<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 12, 1997
FILE NO. 333-36975
FILE NO. 811-8397
- --------------------------------------------------------------------------------
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 2 /X/
POST-EFFECTIVE AMENDMENT NO. / /
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 2 /X/
THE MARSICO INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)
1200 17TH STREET, SUITE 1300
DENVER, CO 80202
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: 1-888-860-8686
------------------------
BARBARA M. JAPHA, ESQ.
The Marsico Investment Fund
1200 17th Street, Suite 1300
Denver, CO 80202
(Name and address of agent for service of process)
COPIES TO:
SANDER M. BIEBER, ESQ.
Dechert Price & Rhoads
1500 K Street, N.W.
Washington, D.C. 20005
------------------------
Registrant elects to register an indefinite number of shares of common stock
under the Securities Act of 1933 pursuant to Rule 24f-2 and under the Investment
Company Act of 1940. Registrant intends to file the notice required by Rule
24f-2 with respect to its fiscal year ending September 30, 1998 on or before
December 29, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE>
THE MARSICO INVESTMENT FUND
CROSS REFERENCE SHEET
(AS REQUIRED BY 495(A))
<TABLE>
<CAPTION>
N-1A ITEM CAPTION IN PROSPECTUS
- -------------------------------------------------------------- --------------------------------------------------
<S> <C> <C>
PART A: INFORMATION REQUIRED IN A PROSPECTUS
Item 1. Cover Page........................................ Cover Page
Item 2. Synopsis.......................................... Expense Summary
Item 3. Condensed Financial Information................... Supplement to Prospectus
Item 4. General Description of Registrant................. Overview of the Fund; Risk Factors
Item 5. Management of the Fund............................ Management of the Trust; Service and Distribution
Plan; Custodian and Transfer and Dividend
Disbursing Agent
Item 5A. Management's Discussion of Fund Performance....... To be included in the Annual Report of the
Registrant.
Item 6. Capital Stock and Other Securities................ Shareholder Services; Dividends and Distributions;
Taxes; Capital Structure; Information for
Shareholders
Item 7. Purchase of Securities Being Offered.............. Investing in the Funds; How to Purchase the Shares
of the Funds; Exchange Privilege
Item 8. Redemption or Repurchase.......................... How to Sell (Redeem) Shares of the Funds; Exchange
Privilege
Item 9. Pending Legal Proceedings......................... Not Applicable
</TABLE>
<TABLE>
<CAPTION>
CAPTION IN PROSPECTUS OR STATEMENT
OF ADDITIONAL INFORMATION
--------------------------------------------------
<C> <S> <C>
PART B: INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
Item 10. Cover Page........................................ Cover Page
Item 11. Table of Contents................................. Table of Contents
Item 12. General Information and History................... Not Applicable
Item 13. Investment Objectives and Policies................ Investment Objectives and Policies
Item 14. Management of the Fund............................ Trustees and Officers
Item 15. Control Persons and Principal Holders of
Securities...................................... Trustees and Officers
Item 16. Investment Advisory and Other Services............ Management of the Fund; Service and Distribution
Plan; Custodian and Transfer and Dividend
Disbursing Agent; Counsel and Independent
Auditors; Investment Advisory and Other
Services; Distribution Plan; Counsel &
Independent Accountants
Item 17. Brokerage Allocation and Other Practices.......... Portfolio Turnover; Portfolio Transactions and
Brokerage
Item 18. Capital Stock and Other Securities................ Capital Structure
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered................................... Investing in the Funds; How to Purchase Shares of
the Funds; Share Price and Determination of Net
Asset Value
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPTION IN PROSPECTUS OR STATEMENT
N-1A ITEM OF ADDITIONAL INFORMATION
- -------------------------------------------------------------- --------------------------------------------------
<C> <S> <C>
Item 20. Tax Status........................................ Tax Status
Item 21. Underwriters...................................... Not Applicable
Item 22. Calculation of Performance Data................... Performance Information; Fund Performance
Item 23. Financial Statements.............................. Financial Statements
</TABLE>
<PAGE>
THE MARSICO INVESTMENT FUND
DECEMBER 12, 1997
The Marsico Investment Fund (the "Trust") is an open-end investment
company (a mutual fund) that currently offers two investment portfolios, the
Marsico Focus Fund and the Marsico Growth & Income Fund (collectively, the
"Funds").
The Marsico Focus Fund (the "Focus Fund") is a non-diversified fund
that seeks long-term growth of capital by normally investing in a core
position of 20-30 common stocks.
The Marsico Growth & Income Fund (the "Growth & Income Fund") is a
diversified fund that seeks long-term growth of capital with a limited
emphasis on income. Although the Growth & Income Fund normally invests at
least 25% of its total assets in securities that have income potential, it
emphasizes equity securities selected for their growth potential.
Marsico Capital Management, LLC (the "Adviser") serves as the
investment adviser to the Funds. Thomas F. Marsico, President and Chief
Executive Officer of the Adviser, manages the investment program of the Funds.
The Focus Fund is designed for long-term investors who seek growth of
capital and who can tolerate the greater risks associated with investments in
common stocks. The Focus Fund is not designed as a short-term trading vehicle
and should not be relied upon for short-term financial needs.
The Growth & Income Fund is designed for long-term investors who seek
growth of capital with a limited emphasis on income. The Growth & Income Fund
is not designed for investors who desire a consistent level of income nor is
it a short-term trading vehicle and should not be relied upon for short-term
financial needs.
This Prospectus describes concisely the information about the Funds that
you ought to know before investing. Please read it carefully and retain it
for future reference.
More information about the Funds is contained in a Statement of
Additional Information that has been filed with the Securities and Exchange
Commission. To obtain a free copy, call 1-888-860-8686. The Statement of
Additional Information, which may be revised from time-to-time, is dated
December 12, 1997 and is hereby incorporated by reference into this
Prospectus.
--------------------------
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.
--------------------------
<PAGE>
PROSPECTUS 1997
[LOGO]
The Marsico Investment Fund
The Marsico Focus Fund
The Marsico Growth & Income Fund
1200 17th Street - Suite 1300 - Denver, Colorado 80202
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1 PROSPECTUS
<PAGE>
THE MARSICO INVESTMENT FUND
DECEMBER 12, 1997
PROSPECTUS
AT A GLANCE
The Marsico Investment Fund (the "Trust") is an open-end investment company
(a mutual fund) that currently offers two investment portfolios, the Marsico
Focus Fund and the Marsico Growth & Income Fund (collectively, the "Funds").
The Marsico Focus Fund (the "Focus Fund")
is a non-diversified fund that seeks long-term growth of capital by normally
investing in a core position of 20-30 common stocks.
The Marsico Growth & Income Fund (the "Growth & Income Fund") is a diversified
fund that seeks long-term growth of capital with a limited emphasis on income.
Although the Growth & Income Fund normally invests at least 25% of its total
assets in securities that have income potential, it emphasizes equity securities
selected for their growth potential.
Marsico Capital Management, LLC (the "Adviser") serves as the investment adviser
to the Funds. Thomas F. Marsico, President and Chief Executive Officer of the
Adviser, manages the investment program of the Funds.
The Focus Fund is designed for long-term investors who seek growth of capital
and who can tolerate the greater risks associated with investments in common
stocks. The Focus Fund is not designed as a short-term trading vehicle and
should not be relied upon for short-term financial needs.
The Growth & Income Fund is designed for long-term investors who seek growth of
capital with a limited emphasis on income. The Growth & Income Fund is not
designed for investors who desire a consistent level of income nor is it a
short-term trading vehicle and should not be relied upon for short-term
financial needs.
This Prospectus describes concisely the information about the Funds that you
ought to know before investing. Please read it carefully and retain it for
future reference.
More information about the Funds is contained in a Statement of Additional
Information that has been filed with the Securities and Exchange Commission. To
obtain a free copy, call 1-888-860-8686. The Statement of Additional
Information, which may be revised from time-to-time, is dated Dec. 12, 1997 and
is hereby incorporated by reference into this Prospectus.
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 PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
2 PROSPECTUS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Expense Summary 4
Overview of the Funds 6
Risk Factors 12
Management of the Trust 15
Portfolio Transactions and
Brokerage 19
Investing in the Funds 19
How to Purchase Shares of
the Funds 20
How to Exchange 23
How to Sell (Redeem) Shares
of the Funds 24
Shareholder Services 27
Service and Distribution
Plan 28
Dividends and Distributions 29
Taxes 29
Fund Performance 30
Share Price and
Determination of Net Asset
Value 31
Capital Structure 32
Other Service Providers 33
Information for Shareholders 33
Appendix A 34
</TABLE>
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3 PROSPECTUS
<PAGE>
EXPENSE SUMMARY
Shareholder Transaction Expenses are charges that you pay when buying or selling
shares of the Funds. Annual Fund Operating Expenses are paid out of the Funds'
assets and include fees for portfolio management, maintenance of shareholder
accounts, general administration of the Funds, shareholder servicing, accounting
and other services.
The following table sets forth certain costs and expenses that an investor is
expected to incur either directly or indirectly as a shareholder of the Funds
for the current fiscal year.
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
FOCUS FUND GROWTH & INCOME FUND
<S> <C> <C>
Maximum Sales Load Imposed on
Purchases None None
Maximum Sales Load Imposed on
Reinvested Dividends None None
Deferred Sales Load None None
Redemption Fees (a) None None
Exchange Fees (a) None None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
FOCUS FUND GROWTH & INCOME FUND
<S> <C> <C>
Management Fees 0.85% 0.85%
12b-1 Fees (b) 0.25% 0.25%
Other Expenses (after
reimbursement) (c) 0.50% 0.40%
Total Fund Operating Expenses
(after expense reimbursement) (d) 1.60% 1.50%
</TABLE>
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4 PROSPECTUS
<PAGE>
EXAMPLE
The following example demonstrates the projected dollar amount of total
cumulative expenses that would be incurred over various periods with respect to
a hypothetical investment in the Funds. These amounts are based on payment by
the Funds of operating expenses at the levels set forth in the above table, and
are also based on the following assumptions:
An investor would pay the following expenses on a $1,000 investment, assuming
(i) a hypothetical 5% annual return and (ii) redemption at the end of the
following time periods:
<TABLE>
<CAPTION>
ONE YEAR THREE YEARS
<S> <C> <C>
Focus Fund $ 16 $ 50
Growth & Income Fund $ 15 $ 47
</TABLE>
PLEASE NOTE THAT THE ABOVE EXAMPLE IS AN ESTIMATE OF THE EXPENSES TO BE INCURRED
BY SHAREHOLDERS OF THE FUNDS. ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE
REFLECTED ABOVE.
(a) A fee of $10 is charged for each wire redemption.
(b) The maximum level of distribution expenses is 0.25% per annum of each Fund's
average net assets. See "Service and Distribution Plan" on page for further
details. The distribution expenses for long-term shareholders may total more
than the maximum sales charge that would have been permissible if imposed
entirely as an initial sales charge.
(c) Such expenses include custodian, transfer agency and administration fees and
other customary Fund expenses.
(d) The Adviser has voluntarily agreed to limit the total expenses of each Fund
(excluding interest, taxes, brokerage and extraordinary expenses) to an annual
rate of 1.60% of the Focus Fund's average net assets and 1.50% of the Growth &
Income Fund's average net assets until January 1, 1999. After such date, the
expense limitations may be terminated or revised at any time. Absent the expense
limitations, it is estimated that the annual operating expenses of the Focus
Fund and the Growth & Income Fund would be 1.65% of the average net assets of
each Fund.
The purpose of the preceding table is to assist investors in understanding
the various costs and expenses that an investor in the Funds will bear, directly
or indirectly. The preceding example should not be considered representative of
past or future investment returns and operating expenses which may be more or
less than those shown.
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5 PROSPECTUS
<PAGE>
OVERVIEW OF THE FUNDS
This section takes a closer look at each Fund's investment objective, policies
and the securities in which it may invest. Please carefully review the "Risk
Factors" section of this Prospectus for a more detailed discussion of the risks
associated with certain investment techniques and refer to Appendix A for a more
detailed description of investment terms used throughout this Prospectus. You
should carefully consider your own investment goals, time horizon and risk
tolerance before investing in the Funds.
Policies that are noted as "fundamental" cannot be changed without a
shareholder vote. All other policies, including the Funds' investment
objectives, are not fundamental and may be changed by the Trustees of the Trust
(the "Trustees") without a shareholder vote. If there is a material change in
the Funds' objectives or policies, you should consider whether either Fund
remains an appropriate investment for you.
THE FOCUS FUND
- ---------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Focus Fund is long-term growth of capital. It is
a non-diversified fund that pursues its objective by normally investing in a
core position of 20-30 common stocks.
TYPES OF INVESTMENTS
The Focus Fund invests primarily in common stocks selected for their growth
potential. The Focus Fund may invest to a lesser degree in other types of
securities, including preferred stock, warrants, convertible securities and debt
securities. The Portfolio Manager utilizes both a "top down" and "bottom up"
approach to building the portfolio. The "top down" approach takes into
consideration such macro-economic factors as interest rates, inflation, the
regulatory environment, and the global competitive landscape. This approach also
analyzes such factors as the most attractive global investment opportunities,
industry consolidation, and the sustainability of economic trends. With respect
to the "bottom up" approach, the Portfolio Manager seeks to identify individual
companies with earnings growth potential that may not be recognized by the
market at large. Although themes may emerge in the Focus Fund, securities are
generally selected without regard to any defined industry sector or other
similarly defined selection procedure. Realization of income is not a
significant investment consideration. Any income realized on the Focus Fund's
investments will be incidental to its objective.
The Focus Fund may also invest up to 25% of its total assets in mortgage- and
asset-backed securities, up to 10% of its total assets in zero coupon,
pay-in-kind and step coupon securities, and without limit in indexed/structured
securities. The Focus Fund will invest less than 35% of its net assets in
high-yield/high-risk securities. See "Risk Factors on page . The Focus Fund may
also purchase high-grade commercial paper, certificates of deposit, and
repurchase agreements. Such securities may offer growth potential because of
anticipated changes in interest rates, credit standing, currency relationships
or other factors. The Focus Fund may also invest in short-term debt securities
as a means of receiving a return on idle cash.
The Focus Fund may hold cash or cash equivalents and invest without limit in
U.S.
- --------------------------------------------------------------------------------
6 PROSPECTUS
<PAGE>
Government obligations and short-term debt securities or money market
instruments if the Portfolio Manager determines that a temporary defensive
position is advisable or to meet anticipated redemption requests. In other
words, the Focus Fund does not always stay fully invested in stocks and bonds.
Cash or similar investments are a residual - they represent the assets that
remain after the Portfolio Manager has committed available assets to desirable
investment opportunities. When the Focus Fund's cash position increases, it may
not participate in stock market advances or declines to the extent that it would
if it remained more fully invested in common stocks.
The Focus Fund may invest without limit in foreign equity and debt
securities. The Focus Fund may invest directly in foreign securities denominated
in a foreign currency and not publicly traded in the United States. Other ways
of investing in foreign securities include depositary receipts or shares, and
passive foreign investment companies. Foreign securities are generally selected
on a stock-by-stock basis without regard to any defined allocation among
countries or geographic regions. However, certain factors such as expected
levels of inflation, government policies influencing business conditions, the
outlook for currency relationships, and prospects for economic growth among
countries, regions or geographic areas may warrant greater consideration in
selecting foreign securities. See "Risk Factors" on page . The Focus Fund may
use options, futures, forward currency contracts, and other types of derivatives
for hedging purposes. See "Risk Factors" on page . The Focus Fund may purchase
securities on a when-issued, delayed delivery or forward commitment basis.
INVESTMENT POLICIES
In investing its assets, the Focus Fund will follow the general policies listed
below. To the extent permitted under the 1940 Act and the rules thereunder, the
percentage limitations included in these policies and elsewhere in this
Prospectus apply only at the time of purchase of the security. For example, if
the Focus Fund exceeds a limit as a result of market fluctuations or the sale of
other securities, it will not be required to dispose of any securities.
CLASSIFICATION. The Investment Company Act of 1940, as amended (the "1940 Act")
classifies investment companies as either diversified or non-diversified. The
Focus Fund is deemed to be a non-diversified fund under the 1940 Act. The Focus
Fund, however, has adopted the following requirements as fundamental policies:
/ / The Focus Fund may not own more than 10% of the outstanding voting shares of
any issuer.
/ / With respect to 50% of its total assets, the Focus Fund will not purchase a
security of any issuer (other than cash items and U.S. government
securities, as defined in the 1940 Act) if such purchase would cause the
Focus Fund's holdings of that issuer to amount to more than 5% of the Fund's
total assets.
/ / The Focus Fund will invest no more than 25% of its total assets in a single
issuer (other than U.S. government securities).
The Focus Fund reserves the right to become a diversified fund by limiting the
investments in which more than 5% of its total assets are invested. A
non-diversified fund has the ability to take larger positions in a smaller
number of issuers. Because the appreciation or depreciation of a single stock
may have a greater impact on the net asset value of a non-diversified fund, its
share price can be expected to fluctuate more than a comparable diversified
fund.
- --------------------------------------------------------------------------------
7 PROSPECTUS
<PAGE>
INDUSTRY CONCENTRATION. As a fundamental policy, the Focus Fund will not invest
25% or more of its total assets in any particular industry (excluding U.S.
government securities).
PORTFOLIO TURNOVER. The Focus Fund generally intends to purchase securities for
long-term investment rather than short-term gains. However, short-term
transactions may result from liquidity needs, securities having reached a price
or yield objective, changes in interest rates or the credit standing of an
issuer, or by reason of economic or other developments not foreseen at the time
of the investment decision. Changes are made in the Focus Fund's portfolio
whenever its Portfolio Manager believes such changes are desirable. Portfolio
turnover rates are generally not a factor in making buy and sell decisions.
To a limited extent, the Focus Fund may purchase securities in anticipation
of relatively short-term price gains. The Focus Fund may also sell one security
and simultaneously purchase the same or a comparable security to take advantage
of short-term differentials in bond yields or securities prices. Increased
portfolio turnover may result in higher costs for brokerage commissions, dealer
mark-ups and other transaction costs and may also result in taxable capital
gains.
ILLIQUID INVESTMENTS. The Focus Fund may invest up to 15% of its net assets in
illiquid investments, including restricted securities or private placements that
are not deemed to be liquid by the Adviser. An illiquid investment is a security
or other position that cannot be disposed of quickly in the normal course of
business. The Adviser will take reasonable steps to bring the Focus Fund in
compliance with this policy if the level of illiquid investments exceeds 15% of
the Fund's net assets. Some securities cannot be sold to the U.S. public because
of their terms or because of SEC regulations. The Adviser will follow guidelines
established by the Fund's Board of Trustees ("Trustees") in making liquidity
determinations for Rule 144A securities and other securities, including
privately placed commercial paper.
BORROWING AND LENDING. The Focus Fund may borrow money and lend securities or
other assets, as follows:
/ / As a fundamental policy, the Focus Fund may borrow money for temporary or
emergency purposes in amounts up to 33-1/3% of its total assets.
/ / The Focus Fund may mortgage or pledge securities as security for borrowings
in amounts up to 15% of its net assets.
/ / As a fundamental policy, the Focus Fund may lend securities or other assets
if, as a result, no more than 25% of its total assets would be lent to other
parties.
Please refer to the Statement of Additional Information for other fundamental
and non-fundamental policies of the Focus Fund.
THE MARSICO
GROWTH & INCOME FUND
- ---------------------------------
INVESTMENT OBJECTIVE
The investment objective of the Growth & Income Fund is long-term growth of
capital with a limited emphasis on income. The Growth & Income Fund is a
diversified fund. Under normal circumstances, the Growth & Income Fund pursues
its objective by investing up to 75% of its total assets in equity securities
selected primarily for their growth potential and at least 25% of its total
assets in securities that have income potential. The Growth & Income Fund
normally emphasizes the growth component.
- --------------------------------------------------------------------------------
8 PROSPECTUS
<PAGE>
However, the Growth & Income Fund may reduce the growth component of its
portfolio to 25% of its total assets.
TYPES OF INVESTMENTS
The Growth & Income Fund may invest in any combination of common stock,
preferred stock, warrants, convertible securities and debt securities. However,
it is expected that the Growth & Income Fund will emphasize investments in
common stocks. The Growth & Income Fund may shift assets between the growth and
income components of its portfolio based on the Portfolio Manager's analysis of
relevant market, financial and economic conditions. If the Portfolio Manager
believes that growth securities will provide better returns than the yields then
available or expected on income-producing securities, then the Growth & Income
Fund will place a greater emphasis on the growth component. The Portfolio
Manager utilizes both a "top down" and "bottom up" approach to building the
portfolio. The "top down" approach takes into consideration such macro-economic
factors as interest rates, inflation, the regulatory environment, and the global
competitive landscape. This approach also analyzes such factors as the most
attractive global investment opportunities, industry consolidation, and the
sustainability of economic trends. With respect to the "bottom up" approach, the
Portfolio Manager seeks to identify individual companies with earnings growth
potential that may not be recognized by the market at large. Although themes may
emerge in the Growth & Income Fund, securities are generally selected without
regard to any defined industry sector or other similarly defined selection
procedure.
Because income is a part of the investment objective of the Growth & Income
Fund, the Portfolio Manager may also consider dividend-paying characteristics in
selecting equity securities for the Growth & Income Fund. The Growth & Income
Fund may also find opportunities for capital growth from debt securities because
of anticipated changes in interest rates, credit standing, currency
relationships or other factors. Investors in the Growth & Income Fund should
keep in mind that the Fund is not designed to produce a consistent level of
income.
The Growth & Income Fund may also invest up to 25% of its total assets in
mortgage- and asset-backed securities, up to 10% of its total assets in zero
coupon, pay-in-kind and step coupon securities, and without limit in
indexed/structured securities. The Growth & Income Fund will invest less than
35% of its net assets in high-yield/high-risk securities. See "Risk Factors" on
page . The Growth & Income Fund may also purchase high-grade commercial paper,
certificates of deposit, and repurchase agreements. The Growth & Income Fund may
also invest in short-term debt securities as a means of receiving a return on
idle cash.
The Growth & Income Fund may hold cash or cash equivalents and invest without
limit in U.S. Government obligations and short-term debt securities or money
market instruments if the Portfolio Manager determines that a temporary
defensive position is advisable or to meet anticipated redemption requests. In
other words, the Growth & Income Fund does not always stay fully invested in
stocks and bonds. Cash or similar investments are a residual--they represent the
assets that remain after the Portfolio Manager has committed available assets to
desirable investment opportunities. When the Growth & Income Fund's
- --------------------------------------------------------------------------------
9 PROSPECTUS
<PAGE>
cash position increases, it may not participate in stock market advances or
declines to the extent that it would if it remained more fully invested in
common stocks.
The Growth & Income Fund may invest without limit in foreign equity and debt
securities. The Growth & Income Fund may invest directly in foreign securities
denominated in a foreign currency and not publicly traded in the United States.
Other ways of investing in foreign securities include depositary receipts or
shares, and passive foreign investment companies. Foreign securities are
generally selected on a company-by-company basis without regard to any defined
allocation among countries or geographic regions. However, certain factors such
as expected levels of inflation, government policies influencing business
conditions, the outlook for currency relationships, and prospects for economic
growth among countries, regions or geographic areas may warrant greater
consideration in selecting foreign securities. See "Risk Factors" on page . The
Growth & Income Fund may use options, futures, forward currency contracts and
other types of derivatives for hedging purposes. See "Risk Factors" on page .
The Fund may purchase securities on a when-issued, delayed delivery or forward
commitment basis.
INVESTMENT POLICIES
In investing its portfolio assets, the Growth & Income Fund will follow the
general policies listed below. To the extent permitted under the 1940 Act and
the rules thereunder, the percentage limitations included in these policies and
elsewhere in this Prospectus apply at the time of purchase of the security. For
example, if the Growth & Income Fund exceeds a limit as a result of market
fluctuations or the sale of other securities, it will not be required to dispose
of any securities.
CLASSIFICATION. The Growth & Income Fund qualifies as a diversified fund under
the 1940 Act and is subject to the following fundamental policies:
/ / The Growth & Income Fund may not own more than 10% of the outstanding voting
shares of any issuer.
/ / With respect to 75% of its total assets, the Growth & Income Fund will not
purchase a security of any issuer (other than cash items and U.S. government
securities, as defined in the 1940 Act) if such purchase would cause the
Growth & Income Fund's holdings of that issuer to amount to more than 5% of
the Growth & Income Fund's total assets.
/ / The Growth & Income Fund will invest no more than 25% of its total assets in
a single issuer (other than U.S. government securities).
INDUSTRY CONCENTRATION. As a fundamental policy, the Growth & Income Fund will
not invest 25% or more of its total assets in any particular industry (excluding
U.S. government securities).
PORTFOLIO TURNOVER. The Growth & Income Fund generally intends to purchase
securities for long-term investment rather than short-term gains. However,
short-term transactions may result from liquidity needs, securities having
reached a price or yield objective, changes in interest rates or the credit
standing of an issuer, or by reason of economic or other developments not
foreseen at the time of the investment decision. Changes are made in the Growth
& Income Fund's portfolio whenever its Portfolio Manager believes such changes
are desirable. Portfolio turnover rates are generally not a factor in making buy
and sell decisions.
To a limited extent, the Growth & Income Fund may purchase securities in
anticipation of relatively short-term price gains. The Growth & Income Fund may
also
- --------------------------------------------------------------------------------
10 PROSPECTUS
<PAGE>
sell one security and simultaneously purchase the same or a comparable security
to take advantage of short-term differentials in bond yields or securities
prices. Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups and other transaction costs and may also result in
taxable capital gains.
ILLIQUID INVESTMENTS. The Growth & Income Fund may invest up to 15% of its net
assets in illiquid investments, including restricted securities or private
placements that are not deemed to be liquid by the Adviser. An illiquid
investment is a security or other position that cannot be disposed of quickly in
the normal course of business. The Adviser will take reasonable steps to bring
the Growth & Income Fund in compliance with this policy if the level of illiquid
investments exceeds 15% of the Fund's net assets. Some securities cannot be sold
to the U.S. public because of their terms or because of SEC regulations. The
Adviser will follow guidelines established by the Trustees in making liquidity
determinations for Rule 144A securities and other securities, including
privately placed commercial paper.
BORROWING AND LENDING. The Growth & Income Fund may borrow money and lend
securities or other assets, as follows:
/ / As a fundamental policy, the Growth & Income Fund may borrow money for
temporary or emergency purposes in amounts up to 33-1/3% of its total
assets.
/ / The Growth & Income Fund may mortgage or pledge securities as security for
borrowings in amounts up to 15% of its net assets.
/ / As a fundamental policy, the Growth & Income Fund may lend securities or
other assets if, as a result, no more than 25% of its total assets would be
lent to other parties.
A complete list of the Funds' objectives, policies and restrictions, both
fundamental and non-fundamental, is set forth in the Statement of Additional
Information. In order to provide a degree of flexibility, the Funds' investment
objectives, as well as other policies which are not deemed fundamental, may be
modified by the Board of Trustees without shareholder approval. Any change in
the Funds' investment objectives may result in the Funds having investment
objectives different from the objectives which the shareholders considered
appropriate at the time of investment in the Funds. However, the Funds will not
change any of their investment objectives, policies or investment restrictions
in any material respect without written notice to shareholders sent at least 30
days in advance of any such change.
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11 PROSPECTUS
<PAGE>
RISK FACTORS
INVESTING IN COMMON STOCKS. The fundamental risk associated with any common
stock fund is the risk that the value of the stocks it holds might decrease.
Stock values may fluctuate in response to the activities of an individual
company or in response to general market and/or economic conditions.
Historically, common stocks have provided greater long-term returns and have
entailed greater short-term risks than other investment choices. Smaller or
newer issuers are more likely to realize more substantial growth as well as
suffer more significant losses than larger or more established issuers.
Investments in such companies can be both more volatile and more speculative.
SPECIAL SITUATIONS. The Funds may invest in "special situations" from time to
time. A special situation arises when, in the opinion of the Funds' Portfolio
Manager, the securities of a particular issuer will be recognized and appreciate
in value due to a specific development with respect to that issuer. Developments
creating a special situation might include, among others, a new product or
process, a technological breakthrough, a management change or other
extraordinary corporate event, or differences in market supply of and demand for
the security. Investment in special situations may carry an additional risk of
loss in the event that the anticipated development does not occur or does not
attract the expected attention.
FOREIGN SECURITIES. Investments in foreign securities, including those of
foreign governments, may involve greater risks than investing in comparable
domestic securities.
Securities of some foreign companies and governments may be traded in the
United States, but most foreign securities are traded primarily in foreign
markets. The risks of foreign investing include:
/ / Currency Risk. The Fund may buy the local currency when it buys a foreign
currency denominated security and sell the local currency when it sells the
security. As long as the Fund holds a foreign security, its value will be
affected by the value of the local currency relative to the U.S. dollar.
When the Fund sells a foreign denominated security, its value may be worth
less in U.S. dollars even though the security increases in value in its home
country. U.S. dollar denominated securities of foreign issuers may also be
affected by currency risk.
/ / Political and Economic Risk. Foreign investments may be subject to
heightened political and economic risks, particularly in underdeveloped or
developing countries which may have relatively unstable governments and
economies based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations of a company
or that the government may impose taxes or limits on the removal of the
Fund's assets from that country. The Fund may invest in emerging market
countries. Emerging market countries involve greater risks such as immature
economic structures, national policies restricting investments by
foreigners, and different legal systems.
/ / Regulatory Risk. There may be less government supervision of foreign
markets. Foreign issuers may not be subject to the
- --------------------------------------------------------------------------------
12 PROSPECTUS
<PAGE>
uniform accounting, auditing and financial reporting standards and practices
applicable to domestic issuers. There may be less publicly available
information about foreign issuers than domestic issuers.
/ / Market Risk. Foreign securities markets, particularly those of
underdeveloped or developing countries, may be less liquid and more volatile
than domestic markets. Certain markets may require payment for securities
before delivery and delays may be encountered in settling securities
transactions. In some foreign markets, there may not be protection against
failure by other parties to complete transactions. There may be limited
legal recourse against an issuer in the event of a default on a debt
instrument.
/ / Transaction Costs. Transaction costs of buying and selling foreign
securities, including brokerage, tax and custody costs, are generally higher
than those involved in domestic transactions.
Foreign securities purchased indirectly (e.g., depositary receipts) are subject
to many of the above risks, including currency risk, because their values depend
on the performance of a foreign security denominated in its home currency.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS. The Funds may enter into
futures contracts on securities, financial indices and foreign currencies and
options on such contracts ("futures contracts") and may invest in options on
securities, financial indices and foreign currencies ("options"), forward
contracts and interest rate swaps and swap-related products (collectively
"derivative instruments"). The Funds intend to use derivative instruments to
hedge the value of their portfolios against potential adverse movements in
securities prices, foreign currency markets or interest rates. Please refer to
Appendix A to this Prospectus and the SAI for a more detailed discussion of
these instruments.
The use of derivative instruments exposes the Funds to additional investment
risks and transaction costs. Risks inherent in the use of derivative instruments
include:
/ / the risk that interest rates, securities prices and currency markets will
not move in the direction that the Portfolio Manager anticipates;
/ / imperfect correlation between the price of derivative instruments and
movements in the prices of the securities, interest rates or currencies
being hedged;
/ / the fact that skills needed to use these strategies are different from those
needed to select portfolio securities;
/ / inability to close out certain hedged positions to avoid adverse tax
consequences;
/ / the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits, either of
which may make it difficult or impossible to close out a position when
desired;
/ / leverage risk, or the risk that adverse price movements in an instrument can
result in a loss substantially greater than the Fund's initial investment in
that instrument (in some cases, the potential loss is unlimited); and
/ / particularly in the case of privately negotiated instruments, the risk that
the counterparty will fail to perform its obligations, which could leave the
Fund worse off than if it had not entered into the position.
Although the Funds believe the use of derivative instruments will benefit the
Funds, the Funds' performance could be worse than if the Funds had not used such
instruments if the Portfolio Manager's judgment
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13 PROSPECTUS
<PAGE>
proves incorrect. When a Fund invests in a derivative instrument, it may be
required to segregate cash and other liquid assets or certain portfolio
securities with its custodian to "cover" the Fund's position. Assets segregated
or set aside generally may not be disposed of so long as a Fund maintains the
positions requiring segregation or cover. Segregating assets could diminish the
Fund's return due to the opportunity losses of foregoing other potential
investments with the segregated assets.
HIGH-YIELD/HIGH-RISK SECURITIES. High-yield/high-risk securities (or "junk"
bonds) are debt securities rated below investment grade by the primary rating
agencies such as Standard & Poor's Ratings Services ("Standard & Poor's") and
Moody's Investors Service, Inc. ("Moody's").
The value of lower quality securities generally is more dependent on the
ability of the issuer to meet interest and principal payments (i.e., credit
risk) than is the case for higher quality securities. Conversely, the value of
higher quality securities may be more sensitive to interest rate movements than
lower quality securities. Issuers of high-yield securities may not be as strong
financially as those issuing bonds with higher credit ratings. Investments in
such companies are considered to be more speculative than higher quality
investments.
Issuers of high-yield securities are more vulnerable to real or perceived
economic changes (for instance, an economic downturn or prolonged period of
rising interest rates), political changes or adverse developments specific to
the issuer. The market for lower quality securities is generally less liquid
than the market for higher quality securities. Adverse publicity and investor
perceptions as well as new or proposed laws may also have a greater negative
impact on the market for lower quality securities. The Funds will not purchase
debt securities rated below "CCC-" by Standard & Poor's or "Caa" by Moody's. The
Funds may also purchase unrated bonds of foreign and domestic issuers.
Please refer to the SAI for a description of bond rating categories.
REPURCHASE AGREEMENTS. A repurchase agreement involves the obligation of the
seller to pay the agreed-upon price, which obligation is in effect secured by
the value (at least equal to the amount of the agreed-upon resale price and
marked-to-market daily) of the underlying security or "collateral." A Fund may
engage in a repurchase agreement with respect to any security in which it is
authorized to invest. A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which may cause a
Fund to suffer a loss if the market value of such securities declines before
they can be liquidated on the open market. In the event of bankruptcy or
insolvency of the seller, a Fund may encounter delays and incur costs in
liquidating the underlying security. Repurchase agreements that mature in more
than seven days will be subject to the 15% limit on illiquid investments. While
it is not possible to eliminate all risks from these transactions, it is the
policy of the Funds to limit repurchase agreements to those parties whose
creditworthiness has been reviewed and found satisfactory by Marsico Capital.
SHORT SALES. The Funds may engage in "short sales against the box." This
technique involves selling either a security that the Fund owns, or a security
equivalent in kind and amount to the security sold short that a Fund has the
right to obtain, for
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14 PROSPECTUS
<PAGE>
delivery at a specified date in the future, without the payment of additional
cost. The Fund will enter into a short sale against the box to hedge against
anticipated declines in the market price of portfolio securities. If the value
of the securities sold short increases prior to the scheduled delivery date, a
Fund loses the opportunity to participate in the gain.
See Appendix A for risks associated with certain other investments.
ILLIQUID OR RESTRICTED SECURITIES. The Fund may invest up to 15% of its net
assets in illiquid securities, for which there is a limited trading market and
for which a low trading volume of a particular security may result in abrupt and
erratic price movements. The Fund may be unable to dispose of its holdings in
illiquid securities at acceptable prices and may have to dispose of such
securities over extended periods of time. The Fund may invest in (i) securities
that are sold in private placement transactions between their issuers and their
purchasers and that are neither listed on an exchange nor traded
over-the-counter, and (ii) securities that are sold in transactions between
qualified institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended. Such securities are subject to contractual or legal
restrictions on subsequent transfer. As a result of the absence of a public
trading market, such restricted securities may in turn be less liquid and more
difficult to value than publicly traded securities. Although these securities
may be resold in privately negotiated transactions, the prices realized from the
sales could, due to illiquidity, be less than those originally paid by the Fund
or less than their fair value and in some instances, it may be difficult to
locate any purchaser. In addition, issuers whose securities are not publicly
traded may not be subject to the disclosure and other investor protection
requirements that may be applicable if their securities were publicly traded. If
any privately placed or Rule 144A securities held by the Fund are required to be
registered under the securities laws of one or more jurisdictions before being
resold, the Fund may be required to bear the expenses of registration.
Securities which are freely tradable under Rule 144A may be treated as liquid if
the Board of Trustees of the Fund is satisfied that there is sufficient trading
activity and reliable price information. Investing in Rule 144A securities could
have the effect of increasing the level of illiquidity of the Fund's portfolio
to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing such 144A securities.
MANAGEMENT OF THE TRUST
The business and affairs of the Trust are managed under the direction of the
Board of Trustees. The Statement of Additional Information contains the name and
background information of each Trustee.
INVESTMENT ADVISER
Marsico Capital Management, LLC ("Marsico Capital" or the "Adviser"), located at
1200 17th Street, Suite 1300, Denver, CO 80202, serves as the investment adviser
to
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15 PROSPECTUS
<PAGE>
the Funds pursuant to an Investment Advisory Agreement (the "Agreement") entered
into with the Trust, which provides that the Adviser will furnish continuous
investment advisory and management services to the Funds. Thomas F. Marsico is
Chairman and Chief Executive Officer and has voting control of Marsico Capital.
Prior to forming Marsico Capital in September 1997, Mr. Marsico had 18 years of
experience as a securities analyst/portfolio manager.
The Adviser supervises and manages the investment portfolio of the Funds, and
subject to such policies as the Board of Trustees may determine, directs the
purchase or sale of investment securities in the day-to-day management of the
Funds' investment portfolio. Under the Agreement, the Adviser, at its own
expense and without reimbursement from the Trust, furnishes office space and all
necessary office facilities, equipment and executive personnel for making the
investment decisions necessary for managing the Funds, and will pay the salaries
and fees of all officers and directors of the Trust (except the fees paid to
disinterested Trustees). For the foregoing, the Adviser receives a fee of 0.85%
per annum of the average daily net assets of each Fund.
BACKGROUND OF PORTFOLIO MANAGER
Mr. Marsico manages the investment program of the Funds and is primarily
responsible for the day-to-day management of the Funds' portfolios. Prior to
forming Marsico Capital, Mr. Marsico served as the Portfolio Manager of the
Janus Twenty Fund from January 31, 1988 through August 11, 1997 and served in
the same capacity for the Janus Growth & Income Fund from May 31, 1991 through
August 11, 1997. The average annual returns for the Janus Twenty Fund and the
Janus Growth & Income Fund ("Janus Funds") from the date on which Mr. Marsico
began serving as Portfolio Manager of each Fund through August 7, 1997 (the last
date for which performance data is available) were 22.38% and 21.19%,
respectively. On August 11, 1997, the date on which Mr. Marsico ceased serving
as the Portfolio Manager to both the Janus Twenty Fund and the Janus Growth &
Income Fund, the Janus Twenty Fund had approximately $6 billion in net assets,
and the Janus Growth & Income Fund had approximately $1.7 billion in net assets.
As Portfolio Manager of the Janus Twenty Fund and the Janus Growth & Income
Fund, Mr. Marsico had full discretionary authority over the selection of
investments for those funds. Average annual returns for the one-year, three-year
and five-year periods ended August 7, 1997 and for the period during which Mr.
Marsico managed those funds through August 7, 1997 compared with the performance
of the Standard & Poor's 500 Composite Stock Price Index were:
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16 PROSPECTUS
<PAGE>
<TABLE>
<CAPTION>
JANUS JANUS
TWENTY GROWTH & INCOME S&P 500
FUND(a) FUND(a) INDEX(b)
<S> <C> <C> <C>
One Year
(8/8/96 - 8/7/97) 48.21% 47.77% 46.41%
Three Years
(8/11/94 - 8/7/97) 32.07% 31.13% 30.63%
Five Years
(8/13/92 - 8/7/97) 20.02% 21.16% 20.98%
During Period of Management by Janus Twenty:
Mr. Marsico 22.38% 21.19% 18.20%(c)
(through 8/7/97) Janus
Growth &
Income:
18.59%(d)
</TABLE>
(a) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(b) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of common stocks that is considered to be generally representative of the United
States stock market. The Index is adjusted to reflect reinvestment of dividends.
(c) This figure represents the average annual return of the S&P 500 Index
during the period that Mr. Marsico managed the Janus Twenty Fund through August
7, 1997.
(d) This figure represents the average annual return of the S&P 500 Index
during the period that Mr. Marsico managed the Janus Growth & Income Fund
through August 7, 1997.
The Janus Twenty Fund has substantially similar investment policies, strategies,
and objectives as those of the Focus Fund, while the investment policies,
strategies, and objectives of the Janus Growth & Income Fund are substantially
similar to those of the Growth & Income Fund. Historical performance is not
indicative of future performance. For a majority of the periods shown above, the
expenses of the Janus Twenty Fund and the Janus Growth & Income Fund were lower
than the anticipated expenses of the Focus Fund and Growth & Income Fund,
respectively. Higher expenses, of course, affect a fund's performance. The Janus
Twenty Fund and the Janus Growth & Income Fund are separate funds and their
historical performance is not indicative of the potential performance of the
Focus Fund and the Growth & Income Fund, respectively. The Janus Twenty and the
Janus Growth & Income Fund were the only investment vehicles that Thomas F.
Marsico managed during the period he was employed at Janus Capital Corporation
that have substantially similar objectives, policies, and strategies as those of
the Funds. Share prices and investment returns will fluctuate reflecting market
conditions, as well as changes in company-specific fundamentals of portfolio
securities.
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17 PROSPECTUS
<PAGE>
ADMINISTRATION
Pursuant to an Administration Agreement (the "Administration Agreement"),
Sunstone Financial Group, Inc. (the "Administrator"), 207 East Buffalo Street,
Suite 400, Milwaukee, WI, 53202, prepares and files all federal income and
excise tax returns and state income tax returns (other than those required to be
made by the Trust's Custodian or Transfer Agent), oversees the Trust's insurance
relationships, reviews drafts of the Trust's registration statement and proxy
statements, prepares securities registration compliance filings pursuant to
state securities laws, compiles data for and prepares required notices and
reports to the Securities and Exchange Commission, prepares financial statements
for annual and semiannual reports to investors, monitors compliance with the
Funds' investment policies and restrictions, prepares and monitors the Funds'
expense accruals and causes all appropriate expenses to be paid from Fund
assets, monitors the Funds' status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, maintains and/or coordinates
with the other service providers the maintenance of the accounts, books and
other documents required pursuant to Rule 31a-1 under the 1940 Act, and
generally assists in the Trust's administrative operations. The Administrator,
at its own expense and without reimbursement from the Trust, furnishes office
space and all necessary office facilities, equipment, supplies and clerical and
executive personnel for performing the services required to be performed by it
under the Administration Agreement. For the foregoing, the Administrator
receives from the Funds a fee, computed daily and payable monthly, based on the
Funds' average net assets at the annual rate beginning at 0.14% and decreasing
as the assets of each Fund reach certain levels, subject to minimum fee of
$62,500 per Fund.
The Trust pays all of its own expenses, including, without limitation, the cost
of preparing and printing its registration statements required under the
Securities Act of 1933 and the 1940 Act and any amendments thereto, the expense
of registering its shares with the Securities and Exchange Commission and in the
various states, advisory and administration fees, costs of organization and
maintenance of corporate existence, the printing and distribution costs of
prospectuses mailed to existing investors, reports to investors, reports to
government authorities and proxy statements, costs of meetings of shareholders,
fees paid to trustees who are not interested persons of the Investment Adviser,
interest charges, taxes, legal expenses, association membership dues, auditing
services, insurance premiums, brokerage commissions and expenses in connection
with portfolio transactions, fees and expenses of the custodian of the Trust's
assets, charges of securities pricing services, printing and mailing expenses
and charges and expenses of dividend disbursing agents, accounting services and
stock transfer agents.
DISTRIBUTION
Sunstone Distribution Services, LLC ("Distributor") acts as agent for the Funds
in the distribution of their Shares and, in such capacity, solicits orders for
the sale of Shares, advertises, and pays the costs of the advertising, office
space and its personnel involved in such activities.
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18 PROSPECTUS
<PAGE>
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, AND FUND ACCOUNTING
State Street Bank and Trust Company ("State Street") has been retained to act as
Custodian of the Funds' investments and to provide accounting services for the
Funds. Sunstone Investor Services, LLC ("Sunstone" or "Transfer Agent") serves
as the Funds' Transfer and Dividend Disbursing Agent. Neither the Custodian nor
the Transfer and Dividend Disbursing Agent has any part in deciding the Funds'
investment policies or which securities are to be purchased or sold for the
Funds' portfolio.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Trustees, decisions to buy and sell securities
for the Funds and negotiation of their brokerage commission rates are made by
the Adviser. In selecting a broker to execute each particular transaction, the
Adviser may take a number of factors into consideration, only one of which may
be the best net price available. Among the additional factors the Adviser may
take into consideration when selecting a broker are the research and investment
services that a broker may provide. Accordingly, the cost of the brokerage
commissions to the Funds in any transaction may be greater than that available
from other brokers if the difference is reasonably justified by other aspects of
the portfolio execution services being offered. See "Portfolio Transaction and
Brokerage" in the Statement of Additional Information.
INVESTING IN THE FUNDS
Shares of the Funds may be purchased by contacting the Transfer Agent, as
discussed below. They may also be purchased through an account that you maintain
with a securities broker or other financial institution ("Financial Service
Agents"). See "How to Purchase Shares of the Funds--Purchases Through Financial
Service Agents" on page .
If you wish to purchase shares of the Funds directly, please refer to the
purchase instructions described under "How to Purchase Shares of the Funds" on
page .
All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash, credit cards or third party checks will be accepted. A $20 fee
will be charged against an investor's account for any payment check returned to
the Transfer Agent for insufficient funds, stop payment, closed account or other
reasons. THE INVESTOR WILL ALSO BE RESPONSIBLE FOR ANY LOSSES SUFFERED BY THE
FUNDS AS A RESULT. Trust management reserves the right to reject any purchase
order for Fund shares.
The Funds will not accept your account if you are investing for another
person as attorney-in-fact. The Funds will not accept accounts with "Power of
Attorney" or "POA" in the registration section of the Purchase Application.
If you have any questions, a Fund telephone representative will be pleased to
provide the information that you need. Please call the following toll-free
number: 1-888-860-8686.
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19 PROSPECTUS
<PAGE>
HOW TO PURCHASE SHARES OF THE FUNDS
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
- --------------------------------------------------------------------
BY MAIL OR COURIER
Complete and sign the Account Application. (To establish an IRA, complete an IRA
Application.) Make your check payable to either the Marsico Focus Fund or the
Marsico Growth & Income Fund. By Mail, send to:
The Marsico Investment Fund
c/o Sunstone Investor Services, LLC,
P.O. Box 3210,
Milwaukee, WI 53201-3210
By Overnight Courier, send to:
The Marsico Investment Fund
c/o Sunstone Investor Services, LLC
207 East Buffalo Street
Suite 400
Milwaukee, WI 53202
Make your check payable to either the Marsico Focus Fund or the Marsico Growth &
Income Fund and mail it to the address at the left. Put your account name,
address and account number on your check. Subsequent investment forms will be
included with each shareholder statement. A shareholder wishing to add to an
account should complete this form and include it with the check. Alternatively,
include with your check a note indicating your account number, your name and
your address.
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BY TELEPHONE
Telephone transactions may not be used for initial purchases. If you want to
make subsequent telephone transactions, please select this service on your
Account Application or call 1-888-860-8686 to set up the account.
Call 1-888-860-8686 to make your purchase from a bank checking or money market
account by electronic funds transfer. Specify account name, address and account
number. This service must be established by you in advance by following the
instructions at the left. Most transfers are completed within three business
days after your call to place the order.
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BY WIRE
To ensure proper credit to your account, you must call the Transfer Agent at
1-888-860-8686 for instructions and to obtain an investor account number prior
to wiring the funds. Funds should be wired through the Federal Reserve System as
follows:
UMB Bank, N.A.
ABA#: 101000695
For Credit to The Marsico Investment Fund
A/C#: 987-085-8118
For further credit to:
(investor account number)
(name or account registration)
(SSN or TIN)
(identify which fund to purchase)
Follow instructions at the left. Please note that wires may be rejected if they
do not contain complete account information.
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20 PROSPECTUS
<PAGE>
THE MINIMUM PURCHASE REQUIREMENTS, WHICH MAY BE ALTERED IN CERTAIN
CIRCUMSTANCES, ARE:
<TABLE>
<CAPTION>
INITIAL
INVESTMENT ADDITIONAL INVESTMENT
<S> <C> <C>
Regular Accounts $ 2,500 $ 100
IRAs and IRA Rollovers 1,000 100
Non-Working Spousal IRAs 500 100
SEP-IRAs 500 100
Gifts to Minors 500 50
Automatic Investment Plan 1,000 50
</TABLE>
PURCHASES BY MAIL
Your Purchase Application, if properly filled out and accompanied by payment in
the form of a check made payable to either the Marsico Focus Fund or the Marsico
Growth & Income Fund, will be processed upon receipt by the Transfer Agent. If
the Transfer Agent receives your order and payment by the close of regular
trading (currently 4:00 p.m. New York City time) on the New York Stock Exchange
("NYSE"), your shares will be purchased at the net asset value calculated at the
close of regular trading on that day. If received after that time, your shares
will be purchased at the net asset value determined as of the close of regular
trading on the next business day. If you contemplate needing to exchange or
redeem your investment shortly after purchase, you should purchase the shares by
wire as discussed above.
PURCHASES THROUGH FINANCIAL SERVICE AGENTS
If you are investing through a Financial Service Agent, please refer to their
program materials for any additional special provisions or conditions that may
be different from those described in this Prospectus. Financial Service Agents
have the responsibility of transmitting purchase orders and funds, and of
crediting their customers' accounts following redemptions, in a timely manner in
accordance with their customer agreements and this Prospectus.
If you place an order for shares of either Fund through a Financial Service
Agent, in accordance with such Financial Service Agent's procedures and such
Financial Service Agent then transmits your order to the Transfer Agent before
the close of regular trading on the NYSE on that day, then your purchase will be
processed at the net asset value calculated at the close of regular trading on
the NYSE on that day. The Financial Service Agent must promise to send to the
Transfer Agent immediately available funds in the amount of the purchase price
in accordance with the Transfer Agent's procedures. If payment is not received
within the time specified, the Transfer Agent may rescind the transaction and
the Financial Service Agent will be held liable for any resulting fees or
losses.
PURCHASES BY TELEPHONE
Only bank accounts held at domestic financial institutions that are Automated
Clearing House (ACH) members can be used for telephone transactions. Telephone
transactions may not be used for initial purchases. Your account must already be
established prior to initiating telephone purchases.
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21 PROSPECTUS
<PAGE>
Your shares will be purchased at the net asset value determined as of the close
of regular trading on the date that the Transfer Agent receives payment for
shares purchased by electronic funds transfer through the ACH system. Most
transfers are completed within three business days after your call to place the
order. To preserve flexibility, the Funds may revise or remove the ability to
purchase shares by phone, or may charge a fee for such service, although
currently, the Funds do not expect to charge a fee. Investors in the Funds may
also request by telephone a change of address, a change in investments made
through an Automatic Investment Plan (see page ), and a change in the manner in
which dividends are received (see page ).
The Funds will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine. Such procedures may include, among
others, requiring some form of personal identification prior to acting upon
telephone instructions, providing written confirmations of all such
transactions, and/or tape recording all telephone instructions. Assuming
procedures such as the above have been followed, the Funds will not be liable
for any loss, cost, or expense for acting upon an investor's telephone
instructions or for any unauthorized telephone redemption. As a result of this
policy, the investor will bear the risk of any loss unless the Funds have failed
to follow such procedure(s).
PURCHASES BY WIRE
Shares purchased by wire will be purchased at the net asset value next
determined after the Funds receive your wired funds and all required information
is provided in the wire instructions. Wiring instructions are listed on page of
this Prospectus. You should contact your bank (which will need to be a
commercial bank that is a member of the federal reserve system) for information
on sending funds by wire, including any charges that your bank may make for
these services. The wire instructions will determine the terms of the purchase
transaction. If the wired funds are received in good order prior to the close of
regular trading on the New York Stock Exchange (currently 4:00 p.m. New York
City time), your shares will be purchased at the net asset value calculated at
the close of regular trading on that day. If received after that time, your
shares will be purchased at the net asset value determined as of the close of
regular trading on the next business day.
If you purchase your initial shares by wire, the Transfer Agent must first
have received a completed account application and issued an account number to
you. The account number must be included in the wiring instructions set forth on
page of this Prospectus. An account application must be received by the
Transfer Agent to establish shareholder privileges and to verify your account
information. Payment of redemption proceeds may be delayed and taxes may be
withheld unless the Funds receive a properly completed and executed account
application.
MISCELLANEOUS PURCHASE INFORMATION
Federal regulations require that you provide a certified taxpayer identification
number whenever you open or reopen an account. Congress has mandated that if any
shareholder fails to provide and certify to the accuracy of the shareholder's
Social Security number or other taxpayer identification
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22 PROSPECTUS
<PAGE>
number, the Fund will be required to withhold 31% of all dividends,
distributions and payments, including redemption proceeds, from such shareholder
as a backup withholding procedure.
For reasons of economy and convenience, the Funds will not issue shares
certificates.
The Funds understand that some Financial Service Agents may impose certain
conditions on their clients which are in addition to or different from those
described in this Prospectus, and, to the extent permitted by applicable
regulatory authorities, may charge their clients direct fees. Moreover,
investors may be charged a fee if they effect transactions in Fund shares
through a broker or agent. Certain Financial Service Agents may receive
compensation from the Funds. Certain Financial Service Agents may enter into
agreements with the Funds which permit them to confirm purchase orders on behalf
of customers by phone, with payment to follow no later than the Funds' pricing
on the following business day. If payment is not received by such time, the
Financial Service Agent could be held liable for resulting fees or losses.
HOW TO EXCHANGE
The Trust offers an exchange program whereby shares of any Marsico Fund may be
exchanged for shares of another Marsico Fund that is available for investment at
any time. Such exchanges will be executed on the basis of the relative net asset
values of the shares exchanged. The shares exchanged must have a current value
that equals or exceeds the minimum investment that is required for the Fund
whose shares are being acquired. You may make additional exchanges of $500 or
more. An exchange is considered to be a sale of shares for federal income tax
purposes on which a shareholder may realize a taxable gain or loss. New accounts
will have the same registration as the existing accounts as well as the same
privileges, unless otherwise specified. A shareholder may make an exchange
request by calling the Funds at 1-888-860-8686 or by providing written
instructions to the Funds.
During periods of significant economic or market change, telephone exchanges
may be difficult to complete. If a shareholder is unable to contact the Funds by
telephone, a shareholder may also mail the exchange request to the Funds at the
address listed under "HOW TO SELL (REDEEM) SHARES OF THE FUNDS." The Funds
reserve the right to modify or terminate the exchange privilege described above
at any time and to reject any exchange request. If an exchange request in good
order is received by the Transfer Agent in good order by the end of regular
trading hours on the New York Stock Exchange (currently 4:00 p.m. New York City
time) ("Valuation Time"), on any day that the New York Stock Exchange is open
("Business Day"), the exchange usually will occur on that day. Any shareholder
who wishes to make an exchange should review the current prospectus of the Fund
in which he or she wishes to invest before making the exchange.
In addition to the ability to exchange among the Funds, you may exchange all
or a portion of your investment from each Fund to the Northern Money Market Fund
(the "Money Market Fund"). This expanded exchange feature is subject to the
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23 PROSPECTUS
<PAGE>
minimum purchase amounts set forth in this Prospectus ($2,500 minimum, $100
subsequent). Any shareholder who wishes to make an exchange into the Money
Market Fund must obtain the Money Market Fund prospectus from the Funds by
calling 1-888-860-8686 and read it carefully before authorizing any investment
in shares of the Money Market Fund. Please note that when exchanging from a Fund
to the Money Market Fund, you will begin accruing income from the Money Market
Fund the day following the exchange. When exchanging less than all of the
balance from the Money Market Fund to a Fund, your exchange proceeds will
exclude accrued and unpaid income from the Money Market Fund through the date of
exchange. When exchanging your entire balance from the Money Market Fund,
accrued income will automatically be exchanged into a Fund when the income is
collected and paid from the Money Market Fund, at the end of the month.
Because of the risks associated with common stock investments, the Funds are
intended to be long-term investment vehicles and not designed to provide
investors with a means of speculating on short-term stock market movements. In
addition, because excessive trading can hurt the Funds' performance and
shareholders, the Funds reserve the right to temporarily or permanently
terminate, with or without advance notice, the exchange privilege of any
investor who makes excessive use of the exchange privilege (more than 6
exchanges per calendar year). Your exchanges may be restricted or refused if a
Fund receives or anticipates simultaneous orders affecting significant portions
of a Fund's assets. This option will be suspended for a period of 15 days
following a telephonic address change.
AUTOMATIC EXCHANGE PLAN. You may make automatic monthly exchanges from one
Marsico Fund account to another or from the Money Market Fund account to another
Fund account ($50 minimum per transaction). You must meet the Funds' minimum
initial investment requirements before this plan is established. Shareholders
wishing to make use of the Funds' Automatic Exchange Plan must so indicate on
the Account Application. To establish the Automatic Exchange Plan after an
account is open, call the Funds at 1-888-860-8686.
HOW TO SELL (REDEEM) SHARES OF THE FUNDS
You may sell (redeem) your shares at any time. The Funds make payment by check
for the shares redeemed within seven days after receiving your properly
completed request. However, the right of redemption may be suspended or payment
may be postponed when an emergency exists such that it is not reasonably
practical for the Funds to determine the fair market value of their net assets.
Payment of redemption proceeds with respect to shares purchased by check will
not be made until the check or payment received for investment has cleared,
which may take up to 15 calendar days from the purchase date. This allows the
Transfer Agent to verify that the check used to purchase Fund shares will not be
returned due to insufficient funds and is intended to protect the remaining
investors from loss.
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24 PROSPECTUS
<PAGE>
Payment of the redemption proceeds for shares of the Funds where an investor
requests wire payment will normally be made in federal funds on the next
business day. The Transfer Agent will wire redemption proceeds only to the bank
and account designated on the Purchase Application or in written instructions
subsequently received by the Transfer Agent, and only if the bank is a
commercial bank that is a member of the Federal Reserve System. The Transfer
Agent currently charges a $10 fee for each payment made by wire of redemption
proceeds, which fee will be deducted from your redemption proceeds.
PROCEDURE FOR
REQUESTING REDEMPTION
You may request the sale of your shares either by mail or courier or by
telephone as described below.
BY MAIL:
Sale requests should be mailed to:
The Marsico Investment Fund
c/o Sunstone Investor Services
P.O. Box 3210
Milwaukee, WI 53201-3210
BY OVERNIGHT COURIER:
The requests should be sent to:
The Marsico Investment Fund
207 East Buffalo Street
Suite 500
Milwaukee, WI 53202
The selling price of each share being redeemed will be the net asset value
per share next calculated after receipt of all required documents in good order.
Good order means that the request must include:
/ / Your Marsico Investment Fund account number.
/ / The name of the fund the shares of which you want to redeem.
/ / The number of shares or dollar amount to be sold (redeemed). (If the dollar
amount requested to be redeemed is greater than the current account value,
as determined by the net asset value on the effective date of the
redemption, the entire account balance will be redeemed.)
/ / The signatures of all account owners exactly as they are registered on the
account.
/ / Any required signature guarantees.
/ / Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships.
/ / In the case of shares being redeemed from an IRA or IRA/SEP Plan, a
statement of whether or not federal income tax should be withheld (in the
absence of any statement, federal tax will be withheld).
A signature guarantee of each owner is required to redeem shares in the
following situations: (i) if you change ownership on your account; (ii) when you
want the redemption proceeds sent to a different address from that registered on
the account; (iii) if the proceeds are to be made payable to someone other than
the account's owner(s); (iv) any redemption transmitted by federal wire transfer
to a bank other than your bank of record; and (v) if a change of address request
has been received by the Transfer Agent within the last 15 days. In addition,
signature guarantees are required for all redemptions of $50,000 or more from
any shareholder account.
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25 PROSPECTUS
<PAGE>
Signature guarantees are designed to protect both you and the Fund from
fraud. Signature guarantees can be obtained from most banks, credit unions or
savings associations, or from broker/dealers, municipal securities
broker/dealers, government securities broker/dealers, national securities
exchanges, registered securities associations or clearing agencies deemed
eligible by the Securities and Exchange Commission. NOTARIES PUBLIC CANNOT
PROVIDE SIGNATURE GUARANTEES.
BY TELEPHONE:
Shares of the Funds may also be sold by calling the Transfer Agent at
1-888-860-8686. Only bank accounts held at domestic financial institutions that
are Automated Clearing House (ACH) members can be used for telephone
transactions. In order to utilize this procedure for telephone redemption, a
shareholder must have previously elected this procedure in writing, which
election will be reflected in the records of the Transfer Agent, and the
redemption proceeds must be mailed directly to the investor or transmitted to
the investor's predesignated account at a domestic bank. To change the
designated account, send a written request with signature(s) guaranteed to the
Transfer Agent. To change the address, call the Transfer Agent at 1-888-860-8686
or send a written request with signature(s) guaranteed to the Transfer Agent.
Telephone redemptions must be for at least $500 and for no more than $50,000.
Any written redemption requests received within 15 days after an address change
must be accompanied by a signature guarantee and no telephone redemptions will
be allowed within 15 days of such a change. The Funds reserve the right to limit
the number of telephone redemptions by an investor. Once made, telephone
redemption requests may not be modified or canceled. The selling price of each
share being redeemed will be the Fund's per share net asset value next
calculated after receipt by the Transfer Agent of the telephone redemption
request.
The Funds will not be liable for following instructions communicated by
telephone that they reasonably believe to be genuine. See "Purchases by
Telephone" on page for discussion of liability for telephone errors.
During periods of substantial economic or market changes, telephone
redemptions may be difficult to implement. If an investor is unable to contact
the Transfer Agent by telephone, shares may also be redeemed by delivering the
redemption request to the Transfer Agent by mail as previously described.
REDEMPTION AT
THE OPTION OF THE FUND
The Funds reserve the right to redeem shares held in any account if the net
asset value remains below $500 in order to relieve the Funds of the cost of
maintaining very small accounts. Before such involuntary redemption, the Funds
will give the shareholder 30 days written notice to bring the account up to $500
before any action is taken. This minimum balance requirement does not apply to
IRAs and other tax-sheltered investment accounts. The right of redemption shall
not apply if the value of a shareholder's account drops below $500 as the result
of market action.
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26 PROSPECTUS
<PAGE>
MISCELLANEOUS
REDEMPTION INFORMATION
Any redemption or transfer of ownership request for corporate accounts will
require the following written documentation:
1. A written Letter of Instruction signed by the required number of authorized
officers, along with their respective positions. For redemption requests in
excess of $50,000, the written request must be signature guaranteed.
Signature guarantees can be obtained from most banks, credit unions or
savings associations, or from broker/ dealers, national securities
exchanges, registered securities associations or clearing agencies deemed
eligible by the Securities Exchange Commission. Notaries public cannot
provide signature guarantees.
2. A certified Corporate Resolution that states the date the Resolution was
adopted and who is empowered to act, transfer or sell assets on behalf of
the corporation.
3. If the Corporate Resolution is more than 60 days old from the date of the
transaction request, a Certificate of Incumbency from the Corporate
Secretary which specifically states that the officer or officers named in
the resolution have the authority to act on the account. The Certificate of
Incumbency must be dated within 60 days of the requested transaction. If the
Corporate Resolution confers authority on officers by title and not by name,
the Certificate of Incumbency must name the officer(s) and their title(s).
When redeeming shares from the Money Market Fund, if you redeem less than all of
the balance of your account, your redemption proceeds will exclude accrued and
unpaid income through the date of the redemption. When redeeming your entire
balance from the Money Market Fund, accrued income will be paid separately when
the income is collected and paid from the Money Market Fund, at the end of the
month.
SHAREHOLDER SERVICES
AUTOMATIC INVESTMENT PLAN
The Funds offer an Automatic Investment Plan whereby an investor may
automatically purchase shares of the Funds on a regular basis ($50 minimum per
transaction). Under the Automatic Investment Plan, an investor's designated bank
or other financial institution debits a pre-authorized amount on the investor's
account each designated period and applies the amount to the purchase of a
Fund's shares. The Automatic Investment Plan must be implemented with a
financial institution that is a member of the Automated Clearing House (ACH).
Also, the designated Fund must have a currently effective registration in those
states in which it is required. You may enroll in the Automatic Investment Plan
by completing the appropriate section of the Account Application. If you wish to
establish an Automatic Investment Plan after your account has been opened,
please contact the Transfer Agent at 1-888-860-8686.
Automatic Investment Plan transactions are scheduled for the 5th and/or 20th
of every month. Transactions also may be scheduled monthly, quarterly,
semi-annually, or annually. No service fee is currently charged by the Funds for
participation in
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27 PROSPECTUS
<PAGE>
the Plan. A $20 fee will be imposed by the Funds if sufficient funds are not
available in your account or your account has been closed at the time of the
automatic transaction and your purchase will be canceled. You will also be
responsible for any losses suffered by the Funds as a result. You may adopt the
Automatic Investment Plan at the time the account is opened by completing the
appropriate section of the Account Application. Changes to bank information must
be made in writing and signed by all registered holders of the account with
signatures guaranteed. A full redemption of all funds from your Plan account
will automatically discontinue Plan privileges. Termination instructions must be
received by the Funds five business days prior to the effective date of
termination.
SYSTEMATIC WITHDRAWAL PLAN
The Funds offer a Systematic Withdrawal Plan which allows you to designate that
a fixed amount ($100 minimum per transaction limited to those shareholders with
a balance of $10,000 or greater upon commencement of participation in the Plan)
be distributed to you at regular intervals. The redemption takes place on the
5th and/or 20th of the month but if the day you designate falls on a Saturday,
Sunday, or legal holiday, the distribution shall be made on the prior business
day. Any changes made to the distribution information must be made in writing
and signed by each registered holder of the account with signatures guaranteed.
The Systematic Withdrawal Plan may be terminated by you at any time without
charge or penalty, and the Funds reserve the right to terminate or modify the
Plan upon 60 days' written notice. Withdrawals involve redemption of funds and
may result in a gain or loss for federal income tax purposes. An application for
participation in the Systematic Withdrawal Plan may be obtained from the
Transfer Agent by calling 1-888-860-8686.
RETIREMENT PLANS
The Funds offer retirement plans that may allow investors to shelter some of
their income from taxes. Descriptions of the plans, application forms, as well
as descriptions of applicable service fees and certain limitations on
contributions and withdrawals, are available by calling the Transfer Agent at
1-888-860-8686.
SERVICE AND DISTRIBUTION PLAN
The Funds have adopted a Service and Distribution Plan (the Plan) pursuant to
Rule 12b-1 under the 1940 Act. The Plan authorizes payments by each Fund in
connection with the distribution of its shares at an annual rate, as determined
from time-to-time by the Board of Trustees, of up to 0.25% of a Fund's average
daily net assets.
Payments may be made by the Funds under the Plan for the purpose of financing
any activity primarily intended to result in the sales of shares of the Funds as
determined by the Board of Trustees. Such activities typically include
advertising; compensation of the Funds' distributor; compensation for sales and
sales marketing activities of Financial Service Agents and others, such as
dealers or distributors; shareholder account servicing; production and
dissemination of prospectuses and sales and marketing materials; and capital or
other expenses of associated equipment, rent, salaries, bonuses, interest and
other overhead. To the extent any activity is one
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28 PROSPECTUS
<PAGE>
which the Funds may finance without a Plan, the Funds may also make payments to
finance such activity outside of the Plan and not subject to its limitations.
Payments under the Plan are not tied exclusively to actual distribution and
service expenses, and the payments may exceed distribution and service expenses
actually incurred.
Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act,
which includes requirements that the Board of Trustees receive and review at
least quarterly reports concerning the nature and qualification of expenses
which are made, that the Board of Trustees approve all agreements implementing
the Plan and that the Plan may be continued from year-to-year only if the Board
of Trustees concludes at least annually that continuation of the Plan is likely
to benefit shareholders.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties, that there is a
reasonable likelihood that the Plan will benefit the Funds and their
shareholders.
DIVIDENDS AND DISTRIBUTIONS
The Focus Fund and the Growth & Income Fund intend to pay dividends from net
investment income and net realized capital gains (not offset by capital loss
carryovers) on an annual basis. Investors may elect to reinvest all income
dividends and capital gains distributions in shares of the Funds or in cash as
designated on the Purchase Application. If the investor does not specify an
election, all income dividends and capital gains distributions will be
automatically reinvested in full and fractional shares of the Funds calculated
to the nearest 1,000th of a share. Shares will be purchased at the net asset
value in effect on the business day after the dividend record date and will be
credited to the investor's account on such date. Reinvested dividends and
distributions receive the same tax treatment as those paid in cash.
An investor may change his or her election at any time by calling the
Transfer Agent at 1-888-860-8686 or by sending written notification to The
Marsico Investment Fund, c/o Sunstone Investor Services, P.O. Box 3210,
Milwaukee, WI 53201-3210. The election is effective for distributions with a
dividend record date on or after the date that the Transfer Agent receives
notice of the election.
TAXES
FEDERAL TAXES
Below is a summary of certain federal income tax considerations affecting the
Funds and their shareholders. More information is contained in the Statement of
Additional Information. Potential investors should consult their tax advisers
about the impact of owning fund shares on their particular tax situations,
including the application of any state or local taxes.
Each Fund intends to elect to be treated and to qualify each year as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended. A regulated investment
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29 PROSPECTUS
<PAGE>
company generally is not subject to federal income tax on its investment company
taxable income distributed in a timely manner to its shareholders.
Dividends paid by a Fund out of net ordinary income and distributions of net
short-term capital gains are taxable to the Fund's U.S. shareholders as ordinary
income. Dividends from net ordinary income may be eligible for the corporate
dividends-received deduction.
Distributions by a Fund of net capital gains (the excess of net long-term
capital gains over net short-term capital losses) to U.S. shareholders are
generally taxable to the shareholders at the applicable mid-term or long-term
capital gains rate, regardless of how long the shareholder has held shares of
the Fund.
A dividend or capital gains distribution declared by a Fund in October,
November or December, but paid during January of the following year will be
considered to be paid on December 31 of the year it was declared.
If the value of shares is reduced below a shareholder's cost as a result of a
distribution by a Fund, the distribution will be taxable even though it, in
effect, represents a return of invested capital. Investors considering buying
shares just prior to a dividend or capital gain distribution payment date should
be aware that, although the price of shares purchased at that time may reflect
the amount of the forthcoming distribution, those who purchase just prior to the
record date for a distribution may receive a distribution which will be taxable
to them.
A dividend or capital gains distribution with respect to shares of a Fund
held by a tax-deferred or qualified plan, such as an IRA, retirement plan or
corporate pension or profit sharing plan, will not be taxable to the plan.
Distributions from such plans will be taxable to individual participants under
applicable tax rules without regard to the character of the income earned by the
qualified plan.
Shareholders will be advised annually as to the federal tax status of
dividends and capital gains distributions made by each Fund for the preceding
year. Distributions by the Funds generally will be subject to state and local
taxes.
FOREIGN INCOME TAXES
Investment income received by the Funds from sources within foreign countries
may be subject to foreign income taxes withheld at the source. It is not
expected that the Funds will be able to "pass through" these taxes to
shareholders but such taxes generally will be deductible by the Fund.
FUND PERFORMANCE
From time-to-time, the Fund may advertise its "average annual total return" over
various periods of time. This total return figure shows the average percentage
change in value of an investment in the Funds from the beginning date of the
measuring period to the ending date of the measuring period. The figure reflects
changes in the price of the Funds' shares and assumes that any income dividends
and/or capital gains distributions made by the Funds during the period are
reinvested in shares of the Funds. Figures will be given for recent one-, five-
and ten-year periods (when applicable), and may be given for other periods as
well (such
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30 PROSPECTUS
<PAGE>
as from commencement of the Funds' operations, or on a year-by-year basis). When
considering "average" total return figures for periods longer than one year,
investors should note that the Funds' annual total return for any one year in
the period might have been greater or less than the average for the entire
period. The Funds also may use "aggregate" total return figures for various
periods, representing the cumulative change in value of an investment in the
Fund for the specific period (again reflecting changes in the Funds' share price
and assuming reinvestment of dividends and distributions). Aggregate total
returns may be shown by means of schedules, charts or graphs, and may indicate
subtotals of the various components of total return (that is, the change in
value of initial investment, income dividends and capital gains distributions).
The Funds may quote the average annual total and/or aggregate total return
for various time periods in advertisements or communications to shareholders.
Each Fund may also compare its performance to that of other mutual funds with
similar investment objectives and to stock and other relevant indices or to
rankings prepared by independent services or industry publications. For example,
each Fund's total return may be compared to data prepared by Lipper Analytical
Services, Inc., Morningstar, Value Line Mutual Fund Survey and CDA Investment
Technologies, Inc. Total return data as reported in such national financial
publications as The Wall Street Journal, The New York Times, Investor's Business
Daily, USA Today, Barron's, Money, and Forbes as well as in publications of a
local or regional nature, may be used in comparing Fund performance.
Each Fund's total return may also be compared to such indices as the:
/ / Dow Jones Industrial Average
/ / Standard & Poor's 500 Composite Stock Price Index
/ / NASDAQ Composite OTC Index or NASDAQ Industries Index
/ / Consumer Price Index
/ / Russell 2000 Index
Further information on performance measurement may be found in the Statement of
Additional Information.
SHARE PRICE AND DETERMINATION OF NET ASSET VALUE
Shares are purchased at their net asset value per share. Each Fund calculates
its net asset value (NAV) as follows:
<TABLE>
<S> <C>
(Value of Funds Assets)-(Fund
Liabilities)
NAV=
Number of Outstanding Shares
</TABLE>
Net asset value is determined as of the end of regular trading hours on the New
York Stock Exchange (currently 4:00 p.m. New York City time) ("Valuation Time")
on days that the New York Stock Exchange is open ("Business Day").
A security listed or traded on a recognized stock exchange or quoted on
NASDAQ is valued at its last sale price prior to the time when assets are valued
on the principal exchange on which the security is traded or on NASDAQ. If no
sale is reported at that time, the most current bid price will be used. All
other securities for which over-the-counter market quotations are readily
available are valued at the most current bid price. Where quotations are
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31 PROSPECTUS
<PAGE>
not readily available, the Funds' investments are valued at fair value as
determined by management and approved in good faith by the Board of Trustees.
Debt securities which will mature in more than 60 days are valued at prices
furnished by a pricing service approved by the Board of Trustees subject to
review and determination of the appropriate price by Marsico Capital Management,
whenever a furnished price is significantly different from the previous day's
furnished price. Securities which will mature in 60 days or less are valued at
amortized cost, which approximates market value.
Generally, trading in foreign securities, as well as United States Government
securities and certain cash equivalents, repurchase agreements and securities
lending agreements, is substantially completed each day at various times prior
to the close of the New York Stock Exchange. The values of such securities used
in computing the net asset value of the shares of the Funds are determined as of
such times. Foreign currency exchange rates are also generally determined prior
to the close of the New York Stock Exchange. Occasionally, events affecting the
value of such securities and such exchange rates may occur between the times at
which they are determined and the close of the New York Stock Exchange, which
will not be reflected in the computation of net asset value. If during such
periods, events occur which materially affect the value of such securities, the
securities will be valued at their fair market value as determined by management
and approved in good faith by the Board of Trustees.
For purposes of determining the net asset value per share of each Fund, all
assets and liabilities initially expressed in foreign currencies will be
converted into United States dollars at the mean between the bid and offer
prices of such currencies against United States dollars furnished by a pricing
service approved by the Board of Trustees.
CAPITAL STRUCTURE
DESCRIPTION OF SHARES
The Trust is organized as a series fund which permits it to issue its authorized
capital stock in one or more series, each such series representing a separate
investment portfolio.
The Trust is authorized to issue an unlimited number of shares of beneficial
interest. The Board of Trustees may, at its discretion, classify additional
series within the Trust without further action by the shareholders. Each share
outstanding entitles the holder to one vote. Generally, shares of all series
will be voted together as one class, except where voting by a series is required
by law. There will normally be no meetings of the shareholders for the purpose
of electing Trustees unless and until such time as less than a majority of the
Trustees holding office have been elected by shareholders. Trustees can be
removed at any meeting of Shareholders by a vote of at least two-thirds of the
Trust's outstanding shares. As of the date of this Prospectus, Marsico Capital
Management, LLC ("MCM") owned all the outstanding shares of each Fund and
thereby controlled each Fund. It is contemplated that the public offering of the
shares of each Fund will reduce MCM's holdings to less than 5% of each Fund's
total outstanding shares.
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32 PROSPECTUS
<PAGE>
OTHER SERVICE PROVIDERS
COUNSEL
Dechert Price & Rhoads, 1500 K Street, N.W., Washington, D.C. 20005, has passed
upon the validity of the shares offered by this Prospectus and also acts as
counsel to the Trust.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 950 Seventeenth Street, Denver, CO 80202, has been
selected to serve as independent accountants of the Trust for the fiscal year
ending September 30, 1998.
INFORMATION FOR SHAREHOLDERS
The Funds will provide the following statements and reports to keep the investor
current regarding the status of his or her investment account:
CONFIRMATION STATEMENTS
Except for Automatic Investment Plans, after each transaction that affects the
account balance or account registration.
ACCOUNT STATEMENTS
Quarterly.
FINANCIAL REPORTS
At least semiannually. Annual reports will include audited financial statements.
To reduce Fund expenses, one copy of each report will be mailed to each taxpayer
identification number even though the investor may have more than one account in
the Fund.
Investors who have questions about their specific accounts, have general
questions or wish to have additional information should call the Funds at
1-888-860-8686. In addition, investors who wish to make a change in their
address of record, a change in investments made through an Automatic Investment
Plan or a change in the manner in which dividends are received may also do so by
calling the Fund at that number.
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33 PROSPECTUS
<PAGE>
APPENDIX A
GLOSSARY OF INVESTMENT TERMS
This glossary provides a more detailed description of some of the types of
securities and other instruments in which the Funds may invest. The Funds may
invest in these instruments to the extent permitted by its investment objective
and policies. The Funds are not limited by this discussion and may invest in any
other types of instruments not precluded by the policies discussed elsewhere in
this Prospectus. Please refer to the SAI for a more detailed discussion of
certain instruments. An asterisk ("*") next to a security indicates that each
Fund will invest less than 5% of its net assets in that security.
I. EQUITY AND DEBT SECURITIES
BONDS are debt securities issued by a company, municipality, government or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value) at a specified maturity and to make scheduled
interest payments.
COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from 1
to 270 days issued by banks, corporations and other borrowers to investors
seeking to invest idle cash. For example, the Funds may purchase commercial
paper issued under Section 4(2) of the Securities Act of 1933.
COMMON STOCK represents a share of ownership in a company and usually carries
voting rights and earns dividends. Unlike preferred stock, dividends on common
stock are not fixed but are declared at the discretion of the issuer's board of
directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed dividend
or interest payment and are convertible into common stock at a specified price
or conversion ratio.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation that
entitle the holder to dividends and capital gains on the underlying security.
Receipts include those issued by domestic banks (American Depositary Receipts),
foreign banks (Global or European Depositary Receipts) and broker-dealers
(depositary shares).
FIXED-INCOME SECURITIES are securities that pay a specified rate of return. The
term generally includes short- and long-term government, corporate and municipal
obligations that pay a specified rate of interest or coupons for a specified
period of time and preferred stock, which pays fixed dividends.
HIGH-YIELD/HIGH-RISK SECURITIES are securities that are rated below investment
grade by the primary rating agencies (e.g., BB or lower by Standard & Poor's and
Ba or lower by Moody's). Other terms commonly used to describe such securities
include "lower rated bonds," "noninvestment grade bonds" and "junk bonds."
INVERSE FLOATERS* are debt instruments whose interest bears an inverse
relationship to the interest rate on another security. The Funds will not invest
more than 5% of their respective net assets in inverse floaters.
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or other
debt. These securities are generally pass-through securities, which means that
principal and interest payments on the underlying securities (less servicing
fees) are passed through to
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34 PROSPECTUS
<PAGE>
shareholders on a pro rata basis. These securities involve prepayment risk,
which is the risk that the underlying mortgages or other debt may be refinanced
or paid off prior to their maturities during periods of declining interest
rates. In that case, the Portfolio Manager may have to reinvest the proceeds
from the securities at a lower rate. Potential market gains on a security
subject to prepayment risk may be more limited than potential market gains on a
comparable security that is not subject to prepayment risk.
PASSIVE FOREIGN INVESTMENT COMPANIES ("PFICS") are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes dividends,
interest, royalties, rents and annuities. Income tax regulations may require the
Fund to recognize income associated with the PFIC prior to the actual receipt of
any such income.
PAY-IN-KIND BONDS are debt securities that normally give the issuer an option to
pay cash at a coupon payment date or give the holder of the security a similar
bond with the same coupon rate and a face value equal to the amount of the
coupon payment that would have been made.
PREFERRED STOCK is a class of stock that generally pays dividends at a specified
rate and has preference over common stock in the payment of dividends and
liquidation. Preferred stock generally does not carry voting rights.
REPURCHASE AGREEMENTS involve the purchase of a security by the Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, the Fund will bear the risk of market value fluctuations until the
security can be sold and may encounter delays and incur costs in liquidating the
security.
REVERSE REPURCHASE AGREEMENTS* involve the sale of a security by the Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique will be used primarily to provide cash to satisfy unusually heavy
redemption requests.
RULE 144A SECURITIES are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
STANDBY COMMITMENTS are obligations purchased by the Fund from a dealer that
give the Fund the option to sell a security to the dealer at a specified price.
STEP COUPON BONDS are debt securities that trade at a discount from their face
value and pay coupon interest. The discount from the face value depends on the
time remaining until cash payments begin, prevailing interest rates, liquidity
of the security and the perceived credit quality of the issuer.
STRIP BONDS are debt securities that are stripped of their interest (usually by
a financial intermediary) after the securities are issued. The market value of
these securities generally fluctuates more in response to changes in interest
rates than interest-paying securities of comparable maturity.
TENDER OPTION BONDS* are relatively long-term bonds that are coupled with the
agreement of a third party (such as a broker, dealer or bank) to grant the
holders of such securities the option to tender the securities to the
institution at periodic intervals.
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35 PROSPECTUS
<PAGE>
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of one
to ten years, and Treasury bonds may be issued with any maturity but generally
have maturities of at least ten years. U.S. government securities also include
indirect obligations of the U.S. government that are issued by federal agencies
and government sponsored entities. Unlike Treasury securities, agency securities
generally are not backed by the full faith and credit of the U.S. government.
Some agency securities are supported by the right of the issuer to borrow from
the Treasury, others are supported by the discretionary authority of the U.S.
government to purchase the agency's obligations and others are supported only by
the credit of the sponsoring agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. These securities pay interest at rates that are adjusted periodically
according to a specified formula, usually with reference to some interest rate
index or market interest rate. The floating rate tends to decrease the
security's price sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred stocks or bonds, that
give the holder the right to buy a proportionate amount of common stock at a
specified price, usually at a price that is higher than the market price at the
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
WHEN-ISSUED, DELAYED DELIVERY AND FORWARD TRANSACTIONS generally involve the
purchase of a security with payment and delivery at some time in the
future--i.e., beyond normal settlement. The Funds do not earn interest on such
securities until settlement, and the Funds bear the risk of market value
fluctuations in between the purchase and settlement dates. New issues of stocks
and bonds, private placements and U.S. government securities may be sold in this
manner.
ZERO COUPON BONDS are debt securities that do not pay interest at regular
intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than in interest-paying
securities of comparable maturity.
II. FUTURES, OPTIONS
AND OTHER DERIVATIVES
FORWARD CONTRACTS are contracts to purchase or sell a specified amount of
property for an agreed upon price at a specified time. Forward contracts are not
currently exchange traded and are typically negotiated on an individual basis.
The Fund may enter into forward currency contracts to hedge against declines in
the value of securities denominated in, or whose value is tied to, a currency
other than the U.S. dollar or to reduce the impact of currency appreciation on
purchases of such securities. It may also enter into forward contracts to
purchase or sell securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. The Fund may buy and sell futures contracts on foreign currencies,
securities and financial indices including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities. The Fund may
also buy options on futures contracts. An option on a futures contract gives the
buyer the right, but not the obligation, to buy or sell a futures contract at a
specified price on or
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36 PROSPECTUS
<PAGE>
before a specified date. Futures contracts and options on futures are
standardized and traded on designated exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices or other financial
indicators. Such securities may be positively or negatively indexed (i.e., their
value may increase or decrease if the reference index or instrument
appreciates). Indexed/structured securities may have return characteristics
similar to direct investments in the underlying instruments and may be more
volatile than the underlying instruments. The Fund bears the market risk of an
investment in the underlying instruments, as well as the credit risk of the
issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
OPTIONS are the right, but not the obligation, to buy or sell a specified amount
of securities or other assets on or before a fixed date at a predetermined
price. The Fund may purchase and write put and call options on securities,
securities indices and foreign currencies.
THE MARSICO INVESTMENT FUND
The Marsico Focus Fund
The Marsico Growth & Income Fund
- ---------------------------------
PROSPECTUS
, 1997
INVESTMENT ADVISER
Marsico Capital Management, LLC
ADMINISTRATOR
Sunstone Financial Group, Inc.
DISTRIBUTOR
Sunstone Distribution Services, LLC
COUNSEL
Dechert Price & Rhoads
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
TRANSFER AND DIVIDEND
DISBURSING AGENT
Sunstone Investor Services, LLC
CUSTODIAN
State Street Bank and Trust Company
- ---------------------------------
[LOGO]
<PAGE>
THE MARSICO INVESTMENT FUND
STATEMENT OF ADDITIONAL INFORMATION
, 1997
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the prospectus for The Marsico Investment Fund dated
, 1997, as amended from time to time, a copy of which may be obtained
without charge by calling 1-888-860-8686 or writing to Sunstone Investor
Services, LLC, P.O. Box 3210, Milwaukee, WI 53201-3210.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES........................................ 1
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES............................. 3
TRUSTEES AND OFFICERS..................................................... 17
INVESTMENT ADVISORY AND OTHER SERVICES.................................... 19
DISTRIBUTION PLAN......................................................... 19
PORTFOLIO TURNOVER........................................................ 20
PORTFOLIO TRANSACTIONS AND BROKERAGE...................................... 20
PERFORMANCE INFORMATION................................................... 20
TAX STATUS................................................................ 22
NET ASSET VALUE........................................................... 26
CAPITAL STRUCTURE......................................................... 26
HOW TO REDEEM SHARES...................................................... 27
HOW TO EXCHANGE........................................................... 27
FINANCIAL STATEMENTS...................................................... 27
APPENDIX.................................................................. A-1
</TABLE>
i
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INVESTMENT OBJECTIVES AND POLICIES
The Marsico Focus Fund ("Focus Fund") is a nondiversified fund that seeks
long-term growth of capital. Under normal conditions, this Fund concentrates its
investments in a core position of 20-30 common stocks.
The Marsico Growth & Income Fund ("Growth & Income Fund") is a diversified
fund that seeks both long-term capital growth and current income. The Growth &
Income Fund places a stronger emphasis on the growth objective and normally
invests up to 75% of its total assets in equity securities selected primarily
for their growth potential and at least 25% of its total assets in securities
that have income potential. In unusual circumstances, the Fund may reduce the
growth component of its portfolio to 25% of its total assets.
FUNDAMENTAL INVESTMENT RESTRICTIONS
As indicated in the Prospectus, the Funds are subject to certain fundamental
policies and restrictions that may not be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50% of the
outstanding voting securities of the Trust (or a particular Fund if a matter
affects just that Fund), or (ii) 67% or more of the voting securities present at
a meeting if the holders of more than 50% of the outstanding voting securities
of the Trust (or a particular Fund) are present or represented by proxy. As
fundamental policies, each Fund may not:
(1) Invest 25% or more of the value of their respective total assets in
any particular industry (other than U.S. government securities).
(2) Invest directly in real estate; however, the Funds may own debt or
equity securities issued by companies engaged in those businesses.
(3) Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this limitation
shall not prevent the Funds from purchasing or selling options, futures,
swaps and forward contracts or from investing in securities or other
instruments backed by physical commodities).
(4) Lend any security or make any other loan if, as a result, more than
25% of a Fund's total assets would be lent to other parties (but this
limitation does not apply to purchases of commercial paper, debt securities
or repurchase agreements).
(5) Act as an underwriter of securities issued by others, except to the
extent that a Fund may be deemed an underwriter in connection with the
disposition of portfolio securities of such Fund.
(6) Issue senior securities, except as permitted under the Investment
Company Act of 1940.
(7) Borrow money, except that the Funds may borrow money for temporary
or emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of the value of their respective total assets (including
the amount borrowed) less liabilities (other than borrowings). If borrowings
exceed 33 1/3% of the value of a Fund's total assets by reason of a decline
in net assets, the Fund will reduce its borrowings within three days to the
extent necessary to comply with the 33 1/3% limitation. This policy shall
not prohibit reverse repurchase agreements, deposits of assets to margin or
guarantee positions in futures, options, swaps or forward contracts, or the
segregation of assets in connection with such contracts. Neither Fund will
purchase securities while its borrowings exceed 5% of that Fund's total
assets.
In addition to the foregoing, as a fundamental policy, the Growth & Income
Fund may not own more than 10% of the outstanding voting securities of any one
issuer and, as to seventy-five percent (75%) of the value of its total assets,
purchase the securities of any one issuer (except cash items and "government
securities" as defined under the Investment Company Act of 1940, as amended (the
"1940 Act")), if
1
<PAGE>
immediately after and as a result of such purchase, the value of the holdings of
the Growth & Income Fund in the securities of such issuer exceeds 5% of the
value of the Growth & Income Fund's total assets.
As a fundamental policy, the Focus Fund may not own more than 10% of the
outstanding voting securities of any one issuer and, as to fifty percent (50%)
of the value of its total assets, purchase the securities of any one issuer
(except cash items and "government securities" as defined under the Investment
Company Act of 1940, as amended (the "1940 Act")), if immediately after and as a
result of such purchase, the value of the holdings of the Focus Fund in the
securities of such issuer exceeds 5% of the value of the Focus Fund's total
assets.
The Trustees have adopted additional investment restrictions for the Funds.
These restrictions are operating policies of the Funds and may be changed by the
Trustees without shareholder approval. The additional investment restrictions
adopted by the Trustees to date include the following:
(a) A Fund will not (i) enter into any futures contracts and related
options for purposes other than bona fide hedging transactions within the
meaning of Commodity Futures Trading Commission ("CFTC") regulations if the
aggregate initial margin and premiums required to establish positions in
futures contracts and related options that do not fall within the definition
of bona fide hedging transactions will exceed 5% of the fair market value of
a Fund's net assets, after taking into account unrealized profits and
unrealized losses on any such contracts it has entered into; and (ii) enter
into any futures contracts if the aggregate amount of such Fund's
commitments under outstanding futures contracts positions would exceed the
market value of its total assets.
(b) The Funds do not currently intend to sell securities short, unless
they own or have the right to obtain securities equivalent in kind and
amount to the securities sold short without the payment of any additional
consideration therefor, and provided that transactions in futures, options,
swaps and forward contracts are not deemed to constitute selling securities
short.
(c) The Funds do not currently intend to purchase securities on margin,
except that the Funds may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments and
other deposits in connection with transactions in futures, options, swaps
and forward contracts shall not be deemed to constitute purchasing
securities on margin.
(d) A Fund may not mortgage or pledge any securities owned or held by
such Fund in amounts that exceed, in the aggregate, 15% of that Fund's net
asset value, provided that this limitation does not apply to reverse
repurchase agreements, deposits of assets to margin, guaranteed positions in
futures, options, swaps or forward contracts, or the segregation of assets
in connection with such contracts.
(e) The Funds do not currently intend to purchase any securities or
enter into a repurchase agreement if, as a result, more than 15% of their
respective net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest within seven days
and in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market. The
Trustees, or the Funds' investment adviser acting pursuant to authority
delegated by the Trustees, may determine that a readily available market
exists for securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended, ("Rule 144A Securities"), or any
successor to such rule, and Section 4(2) commercial paper. Accordingly, such
securities may not be subject to the foregoing limitation.
(f) The Funds may not invest in companies for the purpose of exercising
control of management.
For purposes of the Funds' restriction on investing in a particular
industry, the Funds will rely primarily on industry classifications as published
by Bloomberg L.P. To the extent that Bloomberg L.P. classifications are so broad
that the primary economic characteristics in a single class are materially
different, the Funds may further classify issuers in accordance with industry
classifications as published by the Securities and Exchange Commission ("SEC").
2
<PAGE>
Except as otherwise noted herein and in the Funds' prospectus, a Fund's
investment objectives and policies may be changed by a vote of the Trustees
without a vote of shareholders.
TYPES OF SECURITIES AND INVESTMENT TECHNIQUES
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid investments
(i.e., securities that are not readily marketable). The Trustees have authorized
Marsico Capital Management, LLC ("Marsico Capital") to make liquidity
determinations with respect to its securities, including Rule 144A Securities
and commercial paper. Under the guidelines established by the Trustees, Marsico
Capital will consider the following factors: 1) the frequency of trades and
quoted prices for the obligation; (2) the number of dealers willing to purchase
or sell the security and the number of other potential purchasers; 3) the
willingness of dealers to undertake to make a market in the security; and 4) the
nature of the security and the nature of marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of the transfer. In the case of commercial paper, Marsico Capital will
also consider whether the paper is traded flat or in default as to principal and
interest and any ratings of the paper by a nationally recognized statistical
rating organization ("NRSRO"). A foreign security that may be freely traded on
or through the facilities of an offshore exchange or other established offshore
securities market is not deemed to be a restricted security subject to these
procedures.
ZERO COUPON, PAY-IN-KIND AND STEP COUPON SECURITIES
Each Fund may invest up to 10% of its assets in zero coupon, pay-in-kind and
step coupon securities. Zero coupon bonds are issued and traded at a discount
from their face value. They do not entitle the holder to any periodic payment of
interest prior to maturity. Step coupon bonds trade at a discount from their
face value and pay coupon interest. The coupon rate is low for an initial period
and then increases to a higher coupon rate thereafter. The discount from the
face amount or par value depends on the time remaining until cash payments
begin, prevailing interest rates, liquidity of the security and the perceived
credit quality of the issuer. Pay-in-kind bonds normally give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made.
Current federal income tax law requires holders of zero coupon securities
and step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even
though the holders receive no cash payments of interest during the year. In
order to qualify as a "regulated investment company" under the Internal Revenue
Code of 1986 and the regulations thereunder (the "Code"), a Fund must distribute
its investment company taxable income, including the original issue discount
accrued on zero coupon or step coupon bonds. BECAUSE A FUND WILL NOT RECEIVE
CASH PAYMENTS ON A CURRENT BASIS IN RESPECT OF ACCRUED ORIGINAL-ISSUE DISCOUNT
PAYMENTS, IN SOME YEARS THAT FUND MAY HAVE TO DISTRIBUTE CASH OBTAINED FROM
OTHER SOURCES IN ORDER TO SATISFY THE DISTRIBUTION REQUIREMENTS UNDER THE CODE.
A Fund might obtain such cash from selling other portfolio holdings which might
cause that Fund to incur capital gains or losses on the sale. Additionally,
these actions are likely to reduce the assets to which Fund expenses could be
allocated and to reduce the rate of return for that Fund. In some circumstances,
such sales might be necessary in order to satisfy cash distribution requirements
even though investment considerations might otherwise make it undesirable for a
Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon and pay-in-kind
securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest rates
to a greater degree than other types of debt securities having similar
maturities and credit quality.
3
<PAGE>
PASS-THROUGH SECURITIES
The Funds may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities and participation interests.
A pass-through security is a share or certificate of interest in a pool of debt
obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives an undivided
interest in the underlying pool of securities. The issuers of the underlying
securities make interest and principal payments to the intermediary which are
passed through to purchasers, such as the Funds. The most common type of pass-
through securities are mortgage-backed securities. Government National Mortgage
Association ("GNMA") Certificates are mortgage-backed securities that evidence
an undivided interest in a pool of mortgage loans. GNMA Certificates differ from
bonds in that principal is paid back monthly by the borrowers over the term of
the loan rather than returned in a lump sum at maturity. A Fund will generally
purchase "modified pass-through" GNMA Certificates, which entitle the holder to
receive a share of all interest and principal payments paid and owned on the
mortgage pool, net of fees paid to the "issuer" and GNMA, regardless of whether
or not the mortgagor actually makes the payment. GNMA Certificates are backed as
to the timely payment of principal and interest by the full faith and credit of
the U.S. government.
The Federal Home Loan Mortgage Corporation ("FHLMC") issues two types of
mortgage pass-through securities: mortgage participation certificates ("PCs")
and guaranteed mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in
that each PC represents a pro rata share of all interest and principal payments
made and owned on the underlying pool. FHLMC guarantees timely payments of
interest on PCs and the full return of principal. GMCs also represent a pro rata
interest in a pool of mortgages. However, these instruments pay interest
semiannually and return principal once a year in guaranteed minimum payments.
This type of security is guaranteed by FHLMC as to timely payment of principal
and interest but it is not guaranteed by the full faith and credit of the U.S.
government.
The Federal National Mortgage Association ("FNMA") issues guaranteed
mortgage pass-through certificates ("FNMA Certificates"). FNMA Certificates
resemble GNMA Certificates in that each FNMA Certificate represents a pro rata
share of all interest and principal payments made and owned on the underlying
pool. This type of security is guaranteed by FNMA as to timely payment of
principal and interest but it is not guaranteed by the full faith and credit of
the U.S. government.
Except for GMCs, each of the mortgage-backed securities described above is
characterized by monthly payments to the holder, reflecting the monthly payments
made by the borrowers who received the underlying mortgage loans. The payments
to the security holders (such as the Funds), like the payments on the underlying
loans, represent both principal and interest. Although the underlying mortgage
loans are for a specified period of time, such as 20 or 30 years, the borrowers
can, and typically do, pay them off sooner. Thus, the security holders
frequently receive prepayments of principal in addition to the principal that is
part of the regular monthly payments. A portfolio manager will consider
estimated prepayment rates in calculating the average weighted maturity of a
Fund. A borrower is more likely to prepay a mortgage that bears a relatively
high rate of interest. This means that in times of declining interest rates,
higher yielding mortgage-backed securities held by a Fund might be converted to
cash and that a Fund would be forced to accept lower interest rates when that
cash is used to purchase additional securities in the mortgage-backed securities
sector or in other investment sectors. Additionally, prepayments during such
periods will limit a Fund's ability to participate in as large a market gain as
may be experienced with a comparable security not subject to prepayment.
Asset-backed securities represent interests in pools of consumer loans and
are backed by paper or accounts receivables originated by banks, credit card
companies or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor nor the guarantor of the security, and
interest and principal payments ultimately depend upon payment of the underlying
loans by individuals.
4
<PAGE>
DEPOSITARY RECEIPTS
The Funds may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issued by a foreign
issuer. ADRs, in registered form, are designed for use in U.S. securities
markets. Unsponsored ADRs may be created without the participation of the
foreign issuer. Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in a sponsored
ADR. The bank or trust company depositary of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the foreign
issuer or to pass through voting rights. The Funds may also invest in European
Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs") and in other
similar instruments representing securities of foreign companies. EDRs are
receipts issued by a European financial institution evidencing an arrangement
similar to that of ADRs. EDRs, in bearer form, are designed for use in European
securities markets.
OTHER INCOME-PRODUCING SECURITIES
Other types of income producing securities that the Funds may purchase
include, but are not limited to, the following types of securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities are
relatively long-term instruments that often carry demand features permitting the
holder to demand payment of principal at any time or at specified intervals
prior to maturity.
STANDBY COMMITMENTS. These instruments, which are similar to a put, give a
Fund the option to obligate a broker, dealer or bank to repurchase a security
held by that Fund at a specified price.
TENDER OPTION BONDS. Tender option bonds are relatively long-term bonds
that are coupled with the agreement of a third party (such as a broker, dealer
or bank) to grant the holders of such securities the option to tender the
securities to the institution at periodic intervals.
INVERSE FLOATERS. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another security. The
Funds will not invest more than 5% of their respective net assets in inverse
floaters.
The Funds will purchase standby commitments, tender option bonds and
instruments with demand features primarily for the purpose of increasing the
liquidity of their portfolios.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement, a Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed-upon price on an
agreed upon date within a number of days (usually not more than seven) from the
date of purchase. The resale price reflects the purchase price plus an agreed-
upon incremental amount that is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of the seller
to pay the agreed-upon price, which obligation is in effect secured by the value
(at least equal to the amount of the agreed-upon resale price and marked-to-
market daily) of the underlying security or "collateral." A Fund may engage in a
repurchase agreement with respect to any security in which it is authorized to
invest. A risk associated with repurchase agreements is the failure of the
seller to repurchase the securities as agreed, which may cause a Fund to suffer
a loss if the market value of such securities decline before they can be
liquidated on the open market. In the event of bankruptcy or insolvency of the
seller, a Fund may encounter delays and incur costs in liquidating the
underlying security. Repurchase agreements that mature in more than seven days
will be subject to the 15% limit on illiquid investments. While it is not
possible to eliminate all risks from these transactions, it is the policy of the
Funds to limit repurchase agreements to those parties whose creditworthiness has
been reviewed and found satisfactory by Marsico Capital.
5
<PAGE>
A Fund may use reverse repurchase agreements to provide cash to satisfy
unusually heavy redemption requests or for other temporary or emergency purposes
without the necessity of selling portfolio securities, or to earn additional
income on portfolio securities, such as Treasury bills or notes. In a reverse
repurchase agreement, a Fund sells a portfolio security to another party, such
as a bank or broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase agreement
is outstanding, a Fund will maintain cash and appropriate liquid assets in a
segregated custodial account to cover its obligation under the agreement. The
Funds will enter into reverse repurchase agreements only with parties that
Marsico Capital deems creditworthy. Using reverse repurchase agreements to earn
additional income involves the risk that the interest earned on the invested
proceeds is less than the expense of the reverse repurchase agreement
transaction. This technique may also have a leveraging effect on the Fund's
portfolio, although the Fund's intent to segregate assets in the amount of the
reverse repurchase agreement minimizes this effect.
HIGH-YIELD/HIGH-RISK SECURITIES
The Funds may invest up to 35% of net assets in debt securities that are
rated below investment grade (E.G., securities rated BB or lower by Standard &
Poor's Ratings Services ("Standard &Poor's") or Ba or lower by Moody's Investors
Service, Inc. ("Moody's")). Lower-rated securities involve a higher degree of
credit risk, which is the risk that the issuer will not make interest or
principal payments when due. In the event of an unanticipated default, a Fund
would experience a reduction in its income, and could expect a decline in the
market value of the securities so affected. The Funds will not purchase debt
securities rated lower than "CCC-" by Standard & Poor's or "Caa" by Moody's.
Each Fund may invest in unrated debt securities of foreign and domestic
issuers. Unrated debt, while not necessarily of lower quality than rated
securities, may not have as broad a market. Unrated debt securities will be
included in the 35% limit of each Fund unless the portfolio manager deems such
securities to be the equivalent of investment grade securities.
Investing in high-yield/high risk securities involves certain risks,
including the following:
FINANCIAL AND MARKET RISKS. Investments in high-yield/high risk securities
involve a high degree of financial and market risks that can result in
substantial or, at times, even total losses. Issuers of such securities may have
substantial capital needs and may become involved in bankruptcy or
reorganization proceedings. Among the problems involved in investments in such
issuers is the fact that it may be difficult to obtain information about the
condition of such issuers. The market prices of such securities also are subject
to abrupt and erratic movements and above average price volatility, and the
spread between the bid and asked prices of such securities may be greater than
normally expected.
DISPOSITION OF PORTFOLIO SECURITIES. Although the Funds generally will
purchase securities for which the portfolio manager expects an active market to
be maintained, high-yield/high-risk securities may be less actively traded than
other securities and it may be difficult to dispose of substantial holdings of
such securities at prevailing market prices. The Funds will limit holdings of
any securities to amounts that the portfolio manager believes could be readily
sold, and holdings of such securities would, in any event, be limited so as not
to limit the Funds' ability to readily dispose of securities to meet
redemptions.
FUTURES, OPTIONS AND OTHER DERIVATIVE INSTRUMENTS
FUTURES CONTRACTS. The Funds may enter into contracts for the purchase or
sale for future delivery of fixed-income securities, foreign currencies or
contracts based on financial indices, including indices of U.S. government
securities, foreign government securities, equity or fixed-income securities.
U.S. futures contracts are traded on exchanges which have been designated
"contract markets" by the CFTC and must be executed through a futures commission
merchant ("FCM"), or brokerage firm, which is a member of the relevant contract
market. Through their clearing corporations, the exchanges guarantee performance
of the contracts as between the clearing members of the exchange.
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The buyer or seller of a futures contract is not required to deliver or pay
for the underlying instrument unless the contract is held until the delivery
date. However, both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when the contract is entered into. Initial
margin deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or
certain other liquid assets by the Funds' custodian for the benefit of the FCM.
Initial margin payments are similar to good faith deposits or performance bonds.
Unlike margin extended by a securities broker, initial margin payments do not
constitute purchasing securities on margin for purposes of the Fund's investment
limitations. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments for the benefit of
the FCM to settle the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. In the event of
the bankruptcy of the FCM that holds margin on behalf of a Fund, that Fund may
be entitled to return of margin owed to such Fund only in proportion to the
amount received by the FCM's other customers. Marsico Capital will attempt to
minimize the risk by careful monitoring of the creditworthiness of the FCMs with
which the Funds do business and by depositing margin payments in a segregated
account with the Funds' custodian.
The Funds intend to comply with guidelines of eligibility for exclusion from
the definition of the term "commodity pool operator" adopted by the CFTC and the
National Futures Association, which regulate trading in the futures markets. The
Funds will use futures contracts and related options primarily for bona fide
hedging purposes within the meaning of CFTC regulations. To the extent that the
Funds hold positions in futures contracts and related options that do not fall
within the definition of bona fide hedging transactions, the aggregate initial
margin and premiums required to establish such positions will not exceed 5% of
the fair market value of a Fund's net assets, after taking into account
unrealized profits and unrealized losses on any such contracts it has entered
into.
Although a Fund will segregate cash and liquid assets in an amount
sufficient to cover its open futures obligations, the segregated assets would be
available to that Fund immediately upon closing out the futures position, while
settlement of securities transactions could take several days. However, because
a Fund's cash that may otherwise be invested would be held uninvested or
invested in other liquid assets so long as the futures position remains open,
such Fund's return could be diminished due to the opportunity losses of
foregoing other potential investments.
A Fund's primary purpose in entering into futures contracts is to protect
that Fund from fluctuations in the value of securities or interest rates without
actually buying or selling the underlying debt or equity security. For example,
if the Fund anticipates an increase in the price of stocks, and it intends to
purchase stocks at a later time, that Fund could enter into a futures contract
to purchase a stock index as a temporary substitute for stock purchases. If an
increase in the market occurs that influences the stock index as anticipated,
the value of the futures contracts will increase, thereby serving as a hedge
against that Fund not participating in a market advance. This technique is
sometimes known as an anticipatory hedge. To the extent a Fund enters into
futures contracts for this purpose, the segregated assets maintained to cover
such Fund's obligations with respect to the futures contracts will consist of
other liquid assets from its portfolio in an amount equal to the difference
between the contract price and the aggregate value of the initial and variation
margin payments made by that Fund with respect to the futures contracts.
Conversely, if a Fund holds stocks and seeks to protect itself from a decrease
in stock prices, the Fund might sell stock index futures contracts, thereby
hoping to offset the potential decline in the value of its portfolio securities
by a corresponding increase in the value of the futures contract position. A
Fund could protect against a decline in stock prices by selling portfolio
securities and investing in money market instruments, but the use of futures
contracts enables it to maintain a defensive position without having to sell
portfolio securities.
If a Fund owns Treasury bonds and the portfolio manager expects interest
rates to increase, that Fund may take a short position in interest rate futures
contracts. Taking such a position would have much the same effect as that Fund
selling Treasury bonds in its portfolio. If interest rates increase as
anticipated, the
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value of the Treasury bonds would decline, but the value of that Fund's interest
rate futures contract would increase, thereby keeping the net asset value of
that Fund from declining as much as it may have otherwise. If, on the other
hand, a portfolio manager expects interest rates to decline, that Fund may take
a long position in interest rate futures contracts in anticipation of later
closing out the futures position and purchasing the bonds. Although a Fund can
accomplish similar results by buying securities with long maturities and selling
securities with short maturities, given the greater liquidity of the futures
market than the cash market, it may be possible to accomplish the same result
more easily and more quickly by using futures contracts as an investment tool to
reduce risk.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery of the instrument underlying a futures contract. To the extent
participants decide to make or take delivery, liquidity in the futures market
could be reduced and prices in the futures market distorted. Third, from the
point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of the foregoing
distortions, a correct forecast of general price trends by the portfolio manager
still may not result in a successful use of futures.
Futures contracts entail risks. Although the Funds believe that use of such
contracts will benefit the Funds, a Fund's overall performance could be
adversely affected by entering into such contracts if the portfolio manager's
investment judgment proves incorrect. For example, if a Fund has hedged against
the effects of a possible decrease in prices of securities held in its portfolio
and prices increase instead, that Fund will lose part or all of the benefit of
the increased value of these securities because of offsetting losses in its
futures positions. In addition, if a Fund has insufficient cash, it may have to
sell securities from its portfolio to meet daily variation margin requirements.
Those sales may be, but will not necessarily be, at increased prices which
reflect the rising market and may occur at a time when the sales are
disadvantageous to such Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to a
Fund will not match exactly such Fund's current or potential investments. A Fund
may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests--for
example, by hedging investments in portfolio securities with a futures contract
based on a broad index of securities--which involves a risk that the futures
position will not correlate precisely with the performance of such Fund's
investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with a Fund's
investments. Futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions also may
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures contracts. A
Fund may buy or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or is considering purchasing in order to attempt
to compensate for differences in historical volatility between the futures
contract and the securities, although this may not be successful in all cases.
If price changes in a Fund's futures positions are poorly correlated with its
other investments,
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its futures positions may fail to produce desired gains or result in losses that
are not offset by the gains in that Fund's other investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three days for some
types of securities, the futures markets can provide superior liquidity to the
securities markets. Nevertheless, there is no assurance that a liquid secondary
market will exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for a Fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, a Fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, such Fund's access to other assets held to cover its futures positions
also could be impaired.
OPTIONS ON FUTURES CONTRACTS. The Funds may buy and write put and call
options on futures contracts. An option on a future gives a Fund the right (but
not the obligation) to buy or sell a futures contract at a specified price on or
before a specified date. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when a Fund is not fully invested it may buy a call option on
a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures' price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in that Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures' price at expiration of the option is higher than the exercise
price, a Fund will retain the full amount of the option premium which provides a
partial hedge against any increase in the price of securities which that Fund is
considering buying. If a call or put option a Fund has written is exercised,
such Fund will incur a loss which will be reduced by the amount of the premium
it received. Depending on the degree of correlation between the change in the
value of its portfolio securities and changes in the value of the futures
positions, a Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices or rising interest rates.
The amount of risk a Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
FORWARD CONTRACTS. A forward contract is an agreement between two parties
in which one party is obligated to deliver a stated amount of a stated asset at
a specified time in the future and the other party is obligated to pay a
specified amount for the assets at the time of delivery. The Funds may enter
into forward contracts to purchase and sell government securities, equity or
income securities, foreign currencies or other financial instruments. Forward
contracts generally are traded in an interbank market conducted directly between
traders (usually large commercial banks) and their customers. Unlike futures
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contracts, which are standardized contracts, forward contracts can be
specifically drawn to meet the needs of the parties that enter into them. The
parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated exchange.
The following discussion summarizes the Fund's principal uses of forward
foreign currency exchange contracts ("forward currency contracts"). A Fund may
enter into forward currency contracts with stated contract values of up to the
value of that Fund's assets. A forward currency contract is an obligation to buy
or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). A Fund will exchange foreign currencies for
U.S. dollars and for other foreign currencies in the normal course of business
and may buy and sell currencies through forward currency contracts in order to
fix a price for securities it has agreed to buy or sell ("transaction hedge"). A
Fund also may hedge some or all of its investments denominated in a foreign
currency or exposed to foreign currency fluctuations against a decline in the
value of that currency relative to the U.S. dollar by entering into forward
currency contracts to sell an amount of that currency (or a proxy currency whose
performance is expected to replicate or exceed the performance of that currency
relative to the U.S. dollar) approximating the value of some or all of its
portfolio securities denominated in that currency ("position hedge") or by
participating in options or futures contracts with respect to the currency. A
Fund also may enter into a forward currency contract with respect to a currency
where the Fund is considering the purchase or sale of investments denominated in
that currency but has not yet selected the specific investments ("anticipatory
hedge"). In any of these circumstances a Fund may, alternatively, enter into a
forward currency contract to purchase or sell one foreign currency for a second
currency that is expected to perform more favorably relative to the U.S. dollar
if the portfolio manager believes there is a reasonable degree of correlation
between movements in the two currencies ("cross-hedge").
These types of hedging minimize the effect of currency appreciation as well
as depreciation, but do not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the proceeds of or rates of return on a Fund's foreign
currency denominated portfolio securities. The matching of the increase in value
of a forward contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge generally
will not be precise. Shifting a Fund's currency exposure from one foreign
currency to another removes that Fund's opportunity to profit from increases in
the value of the original currency and involves a risk of increased losses to
such Fund if its portfolio manager's projection of future exchange rates is
inaccurate. Proxy hedges and cross-hedges may result in losses if the currency
used to hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices may result in
poorer overall performance for a Fund than if it had not entered into such
contracts.
The Funds will cover outstanding forward currency contracts by maintaining
liquid portfolio securities
denominated in or whose value is tied to, the currency underlying the forward
contract or the currency being hedged. To the extent that a Fund is not able to
cover its forward currency positions with underlying portfolio securities, the
Funds' custodian will segregate cash or other liquid assets having a value equal
to the aggregate amount of such Fund's commitments under forward contracts
entered into with respect to position hedges, cross-hedges and anticipatory
hedges. If the value of the securities used to cover a position or the value of
segregated assets declines, a Fund will find alternative cover or segregate
additional cash or liquid assets on a daily basis so that the value of the
covered and segregated assets will be equal to the amount of such Fund's
commitments with respect to such contracts. As an alternative to segregating
assets, a Fund may buy call options permitting such Fund to buy the amount of
foreign currency being hedged by a forward sale contract or a Fund may buy put
options permitting it to sell the amount of foreign currency subject to a
forward buy contract.
While forward contracts are not currently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event,
the Funds' ability to utilize forward contracts may be
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restricted. In addition, a Fund may not always be able to enter into forward
contracts at attractive prices and may be limited in its ability to use these
contracts to hedge Fund assets.
OPTIONS ON FOREIGN CURRENCIES. The Funds may buy and write options on
foreign currencies in a manner similar to that in which futures or forward
contracts on foreign currencies will be utilized. For example, a decline in the
U.S. dollar value of a foreign currency in which portfolio securities are
denominated will reduce the U.S. dollar value of such securities, even if their
value in the foreign currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, a Fund may buy put options on
the foreign currency. If the value of the currency declines, such Fund will have
the right to sell such currency for a fixed amount in U.S. dollars, thereby
offsetting, in whole or in part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, a Fund may buy call options on the foreign currency.
The purchase of such options could offset, at least partially, the effects of
the adverse movements in exchange rates. As in the case of other types of
options, however, the benefit to a Fund from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, if currency exchange rates do not move in the direction or
to the extent desired, a Fund could sustain losses on transactions in foreign
currency options that would require such Fund to forego a portion or all of the
benefits of advantageous changes in those rates.
The Funds may also write options on foreign currencies. For example, to
hedge against a potential decline in the U.S. dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange rates, a Fund
could, instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised and the decline in value of portfolio securities will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a potential
increase in the U.S. dollar cost of securities to be acquired, a Fund could
write a put option on the relevant currency which, if rates move in the manner
projected, will expire unexercised and allow that Fund to hedge the increased
cost up to the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only a partial
hedge up to the amount of the premium. If exchange rates do not move in the
expected direction, the option may be exercised and a Fund would be required to
buy or sell the underlying currency at a loss which may not be offset by the
amount of the premium. Through the writing of options on foreign currencies, a
Fund also may lose all or a portion of the benefits which might otherwise have
been obtained from favorable movements in exchange rates.
The Funds may write covered call options on foreign currencies. A call
option written on a foreign currency by a Fund is "covered" if that Fund owns
the foreign currency underlying the call or has an absolute and immediate right
to acquire that foreign currency without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other foreign currencies held in its portfolio. A
call option is also covered if a Fund has a call on the same foreign currency in
the same principal amount as the call written if the exercise price of the call
held (i) is equal to or less than the exercise price of the call written or (ii)
is greater than the exercise price of the call written, if the difference is
maintained by such Fund in cash or other liquid assets in a segregated account
with the Funds' custodian.
The Funds also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is for cross-hedging
purposes if it is designed to provide a hedge against a decline due to an
adverse change in the exchange rate in the U.S. dollar value of a security which
a Fund owns or has the right to acquire and which is denominated in the currency
underlying the option. Call options on foreign currencies which are entered into
for cross-hedging purposes are not covered. However, in such circumstances, a
Fund will collateralize the option by segregating cash or other liquid assets in
an amount not less than the value of the underlying foreign currency in U.S.
dollars marked-to-market daily.
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OPTIONS ON SECURITIES. In an effort to increase current income and to
reduce fluctuations in net asset value, the Funds may write covered put and call
options and buy put and call options on securities that are traded on United
States and foreign securities exchanges and over-the-counter. The Funds may
write and buy options on the same types of securities that the Funds may
purchase directly.
A put option written by a Fund is "covered" if that Fund (i) segregates cash
not available for investment or other liquid assets with a value equal to the
exercise price of the put with the Funds' custodian or (ii) holds a put on the
same security and in the same principal amount as the put written and the
exercise price of the put held is equal to or greater than the exercise price of
the put written. The premium paid by the buyer of an option will reflect, among
other things, the relationship of the exercise price to the market price and the
volatility of the underlying security, the remaining term of the option, supply
and demand and interest rates.
A call option written by a Fund is "covered" if that Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by the Funds'
custodian) upon conversion or exchange of other securities held in its
portfolio. A call option is also deemed to be covered if a Fund holds a call on
the same security and in the same principal amount as the call written and the
exercise price of the call held (i) is equal to or less than the exercise price
of the call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by that Fund in cash and other liquid
assets in a segregated account with its custodian.
The Funds also may write call options that are not covered for cross-hedging
purposes. A Fund collateralizes its obligation under a written call option for
cross-hedging purposes by segregating cash or other liquid assets in an amount
not less than the market value of the underlying security, marked-to-market
daily. A Fund would write a call option for cross-hedging purposes, instead of
writing a covered call option, when the premium to be received from the
cross-hedge transaction would exceed that which would be received from writing a
covered call option and its portfolio manager believes that writing the option
would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in the case of
a put option, since with regard to certain options, the writer may be assigned
an exercise notice at any time prior to the termination of the obligation.
Whether or not an option expires unexercised, the writer retains the amount of
the premium. This amount, of course, may, in the case of a covered call option,
be offset by a decline in the market value of the underlying security during the
option period. If a call option is exercised, the writer experiences a profit or
loss from the sale of the underlying security. If a put option is exercised, the
writer must fulfill the obligation to buy the underlying security at the
exercise price, which will usually exceed the then-current market value of the
underlying security.
The writer of an option that wishes to terminate its obligation may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. The effect of the purchase is that
the writer's position will be canceled by the clearing corporation. However, a
writer may not effect a closing purchase transaction after being notified of the
exercise of an option. Likewise, an investor who is the holder of an option may
liquidate its position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same series as the option previously
bought. There is no guarantee that either a closing purchase or a closing sale
transaction can be effected.
In the case of a written call option, effecting a closing transaction will
permit a Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of a
written put option, such transaction will permit a Fund to write another put
option to the extent that the exercise price is secured by other liquid assets.
Effecting a closing transaction also will permit a Fund to use the cash or
proceeds from the concurrent sale of any securities subject to the option
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for other investments. If a Fund desires to sell a particular security from its
portfolio on which it has written a call option, such Fund will effect a closing
transaction prior to or concurrent with the sale of the security.
A Fund will realize a profit from a closing transaction if the price of the
purchase transaction is less than the premium received from writing the option
or the price received from a sale transaction is more than the premium paid to
buy the option. A Fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium received from writing
the option or the price received from a sale transaction is a less than the
premium paid to buy the option. Because increases in the market of a call option
generally will reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security owned by a Fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, the Fund
may not be able to effect closing transactions in particular options and the
Fund would have to exercise the options in order to realize any profit. If a
Fund is unable to effect a closing purchase transaction in a secondary market,
it will not be able to sell the underlying security until the option expires or
it delivers the underlying security upon exercise. The absence of a liquid
secondary market may be due to the following: (i) insufficient trading interest
in certain options, (ii) restrictions imposed by a national securities exchange
("Exchange") on which the option is traded on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances that interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
A Fund may write options in connection with buy-and-write transactions. In
other words, a Fund may buy a security and then write a call option against that
security. The exercise price of such call will depend upon the expected price
movement of the underlying security. The exercise price of a call option may be
below ("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money")
the current value of the underlying security at the time the option is written.
Buy-and-write transactions using in-the-money call options may be used when it
is expected that the price of the underlying security will remain flat or
decline moderately during the option period. Buy-and-write transactions using
at-the-money call options may be used when it is expected that the price of the
underlying security will remain fixed or advance moderately during the option
period. Buy-and-write transactions using out-of-the-money call options may be
used when it is expected that the premiums received from writing the call option
plus the appreciation in the market price of the underlying security up to the
exercise price will be greater than the appreciation in the price of the
underlying security alone. If the call options are exercised in such
transactions, a Fund's maximum gain will be the premium received by it for
writing the option, adjusted upwards or downwards by the difference between that
Fund's purchase price of the security and the exercise price. If the options are
not exercised and the price of the underlying security declines, the amount of
such decline will be offset by the amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and a Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or otherwise
is below the exercise price, a Fund may elect to close the position or take
delivery of the security at the exercise price and that Fund's return will be
the
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premium received from the put options minus the amount by which the market price
of the security is below the exercise price.
A Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, a Fund will reduce any profit it
might otherwise have realized in the underlying security by the amount of the
premium paid for the put option and by transaction costs.
A Fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call option
plus any transaction costs will reduce the benefit, if any, realized by such
Fund upon exercise of the option, and, unless the price of the underlying
security rises sufficiently, the option may expire worthless to that Fund.
EURODOLLAR INSTRUMENTS. A Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency-denominated instruments are available
from time to time. Eurodollar futures contracts enable purchasers to obtain a
fixed rate for the lending of funds and sellers to obtain a fixed rate for
borrowings. A Fund might use Eurodollar futures contracts and options thereon to
hedge against changes in LIBOR, to which many interest rate swaps and
fixed-income instruments are linked.
SWAPS AND SWAP-RELATED PRODUCTS. A Fund may enter into interest rate swaps,
caps and floors on either an asset-based or liability-based basis, depending
upon whether it is hedging its assets or its liabilities, and will usually enter
into interest rate swaps on a net basis (i.e., the two payment streams are
netted out, with a Fund receiving or paying, as the case may be, only the net
amount of the two payments). The net amount of the excess, if any, of a Fund's
obligations over its entitlement with respect to each interest rate swap will be
calculated on a daily basis and an amount of cash or other liquid assets having
an aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Funds' custodian. If a Fund enters
into an interest rate swap on other than a net basis, it would maintain a
segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. A Fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one NRSRO at the time of entering into
such transaction. Marsico Capital will monitor the creditworthiness of all
counterparties on an ongoing basis. If there is a default by the other party to
such a transaction, a Fund will have contractual remedies pursuant to the
agreements related to the transaction.
The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardizing swap documentation. Marsico Capital has determined that,
as a result, the swap market has become relatively liquid. Caps and floors are
more recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent a
Fund sells (i.e., writes) caps and floors, it will segregate cash or other
liquid assets having an aggregate net asset value at least equal to the full
amount accrued on a daily basis, of its obligations with respect to any caps or
floors.
There is no limit on the amount of interest rate swap transactions that may
be entered into by a Fund. These transactions may in some instances involve the
delivery of securities or other underlying assets by a Fund or its counterparty
to collateralize obligations under the swap. Under the documentation currently
used in those markets, the risk of loss with respect to interest rate swaps is
limited to the net amount of the payments that a Fund is contractually obligated
to make. If the other party to an interest rate swap that is not collateralized
defaults, a Fund would risk the loss of the net amount of the payments that it
contractually is entitled to receive. A Fund may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregation requirement described
above.
14
<PAGE>
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS AND
FOREIGN INSTRUMENTS. Unlike transactions entered into by the Funds in futures
contracts, options on foreign currencies and forward contracts are not traded on
contract markets regulated by the CFTC or (with the exception of certain foreign
currency options) by the SEC. To the contrary, such instruments are traded
through financial institutions acting as market-makers, although foreign
currency options are also traded on certain Exchanges, such as the Philadelphia
Stock Exchange and the Chicago Board Options Exchange, subject to SEC
regulation. Similarly, options on currencies may be traded over-the-counter. In
an over-the-counter trading environment, many of the protections afforded to
Exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the buyer of an option
cannot lose more than the amount of the premium plus related transaction costs,
this entire amount could be lost. Moreover, an option writer and buyer or seller
of futures or forward contracts could lose amounts substantially in excess of
any premium received or initial margin or collateral posted due to the potential
additional margin and collateral requirements associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on Exchanges. As a
result, many of the protections provided to traders on organized Exchanges will
be available with respect to such transactions. In particular, all foreign
currency option positions entered into on an Exchange are cleared and guaranteed
by the OCC, thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on an Exchange may be more readily available
than in the over-the-counter market, potentially permitting a Fund to liquidate
open positions at a profit prior to exercise or expiration, or to limit losses
in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by (i) other complex
foreign political and economic factors, (ii) lesser availability than in the
United States of data on which to make trading decisions, (iii) delays in a
Fund's ability to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States, and (v) low trading volume.
GENERAL CHARACTERISTICS OF FOREIGN SECURITIES.
Foreign securities involve certain inherent risks that are different from
those of domestic issuers, including political or economic instability of the
issuer or the country of issue, diplomatic developments which could affect U.S.
investments in those countries, changes in foreign currency and exchange rates
and the possibility of adverse changes in investment or exchange control
regulations. As a result of these and
15
<PAGE>
other factors, foreign securities purchased by the Funds may be subject to
greater price fluctuation than securities of U.S. companies.
Most foreign stock markets are not as large or liquid as in the United
States, fixed commissions on foreign stock exchanges are generally higher than
the negotiated commissions on U.S. exchanges, and there is generally less
government supervision and regulation of foreign stock exchanges, brokers and
companies than in the United States. Investors should recognize that foreign
markets have different clearance and settlement procedures and in certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Delays in settlement could result in temporary periods when assets
of the Funds are uninvested and no return is earned thereon. The inability of
the Funds to make intended security purchases due to settlement problems could
cause the Funds to miss attractive investment opportunities. Inability to
dispose of portfolio securities due to settlement problems either could result
in losses to the Funds due to subsequent declines in value of the portfolio
security or, if the Funds have entered into a contract to sell the security,
could result in a possible liability to the purchaser. Payment for securities
without delivery may be required in certain foreign markets. Further, the Fund
may encounter difficulties or be unable to pursue legal remedies and obtain
judgments in foreign courts. Foreign governments can also levy confiscatory
taxes, expropriate assets, and limit repatriations of assets. Typically, there
is less publicly available information about a foreign company than about a U.S.
company, and foreign companies may be subject to less stringent reserve,
auditing and reporting requirements. It may be more difficult for the Funds'
agents to keep currently informed about corporate actions such as stock
dividends or other matters which may affect the prices of portfolio securities.
Communications between the United States and foreign countries may be less
reliable than within the United States, thus increasing the risk of delayed
settlements of portfolio transactions or loss of certificates for portfolio
securities. Individual foreign economies may differ favorably or unfavorably
from the U.S. economy in such respects as growth of gross national product, rate
of inflation, capital reinvestment, resource self-sufficiency and balance of
payments position.
Because investments in foreign securities will usually involve currencies of
foreign countries, and because the Funds may hold foreign currencies, the value
of the assets of the Funds as measured in U.S. dollars may be affected favorably
or unfavorably by changes in foreign currency exchange rates and exchange
control regulations, and the Funds may incur costs in connection with
conversions between various currencies. Although the Funds value their assets
daily in terms of U.S. dollars, they do not intend to convert their holdings of
foreign currencies into U.S. dollars on a daily basis. The Funds will do so from
time to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference (the "spread") between the prices at
which they are buying and selling various currencies. Thus, a dealer may offer
to sell a foreign currency to the Funds at one rate, while offering a lesser
rate of exchange should the Funds desire to resell that currency to the dealer.
The Funds will conduct their foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through entering into forward foreign currency exchange
contracts or purchasing or writing put or call options on foreign currencies.
16
<PAGE>
TRUSTEES AND OFFICERS
The Trustees and Officers of the Funds and their principal occupations
during the past five years are set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING
NAME, ADDRESS AND AGE POSITIONS HELD WITH THE FUND THE PAST FIVE YEARS
- ------------------------------- ---------------------------------- ---------------------------------------------
<S> <C> <C>
Thomas F. Marsico (1) Trustee, President, Chief Chairman and Chief Executive Officer, Marsico
1200 17th Street Executive Officer, and Chief Capital Management, LLC (September 1997 -
Suite 1300 Investment Officer present); Executive Vice President, Janus
Denver, CO 80202 Investment Fund (1990 - 1997).
DOB: 1955
Barbara M. Japha (1) Trustee, Vice President, and President and General Counsel, Marsico
1200 17th Street Secretary Capital Management, LLC (September 1997 -
Suite 1300 present); Vice President - Law, U S WEST,
Denver, CO 80202; Inc. (September 1989 - September 1997)
DOB: 1953
Theodore S. Halaby Trustee Partner, Halaby, Cross, Lichty & Schluster
1873 South Ballaire (law firm) (January 1996 - present);
Suite 1400 partner, Halaby, Cross, Lichty, Schluster &
Denver, CO 80222 Buck (law firm) (October 1994 - December
DOB: 1940 1995); Partner, Halaby, McCrea & Cross (law
firm) (more than five years).
Walter A. Koelbel, Jr. Trustee President, and other positions, Koelbel and
5291 Yale Circle Company (Real Estate Development Company)
Denver, CO 80222 (December 1976 - Present);
DOB: 1952
Larry A. Mizel Trustee President, M.D.C. Holdings, Inc.
Suite 900 (Homebuilding and Mortgage Banking) (March
3600 South Yosemite Street 1996-Present); Chairman and Chief Executive
Denver, CO 80237 Officer, M.D.C. Holdings, Inc. (More than
DOB: 1942 five years); President, C Ventures, Inc.;
President, Chester David, Inc.; President,
Courtney Lynn Inc.
</TABLE>
- ------------------------
(1) Trustees who are "interested persons" of the Funds, as defined in the
Investment Company Act of 1940, as amended, (the "1940 Act"). The Trustees
of the Funds who are officers or employees of the investment adviser receive
no remuneration from the Funds. Each of the other Trustees is paid an annual
retainer of $12,000 and a fee of $1,000 for each meeting attended and is
reimbursed for the expenses of attending meetings.
17
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS DURING
NAME, ADDRESS AND AGE POSITIONS HELD WITH THE FUND THE PAST FIVE YEARS
- ------------------------------- ---------------------------------- ---------------------------------------------
<S> <C> <C>
J. Jeffrey Riggs Trustee President, Essex Financial Group, Inc.
8400 East Prentice Avenue (Commercial Mortgage Bank) (More than five
Suite 1310 years); Principal, Metropolitan Homes, Inc.
Englewood, CO 80111 (January 1992 - Present); Principal, Baron
DOB: 1953 Properties, LLC (January 1997 - Present).
Christopher J. Marsico Vice President, Treasurer, and Vice President and Chief Operating Officer,
1200 17th Street Chief Financial Officer Marsico Capital Management, LLC (September
Suite 1300 1997 - present); Vice President, Corporate
Denver, CO 80202 Development, U S WEST, Inc. (February 1997
DOB: 1961 - September 1997); Vice President, U S WEST
Capital Corporation (January 1996 - January
1997); Vice President, U S WEST Financial
Services, Inc. (March 1986 - December
1996).
Christie L. Austin Assistant Treasurer Vice President and Chief Financial Officer,
1200 17th Street Marsico Capital Management, LLC (October
Suite 1300 1997 - Present); President and Chief
Denver, CO 80202 Financial Officer, Englewood Mortgage
DOB: 1956 Corporation (October 1986 - September
1997).
Steffanie Rufenacht Assistant Secretary Various positions with Janus Capital
1200 17th Street Corporation (February 1993 - October 1997).
Suite 1300
Denver, CO 80202
DOB: 1964
Sander M. Bieber Assistant Secretary Partner, Dechert Price & Rhoads (law firm)
1500 K Street, N.W. (more than five years).
Washington, D.C. 20005
DOB: 1950
</TABLE>
18
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
The Adviser of the Funds is Marsico Capital Management, LLC. Under the terms
of the Advisory Agreement, Marsico Capital furnishes overall investment
management for the Funds, provides research and credit analysis, oversees the
purchase and sales of portfolio securities, maintains books and records with
respect to the Funds' securities transactions and provides periodic and special
reports to the Board of Trustees as required.
For the advisory services provided and expenses assumed by it, the Adviser
has agreed to a fee from each Fund, computed daily and payable monthly, at an
annual rate of 0.85% of average daily net assets.
The Trust's Advisory Agreement, with respect to each Fund, will continue in
effect for a period of two years from its effective date. If not sooner
terminated, the Advisory Agreement will continue in effect for successive one
year periods thereafter, provided that each continuance is specifically approved
annually by (a) the vote of a majority of the Board of Trustees who are not
parties to the Advisory Agreement or interested persons (as defined in the 1940
Act), cast in person at a meeting called for the purpose of voting on approval,
and (b) either (i) with respect to a Fund, the vote of a majority of the
outstanding voting securities of that Fund, or (ii) the vote of a majority of
the Board of Trustees. The Advisory Agreement is terminable by vote of the Board
of Trustees, or with respect to a Fund, by the holders of a majority of the
outstanding voting securities of that Fund, at any time without penalty, on 60
days' written notice to the Adviser. The Adviser may also terminate its advisory
relationship with a Fund without penalty on 90 days' written notice to the
Trust. The Advisory Agreement terminates automatically in the event of its
assignment (as defined in the 1940 Act).
DISTRIBUTION PLAN
The Funds have adopted a Service and Distribution Plan (the "Plan") pursuant
to Rule 12b-1 under the 1940 Act. The Plan authorizes payments by the Funds in
connection with the distribution of their shares at an annual rate, as
determined from time-to-time by the Board of Trustees, or up to 0.25% of the
Funds' average daily net assets. Payments may be made by the Funds under the
Plan for the purpose of financing any activity primarily intended to result in
the sales of shares of the Funds as determined by the Board of Trustees. Such
activities typically include advertising; compensation for sales and sales
marketing activities of Financial Service Agents and others, such as dealers or
distributors; shareholder account servicing; production and dissemination of
prospectuses and sales and marketing materials; and capital or other expenses of
associated equipment, rent, salaries, bonuses, interest and other overhead. To
the extent any activity is one which the Funds may finance without a Plan, the
Funds may also make payments to finance such activity outside of the Plan and
not subject to its limitations. Payments under the Plan are not tied exclusively
to actual distribution and service expenses, and the payments may exceed
distribution and service expenses actually incurred.
Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act,
which includes requirements that the Board of Trustees receive and review at
least quarterly reports concerning the nature and qualification of expenses
which are made, that the Board of Trustees approve all agreements implementing
the Plan and that the Plan may be continued from year-to-year only if the Board
of Trustees concludes at least annually that continuation of the Plan is likely
to benefit shareholders.
PORTFOLIO TURNOVER
While it is difficult to predict, the investment adviser expects that the
annual portfolio turnover rates of each Fund will not exceed 100%. Higher
portfolio turnover rates (considered to be annual turnover rates of 100% or more
of a Fund's portfolio) involve greater transaction costs to the Funds and may
result in the realization of net capital gains which would be taxable to
shareholders when distributed.
19
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Trustees, decisions to buy and sell
securities for the Funds and negotiation of their brokerage commission rates are
made by the Adviser. Transactions on United States stock exchanges involve the
payment by the Funds of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
market but the price paid by the Funds usually includes an undisclosed dealer
commission or mark-up. In certain instances, the Funds may make purchases of
underwritten issues at prices which include underwriting fees.
In selecting a broker to execute each particular transaction, the Adviser
takes the following into consideration: the best net price available; the
reliability, integrity and financial condition of the broker; the size and
difficulty in executing the order; and the value of the expected contribution of
the broker to the investment performance of the Funds on a continuing basis.
Accordingly, the cost of the brokerage commissions to the Funds in any
transaction may be greater than that available from other brokers if the
difference is reasonably justified by other aspects of the portfolio execution
services offered. For example, the Adviser will consider the research and
investment services provided by brokers or dealers who effect or are parties to
portfolio transactions of the Funds or the Adviser's other clients. Such
research and investment services include statistical and economic data and
research reports on particular companies and industries as well as research
software. Subject to such policies and procedures as the Trustees may determine,
the Adviser shall not be deemed to have acted unlawfully or to have breached any
duty solely by reason of its having caused the Funds to pay a broker that
provides research services to the investment adviser an amount of commission for
effecting a portfolio investment transaction in excess of the amount another
broker would have charged for effecting that transaction, if the investment
adviser determines in good faith that such amount of commission was reasonable
in relation to the value of the research service provided by such broker viewed
in terms of either that particular transaction or the investment adviser's
ongoing responsibilities with respect to the Funds.
Research and investment information is provided by these and other brokers
at no cost to the Adviser and is available for the benefit of other accounts
advised by the investment adviser and its affiliates, and not all of the
information will be used in connection with the Funds. While this information
may be useful in varying degrees and may tend to reduce the Adviser's expenses,
it is not possible to estimate its value and in the opinion of the Adviser it
does not reduce the Adviser's expenses in a determinable amount. The extent to
which the Adviser makes use of statistical, research and other services
furnished by brokers is considered by the investment adviser in the allocation
of brokerage business but there is no formula by which such business is
allocated. The Adviser does so in accordance with its judgment of the best
interests of the Funds and their shareholders.
PERFORMANCE INFORMATION
From time to time, quotations of the Funds' performances may be included in
advertisements, sales literature or reports to shareholders or prospective
investors. These performance figures are calculated in the following manner.
AVERAGE ANNUAL TOTAL RETURN
Average annual total return is the average annual compounded rate of return
for periods of one year, five years and ten years, all ended on the last day of
a recent calendar quarter. Average annual total return quotations reflect
changes in the price of a Fund's shares and assume that all dividends and
capital gains distributions during the respective periods were reinvested in
Fund shares. Average annual total return is calculated by computing the average
annual compounded rates of return of a hypothetical investment over such
periods, according to the following formula (average annual total return is then
expressed as a percentage):
1/n
20
<PAGE>
T = (ERV/P) - 1
<TABLE>
<S> <C> <C>
Where:
T = average annual total return
P = a hypothetical initial investment of $1,000
n = number of years
ERV = ending redeemable value: ERV is the value, at the end of the
applicable period, of a hypothetical $1,000 investment made at the
beginning of the applicable period.
</TABLE>
It should be noted that average annual total return is based on historical
earnings and is not intended to indicate future performance. Average annual
total return for the Fund will vary based on changes in market conditions and
the level of the Fund's expenses.
In connection with communicating its average annual total return to current
or prospective shareholders, the Funds also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
COMPARISON OF PORTFOLIO PERFORMANCE
Comparison of the quoted non-standardized performance of various investments
is valid only if performance is calculated in the same manner. Since there are
different methods of calculating performance, investors should consider the
effect of the methods used to calculate performance when comparing performance
of a Fund with performance quoted with respect to other investment companies or
types of investments.
In connection with communicating its performance to current or prospective
shareholders, a Fund also may compare these figures to the performance of
unmanaged indices which may assume reinvestment of dividends or interest but
generally do not reflect deductions for administrative and management costs.
Examples include, but are not limited to the Dow Jones Industrial Average, the
Consumer Price Index, Standard & Poor's 500 Composite Stock Price Index (S&P
500), the NASDAQ OTC Composite Index, the NASDAQ Industrials Index, and the
Russell 2000 Index.
From time to time, in advertising, marketing and other Fund literature, the
performance of a Fund may be compared to the performance of broad groups of
mutual funds with similar investment goals, as tracked by independent
organizations such as Investment Company Data, Inc., Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., Morningstar, Inc., Value Line Mutual
Fund Survey and other independent organizations. When these organizations'
tracking results are used, a Fund will be compared to the appropriate fund
category, that is, by fund objective and portfolio holdings or the appropriate
volatility grouping, where volatility is a measure of a Fund's risk. From time
to time, the average price-earnings ratio and other attributes of a Fund's or
the model portfolio's securities, may be compared to the average price-earnings
ratio and other attributes of the securities that comprise the S&P 500.
Statistical and other information, as provided by the Social Security
Administration, may be used in marketing materials pertaining to retirement
planning in order to estimate future payouts of social security benefits.
Estimates may be used on demographic and economic data.
Marketing and other Fund literature may include a description of the
potential risks and rewards associated with an investment in a Fund. The
description may include a "risk/return spectrum" which compares a Fund to broad
categories of funds, such as money market, bond or equity funds, in terms of
potential risks and returns. Money market funds are designed to maintain a
constant $1.00 share price and have a fluctuating yield. Share price, yield and
total return of a bond fund will fluctuate. The share price
21
<PAGE>
and return of an equity fund also will fluctuate. The description may also
compare a Fund to bank products, such as certificates of deposit. Unlike mutual
funds, certificates of deposit are insured up to $100,000 by the U.S. government
and offer a fixed rate of return.
Risk/return spectrums also may depict funds that invest in both domestic and
foreign securities or a combination of bond and equity securities.
TAX STATUS
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, each Fund generally must, among other things, (a) derive in each
taxable year at least 90% of its gross income from dividends, interest, payments
with respect to certain securities loans, and gains from the sale or other
disposition of stock, securities or foreign currencies, or other income derived
with respect to its business of investing in such stock, securities or
currencies; and (b) diversify its holdings so that, at the end of each fiscal
quarter, (i) at least 50% of the market value of its assets is represented by
cash, U.S. Government securities, the securities of other regulated investment
companies and other securities, with such other securities limited, in respect
of any one issuer, to an amount not greater than 5% of the value of the Fund's
total assets and 10% of the outstanding voting securities of such issuer, and
(ii) not more than 25% of the value of its total assets is invested in the
securities of any one issuer (other than U.S. Government securities and the
securities of other regulated investment companies).
As a regulated investment company, a Fund generally will not be subject to
U.S. federal income tax on income and gains that it distributes to shareholders,
if at least 90% of each Fund's investment company taxable income (which
includes, among other items, dividends, interest and the excess of any net
short-term capital gains over net long-term capital losses) for the taxable year
is distributed. Each Fund intends to distribute substantially all of such
income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a nondeductible 4% excise tax at the
Fund level. To avoid the tax, each Fund must distribute during each calendar
year an amount equal to the sum of (1) at least 98% of its ordinary income (not
taking into account any capital gains or losses) for the calendar year, (2) at
least 98% of its capital gains in excess of its capital losses (adjusted for
certain ordinary losses) for a one-year period generally ending on October 31 of
the calendar year, and (3) all ordinary income and capital gains for previous
years that were not distributed during such years. To avoid application of the
excise tax, each Fund intends to make distributions in accordance with the
calendar year distribution requirement.
A distribution will be treated as paid on December 31 of the current
calendar year if it is declared by a Fund in October, November or December of
that year with a record date in such a month and paid by that Fund during
January of the following year. Such distributions will be taxable to
shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.
22
<PAGE>
ORIGINAL ISSUE DISCOUNT
Certain debt securities acquired by the Funds may be treated as debt
securities that were originally issued at a discount. Original issue discount
can generally be defined as the difference between the price at which a security
was issued and its stated redemption price at maturity. Although no cash income
is actually received by a Fund, original issue discount that accrues on a debt
security in a given year generally is treated for federal income tax purposes as
interest and, therefore, such income would be subject to the distribution
requirements applicable to regulated investment companies.
Some debt securities may be purchased by the Funds at a discount that
exceeds the original issue discount on such debt securities, if any. This
additional discount represents market discount for federal income tax purposes.
The gain realized on the disposition of any taxable debt security having market
discount generally will be treated as ordinary income to the extent it does not
exceed the accrued market discount on such debt security. Generally, market
discount accrues on a daily basis for each day the debt security is held by a
Fund at a constant rate over the time remaining to the debt security's maturity
or, at the election of a Fund, at a constant yield to maturity which takes into
account the semi-annual compounding of interest.
OPTIONS, FUTURES AND FOREIGN CURRENCY FORWARD CONTRACTS; STRADDLES
A Fund's transactions in foreign currencies, forward contracts, options and
futures contracts (including options and futures contracts on foreign
currencies) will be subject to special provisions of the Code that, among other
things, may affect the character of gains and losses realized by the Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to the Fund, defer Fund losses, and affect the
determination of whether capital gains and losses are characterized as long-term
or short-term capital gains or losses. These rules could therefore, in turn,
affect the character, amount, and timing of distributions to shareholders. These
provisions also may require the Fund to mark-to-market certain types of the
positions in its portfolio (i.e., treat them as if they were closed out), which
may cause the Fund to recognize income without receiving cash with which to make
distributions in amounts necessary to satisfy its distribution requirements for
relief from income and excise taxes. Each Fund will monitor its transactions and
may make such tax elections as Fund management deems appropriate with respect to
foreign currency, options, futures contracts, forward contracts, or hedged
investments. The Funds' status as regulated investment companies may limit their
transactions involving foreign currency, futures, options, and forward
contracts.
Certain transactions undertaken by a Fund may result in "straddles" for
federal income tax purposes. The straddle rules may affect the character of
gains (or losses) realized by a Fund, and losses realized by the Fund on
positions that are part of a straddle may be deferred under the straddle rules,
rather than being taken into account in calculating the taxable income for the
taxable year in which the losses are realized. In addition, certain carrying
charges (including interest expense) associated with positions in a straddle may
be required to be capitalized rather than deducted currently. Certain elections
that a Fund may make with respect to its straddle positions may also affect the
amount, character and timing of the recognition of gains or losses from the
affected positions.
CURRENCY FLUCTUATIONS--"SECTION 988" GAINS OR LOSSES
Each Fund will maintain accounts and calculate income by reference to the
U.S. dollar for U.S. federal income tax purposes. Some of a Fund's investments
will be maintained and income therefrom calculated by reference to certain
foreign currencies, and such calculations will not necessarily correspond to the
Fund's distributable income and capital gains for U.S. federal income tax
purposes as a result of fluctuations in currency exchange rates. Furthermore,
exchange control regulations may restrict the ability of a Fund to repatriate
investment income or the proceeds of sales of securities. These restrictions and
limitations may limit a Fund's ability to make sufficient distributions to
satisfy the 90% distribution
23
<PAGE>
requirement for qualification as a regulated investment company. Even if a fund
so qualified, these restrictions could inhibit its ability to distribute all of
its income in order to be fully relieved of tax liability.
Gains or losses attributable to fluctuations in exchange rates which occur
between the time a Fund accrues income or other receivables (including
dividends) or accrues expenses or other liabilities denominated in a foreign
currency and the time a Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of some investments, including debt securities and
certain forward contracts denominated in a foreign currency, gains or losses
attributable to fluctuations in the value of the foreign currency between the
date of the acquisition of the security or other instrument and the date of
disposition also are treated as ordinary gain or loss. These gains and losses,
referred to under the Code as "section 988" gains or losses, increase or
decrease the amount of the Funds' investment company taxable income available to
be distributed to its shareholders as ordinary income. If section 988 losses
exceed other investment company taxable income during a taxable year, a Fund
would not be able to make any ordinary dividend distributions, or distributions
made before the losses were realized would be recharacterized as a return of
capital to shareholders, or, in some cases, as capital gain, rather than as an
ordinary dividend.
PASSIVE FOREIGN INVESTMENT COMPANIES
Each Fund may invest in shares of foreign corporations which may be
classified under the Code as passive foreign investment companies ("PFICs"). In
general, a foreign corporation is classified as a PFIC if at least one-half of
its assets constitute investment-type assets, or 75% or more of its gross income
is investment-type income. If the Fund receives a so-called "excess
distribution" with respect to PFIC stock, the Fund itself may be subject to a
tax on a portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. In general, under the PFIC
rules, an excess distribution is treated as having been realized ratably over
the period during which the Fund held the PFIC shares. The Fund itself will be
subject to tax on the portion, if any, of an excess distribution that is so
allocated to prior Fund taxable years and an interest factor will be added to
the tax, as if the tax had been payable in such prior taxable years. Certain
distributions from a PFIC as well as gain from the sale of PFIC shares are
treated as excess distributions. Excess distributions are characterized as
ordinary income even though, absent application of the PFIC rules, certain
distributions might have been classified as capital gain.
The Fund may be eligible to elect alternative tax treatment with respect to
PFIC shares. Under an election that currently is available in some
circumstances, the Fund generally would be required to include in its gross
income its share of the earnings of a PFIC on a current basis, regardless of
whether distributions were received from the PFIC in a given year. If this
election were made, the special rules, discussed above, relating to the taxation
of excess distributions, would not apply. In addition, another election would
involve marking to market the Fund's PFIC shares at the end of each taxable
year, with the result that unrealized gains would be treated as though they were
realized and reported as ordinary income. Any mark-to-market losses and any loss
from an actual disposition of Fund shares would be deductible as ordinary losses
to the extent of any net mark-to-market gains included in income in prior years.
Because the application of the PFIC rules may affect, among other things,
the character of gains, the amount of gain or loss and the timing of the
recognition of income with respect to PFIC shares, as well as subject the Fund
itself to tax on certain income from PFIC shares, the amount that must be
distributed to shareholders, and which will be taxed to shareholders as ordinary
income or long-term capital gains, may be increased or decreased substantially
as compared to a fund that did not invest in PFIC shares.
24
<PAGE>
DISTRIBUTIONS
Distributions of investment company taxable income are taxable to a U.S.
shareholder as ordinary income, whether paid in cash or shares. Dividends paid
by a Fund to a corporate shareholder, to the extent such dividends are
attributable to dividends received from U.S. corporations by a Fund, may qualify
for the dividends received deduction. However, the revised alternative minimum
tax applicable to corporations may reduce the value of the dividends received
deduction. Distributions of net capital gains (the excess of net long-term
capital gains over net short-term capital losses), if any, designated by a Fund
as capital gain dividends, are taxable to shareholders at the applicable
mid-term or long-term capital gains rate, whether paid in cash or in shares,
regardless of how long the shareholder has held a Fund's shares, and they are
not eligible for the dividends received deduction. Shareholders will be notified
annually as to the U.S. federal tax status of distributions, and shareholders
receiving distributions in the form of newly issued shares will receive a report
as to the net asset value of the shares received.
If the net asset value of shares is reduced below a shareholder's cost as a
result of a distribution by a Fund, such distribution generally will be taxable
even though it represents a return of invested capital. Investors should be
careful to consider the tax implications of buying shares of a Fund just prior
to a distribution. The price of shares purchased at this time may reflect the
amount of the forthcoming distribution. Those purchasing just prior to a
distribution will receive a distribution which generally will be taxable to
them.
DISPOSITION OF SHARES
Upon a redemption, sale or exchange of shares of a Fund, a shareholder will
realize a taxable gain or loss depending upon the amount realized and the
shareholder's basis in the shares. A gain or loss will be treated as capital
gain or loss if the shares are capital assets in the shareholder's hands and
generally will be long-term or short-term, depending upon the shareholder's
holding period for the shares. Any loss realized on a redemption, sale or
exchange will be disallowed to the extent the shares disposed of are replaced
(including through reinvestment of dividends) within a period of 61 days
beginning 30 days before and ending 30 days after the shares are disposed of. In
such a case, the basis of the shares acquired will be adjusted to reflect the
disallowed loss. Any loss realized by a shareholder on the disposition of a
Fund's shares held by the shareholder for six months or less will be treated for
tax purposes as a long-term capital loss to the extent of any distributions of
capital gain dividends received or treated as having been received by the
shareholder with respect to such shares.
BACKUP WITHHOLDING
The Funds will be required to report to the Internal Revenue Service (the
"IRS") all distributions and gross proceeds from the redemption of the Funds'
shares, except in the case of certain exempt shareholders. All distributions and
proceeds from the redemption of a Fund's shares will be subject to withholding
of federal income tax at a rate of 31% ("backup withholding") in the case of
non-exempt shareholders if (1) the shareholder fails to furnish the Funds with
and to certify the shareholder's correct taxpayer identification number or
social security number, (2) the IRS notifies the shareholder or the Funds that
the shareholder has failed to report properly certain interest and dividend
income to the IRS and to respond to notices to that effect, or (3) when required
to do so, the shareholder fails to certify that he or she is not subject to
backup withholding. If the withholding provisions are applicable, any such
distributions or proceeds, whether reinvested in additional shares or taken in
cash, will be reduced by the amounts required to be withheld.
OTHER TAXATION
Distributions may also be subject to additional state, local and foreign
taxes depending on each shareholder's particular situation. Non-U.S.
shareholders may be subject to U.S. tax rules that differ
25
<PAGE>
significantly from those summarized above. This discussion does not address all
of the tax consequences applicable to the Funds or shareholders, and
shareholders are advised to consult their own tax advisers with respect to the
particular tax consequences to them of an investment in a Fund.
NET ASSET VALUE
A Fund's net asset value per share will be calculated separately from the
per share net asset value of the other fund of the Trust. "Assets belonging to"
a fund consist of the consideration received upon the issuance of shares of the
particular fund together with all net investment income, earnings, profits,
realized gains/losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds, and a portion of any general
assets of the Trust not belonging to a particular series. Each fund will be
charged with the direct liabilities of that fund and with a share of the general
liabilities of the Trust's funds. Subject to the provisions of the Charter,
determinations by the Trustees as to the direct and allocable expenses, and the
allocable portion of any general assets, with respect to a particular fund are
conclusive.
CAPITAL STRUCTURE
DESCRIPTION OF SHARES
The Trust is an open-end management investment company organized as a
Delaware Business Trust on October 1, 1997. The Trust's Trust Instrument
authorizes the Board of Trustees to issue an unlimited number of shares of
beneficial interest. Each share of the Funds has equal voting, dividend,
distribution and liquidation rights.
Shares of the Trust have no preemptive rights and only such conversion or
exchange rights as the Board may grant in its discretion. When issued for
payment as described in the Prospectus, the Trust's shares will be fully paid
and non-assessable.
Shareholders are entitled to one vote for each full share held, and
fractional votes for fractional shares held, and will vote in the aggregate and
not by class or series except as otherwise required by the 1940 Act or
applicable Delaware law.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as the Trust shall not be deemed to have been effectively acted
upon unless approved by a majority of the outstanding shares of each fund
affected by the matter. A fund is affected by a matter unless it is clear that
the interests of each Fund in the matter are substantially identical or that the
matter does not affect any interest of the Fund. Under Rule 18f-2 the approval
of an investment advisory agreement or 12b-1 distribution plan or any change in
a fundamental investment policy would be effectively acted upon with respect to
a fund only if approved by a majority of the outstanding shares of such Fund.
However, the rule also provides that the ratification of independent
accountants, the approval of principal underwriting contracts and the election
of directors may be effectively acted upon by shareholders of the Trust voting
without regard to particular funds.
Notwithstanding any provision of Delaware law requiring for any purpose the
concurrence of a proportion greater than a majority of all votes entitled to be
cast at a meeting at which a quorum is present, the affirmative vote of the
holders of a majority of the total number of shares of the Trust outstanding (or
of a class or series of the Trust, as applicable) will be effective, except to
the extent otherwise required by the 1940 Act and rules thereunder. In addition,
the Trust Instrument provides that, to the extent consistent with Delaware law
and other applicable law, the By-Laws may provide for authorization to be given
by the affirmative vote of the holders of less than a majority of the total
number of shares of the Trust outstanding (or of a class or series).
26
<PAGE>
If requested to do so by the holders of at least 10% of the Trust's
outstanding shares, the Trust will call a meeting of shareholders for the
purpose of voting upon the question of removal of a Trustee, and to assist in
communications with other shareholders as required by Section 16(c) of the 1940
Act.
HOW TO REDEEM SHARES
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Funds, under the following conditions
authorized by the 1940 Act: (1) for any period (a) during which the New York
Stock Exchange is closed, other than customary weekend or holiday closings, or
(b) during which trading on the New York Stock Exchange is restricted; (2) for
any period during which an emergency exists as a result of which (a) disposal by
the Fund of securities owned by it is not reasonably practical, or (b) it is not
reasonably practical for a Fund to determine the fair value of its net assets;
and (3) for such other periods as the Securities and Exchange Commission may by
order permit for the protection of the Fund's shareholders.
The value of shares of a Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of that Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of a Fund, the loss may be disallowed for tax purposes if shares of the
same Fund are purchased within (before or after) 30 days of the sale.
It is possible that conditions may exist in the future which would, in the
opinion of the Board of Trustees, make it undesirable for the Funds to pay for
redemptions in cash. In such cases the Board may authorize payment to be made in
portfolio securities of the Funds. However, the Funds are obligated under the
1940 Act to redeem for cash all shares presented for redemption by any one
shareholder up to $250,000 (or 1% of a Fund's net assets if that is less) in any
90-day period. Securities delivered in payment of redemptions are valued at the
same value assigned to them in computing the net asset value per share.
Shareholders receiving such securities generally will incur brokerage costs on
their sales.
HOW TO EXCHANGE
As explained in the Prospectus, the Trust offers an exchange program whereby
shares of any Marsico Fund may be exchanged for shares of another Marsico Fund
that is available for investment at any time. In addition, shareholders may
exchange all or a portion of their investment from each Fund to the Northern
Money Market Fund, as provided in the Prospectus. Sunstone Investor Services,
LLC, the Funds' transfer agent, receives a service fee from the Northern Money
Market Fund at the annual rate of 0.25 of 1% of the average daily net asset
value of the shares of the Funds exchanged into the Northern Money Market Fund.
Sunstone Investor Services, LLC is an affiliate of the Funds' administrator and
distributor.
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities of the Funds as of December 8, 1997,
set forth below, has been so included in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in accounting and auditing.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Board of Trustees
of The Marsico Investment Fund
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of Marsico
Focus Fund and Marsico Growth & Income Fund (constituting The Marsico Investment
Fund, hereafter referred to as the "Fund") at December 8, 1997, in conformity
with generally accepted accounting principles. This financial statement is the
responsibility of the Fund's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, CO
December 8, 1997
28
<PAGE>
THE MARISCO INVESTMENT FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 8, 1997
ASSETS
<TABLE>
<CAPTION>
MARSICO MARSICO GROWTH &
FOCUS FUND INCOME FUND
----------- -----------------
<S> <C> <C>
Cash.............................................................................. $ 50,000 $ 50,000
Prepaid initial registration expenses............................................. 22,643 22,643
Deferred organizational costs..................................................... 69,500 69,500
----------- --------
TOTAL ASSETS.................................................................. 142,143 142,143
----------- --------
LIABILITIES
Accrued professional fees......................................................... 59,000 59,000
Accounts Payable.................................................................. 2,500 2,500
Payable to Trustees............................................................... 8,000 8,000
Payable to Advisor................................................................ 22,643 22,643
----------- --------
TOTAL LIABILITIES............................................................. 92,143 92,143
NET ASSETS........................................................................ $ 50,000 $ 50,000
----------- --------
----------- --------
Shares of beneficial interest; unlimited authorized shares........................ $ 50,000 $ 50,000
----------- --------
Shares outstanding................................................................ 5000 5000
----------- --------
----------- --------
Net asset value, redemption price and offering price per share.................... $ 10.00 $ 10.00
----------- --------
----------- --------
</TABLE>
The accompanying notes to the Statement of Assets and Liabilities are an
integral part of this statement.
29
<PAGE>
MARISCO INVESTMENT FUND
BALANCE SHEET DETAIL
DECEMBER 8, 1997
<TABLE>
<S> <C>
DEFERRED ORGANIZATIONAL COSTS:
Legal--incurred and billed................................................... $27,997.63
Incurred and un-billed....................................................... $67,000.00
To be incurred............................................................... $20,000.00
----------
Total Legal................................................................ $114,997.63
----------
AUDIT FEES..................................................................... $ 3,000.00
Trustee's Fees--organizational meeting......................................... $ 4,000.00
Sunstone Financial--Organizational Fee......................................... $ 5,000.00
----------
TOTAL DEFERRED ORGANIZATIONAL COSTS............................................ $126,997.63
----------
----------
REGISTRATION FEES--PD BY ADVISOR...............................................
----------
Both funds................................................................. 45,285.00
----------
----------
</TABLE>
30
<PAGE>
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 8, 1997
NOTE 1--ORGANIZATION AND REGISTRATION
The Marsico Investment Fund (the "Trust") was established on October 1,
1997, as a Delaware Business Trust and is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company. The Trust currently offers two investment portfolios, the
Marsico Focus Fund and the Marsico Growth & Income Fund (collectively, the
"Funds" or individually, the "Fund"). The Trust has had no operations other than
those relating to organizational matters, including the sale of 5,000 shares of
beneficial interest to each Fund to capitalize the Funds, which were sold to
Marsico Capital Management (the "Advisor" or "Marsico Capital") on December 4,
1997, for cash in the amount of $100,000.
Estimated organization costs of $139,000 will be amortized on a straight
line basis over 60 months.
NOTE 2--INVESTMENT ADVISORY AND OTHER AGREEMENTS
Marsico Capital serves as the Trust's investment advisor. As compensation
for its services to the Trust, Marsico Capital receives an investment advisory
fee at an annual rate of 0.85% of the average daily net assets of each Fund
which is accrued daily and paid monthly.
The Trust has entered into an administration agreement with Sunstone
Financial Group, Inc. (the "Administrator"). The administrative services
agreement provides for an annual fee of 0.14% on each Fund's first $50 million
of average daily net assets and 0.10% from $50 million to $100 million of
average daily net assets, 0.04% from $100 million to $350 million and 0.01% on
average daily net assets over $350 million, and is subject to a minimum annual
fee of $62,500 per Fund.
The Trust has entered into an agreement with State Street Bank and Trust
Company ("State Street") to provide custodial services and fund accounting. The
Trust pays a fee at an annual rate of 0.04% on each Fund's first $100 million of
average daily net assets, 0.02% on the next $100 million, and 0.01% on the
balance of average daily net assets. The Fund also pays for various
out-of-pocket expenses that are estimated to be 0.02% of average daily net
assets.
The Trust has entered into an agreement with Sunstone Investor Services LLC
("Transfer Agent") to provide transfer agency services. The Trust pays an annual
base fee of $14 per shareholder account open and $3 per shareholder account
closed, with a minimum annual fee of $15,000 per fund. Transfer Agent is also
paid certain fees related to set-up costs, processing and out-of-pocket
expenses.
The Trust has entered into a distribution agreement with Sunstone
Distribution Services, LLC (the "Distributor"). Under the agreement, the
Distributor serves as each Fund's principal underwriter and acts as exclusive
agent for the Funds in selling their shares to the public. For the marketing and
distribution services provided, the Funds will pay the Distributor a fee at the
annual rate of 0.0175% of each Fund's average daily net assets subject to a
minimum annual fee of $15,000 per Fund. These fees are limited to .25% of each
Fund's average daily net assets.
Certain officers and directors of Marsico Capital are also officers and
trustees of the Trust.
31
<PAGE>
APPENDIX
RATINGS OF INVESTMENT SECURITIES
A rating of a rating service represents the service's opinion as to the
credit quality of the security being rated. However, the ratings are general and
are not absolute standards of quality or guarantees as to the creditworthiness
of an issuer. Consequently, the Fund's investment adviser believes that the
quality of debt securities in which the Fund invests should be continuously
reviewed. A rating is not a recommendation to purchase, sell or hold a security,
because it does not take into account market value or suitability for a
particular investor. When a security has received a rating from more than one
service, each rating should be evaluated independently. Ratings are based on
current information furnished by the issuer or obtained by the ratings services
from other sources which they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.
The following is a description of the characteristics of ratings used by
Moody's Investors Service, Inc. and Standard & Poor's Corporation.
MOODY'S INVESTORS SERVICE, INC. RATINGS
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt-edge".
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba--Bonds rated Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high
degree. Such bonds are often in default or have other marked shortcomings.
A-1
<PAGE>
STANDARD & POOR'S CORPORATION RATING
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest
and differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation among such bonds and CC the highest degree of
speculation. Although such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
A-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<S> <C> <C>
(a) Financial Statements
The Statement of Assets and Liabilities
Report of Independent Accountants
Notes to Statement of Assets and Liabilities
(b) Exhibits
(1)(a) Trust Instrument(1)
(b) Certificate of Trust(1)
(2) By-Laws(1)
(3) Not Applicable
(4) Not Applicable
(5)(a) Investment Advisory Agreement between Registrant and Marsico Capital
Management, LLC with respect to the Marsico Focus Fund
(b) Investment Advisory Agreement between Registrant and Marsico Capital
Management, LLC with respect to the Growth & Income Fund
(6) Distribution Agreement
(7) Not Applicable
(8) Custodian Agreement
(9)(a) Administration Agreement
(b) Transfer Agency Agreement
(10) Opinion and consent of Counsel
(11) Consent of Independent Auditors
(12) Not Applicable
(13) Initial Capital Agreement
(14) IRA Custodial Agreement and Disclosure Statement
(15) Distribution Plan and form of dealer agreement
(16) Computation of Performance(2)
(18) Not Applicable
(27) Financial Data Schedules(2)
</TABLE>
- ------------------------
(1) Filed in Registrant's initial Registration Statement on October 1, 1997 and
incorporated by reference herein.
(2) To be filed by amendment.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
C-1
<PAGE>
ITEM 26. NUMBER OF RECORD HOLDERS
As of the date of this Registration Statement, there is one shareholder of
record of the Registrant's shares.
ITEM 27. INDEMNIFICATION
Reference is made to Article IX, Section 2, of the Registrant's Trust
Instrument.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
Registrant by the Registrant pursuant to the Trust Instrument or otherwise, the
Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, officers or controlling
persons of the Registrant in connection with the successful defense of any act,
suit or proceeding) is asserted by such trustees, officers or controlling
persons in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issues.
Article IX, Section 2 of the Trust Instrument provides in part that a
Trustee, officer, employee, manager, or agent of the Trust shall be indemnified
by the Trust against liability and all expenses reasonably incurred or paid by
such person in connection with any claim, action, suit, or proceeding in which
such person becomes involved because of his or her official relationship to the
Trust unless: (i) such person was adjudicated to be liable to the Trust or its
shareholders by reason of willful misfeanance, bad faith, gross negligence, or
reckless disregard for his duties to the Trust; or (ii) in the event of a
Settlement unless one of the conditions set forth in the Trust Instrument is
satisfied.
Section 5 of the Distribution Agreement between the Registrant and Sunstone
Distribution Services, LLC provides for indemnification of Sunstone Distribution
Services, LLC, an affiliate of Sunstone, in connection with certain claims and
liabilities to which Sunstone Distribution Services, LLC, in its capacity as
Registrant's Distributor, may be subject. A copy of the Distribution Agreement
is incorporated by reference herein as Exhibit 6.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Marsico Capital Management, LLC serves as the investment adviser for the
Registrant. The business and other connections of Marsico Capital Management,
LLC are set forth in the Uniform Application for Investment Adviser Registration
("Form ADV") of Marsico Capital Management, LLC as currently filed with the SEC
which is incorporated by reference herein.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Sunstone Distribution Services, LLC currently serves as distributor of
the shares of The Northern Funds, The Haven Capital Management Trust, The
Garzarelli Funds, The Green Century Funds and First Omaha Funds, Inc.
C-2
<PAGE>
(b) To the best of Registrant's knowledge, the executive officers of
Sunstone Distribution Services, LLC, distributor for Registrant, are as follows:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES WITH
NAME AND PRINCIPAL SUNSTONE DISTRIBUTION SERVICES, POSITIONS AND OFFICES
BUSINESS ADDRESS LLC WITH REGISTRANT
- ------------------------ --------------------------------- ---------------------
<S> <C> <C>
Miriam M. Allison President and Member None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
Daniel S. Allison Secretary and Member None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
Mary M. Tenwinkel Vice President None
207 E. Buffalo Street
Suite 400
Milwaukee, WI 53202
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books or other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder
are in the possession of the Registrant, at Registrant's offices at 1200 17th
Street, Suite 1300, Denver, CO 80202, except (1) records held and maintained by
State Street Bank and Trust Company relating to its functions as custodian; (2)
records held and maintained by Sunstone Financial Group, Inc., 207 East Buffalo
Street, Suite 400, Milwaukee, Wisconsin 53202, relating to its functions as
administrator, (3) records held and maintained by Sunstone Investor Services,
LLC, 207 East Buffalo Street, Suite 400, Milwaukee, Wisconsin 53202, relating to
its role as transfer agent, and (4) records held and maintained by State Street
Bank and Trust Company relating to its role as fund accountant.
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Not Applicable.
(b) Registrant undertakes to file a Post-Effective Amendment, using
financial statements which need not be certified, within four to six
months from the effective date of this Registration Statement under the
Securities Act of 1933 or the date on which Registrant becomes
operational.
(c) Registrant undertakes to furnish each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge, in the event that the
information called for by Item 5A of Form N-1A has been presented in the
Registrant's latest annual report to shareholders.
(d) Registrant undertakes to call a meeting of Shareholders for the purpose
of voting upon the question of removal of a Trustee or Trustees when
requested to do so by the holders of at least 10% of the Registrant's
outstanding shares of beneficial interest and in connection with such
meeting to comply with the shareholders communications provisions of
Section 16(c) of the Investment Company Act of 1940.
C-3
<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 Washington in the District of Columbia, on this 12th
day of December, 1997.
THE MARSICO INVESTMENT FUND
By: /s/ THOMAS F. MARSICO
------------------------------------------
Thomas F. Marsico,*
PRESIDENT
*By: /s/ SANDER M. BIEBER
------------------------------------------
Sander M. Bieber
As 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 date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------------- ------------------------------ ------------------
<C> <C> <S> <C>
/s/ THOMAS F. MARSICO Trustee and President
--------------------------------------- (Principal Executive December 12, 1997
Thomas F. Marsico* Officer)
/s/ BARBARA M. JAPHA
--------------------------------------- Trustee December 12, 1997
Barbara M. Japha*
/s/ THEODORE S. HALABY
--------------------------------------- Trustee December 12, 1997
Theodore S. Halaby*
/s/ WALTER A. KOELBEL, JR.
--------------------------------------- Trustee December 12, 1997
Walter A. Koelbel, Jr.*
/s/ LARRY A. MIZEL
--------------------------------------- Trustee December 12, 1997
Larry A. Mizel*
/s/ J. JEFFREY RIGGS
--------------------------------------- Trustee December 12, 1997
J. Jeffrey Riggs*
/s/ CHRISTOPHER J. MARSICO Treasurer (Principal Financial
--------------------------------------- and Accounting Officer) December 12, 1997
Christopher J. Marsico*
*By: /s/ SANDER M. BIEBER
----------------------------------
Sander M. Bieber
As ATTORNEY-IN-FACT
</TABLE>
II-1
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Barbara M. Japha, Sander M. Bieber, Paul F. Roye and Patrick W. D.
Turley, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution for him in his name, place, and
stead, to sign any and all registration statements applicable to The Marsico
Investment Fund and any amendments or supplements thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
December 3, 1997 /s/ THOMAS F. MARSICO
----------------------------------------------
Thomas F. Marsico
II-2
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Barbara M. Japha, Sander M. Bieber, Paul F. Roye and Patrick W. D.
Turley, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution for him in his name, place, and
stead, to sign any and all registration statements applicable to The Marsico
Investment Fund and any amendments or supplements thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
December 3, 1997 /s/ BARBARA M. JAPHA
----------------------------------------------
Barbara M. Japha
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Barbara M. Japha, Sander M. Bieber, Paul F. Roye and Patrick W. D.
Turley, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution for him in his name, place, and
stead, to sign any and all registration statements applicable to The Marsico
Investment Fund and any amendments or supplements thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
December 3, 1997 /s/ THEODORE S. HALABY
----------------------------------------------
Theodore S. Halaby
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Barbara M. Japha, Sander M. Bieber, Paul F. Roye and Patrick W. D.
Turley, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution for him in his name, place, and
stead, to sign any and all registration statements applicable to The Marsico
Investment Fund and any amendments or supplements thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
December 3, 1997 /s/ WALTER A. KOELBEL, JR.
----------------------------------------------
Walter A. Koelbel, Jr.
II-5
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Barbara M. Japha, Sander M. Bieber, Paul F. Roye and Patrick W. D.
Turley, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution for him in his name, place, and
stead, to sign any and all registration statements applicable to The Marsico
Investment Fund and any amendments or supplements thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
December 3, 1997 /s/ LARRY A. MIZEL
----------------------------------------------
Larry A. Mizel
II-6
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and
appoints Barbara M. Japha, Sander M. Bieber, Paul F. Roye and Patrick W. D.
Turley, and each of them, his true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution for him in his name, place, and
stead, to sign any and all registration statements applicable to The Marsico
Investment Fund and any amendments or supplements thereto, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
December 3, 1997 /s/ J. JEFFREY RIGGS
----------------------------------------------
J. Jeffrey Riggs
II-7
<PAGE>
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
OF THE MARSICO FOCUS FUND
OF THE MARSICO INVESTMENT FUND
AGREEMENT, made this ____ day of ___________, 1997, between The Marsico
Investment Fund (the "Trust"), on behalf of the Marsico Focus Fund (the "Fund"),
and Marsico Capital Management, LLC ("MCM"), a Delaware limited liability
company.
WHEREAS, the Trust is a Delaware business trust authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund is
a series of the Trust;
WHEREAS, MCM is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS, the Trust wishes to retain MCM to render investment management
services to the Fund, and MCM is willing to furnish such services to the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Trust and MCM as follows:
1. APPOINTMENT
The Trust hereby appoints MCM to act as investment adviser and
administrator to the Fund for the periods and on the terms set forth herein.
MCM accepts the appointment and agrees to furnish the services set forth herein
for the compensation provided herein.
2. SERVICES AS INVESTMENT ADVISER
Subject to the general supervision and direction of the Board of Trustees
of the Trust, MCM will (a) manage the Fund in accordance with the Fund's
investment objectives and policies as stated in the Fund's Prospectus and the
Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Fund; (c) place purchase and sale orders on behalf of the
Fund; and (d) employ portfolio managers and securities analysts to provide
research services to the Fund. In providing those services, MCM will provide
the Fund with ongoing research, analysis, advice, and judgments regarding
individual investments, general economic conditions and trends and long-range
investment policy. In addition, MCM will furnish the Fund with whatever
statistical information the Fund may reasonably request with respect to the
securities that the Fund may hold or contemplate purchasing.
3. SERVICES AS MANAGER
Subject to the general supervision and direction of the Board of Trustees
of the Trust, MCM will (a) assist in supervising and managing all aspects of the
Fund's operations; (b) maintain such books and records of the Fund as may be
required by applicable federal or state law, or supervise, as the case may be,
the maintenance by third parties approved by the Trust, of
<PAGE>
such books and records; (c) supply the Fund with office facilities, data
processing services, clerical, accounting and bookkeeping services, internal
executive and administrative services, and stationery and office supplies; (d)
prepare, file, and arrange for the distribution of proxy materials and periodic
reports to the shareholders of the Fund as required by applicable law or
supervise, as the case may be, the distribution of proxy materials by third
parties to the shareholders of the Fund as required by applicable law; (e)
prepare or supervise the preparation by third parties approved by the Trust of
all federal, state, and local tax returns and reports of the Fund required by
applicable law; (f) prepare and arrange for the filing of such registration
statements and other documents as the Securities and Exchange Commission and
other federal and state regulatory authorities may require by applicable law;
(g) render to the Board of Trustees of the Trust such periodic and special
reports respecting the Fund as the Trustees may reasonably request; and (h) make
available its officers and employees to the Board of Trustees and officers of
the Trust for consultation and discussions regarding the administration of the
Fund.
4. PERFORMANCE OF DUTIES BY MCM
MCM further agrees that, in performing its duties set forth in Sections 2
and 3 above, and elsewhere hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code") and all
other applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Trustees;
(b) use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) maintain books and records with respect to the Fund's securities
transactions, render to the Board of Trustees of the Trust such periodic and
special reports as the Board may reasonably request, and keep the Trustees
informed of developments materially affecting the Fund's portfolio;
(d) make available to the Trust, promptly upon request, such copies of its
investment records and ledgers with respect to the Fund as may be required to
assist the Trust in its compliance with applicable laws and regulations. MCM
will furnish the Trustees with such periodic and special reports regarding the
Fund as they may reasonably request;
(e) immediately notify the Trust in the event that MCM or any of its
affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents MCM from serving as investment adviser or
administrator pursuant to this Agreement; or (2) becomes aware that it is the
subject of an administrative proceeding or enforcement action by the Securities
and Exchange Commission or other regulatory authority. MCM further agrees to
notify the Trust immediately of any material fact known to MCM respecting or
relating to MCM that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but
2
<PAGE>
that is required to be disclosed therein, and of any statement contained therein
that becomes untrue in any material respect.
MCM, at its discretion, may enter into contracts with third parties for the
performance of the services to be provided by it under this Agreement.
5. DOCUMENTS
The Fund has delivered properly certified or authenticated copies of each
of the following documents to MCM and will deliver to it all future amendments
and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust authorizing
the appointment of MCM and approving the form of this Agreement;
(b) The Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
6. BROKERAGE
In selecting brokers or dealers to execute transactions on behalf of the
Fund, MCM will use its best efforts to seek the best overall terms available.
In assessing the best overall terms available for any Fund transaction, MCM will
consider all factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, MCM is
authorized to consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) provided to the Fund and/or other accounts over which MCM or its
affiliates exercise investment discretion. In accordance with Section 11(a) of
the 1934 Act and Rule 11a2-2(T) thereunder, and subject to any other applicable
laws and regulations, MCM and its affiliates are authorized to effect portfolio
transactions for the Fund as agent and to retain usual and customary brokerage
commissions on such transactions.
7. RECORDS
MCM agrees to maintain and to preserve for the periods prescribed under the
1940 Act any such records as are required to be maintained by MCM with respect
to the Fund by the 1940 Act. MCM further agrees that all records which it
maintains for the Fund are the property of the Fund and it will promptly
surrender any of such records upon request.
3
<PAGE>
8. STANDARD OF CARE
MCM shall exercise its best judgment in rendering the services under this
Agreement. MCM shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund or the Fund's shareholders in connection
with the matters to which this Agreement relates, provided that nothing herein
shall be deemed to protect or purport to protect MCM against any liability to
the Fund or to its shareholders to which MCM would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of MCM's reckless disregard of its
obligations and duties under this Agreement. As used in this Section 8, the
term "MCM" shall include any officers, directors, employees, or other affiliates
of MCM performing services with respect to the Fund.
9. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay MCM a fee at an annual rate equal to ___% of the average daily net
assets of the Fund. This fee shall be computed and accrued daily and payable
monthly. For the purpose of determining fees payable to MCM, the value of the
Fund's average daily net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information.
10. EXPENSES
MCM will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees and expenses of Trustees of the Trust who are not
officers, directors, or employees of MCM; Securities and Exchange Commission
fees and state blue sky qualification fees; charges of custodians and transfer
and dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of membership in any
industry trade groups; costs of maintenance of the Fund's existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; charges of independent pricing services; costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers or Board of Trustees of the Trust; and any extraordinary expenses. In
addition, the Fund will pay distribution fees pursuant to a Distribution Plan
adopted under Rule 12b-1 of the 1940 Act.
11. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The investment advisory and administrative services provided by MCM to the
Fund under this Agreement are not to be deemed exclusive, and MCM, or any
affiliate thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of the Fund) and to engage in other activities, so
long as it services hereunder are not impaired thereby.
4
<PAGE>
12. REIMBURSEMENT OF ORGANIZATION EXPENSES
The Trust hereby agrees to reimburse MCM for the organization expenses of,
and the expenses incurred in connection with, the initial offering of the shares
of the Fund.
13. DURATION AND TERMINATION
This Agreement shall become effective on __________, 1997 and shall
continue in effect, unless sooner terminated as provided herein, for two years
from such date and shall continue from year to year thereafter, provided each
continuance is specifically approved at least annually by (i) the vote of a
majority of the Board of Trustees of the Trust or (ii) a vote of a "majority"
(as defined in the 1940 Act) of the Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days' written notice by the Board of Trustees of
the Trust or by vote of holders of a majority of the Fund's shares or upon
ninety (90) days' written notice by MCM. This Agreement will also terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
14. AMENDMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of (i) a majority of the outstanding voting securities of
the Fund, and (ii) a majority of the Trustees of the Trust, including a majority
of Trustees who are not interested persons of any party to this Agreement, cast
in person at a meeting called for the purpose of voting on such approval, if
such approval is required by applicable law.
15. USE OF THE NAME "MARSICO."
MCM has consented to and granted a non-exclusive license for the use by the
Trust and by each Series thereof to the phrase "Marsico Capital" or the
identifying word "Marsico" in the name of the Trust and of each Series or any
logo or symbol authorized by MCM. Such consent is conditioned upon the Trust's
employment of MCM or its affiliates as investment adviser to the Trust and to
each Series. As between MCM and the Trust, MCM shall control the use of such
name insofar as such name contains the phrase "Marsico Capital" or the
identifying word "Marsico." MCM may from time to time use the phrase "Marsico
Capital" or the identifying word "Marsico" in other connection and for other
purposes, including without limitation in the names of other investment
companies, corporations or businesses that it may manage, advise, sponsor or own
or in which it may have a financial interest. MCM may require the Trust or any
Series to cease using the phrase "Marsico Capital" or the identifying word
"Marsico" in the name of the Trust or any Series or any logo or symbol
authorized by Marsico Capital if the Trust or Series ceases to employ MCM or an
affiliate thereof as investment adviser.
5
<PAGE>
16. MISCELLANEOUS
a. This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
b. Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
c. This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
d. This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Delaware.
e. If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than those as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
f. Notices of any kind to be given to MCM by the Trust shall be in
writing and shall be duly given if mailed or delivered to MCM at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, Attn: Barbara M. Japha, or at such
other address or to such individual as shall be specified by MCM to the Trust.
Notices of any kind to be given to the Trust by MCM shall be in writing and
shall be duly given if mailed or delivered to 1200 17th Street, Suite 1300,
Denver, Colorado 80202, Attn: Christopher J. Marsico, or at such other address
or to such individual as shall be specified by the Trust to MCM.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MARSICO INVESTMENT FUND
ON BEHALF OF
THE MARSICO FOCUS FUND
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
6
<PAGE>
MARSICO CAPITAL MANAGEMENT, LLC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
7
<PAGE>
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
OF THE MARSICO GROWTH AND INCOME FUND
OF THE MARSICO INVESTMENT FUND
AGREEMENT, made this ____ day of ___________, 1997, between The Marsico
Investment Fund (the "Trust"), on behalf of the Marsico Growth and Income Fund
(the "Fund"), and Marsico Capital Management, LLC ("MCM"), a Delaware limited
liability company.
WHEREAS, the Trust is a Delaware business trust authorized to issue shares
in series and is registered as an open-end management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), and the Fund is
a series of the Trust;
WHEREAS, MCM is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended ("Advisers Act"); and
WHEREAS, the Trust wishes to retain MCM to render investment management
services to the Fund, and MCM is willing to furnish such services to the Fund;
NOW THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the Trust and MCM as follows:
1. APPOINTMENT
The Trust hereby appoints MCM to act as investment adviser and
administrator to the Fund for the periods and on the terms set forth herein.
MCM accepts the appointment and agrees to furnish the services set forth herein
for the compensation provided herein.
2. SERVICES AS INVESTMENT ADVISER
Subject to the general supervision and direction of the Board of Trustees
of the Trust, MCM will (a) manage the Fund in accordance with the Fund's
investment objectives and policies as stated in the Fund's Prospectus and the
Statement of Additional Information filed with the Securities and Exchange
Commission, as they may be amended from time to time; (b) make investment
decisions for the Fund; (c) place purchase and sale orders on behalf of the
Fund; and (d) employ portfolio managers and securities analysts to provide
research services to the Fund. In providing those services, MCM will provide
the Fund with ongoing research, analysis, advice, and judgments regarding
individual investments, general economic conditions and trends and long-range
investment policy. In addition, MCM will furnish the Fund with whatever
statistical information the Fund may reasonably request with respect to the
securities that the Fund may hold or contemplate purchasing.
3. SERVICES AS MANAGER
Subject to the general supervision and direction of the Board of Trustees
of the Trust, MCM will (a) assist in supervising and managing all aspects of the
Fund's operations; (b) maintain such books and records of the Fund as may be
required by applicable federal or state law, or supervise, as the case may be,
the maintenance by third parties approved by the Trust, of
<PAGE>
such books and records; (c) supply the Fund with office facilities, data
processing services, clerical, accounting and bookkeeping services, internal
executive and administrative services, and stationery and office supplies; (d)
prepare, file, and arrange for the distribution of proxy materials and periodic
reports to the shareholders of the Fund as required by applicable law or
supervise, as the case may be, the distribution of proxy materials by third
parties to the shareholders of the Fund as required by applicable law; (e)
prepare or supervise the preparation by third parties approved by the Trust of
all federal, state, and local tax returns and reports of the Fund required by
applicable law; (f) prepare and arrange for the filing of such registration
statements and other documents as the Securities and Exchange Commission and
other federal and state regulatory authorities may require by applicable law;
(g) render to the Board of Trustees of the Trust such periodic and special
reports respecting the Fund as the Trustees may reasonably request; and (h) make
available its officers and employees to the Board of Trustees and officers of
the Trust for consultation and discussions regarding the administration of the
Fund.
4. PERFORMANCE OF DUTIES BY MCM
MCM further agrees that, in performing its duties set forth in Sections 2
and 3 above, and elsewhere hereunder, it will:
(a) comply with the 1940 Act and all rules and regulations thereunder, the
Advisers Act, the Internal Revenue Code of 1986, as amended (the "Code") and all
other applicable federal and state laws and regulations, and with any applicable
procedures adopted by the Trustees;
(b) use reasonable efforts to manage the Fund so that it will qualify, and
continue to qualify, as a regulated investment company under Subchapter M of the
Code and regulations issued thereunder;
(c) maintain books and records with respect to the Fund's securities
transactions, render to the Board of Trustees of the Trust such periodic and
special reports as the Board may reasonably request, and keep the Trustees
informed of developments materially affecting the Fund's portfolio;
(d) make available to the Trust, promptly upon request, such copies of its
investment records and ledgers with respect to the Fund as may be required to
assist the Trust in its compliance with applicable laws and regulations. MCM
will furnish the Trustees with such periodic and special reports regarding the
Fund as they may reasonably request;
(e) immediately notify the Trust in the event that MCM or any of its
affiliates: (1) becomes aware that it is subject to a statutory
disqualification that prevents MCM from serving as investment adviser or
administrator pursuant to this Agreement; or (2) becomes aware that it is the
subject of an administrative proceeding or enforcement action by the Securities
and Exchange Commission or other regulatory authority. MCM further agrees to
notify the Trust immediately of any material fact known to MCM respecting or
relating to MCM that is not contained in the Trust's Registration Statement
regarding the Fund, or any amendment or supplement thereto, but
2
<PAGE>
that is required to be disclosed therein, and of any statement contained therein
that becomes untrue in any material respect.
MCM, at its discretion, may enter into contracts with third parties for the
performance of the services to be provided by it under this Agreement.
5. DOCUMENTS
The Fund has delivered properly certified or authenticated copies of each
of the following documents to MCM and will deliver to it all future amendments
and supplements thereto, if any:
(a) certified resolution of the Board of Trustees of the Trust authorizing
the appointment of MCM and approving the form of this Agreement;
(b) The Registration Statement as filed with the Securities and Exchange
Commission and any amendments thereto; and
(c) exhibits, powers of attorneys, certificates and any and all other
documents relating to or filed in connection with the Registration Statement
described above.
6. BROKERAGE
In selecting brokers or dealers to execute transactions on behalf of the
Fund, MCM will use its best efforts to seek the best overall terms available.
In assessing the best overall terms available for any Fund transaction, MCM will
consider all factors it deems relevant, including, but not limited to, the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer and the
reasonableness of the commission, if any, for the specific transaction and on a
continuing basis. In selecting brokers or dealers to execute a particular
transaction, and in evaluating the best overall terms available, MCM is
authorized to consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) provided to the Fund and/or other accounts over which MCM or its
affiliates exercise investment discretion. In accordance with Section 11(a) of
the 1934 Act and Rule 11a2-2(T) thereunder, and subject to any other applicable
laws and regulations, MCM and its affiliates are authorized to effect portfolio
transactions for the Fund as agent and to retain usual and customary brokerage
commissions on such transactions.
7. RECORDS
MCM agrees to maintain and to preserve for the periods prescribed under the
1940 Act any such records as are required to be maintained by MCM with respect
to the Fund by the 1940 Act. MCM further agrees that all records which it
maintains for the Fund are the property of the Fund and it will promptly
surrender any of such records upon request.
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8. STANDARD OF CARE
MCM shall exercise its best judgment in rendering the services under this
Agreement. MCM shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Fund or the Fund's shareholders in connection
with the matters to which this Agreement relates, provided that nothing herein
shall be deemed to protect or purport to protect MCM against any liability to
the Fund or to its shareholders to which MCM would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of MCM's reckless disregard of its
obligations and duties under this Agreement. As used in this Section 8, the
term "MCM" shall include any officers, directors, employees, or other affiliates
of MCM performing services with respect to the Fund.
9. COMPENSATION
In consideration of the services rendered pursuant to this Agreement, the
Fund will pay MCM a fee at an annual rate equal to ___% of the average daily net
assets of the Fund. This fee shall be computed and accrued daily and payable
monthly. For the purpose of determining fees payable to MCM, the value of the
Fund's average daily net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus or Statement of Additional Information.
10. EXPENSES
MCM will bear all expenses in connection with the performance of its
services under this Agreement. The Fund will bear certain other expenses to be
incurred in its operation, including: taxes, interest, brokerage fees and
commissions, if any; fees and expenses of Trustees of the Trust who are not
officers, directors, or employees of MCM; Securities and Exchange Commission
fees and state blue sky qualification fees; charges of custodians and transfer
and dividend disbursing agents; the Fund's proportionate share of insurance
premiums; outside auditing and legal expenses; costs of membership in any
industry trade groups; costs of maintenance of the Fund's existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; charges of independent pricing services; costs of preparing
and printing prospectuses and statements of additional information for
regulatory purposes and for distribution to existing shareholders; costs of
shareholders' reports and meetings of the shareholders of the Fund and of the
officers or Board of Trustees of the Trust; and any extraordinary expenses. In
addition, the Fund will pay distribution fees pursuant to a Distribution Plan
adopted under Rule 12b-1 of the 1940 Act.
11. SERVICES TO OTHER COMPANIES OR ACCOUNTS
The investment advisory and administrative services provided by MCM to the
Fund under this Agreement are not to be deemed exclusive, and MCM, or any
affiliate thereof, shall be free to render similar services to other investment
companies and other clients (whether or not their investment objectives and
policies are similar to those of the Fund) and to engage in other activities, so
long as it services hereunder are not impaired thereby.
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12. REIMBURSEMENT OF ORGANIZATION EXPENSES
The Trust hereby agrees to reimburse MCM for the organization expenses of,
and the expenses incurred in connection with, the initial offering of the shares
of the Fund.
13. DURATION AND TERMINATION
This Agreement shall become effective on __________, 1997 and shall
continue in effect, unless sooner terminated as provided herein, for two years
from such date and shall continue from year to year thereafter, provided each
continuance is specifically approved at least annually by (i) the vote of a
majority of the Board of Trustees of the Trust or (ii) a vote of a "majority"
(as defined in the 1940 Act) of the Fund's outstanding voting securities,
provided that in either event the continuance is also approved by a majority of
the Board of Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable,
without penalty, on sixty (60) days' written notice by the Board of Trustees of
the Trust or by vote of holders of a majority of the Fund's shares or upon
ninety (90) days' written notice by MCM. This Agreement will also terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
14. AMENDMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which enforcement of the change, waiver, discharge or termination is
sought, and no amendment of this Agreement shall be effective until approved by
an affirmative vote of (i) a majority of the outstanding voting securities of
the Fund, and (ii) a majority of the Trustees of the Trust, including a majority
of Trustees who are not interested persons of any party to this Agreement, cast
in person at a meeting called for the purpose of voting on such approval, if
such approval is required by applicable law.
15. USE OF THE NAME "MARSICO."
MCM has consented to and granted a non-exclusive license for the use by the
Trust and by each Series thereof to the phrase "Marsico Capital" or the
identifying word "Marsico" in the name of the Trust and of each Series or any
logo or symbol authorized by MCM. Such consent is conditioned upon the Trust's
employment of MCM or its affiliates as investment adviser to the Trust and to
each Series. As between MCM and the Trust, MCM shall control the use of such
name insofar as such name contains the phrase "Marsico Capital" or the
identifying word "Marsico." MCM may from time to time use the phrase "Marsico
Capital" or the identifying word "Marsico" in other connection and for other
purposes, including without limitation in the names of other investment
companies, corporations or businesses that it may manage, advise, sponsor or own
or in which it may have a financial interest. MCM may require the Trust or any
Series to cease using the phrase "Marsico Capital" or the identifying word
"Marsico" in the name of the Trust or any Series or any logo or symbol
authorized by Marsico Capital if the Trust or Series ceases to employ MCM or an
affiliate thereof as investment adviser.
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16. MISCELLANEOUS
a. This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof.
b. Titles or captions of Sections contained in this Agreement are
inserted only as a matter of convenience and for reference, and in no way
define, limit, extend or describe the scope of this Agreement or the intent of
any provisions thereof.
c. This Agreement may be executed in several counterparts, all of which
together shall for all purposes constitute one Agreement, binding on all the
parties.
d. This Agreement and the rights and obligations of the parties hereunder
shall be governed by, and interpreted, construed and enforced in accordance with
the laws of the State of Delaware.
e. If any provisions of this Agreement or the application thereof to any
party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of this
Agreement or the application of such provision to such person or circumstance,
other than those as to which it is so determined to be invalid or unenforceable,
shall not be affected thereby, and each provision hereof shall be valid and
shall be enforced to the fullest extent permitted by law.
f. Notices of any kind to be given to MCM by the Trust shall be in
writing and shall be duly given if mailed or delivered to MCM at 1200 17th
Street, Suite 1300, Denver, Colorado 80202, Attn: Barbara M. Japha, or at such
other address or to such individual as shall be specified by MCM to the Trust.
Notices of any kind to be given to the Trust by MCM shall be in writing and
shall be duly given if mailed or delivered to 1200 17th Street, Suite 1300,
Denver, Colorado 80202, Attn: Christopher J. Marsico, or at such other address
or to such individual as shall be specified by the Trust to MCM.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below on the day and year first above
written.
THE MARSICO INVESTMENT FUND
ON BEHALF OF
THE MARSICO GROWTH AND INCOME FUND
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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MARSICO CAPITAL MANAGEMENT, LLC.
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
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DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this ___ day of December, 1997, by and between
The Marsico Investment Fund, a Delaware business trust (the "Trust"), and
Sunstone Distribution Services, LLC, a Wisconsin limited liability company (the
"Distributor").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "Act") and is authorized to
issue shares of beneficial interests (the "Shares") in separate series with each
such series representing interests in a separate portfolio of securities and
other assets;
WHEREAS, the Distributor is registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and is a member of
the National Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Distributor desire to enter into an agreement
pursuant to which Distributor shall be the distributor of the Shares of the
Trust representing the investment portfolios listed on Schedule A hereto and any
additional investment portfolios the Trust and Distributor may agree upon and
include on Schedule A as such Schedule may be amended from time to time (such
investment portfolios and any additional investment portfolios are individually
referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT OF THE DISTRIBUTOR.
The Trust hereby appoints the Distributor as agent for the
distribution of the Shares, on the terms and for the period set forth in this
Agreement. Distributor hereby accepts such appointment as agent for the
distribution of the Shares on the terms and for the period set forth in this
Agreement.
2. SERVICES AND DUTIES OF THE DISTRIBUTOR.
2.1 Distributor will act as agent for the distribution of Shares in
accordance with the instructions of the Trust's Board of Trustees and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended (the "1933 Act").
2.2 Subject to the terms of Section 4.2, Distributor may finance
appropriate activities which it deems reasonable which are primarily intended to
result in the sale of Shares, including, but not limited to, advertising, the
printing and mailing of prospectuses to other than current shareholders, and the
printing and mailing of sales literature. Distributor may enter into servicing
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and/or selling agreements with qualified broker/dealers and other persons with
respect to the offering of Shares to the public, and if it so chooses
Distributor will act only on its own behalf as principal. The Distributor shall
not be obligated to sell any certain number of Shares of any Fund.
2.3 All Shares of the Funds offered for sale by Distributor shall be
offered for sale to the public at a price per unit (the "offering price") equal
to their net asset value (determined in the manner set forth in the Funds' then
current prospectus).
2.4 Distributor shall act as distributor of the Shares in compliance in
all material respects with all applicable laws, rules and regulations,
including, without limitation, all rules and regulations made or adopted
pursuant to the 1940 Act, by the Securities and Exchange Commission (the
"Commission") and the NASD. Distributor shall provide to the Trust's Board of
Trustees, at least quarterly, a report of its expenses incurred pursuant to this
Agreement.
3. DUTIES AND REPRESENTATIONS OF THE TRUST.
3.1 The Trust represents that it is registered as an open-end management
investment company under the 1940 Act and that it has and will continue to act
in conformity with its Declaration of Trust, By-Laws, its registration statement
as may be amended from time to time and resolutions and other instructions of
its Board of Trustees and has and will continue to comply with all applicable
laws, rules and regulations including without limitation the 1933 Act, the 1934
Act, the 1940 Act, the laws of the states in which shares of the Funds are
offered and sold, and the rules and regulations thereunder.
3.2 The Trust shall take or cause to be taken all necessary action to
register and maintain the registration of the Shares under the 1933 Act for sale
as herein contemplated and shall pay all costs and expenses in connection with
the registration of Shares under the 1933 Act, and be responsible for all
expenses in connection with maintaining facilities for the issue and transfer of
Shares and for supplying information, prices and other data to be furnished by
the Trust hereunder.
3.3 The Trust shall execute any and all documents and furnish any and all
information and otherwise take all actions which may be reasonably necessary in
the discretion of the Trust's officers in connection with the qualification of
the Shares for sale in such states as Distributor and the Trust may approve,
shall maintain the registration of a sufficient number or amount of shares
thereunder, and shall pay all expenses which may be incurred in connection with
such qualification.
3.4 The Trust shall, at its expense, keep the Distributor fully informed
with regard to its affairs. In addition, the Trust shall furnish Distributor
from time to time such information with respect to the Trust and the Shares as
Distributor may reasonably request, and the Trust warrants that the statements
contained in any such information shall be true and correct. The Trust
represents that it will not use or authorize the use of any advertising or sales
material unless and until such materials have been approved and authorized for
use by the Distributor.
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3.5 The Trust represents to Distributor that all registration statements
and prospectuses of the Trust filed or to be filed with the Commission under the
1933 Act with respect to the Shares have been and will be prepared in conformity
with the requirements of the 1933 Act, the 1940 Act, and the rules and
regulations of the Commission thereunder. As used in this Agreement the terms
"registration statement" and "prospectus" shall mean any registration statement
and prospectus (together with the related statement of additional information)
at any time now or hereafter filed with the Commission with respect to any of
the Shares and any amendments and supplements thereto which at any time shall
have been or will be filed with said Commission. The Trust represents and
warrants to Distributor that any registration statement and prospectus, when
such registration statement becomes effective, will contain all statements
required to be stated therein in conformity with the 1933 Act, the 1940 Act and
the rules and regulations of the Commission; that all information contained in
the registration statement and prospectus will be true and correct in all
material respects when such registration statement becomes effective; and that
neither the registration statement nor any prospectus when such registration
statement becomes effective will include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Trust agrees to file from time
to time such amendments, supplements, reports and other documents as may be
necessary or required in order to comply with the 1933 Act and the 1940 Act and
in order that there may be no untrue statement of a material fact in a
registration statement or prospectus, or necessary or required in order that
there may be no omission to state a material fact in the registration statement
or prospectus which omission would make the statements therein misleading.
3.6 The Trust shall not file any amendment to the registration statement
or supplement to any prospectus without giving Distributor reasonable notice
thereof in advance and if the Distributor declines to assent to such amendment
(after a reasonable time), the Trust may terminate this Agreement forthwith by
written notice to the Distributor without payment of any penalty. If the Trust
shall not propose an amendment or amendments and/or supplement or supplements
promptly after receipt by the Trust of a written request in good faith from
Distributor to do so, Distributor may, at its option, immediately terminate this
Agreement. In addition, if, at any time during the term of this Agreement, the
Distributor requests the Trust to make any change in its governing instruments
or in its methods of doing business which are necessary in order to comply with
any requirement of applicable law or regulation, and the Trust fails (after a
reasonable time) to make any such change as requested, the Distributor may
terminate this Agreement forthwith by written notice to the Trust without
payment of any penalty. Nothing contained in this Agreement shall in any way
limit the Trust's right to file at any time any amendments to any registration
statement and/or supplements to any prospectus, of whatever character, as the
Trust may deem advisable, such right being in all respects absolute and
unconditional.
3.7 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by circumstances of any kind, the Trust's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Trust shall advise Distributor promptly of such determination.
3.8 The Trust agrees to advise the Distributor promptly in writing:
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(i) of any correspondence or other communication by the Commission
or its staff relating to the Funds including requests by the Commission for
amendments to the registration statement or prospectuses;
(ii) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or prospectuses
then in effect or the initiation of any proceeding for that purpose;
(iii) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectuses or which
requires the making of a change in such registration statement or prospectuses
in order to make the statements therein not misleading; and
(iv) of all actions taken by the Commission with respect to any
amendments to any registration statement or prospectus which may from time to
time be filed with the Commission.
4. COMPENSATION.
4.1 For the services provided pursuant to this Agreement, and subject to
the limitations contained in Section 4.3 below, the Funds will pay to the
Distributor a fee, payable monthly in arrears, at the annual rate of 0.0175% per
annum of each Fund's average daily net assets; provided, however, that such
compensation shall be subject to an aggregate minimum annual fee of $25,000 per
Fund.
4.2 In addition to the compensation payable pursuant to Section 4.1, and
subject to the limitations contained in Section 4.3 below, the Funds will
reimburse the Distributor or pay directly, at the Distributor's discretion, the
Distributor's (i) out-of-pocket expenses incurred in connection with activities
primarily intended to result in the sale of Shares including, without
limitation, typesetting, printing and distribution of prospectuses and
shareholder reports, production, printing and distribution of sales materials
and forms, placement of media advertising, engagement of designers, free lance
writers and public relation firms, long distance telephone lines, services and
charges, postage, overnight delivery charges, storage of inventory, regulatory
filing fees and travel, lodging and meals, and (ii) amounts paid by Distributor
to dealers or other persons entering into a selling or servicing agreement with
Distributor or the Trust.
4.3 Subject to and calculated in accordance with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., if during any
annual period the total of the compensation payable and out-of-pocket
reimbursements under Sections 4.1 and 4.2 to the Distributor exceeds 0.25% of a
Fund's average daily net assets, the Distributor will rebate that portion of its
fee and expenses necessary to result in the total of (i) and (ii) above not
exceeding 0.25% of the Fund's average daily net assets. The payment of
compensation and reimbursement of expenditures is authorized pursuant to the
Trust's Distribution Plan under Rule 12b-1 under the 1940 Act and is contingent
upon the continued effectiveness of the Trust's Distribution Plan. It is
understood that the Trust's investment adviser will reimburse the Distributor
(or pay directly at the discretion of the
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Distributor) any distribution expenses and compensation incurred by Distributor
in excess of the amounts, if any, the Trust, on behalf of a Fund, pays to
Distributor.
5. INDEMNIFICATION.
5.1(a) The Trust authorizes Distributor to use any prospectus, in the form
furnished to Distributor from time to time, in connection with the sale of
Shares. The Trust shall indemnify, defend and hold the Distributor, and each of
its present or former directors, officers, employees, representatives and any
person who controls or previously controlled the Distributor within the meaning
of Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigating or defending any alleged losses, claims, demands, liabilities,
damages or expenses and any counsel fees incurred in connection therewith) which
Distributor, each of its present and former directors, officers, employees or
representatives or any such controlling person, may incur under the 1933 Act,
the 1934 Act, any other statute (including Blue Sky laws) or any rule or
regulation thereunder, or under common law or otherwise, arising out of or based
upon any untrue statement, or alleged untrue statement, of a material fact
contained in the registration statement or any prospectus, as from time to time
amended or supplemented, or an annual or interim report to shareholders, or
arising out of or based upon any omission, or alleged omission, to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Trust's
obligation to indemnify Distributor and any of the foregoing indemnitees shall
not be deemed to cover any losses, claims, demands, liabilities, damages or
expenses arising out of any untrue statement or alleged untrue statement or
omission or alleged omission made in the registration statement, prospectus, or
annual or interim report in reliance upon and in conformity with information
relating to the Distributor and furnished to the Trust or its counsel by
Distributor for the purpose of, and used in, the preparation thereof; and
provided further that the Trust's agreement to indemnify Distributor and any of
the foregoing indemnitees shall not be deemed to cover any liability to the
Trust or its shareholders to which Distributor would otherwise be subject by
reason of its willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement. The Trust's agreement to indemnify
the Distributor, and any of the foregoing indemnitees, as the case may be, with
respect to any action, is expressly conditioned upon the Trust being notified of
such action brought against Distributor, or any of the foregoing indemnitees,
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Distributor, or such person, such notification to be given by letter or by
telegram addressed to the Trust's President, but the failure so to notify the
Trust of any such action shall not relieve the Trust from any liability which
the Trust may have to the person against whom such action is brought by reason
of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of the Trust's indemnity agreement contained
in this Section 5.1.
5.1(b) The Trust shall be entitled to participate at its own expense in
the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Trust elects to assume the defense, such defense shall be conducted by counsel
chosen by the Trust and approved by the Distributor, which approval shall not be
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unreasonably withheld. In the event the Trust elects to assume the defense of
any such suit and retain such counsel, the indemnified defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel retained
by them. If the Trust does not elect to assume the defense of any such suit, or
in case the Distributor does not, in the exercise of reasonable judgment,
approve of counsel chosen by the Trust, the Trust will reimburse the indemnified
person or persons named as defendant or defendants in such suit, for the fees
and expenses of any counsel retained by Distributor and them. The Trust's
indemnification agreement contained in this Section 5.1 and the Trust's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, and each of its present or former directors, officers,
employees, representatives or any controlling person, and shall survive the
delivery of any Shares and the termination of this Agreement. This agreement of
indemnity will inure exclusively to the Distributor's benefit, to the benefit of
each of its present or former directors, officers, employees or representatives
or to the benefit of any controlling persons and their successors. The Trust
agrees promptly to notify Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or directors in connection
with the issue and sale of any of the Shares.
5.2(a) Distributor shall indemnify, defend and hold the Trust, and each of
its present or former trustees, officers, employees, representatives, and any
person who controls or previously controlled the Trust within the meaning of
Section 15 of the 1933 Act, free and harmless from and against any and all
losses, claims, demands, liabilities, damages and expenses (including the costs
of investigating or defending any alleged losses, claims, demands, liabilities,
damages or expenses, and any counsel fees incurred in connection therewith)
which the Trust, and each of its present or former trustees, officers,
employees, representatives, or any such controlling person, may incur under the
1933 Act, the 1934 Act, any other statute (including Blue Sky laws) or any rule
or regulation thereunder, or under common law or otherwise, arising out of or
based upon any untrue, or alleged untrue, statement of a material fact contained
in the Trust's registration statement or any prospectus, as from time to time
amended or supplemented, or annual or interim report to shareholders or the
omission, or alleged omission, to state therein a material fact required to be
stated therein or necessary to make the statement not misleading, but only if
such statement or omission was made in reliance upon, and in conformity with,
information relating to the Distributor and furnished to the Trust or its
counsel by the Distributor for the purpose of, and used in, the preparation
thereof. Distributor's agreement to indemnify the Trust and any of the
foregoing indemnitees shall not be deemed to cover any liability to Distributor
to which the Trust would otherwise be subject by reason of its willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of its reckless disregard of its obligations and duties, under this
Agreement. The Distributor's Agreement to indemnify the Trust, and any of the
foregoing indemnitees, is expressly conditioned upon the Distributor's being
notified of any action brought against the Trust, and any of the foregoing
indemnitees, such notification to be given by letter or telegram addressed to
Distributor's President, within a reasonable time after the summons or other
first legal process giving information of the nature of the claim shall have
been served upon the Trust or such person, but the failure so to notify
Distributor of any such action shall not relieve Distributor from any liability
which Distributor may have to the person against whom such action is brought by
reason of any such untrue, or alleged untrue, statement or omission, otherwise
than on account of Distributor's indemnity agreement contained in this Section
5.2(a).
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5.2(b) The Distributor shall be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought to
enforce any such loss, claim, demand, liability, damage or expense, but if the
Distributor elects to assume the defense, such defense shall be conducted by
counsel chosen by the Distributor and approved by the Trust, which approval
shall not be unreasonably withheld. In the event the Distributor elects to
assume the defense of any such suit and retain such counsel, the indemnified
defendant or defendants in such suit shall bear the fees and expenses of any
additional counsel retained by them. If the Distributor does not elect to
assume the defense of any such suit, or in case the Trust does not, in the
exercise of reasonable judgment, approve of counsel chosen by the Distributor,
the Distributor will reimburse the indemnified person or persons named as
defendant or defendants in such suit, for the fees and expenses of any counsel
retained by the Trust and them. The Distributor's indemnification agreement
contained in this Section 5.2 and the Distributor's representations and
warranties in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Trust, and each of
its present or former directors, officers, employees, representatives or any
controlling person, and shall survive the delivery of any Shares and the
termination of this Agreement. This Agreement of indemnity will inure
exclusively to the Trust's benefit, to the benefit of each of its present or
former directors, officers, employees or representatives or to the benefit of
any controlling persons and their successors. The Distributor agrees promptly
to notify the Trust of the commencement of any litigation or proceedings against
the Distributor or any of its officers or directors in connection with the issue
and sale of any of the Shares.
6. OFFERING OF SHARES.
No Shares shall be offered by either the Distributor or the Trust under any
of the provisions of this Agreement and no orders for the purchase or sale of
such Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act, or if and so long as the current prospectus as required by Section 10 of
the 1933 Act, as amended, is not on file with the Commission; provided, however,
that nothing contained in this paragraph 6 shall in any way restrict or have an
application to or bearing upon the Trust's obligation to repurchase Shares from
any shareholder in accordance with the provisions of the prospectus or
Declaration of Trust.
7. TERM.
7.1 This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. Unless sooner terminated as provided herein,
this Agreement shall continue in effect with respect to each Fund until December
__, 1998. Thereafter, if not terminated, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods, provided
such continuance is specifically approved at least annually by (i) the Trust's
Board of Trustees or (ii) the vote of a majority (as defined in the 1940 Act) of
the outstanding voting securities of a Fund, and provided that in either event
the continuance is also approved by the Distributor and by a majority of the
Trust's Board of Trustees who are not "interested persons" (as defined in the
1940 Act) of any party to this Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval.
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7.2 This Agreement may be terminated without penalty with respect to a
particular Fund (1) through a failure to renew this Agreement at the end of a
term, (2) upon mutual consent of the parties, or (3) on no less than thirty (30)
days' written notice, by the Trust's Board of Trustees, by vote of a majority
(as defined with respect to voting securities in the 1940 Act) of the
outstanding voting securities of a Fund, or by the Distributor (which notice may
be waived by the party entitled to such notice). In addition, this Agreement
may be terminated at any time, without penalty, with respect to a particular
Fund by vote of a majority of the members of the Board of Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and have no direct
or indirect financial interest in the operation of the Trust's Service and
Distribution Plan or in this Agreement. The terms of this Agreement shall not be
waived, altered, modified, amended or supplemented in any manner whatsoever
except by a written instrument signed by the Distributor and the Trust. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
8. MISCELLANEOUS.
8.1 The services of the Distributor rendered to the Funds are not deemed
to be exclusive. The Distributor may render such services and any other
services to others, including other investment companies. The Trust recognizes
that from time to time directors, officers, and employees of the Distributor may
serve as directors, trustees, officers and employees of other entities
(including other investment companies), that such other entities may include the
name of the Distributor as part of their name and that the Distributor or its
affiliates may enter into distribution, administration, fund accounting,
transfer agent or other agreements with such other entities.
8.2 Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds and prior, present or potential shareholders of the Trust (and
clients of said shareholders), and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval may not be withheld where the Distributor may be exposed to civil or
criminal proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, when subject to governmental or
regulatory audit or investigation, or when so requested by the Trust. Records
and information which have become known to the public through no wrongful act of
the Distributor or any of its employees, agents or representatives shall not be
subject to this paragraph.
8.3 This Agreement shall be governed by Wisconsin law (except as to
Section 8.4 hereof which shall be construed in accordance with Delaware law).
To the extent that the applicable laws of the State of Wisconsin, or any of the
provisions herein, conflict with the applicable provisions of the 1940 Act, the
latter shall control, and nothing herein shall be construed in a manner
inconsistent with the 1940 Act or any rule or order of the Commission
thereunder. Any provision of this Agreement which may be determined by
competent authority to be prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or
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unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.4 This Agreement is executed by or on behalf of the Trust and the
obligations hereunder are not binding upon any of the Trustees, officers or
shareholders of the Trust individually but are binding only upon the Funds to
which such obligations pertain and the assets and property of such Funds.
8.5 Any notice required or to be permitted to be given by either party to
the other shall be in writing and shall be deemed to have been given when sent
by registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Distributor shall be sent to Sunstone Distribution
Services, LLC, 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202,
Attention: Miriam M. Allison, and notice to the Trust shall be sent to The
Marsico Investment Fund, 1200 17th Street, Suite 1300, Denver, Colorado 80202,
Attention: Barbara M. Japha.
8.6 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original agreement but such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
THE MARSICO INVESTMENT FUND
(the "Trust")
By:
------------------------------
SUNSTONE DISTRIBUTION SERVICES, LLC
(the "Distributor")
By:
------------------------------
Miriam M. Allison
President
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SCHEDULE A
TO THE
DISTRIBUTION AGREEMENT
BY AND BETWEEN
THE MARSICO INVESTMENT TRUST
AND
SUNSTONE DISTRIBUTION SERVICES, LLC
NAME OF FUNDS
The Marsico Focus Fund
The Marsico Growth & Income Fund
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CUSTODIAN AGREEMENT
This Agreement between MARSICO INVESTMENT FUND, a business trust organized
and existing under the laws of Delaware with its principal place of business at
1200 17th Street, Suite 1300, Denver, Colorado 80202 (the "FUND"), and STATE
STREET BANK and TRUST COMPANY, a Massachusetts trust company with its principal
place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the
"CUSTODIAN"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends that this Agreement be applicable to two series,
THE MARSICO FOCUS FUND AND THE MARSICO GROWTH & INCOME FUND (such series
together with all other series subsequently established by the Fund and made
subject to this Agreement in accordance with Section 18, be referred to herein
as the "PORTFOLIO(S)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("DOMESTIC SECURITIES") and securities it desires to be held outside the United
States ("FOREIGN SECURITIES") pursuant to the provisions of the Fund's
Declaration of Trust. The Fund on behalf of the Portfolio(s) agrees to deliver
to the Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios ("SHARES") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in Section 6
hereof), the Custodian shall on behalf of the applicable Portfolio(s) from time
to time employ one or more sub-custodians located in the United States, but only
in accordance with an applicable vote by the Board of Trustees of the Fund (the
"BOARD OF TRUSTEES") on behalf of the applicable Portfolio(s), and provided that
the Custodian shall have no more or less responsibility or liability to the Fund
on
<PAGE>
account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedules A and B hereto but only in accordance with
the applicable provisions of Sections 3 and 4.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
BY THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to Section
2.8 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury (each, a
"U.S. SECURITIES SYSTEM") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("DIRECT PAPER")
which is deposited and/or maintained in the Direct Paper System of the Custodian
(the "DIRECT PAPER SYSTEM") pursuant to Section 2.9.
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("DIRECT PAPER SYSTEM ACCOUNT") only upon
receipt of Proper Instructions on behalf of the applicable Portfolio, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.8 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.7 or into the name or nominee
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<PAGE>
name of any sub-custodian appointed pursuant to Section 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; PROVIDED that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, BUT ONLY against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, BUT ONLY against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "EXCHANGE
ACT") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
3
<PAGE>
securities exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the Fund (the
"TRANSFER AGENT") for delivery to such Transfer Agent or to the
holders of Shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund related to the
Portfolio (the "PROSPECTUS"), in satisfaction of requests by holders
of Shares for repurchase or redemption; and
15) For any other proper trust purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a copy of a resolution of the Board of Trustees
or of the Executive Committee thereof signed by an officer of the Fund
and certified by the Secretary or an Assistant Secretary thereof (a
"CERTIFIED RESOLUTION"), specifying the securities of the Portfolio to
be delivered, setting forth the purpose for which such delivery is to
be made, declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom delivery of such securities shall
be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, UNLESS the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.7 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Agreement shall
be in "street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such
4
<PAGE>
account or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by the
Portfolio in a bank account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940, as amended (the "1940 ACT"). Funds
held by the Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other banks or
trust companies as it may in its discretion deem necessary or desirable;
PROVIDED, however, that every such bank or trust company shall be qualified to
act as a custodian under the 1940 Act and that each such bank or trust company
and the funds to be deposited with each such bank or trust company shall on
behalf of each applicable Portfolio be approved by vote of a majority of the
Board of Trustees. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian only in that
capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its agent thereof
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery of such securities or evidence of title
to such options, futures contracts or options on futures contracts to
the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
1940 Act to act as a custodian and has been designated by the
Custodian as its agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in the case of
a purchase effected through a U.S. Securities System, in accordance
with the conditions set forth in Section 2.8 hereof; (c) in the case
of a purchase involving the Direct Paper
5
<PAGE>
System, in accordance with the conditions set forth in Section 2.9;
(d) in the case of repurchase agreements entered into between the Fund
on behalf of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of the
securities either in certificate form or through an entry crediting
the Custodian's account at the Federal Reserve Bank with such
securities or (ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the Custodian along
with written evidence of the agreement by the Custodian to repurchase
such securities from the Portfolio or (e) for transfer to a time
deposit account of the Fund in any bank, whether domestic or foreign;
such transfer may be effected prior to receipt of a confirmation from
a broker and/or the applicable bank pursuant to Proper Instructions
from the Fund as defined herein;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued as set forth in
Section 5 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the Fund whether or
not such expenses are to be in whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper trust purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a copy of a Certified Resolution specifying the amount of
such payment, setting forth the purpose for which such payment is to
be made, declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the United States Securities and Exchange
Commission (the "SEC") under Section 17A of the Exchange
6
<PAGE>
Act , which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "U.S. SECURITIES SYSTEM" in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account of the Custodian in the U.S. Securities System (the "U.S.
SECURITIES SYSTEM ACCOUNT") which account shall not include any assets
of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the U.S.
Securities System Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon (i) receipt of advice from
the U.S. Securities System that payment for such securities has been
transferred to the U.S. Securities System Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Portfolio. Copies of all advices
from the U.S. Securities System of transfers of securities for the
account of the Portfolio shall identify the Portfolio, be maintained
for the Portfolio by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund on behalf
of the Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Section 15 hereof;
6) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the
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Portfolio resulting from use of the U.S. Securities System by reason
of any negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from failure of
the Custodian or any such agent to enforce effectively such rights as
it may have against the U.S. Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the U.S. Securities System
or any other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the Portfolio has
not been made whole for any such loss or damage.
SECTION 2.9 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in the Direct Paper
System Account, which account shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the Direct Paper System for the account of
the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
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SECTION 2.10 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and 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 (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other proper
trust purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a copy of a Certified Resolution setting forth the purpose or
purposes of such segregated account and declaring such purpose(s) to be a proper
trust purpose.
SECTION 2.11 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
SECTION 2.12 PROXIES. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting materials
and all notices relating to such securities.
SECTION 2.13 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to
the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund
for each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations of
rights in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar
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transaction, the Portfolio shall notify the Custodian at least three business
days prior to the date on which the Custodian is to take such action.
SECTION 3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS
SECTION 3.1. DEFINITIONS. The following capitalized terms shall have the
indicated meanings:
"COUNTRY RISK" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including financial institutions such as any Mandatory Securities Depositories
operating in the country); prevailing or developing custody and settlement
practices; and laws and regulations applicable to the safekeeping and recovery
of Foreign Assets held in custody in that country.
"ELIGIBLE FOREIGN CUSTODIAN" has the meaning set forth in section (a)(1) of Rule
17f-5 promulgated under Section 17(f) of the 1940 Act ("RULE 17F-5"), except
that the term does not include Mandatory Securities Depositories.
"FOREIGN ASSETS" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"FOREIGN CUSTODY MANAGER" has the meaning set forth in section (a)(2) of Rule
17f-5.
"MANDATORY SECURITIES DEPOSITORY" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund, on the Portfolios' behalf, determines to place Foreign Assets in a country
outside the United States (i) because required by law or regulation; (ii)
because securities cannot be withdrawn from such foreign securities depository
or clearing agency; or (iii) because maintaining or effecting trades in
securities outside the foreign securities depository or clearing agency is not
consistent with prevailing or developing custodial or market practices.
SECTION 3.2. DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER. The
Fund, by resolution adopted by the Board of Trustees, hereby delegates to the
Custodian with respect to the Portfolios, subject to Section (b) of Rule 17f-5,
the responsibilities set forth in this Section 3 with respect to Foreign Assets
of the Portfolios held outside the United States, and the Custodian hereby
accepts such delegation, as Foreign Custody Manager with respect to the
Portfolios.
SECTION 3.3. COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and
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custody arrangements for each such country listed on Schedule A of this
Contract, which may be amended from time to time by the Foreign Custody
Manager. The Foreign Custody Manager shall list on Schedule A the Eligible
Foreign Custodians selected by the Foreign Custody Manager to maintain the
assets of the Portfolios. Mandatory Securities Depositories are listed on
Schedule B to this Contract, which may be amended from time to time by the
Foreign Custody Manager. The Foreign Custody Manager will provide amended
versions of Schedules A and B in accordance with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to
open an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund on behalf of the Portfolios of the
applicable account opening requirements for the country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board of Trustees on
behalf of the Portfolios responsibility as Foreign Custody Manager with respect
to that country and to have accepted such delegation. Following the receipt of
Proper Instructions directing the Foreign Custody Manager to close the account
of a Portfolio with the Eligible Foreign Custodian selected by the Foreign
Custody Manager in a designated country, the delegation by the Board of Trustees
on behalf of the Portfolios to the Custodian as Foreign Custody Manager for that
country shall be deemed to have been withdrawn and the Custodian shall
immediately cease to be the Foreign Custody Manager of the Portfolios with
respect to that country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect to
the country as to which the Custodian's acceptance of delegation is withdrawn.
SECTION 3.4. SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
provisions of this Section 3, the Portfolios' Foreign Custody Manager may
place and maintain the Foreign Assets in the care of the Eligible Foreign
Custodian selected by the Foreign Custody Manager in each country listed on
Schedule A, as amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to
place or maintain Foreign Assets with an Eligible Foreign Custodian, the
Foreign Custody Manager shall determine that the Foreign Assets will be
subject to reasonable care, based on the standards applicable to custodians
in the country in which the Foreign Assets will be held by that Eligible
Foreign Custodian, after considering all factors relevant to the safekeeping
of such assets, including, without limitation:
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(i) the Eligible Foreign Custodian's practices, procedures, and internal
controls, including, but not limited to, the physical protections
available for certificated securities (if applicable), its methods of
keeping custodial records, and its security and data protection
practices;
(ii) whether the Eligible Foreign Custodian has the financial strength to
provide reasonable care for Foreign Assets;
(iii) the Eligible Foreign Custodian's general reputation and standing and,
in the case of a foreign securities depository or clearing agency
which is not a Mandatory Securities Depository, the foreign securities
depository's or clearing agency's operating history and the number of
participants in the foreign securities depository or clearing agency;
and
(iv) whether the Fund will have jurisdiction over and be able to enforce
judgments against the Eligible Foreign Custodian, such as by virtue of
the existence of any offices of the Eligible Foreign Custodian in the
United States or the Eligible Foreign Custodian's consent to service
of process in the United States.
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign Custody
Manager shall determine that the contract (or the rules or established practices
or procedures in the case of an Eligible Foreign Custodian that is a foreign
securities depository or clearing agency) governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will provide reasonable care for the Foreign Assets held by that
Eligible Foreign Custodian based on the standards applicable to custodians in
the particular country. Each such contract shall include provisions that
provide:
(i) for indemnification or insurance arrangements (or any combination of
the foregoing) such that each Portfolio will be adequately protected
against the risk of loss of the Foreign Assets held in accordance with
such contract;
(ii) that the Foreign Assets will not be subject to any right, security
interest, or lien or claim of any kind in favor of the Eligible
Foreign Custodian or its creditors except a claim of payment for their
safe custody or administration or, in the case of cash deposits, liens
or rights in favor of creditors of the Eligible Foreign Custodian
arising under bankruptcy, insolvency, or similar laws;
(iii) that beneficial ownership of the Foreign Assets will be freely
transferable without the payment of money or value other than for safe
custody or administration;
(iv) that adequate records will be maintained identifying the Foreign
Assets as belonging to the applicable Portfolio or as being held by a
third party for the benefit of such Portfolio;
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(v) that the independent public accountants for each Portfolio will be
given access to those records or confirmation of the contents of those
records; and
(vi) that the Fund will receive periodic reports with respect to the
safekeeping of the Foreign Assets, including, but not limited to,
notification of any transfer of the Foreign Assets to or from a
Portfolio's account or a third party account containing the Foreign
Assets held for the benefit of the Portfolio,
or, in lieu of any or all of the provisions set forth in (i) through (vi) above,
such other provisions that the Foreign Custody Manager determines will provide,
in their entirety, the same or greater level of care and protection for the
Foreign Assets as the provisions set forth in (i) through (vi) above, in their
entirety.
3.4.3. MONITORING. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian. In the event the Foreign Custody Manager determines that the
custody arrangements with an Eligible Foreign Custodian it has selected are no
longer appropriate, the Foreign Custody Manager shall notify the Board of
Trustees in accordance with Section 3.7 hereunder.
SECTION 3.5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For
purposes of this Section 3, the Board of Trustees shall be deemed to have
considered and determined to accept such Country Risk as is incurred by placing
and maintaining the Foreign Assets in each country for which the Custodian is
serving as Foreign Custody Manager of the Portfolios. The Fund, on behalf of
the Portfolios, and the Custodian each expressly acknowledge that the Foreign
Custody Manager shall not be delegated any responsibilities under this Section 3
with respect to Mandatory Securities Depositories.
SECTION 3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE
PORTFOLIOS. In performing the responsibilities delegated to it, the Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would exercise.
SECTION 3.7. REPORTING REQUIREMENTS. The Foreign Custody Manager shall
report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian
and the placement of such Foreign Assets with another Eligible Foreign Custodian
by providing to the Board of Trustees amended Schedules A or B at the end of the
calendar quarter in which an amendment to
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either Schedule has occurred. The Foreign Custody Manager shall make written
reports notifying the Board of Trustees of any other material change in the
foreign custody arrangements of the Portfolios described in this Article 3 after
the occurrence of the material change.
SECTION 3.8. REPRESENTATIONS WITH RESPECT TO RULE 17f-5. The Foreign
Custody Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that the
Board of Trustees has determined that it is reasonable for the Board of Trustees
to rely on the Custodian to perform the responsibilities delegated pursuant to
this Agreement to the Custodian as the Foreign Custody Manager of the
Portfolios.
SECTION 3.9. EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN
CUSTODY MANAGER. The Board of Trustees' delegation to the Custodian as Foreign
Custody Manager of the Portfolios shall be effective as of the date of execution
of this Agreement and shall remain in effect until terminated at any time,
without penalty, by written notice from the terminating party to the
non-terminating party. Termination will become effective thirty (30) days after
receipt by the non-terminating party of such notice. The provisions of Section
3.3 hereof shall govern the delegation to and termination of the Custodian as
Foreign Custody Manager of the Portfolios with respect to designated countries.
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
PORTFOLIOS HELD OUTSIDE OF THE UNITED STATES
SECTION 4.1 DEFINITIONS. Capitalized terms in this Section 4 shall have
the following meanings:
"FOREIGN SECURITIES SYSTEM" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"FOREIGN SUB-CUSTODIAN" means a foreign banking institution serving as an
Eligible Foreign Custodian or a Permissible Foreign Custodian.
"PERMISSIBLE FOREIGN CUSTODIAN" means any person with whom property of the
Portfolios may be placed and maintained outside of the United States under (i)
section 17(f) or 26(a) of the 1940 Act without regard to Rule 17f-5 or (ii) an
order of the SEC.
SECTION 4.2. HOLDING SECURITIES. The Custodian shall identify on its
books as belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, PROVIDED HOWEVER, that (i) the records of the
Custodian with respect to foreign securities of the Portfolios which are
maintained in such
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account shall identify those securities as belonging to the Portfolios and (ii)
the Custodian shall require that securities so held by the Foreign Sub-Custodian
be held separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian.
SECTION 4.3. FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country only through
arrangements implemented by the Foreign Sub-Custodian in such country pursuant
to the terms of this Agreement.
SECTION 4.4. HOLDING OF FOREIGN ASSETS WITH PERMISSIBLE FOREIGN
CUSTODIANS. Subject to the requirements of Sections 17(f) and 26(a) of the 1940
Act (and any other applicable law or order), the Custodian may place and
maintain Foreign Assets (as such term is defined in Section 3 hereof) in the
care of any Permissible Foreign Custodian. Section 3 hereof shall not apply to
placement of Foreign Assets by the Custodian with a Permissible Custodian.
SECTION 4.5. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.5.1. DELIVERY OF FOREIGN SECURITIES. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of the Portfolios
held by such Foreign Sub-Custodian, or in a Foreign Securities System account,
only upon receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Portfolios in
accordance with reasonable market practice in the country where such
foreign securities are held or traded, including, without limitation:
(A) delivery against expectation of receiving later payment; or (B) in
the case of a sale effected through a Foreign Securities System in
accordance with the rules governing the operation of the Foreign
Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other similar
offers for foreign securities of the Portfolios;
(iv) to the issuer thereof or its agent when such foreign securities are
called, redeemed, retired or otherwise become payable;
(v) to the issuer thereof, or its agent, for transfer into the name of the
Custodian (or the name of the respective Foreign Sub-Custodian or of
any nominee of the Custodian or such Foreign Sub-Custodian) or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units;
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(vi) to brokers, clearing banks or other clearing agents for examination or
trade execution in accordance with market custom; PROVIDED that in any
such case the Foreign Sub-Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Foreign Sub-Custodian's own negligence or willful misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement;
(viii)in the case of warrants, rights or similar foreign securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities;
(ix) or delivery as security in connection with any borrowings by the
Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper trust purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a copy of a Certified Resolution
specifying the foreign securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose
to be a proper trust purpose, and naming the person or persons to whom
delivery of such securities shall be made.
4.5.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out, or direct the respective Foreign
Sub-Custodian or the respective Foreign Securities System to pay out, monies of
a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, by (A) delivering money to
the seller thereof or to a dealer therefor (or an agent for such
seller or dealer) against expectation of receiving later delivery of
such foreign securities; or (B) in the case of a purchase effected
through a Foreign Securities System, in accordance with the rules
governing the operation of such Foreign Securities System;
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(ii) in connection with the conversion, exchange or surrender of foreign
securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest, taxes,
investment advisory fees, transfer agency fees, fees under this
Agreement, legal fees, accounting fees, and other operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with or
through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts, including
delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign securities; and
(viii)for any other proper trust purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a copy of a Certified Resolution
specifying the amount of such payment, setting forth the purpose for
which such payment is to be made, declaring such purpose to be a
proper trust purpose, and naming the person or persons to whom such
payment is to be made.
4.5.3. MARKET CONDITIONS. Notwithstanding any provision of this
Agreement to the contrary, settlement and payment for Foreign Assets received
for the account of the Portfolios and delivery of Foreign Assets maintained for
the account of the Portfolios may be effected in accordance with the customary
established securities trading or processing practices and procedures in the
country or market in which the transaction occurs, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such Foreign Assets from such purchaser or dealer.
SECTION 4.6. REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Custodian (other than bearer securities)
shall be registered in the name of the applicable Portfolio or in the name of
the Custodian or in the name of any Foreign Sub-Custodian or in the name of any
nominee of the foregoing, and the Fund on behalf of such Portfolio agrees to
hold any such nominee harmless from any liability as a holder of record of such
foreign securities. The Custodian or a Foreign Sub-Custodian shall not be
obligated to accept securities on behalf of a Portfolio under the terms of this
Agreement unless the form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.
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SECTION 4.7. BANK ACCOUNTS. A bank account or bank accounts opened and
maintained outside the United States on behalf of a Portfolio with a Foreign
Sub-Custodian shall be subject only to draft or order by the Custodian or such
Foreign Sub-Custodian, acting pursuant to the terms of this Agreement to hold
cash received by or from or for the account of the Portfolio.
SECTION 4.8. COLLECTION OF INCOME. The Custodian shall use reasonable
endeavors to collect all income and other payments in due course with respect to
the Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, the Fund
and the Custodian shall consult as to such measures and as to the compensation
and expenses of the Custodian relating to such measures.
SECTION 4.9. PROXIES. The Custodian will generally with respect to the
foreign securities held under this Section 4 use its reasonable endeavors to
facilitate the exercise of voting and other shareholder proxy rights, subject
always to the laws, regulations and practical constraints that may exist in the
country where such securities are issued. The Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice and other factors may have the effect of severely limiting the ability
of the Fund to exercise shareholder rights.
SECTION 4.10. COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Fund written information (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities being held for the
account of the Portfolios. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund written information so received by
the Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
The Custodian shall not be liable for any untimely exercise of any tender,
exchange or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the Custodian or
the respective Foreign Sub-Custodian is in actual possession of such foreign
securities or property and (ii) the Custodian receives Proper Instructions with
regard to the exercise of any such right or power, and both (i) and (ii) occur
at least three (3) business days prior to the date on which such right or power
is to be exercised.
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SECTION 4.11. LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES
SYSTEMS. Each agreement pursuant to which the Custodian employs as a Foreign
Sub-Custodian shall, to the extent possible, require the Foreign Sub-Custodian
to exercise reasonable care in the performance of its duties and, to the extent
possible, to indemnify, and hold harmless, the Custodian from and against any
loss, damage, cost, expense, liability or claim arising out of or in connection
with the Foreign Sub-Custodian's performance of such obligations. At the Fund's
election, the Portfolios shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a Foreign Sub-Custodian as a
consequence of any such loss, damage, cost, expense, liability or claim if and
to the extent that the Portfolios have not been made whole for any such loss,
damage, cost, expense, liability or claim.
SECTION 4.12. TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund, the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of the
United States or of any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations imposed on
the Fund with respect to the Portfolios or the Custodian as custodian of the
Portfolios by the tax law of countries other than those mentioned in the above
sentence, including responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental reporting. The
sole responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
SECTION 4.13. CONFLICT. If the Custodian is delegated the responsibilities
of Foreign Custody Manager pursuant to the terms of Section 3 hereof, in the
event of any conflict between the provisions of Sections 3 and 4 hereof, the
provisions of Section 3 shall prevail.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent and deposit into the account of the appropriate Portfolio such
payments as are received for Shares thereof issued or sold from time to time by
the Fund. The Custodian will provide timely notification to the Fund on behalf
of each such Portfolio and the Transfer Agent of any receipt by it of payments
for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Fund's Declaration of Trust and any applicable votes of the
Board of Trustees pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for payment to
holders of Shares who have delivered to the Transfer Agent a request for
redemption or repurchase of their Shares. In connection with the redemption or
repurchase of Shares, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a
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commercial bank designated by the redeeming shareholders. In connection with
the redemption or repurchase of Shares, the Custodian shall honor checks drawn
on the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance
with such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
SECTION 6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Agreement means a writing signed
or initialed by one or more person or persons as the Board of Trustees shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Trustees accompanied
by a detailed description of procedures approved by the Board of Trustees,
Proper Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Trustees and
the Custodian are satisfied that such procedures afford adequate safeguards for
the Portfolios' assets. For purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant to any three - party
agreement which requires a segregated asset account in accordance with Section
2.10.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from the Fund
on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Agreement, PROVIDED that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Trustees.
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SECTION 8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a Certified Resolution as conclusive evidence
(a) of the authority of any person to act in accordance with such resolution or
(b) of any determination or of any action by the Board of Trustees pursuant to
the Fund's Declaration of Trust as described in such resolution, and such
resolution may be considered as in full force and effect until receipt by the
Custodian of written notice to the contrary.
SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees to keep the books of
account of each Portfolio and/or compute the net asset value per Share of the
outstanding Shares or, if directed in writing to do so by the Fund on behalf of
the Portfolio, shall itself keep such books of account and/or compute such net
asset value per Share. If so directed, the Custodian shall also calculate daily
the net income of the Portfolio as described in the Prospectus and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per Share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Prospectus.
SECTION 10. RECORDS
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Agreement in
such manner as will meet the obligations of the Fund under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder. All such records shall be the property of the Fund and shall at
all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the SEC. The Custodian shall, at the Fund's request,
supply the Fund with a tabulation of securities owned by each Portfolio and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
21
<PAGE>
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the SEC and with respect to any
other requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the Portfolios at
such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a U.S. Securities
System or a Foreign Securities System (collectively referred to herein as the
"SECURITIES SYSTEMS"), relating to the services provided by the Custodian under
this Agreement; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, the reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
SECTION 14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Agreement and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled
to rely on and may act upon advice of counsel (who may be counsel for the Fund)
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. The Custodian shall be without liability to
the Fund and the Portfolios for any loss, liability, claim or expense resulting
from or caused by anything which is (A) part of Country Risk (as defined in
Section 3 hereof), including without limitation nationalization, expropriation,
currency restrictions, or acts of war, revolution, riots or terrorism,
22
<PAGE>
or (B) part of the "prevailing country risk" of the Portfolios, as such term is
used in SEC Release Nos. IC-22658; IS-1080 (May 12, 1997) or as such term or
other similar terms are now or in the future interpreted by the SEC or by the
staff of the Division of Investment Management thereof.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, work
stoppages, natural disasters, or other similar events or acts; (ii) errors by
the Fund or the Investment Advisor in their instructions to the Custodian
provided such instructions have been in accordance with this Agreement; (iii)
the insolvency of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's sub-custodian
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) any delay or failure of any company, corporation, or
other body in charge of registering or transferring securities in the name of
the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or
any consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Agreement.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the
23
<PAGE>
performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; PROVIDED, however that the Custodian
shall not with respect to a Portfolio act under Section 2.8 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has approved the initial use of a
particular Securities System by such Portfolio, as required by Rule 17f-4 under
the 1940 Act and that the Custodian shall not with respect to a Portfolio act
under Section 2.9 hereof in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of Trustees has approved
the initial use of the Direct Paper System by such Portfolio; PROVIDED FURTHER,
however, that the Fund shall not amend or terminate this Agreement in
contravention of any applicable federal or state regulations, or any provision
of the Fund's Declaration of Trust, and further provided, that the Fund on
behalf of one or more of the Portfolios may at any time by action of its Board
of Trustees (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this Agreement in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Agreement, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
SECTION 16. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Portfolios shall be appointed by
the Board of Trustees, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities of each applicable Portfolio then held by it
hereunder and shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
24
<PAGE>
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a Certified Resolution, deliver at the office of
the Custodian and transfer such securities, funds and other properties in
accordance with such resolution.
In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to the Custodian on or before the
date when such termination shall become effective, then the Custodian shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian on behalf of each
applicable Portfolio and all instruments held by the Custodian relative thereto
and all other property held by it under this Agreement on behalf of each
applicable Portfolio, and to transfer to an account of such successor custodian
all of the securities of each such Portfolio held in any Securities System.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Agreement.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian shall remain in full force and effect.
SECTION 17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Agreement as
may in their joint opinion be consistent with the general tenor of this
Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Fund's Declaration of
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 18. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to THE MARSICO FOCUS FUND AND THE MARSICO GROWTH & INCOME FUND with
respect to which it desires to have the Custodian render services as custodian
under the terms hereof, it shall so notify the
25
<PAGE>
Custodian in writing, and if the Custodian agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.
SECTION 19. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
SECTION 20. PRIOR AGREEMENTS
This AGREEMENT supersedes and terminates, as of the date hereof, all prior
Agreements between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
SECTION 21. NOTICES.
Any notice, instruction or other instrument required to be given hereunder
may be delivered in person to the offices of the parties as set forth herein
during normal business hours or delivered prepaid registered mail or by telex,
cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: THE MARSICO INVESTMENT FUND
1200 17th Street, Suite 1300
Denver, Colorado 80202
Attention:
Telephone:
Telecopy:
To the Custodian: STATE STREET BANK AND TRUST COMPANY
1776 Heritage Drive
North Quincy, Massachusetts 02171
Attention:
Telephone:
Telecopy:
Such notice, instruction or other instrument shall be deemed to have been
served in the case of a registered letter at the expiration of five business
days after posting, in the case of cable twenty-four hours after dispatch and,
in the case of telex, immediately on dispatch and if
26
<PAGE>
delivered outside normal business hours it shall be deemed to have been received
at the next time after delivery when normal business hours commence and in the
case of cable, telex or telecopy on the business day after the receipt thereof.
Evidence that the notice was properly addressed, stamped and put into the post
shall be conclusive evidence of posting.
SECTION 22. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 23. SHAREHOLDER COMMUNICATIONS ELECTION
SEC Rule 14b-2 requires banks which hold securities for the account of
customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held
by the bank unless the beneficial owner has expressly objected to disclosure
of this information. In order to comply with the rule, the Custodian needs
the Fund to indicate whether it authorizes the Custodian to provide the
Fund's name, address, and share position to requesting companies whose
securities the Fund owns. If the Fund tells the Custodian "no", the
Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below,
the Custodian is required by the rule to treat the Fund as consenting to
disclosure of this information for all securities owned by the Fund or any
funds or accounts established by the Fund. For the Fund's protection, the
Rule prohibits the requesting company from using the Fund's name and address
for any purpose other than corporate communications. Please indicate below
whether the Fund consents or objects by checking one of the alternatives
below.
YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.
NO [x ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
27
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of *[date].
THE MARSICO INVESTMENT FUND FUND SIGNATURE ATTESTED TO BY:
By: By:
--------------------------- ---------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
--------------------------- ---------------------------
STATE STREET BANK AND TRUST COMPANY SIGNATURE ATTESTED TO BY:
By: By:
--------------------------- ---------------------------
Name: Ronald E. Logue Name:
--------------------------- ---------------------------
Title: Executive Vice President Title:
--------------------------- ---------------------------
<PAGE>
CUSTODY, RECORDKEEPING AND ADMINISTRATIVE SERVICES
AGREEMENT
THIS AGREEMENT is made this __ day of December, 1997, by and between UMB
BANK, N.A., a national banking association, having its principal office and
place of business at 1010 Grand Avenue, Kansas City, Missouri 64141 (the
"Bank"), SUNSTONE INVESTOR SERVICES, LLC., a Wisconsin limited liability
company, having its principal office and place of business at 207 East Buffalo
Street, Suite 400, Milwaukee, Wisconsin 53202 ("Sunstone"), and MARSICO
INVESTMENT FUND, having its principal office and place of business at 1200 17th
Street, Colorado 80202 (the "Fund").
WHEREAS, the Fund offers or intends to offer to its shareholders one or
more retirement or similar plans described in Appendix A hereto and as such is
the sponsor of custodial accounts ("Accounts") pursuant to Custodial Agreements
(the "Account Agreements");
WHEREAS, the Fund wishes to appoint the Bank as the custodian for the
Accounts, and the Bank is willing to accept appointment as custodian for the
Accounts, on the terms and conditions set forth herein; and
WHEREAS, the Fund and the Bank desire Sunstone to perform, in its capacity
as transfer agent for the Fund, certain administrative and recordkeeping duties
relative to the Accounts.
NOW, THEREFORE, the parties to this Agreement agree to the following:
1. The Bank represents to Fund and Sunstone that it is, and as long as
the Accounts and this Agreement are in effect will be, qualified to
act as custodian under all applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code") and all other applicable
rules laws, rules and regulations.
2. The Fund hereby appoints the Bank and the Bank hereby accepts
appointment as Custodian for the Accounts. The Bank agrees to act as
Custodian for the Accounts subject to the terms hereof, and of each of
the Account Agreements.
a. The Bank understands and agrees that from time to time Fund may
propose amendments to the Account Agreements, whether to comply
with then-current provisions of the Code or otherwise, and such
amendments shall take effect subject to the provisions of the
Account Agreements and subject to the Bank's rights thereunder.
The rights of the Fund to propose amendments from time to time
shall not affect the Bank's responsibilities as provided herein
including under Section 4 hereof.
<PAGE>
b. The appointment of the Bank as Custodian hereunder is subject to
(i) the terms of the respective Account Agreements; (ii) this
Agreement (which shall govern in case of any inconsistency
between the terms of this Agreement and any of the Account
Agreements or to the extent the respective Account Agreements do
not apply) and the right of Fund hereunder to terminate the
appointment of the Bank as Custodian under the Account Agreements
and to name a successor Custodian at any time and from time to
time on written notice to the Bank; and (iii) the rights of the
Bank and of Fund to terminate such custodianship in accordance
with the terms of the Account Agreements and this Agreement.
3. Sunstone hereby agrees to diligently perform the administrative and
recordkeeping services described in Appendix A with respect to the
Accounts. It is understood that it is not the responsibility of any
party hereunder to perform tests and/or monitor and enforce any
contribution or benefit limitations imposed by the Code, such
responsibility being that of the party adopting the Account Agreement.
4. The responsibilities for preparing and keeping current the documents
related to the Account Agreements shall be as follows:
a. The Fund shall provide Sunstone with approved/authorized forms of
Account Agreements, disclosure statements and similar documents,
and shall keep such documents current by providing timely any
necessary amendments, modifications and supplements thereto
("Account Documents"). The Fund shall bear full responsibility
for the Account Documents and the compliance thereof with all
applicable laws, rules and regulations, as amended from time to
time, and shall fully protect, indemnify and hold harmless the
Bank and Sunstone, as the case may be, against any losses arising
out of its or their reliance thereon.
b. The Fund shall also prepare application forms, transfer forms,
beneficiary designation forms and similar documents ("Related
Documents"). The Fund shall bear full responsibility for the
Related Documents and the compliance thereof with all applicable
laws, rules and regulations, as amended from time to time, and
shall fully protect, indemnify and hold harmless the Fund against
any losses arising out of its or their reliance thereon.
5. Sunstone is hereby authorized to sign any Account Agreement or
application for an account by and on behalf of the Bank as Custodian,
or endorse any check or draft or other item payable to the Bank by and
on behalf of the Bank as Custodian, and to designate an employee or
employees of Sunstone as authorized persons to execute such signatures
and endorsements. The Bank shall promptly transmit, properly
endorsed, to Sunstone any monies, checks or other property received by
the Bank as Custodian for investment for the Accounts.
6. Sunstone shall collect all fees charged to the Accounts. Sunstone
shall remit to the Bank a portion (as specified in Appendix B hereto)
of the fees described in Appendix
<PAGE>
B hereto which are collected by Sunstone as compensation for its
services hereunder. Sunstone shall retain the balance as compensation
for its services performed under this Agreement. Sunstone may from
time to time, after receipt of approval from the Fund, change such fee
schedule; provided, however, no such revision may reduce the
compensation to be remitted to the Bank without the Bank's prior
approval. The Bank authorizes the distribution on its behalf of any
revised fee schedule to existing and prospective Account holders. In
the event the Fund determines to waive all or a portion of any related
Account fees, the Fund shall continue to be responsible for arranging
for payment of all Account related fees to Sunstone and the Bank.
7. Sunstone shall furnish to the Bank a quarterly report consisting of
the number of Accounts and their aggregate market value as of the end
of each quarter. Sunstone shall also provide Bank with a shareholder
list from time to time as Bank may reasonably request and the Fund
hereby authorizes Sunstone to furnish such reports.
8. Bank and Sunstone acknowledge the proprietary and confidential nature
of Fund's list of shareholders, and hereby agree not to disclose to
any other person the names of such shareholders without prior written
permission from Fund, except where such disclosure is required by the
Code or other law or where the Bank or Sunstone may be exposed to
civil or criminal proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when
subject to governmental or regulatory audit or investigation.
.
9. Sunstone and Fund agree to fully protect the Bank in relying upon the
respective duties and responsibilities of Sunstone and Fund under the
Account Agreements and this Agreement, and agree that each will fully
indemnify the Bank and save and hold the Bank harmless from and
against any and all claims, damages (including reasonable attorneys'
fees), costs, expenses, losses, judgments, taxes (including penalties
and interest thereon), or liabilities of any nature whatsoever
resulting from or arising out of their respective duties and
responsibilities under the Account Agreements and this Agreement;
provided however, neither Sunstone nor the Fund is required to
protect, indemnify or hold the Bank harmless for any claims, damages,
costs, expenses, losses, judgments, taxes or liabilities arising out
of, resulting from, or in connection with the negligence, bad faith or
willful misconduct of the Bank. The Bank may reasonably rely on
actions or inactions of Sunstone or the Fund in their performing
duties under this Agreement and such reasonable reliance shall not be
deemed negligent on part of Bank.
10. The Bank agrees to fully protect Fund and Sunstone in relying upon the
Bank's duties and responsibilities with respect to the Account
Agreements and this Agreement, and agrees that it will fully indemnify
the Fund and Sunstone and save and hold each harmless from and against
any and all claims, damages (including reasonable attorneys' fees),
costs, expenses, losses, judgments, taxes (including penalties and
interest thereon), or liabilities of any nature whatsoever resulting
from or arising out of its duties and responsibilities under the
Account Agreements and this Agreement;
<PAGE>
provided however, the Bank is not required to protect, indemnify or
hold the Fund or Sunstone harmless for any claims, damages, costs,
expenses, losses, judgments, taxes or liabilities arising out of,
resulting from, or in connection with (i) the respective negligence,
bad faith or willful misconduct of the Fund or Sunstone, or (ii) the
preparation and keeping current of the Related Documents. Fund and
Sunstone may reasonably rely on actions or inactions of the Bank in
its performing duties under this Agreement and such reasonable
reliance shall not be deemed negligent on part of the Fund and
Sunstone.
11. No provision of this Agreement shall modify or supersede any provision
of the Transfer Agency Agreement executed by Sunstone and Fund.
12. This Agreement may be terminated at any time by mutual consent of the
Bank, Sunstone, and Fund, or upon sixty (60) days' written notice to
each of the other parties by any party. Upon termination, the Bank
and Sunstone shall transfer the records of the Account as directed by
Fund. In the absence of such designation by the Fund, the Fund shall
upon the date specified in the notice of termination of this Agreement
and delivery of the records maintained hereunder, assume full
responsibility hereunder and Sunstone and Bank shall thereby be
relieved of all duties and responsibilities pursuant to this
Agreement. Anything herein to the contrary notwithstanding, the
protective covenants and indemnities provided by this Agreement shall
survive the termination of the Agreement and shall continue in effect
with respect to any and all matters arising (or alleged by any third
party to have occurred, whether by way of act or default) during the
existence of the Agreement.
13. No modification or amendment of this Agreement shall be valid or
binding on the parties unless made in writing and signed on behalf of
each of the parties by their respective duly authorized officers or
representatives.
14. Notices shall be communicated by first class mail, or by such other
means as the parties may agree, to the persons and addresses specified
below or to such other persons and addresses as the parties may
specify in writing.
If to Bank: UMB Bank, N.A.
P.O. Box 419692
Kansas City, Missouri 64141
Attn: William A. Hann
<PAGE>
If to Sunstone: Sunstone Investor Services, LLC
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202
Attn: Anita Zagrodnik
If to Fund: Marsico Investment Fund
1200 17th Street
Denver Colorado 80202
15. This Agreement shall be governed by the laws of the State of
Wisconsin.
16. This Agreement may be executed in any number of counterparts, and by
the parties hereto on separate counterparts, each of which when so
executed shall be deemed an original and all of which when taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers under authority of their respective
Boards as of the day and year first above written.
UMB BANK, N.A.,
By:
- -------------------------------
Title:
-----------------------------
Attest:
----------------------------
Secretary
SUNSTONE INVESTOR SERVICES, LLC.
By:
- -------------------------------
Title:
-----------------------------
Attest:
----------------------------
Secretary
MARSICO INVESTMENT FUND
By:
- -------------------------------
Title:
-----------------------------
Attest:
----------------------------
Secretary
<PAGE>
APPENDIX A
PLANS AND SERVICES
1. Individual Retirement Accounts established under the provisions of Section
408 of the Code, and the regulations promulgated thereunder, simplified employee
pension plans, Roth IRAs, Education IRAs, SIMPLE IRA plans and Section 403(b)
accounts:
a. Receive, allocate to the appropriate Account, and invest pursuant
to the governing Account Agreement, all contributions made
thereunder, in accordance with the written instructions of the
duly authorized directing authority;
b. Reinvest for each Account all dividends and capital gains or
other distributions payable on the shares credited thereto;
c. Maintain and reconcile Account records and investment transaction
records;
d. Furnish to each Account grantor (with respect to each grantor's
individual Account), promptly after the end of each calendar
year, a statement of such grantor's account showing:
i. The net asset value of all full and fractional shares as of
the first and last business days of the calendar year,
ii. Contributions to and distributions from the account during
the calendar year, and
iii. Earnings reinvested in the account during the calendar year.
e. Furnish to each Account grantor (with respect to each grantor's
individual Account) a confirmation of each transaction in
accordance with the terms of the Fund's then current prospectus;
f. Make distributions from Accounts, including withholding and
remittance of federal tax, in accordance with the provisions of
the Account Agreements and relevant provisions of the Code;
g. Furnish informational returns and reports to each Account grantor
(with respect to each grantor's individual Account) and to the
Internal Revenue Service as may be required by the Code; and
h. Other such functions as all of the parties may agree to from time
to time.
<PAGE>
APPENDIX B
FEES
1. Individual Retirement Accounts established under the provisions of Section
408 of the Code, and the regulations promulgated thereunder, simplified employee
pension plans, Roth IRAs, Education IRAs, SIMPLE IRA plans and Section 403(b)
Accounts:
FEES: Annual maintenance fee: _____ per shareholder. The annual
maintenance fee will be deducted from shareholder accounts unless
otherwise paid by the shareholder typically during the fourth
quarter of each calendar year.
PERCENTAGE TO BANK: 25% of the foregoing fees collected by Sunstone.
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this ___ day of December, 1997, by and between
The Marsico Investment Fund, a Delaware business trust (the "Trust"), and
Sunstone Financial Group, Inc., a Wisconsin corporation (the "Administrator").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "Act") and is authorized to
issue shares of beneficial interests (the "Shares") in separate series with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust and the Administrator desire to enter into an agreement
pursuant to which the Administrator shall provide certain administration
services to such investment portfolios of the Trust as are listed on Schedule A
hereto and any additional investment portfolios the Trust and Administrator may
agree upon and include on Schedule A as such Schedule may be amended from time
to time (such investment portfolios and any additional investment portfolios are
individually referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT
The Trust hereby appoints the Administrator as administrator of the Funds
for the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to render the services herein set forth, for
the compensation herein provided.
2. SERVICES AS ADMINISTRATOR
(a) Subject to the direction and control of the Trust's Board of Trustees
and utilizing information provided by the Trust and its agents, the
Administrator will: (1) provide office space, facilities, equipment and
personnel to carry out its services hereunder; (2) compile data for and prepare
with respect to the Funds timely Notices to the Securities and Exchange
Commission (the "Commission") required pursuant to Rule 24f-2 under the Act and
Semi-Annual Reports on Form N-SAR; (3) assist in the preparation for execution
by the Trust and file all federal income and excise tax returns and state income
tax returns (and such other required tax filings as may be agreed to by the
parties) other than those required to be made by the Trust's custodian or
transfer agent, subject to review and approval of the Trust and the Trust's
independent accountants; (4) prepare the financial statements for the Annual and
Semi-Annual Reports required pursuant to Section 30(d) under the Act; (5) review
the Registration Statement for the Trust (on Form N-1A or any replacement
therefor) and any amendments thereto; (6)
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determine and periodically monitor each Fund's expense accruals and cause all
appropriate expenses to be paid from Trust assets on proper authorization from
the Trust; (7) assist in the acquisition of the Trust's fidelity bond required
by the Act, monitor the amount of the bond and make the necessary Commission
filings related thereto; (8) from time to time as the Administrator deems
appropriate, check each Fund's compliance with the policies and limitations of
each Fund relating to the portfolio investments as set forth in the Prospectus
and Statement of Additional Information and monitor each Fund's status as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (but these functions shall not relieve the Trust's investment
adviser and sub-advisers, if any, of their primary day-to-day responsibility for
assuring such compliance); (9) maintain, and/or coordinate with the other
service providers the maintenance of, the accounts, books and other documents
required pursuant to Rule 31a-1(a) and (b) under the Act; (10) prepare and/or
file the documents to be filed with the states identified by the Trust to
maintain the Fund's securities registration; (11) develop with legal counsel and
the Trust an agenda for each board meeting and, if requested by the Trustees,
attend board meetings and prepare minutes; (12) coordinate preparation of other
matters required to be reported to the board; (13) prepare Form 1099s for
directors and other fund vendors; (14) calculate dividend and capital gains
distributions subject to review and approval by the Trust and its independent
accountants; and (15) generally assist in the Trust's administrative operations
as mutually agreed to by the parties. The duties of the Administrator shall be
confined to those expressly set forth herein, and no implied duties are assumed
by or may be asserted against the Administrator hereunder.
(b) The Trustees of the Trust shall cause the officers, adviser,
distributor, legal counsel, independent accountants, custodian and transfer
agent for the Funds to cooperate with the Administrator and to provide the
Administrator, upon request, with such information, documents and advice
relating to the Funds and the Trust as is within the possession or knowledge of
such persons, in order to enable the Administrator to perform its duties
hereunder. In connection with its duties hereunder, the Administrator shall be
entitled to rely, and shall be held harmless by the Trust when acting in
reliance, upon the instruction, advice, information or any documents relating to
the Funds provided to the Administrator by an officer or representative of the
Funds or by any of the aforementioned persons. The Administrator shall be
entitled to rely on any document which it reasonably believes to be genuine and
to have been signed or presented by the proper party. Fees charged by such
persons shall be an expense of the Trust. The Administrator shall be entitled
to rely on any document which it reasonably believes to be genuine and to have
been signed or presented by the proper party. The Administrator shall not be
held to have notice of any change of authority of any officer, agent,
representative or employee of the Trust until receipt of written notice thereof
from the Trust.
(c) In compliance with the requirements of Rule 31a-3 under the Act, the
Administrator hereby agrees that all records which it maintains for the Trust
are the property of the Trust and further agrees to surrender promptly to the
Trust any of such records upon the Trust's request. Subject to the terms of
Section 6, the Administrator further agrees to preserve for the periods
prescribed by Rule 31a-2 under the Act the records described in (a) above which
are maintained by the Administrator for the Trust.
(e) The Trust's Board of Trustees and the Funds' investment adviser have
and retain primary responsibility for all compliance matters relating to the
Funds including but not limited to compliance with the Investment Company Act of
1940, as amended, the Internal Revenue Code of 1986, as amended, and the
policies and limitations of each Fund relating to the portfolio investments as
set forth
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in the Prospectus and Statement of Additional Information. Sunstone's monitoring
and other functions hereunder shall not relieve the Board and the investment
adviser of their primary day-to-day responsibility for assuring such compliance.
3. FEES; DELEGATION; EXPENSES
(a) In consideration of the services rendered pursuant to this Agreement,
the Trust will pay the Administrator a fee, computed daily and payable monthly,
as provided in Schedule B hereto, plus out-of-pocket expenses. The Trust shall
also pay the Administrator for organizational start-up services provided on
behalf of the Funds as specified in Schedule B. Out-of-pocket expenses include,
but are not limited to, travel, lodging and meals in connection with travel on
behalf of the Trust, programming and related expenses (previously incurred or to
be incurred by Administrator) in connection with providing electronic
transmission of data between the Administrator and the Funds' other service
providers, brokers, dealers and depositories, fees and expenses of pricing
services, and photocopying, postage and overnight delivery expenses. Fees shall
be paid by each Fund at a rate that would aggregate at least the applicable
minimum fee for each Fund.
(b) For the purpose of determining fees payable to the Administrator, net
asset value shall be computed in accordance with the Trust's Prospectuses and
resolutions of the Trust's Board of Trustees. The fee for the period from the
day of the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion which such period bears to the
full monthly period. Upon any termination of this Agreement before the end of
any month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. Should the Trust be
liquidated, merged with or acquired by another fund or investment company, any
accrued fees shall be immediately payable. Such fee as is attributable to each
Fund shall be a separate charge to each Fund and shall be the several (and not
joint or joint and several) obligation of each such Fund.
(c) The Administrator will bear all expenses in connection with the
performance of its services under this Agreement except as otherwise provided
herein. Other costs and expenses to be incurred in the operation of the Funds,
including, but not limited to: taxes; interest; brokerage fees and commissions,
if any; salaries, fees and expenses of officers and Trustees; Commission fees
and state Blue Sky fees; advisory fees; charges of custodians, transfer agents,
dividend disbursing and accounting services agents; security pricing services;
insurance premiums; outside auditing and legal expenses; costs of organization
and maintenance of corporate existence; typesetting, printing, proofing and
mailing of prospectuses, statements of additional information, supplements,
notices and proxy materials for regulatory purposes and for distribution to
current shareholders; typesetting, printing, proofing and mailing and other
costs of shareholder reports; expenses incidental to holding meetings of the
Fund's shareholders and Trustees; and any extraordinary expenses; will be borne
by the Funds or their investment adviser. Expenses incurred for distribution of
fund shares, including the typesetting, printing, proofing and mailing of
prospectuses for persons who are not shareholders of the Trust, will be borne by
the Trust or its investment adviser, except for such expenses permitted to be
paid by the Trust under a distribution plan adopted in accordance with
applicable laws.
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4. PROPRIETARY AND CONFIDENTIAL INFORMATION
The Administrator agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds and prior, present or potential shareholders of the Trust (and
clients of said shareholders), and not to use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where the
Administrator may be exposed to civil or criminal proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Trust. Records and information which have become
known to the public through no wrongful act of the Administrator or any of its
employees, agents or representatives shall not be subject to this paragraph.
5. LIMITATION OF LIABILITY
(a) The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds in connection with the
matters to which this Agreement relates, except for a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Furthermore, the Administrator shall not be
liable for any action taken or omitted to be taken in accordance with
instructions received by the Administrator from an officer or representative of
the Trust.
(b) The Administrator assumes no responsibility hereunder, and shall not
be liable, for any damage, loss of data, errors, delay or any other loss
whatsoever caused by events beyond its reasonable control. The Administrator
will, however, take all reasonable steps to minimize service interruptions for
any period that such interruption continues beyond the Administrator's control.
6. TERM
(a) This Agreement shall become effective with respect to each Fund listed
on Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. This Agreement shall continue in effect with
respect to each Fund until December__, 1999 (the "Initial Term"). Thereafter,
if not terminated as provided herein, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods.
(b) This Agreement may be terminated with respect to any one or more
particular Funds without penalty after the Initial Term (i) upon mutual consent
of the parties, or (ii) by either party upon not less than ninety (90) days'
written notice to the other party (which notice may be waived by the party
entitled to the notice). The terms of this Agreement shall not be waived,
altered, modified, amended or supplemented in any manner whatsoever except by a
written instrument signed by the Administrator and the Trust.
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(c) Notwithstanding anything herein to the contrary, upon the termination
of this Agreement or the liquidation of a Fund or the Trust, the Administrator
shall deliver the records of the Fund(s) and/or Trust as the case may be to the
Trust or person(s) designated by the Trust and thereafter the Trust or its
designee shall be solely responsible for preserving the records for the periods
required by all applicable laws, rules and regulations. In addition, in the
event of termination of this Agreement, or the proposed liquidation or merger of
the Trust or a Fund(s), and the Trust requests the Administrator to provide
services in connection therewith, the Administrator shall provide such services
and be entitled to such compensation as the parties may mutually agree.
7. NON-EXCLUSIVITY
The services of the Administrator rendered to the Trust are not deemed to
be exclusive. The Administrator may render such services and any other services
to others, including other investment companies. The Trust recognizes that from
time to time directors, officers and employees of the Administrator may serve as
trustees, directors, officers and employees of other entities (including other
investment companies), that such other entities may include the name of the
Administrator as part of their name and that the Administrator or its affiliates
may enter into investment advisory or other agreements with such other entities.
8. GOVERNING LAW; INVALIDITY
This Agreement shall be governed by Wisconsin law (except as to Section 9
hereof which shall be construed in accordance with Delaware law). To the extent
that the applicable laws of the State of Wisconsin, or any of the provisions
herein, conflict with the applicable provisions of the Act, the latter shall
control, and nothing herein shall be construed in a manner inconsistent with the
Act or any rule or order of the Commission thereunder. Any provision of this
Agreement which may be determined by competent authority to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
9. MISCELLANEOUS
This Agreement is executed by or on behalf of the Trust with respect to
each of the Funds and the obligations hereunder are not binding upon any of the
Trustees, officers or shareholders of the Trust individually but are binding
only upon the Funds to which such obligations pertain and the assets and
property of such Funds. The Trust's Certificate of Trust is on file with the
Secretary of State of Delaware.
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10. NOTICES
Any notice required or to be permitted to be given by either party to the
other shall be in writing and shall be deemed to have been given when sent by
registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Administrator shall be sent to Sunstone Financial Group,
Inc., 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202, Attention:
Miriam M. Allison, and notice to the Trust shall be sent to The Marsico
Investment Fund, 1200 17th Street, Suite 1300, Denver, Colorado 80202,
Attention: Barbara M. Japha.
11. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original agreement but such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
THE MARSICO INVESTMENT TRUST
(the "Trust")
By:
------------------------------------
President
SUNSTONE FINANCIAL GROUP, INC.
("Administrator")
By:
------------------------------------
President
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SCHEDULE A
TO THE
ADMINISTRATION AGREEMENT
BY AND BETWEEN
THE MARSICO INVESTMENT TRUST
AND
SUNSTONE FINANCIAL GROUP, INC.
NAME OF FUNDS
The Marsico Focus Fund
The Marsico Growth & Income Fund
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<PAGE>
SCHEDULE B
TO THE
ADMINISTRATION AGREEMENT
BY AND BETWEEN
THE MARSICO INVESTMENT TRUST
AND
SUNSTONE FINANCIAL GROUP, INC.
<TABLE>
<CAPTION>
MINIMUM
NAME OF FUND AVERAGE NET ASSETS ANNUAL FEES ANNUAL FEE
- ------------ ------------------ ----------- ----------
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Focus Fund Up to $50 Million 14.0 basis points $62,500
$50 Million to $100 Million 10.0 basis points
$100 Million to $350 Million 4.0 basis points
Over $350 Million 1.0 basis point
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Growth & Income Fund Up to $50 Million 14.0 basis points $62,500
$50 Million to $100 Million 10.0 basis points
$100 Million to $350 Million 4.0 basis points
Over $350 Million 1.0 basis point
- -------------------------------------------------------------------------------------------
</TABLE>
The Trust shall pay the Administrator $_______ for its initial start-up services
for the Fund. The Trust shall also pay/reimburse the Administrator's
out-of-pocket expenses as described in the Agreement. The foregoing fee schedule
assumes a single class of shares for each Fund.
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<PAGE>
TRANSFER AGENCY AGREEMENT
THIS AGREEMENT is made as of this ___ day of December, 1997, by and between
The Marsico Investment Fund, a Delaware business trust the "Trust"), and
Sunstone Investor Services, LLC, a Wisconsin limited liability company
("Sunstone").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "Act") and is authorized to
issue shares of beneficial interests (the "Shares") in separate series with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust and the Administrator desire to enter into an agreement
pursuant to which the Administrator shall provide certain transfer agency
services to such investment portfolios of the Trust as are listed on Schedule A
hereto and any additional investment portfolios the Trust and Administrator may
agree upon and include on Schedule A as such Schedule may be amended from time
to time (such investment portfolios and any additional investment portfolios are
individually referred to as a "Fund" and collectively the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE I
APPOINTMENT OF TRANSFER AGENT
A. APPOINTMENT.
1. The Trust hereby appoints Sunstone as transfer agent and dividend
disbursing agent of all the Shares of the Funds during the period of this
Agreement, and Sunstone hereby accepts such appointment as transfer agent and
dividend disbursing agent and agrees to perform the duties thereof as
hereinafter set forth.
2. Sunstone shall perform the transfer agent and dividend disbursing
agent services described on Schedule B hereto. To the extent that the Trust
requests Sunstone to perform any additional services, Sunstone and the Trust
shall mutually agree as to the services to be accomplished, the manner of
accomplishment and the compensation to which Sunstone shall be entitled with
respect thereto.
3. Sunstone may, in its discretion, appoint in writing other parties
qualified to perform transfer agency services reasonably acceptable to the Trust
(individually, a "Sub-transfer Agent") to carry out some or all of its
responsibilities under this Agreement with respect to a Fund; provided, however,
that unless the Trust shall enter into a written agreement with such
Sub-transfer Agent, the Sub-transfer Agent shall be the agent of Sunstone and
not the agent of
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the Trust and, in such event Sunstone shall be fully responsible for the acts or
omissions of such Sub-transfer Agent and shall not be relieved of any of its
responsibilities hereunder by the appointment of such Sub-transfer Agent.
4. Sunstone shall have no duties or responsibilities whatsoever
hereunder except such duties and responsibilities as are specifically set forth
in this Agreement, and no covenant or obligation shall be implied in this
Agreement against Sunstone.
B. DOCUMENTS/RECORDS.
1. In connection with such appointment, the Trust shall deliver or
cause to be delivered to Sunstone the following documents:
a) A copy of the Declaration of Trust and By-laws of the Trust
and all amendments thereto, and a copy of the resolutions of the Board of
Trustees of the Trust appointing Sunstone and authorizing the execution of this
Transfer Agency Agreement on behalf of the Funds, each certified by the
Secretary of the Trust;
b) A certificate signed by the President and Secretary of the
Trust specifying: the number of authorized Shares and the number of such
authorized Shares issued and currently outstanding, if any; the names and
specimen signatures of the officers of the Trust authorized to provide oral
instructions and to sign written instructions and requests on behalf of the
Trust (hereinafter referred to as "Authorized Persons") and to change the
persons authorized to provide such instructions from time to time, it being
understood Sunstone shall not be held to have notice of any change in the
authority of any Authorized Person until receipt of written notice thereof from
the Trust; and
.
c) Copies of the Trust's Registration Statement, as amended to
date, and the most recently filed Post-Effective Amendment thereto, filed by the
Trust with the Securities and Exchange Commission under the Securities Act of
1933, as amended (the "1933 Act"), and under the 1940 Act.
2. The Trust agrees to deliver or to cause to be delivered to
Sunstone in Milwaukee, Wisconsin, at the Trust's expense, all of its shareholder
account records relating to the Funds in a format acceptable to Sunstone and all
such other documents, records and information as Sunstone may reasonably request
in order for Sunstone to perform its services hereunder.
ARTICLE II
COMPENSATION & EXPENSES
A. COMPENSATION. In consideration for its services hereunder as transfer
agent and dividend disbursing agent, each Fund will pay to Sunstone such
compensation as provided in Schedule C.
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<PAGE>
B. EXPENSES. The Trust on behalf of each Fund also agrees to promptly
reimburse Sunstone for all out-of-pocket expenses or disbursements incurred by
Sunstone in connection with the performance of services under this Agreement
including, but not limited to, expenses for postage, express delivery services,
freight charges, envelopes, checks, drafts, forms (continuous or otherwise),
specially requested reports and statements, bank account service fees and
charges, telephone calls, telegraphs, stationery supplies, outside printing and
mailing firms, magnetic tapes, reels or cartridges (if sent to a Fund or to a
third party at a Fund's request) and magnetic tape handling charges, on-site and
off-site record storage, media for storage of records (e.g., microfilm,
microfiche, optical platters, computer tapes and disks), computer equipment
installed at a Fund's request at a Fund's or a third party's premises,
telecommunications equipment, telephone/telecommunication lines between the
Trust and its agents, on one hand, and Sunstone on the other, proxy soliciting,
processing and/or tabulating costs, second site back-up computer facility,
transmission of statement data for remote printing or processing, and
transaction fees to the extent any of the foregoing are paid by Sunstone.
C. PAYMENT PROCEDURES.
1. Amounts due hereunder shall be due and paid by the respective
Fund on or before the fifteenth (15th) day after the date of the statement
therefor (the "Due Date"). Service fees are billed monthly, and out-of-pocket
expenses are billed as incurred (unless prepayment is requested by Sunstone). If
requested by Sunstone, postage and other out-of-pocket expenses are payable in
advance, and in the event requested, postage is due at least seven days prior to
the anticipated mail date. In the event Sunstone requests advance payment,
Sunstone shall not be obligated to incur such expenses or perform the related
service(s) until payment is received. Sunstone may, at its option, arrange to
have various service providers submit invoices directly to the Funds for payment
of out-of-pocket expenses reimbursable hereunder. The Trust is aware that its
failure to pay all amounts in a timely fashion so that they will be received by
Sunstone on or before the Due Date will give rise to costs to Sunstone not
contemplated by this Agreement, including but not limited to carrying,
processing and accounting charges. Accordingly, in the event that any amounts
due hereunder are not received by Sunstone by the Due Date, the Trust shall pay
a late charge equal to one and one-half percent (1.5%) per month or the maximum
amount permitted by law, whichever is less. In addition, the Trust shall pay
all costs of collection, including reasonable attorney's fees and court costs,
of Sunstone. The parties hereby agree that such late charge represents a fair
and reasonable computation of the costs incurred by reason of late payment or
payment of amounts not properly due. Acceptance of such late charge shall in no
event constitute a waiver of a Fund's breach or prevent Sunstone from exercising
any other rights and remedies available to it.
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<PAGE>
ARTICLE III
PROCESSING AND PROCEDURES
A. ISSUANCE, REDEMPTION AND TRANSFER OF SHARES
1. Sunstone acknowledges that it has received a copy of each Fund's
Prospectus (as hereinafter defined), which Prospectus describes how sales and
redemptions of shares of each Fund shall be made and Sunstone agrees to accept
purchase orders and redemption requests with respect to Fund shares on each Fund
Business Day in accordance with such Prospectus. "Fund Business Day" shall be
deemed to be each day on which the New York Stock Exchange is open for trading,
and "Prospectus" shall mean the last Fund prospectus actually received by
Sunstone from the Fund with respect to which the Fund has indicated a
registration statement under the 1933 Act has become effective, including the
Statement of Additional Information, incorporated by reference therein.
2. On each Fund Business Day Sunstone shall, as of the time at which
the net asset value of each Fund is computed, issue to and redeem from the
accounts specified in a purchase order or redemption request in proper form and
accepted by the Trust, which in accordance with the Prospectus is effective on
such day, the appropriate number of full and fractional Shares based on the net
asset value per Share of the respective Fund specified in an advice received on
such Fund Business Day from or on behalf of the Fund.
3. Upon the issuance of any Shares in accordance with this
Agreement, Sunstone shall not be responsible for the payment of any original
issue or other taxes required to be paid by the Fund in connection with such
issuance of any Shares.
4. Sunstone shall not be required to issue any Shares after it has
received from an Authorized Person or from an appropriate federal or state
authority written notification that the sale of Shares has been suspended or
discontinued, and Sunstone shall be entitled to rely upon such written
notification.
5. Upon receipt of a redemption request and monies paid to it by the
Custodian in connection with a redemption of Shares, Sunstone shall cancel the
redeemed Shares and after making appropriate deduction for any withholding of
taxes required of it by applicable federal law, make payment in accordance with
the Fund's redemption and payment procedures described in the Prospectus.
6. (a) Except as otherwise provided in sub-paragraph (b) of this
paragraph, Shares will be transferred or redeemed upon presentation to Sunstone
of instructions properly endorsed for exchange, transfer or redemption,
accompanied by such documents as the Trust and Sunstone deem necessary to
evidence the authority of the person making such transfer or redemption, and
bearing satisfactory evidence of the payment of stock transfer taxes. Sunstone
reserves the right to refuse to transfer or redeem Shares until it is satisfied
that the instructions are valid and genuine, and for that purpose it will
require, unless otherwise instructed by an
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<PAGE>
Authorized Person or except as provided in sub-paragraph (b) of this paragraph,
a guarantee of signature by an "Eligible Guarantor Institution" as that term is
defined by SEC Rule 17Ad-15. Sunstone also reserves the right to refuse to
transfer or redeem Shares until it is satisfied that the requested transfer or
redemption is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or redemptions which Sunstone, in its
judgment, deems improper or unauthorized, or until it is satisfied that there is
no reasonable basis to any claims adverse to such transfer or redemption.
Sunstone may, in effecting transfers and redemptions of Shares, rely upon those
provisions of the Uniform Act for the Simplification of Fiduciary Security
Transfers or the Uniform Commercial Code, as the same may be amended from time
to time, applicable to the transfer of securities, and shall not be responsible
for any act done or omitted by it in good faith in reliance upon such laws.
(b) Notwithstanding the foregoing or any other provision
contained in this Agreement to the contrary, Sunstone shall be fully protected
by each Fund in not requiring any instruments, documents, assurances,
endorsements or guarantees, including, without limitation, any signature
guarantees, in connection with a redemption, exchange or transfer of Shares
whenever Sunstone reasonably believes that requiring the same would be
inconsistent with the transfer and redemption procedures as described in the
Prospectus.
7. Notwithstanding any provision contained in this Agreement to the
contrary, Sunstone shall not be required or expected to require, as a condition
to any transfer or redemption of any Shares pursuant to a computer tape or
electronic data transmission, any documents to evidence the authority of the
person requesting the transfer or redemption and/or the payment of any stock
transfer taxes, and shall be fully protected in acting in accordance with the
applicable provisions of this Article.
8. In connection with each purchase and each redemption of Shares,
Sunstone shall send such statements as are prescribed by the Federal securities
laws applicable to transfer agents or as described in the Prospectus. It is
understood that certificates representing Shares will not be offered by the
Trust or available to investors.
9. Procedures for effecting purchase, redemption or transfer
transactions accepted from investors by telephone or other methods shall be
established by mutual agreement between the Trust and Sunstone and consistent
with the terms of the Prospectus. Sunstone upon notice to the Trust may
establish such additional procedures, rules and regulations governing the
purchase, redemption or transfer of Shares, as it may deem advisable and
consistent with the Prospectus and such rules and regulations generally adopted
by mutual fund transfer agents. Sunstone shall not be liable, and shall be held
harmless by the Trust, for its actions or omissions which are consistent with
the foregoing procedures.
10. Prior to the effective date of any increase or decrease in the
total number of Shares authorized to be issued, or the issuance of any
additional Shares of a Fund pursuant to stock dividends, stock splits,
recapitalizations, capital adjustments or similar transactions, the Trust agrees
to deliver to Sunstone such documents, certificates, reports and legal opinions
as Sunstone may reasonably request.
5
<PAGE>
B. DIVIDENDS AND DISTRIBUTIONS.
1. The Trust shall furnish to Sunstone a copy of a resolution of its
Board of Directors, certified by an Authorized Person, either (i) setting forth
the date of the declaration of a dividend or distribution, the date of accrual
or payment, as the case may be, thereof, the record date as of which
shareholders entitled to payment, or accrual, as the case may be, shall be
determined, the amount per Share of such dividend or distribution, the payment
date on which all previously accrued and unpaid dividends are to be paid, and
the total amount, if any, payable to Sunstone on such payment date, or (ii)
authorizing the declaration of dividends and distributions on a daily or other
periodic basis and authorizing Sunstone to rely on a certificate of an
Authorized Person setting forth the information described in subsection (i) of
this paragraph.
2. In connection with a reinvestment of a dividend or distribution
of Shares of a Fund, Sunstone shall as of each Fund Business Day as specified in
a certificate or resolution described in paragraph 1, issue Shares of the Fund
based on the net asset value per Share of such Fund specified in an advice
received from or on behalf of the Fund on such Fund Business Day.
3. Upon the mail date specified in such certificate or resolution,
as the case may be, the Trust shall, in the case of a cash dividend or
distribution, cause the Custodian to deposit in an account in the name of
Sunstone on behalf of a Fund, an amount of cash, if any, sufficient for Sunstone
to make the payment, as of the mail date, specified in such Certificate or
resolution, as the case may be, to the Shareholders who were of record on the
record date. Sunstone will, upon receipt of any such cash, make payment of such
cash dividends or distributions to the shareholders of record as of the record
date. Sunstone shall not be liable for any improper payments made in accordance
with a certificate or resolution described in the preceding paragraph. If
Sunstone shall not receive from the Custodian sufficient cash to make payments
of any cash dividend or distribution to all shareholders of the Fund as of the
record date, Sunstone shall, upon notifying the Fund, withhold payment to all
shareholders of record as of the record date until sufficient cash is provided
to Sunstone.
4. It is understood that Sunstone in its capacity as transfer agent
and dividend disbursing agent shall in no way be responsible for the
determination of the rate or form of dividends or capital gain distributions due
to the shareholders pursuant to the terms of this Agreement. It is further
understood that Sunstone shall file with the Internal Revenue Service and
shareholders such appropriate federal tax forms concerning the payment of
dividend and capital gain distributions but shall in no way be responsible for
the collection or withholding of taxes due on such dividends or distributions
due to shareholders, except and only to the extent, required by applicable law.
C. RECORDS.
1. Sunstone shall keep such records as are specified in Schedule D
hereto in the form and manner, and for such period, as it may deem advisable but
not inconsistent with the rules and regulations of appropriate government
authorities, in particular Rules 31a-2 and 31a-3 under the 1940 Act. Sunstone
may deliver to the Trust from time to time at Sunstone's
6
<PAGE>
discretion, for safekeeping or disposition by the Trust in accordance with law,
such records, papers and documents accumulated in the execution of its duties as
such transfer agent, as Sunstone may deem expedient, other than those which
Sunstone is itself required to maintain pursuant to applicable laws and
regulations. The Trust shall assume all responsibility for any failure
thereafter to produce any record, paper, canceled Share certificate, or other
document so returned, if and when required. To the extent required by Section
31 of the 1940 Act and the rules and regulations thereunder, the records
specified in Schedule D hereto maintained by Sunstone, which have not been
previously delivered to the Trust pursuant to the foregoing provisions of this
paragraph, shall be considered to be the property of the Trust, shall be made
available upon request for inspection by the officers, employees, and auditors
of the Trust, and shall be delivered to the Trust promptly upon request and in
any event upon the date of termination of this Agreement, in the form and manner
kept by Sunstone on such date of termination or such earlier date as may be
requested by the Trust.
2. Sunstone agrees to keep all records and other information
relative to the Trust, the Funds and their shareholders confidential. In case
of any requests or demands for the inspection of the shareholder records of a
Fund, Sunstone will endeavor to notify the Fund promptly and to secure
instructions from an Authorized Person as to such inspection. Sunstone reserves
the right, however, to exhibit the shareholder records to any person whenever it
believes there is a reasonable likelihood that Sunstone will be held liable for
the failure to exhibit the shareholder records to such person; provided,
however, that in connection with any such disclosure Sunstone shall promptly
notify the Trust that such disclosure has been made or is to be made.
Notwithstanding the foregoing, Sunstone may disclose information when requested
by a shareholder concerning an account as to which such shareholder claims a
legal or beneficial interest or when requested by the Trust, the shareholder or
the dealer of record as to such account.
ARTICLE IV
CONCERNING THE TRUST
A. REPRESENTATIONS. The Trust represents and warrants to Sunstone that:
(a) It is a business trust duly organized and existing under the laws
of the State of Delaware, it is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and perform this Agreement, and
all requisite proceedings have been taken to authorize it to enter into and
perform this Agreement.
(b) It is an investment company registered under the 1940 Act.
(c) A registration statement under the 1933 Act with respect to the
Shares is effective. The Trust shall notify Sunstone if such registration
statement or any state securities registrations have been terminated, lapse or a
stop order has been entered with respect to the Shares.
7
<PAGE>
B. COVENANTS.
1. The Trust will provide to Sunstone copies of all amendments to
its Declaration of Trust and By-laws made after the date of this Agreement. If
requested by Sunstone, each copy of the Declaration of Trust and By-laws of the
Trust and copies of all amendments thereto shall be certified by the Secretary
of the Trust.
2. The Trust shall deliver to Sunstone the Fund's currently
effective Prospectus and, for purposes of this Agreement, Sunstone shall not be
deemed to have notice of any information contained in such Prospectus until a
reasonable time after it is actually received by Sunstone.
3. All requisite steps will be taken by the Trust from time to time
when and as necessary to register the Trust's shares for sale in all states in
which the Trust's shares shall at the time be offered for sale and require
registration. If at any time the Trust receives notice of any stop order or
other proceeding in any such state affecting such registration or the sale of
Trust shares, or of any stop order or other proceeding under the federal
securities laws affecting the sale of Trust shares, the Trust will give prompt
notice thereof to Sunstone.
4. The Trust will comply with all applicable requirements of the
1933 Act, the Securities Exchange Act of 1934, as amended, the 1940 Act, blue
sky laws, and any other applicable laws, rules and regulations.
5. The Trust agrees that prior to effecting any change in the
Prospectus which would increase or alter the duties and obligations of Sunstone
hereunder, it shall advise Sunstone of such proposed change at least 30 days
prior to the intended date of the same, and shall proceed with such change only
if it shall have received the written consent of Sunstone thereto, which shall
not be unreasonably withheld.
ARTICLE V
CONCERNING THE TRANSFER AGENT
A. REPRESENTATIONS. Sunstone represents and warrants to the Fund that:
(a) It is a limited liability company duly organized and existing
under the laws of the State of Wisconsin, is empowered under applicable law and
by its Articles of Organization and Operating Agreement to enter into and
perform this Agreement, and all requisite proceedings have been taken to
authorize it to enter into and perform this Agreement.
(b) It is duly registered as a transfer agent under Section 17A of
the Securities Exchange Act of 1934, as amended, to the extent required.
8
<PAGE>
B. LIMITATION OF LIABILITY; INDEMNIFICATION.
1. Sunstone shall use reasonable care and act in good faith in
providing services under this Agreement, but shall not be liable for any loss or
damage, including counsel fees, resulting from its actions or omissions to act
or otherwise, in the absence of its bad faith, willful misfeasance, gross
negligence or reckless disregard of its duties under this Agreement. Sunstone
shall not be liable in acting upon any writing or document reasonably believed
by it to have been signed or made by an Authorized Person or verbal instructions
which the individual receiving the instructions on behalf of Sunstone reasonably
believes to have been given by an Authorized Person, and Sunstone shall not be
held to have any notice of any change of authority of any person until receipt
of written notice thereof from a Fund or such person.
2. The Trust on behalf of the Funds agrees to indemnify and hold
harmless Sunstone, its employees, agents, members, officers and nominees from
and against any and all claims, demands, actions and suits, whether groundless
or otherwise, and from and against any and all judgments, liabilities, losses,
damages, costs, charges, counsel fees and other expenses of every nature and
character arising out of or in any way relating to Sunstone's actions taken or
nonactions with respect to the performance of services under this Agreement or
based, if applicable, upon reliance on information, records, instructions (oral
or written) or requests given or made to Sunstone by the Funds, its officers,
directors, agents or representatives; provided that this indemnification shall
not apply to actions or omissions of Sunstone in cases of its own willful
misfeasance or gross negligence, and further provided that prior to confessing
any claim against it which may be the subject of this indemnification, Sunstone
shall give the Funds written notice of and reasonable opportunity to defend
against said claim in its own name or in the name of Sunstone. The indemnity
and defense provisions provided hereunder shall indefinitely survive the
termination of this Agreement.
3. Sunstone assumes no responsibility hereunder, and shall not be
liable, for any damage, loss of data, errors, delay or any other loss whatsoever
caused by events beyond its reasonable control. Sunstone will, however, take
all reasonable steps to minimize service interruptions for any period that such
interruption continues beyond Sunstone's control.
4. In no event and under no circumstances shall either party to this
Agreement be liable to anyone, including, without limitation to the other party,
for consequential or punitive damages for any act or failure to act under any
provision of this Agreement even if advised of the possibility thereof.
5. Notwithstanding any of the provisions of this Agreement to the
contrary, Sunstone shall be under no duty or obligation under this Agreement to
inquire into, and shall not be liable for:
(a) The legality of the issue or sale of any Shares, the
sufficiency of the amount to be received therefor, or the authority of a Fund,
as the case may be, to request such sale or issuance;
9
<PAGE>
(b) The legality of a transfer of Shares, or of a redemption of
any Shares, the propriety of the amount to be paid therefor, or the authority of
a Fund, as the case may be, to request such transfer or redemption;
(c) The legality of the declaration of any dividend by a Fund,
or the legality of the issue of any Shares in payment of any stock dividend, or
the legality of any recapitalization or readjustment of Shares.
ARTICLE VI
TERM
1. This Agreement shall remain in full force and effect until
December __, 1999 (the "Initial Term"), and thereafter shall automatically
extend for additional, successive twelve (12) month terms unless earlier
terminated as provided below.
2. Either of the parties hereto may terminate this Agreement after
the Initial Term 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 receipt of such notice. In the event such notice is given by a
Fund, it shall be accompanied by a copy of a resolution of the Board of Trustees
of the Trust, certified by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating the successor transfer agent or
transfer agents. In the event such notice is given by Sunstone, the Fund shall
on or before the termination date, deliver to Sunstone a copy of a resolution of
its Board of Trustees certified by the Secretary or any Assistant Secretary
designating a successor transfer agent or transfer agents. In the absence of
such designation by the Fund, the Fund shall upon the date specified in the
notice of termination of this Agreement and delivery of the records maintained
hereunder, be deemed to be its own transfer agent and Sunstone shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement. Fees
and out-of-pocket expenses incurred by Sunstone, but unpaid by a Fund upon such
termination, shall be immediately due and payable upon and notwithstanding such
termination.
3. In the event this Agreement is terminated as provided herein,
Sunstone, upon the written request of the Trust, shall deliver the records of
the Trust to the Trust or its successor transfer agent in the form maintained by
Sunstone. The Trust shall be responsible to Sunstone for all out-of-pocket
expenses and for the reasonable costs and expenses associated with the
preparation and delivery of such media, including: (a) any custom programming
requested by the Trust in connection with the preparation of such media; (b)
transportation of forms and other materials used in connection with the
processing of Fund transactions by Sunstone; and (c) transportation of records
and files in the possession of Sunstone. Sunstone shall not reduce the level of
service provided to the Trust following notice of termination by the Trust.
10
<PAGE>
ARTICLE VII
MISCELLANEOUS
A. NOTICES. Any notice required or to be permitted to be given by
either party to the other shall be in writing and shall be deemed to have been
given when sent by registered or certified mail, postage prepaid, return receipt
requested, as follows: Notice to Sunstone shall be sent to Sunstone Investor
Services, LLC, 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202,
Attention: Miriam M. Allison, and notice to the Trust shall be sent to The
Marsico Investment Fund, 1200 17th Street, Suite 1300, Denver, Colorado 80202,
Attention: Barbara M. Japha.
B. AMENDMENTS/ASSIGNMENTS.
1. This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with the formality of
this Agreement.
2. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns. This Agreement
shall not be assignable by either party without the written consent of the other
party except that Sunstone may assign this Agreement to an affiliate with
advance written notice to the Trust.
C. WISCONSIN LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin (except as to paragraph D
hereof which shall be construed in accordance with Delaware law). If any part,
term or provision of this Agreement is determined by the courts or any
regulatory authority having jurisdiction over the issue to be illegal, in
conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
D. MISCELLANEOUS. This Agreement is executed by or on behalf of the Trust
with respect to each of the Funds and the obligations hereunder are not binding
upon any of the Trustees, officers or shareholders of the Trust individually but
are binding only upon the Funds to which such obligations pertain and the assets
and property of such Funds. The Trust's Certificate of Trust is on file with
the Secretary of State of Delaware.
E. 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.
F. NON-EXCLUSIVE; OTHER AGREEMENTS. The services of Sunstone hereunder
are not deemed exclusive and Sunstone shall be free to render similar services
to others. Except as specifically provided herein, this Agreement does not in
any way affect any other agreements
11
<PAGE>
entered into among the parties hereto and any actions taken or omitted by any
party hereunder shall not affect any rights or obligations of any other party
hereunder.
G. CAPTIONS. The captions in the 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officer, thereunto duly authorized and
their respective corporate seals to be hereunto affixed, as the day and year
first above written.
SUNSTONE INVESTOR SERVICES LLC THE MARSICO INVESTMENT FUND
By: By:
--------------------------- --------------------------
(Signature) (Signature)
--------------------------- --------------------------
(Name) (Name)
--------------------------- --------------------------
(Title) (Title)
--------------------------- --------------------------
(Date Signed) (Date Signed)
12
<PAGE>
SCHEDULE A
TO THE
TRANSFER AGENT AGREEMENT
BY AND BETWEEN
THE MARSICO INVESTMENT TRUST
AND
SUNSTONE INVESTOR SERVICES LLC
NAME OF FUNDS
The Marsico Focus Fund
The Marsico Growth & Income Fund
13
<PAGE>
SCHEDULE B
TO THE
TRANSFER AGENT AGREEMENT
BY AND BETWEEN
THE MARSICO INVESTMENT TRUST
AND
SUNSTONE INVESTOR SERVICES LLC
SERVICES
/ / MAINTENANCE OF SHAREHOLDER ACCOUNTS
X Maintain records for each shareholder account;
X Scan account documents for electronic storage;
X Record changes to shareholder account information;
X Maintain account documentation files for each shareholder; and
X Establish and maintain retirement plan accounts.
/ / SHAREHOLDER SERVICING AND SHAREHOLDER TRANSACTIONS
X Respond to written and telephone (recorded lines) inquiries from
shareholders for information about their accounts;
X Process shareholder purchase and redemption orders, including those of
automatic investment and systematic withdrawal plans;
X Set up account information, including address, dividend options,
taxpayer identification numbers and wire instructions;
X Issue transaction confirmations;
X Process transfers and exchanges;
X Process dividend payments by check, wire or ACH or purchase new shares
through dividend reinvestment; and
X Issue customer statements.
/ / COMPLIANCE REPORTING AND PROXY PROCESSING
X Provide required reports to the Securities and Exchange Commission,
the National Association of Securities Dealers and the states in which
each fund is registered;
X Prepare and distribute to the Internal Revenue Service required
Internal Revenue Service forms 1099, 1042, 5498 and 945 relating to
earned income and capital gains;
14
<PAGE>
X Issue tax withholding reports to the Internal Revenue Service; and
X Mail, process and tabulate proxies.
/ / DEALER/LOAD PROCESSING (IF APPLICABLE)
X Provide dealer access through NSCC's FundSERV;
X Calculate fees due under 12b-1 plans for distribution and marketing
expenses; and
X Issue periodic statements for broker/dealers and interested parties.
/ / TELEPHONE SERVICE REPRESENTATIVES ON-LINE ACCESS
X Respond to shareholder or dealer inquiries related to:
/ / Account registration;
/ / Share balances;
/ / Account options;
/ / Dividend and capital gain distribution status;
/ / Withholding status;
/ / Transaction dates and types;
/ / Shares traded;
/ / External account number;
/ / Address;
/ / Customer or account type;
/ / Dealer, branch and rep information;
/ / Dollars available/not available in the account;
/ / Shares purchased/redeemed today;
/ / Dividend accrual, current dividend period; and
/ / Market value of shares.
/ / STANDARD REPORTS
X Shareholder base analysis (monthly)
X New account listing (weekly)
15
<PAGE>
X Purchases, redemptions, exchanges (monthly)
X Servicing summary (quarterly)
X Rule 12b-1 reports (quarterly)
OTHER SERVICE FEATURES
In addition to the standard features listed above, Sunstone's system offers
additional features to meet specialized needs.
/ / SPECIALIZED NEEDS
X 12b-1 fee calculations
X Multiple account look-up options
X Cross-fund account queries
X Cross-account queries
X Consolidated statements
X Duplicate statements to third parties
X Cross-fund dividend reinvestment
X Fund-level processing options
X Correspondence system capabilities
16
<PAGE>
SCHEDULE C
TO THE
TRANSFER AGENT AGREEMENT
BY AND BETWEEN
THE MARSICO INVESTMENT TRUST
AND
SUNSTONE INVESTOR SERVICES LLC
FEE SCHEDULE
- BASE FEES
ANNUAL
SHAREHOLDER
TYPE OF FUND ACCOUNT FEE MINIMUM ANNUAL FEE PER
OPEN/CLOSED FUND
----------------------------------------------------------------------
Equity,
Fixed Income
and Balanced $14.00/$3.00 $15,000
Money Market
and Daily
Accrual and
Fixed Income $22.00/$3.00 $20,000
The base fee assumes a single class of shares, availability of automatic
investment plans and systematic withdrawal plans, quarterly or less
frequent dividend distributions for equity funds, monthly dividends on
fixed income and money market funds, annual capital gains distributions,
and includes all standard reports.
- ADDITIONAL FEES TO BE ADDED TO BASE FEE
TYPE OF SERVICE OF ANNUAL MINIMUM ANNUAL FEE
FUND FUNCTION SHAREHOLDER PER FUND
ACCOUNT FEE
----------------------------------------------------------------------
Multiple class --- 25% of base fee
minimum (per class)
17
<PAGE>
- ONE-TIME SET-UP FEES
New funds set up (per fund) $2,000
NSCC Fund/SERV and Networking set-up (per fund group) 2,500
Remote access set-up (per location) 500
Voice Response Unit (VRU) set-up 2,000
- ACCOUNT MAINTENANCE AND PROCESSING FEES
(per occurrence)
Initial account set-up charge $3.00
Omnibus account transaction $2.50
Certificate issuance $4.00
Locating lost shareholders $8.00
- OUT-OF-POCKET EXPENSES
Per statement confirmation and check processing $0.25
Per tax form processing $0.15
Per label printing for proxy or marketing purposes $0.05
Production of ad hoc reports starting at $100
Bulk mailings/insert handling charge
- 1 insert $0.06
- 2 - 3 inserts $0.08
- 4 or more inserts as quoted
Bank account service fees and any other bank charges at cost
Statement paper, check stock, envelopes, tax forms at cost
Postage and express delivery charges at cost
Telephone and long distance charges at cost
Fax charges at cost
P.O. box rental at cost
800-phone number at cost
Inventory and records storage at cost
Fund/SERV charges at cost
Monthly remote access user charges
- First user and password $250
- Additional users and passwords (each) $100
Remote access line charge at cost
- ADDITIONAL FEES
(which may be passed on to shareholders)
Outgoing wire fee varies by bank
Account transcripts older than 2 years $5.00
(per year, per fund)
18
<PAGE>
Non-sufficient funds varies by bank
IRA/SEP/SIMPLE/403(b) processing
- Annual maintenance or custodial fee (per account) $15.00
- Account termination (transfer or rollover) $15.00
- CUSTOM PROGRAMMING
Additional fees may apply for special programming to meet your servicing
requirements or to create custom reports.
19
<PAGE>
SCHEDULE D
TO THE
TRANSFER AGENT AGREEMENT
BY AND BETWEEN
THE MARSICO INVESTMENT TRUST
AND
SUNSTONE INVESTOR SERVICES LLC
RECORDS MAINTAINED BY SUNSTONE
Account applications
Canceled certificates plus stock powers and supporting documents
Checks including check registers, reconciliation records, any adjustment records
and tax withholding documentation
Indemnity bonds for replacement of lost or missing stock certificates and checks
Liquidation, redemption, withdrawal and transfer requests including stock
powers, signature guarantees and any supporting documentation
Shareholder correspondence
Shareholder transaction records
Share transaction history of the Funds
20
<PAGE>
DECHERT PRICE & RHOADS
1500 K Street, N.W.
Suite 500
Washington, D.C. 20005
(202) 626-3300
December 12, 1997
The Marsico Investment Fund
1200 17th Street
Suite 1300
Denver, Colorado 80202
Gentlemen:
In connection with the registration under the Securities Act of 1933 of an
indefinite number of shares of beneficial interest of The Marsico Investment
Fund (the "Trust"), we have examined such matters as we have deemed necessary to
give this opinion.
On the basis of the foregoing, it is our opinion that the shares have been
duly authorized and, when paid for as contemplated by the Trust's Registration
Statement, will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm therein.
Very truly yours,
Dechert Price & Rhoads
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Pre-Effective Amendment No. 2 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
December 8, 1997, relating to the financial statement of Marsico Focus Fund and
Marsico Growth & Income Fund which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the references to us under the headings "Experts" in such Statement
of Additional Information and "Independent Accountants" in such Prospectus.
PRICE WATERHOUSE LLP
Denver, Colorado
December 8, 1997
<PAGE>
Marsico Capital Management, LLC
1200 17th Street
Suite 1300
Denver, Colorado 80202
December 8, 1997
The Marsico Investment Fund
1200 17th Street
Suite 1300
Denver, Colorado 80202
Re: Subscription for the Purchase of Shares of Beneficial Interest of The
Marsico Focus Fund
---------------------------------------------------------------------
Dear Sirs:
The undersigned hereby subscribes to purchase 5,000 shares of beneficial
interest of The Marsico Focus Fund, at a price of $10.00 per share, and agrees
to pay therefor upon demand in cash the amount of $50,000.
Very truly yours,
MARSICO CAPITAL MANAGEMENT, LLC
By: /s/ Barbara M. Japha
---------------------------------
Name: Barbara M. Japha
---------------------------------
Title: President
---------------------------------
<PAGE>
Marsico Capital Management, LLC
1200 17th Street
Suite 1300
Denver, Colorado 80202
December 8, 1997
The Marsico Investment Fund
1200 17th Street
Suite 1300
Denver, Colorado 80202
Re: Subscription for the Purchase of Shares of Beneficial Interest of The
Marsico Growth & Income Fund
---------------------------------------------------------------------
Dear Sirs:
The undersigned hereby subscribes to purchase 5,000 shares of beneficial
interest of The Marsico Growth & Income Fund, at a price of $10.00 per share,
and agrees to pay therefor upon demand in cash the amount of $50,000.
Very truly yours,
MARSICO CAPITAL MANAGEMENT, LLC
By: /s/ Barbara M. Japha
---------------------------------
Name: Barbara M. Japha
---------------------------------
Title: President
---------------------------------
<PAGE>
MARSICO DISCLOSURE STATEMENT
POWER TO REVOKE
For a period of seven (7) days following the date on which you enter into an IRA
Trust Agreement with UMB Bank, n.a. (UMB), you have the right to revoke the
Trust. To effect revocation, please write to (Fund Name/Address), or call (Fund
Phone No.) In the event notice is mailed, the postmark date (or date of
certification or registration, if sent by certified or registered mail) will be
deemed the date of delivery, provided that normal mailing procedures are
followed. If you revoke your account, you are entitled to a return of the
entire amount deposited to your account without reduction for any fees, expenses
or commissions and without any adjustment for any investment gain or loss.
LEGAL REQUIREMENT WITH RESPECT TO YOUR IRA
Current tax law requires that you trust agreement be in writing and that it
contain the following provisions:
1. All contributions must be in the form of cash and cannot be in excess of
the lesser of your compensation, or $2,000 per year, unless the
contribution is a rollover contribution as defined in the Internal Revenue
Code. Employer contributions to a Simplified Employee Pension plan may
exceed the limitations applicable to individuals,.
2. The Trustee must be a bank such as UMB, or other institution (or person)
that has satisfied the Secretary of the Treasury that it is able to
administer your account in accordance with tax laws.
3. None of the funds of your account may be invested in life insurance
contracts.
4. Your interest in the balance of the account cannot be forfeited.
5. With the exception of investments in a common trust fund or common
investment fund such as a mutual fund, none of your account assets may be
commingled.
6. Distribution of your interest in the account must begin no later than April
1 following the year in which you attain age 70 1/2. Any balance in the
account at that time must be distributed to you in a lump sum or commence
to be paid in a series of payments which do not exceed your life expectancy
or the joint and survivor life expectancies of yourself and your designated
beneficiary. However, you may increase withdrawals. If you should die
prior to receiving the entire account, the balance must be distributed to
your beneficiary in accordance with Treasury Department regulations (unless
the beneficiary is your spouse and elects to treat the account as his or
her own IRA).
7. You may not invest the assets of your IRA in collectibles (within meaning
of Internal Revenue Code Section 408(m)). A collectible is defined as any
work of art, rug or antique, metal or gem, stamp or coin, alcoholic
beverage, or other tangible personal property specified by the Internal
Revenue Service. However, specially minted United States gold and silver
bullion coins and certain state-issued coins are permissible investments.
Beginning January 1, 1998, platinum coins and certain gold, silver,
platinum or palladium bullion (as described in IRC Sec. 408(m)(3)) are also
permitted as IRA investments.
TAX TREATMENT OF CONTRIBUTIONS TO YOUR IRA
Without regard to qualifying rollover contributions or to contributions made by
your employer to a Simplified Employee Pension plan, under present tax law you
are permitted to make an annual contribution to your account in any amount up to
the lesser of your compensation or $2,000 ("applicable limit"). Such annual
contributions may be made anytime during the year (and up to your tax return due
date for the taxable year, not including extensions.)
1
<PAGE>
Eligible taxpayers who are not covered by an employer sponsored plan can
continue to deduct the entire contribution up to the applicable limit. However,
for an individual, spouse, or both who are an active participant in an employer
sponsored plan, the contributions may be totally deductible, partially
deductible, or not deductible depending on the taxpayers adjusted gross income
("AGI"). If your AGI is lower then the bottom of the range in the chart below,
you may deduct your contribution up to the applicable limit. Then your AGI
falls within the range, you must calculate the deductible contribution. When
your AGI exceeds the top of the range, none of your contribution is deductible.
See examples below.
LIMITATIONS ON ALLOWABLE DEDUCTIONS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Tax Single Filer Single Filer Married Filing Jointly Married Filing Jointly Married Filing
Year ------------ ------------ ---------------------- ---------------------- --------------
Non Active Active Participant Individual or Spouse Individual, Spouse or Separately
Is Non Active Both - Active Participant ----------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 Maximum Limitation $25 - $35,000 $150 - $160,000 $40 - $50,000 $0 - $10,000
- --------------------------------------------------------------------------------------------------------------------------------
1998 of $2,000 $30 - $40,000 $50 - $60,000
- --------------------------------------------------------------------------------------------------------------------------------
1999 $31 - $41,000 $51 - $61,000
- --------------------------------------------------------------------------------------------------------------------------------
2000 $32 - $42,000 $52 - $62,000
- --------------------------------------------------------------------------------------------------------------------------------
2001 $33 - $43,000 $53 - $63,000
- --------------------------------------------------------------------------------------------------------------------------------
2002 $34 - $44,000 $54 - $64,000
- --------------------------------------------------------------------------------------------------------------------------------
2003 $40 - $50,000 $60 - $70,000
- --------------------------------------------------------------------------------------------------------------------------------
2004 $45 - $55,000 $65 - $75,000
- --------------------------------------------------------------------------------------------------------------------------------
2005 $50 - $60,000 $70 - $80,000
- --------------------------------------------------------------------------------------------------------------------------------
2006 $50 - $60,000 $75 - $85,000
- --------------------------------------------------------------------------------------------------------------------------------
2007 $50 - $60,000 $80 - $100,000
on
</TABLE>
Prorated IRA deduction is calculated using the following formula:
For single filer active participant:
(Highest number in the range of AGI bracket - Adjusted Gross Income) X $2,000
-----------------------------------------------------------------------------
$10,000
Example: Assume your AGI is $35,000 for 1998. Your maximum deductible
contribution is $1,000. This is calculated as follows: $40,000 less $35,000
which equals $5,000. $5,000 divided by $10,000 equals 50%. 50% times $2,000
is the deductible amount allowed.
For joint filer active participant:
(Highest number in the range of AGI bracket - Adjusted Gross Income) X $2,000
- --------------------------------------------------------------------------------
$10,000
($20,000 in the case of a joint return for a taxable year beginning after
December 31, 2006.)
Example: Assume your AGI is $56,000 for 1998. Your maximum deductible
contribution is $800. This is calculated as follows: $60,000 less $56,000
which equals $4,000. $4,000 divided by $10,000 equals 40%. 40% times $2,000 is
$800.
The examples are for illustration only. Please consult your tax advisor for
calculating your deductible amount.
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TAX TREATMENT OF DISTRIBUTIONS FROM YOUR IRA
Amounts distributed to you from the account (except for refunds of certain
excess contributions and non-deductible contributions which are discussed below)
will be taxable as ordinary income in the year received. The benefits of
capital gain treatment and 5-year and 10-year forward averaging (now being
phased out) which may apply to distributions from your employer's qualified
plan, are not available with respect to distributions from your account.
Distributions of non-deductible contributions are not taxable. If you have made
non-deductible contributions to an IRA, then distributions from the IRA will be
excluded from tax in the proportion that all non-deductible contributions to you
IRAs bear to the aggregate balances of all your IRAs at the end of the year of
distribution. All distributions are subject to federal income tax withholding
requirements unless the recipient elects not to have withholding apply by
written notice or a method acceptable to the Trustee at the time such
distribution is requested.
TAX TREATMENT OF YOUR IRA
The funds in your IRA are not subject to income tax until distributed to you.
The earnings accumulate on a tax-deferred basis to compound the growth of your
account.
LIMITS ON CONTRIBUTIONS TO YOUR ACCOUNT
Except in the case of a rollover contribution, during any year the maximum
contribution you can make is $2,000 or 100% of your compensation, whichever is
less. For purposes of determining the amount of your contributions,
"compensation" means wages commissions, salaries, tips, professional fees,
bonuses and other amounts your receive for providing personal service. Alimony
is also treated as compensation which you may contribute to your IRA. No
contributions can be made in the year that you attain age 70 1/2 or subsequent
years.
SPOUSAL IRA
If your spouse is employed, he or she can establish his or her own IRA subject
to the same rules as applicable to your IRA. If you file a joint return with a
spouse who either has no compensation for the taxable year or elects to be
treated as having none, the maximum contribution amount is the lesser of $4,000
or 100% of the total compensation for you and your spouse for the year. In such
a case the amount contributed can be divided between your IRA and the spousal
IRA in any manner you desire, provided that no more that $2,000 can be
contributed to either IRA. No contributions may be made to a spousal IRA during
or after the year in which he or she reaches age 70 1/2. However, if you are
ineligible to make contributions to your own IRA because of age, you may (if you
have sufficient compensation) nevertheless make contributions of up to $2,000 to
an IRA for your non-earning spouse if he or she has not reached age 70 1/2.
SIMPLIFIED EMPLOYEE PENSION PLAN
An IRA may also be used in connection with a SEP plan established by your
employer (or by you if you are self-employed). Under a SEP plan, your employer
may make a contribution to your IRA, and an IRA for all other employees, of up
to 15% of compensation limited to $160,000 (as indexed for inflation) or
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$30,000, whichever is less for 1997. Refer to Publication 560 and 590 or Form
5305SEP. It is your responsibility and that of your employer to see that
contributions are made under and in accordance with a valid SEP plan. Specific
limit amounts can be found in the instructions for Form 5305SEP
ROLLOVER
If your account represents a rollover from a pension or profit-sharing plan
qualified under section 401(a) of the Internal Revenue Code, you should not make
non-rollover additional contributions to the same account if you desire to
preserve its eligibility for future rollover to another qualified plan.
Similarly, if your account represents a rollover from a Section 403(b) annuity
or custodial account, you should not make non-rollover additional contributions
to the same account if you desire to preserve its eligibility for future
rollover to another Section 403(b) annuity or custodial account. A rollover IRA
is eligible to accept future rollover contributions. In addition, you may
establish another IRA to which non-rollover annual cash contributions may be
made.
ROLLOVER CONTRIBUTIONS AND TAX-FREE TRANSFERS
A rollover contribution is a contribution to your IRA of cash and/or property
other than cash which you receive as a distribution from another IRA or as a
qualified distribution from a Section 403(b) annuity, or a qualified
employer-sponsored retirement plan, such as a profit-sharing plan, 401(k) plan,
and ESOP, etc. In the case of a tax-free transfer, the transfer is made
directly between the fiduciaries, that is the trustees, custodian, etc. of the
IRAs and/or the qualified plan, as the case may be. If you receive a
distribution from another IRA you may make a tax-free rollover contribution of
all or part of the assets you receive to your UMB IRA, provided that you
complete the rollover within 60 days of the date you receive the distribution.
You may make only one such rollover during any 12-month period. A direct
transfer from the trustee or custodian of another IRA to your UMB IRA may be
made without regard to the 12-month limitation applicable to IRA rollovers.
If you receive a distribution from your employer's qualified retirement plan, or
a Section 403(b) annuity, you may be eligible to make a rollover contribution to
your UMB IRA of all or part of the distribution, less the amount of any
non-deductible contributions to the plan. Most distributions, with the notable
exception of installments paid over a ten or more year period, are eligible for
rollover. The rollover contribution must be made within 60 days of the date you
receive the distribution. If the distribution included property other than
cash, the property itself (or the proceeds from its sale) must be included in
the rollover contribution to the extent possible, before any cash received in
the distribution may be included.
In order to avoid 20% federal income tax withholding on the amount distributed
from the qualified retirement plan or Section 403(b) annuity, you should direct
that the distribution be transferred to you UMB IRA in a "direct rollover." You
should receive information about the "direct rollover" option from your plan
administrator prior to distribution of your account. You may not roll over any
minimum distribution amounts you are required to receive after age 70 1/2.
EXCESS CONTRIBUTIONS
An excess contribution is any contribution amount which exceeds your
contribution limit, excluding rollover and direct transfer amounts. In
addition, any contributions that are made to an IRA for the year in
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which the IRA owner reaches age 70 1/2, or for any later year, are considered
excess contributions. If excess contributions are made to your account in
any year and excess (including income attributed to that excess) is withdrawn
prior to the due date for your tax return for that year (including
extensions), no penalty excess tax will be imposed on the amount contributed.
Income attributed to such excess contributions refunded is taxable, and may
be subject to a 10% additional excess tax.
If the withdrawal of excess contributions occurs after the due date for your
tax return (including extensions), a 6% cumulative excess penalty tax will be
imposed on the excess. A further 10% additional income tax will be imposed
upon the withdrawn excess amount if a deduction was allowed for the excess
contribution and the total contributions for the year exceeded the maximum
deductible amount, unless you have reached age 59 1/2 or are disabled by the
time of the withdrawal. If excess contributions have been made, you can
correct the situation by reducing your contributions in subsequent years.
Excess contributions left in the account and applied to a later tax year's
contributions are still subject to the 6% penalty tax and will continue to
remain so until the excess has been corrected.
USE OF YOUR ACCOUNT AS SECURITY FOR A LOAN
You may not pledge any part of your account as security for a loan. If you
use all or any part of your account as security for a loan, the portion used
for that purpose is treated as though it were distributed to you and you must
include that amount in your gross income for the year in which that
transaction takes place. If the pledge occurs prior to your attaining age
59 1/2, an additional excise tax equal to 10% of the amount included in your
taxable income may be added to your tax liability.
PROHIBITED TRANSACTIONS
Tax laws also prohibit certain other transactions between a "Disqualified
Person" and your account. A "Disqualified Person" includes UMB, you, a
beneficiary of your account, members of your family or of a beneficiary's family
or any business or trust in which a controlling interest is held by any of these
individuals. The prohibited transactions are as follows:
1. sale or exchange of leasing of property between your account and a
Disqualified Person;
2. lending of money or other extension of credit between your account and a
Disqualified Person;
3. furnishing of goods, services or facilities between your account and a
Disqualified Person;
4. transfer to or use by or for the benefit of a Disqualified Person of the
income or assets of your account;
5. any act by a Disqualified Person who is a fiduciary whereby he or she deals
with the income or assets of your account in his or her own interest or for
his or her own account; or
6. receipt of any consideration for his or her own personal account by any
Disqualified Person who is a fiduciary from any party dealing with your
account in connection with a transaction involving the income or assets of
the account.
If either you or your beneficiary engages in a prohibited transaction, your IRA
will lose its tax exemption, and its full value will be added to your other
taxable income for the year in which the transaction takes place. If any of
these transactions occur prior to your attaining age 59 1/2, you may also be
subject to the 15% excise tax on early distributions for transactions occurring
after August 5, 1997.
EFFECT OF DIVORCE
The general rule is that the Grantor will be liable for income tax and any
penalties on any amount distributed from his or her IRA to meet the obligations
specified in a divorce decree. The transfer may be
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structured so as to avoid taxation to the Grantor if the requirement of Code
Section 408(d)(6) are met. Those requirements are:
1. a written court order clearly specifying the amount to be transferred into
an IRA of the spouse or former spouse, and
2. (a) a direct transfer of the funds to the IRA of the spouse or former
spouse;
(b) changing the name on the IRA from your name to the name of your spouse
or former spouse; or
(c) moving a rollover of IRA assets from your IRA to your spouse or former
spouse.
WITHDRAWALS PRIOR TO AGE 59 1/2
You may make withdrawals from your IRA at any time. However, amounts
withdrawn (except for the return of non-deductible contributions) are
includible in your taxable income for the year of withdrawal. If you have
not yet reached age 59 1/2 when a withdrawal is made, 10% additional income
tax must be paid on the amount withdrawn. After age 59 1/2 you may make
such withdrawals as you wish, free of any penalty tax. Until you reach age
70 1/2 you are not required to make a withdrawal. A withdrawal from your IRA
before you reach age 59 1/2 will not be subject to the penalty tax if it is
made on account of your permanent and total disability, death, a qualifying
rollover, a direct transfer, the timely withdrawal of an excess contribution,
to pay for medical expenses incurred by you, your spouse or your dependent to
the extent that the medical expenses exceed 7.5% of your adjusted gross
income, in certain situations, to pay for medical insurance premiums if you
are unemployed, or if the distribution is a part of a series of substantially
equal periodic payments (at least annually) made over your life expectancy of
the joint life expectancies of you and your beneficiary. For tax years
beginning after December 31, 1997, the exception from the early withdrawal
penalty is expanded to apply to withdrawals for qualifying post-secondary
education expenses for yourself, your spouse, your children or grandchildren
as well as qualifying first home purchase for yourself, your children or
parents (limited to a lifetime maximum of $10,000.)
MINIMUM DISTRIBUTIONS REQUIRED STARTING AT AGE 70 1/2
You must begin withdrawals from your IRA by April 1 of the year following the
year in which you reach age 70 1/2. With respect to the year during which
age 70 1/2 is reached and each subsequent year you must withdraw at least an
amount sufficient to cause the entire balance of your IRA to be distributed
over your remaining life expectancy or the joint life expectancies of you and
your designated beneficiary, determined by actuarial tables. If you elect to
receive your first required distribution between January 1 and April 1
following the year in which you reach age 70 1/2, you must receive a second
required distribution prior to the end of that year.
You must choose (within the limits set forth in the IRS distribution rules)
how you want your required minimum distributions structured. You must make
your payment election no later than April 1 following your 70 1/2 year. If
you name someone other than your spouse as your beneficiary, and your
beneficiary is more than 10 years younger than you, your required minimum
distributions must satisfy the Minimum Distribution Incidental Benefit rule
(which calculates your distributions as if your beneficiary were exactly 10
years younger than you.)
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PENALTY TAX FOR FAILURE TO MEET MINIMUM DISTRIBUTION REQUIREMENTS
If the amount distributed to you with respect to any year in which you are at
least age 70 1/2 is less than the minimum required distribution, a penalty
tax of 50% of the difference between the actual distribution and the minimum
required distributions will be imposed.
ESTATE TAXATION
An excess retirement accumulation exists if, at the time of your death, the
value of all your interests in qualified plans, tax-sheltered annuities and IRAs
exceeds the present value of an annuity with annual payments of $160,000
(adjusted periodically for inflation) payable over your life expectancy
immediately before your death. The excess accumulation tax is repealed and
effective for estates of decedents dying after December 31, 1996.
EXCESS DISTRIBUTION PENALTY
You will be taxed an additional 15% on any amount received and included in your
income during a calendar year from qualified retirement plans, tax-sheltered
annuities and IRAs which exceeds $160,000 (for 1997 and adjusted periodically
for inflation). Certain exceptions may apply. Consult your tax adviser if you
receive any excess distributions. The excess distribution tax is repealed and
effective for excess distributions received after December 31, 1996.
DESIGNATION OF A BENEFICIARY OR BENEFICIARIES
You have the right to designate one or more beneficiaries to whom your account,
or any undistributed portion thereof, is to be paid in the event of your death.
You may also at any time revoke a prior beneficiary designation and, if desired,
designate different individuals as beneficiaries.
You may designate your beneficiary(ies) on the IRA Application, or in a form
acceptable to the Trustees. Write to (Fund Name/Address) or call (Fund Phone
Number).
In the absence of a valid beneficiary designation, the Trustee will make
distribution of any death benefit to your surviving legal spouse; but, if none,
then to your surviving natural and adoptive children in equal shares, but if
none, then to your personal representative. Notwithstanding the foregoing
sentence, the Trustee may, in any case where reasonable doubt exists as to the
proper course of action, request instructions from a court of competent
jurisdiction. All costs and expenses (including time expended by the Trustee)
in such cases will be charged against your account.
DISTRIBUTIONS FOLLOWING DEATH OF GRANTOR
As a general rule, the entire balance of the IRA must be distributed to
beneficiaries by December 31 of the year in which the fifth anniversary of the
Grantor's death falls. If this rule is violated, a penalty tax equal to 50% of
the undistributed balance will be imposed. There are three exceptions to the
general rule: (1) If the Grantor's designated beneficiary is the surviving
spouse of the Grantor, such spouse may elect to treat
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the Grantor's IRA as his or her own IRA. In that case the 5-year limitation
will not apply. (2) Where installment payments have commenced over the life
expectancies of the Grantor and designated beneficiary before the Grantor's
death then payments will continue to the surviving beneficiary at a rate at
least as rapidly as in effect at the time of the Grantor's death, and the 5-year
limitation does not apply. In such case, the surviving beneficiary has the same
right to designate beneficiaries as the Grantor had while living. (The 5-year
limitation will apply to distributions to any such second-level beneficiaries.)
(3) If the Grantor dies before his or her required beginning date and the
designated beneficiary elects that the account balance be distributed in
substantially equal payments over his or her life expectancy, the beneficiary
must make this election and commence distributions by December 31 of the year
following the year of the Grantor's death (distributions need not commence for a
surviving spouse beneficiary until December 31 of the year the Grantor would
have attained age 70 1/2.
TRUSTEE TO ASSUME GRANTOR IS CALENDAR YEAR TAXPAYER UNLESS OTHERWISE INFORMED
Unless and until specifically notified that you make your federal income tax
returns on another basis, the Trustee will assume for all purposes, including
the preparation and furnishing of accounting statements, reports, etc., that
such tax returns are made on the basis calendar years.
TRUSTEE NOT LEGAL ADVISER OR TAX COUNSELOR - GRANTOR SHOULD CONSULT OWN ADVISER
UMB and its ministerial agent expressly disclaims any right, duty, authority or
responsibility to furnish legal or tax advice respecting any matter or matters
concerning or relating to your account including, BUT not limited to, present
or future federal income tax consequences to you or others which may arise or
result from the establishment or maintenance of your account, the selection of
payment options, beneficiaries, and any other matter whatsoever. You are
advised and encouraged to consult with professional counsel of your own
selection respecting all such matters.
INVESTMENT OF ACCOUNT
Your account may be invested only in accordance with your direction in the (Fund
Name) or any other mutual fund designated by (Fund Name) as a permissible
investment alternative. None of the funds held in your account may be used to
purchase life insurance.
FINANCIAL GUARANTEES AND PROJECTIONS
The value of your account at any point in time will, of course, depend upon the
then current market value of the investments, retained investment earnings, if
any, etc. No guarantees or projections of any nature concerning earnings rates
or future security values are made.
TRUSTEE NOT LIABLE
The Trustee and its ministerial agent has no responsibility or liability for any
losses or expenses relating to any investment or to the sale or exchange of any
asset of your account.
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TERMINATION OF THIS ACCOUNT
The Trustee may resign at any time upon 30 days' notice in writing to you, and
the Investment Company. Upon resignation, you automatically delegate to the
Investment Company the responsibility to appoint a successor custodian. You or
the Investment Company may terminate this agreement at any time by giving 30
days written notice filed in a form acceptable to us. The notice must designate
a successor custodian that satisfies the requirement of Internal Revenue Code
408(h).
DUTY TO FILE TAX RETURNS
In any year in which you incur liability for a penalty tax by reason of making
excess contributions, by making early withdrawals (premature distributions), or
by failure to withdraw the minimum amount from your account, you are obligated
to file Internal Revenue Service Form 5329 "Return for Individual Retirement
Arrangement Taxes" with your Form 1040 at the time it is filed. Deductible
contributions in any year are reported on your From 1040. Non-deductible
contributions must be reported on Form 8606.
INTERNAL REVENUE SERVICE APPROVAL
The Individual Retirement Trust Agreement is comprised of eight articles. The
first seven articles constitute Internal Revenue Service Form 5305 (REV. October
1992) "Individual Retirement Trust Account. Under Treasury Department
regulations prototype trusts which use the provisions of the Form are considered
to meet the requirements of the Internal Revenue Code. The addition of Article
VIII by UMB does not negate the approval status of the prototype. The
Individual Retirement Trust Agreement, on IRS From 5305, has been approved as to
form by the Internal Revenue Service. However, in approving the form, the IRS
does not consider the investment merits of the program.
ADDITIONAL INFORMATION
Additional information about the individual retirement accounts is contained in
IRS Publication 590, which can be obtained from the office of the District
Director of Internal Revenue.
MINISTERIAL AGENT
If the custodian is UMB Bank, n.a., Sunstone Investor Services, LLC shall be the
ministerial agent for the custodian in the performance of any ministerial duties
delegated to it by the custodian. If any other bank or entity is the Custodian,
then Sunstone Investor Services , LLC shall not be the ministerial agent for any
duties of the Custodian unless it agrees to in writing with the other Custodian.
ANNUAL SCHEDULE OF FEES
The Trustee will charge the following fees for servicing your IRA account:
Annual maintenance fee $(Applicable dollar amount)
Distribution (including rollover or
direct transfers) $(Applicable dollar amount)
Refund of excess contribution $(Applicable dollar amount)
Any outgoing wire transfer $(Applicable dollar amount)
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The annual maintenance fee will be deducted from your account unless otherwise
paid by you. The charge for refund of excess contribution will be deducted from
your account at the time of the refund. These fees are subject to change
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CUSTODIAL AGREEMENT
This Agreement is made between UMB Bank, n.a. as trustee or its successor
(hereinafter referred to as "Trustee") and the individual whose name appears on
the IRA Application or other Adoption Agreement (hereinafter referred to as
"Grantor"). If the Grantor has previously adopted this Individual Retirement
Trust Account ("IRA") in any earlier form by signature to the IRA Application,
he or she adopts the amended IRA in the form as hereby restated.
The Grantor is establishing (or adopting an amendment to) an individual
retirement account (under Section 408(a) of the Internal Revenue Code) to
provide for his or her retirement, and for the support of his or her
beneficiaries after death. The Trustee has given the Grantor the disclosure
statement required under the Income Tax Regulations under Section 1.408-6 of the
Code. Unless this Agreement is adopted for an existing IRA, the Grantor has
made an initial cash contribution to the IRA concurrently with the execution of
the IRA Application or other Adoption Agreement. The Grantor and Trustee make
the following agreement:
ARTICLE I
The Trustee may accept additional cash contributions on behalf of the Grantor
for a tax year of the Grantor. The total cash contributions are limited to
$2,000 for the tax year unless the contribution is a rollover contribution
described in Section 402(c) (but only after December 31, 1992), 403(a)(4),
403(b)(8), or 408(d)(3) of the Code or an employer contribution to a Simplified
Employee Pension plan as described in Section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in Section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8), or 408(d)(3) of the Code or an
employer contribution to a Simplified Employee Pension plan as described in
Section 408(k).
ARTICLE II
The Grantor's interest in the balance of the trust account is nonforfeitable.
ARTICLE III
1. No part of the trust funds may be invested in life insurance contracts; nor
may the assets of the trust account be commingled with other property
except in a common trust fund or a common investment fund (within the
meaning of Section 408(a)(5) of the Code).
2. No part of the trust fund may be invested in collectibles (within the
meaning of Section 408(m) of the Code), except as otherwise permitted by
Section 408(m)(3) which provides an exception for certain gold and silver
coins issued under the laws of any state. Beginning January 1, 1998,
platinum coins and certain gold, silver, platinum or palladium bullion (as
described is Internal Revenue Code Section 408(m)(3)) are also permitted as
IRA investments.
ARTICLE IV
1. Notwithstanding any provision of the agreement to the contrary, the
distribution of the Grantor's
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interest in the trust account shall be made in accordance with the
following requirements and shall otherwise comply with Section 408(a)(6)
and Proposed Regulations Section 1.408-8, including the incidental death
benefit provisions of Proposed Regulations Section 1.401(a)(9)-2, the
provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin to
the Grantor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the
Grantor and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a non-spouse beneficiary may not be recalculated.
3. The Grantor's entire interest in the trust account must be, or begin to be,
distributed by the Grantor's required beginning date, the April 1,
following the calendar year in which the Grantor reaches age 70 1/2. By
that date, the Grantor may elect, in a manner acceptable to the Trustee, to
have the balance in the trust account distributed in:
(a) a single sum payment.
(b) an annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Grantor.
(c) an annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Grantor and his or her designated beneficiary.
(d) equal or substantially equal payments over a specified period that
may not be longer the Grantor's life expectancy.
(e) equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor
expectancy of the Grantor and his or her designated beneficiary.
1. If the Grantor dies before his or her entire interest is distributed to him
or her, the entire remaining interest will be distributed as follows:
(a) If the Grantor dies on or after distribution of his or her
interest has begun, distribution must continue to be made in
accordance with paragraph 3.
(b) If the Grantor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Grantor, or if the Grantor has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) be distributed by December 31 of the year containing the fifth
anniversary of the Grantor's death or
(ii) be distributed in equal or substantially equal payments over the
life expectancy of the designated beneficiary or beneficiaries
starting by December 31 of the year following the year of the
Grantor's death. If, however, the beneficiary is the Grantor's
surviving spouse, then this distribution is not required to begin
before December 31 of the year in which the Grantor would have
turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of Section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on
the Grantor's required beginning date, even though payments may
actually have been made before that date.
(d) If the Grantor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
1. In the case of distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment of each
year, divide the Grantor's entire interest in the trust as of the close of
business on December 31 of the preceding year by the life expectancy of the
Grantor (or the joint life and last survivor expectancy of the Grantor and
the Grantor's designated beneficiary, or the life expectancy of the
designated beneficiary, whichever applies). In the case of distributions
under paragraph 3, determine the initial life expectancy (or joint life and
last survivor expectancy)
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using the attained ages of the Grantor and designated beneficiary as of
their birthdays in the year the Grantor reaches age 70 1/2. In the case of
distribution in accordance with paragraph 4(b)(ii), determine life
expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
2. The owner of two or more individual retirement accounts may use the
"alternate method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits
an individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirements of
another.
ARTICLE V
1. The Grantor agrees to provide the Trustee with information necessary for
the Trustee to prepare any reports required under Section 408(i) of the
Code and Regulations Sections 1.408-5 and 1.408-6.
2. The Trustee agrees to submit reports to the Internal Revenue Service and
the Grantor as prescribed by the Internal Revenue Service.
ARTICLE VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with Section 408(a) of the Code and
related regulations will be invalid.
ARTICLE VII
This agreement will be amended, from time to time, to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear below.
ARTICLE VIII
SECTION 1 - INVESTMENT OF ACCOUNT
1. The Grantor has the sole authority and discretion, fully and completely, to
select and to direct the investment of all assets in the trust account, but
only in (Fund Name) portfolios or any other mutual fund designated by (Fund
Name) as a permissible investment alternative.
2. Subject to the right and duty of the Grantor to direct the investments of
his or her trust account, the Trustee shall have full authority and power:
(a) to invest and reinvest the trust account in such Mutual Funds as
described in paragraph 1 of this article;
(b) to sell, assign, exchange, convey, or otherwise transfer any part
or all of the securities or other property of the trust account, upon
such terms and conditions as the Grantor shall direct, and no person
dealing with the Trustee shall be bound to see the application of the
purchase money or inquire into the validity, expediency, or propriety
of such transactions;
(c) to sue or defend any suit or legal proceeding by or against the
trust account and to compromise, settle, submit to arbitration, or
adjust any suit or legal proceeding, claim, debt, damage, or
undertaking due to owing from or to the trust account by the Trustee
shall not be obligated to take
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any action which would subject it to expense or liability unless it be
first indemnified in an amount and manner satisfactory to it or be
furnished with funds sufficient, in its sole judgement, to cover the
same;
(d) to acquire and hold any securities or other property of the trust
account without disclosing its fiduciary capacity, or in the name of
any other person, with or without a power of attorney for transfer
hereto attached;
(e) to employ attorneys, accountants, and others as it may deem
advisable for the best interest of the trust account, and to pay
their reasonable expenses and compensation out of the trust account;
(f) to make, execute and deliver, as Trustee, any and all instruments in
writing necessary or proper for the effective exercise of any of the
Trustee's powers as stated herein or otherwise necessary to accomplish
the purpose of the trust account.
1. The following shall constitute charges upon the trust account and shall be
paid by the Trustee out of the trust account unless, and the extent, paid
by the Grantor:
(a) all taxes of whatever kind or character that may be imposed,
levied or assessed under existing or future laws upon or in respect of
the trust account, or upon the Trustee in its capacity as such, or
upon the assets or income of the trust account;
(b) all expenses incurred by the Trustee in the performance of its
duties hereunder, including the fees of attorneys, accountants and
other persons engaged by the Trustee for services in connection with
the trust account; and
(c) the fees and other compensation of the Trustee for its services
hereunder.
1. The Grantor shall not borrow any money from the trust account nor pledge
any part thereof as security for a loan. Furthermore, neither the Grantor
nor the Trustee shall engage, either directly or indirectly, in any of the
following transactions:
(a) the sale or exchange, of leasing, of any property between the
trust account and a Disqualified Person;
(b) the lending of money or other extension of credit between the
trust account and a Disqualified Person;
(c) the furnishing of goods, services or facilities between the trust
account and a Disqualified Person;
(d) the transfer to, or use by or for the benefit of, a Disqualified
Person of the income or assets of the Trust Account;
(e) an act by a Disqualified Person who is a fiduciary whereby he or
she deals with the income or assets of the trust account in his or her
own interest or for his or her own account; or
(f) receipt of any consideration for his or her own personal account
by any Disqualified Person who is a fiduciary from any party dealing
with the trust account in connection with a transaction involving the
income or assets of the trust account.
For purposes of the paragraph, "Disqualified Person" shall have the meaning
ascribed to that term under Section 4975(e)(2) of the Code.
SECTION 2 - BENEFICIARY DESIGNATIONS
1. At any time and from time to time the Grantor shall have the right to
designate one or more beneficiaries to whom distribution of his or her
trust account, or the previously undistributed portion thereof, shall be
made in the event of his of her death prior to the complete distribution of
his of her trust account. This right shall extend to the Grantor's
surviving spouse in the event he or she dies while receiving distributions
under the provisions of Sections 3(e) or 4(b) of Article IV. Any such
beneficiary designation shall be deemed legally valid only when submitted
fully complete, duly executed, and on a form provided by or acceptable to
the Trustee. Subject to the foregoing sentence,
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any such beneficiary designation may be revoked by the Grantor at any time,
and shall be automatically revoked upon receipt by the Trustee of a
subsequent beneficiary designation or beneficiary designations in valid
form bearing a later execution date.
2. In the absence of a valid beneficiary designation on file with the Trustee
at the time of the Grantor's death, the Trustee shall, upon receipt of
notice of the death of the Grantor supported by a certified copy of the
death certificate or other appropriate evidence of the fact of death
satisfactory to the Trustee, make distribution of the Grantor's trust
account to the beneficiary or beneficiaries of the Grantor in the following
order or preference:
(a) to the Grantor's legal spouse; but if no such legal spouse shall
survive the Grantor, then to
(b) the surviving natural and adoptive children of the Grantor in
equal shares per capita and not per stirpes; but if there shall be no
such surviving child or children then to
(c) the personal representative of the Grantor, provided, however,
that the Trustee shall have no duty, obligation, or responsibility to
make any inquiry or conduct any investigation concerning the
identification, address, or legal status of any individual or
individuals alleging the status of beneficiary (designated or
otherwise) nor to make inquiry or investigation concerning the
possible existence of any beneficiary not reported to the Trustee
within a reasonable period after the notification period after the
notification of the Grantor's death (or that of his or her surviving
spouse) and previous to the distribution of the trust account. The
Trustee may conclusively rely upon the veracity and accuracy of all
matters reported to it by any source ordinarily presumed to be
knowledgeable respecting the matters so reported. With respect to any
distribution made by reason of the death of the Grantor (or his or her
surviving spouse) the Trustee shall have no higher duty that the
exercise of good faith, shall incur no liability by reason of any
action taken in reliance upon erroneous, inaccurate or fraudulent
information reported by any source assumed to be reliable, or by
reason of incomplete information in its possession at the time of such
distribution. Upon full and complete distribution of the trust
account pursuant to the provisions of this Section, the Trustee shall
be fully and forever discharged from all liability respecting such
trust account.
1. Any distribution pursuant to the provisions of this Section may be made in
cash or in kind or partly in both, at the sole discretion of the Trustee,
and shall be make within 30 days following receipt by the Trustee of
information deemed by it sufficient upon which to base such distribution;
provided, however, that the Trustee shall incur no liability respecting
fluctuations in the value of the trust account in the event of a delay
occasioned by the Trustee's good faith decision to await additional
evidence or information bearing on the beneficiary or beneficiaries.
2. Whenever any distribution hereunder is payable to a minor or to a person
known by the Trustee to be under a legal disability, the Trustee in its
absolute discretion may make all or any part of such distribution to (a) a
legal guardian or conservator for such person, (b) a custodian under the
Uniform Transfers to Minors Act, (c) a parent of such person, or (d) such
person directly.
3. Anything to the contrary herein notwithstanding, in the event of reasonable
doubt respecting the proper course of action to be taken, the Trustee may
in its sole and absolute discretion resolve such doubt by judicial
determination which shall be binding on all parties claiming any interest
in the trust account. In such event all court costs, legal expenses,
reasonable compensation for the time expended by the Trustee in the
performance of its duties, and other appropriate and pertinent expenses and
costs, shall be collected by the Trustee from the trust account.
SECTION 3 - MISCELLANEOUS
1. The Trustee may make further amendments to this Agreement, in order to make
said Agreement acceptable in form to the Secretary of the Treasury and the
Secretary of Labor, or for any other purpose. Any such amendments shall be
effective without the signature of the Grantor to a new Adoption Agreement
or IRA Application and shall, if for the purpose of initially qualifying
the trust account pursuant to the Code, be retroactively effective to the
date of the captioned Agreement. The Trustee will mail a copy of any such
amendment to the Grantor.
2. The Trustee shall deliver, or cause to be executed and delivered, to the
Grantor all proxies,
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prospectuses and notices pertaining to securities held in the account. The
Trustee shall not vote any such securities except pursuant to written
instructions from the Grantor. Any notice sent from the Trustee to the
Grantor shall be effective, if sent by mail to the Grantor's last address
of record.
3. The Trustee, within 30 days after the close of each calendar year, shall
provide the Grantor a record of activity in the trust account during such
year, including the date and dollar amount of contributions, any earnings
on such contributions, the date and dollar amount of any distributions, a
beginning balance and an ending balance. The Trustee may meet its
recordkeeping and reporting requirements by adopting the records of any
investment facility permitted by this Agreement, and it may delegate
ministerial duties of keeping such records to such facilities or their
managers.
4. Confirmation of transactions and records of statements of activity in the
Grantor's account shall be conclusive if the Grantor does not object within
ten days after mailing to the Grantor. In such case, the Trustee and its
officers and employees shall be forever released and discharged from any
liability with respect to any claim arising out of any action or omission
reflected on such confirmation or record.
5. The Trustee does not guarantee the trust account from loss or depreciation.
The liability of the Trustee to make any payment from the trust account at
any time is limited to the then available assets of the trust account.
6. Subject to the limitations contained in paragraph 1 of Section 1 of this
Article VIII, the Grantor shall have the sole power, right and duty to
direct the Trustee from time to time with respect to the investment and
reinvestment of the assets of the trust account. The Trustee shall comply
promptly with all such directions, providing such directions are clearly
stated in writing executed by the Grantor, and in form acceptable to the
Trustee. The Trustee shall not have any duty to inquire into the propriety
of any such direction nor into its effect upon the trust account or the
beneficiary or beneficiaries thereof, not to apply to a court for
instructions notwithstanding the fact that the Trustee has, or with
reasonable inquiry should have, actual or constructive notice that any
action taken or omitted pursuant to, or as a result of, the exercise of
such directive power constitutes, or may constitute, a breach of the terms
of the trust account or a violation of any law applicable to the investment
of the funds held hereunder. Any such direction so given the Trustee shall
be deemed to be continuing until revoked or modified by a subsequent
direction in writing, notwithstanding the occurrence of any event or
development of which the Trustee has or should have knowledge. The Trustee
shall not be liable or responsible for any loss resulting to the trust
account or to any present or future beneficiary thereof by reason of:
(a) any sale or investment made or other action taken pursuant to and
in accordance with the direction of the Grantor; or
(b) the retention of any asset, including cash, the acquisition or
retention of which has been directed by the Grantor.
1. This Agreement shall be binding upon all persons entitled to benefits under
the trust account, their respective heirs and legal representative, and
upon the Trustee and its successors.
2. Words used in the masculine shall apply to the feminine where applicable,
and wherever the context of the Agreement dictates, the plural shall be
read as the singular and the singular as the plural.
3. As the context requires, the term "Grantor" shall be deemed to include any
beneficiary of the Account following the death of the Grantor.
4. All questions arising with respect to the provisions of the Agreement shall
be determined by application of the laws of the State of Missouri except to
the extent federal statutes supersede Missouri law. To the extent
permitted by law, none of the creditors of the Grantor or any beneficiary
shall have any power to execute any levy, lien, assignment, garnishment,
alienation, attachment, or other voluntary or involuntary transfer on any
of the assets of the IRA; and all sums payable to the Grantor or any
beneficiary shall be free and clear of all liabilities for debts, levies,
attachments and proceedings of any kind, at law or in equity.
5. The Trustee shall receive reasonable annual compensation as may be agreed
upon from time to time between the Grantor and Trustee. The Trustee shall
pay all expenses reasonably incurred by it in its administration from the
trust account unless the Grantor pays the expenses.
6. The Trustee may resign at any time for any reason, upon 30 days' notice in
writing to the Grantor and may be removed by the Grantor at any time upon
30 days' notice in writing to the Trustee. Upon resignation, the Grantor
automatically delegates to the Investment Company the responsibility to
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appoint a successor Custodian. The Grantor or the Investment Company may
terminate this Agreement at any time by giving 30 days notice filed in a
form acceptable to us. The notice must include designation of a successor
custodian. The successor custodian shall satisfy the requirements of IRC
Section 408(h). We shall not be liable for any actions or failures to act
on the part of any successor custodian or trustee nor for any tax
consequences you may incur that result from the transfer or distribution of
your assets pursuant to this section. If this Agreement is terminated, we
may hold back from you IRA a reasonable amount of money that we believe is
necessary to cover any one or more of the following:
- Any fees, expenses or taxes chargeable against your IRA;
- Any penalties associated with the early withdrawal of any saving
instrument or other investment in you IRA
If our organization is merged with another organization (or comes under the
control of any Federal or State agency) or if our entire organization (or
any portion which includes your IRA) is bought by another organization,
that organization (or agency) shall automatically become the trustee or
custodian of you IRA, but only if it is the type of organization authorized
to serve as an IRA trustee or custodian. If we are required to comply with
Section 1.401-12(n) of the Treasury Regulations and we fail to do so, or we
are not keeping the records, making the returns or sending the statements
as are required by forms or regulations, the IRS may, after notifying you,
require you to substitute another custodian or trustee.
1. The Trustee shall not be responsible for determining the permissible amount
of contributions to the account, or for the amount of timing of
distributions from the account, or for any other actions taken at the
request of the Grantor. The Grantor shall indemnify and hold the Trustee
harmless from any and all liability, claims and expenses arising from any
actions taken at the Grantor's request or in connection with this
Agreement, except for any liability, claims, or expenses caused by the
negligence of the Trustee.
2. The Grantor agrees to pay to the Trustee fees for services performed under
this Agreement in an amount specified from time to time by the Trustee.
Such fees may include, but are not limited to, a fee to establish the
Custodial Account and the annual maintenance fee. The Trustee shall have
the right to change such fees at any time without prior written notice to
the Grantor. As soon as practicable after any change in fees, the Trustee
shall make available to the Grantor a new fee schedule. All fees may be
billed to the Grantor or deducted from the Custodial Account, at the
discretion of the Grantor. The Trustee shall also be entitled to
reimbursement for all reasonable and necessary costs, expenses and
disbursements incurred by it in the performance of services. Such fees and
reimbursement shall be paid from the Account if not paid directly by the
Grantor and shall constitute a lien upon the Account until paid.
3. If the custodian is UMB Bank, n.a., Sunstone Investor Services, LLC shall
be the ministerial agent for the custodian in the performance of any
ministerial duties delegated to it by the custodian. If any other bank or
entity is the Custodian, then Sunstone Investor Services , LLC shall not be
the ministerial agent for any duties of the Custodian unless it agrees to
in writing with the other Custodian.
4. You may not invest the assets of your IRA in collectibles (within meaning
of Internal Revenue Code Section 408(m)). A collectible is defined as any
work of art, rug or antique, metal or gem, stamp or coin, alcoholic
beverage, or other tangible personal property specified by the Internal
Revenue Service. However, specially minted United States gold and silver
bullion coins and certain state-issued coins are permissible investments.
Beginning January 1, 1998, platinum coins and certain gold, silver,
platinum or palladium bullion (as described in IRC Sec. 408(m)(3)) are also
permitted as IRA investments.
5. The Depositor must begin taking required minimum distributions from the
Custodial Account, under Article IV, on or before the Depositor's required
beginning date (April 1 immediately following the end of the calendar year
in which the Depositor reaches age 70 1/2.) Such distributions will be
made only upon the request of the Depositor (or the Depositor's authorized
agent, beneficiary, executor or administrator), in such form and manner as
is acceptable to the Custodian. For such distributions, life expectancy
and joint-life and last-survivor expectancy are calculated based on
information provided by the Depositor (or the Depositor's authorized agent,
beneficiary, executor, or administrator) using the expected return
multiples under Treasury Regulations Section 1.72-9. The
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Custodian will not be liable for errors in such calculations resulting from
its reliance on such information. If any assets held on the Depositor's
behalf in a Custodial Account are transferred directly to a trustee or
custodian of another individual retirement account described in Code
Section 408(a) established for the Depositor, it shall be the Depositor's
responsibility to ensure that any required minimum distribution required by
Article IV is made prior to giving the Custodian such transfer
instructions.
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DISTRIBUTION AND SERVICE PLAN
OF THE MARSICO INVESTMENT FUND
WHEREAS, The Marsico Investment Fund (the "Trust") engages in business as
an open-end management investment company and is registered as such under the
Investment Company Act of 1940, as amended (the "Act");
WHEREAS, shares of beneficial interest of the Trust have initially been
divided into two separate series, the Marsico Focus Fund and the Marsico Growth
& Income Fund, and may be divided into additional series in the future (the
"Funds");
WHEREAS, the Trust desires to adopt, on behalf of the Funds, a Distribution
and Service Plan pursuant to Rule 12b-l under the Act (the "Plan"), and the
Trustees of the Trust have determined that there is a reasonable likelihood that
adoption of the Distribution and Service Plan will benefit the Trust, the Funds
and their respective shareholders;
NOW, THEREFORE, the Trust on behalf of the Funds hereby agrees to the terms
of the Plan, in accordance with Rule 12b-l under the Act on the following terms
and conditions:
1. The Funds shall pay fees for the distribution of their shares and for
services to shareholders of the Funds at the annual rate of .25% of each
respective Funds' average daily net assets. Such fee shall be calculated and
accrued daily and paid monthly or at such other intervals as the Trustees shall
determine, subject to any applicable restriction imposed by rules of the
National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan shall be paid in
connection with any activities or expenses primarily intended to result in the
sale of the shares of the Funds, including, but not limited to, compensation to
registered representatives of broker-dealers that have entered into a Dealer
Agreement with the Funds' Distributor and to financial institutions and other
entities that make shares of the Funds available to their customers;
compensation to and expenses of employees of the Funds' Distributor who engage
in or support distribution of the Funds' shares; telephone expenses; interest
expense; printing of prospectuses and reports for other than existing
shareholders; preparation, printing and distribution of sales literature and
advertising materials; and profit on the foregoing; in addition, a portion of
such amount may be paid for account maintenance and personal service to
shareholders (the "Service Fee").
3. This Plan shall not take effect with respect to a Fund until it has
been approved by a vote of at least a majority (as defined in the Act) of the
outstanding voting securities of such Fund.
4. This Plan shall not take effect until it, together with any related
agreements, has been approved by votes of a majority of both (a) the Trustees of
the Trust and (b) those Trustees of the Trust who are not "interested persons"
of the Trust (as defined in the Act) and who have no direct or indirect
financial interest in the operation of this Plan or any agreements related to it
(the "Rule 12b-l Trustees"), cast in person at a meeting (or meetings) called
for the purpose of voting on this Plan and such related agreements.
5. This Plan of Distribution shall continue in full force and effect as
to the Funds for so long as such continuance is specifically approved at least
annually in the manner provided for approval of this Plan in paragraph 4.
<PAGE>
6. The Trustees of the Trust shall be provided and shall review at least
quarterly, a written report of the amounts expended under this Plan and the
purposes for which such expenditures were made.
7. This Plan may be terminated as to the Funds at any time, without
payment of any penalty, by vote of a majority of the Rule 12b-l Trustees, or by
a vote of a majority of the outstanding voting securities of the Funds on not
more than 30 days' written notice to any other party to the Plan.
8. This Plan may not be amended to increase materially the amount of the
distribution fee (including any Service Fee) provided for in paragraph 1 hereof
unless such amendment is approved in the manner provided for initial approval in
paragraph 3 hereof, and no material amendment to the Plan shall be made unless
approved in the manner provided for approval and annual renewal in paragraph 4
hereof.
9. While this Plan is in effect, the selection and nomination of Trustees
who are not interested persons (as defined in the Act) of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
10. The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
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Sunstone Distribution Services, LLC
207 East Buffalo Street
Suite 400
Milwaukee, Wisconsin 53202
DEALER ASSISTANCE AGREEMENT FOR THE SALE OF SHARES
OF THE MARSICO INVESTMENT FUND
Gentlemen:
We have entered into a Distribution Agreement with The Marsico Investment
Fund (the "Trust"), a Delaware business trust registered as a management
investment company under the Investment Company Act of 1940 (the "1940 Act"), in
connection with its initial two separate series, the Marsico Focus Fund and the
Marsico Growth & Income Fund, and such other series as may added to the Trust in
the future (the "Funds"), pursuant to which we have been appointed distributor
of shares of the Funds.
This Dealer Assistance Agreement (the "Agreement") has been adopted
pursuant to Rule 12b-1 under the 1940 Act by the Trust on behalf of the Funds
under a Distribution and Service Plan (the "Plan") adopted pursuant to said
Rule. This Agreement, being made between Sunstone Distribution Services, LLC
(the "Distributor") and the undersigned authorized dealer, relates to the
services to be provided by the authorized dealer and for which it is entitled to
receive payments pursuant to the Plan.
1. To the extent that you provide distribution assistance and/or
account maintenance and personal services in accordance with the
Plan and applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD") to those of your customers
who may from time to time directly or beneficially own shares of
the Funds, we shall pay you a fee periodically.
2. The fee paid with respect to each applicable Fund will be
computed daily and paid quarterly at an annual rate of up to
0.25% of the average net asset value of the shares of such Fund
purchased or acquired, provided that such shares are owned of
record at the close of business on the last business day of the
payment period by your firm as nominee for your customers, or are
owned on such date by those customers of your firm whose records,
as maintained by the Fund or its transfer agent, designate your
firm as the customers' dealer of record or holder of record (the
"Subject Shares").
3. We shall pay you the total of the fees calculated for each
respective Fund for any period with respect to which such
calculations are made within 45 days after the close of such
period.
4. We reserve the right to withhold payment with respect to the
Subject Shares purchased by you and redeemed or repurchased by
the Fund or by us as distributor within seven (7) business days
after the date of our confirmation of such purchase. We reserve
the right at any time to impose
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minimum fee payment requirements before any periodic payments
will be made to you hereunder.
5. You shall furnish us and the Funds with such information as shall
reasonably be requested either by the trustees of the Funds or by
us with respect to the fees paid to you pursuant to this
Agreement.
6. We shall furnish the trustees of the Funds, for their review on a
quarterly basis, a written report of the amounts expended under
the Plan by us and the purposes for which such expenditures were
made.
7. Neither you nor any of your employees or agents are authorized to
make any representation concerning shares of the Funds except
those contained in the then current Prospectus for the Funds, and
you shall have no authority to act as agent for the Funds or for
the Distributor.
8. We may enter into other similar agreements with any other person
without your consent.
9. You represent that you are a member of the NASD and agree to
maintain membership in the NASD. You agree to abide by all the
rules and regulations of the Securities and Exchange Commission
and the NASD which are binding upon underwriters and dealers in
the distribution of the securities of open-end investment
companies, including without limitation, Section 2830 of the NASD
Conduct Rules, all of which are incorporated herein as if set
forth in full. You shall comply with all applicable state and
Federal laws and the rules and regulations of authorized
regulatory agencies. You will not sell or offer for sale shares
of any Fund in any state where (i) you are not qualified to act
as a dealer or (ii) the shares are not qualified for sale under
the Blue Sky laws and regulations for such state, except for
states in which they are exempt from qualification. You agree to
notify us immediately if your license or registration to act as a
broker-dealer is revoked or suspended by any Federal,
self-regulatory or state agency.
10. This Agreement may be terminated with respect to any Fund at any
time without payment of any penalty by the vote of a majority of
the trustees of such Fund who are not interested persons of that
Fund (the "Independent Trustees") or by a vote of a majority of
the Fund's outstanding shares, on sixty (60) days' written
notice. It will be terminated by any act which terminates either
the Distribution Agreement with us or the Distribution and
Service Plan, and in any event, it shall terminate automatically
in the event of its assignment as that term is defined in the
1940 Act.
11. The provisions of the Distribution Agreement, insofar as they
relate to the Plan, are incorporated herein by reference. This
Agreement shall become effective upon execution and delivery
hereof and shall continue in full force and effect as long as the
continuance of the Plan and this related Agreement are approved
at least annually by a vote of the trustees, including a majority
of the Independent Trustees, cast in person at a meeting called
for the purpose of voting thereon. All communications to
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us should be sent to the address shown on the first page of this
Agreement. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
12. This Agreement shall be construed in accordance with the laws of
the State of Wisconsin.
SUNSTONE DISTRIBUTION SERVICES, LLC
By:
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Name:
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Title:
----------------------------------
ACCEPTED:
----------------------------------------
Dealer's Name
----------------------------------------
Address
By:
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Name:
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Title:
----------------------------------
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