REGISTRATION NO. 333-46097
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
PRE-EFFECTIVE AMENDMENT NO. 2 |X|
POST EFFECTIVE AMENDMENT NO. | |
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
AMENDMENT NO. 2 |X|
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THE WHITE ELK FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
C/O WILLIAM D. WITTER, INC.
ONE CITICORP CENTER
153 EAST 53RD STREET
NEW YORK, NEW YORK 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 753-7878
COPY TO:
MS. MELANIE MARSHAK JAMES W. GIDDENS, ESQ.
WHITE ELK ASSET MANAGEMENT, INC. HUGHES HUBBARD & REED LLP
ONE CITICORP CENTER ONE BATTERY PARK PLAZA
153 EAST 53RD STREET NEW YORK, NEW YORK 10004-1482
NEW YORK, NEW YORK 10022
(NAME AND ADDRESS OF AGENT FOR SERVICE)
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER THE
EFFECTIVE DATE HEREOF.
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE
BOX):
| | IMMEDIATELY UPON FILING PURSUANT TO RULE 485(B), OR
| | ON PURSUANT TO RULE 485(B), OR
| | 60 DAYS AFTER FILING, PURSUANT TO RULE 485(A), OR
| | ON PURSUANT TO RULE 485(A)
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATES AS MAY BE
NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES
ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
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<PAGE>
THE WHITE ELK FUNDS
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following documents:
o Facing Sheet
o Contents of Registration Statement
o Cross Reference Sheets
o Part A - Combined Prospectus
o Part B - Combined Statement of Additional Information
o Part C - Other Information
o Signature Page
<PAGE>
THE WHITE ELK FUNDS
CROSS REFERENCE SHEETS
FORM N-1A
Part A: Information Required in Prospectus
(Combined Prospectus for The White Elk Funds)
White Elk Large Cap Growth Fund
White Elk Mid Cap Growth Fund
White Elk Small Cap Growth Fund
White Elk Large Cap Value Fund
White Elk Mid Cap Value Fund
White Elk Small Cap Value Fund
White Elk Leveraged All Cap Fund
White Elk Global Equity Fund
White Elk Long-Term Bond Fund
White Elk Medium-Term Bond Fund
White Elk Money Market Fund
<TABLE>
<CAPTION>
N-1A
Item No. Item Location in the Registration Statement by Heading
- -------- -------------------------------- -------------------------------------------------
<C> <S> <S>
1. Cover Page...................... Front Cover Page
2. Synopsis........................ Not Applicable
3. Condensed Financial Information. Not Applicable
4. General Description of
Registrant.................. Front Cover Page; The White Elk Funds;
Investment Objectives and Policies;
Management of the Trust
5. Management of the Trust......... Management of the Trust
5A. Management's Discussion of
Trust Performance............... Not Applicable
6. Capital Stock and Other
Securities.................. Management of the Trust; Dividends and
Distributions; Taxes; Investor and
Shareholder Information
7. Purchase of Securities Being
Offered..................... Management of the Trust; Net Asset Value;
Purchases and Redemptions
8. Redemption or Repurchase........ Purchases and Redemptions
9. Pending Legal Proceedings....... Not Applicable
</TABLE>
<PAGE>
Part B: Information Required in
Statement of Additional Information
(Combined Statement of Additional Information for The White Elk Funds)
White Elk Large Cap Growth Fund
White Elk Mid Cap Growth Fund
White Elk Small Cap Growth Fund
White Elk Large Cap Value Fund
White Elk Mid Cap Value Fund
White Elk Small Cap Value Fund
White Elk Leveraged All Cap Fund
White Elk Global Equity Fund
White Elk Long-Term Bond Fund
White Elk Medium-Term Bond Fund
White Elk Money Market Fund
<TABLE>
<CAPTION>
N-1A Location in the Registration Statement
Item No. Item by Heading
- -------- ----------------------------------- --------------------------------------
<C> <S> <S>
10. Cover Page.......................... Front Cover Page
11. Table of Contents................... Table of Contents
12. General Information and History..... Organization
13. Investment Objectives............... Investment Objectives and
Policies; Appendix --
Description of Ratings
14. Management of the Registrant........ Management
15. Control Persons and Principal
Holders of Securities........... Management of the Trust
16. Investment Advisory and Other
Services........................ Management; Purchases and
Redemptions; Management of the
Trust
17. Brokerage Allocation................ Investment Objectives and
Policies; Management of the Trust
18. Capital Stock and Other Securities.. Dividends and Distributions;
Management of the Trust
19. Purchase, Redemption and Pricing
of Securities Being Offered..... Net Asset Value; Purchases and
Redemptions
20. Tax Status.......................... Taxes
21. Underwriters........................ Purchases and Redemptions
<PAGE>
N-1A Location in the Registration Statement
Item No. Item by Heading
- -------- ------------------------------------ --------------------------------------
<C> <S> <S>
22. Calculation of Performance Data..... Determination of Performance;
Performance
23. Financial Statements................ Not Applicable
</TABLE>
PART C
------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PART A
COMBINED PROSPECTUS
The White Elk Funds
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STOCK FUNDS
-----------
White Elk Large Cap Growth Fund
White Elk Mid Cap Growth Fund
White Elk Small Cap Growth Fund
White Elk Large Cap Value Fund
White Elk Mid Cap Value Fund
White Elk Small Cap Value Fund
White Elk Leveraged All Cap Fund
White Elk Global Equity Fund
BOND FUNDS
----------
White Elk Long-Term Bond Fund
White Elk Medium-Term Bond Fund
MONEY MARKET FUND
-----------------
White Elk Money Market Fund
<PAGE>
SUBJECT TO COMPLETION -- Dated October 8, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE SHARES OF THESE FUNDS MAY NOT BE SOLD
NOR MAY ANY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS COMMUNICATION SHALL NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATES IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE. TO OBTAIN A CURRENTLY EFFECTIVE PROSPECTUS FOR THE EXISTING FUNDS OF
THE WHITE ELK FUNDS PLEASE CONTACT WHITE ELK ASSET MANAGEMENT, INC.
PROSPECTUS
----------
|
THE | c/o White Elk Asset
WHITE ELK | Management, Inc.
FUNDS | One Citicorp Center
| 153 East 53rd Street
| New York, New York 10022
| (212) 753-7878
The White Elk Funds (the "Trust") is a registered investment company
- -- a mutual fund -- that presently offers interests in eleven funds (the
"Funds"). Each Fund has distinct investment objectives and policies and a
shareholder's interest is limited to the Fund in which he or she owns shares.
The eleven Funds are:
o White Elk Large Cap Growth Fund
o White Elk Mid Cap Growth Fund
o White Elk Small Cap Growth Fund
o White Elk Large Cap Value Fund
o White Elk Mid Cap Value Fund
o White Elk Small Cap Value Fund
o White Elk Leveraged All Cap Fund
o White Elk Global Equity Fund
o White Elk Long-Term Bond Fund
o White Elk Medium-Term Bond Fund
o White Elk Money Market Fund
Shares of the Funds are offered as a pooled funding vehicle for
insurance companies writing all types of Variable Annuity contracts ("VA
contracts") and Variable Life Insurance policies ("VLI policies") and are also
offered directly to qualified pension and retirement plans (the "Plans"). See
"The White Elk Funds."
<PAGE>
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. INVESTMENT IN A FUND'S SHARES INVOLVES RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
AN INVESTMENT IN THE WHITE ELK MONEY MARKET FUND IS NEITHER INSURED
NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THIS
FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
This Prospectus, which should be retained for future reference,
contains important information that you should know before investing. Please
read it along with the prospectuses issued by the insurance companies with
respect to the VA contracts and VLI policies or with the Plan documents. A
Statement of Additional Information dated February 11, 1998, as may be revised,
containing further information about the Trust and each Fund has been filed with
the Securities and Exchange Commission and is incorporated by reference into
this Prospectus. It is available at no charge by contacting the Trust at the
address or phone number above. If you are viewing the electronic version of this
prospectus through an on-line computer service, you may request a printed
version free of charge by calling (800) 755-7045.
WHITE ELK ASSET|
MANAGEMENT,| Investment Manager
INC.|
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
There can be no assurance that the investment objective of any Fund will be
achieved.
_____________, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUMMARY...................................................... 1
INVESTMENT OBJECTIVES AND POLICIES................................ 1
INVESTMENT MANAGER................................................ 2
MANAGEMENT FEE.................................................... 8
PURCHASES AND REDEMPTIONS OF SHARES............................... 9
STATUS OF THE FUNDS............................................... 9
SPECIAL CONSIDERATIONS............................................ 10
THE WHITE ELK FUNDS..................................................... 10
PARTICIPATING INSURANCE COMPANIES AND PLANS............................. 10
INVESTMENT OBJECTIVES AND POLICIES...................................... 10
WHITE ELK LARGE CAP GROWTH FUND................................... 13
WHITE ELK MID CAP GROWTH FUND..................................... 13
WHITE ELK SMALL CAP GROWTH FUND................................... 14
WHITE ELK LARGE CAP VALUE FUND.................................... 14
WHITE ELK MID CAP VALUE FUND...................................... 14
WHITE ELK SMALL CAP VALUE FUND.................................... 15
WHITE ELK LEVERAGED ALL CAP FUND.................................. 15
WHITE ELK GLOBAL EQUITY FUND...................................... 16
BOND FUNDS.............................................................. 16
WHITE ELK LONG-TERM BOND FUND..................................... 16
WHITE ELK MEDIUM-TERM BOND FUND................................... 17
WHITE ELK MONEY MARKET FUND....................................... 18
<PAGE>
RISKS OF CERTAIN TYPES OF INVESTMENTS................................... 18
MARKET RISKS...................................................... 18
ILLIQUID AND RESTRICTED SECURITIES................................ 18
LENDING OF FUND SECURITIES........................................ 19
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE
AGREEMENTS........................................................ 19
ASSET-BACKED SECURITIES AND MORTGAGE RELATED
SECURITIES........................................................ 19
HIGH YIELD BONDS.................................................. 21
FOREIGN SECURITIES................................................ 21
COUNTRY CONCENTRATION............................................. 22
DERIVATIVE INSTRUMENTS............................................ 22
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX
FUTURES........................................................... 22
LEVERAGE THROUGH BORROWING........................................ 22
FUND TURNOVER..................................................... 23
MONEY MARKET FUND INVESTMENTS..................................... 23
MANAGEMENT OF THE TRUST................................................. 25
ORGANIZATION...................................................... 25
VOTING RIGHTS..................................................... 26
FEES.............................................................. 26
BOARD OF TRUSTEES................................................. 27
MANAGEMENT PERSONNEL.............................................. 27
EXPENSES.......................................................... 27
CUSTODIAN......................................................... 28
TRANSFER AGENT.................................................... 28
<PAGE>
ADMINISTRATOR..................................................... 28
YEAR 2000......................................................... 29
NET ASSET VALUE......................................................... 29
PURCHASES AND REDEMPTIONS............................................... 31
DIVIDENDS AND DISTRIBUTIONS............................................. 32
TAXES................................................................... 32
PERFORMANCE............................................................. 33
INVESTOR AND SHAREHOLDER INFORMATION.................................... 35
APPENDIX -- DESCRIPTION OF RATINGS...................................... 36
MOODY'S INVESTORS SERVICE......................................... 36
BOND RATINGS................................................ 36
SHORT-TERM DEBT RATINGS..................................... 37
STANDARD & POOR'S RATING GROUP.................................... 37
BOND RATINGS................................................ 37
COMMERCIAL PAPER RATINGS.................................... 37
FITCH INVESTORS SERVICES, INC..................................... 38
BOND RATINGS................................................ 38
SHORT-TERM DEBT RATINGS..................................... 39
DUFF & PHELPS CREDIT RATING CO.................................... 39
BOND RATINGS................................................ 39
SHORT-TERM DEBT RATINGS..................................... 39
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to
the more detailed information included elsewhere in this Prospectus and in the
Statement of Additional Information.
The White Elk Funds (the "Trust") is an open-end, diversified
management investment company organized as a Massachusetts business trust that
currently offers investors a selection of eleven investment funds (the "Funds").
The Trust is intended to be a funding vehicle for variable annuity contracts
("VA contracts") and variable life insurance policies ("VLI policies") to be
offered by the separate accounts of life insurance companies ("Participating
Insurance Companies"). Shares of the Trust are also offered directly to
qualified pension and retirement plans (the "Plans"). See "The White Elk Funds"
and "Organization."
INVESTMENT OBJECTIVES AND POLICIES
Each Fund has distinct investment objectives and policies. No
assurance can be made that any Fund's objectives will be achieved. Further
information regarding the investment practices of the Funds is set forth under
the caption "Investment Objectives and Policies" in this Prospectus and in the
Statement of Additional Information. The investment objective of each Fund is
fundamental and may not be changed without shareholder approval:
STOCK FUNDS
o WHITE ELK LARGE CAP GROWTH FUND. The investment objective of
the Fund is long-term capital appreciation. It seeks to achieve this objective
by investing primarily in equity securities of large capitalization companies
using the growth investing style.
o WHITE ELK MID CAP GROWTH FUND. The investment objective of
the Fund is long-term capital appreciation. It seeks to achieve this objective
by investing primarily in equity securities of mid capitalization companies
using the growth investing style.
o WHITE ELK SMALL CAP GROWTH FUND. The investment objective of
the Fund is long-term capital appreciation. It seeks to achieve this objective
by investing primarily in equity securities of small capitalization companies
using the growth investing style.
o WHITE ELK LARGE CAP VALUE FUND. The investment objective of
the Fund is long-term capital appreciation. It seeks to achieve this objective
by investing primarily in equity securities of large capitalization companies
using the value investing style.
o WHITE ELK MID CAP VALUE FUND. The investment objective of the
Fund is long-term capital appreciation. It seeks to achieve this objective by
investing primarily in equity securities of mid capitalization companies using
the value investing style.
<PAGE>
o WHITE ELK SMALL CAP VALUE FUND. The investment objective of
the Fund is long-term capital appreciation. It seeks to achieve this objective
by investing in equity securities of small capitalization companies using the
value investing style.
o WHITE ELK LEVERAGED ALL CAP FUND. The investment objective of
the Fund is long-term capital appreciation. It seeks to achieve this objective
by using a variety of investment techniques and strategies.
o WHITE ELK GLOBAL EQUITY FUND. The investment objective of the
Fund is long-term capital appreciation. It seeks to achieve this objective by
investing primarily in equity securities of foreign and U.S.
companies.
BOND FUNDS
----------
o WHITE ELK LONG-TERM BOND FUND. The investment objective of
the Fund is total return. It seeks to achieve this objective by investing
primarily in debt instruments and other interest bearing securities that have an
average maturity of over ten years.
o WHITE ELK MEDIUM-TERM BOND FUND. The investment objective of
the Fund is total return. It seeks to achieve this objective by investing
primarily in debt instruments and other interest bearing securities that have an
average maturity of under ten years.
MONEY MARKET FUND
-----------------
o WHITE ELK MONEY MARKET FUND. The investment objectives of the
Fund are to seek current income, preservation of capital and liquidity. It seeks
to achieve these objectives by investing in a diversified portfolio of
short-term money market securities. An investor's interest in the White Elk
Money Market Fund is neither insured nor guaranteed by the U.S.
government.
INVESTMENT MANAGER
White Elk Asset Management, Inc. (the "Investment Manager") is the
Trust's investment manager and is responsible for the overall administration of
the Trust, subject to the supervision of the Board of Trustees. William D.
Witter and Stephen E. O'Neil each own fifty percent (50%) of the Investment
Manager. The Investment Manager is responsible for investment decisions for the
Funds and places orders to purchase and sell securities on behalf of the Funds
except to the extent that such decisions are delegated to sub-portfolio managers
pursuant to agreements entered into with sub-portfolio managers and approved in
accordance with the Investment Company Act of 1940, as amended (the "1940 Act")
(the "Sub-Portfolio Managers"). The Investment Manager is a newly registered
investment manager organized for the purpose of managing the Funds that expects
to operate primarily by retaining and supervising Sub-Portfolio Managers.
The Investment Manager may enter into agreements whereby the
Investment Manager will pay a cash fee to other investment advisors that solicit
investment management clients for and on behalf of the Investment Manager. Such
<PAGE>
amounts will not be reimbursed by the Funds. The Investment Manager may also
enter into agreements whereby the Investment Manager will receive a cash fee for
soliciting investment management clients for and on behalf of other investment
advisors including the Sub-Portfolio Managers. The Investment Manager and
Oechsle International Advisors, L.P. ("Oechsle"), a Sub-Portfolio Manager, have
entered into a solicitation agreement.
The Investment Manager has entered into a contract with Oechsle,
subject to the requirements of the 1940 Act, whereby Oechsle will manage the
White Elk Global Equity Fund. Oechsle is currently organized as a Delaware
limited partnership with principal offices at One International Place, Boston,
Massachusetts 02110. The general partner of Oechsle is Oechsle Group, L.P.,
which is also a Delaware limited partnership.
Oechsle is an international investment management firm which was
formed and registered as an investment advisor with the Securities and Exchange
Commissions in 1986. As of March 31, 1998 Oechsle managed approximately $11.9
billion on behalf of institutional and individual investors and registered and
unregistered investment companies. The founding partners of Oechsle have worked
together for an average of fifteen years. The firm is headquartered in Boston,
with offices in Frankfurt, London and Tokyo.
In May 1998, Oechsle entered into an agreement under which it will
undergo a recapitalization and certain ownership changes. Under this agreement,
Oechsle will be reorganized into Oechsle International Advisors, LLC ("Oechsle
LLC"), a Delaware limited liability company, which will thereafter conduct the
business that Oechsle conducted prior to that time, including serving as a
Sub-Portfolio Manager to the White Elk Global Equity Fund. Also under this
agreement, Dresdner Bank AG, which currently indirectly holds the largest
limited partnership interest in Oechsle, will sell all of its interests in
Oechsle. In addition, Fleet Financial Group, Inc. will thereafter hold
approximately 35% (on a fully diluted basis) non-voting interest in Oechsle LLC.
Consummation of the transaction, subject to satisfaction of a number of
conditions, is currently expected on or about October 30, 1998.
The Member Manager of Oechsle LLC will be Oechsle Group, LLC, a
Delaware limited liability company ("Group LLC"). The management, policies and
control of Oechsle LLC will, subject to certain limitations, be vested
exclusively in Group LLC. Day-to-day management of Oechsle LLC will be exercised
by the Management Committee of Group LLC, which will consist of S. Dewey
Keesler, Jr.; L. Sean Roche; Stephen Langer; Warren Walker and Andrew Parlin.
The principal offices of Oechsle LLC will remain at One International Place,
Boston, Massachusetts 02110.
Oechsle's investment process is based on the belief that
inefficiencies within and between international equity markets provide
opportunities for incremental returns. All of the firm's investment
professionals participate in the firm's investment process, focusing on an
investment horizon of approximately one to two years, where, in the firm's
judgment, the greatest identifiable inefficiencies occur. Significantly
overweighting markets identified as fundamentally attractive while attempting to
limit country risk through broad country diversification, the firm tends to
<PAGE>
invest in a concentrated number of securities selected from an approved list in
which the firm's analysts have strong conviction.
The White Elk Global Equity Fund is managed by the investment team
of Oechsle, which consists of 16 investment professionals, including portfolio
managers and analysts. Kathleen Harris is primarily responsible for overseeing
the day-to-day management of the Fund's investment portfolio through
implementation of the team's approach. Ms. Harris has been a portfolio manager
at Oechsle since January 1995. Prior to that, she was Portfolio Manager and
Investment Director for the State of Wisconsin Investment Board and a Fund
Manager and Equity Analyst for Northern Trust Company.
The Investment Manager has entered into a contract with William D.
Witter, Inc. ("Witter"), subject to the requirements of the 1940 Act, whereby
Witter will manage the White Elk Large Cap Growth Fund, Mid Cap Growth Fund,
Small Cap Growth Fund, Large Cap Value Fund, Mid Cap Value Fund, Small Cap Value
Fund, Leveraged All Cap Fund, Long-Term Bond Fund, Medium-Term Bond Fund and the
Money Market Fund. William D. Witter is the majority owner of Witter. Witter, a
registered investment advisor since 1977, currently manages over $900 million in
equity, bond, and balanced portfolios for individuals and institutions. A staff
of 9 professionals service some 110 client relationships. The principals and
managing directors are experienced portfolio managers.
William D. Witter, a Trustee, Chairman and President of The White
Elk Funds, is the Founder, President and Chief Executive of Witter, which acts
as an investment advisor to institutional and individual clients. Mr. Witter
will take primary responsibility for managing the Large Cap Growth Fund, the
Small Cap Growth Fund, the Large Cap Value Fund, the Small Cap Value Fund and
the Leveraged All Cap Fund. Mr. Witter started his investment career in 1956
with Dean Witter & Co., where he became a partner and member of the Executive
committee. In 1966, he formed his own New York Stock Exchange firm specializing
in institutional research and asset management before he founded Witter. Mr.
Witter was an original founder of National Semiconductor.
Mr. Witter is a graduate of Yale University and holds an MBA from
Stanford University Graduate School of Business. He is a member of the New York
Society of Security Analysts. He also serves as a Trustee of the Dean Witter
Foundation, San Francisco, and is a member of the Senate Commission on Corporate
Governance, Shareholder Rights and Securities Transactions (California
Legislature). He served as a Lieutenant in the Air Force 1953 - 1955, and three
terms on the Advisory Committee to the Stanford Graduate School of Business.
A. J. Meyer is a managing director of Witter. Mr. Meyer joined
Witter in 1996. Mr. Meyer will take primary responsibility for managing the Bond
Funds and the Money Market Fund. Mr. Meyer was a managing director in charge of
portfolio management, client servicing and marketing for the corporate asset
management group at Mitchell Hutchins Institutional Investors Inc. and its
predecessor firm Manufacturers Hanover Investment Corp. from 1982 through 1996.
He focused on fixed income management for corporate
<PAGE>
assets, hospitals, insurance companies and high net worth individuals. Mr. Meyer
received a B.A. in economics from St. John's University.
Paul B. Phillips is a managing director of Witter. Mr. Phillips
joined Witter in 1996. Mr. Phillips will take primary responsibility for the Mid
Cap Growth Fund and the Mid Cap Value Fund. He was a senior portfolio manager at
Bankers Trust Company from 1986 to 1995 and was responsible for individual and
private foundation portfolios. Accounts included the U.S. assets of
international clients and a number of trusts. Prior to 1985, Mr. Phillips
actively managed the equities of pension trusts, profit sharing plans and other
institutional accounts. Mr. Phillips joined Bankers Trust Company in 1965. Mr.
Phillips earned his B. A. from Williams College and attended New York University
Graduate School of Business. Mr. Phillips is a Chartered Financial Analyst and a
member of the New York Society of Security Analysts.
In stock selection, Witter emphasizes earnings growth. Witter
focuses primarily on stocks with Price to Earnings ratios lower than the growth
rate of earnings.
In bond management, Witter's key decisions will be the direction of
interest rates and the appropriate structure of maturities. Witter will (i) not
adopt exaggerated maturity schedules, either long or short, to avoid large
risks; (ii) be quality-oriented to avoid credit risk; (iii) favor certainty of
the return from current coupons; and (iv) use marketable bonds to facilitate
change when appropriate.
Witter, the Sub-Portfolio Manager of the White Elk Small Cap Growth
Fund, has, for more than ten years, managed private accounts (not registered
mutual funds) that have invested in substantially the same style as is intended
for the White Elk Small Cap Growth Fund; that is, they invested at least 65% of
their total assets in equity securities of issuers that, at the time of
purchase, have "total market capitalization" within the range of issuers
included in the Russell 2000 Index and were managed in the growth style. The
same growth investing style is intended for the White Elk Small Cap Growth Fund.
The following chart shows the performance of Witter's Equity Oriented Tax Exempt
Accounts (the "Composite") after payment of management fees, with income
reinvested, and compares the results with the S&P 500 Index, which is a
benchmark for large capitalization stocks, and the Russell 2000 Index, which is
a benchmark for small capitalization stocks, in each case assuming reinvestment
of dividends in the index. The inception date of the Composite is January 1,
1989. The accounts included in the Composite were of non-taxable accounts and,
therefore, were managed without regard to the tax consequences of the
investments.
The following Composite sets forth Witter's composite performance
data relating to the historical performance of institutional private accounts
managed by Witter, since the dates indicated, that have investment objectives,
policies, strategies and risks substantially similar to those of the White Elk
Small Cap Growth Fund. The data is provided to illustrate the past performance
of Witter in managing substantially similar accounts as measured against
specific market indices and does not represent the performance of the White Elk
Small Cap Growth Fund. Investors should not consider this performance data as
<PAGE>
the performance of the White Elk Small Cap Growth Fund or an indication of
future performance of the White Elk Small Cap Growth Fund or of the Investment
Manager.
All returns reflect the deduction of estimated investment advisory
fees, brokerage commissions and custodial costs paid by Witter's institutional
private accounts, without provision for federal or state income taxes. Witter's
Composite includes all actual, fee-paying, discretionary institutional private
accounts managed by Witter that have investment objectives, policies, strategies
and risks substantially similar to those of the White Elk Small Cap Growth Fund.
The composite performance data was calculated as follows: (1) the
returns presented were calculated on a time weighted total return basis and
include all accruals; (2) cash and equivalents in whatever percentages the
accounts maintained were included in performance returns; (3) returns were
weighted against the beginning market value monthly; (4) accounts were added to
the composite in the first full month that they were under management or after
they were substantially fully invested, whichever was later; (5) accounts were
removed from the composite after the last full month that they were under
management; and (6) trading costs and all other expenses from the accounts were
deducted from the performance returns.
The institutional private accounts that are included in Witter's
Composite are not subject to the same types of expenses to which the White Elk
Small Cap Growth Fund is subject nor to the diversification requirements,
specific tax restrictions and investment limitations imposed on the White Elk
Small Cap Growth Fund by the Investment Company Act or Subchapter M of the
Internal Revenue Code of 1986, as amended. The above restrictions, had they been
applicable to the Composite, may have adversely affected the results.
The Composite does not reflect fees that may be charged by life
insurance companies to separate accounts. If these fees had been reflected, they
would have lowered the composite performance. The composite performance reflects
the deduction of all fees and expenses including: estimated investment advisory
fees, brokerage commissions and custodial fees. The performance reflects the
actual fees and expenses charged against the private accounts, which are not
subject to the same types of expenses as the Funds. The private accounts pay
management fees, brokerage fees and custodian fees. The Fund, in addition, pays
expenses related to its daily operations, such as administrative fees, trustees'
fees, transfer agency fees and legal and auditing fees. Consequently, the
performance results for the Witter's Composite could have been adversely
affected if the institutional private accounts included in the Composite had
been regulated as investment companies under the federal securities and tax
laws.
The investment results of Witter's Composite presented below is not
intended to predict or suggest the returns that might be experienced by the
White Elk Small Cap Growth Fund or an individual investor investing in such
Funds. Investors should also be aware that the use of a methodology different
from that used below to calculate performance could result in different
performance data. Investors should be aware that the Funds have no performance
of their own.
<PAGE>
----------------------------------------------------------------
| WILLIAM D. WITTER, INC. |
| EQUITY ORIENTED TAX-EXEMPT COMPOSITE |
| HISTORICAL PERFORMANCE - ANNUAL RETURNS |
| DOLLAR WEIGHTED - TOTAL RETURN |
| NET OF FEES<F1> |
| |
| * GROSS PERFORMANCE NUMBERS DIFFER FROM NET PERFORMANCE |
| NUMBERS ONLY WITH RESPECT TO MANAGEMENT/ADVISORY FEES |
----------------------------------------------------------------
================================================================================
YEAR | WDW | S&P 500 | RUSSELL 2000
======================|=================|==================|====================
| | |
1989 | 26.58% | 31.79% | 16.20%
- ----------------------|-----------------|------------------|--------------------
1990 | -18.00% | -3.11% | -19.50%
- ----------------------|-----------------|------------------|--------------------
1991 | 45.87% | 30.46% | 46.10%
- ----------------------|-----------------|------------------|--------------------
1992 | 17.30% | 7.62% | 18.40%
- ----------------------|-----------------|------------------|--------------------
1993 | 19.31% | 10.07% | 18.90%
- ----------------------|-----------------|------------------|--------------------
1994 | 3.51% | 1.32% | -1.82%
- ----------------------|-----------------|------------------|--------------------
1995 | 31.87% | 37.57% | 28.44%
- ----------------------|-----------------|------------------|--------------------
1996 | 15.24% | 22.96% | 16.49%
- ----------------------|-----------------|------------------|--------------------
1997 | 38.64% | 33.37% | 22.36%
======================|=================|==================|====================
AVERAGE ANNUAL | WDW | S&P 500 | RUSSELL 2000
TOTAL RETURN FOR: | | |
======================|=================|==================|===================
9 YRS ENDING 12/31/97 | 18.54% | 18.22% | 14.78%
- ----------------------|-----------------|------------------|--------------------
5 YRS ENDING 12/31/97 | 21.08% | 20.27% | 16.41%
- ----------------------|-----------------|------------------|--------------------
3 YRS ENDING 12/31/97 | 28.20% | 31.15% | 22.34%
- --------------------------------------------------------------------------------
--------------------------------------------------------------
| |
| PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS. |
| |
--------------------------------------------------------------
- -----------------------
<F1> There are two sets of returns presented on the chart: one table provides a
year by year presentation while the other table provides an average annual
total return presentation.
<PAGE>
MANAGEMENT FEE
For its services, White Elk Asset Management, Inc. (the "Investment
Manager") receives a fee, accrued daily by each Fund and payable to the
Investment Manager on the first business day of the succeeding month, at the
following annual percentages of average daily net assets: White Elk Large Cap
Growth Fund--1%; White Elk Mid Cap Growth Fund--1%; White Elk Small Cap Growth
Fund--1%; White Elk Large Cap Value Fund--1%; White Elk Mid Cap Value Fund--1%;
White Elk Small Cap Value Fund--1%; White Elk Leveraged All Cap Fund--1%; White
Elk Global Equity Fund--1%; White Elk Long-Term Bond Fund--.50%; White Elk
Medium-Term Bond Fund--.50%; White Elk Money Market Fund--.25%.
William D. Witter, Inc. has been retained by the Investment Manager
as Sub-Portfolio Manager and receives a fee from the Investment Manager at the
following annual percentages of average daily net assets: White Elk Large Cap
Growth Fund--.50%; White Elk Mid Cap Growth Fund--.50%; White Elk Small Cap
Growth Fund--.50%; White Elk Large Cap Value Fund--.50%; White Elk Mid Cap Value
Fund--.50%; White Elk Small Cap Value Fund--.50%; White Elk Leveraged All Cap
Fund--.50%; White Elk Long-Term Bond Fund--..25%; White Elk Medium-Term Bond
Fund--.25%; White Elk Money Market Fund--.125%.
Oechsle International Advisors, L.P. has been retained by the
Investment Manager as Sub-Portfolio Manager and receives a fee from the
Investment Manager at the following annual percentage of average daily net
assets: White Elk Global Equity Fund--.50%.
The Trust will pay investment management fees directly to the
Investment Manager.
The estimated total expenses of the each Fund, before the Investment
Manager's voluntary reimbursement when the net average assets of the Funds are
$110 million, are as follows: 2.54% for each of the Large Cap Growth Fund, Mid
Cap Growth Fund, Small Cap Growth Fund, Large Cap Value Fund, Mid Cap Value
Fund, Small Cap Value Fund, and Leveraged All Cap Fund; 2.60% for the Global
Equity Fund; 2.04% for each of the Bond Funds; and 1.79% for the Money Market
Fund. The Investment Manager has voluntarily agreed to pay or reimburse the
Large Cap Growth Fund, Mid Cap Growth Fund, Small Cap Growth Fund, Large Cap
Value Fund, Mid Cap Value Fund, Small Cap Value Fund, Leveraged All Cap Fund and
the Global Equity Fund for all expenses in excess of 1.50% of the average daily
net assets of the Fund. The Investment Manager has voluntarily agreed to pay or
reimburse the Bond Funds for all expenses in excess of .75% of the average daily
net assets of the Fund. The Investment Manager has voluntarily agreed to pay or
reimburse the Money Market Fund for all expenses in excess of .50% of the
average daily net assets of the Fund. These are voluntary agreements made by the
Investment Manager and may be discontinued by the Investment Manager at any
time.
From time to time the Investment Manager may compensate insurance
companies or their affiliates whose customers hold shares of the Funds for
providing a variety of record-keeping, administrative, marketing and/or
shareholder support services. This compensation, which may be paid at a rate of
up to .30% of the net asset values of shares held by those customers, will be
paid from the Investment Manager's own resources and not from the assets of the
Fund.
<PAGE>
PURCHASES AND REDEMPTIONS OF SHARES
Contract or policy holders or Plan participants may not deal
directly with the Trust regarding the purchase or redemption of a Fund's shares.
The separate accounts of the Participating Insurance Companies place orders to
purchase and redeem shares of each Fund based on, among other things, the amount
of premium payments to be invested and the amount of surrender and transfer
requests (as defined in the prospectuses describing the VA contracts and VLI
policies issued by the Participating Insurance Companies) to be effected on that
day pursuant to VA contracts and VLI policies. Plan trustees purchase and redeem
Fund shares. Plan participants cannot contact the Trust directly to purchase
shares of the Funds but may invest in shares of the Funds only through their
Plan. Participants should contact their Plan sponsor for information concerning
the appropriate procedure for investing in the Trust.
Orders received by the Trust or the Trust's transfer agent are
effected on days on which the New York Stock Exchange (the "NYSE") and State
Street Bank and Trust Company ("State Street") are open. For orders received
before the close of regular trading on the NYSE, purchases and redemptions of
the shares of each Fund are effected at the respective net asset values per
share determined as of the close of regular trading on the NYSE on that same
day. Orders received after the close of regular trading on the NYSE are effected
at the next calculated net asset value. See "Net Asset Value." All orders for
the purchase of shares are subject to acceptance or rejection by the Trust.
Payment for redemptions will be made by the Trust's transfer agent on behalf of
the Trust and the relevant Funds within seven days after the request is
received. The Trust does not assess any fees, either when it sells or when it
redeems its shares. Surrender charges, mortality and expense risk fees and other
charges may be assessed by Participating Insurance Companies under the VA
contracts or VLI policies. These fees should be described in the Participating
Insurance Companies' prospectuses. Any charges assessed by the Plans should be
described in the Plan documents.
Under unusual circumstances, shares of a Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with securities
which are held by the Fund. See "Statement of Additional Information."
STATUS OF THE FUNDS
The Trust may establish additional Funds at any time. The Trust will
treat each of its current Funds and any additional Funds as separate investment
companies for federal income tax purposes. The calculation of the Funds' net
asset values and the determination of the tax consequences of investing in the
Funds will be determined on a Fund-by-Fund basis. See "Net Asset Value,"
"Dividends and Distributions" and "Taxes."
SPECIAL CONSIDERATIONS
One or more of the Funds may employ investment techniques that
involve certain risks, including entering into repurchase agreements and reverse
repurchase agreements, lending Fund securities, engaging in "short sales against
the box", investing in instruments issued by foreign issuers, entering into firm
commitment agreements and investing in derivatives, warrants, options and
<PAGE>
restricted securities. See "The White Elk Funds", "Investment Objectives and
Policies" and "Certain Securities and Investment Techniques."
THE WHITE ELK FUNDS
The Trust is designed to permit insurance companies that issue VA
contracts and VLI policies to offer contract and policy holders the opportunity
to participate in the performance of one or more of the Funds of the Trust. The
Trust may also be a funding vehicle for qualified pension and retirement plans
that elect to make the Trust an investment option for Plan participants.
The Trust is a diversified, open-end management investment company
that offers a selection of eleven Funds, each having distinct investment
objectives and policies. The Trust's Board of Trustees may establish additional
Funds at any time.
PARTICIPATING INSURANCE COMPANIES AND PLANS
The Trust is intended to be a funding vehicle for VA contracts and
VLI policies to be offered by the Participating Insurance Companies and Plans.
Individuals cannot invest in a Fund directly but may do so only through a VA
contract or VLI policy or a Plan. The Trust currently does not foresee any
disadvantages to the holders of VA contracts and VLI policies arising from the
fact that the interests of the holders of VA contracts and VLI policies may
differ, that the Participating Insurance Companies may not be affiliated with
each other or that the Trust may offer its shares to Plans. Nevertheless, the
Trust's Board of Trustees intends to monitor events in order to identify any
material irreconcilable conflicts which may possibly arise due to differences of
tax treatment or other considerations, and to determine what action, if any,
should be taken in response to such conflicts. If such a conflict were to occur,
one or more Participating Insurance Company separate accounts or Plans might
withdraw its investment in a Fund, which may cause the Fund to sell Fund
securities at disadvantageous prices. The VA contracts and VLI policies are
described in the separate prospectuses issued by the Participating Insurance
Companies, and the Plans are described in the Plan documents made available by
the Plan sponsors. The Trust assumes no responsibility for such prospectuses or
plan documents.
INVESTMENT OBJECTIVES
AND POLICIES
The Stock Funds (Large Cap Growth Fund, Mid Cap Growth Fund, Small
Cap Growth Fund, Large Cap Value Fund, Mid Cap Value Fund, Small Cap Value Fund,
Leveraged All Cap Fund and Global Equity Fund) seek to achieve their objectives
by investing in equity securities, such as common or preferred stocks, or
securities convertible into or exchangeable for equity securities, including
warrants and rights. Except for the White Elk Global Equity Fund, the Stock
Funds will invest primarily in the equity securities of companies whose
securities are traded on domestic stock exchanges or on the NASDAQ National
Market. The Stock Funds (other than the White Elk Global Equity Fund) may invest
up to 20% of their total assets in securities of foreign issuers that are not
traded on domestic stock exchanges or on the NASDAQ national market. The White
<PAGE>
Elk Global Equity Fund may invest up to 100% of its assets in securities of
foreign issuers. See "Risks of Certain Types of Investments."
The White Elk Funds include eight funds that invest primarily in
equity securities (common and preferred stocks and securities convertible into
common stock). Three of these funds use the growth investing style, three of
them use the value investing style, one uses a more aggressive leveraged
investing style, and one is a global fund that provides significant
international as well as domestic exposure.
Growth investing and value investing are two styles employed by
stock fund managers. Growth 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. In managing the Small Cap
Growth Fund and Mid Cap Growth Fund, Witter also seeks to invest in growth
stocks with price earnings ratios that are lower than the growth rate of
earnings. Value funds generally emphasize companies that, considering their
assets and earnings history, are attractively priced; these companies often pay
regular dividend income to shareholders. Value and growth stocks have, in the
past, produced similar long-term returns, though each has periods when it
outperforms the other. In general, growth funds appeal to investors who will
accept more volatility in hopes of a greater increase in share price or who
prefer a higher portion of the fund's returns as capital gains, which may be
taxed at lower rates than dividend income, while value funds are appropriate for
investors who want some dividend income and the potential for capital gains but
are less tolerant of share-price fluctuations, while.
THE STOCK FUNDS ARE SUBJECT, IN VARYING DEGREES, TO OBJECTIVE
RISK, WHICH IS THE POSSIBILITY THAT RETURNS FROM A SPECIFIC TYPE
OF STOCK (FOR INSTANCE, SMALL-CAP OR VALUE) WILL TRAIL RETURNS
FROM THE OVERALL STOCK MARKET. EACH TYPE OF STOCK TENDS TO GO
THROUGH CYCLES OF OUTPERFORMANCE AND UNDERPERFORMANCE IN
COMPARISON TO THE STOCK MARKET IN GENERAL. THESE PERIODS HAVE, IN
THE PAST, LASTED FOR AS LONG AS SEVERAL YEARS.
BOND FUNDS
----------
Bond funds generally are more stable than equity funds, although
they can and do fluctuate in value. In most interest rate environments,
long-term bonds and other long-term interest bearing securities pay higher rates
of interest than shorter term securities. However, the prices of longer term
securities also are more volatile than the prices of shorter term securities.
Bond funds generally provide a higher level of current income than stock funds
but generally have less possibility of capital appreciation.
MONEY MARKET FUND
-----------------
A Money Market Fund is intended for temporary investments and for
times when shareholders wish to take a defensive posture. A Money Market Fund
has earnings based on current short-term market interest rates. It has no
opportunity for capital appreciation.
<PAGE>
CHOOSING A FUND
---------------
The following descriptions are designed to help you choose the Fund
that best fits your investment objective. You may want to pursue more than one
objective by investing in more than one of the Funds. There can be no assurance
that any objective will be met. Historically, investing in smaller, newer
issuers has involved greater risk and volatility than investing in larger, more
established issuers. In addition, the equity securities of different issuer size
ranges have performed best (or worst) in different time periods. Several Funds
of The White Elk Funds have different issuer size ranges in which they primarily
invest, based on market capitalization at the time of purchase. Investors should
consider these factors in deciding which Fund may be most appropriate for them.
INVESTMENT OBJECTIVES AND RESTRICTIONS
--------------------------------------
The investment objectives of the Funds and the investment
restrictions summarized in the next paragraphs are fundamental which means that
they may not be changed without the approval of a majority of the Fund's
outstanding voting securities, as defined in the 1940 Act. All investment
policies and practices described elsewhere in this Prospectus, and not
explicitly identified as fundamental, are not fundamental, so the Trust's Board
of Trustees may change them without shareholder approval. Each Fund has adopted
additional investment restrictions that are set forth in the Statement of
Additional Information. There is no guarantee that any Fund's objectives will be
achieved. In addition, each of the Funds may make use of certain types of
investments and investing techniques that are described under the caption
"Investment Objectives and Policies". For a discussion of certain risks
associated with investment in the Funds, see "Risks of Certain Types of
Investments."
As a matter of fundamental policy, each of the Funds will not: (1)
with respect to 75% of its total assets, invest more than 5% of its total assets
in any one issuer, except for obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government securities");
(2) own more than 10% of the outstanding voting securities of any company; (3)
invest more than 10% (15% for White Elk Leveraged All Cap Fund) of its net
assets in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market (securities
eligible for resale under Rule 144A shall not be subject to this limitation);
(4) invest more than 25% of its total assets (taken at market value at the time
of each investment) in the securities of issuers in any particular industry,
except for U.S. Government securities; (5) borrow money or pledge its assets,
except that (i) it may borrow money or pledge its assets in an amount up to 10%
of its total assets for temporary or emergency purposes and (ii) White Elk
Leveraged All Cap Fund may borrow for investment purposes; (6) enter into
repurchase agreements or purchase and sale contracts if, as a result, more than
10% of the Fund's total assets (taken at market value at the time of each
investment) would be subject to repurchase agreements or purchase and sale
contracts maturing in more than seven days; and (7) the White Elk Money Market
Fund will not: (1) purchase any securities other than (i) money market and (ii)
other securities described under "Investment Objectives and Policies."
<PAGE>
WHITE ELK LARGE CAP GROWTH FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of large capitalization companies using the growth investing
style.
Under normal circumstances, the Fund invests at least 65% of its
total assets in equity securities of companies that, at the time of purchase,
have "total market capitalization" -- present market value per share multiplied
by the total number of shares outstanding -- greater than $5 billion. The Fund
also may invest in a broad range of other instruments, including equity
securities of smaller companies, when deemed appropriate by the Investment
Manager. See "Risks of Certain Types of Investments".
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in money market instruments, bank
deposits, and high-grade short-term interest bearing securities (collectively
referred to as "Money Market Instruments").
WHITE ELK MID CAP GROWTH FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of mid capitalization companies using the growth investing
style.
Under normal circumstances, the Fund invests at least 65% of its
total assets in equity securities of companies that, at the time of purchase,
have "total market capitalization" -- present market value per share multiplied
by the total number of shares outstanding -- within the range of companies
included in the S&P MidCap 400 Index ("MidCap 400 Index"), updated quarterly.
The MidCap 400 Index is a broad index of medium sized issuers based on
capitalization. As of December 31, 1997, the range of market capitalization of
the companies in the MidCap 400 Index was $213 million to $13.7 billion. The
Fund also may invest in a broad range of other instruments, including equity
securities of companies whose capitalization is outside the MidCap 400 Index
range, when deemed appropriate by the Investment Manager. See "Risks of Certain
Types of Investments". Although the Fund invests primarily in equity securities
of companies that have a capitalization within the MidCap 400 Index range, the
Fund does not attempt to replicate the performance of the MidCap 400 Index.
During temporary defensive periods, the Fund may invest a large
percentage (up to 100% of its assets) in Money Market Instruments.
WHITE ELK SMALL CAP GROWTH FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of small capitalization companies using the growth investing
style.
<PAGE>
Under normal circumstances, the Fund invests at least 65% of its
total assets in equity securities of companies that, at the time of purchase,
have "total market capitalization" -- present market value per share multiplied
by the total number of shares outstanding -- less than $1.1 billion, which is
within the range of companies included in the Russell 2000 Growth Index
("Russell Index"), updated quarterly. The Russell Index is a broad index of
small capitalization stocks. As of December 31, 1997, the range of market
capitalization of the companies in the Russell Index was $171.7 million to $ 1.1
billion. The Fund also may invest in a broad range of other instruments,
including equity securities of companies whose capitalization is outside the
Russell Index range, when deemed appropriate by the Investment Manager. See
"Risks of Certain Types of Investments". Although the Fund invests primarily in
equity securities of companies that have a capitalization within the Russell
Index range, the Fund does not attempt to replicate the performance of the
Russell Index.
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in Money Market Instruments.
WHITE ELK LARGE CAP VALUE FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of large capitalization companies using the value investing
style.
Under normal circumstances, the Fund invests at least 65% of its
total assets in equity securities of companies that, at the time of purchase,
have "total market capitalization" -- present market value per share multiplied
by the total number of shares outstanding -- greater than $5 billion. The Fund
also may invest in a broad range of other instruments, including equity
securities of smaller companies, when deemed appropriate by the Investment
Manager. See "Risks of Certain Types of Investments".
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in Money Market Instruments.
WHITE ELK MID CAP VALUE FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of mid capitalization companies using the value investing
style.
Under normal circumstances, the Fund invests at least 65% of its
total assets in equity securities of companies that, at the time of purchase,
have "total market capitalization" -- present market value per share multiplied
by the total number of shares outstanding -- within the range of companies
included in the S&P MidCap 400 Index ("MidCap 400 Index"), updated quarterly.
The MidCap 400 Index is a broad index of medium sized issuers based on
capitalization. As of December 31, 1997, the range of market capitalization of
the companies in the MidCap 400 Index was $213 million to $13.7 billion. The
Fund also may invest in a broad range of other instruments, including equity
securities of companies whose capitalization is outside the MidCap 400 Index
<PAGE>
range, when deemed appropriate by the Investment Manager. See "Risks of Certain
Types of Investments". Although the Fund invests primarily in equity securities
of companies that have a capitalization within the MidCap 400 Index range, the
Fund does not attempt to replicate the performance of the MidCap 400 Index.
During temporary defensive periods, the Fund may invest a large
percentage (up to 100% of its assets) in Money Market Instruments.
WHITE ELK SMALL CAP VALUE FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of small capitalization companies using the value investing
style.
Under normal circumstances, the Fund invests at least 65% of its
total assets in equity securities of companies that, at the time of purchase,
have "total market capitalization" -- present market value per share multiplied
by the total number of shares outstanding -- less than $1.1 billion, which is
within the range of companies included in the Russell 2000 Growth Index
("Russell Index"), updated quarterly. The Russell Index is a broad index of
small capitalization stocks. As of December 31, 1997, the range of market
capitalization of the companies in the Russell Index was $171.1 million to $1.1
billion. The Fund also may invest in a broad range of other instruments,
including equity securities of companies whose capitalization is outside the
Russell Index range, when deemed appropriate by the Investment Manager. See
"Risks of Certain Types of Investments". Although the Fund invests primarily in
equity securities of companies that have a capitalization within the Russell
Index, the Fund does not attempt to replicate the performance of the Russell
Index.
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in Money Market Instruments.
WHITE ELK LEVERAGED ALL CAP FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by using a variety of
investment techniques and strategies.
This Fund may invest in equity securities of issuers of any size and
may use a number of techniques to leverage potential returns. For example, the
Fund may purchase put and call options and sell (write) covered call and put
options on securities and securities indexes. In addition, the Fund may enter
into futures contracts. These activities may be undertaken either for the
prospect of gain or for hedging purposes. The Fund also may borrow money for the
purchase of additional securities. All of these practices are in the nature of
leverage and are deemed to be speculative. They will tend to make the Fund's net
asset value more volatile than the net asset value of a fund that does not
engage in these activities. That is, these activities will tend to make gains
greater when the Investment Manager's choices are correct and will tend to make
the losses greater when the market goes against those choices.
<PAGE>
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in Money Market Instruments.
WHITE ELK GLOBAL EQUITY FUND
The investment objective of the Fund is long-term capital
appreciation. It seeks to achieve this objective by investing primarily in
equity securities of foreign and U.S. companies. Under normal circumstances, the
Fund expects to invest in the securities markets of at least three countries at
any one time, one of which may include the U.S.
Under normal circumstances, the Fund will invest at least 65% of
assets in equity securities, without restrictions as to the size of the issuer
or its domicile. These equity securities may be of issuers based in the United
States or from other countries with established stock and capital markets or
countries with emerging markets. This will expose the Fund to currency,
political and other local market risks as well as the risks of investing in
equity securities of specific issuers. The Fund may seek to hedge some of such
risks. There can be no guarantee, however, that the hedging techniques will
succeed. See "Risks of Certain Types of Investments -- Foreign Securities."
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in Money Market Instruments.
BOND FUNDS
WHITE ELK LONG-TERM BOND FUND
The investment objective of the Fund is total return. It seeks to
achieve this objective by investing primarily in debt instruments and other
interest bearing securities that have an average maturity of over ten years. At
least 95% of the Fund's assets are required to be invested in investment grade
securities, meaning securities that have received a long-term rating with
respect to a class of obligations that are comparable in priority and security
with the instrument to be purchased from at least one of the nationally
recognized statistical rating organizations ("NRSROs") in one of the four
highest long-term rating categories. Currently, there are six NRSROs: Duff &
Phelps Inc., Fitch Investors Service, Inc., IBCA Limited and its affiliate IBCA
Inc., Thompson Bankwatch, Inc., Moody's Investors Service, Inc. and Standard &
Poor's Ratings Services.
Up to 5% of the Fund's assets may be invested in securities that are
of lesser quality, including securities that may be described as "junk bonds".
Such investments of lesser quality may increase yields but also increase risk
and volatility of the Fund's net asset value. See "High Yield Bonds."
Debt instruments and other interest bearing securities include
corporate bonds, government bonds, bonds issued by agencies of governments and
various mortgage related and asset-backed securities.
<PAGE>
To the extent that such investments are made in securities of
foreign issuers or securities denominated in currencies other than the United
States dollar, foreign currency, political and other market risks may be
assumed. See "Risks of Certain Types of Investments -- Foreign Securities."
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in Money Market Instruments.
WHITE ELK MEDIUM-TERM BOND FUND
The investment objective of the Fund is total return. It seeks to
achieve this objective by investing primarily in debt instruments and other
interest bearing securities that have an average maturity of under ten years. At
least 95% of the Fund's assets are required to be invested in investment grade
securities, meaning securities that have received a medium-term rating with
respect to a class of obligations that are comparable in priority and security
with the instrument to be purchased from at least one of the NRSROs in one of
the four highest medium-term rating categories.
Up to 5% of the Fund's assets may be invested in securities that are
of lesser quality, including securities that may be described as "junk bonds".
Such investments of lesser quality may increase yields but also increase risk
and volatility of the Fund's net asset value. See "High Yield Bonds."
Debt instruments and other interest bearing securities include
corporate bonds, government bonds, bonds issued by agencies of governments and
various mortgage related and asset-backed securities.
To the extent that such investments are made in securities of
foreign issuers or securities dominated in currencies other than the United
States dollar, foreign currency, political and other market risks may be
assumed. See "Risks of Certain Types of Investments -- Foreign Securities."
During temporary defensive periods, the Fund may invest a large
percentage (up to 100%) of its assets in Money Market Instruments.
WHITE ELK MONEY MARKET FUND
The investment objectives of the Fund are to seek current income,
preservation of capital and liquidity. It seeks to achieve these objectives by
investing primarily in a diversified portfolio of short-term money market
securities.
Money market instruments are those determined to be of eligible
quality under Securities and Exchange Commission ("SEC") rules and to pose
minimal credit risk. Under SEC rules, eligible securities include First Tier
Securities (i.e., securities rated in the highest short-term rating categories)
and Second Tier Securities (i.e., securities which are otherwise eligible but
not in the First Tier).
<PAGE>
RISKS OF CERTAIN TYPES OF INVESTMENTS
MARKET RISKS
Investments in stock and bond funds involve certain risks. The
principal risk in each of these Funds is the potential change in market prices
of the equity and fixed income securities in which it invests. These may be
affected by general market conditions, including changes in interest rates or
the shape of the yield curve, or by conditions specific to the particular
issuers. The market value of the fixed income obligations in a Fund's portfolio
can be expected to vary inversely to changes in prevailing interest rates. In
addition, some of the techniques used and instruments or securities invested in
may have additional risks, some of which are described under the heading
"Certain Securities and Investment Techniques." The Statement of Additional
Information also contains information about the risks associated with investing
in the various Funds.
ILLIQUID AND RESTRICTED SECURITIES
The investment policies adopted by the Trust permit each Fund to
invest up to 10 percent (15 percent for White Elk Leveraged All Cap Fund) of the
value of the Fund's net assets in securities that are illiquid by virtue of the
absence of a readily available market (either within or outside of the United
States) or legal or contractual restrictions on resale. Historically, illiquid
securities have included securities subject to contractual or legal restrictions
on resale because they have not been registered under the Securities Act,
securities which are otherwise not readily marketable and repurchase agreements
that have a maturity of longer than seven days. Mutual funds do not typically
hold a significant amount of restricted or other illiquid securities because of
the potential for delays on resale and uncertainty in valuation. Delays on
resale may have an adverse effect on a Fund's ability to redeem its securities
within seven days. Uncertainty in valuation due to illiquidity may cause
uncertainty as to the correctness of a Fund's net asset value. The Trust has
established procedures for determining when securities are illiquid and for
valuing illiquid securities. Some securities that have not been registered under
the Securities Act of 1933 (the "1933 Act"), including some securities eligible
for resale under Section 144A under the 1933 Act, may be determined to be liquid
under these procedures. Securities that have been determined to be liquid are
not subject to the Funds' limits on investments in illiquid securities.
LENDING OF FUND SECURITIES
In order to generate income and to offset expenses, each Fund may
lend Fund securities with a value up to 33 1/3% of the Fund's total assets to
brokers, dealers and other financial organizations. Any such loan will be
secured by collateral of cash or securities issued or guaranteed by the U.S.
Government at least equal to the value of the securities loaned (plus accrued
interest) "marked to market" daily. Default by the borrower could, however,
result in delays, costs and/or losses in disposing of the collateral or
recovering the loaned securities and, should the borrower fail financially,
possible loss of rights in the collateral.
<PAGE>
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
Each Fund may enter into repurchase agreements involving securities
in which it is permitted to invest with banks or broker-dealers, whereby the
seller of a security agrees to repurchase the security on an agreed-upon date in
the future. While each Fund intends to be fully "collateralized" as to such
agreements, and the collateral will be marked to market daily, if the person
obligated to repurchase from the Fund defaults, there may be possible delays and
expenses in liquidating the securities subject to the repurchase agreement, a
decline in its value and loss of interest.
Each Fund may also enter into reverse repurchase agreements in an
amount up to 5% of the value of its total assets. A reverse repurchase agreement
involves the sale of securities held by the Fund, with an agreement to
repurchase the securities at an agreed upon price, date and interest payment.
During the time a reverse repurchase agreement is outstanding, the Fund will
maintain a segregated custodial account containing high-grade securities having
a value equal to the repurchase price (including accrued interest).
ASSET-BACKED SECURITIES AND MORTGAGE RELATED SECURITIES
Except as noted below, the Funds may invest in securities whose
principal and interest payouts are backed by, or supported by, any of various
types of assets. These assets most typically include receivables related to the
purchase of automobiles, credit card loans, and home equity loans. These
securities generally take the form of a structured type of security, including
pass-through, pay-through, and stripped interest payout structures.
The Funds also may invest in mortgage-related securities, including
mortgage pass-through securities and collateralized mortgage obligations.
Mortgage pass-through securities are securities representing interests in pools
of mortgages in which payments of both interest and principal on the securities
are generally made monthly, in effect "passing through" monthly payments made by
the individual borrowers on the residential mortgage loans which underlie the
securities (net of fees paid to the issuer or guarantor of the securities).
Payment of principal and interest on some mortgage-related
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit of the U.S. Government (in the case of
securities guaranteed by the Government National Mortgage Association (the
"GNMA")) or by agencies or instrumentalities of the U.S. Government (in the case
of securities guaranteed by the Federal National Mortgage Association (the
"FNMA") or the Federal Home Loan Mortgage Corporation (the "FHLMC"), which are
supported only by the discretionary authority of the U.S. Government to purchase
the agency's obligations). Mortgage pass-through securities created by
non-governmental issuers (such as commercial banks, savings associations,
private mortgage insurance companies, mortgage bankers and other secondary
market insurers) may be supported by various forms of insurance or guarantees,
including individual loan, title, pool and hazard insurance, and letters of
credit, which may be issued by governmental entities, private insurers or the
mortgage poolers.
<PAGE>
Collateralized mortgage obligations ("CMOs"), including CMOs that
have elected to be treated as Real Estate Mortgage Investment Conduits
("REMICs"), are hybrid instruments with characteristics of both bonds and
mortgage pass-through securities. Similar to a bond, interest and prepaid
principal on a CMO are paid, in most cases, monthly. CMOs may be collateralized
by whole mortgage loans but are more typically collateralized by Funds of
securities guaranteed by GNMA, FHLMC or FNMA or of mortgage pass-through
securities created by non-governmental issuers. CMOs are structured into
multiple classes, with each class bearing a different stated maturity. Monthly
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class. Investors holding the longer maturity
classes receive principal only after the first class has been retired.
Other mortgage-related securities include those that directly or
indirectly represent a participation in or are secured by and payable from
mortgage loans on real property, such as CMO residuals, stripped mortgage-backed
securities, variable rate securities (including inverse floaters), or tiered
index bonds and may be structured in classes with rights to receive varying
proportions of principal and interest. Stripped mortgage-backed securities are
derivative, multi-class mortgage securities. The Funds may invest in stripped
mortgage-backed securities issued by the U.S. Government, its agencies and
instrumentalities.
Stripped mortgage-backed securities are usually structured with two
classes that receive different proportions of the interest and principal
distributions on a pool of mortgage assets. In certain cases, one class will
receive all of the interest (the interest-only or "IO" class), while the other
class will receive all of the principal (the principal-only or "PO" class). The
yields to maturity on IOs and POs are sensitive to the rate of principal
repayments (including prepayments) on the related underlying mortgage assets,
and principal payments may have a material effect on yield to maturity. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, a Fund may not fully recoup its initial investment in IOs.
Conversely, if the underlying mortgage assets experience less than expected
prepayments of principal, the yield on POs could be materially adversely
affected. Such securities will be considered liquid only if so determined in
accordance with guidelines established by the Trustees. The Funds also may
invest in stripped mortgage-backed securities that are privately issued. These
securities will be considered illiquid for purposes of each Fund's limit on
illiquid securities.
CMOs and other mortgage-related securities that are issued or
guaranteed by the U.S. Government or by any of its agencies or instrumentalities
will be considered U.S. Government securities for purposes of applying a Fund's
diversification tests. Generally, the entity that has the ultimate
responsibility for the payment of interest and principal on a security is deemed
to be the issuer of an obligation. The White Elk Money Market Fund may invest in
asset-backed and mortgage related securities only to the extent described under
the heading "Money Market Fund Instruments".
<PAGE>
HIGH YIELD BONDS
The Funds (except for the White Elk Money Market Fund) may invest up
to 5% of its total assets in non-investment grade debt securities, commonly
referred to as "junk bonds." Low-rated and comparable unrated securities, while
generally offering higher yields than investment grade securities with similar
maturities, involve greater risks, including the possibility of default or
bankruptcy. They are regarded as speculative with respect to the issuer's
capacity to pay interest and to repay principal. The market values of certain of
these securities tend to be more sensitive to individual corporate developments
and changes in economic conditions than higher quality bonds. In addition,
low-rated and comparable unrated securities tend to be less marketable than
higher-quality debt securities because the market for them is not as broad or
active. The lack of a liquid secondary market may have an adverse effect on
market price and a Fund's ability to sell particular securities.
FOREIGN SECURITIES
Each Fund (except for the White Elk Money Market Fund) may invest up
to 20% of its total assets in emerging market and other foreign securities. The
White Elk Global Equity Fund may invest up to 100% of its assets in emerging
market and other foreign securities.
Investments in emerging market and other foreign securities involve
certain risk considerations not typically associated with investing in
securities of U.S. issuers, including: (a) currency devaluations and other
currency exchange rate fluctuations; (b) political uncertainty and instability;
(c) more substantial government involvement in the economy; (d) higher rates of
inflation; (e) less government supervision and regulation of the securities
markets and participants in those markets; (f) controls on foreign investment
and limitations on repatriation of invested capital and on a Fund's ability to
exchange local currencies for U.S. dollars; (g) greater price volatility,
substantially less liquidity and significantly smaller capitalization of
securities markets; (h) absence of uniform accounting and auditing standards;
(i) generally higher commission expenses; (j) delay in settlement of securities
transactions; and (k) greater difficulty in enforcing shareholder rights and
remedies.
Each Fund (except for the White Elk Money Market Fund) may purchase
American Depository Receipts ("ADRs"), American Depository Shares ("ADSs"), or
U.S. dollar-denominated securities of foreign issuers, none of which are
included in the 20% foreign securities limitation. ADRs and ADSs are traded in
the U.S. securities markets and represent the securities of foreign issuers.
While ADRs and ADSs may not necessarily be denominated in the same currency as
the foreign securities they represent, many of the risks associated with foreign
securities may also apply to ADRs and ADSs.
The Funds (except for the White Elk Money Market Fund) may purchase
foreign currency options or enter into forward foreign currency exchange
contracts for the purpose of hedging against the effect that currency
fluctuation may have on the value of Fund assets. Except with the prior approval
of the Board of Trustees, no Fund will enter into foreign currency option
contracts if the premiums on such options exceed 5% of the Funds total assets.
See "Investment Objectives and Policies - Derivative Investments".
<PAGE>
COUNTRY CONCENTRATION
More than 25% of the White Elk Global Equity Fund's total assets may
be invested in the securities of issuers located in the same country. Investment
in a particular country of 25% or more of the Fund's total assets will make the
Fund's performance more dependent upon the political and economic circumstances
of a particular country than a mutual fund that is more widely diversified among
issuers of different countries. Under normal market and economic conditions, no
more than 30% of the Fund's net assets, measured at the time of purchase, will
be invested in the aggregate in the securities of issuers located in countries
with emerging economies or emerging securities markets.
DERIVATIVE INSTRUMENTS
The Funds (except for the White Elk Money Market Fund) may invest in
a variety of what are known as derivative instruments -- that is, instruments
that depend for their value on the fluctuations in the values of specified
underlying instruments or securities. Among the derivative instruments in which
the Funds may invest are call and put options on securities, securities indexes
and foreign currencies; futures contracts and options on futures contracts;
interest rate futures, options on interest rate futures; forward foreign
currency exchange contracts, foreign currency options, futures and options on
futures; interest rate, index and currency exchange rate swap agreements.
The use of derivative instruments is complex and specialized. Except
when used for hedging purposes, investment in derivative instruments tends to
increase the volatility of the net asset value of a Fund. When used for hedging
purposes, there can be no guarantee that the hedge will perform as intended. The
failure of a hedge to perform as intended also may increase volatility. See
"Investment Objectives and Policies - Derivative Investments" in the Statement
of Additional Information.
STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX FUTURES
White Elk Leveraged All Cap Fund may purchase and sell stock index
futures contracts and options on stock index futures contracts. These
investments may be made only for hedging, not speculative, purposes. There is no
assurance that a hedge will perform as intended.
LEVERAGE THROUGH BORROWING
White Elk Leveraged All Cap Fund may borrow for temporary, emergency
or investment purposes. This borrowing may be unsecured. The 1940 Act requires a
Fund to maintain continuous asset coverage (that is, total assets including
borrowings, less liabilities exclusive of borrowings) of 300% of the amount
borrowed. Borrowing subjects a Fund to interest costs which may or may not be
recovered by appreciation of the securities purchased, and can exaggerate the
effect on net asset value of any increase or decrease in the market value of a
Fund. This is the speculative factor known as leverage.
<PAGE>
Each Fund may also enter into reverse repurchase agreements in an
amount up to 5% of the value of the total assets. A reverse repurchase agreement
involves the sale of securities held by the Fund, with an agreement to
repurchase the securities at an agreed upon price, date and interest payment.
During the time a reverse repurchase agreement is outstanding, the Fund will
maintain a segregated custodial account containing U.S. Government or other
appropriate high-grade debt securities having a value equal to the repurchase
price (including accrued interest).
FUND TURNOVER
Purchases and sales of Fund securities will generally be made
without regard to the length of time a security has been held or whether a sale
would result in a profit or loss. Increased turnover will have the effect of
increasing the Funds' brokerage and custodial expenses. The Trust anticipates
that each Fund's turnover rate will be at least 100%.
MONEY MARKET FUND INVESTMENTS
The White Elk Money Market Fund invests only in high quality money
market instruments, which are determined to be of eligible quality under SEC
rules and to present minimal credit risk. Under SEC rules, eligible securities
include First Tier Securities (i.e., securities rated in the highest short-term
rating category) and Second Tier Securities (i.e., securities which are
otherwise eligible but not in the First Tier). The rules prohibit the Fund from
holding more than 5% of its value in Second Tier Securities. The following is a
description of the types of money market securities in which the White Elk Money
Market Fund may invest.
UNITED STATES GOVERNMENT SECURITIES: Marketable securities issued by
or guaranteed as to principal and interest by the U.S. Government and supported
by the full faith and credit of the United States.
UNITED STATES GOVERNMENT AGENCY SECURITIES: Debt securities issued
by U.S. Government-sponsored enterprises, Federal agencies and certain
international institutions which are not direct obligations of the United States
but involve U.S. Government sponsorship or guarantees by U.S. Government
agencies or enterprises. The U.S. Government is not obligated to provide
financial support to these instrumentalities.
Bank Money Instruments: Obligations of commercial banks, savings
banks, savings associations, depository or other institutions, such as
certificates of deposit, including variable rate certificates of deposit,
bankers' acceptances, bank notes and time deposits. The savings banks and
savings associations must be organized and operating in the United States. The
obligations of commercial banks may be issued by U.S. banks, foreign branches or
subsidiaries of U.S. banks ("Eurodollar" obligations) or U.S. branches or
subsidiaries of foreign banks ("Yankeedollar" obligations). The White Elk Money
Market Fund may invest in Eurodollar obligations which by their terms are
general obligations of the U.S. parent bank.
COMMERCIAL PAPER AND OTHER SHORT-TERM OBLIGATIONS: Commercial paper,
including variable amount master demand notes, that is rated in one of
<PAGE>
the two highest short-term rating categories by any two of Standard & Poor's
Ratings Series ("S&P") or Moody's Investors Service, Inc. ("Moody's") or any
other NRSROs (or by a single rating agency if only one of these agencies has
assigned a rating).
FOREIGN BANK MONEY INSTRUMENTS: The White Elk Money Market Fund may
invest in U.S. dollar-denominated obligations of foreign depository institutions
and their foreign branches and subsidiaries, such as certificates of deposit,
bankers' acceptances, time deposits, bank notes and deposit notes. The
obligations of such foreign branches and subsidiaries may be the general
obligation of the parent bank or may be limited to the issuing branch or
subsidiary by the terms of the specific obligation or by government regulation.
Such investments will only be made if determined to be of comparable quality to
other investments permissible for the White Elk Money Market Fund. The White Elk
Money Market Fund will not invest more than 25% of its total assets (taken at
market value at the time of each investment) in these obligations.
FOREIGN SHORT-TERM DEBT INSTRUMENTS: The White Elk Money Market Fund
may also invest in U.S. dollar-denominated commercial paper and other short-term
obligations issued by foreign entities. Such investments are subject to quality
standards similar to those applicable to investments in comparable obligations
of domestic issuers. Investments in foreign entities in general involve the same
risks as those described in the White Elk Money Market Fund Statement of
Additional Information in connection with investments in Eurodollar and
Yankeedollar obligations.
Preservation of capital is a prime investment objective of the White
Elk Money Market Fund, and, while the types of money market securities in which
the White Elk Money Market Fund invests are not completely risk free, such
securities generally are considered to have low principal risk. There is the
risk of the failure of issuers to meet their principal and interest obligations.
Bank money instruments in which the White Elk Money Market Fund
invests must be issued by depository institutions with total assets of at least
$1 billion, except that up to 10% of total assets (taken at market value) may be
invested in certificates of deposit of smaller institutions if such certificates
of deposit are Federally insured.
The White Elk Money Market Fund may invest in participations in, or
bonds and notes backed by, pools of mortgage, credit card, automobile or other
types of receivables with remaining maturities of no more than 397 days (13
months). These structured financings will be supported by sufficient collateral
and other credit enhancements, including letters of credit, insurance, reserve
funds and guarantees by third parties, to enable such instruments to obtain the
requisite quality rating by NRSROs.
The White Elk Money Market Fund's investments in U.S. Government and
Government agency securities will be in instruments with a remaining maturity of
762 days (25 months) or less. The White Elk Money Market Fund's other
investments will be in instruments with a remaining maturity of 397 days (13
months) or less that have received a short-term rating, or that have been issued
by issuers that have received a short-term rating with respect to a class of
debt obligations that are comparable in priority and security with the
instruments, from the requisite NRSROs in the two highest short-term rating
<PAGE>
categories or, if neither the instrument nor its issuer is so rated, will be of
comparable quality as determined by the Trustees of the Trust. The White Elk
Money Market Fund will determine the remaining maturity of investments in which
it invests in accordance with Commission regulations.
A Commission regulation ordinarily limits investments by the White
Elk Money Market Fund in securities issued by any one issuer (other than the
U.S. Government, its agencies or instrumentalities) to not more than 5% of its
total assets, or in the event that such securities do not have the highest
rating, not more than 1% of its total assets. In addition, such regulation
requires that not more than 5% of the White Elk Money Market Fund's total assets
be invested in securities that do not have the highest rating or are not of
comparable quality to securities with the highest rating as determined by the
Trustees of the Trust.
The White Elk Money Market Fund may purchase or sell money market
securities on a forward commitment basis at fixed purchase terms. The purchase
of money market securities on a forward commitment basis involves the risk that
the yields available in the market when the delivery takes place may actually be
higher than those obtained in the transaction itself; if yields increase, the
value of securities purchased on a forward commitment basis will generally
decrease. A separate account of the White Elk Money Market Fund will be
established with its Custodian consisting of cash or liquid money market
securities having a market value at all times at least equal to the amount of
the forward purchase commitment.
For purposes of its investment policies, the White Elk Money Market
Fund defines short- term money market securities as securities having a maturity
of no more than 762 days (25 months) in the case of U.S. Government and agency
securities and no more than 397 days (13 months) in the case of all other
securities. The dollar-weighted average maturity of the White Elk Money Market
Fund's portfolio will not exceed 90 days.
MANAGEMENT OF THE TRUST
ORGANIZATION
The Trust was organized on December 4, 1997 as a Massachusetts
business trust. The Trust offers an unlimited number of shares of eleven series,
representing the shares of the Funds.
Although the Trust is not required by law to hold annual shareholder
meetings, it may hold meetings from time to time on important matters, and
shareholders have the right to call a meeting to remove a Trustee or to take
other action described in the Trust's Agreement and Declaration of Trust.
Shareholders of one Fund may vote only on matters that affect that Fund.
Under normal circumstances, the Trust intends to distribute shares
of the Funds only to Participating Insurance Companies and Plans, so that only
Participating Insurance Companies and their separate accounts and Plans will be
considered shareholders of the Funds.
<PAGE>
VOTING RIGHTS
The shares of the Funds have equal voting rights, except that
certain issues will be voted on separately by the shareholders of each Fund.
Pursuant to current SEC requirements and staff interpretations, insurance
companies will vote Fund shares held in registered separate accounts in
accordance with voting instructions received from variable contract owners or
payees having the right to give such instructions. Fund shares for which
contract owners or payees are entitled to give voting instructions, but as to
which no voting instructions are received, and shares owned by an insurance
company in its general and unregistered separate accounts, will be voted in
proportion to the shares for which voting instructions have been received by
that company. Under state insurance law and federal regulations, there are
certain circumstances under which the insurance companies may disregard such
voting instructions. If voting instructions are ever ignored, the insurance
companies will so advise contract owners in the next semiannual report. The
Company currently does not intend to hold annual meetings of shareholders unless
required to do so under applicable law.
When matters are submitted for shareholder vote, shareholders of
each Fund will have one vote for each full share held. A separate vote of a Fund
is required on any matter affecting the Fund on which shareholders are entitled
to vote, as provided in the Agreement and Declaration of Trust dated November
11, 1997. Shareholders of one Fund are not entitled to vote on a matter that
does not affect that Fund but that does require a separate vote of the other
Funds. Any Trustee may be removed from office on the vote of shareholders
holding at least two-thirds of the shares of each Fund then outstanding at a
meeting called for the purpose. The Trustees are required to call such a meeting
on the written request of shareholders holding at least 10% of the Trust's
outstanding shares.
FEES
For its services, White Elk Asset Management, Inc. (the "Investment
Manager") receives a fee, accrued daily by each Fund and payable to the
Investment Manager on the first business day of the succeeding month, at the
following annual percentages of average daily net assets: White Elk Large Cap
Growth Fund--1%; White Elk Mid Cap Growth Fund--1%; White Elk Small Cap Growth
Fund--1%; White Elk Large Cap Value Fund--1%; White Elk Mid Cap Value Fund--1%;
White Elk Small Cap Value Fund--1%; White Elk Leveraged All Cap Fund--1%; White
Elk Global Equity Fund--1%; White Elk Long-Term Bond Fund--.50%; White Elk
Medium-Term Bond Fund--.50%; White Elk Money Market Fund--.25%.
William D. Witter, Inc. has been retained by the Investment Manager
as Sub-Portfolio Manager and receives a fee from the Investment Manager at the
following annual percentages of average daily net assets: White Elk Large Cap
Growth Fund--.50%; White Elk Mid Cap Growth Fund--.50%; White Elk Small Cap
Growth Fund--.50%; White Elk Large Cap Value Fund--.50%; White Elk Mid Cap Value
Fund--.50%; White Elk Small Cap Value Fund--.50%; White Elk Leveraged All Cap
Fund--.50%; White Elk Long-Term Bond Fund--..25%; White Elk Medium-Term Bond
Fund--.25%; White Elk Money Market Fund--.125%.
<PAGE>
Oechsle International Advisors, L.P. has been retained by the
Investment Manager as Sub-Portfolio Manager and receives a fee from the
Investment Manager at the following annual percentage of average daily net
assets: White Elk Global Equity Fund - .50%.
BOARD OF TRUSTEES
The Trust is governed by a Board of Trustees which is responsible
for protecting the interests of shareholders under Massachusetts law. The
Statement of Additional Information contains general background information
about each Trustee and officer of the Trust.
MANAGEMENT PERSONNEL
The Investment Manager personnel ("Access Persons") are permitted to
engage in personal securities transactions subject to the restrictions and
procedures of the Trust's Code of Ethics. Pursuant to the Code of Ethics, Access
Persons generally must report all personal securities transactions and are
subject to certain prohibitions on personal trading.
EXPENSES
Each Fund pays expenses related to its daily operations, such as
management fees, brokerage fees, custodian fees, Trustees' fees, transfer agency
fees and legal and auditing costs. Expenses attributable to a particular Fund
are charged against the assets of that Fund. Other expenses of the Trust are
allocated among the Funds on a basis determined by the Board of Trustees, which
may be proportionately in relation to each Fund's assets or may be on another
basis deemed equitable by the Board of Trustees.
With respect to the operation of each Fund, the Investment Manager
is responsible for (i) the compensation of any of the Trust's trustees,
officers, and employees who are affiliates of The Investment Manager, (ii) the
expenses of printing and distributing the Funds' prospectuses, statements of
additional information, and sales and advertising materials (but not the legal,
auditing or accounting fees attendant thereto) to prospective investors (but not
to existing shareholders), and (iii) providing office space and equipment
reasonably necessary for the operation of the Funds.
The Investment Manager is responsible for and has unconditionally
assumed all organizational and start-up expenses of the Funds. Each Fund is
responsible for and has assumed the obligation for payment of all of its
expenses, other than as stated in the paragraph above, including but not limited
to: brokerage and commission expenses; all expenses of transfer, receipt,
safekeeping, servicing and accounting for the cash, securities and other
property of the Trust for the benefit of the Funds including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the 1940 Act; taxes, if any; expenditures in connection with
meetings of each Fund's shareholders and Board of Trustees that are properly
payable by the Fund; salaries and expenses of officers and fees and expenses of
members of the Trust's Board of Trustees or members of any Investment Advisory
board or committee who are not members of, affiliated with or interested persons
<PAGE>
of the Investment Manager; insurance premiums on property or personnel of each
Fund which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of the Fund or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of the Funds, if any; and all other charges and costs of
its operation plus any extraordinary and non-recurring expenses, except as
herein otherwise prescribed.
The Statement of Additional Information contains information about
the Trust's brokerage policies and practices.
CUSTODIAN
State Street serves as the custodian of the Trust's assets pursuant
to a Custodian Contract by and between State Street and the Trust. State Street
is a Massachusetts trust company with a principal office at 225 Franklin Street,
Boston, Massachusetts 02111. State Street's responsibilities include
safeguarding and controlling the Trust's cash and securities, handling the
receipt and delivery of securities, and collecting interest and dividends on the
Trust's investments. Pursuant to the Custodian Contract, State Street also
provides certain accounting and pricing services to the Trust, including
calculating the daily net asset value per share for each Fund; maintaining
original entry documents and books of record and general ledgers; posting cash
receipts and disbursements; reconciling bank account balances monthly; recording
purchases and sales based upon communications from the Investment Manager or a
Sub-Portfolio Manager; and preparing monthly and annual summaries to assist in
the preparation of financial statements of, and regulatory reports for, the
Trust.
TRANSFER AGENT
State Street provides transfer agent and dividend disbursing
services to each Fund pursuant to the terms of a Transfer Agency and Service
Agreement by and between State Street and the Trust.
ADMINISTRATOR
State Street is the administrator of the Trust. State Street is a
Massachusetts trust company with a principal office at 225 Franklin Street,
Boston, Massachusetts 02111. State Street serves as administrator of other
mutual funds.
Pursuant to the Administration Agreement with the Trust, State
Street provides all administrative services reasonably necessary for the Trust,
other than those provided by the Investment Manager or any Sub-Portfolio
Manager, subject to the supervision of the Board of Trustees of the Trust.
<PAGE>
Under the Administration Agreement with the Trust, State Street
provides administrative services including, without limitation: (i) services of
personnel competent to perform such administrative and clerical functions as are
necessary to provide effective administration of the Trust; (ii) maintaining the
Trust's books and records (other than financial and accounting books and records
and records maintained by the Trust's custodian or transfer agent); (iii)
overseeing the Trust's insurance relationships; (iv) preparing or assisting in
the preparation of all required tax returns, proxy statements and reports to the
Trust's shareholders and Trustees and reports to and filings with the SEC and
any other governmental agency; (v) preparing or assisting in the preparation of
such notices and reports as may be necessary to offer and sell the Trust's
shares under applicable state securities laws; (vi) preparing or assisting in
the preparation of, and coordinating the distribution of all materials for
meetings of the Board of Trustees of the Trust; (vii) monitoring daily and
periodic compliance with respect to all requirements and restrictions of the
1940 Act, the Internal Revenue Code and the Prospectus; (viii) monitoring the
calculation of all income and expense accruals, sales and redemptions of capital
shares outstanding by the Trust's custodian; (ix) evaluating expenses,
projecting future expenses, and processing payments of expenses; and (x)
monitoring and evaluating performance of accounting and related services by the
Trust's custodian.
The Agreement is terminable at any time by the Trust or State Street
on sixty days' written notice.
YEAR 2000
The Funds' operations depend on the seamless functioning of computer
systems in the financial service industry, including those of its service
providers. Many computer software systems in use today cannot properly process
date-related information after December 31, 1999 because of the method by which
dates are encoded and calculated. This failure, commonly referred to as the
"Year 2000 Issue," could adversely affect the handling of securities trades,
pricing and account servicing for the Funds. The Funds have been informed that
their major service providers have made compliance with the Year 2000 Issue a
high priority and are taking steps that they believe are reasonably designed to
address the Year 2000 Issue with respect to their computer systems. There can
be, however, no assurance that these steps will be successful, or that
interaction with other non-complying computer systems will not impair their
services at that time.
NET ASSET VALUE
The price of one share of a Fund is its "net asset value." The net
asset value is computed by adding the value of the Fund's investments plus cash
and other assets, deducting liabilities and then dividing the result by the
number of its shares outstanding. The net asset value of each Fund is calculated
as of the close of business (usually 4:00 p.m., New York time) on each day the
NYSE and State Street are open. The NYSE annually announces the days on which it
will not be open for trading. The most recent announcement indicates that it
will not be open on the following days: New Year's Day, Martin Luther King's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. However, the Exchange may close on days not
<PAGE>
included in that announcement. Also, no Fund is required to compute its net
asset value on any day on which no order to purchase or redeem its shares is
received.
Fixed-income securities which are traded on a national securities
exchange will be valued at the last sale price or, if there was no sale on such
day, at the last available bid price. However, securities with a demand feature
exercisable within one to seven days are valued at par. Prices for fixed-income
securities may be based on quotations received from one or more market-makers in
the securities, or on evaluations from pricing services. Debt securities which
mature in less than 60 days are valued at amortized cost (unless the Board of
Trustees determines that this method does not represent fair value).
In determining the net asset value of each Fund's shares, equity
securities that are listed on a securities exchange (whether domestic or
foreign) or quoted by the NASDAQ National Market System are valued at the last
sale price on that day as of the close of regular trading on the NYSE, or, in
the absence of recorded sales, at the last available bid price. Unlisted equity
securities that are not included in such National Market System are valued at
the last available bid price.
Options, futures contracts and options thereon which are traded on
exchanges are valued at their last sale or settlement price as of the close of
the exchanges or, if no sales are reported, at the last available bid price.
Trading in securities listed on foreign securities exchanges or
over-the-counter markets is normally completed before the close of regular
trading on the NYSE. In addition, foreign securities trading may not take place
on all business days in New York and may occur on days on which the NYSE is not
open. In addition, foreign currency exchange rates are generally determined
prior to the close of trading on the NYSE. Events affecting the value of foreign
securities and currencies will not be reflected in the determination of net
asset value unless the Board of Trustees determines that the particular event
would materially affect net asset value, in which case an adjustment will be
made. Investments quoted in foreign currency are valued daily in U.S. dollars on
the basis of the foreign currency exchange rate prevailing at the time of
valuation. Foreign currency exchange transactions conducted on a spot basis are
valued at the spot rate prevailing in the foreign exchange market.
Securities and other assets for which market quotations are not
readily available are valued at their fair value as determined by the Investment
Manager or any Sub-Portfolio Manager under guidelines established by and under
the general supervision and responsibility of the Board of Trustees.
The net asset value of the White Elk Money Market Fund per share is
determined under the "penny-rounding" method by adding the value of all
securities and other assets in the portfolio, deducting the Fund's liabilities,
dividing by the number of shares outstanding and rounding the result to the
nearest whole cent.
<PAGE>
In accordance with the Commission rule applicable to the valuation
of its portfolio securities, the White Elk Money Market Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less and will purchase
instruments having remaining maturities of not more than 397 days (13 months),
with the exception of U.S. Government Securities and U.S. Government agency
securities, which may have remaining maturities of up to 762 (25 months). The
White Elk Money Market Fund will invest only in securities determined by the
Trustees to be of high quality with minimal credit risks. In addition, the
Trustees have established procedures designed to stabilize, to the extent
reasonably possible, the White Elk Money Market Fund's price per share as
computed for the purposes of sales and redemptions at $1.00. Deviations of more
than an insignificant amount between the net asset value per share calculated
using market quotations and that calculated on a "penny-rounded" basis will be
reported to the Trustees by any Sub-Portfolio Manager. In the event the Trustees
determine that a deviation exists which may result in the material dilution or
other unfair results to investors or existing shareholders, the White Elk Money
Market Fund will take such corrective action as it regards as necessary and
appropriate, including the reduction of the number of outstanding shares of the
White Elk Money Market Fund by having each shareholder proportionately
contribute shares to the White Elk Money Market Fund's capital; the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; or establishing a net
asset value per share solely by using available market quotations. If the number
of outstanding shares is reduced in order to maintain a constant "penny rounded"
net asset value of $1.00 per share, the shareholders will contribute
proportionately to the White Elk Money Market Fund's capital. Each shareholder
will be deemed to have agreed to such contribution by an investment in the White
Elk Money Market Fund.
Since the net income of the White Elk Money Market Fund (including
realized gains and losses on the portfolio securities) is determined and
declared as a dividend immediately prior to each time the net asset value of the
White Elk Money Market Fund is determined, the net asset value of the White Elk
Money Market Fund normally remains at $1.00 per share immediately after each
such dividend declaration. Any increase in the value of a shareholder's
investment in the White Elk Money Market Fund, representing the reinvestment of
dividend income, is reflected by an increase in the number of shares of the
White Elk Money Market Fund in the account, and any decrease in the value of a
shareholder's investment may be reflected by a decrease in the number of shares
in the account. See "Taxes."
PURCHASES AND REDEMPTIONS
Contract or policy holders or Plan participants will not deal
directly with the Trust regarding the purchase or redemption of a Fund's shares.
The separate accounts of the Participating Insurance Companies place orders to
<PAGE>
purchase and redeem shares of each Fund based on, among other things, the amount
of premium payments to be invested and the amount of surrender and transfer
requests (as defined in the prospectuses describing the VA contracts and VLI
policies issued by the Participating Insurance Companies) to be effected on that
day pursuant to VA contracts and VLI policies. Plan trustees purchase and redeem
Fund's shares. Plan participants cannot contact the Trust directly to purchase
shares of the Funds but may invest in shares of the Funds only through their
Plan. Participants should contact their Plan sponsor for information concerning
the appropriate procedure for investing in the Trust.
Orders received by the Trust or the Trust's transfer agent are
effected on days on which the NYSE is open for trading. For orders received
before the close of regular trading on the NYSE, purchases and redemptions of
the shares of each Fund are effected at the respective net asset values per
share determined as of the close of regular trading on the NYSE on that same
day. Orders received after the close of regular trading on the NYSE are effected
at the next calculated net asset value. See "Net Asset Value." All orders for
the purchase of shares are subject to acceptance or rejection by the Trust.
Payment for redemptions will be made by the Trust's transfer agent on behalf of
the Trust and the relevant Funds within seven days after the request is
received. Surrender charges, mortality and expense risk fees and other charges
may be assessed by Participating Insurance Companies under the VA contracts or
VLI policies. These fees should be described in the Participating Insurance
Companies' prospectuses. Any charges assessed by the Plans should be described
in the Plan documents.
Under unusual circumstances, shares of a Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with securities
which are held by the Fund. Please refer to the Statement of Additional
Information for more details.
DIVIDENDS AND DISTRIBUTIONS
Each Fund will be treated separately in determining the amount of
dividends of investment income and distributions of capital gains payable to
holders of its shares. Dividends and distributions will be automatically
reinvested at net asset value on the payment date for each shareholder's account
in additional shares of the Fund that paid the dividend or distribution or, in
the case of VA contracts and VLI policies, will be paid in cash at the election
of the Participating Insurance Company. Declaration of dividends is determined
daily with respect to the White Elk Money Market Fund and paid monthly. Any
dividends of the Funds will be declared and paid at least annually.
Distributions of any net realized capital gains earned by a Fund usually will be
made annually. Participating Insurance Companies and Plans will be informed
about the amount and character of dividends and distributions from the relevant
Fund for federal income tax purposes.
TAXES
The following is a summary of selected federal income tax
considerations that may affect the Funds and their shareholders and is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, court decisions and IRS rulings now in effect, all of which are
subject to change.
<PAGE>
Each Fund will be treated as a separate taxpayer with the result
that, for federal income tax purposes, the amounts of net investment income and
capital gains earned will be determined on a Fund-by-Fund (rather than on a
Trust-wide) basis.
The Trust intends that each Fund will qualify separately as a
"regulated investment company" under the Code for each taxable year of each
Fund. If so qualified, and provided certain distribution requirements are met, a
Fund will not be subject to federal income tax on its net investment income and
net capital gains. The Trust intends that each Fund will meet the distribution
requirements.
Dividends paid from net investment income and distributions of net
realized short-term capital gains are treated as ordinary income earned by the
shareholders of a Fund. Distributions of net realized long-term capital gains
are treated as such by shareholders for federal income tax purposes regardless
of the length of time a shareholder has owned his shares. Treasury is authorized
to promulgate regulations dealing with how long-term and "mid-term" capital
gains rates enacted in the Taxpayer Relief Act of 1997 will apply to regulated
investment companies. No regulations have yet been enacted. Federal income
taxation of separate accounts of life insurance companies, VA contracts, VLI
policies and of the Plans is discussed in the prospectuses of the Participating
Insurance Companies and in the Plan documents. With respect to participants in
the Plans, dividends from net investment income and net realized capital gains
will ordinarily not be subject to taxation until such dividends are distributed
to such participants from their Plan accounts.
Dividends and interest received by a Fund may be subject to
withholding and other taxes imposed by foreign countries. Tax conventions
between certain countries and the US may reduce or eliminate those foreign
taxes, and foreign countries generally do not impose taxes on capital gains on
investments by foreign investors.
Shareholders are urged to consult their own tax advisers with
specific questions about the federal, state, or local income tax implications of
an investment in a Fund.
PERFORMANCE
Each Fund (except the Money Market Fund) may include quotations of
its "total return" in advertisements or reports to shareholders or prospective
investors. Total return figures show the aggregate or average percentage change
in value of an investment in a Fund from the beginning date of the measuring
period to the end of the measuring period. These figures reflect changes in the
price of the Fund's shares and assume that any income dividends and/or capital
gains distributions made by the Fund during the period were reinvested in shares
of the Fund. Figures will be given for recent 1, 5 and 10 year periods, and may
be given for other periods as well (such as from commencement of the Fund's
operations, or on a year-by-year basis) and may utilize dollar cost averaging.
The Fund may use "aggregate" total return figures for various periods,
representing the cumulative change in value of an investment in the Fund for the
specific period (again reflecting changes in Fund share price and assuming
reinvestment of dividends and distributions) as well as "actual annual" and
"annualized" total return figures. Total returns may be shown by means of
schedules, charts or graphs, and may indicate subtotals of the various
components of total return (i.e., change in value of initial investment, income
<PAGE>
dividends and capital gains distributions). "Total return" and "yield" for a
Fund will vary based on changes in market conditions. In addition, since the
deduction of a Fund's expenses is reflected in the total return and yield
figures, "total return" and "yield" will also vary based on the level of the
Fund's expenses.
The Funds also may refer in advertising and promotional materials to
bond yield. A Bond Fund's yield shows the rate of income that a Fund earns on
its investments, expressed as a percentage of the net asset value of Fund
shares. A Fund calculates yield by determining the interest income it earned
from its portfolio investments for a specified thirty-day period (net of
expense), dividing such income by the average number of Fund shares outstanding,
and expressing the result as an annualized percentage based on the net asset
value at the end of that 30-day period. Bond yield accounting methods differ
from the methods used for other accounting purposes; accordingly, a Bond Fund's
yield may not equal the dividend income actually paid to investors or the income
reported in the Bond Fund's financial statements.
The White Elk Money Market Fund normally computes its annualized
yield by determining the net income for a seven-day base period for a
hypothetical pre-existing account having a balance of one share at the beginning
of the base period, dividing the net income by the net asset value of the
account at the beginning of the base period to obtain the base period return,
multiplying the result by 365 and then dividing by seven. Under this
calculation, the yield reflects realized and unrealized gains and losses on
portfolio securities. In accordance with regulations adopted by the Commission,
the White Elk Money Market Fund is required to disclose its annualized yield for
certain seven-day base periods in a standardized manner which does not take into
consideration any realized or unrealized gains or losses on portfolio
securities. The Commission also permits the calculation of a standardized
effective or compounded yield. This is computed by compounding the unannualized
base period return which is done by adding one to the base period return,
raising the sum to a power equal to 365 divided by seven and subtracting one
from the result. This compounded yield calculation also excludes realized and
unrealized gains or losses on portfolio securities.
The yield on the Money Market Fund's shares normally will fluctuate
on a daily basis. Therefore, the yield for any given past period is not an
indication or representation by the Trust of future yields or rates of return on
its shares. The yield is affected by such factors as changes in interest rates
on Treasury securities, average portfolio maturity, the types and quality of
portfolio securities held and operating expenses. The yield on Trust shares for
various reasons may not be comparable to the yield on shares of other money
market funds or other investments.
The Statement of Additional Information further describes the method
used to determine the yields and total return figures. Current yield and/or
total return quotations may be obtained by contacting the Trust.
The actual return to a holder of a VA contract or VLI policy will
also be affected by charges imposed by the separate accounts of Participating
Insurance Companies or, in the case of Plan participants, by any charges imposed
under the plan.
<PAGE>
INVESTOR AND
SHAREHOLDER INFORMATION
Investors and shareholders may contact the Trust toll-free at (800)
755-7045 for further information regarding the Trust and the Funds and to obtain
a Statement of Additional Information. Holders of VA contracts or VLI policies
issued by Participating Insurance Companies and participants in Plans for which
shares of one or more Funds are the investment vehicle may receive from the
Participating Insurance Companies or Plan sponsor unaudited semi-annual
financial statements and year-end financial statements audited by the Trust's
independent public accountants. Each report will show the investments owned by
each of the Funds and the market values of the investments and will provide
other information about the Trust and its operations.
<PAGE>
APPENDIX -- DESCRIPTION OF RATINGS
MOODY'S INVESTORS SERVICE
BOND RATINGS:
"Aaa"--Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt-edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa"--Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
Moody's applies numerical modifiers "1", "2" and "3" in each generic
rating classification from Aa through B. The modifier "1" indicates that the
obligation ranks in the higher of its generic rating category; the modifier "2"
indicates a mid-range ranking; and the modifier "3" indicates that the company
ranks in the lower end of that generic rating category.
"A"--Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment some time in the
future.
"Baa"--Bonds which are rated Baa are considered as medium-grade
obligations (i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
"Ba"--Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often the
protection of interest and principal payments may be very moderate, and thereby
not well safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
"B"--Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
<PAGE>
SHORT-TERM DEBT RATINGS:
Moody's short-term debt ratings are opinions regarding the ability
of issuers to repay punctually senior debt obligations. These obligations have
an original maturity not exceeding one year, unless explicitly noted.
"P-1"--Issuers rated "Prime-1" or "P-1" (or supporting institutions)
have a superior ability for repayment of senior short-term debt obligations.
"P-2"-- Issuers rated "Prime-2" or "P-2" (or supporting
institutions) have a strong ability for repayment of senior short-term debt
obligations.
STANDARD & POOR'S RATING GROUP
BOND RATINGS:
"AAA"--Debt rated AAA has the highest rating assigned by S&P.
Capacity to pay interest and repay principal is extremely strong.
"AA"--Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small degree.
"A"--Debt rated A has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher-rated
categories.
"BBB"--Debt rated BBB is regarded as having an adequate capacity to
pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.
Debt rated BB and B is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major exposures to adverse
conditions.
COMMERCIAL PAPER RATINGS:
An S&P commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market.
"A-1"--This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus (+) designation.
<PAGE>
"A-2"--Capacity for timely payment on issues with this designation
is satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
FITCH INVESTORS SERVICES, INC.
BOND RATINGS:
The following summarizes the ratings used by Fitch for corporate
bonds:
"AAA"--Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
"AA"--Bonds considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA". Because bonds
rated in the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated "F-1+".
"A"--Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
"BBB"--Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay is considered to
be adequate. Adverse changes in economic conditions and circumstances, however,
are more likely to have adverse impact on these bonds and, therefore, impair
timely payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
"BB"--Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified, which
could assist the obligor in satisfying its debt service requirements.
"B"--Bonds are considered highly speculative. While bonds in this
class are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
Plus (+) Minus (-)--Plus and minus signs are used with a rating
symbol to indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the "AAA" category.
<PAGE>
SHORT-TERM DEBT RATINGS:
"F-1+"--Exceptionally Strong Credit Quality. Issues assigned this
rating are regarded as having the strongest degree of assurance for timely
payment.
"F-1"--Very Strong Credit Quality. Issues assigned this rating
reflect an assurance of timely payment only slightly less in degree than issues
rated "F-1+".
"F-2"--Good Credit Quality. Issues assigned this rating have a
satisfactory degree of assurance for timely payment, but the margin of safety is
not as great as for issues assigned "F-1+" or "F-1" ratings.
DUFF & PHELPS CREDIT RATING CO.
BOND RATINGS:
The following summarizes the ratings used by Duff & Phelps for
long-term debt:
"AAA"--Highest credit quality. The risk factors are negligible,
being only slightly more than for risk-free US Treasury debt.
"AA+", "AA", "AA-"--High credit quality. Protection factors are
strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A+", "A", "A-"--Protection factors are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.
"BBB+", "BBB", "BBB-"--Below average protection factors but still
considered sufficient for prudent investment. Considerable variability in risk
during economic cycles.
"BB+", "BB", "BB-"--Below investment grade but deemed likely to meet
obligations when due. Present or prospective financial protection factors
fluctuate according to industry conditions or company fortunes. Overall quality
may move up or down frequently within this category.
"B+", "B", "B-"--Below investment grade and possessing risk that
obligations will not be met when due. Financial protection factors will
fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the rating within
this category or into a higher or lower rating grade.
SHORT-TERM DEBT RATINGS:
"D-1+"--Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources of
funds, is outstanding and safety is just below risk-free US Treasury short-term
obligations.
<PAGE>
"D-1"--Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk factors are
minor.
"D-1-"--High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors are
very small.
"D-2"--Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may enlarge total
financing requirements, access to capital markets is good. Risk factors are
small.
<PAGE>
====================================== ======================================
INFORMATION CONTAINED HEREIN IS THE WHITE ELK
SUBJECT TO COMPLETION OR AMENDMENT. A FUNDS
REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE
COMMISSION. THE SHARES OF THESE FUNDS
MAY NOT BE SOLD NOR MAY ANY OFFERS TO
BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS COMMUNICATION SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATES IN WHICH SUCH WHITE ELK LARGE CAP GROWTH
OFFER, SOLICITATION OR SALE WOULD BE FUND
UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES WHITE ELK MID CAP GROWTH FUND
LAWS OF ANY SUCH STATE. TO OBTAIN A
CURRENTLY EFFECTIVE PROSPECTUS FOR THE WHITE ELK SMALL CAP GROWTH
EXISTING FUNDS OF THE WHITE ELK FUNDS FUND
PLEASE CONTACT WHITE ELK ASSET
MANAGEMENT, INC.
WHITE ELK LARGE CAP VALUE FUND
------------
WHITE ELK MID CAP VALUE FUND
INVESTMENT MANAGER:
White Elk Asset Management, Inc. WHITE ELK SMALL CAP VALUE FUND
c/o William D. Witter, Inc.
One Citicorp Center WHITE ELK LEVERAGED ALL CAP
153 East 53rd Street FUND
New York, New York 10022
SUB-PORTFOLIO MANAGERS WHITE ELK GLOBAL EQUITY FUND
William D. Witter, Inc.
One Citicorp Center WHITE ELK LONG-TERM BOND FUND
153 East 53rd Street
New York, New York 10022 WHITE ELK MEDIUM-TERM BOND
Oechsle International Advisors, L.P. FUND
One International Place
23rd Floor WHITE ELK MONEY MARKET FUND
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND
ADMINISTRATOR
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS:
PricewaterhouseCoopers LLP
1301 Avenue of the Americas
New York, New York 10019
COUNSEL:
Hughes Hubbard & Reed LLP
One Battery Park Plaza PROSPECTUS
New York, New York 10004-1482 [___________], 1998
====================================== ======================================
<PAGE>
PART B
COMBINED STATEMENT OF ADDITIONAL INFORMATION
The White Elk Funds
White Elk Large Cap Growth Fund
White Elk Mid Cap Growth Fund
White Elk Small Cap Growth Fund
White Elk Large Cap Value Fund
White Elk Mid Cap Value Fund
White Elk Small Cap Value Fund
White Elk Leveraged All Cap Fund
White Elk Global Equity Fund
White Elk Long-Term Bond Fund
White Elk Medium-Term Bond Fund
White Elk Money Market Fund
<PAGE>
SUBJECT TO COMPLETION -- Dated October 8, 1998.
Information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may any
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information does not constitute a
prospectus.
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
THE | c/o William D. Witter, Inc.
WHITE ELK One | Citicorp Center
FUNDS | 153 East 53rd Street
| New York, New York 10022
| (212) 753-7878
The White Elk Funds (the "Trust") is a registered investment company
- -- a mutual fund -- that presently offers interests in the following eleven
Funds (the "Funds"):
o White Elk Large Cap Growth Fund
o White Elk Mid Cap Growth Fund
o White Elk Small Cap Growth Fund
o White Elk Large Cap Value Fund
o White Elk Mid Cap Value Fund
o White Elk Small Cap Value Fund
o White Elk Leveraged All Cap Fund
o White Elk Global Equity Fund
o White Elk Long-Term Bond Fund
o White Elk Medium-Term Bond Fund
o White Elk Money Market Fund
The Trust is designed to permit insurance companies that issue
Variable Annuity contracts ("VA contracts") and Variable Life Insurance policies
("VLI policies") to offer VA contract and VLI policy holders the opportunity to
participate in the performance of one or more of the Funds of the Trust. Shares
of the Trust are also offered directly to qualified pension and retirement
plans.
A Prospectus for the Trust dated _________________, 1998, which
provides the basic information investors should know before investing, may be
obtained without charge by contacting the Trust at the address or phone number
above. This Statement of Additional Information, which is not a prospectus, is
intended to provide additional information regarding the activities and
operations of the Trust, and should be read in conjunction with the Prospectus.
Unless otherwise noted, terms used in this Statement of Additional Information
have the same meanings as assigned to them in the Prospectus.
<PAGE>
White Elk Asset Management, Inc. (the "Investment Manager") is the
investment manager of the Trust. The Investment Manager is a newly registered
investment manager organized for the purpose of managing the Funds that expects
to operate primarily by retaining and supervising sub-portfolio managers (the
"Sub-Portfolio Managers"). William D. Witter, Inc. ("Witter") and Oechsle
International Advisors, L.P. ("Oechsle") are Sub-Portfolio Managers of the
Trust.
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TABLE OF CONTENTS
PAGE
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INVESTMENT OBJECTIVES AND POLICIES..................................... B- 1
Investment Restrictions.......................................... B- 1
Certain Securities and Investment Techniques............... B- 2
Repurchase Agreements................................ B- 2
Bank Obligations..................................... B- 2
Lending of Fund Securities........................... B- 3
Convertible Securities............................... B- 3
Mortgage-Related Securities.......................... B- 4
Mortgage Pass-Through Securities..................... B- 4
Collateralized Mortgage Obligations.................. B- 5
Adjustable Rate Mortgage Securities.................. B- 6
CMO Residuals........................................ B- 7
Stripped Mortgage-Related Securities................. B- 7
Inverse Floaters..................................... B- 8
Tiered Index Bonds................................... B- 8
Asset-Backed Securities.............................. B- 8
Risk Factors Relating to Investing in
Mortgage-Related and Asset-Backed
Securities........................................ B- 9
Derivative Instruments............................... B- 9
Options on Securities and on Securities Indexes...... B-11
Futures Contracts and Options on Futures Contracts... B-12
Limitations on Use of Futures and Options Thereon.... B-13
Investment Restrictions.......................................... B-14
Use of Ratings as Investment Criteria...................... B-14
Fund Transactions.................................... B-15
MANAGEMENT............................................................. B-15
Trustees and Officers of the Trust............................... B-15
Investment Manager............................................... B-16
Participation Agreements......................................... B-17
Administrator.................................................... B-17
Transfer Agent................................................... B-18
Custodian........................................................ B-18
NET ASSET VALUE........................................................ B-18
PURCHASES AND REDEMPTIONS.............................................. B-20
TAXES.................................................................. B-21
Plans............................................................ B-21
Segregated Asset Account......................................... B-22
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TABLE OF CONTENTS
(CONT'D.)
PAGE
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DETERMINATION OF PERFORMANCE........................................... B-22
Total Return..................................................... B-22
Yield............................................................ B-22
Other Information................................................ B-23
In General....................................................... B-24
GENERAL INFORMATION ABOUT THE TRUST.................................... B-24
ADDITIONAL INFORMATION................................................. B-25
Legal Opinion.................................................... B-25
Independent Accountants.......................................... B-25
Other Information................................................ B-25
Financial Statements............................................. B-25
Independent Accountant's Report.................................. B-29
Consent.......................................................... B-30
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INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT RESTRICTIONS
-----------------------
The investment restrictions below have been adopted by the Trust
with respect to each of the Funds as fundamental policies, which may not be
changed without the favorable vote of the holders of a "majority" of that Fund's
outstanding voting securities, as defined in the Investment Company Act of 1940
(the "1940 Act"). Under the 1940 Act, the vote of the holders of a "majority" of
a Fund's outstanding voting securities means the vote of the holders of the
lesser of (i) 67% of the shares of the Fund represented at a meeting at which
the holders of more than 50% of its outstanding shares are represented or (ii)
more than 50% of the outstanding shares.
The following are the Funds' fundamental investment limitations set
forth in their entirety. Each of the Funds may not: (1) with respect to 75% of
its total assets, invest more than 5% of its total assets in any one issuer,
except for obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities ("U.S. Government securities"); (2) own more than 10% of
the outstanding voting securities of any company; (3) issue senior securities,
except as permitted under the 1940 Act; (4) invest more than 25% of its total
assets (taken at market value at the time of each investment) in the securities
of issuers in any particular industry, except for U.S. Government securities;
(5) borrow money or pledge its assets, except that (i) it may borrow money or
pledge its assets in an amount up to 10% of its total assets for temporary or
emergency purposes and (ii) White Elk Leveraged All Cap Fund may borrow for
investment purposes; (6) underwrite securities issued by others (except to the
extent that the Fund may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 (the "1933 Act") in the disposition of restricted
securities); (7) purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business); (8) purchase or
sell physical commodities unless acquired as a result of ownership of securities
or other instruments; or (9) lend any security or make any other loan, if as a
result, more than 33 1/3% of the Fund's total assets would be lent to brokers,
dealers and other financial organizations; (10) Each of the Funds may,
notwithstanding any other fundamental investment policy or limitation, invest
all of its assets in the securities of a single open-end management investment
company with substantially the same fundamental investment objective, policies
and limitations as the Fund.
The following limitations are not fundamental and may be changed
without shareholder approval: Each of the Funds does not currently intend (1) to
sell securities short, unless it owns or has the right to obtain securities
equivalent in kind and amount to the securities sold short; (2) to purchase
securities on margin, except that the Fund may obtain such short-term credits as
are necessary for the clearance of transactions; (3) to invest more than 10%
(15% for White Elk Leveraged All Cap Fund) of its net assets in securities that
are illiquid by virtue of legal or contractual restrictions on resale or the
absence of a readily available market (securities eligible for resale under Rule
144A shall not be subject to this limitation); (4) to invest all of its assets
in the securities of a single open-end management investment company with
<PAGE>
substantially the same fundamental investment objective, policies, and
limitations of the Fund.
CERTAIN SECURITIES AND INVESTMENT TECHNIQUES
- --------------------------------------------
The Prospectus discusses the investment objectives of each Fund and
the policies to be employed to achieve those objectives. This section contains
supplemental information concerning the types of securities and other
instruments in which the Funds may invest, the investment policies and Fund
strategies that the Funds may utilize and certain risks attendant to those
investments, policies and strategies.
REPURCHASE AGREEMENTS. The Funds may enter into repurchase
agreements involving securities in which they can invest. Under such agreements,
the counterparty agrees, upon entering into the contract, to repurchase the
security at a mutually agreed upon time and price, thereby determining the yield
during the term of the agreement. This results in a fixed rate of return
insulated from market fluctuations during such period. Such agreements usually
cover short periods, such as under a week. Repurchase agreements may be
construed to be collateralized loans by the purchaser to the seller secured by
the securities transferred to the purchaser. Each Fund will require the seller
to provide additional collateral if the market value of the securities falls
below the repurchase price at any time during the term of the repurchase
agreement. In the event of a default by the seller, each Fund ordinarily will
retain ownership of the securities underlying the repurchase agreement, and
instead of a contractually fixed rate of return, the rate of return to each Fund
shall be dependent upon intervening fluctuations of the market value of such
securities and the accrued interest on the securities. In such event, each Fund
would have rights against the seller for breach of contract with respect to any
losses arising from market fluctuations following the failure of the seller to
perform. In the event of default by the seller under a repurchase agreement
construed to be a collateralized loan, the underlying securities are not owned
by each Fund but only constitute collateral for the seller's obligation to pay
the repurchase price. Therefore, each Fund may suffer time delays and incur
costs or possible losses in connection with the disposition of the collateral.
From time to time, each Fund also may invest in securities pursuant to purchase
and sale contracts. While purchase and sale contracts are similar to repurchase
agreements, purchase and sale contracts are structured so as to be in substance
more like a purchase and sale of the underlying security than is the case with
repurchase agreements.
BANK OBLIGATIONS. All Funds may invest in bank obligations of
various kinds, including obligations of domestic banks (national banks,
state-chartered banks and insured thrift institutions), the foreign branches of
domestic banks, and domestic branches of foreign banks. Each of these categories
may carry a different level of risk and, in general, even when federal deposit
insurance is applicable, it may provide incomplete protection because the amount
invested exceeds $100,000.
Investments in the obligations of domestic offices of domestic banks
generally carry less risk than investments in the other categories of banks
because domestic banks are subject to comprehensive regulation and supervision
<PAGE>
by a federal banking supervisor. Nevertheless, such investments do involve risk
if the bank fails, even though the first $100,000 of investment may be covered
by federal deposit insurance.
Investments in obligations of foreign branches of domestic banks may
carry additional risks having to do with the stability of the country where the
branch is located and the conditions that may be imposed on repayment by the
bank or the foreign country.
Obligations of domestic branches of foreign banks may be seen to
carry additional risk because not all foreign banks are regulated and supervised
as comprehensively as domestic banks and because such obligations may or may not
be general obligations of the foreign bank as a whole.
In deciding which banks' obligations to purchase, the Investment
Manager or any Sub-Portfolio Manager will consider the rating of the bank by
recognized rating agencies, the quality of its home country supervision, and its
financial standing, as well as the duration and other terms of the purchased
obligations.
LENDING OF FUND SECURITIES. The Funds have the authority to lend
securities to brokers, dealers and other financial organizations. The Funds will
not lend securities to White Elk Asset Management, Inc. (the "Investment
Manager") or its affiliates. By lending its securities, a Fund can increase its
income by continuing to receive interest on the loaned securities as well as by
either investing the cash collateral in short-term securities or by earning
income in the form of interest paid by the borrower when U.S. Government
securities are used as collateral. Each Fund will adhere to the following
conditions whenever its securities are loaned: (a) the Fund must receive at
least 100 percent cash collateral or equivalent securities from the borrower
plus accrued interest; (b) the borrower must increase this collateral whenever
the market value of the securities including accrued interest exceeds the value
of the collateral; (c) the Fund must be able to terminate the loan at any time;
(d) the Fund must receive reasonable interest on the loan, as well as any
dividends, interest or other distributions on the loaned securities and any
increase in market value; (e) the Fund may pay only reasonable custodian fees in
connection with the loan; and (f) voting rights on the loaned securities may
pass to the borrower; provided, however, that if a material event adversely
affecting the investment occurs, the Trust's Board of Trustees must terminate
the loan and regain the right to vote the securities.
CONVERTIBLE SECURITIES. The Funds (except for the White Elk Money
Market Fund) may invest in convertible securities of domestic or foreign
issuers. A convertible security is a fixed-income security (a bond or preferred
stock) which may be converted at a stated price within a specific period of time
into a certain quantity of common stock or other equity securities of the same
or a different issuer. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinated to similar
non-convertible securities. While providing a fixed-income stream (generally
higher in yield than the income derivable from common stock but lower than that
afforded by a similar non-convertible security), a convertible security also
offers the possibility, through its conversion feature, to participate in
appreciation of convertible security's underlying common stock.
<PAGE>
In general, the market value of a convertible security is at least
the higher of its "investment value" (i.e., its value as a fixed-income
security) or its "conversion value" (i.e., its value upon conversion into its
underlying stock). As a fixed-income security, a convertible security tends to
increase in market value when interest rates decline and tends to decrease in
value when interest rates rise. However, the price of a convertible security is
also influenced by the market value of the security's underlying common stock.
The price of a convertible security tends to increase as the market value of the
underlying stock rises, whereas it tends to decrease as the market value of the
underlying stock declines.
MORTGAGE-RELATED SECURITIES. Except as noted below, the Funds may
invest in residential or commercial mortgage-related securities, including
mortgage pass-through securities, collateralized mortgage obligations ("CMOs"),
adjustable rate mortgage securities, CMO residuals, stripped mortgage-related
securities, floating and inverse floating rate securities and tiered index
bonds.
MORTGAGE PASS-THROUGH SECURITIES. Mortgage pass-through securities
represent interests in pools of mortgages in which payments of both principal
and interest on the securities are generally made monthly, in effect "passing
through" monthly payments made by borrowers on the residential or commercial
mortgage loans which underlie the securities (net of any fees paid to the issuer
or guarantor of the securities). Mortgage pass-through securities differ from
other forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified call
dates. Early payment of principal on mortgage pass-through securities (arising
from prepayments of principal due to the sale of underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose a Fund to a lower rate of return upon reinvestment of principal. Also, if
a security subject to repayment has been purchased at a premium, in the event of
prepayment, the value of the premium would be lost.
There are currently three types of mortgage pass-through securities,
(i) those issued by the U.S. Government or one of its agencies or
instrumentalities, such as the Government National Mortgage Association
("GNMA"), the Federal National Mortgage Association ("FNMA") and the Federal
Home Loan Mortgage Corporation ("FHLMC"); (ii) those issued by private issuers
that represent an interest in or are collateralized by pass-through securities
issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities; and (iii) those issued by private issuers that represent an
interest in or are collateralized by whole mortgage loans or pass-through
securities without a government guarantee but usually having some form of
private credit enhancement.
GNMA is a wholly-owned United States Government corporation within
the Department of Housing and Urban Development. GNMA is authorized to
guarantee, with the full faith and credit of the United States Government, the
timely payment of principal and interest on securities issued by the
institutions approved by GNMA (such as savings and loan institutions, commercial
banks and mortgage banks), and backed by pools of FHA-insured or VA-guaranteed
mortgages.
<PAGE>
Obligations of FNMA and FHLMC are not backed by the full faith and
credit of the United States Government. In the case of obligations not backed by
the full faith and credit of the United States Government, the Trust must look
principally to the agency issuing or guaranteeing the obligation for ultimate
repayment. FNMA and FHLMC may borrow from the U.S. Treasury to meet its
obligations, but the U.S. Treasury is under no obligation to lend to FNMA or
FHLMC.
Private mortgage pass-through securities are structured similarly to
GNMA, FNMA and FHLMC mortgage pass-through securities and are issued by
originators of and investors in mortgage loans, including depository
institutions, mortgage banks, investment banks and special purpose subsidiaries
of the foregoing.
Pools created by private mortgage pass-through issuers generally
offer a higher rate of interest than government and government-related pools
because there are no direct or indirect government or agency guarantees of
payments in the private pools. However, timely payment of interest and principal
of these pools may be supported by various forms of insurance or guarantees,
including individual loan, title, pool and hazard insurance and letters of
credit. The insurance and guarantees are issued by governmental entities,
private insurers and the mortgage poolers. The insurance and guarantees and the
credit worthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets the Funds' investment quality
standards. There can be no assurance that the private insurers or guarantors can
meet their obligations under the insurance policies or guarantee arrangements.
Private mortgage pass-through securities may be bought without insurance or
guarantees if, through an examination of the loan experience and practices of
the originator/servicers and poolers, the Investment Manager or any
Sub-Portfolio Manager determines that the securities meet the Funds' quality
standards.
COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized mortgage
obligations ("CMOs") are debt obligations collateralized by residential or
commercial mortgage loans or residential or commercial mortgage pass-through
securities. Interest and prepaid principal are generally paid monthly. CMOs may
be collateralized by whole mortgage loans or private mortgage pass-through
securities but are more typically collateralized by Funds of mortgage
pass-through securities guaranteed by GNMA, FHLMC or FNMA. The issuer of a
series of CMOs may elect to be treated as a Real Estate Mortgage Investment
Conduit ("REMIC"). All future references to CMOs shall also be deemed to include
REMICs.
CMOs are structured into multiple classes, each bearing a different
stated maturity. Actual maturity and average life will depend upon the
prepayment experience of the collateral which is ordinarily unrelated to the
stated maturity date. CMOs often provide for a modified form of call protection
through a de facto breakdown of the underlying pool of mortgages according to
how quickly the loans are repaid. Monthly payment of principal received from the
pool of underlying mortgages, including prepayments, is first returned to
investors holding the shortest maturity class. Investors holding the longer
maturity classes usually receive principal only after the first class has been
retired. An investor may be partially protected against a sooner than desired
return of principal because of the sequential payments.
<PAGE>
Certain issuers of CMOs are not considered investment companies
pursuant to a rule adopted by the Securities and Exchange Commission ("SEC"),
and the Funds may invest in the securities of such issuers without the
limitations imposed by the Investment Company Act of 1940 Act, as amended (the
"1940 Act") on investments by the Trust in other investment companies. In
addition, in reliance on an earlier SEC interpretation, the Fund's investments
in certain other qualifying CMOs, which cannot or do not rely on the rule, are
also not subject to the limitation of the 1940 Act on acquiring interests in
other investment companies. In order to be able to rely on the SEC's
interpretation, these CMOs must be unmanaged, fixed asset issuers, that (a)
invest primarily in mortgage-backed securities, (b) do not issue redeemable
securities, (c) operate under general exemptive orders exempting them from all
provisions of the 1940 Act and (d) are not registered or regulated under the
1940 Act as investment companies. To the extent that the Funds select CMOs that
cannot rely on the rule or do not meet the above requirements, the Funds may not
invest more than 10% of their assets in all such entities and may not acquire
more than 3% of the voting securities of any single entity.
The Funds also may invest in, among other things, parallel pay CMOs,
Planned Amortization Class CMOs ("PAC bonds"), sequential pay CMOs, and floating
rate CMOs. Parallel pay CMOs are structured to provide payments of principal on
each payment date to more than one class. PAC bonds generally require payments
of a specified amount of principal on each payment date. Sequential pay CMOs
generally pay principal to only one class while paying interest to several
classes. Floating rate CMOs are securities whose coupon rate fluctuates
according to some formula related to an existing mortgage index or rate. Typical
indices would include the eleventh district cost-of-funds index ("COFI"), the
London Interbank Offered Rate ("LIBOR"), one-year Treasury yields, and ten-year
Treasury yields.
ADJUSTABLE RATE MORTGAGE SECURITIES. Adjustable rate mortgage
securities ("ARMs") are pass-through securities collateralized by mortgages with
adjustable rather than fixed rates. ARMs eligible for inclusion in a mortgage
pool generally provide for a fixed initial mortgage interest rate for either the
first three, six, twelve, thirteen, thirty-six, or sixty scheduled monthly
payments. Thereafter, the interest rates are subject to periodic adjustment
based on changes to a designated benchmark index.
The ARMs contain maximum and minimum rates beyond which the mortgage
interest rate may not vary over the lifetime of the security. In addition,
certain ARMs provide for additional limitations on the maximum amount by which
the mortgage interest may adjust for any single adjustment period. In the event
that market rates of interest rise more rapidly to levels above that of the
ARM's maximum rate, the ARM's coupon may represent a below market rate of
interest. In these circumstances, the market value of ARM security will likely
have fallen.
Certain ARMs contain limitations on changes in the required monthly
payment. In the event that a monthly payment is not sufficient to pay the
interest accruing on an ARM, any such excess interest is added to the principal
balance of the mortgage loan, which is repaid through future monthly payments.
If the monthly payment for such an instrument exceeds the sum of the interest
accrued at the applicable mortgage interest rate and the principal payment
required at such point to amortize the outstanding principal balance over the
<PAGE>
remaining term of the loan, the excess is then utilized to reduce the
outstanding principal balance of the ARM.
CMO RESIDUALS. CMO residuals are derivative mortgage securities
issued by agencies or instrumentalities of the U.S. Government or by private
originators of, or investors in, mortgage loans, including savings and loan
associations, homebuilders, mortgage banks, commercial banks, investment banks,
and special purpose entities of the foregoing.
The cash flow generated by the mortgage assets underlying a series
of CMOs is applied first to make required payments of principal and interest on
the CMOs and second to pay the related administrative expenses of the issuer.
The residual in a CMO structure generally represents the interest in any excess
cash flow remaining after making the foregoing payments. Each payment of such
excess cash flow to a holder of the related CMO residual represents income
and/or a return of capital. The amount of residual cash flow resulting from a
CMO will depend on, among other things, the characteristics of the mortgage
assets, the coupon rate of each class of CMO, prevailing interest rates, the
amount of administrative expenses and the prepayment experience on the mortgage
assets. In part, the yield to maturity on the CMO residuals is extremely
sensitive to prepayments on the related underlying mortgage assets, in the same
manner as an interest-only ("IO") class of stripped mortgage-related securities.
See "Stripped Mortgage-Related Securities" below. In addition, if a series of a
CMO includes a class that bears interest at an adjustable rate, the yield to
maturity on the related CMO residual will also be extremely sensitive to changes
in the level of the index upon which interest rate adjustments are based. As
described below with respect to stripped mortgage-related securities, in certain
circumstances a Fund may fail to recoup its initial investment in a CMO
residual.
CMO residuals are generally purchased and sold by institutional
investors through several investment banking firms acting as brokers or dealers.
The CMO residual market has recently developed and CMO residuals currently may
not have the liquidity of other more established securities trading in other
markets. Transactions in CMO residuals are generally completed only after
careful review of the characteristics of the securities in question. In
addition, CMO residuals may or, pursuant to an exemption therefrom, may not have
been registered under the Securities Act 0f 1933, as amended (the "1933 Act").
CMO residuals, whether or not registered under such Act, may be subject to
certain restrictions on transferability, and may be deemed "illiquid" and
subject to a Fund's limitations on investment in illiquid securities.
STRIPPED MORTGAGE-RELATED SECURITIES. Stripped mortgage-related
securities ("SMBS") are derivative multi-class mortgage securities. SMBS may be
issued by agencies or instrumentalities of the U.S. Government, or by private
originators of, or investors in, mortgage loans, including savings and loan
associations, mortgage banks, commercials banks, investment banks, and special
purpose entities of the foregoing.
SMBS are usually structured with two classes that receive different
proportions of the interest and principal distributions on a pool of mortgage
assets. A common type of SMBS will have one class receiving some of the interest
<PAGE>
and most of the principal from the mortgage assets, while the other class will
receive most of the interest and the remainder of the principal. In the most
extreme case, one class will receive all of the interest, (the "IO" class),
while the other class will receive all of the principal (the principal-only or
"PO" class). The yield to maturity on an IO class is extremely sensitive to the
rate of principal payments (including prepayments) on the related underlying
mortgage assets, and a rapid rate of principal payments may have a material
adverse effect on a Fund's yield to maturity from these securities. If the
underlying mortgage assets experience greater than anticipated prepayments of
principal, a Fund may fail to fully recoup its initial investment in these
securities even if the security is in one of the highest rating categories.
Although SMBS are purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers, these
securities were only recently introduced. As a result, established trading
markets have not yet been fully developed and accordingly, these securities may
be deemed "illiquid" and subject to a Fund's limitations on investment in
illiquid securities.
INVERSE FLOATERS. An inverse floater is a debt instrument with a
floating or variable interest rate that moves in the opposite direction to the
interest rate on another security or index level. Changes in the interest rate
on the other security or index inversely affect the residual interest rate paid
on the inverse floater, with the result that the inverse floater's price will be
considerably more volatile than that of a fixed rate bond. Inverse floaters may
experience gains when interest rates fall and may suffer losses in periods of
rising interest rates. The market for inverse floaters is relatively new.
TIERED INDEX BONDS. Tiered index bonds are relatively new forms of
mortgage-related securities. The interest rate on a tiered index bond is tied to
a specified index or market rate. So long as this index or market rate is below
a predetermined "strike" rate, the interest rate on the tiered index bond
remains fixed. If, however, the specified index or market rate rises above the
"strike" rate, the interest rate of the tiered index bond will decrease. Thus,
under these circumstances, the interest rate on a tiered index bond, like an
inverse floater, will move in the opposite direction of prevailing interest
rates, with the result that the price of the tiered index bond may be
considerably more volatile than that of a fixed rate bond.
The White Elk Money Market Fund may invest in asset-backed and
mortgage related securities only to the extent described under the heading
"Money Market Fund Investments" in the Prospectus. The White Elk Money Market
Fund will not invest in inverse floaters, CMT floaters, capped floaters, range
floaters, dual index floaters, COFI floaters or IOs or POs.
ASSET-BACKED SECURITIES. The Funds may invest in various types of
asset-backed securities. Through the use of trusts and special purpose
corporations, various types of assets, primarily automobile and credit card
receivables and home equity loans, are being securitized in pass-through
structures similar to the mortgage pass-through or in a pay-through structure
similar to the CMO structure. Investments in these and other types of
asset-backed securities must be consistent with the investment objectives and
policies of the Funds.
<PAGE>
RISK FACTORS RELATING TO INVESTING IN MORTGAGE-RELATED AND
ASSET-BACKED SECURITIES. The yield characteristics of mortgage-related and
asset-backed securities differ from traditional debt securities. Among the major
differences are that interest and principal payments are made more frequently,
usually monthly, and that principal may be prepaid at any time because the
underlying mortgage loans or other assets generally may be prepaid at any time.
As a result, if the Funds purchase such a security at a premium, a prepayment
rate that is faster than expected will reduce yield to maturity, while a
prepayment that is slower than expected will have the opposite effect of
increasing yield to maturity. Alternatively, if the Funds purchase these
securities at a discount, faster than expected prepayments will increase, while
slower than expected prepayments will reduce, yield to maturity. The Funds may
invest a portion of their assets in derivative mortgage-related securities which
are highly sensitive to changes in prepayment and interest rates. The Investment
Manager or any Sub-Portfolio Manager will seek to manage these risks (and
potential benefits) by diversifying its investments in such securities and
through hedging techniques.
During periods of declining interest rates, prepayment of mortgages
underlying mortgage-related securities can be expected to accelerate.
Accordingly, a Fund's ability to maintain positions in high-yielding
mortgage-related securities will be affected by reductions in the principal
amount of such securities resulting from such prepayments, and its ability to
reinvest the returns of principal at comparable rates is subject to generally
prevailing interest rates at that time. Prepayments may also result in the
realization of capital losses with respect to higher yielding securities that
had been bought at a premium or the lost of opportunity to realize capital gains
in the future from possible future appreciation.
Asset-backed securities involve certain risks that are not posed by
mortgage-related securities, resulting mainly from the fact that asset-backed
securities do not usually contain the complete benefit of a security interest in
the related collateral. For example, credit card receivables generally are
unsecured and the debtors are entitled to the protection of a number of state
and federal consumer credit laws, some of which may reduce the ability to obtain
full payment. In the case of automobile receivables, due to various legal and
economic factors, proceeds from repossessed collateral may not always be
sufficient to support payments on these securities.
DERIVATIVE INSTRUMENTS. The Funds (except the White Elk Money Market
Fund) may purchase and write call and put options on securities, securities
indexes and on foreign currencies and enter into futures contracts and use
options on futures contracts. The Funds may use these techniques to hedge
against changes in interest rates, foreign currency exchange rates, or
securities prices or as part of their overall investment strategies. The Funds
may also purchase and sell options relating to foreign currencies for the
purpose of increasing exposure to a foreign currency or to shift exposure to
foreign currency fluctuations from one country to another. The Funds will
maintain segregated accounts consisting of cash, U.S. Government securities,
high grade debt obligations securities or other liquid, unencumbered assets,
marked-to-market daily (or, as permitted by applicable regulation, enter into
certain offsetting positions) to cover its obligations under options, futures
contracts and swap agreements to avoid leveraging of the Fund.
<PAGE>
The Funds (except the White Elk Money Market Fund) may buy or sell
interest rate futures contracts, options on interest rate futures contracts and
options on debt securities for the purpose of hedging against changes in the
value of securities which the Funds own or anticipate purchasing due to
anticipated changes in interest rates. The Fund also may engage in currency
exchange transactions by means of buying or selling foreign currency on a spot
basis, entering into forward foreign currency exchange contracts, and buying and
selling foreign currency options, futures and options on futures. Foreign
currency exchange transactions may be entered into for the purpose of hedging
against foreign currency exchange risk arising from the Funds' investments or
anticipated investments in securities denominated in foreign currencies.
The Funds will not enter into futures contracts or options thereon
for non-hedging purposes if, immediately thereafter, the aggregate initial
margin deposits on the Fund's futures positions and premiums paid for options
thereon would exceed 5% of the liquidation value of the Funds' total assets.
There is no other percentage limitation on a Fund's use of options, futures and
options thereon, except for the limitation on foreign currency option contracts
described below.
Also, the Funds may enter into interest rate, index and currency
exchange rate swap agreements for the purpose of attempting to obtain a
particular desired return at a lower cost to the Funds than if the Funds had
invested directly in an instrument that yielded that desired return. In a
standard swap agreement, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on a particular
predetermined investment or investments. Swap agreements are subject to the
Funds' overall limit that no more than 10% of each Fund's net assets may be
invested in illiquid securities, and the Funds will not enter into a swap
agreement with any single party if the net amount owed or to be received under
existing contracts with that party would exceed 10% of the Funds' assets.
Participation in the options or futures markets involves investment
risks and transaction costs, as delineated further below, to which the Funds
would not be subject absent the use of these strategies. If the Investment
Manager's or any Sub-Portfolio Manager's predictions of movements in the
direction of the securities and interest rate markets are inaccurate, the
adverse consequences to the Funds may leave the Funds in a worse position than
if such strategies were not used. Risks inherent in the use of options, futures
contracts and options on futures contracts include: (i) dependence on the
Investment Manager's or any Sub-Portfolio Manager's ability to predict correctly
movements in the direction of interest rates and securities prices; (ii)
imperfect correlation between the price of options and futures contracts and
options thereon and movements in the prices of the securities being hedged;
(iii) the fact that skills needed to use these strategies are different from
those needed to select Fund securities; (iv) the absence of a liquid secondary
market for any particular instrument at any time; (v) the possible need to defer
closing out certain hedged positions to avoid adverse tax consequences; and (vi)
the possible inability of the Funds to purchase or sell a Fund security at a
time that otherwise would be favorable for it to do so, or the possible need for
the Funds to sell the security at a disadvantageous time, due to the requirement
that the Funds maintain "cover" or segregate securities in connection with
hedging transactions. The loss from investing in futures transactions is
potentially unlimited. There also is no assurance that a liquid secondary market
<PAGE>
will exist for futures contracts and options thereon in which the Funds may
invest.
OPTIONS ON SECURITIES AND ON SECURITIES INDEXES. The Funds (except
the Money Market Fund) may purchase put options on securities to protect
holdings in an underlying or related security against a substantial decline in
market value. The Funds may purchase call options on securities to protect
against substantial increases in prices of securities the Funds intend to
purchase pending their ability to invest in such securities in an orderly
manner. The Funds may sell put or call options they have previously purchased,
which could result in a net gain or loss depending on whether the amount
realized on the sale is more or less than the premium and other transaction
costs paid on the put or call option which is sold. A Fund may write a call or
put option only if the option is "covered" by the Fund holding a position in the
underlying securities or by other means which would permit immediate
satisfaction of the Fund's obligation as writer of the option. Prior to exercise
or expiration, an option may be closed out by an offsetting purchase or sale of
an option of the same series.
The purchase and writing of options involves certain risks. During
the option period, the covered call writer has, in return for the premium on the
option, given up the opportunity to profit from a price increase in the
underlying securities above the exercise price, but, as long as its obligation
as a writer continues, has retained the risk of loss should the price of the
underlying securities decline. The writer of an option has no control over the
time when it may be required to fulfill its obligation as a writer of the
option. Once an option writer has received an exercise notice, it cannot effect
a closing purchase transaction in order to terminate its obligation under the
option and must deliver the underlying securities at the exercise price. If a
put or call option purchased by a Fund is not sold when it has remaining value,
and if the market price of the underlying security, in the case of a put,
remains equal to or greater than the exercise price or, in the case of a call,
remains less than or equal to the exercise price, the Funds will lose its entire
investment in the option. Also, where a put or call option on a particular
security is purchased to hedge against price movements in a related security,
the price of the put or call option may move more or less than the price of the
related security. There can be no assurance that a liquid market will exist when
the Fund seeks to close out an option position. Furthermore, if trading
restrictions or suspensions are imposed on the options markets, the Funds may be
unable to close out a position.
There are several risks associated with transactions in options on
securities and on indexes. For example, there are significant differences
between the securities and options markets that could result in an imperfect
correlation between these markets, causing a given transaction not to achieve
its objectives. A decision as to whether, when and how to use options involves
the exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.
There can be no assurance that a liquid market will exist when the
Funds seek to close out an option position. If a Fund was unable to close out an
option that it has purchased on a security, it would have to exercise the option
in order to realize any profit or the option may expire worthless. If a Fund was
unable to close out a covered call option that it had written on a security, it
would not be able to sell the underlying security unless the option expired
<PAGE>
without exercise. As the writer of a covered call option, the Fund forgoes,
during the option's life, the opportunity to profit from increases in the market
value of the security covering the call option above the sum of the premium and
the exercise price of the call.
If trading were suspended in an option purchased by a Fund, the Fund
would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it had purchased. Except
to the extent that a call option on an index written by a Fund is covered by an
option on the same index purchased by the Fund, movements in the index may
result in a loss to the Fund; however, such losses may be mitigated by changes
in the value of the Fund's securities during the period the option was
outstanding.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. The Funds
(except the White Elk Money Market Fund) may use interest rate, foreign currency
or index futures contracts. An interest rate, foreign currency or index futures
contract provides for the future sale by one party and purchase by another party
of a specified quantity of a financial instrument, foreign currency or the cash
value of an index at a specified price and time. A futures contract on an index
is an agreement pursuant to which two parties agree to take or make delivery of
an amount of cash equal to the difference between the value of the index at the
close of the last trading day of the contract and the price at which the index
contract was originally written. Although the value of an index might be a
function of the value of certain specified securities, no physical delivery of
these securities is made. A public market exists in futures contracts covering
several indexes as well as a number of financial instruments and foreign
currencies, including: the Standard & Poor's 500 Index; the Standard & Poor's
100 Index; the New York Stock Exchange (the "NYSE") composite; U.S. Treasury
bonds; U.S. Treasury notes; GNMA Certificates; three-month U.S. Treasury bills;
90-day commercial paper; bank certificates of deposit; the Australian dollar;
the Canadian dollar; the British pound; the German mark; the Japanese yen; the
French franc; the Swiss franc; the Mexican peso; and certain multinational
currencies, such as the European Currency Unit ("ECU"). It is expected that
other futures contracts will be developed and traded in the future.
The Funds may purchase and write call and put options on futures.
Options on futures possess many of the same characteristics as options on
securities and indexes (discussed above). An option on a future contract gives
the holder the right, in return for the premium paid, to assume a long position
(call) or short position (put) in a futures contract at a specified exercise
price at any time during the period of the option. Upon exercise of a call
option the holder acquires a long position in the futures contract and the
writer is assigned the opposite short position. In the case of a put option, the
opposite is true.
The Funds will use futures contracts and options on futures
contracts in accordance with the rules of the Commodity Futures Trading
Commission ("CFTC"). For example, the Funds might use futures contracts to hedge
against anticipated changes in interest rates that might adversely affect either
the value of the Funds' securities or the price of the securities which the Fund
intends to purchase. The Funds' hedging activities may include sales of futures
contracts as an offset against the effect of an expected increase in interest
rates, and purchases of futures contracts as an offset against the effect of
<PAGE>
expected declines in interest rates. Although other techniques could be used to
reduce the Funds' exposure to interest rate fluctuations, the Funds may be able
to hedge its exposure more effectively and perhaps at a lower cost by using
futures contracts and options on futures contracts.
The Funds will only enter into futures contracts and options on
futures contracts which are standardized and traded on a U.S. or foreign
exchange, board of trade, or similar entity, or quoted on an automated quotation
system.
When a purchase or sale of a futures contract is made by a Fund, it
is required to deposit with its custodian (or broker, if legally permitted) a
specified amount of cash or U.S. Government securities ("initial margin"). The
margin required for a futures contract is set by the exchange on which the
contract is traded and may be modified during the term of the contract. The
initial margin is in the nature of a performance bond or good faith deposit on
the futures contract which is returned to the Fund upon termination of the
contract, assuming all contractual obligations have been satisfied. The Funds
expect to earn interest income on their initial margin deposits. A futures
contract held by a Fund is valued daily at the official settlement price on the
exchange on which it is traded. Each day the Fund pays or receives cash, called
"variation margin," equal to the daily change in value of the futures contract.
This process is known as "marking to market." Variation margin does not
represent a borrowing or loan by the Fund but is instead a settlement between
the Fund and the broker of the amount one would owe the other if the futures
contract expired. In computing daily net asset value, each Fund will mark to
market its open futures positions.
A Fund also is required to deposit and maintain margin with respect
to put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related margin requirements), the current market value of the option, and other
futures positions held by the Fund.
Although some futures contracts call for making or taking delivery
of the underlying securities, generally these obligations are closed out prior
to delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund realizes a capital
gain, or if it is more, the Fund realizes a capital loss. Conversely, if an
offsetting sale price is more than the original purchase price, the Fund
realizes a capital gain, or if it is less, the Fund realizes a capital loss. The
transaction costs must also be included in these calculations.
LIMITATIONS ON USE OF FUTURES AND OPTIONS THEREON. When purchasing a
futures contract, a Fund will maintain with its custodian (and mark-to market on
a daily basis) cash, U.S. Government securities, or other highly liquid debt
securities that, when added to the amounts deposited with a futures commission
merchant as margin, are equal to the market value of the futures contract.
Alternatively, the Fund may "cover" its position by purchasing a put option on
the same futures contract with a strike price as high or higher than the price
of the contract held by the Fund.
<PAGE>
When selling a futures contract, a Fund will maintain with its
custodian (and mark-to market on a daily basis) liquid assets that, when added
to the amount deposited with a futures commission merchant as margin, are equal
to the market value of the instruments underlying the contract. Alternatively, a
Fund may "cover" its position by owning the instruments underlying the contract
(or, in the case of an index futures contract, a Portfolio with a volatility
substantially similar to that of the index on which the futures contract is
based), or by holding a call option permitting the Fund to purchase the same
futures contract at a price no higher than the price of the contract written by
the Fund (or at a higher price if the difference is maintained in liquid assets
with the Trust's custodian).
When selling a call option on a futures contract, a Fund will
maintain with its custodian (and mark-to-market on a daily basis) cash, U.S.
Government securities, or other highly liquid debt securities that, when added
to the amounts deposited with a futures commission merchant as margin, equal the
total market value of the futures contract underlying the call option.
Alternatively, a Fund may cover its position by entering into a long position in
the same futures contract at a price no higher than the strike price of the call
option, by owning the instruments underlying the futures contract, or by holding
a separate call option permitting the Fund to purchase the same futures contract
at a price not higher than the strike price of the call option sold by the Fund.
When selling a put option on a futures contract, a Fund will
maintain with its custodian (and mark-to-market on a daily basis) cash, U.S.
Government Securities, or other highly liquid debt securities that equal the
purchase price of the futures contract, less any margin on deposit.
Alternatively, the Fund may cover the position either by entering into a short
position in the same futures contract, or by owning a separate put option
permitting it to sell the same futures contract so long as the strike price of
the purchased put option is the same or higher than the strike price of the put
option sold by the Fund.
The White Elk Money Market Fund's investments in U.S. Government and
Government agency securities will be in instruments with a remaining maturity of
762 days (25 months) or less. The White Elk Money Market Fund's other
investments will be in instruments with a remaining maturity of 397 days (13
months) or less that have received a short-term rating, or that have been issued
by issuers that have received a short-term rating with respect to a class of
debt obligations that are comparable in priority and security with the
instruments, from the nationally recognized statistical rating organizations
(the "NRSROs") in two highest short-term rating categories or, if neither the
instrument nor its issuer is so rated, will be of comparable quality as
determined by the Trustees of the Trust.
INVESTMENT RESTRICTIONS
-----------------------
USE OF RATINGS AS INVESTMENT CRITERIA
- -------------------------------------
The ratings of Moody's Investors Service, Inc., Standard & Poor's
Rating Group, Fitch Investors Services, Inc., Duff & Phelps Credit Rating Co.
and other rating services represent their opinions as to the quality of
corporate obligations. It should be emphasized that ratings are general and not
absolute standards of quality, and obligations with the same maturity, interest
<PAGE>
rate and rating may have different yields while obligations of the same maturity
and interest rate with different ratings may have the same yield. After being
purchased by a Fund, an obligation may cease to be rated or its rating may be
reduced below the minimum required for purchase by the Fund.
FUND TRANSACTIONS. The Investment Manager or the appropriate
Sub-Portfolio Manager assumes general supervision over placing orders on behalf
of each Fund for the purchase or sale of investment securities. Allocation of
brokerage transactions, including their frequency, is made in the Investment
Manager's or the Sub-Portfolio Manager's best judgment and in a manner deemed
fair and reasonable to shareholders. The primary consideration is prompt
execution of orders at the most favorable net price. Subject to this
consideration, the brokers selected will include those that supplement the
Investment Manager's or the Sub-Portfolio Manager's research facilities with
statistical data, investment information, economic facts and opinions.
Information so received is in addition to and not in lieu of services required
to be performed by the Investment Manager or the Sub-Portfolio Manager and the
Investment Manager's or the Sub-Portfolio Manager's fees are not reduced as a
consequence of the receipt of such supplemental information.
Such information may be useful to the Investment Manager or the
Sub-Portfolio Manager in serving each Fund and other clients that it advises
and, conversely, supplemental information obtained by the placement of business
of other clients may be useful to the Investment Manager or the Sub-Portfolio
Manager in carrying out its obligations to the Funds. Brokers also will be
selected because of their ability to handle special executions such as are
involved in large block trades or broad distributions, provided the primary
consideration is met. Large block trades may, in certain cases, result from two
or more Funds advised or administered by the Investment Manager or the
Sub-Portfolio Manager being engaged simultaneously in the purchase or sale of
the same security. Certain of the Investment Manager's or the Sub-Portfolio
Manager's transactions in securities of foreign issuers may not benefit from the
negotiated commission rates available to a Fund for transactions in securities
of domestic issuers. When transactions are executed in the over-the-counter
market, each Fund will deal with the primary market makers unless a more
favorable price or execution otherwise is obtainable. Foreign exchange
transactions of each Fund are made with banks or institutions in the interbank
market at prices reflecting a mark-up or mark-down and/or commission.
MANAGEMENT
TRUSTEES AND OFFICERS OF THE TRUST
- ----------------------------------
The names of the Trustees and Officers of the Trust, together with
information concerning their principal business occupations, are set forth
below. Unless otherwise noted, the address of each person named below is c/o
William D. Witter, Inc., One Citicorp Center, 153 East 53rd Street, New York,
New York 10022.
<PAGE>
<TABLE>
<CAPTION>
|Principal
Name, Address |Birthdate |Position with the |Occupation During
| |Trust |Past Five Years
<S> <C> <C> <C>
- ------------------|-------------------|----------------------|------------------
William D. Witter |September 2, 1929 |President, Trustee |President, William
| |and Chairman of the |D. Witter, Inc.
| |Board |
- ------------------|-------------------|----------------------|------------------
Peter Slusser | June 20, 1929 |Trustee |President, Slusser
| | |Associates, Inc.
- ------------------|-------------------|----------------------|------------------
Richard R. Hayes | September 17, |Trustee |Retired Executive
| 1929 | |Vice President,
| | |Director, Dean
| | |Witter Reynolds
</TABLE>
No director, officer or employee of the Investment Manager, or its
affiliates, will receive any compensation from the Trust for serving as an
officer or a Trustee of the Trust. The Trust pays each Trustee who is not a
director, officer or employee of the Investment Manager or its affiliates a fee
of $500 per Fund per meeting. The Investment Manager will hold at least 4
meetings per Fund in a year.
INVESTMENT MANAGER
- ------------------
The Investment Manager serves as investment manager to each of the
Funds pursuant to the Investment Management Agreement (the "Management
Agreement"). Certain of the services provided by, and the fees paid by the Trust
to the Investment Manager under the Management Agreement are described in the
Prospectus. The Investment Manager pays the salaries of all officers who are
employed by both it and the Trust. The Investment Manager will supervise
investments of the Funds on behalf of the Funds in accordance with the
investment objectives, programs and restrictions of the Funds, as provided in
the Trust's governing documents, including, without limitation, the Trust's
Agreement and Declaration of Trust and By-Laws, or otherwise, and such other
limitations as the Trustees may impose from time to time in writing to the
Investment Manager, except to the extent that such decisions are delegated to
Sub-Portfolio Managers pursuant to agreements entered into with Sub-Portfolio
Managers and approved in accordance with the 1940 Act. The Investment Manager is
a newly registered investment manager organized for the purpose of managing the
Funds that expects to operate primarily by retaining and supervising
Sub-Portfolio Managers.
Without limiting the generality of the foregoing, the Investment
Manager will: (i) furnish the Funds with advice and recommendations with respect
to the investment of each Fund's assets and the purchase and sale of Fund
securities for the Funds, including the taking of such other steps as may be
necessary to implement such advice and recommendations; (ii) furnish the Funds
with reports, statements and other data on securities, economic conditions and
other pertinent subjects which the Trust's Board of Trustees may reasonably
request; (iii) manage the investments of the Funds, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iv) provide persons
satisfactory to the Trust's Board of Trustees to act as officers and employees
of the Trust and the Funds (such officers and employees, as well as certain
trustees, may be trustees, directors, officers, partners, or employees of the
Investment Manager or its affiliates) but not including personnel to provide
<PAGE>
limited administrative services to the Funds not typically provided by the
Funds' administrator under separate agreement; and (v) render to the Trust's
Board of Trustees such periodic and special reports with respect to each Fund's
investment activities as the Board may reasonably request.
The Investment Manager has entered into a contract with William D.
Witter, Inc. ("Witter"), subject to the requirements of the 1940 Act, whereby
Witter will manage the White Elk Large Cap Growth Fund, Mid Cap Growth Fund,
Small Cap Growth Fund, Large Cap Value Fund, Mid Cap Value Fund, Small Cap Value
Fund, Leveraged All Cap Fund, Long-Term Bond Fund, Medium-Term Bond Fund and the
Money Market Fund.
The Investment Manager has entered into a contract with Oechsle
International Advisors, L.P. ("Oechsle"), subject to the requirements of the
1940 Act, whereby Oechsle will manage the White Elk Global Equity Fund.
PARTICIPATION AGREEMENTS
- ------------------------
Participation Agreements will be entered into between the Trust and
Participating Insurance Companies whereby the Trust intends to make a continuous
offering of its shares at net asset value to the Participating Insurance
Companies, and, whereby the Participating Insurance Companies intend to purchase
the shares of the Trust on behalf of the segregated accounts of the
Participating Insurance Companies.
ADMINISTRATOR
- -------------
State Street Bank and Trust Company ("State Street") is the
administrator of the Trust. State Street is a Massachusetts trust company with a
principal office at 225 Franklin Street, Boston, Massachusetts 02111. State
Street serves as administrator of other mutual funds.
Pursuant to the Administration Agreement with the Trust, State
Street provides all administrative services reasonably necessary for the Trust,
other than those provided by the Investment Manager or any Sub-Portfolio
Manager, subject to the supervision of the Board of Trustees of the Trust.
Under the Administration Agreement with the Trust, State Street
provides administrative services including, without limitation: (i) services of
personnel competent to perform such administrative and clerical functions as are
necessary to provide effective administration of the Trust; (ii) maintaining the
Trust's books and records (other than financial and accounting books and records
and records maintained by the Trust's custodian or transfer agent); (iii)
overseeing the Trust's insurance relationships; (iv) preparing or assisting in
the preparation of all required tax returns, proxy statements and reports to the
Trust's shareholders and Trustees and reports to and filings with the SEC and
any other governmental agency; (v) preparing or assisting in the preparation of
such notices and reports as may be necessary to offer and sell the Trust's
shares under applicable state securities laws; (vi) preparing or assisting in
the preparation of, and coordinating the distribution of all materials for
meetings of the Board of Trustees of the Trust; (vii) monitoring daily and
periodic compliance with respect to all requirements and restrictions of the
1940 Act, the Internal Revenue Code and the Prospectus; (viii) monitoring the
<PAGE>
calculation of all income and expense accruals, sales and redemptions of capital
shares outstanding by the Trust's custodian; (ix) evaluating expenses,
projecting future expenses, and processing payments of expenses; and (x)
monitoring and evaluating performance of accounting and related services by the
Trust's custodian.
The Administration Agreement is terminable at any time by the Trust
or State Street on sixty days' written notice.
TRANSFER AGENT
- --------------
State Street provides transfer agent and dividend disbursing
services to each Fund pursuant to the terms of a Transfer Agency Agreement by
and between State Street and the Trust.
CUSTODIAN
- ---------
State Street serves as the custodian of the Trust's assets pursuant
to a Custodian Agreement by and between State Street and the Trust. State
Street's responsibilities include safeguarding and controlling the Trust's cash
and securities, handling the receipt and delivery of securities, and collecting
interest and dividends on the Trust's investments. Pursuant to the Custodian
Agreement, State Street also provides certain accounting and pricing services to
the Trust, including calculating the daily net asset value per share for each
Fund; maintaining original entry documents and books of record and general
ledgers; posting cash receipts and disbursements; reconciling bank account
balances monthly; recording purchases and sales based upon communications from
the Investment Manager or any Sub-Portfolio Manager; and preparing monthly and
annual summaries to assist in the preparation of financial statements of, and
regulatory reports for, the Trust. The Trust may employ foreign sub-custodians
that are approved by the Board of Trustees to hold foreign assets.
NET ASSET VALUE
The net asset value per share of each Fund's shares will be
determined (as of the close of business usually at 4:00 p.m., New York time) on
each day that the NYSE and State Street are open for trading. NYSE annually
announces the days on which it will not be open for trading; the most recent
announcement indicates that it will not be open on the following days: New
Year's Day, Martin Luther King's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. However,
NYSE may close on days not included in that announcement. Also, no Fund is
required to compute its net asset value on any day on which no order to purchase
or redeem its shares is received.
Fixed-income securities which are traded on a national securities
exchange will be valued at the last sale price or, if there was no sale on such
day, at the last available bid price. However, securities with a demand feature
exercisable within one to seven days are valued at par. Prices for fixed-income
securities may be based on quotations received from one or more market-makers in
the securities, or on evaluations from pricing services. Debt securities which
<PAGE>
mature in less than 60 days are valued at amortized cost (unless the Board of
Trustees determines that this method does not represent fair value).
In determining the net asset value of each Fund's shares, equity
securities that are listed on a securities exchange (whether domestic or
foreign) or quoted by the NASDAQ National Market System are valued at the last
sale price on that day as of the close of regular trading on the NYSE, or, in
the absence of recorded sales, at the last available bid price. Unlisted equity
securities that are not included in such National Market System are valued at
the last available bid price.
Options, futures contracts and options thereon which are traded on
exchanges are valued at their last sale or settlement price as of the close of
the exchanges or, if no sales are reported, at the last available bid price.
Trading in securities listed on foreign securities exchanges or
over-the-counter markets is normally completed before the close of regular
trading on the NYSE. In addition, foreign securities trading may not take place
on all business days in New York and may occur on days on which the NYSE is not
open. In addition, foreign currency exchange rates are generally determined
prior to the close of trading on the NYSE. Events affecting the value of foreign
securities and currencies will not be reflected in the determination of net
asset value unless the Board of Trustees determines that the particular event
would materially affect net asset value, in which case an adjustment will be
made. Investments quoted in foreign currency are valued daily in U.S. dollars on
the basis of the foreign currency exchange rate prevailing at the time of
valuation. Foreign currency exchange transactions conducted on a spot basis are
valued at the spot rate prevailing in the foreign exchange market.
Securities and other assets for which market quotations are not
readily available are valued at their fair value as determined by the Investment
Manager or any Sub-Portfolio Manager under guidelines established by and under
the general supervision and responsibility of the Board of Trustees.
The White Elk Money Market Fund values its portfolio securities with
remaining maturities of 60 days or less on an amortized cost basis and values
its securities with remaining maturities of greater than 60 days for which
market quotations are readily available at market value. Other securities held
by the White Elk Money Market Fund are valued at their fair value as determined
in good faith by or under the direction of the Board of Trustees.
In accordance with the Commission rule applicable to the valuation
of its portfolio securities, the White Elk Money Market Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less and will purchase
instruments having remaining maturities of not more than 397 days (13 months),
with the exception of U.S. Government Securities and U.S. Government agency
securities, which may have remaining maturities of up to 762 days (twenty-five
months). The White Elk Money Market Fund will invest only in securities
determined by the Trustees to be of high quality with minimal credit risks. In
addition, the Trustees have established procedures designed to stabilize, to the
extent reasonably possible, the White Elk Money Market Fund's price per share as
<PAGE>
computed for the purposes of sales and redemptions at $1.00. Deviations of more
than an insignificant amount between the net asset value per share calculated
using market quotations and that calculated on a "penny-rounded" basis will be
reported to the Trustees by the Investment Manager. In the event the Trustees
determine that a deviation exists which may result in the material dilution or
other unfair results to investors or existing shareholders, the White Elk Money
Market Fund will take such corrective action as it regards as necessary and
appropriate, including the reduction of the number of outstanding shares of the
White Elk Money Market Fund by having each shareholder proportionately
contribute shares to the White Elk Money Market Fund's capital; the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; or establishing a net
asset value per share solely by using available market quotations. If the number
of outstanding shares is reduced in order to maintain a constant "penny rounded"
net asset value of $1.00 per share, the shareholders will contribute
proportionately to the White Elk Money Market Fund's capital. Each shareholder
will be deemed to have agreed to such contribution by an investment in the White
Elk Money Market Fund.
Since the net income of the White Elk Money Market Fund (including
realized gains and losses on the portfolio securities) is determined and
declared as a dividend immediately prior to each time the net asset value of the
White Elk Money Market Fund is determined, the net asset value per share of the
White Elk Money Market Fund normally remains at $1.00 per share immediately
after each such dividend declaration. Any increase in the value of a
shareholder's investment in the White Elk Money Market Fund, representing the
reinvestment of dividend income, is reflected by an increase in the number of
shares of the White Elk Money Market Fund in the account, and any decrease in
the value of a shareholder's investment may be reflected by a decrease in the
number of shares in the account. See "Taxes."
PURCHASES AND REDEMPTIONS
Shares of the Funds are offered by the Trust on a continuous basis
to separate accounts of Participating Insurance Companies pursuant to the
Participation Agreements described above and applicable retirement plans.
The separate accounts of the Participating Insurance Companies
purchase and redeem shares of each Fund based on, among other things, the amount
of premium payments to be invested and surrender and transfer requests (as
defined in the prospectuses describing the VA contracts and VLI policies issued
by the Participating Insurance Companies) to be effected on that day pursuant to
VA contracts and VLI policies but only on days on which the NYSE is open for
trading. Such purchases and redemptions of the shares of each Fund are effected
at their respective net asset values per share determined as of the close of
trading on the NYSE usually 4:00 p.m., New York time on that same day. See "Net
Asset Value." Payment for redemptions will be made by the Trust's transfer agent
on behalf of the Trust and the relevant Funds within seven days after receipt of
redemption requests.
The Trust may suspend the right of redemption of shares of any Fund
and may postpone payment for any period: (i) during which the NYSE is closed
<PAGE>
other than customary weekend and holiday closings or during which trading on the
NYSE is restricted; (ii) when the SEC determines that a state of emergency
exists which may make payment or transfer not reasonably practicable; (iii) as
the SEC may by order permit for the protection of the shareholders of the Trust
or (iv) at any other time when the Trust may, under applicable laws and
regulations, suspend payment on the redemption of its shares.
Should any conflict between VA contract and VLI policy holders arise
which would require that a substantial amount of net assets be withdrawn from
the Trust, orderly Fund management could be disrupted to the potential detriment
of the VA contract and VLI policy holders.
TAXES
The following is a summary of selected federal income tax
considerations that may affect the Funds and their shareholders and is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, court decisions and IRS rulings now in effect, all of which are
subject to change.
Each Fund will be structured so as to qualify as a regulated
investment company within the meaning of the Code. The Trust will monitor each
Fund's investments so as to meet the requirements for qualification on a
continuing basis. To so qualify, a Fund must, among other things derive at least
90% of its gross income in each taxable year from dividends, interest, payments
with respect to securities loans and gains from the sale or other disposition of
stock or securities and meet certain quarterly diversification tests.
As a regulated investment company, a Fund will not be subject to
federal income tax on its net investment income and net capital gains, if any,
that it distributes to its shareholders, provided that at least 90% of its net
investment income for the taxable year is distributed. All net investment income
and net capital gains distributed by a Fund will be reinvested automatically in
additional shares of the Fund. Amounts reinvested in additional shares will be
considered to have been distributed to shareholders.
A Fund is required to pay an excise tax to the extent that it does
not distribute to its shareholders during such calendar year at least 98% of its
ordinary income for that calendar year, 98% of its capital gain over capital
losses as of the twelve-month period ending October 31, and all undistributed
ordinary income and capital gains for the preceding respective one-year period.
The Trust intends that each Fund will meet these distribution requirements to
avoid excise tax liability.
PLANS
- -----
Generally, distributions from a Plan will be taxable as ordinary
income at the rate applicable to the participant at the time of distribution. In
certain cases, distributions made to a participant from a Plan prior to the date
on which the participant reaches age 59 1/2 are subject to a penalty tax
equivalent to 10% of the amount so distributed, in addition to the ordinary
income tax payable on such amount for the year in which it is distributed.
<PAGE>
SEGREGATED ASSET ACCOUNT
- ------------------------
The Trust intends to distribute shares in the Funds only to
Participating Insurance Companies which will hold those shares, directly or
indirectly, in a "segregated asset account" within the meaning of the Code. To
qualify as a segregated asset account, the Fund in which such an account holds
shares must meet the diversification requirements of the Code and the
regulations promulgated thereunder. To meet those requirements, a Fund may not
invest more than certain specified percentages of its assets in the securities
of any one, two, three or four issuers.
The Trust has undertaken to meet the diversification requirements of
the Code. This undertaking may limit the ability of a particular Fund to make
certain otherwise permitted investments.
Income on assets of a segregated asset account will not be taxable
currently to VA contract or VLI policy holders if that account has met the
diversification requirements. In the event an account is not so qualified, all
VA contract or VLI policies allocating any amount of premiums to such account
will not qualify as "annuity contracts" or "life insurance" for federal income
tax purposes. In that event, the holder of the VA contract or VLI policy would
be taxed as though he or she owned a proportionate amount of the assets held by
such account during and after all periods for which the account failed to be
qualified.
DETERMINATION OF PERFORMANCE
TOTAL RETURN. Average annual total return quotations used in the
Funds' advertising and promotional materials are calculated according to the
following formula:
P(1 + T)n= ERV
where "P" equals a hypothetical initial payment of $1000; "T" equals average
annual total return; "n" equals the number of years; and "ERV" equals the ending
redeemable value at the end of the period of a hypothetical $1000 payment made
at the beginning of the period.
Under the foregoing formula, the time periods used in advertising
will be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication. Average
annual total return, or "T" in the above formula, is computed by finding the
average annual compounded rates of return over the period that would equate the
initial amount invested to the ending redeemable value. Average annual total
return assumes the reinvestment of all dividends and distributions.
YIELD. Annualized bond yield quotations used in a Fund's advertising
and promotional materials are calculated by dividing the Fund's interest income
for a specified thirty-day period, net of expenses, by the average number of
shares outstanding during the period, and expressing the result as an annualized
percentage (assuming semi-annual compounding) of the net asset value per share
at the end of the period. Bond yield quotations are calculated according to the
following formula:
<PAGE>
a-b 6
YIELD=2[---+1) -1]
cd
where "a" equals dividends and interest earned during the period; "b" equals
expenses accrued for the period, net of reimbursements; "c" equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends; and "d" equals the maximum offering price per share on the
last day of the period.
Except as noted below, in determining net investment income earned
during the period ("a" in the above formula), a Fund calculates interest earned
on each debt obligation held by it during the period by (1) computing the
obligation's yield to maturity, based on the market value of the obligation
(including actual accrued interest) on the last business day of the period or,
if the obligation was purchased during the period, the purchase price plus
accrued interest; (2) dividing the yield to maturity by 360 and multiplying the
resulting quotient by the market value of the obligation (including actual
accrued interest). Once interest earned is calculated in this fashion for each
debt obligation held by the Fund, net investment income is then determined by
totaling all such interest earned.
For purposes of these calculations, the maturity of an obligation
with one or more call provisions is assumed to be the next date on which the
obligation reasonably can be expected to be called or, if none, the maturity
date.
The White Elk Money Market Fund normally computes its annualized
yield by determining the net income for a seven-day base period for a
hypothetical pre-existing account having a balance of one share at the beginning
of the base period, dividing the net income by the net asset value of the
account at the beginning of the base period to obtain the base period return,
multiplying the result by 365 and then dividing by seven. Under this
calculation, the yield reflects realized and unrealized gains and losses on
portfolio securities. In accordance with regulations adopted by the Commission,
the White Elk Money Market Fund is required to disclose its annualized yield for
certain seven-day base periods in a standardized manner which does not take into
consideration any realized or unrealized gains or losses on portfolio
securities. The Commission also permits the calculation of a standardized
effective or compounded yield. This is computed by compounding the unannualized
base period return which is done by adding one to the base period return,
raising the sum to a power equal to 365 divided by seven and subtracting one
from the result. This compounded yield calculation also excludes realized and
unrealized gains or losses on portfolio securities.
The yield on the Trust's shares normally will fluctuate on a daily
basis. Therefore, the yield for any given past period is not an indication or
representation by the Trust of future yields or rates of return on its shares.
The yield is affected by such factors as changes in interest rates on Treasury
securities, average portfolio maturity, the types and quality of portfolio
securities held and operating expenses. The yield on Trust shares for various
reasons may not be comparable to the yield on shares of other money market funds
or other investments.
OTHER INFORMATION. Each Fund's performance data quoted in
advertising and other promotional materials represents past performance and is
not intended to predict or indicate future results. The return and principal
<PAGE>
value of an investment in a Fund will fluctuate, and an investor's redemption
proceeds may be more or less than the original investment amount. In advertising
and promotional materials a Fund may compare its performance with data published
by Lipper Analytical Services, Inc. ("Lipper") or CDA Investment Technologies,
Inc. ("CDA"). The Fund also may refer in such materials to mutual fund
performance rankings and other data, such as comparative asset, expense and fee
levels, published by Lipper or CDA. Advertising and promotional materials also
may refer to discussions of the Fund and comparative mutual fund data and
ratings reported in independent periodicals including, but not limited to, The
Wall Street Journal, Money Magazine, Forbes, Business Week, Financial World and
Barron's.
IN GENERAL. Current performance information for the Funds may be
obtained by calling the Trust at the telephone number provided on the cover page
of this Statement of Additional Information. A Fund's quoted performance may not
be indicative of future performance. A Fund's performance will depend upon
factors such as the Fund's expenses and the types and maturities of instruments
held by the Fund. In addition, the actual return of a holder of a VA contract or
a VLI policy will be affected by charges imposed by the separate accounts of
Participating Insurance Companies.
GENERAL INFORMATION ABOUT THE TRUST
The Trust has been organized as an unincorporated business trust
under the laws of the Commonwealth of Massachusetts pursuant to an Agreement and
Declaration of Trust dated November 11, 1997 (the "Trust Agreement").
Shares do not have cumulative voting rights, which means that
holders of more than 50 percent of the shares voting for the election of
Trustees can elect all Trustees. Shares are transferable but there are no
preemptive rights. Shareholders generally vote by Fund, except when expressly
provided in the Trust Agreement. In the interest of economy and convenience,
certificates representing shares of a Fund are physically issued only upon
specific written request of a shareholder.
Under the Trust Agreement, shareholders of record of no less than
two-thirds of the outstanding shares of the Trust may remove a Trustee through a
declaration in writing or by vote cast in person or by proxy at a meeting called
for that purpose. Trustees are required to call a meeting of shareholders for
the purpose of voting on the question of removal of any such Trustee when
requested in writing to do so by the shareholders of record of not less than 10
percent of the Trust's outstanding shares.
Massachusetts law provides that shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Trust Agreement disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Trust
or a Trustee. The Trust Agreement provides for indemnification from the Trust's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder's incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust itself would be unable to meet its obligations, a possibility
that the Trust believes is remote. Upon payment of any liability incurred by the
<PAGE>
Trust, the shareholder paying the liability will be entitled to reimbursement
from the general assets of the Trust. The Trustees intend to conduct the
operations of the Trust in a manner so as to avoid, as far as possible, ultimate
liability of the shareholders for liabilities of the Trust.
ADDITIONAL INFORMATION
LEGAL OPINION
- -------------
The validity of the shares offered by the Prospectus will be passed
upon by Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New York
10004-1482.
INDEPENDENT ACCOUNTANTS
- -----------------------
The annual financial statements of the Funds will be audited by
PricewaterhouseCoopers LLP, independent accountants for the Funds.
OTHER INFORMATION
- -----------------
The Prospectus and this Statement of Additional Information,
together, do not contain all of the information set forth in the Registration
Statement of The White Elk Funds filed with the SEC. Certain information is
omitted in accordance with rules and regulations of the SEC. The Registration
Statement may be inspected at the Public Reference Room of the SEC at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and copies thereof may be
obtained from the SEC at prescribed rates.
FINANCIAL STATEMENT
- -------------------
The Statement of Assets and Liabilities for the White Elk Money
Market Fund, as of October 7, 1998 and accompanying notes, together with the
Independent Accountant's Report dated October 7, 1998, are attached to this
Statement of Additional Information.
<PAGE>
WHITE ELK FUNDS
Statement of Assets and Liabilities
October 7, 1998
Assets
<TABLE>
<CAPTION>
Money Market
Fund
<S> <C>
Cash $100,000
--------
Total Assets $100,000
--------
</TABLE>
<PAGE>
Liabilities
Accrued Expenses 0
--------
Net Assets $100,000
--------
Fund shares (unlimited authorization --
$0.01 par value) 100,000 outstanding shares of
beneficial interest of the Fund
Net asset value ($100,000 divided by 100,000 $1.00
shares) ========
The accompanying notes are an integral part of this financial statement.
1. Organization
The White Elk Funds (the "Trust") was organized as a Massachusetts
Business Trust under a Trust Instrument dated December 4, 1997 and is
registering under the Investment Company Act of 1940, as amended, as an
open-end investment company to consist of eleven separate diversified
portfolios (the "Funds"), each of which is a separate mutual fund. The
Funds are the White Elk Large Cap Growth Fund, White Elk Mid Cap Growth
Fund, White Elk Small Cap Growth Fund, White Elk Large Cap Value Fund,
White Elk Mid Cap Value Fund, White Elk Small Cap Value Fund, White Elk
Leveraged All Cap Fund, White Elk Global Equity Fund, White Elk Long-Term
Bond Fund, White Elk Medium-Term Bond Fund and the White Elk Money Market.
The Funds have not commenced operations except those related to
organizational matters and the sale of initial shares of beneficial
interest to initial shareholders in the Funds.
It is the intention of the Funds to qualify and elect treatment as
"regulated investment companies" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), by complying with the
provisions available to certain investment companies as defined in
applicable sections of the Code, and to make distributions of taxable
income to shareholders sufficient to relieve the Funds from all, or
substantially all, federal income tax.
<PAGE>
The preparation of the accompanying financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statement. Actual results may
differ from these estimates.
2. Investment Advisory and Management and Shareholder Services Agreements
The Trust has entered into the following service agreements:
An Investment Management Agreement pursuant to which White Elk Asset
Management, Inc. (the "Investment Manager") will act as the investment
adviser to the Funds. For its services, the Investment Manager receives a
fee, accrued daily by each Fund and payable to the Investment Manager on
the first business day of the succeeding month, at the following annual
percentages of average daily net assets: White Elk Large Cap Growth
Fund--1%; White Elk Mid Cap Growth Fund--1%; White Elk Small Cap Growth
Fund--1%; White Elk Large Cap Value Fund--1%; White Elk Mid Cap Value
Fund--1%; White Elk Small Cap Value Fund--1%; White Elk Leveraged All Cap
Fund--1%; White Elk Global Equity Fund--1%; White Elk Long-Term Bond
Fund--.50%; White Elk Medium-Term Bond Fund--.50%; White Elk Money Market
Fund--.25%.
William D. Witter, Inc. has been retained by the Investment Manager as a
Sub-Portfolio Manager for ten of the Funds and receives a fee from the
Investment Manager at the following annual percentages of average daily
net assets: White Elk Large Cap Growth Fund--.50%; White Elk Mid Cap
Growth Fund--.50%; White Elk Small Cap Growth Fund--.50%; White Elk Large
Cap Value Fund--.50%; White Elk Mid Cap Value Fund--.50%; White Elk Small
Cap Value Fund--.50%; White Elk Leveraged All Cap Fund--.50%; White Elk
Long-Term Bond Fund--..25%; White Elk Medium-Term Bond Fund--.25%; White
Elk Money Market Fund--.125%. William D. Witter, a Trustee of the Funds
and President of the Investment Manager, holds the majority of the
outstanding shares of William D. Witter, Inc.
Oechsle International Advisors, L.P. has been retained by the Investment
Manager as Sub-Portfolio Manager and receives a fee from the Investment
Manager at the following annual percentage of average daily net assets:
White Elk Global Equity Fund--.50%.
State Street Bank and Trust Company ("State Street") is the administrator,
custodian and transfer agent of the Trust.
Pursuant to the Administration Agreement with the Trust, State Street
provides all administrative services reasonably necessary for the Trust,
other than those provided by the Investment Manager or any Sub-Portfolio
Manager, subject to the supervision of the Board of Trustees of the Trust.
The Administration Agreement is terminable at any time by the Trust or
State Street on sixty days' written notice.
<PAGE>
3. Transaction with Affiliates
The Investment Manager has unconditionally assumed all the organization
costs on behalf of the Funds.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Shareholders and
Board of Trustees of White Elk Money Market Fund:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of White Elk Money
Market Fund (one of eleven series constituting the White Elk Funds) as of
October 7, 1998 in conformity with generally accepted accounting principles.
This financial statement is the responsibility of the Fund's management; our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
New York, New York
October 7, 1998
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------
We consent to the inclusion in this registration statement on Form N-1A
(Securities Act File No. 333-46097) of our report dated October 7, 1998, on our
audit of the statement of assets and liabilities of White Elk Money Market Fund.
We also consent to the reference to our firm under the caption "Additional
Information."
/s/ PricewaterhouseCoopers LLP
New York, New York
October 7, 1998.
<PAGE>
THE WHITE ELK FUNDS
================================================================================
INVESTMENT MANAGER: STATEMENT OF
- ------------------- ADDITIONAL
White Elk Asset Management, Inc. INFORMATION
c/o William D. Witter, Inc.
One Citicorp Center
153 East 53rd Street
New York, New York 10022
SUB-PORTFOLIO MANAGERS:
- -----------------------
William D. Witter, Inc.
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Oechsle International Advisors L.P.
One International Place
23rd Floor
Boston, Massachusetts 02110
CUSTODIAN, TRANSFER AGENT AND ADMINISTRATOR:
- --------------------------------------------
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS:
- ------------------------
PricewaterhouseCoopers LLP
1301 Avenue of the Americas
New York, New York 10019
COUNSEL:
- --------
Hughes Hubbard & Reed LLP
One Battery Park Plaza
New York, New York 10004-1482 , 1998
<PAGE>
------------------------------------------------------------
PART C
OTHER INFORMATION
------------------------------------------------------------
<PAGE>
------------------------------------------------------------
THE WHITE ELK FUNDS
------------------------------------------------------------
FORM N-1A
------------------------------------------------------------
PART C
------------------------------------------------------------
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements:
(1) To be filed by post-effective amendment.
(b) Exhibits:
(1) Agreement and Declaration of Trust.
(2) By-Laws.
(3) Voting Trust Agreement - Not applicable.
(4) Specimen Share Certificate - Not applicable.
(5) Investment Management Agreement.
(6) Sub-Portfolio Management Agreements.
(7) Benefit Plan(s) - Not applicable.
(8) Custodian Agreement.
(9) Administration Agreement.
(10) Form of Participation Agreement.
(11) Transfer Agency Agreement.
(12) Form of Consent and Opinion of Counsel as to legality of
Shares.
(13) Consent of Independent Public Accountants -Not
applicable.
<PAGE>
(14) Financial Statements omitted from Item 23 - Not
applicable.
(15) Form of Subscription Agreement.
(16) Model Retirement Plan Documents - Not applicable.
(17) Rule 12b-1 Plan - Not applicable.
(18) Performance computation - Not applicable.
(19) Financial Data Schedule - Not applicable.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
-------------------------------------------------------------
Item 26. NUMBER OF HOLDERS OF SECURITIES
-------------------------------
Item 27. INDEMNIFICATION
---------------
Under Section 8.4 of Registrant's Agreement and Declaration of
Trust, any past or present Trustee or officer of Registrant (including persons
who serve at Registrant's request as directors, officers or trustees of another
organization in which Registrant has any interest as a shareholder, creditor or
otherwise hereinafter referred to as a "Covered Person") is indemnified to the
fullest extent permitted by law against liability and all expenses reasonably
incurred by him or her in connection with any action, suit or proceeding to
which he or she may be a party or otherwise involved by reason of his or her
being or having been a Covered Person. This provision does not authorize
indemnification when it is determined, in the manner specified in the Agreement
and Declaration of Trust, that such Covered Person has not acted in good faith
in the reasonable belief that his or her actions were in or not opposed to the
best interests of Registrant. Moreover, this provision does not authorize
indemnification when it is determined, in the manner specified in the Agreement
and Declaration of Trust, that such Covered Person would otherwise be liable to
Registrant or its shareholders by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of his or her duties. Expenses may be
paid by Registrant in advance of the final disposition of any action, suit or
proceeding upon receipt of an undertaking by such Covered Person to repay such
expenses to Registrant in the event that it is ultimately determined that
indemnification of such expenses is not authorized under the Agreement and
Declaration of Trust and either (i) the Covered Person provides security for
such undertaking, (ii) Registrant is insured against losses from such advances
or (iii) the disinterested Trustees or independent legal counsel determines, in
the manner specified in the Agreement and Declaration of Trust, that there is
reason to believe the Covered Person will be found to be entitled to
indemnification.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "1933 Act") may be permitted to
Trustees, officers and controlling persons of Registrant pursuant to the
foregoing provisions, or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission (the "SEC") such
<PAGE>
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the final
adjudication of such issue.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
----------------------------------------------------
Information about White Elk Asset Management, Inc., which serves as
investment manager to Registrant, is set forth in Part B under "Management".
Item 29. PRINCIPAL UNDERWRITER
---------------------
Item 30. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
The accounts, books, or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 will be kept by the
Registrant's Transfer Agent, State Street Bank and Trust Company, 225 Franklin
Street, Boston, MA 02110, except those records relating to Fund transactions and
the basic organizational and Trust documents of the Registrant which will be
kept by the Registrant at The White Elk Funds, One Citicorp Center, 153 East
53rd Street, New York, New York 10022.
Item 31. MANAGEMENT SERVICES
-------------------
There are no management-related service contracts not discussed in
Parts A and B.
Item 32. UNDERTAKINGS
------------
(a) Registrant hereby undertakes to file a post-effective amendment
including financial statements of each series of the Registrant, which need not
be certified, within four to six months from the effective date of Registrant's
1933 Act Registration Statement with respect to shares of each of them.
(b) Registrant has undertaken to comply with section 16(a) of the
Investment Company Act of 1940, as amended, which requires the prompt convening
of a meeting of shareholders to elect trustees to fill existing vacancies in the
Registrant's Board of Trustees in the event that less than a majority of the
trustees have been elected to such position by shareholders. Registrant has also
undertaken promptly to call a meeting of shareholders for the purpose of voting
upon the question of removal of any Trustee or Trustees when requested in
writing to do so by the record holders of not less than 10 percent of the
Registrant's outstanding shares and to assist its shareholders in communicating
with other shareholders in accordance with the requirements of Section 16(c) of
the Investment Company Act of 1940, as amended.
<PAGE>
(c) Registrant has undertaken to submit the Investment Management
Agreement and the Sub-Portfolio Investment Management Agreement to a Shareholder
vote at Registrant's initial meeting of shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, Registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York and State of New
York on the 6th day of October, 1998.
THE WHITE ELK FUNDS
BY: /s/ William D. Witter
-------------------------------
William D. Witter President
ATTEST:
/s/ Melanie Marshak
---------------------------
Melanie Marshak
Secretary
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President and Chairman October 6, 1998
of the Board
/s/ William D. Witter
- --------------------------
William D. Witter
Trustee October 6, 1998
/s/ Peter Slusser
- --------------------------
Peter Slusser
Trustee October 6, 1998
/s/ Richard R. Hayes
- --------------------------
Richard R. Hayes
</TABLE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 25049
------------------------------
EXHIBITS
to
FORM N-1A
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
and
under
THE INVESTMENT COMPANY ACT OF 1940
-----------------------------
THE WHITE ELK FUNDS
c/o William D. Witter, Inc.
One Citicorp Center
153 East 53rd Street
New York, New York 10022
<PAGE>
INDEX TO EXHIBITS
-----------------
EXHIBIT NO. DOCUMENT PAGE NO.
----------- -------- --------
| |
1 |Agreement and Declaration of Trust |
- -------------------|------------------------------------------|-----------------
2 |By-Laws |
- -------------------|------------------------------------------|-----------------
5 |Investment Management Agreement |
- -------------------|------------------------------------------|-----------------
6 |Sub-Portfolio Investment Management |
|Agreements |
- -------------------|------------------------------------------|-----------------
8 |Custodian Agreement |
- -------------------|------------------------------------------|-----------------
9 |Administration Agreement |
- -------------------|------------------------------------------|-----------------
10 |Form of Participation Agreement |
- -------------------|------------------------------------------|-----------------
11 |Transfer Agency Agreement |
- -------------------|------------------------------------------|-----------------
12 |Form of Consent and Opinion of Counsel as |
|to Legality of Shares |
- -------------------|------------------------------------------|-----------------
13 |Form of Subscription Agreement |
- --------------------------------------------------------------|-----------------
E X H I B I T 1
- - - - - - - -
THE WHITE ELK FUNDS
--------------------------------------------
Agreement and Declaration of Trust
--------------------------------------------
<PAGE>
THE SHEFFIELD FUNDS
--------------------------------------------
AGREEMENT AND DECLARATION OF TRUST
--------------------------------------------
Dated: November 11, 1997
<PAGE>
THE SHEFFIELD FUNDS
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
TABLE OF CONTENTS
-----------------
PAGE
----
RECITALS.................................................................. 1
ARTICLE 1 - THE TRUST
SECTION 1.1. Name...................................................... 2
SECTION 1.2. Location.................................................. 2
SECTION 1.3. Nature of Trust........................................... 2
SECTION 1.4. Definitions............................................... 2
SECTION 1.5. Real Property to be Converted into Personal Property...... 6
ARTICLE 2 - PURPOSE OF THE TRUST
ARTICLE 3 - POWERS OF THE TRUSTEES
SECTION 3.1. Powers in General......................................... 6
(a) Investments........................................ 7
(b) Disposition of Assets.............................. 7
(c) Ownership Powers................................... 8
(d) Form of Holding.................................... 8
(e) Reorganization, etc................................ 8
(f) Voting Trusts, etc................................. 8
(g) Contracts, etc..................................... 8
(h) Guarantees, etc.................................... 9
(i) Partnerships, etc.................................. 9
(j) Insurance.......................................... 9
<PAGE>
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(Continued)
PAGE
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(k) Pensions, etc...................................... 9
(l) Power of Collection and Litigation................. 9
(m) Issuance and Repurchase of Shares.................. 9
(n) Offices............................................ 10
(o) Expenses........................................... 10
(p) Agents, etc........................................ 10
(q) Accounts........................................... 10
(r) Valuation.......................................... 10
(s) Indemnification.................................... 10
(t) General............................................ 10
SECTION 3.2. Borrowings; Financings; Issuance of Securities............ 11
SECTION 3.3. Deposits.................................................. 11
SECTION 3.4. Allocations............................................... 11
SECTION 3.5. Further Powers; Limitations............................... 11
ARTICLE 4 - TRUSTEES AND OFFICERS
SECTION 4.1. Number, Designation, Election, Term, etc.................. 12
(a) Initial Trustee.................................... 12
(b) Number............................................. 12
(c) Election and Term.................................. 12
(d) Resignation and Retirement......................... 12
(e) Removal............................................ 13
(f) Vacancies.......................................... 13
(g) Acceptance of Trusts............................... 13
(h) Effect of Death, Resignation, etc.................. 13
<PAGE>
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(Continued)
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(i) Conveyance......................................... 14
(j) No Accounting...................................... 14
(k) Filings............................................ 14
SECTION 4.2. Trustees' Meetings; Participation by Telephone, etc....... 14
SECTION 4.3. Committees; Delegation.................................... 15
SECTION 4.4. Officers.................................................. 15
SECTION 4.5 Compensation of Trustees and Officers..................... 15
SECTION 4.6. Ownership of Shares and Securities of the Trust........... 15
SECTION 4.7. Right of Trustees and Officers to Own Property or to
Engage in Business; Authority of Trustees to Permit
Others to Do Likewise..................................... 15
SECTION 4.8. Reliance on Experts....................................... 16
SECTION 4.9. Surety Bonds.............................................. 16
SECTION 4.10. Apparent Authority of Trustees and Officers............... 16
SECTION 4.11. Other Relationships Not Prohibited........................ 16
SECTION 4.12. Payment of Trust Expenses................................. 17
SECTION 4.13. Ownership of the Trust Property........................... 17
ARTICLE 5 - DELEGATION OF MANAGERIAL RESPONSIBILITIES
SECTION 5.1. Appointment; Action by Less than All Trustees............. 18
SECTION 5.2. Certain Contracts......................................... 18
(a) Advisory........................................... 18
(b) Administration..................................... 19
(c) Distribution....................................... 19
(d) Custodian.......................................... 19
(e) Transfer and Dividend Disbursing Agency............ 19
<PAGE>
TABLE OF CONTENTS
-----------------
(Continued)
PAGE
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(f) Shareholder Servicing.............................. 20
(g) Accounting......................................... 20
ARTICLE 6 - PORTFOLIOS AND SHARES
SECTION 6.1. Description of Portfolios and Shares...................... 20
(a) Shares; Portfolios; Series of Shares............... 20
(b) Establishment, etc. of Portfolios; Authorization
of Shares.......................................... 20
(c) Character of Separate Portfolios and Shares Thereof 21
(d) Consideration for Shares........................... 21
SECTION 6.2. Establishment and Designation of Certain Portfolios;
General Provisions for All Portfolios..................... 21
(a) Assets Belonging to Portfolios..................... 22
(b) Liabilities of Portfolios.......................... 22
(c) Dividends.......................................... 22
(d) Liquidation........................................ 23
(e) Voting............................................. 23
(f) Redemption by Shareholder.......................... 23
(g) Redemption at the Option of the Trust.............. 24
(h) Net Asset Value.................................... 24
(i) Transfer........................................... 24
(j) Equality........................................... 25
(k) Rights of Fractional Shares........................ 25
(l) Conversion Rights.................................. 25
SECTION 6.3. Ownership of Shares....................................... 25
SECTION 6.4. Investments in the Trust.................................. 25
<PAGE>
TABLE OF CONTENTS
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(Continued)
PAGE
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SECTION 6.5. No Pre-emptive Rights..................................... 26
SECTION 6.6. Status of Shares.......................................... 26
ARTICLE 7 - SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.1. Voting Powers............................................. 26
SECTION 7.2. Number of Votes and Manner of Voting; Proxies............. 27
SECTION 7.3. Meetings.................................................. 27
SECTION 7.4. Record Dates.............................................. 27
SECTION 7.5. Quorum and Required Vote.................................. 28
SECTION 7.6. Action by Written Consent................................. 28
SECTION 7.7. Inspection of Records..................................... 28
SECTION 7.8. Additional Provisions..................................... 28
ARTICLE 8 - LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1. Trustees, Shareholders, etc. Not Personally Liable;
Notice.................................................... 28
SECTION 8.2. Trustees' Good Faith Action; Expert Advice; No Bond
or Surety................................................. 29
SECTION 8.3. Indemnification of Shareholders........................... 29
SECTION 8.4. Indemnification of Trustees, Officers, etc................ 30
SECTION 8.5. Compromise Payment........................................ 31
SECTION 8.6. Indemnification Not Exclusive, etc........................ 31
SECTION 8.7. Liability of Third Persons Dealing with Trustees.......... 31
ARTICLE 9 - DURATION; REORGANIZATION; AMENDMENTS
SECTION 9.1. Duration and Termination of Trust......................... 31
SECTION 9.2. Reorganization............................................ 32
SECTION 9.3. Amendments; etc........................................... 32
<PAGE>
TABLE OF CONTENTS
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(Continued)
PAGE
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SECTION 9.4. Filing of Copies of Declaration and Amendments............ 33
ARTICLE 10 - MISCELLANEOUS
SECTION 10.1. Governing Law............................................. 33
SECTION 10.2. Counterparts.............................................. 33
SECTION 10.3. Reliance by Third Parties................................. 33
SECTION 10.4. References; Headings...................................... 34
ACKNOWLEDGMENTS .......................................................... 36
<PAGE>
AGREEMENT AND DECLARATION OF TRUST
OF
THE SHEFFIELD FUNDS
This AGREEMENT AND DECLARATION OF TRUST, made at New York, New York,
this 11th day of November, 1997, by and between the Settlor and the Trustee
whose signature is set forth below (the "INITIAL TRUSTEE"),
W I T N E S S E T H T H A T:
- - - - - - - - - - - - - -
WHEREAS, Stephen E. O'Neil, an individual residing in New York, New
York (the "SETTLOR"), proposes to deliver to the Initial Trustee the sum of one
hundred dollars ($100.00) lawful money of the United States of America in trust
hereunder and to authorize the Initial Trustee and all other Persons acting as
Trustees hereunder to employ such funds, and any other funds coming into their
hands or the hands of their successor or successors as such Trustees, to carry
on the business of an investment company, and as such of buying, selling,
investing in or otherwise dealing in and with stocks, bonds, debentures,
warrants, options, futures contracts and other securities and interests therein,
or calls or puts with respect to any of the same, or such other and further
investment media and other property as the Trustees may deem advisable, which
are not prohibited by law or the terms of this Declaration; and
WHEREAS, the Initial Trustee is willing to accept such sum, together
with any and all additions thereto and the income or increments thereof, upon
the terms, conditions and trusts hereinafter set forth; and
WHEREAS, it is proposed that the assets held by the Trustees be
divided into separate portfolios, each with its own separate investment assets,
investment objectives, policies and purposes, and that the beneficial interest
in each such fund shall be divided into transferable Shares of Beneficial
Interest, a separate Series of Shares for each fund, all in accordance with the
provisions hereinafter set forth; and
WHEREAS, it is desired that the trust established hereby (the
"TRUST") be managed and operated as a trust with transferable shares under the
laws of Massachusetts, of the type commonly known as and referred to as a
Massachusetts business trust, in accordance with the provisions hereinafter set
forth,
NOW, THEREFORE, the Initial Trustee, for himself and his successors
as Trustees, hereby declares, and agrees with the Settlor, for himself and for
all Persons who shall hereafter become holders of Shares of Beneficial Interest
of the Trust, of any Series, that the Trustees will hold the sum delivered to
them upon the execution hereof, and all other and further cash, securities and
other property of every type and description which they may in any way acquire
in their capacity as such Trustees, together with the income therefrom and the
proceeds thereof, IN TRUST NEVERTHELESS, to manage and dispose of the same for
the benefit of the holders from time to time of the Shares of Beneficial
<PAGE>
Interest of the several Series being issued and to be issued hereunder and in
the manner and subject to the provisions hereof, to wit:
ARTICLE 1
---------
THE TRUST
---------
SECTION 1.1. NAME. The name of the Trust shall be
"THE SHEFFIELD FUNDS",
and so far as may be practicable the Trustees shall conduct the Trust's
activities, execute all documents and sue or be sued under that name, which name
(and the word "TRUST" wherever used in this Agreement and Declaration of Trust,
except where the context otherwise requires) shall refer to the Trustees in
their capacity as Trustees, and not individually or personally, and shall not
refer to the officers, agents or employees of the Trust or of such Trustees, or
to the holders of the Shares of Beneficial Interest of the Trust, of any Series.
If the Trustees determine that the use of such name is not practicable, legal or
convenient at any time or in any jurisdiction, the Trustees may use such other
designation, or they may adopt such other name for the Trust as they deem
proper, and the Trust may hold property and conduct its activities under such
designation or name.
SECTION 1.2. LOCATION. The Trust shall have an office in Boston,
Massachusetts at c/o CT Corporation System, 2 Oliver Street, Boston, MA 02109,
unless changed by the Trustees to another location, but such office need not be
the sole or principal office of the Trust. The Trust may have such other offices
or places of business as the Trustees may from time to time determine to be
necessary or expedient.
SECTION 1.3. NATURE OF TRUST. The Trust shall be a trust with
transferable shares under the laws of The Commonwealth of Massachusetts, of the
type referred to in Section 1 of Chapter 182 of the Massachusetts General Laws
and commonly termed a Massachusetts business trust. The Trust is not intended to
be, shall not be deemed to be, and shall not be treated as, a general
partnership, limited partnership, joint venture, corporation or joint stock
company. The Shareholders shall be beneficiaries and their relationship to the
Trustees shall be solely in that capacity in accordance with the rights
conferred upon them hereunder.
SECTION 1.4. DEFINITIONS. As used in this Agreement and Declaration
of Trust, the following terms shall have the meanings set forth below unless the
context thereof otherwise requires:
"ACCOUNTING AGENT" shall have the meaning designated in Section
5.2(g) hereof.
"ADMINISTRATOR" shall have the meaning designated in Section 5.2(b)
hereof.
"AFFILIATED PERSON" shall have the meaning assigned to it in the 1940
Act.
<PAGE>
"BY-LAWS" shall mean the By-Laws of the Trust, as amended from time
to time.
"CERTIFICATE OF DESIGNATION" shall have the meaning designated in
Section 6.1 hereof.
"CERTIFICATE OF TERMINATION" shall have the meaning designated in
Section 6.1 hereof.
"COMMISSION" shall have the same meaning as in the 1940 Act.
"CONTRACTING PARTY" shall have the meaning designated in the preamble
to Section 5.2 hereof.
"COVERED PERSON" shall have the meaning designated in Section 8.4
hereof.
"CUSTODIAN" shall have the meaning designated in Section 5.2(d)
hereof.
"DECLARATION" and "DECLARATION OF TRUST" shall mean this Agreement
and Declaration of Trust and all amendments or modifications thereof as from
time to time in effect. References in this Agreement and Declaration of Trust to
"HEREOF", "HEREIN" and "HEREUNDER" shall be deemed to refer to the Declaration
of Trust generally, and shall not be limited to the particular text, Article or
Section in which such words appear.
"DISABLING CONDUCT" shall have the meaning designated in Section 8.4
hereof.
"DISTRIBUTOR" shall have the meaning designated in Section 5.2(c)
hereof.
"DIVIDEND DISBURSING AGENT" shall have the meaning designated in
Section 5.2(e) hereof.
"PORTFOLIO" or "PORTFOLIOS" shall mean one or more of the separate
components of the assets of the Trust which are now or hereafter established and
designated under or in accordance with the provisions of Article 6 hereof.
"PORTFOLIO ASSETS" shall have the meaning defined in Section 6.2(a)
hereof.
"GENERAL ITEMS" shall have the meaning defined in Section 6.2(a)
hereof.
"INITIAL TRUSTEE" shall have the meaning defined in the preamble
hereto.
"INVESTMENT ADVISER" shall have the meaning stated in Section 5.2(a)
hereof.
"MAJORITY OF THE TRUSTEES" shall mean a majority of the Trustees in
office at the time in question. At any time at which there shall be only one (1)
Trustee in office, such term shall mean such Trustee.
"MAJORITY SHAREHOLDER VOTE," as used with respect to the election of
any Trustee at a meeting of Shareholders, shall mean the vote for the election
of such Trustee of a plurality of all outstanding Shares of the Trust, without
regard to Series, represented in person or by proxy and entitled to vote
thereon, provided that a quorum (as determined in accordance with the By-Laws)
<PAGE>
is present, and used with respect to any other action required or permitted to
be taken by Shareholders, shall mean the vote for such action of the holders of
that majority of all outstanding Shares (or, where a separate vote of Shares of
any particular Series is to be taken, the affirmative vote of that majority of
the outstanding Shares of that Series) of the Trust which consists of: (i) a
majority of all Shares (or of Shares of the particular Series) represented in
person or by proxy and entitled to vote on such action at the meeting of
Shareholders at which such action is to be taken, provided that a quorum (as
determined in accordance with the By-Laws) is present; or (ii) if such action is
to be taken by written consent of Shareholders, a majority of all Shares (or of
Shares of the particular Series) issued and outstanding and entitled to vote on
such action; PROVIDED, that (iii) as used with respect to any action requiring
the affirmative vote of "a majority of the outstanding voting securities", as
the quoted phrase is defined in the 1940 Act, of the Trust or of any Portfolio,
"MAJORITY SHAREHOLDER VOTE" means the vote for such action at a meeting of
Shareholders of the smallest majority of all outstanding Shares of the Trust (or
of Shares of the particular Portfolio) entitled to vote on such action which
satisfies such 1940 Act voting requirement.
"1940 ACT" shall mean the provisions of the Investment Company Act of
1940 and the rules and regulations thereunder, both as amended from time to
time, and any order or orders thereunder which may from time to time be
applicable to the Trust.
"PERSON" shall mean and include individuals, as well as corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, banks, trust companies, land trusts, business trusts or
other organizations established under the laws of any jurisdiction, whether or
not considered to be legal entities, and governments and agencies and political
subdivisions thereof.
"PRINCIPAL UNDERWRITER" shall have the meaning designated in Section
5.2(c) hereof.
"PROSPECTUS," as used with respect to any Portfolio or Series of
Shares, shall mean the prospectus relating to such Portfolio or Series which
constitutes part of the currently effective Registration Statement of the Trust
under the Securities Act of 1933, as such prospectus may be amended or
supplemented from time to time.
"SECURITIES" shall mean any and all bills, notes, bonds, debentures
or other obligations or evidences of indebtedness, certificates of deposit,
bankers' acceptances, commercial paper, repurchase agreements or other money
market instruments; stocks, shares or other equity ownership interests; and
warrants, options or other instruments representing rights to subscribe for,
purchase, receive or otherwise acquire or to sell, transfer, assign or otherwise
dispose of, and scrip, certificates, receipts or other instruments evidencing
any ownership rights or interests in, any of the foregoing and "when issued" and
"delayed delivery" contracts for securities, issued, guaranteed or sponsored by
any governments, political subdivisions or governmental authorities, agencies or
instrumentalities, by any individuals, firms, companies, corporations,
syndicates, associations or trusts, or by any other organizations or entities
whatsoever, irrespective of their forms or the names by which they may be
<PAGE>
described, whether or not they be organized and operated for profit, and whether
they be domestic or foreign with respect to The Commonwealth of Massachusetts or
the United States of America.
"SECURITIES OF THE TRUST" shall mean any Securities issued by the
Trust.
"SERIES" shall mean one or more of the series of Shares authorized by
the Trustees to represent the beneficial interest in one or more of the
Portfolios.
"SETTLOR" shall have the meaning stated in the first "Whereas" clause
set forth above.
"SHAREHOLDER" shall mean as of any particular time any Person shown
of record at such time on the books of the Trust as a holder of outstanding
Shares of any Series, and shall include a pledgee into whose name any such
Shares are transferred in pledge.
"SHAREHOLDER SERVICING AGENT" shall have the meaning designated in
Section 5.2(f) hereof.
"SHARES" shall mean the transferable units into which the beneficial
interest in the Trust and each Portfolio of the Trust (as the context may
require) shall be divided from time to time, and includes fractions of Shares as
well as whole Shares. All references herein to "Shares" which are not
accompanied by a reference to any particular Series or Portfolio shall be deemed
to apply to outstanding Shares without regard to Series.
"SINGLE CLASS VOTING," as used with respect to any matter to be acted
upon at a meeting or by written consent of Shareholders, shall mean a style of
voting in which each holder of one or more Shares shall be entitled to one vote
on the matter in question for each Share standing in his name on the records of
the Trust, irrespective of Series, and all outstanding Shares of all Series vote
as a single class.
"STATEMENT OF ADDITIONAL INFORMATION," as used with respect to any
Portfolio or Series of Shares, shall mean the statement of additional
information relating to such Portfolio or Series, which constitutes part of the
currently effective Registration Statement of the Trust under the Securities Act
of 1933, as such statement of additional information may be amended or
supplemented from time to time.
"TRANSFER AGENT" shall have the meaning defined in Section 5.2(e)
hereof.
"TRUST" shall have the meaning stated in the fourth "Whereas" clause
set forth above.
"TRUST PROPERTY" shall mean, as of any particular time, any and all
property which shall have been transferred, conveyed or paid to the Trust or the
Trustees, and all interest, dividends, income, earnings, profits and gains
therefrom, and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and which at
such time is owned or held by, or for the account of, the Trust or the Trustees,
without regard to the Portfolio to which such property is allocated.
<PAGE>
"TRUSTEES" shall mean, collectively, the Initial Trustee, so long as
he shall continue in office, and all other individuals who at the time in
question have been duly elected or appointed as Trustees of the Trust in
accordance with the provisions hereof and who have qualified and are then in
office. At any time at which there shall be only one (1) Trustee in office, such
term shall mean such single Trustee.
SECTION 1.5. REAL PROPERTY TO BE CONVERTED INTO PERSONAL PROPERTY.
Notwithstanding any other provision hereof, any real property at any time
forming part of the Trust Property shall be held in trust for sale and
conversion into personal property at such time or times and in such manner and
upon such terms as the Trustees shall approve, but the Trustees shall have power
until the termination of this Trust to postpone such conversion as long as they
in their uncontrolled discretion shall think fit, and for the purpose of
determining the nature of the interest of the Shareholders therein, all such
real property shall at all times be considered as personal property.
ARTICLE 2
---------
PURPOSE OF THE TRUST
--------------------
The purpose of the Trust shall be to engage in the business of being
an investment company, and as such of subscribing for, purchasing or otherwise
acquiring, holding for investment or trading in, borrowing, lending and selling
short, selling, assigning, negotiating or exchanging and otherwise disposing of,
and turning to account, realizing upon and generally dealing in and with, in any
manner, (a) Securities of all kinds, (b) precious metals and other minerals,
contracts to purchase and sell, and other interests of every nature and kind in,
such metals or minerals, and (c) rare coins and other numismatic items, and all
as the Trustees in their discretion shall determine to be necessary, desirable
or appropriate, and to exercise and perform any and every act, thing or power
necessary, suitable or desirable for the accomplishment of such purpose, the
attainment of any of the objects or the furtherance of any of the powers given
hereby which are lawful purposes, objects or powers of a trust with transferable
shares of the type commonly termed a Massachusetts business trust; and to do
every other act or acts or thing or things incidental or appurtenant to or
growing out of or in connection with the aforesaid objects, purposes or powers,
or any of them, which a trust of the type commonly termed a Massachusetts
business trust is not now or hereafter prohibited from doing, exercising or
performing.
ARTICLE 3
---------
POWERS OF THE TRUSTEES
----------------------
SECTION 3.1. POWERS IN GENERAL. The Trustees shall have, without
other or further authorization, full, entire, exclusive and absolute power,
control and authority over, and management of, the business of the Trust and
over the Trust Property, to the same extent as if the Trustees were the sole
owners of the business and property of the Trust in their own right, and with
such powers of delegation as may be permitted by this Declaration, subject only
to such limitations as may be expressly imposed by this Declaration of Trust or
by applicable law. The enumeration of any specific power or authority herein
<PAGE>
shall not be construed as limiting the aforesaid power or authority or any
specific power or authority. Without limiting the foregoing, the Trustees may
adopt By-Laws not inconsistent with this Declaration of Trust providing for the
conduct of the business and affairs of the Trust and may amend and repeal them
to the extent that such By-Laws do not reserve that right to the Shareholders;
they may select, and from time to time change, the fiscal year of the Trust;
they may adopt and use a seal for the Trust, PROVIDED, that unless otherwise
required by the Trustees, it shall not be necessary to place the seal upon, 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; they may from time to
time in accordance with the provisions of Section 6.1 hereof establish one or
more Portfolios to which they may allocate such of the Trust Property, subject
to such liabilities, as they shall deem appropriate, each such Portfolio to be
operated by the Trustees as a separate and distinct investment medium and with
separately defined investment objectives and policies and distinct investment
purposes, all as established by the Trustees, or from time to time changed by
them; they may as they consider appropriate elect and remove officers and
appoint and terminate agents and consultants and hire and terminate employees,
any one or more of the foregoing of whom may be a Trustee; they may appoint from
their own number, and terminate, any one or more committees consisting of one or
more Trustees, including without implied limitation an Executive Committee,
which may, when the Trustees are not in session and subject to the 1940 Act,
exercise some or all of the power and authority of the Trustees as the Trustees
may determine; in accordance with Section 5.2 they may employ one or more
Investment Advisers, Administrators and Custodians and may authorize any
Custodian to employ subcustodians or agents and to deposit all or any part of
such assets in a system or systems for the central handling of Securities,
retain Transfer, Dividend Disbursing, Accounting or Shareholder Servicing Agents
or any of the foregoing, provide for the distribution of Shares by the Trust
through one or more Distributors, Principal Underwriters or otherwise, set
record dates or times for the determination of Shareholders entitled to
participate in, benefit from or act with respect to various matters; and in
general they may delegate to any officer of the Trust, to any Committee of the
Trustees and to any employee, Investment Adviser, Administrator, Distributor,
Custodian, Transfer Agent, Dividend Disbursing Agent, or any other agent or
consultant of the Trust, such authority, powers, functions and duties as they
consider desirable or appropriate for the conduct of the business and affairs of
the Trust, including without implied limitation the power and authority to act
in the name of the Trust and of the Trustees, to sign documents and to act as
attorney-in-fact for the Trustees. Without limiting the foregoing and to the
extent not inconsistent with the 1940 Act or other applicable law, the Trustees
shall have power and authority:
(a) INVESTMENTS. To invest and reinvest cash and other property;
to buy, for cash or on margin, and otherwise acquire and hold,
Securities created or issued by any Persons, including Securities
maturing after the possible termination of the Trust; to make payment
therefor in any lawful manner in exchange for any of the Trust
Property; and to hold cash or other property uninvested without in any
event being bound or limited by any present or future law or custom in
regard to investments by trustees;
(b) DISPOSITION OF ASSETS. Upon such terms and conditions as they
deem best, to lend, sell, exchange, mortgage, pledge, hypothecate,
grant security interests in, encumber, negotiate, convey, transfer or
<PAGE>
otherwise dispose of, and to trade in, any and all of the Trust
Property, free and clear of all trusts, for cash or on terms, with or
without advertisement, and on such terms as to payment, security or
otherwise, all as they shall deem necessary or expedient;
(c) OWNERSHIP POWERS. To vote or give assent, or exercise any and
all other rights, powers and privileges of ownership with respect to,
and to perform any and all duties and obligations as owners of, any
Securities or other property forming part of the Trust Property, the
same as any individual might do; to exercise powers and rights of
subscription or otherwise which in any manner arise out of ownership
of Securities, and to receive powers of attorney from, and to execute
and deliver proxies or powers of attorney to, such Person or Persons
as the Trustees shall deem proper, receiving from or granting to such
Person or Persons such power and discretion with relation to
Securities or other property of the Trust, all as the Trustees shall
deem proper;
(d) FORM OF HOLDING. To hold any Security or other property in a
form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of the Trust,
or of the Portfolio to which such Securities or property belong, or in
the name of a Custodian, subcustodian or other nominee or nominees, or
otherwise, upon such terms, in such manner or with such powers, as the
Trustees may determine, and with or without indicating any trust or
the interest of the Trustees therein;
(e) REORGANIZATION, ETC. To consent to or participate in any plan
for the reorganization, consolidation or merger of any corporation or
issuer, any Security of which is or was held in the Trust or any
Portfolio; 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 forming part of the Trust
Property;
(f) VOTING TRUSTS, ETC. To join with other holders of any
Securities in acting through a committee, depository, voting trustee
or otherwise, and in that connection to deposit any Security with, or
transfer any Security to, any such committee, depository 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, depository or trustee
as the Trustees shall deem proper;
(g) CONTRACTS, ETC. To enter into, make and perform all such
obligations, contracts, agreements and undertakings of every kind and
description, with any Person or Persons, as the Trustees shall in
their discretion deem expedient in the conduct of the business of the
Trust, for such terms as they shall see fit, whether or not extending
beyond the term of office of the Trustees, or beyond the possible
expiration of the Trust; to amend, extend, release or cancel any such
obligations, contracts, agreements or understandings; and to execute,
acknowledge, deliver and record all written instruments which they may
deem necessary or expedient in the exercise of their powers;
<PAGE>
(h) GUARANTEES, ETC. 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 such obligations;
(i) PARTNERSHIPS, ETC. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) INSURANCE. To purchase and pay for entirely out of Trust
Property such insurance as they may deem necessary or appropriate for
the conduct of the business, including, without limitation, insurance
policies insuring the assets of the Trust and payment of distributions
and principal on its portfolio investments, and insurance policies
insuring the Shareholders, Trustees, officers, employees, agents,
consultants, Investment Advisers, managers, Administrators,
Distributors, Principal Underwriters, or other independent
contractors, or any thereof (or any Person connected therewith), 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 in any such capacity, 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 such liability;
(k) PENSIONS, ETC. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt, establish and carry
out pension, profit-sharing, share bonus, share purchase, savings,
thrift and other retirement, incentive and benefit plans, trusts and
provisions, 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;
(l) POWER OF COLLECTION AND LITIGATION. To collect, sue for and
receive all sums of money coming due to the Trust, to employ counsel,
and to commence, engage in, prosecute, intervene in, join, defend,
compound, compromise, adjust or abandon, in the name of the Trust, any
and all actions, suits, proceedings, disputes, claims, controversies,
demands or other litigation or legal proceedings relating to the
Trust, the business of the Trust, the Trust Property, or the Trustees,
officers, employees, agents and other independent contractors of the
Trust, in their capacity as such, at law or in equity, or before any
other bodies or tribunals, and to compromise, arbitrate or otherwise
adjust any dispute to which the Trust may be a party, whether or not
any suit is commenced or any claim shall have been made or asserted;
(m) ISSUANCE AND REPURCHASE OF SHARES. To issue, sell,
repurchase, redeem, retire, cancel, acquire, hold, resell, reissue,
dispose of, transfer, and otherwise deal in Shares of any Series, and,
subject to Article 6 hereof, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares of any
Series, any of the Portfolio Assets belonging to the Portfolio to
which such Series relates, whether constituting capital or surplus or
otherwise, to the full extent now or hereafter permitted by applicable
<PAGE>
law; PROVIDED, that any Shares belonging to the Trust shall not be
voted, directly or indirectly;
(n) OFFICES. To have one or more offices, and to carry on all or
any of the operations and business of the Trust, in any of the States,
Districts or Territories of the United States, and in any and all
foreign countries, subject to the laws of such State, District,
Territory or country;
(o) EXPENSES. To incur and pay any and all such expenses and
charges as they may deem advisable (including without limitation
appropriate fees to themselves as Trustees), and to pay all such sums
of money for which they may be held liable by way of damages, penalty,
fine or otherwise;
(p) AGENTS, ETC. To retain and employ any and all such servants,
agents, employees, attorneys, brokers, investment advisers,
accountants, architects, engineers, builders, escrow agents,
depositories, consultants, ancillary trustees, custodians, agents for
collection, insurers, banks and officers, as they think best for the
business of the Trust or any Portfolio, to supervise and direct the
acts of any of the same, and to fix and pay their compensation and
define their duties;
(q) ACCOUNTS. To determine, and from time to time change, the
method or form in which the accounts of the Trust shall be kept;
(r) VALUATION. Subject to the requirements of the 1940 Act, to
determine from time to time the value of all or any part of the Trust
Property and of any services, Securities, property or other
consideration to be furnished to or acquired by the Trust, and from
time to time to revalue all or any part of the Trust Property in
accordance with such appraisals or other information as is, in the
Trustees' sole judgment, necessary and satisfactory;
(s) INDEMNIFICATION. In addition to the mandatory indemnification
provided for in Article 8 hereof and to the extent permitted by law,
to indemnify or enter into agreements with respect to indemnification
with any Person with whom this Trust has dealings, including, without
limitation, any independent contractor, to such extent as the Trustees
shall determine; and
(t) GENERAL. To do all such other acts and things and to conduct,
operate, carry on and engage in such other lawful businesses or
business activities as they shall in their sole and absolute
discretion consider to be incidental to the business of the Trust or
any Portfolio as an investment company, and to exercise all powers
which they shall in their discretion consider necessary, useful or
appropriate to carry on the business of the Trust or any Portfolio, to
promote any of the purposes for which the Trust is formed, whether or
not such things are specifically mentioned herein, in order to protect
or promote the interests of the Trust or any Portfolio, or otherwise
to carry out the provisions of this Declaration.
<PAGE>
SECTION 3.2. BORROWINGS; FINANCINGS; ISSUANCE OF SECURITIES. The
Trustees have power to borrow or in any other manner raise such sum or sums of
money, and to incur such other indebtedness for goods or services, or for or in
connection with the purchase or other acquisition of property, as they shall
deem advisable for the purposes of the Trust, in any manner and on any terms,
and to evidence the same by negotiable or non-negotiable Securities which may
mature at any time or times, even beyond the possible date of termination of the
Trust; to issue Securities of any type for such cash, property, services or
other considerations, and at such time or times and upon such terms, as they may
deem advisable; and to reacquire any such Securities. Any such Securities of the
Trust may, at the discretion of the Trustees, be made convertible into Shares of
any Series, or may evidence the right to purchase, subscribe for or otherwise
acquire Shares of any Series, at such times and on such terms as the Trustees
may prescribe.
SECTION 3.3. DEPOSITS. Subject to the requirements of the 1940 Act,
the Trustees shall have power to deposit any moneys or Securities included in
the Trust Property with any one or more banks, trust companies or other banking
institutions, whether or not such deposits will draw interest. Such deposits are
to be subject to withdrawal in such manner as the Trustees may determine, and
the Trustees shall have no responsibility for any loss which may occur by reason
of the failure of the bank, trust company or other banking institution with
which any such moneys or Securities have been deposited, other than liability
based on their gross negligence or willful fault.
SECTION 3.4. ALLOCATIONS. The Trustees shall have power to determine
whether moneys or other assets received by the Trust shall be charged or
credited to income or capital, or allocated between income and capital,
including the power to amortize or fail to amortize any part or all of any
premium or discount, to treat any part or all of the profit resulting from the
maturity or sale of any asset, whether purchased at a premium or at a discount,
as income or capital, or to apportion the same between income and capital, to
apportion the sale price of any asset between income and capital, and to
determine in what manner any expenses or disbursements are to be borne as
between income and capital, whether or not in the absence of the power and
authority conferred by this Section 3.4 such assets would be regarded as income
or as capital or such expense or disbursement would be charged to income or to
capital; to treat any dividend or other distribution on any investment as income
or capital, or to apportion the same between income and capital; to provide or
fail to provide reserves, including reserves for depreciation, amortization or
obsolescence in respect of any Trust Property in such amounts and by such
methods as they shall determine; to allocate less than all of the consideration
paid for Shares of any Series to the shares of beneficial interest account of
the Portfolio to which such Shares relate and to allocate the balance thereof to
paid in-capital of that Portfolio, and to reallocate such amounts from time to
time; all as the Trustees may reasonably deem proper.
SECTION 3.5. FURTHER POWERS; LIMITATIONS. The Trustees shall have
power to do all such other matters and things, and to execute all such
instruments, as they deem necessary, proper or desirable in order to carry out,
promote or advance the interests of the Trust, although such matters or things
are not herein specifically mentioned. Any determination as to what is in the
interests of the Trust made by the Trustees in good faith shall be conclusive.
<PAGE>
In construing the provisions of this Declaration of Trust, the presumption shall
be in favor of a grant of power to the Trustees. The Trustees shall not be
required to obtain any court order to deal with the Trust Property. The Trustees
may limit their right to exercise any of their powers through express
restrictive provisions in the instruments evidencing or providing the terms for
any Securities of the Trust or in other contractual instruments adopted on
behalf of the Trust.
ARTICLE 4
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TRUSTEES AND OFFICERS
---------------------
SECTION 4.1. NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) INITIAL TRUSTEE. Upon his execution of this Declaration of
Trust or a counterpart hereof or some other writing in which he
accepts such Trusteeship and agrees to the provisions hereof, the
individual whose signature is affixed hereto as Initial Trustee shall
become the Initial Trustee hereof.
(b) NUMBER. The Trustees serving as such, whether named above or
hereafter becoming Trustees, may increase (to not more than twenty
(20)) or decrease the number of Trustees to a number other than the
number theretofore determined by a written instrument signed by a
Majority of the Trustees (or by an officer of the Trust pursuant to
the vote of a Majority of the Trustees). No decrease in the number of
Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his term, but the number of Trustees may be
decreased in conjunction with the removal of a Trustee pursuant to
subsection (e) of this Section 4.1.
(c) ELECTION AND TERM. The Trustees shall be elected by the
Shareholders of the Trust at the first meeting of Shareholders
immediately prior to the initial public offering of Shares of the
Trust, and the term of office of any Trustees in office before such
election shall terminate at the time of such election. Subject to
Section 16(a) of the 1940 Act and to the preceding sentence of this
subsection (c), the Trustees shall have the power to set and alter the
terms of office of the Trustees, and at any time to lengthen or
shorten their own terms or make their terms of unlimited duration, to
elect their own successors and, pursuant to subsection (f) of this
Section 4.1, to appoint Trustees to fill vacancies; PROVIDED, that
Trustees shall be elected by a Majority Shareholder Vote at any such
time or times as the Trustees shall determine that such action is
required under Section 16(a) of the 1940 Act or, if not so required,
that such action is advisable; and FURTHER PROVIDED, that, after the
initial election of Trustees by the Shareholders, the term of office
of any incumbent Trustee shall continue until the termination of this
Trust or his earlier death, resignation, retirement, bankruptcy,
adjudicated incompetency or other incapacity or removal, or if not so
terminated, until the election of such Trustee's successor in office
has become effective in accordance with this subsection (c).
(d) RESIGNATION AND RETIREMENT. Any Trustee may resign his trust
or retire as a Trustee, by a written instrument signed by him and
delivered to the other Trustees or to any officer of the Trust, and
<PAGE>
such resignation or retirement shall take effect upon such delivery or
upon such later date as is specified in such instrument.
(e) REMOVAL. Any Trustee may be removed with or without cause at
any time: (i) by written instrument, signed by at least two-thirds
(2/3) of the number of Trustees prior to such removal, specifying the
date upon which such removal shall become effective; or (ii) by vote
of Shareholders holding not less than two-thirds (2/3) of the Shares
of each Series then outstanding, cast in person or by proxy at any
meeting called for the purpose; or (iii) by a written declaration
signed by Shareholders holding not less than two-thirds (2/3) of the
Shares of each Series then outstanding and filed with the Trust's
Custodian.
(f) VACANCIES. Any vacancy or anticipated vacancy resulting from
any reason, including an increase in the number of Trustees, may (but
need not unless required by the 1940 Act) be filled by a Majority of
the Trustees, subject to the provisions of Section 16(a) of the 1940
Act, through the appointment in writing of such other individual as
such remaining Trustees in their discretion shall determine; PROVIDED,
that if there shall be no Trustees in office, such vacancy or
vacancies shall be filled by vote of the Shareholders. Any such
appointment or election shall be effective upon such individual's
written acceptance of his appointment as a Trustee and his agreement
to be bound by the provisions of this Declaration of Trust, except
that any such appointment in anticipation of a vacancy to occur by
reason of retirement, resignation or increase in the number of
Trustees to be effective at a later date shall become effective only
at or after the effective date of said retirement, resignation or
increase in the number of Trustees.
(g) ACCEPTANCE OF TRUSTS. Any individual appointed as a Trustee
under subsection (f), and any individual elected as a Trustee under
subsection (c), of this Section 4.1 who was not, immediately prior to
such election, acting as a Trustee, shall accept such appointment or
election in writing and agree in such writing to be bound by the
provisions hereof, and whenever such individual shall have executed
such writing and any conditions to such appointment or election shall
have been satisfied, such individual shall become a Trustee and the
Trust Property shall vest in the new Trustee, together with the
continuing Trustees, without any further act or conveyance.
(h) EFFECT OF DEATH, RESIGNATION, ETC. No vacancy, whether
resulting from the death, resignation, retirement, removal, or
incapacity of any Trustee, an increase in the number of Trustees or
otherwise, shall operate to annul or terminate the Trust hereunder or
to revoke or terminate any existing agency or contract created or
entered into pursuant to the terms of this Declaration of Trust. Until
such vacancy is filled as provided in this Section 4.1, the Trustees
in office (if any), 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. A written instrument
certifying the existence of such vacancy signed by a Majority of the
Trustees shall be conclusive evidence of the existence of such
vacancy.
<PAGE>
(i) CONVEYANCE. In the event of the resignation or removal of a
Trustee or his otherwise ceasing to be a Trustee, such former Trustee
or his legal representative shall, upon request of the continuing
Trustees, execute and deliver such documents as may be required for
the purpose of consummating or evidencing the conveyance to the Trust
or the remaining Trustees or any Trust Property held in such former
Trustee's name, but the execution and delivery of such documents shall
not be requisite to the vesting of title to the Trust Property in the
remaining Trustees, as provided in subsection (g) of this Section 4.1
and in Section 4.13 hereof.
(j) NO ACCOUNTING. Except to the extent required by the 1940 Act
or under circumstances which would justify his removal for cause, no
Person ceasing to be a Trustee (nor the estate of any such Person)
shall be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
(k) FILINGS. Whenever there shall be a change in the composition
of the Trustees, the Trust shall cause to be filed in the office of
the Secretary of The Commonwealth of Massachusetts and in each other
place where the Trust is required to file amendments to this
Declaration a copy of (i) the instrument by which (in the case of the
appointment of a new Trustee, or the election of an individual who was
not theretofore a Trustee) the new Trustee accepted his appointment or
election and agreed to be bound by the terms of this Declaration, or
(in the case of a resignation) by which the former Trustee resigned as
such, together in either case with a certificate of one of the other
Trustees as to the circumstances of such election, appointment or
resignation, or (ii) in the case of the removal or death of a Trustee,
a certificate of one of the Trustees as to the circumstances of such
removal or resignation.
SECTION 4.2. TRUSTEES' MEETINGS; PARTICIPATION BY TELEPHONE, ETC. An
annual meeting of Trustees shall be held not later than the last day of the
fourth month after the end of each fiscal year of the Trust and special meetings
may be held from time to time, in each case, upon the call of such officers as
may be thereunto authorized by the By-Laws or vote of the Trustees, or by any
two (2) Trustees, or pursuant to a vote of the Trustees adopted at a duly
constituted meeting of the Trustees, and upon such notice as shall be provided
in the By-Laws. The Trustees may act with or without a meeting, and a written
consent to any matter, signed by a Majority of the Trustees, shall be equivalent
to action duly taken at a meeting of the Trustees, duly called and held. Except
as otherwise provided by the 1940 Act or other applicable law, or by this
Declaration of Trust or the By-Laws, any action to be taken by the Trustees may
be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a Majority of the Trustees, being present),
within or without Massachusetts. If authorized by the By-Laws, all or any one or
more Trustees may participate in a meeting of the Trustees or any Committee
thereof by means of conference telephone or similar means of communication by
means of which all Persons participating in the meeting can hear each other, and
participation in a meeting pursuant to such means of communication shall
constitute presence in person at such meeting. The minutes of any meeting thus
held shall be prepared in the same manner as a meeting at which all participants
were present in person.
<PAGE>
SECTION 4.3. COMMITTEES; DELEGATION. The Trustees shall have power,
consistent with their ultimate responsibility to supervise the affairs of the
Trust, to delegate from time to time to an Executive Committee, and to one or
more other Committees, or to any single Trustee, the doing of such things and
the execution of such deeds or other instruments, either in the name of the
Trust or the names of the Trustees or as their attorney or attorneys in fact, or
otherwise as the Trustees may from time to time deem expedient, and any
agreement, deed, mortgage, lease or other instrument or writing executed by the
Trustee or Trustees or other Person to whom such delegation was made shall be
valid and binding upon the Trustees and upon the Trust.
SECTION 4.4. OFFICERS. The Trustees shall annually elect such
officers or agents, who shall have such powers, duties and responsibilities as
the Trustees may deem to be advisable, and as they shall specify by resolution
or in the By-Laws. Except as may be provided in the By-Laws, any officer elected
by the Trustees may be removed at any time with or without cause. Any two (2) or
more offices may be held by the same individual.
SECTION 4.5 COMPENSATION OF TRUSTEES AND OFFICERS. The Trustees shall
fix the compensation of all officers and Trustees. Without limiting the
generality of any of the provisions hereof, the Trustees shall be entitled to
receive reasonable compensation for their general services as such, and to fix
the amount of such compensation, and to pay themselves or any one or more of
themselves such compensation for special services, including legal, accounting,
or other professional services, as they in good faith may deem reasonable. No
Trustee or officer resigning and (except where a right to receive compensation
for a definite future period shall be expressly provided in a written agreement
with the Trust, duly approved by the Trustees) no Trustee or officer removed
shall have any right to any compensation as such Trustee or officer for any
period following his resignation or removal, or any right to damages or account
of his removal, whether his compensation be by the month, by the year or
otherwise.
SECTION 4.6. OWNERSHIP OF SHARES AND SECURITIES OF THE TRUST. Any
Trustee, and any officer, employee or agent of the Trust, and any organization
in which any such Person is interested, may acquire, own, hold and dispose of
Shares of any Series and other Securities of the Trust for his or its individual
account, and may exercise all rights of a holder of such Shares or Securities to
the same extent and in the same manner as if such Person were not such a
Trustee, officer, employee or agent of the Trust; subject, in the case of
Trustees and officers, to the same limitations as directors or officers (as the
case may be) of a Massachusetts business corporation; and the Trust may issue
and sell or cause to be issued and sold and may purchase any such Shares or
other Securities from any such Person or any such organization, subject only to
the general limitations, restrictions or other provisions applicable to the sale
or purchase of Shares of such Series or other Securities of the Trust generally.
SECTION 4.7. RIGHT OF TRUSTEES AND OFFICERS TO OWN PROPERTY OR TO
ENGAGE IN BUSINESS; AUTHORITY OF TRUSTEES TO PERMIT OTHERS TO DO LIKEWISE. The
Trustees, in their capacity as Trustees, and (unless otherwise specifically
directed by vote of the Trustees) the officers of the Trust in their capacity as
such, shall not be required to devote their entire time to the business and
affairs of the Trust. Except as otherwise specifically provided by vote of the
Trustees, or by agreement in any particular case, any Trustee or officer of the
<PAGE>
Trust may acquire, own, hold and dispose of, for his own individual account, any
property, and acquire, own, hold, carry on and dispose of, for his own
individual account, any business entity or business activity, whether similar or
dissimilar to any property or business entity or business activity invested in
or carried on by the Trust, and without first offering the same as an investment
opportunity to the Trust, and may exercise all rights in respect thereof as if
he were not a Trustee or officer of the Trust. The Trustees shall also have
power, generally or in specific cases, to permit employees or agents of the
Trust to have the same rights (or lesser rights) to acquire, hold, own and
dispose of property and businesses, to carry on businesses, and to accept
investment opportunities without offering them to the Trust, as the Trustees
have by virtue of this Section 4.7.
SECTION 4.8. RELIANCE ON EXPERTS. The Trustees and officers may
consult with counsel, engineers, brokers, appraisers, auctioneers, accountants,
investment bankers, securities analysts or other Persons (any of which may be a
firm in which one or more of the Trustees or officers is or are members or
otherwise interested) whose profession gives authority to a statement made by
them on the subject in question, and who are reasonably deemed by the Trustees
or officers in question to be competent, and the advice or opinion of such
Persons shall be full and complete personal protection to all of the Trustees
and officers in respect of any action taken or suffered by them in good faith
and in reliance on or in accordance with such advice or opinion. In discharging
their duties, Trustees and officers, when acting in good faith, may rely upon
financial statements of the Trust represented to them to be correct by any
officer of the Trust having charge of its books of account, or stated in a
written report by an independent certified public accountant fairly to present
the financial position of the Trust. The Trustees and officers may rely, and
shall be personally protected in acting, upon any instrument or other document
believed by them to be genuine.
SECTION 4.9. SURETY BONDS. No Trustee, officer, employee or agent of
the Trust shall, as such, be obligated to give any bond or surety or other
security for the performance of any of his duties, unless required by applicable
law or regulation, or unless the Trustees shall otherwise determine in any
particular case.
SECTION 4.10. APPARENT AUTHORITY OF TRUSTEES AND OFFICERS. No
purchaser, lender, transfer agent, or other Person dealing with the Trustees or
any officer of the Trust shall be bound to make any inquiry concerning the
validity of any transaction purporting to be made by the Trustees or by such
officer, or to make inquiry concerning or be liable for the application of money
or property paid, loaned or delivered to or on the order of the Trustees or of
such officer.
SECTION 4.11. OTHER RELATIONSHIPS NOT PROHIBITED. The fact that:
(a) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party (as defined in Section 5.2 hereof), or of or for
any parent or affiliate of any Contracting Party, or that the
Contracting Party or any parent or affiliate thereof is a Shareholder
or has an interest in the Trust or any Portfolio, or that
<PAGE>
(b) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or have other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees 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 to the holders of Shares of any Series; PROVIDED, that, in the case
of any relationship or interest referred to in the preceding clause (a) on the
part of any Trustee or officer of the Trust, either (x) the material facts as to
such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or interest and the contract involved
is approved in good faith by a majority of such Trustees not having any such
relationship or interest (even though such unrelated or disinterested Trustees
are less than a quorum of all of the Trustees), (y) the material facts as to
such relationship or interest and as to the contract have been disclosed to or
are known by the Shareholders entitled to vote thereon and the contract involved
is specifically approved in good faith by vote of the Shareholders, or (z) the
specific contract involved is fair to the Trust as of the time it is authorized,
approved or ratified by the Trustees or by the Shareholders.
SECTION 4.12. PAYMENT OF TRUST EXPENSES. The Trustees authorized to
pay or to cause to be paid out of the principal or income of the Trust, or
partly out of principal and partly out of income, and according to any
allocation to particular Portfolios made by them pursuant to Section 6.2(b)
hereof, all expenses, fees, charges, taxes and liabilities incurred or arising
in connection with the business and affairs of 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, Investment Adviser, Administrator, Distributor, Principal
Underwriter, auditor, counsel, Custodian, Transfer Agent, Dividend Disbursing
Agent, Accounting Agent, Shareholder Servicing Agent, and such other agents,
consultants, and independent contractors and such other expenses and charges as
the Trustees may deem necessary or proper to incur.
SECTION 4.13. OWNERSHIP OF THE TRUST PROPERTY. Legal title to all the
Trust Property shall be vested in the Trustees as joint tenants, 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 of any particular Portfolio, or in the name of any other Person as nominee,
on such terms as the Trustees may determine; PROVIDED, that the interest of the
Trust and of the respective Portfolio therein is appropriately protected. 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
termination of the term of office of a Trustee as provided in Section 4.1(c),
(d) or (e) hereof, such Trustee 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 pursuant
to Section 4.1(i) hereof.
<PAGE>
ARTICLE 5
---------
DELEGATION OF MANAGERIAL RESPONSIBILITIES
-----------------------------------------
SECTION 5.1. APPOINTMENT; ACTION BY LESS THAN ALL TRUSTEES. The
Trustees shall be responsible for the general operating policy of the Trust and
for the general supervision of the business of the Trust conducted by officers,
agents, employees or advisers of the Trust or by independent contractors, but
the Trustees shall not be required personally to conduct all the business of the
Trust and, consistent with their ultimate responsibility as stated herein, the
Trustees may appoint, employ or contract with one or more officers, employees
and agents to conduct, manage and/or supervise the operations of the Trust, and
may grant or delegate such authority to such officers, employees and/or agents
as the Trustees may, in their sole discretion, deem to be necessary or
desirable, without regard to whether such authority is normally granted or
delegated by trustees. With respect to those matters of the operation and
business of the Trust which they shall elect to conduct themselves, except as
otherwise provided by this Declaration or the By-Laws, if any, the Trustees may
authorize any single Trustee or defined group of Trustees, or any committee
consisting of a number of Trustees less than the whole number of Trustees then
in office without specification of the particular Trustees required to be
included therein, to act for and to bind the Trust, to the same extent as the
whole number of Trustees could do, either with respect to one or more particular
matters or classes of matters, or generally.
SECTION 5.2. CERTAIN CONTRACTS. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time in their discretion and
without limiting the generality of their powers and authority otherwise set
forth herein, enter into one or more contracts with any one or more
corporations, trusts, associations, partnerships, limited partnerships or other
types of organizations, or individuals ("CONTRACTING PARTY"), to provide for
the performance and assumption of some or all of the following services, duties
and responsibilities to, for or on behalf of the Trust and/or any Portfolio,
and/or the Trustees, and to provide for the performance and assumption of such
other services, duties and responsibilities in addition to those set forth
below, as the Trustees may deem appropriate:
(a) ADVISORY. An investment advisory or management agreement
whereby the Investment Adviser shall undertake to furnish the Trust
such management, investment advisory or supervisory, administrative,
accounting, legal, statistical and research facilities and services,
and such other facilities and services, if any, as the Trustees shall
from time to time consider desirable, all upon such terms and
conditions as the Trustees may in their discretion determine to be not
inconsistent with this Declaration, the applicable provisions of the
1940 Act or any applicable provisions of the By-Laws. Any such
advisory or management agreement and any amendment thereto shall be
subject to approval by a Majority Shareholder Vote at a meeting of the
Shareholders of the Trust. Notwithstanding any provisions of this
Declaration, the Trustees may authorize the Investment Advisor
(subject to such general or specific instructions as the Trustees may
from time to time adopt) to effect purchases, sales, loans or
<PAGE>
exchanges of portfolio securities of the Trust on behalf of the
Trustees or may authorize any officer or employee of the Trust or any
Trustee to effect such purchases, sales, loans or exchanges pursuant
to recommendations of the Investment Adviser (and all without further
action by the Trustees). Any such purchases, sales, loans and
exchanges shall be deemed to have been authorized by all of the
Trustees. The Trustees may, in their sole discretion, call a meeting
of Shareholders in order to submit to a vote of Shareholders at such
meeting the approval of continuance of any such investment advisory or
management agreement. If the Shareholders of any Portfolio should fail
to approve any such investment advisory or management agreement, the
Investment Adviser may nonetheless serve as Investment Adviser with
respect to any other Portfolio whose Shareholders shall have approved
such contract.
(b) ADMINISTRATION. An agreement whereby the agent, subject to
the general supervision of the Trustees and in conformity with any
policies of the Trustees with respect to the operations of the Trust
and each Portfolio, will supervise all or any part of the operations
of the Trust and each Portfolio, and will provide all or any part of
the administrative and clerical personnel, office space and office
equipment and services appropriate for the efficient administration
and operations of the Trust and each Portfolio (any such agent being
herein referred to as an "Administrator").
(c) DISTRIBUTION. An agreement providing for the sale of Shares
of any one or more series to net the Trust not less than the net asset
value per Share (as described in Section 6.2(h) hereof) and pursuant
to which the Trust may appoint the other party to such agreement as
its principal underwriter or sales agent for the distribution of such
Shares. The agreement shall contain such terms and conditions as the
Trustees may in their discretion determine to be not inconsistent with
this Declaration, the applicable provisions of the 1940 Act and any
applicable provisions of the By-Laws (any such agent being herein
referred to as a "DISTRIBUTOR" or a "PRINCIPAL UNDERWRITER", as the
case may be).
(d) CUSTODIAN. The appointment of a bank or trust company having
an aggregate capital, surplus and undivided profits (as shown in its
last published report) of at least two million dollars ($2,000,000) as
custodian of the Securities and cash of the Trust and of each
Portfolio and of the accounting records in connection therewith (any
such agent being herein referred to as a "CUSTODIAN").
(e) TRANSFER AND DIVIDEND DISBURSING AGENCY. An agreement with an
agent to maintain records of the ownership of outstanding Shares, the
issuance and redemption and the transfer thereof (any such agent being
herein referred to as a "TRANSFER AGENT"), and to disburse any
dividends declared by the Trustees and in accordance with the policies
of the Trustees and/or the instructions of any particular Shareholder
to reinvest any such dividends (any such agent being herein referred
to as a "DIVIDEND DISBURSING AGENT").
<PAGE>
(f) SHAREHOLDER SERVICING. An agreement with an agent to provide
service with respect to the relationship of the Trust and its
Shareholders, records with respect to Shareholders and their Shares,
and similar matters (any such agent being herein referred to as a
"SHAREHOLDER SERVICING AGENT").
(g) ACCOUNTING. An agreement with an agent to handle all or any
part of the accounting responsibilities, whether with respect to the
Trust's properties, Shareholders or otherwise (any such agent being
herein referred to as an "ACCOUNTING AGENT").
The same Person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into sub-contractual arrangements relative to any of the matters referred to in
subsections (a) through (g) of this Section 5.2.
ARTICLE 6
---------
PORTFOLIOS AND SHARES
---------------------
SECTION 6.1. Description of Portfolios and Shares.
(a) SHARES; PORTFOLIOS; SERIES OF SHARES. The beneficial interest
in the Trust shall be divided into Shares having a nominal or par
value of one mill ($.001) per Share, and all of one class, of which an
unlimited number may be issued. The Trustees shall have the authority
from time to time to establish and designate one or more separate,
distinct and independent Portfolios into which the assets of the Trust
shall be divided, and to authorize a separate Series of shares for
each such Portfolio (each of which Series, including without
limitation each Series authorized in Section 6.2 hereof, shall
represent interests only in the Portfolio with respect to which such
series was authorized), as they deem necessary or desirable. Except as
otherwise provided as to a particular Portfolio herein, or in the
Certificate of Designation therefor, the Trustees shall have all the
rights and powers, and be subject to all the duties and obligations,
with respect to each such Portfolio and the assets and affairs thereof
as they have under this Declaration with respect to the Trust and the
Trust Property in general.
(b) ESTABLISHMENT, ETC. OF PORTFOLIOS; AUTHORIZATION OF SHARES.
The establishment and designation of any Portfolio in addition to the
Portfolios established and designated in Section 6.2 hereof and the
authorization of the shares thereof shall be effective upon the
execution by a Majority of the Trustees (or by an officer of the Trust
pursuant to the vote of a Majority of the Trustees) of an instrument
setting forth such establishment and designation and the relative
rights and preferences of the Shares of such Portfolio and the manner
in which the same may be amended (a "CERTIFICATE OF DESIGNATION"), and
may provide that the number of shares of such Series which may be
<PAGE>
issued is unlimited, or may limit the number issuable. At any time
that there are no Shares outstanding of any particular Portfolio
previously established and designated, including any Portfolio
established and designated in Section 6.2 hereof, the Trustees may by
an instrument executed by a majority of the Trustees (or by an officer
of the Trust pursuant to the vote of a Majority of the Trustees)
terminate such Portfolio and the establishment and designation thereof
and the authorization of its Shares (a "CERTIFICATE OF TERMINATION").
Each Certificate of Designation, Certificate of Termination and any
instrument amending a Certificate of Designation shall have the status
of an amendment to this Declaration of Trust, and shall be filed and
become effective as provided in Section 9.4 hereof.
(c) CHARACTER OF SEPARATE PORTFOLIOS AND SHARES THEREOF. Each
Portfolio established hereunder shall be a separate component of the
assets of the Trust, and the holders of Shares of the Series
representing the beneficial interest in the assets of that Portfolio
shall be considered Shareholders of such Portfolio, but such
shareholders shall also be considered Shareholders of the Trust for
purposes of receiving reports and notices and, except as otherwise
provided herein or in the Certificate of Designation of a particular
Portfolio as to such Portfolio, or as required by the 1940 Act or
other applicable law, the right to vote, all without distinction by
Series. The Trustees shall have exclusive power without the
requirement of Shareholder approval to establish and designate such
separate and distinct Portfolios, and to fix and determine the
relative rights and preferences as between the shares of the
respective Portfolios as to rights of redemption and the price, terms
and manner of redemption, special and relative rights as to dividends
and other distributions and on liquidation, sinking or purchase fund
provisions, conversion rights, and conditions under which the
Shareholders of the several Portfolios shall have separate voting
rights or no voting rights.
(d) CONSIDERATION FOR SHARES. The Trustees may issue Shares of
any Series for such consideration (which may include property subject
to, or acquired in connection with the assumption of, liabilities) and
on such terms as they may determine (or for no consideration if
pursuant to a Share dividend or split up), or without action or
approval of the Shareholders. All Shares when so issued on the terms
determined by the Trustees shall be fully paid and non-assessable (but
may be subject to mandatory contribution back to the Trust as provided
in Section 6.2(h) hereof). The Trustees may classify or reclassify any
unissued Shares, or any Shares of any Series previously issued and
reacquired by the Trust, into Shares of one or more other Portfolios
that may be established and designated from time to time.
SECTION 6.2. ESTABLISHMENT AND DESIGNATION OF CERTAIN PORTFOLIOS;
GENERAL PROVISIONS FOR ALL PORTFOLIOS. Without limiting the authority of the
Trustees set forth in Section 6.1(a) hereof to establish and designate further
Portfolios, there are hereby established and designated the following six (6)
Portfolios: the Sheffield Balanced Portfolio, the Sheffield Income and Growth
Portfolio, the Sheffield Small Capitalization Portfolio, the Sheffield Growth
Portfolio, the Sheffield MidCap Growth Portfolio and the Sheffield Leveraged
AllCap Portfolio. The Shares of such Portfolios, and the Shares of any further
Portfolios that may from time to time be established and designated by the
<PAGE>
Trustees shall (unless the Trustees otherwise determine with respect to some
further Portfolio at the time of establishing and designating the same) have the
following relative rights and preferences:
(a) ASSETS BELONGING TO PORTFOLIOS. Any portion of the Trust
Property allocated to a particular Portfolio, and all consideration
received by the Trust for the issue or sale of Shares of such
Portfolio, together with all assets in which such consideration is
invested or reinvested, all interest, dividends, income, earnings,
profits and gains therefrom, and proceeds thereof, including 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 be held by the
Trustees in trust for the benefit of the holders of Shares of that
Portfolio and shall irrevocably belong to that Portfolio for all
purposes, and shall be so recorded upon the books of account of the
Trust, and the Shareholders of such Portfolio shall not have, and
shall be conclusively deemed to have waived, any claims to the assets
of any Portfolio of which they are not Shareholders. Such
consideration, assets, interest, dividends, income, earnings, profits,
gains and proceeds, together with any General Items allocated to that
Portfolio as provided in the following sentence, are herein referred
to collectively as "PORTFOLIO ASSETS" of such Portfolio, and as assets
"BELONGING TO" that Portfolio. In the event that there are any assets,
income, earnings, profits, and proceeds thereof, funds, or payments
which are not readily identifiable as belonging to any particular
Portfolio (collectively "GENERAL ITEMS"), the Trustees shall allocate
such General Items to and among any one or more of the Portfolios
established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable;
and any General Items so allocated to a particular Portfolio shall
belong to and be part of the Portfolio Assets of that Portfolio. Each
such allocation by the Trustees shall be conclusive and binding upon
the Shareholders of all Portfolios for all purposes.
(b) LIABILITIES OF PORTFOLIOS. The assets belonging to each
particular Portfolio shall be charged with the liabilities in respect
of that Portfolio and all expenses, costs, charges and reserves
attributable to that Portfolio, and any general liabilities, expenses,
costs, charges or reserves of the Trust which are not readily
identifiable as pertaining to any particular Portfolio shall be
allocated and charged by the Trustees to and among any one or more of
the Portfolios established and designated from time to time in such
manner and on such basis as the Trustees in their sole discretion deem
fair and equitable. The indebtedness, expenses, costs, charges and
reserves allocated and so charged to a particular Portfolio are herein
referred to as "LIABILITIES OF" that Portfolio. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the Shareholders of all
Portfolios for all purposes. Any creditor of any Portfolio may look
only to the assets of that Portfolio to satisfy such creditor's debt.
(c) DIVIDENDS. Dividends and distributions on Shares of a
particular Portfolio may be paid with such frequency as the Trustees
may determine, which may be daily or otherwise pursuant to a standing
resolution or resolutions adopted only once or with such frequency as
the Trustees may determine, to the Shareholders of that Portfolio,
<PAGE>
from such of the income, accrued or realized, and capital gains,
realized or unrealized, and out of the assets belonging to that
Portfolio, as the Trustees may determine, after providing for actual
and accrued liabilities of that Portfolio. All dividends and
distributions on Shares of a particular Portfolio shall be distributed
pro rata to the Shareholders of that Portfolio in proportion to the
number of such Shares held by such holders at the date and time of
record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure the Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times
established by the Trustees under such program or procedure, or that
dividends or distributions shall be payable on Shares which have been
tendered by the holder thereof for redemption or repurchase, but the
redemption or repurchase proceeds of which have not yet been paid to
such Shareholder. Such dividends and distributions may be made in cash
or Shares of that Portfolio or a combination thereof as determined by
the Trustees, or pursuant to any program that the Trustees may have in
effect at the time for the election by each Shareholder of the mode of
the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net
asset value thereof as determined in accordance with subsection (h) of
this Section 6.2.
(d) LIQUIDATION. In the event of the liquidation or dissolution
of the Trust, the Shareholders of each Portfolio of which Shares are
outstanding shall be entitled to receive, when and as declared by the
Trustees, the excess of the Portfolio Assets over the liabilities of
such Portfolio. The assets so distributable to the Shareholders of any
particular Portfolio shall be distributed among such Shareholders in
proportion to the number of Shares of that Portfolio held by them and
recorded on the books of the Trust. The liquidation of any particular
Portfolio may be authorized by vote of a Majority of the Trustees,
subject to the affirmative vote of "a majority of the outstanding
voting securities" of that Portfolio, as the quoted phrase is defined
in the 1940 Act, determined in accordance with clause (iii) of the
definition of "MAJORITY SHAREHOLDER VOTE" in Section 1.4 hereof.
(e) VOTING. The Shareholders shall have the voting rights set
forth in or determined under Article 7 hereof.
(f) REDEMPTION BY SHAREHOLDER. Each holder of Shares of a
particular Portfolio shall have the right at such times as may be
permitted by the Trust, but no less frequently than once each week, to
require the Trust to redeem all or any part of his Shares of that
Portfolio at a redemption price equal to the net asset value per Share
of that Portfolio next determined in accordance with subsection (h) of
this Section 6.2 after the Shares are properly tendered for
redemption; PROVIDED, that the Trustees may from time to time, in
their discretion, determine and impose a fee for such redemption.
Payment of the redemption price shall be in cash; PROVIDED, HOWEVER,
that if the Trustees determine, which determination shall be
conclusive, that conditions exist which make payment wholly in cash
unwise or undesirable, the Trust may make payment wholly or partly in
Securities or other assets belonging to such Portfolio at the value of
<PAGE>
such Securities or assets used in such determination of net asset
value. Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the holders of
Shares of any Portfolio to require the Trust to redeem Shares of that
Portfolio during any period or at any time when and to the extent
permissible under the 1940 Act.
(g) REDEMPTION AT THE OPTION OF THE TRUST. Each Share of any
Portfolio shall be subject to redemption at the option of the Trust at
the redemption price which would be applicable if such Share were then
being redeemed by the Shareholder pursuant to subsection (f) of this
Section 6.2: (i) at any time, if the Trustees determine in their sole
discretion that failure to so redeem may have materially adverse
consequences to the holders of the shares of the Trust or of any
Portfolio, or (ii) upon such other conditions with respect to
maintenance of Shareholder accounts of a minimum amount as may from
time to time be determined by the Trustees and set forth in the then
current Prospectus of such Portfolio. Upon such redemption the holders
of the Shares so redeemed shall have no further right with respect
thereto other than to receive payment of such redemption price.
(h) NET ASSET VALUE. The net asset value per Share of any
Portfolio at any time shall be the quotient obtained by dividing the
value of the net assets of such Portfolio at such time (being the
current value of the assets belonging to such Portfolio, less its then
existing liabilities) by the total number of Shares of that Portfolio
then outstanding, all determined in accordance with the methods and
procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time. The Trustees
may determine to maintain the net asset value per Share of any
Portfolio at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for
the continuing declaration of income attributable to that Portfolio as
dividends payable in additional Shares of that Portfolio at the
designated constant dollar amount and for the handling of any losses
attributable to that Portfolio. Such procedures may provide that in
the event of any loss each Shareholder shall be deemed to have
contributed to the shares of beneficial interest account of that
Portfolio his pro rata portion of the total number of shares required
to be canceled in order to permit the net asset value per Share of
that Portfolio to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each Shareholder of the Trust shall
be deemed to have expressly agreed, by his investment in any Portfolio
with respect to which the Trustees shall have adopted any such
procedure, to make the contribution referred to in the preceding
sentence in the event of any such loss.
(i) TRANSFER. All Shares of each particular Portfolio shall be
transferable, but transfers of Shares of a particular Portfolio will
be recorded on the Share transfer records of the Trust applicable to
that Portfolio only at such times as Shareholders shall have the right
to require the Trust to redeem Shares of that Portfolio and at such
other times as may be permitted by the Trustees.
<PAGE>
(j) EQUALITY. All Shares of each particular Portfolio shall
represent an equal proportionate interest in the assets belonging to
that Portfolio (subject to the liabilities of that Portfolio), and
each Share of any particular Portfolio shall be equal to each other
Share thereof; but the provisions of this sentence shall not restrict
any distinctions permissible under subsection (c) of this Section 6.2
that may exist with respect to dividends and distributions on Shares
of the same Portfolio. The Trustees may from time to time divide or
combine the Shares of any particular Portfolio into a greater or
lesser number of Shares of that Portfolio without thereby changing the
proportionate beneficial interest in the assets belonging to that
Portfolio or in any way affecting the rights of the holders of Shares
of any other Portfolio.
(k) RIGHTS OF FRACTIONAL SHARES. Any fractional Share of any
Series shall carry proportionately all the rights and obligations of a
whole Share of that Series, including rights and obligations with
respect to voting, receipt of dividends and distributions, redemption
of Shares, and liquidation of the Trust or of the Portfolio to which
they pertain.
(l) CONVERSION RIGHTS. Subject to compliance with the
requirements of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Portfolio shall have the right
to convert said Shares into Shares of one or more other Portfolios in
accordance with such requirements and procedures as the Trustees may
establish.
SECTION 6.3. OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a Transfer Agent or similar agent for
the Trust, which books shall be maintained separately for the Shares of each
Series that has been authorized. Certificates evidencing the ownership of Shares
need not be issued except as the Trustees may otherwise determine from time to
time, and the Trustees shall have power to call outstanding Share certificates
and to replace them with book entries. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the use of
facsimile signatures, the transfer of Shares and similar matters. The record
books of the Trust as kept by the Trust or any Transfer Agent or similar agent,
as the case may be, shall be conclusive as to who are the Shareholders and as to
the number of Shares of each Portfolio held from time to time by each such
Shareholder.
The holders of Shares of each Portfolio shall upon demand disclose to
the Trustees in writing such information with respect to their direct and
indirect ownership of Shares of such Portfolio as the Trustees deem necessary to
comply with the provisions of the Internal Revenue Code, or to comply with the
requirements of any other authority.
SECTION 6.4. INVESTMENTS IN THE TRUST. The Trustees may accept
investments in any Portfolio of the Trust from such Persons and on such terms
and for such consideration, not inconsistent with the provisions of the 1940
Act, as they from time to time authorize. The Trustees may authorize any
Distributor, Principal Underwriter, Custodian, Transfer Agent or other Person to
<PAGE>
accept orders for the purchase of Shares that conform to such authorized terms
and to reject any purchase orders for Shares, whether or not conforming to such
authorized terms.
SECTION 6.5. NO PRE-EMPTIVE RIGHTS. No Shareholder, by virtue of
holding Shares of any Portfolio, shall have any pre-emptive or other right to
subscribe to any additional Shares of that Portfolio, or to any shares of any
other Portfolio, or any other Securities issued by the Trust.
SECTION 6.6. STATUS OF SHARES. Every Shareholder, by virtue of having
become a Shareholder, shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto. Shares shall be deemed to be
personal property, giving only the rights provided herein. Ownership of Shares
shall not entitle the Shareholder to any title in or to the whole or any part of
the Trust Property or right to call for a partition or division of the same or
for an accounting, nor shall the ownership of Shares constitute the Shareholders
partners. The death of a Shareholder during the continuance of the Trust shall
not operate to terminate the Trust or any Portfolio, nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Declaration of Trust.
ARTICLE 7
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
SECTION 7.1. VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Sections 4.1(c)
and (e) hereof, (ii) with respect to the approval or termination in accordance
with the 1940 Act of any contract with a Contracting Party as provided in
Section 5.2 hereof as to which Shareholder approval is as required by the 1940
Act, (iii) with respect to any termination or reorganization of the Trust or any
Portfolio to the extent and as provided in Sections 9.1 and 9.2 hereof, (iv)
with respect to any amendment of this Declaration of Trust to the extent and as
provided in Section 9.3 hereof, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or any Portfolio, or the
Shareholders of any of them (PROVIDED, HOWEVER, that a Shareholder of a
particular Portfolio shall not in any event be entitled to maintain a derivative
or class action on behalf of any other Portfolio or the Shareholders thereof),
and (vi) with respect to such additional matters relating to the Trust as may be
required by the 1940 Act, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or any
State, or as the Trustees may consider necessary or desirable. If and to the
extent that the Trustees shall determine that such action is required by law,
they shall cause each matter required or permitted to be voted upon at a meeting
or by written consent of Shareholders to be submitted to a separate vote of the
outstanding Shares of each Portfolio entitled to vote thereon; PROVIDED, that
(i) when expressly required by this Declaration or by the 1940 Act, actions of
Shareholders shall be taken by Single Class Voting of all outstanding Shares of
each Series whose holders are entitled to vote thereon; and (ii) when the
Trustees determine that any matter to be submitted to a vote of Shareholders
<PAGE>
affects only the rights or interests of Shareholders of one or more but not all
Portfolios, then only the Shareholders of the Portfolios so affected shall be
entitled to vote thereon.
SECTION 7.2. NUMBER OF VOTES AND MANNER OF VOTING; PROXIES. On each
matter submitted to a vote of the Shareholders, each holder of Shares of any
Series shall be entitled to a number of votes equal to the number of Shares of
such Series standing in his name on the books of the Trust. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. A proxy with respect to Shares held in the name of two (2) 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 them. 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.
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 Shareholders.
SECTION 7.3. MEETINGS. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided, or upon
any other matter deemed by the Trustees to be necessary or desirable. Written
notice of any meeting of Shareholders shall be given or caused to be given by
the Trustees by mailing such notice at least seven (7) days before such meeting,
postage prepaid, stating the time, place and purpose of the meeting, to each
Shareholder at the Shareholder's address as it appears on the records of the
Trust. The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the Trust
when requested to do so in writing by Shareholders holding not less than ten
percent (10%) of the Shares then outstanding. If the Trustees shall fail to call
or give notice of any meeting of Shareholders for a period of thirty (30) days
after written application by Shareholders holding at least ten percent (10%) of
the Shares then outstanding requesting that a meeting be called for any other
purpose requiring action by the Shareholders as provided herein or in the
By-Laws, then Shareholders holding at least ten percent (10%) of the Shares then
outstanding may call and give notice of such meeting, and thereupon the meeting
shall be held in the manner provided for herein in case of call thereof by the
Trustees.
SECTION 7.4. RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding thirty (30) days (except at or
in connection with the termination of the Trust), as the Trustees may determine;
or without closing the transfer books the Trustees may fix a date and time not
more than sixty (60) days prior to the date of any meeting of Shareholders or
other action as the date and time of record for the determination of
Shareholders entitled to vote at such meeting or any adjournment thereof or to
be treated as Shareholders of record for purposes of such other action, and any
Shareholder who was a Shareholder at the date and time so fixed shall be
entitled to vote at such meeting or any adjournment thereof or to be treated as
a Shareholder of record for purposes of such other action, even though he has
since that date and time disposed of his Shares, and no Shareholder becoming
<PAGE>
such after that date and time shall be so entitled to vote at such meeting or
any adjournment thereof or to be treated as a Shareholder of record for purposes
of such other action.
SECTION 7.5. QUORUM AND REQUIRED VOTE. A majority of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a reasonable
time after the date set for the original meeting without the necessity of
further notice. A Majority Shareholder Vote at a meeting of which a quorum is
present shall decide any question, except when a different vote is required or
permitted by any provision of the 1940 Act or other applicable law or by this
Declaration of Trust or the By-Laws, or when the Trustees shall in their
discretion require a larger vote or the vote of a majority or larger fraction of
the Shares of one or more particular Series.
SECTION 7.6. ACTION BY WRITTEN CONSENT. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may be
taken without a meeting if a majority of Shareholders entitled to vote on the
matter (or such larger proportion thereof or of the Shares of any particular
Series as shall be required by the 1940 Act or by any express provision of this
Declaration of Trust or the By-Laws or as shall be permitted by the Trustees)
consent to the action in writing and if the writings in which such consent is
given are filed with the records of the meetings of Shareholders, to the same
extent and for the same period as proxies given in connection with a
Shareholders' meeting. Such consent shall be treated for all purposes as a vote
taken at a meeting of Shareholders.
SECTION 7.7. INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the Massachusetts
Business Corporation Law.
SECTION 7.8. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE 8
---------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
SECTION 8.1. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE;
NOTICE. The Trustees and officers 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 or
officers 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 Portfolio, and subject to Section 8.4 hereof, 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
Portfolio, save only that arising from his own willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office or the discharge of his functions. The Trust (or if the matter
<PAGE>
relates only to a particular Portfolio, that Portfolio) 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
Portfolio in tort, contract or otherwise in connection with the assets or the
affairs of the Trust or such Portfolio, and all Persons dealing with the Trust
or any Portfolio shall be deemed to have agreed that resort shall be had solely
to the Trust Property of the Trust or the Portfolio Assets of such Portfolio, as
the case may be, for the payment or performance thereof.
The Trustees shall use their best efforts to ensure 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 this Declaration
of Trust is on file with the Secretary of The Commonwealth of Massachusetts and
shall 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 such instrument 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 Portfolio in question, as
the case may be, but the omission thereof shall not operate to bind any Trustees
or Trustee or officers or officer or Shareholders or Shareholder individually,
or to subject the Portfolio Assets of any Portfolio to the obligations of any
other Portfolio.
SECTION 8.2. 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 8.4 hereof, a
Trustee shall be liable for his 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, Investment Advisor, 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 appointed by
the Trustees pursuant to Section 5.2 hereof. 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 8.3. 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) shall assume the defense against such charge and satisfy any
<PAGE>
judgment thereon, 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 Portfolio 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 8.4. INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject to
the limitations set forth hereinafter in this Section 8.4, the Trust shall
indemnify (from the assets of the Portfolio or Portfolios to which the conduct
in question relates) each of its Trustees and officers (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 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
(either and both of the conduct described in (i) and (ii) 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
Trustees who are neither "interested persons" of the Trust as defined in Section
2(a)(19) of the 1940 Act nor parties to the proceeding, 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 the Portfolio or Portfolios 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 Portfolio or Portfolios if it is ultimately determined
that indemnification of such expenses is not authorized under this Article 8 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.
<PAGE>
SECTION 8.5. COMPROMISE PAYMENT. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 8.4.
hereof, 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 such Covered
Person's office.
SECTION 8.6. INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article 8 shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article 8, 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 8 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.
SECTION 8.7. 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.
ARTICLE 9
---------
DURATION; REORGANIZATION; AMENDMENTS
------------------------------------
SECTION 9.1. DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alternation or
modification with respect to any Portfolio or Series of Shares shall operate to
terminate the Trust. The Trust may be terminated at any time by a Majority of
the Trustees, subject to the favorable vote of the holders of not less than a
majority of the Shares outstanding and entitled to vote of each Portfolio of the
Trust, or by an instrument or instruments in writing without a meeting,
consented to by the holders of not less than a majority of such Shares, or by
such greater or different vote of Shareholders of any Series as may be
established by the Certificate of Designation by which such Series was
authorized. Upon termination, after paying or otherwise providing for all
charges, taxes, expenses and liabilities, whether due or accrued or anticipated
as may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
<PAGE>
distributable form in cash, Securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of Section 6.2(d) hereof.
SECTION 9.2. REORGANIZATION. The Trustees may sell, convey and
transfer all or substantially all of the assets of the Trust, or the assets
belonging to any one or more Portfolios, to another trust, partnership,
association or corporation organized under the laws of any state of the United
States, or may transfer such assets to another Portfolio of the Trust, in
exchange for cash, Shares or other Securities (including, in the case of a
transfer to another Portfolio of the Trust, Shares of such other Portfolio), or
to the extent permitted by law then in effect may merge or consolidate the Trust
or any Portfolio with any other Trust or any corporation, partnership, or
association organized under the laws of the state of the United States, all upon
such terms and conditions and for such consideration when and as authorized by
vote or written consent of a Majority of the Trustees and approved by the
affirmative vote of the holders of not less than a majority of the Shares
outstanding and entitled to vote of each Portfolio whose assets are affected by
such transaction, or by an instrument or instruments in writing without a
meeting, consented to by the holders of not less than a majority of such Shares,
and/or by such other vote of any Series as may be established by the Certificate
of Designation with respect to such Series. Following such transfer, the
Trustees shall distribute the cash, Shares or other Securities or other
consideration received in such transaction (giving due effect to the assets
belonging to and indebtedness of, and any other differences among, the various
Portfolios of which the assets have so been transferred) among the Shareholders
of the Portfolio of which the assets have been so transferred; and if all of the
assets of the Trust have been so transferred, the Trust shall be terminated.
Nothing in this Section 9.2 shall be construed as requiring approval of
Shareholders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations, and to
sell, convey or transfer less than substantially all of the Trust Property or
the assets belonging to any Portfolio to such organizations or entities.
SECTION 9.3. AMENDMENTS; ETC. All rights granted to the Shareholders
under this Declaration of Trust are granted subject to the reservation of the
right to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any Shareholder
or Trustee or the prohibition of assessment upon the Shareholders (otherwise
than as permitted under Section 6.2(h)) without the express consent of each
Shareholder or Trustee involved. Subject to the foregoing, the provisions of
this Declaration of Trust (whether or not related to the rights of Shareholders)
may be amended at any time, so long as such amendment does not adversely affect
the rights of any Shareholder with respect to which such amendment is or
purports to be applicable and so long as such amendment is not in contravention
of applicable law, including the 1940 Act, by an instrument in writing signed by
a Majority of the Trustees (or by an officer of the Trust pursuant to the vote
of a Majority of the Trustees). Any amendment to this Declaration of Trust that
adversely affects the rights of all Shareholders may be adopted at any time by
an instrument in writing signed by a Majority of the Trustees (or by an officer
of the Trust pursuant to a vote of a Majority of the Trustees) when authorized
to do so by the vote in accordance with Section 7.1 hereof of Shareholders
holding a majority of all the Shares outstanding and entitled to vote, without
regard to Series, or if said amendment adversely affects the rights of the
Shareholders of less than all of the Portfolios, by the vote of the holders of a
<PAGE>
majority of all the Shares entitled to vote of each Portfolio so affected.
Subject to the foregoing, any such amendment shall be effective when the
instrument containing the terms thereof and a certificate (which may be a part
of such instrument) to the effect that such amendment has been duly adopted, and
setting forth the circumstances thereof, shall have been executed and
acknowledged by a Trustee or officer of the Trust and filed as provided in
Section 9.4 hereof.
SECTION 9.4. FILING OF COPIES OF DECLARATION AND AMENDMENTS. The
original or a copy of this Declaration and of each amendment hereto (including
each Certificate of Designation and Certificate of Termination), as well as the
certificates called for by Section 4.1(k) hereof as to changes in the Trustees,
shall be kept at the office of the Trust where it may be inspected by any
Shareholder, and one copy of each such instrument shall be filed with the
Secretary of The Commonwealth of Massachusetts, as well as with any other
governmental office where such filing may from time to time be required by the
laws of Massachusetts. A restated Declaration, integrating into a single
instrument all of the provisions of this Declaration which are then in effect
and operative, may be executed from time to time by a Majority of the Trustees
and shall, upon filing with the Secretary of The Commonwealth of Massachusetts,
be conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
ARTICLE 10
----------
MISCELLANEOUS
-------------
SECTION 10.1. GOVERNING LAW. This Declaration of Trust is executed
and delivered in The Commonwealth of Massachusetts and with reference to the
laws thereof, and the rights of all parties and the construction and effect of
every provision hereof shall be subject to and construed according to the laws
of said Commonwealth.
SECTION 10.2. COUNTERPARTS. This Declaration of Trust and any
amendment thereto may be simultaneously executed in several counterparts, each
of which so executed shall be deemed to be an original, and such counterparts,
together, shall constitute but one and the same instrument, which shall be
sufficiently evidenced by any such original counterpart.
SECTION 10.3. RELIANCE BY THIRD PARTIES. Any certificate executed by
an individual who, according to the records in the office of the Secretary of
The Commonwealth of Massachusetts appears to be a Trustee hereunder, certifying
to: (a) the number or identity of Trustees or Shareholders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Shareholders, (d) the fact that the
number of Trustees or Shareholders present at any meeting or executing any
written instrument satisfies the requirements of this Declaration of Trust, (e)
the form of any By-Law adopted, or the identity of any officers elected, by the
Trustees, or (f) the existence or non-existence of any fact or facts which in
any manner relate to the affairs of the Trust, shall be conclusive evidence as
to the matters so certified in favor of any Person dealing with the Trustees, or
any of them, and the successors of such Person.
<PAGE>
SECTION 10.4. REFERENCES; HEADINGS. The masculine gender shall
include the feminine and neuter genders. Headings are placed herein for
convenience of reference only and shall not be taken as a part of this
Declaration or control or affect the meaning, construction or effect hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
seal, for himself and his assigns, and has thereby accepted the Trusteeship as
the Initial Trustee of The Sheffield Funds hereby granted and agreed to the
provisions hereof, all as of the day and year first above written.
/S/ WILLIAM WITTER
-------------------------------
William Witter, Initial Trustee
The undersigned Settlor of The Sheffield Funds hereby accepts,
approves and authorizes the foregoing Agreement and Declaration of Trust of The
Sheffield Funds.
Dated: November 11, 1997
/S/ STEPHEN E. O'NEIL
-------------------------------
Stephen E. O'Neil
<PAGE>
ACKNOWLEDGMENTS
---------------
NEW YORK
New York: November 11, 1997
Then personally appeared the above named William Witter and
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/S/ WILLIAM WITTER
-------------------------------
Notary Public
NEW YORK
New York: November 11, 1997
Then personally appeared the above named Stephen E. O'Neil and
acknowledged the foregoing instrument to be his free act and deed.
Before me,
/S/ STEPHEN E. O'NEIL
-------------------------------
Notary Public
<PAGE>
AMENDMENT TO THE
INSTRUMENT OF ORGANIZATION
OF
THE SHEFFIELD FUNDS
The undersigned, being the Trustees of The Sheffield Funds, an
unincorporated Massachusetts business trust (the "Trust"), organized on December
4, 1997, hereby take the following action:
1. The name of the Trust is changed to The White Elk Funds.
Dated: December 26, 1997
/S/ WILLIAM D. WITTER
--------------------------
William D. Witter, Trustee
/S/ STEPHEN E. O'NEIL
--------------------------
Stephen E. O'Neil, Trustee
E X H I B I T 2
- - - - - - - -
THE WHITE ELK FUNDS
-------------------------
By-Laws
-------------------------
<PAGE>
THE WHITE ELK FUNDS
-------------------------
By-Laws
-------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
RECITALS................................................................... 1
ARTICLE 1 - SHAREHOLDERS AND SHAREHOLDERS' MEETINGS........................ 1
SECTION 1.1. Meetings............................................... 1
SECTION 1.2. Presiding Officer; Secretary........................... 1
SECTION 1.3. Authority of Chairman of Meeting to Interpret
Declaration and By-Laws................................ 1
SECTION 1.4. Voting; Quorum......................................... 1
SECTION 1.5. Inspectors............................................. 2
SECTION 1.6. Shareholders' Action in Writing........................ 2
ARTICLE 2 - TRUSTEES AND TRUSTEES' MEETINGS................................ 2
SECTION 2.1. Number of Trustees.................................... 2
SECTION 2.2. Regular Meetings of Trustees.......................... 2
SECTION 2.3. Special Meetings of Trustees.......................... 2
SECTION 2.4. Notice of Meetings.................................... 3
SECTION 2.5. Quorum; Presiding Officer............................. 3
SECTION 2.6. Participation by Telephone............................ 3
SECTION 2.7. Location of Meetings.................................. 3
SECTION 2.8. Votes................................................. 3
SECTION 2.9. Rulings of Chairman................................... 3
SECTION 2.10. Trustees' Action in Writing........................... 3
SECTION 2.11. Resignations.......................................... 3
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE 3 - OFFICERS...................................................... 4
SECTION 3.1. Officers of the Trust................................. 4
SECTION 3.2. Time and Terms of Election............................ 4
SECTION 3.3. Resignation and Removal............................... 4
SECTION 3.4. Fidelity Bond......................................... 4
SECTION 3.5. Chairman of the Trustees.............................. 4
SECTION 3.6. Vice Chairmen......................................... 5
SECTION 3.7. President............................................. 5
SECTION 3.8. Vice Presidents....................................... 5
SECTION 3.9. Treasurer and Assistant Treasurers.................... 5
SECTION 3.10. Controller and Assistant Controllers.................. 5
SECTION 3.11. Secretary and Assistant Secretaries................... 6
SECTION 3.12. Substitutions......................................... 6
SECTION 3.13. Execution of Deeds, etc............................... 6
SECTION 3.14. Power to Vote Securities.............................. 6
ARTICLE 4 - COMMITTEES.................................................... 7
SECTION 4.1. Power of Trustees to Designate Committees............. 7
SECTION 4.2. Rules for Conduct of Committee Affairs................ 7
SECTION 4.3. Trustees May Alter, Abolish, etc., Committees......... 7
SECTION 4.4. Minutes; Review by Trustees........................... 7
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE 5 - SEAL.......................................................... 7
ARTICLE 6 - SHARES........................................................ 8
SECTION 6.1. Issuance of Shares.................................... 8
SECTION 6.2. Uncertificated Shares................................. 8
SECTION 6.3. Share Certificates.................................... 8
SECTION 6.4. Lost, Stolen, etc., Certificates...................... 8
SECTION 6.5. Record Transfer of Pledged Shares..................... 8
ARTICLE 7 - CUSTODIAN..................................................... 9
ARTICLE 8 - AMENDMENTS.................................................... 9
SECTION 8.1. By-Laws Subject to Amendment.......................... 9
SECTION 8.2. Notice of Proposal to Amend By-Laws Required.......... 9
<PAGE>
THE WHITE ELK FUNDS
BY-LAWS
These Articles are the By-Laws of The White Elk Funds, a trust with
transferable shares established under the laws of The Commonwealth of
Massachusetts (the "Trust"), pursuant to an Agreement and Declaration of Trust
of the Trust (the "Declaration") made the 3rd day of December, 1997, and filed
in the office of the Secretary of the Commonwealth. These By-Laws have been
adopted by the Trustees pursuant to the authority granted by Section 3.1 of the
Declaration.
All words and terms capitalized in these By-Laws, unless otherwise
defined herein, shall have the same meanings as they have in the Declaration.
ARTICLE 1
---------
SHAREHOLDERS AND SHAREHOLDERS' MEETINGS
---------------------------------------
SECTION 1.1. MEETINGS. A meeting of the Shareholders of the Trust
shall be held whenever called by the Trustees and whenever election of a Trustee
or Trustees by Shareholders is required by the provisions of the 1940 Act.
Meetings of Shareholders shall also be called by the Trustees when requested in
writing by Shareholders holding at least ten percent (10%) of the Shares then
outstanding for the purpose of voting upon removal of any Trustee, or if the
Trustees shall fail to call or give notice of any such meeting of Shareholders
for a period of thirty (30) days after such application, then Shareholders
holding at least ten percent (10%) of the Shares then outstanding may call and
give notice of such meeting. Notice of Shareholders' meetings shall be given as
provided in the Declaration.
SECTION 1.2. PRESIDING OFFICER; SECRETARY. The Chairman of the
Trustees, or in his absence the Vice Chairman or Chairmen, if any, in the order
of their seniority or as the Trustees shall otherwise determine, and in the
absence of the Chairman and all Vice Chairmen, if any, the President, shall
preside at each Shareholders' meeting as chairman of the meeting, or in the
absence of the Chairman, all Vice Chairmen and the President, the Trustees
present at the meeting shall elect one of their number as chairman of the
meeting. Unless otherwise provided for by the Trustees, the Secretary of the
Trust shall be the secretary of all meetings of Shareholders and shall record
the minutes thereof.
SECTION 1.3. AUTHORITY OF CHAIRMAN OF MEETING TO INTERPRET
DECLARATION AND BY-LAWS. At any Shareholders' meeting the chairman of the
meeting shall be empowered to determine the construction or interpretation of
the Declaration or these By-Laws, or any part thereof or hereof, and his ruling
shall be final.
SECTION 1.4. VOTING; QUORUM. At each meeting of Shareholders, except
as otherwise provided by the Declaration, every holder of record of Shares
entitled to vote shall be entitled to a number of votes equal to the number of
Shares standing in his name on the Share register of the Trust. Shareholders may
<PAGE>
vote by proxy and the form of any such proxy may be prescribed from time to time
by the Trustees. A quorum shall exist if the holders of a majority of the
outstanding Shares of the Trust entitled to vote without regard to Series are
present in person or by proxy, but any lesser number shall be sufficient for
adjournments. At all meetings of the Shareholders, votes shall be taken by
ballot for all matters which may be binding upon the Trustees pursuant to
Section 7.1 of the Declaration. On other matters, votes of Shareholders need not
be taken by ballot unless otherwise provided for by the Declaration or by vote
of the Trustees, or as required by the Act of the Regulations, but the chairman
of the meeting may in his discretion authorize any matter to be voted upon by
ballot.
SECTION 1.5. INSPECTORS. At any meeting of Shareholders, the chairman
of the meeting may appoint one or more Inspectors of Election or Balloting to
supervise the voting at such meeting or any adjournment thereof. If Inspectors
are not so appointed, the chairman of the meeting may, and on the request of any
Shareholder present or represented and entitled to vote shall, appoint one or
more Inspectors for such purpose. Each Inspector, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute the
duties of Inspector of Election or Balloting, as the case may be, at such
meeting with strict impartiality and according to the best of his ability. If
appointed, Inspectors shall take charge of the polls and, when the vote is
completed, shall make a certificate of the result of the vote taken and of such
other facts as may be required by law.
SECTION 1.6. SHAREHOLDERS' ACTION IN WRITING. Nothing in this Article
I shall limit the power of the Shareholders to take any action by means of
written instruments without a meeting, as permitted by Section 7.6 of the
Declaration.
ARTICLE 2
---------
TRUSTEES AND TRUSTEES' MEETINGS
-------------------------------
SECTION 2.1. NUMBER OF TRUSTEES. There shall initially be one (1)
Trustee, and the number of Trustees shall thereafter be such number, authorized
by the Declaration, as from time to time shall be fixed by a vote adopted by a
Majority of the Trustees.
SECTION 2.2. REGULAR MEETINGS OF TRUSTEES. Regular meetings of the
Trustees may be held without call or notice at such places and at such times as
the Trustees may from time to time determine; provided, that notice of such
determination, and of the time, place and purposes of the first regular meeting
thereafter, shall be given to each absent Trustee in accordance with Section 2.4
hereof.
SECTION 2.3. SPECIAL MEETINGS OF TRUSTEES. Special meetings of the
Trustees may be held at any time and at any place when called by the Chairman of
the trustees, any Vice Chairman, the President or the Treasurer or by two (2) or
more Trustees, or if there shall be fewer than three (3) Trustees, by any
Trustee; provided, that notice of the time, place and purposes thereof is given
to each Trustee in accordance with Section 2.4 hereof by the Secretary or an
Assistant Secretary or by the Officer or the Trustees calling the meeting.
<PAGE>
SECTION 2.4. NOTICE OF MEETINGS. Notice of any regular or special
meeting of the Trustees shall be sufficient if given in writing to each Trustee,
and if sent by mail at least five (5) days, or by telegram, Federal Express or
other similar delivery service at least twenty-four (24) hours, before the
meeting, addressed to his usual or last known business or residence address, or
if delivered to him in person at least twenty-four (24) hours before the
meeting. Notice of a special meeting need not be given to any Trustee who was
present at an earlier meeting, not more than thirty-one (31) days prior to the
subsequent meeting, at which the subsequent meeting was called. Notice of a
meeting may be waived by any Trustee by written waiver of notice, executed by
him before or after the meeting, and such waiver shall be filed with the records
of the meeting. Attendance by a Trustee at a meeting shall constitute a waiver
of notice, except where a Trustee attends a meeting for the purpose of
protesting prior thereto or at its commencement the lack of notice.
SECTION 2.5. QUORUM; PRESIDING OFFICER. At any meeting of the
Trustees, a Majority of the Trustees shall constitute a quorum. Any meeting may
be adjourned from time to time by a majority of the votes cast upon the
question, whether or not a quorum is present, and the meeting may be held as
adjourned without further notice. Unless the trustees shall otherwise elect,
generally or in a particular case, the Chairman of the Trustees, or in his
absence the Vice Chairman or Vice Chairmen, if any, in the order of their
seniority or as the Trustees shall otherwise determine, or in the absence of the
Chairman and all Vice Chairmen, if any, the President, shall preside at each
meeting of the Trustees as chairman of the meeting.
SECTION 2.6. PARTICIPATION BY TELEPHONE. One or more of the Trustees
may participate in a meeting thereof or of any Committee of the Trustees by
means of a conference telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
SECTION 2.7. LOCATION OF MEETINGS. Trustees' meetings may be held at
any place, within or without Massachusetts.
SECTION 2.8. VOTES. Voting at Trustees' meetings may be conducted
orally, by show of hands or, if requested by any Trustee, by written ballot. The
results of all voting shall be recorded by the Secretary in the minute book.
SECTION 2.9. RULINGS OF CHAIRMAN. All other rules of conduct adopted
and used at any Trustees' meeting shall be determined by the chairman of such
meeting, whose ruling on all procedural matters shall be final.
SECTION 2.10. TRUSTEES' ACTION IN WRITING. Nothing in this Article II
shall limit the power of the Trustees to take action by means of a written
instrument without a meeting, as provided in Section 4.2 of the Declaration.
SECTION 2.11. RESIGNATIONS. Any Trustee may resign at any time by
written instrument signed by him and delivered to the Chairman, the President or
<PAGE>
the Secretary or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
ARTICLE 3
---------
OFFICERS
--------
SECTION 3.1. OFFICERS OF THE TRUST. The officers of the Trust shall
consist of a Chairman of the Trustees, a President, a Treasurer and a Secretary,
and may include one or more Vice Chairmen, Vice Presidents, Assistant Treasurers
and Assistant Secretaries, and such other officers as the Trustees may
designate. Any person may hold more than one office. Except for the Chairman and
any Vice Chairmen, no officer need be a Trustee.
SECTION 3.2. TIME AND TERMS OF ELECTION. The Chairman, the President,
the Treasurer and the Secretary shall be elected by the Trustees at their first
meeting and thereafter at the annual meeting of the Trustees, as provided in
Section 4.2 of the Declaration. Such officers shall hold office until the next
annual meeting of the Trustees and until their successors shall have been duly
elected and qualified, and may be removed at any meeting by the affirmative vote
of a Majority of the Trustees. All other officers of the Trust may be elected or
appointed at any meeting of the Trustees. Such officers shall hold office for
any term, or indefinitely, as determined by the Trustees, and shall be subject
to removal, with or without cause, at any time by the Trustees.
SECTION 3.3. RESIGNATION AND REMOVAL. Any officer may resign at any
time by giving written notice to the Trustees. Such resignation shall take
effect at the time specified therein, and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
If the office of any officer or agent becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office or otherwise, the
Trustees may choose a successor, who shall hold office for the unexpired term in
respect of which such vacancy occurred. Except to the extent expressly provided
in a written agreement with the Trust, no officer resigning or removed shall
have any right to any compensation for any period following such resignation or
removal, or any right to damage on account of such removal.
SECTION 3.4. FIDELITY BOND. The Trustees may, in their discretion,
direct any officer appointed by them to furnish at the expense of the Trust a
fidelity bond approved by the Trustees, in such amount as the Trustees may
prescribe.
SECTION 3.5. CHAIRMAN OF THE TRUSTEES. Unless the Trustees otherwise
provide, the Chairman of the Trustees shall preside at all meetings of the
Shareholders and of the Trustees. The Chairman, subject to the supervision of
the Trustees, shall have general charge and supervision of the business,
property and affairs of the Trust and such other powers and duties as the
Trustees may prescribe, and unless otherwise provided by law, the Declaration,
these By-Laws or specific vote of the Trustees, shall have and may exercise all
of the powers given to the Trustees by the Declaration and by these By-Laws.
<PAGE>
SECTION 3.6. VICE CHAIRMEN. If the Trustees shall elect one or more
Vice Chairmen, the Vice Chairman or if there shall be more than one, such Vice
Chairmen in the order of their seniority or as otherwise designated by the
Trustees, shall preside at meetings of the Shareholders and of the Trustees, and
shall exercise such other powers and duties of the Chairman as the Trustees
shall determine.
SECTION 3.7. PRESIDENT. The President shall be the chief
administrative officer of the Trust and, subject to the supervision of the
Chairman, shall have general charge of the operations of the Trust and general
supervision of the personnel of the Trust, and such other powers and duties as
the Trustees or the Chairman shall prescribe. In the absence or disability of
the Chairman, the President shall exercise the powers and duties of the
Chairman, except to the extent that the Trustees shall have delegated such
powers and duties to the Vice Chairman or Chairmen, and except that he shall not
preside at meetings of the Trustees if he is not himself a Trustee.
SECTION 3.8. VICE PRESIDENTS. In the absence or disability of the
President, the Vice President or, if there shall be more than one, the Vice
Presidents in the order of their seniority or as otherwise designated by the
Trustees, shall exercise all of the powers and duties of the President. The Vice
Presidents shall have the power to execute bonds, notes, mortgages and other
contracts, agreements and instruments in the name of the Trust, and shall do and
perform such other duties as the Trustees, the Chairman or the President shall
direct.
SECTION 3.9. TREASURER AND ASSISTANT TREASURERS. The Treasurer shall
be the chief financial officer of the Trust, and shall have the custody of the
Trust's funds and Securities, and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Trust and shall deposit all
moneys, and other valuable effects in the name and to the credit of the Trust,
in such depositories as may be designated by the Trustees, taking proper
vouchers for such disbursements, shall have such other duties and powers as may
be prescribed from time to time by the Trustees or the Chairman, and shall
render to the Trustees, whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the Trust. If no
Controller is elected, the Treasurer shall also have the duties and powers of
the Controller, as provided in these By-Laws. Any Assistant Treasurer shall have
such duties and powers as shall be prescribed from time to time by the Trustees
or the Treasurer, and shall be responsible to and shall report to the Treasurer.
In the absence or disability of the Treasurer, the Assistant Treasurer or, if
there shall be more than one, the Assistant Treasurers in the order of their
seniority or as otherwise designated by the Trustees or the Chairman, shall have
the powers and duties of the Treasurer.
SECTION 3.10. CONTROLLER AND ASSISTANT CONTROLLERS. If a Controller
is elected, he shall be the chief accounting officer of the Trust and shall be
in charge of its books of account and accounting records and of its accounting
procedures, and shall have such duties and powers as are commonly incident to
the office of a controller, and such other duties and powers as may be
prescribed from time to time by the Trustees. The Controller shall be
responsible to and shall report to the Trustees, but in the ordinary conduct of
the Trust's business, shall be under the supervision of the Treasurer. Any
Assistant Controller shall have such duties and powers as shall be prescribed
<PAGE>
from time to time by the Trustees or the Controller, and shall be responsible to
and shall report to the Controller. In the absence or disability of the
Controller, the Assistant Controller or, if there shall be more than one, the
Assistant Controllers in the order of their seniority or as otherwise designated
by the Trustees or the Chairman, shall have the powers and duties of the
Controller.
SECTION 3.11. SECRETARY AND ASSISTANT SECRETARIES. The Secretary
shall, if and to the extent requested by the Trustees, attend all meetings of
the Trustees, any Committee of the Trustees and/or the Shareholders and record
all votes and the minutes of proceedings in a book to be kept for that purpose,
shall give or cause to be given notice of all meetings of the Trustees, any
Committee of the Trustees, and of the Shareholders and shall perform such other
duties as may be prescribed by the Trustees. The Secretary, or in his absence
any Assistant Secretary, shall affix the Trust's seal to any instrument
requiring it, and when so affixed, it shall be attested by the signature of the
Secretary or an Assistant Secretary. The Secretary shall be the custodian of the
Share records and all other books, records and papers of the Trust (other than
financial) and shall see that all books, reports, statements, certificates and
other documents and records required by law are properly kept and filed. In the
absence or disability of the Secretary, the Assistant Secretary or, if there
shall be more than one, the Assistant Secretaries in the order of their
seniority or as otherwise designated by the Trustees or the Chairman, shall have
the powers and duties of the Secretary.
SECTION 3.12. SUBSTITUTIONS. In case of the absence or disability of
any officer of the Trust, or for any other reason that the Trustees may deem
sufficient, the Trustees may delegate for the time being the powers or duties,
or any of them, of such officer to any other officer, or to any Trustee.
SECTION 3.13. EXECUTION OF DEEDS, ETC. Except as the Trustees may
generally or in particular cases otherwise authorize or direct, all deeds,
leases, transfers, contracts, proposals, bonds, notes, checks, drafts and other
obligations made, accepted or endorsed by the Trust shall be signed or endorsed
on behalf of the Trust by the Chairman, the President, one of the Vice
Presidents or the Treasurer.
SECTION 3.14. POWER TO VOTE SECURITIES. Unless otherwise ordered by
the Trustees, the Treasurer and the Secretary each shall have full power and
authority on behalf of the Trust to give proxies for and/or to attend and to act
and to vote at any meeting of stockholders of any corporation in which the Trust
may hold stock, and at any such meeting the Treasurer or the Secretary, as the
case may be, his proxy shall possess and may exercise any and all rights and
powers incident to the ownership of such stock which, as the owner thereof, the
Trust might have possessed and exercised if present. The Trustees, by resolution
from time to time, or, in the absence thereof, either the Treasurer or the
Secretary, may confer like powers upon any other person or persons as attorneys
and proxies of the Trust.
<PAGE>
ARTICLE 4
---------
COMMITTEES
----------
SECTION 4.1. POWER OF TRUSTEES TO DESIGNATE COMMITTEES. The Trustees,
by vote of a Majority of the Trustees, may elect from their number an Executive
Committee and any other Committees and may delegate thereto some or all of their
powers except those which by law, by the Declaration or by these By-Laws may not
be delegated; provided, that the Executive Committee shall not be empowered to
elect the Chairman of the Trustees, the President, the Treasurer or the
Secretary, to amend the By-Laws, to exercise the powers of the Trustees under
this Section 4.1 or under Section 4.3 hereof, or to perform any act for which
the action of a majority of the Trustees is required by law, by the Declaration
or by these By-Laws. The members of any such Committee shall serve at the
pleasure of the Trustees.
SECTION 4.2. RULES FOR CONDUCT OF COMMITTEE AFFAIRS. Except as
otherwise provided by the Trustees, each Committee elected or appointed pursuant
to this Article IV may adopt such standing rules and regulations for the conduct
of its affairs as it may deem desirable, subject to review and approval of such
rules and regulations by the Trustees at the next succeeding meeting of the
Trustees, but in the absence of any such action or any contrary provisions by
the Trustees, the business of each Committee shall be conducted, so far as
practicable, in the same manner as provided herein and in the Declaration for
the Trustees.
SECTION 4.3. TRUSTEES MAY ALTER, ABOLISH, ETC., COMMITTEES. The
Trustees may at any time alter or abolish any Committee, change the membership
of any Committee, or revoke, rescind or modify any action of any Committee or
the authority of any Committee with respect to any matter or class of matters;
provided, that no such action shall impair the rights of any third parties.
SECTION 4.4. MINUTES; REVIEW BY TRUSTEES. Any Committee to which the
Trustees delegate any of their powers or duties shall keep records of its
meetings and shall report its actions to the Trustees.
ARTICLE 5
---------
SEAL
----
The seal of the Trust shall consist of a flat-faced circular die with
the word "Massachusetts", together with the name of the Trust, and the year of
its organization cut or engraved thereon, but, 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.
<PAGE>
ARTICLE 6
---------
SHARES
------
SECTION 6.1. ISSUANCE OF SHARES. The Trustees may issue Shares of any
or all Series either in certificated or uncertificated form, they may issue
certificates to the holders of Shares of a Series which was originally issued in
uncertificated form, and if they have issued Shares of any Series in
certificated form, they may at any time discontinue the issuance of Share
certificates for such Series and may, by written notice to such Shareholders of
such Series require the surrender of their Share certificates to the Trust for
cancellation, which surrender and cancellation shall not affect the ownership of
Shares for such Series.
SECTION 6.2. UNCERTIFICATED SHARES. For any Series of Shares for
which the Trustees issue Shares without certificates, the Trust or the Transfer
Agent may either issue receipts therefor or may keep accounts upon the books of
the Trust for the record holders of such Shares, who shall in either case be
deemed, for all purposes hereunder, to be the holders of such Shares as if they
had received certificates therefor and shall be held to have expressly assented
and agreed to the terms hereof and of the Declaration.
SECTION 6.3. SHARE CERTIFICATES. For any Series of Shares for which
the Trustees shall issue Share certificates, each Shareholder of such Series
shall be entitled to a certificate stating the number of Shares owned by him in
such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the Chairman or a Vice Chairman, or the President
or a Vice-President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary of the Trust. Such signatures may be
facsimiles if the certificate is countersigned by a Transfer Agent, or by a
Registrar, other than a Trustee, officer or employee of the Trust. In case any
officer who has signed or whose facsimile signature has been placed on such
certificate shall cease to be such officer before such certificate is issued, it
may be issued by the Trust with the same effect as if he were such officer at
the time of its issue.
SECTION 6.4. LOST, STOLEN, ETC., CERTIFICATES. If any certificate for
certificated Shares shall be lost, stolen, destroyed or mutilated, the Trustees
may authorize the issuance of a new certificate of the same tenor and for the
same number of Shares in lieu thereof. The Trustees shall require the surrender
of any mutilated certificate in respect of which a new certificate is issued,
and may, in their discretion, before the issuance of a new certificate, require
the owner of a lost, stolen or destroyed certificate, or the owner's legal
representative, to make an affidavit or affirmation setting forth such facts as
to the loss, theft or destruction as they deem necessary, and to give the Trust
a bond in such reasonable sum as the Trustees direct, in order to indemnify the
Trust.
SECTION 6.5. RECORD TRANSFER OF PLEDGED SHARES. A pledgee of Shares
pledged as collateral security shall be entitled to a new certificate in his
name as pledgee, in the case of certificated Shares, or to be registered as the
holder in pledge of such Shares in the case of uncertificated Shares; provided,
that the instrument of pledge substantially describes the debt or duty that is
intended to be secured thereby. Any such new certificate shall express on its
face that it is held as collateral security, and the name of the pledgor shall
<PAGE>
be stated thereon, and any such registration of uncertificated Shares shall be
in a form which indicates that the registered holder holds such Shares in
pledge. After such issue or registration, and unless and until such pledge is
released, such pledgee and his successors and assigns shall alone be entitled to
the rights of a Shareholder, and entitled to vote such Shares.
ARTICLE 7
---------
CUSTODIAN
---------
The Trust shall at all times employ a bank or trust company having a
capital, surplus and undivided profits of at least Two Million Dollars
($2,000,000) as Custodian of the capital assets of the Trust. The Custodian
shall be compensated for its services by the Trust upon such basis as shall be
agreed upon from time to time between the Trust and the Custodian.
ARTICLE 8
---------
AMENDMENTS
----------
SECTION 8.1. BY-LAWS SUBJECT TO AMENDMENT. These By-Laws may be
altered, amended or repealed, in whole or in part, at any time by vote of the
holders of a majority of the Shares (or whenever there shall be more than one
Series of Shares, of the holders of a majority of the Shares of each Series)
issued, outstanding and entitled to vote. The Trustees, by vote of a Majority of
the Trustees, may alter, amend or repeal these By-Laws, in whole or in part,
including By-Laws adopted by the Shareholders, except with respect to any
provision hereof which by law, the Declaration or these By-Laws requires action
by the Shareholders.
By-Laws adopted by the Trustees may be altered, amended or repealed by the
Shareholders.
SECTION 8.2. NOTICE OF PROPOSAL TO AMEND BY-LAWS REQUIRED. No
proposal to amend or repeal these By-Laws or to adopt new By-Laws shall be acted
upon at a meeting unless either (i) such proposal is stated in the notice or in
the waiver of notice, as the case may be, of the meeting of the Trustees or
Shareholders at which such action is taken, or (ii) all of the Trustees or
Shareholders, as the case may be, are present at such meeting and all agree to
consider such proposal without protesting the lack of notice.
E X H I B I T 5
- - - - - - - -
THE WHITE ELK FUNDS
--------------------------------------
Investment Management Agreement
--------------------------------------
<PAGE>
THIS INVESTMENT MANAGEMENT AGREEMENT made as of the 4th day of
February, 1998, by and between The White Elk Funds, a Massachusetts business
trust (hereinafter called the "Trust"), on behalf of each series of the Trust
listed in Appendix A hereto, as such may be amended from time to time
(hereinafter referred to individually as a "Fund" and collectively as the
"Funds"), and White Elk Asset Management, Inc., a Delaware corporation
(hereinafter called the "Manager").
WITNESSETH:
WHEREAS, the Trust is an open-end, diversified management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
1940 Act, as amended, and is engaged in the business of supplying investment
advice, investment management and administrative services, as an independent
contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Funds pursuant to the terms and provisions of this Agreement,
and the Manager is interested in furnishing said advice and services; and
WHEREAS, the Manager, subject to requisite approvals under the 1940
Act, may retain and hire other entities (the "Sub-Portfolio Managers") and
delegate to the Sub-Portfolio Managers pursuant to written agreements certain
duties of the Manager under this Agreement;
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF MANAGER. The Trust hereby employs the Manager and
the Manager hereby accepts such employment, to render investment advice and
management services with respect to the assets of the Funds for the period and
on the terms set forth in this Agreement, subject to the supervision and
direction of the Trust's Board of Trustees.
2. DUTIES OF MANAGER.
(a) General Duties. The Manager shall act as investment manager to
the Funds and shall supervise investments of the Funds on behalf of the Funds in
accordance with the investment objectives, programs and restrictions of the
Funds as provided in the Trust's governing documents, including, without
limitation, the Trust's Agreement and Declaration of Trust and By-Laws, or
otherwise and such other limitations as the Trustees may impose from time to
time in writing to the Manager. Without limiting the generality of the
foregoing, the Manager shall: (i) furnish the Funds with advice and
<PAGE>
recommendations with respect to the investment of each Fund's assets and the
purchase and sale of portfolio securities for the Funds, including the taking of
such other steps as may be necessary to implement such advice and
recommendations; (ii) furnish the Funds with reports, statements and other data
on securities, economic conditions and other pertinent subjects which the
Trust's Board of Trustees may reasonably request and furnish the Funds with
important developments materially affecting any Funds as the Manager, on its own
initiative, deems appropriate from time to time; (iii) manage the investments of
the Funds, subject to the ultimate supervision and direction of the Trust's
Board of Trustees; (iv) provide persons satisfactory to the Trust's Board of
Trustees to act as officers and employees of the Trust and the Funds (such
officers and employees, as well as certain trustees, may be trustees, directors,
officers, partners, or employees of the Manager or its affiliates) but not
including personnel to provide limited administrative services to the Fund not
typically provided by the Fund's administrator under separate agreement; and (v)
render to the Trust's Board of Trustees such periodic and special reports with
respect to each Fund's investment activities as the Board may reasonably
request.
(b) Sub-Portfolio Managers. The Manager, subject to requisite
approvals under the 1940 Act, may retain individuals or other business entities
to assist it in its duties hereunder to act as an investment manager to the
Funds on such terms and conditions as the Manager shall deem appropriate. Any
such individual or business entity shall be referred to as a Sub-Portfolio
Manager.
(c) Brokerage. The Manager shall place orders for the purchase and
sale of securities either directly with the issuer or with a broker or dealer
selected by the Manager. In placing each Fund's securities trades, it is
recognized that the Manager will give primary consideration to securing the most
favorable price and efficient execution, so that each Fund's total cost or
proceeds in each transaction will be the most favorable under all the
circumstances. Within the framework of this policy, the Manager may consider the
financial responsibility, research and investment information, and other
services provided by brokers or dealers who may effect or be a party to any such
transaction or other transactions to which other clients of the Manager may be a
party.
It is also understood that it is desirable for the Funds that the
Manager have access to investment and market research and securities and
economic analyses provided by brokers and others. It is also understood that
brokers providing such services may execute brokerage transactions at a higher
cost to the Funds than might result from the allocation of brokerage to other
brokers on the basis of seeking the most favorable price and efficient
execution. Therefore, the purchase and sale of securities for the Funds may be
made with brokers who provide such research and analysis, subject to review by
the Trust's Board of Trustees from time to time with respect to the extent and
continuation of this practice. It is understood by both parties that the Manager
may select broker-dealers for the execution of the Funds' portfolio transactions
who provide research and analysis as the Manager may lawfully and appropriately
use in its investment management and advisory capacities, whether or not such
research and analysis may also be useful to the Manager in connection with its
services to other clients.
<PAGE>
On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of one or more of the Funds as well as of
other clients, the Manager, to the extent permitted by applicable laws and
regulations, may aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and the most
efficient execution. In such event, allocation of the securities so purchased or
sold, as well as the expenses incurred in the transaction, will be made by the
Manager in the manner it considers to be the most equitable and consistent with
its fiduciary obligations to the Funds and to such other clients.
(d) Administrative Services. The Manager shall oversee the
administration of the Funds' business and affairs although the provision of
administrative services, to the extent not covered by subparagraphs (a) or (b)
above, is not the obligation of the Manager under this Agreement.
Notwithstanding any other provisions of this Agreement, the Manager shall be
entitled to reimbursement from the Funds for all or a portion of the reasonable
costs and expenses, including salary, associated with the provision by Manager
of personnel to render administrative services to the Funds.
3. BEST EFFORTS AND JUDGMENT. The Manager shall use its best judgment
and efforts in rendering the advice and services to the Funds as contemplated by
this Agreement.
4. INDEPENDENT CONTRACTOR. The Manager shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or
represent the Trust or the Funds in any way, or in any way be deemed an agent
for the Trust or for the Funds. It is expressly understood and agreed that the
services to be rendered by the Manager to the Funds under the provisions of this
Agreement are not to be deemed exclusive, and the Manager shall be free to
render similar or different services to others so long as its ability to render
the services provided for in this Agreement shall not be impaired thereby.
5. MANAGER'S PERSONNEL. The Manager shall, at its own expense,
maintain such staff and employ or retain such personnel and consult with such
other persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager or the Trust's Board of Trustees may desire and reasonably request.
6. REPORTS BY FUNDS TO MANAGER. Each Fund will from time to time
furnish to the Manager detailed statements of its investments and assets, and
information as to its investment objective and needs, and will make available to
the Manager such financial reports, proxy statements, legal and other
information relating to each Fund's investments as may be in its possession or
available to it, together with such other information as the Manager may
reasonably request.
<PAGE>
7. EXPENSES.
(a) With respect to the operation of each Fund, the Manager is
responsible for (i) the compensation of any of the Trust's trustees, officers,
and employees who are affiliates of the Manager (but not the compensation of
employees performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below or the compensation of affiliates
performing distribution and marketing duties outside of the scope of this
Agreement if a Rule 12b-1 plan has been adopted by the Trust), (ii) the expenses
of printing and distributing the Funds' prospectuses, statements of additional
information, and sales and advertising materials (but not the legal, auditing or
accounting fees attendant thereto) to prospective investors (but not to existing
shareholders), and (iii) providing office space and equipment reasonably
necessary for the operation of the Funds.
(b) Each fund is responsible for and has assumed the obligation
for payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in connection
with the issuance, registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt, safekeeping, servicing
and accounting for the cash, securities and other property of the Trust for the
benefit of the Funds including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any; expenditures in connection with meetings of each Fund's
shareholders and Board of Trustees that are properly payable by the Fund;
salaries and expenses of officers and fees and expenses of members of the
Trust's Board of Trustees or members of any advisory board or committee who are
not members of, affiliated with or interested persons of the Manager; insurance
premiums on property or personnel of each Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of preparing and
printing reports, proxy statements, prospectuses and statements of additional
information of the Fund or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association dues; fees
and expenses (including legal fees) of registering and maintaining registration
of its shares for sale under federal and applicable state and foreign securities
laws; all expenses of maintaining and servicing shareholder accounts, including
all charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Funds, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming
expenses which are an obligation of a Fund as set forth herein, such Fund shall
promptly reimburse the Manager for such costs and expenses, except to the extent
the Manager has otherwise agreed to bear such expenses. To the extent the
services for which a Fund is obligated to pay are performed by the Manager, the
Manager shall be entitled to recover from such Fund to the extent of the
Manager's actual costs for providing such services.
<PAGE>
8. INVESTMENT MANAGEMENT FEE.
(a) Each Fund shall pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management
services furnished or provided to such Fund pursuant to this Agreement, a
management fee at the annual rate set forth in the Fee Schedule attached hereto
as Appendix A, as may be amended in writing from time to time by the Trust and
the Manager.
(b) The management fee shall be accrued daily by each Fund and
paid to the Manager on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated before the end of any month, the fee to the Manager shall be prorated
for the portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The Manager may reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may agree to
make payments to limit the expenses which are the responsibility of a Fund under
this Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Manager hereunder to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis. Any fee withheld pursuant to this paragraph from the
Manager shall be reimbursed by the appropriate Fund to the Manager in the first,
second or third (or any combination thereof) fiscal year next succeeding the
fiscal year of the withholding to the extent permitted by the applicable state
law if the aggregate expenses for the next succeeding fiscal year, second
succeeding fiscal year or third succeeding fiscal year do not exceed the
applicable state limitation or any more restrictive limitation to which the
Manager has agreed. The Manager may elect to seek reimbursement for the oldest
reductions and waivers before payment by a Fund of fees or expenses for the
current year.
(e) The Manager may agree not to require payment of any portion of
the compensation or reimbursement of expenses otherwise due to it pursuant to
this Agreement prior to the time such compensation or reimbursement has accrued
as a liability of the Fund. Any such agreement shall be applicable only with
respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Manager hereunder.
9. FUND SHARE ACTIVITIES OF MANAGER'S OFFICERS AND EMPLOYEES. The
Manager agrees that neither it nor any of its officers or employees shall take
any short position in the shares of the Funds. This prohibition shall not
prevent the purchase of such shares by any of the officers or bona fide
<PAGE>
employees of the Manager or any trust, pension, profit-sharing or other benefit
plan for such persons or affiliates thereof, at a price not less than the net
asset value thereof at the time of purchase, as allowed pursuant to rules
promulgated under the 1940 Act.
10. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Funds.
11. MANAGER'S LIABILITIES.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Manager, the Manager shall not be subject to liability to the Trust
or the Funds or to any shareholder of the Funds 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 by the
Funds.
(b) The Funds shall indemnify and hold harmless the Manager and
the partners, members, officers and employees of the Manager and its general
partner (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or non-performance of any duties under this Agreement
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or officer of the Manager (or its general
partner), from liability in violation of Sections 17(h) and (i) of the 1940 Act.
12. NON-EXCLUSIVITY. The Trust's employment of the Manager is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein. The
Manager may, from time to time hereafter, act as investment adviser to one or
more other investment companies and fiduciary or other managed accounts,
provided that when the purchase or sale of securities of the same issuer is
suitable for the investment objectives of two or more companies or accounts
managed by the Manager which have available funds for investment, the available
securities will be allocated in a manner believed by the Manager to be equitable
to each company or account. If this Agreement is terminated with respect to any
Fund, this Agreement shall remain in full force and effect with respect to all
other Funds listed on Appendix A hereto, as the same may be amended.
<PAGE>
13. TERM. This Agreement shall become effective at the time the
Trust's initial Registration Statement under the Securities Act of 1933 with
respect to the shares of the Trust is declared effective by the Securities and
Exchange Commission and shall remain in effect for a period of two (2) years,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in effect thereafter for additional periods not exceeding one (1) year so long
as such continuation is approved for each Fund at least annually by (i) the
Board of Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of each Fund and (ii) the vote of a majority of the Trustees
of the Trust who are not parties to this Agreement nor interested persons
thereof, cast in person at a meeting called for the purpose of voting on such
approval.
14. TERMINATION. This Agreement may be terminated by the Trust on
behalf of any one or more of the Funds at any time without payment of any
penalty, by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of a Fund, upon sixty (60) days' written notice to
the Manager, and by the Manager upon sixty (60) days' written notice to a Fund.
15. TERMINATION BY ASSIGNMENT. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
16. TRANSFER, ASSIGNMENT. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
18. DEFINITIONS. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
19. NOTICE OF DECLARATION OF TRUST. The Manager agrees that the
Trust's obligations under this Agreement shall be limited to the Funds and to
their assets, and that the Manager shall not seek satisfaction of any such
obligation from the shareholders of the Funds nor from any trustee, officer,
employee or agent of the Trust or the Funds.
20. CAPTIONS. 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.
21. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisors Act of 1940 and any
rules and regulations promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested by their duly authorized officers, all on the day
and year first above written.
THE WHITE ELK FUNDS
By: /s/ William D. Witter By: /s/ Melanie Marshak
------------------------------ ------------------------------
Title: President Title: Vice President
--------------------------- ---------------------------
WHITE ELK ASSET MANAGEMENT, INC.
By: /s/ William D. Witter By: /s/ Melanie Marshak
------------------------------ ------------------------------
Title: President Title: Vice President
--------------------------- ---------------------------
<PAGE>
Appendix A
to Investment Management
Agreement
<TABLE>
<CAPTION>
FEE SCHEDULE
Name of Fund Applicable Fee
- --------------------------------------- --------------------------
<S> <C>
White Elk Large Cap Growth Fund 1.0%
White Elk Mid Cap Growth Fund 1.0%
White Elk Small Cap Growth Fund 1.0%
White Elk Large Cap Value Fund 1.0%
White Elk Mid Cap Value Fund 1.0%
White Elk Small Cap Value Fund 1.0%
White Elk Leveraged All Cap Fund 1.0%
White Elk Global Equity Fund 1.0%
White Elk Long-Term Bond Fund .50%
White Elk Medium-Term Bond Fund .50%
White Elk Money Market Fund .25%
</TABLE>
THE WHITE ELK FUNDS
By: /s/ William D. Witter By: /s/ Melanie Marshak
------------------------------ ------------------------------
Title: President Title: Vice President
--------------------------- ---------------------------
WHITE ELK ASSET MANAGEMENT, INC.
By: /s/ William D. Witter By: /s/ Melanie Marshak
------------------------------ ------------------------------
Title: President Title: Vice President
--------------------------- ---------------------------
E X H I B I T 6
- - - - - - - -
THE WHITE ELK FUNDS
-----------------------------------------------------
Sub-Portfolio Investment Management Agreements
-----------------------------------------------------
<PAGE>
THIS SUB-PORTFOLIO INVESTMENT MANAGEMENT AGREEMENT made as of the 9th
day of February, 1998, by and between White Elk Asset Management, Inc., a
Delaware corporation (hereinafter called the "Manager"), and William D. Witter,
Inc., an investment manager (hereinafter called the "Sub-Portfolio Manager").
WITNESSETH:
WHEREAS, the Manager entered into an agreement made as of the 4th day
of February, 1998, with The White Elk Funds, a Massachusetts business trust (the
"Trust");
WHEREAS, the Trust is an open-end, diversified management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
1940 Act, as amended, and is engaged in the business of supplying investment
advice, investment management and administrative services, as an independent
contractor; and
WHEREAS, the Sub-Portfolio Manager is registered as an investment
adviser under the 1940 Act, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Manager desires to retain, subject to requisite
approvals under the 1940 Act, the Sub-Portfolio Manager to render advice and
services on behalf of each series of the Trust listed in Appendix A hereto, as
such may be amended from time to time (hereinafter referred to individually as a
"Fund" and collectively as the "Funds") pursuant to the terms and provisions of
this Agreement, and the Sub-Portfolio Manager is interested in furnishing said
advice and services; and
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF SUB-PORTFOLIO MANAGER. The Manager hereby employs
the Sub-Portfolio Manager and the Sub-Portfolio Manager hereby accepts such
employment, to render investment advice and management services with respect to
the assets of the Funds for the period and on the terms set forth in this
Agreement, subject to the supervision and direction of the Manager.
2. DUTIES OF SUB-PORTFOLIO MANAGER.
(a) General Duties. The Sub-Portfolio Manager shall act as
investment manager to the Funds and shall supervise investments of the Funds on
behalf of the Funds in accordance with the investment objectives, programs and
<PAGE>
restrictions of the Funds as provided in the Trust's governing documents,
including, without limitation, the Trust's Agreement and Declaration of Trust
and By-Laws, or otherwise and such other limitations as the Manager may impose
from time to time in writing to the Sub-Portfolio Manager. Without limiting the
generality of the foregoing, the Sub-Portfolio Manager shall: (i) furnish the
Funds with advice and recommendations with respect to the investment of each
Fund's assets and the purchase and sale of portfolio securities for the Funds,
including the taking of such other steps as may be necessary to implement such
advice and recommendations; (ii) furnish the Funds with reports, statements and
other data on securities, economic conditions and other pertinent subjects which
the Manager may reasonably request and furnish the Funds with important
developments materially affecting any Funds as the Sub-Portfolio Manager, on its
own initiative, deems appropriate from time to time; (iii) manage the
investments of the Funds, subject to the ultimate supervision and direction of
the Manager; and (iv) render to the Manager such periodic and special reports
with respect to each Fund's investment activities as the Manager may reasonably
request.
(b) Brokerage. The Sub-Portfolio Manager shall place orders for
the purchase and sale of securities either directly with the issuer or with a
broker or dealer selected by the Sub-Portfolio Manager. In placing each Fund's
securities trades, it is recognized that the Sub-Portfolio Manager will give
primary consideration to securing the most favorable price and efficient
execution, so that each Fund's total cost or proceeds in each transaction will
be the most favorable under all the circumstances. Within the framework of this
policy, the Sub-Portfolio Manager may consider the financial responsibility,
research and investment information, and other services provided by brokers or
dealers who may effect or be a party to any such transaction or other
transactions to which other clients of the Sub-Portfolio Manager may be a party.
It is also understood that it is desirable for the Funds that the
Sub-Portfolio Manager have access to investment and market research and
securities and economic analyses provided by brokers and others. It is also
understood that brokers providing such services may execute brokerage
transactions at a higher cost to the Funds than might result from the allocation
of brokerage to other brokers on the basis of seeking the most favorable price
and efficient execution. Therefore, the purchase and sale of securities for the
Funds may be made with brokers who provide such research and analysis, subject
to review by the Manager from time to time with respect to the extent and
continuation of this practice. It is understood by the parties that the
Sub-Portfolio Manager may select broker-dealers for the execution of the Funds'
portfolio transactions who provide research and analysis as the Sub-Portfolio
Manager may lawfully and appropriately use in its investment management and
advisory capacities, whether or not such research and analysis may also be
useful to the Sub-Portfolio Manager in connection with its services to other
clients.
On occasions when the Sub-Portfolio Manager deems the purchase or
sale of a security to be in the best interest of one or more of the Funds as
well as of other clients, the Sub-Portfolio Manager, to the extent permitted by
applicable laws and regulations, may aggregate the securities to be so purchased
or sold in order to obtain the most favorable price or lower brokerage
commissions and the most efficient execution. In such event, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
<PAGE>
transaction, will be made by the Sub-Portfolio Manager in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Funds and to such other clients.
3. BEST EFFORTS AND JUDGMENT. The Sub-Portfolio Manager shall use its
best judgment and efforts in rendering the advice and services to the Funds as
contemplated by this Agreement.
4. INDEPENDENT CONTRACTOR. The Sub-Portfolio Manager shall, for all
purposes herein, be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized to do so, have no authority to act
for or represent the Trust, the Manager or the Funds in any way, or in any way
be deemed an agent for the Trust, the Manager or for the Funds. It is expressly
understood and agreed that the services to be rendered by the Sub-Portfolio
Manager to the Funds under the provisions of this Agreement are not to be deemed
exclusive, and the Sub-Portfolio Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. SUB-PORTFOLIO MANAGER'S PERSONNEL. The Sub-Portfolio Manager
shall, at its own expense, maintain such staff and employ or retain such
personnel and consult with such other persons as it shall from time to time
determine to be necessary to the performance of its obligations under this
Agreement. Without limiting the generality of the foregoing, the staff and
personnel of the Sub-Portfolio Manager shall be deemed to include persons
employed or retained by the Sub-Portfolio Manager to furnish statistical
information, research, and other factual information, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice and assistance as the
Sub-Portfolio Manager or the Manager may desire and reasonably request.
6. REPORTS BY FUNDS TO SUB-PORTFOLIO MANAGER. Each Fund will from
time to time furnish to the Sub-Portfolio Manager detailed statements of its
investments and assets, and information as to its investment objective and
needs, and will make available to the Sub-Portfolio Manager such financial
reports, proxy statements, legal and other information relating to each Fund's
investments as may be in its possession or available to it, together with such
other information as the Sub-Portfolio Manager may reasonably request.
7. EXPENSES.
(a) With respect to the operation of each Fund, the Sub-Portfolio
Manager is responsible for (i) the compensation of any of the Trust's trustees,
officers, and employees and directors, officers and employees of the Manager who
are affiliates of the Sub-Portfolio Manager (but not the compensation of
employees performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below or the compensation of affiliates
performing distribution and marketing duties outside of the scope of this
Agreement if a Rule 12b-1 plan has been adopted by the Trust).
<PAGE>
(b) Each Fund is responsible for and has assumed the obligation
for payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in connection
with the issuance, registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt, safekeeping, servicing
and accounting for the cash, securities and other property of the Trust for the
benefit of the Funds including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any; expenditures in connection with meetings of each Fund's
shareholders and Board of Trustees that are properly payable by the Fund;
salaries and expenses of officers and fees and expenses of members of the
Trust's Board of Trustees or members of any advisory board or committee who are
not members of, affiliated with or interested persons of the Sub-Portfolio
Manager; insurance premiums on property or personnel of each Fund which inure to
its benefit, including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statements, prospectuses and statements of
additional information of the Fund or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Funds,
if any; and all other charges and costs of its operation plus any extraordinary
and non-recurring expenses, except as herein otherwise prescribed.
(c) To the extent the Sub-Portfolio Manager incurs any costs by
assuming expenses which are an obligation of a Fund as set forth herein, such
Fund shall promptly reimburse the Sub-Portfolio Manager for such costs and
expenses, except to the extent the Sub-Portfolio Manager has otherwise agreed to
bear such expenses. To the extent the services for which a Fund is obligated to
pay are performed by the Sub-Portfolio Manager, the Sub-Portfolio Manager shall
be entitled to recover from such Fund to the extent of the Sub-Portfolio
Manager's actual costs for providing such services.
8. INVESTMENT MANAGEMENT FEE.
(a) The Manager shall pay to the Sub-Portfolio Manager, and the
Sub-Portfolio Manager agrees to accept, as full compensation for all investment
management services furnished or provided to such Fund pursuant to this
Agreement, a management fee at the annual rate set forth in the Fee Schedule
attached hereto as Appendix A, as may be amended in writing from time to time by
the Manager and the Sub-Portfolio Manager.
(b) The management fee shall be accrued daily by each Fund and
paid to the Sub-Portfolio Manager on the first business day of the succeeding
month.
(c) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
<PAGE>
terminated before the end of any month, the fee to the Sub-Portfolio Manager
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The Sub-Portfolio Manager may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of a Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Sub-Portfolio Manager hereunder to continue future payments. Any such
reduction will be agreed to prior to accrual of the related expense or fee and
will be estimated daily and reconciled and paid on a monthly basis. Any fee
withheld pursuant to this paragraph from the Sub-Portfolio Manager shall be
reimbursed by the Manager to the Sub-Portfolio Manager in the first, second or
third (or any combination thereof) fiscal year next succeeding the fiscal year
of the withholding to the extent permitted by the applicable state law if the
aggregate expenses for the next succeeding fiscal year, second succeeding fiscal
year or third succeeding fiscal year do not exceed the applicable state
limitation or any more restrictive limitation to which the Sub-Portfolio Manager
has agreed. The Sub-Portfolio Manager may elect to seek reimbursement for the
oldest reductions and waivers before payment by the Manager of fees or expenses
for the current year.
(e) The Sub-Portfolio Manager may agree not to require payment of
any portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement prior to the time such compensation or reimbursement
has accrued as a liability of the Fund. Any such agreement shall be applicable
only with respect to the specific items covered thereby and shall not constitute
an agreement not to require payment of any future compensation or reimbursement
due to the Sub-Portfolio Manager hereunder.
9. FUND SHARE ACTIVITIES OF SUB-PORTFOLIO MANAGER'S OFFICERS AND
EMPLOYEES. The Sub-Portfolio Manager agrees that neither it nor any of its
officers or employees shall take any short position in the shares of the Funds.
This prohibition shall not prevent the purchase of such shares by any of the
officers or bona fide employees of the Sub-Portfolio Manager or any trust,
pension, profit-sharing or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the 1940 Act.
10. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Funds.
<PAGE>
11. SUB-PORTFOLIO MANAGER'S LIABILITIES.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Sub-Portfolio Manager, the Sub-Portfolio Manager shall not be
subject to liability to the Manager, the Trust or the Funds or to any
shareholder of the Funds 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 by the Funds.
(b) The Funds shall indemnify and hold harmless the Sub-Portfolio
Manager and the partners, members, officers and employees of the Sub-Portfolio
Manager and its general partner (any such person, an "Indemnified Party")
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating and defending any alleged loss, liability, claim, damage
or expenses and reasonable counsel fees incurred in connection therewith)
arising out of the Indemnified Party's performance or non-performance of any
duties under this Agreement provided, however, that nothing herein shall be
deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or director or officer of the Manager or
officer of the Sub-Portfolio Manager (or its general partner), from liability in
violation of Sections 17(h) and (i) of the 1940 Act.
12. NON-EXCLUSIVITY. The Manager's employment of the Sub-Portfolio
Manager is not an exclusive arrangement, and the Manager may from time to time
employ other individuals or entities to furnish it with the services provided
for herein. The Sub-Portfolio Manager may, from time to time hereafter, act as
investment adviser to one or more other investment companies and fiduciary or
other managed accounts, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two or more
companies or accounts managed by the Sub-Portfolio Manager which have available
funds for investment, the available securities will be allocated in a manner
believed by the Sub-Portfolio Manager to be equitable to each company or
account. If this Agreement is terminated with respect to any Fund, this
Agreement shall remain in full force and effect with respect to all other Funds
listed on Appendix A hereto, as the same may be amended.
13. TERM. This Agreement shall become effective at the time the
Trust's initial Registration Statement under the Securities Act of 1933 with
respect to the shares of the Trust is declared effective by the Securities and
Exchange Commission and shall remain in effect for a period of two (2) years,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in effect thereafter for additional periods not exceeding one (1) year so long
as such continuation is approved for each Fund at least annually by the Manager.
<PAGE>
14. TERMINATION. This Agreement may be terminated by the Manager on
behalf of any one or more of the Funds at any time without payment of any
penalty, upon sixty (60) days' written notice to the Sub-Portfolio Manager, by
the Sub-Portfolio Manager upon sixty (60) days' written notice to the Manager.
15. TERMINATION BY ASSIGNMENT. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
16. TRANSFER, ASSIGNMENT. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
18. DEFINITIONS. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
19. NOTICE OF DECLARATION OF TRUST. The Sub-Portfolio Manager agrees
that the Manager and the Trust's obligations under this Agreement shall be
limited to the Funds and to their assets, and that the Sub-Portfolio Manager
shall not seek satisfaction of any such obligation from the shareholders of the
Funds nor from any trustee, officer, employee or agent of the Trust or the Funds
or the directors and officers of the Manager.
20. CAPTIONS. 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.
21. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisors Act of 1940 and any
rules and regulations promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested by their duly authorized officers, all on the day
and year first above written.
WHITE ELK ASSET MANAGEMENT, INC. WILLIAM D. WITTER, INC.
By: /s/ William D. Witter By: /s/ William D. Witter
------------------------------ ------------------------------
Title: President Title: President
--------------------------- ---------------------------
By: /s/ Melanie Marshak By: /s/ Melanie Marshak
------------------------------ ------------------------------
Title: Vice President Title: Vice President
--------------------------- ---------------------------
<PAGE>
Appendix A
to Sub-Portfolio Investment
Management Agreement
FEE SCHEDULE
Name of Fund Applicable Fee
- --------------------------------------- --------------------------
White Elk Mid Cap Growth Fund 0.50%
White Elk Small Cap Growth Fund 0.50%
White Elk Mid Cap Value Fund 0.50%
White Elk Small Cap Value Fund 0.50%
White Elk Long-Term Bond Fund 0.25%
White Elk Medium-Term Bond Fund 0.25%
White Elk Money Market Fund 0.125%
<PAGE>
THIS SUB-PORTFOLIO INVESTMENT MANAGEMENT AGREEMENT made as of the 28th
day of July, 1998, by and between White Elk Asset Management, Inc., a Delaware
corporation (hereinafter called the "Manager"), and William D. Witter, Inc., an
investment manager (hereinafter called the "Sub-Portfolio Manager").
WITNESSETH:
WHEREAS, the Manager entered into an agreement made as of the 4th day
of February, 1998, with The White Elk Funds, a Massachusetts business trust (the
"Trust");
WHEREAS, the Trust is an open-end, diversified management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
1940 Act, as amended, and is engaged in the business of supplying investment
advice, investment management and administrative services, as an independent
contractor; and
WHEREAS, the Sub-Portfolio Manager is registered as an investment
adviser under the 1940 Act, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Manager desires to retain, subject to requisite approvals
under the 1940 Act, the Sub-Portfolio Manager to render advice and services on
behalf of each series of the Trust listed in Appendix A hereto, as such may be
amended from time to time (hereinafter referred to individually as a "Fund" and
collectively as the "Funds") pursuant to the terms and provisions of this
Agreement, and the Sub-Portfolio Manager is interested in furnishing said advice
and services; and
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF SUB-PORTFOLIO MANAGER. The Manager hereby employs
the Sub-Portfolio Manager and the Sub-Portfolio Manager hereby accepts such
employment, to render investment advice and management services with respect to
the assets of the Funds for the period and on the terms set forth in this
Agreement, subject to the supervision and direction of the Manager.
2. DUTIES OF SUB-PORTFOLIO MANAGER.
(a) General Duties. The Sub-Portfolio Manager shall act as
investment manager to the Funds and shall supervise investments of the Funds on
behalf of the Funds in accordance with the investment objectives, programs and
restrictions of the Funds as provided in the Trust's governing documents,
<PAGE>
including, without limitation, the Trust's Agreement and Declaration of Trust
and By-Laws, or otherwise and such other limitations as the Manager may impose
from time to time in writing to the Sub-Portfolio Manager. Without limiting the
generality of the foregoing, the Sub-Portfolio Manager shall: (i) furnish the
Funds with advice and recommendations with respect to the investment of each
Fund's assets and the purchase and sale of portfolio securities for the Funds,
including the taking of such other steps as may be necessary to implement such
advice and recommendations; (ii) furnish the Funds with reports, statements and
other data on securities, economic conditions and other pertinent subjects which
the Manager may reasonably request and furnish the Funds with important
developments materially affecting any Funds as the Sub-Portfolio Manager, on its
own initiative, deems appropriate from time to time; (iii) manage the
investments of the Funds, subject to the ultimate supervision and direction of
the Manager; and (iv) render to the Manager such periodic and special reports
with respect to each Fund's investment activities as the Manager may reasonably
request.
(b) Brokerage. The Sub-Portfolio Manager shall place orders for
the purchase and sale of securities either directly with the issuer or with a
broker or dealer selected by the Sub-Portfolio Manager. In placing each Fund's
securities trades, it is recognized that the Sub-Portfolio Manager will give
primary consideration to securing the most favorable price and efficient
execution, so that each Fund's total cost or proceeds in each transaction will
be the most favorable under all the circumstances. Within the framework of this
policy, the Sub-Portfolio Manager may consider the financial responsibility,
research and investment information, and other services provided by brokers or
dealers who may effect or be a party to any such transaction or other
transactions to which other clients of the Sub-Portfolio Manager may be a party.
It is also understood that it is desirable for the Funds that the
Sub-Portfolio Manager have access to investment and market research and
securities and economic analyses provided by brokers and others. It is also
understood that brokers providing such services may execute brokerage
transactions at a higher cost to the Funds than might result from the allocation
of brokerage to other brokers on the basis of seeking the most favorable price
and efficient execution. Therefore, the purchase and sale of securities for the
Funds may be made with brokers who provide such research and analysis, subject
to review by the Manager from time to time with respect to the extent and
continuation of this practice. It is understood by the parties that the
Sub-Portfolio Manager may select broker-dealers for the execution of the Funds'
portfolio transactions who provide research and analysis as the Sub-Portfolio
Manager may lawfully and appropriately use in its investment management and
advisory capacities, whether or not such research and analysis may also be
useful to the Sub-Portfolio Manager in connection with its services to other
clients.
On occasions when the Sub-Portfolio Manager deems the purchase or sale
of a security to be in the best interest of one or more of the Funds as well as
of other clients, the Sub-Portfolio Manager, to the extent permitted by
applicable laws and regulations, may aggregate the securities to be so purchased
or sold in order to obtain the most favorable price or lower brokerage
commissions and the most efficient execution. In such event, allocation of the
<PAGE>
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Portfolio Manager in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Funds and to such other clients.
3. BEST EFFORTS AND JUDGMENT. The Sub-Portfolio Manager shall use its
best judgment and efforts in rendering the advice and services to the Funds as
contemplated by this Agreement.
4. INDEPENDENT CONTRACTOR. The Sub-Portfolio Manager shall, for all
purposes herein, be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized to do so, have no authority to act
for or represent the Trust, the Manager or the Funds in any way, or in any way
be deemed an agent for the Trust, the Manager or for the Funds. It is expressly
understood and agreed that the services to be rendered by the Sub-Portfolio
Manager to the Funds under the provisions of this Agreement are not to be deemed
exclusive, and the Sub-Portfolio Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. SUB-PORTFOLIO MANAGER'S PERSONNEL. The Sub-Portfolio Manager shall,
at its own expense, maintain such staff and employ or retain such personnel and
consult with such other persons as it shall from time to time determine to be
necessary to the performance of its obligations under this Agreement. Without
limiting the generality of the foregoing, the staff and personnel of the
Sub-Portfolio Manager shall be deemed to include persons employed or retained by
the Sub-Portfolio Manager to furnish statistical information, research, and
other factual information, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice and assistance as the Sub-Portfolio Manager or the
Manager may desire and reasonably request.
6. REPORTS BY FUNDS TO SUB-PORTFOLIO MANAGER. Each Fund will from time
to time furnish to the Sub-Portfolio Manager detailed statements of its
investments and assets, and information as to its investment objective and
needs, and will make available to the Sub-Portfolio Manager such financial
reports, proxy statements, legal and other information relating to each Fund's
investments as may be in its possession or available to it, together with such
other information as the Sub-Portfolio Manager may reasonably request.
7. EXPENSES.
(a) With respect to the operation of each Fund, the Sub-Portfolio
Manager is responsible for (i) the compensation of any of the Trust's trustees,
officers, and employees and directors, officers and employees of the Manager who
are affiliates of the Sub-Portfolio Manager (but not the compensation of
employees performing services in connection with expenses which are the Fund's
responsibility under Subparagraph 7(b) below or the compensation of affiliates
performing distribution and marketing duties outside of the scope of this
Agreement if a Rule 12b-1 plan has been adopted by the Trust).
<PAGE>
(b) Each Fund is responsible for and has assumed the obligation
for payment of all of its expenses, other than as stated in Subparagraph 7(a)
above, including but not limited to: fees and expenses incurred in connection
with the issuance, registration and transfer of its shares; brokerage and
commission expenses; all expenses of transfer, receipt, safekeeping, servicing
and accounting for the cash, securities and other property of the Trust for the
benefit of the Funds including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any; expenditures in connection with meetings of each Fund's
shareholders and Board of Trustees that are properly payable by the Fund;
salaries and expenses of officers and fees and expenses of members of the
Trust's Board of Trustees or members of any advisory board or committee who are
not members of, affiliated with or interested persons of the Sub-Portfolio
Manager; insurance premiums on property or personnel of each Fund which inure to
its benefit, including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statements, prospectuses and statements of
additional information of the Fund or other communications for distribution to
existing shareholders; legal, auditing and accounting fees; trade association
dues; fees and expenses (including legal fees) of registering and maintaining
registration of its shares for sale under federal and applicable state and
foreign securities laws; all expenses of maintaining and servicing shareholder
accounts, including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit of the Funds,
if any; and all other charges and costs of its operation plus any extraordinary
and non-recurring expenses, except as herein otherwise prescribed.
(c) To the extent the Sub-Portfolio Manager incurs any costs by
assuming expenses which are an obligation of a Fund as set forth herein, such
Fund shall promptly reimburse the Sub-Portfolio Manager for such costs and
expenses, except to the extent the Sub-Portfolio Manager has otherwise agreed to
bear such expenses. To the extent the services for which a Fund is obligated to
pay are performed by the Sub-Portfolio Manager, the Sub-Portfolio Manager shall
be entitled to recover from such Fund to the extent of the Sub-Portfolio
Manager's actual costs for providing such services.
8. INVESTMENT MANAGEMENT FEE.
(a) The Manager shall pay to the Sub-Portfolio Manager, and the
Sub-Portfolio Manager agrees to accept, as full compensation for all investment
management services furnished or provided to such Fund pursuant to this
Agreement, a management fee at the annual rate set forth in the Fee Schedule
attached hereto as Appendix A, as may be amended in writing from time to time by
the Manager and the Sub-Portfolio Manager.
(b) The management fee shall be accrued daily by each Fund and
paid to the Sub-Portfolio Manager on the first business day of the succeeding
month.
(c) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated before the end of any month, the fee to the Sub-Portfolio Manager
<PAGE>
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The Sub-Portfolio Manager may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of a Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Sub-Portfolio Manager hereunder to continue future payments. Any such
reduction will be agreed to prior to accrual of the related expense or fee and
will be estimated daily and reconciled and paid on a monthly basis. Any fee
withheld pursuant to this paragraph from the Sub-Portfolio Manager shall be
reimbursed by the Manager to the Sub-Portfolio Manager in the first, second or
third (or any combination thereof) fiscal year next succeeding the fiscal year
of the withholding to the extent permitted by the applicable state law if the
aggregate expenses for the next succeeding fiscal year, second succeeding fiscal
year or third succeeding fiscal year do not exceed the applicable state
limitation or any more restrictive limitation to which the Sub-Portfolio Manager
has agreed. The Sub-Portfolio Manager may elect to seek reimbursement for the
oldest reductions and waivers before payment by the Manager of fees or expenses
for the current year.
(e) The Sub-Portfolio Manager may agree not to require payment of
any portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement prior to the time such compensation or reimbursement
has accrued as a liability of the Fund. Any such agreement shall be applicable
only with respect to the specific items covered thereby and shall not constitute
an agreement not to require payment of any future compensation or reimbursement
due to the Sub-Portfolio Manager hereunder.
9. FUND SHARE ACTIVITIES OF SUB-PORTFOLIO MANAGER'S OFFICERS AND
EMPLOYEES. The Sub-Portfolio Manager agrees that neither it nor any of its
officers or employees shall take any short position in the shares of the Funds.
This prohibition shall not prevent the purchase of such shares by any of the
officers or bona fide employees of the Sub-Portfolio Manager or any trust,
pension, profit-sharing or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the 1940 Act.
10. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS.
Nothing herein contained shall be deemed to require the Trust or the Funds to
take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Funds.
<PAGE>
11. SUB-PORTFOLIO MANAGER'S LIABILITIES.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Sub-Portfolio Manager, the Sub-Portfolio Manager shall not be
subject to liability to the Manager, the Trust or the Funds or to any
shareholder of the Funds 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 by the Funds.
(b) The Funds shall indemnify and hold harmless the Sub-Portfolio
Manager and the partners, members, officers and employees of the Sub-Portfolio
Manager and its general partner (any such person, an "Indemnified Party")
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating and defending any alleged loss, liability, claim, damage
or expenses and reasonable counsel fees incurred in connection therewith)
arising out of the Indemnified Party's performance or non-performance of any
duties under this Agreement provided, however, that nothing herein shall be
deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or director or officer of the Manager or
officer of the Sub-Portfolio Manager (or its general partner), from liability in
violation of Sections 17(h) and (i) of the 1940 Act.
12. NON-EXCLUSIVITY. The Manager's employment of the Sub-Portfolio
Manager is not an exclusive arrangement, and the Manager may from time to time
employ other individuals or entities to furnish it with the services provided
for herein. The Sub-Portfolio Manager may, from time to time hereafter, act as
investment adviser to one or more other investment companies and fiduciary or
other managed accounts, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two or more
companies or accounts managed by the Sub-Portfolio Manager which have available
funds for investment, the available securities will be allocated in a manner
believed by the Sub-Portfolio Manager to be equitable to each company or
account. If this Agreement is terminated with respect to any Fund, this
Agreement shall remain in full force and effect with respect to all other Funds
listed on Appendix A hereto, as the same may be amended.
13. TERM. This Agreement shall become effective at the time the
Trust's initial Registration Statement under the Securities Act of 1933 with
respect to the shares of the Trust is declared effective by the Securities and
Exchange Commission and shall remain in effect for a period of two (2) years,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in effect thereafter for additional periods not exceeding one (1) year so long
as such continuation is approved for each Fund at least annually by the Manager.
<PAGE>
14. TERMINATION. This Agreement may be terminated by the Manager on
behalf of any one or more of the Funds at any time without payment of any
penalty, upon sixty (60) days' written notice to the Sub-Portfolio Manager, by
the Sub-Portfolio Manager upon sixty (60) days' written notice to the Manager.
15. TERMINATION BY ASSIGNMENT. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
16. TRANSFER, ASSIGNMENT. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
18. DEFINITIONS. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
19. NOTICE OF DECLARATION OF TRUST. The Sub-Portfolio Manager agrees
that the Manager and the Trust's obligations under this Agreement shall be
limited to the Funds and to their assets, and that the Sub-Portfolio Manager
shall not seek satisfaction of any such obligation from the shareholders of the
Funds nor from any trustee, officer, employee or agent of the Trust or the Funds
or the directors and officers of the Manager.
20. CAPTIONS. 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.
21. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisors Act of 1940 and any
rules and regulations promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested by their duly authorized officers, all on the day
and year first above written.
WHITE ELK ASSET MANAGEMENT, INC. WILLIAM D. WITTER, INC.
By: By:
/s/ William D. Witter /s/ William D. Witter
----------------------------- -------------------------
Title: Title:
President President
----------------------------- -------------------------
By: By:
/s/ Melanie Marshak /s/ Melanie Marshak
----------------------------- -------------------------
Title: Title:
Vice-President Vice-President
----------------------------- -------------------------
<PAGE>
Appendix A
to Sub-Portfolio Investment
Management Agreement
FEE SCHEDULE
Name of Fund Applicable Fee
- -------------------------------------------- ----------------
White Elk Large Cap Growth Fund 0.50%
White Elk Large Cap Value Fund 0.50%
White Elk Leveraged All Cap Fund 0.50%
<PAGE>
THIS SUB-PORTFOLIO INVESTMENT MANAGEMENT AGREEMENT made as of the 29th
day of July, 1998, by and between White Elk Asset Management, Inc., a Delaware
corporation (hereinafter called the "Manager"), and Oechsle International
Advisors, L.P., an investment manager (hereinafter called the "Sub-Portfolio
Manager").
WITNESSETH:
WHEREAS, the Manager entered into an agreement made as of the 4th day
of February, 1998, with The White Elk Fund, a Massachusetts business trust (the
"Trust");
WHEREAS, the Trust is an open-end, diversified management investment
company, registered as such under the Investment Company Act of 1940, as amended
(the "1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser under the
1940 Act, as amended, and is engaged in the business of supplying investment
advice, investment management and administrative services, as an independent
contractor; and
WHEREAS, the Sub-Portfolio Manager is registered as an investment
adviser under the 1940 Act, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Manager desires to retain, subject to requisite approvals
under the 1940 Act, the Sub-Portfolio Manager to render advice and services on
behalf of the series of the Trust listed in Appendix A hereto, as such may be
amended from time to time (hereinafter referred to as the "Fund") pursuant to
the terms and provisions of this Agreement, and the Sub-Portfolio Manager is
interested in furnishing said advice and services; and
NOW, THEREFORE, in consideration of the covenants and the mutual
promises hereinafter set forth, the parties hereto, intending to be legally
bound hereby, mutually agree as follows:
1. APPOINTMENT OF SUB-PORTFOLIO MANAGER. The Manager hereby employs
the Sub-Portfolio Manager and the Sub-Portfolio Manager hereby accepts such
employment, to render investment advice and management services with respect to
the assets of the Fund for the period and on the terms set forth in this
Agreement, subject to the supervision and direction of the Manager.
2. DUTIES OF SUB-PORTFOLIO MANAGER.
(a) General Duties. The Sub-Portfolio Manager shall act as
investment manager to the Fund and shall supervise investments of the Fund on
behalf of the Fund in accordance with the investment objectives, programs and
restrictions of the Fund as provided in the Trust's governing documents,
<PAGE>
including, without limitation, the Trust's Agreement and Declaration of Trust
and By-Laws, or otherwise and such other limitations as the Manager may impose
from time to time in writing to the Sub-Portfolio Manager. Without limiting the
generality of the foregoing, the Sub-Portfolio Manager shall: (i) furnish the
Fund with advice and recommendations with respect to the investment of the
Fund's assets and the purchase and sale of portfolio securities for the Fund,
including the taking of such other steps as may be necessary to implement such
advice and recommendations; (ii) furnish the Fund with reports, statements and
other data on securities, economic conditions and other pertinent subjects which
the Manager may reasonably request and furnish the Fund with important
developments materially affecting the Fund as the Sub-Portfolio Manager, on its
own initiative, deems appropriate from time to time; (iii) manage the
investments of the Fund, subject to the ultimate supervision and direction of
the Manager; and (iv) render to the Manager such periodic and special reports
with respect to the Fund's investment activities as the Manager may reasonably
request.
(b) Brokerage. The Sub-Portfolio Manager shall place orders for
the purchase and sale of securities either directly with the issuer or with a
broker or dealer selected by the Sub-Portfolio Manager. In placing the Fund's
securities trades, it is recognized that the Sub-Portfolio Manager will give
primary consideration to securing the most favorable price and efficient
execution, so that the Fund's total cost or proceeds in each transaction will be
the most favorable under all the circumstances. Within the framework of this
policy, the Sub-Portfolio Manager may consider the financial responsibility,
research and investment information, and other services provided by brokers or
dealers who may effect or be a party to any such transaction or other
transactions to which other clients of the Sub-Portfolio Manager may be a party.
It is also understood that it is desirable for the Fund that the
Sub-Portfolio Manager have access to investment and market research and
securities and economic analyses provided by brokers and others. It is also
understood that brokers providing such services may execute brokerage
transactions at a higher cost to the Fund than might result from the allocation
of brokerage to other brokers on the basis of seeking the most favorable price
and efficient execution. Therefore, the purchase and sale of securities for the
Fund may be made with brokers who provide such research and analysis, subject to
review by the Manager from time to time with respect to the extent and
continuation of this practice. It is understood by the parties that the
Sub-Portfolio Manager may select broker-dealers for the execution of the Fund's
portfolio transactions who provide research and analysis as the Sub-Portfolio
Manager may lawfully and appropriately use in its investment management and
advisory capacities, whether or not such research and analysis may also be
useful to the Sub-Portfolio Manager in connection with its services to other
clients.
On occasions when the Sub-Portfolio Manager deems the purchase or sale
of a security to be in the best interest of the Fund as well as of other
clients, the Sub-Portfolio Manager, to the extent permitted by applicable laws
and regulations, may aggregate the securities to be so purchased or sold in
order to obtain the most favorable price or lower brokerage commissions and the
most efficient execution. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the transaction, will be
<PAGE>
made by the Sub-Portfolio Manager in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and to such
other clients.
3. BEST EFFORTS AND JUDGMENT. The Sub-Portfolio Manager shall use its
best judgment and efforts in rendering the advice and services to the Fund as
contemplated by this Agreement.
4. INDEPENDENT CONTRACTOR. The Sub-Portfolio Manager shall, for all
purposes herein, be deemed to be an independent contractor, and shall, unless
otherwise expressly provided and authorized to do so, have no authority to act
for or represent the Trust, the Manager or the Fund in any way, or in any way be
deemed an agent for the Trust, the Manager or for the Fund. It is expressly
understood and agreed that the services to be rendered by the Sub-Portfolio
Manager to the Fund under the provisions of this Agreement are not to be deemed
exclusive, and the Sub-Portfolio Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. SUB-PORTFOLIO MANAGER'S PERSONNEL. The Sub-Portfolio Manager shall,
at its own expense, maintain such staff and employ or retain such personnel and
consult with such other persons as it shall from time to time determine to be
necessary to the performance of its obligations under this Agreement. Without
limiting the generality of the foregoing, the staff and personnel of the
Sub-Portfolio Manager shall be deemed to include persons employed or retained by
the Sub-Portfolio Manager to furnish statistical information, research, and
other factual information, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice and assistance as the Sub-Portfolio Manager or the
Manager may desire and reasonably request.
6. REPORTS BY FUND TO SUB-PORTFOLIO MANAGER. The Fund will from time
to time furnish to the Sub-Portfolio Manager detailed statements of its
investments and assets, and information as to its investment objective and
needs, and will make available to the Sub-Portfolio Manager such financial
reports, proxy statements, legal and other information relating to the Fund's
investments as may be in its possession or available to it, together with such
other information as the Sub-Portfolio Manager may reasonably request.
7. EXPENSES.
(a) The Fund is responsible for and has assumed the obligation
for payment of all of its expenses including but not limited to: fees and
expenses incurred in connection with the issuance, registration and transfer of
<PAGE>
its shares; brokerage and commission expenses; all expenses of transfer,
receipt, safekeeping, servicing and accounting for the cash, securities and
other property of the Trust for the benefit of the Fund including all fees and
expenses of its custodian, shareholder services agent and accounting services
agent; interest charges on any borrowings; costs and expenses of pricing and
calculating its daily net asset value and of maintaining its books of account
required under the 1940 Act; taxes, if any; expenditures in connection with
meetings of the Fund's shareholders and Board of Trustees that are properly
payable by the Fund; salaries and expenses of officers and fees and expenses of
members of the Trust's Board of Trustees or members of any advisory board or
committee who are not members of, affiliated with or interested persons of the
Sub-Portfolio Manager; insurance premiums on property or personnel of the Fund
which inure to its benefit, including liability and fidelity bond insurance; the
cost of preparing and printing reports, proxy statements, prospectuses and
statements of additional information of the Fund or other communications for
distribution to existing shareholders; legal, auditing and accounting fees;
trade association dues; fees and expenses (including legal fees) of registering
and maintaining registration of its shares for sale under federal and applicable
state and foreign securities laws; all expenses of maintaining and servicing
shareholder accounts, including all charges for transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents for the benefit
of the Fund, if any; and all other charges and costs of its operation plus any
extraordinary and non-recurring expenses, except as herein otherwise prescribed.
(b) To the extent the Sub-Portfolio Manager incurs any costs by
assuming expenses which are an obligation of the Fund as set forth herein, the
Fund shall promptly reimburse the Sub-Portfolio Manager for such costs and
expenses, except to the extent the Sub-Portfolio Manager has otherwise agreed to
bear such expenses. To the extent the services for which the Fund is obligated
to pay are performed by the Sub-Portfolio Manager, the Sub-Portfolio Manager
shall be entitled to recover from the Fund to the extent of the Sub-Portfolio
Manager's actual costs for providing such services.
8. INVESTMENT MANAGEMENT FEE.
(a) The Manager shall pay to the Sub-Portfolio Manager, and the
Sub-Portfolio Manager agrees to accept, as full compensation for all investment
management services furnished or provided to the Fund pursuant to this
Agreement, a management fee at the annual rate set forth in the Fee Schedule
attached hereto as Appendix A, as may be amended in writing from time to time by
the Manager and the Sub-Portfolio Manager.
(b) The management fee shall be accrued daily by the Fund and
paid to the Sub-Portfolio Manager on the first business day of the succeeding
month.
(c) The initial fee under this Agreement shall be payable on the
first business day of the first month following the effective date of this
Agreement and shall be prorated as set forth below. If this Agreement is
terminated before the end of any month, the fee to the Sub-Portfolio Manager
shall be prorated for the portion of any month in which this Agreement is in
effect which is not a complete month according to the proportion which the
<PAGE>
number of calendar days in the month during which the Agreement is in effect
bears to the number of calendar days in the month, and shall be payable within
ten (10) days after the date of termination.
(d) The Sub-Portfolio Manager may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of the Fund under this Agreement. Any such reduction or payment
shall be applicable only to such specific reduction or payment and shall not
constitute an agreement to reduce any future compensation or reimbursement due
to the Sub-Portfolio Manager hereunder to continue future payments. Any such
reduction will be agreed to prior to accrual of the related expense or fee and
will be estimated daily and reconciled and paid on a monthly basis. Any fee
withheld pursuant to this paragraph from the Sub-Portfolio Manager shall be
reimbursed by the Manager to the Sub-Portfolio Manager in the first, second or
third (or any combination thereof) fiscal year next succeeding the fiscal year
of the withholding to the extent permitted by the applicable state law if the
aggregate expenses for the next succeeding fiscal year, second succeeding fiscal
year or third succeeding fiscal year do not exceed the applicable state
limitation or any more restrictive limitation to which the Sub-Portfolio Manager
has agreed. The Sub-Portfolio Manager may elect to seek reimbursement for the
oldest reductions and waivers before payment by the Manager of fees or expenses
for the current year.
(e) The Sub-Portfolio Manager may agree not to require payment of
any portion of the compensation or reimbursement of expenses otherwise due to it
pursuant to this Agreement prior to the time such compensation or reimbursement
has accrued as a liability of the Fund. Any such agreement shall be applicable
only with respect to the specific items covered thereby and shall not constitute
an agreement not to require payment of any future compensation or reimbursement
due to the Sub-Portfolio Manager hereunder.
9. FUND SHARE ACTIVITIES OF SUB-PORTFOLIO MANAGER'S OFFICERS AND
EMPLOYEES. The Sub-Portfolio Manager agrees that neither it nor any of its
officers or employees shall take any short position in the shares of the Fund.
This prohibition shall not prevent the purchase of such shares by any of the
officers or bona fide employees of the Sub-Portfolio Manager or any trust,
pension, profit-sharing or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the 1940 Act.
10. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS.
Nothing herein contained shall be deemed to require the Trust or the Fund to
take any action contrary to the Trust's Agreement and Declaration of Trust,
By-Laws, or any applicable statute or regulation, or to relieve or deprive the
Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust and Fund.
<PAGE>
11. SUB-PORTFOLIO MANAGER'S LIABILITIES.
(a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the obligations or duties hereunder on the
part of the Sub-Portfolio Manager, the Sub-Portfolio Manager shall not be
subject to liability to the Manager, the Trust or the Fund or to any shareholder
of the Fund 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 by the Fund.
(b) The Fund shall indemnify and hold harmless the Sub-Portfolio
Manager and the partners, members, officers and employees of the Sub-Portfolio
Manager and its general partner (any such person, an "Indemnified Party")
against any loss, liability, claim, damage or expense (including the reasonable
cost of investigating and defending any alleged loss, liability, claim, damage
or expenses and reasonable counsel fees incurred in connection therewith)
arising out of the Indemnified Party's performance or non-performance of any
duties under this Agreement provided, however, that nothing herein shall be
deemed to protect any Indemnified Party against any liability to which such
Indemnified Party would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties hereunder or by
reason of reckless disregard of obligations and duties under this Agreement.
(c) No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or director or officer of the Manager or
officer of the Sub-Portfolio Manager (or its general partner), from liability in
violation of Sections 17(h) and (i) of the 1940 Act.
12. NON-EXCLUSIVITY. The Manager's employment of the Sub-Portfolio
Manager is not an exclusive arrangement, and the Manager may from time to time
employ other individuals or entities to furnish it with the services provided
for herein. The Sub-Portfolio Manager may, from time to time hereafter, act as
investment adviser to one or more other investment companies and fiduciary or
other managed accounts, provided that when the purchase or sale of securities of
the same issuer is suitable for the investment objectives of two or more
companies or accounts managed by the Sub-Portfolio Manager which have available
funds for investment, the available securities will be allocated in a manner
believed by the Sub-Portfolio Manager to be equitable to each company or
account.
13. TERM. This Agreement shall become effective at the time the
Trust's initial Registration Statement under the Securities Act of 1933 with
respect to the shares of the Trust is declared effective by the Securities and
Exchange Commission and shall remain in effect for a period of two (2) years,
unless sooner terminated as hereinafter provided. This Agreement shall continue
in effect thereafter for additional periods not exceeding one (1) year so long
as such continuation is approved for each Fund at least annually by the Manager.
14. TERMINATION. This Agreement may be terminated by the Manager on
behalf of the Fund at any time without payment of any penalty, upon sixty (60)
<PAGE>
days' written notice to the Sub-Portfolio Manager, by the Sub-Portfolio Manager
upon sixty (60) days' written notice to the Manager.
15. TERMINATION BY ASSIGNMENT. This Agreement shall terminate
automatically in the event of any transfer or assignment thereof, as defined in
the 1940 Act.
16. TRANSFER, ASSIGNMENT. This Agreement may not be transferred,
assigned, sold or in any manner hypothecated or pledged without the affirmative
vote or written consent of the holders of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, the Manager hereby
consents to the assignment of the Agreement to Oechsle International Advisors,
L.L.C., the successor entity to the Sub-Portfolio Manager, upon the effective
date of the closing of the transactions contemplated under the Partnership
Interests Recapitalization Agreement among the "Oechsle Parties," the Dresdner
Parties," the "H&F Parties," and "Fleet Acquisition Corporation" (all as defined
in said Partnership Interests Recapitalization Agreement).
17. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
18. DEFINITIONS. The terms "majority of the outstanding voting
securities" and "interested persons" shall have the meanings as set forth in the
1940 Act.
19. NOTICE OF DECLARATION OF TRUST. The Sub-Portfolio Manager agrees
that the Manager and the Trust's obligations under this Agreement shall be
limited to the Fund and to its assets, and that the Sub-Portfolio Manager shall
not seek satisfaction of any such obligation from the shareholders of the Fund
nor from any trustee, officer, employee or agent of the Trust or the Fund or the
directors and officers of the Manager.
20. CAPTIONS. 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.
21. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisors Act of 1940 and any
rules and regulations promulgated thereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and attested by their duly authorized officers, all on the day
and year first above written.
WHITE ELK ASSET MANAGEMENT, INC. OECHSLE INTERNATIONAL
ADVISORS, L.P.
By: Oechsle Group, L.P.,
Its General Partner
By: By:
/s/ William D. Witter /s/ L. Sean Roche
------------------------ ----------------------------
Title: President Title: General Partner
------------------------ ---------------------------
By: By:
/s/ Melanie Marshak /s/ Stephen P. Langer
------------------------ ----------------------------
Title: Vice President Title: General Partner
------------------------ --------------------------
<PAGE>
Appendix A
to Sub-Portfolio Investment
Management Agreement
FEE SCHEDULE
Name of Fund Applicable Fee
- ------------------------------------- ----------------------
White Elk Global Equity Fund 0.50%
E X H I B I T 8
- - - - - - - -
THE WHITE ELK FUNDS
-----------------------------------------------------
Custodian Agreement
-----------------------------------------------------
<PAGE>
CUSTODIAN AGREEMENT
-------------------
This Agreement between THE WHITE ELK FUNDS, a business trust
organized and existing under the laws of Massachusetts with its principal place
of business at One Citicorp Center, 153 East 53rd Street, New York, New York
10022 (the "Fund"), and STATE STREET BANK and TRUST COMPANY, a Massachusetts
trust company with its principal place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (the "CUSTODIAN").
W I T N E S S E T H:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends that this Agreement be applicable to eleven
series, WHITE ELK LARGE CAP GROWTH FUND, WHITE ELK MID CAP GROWTH FUND, WHITE
ELK SMALL CAP GROWTH FUND, WHITE ELK LARGE CAP VALUE FUND, WHITE ELK MID CAP
VALUE FUND, WHITE ELK SMALL CAP VALUE FUND, WHITE ELK LEVERAGED ALL CAP FUND,
WHITE ELK GLOBAL EQUITY FUND, WHITE ELK LONG-TERM BOND FUND, WHITE ELK
MEDIUM-TERM BOND FUND, WHITE ELK MONEY MARKET FUND (such series together with
all other series subsequently established by the Fund and made subject to this
Agreement in accordance with Section 18, be referred to herein as the
"PORTFOLIO(S)");
NOW THEREFORE, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets
of the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("DOMESTIC SECURITIES") and securities it desires to be held outside the United
States ("FOREIGN SECURITIES"). The Fund on behalf of the Portfolio(s) agrees to
deliver to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by the Portfolio(s) from time to time,
and the cash consideration received by it for such new or treasury shares of
beneficial interest of the Fund representing interests in the Portfolios
("SHARES") as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in
Section 6 hereof), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians located in the United
States, but only in accordance with an applicable vote by the Board of Trustees
<PAGE>
of the Fund (the "BOARD") on behalf of the applicable Portfolio(s), and provided
that the Custodian shall have no more or less responsibility or liability to the
Fund on account of any actions or omissions of any sub-custodian so employed
than any such sub-custodian has to the Custodian. The Custodian may employ as
sub-custodian for the Fund's foreign securities on behalf of the applicable
Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedules A and B hereto but only in accordance with
the applicable provisions of Sections 3 and 4.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
BY THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and
physically segregate for the account of each Portfolio all non-cash property, to
be held by it in the United States including all domestic securities owned by
such Portfolio, other than (a) securities which are maintained pursuant to
Section 2.8 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury (each, a
"U.S. SECURITIES SYSTEM") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("DIRECT PAPER")
which is deposited and/or maintained in the Direct Paper System of the Custodian
(the "DIRECT PAPER SYSTEM") pursuant to Section 2.9.
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("DIRECT PAPER SYSTEM ACCOUNT") only upon
receipt of Proper Instructions on behalf of the applicable Portfolio, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities System,
in accordance with the provisions of Section 2.8 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Portfolio or into the name of any nominee or nominees of
the Custodian or into the name or nominee name of any agent
<PAGE>
appointed pursuant to Section 2.7 or into the name or nominee
name of any sub-custodian appointed pursuant to Section 1; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; PROVIDED that, in any such case, the new securities are to
be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall have
no responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Portfolio, BUT ONLY against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund on
behalf of the Portfolio, which may be in the form of cash or
obligations issued by the United States government, its agencies
or instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's account
in the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible
for the delivery of securities owned by the Portfolio prior to
the receipt of such collateral;
11) For delivery as security in connection with any borrowing by the
Fund on behalf of the Portfolio requiring a pledge of assets by
the Fund on behalf of the Portfolio, BUT ONLY against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of
1934 (the "EXCHANGE ACT") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation and
of any registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Portfolio of
the Fund;
<PAGE>
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian, and a
Futures Commission Merchant registered under the Commodity
Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any Contract Market,
or any similar organization or organizations, regarding account
deposits in connection with transactions by the Portfolio of the
Fund;
14) Upon receipt of instructions from the transfer agent for the Fund
(the "TRANSFER AGENT") for delivery to such Transfer Agent or to
the holders of Shares in connection with distributions in kind,
as may be described from time to time in the currently effective
prospectus and statement of additional information of the Fund
related to the Portfolio (the "PROSPECTUS"), in satisfaction of
requests by holders of Shares for repurchase or redemption; and
15) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a copy of a resolution of the Board or of
the Executive Committee thereof signed by an officer of the Fund
and certified by the Secretary or an Assistant Secretary thereof
(a "CERTIFIED RESOLUTION"), specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper trust purpose, and naming the person or persons to whom
delivery of such securities shall be made.
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by
the Custodian (other than bearer securities) shall be registered in the name of
the Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be assigned
exclusively to the Portfolio, UNLESS the Fund has authorized in writing the
appointment of a nominee to be used in common with other registered investment
companies having the same investment adviser as the Portfolio, or in the name or
nominee name of any agent appointed pursuant to Section 2.7 or in the name or
nominee name of any sub-custodian appointed pursuant to Section 1. All
securities accepted by the Custodian on behalf of the Portfolio under the terms
of this Agreement shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in "street name",
the Custodian shall utilize its best efforts only to timely collect income due
the Fund on such securities and to notify the Fund on a best efforts basis only
of relevant corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended (the "1940 ACT"). Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as Custodian in
<PAGE>
the Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable; PROVIDED,
however, that every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust company and the
funds to be deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the Board. Such
funds shall be deposited by the Custodian in its capacity as Custodian and shall
be withdrawable by the Custodian only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of
Section 2.3, the Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its agent thereof
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as may
be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper
Instructions on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall pay out
monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Portfolio but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options
on futures contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States or abroad
which is qualified under the 1940 Act to act as a custodian and
has been designated by the Custodian as its agent for this
purpose) registered in the name of the Portfolio or in the name
of a nominee of the Custodian referred to in Section 2.3 hereof
or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.8 hereof; (c) in the case of a
purchase involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.9; (d) in the case of
repurchase agreements entered into between the Fund on behalf of
the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of
the securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase by the Portfolio of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Portfolio or (e)
for transfer to a time deposit account of the Fund in any bank,
<PAGE>
whether domestic or foreign; such transfer may be effected prior
to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as defined
herein;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued as set forth in
Section 5 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of the Fund whether or not such expenses are to be in whole or
part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant to
the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a copy of a Certified Resolution specifying the amount
of such payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper trust
purpose, and naming the person or persons to whom such payment is
to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the United States Securities and Exchange
Commission (the "SEC") under Section 17A of the Exchange Act, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively referred
to herein as "U.S. SECURITIES SYSTEM" in accordance with applicable Federal
Reserve Board and SEC rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented
in an account of the Custodian in the U.S. Securities System (the
"U.S. SECURITIES SYSTEM ACCOUNT") which account shall not include
<PAGE>
any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the account
of the Portfolio upon (i) receipt of advice from the U.S.
Securities System that such securities have been transferred to
the U.S. Securities System Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment and
transfer for the account of the Portfolio. The Custodian shall
transfer securities sold for the account of the Portfolio upon
(i) receipt of advice from the U.S. Securities System that
payment for such securities has been transferred to the U.S.
Securities System Account, and (ii) the making of an entry on the
records of the Custodian to reflect such transfer and payment for
the account of the Portfolio. Copies of all advices from the U.S.
Securities System of transfers of securities for the account of
the Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each transfer to or from
the account of the Portfolio in the form of a written advice or
notice and shall furnish to the Fund on behalf of the Portfolio
copies of daily transaction sheets reflecting each day's
transactions in the U.S. Securities System for the account of the
Portfolio;
4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the U.S. Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Section 15 hereof;
6) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from
use of the U.S. Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents
or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as
it may have against the U.S. Securities System; at the election
of the Fund, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against the U.S.
Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the
extent that the Portfolio has not been made whole for any such
loss or damage.
<PAGE>
SECTION 2.9 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions from the
Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct
Paper System only if such securities are represented in the
Direct Paper System Account, which account shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the account
of the Portfolio upon the making of an entry on the records of
the Custodian to reflect such payment and transfer of securities
to the account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon the making
of an entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, in the form of a written advice or notice, of Direct
Paper on the next business day following such transfer and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the
Direct Paper System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio
with any report on its system of internal accounting control as
the Fund may reasonably request from time to time.
SECTION 2.10 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions on behalf of each applicable Portfolio establish and
maintain a segregated account or accounts for and on behalf of each such
Portfolio, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an account by the Custodian
pursuant to Section 2.8 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing Corporation and of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Portfolio, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio
<PAGE>
with the procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other proper
trust purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a copy of a Certified Resolution setting forth the purpose or
purposes of such segregated account and declaring such purpose(s) to be a proper
trust purpose.
SECTION 2.11 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with receipt of income or other payments
with respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
SECTION 2.12 PROXIES. The Custodian shall, with respect to the
domestic securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are registered otherwise
than in the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
SECTION 2.13 COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject
to the provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations of
rights in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect to tender
or exchange offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the securities
whose tender or exchange is sought and from the party (or his agents) making the
tender or exchange offer. If the Portfolio desires to take action with respect
to any tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
SECTION 3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER OF THE PORTFOLIOS
SECTION 3.1 DEFINITIONS. The following capitalized terms shall have
the indicated meanings:
"COUNTRY RISK" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment; economic and financial infrastructure
(including any Mandatory Securities Depositories operating in the country);
prevailing or developing custody and settlement practices; and laws and
<PAGE>
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country.
"ELIGIBLE FOREIGN CUSTODIAN" has the meaning set forth in section (a)(l) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the
requirements of a custodian under Section 17(f) of the 1940 Act, except that the
term does not include Mandatory Securities Depositories.
"FOREIGN ASSETS" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"FOREIGN CUSTODY MANAGER" has the meaning set forth in section (a)(2) of Rule
17f-5.
"MANDATORY SECURITIES DEPOSITORY" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund, on the Portfolios' behalf, determines to place Foreign Assets in a country
outside the United States (i) because required by law or regulation; (ii)
because securities cannot be withdrawn from such foreign securities depository
or clearing agency; or (iii) because maintaining or effecting trades in
securities outside the foreign securities depository or clearing agency is not
consistent with prevailing or developing custodial or market practices.
SECTION 3.2 DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
The Fund, by resolution adopted by the Board, hereby delegates to the Custodian
with respect to the Portfolios, subject to Section (b) of Rule 17f-5, the
responsibilities set forth in this Section 3 with respect to Foreign Assets of
the Portfolios held outside the United States, and the Custodian hereby accepts
such delegation, as Foreign Custody Manager with respect to the Portfolios.
SECTION 3.3 COUNTRIES COVERED. The Foreign Custody Manager shall be
responsible for performing the delegated responsibilities defined below only
with respect to the countries and custody arrangements for each such country
listed on Schedule A to this Agreement, which list of countries may be amended
from time to time by the Fund with the Agreement of the Foreign Custody Manager.
The Foreign Custody Manager shall list on Schedule A the Eligible Foreign
Custodians selected by the Foreign Custody Manager to maintain the assets of the
Portfolios, which list of Eligible Foreign Custodians may be amended from time
to time in the sole discretion of the Foreign Custody Manager. Mandatory
Securities Depositories are listed on Schedule B to this Contract, which
Schedule B may be amended from time to time by the Foreign Custody Manager. The
Foreign Custody Manager will provide amended versions of Schedules A and B in
accordance with Section 3.7 hereof.
Upon the receipt by the Foreign Custody Manager of Proper
Instructions to open an account or to place or maintain Foreign Assets in a
<PAGE>
country listed on Schedule A, and the fulfillment by the Fund on behalf of the
Portfolios of the applicable account opening requirements for such country, the
Foreign Custody Manager shall be deemed to have been delegated by the Board on
behalf of the Portfolios responsibility as Foreign Custody Manager with respect
to that country and to have accepted such delegation. Following the receipt of
Proper Instructions directing the Foreign Custody Manager to close the account
of a Portfolio with the Eligible Foreign Custodian selected by the Foreign
Custody Manager in a designated country, the delegation by the Board on behalf
of the Portfolios to the Custodian as Foreign Custody Manager for that country
shall be deemed to have been withdrawn and the Custodian shall immediately cease
to be the Foreign Custody Manager of the Portfolios with respect to that
country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Thirty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect to
the country as to which the Custodian's acceptance of delegation is withdrawn.
SECTION 3.4 SCOPE OF DELEGATED RESPONSIBILITIES.
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
provisions of this Section 3, the Portfolios' Foreign Custody Manager may place
and maintain the Foreign Assets in the care of the Eligible Foreign Custodian
selected by the Foreign Custody Manager in each country listed on Schedule A, as
amended from time to time. In performing its delegated responsibilities as
Foreign Custody Manager to place or maintain Foreign Assets with an Eligible
Foreign Custodian, the Foreign Custody Manager shall determine that the Foreign
Assets will be subject to reasonable care, based on the standards applicable to
custodians in the country in which the Foreign Assets will be held by that
Eligible Foreign Custodian, after considering all factors relevant to the
safekeeping of such assets, including, without limitation the factors specified
in Rule 17f-5(c)(1).
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign
Custody Manager shall determine that the contract (or the rules or established
practices or procedures in the case of an Eligible Foreign Custodian that is a
foreign securities depository or clearing agency) governing the foreign custody
arrangements with each Eligible Foreign Custodian selected by the Foreign
Custody Manager will satisfy the requirements of Rule 1 7f-5(c)(2).
3.4.3. MONITORING. In each case in which the Foreign Custody Manager
maintains Foreign Assets with an Eligible Foreign Custodian selected by the
Foreign Custody Manager, the Foreign Custody Manager shall establish a system to
monitor (i) the appropriateness of maintaining the Foreign Assets with such
Eligible Foreign Custodian and (ii) the contract governing the custody
arrangements established by the Foreign Custody Manager with the Eligible
Foreign Custodian (or the rules or established practices and procedures in the
case of an Eligible Foreign Custodian selected by the Foreign Custody Manager
which is a foreign securities depository or clearing agency that is not a
Mandatory Securities Depository). In the event the Foreign Custody Manager
determines that the custody arrangements with an Eligible Foreign Custodian it
<PAGE>
has selected are no longer appropriate, the Foreign Custody Manager shall notify
the Board in accordance with Section 3.7 hereunder.
SECTION 3.5 GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For
purposes of this Section 3, the Board shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of the Portfolios. The Fund, on behalf of the Portfolios, and
the Board shall be deemed to be monitoring on a continuing basis such Country
Risk to the extent that the Board considers necessary or appropriate. The Fund
and the Custodian each expressly acknowledge that the Foreign Custody Manager
shall not be delegated any responsibilities under this Section 3 with respect to
Mandatory Securities Depositories.
SECTION 3.6 STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF THE
PORTFOLIOS. In performing the responsibilities delegated to it, the Foreign
Custody Manager agrees to exercise reasonable care, prudence and diligence such
as a person having responsibility for the safekeeping of assets of management
investment companies registered under the 1940 Act would exercise.
SECTION 3.7 REPORTING REQUIREMENTS. The Foreign Custody Manager shall
report the withdrawal of the Foreign Assets from an Eligible Foreign Custodian
and the placement of such Foreign Assets with another Eligible Foreign Custodian
by providing to the Board amended Schedules A or B at the end of the calendar
quarter in which an amendment to either Schedule has occurred. The Foreign
Custody Manager shall make written reports notifying the Board of any other
material change in the foreign custody arrangements of the Portfolios described
in this Section 3 after the occurrence of the material change.
SECTION 3.8 REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign
Custody Manager represents to the Fund that it is a U.S. Bank as defined in
section (a)(7) of Rule 17f-5. The Fund represents to the Custodian that the
Board has determined that it is reasonable for the Board to rely on the
Custodian to perform the responsibilities delegated pursuant to this Agreement
to the Custodian as the Foreign Custody Manager of the Portfolios.
SECTION 3.9 EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS
FOREIGN CUSTODY MANAGER. The Board's delegation to the Custodian as Foreign
Custody Manager of the Portfolios shall be effective as of the date of execution
of this Agreement and shall remain in effect until terminated at any time,
without penalty, by written notice from the terminating party to the
non-terminating party. Termination will become effective thirty (30) days after
receipt by the non-terminating party of such notice. The provisions of Section
3.3 hereof shall govern the delegation to and termination of the Custodian as
Foreign Custody Manager of the Portfolios with respect to designated countries.
<PAGE>
SECTION 4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE
PORTFOLIOS HELD OUTSIDE OF THE UNITED STATES
SECTION 4.1 DEFINITIONS. Capitalized terms in this Section 4 shall
have the following meanings:
"FOREIGN SECURITIES SYSTEM" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
"FOREIGN SUB-CUSTODIAN" means a foreign banking institution serving as an
Eligible Foreign Custodian.
SECTION 4.2 HOLDING SECURITIES. The Custodian shall identify on its
books as belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. The Custodian may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to the Custodian for
the benefit of its customers, PROVIDED HOWEVER, that (i) the records of the
Custodian with respect to foreign securities of the Portfolios which are
maintained in such account shall identify those securities as belonging to the
Portfolios and (ii), to the extent permitted and customary in the market in
which the account is maintained, the Custodian shall require that securities so
held by the Foreign Sub-Custodian be held separately from any assets of such
Foreign Sub-Custodian or of other customers of such Foreign Sub-Custodian.
SECTION 4.3 FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country only through
arrangements implemented by the Foreign Sub-Custodian in such country pursuant
to the terms of this Agreement.
SECTION 4.4 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
4.4.1. DELIVERY OF FOREIGN SECURITIES. The Custodian or a Foreign
Sub-Custodian shall release and deliver foreign securities of the Portfolios
held by such Foreign Sub-Custodian, or in a Foreign Securities System account,
only upon receipt of Proper Instructions, which may be continuing instructions
when deemed appropriate by the parties, and only in the following cases:
(i) upon the sale of such foreign securities for the Portfolios in
accordance with commercially reasonable market practice in the
country where such foreign securities are held or traded,
including, without limitation: (A) delivery against
expectation of receiving later payment; or (B) in the case of
a sale effected through a Foreign Securities System in
accordance with the rules governing the operation of the
Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolios;
<PAGE>
(iv) to the issuer thereof or its agent when such foreign
securities are called, redeemed, retired or otherwise become
payable;
(v) to the issuer thereof, or its agent, for transfer into the
name of the Custodian (or the name of the respective Foreign
Sub-Custodian or of any nominee of the Custodian or such
Foreign Sub-Custodian) or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market
custom; PROVIDED that in any such case the Foreign
Sub-Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from
the Foreign Sub-Custodian's own negligence or willful
misconduct;
(vii) for exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
(viii) in the case of warrants, rights or similar foreign securities,
the surrender thereof in the exercise of such warrants, rights
or similar securities or the surrender of interim receipts or
temporary securities for definitive securities;
(ix) for delivery as security in connection with any borrowings by
the Portfolios requiring a pledge of assets by the Portfolios;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a copy of a Certified
Resolution specifying the foreign securities to be delivered,
setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom delivery of such
securities shall be made.
4.4.2. PAYMENT OF PORTFOLIO MONIES. Upon receipt of Proper
Instructions, which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out, or direct the respective Foreign
Sub-Custodian or the respective Foreign Securities System to pay out, monies of
a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio,
unless otherwise directed by Proper Instructions, by (A)
<PAGE>
delivering money to the seller thereof or to a dealer therefor
(or an agent for such seller or dealer) against expectation of
receiving later delivery of such foreign securities; or (B) in
the case of a purchase effected through a Foreign Securities
System, in accordance with the rules governing the operation
of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees
under this Agreement, legal fees, accounting fees, and other
operating expenses;
(iv) for the purchase or sale of foreign exchange or foreign
exchange contracts for the Portfolio, including transactions
executed with or through the Custodian or its Foreign
Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a copy of a Certified
Resolution specifying the amount of such payment, setting
forth the purpose for which such payment is to be made,
declaring such purpose to be a proper trust purpose, and
naming the person or persons to whom such payment is to be
made.
4.4.3. MARKET CONDITIONS. Notwithstanding any provision of this
Agreement to the contrary, settlement and payment for Foreign Assets received
for the account of the Portfolios and delivery of Foreign Assets maintained for
the account of the Portfolios may be effected in accordance with the customary
established securities trading or processing practices and procedures in the
country or market in which the transaction occurs, including, without
limitation, delivering Foreign Assets to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) with the expectation of
receiving later payment for such Foreign Assets from such purchaser or dealer.
The Custodian shall provide to the Board the information with respect
to custody and settlement practices in countries in which the Custodian employs
a Foreign Sub-Custodian, including without limitation information relating to
Foreign Securities Systems, described on Schedule C hereto at the time or times
set forth on such Schedule. The Custodian may revise Schedule C from time to
time, provided that no such revision shall result in the Board being provided
with substantively less information than had been previously provided hereunder.
SECTION 4.5 REGISTRATION OF FOREIGN SECURITIES. The foreign
securities maintained in the custody of a Foreign Custodian (other than bearer
<PAGE>
securities) shall be registered in the name of the applicable Portfolio or in
the name of the Custodian or in the name of any Foreign Sub-Custodian or in the
name of any nominee of the foregoing, and the Fund on behalf of such Portfolio
agrees to hold any such nominee harmless from any liability as a holder of
record of such foreign securities. The Custodian or a Foreign Sub-Custodian
shall not be obligated to accept securities on behalf of a Portfolio under the
terms of this Agreement unless the form of such securities and the manner in
which they are delivered are in accordance with reasonable market practice.
SECTION 4.6 BANK ACCOUNTS. The Custodian shall identify on its books
as belonging to the Fund cash (including cash denominated in foreign currencies)
deposited with the Custodian. Where the Custodian is unable to maintain, or
market practice does not facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts opened and maintained outside the
United States on behalf of a Portfolio with a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Agreement to hold cash received by or from
or for the account of the Portfolio.
SECTION 4.7 COLLECTION OF INCOME. The Custodian shall use reasonable
commercial efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, the Fund
and the Custodian shall consult as to such measures and as to the compensation
and expenses of the Custodian relating to such measures.
SECTION 4.8 SHAREHOLDER RIGHTS. With respect to the foreign
securities held pursuant to this Agreement, the Custodian will use reasonable
commercial efforts to facilitate the exercise of voting and other shareholder
rights, subject always to the laws, regulations and practical constraints that
may exist in the country where such securities are issued. The Fund acknowledges
that local conditions, including lack of regulation, onerous procedural
obligations, lack of notice and other factors may have the effect of severely
limiting the ability of the Fund to exercise shareholder rights.
SECTION 4.9 COMMUNICATIONS RELATING TO FOREIGN SECURITIES. The
Custodian shall transmit promptly to the Fund written information (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith) received by the Custodian via the
Foreign Sub-Custodians from issuers of the foreign securities being held for the
account of the Portfolios. With respect to tender or exchange offers, the
Custodian shall transmit promptly to the Fund written information so received by
the Custodian from issuers of the foreign securities whose tender or exchange is
sought or from the party (or its agents) making the tender or exchange offer.
The Custodian shall not be liable for any untimely exercise of any tender,
exchange or other right or power in connection with foreign securities or other
property of the Portfolios at any time held by it unless (i) the Custodian or
the respective Foreign Sub-Custodian is in actual possession of such foreign
securities or property and (ii) the Custodian receives Proper Instructions with
regard to the exercise of any such right or power, and both (i) and (ii) occur
<PAGE>
at least three business days prior to the date on which the Custodian is to take
action to exercise such right or power.
SECTION 4.10 LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN
SECURITIES SYSTEMS. Each agreement pursuant to which the Custodian employs as a
Foreign Sub-Custodian shall, to the extent possible, require the Foreign
Sub-Custodian to exercise reasonable care in the performance of its duties and,
to the extent possible, to indemnify, and hold harmless, the Custodian from and
against any loss, damage, cost, expense, liability or claim arising out of or in
connection with the Foreign Sub-Custodian's performance of such obligations. At
the Fund's election, the Portfolios shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a Foreign
Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolios have not been made
whole for any such loss, damage, cost, expense, liability or claim.
SECTION 4.11 TAX LAW. The Custodian shall have no responsibility or
liability for any obligations now or hereafter imposed on the Fund, the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of the
United States or of any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations imposed on
the Fund with respect to the Portfolios or the Custodian as custodian of the
Portfolios by the tax law of countries other than those mentioned in the above
sentence, including responsibility for withholding and other taxes, assessments
or other governmental charges, certifications and governmental reporting. The
sole responsibility of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for exemption or
refund under the tax law of countries for which the Fund has provided such
information.
SECTION 4.12 CONFLICT. If the Custodian is delegated the
responsibilities of Foreign Custody Manager pursuant to the terms of Section 3
hereof, in the event of any conflict between the provisions of Sections 3 and 4
hereof, the provisions of Section 3 shall prevail.
SECTION 5. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES
The Custodian shall receive from the distributor for the Shares or
from the Transfer Agent and deposit into the account of the appropriate
Portfolio such payments as are received for Shares thereof issued or sold from
time to time by the Fund. The Custodian will provide timely notification to the
Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by
it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make funds
available for payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In connection with
the redemption or repurchase of Shares, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares, the Custodian shall honor checks drawn on the Custodian
by a holder of Shares, which checks have been furnished by the Fund to the
<PAGE>
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time between
the Fund and the Custodian.
SECTION 6. PROPER INSTRUCTIONS
Proper Instructions as used throughout this Agreement means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved, including a specific statement of
the purpose for which such action is requested. Oral instructions will be
considered Proper Instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with respect to the
transaction involved. The Fund shall cause all oral instructions to be confirmed
in writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board accompanied by a detailed
description of procedures approved by the Board, Proper Instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board and the Custodian are satisfied that such
procedures afford adequate safeguards for the Portfolios' assets. For purposes
of this Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three - party agreement which requires a segregated
asset account in accordance with Section 2.10.
SECTION 7. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY
The Custodian may in its discretion, without express authority from
the Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Agreement, PROVIDED that all such payments shall be
accounted for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board.
SECTION 8. EVIDENCE OF AUTHORITY
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a copy of a Certified Resolution as
conclusive evidence (a) of the authority of any person to act in accordance with
such resolution or (b) of any determination or of any action by the Board as
described in such resolution, and such resolution may be considered as in full
<PAGE>
force and effect until receipt by the Custodian of written notice to the
contrary.
SECTION 9. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND
CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information
to the entity or entities appointed by the Board to keep the books of account of
each Portfolio and/or compute the net asset value per Share of the outstanding
Shares or, if directed in writing to do so by the Fund on behalf of the
Portfolio, shall itself keep such books of account and/or compute such net asset
value per Share. If so directed, the Custodian shall also calculate daily the
net income of the Portfolio as described in the Prospectus and shall advise the
Fund and the Transfer Agent daily of the total amounts of such net income and,
if instructed in writing by an officer of the Fund to do so, shall advise the
Transfer Agent periodically of the division of such net income among its various
components. The calculations of the net asset value per Share and the daily
income of each Portfolio shall be made at the time or times described from time
to time in the Prospectus.
SECTION 10. RECORDS
The Custodian shall with respect to each Portfolio create and
maintain all records relating to its activities and obligations under this
Agreement in such manner as will meet the obligations of the Fund under the 1940
Act, with particular attention to Section 31 thereof and Rules 31a-l and 3la-2
thereunder. All such records shall be the property of the Fund and shall at all
times during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and employees and
agents of the SEC. The Custodian shall, at the Fund's request, supply the Fund
with a tabulation of securities owned by each Portfolio and held by the
Custodian and shall, when requested to do so by the Fund and for such
compensation as shall be agreed upon between the Fund and the Custodian, include
certificate numbers in such tabulations.
SECTION 11. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund on behalf
of each applicable Portfolio may from time to time request, to obtain from year
to year favorable opinions from the Fund's independent accountants with respect
to its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other annual reports to the SEC and with respect to
any other requirements thereof.
SECTION 12. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a U.S. Securities System or a Foreign Securities System, relating to the
<PAGE>
services provided by the Custodian under this Agreement; such reports, shall be
of sufficient scope and in sufficient detail, as may reasonably be required by
the Fund to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.
SECTION 13. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
SECTION 14. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Agreement and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Agreement,
but shall be kept indemnified by and shall be without liability to the Fund for
any action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice. The Custodian shall be
without liability to the Fund and the Portfolios for any loss, liability, claim
or expense resulting from or caused by anything which is (A) part of Country
Risk (as defined in Section 3 hereof), including without limitation
nationalization, expropriation, currency restrictions, or acts of war,
revolution, riots or terrorism, or (B) part of the "prevailing country risk" of
the Portfolios, as such term is used in SEC Release Nos. IC-22658; IS-1080 (May
12, 1997) or as such term or other similar terms are now or in the future
interpreted by the SEC or by the staff of the Division of Investment Management
thereof.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, work
stoppages, natural disasters, or other similar events or acts; (ii) errors by
the Fund or the Investment Advisor in their instructions to the Custodian
provided such instructions have been in accordance with this Agreement; (iii)
the insolvency of or acts or omissions by a Securities System; (iv) any delay or
failure of any broker, agent or intermediary, central bank or other commercially
prevalent payment or clearing system to deliver to the Custodian's sub-custodian
<PAGE>
or agent securities purchased or in the remittance or payment made in connection
with securities sold; (v) any delay or failure of any company, corporation, or
other body in charge of registering or transferring securities in the name of
the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or
any consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally in this Agreement.
If the Fund on behalf of a Portfolio requires the Custodian to take
any action with respect to securities, which action involves the payment of
money or which action may, in the opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund or the Portfolio being liable for
the payment of money or incurring liability of some other form, the Fund on
behalf of the Portfolio, as a prerequisite to requiring the Custodian to take
such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Agreement, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Portfolio shall
be security therefor and should the Fund fail to repay the Custodian promptly,
the Custodian shall be entitled to utilize available cash and to dispose of such
Portfolio's assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
SECTION 15. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than sixty (60) days after the date of such delivery or mailing; PROVIDED,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.8 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board has approved the initial use
of a particular Securities System by such Portfolio, as required by Rule 17f-4
under the 1940 Act and that the Custodian shall not with respect to a Portfolio
act under Section 2.9 hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board has approved the
<PAGE>
initial use of the Direct Paper System by such Portfolio; PROVIDED FURTHER,
however, that the Fund shall not amend or terminate this Agreement in
contravention of any applicable federal or state regulations, or any provision
of the Fund's Trust Agreement or Declaration of Trust, and further provided,
that the Fund on behalf of one or more of the Portfolios may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Agreement in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Agreement, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
SECTION 16. SUCCESSOR CUSTODIAN
If a successor custodian for one or more Portfolios shall be
appointed by the Board, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, duly endorsed and in the
form for transfer, all securities of each applicable Portfolio then held by it
hereunder and shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a Certified Resolution, deliver at the
office of the Custodian and transfer such securities, funds and other properties
in accordance with such resolution.
In the event that no written order designating a successor custodian
or Certified Resolution shall have been delivered to the Custodian on or before
the date when such termination shall become effective, then the Custodian shall
have the right to deliver to a bank or trust company, which is a "bank" as
defined in the 1940 Act, doing business in Boston, Massachusetts, or New York,
New York, of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$25,000,000, all securities, funds and other properties held by the Custodian on
behalf of each applicable Portfolio and all instruments held by the Custodian
relative thereto and all other property held by it under this Agreement on
behalf of each applicable Portfolio, and to transfer to an account of such
successor custodian all of the securities of each such Portfolio held in any
Securities System. Thereafter, such bank or trust company shall be the successor
of the Custodian under this Agreement.
In the event that securities, funds and other properties remain in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the Certified Resolution to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Agreement relating to the duties
and obligations of the Custodian shall remain in full force and effect.
<PAGE>
SECTION 17. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Agreement, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time agree on
such provisions interpretive of or in addition to the provisions of this
Agreement as may in their joint opinion be consistent with the general tenor of
this Agreement. Any such interpretive or additional provisions shall be in a
writing signed by both parties and shall be annexed hereto, PROVIDED that no
such interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Fund's Declaration of
Trust. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Agreement.
SECTION 18. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares
in addition to WHITE ELK LARGE CAP GROWTH FUND, WHITE ELK MID CAP GROWTH FUND,
WHITE ELK SMALL CAP GROWTH FUND, WHITE ELK LARGE CAP VALUE FUND, WHITE ELK MID
CAP VALUE FUND, WHITE ELK SMALL CAP VALUE FUND, WHITE ELK LEVERAGED ALL CAP
FUND, WHITE ELK GLOBAL EQUITY FUND, WHITE ELK LONG-TERM BOND FUND, WHITE ELK
MEDIUM-TERM BOND FUND, WHITE ELK MONEY MARKET FUND with respect to which it
desires to have the Custodian render services as custodian under the terms
hereof, it shall so notify the Custodian in writing, and if the Custodian agrees
in writing to provide such services, such series of Shares shall become a
Portfolio hereunder.
SECTION 19. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
SECTION 20. PRIOR AGREEMENTS
This AGREEMENT supersedes and terminates, as of the date hereof, all
prior Agreements between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
SECTION 21. NOTICES
Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as set forth
herein during normal business hours or delivered prepaid registered mail or by
telex, cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
<PAGE>
To the Fund: THE WHITE ELK FUNDS
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attention: Melanie Marshak
Telephone: (212) 753-7878
Telecopy: (212) 486-7697
To the Custodian: STATE STREET BANK AND TRUST COMPANY
Allan Forbes Building
150 Newport Avenue
North Quincy, Massachusetts 02171
Attention: Frank J. Sidoti, Jr.
Telephone: 617-985-5262
Telecopy: 617-985-6130
Such notice, instruction or other instrument shall be deemed to have
been served in the case of a registered letter at the expiration of five
business days after posting, in the case of cable twenty-four hours after
dispatch and, in the case of telex, immediately on dispatch and if delivered
outside normal business hours it shall be deemed to have been received at the
next time after delivery when normal business hours commence and in the case of
cable, telex or telecopy on the business day after the receipt thereof. Evidence
that the notice was property addressed, stamped and put into the post shall be
conclusive evidence of posting.
SECTION 22. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
SECTION 23. SHAREHOLDER COMMUNICATORS ELECTION
SEC Rule 14b-2 requires banks which hold securities for the account
of customers to respond to requests by issuers of securities for the names,
addresses and holdings of beneficial owners of securities of that issuer held by
the bank unless the beneficial owner has expressly objected to disclosure of
this information. In order to comply with the rule, the Custodian needs the Fund
to indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
<PAGE>
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [X] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of February 12, 1998.
THE WHITE ELK FUNDS FUND SIGNATURE ATTESTED TO BY:
By: /s/ WILLIAM D. WITTER By: /s/ MELANIE MARSHAK
------------------------------- -------------------------------
Name: WILLIAM D. WITTER Name: MELANIE MARSHAK
----------------------------- -----------------------------
Title: PRESIDENT Title: *[SECRETARY/ASS'T SECRETARY]
---------------------------- ----------------------------
STATE STREET BANK AND TRUST SIGNATURE ATTESTED TO BY:
COMPANY
By: /s/ RONALD E. LOGUE By:
------------------------------- -------------------------------
Name: RONALD E. LOGUE Name:
----------------------------- -----------------------------
Title: EXECUTIVE VICE PRESIDENT Title:
---------------------------- ----------------------------
<PAGE>
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Argentina Citibank, N.A. --
Australia Westpac Banking Corporation --
Austria Erste Bank der oesterreichischen --
Sparkasen AG
Bahrain The British Bank of the Middle --
East (as delegate of the Hongkong
and Shanghai Banking Corporation
Limited)
Bangladesh Standard Chartered Bank --
Belgium Generale Bank --
Bermuda The Bank of Bermuda Limited --
Bolivia Banco Boliviano Americano --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada Canada Trustco Mortgage Company --
Chile Citibank, N.A. --
People's The Hongkong and Shanghai --
Republic of Banking Corporation Limited,
China Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
Croatia Privredana banka Zagreb d.d --
Cyprus Barclays Bank PLC --
Cyprus Offshore Banking Unit
</TABLE>
<PAGE>
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Czech Republic Ceskoslovenska Obchodni --
Banka A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt National Bank of Egypt --
Estonia Hansabank --
Finland Merita Bank Ltd. --
France Banque Paribas --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A Bank of Greece
Hong Kong Standard Chartered Bank --
Hungary Citibank Budapest Rt. --
India Deutsche Bank AG; --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Banque Paribas --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Trust and Merchant Bank --
</TABLE>
<PAGE>
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Japan The Daiwa Bank, Limited; Japan Securities Depository
The Fuji Bank, Limited; Center;
The Sumitomo Trust
& Banking Co., Ltd.
Jordan The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of SEOULBANK --
Korea
The Hongkong and Shanghai Banking
Corporation Limited
Latvia Hansabank --
Lebanon The British Bank of the Middle East Custodian and Clearing Center
(as delegate of the Hongkong and of Financial Instruments
Shanghai Banking Corporation Limited) for Lebanon (MIDCLEAR) S.A.L.;
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse
</TABLE>
<PAGE>
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Oman The British Bank of the Middle East --
(as delegate of the Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank AG --
Peru Citibank, N.A. --
Philippines Standard Chartered Bank --
Poland Citibank Poland S.A. --
Portugal Banco Comercial Portugues --
Romania ING Bank, N.V. --
Russia Credit Suisse First Boston, Zurich --
via Credit Suisse First Boston
Limited, Moscow
Singapore The Development Bank --
of Singapore Ltd.
Slovak Republic Ceskoslovenska Obchodna --
Banka A.S.
Slovenia Banka Creditanstalt d.d. --
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Barclays Bank of Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland Union Bank of Switzerland --
Taiwan - R.O.C. Central Trust of China --
</TABLE>
<PAGE>
SCHEDULE A
STATE STREET
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN NON-MANDATORY DEPOSITORIES
<S> <C> <C>
Thailand Standard Chartered Bank --
Trinidad & Tobago Republic Bank Ltd. --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
United Kingdom State Street Bank and Trust --
Uruguay Citibank, N.A. --
Venezuela Citibank, N.A. --
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)
Cedel (Cedel Bank, societe anonyme)
INTERSETTLE (for EASDAQ Securities)
</TABLE>
<PAGE>
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
<TABLE>
<CAPTION>
COUNTRY MANDATORY DEPOSITORIES
<S> <C>
Argentina -Caja de Valores S.A.;
-CRYL
Australia -Austraclear Limited;
-Reserve Bank Information and
Transfer System
Austria -Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium -Caisse Interprofessionnelle de Depots et
de Virements de Titres S.A.;
-Banque Nationale de Belgique
Brazil -Camara de Liquidacao de Sao Paulo, (Calispa);
-Bolsa de Valores de Rio de Janeiro
-All SSB CLIENTS PRESENTLY USE CALISPA
-Central de Custodia e de Liquidacao Financeira
de Titulos
-Banco Central do Brasil, Systema Especial de
Liquidacao e Custodia
Bulgaria -Central Depository AD
Canada -The Canadian Depository
for Securities Limited; West Canada
Depository Trust Company [DEPOSITORIES
LINKED]
People's Republic -Shanghai Securities Central Clearing and
Registration Corporation;
of China
-Shenzhen Securities Central Clearing Co., Ltd.
Croatia Ministry of Finance
Czech Republic -Stredisko cennych papiru(Degree)
-Czech National Bank
Denmark -Vaerdipapircentralen - The Danish
Securities Center
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
</TABLE>
<PAGE>
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Egypt -Misr Company for Clearing, Settlement,
and Central Depository
Estonia -Eesti Vaartpaberite Keskdepositooruim
Finland -The Finnish Central Securities
Depository
France -Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres;
-Banque de France,
Saturne System
Germany -The Deutscher Kassenverein AG
Greece -The Central Securities Depository
(Apothetirion Titlon A.E.);
Hong Kong -The Central Clearing and
Settlement System;
-The Central Money Markets Unit
Hungary -The Central Depository and Clearing
House (Budapest) Ltd.
[MANDATORY FOR GOV'T BONDS ONLY;
SSB DOES NOT USE FOR OTHER SECURITIES]
India -The National Securities Depository Limited
Indonesia -Bank of Indonesia
Ireland -The Central Bank of Ireland,
The Gilt Settlement Office
Israel -The Clearing House of the
Tel Aviv Stock Exchange;
-Bank of Israel
Italy -Monte Titoli S.p.A.;
-Banca d'Italia
Japan -Bank of Japan Net System
Republic of Korea -Korea Securities Depository Corporation
Latvia -The Latvian Central Depository
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
<PAGE>
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Lebanon -The Central Bank of Lebanon
Lithuania -The Central Securities Depository of Lithuania
Malaysia -Malaysian Central Depository Sdn. Bhd.;
-Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
Systems
Mauritius -The Central Depository & Settlement
Co. Ltd.
Mexico -S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito de Valores);
The Netherlands -Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. ("NECIGEF");
New Zealand -New Zealand Central Securities
Depository Limited
Norway -Verdipapirsentralen - The Norwegian
Registry of Securities
Oman -Muscat Securities Market
Peru -Caja de Valores y Liquidaciones
(CAVALI, S.A.)
Philippines -The Philippines Central Depository Inc.
-The Book-Entry-System of Bangko
Sentral ng Pilipinas;
-The Registry of Scripless Securities of
the Bureau of the Treasury
Poland -The National Depository of Securities
(Krajowy Depozyt Papierow Wartos'ciowych);
-National Bank of Poland
Portugal -Central de Valores Mobiliarios
Romania -National Securities Clearing, Settlement
and Depository Co.;
-Bucharest Stock Exchange;
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
<PAGE>
SCHEDULE B
STATE STREET
GLOBAL CUSTODY NETWORK
MANDATORY* DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
-National Bank of Romania
Singapore -The Central Depository (Pvt.)
Limited;
-Monetary Authority of Singapore
Slovak Republic -Stredisko Cennych Papierov;
-National Bank of Slovakia
Slovenia -Klirinsko Depotna Bruzba
South Africa -The Central Depository Limited
Spain -Servicio de Compensacion y
Liquidacion de Valores, S.A.;
-Banco de Espana,
Anotaciones en Cuenta
Sri Lanka -Central Depository System
(Pvt) Limited
Sweden -Vardepapperscentralen VPC AB -
The Swedish Central Securities Depository
Switzerland -Schweizerische Effekten - Giro AG;
Taiwan - R.O.C. -The Taiwan Securities Central
Depository Company, Ltd.
Thailand -Thailand Securities Depository
Company Limited
Tunisia -STICODEVAM;
-Central Bank of Tunisia;
-Tunisian Treasury
Turkey -Takas ve Saklama Bankasi A.S.;
-Central Bank of Turkey
United Kingdom -The Bank of England,
The Central Gilts Office;
The Central Moneymarkets Office
Uruguay -Central Bank of Uruguay
Zambia -Lusaka Central Depository
* Mandatory depositories include entities for which use is mandatory as a matter
of law or effectively mandatory as a matter of market practice.
<PAGE>
SCHEDULE C
MARKET INFORMATION
<TABLE>
<CAPTION>
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
(FREQUENCY)
<S> <C>
THE GUIDE TO CUSTODY IN WORLD MARKETS
(annually): An overview of safekeeping and
settlement practices and procedures in
each market in which State Street Bank
and Trust Company offers custodial
services.
THE DEPOSITORY REVIEW (annually): Information relating to the operating
history and structure of depositories
located in the markets in which State
Street Bank and Trust Company offers
custodial services, including
transnational depositories.
legal opinions (annually): With respect to each market in which
State Street Bank and Trust Company
offers custodial services, opinions
relating to whether local law restricts
(i) access of a fund's independent
public accountants to books and records
of a Foreign Sub-Custodian or Foreign
Securities System, (ii) the Fund's
ability to recover in the event of
bankruptcy or insolvency of a Foreign
Sub-Custodian or Foreign Securities
System, (iii) the Fund's ability to
recover in the event of a loss by a
Foreign Sub-Custodian or Foreign
Securities System, and (iv) the ability
of a foreign investor to convert cash
and cash equivalents to U.S. dollars.
Network Bulletins (weekly): Developments of interest to investors in
the markets in which State Street Bank
and Trust Company offers custodial
services.
Foreign Custody Advisories (as
necessary): With respect to markets in which State
Street Bank and Trust Company offers
custodial services which exhibit special
custody risks, developments which may
impact State Street's ability to deliver
expected levels of service.
</TABLE>
<PAGE>
DATA ACCESS SERVICE ADDENDUM TO CUSTODIAN AGREEMENT
---------------------------------------------------
Addendum to the Custodian Agreement between The White Elk Funds (the
"Customer") and State Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain
assets of the Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") dated as of February 12, 1998;
WHEREAS, State Street has developed and utilizes proprietary
accounting and other systems, including State Street's proprietary Multicurrency
HORIZONSM Accounting System, in its role as custodian of the Customer, and
maintains certain Customer-related data ("Customer Data") in databases under the
control and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to the Customer certain Data
Access Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this Addendum.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
parties agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
(a) SYSTEM. Subject to the terms and conditions of this Addendum,
State Street hereby agrees to provide the Customer with access to State Street's
Multicurrency HORIZONSM Accounting System and the other information systems
(collectively, the "System") as described in Attachment A, on a remote basis for
the purpose of obtaining reports and information, solely on computer hardware,
system software and telecommunication links as listed in Attachment B (the
"Designated Configuration") of the Customer, or certain third parties approved
by State Street that serve as investment advisors or investment managers of the
Customer (the "Investment Advisor"), and solely with respect to the Customer or
on any designated substitute or back-up equipment configuration with State
Street's written consent, such consent not to be unreasonably withheld.
(b) DATA ACCESS SERVICES. State Street agrees to make available to
the Customer the Data Access Services subject to the terms and conditions of
this Addendum and data access operating standards and procedures as may be
issued by State Street from time to time. The ability of the Customer to
originate electronic instructions to State Street on behalf of the Customer in
order to (i) effect the transfer or movement of cash or securities held under
custody by State Street or (ii) transmit accounting or other information (such
transactions are referred to herein as "Client Originated Electronic Financial
<PAGE>
Instructions"), and (iii) access data for the purpose of reporting and analysis,
shall be deemed to be Data Access Services for purposes of this Addendum.
(c) ADDITIONAL SERVICES. State Street may from time to time agree
to make available to the Customer additional Systems that are not described in
the attachments to this Addendum. In the absence of any other written agreement
concerning such additional systems, the term "System" shall include, and this
Addendum shall govern, the Customer's access to and use of any additional System
made available by State Street and/or accessed by the Customer.
2. NO USE OF THIRD PARTY SYSTEMS-LEVEL SOFTWARE
State Street and the Customer acknowledge that in connection with the
Data Access Services provided under this Addendum, the Customer will have
access, through the Data Access Services, to Customer Data and to functions of
State Street's proprietary systems; provided, however, that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
(a) DESIGNATED EQUIPMENT; DESIGNATED LOCATION. The System and the
Data Access Services shall be used and accessed solely on and through the
Designated Configuration at the offices of the Customer or the Investment
Advisor located in New York, New York ("Designated Location").
(b) DESIGNATED CONFIGURATION; TRAINED PERSONNEL. State Street
shall be responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable both
parties to perform their respective obligations under this Addendum. State
Street agrees to use commercially reasonable efforts to maintain the System so
that it remains serviceable, provided, however, that State Street does not
guarantee or assure uninterrupted remote access use of the System.
(c) SCOPE OF USE. The Customer will use the System and the Data
Access Services only for the processing of securities transactions, the keeping
of books of account for the Customer and accessing data for purposes of
reporting and analysis. The Customer shall not, and shall cause its employees
and agents not to (i) permit any third party to use the System or the Data
Access Services, (ii) sell, rent, license or otherwise use the System or the
Data Access Services in the operation of a service bureau or for any purpose
other than as expressly authorized under this Addendum, (iii) use the System or
the Data Access Services for any fund, trust or other investment vehicle without
the prior written consent of State Street, (iv) allow access to the System or
the Data Access Services through terminals or any other computer or
telecommunications facilities located outside the Designated Locations, (v)
allow or cause any information (other than portfolio holdings, valuations of
portfolio holdings, and other information reasonably necessary for the
management or distribution of the assets of the Customer) transmitted from State
Street's databases, including data from third party sources, available through
use of the System or the Data Access Services to be redistributed or
retransmitted to another computer, terminal or other device for other than use
<PAGE>
for or on behalf of the Customer or (vi) modify the System in any way, including
without limitation, developing any software for or attaching any devices or
computer programs to any equipment, system, software or database which forms a
part of or is resident on the Designated Configuration.
(d) OTHER LOCATIONS. Except in the event of an emergency or of a
planned System shutdown, the Customer's access to services performed by the
System or to Data Access Services at the Designated Location may be transferred
to a different location only upon the prior written consent of State Street. In
the event of an emergency or System shutdown, the Customer may use any back-up
site included in the Designated Configuration or any other back-up site agreed
to by State Street, which agreement will not be unreasonably withheld. The
Customer may secure from State Street the right to access the System or the Data
Access Services through computer and telecommunications facilities or devices
complying with the Designated Configuration at additional locations only upon
the prior written consent of State Street and on terms to be mutually agreed
upon by the parties.
(e) TITLE. Title and all ownership and proprietary rights to the
System, including any enhancements or modifications thereto, whether or not made
by State Street, are and shall remain with State Street.
(f) NO MODIFICATION. Without the prior written consent of State
Street, the Customer shall not modify, enhance or otherwise create derivative
works based upon the System, nor shall the Customer reverse engineer, decompile
or otherwise attempt to secure the source code for all or any part of the
System.
(g) SECURITY PROCEDURES. The Customer shall comply with data
access operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and to
access the Data Access Services. The Customer shall have access only to the
Customer Data and authorized transaction agreed upon from time to time by State
Street and, upon notice from State Street, the Customer shall discontinue remote
use of the System and access to Data Access Services for any security reasons
cited by State Street; provided, that, in such event, State Street shall, for a
period not less than 180 days (or such other shorter period specified by the
Customer) after such discontinuance, assume responsibility to provide accounting
services under the terms of the Custodian Agreement.
(h) INSPECTIONS. State Street shall have the right to inspect the
use of the System and the Data Access Services by the Customer and the
Investment Advisor to ensure compliance with this Addendum. The on-site
inspections shall be upon prior written notice to the Customer and the
Investment Advisor and at reasonably convenient times and frequencies so as not
to result in an unreasonable disruption of the Customer's or the Investment
Advisor's business.
<PAGE>
4. PROPRIETARY INFORMATION
(a) PROPRIETARY INFORMATION. The Customer acknowledges and State
Street represents that the System and the databases, computer programs, screen
formats, report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Customer shall be
deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Customer agrees that it will hold such
Proprietary Information in the strictest confidence and secure and protect it in
a manner consistent with its own procedures for the protection of its own
confidential information and to take appropriate action by instruction or
agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder. The Customer further
acknowledges that State Street shall not be required to provide the Investment
Advisor with access to the System unless it has first received from the
Investment Advisor an undertaking with respect to State Street's Proprietary
Information in the form of Attachment C to this Addendum. The Customer shall use
all commercially reasonable efforts to assist State Street in identifying and
preventing any unauthorized use, copying or disclosure of the Proprietary
Information or any portions thereof or any of the logic, formats or designs
contained therein.
(b) COOPERATION. Without limitation of the foregoing, the Customer
shall advise State Street immediately in the event the Customer learns or has
reason to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Addendum, and the Customer will, at its expense,
co-operate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
(c) INJUNCTIVE RELIEF. The Customer acknowledges that the
disclosure of any Proprietary Information, or of any information which at law or
equity ought to remain confidential, will immediately give rise to continuing
irreparable injury to State Street inadequately compensable in damages at law.
In addition, State Street shall be entitled to obtain immediate injunctive
relief against the breach or threatened breach of any of the foregoing
undertakings, in addition to any other legal remedies which may be available.
(d) SURVIVAL. The provisions of this Section 4 shall survive the
termination of this Addendum.
5. LIMITATION ON LIABILITY
(a) LIMITATION ON AMOUNT AND TIME FOR BRINGING ACTION. The
Customer agrees that any liability of State Street to the Customer or any third
party arising out of State Street's provision of Data Access Services or the
System under this Addendum shall be limited to the amount paid by the Customer
for the preceding 24 months for such services. In no event shall State Street be
liable to the Customer or any other party for any special, indirect, punitive or
consequential damages even if advised of the possibility of such damages. No
action, regardless of form, arising out of this Addendum may be brought by the
<PAGE>
Customer more than two years after the Customer has knowledge that the cause of
action has arisen.
(b) LIMITED WARRANTIES. NO OTHER WARRANTIES, WHETHER EXPRESS OR
IMPLIED, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, ARE MADE BY STATE STREET.
(c) THIRD-PARTY DATA. Organizations from which State Street may
obtain certain data included in the System or the Data Access Services are
solely responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
(d) REGULATORY REQUIREMENTS. As between State Street and the
Customer, the Customer shall be solely responsible for the accuracy of any
accounting statements or reports produced using the Data Access Services and the
System and the conformity thereof with any requirements of law.
(e) FORCE MAJEURE. Neither party shall be liable for any costs or
damages due to delay or nonperformance under this Addendum arising out of any
cause or event beyond such party's control, including without limitation,
cessation of services hereunder or any damages resulting therefrom to the other
party, or the Customer as a result of work stoppage, power or other mechanical
failure, computer virus, natural disaster, governmental action, or communication
disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless
from any loss, damage or expense including reasonable attorneys' fees (a
"loss"), suffered by State Street arising from (i) the negligence or willful
misconduct in the use by the Customer of the Data Access Services or the System,
including any loss incurred by State Street resulting from a security breach at
the Designated Location or committed by the Customer's employees or agents or
the Investment Advisor and (ii) any loss resulting from incorrect Client
Originated Electronic Financial Instructions. State Street shall be entitled to
rely on the validity and authenticity of Client Originated Electronic Financial
Instructions without undertaking any further inquiry as long as such instruction
is undertaken in conformity with security procedures established by State Street
from time to time.
7. FEES
Fees and charges for the use of the System and the Data Access
Services and related payment terms shall be as set forth in the Custody Fee
Schedule in effect from time to time between the parties (the "Fee Schedule").
Any tariffs, duties or taxes imposed or levied by any government or governmental
agency by reason of the transactions contemplated by this Addendum, including,
without limitation, federal, state and local taxes, use, value added and
personal property taxes (other than income, franchise or similar taxes which may
be imposed or assessed against State Street) shall be borne by the Customer. Any
<PAGE>
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
(a) TRAINING. State Street agrees to provide training, at a
designated State Street training facility or at the Designated Location, to the
Customer's personnel in connection with the use of the System on the Designated
Configuration. The Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time to
enable all operators of the System and the Data Access Services, designated by
the Customer, to receive the training offered by State Street pursuant to this
Addendum.
(b) INSTALLATION AND CONVERSION. State Street shall be responsible
for the technical installation and conversion ("Installation and Conversion") of
the Designated Configuration. The Customer shall have the following
responsibilities in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely
acquisition and maintenance of the hardware and software that
attach to the Designated Configuration in order to use the Data
Access Services at the Designated Location.
(ii) State Street and the Customer each agree that they will
assign qualified personnel to actively participate during the
Installation and Conversion phase of the System implementation to
enable both parties to perform their respective obligations under
this Addendum.
9. SUPPORT
During the term of this Addendum, State Street agrees to provide the
support services set out in Attachment D to this Addendum.
10. TERM OF ADDENDUM
(a) TERM OF ADDENDUM. This Addendum shall become effective on the
date of its execution by State Street and shall remain in full force and effect
until terminated as herein provided.
(b) TERMINATION OF ADDENDUM. Either party may terminate this
Addendum (i) for any reason by giving the other party at least one-hundred and
eighty days' prior written notice in the case of notice of termination by State
Street to the Customer or thirty days' notice in the case of notice from the
Customer to State Street of termination; or (ii) immediately for failure of the
other party to comply with any material term and condition of the Addendum by
giving the other party written notice of termination. In the event the Customer
shall cease doing business, shall become subject to proceedings under the
bankruptcy laws (other than a petition for reorganization or similar proceeding)
<PAGE>
or shall be adjudicated bankrupt, this Addendum and the rights granted hereunder
shall, at the option of State Street, immediately terminate with notice to the
Customer. This Addendum shall in any event terminate as to any Customer within
90 days after the termination of the Custodian Agreement applicable to such
Customer.
(c) TERMINATION OF THE RIGHT TO USE. Upon termination of this
Addendum for any reason, any right to use the System and access to the Data
Access Services shall terminate and the Customer shall immediately cease use of
the System and the Data Access Services. Immediately upon termination of this
Addendum for any reason, the Customer shall return to State Street all copies of
documentation and other Proprietary Information in its possession; provided,
however, that in the event that either party terminates this Addendum or the
Custodian Agreement for any reason other than the Customer's breach, State
Street shall provide the Data Access Services for a period of time and at a
price to be agreed upon by the parties.
11. MISCELLANEOUS
(a) ASSIGNMENT; SUCCESSORS. This Addendum and the rights and
obligations of the Customer and State Street hereunder shall not be assigned by
either party without the prior written consent of the other party, except that
State Street may assign this Addendum to a successor of all or a substantial
portion of its business, or to a party controlling, controlled by, or under
common control with State Street.
(b) SURVIVAL. All provisions regarding indemnification, warranty,
liability and limits thereon, and confidentiality and/or protection of
proprietary rights and trade secrets shall survive the termination of this
Addendum.
(c) ENTIRE AGREEMENT. This Addendum and the attachments hereto
constitute the entire understanding of the parties hereto with respect to the
Data Access Services and the use of the System and supersedes any and all prior
or contemporaneous representations or agreements, whether oral or written,
between the parties as such may relate to the Data Access Services or the
System, and cannot be modified or altered except in a writing duly executed by
the parties. This Addendum is not intended to supersede or modify the duties and
liabilities of the parties hereto under the Custodian Agreement or any other
agreement between the parties hereto except to the extent that any such
agreement specifically refers to the Data Access Services or the System. No
single waiver of any right hereunder shall be deemed to be a continuing waiver.
(d) SEVERABILITY. If any provision or provisions of this Addendum
shall be held to be invalid, unlawful, or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired.
(e) GOVERNING LAW. This Addendum shall be interpreted and
construed in accordance with the internal laws of The Commonwealth of
Massachusetts without regard to the conflict of laws provisions thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of February 12, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
---------------------------------------
Title: Executive Vice President
---------------------------------------
Date: October 7, 1998
---------------------------------------
THE WHITE ELK FUNDS
By: /s/ Melanie Marshak
---------------------------------------
Title: Treasurer
---------------------------------------
Date: October 8, 1998
---------------------------------------
<PAGE>
ATTACHMENT A
Multicurrency HORIZONSM Accounting System
SYSTEM PRODUCT DESCRIPTION
I. The Multicurrency HORIZONSM Accounting System is designed to provide lot
level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general
ledger entries; 2) calculation of daily income and expense; 3)
reconciliation of daily activity with the trial balance, and 4) appropriate
automated feeding mechanisms to (i) domestic and international settlement
systems, (ii) daily, weekly and monthly evaluation services, (iii)
portfolio performance and analytic services, (iv) customer's internal
computing systems and (v) various State Street provided information
services products.
II. GlobalQuestR is designed to provide customer access to the following
information maintained on The Multicurrency HORIZONSM Accounting System: 1)
cash transactions and balances; 2) purchases and sales; 3) income
receivables; 4) tax refund receivables; 5) daily priced positions; 6) open
trades; 7) settlement status; 8) foreign exchange transactions; 9) trade
history, and 10) daily, weekly and monthly evaluation services.
III. SAFIRESM. SaFiReSM is designed to provide the customer with the ability to
prepare its own financial reports by permitting the customer to access
customer information maintained on the Multicurrency HORIZONR Accounting
System, to organize such information in a flexible reporting format and to
have such reports printed on the customer's desktop or by its printing
provider.
<PAGE>
ATTACHMENT B
DESIGNATED CONFIGURATION
<PAGE>
ATTACHMENT C
UNDERTAKING
The undersigned understands that in the course of its employment as
Investment Advisor to The White Elk Funds (the "Customer") it will have access
to State Street Bank and Trust Company's ("State Street") Multicurrency
HORIZONSM Accounting System and other information systems (collectively, the
"System").
The undersigned acknowledges that the System and the databases,
computer programs, screen formats, report formats, interactive design
techniques, documentation and other information made available to the
undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System constitute copyrighted, trade secret,
or other proprietary information of substantial value to State Street. Any and
all such information provided by State Street to the Undersigned shall be deemed
proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The undersigned agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy its
obligations hereunder.
The undersigned will not attempt to intercept data, gain access to
data in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the
System and access to the Data Access Services shall terminate and the
undersigned shall immediately cease use of the System and the Data Access
Services. Immediately upon notice by State Street for any reason, the
undersigned shall return to State Street all copies of documentation and other
Proprietary Information in its possession.
WHITE ELK ASSET MANAGEMENT, INC.
By: /s/ Melanie Marshak
-------------------------------
Title: Vice President
----------------------------
Date: October 8, 1998
-----------------------------
<PAGE>
UNDERTAKING
The undersigned, PricewaterhouseCoopers LLP ("PwC"), understands
that in the course of its employment as Independent Auditor to The White Elk
Funds (the "Customer") it will have access to State Street Bank and Trust
Company's ("State Street") Multicurrency HORIZON Accounting System and other
information systems (collectively, the "System").
The undersigned acknowledges that the System and the databases,
computer programs, screen formats, report formats, interactive design
techniques, documentation, and other information made available to the
Undersigned by State Street as part of the Data Access Services provided to the
Customer and through the use of the System constitute copyrighted, trade secret,
or other proprietary information of substantial value to State Street. Any and
all such information provided by State Street to the Undersigned shall be deemed
proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Undersigned agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy its
obligations hereunder. Proprietary information shall mean all such information
as described above, except that Propriety Information shall not include
information that:
a) was previously known to PwC from a source other than State Street;
b) is or becomes generally available through no fault of PwC;
c) is rightfully disclosed to PwC by a third party without restriction of
confidentiality;
d) is developed by PwC independent of this Agreement and without reference to
any Proprietary Information;
e) is disclosed by PwC pursuant to a validly issued court order, subpoena,
request for information or other legal process, provided, however, that
promptly upon receiving such order, subpoena, request or process, PwC shall
notify client.
The Undersigned will not attempt to intercept data, gain access to
data in transmission, or attempt entry into any system or files for which it is
not authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the
System and access to the Data Access Services shall terminate and the
Undersigned shall immediately cease use of the System and the Data Access
Services. Immediately upon notice by State Street for any reason, the
Undersigned shall return to State Street all copies of documentation and other
Proprietary Information in its possession.
PricewaterhouseCoopers LLP
By: Linda Ianieri
-------------------------------
Title: Partner
----------------------------
Date: October 8, 1998
-----------------------------
<PAGE>
ATTACHMENT D
SUPPORT
During the term of this Addendum, State Street agrees to provide the
following on-going support services:
a. TELEPHONE SUPPORT. The Customer Designated Persons may contact
State Street's Multicurrency HORIZONSM Help Desk and Customer Assistance Center
between the hours of 8 a.m. and 6 p.m. (Eastern time) on all business days for
the purpose of obtaining answers to questions about the use of the System, or to
report apparent problems with the System. From time to time, the Customer shall
provide to State Street a list of persons, not to exceed five in number, who
shall be permitted to contact State Street for assistance (such persons being
referred to as the "Customer Designated Persons").
b. TECHNICAL SUPPORT. State Street will provide technical support
to assist the Customer in using the System and the Data Access Services. The
total amount of technical support provided by State Street shall not exceed 10
resource days per year. State Street shall provide such additional technical
support as is expressly set forth in the fee schedule in effect from time to
time between the parties (the "Fee Schedule"). Technical support, including
during installation and testing, is subject to the fees and other terms set
forth in the Fee Schedule.
c. MAINTENANCE SUPPORT. State Street shall use commercially
reasonable efforts to correct system functions that do not work according to the
System Product Description as set forth on Attachment A in priority order in the
next scheduled delivery release or otherwise as soon as is practicable.
d. SYSTEM ENHANCEMENTS. State Street will provide to the Customer
any enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such enhancement,
State Street shall notify the Customer and shall offer the Customer reasonable
training on the enhancement. Charges for system enhancements shall be as
provided in the Fee Schedule. State Street retains the right to charge for
related systems or products that may be developed and separately made available
for use other than through the System.
e. CUSTOM MODIFICATIONS. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in its
sole discretion in accordance with the Fee Schedule.
f. LIMITATION ON SUPPORT. State Street shall have no obligation to
support the Customer's use of the System: (i) for use on any computer equipment
or telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Customer has modified the System in
breach of this Addendum.
E X H I B I T 9
- - - - - - - -
THE WHITE ELK FUNDS
-----------------------------------------------------
Administration Agreement
-----------------------------------------------------
<PAGE>
ADMINISTRATION AGREEMENT
Agreement dated as of February 12, 1998 by and between State Street
Bank and Trust Company, a Massachusetts trust company (the "Administrator"), and
The White Elk Funds (the "Trust").
WHEREAS, the Trust is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust desires to retain the Administrator to furnish
certain administrative services to the Trust, and the Administrator is willing
to furnish such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT OF ADMINISTRATOR
The Trust hereby appoints the Administrator to act as administrator
with respect to the Trust for purposes of providing certain administrative
services for the period and on the terms set forth in this Agreement. The
Administrator accepts such appointment and agrees to render the services stated
herein.
The Trust will initially consist of the portfolio(s) and/or class(es)
of shares (each an "Investment Fund") listed in Schedule A to this Agreement. In
the event that the Trust establishes one or more additional Investment Funds
with respect to which it wishes to retain the Administrator to act as
administrator hereunder, the Trust shall notify the Administrator in writing.
Upon written acceptance by the Administrator, such Investment Fund shall become
subject to the provisions of this Agreement to the same extent as the existing
Investment Funds, except to the extent that such provisions (including those
relating to the compensation and expenses payable by the Trust and its
Investment Funds) may be modified with respect to each additional Investment
Fund in writing by the Trust and the Administrator at the time of the addition
of the Investment Fund.
2. DELIVERY OF DOCUMENTS
The Trust will promptly deliver to the Administrator copies of each
of the following documents and all future amendments and supplements, if any:
(a) The Trust's Agreement and Declaration of Trust;
(b) The Trust's currently effective registration statement under
the Securities Act of 1933, as amended (the "1933 Act"), and the 1940
Act and the Trust's Prospectus(es) and Statement(s) of Additional
Information relating to all Investment Funds and all amendments and
supplements thereto as in effect from time to time;
<PAGE>
(c) Certified copies of the resolutions of the Board of Trustees
of the Trust (the "Board") authorizing (1) the Trust to enter into
this Agreement and (2) certain individuals on behalf of the Trust to
(a) give instructions to the Administrator pursuant to this Agreement
and (b) sign checks and pay expenses;
(d) A copy of the investment advisory agreement between the Trust
and its investment adviser; and
(e) Such other certificates, documents or opinions which the
Administrator may, in its reasonable discretion, deem necessary or
appropriate in the proper performance of its duties.
3. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATOR
The Administrator represents and warrants to the Trust that:
(a) It is a Massachusetts trust company, duly organized and
existing under the laws of The Commonwealth of Massachusetts;
(b) It has the corporate power and authority to carry on its
business in The Commonwealth of Massachusetts;
(c) All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
(d) No legal or administrative proceedings have been instituted
or threatened which would impair the Administrator's ability to
perform its duties and obligations under this Agreement; and
(e) Its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or
obligation of the Administrator or any law or regulation applicable
to it.
4. REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to the Administrator that:
(a) It is a business trust, duly organized, existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) It has the corporate power and authority under applicable
laws and by its charter and by-laws to enter into and perform this
Agreement;
(c) All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
(d) It is an investment company properly registered under the
1940 Act;
<PAGE>
(e) A registration statement under the 1933 Act and the 1940 Act
has been filed and will be effective and remain effective during the
term of this Agreement. The Trust also warrants to the Administrator
that as of the effective date of this Agreement, all necessary
filings under the securities laws of the states in which the Trust
offers or sells its shares have been made;
(f) No legal or administrative proceedings have been instituted
or threatened which would impair the Trust's ability to perform its
duties and obligations under this Agreement;
(g) Its entrance into this Agreement will not cause a material
breach or be in material conflict with any other agreement or
obligation of the Trust or any law or regulation applicable to it;
and
(h) As of the close of business on the date of this Agreement,
the Trust is authorized to issue shares of beneficial interest, and
it will initially offer shares, in the authorized amounts as set
forth in Schedule A to this Agreement:
5. ADMINISTRATION SERVICES
The Administrator shall provide the following services, in each case,
subject to the control, supervision and direction of the Trust and the review
and comment by the Trust's auditors and legal counsel and in accordance with
procedures which may be established from time to time between the Trust and the
Administrator:
(a) Oversee the determination and publication of the Trust's net
asset value in accordance with the Trust's policy as adopted from
time to time by the Board;
(b) Oversee the maintenance by the Trust's custodian of certain
books and records of the Trust as required under Rule 31a-1(b) of the
1940 Act;
(c) Prepare the Trust's federal, state and local income tax
returns for review by the Trust's independent accountants and filing
by the Trust's treasurer;
(d) Review calculation, submit for approval by officers of the
Trust and arrange for payment of the Trust's expenses;
(e) Prepare for review and approval by officers of the Trust
financial information for the Trust's semi-annual and annual reports,
proxy statements and other communications required or otherwise to be
sent to Trust shareholders, and arrange for the printing and
dissemination of such reports and communications to shareholders;
(f) Prepare for review by an officer of and legal counsel for the
Trust the Trust's periodic financial reports required to be filed
with the Securities and Exchange Commission ("SEC") on Form N-SAR and
financial information required by Form [N-A/N-2] and such other
reports, forms or filings as may be mutually agreed upon;
<PAGE>
(g) Prepare reports relating to the business and affairs of the
Trust as may be mutually agreed upon and not otherwise prepared by
the Trust's investment adviser, custodian, legal counsel or
independent accountants;
(h) Make such reports and recommendations to the Board concerning
the performance of the independent accountants as the Board may
reasonably request;
(i) Make such reports and recommendations to the Board concerning
the performance and fees of the Trust's custodian and transfer and
dividend disbursing agent ("Transfer Agent") as the Board may
reasonably request or deems appropriate;
(j) Oversee and review calculations of fees paid to the Trust's
investment adviser, custodian and Transfer Agent;
(k) Consult with the Trust's officers, independent accountants,
legal counsel, custodian and Transfer Agent in establishing the
accounting policies of the Trust;
(l) Respond to, or refer to the Trust's officers or Transfer
Agent, shareholder inquiries relating to the Trust;
(m) Provide periodic testing of portfolios to assist the Trust's
investment adviser in complying with Internal Revenue Code mandatory
qualification requirements, the requirements of the 1940 Act and
Trust prospectus limitations as may be mutually agreed upon;
(n) Review and provide assistance on shareholder communications;
(o) Maintain general corporate calendar;
(p) Maintain copies of the Trust's charter and by-laws;
(q) File annual and semi-annual shareholder reports with the
appropriate regulatory agencies; review text of "President's letters"
to shareholders and "Management's Discussion of Trust Performance"
(which shall also be subject to review by the Trust's legal counsel);
(r) Organize, attend and prepare minutes of shareholder meetings;
(s) Provide consultation on regulatory matters relating to
portfolio management, Trust operations and any potential changes in
the Trust's investment policies, operations or structure; act as
liaison to legal counsel to the Trust and, where applicable, to legal
counsel to the Trust's independent Board members;
(t) Maintain continuing awareness of significant emerging
regulatory and legislative developments which may affect the Trust,
update the Board and the investment adviser on those developments and
provide related planning assistance where requested or appropriate;
<PAGE>
(u) Develop or assist in developing guidelines and procedures to
improve overall compliance by the Trust and its various agents;
(v) Counsel and assist the Trust in the handling of routine
regulatory examinations and work closely with the Trust's legal
counsel in response to any non-routine regulatory matters;
Subject to review and comment by the Trust's legal counsel:
(w) Prepare and file with the SEC amendments to the Trust's
registration statement, including updating the Prospectus and
Statement of Additional Information, where applicable;
(x) Prepare and file with the SEC proxy statements; provide
consultation on proxy solicitation matters;
(y) Prepare agenda and background materials for Board meetings,
make presentations where appropriate, prepare minutes and follow-up
on matters raised at Board meetings; and
(z) Prepare and file with the SEC Rule 24f-2 notices.
(aa) Perform Blue Sky services pursuant to the specific
instructions of the Trust and as detailed in Schedule C to this
Agreement.
The Administrator shall provide the office facilities and the personnel required
by it to perform the services contemplated herein.
6. FEES; EXPENSES; EXPENSE REIMBURSEMENT
The Administrator shall receive from the Trust such compensation for
the Administrator's services provided pursuant to this Agreement as may be
agreed to from time to time in a written fee schedule approved by the parties
and initially set forth in Schedule B to this Agreement. The fees are accrued
daily and billed monthly and shall be due and payable upon receipt of the
invoice. Upon the termination of this Agreement before the end of any month, the
fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period and
shall be payable upon the date of termination of this Agreement. In addition,
the Trust shall reimburse the Administrator for its out-of-pocket costs incurred
in connection with this Agreement.
The Trust agrees promptly to reimburse the Administrator for any
equipment and supplies specially ordered by or for the Trust through the
Administrator and for any other expenses not contemplated by this Agreement that
the Administrator may incur on the Trust's behalf at the Trust's request or with
the Trust's consent.
The Trust will bear all expenses that are incurred in its operation
and not specifically assumed by the Administrator. Expenses to be borne by the
<PAGE>
Trust, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel (including
such counsel's review of the Trust's registration statement, proxy materials,
federal and state tax qualification as a regulated investment company and other
reports and materials prepared by the Administrator under this Agreement); cost
of any services contracted for by the Trust directly from parties other than the
Administrator; cost of trading operations and brokerage fees, commissions and
transfer taxes in connection with the purchase and sale of securities for the
Trust; investment advisory fees; taxes, insurance premiums and other fees and
expenses applicable to its operation; costs incidental to any meetings of
shareholders including, but not limited to, legal and accounting fees, proxy
filing fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and expenses of
Board members; the salary and expenses of any officer, director/trustee or
employee of the Trust; costs incidental to the preparation, printing and
distribution of the Trust's registration statements and any amendments thereto
and shareholder reports; cost of typesetting and printing of prospectuses; cost
of preparation and filing of the Trust's tax returns, Form N-1A or N-2 and Form
N-SAR, and all notices, registrations and amendments associated with applicable
federal and state tax and securities laws; all applicable registration fees and
filing fees required under federal and state securities laws; fidelity bond and
directors' and officers' liability insurance; and cost of independent pricing
services used in computing the Trust's net asset value.
The Administrator is authorized to and may employ or associate with
such person or persons as the Administrator may deem desirable to assist it in
performing its duties under this Agreement; provided, however, that the
compensation of such person or persons shall be paid by the Administrator and
that the Administrator shall be as fully responsible to the Trust for the acts
and omissions of any such person or persons as it is for its own acts and
omissions.
7. INSTRUCTIONS AND ADVICE
At any time, the Administrator may apply to any officer of the Trust
for instructions and may consult with its own legal counsel or outside counsel
for the Trust or the independent accountants for the Trust at the expense of the
Trust, with respect to any matter arising in connection with the services to be
performed by the Administrator under this Agreement. The Administrator shall not
be liable, and shall be indemnified by the Trust, for any action taken or
omitted by it in good faith in reliance upon any such instructions or advice or
upon any paper or document believed by it to be genuine and to have been signed
by the proper person or persons. The Administrator shall not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Trust. Nothing in this paragraph shall be construed as imposing
upon the Administrator any obligation to seek such instructions or advice, or to
act in accordance with such advice when received.
8. LIMITATION OF LIABILITY AND INDEMNIFICATION
The Administrator shall be responsible for the performance of only
such duties as are set forth in this Agreement and, except as otherwise provided
under Section 6, shall have no responsibility for the actions or activities of
any other party, including other service providers. The Administrator shall have
<PAGE>
no liability for any error of judgment or mistake of law or for any loss or
damage resulting from the performance or nonperformance of its duties hereunder
unless solely caused by or resulting from the gross negligence or willful
misconduct of the Administrator, its officers or employees. The Administrator
shall not be liable for any special, indirect, incidental, or consequential
damages of any kind whatsoever (including, without limitation, attorneys' fees)
under any provision of this Agreement or for any such damages arising out of any
act or failure to act hereunder. In any event, the Administrator's liability
under this Agreement shall be limited to its total annual compensation earned
and fees paid hereunder during the preceding twelve months for any liability or
loss suffered by the Trust including, but not limited to, any liability relating
to qualification of the Trust as a regulated investment company or any liability
relating to the Trust's compliance with any federal or state tax or securities
statute, regulation or ruling.
The Administrator shall not be responsible or 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 control,
including without limitation, work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action or communication
disruption.
The Trust shall indemnify and hold the Administrator harmless from
all loss, cost, damage and expense, including reasonable fees and expenses for
counsel, incurred by the Administrator resulting from any claim, demand, action
or suit in connection with the Administrator's acceptance of this Agreement, any
action or omission by it in the performance of its duties hereunder, or as a
result of acting upon any instructions reasonably believed by it to have been
duly authorized by the Trust, provided that this indemnification shall not apply
to actions or omissions of the Administrator, its officers or employees in cases
of its or their own gross negligence or willful misconduct.
The indemnification contained herein shall survive the termination of
this Agreement.
9. CONFIDENTIALITY
The Administrator agrees that, except as otherwise required by law or
in connection with any required disclosure to a banking or other regulatory
authority, it will keep confidential all records and information in its
possession relating to the Trust or its shareholders or shareholder accounts and
will not disclose the same to any person except at the request or with the
written consent of the Trust.
10. COMPLIANCE WITH GOVERNMENTAL RULES AND
REGULATIONS; RECORDS
The Trust assumes full responsibility for complying with all
securities, tax, commodities and other laws, rules and regulations applicable to
it.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrator agrees that all records which it maintains for the Trust shall
at all times remain the property of the Trust, shall be readily accessible
<PAGE>
during normal business hours, and shall be promptly surrendered upon the
termination of the Agreement or otherwise on written request. The Administrator
further agrees that all records which it maintains for the Trust pursuant to
Rule 31a-1 under the 1940 Act will be preserved for the periods prescribed by
Rule 31a-2 under the 1940 Act unless any such records are earlier surrendered as
provided above. Records shall be surrendered in usable machine-readable form.
11. SERVICES NOT EXCLUSIVE
The services of the Administrator to the Trust are not to be deemed
exclusive, and the Administrator shall be free to render similar services to
others. The Administrator shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided herein or authorized by the Trust
from time to time, have no authority to act or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
12. TERM, TERMINATION AND AMENDMENT
This Agreement shall become effective on the date of its execution
and shall remain in full force and effect from the effective date and shall
automatically continue in full force and effect after such initial term unless
either party terminates this Agreement by written notice to the other party at
least sixty (60) days prior to the expiration of the initial term. Either party
may terminate this Agreement at any time after the initial term upon at least
sixty (60) days' prior written notice to the other party. Termination of this
Agreement with respect to any given Investment Fund shall in no way affect the
continued validity of this Agreement with respect to any other Investment Fund.
Upon termination of this Agreement, the Trust shall pay to the Administrator
such compensation and any reimbursable expenses as may be due under the terms
hereof as of the date of such termination, including reasonable out-of-pocket
expenses associated with such termination. This Agreement may be modified or
amended from time to time by mutual written agreement of the parties hereto.
13. NOTICES
Any notice or other communication authorized or required by this
Agreement to be given to either party shall be in writing and deemed to have
been given when delivered in person or by confirmed facsimile, or posted by
certified mail, return receipt requested, to the following address (or such
other address as a party may specify by written notice to the other): if to the
Trust: The White Elk Funds, Attn: Melanie Marshak, fax: (212) 486-7697; if to
the Administrator: State Street Bank and Trust Company, 1776 Heritage Drive,
AFB-4, North Quincy, Massachusetts 02171, Attn: Fund Administration Legal
Department, fax: 617-985-4867.
14. NON-ASSIGNABILITY
This Agreement shall not be assigned by either party hereto without
the prior consent in writing of the other party, except that the Administrator
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by or under common control with
the Administrator.
<PAGE>
15. SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of
the Trust and the Administrator and their respective successors and permitted
assigns.
16. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
hereto with respect to the subject matter hereof and supersedes all previous
representations, warranties or commitments regarding the services to be
performed hereunder whether oral or in writing.
17. WAIVER
The failure of a party to insist upon strict adherence to any term of
this Agreement on any occasion shall not be considered a waiver nor shall it
deprive such party of the right thereafter to insist upon strict adherence to
that term or any term of this Agreement. Any waiver must be in writing signed by
the waiving party.
18. SEVERABILITY
If any provision of this Agreement is invalid or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
19. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
20. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the date first written
above.
THE WHITE ELK FUNDS
By: /s/ WILLIAM D. WITTER
-------------------------------
Name: WILLIAM D. WITTER
-----------------------------
Title: PRESIDENT
----------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/ KATHLEEN C. CUOCOLO
-------------------------------
Name: KATHLEEN C. CUOCOLO
-----------------------------
Title: SENIOR VICE PRESIDENT
----------------------------
<PAGE>
ADMINISTRATION AGREEMENT
THE WHITE ELK FUNDS
SCHEDULE A
LISTING OF INVESTMENT FUNDS AND AUTHORIZED SHARES
Investment Fund Authorized Shares
White Elk Large Cap Growth Fund
White Elk Mid Cap Growth Fund
White Elk Small Cap Growth Fund
White Elk Large Cap Value Fund
White Elk Mid Cap Value Fund
White Elk Small Cap Value Fund
White Elk Leveraged All Cap Fund
White Elk Global Equity Fund
White Elk Long-Term Bond Fund
White Elk Medium-Term Bond Fund
White Elk Money Market Fund
<PAGE>
ADMINISTRATION AGREEMENT
THE WHITE ELK FUNDS
SCHEDULE B
FEES AND EXPENSES
<PAGE>
ADMINISTRATION AGREEMENT
THE WHITE ELK FUNDS
SCHEDULE C
NOTICE FILING WITH
STATE SECURITIES ADMINISTRATORS
AT THE SPECIFIC DIRECTION OF THE TRUST, THE ADMINISTRATOR WILL
PREPARE REQUIRED DOCUMENTATION AND MAKE NOTICE FILINGS IN ACCORDANCE WITH THE
SECURITIES LAWS OF EACH JURISDICTION IN WHICH TRUST SHARES ARE TO BE OFFERED OR
SOLD PURSUANT TO INSTRUCTIONS GIVEN TO THE ADMINISTRATOR BY THE TRUST.
THE TRUST SHALL BE SOLELY RESPONSIBLE FOR THE DETERMINATION (I) OF
THOSE JURISDICTIONS IN WHICH NOTICE FILINGS ARE TO BE SUBMITTED AND (II) THE
NUMBER OF TRUST SHARES TO BE PERMITTED TO BE SOLD IN EACH SUCH JURISDICTION. IN
THE EVENT THAT THE ADMINISTRATOR BECOMES AWARE OF (A) THE SALE OF TRUST SHARES
IN A JURISDICTION IN WHICH NO NOTICE FILING HAS BEEN MADE OR (B) THE SALE OF
TRUST SHARES IN EXCESS OF THE NUMBER OF TRUST SHARES PERMITTED TO BE SOLD IN
SUCH JURISDICTION, THE ADMINISTRATOR SHALL REPORT SUCH INFORMATION TO THE TRUST,
AND IT SHALL BE THE TRUST'S RESPONSIBILITY TO DETERMINE APPROPRIATE CORRECTIVE
ACTION AND INSTRUCT THE ADMINISTRATOR WITH RESPECT THERETO.
The Blue Sky services shall consist of the following:
1. Filing of Trust's Initial Notice Filings, as directed by the
Trust;
2. Filing of Trust's renewals and amendments as required;
3. Filing of amendments to the Trust's registration statement where
required;
4. Filing Trust sales reports where required;
5. Payment at the expense of the Trust of all Trust Notice Filing
fees;
6. Filing the Prospectuses and Statements of Additional Information
and any amendments or supplements thereto where required;
7. Filing of annual reports and proxy statements where required; and
8. The performance of such additional services as the Administrator
and the Trust may agree upon in writing.
Unless otherwise specified in writing by the Administrator, Blue Sky
services by the Administrator shall not include determining the availability of
exemptions under a jurisdiction's blue sky law. Any such determination shall be
<PAGE>
made by the Trust or its legal counsel. In connection with the services
described herein, the Trust shall issue in favor of the Administrator a power of
attorney to submit Notice Filings on behalf of the Trust, which power of
attorney shall be substantially in the form of Exhibit I attached hereto.
<PAGE>
EXHIBIT I
LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, as of February 12, 1998 that the White
Elk Funds with principal offices at 153 E. 53rd Street, New York, New York 10022
(the "Trust") makes, constitutes, and appoints STATE STREET BANK AND TRUST
COMPANY (the "Administrator") with principal offices at 225 Franklin Street,
Boston, Massachusetts its lawful attorney-in-fact for it to do as if it were
itself acting, the following:
1. REGISTRATION OF TRUST SHARES. The power to register shares of the
Trust in each jurisdiction in which Trust shares are offered or
sold and in connection therewith the power to prepare, execute,
and deliver and file any and all Trust applications, including
without limitation, applications to register shares, consents,
including consents to service of process, reports, including
without limitation, all periodic reports, claims for exemption,
or other documents and instruments now or hereafter required or
appropriate in the judgment of the Administrator in connection
with the registration of Trust shares.
2. AUTHORIZED SIGNERS. Pursuant to this Limited Power of Attorney,
individuals holding the titles of Officer, Blue Sky Manager, or
Senior Blue Sky Administrator at the Administrator shall have
authority to act on behalf of the Trust with respect to item 1
above.
The execution of this limited power of attorney shall be deemed
coupled with an interest and shall be revocable only upon receipt by the
Administrator of such termination of authority. Nothing herein shall be
construed to constitute the appointment of the Administrator as or otherwise
authorize the Administrator to act as an officer, director or employee of the
Trust.
IN WITNESS WHEREOF, the Trust has caused this Agreement to be
executed in its name and on its behalf by and through its duly authorized
officer, as of the date first written above.
THE WHITE ELK FUNDS
By: /s/ William D. Witter
--------------------------
Name: William D. Witter
-------------------------
Title: President
-----------------------
E X H I B I T 10
- - - - - - - --
THE WHITE ELK FUNDS
-----------------------------------------------------
Form of Participation Agreement
-----------------------------------------------------
<PAGE>
FORM OF PARTICIPATION AGREEMENT
THIS AGREEMENT is made and entered into this ___ day of _________,
1998 by and between [Name of Participating Insurance Company], a _________
corporation (the "Company"), on its own behalf and on behalf of the segregated
asset accounts of the Company set forth on Schedule A attached hereto (each, an
"Account"; collectively, the "Accounts"), and THE WHITE ELK FUNDS, a
Massachusetts business trust (the "Trust").
WHEREAS, the Trust is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act");
WHEREAS, the Trust issues shares of beneficial interest (the
"Shares") registered under the Securities Act of 1933, as amended (the "1933
Act") pursuant to a registration statement initially filed with the Securities
and Exchange Commission (the "SEC") on February ___, 1998, as amended from time
to time (the "Registration Statement");
WHEREAS, the Trust has established eleven separate series of Shares,
each corresponding to a separate investment portfolio having its own investment
objective, and may establish additional series of Shares in the future (such
existing and future series are collectively referred to herein as the "Funds");
WHEREAS, the Trust will, to the extent necessary, obtain an order
from the SEC granting participating insurance companies and variable annuity and
variable life insurance separate accounts exemptions from the provisions of
sections 9(a), 13(a), 15(a), and 15(b) of the 1940 Act and Rules 6e-2 (b) (15)
and 6e-3(T) (b) (15) thereunder, if and to the extent necessary to permit shares
of the Trust to be sold to and held by variable annuity and variable life
insurance separate accounts of both affiliated and unaffiliated life insurance
companies (the "Mixed and Shared Funding Exemptive Order");
WHEREAS, the Trust is available to act as the investment vehicle for
the Accounts, and other separate accounts established in connection with
variable life insurance policies and variable annuity contracts issued by the
Company and its affiliates (the "Contracts");
WHEREAS, the Accounts are duly organized, validly existing segregated
asset accounts, established by resolutions of the Board of Directors of the
Company, to set aside and invest assets attributable to the Contracts that are
allocated to the Accounts (the Contracts and the Accounts covered by this
agreement, and the corresponding Funds covered by this agreement in which the
Accounts invest, are specified in Schedule A attached hereto as may be modified
from time to time);
<PAGE>
WHEREAS, the Company has registered the Accounts as unit investment
trusts under the 1940 Act;
WHEREAS, White Elk Asset Management, Inc. (the "Adviser"), which
serves as investment adviser to the Trust, is duly registered as an investment
adviser under the 1940 Act;
[WHEREAS, [Name of Participating Insurance Company's broker-dealer
affiliate, if any], which serves as a distributor of the Trust, is a
broker-dealer registered under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), and a member of the National Association of Securities
Dealers, Inc. (the "NASD");] and
WHEREAS, to the extent permitted by applicable insurance laws and
regulations, the Trust intends to make a continuous offering of its shares at
net asset value, and the Company has and intends to purchase the shares of the
Funds on behalf of the Accounts to fund the Contracts;
NOW, THEREFORE, in consideration of their mutual promises, the
Company and the Trust, agree as follows:
ARTICLE 1
SALE OF TRUST SHARES
1.1 The Trust agrees to sell to the Company those shares of the Trust
which the Accounts order, executing such orders on a daily basis at the net
asset value next computed after receipt by the Trust for the order of the shares
of the Trust. For purposes of this Section 1.1, the Company shall be the Trust's
for receipt of such orders from Contract owners and receipt by the Company shall
constitute receipt by the Trust; provided, that the Trust receives notice of
such order by 4:00 p.m. Eastern time on the next following Business Day.
"Business Day" shall mean any day on which the New York Stock Exchange is open
for trading and on which the Trust calculates its net asset value pursuant to
the rules of the SEC.
1.2 The Trust agrees to make Trust shares available indefinitely for
purchase at the applicable net asset value per share by the Company and the
Accounts on those days on which the Trust calculates its net asset value
pursuant to rules of the SEC. The Trust shall use reasonable efforts to
calculate its net asset values on the days and at the times described in the
Trust's prospectus (as of the date hereof, as of the close of the New York Stock
Exchange on each day on which the New York Stock Exchange is open for trading,
but not on the Friday following Thanksgiving). Notwithstanding the foregoing,
the Board of Trustees of the Trust (the "Board") may refuse to sell shares of
any Fund to the Company and the Accounts, or suspend or terminate the offering
of shares of any Fund if such action is required by law or by regulatory
authorities having jurisdiction or is, in the sole discretion of the Board
acting in good faith and in light of its fiduciary duties under federal and any
applicable state laws, necessary in the best interests of the shareholders of
such Fund.
1.3 The Trust agrees that shares of the Trust will be sold to the
Company and the Accounts. In addition, shares of the Trust may be sold to other
<PAGE>
insurance companies affiliated with the Company or their separate accounts.
Shares will not be sold to natural persons. Nothing herein shall prohibit the
Company from establishing separate accounts or sub-accounts other than the
Accounts which purchase shares from investment companies other than the Trust.
1.4 The Company shall pay for the Trust shares in federal funds
transmitted by wire on the next Business Day after an order to purchase shares
is made in accordance with the provisions of Section 1.1 hereof. Orders received
by the Trust or the Trust's transfer agent are effected on days on which the New
York Stock Exchange (the "NYSE") is open for trading. For orders received before
the close of regular trading on the NYSE, purchases of the shares of each
Portfolio are effected at the respective net asset values per share determined
as of the close of regular trading on the NYSE on that same day. Orders received
after the close of regular trading on NYSE are effected the next calculated net
asset value.
1.5 Payment for redemptions will be made by the Trust's transfer
agent on behalf of the Trust and the relevant Portfolios within seven days after
the request is received. The Trust does not assess any fees when it redeems
shares. Surrender charges, mortality and expense risk fees and other charges may
be assessed by the Company, as described in their prospectus. Any changes
assessed by the Funds will be described in the Fund documents. Shares of a
Portfolio may be redeemed "in kind" which means that the redemption proceeds
will be paid with securities which are held by the Portfolio. If notification of
redemption is received after 4:00 p.m. Eastern time, payment for redeemed shares
will be made on the next following Business Day.
1.6 Unless otherwise determined by the Board, issuance and transfer
of the Trust's shares will be by book entry only and share certificates will not
be issued to the Company or the Accounts. Shares ordered from the Trust will be
recorded in an appropriate title for the Accounts or the appropriate subaccounts
of the Accounts.
1.7 The Trust shall furnish same day notice (by wire or telephone
followed by written confirmation) to the Company of any income, dividends or
capital gain distributions payable on the Trust's shares. The Company hereby
elects to receive all such dividends and distributions as are payable on the
Fund shares in additional shares of that Fund. The Trust shall notify the
Company of the number of shares so issued as payment of such dividends and
distributions.
1.8 The Trust or its custodian shall make the net asset value per
share for each Fund available to the Company on each Business Day as soon as
reasonably practical after the net asset value per share is calculated and shall
use its best efforts to make such net asset value per share available by 6:00
p.m. Eastern time.
<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 The Company represents and warrants that the Contracts are or
will be registered under the 1933 Act, and that the Contracts will be issued,
sold, and distributed in material compliance with all applicable state and
federal laws, including without limitation the 1933 Act, the 1934 Act, and the
1940 Act. The Company further represents and warrants that it is an insurance
company duly organized and in good standing under applicable law, that it has
legally and validly established the Accounts as segregated asset accounts under
the law of the Company's domicile, and that it has registered the Accounts as
unit investment trusts in accordance with the provisions of the 1940 Act (unless
exempt therefrom) to serve as segregated investment accounts for the Contracts
and that it will maintain such registrations for so long as any Contracts are
outstanding. The Company shall amend the registration statements under the 1933
Act for the Contracts and the registration statements under the 1940 Act for the
Accounts from time to time as required in order to effect the continuous
offering of the Contracts or as may otherwise be required by applicable law. The
Company shall register and qualify the Contracts for sale in accordance with the
securities laws of the various states only to the extent deemed necessary to
comply with such laws.
2.2 The Company represents that it believes, in good faith, that the
Contracts are currently and at the time of issuance will be treated as life
insurance, endowment or annuity contracts under applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), that it will make every
effort to maintain such treatment and that it will notify the Trust immediately
upon having a reasonable basis for believing that the Contracts have ceased to
be so treated or that they might not be so treated in the future.
2.3 The Trust represents and warrants that Trust shares sold pursuant
to this agreement shall be registered under the 1933 Act, duly authorized for
issuance and sold in material compliance with the laws of Massachusetts and all
applicable federal and state securities laws. The Trust further represents that
it is and shall remain registered under the 1940 Act, and that it shall amend
the Registration Statement for its shares under the 1933 Act and the 1940 Act
from time to time as required in order to effect the continuous offering of its
shares. The Trust shall register and qualify the shares for sale in accordance
with the laws of the various states to the extent that the Trust is required to
do so by law.
2.4 The Trust represents that each Fund of the Trust is currently
qualified or will be qualified as a Regulated Investment Company under
Subchapter M of the Code and that every effort will be made to maintain such
qualification (under Subchapter M or any successor or similar provision) and
that the Trust will notify the Company orally (followed by written notice) or by
wire immediately upon having a reasonable basis for believing that any Fund of
the Trust has ceased to so qualify or that any Fund might not so qualify in the
future.
2.5 The Trust currently does not intend to make any payments to
finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act or
otherwise, although it may make such payments in the future. However, if the
Trust were authorized to establish a 12b-1 plan, the Trust would undertake to
<PAGE>
have the Boards of which a majority of trustees are not interested persons, as
defined in the 1940 Act, of the Trust, formulate and approve any plan under Rule
12b-1 to finance distribution expenses.
2.6 The Trust represents that it is lawfully organized and validly
existing under the laws of the State of Massachusetts and that it does and will
comply in all material respects with the 1940 Act.
[2.7 [Name of Participating Insurance Company's broker-dealer
affiliate, if any] represents that it is and shall remain duly registered a
broker-dealer under all applicable federal and state securities laws at all
times when it is a Trust's distributor and that it shall perform its obligations
for the Trust in material compliance with any applicable state and federal
securities laws and NASD rules and regulations relating to broker-dealers.]
2.8 The Trust and the Company each represents and warrants that all
of its directors, trustees, officers, employees, investment advisers, and other
individuals or entities dealing with the money and/or securities of the Trust
are and shall continue to be at all times covered by a blanket fidelity bond or
similar coverage for the benefit of the Trust in an amount not less than the
minimal coverage as required currently by Section 17(g) and Rule 17g-1 of the
1940 Act or related provisions as may be promulgated from time to time. The
aforesaid bond shall include coverage for larceny and embezzlement and shall be
issued by a reputable bonding company.
ARTICLE 3
PROSPECTUS AND PROXY STATEMENTS; VOTING
3.1 At least annually, the Trust shall, at its expense, provide the
Company, free of charge, with as many copies of the Trust's current prospectus
as the Company may reasonably request for distribution to both existing Contract
owners and prospective purchasers. If requested by the Company in lieu thereof,
the Trust shall provide such documentation (including a final "camera ready"
copy of the new prospectus as set in type at the Trust's expense) and other
assistance as is reasonably necessary in order for the parties hereto once each
year (or more frequently if the prospectus for the Trust is supplemented or
amended) to have the prospectus for the Contracts and the Trust's prospectus
printed together in one document; the expenses of such printing to be
apportioned between the Company and the Trust in proportion to the number of
pages of the Contract and Trust prospectuses, taking account of other relevant
factors affecting the expense of printing, such as columns, charts, etc.; the
Trust will bear the cost of printing the Trust's portion of such document, and
the Company will bear the expenses of printing the Accounts' portion of such
document.
3.2 The Trust's prospectus shall state that the Statement of
Additional Information ("SAI") for the Trust is available from the Trust. The
Trust shall print and provide the SAI to the Company (or a master of the SAI
suitable for duplication by the Company) for any Contract owner or prospective
purchaser who requests the SAI. The Company shall provide the SAI to any
Contract owner or prospective purchaser who requests it.
<PAGE>
3.3 The Trust, at its expense, shall provide the Company with copies
of its proxy material, reports to shareholders and other communications to
shareholders in such quantity as the Company shall reasonably require for
distribution to Contract owners.
3.4 The Company shall: (a) solicit voting instructions from Contract
owners; (b) vote the Trust shares in accordance with instructions received from
Contract owners; and (c) vote Trust shares for which no instructions have been
received in the same proportion as Trust shares of such Fund for which
instructions have been received. The Company reserves the right to vote Trust
shares held in the Accounts in its own right, to the extent permitted by law.
3.5 The process of soliciting Contract owners' voting instructions,
tabulating votes, and other shareholder voting procedures shall be conducted in
accordance with procedures adopted by the Company.
ARTICLE 4
SALES MATERIAL AND INFORMATION
4.1 The Company shall furnish, or shall cause to be furnished, to the
Trust or its designee, each piece of sales literature or other promotional
material in which the Trust is named, at least five (5) Business Days prior to
its use by the Company. No such material shall be used by the Company if the
Trust or its designee object to such use within five (5) Business Days after
receipt of such material.
4.2 The Company shall not give any information or make any
representations or statements on behalf of the Trust or concerning the Trust in
connection with the sale of the Contracts other than the information or
representations contained in the registration statement or prospectus for the
Trust shares, as such registration statement and prospectus may be amended or
supplemented from time to time, or in reports or proxy statements for the Trust
which are in the public domain or approved by the Trust for distribution to
Contract owners, or in sales literature or other promotional material approved
by the Trust or its designee, except with the permission of the Trust. The Trust
or its designee agrees to respond to any request for approval on a prompt and
timely basis.
4.3 The Trust shall furnish, or shall cause to be furnished, to the
Company or its designee, each piece of sales literature or other promotional
material in which the Company and/or the Accounts is named, at least five (5)
Business Days prior to its use by the Trust. No such material shall be used by
the Trust if the Company or its designee object to such use within five (5)
Business Days after receipt of such material.
4.4 The Trust shall not give any information or make any
representations on behalf of the Company or concerning the Company, the
Accounts, or the Contracts other than information or representations contained
in a registration statement or prospectus for the Contracts, as such
registration statement and prospectus may be amended or supplemented from time
to time, or in reports for the Accounts which are in the public domain or
approved by the Company for distribution to Contract owners, or in sales
<PAGE>
literature or other promotional material approved by the Company or its
designee, except with the permission of the Company. The Company or its designee
agrees to respond to any request for approval on a prompt and timely basis.
4.5 The Company and the Trust may each request that the other provide
at least one complete copy of all registration statements, prospectuses, SAIs,
reports, proxy statements, sales literature and other promotional materials,
applications for exemptions, requests for "no-action" letters, and all
amendments to any of the above, that relate to the Contracts, or to the Trust or
its shares, prior to or contemporaneously with the filing of such document with
the SEC or other regulatory authority. The Company or Trust shall also each
promptly inform the other of the results of any examination by the SEC (or other
regulatory authority) that relates to the Contracts, the Trust or its shares,
and the party that was the subject of the examination shall provide the other
party with a copy of any "deficiency letter" or other correspondence or written
report regarding any such examination.
4.6 For purposes of this Article 4, the phrase "sales literature or
other promotional material" means advertisements (defined as material published,
or designed for use in, a newspaper, magazine, or other periodical, radio,
television, telephone or tape recording, videotape display, signs or billboards,
motion pictures, telephone directories (other than routine listings), electronic
or other public media), sales literature (defined as any written or electronic
communication distributed or made generally available to customers or the public
that is not an advertisement as defined above, including, but not limited to,
circulars, research reports, market letters, performance reports or summaries,
form letters, telemarketing scripts, seminar texts, and reprints or excerpts of
any other advertisement, sales literature or published article), and educational
or training materials or communications distributed or made generally available
to some or all agents or employees.
ARTICLE 5
FEES AND EXPENSES
5.1 No party hereto shall pay any fee or other compensation to any
other party hereto pursuant to this agreement, except that if the Trust or any
Fund adopts and implements a plan pursuant to Rule 12b-1 under the 1940 Act to
finance distribution expenses, then, subject to obtaining any regulatory
approvals, the Trust may make payments to the Company for the Contracts if and
in amounts agreed to by the Trust in writing.
5.2 Each party shall reimburse each other party for expenses
initially paid by such other party but allocated to it in accordance with any
allocation of expenses specified in Article 3 hereof.
<PAGE>
ARTICLE 6
DIVERSIFICATION AND RELATED LIMITATIONS
6.1 Subject to the Company's obligations under Section 2.2 hereof,
the Trust represents and warrants that the Trust will at all times invest its
assets in such a manner as to ensure that the Contracts will be treated as
annuity or life insurance contracts under the Code and the regulations issued
thereunder. Without limiting the scope of the foregoing, the Trust will at all
times ensure that the Trust complies with Section 817(h) of the Code and Treas.
Reg. (S) 1.817-5, as amended from time to time, and any Treasury interpretations
thereof, relating to the diversification requirements for variable annuity or
life insurance contracts and any amendments or other modifications to such
Section or Regulations.
6.2 Trust shares will not be sold to any person or entity that would
result in the Contracts not being treated as annuity or life insurance
contracts, in accordance with the statutes and regulations referred to in
Section 6.1 hereof.
ARTICLE 7
POTENTIAL MATERIAL CONFLICTS
7.1 The Board shall monitor each Fund of the Trust for the existence
of any material irreconcilable conflict between the interests of the variable
annuity contract owners and the variable life policy owners of the Company
and/or affiliated companies (collectively, "contract owners") investing
indirectly in the Trust. The Trust represents that at all times at least a
majority of the trustees of the Trust shall not be interested persons, as
defined in the 1940 Act (the "disinterested trustees"). The Board shall have the
sole authority to determine if a material irreconcilable conflict exists, and
such determination shall be binding on the Company only if approved in the form
of a resolution by a majority of the Board, or a majority of the disinterested
trustees of the Board. The Board will give prompt notice of any such
determination to the Company.
7.2 The Company agrees that it will be responsible for reporting any
potential or existing conflicts to the Board. The Trust agrees that, if a
material irreconcilable conflict arises, it will at its own cost remedy such
conflict up to and including: (a) withdrawing the assets allocable to some or
all of the Accounts from the Trust or any Fund and reinvesting such assets in a
different investment medium, including (but not limited to) another Fund of the
Trust, or submitting to a vote of all affected contract owners whether to
withdraw assets from the Trust or any Fund and reinvesting such assets in a
different investment medium and, as appropriate, segregating the assets
attributable to any appropriate group of contract owners that votes in favor of
such segregation, or offering to any of the affected contract owners the option
of segregating the assets attributable to their contracts or policies; and/or
(b) establishing and registering a new management investment company and
segregating the assets underlying the Contracts, unless a majority of Contract
owners materially adversely affected by the conflict have voted to decline the
offer to establish and register a new management investment company.
<PAGE>
7.3 A majority of the disinterested trustees of the Board shall
determine whether any proposed action by the Company adequately remedies any
material irreconcilable conflict. In the event that the Board determines that
any proposed action does not adequately remedy any material irreconcilable
conflict, the Company will withdraw each Account designated by the disinterested
trustees from investment in the Trust and terminate this agreement within six
(6) months after the Board informs the Company in writing of the foregoing
determination; provided, that such withdrawal and termination shall be limited
to the extent required to remedy any such material irreconcilable conflict as
determined by a majority of the disinterested trustees of the Board.
7.4 The Trust agrees that it will not enter into any participation
agreement with any life insurance company unless such agreement includes a
section substantially identical to this Article 7.
7.5 If and to the extent the Mixed and Shared Funding Exemption Order
or any amendment thereto contains terms and conditions different from Article 3
and Article 7 of this Agreement, then the Trust and/or the Company, as
appropriate, shall take such steps as may be necessary to comply with the Mixed
and Shared Funding Exemptive Order, and Article 3 and Article 7 of this
Agreement shall continue in effect only to the extent that terms and conditions
substantially identical to such Articles are contained in the Mixed and Shared
Funding Exemptive Order or any amendment thereto. If and to the extent that Rule
6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive
relief from any provision of the 1940 Act or the rules promulgated thereunder
with respect to mixed or shared funding (as defined in the Mixed and Shared
Funding Exemptive Order) on terms and conditions materially different from those
contained in the Mixed and Shared Funding Exemptive Order, then (a) the Trust
and/or Company, as appropriate, shall take such steps as may be necessary to
comply with Rules 6e-2 and 6e-e(T), as amended, and Rule 6e-3, as adopted, to
the extent such rules are applicable; and (b) Article 3 and Article 7 of this
Agreement shall continue in effect only the extent that terms and conditions
substantially identical to such Articles are continued in such Rule(s) as so
amended or adopted.
ARTICLE 8
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
(a) The Company agrees to indemnify and hold harmless the Trust and
each of the Trust's trustees, directors, and officers and each person, if any,
who controls the Trust within the meaning of Section 15 of the 1933 Act, and any
agents or employees of the foregoing (collectively, the "Indemnified Parties"
for purposes of this Section 8.1), against any and all losses, claims, damages,
liabilities (including amounts paid in settlement with the written consent of
the Company) or litigation (including legal and other expenses), to which the
Indemnified Parties may become subject under any statute, regulation, at common
law or otherwise, insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof) or settlements are related to the sale
or acquisition of the Trust's shares or the Contracts and:
<PAGE>
(i) arise out of or are based upon any untrue statements or
alleged untrue statements of any material fact contained in the
registration statement or prospectus for the Contracts or contained
in the Contracts or sales literature for the Contracts (or any
amendment or supplement to any of the foregoing), or arise out of or
are based upon the omission or the alleged omission to state therein
a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided, that this agreement
to indemnify shall not apply as to any Indemnified Party if such
statement or omission or such alleged statement or omission was made
in reliance upon and in conformity with information furnished the
Company by or on behalf of the Trust for use in the registration
statement or prospectus for the Contracts or in the Contracts or
sales literature (or any amendment or supplement) or otherwise for
use in connection with the sale of the Contracts or Trust shares;
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature of the Trust
not supplied by the Company, or persons under its control) or
wrongful conduct of the Company or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares;
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature of the Trust or any amendment thereof
or supplement thereto or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement or
omission was made in reliance upon information furnished to the Trust
by or on behalf of the Company; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Company in this agreement
or arise out of or result from any other material breach of this
agreement by the Company; except to the extent provided in Sections
8.1(b) and 8.1(c) hereof.
(b) The Company shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Company in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Company of any
such claim shall not relieve the Company from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that failure to
notify results in failure of actual notice to the Company and the Company is
damaged solely as a result of failure to give notice. In case any such action is
brought against the Indemnified Parties, the Company shall be entitled to
participate, at its own expense, in the defense of such action. The Company also
shall be entitled to assume the defense thereof, with counsel satisfactory to
<PAGE>
the party named in the action. After notice from the Company to such party of
the Company's election to assume the defense thereof, the Indemnified Party
shall bear the fees and expenses of any additional counsel retained by it, and
the Company will not be liable to such party under this agreement for any legal
or other expenses subsequently incurred by such party independently in
connection with the defense thereof other than reasonable costs of
investigation, unless: (i) the Company and the Indemnified Party shall have
mutually agreed on the retention of such counsel; or (ii) the named parties to
any such proceeding (including any impleaded parties) include both the Company
and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. The Company shall not be liable for any settlement of any proceeding
effected without its written consent but if settled with such consent or if
there be a final judgment for the plaintiff, the Company agrees to indemnify the
Indemnified Party from all and against any loss or liability by reason of such
settlement or judgment.
(c) The Indemnified Parties will promptly notify the Company of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust and the Indemnified Parties will provide the Company with all relevant
information and documents requested by the Company. For purposes of this Section
8.1(c), the "commencement" of proceedings shall include any formal
communications from the SEC or its staff indicating that enforcement action by
said Commission or staff may be contemplated or forthcoming; this includes any
information to the effect that any matter(s) has been referred to the SEC's
Division of Enforcement.
8.2 INDEMNIFICATION BY THE TRUST.
(a) The Trust agrees to indemnify and hold harmless the Company and
each of its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act, and any agents or
employees of the foregoing (collectively, the "Indemnified Parties" for purposes
of this Section 8.2), against any and all losses, claims, damages, liabilities
(including amounts paid in settlement with the written consent of the Trust) or
litigation (including legal and other expenses) to which the Indemnified Parties
may become subject under any statute, at common law or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) or settlements are related to the sale or acquisition of the Trust's
shares or the Contracts and:
(i) arise out of or are based upon any untrue statement or
alleged-untrue statement of any material fact contained in the
registration statement or prospectus or sales literature of the Trust
(or any amendment or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided,
that this agreement to indemnify shall not apply as to any
Indemnified Party if such statement or omission or such alleged
statement or omission was made in reliance upon and in conformity
with information furnished to the Trust by or on behalf of the
Company for use in the registration statement or prospectus for the
Trust or in sales literature for the Trust (or any amendment or
<PAGE>
supplement) or otherwise for use in connection with the sale of the
Contracts or Trust shares;
(ii) arise out of or as a result of statements or representations
(other than statements or representations contained in the
registration statement, prospectus or sales literature for the
Contracts not supplied by the Trust, or persons under its control) or
wrongful conduct of the Trust or persons under its control, with
respect to the sale or distribution of the Contracts or Trust shares;
(iii) arise out of any untrue statement or alleged untrue
statement of a material fact contained in a registration statement,
prospectus, or sales literature covering the Contracts, or any
amendment thereof or supplement thereto, or the omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statement or statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to the Company by or on behalf of the Trust; or
(iv) arise out of or result from any material breach of any
representation and/or warranty made by the Trust in this agreement or
arise out of or result from any other material breach of this
agreement by the Trust (including a failure, whether unintentional or
in good faith or otherwise, to comply with the requirements specified
in Article 6 of this agreement);
except to the extent provided in Sections 8.2(b) and 8.2(c) hereof.
(b) The Trust shall not be liable under this indemnification
provision with respect to any claim made against an Indemnified Party unless
such Indemnified Party shall have notified the Trust in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Indemnified Party (or after such Indemnified Party shall have received notice of
such service on any designated agent), but failure to notify the Trust of any
such claim shall not relieve the Trust from any liability which it may have to
the Indemnified Party against whom such action is brought otherwise than on
account of this indemnification provision, except to the extent that failure to
notify results in the failure of actual notice to the Trust and the Trust is
damaged solely as a result of failure to give such notice. In case any such
action is brought against the Indemnified Parties, the Trust will be entitled to
participate, at their own expense, in the defense thereof. The Trust also shall
be entitled to assume the defense thereof, with counsel satisfactory to the
party named in the action. After notice from the Trust to such party of its
election to assume the defense thereof, the Indemnified Party shall bear the
fees and expenses of any additional counsel retained by it, and the Trust shall
not be liable to such party under this agreement for any legal or other expenses
subsequently incurred by such party independently in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the Trust and
the Indemnified Party shall have mutually agreed to the retention of such
counsel or (ii) the named parties to any such proceeding (including any
impleaded parties) include the Trust and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due to
<PAGE>
actual or potential differing interests between them. The Trust shall not be
liable for any settlement of any proceeding effected without their written
consent but if settled with such consent or if there be a final judgment for the
plaintiff, the Trust agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment.
(c) The Indemnified Parties will promptly notify the Trust of the
commencement of any litigation or proceedings against them in connection with
the issuance or sale of the Trust shares or the Contracts or the operation of
the Trust and the Indemnified Parties will provide the Trust with all relevant
information and documents requested by the Trust, respectively. For purposes of
this Section 8.1(c), the "commencement" of proceedings shall include any formal
communications from the SEC or its staff indicating that enforcement action by
said Commission or staff may be contemplated or forthcoming; this includes any
information to the effect that any matter(s) has been referred to the SEC's
Division of Enforcement.
8.3 A successor by law of the parties to this agreement shall be
entitled to the benefits of the indemnification contained in this Article 8. The
indemnification provisions contained in this Article 8 shall survive any
termination of this agreement.
ARTICLE 9
LIMITATIONS OF LIABILITY
9.1 LIMITATION OF LIABILITY OF COMPANY. The Company shall give the
Trust the benefit of the Company's best judgment and efforts in fulfilling its
obligations under this agreement; provided, that the Company shall not be liable
for any error of judgment or for any loss suffered by the Trust in connection
with the matters to which this agreement relates, except loss resulting from:
(i) willful misfeasance, bad faith or gross negligence on the part of the
Company in the performance of its obligations and duties under this agreement;
(ii) its reckless disregard of its obligations and duties under this agreement;
or (iii) a breach of Section 2.2 of this agreement.
9.2 LIMITATION OF LIABILITY OF TRUST. The Trust shall give the
Company the benefit of the Trust's best judgment and efforts in fulfilling its
obligations under this agreement; provided, that the Trust shall not be liable
for any error of judgment or for any loss suffered by the Company in connection
with the matters to which this agreement relates, except loss resulting from:
(i) willful misfeasance, bad faith or gross negligence on the part of the Trust
in the performance of its obligations and duties under this agreement or (ii)
its reckless disregard of its obligations and duties under this agreement. [The
Company agrees that the Trust's obligations hereunder shall be limited to the
assets of the Funds, and with respect to each Fund shall be limited to the
assets of such Fund, and no party shall seek satisfaction of any such obligation
from any shareholder of the Trust, nor from any trustee, officer, employee or
agent of the Trust.]
9.3 [Limitation of Liability of Participating Insurance Company's
broker-dealer affiliate, if any]
<PAGE>
ARTICLE 10
DURATION AND TERMINATION OF THIS AGREEMENT
10.1 EFFECTIVE DATE AND TERM. This agreement shall not become
effective unless and until it is approved by the Trust's Board. This agreement
shall come into full force and effect on the date which it is so approved,
provided that it shall not became effective as to any subsequently created Fund
until it has been approved by the Board specifically for such Fund.
10.2 TERMINATION.
(a) This agreement shall terminate with respect to one, some, or all
the Accounts, or one, some, or all Funds:
(i) at the option of any party upon six months' advance written
notice to the other party;
(ii) at the option of the Company to the extent that shares of
the Funds are not reasonably available to meet the requirements of
the Contracts or are not "appropriate funding vehicles" for the
Contracts, as determined by the Company reasonably and in good faith;
provided, that prompt notice of the election to terminate for such
cause and an explanation of such cause shall be furnished by the
Company;
(iii) at the option of the Trust upon institution of formal
proceedings against the Company by the SEC or any insurance
department or any other regulatory body regarding the Company's
duties under this agreement or related to the sale of the Contracts,
the operation of the Accounts, or the purchase of the Trust shares;
(iv) at the option of the Company upon institution of formal
proceedings against the Trust by the NASD, the SEC, or any state
securities or insurance department or any other regulatory body;
(v) at the option of the Company or the Trust upon receipt of any
necessary regulatory approvals and/or the vote of the Contract owners
having an interest in the Accounts (or any subaccount) to substitute
the shares of another investment company for the corresponding Fund
shares of the Trust in accordance with the terms of the Contracts for
which those Fund shares had been selected to serve as the underlying
investment media; provided, that the Company will give 30 days' prior
written notice to the Trust of the date of any proposed vote or other
action taken to replace the Trust's shares; or
(vi) at the option of the Company or the Trust, upon the other
party's material breach of any provision of this agreement.
<PAGE>
(b) Without limiting the generality of Section 10.1(a)(ii), shares of
a Fund would not be "appropriate funding vehicles" if, for example, such shares
did not meet the diversification or other requirements referred to in Article 6
hereof, the Fund did not qualify under Subchapter M of the Code, as referred to
in Section 2.4 hereof, the investments or investment policies, objectives,
and/or limitations of the Fund would impose unanticipated risks on the Company,
or if the Company would be permitted to disregard policy owner voting
instructions under the 1940 Act or the rules promulgated thereunder.
10.3 Any notice pursuant to Section 10.1 shall specify the Fund or
Funds, Contracts and, if applicable, the Accounts as to which the agreement is
to be terminated.
10.4 It is understood and agreed that the right of any party hereto
to terminate this agreement pursuant to Section 10.1(a) may be exercised for
cause or for no cause.
10.5 Except as necessary to implement Contract owner initiated
transactions, or as required by state insurance laws or regulations, the Company
shall not redeem Trust shares attributable to the Contracts (as opposed to Trust
shares attributable to the Company's assets held in the Accounts), and the
Company shall not prevent Contract owners from allocating payments to a Fund
that was otherwise available under the Contracts, until thirty (30) days after
the Company shall have notified the Trust of its intention to do so.
10.6 Notwithstanding any termination of this agreement, the Trust
shall, at the option of the Company, continue to make available additional
shares of the Funds pursuant to the terms and conditions of this agreement for
all Contracts in effect on the effective date of termination of this agreement
(the "Existing Contracts"). Specifically, without limitation, the owners of the
Existing Contracts shall be permitted to transfer or reallocate investments
under the Contracts, redeem investments in the Trust and/or invest in the Trust
upon the making of additional purchase payments under the Existing Contracts.
ARTICLE 11
NOTICES
11.1 Any notice shall be sufficiently given when sent by registered
or certified mail to the other party at the address of such party set forth
below or at such other address as such party may from time to time specify in
writing to the other party.
If to the Company:
[Name of Participating Insurance Company]
[Address]
Attn: _________________________
<PAGE>
If to the Trust:
The White Elk Funds
c/o William D. Witter, Inc.
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: Melanie Marshak
[Name of Participating Insurance Company's broker-dealer
affiliate, if any]
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 APPLICABLE LAW.
(a) This agreement shall be construed and the provisions hereof
interpreted under and in accordance with the laws of New York without regard to
conflicts of law principles or precedents.
(b) This agreement shall be subject to the provisions of the 1933,
1934 and 1940 Acts, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
12.2 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.
12.3 CAPTIONS. The captions in this agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
12.4 COUNTERPARTS. This agreement may be executed simultaneously in
multiple counterparts, each of which taken together shall constitute one and the
same instrument.
12.5 SCHEDULES. The Schedules attached hereto, as modified from time
to time, are incorporated herein by reference and are part of this agreement.
12.6 COOPERATION WITH AUTHORITIES. Each party hereto shall cooperate
with the other party and all appropriate governmental authorities (including
without limitation the SEC, the NASD, and state insurance regulators) and shall
permit such authorities reasonable access to its books and records in connection
with any investigation or inquiry relating to this agreement or the transactions
contemplated hereby.
<PAGE>
12.7 CUMULATIVE RIGHTS. The rights, remedies and obligations
contained in this agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
12.8 AMENDMENTS. This agreement may be amended at any time upon the
consent of all of the parties.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed in their names and on their behalf by their duly authorized officers
all on the day and year first above written.
[NAME OF PARTICIPATING INSURANCE CO.]
By:
---------------------------------
Title:
------------------------------
THE WHITE ELK FUNDS
By:
---------------------------------
Title:
------------------------------
<PAGE>
SCHEDULE A
ACCOUNTS, CONTRACTS AND FUNDS SUBJECT
TO THE PARTICIPATION AGREEMENT
[NAME OF PARTICIPATING INSURANCE COMPANY] VARIABLE ANNUITY SEPARATE ACCOUNT:
- ---------------------------------------------------------------------------
CONTRACTS: */
---------
FUNDS: White Elk Large Cap Growth Fund**/
-----
White Elk Mid Cap Growth Fund**/
White Elk Small Cap Growth Fund**/
White Elk Large Cap Value Fund**/
White Elk Mid Cap Value Fund**/
White Elk Small Cap Value Fund**/
White Elk Leveraged All Cap Fund**/
White Elk Global Equity Fund**/
White Elk Long-Term Bond Fund**/
White Elk Medium-Term Bond Fund**/
White Elk Money Market Fund**/
[NAME OF PARTICIPATING INSURANCE COMPANY] VARIABLE LIFE SEPARATE ACCOUNT:
- ------------------------------------------------------------------------
CONTRACTS: */
---------
FUNDS: White Elk Large Cap Growth Fund**/
-----
White Elk Mid Cap Growth Fund**/
White Elk Small Cap Growth Fund**/
White Elk Large Cap Value Fund**/
<PAGE>
White Elk Mid Cap Value Fund**/
White Elk Small Cap Value Fund**/
White Elk Leveraged All Cap Fund**/
White Elk Global Equity Fund**/
White Elk Long-Term Bond Fund**/
White Elk Medium-Term Bond Fund**/
White Elk Money Market Fund**/
- -----------------------
*/ After effectiveness of registration statements for the Contract.
**/ After effectiveness of registration statement for the Fund.
E X H I B I T 11
- - - - - - - --
THE WHITE ELK FUNDS
-----------------------------------------------------
Transfer Agency Agreement
-----------------------------------------------------
<PAGE>
TRANSFER AGENCY AGREEMENT
between
THE WHITE ELK FUNDS
and
STATE STREET BANK AND TRUST COMPANY
1C-Domestic Trust/Series
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
1. Terms of Appointment; Duties of the Bank................................1
2. Fees and Expenses.......................................................3
3. Representations and Warranties of the Bank..............................4
4. Representations and Warranties of the Fund..............................4
5. Data Access and Proprietary Information.................................5
6. Indemnification.........................................................6
7. Standard of Care........................................................7
8. Covenants of the Fund and the Bank......................................7
9. Termination of Agreement................................................8
10. Additional Funds........................................................8
11. Assignment..............................................................9
12. Amendment...............................................................9
13. Massachusetts Law to Apply..............................................9
14. Force Majeure...........................................................9
15. Consequential Damages...................................................9
16. Merger of Agreement.....................................................9
17. Limitations of Liability of the Trustees or Shareholders...............10
18. Counterparts...........................................................10
19. Reproduction of Documents..............................................10
<PAGE>
TRANSFER AGENCY AGREEMENT
-------------------------
AGREEMENT made as of the 12th day of February, 1998, by and between
The White Elk Funds, a Massachusetts business trust, having its principal office
and place of business at 153 E. 53rd Street, New York, New York 10022 (the
"Fund"), and State Street Bank and Trust Company, a Massachusetts trust company
having its principal office and place of business at 225 Franklin Street,
Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in eleven series,
White Elk Large Cap Growth Fund, White Elk Mid Cap Growth Fund, White Elk Small
Cap Growth Fund, White Elk Large Cap Value Fund, White Elk Mid Cap Value Fund,
White Elk Small Cap Value Fund, White Elk Leveraged All Cap Fund, White Elk
Global Equity Fund, White Elk Long-Term Bond Fund, White Elk Medium-Term Bond
Fund, White Elk Money Market Fund (each such series, together with all other
series subsequently established by the Fund and made subject to this Agreement
in accordance with Article 10, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the
Bank as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities, and the
Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.1 Subject to the terms and conditions set forth in this
Agreement, the Fund, on behalf of the Portfolios, hereby employs and appoints
the Bank to act as, and the Bank agrees to act as its transfer agent for the
Fund's authorized and issued shares of beneficial interest, $.001 par value,
("Shares"), dividend disbursing agent, custodian of certain retirement plans and
agent in connection with any accumulation, open-account or similar plans
provided to the shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective prospectus and statement
of additional information ("prospectus") of the Fund on behalf of the applicable
Portfolio, including without limitation any periodic investment plan or periodic
withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as applicable
and the Bank, the Bank shall:
<PAGE>
(i) Receive for acceptance, orders for the purchase of Shares,
and promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the
Declaration of Trust of the Fund (the "Custodian");
(ii) Pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and
redemption directions and deliver the appropriate documentation
thereof to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and
(iii) above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be deemed
to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners
thereof upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and
distributions declared by the Fund on behalf of the applicable
Portfolio;
(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt by the
Bank of indemnification satisfactory to the Bank and protecting
the Bank and the Fund, and the Bank at its option, may issue
replacement certificates in place of mutilated stock certificates
upon presentation thereof and without such indemnity;
(ix) Maintain records of account for and advise the Fund and
its Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number of
shares of the Fund which are authorized, based upon data provided
to it by the Fund, and issued and outstanding. The Bank shall also
provide the Fund on a regular basis with the total number of
shares which are authorized and issued and outstanding and shall
have no obligation, when recording the issuance of shares, 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 Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i) perform the
customary services of a transfer agent, dividend disbursing agent, custodian of
certain retirement plans and, as relevant, agent in connection with
<PAGE>
accumulation, open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to: maintaining all Shareholder accounts, preparing Shareholder meeting
lists, mailing proxies, mailing Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident alien
accounts, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders, preparing and mailing confirmation
forms and statements of account to Shareholders for all purchases and
redemptions of Shares and other confirmable transactions in Shareholder
accounts, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which will
enable the Fund to monitor the total number of Shares sold in each State.
(c) In addition, the Fund shall: (i) identify to the Bank in
writing those transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of transactions for
each State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Bank for the Fund's blue sky
State registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services
in Section 1 may be established from time to time by agreement between the Fund
on behalf of each Portfolio and the Bank per the attached service responsibility
schedule. The Bank may at times perform only a portion of these services and the
Fund or its agent may perform these services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the
Fund (i.e., escheatment services) which may be agreed upon in writing between
the Fund and the Bank.
2. FEES AND EXPENSES
2.1 For the performance by the Bank pursuant to this Agreement,
the Fund agrees on behalf of each of the Portfolios to pay the Bank an annual
maintenance fee for each Shareholder account as set out in the initial fee
schedule attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time subject to
mutual written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund
agrees on behalf of each of the Portfolios to reimburse the Bank for
out-of-pocket expenses, including but not limited to confirmation production,
postage, forms, telephone, microfilm, microfiche, tabulating proxies, records
storage, or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by the Bank
at the request or with the consent of the Fund, will be reimbursed by the Fund
on behalf of the applicable Portfolio.
<PAGE>
2.3 The Fund agrees on behalf of each of the Portfolios to pay all
fees and reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all shareholder accounts shall be advanced to the
Bank by the Fund at least seven (7) days prior to the mailing date of such
materials.
3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing under the
laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and
By-Laws to enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Bank that:
4.1 It is a business trust duly organized and existing and in good
standing under the laws of The Commonwealth of Massachusetts.
4.2 It is empowered under applicable laws and by its Declaration
of Trust and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Agreement and
Declaration of Trust and By-Laws have been taken to authorize it to enter into
and perform this Agreement.
4.4 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as
amended on behalf of each of the Portfolios is currently effective and will
remain effective, and appropriate state securities law filings have been made
and will continue to be made, with respect to all Shares of the Fund being
offered for sale.
<PAGE>
5. DATA ACCESS AND PROPRIETARY INFORMATION
5.1 The Fund acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank on
data bases under the control and ownership of the Bank or other third party
("Data Access Services") constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of substantial
value to the Bank or other third party. In no event shall Proprietary
Information be deemed Customer Data. The Fund agrees to treat all Proprietary
Information as proprietary to the Bank and further agrees that it shall not
divulge any Proprietary Information to any person or organization except as may
be provided hereunder. Without limiting the foregoing, the Fund agrees for
itself and its employees and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any portion
of the Proprietary Information, and if such access is inadvertently obtained, to
inform in a timely manner of such fact and dispose of such information in
accordance with the Bank's instructions;
(d) to refrain from causing or allowing the data acquired
hereunder from being retransmitted to any other computer facility or other
location, except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in Proprietary Information
at common law, under federal copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees
of their obligations pursuant to this Section 5. The obligations of this Section
shall survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain certain
data included in the Data Access Services are solely responsible for the
contents of such data and the Fund agrees to make no claim against the Bank
arising out of the contents of such third-party data, including, but not limited
<PAGE>
to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND
SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS,
AS AVAILABLE BASIS. The BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE
EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.3 If the transactions available to the Fund include the ability
to originate electronic instructions to the Bank in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Bank from time to time.
6. INDEMNIFICATION
6.1 The Bank shall not be responsible for, and the Fund shall on
behalf of the applicable Portfolio indemnify and hold the Bank harmless from and
against, any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors
required to be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records, documents or services which (i) are
received by the Bank or its agents or subcontractors, and (ii) have been
prepared, maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer agent or
registrar.
(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any instructions or requests of the Fund on behalf of the
applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
(f) The negotiation and processing by the Bank of checks not made
payable to the order of the Bank, the Fund, the Fund's management company,
transfer agent or distributor or the retirement account custodian or trustee for
a plan account investing in Shares, which checks are tendered to the Bank for
<PAGE>
the purchase of Shares (i.e., checks made payable to prospective or existing
Shareholders, such checks are commonly known as "third party checks").
6.2 At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund on behalf of the applicable Portfolio for any
action taken or omitted by it in reliance upon such instructions or upon the
opinion of such counsel. The Bank, its agents and subcontractors shall be
protected and indemnified in acting upon any paper or document, reasonably
believed to be genuine and to have been signed by the proper person or persons,
or upon any instruction, information, data, records or documents provided the
Bank or its agents or subcontractors by machine readable input, telex, CRT data
entry or other similar means authorized by the Fund, and shall not be held to
have notice of any change of authority of any person, until receipt of written
notice thereof from the Fund. The Bank, its agents and subcontractors shall also
be protected and indemnified in recognizing stock certificates which are
reasonably believed to bear the proper manual or facsimile signatures of the
officers of the Fund, and the proper countersignature of any former transfer
agent or former registrar, or of a co-transfer agent or co-registrar.
6.3 In order that the indemnification provisions contained in this
Section 6 shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of such
assertion, and shall keep the Fund advised with respect to all developments
concerning such claim. The Fund shall have the option to participate with the
Bank in the defense of such claim or to defend against said claim in its own
name or in the name of the Bank. The Bank shall in no case confess any claim or
make any compromise in any case in which the Fund may be required to indemnify
the Bank except with the Fund's prior written consent.
7. STANDARD OF CARE
The Bank shall at all times act in good faith and agrees to use
its best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its employees.
8. COVENANTS OF THE FUND AND THE BANK
8.1 The Fund shall on behalf of each of the Portfolios promptly
furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees of
the Fund authorizing the appointment of the Bank and the execution and delivery
of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the Fund and
all amendments thereto.
<PAGE>
8.2 The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
8.3 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.4 The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.5 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
9. TERMINATION OF AGREEMENT
9.1 This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund on behalf of the applicable Portfolio(s). Additionally, the
Bank reserves the right to charge for any other reasonable expenses associated
with such termination and/or a charge equivalent to the average of three (3)
months' fees.
10. ADDITIONAL FUNDS
t In the event that the Fund establishes one or more series of
Shares in addition to White Elk Large Cap Growth Fund, White Elk Mid Cap Growth
Fund, White Elk Small Cap Growth Fund, White Elk Large Cap Value Fund, White Elk
Mid Cap Value Fund, White Elk Small Cap Value Fund, White Elk Leveraged All Cap
Fund, White Elk Global Equity Fund, White Elk Long-Term Bond Fund, White Elk
Medium-Term Bond Fund, White Elk Money Market Fund with respect to which it
desires to have the Bank render services as transfer agent under the terms
hereof, it shall so notify the Bank in writing, and if the Bank agrees in
writing to provide such services, such series of Shares shall become a Portfolio
hereunder.
<PAGE>
11. ASSIGNMENT
11.1 Except as provided in Section 11.3 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the
Fund, subcontract for the performance hereof with (i) Boston Financial Data
Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as
a transfer agent pursuant to Section 17A(c)(2) of the Securities Exchange Act of
1934, as amended ("Section 17A(c)(2)"), (ii) a BFDS subsidiary duly registered
as a transfer agent pursuant to Section 17A(c)(2) or (iii) a BFDS affiliate;
provided, however, that the Bank shall be as fully responsible to the Fund for
the acts and omissions of any subcontractor as it is for its own acts and
omissions.
12. AMENDMENT
This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Trustees of the Fund.
13. MASSACHUSETTS LAW TO APPLY
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
14. FORCE MAJEURE
In the event either party is unable to perform its obligations under
the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
15. CONSEQUENTIAL DAMAGES
Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
16. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
<PAGE>
17. LIMITATIONS OF LIABILITY OF THE TRUSTEES OR SHAREHOLDERS
A copy of the Agreement and Declaration of Trust of the Fund is on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Fund as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or Shareholders individually
but are binding only upon the assets and property of the Fund.
18. COUNTERPARTS
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
19. REPRODUCTION OF DOCUMENTS
This Agreement and all schedules, exhibits, attachments and
amendments hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
THE WHITE ELK FUNDS
BY: /s/ William D. Witter
-------------------------------
President
ATTEST:
/s/ Melanie Marshak
- -------------------------------
Treasurer
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
-------------------------------
Executive Vice President
ATTEST:
/s/ Marc L. Parsons
- -------------------------------
Associate Counsel
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
SERVICE PERFORMED RESPONSIBILITY
- ----------------- --------------
BANK FUND
---- ----
1. Receives orders for the purchase of X
Shares.
2. Issue Shares and hold Shares in
Shareholders accounts. X
3. Receive redemption requests. X
4. Effect transactions 1-3 above
directly with broker-dealers. NA
5. Pay over monies to redeeming
Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends and
distributions. X
8. Issue Replacement Certificates. NA
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and
accurate control book for each
issue of securities. NA
12. Mail proxies. X
13. Mail Shareholder reports. X
<PAGE>
SERVICE PERFORMED RESPONSIBILITY
- ----------------- --------------
BANK FUND
---- ----
14. Mail prospectuses to current
Shareholders. X
15. Withhold taxes on U.S. resident and
non-resident alien accounts. X
16. Prepare and file U.S. Treasury
Department forms. X
17. Prepare and mail account and
confirmation statements for
Shareholders. X
18. Provide Shareholder account
information. X
19. Blue sky reporting. NA
* Such services are more fully described in Section 1.2 (a), (b) and (c) of
the Agreement.
<PAGE>
THE WHITE ELK FUNDS
BY: /s/ William D. Witter
-------------------------------
President
ATTEST:
/s/ Melanie Marshak
- -------------------------------
Treasurer
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Ronald E. Logue
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Executive Vice President
ATTEST:
/s/ Marc L. Parsons
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Associate Counsel
<PAGE>
FUNDS TRANSFER
OPERATING GUIDELINES
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1. OBLIGATION OF THE SENDER: State Street is authorized to promptly debit
client's accounts upon the receipt of a payment order in compliance with the
selected Security Procedure chosen for funds transfer and in the amount of money
that State Street has been instructed to transfer. State Street shall execute
payment orders in compliance with the Security Procedure and with the
Client's/Investment Manager's instructions on the execution date provided that
such payment order is received by the customary deadline for processing such a
request, unless the payment order specifies a later time. All payment orders and
communications received after this time will be deemed to have been received on
the next business day.
2. SECURITY PROCEDURE: The Client acknowledges that the Security Procedure it
has designated on the Selection Form was selected by the Client from Security
Procedures offered by State Street. The Client shall restrict access to
confidential information relating to the Security Procedure to authorized
persons as communicated in writing to State Street. The Client must notify State
Street immediately if it has reason to believe unauthorized persons may have
obtained access to such information or of any change in the Client's authorized
personnel. State Street shall verify the authenticity of all instructions
according to the Security Procedure.
3. ACCOUNT NUMBERS: State Street shall process all payment orders on the basis
of the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the account
number, the account number shall take precedence and govern.
4. REJECTION: State Street reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of State Street's receipt of such payment
order; (b) if initiating such payment order would cause State Street, in State
Street's sole judgment, to exceed any volume, aggregate dollar, network, time,
credit or similar limits upon wire transfers which are applicable to State
Street; or (c) if State Street, in good faith, is unable to satisfy itself that
the transaction has been properly authorized.
5. CANCELLATION OR AMENDMENT: State Street shall use reasonable efforts to act
on all authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests are received
in a timely manner affording State Street reasonable opportunity to act.
However, State Street assumes no liability if the request for amendment or
cancellation cannot be satisfied.
6. ERRORS: State Street shall assume no responsibility for failure to detect any
erroneous payment order provided that State Street complies with the payment
order instructions as received and State Street complies with the Security
Procedure. The Security Procedure is established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.
7. INTEREST AND LIABILITY LIMITS: State Street shall assume no responsibility
for lost interest with respect to the refundable amount of any unauthorized
payment order, unless State Street is notified of the unauthorized payment order
within thirty (30) days of notification by State Street of the acceptance of
such payment order. In no event shall State Street be liable for special,
indirect or consequential damages, even if advised of the possibility of such
damages and even for failure to execute a payment order.
<PAGE>
8. AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS: When a
Client initiates or receives ACH credit and debit entries pursuant to these
Guidelines and the rules of the National Automated Clearing House Association
and the New England Clearing House Association, State Street will act as an
Originating Depository Financial Institution and/or Receiving Depository
Institution, as the case may be, with respect to such entries. Credits given by
State Street with respect to an ACH credit entry are provisional until State
Street receives final settlement for such entry from the Federal Reserve Bank.
If State Street does not receive such final settlement, the Client agrees that
State Street shall receive a refund of the amount credited to the Client in
connection with such entry, and the party making payment to the Client via such
entry shall not be deemed to have paid the amount of the entry.
9. CONFIRMATION STATEMENTS: Confirmation of State Street's execution of payment
orders shall ordinarily be provided within 24 hours' notice which may be
delivered through State Street's proprietary information systems, such as, but
not limited to Horizon and GlobalQuest(R), or by facsimile or callback. The
Client must report any objections to the execution of a payment order within 30
days.
I understand and agree to the terms and conditions described above. I am
authorized to sign on behalf of each of the mutual funds or other entities named
on Schedule A attached. EACH OF THE PARTIES NAMED ON SCHEDULE A ATTACHED HERETO.
By: Melanie Marshak /s/ Melanie Marshak Vice-President 10/8/98
-------------------- -------------------- -------------- ---------
Type or Print Name Authorized Signature Title Date
<PAGE>
FUNDS TRANSFER
SCHEDULE A
NAME OF MANAGEMENT COMPANY: White Elk Asset Management, Inc.
________________________________________________
FUND NAME(S): THE WHITE ELK FUNDS, together with each of its
series which are made subject to that certain
Custodial Agreement dated as of 2/12/98.
White Elk Large Cap Growth Fund
White Elk Mid Cap Growth Fund
White Elk Small Cap Growth Fund
White Elk Large Cap Value Fund
White Elk Mid Cap Value Fund
White Elk Small Cap Value Fund
White Elk Leveraged All Cap Fund
White Elk Global Equity Fund
White Elk Long-Term Bond Fund
White Elk Medium-Term Bond Fund
White Elk Money Market Fund
THE WHITE ELK FUNDS
AUTHORIZED SIGNATURE: /s/ Melanie Marshak
---------------------------
Name: Melanie Marshak
Title: Vice-President
DATE: 10/8/98
<PAGE>
FUNDS TRANSFER INSTRUCTIONS
TELEPHONE CONFIRMATION
- ----------------------
CLIENT/INVESTMENT MANAGER White Elk Asset Management, Inc.
_____________________________________
Company
AUTHORIZED INITIATORS
Please Type or Print
PLEASE PROVIDE A LISTING OF YOUR STAFF MEMBERS WHO ARE CURRENTLY AUTHORIZED TO
INITIATE WIRE TRANSFER INSTRUCTIONS TO STATE STREET:
NAME TITLE SPECIMEN SIGNATURE
Melanie Marshak Vice-President-IA /s/ Melanie Marshak
- ----------------------- ----------------------- ------------------------
Eileen Lawrence N/A /s/ Eileen Lawrence
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William D. Witter President-IA /s/ William D. Witter
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- ----------------------- ----------------------- ------------------------
- ----------------------- ----------------------- ------------------------
AUTHORIZED VERIFIERS
Please Type or Print
PLEASE PROVIDE A LISTING OF YOUR STAFF MEMBERS WHO WILL BE CALLED BACK TO VERIFY
THE INITIATION OF REPETITIVE WIRES OF $10 MILLION OR MORE AND ALL NON-REPETITIVE
WIRE INSTRUCTIONS:
NAME CALLBACK PHONE NUMBER DOLLAR LIMITATION (IF ANY)
Melanie Marshak 212-753-7878 N/A
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Eileen Lawrence 212-753-7878 N/A
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William D. Witter 212-753-7878 N/A
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- ----------------------- ----------------------- ------------------------
- ----------------------- ----------------------- ------------------------
Melanie Marshak /s/ Melanie Marshak
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Type or Print Name Authorized Signature
Vice-President 10/8/98
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Title Date
<PAGE>
FUNDS TRANSFER SECURITY PROCEDURES
SELECTION FORM
- --------------
Please select one or more of the funds transfer security procedures indicated
below.
_
|_|SWIFT
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions that
provides telecommunications services for its membership. Participation is
limited to securities brokers and dealers, clearing and depository institutions,
recognized exchanges for securities, and investment management institutions.
SWIFT provides a number of security features through encryption and
authentication to protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent changes to
messages. SWIFT is considered to be one of the most secure and efficient
networks for the delivery of funds transfer instructions. SELECTION OF THIS
SECURITY PROCEDURE WOULD BE MOST APPROPRIATE FOR EXISTING SWIFT MEMBERS.
_
|_|STANDING INSTRUCTIONS
Standing Instructions may be used where funds are transferred to a broker on the
Client's established list of brokers with which it engages in foreign exchange
transactions. Only the date, the currency and the currency amount are variable.
In order to establish this procedure, State Street will send to the Client a
list of the brokers that State Street has determined are used by the Client. The
Client will confirm the list in writing, and State Street will verify the
written confirmation by telephone. Standing Instructions will be subject to a
mutually agreed upon limit. If the payment order exceeds the established limit,
the Standing Instruction will be confirmed by telephone prior to execution.
_
|_|REMOTE BATCH TRANSMISSION
Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU) data
communications between the Client and State Street. Security procedures include
encryption and/or the use of a test key by those individuals authorized as
Automated Batch Verifiers. CLIENTS SELECTING THIS OPTION SHOULD HAVE AN EXISTING
FACILITY FOR COMPLETING CPU-CPU TRANSMISSIONS. THIS DELIVERY MECHANISM IS
TYPICALLY USED FOR HIGH-VOLUME BUSINESS.
_
|_|GLOBAL HORIZON INTERCHANGESM FUNDS
TRANSFER SERVICE Global Horizon Interchange Funds Transfer Service (FTS) is a
State Street proprietary microcomputer-based wire initiation system. FTS enables
Clients to electronically transmit authenticated Fedwire, CHIPS or internal book
transfer instructions to State Street. THIS DELIVERY MECHANISM IS MOST
APPROPRIATE FOR CLIENTS WITH A LOW-TO-MEDIUM NUMBER OF TRANSACTIONS (5-75 PER
DAY), ALLOWING CLIENTS TO ENTER, BATCH, AND REVIEW WIRE TRANSFER INSTRUCTIONS ON
THEIR PC PRIOR TO RELEASE TO STATE STREET.
_
|X|TELEPHONE CONFIRMATION (CALLBACK)
Telephone confirmation will be used to verify all non-repetitive funds transfer
instructions received via untested facsimile or phone. This procedure requires
Clients to designate individuals as authorized initiators and authorized
verifiers. State Street will verify that the instruction contains the signature
of an authorized person and prior to execution, will contact someone other than
the originator at the Client's location to authenticate the instruction.
SELECTION OF THIS ALTERNATIVE IS APPROPRIATE FOR CLIENTS WHO DO NOT HAVE THE
CAPABILITY TO USE OTHER SECURITY PROCEDURES.
<PAGE>
_
|X|REPETITIVE WIRES
For situations where funds are transferred periodically (minimum of one
instruction per calendar quarter) from an existing authorized account to the
same payee (destination bank and account number) and only the date and currency
amount are variable, a repetitive wire may be implemented. Repetitive wires will
be subject to a mutually agreed upon limit. If the payment order exceeds the
established limit, the instruction will be confirmed by telephone prior to
execution. Telephone confirmation is used to establish this process. Repetitive
wire instructions must be reconfirmed annually. THIS ALTERNATIVE IS RECOMMENDED
WHENEVER FUNDS ARE FREQUENTLY TRANSFERRED BETWEEN THE SAME TWO ACCOUNTS.
_
|_|TRANSFERS INITIATED BY FACSIMILE
The Client faxes wire transfer instructions directly to State Street Mutual Fund
Services. Standard security procedure requires the use of a random number test
key for all transfers. Every six months the Client receives test key logs from
State Street. The test key contains alpha-numeric characters, which the Client
puts on each document faxed to State Street. This procedure ensures all wire
instructions received via fax are authorized by the Client. WE PROVIDE THIS
OPTION FOR CLIENTS WHO WISH TO BATCH WIRE INSTRUCTIONS AND TRANSMIT THESE AS A
GROUP TO STATE STREET MUTUAL FUND SERVICES ONCE OR SEVERAL TIME A DAY.
IMPORTANT: SIGNATURE REQUIRED ON THE REVERSE SIDE
<PAGE>
FUNDS TRANSFER SECURITY PROCEDURES
_
|_|AUTOMATED CLEARING HOUSE (ACH)
State Street receives an automated transmission or a magnetic tape from a Client
for the initiation of payment (credit) or collection (debit) transactions
through the ACH network. The transactions contained on each transmission or tape
must be authenticated by the Client. Clients using ACH must select one or more
of the following delivery options:
_
|_|GLOBAL HORIZON INTERCHANGE AUTOMATED
CLEARING HOUSE SERVICE Transactions are created on a microcomputer, assembled
into batches and delivered to State Street via fully authenticated electronic
transmissions in standard NACHA formats.
_
|_|Transmission from Client PC to State Street Mainframe with Telephone Callback
_
|_|Transmission from Client Mainframe to State Street Mainframe with Telephone
Callback
_
|_|Transmission from DST Systems to State Street Mainframe with Encryption
_
|_|Magnetic Tape Delivered to State Street with Telephone Callback
State Street is hereby instructed to accept funds transfer instructions only via
the delivery methods and security procedures indicated. The selected delivery
methods and security procedure(s) will be effective ____________________ for
payment orders initiated by our organization.
I am authorized to sign below on behalf of each of the mutual funds or other
entities named in Schedule A attached.
EACH OF THE PARTIES NAMED ON SCHEDULE A ATTACHED HERETO
By: Melanie Marshak /s/ Melanie Marshak Vice-President 10/8/98
-------------------- -------------------- -------------- ---------
Type or Print Name Authorized Signature Title Date
KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?
CLIENT OPERATIONS CONTACT ALTERNATE CONTACT
Melanie Marshak Eileen Lawrence
- ---------------------------- ------------------------------
Name Name
153 E. 53rd Street, 51st Flr. 153 E. 53rd Street, 51st Flr.
- ---------------------------- ------------------------------
Address Address
New York, NY 10022 New York, NY 10022
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City/State/Zip Code City/State/Zip Code
212-753-7878 212-753-7878
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Telephone Number Telephone Number
212-486-7697 212-486-7697
- ---------------------------- ------------------------------
Facsimile Number Facsimile Number
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SWIFT Number
- ---------------------------
Telex Number
E X H I B I T 12
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THE WHITE ELK FUNDS
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Form of Consent and Opinion of Counsel
as to Legality of Shares
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<PAGE>
Hughes Hubbard & Reed LLP
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One Battery Park Plaza
New York, New York 10004-1482
Telephone: 212-837-6000
Facsimile: 212-422-4726
EXHIBIT 12
October 8, 1998
The White Elk Funds
153 East 53rd Street
New York, New York 10022
Re: The White Elk Funds
--------------------
Dear Ladies and Gentlemen:
The White Elk Funds (the "Trust") is an open-end, diversified
management investment company organized as a Massachusetts business trust that
currently offers investors a selection of eleven investment funds (the "Funds")
pursuant to a Declaration of Trust dated November 11, 1997. The Trust is
intended to be a funding vehicle for variable annuity contracts and variable
life insurance policies to be offered by the separate accounts of life insurance
companies. Shares of the Trust are also offered directly to qualified pension
and retirement plans.
We have, as counsel, participated in various business and other
matters related to the Trust. We have examined copies, either certified or
otherwise proved to be genuine, of the Declaration of Trust and By-Laws of the
Trust, the minutes of meetings of the trustees and other documents relating to
the organization and operation of the Trust, and we generally are familiar with
its business affairs. Based on the foregoing, it is our opinion that the
unlimited number of unissued Shares which are currently being registered may be
legally and validly issued from time to time in accordance with the Trust's
Declaration of Trust and By-Laws and subject to compliance with the Securities
Act of 1933, the Investment Company Act of 1940, and applicable state laws
regulating the offer and sale of securities; and when so issued, will be legally
issued, fully paid and nonassessable by the Trust. The Trust is an entity of the
type commonly known as a "business trust." Under the laws of certain states,
shareholders could, under certain circumstances, be held personally liable for
the obligations of the Trust. The Declaration of Trust provides that the Trust
shall not have any claim against shareholders except for the payment of the
purchase price of shares. It also requires that each note, bond, contract,
certificate or other undertaking issued by or on behalf of the Trust or the
Trustees include a provision limiting the obligations created thereby to the
Trust and its assets. The Declaration of Trust further provides (i) for
indemnification out of the assets of the applicable series for all losses and
<TABLE>
<CAPTION>
<S> <C> <C> <C>
47, Avenue Georges 1775 I Street, 350 South Grand 201 South Biscayne Boulevard
Mandel N.W. Washington, Avenue Miami, FL
75116 Paris, France D.C. Los Angeles, CA 33131-4332
(33) (1) 44.05.80.00 20006-2401 90071-3442 305-358-1666
202-721-4600 213-613-2800
</TABLE>
<PAGE>
Hughes Hubbard & Reed LLP
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Page 2
expenses of any shareholder held personally liable for the obligations of the
Trust solely by virtue of ownership of shares of the Trust and (ii) for the
Trust, upon the request of a shareholder, to assume the defense of any claim
against the shareholder for any act or obligation of the Trust. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the applicable series would be unable to meet
its obligations.
We hereby consent to the filing of this opinion in connection with the
Trust's Registration Statement on Form N-1A to be filed with the Securities and
Exchange Commission.
/s/ Hughes Hubbard & Reed LLP
E X H I B I T 13
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THE WHITE ELK FUNDS
-------------------------------------------
Form of Subscription Agreement
-------------------------------------------
<PAGE>
FORM OF SUBSCRIPTION AGREEMENT
This Subscription Agreement ("Agreement") between The White Elk Funds (the
"Funds"), a business trust organized under the laws of the Commonwealth of
Massachusetts, and ____________________________ (the "undersigned")
(collectively, the "Parties").
In consideration of the mutual promises set forth herein, the Parties agree
as follows:
1. The Fund agrees to sell to the undersigned, and the undersigned agrees to
purchase, _____________ shares of beneficial interest of the Fund ("Shares") at
a price of ten dollars ($10.00) per Share for each series of the Fund in the
following amounts: _____________ Shares of White Elk Large Cap Growth Fund,
_________ Shares of White Elk Mid Cap Growth Fund, ___________ Shares of White
Elk Small Cap Growth Fund, ____________ Shares of White Elk Large Cap Value
Fund, ___________ Shares of White Elk Mid Cap Value Fund, _________________
Shares of White Elk Small Cap Value Fund, _____________ Shares of White Elk
Leveraged All Cap Fund, ___________ Shares of White Elk Global Equity Fund,
__________ Shares of White Elk Long-Term Bond Fund, ___________ Shares of White
Elk Medium-Term Bond Fund, and __________ Shares of White Elk Money Market Fund,
on a date to be specified by the Fund, prior to the effective date of the Fund's
Form N-1A Registration Statement under the Securities Act of 1933 ("1933 Act").
2. The undersigned represents and warrants to the Fund that the Shares are
being acquired solely for investment purposes and not with a view towards resale
or disposition of all or any part thereof, and that he or she has no present
plan or intention to sell or otherwise dispose of the Shares or any part
thereof.
3. The undersigned represents and warrants that he or she has such knowledge
and experience of financial and business matters to evaluate the merits and
risks of the prospective investment and to make an informed decision.
4. The undersigned acknowledges that the Shares have not been registered under
any state of federal securities laws and that, therefore, the Fund is relying on
certain exemptions therein from such registration requirements, including
exemptions dependent on the intent of the undersigned in acquiring the Shares.
5. The undersigned represents and warrants that the sale of any of the Shares
will only be made by redemption to the Fund and not by a transfer to any third
party.
6. The undersigned agrees to withdraw any request to redeem any of the Shares
to the extent that the Fund informs the undersigned that the effect of such
redemption could have a material adverse effect on the series of the Fund.
<PAGE>
7. The undersigned agrees not to otherwise dispose of the Shares or any part
thereof unless a registration statement with respect to such Shares is then in
effect under the 1933 Act and under any applicable state securities laws or
unless the undersigned shall have delivered to the Fund an opinion of counsel,
in form and substance acceptable to the Fund, that no such registration is
necessary.
8. The Parties acknowledge that there are no agreements or arrangements
between the undersigned and any of the Fund's officers, directors, employees or
its investment adviser, or any affiliated persons thereof with respect to the
redemption of the Shares or the future distribution of Fund shares.
9. The undersigned acknowledges that the or she is aware that in issuing and
selling these Shares, the Fund is relying upon the representations, warranties
and acknowledgments contained herein.
IN WITNESS WHEREOF, the Parties hereto have executed this agreement on this
_____ day of _____________, 1998.
THE WHITE ELK FUNDS NAME OF SUBSCRIBER
BY: ______________________________ ____________________________
<PAGE>
FORM OF SUBSCRIPTION AGREEMENT
This Subscription Agreement ("Agreement") between The White Elk Funds (the
"Funds"), a business trust organized under the laws of the Commonwealth of
Massachusetts, and William D. Witter (the "undersigned") (collectively, the
"Parties").
In consideration of the mutual promises set forth herein, the Parties
agree as follows:
1. The Fund agrees to sell to the undersigned, and the undersigned agrees to
purchase, 100,000 shares of beneficial interest of the White Elk Money Market
Fund ("Shares") at a price of one dollar ($1.00) per Share for each series of
the Fund in the following amounts on a date to be specified by the Fund, prior
to the effective date of the Fund's Form N-1A Registration Statement under the
Securities Act of 1933 ("1933 Act").
2. The undersigned represents and warrants to the Fund that the Shares are being
acquired solely for investment purposes and not with a view towards resale or
disposition of all or any part thereof, and that he or she has no present plan
or intention to sell or otherwise dispose of the Shares or any part thereof.
3. The undersigned represents and warrants that he or she has such knowledge and
experience of financial and business matters to evaluate the merits and risks of
the prospective investment and to make an informed decision.
4. The undersigned acknowledges that the Shares have not been registered under
any state of federal securities laws and that, therefore, the Fund is relying on
certain exemptions therein from such registration requirements, including
exemptions dependent on the intent of the undersigned in acquiring the Shares.
5. The undersigned represents and warrants that the sale of any of the Shares
will only be made by redemption to the Fund and not by a transfer to any third
party.
6. The undersigned agrees to withdraw any request to redeem any of the Shares to
the extent that the Fund informs the undersigned that the effect of such
redemption could have a material adverse effect on the series of the Fund.
7. The undersigned agrees not to otherwise dispose of the Shares or any part
thereof unless a registration statement with respect to such Shares is then in
effect under the 1933 Act and under any applicable state securities laws or
unless the undersigned shall have delivered to the Fund an opinion of counsel,
in form and substance acceptable to the Fund, that no such registration is
necessary.
8. The Parties acknowledge that there are no agreements or arrangements between
the undersigned and any of the Fund's officers, directors, employees or its
investment adviser, or any affiliated persons thereof with respect to the
redemption of the Shares or the future distribution of Fund shares.
<PAGE>
9. The undersigned acknowledges that the or she is aware that in issuing and
selling these Shares, the Fund is relying upon the representations, warranties
and acknowledgments contained herein.
IN WITNESS WHEREOF, the Parties hereto have executed this agreement on
this 6th day of October, 1998.
THE WHITE ELK FUNDS WILLIAM D. WITTER
BY: /s/ Melanie Marshak /s/ William D. Witter
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