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SECURITIES AND EXCHANGE COMMISION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
BOWES INVESTMENT TRUST
4520 EAST WEST HWY, SUITE 540
BETHESDA, MD 20814
(301) 654-9567
http://www.bowesfunds.com
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective
(check appropriate box)
[ ]immediately upon filing pursuant to paragraph (b)
[ ]on (date) pursuant to paragraph (b)
[ ]60 days after filing pursuant to paragraph (a)(i)
[ ]on (date) pursuant to paragraph (a)(i)
[ ]75 days after filing pursuant to paragraph (a)(ii)
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Comments should be directed to: With copies to:
Thomas I. Carocci David M. Leahy
Bowes Funds, LLC Sullivan & Worcester LLP
4520 East West Hwy., Suite 540 1025 Connecticut Avenue
Bethesda, Maryland 20814 Washington, D.C. 20036
301-654-9567 202-775-8190
Declaration Pursuant to Rule 24f-2. The Registrant has registered an indefinite
number or amount of securities under the Securities Act of 1933 pursuant to Rule
24f-2 under the Investment Company Act of 1940.
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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BOWES INVESTMENT TRUST - CROSS REFERENCE SHEET
Form N-1A
<TABLE>
<CAPTION>
Location in
PART A Registration
Item No. Item Name Statement
- -------- --------- ---------
<S> <C>
1. Cover Page Cover Page
2. Synopsis Expense Summary
3. Condensed Financial Highlights Performance Information
4. General Description of Registrant Investment Objective, Policies,
and Risks
5. Management of the Fund Management of the Fund
6. Capital Stock and Distributions, Management of the Fund; Dividends,
Other Securities Distributions and Taxes
7. Purchase of the Securities How to Purchase Fund Shares; How
Being Offered Net Asset Value is Determined
8. Redeeming Fund Shares How to Redeem Fund Shares
9. Pending Legal Proceedings Not Applicable
<CAPTION>
STATEMENT OF ADDITIONAL INFORMATION
PART B Location in Part B (Statement of
Item No. Item Name Additional Information)
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objective,
Policies; and Risks
14. Management of the Fund Trustees and Officers
15. Control Persons and Principal Not Applicable
Holders of Securities
16. Investment Advisory and Investment Advisory and Other Services;
Other Services Distribution of Fund Shares and 12b-1 Plan
17. Brokerage, Allocation and Portfolio Transactions and Brokerage
Other Practices
18. Capital Stock and Capital Shares
Other Securities
19. Purchase, Redemption and Pricing Pricing and Redemption
Of Securities Being Offered of Securities Being Offered
20. Tax Status Taxes
21. Underwriters Distribution of Fund Shares and 12b-1 Plan
22. Calculation of Performance Calculation of Performance
Data
23. Financial Statements Statement of Assets and Liabilities
</TABLE>
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[logo] BOWES INVESTMENT TRUST
BANK AND INSURANCE FUND
PROSPECTUS , 1998
INVESTMENT OBJECTIVE AND POLICIES
Bowes Investment Trust (the "Trust") is an open-end diversified management
investment company that currently offers one investment portfolio, the Bank and
Insurance Fund (the "Fund"). The Fund's investment objective is to achieve long
term capital appreciation. The Fund seeks to achieve its investment objective by
normally investing at least 65% of its total assets in the equity securities of
United States based companies involved in the banking and insurance industries.
The Fund will concentrate in the banking and insurance industries. Issuers in
the banking and insurance industries include banks, savings and loan
organizations, credit card companies, consumer finance companies, credit unions,
mortgage lenders, life and health insurers, property casualty insurers,
insurance brokers and agents, and financial guaranty insurance companies. The
Fund's concentration in the banking and insurance industries is a fundamental
policy and may not be changed without shareholder approval.
In addition, the Fund intends to deposit a portion, not to exceed 5% of its net
assets, in savings accounts of mutual bank and thrift institutions and to invest
a portion, not to exceed 5% of its net assets, in general account fixed
annuities of mutual life insurance companies, each of which may entitle the Fund
to participate in conversions and de-mutualizations, respectively, that may
occur in the future. In order to take advantage of the new 20% maximum capital
gains tax rate, the Fund utilizes tax-sensitive investment strategies designed
to minimize taxable distributions to shareholders and maximize after-tax
returns.
The Fund's investment manager is Bowes Funds, LLC (the "Advisor"). The Advisor
is located at 4520 East West Highway, Suite 540 Bethesda, Maryland 20814. Shares
of the Fund are distributed by Countrywide Investments, Inc.
About this Prospectus
This Prospectus is designed to set forth concisely the information you should
know about the Trust before you invest. It should be retained for future
reference. More information about the Trust is contained in a Statement of
Additional Information that has been filed with the Securities and Exchange
Commission. On-line access to this prospectus is available at www.sec.gov or
www.bowesfunds.com. To obtain a free copy, call the Distributor at
(888)-829-9973. The Statement of Additional Information dated ,
1998 is hereby incorporated by reference into this Prospectus.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY OF THE U.S.
GOVERNMENT. SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS IS NOT AN OFFERING OF THE SECURITIES HEREIN DESCRIBED IN ANY
STATE, JURISDICTION OR COUNTRY IN WHICH THE OFFERING IS NOT AUTHORIZED. NO SALES
REPRESENTATIVE, DEALER, OR OTHER PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR
MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS.
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EXPENSE SUMMARY
The following table illustrates all expenses and fees that you would incur as a
shareholder of the Fund.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases ------------- None
Maximum sales load imposed on reinvested dividends -- None
Deferred sales load --------------------------------- None
Redemption Fees *------------------------------------ None *
* A wire transfer fee is charged by the Fund's Custodian in the case
of redemptions made by wire. Such fee is subject to change and is
currently $9. See "How to Redeem Fund Shares".
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees ------------------------------------- 1.00%
12b-1 Fees ------------------------------------------ .25%
Other Expenses -------------------------------------- .73%
-----
Total Fund Operating Expenses ----------------------- 1.98%
The purpose of the above table is to assist you in understanding the various
expenses that you would bear directly or indirectly as an investor in the Fund.
"Management Fees" are paid by the Fund to the Fund's Advisor under the terms of
the Investment Management Agreement. "12b-1 Fees" are for distribution,
promotional and shareholder servicing costs paid by the Fund under the terms of
the Distribution Plan. "Other Expenses" includes custodian, legal, accounting,
transfer agency and shareholder administration fees, printing, and other
customary Fund expenses. The "Other Expenses" are based on estimated amounts for
the current fiscal year. The Fund's fees and expenses are discussed in more
detail under "Management of the Fund".
Example
The following example illustrates the expenses you would incur on a $1,000
investment over one and three year periods, assuming (1) a 5% annual rate of
return and (2) redemption at the end of each period:
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1 Year 3 Years
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$20 $ 62
</TABLE>
This example should not be considered a representation of past or future
expenses or performance. ACTUAL EXPENSES MAY BE HIGHER OR LOWER THAN THOSE
SHOWN.
INVESTMENT OBJECTIVE, POLICIES, AND RISKS
The investment objective of the Fund is long-term capital appreciation. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in the equity securities of United States based issuers involved in the banking
and insurance industries. Equity securities may include common stocks, preferred
stocks, convertible securities, warrants and limited partnership interests.
Common stocks, the most familiar type, represent an equity (ownership) interest
in a corporation. Although equity securities have a history of long-term growth
in value, their prices fluctuate based on changes in a company's financial
condition and on overall market and economic conditions. Issuers in such
industries include banks, savings and loan organizations, credit card companies,
consumer finance companies, credit unions, mortgage lenders, life and health
insurers, property casualty insurers, insurance brokers and agents, and
financial guaranty insurance companies. United States based issuers are defined
as those companies that both (a) derive a majority of their revenues from
operations in the United States and (b) have corporate headquarters
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located in the United States. As the nature of the banking and insurance
industries are impacted by mergers, regulations, or product line dynamics,
additional types of equity issuers that derive a substantial portion of their
revenues from the banking and insurance industries may be added to the list of
permissible investments for the Fund. There is no assurance that the Fund's
investment objective will be achieved. The Fund's investment objective is not
fundamental and may be changed by the Trustees of the Fund without shareholder
vote. Shareholders would be given 30 days prior notice before any change is made
to the Fund's investment objective.
The Fund intends to achieve its investment objective through the Advisor's use
of fundamental investment analysis and research supported by the background and
experience in financial institution corporate finance, financial analysis, and
merger evaluation of the Advisor's principal and his staff. The opportunities
for capital appreciation by investing in the banking and insurance industries
can be summarized as follows:
(A) MERGERS & PRODUCT LINE EXPANSION
The current financial health and high capital and earnings levels of
the banking and insurance industries, coupled with regulations
permitting geographic and product line expansion has created a
dynamic merger environment that has seen the number of banking and
thrift institutions decrease from over 20,000 in 1992 to
approximately 9,000 at the beginning of 1998. Economies of scale
have become more important to financial institution profitability.
Disparity in the price to earnings ratio and price to book value
ratios among banking, thrift and insurance institutions has also
been conducive to mergers in those industries.
(B) MANAGEMENT EFFECTIVENESS; USE OF TECHNOLOGY
Improved marketing techniques, the greater application of improved
underwriting policies and management decisions to implement
technological upgrades to improve efficiency has tended to
contribute to earnings growth of the banking and insurance
industries. More sophisticated financial management techniques to
protect against risk to earnings from changes in interest rates have
been widely implemented. Institutions with seemingly identical
balance sheets and product lines may be oppositely sensitive to
interest rate moves or asset and liability re-pricing, depending on
each company's use of asset liability management tools and the view
of each company's management. Bank management decisions to invest in
their own institutions in the form of share repurchase programs have
been favorable to the share price dynamics of bank stocks. These
buyback programs have become more frequent in the past two years as
institutions have decided that among their best investments is
investment in their own shares.
(C) MUTUAL CONVERSIONS
Access to capital markets by mutual institutions may be expanded by
converting to stock ownership form. The opportunity for
policyholders and depositors to realize liquid shareholder value,
and ultimate acquisition or merger with other industry participants
are key benefits contemplated in decisions to convert from mutual
form to public ownership. Banking and insurance industry regulators,
whose primary functions are to protect depositors and policyholders
and to ensure capital adequacy, have adopted policies to allow
mutual depositors and mutual policyholders to become stockholders of
their own institutions, often at a discount to the institution's
pro-forma tangible book value and, depending on industry pricing and
market trends at the time, often at a substantial discount to the
value of the institution in a merger
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transaction. If the Fund were a depositor or policyholder in a
mutual banking, thrift or insurance institution, it would be
entitled to subscription rights if and when any of those
institutions determined to de-mutualize.
(D) MODERNIZATION OF REGULATIONS
Strengthened and uniform regulation of the thrift, insurance and
banking industries have assisted in creating an environment where
industry participants may achieve improved financial performance.
Regulatory modernization has permitted banks, thrifts and insurers
to offer additional products and services that may have higher
marginal profitability than a narrower more traditional product
line. Regulations allowing geographic expansion have allowed issuers
to achieve improved economies of scale.
Growth and Value Stocks
Growth oriented mutual funds generally focus on companies that, due to their
strong earnings and revenue potential, offer above-average prospects for capital
growth, with less emphasis on dividend income. Value oriented mutual funds
generally emphasize companies that, considering their assets and earnings
history, are attractively priced and may provide dividend income. Value stocks
may be issuers that have experienced recent price weakness yet maintain a strong
underlying franchise value or solid financial condition. The banking and
insurance sectors contain both growth and value stock opportunities. The Fund
may invest in the securities of issuers classified as either growth or value
stocks or both depending on the particular type and characteristics of such
issuers. Regardless of issuer style classification, the Fund will strive to
identify undervalued issuers representing solid opportunity for long term
appreciation without a specific focus on dividend income.
Tax Sensitive Investing For The Long Term
The Fund is intended to be a long-term investment vehicle and is not designed to
provide investors with a means of speculating on short-term fluctuations in the
stock market. In order to capitalize on the Taxpayer Relief Act of 1997, which
lowers the maximum capital gains tax rate from 28% to 20% on shares held longer
than 18 months, the Fund uses tax-sensitive investment strategies designed to
generate maximize after-tax returns.
Portfolio Turnover
While it is difficult to predict, the annual portfolio turnover rate for the
Fund is not expected to exceed 75%. A 75% turnover rate would occur, for
example, if three quarters of the securities in the Fund were replaced within
one year. In pursuit of the Fund's investment objective, management monitors
Fund investments and (considering the Fund's tax strategies) adjusts the Fund's
portfolio accordingly regardless of portfolio turnover concerns. Portfolio
turnover may increase as a result of large amounts of purchases and redemptions
of shares of the Fund due to economic, market or other factors that are not
within the control of the Advisor. Increased portfolio turnover to accommodate
redemptions may result in the acceleration of net taxable gains and additional
brokerage costs to the Fund.
Conversions and De-Mutualizations
The Fund intends to deposit a portion, not to exceed 5% of its net assets, in
savings accounts of domestic mutual bank and thrift institutions and to invest a
portion, not to exceed 5% of its net assets, in general account fixed annuities
of domestic mutual life insurance companies, such deposits and investments may
entitle the Fund to participate in conversions and de-mutualizations,
respectively, that may occur in the future. Additionally, the Fund may invest in
initial public offerings of mutual conversions and de-mutualizations.
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Illiquid Securities
The Fund may invest up to 15% of its net assets in restricted or illiquid
securities. Restricted or illiquid securities are securities which are not
freely marketable or which are subject to restrictions upon sale under the
Securities and Exchange Act of 1933. The Fund's Trustees may, in accordance with
procedures adopted by the Fund, from time to time determine certain restricted
securities known as Rule 144A securities to be liquid. Such securities,
determined by the Trustees to be liquid, will not be subject to the 15%
limitation described above. Investments in illiquid securities involve certain
risks to the extent that the Fund may be unable to dispose of such a security at
the time desired or at a reasonable price or, in some cases, may be unable to
dispose of it at all. In addition, in order to resell a restricted security, the
Fund might have to incur the potentially substantial expense and delay
associated with effecting registration. The Fund may invest in securities
offered in an initial public offering where the Fund will not receive shares for
which it has subscribed within a seven day period ("when-issued securities").
Loan Participations
The Fund may invest, subject to an overall 10% limit of any specific loan, in
loan participations, typically made by a syndicate of banks to U.S. or
governmental borrowers for a variety of purposes. The underlying loans may be
secured or unsecured, and will vary in term and legal structure. When purchasing
such instruments the Fund may assume the credit risks associated with the
original bank lender as well as the credit risks associated with the borrower.
Investments in loan participations present the possibility that the Fund could
be held liable as a co-lender under emerging legal theories of lender liability.
In addition, if the loan is foreclosed, the Fund could be part owner of any
collateral, and could bear the costs and liabilities of owning and disposing of
the collateral. Loan participations are generally not rated by major rating
agencies and may not be protected by the securities laws. Also, loan
participations are generally considered to be illiquid and therefore subject to
the Fund's overall 15% limitation on illiquid securities.
Borrowing Money
The Fund will not borrow money, except that the Fund may borrow from banks, for
temporary or emergency (not leveraging) purposes, including the meeting of
redemption requests which might otherwise require the untimely disposition of
securities, in an amount not exceeding 5% of the value of the Fund's net assets
(including the amount borrowed) at the time the borrowing is made. Whenever
borrowings exceed 5% of the value of the Fund's net assets, the Fund will not
make any additional investments.
Repurchase Agreements
The Fund may enter into repurchase agreements. Under a repurchase agreement, the
Fund acquires a debt instrument for a relatively short period(usually not more
than one week), subject to the obligation of the seller to purchase and the Fund
to resell such debt instrument at a fixed price. The resale price is in excess
of the purchase price in that it reflects an agreed-upon market interest rate
effective for the period of time during which the Fund's money is invested. The
Fund's repurchase agreements will at all times be fully collateralized in an
amount equal to 102% of the purchase price including accrued interest earned on
the underlying securities. The instruments held as collateral are valued daily
by the Advisor and if the value of such instruments declines, the Fund will
require additional collateral. If the seller defaults and the value of the
collateral securing the repurchase agreements declines, the Fund may incur a
loss. If such a defaulting seller were to become insolvent and subject to
liquidation or reorganization under applicable bankruptcy or other laws,
disposition of the underlying securities could involve certain costs or delays
pending court action. Finally, it is not certain whether the Fund would be
entitled, as against a claim of the seller or its receiver, trustee in
bankruptcy or
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creditors, to retain the underlying securities. Repurchase agreements are
considered by the staff of the SEC to be loans by the Fund.
Options, Index Options, Interest Rate Swaps and Options
The Fund may invest in options on securities, financial indices, and interest
rates. The Fund intends to use options and swaps to hedge the value of its
portfolio against adverse movements in securities prices or interest rates.
Please refer to the Statement of Additional Information for a more detailed
discussion of these investments. The Fund may enter into options contracts and
interest rate swaps provided that such investments represent not more than 5% of
the Funds net assets. The risk of loss in option contracts and interest rate
swaps in some strategies can be substantial due to the extremely high degree of
market valuation fluctuation potential. As a result, a relatively small price
movement in an options contract or in the investment underlying the option
contract or a small change in interest rates may result in immediate and
substantial loss (as well as gain) to the investor. However, the Fund will not
use options and interest rate swaps for speculative purposes. Accordingly, the
primary risks associated with the use of options and swaps are: (i) the risk
that securities prices and interest rates will not move in the direction that
the Advisor anticipates; (ii) an imperfect correlation between the change in
market value of the equities held by the Fund and the prices of related option
contracts; (iii) possible lack of a liquid secondary market for an option
contract and the resulting inability to close an option position prior to its
expiry date. The risk of imperfect correlation will be minimized by investing
only in those contracts whose price fluctuations are expected to resemble those
of the Fund's underlying securities. The risk that the Fund will be unable to
close out a futures or option position will be minimized by entering into such
transactions on a national exchange with an active and liquid secondary market.
Cash Reserves
To accommodate future investment opportunities and for possible redemptions, the
Fund maintains short term investment securities, including, but not limited to,
commercial paper, institution and retail money market funds, savings accounts at
mutual banks and thrifts and certificates of deposit, that can easily and
quickly be converted to cash.
Risks of Investing in Banks and Insurers
The Fund is subject to market, industry, or issuer specific risks described
below and in the Statement of Additional Information. These risks may cause your
investment in the Fund, as with any investment, to decrease in value. Financial
services companies are subject to extensive government regulation that may limit
both the amount and types of loans and commitments they can make and policies
they can issue, and the interest rates and fees they can charge. Financial
performance depends, in part, on the issuer's such as those in which the Fund
invests access to capital, and can fluctuate when interest rates change. Credit
losses resulting from financial difficulties of borrowers can adversely impact
the banking, consumer finance, and mortgage lending industry. Insurance
companies may be subject to, among other factors, poor investment performance,
policy pricing competition, higher claims and claim processing expenses, adverse
mortality and morbidity experience, marketing competition and general economic
conditions. Individual insurance companies may be subject to material risks
including reserve inadequacy and the inability to collect from reinsurance
carriers.
Other Risks You Should Consider
The Fund will often invest in securities of companies with small- or mid-sized
market capitalizations. Market capitalization is defined as total current market
value of a company's outstanding common stock. Investments in companies with
smaller market capitalizations may involve greater risks and price volatility
than investments in larger, more mature companies since smaller companies may be
at an earlier stage of
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development and may have limited product lines, reduced daily volume of trading
in their shares, limited financial resources or less depth in management than
larger or more established companies. Smaller companies also may be adversely
impacted by competition from larger industry companies. While smaller companies
may be subject to these additional risks, they may also realize more substantial
growth than larger or more established companies. The Fund may invest in
securities of unseasoned issuers. Unseasoned issuers are companies with a record
of less than three years' continuous activity as a publicly traded company, even
though they may have a longer history of operations as a private or mutually
owned institution. Unseasoned issuers may not yet have established the market
institutional analyst following of a seasoned public company.
HOW TO PURCHASE FUND SHARES
The minimum initial purchase requirements, which may be changed from time to
time or altered in certain circumstances, are:
Regular Accounts $2,000
IRA and IRA Rollovers 1,000
Gifts to Minors 1,000
Automatic Investment Plan 1,000
Defined Contribution Plans 1,000
To purchase shares in the Fund, simply complete the Account Application form
included with the Prospectus and mail it along with a check payable to the "Bank
and Insurance Fund" as follows:
Bank and Insurance Fund
P.O. Box 5354
Cincinnati, Ohio 45201-5354
Express Mail/Overnight: Bank and Insurance Fund
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
A prompt confirmation indicating the details of the transaction will be sent to
you. In addition, Fund shares may be purchased through certain broker-dealers
that have established mutual fund programs and certain other organizations
connected with pension and retirement plans. These broker-dealers and other
organizations may charge investors a transaction or other fee for their
services, may require different minimum initial and subsequent investments than
the Fund and may impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. Fees charged by
these organizations will have the effect of reducing a shareholder's total
return on an investment in Fund shares. No such charge will be paid by an
investor who purchases the Fund shares directly from the Fund as described
above.
The Fund will, at its discretion, accept orders transmitted by these
organizations although not accompanied by payment for the shares being
purchased. Payment must be received by the Fund within three business days after
acceptance of the order. The price at which a purchase will be effected is based
on the next calculation of net asset value after the application and check are
received by the Fund's transfer agent or any other authorized agent of the Fund.
Payment for Fund Share Purchases
Payment for shares purchased should be made by check or money order drawn on a
United States bank and made payable to the "Bank and Insurance Fund". Checks
made payable to a party other than "Bank and Insurance Fund", (for example, the
account registrant, the Fund's transfer agent or your retirement account
custodian) will not
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be accepted. Alternatively, payment for shares purchased by institutions by
telephone may be made by wire or electronic funds transfer from the investor's
bank to the Bank and Insurance Fund as follows:
Star Bank, N.A.
ABA # 042000013
Credit: Bank and Insurance Fund
DDA # 488886599
[Your Name(s) as Registered with Fund]
[Your Account # at the Fund]
The Fund will not accept purchases by cash or credit card or checks drawn on
foreign banks unless provision is made for payment through a U.S. bank in U.S.
dollars. The Fund reserves the right in its sole discretion to withdraw all or
any part of the offering made by this Prospectus or to reject purchase orders,
when in the judgment of management, such withdrawal or rejection is in the best
interest of the Fund. The Fund also reserves the right at any time to waive the
minimum investment requirements applicable to initial investments, to increase
minimum investment or account balance requirements following notice. No
application to purchase shares is binding on the Fund until confirmed in
writing.
Automatic Investment Plan
By completing the Automatic Investment Plan section of the account application
attached herein, you may authorize the Fund to debit your bank account for the
periodic purchase of Fund shares on the 15th day and/or the last business day of
each month. You will receive confirmation of automatic investments after each
transaction.
Telephone Investments
The Fund will, at its discretion, accept purchase orders from existing
institutional shareholders by telephone although not accompanied by payment for
the shares being purchased. To receive the net asset value for a specific day, a
telephone purchase request must be received before the close of the New York
Stock Exchange on that day. Payment for shares ordered by telephone must be
received by the Fund within three business days after acceptance of the order.
In order to make sure that payment is received on time, shareholders are
encouraged to remit payment by electronic funds transfer. Shareholders may also
remit payment by wire or by overnight delivery. If payment is not received on
time, the Fund may cancel the order and redeem shares held in the shareholder's
account to compensate the Fund for any decline in the value of the purchased
shares. The Advisor bears the risk of loss from cancelled orders that result in
a loss when the Fund cannot recover the loss from a shareholder account.
Telephone purchase orders may not exceed ten times the value of an account on
the date the order is placed.
Market Timing
Some investors try to profit from investing in a mutual fund or stock when they
expect prices to rise, and selling their investment when they expect the market
to fall. With this buying and selling revolving door, a fund incurs expenses for
buying and selling securities. These costs are borne by the remaining long term
fund shareholders. In addition, investors attempting to time the markets may
face higher tax rates on short-term capital gains and/or losses. The Fund
reserves the right to reject any purchase request that it regards as disruptive
to the efficient management of the Fund, including the timing of the investment
or because of a history of excessive trading by the investor.
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Open Account System
Unless otherwise directed, all investor accounts are maintained on a book-entry
basis. Share certificates will not be issued. Shares purchased by dividend
reinvestment or under an Automatic Investment Plan, will be confirmed after each
transaction. The investor will receive a printed confirmation indicating the
dollar amount of the transaction, the per share price of the transaction and the
number of shares purchased or redeemed.
Statements and Reports
The Fund will send you account and tax statements to help you keep track of your
investment throughout the year as well as when you are preparing your income tax
returns. In order to assist you in evaluating Fund performance, a detailed
financial statement showing a statement of operations and balance sheet
including a listing of portfolio holdings will be mailed to you in March and
September. For tax purposes, a reports of the previous year's dividend
distributions, proceeds from the sale of shares, and distributions from IRAs or
other retirement accounts will be sent to you in January of each year.
Shareholder account inquiries may be made by contacting Countrywide Fund
Services, Inc., the Fund's transfer agent at 1-888-829-9973 or by writing to the
Fund, c/o Countrywide Fund Services, Inc. P.O. Box 5354 Cincinnati, Ohio
45201-5354. For Express Mail or Overnight delivery the Fund's address is 312
Walnut Street, 21st Floor, Cincinnati, Ohio 45202
Confirmation and Account Statements
You will be sent, each time you buy or sell shares, a confirmation statement
indicating details with respect to the date and the amount of your transaction.
A statement of your account value will be sent to you at the end of each
statement period showing the market value of your account at the close of the
statement period, as well as distributions, purchases, and redemptions for the
current calendar year.
HOW TO REDEEM FUND SHARES
The Fund will buy back from any investor, at current net asset value, all shares
of the Fund offered for redemption. The redemption price of shares tendered for
redemption will be the net asset value next determined after receipt of
telephone or written redemption instructions by the Fund or other authorized
agent of the Fund. To receive the net asset value for a specific day, a
redemption request must be received before the close of the Exchange on that
day. The written request for redemption must be signed by each registered owner
exactly as each account is registered and must clearly identify the account and
the number of shares or the dollar amount to be redeemed. It is important that
you call the Advisor before you redeem a large dollar amount.
Signature Guarantee On Certain Redemptions
The use of signature guarantees is intended to protect the shareholder and the
Fund from a possibly fraudulent application for redemption. The signatures of
the redeeming shareholders must be guaranteed by a national or state bank, a
member firm of a domestic stock exchange or the National Association of
Securities Dealers, Inc. (NASD), a credit union, a federal savings and loan
association or another eligible guarantor institution if the redemption: exceeds
$25,000; is being made payable other than exactly as registered; is being mailed
to an address which has been changed within 30 days of the redemption request;
or is being mailed to an address other than the one on record. This prospectus
hereby constitutes notice that a signature guarantee may be required in the
above circumstances. A notary public is not an acceptable guarantor. The Fund
also reserves the right to require a signature guarantee under other
circumstances. The signature guarantees must appear, together with the
signatures of the registered owners (i) on the written request for redemption
which clearly identifies the account and the dollar amount or number of
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<PAGE> 12
shares to be redeemed, or (ii) on a separate instrument of assignment ("stock
power") which may be obtained from a bank or broker. The use of signature
guarantees is intended to protect the shareholder and the Fund from a possibly
fraudulent application for redemption.
Additional documents such as corporate authorizations are required for proper
account establishment prior to redemptions by corporations, executors,
administrators, trustees and guardians. The Fund's Transfer Agent will be
pleased to assist you with the proper forms required for corporate or other
non-individual account set-up and can be reached at 888-829-9973.
Telephone Redemptions
All shareholders are permitted to redeem shares by telephone, except that the
telephone redemption option is not available for shares held in retirement
accounts. Telephone redemption requests may be made by calling 1-888-TAX-WYSE.
To receive the net asset value for a specific day, a redemption request must be
received before the close of the New York Stock Exchange on that day. As
discussed above, certain requests must be in writing and the signature of a
redeeming shareholder must be signature guaranteed. All telephone transactions
are recorded and written confirmations indicating their details will promptly be
sent to the shareholder of record. Prior to accepting a telephone transaction,
the shareholder placing the order may be required to provide certain identifying
information. A shareholder electing to communicate instructions by telephone may
be giving up some level of security that would otherwise be present were the
shareholder to request a transaction in writing. Neither the Fund nor its
Transfer Agent or Advisor assume responsibility for the authenticity of
instructions communicated by telephone or other medium which are reasonably
believed to be genuine and which comply with the foregoing procedures. The Fund,
and/or its Transfer Agent, may be liable for losses resulting from unauthorized
or fraudulent telephone or on-line instructions in the event these procedures
are not followed.
In times of extreme economic or market conditions, redeeming shares by telephone
may be difficult.
The Fund may terminate or modify the procedures concerning the telephone and
wire transfer services at any time, although shareholders of the Fund will be
given at least 60 days' prior notice of any termination or material
modification.
Payment for Redeemed Shares
Payment for shares redeemed upon written request will be made by check and
generally will be mailed within three business days after receipt by the
transfer agent of the properly executed redemption request. Payment for shares
redeemed by telephone will be made by check payable to the account name(s)and
address exactly as registered, and generally will be mailed within three
business days following the date of the request for redemption. A shareholder
may request that payment for redeemed shares of the Fund be made by wire or
electronic funds transfer. Shareholders may elect to use these services on the
account application or by providing the Fund with a signature guaranteed letter
requesting these services and designating the bank to receive all wire or
electronic funds transfers. A shareholder may change the pre-designated bank of
record by providing the Fund with written, signature guaranteed instructions.
Wire and electronic funds transfers are subject to a $1,000 minimum. Redemption
proceeds paid by wire transfer generally will be transmitted to the
shareholder's pre-designated bank account on the next business day after receipt
of the shareholder's redemption request. There is a $9 fee for each wire payment
for shares redeemed by the Fund. Redemption proceeds paid by electronic funds
transfer will be electronically transmitted to the shareholder's pre-designated
bank account on the second business day after receipt of the shareholder's
redemption request.
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<PAGE> 13
Shareholders may encounter delays in redeeming shares purchased by check (other
than cashier's or certified checks, electronic funds transfer or through the
Automatic Investment Program) if the redemption request is made within 15 days
after the date of purchase. In those situations, the redemption check will
normally be mailed within 15 days after the transfer agent's receipt of the
purchase instrument, provided that it has not been dishonored or cancelled
during that time. The foregoing policy is to ensure that all payments for the
shares being redeemed have been honored. In addition to the foregoing
restrictions, no redemption payment will be made for shares that have been
purchased by telephone order until full payment for the shares has been
received. In any event, valid redemption requests concerning shares for which
full payment has been made will be priced at the net asset value next determined
after receipt of the request.
Involuntary Redemptions
As a means of reducing its expenses, the Fund is authorized to redeem all shares
held in regular accounts with a value of less than $2,000.
Such redemptions will be permitted only when the account is reduced below the
minimum value by redemption, and not by declines in per share net asset value.
As a result, accounts established with the applicable minimum investment might
be subject to redemption after a redemption has been made by the shareholder. At
least 30 days' written notice will be given to a shareholder before such an
account is redeemed. During that time, the shareholder may add sufficient funds
to the account. If such amount is not added to the account, the shares will be
redeemed, at the per share net asset value next determined after the 30th day
following the notice. A check for the proceeds will be sent to the shareholder.
MANAGEMENT OF THE FUND
Board of Trustees
The Fund is a diversified series of Bowes Investment Trust, an open end
management investment company organized as a business trust under the laws of
the State of Delaware. The Board of Trustees is responsible for the overall
management of the Fund. The Trustees set broad policies for the Fund, employ the
Fund's Advisor, and elect the Fund's Officers. The Trustees are responsible for
the approval and review of the Fund's material contracts.
The Board of Trustees is comprised of one officer of the Advisor, and three
Trustees who are not "interested persons" of the Fund or the Advisor, as that
term is defined in the Investment Company Act of 1940. A list of Trustees and
Officers of the Fund and a description of their present positions and principal
occupations during the past five years can be found in the Statement of
Additional Information.
Investment Adviser
Bowes Funds, LLC (the "Advisor"), located at 4520 East West Highway, Suite 540
Bethesda, Maryland 20814, serves as the investment adviser to the Fund. The
Advisor will furnish continuous investment advisory and management services to
the Fund. Robert B. Bowes is President and Chief Executive Officer of the
Advisor and Chairman of the Board and President of the Fund. Mr. Bowes has
voting control of the Advisor. He is also the Fund's portfolio manager and, as
such, exercises day-to-day responsibility for the management of the Fund's
portfolio. Prior to forming the Advisor in October, 1997, Mr. Bowes had 13 years
of experience as a financial manager, including 8 years most recently as Vice
President of The Chase Manhattan Bank, N. A. in its North America Corporate
Finance - Financial Institutions Group, 4 years in which he served as President
of Fund Commission Services, Inc., a mutual fund financial advisory company, and
one year in which he served as Chief Financial
-14-
<PAGE> 14
Officer of Financial Institution Partners, L.P., a private institutional equity
investment partnership with total invested assets of approximately $90 million
as of September 5, 1997. As of the date of this Prospectus, the Advisor is the
sole shareholder of the Fund. For its services, the Advisor receives a monthly
fee at the rate of 1.00% per annum of the average daily net assets of the Fund.
Under the Agreement, the Advisor, at its own expense and without reimbursement
from the Fund, furnishes office space and all necessary office facilities,
equipment and executive personnel for making the investment decisions necessary
for managing the Fund and maintaining its organization. The Advisor pays the
salaries and fees of all officers and Trustees of the Fund affiliated with the
Advisor.
Year 2000 Disclosure
The Advisor has assessed the exposure of the Fund to potential problems
associated with computer failures or errors that may be caused by operating
systems because of erroneous date calculation readings. There are several
suppliers of services to the Fund that have also or are in the process of
assessing their exposure to Year 2000 issues, if any. The suppliers that have
been surveyed are the Fund's Advisor, independent accountants, custodian,
transfer agent, administrator and shareholder servicing agent. Each has supplied
the Registrant with a status report regarding their anticipated costs, if any,
and problems and uncertainties associated with Year 2000 consequences, if any.
In turn, the principal vendors and service providers to the Fund have inquired
and received an assessment from their key suppliers. Based on the results of
these inquiries and assessments, the Fund and the Advisor expect (a) no material
costs associated with and (b) no material adverse impact on the business,
operations, or financial condition of the Fund from computer correction projects
or the prevention of adverse consequences of the Year 2000 problem.
Operating Expenses
The Fund pays all of its own expenses, including, without limitation, 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 disinterested Trustees, 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 Fund'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.
Distributor and Distribution Fees
The Fund has retained Countrywide Investments, Inc. or an affiliate
("Distributor") to provide the Fund with primary underwriting, distribution,
institutional selling and servicing, and settlement of Fund shares. Distributor
is a member of the National Association of Securities Dealers, Inc. (NASD).
Distributor was organized in 1974 and is an indirect wholly-owned subsidiary of
Countrywide Credit Industries, Inc., a New York Stock Exchange listed company
principally engaged in the business of residential mortgage lending. The Fund is
a member of National Securities Clearing Corporation (NSCC).
Rule 12b-1 Fees are distribution fees which the Fund pays or reimburses the
Distributor or others for the expenses of activities that are primarily intended
to sell shares of the class. These expenses may include, but are not limited to,
distribution or service fees paid to financial intermediaries or others who have
executed a servicing agreement with the Fund, fees paid for advertising and
promoting
-15-
<PAGE> 15
the Fund, printing prospectuses and reports used for sales purposes, and the
costs of preparing and distributing sales literature. The Fund is authorized to
pay annual Rule 12b-1 fees of up to .25% of the average daily net assets of the
Fund.
Transfer Agent and Administrator
The Fund has retained Countrywide to serve as the Fund's transfer agent,
dividend paying agent and shareholder servicing agent.
In addition, Countrywide has been retained to provide administrative services to
the Fund. The administrative services provided by Countrywide to the Fund
include internal auditing and regulatory services, coordination and preparation
of reports and filings with the SEC and state securities authorities, and
preparation of reports to the Fund's shareholders and Trustees. For these
services, the Fund pays Countrywide a fee based on it's average daily net assets
equal to .10% per annum of the first $25 million of such assets, .075% per annum
of the next $25 million of such assets, and .05% per annum of the amount of such
assets in excess of $50 million, subject to a monthly minimum of $1,000.
Countrywide also provides accounting and pricing services to the Fund.
Countrywide receives a monthly fee from the Fund for calculating daily net asset
value per share and maintaining such books and records as are necessary to
enable it to perform its duties.
Portfolio Transactions and Brokerage
Decisions to buy and sell securities for the Fund and negotiation of the Fund's
brokerage commission rates are determined by the Advisor. In selecting a broker
to execute each particular transaction, the Advisor may take a number of factors
into consideration, only one of which may be the best net price available. Among
the additional factors the Advisor 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 Fund 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.
The Advisor may also consider sales of shares of the Fund by a broker-dealer and
the recommendations of a broker-dealer to its customers that they purchase Fund
shares as factors in the selection of broker-dealers to execute portfolio
transactions for the Fund. In placing portfolio business with such
broker-dealers, the Advisor will seek the best execution of each transaction.
DIVIDENDS, DISTRIBUTIONS AND TAXES
On an annual basis the Fund distributes to shareholders virtually all of its
income from interest and dividends, as well as any capital gains realized from
the sale of securities. Distributions of income and capital gains will be
automatically reinvested in additional shares of the Fund, unless you elect to
receive these distributions in cash on the account application or by calling or
writing to the Transfer Agent.
The income dividends and distributions of short-term capital gains that you
receive are taxable to you as ordinary dividend income. Any distributions of net
long-term capital gains by the Fund are taxable to you as long-term capital
gains, no matter how long you have owned shares in the Fund. Both dividends and
capital gains distributions are taxable to you whether received in cash or
reinvested in additional shares. Although the Fund does not seek to realize any
particular amount of capital gains during a year, such gains are realized from
time to time as byproducts of the ordinary investment activities of the Fund.
Consequently, distributions will vary
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<PAGE> 16
considerably from year to year. Distributions of dividends and capital gains
that are declared in December, even if paid to you in January, are taxed as if
they had been paid to you in December.
If you sell or exchange shares of the Fund, any gain or loss you have is a
taxable event, which means that you may have a capital gain or loss to report
when you complete your Federal income tax return.
Distributions of dividends or capital gains, and capital gains or losses from
your sale of Fund shares, may be subject to state and local taxes as well.
The foregoing tax information is provided as general information and will not
apply to you if you are investing in a tax-deferred account such as an IRA. You
should consult your own tax advisor about the tax consequences of an investment
in the Fund. The Fund must consider the interests of all Fund shareholders and
so reserves the right to delay your redemption proceeds -- up to five business
days -- if the amount will disrupt the Fund's operation or performance.
The Fund has elected and intends to qualify as a regulated investment company
under Subchapter M of the Internal Revenue Code. By distributing all of its net
investment income and realized capital gains and meeting certain other
requirements relating to the sources of its income and diversification of its
assets, the Fund will generally not be liable for federal income taxes. If the
Fund distributes annually less than 98% of its net investment income and net
realized capital gains, it may be subject to a nondeductible excise tax equal to
4% of the shortfall.
Any distributions designated as realized net capital gain (the excess of net
long-term capital gain over net short-term capital loss) will be taxable as
long-term capital gain, regardless of the holding period of your shares. All or
a portion of any dividends paid by the Fund to corporate shareholders may, under
certain circumstances, be eligible for the dividends received deduction. If you
buy shares shortly before the record date, please keep in mind that any
distribution will lower the value of the Fund's shares by the amount of the
distribution and generally be subject to tax.
The value of shares of the Fund on redemption may be more or less than the
shareholder's cost, depending upon the market value of the Fund's assets at the
time. Shareholders should note that if a loss has been realized on the sale of
shares of the Fund, the loss may be disallowed for tax purposes if shares of the
Fund are purchased within (before or after) 30 days of the sale.
The IRS requires backup withholding of federal income tax of 31% of the gross
amount of dividends, capital gain distributions, and redemption proceeds paid or
credited to shareholders who do not furnish a valid social security or taxpayer
identification number. The preceding is only a brief summary of the Federal
income tax considerations affecting the Fund and its shareholders. Accordingly,
potential investors should consult their tax advisors with specific reference to
their own tax situation.
HOW NET ASSET VALUE IS DETERMINED
The price of Fund shares is based on the net asset value of the Fund, which is
determined at the close of the regular trading session of the New York Stock
Exchange (the "Exchange") (normally 4:00 p.m., New York time) each day that the
Exchange is open.
-17-
<PAGE> 17
The per share net asset value of the Fund is determined by dividing the total
value of its securities and other assets, less liabilities, by the total number
of shares outstanding. In determining net asset value, portfolio securities are
valued at market value as follows: (i) securities which are traded on stock
exchanges or are quoted by NASDAQ are valued at the last reported sale price as
of the close of the regular session of trading on the New York Stock Exchange on
the day the securities are being valued, or, if not traded on a particular day,
at the closing bid price, (ii) securities traded in the over-the-counter market,
and which are not quoted by NASDAQ, are valued at the last sale price (or, if
the last sale price is not readily available, at the last bid price as quoted by
brokers that make markets in the securities) as of the close of the regular
session of trading on the New York Stock Exchange on the day the securities are
being valued, (iii) securities which are traded both in the over-the-counter
market and on a stock exchange are valued according to the broadest and most
representative market, and (iv) securities (and other assets) for which market
quotations are not readily available are valued at their fair value as
determined in good faith in accordance with consistently applied procedures
established by and under the general supervision of the Board of Trustees. The
net asset value per share of the Fund will fluctuate with the value of the
securities it holds.
Investments in mutual insurance company fixed general account annuities are
valued at their cash surrender value.
Since the Fund does not impose any sales commission or redemption fee, both the
purchase price and the redemption price of a Fund share is the same and will be
equal to the next calculated net asset value of a share of the Fund.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise its "average annual total return." The
Fund may also advertise yield. Both yield and average annual total return
figures are based on historical earnings and are not intended to indicate future
performance. The "average annual total return" of the Fund refers to the average
annual compounded rates of return over the most recent 1, 5, and 10 year periods
or, where the Fund has not been in operation for such period, over the life of
the Fund (which periods will be stated in the advertisement) that would equate
an initial amount invested at the beginning of a stated period to the ending
redeemable value of the investment. The calculation of "average annual total
return" assumes the reinvestment of all dividends and distributions. The Fund
may also advertise total return (a "nonstandardized quotation") which is
calculated differently from "average annual total return." A nonstandardized
quotation of total return may be a cumulative return which measures the
percentage change in the value of an account between the beginning and end of a
period, assuming no activity in the account other than reinvestment of dividends
and capital gains distributions. A nonstandardized quotation of total return may
also indicate average annual compounded rates of return over periods other than
those specified for "average annual total return." A nonstandardized quotation
of total return will always be accompanied by the Fund's "average annual total
return" as described above.
From time to time, the Fund may advertise its performance rankings as published
by recognized independent mutual fund statistical services such as Lipper
Analytical Services, Inc. ("Lipper"), or by publications of general interest
such as Forbes, Money, Investors Business Daily, The Wall Street Journal,
Business Week, Barron's, Fortune or Morningstar Mutual Fund Values. The Fund may
also compare its performance to that of other selected mutual funds, averages of
other mutual funds within its category as determined by Lipper or by any other
recognized mutual fund ranking organization, or recognized indicators such as
the Dow Jones Industrial Average and
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<PAGE> 18
the Standard & Poor's 500 Stock Index. In connection with a ranking, the Fund
may provide additional information, such as the particular category of funds to
which the ranking relates, the number of funds in the category, the criteria
upon which the ranking is based, and the effect of fee waivers and/or expense
reimbursements, if any. The Fund may also present its performance and other
investment characteristics, such as volatility or a temporary defensive posture,
in light of the Advisor's view of current or past market conditions or
historical trends.
INVESTMENT MANAGER
BOWES FUNDS, LLC
4520 EAST WEST HWY, SUITE #540
BETHESDA, MARYLAND 20814
(301) 654-9567 http://www.bowesfunds.com
SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
COUNTRYWIDE FUND SERVICES, INC.
P.O. BOX 5354
CINCINNATI, OHIO 45201-5354
CUSTODIAN
STAR BANK, N.A.
425 WALNUT STREET
CINCINNATI, OHIO 45202
LEGAL COUNSEL
SULLIVAN & WORCESTER LLP
1025 CONNECTICUT AVENUE, N.W.
WASHINGTON, D.C. 20036
FUND DISTRIBUTOR
COUNTRYWIDE INVESTMENTS, INC.
312 WALNUT STREET
CINCINATTI, OHIO 45201-5354
INDEPENDENT AUDITORS
ARTHUR ANDERSEN LLP
425 WALNUT STREET
CINCINATTI, OHIO 45202
<TABLE>
<CAPTION>
Table of Contents
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Page Page
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<S> <C> <C> <C>
Portfolio Expenses 2 Management of the Fund 17
Investment Objective, Dividends, Distributions
Policies, and Risks 2 and Taxes 20
How to Purchase Fund Shares 8 How Net Asset Value is
Account Application 11 Determined 21
How to Redeem Fund Shares 15 Performance Information 22
</TABLE>
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<PAGE> 19
Part B STATEMENT OF ADDITIONAL INFORMATION
BOWES INVESTMENT TRUST
4520 East West Hwy, Suite #540
Bethesda, MD 20814
(301) 654-9567
http://www.bowesfunds.com
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus dated , 1998 with the Securities
and Exchange Commission. To obtain a free copy of the prospectus call the Fund's
Advisor at 301-654-9567. This Statement of Additional Information is dated
, 1998.
BOWES INVESTMENT TRUST
BANK AND INSURANCE FUND
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
<TABLE>
<S> <C>
INVESTMENT OBJECTIVES, POLICIES AND RISKS.................. 1
CAPITAL SHARES............................................. 7
TRUSTEES AND OFFICERS...................................... 8
INVESTMENT ADVISORY AND OTHER SERVICES.....................11
DISTRIBUTION OF FUND SHARES AND 12B-1 PLAN.................12
PORTFOLIO TRANSACTIONS AND BROKERAGE.......................13
TAXES......................................................14
PRICING AND REDEMPTION OF SECURITIES BEING OFFERED ........14
CALCULATION OF PERFORMANCE ................................15
STATEMENT OF ASSETS AND LIABILITIES........................15
</TABLE>
INVESTMENT OBJECTIVE, POLICIES AND RISKS
The investment objective of the Fund is long term capital appreciation. The Fund
will normally invest at least 65% of its assets in the equity securities of
United States based issuers in the banking and insurance industries. As the
nature of the banking and insurance industries are impacted by mergers,
regulations, or product line dynamics, additional types of equity issuers that
derive a substantial portion of their revenues from those industries may be
eligible for investment by the Fund. As part of its value investing strategy,
the Fund intends to deposit a portion, not to exceed 5% of its net assets, in
savings accounts of domestic mutual bank and thrift institutions and to invest a
portion, not to exceed 5% of its net assets, in general account fixed annuities
of domestic mutual life insurance companies, each of which may entitle the Fund
to participate in conversions and de-mutualizations, respectively, that may
occur in the future. The Fund intends to achieve its primary investment
objectives by fundamental investment analysis to uncover opportunities for
capital appreciation because of:
Mergers & product line expansion,
Management effectiveness and use of technology,
Mutual conversions, and
Modernization of regulations.
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<PAGE> 20
Supervision and Regulatory Environment
THE FOLLOWING REFERENCES TO MATERIAL STATUTES AND REGULATIONS AFFECTING
FINANCIAL INSTITUTIONS ARE ONLY BRIEF SUMMARIES THEREOF AND DO NOT PURPORT TO BE
COMPLETE AND THEY ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH STATUTES
AND REGULATIONS. ANY CHANGES IN APPLICABLE LAW OR REGULATION MAY HAVE A MATERIAL
EFFECT ON THE BUSINESS AND RESULTS OF OPERATIONS OF A PARTICULAR FINANCIAL
INSTITUTION OR INDUSTRY SEGMENT. PROSPECTIVE INVESTORS IN THE FUND ARE URGED TO
REFER TO SUCH STATUTES, REGULATIONS AND SUCH INFORMATION, AS APPLICABLE.
The financial performance and management of banks and insurers is not only
influenced by company management and by general economic conditions (e.g.
interest rates, real estate and business cycles, volatility of the capital
markets, and property casualty loss experience) but also by policies of various
governmental authorities. Depending on the particular type of financial
institution, the governmental authorities or self-regulatory organizations
include but are not limited to the, National Association of Insurance
Commissions ("NAIC"), State Insurance Departments, the Federal Reserve Board
("FRB"), The Federal Deposit Insurance Corporation ("FDIC"), the Office of the
Comptroller of the Currency ("OCC"), the Office of Thrift Supervision ("OTS"),
the Securities and Exchange Commission ("SEC"), the Internal Revenue Service
("IRS"), and state securities and banking and taxing authorities. These
regulatory authorities regulate the scope of the financial institutions
business, investment activities, capital levels, reserves against losses and
deposits, collateral requirements, the establishment of offices in additional
locations, mergers, acquisitions, the issuance of equity and debt securities,
and the payment of dividends. These authorities also establish a comprehensive
method for the periodic examination of financial institutions and an enforcement
mechanism for violations of applicable laws and regulations. This system of
supervision and regulation is intended primarily for the protection of
depositors and policyholders rather than the shareholders of financial
institutions.
The financial institutions in which the Fund will make securities investments
that are subject to the registration requirements of the Securities Act of 1933,
as amended (the "1933 Act") and /or the Securities Exchange Act of 1934, as
amended (the "1934 Act"), must register their securities with the SEC.
Consequently such companies are subject to the information and periodic
reporting requirements, proxy solicitation, insider trading and other
restrictions and requirements of the SEC under the 1934 Act. Similarly, the OCC,
the FDIC and the OTS, each of which regulates a segment of the banking industry,
administer the provisions of the 1934 Act as they relate to national banks,
banks other than member banks, and savings associations, respectively. These
banking agencies also require that such institutions subject to their
jurisdiction and the registration requirements of the 1934 Act register their
securities with such federal banking agencies and, although securities issued by
banks and savings associations are exempt from the registration requirements of
the 1933 Act, that they comply with their rules and regulations with respect to
the offering of their securities to the public.
In recent years, the laws governing these industries have been simplified and
have become more uniform and coordinated among jurisdictions. Further reforms of
the banking and insurance regulations have been proposed. While the current
regulatory environment has been in place, the banking and insurance industries
have experienced overall financial condition improvement. For example, the
adoption of interstate banking legislation in 1994 resulted in the removal of
substantially all geographic barriers for banks and thrifts. In addition, the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA")
and the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA"), which provided banks and thrifts with the initial eligibility to
merge, coupled with legislation enacted in the early
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<PAGE> 21
autumn of 1996 which virtually eliminated all remaining impediments to the
mergers of banks and thrifts by substantially altering the treatment of bad debt
reserves and by recapitalizing the Savings Association Insurance Fund ("SAIF"),
has resulted in the rapid consolidation of the banking and thrift industries.
Legislative initiatives have facilitated the conversion of mutual banks, thrifts
and insurers to stock ownership form. There is the risk that the rules and
regulations could change to be more restrictive and create a less favorable
industry operating environment. For example, any regulator could alter (a)
minimum capitalization requirements, (b) asset quality standards, (c)
limitations on the separation of various banking, securities, insurance and
deposit taking, and (d) limitations on market share and concentration.
Investment Limitations
The Fund is subject to the restrictions below. Restrictions 1 through 8 are
fundamental and, as such, may not be changed without the approval of the lesser
of (i) 67 percent or more of the voting securities present at a meeting if the
holders of more than 50 percent of the outstanding voting securities of the Fund
are present or represented by proxy, or (ii) more than 50 percent of the
outstanding voting securities of the Fund. The Fund will not:
(1) purchase or sell commodities or contracts on commodities, except
to the extent that the Fund may engage in financial futures
contracts and related options and currency contracts and related
options and may otherwise do so in accordance with applicable law
and without registering as a commodity pool operator under the
Commodity Exchange Act;
(2) purchase or sell real estate, except, in accordance with
applicable law, the Fund may invest in (a) securities directly or
indirectly secured by real estate, or (b) securities issued by
issuers that invest in real estate;
(3) make loans, except that the Fund may lend its portfolio
securities in accordance with applicable law. The acquisition of
investment securities or other investment instruments shall not
be deemed to be the making of loans;
(4) engage in the business of underwriting securities issued by
others except to the extent that the Fund may technically be
deemed to be an underwriter under the Securities Act of 1933, as
amended, in disposing of portfolio securities;
(5) borrow money, except that the Fund may borrow from banks, for
temporary or emergency purposes, including the meeting of
redemption requests which might otherwise require the untimely
disposition of securities, in an amount not exceeding 5% of the
value of the Fund's net assets at the time the borrowing is made.
Whenever borrowings exceed 5% of the value of the Fund's net
assets, the Fund will not make any additional investments;
(6) invest more than 25% of its total assets in the securities of any
one industry, except that, under normal market conditions, the
Fund will (a) invest more than 25 % of its total assets in the
securities of issuers in the banking industry; and (b) invest
more than 25% of its total assets in the securities of issuers in
the insurance industry;
(7) purchase securities on margin or make short sales (except for tax
management reasons);
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<PAGE> 22
(8) make any investment inconsistent with the Fund's classification
as a diversified investment company under the Investment Company
Act of 1940;
(9) pledge, mortgage, or hypothecate any of its assets except in
connection with permissible borrowings of the Fund;
(10) invest for the purpose of exercising control over management of
any company;
(11) invest in the securities of other investment companies except to
the extent such purchases are permitted by applicable law;
(12) purchase or otherwise acquire illiquid securities if, as a
result, more than 15% of its net assets would be invested in
securities that are illiquid (included in this limitation are
investments in mutual insurance company general fixed annuities);
and
(13) invest in index option contracts, stock options and interest rate
swaps and options if as a result more than 5% of its net assets
would be committed to such options contracts and interest rate
swaps.
Options on Securities
In an effort to increase current income and to reduce fluctuations in net asset
value, the Fund may write covered put and call options and buy put and call
options on securities that are traded on United States exchanges and
over-the-counter. The Fund may write and buy options on the same types of
securities that the Fund may purchase directly.
A put option written by the Fund is "covered" if the 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 Fund's 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 the Fund is "covered" if the 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 Fund's 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 the Fund in cash and other liquid assets in a segregated
account with its custodian.
The Fund also may write call options that are not covered for cross-hedging
purposes. The 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. The 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 when the Advisor believes that writing the option would
achieve the desired hedge.
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<PAGE> 23
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 cancelled 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 the 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 the 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 the Fund
to use the cash or proceeds from the concurrent sale of any securities subject
to the option for other investments. If the Fund desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing transaction prior to or concurrent with the sale of the
security.
The 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. The 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 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 the
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 exit, 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 the 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
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<PAGE> 24
Corporation ("OCC") may not at all times be adequate to handle current trading
volume; or, (vi) one of 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.
The Fund may write options in connection with buy-and-write transactions. In
other words, the 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, the Fund's maximum gain will be the premium
received by it for writing the option, adjusted upwards or downwards by the
difference between the 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 the 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, the Fund may elect to close the position or take
delivery of the security at the exercise price; and the Fund's return will be
the premium received from the put options minus the amount by which the market
price of the security is below the exercise price.
The Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, the 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.
The 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 the Fund
upon exercise of the option, and, unless the price of the underlying security
rises sufficiently, the option may expire worthless to the Fund.
Interest Rate Swaps and Swap-Related Products
The 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 the Fund receiving
or paying, as the case may be, only the net amount of the two payments). The net
amount of the excess,
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<PAGE> 25
if any, of the 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 Fund's
custodian. If the 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. The 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. The Advisor will monitor the creditworthiness of
all counterparties on an ongoing basis. If there is a default by the other party
to such a transaction, the 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
financial institutions acting both as principals and as agents utilizing
standardizing swap documentation. The Advisor has determined that, as a result,
the swap market has become relatively liquid. Caps and floors are more recent
innovations that are less liquid than swaps. To the extent the 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.
The value of any interest rate swap transactions may, when combined with the
value of any option contracts held by the Fund, may not exceed 5% of the net
assets of the Fund. These transactions may in some instances involve the
delivery of securities or other underlying assets by the 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 the Fund
is contractually obligated to make. If the other party to an interest rate swap
that is not collateralized defaults, the Fund would risk the loss of the net
amount of the payments that it contractually is entitled to receive.
CAPITAL SHARES
The Trust is an open-end management investment company organized on February 3,
1998 as a business trust under the laws of the State of Delaware. The Trust
currently offers one portfolio of securities, the Bank and Insurance Fund. The
Trust is authorized to issue an unlimited number of capital shares. Each share
of the Fund has equal voting, dividend, distribution and liquidation rights.
Fund shares have par value equal to $.001 per share. Shares of the Fund have no
preemptive rights and only such conversion or exchange rights as the Trustees
may grant in its discretion. When issued for payment the Fund'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 except as otherwise required by the 1940 Act or applicable
Delaware law. Shares of the Fund have non-cumulative voting rights, which means
that the holders of more than 50% of the shares voting for the election of
trustees can elect 100% of the trustees if they choose to do so. The Fund does
not intend to hold annual shareholder meetings. The Board may hold special
meetings for matters requiring shareholder approval. A special shareholders
meeting may be called by shareholders holding at least 10% of the outstanding
shares in order to consider the removal of a trustee of the Fund. Special
meetings will be held for other purposes if the holders of at least 25% of the
outstanding shares of the Fund so request. Subject to certain limitations, the
Fund will facilitate appropriate communications by shareholders desiring to call
a special meeting for the purpose of considering the removal of a trustee.
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<PAGE> 26
TRUSTEES AND OFFICERS
Trustees of the Fund
The Trustees of the Fund and their principal occupations during the past five
years are set forth below.
Name Age Address
- ---- --- -------
Harry M.K. Johnston 61 c/o Public Savings Bank
Trustee 2300 Computer Ave, Suite H42
Willow Grove, PA 19090
Principal Occupation:
Bank Executive; Consultant
Division Manager, Public Savings Bank since 1996; Contract Consultant to
Resolution Trust Company from 1993 to 1996; Independent Consultant from 1991 to
1993; President and CEO, Chestnut Hill National Bank from 1984 to 1991; Past
Chairman, Committees of the Pennsylvania Bankers Association.
Name Age Address
- ---- --- -------
Louis M. Marmon, M.D., Ph.D. 41 9711 Medical Center Dr. #212
Trustee Rockville, MD 20850
Principal Occupation:
Surgeon
Director of Pediatric Surgery, Shady Grove Adventist Hospital, Maryland since
1994; Director of Pediatric Surgical Research, Georgetown University School of
Medicine and Clinical Assistant Professor of Surgery, Georgetown University
School of Medicine from 1990 to 1994; Medical Director, Chartwell Health
Management, Inc. since March, 1997.
Name Age Address
- ---- --- -------
Thomas P.F. Kiely, J.D. 42 4767 Berkeley Terrace, N.W.
Trustee Washington, D.C. 20007
Principal Occupation:
Attorney, Aviator and Engineer.
Major, U.S. Army Reserve - Judge Advocate General's Corps. Since May, 1997;
Attorney, Federal Aviation Administration - Office of the Chief Counsel,
Procurement Litigation Division from 1993 to the present; Former Aviator, Major,
U.S. Marine Corps; 1977 Graduate United States Naval Academy
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<PAGE> 27
Trustees of the Fund (continued)
Name Age Address
- ---- --- -------
Robert B. Bowes * 36 c/o Bowes Funds, LLC
Trustee and President 4520 East-West Hwy, Suite 540
Bethesda, Maryland 20814
Principal Occupation:
Insurance and Mutual Fund Corporate Finance Banker;
Chief Executive Officer, Bowes Funds, LLC since October, 1997; Chief Financial
Officer - Financial Institution Partners, L.P., a private bank equity investment
partnership based in Washington D.C. and it's affiliates including Hovde
Financial, Inc., a bank specialized merger advisory firm, from September, 1996
to September, 1997; President - Fund Commission Services, Inc., a financial
advisor to mutual fund company managers and distributors based in New York, NY,
from June, 1992 to August, 1996; Vice President - The Chase Manhattan Bank, N.A.
- - Financial Institutions Group, New York, NY, from October, 1985 to June, 1992.
* Trustees who are "interested persons" of the Fund, as defined in the
Investment Company Act of 1940, as amended, (the "1940 Act"). Trustee(s) of the
Fund who are officers or employees of the investment adviser receive no
remuneration from the Fund. Each of the other Trustees is paid a fee of $500 for
each meeting attended and is reimbursed for the expenses of attending meetings.
Officers of the Fund
Name Age Address
- ---- --- -------
Robert B. Bowes 36 c/o Bowes Funds, LLC
President and 4520 East-West Hwy, Suite 540
Chief Executive Officer Bethesda, Maryland 20814
Principal Occupation: Same as Above
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<PAGE> 28
Officers of the Fund (continued)
Name Age Address
- ---- --- -------
Thomas I. Carocci, 27 c/o Bowes Funds, LLC
Vice President and Secretary 4520 East-West Hwy, Suite 540
Bethesda, Maryland 20814
Principal Occupation:
Controller, Mackenzie & Co. (Election Consultants) from February, 1996 to
November, 1997; Lebouef, Lamb, Green & MacRae, (Law Firm) Legal Intern during
1993 and 1994; Received J.D. degree from Duquesne University School of Law
- -June, 1995.
Name Age Address
- ---- --- -------
Mark J. Seger, CPA, CFP 36 c/o Countrywide Fund Services, Inc.
Senior Vice President 312 Walnut Street, 21st Floor
and Treasurer Cincinnati, Ohio 45201-5354
Principal Occupation:
Chief Operating Officer of Countrywide Fund Services, Inc.
Name Age Address
- ---- --- -------
Robert G. Dorsey 40 c/o Countrywide Fund Services, Inc.
Senior Vice President 312 Walnut Street, 21st Floor
Cincinnati, Ohio 45201-5354
Principal Occupation:
President of Countrywide Fund Services, Inc.
Name Age Address
- ---- --- -------
John F. Splain 41 c/o Countrywide Fund Services, Inc.
Senior Vice President 312 Walnut Street, 21st Floor
Cincinnati, Ohio 45201-5354
Principal Occupation:
General Counsel of Countrywide Fund Services, Inc.
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<PAGE> 29
TRUSTEE COMPENSATION TABLE
Total
Compensation
Aggregate from
Compensation Registrant &
Name of Person, from Mutual Fund
Fund Position Registrant Complex
- ------------- ---------- -------
Robert B. Bowes, Trustee $ -0- $ -0-
President & Chief Executive
Officer
Harry M.K. Johnston, 2,000 2,000
Trustee
Louis M. Marmon, M.D., Ph.D. 2,000 2,000
Trustee
Thomas P.F. Kiely, 2,000 2,000
Trustee
The preceding table sets forth information regarding projected annual
compensation (expressed in dollars) of the Trustees. Officers of the Fund and
Trustee(s) who are interested persons of the Fund do not receive any
compensation from the Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
The investment advisor of the Fund is Bowes Funds, LLC (the "Advisor"). The
Advisor is wholly-owned and controlled by Robert B. Bowes. The Advisor has no
prior experience with the management of registered investment companies. Under
the terms of the Investment Advisory Agreement between the Fund and the Advisor
(the "Agreement"), the Advisor furnishes overall investment management for the
Fund, provides research and credit analysis, oversees the purchase and sales of
portfolio securities, maintains books and records with respect to Fund
securities transactions and provides periodic and special reports to the Board
of Trustees as required. Pursuant to the Agreement, the Fund pays the Advisor a
fee computed daily and payable monthly, at an annual rate of 1.00% of the Fund's
average daily net assets. The Agreement expires two years from the date of its
effectiveness, at which time it can be renewed for successive one year periods,
provided that such continuance is specifically approved annually by (a) the vote
of a majority of the Trustees who are not parties to the 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) the vote of a majority of the
outstanding voting securities of the Fund, or (ii) the vote of a majority of the
Trustees.
The Agreement may be terminated at any time by (a) the vote of a majority of the
Trustees who are not interested persons (as defined in the 1940 Act) or (b) the
vote of a majority of the outstanding voting securities of the Fund, without
penalty, on 60 days' written notice to the Advisor. The Advisor may also
terminate its advisory relationship with the Fund without penalty on 90 days'
written notice to the Fund. The Agreement terminates automatically in the event
of its assignment (as defined in the 1940 Act).
ADMINISTRATOR
The Fund has retained Countrywide Fund Services, Inc. (Countrywide) to provide
administration services to the Fund. The administrative services provided by
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<PAGE> 30
Countrywide to the Fund include internal auditing and regulatory services,
coordination and preparation of reports and filings with the SEC and state
securities authorities, and preparation of reports to the Fund shareholders and
Trustees. For these services, the Fund pays Countrywide a fee (computed daily
and payable monthly) based on the average net assets of the Fund equal to .10%
per annum.
DISTRIBUTION OF FUND SHARES AND 12b-1 PLAN
Distribution of Fund Shares
The Fund has entered into an Underwriting Agreement with Countrywide
Investments, Inc. or an affiliate to serve as the Fund's Distributor.
Countrywide Investments, Inc. was organized in 1974 and is an indirect
wholly-owned subsidiary of Countrywide Credit Industries, Inc., a New York Stock
Exchange listed company principally engaged in the business of residential
mortgage lending.
The Fund has adopted a plan of distribution (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, which permits the Fund to pay certain
costs for the distribution of its shares. The Plan provides for the payment to
the Advisor of a 12b-1 fee of .25 of 1% (0.25%) per annum of the Fund's average
daily net assets to finance activities primarily intended to result in the sale
of Fund shares. The expenses paid by the Advisor include, but are not limited
to, payments made to and expenses of persons (including employees of the
Advisor) who are engaged in, or provide support services in connection with, the
distribution of Fund shares, such as answering routine telephone inquiries and
processing shareholder requests for information; compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) paid to securities dealers, financial
institutions and other organizations which render distribution and
administrative services in connection with the distribution of Fund shares;
costs related to the formulation and implementation of marketing and promotional
activities, including direct mail promotions and television, radio, newspaper,
magazine and other mass media advertising; costs of printing and distributing
prospectuses and reports to prospective shareholders of the Fund; costs involved
in preparing, printing and distributing sales literature for the Fund; costs
involved in obtaining whatever information, analyses and reports with respect to
market and promotional activities on behalf of the Fund that the Advisor deems
advisable; and such other costs as may from time to time be agreed upon by the
Fund. Actual distribution expenses may be more or less than the .25% per annum
(but in any event the Advisor will be paid .25% per annum of net assets). Such
payments are to be made monthly by the Fund to the Advisor with respect to each
fiscal year of the Fund to reimburse the actual distribution expenses incurred
by the Advisor in such year. From time to time the Fund may engage in activities
to promote the sale of the shares of the Fund and other funds that are or may in
the future be advised or administered by the Advisor which costs are not readily
identifiable as related to any one fund. In such cases, the Advisor allocates
the cost of the activity among the funds involved on the basis of their
respective net assets, unless otherwise directed by the Trustees.
The Plan will continue in effect from year to year if approved at least annually
by a majority of the Fund's Trustees who are not interested persons of the Fund
and have no direct or indirect financial interest in the operation of the Plan
or any related agreements by votes cast in person at a meeting called for such
purpose. Administration of the Plan is regulated by Rule 12b-1 under the 1940
Act, which includes requirements that the Trustees receive and review at least
quarterly reports concerning the nature and qualification of expenses which are
made, that the Trustees approve all agreements implementing the Plan and that
the Plan may be continued from year-to-year only if the Trustees conclude at
least annually that continuation of the Plan is likely to benefit shareholders.
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<PAGE> 31
The Plan may not be amended to increase materially the amount to be spent on
distribution of shares of the Fund without shareholder approval.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to the supervision of the Trustees, decisions to buy and sell securities
for the Fund and negotiation of brokerage commission rates are made by the
Advisor. Transactions on exchanges involve the payment by the Fund 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 Fund
usually includes an undisclosed dealer commission or mark-up. In certain
instances, the Fund may make purchases of underwritten issues at prices that
include underwriting fees. In selecting a broker to execute each particular
transaction, the Advisor 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 Fund on
a continuing basis. Accordingly, the cost of the brokerage commissions to the
Fund 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 Advisor will consider the research
and investment services provided by brokers or dealers who effect or are parties
to portfolio transactions of the Fund or the Advisor'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 Advisor shall not be deemed to have acted unlawfully or to have breached any
duty solely by reason of its having caused the Fund 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 Advisor
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 Advisor's ongoing
responsibilities with respect to the Fund.
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<PAGE> 32
TAXES
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the
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 on loans, and gains from the sale or other disposition of
stock, securities, or other income derived with respect to its business of
investing in such stock or securities; 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 the Fund's investment company taxable income (which includes,
among other items, dividends, interest, and any realized net short-term and
long-term capital gains) for the taxable year is distributed. The Fund intends
to distribute substantially all such income.
Amounts not distributed on a timely basis in accordance with a calendar year
distribution requirement are subject to a non-deductible 4% excise tax at the
Fund level. To avoid the tax, the Fund must distribute during each calendar year
an amount equal to the sum of (1) at least 98% of its ordinary income for the
calendar year, (2) at least 98% of its realized capital gains in excess of its
realized capital losses for a one year period generally ending on October 31 of
the calendar year, and (3) all ordinary income and net realized capital gains
for previous years that were not distributed during such years. To avoid
application of the excise tax, the Fund intends to make distributions in
accordance with the calendar year distribution requirement.
A distribution will be treated as paid as on December 31 of the current calendar
year if it is declared by the Fund in October, November or December of that year
with a record date in such month and paid by the Fund during January of the
following year. Such distributions will be taxable to shareholders in the
calendar year in which such distribution is declared, rather than the calendar
year in which the distributions are received.
PRICING AND REDEMPTION OF SECURITIES BEING OFFERED
The Fund continuously offers its shares for sale and redemption without sales or
redemption charges at net asset value calculated in accordance with generally
accepted accounting principals. The net asset value of the Fund is determined as
of the close of trading of the New York Stock Exchange (currently 4:00 p.m.
Eastern time) on each "Business Day." A Business day means any day, Monday
through Friday, except for the following holidays: New Year's Day, Martin Luther
King Jr. Day, Presidents' Day, Good Friday, Memorial Day, Fourth of July, Labor
Day, Columbus Day, Veterans Day, Thanksgiving Day and Christmas. Net asset value
per share is determined by dividing the total value of all Fund securities and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed income securities, which is accrued
daily.
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<PAGE> 33
How to Redeem Fund Shares
The right of redemption may be suspended, or the date of payment postponed
beyond the normal seven-day period by the Fund, 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 closing, 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 the 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.
It is possible that conditions may exist in the future which would, in the
opinion of the Trustees, make it undesirable for the Fund to pay for redemptions
in cash. In such cases the Trustees may authorize payment to be made in
portfolio securities of the Fund. However, the Fund is 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 the 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.
CALCULATION OF PERFORMANCE DATA
Average annual total return is the average annual compound rate of return for
various time periods (i.e., one year, five years and ten years), all ended on
the last day of the most recent calendar quarter. Average annual total return
quotations reflect changes in the price of the 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 compound 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):
n
P (1 + T) = ERV
<TABLE>
<CAPTION>
Where:
<S> <C>
T = average annual total return
P = a hypothetical initial investment of $1,000 made at the beginning of the applicable
period
n = number of years
ERV = ending redeemable value at the end 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.
The Fund may also quote the Fund's performance as expressed by a measure of
total return which is calculated differently from average annual return. Total
return of the Fund is calculated for any specified period of time by assuming
the purchase of shares of the Fund at the net asset value at the beginning of
the period. Each dividend or other distribution paid by the Fund is assumed to
have been reinvested at the net asset value on the reinvestment date. The total
number of shares then owned as a result of this process is valued at the net
asset value at the end of the period. The percentage increase is determined by
subtracting the initial value of the investment from the ending value and
dividing the remainder by the initial value.
-34-
<PAGE> 34
In connection with communicating its performance to current or prospective
shareholders, the 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,
Standard & Poor's 500 Composite Stock Price Index (S&P 500), the Philadelphia
Stock Exchange Bank Index, and the Russell 2000 Index.
From time to time, in advertising, marketing and other Fund literature, the
performance of the 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., and other
independent organizations. When these organizations' tracking results are used,
the 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 the Fund's risk. From time to time, the average
price-earnings ratio and other attributes of the 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. An average annual total
return reflects the hypothetical annually compounded return that would have
produced the same total return if the Fund's performance had been constant over
the entire period. Total return figures are based on the overall change in value
of a hypothetical investment in the Fund over a stated period of time. Because
average annual total returns for more than one year tend to smooth out
variations in the Fund's return, investors should recognize that such figures
are not the same as actual year-by-year results.
STATEMENT OF ASSETS AND LIABILITIES
The Statement of Assets and Liabilities of the Fund as of February 3, 1998, set
forth below, has been so included in reliance on the report of Arthur Andersen
LLP, independent accountants, given on the authority of said firm as experts in
accounting and auditing.
-35-
<PAGE> 35
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Trustees and Shareholder of
the Bank and Insurance Fund of Bowes Investment Trust:
We have audited the accompanying statement of assets and liabilities of the Bank
and Insurance Fund of Bowes Investment Trust as of February 3, 1998. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Bank
and Insurance Fund of Bowes Investment Trust as of February 3, 1998 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
February 3, 1998
-36-
<PAGE> 36
Bowes Investment Trust
Bank and Insurance Fund
Statement of Assets and Liabilities
February 3, 1998
ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . $ 100,000
Organization costs (Note 2) . . . . . . . . . . . . 8,000
-----
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . 108,000
LIABILITIES
Accrued Expenses (note 2) . . . . . . . . . . . . . 8,000
-----
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . 8,000
Net Assets for shares of beneficial
Interest outstanding . . . . . . . . . . . . . . 100,000
-------
Shares outstanding . . . . . . . . . . . . . . . . 10,000
------
Net asset value, offering price and redemption
price per share . . . . . . . . . . . . . . . . $ 10.00
---------
The accompanying notes are an integral part of this statement.
-37-
<PAGE> 37
BOWES INVESTMENT TRUST
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
AS OF FEBRUARY 3, 1998
(1) The Bank and Insurance Fund (the Fund) is a diversified series of the
Bowes Investment Trust, an open-end management investment company
established as a Delaware business trust under a Declaration of Trust
dated February 3, 1998. On February 3, 1998, 10,000 shares of the Fund
were issued for cash at $10.00 per share. The Fund has had no operations
except for the initial issuance of shares.
(2) Expenses incurred in connection with the organization of the Fund and
the initial offering of shares are estimated to be $8,000. These
expenses have been or will be paid by Bowes Funds, LLC (the Adviser).
Upon commencement of the public offering of shares of the Fund, the Fund
will reimburse the Adviser for such expenses, with that amount being
capitalized and amortized on a straight line basis over five years. As
of February 3, 1998, all outstanding shares of the Fund were held by the
Adviser, who purchased these shares in order to provide the Trust with
its required capital. In the event the initial shares of the Fund are
redeemed by any holder thereof at any time prior to the complete
amortization of organizational expenses, the redemption proceeds payable
with respect to such shares will be reduced by the pro rata share (based
upon the portion of the shares redeemed in relation to the required
capitalization) of the unamortized deferred organizational expenses as
of the date of such redemption.
(3) Reference is made to the Prospectus and this Statement of Additional
Information for a description of the Management Agreement, the
Underwriting Agreement, the Distribution Expense Plan, the
Administration Agreement, the tax aspects of the Fund and the
calculation of the net asset value of shares of the Fund.
-38-
<PAGE> 38
PART C APPENDIX
OTHER INFORMATION
<TABLE>
<CAPTION>
Financial Statements and Exhibits
<S> <C>
(a) Financial Statements
Audited Statement of Assets and Liabilities
Account Application
(b) Exhibits
(1) Declaration of Trust of the Registrant
(2) By-Laws of the Registrant
(3) Not Applicable
(4) Not Applicable
(5)(a) Investment Advisory Agreement between Registrant and Bowes Funds, LLC
(6) Underwriting Agreement between the Registrant and Countrywide Investments, Inc.
(7) Not Applicable
(8)(a) Custody Agreement between Registrant and Star Bank, N.A.
(b) Letter from Star Bank, N.A. setting forth schedule of remuneration for custodian
services.
(9)(a) Administration Agreement between Registrant and Countrywide Fund Services, Inc.
(b) Transfer, Dividend Disbursing, Shareholder Service and Plan Agency Agreement between
the Registrant and Countrywide Fund Services, Inc.
(c) Accounting Services Agreement between Registrant and Countrywide Fund Services, Inc.
(10) Opinion and consent of Counsel
(11) Consent of Independent Auditors
(12) Not Applicable
(13) Initial Capital Agreement between Registrant and Bowes Funds, LLC dated February 3,
1998
(14) Not Applicable
(15) Rule 12b-1 Distribution Plan
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) (a) Powers of Attorney of Independent Trustees of Registrant
(b) Consent of Persons Serving as Trustees
</TABLE>
-39-
<PAGE> 39
Persons Controlled by or Under Common Control with Registrant The Registrant is
not directed or indirectly controlled by or under common control with any person
other than its Trustees.
Number of Record Holders
As of the date of this Registration Statement, the Fund's Advisor was the only
shareholder of record of the Registrant's shares.
Indemnification
Reference is made to Article Seven of the Registrant's Declaration of Trust.
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 Declaration of Trust 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
submit to a court of appropriate jurisdiction the question of 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.
Business and Other Connections of Investment Adviser
Bowes Funds, LLC serves as the investment adviser for the Registrant. The
business and other connections of Bowes Funds, LLC are set forth in the Uniform
Application for Investment Adviser Registration ("Form ADV") of Bowes Funds, LLC
as currently filed with the SEC. The Officers of Bowes Funds, LLC are Robert B.
Bowes, President, Thomas I. Carocci, Vice President and Michael J. Henry, Vice
President.
Principal Underwriter
Countrywide Investments, Inc. or an affiliate
312 Walnut Street
Cincinnati, Ohio 45201-5354
Location of Accounts and Records
The accounts, books, and other documents required to be maintained by Registrant
pursuant to Section 31(a) of the Investment Company Act of 1940 and rules
promulgated thereunder are in the possession of Countrywide Fund Services, Inc.
at 312 Walnut Street, Cincinnati, Ohio 45201-5354. Certain records relating to
the Fund's portfolio securities are maintained by Bowes Funds, LLC at 4520
East-West Hwy., Suite 540, Bethesda, Maryland, 20814.
Management Services Not Applicable.
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
-40-
<PAGE> 40
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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant has duly caused this
Pre-Effective Amendment No. 1 to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Bethesda, Maryland in
the State of Maryland on the 3rd day of February, 1998.
BOWES INVESTMENT TRUST
By: /s/ Robert B. Bowes
-----------------------------
Robert B. Bowes
Trustee and Chairman
By: /s/ Harry M.K. Johnston
-----------------------------
Harry M.K. Johnston
Trustee
By: /s/ Louis M. Marmon
-----------------------------
Louis M. Marmon, M.D., Ph.D.
Trustee
By: /s/ Thomas P.F. Kiely
----------------------------
Thomas P.F. Kiely, J.D.
Trustee
-41-
<PAGE> 41
<TABLE>
<S> <C>
Bowes Investment Trust Bank and Insurance Fund
Account Application ACCOUNT No. ________________
Please mail account application to: FOR BROKER DEALER USE ONLY
Firm Name:___________________
Bowes Bank and Insurance Fund Home office Address:_________
P.O. Box 5354 Branch Address: _____________
Cincinnati, Ohio 45201- 5354 Rep. Name & No.______________
Rep. Signature: _____________
</TABLE>
For help with this application or for a IRA, Roth IRA, 401(k) or 403(b)
application call (301)654-9567.
BOWES BANK AND INSURANCE FUND
Initial Investment of $ _____________________(minimum $2,000)
Check or draft enclosed payable to the Fund.
Bank Wire From:_________________________________________________________
Account Name S. S. #/ Tax I. D. #
- ---------------------------------------------- -----------------------
Name of Individual, Corporation, Custodial account use
Organization ,or Minor Minor's S.S#
- ----------------------------------------------
Name of Joint Tenant, Partner, Custodian
Citizenship:
[ ] U.S.
[ ] Other __________________________
Address Phone
- -------------------------------------------------------(-----)---------
Street or Address Business Phone
- ------------------------------------------------------(----)-----------
City State Zip Home Phone
Check Appropriate Box:
[ ] Individual
[ ] Joint Tenant (Right of survivorship presumed)
[ ] Partnership
[ ] Corporation
[ ] Trust
[ ] Custodial
[ ] Non-Profit
[ ] Other
Occupation and Employer Name and Address:
- -----------------------------------------
- -----------------------------------------
-42-
<PAGE> 42
Are you an associated person of a NASD member? ______ Yes/No
TAXPAYER IDENTIFICATION NUMBER - Under penalties of perjury I certify that the
Taxpayer Identification Number listed above is my correct number. The Internal
Revenue Service does not require my consent to any provision of this document
other than the certifications required to avoid backup withholding. Check box if
appropriate:
[ ] I am exempt from backup withholding under the provisions of section 3406
(a) (1) (c) of the Internal Revenue Code; or I am not subject to backup
withholding because I have not been notified that I am subject to backup
withholding as a result of a failure to report all interest or dividends; or
the Internal Revenue Service has notified me that I am no longer subject to
backup withholding.
[ ] I certify under penalties of perjury that a Taxpayer Identification Number
has not been issued to me and I have mailed or delivered an application to
receive a Taxpayer Identification Number to the Internal Revenue Service
Center or Social Security Administration Office. I understand that if I do
not provide a Taxpayer Identification Number within 60 days that 31% of all
reportable payments will be withheld until I provide a number.
DISTRIBUTION (If no election is checked the SHARE OPTION will be assigned.)
[ ] Share Option Income distribution and capital gains automatically
reinvested in additional Shares.
[ ] Cash Option Income distribution and capital gains distribution
paid in cash.
[ ] By Check
[ ] By ACH to my bank checking or savings account. Please attach a voided
check.
REDEMPTION OPTIONS
I (we) authorize the Trust or Countrywide Fund Services, Inc. to act upon
instructions received by telephone, or upon receipt of and in the amounts of
checks described below (if check writing is selected), to have amounts withdrawn
from my (our) account in the Bowes Bank and Insurance Fund and:
[ ] Wired ($1,000 minimum) or mailed to my (our) bank account designated below.
I we further authorize the use of automated cash transfers to and from the
account designated below. NOTE: For wire redemptions, the indicated bank
should be a commercial bank. Please attach a voided check for the account.
Bank Account Number __________ Bank Routing Transit Number ____________
Name of Account Holder _________________________________________________________
Bank Name _____________________ Bank Address __________________________
City State
SIGNATURES
By signature below each investor certifies the investor has received a copy of
the Fund's Prospectus, that he or she is of legal age, and that he or she has
full authority and legal capacity for himself/herself or the organization named
below, to make this investment and to use the options selected above. The
investor appoints
-43-
<PAGE> 43
Countrywide Fund Services, Inc. as his or her agent to enter orders for shares
whether by direct purchase or exchange, to receive dividends and distributions
for automatic reinvestment in additional shares of the fund for credit to the
investor's account and to surrender for redemption shares held in the investor's
account in accordance with any of the procedures elected above or for payment of
services charges incurred by the investor. The investor further agrees that
Countrywide Fund Services, Inc. can cease to act as such agent upon ten days'
notice in writing to the investor at the address contained in this Application.
The investor hereby ratifies any instructions given pursuant to this Application
and for himself/herself and his/her successors and assigns does hereby release
Countrywide Fund Services Inc., Bowes Investment Trust, Countrywide Investments,
Inc., and their respective officers, employees, agents and affiliates from any
and all liability in the performance of the acts instructed herein. Neither the
Trust, Countrywide Fund Services, Inc., nor their respective affiliates will be
liable for complying with telephone instructions they reasonably believe to be
genuine or for any loss, damage, cost or expense in acting on such telephone
instructions. The investor(s) will bear the risk of any such loss. The Trust or
Countrywide Fund Services, Inc., or both, will employ reasonable procedures to
determine that telephone instructions are reasonable are genuine. If the Trust
and/or Countrywide Fund Services, Inc. do not employ such procedures, they may
be liable for losses due to unauthorized or fraudulent instructions. These
procedures may include, among others, requiring forms of personal identification
prior to acting upon telephone instructions, providing written confirmation of
the transactions and/or tape recording telephone instructions.
- -------------------------------- ----------------------------------
Signature of Individual Owner, Title of Corporate Officer, Trustee
Corporate Officer, Trustee
- ---------------------------------------------- ----------------------
Signature of Joint Owner, if Any Date
NOTE: Corporations, trusts and other organizations must complete the resolution
form. Unless otherwise specified, each joint owner should have shall have full
authority to act on behalf of the account.
AUTOMATIC INVESTMENT PLAN (Complete for Investments In the Fund) The Automatic
Investment Plan is available for the Bowes Bank and Insurance Fund. There is no
charge for this service, and it offers the convenience of automatic investing on
a regular basis. For an account that is open by using this plan, the minimum
initial investment must be $500.00. Though a continuous program of 12 monthly
investment is recommended, the plan may be discontinued by the shareholder at
any time.
Please invest $________ per month in the Bowes Bank and Insurance Fund.
ABA Routing Number __________________Account Number ___________________
[ ] Checking Account
[ ] Savings Account
-44-
<PAGE> 44
Please make my automatic investment on:
[ ] the last business day of each month
[ ] the 15th day of each month
[ ] both the 15th and last business day of each month.
- -------------------------------------------- ----------------------
Name of Financial Institution (FI) City State
- ------------------------------------ -------------------------
Signature of Depositor as it appears Signature of Joint Tenant
on FI Records
Please attach a voided check here for the Automatic Investment Plan.
Indemnification to Depositor's Bank
In consideration of your participation in a plan which Countrywide Fund
Services, Inc (CFS) has put into effect, by which amounts, determined by your
depositor, payable to the Bowes Bank and Insurance Fund, for purchase of shares
of the Fund, are collected by CFS, CFS hereby agrees:
CFS will indemnify and hold you harmless for any liability to any person or
persons whatsoever arising out of the payment by you of any amount drawn by the
Fund to its own order on the account of you depositor or from any liability to
any person whatsoever arising out of the dishonor by you whether with or without
cause or intentionally or inadvertently, of any such amount. CFS will defend, at
its own cost and expense, any action which may be brought against you by any
person or persons whatsoever because of your actions taken pursuant to the
foregoing request or in any manner arising by reason of your participation this
arrangement. CFS will refund to you any amount erroneously paid by you to the
Fund if the claim for the amount of such erroneous payments is made by you
within six (6) months, of such erroneous payment; your participation in this
arrangement and that of the Fund may be terminated by thirty (30) days written
notice from either party to the other.
RESOLUTIONS (This section to be completed by Corporations, Trusts and Other
Organizations.
RESOLVED: That this corporation or organization become a shareholder of the
Bowes Bank and Insurance Fund (the Trust) and that
____________________________________ is hereby authorized to complete and
execute this the Application on behalf of the corporation or organization and to
take any action for it as may be necessary or appropriate with respect to its
shareholder account with the Trust, and it is FURTHER RESOLVED: That any one of
the above noted officers is authorized to sign any documents necessary or
appropriate to appoint Countrywide Fund Services, Inc. as redemption agent of
the corporation or organization for shares of the applicable
-45-
<PAGE> 45
series of the Trust, to establish or acknowledge terms and conditions governing
the redemption of said shares and to otherwise implement the privileges elected
on the Application.
CERTIFICATE
I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the:
- --------------------------------------------------------
(Name of Organization)
incorporated or formed under the laws of _______
(State)
and were adopted at the Board of Directors or Trustees of the organization or
corporation duly called and held on _____________________ at which a quorum was
present and acting throughout, and that the same are now in full force and
effect. I further certify that the following is (are) duly elected officer(s) of
the corporation or organization, authorized to act in accordance with the
foregoing resolutions.
NAME TITLE
- ------------------------------------ -----------------
- ------------------------------------ -----------------
- ------------------------------------ -----------------
Witness my hand and seal of the corporation or organization this
________________________ day of _______________________, 19______
- ----------------------------- ----------------------------------------
Secretary-Clerk Other Authorized Officer (if required)
* If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
-46-
<PAGE> 46
Part C
Financial Statements and Exhibits
BOWES INVESTMENT TRUST
BANK AND INSURANCE FUND
STATEMENT OF ASSETS AND LIABILITIES
AS OF
FEBRUARY 3, 1998
TOGETHER WITH
AUDITORS' REPORT
BOWES INVESTMENT TRUST
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
AS OF FEBRUARY 3, 1998
-47-
<PAGE> 47
Report of Independent Public Accountants
To the Trustees and Shareholder of the Bank and Insurance Fund of Bowes
Investment Trust:
We have audited the accompanying statement of assets and liabilities of the Bank
and Insurance Fund of Bowes Investment Trust as of February 3, 1998. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of the Bank
and Insurance Fund of Bowes Investment Trust as of February 3, 1998 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio
February 3, 1998
-48-
<PAGE> 48
BOWES INVESTMENT TRUST
BANK AND INSURANCE FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 3, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash $ 100,000
Organization costs (Note 2) 8,000
TOTAL ASSETS 108,000
LIABILITIES
Accrued expenses (Note 2) 8,000
TOTAL LIABILITIES 8,000
NET ASSETS FOR SHARES OF BENEFICIAL
INTEREST OUTSTANDING $ 100,000
SHARES OUTSTANDING 10,000
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE $ 10.00
</TABLE>
The accompanying notes are an integral part of this statement.
-49-
<PAGE> 49
Notes to Statement of Assets and Liabilities
(1) The BANK AND INSURANCE FUND (the Fund) is a diversified series of the BOWES
INVESTMENT TRUST, an open-end management investment company established as a
Delaware business trust under a Declaration of Trust dated February 3, 1998. On
February 3, 1998, 10,000 shares of the Fund were issued for cash at $10.00 per
share. The Fund has had no operations except for the initial issuance of shares.
Expenses incurred in connection with the organization of the Fund and the
initial offering of shares are estimated to be $8,000. These expenses have been
or will be paid by Bowes Funds, LLC (the Adviser). Upon commencement of the
public offering of shares of the Fund, the Fund will reimburse the Adviser for
such expenses, with that amount being capitalized and amortized on a
straight-line basis over five years. As of February 3, 1998, all outstanding
shares of the Fund were held by the Adviser, who purchased these initial shares
in order to provide the Trust with its required capital. In the event the
initial shares of the Fund are redeemed by any holder thereof at any time prior
to the complete amortization of organizational expenses, the redemption proceeds
payable with respect to such shares will be reduced by the pro rata share (based
upon the portion of the shares redeemed in relation to the required
capitalization) of the unamortized deferred organizational expenses as of the
date of such redemption.
(3) Reference is made to the Prospectus and this Statement of Additional
Information for a description of the Management Agreement, the Underwriting
Agreement, the Distribution Expense Plan, the Administration Agreement, tax
aspects of the Funds and the calculation of the net asset value of shares of the
Fund.
-50-
<PAGE> 1
Part C
Exhibit (5) (a)
Bowes Investment Trust
Bank and Insurance Fund
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, made this 3rd day of February 1998, by
and between Bowes Funds, LLC., a Maryland Corporation having its principal place
of business in Bethesda, Maryland (the "Advisor"), and Bowes Investment Trust, a
Delaware business Trust executed with the Secretary of State of Delaware (the
"Trust").
WHEREAS, the Trust is registered as an open-end investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), for the
purpose of investing and reinvesting its assets in securities, as set forth in
the Trust prospectus, its By-laws and its registration statements under the 1940
Act and the Securities Act of 1933 as amended (the "1933 Act"), the Trust will
avail itself of the services, information, advice, assistance and facilities of
an investment advisor and to have an investment advisor perform for it various
investment advisory and research services, and other management services; and
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
rendering management and investment advisory services to investment companies
and desires to provide such services to the Trust;
NOW, THEREFORE in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of the Advisor. The Trust hereby employs the Advisor to manage the
investment and reinvestment of the assets of the Trust, subject to the control
and direction of the Trust's Board of Trustees, for the period and on the terms
hereinafter set forth. The Advisor hereby accepts such employment and agrees
during such period to render the services and to assume the obligations herein
set forth for the compensation herein provided. The Advisor shall for all
purposes herein be deemed to be an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. Obligations of and Services to be Provided by the Advisor. The Advisor
undertakes to provide the following services and to assume the following
obligations:
a. The Advisor shall manage the investment and reinvestment of the Trust's
assets, subject to and in accordance with the investment objectives and policies
of the Trust as stated in the then current prospectus and statement of
additional information for the Trust and any directions which the Trust's Board
of Trustees may issue from time to time. In pursuance of the foregoing, the
Advisor shall make all determinations with respect to the investment of the
Trust's assets and the purchase and sale of portfolio securities and shall take
such steps as may be necessary to implement the same. Such determination and
services shall also include determining the manner in which voting rights,
rights to consent to corporate action, any other rights pertaining to the
Trust's portfolio securities shall be exercised. The Advisor shall render
regular reports to the Trust's Board of Trustees concerning the Trust's
investment activities.
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b. The Advisor shall, in the name of the Trust, place orders for the execution
of the Trust's portfolio transactions in accordance with the policies with
respect thereto set forth in the Trust's registration statement under the 1940
Act and the 1933 Act, as applicable to the Trust as such registration statement
may be amended from time to time. In connection with the placement of orders for
the execution of the Trust's portfolio transactions, the Advisor shall create
and maintain all necessary brokerage records of the Trust in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the Securities and
Exchange Commission (the "SEC"), the Trust or any person retained by the Trust.
Where applicable, such records shall be maintained by the Advisor for the
periods and the places required by Rule 31a-2 under the 1940 Act.
c. The Advisor shall bear its expenses of providing services to the Trust
pursuant to this Agreement except such expenses as are undertaken by the Trust.
In addition, the Advisor shall pay the salaries and fees of all Trustees,
executive officers and employees of the Trust who are affiliated persons, as
defined in Section 2(a)(3) of the 1940 Act, of the Advisor.
3. Expenses of the Trust. The Trust shall pay all expenses other than those
expressly assumed by the Advisor. Expenses payable by the Trust shall include,
but are not limited to:
a. Fees to the Advisor as provided herein:
b. Legal and audit expenses;
c. Fees and expenses related to the registration and qualification of the
Trust and its shares for distribution under federal and state securities
laws;
d. Expenses of the transfer agent, registrar, custodian, dividend
disbursing agent and shareholder servicing agent;
e. Salaries, fees and expenses of Trustees and executive officers of the
Trust who are not "affiliated persons" of the Advisor within the meaning
of the 1940 Act;
f. Brokerage commissions and other expenses associated with the purchase
and sale of portfolio securities for the Trust;
g. Expenses, including interest, of borrowing money;
h. Expenses incidental to meetings of the Trust's shareholders and the
Trust's allocable portion of the expenses incidental to the maintenance
of the Trust's organizational existence;
i. Expenses of preparing, printing and mailing notices, proxy material,
reports to regulatory bodies and reports to shareholders of the Trust;
k. Expenses of preparing and typesetting of prospectuses of the Trust;
l. Expenses of printing and distributing prospectuses to shareholders of
the Trust;
m. The Trust's allocable portion of association membership dues of the
Trust;
n. Insurance premiums for fidelity and other coverage; and
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o. Distribution Plan expenses, as permitted by Rule 12b-1 under the 1940
Act and as authorized by the Trustees.
4. Compensation of Advisor
a. As compensation for the services rendered and obligations assumed
hereunder by the Advisor, the Trust shall pay to the Advisor advisory
fees as specified in the Schedule attached hereto and made part of this
Agreement. Such fees shall be payable within ten (10) days after the
last day of each calendar month. Upon termination of this Agreement
before the end of any calendar month, the fee for such period shall be
prorated in the manner set forth in the attached Schedule. The Schedule
may be amended from time to time, provided that amendments thereto are
made in conformity with applicable laws and regulations and the
Prospectus of the Trust and By-laws of the Trust. Any amendment to a
Schedule pertaining to any new Trust shall not be deemed to affect the
interest of this Trust.
b. The Advisor reserves the right (i) to waive all or part of its fee and
assume expenses of the Trust and (ii) to make payments to brokers and
dealers in consideration of their promotional or administrative
services.
5. Activities of the Advisor. The services of the Advisor to the Trust are not
to be deemed exclusive, and the Advisor shall be free to render similar services
to others. It is understood that Trustees and officers of the Trust are or may
become interested in the Advisor as stockholders, officers, or otherwise, and
that stockholders and officers of the Advisor are or may become similarly
interested in the Trust, and that the Advisor may become interested in the Trust
as shareholder or otherwise.
6. Use of Names. The Trust shall not use the name of the Advisor in any
prospectus, sales literature or other material relating to the Trust in any
manner not approved prior thereto by the Advisor; provided, however, that the
Advisor shall approve all uses of its name which merely refer in accurate terms
to its appointment hereunder or which are required by the SEC or a State
Securities Commission; and, provided, further, that in no event shall such
approval be unreasonably withheld. The Advisor shall not use the name of the
Trust in any material relating to the Advisor in any manner not approved prior
thereto by the Trust; provided, however, that the Trust shall approve all uses
of its name which merely refer in accurate terms to the appointment of the
Advisor hereunder or which are required by the SEC or a State Securities
Commission; and, provide, further, that in no event shall such approval be
unreasonably withheld.
The Trustees of the Trust acknowledge that, in consideration of the Advisor's
assumption of certain expenses of formation of the Trust, the Advisor has
reserved for itself the rights to the name "BANK AND INSURANCE FUND" (or any
similar name) and that use by the Trust of such name shall continue only with
the continuing consent of the Advisor, which consent may be withdrawn at any
time, effective immediately, upon written notice thereof to the Trust.
7. Liability of the Advisor. Absent willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Advisor, the Advisor shall not be subject to liability to the Trust or to
any shareholder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
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8. Limitation of Trust's Liability. The Advisor agrees that the Trust's
obligations hereunder in any case shall be limited to the Trust and to its
assets and that the Advisor shall not seek satisfaction of any such obligation
from the shareholders of the Trust nor from any Trustees, officers, employee or
agent of the Trust.
9. Force Majeure. The Advisor shall not be liable for delays or errors occurring
by reason of circumstances beyond its control, including but not limited to acts
of civil or military authority, national emergencies, work stoppages, fire,
flood, catastrophe, acts of God, insurrection, war, riot, or failure of
communication or power supply. In the event of equipment breakdowns beyond its
control, the Advisor shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
10. Renewal, Termination and Amendment. This Agreement shall continue in effect
with respect to the Trust, unless sooner terminated as hereinafter provided for
two years from the effective date of the Trust, and indefinitely thereafter if
its continuance after such one year period shall be specifically approved at
least annually by vote of the holders of a majority of the outstanding voting
securities of the Trust or by vote of a majority of the Trust's Board of
Trustees; and further provided that such continuance is also approved annually
by the vote of a majority of the Trustees who are not parties to this Agreement
or interested persons of the Advisor, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may be terminated at any time
with respect to the Trust, without payment of any penalty, by the Trust's Board
of Trustees or by vote of the majority of the outstanding voting securities of
the Trust upon 60 days' prior written notice to the Advisor and by the Advisor
upon 60 days' prior written notice to the Trust. This Agreement may be amended
with respect to the Trust at any time by the parties, subject to approval by the
Trust's Board of Trustees and, if required by applicable SEC rules and
regulations, a vote of a majority of the Trust's outstanding voting securities.
This Agreement shall terminate automatically in the event of its assignment. The
terms "assignment", "interested person", and "vote of a majority of the
outstanding voting securities" shall have the meaning set forth for such terms
in the 1940 Act.
11. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
12. Miscellaneous. Each party agrees to perform such further actions and execute
such further documents as are necessary to effectuate the purposes hereof. This
Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Maryland. The captions in this Agreement are included for
convenience 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 have duly executed this Agreement as of the date
first written above.
BOWES INVESTMENT TRUST
By: /s/ Robert B. Bowes
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Robert B. Bowes
Chairman
BOWES FUNDS, LLC
By: /s/ Robert B. Bowes
Robert B. Bowes
President
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Schedule dated February 3,1998 to the Investment Advisory Agreement between:
BOWES FUNDS, LLC
and
BOWES INVESTMENT TRUST
1. Compensation. As compensation pursuant to Section 4 of the Investment
Advisory Agreement between BOWES FUNDS, LLC., ("Advisor") and the BOWES
INVESTMENT TRUST ("Trust") dated February 3, 1998, with respect to the Bank and
Insurance Fund (the "Fund"), the Advisor is entitled to receive from the Fund an
advisory fee ("Fee"). The annual Fee shall be computed daily and payable
monthly, at an annual rate of 1 (one)% of the average daily net assets of the
Fund.
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Part C
Exhibit (6)
Bowes Investment Trust
Bank and Insurance Fund
UNDERWRITING AGREEMENT
This Agreement made as of February 3, 1998 by and between Bowes
Investment Trust (the "Trust"), a Delaware business trust, and Countrywide
Investments, Inc., an Ohio corporation ("Underwriter").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities
and Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of the Trust;
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
The Trust hereby appoints Underwriter as its exclusive agent for
the distribution of the Shares, and Underwriter hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the Trust
shall not sell any Shares except on the terms set forth in this Agreement.
Notwithstanding any other provision hereof, the Trust may terminate, suspend or
withdraw the offering of Shares whenever, in its sole discretion, it deems such
action to be desirable.
2. Sale and Repurchase of Shares.
(a) Underwriter will have the right, as agent for the Trust, to
enter into dealer agreements with responsible investment dealers, and to sell
Shares to such investment dealers against orders therefor at the public offering
price (as defined in subparagraph 2(d) hereof) stated in the Trust's effective
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, including the then current prospectus and statement of additional
information (the "Registration Statement"). Upon receipt of an order to purchase
Shares from a dealer with whom Underwriter has a dealer agreement, Underwriter
will promptly cause such order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the Trust,
to sell such Shares to the public against orders therefor at the public offering
price.
(c) Underwriter will also have the right to take, as agent for
the Trust, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
(d) The public offering price for the Shares shall be the
respective net asset value of the Shares then in effect, plus any applicable
sales charge determined in the manner set forth in the Registration Statement or
as permitted by the Act and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder. In no event shall any applicable
sales charge exceed the maximum sales charge permitted by the Rules of the NASD.
(e) The net asset value of the Shares shall be determined in the
manner provided in the Registration Statement, and when determined shall be
applicable to transactions as provided for in the Registration Statement. The
net asset value of the Shares shall be calculated by the Trust or by another
entity on behalf of the Trust. Underwriter shall have no duty to inquire into or
liability for the accuracy of the net asset value per Share as calculated.
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(f) On every sale, the Trust shall receive the applicable net
asset value of the Shares promptly, but in no event later than the third
business day following the date on which Underwriter shall have received an
order for the purchase of the Shares.
(g) Upon receipt of purchase instructions, Underwriter will
transmit such instructions to the Trust or its transfer agent for registration
of the Shares purchased.
(h) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(i) Underwriter, as agent of and for the account of the Trust,
may repurchase the Shares at such prices and upon such terms and conditions as
shall be specified in the Registration Statement.
3. Sale of Shares by the Trust.
The Trust reserves the right to issue any Shares at any time
directly to the holders of Shares ("Shareholders"), to sell Shares to its
Shareholders or to other persons approved by Underwriter at not less than net
asset value and to issue Shares in exchange for substantially all the assets of
any corporation or trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Trust, undertakes to sell Shares on a best efforts
basis only against orders therefor.
5. Rules of NASD, etc.
(a) Underwriter will conform to the Rules of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any Shares.
(b) Underwriter will require each dealer with whom Underwriter
has a dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of the Shares,
and neither Underwriter nor any such dealers shall withhold the placing of
purchase orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient copies
of any agreements, plans or other materials it intends to use in connection with
any sales of Shares in adequate time for the Trust to file and clear them with
the proper authorities before they are put in use, and not to use them until so
filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or
broker, or otherwise, under all applicable State or federal laws required in
order that Shares may be sold in such States as may be mutually agreed upon by
the parties.
(e) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those contained
in the then current prospectus and statement of additional information covering
the Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
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6. Records to be Supplied by Trust.
The Trust shall furnish to Underwriter copies of all information,
financial statements and other papers which Underwriter may reasonably request
for use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified copy, upon request by
Underwriter, of all financial statements prepared for the Trust by independent
public accountants.
7. Expenses.
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Trust or the Trust's
investment adviser in accordance with agreements between them as permitted by
applicable law, including the Act and rules and regulations promulgated
thereunder.
8. Indemnification of Trust.
Underwriter agrees to indemnify and hold harmless the Trust, and
each person who has been, is, or may hereafter be a trustee, officer, employee,
partner, shareholder or control person of the Trust, against any loss, damage or
expense (including the reasonable costs of investigation and any amounts paid in
satisfaction of judgments or in settlements which are made with the Trust's
consent) reasonably incurred by any of them in connection with any claim or in
connection with any action, suit or proceeding to which any of them may be a
party, which arises out of or is alleged to arise out of or is based upon any
untrue statement or alleged untrue statement of a material fact, or the omission
or alleged omission to state a material fact necessary to make the statements
not misleading, on the part of Underwriter or any agent or employee of
Underwriter or any other person for whose acts Underwriter is responsible,
unless such statement or omission was made in reliance upon written information
furnished by the Trust. Underwriter likewise agrees to indemnify and hold
harmless the Trust and each such person in connection with any claim or in
connection with any action, suit or proceeding which arises out of or is alleged
to arise out of Underwriter's failure to exercise reasonable care and diligence
with respect to its services, if any, rendered in connection with investment,
reinvestment, automatic withdrawal and other plans for Shares. Underwriter will
advance attorneys' fees or other expenses incurred by an indemnified person in
defending a proceeding, upon the undertaking by or on behalf of such person to
repay the advance if it is ultimately determined that such person is not
entitled to indemnification. The foregoing rights of indemnification shall be in
addition to any other rights to which the Trust or each such person may be
entitled as a matter of law.
9. Indemnification of Underwriter.
The Trust agrees to indemnify and hold harmless Underwriter, and
each person who has been, is, or may hereafter be a director, officer, employee,
shareholder or control person of Underwriter, against any error of judgment or
mistake of law or for any loss, damage or expense (including the reasonable
costs of investigation and any amounts paid in satisfaction of judgments or in
settlements which are made with the Trust's consent) suffered by the Trust in
connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
any of such persons in the performance of Underwriter's duties or from the
reckless disregard by any of such persons of Underwriter's obligations and
duties under this Agreement. The Trust will advance attorneys' fees or other
expenses incurred by any such person in defending a proceeding, upon the
undertaking by or on behalf of such person to repay the advance if it is
ultimately determined that such person is not entitled to indemnification.
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Any person employed by Underwriter who may also be or become an officer or
employee of the Trust shall be deemed, when acting within the scope of his
employment by the Trust, to be acting in such employment solely for the Trust
and not as an employee or agent of Underwriter.
10. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without the
payment of any penalty, in the event of its assignment. This Agreement may be
amended only if such amendment is approved (i) by Underwriter, (ii) either by
action of the Board of Trustees of the Trust or at a meeting of the Shareholders
of the Trust by the affirmative vote of a majority of the outstanding Shares,
and (iii) by a majority of the Trustees of the Trust who are not interested
persons of the Trust or of Underwriter by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and shall
remain in full force and effect for a period of two (2) years from the date of
its execution (unless terminated automatically as set forth in Section 10), and
from year to year thereafter, subject to annual approval (i) by Underwriter,
(ii) by the Board of Trustees of the Trust or a vote of a majority of the
outstanding Shares, and (iii) by a majority of the Trustees of the Trust who are
not interested persons of the Trust or of Underwriter by vote cast in person at
a meeting called for the purpose of voting on such approval.
12. Successor Investment Company.
Unless this Agreement has been terminated in accordance with
Paragraph 10, the terms and provisions of this Agreement shall become
automatically applicable to any investment company which is a successor to the
Trust as a result of reorganization, recapitalization or change of domicile.
13. Limitation of Liability.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
14. Severability.
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
15. Questions of Interpretation.
(a) This Agreement shall be governed by the laws of the State
of Ohio.
(b) Any question of interpretation of any term or provision
of this Agreement having a counterpart in or otherwise derived from a term or
provision of the Act shall be resolved by reference to such term or provision
of the Act and to interpretation thereof, if any, by the United States courts
or in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued pursuant
to said Act. In addition, where
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the effect of a requirement of the Act, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
16. Notices.
Any notices under this Agreement shall be in writing, addressed
and delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust for this purpose
shall be 4520 East West Highway, Suite 540, Bethesda, Maryland 20814, and that
the address of the Underwriter for this purpose shall be 312 Walnut Street, 21st
Floor, Cincinnati, Ohio 45202.
IN WITNESS WHEREOF, the Trust and Underwriter have each caused
this Agreement to be signed in duplicate on their behalf, all as of the day and
year first above written.
ATTEST: BOWES INVESTMENT TRUST
By: /s/ Thomas I. Carocci By: /s/ Robert B. Bowes
Thomas I. Carocci Robert B. Bowes
Vice President and Secretary Chairman
COUNTRYWIDE INVESTMENTS, INC.
By: /s/ Robert G. Dorsey
Robert G. Dorsey
President
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Part C
Exhibit (8) (a)
Bowes Investment Trust
Bank and Insurance Fund
CUSTODY AGREEMENT
This AGREEMENT, dated as of February 3, 1998, by and between BOWES
INVESTMENT TRUST (the "Trust"), a business trust organized under the laws of the
State of Delaware, acting with respect to its BANK AND INSURANCE FUND series,
and such other series as shall be designated from time to time by the Trust
(individually, a "Fund" and, collectively, the "Funds"), each of them a series
of the Trust and each of them operated and administered by the Trust, and STAR
BANK, N.A., a national banking association (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Trust desires that the Funds' Securities and cash be held
and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Funds and named in Exhibit A hereto or in
such resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Trust computes
the net asset value of Shares of any Fund.
1.5 "Fund Custody Account" shall mean any of the accounts in the name of
the Trust, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.7 "Officer" shall mean the Chairman, the President, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
the Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii)
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orally confirmed by the Custodian. The Trust shall cause all Oral Instructions
to be confirmed by Written Instructions prior to the end of the next Business
Day. If such Written Instructions confirming Oral Instructions are not received
by the Custodian prior to a transaction, it shall in no way affect the validity
of the transaction or the authorization thereof by the Trust. If Oral
Instructions vary from the Written Instructions which purport to confirm them,
the Custodian shall notify the Trust of such variance but such Oral Instructions
will govern unless the Custodian has not yet acted.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of the Board
of Trustees, certified by an Officer, specifically approving the use of such
clearing agency as a depository for the Funds) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities or
other obligations, and any certificates, receipts, warrants or other instruments
or documents representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to clear and to
service.
1.12 "Shares" shall mean, with respect to a Fund, the units of
beneficial interest issued by the Trust on account of such Fund.
1.13 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Funds based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Funds will be adequately protected
against the risk of loss of assets held in accordance with such contract; (ii)
that the Funds' assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Sub-Custodian or its
creditors except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that
beneficial ownership of the Funds' 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 assets as
belonging to the Funds or as being held by a third party for the benefit of the
Funds; (v) that the Funds' independent public accountants will be given access
to those records or confirmation of the contents of those records; and (vi) that
the Funds will receive periodic reports with respect to the safekeeping of the
Funds' assets, including, but not limited to, notification of any transfer to or
from a Fund's account or a third party account containing assets held for the
benefit of the Fund. Such contract may contain, in lieu of any or all of the
provisions specified above, such other provisions that the Custodian determines
will provide, in their entirety, the same or greater level of care and
protection for Fund assets as the specified provisions, in their entirety.
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1.14 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the Custodian
as custodian of all Securities and cash owned by or in the possession of the
Funds at any time during the period of this Agreement.
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth.
2.3 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the Trust:
a. A copy of the Declaration of Trust of the Trust certified
by the Secretary;
b. A copy of the Bylaws of the Trust certified by the
Secretary;
c. A copy of the resolution of the Board of Trustees of the
Trust appointing the Custodian, certified by the Secretary;
d. A copy of the then current Prospectus of each Fund; and
e. A certification of the Chairman and Secretary of the
Trust setting forth the names and signatures of the current
Officers of the Trust and other Authorized Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent of the Funds.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of a Fund (other than Securities maintained in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open and
maintain in its trust department a custody account in the name of the Trust
coupled with the name of such Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all Securities, cash and
other assets of such Fund which are delivered to it.
3.3 Appointment of Agents. (a) In its discretion, the Custodian may
appoint one or more Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Funds and to carry out such
other provisions of this Agreement as it may determine, provided, however, that
the appointment of any such agents and maintenance of any Securities and cash of
the Fund shall be at the Custodian's expense and shall not relieve the Custodian
of any of its obligations or liabilities under this Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board of
Trustees in connection with this Agreement, the Custodian wishes
to appoint other Sub-Custodians to hold property of the Funds, it
will so notify the Trust
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and provide it with information reasonably necessary to determine
any such new Sub-Custodian's eligibility under Rule 17f-5 under
the 1940 Act, including a copy of the proposed agreement with
such Sub-Custodian. The Trust shall at the meeting of the Board
of Trustees next following receipt of such notice and information
give a written approval or disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Trustees of the placement
of the Securities and cash of the Funds with a particular
Sub-Custodian and of any material changes in the Funds'
arrangements. The Custodian shall promptly take such steps as may
be required to withdraw assets of the Funds from any
Sub-Custodian that has ceased to meet the requirements of Rule
17f-5 under the 1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Trust that it agrees to exercise
reasonable care, prudence and diligence such as a person having
responsibility for the safekeeping of property of the Funds. The
Custodian further warrants that a Fund's assets will be subject
to reasonable care, based on the standards applicable to
custodians in the relevant market, if maintained with each
Sub-Custodian, after considering all factors relevant to the
safekeeping of such assets, including, without limitation: (i)
the Sub-Custodian's practices, procedures, and internal controls,
including, but not limited to, the physical protections available
for certificated securities (if applicable), the method of
keeping custodial records, and the security and data protection
practices; (ii) whether the Sub-Custodian has the requisite
financial strength to provide reasonable care for Fund assets;
(iii) the Sub-Custodian's general reputation and standing and, in
the case of a Securities Depository, the Securities Depository's
operating history and number of participants; and (iv) whether
the Fund will have jurisdiction over and be able to enforce
judgments against the Sub-Custodian, such as by virtue of the
existence of any offices of the Sub-Custodian in the United
States or the Sub-Custodian's consent to service of process in
the United States.
(f) The Custodian shall establish a system to monitor the
appropriateness of maintaining the Funds' assets with a
particular Sub-Custodian and the contract governing the Funds'
arrangements with such Sub-Custodian.
3.4 Delivery of Assets to Custodian. The Trust shall deliver, or
cause to be delivered, to the Custodian all of the Funds' Securities, cash and
other assets, including (a) all payments of income, payments of principal and
capital distributions received by the Funds with respect to such Securities,
cash or other assets owned by the Funds at any time during the period of this
Agreement, and (b) all cash received by the Funds for the issuance, at any time
during such period, of Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Funds in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Trust shall deliver to the
Custodian a resolution of the Board of Trustees, certified by an
Officer, authorizing and instructing the Custodian on an on-going
basis to deposit in such Securities Depository or Book-Entry
System all Securities eligible for deposit therein and to make
use of such Securities
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Depository or Book-Entry System to the extent possible and
practical in connection with its performance hereunder,
including, without limitation, in connection with settlements of
purchases and sales of Securities, loans of Securities, and
deliveries and returns of collateral consisting of Securities.
(b) Securities of the Funds kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of
the Custodian in such Book-Entry System or Securities Depository
which includes only assets held by the Custodian as a fiduciary,
custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of a Fund
maintained in a Book-Entry System or Securities Depository shall,
by book-entry, identify such Securities as belonging to such
Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such
Securities upon (i) receipt of advice from the Book-Entry System
or Securities Depository that such Securities have been
transferred to the Depository Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment and
transfer for the account of such Fund. If Securities sold by a
Fund are held in a Book-Entry System or Securities Depository,
the Custodian shall transfer such Securities upon (i) receipt of
advice from the Book-Entry System or Securities Depository that
payment for such Securities has been transferred to the
Depository Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for
the account of such Fund.
(e) The Custodian shall provide the Trust with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities
Depository in which Securities of the Funds are kept) on the
internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to
a Fund resulting (i) from the use of a Book-Entry System or
Securities Depository by reason of any negligence or willful
misconduct on the part of Custodian or any Sub-Custodian
appointed pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such
Sub-Custodian to enforce effectively such rights as it may have
against a Book-Entry System or Securities Depository. At its
election, the Trust shall be subrogated to the rights of the
Custodian with respect to any claim against a Book-Entry System
or Securities Depository or any other person from any loss or
damage to the Funds arising from the use of such Book-Entry
System or Securities Depository, if and to the extent that the
Funds have not been made whole for any such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Accounts. Upon receipt
of Proper Instructions, the Custodian shall disburse moneys from a Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in
accordance with Section 4.1 of this Agreement and only (i) in the
case of Securities (other than options on Securities, futures
contracts and options on futures contracts), against the delivery
to the Custodian (or any Sub-Custodian appointed pursuant to
Section 3.3 above) of such Securities registered as provided in
Section 3.9 below or in proper form for transfer, or if the
purchase of such Securities is effected through a Book-Entry
System or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the case of
options on Securities, against delivery to the Custodian (or such
Sub-Custodian) of
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such receipts as are required by the customs prevailing among
dealers in such options; (iii) in the case of futures contracts
and options on futures contracts, against delivery to the
Custodian (or such Sub-Custodian) of evidence of title thereto in
favor of the Fund or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse repurchase
agreements entered into between the Trust and a bank which is a
member of the Federal Reserve System or between the Trust and a
primary dealer in U.S. Government securities, against delivery of
the purchased Securities either in certificate form or through an
entry crediting the Custodian's account at a Book-Entry System or
Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; administration, investment
advisory, accounting, auditing, transfer agent, custodian,
trustee and legal fees; and other operating expenses of the
Fund; in all cases, whether or not such expenses are to be in
whole or in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with rules of The Options Clearing Corporation and of
any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(g) For transfer in accordance with the provision of any agreement
among the Trust, 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 Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including
the Custodian), which deposit or account has a term of one year
or less; and
(i) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of
Trustees, certified by an Officer, specifying the amount and
purpose of such payment, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom such
payment is to be made.
3.7 Delivery of Securities from Fund Custody Accounts. Upon receipt
of Proper Instructions, the Custodian shall release and deliver Securities from
a Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that,
in any such case, the cash or other consideration is to be
delivered to the Custodian;
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(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of
any of the foregoing, or (ii) for exchange for a different number
of 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;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment
of the issuer of such Securities, or pursuant to provisions for
conversion contained in such Securities, or pursuant to any
deposit agreement, including surrender or receipt of underlying
Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Trust, but only against
receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust;
(l) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Trust, 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 Fund; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board of Trustees, certified by an Officer, specifying the
Securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities held
for a Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either by
law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may
mature or be called, redeemed, or retired, or otherwise become
payable;
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(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect, and prepare and submit reports to the Internal Revenue
Service ("IRS") and to the Trust at such time, in such manner and
containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect
to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.9 Registration and Transfer of Securities. All Securities held
for a Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System if eligible therefor. All other Securities held for a Fund
may be registered in the name of such Fund, the Custodian, or any Sub-Custodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any
of them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Trust shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove
referred to or in the name of a Book-Entry System or Securities Depository, any
Securities registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for the
Funds, including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Funds as the Trust
shall reasonably request, or as may be required by the 1940 Act, including, but
not limited to, Section 31 of the 1940 Act and Rule 31a-2 promulgated
thereunder.
(b) All such books and records maintained by the Custodian shall
(i) be maintained in a form acceptable to the Trust and in compliance with
rules and regulations of the Securities and Exchange Commission, (ii) be the
property of the Trust and at all times during the regular business hours of the
Custodian be made available upon request for inspection by duly authorized
officers, employees or agents of the Trust and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained by
Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust
with a daily activity statement by Fund and a summary of all transfers to or
from each Fund Custody Account on the day following such transfers. At least
monthly and from time to time, the Custodian shall furnish the Trust with a
detailed statement, by Fund, of the Securities and moneys held by the Custodian
and the Sub-Custodians for the Funds under this a Agreement.
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3.12 Other Reports by Custodian. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all
proxies relating to Securities which are not registered in the name of a Fund,
to be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy soliciting materials and
all notices relating to such Securities.
3.14 Information on Corporate Actions. The Custodian shall promptly
deliver to the Trust all information received by the Custodian and pertaining to
Securities being held by the Funds with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Exhibit B. If the Trust desires to
take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be provided to the Custodian all relevant information for
any Security which has unique put/option provisions at least five Business Days
prior to the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUNDS
4.1 Purchase of Securities. Promptly upon each purchase of Securities
for a Fund, Written Instructions shall be delivered to the Custodian, specifying
(a) the Fund for which the purchase was made, (b) the name of the issuer or
writer of such Securities, and the title or other description thereof, (c) the
number of shares, principal amount (and accrued interest, if any) or other units
purchased, (d) the date of purchase and settlement, (e) the purchase price per
unit, (f) the total amount payable upon such purchase, and (g) the name of the
person to whom such amount is payable. The Custodian shall upon receipt of such
Securities purchased by a Fund pay out of the moneys held for the account of
such Fund the total amount specified in such Written Instructions to the person
named therein. The Custodian shall not be under any obligation to pay out moneys
to cover the cost of a purchase of Securities for a Fund, if in the relevant
Fund Custody Account there is insufficient cash available to the Fund for which
such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of Securities
for a Fund is made by the Custodian in advance of receipt of the Securities
purchased but in the absence of specified Written Instructions to so pay in
advance, the Custodian shall be liable to the Fund for such Securities to the
same extent as if the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the Fund for which the sale was made, (b) the name of the issuer or writer of
such Securities, and the title or other description thereof, (c) the number of
Shares, principal amount (and accrued interest, if any), or other units sold,
(d) the date of sale and settlement, (e) the sale price per unit, (f) the total
amount payable upon such sale, and (g) the person to whom such Securities are
to be delivered. Upon receipt of the total amount payable to the Fund as
specified in such Written Instructions, the Custodian shall deliver such
Securities to the person specified in such Written Instructions. Subject to the
foregoing, the Custodian may accept payment in such form as shall be
satisfactory to it, and may deliver Securities and arrange for payment in
accordance with the customs prevailing among dealers in Securities.
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4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund for which such Securities
were delivered shall bear the risk that final payment for such Securities may
not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and the
Custodian shall have no liability for any for the foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the relevant Fund Custody Account, prior
to actual receipt of final payment thereof, with (i) proceeds from the sale of
Securities which it has been instructed to deliver against payment, (ii)
proceeds from the redemption of Securities or other assets of the Fund, and
(iii) income from cash, Securities or other assets of the Fund. Any such credit
shall be conditional upon actual receipt by Custodian of final payment and may
be reversed if final payment is not actually received in full. The Custodian
may, in its sole discretion and from time to time, permit a Fund to use funds so
credited to its Fund Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance funds to the Trust to facilitate
the settlement of a Fund's transactions in its Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of a Fund,
the Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Trust may designate with respect to such amount in such
Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be
under any obligation to effect payment or distribution by any bank designated
in Proper Instructions given pursuant to Section 5.1 above of any amount paid
by the Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of a Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under the
1934 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 Fund,
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(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in
connection with financial futures contracts (or options thereon)
purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the
Fund, (d) for purposes of compliance by the Fund with
requirements under the 1940 Act for the maintenance of
segregated accounts by registered investment companies in
connection with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board of Trustees, certified by an Officer, setting forth
the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust or any Fund for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
such loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any Sub-Custodian
appointed pursuant to Section 3.3 above. The Custodian shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall promptly notify the Trust of any action taken or omitted by
the Custodian pursuant to advice of counsel. The Custodian shall not be under
any obligation at any time to ascertain whether the Trust or a Fund is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Trust's charter documents or bylaws, or its investment objectives and policies
as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable
for, or considered to be the custodian of, any cash belonging to a Fund or any
money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually receive such cash or collect
on such instrument.
7.3 No Responsibility for Title, etc. 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 or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for a Fund if such Securities are in
default or payment is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
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7.7 Co-operation. The Custodian shall cooperate with and supply
necessary information, by Fund, to the entity or entities appointed by the Trust
to keep the books of account of the Funds and/or compute the value of the assets
of the Funds. The Custodian shall take all such reasonable actions as the Trust
may from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's reports on Form N-1A and Form N-SAR and any other reports required by
the Securities and Exchange Commission, and (b) the fulfillment by the Trust of
any other requirements of the Securities and Exchange Commission.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Trust. The Trust shall indemnify and hold
harmless the Custodian and any Sub-Custodian appointed pursuant to Section 3.3
above, and any nominee of the Custodian or of such Sub-Custodian, from and
against any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act, and any state or
foreign securities and/or banking laws) or claim arising directly or indirectly
(a) from the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by the Custodian or such
Sub-Custodian (i) at the request or direction of or in reliance on the advice of
the Trust, or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or any sub-custody agreement
with a Sub-Custodian appointed pursuant to Section 3.3 above, provided that
neither the Custodian nor any such Sub-Custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such Sub-Custodian's negligence, bad faith
or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall indemnify and
hold harmless the Trust from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking laws) or claim
arising from the negligence, bad faith or willful misconduct of the Custodian
or any Sub-Custodian appointed pursuant to Section 3.3 above, or any nominee of
the Custodian or of such Sub-Custodian.
8.3 Indemnity to be Provided. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
8.4 Security. If the Custodian advances cash or Securities to a
Fund for any purpose, either at the Trust's request or as otherwise
contemplated in this Agreement, or in the event that the Custodian or its
nominee incurs, in connection with its performance under this Agreement, any
loss, damage, cost, expense (including attorneys' fees and disbursements),
liability or claim (except such as may arise from its or its nominee's
negligence, bad faith or willful misconduct), then, in any such event, any
property at any time held for the account of such Fund shall be security
therefor, and should such Fund fail promptly to repay or indemnify the
Custodian, the Custodian shall be entitled to utilize available cash of such
Fund and to dispose of other assets of such Fund to the extent necessary to
obtain reimbursement or indemnification.
ARTICLE IX
FORCE MAJEURE
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Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Funds in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Funds and held by the Custodian as custodian, and (b) transfer any Securities
held in a Book-Entry System or Securities Depository to an account of or for the
benefit of the Funds at the successor custodian, provided that the Trust shall
have paid to the Custodian all fees, expenses and other amounts to the payment
or reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Trust may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Custodian by
regulatory authorities or upon the happening of a like event at the direction of
an appropriate regulatory agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor
custodian is not designated by the Trust on or before the date of termination
specified pursuant to Section 10.1 above, then the Custodian shall have the
right to deliver to a bank or trust company of its own selection, which (a) is
a "bank" as defined in the 1940 Act and (b) has aggregate capital, surplus and
undivided profits as shown on its then most recent published report of not less
than $25 million, all Securities, cash and other property held by Custodian
under this Agreement and to transfer to an account of or for the Funds at such
bank or trust company all Securities of the Funds held in a Book-Entry System
or Securities Depository. Upon such delivery and transfer, such bank or trust
company shall be the successor custodian under this Agreement and the Custodian
shall be relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time
to time by the Trust and the Custodian. The fees and other charges in effect on
the date hereof and applicable to the Funds are set forth in Exhibit C attached
hereto.
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ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust, as from time to time amended. The execution and delivery of this
Agreement have been authorized by the Trustees, and this Agreement has been
signed and delivered by an authorized officer of the Trust, acting as such, and
neither such authorization by the Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the above-mentioned Agreement and
Declaration of Trust.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
sent or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Trust:
Bowes Investment Trust
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Telephone: (513) 629-2000
Facsimile: (513) 629-2008
To Custodian:
Star Bank, N.A.
425 Walnut Street, M.L. 6118
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632-3016
Facsimile: (513) 632-4448
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust shall not circulate any
printed matter which contains any reference to Custodian without the prior
written approval of Custodian, excepting printed matter contained in the
prospectus or statement of additional information for a Fund and such other
printed matter as merely identifies Custodian as custodian for one or more
Funds. The Trust shall submit printed matter requiring approval to Custodian in
draft form, allowing sufficient time for review by Custodian and its counsel
prior to any deadline for printing.
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14.3 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 Severability. If any provision of this Agreement shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: BOWES INVESTMENT TRUST
By: /s/ Thomas I. Carocci By: /s/ Robert B. Bowes
Thomas I. Carocci Robert B. Bowes
Vice President and Secretary Chairman
STAR BANK, N.A.
By: /s/ Lawrence A. Woodcock
Lawrence A. Woodcock
Senior Vice President
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EXHIBIT A TO CUSTODY AGREEMENT
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to administer the Fund Custody Accounts.
Name Signature
- ---- ---------
Robert B. Bowes /s/ Robert B. Bowes
Thomas I. Carocci /s/ Thomas I. Carocci
John F. Splain /s/ John F. Splain
Robert G. Dorsey /s/ Robert G. Dorsey
Mark J. Seger /s/ Mark J. Seger
M. Kathleen Leugers /s/ M. Kathleen Leugers
Christina H. Kelso /s/ Christina H. Kelso
Tina D. Hosking /s/ Tina D. Hosking
Gary H. Goldschmidt /s/ Gary H. Goldschmidt
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EXHIBIT B TO CUSTODY AGREEMENT
STAR BANK, N.A.
STANDARDS OF SERVICE GUIDE
Star Bank, N.A., is committed to providing superior quality service to
all customers and their agents at all times. We have compiled this guide as a
tool for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Star Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Star Bank will make every effort to complete all
processing on a timely basis.
Star Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers
Trust Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Star Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the Wall Street
Journal,
For bond calls and mandatory puts, Star Bank utilizes SEI's Bond Source,
Kenny Information Systems, Standard & Poor's Corporation, and DTC Important
Notices. Star Bank will not notify clients of optional put opportunities.
Any securities delivered free to Star Bank or its agents must be
received three (3) business days prior to any payment or settlement in order for
the Star Bank standards of service to apply.
Should you have any questions regarding the information contained in
this guide, please feel free to contact your account representative.
The information contained in this Standards of Service Guide is subject to
change. Should any changes be made Star Bank will provide you with an updated
copy of its Standards of Service Guide.
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Part C
Exhibit (8) (b)
Star Bank, N.A.
Domestic Custody Fee Schedule for Bank and Insurance Fund
Star Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following schedule:
Portfolio Transaction Fees:
<TABLE>
<S> <C>
(a) For each repurchase agreement transaction $ 7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve $ 9.00
(c) For each portfolio transaction processed
through our New York Custodian $ 25.00
(d) For each GNMA/Amortized Security Purchase $ 16.00
(e) For each GNMA Print/Int Paydown, GNMA Sales $ 8.00
(f) For each option /future contract written,
exercised or expired $ 40.00
(g) For each Cedel/Euro clear transaction $ 80.00
(h) For each Disbursement (Fund expenses only) $ 5.00
</TABLE>
A transaction is a purchase /sale of a security, free receipt /free delivery
(excludes initial conversion), maturity, tender or exchange:
II. Market Value Fee *
Based upon an annual rate of: Million
.0003(3 Basis Points) on First $ 20
.0002(2 Basis Points) on Next $ 20
.00010(1.0 Basis Point) on Balance
III. Monthly Minimum Fee-Per Fund $ 300.00
----------------------------
IV. Out-of-Pocket Expenses
The only out-of-pocket expenses charged to your account will be shipping
fees or transfer fees.
V. Earnings Credit
On a monthly basis any earnings credits generated from uninvested
custody balances will be applied against any cash management services
fees generated. Earnings credits are based on a Cost of Funds Tiered
Earnings Credit Rate.
* It is agreed that for the first year of operation, Star Bank will reduce the
market value fee (Section II) of the Custody Fee Schedule by 25%. In addition,
the minimum annual fee will be reduced for the first year of operation by 15%.
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<PAGE> 1
Part C
Exhibit (9) (a)
Bowes Investment Trust
Bank and Insurance Fund
ADMINISTRATION AGREEMENT
AGREEMENT dated as of February 3, 1998 between Bowes Investment Trust
(the "Trust"), a Delaware business trust, and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to serve
as its administrative agent; and
WHEREAS, Countrywide wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities and
Exchange Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by
Board of Trustees' resolutions approving such forms;
F. Such other certificates, documents or opinions which Countrywide
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties;
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G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or
withdrawal plans which are offered or may be offered in the
future by the Trust and for which Countrywide is to act as plan
agent.
3. TRUST ADMINISTRATION.
Subject to the direction and control of the Trustees of the
Trust, Countrywide shall supervise the Trust's business affairs not otherwise
supervised by other agents of the Trust. To the extent not otherwise the primary
responsibility of, or provided by, other agents of the Trust, Countrywide shall
supply (i) office facilities, (ii) internal auditing and regulatory services,
and (iii) executive and administrative services. Countrywide shall coordinate
the preparation of (i) tax returns, (ii) reports to shareholders of the Trust,
(iii) reports to and filings with the SEC and state securities authorities
including preliminary and definitive proxy materials, post-effective amendments
to the Trust's registration statement, and the Trust's Form N-SAR, and (iv)
necessary materials for Board of Trustees' meetings unless prepared by other
parties under agreement with the Trust. Countrywide shall provide personnel to
serve as officers of the Trust if so elected by the Board of Trustees; provided,
however, that the Trust shall reimburse Countrywide for the reasonable
out-of-pocket expenses incurred by such personnel in attending Board of
Trustees' meetings and shareholders' meetings of the Trust.
4. RECORDKEEPING AND OTHER INFORMATION.
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
5. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
6. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee at the annual rate of .10% of
its average daily net assets up to $25 million; .075% of such assets from $25 to
$50 million; and .05% of such assets in excess of $50 million; provided,
however, that the minimum fee shall be $1,000 per month with respect to each
series.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
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<PAGE> 3
The parties hereto acknowledge and agree that nothing contained
herein shall be construed to require Countrywide to perform any services for the
Trust which services could cause Countrywide to be deemed an "investment
adviser" of the Trust within the meaning of Section 2(a)(20) of the 1940 Act or
to supersede or contravene the Trust's prospectus or statement of additional
information or any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the accuracy of
information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
8. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which contains
any reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
9. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required by the 1940
Act and the rules thereunder, neither Countrywide nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any other matter
to which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
the duties of Countrywide under this Agreement or by reason of reckless
disregard by any of such persons of the obligations and duties of Countrywide
under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii)
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<PAGE> 4
any action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
10. INDEMNIFICATION OF THE TRUST.
Notwithstanding any other provision of this Agreement,
Countrywide shall indemnify and hold harmless the Trust, its trustees, officers,
employees, shareholders, agents, control persons and affiliates, from and
against any and all claims, demands, expenses and liabilities (whether with or
without basis in fact or law) of any and every nature which the Trust may
sustain or incur or which may be asserted against the Trust by any person by
reason of, or as a result of, Countrywide's gross negligence, willful
misconduct, bad faith or reckless disregard of its duties hereunder.
11. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two years from that date
and shall continue in force from year to year thereafter, but only so long as
such continuance is approved (1) by Countrywide, (2) by vote, cast in person at
a meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
12. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
13. LIMITATION OF LIABILITY.
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It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
14. SEVERABILITY.
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
15. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the SEC issued pursuant to said 1940 Act. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
16. NOTICES.
All notices, requests, consents and other communications required
or permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Bowes Investment Trust
4520 East West Highway, Suite 540
Bethesda, Maryland 20814
Attention: Robert Bowes
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 16. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
17. AMENDMENT.
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This Agreement may not be amended or modified except by a written
agreement executed by both parties.
18. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that he
has the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
19. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
20. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
21. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BOWES INVESTMENT TRUST
By: /s/ Robert B. Bowes
Robert B. Bowes
Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
Robert G. Dorsey
President
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Part C
Exhibit (9) (b)
Bowes Investment Trust
Bank and Insurance Fund
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of February 3, 1998 between Bowes Investment Trust
(the "Trust"), a Delaware business trust, and Countrywide Trust Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to serve
as its transfer, dividend disbursing, shareholder service and plan agent; and
WHEREAS, Countrywide wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing
the original issue of its shares;
B. Each Registration Statement filed with the Securities and
Exchange Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and
Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Countrywide;
E. Specimens of all new forms of share certificates accompanied by
Board of Trustees' resolutions approving such forms;
F. Such other certificates, documents or opinions which Countrywide
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
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H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or
withdrawal plans which are offered or may be offered in the
future by the Trust and for which Countrywide is to act as plan
agent.
3. COUNTRYWIDE TO RECORD SHARES.
Countrywide shall record the issuance of shares of the Trust and
maintain pursuant to applicable rules of the SEC a record of the total number of
shares of the Trust which are authorized, issued and outstanding, based upon
data provided to it by the Trust. Countrywide shall also provide the Trust on a
regular basis or upon reasonable request the total number of shares which are
authorized, issued and outstanding, but shall have no obligation when recording
the issuance of the Trust's shares, except as otherwise set forth herein, to
monitor the issuance of such shares or to take cognizance of any laws relating
to the issue or sale of such shares, which functions shall be the sole
responsibility of the Trust.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon surrender
to Countrywide of certificates, if any, in proper form for transfer, Countrywide
shall approve such transfer and shall take all necessary steps to effectuate the
transfer as indicated in the transfer request. Upon approval of the transfer,
Countrywide shall notify the Trust in writing of each such transaction and shall
make appropriate entries on the shareholder records maintained by Countrywide.
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificates and an
investor requests a share certificate, Countrywide will countersign and mail, by
insured first class mail, a share certificate to the investor at his address as
set forth on the transfer books of the Trust, subject to any other instructions
for delivery of certificates representing newly purchased shares and subject to
the limitation that no certificates representing newly purchased shares shall be
mailed to the investor until the cash purchase price of such shares has been
collected and credited to the account of the Trust maintained by the Custodian.
The Trust shall supply Countrywide with a sufficient supply of blank share
certificates and from time to time shall renew such supply upon request of
Countrywide. Such blank share certificates shall be properly signed, manually
or, if authorized by the Trust, by facsimile; and notwithstanding the death,
resignation or removal of any officers of the Trust authorized to sign share
certificates, Countrywide may continue to countersign certificates which bear
the manual or facsimile signature of such officer until otherwise directed by
the Trust. In case of the alleged loss or destruction of any share certificate,
no new certificates shall be issued in lieu thereof, unless there shall first be
furnished an appropriate bond satisfactory to Countrywide and the Trust, and
issued by a surety company satisfactory to Countrywide and the Trust.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or endorsed
to it as agent for, or identified as being for the account of, the Trust,
Countrywide shall stamp the check or instrument with the date of receipt,
determine the amount thereof due the Trust and shall forthwith process the same
for collection. Upon receipt of notification of receipt of funds eligible for
share purchases in accordance with the Trust's then current prospectus and
statement of additional information, Countrywide
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shall notify the Trust, at the close of each business day, in writing of the
amount of said funds credited to the Trust and deposited in its account with the
Custodian.
7. PURCHASE ORDERS.
Upon receipt of an order for the purchase of shares of the Trust,
accompanied by sufficient information to enable Countrywide to establish a
shareholder account, Countrywide shall, as of the next determination of net
asset value after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the shareholder and/or
dealer of record a notice of such credit when requested to do so by the Trust.
8. RETURNED CHECKS.
In the event that Countrywide is notified by the Trust's
Custodian that any check or other order for the payment of money is returned
unpaid for any reason, Countrywide will:
A. Give prompt notification to the Trust of the non-payment of said
check;
B. In the absence of other instructions from the Trust, take such
steps as may be necessary to redeem any shares purchased on the basis of such
returned check and cause the proceeds of such redemption plus any dividends
declared with respect to such shares to be credited to the account of the Trust
and to request the Trust's Custodian to forward such returned check to the
person who originally submitted the check; and
C. Notify the Trust of such actions and correct the Trust's records
maintained by Countrywide pursuant to this Agreement.
9. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish Countrywide with appropriate evidence of
actions of the Board of Trustees authorizing the declaration of dividends and
other distributions. Countrywide shall establish procedures in accordance with
the Trust's then current prospectus and statement of additional information and
with other authorized actions of the Trust's Board of Trustees under which it
will have available from the Custodian or the Trust any required information for
each dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, Countrywide shall, as agent for each
shareholder who so requests, invest the dividends and other distributions in
full and fractional shares in accordance with the Trust's then current
prospectus and statement of additional information. If a shareholder has elected
to receive dividends or other distributions in cash, then Countrywide shall
disburse dividends to shareholders of record in accordance with the Trust's then
current prospectus and statement of additional information. Countrywide shall,
on or before the mailing date of such checks, notify the Trust and the Custodian
of the estimated amount of cash required to pay such dividend or distribution,
and the Trust shall instruct the Custodian to make available sufficient funds
therefor in the appropriate account of the Trust. Countrywide shall mail to the
shareholders periodic statements, as requested by the Trust, showing the number
of full and fractional shares and the net asset value per share of shares so
credited. When requested by the Trust, Countrywide shall prepare and file with
the Internal Revenue Service, and when required, shall address and mail
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to shareholders, such returns and information relating to dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed by applicable laws, rules and regulations.
10. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
Countrywide shall, at least annually, furnish in writing to the
Trust the names and addresses, as shown in the shareholder accounts maintained
by Countrywide, of all shareholders for which there are, as of the end of the
calendar year, dividends, distributions or redemption proceeds for which checks
or share certificates mailed in payment of distributions have been returned.
Countrywide shall use its best efforts to contact the shareholders affected and
to follow any other written instructions received from the Trust concerning the
disposition of any such unclaimed dividends, distributions or redemption
proceeds.
11. REDEMPTIONS AND EXCHANGES.
A. Countrywide shall process, in accordance with the Trust's then
current prospectus and statement of additional information, each order for the
redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Trust, shall mail to
the shareholder and/or dealer of record a confirmation showing trade date,
number of full and fractional shares redeemed, the price per share and the total
redemption proceeds. For each such redemption, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Trust and signature by an authorized officer of Countrywide and mail the checks
to the appropriate person, or (b) in the event redemption proceeds are to be
wired through the Federal Reserve Wire System or by bank wire, cause such
proceeds to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Trust's Board of Trustees or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Trust and accepted by Countrywide. If Countrywide or the Trust
determines that a request for redemption does not comply with the requirements
for redemptions, Countrywide shall promptly notify the shareholder indicating
the reason therefor.
B. If shares of the Trust are eligible for exchange with shares of
any other investment company, Countrywide, in accordance with the then current
prospectus and statement of additional information and exchange rules of the
Trust and such other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests and shall, on
behalf of the Trust's shareholders, process such approved exchange requests.
C. Countrywide shall notify the Trust and the Custodian on each
business day of the amount of cash required to meet payments made pursuant to
the provisions of this Paragraph 11, and, on the basis of such notice, the
Trust shall instruct the Custodian to make available from time to time
sufficient funds therefor in the appropriate account of the Trust. Procedures
for effecting redemption orders accepted from shareholders or dealers of record
by telephone or other methods shall be established by mutual agreement between
Countrywide and the Trust consistent with the Trust's then current prospectus
and statement of additional information.
D. The authority of Countrywide to perform its responsibilities
under Paragraph 7, Paragraph 9, and this Paragraph 11 shall be suspended with
respect to
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any series of the Trust upon receipt of notification by it of the suspension of
the determination of such series' net asset value.
12. AUTOMATIC WITHDRAWAL PLANS.
Countrywide will process automatic withdrawal orders pursuant to
the provisions of the withdrawal plans duly executed by shareholders and the
current prospectus and statement of additional information of the Trust.
Payments upon such withdrawal order shall be made by Countrywide from the
appropriate account maintained by the Trust with the Custodian on approximately
the last business day of each month in which a payment has been requested, and
Countrywide will withdraw from a shareholder's account and present for
repurchase or redemption as many shares as shall be sufficient to make such
withdrawal payment pursuant to the provisions of the shareholder's withdrawal
plan and the current prospectus and statement of additional information of the
Trust. From time to time on new automatic withdrawal plans a check for a payment
date already past may be issued upon request by the shareholder.
13. WIRE-ORDER PURCHASES.
Countrywide will send written confirmations to the dealers of
record containing all details of the wire-order purchases placed by each such
dealer by the close of business on the business day following receipt of such
orders by Countrywide. Upon receipt of any check drawn or endorsed to the Trust
(or Countrywide, as agent) or otherwise identified as being payment of an
outstanding wire-order, Countrywide will stamp said check with the date of its
receipt and deposit the amount represented by such check to Countrywide's
deposit accounts maintained with the Custodian. Countrywide will cause the
Custodian to transfer federal funds in an amount equal to the net asset value of
the shares so purchased to the Trust's account with the Custodian and will
notify the Trust before noon of each business day of the total amount deposited
in the Trust's deposit accounts, and in the event that payment for a purchase
order is not received by Countrywide or the Custodian on the tenth business day
following receipt of the order, prepare an NASD "notice of failure of dealer to
make payment."
14. OTHER PLANS.
Countrywide will process such accumulation plans, group programs
and other plans or programs for investing in shares of the Trust as are now
provided for in the Trust's current prospectus and statement of additional
information and will act as plan agent for shareholders pursuant to the terms of
such plans and programs duly executed by such shareholders.
15. RECORDKEEPING AND OTHER INFORMATION.
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
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16. SHAREHOLDER RECORDS.
Countrywide shall maintain records for each shareholder account
showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each shareholder,
including dividends and distributions in cash or invested in
shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term gains
and realized long-term gains;
F. Any instructions from a shareholder including all forms furnished
by the Trust and executed by a shareholder with respect to (i)
dividend or distribution elections and (ii) elections with
respect to payment options in connection with the redemption of
shares;
G. Any correspondence relating to the current maintenance of a
shareholder's account;
H. Certificate numbers and denominations for any shareholder holding
certificates;
I. Any stop or restraining order placed against a shareholder's
account;
J. Information with respect to withholding in the case of a foreign
account or any other account for which withholding is required by
the Internal Revenue Code of 1986, as amended; and
K. Any information required in order for Countrywide to perform the
calculations contemplated under this Agreement.
17. TAX RETURNS AND REPORTS.
Countrywide will prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies and, if required, mail
to shareholders of the Trust such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
18. OTHER INFORMATION TO THE TRUST.
Subject to such instructions, verification and approval of the
Custodian and the Trust as shall be required by any agreement or applicable law,
Countrywide will also maintain such records as shall be necessary to furnish to
the Trust the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
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19. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, Countrywide shall arrange for the Trust's
investment adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
20. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
21. SHAREHOLDER SERVICE AND CORRESPONDENCE.
Countrywide will provide and maintain adequate personnel, records
and equipment to receive and answer all shareholder and dealer inquiries
relating to account status, share purchases, redemptions and exchanges and other
investment plans available to Trust shareholders. Countrywide will answer
written correspondence from shareholders relating to their share accounts and
such other written or oral inquiries as may from time to time be mutually agreed
upon, and Countrywide will notify the Trust of any correspondence or inquiries
which may require an answer from the Trust.
22. PROXIES.
Countrywide shall assist the Trust in the mailing of proxy cards
and other material in connection with shareholder meetings of the Trust, shall
receive, examine and tabulate returned proxies and shall, if requested by the
Trust, provide at least one inspector of election to attend and participate as
required by law in shareholder meetings of the Trust.
23. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
24. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee in accordance with the
schedule attached hereto as Schedule A. The Trust shall promptly reimburse
Countrywide for any out-of-pocket expenses and advances which are to be paid by
the Trust in accordance with Paragraph 25.
25. EXPENSES.
Countrywide shall furnish, at its expense and without cost to the
Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) use of data
processing equipment. All costs and expenses not expressly assumed by
Countrywide under this Paragraph 25 shall be paid by the Trust, including, but
not limited to, costs and expenses of officers and employees of Countrywide in
attending meetings of the Board
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of Trustees and shareholders of the Trust, as well as costs and expenses for
postage, envelopes, checks, drafts, continuous forms, reports, communications,
statements and other materials, telephone, telegraph and remote transmission
lines, use of outside mailing firms, necessary outside record storage, media for
storage of records (e.g., microfilm, microfiche, computer tapes), printing,
confirmations and any other shareholder correspondence and any and all
assessments, taxes or levies assessed on Countrywide for services provided under
this Agreement. Postage for mailings of dividends, proxies, reports and other
mailings to all shareholders shall be advanced to Countrywide three business
days prior to the mailing date of such materials.
26. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing contained
herein shall be construed to require Countrywide to perform any services for the
Trust which services could cause Countrywide to be deemed an "investment
adviser" of the Trust within the meaning of Section 2(a)(20) of the 1940 Act or
to supersede or contravene the Trust's prospectus or statement of additional
information or any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the accuracy of
information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
27. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which contains
any reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
28. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
29. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required by the 1940
Act and the rules thereunder, neither Countrywide nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any other matter
to which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
the duties of Countrywide under this Agreement or by reason of reckless
disregard by any of such persons of the obligations and duties of Countrywide
under this Agreement.
B. Any person, even though also a trustee, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer,
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trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust, to be rendering
such services to or acting solely as an officer, trustee, employee or agent of
the Trust and not as a trustee, officer, employee, shareholder or agent of or
one under the control or direction of Countrywide or any of its affiliates, even
though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
30. INDEMNIFICATION OF THE TRUST.
Notwithstanding any other provision of this Agreement,
Countrywide shall indemnify and hold harmless the Trust, its trustees, officers,
employees, shareholders, agents, control persons and affiliates, from and
against any and all claims, demands, expenses and liabilities (whether with or
without basis in fact or law) of any and every nature which the Trust may
sustain or incur or which may be asserted against the Trust by any person by
reason of, or as a result of, Countrywide's gross negligence, willful
misconduct, bad faith or reckless disregard of its duties hereunder.
31. TERMINATION
A. The provisions of this Agreement shall be effective on the date
first above written, shall continue in effect for two years from that date and
shall continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Countrywide, (2) by vote, cast in person at a
meeting called for that purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940
Act) of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving
the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due,
and shall likewise reimburse Countrywide for any out-of-pocket expenses and
disbursements reasonably incurred by Countrywide to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is
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designated by the Trust by written notice to Countrywide, Countrywide shall,
promptly upon such termination and at the expense of the Trust, transfer all
records maintained by Countrywide under this Agreement and shall cooperate in
the transfer of such duties and responsibilities, including providing for
assistance from Countrywide's cognizant personnel in the establishment of books,
records and other data by such successor.
32. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
33. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
34. SEVERABILITY.
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
35. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the SEC issued pursuant to said 1940 Act. In addition, where the
effect of a requirement of the 1940 Act, reflected in any provision of this
Agreement, is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
36. NOTICES.
All notices, requests, consents and other communications required
or permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Bowes Investment Trust
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4520 East West Highway, Suite 540
Bethesda, Maryland 20814
Attention: Robert Bowes
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 36. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
37. AMENDMENT.
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
38. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that he
has the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
39. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
40. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
41. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BOWES INVESTMENT TRUST
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By: /s/ Robert B. Bowes
Robert B. Bowes
Chairman
COUNTRYWIDE FUND SERVICES, INC.
By: /s/ Robert G. Dorsey
Robert G. Dorsey
President
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Bowes Investment Trust
Bank and Insurance Fund
Schedule A
COMPENSATION
As Transfer, Dividend Disbursing and
Shareholder Service Agent
Bank and Insurance Fund: Payable monthly at a rate
of $20/account per year; subject to minimum of
$1,500 per month
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Part C
Exhibit (9) (c)
Bowes Investment Trust
Bank and Insurance Fund
ACCOUNTING SERVICES AGREEMENT
AGREEMENT dated as of February 3, 1998 between Bowes Investment Trust
(the "Trust"), a Delaware business trust, and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
provide the Trust with certain accounting and pricing services; and
WHEREAS, Countrywide wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. CALCULATION OF NET ASSET VALUE.
Countrywide will calculate the net asset value of the Trust and
the per share net asset value of each series of the Trust, in accordance with
the Trust's current prospectus and statement of additional information, once
daily as of the time selected by the Trust's Board of Trustees. Countrywide will
prepare and maintain a daily valuation of all securities and other assets of the
Trust in accordance with instructions from a designated officer of the Trust or
its investment adviser and in the manner set forth in the Trust's current
prospectus and statement of additional information. In valuing securities of the
Trust, Countrywide may contract with, and rely upon market quotations provided
by, outside services.
3. BOOKS AND RECORDS.
Countrywide will maintain and keep current the general ledger for
each series of the Trust, recording all income and expenses, capital share
activity and security transactions of the Trust. Countrywide will maintain such
further books and records as are necessary to enable it to perform its duties
under this Agreement, and will periodically provide reports to the Trust and its
authorized agents regarding share purchases and redemptions and trial balances
of each series of the Trust. Countrywide will prepare and maintain complete,
accurate and current all records with respect to the Trust required to be
maintained by the Trust under the Internal Revenue Code of 1986, as amended, and
under the rules and regulations of the 1940 Act, and will preserve said records
in the manner and for the periods prescribed in the Code and the 1940 Act. The
retention of such records shall be at the expense of the Trust.
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All of the records prepared and maintained by Countrywide pursuant to
this Section 3 which are required to be maintained by the Trust under the Code
and the 1940 Act will be the property of the Trust. In the event this Agreement
is terminated, all such records shall be delivered to the Trust at the Trust's
expense, and Countrywide shall be relieved of responsibility for the preparation
and maintenance of any such records delivered to the Trust.
4. PAYMENT OF TRUST EXPENSES.
Countrywide shall process each request received from the Trust or
it's authorized agents for payment of the Trust's expenses. Upon receipt of
written instructions signed by an officer or other authorized agent of the
Trust, Countrywide shall prepare checks in the appropriate amounts which shall
be signed by an authorized officer of Countrywide and mailed to the appropriate
party.
5. FORM N-SAR.
Countrywide shall maintain such records within its control and
shall be requested by the Trust to assist the Trust in fulfilling the
requirements of Form N-SAR.
6. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
7. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
8. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide a monthly fee in
accordance with the schedule attached hereto as Schedule A. The fees with
respect to any month shall be paid to Countrywide on the last business day of
such month. The Trust shall also promptly reimburse Countrywide for the cost of
external pricing services utilized by Countrywide.
9. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing contained
herein shall be construed to require Countrywide to perform any services for the
Trust which services could cause Countrywide to be deemed an "investment
adviser" of the Trust within the meaning of Section 2(a)(20) of the 1940 Act or
to supersede or contravene the Trust's prospectus or statement of additional
information or any provisions of the 1940 Act and the rules thereunder. Except
as otherwise provided in this Agreement and except for the accuracy of
information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
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<PAGE> 3
10. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which contains
any reference to Countrywide without the prior written approval of Countrywide,
excepting solely such printed matter as merely identifies Countrywide as
Administrative Services Agent, Transfer, Shareholder Servicing and Dividend
Disbursing Agent and Accounting Services Agent. The Trust will submit printed
matter requiring approval to Countrywide in draft form, allowing sufficient time
for review by Countrywide and its counsel prior to any deadline for printing.
11. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or avoid
service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
12. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it
to be accurate and reliable. Except as may otherwise be required by the 1940
Act and the rules thereunder, neither Countrywide nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of judgment, mistake
of law, any act or omission connected with or arising out of any services
rendered under or payments made pursuant to this Agreement or any other matter
to which this Agreement relates, except by reason of willful misfeasance, bad
faith or gross negligence on the part of any such persons in the performance of
the duties of Countrywide under this Agreement or by reason of reckless
disregard by any of such persons of the obligations and duties of Countrywide
under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder, or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of those entities.
C. Notwithstanding any other provision of this Agreement, the Trust
shall indemnify and hold harmless Countrywide, its directors, officers,
employees, shareholders, agents, control persons and affiliates from and against
any and all claims, demands, expenses and liabilities (whether with or without
basis in fact or law) of any and every nature which Countrywide may sustain or
incur or which may be asserted against Countrywide by any person by reason of,
or as a result of: (i) any action taken or omitted to be taken by Countrywide in
good faith in reliance upon any certificate, instrument, order or share
certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees,
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<PAGE> 4
shareholders or agents in cases of its or their own gross negligence, willful
misconduct, bad faith, or reckless disregard of its or their own duties
hereunder.
13. INDEMNIFICATION OF THE TRUST.
Notwithstanding any other provision of this Agreement,
Countrywide shall indemnify and hold harmless the Trust, its trustees, officers,
employees, shareholders, agents, control persons and affiliates, from and
against any and all claims, demands, expenses and liabilities (whether with or
without basis in fact or law) of any and every nature which the Trust may
sustain or incur or which may be asserted against the Trust by any person by
reason of, or as a result of, Countrywide's gross negligence, willful
misconduct, bad faith, or reckless disregard of its duties hereunder.
14. TERMINATION.
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two years from that date
and shall continue in force from year to year thereafter, but only so long as
such continuance is approved (1) by Countrywide, (2) by vote, cast in person at
a meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of this
Agreement a successor to any of Countrywide's duties or responsibilities under
this Agreement is designated by the Trust by written notice to Countrywide,
Countrywide shall, promptly upon such termination and at the expense of the
Trust, transfer all records maintained by Countrywide under this Agreement and
shall cooperate in the transfer of such duties and responsibilities, including
provision for assistance from Countrywide's cognizant personnel in the
establishment of books, records and other data by such successor.
15. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
16. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of
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the Trust and signed by an officer of the Trust, acting as such, and neither
such authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the trust
property of the Trust.
17. SEVERABILITY.
In the event any provision of this Agreement is determined to be
void or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
18. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Ohio. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act shall be resolved by reference to such term or provision of the 1940
Act and to interpretations thereof, if any, by the United States Courts or in
the absence of any controlling decision of any such court, by rules, regulations
or orders of the Securities and Exchange Commission issued pursuant to said 1940
Act. In addition, where the effect of a requirement of the 1940 Act, reflected
in any provision of this Agreement, is revised by rule, regulation or order of
the Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
19. NOTICES.
All notices, requests, consents and other communications required
or permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Bowes Investment Trust
4520 East West Highway, Suite 540
Bethesda, Maryland 20814
Attention: Robert Bowes
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 19. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
20. AMENDMENT.
This Agreement may not be amended or modified except by a written
agreement executed by both parties.
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21. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that he
has the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
22. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
23. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services or
prevented entirely or in part from performing services due to causes or events
beyond its control, including and without limitation, acts of God, interruption
of power or other utility, transportation or communication services, acts of
civil or military authority, sabotages, national emergencies, explosion, flood,
accident, earthquake or other catastrophe, fire, strike or other labor problems,
legal action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
24. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BOWES INVESTMENT TRUST
By: /s/ Robert B. Bowes
Robert B. Bowes
Chairman
COUNTRYWIDE FUND SERVICES,INC.
By: /s/ Robert G. Dorsey
Robert G. Dorsey
President
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<PAGE> 7
Bowes Investment Trust
Bank and Insurance Fund
Schedule A to Accounting Services Agreement
COMPENSATION
Each series of the Trust will pay Countrywide a monthly fee according to
the average net assets of such series during such month, as follows:
<TABLE>
<CAPTION>
Monthly Fee Average Net Assets During Month
----------- -------------------------------
<S> <C>
$2,000 $ 0 - $ 50,000,000
$2,500 $ 50,000,000 - $100,000,000
$3,000 $100,000,000 - $200,000,000
$4,000 $200,000,000 - $300,000,000
$5,000 + .001% Over $300,000,000
per annum of average
net assets in excess
of $300,000,000
</TABLE>
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<PAGE> 1
Part C
Exhibit (10)
SULLIVAN & WORCESTER LLP
1025 Connecticut Avenue, N.W.
Washington, D.C. 20036
Opinion of Independent Legal Counsel
February 3, 1998
Bowes Investment Trust
4520 East West Highway
Suite 540
Bethesda, Maryland 20814
Registration Statement of
Bowes Investment Trust
Gentlemen:
You have requested our opinion with respect to certain matters of Delaware law
in connection with the registration statement on Form N-1A (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act")
of Bowes Investment Trust (the "Trust") in connection with the registration
under the Securities Act of an indefinite number of shares of beneficial
interest of the Trust authorized by the Trust's Agreement and Declaration of
Trust to be issued (the "Shares").
We have reviewed the actions taken by the Trustees of the Trust to organize the
Trust and to authorize the issuance and sale of the Shares. In this connection
we have examined the Agreement and Declaration of Trust and By-Laws of the
Trust, the Registration Statement of the Trust to be filed with the Securities
and Exchange Commission on February 4, 1998, including the prospectus and
statement of additional information forming a part thereof, certificates of
officers of the Trust and of public officials as to matters of fact, and such
other documents and instruments, certified or otherwise identified to our
satisfaction, and such questions of law and fact, as we have considered
necessary or appropriate for the purpose of rendering the opinions expressed
herein. In such examination we have assumed, without independent verification,
the genuineness of all signatures (whether original or photostatic), the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as certified or
photostatic copies. As to all questions of fact material to such opinions, we
have relied upon the representations contained in the certificates referred to
above. We have assumed, without independent verification, the accuracy of the
relevant facts stated therein.
We are admitted to the Bars of The Commonwealth of Massachusetts, the State of
New York and the District of Columbia and generally do not purport to be
familiar with the laws of the State of Delaware. To the extent that the
conclusions based on the laws of the State of Delaware are involved in the
opinions set forth herein below, we have relied, in rendering such opinions,
upon our examination of Chapter 38 of Title
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<PAGE> 2
12 of the Delaware Code Annotated, as amended, entitled "Treatment of Delaware
Business Trusts" (the "Delaware business trust law") and on our knowledge of
interpretation of analogous common law of The Commonwealth of Massachusetts.
This letter expresses our opinion as to the provisions of the Trust's Agreement
and Declaration of Trust, but does not extend to the Delaware Uniform Securities
Act, or to other federal or state securities laws or other federal laws.
Based upon the foregoing and subject to the qualifications set forth herein, we
hereby advise you that, in our opinion:
1. The Trust is validly existing as a trust with transferable shares under the
laws of the State of Delaware.
2. The Trust is authorized to issue an unlimited number of shares of beneficial
interest, $.001 par value per share; the Shares have been duly and validly
authorized by all action of the Trustees of the Trust, and no action of the
shareholders of the Trust is required in such connection.
3. When issued and paid for as described in the Registration Statement, the
Shares will be fully paid and nonassessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder.
Very truly yours,
SULLIVAN & WORCESTER LLP
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<PAGE> 1
Part C
Exhibit (11)
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Registration Statement of our report dated February 3, 1998 and to all
references to our Firm included in or made a part of this Registration
Statement.
ARTHUR ANDERSEN LLP
Cincinnati, Ohio,
February 3, 1998
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<PAGE> 1
Part C
Exhibit (13)
Bowes Investment Trust
Bank and Insurance Fund
February 3, 1998
SUBSCRIPTION AGREEMENT
BOWES INVESTMENT TRUST, a business trust organized under the laws of the State
of Delaware (the "Trust") and currently consisting of one series portfolio,
namely, Bowes Bank and Insurance Fund (the "Fund") and Bowes Funds, LLC, a
limited liability company organized under the laws of the State of Maryland (the
"Purchaser"), hereby agree with each other as follows:
1. Proposed Registration of Shares of Beneficial Interest. The Trust and
the Fund propose to issue and sell to the public shares of beneficial interest
("Shares") pursuant to a registration statement on Form N-1A (the "Registration
Statement") to be filed with the Securities and Exchange Commission. In order
to provide the Trust with a net worth of at least $100,000 as required by
Section 14 of the Investment Company Act of 1940, as amended, and additional
capitalization, the Trust hereby offers to purchase at private placement 10,000
Shares of the Trust representing 10,000 Shares of the Fund at a price of $10.00
per share for purchase prior to the effective date of the Registration
Statement.
2. Purchase of Shares. The Purchaser agrees to purchase 10,000 Shares on
such date as the parties may agree upon. The Shares will be purchased at the
purchase price of $10.00 per share. The Purchaser will make payment for the
10,000 Shares to be purchased by wire to the Trust's custodian bank.
3. Purchase for Investment. The Purchaser represents and warrants to the
Trust that the Shares are being acquired by it for investment and not with a
view to the resale or further distribution thereof and that it has no present
intention to redeem the Shares.
4. Execution. This instrument is executed and made on behalf of the Trust
and the Fund by an officer of the Trust. The name Bowes Investment Trust is the
designation of the Trustees under the Declaration of Trust, dated February 3,
1998, as amended from time to time. A Certificate of Trust has been filed with
the Secretary of State of the State of Delaware. The obligations of the Trust
are not personally binding upon, nor shall resort be had to the private
property of, any of the Trustees, shareholders, officers, employees, or agents
of the Trust or the Funds, but the Trust's property only shall be bound.
5. Assignment. The right of the Purchaser to purchaser the Shares as set
forth herein is not assignable without the consent of the Trust.
6. Notices, etc. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to have been sufficiently given if
mailed by first-class mail and addressed as follows:
To the Trust: 4520 East West Highway, Suite 540
Bethesda, Maryland 20814
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<PAGE> 2
To the Purchaser: 4520 East West Highway, Suite 540
Bethesda, Maryland 20814
or in any case to such other address as shall have been specified by notice from
the addressee to the sender of such notice, request or other communication.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of the
date first above written.
BOWES INVESTMENT TRUST
By /s/ Robert B. Bowes
Robert B. Bowes
Chairman
BOWES FUNDS, LLC
By /s/ Robert B. Bowes
Robert B. Bowes
President
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<PAGE> 1
Part C
Exhibit (15)
Bowes Investment Trust
Bank and Insurance Fund
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12b-1
WHEREAS, Bowes Investment Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware, 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 "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest without par value (the "Shares"), which may be divided
into two or more Series of Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Sections 36(a) and (b) of the 1940 Act, that there is
a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast in person at a meeting
called for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with
Rule 12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees
of the Trust, the Trust may, directly or indirectly, engage in any activities
related to the distribution of Shares, which activities may include, but are not
limited to, the following: (a) payments to securities dealers and others who are
engaged in the sale of Shares and who may be advising shareholders of the Trust
regarding the purchase, sale or retention of Shares; (b) expenses of maintaining
personnel (including personnel of organizations with which the Trust has entered
into agreements related to this Plan) who engage in or support distribution of
Shares or who render shareholder support services not otherwise provided by the
Trust's transfer agent, including, but not limited to, office space and
equipment, telephone facilities and expenses, answering routine inquiries
regarding the Trust, processing shareholder transactions, and providing such
other shareholder services as the Trust may reasonably request; (c) formulating
and implementing marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparing, printing and distributing sales
literature; (e) preparing, printing and distributing prospectuses and statements
of additional information and reports of the Trust for recipients other than
existing shareholders of the Trust; and (f) obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may, from time to time, deem advisable. The Trust is authorized to engage in the
activities listed above, and in any other activities related to the distribution
of Shares, either directly or through other persons with which the Trust has
entered into agreements related to this Plan.
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<PAGE> 2
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the Trustees of the Trust, but in no event may
such expenditures exceed in any fiscal year an amount calculated at the rate of
.25% of the average daily net asset value of any Series of the Trust. Such
payments for distribution activities may be made directly by the Trust or the
Trust's investment adviser or principal underwriter may incur such expenses and
obtain reimbursement from the Trust. Unreimbursed expenditures will not be
carried over from year to year. In the event the Plan is terminated with respect
to any Series, such Series will not be required to make any payments for
expenses incurred after the date the plan terminates.
3. Term and Termination. (a) This Plan shall become effective on the
date hereof. Unless terminated as herein provided, this Plan shall continue in
effect for one year from the date hereof and shall continue in effect for
successive periods of one year thereafter, but only so long as each such
continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Rule 12b-1 Trustees, cast in person at a
meeting called for the purpose of voting on such approval.
(b) This Plan may be terminated with respect to any Series at any time
by vote of a majority of the Rule 12b-1 Trustees or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Series.
4. Amendments. This Plan may not be amended to increase materially the
amount of a Series' expenditures provided for in Section 2 hereof unless such
amendment is approved by a vote of the majority of the outstanding voting
securities of such Series (as defined in the 1940 Act), and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust shall be committed to the discretion of
the Trustees who are not interested persons of the Trust.
6. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees and the Trustees shall review, at least quarterly, a written report of
the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreements and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
8. Limitation of Liability. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of the State of Delaware and
notice is hereby given that this Plan is executed on behalf of the Trustees of
the Trust as trustees and not individually and that the obligations of this
instrument are not binding upon the Trustees or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of
the date set forth below.
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Dated: February 3, 1998
Attest: BOWES INVESTMENT TRUST
By: /s/ Thomas I. Carocci By: /s/ Robert B. Bowes
Thomas I. Carocci Robert B. Bowes
Vice President and Secretary Chairman
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Part C
Exhibit (19) (a)
Bowes Investment Trust
Bank and Insurance Fund
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned, BOWES INVESTMENT TRUST, a
business trust organized under the laws of the State of Delaware (the "Trust"),
Bowes Bank and Insurance Fund, currently the sole series portfolio of the Trust,
and certain Trustees and officers of the Trust do hereby constitute and appoint
ROBERT B. BOWES, DAVID M. LEAHY AND JOHN F. SPLAIN and each of them
individually, their true and lawful attorneys and agents to take any and all
action and execute any and all instruments which said attorneys and agents may
deem necessary or advisable:
(i) to enable the Trust to comply with the Securities Act of
1933, as amended, and any rules, regulations, orders or other
requirements of the Securities and Exchange Commission thereunder, in
connection with the registration under such Securities Act of 1933 of
shares of beneficial interest of the Trust and
(ii) in connection with the registration of the Trust under the
Investment Company Act of 1940, as amended,
including specifically, but without limitation of the foregoing, power and
authority to sign the name of the Trust in its behalf and to sign the names of
each of such Trustees and officers in his behalf, to any amendment or supplement
(including post-effective amendments) to the registration statement or
statements filed with the Securities and Exchange Commission under such
Securities Act of 1933 and such Investment Company Act of 1940, and to execute
any instruments or documents filed or to be filed as a part of or in connection
with such registration statement or statements; and each of the undersigned
hereby ratifies and confirms all that said attorneys and agents shall do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Trust has caused these presents to be signed by its
Chairman, and the same attested to, and each of the undersigned has set his hand
hereto as of the date set forth below.
BOWES INVESTMENT TRUST
By /s/ Robert B. Bowes
Robert B. Bowes
Chairman of the Board
and President
/s/ Robert B. Bowes /s/ Louis M. Marmon
- ---------------------------- --------------------------
Robert B. Bowes Louis M. Marmon
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Trustee Trustee
/s/ Harry M. K. Johnston /s/ Thomas P.F. Kiely
- ---------------------------- -------------------------
Harry M. K. Johnston Thomas P. F. Kiely
Trustee Trustee
DATE: February 3, 1998
Attest: /s/ Thomas I. Carocci
Thomas I. Carocci
Vice President and Secretary
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<PAGE> 1
Part C
Exhibit (19) (b)
Bowes Investment Trust
Bank and Insurance Fund
CONSENTS OF PERSONS TO SERVE AS TRUSTEES
The undersigned person is named as a Trustee of Bowes Investment Trust
in the Statement of Additional Information filed by such Trust under the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended, and hereby consents to the use of his name in such Statement of
Additional Information.
/s/ Robert B. Bowes
Robert B. Bowes
/s/ Harry M.K. Johnston
Harry M.K. Johnston
/s/ Louis M. Marmon
Louis M. Marmon
/s/ Thomas P.F. Kiely
Thomas P.F. Kiely
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<PAGE> 1
Part C
(b) Exhibit (1)
AGREEMENT AND DECLARATION OF TRUST
Of
BOWES INVESTMENT TRUST
a Delaware Business Trust
Principal Place of Business:
4520 East West Highway Suite 540
Bethesda, Maryland 20814
Agent for Service of Process in Delaware:
Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
AGREEMENT AND DECLARATION OF TRUST
<S> <C>
ARTICLE I Name and Definitions 1
1. Name 1
2. Definitions 1
(a) By-Laws 1
(b) Certificate of Trust 1
(c) Class 1
(d) Commission 2
(e) Declaration of Trust 2
(f) Delaware Act 2
(g) Interested Person 2
(h) Adviser(s) 2
(i) 1940 Act 2
(j) Person 2
(k) Principal Underwriter 2
(l) Series 2
(m) Shareholder 2
(n) Shares 2
(o) Trust 2
(p) Trust Property 2
(q) Trustees 2
ARTICLE II Purpose of Trust 3
ARTICLE III Shares 3
1. Division of Beneficial Interest 3
2. Ownership of Shares 4
3. Transfer of Shares 4
4. Investments in the Trust 5
5. Status of Shares and Limitation of Personal Liability 5
6. Establishment, Designation, Abolition or
Termination, etc. of Series or Class 5
(a) Assets Held with Respect to a Particular Series 5
(b) Liabilities Held with Respect to a Particular Series 6
(c) Dividends, Distributions, Redemptions,
and Repurchases 7
(d) Equality 7
(e) Fractions 7
(f) Exchange Privilege 7
(g) Combination of Series 7
ARTICLE IV Trustees 8
1. Number, Election, and Tenure 8
2. Effect of Death, Resignation, etc. of a Trustee 8
3. Powers 9
4. Payment of Expenses by the Trust 12
5. Payment of Expenses by Shareholders 13
6. Ownership of Assets of the Trust 13
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
7. Service Contracts 13
8. Trustees and Officers as Shareholders 14
9. Compensation 15
ARTICLE V Shareholders' Voting Powers and Meetings 15
1. Voting Powers, Meetings, Notice and Record Dates 15
2. Quorum and Required Vote 15
3. Record Dates 16
4. Additional Provisions 16
ARTICLE VI Net Asset Value, Distributions and Redemptions 16
1. Determination of Net Asset Value, Net Income
and Distributions 16
2. Redemptions and Repurchases 16
ARTICLE VII Limitation of Liability; Indemnification 17
1. Trustees, Shareholders, etc. Not Personally
Liable; Notice 17
2. Trustees' Good Faith Action; Expert Advice;
No Bond or Surety 18
3. Indemnification of Shareholders 19
4. Indemnification of Trustees, Officers, etc. 19
5. Compromise Payment 20
6. Indemnification Not Exclusive, etc. 20
7. Liability of Third Persons Dealing with Trustees 20
8. Insurance 21
ARTICLE VIII Miscellaneous
1. Termination of the Trust or Any Series or Class 21
2. Reorganization 21
3. Amendments 22
4. Filing of Copies; References; Headings 23
5. Applicable Law 23
6. Provisions in Conflict with Law or Regulations 24
7. Business Trust Only 24
</TABLE>
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AGREEMENT AND DECLARATION OF TRUST
BOWES INVESTMENT TRUST
THIS AGREEMENT AND DECLARATION OF TRUST is made and entered into as of the date
set forth below by the Trustees named hereunder for the purpose of forming a
Delaware business trust in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby direct that the Certificate of Trust be
filed with the Office of the Secretary of State of the State of Delaware and do
hereby declare that the Trustees will hold IN TRUST all cash, securities, and
other assets which the Trust now possesses or may hereafter acquire from time to
time in any manner and manage and dispose of the same upon the following terms
and conditions for the benefit of the holders of Shares of this Trust.
ARTICLE I
Name and Definitions
Section 1. Name. This Trust shall be known as Bowes Investment Trust and the
Trustees shall conduct the business of the Trust under that name or any other
name as they may from time to time determine.
Section 2. Definitions. Whenever used herein, unless otherwise required by the
context or specifically provided:
(a) "Adviser(s)" means a party or parties furnishing services to the Trust
pursuant to any investment advisory or investment management contract described
in Article IV, Section 6(a) hereof;
(b) "By-Laws" shall mean the By-Laws of the Trust as amended from time to time,
which By-Laws are expressly herein incorporated by reference as part of the
"governing instrument" within the meaning of the Delaware Act;
(c) "Certificate of Trust" means the certificate of trust, as amended or
restated from time to time, filed by the Trustees in the Office of the Secretary
of State of the State of Delaware in accordance with the Delaware Act;
(d) "Class" means a class of Shares of a Series of the Trust established in
accordance with the provisions of Article III hereof;
(e) "Commission" shall have the meaning given such term in the 1940 Act;
(f) "Declaration of Trust" means this Agreement and Declaration of Trust, as
amended or restated from time to time;
(g) "Delaware Act" means the Delaware Business Trust Act, 12 Del. C. Sections
3801 et seq., as amended from time to time;
(h) "Interested Person" shall have the meaning given it in Section 2(a)(19) of
the 1940 Act;
(i) "1940 Act" means the Investment Company Act of 1940 and the rules and
regulations thereunder, all as amended from time to time;
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(j) "Person" means and includes individuals, corporations, partnerships, trusts,
associations, joint ventures, estates, and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof,
whether domestic or foreign;
(k) "Principal Underwriter" shall have the meaning given such term in the 1940
Act;
(l) "Series" means each Series of Shares established and designated under or in
accordance with the provisions of Article III hereof; and where the context
requires or where appropriate, shall be deemed to include "Class" or "Classes";
(m) "Shareholder" means a record owner of outstanding Shares;
(n) "Shares" means the shares of beneficial interest into which the beneficial
interest in the Trust shall be divided from time to time and includes fractions
of Shares as well as whole Shares;
(o) "Trust" means the Delaware Business Trust established under the Delaware Act
by this Declaration of Trust and the filing of the Certificate of Trust in the
Office of the Secretary of State of the State of Delaware;
(p) "Trust Property" means any and all property, real or personal, tangible or
intangible, which is from time to time owned or held by or for the account of
the Trust; and
(q) "Trustees" means the Person or Persons who have signed this Declaration of
Trust and all other Persons who may from time to time be duly elected or
appointed to serve as Trustees in accordance with the provisions hereof, in each
case so long as such Person shall continue in office in accordance with the
terms of this Declaration of Trust, and reference herein to a Trustee or the
Trustees shall refer to such Person or Persons in his or her or their capacity
as Trustees hereunder.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business of an
investment company registered under the 1940 Act through one or more Series and
to carry on such other business as the Trustees may from time to time determine.
The Trustees shall not be limited by any law limiting the investments which may
be made by fiduciaries.
ARTICLE III
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the Trust
shall be divided into one or more Series. The Trustees may divide each Series
into Classes. Subject to the further provisions of this Article III and any
applicable requirements of the 1940 Act, the Trustees shall have full power and
authority, in their sole discretion, and without obtaining any authorization or
vote of the Shareholders of any Series or Class thereof, (i) to divide the
beneficial interest in each Series or Class thereof into Shares, with or without
par value as the Trustees shall determine, (ii) to issue Shares without
limitation as to number (including fractional Shares) to such Persons and for
such amount and type of consideration, including cash or securities, subject to
any restriction set forth in the By-Laws, at such time or times and on such
terms as the Trustees may deem appropriate, (iii) to
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establish and designate and to change in any manner any Series or Class thereof
and to fix such preferences, voting powers, rights, duties and privileges and
business purpose of each Series or Class thereof as the Trustees may from time
to time determine, which preferences, voting powers, rights, duties and
privileges may be senior or subordinate to (or in the case of business purpose,
different from) any existing Series or Class thereof and may be limited to
specified property or obligations of the Trust or profits and losses associated
with specified property or obligations of the Trust, (iv) to divide or combine
the Shares of any Series or Class thereof into a greater or lesser number
without thereby materially changing the proportionate beneficial interest of the
Shares of such Series or Class thereof in the assets held with respect to that
Series, (v) to classify or reclassify any issued Shares of any Series or Class
thereof into shares of one or more Series or Classes thereof; (vi) to change the
name of any Series or Class thereof; (vii) to abolish or terminate any one or
more Series or Classes thereof; (viii) to refuse to issue Shares to any Person
or class of Persons; and (ix) to take such other action with respect to the
Shares as the Trustees may deem desirable.
Subject to the distinctions permitted among Classes of the same Series as
established by the Trustees, consistent with the requirements of the 1940 Act,
each Share of a Series of the Trust shall represent an equal beneficial interest
in the net assets of such Series, and each holder of Shares of a Series shall be
entitled to receive such Shareholder's pro rata share of distributions of income
and capital gains, if any, made with respect to such Series and upon redemption
of the Shares of any Series, such Shareholder shall be paid solely out of the
funds and property of such Series of the Trust.
All references to Shares in this Declaration of Trust shall be deemed to be
Shares of any or all Series or Classes thereof, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series of
the Trust and each Class thereof, except as the context otherwise requires.
All Shares issued hereunder, including, without limitation, Shares issued in
connection with a dividend or other distribution in Shares or a split or reverse
split of Shares, shall be fully paid and nonassessable. Except as otherwise
provided by the Trustees, Shareholders shall have no preemptive or other right
to subscribe to any additional Shares or other securities issued by the Trust.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded on the
books of the Trust or those of a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Series or Class of
the Trust. No certificates certifying the ownership of Shares shall be issued
except as the Trustees may otherwise determine from time to time. The Trustees
may make such rules as they consider appropriate for the issuance of Share
certificates, the transfer of Shares of each Series or Class of the Trust and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to the
identity of the Shareholders of each Series or Class of the Trust and as to the
number of Shares of each Series or Class of the Trust held from time to time by
each Shareholder.
Section 3. Transfer of Shares. Except as otherwise provided by the Trustees,
Shares shall be transferable on the books of the Trust only by the record holder
thereof or by his or her duly authorized agent upon delivery to the Trustees or
the Trust's transfer agent of a duly executed instrument of transfer, together
with a Share certificate if one is outstanding, and such evidence of the
genuineness of each such execution and authorization and of such other matters
as may be required by the Trustees. Upon such delivery, and subject to any
further requirements specified by the Trustees or contained in the By-Laws, the
transfer shall be recorded on the books
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<PAGE> 7
of the Trust. Until a transfer is so recorded, the holder of record of Shares
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor the Trust, nor any transfer agent or registrar or any
officer, employee, or agent of the Trust, shall be affected by any notice of a
proposed transfer.
Section 4. Investments in the Trust. Investments may be accepted by the Trust
from Persons, at such times, on such terms, and for such consideration as the
Trustees from time to time may authorize.
Section 5. Status of Shares and Limitation of Personal Liability. Shares shall
be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof. The death,
incapacity, dissolution, termination, or bankruptcy of a Shareholder during the
existence of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any such Shareholder to an accounting or to take any action in
court or elsewhere against the Trust or the Trustees, but shall entitle such
representative only to the rights of such Shareholder under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust Property or any right to call for a participation
or division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders as partners. No Shareholder shall be personally
liable for the debts, liabilities, obligations and expenses incurred by,
contracted for, or otherwise existing with respect to, the Trust or any Series.
Neither the Trust nor the Trustees, nor any officer, employee, or agent of the
Trust shall have any power to bind personally any Shareholder, nor, except as
specifically provided herein, to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
Section 6. Establishment, Designation, Abolition or Termination etc. of Series
or Class. The establishment and designation of any Series or Class of Shares of
the Trust shall be effective upon the adoption by a majority of the Trustees
then in office of a resolution that sets forth such establishment and
designation and the relative rights and preferences of such Series or Class of
the Trust, whether directly in such resolution or by reference to another
document including, without limitation, any registration statement of the Trust,
or as otherwise provided in such resolution. The abolition or termination of any
Series or Class of Shares of the Trust shall be effective upon the adoption by a
majority of the Trustees then in office of a resolution that abolishes or
terminates such Series or Class.
Shares of each Series or Class of the Trust established pursuant to this Article
III, unless otherwise provided in the resolution establishing such Series or
Class, shall have the following relative rights and preferences:
(a) Assets Held with Respect to a Particular Series. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof from whatever source derived
(including, without limitation, any proceeds derived from the sale, exchange or
liquidation of such assets and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be) shall
irrevocably be held separate with respect to that Series for all purposes, and
shall be so recorded upon the books of account of the Trust. Such consideration,
assets, income, earnings, profits and proceeds thereof, from whatever source
derived, (including, without limitation) any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds), in whatever form the same may be, are herein
referred to as "assets held with respect to" that Series. In the
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event that there are any assets, income, earnings, profits and proceeds thereof,
funds or payments which are not readily identifiable as assets held with respect
to any particular Series (collectively "General Assets"), the Trustees shall
allocate such General Assets to, between or among any one or more of the Series
in such manner and on such basis as the Trustees, in their sole discretion, deem
fair and equitable, and any General Assets so allocated to a particular Series
shall be held with respect to that Series. Each such allocation by the Trustees
shall be conclusive and binding upon the Shareholders of all Series for all
purposes. Separate and distinct records shall be maintained for each Series and
the assets held with respect to each Series shall be held and accounted for
separately from the assets held with respect to all other Series and the General
Assets of the Trust not allocated to such Series.
(b) Liabilities Held with Respect to a Particular Series. The assets of the
Trust held with respect to each particular Series shall be charged against the
liabilities of the Trust held with respect to that Series and all expenses,
costs, charges, and reserves attributable to that Series, except that
liabilities and expenses allocated solely to a particular Class shall be borne
by that Class. Any general liabilities of the Trust which are not readily
identifiable as being held with respect to any particular Series or Class shall
be allocated and charged by the Trustees to and among any one or more of the
Series or Classes in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. All liabilities, expenses, costs, charges,
and reserves so charged to a Series or Class are herein referred to as
"liabilities held with respect to" that Series or Class. Each allocation of
liabilities, expenses, costs, charges, and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Series or Classes for all
purposes. Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets held with respect to such Series only and not
against the assets of the Trust generally or against the assets held with
respect to any other Series. Notice of this contractual limitation on
liabilities among Series may, in the Trustees' discretion, be set forth in the
Certificate of Trust and upon the giving of such notice in the Certificate of
Trust, the statutory provisions of Section 3804 of the Delaware Act relating to
limitations on liabilities among Series (and the statutory effect under Section
3804 of setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any person extending credit to,
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt, with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim on
or any right to any assets allocated or belonging to any other Series.
(c) Dividends, Distributions. Redemptions, and Repurchases. Notwithstanding any
other provisions of this Declaration of Trust, including, without limitation,
Article VI, no dividend or distribution, including, without limitation, any
distribution paid upon termination of the Trust or of any Series or Class with
respect to, nor any redemption or repurchase of, the Shares of any Series or
Class, shall be effected by the Trust other than from the assets held with
respect to such Series, nor shall any Shareholder or any particular Series or
Class otherwise have any right or claim against the assets held with respect to
any other Series except to the extent that such Shareholder has such a right or
claim hereunder as a Shareholder of such other Series. The Trustees shall have
full discretion, to the extent not inconsistent with the 1940 Act, to determine
which items shall be treated as income and which items as capital, and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
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(d) Equality. All the Shares of each particular Series shall represent an equal
proportionate interest in the assets held with respect to that Series (subject
to the liabilities held with respect to that Series or Class thereof and such
rights and preferences as may have been established and designated with respect
to any Class within such Series), and each Share of any particular Series shall
be equal to each other Share of that Series. With respect to any Class of a
Series, each such Class shall represent interests in the assets held with
respect to that Series and shall have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that expenses
allocated to a Class may be borne solely by such Class as determined by the
Trustees and a Class may have exclusive voting rights with respect to matters
affecting only that Class.
(e) Fractions. Any fractional Share of a Series or Class thereof shall carry
proportionately all the rights and obligations of a whole Share of that Series
or Class, including rights with respect to voting, receipt of dividends and
distributions, redemption of Shares and termination of the Trust.
(f) Exchange Privilege. The Trustees shall have the authority to provide that
the holders of Shares of any Series or Class shall have the right to exchange
said Shares for Shares of one or more other Series of Shares or Class of Shares
of the Trust or of other investment companies registered under the 1940 Act in
accordance with such requirements and procedures as may be established by the
Trustees.
(g) Combination of Series. The Trustees shall have the authority, without the
approval of the Shareholders of any Series or Class unless otherwise required by
applicable law, to combine the assets and liabilities held with respect to any
two or more Series or Classes into assets and liabilities held with respect to a
single Series or Class.
ARTICLE IV
Trustees
Section 1. Number, Election and Tenure. The number of Trustees shall initially
be 4, who shall be Robert B. Bowes, Harry M. K. Johnston, Louis M. Marmon, M.D.,
Ph.D, and Thomas P. F. Kiely. Thereafter, the number of Trustees shall at all
times be at least one and no more than such number as determined, from time to
time, by the Trustees pursuant to Section 3 of this Article IV. Each Trustee
shall serve during the lifetime of the Trust until he or she dies, resigns, has
reached any mandatory retirement age as set by the Trustees, is declared
bankrupt or incompetent by a court of appropriate jurisdiction, or is removed,
or, if sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his or her
successor. In the event that less than a majority of the Trustees holding office
have been elected by the Shareholders, the Trustees then in office shall take
such actions as may be necessary under applicable law for the election of
Trustees. Any Trustee may resign at any time by written instrument signed by him
or her and delivered to any officer of the Trust or to a meeting of the
Trustees. Such resignation shall be effective upon receipt unless specified to
be effective at some other time. Except to the extent expressly provided in a
written agreement with the Trust, no Trustee resigning and no Trustee removed
shall have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal. The
Shareholders may elect Trustees at any meeting of Shareholders called by the
Trustees for that purpose. Any Trustee may be removed at any meeting of
Shareholders by a vote of two-thirds of the outstanding Shares of the Trust.
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Section 2. Effect of Death. Resignation. etc. of a Trustee. The death,
declination to serve, resignation, retirement, removal or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever there shall be fewer than the designated number of Trustees, until
additional Trustees are elected or appointed as provided herein to bring the
total number of Trustees equal to the designated number, the Trustees in office,
regardless of their number, shall have all the powers granted to the Trustees
and shall discharge all the duties imposed upon the Trustees by this Declaration
of Trust. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Trustees. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to replace those no longer serving,
the Trust's Adviser(s) are empowered to appoint new Trustees subject to the
provisions of the 1940 Act.
Section 3. Powers. Subject to the provisions of this Declaration of Trust, the
business of the Trust shall be managed by the Trustees, and the Trustees shall
have all powers necessary or convenient to carry out that responsibility
including the power to engage in transactions of all kinds on behalf of the
Trust as described in this Declaration of Trust. Without limiting the foregoing,
the Trustees may: adopt By-Laws not inconsistent with this Declaration of Trust
providing for the management of the affairs of the Trust and may amend and
repeal such By-Laws to the extent that such By-Laws do not reserve that right to
the Shareholders; enlarge or reduce the number of Trustees; remove any Trustee
with or without cause at any time by written instrument signed by at least
two-thirds of the number of Trustees prior to such removal, specifying the date
when such removal shall become effective, and fill vacancies caused by
enlargement of their number or by the death, resignation, retirement or removal
of a Trustee; elect and remove, with or without cause, such officers and appoint
and terminate such agents as they consider appropriate; appoint from their own
number and establish and terminate one or more committees, consisting of two or
more Trustees, that may exercise the powers and authority of the Board of
Trustees to the extent that the Trustees so determine; employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a system
or systems for the central handling of securities or with a Federal Reserve
Bank; employ an administrator for the Trust and may authorize such administrator
to employ subadministrators; employ an investment adviser or investment advisers
to the Trust and may authorize such Advisers to employ subadvisers; retain a
transfer agent or a shareholder servicing agent, or both; provide for the
issuance and distribution of Shares by the Trust directly or through one or more
Principal Underwriters or otherwise; redeem, repurchase and transfer Shares
pursuant to applicable law; set record dates for the determination of
Shareholders with respect to various matters; declare and pay dividends and
distributions to Shareholders of each Series from the assets of such Series; and
in general delegate such authority as they consider desirable to any officer of
the Trust, to any committee of the Trustees and to any agent or employee of the
Trust or to any such custodian, transfer or shareholder servicing agent, or
Principal Underwriter. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration of Trust, the presumption shall be in favor of a
grant of power to the Trustees. Unless otherwise specified herein or in the
By-Laws or required by law, any action by the Trustees shall be deemed effective
if approved or taken by a majority of the Trustees present at a meeting of
Trustees at which a quorum of Trustees is present, within or without the State
of Delaware.
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Without limiting the foregoing, the Trustees shall have the power and authority
to cause the Trust (or to act on behalf of the Trust):
(a) To invest and reinvest cash, to hold cash uninvested, and to subscribe for,
invest in, reinvest in, purchase or otherwise acquire, own, hold, pledge, sell,
assign, transfer, exchange, distribute, write options on, lend or otherwise deal
in or dispose of contracts for the future acquisition or delivery of fixed
income or other securities, and securities of every nature and kind, including,
without limitation, all types of bonds, debentures, stocks, negotiable or
non-negotiable instruments, obligations, evidences of indebtedness, certificates
of deposit or indebtedness, commercial papers, repurchase agreements, bankers'
acceptances, and other securities of any kind, issued, created, guaranteed, or
sponsored by any and all Persons, including without limitation, states,
territories, and possessions of the United States and the District of Columbia
and any political subdivision, agency, or instrumentality thereof, any foreign
government or any political subdivision of the United States Government or any
foreign government, or any international instrumentality, or by any bank or
savings institution, or by any corporation or organization organized under the
laws of the United States or of any state, territory, or possession thereof, or
by any corporation or organization organized under any foreign law, or in "when
issued" contracts for any such securities, to change the investments of the
assets of the Trust; and to exercise any and all rights, powers, and privileges
of ownership or interest in respect of any and all such investments of every
kind and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more Persons
to exercise any of said rights, powers, and privileges in respect of any of said
instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or write
options (including, options on futures contracts) with respect to or otherwise
deal in any property rights relating to any or all of the assets of the Trust or
any Series;
(c) To vote or give assent, or exercise any rights of ownership, with respect to
stock or other securities or property; and to execute and deliver proxies or
powers of attorney to such Person or Persons as the Trustees shall deem proper,
granting to such Person or Persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any trust, whether
in bearer, unregistered or other negotiable form, or in its own name or in the
name of a custodian or subcustodian or a nominee or nominees or otherwise;
(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(g) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
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(h) To compromise, arbitrate or otherwise adjust claims in favor of or against
the Trust or any matter in controversy, including, but not limited to, claims
for taxes;
(i) To enter into joint ventures, general or limited partnerships and any other
combinations or associations;
(j) To borrow funds or other property in the name of the Trust exclusively for
Trust purposes and in connection therewith to issue notes or other evidences of
indebtedness; and to mortgage and pledge the Trust Property or any part thereof
to secure any or all of such indebtedness;
(k) To endorse or guarantee the payment of any notes or other obligations of any
Person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof; and to mortgage and pledge the Trust Property or
any part thereof to secure any of or all of such obligations;
(l) To purchase and pay for entirely out of Trust Property such insurance as the
Trustees may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of the
Trust or payment of distributions and principal on its portfolio investments,
and insurance polices insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, principal underwriters, or independent contractors
of the Trust, individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such office or position,
or by reason of any action alleged to have been taken or omitted by any such
Person as Trustee, officer, employee, agent, investment adviser, principal
underwriter, or independent contractor, including any action taken or omitted
that may be determined to constitute negligence, whether or not the Trust would
have the power to indemnify such Person against liability;
(m) To adopt, establish and carry out pension, profit-sharing, share bonus,
share purchase, savings, thrift and other retirement, incentive and benefit
plans and trusts, including the purchasing of life insurance and annuity
contracts as a means of providing such retirement and other benefits, for any or
all of the Trustees, officers, employees and agents of the Trust;
(n) To operate as and carry out the business of an investment company, and
exercise all the powers necessary or appropriate to the conduct of such
operations;
(o) To enter into contracts of any kind and description;
(p) To employ as custodian of any assets of the Trust one or more banks, trust
companies or companies that are members of a national securities exchange or
such other entities as the Commission may permit as custodians of the Trust,
subject to any conditions set forth in this Declaration of Trust or in the
By-Laws;
(q) To employ auditors, counsel or other agents of the Trust, subject to any
conditions set forth in this Declaration of Trust or in the By-Laws;
(r) To interpret the investment policies, practices, or limitations of any
Series or Class;
(s) To establish separate and distinct Series with separately defined investment
objectives and policies and distinct investment purposes, and with separate
Shares representing beneficial interests in such Series, and to establish
separate Classes, all in accordance with the provisions of Article III;
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(t) To the full extent permitted by the Delaware Act, to allocate assets,
liabilities and expenses of the Trust to a particular Series and Class or to
apportion the same between or among two or more Series or Classes, provided that
any liabilities or expenses incurred by a particular Series or Class shall be
payable solely out of the assets belonging to that Series or Class as provided
for in Article III;
(u) To invest all of the assets of the Trust, or any Series or any Class thereof
in a single investment company;
(v) Subject to the 1940 Act, to engage in any other lawful act or activity in
which a business trust organized under the Delaware Act may engage.
The Trust shall not be limited to investing in obligations maturing before the
possible termination of the Trust or one or more of its Series. The Trust shall
not in any way be bound or limited by any present or future law or custom in
regard to investment by fiduciaries. The Trust shall not be required to obtain
any court order to deal with any assets of the Trust or take any other action
hereunder.
Section 4. Payment of Expenses by the Trust. The Trustees are authorized to pay
or cause to be paid out of the principal or income of the Trust, or partly out
of the principal and partly out of income, as they deem fair, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust, or in connection with the management thereof, including, but not limited
to, the Trustees' compensation and such expenses and charges for the services of
the Trust's officers, employees, Advisers, Principal Underwriter, auditors,
counsel, custodian, transfer agent, shareholder servicing agent, and such other
agents or independent contractors and such other expenses and charges as the
Trustees may deem necessary or proper to incur, which expenses, fees, charges,
taxes and liabilities shall be allocated in accordance with Article III, Section
6 hereof.
Section 5. Payment of Expenses by Shareholders. The Trustees shall have the
power, as frequently as they may determine, to cause each Shareholder, or each
Shareholder of any particular Series, to pay directly, in advance or arrears,
expenses of the Trust as described in Section 4 of this Article IV ("Expenses"),
in an amount fixed from time to time by the Trustees, by setting off such
Expenses due from such Shareholder from declared but unpaid dividends owed such
Shareholder and/or by reducing the number of Shares in the account of such
Shareholder by that number of full and/or fractional Shares which represents the
outstanding amount of such Expenses due from such Shareholder, provided that the
direct payment of such Expenses by Shareholders is permitted under applicable
law.
Section 6. Ownership of Assets of the Trust. Title to all of the assets of the
Trust shall at all times be considered as vested in the Trust, except that the
Trustees shall have power to cause legal title to any Trust Property to be held
by or in the name of one or more of the Trustees, or in the name of the Trust,
or in the name of any other Person as nominee, on such terms as the Trustees may
determine. The right, title and interest of the Trustees in the Trust Property
shall vest automatically in each Person who may hereafter become a Trustee. Upon
the resignation, removal or death of a Trustee, he or she shall automatically
cease to have any right, title or interest in any of the Trust Property, and the
right, title and interest of such Trustee in the Trust property shall vest
automatically in the remaining Trustees. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
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Section 7. Service Contracts.
(a) Subject to such requirements and restrictions as may be set forth under
federal and/or state law and in the By-Laws, including, without limitation, the
requirements of Section 15 of the 1940 Act, the Trustees may, at any time and
from time to time, contract for exclusive or nonexclusive advisory, management
and/or administrative services for the Trust or for any Series (or Class
thereof) with any Person and any such contract may contain such other terms as
the Trustees may determine, including, without limitation, authority for the
Adviser(s) or administrator to delegate certain or all of its duties under such
contracts to other qualified investment advisers and administrators and to
determine from time to time without prior consultation with the Trustees what
investments shall be purchased, held sold or exchanged and what portion, if any,
of the assets of the Trust shall be held uninvested and to make changes in the
Trust's investments, or such other activities as may specifically be delegated
to such party.
(b) The Trustees may also, at any time and from time to time, contract with any
Person, appointing such Person exclusive or nonexclusive distributor or
Principal Underwriter for the Shares of one or more of the Series (or Classes)
or other securities to be issued by the Trust.
(c) The Trustees are also empowered, at any time and from time to time, to
contract with any Person, appointing such Person or Persons the custodian,
transfer agent and/or shareholder servicing agent for the Trust or one or more
of its Series.
(d) The Trustees are further empowered, at any time and from time to time, to
contract with any Person to provide such other services to the Trust or one or
more of the Series, as the Trustees determine to be in the best interests of the
Trust and the applicable Series.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, Adviser, Principal
Underwriter, distributor, or affiliate or agent of or for any Person, or for any
parent or affiliate of any Person with which an advisory, management, or
administration contract, or Principal Underwriter's or distributor's contract,
or transfer agent, shareholder servicing agent or other type of service contract
may have been or may hereafter be made, or that any such organization, or any
parent or affiliate thereof, is a Shareholder or has an interest in the Trust;
or that
(ii) any Person with which an advisory, management, or administration contract
or Principal Underwriter's or distributor's contract, or transfer agent or
shareholder servicing agent contract may have been or may hereafter be made also
has an advisory, management, or administration contract, or Principal
Underwriter's or distributor's or other service contract with one or more other
Persons, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
shareholders.
Section 8. Trustees and Officers as Shareholders. Any Trustee, officer or agent
of the Trust may acquire, own and dispose of Shares to the same extent as if he
or she were not a Trustee, officer or agent; and the Trustees may issue and sell
and cause to be issued and sold Shares to, and redeem such Shares from, any such
Person or any firm or company in which such Person is interested, subject only
to the general
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limitations contained herein or in the By-Laws relating to the sale and
redemption of such Shares.
Section 9. Compensation. The Trustees in such capacity shall be entitled to
reasonable compensation from the Trust and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for such services by the Trust.
ARTICLE V
Shareholders' Voting Powers and Meetings
Section 1. Voting Powers. Meetings. Notice. and Record Dates. The Shareholders
shall have power to vote only: (i) for the election or removal of Trustees as
provided in Article IV, Section 1 hereof, and (ii) with respect to such
additional matters relating to the Trust as may be required by applicable law,
this Declaration of Trust, the By-Laws or any registration statement of the
Trust with the Commission (or any successor agency) or as the Trustees may
consider necessary or desirable. Each whole share shall be entitled to one vote
as to any matter on which it is entitled to vote and each fractional share will
be entitled to a proportionate fractional vote. Notwithstanding any other
provision of this Declaration of Trust, on any matters submitted to a vote of
the Shareholders, all shares of the Trust then entitled to vote shall be voted
in aggregate, except: (i) when required by the 1940 Act, Shares shall be voted
by individual Series; (ii) when the matter involves any action that the Trustees
have determined will affect only the interests of one or more Series, then only
Shareholders of such Series shall be entitled to vote thereon; and (iii) when
the matter involves any action that the Trustees have determined will affect
only the interests of one or more Classes, then only the Shareholders of such
Class or Classes shall be entitled to vote thereon. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy. A
proxy may be given in writing. The By-Laws may provide that proxies may also, or
may instead, be given by an electronic or telecommunications device or in any
other manner. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by the Shareholders. Meetings of the Shareholders
shall be called and notice thereof and record dates therefor shall be given and
set as provided in the By-Laws.
Section 2. Quorum and Required Vote. Except when a larger quorum is required by
applicable law, by the By-Laws or by this Declaration of Trust, thirty-three and
one-third percent (33 1/3%) of the Shares issued and outstanding shall
constitute a quorum at a Shareholders' meeting but any lesser number shall be
sufficient for adjourned sessions. When any one or more Series (or Classes) is
to vote as a single Series (or Class) separate from any other Shares, thirty
three and one-third percent (33 1/3%) of the Shares of each such Series (or
Class) issued and outstanding shall constitute a quorum at a Shareholders'
meeting of that Series (or Class). Except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law, when
a quorum is present at any meeting, a majority of the Shares voted shall decide
any questions and a plurality of the Shares voted shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
requires that the holders of any Series shall vote as a Series (or that holders
of a Class shall vote as a Class), then a majority of the Shares of that Series
(or Class) voted on the matter (or a plurality with respect to the election of a
Trustee) shall decide that matter insofar as that Series (or Class) is
concerned.
Section 3. Record Dates. For the purpose of determining the Shareholders of any
Series (or Class) who are entitled to receive payment of any dividend or of any
other
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distribution, the Trustees may from time to time fix a date, which shall be
before the date for the payment of such dividend or such other payment, as the
record date for determining the Shareholders of such Series (or Class) having
the right to receive such dividend or distribution. Without fixing a record
date, the Trustees may for distribution purposes close the register or transfer
books for one or more Series (or Classes) at any time prior to the payment of a
distribution. Nothing in this Section shall be construed as precluding the
Trustees from setting different record dates for different Series (or Classes).
Section 4. Additional Provisions. The By-Laws may include further provisions for
Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income and Distributions.
Subject to applicable law and Article III, Section 6 hereof, the Trustees, in
their absolute discretion, may prescribe and shall set forth in the By-Laws or
in a duly adopted vote of the Trustees such bases and time for determining the
per Share or net asset value of the Shares of any Series or Class or net income
attributable to the Shares of any Series or Class, or the declaration and
payment of dividends and distributions on the Shares of any Series or Class, as
they may deem necessary or desirable.
Section 2. Redemptions and Repurchases.
(a) The Trust shall purchase such Shares as are offered by any Shareholder for
redemption, upon the presentation of a proper instrument of transfer together
with a request directed to the Trust, or a Person designated by the Trust, that
the Trust purchase such Shares or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and the Trust will
pay therefor the net asset value thereof as determined by the Trustees (or on
their behalf), in accordance with any applicable provisions of the By-Laws, any
registration statement of the Trust and applicable law. Unless extraordinary
circumstances exist, payment for said Shares shall be made by the Trust to the
Shareholder in accordance with the 1940 Act and any rules and regulations
thereunder or as otherwise required by the Commission. The obligation set forth
in this Section 2(a) is subject to the provision that, during any emergency
which makes it impracticable for the Trust to dispose of the investments of the
applicable Series or to determine fairly the value of the net assets held with
respect to such Series, such obligation may be suspended or postponed by the
Trustees. In the case of a suspension of the right of redemption as provided
herein, a Shareholder may either withdraw the request for redemption or receive
payment based on the net asset value per share next determined after the
termination of such suspension.
(b) The redemption price may in any case or cases be paid wholly or partly in
kind if the Trustees determine that such payment is advisable in the interest of
the remaining Shareholders of the Series or Class thereof for which the Shares
are being redeemed. Subject to the foregoing, the fair value, selection and
quantity of securities or other property so paid or delivered as all or part of
the redemption price may be determined by or under authority of the Trustees. In
no case shall the Trust be liable for any delay of any Adviser or other Person
in transferring securities selected for delivery as all or part of any
payment-in-kind.
(c) If the Trustees shall, at any time and in good faith, determine that direct
or indirect ownership of Shares of any Series or Class thereof has or may become
concentrated in any Person to an extent that would disqualify any Series as a
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regulated investment company under the Internal Revenue Code of 1986, as amended
(or any successor statute thereof), then the Trustees shall have the power (but
not the obligation) by such means as they deem equitable (i) to call for the
redemption by any such Person of a number, or principal amount, of Shares
sufficient to maintain or bring the direct or indirect ownership of Shares into
conformity with the requirements for such qualification, (ii) to refuse to
transfer or issue Shares of any Series or Class thereof to such Person whose
acquisition of the Shares in question would result in such disqualification, or
(iii) to take such other actions as they deem necessary and appropriate to avoid
such disqualification. Any such redemption shall be effected at the redemption
price and in the manner provided in this Article VI.
(d) The holders of Shares shall upon demand disclose to the Trustees in writing
such information with respect to direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code of 1986, as amended (or any successor statute thereto), or to comply with
the requirements of any other taxing authority.
ARTICLE VII
Limitation of Liability; Indemnification
Section 1. Trustees, Shareholders, etc. Not Personally Liable; Notice. The
Trustees, officers, employees and agents of the Trust, in incurring any debts,
liabilities or obligations, or in limiting or omitting any other actions for or
in connection with the Trust, are or shall be deemed to be acting as Trustees,
officers, employees or agents of the Trust and not in their own capacities. No
Shareholder shall be subject to any personal liability whatsoever in tort,
contract or otherwise to any other Person or Persons in connection with the
assets or the affairs of the Trust or of any Series, and subject to Section 4 of
this Article VII, no Trustee, officer, employee or agent of the Trust shall be
subject to any personal liability whatsoever in tort, contract, or otherwise, to
any other Person or Persons in connection with the assets or affairs of the
Trust or of any Series, save only that arising from his or her own willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office or the discharge of his or her
functions. The Trust (or if the matter relates only to a particular Series, that
Series) shall be solely liable for any and all debts, claims, demands,
judgments, decrees, liabilities or obligations of any and every kind, against or
with respect to the Trust or such Series in tort, contract or otherwise in
connection with the assets or the affairs of the Trust or such Series, and all
Persons dealing with the Trust or any Series shall be deemed to have agreed that
resort shall be had solely to the Trust Property of the Trust (or if the matter
relates only to a particular Series, that of such Series), for the payment or
performance thereof.
The Trustees may provide that every note, bond, contract, instrument,
certificate or undertaking made or issued by the Trustees or by any officers or
officer shall give notice that a Certificate of Trust in respect of the Trust is
on file with the Secretary of State of the State of Delaware and may recite to
the effect that the same was executed or made by or on behalf of the Trust or by
them as Trustees or Trustee or as officers or officer, and not individually, and
that the obligations of any instrument made or issued by the Trustees or by any
officer of officers of the Trust are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property of
the Trust, or the particular Series in question, as the case may be. The
omission of any statement to such effect from such instrument shall not operate
to bind any Trustees or Trustee or officers or officer
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or Shareholders or Shareholder individually, or to subject the assets of any
Series to the obligations of any other Series.
Section 2. Trustees' Good Faith Action; Expert Advice; No Bond or Surety. The
exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. Subject to Section 4 of this Article VII, a
Trustee shall be liable for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. Subject to the foregoing, (i) the Trustees
shall not be responsible or liable in any event for any neglect or wrongdoing of
any officer, agent, employee, consultant, Adviser, administrator, distributor or
Principal Underwriter, custodian or transfer agent, dividend disbursing agent,
shareholder servicing agent or accounting agent of the Trust, nor shall any
Trustee be responsible for the act or omission of any other Trustee; (ii) the
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as Trustees, and
shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice; and (iii) in discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant, and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of a contracting party employed by the Trust. The Trustees
as such shall not be required to give any bond or surety or any other security
for the performance of their duties.
Section 3. Indemnification of Shareholders. If any Shareholder (or former
Shareholder) of the Trust shall be charged or held to be personally liable for
any obligation or liability of the Trust solely by reason of being or having
been a Shareholder and not because of such Shareholder's acts or omissions or
for some other reason, the Trust (upon proper and timely request by the
Shareholder) may assume the defense against such charge and satisfy any judgment
thereon or may reimburse the Shareholders for expenses, and the Shareholder or
former Shareholder (or the heirs, executors, administrators or other legal
representatives thereof, or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled (but solely out of the
assets of the Series of which such Shareholder or former Shareholder is or was
the holder of Shares) to be held harmless from and indemnified against all loss
and expense arising from such liability.
Section 4. Indemnification of Trustees, Officers, etc. Subject to the
limitations, if applicable, hereinafter set forth in this Section 4, the Trust
shall indemnify (from the assets of one or more Series to which the conduct in
question relates) each of its Trustees, officers, employees and agents
(including Persons who serve at the Trust's request as directors, officers or
trustees of another organization in which the Trust has any interest as a
shareholder, creditor or otherwise (hereinafter, together with such Person's
heirs, executors, administrators or personal representative, referred to as a
"Covered Person")) against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred by any
Covered Person in connection with the defense or disposition of any action, suit
or other proceeding, whether civil or criminal, before any court or
administrative or legislative body, in which such Covered Person may be or may
have been involved as a party or otherwise or with which such Covered Person may
be or may have been threatened, while in office or thereafter, by reason of
being or having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such Covered
Person's action
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was in or not opposed to the best interests of the Trust; or (ii) had acted with
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office; and (iii) for a
criminal proceeding, had reasonable cause to believe that his or her conduct was
unlawful (the conduct described in (i), (ii) and (iii) being referred to
hereafter as "Disabling Conduct"). A determination that the Covered Person is
entitled to indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the Covered
Person to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a Covered
Person for insufficiency of evidence of Disabling Conduct, or (iii) a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of Disabling Conduct by (a) a vote of a majority of a quorum of
the Trustees who are neither "interested persons" of the Trust as defined in the
1940 Act nor parties to the proceeding (the "Disinterested Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including accountants'
and counsel fees so incurred by any such Covered Person (but excluding amounts
paid in satisfaction of judgments, in compromise or as fines or penalties), may
be paid from time to time by one or more Series to which the conduct in question
related in advance of the final disposition of any such action, suit or
proceeding; provided that the Covered Person shall have undertaken to repay the
amounts so paid to such Series if it is ultimately determined that
indemnification of such expenses is not authorized under this Article VII and
(i) the Covered Person shall have provided security for such undertaking, (ii)
the Trust shall be insured against losses arising by reason of any lawful
advances, or (iii) a majority of a quorum of the Disinterested Trustees, or an
independent legal counsel in a written opinion, shall have determined, based on
a review of readily available facts (as opposed to a full trial type inquiry),
that there is reason to believe that the Covered Person ultimately will be found
entitled to indemnification.
Section 5. Compromise Payment. As to any matter disposed of by a compromise
payment by any such Covered Person referred to in Section 4 of this Article VII,
pursuant to a consent decree or otherwise, no such indemnification either for
said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of a quorum of the
Disinterested Trustees or (ii) by an independent legal counsel in a written
opinion. Approval by the Trustees pursuant to clause (i) or by independent legal
counsel pursuant to clause (ii) shall not prevent the recovery from any Covered
Person of any amount paid to such Covered Person in accordance with either of
such clauses as indemnification if such Covered Person is subsequently
adjudicated by a court of competent jurisdiction not to have acted in good faith
in the reasonable belief that such Covered Person's action was in or not opposed
to the best interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the Covered Person's
office.
Section 6. Indemnification Not Exclusive, etc. The right of indemnification
provided by this Article VII shall not be exclusive of or affect any other
rights to which any such Covered Person or shareholder may be entitled. As used
in this Article VII, a "disinterested" Person is one against whom none of the
actions, suits or other proceedings in question, and no other action, suit or
other proceeding on the same or similar grounds is then or has been pending or
threatened. Nothing contained in this Article VII shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other Persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such Person.
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Section 7. Liability of Third Persons Dealing with Trustees. No person dealing
with the Trustees shall be bound to make any inquiry concerning the validity of
any transaction made or to be made by the Trustees or to see to the application
of any payments made or property transferred to the Trust or upon its order.
Section 8. Insurance. The Trustees shall be entitled and empowered to the
fullest extent permitted by law to purchase with Trust assets insurance for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee, officer, employee, or agent of the Trust in connection with
any claim, action, suit, or proceeding in which he or she may become involved by
virtue of his or her capacity or former capacity as a Trustee of the Trust.
ARTICLE VIII
Miscellaneous
Section 1. Termination of the Trust or Any Series or Class.
(a) Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trustees in their sole discretion may terminate the
Trust.
(b) Upon the requisite action by the Trustees to terminate the Trust or any one
or more Series of Shares or any Class thereof, after paying or otherwise
providing for all charges, taxes, expenses, and liabilities, whether due or
accrued or anticipated, of the Trust or of the particular Series or any Class
thereof as may be determined by the Trustees, the Trust shall in accordance with
such procedures as the Trustees may consider appropriate reduce the remaining
assets of the Trust or of the affected Series or Class to distributable form in
cash or Shares (if any Series remain) or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the Series or
Classes involved, ratably according to the number of Shares of such Series or
Class held by the Shareholders of such Series or Class on the date of
distribution. Thereupon, the Trust or any affected Series or Class shall
terminate and the Trustees and the Trust shall be discharged from any and all
further liabilities and duties relating thereto or arising therefrom, and the
right, title, and interest of all parties with respect to the Trust or such
Series or Class shall be canceled and discharged.
(c) Upon termination of the Trust, following completion of winding up of its
business, the Trustees shall cause a certificate of cancellation of the Trust's
Certificate of Trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
Section 2. Reorganization.
(a) Notwithstanding anything else herein, the Trustees may, without Shareholder
approval unless such approval is required by applicable law, (i) cause the Trust
to merge or consolidate with or into or transfer its assets and any liabilities
to one or more trusts (or series thereof to the extent permitted by law),
partnerships, associations, corporations or other business entities (including
trusts, partnerships, associations, corporations or other business entities
created by the Trustees to accomplish such merger or consolidation or transfer
of assets and any liabilities) so long as the surviving or resulting entity is
an investment company as defined in the 1940 Act, or is a series thereof, that
will succeed to or assume the Trust's registration under the 1940 Act and that
is formed, organized, or existing under the laws of the United States or of a
state, commonwealth, possession or colony of the United States, unless otherwise
permitted under the 1940 Act, (ii) cause any one or more Series (or Classes) of
the Trust to merge or consolidate with or into or
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transfer its assets and any liabilities to any one or more other Series (or
Classes) of the Trust, one or more trusts (or series or classes thereof to the
extent permitted by law), partnerships, associations, corporations, (iii) cause
the Shares to be exchanged under or pursuant to any state or federal statute to
the extent permitted by law or (iv) cause the Trust to reorganize as a
corporation, limited liability company or limited liability partnership under
the laws of Delaware or any other state or jurisdiction.
(b) Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, and notwithstanding anything to the contrary contained in this
Declaration of Trust, an agreement of merger or consolidation or exchange or
transfer of assets and liabilities approved by the Trustees in accordance with
this Section 2 may (i) effect any amendment to the governing instrument of the
Trust or (ii) effect the adoption of a new governing instrument of the Trust if
the Trust is the surviving or resulting trust in the merger or consolidation.
(c) The Trustees may create one or more business trusts to which all or any part
of the assets, liabilities, profits, or losses of the Trust or any Series or
Class thereof may be transferred and may provide for the conversion of Shares in
the Trust or any Series or Class thereof into beneficial interests in any such
newly created trust or trusts or any series or classes thereof.
Section 3. Amendments. Except as specifically provided in this Section 3, the
Trustees may, without Shareholder vote, restate, amend, or otherwise supplement
this Declaration of Trust. Shareholders shall have the right to vote on (i) any
amendment that would affect their right to vote granted in Article V, Section 1
hereof, (ii) any amendment to this Section 3 of Article VIII; (iii) any
amendment that may require their vote under applicable law or by the Trust's
registration statement, as filed with the Commission, and (iv) any amendment
submitted to them for their vote by the Trustees. Any amendment required or
permitted to be submitted to the Shareholders that, as the Trustees determine,
shall affect the Shareholders of one or more Series shall be authorized by a
vote of the Shareholders of each Series affected and no vote of Shareholders of
a Series not affected shall be required. Notwithstanding anything else herein,
no amendment hereof shall limit the rights to insurance provided by Article VII
hereof with respect to any acts or omissions of Persons covered thereby prior to
such amendment nor shall any such amendment limit the rights to indemnification
referenced in Article VII hereof as provided in the By-Laws with respect to any
actions or omissions of Persons covered thereby prior to such amendment. The
Trustees may, without Shareholder vote, restate, amend, or otherwise supplement
the Certificate of Trust as they deem necessary or desirable.
Section 4. Filing of Copies; References; Headings. The original or a copy of
this instrument and of each restatement and/or amendment hereto shall be kept at
the office of the Trust where it may be inspected by any Shareholder. Anyone
dealing with the Trust may rely on a certificate by an officer of the Trust as
to whether or not any such restatements and/or amendments have been made and as
to any matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such restatements and/or
amendments. In this instrument and in any such restatements and/or amendments,
references to this instrument, and all expressions such as "herein," "hereof,"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by any such restatements and/or amendments. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
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applicable. This instrument may be executed in any number of counterparts each
of which shall be deemed an original.
Section 5. Applicable Law.
(a) The Trust is created under, and this Declaration of Trust is to be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware. The Trust shall be of the type commonly called a business trust, and
without limiting the provisions hereof, the Trust specifically reserves the
right to exercise any of the powers or privileges afforded to business trusts or
actions that may be engaged in by business trusts under the Delaware Act, and
the absence of a specific reference herein to any such power, privilege, or
action shall not imply that the Trust may not exercise such power or privilege
or take such actions.
(b) Notwithstanding the first sentence of Section 5(a) of this Article VIII,
there shall not be applicable to the Trust, the Trustees, or this Declaration of
Trust either the provisions of Section 3540 of Title 12 of the Delaware Code or
any provisions of the laws (statutory or common) of the State of Delaware (other
than the Delaware Act) pertaining to trusts that relate to or regulate: (i) the
filing with any court or governmental body or agency of Trustee accounts or
schedules of trustee fees and charges; (ii) affirmative requirements to post
bonds for trustees, officers, agents, or employees of a trust; (iii) the
necessity for obtaining a court or other governmental approval concerning the
acquisition, holding, or disposition of real or personal property; (iv) fees or
other sums applicable to trustees, officers, agents or employees of a trust; (v)
the allocation of receipts and expenditures to income or principal; (vi)
restrictions or limitations on the permissible nature, amount, or concentration
of trust investments or requirements relating to the titling, storage, or other
manner of holding of trust assets; or (vii) the establishment of fiduciary or
other standards or responsibilities or limitations on the acts or powers or
liabilities or authorities and powers of trustees that are inconsistent with the
limitations or liabilities or authorities and powers of the Trustees set forth
or referenced in this Declaration of Trust; or (viii) activities similar to
those referenced in the foregoing items (i) through (vii).
Section 6. Provisions in Conflict with Law or Regulations.
(a) The provisions of this Declaration of Trust are severable, and if the
Trustees shall determine, with the advice of counsel, that any such provision is
in conflict with the 1940 Act, the regulated investment company provisions of
the Internal Revenue Code of 1986, as amended (or any successor statute
thereto), and the regulations thereunder, the Delaware Act or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such decision shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall, not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.
Section 7. Business Trust Only. It is the intention of the Trustees to create a
business trust pursuant to the Delaware Act. It is not the intention of the
Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, or any form of legal relationship other than
a business trust pursuant to the Delaware Act. Nothing in this Declaration of
Trust shall be construed
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to make the Shareholders, either by themselves or with the Trustees, partners,
or members of a joint stock association.
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into this
Agreement and Declaration of Trust as of the 3rd day of February, 1998.
/s/ Robert B. Bowes
- ------------------------
Robert B. Bowes
Trustee and not individually
/s/ Harry M.K. Johnston
- ------------------------
Harry M. K. Johnston
Trustee and not individually
/s/ Louis M. Marmon
- ------------------------
Louis M. Marmon
Trustee and not individually
/s/ Thomas P.F. Kiely
- ------------------------
Thomas P. F. Kiely
Trustee and not individually
THE PRINCIPAL PLACE OF BUSINESS
OF THE TRUST IS:
4520 East West Highway
Suite 540
Bethesda, Maryland 20814
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<PAGE> 1
Part C
(b) Exhibit (2)
Bowes Investment Trust
Bank and Insurance Fund
BY-LAWS
OF
BOWES INVESTMENT TRUST
a Delaware Business Trust
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
INTRODUCTION 1
A. Agreement and Declaration of Trust 1
B. Definitions 1
ARTICLE I OFFICES 1
Section 1. Principal Office 1
Section 2. Delaware Office 1
Section 3. Other Offices 1
ARTICLE II MEETINGS OF SHAREHOLDERS 1
Section 1. Place of Meetings 1
Section 2. Call of Meetings 2
Section 3. Notice of Meetings of Shareholders 2
Section 4. Manner of Giving Notice: Affidavit of Notice 2
Section 5. Adjourned Meeting; Notice 3
Section 6. Voting 3
Section 7. Waiver of Notice; Consent of Absent Shareholders 3
Section 8. Shareholder Action by Written Consent Without a
Meeting 4
Section 9. Record Date for Shareholder Notice; Voting and
Giving Consents 4
Section 10. Proxies 5
Section 11. Inspectors of Election 5
ARTICLE III TRUSTEES 6
Section 1. Powers 6
Section 2. Number of Trustees 6
Section 3. Vacancies 6
Section 4. Chair 6
Section 5. Place of Meetings and Meetings by Telephone 7
Section 6. Regular Meetings 7
Section 7. Special Meetings 7
Section 8. Quorum 7
Section 9. Waiver of Notice 8
Section 10. Adjournment 8
Section 11. Notice of Adjournment 8
Section 12. Action Without a Meeting 8
Section 13. Fees and Compensation of Trustees 8
Section 14. Delegation of Power to Other Trustees 8
</TABLE>
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<TABLE>
<S> <C>
ARTICLE IV COMMITTEES 9
Section 1. Committees of Trustees 9
Section 2. Meetings and Action of Committees 9
ARTICLE V OFFICERS 10
Section 1. Officers 10
Section 2. Election of Officers 10
Section 3. Subordinate Officers 10
Section 4. Removal and Resignation of Officers 10
Section 5. Vacancies in Offices 10
Section 6. President 10
Section 7. Vice Presidents 11
Section 8. Secretary 11
Section 9. Treasurer 11
ARTICLE VI INSPECTION OF RECORDS AND REPORTS 12
Section 1. Inspection by Shareholders 12
Section 2. Inspection by Trustees 12
ARTICLE VII GENERAL MATTERS 12
Section 1. Checks, Drafts, Evidences of Indebtedness 12
Section 2. Contracts and Instruments: How Executed 13
Section 3. Fiscal Year 13
Section 4. Seal 13
ARTICLE VIII AMENDMENTS 13
Section 1. Amendment 13
</TABLE>
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BY-LAWS
of
BOWES INVESTMENT TRUST
a Delaware Business Trust
INTRODUCTION
A. Agreement and Declaration of Trust. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Bowes Investment Trust, a Delaware business trust
(the "Trust"). In the event of any inconsistency between the terms hereof and
the terms of the Declaration of Trust, the terms of the Declaration of Trust
shall control.
B. Definitions. Capitalized terms used herein and not herein defined are used as
defined in the Declaration of Trust.
ARTICLE I OFFICES
Section 1. Principal Office. The Trustees shall fix and, from time to time, may
change the location of the principal executive office of the Trust at any place
within or outside the State of Delaware.
Section 2. Delaware Office. The Trustees shall establish a registered office in
the State of Delaware and shall appoint as the Trust's registered agent for
service of process in the State of Delaware an individual who is a resident of
the State of Delaware or a Delaware corporation or a corporation authorized to
transact business in the State of Delaware; in each case the business office of
such registered agent for service of process shall be identical with the
registered Delaware office of the Trust.
Section 3. Other Offices. The Trustees may at any time establish branch or
subordinate offices at any place or places within or outside the State of
Delaware where the Trust intends to do business.
ARTICLE II MEETINGS OF SHAREHOLDERS
Section 1. Place of Meetings. Meetings of Shareholders shall be held at any
place designated by the Trustees. In the absence of any such designation,
Shareholders' meetings shall be held at the principal executive office of the
Trust.
Section 2. Call of Meetings. There shall be no annual Shareholders' meetings.
Special meetings of the Shareholders may be called at any time by the Trustees,
the President or any other officer designated for the purpose by the Trustees,
for the purpose of seeking action upon any matter requiring the vote or
authority of the Shareholders as herein provided or provided in the Declaration
of Trust or upon any other matter as to which such vote or authority is deemed
by the Trustees or the President to be necessary or desirable. To the extent
required by the Investment Company Act of 1940, as amended ("1940 Act"),
meetings of the Shareholders for the purpose of voting on the removal of any
Trustee shall be called promptly by the Trustees.
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Section 3. Notice of Meetings of Shareholders. All notices of meetings of
Shareholders shall be sent or otherwise given to Shareholders in accordance with
Section 4 of this Article II not less than ten (10) nor more than ninety (90)
days before the date of the meeting. The notice shall specify (i) the place,
date and hour of the meeting, and (ii) the general nature of the business to be
transacted.
Section 4. Manner of Giving Notice: Affidavit of Notice. Notice of any meeting
of Shareholders shall be (i) given either by hand delivery, first-class mail,
telegraphic or other written communication, charges prepaid, and (ii) addressed
to the Shareholder at the address of that Shareholder appearing on the books of
the Trust or its transfer agent or given by the Shareholder to the Trust for the
purpose of notice. If no such address appears on the Trust's books or is not
given to the Trust, notice shall be deemed to have been given if sent to that
Shareholder by first class mail or telegraphic or other written communication to
the Trust's principal executive office, or if published at least once in a
newspaper of general circulation in the county where that office is located.
Notice shall be deemed to have been given at the time when delivered personally
or deposited in the mail or sent by telegram or other means of written
communication or, where notice is given by publication, on the date of
publication.
An affidavit of the mailing or other means of giving any notice of any meeting
of Shareholders shall be filed and maintained in the minute book of the Trust.
Section 5. Adjourned Meeting; Notice. Any meeting of Shareholders, whether or
not a quorum is present, may be adjourned from time to time by: (a) the vote
of the majority of the Shares represented at that meeting, either in person or
by proxy; or (b) in his or her discretion by the chair of the meeting.
When any meeting of Shareholders is adjourned to another time or place, notice
need not be given of the adjourned meeting at which the adjournment is taken,
unless a new record date of the adjourned meeting is fixed. Notice of any such
adjourned meeting shall be given to each Shareholder of record entitled to vote
at the adjourned meeting in accordance with the provisions of Sections 3 and 4
of this Article II. At any adjourned meeting, any business may be transacted
which might have been transacted at the original meeting.
Section 6. Voting. The Shareholders entitled to vote at any
meeting of Shareholders shall be determined in accordance with the provisions of
the Declaration of Trust of the Trust, as in effect at such time. The
Shareholders' vote may be by voice vote or by ballot, provided, however, that
any election for Trustees must be by ballot if demanded by any Shareholder
before the voting has begun.
Section 7. Waiver of Notice; Consent of Absent Shareholders. The transaction of
business and any actions taken at a meeting of Shareholders, however called and
noticed and wherever held, shall be as valid as though taken at a meeting duly
held after regular call and notice provided a quorum is present either in person
or by proxy at the meeting of Shareholders and if either before or after the
meeting, each Shareholder entitled to vote who was not present in person or by
proxy at the meeting of the Shareholders signs a written waiver of notice or a
consent to a holding of the meeting or an approval of the minutes. The waiver of
notice or consent need not specify either the business to be transacted or the
purpose of any meeting of Shareholders.
Attendance by a Shareholder at a meeting of Shareholders shall constitute a
waiver of notice of that meeting, except if the Shareholder objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened and except that attendance at a meeting of
Shareholders is not a waiver
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of any right to object to the consideration of matters not included in the
notice of the meeting of Shareholders if that objection is expressly made at the
beginning of the meeting.
Section 8. Shareholder Action by Written Consent Without a Meeting. Except as
provided in the Declaration of Trust, any action that may be taken at any
meeting of Shareholders may be taken without a meeting and without prior notice
if a consent in writing setting forth the action to be taken is signed by the
holders of outstanding Shares having not less than the minimum number of votes
that would be necessary to authorize or take that action at a meeting at which
all Shares entitled to vote on that action were present and voted, provided,
however, that the Shareholders receive any necessary Information Statement or
other necessary documentation in conformity with the requirements of the
Securities Exchange Act of 1934 or the rules or regulations thereunder. All such
consents shall be filed with the Secretary of the Trust and shall be maintained
in the Trust's records. Any Shareholder giving a written consent or the
Shareholder's proxy holders or a transferee of the Shares or a personal
representative of the Shareholder or their respective proxy holders may revoke
the Shareholder's written consent by a writing received by the Secretary of the
Trust before written consents of the number of Shares required to authorize the
proposed action have been filed with the Secretary.
If the consents of all Shareholders entitled to vote have not been solicited in
writing and if the unanimous written consent of all such Shareholders shall not
have been received, the Secretary shall give prompt notice of the action
approved by the Shareholders without a meeting. This notice shall be given in
the manner specified in Section 4 of this Article II.
Section 9. Record Date for Shareholder Notice; Voting and Giving Consents. (a)
For purposes of determining the Shareholders entitled to vote or act at any
meeting or adjournment thereof, the Trustees may fix in advance a record date
which shall not be more than ninety (90) days nor less than ten (10) days before
the date of any such meeting. Without fixing a record date for a meeting, the
Trustees may for voting and notice purposes close the register or transfer books
for one or more Series (or Classes) for all or any part of the period between
the earliest date on which a record date for such meeting could be set in
accordance herewith and the date of such meeting.
If the Trustees do not so fix a record date or close the register or transfer
books of the affected Series or Classes, the record date for determining
Shareholders entitled to notice of or to vote at a meeting of Shareholders shall
be the close of business on the business day next preceding the day on which
notice is given or if notice is waived, at the close of business on the business
day next preceding the day on which the meeting is held.
(b) The record date for determining Shareholders entitled to give consent to
action in writing without a meeting, (a) when no prior action of the Trustees
has been taken, shall be the day on which the first written consent is given, or
(b) when prior action of the Trustees has been taken, shall be (i) such date as
determined for that purpose by the Trustees, which record date shall not precede
the date upon which the resolution fixing it is adopted by the Trustees and
shall not be more than twenty (20) days after the date of such resolution, or
(ii) if no record date is fixed by the Trustees, the record date shall be the
close of business on the day on which the Trustees adopt the resolution relating
to that action. Nothing in this Section shall be constituted as precluding the
Trustees from setting different record dates for different Series or Classes.
Only Shareholders of record on the record date as herein determined shall have
any right to vote or to act at any meeting or give consent to
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<PAGE> 6
any action relating to such record date, notwithstanding any transfer of Shares
on the books of the Trust after such record date.
Section 10. Proxies. Subject to the provisions of the Declaration of Trust,
every Person entitled to vote for Trustees or on any other matter shall have the
right to do so either in person or by proxy, provided that either (i) an
instrument authorizing such a proxy to act is executed by the Shareholder in
writing and dated not more than eleven (11) months before the meeting, unless
the instrument specifically provides for a longer period or (ii) the Trustees
adopt an electronic, telephonic, computerized or other alternative to the
execution of a written instrument authorizing the proxy to act, and such
authorization is received not more than eleven (11) months before the meeting. A
proxy shall be deemed executed by a Shareholder if the Shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the Shareholder or the Shareholder's
attorney-in-fact. A valid proxy which does not state that it is irrevocable
shall continue in full force and effect unless (i) revoked by the Person
executing it before the vote pursuant to that proxy is taken, (a) by a writing
delivered to the Trust stating that the proxy is revoked, or (b) by a subsequent
proxy executed by such Person, or (c) attendance at the meeting and voting in
person by the Person executing that proxy, or (d) revocation by such Person
using any electronic, telephonic, computerized or other alternative means
authorized by the Trustees for authorizing the proxy to act; or (ii) written
notice of the death or incapacity of the maker of that proxy is received by the
Trust before the vote pursuant to that proxy is counted. A proxy with respect to
Shares held in the name of two or more Persons shall be valid if executed by any
one of them unless at or prior to exercise of the proxy the Trust receives a
specific written notice to the contrary from any one of the two or more Persons.
A proxy purporting to be executed by or on behalf of a Shareholder shall be
deemed valid unless challenged at or prior to its exercise and the burden of
proving invalidity shall rest on the challenger.
Section 11. Inspectors of Election. Before any meeting of Shareholders, the
Trustees may appoint any persons other than nominees for office to act as
inspectors of election at the meeting or its adjournments. If no inspectors of
election are so appointed, the Chairman of the meeting may appoint inspectors of
election at the meeting. The number of inspectors shall be two (2). If any
person appointed as inspector fails to appear or fails or refuses to act, the
Chairman of the meeting may appoint a person to fill the vacancy.
These inspectors shall:
(a) Determine the number of Shares outstanding and the voting power of each,
the Shares represented at the meeting, the existence of a quorum and the
authenticity, validity and effect of proxies;
(b) Receive votes, ballots or consents;
(c) Hear and determine all challenges and questions in any way arising in
connection with the right to vote;
(d) Count and tabulate all votes or consents;
(e) Determine when the polls shall close;
(f) Determine the result; and
(g) Do any other acts that may be proper to conduct the election or vote
with fairness to all Shareholders.
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ARTICLE III TRUSTEES
Section 1. Powers. Subject to the applicable provisions of the 1940 Act, the
Declaration of Trust and these By-Laws relating to action required to be
approved by the Shareholders, the business and affairs of the Trust shall be
managed and all powers shall be exercised by or under the direction of the
Trustees.
Section 2. Number of Trustees. The exact number of Trustees within the limits
specified in the Declaration of Trust shall be fixed from time to time by a
resolution of the Trustees.
Section 3. Vacancies. Vacancies in the authorized number of Trustees may be
filled as provided in the Declaration of Trust.
Section 4. Chair. The Trustees shall have the power to appoint from among the
members of the Board of Trustees a Chair. Such appointment shall be by majority
vote of the Trustees. Such Chair shall serve until his or her successor is
appointed or until his or her earlier death, resignation or removal. The Chair
shall preside at meetings of the Trustees and shall, subject to the control of
the Trustees, perform such other powers and duties as may be from time to time
assigned to him or her by the Trustees or prescribed by the Declaration of Trust
or these By-Laws, consistent with his or her position. The Chair need not be a
Shareholder.
Section 5. Place of Meetings and Meetings by Telephone. All meetings of the
Trustees may be held at any place that has been selected from time to time by
the Trustees. In the absence of such an election, regular meetings shall be held
at the principal executive office of the Trust. Subject to any applicable
requirements of the 1940 Act, any meeting, regular or special, may be held by
conference telephone or similar communication equipment, so long as all Trustees
participating in the meeting can hear one another and all such Trustees shall be
deemed to be present in person at the meeting.
Section 6. Regular Meetings. Regular meetings of the Trustees shall be held
without call at such time as shall from time to time be fixed by the Trustees.
Such regular meetings may be held without notice.
Section 7. Special Meetings. Special meetings of the Trustees for any purpose or
purposes may be called at any time by the Chair, the President or the Secretary
or any two (2) Trustees.
Notice of the time and place of special meetings shall be delivered personally
or by telephone to each Trustee or sent by first-class mail, by telegram or
telecopy (or similar electronic means) or, by nationally recognized overnight
courier, charges prepaid, addressed to each Trustee at that Trustee's address as
it is shown on the records of the Trust. If the notice is mailed, it shall be
deposited in the United States mail at least seven (7) calendar days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or by telegram, telecopy (or similar electronic means), or overnight
courier, it shall be given at least forty eight (48) hours before the time of
the holding of the meeting. Any oral notice given personally or by telephone
must be communicated only to the Trustee. The notice need not specify the
purpose of the meeting or the place of the meeting, if the meeting is to be held
at the principal executive office of the Trust. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by such Trustee
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such Trustee.
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Section 8. Quorum. Seventy-five percent (75%) of the Trustees shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
10 of this Article III. Every act or decision done or made by a majority of the
Trustees present at a meeting duly held at which a quorum is present shall be
regarded as the act of the Trustees, subject to the provisions of the
Declaration of Trust. A meeting at which a quorum is initially present may
continue to transact business notwithstanding the withdrawal of Trustees if any
action taken is approved by at least a majority of the required quorum for that
meeting.
Section 9. Waiver of Notice. Notice of any meeting need not be given to any
Trustee who either before or after the meeting signs a written waiver of notice,
a consent to holding the meeting, or an approval of the minutes. The waiver of
notice or consent need not specify the purpose of the meeting. All such waivers,
consents, and approvals shall be filed with the records of the Trust or made a
part of the minutes of the meeting. Notice of a meeting shall also be deemed
given to any Trustee who attends the meeting without protesting, prior to or at
its commencement, the lack of notice to that Trustee.
Section 10. Adjournment. A majority of the Trustees present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
Section 11. Notice of Adjournment. Notice of the time and place of holding an
adjourned meeting need not be given.
Section 12. Action Without a Meeting. Unless the 1940 Act requires that a
particular action be taken only at a meeting at which the Trustees are present
in person, any action to be taken by the Trustees at a meeting may be taken
without such meeting by the written consent of a majority of the Trustees then
in office. Any such written consent may be executed and given by telecopy or
similar electronic means. Such written consents shall be filed with the minutes
of the proceedings of the Trustees. If any action is so taken by the Trustees by
the written consent of less than all of the Trustees, prompt notice of the
taking of such action shall be furnished to each Trustee who did not execute
such written consent, provided that the effectiveness of such action shall not
be impaired by any delay or failure to furnish such notice.
Section 13. Fees and Compensation of Trustees. Trustees and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
Trustees. This Section 13 of Article III shall not be construed to preclude any
Trustee from serving the Trust in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation for those services.
Section 14. Delegation of Power to Other Trustees. Any Trustee may, by power of
attorney, delegate his or her power for a period not exceeding one (1) month at
any one time to any other Trustee. Except where applicable law may require a
Trustee to be present in person, a Trustee represented by another Trustee,
pursuant to such power of attorney, shall be deemed to be present for purpose of
establishing a quorum and satisfying the required majority vote.
ARTICLE IV COMMITTEES
Section 1. Committees of Trustees. The Trustees may by resolution designate one
or more committees, each consisting of two (2) or more Trustees, to serve at the
pleasure of the Trustees. The Trustees may designate one or more Trustees as
alternate members of any committee who may replace any absent member at any
meeting
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of the committee. Any committee, to the extent provided for by resolution of the
Trustees, shall have the authority of the Trustees, except with respect to:
(a) the approval of any action which under applicable law requires approval
by a majority of the Trustees or certain Trustees;
(b) the filling of vacancies of Trustees;
(c) the fixing of compensation of the Trustees for services generally or as
a member of any committee;
(d) the amendment or termination of the Declaration of Trust or any Series
or Class or the amendment of the By-Laws or the adoption of new By-Laws;
(e) the amendment or repeal of any resolution of the Trustees which by its
express terms is not so amendable or repealable;
(f) a distribution to the Shareholders of the Trust, except at a rate or in
a periodic amount or within a designated range determined by the
Trustees; or
(g) the appointment of any other committees of the Trustees or the members
of such new committees.
Section 2. Meetings and Action of Committees. Meetings and action of committees
shall be governed by, held and taken in accordance with the provisions of
Article III of these By-Laws, with such changes in the context thereof as are
necessary to substitute the committee and its members for the Trustees
generally, except that the time of regular meetings of committees may be
determined either by resolution of the Trustees or by resolution of the
committee. Special meetings of committees may also be called by resolution of
the Trustees. Alternate members shall be given notice of meetings of committees
and shall have the right to attend all meetings of committees. The Trustees may
adopt rules for the governance of any committee not inconsistent with the
provisions of these By-Laws.
ARTICLE V OFFICERS
Section 1. Officers. The officers of the Trust shall be a President, a
Secretary, and a Treasurer. The Trust may also have, at the discretion of the
Trustees, one or more Vice Presidents, one or more Assistant Secretaries, one or
more Assistant Treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article V. Any number of
offices may be held by the same person. Any officer may be, but need not be, a
Trustee or Shareholder.
Section 2. Election of Officers. The officers of the Trust, except such officers
as may be appointed in accordance with the provisions of Section 3 or Section 5
of this Article V, shall be chosen by the Trustees, and each shall serve at the
pleasure of the Trustees, subject to the rights, if any, of an officer under any
contract of employment.
Section 3. Subordinate Officers. The Trustees may appoint and may empower the
President to appoint such other officers as the business of the Trust may
require, each of whom shall hold office for such period, have such authority and
perform such duties as are provided in these By-Laws or as the Trustees may from
time to time determine.
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Section 4. Removal and Resignation of Officers. Subject to the rights, if any,
of an officer under any contract of employment, any officer may be removed,
either with or without cause, by the Trustees at any regular or special meeting
of the Trustees or by such officer upon whom such power of removal may be
conferred by the Trustees.
Any officer may resign at any time by giving written notice to the Trust. Any
resignation shall take effect at the date of the receipt of that notice or at
any later time specified in that notice; and unless otherwise specified in that
notice, the acceptance of the resignation shall not be necessary to make it
effective. Any resignation is without prejudice to the rights, if any, of the
Trust under any contract to which the officer is a party.
Section 5. Vacancies in Offices. A vacancy in any office because of death,
resignation, removal, disqualification or other cause shall be filled in the
manner prescribed in these By-Laws for regular appointment to that office. The
President may make temporary appointments to a vacant office pending action by
the Trustees.
Section 6. President. The President shall be the chief operating and chief
executive officer of the Trust and shall, subject to the control of the
Trustees, have general supervision, direction and control of the business and
the officers of the Trust. He or she or his or her designee, shall preside at
all meetings of the Shareholders. He or she shall have the general powers and
duties of a president of a corporation and shall have such other powers and
duties as may be prescribed by the Trustees, the Declaration of Trust or these
By-Laws.
Section 7. Vice Presidents. In the absence or disability of the President, any
Vice President, unless there is an Executive Vice President, shall perform all
the duties of the President and when so acting shall have all powers of and be
subject to all the restrictions upon the President. The Executive Vice President
or Vice Presidents, whichever the case may be, shall have such other powers and
shall perform such other duties as from time to time may be prescribed for them
respectively by the Trustees or the President or by these By-Laws.
Section 8. Secretary. The Secretary shall keep or cause to be kept at the
principal executive office of the Trust, or such other place as the Trustees may
direct, a book of minutes of all meetings and actions of Trustees, committees of
Trustees and Shareholders with the time and place of holding, whether regular or
special, and if special, how authorized, the notice given, the names of those
present at Trustees' meetings or committee meetings, the number of Shares
present or represented at meetings of Shareholders and the proceedings of the
meetings.
The Secretary shall keep or cause to be kept at the principal executive office
of the Trust or at the office of the Trust's transfer agent or registrar, a
share register or a duplicate share register showing the names of all
Shareholders and their addresses, the number and classes of Shares held by each,
the number and date of certificates issued for the same and the number and date
of cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all meetings of the
Shareholders and of the Trustees (or committees thereof) required to be given by
these By-Laws or by applicable law and shall have such other powers and perform
such other duties as may be prescribed by the Trustees or by these By-Laws.
Section 9. Treasurer. The Treasurer shall be the chief financial officer and
chief accounting officer of the Trust and shall keep and maintain or cause to be
kept and maintained adequate and correct books and records of accounts of the
properties and business transactions of the Trust and each Series or Class
thereof, including
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accounts of the assets, liabilities, receipts, disbursements, gains, losses,
capital and retained earnings of all Series or Classes thereof. The books of
account shall at all reasonable times be open to inspection by any Trustee.
The Treasurer shall deposit all monies and other valuables in the name and to
the credit of the Trust with such depositaries as may be designated by the Board
of Trustees. He or she shall disburse the funds of the Trust as may be ordered
by the Trustees, shall render to the President and Trustees, whenever they
request it, an account of all of his or her transactions as chief financial
officer and of the financial condition of the Trust and shall have other powers
and perform such other duties as may be prescribed by the Trustees or these
By-Laws.
ARTICLE VI INSPECTION OF RECORDS AND REPORTS
Section 1. Inspection by Shareholders. The Trustees shall from time to time
determine whether and to what extent, and at what times and places, and under
what conditions and regulations the accounts and books of the Trust or any of
them shall be open to the inspection of the Shareholders; and no Shareholder
shall have any right to inspect any account or book or document of the Trust
except as conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
Section 2. Inspection by Trustees. Every Trustee shall have the absolute right
at any reasonable time to inspect all books, records, and documents of every
kind and the physical properties of the Trust. This inspection by a Trustee may
be made in person or by an agent or attorney and the right of inspection
includes the right to copy and make extracts of documents.
ARTICLE VII GENERAL MATTERS
Section 1. Checks, Drafts, Evidences of Indebtedness. All checks, drafts, or
other orders for payment of money, notes or other evidences of indebtedness
issued in the name of or payable to the Trust shall be signed or endorsed in
such manner and by such person or persons as shall be designated from time to
time in accordance with the resolution of the Board of Trustees.
Section 2. Contracts and Instruments: How Executed. The Trustees, except as
otherwise provided in these By-Laws, may authorize any officer or officers,
agent or agents, to enter into any contract or execute any instrument in the
name of and on behalf of the Trust and this authority may be general or confined
to specific instances; and unless so authorized or ratified by the Trustees or
within the agency power of an officer, no officer, agent, or employee shall have
any power or authority to bind the Trust by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
Section 3. Fiscal Year. The fiscal year of each series of the Trust shall be
fixed and refixed or changed from time to time by the Trustees.
Section 4. Seal. The seal of the Trust shall consist of a flat-faced dye with
the name of the Trust cut or engraved thereon. However, unless otherwise
required by the Trustees, the seal shall not be necessary to be placed on, and
its absence shall not impair the validity of, any document, instrument or other
paper executed and delivered by or on behalf of the Trust.
ARTICLE VIII AMENDMENTS
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Section 1. Amendment. Except as otherwise provided by applicable law or by the
Declaration of Trust, these By-Laws may be restated, amended, supplemented or
repealed by a majority vote of the Trustees.
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