U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No.
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Post-Effective Amendment No.
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No.
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(Check appropriate box or boxes)
DUNHILL INVESTMENT TRUST
(Exact Name of Registrant as Specified in Charter)
7424 Jager Court
Cincinnati, OH 45230
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (513) 624-5900
Jasen M. Snelling
CityFund Advisory, Inc.
7424 Jager Court
Cincinnati, OH 45230
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
Registration Statement becomes effective.
Registrant hereby declares its intention to register and indefinite number of
shares of beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940.
The Registrant hereby amends this Registration Statement on such date of dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration State shall become effective on
such date as the Commission acting pursuant to said Section 8(a) may determine.
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DUNHILL INVESTMENT TRUST
Cross-Reference Sheet Pursuant to Rule 495(a)
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PART A PROSPECTUS
FORM ITEM CROSS-REFERENCE
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Item 1. Cover Page Cover Page
Item 2. Synopsis Prospectus Summary; Synopsis of Costs and
Expenses
Item 3. Condensed Financial Information Financial Highlights; Dividends,
Distributions, Taxes and Other Information
Item 4. General Description of Registrant Investment Objective, Investment Policies and
Risk Considerations; Management of the Fund
Item 5. Management of the Fund Management of the Fund
Item 5A. Management's Discussion of Fund Performance Not Applicable
Item 6. Capital Stock and Distributions, Other Dividends, Distributions, Taxes and Other
Securities Information
Item 7. Purchase of Securities Being Offered How to Purchase Shares
Item 8. Redemption or Repurchase of Securities Being How to Redeem Shares
offered
Item 9. Pending Legal Proceedings Not Applicable
PART B STATEMENT OF ADDITIONAL INFORMATION
FORM ITEM CROSS-REFERENCE
Item 10. Cover Page Cover Page
Item 11. Table of Contents Cover Page
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Item 12. General Information and History Description of the Trust
Item 13. Investment Objectives and Policies Investment Objective and Policies; Investment
Limitations; Appendix A-Description of Ratings
Item 14. Management of the Fund Trustees and Officers
Item 15. Control Persons and Principal Holders of Trustees and Officers
Securities
Item 16. Investment Advisory and Other Services Investment Manager; Investment Advisor;
Transfer Agent and Administrator
Item 17. Brokerage Allocation Brokerage
Item 18. Capital Stock and Other Securities Description of the Trust
Item 19. Purchase, Redemption and Pricing of Securities Additional Purchase and Redemption
Being Offered Information; How Share Price is Determined
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Distributor
Item 22. Calculation of Performance Data Calculation of Performance Data
Item 23. Financial Statements Financial Statements and Reports
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PROSPECTUS
__________, 1998
REGIONAL OPPORTUNITY FUND:
OHIO, INDIANA, KENTUCKY
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The investment objective of the REGIONAL OPPORTUNITY FUND: OHIO, INDIANA,
KENTUCKY is to provide long-term capital growth by investing primarily in common
stocks and other equity securities of publicly-traded companies headquartered in
Greater Cincinnati and the Cincinnati tri-state region, and those companies
having a significant presence in the region. While there is no assurance that
the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus.
The Fund's shares are sold subject to a maximum 5% contingent deferred sales
charge and a 12b-1 distribution fee of up to 1% of average daily net assets.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
INVESTMENT MANAGER
Dunhill Investment Advisors, Limited
700 W. Pete Rose Way
Longworth Hall, Ste. #127
Cincinnati, Ohio 45203
The Regional Opportunity Fund: Ohio, Indiana, Kentucky (the "Fund") is a
non-diversified, open-end series of Dunhill Investment Trust, a registered
management investment company.
Pursuant to an Agreement and Plan of Reorganization dated __________, 1998, the
Fund, on or about ____________, 1998, will succeed to the assets and liabilities
of another mutual fund of the same name (the Predecessor Fund"), which is an
investment series of Maplewood Investment Trust. The investment objective,
policies and restrictions of the Fund and the Predecessor Fund are substantially
identical and the financial data and information in this Prospectus relates to
the Predecessor Fund.
This Prospectus provides you with the basic information you should know before
investing. You should read it and keep it for future reference. A Statement of
Additional Information, dated ___________, 1998, containing additional
information about the Fund has been filed with the Securities and Exchange
Commission and is incorporated by reference in this Prospectus in its entirety.
The Fund's address is P.O. Box 54944, Cincinnati, Ohio 45254-0944. The Fund's
telephone number is 1-513-241-5555. A copy of the Statement of Additional
Information may be obtained at no charge by calling or writing the Fund.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY........................................................
SYNOPSIS OF COSTS AND EXPENSES............................................
FINANCIAL HIGHLIGHTS......................................................
INVESTMENT OBJECTIVE, INVESTMENT POLICIES
AND RISK CONSIDERATIONS.................................................
HOW TO PURCHASE SHARES....................................................
HOW TO REDEEM SHARES......................................................
HOW SHARES ARE VALUED.....................................................
MANAGEMENT OF THE FUND....................................................
DISTRIBUTOR AND DISTRIBUTION PLAN.........................................
DIVIDENDS, DISTRIBUTIONS, TAXES AND OTHER INFORMATION.....................
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTUS SUMMARY
THE FUND. The Regional Opportunity Fund: Ohio, Indiana, Kentucky (the "Fund") is
a non-diversified, open-end management investment company commonly known as a
"mutual fund." The Fund's investment objective is to provide long-term capital
growth. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this Prospectus.
INVESTMENT APPROACH. In seeking to achieve the Fund's investment objective, the
Fund will invest primarily in common stocks and other equity securities of
publicly-traded companies headquartered in the Cincinnati tri-state region, and
those companies having a significant presence in the tri-state region.
Realization of current income is not a significant investment consideration and
any income realized will be incidental to the Fund's objective. (See "Investment
Objective, Investment Policies and Risk Considerations.")
INVESTMENT ADVISOR. CityFund Advisory, Inc. (the "Advisor") serves as investment
advisor to the Fund. For its services, the Advisor receives compensation of
1.25% of the average daily net assets of the Fund. (See "Management of the
Fund.")
PURCHASE OF SHARES. Shares of the Fund are offered at net asset value and are
subject to a maximum 5% contingent deferred sales charge and 12b-1 distribution
fees of up to 1% of average daily net assets. The contingent deferred sales
charge may be reduced or eliminated as described in this Prospectus. The minimum
initial investment is $1,000 ($250 for IRA accounts). (See "How to Purchase
Shares.")
REDEMPTION OF SHARES. Redemptions of shares of the Fund may be subject to a
contingent deferred sales charge as described in this Prospectus. Shares may be
redeemed at any time in which the Fund is open for business at the net asset
value next determined after receipt of a redemption request by the Fund, less
any applicable contingent deferred sales charge. A shareholder who submits
written authorization may redeem shares by telephone. (See "How to Redeem
Shares.")
DIVIDENDS AND DISTRIBUTIONS. Net investment income and net capital gains, if
any, are distributed annually. Shareholders may elect to receive dividends and
distributions in cash or the dividends and distributions may be reinvested in
additional Fund shares. (See "Dividends, Distributions, Taxes and Other
Information.")
MANAGEMENT. The Fund is a series of Dunhill Investment Trust (the "Trust"), the
Board of Trustees of which is responsible for overall management of the Trust
and the Fund. The Trust has also employed the Manager to provide administration
and transfer agent services. (See "Management of the Fund.")
DISTRIBUTOR. Alpha-Omega Capital Corp. (the "Distributor") serves as the
national distributor of shares of the Fund. For its services, the Distributor
receives commissions from the Manager for the sale of Fund shares. (See
"Distributor and Distribution Plan.")
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SYNOPSIS OF COSTS AND EXPENSES
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Charge Imposed on Purchases
(As a percentage of offering price) ........................... None
Maximum Contingent Deferred Sales Charge
(As a percentage of original purchase price
or redemption proceeds, whichever is lower) ................... 5.00%
Sales Charge Imposed on Reinvested Dividends ....................... None
Redemption Fee....................................................... None
ANNUAL FUND OPERATING EXPENSES:
(As a percentage of average net assets)
Management Fees After Waivers(1) %
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12b-1 Fees(2) 1.00%
Other Expenses %
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Total Operating Expenses After Waivers(3) 2.70%
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(1) Absent waivers of management fees, such fees would be 1.25%.
(2) Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales loads permitted by the National Association of
Securities Dealers.
(3) Absent waivers of management fees, total operating expenses would be _____%.
EXAMPLE:
You would pay the following expenses on a $1,000 investment, assuming 5% annual
return and redemption at the end of the period:
1 Year $ 77
3 Years 114
5 Years 153
10 Years 303
You would pay the following expenses on $1,000 investment, assuming 5% annual
return and no redemption at the end of the period:
1 Year $ 27
3 Years 84
5 Years 143
10 Years 303
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The purpose of the foregoing table is to assist investors in the Fund in
understanding the various costs and expenses that they will bear directly or
indirectly. See "Management of the Fund" for more information about the fees and
costs of operating the Fund. The Annual Fund Operating Expenses shown above are
based upon expenses incurrent by the Predecessor Fund during the most recent
fiscal year. The Manager intends to waive its investment advisory fees and
reimburse the Fund for expenses to the extent necessary to limit total operating
expenses to 2.70% of its average net assets. THE EXAMPLES SHOWN SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES IN THE
FUTURE MAY BE GREATER OR LESS THAN THOSE SHOWN.
FINANCIAL HIGHLIGHTS
The following audited financial information for the Predecessor Fund has been
audited by KPMG Peat Marwick LLP, independent auditors, and should be read in
conjunction with the financial statements. The annual financial statements as of
February 28, 1998 and the independent auditors' report thereon appear in the
Statement of Additional Information, a copy of which may be obtained at no
charge by calling the Fund.
Further information about the performance of the Predecessor Fund is contained
in the Annual Report, a copy of which can be obtained at no charge by calling
the Fund.
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INVESTMENT OBJECTIVE, INVESTMENT POLICIES
AND RISK CONSIDERATIONS
The investment objective of the Fund is to provide long-term capital growth by
investing primarily in common stocks and other equity securities of
publicly-traded companies headquartered in Greater Cincinnati and the Cincinnati
tri-state region, and those companies having a significant presence in the
Cincinnati tri-state region ("Tri-State Regional Securities"). Realization of
current income will not be a significant investment consideration, and any such
income realized should be considered incidental to the Fund's objective. Any
investment involves risk, and there can be no assurance that the Fund will
achieve its investment objective. The investment objective and fundamental
investment limitations of the Fund may not be altered without the prior approval
of a majority, as defined by the Investment Company Act of 1940 (the "1940 Act")
of the Fund's shares.
The Advisor believes that the demographic and economic characteristics of
Greater Cincinnati and the Cincinnati tri-state region, including population,
employment, retail sales, personal income, bank loans, bank deposits and
residential construction are such that many companies headquartered in the
Cincinnati tri-state region, or having a significant presence in the region by
virtue of having a significant portion of their corporate earnings generated
from operations in the region, have a greater than average potential for capital
appreciation. For these purposes, the Advisor defines the Cincinnati tri-state
region to be Greater Cincinnati and its surrounding area, including all of Ohio,
Kentucky and Indiana. If a company is not headquartered in the Cincinnati
tri-state region, the Advisor will consider such company as having a
"significant presence" in the Cincinnati tri-state region if 50% or more of its
profits are generated from operations (including plants, offices or a sales
force) based in the region and/or the company employs 500 or more in its
operations within the region.
INVESTMENT SELECTION. Through fundamental analysis the Advisor will attempt to
identify securities and groups of securities with potential for capital
appreciation. Under normal market conditions, not less than 65% of the Fund's
total assets will be invested in Tri-State Regional Securities. The Advisor will
generally focus on common stocks and other equity securities of large companies
headquartered or having a significant presence in the Cincinnati tri-state
region that have exhibited a history of ten years or more of increased earnings
and/or dividend distribution per share. The Fund will generally remain fully
invested at all times. The Advisor intends to limit portfolio turnover in the
Fund, believing that a long-term rather than a short-term selection of
investments is preferable.
The equity securities in which the Fund may invest include common stocks,
convertible preferred stocks, straight preferred stocks and investment grade
convertible bonds. The Fund may also invest up to 5% of its net assets in
warrants or rights to acquire equity securities other than those acquired in
units or attached to other securities. (See "Investment Limitations.")
The Fund's concentration in companies headquartered in or having a significant
presence in the Cincinnati tri-state region generally will tie the performance
of the Fund to the economic environment of Cincinnati and the surrounding area.
There is no assurance that the demographic and economic
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Characteristics and other factors that the Advisor believes favor companies in
the Cincinnati tri-state region will continue in the future. Moreover, the
Fund's portfolio may include securities of smaller companies and companies that
are not nationally recognized. The prices of stocks of such companies generally
are more volatile than those of larger or more mature companies, their
securities are generally less liquid, and they are more likely to be negatively
affected by adverse economic or market conditions. Moreover, because of its
concentration, the Fund's portfolio may be invested in a smaller number of
companies than a general equity mutual fund. This may result in imbalances
relative to diversification by industry sector. These limitations may also
restrict the Advisor from using certain traditional analytical measures employed
to select investments and also exclude some strategies that could offer superior
performance or reduce fluctuations in the values of such assets.
Under normal market conditions, at least 90% of the Fund's total assets will be
invested in equity securities (with at least 65% of the Fund's total assets
invested in Tri-State Regional Securities). Warrants and rights will be excluded
for purposes of this calculation. As a temporary defensive measure, however, the
Fund may invest up to 100% of its total assets in investment grade bonds, U.S.
Government Securities or money market instruments. When the Fund invests its
assets in investment grade bonds, U.S. Government Securities or money market
instruments as a temporary defensive measure, it is not pursuing its stated
investment objective.
U.S. GOVERNMENT SECURITIES. The Fund may invest a portion of its assets in U.S.
Government Securities. "U.S. Government Securities" include U.S. Treasury notes,
U.S. Treasury bonds, and U.S. Treasury bills, obligations guaranteed by the U.S.
Government such as Government National Mortgage Association as well as
obligations of U.S. Government authorities, agencies and instrumentalities such
as Federal National Mortgage Association, Federal Home Loan Mortgage
Corporation, Federal Farm Credit Bank, Federal Home Loan Bank, Resolution
Funding Corporation, Financing Corporation, Tennessee Valley Authority and
Student Loan Marketing Association. U.S. Government Securities may be acquired
subject to repurchase agreements. While obligations of some U.S. Government
sponsored entities are supported by the full faith and credit of the U.S.
Government, several are supported by the right of the issuer to borrow from the
U.S. Government, and still others are supported only by the credit of the issuer
itself. The guarantee of the U.S. Government does not extend to the yield or
value of the U.S. Government Securities held by the Fund or to the Fund's
shares.
MONEY MARKET INSTRUMENTS. Money market instruments may be purchased for
temporary defensive purposes when the Advisor believes that unusually volatile
or unstable economic and market conditions exist. When the Fund assumes a
temporary defensive posture, it may invest up to 100% of its net assets in money
market instruments. Under normal circumstances, money market instruments will
typically represent a portion of the Fund's portfolio, as funds awaiting
investment, to accumulate cash for anticipated purchases of portfolio securities
and to provide for shareholder redemptions and operational expenses of the Fund.
Money market instruments mature in thirteen months or less from the date of
purchase and include U.S. Government Securities (defined above) and corporate
debt securities (including those subject to repurchase agreements), bankers'
acceptances and certificates of deposit of domestic branches of U.S. banks, and
commercial paper (including variable amount demand master notes). At the time of
purchase, money market instruments will have a short-term rating in one of the
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two highest categories by any nationally recognized statistical rating
organization ("NRSRO") or, if not rated, of equivalent quality in the Advisor's
opinion. See the Statement of Additional Information for a further description
of money market instruments.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or other
high-grade debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to five days of
the purchase. For purposes of the 1940 Act, a repurchase agreement is considered
to be a loan collateralized by the securities subject to the repurchase
agreement. The Fund will not enter into a repurchase agreement which will cause
more than 10% of its assets to be invested in repurchase agreements which extend
beyond seven days and other illiquid securities.
INVESTMENT COMPANIES. In order to achieve its investment objective, the Fund may
invest in the securities of open-end investment companies which are generally
authorized to invest in securities eligible for purchase by the Fund. To the
extent the Fund does so, Fund shareholders would indirectly pay a portion of the
operating costs of the underlying investment companies. These costs include
management, brokerage, shareholder servicing and other operational expenses.
Indirectly, then, shareholders may pay higher operational costs than if they
owned the underlying investment companies directly. The Fund will only invest in
other investment companies by purchase of such securities on the open market
where no commission or profit to a sponsor or dealer results from the purchase
other than the customary broker's commissions or when the purchase is part of a
plan of merger, consolidation, reorganization or acquisition. The Advisor will
waive its advisory fee for that portion of the Fund's assets invested in other
investment companies, except when such purchase is part of a plan of merger,
consolidation, reorganization or acquisition.
The Fund may invest up to 10% of its total assets in securities of other
investment companies. In addition, the Fund will not invest more than 5% of its
total assets in securities of any single investment company, nor will it
purchase more than 3% of the outstanding voting securities of any investment
company.
REAL ESTATE SECURITIES. The Fund may not invest in real estate (including
limited partnership interests), but may invest in readily marketable securities
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein. The Fund may also invest in readily
marketable interests in real estate investment trusts ("REITs"). REITs are
generally publicly traded on the national stock exchanges and in the
over-the-counter market and have varying degrees of liquidity. Although the Fund
is not limited in the amount of REITs it may acquire, the Fund does not
presently intend to invest more than 5% of its net assets in REITs.
OPTIONS ON PORTFOLIO SECURITIES. When the Advisor believes that individual
portfolio securities are approaching the top of the Advisor's growth and price
expectations, covered call options (calls) may be
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written (sold) against such securities in a disciplined approach to selling
portfolio securities. The Fund writes options only for hedging purposes and not
for speculation. If the Advisor is incorrect in its expectations and the market
price of a stock subject to a call option rises above the exercise price of the
option, the Fund will lose the opportunity for further appreciation of that
security. Additional information on writing covered call options is contained in
the Statement of Additional Information.
FACTORS TO CONSIDER. The Fund is not intended to be a complete investment
program and there can be no assurance that the Fund will achieve its investment
objective. To the extent that a major portion of the Fund's portfolio consists
of common stocks and other equity securities, it may be expected that its net
asset value will be subject to greater fluctuation than a portfolio containing
mostly fixed-income securities. The Fund is a non-diversified fund and therefore
may invest more than 5% of its total assets in the securities of one or more
issuers. Because a relatively high percentage of the assets of the Fund may be
invested in the securities of a limited number of issuers, the value of shares
of the Fund may be more sensitive to any single economic, business, political or
regulatory occurrence than the value of shares of a diversified investment
company. The Fund may borrow only under certain limited conditions (including to
meet redemption requests), but not to purchase securities. Borrowing, if done,
would tend to exaggerate the effects of market fluctuations in the Fund's net
asset value until repaid. (See "Borrowing").
PORTFOLIO TURNOVER. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. The Fund's annual portfolio turnover generally is not expected to
exceed 100%. Market conditions may dictate, however, a higher rate of portfolio
turnover in a particular year. The degree of portfolio activity affects the
brokerage costs of the Fund and may have an impact on the amount of taxable
distributions to shareholders.
BORROWING. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and may increase the limit to 15% of its total assets to
meet redemption requests which might otherwise require untimely disposition of
portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on portfolio net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund would be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with such borrowing. The Fund will not make any
additional investments while its outstanding borrowings exceed 5% of the current
value of its total assets.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. Included within the category of illiquid securities are restricted
securities, which cannot be resold to the public without registration under the
federal securities laws. Unless registered for sale, these securities can only
be sold in privately negotiated transactions or pursuant to an exemption from
registration.
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FORWARD COMMITMENTS AND WHEN-ISSUED SECURITIES. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.
INVESTMENT LIMITATIONS. For the purpose of limiting the Fund's exposure to risk,
the Fund has adopted certain investment limitations. The Fund will not: (1)
issue senior securities, borrow money or pledge its assets, except that it may
borrow from banks as a temporary measure (a) for extraordinary or emergency
purposes, in amounts not exceeding 5% of the Fund's total assets, or (b) in
order to meet redemption requests which might otherwise require untimely
disposition of portfolio securities in amounts not exceeding 15% of its total
assets (the Fund will not make any investment if borrowings exceed 5% of its
total assets); (2) make loans of money or securities, except that the Fund may
invest in repurchase agreements (but repurchase agreements having a maturity of
longer than seven days are subject to the limitation on investing in illiquid
securities); (3) invest more than 10% of its net assets in illiquid securities;
(4) invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of bonds,
guarantors), if more than 5% of its total assets would be invested in such
securities; (5) purchase foreign securities; (6) purchase or sell commodities,
commodities contracts, real estate (including limited partnership interests, but
excluding readily marketable securities secured by real estate or interests
therein, readily marketable interests in real estate investment trusts, or
readily marketable securities issued by companies that invest in real estate or
interests therein) or interests in oil, gas, or other mineral exploration or
development programs or leases (although it may invest in readily marketable
securities of issuers that invest in or sponsor such programs or leases); (7)
invest more than 10% of its total assets in the securities of other investment
companies; (8) invest more than 25% of its total assets in the securities of
issuers within a single industry; (9) write, purchase, or sell puts, calls,
straddles, spreads or combinations thereof, or futures contracts or related
options (but the Fund may write covered call options as described in this
Prospectus); and (10) invest more than 5% of its net assets in warrants.
Investment restrictions (1),(2),(5),(6),(7),(8) and (10) are deemed fundamental,
that is, they may not be changed without shareholder approval. See "Investment
Limitations" in the Fund's Statement of Additional Information for a complete
list of investment limitations.
If the Board of Trustees determines that the Fund's investment objective can
best be achieved by a substantive change in a nonfundamental investment
limitation, the Board can make such change without shareholder approval and will
disclose any such material changes in its Prospectus. Any limitation that is not
specified in the Fund's Prospectus or Statement of Additional Information as
being fundamental is non fundamental. If a percentage limitation is satisfied at
the time of investment, a later increase or
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decrease in such percentage resulting from a change in the value of the Fund's
portfolio securities will not constitute a violation of such limitation.
HOW TO PURCHASE SHARES
Assistance in opening accounts may be obtained from the Manager by calling
1-513-241-5555, or by writing to the Fund at the address shown below for regular
mail orders. Assistance is also available through any broker-dealer authorized
to sell shares of the Fund. Such broker-dealer may charge you a fee for its
services. Payment for shares purchased for your account may be made through the
broker-dealer processing your application and order to purchase. Your investment
will purchase shares at the net asset value next determined after your order is
received by the Fund in proper form as indicated herein. The minimum initial
investment in the Fund is $1,000 ($250 for IRAs). The Fund may, in the Manager's
sole discretion, accept certain accounts with less than the stated minimum
initial investment.
Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. All orders received by the Manager, whether by mail, bank wire or
facsimile order, prior to 4:00 p.m., Eastern time, will purchase shares at the
next determined public offering price on that business day. If your order is not
received by 4:00 p.m., Eastern time, your order will purchase shares at the
public offering price determined on the next business day. Broker-dealers are
responsible for transmitting properly completed orders so that they will be
received by 4:00 p.m., Eastern time.
Regular Mail Orders. Please complete and sign the Account Application form
accompanying this Prospectus and send it with your check, made payable to the
Regional Opportunity Fund, and mail it to:
Regional Opportunity Fund
c/o Shareholder Services
P.O. Box 54944
Cincinnati, Ohio 45254-0944
Bank Wire Orders. Investments can be made directly by bank wire. To establish a
new account or add to an existing account by wire, please call the Fund, AT
1-513-241-5555 before wiring funds, to advise the Fund of the investment, the
dollar amount and the account registration. This will ensure prompt and accurate
handling of your investment. Please have your bank use the following wiring
instructions to purchase by wire:
The Fifth Third Bank
ABA# 042000314
For Dunhill Investment Trust #__________
For the Regional Opportunity Fund
(Shareholder name and account number)
It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. Once your wire is
sent you should, as soon as possible thereafter,
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complete and mail your Account Application to the Fund as described under
"Regular Mail Orders," above. Investors should be aware that some banks may
impose a wire service fee.
ADDITIONAL INVESTMENTS. You may add to your account by mail or wire at any time
by purchasing shares at the then current net asset value or public offering
price as aforementioned. Before making additional investments by bank wire,
please call the Fund, AT 1-513-241-5555 to alert the Fund that your wire is to
be sent. Follow the wire instructions above to send your wire. When calling for
any reason, please have your account number ready, if known. Mail orders should
include, when possible, the "Invest by Mail" stub which is attached to your Fund
confirmation statement. Otherwise, be sure to identify your account in your
letter.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables shareholders to
make regular monthly or bimonthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Manager will automatically charge the checking account for the
amount specified ($50 minimum), which will be automatically invested in shares
at net asset value or the public offering price, whichever is applicable, on or
about the fifteenth day and/or the last business day of the month. Shareholders
may change the amount of the investment or discontinue the plan at any time by
writing to the Manager.
STOCK CERTIFICATES. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
which will show the number of shares owned.
CONTINGENT DEFERRED SALES CHARGE. Shares of the Fund are sold at net asset value
and are subject to a contingent deferred sales charge ("CDSC") at the rates set
forth in the chart below if they are redeemed within five years of their date of
purchase. Shares are sold without a front-end sales charge so that the Fund will
receive the full amount of the investor's purchase payment. Dealers, however,
will receive commissions from the Manager in connection with sales of Fund
shares. These commissions will be paid from the Manager's own funds.
The Manager currently expects to pay sales commissions to dealers at the time of
sale of up to 4.5% of the purchase price of the Class B shares sold by such
dealer. An additional 0.5% of the purchase price of such shares will be paid by
the Manager to the Distributor. The Manager will use its own funds or funds
facilitated by the Manager (which may be borrowed or otherwise financed) to pay
such sales commission.
Proceeds from the CDSC and the distribution fees payable under the Fund's
Distribution Plan (up to 1% of the Fund's average net assets) will be paid to
the Manager and are used in whole or in part by the Manager to defray the
expenses of dealers and sales personnel related to providing
distribution-related expenses to the Fund in connection with the sale of Fund
shares, such as the payment of commissions to dealers and sales personnel for
selling shares. The combination of the CDSC and the ongoing distribution fees
facilitates the ability of the Fund to sell Fund shares without a front-end
sales charge.
A CDSC applies if a redemption of Fund shares is made during the five years
since the purchase of such shares. The charge declines from 5% to zero over a
five year period. The CDSC will be deducted from the redemption proceeds and
will reduce the amount paid to the redeeming investor. A CDSC will be
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applied to the lesser of the original purchase price or the current value of the
shares being redeemed. Accordingly, no CDSC will be imposed on increases in net
asset value above the initial purchase price. In addition, no CDSC will be
imposed on shares issued through reinvested dividends or capital gains
distributions. The amount of the CDSC, if any, will vary depending on the number
of years from the time of initial purchase of Fund shares until the time the
shares are redeemed in accordance with the following schedule.
Contingent Deferred Sales
Years Since Purchase Charge as a Percentage
Payment Made of Dollar Amount
------------ ----------------
First 5.00%
Second 4.00
Third 3.00
Fourth 2.00
Fifth 1.00
Sixth and Thereafter NONE
In determining whether a CDSC is applicable to a redemption, the calculation
will be determined in the manner that results in the lowest applicable rate
being charged. Therefore, it will be assumed that the redemption is first of
shares held for over five years or shares acquired pursuant to reinvestment of
dividends or distributions and then of shares held longest during the five-year
period. The charge will not be applied to dollar amounts representing an
increase in net asset value since the time of purchase.
To provide an example, assume an investor purchased 100 shares at $10 per share
(at a cost of $1,000) and in the third year after purchase, the net asset value
per share is $12 and, during such time, the investor has acquired 10 additional
shares upon dividend reinvestment. If at such time the investor makes his first
redemption of 50 shares (proceeds of $600), 10 shares will not be subject to the
deferred sales charge because of dividend reinvestment. With respect to the
remaining 40 shares, the deferred sales charge is applied only to the original
cost of $10 per share and not to the increase in net asset value of $2 per
share. Therefore, $400 of the $600 redemption proceeds will be charged at a rate
of 3% (the applicable rate in the third year after purchase).
CONTINGENT DEFERRED SALES CHARGE WAIVERS. The Fund offers the following waiver
policies, which are designed to eliminate the CDSC when a shareholder's state of
affairs unexpectedly changes or under the other limited circumstances described
below. For the waiver to become effective, the shareholder or shareholder's
estate must meet all the conditions of the waiver policy. Please note that
additional documentation may be required depending on the policy requirements.
1. DEATH. The CDSC is waived when death occurs on an individual account if the
beneficiary redeems all or part of the investment within one year of death. A
letter of instruction to redeem from the estate administrator must accompany a
certified certificate of death and a copy of the instrument appointing the
administrator. Shares transferred to a beneficiary's account retain the same
CDSC status as the original account.
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Death of fewer than all shareholders in a joint account will not qualify a share
redemption for the waiver at any time during the period in which the CDSC
applies. The remaining shareholder(s) retain the same CDSC status had the death
not occurred.
2. DISABILITY. The CDSC is waived when an individual becomes disabled at any
age. Disability is defined using the definition contained in the Internal
Revenue Code. A person is generally considered disabled if he cannot do any
substantial gainful activity (comparable to what he engaged in prior his
disability) because of any physical or mental impairment. A physician must
determine that the impairment is expected to continue for a long and indefinite
period or to result in death. Qualifying shares must be redeemed within one year
of the initial disability. Subsequent disabling events may extend the one year
redemption period if the disability is separate and distinct from the initial
qualifying disability. The following documentation is required: A letter of
instruction to redeem must accompany a copy of Social Security Administration
Schedule R or a notarized letter from the shareholder's physician describing the
nature of the disability, the date of onset, and a statement that the disability
is semi-permanent or expected to result in death.
3. MINIMUM REQUIRED DISTRIBUTIONS. The CDSC is waived in connection with
distributions from IRA, 403(b)(7), and qualified employee benefit plan accounts
due to the shareholders reaching age 70 1/2.
4. INVOLUNTARY REDEMPTIONS. The CDSC is waived in connection with involuntary
redemptions of Fund shares in accounts with low balances as described in "How to
Redeem Shares" below.
OTHER PURCHASE INFORMATION. Under certain circumstances, the Advisor, in its
sole discretion, may allow payment in kind for Fund shares purchased by
accepting securities in lieu of cash. Any securities so accepted would be valued
on the date received and included in the calculation of the net asset value of
the Fund. See the Statement of Additional Information for more information on
purchases in kind.
Due to Internal Revenue Service ("IRS") regulations, the Fund is required to,
and will, withhold taxes on all distributions and redemption proceeds without
social security or tax identification numbers, if the number is not delivered to
the Fund within 60 days. If, however, you have already applied for a social
security or tax identification number at the time of completing your account
application, the application should so indicate.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Manager and certain of their affiliates,
excluding such entities from certain liabilities (including, among others,
losses resulting from unauthorized shareholder transactions) relating to the
various services made available to investors.
Should an order to purchase shares be cancelled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Fund or the Manager in the transaction.
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HOW TO REDEEM SHARES
Shares of the Fund may be redeemed on each day that the Fund is open for
business. The Fund is open for business on each day the New York Stock Exchange
(the "Exchange") is open for business. Any redemption may be for more or less
than the purchase price of your shares depending on the market value of the
Fund's portfolio securities. All redemption orders received in proper form, as
indicated herein, by the Manager prior to 4:00 p.m., Eastern time, will redeem
shares at the net asset value determined as of that business day's close of
trading, less any applicable contingent deferred sales charge. Otherwise, your
order will redeem shares on the next business day. There is no charge for
redemptions from the Fund other than the contingent deferred sales charge
imposed on certain redemptions of Fund shares. You may also redeem your shares
through a broker-dealer or other institution which may charge you a fee for its
services.
The Board of Trustees reserves the right to involuntarily redeem any account
having an account value of less than $1,000 (due to redemptions, exchanges or
transfers, but not due to market action) upon 30 days' written notice. If the
shareholder brings his account value up to $1,000 or more during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to tax withholding.
If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-513-241-5555 or write to the address shown below.
REGULAR MAIL REDEMPTIONS. Your request should be addressed to the Regional
Opportunity Fund, P.O. Box 54944 Cincinnati, Ohio 45254-0944. Your request for
redemption must include:
1) your letter of instruction specifying the account number and the number of
shares or dollar amount to be redeemed. This request must be signed by all
registered shareholders in the exact names in which they are registered;
2) any required signature guarantees (see "Signature Guarantees"); and
3) other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds will be mailed to you within three business days after
receipt of your redemption request. However, the Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days) may
be reduced or avoided if the purchase is made by wire transfer. In such cases,
the net asset value next determined after receipt of the request for redemption
will be used in processing the redemption and your redemption proceeds will be
mailed to you upon clearance of your check to purchase shares. The Fund may
suspend redemption privileges or postpone the date of payment (i) during any
period that the Exchange is closed, or trading on the Exchange is restricted as
determined by the Securities and Exchange Commission (the "Commission"), (ii)
during any period
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when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for the Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.
TELEPHONE AND BANK WIRE REDEMPTIONS. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. You may redeem
shares, subject to the procedures outlined below, by calling the Fund
nationwide, 1-888-___-____, in Cincinnati ___-____. The Fund will redeem shares
when requested by telephone if, and only if, the shareholder confirms redemption
instructions in writing. The Fund may rely upon confirmation of redemption
requests transmitted via facsimile (FAX # 513-___-____). The confirmation
instructions must include:
1) Shareholder name and account number;
2) Number of shares or dollar amount to be redeemed;
3) Instructions for transmittal of redemption funds to the shareholder;
4) Shareholder signature as it appears on the application then on file with
the Fund; and
5) Any required signature guarantees (see "Signature Guarantees").
In such cases, the net asset value used in processing the redemption will be the
net asset value next determined after the telephone request is received.
Proceeds from the redemption of Fund shares will be reduced by the amount of any
applicable contingent deferred sales charge imposed on such shares. Redemption
proceeds will not be remitted until written confirmation of the redemption
request is received. You can choose to have redemption proceeds mailed to you at
your address of record, your bank, or to any other authorized person, or you can
have the proceeds sent by bank wire to your bank ($1,000 minimum). Shares of the
Fund may not be redeemed by wire on days in which your bank is not open for
business. Redemption proceeds will only be sent to the bank account or person
named in your Account Application currently on file with the Fund. You can
change your redemption instructions anytime you wish by filing a letter with the
Fund including your new redemption instructions. (See "Signature Guarantees.")
The Fund reserves the right to restrict or cancel telephone redemption
privileges for any or all shareholders, without notice, if the Trustees believe
it to be in the best interest of the shareholders to do so. During drastic
economic and market changes, telephone redemption privileges may be difficult to
implement.
Neither the Trust, the Manager, nor their respective affiliates will be liable
for complying with telephone instructions they reasonably believe to be genuine
or for any loss, damage, cost or expense in acting on such telephone
instructions. The affected shareholders will bear the risk of any such loss. The
Trust or the Manager, or both, will employ reasonable procedures to determine
that telephone instructions are genuine. If the Trust and/or the Manager do not
employ such procedures, they may be liable for losses
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due to unauthorized or fraudulent instructions. These procedures may include,
among others, requiring forms of personal identification prior to acting upon
telephone instructions, providing written confirmation of the transactions
and/or tape recording telephone instructions.
There is currently no charge by the Manager for wire redemptions. However, the
Manager reserves the right, upon thirty days' written notice, to make reasonable
charges for wire redemptions. All charges will be deducted from your account by
redemption of shares in your account. Your bank or brokerage firm may also
impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of the Fund valued at
$5,000 or more at the current net asset value may establish a Systematic
Withdrawal Plan to receive a monthly or quarterly check in a stated amount of
not less than $50. Each month or quarter, as specified, the Fund will
automatically redeem sufficient shares from your account to meet the specified
withdrawal amount. The shareholder may establish this service whether dividends
and distributions are reinvested or paid in cash. Systematic withdrawals may be
deposited directly to the shareholder's bank account by completing the
applicable section on the Account Application form accompanying this Prospectus,
or by calling or writing the Fund. See the Statement of Additional Information
for further details.
The amount of regular periodic payments specified by shareholders pursuant to a
Systematic Withdrawal Plan will be reduced by any applicable contingent deferred
sales charge. Because of the effects of this deferred sales charge, the
maintenance of a Systematic Withdrawal Plan may be disadvantageous for
shareholders.
SIGNATURE GUARANTEES. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, and (2)
requests to establish or change redemption services other than through your
initial account application, and (3) requests for redemptions in excess of
$25,000. Signature guarantees are acceptable from a member bank of the Federal
Reserve System, a savings and loan institution, credit union, registered
broker-dealer or a member firm of a U.S. Stock Exchange, and must appear on the
written request for redemption or change of registration.
HOW SHARES ARE VALUED
The net asset value of shares of the Fund is determined on each business day
that the Exchange is open for trading, as of the close of the Exchange
(currently 4:00 p.m., Eastern time). Net asset value per share is determined by
dividing the total value of all Fund securities (valued at market value) and
other assets, less liabilities, by the total number of shares then outstanding.
Net asset value includes interest on fixed-income securities, which is accrued
daily. The net asset value per share will be affected by the expenses accrued
and payable by the Fund. See the Statement of Additional Information for further
details.
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Securities which are traded over-the-counter are priced at the last sale price,
if available, otherwise, at the last quoted bid price. Securities traded on a
securities exchange are valued based upon the closing price on the valuation
date on the principal exchange where the security is traded. Securities that are
listed on an exchange and which are not traded on the valuation date are valued
at the bid price. Securities in which market quotations are not readily
available may be valued on the basis of prices provided by an independent
pricing service, when such prices are believed to reflect the fair market value
of such securities. Securities and other assets for which no quotations are
readily available will be valued in good faith at fair value using methods
determined by the Board of Trustees.
MANAGEMENT OF THE FUND
The Fund is a non-diversified series of Dunhill Investment Trust, a series
company (the "Trust"), an investment company organized as an Ohio business trust
on ____________, 1998. The Board of Trustees has overall responsibility for
management of the Fund under the laws of Ohio governing the responsibilities of
Trustees of business trusts. The Statement of Additional Information identifies
the Trustees and officers of the Trust and provides information about them.
MANAGER. The Trust retains Dunhill Investment Advisors, Limited, 700 W. Pete
Rose Way, Cincinnati, Ohio 45203 (the "Manager"), to provide general investment
supervisory services to the Fund. The Manager is a newly organized company and
therefore has not previously provided services to registered investment
companies. The controlling shareholders of the Manager are Jasen M. Snelling,
Jerry A. Smith, Bryan E. Pifer and William C. Riffle. The Fund pays the Manager
a fee equal to the annual rate of 1.25% of the average value of its daily net
assets.
The Manager currently intends to waive its management fees and reimburse the
Fund for expenses to the extent necessary to limit total operating expenses
(exclusive of interest, taxes, brokerage commissions, sales charges and
extraordinary expenses) to 2.70% per annum of the Fund's average daily net
assets. However, there is no assurance that any voluntary fee waivers or expense
reimbursements will continue in the current or future fiscal years, and expenses
may therefore exceed 2.70% of the Fund's average daily net assets.
INVESTMENT ADVISOR. CityFund Advisory, Inc. (the "Advisor") has been retained by
the Manager to provide the Fund with a continuous program of supervision of the
Fund's assets, including the composition of its portfolio, and furnishes advice
and recommendations with respect to investments, investment policies and the
purchase and sale of securities, pursuant to an Investment Advisory Agreement
with the Trust. The Advisor is also responsible for the selection of
broker-dealers through which the Fund executes portfolio transactions, subject
to brokerage policies established by the Trustees. The Advisor's address is P.O.
Box 54944, Cincinnati, Ohio 45254-0944. The controlling shareholders of the
Advisor are Jasen M. Snelling and Jerry A. Smith. The Advisor is an affiliate of
the Manager. Jill H. Travis is primarily responsible for the day-to-day
management of the Fund's portfolio and has managed the Predecessor Fund since
November 1995. In addition to being employed by the Advisor, Ms. Travis is
President and Chief Executive Officer of Amelia Earhart Capital Management,
Inc., an
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investment advisory firm located in Southfield, Michigan. Ms. Travis formerly
served as portfolio manager of the Amelia Earhart: Eagle Equity Fund, another
investment company, from 1993 to 1998. Since 1991, Ms. Travis has been a
self-employed certified financial planner and business consultant.
Under the Investment Advisory Agreement with the Fund, the Advisor receives from
the Manager (not the Fund) a monthly management fee equal to an annual rate of
.35% of the average daily net assets of the Fund.
ADMINISTRATOR. The Fund has retained the Manager to serve as its transfer agent,
dividend paying agent and shareholder service agent.
In addition, the Manager has been retained to provide administrative services to
the Fund. In this capacity, the Manager supplies executive, administrative and
regulatory services, supervises the preparation of tax returns, and coordinates
the preparation of reports to shareholders and reports to and filings with the
Commission and state securities authorities. The Fund pays the Manager a fee for
these administrative services at the annual rate of .15% of the average value of
its daily net assets up to $50 million, .125% of the next $50 million of such
assets and .1% of such assets in excess of $100 million, provided, however, that
the minimum fee is $1,000 per month.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank. The
Custodian's mailing address is 38 Fountain Square Plaza, Cincinnati, Ohio 45263.
The Custodian acts as the depository for the Fund, safekeeps its portfolio
securities, collects all income, disperses monies at the Fund's request and
maintains records in connection with its duties.
The Custodian also provides accounting and pricing services to the Fund. The
Custodian receives a monthly fee of $2,000 for calculating daily net asset value
per share and maintaining such books and records as are necessary to enable it
to perform its duties. The Custodian also charges the Fund for certain costs
involved with the daily evaluation of investment securities.
OTHER EXPENSES. The Fund is responsible for the payment of all of its operating
expenses. These include the fees payable to the Manager, the fees and expenses
of the Custodian, the fees and expenses of Trustees, outside auditing and legal
expenses, all taxes and corporate fees payable by the Fund, registration fees,
state securities qualification fees, costs of preparing and printing
prospectuses for regulatory purposes and for distribution to shareholders, costs
of shareholder reports and shareholder meetings, and any extraordinary expenses.
The Fund also pays for brokerage commissions and transfer taxes (if any) in
connection with the purchase and sale of portfolio securities.
BROKERAGE. In selecting broker-dealers through which to execute brokerage
transactions for the Fund, the Advisor attempts to obtain the best execution for
all such transactions. If it is believed that more than one broker is able to
provide the best execution, the Advisor will consider the receipt of quotations
and other market services, receipt of research, statistical and other data and
the sale of shares of the Fund
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in selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. The Statement of Additional Information contains
more information about the management and brokerage practices of the Fund.
DISTRIBUTOR AND DISTRIBUTION PLAN
Alpha-Omega Capital Corp., 700 W. Pete Rose Way, Cincinnati, Ohio 45203 (the
"Distributor"), is the national distributor for the Fund under an Underwriting
Agreement with the Trust. The Distributor may sell Fund shares to or through
qualified securities dealers or others. The controlling shareholders of the
Distributor are Bryan E. Pifer and William C. Riffle. The Distributor is an
affiliate of the Manager and the Advisor.
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. Under the Plan, the Fund may reimburse any expenditures to
finance any activity primarily intended to result in the sale of Fund shares or
the servicing of shareholder accounts, including, but not limited to the
following: (i) payments to the Manager, securities dealers and others for the
sale of Fund shares or the servicing of shareholder accounts, including payments
used to pay for or finance sales commissions and other fees payable to dealers
and others who may sell Fund shares or service accounts of shareholders; (ii)
payment of compensation to and expenses of personnel who engage in or support
distribution of shares or who render shareholder support services not otherwise
provided by the Manager or Custodian; and (iii) formulation and implementation
of marketing and promotional activities. Expenditures by the Fund pursuant to
the Plan are accrued based on average daily net assets and may not exceed 1% of
its average net assets for each year elapsed subsequent to the adoption of the
Plan. Such expenditures paid as service fees to any person who sells shares of
the Fund may not exceed .25% of the Fund's average daily net assets; such
expenditures paid as distribution fees for distribution-related activities as an
asset-based sales charge under the Plan may not exceed .75% of the Fund's
average daily net assets.
The distribution fees payable under the Plan are designed to permit an investor
to purchase Fund shares through dealers without the assessment of a front-end
sales charge and at the same time to permit the dealer to compensate its
personnel in connection with the sale of the shares. In this regard, the purpose
and function of the ongoing distribution fees and the deferred sales charge are
to provide for the financing of the distribution of Fund shares.
In addition to the payments by the Fund pursuant to the Plan for distribution
fees, dealers and other service organizations may charge their clients
additional fees for account services. Customers who are beneficial owners of
shares of the Fund should read this Prospectus in light of the terms and fees
governing their accounts with dealers or other service organizations.
The National Association of Securities Dealers, in its Rules of Fair Practice,
places certain limitations on asset-based sales charges of mutual funds. These
Rules require fund-level accounting in which all sales charges - front-end
charge, 12b-1 fees or contingent deferred charge - terminate when a percentage
of gross sales is reached. Expenditures paid as shareholder servicing fees under
the Plan which are limited
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to .25% of average daily net assets are not included in the limit. If in any
month the Distributor expends more monies than are immediately payable under the
Plan because of the percentage limitations described above (or, due to any
expense limitation imposed on the Fund, monies otherwise payable by the Fund to
the Distributor under the Plan are rendered uncollectible), the unpaid
expenditures may be "carried forward" from month to month until such time, if
ever, as they may be paid. In addition, payments to service organizations (which
may include the Distributor, the Manager, and their affiliates) are not tied
directly to the organizations' own out-of-pocket expenses and therefore may be
used as they elect (including, for example, to defray their overhead expenses).
Amounts accrued under the Plan in one year but which are not actually paid in
that year, may be paid in subsequent years. Amounts not accrued by each class
under the Plan during a year may not be carried forward to subsequent years. The
Plan may not be amended to increase materially the amount to be spent under the
Plan without shareholder approval. The continuation of the Plan must be approved
annually by the Board of Trustees. At least quarterly the Board of Trustees will
review a written report of amounts expended pursuant to the Plan and the
purposes for which such expenditures were made.
DIVIDENDS, DISTRIBUTIONS, TAXES
AND OTHER INFORMATION
The Statement of Additional Information contains additional information about
the federal income tax implications of an investment in the Fund in general and,
particularly, with respect to dividends and distributions and other matters. The
discussion herein of the federal income tax consequences of an investment in the
Fund is not exhaustive on the subject. Consequently, investors should seek
qualified tax advice.
The Fund intends to qualify as a "regulated investment company" under Subchapter
M of the Internal Revenue Code of 1986 (the "Code") and will distribute all of
its net income and realized capital gains to shareholders. Shareholders are
liable for taxes on distributions of net income and realized capital gains of
the Fund but, of course, shareholders who are not subject to tax on their income
will not be required to pay taxes on amounts distributed to them. The Fund
intends to declare dividends, if any, annually and will distribute any net
short-term or long-term capital gains derived from the sale of securities at the
end of its fiscal year. In addition, the Fund may make a supplemental
distribution of capital gains annually in December. The nature and amount of all
dividends and distributions will be identified separately when tax information
is distributed by the Fund at the end of each year. The Fund intends to withhold
30% on taxable dividends and any other payments that are subject to such
withholding and are made to persons who are neither citizens nor residents of
the U.S.
There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. All dividends and capital
gains distributions are reinvested in additional shares of the Fund unless the
shareholder requests in writing to receive dividends and/or capital gains
distributions in cash. That request must be received by the Fund prior to the
record date to be effective as to the next dividend. Tax consequences to
shareholders of dividends and distributions are the same if received in cash or
if received in additional shares of the Fund.
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TAX STATUS OF THE FUND. If the Fund is qualified as a "regulated investment
company" under the Code, it will not be liable for federal income taxes on
amounts paid as dividends and distributions. The Code contains a number of
complex requirements which an investment company must meet in order to qualify.
For a more detailed discussion of the tax status of the Fund, see "Additional
Tax Information" in the Statement of Additional Information.
DESCRIPTION OF SHARES. The Trust was organized as an Ohio business trust on
__________, 1998 under a Declaration of Trust. The Declaration of Trust permits
the Board of Trustees to issue an unlimited number of full and fractional shares
and to create an unlimited number of series of shares. The Board of Trustees may
also classify and reclassify any unissued shares into one or more classes of
shares.
When issued, the shares of each series of the Trust, including the Fund, will be
fully paid, nonassessable and redeemable. The Trust does not intend to hold
annual shareholder meetings; it may, however, hold special shareholder meetings
for purposes such as changing fundamental policies or electing Trustees. The
Board of Trustees shall promptly call a meeting for the purpose of electing or
removing Trustees when requested in writing to do so by the record holders of at
least 10% of the outstanding shares of the Trust. The term of office of each
Trustee is of unlimited duration. The holders of at least two-thirds of the
outstanding shares of the Trust may remove a Trustee from that position either
by declaration in writing filed with the Custodian or by votes cast in person or
by proxy at a meeting called for that purpose.
Shareholders of the Trust will vote in the aggregate and not by series (fund),
except as otherwise required by the 1940 Act or when the Board of Trustees
determines that the matter to be voted on affects only the interests of the
shareholders of a particular series. Matters affecting an individual series,
such as the Fund, include, but are not limited to, the investment objectives,
policies and restrictions of that series. Shares have no subscription,
preemptive or conversion rights. Share certificates will not be issued. Each
share is entitled to one vote (and fractional shares are entitled to
proportionate fractional votes) on all matters submitted for a vote, and shares
have equal voting rights except that only shares of a particular series are
entitled to vote on matters affecting only that series. Shares do not have
cumulative voting rights. Therefore, the holders of more than 50% of the
aggregate number of shares of the Trust may elect all the Trustees.
See "Description of the Trust" in the Statement of Additional Information for
further information about the Trust and its shares.
REPORTING TO SHAREHOLDERS. The Fund will send to its shareholders annual reports
which have been audited by the Trust's independent accountants and semiannual
reports which are unaudited. In addition, the Manager will send to each
shareholder having an account directly with the Fund a quarterly statement
showing transactions in the account, the total number of shares owned and any
dividends or distributions paid.
CALCULATION OF PERFORMANCE DATA. From time to time the Fund may advertise its
total return. The Fund may also advertise yield. Both yield and total return
figures are based on historical earnings and are not intended to indicate future
performance.
-22-
<PAGE>
The "total return" of the Fund refers to the average annual compounded rates of
return over 1, 5 and 10 year periods that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of total return assumes the reinvestment of all
dividends and distributions, includes all recurring fees that are charged to all
shareholder accounts and deducts all nonrecurring charges at the end of each
period, including any contingent deferred sales charge that would be applicable
to a complete redemption of the investment at the end of the specified period.
The calculation further assumes the deduction of the current maximum sales load
from the initial investment. If the Fund has been operating less than 1, 5 or 10
years, the time period during which the Fund has been operating is substituted.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. Nonstandardized Return may be quoted for the same or
different periods as those for which standardized return is quoted.
Nonstandardized Return may consist of a cumulative rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents a cumulative change in value of an investment in the Fund for various
periods.
The "yield" of the Fund is computed by dividing the net investment income per
share earned during a thirty-day (or one month) period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). The
yield formula assumes that net investment income is earned and reinvested at a
constant rate and annualized at the end of a six-month period. For the purpose
of determining net investment income, the calculation includes among expenses of
the Fund all recurring fees that are charged to all shareholder accounts and any
nonrecurring charges for the period stated.
-23-
<PAGE>
REGIONAL OPPORTUNITY FUND: OHIO, INDIANA, KENTUCKY
INVESTMENT MANAGER
Dunhill Investment Advisors, Limited
700 W. Pete Rose Way
Longworth Hall, Ste. #127
Cincinnati, OH 45203
INVESTMENT ADVISOR
CityFund Advisory, Inc.
P.O. Box 54944
Cincinnati, Ohio 45254-0944
DISTRIBUTOR
Alpha-Omega Capital Corp.
700 Pete Rose Way
Cincinnati, Ohio 45203
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
201 East Fifth Street
Cincinnati, Ohio 45202
CUSTODIAN
Fifth Third Bank
39 Fountain Square Plaza
Cincinnati, Ohio 45263
No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell
shares in any State to any person to whom it is unlawful for the Fund to make
such offer in such State.
-24-
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
REGIONAL OPPORTUNITY FUND:
OHIO INDIANA KENTUCKY
__________ 1998
A Series of
DUNHILL INVESTMENT TRUST
P.O. Box 54944
Cincinnati, Ohio 45254-0944
Telephone - Nationwide, 1-888-___________
In Cincinnati, ____________
TABLE OF CONTENTS
-----------------
DESCRIPTION OF THE TRUST...................................................2
INVESTMENT OBJECTIVE AND POLICIES..........................................3
INVESTMENT LIMITATIONS.....................................................6
TRUSTEES AND OFFICERS......................................................9
INVESTMENT MANAGER........................................................10
INVESTMENT ADVISOR........................................................11
TRANSFER AGENT AND ADMINISTRATOR..........................................12
DISTRIBUTOR...............................................................13
OTHER SERVICES............................................................13
BROKERAGE.................................................................14
DISTRIBUTION PLANS UNDER RULE 12b-1.......................................16
SPECIAL SHAREHOLDER SERVICES..............................................18
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................20
HOW SHARE PRICE IS DETERMINED.............................................21
ADDITIONAL TAX INFORMATION................................................22
CALCULATION OF PERFORMANCE DATA...........................................24
APPENDIX A - DESCRIPTION OF RATINGS.......................................27
FINANCIAL STATEMENTS AND REPORTS..........................................32
This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the Prospectus dated _________, 1998 for the
Regional Opportunity Fund: Ohio Indiana Kentucky (the "Fund"). Copies of the
Fund's Prospectus may be obtained at no charge from the Fund, at the address and
phone number shown above.
<PAGE>
DESCRIPTION OF THE TRUST
The Trust is an unincorporated business trust organized under Ohio law on
___________ 1998. The Trust's Declaration of Trust authorizes the Board of
Trustees to divide shares into series, each series relating to a separate
portfolio of investments.
In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each shareholder. If any
assets, income, earnings, proceeds, funds or payments are not readily
identifiable as belonging to any particular series, the Trustees shall allocate
them among any one or more series as they, in their sole discretion, deem fair
and equitable.
Shares of the Fund, when issued, are fully paid and non-assessable. Shareholders
are entitled to one vote for each full share held and a fractional vote for each
fractional share held. Shareholders of all series in the Trust, including the
Fund, will vote together and not separately, except as otherwise required by law
or when the Board of Trustees determines that the matter to be voted upon
affects only the interests of the shareholders of a particular series or class.
Rule 18f-2 under the 1940 Act provides that any matter required to be submitted
to the holders of the outstanding voting securities of an investment company
such as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each series
affected by the matter. A series is affected by a matter unless it is clear that
the interests of each series in the matter are substantially identical or that
the matter does not affect any interest of the series. Under Rule 18f-2 of the
1940 Act, the approval of an investment advisory agreement, a material change to
a Rule 12b-1 Plan or any change in a fundamental investment policy would be
effectively acted upon with respect to a series only if approved by a majority
of the outstanding shares of such series. However, the Rule also provides that
the ratification of the appointment of independent accountants, the approval of
principal underwriting contracts and the election of Trustees may be effectively
acted upon by shareholders of the Trust voting together, without regard to a
particular series.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as such
liability may arise from his or her own bad faith, willful misfeasance, gross
negligence or reckless disregard of duties. It also provides that all third
parties shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust. With the
- 2 -
<PAGE>
exceptions stated, the Declaration of Trust provides that a Trustee or officer
is entitled to be indemnified against all liability in connection with the
affairs of the Trust.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective and policies of the Fund are described in the
Prospectus. Supplemental information about these policies is set forth below.
Certain capitalized terms used but not defined have the same meaning as in the
Prospectus. A description of the various ratings used by the nationally
recognized statistical rating organizations ("NRSROs") for securities in which
the Fund may invest is included in this SAI as Appendix A.
REPURCHASE AGREEMENTS. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve System or a registered Government Securities dealer)
and must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. Such
securities, including any securities so substituted, are referred to as the
"Repurchase Securities." The repurchase price exceeds the purchase price by an
amount which reflects an agreed upon market interest rate effective for the
period of time during which the repurchase agreement is in effect.
The majority of these transactions run day to day and the delivery pursuant to
the resale typically will occur within one to five days of the purchase. The
Fund's risk is limited to the ability of the vendor to pay the agreed upon sum
upon the delivery date; in the event of bankruptcy or other default by the
vendor, there may be possible delays and expenses in liquidating the instrument
purchased, decline in its value and loss of interest. These risks are minimized
when the Fund holds a perfected security interest in the Repurchase Securities
and can therefore sell the instrument promptly. Under guidelines issued by the
Trustees, the Advisor will carefully consider the creditworthiness during the
term of the repurchase agreement. Repurchase agreements are considered as loans
collateralized by the Repurchase Securities, such agreements being defined as
"loans" under the Investment Company Act of 1940 (the "1940 Act"). The return on
such "collateral" may be more or less than that from the repurchase agreement.
The market value of the resold securities will be monitored so that the value of
the "collateral" is at all times as least equal to the value of the loan,
including the accrued interest earned thereon. All Repurchase Securities will be
held by the Fund's custodian either directly or through a securities depository.
- 3 -
<PAGE>
DESCRIPTION OF MONEY MARKET INSTRUMENTS. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements) as described herein, provided that they mature in
thirteen months or less from the date of acquisition and are otherwise eligible
for purchase by the Fund. Money market instruments also may include Bankers'
Acceptances and Certificates of Deposit of domestic branches of U.S. banks,
Commercial Paper and Variable Amount Demand Master Notes ("Master Notes").
BANKERS' ACCEPTANCES are time drafts drawn on and "accepted" by a bank, are the
customary means of effecting payment for merchandise sold in import-export
transactions and are a source of financing used extensively in international
trade. When a bank "accepts" such a time draft, it assumes liability for its
payment. When the Fund acquires a Bankers' Acceptance, the bank which "accepted"
the time draft is liable for payment of interest and principal when due. The
Bankers' Acceptance, therefore, carries the full faith and credit of such bank.
A CERTIFICATE OF DEPOSIT ("CD") is an unsecured interest- bearing debt
obligation of a bank. COMMERCIAL PAPER is an unsecured, short term debt
obligation of a bank, corporation or other borrower. Commercial Paper maturity
generally ranges from two to 270 days and is usually sold on a discounted basis
rather than as an interest-bearing instrument. The Fund will invest in
Commercial Paper only if it is rated in one of the two highest rating categories
by any NRSRO or, if not rated, is of equivalent quality in the Advisor's
opinion. Commercial Paper may include Master Notes of the same quality. MASTER
NOTES are unsecured obligations which are redeemable upon demand of the holder
and which permit the investment of fluctuating amounts at varying rates of
interest. Master Notes are acquired by the Fund only through the Master Note
program of the Fund's custodian, acting as administrator thereof. The Advisor
will monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.
ILLIQUID INVESTMENTS. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments and, through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features) and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Fund to be
- 4 -
<PAGE>
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days and restricted securities. If through a
change in values, net assets or other circumstances, the Fund were in a position
where more than 10% of its net assets were invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.
RESTRICTED SECURITIES. Within its limitation on investments in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.
WRITING COVERED CALL OPTIONS. When the Advisor believes that individual
portfolio securities are approaching the top of the Advisor's growth and price
expectations, covered call options (calls) may be written (sold) against such
securities in a disciplined approach to selling portfolio securities. The Fund
writes options only for hedging purposes and not for speculation. When the Fund
writes a call, it receives a premium and agrees to sell the underlying
securities to a purchaser of a corresponding call at any time during the call
period (usually not more than 9 months) at a fixed exercise or "strike" price
(which may, and often does, differ from the market price of the underlying
securities at the time of writing the call). The strike price remains the same
throughout the option period, regardless of market price changes. To terminate
its obligation on a call the Fund has written, it may purchase a corresponding
call in a "closing purchase transaction." A profit or loss will be realized,
depending upon whether the price of the closing purchase transaction is more or
less than the premium (net of transaction costs) previously received on the call
written. The Fund may also realize a profit if the call it has written lapses
unexercised, in which case the Fund keeps the premium and retains the underlying
securities as well. If a call written by the Fund is exercised the Fund forgoes
any possible profit from an increase in the market price of the underlying
security over the exercise price plus the premium received.
Utilizing the facilities of the Options Clearing Corporation ("OCC"), the Fund's
Custodian or a securities depository acting for the Custodian will, as the
Fund's escrow agent, hold the securities underlying calls written by the Fund,
so that no margin will be required for such transactions. OCC
- 5 -
<PAGE>
will release the securities on the expiration of the calls or upon the Fund's
entering into a closing purchase transaction. Call writing affects the Fund's
portfolio turnover rate and the brokerage commissions it pays. Commissions for
options, which are normally higher than for general securities transactions, are
payable when writing calls and when purchasing closing purchase transactions.
The writing of call options by the Fund is subject to limitations established by
each of the exchanges governing the maximum number of options which may be
written or held by a single investor or group of investors acting in concert,
regardless of whether the options were written or purchased on the same or
different exchanges or are held in one or more accounts or through one or more
different exchanges or through one or more brokers. Therefore the number of
calls the Fund may write (or purchase in closing transactions) may be affected
by options written or held by other entities, including other clients of the
Advisor. An exchange may order the liquidation of positions found to be in
violation of these limits and may impose certain other sanctions.
Profits on closing purchase transactions and premiums on lapsed calls written
are considered capital gains for financial reporting purposes and are short-term
gains for federal income tax purposes. When short-term gains are distributed to
shareholders, they are taxed as ordinary income. If the Fund desires to enter
into a closing purchase transaction, but there is no market when it desires to
do so, it would have to hold the securities underlying the call until the call
lapses or until the call is exercised.
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval of the holders of a majority of the
outstanding voting shares of the Fund. When used in the Prospectus or this SAI,
a "majority" of shareholders means the vote of the lesser of (1) 67% of the
shares of the Trust (or the Fund) present at a meeting if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (2)
more than 50% of the outstanding shares of the Trust (or the Fund). Unless
otherwise indicated, percentage limitations apply at the time of purchase.
As a matter of fundamental policy, the Fund MAY NOT:
(1) Issue senior securities, borrow money, or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of its total assets or (b)
in order to meet redemption requests in amounts not exceeding 15% of its
total assets. The Fund will not make any further investments if borrowing
exceeds 5% of its total assets until such time as total borrowing
represents less than 5% of Fund assets.
- 6 -
<PAGE>
(2) Invest for the purpose of exercising control or management of another
issuer;
(3) Purchase or sell commodities or commodities contracts, real estate
(including limited partnership interests, but excluding readily marketable
securities secured by real estate or interests therein, readily marketable
interests in real estate investment trusts, or readily marketable
securities issued by companies that invest in real estate or interests
therein) or interests in oil, gas, or other mineral exploration or
development programs or leases (although it may invest in readily
marketable securities of issuers that invest in or sponsor such programs or
leases).
(4) Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or from
an underwriter for an issuer may be deemed to be an underwriter under the
federal securities laws.
(5) Invest in warrants, valued at the lower of cost or market, exceeding more
than 5% of the value of the Fund's net assets. Included within this amount,
but not to exceed 2% of the value of the Fund's net assets, may be warrants
which are not listed on the New York or American Stock Exchange; warrants
acquired by the Fund in units or attached to securities may be deemed to be
without value;
(6) Participate on a joint or joint and several basis in any trading account in
securities;
(7) Purchase foreign securities;
(8) Invest more than 10% of its total assets in the securities of one or more
investment companies;
(9) Invest more than 25% of its total assets in the securities of issuers
within a single industry; or
(10) Make loans of money or securities, except that the Fund may (i) invest in
repurchase agreements and commercial paper; (ii) purchase a portion of an
issue of publicly distributed bonds, debentures or other debt securities;
and (iii)acquire private issues of debt securities subject to the
limitations on investments in illiquid securities.
The following investment limitations are not fundamental, and may be
- 7 -
<PAGE>
changed without shareholder approval. As a matter of non-fundamental policy, the
Fund may not:
(1) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be invested in
such securities;
(2) Invest more than 10% of its net assets in illiquid securities. For this
purpose, illiquid securities includamong others (a) securities for which no
readily availablmarket exists or which have legal or contractual
restrictions on resale, (b) fixed time deposits that are subject to
withdrawal penalties and have maturities of more than seven days, and (c)
repurchase agreements not terminable within seven days;
(3) Invest in the securities of any issuer if those officers or Trustees of the
Trust and those officers and directors of the Advisor who individually own
more than 1/2 of 1% of the outstanding securities of such issuer together
own more than 5% of such issuer's securities;
(4) Write, purchase, or sell puts, calls, straddles, spreads, or combinations
thereof or futures contracts or related options (but the Fund may write
covered call options as described in its Prospectus);
(5) Make short sales of securities or maintain a short position, except short
sales "against the box" (a short sale is made by selling a security the
Fund does not own; a short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no additional
cost securities identical to those sold short);
(6) Purchase any securities on margin except in connection with such short-term
credits as may be necessary for the clearance of transactions.
Whenever any fundamental investment policy or investment restriction states a
maximum percentage of assets, it is intended that if the percentage limitation
is met at the time the investment is made, a later change in percentage
resulting from changing total or net asset values will not be considered a
violation of such policy. While the Fund has reserved the right to make short
sales "against the box," the Advisor has no present intention of engaging in
such transactions at this time or during the coming year.
- 8 -
<PAGE>
TRUSTEES AND OFFICERS
Following are the Trustees and executive officers of the Trust, their present
position with the Trust, age, principal occupations during the past 5 years and
their estimated annual compensation from the Trust:
<TABLE>
<CAPTION>
Name, Position, Principal Occupation(s) Compensation
Age and Address During Past 5 Years From the Trust
- ------------------ -------------------- --------------
<S> <C> <C>
*Jasen M. Snelling (age 34 ) President None
Trustee and President CityFund Advisory, Inc;
Regional Opportunity Fund: previously, Registered Representative
Ohio Indiana Kentucky of PNC Securities Corp.
P.O. Box 54944 and of Provident Securities
Cincinnati, Ohio 45254 Investment Co., Cincinnati, Ohio
</TABLE>
[Other Trustees and Officers to be supplied]
- ------------
* Indicates that Trustee is an "interested person" for purposes of the 1940
Act.
The officers of the Trust do not receive compensation from the Trust for
performing the duties of their office. All Trustees are reimbursed for any
out-of-pocket expenses incurred in connection with their attendance at Board
meetings.
PRINCIPAL HOLDERS OF VOTING SECURITIES. As of ____________, 1998, the Trustees
and officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) _______% of the then outstanding shares of the Predecessor
Fund. On the same date, (to be inserted)
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<PAGE>
INVESTMENT MANAGER
Dunhill Investment Advisors, Limited ( the "Manager') performs management,
statistical, portfolio adviser selection and other services for the Fund. The
controlling shareholders of the Manager are Jasen M. Snelling, Jerry A. Smith,
William C. Riffle and Bryan E. Pifer.
Under the terms of the Management Agreement between the Trust and the Manager,
the Fund pays the Manager a fee computed and accrued daily and paid monthly at
an annual rate of 1.25% of its average daily net assets.
The Fund is responsible for the payment of all expenses incurred in connection
with the organization, registration of shares and operations of the Fund,
including such extraordinary or non-recurring expenses as may arise, such as
litigation to which the Trust may be a party. The Fund may have an obligation to
indemnify the Trust's officers and Trustees with respect to such litigation,
except in instances of willful misfeasance, bad faith, gross negligence or
reckless disregard by such officers and Trustees in connection with the
distribution of the Fund's shares to the extent that (see below). The
compensation and expenses of any officer, Trustee or employee of the Trust who
is an officer, director, employee or stockholder of the Manager are paid by the
Manager.
By its terms, the Fund's Management Agreement will remain in force until
____________,2000 and from year to year thereafter, subject to annual approval
by (a) the Board of Trustees or (b) a vote of the majority of the fund's
outstanding voting securities; provided that in either event interested persons
of the Trust, by a vote cast in person at a meeting called for that purpose of
voting such approval. The Fund's Management Agreement may be terminated at any
time, on sixty days written notice, without the payment of any penalty, by the
Board of Trustees, by a vote of the majority of the Fund's outstanding voting
securities, of by the manager, The Management Agreement automatically terminates
in the event of assignment, as defined by the Investment company Act of 1940 and
the rules thereunder. Under the Management Agreement, the Manager is not
responsible for any error of judgement or mistake of law or for any loss
suffered by the Fund in connection with the performance of the Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on the part of the Advisor in the performance of its
duties or from the reckless disregard of its duties and obligations under the
Agreement.
- 10 -
<PAGE>
INVESTMENT ADVISOR
CityFund Advisory, Inc. (the "Advisor") supervises the Fund's investments
pursuant to an Investment Advisory Agreement (the "Advisory Agreement")
described in the Prospectus. The Advisory Agreement will be renewed for one year
periods only so long as such renewal and continuance is specifically approved at
least annually by the Board of Trustees or by vote of a majority of the Fund's
outstanding voting securities, provided the continuance is also approved by a
majority of the Trustees who are not "interested persons" of the Trust or the
Advisor by vote cast in person at a meeting called for the purpose of voting on
such approval. The Advisory Agreement is terminable without penalty on sixty
days notice by the Board of Trustees of the Trust or by the Advisor. The
Advisory Agreement provides that it will terminate automatically in the event of
its assignment.
Compensation of the Advisor is at the annual rate of .625% of the Fund's average
daily net assets. For the fiscal year ended February 28, 1998, the Advisor
waived its entire advisory fee of $11,179 and reimbursed the Fund $73,594 of
expenses in order to voluntarily reduce the operating expenses of the Fund. For
the fiscal year ended February 29, 1996, the Advisor waived its entire advisory
fee of $6,850 and reimbursed the Fund $80,044 of expenses in order to
voluntarily reduce the operating expenses of the Fund.
The Advisor is controlled by Jasen M. Snelling and Jerry A. Smith, and as an
affiliate of the Manager.
The Advisor provides a continuous investment program for the Fund, including
investment research and management with respect to all securities, investments,
cash and cash equivalents of the Fund. The Advisor determines what securities
and other investments will be purchased, retained or sold by the Fund, and does
so in accordance with the investment objective and policies of the Fund as
described herein and in the Prospectus. The Advisor places all securities orders
for the Fund, determining with which broker, dealer, or issuer to place the
orders. The Advisor also provides, at its own expense, certain Executive
Officers to the Trust.
The Advisor must adhere to the brokerage policies of the Fund in placing all
orders, the substance of which policies are that the Advisor attempts to obtain
the best execution for all securities brokerage transactions.
Under the Advisory Agreement, the Advisor is not responsible for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the performance of the Agreement, except a loss resulting
- 11 -
<PAGE>
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Advisor in the performance of its duties or from
the reckless disregard of its duties and obligations under the Agreement.
TRANSFER AGENT AND ADMINISTRATOR
The Manager maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemption's of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. The Manager receives for
its services as transfer agent a fee payable monthly at an annual rate of $17
per account, provided, however, that the minimum fee is $1,000 per month. In
addition, the Fund pays out-of-pocket expenses, including but not limited to,
postage, envelopes, checks, drafts, forms, reports, record storage and
communication lines.
In addition, the Manager has been retained to provide administrative services to
the Fund. In this capacity, the Manager supplies non-investment related
statistical and research data, internal regulatory compliance services and
executive and administrative services. The Manager supervises the preparation of
tax returns, reports to shareholders of the Fund, reports to and filings with
the Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, the Fund pays the Manager a fee at the annual rate of
.15% of the average value of its daily net assets up to $50,000,000, .125% of
such assets from $50,000,000 to $100,000,000 and .1% of such assets in excess of
$100,000,000, provided, however, that the minimum fee is $1,000 per month.
Prior to ________, 1998, the transfer agent and administrator to the Predecessor
Fund was Countrywide Fund Services, Inc., Cincinnati, Ohio. For the fiscal year
ended February 28, 1998, Countrywide Fund Services, Inc. received from the
Predecessor Fund transfer agent fees of $_________, accounting and pricing fees
of $_________, and administrative fees of $_________. For the fiscal year ended
February 28, 1997, Countrywide Fund Services, Inc. received from the Fund
transfer agent fees of $12,750, accounting and pricing fees of $15,000 and
administrative fees of $7,500. Prior to June 1, 1996, the administrator to the
Predecessor Fund was The Nottingham Company, Rocky Mount, North Carolina. For
the fiscal years ended February 28, 1997 and February 29, 1996, The Nottingham
Company received from the Predecessor Fund fees of $7,450 and $36,000,
respectively.
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<PAGE>
DISTRIBUTOR
Alpha-Omega Capital Corp. (the "Distributor") is the principal underwriter of
the Fund and, as such, the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares on a best efforts basis
only against purchase orders for the shares. Shares of the Fund are offered to
the public on a continuous basis.
The Fund may compensate dealers, including the Distributor and its affiliates,
based on the average balance of all accounts in the Fund for which the dealer is
designated as the party responsible for the account. See "Distribution Plan
Under Rule 12b-1" below. The distributor is controlled by William C. Riffle and
Bryan E. Pifer and is an affiliate of the Manager and the Advisor.
OTHER SERVICES
AUDITORS. The firm of KPMG Peat Marwick LLP, 201 East Fifth Street, Cincinnati,
Ohio 45202, has been retained by the Board of Trustees to perform an independent
audit of the financial statements of the Fund.
CUSTODIAN. The Custodian of the Fund's assets is The Fifth Third Bank, 38
Fountain Square Plaza, Cincinnati, Ohio 45263. The Custodian holds all cash and
securities of the Fund (either in its possession or in its favor through "book
entry systems" authorized by the Trustees in accordance with the 1940 Act),
collects all income and effects all securities transactions on behalf of the
Fund. For its services as Custodian, the Custodian receives an annual fee from
the Fund based on the average net assets of the Fund held by the Custodian. The
Custodian also provides accounting and pricing services to the Fund. The
Custodian receives $_________ per month from the Fund for calculating daily net
asset value per share and maintaining such books and records as are necessary
for the Custodian to perform its duties.
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<PAGE>
BROKERAGE
It is the Fund's practice to seek to obtain the best overall terms available in
executing Fund transactions and selecting brokers or dealers. Subject to the
general supervision of the Board of Trustees, the Advisor is responsible for,
makes decisions with respect to, and places orders for all purchases and sales
of portfolio securities for the Fund.
In assessing the best overall terms available for any transaction, the Advisor
shall consider factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. In addition,
the Advisor may cause the Fund to pay a broker-dealer which furnishes brokerage
and research services a higher commission than that which might be charged by
another broker-dealer for effecting the same transaction, provided the Advisor
determines in good faith that such commission is reasonable in relation to the
value of the brokerage and research services provided by such broker-dealer,
viewed in terms of either the particular transaction or the overall
responsibilities of the Advisor to the Fund. Such brokerage and research
services may consist of reports and statistics relating to specific companies or
industries, general summaries of groups of stocks or bonds and their comparative
earnings and yields, or broad overviews of the economy and the stock, bond and
government securities markets.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Fund. The Trustees will periodically review any
commissions paid by the Fund to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits received by the Fund. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
accounts for which investment discretion is exercised by the Advisor.
Conversely, the Fund may be the primary beneficiary of the research or other
services received as a result of securities transactions effected for such other
accounts.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution from such firm. The Fund
will not execute portfolio transactions through, acquire securities issued by,
make savings deposits in or enter into repurchase agreements with the Advisor or
an affiliated person of the Advisor (as such term is defined in the 1940 Act)
acting as principal, except to the extent permitted by the Securities and
Exchange Commission ("SEC"). In addition, the Fund will not purchase securities
during the existence of any underwriting or selling group relating thereto of
which the Advisor or an
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<PAGE>
affiliated person of the Advisor, is a member, except to the extent permitted by
the SEC. Under certain circumstances, the Fund may be at a disadvantage because
of these limitations in comparison with other investment companies that have
similar investment objectives but are not subject to such limitations.
The Fund purchases money market instruments from dealers, underwriters and
issuers. The Fund does not expect to incur any brokerage commissions on such
purchases because money market instruments are generally traded on a net basis
by a dealer acting as principal for its own account without a stated commission.
The price of the security, however, usually includes a profit to the dealer.
Securities purchased in underwritten offerings include a fixed amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. When securities are purchased directly from or sold
directly to an issuer, no commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e. without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument.
The Fund's fixed-income portfolio transactions will normally be principal
transactions executed in the over-the-counter market and will be executed on a
net basis, which may include a dealer markup. With respect to securities traded
only in the over-the-counter market, orders will be executed on a principal
basis with primary market makers in such securities except where better prices
or executions may be obtained on an agency basis or by dealing with other than a
primary market maker.
The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.
Investment decisions for the Fund will be made independently from any other
accounts advised or managed by the Advisor. Such other accounts may also invest
in the same securities as the Fund. To the extent permitted by law, the Advisor
may aggregate the securities to be sold or purchased for the Fund with those to
be sold or purchased for other accounts in executing transactions. When a
purchase or sale of the same security is made at substantially the same time on
behalf of the Fund and other accounts, the transaction will be averaged as to
price and available investments
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<PAGE>
allocated as to amount, in the manner which the Advisor believes to be equitable
to the Fund and such other accounts. In some instances, this investment
procedure may adversely affect the price paid or received by the Fund or the
size of the position obtained or sold by the Fund.
For the fiscal years ended February 28, 1998, 1997, and 1996, the total amount
of brokerage commissions paid by the Predecessor Fund were $________, $1,539,
and $5,587, respectively.
DISTRIBUTION PLAN UNDER RULE 12B-1
The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. The Plan permits the Fund to pay for expenses incurred in
the distribution and promotion of the Fund's shares.
Under the Plan, the Fund may expend in any fiscal year up to 1% of its average
daily net assets to finance any activity which is primarily intended to result
in the sale of its shares and the servicing of shareholder accounts, provided
the Board of Trustees has approved the category of expenses for which payment is
being made. Expenditures under the Plan as service fees to any person who sells
shares may not exceed an annual rate of .25% of the average net assets of such
shares. Expenditures under the Plan for distribution activities as an
asset-based sales charge may not exceed an annual rate of .75% of the Fund's
average net assets.
Dealers and other service organizations receive commissions from the Advisor for
selling Fund shares, which are paid at the time of sale. The expenditures
payable under the Plan for distribution activities (at an annual rate of .75% of
net assets) are intended to cover the expense to the Advisor of paying such
up-front commissions, and the contingent deferred sales charge is calculated to
charge the investor with any shortfall that would occur if shares are redeemed
prior to the expiration of the five year CDSC period. To provide funds for the
payment of up-front sales commissions, the Advisor has arranged a line of credit
with an unaffiliated third party lender, which provides funds for the payment of
commissions and other fees payable to dealers and other service organizations
which sell Fund shares. Under the terms of the financing, the Advisor may assign
to the lender the distribution fees that may be payable from time to time to the
Advisor under the Plan and the contingent deferred sales charges payable to the
Advisor.
During the fiscal years ended February 28, 1998 and 1997, the Fund incurred
$________ and $2,466, respectively, in distribution expenses for payments to
broker-dealers and others for the retention of assets.
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<PAGE>
Jasen M. Snelling, a controlling shareholder of the Advisor, may be deemed to
have a financial interest in the operation of the Plan and the Implementation
Agreements.
Potential benefits to the Fund from the Plan include improved shareholder
servicing, savings in transfer agency costs, benefits to the investment process
from growth and stability of assets and maintenance of a financially healthy
management organization. Subject to its practice of seeking to obtain best
execution, the Fund may, from time to time, buy or sell portfolio securities
from or to firms which receive payments under the Plan.
The Plan, the Underwriting Agreement with the Distributor and the form of Dealer
Agreement with broker-dealers have all been approved by the Board of Trustees of
the Trust, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust and who have no direct or indirect
financial interest in the Plan or any related agreements, by vote cast in person
or at a meeting duly called for the purpose of voting on the Plan and such
Agreements. Continuation of the Plan, the Underwriting Agreement and the form of
Dealer Agreement must be approved annually by the Board of Trustees in the same
manner as specified above. Each year the Trustees must determine that
continuation of the Plan is in the best interests of shareholders of the Fund
and there is a reasonable likelihood that the Plan will benefit the Fund. The
Board of Trustees has made such a determination for the current year of
operations under the Plan. The Plan, the Underwriting Agreement and the Dealer
Agreements may be terminated at any time without penalty by a majority of those
trustees who are not "interested persons" or by a majority of the outstanding
shares of the Fund. Any amendment materially increasing the maximum percentage
payable under the Plan must likewise be approved by a majority of the
outstanding shares of the applicable class as well as a majority of the Trustees
who are not "interested persons" and have no direct or indirect financial
interest in the Plan (the "Independent Trustees"). In order for the Plan to
remain effective, the selection and nomination of those Trustees who are not
interested persons of the Trust must be effected by the Independent Trustees
during such period. All amounts spent by the Fund pursuant to the Plan must be
reported quarterly in a written report to the Trustees for their review.
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<PAGE>
SPECIAL SHAREHOLDER SERVICES
As noted in the Prospectus, the Fund offers the following shareholder services:
REGULAR ACCOUNT. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date.
AUTOMATIC INVESTMENT PLAN. The automatic investment plan enables investors to
make regular monthly or bi-monthly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Manager will automatically charge the checking account for the
amount specified ($50 minimum) which will be automatically invested in shares at
the public offering price on or about the fifteenth and/or the last business day
of the month. The shareholder may change the amount of the investment or
discontinue the plan at any time by writing to the Manager.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders owning shares with a value of $5,000 or
more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $50 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December).
Payments may be made directly to an investor's account with a commercial bank or
other depository institution via an Automated Clearing House ("ACH")
transaction. Instructions for establishing this service are included in the
Application contained in the Prospectus or are available by calling the Fund.
Payment may also be made by check made payable to the designated recipient and
mailed within 7 days of the valuation date. If the designated recipient is other
than the registered shareholder, the signature of each shareholder must be
guaranteed on the application (see "Signature Guarantees" in the Prospectus). A
corporation (or partnership) must also submit a "Corporate Resolution" (or
"Certification of Partnership") indicating the names,
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<PAGE>
titles and required number of signatures authorized to act on its behalf. The
application must be signed by a duly authorized officer(s) and the corporate
seal affixed. No redemption fees are charged to shareholders under this plan
except for potential deferred sales charges. The Prospectus contains additional
information and limitations relating to the use of a Systematic Withdrawal Plan.
Costs in conjunction with the administration of the plan are borne by the Fund.
Investors should be aware that such systematic withdrawals may deplete or use up
entirely their initial investment and may result in realized long-term or
short-term capital gains or losses. The Systematic Withdrawal Plan may be
terminated at any time by the Fund upon sixty days' written notice or by an
investor upon written notice to the Fund. Applications and further details may
be obtained by calling the Fund, NATIONWIDE 1-888-________, IN CINCINNATI
__________, or by writing to:
Regional Opportunity Fund
Shareholder Services
P.O. Box 54944
Cincinnati, Ohio 45254-0944
PURCHASES IN KIND. The Fund may accept securities in lieu of cash in payment for
the purchase of shares of the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Shares are Valued" in the Prospectus. Transactions involving
the issuance of shares in the Fund for securities in lieu of cash will be
limited to acquisitions of securities (except for municipal debt securities
issued by state political subdivisions or their agencies or instrumentalities)
which: (a) meet the investment objective and policies of the Fund; (b) are
acquired for investment and not for resale; (c) are liquid securities which are
not restricted as to transfer either by law or liquidity of market; and (d) have
a value which is readily ascertainable (and not established only by evaluation
procedures) as evidenced by a listing on the American Stock Exchange, the New
York Stock Exchange or NASDAQ.
REDEMPTION IN KIND. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the
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<PAGE>
Trustees, make it undesirable for the Fund to pay for all redemptions in cash.
In such case, the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving such securities would incur
brokerage costs when the securities are sold. An irrevocable election has been
filed under Rule 18f-1 of the 1940 Act, wherein the Fund is committed to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net assets at the beginning of such period.
TRANSFER OF REGISTRATION. To transfer shares to another owner, send a written
request to the Manager at the address shown herein. Your request should include
the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (see the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Manager.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
PURCHASES. Shares of the Fund are offered and sold on a continuous basis and may
be purchased through authorized dealers or directly by contacting the
Distributor or the Manager. Selling dealers have the responsibility of
transmitting orders promptly to the Fund's Manager. Fund shares may be subject
to a contingent deferred sales charge upon redemption. The Advisor may
compensate dealers up-front from its own funds for distribution-related
activities in connection with the sale of Fund shares, for which the Advisor
will receive the contingent deferred sales charge and a distribution fee under
the Plan as described in "Distribution Plan Under Rule 12b-1." The current
schedule of sales charges is set forth in the Prospectus. See "How to Purchase
Shares" in the Prospectus.
REDEMPTIONS. Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange is restricted by applicable rules and regulations of
the SEC; (b) the Exchange is closed for other than customary weekend and holiday
closings; (c) the SEC has by order permitted such suspension; or (d) an
emergency exists as determined by the SEC. The
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<PAGE>
Fund may also suspend or postpone the recordation of the transfer of shares upon
the occurrence of any of the foregoing conditions.
In addition to the situations described in the Prospectus under "How to Redeem
Shares," the Fund may redeem shares involuntarily to reimburse the Fund for any
loss sustained by reason of the failure of an investor to make full payment for
shares purchased by the investor or to collect any charge relating to a
transaction effected for the benefit of an investor which is applicable to Fund
shares as provided in the Prospectus from time to time.
HOW SHARE PRICE IS DETERMINED
Under the 1940 Act, the Trustees are responsible for determining in good faith
the fair value of the securities and other assets of the Fund and they have
adopted procedures to do so as follows:
The net asset value of shares of the Fund is determined as of 4:00 p.m. Eastern
time, Monday through Friday, except on business holidays when the New York Stock
Exchange is closed. The New York Stock Exchange recognizes the following
holidays: New Year's Day, President's Day, Good Friday, Memorial Day, Fourth of
July, Labor Day, Thanksgiving Day and Christmas Day. Any other holiday
recognized by the New York Stock Exchange will be considered a business holiday
on which the Fund's share price will not be determined.
The net asset value per share of the Fund is calculated separately by adding the
value of the securities and other assets belonging to the Fund, subtracting the
liabilities charged to the Fund, and dividing the result by the number of
outstanding shares of the Fund. Assets belonging to the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and any
general assets of the Fund.
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<PAGE>
ADDITIONAL TAX INFORMATION
The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.
The Fund intends to qualify or remain qualified as a regulated investment
company. In order to so qualify, the Fund must elect to be a regulated
investment company or have made such an election for a previous year and must
satisfy, in addition to the distribution requirement described in the
Prospectus, certain requirements with respect to the source of its income for a
taxable year. At least 90% of the gross income of the Fund must be derived from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stocks, securities or foreign currencies, and other
income derived with respect to the Fund's business of investing in such stock,
securities or currencies. Any income derived by the Fund from a partnership or
trust is derived with respect to the Fund's business of investing in such stock,
securities or currencies only to the extent that such income is attributable to
items of income that would have been qualifying income if realized by the Fund
in the same manner as by the partnership or trust.
The Fund may not qualify as a regulated investment company for any taxable year
unless it satisfies certain requirements with respect to the diversification of
its investments at the close of each quarter of the taxable year. In general, at
least 50% of the value of its total assets must be represented by cash, cash
items, government securities, securities of other regulated investment companies
and other securities which, with respect to any one issuer, do not represent
more that 5% of the total assets of the investment company nor more than 10% of
the outstanding voting securities of such issuer. In addition, not more than 25%
of the value of the investment company's total assets may be invested in the
securities (other than government securities or the securities of other
regulated investment companies) of any one issuer. The Fund intends to satisfy
all requirements on an ongoing basis for continued qualification as a regulated
investment company.
The Fund will designate any distribution of long term capital gains as a
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<PAGE>
capital gain dividend in a written notice mailed to shareholders within 60 days
after the close of the Fund's taxable year. Shareholders should note that, upon
the sale or exchange of shares, if the shareholder has not held such shares for
at least six months, any loss on the sale or exchange of those shares will be
treated as a long term capital loss to the extent of the capital gain dividends
with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income prior to the end of each calendar year to avoid liability for this excise
tax.
If for any taxable year the Fund does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the Fund's
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of taxable dividends or 31% of gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, or who are subject to withholding by the Internal
Revenue Service for failure to properly include on their tax return payments of
taxable interest or dividends, or who have failed to certify to the Fund that
they are not subject to backup withholding when required to do so or that they
are "exempt recipients."
Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.
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<PAGE>
CALCULATION OF PERFORMANCE DATA
As indicated in the Prospectus, the Fund may, from time to time, advertise
certain total return and yield information. The average annual total return of
the Fund for a period is computed by subtracting the net asset value per share
at the beginning of the period from the net asset value per share at the end of
the period (after adjusting for the reinvestment of any income dividends and
capital gain distributions), and dividing the result by the net asset value per
share at the beginning of the period. In particular, the average annual total
return of the Fund ("T") is computed by using the redeemable value at the end of
a specified period of time ("ERV") of a hypothetical initial investment of
$1,000 ("P") over a period of time ("n") according to the formula P(l+T)n=ERV.
The calculation of average annual total return assumes the reinvestment of all
dividends and distributions and the deduction of the current maximum sales load
from the initial $1,000 payment. The average annual total returns of the Fund
for the one year period ended December 31, 1997 and for the period since
inception (January 3, 1995) to December 31, 1997 are ______% and ______%,
respectively.
In addition, the Fund may advertise other total return performance data
("Nonstandardized Return"). Nonstandardized Return shows as a percentage rate of
return encompassing all elements of return (i.e., income and capital
appreciation or depreciation); it assumes reinvestment of all dividends and
capital gain distributions. This computation does not include the effect of the
applicable sales load which, if included, would reduce total return.
Nonstandardized Return may consist of a cumulative percentage of return, actual
year-by-year rates or any combination thereof.
The cumulative total return of the Fund (computed without the applicable sales
load) for the period since inception (January 3, 1995) to December 31, 1997 is
_______%. The average annual Nonstandardized Returns of the Fund (computed
without the applicable sales load) for the one year period ended December 31,
1997 and for the period since inception (January 3, 1995) to December 31, 1997
are _______% and _______%, respectively. A nonstandardized quotation of total
return will always be accompanied by the Fund's average annual total return as
described above.
From time to time, the Fund may advertise its yield. A yield quotation is based
on a 30-day (or one month) period and is computed by dividing the net investment
income per share earned during the period by the maximum offering price per
share on the last day of the period, according to the following formula:
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<PAGE>
6
Yield = 2[(a-b/cd + 1) - 1]
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that were
entitled to receive dividends
d = the maximum offering price per share on the last day of the period
Solely for the purpose of computing yield, dividend income is recognized by
accruing 1/360 of the stated dividend rate of the security each day that the
Fund owns the security. Generally, interest earned (for the purpose of "a"
above) on debt obligations is computed by reference to the yield to maturity of
each obligation held based on the market value of the obligation (including
actual accrued interest) at the close of business on the last business day prior
to the start of the 30-day (or one month) period for which yield is being
calculated, or, with respect to obligations purchased during the month, the
purchase price (plus actual accrued interest).
The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the S&P 500 Index, which is generally considered to be representative of the
performance of unmanaged common stocks that are publicly traded in the United
States securities markets. Comparative performance may also be expressed by
reference to a ranking prepared by a mutual fund monitoring service, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. or by one or more
newspapers, newsletters or financial periodicals. The Fund may also occasionally
cite statistics to reflect its volatility and risk. The Fund may also compare
its performance to published reports of the performance of unmanaged companies
located in the Cincinnati tri-state area. The performance of such unmanaged
portfolios generally does not reflect the effects of dividends or dividend
reinvestment. Of course, there can be no assurance that the Fund will experience
the same results. Performance comparisons may be useful to investors who wish to
compare the Fund's past performance to that of other mutual funds and investment
products. Of course, past performance is not a guarantee of future results.
The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings
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<PAGE>
and net asset value per share are factors in the computation of total return as
described above.
As indicated, from time to time, the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:
o LIPPER ANALYTICAL SERVICES, INC. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o MORNINGSTAR, INC., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on nonstandardized base periods. The total returns represent the historic change
in the value of an investment in the Fund based on monthly reinvestment of
dividends over a specified period of time.
From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also
- 26 -
<PAGE>
include in advertisements and in materials furnished to present and prospective
shareholders statements or illustrations relating to the appropriateness of
types of securities and/or mutual funds that may be employed to meet specific
financial goals, such as saving for retirement, children's education, or other
future needs.
APPENDIX A
DESCRIPTION OF RATINGS
Under normal market conditions, at least 90% of the Fund's net assets will be
invested in equities. As a temporary defensive position, however, the Fund may
invest up to 100% of its assets in investment grade bonds, U.S. Government
Securities, repurchase agreements or money market instruments ("Investment-Grade
Debt Securities"). When the Fund invests in Investment-Grade Debt Securities as
a temporary defensive measure, it is not pursuing its investment objective.
Under normal circumstances, however, the Fund may invest in money market or
repurchase agreement instruments as described in the Prospectus.
The various ratings used by the NRSROs are described below. A rating by an NRSRO
represents the organization's opinion as to the credit quality of the security
being rated. However, the ratings are general and are not absolute standards of
quality or guarantees as to the creditworthiness of an issuer. Consequently, the
Advisor believes that the quality of fixed-income securities in which the Fund
may invest should be continuously reviewed and that individual analysts give
different weightings to the various factors involved in credit analysis. A
rating is not a recommendation to purchase, sell or hold a security because it
does not take into account market value or suitability for a particular
investor. When a security has received a rating from more than one NRSRO, each
rating is evaluated independently. Ratings are based on current information
furnished by the issuer or obtained by the NRSROs from other sources that they
consider reliable. Ratings may be changed, suspended or withdrawn as a result of
changes in or unavailability of such information, or for other reasons.
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S RATINGS:
The following summarizes the four highest ratings used by Moody's Investors
Service, Inc. ("Moody's") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
Aaa: Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
- 27 -
<PAGE>
"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 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.
A: Bonds rated A possess many favorable investment attributes and are to be
considered upper medium grade obligations. Factors giving security to principal
and interest are considered adequate but elements may be present that suggest a
susceptibility to impairment sometime in the future.
Baa: Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Moody's applies numerical modifiers (1,2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category.
Bonds which are rated Ba, B, Caa, Ca or C by Moody's are not considered
Investment-Grade Debt Securities by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because the
protection of interest and principal payments often may be very moderate and not
well safeguarded. Bonds which are rated B generally lack characteristics of a
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the security over any long period of time may be
small. Bonds which are rated Caa are of poor standing. Such securities may be in
default or there may be present elements of danger with respect to principal or
interest. Bonds which are
- 28 -
<PAGE>
rated Ca represent obligations which are speculative in a high degree. Such
issues are often in default or have other marked shortcomings. Bonds which are
rated C are the lowest rated class of bonds, and issues so rated can be regarded
as having extremely poor prospects of ever attaining any real investment
standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriated may be more affected by external conditions. Ample alternate
liquidity is maintained.
The following summarizes the highest rating used by Moody's for short-term notes
and variable rate demand obligations:
MIG-1; VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP'S RATINGS:
The following summarizes the four highest ratings used by Standard & Poor's
Ratings Group ("S&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated AA also qualify as high quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A: Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
- 29 -
<PAGE>
BBB: Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in the A category.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
Investment-Grade Debt Securities and are regarded, on balance, as predominately
speculative with respect to the issuer's capacity to pay interest and principal
in accordance with the terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation. While such bonds may
have some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are give a plus
(+) designation.
DESCRIPTION OF FITCH INVESTORS SERVICE INC.'S RATINGS:
The following summarizes the four highest ratings used by Fitch Investors
Service, Inc. ("Fitch") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: Bonds are 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 are considered to be investment grade and of very high
- 30 -
<PAGE>
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 are 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 are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse impact on these bonds, and therefore,
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.
Bonds rated BB, B and CCC by Fitch are not considered Investment-Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper.
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.
DESCRIPTION OF DUFF & PHELPS' CREDIT RATING CO.'S RATINGS:
The following summarizes the four highest ratings used by Duff & Phelps
- 31 -
<PAGE>
Credit Rating Co. ("D&P") for bonds which are deemed by the Advisor to be
Investment-Grade Debt Securities.
AAA: This is the highest rating credit quality. The risk factors are
considered to be negligible, being only slightly more than for risk-free U.S.
Treasury debt.
AA: Bonds rated AA are considered to be of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to time
because of economic conditions.
A: Bonds rated A have average but adequate protection factors. However risk
factors are more variable and greater in periods of economic stress.
BBB: Bonds rated BBB have below average protection factors, but are still
considered sufficient for prudent investment. There is considerable variability
in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered Investment-Grade Debt
Securities and are regarded, on balance, as predominately speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The rating Duff 1 is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff 1+, Duff 1 and
Duff 1- within the highest rating category. Duff 1+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations. Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
FINANCIAL STATEMENTS AND REPORTS
The Financial Statements of the Fund will be audited at least once each year by
independent public accountants. Shareholders will receive annual audited and
semiannual (unaudited) reports when published, and will receive written
confirmation of all confirmable transactions in their account. A
- 32 -
<PAGE>
copy of the Annual Report will accompany the Statement of Additional Information
whenever the Statement of Additional Information is requested by a shareholder
or prospective investor. The Financial Statements of the Predecessor Fund as of
February 28, 1998, together with the report of the independent accountants
thereon, are included on the following pages.
(Financial statements to be supplied)
- 33 -
<PAGE>
DUNHILL INVESTMENT TRUST
------------------------
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- ------- ---------------------------------
(a) (i) Financial Statements included in Part A:
Financial Highlights*
(ii) Financial Statements included in Part B:
Annual Audited Financial Statements as of February 28, 1998*
*To be filed by Amendment
(b) Exhibits
(1) Agreement and Declaration of Trust
(2) Bylaws
(3) Inapplicable
(4) Inapplicable
(5) (i) Form of Management Agreement with Dunhill Investment
Advisors, Limited
(ii) Form of Subadvisory Agreement with CityFund Advisory, Inc.
(6) Inapplicable
(7) (i) Form of Underwriting Agreement with Alpha-Omega
Capital Corp.
(ii) Form of Dealer Agreement*
(8) Form of Custody Agreement
<PAGE>
(9) (i) Form of Administrative Services Agreement with Dunhill
Investment Advisors, Limited
(ii) Form of Transfer, Dividend Disbursing, Shareholder Service
and Plan Agency Agreement with Dunhill Investment Advisors,
Limited
(iii)Form of Accounting Services Agreement with Fifth Third Bank*
(10) Opinions and Consent of Counsel*
(11) Consent of Independent Public Accountants*
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Form of Plan of Distribution
(16) Inapplicable
(17) Financial Data Schedule*
(18) Inapplicable
- -------------------------------------
* To be filed by Amendment
Item 25. Persons Controlled by or Under Common Control with Registrant.
- ------- --------------------------------------------------------------
After commencement of the public offering of the Registrant's shares,
the Registrant expects that no person will be directly or indirectly
controlled by or under common control with the Registrant.
Item 26. Number of Holders of Securities.
- -------- --------------------------------
As of January 1, 1998, there were no holders of the shares of
beneficial interest of the Registrant.
Item 27. Indemnification
- -------- ---------------
Article VI of the Registrant's Agreement and Declaration of Trust
provides for indemnification of officers and Trustees as follows:
<PAGE>
"Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject
to and except as otherwise provided in the Securities Act of
1933, as amended, and the 1940 Act, the Trust shall indemnify
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 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 my be or may have been involved as a party or
otherwise or with which such 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, and
except that no Covered Person shall be indemnified against any
liability to the Trust or its Shareholders to which such Covered
Person would otherwise be subject 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 6.5 ADVANCES OF EXPENSES. The Trust shall advance
attorneys' fees or other expenses incurred by a Covered Person in
defending a proceeding to the full extent permitted by the
Securities Act of 1933, as amended, the 1940 Act, and Ohio
Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(e), as
amended, these law, and not Ohio Revised Code Section 1701.13(e),
shall govern.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be
exclusive of or affect any other rights to which any such Covered
Person my be entitled. As used in this Article VI, "Covered
Person" shall include such person's heirs, executors and
administrators. Nothing contained in this article 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."
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to Trustees, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the 1940 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer or controlling person of the
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, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1940 Act and will be
governed by the final adjudication of such issue.
The Registrant expects to maintain a standard mutual fund and
investment advisory professional and directors and officers liability
policy. The policy will provide coverage to the Registrant, it
Trustees and officers. Coverage under the policy will include losses
by reason of any act, error, omission, misstatement, misleading
statement, neglect or breach of duty.
The Investment Management Agreement with Dunhill Investment Advisors,
Limited (the "Manager") and the Investment Advisory Agreement with
CityFund Advisory, Inc. (the "Advisor") provides that the Manager and
the Advisor shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Registrant in connection with
any investment policy or the purchase, sale, or retention of any
investment on the recommendation of the Manager or the Advisor;
provided, however, that nothing therein contained shall be construed
to protect the Manager and the Advisor against any liability to the
Registrant by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties under the Agreements.
The Underwriting Agreement with Alpha-Omega Capital Corp. ( the
"Underwriter") provides that the Underwriter, its directors, officers,
employees, shareholders and control persons shall not be liable for
any error of judgment or mistake of law or for any loss suffered by
Registrant in connection with the matters to which the Agreement
relates, except a loss resulting from willful misfeasance, bad faith
or negligence on the part of any of such persons in the performance of
Underwriter's duties or from the reckless disregard by any of such
persons of Underwriter's obligations and duties under the Agreement.
Registrant will advance attorneys' fees or other expenses incurred by
any such person in defending a proceeding, upon the undertaking by or
on behalf of such person to repay the advance if it is ultimately
determined that such person is not entitled to indemnification.
Item 28. Business And Other Connections of the Investment Adviser
- -------- --------------------------------------------------------
(a) The Manager will provide investment supervisory services to
Registrant and serve as Registrant's transfer agent and
administrative services agent. The Advisor will provide
discretionary investment advisory services to Registrant.
(b) The directors and officers of the Manager and the Advisor and any
other business, profession, vocation or employment of a
substantial nature engaged in at any time during the past two
years:
(i) Jasen M. Snelling - President of the Manager and the Advisor
(ii) Jerry A. Smith - Secretary and Treasurer of the Manager and
the Advisor; registered representative with the Underwriter;
formerly a registered representative with Equitable Life
Assurance Society.
<PAGE>
Item 29. Principal Underwriters
- -------- ----------------------
(a) Inapplicable
(b) The following list sets forth the directors and officers of
Alpha-Omega Capital Corp., the Trust's underwriter.
Position with Position with
Name Underwriter Registrant
---- ----------- ----------
Bryan E. Pifer President and None
6318 Paxton Woods Director
Loveland, Ohio 45140
William C. Riffle Director None
700 W. Pete Rose Way
Cincinnati, OH 45203
Jerry Fedasch Vice President None
700 W. Pete Rose Way
Cincinnati, OH 45203
(c) None
Item 30. Location of Accounts and Records
- -------- --------------------------------
Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at the principal executive offices of its
investment advisors. Certain records, including records
relating to the physical possession of Registrant's
securities, may be maintained at the offices of Registrant's
custodian.
Item 31. Management Services Not Discussed in Parts A or B
- -------- -------------------------------------------------
Inapplicable
Item 32. Undertakings
- -------- ------------
(a) Inapplicable
(b) Inapplicable
(c) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
report to shareholders, upon request and without charge.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed below on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati and State of Ohio, on the 27th day of
March, 1998.
DUNHILL INVESTMENT TRUST
By: /s/ Jasen M. Snelling
------------------------
Jasen M. Snelling
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Jasen M. Snelling Trustee and March 27, 1998
- --------------------- President
Jasen M. Snelling
/s/ Jerry A. Smith Secretary and March 27, 1998
- ------------------ Treasurer
Jerry A. Smith
<PAGE>
INDEX TO EXHIBITS
-----------------
(1) Agreement and Declaration of Trust
(2) Bylaws
(3) Inapplicable
(4) Inapplicable
(5) (i) Form of Management Agreement
(ii) Form of Subadvisory Agreement
(6) Inapplicable
(7) (i) Form of Underwriting Agreement
(ii) Form of Dealer's Agreement*
(8) Form of Custody Agreement
(9) (i) Form of Administrative Services Agreement
(ii) Form of Transfer, Dividend Disbursing, Shareholder Service
and Plan Agency Agreement
(iii) Form of Accounting Services Agreement*
(10) Opinions and Consent of Counsel*
(11) Consent of Independent Public Accountant*
(12) Inapplicable
(13) Inapplicable
(14) Inapplicable
(15) Form of Plan of Distribution
(16) Inapplicable
(17) Financial Data Schedule*
(18) Inapplicable
- -------------------------------------------------------
* To be filed by Amendment
DUNHILL INVESTMENT TRUST
AGREEMENT AND DECLARATION OF TRUST
MARCH 13, 1998
<PAGE>
DUNHILL INVESTMENT TRUST
------------------------
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
PAGE
----
ARTICLE I. NAME AND DEFINITIONS..........................................1
- ---------- --------------------
Section 1.1 Name..........................................................1
Section 1.2 Definitions...................................................1
(a) "Trust"..............................................1
(b) "Trustees"...........................................1
(c) "Shares".............................................2
(d) "Series".............................................2
(e) "Shareholder"........................................2
(f) "1940 Act"...........................................2
(g) "Commission".........................................2
(h) "Declaration of Trust"...............................2
(i) "Bylaws".............................................2
ARTICLE II. PURPOSE OF TRUST..............................................2
- ---------- ----------------
ARTICLE III. THE TRUSTEES..................................................2
- ------------ ------------
Section 3.1 Number, Designation, Election, Term, etc......................2
(a) Initial Trustees.....................................2
(b) Number...............................................3
(c) Term.................................................3
(d) Resignation and Retirement...........................3
(e) Removal..............................................3
(f) Vacancies............................................4
(g) Effect of Death, Resignation, etc....................4
(h) No Accounting........................................4
Section 3.2 Powers of the Trustees........................................5
(a) Investments..........................................6
(b) Disposition of Assets................................6
(c) Ownership Powers.....................................6
(d) Subscription.........................................6
(e) Form of Holding......................................6
(f) Reorganization, etc..................................6
(g) Voting Trusts, etc...................................7
(h) Compromise...........................................7
(i) Partnerships, etc....................................7
- i -
<PAGE>
(j) Borrowing and Security...............................7
(k) Guarantees, etc......................................7
(l) Insurance............................................7
(m) Pensions, etc........................................8
Section 3.3 Certain Contracts.............................................8
(a) Advisory.............................................9
(b) Administration.......................................9
(c) Distribution.........................................9
(d) Custodian and Depository.............................9
(e) Transfer and Dividend Disbursing Agency..............9
(f) Shareholder Servicing................................9
(g) Legal, Accounting, Taxes and Other..................10
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees..................................................11
Section 3.5 Ownership of Assets of the Trust.............................11
ARTICLE IV. SHARES.......................................................11
- ---------- ------
Section 4.1 Description of Shares........................................11
Section 4.2 Establishment and Designation of Series......................13
(a) Assets Belonging to Series..........................14
(b) Liabilities Belonging to Series.....................14
(c) Dividends...........................................15
(d) Liquidation.........................................16
(e) Voting..............................................16
(f) Redemption by Shareholder...........................17
(g) Redemption by Trust.................................17
(h) Net Asset Value.....................................18
(i) Transfer............................................18
(j) Equality............................................18
(k) Fractions...........................................19
(l) Conversion Rights...................................19
Section 4.3 Ownership of Shares..........................................19
Section 4.4 Investments in the Trust.....................................19
Section 4.5 No Preemptive Rights.........................................19
Section 4.6 Status of Shares and Limitation of Personal
Liability....................................................20
- ii -
<PAGE>
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS.....................20
- --------- ----------------------------------------
Section 5.1 Voting Powers................................................20
Section 5.2 Meetings.....................................................21
Section 5.3 Record Dates.................................................21
Section 5.4 Quorum and Required Vote.....................................22
Section 5.5 Action by Written Consent....................................22
Section 5.6 Inspection of Records........................................22
Section 5.7 Additional Provisions........................................23
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION.....................23
- ---------- ----------------------------------------
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice...............................................23
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety............................................24
Section 6.3 Indemnification of Shareholders..............................24
Section 6.4 Indemnification of Trustees, Officers, etc...................25
Section 6.5 Advances of Expenses.........................................25
Section 6.6 Indemnification Not Exclusive, etc...........................25
Section 6.7 Liability of Third Persons Dealing with
Trustees.....................................................25
ARTICLE VII. MISCELLANEOUS................................................26
- ----------- -------------
Section 7.1 Duration and Termination of Trust............................26
Section 7.2 Reorganization...............................................26
Section 7.3 Amendments...................................................27
Section 7.4 Filing of Copies; References; Headings.......................27
Section 7.5 Applicable Law...............................................28
- iii -
<PAGE>
DUNHILL INVESTMENT TRUST
------------------------
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
AGREEMENT AND DECLARATION OF TRUST made this 13th day of March, 1998, by
the Trustees hereunder, and by the holders of Shares of beneficial interest to
be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of an Ohio business trust in accordance with the provisions
hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
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NAME AND DEFINITIONS
--------------------
Section 1.1 NAME. This Trust shall be known as "Dunhill Investment Trust"
and the Trustees shall conduct the business of the Trust under that name.
Section 1.2 DEFINITIONS. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established by this
Agreement and Declaration of Trust, as amended from time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or elected
in accordance with Article III;
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(c) "Shares" refers to the transferable units of interest into which the
beneficial interest in the Trust or any Series of the Trust (as the
context may require) shall be divided from time to time;
(d) "Series" refers to Series of Shares established and designated under
or in accordance with the provisions of Article IV;
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time;
(g) "Commission " shall have the meaning given it in the 1940 Act;
(h) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time; and
(i) "Bylaws" shall mean the Bylaws of the Trust as amended from time to
time.
ARTICLE II
----------
PURPOSE OF TRUST
----------------
The purpose of the Trust is to operate as an investment company, to offer
Shareholders one or more investment programs primarily in securities and debt
instruments and to engage in any and all lawful acts or activities for which
business trusts may be formed under Chapter 1746.01 through 1746.99 of the Ohio
Revised Code. Until the Trustees determine otherwise, the principal office of
the Trust is to be located at 700 W. Pete Rose Way, Suite 127, Cincinnati, Ohio
45203.
ARTICLE III
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THE TRUSTEES
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Section 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) Initial Trustees. Upon 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, Jasen M. Snelling
shall become a Trustee hereof.
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(b) Number. The Trustees serving as such, whether named above or hereafter
becoming a Trustee, may increase or decrease the number of Trustees to
a number other than the number theretofore determined. 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 3.1.
(c) Term. Each Trustee shall serve as a Trustee during the lifetime of the
Trust and until its termination as hereinafter provided or until such
Trustee sooner dies, resigns, retires or is removed. The Trustees may
elect their own successors and may, pursuant to Section 3.1(f) hereof,
appoint Trustees to fill vacancies; provided that, immediately after
filling a vacancy, at least two-thirds of the Trustees then holding
office shall have been elected to such office by the Shareholders at
an annual or special meeting. If at any time less than a majority of
the Trustees then holding office were so elected, the Trustees shall
forthwith cause to be held as promptly as possible, and in any event
within 60 days, a meeting of Shareholders for the purpose of electing
Trustees to fill any existing vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust or retire
as a Trustee, by written instrument signed by him and delivered to the
other Trustees or to any officer of the Trust, and 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 of the number
of Trustees prior to such removal, specifying the date upon which such
removal shall become effective, (ii) by vote of the Shareholders
holding not less than two-thirds of the Shares then outstanding, cast
in person or by proxy at any meeting called for the purpose, or (iii)
by a declaration in writing signed by Shareholders holding not less
than two-thirds of the Shares then outstanding and filed with the
Trust's Custodian.
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(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation, the death, resignation,
retirement, removal or incapacity of any of the Trustees or resulting
from an increase in the number of Trustees by the Trustees, may (but
so long as there are at least three remaining Trustees, need not
unless required by the 1940 Act) be filled either by a majority of the
remaining Trustees through the appointment in writing of such other
person as such remaining Trustees in their discretion shall determine
(unless a shareholder election is required by the 1940 Act) or by the
election by the Shareholders, at a meeting called for the purpose, of
a person to fill such vacancy, and such appointment or election shall
be effective upon the written acceptance of the person named therein
to serve as a Trustee and agreement by such person to be bound by the
provisions of this Declaration of Trust, except that any such
appointment or election in anticipation of a vacancy to occur by
reason of retirement, resignation, or increase in 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 number of Trustees. As soon as any Trustee so appointed or elected
shall have accepted such appointment or election and shall have agreed
in writing to be bound by this Declaration of Trust and the
appointment or election is effective, the Trust estate shall vest in
the new Trustee, together with the continuing Trustees, without any
further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation, retirement,
removal, or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into pursuant to the
terms of this Declaration of Trust.
(h) 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 as a result of his death, resignation,
retirement, removal or incapacity (nor the estate of any such person)
shall be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
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Section 3.2 POWERS OF THE TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt Bylaws 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 Bylaws do not reserve that
right to the Shareholders; 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,
and may provide for the compensation of all of the foregoing; they may appoint
from their own number, and terminate, any one or more committees consisting of
two 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 3.3 they may employ one or
more advisers, administrators, depositories and custodians and may authorize any
depository or 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 and debt instruments, retain transfer, dividend, 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 or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, principal underwriter,
depository, custodian, transfer and 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:
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(a) Investments. To invest and reinvest cash and other 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. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of
the Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities, debt instruments
or property; and to execute and deliver proxies or powers of attorney
to such person or persons as the Trustees shall deem proper, granting
to such person or persons such power and discretion with relation to
securities, debt instruments or property as the Trustees shall deem
proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or
debt instruments;
(e) Form of Holding. To hold any security, debt instrument or 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 in the name of a custodian, subcustodian or other depository or a
nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer,
any security or debt instrument of which is or was held in the Trust;
to consent to any contract, lease, mortgage, purchase or sale of
property by such corporation or issuer, and to pay calls or
subscriptions with respect to any security or debt instrument held in
the Trust;
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(g) Voting Trusts, etc. To join with other holders of any securities or
debt instruments in acting through a committee, depository, voting
trustee or otherwise, and in that connection to deposit any security
or debt instrument with, or transfer any security or debt instrument
to, any such committee, depository or trustee, and to delegate to them
such power and authority with relation to any security or debt
instrument (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;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any matter in controversy, including
but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge the
assets of the Trust or any part thereof to secure obligations arising
in connection with such borrowing;
(k) 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;
(l) 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 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;
provided, however, that insurance which protects the Trustees and
officers against liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their offices may not be purchased;
and,
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(m) 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.
Except as otherwise provided by the 1940 Act or other applicable law, this
Declaration of Trust or the Bylaws, 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 then in office, being
present), within or without Ohio, including any meeting held by means of a
conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
Section 3.3 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 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, other type 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 of the Trust 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 determine appropriate:
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(a) Advisory. Subject to the general supervision of the Trustees and in
conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Series of
Shares of the Trust (as that phrase is defined in subsection (a) of
Section 4.2), to manage such investments and assets, make investment
decisions with respect thereto, and to place purchase and sale orders
for portfolio transactions relating to such investments and assets;
(b) Administration. 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, to supervise all or any part of the
operations of the Trust, and to 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;
(c) Distribution. To distribute the Shares of the Trust, to be principal
underwriter of such Shares, and/or to act as agent of the Trust in the
sale of Shares and the acceptance or rejection of orders for the
purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and accounting records in
connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain records of the
ownership of outstanding Shares, the issuance and redemption and the
transfer thereof, 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;
(f) Shareholder Servicing. 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; and
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(g) Legal, Accounting, Taxes and Other. To handle all or any part of the
legal, accounting, tax or other responsibilities, whether with respect
to the Trust's properties, Shareholders or otherwise.
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 subcontractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
(i) 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, 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 that
(ii) 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 has 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 its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (1) 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
reasonably justified by such facts 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), or (2) 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.
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Section 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES. The
Trustees are 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 to
charge or allocate the same to, between or among such one or more of the Series
that may be established and designated pursuant to Article IV, as the Trustees
deem fair, all expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the Trust, or in connection with the management
thereof, including, but not limited to, the Trustees' compensation and such
expenses and charges for the services of the Trust's officers, employees,
investment adviser, administrator, distributor, principal underwriter, auditor,
counsel, depository, 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. Without limiting the
generality of any other provision hereof, the Trustees shall be entitled to
reasonable compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
Section 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the assets of
the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
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SHARES
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Section 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust
shall be divided into Shares, all without par value, but the Trustees shall have
the authority from time to time to divide the Shares into two or more Series of
Shares, as they deem necessary or desirable, to establish and designate such
Series, and to fix and determine the relative rights and preferences as between
the different Series of Shares as to right 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 several Series shall have
separate voting rights or no voting rights. Except as aforesaid all Shares of
the different Series shall be identical.
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The Shares of each Series may be issued or reissued from time to time in
one or more classes ("Classes"), as determined by the Board of Trustees pursuant
to resolution. Each Class shall be appropriately designated, prior to the
issuance of any shares thereof, by some distinguishing letter, number or title.
All Shares within a Class shall be alike in every particular. All Shares of each
Series shall be of equal rank and have the same powers, preferences and rights,
and shall be subject to the same qualifications, limitations and restrictions
without distinction between the shares of different Classes thereof, except with
respect to such differences among such Classes, as the Board of Trustees shall
from time to time determine to be necessary or desirable, including differences
in the rate or rates of dividends or distributions. The Board of Trustees may
from time to time increase the number of Shares allocated to any Class already
created by providing that any unissued Shares of the applicable Series shall
constitute part of such Class, or may decrease the number of Shares allocated to
any Class already created by providing that any unissued Shares previously
assigned to such Class shall no longer constitute part thereof. The Board of
Trustees is hereby empowered to classify or reclassify from time to time any
unissued Shares of each Series by fixing or altering the terms thereof and by
assigning such unissued shares to an existing or newly created Class.
Notwithstanding anything to the contrary in this paragraph the Board of Trustees
is hereby empowered (i) to redesignate any issued Shares of any Series by
assigning a distinguishing letter, number or title to such shares and (ii) to
reclassify all or any part of the issued Shares of any Series to make them part
of an existing or newly created Class. The number of authorized Shares and the
number of Shares of each Series that may be issued is unlimited, and the
Trustees may issue Shares of any Series for such consideration and on such terms
as they may determine (or for no consideration if pursuant to a Share dividend
or split-up), all 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 subsection (g) of Section 4.2). The Trustees may classify or
reclassify any unissued Shares or any Shares previously issued and reacquired of
any Series into one or more Series that may be established and designated from
time to time. The Trustees may hold as treasury Shares (of the same or some
other Series), reissue for such consideration and on such terms as they may
determine, or cancel, at their discretion from time to time, any Shares of any
Series reacquired by the Trust.
The Trustees may from time to time close the transfer books or establish
record dates and times for the purposes of determining the holders of Shares
entitled to be treated as such, to the extent provided or referred to in Section
5.3.
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The establishment and designation of any Series of Shares in addition to
that established and designated in Section 4.2, or of any Class of Shares, shall
be effective upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such Series or Class, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated the Trustees may by an
instrument executed by a majority of their number abolish that Series or Class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this Declaration of
Trust.
Any Trustee, officer or other 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 of the Trust to the same extent as if such person were not a
Trustee, officer or other agent of the Trust; and the Trust may issue and sell
or cause to be issued and sold and may purchase Shares of any Series 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 generally.
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Section 4.2 ESTABLISHMENT AND DESIGNATION OF SERIES. Without limiting the
authority of the Trustees set forth in Section 4.1 to establish and designate
any further Series, the Trustees hereby establish and designate one Series of
Shares: the "Regional Opportunity Fund: Ohio, Indiana, Kentucky". The Shares of
these Series and any Shares of any further Series that may from time to time be
established and designated by the Trustees shall (unless the Trustees otherwise
determine with respect to some further Series or Class at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Series. All consideration received by the Trust
for the issue or sale of Shares of a particular Series, together with
all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof, 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 irrevocably
belong to that Series for all purposes, subject only to the rights of
creditors, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits 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, together with any General Items allocated to that Series
as provided in the following sentence, are herein referred to as
"assets belonging to" that Series. In the event that there are any
assets, incomes, earnings, profits, and proceeds thereof, funds, or
payments which are not readily identifiable as belonging to any
particular Series (collectively "General Items"), the Trustees shall
allocate such General Items to and among any one or more of the Series
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 Series shall belong
to that Series. Each such allocation by the Trustees shall be
conclusive and binding upon the Shareholders of all Series for all
purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be
treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding upon the
Shareholders.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities of the Trust
in respect of that Series and all expenses, costs, charges and
reserves attributable to that Series, and any general liabilities,
expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series shall be
allocated and charged by the Trustees to and among any one or more of
the Series 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 liabilities, expenses, costs, charges and reserves
allocated and so charged to a Series are herein referred to as
"liabilities belonging to" that Series. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees
shall be conclusive and binding upon the holders of all Series for all
purposes.
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(c) Dividends. Dividends and distributions on Shares of a particular
Series 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 holders of Shares of that Series, from such of
the estimated income and capital gains, accrued or realized, from the
assets belonging to that Series, as the Trustees may determine, after
providing for actual and accrued liabilities belonging to that Series.
All dividends and distributions on Shares of a particular Series shall
be distributed pro rata to the holders of that Series in proportion to
the number of Shares of that Series 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, and except that if Classes have been established for any
Series, the rate of dividends or distributions may vary among such
Classes pursuant to resolution, which may be a standing resolution, of
the Board of Trustees. Such dividends and distributions may be made in
cash or Shares 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 Section
4.2.
The Trust intends to qualify each Series as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended, or any
successor or comparable statute thereto, and regulations promulgated
thereunder. Inasmuch as the computation of net income and gains for
federal income tax purposes may vary from the computation thereof on
the books of the Trust, the Board of Trustees shall have the power, in
its sole discretion, to distribute in any fiscal year as dividends,
including dividends designated in whole or in part as capital gains
distributions, amounts sufficient, in the opinion of the Board of
Trustees, to enable each Series to qualify as a regulated investment
company and to avoid liability of the Series for federal income tax in
respect of that year. However, nothing in the foregoing shall limit
the authority of the Board of Trustees to make distributions greater
than or less than the amount necessary to qualify as a regulated
investment company and to avoid liability of each Series for such tax.
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(d) Liquidation. In event of the liquidation or dissolution of the Trust,
the Shareholders of each Series that has been established and
designated shall be entitled to receive, as a Series, when and as
declared by the Trustees, the excess of the assets belonging to that
Series over the liabilities belonging to that Series. The assets so
distributable to the Shareholders of any particular Series shall be
distributed among such Shareholders in proportion to the number of
Shares of that Series held by them and recorded on the books of the
Trust. The liquidation of any particular Series may be authorized by
vote of a majority of the Trustees then in office subject to the
approval of a majority of the outstanding voting Shares of that
Series, as defined in the 1940 Act.
(e) Voting. All shares of all Series shall have "equal voting rights" as
such term is defined in the Investment Company Act of 1940 and except
as otherwise provided by that Act or rules, regulations or orders
promulgated thereunder. On each matter submitted to a vote of the
Shareholders, all Shares of all Series shall vote as a single class
("Single Class Voting"); provided, however, that (a) as to any matter
with respect to which a separate vote of any Series is required by the
1940 Act or rules and regulations promulgated thereunder, or would be
required under the Ohio General Corporation Law if the Trust were an
Ohio corporation, such requirements as to a separate vote by that
Series shall apply in lieu of Single Class Voting as described above;
(b) in the event that the separate vote requirements referred to in
(a) above apply with respect to one or more Series, then, subject to
(c) below, the Shares of all other Series shall vote as a single
class; and (c) as to any matter which does not affect the interest of
a particular Series, only the holders of Shares of the one or more
affected Series shall be entitled to vote.
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<PAGE>
(f) Redemption by Shareholder. Each holder of Shares of a particular
Series 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 Series at a
redemption price equal to the net asset value per Share of that Series
next determined in accordance with subsection (h) of this Section 4.2
after the Shares are properly tendered for 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 the Series of which the Shares being
redeemed are part at the value of 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 Series to require the Trust to redeem Shares of that Series during
any period or at any time when and to the extent permissible under the
1940 Act, and such redemption is conditioned upon the Trust having
funds or property legally available therefor.
(g) Redemption by Trust. Each Share of each Series that has been
established and designated is subject to redemption by the Trust at
the redemption price which would be applicable if such Share was then
being redeemed by the Shareholder pursuant to subsection (f) of this
Section 4.2: (a) at any time, if the Trustees determine in their sole
discretion that failure to so redeem may have materially adverse
consequences to all or any of the holders of the Shares, or any Series
thereof, of the Trust, or (b) upon such other conditions as may from
time to time be determined by the Trustees and set forth in the then
current Prospectus of the Trust with respect to maintenance of
Shareholder accounts of a minimum amount. 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.
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<PAGE>
(h) Net Asset Value. The net asset value per Share of any Series shall be
the quotient obtained by dividing the value of the net assets of that
Series (being the value of the assets belonging to that Series less
the liabilities belonging to that Series) by the total number of
Shares of that Series 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.
(i) Transfer. All Shares of each particular Series shall be transferable,
but transfers of Shares of a particular Series will be recorded on the
Share transfer records of the Trust applicable to that Series only at
such times as Shareholders shall have the right to require the Trust
to redeem Shares of that Series and at such other times as may be
permitted by the Trustees.
(j) Equality. All Shares of each particular Series shall represent an
equal proportionate interest in the assets belonging to that Series
(subject to the liabilities belonging to that Series), and each Share
of any particular Series shall be equal to each other Share of that
Series; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that
may exist with respect to dividends and distributions on Shares of the
same Series. The Trustees may from time to time divide or combine the
Shares of any particular Series into a greater or lesser number of
Shares of that Series without thereby changing the proportionate
beneficial interest in the assets belonging to that Series or in any
way affecting the rights of Shares of any other Series.
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<PAGE>
(k) Fractions. Any fractional Share of any Series or Class, if any such
fractional Share is outstanding, shall carry proportionately all the
rights and obligations of a whole Share of that Series or Class,
including with respect to voting, receipt of dividends and
distributions, redemption of Shares, and liquidation of the Trust.
(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 Series shall have the right to convert said
Shares into Shares of one or more other Series of Shares in accordance
with such requirements and procedures as may be established by the
Trustees.
Section 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be recorded
on the books of the Trust or of a transfer or similar agent for the Trust, which
books shall be maintained separately for the Shares of each Series that has been
established and designated. No certificates certifying the ownership of Shares
need be issued except as the Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for the issuance
of Share certificates, the 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 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 Series and Class held
from time to time by each such Shareholder.
Section 4.4 INVESTMENTS IN THE TRUST. The Trustees may accept investments
in 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 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 4.5 NO PREEMPTIVE RIGHTS. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other securities issued by
the Trust.
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<PAGE>
Section 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY. Shares
shall be deemed to be personal property giving only the rights provided in this
instrument. Every Shareholder by virtue of having become a Shareholder shall be
held to have expressly assented and agreed to the terms hereof and to have
become a party hereto. The death of a Shareholder during the continuance of the
Trust shall not operate to terminate the Trust 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 Trust. Ownership of Shares shall not entitle the Shareholder
to any title in or to the whole or any part of the Trust property or right to
call for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust shall have any
power to bind personally any Shareholder, nor except as specifically provided
herein to call upon any Shareholder for the payment of any sum of money or
assessment whatsoever other than such as the Shareholder may at any time
personally agree to pay.
ARTICLE V
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Section 5.1 VOTING POWERS. The Shareholders shall have power to vote only
(i) for the election or removal of Trustees as provided in Section 3.1, (ii)
with respect to any contract with a Contracting Party as provided in Section 3.3
as to which Shareholder approval is required by the 1940 Act, (iii) with respect
to any termination or reorganization of the Trust or any Series to the extent
and as provided in Sections 7.1 and 7.2, (iv) with respect to any amendment of
this Declaration of Trust to the extent and as provided in Section 7.3, (v) to
the same extent as the stockholders of an Ohio 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 the Shareholders, 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
Bylaws 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.
There shall be no cumulative voting in the election of any Trustee or Trustees.
Shares may be voted in person or by proxy. A proxy with respect to Shares held
in the name of two or more persons shall be valid if executed by any one of them
unless at or prior to exercise of the proxy the Trust receives a specific
written notice to the contrary from any one of 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 Bylaws to be taken by Shareholders.
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<PAGE>
Section 5.2 MEETINGS. Meetings (including meetings involving only the
holders of Shares of one or more but less than all Series) 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 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 10% of the Shares then outstanding. If the Trustees shall fail to call or
give notice of any meeting of Shareholders (including a meeting involving only
the holders of Shares of one or more but less than all Series) for a period of
30 days after written application by Shareholders holding at least 25% of the
Shares then outstanding requesting a meeting be called for any other purpose
requiring action by the Shareholders as provided herein or in the Bylaws, then
Shareholders holding at least 25% 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 5.3 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 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 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 (subject to any provisions permissible
under subsection (c) of Section 4.2 with respect to dividends or distributions
on Shares that have not been ordered and/or paid for by the time or times
established by the Trustees under the applicable dividend or distribution
program or procedure then in effect) 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 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.
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<PAGE>
Section 5.4 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 of the Shares voted, at a meeting of which a quorum is present, shall
decide any questions and a plurality shall elect a Trustee, 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 Bylaws.
Section 5.5 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 other proportion thereof as shall be required by the 1940 Act or by any
express provision of this Declaration of Trust or the Bylaws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
Section 5.6 INSPECTION OF RECORDS. The records of the Trust shall be open
to inspection by Shareholders to the same extent as is permitted stockholders of
an Ohio corporation under the Ohio General Corporation Law.
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<PAGE>
Section 5.7 ADDITIONAL PROVISIONS. The Bylaws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
ARTICLE VI
----------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Trust for payment under such credit,
contract or claim; and neither the Shareholders nor the Trustees, nor any of the
Trust's officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Every note, bond, contract, instrument, certificate
or undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only by or for the
Trust or the Trustees and not personally. Nothing in this Declaration of Trust
shall protect any Trustee or officer against any liability to the Trust or the
Shareholders to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of the office of Trustee or of such
officer.
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 State of Ohio 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, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.
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<PAGE>
Section 6.2 TRUSTEE'S 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. 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, (a) the Trustees shall not be responsible or liable in any
event for any neglect or wrongdoing of any officer, agent, employee, consultant,
adviser, administrator, distributor or principal underwriter, custodian or
transfer, dividend disbursing, Shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be responsible for the act or omission of any other
Trustee; (b) 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 (c) 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 3.3. The Trustees as such shall not be required
to give any bond or surety or any other security for the performance of their
duties. Nothing stated herein is intended to detract from the protection
accorded to Trustees by Ohio Revised Code Sections 1746.08 and 1701.59, as
amended from time to time.
Section 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder 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 judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability.
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<PAGE>
Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify 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 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 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, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject 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 6.5 ADVANCES OF EXPENSES. The Trust shall advance attorneys' fees
or other expenses incurred by a Covered Person in defending a proceeding to the
full extent permitted by the Securities Act of 1933, as amended, the 1940 Act,
and Ohio Revised Code Chapter 1707, as amended. In the event any of these laws
conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws, and
not Ohio Revised Code Section 1701.13(E), shall govern.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article 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 6.7 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.
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<PAGE>
ARTICLE VII
-----------
MISCELLANEOUS
-------------
Section 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office
subject to a favorable vote of a majority of the outstanding voting Shares, as
defined in the 1940 Act, of each Series voting separately by Series.
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
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 subsection (d) of Section 4.2.
Section 7.2 REORGANIZATION. The Trustees may sell, convey and transfer the
assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that if shareholder
approval is required by the 1940 Act, no assets belonging to any particular
Series shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Series. Following such transfer, the Trustees shall distribute
such cash, shares or other securities (giving due effect to the assets and
liabilities belonging to and any other differences among the various Series the
assets belonging to which have so been transferred) among the Shareholders of
the Series the assets belonging to which have been so transferred; and if all of
the assets of the Trust have been so transferred, the Trust shall be terminated.
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<PAGE>
Section 7.3 AMENDMENTS. 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 repeal the prohibition of assessment upon the Shareholders 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 by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees), when authorized so to do
by the vote in accordance with subsection (e) of Section 4.2 of Shareholders
holding a majority of the Shares entitled to vote, except that amendments either
(a) establishing and designating any new Series of Shares not established and
designated in Section 4.2, or any Class or (b) having the purpose of changing
the name of the Trust or the name of any Shares theretofore established and
designated or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any provision hereof which is internally
inconsistent with any other provision hereof or which is defective or
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code and applicable regulations for the Trust's obtaining the most favorable
treatment thereunder available to regulated investment companies, shall not
require authorization by Shareholder vote. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the terms
of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate (which
may be a part of such instrument) executed by a Trustee or officer of the Trust
to the effect that such amendment has been duly adopted.
Section 7.4 FILING OF COPIES; REFERENCES; HEADINGS. The original or a copy
of this instrument and of each amendment hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of the State of Ohio, as well as any other governmental office where
such filing may from time to time be required, but the failure to make any such
filing shall not impair the effectiveness of this instrument or any such
amendment. Anyone dealing with the Trust may rely on a certificate by an officer
of the Trust as to whether or not any such amendments have been made, as to the
identities of the Trustees and officers, and as to any matters in connection
with the Trust hereunder; and, with the same effect as if it were the original,
may rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein,"
"hereof" and "hereunder" shall be deemed to refer to this instrument as a whole
as the same may be amended or affected by any such amendments. 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 hereof or
control or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
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<PAGE>
Section 7.5 APPLICABLE LAW. This Declaration of Trust is created under and
is to be governed by and construed and administered according to the laws of the
State of Ohio, including the Ohio General Corporation Law as the same may be
amended from time to time, but the reference to said Corporation Law is not
intended to give the Trust, the Trustees, the Shareholders or any other person
any right, power, authority or responsibility available only to or in connection
with an entity organized in corporate form. The Trust shall be of the type
referred to in Section 1746.01 of the Ohio Revised Code, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand for himself
and his assigns, as of the day and year first above written.
/s/ Jasen M. Snelling
---------------------------
Jasen M. Snelling
STATE OF OHIO )
) ss:
COUNTY OF HAMILTON )
Before me, a Notary Public in and for said county and state, personally
appeared the above named Jasen M. Snelling, who acknowledged that he did sign
the foregoing instrument and that the same is his free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this 13th day of March, 1998.
---------------------------
Notary Public
My Commission Expires:
BYLAWS
------
OF
--
DUNHILL INVESTMENT TRUST
------------------------
ARTICLE 1
---------
Agreement and Declaration of Trust and Offices
----------------------------------------------
1.1 Agreement and Declaration of Trust. These Bylaws shall be subject
to the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of Dunhill Investment Trust, the Ohio business trust
established by the Declaration of Trust (the "Trust").
1.2 Offices. The Trust may maintain one or more other offices,
including its principal office, in or outside of Ohio, in such cities as the
Trustees may determine from time to time. Unless the Trustees otherwise
determine, the principal office of the Trust shall be located in Cincinnati,
Ohio.
ARTICLE 2
---------
Meetings of Trustees
--------------------
2.1 Regular Meetings. 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 the first regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as any meeting of the shareholders.
2.2 Special Meetings. Special meetings of the Trustees may be held at
any time and at any place designated in the call of the meeting when called by
the Chairman of the Board or the Treasurer or by two or more Trustees,
sufficient notice thereof being given to each Trustee by the Secretary or an
Assistant Secretary or by the officer or the Trustees calling the meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of a special
meeting to send notice by mail at least forty-eight hours or by telegram at
least twenty-four hours before the meeting addressed to the Trustee at his or
her usual or last known business or residence address or to give notice to him
or her in person or by telephone at least
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<PAGE>
twenty-four hours before the meeting. Notice of a meeting need not be given to
any Trustee if a written waiver of notice, executed by him or her before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to him or her. Neither notice of a meeting nor
a waiver of a notice need specify the purposes of the meeting.
2.4 Quorum. At any meeting of the Trustees a majority of the Trustees
then in office 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.
2.5 Participation by Telephone. One or more of the Trustees or of any
committee of the Trustees may participate in a meeting thereof 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 except as
otherwise provided by the Investment Company Act of 1940.
2.6 Action by Consent. Any action required or permitted to be taken at
any meeting of the Trustees or any committee thereof may be taken without a
meeting, if a written consent of such action is signed by a majority of the
Trustees then in office or a majority of the members of such committee, as the
case may be, and such written consent is filed with the minutes of the
proceedings of the Trustees or such committee.
ARTICLE 3
---------
Officers
--------
3.1 Enumeration; Qualification. The officers of the Trust shall be a
Chairman of the Board, a President, a Treasurer, a Secretary and such other
officers, including Vice Presidents, if any, as the Trustees from time to time
may in their discretion elect. The Trust may also have such agents as the
Trustees from time to time may in their discretion appoint. The Chairman of the
Board of the Trust shall be a Trustee and may but need not be a shareholder; and
any other officer may be but none need be a Trustee or shareholder. Any two or
more offices may be held by the same person.
3.2 Election. The Chairman of the Board, the President, the Treasurer
and the Secretary shall be elected annually by the Trustees.
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Other officers, if any, may be elected or appointed by the Trustees at any time.
Vacancies in any office may be filled at any time.
3.3 Tenure. The Chairman of the Board, the President, the Treasurer and
the Secretary shall hold office for one year and until their respective
successors are chosen and qualified, or in each case until he or she sooner
dies, resigns, is removed or becomes disqualified. Each other officer shall hold
office and each agent shall retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these Bylaws, each
officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to the office occupied by him or her as if the Trust were organized as an Ohio
business corporation and such other duties and powers as the Trustees may from
time to time designate.
3.5 Chairman of the Board and President. Unless the Trustees otherwise
provide, the Chairman of the Board, or in the absence of the Chairman of the
Board, the President, or in the absence of the President, any other Trustee
chosen by the Trustees, shall preside at all meetings of the shareholders and of
the Trustees. The Chairman of the Board shall be the chief executive officer of
the Trust.
3.6 Treasurer. The Treasurer shall be the chief financial and
accounting officer of the Trust, and shall, subject to the provisions of the
Declaration of Trust and to any arrangement made by the Trustees with a
custodian, investment adviser or manager, or transfer, shareholder servicing or
similar agent, be in charge of the valuable papers, books of account and
accounting records of the Trust, and shall have such other duties and powers as
may be designated from time to time by the Trustees or by the Chairman of the
Board.
3.7 Secretary. The Secretary shall record all proceedings of the
shareholders and the Trustees in books to be kept therefor, which books or a
copy thereof shall be kept at the principal office of the Trust. In the absence
of the Secretary from any meeting of the shareholders or Trustees, an assistant
secretary, or if there be none or if he or she is absent, a temporary secretary
chosen at such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 Resignations and Removals. Any Trustee or officer may resign at any
time by written instrument signed by him or her and delivered to the Chairman of
the Board or 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. The Trustees may remove any officer elected by them with or without cause.
Except to the
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extent expressly provided in a written agreement with the Trust, no Trustee or
officer resigning and no officer removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal.
ARTICLE 4
---------
Committees
----------
4.1 General. The Trustees, by vote of a majority of the Trustees then
in office, may elect from their number an Executive Committee or other
committees and may delegate thereto some or all of their powers except those
which by law, by the Declaration of Trust, or by these Bylaws may not be
delegated. Except as the Trustees may otherwise determine, any such committee
may make rules for the conduct of its business, but unless otherwise provided by
the Trustees or in such rules, its business shall be conducted so far as
possible in the same manner as is provided by these Bylaws for the Trustees
themselves. All members of such committees shall hold such offices at the
pleasure of the Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their powers or duties
shall keep records of its meetings and shall report its action to the Trustees.
The Trustees shall have power to rescind any action of any committee, but no
such rescission shall have retroactive effect.
ARTICLE 5
---------
Reports
-------
5.1 General. The Trustees and officers shall render reports at the time
and in the manner required by the Declaration of Trust or any applicable law.
Officers and committees shall render such additional reports as they may deem
desirable or as may from time to time be required by the Trustees.
ARTICLE 6
---------
Fiscal Year
-----------
6.1 General. The fiscal year of the Trust shall be fixed, and shall be
subject to change by the Trustees.
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ARTICLE 7
---------
Seal
----
7.1 General. If required by applicable law, the seal of the Trust shall
consist of a flat-faced die with the word "Ohio", 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.
ARTICLE 8
---------
Execution of Papers
-------------------
8.1 General. Except as the Trustees may generally or in particular
cases authorize the execution thereof in some other manner, all deeds, leases,
contracts, notes and other obligations made by the Trustees shall be signed by
the Chairman of the Board, the President, any Vice President, the Secretary or
the Treasurer and need not bear the seal of the Trust, but shall state the
substance of or make reference to the provisions of Section 6.1 of the
Declaration of Trust.
ARTICLE 9
---------
Issuance of Share Certificates
------------------------------
9.1 Share Certificates. In lieu of issuing certificates for shares, the
Trustees 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
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
The Trustees may at any time authorize the issuance of share
certificates. In that event, each shareholder 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 of the Board or the President and by the Treasurer or Assistant
Treasurer. Such signatures may be facsimiles if the certificate is signed 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
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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.
9.2 Loss of Certificates. In case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees shall prescribe.
9.3 Issuance of New Certificate to Pledgee. In the event certificates
have been issued, a pledgee of shares transferred as collateral security shall
be entitled to a new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby. Such new
certificate shall express on its face that it is held as collateral security,
and the name of the pledgor shall be stated thereon, who alone shall be liable
as a shareholder, and entitled to vote thereon.
9.4 Discontinuance of Issuance of Certificates. The Trustees may at any
time discontinue the issuance of share certificates and may, by written notice
to each shareholder, require the surrender of share certificates to the Trust
for cancellation. Such surrender and cancellation shall not affect the ownership
of shares in the Trust.
ARTICLE 10
----------
Custodian
---------
10.1 General. The Trust shall at all times employ a bank or trust
company having a capital, surplus and undivided profits of at least Five Hundred
Thousand ($500,000) Dollars as Custodian of the capital assets of the Trust. The
Custodian shall be compensated for its services by the Trust and upon such basis
as shall be agreed upon from time to time between the Trust and the Custodian.
ARTICLE 11
----------
Dealings with Trustees and Officers
-----------------------------------
11.1 General. Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent as if he were
not a Trustee, officer or agent; and the Trustees may accept subscriptions to
shares or repurchase shares from any firm or company in which he is interested.
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ARTICLE 12
----------
Shareholders
------------
12.1 Meetings. A meeting of the shareholders of the Trust shall be held
whenever called by the Trustees, whenever election of a Trustee or Trustees by
shareholders is required by the provisions of Section 16(a) of the Investment
Company Act of 1940 for that purpose or whenever otherwise required pursuant to
the Declaration of Trust. Any meeting shall be held on such day and at such time
as the Chairman of the Board or the Trustees may fix in the notice of the
meeting.
12.2 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 receive payment of any dividend or of any other distribution,
the Trustees may from time to time fix a time, which shall be not more than 60
days before the date of any meeting of shareholders or the date for the payment
of any dividend or of any other distribution, as the record date for determining
the shareholders having the right to notice of and to vote at such meeting and
any adjournment thereof or the right to receive such dividend or distribution,
and in such case, only shareholders of record on such record date shall have
such right, notwithstanding any transfer of shares on the books of the Trust
after the record date; or without fixing such record date the Trustees may for
any such purposes close the register or transfer books for all or any part of
such period.
ARTICLE 13
----------
Amendments to the Bylaws
------------------------
13.1 General. These Bylaws may be amended or repealed, in whole or in
part, by a majority of the Trustees then in office at any meeting of the
Trustees, or by one or more writings signed by such a majority.
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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this day of ________, 1998, between
Dunhill Investment Trust (the "Trust"), a business trust organized under the
laws of the State of Ohio, and Dunhill Investment Advisors, Limited (the
"Manager"), a limited liability company organized under the laws of the State of
Ohio.
WHEREAS, the Trust has been organized to operate as an investment
company registered under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series and each such share of a series represents an undivided interest
in the assets, subject to the liabilities, located to that series, and each
series has separate investment objectives and policies; and
WHEREAS, the Regional Opportunity Fund: Ohio Indiana Kentucky (the
"Fund"), a series of the Trust, has been created for the purpose of investing
and reinvesting its assets in securities pursuant to the investment objectives
and policies as set forth in its registration statement under the Act and the
Securities Act of 1933 ("Registration Statement"), as heretofore amended and
supplemented; and the Trust desires to avail itself of the services,
information, advice, assistance and facilities of a manager and to have a
manager provide or perform for it
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<PAGE>
various management, statistical, portfolio adviser selection and other services
for the Fund; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended;
NOW, THEREFORE, the Trust and Manager agree as follows:
1. Employment of the Manager. The Trust hereby employs the Manager to
manage the investment and reinvestment of the assets of the Fund in the manner
set forth in subparagraph 2A of this Agreement, subject to the direction of the
Board of Trustees and the officers of the Trust, for the period, in the manner,
and on the terms hereinafter set forth. The Manager hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth. The Manager shall for all purposes herein be
deemed to be an independent contractor and shall, except as expressly provided
or authorized (whether herein or otherwise), have no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
2. Obligation of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. Investment Management Services.
(a) The Manager shall have overall supervisory
responsibility for the general management and
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investment of the assets and portfolio securities of
the Fund subject to and in accordance with the
investment objectives and policies of the Fund, and
any directions which the Trust's Board of Trustees
may issue to the Manager from time to time.
(b) The Manager shall provide overall investment programs
and strategies for the Fund, shall revise such
programs as necessary and shall monitor and report
periodically to the Board of Trustees concerning the
implementation of the programs.
(c) The Manager, with the approval of the Board of
Trustees of the Trust as to particular appointments,
intends to (i) appoint one or more persons or
companies (the "Adviser") and, subject to the terms
and conditions of this Agreement, the Adviser shall
have full investment discretion and shall make all
determinations with respect to the investment of the
Fund's assets and the purchase and sale of portfolio
securities with those assets, and (ii) take such
steps as may be necessary to implement such
appointments. The Manager shall be solely responsible
for paying the fees and expenses of the Adviser for
its services
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<PAGE>
to the Fund. The Manager shall not be responsible or
liable for the investment merits of any decision by
the Adviser to purchase, hold or sell a portfolio
security for the Fund.
(d) The Manager shall evaluate advisers and shall
recommend to the Board of Trustees the Adviser which
the Manager believes is best suited to invest the
assets of the Fund; shall monitor and evaluate the
investment performance of the Adviser; shall
recommend changes in the Adviser when appropriate;
shall coordinate the investment activities of the
Adviser to ensure compliance with applicable
restrictions and limitations applicable to the Fund;
and shall compensate the Adviser.
(e) The Manager shall render regular reports to the
Trust, at regular meetings of the Board of Trustees,
of, among other things, the portfolio investments of
the Fund and measurement and analysis of the results
achieved by the Fund.
(f) The Manager shall employ or provide and compensate
the executive, administrative, secretarial and
clerical personnel necessary to provide the services
set forth in this subparagraph 2B, and
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<PAGE>
shall bear the expense thereof, except as may
otherwise be provided in Section 4 of this Agreement.
The Manager shall also compensate all officers and
employees of the Trust who are officers or employees
of the Manager.
(g) The Manager shall pay all advertising and promotion
expenses incurred in connection with the sale or
distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under its Plan
of Distribution.
B. Provision of Information Necessary for Preparation of
Securities Registration Statement, Amendments and Other
Materials.
The Manager will make available and provide financial,
accounting and statistical information required by the Trust
in the preparation of the Registration Statement, reports and
other documents required by federal and state securities laws,
and such information as the Trust may reasonably request for
use in the preparation of the Registration Statement, reports
and other documents required by federal and state securities
laws.
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<PAGE>
C. Other Obligations and Services.
The Manager shall make available its officers and employees to
the Board of Trustees and officers of the Trust for
consultation and discussions regarding the administration and
management of the Fund and its investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions. The
Adviser, subject to the supervision of the Manager and the limitations contained
in this paragraph 3, shall place, on behalf of the Fund, orders for the
execution of portfolio transactions. The Adviser is not authorized by the Fund
to take any action, including the purchase or sale of securities for the Fund's
account, (a) in contravention of (i) any investment restrictions set forth in
the Act and the rules thereunder, (ii) specific instructions adopted by the
Board of Trustees and communicated to the Adviser, (iii) the investment
objectives, policies and restrictions of the Fund as set forth in the
Registration Statement, or (iv) instructions from the Manager communicated to
the Adviser, or (b) which would have the effect of causing the Fund to fail to
qualify or to cease to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended, or any succeeding statute.
Subject to the foregoing, the Adviser shall determine the securities to
be purchased or sold by the Fund and will place
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<PAGE>
orders with or through such persons, brokers or dealers in conformity with the
policies with respect to brokerage as set forth in the Registration Statement or
as the Board of Trustees may direct from time to time. It is recognized that, in
providing the Fund with investment supervision of the placing of orders for
portfolio transactions, the Adviser will give primary consideration to securing
the best qualitative execution, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), the execution
capability, financial responsibility and responsiveness of the broker or dealer
and the brokerage and research services provided by the broker or dealer.
Consistent with this policy, the Adviser may select brokers or dealers who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the other accounts over which
it exercises investment discretion. It is understood that neither the Trust nor
the Manager nor the Adviser have adopted a formula for allocation of the Fund's
investment transaction business. It is also understood that it is desirable for
the Fund that the Manager and/or the Adviser have access to supplemental
investment and market research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a higher commission to
the Fund than may result when allocating brokerage to other brokers on the
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<PAGE>
basis of seeking the lowest commission. Therefore, the Adviser is authorized to
place orders for the purchase and sale of securities for the Fund with such
certain brokers, subject to review by the Trust's Board of Trustees from time to
time with respect to the extent and continuation of this practice, provided that
the Adviser determines in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or the Adviser's overall
responsibilities with respect to the Fund and to other accounts over which it
exercises investment discretion. It is understood that although the information
may be useful to the Trust, the Manager and the Adviser, it is not possible to
place a dollar value on such information. Consistent with the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., and subject to
seeking best qualitative execution, the Adviser may give consideration to sales
of shares of the Fund as a factor in the selection of brokers and dealers to
execute portfolio transactions of the Fund.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to,
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<PAGE>
aggregate the securities to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as expenses
incurred in the transaction, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Trust with respect to the Fund and to such other clients.
The Adviser will not execute any portfolio transactions for the Fund's
account with a broker or dealer which is an "affiliated person" (as defined in
the Act) of the Trust, the Manager or the Adviser without the prior approval of
the Manager. The Manager agrees that it will provide the Adviser with a list of
brokers and dealers which are "affiliated persons" of the Trust, the Manager or
the Adviser.
The Manager shall render regular reports to the Trust of the total
brokerage business placed by the Fund and the manner in which the allocation has
been accomplished.
4. Expenses of the Fund. It is understood that the Fund will pay, or
that the Fund will enter into arrangements that require third parties to pay,
all its expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Fund shall include:
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<PAGE>
A. Expenses of all audits by independent public accountants;
B. Expenses of transfer agent, dividend disbursing agent,
accounting and pricing agent and shareholder recordkeeping
services;
C. Expenses of custodial services including recordkeeping
services provided by the custodian;
D. Expenses of obtaining security valuation quotations for
calculating the value of the Fund's net assets;
E. Salaries and other compensation of any of its executive
officers and employees, if any, who are not officers,
directors, stockholders or employees of the Manager or the
Adviser;
F. Taxes or governmental fees levied against the Fund;
G. Brokerage fees and commissions in connection with the purchase
and sale of the Fund's portfolio securities;
H. Costs, including the interest expenses, of borrowing money;
I. Costs and/or fees incident to Board of Trustee and shareholder
meetings, the preparation and mailings of prospectuses,
reports and notices to the existing shareholders of the Fund,
the filing of reports with regulatory bodies, the maintenance
of the Trust's existence as a business trust, membership in
investment
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<PAGE>
company organizations, and the registration of shares with
federal and state securities authorities;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Fund's shares
for sale and legal fees arising from litigation to which the
Trust may be a party and indemnification of the Trust's
officers and Trustees with respect thereto;
K. Costs of printing share certificates (in the event such
certificates are issued) representing shares of the Fund;
L. Trustees' fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Manager, the
Adviser or any of their affiliates; and
M. The Fund's pro rata portion of the fidelity bond required by
Section 17(g) of the Act and other insurance premiums.
5. Activities and Affiliates of the Manager.
A. The services of the Manager hereunder are not to be deemed
exclusive, and the Manager and any of its affiliates shall be
free to render similar services to others. The Manager shall
use the same skill and care in the management of the Fund's
assets as it uses in the administration of other accounts to
which it
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<PAGE>
provides asset management, consulting and portfolio manager
selection services, but shall not be obligated to give the
Fund more favorable or preferential treatment vis-a-vis its
other clients.
B. Subject to and in accordance with the Declaration of Trust and
Bylaws of the Trust and to Section 10(a) of the Act, it is
understood that Trustees, officers and agents of the Trust and
shareholders of the Fund are or may be interested in the
Manager or its affiliates as directors, officers, agents or
stockholders of the Manager or its affiliates; that directors,
officers, agents and stockholders of the Manager or its
affiliates are or may be interested in the Trust as Trustees,
officers, agents, shareholders or otherwise; that the Manager
or its affiliates may be interested in the Trust as
shareholders or otherwise; and that the effect of any such
interests shall be governed by said Declaration of Trust,
Bylaws and the Act.
6. Compensation of the Manager. For all services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Manager a
daily fee equal to the annual rate of 1.2% of the value of the daily net assets
of the Fund. Manager's fee shall be payable monthly and shall be due with
respect to any
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<PAGE>
month as of the first business day following the end of such month.
The value of the daily net assets of the Fund shall be determined
pursuant to the applicable provisions of the Declaration of Trust and to
resolutions to the Board of Trustees of the Trust. If, pursuant to such
provisions, the determination of net asset value is suspended for any particular
business day, then for the purposes of this paragraph 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of the close of business on that day, or as of such other time as the
value of the Fund's net assets may lawfully be determined on that day. If the
determination of the net asset value of the Fund's shares has been suspended for
a period including such month, the Manager's compensation payable for such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).
7. Liabilities of the Manager.
The Manager (including its directors, officers, shareholders,
employees, control persons and affiliates of any thereof) shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
in connection with the matters to which this Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence
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<PAGE>
on the part of the Manager in the performance of its duties or from the reckless
disregard by the Manager of its obligations and duties under this Agreement
("disabling conduct"). However, the Manager will not be indemnified for any
liability unless (1) a final decision is made on the merits by a court or other
body before whom the proceeding was brought that the Manager was not liable by
reason of disabling conduct, or (2) in the absence of such a decision, a
reasonable determination is made, based upon a review of the facts, that the
Manager was not liable by reason of disabling conduct, by (a) the vote of a
majority of a quorum of Trustees who are neither "interested persons" of the
Trust as defined in the Act nor parties to the proceeding ("disinterested,
non-party trustees"), or (b) an independent legal counsel in a written opinion.
The Fund will advance attorneys' fees or other expenses incurred by the Manager
in defending a proceeding, upon the undertaking by or on behalf of the Manager
to repay the advance unless it is ultimately determined that the Manager is
entitled to indemnification, so long as the Manager meets at least one of the
following as a condition to the advance: (1) the Manager shall provide a
security for its undertaking, (2) the Fund shall be insured against losses
arising by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested, non-party trustees of the Trust, or an independent legal counsel
in a written opinion, shall determine, based on a
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<PAGE>
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Manager ultimately will be found
entitled to indemnification. Any person employed by the Manager who may also be
or become an employee of the Trust shall be deemed, when acting within the scope
of his employment by the Trust, to be acting in such employment solely for the
Trust and not as the Manager's employee or agent.
8. Renewal and Termination.
A. This Agreement shall become effective upon its execution,
shall remain in force for an initial term of two (2) years
from such date and from year to year thereafter, but only so
long as such continuance is specifically approved at least
annually by the vote of a majority of the Trustees who are not
interested persons of the Trust, the Manager or the Adviser,
cast in person at a meeting called for the purpose of voting
on such approval and by a vote of the Board of Trustees or of
a majority of the outstanding voting securities. The aforesaid
provision that this Agreement may be continued "annually"
shall be construed in a manner consistent with the Act and the
rules and regulations thereunder.
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<PAGE>
B. This Agreement:
(a) may at any time be terminated without the payment of
any penalty either by vote of the Board of Trustees
of the Trust or by vote of a majority of the
outstanding voting securities of the Fund, on sixty
(60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by the Manager on sixty (60) days'
written notice to the Trust.
C. As used in this Section 8, the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
D. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postpaid, to the other party
to this Agreement at its principal place of business.
9. 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.
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<PAGE>
10. Limitation of Liability. It is expressly agreed that the
obligations of the Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Fund, as provided in the Declaration of
Trust of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and the shareholders of the Fund and
signed by the officers of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
trust property of the Fund as provided in the Trust's Declaration of Trust.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, and no amendment of this
Agreement shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of the Fund and by the Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Manager or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
12. Governing Law. To the extent that state law has not been preempted
by the provisions of any law of the United States
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<PAGE>
heretofore or hereafter enacted, as the same may be amended from time to time,
this Agreement shall be administered, construed and enforced according to the
laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
DUNHILL INVESTMENT TRUST
ATTEST: By:
------------------------ --------------------------------
Title: President
DUNHILL INVESTMENT ADVISORS, LIMITED
ATTEST: By:
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Title: President
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SUBADVISORY AGREEMENT
CityFund Advisory, Inc.
700 W. Pete Rose Way, Ste. #127
Cincinnati, OH 45203
Gentlemen:
Dunhill Investment Trust (the "Trust") is a diversified open-end
management investment company registered under the Investment Company Act of
1940, as amended (the "Act"), and subject to the rules and regulations
promulgated thereunder. The Trust's shares of beneficial interest are divided
into separate series or funds. Each such share of a fund represents an undivided
interest in the assets, subject to the liabilities, allocated to that fund. Each
fund has separate investment objectives and policies. The Regional Opportunity
Fund: Ohio Indiana Kentucky (the "Fund") has been established as a series of the
Trust.
Dunhill Investment Advisors, Limited (the "Manager") acts as the investment
manager for the Fund pursuant to the terms of a Management Agreement. The
Manager is responsible for the coordination of investment of the Fund's assets
in portfolio securities. However, specific portfolio purchases and sales for the
investment portfolio of the Fund are to be made by advisory organizations
recommended by the Manager and approved by the Board of Trustees of the Trust.
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<PAGE>
1. Appointment as an Adviser. The Trust being duly authorized hereby
appoints and employs CityFund Advisors, Inc. (the "Adviser") as the
discretionary portfolio manager of the Fund, on the terms and conditions set
forth herein.
2. Acceptance of Appointment; Standard of Performance. The Adviser
accepts the appointment as the discretionary portfolio manager and agrees to use
its best professional judgment to make timely investment decisions for the Fund
in accordance with the provisions of this Agreement.
3. Portfolio Management Services of Adviser. The Adviser is hereby
employed and authorized to select portfolio securities for investment by the
Fund, to purchase and sell securities of the Fund, and upon making any purchase
or sale decision, to place orders for the execution of such portfolio
transactions in accordance with paragraphs 5 and 6 hereof. In providing
portfolio management services to the Fund, the Adviser shall be subject to such
investment restrictions as are set forth in the Act and the rules thereunder,
the Internal Revenue Code, applicable state securities laws, the supervision and
control of the Board of Trustees of the Trust, such specific instructions as the
Board of Trustees may adopt and communicate to the Adviser, the investment
objectives, policies and restrictions of the Fund furnished pursuant to
paragraph 4, the provisions of Schedule A
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<PAGE>
hereto and instructions from the Manager. The Adviser is not authorized by the
Fund to take any action, including the purchase or sale of securities for the
Fund, in contravention of any restriction, limitation, objective, policy or
instruction described in the previous sentence. The Adviser shall maintain on
behalf of the Fund the records listed in Schedule A hereto (as amended from time
to time). At the Trust's reasonable request, the Adviser will consult with the
Manager with respect to any decision made by it with respect to the investments
of the Fund.
4. Investment Objectives, Policies and Restrictions. The Trust will
provide the Adviser with the statement of investment objectives, policies and
restrictions applicable to the Fund as contained in the Trust's registration
statement under the Act and the Securities Act of 1933, and any instructions
adopted by the Board of Trustees supplemental thereto. The Trust will provide
the Adviser with such further information concerning the investment objectives,
policies and restrictions applicable thereto as the Adviser may from time to
time reasonably request. The Trust retains the right, on written notice to the
Adviser from the Trust or the Manager, to modify any such objectives, policies
or restrictions in any manner at any time.
5. Transaction Procedures. All transactions will be consummated by
payment to or delivery by Fifth Third Bank or any
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<PAGE>
successor custodian (the "Custodian"), or such depositories or agents as may be
designated by the Custodian in writing, as custodian for the Fund, of all cash
and/or securities due to or from the Fund, and the Adviser shall not have
possession or custody thereof. If the Manager has authorized the Adviser to
place orders for portfolio transactions of the Fund, the Adviser shall advise
the Custodian and confirm in writing to the Trust and to the Manager all
investment orders for the Fund placed by it with brokers and dealers. The
Adviser shall issue to the Custodian such instructions as may be appropriate in
connection with the settlement of any transaction initiated by the Adviser. It
shall be the responsibility of the Adviser to take appropriate action if the
Custodian fails to confirm in writing proper execution of the instructions.
6. Allocation of Brokerage. The Adviser shall have the authority and
discretion to select brokers and dealers to execute portfolio transactions
initiated by the Adviser, and for the selection of the markets on or in which
the transactions will be executed.
A. In doing so, the Adviser will give primary consideration to
securing the best qualitative execution, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability,
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<PAGE>
financial responsibility and responsiveness of the broker or dealer and the
brokerage and research services provided by the broker or dealer. Consistent
with this policy, the Adviser may select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the other accounts over which it
exercises investment discretion. It is understood that neither the Trust, the
Manager nor the Adviser have adopted a formula for allocation of the Fund's
investment transaction business. It is also understood that it is desirable for
the Fund that the Manager and/or the Adviser have access to supplemental
investment and market research and security and economic analyses provided by
certain brokers who may execute brokerage transactions at a higher commission to
the Fund than may result when allocating brokerage to other brokers on the basis
of seeking the lowest commission. Therefore, the Adviser is authorized to place
orders for the purchase and sale of securities for the Fund with such certain
brokers, subject to review by the Trust's Board of Trustees from time to time
with respect to the extent and continuation of this practice, provided that the
Adviser determines in good faith that the amount of the commission is reasonable
in relation to the value of the brokerage and research services provided by the
executing broker
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<PAGE>
or dealer. The determination may be viewed in terms of either a particular
transaction or the Adviser's overall responsibilities with respect to the Fund
and to the other accounts over which it exercises investment discretion. It is
understood that although the information may be useful to the Trust, the Manager
and the Adviser, it is not possible to place a dollar value on such information.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution, the
Adviser may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions of the Fund.
On occasions when the Adviser deems the purchase or sale of a security
to be in the best interest of the Fund as well as other clients, the Adviser, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the securities so purchased or sold, as
well as expenses incurred in the transaction, will be made by the Adviser in the
manner it considers to be the most equitable and consistent with its
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<PAGE>
fiduciary obligations to the Fund with respect to the Fund and to such other
clients.
For each fiscal quarter of the Fund, the Adviser shall prepare and
render reports to the Manager and the Trust's Board of Trustees of the total
brokerage business placed by the Adviser and the manner in which the allocation
has been accomplished. Such reports shall set forth at a minimum the information
required to be maintained by Rule 31a-1(b)(9) under the Act.
B. Adviser agrees that it will not execute any portfolio
transactions for the Fund's account with a broker or dealer which is an
"affiliated person" (as defined in the Act) of the Trust, the Manager or the
Adviser without the prior approval of the Manager. The Manager agrees that it
will provide the Adviser with a list of brokers and dealers which are
"affiliated persons" of the Trust, the Manager or the Adviser.
7. Proxies. The Trust will vote all proxies solicited by or with
respect to the issuers of securities in which assets of the Fund may be invested
from time to time. At the Trust's request, the Adviser shall provide the Trust
with its recommendations as to the voting of such proxies.
8. Reports to the Adviser. The Trust will provide the Adviser with such
periodic reports concerning the status of the Fund as the Adviser may reasonably
request.
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<PAGE>
9. Fees for Services. For the services provided to the Fund, the
Manager shall pay the Adviser a fee equal to the annual rate of 35/100 of 1% of
the average value of the daily net assets of the Fund.
The Adviser's fees shall be payable monthly within ten days following
the end of each month. Pursuant to the provisions of the Management Agreement
between the Trust and the Manager, the Manager is solely responsible for the
payment of fees to the Adviser, and the Adviser agrees to seek payment of the
Adviser's fees solely from the Manager.
10. Other Investment Activities of the Adviser. The Trust acknowledges
that the Adviser or one or more of its affiliates may have investment
responsibilities or render investment advice to or perform other investment
advisory services for other individuals or entities and that the Adviser, its
affiliates or any of its or their directors, officers, agents or employees may
buy, sell or trade in any securities for its or their respective accounts
("Affiliated Accounts"). Subject to the provisions of paragraph 2 hereof, the
Trust agrees that the Adviser or its affiliates may give advice or exercise
investment responsibility and take such other action with respect to other
Affiliated Accounts which may differ from the advice given or the timing or
nature of action taken with respect to the Fund, provided that
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<PAGE>
the Adviser acts in good faith, and provided further, that it is the Adviser's
policy to allocate, within its reasonable discretion, investment opportunities
to the Fund over a period of time on a fair and equitable basis relative to the
Affiliated Accounts, taking into account the investment objectives and policies
of the Fund and any specific investment restrictions applicable thereto. The
Trust acknowledges that one or more of the Affiliated Accounts may at any time
hold, acquire, increase, decrease, dispose of or otherwise deal with positions
in investments in which the Fund may have an interest from time to time, whether
in transactions which involve the Fund or otherwise. The Adviser shall have no
obligation to acquire for the Fund a position in any investment which any
Affiliated Account may acquire, and the Trust shall have no first refusal,
co-investment or other rights in respect of any such investment, either for the
Fund or otherwise.
11. Certificate of Authority. The Trust, the Manager and the Adviser
shall furnish to each other from time to time certified copies of the
resolutions of their Board of Trustees or Board of Directors or executive
committees, as the case may be, evidencing the authority of officers and
employees who are authorized to act on behalf of the Trust, the Fund, the
Manager and/or the Adviser.
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<PAGE>
12. Limitation of Liability. The Adviser (including its directors,
officers, shareholders, employees, control persons and affiliates of any
thereof) shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Adviser in the performance of its duties
or from the reckless disregard by the Adviser of its obligations and duties
under this Agreement ("disabling conduct"). However, the Adviser will not be
indemnified for any liability unless (1) a final decision is made on the merits
by a court or other body before whom the proceeding was brought that the Adviser
was not liable by reason of disabling conduct, or (2) in the absence of such a
decision, a reasonable determination is made, based upon a review of the facts,
that the Adviser was not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Act nor parties to the proceeding ("disinterested,
non-party trustees"), or (b) an independent legal counsel in a written opinion.
The Fund will advance attorneys' fees or other expenses incurred by the Adviser
in defending a proceeding, upon the undertaking by or on behalf of the Adviser
to repay the advance unless it is ultimately
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<PAGE>
determined that the Adviser is entitled to indemnification, so long as the
Adviser meets at least one of the following as a condition to the advance: (1)
the Adviser shall provide a security for its undertaking, (2) the Fund shall be
insured against losses arising by reason of any lawful advances, or (3) a
majority of a quorum of the disinterested, non-party trustees of the Trust, or
an independent legal counsel in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Adviser ultimately will be found
entitled to indemnification. Any person employed by the Adviser who may also be
or become an employee of the Trust shall be deemed, when acting within the scope
of his employment by the Trust, to be acting in such employment solely for the
Trust and not as the Adviser's employee or agent.
13. Confidentiality. Subject to the duty of the Adviser and the Trust
to comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all information pertaining to the Fund and the actions of the Adviser and the
Trust in respect thereof.
14. Assignment. No assignment of this Agreement shall be made by the
Adviser, and this Agreement shall terminate
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<PAGE>
automatically in the event of such assignment. The Adviser shall notify the
Trust in writing sufficiently in advance of any proposed change of control, as
defined in Section 2(a)(9) of the Act, as will enable the Trust to consider
whether an assignment will occur, and to take the steps necessary to enter into
a new contract with the Adviser.
15. Representations, Warranties and Agreements of the Trust. The Trust
represents, warrants and agrees that:
A. The Adviser has been duly appointed by the Board of
Trustees of the Trust to provide investment services to the Fund as contemplated
hereby.
B. The Trust will deliver to the Adviser a true and complete
copy of its then current prospectus and statement of additional information as
effective from time to time and such other documents or instruments governing
the investments of the Fund and such other information as is necessary for the
Adviser to carry out its obligations under this Agreement.
C. The Trust is currently in compliance and shall at all times
comply with the requirements imposed upon the Fund by applicable laws and
regulations.
16. Representations, Warranties and Agreements of the Adviser. The
Adviser represents, warrants and agrees that:
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<PAGE>
A. The Adviser is registered as an "investment adviser" under
the Investment Advisers Act of 1940.
B. The Adviser will maintain, keep current and preserve on
behalf of the Fund, in the manner and for the time periods required or permitted
by the Act, the records identified in Schedule A. The Adviser agrees that such
records (unless otherwise indicated on Schedule A) are the property of the
Trust, and will be surrendered to the Trust promptly upon request.
C. The Adviser will complete such reports concerning purchases
or sales of securities on behalf of the Fund as the Manager or the Trust may
from time to time require to ensure compliance with the Act, the Internal
Revenue Code and applicable state securities laws.
D. The Adviser will adopt a written code of ethics complying
with the requirements of Rule 17j-1 under the Act and will provide the Trust
with a copy of the code of ethics and evidence of its adoption. Within
forty-five (45) days of the end of the last calendar quarter of each year while
this Agreement is in effect, the president or a vice president of the Adviser
shall certify to the Trust that the Adviser has complied with the requirements
of Rule 17j-1 during the previous year and that there have been no violations of
the Adviser's code of ethics or, if such a violation has occurred, that
appropriate action was
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<PAGE>
taken in response to such violation. Upon the written request of the Trust, the
Adviser shall submit to the Trust the reports required to be made to the Adviser
by Rule 17j-1(c)(1).
E. The Adviser will promptly after filing with the Securities
and Exchange Commission an amendment to its Form ADV furnish a copy of such
amendment to the Trust and to the Manager.
F. Upon request of the Trust, the Adviser will provide
assistance to the Custodian in the collection of income due or payable to the
Fund.
G. The Adviser will immediately notify the Trust and the
Manager of the occurrence of any event which would disqualify the Adviser from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the Act or otherwise.
17. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Adviser and the Trust, which amendment, other than
amendments to Schedule A, is subject to the approval of the Board of Trustees
and the shareholders of the Fund in the manner required by the Act and the rules
thereunder, subject to any applicable exemptive order of the Securities and
Exchange Commission modifying the provisions of the Act with respect to approval
of amendments to this Agreement.
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18. Effective Date; Term. This Agreement shall become effective on the
date of its execution and shall remain in force for an initial term of two (2)
years from such date, and from year to year thereafter but only so long as such
continuance is specifically approved at least annually by the vote of a majority
of the Trustees who are not interested persons of the Trust, the Manager or the
Adviser, cast in person at a meeting called for the purpose of voting on such
approval, and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Fund. The aforesaid requirement that this
Agreement may be continued "annually" shall be construed in a manner consistent
with the Act and the rules and regulations thereunder.
19. Termination. This Agreement may be terminated by either party
hereto, without the payment of any penalty, immediately upon written notice to
the other in the event of a breach of any provision thereof by the party so
notified, or otherwise upon sixty (60) days' written notice to the other, but
any such termination shall not affect the status, obligations or liabilities of
any party hereto to the other.
20. Shareholder Liability. The Adviser is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the
Declaration of Trust of the Trust and agrees that
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<PAGE>
obligations assumed by the Trust pursuant to this Agreement shall be limited in
all cases to the Fund and its assets. The Adviser agrees that it shall not seek
satisfaction of any such obligations from the shareholders or any individual
shareholder of the Fund, nor from the Trustees or any individual Trustee of the
Trust.
21. Definitions. As used in paragraphs 14 and 18 of this Agreement, the
terms "assignment," interested person" and "vote of a majority of the
outstanding voting securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
22. Applicable Law. To the extent that state law is not preempted by
the provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of Ohio.
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<PAGE>
DUNHILL INVESTMENT ADVISOR'S, DUNHILL INVESTMENT TRUST
LIMITED
By: By:
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Title: President Title: President
------------------------- -----------------------------
Date: , 1998 Date: , 1998
--------------- ---------------
ACCEPTANCE
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The foregoing Agreement is hereby accepted.
CITYFUND ADVISORY,INC.
By:
--------------------------------
Title: President
-----------------------------
Date: , 1998
----------------
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<PAGE>
SCHEDULE A
RECORDS TO BE MAINTAINED BY THE ADVISER
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1. (Rule 31a-1(b)(5) and (6)) A record of each brokerage order, and all other
portfolio purchases and sales, given by the Adviser on behalf of the Fund
for, or in connection with, the purchase or sale of securities, whether
executed or unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modification or
cancellation thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Fund.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
portfolio securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Fund by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust;
(b) the Manager;
(c) the Adviser;
(d) any other portfolio adviser of the Trust; and
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(e) any person affiliated with the foregoing persons.
(iii)Any other consideration other than the technical
qualifications of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such allocation of
purchase and sale orders and such division of brokerage commissions or
other compensation.
D. The name of the person responsible for making the determination of
such allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-1(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of portfolio securities. Where an authorization is made by
a committee or group, a record shall be kept of the names of its members
who participate in the authorization. There shall be retained as part of
this record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of portfolio securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rules adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Adviser's transactions
with respect to the Fund.
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*Such information might include: the current Form 10-K, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or portfolio adviser reviews.
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UNDERWRITING AGREEMENT
----------------------
This Agreement made as of ________, 1998 by and between Dunhill Investment
Trust, the "Trust"), and Alpha-Omega Capital Corp., an Ohio corporation
("Underwriter").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of each series of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
------------
The Trust hereby appoints Underwriter as its exclusive agent for the
distribution of the Shares, and Underwriter hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the Trust
shall not sell any Shares except on the terms set forth in this Agreement.
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<PAGE>
Notwithstanding any other provision hereof, the Trust may terminate, suspend or
withdraw the offering of Shares whenever, in its sole discretion, it deems such
action to be desirable.
2. Sale and Repurchase of Shares.
------------------------------
(a) Underwriter will have the right, as agent for the Trust, to enter
into dealer agreements with responsible investment dealers, and to sell Shares
to such investment dealers against orders therefor at the public offering price
(as defined in subparagraph 2(e) hereof) less a discount determined by
Underwriter, which discount shall not exceed the amount of the sales charge
stated in the Trust's effective Registration Statement on Form N-1A under the
Securities Act of 1933, as amended, including the then current prospectus and
statement of additional information (the "Registration Statement"). Upon receipt
of an order to purchase Shares from a dealer with whom Underwriter has a dealer
agreement, Underwriter will promptly cause such order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the Trust, to
sell such Shares to the public against orders therefor at the public offering
price.
(c) Underwriter will also have the right, as agent for the Trust, to
sell Shares at their net asset value to such persons as may be approved by the
Trustees of the Trust, all such
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<PAGE>
sales to comply with the provisions of the Act and the rules and regulations of
the Securities and Exchange Commission promulgated thereunder.
(d) Underwriter will also have the right to take, as agent for the
Trust, all actions which, in Underwriter's judgment, are necessary to carry into
effect the distribution of the Shares.
(e) The public offering price for the Shares of each Series shall be
the respective net asset value of the Shares of that Series then in effect, plus
any applicable sales charge determined in the manner set forth in the
Registration Statement or as permitted by the Act and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder. In no event
shall any applicable sales charge exceed the maximum sales charge permitted by
the Rules of Fair Practice of the NASD.
(f) The net asset value of the Shares of each Series shall be
determined in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each Series shall
be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
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<PAGE>
(g) On every sale, the Trust shall receive the applicable net asset
value of the Shares promptly, but in no event later than the third business day
following the date on which Underwriter shall have received an order for the
purchase of the Shares. Underwriter shall have the right to retain the sales
charge less any applicable dealer discount.
(h) Upon receipt of purchase instructions, Underwriter will transmit
such instructions to the Trust or its transfer agent for registration of the
Shares purchased.
(i) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(j) Underwriter, as agent of and for the account of the Trust, may
repurchase the Shares at such prices and upon such
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<PAGE>
terms and conditions as shall be specified in the Registration Statement.
3. Sale of Shares by the Trust.
----------------------------
The Trust reserves the right to issue any Shares at any time directly
to the holders of Shares ("Shareholders"), to sell Shares to its Shareholders or
to other persons approved by Underwriter at not less than net asset value and to
issue Shares in exchange for substantially all the assets of any corporation or
trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
------------------------
Underwriter does not agree to sell any specific number of Shares.
Underwriter, as agent for the Trust, undertakes to sell Shares on a best efforts
basis only against orders therefor.
5. Rules of NASD, etc.
-------------------
(a) Underwriter will conform to the Rules of Fair Practice of the NASD
and the securities laws of any jurisdiction in which it sells, directly or
indirectly, any Shares.
(b) Underwriter will require each dealer with whom Underwriter has a
dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of the Shares,
and neither Underwriter nor any such dealers shall withhold the placing of
purchase orders so as to make a profit thereby.
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<PAGE>
(c) Underwriter agrees to furnish to the Trust sufficient copies of
any agreements, plans or other materials it intends to use in connection with
any sales of Shares in adequate time for the Trust to file and clear them with
the proper authorities before they are put in use, and not to use them until so
filed and cleared.
(d) Underwriter will qualify as dealer or broker, or otherwise, under
all applicable State or federal laws required in order that Shares may be sold
in such States as may be mutually agreed upon by the parties.
(e) Underwriter shall not make, or permit any representative, broker
or dealer to make, in connection with any sale or solicitation of a sale of the
Shares, any representations concerning the Shares except those contained in the
then current prospectus and statement of additional information covering the
Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
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<PAGE>
6. Records to be Supplied by Trust.
--------------------------------
The Trust shall furnish to Underwriter copies of all information,
financial statements and other papers which Underwriter may reasonably request
for use in connection with the distribution of the Shares, and this shall
include, but shall not be limited to, one certified copy, upon request by
Underwriter, of all financial statements prepared for the Trust by independent
public accountants.
7. Expenses.
---------
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Trust or the Trust's
investment advisers (the "Advisors") in accordance with agreements between them
as permitted by applicable law, including the Act and rules and regulations
promulgated thereunder.
8. Indemnification of Trust.
-------------------------
Underwriter agrees to indemnify and hold harmless the Trust, the
Advisors and each person who has been, is, or may hereafter be a trustee,
director, officer, employee, partner, shareholder or control person of the Trust
or the Advisors,
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<PAGE>
against any loss, damage or expense (including the reasonable costs of
investigation) reasonably incurred by any of them in connection with any claim
or in connection with any action, suit or proceeding to which any of them may be
a party, which arises out of or is alleged to arise out of or is based upon any
untrue statement or alleged untrue statement of a material fact, or the omission
or alleged omission to state a material fact necessary to make the statements
not misleading, on the part of Underwriter or any agent or employee of
Underwriter or any other person for whose acts Underwriter is responsible,
unless such statement or omission was made in reliance upon written information
furnished by the Trust or the Advisors. Underwriter likewise agrees to indemnify
and hold harmless the Trust, the Advisors and each such person in connection
with any claim or in connection with any action, suit or proceeding which arises
out of or is alleged to arise out of Underwriter's negligence with respect to
its services, if any, rendered in connection with investment, reinvestment,
automatic withdrawal and other plans for Shares. The term "expenses" for
purposes of this and the next paragraph includes amounts paid in satisfaction of
judgments or in settlements which are made with Underwriter's consent. The
foregoing rights of indemnification shall be in addition to any
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<PAGE>
other rights to which the Trust, the Advisors or each such person may be
entitled as a matter of law.
9. Liability of Underwriter.
-------------------------
Underwriter, its directors, officers, employees, shareholders and
control persons shall not be liable for any error of judgment or mistake of law
or for any loss suffered by the Trust in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or negligence on the part of any of such persons in the performance of
Underwriter's duties or from the reckless disregard by any of such persons of
Underwriter's obligations and duties under this Agreement. Any person employed
by Underwriter who may also be or become an officer or employee of the Trust
shall be deemed, when acting within the scope of his employment by the Trust, to
be acting in such employment solely for the Trust and not as an employee or
agent of Underwriter.
10. Termination and Amendment of this Agreement.
--------------------------------------------
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Underwriter, (ii) either by action of the
Board of Trustees of the Trust or at a meeting of the Shareholders of the Trust
by the
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<PAGE>
affirmative vote of a majority of the outstanding Shares, and (iii) by a
majority of the Trustees of the Trust who are not interested persons of the
Trust or of Underwriter by vote cast in person at a meeting called for the
purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. Effective Period of this Agreement.
-----------------------------------
This Agreement shall take effect upon its execution and shall remain
in full force and effect for a period of two (2) years from the date of its
execution (unless terminated automatically as set forth in Section 10), and from
year to year thereafter, subject to annual approval (i) by Underwriter, (ii) by
the Board of Trustees of the Trust or a vote of a majority of the outstanding
Shares, and (iii) by a majority of the Trustees of the Trust who are not
interested persons of the Trust or of Underwriter by vote cast in person at a
meeting called for the purpose of voting on such approval.
12. Limitation of Liability.
------------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees,
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<PAGE>
Shareholders, nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Trust, as provided in the Agreement and
Declaration of Trust of the Trust. The execution and delivery of this Agreement
have been authorized by the Trustees of the Trust and signed by an officer of
the Trust, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of the Trust as provided in its Agreement
and Declaration of Trust.
13. New Series.
-----------
The terms and provisions of this Agreement shall become automatically
applicable to any additional series of the Trust established during the initial
or renewal term of this Agreement.
14. Successor Investment Company.
-----------------------------
Unless this Agreement has been terminated in accordance with Paragraph
10, the terms and provisions of this Agreement shall become automatically
applicable to any investment company which is a successor to the Trust as a
result of reorganization, recapitalization or change of domicile.
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<PAGE>
15. Severability.
-------------
In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
16. Questions of Interpretation.
----------------------------
(a) This Agreement shall be governed by the laws of the State of Ohio.
(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Act shall be resolved by reference to such term or provision of the Act
and to interpretation thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court, by rules, regulations or
orders of the Securities and Exchange Commission issued pursuant to said Act. In
addition, where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of the
Securities and Exchange Commission, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
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<PAGE>
17. Notices.
--------
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust for this purpose
shall be c/o Jasen M. Snelling, 700 W. Pete Rose Way, #127, Cincinnati, OH 45203
and that the address of Underwriter for this purpose shall be 700 Pete Rose Way
#127, Cincinnati, Ohio 45203.
IN WITNESS WHEREOF, the Trust and Underwriter have each caused this
Agreement to be signed in duplicate on their behalf, all as of the day and year
first above written.
ATTEST: DUNHILL INVESTMENT TRUST
By:
- ----------------------------- -------------------------------
Its: President
ATTEST: ALPHA-OMEGA CAPITAL CORP.
By:
- ----------------------------- -------------------------------
Its: President
- 13 -
CUSTODY AGREEMENT
-----------------
This AGREEMENT, dated as of _________, 1998, by and between DUNHILL
INVESTMENT TRUST (the "Trust"), a business trust organized under the laws of the
state of Ohio, acting with respect to the REGIONAL OPPORTUNITY FUND: OHIO,
INDIANA, KENTUCKY, (the "Fund"), a series of the Trust operated and administered
by the Trust, and THE FIFTH THIRD BANK, a banking company organized under the
laws of the State of Ohio (the "Custodian").
W I T N E S S E T H:
--------------------
WHEREAS, the Trust desires that the Fund Securities and cash be held
and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
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<PAGE>
ARTICLE I
---------
DEFINITIONS
-----------
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Fund and named in Exhibit A hereto or in
such resolutions of the Board of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Trust computes
the net asset value of Shares of Fund.
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<PAGE>
1.5 "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.6 "Officer" shall mean the Chairman, the President, any Vice
President, the Secretary, any Assistant Secretary, the Treasurer, or any
Assistant Treasurer of the Trust.
1.7 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Trust shall cause
all Oral Instructions to be confirmed by Written Instructions. If such Written
Instructions confirming Oral Instructions are not received by the Custodian
prior to a transaction, it shall in no way affect the validity of the
transaction or the authorization thereof by the Trust. If Oral Instructions vary
from the Written Instructions which purport to confirm them, the Custodian shall
notify the Trust of such variance but such Oral Instructions will govern unless
the Custodian has not yet acted.
1.8 "Fund Custody Account" shall mean any of the accounts in the name
of the Trust, which are provided for in Section 3.2 below.
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<PAGE>
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Participants Trust Company
or The Depository Trust Company and (provided that Custodian shall have received
a copy of a resolution of the Board of Trustees, certified by an Officer,
specifically approving the use of such clearing agency as a depository for the
Fund) any other clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities and Exchange Act of 1934 (the
"1934 Act"), which acts as a system for the central handling of Securities where
all Securities of any particular class or series of an issuer deposited within
the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities, other
money market instruments or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any
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<PAGE>
similar property or assets that the Custodian has the facilities to clear and to
service.
1.12 "Shares" shall mean the units of beneficial interest issued by the
Trust on account the Fund.
1.13 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by one or more Authorized Persons,
or (ii) communications by telex or any other such system from a person or
persons reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications transmitted electronically through the Institutional Delivery
System (IDS), or any other similar electronic instruction system acceptable to
Custodian and approved by resolutions of the Board of Trustees, a copy of which,
certified by an Officer, shall have been delivered to the Custodian.
ARTICLE II
----------
APPOINTMENT OF CUSTODIAN
------------------------
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the possession
of the Trust at any time during the period of this Agreement, provided that such
Securities and cash at all times shall be and remain the property of the Trust.
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<PAGE>
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
-----------
CUSTODY OF CASH AND SECURITIES
------------------------------
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund (other than Securities maintained in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian and
shall be identified as subject to this Agreement.
3.2 Fund Custody Account. The Custodian shall open and maintain in its
trust department a custody account in the name of the Trust coupled with the
name of the Fund, subject only to draft or order of the Custodian, in which the
Custodian shall enter and carry all Securities, cash and other assets of Fund
which are delivered to it.
3.3 Appointment of Agents. (a) In its discretion, the Custodian may
appoint, and at any time remove, any domestic bank or trust company, which has
been approved by the Board of Trustees and is qualified to act as a custodian
under the 1940 Act, as sub-custodian to hold Securities and cash of the Fund and
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<PAGE>
to carry out such other provisions of this Agreement as it may determine, and
may also open and maintain one or more banking accounts with such a bank or
trust company (any such accounts to be in the name of the Custodian and subject
only to its draft or order), provided, however, that the appointment of any such
agent shall not relieve the Custodian of any of its obligations or liabilities
under this Agreement.
3.4 Delivery of Assets to Custodian. The Trust shall deliver, or cause
to be delivered, to the Custodian all of the Fund Securities, cash and other
assets, including (a) all payments of income, payments or principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the period of this Agreement,
and (b) all cash received by the Fund for the issuance, at any time during such
period, of Shares. The Custodian shall not be responsible for such Securities,
cash or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Trust
- 7 -
<PAGE>
shall deliver to the Custodian a resolution of the Board of
Trustees, certified by an Officer, authorizing and instructing
the Custodian on an on-going basis to deposit in such
Securities Depository or Book-Entry System all Securities
eligible for deposit therein and to make use of such
Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of
Securities, and deliveries and returns of collateral
consisting of Securities. So long as such Securities
Depository or Book-Entry System shall continue to be employed
for the deposit of Securities of the Fund, the Trust shall
annually re-adopt such resolution and deliver a copy thereof,
certified by an Officer, to the Custodian.
(b) Securities of the Fund kept in a Book-Entry System or
Securities Depository shall be kept in an account ("Depository
Account") of the Custodian in such Book-Entry System or
Securities Depository which includes only assets held by the
Custodian as a fiduciary, custodian or otherwise for
customers.
- 8 -
<PAGE>
(c) The records of the Custodian and the Custodian's account on
the books of the Book-Entry System and Securities Depository
as the case may be, with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository
shall, by book-entry or otherwise, identify such Securities as
belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a
Book-Entry System or Securities Depository, the Custodian
shall pay for such Securities upon (i) receipt of advice from
the Book-Entry System or Securities Depository that such
Securities have been transferred to the Depository Account,
and (ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for the account
of such Fund. If Securities sold by the Fund are held in a
Book-Entry System or Securities Depository, the Custodian
shall transfer such Securities upon (i) receipt of advice from
the Book-Entry System or Securities Depository that payment
for such Securities has been transferred to the Depository
Account, and (ii) the making of an entry on the records of the
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<PAGE>
Custodian to reflect such transfer and payment for the account
of the Fund.
(e) Upon request, the Custodian shall provide the Trust with
copies of any report (obtained by the Custodian from a
Book-Entry System or Securities Depository in which Securities
of the Fund are kept) on the internal accounting controls and
procedures for safeguarding Securities deposited in such
Book-Entry System or Securities Depository.
(f) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Trust for any loss or
damage to the Fund resulting (i) from the use of a Book-Entry
System or Securities Depository by reason of any negligence or
willful misconduct on the part of Custodian or any
sub-custodian appointed pursuant to Section 3.3 above or any
of its or their employees, or (ii) from failure of Custodian
or any such sub-custodian to enforce effectively such rights
as it may have against a Book-Entry System or Securities
Depository. At its election, the Trust shall be subrogated to
the rights of the Custodian with respect to any claim against
a Book-Entry System or Securities Depository or any other
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<PAGE>
person from any loss or damage to the Fund arising from the
use of such Book-Entry System or Securities Depository, if and
to the extent that the Fund have not been made whole for any
such loss or damage.
3.6 Disbursement of Moneys from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund Custody
account but only in the following cases:
(a) For the purchase of Securities for the Fund but only upon
compliance with Section 4.1 of this Agreement and only (i) in
the case of Securities (other than options on Securities,
futures contracts and options on futures contracts), against
the delivery to the Custodian (or any sub-custodian appointed
pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below or in proper form for
transfer, or if the purchase of such Securities is effected
through a Book-Entry System or Securities Depository, in
accordance with the conditions set forth in Section 3.5 above;
(ii) in the case of options on Securities, against delivery to
the Custodian (or such sub-custodian) of such receipts as are
required by the customs prevailing among dealers in such
options; (iii)
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<PAGE>
in the case of futures contracts and options on futures
contracts, against delivery to the Custodian (or such
sub-custodian) of evidence of title thereto in favor of the
Fund or any nominee referred to in Section 3.9 below; and (iv)
in the case of repurchase or reverse repurchase agreements
entered into between the Trust and a bank which is a member of
the Federal Reserve System or between the Trust and a primary
dealer in U.S. Government securities, against delivery of the
purchased Securities either in certificate form or through an
entry crediting the Custodian's account at a Book-Entry System
or Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as
set forth in Section 3.7(f) below, of Securities owned by the
Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest; taxes;
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<PAGE>
administration, investment management, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and
legal fees; and other operating expenses of the Fund; in all
cases, whether or not such expenses are to be in whole or in
part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer
registered under the 1934 Act and a member of the NASD,
relating to compliance with rules of The Options Clearing
Corporation and of any registered national securities exchange
(or of any similar organization or organizations) regarding
escrow or other arrangements in connection with transactions
by the Fund;
(g) For transfer in accordance with the provision of any agreement
among the Trust, the Custodian, and a futures commission
merchant registered under the Commodity Exchange Act, relating
to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in
connection with transactions by the Fund;
- 13 -
<PAGE>
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution
(including the Custodian), which deposit or account has a term
of one year or less; and
(i) For any other proper purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of
the Board of Trustees, certified by an Officer, specifying the
amount and purposes of such payment, declaring such purpose to
be a proper corporate purpose, and naming the person or
persons to whom such payment is to be made.
3.7 Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from the
Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but
only against receipt of payment therefor in cash, by certified
or cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of
Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the
- 14 -
<PAGE>
Fund; provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the
name of the Fund, the Custodian or any sub-custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees
of any of the foregoing, or (ii) for exchange for a different
number of certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in
any such case, the new Securities are to be delivered to the
Custodian;
(e) To the broker selling Securities, for examination in
accordance with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the issuer of such Securities, or pursuant to
provisions for conversion contained in such Securities, or
pursuant to any deposit agreement, including surrender or
receipt of underlying Securities in connection with the
issuance or cancellation of depository receipts; provided
that, in any such case,
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<PAGE>
the new Securities and cash, if any, are to be delivered to
the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon
the exercise thereof, provided that, in any such case, the new
Securities and cash, if any, are to be delivered to the
Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust
shall have specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by
the Fund requiring a pledge of assets by the Fund, but only
against receipt by the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Trust or the Fund;
(l) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer
registered under the 1934 Act and a member of
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<PAGE>
the NASD, relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with
transactions by the Fund;
(m) For delivery in accordance with the provisions of any
agreement among the Trust, the Custodian, and a futures
commission merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market (or any
similar organization or organizations) regarding account
deposits in connection with transactions by the Fund; or
(n) For any other proper corporate purposes, but only upon
receipt, in addition to Proper Instructions, of a copy of a
resolution of the Board of Trustees, certified by an Officer,
specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the
person or persons to whom delivery of such Securities shall be
made.
- 17 -
<PAGE>
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities held
for the Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all
income and other payments to which the Fund is entitled either
by law or pursuant to custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect
on a timely basis the amount payable upon all Securities which
may mature or be called, redeemed, or retired, or otherwise
become payable;
(c) Endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or
certificates of ownership under the federal income tax laws or
the laws or regulations of any other taxing authority now or
hereafter in effect, and prepare and submit reports to the
Internal Revenue Service ("IRS") and to the Trust at such
time, in such manner and containing such information as is
prescribed by the IRS;
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<PAGE>
(f) Hold for the Fund, either directly or, with respect to
Securities held therein, through a Book-Entry System or
Securities Depository, all rights and similar securities
issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with Securities and assets of the
Fund.
3.9 Registration and Transfer of Securities. All Securities held for
the Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System for the account of the Fund if eligible therefor. All other
Securities held for the Fund may be registered in the name of the Fund, the
Custodian, or any sub-custodian appointed pursuant to Section 3.3 above, or in
the name of any nominee of any of them, or in the name of a Book-Entry System,
Securities Depository or any nominee of either thereof; provided, however, that
such Securities are held specifically for the account of the Fund. The Trust
shall furnish to the Custodian appropriate instruments to enable the Custodian
to hold or deliver in proper form for
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<PAGE>
transfer, or to register in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry System or Securities Depository, any
Securities registered in the name of the Fund.
3.10 Records. (a) The Custodian shall maintain complete and accurate
records with respect to Securities, cash or other property held for the Fund,
including (i) journals or other records of original entry containing an itemized
daily record in detail of all receipts and deliveries of Securities and all
receipts and disbursements of cash; (ii) ledgers (or other records) reflecting
(A) Securities in transfer, (B) Securities in physical possession, (C) monies
and Securities borrowed and monies and Securities loaned (together with a record
of the collateral therefor and substitutions of such collateral), (D) dividends
and interest received, and (E) dividends receivable and interest accrued; and
(iii) canceled checks and bank records related thereto. The Custodian shall keep
such other books and records of the Fund as the Trust shall reasonably request,
or as may be required by the 1940 Act, including, but not limited to, Section 31
of the 1940 Act and Rule 31a-1 and 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in
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<PAGE>
compliance with rules and regulations of the Securities and Exchange Commission,
(ii) be the property of the Trust and at all times during the regular business
hours of the Custodian be made available upon request for inspection by duly
authorized officers, employees or agents of the Trust and employees or agents of
the Securities and Exchange Commission, and (iii) if required to be maintained
by Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in
Rule 31a-2 under the 1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust
with a daily activity statement and a summary of all transfers to or from the
Fund Custody Account on the day following such transfers. At least monthly and
from time to time, the Custodian shall furnish the Trust with a detailed
statement of the Securities and moneys held for the Fund under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any sub-custodian appointed pursuant to Section
3.3 above.
- 21 -
<PAGE>
3.13 Proxies and Other Materials. The Custodian shall cause all
proxies, if any, relating to Securities which are not registered in the name of
the Fund, to be promptly executed by the registered holder of such Securities,
without indication of the manner in which such proxies are to be voted, and
shall include all other proxy materials, if any, and shall promptly deliver to
the Trust such proxies, all proxy soliciting materials, which should include all
other proxy materials, if any, and all notices relating to such Securities.
3.14 Information on Corporate Actions. The Custodian will promptly
notify the Trust of corporate actions, limited to those Securities registered in
nominee name and to those Securities held at a Securities Depository or
sub-custodian acting as agent for the Custodian. Custodian will be responsible
only if the notice of such corporate actions is published by the Financial Daily
Card Service, J. J. Kenny Called Bond Service or Depository Trust Company, or
received by first class mail from the agent. For market announcements not yet
received and distributed by Custodian's services, Trust will inform its custody
representative with appropriate instructions. Custodian will, upon receipt of
Trust's response within the required deadline, affect such action for receipt or
payment for the Trust. For those responses received after the deadline,
Custodian will
- 22 -
<PAGE>
affect such action for receipt or payment, subject to the limitations of the
agent(s) affecting such actions. Custodian will promptly notify Trust for put
options only if the notice is received by first class mail from the agent. The
Trust will provide or cause to be provided to the Custodian all relevant
information contained in the prospectus for any Security which has unique
put/option provisions and provide Custodian with specific tender instructions at
least ten Business Days prior to the beginning date of the tender period.
ARTICLE IV
----------
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
--------------------------------------------
4.1 Purchase of Securities. Promptly upon each purchase of Securities
for the Fund, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities, and the
title or other description thereof, (b) the number of shares, principal amount
(and accrued interest, if any) or other units purchased, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person to whom such amount
is payable. The Custodian shall upon receipt of such Securities purchased by the
Fund pay out of the moneys held for the account of the Fund the total amount
specified in such
- 23 -
<PAGE>
Written Instructions to the person named therein. The Custodian shall not be
under any obligation to pay out moneys to cover the cost of a purchase of
Securities for the Fund, if in the Fund Custody Account there is insufficient
cash available to the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of Securities
for the Fund is made by the Custodian in advance of receipt of the Securities
purchased but in the absence of specified Written or Oral Instructions to so pay
in advance, the Custodian shall be liable to the Fund for such Securities to the
same extent as if the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by the
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions,
- 24 -
<PAGE>
the Custodian shall deliver such Securities to the person specified in such
Written Instructions. Subject to the foregoing, the Custodian may accept payment
in such form as shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing among dealers in
Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Fund shall bear the risk that
final payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for the
foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the Fund Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Fund,
- 25 -
<PAGE>
and (iii) income from cash, Securities or other assets of the Fund. Any such
credit shall be conditional upon actual receipt by Custodian of final payment
and may be reversed if final payment is not actually received in full. The
Custodian may, in its sole discretion and from time to time, permit the Fund to
use funds so credited to its Fund Custody Account in anticipation of actual
receipt of final payment. Any such funds shall be repayable immediately upon
demand made by the Custodian at any time prior to the actual receipt of all
final payments in anticipation of which funds were credited to the Fund Custody
Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance funds to the Trust to facilitate
the settlement of the Fund's transactions in its Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
---------
REDEMPTION OF FUND SHARES
-------------------------
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the Fund Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares of the Fund, the
Custodian shall wire each amount
- 26 -
<PAGE>
specified in such Proper Instructions to or through such bank as the Trust may
designate with respect to such amount in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under
any obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount paid by
the Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
----------
SEGREGATED ACCOUNTS
-------------------
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Trust, the Custodian and a broker-dealer registered under the
1934 Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange
(or the
- 27 -
<PAGE>
Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection
with securities options purchased or written by the Fund or in
connection with financial futures contracts (or options
thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by
the Fund,
(d) for purposes of compliance by the Fund with requirements under
the 1940 Act for the maintenance of segregated accounts by
registered investment companies in connection with reverse
repurchase agreements and when-issued, delayed delivery and
firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees, certified by an Officer,
setting forth the purpose or purposes of such segregated
account and
- 28 -
<PAGE>
declaring such purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained the Fund only.
ARTICLE VII
-----------
CONCERNING THE CUSTODIAN
------------------------
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust or the Fund for any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
such loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any sub-custodian
appointed pursuant to Section 3.3 above. The Custodian shall be entitled to rely
on and may act upon advice of counsel on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such advice.
The Custodian shall promptly notify the Trust of any action taken or omitted by
the Custodian pursuant to advice of counsel. The Custodian shall not be under
any obligation at any time to ascertain whether the Trust or the Fund is in
compliance with the 1940 Act, the regulations thereunder, the
- 29 -
<PAGE>
provisions of the Trust's charter documents or by-laws, or its investment
objectives and policies as then in effect.
7.2 Actual Collection Required. The Custodian shall not be liable for,
or considered to be the custodian of, any cash belonging to the Fund or any
money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually receive such cash or collect
on such instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Fund if such Securities are
in default or payment is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to
- 30 -
<PAGE>
rely upon any Oral Instructions and/or any Written Instructions actually
received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Cooperation. The Custodian shall cooperate with and supply
necessary information to the entity or entities appointed by the Trust to keep
the books of account of the Fund and/or compute the value of the assets of the
Fund. The Custodian shall take all such reasonable actions as the Trust may from
time to time request to enable the Trust to obtain, from year to year, favorable
opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's reports on Form N-1A and Form N-SAR and any other reports required by
the Securities and Exchange Commission, and (b) the fulfillment by the Trust of
any other requirements of the Securities and Exchange Commission.
- 31 -
<PAGE>
ARTICLE VIII
------------
INDEMNIFICATION
---------------
8.1 Indemnification. The Trust shall indemnify and hold harmless the
Custodian and any sub-custodian appointed pursuant to Section 3.3 above, and any
nominee of the Custodian or of such sub-custodian, from and against any loss,
damage, cost, expense (including attorneys' fees and disbursements), liability
(including, without limitation, liability arising under the Securities Act of
1933, the 1934 Act, the 1940 Act, and any state or foreign securities and/or
banking laws) or claim arising directly or indirectly (a) from the fact that
Securities are registered in the name of any such nominee, or (b) from any
action or inaction by the Custodian or such sub-custodian (i) at the request or
direction of or in reliance on the advice of the Trust, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement or any sub-custody agreement with a sub-custodian appointed
pursuant to Section 3.3 above, provided that neither the Custodian nor any such
sub-custodian shall be indemnified and held harmless from and against any such
loss, damage, cost, expense, liability or claim arising from the Custodian's or
such sub-custodian's negligence, bad faith or willful misconduct.
- 32 -
<PAGE>
8.2 Indemnity to be Provided. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
ARTICLE IX
----------
FORCE MAJEURE
-------------
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
- 33 -
<PAGE>
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Fund in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
---------
EFFECTIVE PERIOD; TERMINATION
-----------------------------
10.1 Effective Period. This Agreement shall become effective as of the
date first set forth above and shall continue in full force and effect until
terminated as hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than ninety (90) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in
- 34 -
<PAGE>
a Book-Entry System or Securities Depository) and cash then owned by the Fund
and held by the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or for the benefit
of the Fund at the successor custodian, provided that the Trust shall have paid
to the Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
Agreement. The Trust may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Custodian by
regulatory authorities in the State of Ohio or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian
is not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or trust company of its own selection, which is (a) a "Bank"
as defined in the 1940 Act, (b) has aggregate capital, surplus and undivided
profits as shown on its then most recent published report of not less than $25
million, and (c) is doing business in New York, New York, all Securities, cash
and other property held
- 35 -
<PAGE>
by Custodian under this Agreement and to transfer to an account of or for the
Fund at such bank or trust company all Securities of the Fund held in a
Book-Entry System or Securities Depository. Upon such delivery and transfer,
such bank or trust company shall be the successor custodian under this Agreement
and the Custodian shall be relieved of all obligations under this Agreement.
ARTICLE XI
----------
COMPENSATION OF CUSTODIAN
-------------------------
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges in
effect on the date hereof and applicable to the Fund are set forth in Exhibit B
attached hereto.
ARTICLE XII
-----------
LIMITATION OF LIABILITY
-----------------------
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust as provided in the Trust's Agreement and Declaration of
Trust, as from time to time amended. The execution and delivery
- 36 -
<PAGE>
of this Agreement have been authorized by the Trustees, and this Agreement has
been signed and delivered by an authorized officer of the Trust, acting as such,
and neither such authorization by the Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the trust
property of the Trust as provided in the above-mentioned Agreement and
Declaration of Trust.
ARTICLE XIII
------------
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
sent or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Trust:
-------------
Dunhill Investment Trust
700 W. Pete Rose Way, Ste. 127
Cincinnati, Ohio 45202
Telephone: (513) 624-5900
Facsimile: (513) -
To Custodian:
-------------
The Fifth Third Bank
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Attention: Area Manager-Trust Operations
Telephone: (513) 579-5300
Facsimile: (513) 579-4312
- 37 -
<PAGE>
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Trust shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
14.3 No Waiver. No failure by either party hereto to exercise, and no
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the
- 38 -
<PAGE>
exercise of any other right, and the remedies provided herein are cumulative and
not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
- 39 -
<PAGE>
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representatives thereunto duly authorized, all as of the day and year first
above written.
ATTEST: DUNHILL INVESTMENT TRUST
By:
- ------------------------------ -------------------------------
Its: President
ATTEST: THE FIFTH THIRD BANK
By:
- ------------------------------ -------------------------------
Its: President
- 40 -
<PAGE>
EXHIBIT A
TO THE CUSTODY AGREEMENT BETWEEN
DUNHILL INVESTMENT TRUST AND THE FIFTH THIRD BANK
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Trust to Administer the Fund Custody Account.
Name Signature
- ---- ---------
- ------------------------------ -------------------------------
- ------------------------------ -------------------------------
- ------------------------------ -------------------------------
- ------------------------------ -------------------------------
- 41 -
<PAGE>
EXHIBIT B
FIFTH THIRD BANK
FEE SCHEDULE
DUNHILL INVESTMENT TRUST
PER UNIT FEE
I Annual asset based Fees per fund
Under $25 Million 1 bp
$25 - $100 Million .75 bp
$100 - $200 Million .5 bp
Over $200 Million .25 bp
Minimum per fund $2,400.00
II Security Transaction Fees
DTC/Fed Eligible $ 9.00
Physical 25.00
Amortized Securities 25.00
Options 25.00
Mutual Funds 15.00
Foreign - Euroclear & Cedel 50.00
Foreign - Other TBD
III Systems
Automated Securities Workstation $150.00
$200.00 Initial Setup
Mainframe-To-Mainframe 150.00
$200.00 Initial Setup
IV. Miscellaneous Fees
Principal & Interest Collection $ 5.00
(on amortized securities)
Per additional issue for repo 5.00
collateral
Voluntary Corporate Actions 25.00
Wire Transfers (In/Out) 7.00
Check Requests 6.00
Automated Asset Reconciliation 25.00
Escrow Receipt 5.00
Special Services - per hr. fee 75.00
Overnight Packages 8.00
- 42 -
ADMINISTRATION AGREEMENT
------------------------
AGREEMENT dated as of __________, 1998 between Dunhill Investment Trust(the
"Trust")and Dunhill Investment Advisors, Limited ("Dunhill"), an Ohio limited
liability company.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Dunhill to serve as its
administrative agent; and
WHEREAS, Dunhill wishes to provide such services under the conditions set
forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Dunhill agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Dunhill as agent to perform those
services described in this Agreement for the Trust. Dunhill shall act under such
appointment and perform the obligations thereof upon the terms and conditions
hereinafter set forth.
2. DOCUMENTATION.
--------------
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing the
original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and Declaration of
Trust and the Bylaws of the Trust;
<PAGE>
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Dunhill;
E. Specimens of all new forms of share certificates accompanied by Board
of Trustees' resolutions approving such forms;
F. Such other certificates, documents or opinions which Dunhill may, in
its discretion, deem necessary or appropriate in the proper
performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the Trust
and for which Dunhill is to act as plan agent.
3. TRUST ADMINISTRATION.
---------------------
Subject to the direction and control of the Trustees of the Trust, Dunhill
shall supervise the Trust's business affairs not otherwise supervised by other
agents of the Trust. To the extent not otherwise the primary responsibility of,
or provided by, other agents of the Trust, Dunhill shall supply (i) office
facilities, (ii) internal auditing and regulatory services, and (iii) executive
and administrative services. Dunhill shall coordinate the preparation of (i) tax
returns, (ii) reports to shareholders of the Trust, (iii) reports to and filings
with the SEC and state securities authorities including preliminary and
definitive proxy materials, post-effective amendments to the Trust's
registration statement, and the Trust's Form N-SAR, and (iv) necessary materials
for Board of Trustees' meetings unless prepared by other parties under agreement
with the Trust. Dunhill shall provide personnel to serve as officers of the
Trust if so elected by the Board of Trustees; provided, however, that the Trust
shall reimburse Dunhill for the reasonable out-of-pocket expenses incurred by
such personnel in attending Board of Trustees' meetings and shareholders'
meetings of the Trust.
<PAGE>
4. RECORDKEEPING AND OTHER INFORMATION.
------------------------------------
Dunhill shall create and maintain all records required by applicable laws,
rules and regulations, including but not limited to records required by Section
31(a) of the 1940 Act and the rules thereunder, as the same may be amended from
time to time, pertaining to the various functions performed by it and not
otherwise created and maintained by another party pursuant to contract with the
Trust. All such records shall be the property of the Trust at all times and
shall be available for inspection and use by the Trust. Where applicable, such
records shall be maintained by Dunhill for the periods and in the places
required by Rule 31a-2 under the 1940 Act. The retention of such records shall
be at the expense of the Trust. Dunhill shall make available during regular
business hours all records and other data created and maintained pursuant to
this Agreement for reasonable audit and inspection by the Trust, any person
retained by the Trust, or any regulatory agency having authority over the Trust.
5. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
6. COMPENSATION.
-------------
For the performance of Dunhill's obligations under this Agreement, each
series of the Trust shall pay Dunhill, on the first business day following the
end of each month, a monthly fee at the annual rate of .15% of such series'
average daily net assets up to $50 million; .125% of such assets from $50 to
$100 million; and .1% of such assets in excess of $100 million.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Dunhill to perform any services for the Trust
which services could cause Dunhill to be deemed an "investment adviser" of the
Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede or
contravene the Trust's prospectus or statement of additional information or any
provisions of the 1940 Act and the rules thereunder. Except
<PAGE>
as otherwise provided in this Agreement and except for the accuracy of
information furnished to it by Dunhill, the Trust assumes full responsibility
for complying with all applicable requirements of the 1940 Act, the Securities
Act of 1933, as amended, and any other laws, rules and regulations of
governmental authorities having jurisdiction.
8. REFERENCES TO DUNHILL.
----------------------
The Trust shall not circulate any printed matter which contains any
reference to Dunhill without the prior written approval of Dunhill, excepting
solely such printed matter as merely identifies Dunhill as Administrative
Services Agent, Transfer, Shareholder Servicing and Dividend Disbursing Agent
and Accounting Services Agent. The Trust will submit printed matter requiring
approval to Dunhill in draft form, allowing sufficient time for review by
Dunhill and its counsel prior to any deadline for printing.
9. INDEMNIFICATION OF DUNHILL.
---------------------------
A. Dunhill may rely on information reasonably believed by it to be accurate
and reliable. Except as may otherwise be required by the 1940 Act and the rules
thereunder, neither Dunhill nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof shall be subject
to any liability for, or any damages, expenses or losses incurred by the Trust
in connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of the duties of Dunhill under this
Agreement or by reason of reckless disregard by any of such persons of the
obligations and duties of Dunhill under this Agreement.
B. Any person, even though also a director, officer, employee, shareholder
or agent of Dunhill, or any of its affiliates, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust, to be rendering
such services to or acting solely as an officer, trustee,
<PAGE>
employee or agent of the Trust and not as a director, officer, employee,
shareholder or agent of or one under the control or direction of Dunhill or any
of its affiliates, even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust shall
indemnify and hold harmless Dunhill, its directors, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which Dunhill may sustain or incur or which
may be asserted against Dunhill by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by Dunhill in good faith in reliance
upon any certificate, instrument, order or share certificate reasonably believed
by it to be genuine and to be signed, countersigned or executed by any duly
authorized person, upon the oral instructions or written instructions of an
authorized person of the Trust or upon the opinion of legal counsel for the
Trust or its own counsel; or (ii) any action taken or omitted to be taken by
Dunhill in connection with its appointment in good faith in reliance upon any
law, act, regulation or interpretation of the same even though the same may
thereafter have been altered, changed, amended or repealed. However,
indemnification under this subparagraph shall not apply to actions or omissions
of Dunhill or its directors, officers, employees, shareholders or agents in
cases of its or their own gross negligence, willful misconduct, bad faith, or
reckless disregard of its or their own duties hereunder.
10. TERMINATION
-----------
A. The provisions of this Agreement shall be effective on the date first
above written, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Dunhill, (2) by vote, cast in person at a meeting
called for the purpose, of a majority of the Trust's trustees who are not
parties to this Agreement or interested persons (as defined in the 1940 Act) of
any such party, and (3) by vote of a majority of the Trust's Board of Trustees
or a majority of the Trust's outstanding voting securities.
<PAGE>
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefore. Upon termination of this Agreement, the
Trust shall pay to Dunhill such compensation as may be due as of the date of
such termination, and shall likewise reimburse Dunhill for any out-of-pocket
expenses and disbursements reasonably incurred by Dunhill to such date.
C. In the event that in connection with the termination of this Agreement a
successor to any of Dunhill's duties or responsibilities under this Agreement is
designated by the Trust by written notice to Dunhill, Dunhill shall, promptly
upon such termination and at the expense of the Trust, transfer all records
maintained by Dunhill under this Agreement and shall cooperate in the transfer
of such duties and responsibilities, including provision for assistance from
Dunhill's cognizant personnel in the establishment of books, records and other
data by such successor.
11. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Dunhill or any affiliated person
(as defined in the 1940 Act) of Dunhill from providing services for any other
person, firm or corporation (including other investment companies); provided,
however, that Dunhill expressly represents that it will undertake no activities
which, in its judgment, will adversely affect the performance of its obligations
to the Trust under this Agreement.
12. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the Trust, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust.
<PAGE>
13. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
14. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
15. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and shall be (as elected by the person giving such
notice) hand delivered by messenger or courier service, telecommunicated, or
mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: Dunhill Investment Trust
700 W. Pete Rose Way, #127
Cincinnati, Ohio 45203
Attention: Jasen M. Snelling
To Dunhill: Dunhill Investment Advisors, Limited
700 West Pete Rose Way, #127
Cincinnati, Ohio 45203
Attention: Jasen M. Snelling
or to such other address as any party may designate by notice complying with the
terms of this Section 15. Each such notice
<PAGE>
shall be deemed delivered (a) on the date delivered if by personal delivery; (b)
on the date telecommunicated if by telegraph; (c) on the date of transmission
with confirmed answer back if by telex, telefax or other telegraphic method; and
(d) on the date upon which the return receipt is signed or delivery is refused
or the notice is designated by the postal authorities as not deliverable, as the
case may be, if mailed.
16. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written agreement
executed by both parties.
17. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
18. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
19. FORCE MAJEURE.
--------------
If Dunhill shall be delayed in its performance of services or prevented
entirely or in part from performing services due to causes or events beyond its
control, including and without limitation, acts of God, interruption of power or
other utility, transportation or communication services, acts of civil or
military authority, sabotages, national emergencies, explosion, flood, accident,
earthquake or other catastrophe, fire, strike or other labor problems, legal
action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
<PAGE>
20. MISCELLANEOUS.
--------------
The captions in this Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
DUNHILL INVESTMENT TRUST
By:
------------------------
Its: President
DUNHILL INVESTMENT ADVISORS, LIMITED
By:
------------------------
Its: President
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
--------------------------------------------------
AND PLAN AGENCY AGREEMENT
-------------------------
AGREEMENT dated as of ___________, 1998 between Dunhill Investment Trust
(the "Trust") and Dunhill Investment Advisors, Limited ("Dunhill"), an Ohio
limited liability company.
WHEREAS, the Trust is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Dunhill to serve as its
transfer, dividend disbursing, shareholder service and plan agent; and
WHEREAS, Dunhill wishes to provide such services under the conditions set
forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Dunhill agree as follows:
1. APPOINTMENT.
------------
The Trust hereby appoints and employs Dunhill as agent to perform those
services described in this Agreement for the Trust. Dunhill shall act under such
appointment and perform the obligations thereof upon the terms and conditions
hereinafter set forth.
2. DOCUMENTATION.
--------------
The Trust will furnish from time to time the following documents:
A. Each resolution of the Board of Trustees of the Trust authorizing the
original issue of its shares;
B. Each Registration Statement filed with the Securities and Exchange
Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement and Declaration of
Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of Trustees
authorizing officers to give instructions to Dunhill;
- 1 -
<PAGE>
E. Specimens of all new forms of share certificates accompanied by Board
of Trustees' resolutions approving such forms;
F. Such other certificates, documents or opinions which Dunhill may, in
its discretion, deem necessary or appropriate in the proper
performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or withdrawal
plans which are offered or may be offered in the future by the Trust
and for which Dunhill is to act as plan agent.
3. DUNHILL TO RECORD SHARES.
-------------------------
Dunhill shall record the issuance of shares of the Trust and maintain
pursuant to applicable rules of the SEC a record of the total number of shares
of the Trust which are authorized, issued and outstanding, based upon data
provided to it by the Trust. Dunhill shall also provide the Trust on a regular
basis or upon reasonable request the total number of shares which are
authorized, issued and outstanding, but shall have no obligation when recording
the issuance of the Trust's shares, except as otherwise set forth herein, to
monitor the issuance of such shares or to take cognizance of any laws relating
to the issue or sale of such shares, which functions shall be the sole
responsibility of the Trust.
4. DUNHILL TO VALIDATE TRANSFERS.
------------------------------
Upon receipt of a proper request for transfer and upon surrender to Dunhill
of certificates, if any, in proper form for transfer, Dunhill shall approve such
transfer and shall take all necessary steps to effectuate the transfer as
indicated in the transfer request. Upon approval of the transfer, Dunhill shall
notify the Trust in writing of each such transaction and shall make appropriate
entries on the shareholder records maintained by Dunhill.
- 2 -
<PAGE>
5. SHARE CERTIFICATES.
-------------------
If the Trust authorizes the issuance of share certificates and an investor
requests a share certificate, Dunhill will countersign and mail, by insured
first class mail, a share certificate to the investor at his address as set
forth on the transfer books of the Trust, subject to any other instructions for
delivery of certificates representing newly purchased shares and subject to the
limitation that no certificates representing newly purchased shares shall be
mailed to the investor until the cash purchase price of such shares has been
collected and credited to the account of the Trust maintained by the Custodian.
The Trust shall supply Dunhill with a sufficient supply of blank share
certificates and from time to time shall renew such supply upon request of
Dunhill. Such blank share certificates shall be properly signed, manually or, if
authorized by the Trust, by facsimile; and notwithstanding the death,
resignation or removal of any officers of the Trust authorized to sign share
certificates, Dunhill may continue to countersign certificates which bear the
manual or facsimile signature of such officer until otherwise directed by the
Trust. In case of the alleged loss or destruction of any share certificate, no
new certificates shall be issued in lieu thereof, unless there shall first be
furnished an appropriate bond satisfactory to Dunhill and the Trust, and issued
by a surety company satisfactory to Dunhill and the Trust.
6. RECEIPT OF FUNDS.
-----------------
Upon receipt of any check or other instrument drawn or endorsed to it as
agent for, or identified as being for the account of, the Trust or the principal
underwriter of the Trust (the "Underwriter"), Dunhill shall stamp the check or
instrument with the date of receipt, determine the amount thereof due the Trust
and shall forthwith process the same for collection. Upon receipt of
notification of receipt of funds eligible for share purchases in accordance with
the Trust's then current prospectus and statement of additional information,
Dunhill shall notify the Trust, at the close of each business day, in writing of
the amount of said funds credited to the Trust and deposited in its account with
the Custodian, and shall similarly notify the Underwriter of the amount of said
funds credited to the Underwriter and deposited in its account with its
designated bank.
- 3 -
<PAGE>
7. PURCHASE ORDERS.
----------------
Upon receipt of an order for the purchase of shares of the Trust,
accompanied by sufficient information to enable Dunhill to establish a
shareholder account, Dunhill shall, as of the next determination of net asset
value after receipt of such order in accordance with the Trust's then current
prospectus and statement of additional information, compute the number of shares
due to the shareholder, credit the share account of the shareholder, subject to
collection of the funds, with the number of shares so purchased, shall notify
the Trust in writing or by computer report at the close of each business day of
such transactions and shall mail to the shareholder and/or dealer of record a
notice of such credit when requested to do so by the Trust.
8. RETURNED CHECKS.
----------------
In the event that Dunhill is notified by the Trust's Custodian that any
check or other order for the payment of money is returned unpaid for any reason,
Dunhill will:
A. Give prompt notification to the Trust and the Underwriter of the
non-payment of said check;
B. In the absence of other instructions from the Trust or the Underwriter,
take such steps as may be necessary to redeem any shares purchased on the basis
of such returned check and cause the proceeds of such redemption plus any
dividends declared with respect to such shares to be credited to the account of
the Trust and to request the Trust's Custodian to forward such returned check to
the person who originally submitted the check; and
C. Notify the Trust of such actions and correct the Trust's records
maintained by Dunhill pursuant to this Agreement.
9. SALES CHARGE.
-------------
In computing the number of shares to credit to the account of a
shareholder, Dunhill will calculate the total of the applicable sales charges
with respect to each purchase as set forth in the Trust's current prospectus and
statement of additional information and in accordance with any notification
filed with respect to combined and accumulated purchases. Dunhill will also
determine the portion of each sales charge payable by the Underwriter to the
dealer of record participating
- 4 -
<PAGE>
in the sale in accordance with such schedules as are from time to time delivered
by the Underwriter to Dunhill; provided, however, Dunhill shall have no
liability hereunder arising from the incorrect selection by Dunhill of the gross
rate of sales charges except that this exculpation shall not apply in the event
the rate is specified by the Underwriter or the Trust and Dunhill fails to
select the rate specified.
10. DIVIDENDS AND DISTRIBUTIONS.
----------------------------
The Trust shall furnish Dunhill with appropriate evidence of trustee action
authorizing the declaration of dividends and other distributions. Dunhill shall
establish procedures in accordance with the Trust's then current prospectus and
statement of additional information and with other authorized actions of the
Trust's Board of Trustees under which it will have available from the Custodian
or the Trust any required information for each dividend and other distribution.
After deducting any amount required to be withheld by any applicable laws,
Dunhill shall, as agent for each shareholder who so requests, invest the
dividends and other distributions in full and fractional shares in accordance
with the Trust's then current prospectus and statement of additional
information. If a shareholder has elected to receive dividends or other
distributions in cash, then Dunhill shall disburse dividends to shareholders of
record in accordance with the Trust's then current prospectus and statement of
additional information. Dunhill shall, on or before the mailing date of such
checks, notify the Trust and the Custodian of the estimated amount of cash
required to pay such dividend or distribution, and the Trust shall instruct the
Custodian to make available sufficient funds therefor in the appropriate account
of the Trust. Dunhill shall mail to the shareholders periodic statements, as
requested by the Trust, showing the number of full and fractional shares and the
net asset value per share of shares so credited. When requested by the Trust,
Dunhill shall prepare and file with the Internal Revenue Service, and when
required, shall address and mail to shareholders, such returns and information
relating to dividends and distributions paid by the Trust as are required to be
so prepared, filed and mailed by applicable laws, rules and regulations.
11. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
------------------------------------------------------
Dunhill shall, at least annually, furnish in writing to the Trust the names
and addresses, as shown in the shareholder accounts maintained by Dunhill, of
all shareholders for which
- 5 -
<PAGE>
there are, as of the end of the calendar year, dividends, distributions or
redemption proceeds for which checks or share certificates mailed in payment of
distributions have been returned. Dunhill shall use its best efforts to contact
the shareholders affected and to follow any other written instructions received
from the Trust concerning the disposition of any such unclaimed dividends,
distributions or redemption proceeds.
12. REDEMPTIONS AND EXCHANGES.
--------------------------
A. Dunhill shall process, in accordance with the Trust's then current
prospectus and statement of additional information, each order for the
redemption of shares accepted by Dunhill. Upon its approval of such redemption
transactions, Dunhill, if requested by the Trust, shall mail to the shareholder
and/or dealer of record a confirmation showing trade date, number of full and
fractional shares redeemed, the price per share and the total redemption
proceeds. For each such redemption, Dunhill shall either: (a) prepare checks in
the appropriate amounts for approval and verification by the Trust and signature
by an authorized officer of Dunhill and mail the checks to the appropriate
person, or (b) in the event redemption proceeds are to be wired through the
Federal Reserve Wire System or by bank wire, cause such proceeds to be wired in
federal funds to the bank account designated by the shareholder, or (c)
effectuate such other redemption procedures which are authorized by the Trust's
Board of Trustees or its then current prospectus and statement of additional
information. The requirements as to instruments of transfer and other
documentation, the applicable redemption price and the time of payment shall be
as provided in the then current prospectus and statement of additional
information, subject to such supplemental instructions as may be furnished by
the Trust and accepted by Dunhill. If Dunhill or the Trust determines that a
request for redemption does not comply with the requirements for redemptions,
Dunhill shall promptly notify the shareholder indicating the reason therefor.
B. If shares of the Trust are eligible for exchange with shares of any
other investment company, Dunhill, in accordance with the then current
prospectus and statement of additional information and exchange rules of the
Trust and such other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests and shall, on
behalf of the Trust's shareholders, process such approved exchange requests.
- 6 -
<PAGE>
C. Dunhill shall notify the Trust, the Custodian and the Underwriter on
each business day of the amount of cash required to meet payments made pursuant
to the provisions of this Paragraph 12, and, on the basis of such notice, the
Trust shall instruct the Custodian to make available from time to time
sufficient funds therefor in the appropriate account of the Trust. Procedures
for effecting redemption orders accepted from shareholders or dealers of record
by telephone or other methods shall be established by mutual agreement between
Dunhill and the Trust consistent with the Trust's then current prospectus and
statement of additional information.
D. The authority of Dunhill to perform its responsibilities under Paragraph
7, Paragraph 10, and this Paragraph 12 shall be suspended with respect to any
series of the Trust upon receipt of notification by it of the suspension of the
determination of such series' net asset value.
13. AUTOMATIC WITHDRAWAL PLANS.
---------------------------
Dunhill will process automatic withdrawal orders pursuant to the provisions
of the withdrawal plans duly executed by shareholders and the current prospectus
and statement of additional information of the Trust. Payments upon such
withdrawal order shall be made by Dunhill from the appropriate account
maintained by the Trust with the Custodian on approximately the last business
day of each month in which a payment has been requested, and Dunhill will
withdraw from a shareholder's account and present for repurchase or redemption
as many shares as shall be sufficient to make such withdrawal payment pursuant
to the provisions of the shareholder's withdrawal plan and the current
prospectus and statement of additional information of the Trust. From time to
time on new automatic withdrawal plans a check for payment date already past may
be issued upon request by the shareholder.
14. LETTERS OF INTENT.
------------------
Dunhill will process such letters of intent for investing in shares of the
Trust as are provided for in the Trust's current prospectus and statement of
additional information. Dunhill will make appropriate deposits to the account of
the Underwriter for the adjustment of sales charges as therein provided and will
currently report the same to the Underwriter.
- 7 -
<PAGE>
15. WIRE-ORDER PURCHASES.
---------------------
Dunhill will send written confirmations to the dealers of record containing
all details of the wire-order purchases placed by each such dealer by the close
of business on the business day following receipt of such orders by Dunhill or
the Underwriter, with copies to the Underwriter. Upon receipt of any check drawn
or endorsed to the Trust (or Dunhill, as agent) or otherwise identified as being
payment of an outstanding wire-order, Dunhill will stamp said check with the
date of its receipt and deposit the amount represented by such check to
Dunhill's deposit accounts maintained with the Custodian. Dunhill will compute
the respective portions of such deposit which represent the sales charge and the
net asset value of the shares so purchased, will cause the Custodian to transfer
federal funds in an amount equal to the net asset value of the shares so
purchased to the Trust's account with the Custodian, and will notify the Trust
and the Underwriter before noon of each business day of the total amount
deposited in the Trust's deposit accounts, and in the event that payment for a
purchase order is not received by Dunhill or the Custodian on the tenth business
day following receipt of the order, prepare an NASD "notice of failure of dealer
to make payment" and forward such notification to the Underwriter.
16. OTHER PLANS.
------------
Dunhill will process such accumulation plans, group programs and other
plans or programs for investing in shares of the Trust as are now provided for
in the Trust's current prospectus and statement of additional information and
will act as plan agent for shareholders pursuant to the terms of such plans and
programs duly executed by such shareholders.
17. RECORDKEEPING AND OTHER INFORMATION.
------------------------------------
Dunhill shall create and maintain all records required by applicable laws,
rules and regulations, including but not limited to records required by Section
31(a) of the 1940 Act and the rules thereunder, as the same may be amended from
time to time, pertaining to the various functions performed by it and not
otherwise created and maintained by another party pursuant to contract with the
Trust. All such records shall be the property of the Trust at all times and
shall be available for inspection and use by the Trust. Where applicable, such
records shall be maintained by Dunhill for the periods and in the places
required by Rule 31a-2 under the 1940 Act. The retention of such records
- 8 -
<PAGE>
shall be at the expense of the Trust. Dunhill shall make available during
regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
18. SHAREHOLDER RECORDS.
--------------------
Dunhill shall maintain records for each shareholder account showing the
following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each shareholder,
including dividends and distributions in cash or invested in shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term gains and
realized long-term gains;
F. Any instructions from a shareholder including all forms furnished by
the Trust and executed by a shareholder with respect to (i) dividend
or distribution elections and (ii) elections with respect to payment
options in connection with the redemption of shares;
G. Any correspondence relating to the current maintenance of a
shareholder's account;
H. Certificate numbers and denominations for any shareholder holding
certificates;
I. Any stop or restraining order placed against a shareholder's account;
J. Information with respect to withholding in the case of a foreign
account or any other account for which withholding is required by the
Internal Revenue Code of 1986, as amended; and
- 9 -
<PAGE>
K. Any information required in order for Dunhill to perform the
calculations contemplated under this Agreement.
19. TAX RETURNS AND REPORTS.
------------------------
Dunhill will prepare in the appropriate form, file with the Internal
Revenue Service and appropriate state agencies and, if required, mail to
shareholders of the Trust such returns for reporting dividends and distributions
paid by the Trust as are required to be so prepared, filed and mailed and shall
withhold such sums as are required to be withheld under applicable federal and
state income tax laws, rules and regulations.
20. OTHER INFORMATION TO THE TRUST.
-------------------------------
Subject to such instructions, verification and approval of the Custodian
and the Trust as shall be required by any agreement or applicable law, Dunhill
will also maintain such records as shall be necessary to furnish to the Trust
the following: annual shareholder meeting lists, proxy lists and mailing
materials, shareholder reports and confirmations and checks for disbursing
redemption proceeds, dividends and other distributions or expense disbursements.
21. ACCESS TO SHAREHOLDER INFORMATION.
----------------------------------
Upon request, Dunhill shall arrange for the Trust's investment advisers to
have direct access to shareholder information contained in Dunhill's computer
system, including account balances, performance information and such other
information which is available to Dunhill with respect to shareholder accounts.
22. COOPERATION WITH ACCOUNTANTS.
-----------------------------
Dunhill shall cooperate with the Trust's independent public accountants and
shall take all reasonable action in the performance of its obligations under
this Agreement to assure that the necessary information is made available to
such accountants for the expression of their unqualified opinion where required
for any document for the Trust.
23. SHAREHOLDER SERVICE AND CORRESPONDENCE.
---------------------------------------
Dunhill will provide and maintain adequate personnel, records and equipment
to receive and answer all shareholder and
- 10 -
<PAGE>
dealer inquiries relating to account status, share purchases, redemptions and
exchanges and other investment plans available to Trust shareholders. Dunhill
will answer written correspondence from shareholders relating to their share
accounts and such other written or oral inquiries as may from time to time be
mutually agreed upon, and Dunhill will notify the Trust of any correspondence or
inquiries which may require an answer from the Trust.
24. PROXIES.
--------
Dunhill shall assist the Trust in the mailing of proxy cards and other
material in connection with shareholder meetings of the Trust, shall receive,
examine and tabulate returned proxies and shall, if requested by the Trust,
provide at least one inspector of election to attend and participate as required
by law in shareholder meetings of the Trust.
25. FURTHER ACTIONS.
----------------
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
26. COMPENSATION.
-------------
For the performance of Dunhill's obligations under this Agreement, each
series of the Trust shall pay Dunhill, on the first business day following the
end of each month, a monthly fee in accordance with the schedule attached hereto
as Schedule A. The Trust shall promptly reimburse Dunhill for any out-of-pocket
expenses and advances which are to be paid by the Trust in accordance with
Paragraph 27.
27. EXPENSES.
---------
Dunhill shall furnish, at its expense and without cost to the Trust (i) the
services of its personnel to the extent that such services are required to carry
out its obligations under this Agreement and (ii) use of data processing
equipment. All costs and expenses not expressly assumed by Dunhill under this
Paragraph 27 shall be paid by the Trust, including, but not limited to, costs
and expenses of officers and employees of Dunhill in attending meetings of the
Board of Trustees and shareholders of the Trust, as well as costs and expenses
for postage, envelopes, checks, drafts, continuous forms, reports,
communications, statements and other materials, telephone,
- 11 -
<PAGE>
telegraph and remote transmission lines, use of outside pricing services, use of
outside mailing firms, necessary outside record storage, media for storage of
records (e.g., microfilm, microfiche, computer tapes), printing, confirmations
and any other shareholder correspondence and any and all assessments, taxes or
levies assessed on Dunhill for services provided under this Agreement. Postage
for mailings of dividends, proxies, reports and other mailings to all
shareholders shall be advanced to Dunhill three business days prior to the
mailing date of such materials.
28. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
---------------------------------------------------
The parties hereto acknowledge and agree that nothing contained herein
shall be construed to require Dunhill to perform any services for the Trust
which services could cause Dunhill to be deemed an "investment adviser" of the
Trust within the meaning of Section 2(a)(20) of the 1940 Act or to supersede or
contravene the Trust's prospectus or statement of additional information or any
provisions of the 1940 Act and the rules thereunder. Except as otherwise
provided in this Agreement and except for the accuracy of information furnished
to it by Dunhill, the Trust assumes full responsibility for complying with all
applicable requirements of the 1940 Act, the Securities Act of 1933, as amended,
and any other laws, rules and regulations of governmental authorities having
jurisdiction.
29. REFERENCES TO DUNHILL.
----------------------
The Trust shall not circulate any printed matter which contains any
reference to Dunhill without the prior written approval of Dunhill, excepting
solely such printed matter as merely identifies Dunhill as Administrative
Services Agent Transfer, Shareholder Servicing and Dividend Disbursing Agent and
Accounting Services Agent. The Trust will submit printed matter requiring
approval to Dunhill in draft form, allowing sufficient time for review by
Dunhill and its counsel prior to any deadline for printing.
30. EQUIPMENT FAILURES.
-------------------
Dunhill shall take all steps necessary to minimize or avoid service
interruptions, and has entered into one or more agreements making provision for
emergency use of electronic data processing equipment. Dunhill shall have no
liability with respect to equipment failures beyond its control.
- 12 -
<PAGE>
31. INDEMNIFICATION OF DUNHILL.
---------------------------
A. Dunhill may rely on information reasonably believed by it to be accurate
and reliable. Except as may otherwise be required by the 1940 Act and the rules
thereunder, neither Dunhill nor its shareholders, officers, directors,
employees, agents, control persons or affiliates of any thereof shall be subject
to any liability for, or any damages, expenses or losses incurred by the Trust
in connection with, any error of judgment, mistake of law, any act or omission
connected with or arising out of any services rendered under or payments made
pursuant to this Agreement or any other matter to which this Agreement relates,
except by reason of willful misfeasance, bad faith or gross negligence on the
part of any such persons in the performance of the duties of Dunhill under this
Agreement or by reason of reckless disregard by any of such persons of the
obligations and duties of Dunhill under this Agreement.
B. Any person, even though also a director, officer, employee, shareholder
or agent of Dunhill, or any of its affiliates, who may be or become an officer,
trustee, employee or agent of the Trust, shall be deemed, when rendering
services to the Trust or acting on any business of the Trust, to be rendering
such services to or acting solely as an officer, trustee, employee or agent of
the Trust and not as a director, officer, employee, shareholder or agent of or
one under the control or direction of Dunhill or any of its affiliates, even
though paid by one of these entities.
C. The Trust shall indemnify and hold harmless Dunhill, its directors,
officers, employees, shareholders, agents, control persons and affiliates from
and against any and all claims, demands, expenses and liabilities (whether with
or without basis in fact or law) of any and every nature which Dunhill may
sustain or incur or which may be asserted against Dunhill by any person by
reason of, or as a result of: (i) any action taken or omitted to be taken by
Dunhill in good faith in reliance upon any certificate, instrument, order or
share certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Dunhill in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under
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<PAGE>
this subparagraph shall not apply to actions or omissions of Dunhill or its
directors, officers, employees, shareholders or agents in cases of its or their
own gross negligence, willful misconduct, bad faith, or reckless disregard of
its or their own duties hereunder.
32. TERMINATION
-----------
A. The provisions of this Agreement shall be effective on the date first
above written, shall continue in effect for two years from that date and shall
continue in force from year to year thereafter, but only so long as such
continuance is approved (1) by Dunhill, (2) by vote, cast in person at a meeting
called for the purpose, of a majority of the Trust's trustees who are not
parties to this Agreement or interested persons (as defined in the 1940 Act) of
any such party, and (3) by vote of a majority of the Trust's Board of Trustees
or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by giving the
other party at least sixty (60) days' prior written notice of such termination
specifying the date fixed therefore. Upon termination of this Agreement, the
Trust shall pay to Dunhill such compensation as may be due as of the date of
such termination, and shall likewise reimburse Dunhill for any out-of-pocket
expenses and disbursements reasonably incurred by Dunhill to such date.
C. In the event that in connection with the termination of this Agreement a
successor to any of Dunhill's duties or responsibilities under this Agreement is
designated by the Trust by written notice to Dunhill, Dunhill shall, promptly
upon such termination and at the expense of the Trust, transfer all records
maintained by Dunhill under this Agreement and shall cooperate in the transfer
of such duties and responsibilities, including provision for assistance from
Dunhill's cognizant personnel in the establishment of books, records and other
data by such successor.
33. SERVICES FOR OTHERS.
--------------------
Nothing in this Agreement shall prevent Dunhill or any affiliated person
(as defined in the 1940 Act) of Dunhill from providing services for any other
person, firm or corporation (including other investment companies); provided,
however, that
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<PAGE>
Dunhill expressly represents that it will undertake no activities which, in its
judgment, will adversely affect the performance of its obligations to the Trust
under this Agreement.
34. LIMITATION OF LIABILITY.
------------------------
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Trust. The execution and delivery of this Agreement have been authorized
by the Trustees of the Trust and signed by an officer of the Trust, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust.
35. SEVERABILITY.
-------------
In the event any provision of this Agreement is determined to be void or
unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.
36. QUESTIONS OF INTERPRETATION.
----------------------------
This Agreement shall be governed by the laws of the State of Ohio. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the SEC issued pursuant to said 1940 Act. In addition, where the effect of a
requirement of the 1940 Act, reflected in any provision of this Agreement, is
revised by rule, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
37. NOTICES.
--------
All notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing (including telex and
telegraphic communication) and
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<PAGE>
shall be (as elected by the person giving such notice) hand delivered by
messenger or courier service, telecommunicated, or mailed (airmail if
international) by registered or certified mail (postage prepaid), return receipt
requested, addressed to:
To the Trust: Dunhill Investment Trust
700 W. Pete Rose Way, #127
Cincinnati, OH 45203
Attention: Jasen M. Snelling
To Dunhill: Dunhill Investment Advisors, Limited
700 W. Pete Rose Way, #127
Cincinnati, Ohio 45203
Attention: Jasen M. Snelling
or to such other address as any party may designate by notice complying with the
terms of this Section 37. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
38. AMENDMENT.
----------
This Agreement may not be amended or modified except by a written agreement
executed by both parties.
39. BINDING EFFECT.
---------------
Each of the undersigned expressly warrants and represents that he has the
full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.
40. COUNTERPARTS.
-------------
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
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<PAGE>
41. FORCE MAJEURE.
--------------
If Dunhill shall be delayed in its performance of services or prevented
entirely or in part from performing services due to causes or events beyond its
control, including and without limitation, acts of God, interruption of power or
other utility, transportation or communication services, acts of civil or
military authority, sabotages, national emergencies, explosion, flood, accident,
earthquake or other catastrophe, fire, strike or other labor problems, legal
action, present or future law, governmental order, rule or regulation, or
shortages of suitable parts, materials, labor or transportation, such delay or
non-performance shall be excused and a reasonable time for performance in
connection with this Agreement shall be extended to include the period of such
delay or non-performance.
42. MISCELLANEOUS.
--------------
The captions in this Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
DUNHILL INVESTMENT TRUST
By:
----------------------------
Its: President
DUNHILL INVESTMENT ADVISORS, LIMITED
By:
----------------------------
Its: President
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<PAGE>
Schedule A
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COMPENSATION
------------
Services FEE
- -------- ---
As Transfer Agent and Shareholder (Per Account)
Servicing Agent:
Regional Opportunity Fund: Payable monthly at
Ohio Indiana Kentucky rate of $17.00/year
Each Fund will be subject to a minimum charge of $1,000 per month.
- 18 -
PLAN OF DISTRIBUTION
PURSUANT TO RULE 12B-1 FOR
DUNHILL INVESTMENT TRUST
WHEREAS, Dunhill Investment Trust (the "Trust"), an unincorporated
business trust organized under the laws of the state of Ohio, is an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares
of beneficial interest without par value (the "Shares"), which are divided into
separate Series of Shares; and
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Rule 12b-1 Trustees"), having determined, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under state law and under Section 36(a) and (b) of the 1940 Act, that there is a
reasonable likelihood that this Plan will benefit each Series and the holders of
its Shares, have approved this Plan by votes cast in person at a meeting called
for the purpose of voting hereon and on any agreements related hereto;
NOW, THEREFORE, this Rule 12b-1 distribution plan is hereby approved as
it pertains to the Shares of each Series in accordance with Rule 12b-1 under the
1940 Act, on the following terms and conditions:
1. Distribution Activities. Subject to the supervision of the Trustees
of the Trust, the Trust may, directly or indirectly, engage in any activities
related to the distribution of Shares, which activities may include, but are not
limited to, the following: (a) maintenance fees or other payments to the Trust's
principal underwriter and to securities dealers and others who are engaged in
the sale of Shares and who may be advising shareholders of the Trust regarding
the purchase, sale or retention of Shares; (b) expenses of maintaining personnel
(including personnel of organizations with which the Trust has entered into
agreements related to this Plan) who engage in or support distribution of Shares
or who render shareholder support services not otherwise provided by the Trust's
transfer agent, including, but not limited to, office space and equipment,
telephone facilities and expenses, answering routine inquiries
<PAGE>
regarding the Trust, processing shareholder transactions, and providing such
other shareholder services as the Trust may reasonably request; (c) formulating
and implementing of marketing and promotional activities, including, but not
limited to, direct mail promotions and television, radio, newspaper, magazine
and other mass media advertising; (d) preparing, printing and distributing sales
literature; (e) preparing, printing and distributing prospectuses and statements
of additional information and reports of the Trust for recipients other than
existing shareholders of the Trust; and (f) obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may, from time to time, deem advisable. The Trust is authorized to engage in the
activities listed above, and in any other activities related to the distribution
of Shares, either directly or through other persons with which the Trust has
entered into agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made pursuant to
Section 1 and the basis upon which payment of such expenditures will be made
shall be determined by the Trustees of the Trust, but in no event may such
expenditures exceed in any fiscal year an amount calculated at the rate of .75%
of the average daily net asset value of the of any Series of the Trust. Such
payments for distribution activities may be made directly by the applicable
Series or the Trust's investment adviser or principal underwriter may incur such
expenses and obtain reimbursement from such Series.
3. Maintenance Fee. In addition to the payments of compensation
provided for in Section 2 and in order to further enhance the distribution of
its Shares, each Series shall pay the principal underwriter a maintenance fee,
accrued daily and paid monthly, in an amount equal to an annual rate of .25% of
the daily net assets of such Series. When requested by and at the direction of
the principal underwriter, the Trust shall pay a maintenance fee to dealers
based on the amount of Shares sold by such dealers and remaining outstanding for
specified periods of time, if any, determined by the principal underwriter, in
amounts up to .25% per annum of the average daily net assets of the Shares. Any
maintenance fees paid to dealers shall reduce the maintenance fees otherwise
payable to the principal underwriter.
4. Term and Termination. This Plan shall become effective on the date
hereof. Unless terminated as herein provided, this Plan shall continue in effect
for one year from the date hereof
<PAGE>
and shall continue in effect for successive periods of one year thereafter, but
only so long as each such continuance is specifically approved by votes of a
majority of both (i) the Trustees of the Trust and (ii) the Rule 12b-1 Trustees,
cast in person at a meeting called for the purpose of voting on such approval.
This Plan may be terminated with respect to any Series at any time by vote of a
majority of the Rule 12b-1 Trustees or by vote of a majority (as defined in the
1940 Act) of the outstanding Shares of such Series of the Trust. In the event
this Plan is terminated by any Series in accordance with its terms, the
obligations of such Series to make payments to the Trust's principal underwriter
pursuant to this Plan will cease and such Series will not be required to make
any payments for expenses incurred after the date of termination.
5. Amendments. This Plan may not be amended with respect to any Series
to increase materially the amount of expenditures provided for in Sections 2 and
3 hereof unless such amendment is approved by a vote of the majority (as defined
in the 1940 Act) of the outstanding Shares of such Series, and no material
amendment to this Plan shall be made unless approved in the manner provided for
annual renewal of this Plan in Section 4 hereof.
6. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust shall be committed to the discretion of
the Trustees who are not interested persons of the Trust.
7. Quarterly Reports. The principal underwriter and the Treasurer of
the Trust shall provide to the Trustees and the Trustees shall review, at least
quarterly, a written report of the amounts expended pursuant to this Plan and
any related agreement and the purposes for which such expenditures were made.
8. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 7 hereof, for a
period of not less than six years from the date of this Plan, the agreements or
such reports, as the case may be, the first two years in an easily accessible
place.
9. Limitation of Liability. A copy of the Agreement and Declaration of
Trust of the Trust is on file with the Secretary of the state of Ohio and notice
is hereby given that this Plan is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
instrument are
<PAGE>
not binding upon the Trustees or shareholders of the Trust individually but are
binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the Trust has caused this Plan to be executed as of
the date set forth below.
Dated: , 1998
------------
Attest:
By:
- ------------------------------- --------------------------------
Secretary President
