
Written Instructions - communications in writing actually received by
the Custodian from an Authorized Person. A communication in writing includes a
communication by facsimile, telex or between electro-mechanical or electronic
devices (where the use of such devices have been approved by resolution of the
Board of Trustees and the resolution is certified by an Officer and delivered to
the Custodian). All written communications shall be directed to the Custodian,
attention: Mutual Fund Custody Department.
<PAGE>
ARTICLE II
Appointment; Acceptance; and Furnishing of Documents
. The Trust hereby constitutes and appoints the Custodian as custodian of all
Securities and cash owned by the Trust at any time during the term of this
Agreement.
. The Custodian hereby accepts appointment as such custodian and agrees to
perform the duties thereof as hereinafter set forth.
. The following documents, including any amendments thereto, will be provided
contemporaneously with the execution of the Agreement, to the Custodian by the
Trust:
1. A copy of the Declaration of Trust of the Trust certified
by the Secretary.
2. A copy of the By-Laws of the Trust certified by the
Secretary.
3. A copy of the resolution of the Board of Trustees of the
Trust appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Trust
setting forth the names and signatures of all Authorized Persons
The Trust agrees to notify the Custodian in writing of the appointment,
termination or change in appointment of any Dividend and Transfer Agent.
<PAGE>
ARTICLE III
Receipt of Trust Assets
A. Delivery of Moneys. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all moneys to be
held by the Custodian for the account of any Fund. The Custodian shall be
entitled to reverse any deposits made on any Fund's behalf where such deposits
have been entered and moneys are not finally collected within 30 days of the
making of such entry.
B. Delivery of Securities. During the term of this Agreement, the
Trust will deliver or cause to be delivered to the Custodian all Securities to
be held by the Custodian for the account of any Fund. The Custodian will not
have any duties or responsibilities with respect to such Securities until
actually received by the Custodian. The Custodian is hereby authorized by the
Trust, acting on behalf of the Fund, to actually deposit any assets of the Fund
in the Book-Entry System or in a Depository, provided, however, that the
Custodian shall always be accountable to the Trust for the assets of the Fund so
deposited. Assets deposited in the Book-Entry System or the Depository will be
represented in accounts which include only assets held by the Custodian for
customers, including but not limited to accounts in which the Custodian acts in
a fiduciary or representative capacity.
C. Payments for Shares. As and when received, the Custodian shall
deposit to the account(s) of a Fund any and all payments for Shares of that Fund
issued or sold from time to time as they are received from the Trust's
distributor or Dividend and Transfer Agent or from the Trust itself.
D. Duties Upon Receipt. The Custodian shall not be responsible
for any Securities, moneys or other assets of any Fund until actually received.
<PAGE>
ARTICLE IV
Disbursement of Trust Assets
IV. A. Declaration of Dividends by Trust. The Trust shall furnish to
the Custodian a copy of the resolution of the Board of Trustees of the Trust,
certified by the Trust's Secretary, either (i) setting forth the date of the
declaration of any dividend or distribution in respect of Shares of any Fund of
the Trust, the date of payment thereof, the record date as of which the Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date, or (ii) authorizing
the declaration of dividends and distributions in respect of Shares of a Fund on
a daily basis and authorizing the Custodian to rely on Written Instructions
setting forth the date of the declaration of any such dividend or distribution,
the date of payment thereof, the record date as of which the Fund shareholders
entitled to payment shall be determined, the amount payable per share to Fund
shareholders of record as of that date, and the total amount to be paid by the
Dividend and Transfer Agent on the payment date.
On the payment date specified in the resolution or Written Instructions
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Segregation of Redemption Proceeds. Upon receipt of Proper
Instructions so directing it, the Custodian shall segregate amounts necessary
for the payment of redemption proceeds to be made by the Dividend and Transfer
Agent from moneys held for the account of the Fund so that they are available
for such payment.
<PAGE>
C. Disbursements of Custodian. Upon receipt of a Certificate
directing payment and setting forth the name and address of the person to whom
such payment is to be made, the amount of such payment, the name of the Fund
from which payment is to be made, and the purpose for which payment is to be
made, the Custodian shall disburse amounts as and when directed from the assets
of that Fund. The Custodian is authorized to rely on such directions and shall
be under no obligation to inquire as to the propriety of such directions.
D. Payment of Custodian Fees. Upon receipt of Written Instructions
directing payment, the Custodian shall disburse moneys from the assets of the
Trust in payment of the Custodian's fees and expenses as provided in Article
VIII hereof.
ARTICLE V
Custody of Trust Assets
A. Separate Accounts for Each Fund. As to each Fund, the Custodian
shall open and maintain a separate bank account or accounts in the United States
in the name of the Trust coupled with the name of such Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and shall hold all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established and used by
the Fund in accordance with Rule 17f-3 under the Act. Moneys held by the
Custodian on behalf of a Fund may be deposited by the Custodian to its credit as
Custodian in the banking department of the Custodian. Such moneys shall be
deposited by the Custodian in its capacity as such, and shall be withdrawable by
the Custodian only in such capacity.
B. Segregation of Non-Cash Assets. All Securities and non-cash
property held by the Custodian for the account of a Fund (other than Securities
maintained in a Depository or Book-entry System) shall be physically segregated
from other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
<PAGE>
C. Securities in Bearer and Registered Form. All Securities held
which are issued or issuable only in bearer form, shall be held by the Custodian
in that form; all other Securities held for the Fund may be registered in the
name of the Custodian, any sub-custodian appointed in accordance with this
Agreement, or the nominee of any of them. The Trust agrees to furnish to the
Custodian appropriate instruments to enable the Custodian to hold, or deliver in
proper form for transfer, any Securities that it may hold for the account of any
Fund and which may, from time to time, be registered in the name of a Fund.
D. Duties of Custodian as to Securities. Unless otherwise
instructed by the Trust, with respect to all Securities held for the Trust, the
Custodian shall on a timely basis (concerning items 1 and 2 below, as defined in
the Custodian's Standards of Service Guide, as amended from time to time,
annexed hereto as Appendix D):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or retired, or otherwise
become payable;
3.) Surrender interim receipts or Securities in temporary form
for Securities in definitive form; and
4.) Execute, as Custodian, any necessary declarations or
certificates of ownership under the Federal income tax laws or the laws or
regulations of any other taxing authority, including any foreign taxing
authority, now or hereafter in effect.
<PAGE>
E. Certain Actions Upon Written Instructions. Upon receipt of a
Written Instructions and not otherwise, the Custodian shall:
1.) Execute and deliver to such persons as may be designated
in such Written Instructions proxies, consents, authorizations, and any other
instruments whereby the authority of the Trust as beneficial owner of any
Securities may be exercised;
2.) Deliver any Securities in exchange for other Securities or
cash issued or paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation, or recapitalization of any corporation, or
the exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection with the reorganization,
refinancing, merger, consolidation, recapitalization, or sale of assets of any
corporation, and receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4.) Make such transfers or exchanges of the assets of any Fund
and take such other steps as shall be stated in the Written Instructions to be
for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Trust; and
<PAGE>
5.) Deliver any Securities held for any Fund to the depository
agent for tender or other similar offers.
F. Custodian to Deliver Proxy Materials. The Custodian shall
promptly deliver to the Trust all notices, proxy material and executed but
unvoted proxies pertaining to shareholder meetings of Securities held by any
Fund. The Custodian shall not vote or authorize the voting of any Securities or
give any consent, waiver or approval with respect thereto unless so directed by
Written Instructions.
G. Custodian to Deliver Tender Offer Information. The Custodian
shall promptly deliver to the Trust all information received by the Custodian
and pertaining to Securities held by any Fund with respect to tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Appendix D. If the Trust desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
H. Custodian to Deliver Security and Transaction Information. On
each Business Day that the Federal Reserve Bank is open, the Custodian shall
furnish the Trust with a detailed statement of monies held for the Fund under
this Agreement and with confirmations and a summary of all transfers to or from
the account of the Fund. At least monthly and from time to time, the Custodian
shall furnish the Trust with a detailed statement of the Securities held for the
Fund under this Agreement. Where Securities are transferred to the account of
the Fund without physical delivery, the Custodian shall also identify as
belonging to the Fund a quantity of Securities in a fungible bulk of Securities
registered in the name of the Custodian (or its nominee) or shown on the
Custodian's account on the books of the Book-Entry System or the Depository.
With respect to information provided by this section, it shall not be necessary
for the Custodian to provide notice as described by Article XI Section F.
Notices to Trust; it shall be sufficient to communicate by such means as shall
be mutually agreeable to the Trust and the Custodian.
ARTICLE VI
Purchase and Sale of Securities
A. Purchase of Securities. Promptly after each purchase of
Securities by the Trust, the Trust shall deliver to the Custodian (i) with
respect to each purchase of Securities which are not Money Market Securities,
Written Instructions, and (ii) with respect to each purchase of Money Market
Securities, Proper Instructions, specifying with respect to each such purchase
the;
1.) name of the issuer and the title of the Securities,
<PAGE>
2.) the number of shares, principal amount purchased (and
accrued interest, if any) or other units purchased,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable,
6.) name of the person from whom, or the broker through
which, the purchase was made,
7.) the name of the person to whom such amount is payable,
and
8.) the Fund for which the purchase was made.
The Custodian shall, against receipt of Securities purchased by or for the
Trust, pay out of the moneys held for the account of such Fund the total amount
specified in the Written Instructions, or Oral Instructions, if applicable, to
the person named therein. The Custodian shall not be under any obligation to pay
out moneys to cover the cost of a purchase of Securities for a Fund, if in the
relevant Fund custody account there is insufficient cash available to the Fund
for which such purchase was made. With respect to any repurchase agreement
transaction for the Funds, the Custodian shall assure that the collateral
reflected on the transaction advice is received by the Custodian.
B. Sale of Securities. Promptly after each sale of Securities by a
Fund, the Trust shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, Written Instructions, and (ii)
with respect to each sale of Money Market Securities, Proper Instructions,
specifying with respect to each such sale the:
1.) name of the issuer and the title of the Securities,
2.) number of shares, principal amount sold (and accrued
interest, if any) or other units sold,
<PAGE>
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable,
6.) name of the person to whom, or the broker through
which, the sale was made,
7.) name of the person to whom such Securities are to be
delivered, and
8.) Fund for which the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
specified in the Written Instructions, or Oral Instructions, if applicable.
C. Delivery Versus Payment for Purchases and Sales. Purchases and
sales of Securities effected by the Custodian will be made on a delivery versus
payment basis. The Custodian may, in its sole discretion, upon receipt of
Written Instructions, elect to settle a purchase or sale transaction in some
other manner, but only upon receipt of acceptable indemnification from the Fund.
<PAGE>
D. Payment on Settlement Date. On contractual settlement date, the
account of the Fund will be charged for all purchased Securities settling on
that day, regardless of whether or not delivery is made. Likewise, on
contractual settlement date, proceeds from the sale of Securities settling that
day will be credited to the account of the Fund, irrespective of delivery.
E. Segregated Accounts. The Custodian shall, upon receipt of
Proper Instructions so directing it, establish and maintain a segregated account
or accounts for and on behalf of a Fund. Cash and/or Securities may be
transferred into such account or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement among
the Trust, the Custodian, and a broker-dealer registered under the 1934 Act, and
also a member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of the
Options Clearing Corporation and of any registered national securities exchange,
the Commodity Futures Trading Commission, any registered contract market, or any
similar organization or organizations requiring escrow or other similar
arrangements in connection with transactions by the Fund;
2.) for purposes of segregating cash or Securities in
connection with options purchased, sold, or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund;
<PAGE>
3.) for the purpose of compliance by the Fund with the
procedures required for reverse repurchase agreements, firm commitment
agreements, standby commitment agreements, short sales, or any other securities
by Act Release No. 10666, or any subsequent release or releases or rule of the
SEC relating to the maintenance of segregated accounts by registered investment
companies;
4.) for the purpose of segregating collateral for loans of
Securities made by the Fund; and
5.) for other proper corporate purposes, but only upon receipt
of, in addition to Proper Instructions, a copy of a resolution of the Board of
Trustees, certified by an Officer, setting forth the purposes of such segregated
account.
Each segregated account established hereunder shall be established and
maintained for a single Fund only. All Proper Instructions relating to a
segregated account shall specify the Fund involved.
F. Advances for Settlement. Except as otherwise may be agreed upon
by the parties hereto, the Custodian shall not be required to comply with any
Written Instructions to settle the purchase of any Securities on behalf of a
Fund unless there is sufficient cash in the account(s) pertaining to such Fund
at the time or to settle the sale of any Securities from such an account(s)
unless such Securities are in deliverable form. Notwithstanding the foregoing,
if the purchase price of such Securities exceeds the amount of cash in the
account(s) at the time of such purchase, the Custodian may, in its sole
discretion, advance the amount of the difference in order to settle the purchase
of such Securities. The amount of any such advance shall be deemed a loan from
the Custodian to the Trust payable on demand and bearing interest accruing from
the date such loan is made up to but not including the date such loan is repaid
at the rate per annum customarily charged by the Custodian on similar loans.
<PAGE>
ARTICLE VII
Trust Indebtedness
VII. A. Borrowings. In connection with any borrowings by the Trust, the
Trust will cause to be delivered to the Custodian by a bank or broker requiring
Securities as collateral for such borrowings (including the Custodian if the
borrowing is from the Custodian), a notice or undertaking in the form currently
employed by such bank or broker setting forth the amount of collateral. The
Trust shall promptly deliver to the Custodian Written Instructions specifying
with respect to each such borrowing: (a) the name of the bank or broker, (b) the
amount and terms of the borrowing, which may be set forth by incorporating by
reference an attached promissory note duly endorsed by the Trust, or a loan
agreement, (c) the date, and time if known, on which the loan is to be entered
into, (d) the date on which the loan becomes due and payable, (e) the total
amount payable to the Trust on the borrowing date, and (f) the description of
the Securities securing the loan, including the name of the issuer, the title
and the number of shares or other units or the principal amount. The Custodian
shall deliver on the borrowing date specified in the Written Instructions the
required collateral against the lender's delivery of the total loan amount then
payable, provided that the same conforms to that which is described in the
Written Instructions. The Custodian shall deliver, in the manner directed by the
Trust, such Securities as additional collateral, as may be specified in Written
Instructions, to secure further any transaction described in this Article VII.
The Trust shall cause all Securities released from collateral status to be
returned directly to the Custodian and the Custodian shall receive from time to
time such return of collateral as may be tendered to it.
<PAGE>
The Custodian may, at the option of the lender, keep such collateral in
its possession, subject to all rights therein given to the lender because of the
loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
B. Advances. With respect to any advances of cash made by the
Custodian to or for the benefit of a Fund for any purpose which results in the
Fund incurring an overdraft at the end of any Business Day, such advance shall
be repayable immediately upon demand made by the Custodian at any time.
ARTICLE VIII
Concerning the Custodian
A. Limitations on Liability of Custodian. Except as otherwise
provided herein, the Custodian shall not be liable for any loss or damage,
including counsel fees, resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its negligence or
willful misconduct. The Trust, on behalf of the Fund and only from assets of the
Fund (or insurance purchased by the Trust with respect to its liabilities on
behalf of the Fund hereunder), shall defend, indemnify and hold harmless the
Custodian and its directors, officers, employees and agents with respect to any
loss, claim, liability or cost (including reasonable attorneys' fees) arising or
alleged to arise from or relating to the Trust's duties hereunder or any other
action or inaction of the Trust or its Trustees, officers, employees or agents,
except such as may arise from the negligent action, omission, willful misconduct
or breach of this Agreement by the Custodian, its directors, officers, employees
or agents. The Custodian shall defend, indemnify and hold harmless the Trust
and its trustees, officers, employees or agents with respect to any loss, claim,
liability or cost (including reasonable attorneys' fees) arising or alleged to
arise from or relating to the Custodian's duties as specifically set forth in
this agreement with respect to the Fund hereunder or any other action or
inaction of the Custodian or its directors, officers, employees, agents,
nominees, or Sub-Custodians as to the Fund, except such as may arise from the
negligent action, omission or willful misconduct of the Trust, its trustees,
officers, employees, or agents. The Custodian may, with respect to questions of
law apply for and obtain the advice and opinion of counsel to the Trust at the
expense of the Fund, or of its own counsel at its own expense, and shall be
fully protected with respect to anything done or omitted by it in good faith in
conformity with the advice or opinion of counsel to the Trust, and shall be
similarly protected with respect to anything done or omitted by it in good faith
in conformity with advice or opinion of its counsel, unless counsel to the Fund
shall, within a reasonable time after being notified of legal advice received by
the Custodian, have a differing interpretation of such question of law. The
Custodian shall be liable to the Trust for any proximate loss or damage
resulting from the use of the Book-Entry System or any Depository arising by
reason of any negligence, misfeasance or misconduct on the part of the Custodian
or any of its employees, agents, nominees or Sub-Custodians, but not for any
special, incidental, consequential, or punitive damages; provided, however, that
nothing contained herein shall preclude recovery by the Trust, on behalf of the
Fund, of principal and of interest to the date of recovery on Securities
incorrectly omitted from the Fund's account or penalties imposed on the Trust,
in connection with the Fund, for any failures to deliver Securities.
<PAGE>
In any case in which one party hereto may be asked to indemnify the
other or hold the other harmless, the party from whom indemnification is sought
(the "Indemnifying Party") shall be advised of all pertinent facts concerning
the situation in question, and the party claiming a right to indemnification
(the "Indemnified Party") will use reasonable care to identify and notify the
Indemnifying Party promptly concerning any situation which presents or appears
to present a claim for indemnification against the Indemnifying Party. The
Indemnifying Party shall have the option to defend the Indemnified Party against
any claim which may be the subject of the indemnification, and in the event the
Indemnifying Party so elects, such defense shall be conducted by counsel chosen
by the Indemnifying Party and satisfactory to the Indemnified Party and the
Indemnifying Party will so notify the Indemnified Party and thereupon such
Indemnifying Party shall take over the complete defense of the claim and the
Indemnifying Party shall sustain no further legal or other expenses in such
situation for which indemnification has been sought under this paragraph, except
the expenses of any additional counsel retained by the Indemnified Party. In no
case shall any party claiming the right to indemnification confess any claim or
make any compromise in any case in which the other party has been asked to
indemnify such party (unless such confession or compromise is made with such
other party's prior written consent. The provisions of this section VIII. A.
shall survive the termination of this Agreement.
<PAGE>
B. Actions not Required by Custodian. Without limiting the
generality of the foregoing, the Custodian, acting in the capacity of Custodian
hereunder, shall be under no obligation to inquire into, and shall not be liable
for:
1.) The validity of the issue of any Securities purchased
by or for the account of any Fund, the legality of the purchase thereof, or the
propriety of the amount paid therefor;
2.) The legality of the sale of any Securities by or for
the account of any Fund, or the propriety of the amount for which the same are
sold;
3.) The legality of the issue or sale of any Shares of any
Fund, or the sufficiency of the amount to be received therefor;
4.) The legality of the redemption of any Shares of any
Fund, or the propriety of the amount to be paid therefor;
5.) The legality of the declaration or payment of any dividend
by the Trust in respect of Shares of any Fund;
6.) The legality of any borrowing by the Trust on behalf of
the Trust or any Fund, using Securities as collateral;
7.) Whether the Trust or a Fund is in compliance with the 1940
Act, the regulations thereunder, the provisions of the Trust's charter documents
or by-laws, or its investment objectives and policies as then in effect.
VIII. C. No Duty to Collect Amounts Due From Dividend and Transfer
Agent. The Custodian shall not be under any duty or obligation to take action to
effect collection of any amount due to the Trust from any Dividend and Transfer
Agent of the Trust nor to take any action to effect payment or distribution by
any Dividend and Transfer Agent of the Trust of any amount paid by the Custodian
to any Dividend and Transfer Agent of the Trust in accordance with this
Agreement.
<PAGE>
D. No Enforcement Actions. Notwithstanding Section D of Article V,
the Custodian shall not be under any duty or obligation to take action, by legal
means or otherwise, to effect collection of any amount, if the Securities upon
which such amount is payable are in default, or if payment is refused after due
demand or presentation, unless and until (i) it shall be directed to take such
action by Written Instructions and (ii) it shall be assured to its satisfaction
(including prepayment thereof) of reimbursement of its costs and expenses in
connection with any such action.
E. Authority to Use Agents and Sub-Custodians. The Trust
acknowledges and hereby authorizes the Custodian to hold Securities through its
various agents described in Appendix C annexed hereto. In addition, the Trust
acknowledges that the Custodian may appoint one or more financial institutions,
as agent or agents or as sub-custodian or sub-custodians, including, but not
limited to, banking institutions located in foreign countries, for the purpose
of holding Securities and moneys at any time owned by the Fund. The Custodian
shall not be relieved of any obligation or liability under this Agreement in
connection with the appointment or activities of such agents or sub-custodians.
Any such agent or sub-custodian shall be qualified to serve as such for assets
of investment companies registered under the Act. The Funds shall reimburse the
Custodian for all costs incurred by the Custodian in connection with opening
accounts with any such agents or sub-custodians. Upon request, the Custodian
shall promptly forward to the Trust any documents it receives from any agent or
sub-custodian appointed hereunder which may assist trustees of registered
investment companies to fulfill their responsibilities under Rule 17f-5 of the
Act.
<PAGE>
F. No Duty to Supervise Investments. The Custodian shall not be
under any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the account of the Trust are such as properly may
be held by the Trust under the provisions of the Declaration of Trust and the
Trust's By-Laws.
G. All Records Confidential. The Custodian shall treat all records
and other information relating to the Trust and the assets of all Funds as
confidential and shall not disclose any such records or information to any other
person unless (i) the Trust shall have consented thereto in writing or (ii) such
disclosure is compelled by law.
H. Compensation of Custodian. The Custodian shall be entitled to
receive and the Trust agrees to pay to the Custodian, for the Fund's account
from the Fund's assets only, such compensation as shall be determined pursuant
to Appendix E attached hereto, or as shall be determined pursuant to amendments
to Appendix E as approved by the Custodian and the Trust. The Custodian shall be
entitled to charge against any money held by it for the accounts of the Fund the
amount of any loss, damage, liability or expense, including counsel fees, for
which it shall be entitled to reimbursement under the provisions of this
Agreement as determined by agreement of the Custodian and the Trust or by the
final order of any court or arbitrator having jurisdiction and as to which all
rights of appeal shall have expired. The expenses which the Custodian may charge
against the account of a Fund include, but are not limited to, the expenses of
agents or Sub-Custodians incurred in settling transactions involving the
purchase and sale of Securities of the Fund.
I. Reliance Upon Instructions. The Custodian shall be entitled to
rely upon any Proper Instructions if such reliance is made in good faith. The
Trust agrees to forward to the Custodian Written Instructions confirming Oral
Instructions in such a manner so that such Written Instructions are received by
the Custodian, whether by hand delivery, telex, facsimile or otherwise, on the
same Business Day on which such Oral Instructions were given. The Trust agrees
that the failure of the Custodian to receive such confirming instructions shall
in no way affect the validity of the transactions or enforceability of the
transactions hereby authorized by the Trust. The Trust agrees that the Custodian
shall incur no liability to the Trust for acting upon Oral Instructions given to
the Custodian hereunder concerning such transactions.
<PAGE>
J. Books and Records. The Custodian will (i) set up and maintain
proper books of account and complete records of all transactions in the accounts
maintained by the Custodian hereunder in such manner as will meet the
obligations of the Fund under the Act, with particular attention to Section 31
thereof and Rules 3la-1 and 3la-2 thereunder and those records are the property
of the Trust, and (ii) preserve for the periods prescribed by applicable Federal
statute or regulation all records required to be so preserved. All such books
and records shall be the property of the Trust, and shall be available, upon
request, for inspection by duly authorized officers, employees or agents of the
Trust and employees of the SEC.
K. Internal Accounting Control Systems. The Custodian shall send
to the Trust any report received on the systems of internal accounting control
of the Custodian, or its agents or sub-custodians, as the Trust may reasonably
request from time to time.
L. No Management of Assets by Custodian. The Custodian performs
only the services of a custodian and shall have no responsibility for the
management, investment or reinvestment of the Securities or other assets from
time to time owned by any Fund. The Custodian is not a selling agent for Shares
of any Fund and performance of its duties as custodian shall not be deemed to be
a recommendation to any Fund's depositors or others of Shares of the Fund as an
investment. The Custodian shall have no duties or obligations whatsoever except
such duties and obligations as are specifically set forth in this Agreement, and
no covenant or obligation shall be implied in this Agreement against the
Custodian.
<PAGE>
M. Assistance to Trust. The Custodian shall take all reasonable
action, that the Trust may from time to time request, to assist the Trust in
obtaining favorable opinions from the Trust's independent accountants, with
respect to the Custodian's activities hereunder, in connection with the
preparation of the Fund's Form N- IA, Form N-SAR, or other annual reports to the
SEC.
N. Grant of Security Interest. The Trust hereby pledges to and
grants the Custodian a security interest in the assets of any Fund to secure the
payment of any liabilities of the Fund to the Custodian for money borrowed from
the Custodian. This pledge is in addition to any other pledge of collateral by
the Trust to the Custodian.
ARTICLE IX
Termination
A. Termination. Either party hereto may terminate this Agreement
for any reason by giving to the other party a notice in writing specifying the
date of such termination, which shall be not less than ninety (90) days after
the date of giving of such notice. If such notice is given by the Trust, it
shall be accompanied by a copy of a resolution of the Board of Trustees of the
Trust, certified by the Secretary of the Trust, electing to terminate this
Agreement and designating a successor custodian or custodians each of which
shall be a bank or trust company having not less than $100,000,000 aggregate
capital, surplus, and undivided profits. In the event such notice is given by
the Custodian, the Trust shall, on or before the termination date, deliver to
the Custodian a copy of a resolution of the Board of Trustees of the Trust,
certified by the Secretary, designating a successor custodian or custodians to
act on behalf of the Trust. In the absence of such designation by the Trust, the
Custodian may designate a successor custodian which shall be a bank or trust
company having not less than $100,000,000 aggregate capital, surplus, and
undivided profits. Upon the date set forth in such notice this Agreement shall
terminate, and the Custodian, provided that it has received a notice of
acceptance by the successor custodian, shall deliver, on that date, directly to
the successor custodian all Securities and monies then owned by the Fund and
held by it as Custodian. Upon termination of this Agreement, the Trust shall pay
to the Custodian on behalf of the Trust such compensation as may be due as of
the date of such termination. The Trust agrees on behalf of the Trust that the
Custodian shall be reimbursed for its reasonable costs in connection with the
termination of this Agreement.
B. Failure to Designate Successor Trustee. If a successor
custodian is not designated by the Trust, or by the Custodian in accordance with
the preceding paragraph, or the designated successor cannot or will not serve,
the Trust shall, upon the delivery by the Custodian to the Trust of all
Securities (other than Securities held in the Book-Entry System which cannot be
delivered to the Trust) and moneys then owned by the Trust, be deemed to be the
custodian for the Trust, and the Custodian shall thereby be relieved of all
duties and responsibilities pursuant to this Agreement, other than the duty with
respect to Securities held in the Book-Entry System, which cannot be delivered
to the Trust, which shall be held by the Custodian in accordance with this
Agreement.
<PAGE>
ARTICLE X
Force Majeure
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; labor
disputes; acts of civil or military authority; governmental actions; or
inability to obtain labor, material, equipment or transportation; provided,
however, that the Custodian, in the event of a failure or delay, shall use its
best efforts to ameliorate the effects of any such failure or delay.
ARTICLE XI
Miscellaneous
A. Designation of Authorized Persons. Appendix A sets forth the
names and the signatures of all Authorized Persons as of this date, as certified
by the Secretary of the Trust. The Trust agrees to furnish to the Custodian a
new Appendix A in form similar to the attached Appendix A, if any present
Authorized Person ceases to be an Authorized Person or if any other or
additional Authorized Persons are elected or appointed. Until such new Appendix
A shall be received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of the then
current Authorized Persons as set forth in the last delivered Appendix A.
<PAGE>
B. Limitation of Personal Liability. No recourse under any
obligation of this Agreement or for any claim based thereon shall be had against
any organizer, shareholder, officer, trustee, past, present or future as such,
of the Trust or of any predecessor or successor, either directly or through the
Trust or any such predecessor or successor, whether by virtue of any
constitution, statute or rule of law or equity, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Agreement and the obligations thereunder are enforceable solely
against the assets of the Trust, and that no such personal liability whatever
shall attach to, or is or shall be incurred by, the organizers, shareholders,
officers, or trustees of the Trust or of any predecessor or successor, or any of
them as such, because of the obligations contained in this Agreement or implied
therefrom and that any and all such liability is hereby expressly waived and
released by the Custodian as a condition of, and as a consideration for, the
execution of this Agreement.
C. Authorization By Board. The obligations set forth in this
Agreement as having been made by the Trust have been made by the Board of
Trustees, acting as such Trustees for and on behalf of the Trust, pursuant to
the authority vested in them under the laws of the State of Ohio, the
Declaration of Trust and the By-Laws of the Trust. This Agreement has been
executed by Officers of the Trust as officers, and not individually, and the
obligations contained herein are not binding upon any of the Trustees, Officers,
agents or holders of shares, personally, but bind only the Trust and then only
to the extent of the assets of the Trust.
D. Custodian's Consent to Use of Its Name. The Trust shall obtain
the Custodian's consent prior to the publication and/or dissemination or
distribution, of the Prospectus and any other documents (including advertising
material) specifically mentioning the Custodian (other than merely by name and
address).
<PAGE>
E. Notices to Custodian. Any notice or other instrument in
writing, authorized or required by this Agreement to be given to the Custodian,
shall be sufficiently given if addressed to the Custodian and mailed or
delivered to it at its offices at Star Bank Center, 425 Walnut .Street, M. L.
6118, Cincinnati, Ohio 45202, attention Mutual Fund Custody Department, or at
such other place as the Custodian may from time to time designate in writing.
F. Notices to Trust. Any notice or other instrument in writing,
authorized or required by this Agreement to be given to the Trust shall be
sufficiently given when delivered to the Trust or on the second Business Day
following the time such notice is deposited in the U.S. mail postage prepaid and
addressed to the Trust at its office at 425 Walnut Street, Cincinnati, Ohio
45202 or at such other place as the Trust may from time to time designate in
writing.
G. Amendments In Writing. This Agreement, with the exception of
the Appendices, may not be amended or modified in any manner except by a written
agreement executed by both parties with the same formality as this Agreement,
and authorized and approved by a resolution of the Board of Trustees of the
Trust.
H. Successors and Assigns. This Agreement shall extend to and
shall be binding upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by the
Trust or by the Custodian, and no attempted assignment by the Trust or the
Custodian shall be effective without the written consent of the other party
hereto.
I. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
<PAGE>
J. Jurisdiction. Any legal action, suit or proceeding to be
instituted by either party with respect to this Agreement shall be brought by
such party exclusively in the courts of the State of Ohio or in the courts of
the United States for the Southern District of Ohio, and each party, by its
execution of this Agreement, irrevocably (i) submits to such jurisdiction and
(ii) consents to the service of any process or pleadings by first class U.S.
mail, postage prepaid and return receipt requested, or by any other means from
time to time authorized by the laws of such jurisdiction.
K. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
L. Headings. The headings of paragraphs in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective Officers, thereunto duly authorized as of the day
and year first above written.
ATTEST: TRUST:
Empirical Investment Funds
By:__/s/_____________________
Kaye Anderson-Kerr, President
ATTEST: CUSTODIAN:
Star Bank, N.A.
By:__/s/_____________________
Marsha A. Croxton
Senior Vice President
<PAGE>
APPENDIX A
Authorized Persons Specimen Signatures
Chairman: __________________ ___________________
President: __Kaye Anderson___ ___/s/_____________
Secretary: __________________ ___________________
Treasurer: __________________ ___________________
Senior Vice
President: __________________ ___________________
Assistant
Secretary: __________________ ___________________
Assistant
Treasurer: __________________ ___________________
Adviser Employees: __________________ ___________________
<PAGE>
Transfer Agent/Trust Accountant
Employees: __________________ ___________________
------------------ -------------------
------------------ -------------------
------------------ -------------------
* Authority restricted; does not include:_____________________________________
<PAGE>
APPENDIX B
Series of the Trust
<PAGE>
APPENDIX C
Agents of the Custodian
The following agents are employed currently by Star Bank, N.A. for
securities processing and control ...
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible Securities)
<PAGE>
APPENDIX D
Standards of Service Guide
<PAGE>
Star Bank, N.A.
Standards of Service Guide
Star Bank, N.A. is committed to providing superior quality service to
all customers and their agents at all times. We have compiled this guide as a
tool for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to complete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers
Trust Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the Wall Street
Journal.
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond
Source, Kenny Information Systems, Standard & Poor's Corporation, and DTC
Important Notices. Star Bank will not notify clients of optional put
opportunities.
Any securities delivered free to Star Bank or its agents must be
received three (3) business days prior to any payment or settlement in order for
the Star Bank standards of service to apply.
Should you have any questions regarding the information contained in
this guide, please feel free to contact your account representative.
The information contained in this Standards of Service
Guide is subject to change. Should any changes be made
Star Bank will provide you with an updated copy of its
Standards of Service Guide.
<PAGE>
Appendix E
Compensation
<PAGE>
Star Bank, N.A.
Proposed Domestic Custody Fee Schedule for Empirical Growth Fund
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. Portfolio Transaction Fees:
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve $9.00
(c) For each portfolio transaction processed through
our New York custodian $25.00
(d) For each GNMA/Amortized Security Purchase $16.00
(e) For each GNMA Prin/Int Paydown, GNMA Sales $8.00
(f) For each option/future contract written,
exercised or expired $40.00
(g) For each Cedel/Euro clear transaction $80.00
(h) For each Disbursement (Fund expenses only) $5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II. Market Value Fee
Based upon an annual rate of: Million
.0003 (3 Basis Points) on First $20
.0002 (2 Basis Points) on Next $20
.00015 (1.5 Basis Points) on Balance
III. Monthly Minimum Fee-Per Fund $250.00
IV. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be
shipping fees or transfer fees.
V. IRA Documents
Per Shareholder/year to hold each IRA Document $8.00
VI. Earnings Credits
On a monthly basis any earnings credits generated from uninvested
custody balances will be applied against any cash management service fees
generated. Earnings credits are based on a Cost of Funds Tiered Earnings Credit
Rate.
*Star Bank guarantees the above fees for a period of eighteen (18) months from
the effective date of the fund.
Revised March 13, 1998
<PAGE>
Star Bank
Proposed Cash Management Fee Schedule for Empirical Growth Fund
Services Unit Cost ($) Monthly Cost ($)
- -------- ------------- ----------------
D.D.A. Account Maintenance 14.00
Deposits .399
Deposited Items .109
Checks Paid .159
Balance Reporting - P.C. Access 50.00 1st Acct.
35.00 each add'l
ACH Transaction .105
ACH Monthly Maintenance 40.00
ACH Additions, Deletions, Changes 3.50
ACH Debits .12
Controlled Disbursement (1st account) 110.00
Each additional account 25.00
Deposited Items Returned 6.00
International Items Returned 10.00
NSF Returned Checks 25.00
Stop Payments 22.00
Data Transmission per account 110.00
Data Capture* .10
Drafts Cleared .179
Lockbox Maintenance** 55.00
Lockbox items Processed
with copy of check .32
without copy of check .26
Checks Printed .20
Positive Pay .06
Issued Items .015
ARP Tape/Transmission/Diskette 25.00
Special Statements 6.00
Invoicing for Service Charge 15.00
Wires Incoming
Domestic 10.00
International 10.00
Wires Outgoing
Domestic International
Repetitive 12.00 Repetitive 35.00
Non-Repetitive 13.00 Non-Repetitive 40.00
PC - Initiated Wires:
Domestic International
Repetitive 9.00 Repetitive 25.00
Non-Repetitive 9.00 Non-Repetitive 25.00
***Uncollected Charge Star Bank Prime Rate as of first of month plus 4%
* Price can vary depending upon what information needs to be captured
** With the use of lockbox, the collected balance in the demand deposit
account will be significantly increased and therefore earnings to
offset cash management service fees will be maximized.
*** Fees for uncollected balances are figured on the monthly average of all
combined accounts.
**** Other available cash management services are priced separately.
Revised October, 1997
<PAGE>
MUTUAL FUND
ACCOUNTING SERVICES AND ADMINISTRATION AGREEMENT
RECITALS
WHEREAS, Empirical Investment Funds, (the "Fund") is a
business trust organized and operated under the laws of the State of
Delaware and which is commonly referred to as a mutual funds; and
WHEREAS, Maxus Information Systems, Inc., dba Mutual
Shareholder Services ("MSS") is a corporation organized and operated
under the laws of the State of Ohio; and
WHEREAS, MSS provides accounting services to entities
providing retail securities and investment services acting as
Accounting Services Agent to maintain and keep current the books,
accounts, records, journals or other records of original entry relating
to the business of the Fund as set forth in this Agreement (the
"Accounts and Records") and to perform in other such capacities as are
agreed herein; and
WHEREAS, MSS provides transfer agent services and is acting as
Transfer Agent, Dividend and/or Capital Gain Disbursing Agent,
Redemption Agent and Administrator pursuant to a separate agreement
between the parties; and
WHEREAS, the Fund desires the services offered by MSS and MSS
desires to provide such services to the Fund:
AGREEMENT
NOW THEREFORE, in consideration of the foregoing, the parties intend to
be legally bound and it is, therefore, agreed as follows:
Section I. Appointment
The Fund hereby appoints MSS as its Accounting Services Agent.
MSS agrees to such appointment and agrees to perform in such a
capacity.
Section II. Accounting Services Agent
A. The Fund shall promptly turn over to MSS such of the
Accounts and Records previously maintained by or for it as are
necessary for MSS to perform its functions under this Agreement. The
Fund authorized MSS to rely on such Accounts and Records turned over to
it and hereby indemnifies and hold harmless MSS in that regard and as
further contemplated in this Agreement.
<PAGE>
B. To the extent the MSS receives the necessary information
from the Fund or its agent by Written or Oral Instructions (and MSS
will make reasonable efforts in accord with reasonable standards to
immediately notify the Fund if such information is not received), MSS
shall maintain and keep current the following Accounts and Records
relating to the business of the Fund, in such form as may be mutually
agreed to between the Fund and MSS:
(1) Cash Receipts Journal;
(2) Cash Disbursements Journal;
(3) Dividends Paid Record;
(4) Purchase and Sales Journals - Portfolio
Securities;
(5) Subscription and Redemption Journals;
(6) Security Ledgers;
(7) Broker Ledger;
(8) General Ledger;
(9) Daily Expense Accruals;
(10) Daily Interest Accruals;
(11) Securities and Monies Borrowed or Loaned and
Collateral therefor;
(12) Daily Trial Balance;
(13) Investment Income Journal;
MSS will make all reasonable efforts per industry standard to
obtain the necessary information to perform the above functions and the
calculation of the Fund's net asset value, as provided below. MSS shall
incur no liability, and the Fund shall indemnify and hold harmless MSS
from and against any liability arising from the failure to provide
complete information or from any discrepancy between the information
received by MSS and used in such calculations and any subsequent
information received from the Fund or any of its designated agents.
C. MSS shall perform certain administrative functions for the
Fund, including without limitation, assisting with the preparation and
filing with the Securities and Exchange Commission and state securities
regulators of registration statements, notices, reports and other
material required to be filed under applicable laws; preparing
compliance reports; providing routine accounting services; and
providing office facilities and clerical support as well as providing
general oversight of other service providers.
D. MSS shall perform the ministerial calculations necessary to
calculate the Fund's net asset value daily, in accordance with the
Fund's current prospectus, as amended from time to time and utilizing
the information described in this Section.
(1) MSS may, in its discretion, use an automated financial
information service to obtain market quotations. In such
event, portfolio items for which market quotations are
available by MSS's use of such service shall be based on the
closing prices quoted on such service, except where the Fund
has given or caused to be given specific Written or Oral
Instructions to utilize a different Value.
(2) All other portfolio securities shall be given such values
as the Fund provides by Written or Oral Instructions,
including all foreign securities, restricted securities and
other securities requiring valuation not readily ascertainable
solely by use of an automated financial information service.
(3) MSS shall have no responsibility or liability for the
accuracy of prices quoted by the automated financial
information service; for the accuracy of the information
supplied by the fund; or for any loss, liability, damage or
costs arising out of any inaccuracy of such data.
<PAGE>
(4) MSS shall have no responsibility or duty to include
information or valuations to be provided by the Fund in any
computation unless and until it is timely supplied to MSS in
useable form.
(5) Unless the necessary information to calculate the net
asset value daily is reasonably available per industry
standards and/or furnished by Written or Oral Instructions
from the Fund, MSS shall incur no liability and the Fund shall
indemnify and hold harmless MSS from and against any liability
arising from any failure to provide complete information or
from any discrepancy between the information received by MSS
and used in such calculation and any subsequent information
received from the Fund or any of its designated agents.
E. For all purposes under this Agreement, MSS is authorized to
act upon receipt of the first of any Written or Oral Instruction it
receives from the fund or its agents on behalf of the Fund. In cases
where the first Instruction is an Oral Instruction that is not in the
form of a document or written record, a confirmatory written
Instruction or Oral Instruction in the form of a document or written
record shall be delivered, and in cases where MSS receives any
Instruction, whether Written or Oral, to enter a portfolio transaction
on the records, the Fund shall cause the broker/dealer to send a
written confirmation to MSS. MSS shall be entitled to rely on the first
Instruction received, and for any act or omission undertaken in
compliance therewith shall be free of liability and fully indemnified
and held harmless by the Fund, provided, however that in the event a
Written or Oral Instruction received by MSS is countermanded by a
timely letter Written or Oral Instruction received by MSS prior to
acting upon such countermanded Instruction, MSS shall act upon such
letter Written or Oral Instruction. The sole obligation of MSS with
respect to any follow-up or confirmatory Written Instruction, Oral
Instruction, documentary or written form, or broker/dealer written
confirmation shall be to make reasonable efforts to detect any
discrepancy between the original Instruction and such confirmation and
to report such discrepancy to the Fund. The Fund shall be responsible,
at the Fund's expense, for taking any action, including any
reprocessing necessary to correct any discrepancy or error, and, to the
extent such action required MSS to act, the Fund shall give MSS
specific Written Instruction as to the action required.
F. At the end of each month, the Fund shall cause its
Custodian to forward to MSS a monthly statement of cash and portfolio
transactions, which will be reconciled by MSS with MSS's Accounts and
Records maintained for the Fund. MSS will report any discrepancies to
the Custodian and report any unreconciled items to the Fund.
G. MSS shall promptly supply daily and periodic reports of the
Fund as requested by the Fund and agreed to upon by MSS.
<PAGE>
H. To the extent that such information is not available to MSS
the Fund shall require each of its agents (including without limitation
its Transfer Agent and its Custodian) to provide MSS as of the close of
each business day, or on such other schedule as the Fund determines is
necessary, with Written or Oral Instructions (to be delivered to MSS by
10:00 a.m. the next following business day) containing all data and
information necessary for MSS to maintain the Fund's accounts and
Records, and MSS may conclusively assume that the information its
received by Written or Oral Instructions is complete and current.
I. The Accounts and Records, in the agreed upon format,
maintained by MSS shall be the property of the Fund, and shall be made
available to the Fund promptly upon request and shall be maintained for
the periods prescribed in Rule 31a-2 of the Investment company Act of
1940, as amended.
(1) MSS shall assist the fund's independent auditors, or upon
approval of the Fund, or upon demand, any regulatory body, in
any requested review of the Fund's Accounts and Records.
(2) MSS shall be reimbursed for all expenses and employee time
invested in any such review of the Fund's Accounts and Records
other than as specified above.
MSS shall supply the necessary data for the Fund for
accountant's completion of any necessary tax returns, questionnaires,
periodic reports to shareholders and such other reports and information
requests as the Fund and MSS shall agree upon from time to time.
J. MSS and the Fund may, from time to time, adopt such
procedures as they agree upon in writing, and MSS may conclusively
assume that any procedure approved by the Fund or directed by the Fund,
(1) Does not conflict with or violate any requirements of its
Prospectus, Declaration of Trust, by-laws, or any rule or
regulation of any regulatory body or governmental agency.
(2) The Fund shall be responsible for notifying MSS of any
changes in regulation or rules, which might necessitate
changes in MSS's procedures, and for working out with MSS such
changes.
K. All financial data provided to, processed by, and reported
by MSS under this Agreement shall be stated in United States Dollars or
currency
<PAGE>
(1) MSS shall have no obligation to convert to, equate, or
deal in foreign currencies or values;
(2) MSS expressly assumes no liability for any currency
conversion or equation computations relating to the affairs of
the Fund.
L. It is expressly agreed that the obligation of the Fund
hereunder shall not be binding upon nor resort be had to the private
property of any of the trustees, Shareholders, nominees, officers,
agents or employees of the Fund, personally, but bind only the trust
property of the Fund, as provided in the Declaration of Trust of the
Fund.
M. The execution and delivery of this Agreement have been
authorized by the trustees of the Fund and signed by the officers of
the Fund, acting as such, and neither such authorization by such
trustees nor such execution and delivery by such officers shall be
deemed to have been made by any of them individually, or to impose any
liability on any of them personally, but shall bind only the trust
property of the Fund as provided in the Declaration of Trust.
SECTION III. GENERAL PROVISIONS
A. This Agreement shall not cause MSS to incur obligations to
perform on any legal Holiday, on any day that the New York Stock
Exchange is closed or on any day MSS is closed for a designated Holiday
or other similar reason. Obligations under this Agreement, which cannot
be fulfilled on any particular day(s) for the reasons in the preceding
sentence, shall be performed on the next business day that MSS is
operating.
B. The Fund agrees to compensate MSS for its services and to
reimburse MSS for expenses, as set forth in Schedule A attached hereto,
or as shall be set forth in amendments to this Agreement or to Schedule
A and as approved by both the Fund and by MSS.
<PAGE>
SECTION IV. INDEMNIFICATION
A. The Fund shall indemnify MSS and save it harmless from and
against any and all actions, suits, and claims, whether groundless or
otherwise, arising directly or indirectly out of or in connection with
MSS's performance under this Agreement and from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses and
liabilities incurred by MSS in connection with any such action, suit or
claim except that nothing herein shall be understood to provide
indemnity for negligence, negligent performance, gross negligence,
willful misconduct or fraud. MSS shall not be under any obligation to
prosecute or to defend any action, suit or claim arising out of or in
connection with its performance under this Agreement and subject to the
foregoing indemnity, which, in the opinion of counsel, may involve it
in expense or liability, and the Fund shall, so often as reasonably
requested, furnish MSS with satisfactory indemnity against such expense
or liability, and upon request of MSS the Fund shall assume the entire
defense of any action, suit or claim subject to the foregoing
indemnity. Provided, however, that MSS shall give the Fund notice of,
and reasonable opportunity to defend any such action, suit or claim in
the name of the Fund or MSS or both; Without limitation of the
foregoing:
(1) MSS may rely upon the advice of the Fund, or of counsel,
and upon statement of accountants, brokers and other persons
believed by it in good faith to be expert in the matters upon
which they are consulted, and, for any actions taken in good
faith upon such statements, MSS shall not be liable to anyone.
(2) MSS shall not be liable for any action taken in good faith
reliance upon any Written Instruction from the Fund or
certified copy of any resolution of the Board of Trustees of
the Fund, and MSS may rely upon the genuineness of any such
document or copy thereof believed in good faith by MSS to have
been validly executed.
<PAGE>
(3) MSS may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal,
certificate, opinion of counsel, statement, instrument,
report, notice, consent, order, or other paper or document
believed by it to be genuine and to have been signed or
presented by the purchaser, Fund or other proper party or
parties.
(4) MSS will be responsible for errors and omissions resulting
from download, keypunch, calculation and other similar acts
to, and only to, the extent that such errors and omissions are
covered under a policy held by MSS for such purposes. MSS does
not, however, make any guarantee or representation that it
does or will have such a policy in effect or that such a
policy is current. MSS will, however, accept responsibility
for actual losses to clients resulting from its own such error
and/or omissions but only upon (a) Written notification of an
error and/or omission given and provided that (b) MSS may
first take corrective measures of its own choosing, that (c)
MSS is given sufficient time to take such corrective measures
and that (d) Damages or loss are incurred and are actual
damages or losses.
B. MSS shall indemnify the Fund and save it harmless from and
against any and all actions, suits, or claims, whether groundless or
otherwise, and any losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities, which are actual, incurred by the
Fund in connection with any such action, suit or claim to the extent
that any such claim results from MSS's negligence, negligent
performance, gross negligence willful misconduct or fraud related to
MSS's performance under this Agreement.
<PAGE>
SECTION V. TAXES AND REGULATORY MATTERS
Except as contemplated in this agreement, all liabilities and
procedures necessary for the maintenance of the Fund in good standing
with
(1) Both Federal and State agencies, including, but not
limited to taxes, charters, fees, applications, forms,
permits, licenses and documents shall be the responsibility of
the Fund.
(2) MSS shall not be liable for any taxes, assessments or
governmental charges which may be levied or assessed on any
basis whatsoever in connection with this Agreement, excepting
only for taxes assessed against its corporate capacity arising
out of its compensation hereunder.
SECTION VI. NOTICES
All notices required or permitted to be given hereunder shall
be in writing and may be delivered personally or through the public or
private mails (postage paid). Receipt of notice shall be deemed to have
been given upon receipt if personally delivered or within ten (10) days
after being deposited in the mail. Notice shall be addressed:
(1) If to the Fund: Empricial Investment Funds
1521 Alton Road, Suite 364
Miami Beach, FL 33139
(2) If to MSS: Mutual Shareholder Services
1301 East 9th Street, Suite 3600
Cleveland, Ohio 44114
<PAGE>
SECTION VII. WRITTEN INSTRUCTIONS
AND ORAL INSTRUCTIONS
The Fund shall file with MSS a certified copy of each
resolution of its Board of Trustees authorizing the execution of
Written Instruction or the transmittal of Oral Instruction. The
following terms, for the purposes of this Agreement or any amendment or
supplement thereto, shall have the meaning herein specified unless the
context otherwise requires:
(1) Plan. The term Plan shall include such investment plan,
dividends or capital gains reinvestment plans, systematic withdrawal
plans or other types of plans set forth in the Prospectus of the Fund,
in form acceptable to MSS, which the Fund may from time to time adopt
and make available to its Shareholders, including plans or accounts by
self-employed individuals or partnerships.
(2) Planholder. The term Planholder shall mean a Shareholder
who, at the time of reference, is participating in a Plan, and shall
include any underwriter, representative or broker/dealer.
(3) Oral Instructions. The term Oral Instructions shall mean
an authorization, instruction, approval, item or set of data, or
information of any kind transmitted to MSS in person or by telephone,
telegram, telecopy or other mechanical or documentary means lacking
original signature, by a person or persons believed in good faith by
the Custodian to be a person or persons authorized by a resolution of
the Board of Trustees of the Fund to give Oral Instructions on behalf
of the Fund.
(4) Written Instructions. The Term Written Instructions shall
mean an authorization, instruction, approval, item or set of data, or
information of any kind transmitted to MSS in original writing
containing original signatures or a copy of such document transferred
by telecopy including transmission of such signature, believed in good
faith by MSS to be the signature of a person or persons authorized by a
resolution of the Board of Trustees of the Fund to give Written
Instructions on behalf of the Fund.
SECTION VIII. WARRANTIES
A. The Fund represents and warrants MSS that the execution and
delivery of this Agreement by the undersigned officer of the Fund has
been duly and validly authorized by resolution of the Board of Trustees
of the Fund.
B. MSS represents and warrants that the execution and delivery
of this Agreement by the undersigned officer has been duly and validly
authorized.
<PAGE>
SECTION IX. CANCELLATION, RESCISSION, AND TERMINATION
A. Cancellation - Within five (5) business days of the signing
of this Agreement the Fund may, by written notice, cancel this
agreement for any reason. Written notice, postmarked not later than the
last day of the cancellation period, shall be sent to MSS by registered
or certified mail, return receipt requested. Cancellation shall
terminate this agreement and neither party will have any further
obligation or liability to the other. This clause shall have no effect
upon other agreements between the parties which must be separately
canceled, rescinded or terminated.
B. Rescission - This Agreement may be rescinded on the grounds
of mutual mistake, fraud or impossibility by either party; however,
such rescission must be granted in accord with the provisions for
dispute resolution enumerated in this agreement or by mutual written
agreement.
<PAGE>
C. Termination - Either the Fund or MSS may give 60 days
written notice to the other for termination of this Agreement:
(1) Termination to take effect at the time specified in the
notice.
(2) Such notice shall be evidenced by and be delivered via a
secured delivery requiring signature.
SECTION X. DISPUTE RESOLUTION
A. Mediation - any controversies, disputes or claims arising
out of or relating to this agreement shall be subject to mediation. The
parties stipulate that the procedures for mediation enumerated by the
National Association of Securities Dealer, Inc. (NASD) shall apply. The
NASD shall designate the mediator(s).
(1) Mediation may take place in any mutually agreed upon
location or within Cuyahoga County, Ohio.
(2) In the event that no resolution is found, the parties
shall be subject to arbitration as prescribed by section (B)
of this clause.
B. Arbitration - Any controversy or claim arising out of or
relating to this Agreement, or the breach thereof, shall be settled by
arbitration in accordance with the arbitration rules of the NASD. In
addition, the parties stipulate:
(1) The number of arbitrators shall be three; and
(2) The place of arbitration shall be within Cuyahoga County,
Ohio.
<PAGE>
SECTION XI. JURISDICTION
This Agreement and any Schedules and/or Amendments hereto, shall be
construed and understood under the laws of the State of Ohio at
Cuyahoga County.
SECTION XII. FORCE MAJEURE
A party shall not be considered to be in default in the
performance of its obligations to the extent that it proves that such
performance has been prevented by force Majeure.
SECTION XIII. ASSIGNMENT
This Agreement and any rights granted hereunder shall not be
assigned by either party hereto to any person, firm or corporation
without the prior written consent of the other.
SECTION XIV. COUNTERPARTS
This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but
such counterparts shall together constitute but one and the same
instrument.
SECTION XV. ALTERATIONS/ENTIRE AGREEMENT
A. It is agreed between the parties hereto that there are no
other agreements or understandings between them relating to the subject
matter of this Agreement. This Agreement supersedes all prior
agreements, oral or written, between the parties and is intended as a
complete and exclusive statement of the Agreement between the parties.
Neither this Agreement, nor its execution has been induced by any
reliance, representation, stipulation, warranty, agreement or
understanding of any kind other than those herein expressed.
B. No change or modification of this Agreement shall be valid
unless the same be in writing and signed by the parties. Any and all
addenda to this Agreement must and shall be endorsed by both parties
and must make direct and specific mention to their status as addenda
and to their incorporation hereto.
DATED, this 27th day of April, 1998
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE
SIGNED BY THEIR DULY AUTHORIZED OFFICERS:
Maxus Information Systems, Inc. Empirical Investment Funds
By: /s/ By: /s/
Gregory B. Getts Kaye Anderson-Kerr
Its: President Its: President
<PAGE>
EXHIBIT A
COMBINED FEE SCHEDULE
Current Mutual Shareholder Services billing system:
Accounting Fees
If average value of fund is Yearly Monthly
between the following Fee Fee
25,000,000 21,000 1,750
25,000,000 50,000,000 30,500 2,542
50,000,000 75,000,000 36,250 3,021
75,000,000 100,000,000 42,000 3,500
100,000,000 125,000,000 47,750 3,979
125,000,000 150,000,000 53,500 4,458
150,000,000 59,250 4,938
Shareholder Servicing Fees
9.25 annual fee per shareholder with a min of
$775.00 charge per month
Blue Sky Servicing Fees
12.00 per state per month
Calculated monthly charges for Empirical Investment Funds
Approx.
Value Monthly Fee
Approximate Fund Size: 1,000,000 1,750
No. of Shareholders: 100 775
Blue Sky States 5 60
------
2,585
Less 50% discount* 1,293
Discounted fee 1,293
Annual Fee 15,510
*Discount calculated as follows:
DiscountNet assets of Fund
50% 100,000 2,000,000
45% 2,000,000 3,000,000
40% 3,000,000 4,000,000
35% 4,000,000 5,000,000
30% 5,000,000 6,000,000
25% 6,000,000 7,000,000
20% 7,000,000 8,000,000
15% 8,000,000 9,000,000
10% 9,000,000 10,000,000
5% 10,000,000 11,000,000
0% 11,000,000
<PAGE>
[Letterhead - Richards, Layton & Finger]
April 27, 1998
Empirical Investment Funds
c/o Worldwide Financial Management Associates, Inc.
1521 Alton Rd., Suite 364
Miami Beach, FL 33139
Re: Worldwide Financial Management Associates, Inc. and
Empirical Investment Funds - offering of securities (Exhibit 10 opinion)
Dear Ladies and Gentlemen:
We have acted as special Delaware counsel for Worldwide Financial
Management Associates, Inc., a Florida corporation (the "Company") and for
Empirical Investment Funds (the "Trust"), a Delaware business trust, in
connection with the matters set forth herein. At your request, this opinion is
being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
1. The Certificate of Trust of the Trust, dated September 29,
1997, as filed with the office of the Secretary of State of
the State of Delaware (the "Secretary of State") on September
29, 1997;
2. The Declaration of Trust of the Trust, dated as of September
29, 1997, as amended and restated in the Amended and Restated
Declaration of Trust, dated as of March 10, 1998,
(collectively, the "Trust Agreement") by the trustee of the
Trust named therein;
<PAGE>
Empirical Investment Funds
April 27, 1998
Page 2
3. The Registration Statement (the "Registration Statement") on
Form N-1A, including a preliminary prospectus with respect to
the Trust (the "Prospectus"), relating to the Shares of the
Trust representing undivided beneficial interests in the
assets of the Trust (each, a "Share" and collectively, the
"Shares"), filed by the Company and the Trust with the
Securities and Exchange Commission on November 17, 1997,
amended on or about January 12, 1998, and further amended on
or about April 27, 1998;
4. A Certificate of Good Standing for the Trust, dated April 27,
1998, obtained from the Secretary of State.
Based upon the foregoing and upon an examination of such questions of
law as we have deemed necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth herein, we advise you that, in our
opinion:
1. The Trust has been duly formed and is validly existing as
a business trust under the Delaware Business Trust Act, 12 Del. C. ss. 3801, et
seq.
2. The Shares will be legally issued, fully paid and
non-assessable.
3. The Shareholders, as beneficial owners of the Trust, will
be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
The foregoing opinions are subject to the following
exceptions, qualifications and assumptions:
A. We are admitted to practice law in the State of Delaware
and we do not hold ourselves out as being experts on the law of any other
jurisdiction. The foregoing opinions are limited to the laws of the State of
Delaware (excluding securities laws) currently in effect. We express no opinion
with respect to federal laws.
B. We have assumed (i) the valid existence of each party to
the documents examined by us under the laws of the jurisdiction governing its
organization, (ii) that each party has the power and authority to execute and
deliver, and to perform its obligations under, the documents examined by us,
(iii) that each party has duly authorized, executed and delivered the documents
examined by us, (iv) that the Trust Agreement constitutes the entire agreement
among the parties thereto with respect to the subject matter thereof, including,
without limitation, the creation, operation and termination of the Trust, and
that the Trust Agreement and the Certificate of Trust are in full force and
effect and have not been amended, and (v) the Trust is a registered investment
company under the Investment Company Act of 1940, as amended (15 U.S.C. ss.ss.
80a-1 et seq.).
<PAGE>
Empirical Investment Funds
April 27, 1998
Page 2
C. We have assumed that all signatures on documents examined
by us are genuine, that all documents submitted to us as originals are
authentic, and that all documents submitted to us as copies conform with the
originals, which facts we have not independently verified.
D. We have assumed the receipt by each Person to whom a Share
is to be issued by the Trust of such Share and that each Share has been issued
and paid for in accordance with authorizations of the officers and Trustee of
the Trust under the Trust Agreement and as contemplated by the Prospectus.
E. We have not participated in the preparation of the
Registration Statement and assume no responsibility for its content.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person for any purpose
Very truly yours,
/s/
Richards, Layton & Finger, P.L.
GCK/CDR
<PAGE>
[LETTERHEAD OF MCCURDY & ASSOCIATES]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Pre-Effective Amendment No. 2 to the Registration Statement for the Empirical
Investment Funds of all references to our firm included in or made a part of
this Amendment.
McCurdy & Associates CPS's, Inc.
April 11, 1998
<PAGE>
Empirical Investment Funds
1521 Alton Road, Suite 364
Miami Beach, Florida 33139
Gentlemen:
The undersigned hereby purchases 10,000 shares of Empirical Investment
Funds at $10.00 per share, representing a total investment of $100,000 in the
shares of the series of the Empirical Growth Fund. The undersigned hereby
represents that (i) such purchase is for investment purposes, and (ii) the
undersigned has no present intention of redeeming or selling said shares.
Worldwide Financial Management Associates, Inc.
By: _/s/_________________________
Name: Kaye Anderson-Kerr
Dated As of March 5, 1997 Title: President
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 2-MO
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] APR-11-1998
[INVESTMENTS-AT-COST] 100000
[INVESTMENTS-AT-VALUE] 100000
[RECEIVABLES] 0
[ASSETS-OTHER] 44552
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 144552
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 44552
[TOTAL-LIABILITIES] 0
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 100000
[SHARES-COMMON-STOCK] 10000
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 0
[NET-ASSETS] 100000
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 0
[OTHER-INCOME] 0
[EXPENSES-NET] 0
[NET-INVESTMENT-INCOME] 0
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 0
[NET-CHANGE-FROM-OPS] 0
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 10000
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 0
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 0
[AVERAGE-NET-ASSETS] 100000
[PER-SHARE-NAV-BEGIN] 10
[PER-SHARE-NII] 0
[PER-SHARE-GAIN-APPREC] 0
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 10
[EXPENSE-RATIO] 0
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, EMPIRICAL INVESTMENT FUNDS, a business trust organized under
the laws of the State of Delaware (hereinafter referred to as the "Trust"),
periodically files amendments to its Registration Statement with the Securities
and Exchange Commission under the provisions of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended; and
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES
R. CUMMINS and DONALD S. MENDELSOHN, and each of them, its attorneys for it and
in its name, place and stead, to execute and file any Amendment or Amendments to
the Trust's Registration Statement, hereby giving and granting to said attorneys
full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in and about the premises as fully
to all intents and purposes as it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said attorneys may or
shall lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused its name to be subscribed
hereto by the President this 21st day of April, 1998.
ATTEST: EMPIRICAL INVESTMENT FUNDS
/s/ By: /s/
Diana Sosa-Gonzalez, Secretary KAYE ANDERSON-KERR, President
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me, a Notary Public, in and for said county and state,
personally appeared KAYE ANDERSON-KERR, President and Diana Sosa-Gonzalez,
Secretary, who represented that they are duly authorized in the premises, and
who are known to me to be the persons described in and who executed the
foregoing instrument, and they duly acknowledged to me that they executed and
delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 21st day of April, 1998.
Notary Public /s/
Roshni D. Allen
My commission expires: 1-30-2002
<PAGE>
CERTIFICATE
The undesigned, Secretary of Empirical Investment Funds, hereby
certifies that the following resolution was duly adopted by a majority of the
Board of Trustees at a meeting held April 21, 1998, and is in full force and
effect:
"WHEREAS, Empirical Investment Funds, a business trust
organized under the laws of the State of Delaware (hereinafter
referred to as the "Trust"), periodically files amendments to
its Registration Statement with the Securities and Exchange
Commission under the provisions of the Securities Act of 1933
and the Investment Company Act of 1940, as amended;
NOW, THEREFORE, the undersigned hereby constitutes and
appoints JAMES R. CUMMINS and DONALD S. MENDELSOHN, and each
of them, its attorneys for it and in its name, place and
stead, to execute and file any Amendment or Amendments to the
Trust's Registration Statement, hereby giving and granting to
said attorneys full power and authority to do and perform all
and every act and thing whatsoever requisite and necessary to
be done in and about the premises as fully to all intents and
purposes as it might or could do if personally present at the
doing thereof, hereby ratifying and confirming all that said
attorneys may or shall lawfully do or cause to be done by
virtue hereof."
Dated: April 21, 1998
/s/
Diana Sosa-Gonzalez, Secretary
Empirical Investment Funds
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, EMPIRICAL INVESTMENT FUNDS, a business trust organized under the
laws of the State of Delaware (hereinafter referred to as the "Trust"),
periodically files amendments to its Registration Statement with the Securities
and Exchange Commission under the provisions of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is the President, Treasurer, Chief Financial
Officer and a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES R.
CUMMINS and DONALD S. MENDELSOHN, and each of them, her attorneys for her and in
her name, place and stead, and in her office and capacity in the Trust, to
execute and file any Amendment or Amendments to the Trust's Registration
Statement, hereby giving and granting to said attorneys full power and authority
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully to all intents and purposes as she
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 21st day
of April, 1998.
/s/
KAYE ANDERSON-KERR
President, Treasurer, Chief Financial Officer and
Trustee
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me, a Notary Public, in and for said county and state, personally
appeared KAYE ANDERSON-KERR, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that she executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 21st day of April, 1998.
Notary Public /s/
Roshni D. Allen
My commission expires: 1-30-2002
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, EMPIRICAL INVESTMENT FUNDS, a business trust organized under the
laws of the State of Delaware (hereinafter referred to as the "Trust"),
periodically files amendments to its Registration Statement with the Securities
and Exchange Commission under the provisions of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES R.
CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and in
his name, place and stead, and in his office and capacity in the Trust, to
execute and file any Amendment or Amendments to the Trust's Registration
Statement, hereby giving and granting to said attorneys full power and authority
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully to all intents and purposes as he
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 21st day
of April, 1998.
/s/
REZA JALALI BIDGOLI, Trustee
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me, a Notary Public, in and for said county and state, personally
appeared REZA JALALI BIDGOLI, known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that he executed
and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 21st day of April, 1998.
Notary Public /s/
Roshni D. Allen
My commission expires: 1-30-2002
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, EMPIRICAL INVESTMENT FUNDS, a business trust organized under the
laws of the State of Delaware (hereinafter referred to as the "Trust"),
periodically files amendments to its Registration Statement with the Securities
and Exchange Commission under the provisions of the Securities Act of 1933 and
the Investment Company Act of 1940, as amended; and
WHEREAS, the undersigned is a Trustee of the Trust;
NOW, THEREFORE, the undersigned hereby constitutes and appoints JAMES R.
CUMMINS and DONALD S. MENDELSOHN, and each of them, his attorneys for him and in
his name, place and stead, and in his office and capacity in the Trust, to
execute and file any Amendment or Amendments to the Trust's Registration
Statement, hereby giving and granting to said attorneys full power and authority
to do and perform all and every act and thing whatsoever requisite and necessary
to be done in and about the premises as fully to all intents and purposes as he
might or could do if personally present at the doing thereof, hereby ratifying
and confirming all that said attorneys may or shall lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 21st day
of April, 1998.
/s/
DAVID ANDREW SHEA, III, Trustee
STATE OF FLORIDA )
) ss:
COUNTY OF DADE )
Before me, a Notary Public, in and for said county and state, personally
appeared DAVID ANDREW SHEA, III, known to me to be the person described in and
who executed the foregoing instrument, and who acknowledged to me that he
executed and delivered the same for the purposes therein expressed.
WITNESS my hand and official seal this 21st day of April, 1998.
Notary Public /s/
Roshni D. Allen
My commission expires: 1-30-2002
