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Registration No. 333-49347
ICA No. 811-08729
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As filed with the Securities and Exchange Commission on June 10, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 /x/
Pre-Effective Amendment No. 1 /x/
Post-Effective Amendment No.___ / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /x/
Amendment No. 1 /x/
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(Check Appropriate Box or Boxes)
Millennium RHIM Funds, Inc.
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(Exact Name of Registrant as Specified in Charter)
303 Twin Dolphin Drive - Suite 530
Redwood Shores, CA 94065
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(Address of Principal Executive Offices)(Zip Code)
(650) 594-1600
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(Registrant's Telephone Number, Including Area Code)
Robert A. Dowlett
Millennium RHIM Funds, Inc.
303 Twin Dolphin Drive - Suite 530
Redwood Shores, CA 94065
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(Name and Address of Agent For Service)
With a copy to:
Thomas R. Westle, Esq.
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
As soon as practicable after the effective date
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(Approximate Date of Proposed Public Offering)
Shares of Common Stock
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(Title of Securities Being Registered)
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It is proposed that this filing will become effective (check
appropriate box):
/ / immediately upon filing pursuant to paragraph (b).
/ / on (date) pursuant to paragraph (b).
/ / 60 days after filing pursuant to paragraph (a)(1).
/ / on (date) pursuant to paragraph (a)(1).
/ / 75 days after filing pursuant to paragraph (a)(2).
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.
Registrant declares that an indefinite amount of its shares of common
stock is being registered by the Registration Statement pursuant to Section
24(f) under the Investment Company Act of 1940, as amended, and Rule 24f-2
thereunder.
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MILLENNIUM RHIM FUNDS, INC.
REGISTRATION STATEMENT ON FORM N-1A
Cross Reference Sheet for Items Required by Form N-1A
Item No. Caption in Prospectus
1 Cover page
2 Expense Table
3 Financial Highlights
4 General Information; Investment Objective and Policies;
Other Investment Techniques
5 Management of the Funds
5A Management of the Funds
6 General Information; Investor Guide; How to Purchase
Shares of Each Fund; Services Available to
Shareholders; Distributions and Taxes
7 How to Purchase Shares of Each Fund; Services Available
to Shareholders; Distributions and Taxes
8 Services Available to Shareholders; Distributions and
Taxes; How to Redeem Your Shares
9 Not Applicable
Caption in Statement of Additional Information
10 Cover page
11 Table of Contents
12 Cover Page
13 Investment Objective and Policies
14 Management
15 General Information
16 Management
17 Portfolio Transactions and Brokerage
18 General Information
19 Net Asset Value; General Information
20 Taxation
21 Management
22 Performance Information
23 Financial Statements
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THE MILLENNIUM RHIM FUNDS, INC.
THE MILLENNIUM GROWTH FUND
THE MILLENNIUM GROWTH & INCOME FUND
This Prospectus sets forth basic information about each of the Millennium Growth
Fund and the Millennium Growth & Income Fund that prospective investors should
know before investing. It should be read and retained for future reference. Each
Fund is a separate series of The Millennium RHIM Funds, Inc., an open-end
registered management investment company incorporated under the laws of the
State of Maryland. A Statement of Additional Information ("SAI") dated June __,
1998, as may be amended from time to time, has been filed with the Securities
and Exchange Commission and is incorporated herein by reference. This Statement
of Additional Information is available without charge upon request by calling
the Fund at (800) 535-9169. The SEC maintains an Internet site
(http://www.sec.gov) that contains the SAI, other material incorporated by
reference and other information about companies that file electronically with
the SEC.
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.
Prospectus
June __, 1998
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TABLE OF CONTENTS
Expense Table ....................................................... 3
Financial Highlights................................................. 5
Investment Objective and Policies ....................................6
Other Investment Techniques.......................................... 7
Management of the Funds...............................................9
Investor Guide ......................................................10
How to Purchase Shares of Each Fund..................................11
Services Available to Shareholders...................................13
How to Redeem Your Shares............................................14
Distributions and Taxes..............................................16
General Information..................................................17
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The Millennium RHIM Funds, Inc.
303 Twin Dolphin Drive, Suite 530
Redwood Shores, CA 94065
Fund Literature and
Shareholder Services (800) 535-9169
The Millennium Growth Fund (the "Growth Fund") is a mutual fund with the
investment objective of growth of capital. The Millennium Growth & Income Fund
(the "Growth & Income Fund") is a mutual fund with the investment objective of
growth of capital and dividend income. Each Fund attempts to achieve its
objective by investing in equity securities. See "Investment Objective and
Policies." There can be no assurance that either Fund will achieve its
investment objective.
EXPENSE TABLE
Expenses are one of several factors to consider when investing in a Fund. There
are two types of expenses involved: shareholder transaction expenses, such as
sales loads, and annual operating expenses, such as investment advisory fees.
Each Fund is a no-load mutual fund and has no shareholder transaction expenses.
Annual Operating Expenses Growth &
(As a percentage of average Growth Income
net assets) Fund Fund*
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Investment Advisory Fees 0.95% 0.95%
Other Expenses (after expense
reimbursement) 0.50% 0.50%
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Total Fund Operating Expenses (after expense
reimbursement) 1.45% 1.45%
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The purpose of the above fee table is to provide an understanding of the various
annual operating expenses which may be borne directly or indirectly by an
investment in each Fund. Actual expenses may be more or less than those shown.
Each Fund's total operating expenses are not expected to exceed 1.45% of average
net assets annually, but in the event that they do, the Advisor has agreed to
reduce
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*Estimated
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its fees to insure that the expenses for a Fund will not exceed 1.45%. "Other
Expenses" in the above table have been estimated for the first fiscal year of
the Growth & Income Fund. If the Advisor did not limit a Fund's expenses, it is
expected that "Other Expenses" in the above table would be 1.45% and "Total
Operating Expenses" would be 2.40%. If the Advisor does waive any of its fees,
each Fund may reimburse the Advisor in future years. See "Management of the
Funds."
Example
This table illustrates the net operating expenses that would be incurred by an
investment in each Fund over different time periods assuming a $1,000
investment, a 5% annual return, and redemption at the end of each time period.
Growth Fund Growth & Income Fund
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1 Year $15 $15
3 Years $46 $46
The Example shown above should not be considered a representation of past or
future expenses and actual expenses may be greater or less than those shown. In
addition, federal regulations require the Example to assume a 5% annual return,
but a Fund's actual return may be higher or lower. See "Management of the
Funds."
The minimum initial investment in each Fund is $2,500, with subsequent minimum
investments of $100 or more ($1,000 and $100, respectively, for retirement
plans). Shares will be redeemed at their net asset value.
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FINANCIAL HIGHLIGHTS
The Millennium Growth Fund
The following financial information is provided solely with respect to The
Millennium Growth Fund, is based upon financial information contained in the
Semi-Annual Report to Shareholders (Unaudited) and relates solely to the
Ridgeway Helms Millennium Fund, the predecessor fund to the Growth Fund, which
was reorganized into the Growth Fund on June 15, 1998.
For a capital share outstanding throughout the period (Unaudited)
July 16, 1997* through December 31, 1997
Net asset value, beginning of period $10.00
Loss from investment operations:
Net investment loss (0.04)
Net realized and unrealized gain
on investments (1.02)
Total from investment operations (1.06)
Net asset value, end of period $ 8.94
Total Return (10.60%)**
Ratios/supplemental data:
Net assets, end of period (thousands) $6,439
Ratio of expenses to average net assets:
Before expense reimbursement 2.73%***
After expense reimbursement 1.45%***
Ratio of net investment loss to average net assets:
Before expense reimbursement (2.07%)***
After expense reimbursement (0.78%)***
Portfolio turnover rate 70.13%
Average commission rate paid per share $0.0285
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* Commencement of operations.
** Not Annualized.
***Annualized.
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INVESTMENT OBJECTIVE AND POLICIES
The Millennium Growth Fund
What is the Growth Fund's investment objective? The investment objective of the
Growth Fund is to seek growth of capital. There can be no assurance that the
Growth Fund will achieve its objective.
How does the Growth Fund seek to achieve its objective? Ridgeway Helms
Investment Management, Inc. (the "Advisor") selects equity securities for the
Growth Fund's portfolio that it believes are experiencing, or have the potential
to experience, growth in earnings that exceed the average growth rate of
companies within the Standard & Poor's 500 Composite Stock Price Index. The
Advisor will also consider the relationship between the price/earnings ratio of
the security and its expected growth rate.
The Millennium Growth & Income Fund
What is the Growth & Income Fund's investment objective? The investment
objective of the Growth & Income Fund is to seek growth of capital and dividend
income. There can be no assurance that the Growth & Income Fund will achieve its
objective.
How does the Growth & Income Fund seek to achieve its objective? The Advisor
selects equity securities for the Growth & Income Fund's portfolio that it
believes are experiencing, or have the potential to experience, growth in
earnings that exceed the average growth rate of companies within the Standard &
Poor's 500 Composite Stock Price Index and that will provide dividend income.
The Advisor will consider the relationship between the price/ earnings ratio of
the security and its expected growth rate.
What are the investment policies of each Fund? In seeking investments for each
Fund, the Advisor's primary emphasis is on evaluating a company's management,
growth prospects, business operations, competitive forces, revenues, earnings,
cash flow and balance sheet in relation to its share price. The Advisor may
select stocks which it believes offer substantial growth in any or all of the
above criteria and/or stocks which it believes are undervalued relative to its
current price.
Each Fund will invest in small, medium and large companies; the minimum market
capitalization of a portfolio security is expected to be $25 million. A small
company is considered to be one which has a market capitalization of less than
$500 million at the time of investment. Currently, the Advisor expects
approximately 20% of the Growth Fund's portfolio to be invested in small
companies, but the Advisor could invest up to two-thirds of such Fund's assets
in stocks of small companies. The Advisor expects that no more than 20% of the
Growth & Income Fund's portfolio will be invested in small companies. To the
extent that either Fund does invest in small capitalization stocks, there is the
risk that its portfolio will be less marketable and may be subject to greater
fluctuations in price than a
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portfolio holding stocks of larger issuers. Small capitalization stocks often
pay no dividends, but contrary to the investment goal of the Growth & Income
Fund, income is not a primary goal of the Growth Fund. The Advisor does not
expect either Fund's annual turnover rate to exceed 100%.
There is, of course, no assurance that each Fund's objective will be achieved.
Because prices of common stocks and other securities fluctuate, the value of an
investment in each Fund will vary as the market value of its investment
portfolio changes.
Other securities a Fund might purchase. Under normal market conditions, each
Fund will invest at least 85% of its total assets in equity securities,
consisting of common stocks and securities having the characteristics of common
stocks, such as convertible securities, rights and warrants. If the Advisor
believes that market conditions warrant a temporary defensive posture, each Fund
may invest without limit in high quality, short-term debt securities and money
market instruments. These short-term debt securities and money market
instruments include commercial paper, certificates of deposit, bankers'
acceptances, U.S. Government securities and repurchase agreements. More
information about these investments is contained in the SAI.
OTHER INVESTMENT TECHNIQUES
Options on Securities and Securities Indices. Each Fund may buy call options on
securities in order to fix the cost of a future purchase or to attempt to
enhance return. Each Fund may buy put options on securities to hedge against a
decline in the value of securities it owns. Each Fund may also write (sell) put
and covered call options on securities in which it is authorized to invest. Each
Fund may also purchase and write options on U.S. securities indices. Options
transactions will be entered into for hedging purposes and not for speculation.
A Fund's ability to use these instruments successfully will depend on an
investment manager's ability to predict accurately movements in the prices of
securities, interest rates and the securities markets. There is no assurance
that liquid secondary markets for options will always exist, and the correlation
between hedging instruments and the securities or sectors being hedged may be
imperfect. The requirement to cover obligations may impede portfolio management
or the ability to meet redemption requests.
Lending Securities. To increase its income, each Fund may lend securities from
its portfolio to brokers, dealers and other financial institutions. No more than
one-third of a Fund's total assets may be loaned. Each Fund's loans of portfolio
securities will be collateralized at all times by high quality liquid
securities. Under the present regulatory requirements which govern loans of
portfolio securities, the loan collateral must, on each business day, at least
equal the value of the loaned securities and must consist of cash, letters of
credit of domestic banks or domestic branches of foreign banks, or securities of
the U.S. Government or its agencies. To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by a Fund if the demand
meets the terms of the letter. Such terms and the issuing bank would have to be
satisfactory to each Fund. Any loan might be secured by any one or more of the
three types of collateral. The terms of each Fund's loans must permit the Fund
to reacquire loaned securities on five days' notice or in time to vote on any
serious matter and must meet certain tests under the Internal Revenue Code of
1986 (the "Code").
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Selling Short. Each Fund may sell securities short by borrowing securities it
does not own and selling them. A Fund is then obligated to replace the
securities borrowed by purchasing them at the market price at the time of
replacement. If the securities sold short increase in value between the time of
sale and the time a Fund purchases them, the Fund will incur a loss. On the
other hand, if the securities decline in value, a Fund may repurchase them at a
lower price and realize a profit. There are limits on the extent to which each
Fund may engage in short sales, as described in the SAI.
Borrowing Money. Each Fund may borrow money from banks for leverage, up to
one-third of its total assets. The use of borrowing by a Fund involves special
risk considerations that may not be associated with other funds having similar
objectives and policies. Since substantially all of each Fund's assets fluctuate
in value, whereas the interest obligation resulting from a borrowing will be
fixed by the terms of the Fund's agreement with its lender, the asset value per
share of each Fund will tend to increase more when its portfolio assets decrease
in value than would otherwise be the case if the Fund did not borrow funds. In
addition, interest costs on borrowings may fluctuate with changing market rates
of interest and may partially offset or exceed the return earned on borrowed
funds. Under adverse market conditions, a Fund might have to sell portfolio
securities to meet interest or principal payments at a time when fundamental
investment considerations would not favor such sales. Each Fund is required to
segregate high quality liquid assets with its custodian equal to the amount it
has borrowed.
Investment restrictions. Each Fund has adopted certain investment restrictions,
which are described fully in the SAI. Like each Fund's investment objective,
certain of these restrictions are fundamental and may be changed only by a
majority vote of such Fund's outstanding shares. As a fundamental policy, each
Fund is a non-diversified fund, which may involve greater risks and volatility
than would be found in a diversified fund.
MANAGEMENT OF THE FUNDS
The Board of Directors of the Company establishes each Fund's policies and
supervises and reviews the management of each Fund.
The Advisor. Ridgeway Helms Investment Management, Inc. (the "Advisor"), 303
Twin Dolphin Drive, Suite 530, Redwood Shores, California 94065, was organized
under the laws of the State of California and registered as an investment
advisor with the Securities and Exchange Commission in 1995 to provide advice to
affiliated mutual funds and similar investment products. The Advisor, acting
through its advisory affiliate, Ridgeway Helms Securities Corporation, has
provided asset management services to individuals and institutional investors
since June, 1995. Robert A. Dowlett and N. Joseph Nahas are principally
responsible for the management of each Fund's portfolio. Mr. Dowlett (who
controls the Advisor) is the President of the Advisor and has been active in the
investment field professionally for the past five years. Prior to founding the
Advisor, he was a financial consultant and guided portfolio manager with Smith
Barney Inc. Mr. Nahas has also been active professionally in the investment
field for the past five years. Prior to joining the Advisor
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as First Vice President in August, 1996, he was First Vice President -
Investments of Round Hill Securities (since November, 1994) and prior to that a
financial consultant and guided portfolio manager with Smith Barney Inc.
The Advisor provides each Fund with advice on buying and selling securities,
manages the investments of each Fund, furnishes the Funds with office space and
certain administrative services, and provides most of the personnel needed by
each Fund. As compensation, each Fund pays the Advisor a monthly management fee
based upon the average daily net assets of such Fund at the annual rate of
0.95%.
The Administrator. American Data Services, Inc. (the "Administrator") prepares
various federal and state regulatory filings, reports and returns for each Fund,
prepares reports and materials to be supplied to the directors, monitors the
activities of the Funds' custodian, shareholder servicing agent and accountants,
and coordinates the preparation and payment of Fund expenses and reviews each
Fund's expense accruals. For its services, the Administrator receives a monthly
fee from each Fund at the annual rate of 0.35% based upon the average daily net
assets of each Fund.
Other operating expenses. Each Fund is responsible for its own operating
expenses, including but not limited to, the advisory and administration fees;
custody, record keeping and shareholder servicing agent fees; legal and auditing
expenses; federal and state registration fees; and fees to the Company's
disinterested directors. The Advisor may reduce its fees or reimburse a Fund for
expenses at any time in order to reduce the Fund's expenses. Reductions made by
the Advisor in its fees or payments or reimbursements of expenses that are a
Fund's obligation are subject to reimbursement by the Fund provided the Fund is
able to do so and remain in compliance with any applicable expense limitations.
Brokerage transactions. The Advisor considers a number of factors in determining
which brokers or dealers to use for each Fund's portfolio transactions. While
these are more fully discussed in the SAI, the factors include, but are not
limited to, the reasonableness of commissions, quality of services and
execution, and the availability of research which the Advisor may lawfully and
appropriately use in its investment advisory capacities. Provided a Fund
receives prompt execution at competitive prices, the Advisor may also consider
the sale of Fund shares as a factor in selecting broker-dealers for each Fund's
portfolio transactions. Subject to overall requirements of obtaining the best
combination of price and execution on a particular transaction, each Fund may
place portfolio transactions through Ridgeway Helms Securities Corporation, an
affiliate of the Advisor, in accordance with procedures adopted by the Board of
Directors.
INVESTOR GUIDE
How to purchase shares of each Fund. There are several ways to purchase shares
of a Fund. An Application Form, which accompanies this Prospectus, is used if
you send money directly to the Fund by mail or by wire. If you have questions
about how to invest, or about how to complete the Application Form, please call
an account representative at (800) 535-9169. Ridgeway Helms Securities
Corporation, 303 Twin Dolphin Drive, Redwood Shores, California 94065, an
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affiliate of the Advisor, is the principal underwriter ("Distributor") of each
Fund's shares.
You may send money to each Fund by mail. If you wish to invest by mail, simply
complete the Application Form and mail it with a check (made payable to The
Millennium (insert name) Fund) to the Fund's Shareholder Servicing Agent,
American Data Services, Inc. at the following address:
The Millennium (insert name) Fund
P.O. Box 640947
Cincinnati, OH 45264-0947
You may wire money to a Fund. Before sending a wire, you should call the
appropriate Fund you wish to purchase at (800) 535-9169 between 9:00 a.m. and
5:00 p.m., Eastern time, on a day when the New York Stock Exchange ("NYSE") is
open for trading, in order to receive an account number. It is important to call
and receive this account number, because if your wire is sent without it or
without the name of the appropriate Fund, there may be a delay in investing the
money you wire. You should then ask your bank to wire money to:
Star Bank, N.A. Cinti/Trust
ABA # 0420-0001-3
for credit to The Millennium (insert name) Fund
DDA # 486479777 for
further credit to [your name and account number]
Each Fund will charge you a $10.00 wire fee. In addition, your bank may charge
you a fee for sending a wire to a Fund.
You may purchase shares through an investment dealer. You may be able to invest
in shares of a Fund through an investment dealer, if the dealer has made
arrangements with the Distributor. The dealer may place an order for you with
each Fund; the price you will pay will be the net asset value which is next
calculated after receipt of the order from the dealer. It is the responsibility
of the dealer to place your order promptly. A dealer may charge you a fee for
placing your order, but you could avoid paying such a fee by sending an
Application Form and payment directly to the appropriate Fund. The dealer may
also hold the shares you purchase in its omnibus account rather than in your
name in the records of each Fund's transfer agent. Each Fund may reimburse the
dealer for maintaining records of your account as well as for other services
provided to you.
Your dealer is responsible for sending your money to each Fund promptly after
placing the order to purchase shares, and the Fund may cancel the order if
payment is not received from the dealer promptly.
Minimum investments. The minimum initial investment in each Fund is $2,500. The
minimum subsequent investment is $100. However, if you are investing in an
Individual Retirement Account ("IRA"), or you are starting an Automatic
Investment Plan (see below), the minimum initial and
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subsequent investments are $1,000 and $100, respectively.
Subsequent investments. You may purchase additional shares of a Fund by sending
a check, with the stub from an account statement, to the appropriate Fund at the
address above. Please also write your account number on the check. (If you do
not have a stub from an account statement, you can write your name, address and
account number on a separate piece of paper and enclose it with your check.) If
you want to send additional money for investment by wire, it is important for
you to call the Fund at (800) 535-9169. You may also make additional purchases
through an investment dealer, as described above.
When is money invested in a Fund? Any money received for investment in a Fund
from an investor, whether sent by check or by wire, is invested at the net asset
value of the Fund which is next calculated after the money is received (assuming
the check or wire correctly identifies the appropriate Fund and account). Orders
received from dealers are invested at the net asset value next calculated after
the order is received. The net asset value is calculated at the close of regular
trading of the NYSE, currently 4:00 p.m., Eastern time. A check or wire received
after the NYSE closes is invested as of the next calculation of each Fund's net
asset value.
What is the net asset value of a Fund? Each Fund's net asset value per share is
calculated by dividing the value of the Fund's total assets, less its
liabilities, by the number of its shares outstanding. In calculating the net
asset value, portfolio securities are valued using current market values, if
available. Securities for which market quotations are not readily available are
valued at fair values determined in good faith by or under the supervision of
the Board of Directors of the Company. The fair value of short-term obligations
with remaining maturities of 60 days or less is considered to be their amortized
cost.
Other information. The Distributor may waive the minimum investment requirements
for purchases by certain group or retirement plans. All checks must be drawn on
U.S. banks. Third party checks will not be accepted. A charge may be imposed if
a check used to make an investment does not clear. Each Fund and the Distributor
reserve the right to reject any investment, in whole or in part. Federal tax law
requires that investors provide a certified taxpayer identification number and
other certifications on opening an account in order to avoid backup withholding
of taxes. See the Application Form for more information about backup
withholding. A Fund is not required to issue share certificates; all shares are
normally held in non-certificated form on the books of the Fund, for the account
of the shareholder. Each Fund may, under certain circumstances, accept
investments of securities appropriate for the Fund's portfolio, in lieu of cash.
Prior to making such a purchase, you should call the Advisor to determine if
such an investment may be made.
Special Purchase Privilege (Growth & Income Fund only).
Commencing with the date of this prospectus and extending for a period not to
exceed 30 days thereafter, investors may be permitted to transfer the shares
that they own of the common stocks of certain registered companies determined to
be appropriate to be held in the portfolio of the Growth & Income Fund (such
determination to be in the absolute and sole discretion
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of the Adviser) in exchange for shares of the Fund. Internal Revenue Code
Section 351(a) provides the circumstances under which such an exchange will
result in a non-taxable transaction for an investor. The Adviser will endeavor
to ensure that favorable tax treatment will be passed on to investors purchasing
shares of the Fund by means of such an exchange of common stocks; however, the
Adviser does not guarantee that each of the conditions in Section 351(a) will be
necessarily met. If shares of common stock are transferred to the Growth &
Income Fund to purchase shares of the Fund without gain or loss recognition to
the investor, the investor's basis and holding period in the common stocks
carries over to the Fund and, as a result, subsequent investors purchasing
shares of the Fund, after the completion of such exchange transactions, will be
purchasing Fund shares at a public purchase price that includes unrealized gain
or loss in the Fund's net asset value.
SERVICES AVAILABLE TO SHAREHOLDERS
Retirement Plans. You may obtain a prototype IRA plan from the Funds. Shares of
each Fund are also eligible investments for other types of retirement plans.
Automatic investing by check. You may make regular monthly investments in each
Fund using the "Automatic Investment Plan." A check is automatically drawn on
your personal checking account each month for a predetermined amount (but not
less than $100), as if you had written it directly. Upon receipt of the
withdrawn funds, the Fund automatically invests the money in additional shares
of the Fund at the current net asset value. Applications for this service are
available from each Fund. There is no charge by a Fund for this service. Each
Fund may terminate or modify this privilege at any time, and shareholders may
terminate their participation by notifying the Shareholder Servicing Agent in
writing, sufficiently in advance of the next withdrawal.
Automatic withdrawals. Each Fund offers a Systematic Withdrawal Program whereby
shareholders may request that a check drawn in a predetermined amount be sent to
them each month or calendar quarter. To start this Program, your account must
have Fund shares with a value of at least $10,000, and the minimum amount that
may be withdrawn each month or quarter is $50. This Program may be terminated or
modified by a shareholder or a Fund at any time without charge or penalty. A
withdrawal under the Systematic Withdrawal Program involves a redemption of
shares of a Fund, and may result in a gain or loss for federal income tax
purposes. In addition, if the amount withdrawn exceeds the dividends credited to
your account, the account ultimately may be depleted.
Exchange Privilege. You may exchange your shares of the Growth Fund or the
Growth & Income Fund (in amounts of $1,000 or more) for shares of the other Fund
or shares of RNC Liquid Assets Fund, Inc. ("RNC Fund"), a money market fund not
affiliated with the Funds or the Advisor, if shares of RNC Fund are offered in
the state where you live. Prior to making an exchange, you should obtain and
read carefully the prospectus of RNC Fund. The exchange privilege is not an
offering or recommendation of RNC Fund by the Funds or the Advisor. For more
information, call the Shareholder Servicing Agent at (800) 535-9169.
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How to Redeem Your Shares
You have the right to redeem all or any portion of your shares of each Fund at
its net asset value on each day the NYSE is open for trading.
Redemption in writing. You may redeem your shares by simply sending a written
request to the appropriate Fund. You should give your account number and state
whether you want all or part of your shares redeemed. The letter should be
signed by all of the shareholders whose names appear in the account
registration. You should send your redemption request to:
The Millennium (insert name) Fund
c/o American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway, Suite 109
Hauppauge, NY 11788-0132
Signature guarantee. If the value of the shares you wish to redeem exceeds
$5,000, the signatures on the redemption request must be guaranteed by an
"eligible guarantor institution." These institutions include banks,
broker-dealers, credit unions and savings institutions. A broker-dealer
guaranteeing a signature must be a member of a clearing corporation or maintain
net capital of at least $100,000. Credit unions must be authorized to issue
signature guarantees. Signature guarantees will be accepted from any eligible
guarantor institution which participates in a signature guarantee program. A
notary public is not an acceptable guarantor.
Redemption by telephone. If you complete the Redemption by Telephone portion of
each Fund's Application Form, you may redeem shares on any business day the NYSE
is open by calling the Fund's Shareholder Servicing Agent at (800) 535-9169
before 4:00 p.m. Eastern time. Redemption proceeds will be mailed or wired, at
your direction, on the next business day to the bank account you designated on
the Application Form. The minimum amount that may be wired is $1,000 (wire
charges, if any, will be deducted from redemption proceeds). Telephone
redemptions cannot be made for IRA accounts.
By establishing telephone redemption privileges, you authorize each Fund and its
Shareholder Servicing Agent to act upon the instruction of any person who makes
the telephone call to redeem shares from your account and transfer the proceeds
to the bank account designated in the Application Form. Each Fund and the
Shareholder Servicing Agent will use procedures to confirm that redemption
instructions received by telephone are genuine, including recording of telephone
instructions and requiring a form of personal identification before acting on
these instructions. If these normal identification procedures are followed,
neither a Fund nor the Shareholder Servicing Agent will be liable for any loss,
liability, or cost which results from acting upon instructions of a person
believed to be a shareholder with respect to the telephone redemption privilege.
Each Fund may change, modify, or terminate these privileges at any time upon at
least 60-days' notice to shareholders.
-13-
<PAGE>
You may request telephone redemption privileges after your account is opened;
however, the authorization form will require a separate signature guarantee.
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity.
What price is used for a redemption? The redemption price is the net asset value
of each Fund's shares, next determined after shares are validly tendered for
redemption. All signatures of account holders must be included in the request,
and a signature guarantee, if required, must also be included for the request to
be valid.
When are redemption payments made? As noted above, redemption payments for
telephone redemptions are sent on the day after the telephone call is received.
Payments for redemptions sent in writing are normally made promptly, but no
later than seven days after the receipt of a request that meets requirements
described above. However, a Fund may suspend the right of redemption under
certain extraordinary circumstances in accordance with rules of the Securities
and Exchange Commission.
If shares were purchased by wire, they cannot be redeemed until the day after
the Application Form is received. If shares were purchased by check and then
redeemed shortly after the check is received, each Fund may delay sending the
redemption proceeds until it has been notified that the check used to purchase
the shares has been collected, a process which may take up to 15 days. This
delay may be avoided by investing by wire or by using a certified or official
bank check to make the purchase.
Redemptions through dealers. If you hold shares through an investment dealer,
you will have to redeem your shares through that investment dealer. The net
asset value you receive will be the next calculated after receipt of the order
from the dealer. The dealer is responsible for forwarding any documents required
in connection with a redemption, including a signature guarantee, promptly, and
a Fund may cancel the order if these documents are not received promptly.
Other information about redemptions. A redemption may result in recognition of a
gain or loss for federal income tax purposes. Due to the relatively high cost of
maintaining smaller accounts, the shares in your account (unless it is a
retirement plan or Uniform Gifts or Transfers to Minors Act account) may be
redeemed by a Fund if, due to redemptions you have made, the total value of your
account is reduced to less than $500. If a Fund determines to make such an
involuntary redemption, you will first be notified that the value of your
account is less than $500, and you will be allowed 30 days to make an additional
investment to bring the value of your account to at least $500 before the Fund
takes any action.
DISTRIBUTIONS AND TAXES
Dividends and other distributions. Dividends from net investment income, if any,
are normally declared and paid by each Fund in December. Capital gains
distributions, if any, are also normally made in December, but a Fund may make
an additional payment of dividends or distributions if it deems it desirable at
another time during any year.
-14-
<PAGE>
Dividends and capital gain distributions (net of any required tax withholding)
are automatically reinvested in additional shares of each Fund at the net asset
value per share on the reinvestment date unless you have previously requested in
writing to the Shareholder Servicing Agent that payment be made in cash.
Any dividend or distribution paid by a Fund has the effect of reducing the net
asset value per share on the record date by the amount of the dividend or
distribution. You should note that a dividend or distribution paid on shares
purchased shortly before that dividend or distribution was declared will be
subject to income taxes even though the dividend or distribution represents, in
substance, a partial return of capital to you.
Taxes. Each Fund intends to qualify and elect to be treated as a regulated
investment company under Subchapter M of the Code. As long as a Fund continues
to qualify, and as long as a Fund distributes all of its income each year to the
shareholders, the Fund will not be subject to any federal income or excise
taxes. Distributions made by a Fund will be taxable to shareholders whether
received in shares (through dividend reinvestment) or in cash. Distributions
derived from net investment income, including net short-term capital gains, are
taxable to shareholders as ordinary income. A portion of these distributions may
qualify for the intercorporate dividends-received deduction. Distributions
designated as capital gains dividends are taxable as long-term capital gains
regardless of the length of time shares of a Fund have been held. Although
distributions are generally taxable when received, certain distributions made in
January are taxable as if received the prior December. You will be informed
annually of the amount and nature of each Fund's distributions. Additional
information about taxes is set forth in the SAI. You should consult your own
advisors concerning federal, state and local taxation of distributions from each
Fund.
GENERAL INFORMATION
The Company. The Company was incorporated under the laws of the State of
Maryland on February 20, 1998. The Ridgeway Helms Millennium Fund, the
predecessor fund to the Growth Fund, was originally a series of the Advisers
Series Trust (organized as a Delaware business trust on October 3, 1996). Such
Fund was reorganized as a series of the Company on June 15, 1998, upon the
approval of the majority of the then-current shareholders of such Fund. The
Articles of Incorporation permit the Company to issue its shares of common stock
in any number of series. Currently, the Growth Fund and the Growth & Income Fund
are the only series of the Company. The Board of Directors may, from time to
time, issue other series, the assets and liabilities of which will be separate
and distinct from any other series.
Shareholder Rights. Shares issued by each Fund have no preemptive, conversion,
or subscription rights. Shareholders have equal and exclusive rights as to
dividends and distributions as declared by a Fund and to the net assets of the
Fund upon liquidation or dissolution. Each Fund, as a separate series of the
Company, votes separately on matters affecting only the Fund (e.g., approval of
the Investment Advisory Agreement); all series of the Company vote as a single
class on matters affecting all series jointly or the Company as a whole (e.g.,
election or removal of Directors). Voting rights are
-15-
<PAGE>
not cumulative, so that the holders of more than 50% of the shares voting in any
election of Directors can, if they so choose, elect all of the Directors. While
the Company is not required and does not intend to hold annual meetings of
shareholders, such meetings may be called by the Directors in their discretion,
or upon demand by the holders of 10% or more of the outstanding shares of the
Company for the purpose of removing Directors.
Performance Information. From time to time, each Fund may publish its total
return in advertisements and communications to investors. Total return
information will include each Fund's average annual compounded rate of return
over the most recent four calendar quarters and over the period from the Fund's
inception of operations. Each Fund may also advertise aggregate and average
total return information over different periods of time. Each Fund's total
return will be based upon the value of the shares acquired through a
hypothetical $1,000 investment at the beginning of the specified period and the
net asset value of those shares at the end of the period, assuming reinvestment
of all distributions. Total return figures will reflect all recurring charges
against a Fund's income. You should note that the investment results of a Fund
will fluctuate over time, and any presentation of a Fund's total return for any
prior period should not be considered as a representation of what an investor's
total return may be in any future period.
Shareholder Inquiries. Shareholder inquiries should be directed to the
Shareholder Servicing Agent at (800) 535-9169.
Year 2000 Compliance. As the year 2000 approaches, an issue has emerged
regarding how existing application software programs and operating systems can
accommodate this date value. Failure to adequately address this issue could have
potentially serious repercussions. The Advisor is in the process of working with
each Fund's service providers to prepare for the year 2000. Based on information
currently available, the Advisor does not expect that the Funds will incur
significant operating expenses or be required to incur materials costs to be
year 2000 compliant. Although the Advisor does not anticipate that the year 2000
issue will have a material impact on a Fund's ability to provide service at
current levels, there can be no assurance that steps taken in preparation for
the year 2000 will be sufficient to avoid any adverse impact on each Fund.
-16-
<PAGE>
ADVISOR
Ridgeway Helms Investment Management, Inc.
303 Twin Dolphin Drive, Suite 530
Redwood Shores, CA 94065
DISTRIBUTOR
Ridgeway Helms Securities Corporation
303 Twin Dolphin Drive, Suite 530
Redwood Shores, California 94065
CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
ADMINISTRATOR & TRANSFER AGENT
American Data Services, Inc.
The Hauppauge Corporate Center
150 Motor Parkway, Suite 109
Hauppauge, NY 11788-0132
AUDITORS
McGladrey & Pullen, LLP
555 Fifth Avenue
New York, NY 10017
LEGAL COUNSEL
Spitzer & Feldman P.C.
405 Park Avenue
New York, N.Y. 10022
-17-
<PAGE>
THE MILLENNIUM RHIM FUNDS, INC.
THE MILLENNIUM GROWTH FUND
THE MILLENNIUM GROWTH & INCOME FUND
Statement of Additional Information
Dated June __, 1998
This Statement of Additional Information is not a prospectus, and it should be
read in conjunction with the prospectus dated June __, 1998, as may be amended
from time to time, of The Millennium Growth Fund (the "Growth Fund") and The
Millennium Growth & Income Fund (the "Growth & Income Fund", and individually or
collectively, a "Fund" or the "Funds"), each a series of The Millennium RHIM
Funds, Inc. (the "Company"). On June 15, 1998, the shareholders of the Ridgeway
Helms Millennium Fund, a series of Advisors Series Trust, approved the
reorganization of such fund into the Growth Fund. Ridgeway Helms Investment
Management, Inc. (the "Advisor") is the Advisor to each Fund. A copy of the
prospectus may be obtained from each Fund at 303 Twin Dolphin Drive, Suite 530,
Redwood Shores, CA 94104; telephone (800) 535-9169.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Cross-reference to sections
Page in the prospectus
---- -----------------
<S> <C> <C>
Investment Objective and Policies.................... B-2 Investment Objective and
Policies Management.................................. B-10 Management of the Funds
Portfolio Transactions and Brokerage
Management of the Fund......................... B-12
Net Asset Value...................................... B-13 Investor Guide
Taxation
Distributions and Taxes........................ B-14
Performance Information.............................. B-16 General Information
General Information.................................. B-19 General Information
Financial Statements................................. B-19 Not Applicable
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Appendix............................................. B-18 Not Applicable
</TABLE>
B-2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Growth Fund is growth of capital. The
investment objective of the Growth & Income Fund is growth of capital and
dividend income. There is no assurance that either Fund will achieve its
objective. The discussion below supplements information contained in the
prospectus as to investment policies of each Fund.
Convertible Securities and Warrants
Each Fund may invest in convertible securities and warrants. A convertible
security is a fixed income security (a debt instrument or a preferred stock)
which may be converted at a stated price within a specified period of time into
a certain quantity of the common stock of the same or a different issuer.
Convertible securities are senior to common stocks in an issuer's capital
structure, but are usually subordinated to similar non-convertible securities.
While providing a fixed income stream (generally higher in yield than the income
derivable from common stock but lower than that afforded by a similar
nonconvertible security), a convertible security also gives an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of the issuing company depending upon a market price advance in the
convertible security's underlying common stock.
A warrant gives the holder a right to purchase at any time during a
specified period a predetermined number of shares of common stock at a fixed
price. Unlike convertible debt securities or preferred stock, warrants do not
pay a fixed dividend. Investments in warrants involve certain risks, including
the possible lack of a liquid market for resale of the warrants, potential price
fluctuations as a result of speculation or other factors, and failure of the
price of the underlying security to reach or have reasonable prospects of
reaching a level at which the warrant can be prudently exercised (in which event
the warrant may expire without being exercised, resulting in a loss of the
Fund's entire investment therein).
Short-Term Investments
Each Fund may invest in any of the following securities and instruments:
Bank Certificates or Deposit, Bankers' Acceptances and Time Deposits.
A Fund may acquire certificates of deposit, bankers' acceptances and time
deposits. Certificates of deposit are negotiable certificates issued against
funds deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by a Fund will be
dollar-denominated obligations of domestic or foreign banks or financial
institutions which at the time of purchase have capital, surplus and undivided
profits in excess of $100 million (including assets of both domestic and foreign
branches), based on latest published reports, or less than $100 million if the
principal amount of such bank obligations are fully insured by the U.S.
Government. If a Fund holds instruments of foreign banks or financial
institutions, it may be subject to additional investment risks that are
different in some respects from those incurred by a fund which invests only
B-3
<PAGE>
in debt obligations of U.S. domestic issuers. See "Foreign Investments" below.
Such risks include future political and economic developments, the possible
imposition of withholding taxes by the particular country in which the issuer is
located on interest income payable on the securities, the possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest on these securities.
Domestic banks and foreign banks are subject to different governmental
regulations with respect to the amount and types of loans which may be made and
interest rates which may be charged. In addition, the profitability of the
banking industry depends largely upon the availability and cost of funds for the
purpose of financing lending operations under prevailing money market
conditions. General economic conditions as well as exposure to credit losses
arising from possible financial difficulties of borrowers play an important part
in the operations of the banking industry.
As a result of federal and state laws and regulations, domestic banks are,
among other things, required to maintain specified levels of reserves, limited
in the amount which they can loan to a single borrower, and subject to other
regulations designed to promote financial soundness. However, such laws and
regulations do not necessarily apply to foreign bank obligations that a Fund may
acquire.
In addition to purchasing certificates of deposit and bankers'
acceptances, to the extent permitted under its investment objective and policies
stated above and in its prospectus, each Fund may make interest-bearing time or
other interest-bearing deposits in commercial or savings banks. Time deposits
are non-negotiable deposits maintained at a banking institution for a specified
period of time at a specified interest rate.
Savings Association Obligations. Each Fund may invest in certificates of
deposit (interest-bearing time deposits) issued by savings banks or savings and
loan associations that have capital, surplus and undivided profits in excess of
$100 million, based on latest published reports, or less than $100 million if
the principal amount of such obligations is fully insured by the U.S.
Government.
Commercial Paper, Short-Term Notes and Other Corporate Obligations. Each
Fund may invest a portion of its assets in commercial paper and short-term
notes. Commercial paper consists of unsecured promissory notes issued by
corporations. Issues of commercial paper and short-term notes will normally have
maturities of less than nine months and fixed rates of return, although such
instruments may have maturities of up to one year.
Commercial paper and short-term notes will consist of issues rated at the
time of purchase "A-2" or higher by S&P, "Prime-1" or "Prime-2" by Moody's, or
similarly rated by another nationally recognized statistical rating organization
or, if unrated, will be determined by the Advisor to be of comparable quality.
These rating symbols are described in the Appendix attached hereto.
Corporate obligations include bonds and notes issued by corporations
to finance longer-term credit needs than supported by commercial paper. While
B-4
<PAGE>
such obligations generally have maturities of ten years or more, a Fund may
purchase corporate obligations which have remaining maturities of one year or
less from the date of purchase and which are rated "AA" or higher by S&P or "Aa"
or higher by Moody's.
Government Obligations
Each Fund may make short-term investments in U.S. Government obligations.
Such obligations include Treasury bills, certificates of indebtedness, notes and
bonds, and issues of such entities as the Government National Mortgage
Association ("GNMA"), Export-Import Bank of the United States, Tennessee Valley
Authority, Resolution Funding Corporation, Farmers Home Administration, Federal
Home Loan Banks, Federal Intermediate Credit Banks, Federal Farm Credit Banks,
Federal Land Banks, Federal Housing Administration, Federal National Mortgage
Association ("FNMA"), Federal Home Loan Mortgage Corporation, and the Student
Loan Marketing Association.
Each of these obligations, such as those of the GNMA, are supported by the
full faith and credit of the U.S. Treasury; others, such as those of the
Export-Import Bank of United States, are supported by the right of the issuer to
borrow from the Treasury; others, such as those of the FNMA, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. No
assurance can be given that the U.S. Government would provide financial support
to U.S. Government-sponsored instrumentalities if it is not obligated to do so
by law.
The Fund may invest in sovereign debt obligations of foreign countries. A
sovereign debtor's willingness or ability to repay principal and interest in a
timely manner may be affected by a number of factors, including its cash flow
situation, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
principal international lenders and the political constraints to which it may be
subject. Emerging market governments could default on their sovereign debt. Such
sovereign debtors also may be dependent on expected disbursements from foreign
governments, multilateral agencies and other entities abroad to reduce principal
and interest arrearages on their debt. The commitments on the part of these
governments, agencies and others to make such disbursements may be conditioned
on a sovereign debtor's implementation of economic reforms and/or economic
performance and the timely service of such debtor's obligations. Failure to meet
such conditions could result in the cancellation of such third parties'
commitments to lend funds to the sovereign debtor, which may further impair such
debtor's ability or willingness to service its debt in a timely manner.
Foreign Investments and Currencies
Each Fund may invest in securities of foreign issuers, provided that they
are publicly traded in the United States.
Depositary Receipts. Depositary Receipts ("DRs") include American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
B-5
<PAGE>
Depositary Receipts ("GDRs") or other forms of depositary receipts. DRs are
receipts typically issued in connection with a U.S. or foreign bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation.
Risks of Investing in Foreign Securities. Investments in foreign
securities involve certain inherent risks, including the following:
Political and Economic Factors. Individual foreign economies of certain
countries may differ favorably or unfavorably from the United States' economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, diversification and balance of payments
position. The internal politics of certain foreign countries may not be as
stable as those of the United States. Governments in certain foreign countries
also continue to participate to a significant degree, through ownership interest
or regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are accordingly
affected by the trade policies and economic conditions of their trading
partners. Enactment by these trading partners of protectionist trade legislation
could have a significant adverse effect upon the securities markets of such
countries.
Currency Fluctuations. Each Fund may invest in securities denominated in
foreign currencies. Accordingly, a change in the value of any such currency
against the U.S. dollar will result in a corresponding change in the U.S. dollar
value of a Fund's assets denominated in that currency. Such changes will also
affect a Fund's income. The value of a Fund's assets may also be affected
significantly by currency restrictions and exchange control regulations enacted
from time to time.
Taxes. The interest and dividends payable on certain of a Fund's foreign
portfolio securities may be subject to foreign withholding taxes, thus reducing
the net amount of income available for distribution to the Fund's shareholders.
Options on Securities
Purchasing Put and Call Options. Each Fund may purchase covered "put" and
"call" options with respect to securities which are otherwise eligible for
purchase by the Fund subject to certain restrictions. Each Fund will engage in
trading of such derivative securities exclusively for hedging purposes.
If a Fund purchases a put option, the Fund acquires the right to sell the
underlying security at a specified price at any time during the term of the
option (for "American-style" options) or on the option expiration date (for
"European-style" options). Purchasing put options may be used as a portfolio
investment strategy when the Advisor perceives significant short-term risk but
substantial long-term appreciation for the underlying security. The put option
acts as an insurance policy, as it protects against significant downward price
movement while it allows full participation in any upward movement. If a Fund is
holding a security which it feels has strong fundamentals, but for some reason
may be weak in the near term, the Fund may purchase a put option on such
security, thereby giving itself the right to sell such security at a certain
strike price throughout the term of the
B-6
<PAGE>
option. Consequently, a Fund will exercise the put only if the price of such
security falls below the strike price of the put. The difference between the
put's strike price and the market price of the underlying security on the date a
Fund exercises the put, less transaction costs, will be the amount by which the
Fund will be able to hedge against a decline in the underlying security. If
during the period of the option the market price for the underlying security
remains at or above the put's strike price, the put will expire worthless,
representing a loss of the price the Fund paid for the put, plus transaction
costs. If the price of the underlying security increases, the profit a Fund
realizes on the sale of the security will be reduced by the premium paid for the
put option less any amount for which the put may be sold.
If a Fund purchases a call option, it acquires the right to purchase the
underlying security at a specified price at any time during the term of the
option. The purchase of a call option is a type of insurance policy to hedge
against losses that could occur if the Fund has a short position in the
underlying security and the security thereafter increases in price. Each Fund
will exercise a call option only if the price of the underlying security is
above the strike price at the time of exercise. If during the option period the
market price for the underlying security remains at or below the strike price of
the call option, the option will expire worthless, representing a loss of the
price paid for the option, plus transaction costs. If the call option has been
purchased to hedge a short position of a Fund in the underlying security and the
price of the underlying security thereafter falls, the profit the Fund realizes
on the cover of the short position in the security will be reduced by the
premium paid for the call option less any amount for which such option may be
sold.
Prior to exercise or expiration, an option may be sold when it has
remaining value by a purchaser through a "closing sale transaction," which is
accomplished by selling an option of the same series as the option previously
purchased. Each Fund generally will purchase only those options for which the
Advisor believes there is an active secondary market to facilitate closing
transactions.
Writing Call Options. Each Fund may write covered call options. A call
option is "covered" if a Fund owns the security underlying the call or has an
absolute right to acquire the security without additional cash consideration
(or, if additional cash consideration is required, cash or cash equivalents in
such amount as are held in a segregated account by the Custodian). The writer of
a call option receives a premium and gives the purchaser the right to buy the
security underlying the option at the exercise price. The writer has the
obligation upon exercise of the option to deliver the underlying security
against payment of the exercise price during the option period. If the writer of
an exchange-traded option wishes to terminate his obligation, he may effect a
"closing purchase transaction." This is accomplished by buying an option of the
same series as the option previously written. A writer may not effect a closing
purchase transaction after it has been notified of the exercise of an option.
Effecting a closing transaction in the case of a written call option will
permit a Fund to write another call option on the underlying security with
either a different exercise price, expiration date or both. Also, effecting a
closing transaction will permit the cash or proceeds from the
B-7
<PAGE>
concurrent sale of any securities subject to the option to be used for other
investments of a Fund. If a Fund desires to sell a particular security from its
portfolio on which it has written a call option, it will effect a closing
transaction prior to or concurrent with the sale of the security.
A Fund will realize a gain from a closing transaction if the cost of the
closing transaction is less than the premium received from writing the option or
if the proceeds from the closing transaction are more than the premium paid to
purchase the option. A Fund will realize a loss from a closing transaction if
the cost of the closing transaction is more than the premium received from
writing the option or if the proceeds from the closing transaction are less than
the premium paid to purchase the option. However, because increases in the
market price of a call option will generally reflect increases in the market
price of the underlying security, any loss to a Fund resulting from the
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security owned by the Fund.
Risks Of Investing in Options. There are several risks associated with
transactions in options on securities. Options may be more volatile than the
underlying securities and, therefore, on a percentage basis, an investment in
options may be subject to greater fluctuation than an investment in the
underlying securities themselves. There are also significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its objective.
In addition, a liquid secondary market for particular options may be absent for
reasons which include the following: there may be insufficient trading interest
in certain options; restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; trading halts, suspensions or
other restrictions may be imposed with respect to particular classes or series
of options of underlying securities; unusual or unforeseen circumstances may
interrupt normal operations on an exchange; the facilities of an exchange or
clearing corporation may not at all times be adequate to handle current trading
volume; or one or more exchanges could, for economic or other reasons, decide or
be compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in that class or series of options) would cease to exist,
although outstanding options that had been issued by a clearing corporation as a
result of trades on that exchange would continue to be exercisable in accordance
with their terms.
A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.
Dealer Options. Each Fund will engage in transactions involving dealer
options as well as exchange-traded options. Certain additional risks are
specific to dealer options. While a Fund might look to a clearing corporation to
exercise exchange-traded options, if the Fund were to purchase a dealer option
it would need to rely on the dealer from which it purchased the option to
perform if the option were exercised. Failure by the dealer to do so would
result in the loss of the premium paid by a Fund as well as loss of the expected
benefit of the transaction.
B-8
<PAGE>
Exchange-traded options generally have a continuous liquid market while
dealer options may not. Consequently, a Fund may generally be able to realize
the value of a dealer option it has purchased only by exercising or reselling
the option to the dealer who issued it. Similarly, when a Fund writes a dealer
option, the Fund may generally be able to close out the option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to whom the Fund originally wrote the option. While each Fund will seek to enter
into dealer options only with dealers who will agree to and which are expected
to be capable of entering into closing transactions with the Fund, there can be
no assurance that a Fund will at any time be able to liquidate a dealer option
at a favorable price at any time prior to expiration. Unless a Fund, as a
covered dealer call option writer, is able to effect a closing purchase
transaction, it will not be able to liquidate securities (or other assets) used
as cover until the option expires or is exercised. In the event of insolvency of
the other party, a Fund may be unable to liquidate a dealer option. With respect
to options written by a Fund, the inability to enter into a closing transaction
may result in material losses to the Fund. For example, because a Fund must
maintain a secured position with respect to any call option on a security it
writes, the Fund may not sell the assets which it has segregated to secure the
position while it is obligated under the option. This requirement may impair a
Fund's ability to sell portfolio securities at a time when such sale might be
advantageous.
The Staff of the Securities and Exchange Commission (the "Commission") has
taken the position that purchased dealer options are illiquid securities. Each
Fund may treat the cover used for written dealer options as liquid if the dealer
agrees that the Fund may repurchase the dealer option it has written for a
maximum price to be calculated by a predetermined formula. In such cases, the
dealer option would be considered illiquid only to the extent the maximum
purchase price under the formula exceeds the intrinsic value of the option.
Accordingly, each Fund will treat dealer options as subject to the Fund's
limitation on illiquid securities. If the Commission changes its position on the
liquidity of dealer options, each Fund will change its treatment of such
instruments accordingly.
Spread Transactions. Each Fund may purchase covered spread options from
securities dealers. These covered spread options are not presently
exchange-listed or exchange-traded. The purchase of a spread option gives a Fund
the right to put securities that it owns at a fixed dollar spread or fixed yield
spread in relationship to another security that the Fund does not own, but which
is used as a benchmark. The risk to a Fund, in addition to the risks of dealer
options described above, is the cost of the premium paid as well as any
transaction costs. The purchase of spread options will be used to protect a Fund
against adverse changes in prevailing credit quality spreads, i.e., the yield
spread between high quality and lower quality securities. This protection is
provided only during the life of the spread options.
Repurchase Agreements
Each Fund may enter into repurchase agreements with respect to its
portfolio securities. Pursuant to such agreements, a Fund acquires securities
from financial institutions such as banks and broker-dealers as are deemed to be
creditworthy by the Advisor, subject to the seller's agreement to
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repurchase and the Fund's agreement to resell such securities at a mutually
agreed upon date and price. The repurchase price generally equals the price paid
by a Fund plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the underlying portfolio security).
Securities subject to repurchase agreements will be held by the Custodian or in
the Federal Reserve/Treasury Book-Entry System or an equivalent foreign system.
The seller under a repurchase agreement will be required to maintain the value
of the underlying securities at not less than 102% of the repurchase price under
the agreement. If the seller defaults on its repurchase obligation, a Fund will
suffer a loss to the extent that the proceeds from a sale of the underlying
securities are less than the repurchase price under the agreement. Bankruptcy or
insolvency of such a defaulting seller may cause a Fund's rights with respect to
such securities to be delayed or limited. Repurchase agreements are considered
to be loans under the 1940 Act.
When-Issued Securities, Forward Commitments and Delayed Settlements
Each Fund may purchase securities on a "when-issued," forward commitment
or delayed settlement basis. In this event, the Custodian will set aside cash or
liquid portfolio securities equal to the amount of the commitment in a separate
account. Normally, the Custodian will set aside portfolio securities to satisfy
a purchase commitment. In such a case, a Fund may be required subsequently to
place additional assets in the separate account in order to assure that the
value of the account remains equal to the amount of the Fund's commitment. It
may be expected that a Fund's net assets will fluctuate to a greater degree when
it sets aside portfolio securities to cover such purchase commitments than when
it sets aside cash.
Each Fund does not intend to engage in these transactions for speculative
purposes but only in furtherance of its investment objective. Because a Fund
will set aside cash or liquid portfolio securities to satisfy its purchase
commitments in the manner described, the Fund's liquidity and the ability of the
Advisor to manage it may be affected in the event the Fund's forward
commitments, commitments to purchase when-issued securities and delayed
settlements ever exceeded 15% of the value of its net assets.
Each Fund will purchase securities on a when-issued, forward commitment or
delayed settlement basis only with the intention of completing the transaction.
If deemed advisable as a matter of investment strategy, however, a Fund may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered to
the Fund on the settlement date. In these cases a Fund may realize a taxable
capital gain or loss. When a Fund engages in when-issued, forward commitment and
delayed settlement transactions, it relies on the other party to consummate the
trade. Failure of such party to do so may result in a Fund's incurring a loss or
missing an opportunity to obtain a price credited to be advantageous.
The market value of the securities underlying a when-issued purchase,
forward commitment to purchase securities, or a delayed settlement and any
subsequent fluctuations in their market value is taken into account when
determining the market value of a Fund starting on the day the Fund agrees to
purchase the securities. A Fund does not earn interest on the securities
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it has committed to purchase until they are paid for and delivered on the
settlement date.
Short Sales
Each Fund is authorized to make short sales of securities it owns or has
the right to acquire at no added cost through conversion or exchange of other
securities it owns (referred to as short sales "against the box") and to make
short sales of securities which it does not own or have the right to acquire.
In a short sale that is not "against the box," a Fund sells a security
which it does not own, in anticipation of a decline in the market value of the
security. To complete the sale, a Fund must borrow the security (generally from
the broker through which the short sale is made) in order to make delivery to
the buyer. The Fund is then obligated to replace the security borrowed by
purchasing it at the market price at the time of replacement. The Fund is said
to have a "short position" in the securities sold until it delivers them to the
broker. The period during which a Fund has a short position can range from one
day to more than a year. Until the security is replaced, the proceeds of the
short sale are retained by the broker, and the Fund is required to pay to the
broker a negotiated portion of any dividends or interest which accrue during the
period of the loan. To meet current margin requirements, each Fund is also
required to deposit with the broker additional cash or securities so that the
total deposit with the broker is maintained daily at 150% of the current market
value of the securities sold short (100% of the current market value if a
security is held in the account that is convertible or exchangeable into the
security sold short within 90 days without restriction other than the payment of
money).
Short sales by a Fund that are not made "against the box" create
opportunities to increase the Fund's return but, at the same time, involve
specific risk considerations and may be considered a speculative technique.
Since a Fund in effect profits from a decline in the price of the securities
sold short without the need to invest the full purchase price of the securities
on the date of the short sale, the Fund's net asset value per share will tend to
increase more when the securities it has sold short decrease in value, and to
decrease more when the securities it has sold short increase in value, than
would otherwise be the case if it had not engaged in such short sales. The
amount of any gain will be decreased, and the amount of any loss increased, by
the amount of any premium, dividends or interest a Fund may be required to pay
in connection with the short sale. Furthermore, under adverse market conditions,
a Fund might have difficulty purchasing securities to meet its short sale
delivery obligations, and might have to sell portfolio securities to raise the
capital necessary to meet its short sale obligations at a time when fundamental
investment considerations would not favor such sales.
If a Fund makes a short sale "against the box," the Fund would not
immediately deliver the securities sold and would not receive the proceeds from
the sale. The seller is said to have a short position in the securities sold
until it delivers the securities sold, at which time it receives the proceeds of
the sale. To secure its obligation to deliver securities sold short, a Fund will
deposit in escrow in a separate account with the Custodian an equal amount of
the securities sold short or securities convertible into
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or exchangeable for such securities. A Fund can close out its short position by
purchasing and delivering an equal amount of the securities sold short, rather
than by delivering securities already held by the Fund, because the Fund might
want to continue to receive interest and dividend payments on securities in its
portfolio that are convertible into the securities sold short.
A Fund's decision to make a short sale "against the box" may be a
technique to hedge against market risks when the Advisor believes that the price
of a security may decline, causing a decline in the value of a security owned by
the Fund or a security convertible into or exchangeable for such security. In
such case, any future losses in the Fund's long position would be reduced by a
gain in the short position. The extent to which such gains or losses in the long
position are reduced will depend upon the amount of securities sold short
relative to the amount of the securities a Fund owns, either directly or
indirectly, and, in the case where the Fund owns convertible securities, changes
in the investment values or conversion premiums of such securities.
Illiquid Securities
Each Fund may not invest more than 15% of the value of its net assets in
securities that at the time of purchase have legal or contractual restrictions
on resale or are otherwise illiquid. The Advisor will monitor the amount of
illiquid securities in each Fund's portfolio, under the supervision of the
Company's Board of Directors, to ensure compliance with the Fund's investment
restrictions.
Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a Fund might be unable
to dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemption requests
within seven days. A Fund might also have to register such restricted securities
in order to dispose of them, resulting in additional expense and delay. Adverse
market conditions could impede such a public offering of securities.
In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. If such securities are subject to purchase by institutional buyers
in accordance with Rule 144A promulgated by the
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Commission under the Securities Act, the Company's Board of Directors may
determine that such securities are not illiquid securities notwithstanding their
legal or contractual restrictions on resale. In all other cases, however,
securities subject to restrictions on resale will be deemed illiquid.
Risks of Investing in Small Companies
As stated in the prospectus, each Fund may purchase securities of
companies with market capitalization as low as $25 million. Additional risks of
such investments include the markets on which such securities are frequently
traded. In many instances the securities of smaller companies are traded only
over-the-counter or on a regional securities exchange, and the frequency and
volume of their trading is substantially less than is typical of larger
companies. Therefore, the securities of smaller companies may be subject to
greater and more abrupt price fluctuations. When making large sales, a Fund may
have to sell portfolio holdings at discounts from quoted prices or may have to
make a series of small sales over an extended period of time due to the trading
volume of smaller company securities. Investors should be aware that, based on
the foregoing factors, an investment in each Fund may be subject to greater
price fluctuations than an investment in a fund that invests exclusively in
larger, more established companies. The Advisor's research efforts may also play
a greater role in selecting securities for each Fund than in a fund that invests
in larger, more established companies.
Investment Restrictions
The Company (on behalf of each Fund) has adopted the following
restrictions as fundamental policies, which may not be changed without the
favorable vote of the holders of a "majority," as defined in the 1940 Act, of
the outstanding voting securities of a Fund. Under the 1940 Act, the "vote of
the holders of a majority of the outstanding voting securities" means the vote
of the holders of the lesser of (i) 67% of the shares of a Fund represented at a
meeting at which the holders of more than 50% of its outstanding shares are
represented or (ii) more than 50% of the outstanding shares of a Fund.
As a matter of fundamental policy, each Fund is non-diversified. Each
Fund's investment objective is also fundamental.
In addition, each Fund may not:
1. Issue senior securities, borrow money or pledge its assets, except that
(i) a Fund may borrow from banks in amounts not exceeding one-third of its total
assets (including the amount borrowed); and (ii) this restriction shall not
prohibit a Fund from engaging in options transactions or short sales;
2. Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of transactions and except that a Fund may borrow
money from banks to purchase securities;
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3. Act as underwriter (except to the extent a Fund may be deemed to be an
underwriter in connection with the sale of securities in its investment
portfolio);
4. Invest 25% or more of its total assets, calculated at the time of
purchase and taken at market value, in any one industry (other than U.S.
Government securities);
5. Purchase or sell real estate or interests in real estate or real estate
limited partnerships (although a Fund may purchase and sell securities which are
secured by real estate and securities of companies which invest or deal in real
estate);
6. Purchase or sell commodities or commodity futures contracts, except
that a Fund may purchase and sell foreign currency contracts in accordance with
any rules of the Commodity Futures Trading Commission;
7. Make loans of money (except for purchases of debt securities consistent
with the investment policies of a Fund and except for repurchase agreements); or
8. Make investments for the purpose of exercising control or management.
Each Fund also observes the following restrictions as a matter of
operating but not fundamental policy, pursuant to positions taken by federal
regulatory authorities:
Each Fund may not:
1. Invest in the securities of other investment companies or purchase any
other investment company's voting securities or make any other investment in
other investment companies except to the extent permitted by federal law; or
2. Invest more than 15% of its assets in securities which are restricted
as to disposition or otherwise are illiquid or have no readily available market
(except for securities which are determined by the Board of Directors to be
liquid).
MANAGEMENT
The overall management of the business and affairs of the Company is
vested with its Board of Directors. The Board approves all significant
agreements between the Company and persons or companies furnishing services to
it, including the agreements with the Advisor, Administrator, Custodian and
Transfer Agent. The day to day operations of the Company are delegated to its
officers, subject to each Fund's investment objective and policies and to
general supervision by the Board of Directors.
The Directors and officers of the Company their ages and positions with
the Company, their business addresses and principal occupations during the past
five years are:
Name, address and age Position
Principal Occupation During Past Five Years
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<PAGE>
Robert A. Dowlett* Director President, Ridgeway Helms Investment
303 Twin Dolphin Drive Management, Inc. since 1995. Prior
Suite 530 thereto, financial consultant and
Redwood Shores, CA 94065 portfolio manager with Smith Barney Inc.
Age 30
N. Joseph Nahas* Director First Vice President, Ridgeway Helms
303 Twin Dolphin Drive Investment Management, Inc. since August
Suite 530 1996. Prior thereto, First Vice
Redwood Shores, CA 94065 Investments of Round Hill Securities
(since November 1994) and President-
prior thereto, a financial consultant
and portfolio manager with Smith Barney
Inc.
Age 30
Smith Barney Inc.
D. Ian Hopper Director Chief Software Architect, Northern
930 East Evelyn Avenue Telecom since 1982.
Sunnyvale, CA 94086
Age 38
Peter B. Oberto Director Independent Consultant since 1995; prior
408 Greenbrier Road thereto Manager of Compensation,
Half Moon Bay, CA 94019 Americas, Hewlett Packard since 1979.
Age 41
- ----------
*Denotes a Director who is an "interested person" of the Trust under the
1940 Act.
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<PAGE>
COMPENSATION OF DISINTERESTED DIRECTORS
Name and Position Aggregate Compensation from The Company**
D. Ian Hopper, Director
Peter B. Oberto, Director
The Advisor
Subject to the supervision of the Board of Directors, investment
management and related services for each Fund are provided by the Advisor,
pursuant to an Investment Advisory Agreement (the "Advisory Agreement") entered
into between the Advisor and the Company, on behalf of each Fund.
Under each Advisory Agreement, the Advisor agrees to invest the assets
of each Fund in accordance with the investment objective, policies and
restrictions of such Fund as set forth in the Fund's and Company's governing
documents, including, without limitation, the Company's Article of Incorporation
and By-Laws; each Fund's prospectus, statement of additional information, and
undertakings; and such other limitations, policies and procedures as the
Directors of the Company may impose from time to time in writing to the Advisor.
In providing such services, the Advisor shall at all times adhere to the
provisions and restrictions contained in the federal securities laws, applicable
state securities laws, the Code, and other applicable law.
Without limiting the generality of the foregoing, the Advisor has
agreed to (i) furnish each Fund with advice and recommendations with respect to
the investment of the Fund's assets, (ii) effect the purchase and sale of
portfolio securities; (iii) manage and oversee the investments of each Fund,
subject to the ultimate supervision and direction of the Company's Board of
Directors; (iv) vote proxies and take other actions with respect to each Fund's
securities; (v) maintain the books and records required to be maintained with
respect to the securities in each Fund's portfolio; (vi) furnish reports,
statements and other data on securities, economic conditions and other matters
related to the investment of each Fund's assets which the Directors or the
officers of the Company may reasonably request; and (vi) render to the Company's
Board of Directors such periodic and special reports as the Board may reasonably
request. The Advisor has also agreed, at its own expense, to maintain such staff
and employ or retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary to the performance of its
obligations under each Advisory Agreement. Personnel of the Advisor may serve as
officers of the Company provided they do so without compensation from the
Company. Without limiting the generality of the foregoing, the staff and
personnel of the Advisor shall be deemed to include persons employed or retained
by the Advisor to furnish statistical information, research, and other factual
information, advice regarding economic factors and trends, information with
respect to technical and scientific developments, and such other information,
advice and assistance
- ----------
**Estimated for the current fiscal year. The company has no pension or
retirement plan. No other entity affiliated with the Company pays any
compensation to the Directors.
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<PAGE>
as the Advisor or the Company's Board of Directors may desire and reasonably
request. With respect to the operation of each Fund, the Advisor has agreed to
be responsible for the expenses of printing and distributing extra copies of the
Fund's prospectus, statement of additional information, and sales and
advertising materials (but not the legal, auditing or accounting fees attendant
thereto) to prospective investors (but not to existing shareholders); and the
costs of any special Board of Directors meetings or shareholder meetings
convened for the primary benefit of the Advisor.
As compensation for the Advisor's services, each Fund pays it an
advisory fee at the rate specified in the prospectus. In addition to the fees
payable to the Advisor and the Administrator, the Company is responsible for its
operating expenses, including: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Company for the
benefit of each Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any; a pro rata portion of expenditures in connection with meetings of
each Fund's shareholders and the Company's Board of Directors that are properly
payable by a Fund; salaries and expenses of officers and fees and expenses of
members of the Company's Board of Directors or members of any advisory board or
committee who are not members of, affiliated with or interested persons of the
Advisor or Administrator; insurance premiums on property or personnel of each
Fund which inure to its benefit, including liability and fidelity bond
insurance; the cost of preparing and printing reports, proxy statements,
prospectuses and statements of additional information of each Fund or other
communications for distribution to existing shareholders; legal, auditing and
accounting fees; trade association dues; fees and expenses (including legal
fees) of registering and maintaining registration of its shares for sale under
federal and applicable state and foreign securities laws; all expenses of
maintaining and servicing shareholder accounts, including all charges for
transfer, shareholder recordkeeping, dividend disbursing, redemption, and other
agents for the benefit of each Fund, if any; and all other charges and costs of
its operation plus any extraordinary and non-recurring expenses, except as
otherwise prescribed in each Advisory Agreement.
The Advisor may agree to waive certain of its fees or reimburse each
Fund for certain expenses, in order to limit the expense ratio of the Fund. In
that event, subject to approval by the Company's Board of Directors, each Fund
may reimburse the Advisor in subsequent years for fees waived and expenses
reimbursed, provided the expense ratio before reimbursement is less than the
expense limitation in effect at that time.
The Advisor is controlled by Robert A. Dowlett.
Under each Advisory Agreement, the Advisor will not be liable to the
Company or a Fund or any shareholder for any act or omission in the course of,
or connected with, rendering services or for any loss sustained by the Company
except in the case of a breach of fiduciary duty with respect to the receipt of
compensation for services (in which case any award of damages will
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<PAGE>
be limited as provided in the 1940 Act) or of willful misfeasance, bad faith or
gross negligence, or reckless disregard of its obligations and duties under the
Agreement.
Each Advisory Agreement will initially remain in effect for a period
not to exceed two years. Thereafter, if not terminated, each Advisory Agreement
will continue automatically for successive annual periods, provided that such
continuance is specifically approved at least annually (i) by a majority vote of
the Independent Directors cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board of Directors or by vote of a
majority of the outstanding voting securities of each Fund.
Each Advisory Agreement is terminable by vote of the Board of Directors
or by the holders of a majority of the outstanding voting securities of a Fund
at any time without penalty, on 60 days written notice to the Advisor. Each
Advisory Agreement also may be terminated by the Advisor on 60 days written
notice to the Company. Each Advisory Agreement terminates automatically upon its
assignment (as defined in the 1940 Act).
The Administrator. The Administrator, American Data Services, Inc., has
agreed to be responsible for providing such services as the Directors may
reasonably request, including but not limited to (i) maintaining the Company's
books and records (other than financial or accounting books and records
maintained by any custodian, transfer agent or accounting services agent); (ii)
overseeing the Company's insurance relationships; (iii) preparing for the
Company (or assisting counsel and/or auditors in the preparation of) all
required tax returns, proxy statements and reports to the Company's shareholders
and Directors and reports to and other filings with the Commission and any other
governmental agency (the Company agreeing to supply or cause to be supplied to
the Administrator all necessary financial and other information in connection
with the foregoing); (iv) preparing such applications and reports as may be
necessary to permit the offer and sale of the shares of the Company under the
securities or "blue sky" laws of the various states selected by the Company (the
Company agreeing to pay all filing fees or other similar fees in connection
therewith); (v) responding to all inquiries or other communications of
shareholders, if any, which are directed to the Administrator, or if any such
inquiry or communication is more properly to be responded to by the Company's
custodian, transfer agent or accounting services agent, overseeing their
response thereto; (vi) overseeing all relationships between the Company and any
custodian(s), transfer agent(s) and accounting services agent(s), including the
negotiation of agreements and the supervision of the performance of such
agreements; and (vii) authorizing and directing any of the Administrator's
directors, officers and employees who may be elected as Directors or officers of
the Company to serve in the capacities in which they are elected. All services
to be furnished by the Administrator under this Agreement may be furnished
through the medium of any such directors, officers or employees of the
Administrator.
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<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Each Advisory Agreement states that the Advisor shall be responsible
for broker-dealer selection and for negotiation of brokerage commission rates,
provided that the Advisor shall not direct orders to an affiliated person of the
Advisor without general prior authorization to use such affiliated broker or
dealer by the Company's Board of Directors. The Advisor's primary consideration
in effecting a securities transaction will be execution at the most favorable
price. In selecting a broker-dealer to execute each particular transaction, the
Advisor may take the following into consideration: the best net price available;
the reliability, integrity and financial condition of the broker-dealer; the
size of and difficulty in executing the order; and the value of the expected
contribution of the broker-dealer to the investment performance of each Fund on
a continuing basis. The price to a Fund in any transaction may be less favorable
than that available from another broker-dealer if the difference is reasonably
justified by other aspects of the portfolio execution services offered.
Subject to such policies as the Advisor and the Board of Directors of
the Company may determine, the Advisor shall not be deemed to have acted
unlawfully or to have breached any duty created by an Advisory Agreement or
otherwise solely by reason of its having caused a Fund to pay a broker or dealer
that provides (directly or indirectly) brokerage or research services to the
Advisor an amount of commission for effecting a portfolio transaction in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction, if the Advisor determines in good faith that such
amount of commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Advisor's overall responsibilities
with respect to a Fund. The Advisor is further authorized to allocate the orders
placed by it on behalf of a Fund to such brokers or dealers who also provide
research or statistical material, or other services, to the Company, the
Advisor, or any affiliate of either. Such allocation shall be in such amounts
and proportions as the Advisor shall determine, and the Advisor shall report on
such allocations regularly to the Board of Directors of the Company, indicating
the broker-dealers to whom such allocations have been made and the basis
therefor. The Advisor is also authorized to consider sales of shares of a Fund
as a factor in the selection of brokers or dealers to execute portfolio
transactions, subject to the requirements of best execution, i.e., that such
brokers or dealers are able to execute the order promptly and at the best
obtainable securities price.
On occasions when the Advisor deems the purchase or sale of a security
to be in the best interest of a Fund as well as other clients of the Advisor,
the Advisor, to the extent permitted by applicable laws and regulations, may
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and the most efficient execution.
In such event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Advisor in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to a Fund and to such other clients.
NET ASSET VALUE
The net asset value of each Fund's shares will fluctuate and is
determined as of the close of trading on the New York Stock Exchange (the
"NYSE") (currently 4:00 p.m. Eastern time) each business day. The NYSE annually
announces the days on which it will not be open for trading. The most recent
announcement indicates that it will not be open on the following
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days: New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. However, the NYSE may close on days not included in that
announcement.
The net asset value per share is computed by dividing the value of the
securities held by a Fund plus any cash or other assets (including interest and
dividends accrued but not yet received) minus all liabilities (including accrued
expenses) by the total number of shares in the Fund outstanding at such time.
Generally, each Fund's investments are valued at market value or, in
the absence of a market value, at fair value as determined in good faith by the
Advisor pursuant to procedures approved by or under the direction of the Board.
Each Fund's securities, including ADRs, EDRs and GDRs, which are traded
on securities exchanges are valued at the last sale price on the exchange on
which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any reported sales, at the mean between
the last available bid and asked price. Securities that are traded on more than
one exchange are valued on the exchange determined by the Advisor to be the
primary market. Securities traded in the over-the-counter market are valued at
the mean between the last available bid and asked price prior to the time of
valuation. Securities and assets for which market quotations are not readily
available (including restricted securities which are subject to limitations as
to their sale) are valued at fair value as determined in good faith by or under
the direction of the Board.
Short-term debt obligations with remaining maturities in excess of 60
days are valued at current market prices, as discussed above. Short-term
securities with 60 days or less remaining to maturity are, unless conditions
indicate otherwise, amortized to maturity based on their cost to each Fund if
acquired within 60 days of maturity or, if already held by the Fund on the 60th
day, based on the value determined on the 61st day.
An option that is written by a Fund is generally valued at the last
sale price or, in the absence of the last sale price, the last offer price. An
option that is purchased by a Fund is generally valued at the last sale price
or, in the absence of the last sale price, the last bid price. If an options
exchange closes after the time at which a Fund's net asset value is calculated,
the last sale or last bid and asked prices as of that time will be used to
calculate the net asset value.
All other assets of a Fund are valued in such manner as the Board in
good faith deems appropriate to reflect their fair value.
TAXATION
Each Fund intends to qualify to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). To qualify as a regulated investment company, a Fund must distribute to
shareholders at least 90% of its investment company taxable income (which
includes, among other items, dividends, taxable interest and the excess of net
short-term capital gains over net long-term capital losses), and meet certain
diversification of assets, source of income, and other requirements of the Code.
By meeting these requirements, a Fund generally will not be subject to Federal
income tax on its investment company taxable
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income and net capital gains (the excess of net long-term capital gains over net
short-term capital losses) designated by the Fund as capital gain dividends and
distributed to shareholders. If a Fund does not meet all of these Code
requirements, it will be taxed as an ordinary corporation and its distributions
will be taxed to shareholders as ordinary income. In determining the amount of
capital gains to be distributed, any capital loss carryover from prior years
will be applied against capital gains to reduce the amount of distributions
paid. In addition, any losses incurred in the taxable year subsequent to October
31 will be deferred to the next taxable year and used to reduce distributions in
the subsequent year.
In order to qualify for treatment as a RIC, a Fund must distribute
annually to shareholders at least 90% of its investment company taxable income
and must meet several additional requirements. Among these requirements are, in
general, the following: (1) at least 90% of a Fund's gross income each taxable
year must be derived from dividends, interest, payments with respect to
securities loans and gains from the sale or other disposition of securities or
foreign currencies, or other income derived with respect to its business of
investing in securities or currencies; (2) at the close of each quarter of a
Fund's taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities of
other RICs and other securities, limited in respect of any one issuer, to an
amount that does not exceed 5% of the value of the Fund's assets and that does
not represent more than 10% of the outstanding voting securities of such issuer;
and (3) at the close of each quarter of a Fund's taxable year, not more than 25%
of the value of its assets may be invested in securities (other than U.S.
Government securities or the securities of other RICs) of any one issuer.
Amounts, other than tax-exempt interest, not distributed on a timely
basis in accordance with a calendar year distribution requirement may be subject
to a nondeductible 4% excise tax. To prevent imposition of the excise tax, each
Fund must distribute for the calendar year an amount equal to the sum of (1) at
least 98% of its ordinary income (excluding any capital gains or losses) for the
calendar year, (2) at least 98% of the excess of its capital gains over capital
losses (adjusted for certain ordinary losses) for the one-year period ending
October 31 of such year, and (3) all ordinary income and capital gain net income
(adjusted for certain ordinary losses) for previous years that were not
distributed during such years. A distribution will be treated as paid on
December 31 of a calendar year if it is declared by a Fund during October,
November or December of that year to shareholders of record on a date in such a
month and paid by the Fund during January of the following year. Such
distributions will be taxable to shareholders in the calendar year in which the
distributions are declared, rather than the calendar year in which the
distributions are received.
Distributions of investment company taxable income generally are
taxable to shareholders as ordinary income. Distributions may be eligible for
the dividends-received deduction available to corporations. To the extent
dividends received by a Fund are attributable to foreign corporations, a
corporation that owns shares in a Fund will not be entitled to the dividends
received deduction with respect to its pro rata portion of such dividends, since
the dividends-received deduction is generally available only with
B-21
<PAGE>
respect to dividends paid by domestic corporations. In addition, the
dividends-received deduction will be disallowed for shareholders who do not hold
their shares in a Fund for at least 45 days during the 90 day period beginning
45 days before a share in the Fund becomes ex dividend with respect to such
dividend.
Distributions of net capital gains, if any, designated by a Fund as
capital gain dividends are taxable to shareholders as long-term or mid-term
capital gains, regardless of the length of time the Fund's shares have been held
by a shareholder. All distributions are taxable to the shareholder whether
reinvested in additional shares or received in cash Shareholders will be
notified annually as to the Federal tax status of distributions.
Investors should be careful to consider the tax implications of buying
shares just prior to a distribution by a Fund. Distributions by a Fund reduce
the net asset value of the Fund's shares. Should a distributions reduce the net
asset value below a stockholder's cost basis, such distribution, nevertheless,
would be taxable to the shareholder as ordinary income or capital gain as
described above, even though, from an investment standpoint, it may constitute a
partial return of capital. The price of shares purchased at that time includes
the amount of the forthcoming distribution.
Upon the taxable disposition (including a sale or redemption) of shares
of a Fund, a shareholder may realize a gain or loss depending upon his basis in
his shares. Such gain or loss will be treated as capital gain or loss if the
shares are capital assets in the shareholder's hands. Such gain or loss will be
long-term, mid-term, or short-term, generally depending upon the shareholder's
holding period for the shares. Noncorporate shareholders are subject to tax at a
minimum rate of 28% on capital gains resulting from the disposition of shares
held for more than 12 months but not more than 18 months, and at a maximum rate
of 20% on capital gains from the disposition of shares held for more than 18
months, (10% if the taxpayer is, and would be after accounting for such gains,
subject to the 15% tax bracket for ordinary income). However, a loss realized by
a shareholder on the disposition of Fund shares with respect to which capital
gain dividends have been paid will, to the extent of such capital gain
dividends, be treated as long-term capital loss if such shares have been held by
the shareholder for six months or less. Further, a loss realized on a
disposition will be disallowed to the extent the shares disposed of are replaced
(whether by reinvestment of distributions or otherwise) within a period of 61
days beginning 30 days before and ending 30 days after the shares are disposed
of. In such a case, the basis of the shares acquired will be adjusted to reflect
the disallow loss. Shareholders receiving distributions in the form of
additional shares will have a cost basis for Federal income tax purposes in each
share received equal to the net asset value of a share of the Funds on the
reinvestment date.
Certain of the options, futures, contracts, and forward foreign
currency exchange contracts in which a Fund may invest are so-called "section
1256 contracts". With certain exceptions, realized gains or losses on section
1256 contracts generally are considered 60% long-term and 40% short-term capital
gains or losses ("60/40"). Also, section 1256 contracts held by a Fund at
B-22
<PAGE>
the end of each taxable year (and, generally, for purposes of the 4% excise tax,
on October 31 of each year) are "marked-to-market" with the result that
unrealized gains or losses are treated as though they were realized and the
resulting gain or loss is treated as 60/40 gain or loss. Investors should
consult their own tax advisers in this regard.
Generally, the hedging transactions undertaken by a Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by a Fund. In addition, losses realized
by a Fund on a position that is part of a straddle may be deferred under the
straddle rules, rather than being taken into account in calculating the taxable
income for the taxable year in which such losses are realized. Because only a
few regulations implementing the straddle rules have been promulgated, the tax
consequences to a Fund of hedging transactions are not entirely clear. The
hedging transactions may increase the amount of short-term capital gain realized
by a Fund which is taxed as ordinary income when distributed to stockholders.
A Fund may make one or more of the elections available under the Code
which are applicable to straddles. If a Fund makes any of the elections, the
amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the election(s) made. The rules applicable under certain of the elections may
operate to accelerate the recognition of gains or losses from the affected
straddle positions.
Because application of the straddle rules may affect the character of
gains or losses, defer losses and/or accelerate the recognition of gains or
losses from the affected straddle positions, the amount which must be
distributed to shareholders, and will be taxed to shareholders as ordinary
income or long-term capital gain, may be increased or decreased substantially as
compared to a Fund that did not engage in such hedging transactions.
Under the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time a Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in a foreign
currency and the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary loss.
Similarly, on disposition of debt securities denominated in a foreign currency
and on disposition of certain forward contracts, gains or losses attributable to
fluctuations in the value of foreign currency between the date of acquisition of
the security or contract and the date of disposition also are treated as
ordinary gain or loss. These gains or losses, referred to under the Code as
"section 988" gains or losses, may increase, decrease, or eliminate the amount
of a Fund's investment company taxable income to be distributed to its
shareholders as ordinary income.
Income received by a Fund from sources within foreign countries may be
subject to withholding and other similar income taxes imposed by the foreign
country.
Generally, a credit for foreign taxes is available but is subject to
the limitation that it may not exceed the shareholder's U.S. tax attributable to
his total foreign source taxable income. For this purpose, if Fund
B-23
<PAGE>
qualifies as a regulated investment company, the source of the Fund's income
flows through to its shareholders. With respect to a Fund, gains from the sale
of securities will be treated as derived from U.S. sources and certain currency
fluctuation gains, including fluctuation gains from foreign currency-
denominated debt securities, receivables and payable, will be treated as
ordinary income derived from U.S. sources. The limitation on the foreign tax
credit is applied separately to foreign source passive income (as defined for
purposes of the foreign tax credit) including foreign source passive income of a
Fund. The foreign tax credit may offset only 90% of the alternative minimum tax
imposed on corporations and individuals, and foreign taxes generally may not be
deducted in computing alternative minimum taxable income.
Each Fund is required to report to the Internal Revenue Service ("IRS")
all distributions to shareholders except in the case of certain exempt
shareholders. All such distributions generally are subject to withholding of
Federal income tax at a rate of 31% ("backup withholding") in the case of
non-exempt shareholders if (1) the shareholder fails to furnish the Fund with
and to certify the shareholder's correct taxpayer identification number or
social security number, (2) the IRS notifies the Fund or a shareholder that the
shareholder has failed to report properly certain interest and dividend income
to the IRS and to respond to notices to that effect, or (3) when required to do
so, the shareholder fails to certify that he is not subject to backup
withholding. If the withholding provisions are applicable, any such
distributions whether reinvest in addition shares or taken in cash, will be
reduced by the amounts required to be withheld.
The foregoing discussion relates only to Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens and residents and U.S. domestic
corporations, partnerships, trusts and estates). Distributions by a Fund also
may be subject to state and local taxes and their treatment under state and
local income tax laws may differ from the Federal income tax treatment.
Shareholders should consult their tax advisors with respect to particular
questions of Federal, state and local taxation. Shareholders who are not U.S.
persons should consult their tax advisors regarding U.S. and foreign tax
consequences of ownership of shares of a Fund, including the likelihood that
distributions to them would be subject to withholding of U.S. tax at a rate of
30% (or at a lower rate under a tax treaty).
PERFORMANCE INFORMATION
Total Return
Average annual total return quotations used in each Fund's advertising
and promotional materials are calculated according to the following formula:
P(1 + T)n = ERV
where "P" equals a hypothetical initial payment of $1000; "T" equals average
annual total return; "n" equals the number of years; and "ERV" equals the ending
redeemable value at the end of the period of a hypothetical $1000 payment made
at the beginning of the period.
B-24
<PAGE>
Under the foregoing formula, the time periods used in advertising will
be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertising for publication. Average
annual total return, or "T" in the above formula, is computed by finding the
average annual compounded rates of return over the period that would equate the
initial amount invested to the ending redeemable value. Average annual total
return assumes the reinvestment of all dividends and distributions.
Yield
Annualized yield quotations used in each Fund's advertising and
promotional materials are calculated by dividing the Fund's investment income
for a specified thirty-day period, net of expenses, by the average number of
shares outstanding during the period, and expressing the result as an annualized
percentage (assuming semi-annual compounding) of the net asset value per share
at the end of the period. Yield quotations are calculated according to the
following formula:
6
YIELD = 2 [(a-b + 1) - 1]
cd
where "a" equals dividends and interest earned during the period; "b" equals
expenses accrued for the period, net of reimbursements; "c" equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends and "d" equals the maximum offering price per share on the
last day of the period.
Except as noted below, in determining net investment income earned
during the period ("a" in the above formula), each Fund calculates interest
earned on each debt obligation held by it during the period by (1) computing the
obligation's yield to maturity, based on the market value of the obligation
(including actual accrued interest) on the last business day of the period or,
if the obligation was purchased during the period, the purchase price plus
accrued interest; (2) dividing the yield to maturity by 360 and multiplying the
resulting quotient by the market value of the obligation (including actual
accrued interest). Once interest earned is calculated in this fashion for each
debt obligation held by a Fund, net investment income is then determined by
totaling all such interest earned.
For purposes of these calculations, the maturity of an obligation with
one or more call provisions is assumed to be the next date on which the
obligation reasonably can be expected to be called or, if none, the maturity
date.
Other information
Performance data of a Fund quoted in advertising and other promotional
materials represents past performance and is not intended to predict or indicate
future results. The return and principal value of an investment in a Fund will
fluctuate, and an investor's redemption proceeds may be more or less than the
original investment amount. In advertising and promotional materials each Fund
may compare its performance with data published by Lipper Analytical Services,
Inc. ("Lipper") or CDA Investment Technologies, Inc. ("CDA"). Each Fund also may
refer in such materials to mutual fund
B-25
<PAGE>
performance rankings and other data, such as comparative asset, expense and fee
levels, published by Lipper or CDA. Advertising and promotional materials also
may refer to discussions of a Fund and comparative mutual fund data and ratings
reported in independent periodicals including, but not limited to, The Wall
Street Journal, Money Magazine, Forbes, Business Week, Financial World and
Barron's.
GENERAL INFORMATION
The Company is a newly organized entity and has no prior business
history. The Articles of Incorporation permit the Directors to issue full and
fractional shares of common stock into a greater or lesser number of shares
without thereby changing the proportionate beneficial interest in each Fund.
Each share represents an interest in a Fund proportionately equal to the
interest of each other share. Upon the Fund's liquidation, all shareholders
would share pro rata in the net assets of the Fund available for distribution to
shareholders.
The By-Laws require the issuance of stock certificates, upon request
from a shareholder. If stock certificates are issued, they must be returned by
the registered owners prior to the transfer or redemption of shares represented
by such certificates.
If they deem it advisable and in the best interest of shareholders, the
Board of Directors may create additional series of shares. The Board of
Directors has currently created two series of shares and may create additional
series in the future, which have separate assets and liabilities. Income and
operating expenses not specifically attributable to a particular Fund are be
allocated fairly among the Funds by the Directors, generally on the basis of the
relative net assets of each Fund.
Rule 18f-2 under the Investment Company Act provides that as to any
investment company which has two or more series outstanding and as to any matter
required to be submitted to shareholder vote, such matter is not deemed to have
been effectively acted upon unless approved by the holders of a "majority" (as
defined in the Rule) of the voting securities of each series affected by the
matter. Such separate voting requirements do not apply to the election of
Directors or the ratification of the selection of accountants. The Rule contains
special provisions for cases in which an advisory contract is approved by one or
more, but not all, series. A change in investment policy may go into effect as
to one or more series whose holders so approve the change even though the
required vote is not obtained as to the holders of other affected series.
The Funds' custodian, Star Bank, 425 Walnut Street, Cincinnati, Ohio
45202 is responsible for holding such Funds' assets. American Data Services,
Inc., The Hauppauge Corporate Center, 150 Motor Parkway, Suite 109, Hauppaugue,
NY 11788, acts as administrator and as each Fund's transfer agent, dividend
disbursing agent and accounting services agent. The Company's independent
accountants, McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, NY 10017,
assist in the preparation of certain reports to the Securities and Exchange
Commission and each Fund's tax returns. Spitzer & Feldman P.C., 405 Park Avenue,
New York, NY 10022 serves as counsel to the Funds.
B-26
<PAGE>
Shares of each Fund owned by the Directors and officers as a group were
less than 1% at June 15, 1998.
As of May 15, 1998, the following persons or entities owned of record
and/or beneficially 5% or more of the Ridgeway Helms Millennium Fund and,
therefore, as of June 16, 1998 (after the reorganization), 5% or more of the
Growth Fund's outstanding voting securities:
Esther F. Nagao, Trustee, 1 Metrotech Center North, Brooklyn, NY
11201-3859; 5.74%.
Renato Ghiozzi (IRA), 1 Metrotech Center North, Brooklyn, NY
11201-3859; 5.0%.
Hines, 1 Metrotech Center North, Brooklyn, NY 11201-3859; 8.93% record.
Middlemist, 1 Metrotech Center North, Brooklyn, NY 11201-3859; 8.24%
record.
FINANCIAL STATEMENTS
Shareholders will receive reports semi-annually showing the investments
of each Fund and other financial information. In addition, shareholders will
receive annual financial statements audited by the Fund's independent auditors.
The Semi-Annual Report to Shareholders dated December 31, 1997 for the Ridgeway
Helms Millennium Fund is incorporated herein by reference. Shareholder Reports
are available upon request at no charge.
B-27
<PAGE>
APPENDIX
Description of Ratings
MOODY'S INVESTORS SERVICE, INC.: CORPORATE BOND RATINGS
Aaa--Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected by
a large or by an exceptionally stable margin, and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa---Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
Moody's applies numerical modifiers "1", "2" and "3" to both the Aaa
and Aa rating classifications. The modifier "1" indicates that the security
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 issue
ranks in the lower end of its generic rating category.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great period of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
STANDARD & POOR'S CORPORATION: CORPORATE BOND RATINGS
AAA--This is the highest rating assigned by Standard & Poor's 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.
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.
COMMERCIAL PAPER RATINGS
Moody's commercial paper ratings are assessments of the issuer's
ability to repay punctually promissory obligations. Moody's employs the
following three designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers: Prime 1--highest quality; Prime
2--higher quality; Prime 3--high quality.
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment. Ratings are graded into four categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating, A, are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers "1", "2" and "3" to indicate the relative degree of safety. The
designation A-1 indicates that the degree of safety regarding timely payment is
either overwhelming or very strong. A "+" designation is applied to those issues
rated "A-1" which possess extremely strong safety characteristics. Capacity for
timely payment on issues with the designation "A-2" is strong. However, the
relative degree of safety is not as high as for issues designated A-1. Issues
carrying the designation "A-3" have a satisfactory capacity for timely payment.
They are, however, somewhat more vulnerable to the adverse effect of changes in
circumstances than obligations carrying the higher designations.
B-28
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Part A - Financial Highlights for the period ended December 31, 1997
with respect to the Ridgeway Helms Millennium Fund, the
predecessor by merger to the Millennium Growth Fund.
Part B - The financial statements for the Ridgeway Helms Millennium
Fund, the predecessor by merger to the Millennium Growth Fund
are incorporated herein by reference from the Semi-Annual
Report to Shareholders for the Ridgeway Helms Millennium Fund.
Part C - None.
(b) Exhibits:
+(1.1) Articles of Incorporation;
*(1.2) Articles of Amendment and Restatement
+(2.1) By-laws of the Company;
*(2.2) Amended and Restated By-Laws
(3) Not Applicable.
(4) Not Applicable.
+(5) Forms of Investment Advisory Agreement for each
Fund.
+(6) Form of Distribution Agreement.
(7) Not Applicable.
+(8) Form of Custody Agreement.
*(9.1) Administrative Services Agreement.
*(9.2) Transfer Agency Agreement.
*(9.3) Fund Accounting Service Agreement.
*(10) Opinions of Spitzer & Feldman P.C. and Venable,
Baetjer and Howard, LLP (Maryland counsel) as to
the legality of the securities being registered,
including Spitzer & Feldman's consent to the filing
thereof and as to the use of their names in the
Prospectus.
*(11) Consent of McGladrey & Pullen, L.L.P., independent
accountants.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
**(17) Financial Data Schedule.
(18) Not Applicable.
- ---------------
+ Filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement (Reg.
No. 333-49347) on April 3, 1998.
* Filed herewith.
** To be filed by Amendment.
<PAGE>
Item 25. Persons Controlled by or Under Common Control With
Registrant.
Not applicable
Item 26. Number of Holders of Securities.
As of the date of this Registration Statement, no shares have been
issued by the Company.
Item 27. Indemnification.
(a) In accordance with Section 2-418 of the General
Corporation Law of the State of Maryland, Article NINTH of the Registrant's
Articles of Incorporation provides as follows:
"NINTH:(1) The Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the
Corporation or at its request any other entity, to the fullest
extent required or permitted by the General Laws of the State of
Maryland now or hereafter in force, including the advance of
expenses under the procedures and to the fullest extent permitted
by law, and (ii) other employees and agents to such extent as
shall be authorized by the Board of Directors or the By-Laws and
as permitted by law. Nothing contained herein shall be construed
to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office. The foregoing rights of
indemnification shall not be exclusive of any other rights to
which those seeking indemnification may be entitled. The Board of
Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt,
approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such indemnification
arrangements as may be permitted by law. No amendment of the
charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the right of indemnification provided
hereunder with respect to acts or omissions occurring prior to
such amendment or repeal.
(2) To the fullest extent permitted by Maryland statutory or
decisional law, as amended or
C-2
<PAGE>
interpreted, and the Investment Company Act of 1940, no director
or officer of the Corporation shall be personally liable to the
Corporation or its stockholders for money damages; provided,
however, that nothing herein shall be construed to protect any
director or officer of the Corporation against any liability to
the Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in
the conduct of his office. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or
eliminate the limitation of liability provided to directors and
officers hereunder with respect to any act or omission occurring
prior to such amendment or repeal."
(b) In the Distribution Agreement relating to the securities
being offered hereby, the Registrant agrees to indemnify and hold
harmless any person who controls Ridgeway Helms Securities
Corporation within the meaning of the Securities Act of 1933,
against certain types of civil liabilities arising in connection
with the Registration Statement or Prospectus.
Item 28. Business and Other Connections of Investment Adviser.
Ridgeway Helms Investment Management, Inc. serves as
investment adviser to the Company. Set forth below are the names
of the directors and officers of the Adviser:
Robert A. Dowlett President and CEO and Director
N. Joseph Nahas First Vice President
Item 29. Principal Underwriter.
(a) The principal underwriter of the Company's shares does not
currently act as a principal underwriter, depositor or
investment adviser for any other investment company.
(b) The following table contains information with respect to each
director, officer or partner of each principal underwriter
named in the answer to Item 21:
C-3
<PAGE>
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant
---------------- ---------------- ---------------
Robert A. Dowlett President & CEO Director, President &
Ridgeway Helms CEO
Securities
Corporation
303 Twin Dolphin Drive
Suite 530
Redwood Shores, CA 94065
Item 30. Location of Accounts and Records.
The accounts and records of the Company required to be
maintained by Section 31(a) of the 1940 Act and the rules promulgated thereunder
are located, in whole or in part, at the office of the Investment Advisor and
the Company at 303 Twin Dolphin Drive, Suite 530, Redwood Shores, CA 94065;
except transfer agency records which are maintained at the offices of the
Administrator: American Data Services, Inc., The Hauppauge Corporate Center, 150
Motor Parkway, Hauppauge, New York 11788 and custodial records which are
maintained at the offices of the Custodian, Star Bank, N.A., 425 Walnut Street,
Cincinnati, Ohio 45202.
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
The Company hereby undertakes:
(a) to file an amendment to the registration statement
with certified financial statements showing the
initial capital received before accepting
subscriptions from any persons in excess of 25 if the
Company proposes to raise its initial capital
pursuant to Section 14(a)(3) of the 1940 Act;
(b) only to the extent required under the amendments to
Form N-1A, to file a post-effective amendment, using
financial statements which need not be certified,
within four to six months from the
C-4
<PAGE>
effective date of the Company's 1933 Act
registration statement.
(c) pursuant to Section 16(c) of the Investment
Company Act of 1940, as amended, to call a
shareholder meeting for the purpose of voting upon
the question of removal of one or more directors
(and to assist shareholders in communications with
each other) if and when requested in writing to do
so by the recordholders of not less than 10% of
the Company's outstanding shares.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Redwood Shores and State of California, on the 5th
day of June, 1998.
MILLENNIUM RHIM FUNDS, INC.
By: /s/ Robert A. Dowlett
------------------------
Robert A. Dowlett, 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 date indicated.
/s/ Robert A. Dowlett 6/5/98
- --------------------- ------
Robert A. Dowlett Director, Chairman of the (Date)
Board and Chief Executive
Officer
/s/ N. Joseph Nahas 6/5/98
- ------------------- ------
N. Joseph Nahas Director, Vice President, (Date)
Chief Financial Officer and
Secretary
The above persons signing as Director are all of the members of the
Company's Board of Directors.
<PAGE>
EXHIBIT INDEX
Exhibits:
- ---------
+(1.1) Articles of Incorporation;
*(1.2) Articles of Amendment and Restatement
+(2.1) By-laws of the Company;
*(2.2) Amended and Restated By-Laws
(3) Not Applicable.
(4) Not Applicable.
+(5) Formsof Investment Advisory Agreement for each
Fund.
+(6) Form of Distribution Agreement.
(7) Not Applicable.
+(8) Form of Custody Agreement.
*(9.1) Administrative Services Agreement.
*(9.2) Transfer Agency Agreement.
*(9.3) Fund Accounting Service Agreement.
*(10) Opinions of Spitzer & Feldman P.C. and Venable,
Baetjer and Howard, LLP (Maryland counsel) as to
the legality of the securities being registered,
including Spitzer & Feldman's consent to the filing
thereof and as to the use of their names in the
Prospectus.
*(11) Consent of McGladrey & Pullen, L.L.P., independent
accountants.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) Not Applicable.
(16) Not Applicable.
**(17) Financial Data Schedule.
(18) Not Applicable.
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+ Filed with the Securities and Exchange Commission as an
Exhibit to the Registrant's Registration Statement (Reg.
No. 333-49347) on April 3, 1998.
* Filed herewith.
** To be filed by Amendment.
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Exhibit 1.2
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
THE MILLENNIUM RHIM FUNDS, INC.
The Millennium RHIM Funds, Inc., a Maryland corporation having its
principal office in the City of Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Charter of the Corporation is amended and as so amended is
restated in its entirety by striking out Articles First through Tenth and
inserting in lieu thereof the following:
FIRST: (1) The name of the incorporator is Thomas R.
Westle.
(2) The incorporator's post office address is 75
East 55th Street, New York, New York 10022.
(3) The incorporator is over eighteen years of age.
(4) The incorporator is forming the corporation named
in these Articles of Incorporation under the General Corporation Law of the
State of Maryland.
SECOND: The name of the corporation (hereinafter called the
"Corporation") is The Millennium RHIM Funds, Inc.
THIRD: The purposes for which the Corporation is formed are:
(1) to conduct, operate and carry on the business of
an investment company;
(2) to subscribe for, invest in, reinvest in,
purchase or otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise dispose of notes, bills, bonds, debentures and other
negotiable or non-negotiable instruments, obligations and evidences of
indebtedness issued or guaranteed as to principal and interest by the United
States Government, or any agency or instrumentality thereof, any State or local
government, or any agency or instrumentality thereof, or any other securities of
any kind issued by any corporation or other issuer organized under the laws of
the United States or any State, territory or possession thereof or any foreign
country or any subdivision thereof or otherwise, to pay for the same in cash or
by the issue of stock, including treasury stock, bonds and notes of the
Corporation or otherwise; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such investments
of every kind and description, including and without limitation, the right to
consent and otherwise act with respect thereto, with power to designate one or
more persons, firms, associations or corporations to exercise any of said
rights, powers and privileges in respect of any said investments;
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(3) to conduct research and investigations in respect
of securities, organizations, business and general business and financial
conditions in the United States of America and elsewhere for the purpose of
obtaining information pertinent to the investment and employment of the assets
of the Corporation and to procure any and all of the foregoing to be done by
others as independent contractors and to pay compensation therefor;
(4) to borrow money or otherwise obtain credit and to
secure the same by mortgaging, pledging or otherwise subjecting as security the
assets of the Corporation, and to endorse, guarantee or undertake the
performance of any obligation, contract or engagement of any other person, firm,
association or corporation;
(5) to issue, sell, distribute, repurchase, redeem,
retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and
otherwise deal in, shares of stock of the Corporation, including shares of stock
of the Corporation in fractional denominations, and to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of shares of
stock of the Corporation, any funds or property of the Corporation, whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the State of Maryland and by these Articles of Incorporation;
(6) to conduct its business, promote its purposes,
and carry on its operations in any and all of its branches and maintain offices
both within and without the State of Maryland, in any and all States of the
United States of America, in the District of Columbia, and in any or all
commonwealths, territories, dependencies, colonies, possessions, agencies, or
instrumentalities of the United States of America and of foreign governments;
(7) to carry out all or any part of the foregoing
purposes or objects as principal or agent, or in conjunction with any other
person, firm, association, corporation or other entity, or as a partner or
member of a partnership, syndicate or joint venture or otherwise, and in any
part of the world to the same extent and as fully as natural persons might or
could do;
(8) to have and exercise all of the powers and
privileges conferred by the laws of the State of Maryland upon corporations
formed under the laws of such State; and
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(9) to do any and all such further acts and things
and to exercise any and all such further powers and privileges as may be
necessary, incidental, relative, conducive, appropriate or desirable for the
foregoing purposes.
The enumeration herein of the objects and purposes of the
Corporation shall be construed as powers as well as objects and purposes and
shall not be deemed to exclude by inference any powers, objects or purposes
which the Corporation is empowered to exercise, whether expressly by force of
the laws of the State of Maryland now or hereafter in effect, or impliedly by
the reasonable construction of the said law.
FOURTH: The post office address of the principal office of
the Corporation within the State of Maryland is c/o 11 East Chase Street,
Baltimore City, Maryland 21202.
FIFTH: The resident agent of the Corporation in the State of
Maryland is National Registered Agents, Inc., MD, at 11 East Chase Street,
Baltimore, Maryland 21202.
SIXTH: (1) The total number of shares of stock of all
classes and series which the Corporation initially has authority to issue is one
billion (1,000,000,000) shares of capital stock (par value of One Tenth of One
Cent $.001 per share), amounting in aggregate par value to $100,000. All of such
shares are classified as "Common Stock".
(2) The Board of Directors may classify or
reclassify any unissued shares of capital stock (whether or not such shares have
been previously classified or reclassified) from time to time by setting or
changing in any one or more respects the preferences, conversion or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, or terms or conditions of redemption of such shares of stock.
(3) Unless otherwise prohibited by law, so long as
the Corporation is registered as a open-end management company under the
Investment Company Act of 1940, the Board of Directors shall have the power and
authority, without the approval of the holders of any outstanding shares, to
increase or decrease the number of shares of capital stock or the number of
shares of capital stock of any class or series that the Corporation has
authority to issue.
(4) Until such time as the Board of Directors shall
provide otherwise in accordance with Section (2) of this Article SIXTH one
hundred million (100,000,000) shares of the authorized shares of stock of the
Corporation shall be allocated to each of the following series of Common Stock:
(i) The Millennium Growth Fund and (ii) The Millennium Growth & Income Fund. The
balance of eight hundred million (800,000,000) shares of such stock may be
issued in this series, or in any new series each comprising such number of
shares and having
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such designations, limitations and restrictions thereof as shall be fixed and
determined from time-to-time by resolution or resolutions providing for the
issuance of such stock adopted by the Board of Directors.
(5) Any series of Common Stock shall be referred to
herein individually as a "Series" and collectively, together with any further
series from time to time established, as the "Series".
(6) The following is a description of the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption of the shares of Common Stock of the Corporation (unless provided
otherwise by the Board of Directors with respect to any such additional Series
at the time it is established and designated):
(a) Asset Belonging to Series. All consideration
received by the Corporation from 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 investment or 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 Corporation. Such consideration, assets,
income, earnings, profits and proceeds, together with any General Items
allocated to that Series as provided in the following sentence, are herein
referred to collectively as "assets belonging to" that Series. In the event that
there are any assets, income, earnings, profits or proceeds which are not
readily identifiable as belonging to any particular Series (collectively,
"General Items"), such General Items shall be allocated by or under the
supervision of the Board of Directors 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 Board of Directors, in its sole discretion, deems fair and equitable; and
any General Items so allocated to a particular Series shall belong to that
Series. Each such allocation by the Board of Directors shall be conclusive and
binding for all purposes.
(b) Liabilities of Series. The assets belonging to
each particular Series shall be charged with the liabilities of the Corporation
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 Corporation which are not readily identifiable as
pertaining to any particular Series, shall be allocated and charged by or under
the supervision of the Board of Directors 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 Board of Directors, in its sole discretion, deems fair and
equitable. The liabilities, expenses, costs, charges and reserves allocated and
so charged to a Series are herein referred to collectively as "liabilities of"
that Series. Each allocation of liabilities, expenses, costs, charges and
reserves by or under the supervision of the Board of Directors shall be
conclusive and binding for all purposes.
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(c) Dividends and Distributions. Dividends and
capital gains distributions on shares of a particular Series may be paid with
such frequency, in such form and in such amount as the Board of Directors may
determine by resolution adopted from time to time, or pursuant to a standing
resolution or resolutions adopted only once or with such frequency as the Board
of Directors may determine, after providing for actual and accrued liabilities
of that Series. All dividends on shares of a particular Series shall be paid
only out of the income belonging to that Series and all capital gains
distributions on shares of a particular Series shall be paid only out of the
capital gains 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 Board of Directors may determine that no
dividend or distribution shall be payable on shares as to which the
stockholder's purchase order and/or payment have not been received by the time
or times established by the Board of Directors under such program or procedure.
Dividends and distributions may be paid in cash, property or
additional shares of the same or another Series, or a combination thereof, as
determined by the Board of Directors or pursuant to any program that the Board
of Directors may have in effect at the time for the election by stockholders of
the form in which dividends or distributions are to be paid. Any such dividend
or distribution paid in shares shall be paid at the current net asset value
thereof.
(d) Voting. On each matter submitted to a vote of the
stockholders, each holder of shares shall be entitled to one vote for each share
standing in his name on the books of the Corporation, irrespective of the Series
thereof, and all shares of all Series shall vote as a single class ("Single
Class Voting"); provided, however, that (i) as to any matter with respect to
which a separate vote of any Series is required by the Investment Company Act of
1940 or by the Maryland General Corporation Law, such requirement as to a
separate vote by that Series shall apply in lieu of Single Class Voting; (ii) in
the event that the separate vote requirement referred to in clause (i) above
applies with respect to one or more Series, then, subject to clause (iii) below,
the shares of all other Series shall vote as a single class; and (iii) as to any
matter which does not affect the interest of a particular Series, including
liquidation of another Series as described in subsection (7) below, only the
holders of shares of the one or more affected Series shall be entitled to vote.
(e) Redemption by Stockholders. Each holder of shares
of a particular Series shall have the right at such times as may be permitted by
the Corporation to require the Corporation to redeem all or any part of his
shares of that Series, at a redemption price per share equal to the net asset
value per share of that Series next determined after the shares are properly
tendered for redemption, less such redemption fee or sales charge, if any, as
may be established from time to time by the
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<PAGE>
Board of Directors in its sole discretion. Payment of the redemption price shall
be in cash; provided, however, that if the Board of Directors determines, which
determination shall be conclusive, that conditions exist which make payment
wholly in cash unwise or undesirable, the Corporation may, to the extent and in
the manner permitted by the Investment Company Act of 1940, make payment wholly
or partly in securities or other assets belonging to the Series of which the
shares being redeemed are a part, at the value of such securities or assets used
in such determination of net asset value.
Payment by the Corporation for shares of stock of the
Corporation surrendered to it for redemption shall be made by the Corporation
within such period from surrender as may be required under the Investment
Company Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Corporation may postpone payment of the redemption price and may
suspend the right of the holders of shares of any Series to require the
Corporation to redeem shares of that Series during any period or at any time
when and to the extent permissible under the Investment Company Act of 1940.
(f) Redemption by Corporation. The Board of Directors
may cause the Corporation to redeem at their net asset value the shares of any
Series held in an account having, because of redemptions or exchanges, a net
asset value on the date of the notice of redemption less than the Minimum
Amount, as defined below, in that Series or class thereof specified by the Board
of Directors from time to time in its sole discretion, provided that at least 30
days prior written notice of the proposed redemption has been given to the
holder of any such account by first class mail, postage prepaid, at the address
contained in the books and records of the Corporation and such holder has been
given an opportunity to purchase the required value of additional shares.
(i) The term "Minimum Amount" when used herein
shall mean Five Hundred Dollars ($500) unless otherwise fixed by the Board of
Directors from time to time, provided that the Minimum Amount may not in any
event exceed Twenty-Five Thousand Dollars ($25,000). The Board of Directors may
establish differing Minimum Amounts for each class and series of the
Corporation's stock and for holders of shares of each such Class and Series of
stock based on such criteria as the Board of Directors may deem appropriate.
(ii) The Corporation shall be entitled but not
required to redeem shares of stock from any stockholder or stockholders, as
provided in this subsection (6), to the extent and at such times as the Board of
Directors shall, in its absolute discretion, determine to be necessary or
advisable to prevent the Corporation from qualifying as a "personal holding
company", within the meaning of the Internal Revenue Code of 1986, as amended
from time to time.
(g) Liquidation. In the event of the liquidation of a
particular Series, the stockholders of the Series that is being liquidated shall
be entitled to receive, as a class, when and as declared by the Board of
Directors, the excess of the assets
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<PAGE>
belonging to that Series over the liabilities of that Series. The holders of
shares of any particular Series shall not be entitled thereby to any
distribution upon liquidation of any other Series. The assets so distributable
to the stockholders of any particular Series shall be distributed among such
stockholders in proportion to the number of shares of that Series held by them
and recorded on the books of the Corporation, or in such other manner as may be
determined by the Board of Directors in accordance with law.
(h) Net Asset Value Per Share. 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 of that Series) by the total number of shares of
that Series outstanding, all as determined by or under the direction of the
Board of Directors in accordance with generally accepted accounting principles
and the Investment Company Act of 1940. Subject to the applicable provisions of
the Investment Company Act of 1940, the Board of Directors, in its sole
discretion, may prescribe and shall set forth in the By-Laws of the Corporation
or in a duly adopted resolution of the Board of Directors such bases and times
for determining the value of the assets belonging to, and the net asset value
per share of outstanding shares of, each Series, or the net income attributable
to such shares, as the Board of Directors deems necessary or desirable. The
Board of Directors shall have full discretion, to the extent not inconsistent
with the Maryland General Corporation Law and the Investment Company Act of
1940, to determine which item shall be treated as income and which items as
capital and whether any item of expense shall be charged to income or capital.
Each such determination and allocation shall be conclusive and binding for all
purposes.
The Board of Directors may determine to maintain the net asset
value per share of any Series at a designated constant dollar amount and in
connection therewith may adopt procedures not inconsistent with the Investment
Company Act of 1940 for the continuing declaration of income attributable to
that Series as dividends and for the handling of any losses attributable to that
Series. Such procedures may provide that in the event of any loss, each
stockholder shall be deemed to have contributed to the capital of the
Corporation attributable to that Series his pro rata portion of the total number
of shares required to be canceled in order to permit the net asset value per
share of that Series to be maintained, after reflecting such loss, at the
designated constant dollar amount. Each stockholder of the Corporation shall be
deemed to have agreed, by his investment in any Series with respect to which the
Board of Directors shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
(i) Equality. All shares of each particular Series
shall represent an equal proportionate interest in the assets belonging to that
Series (subject to the liabilities of that Series), and each share of any
particular Series shall be equal to each other share of that Series.
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(j) Conversion or Exchange Rights. Subject to
compliance with the requirements of the Investment Company Act of 1940, the
Board of Directors shall have the authority to provide that holders of shares of
any Series shall have the right to convert or exchange 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 Board of Directors.
(7) The Board of Directors may, from time to time and without
stockholder action, classify unissued shares of a particular Series into one or
more additional classes of that Series, the voting, dividend, liquidation and
other rights of which shall differ from the other classes of common stock of
that Series to the extent provided in Articles Supplementary for such additional
class, such Articles to be filed for record with the appropriate authorities of
the State of Maryland. Any class of a Series of Common Stock shall be referred
to herein individually as a "Class" and collectively, together with any further
class or classes of such Series from time to time established, as the "Classes".
(8) All Classes of a particular Series of Common Stock of the
Corporation shall represent the same interest in the Corporation and have
identical voting, dividend, liquidation and other rights with any other shares
of Common Stock of that Series; provided, however, that notwithstanding anything
in the charter of the Corporation to the contrary:
(a) Any class of shares may be subject to such sales
loads, contingent deferred sales charges, Rule 12b-1 fees, administrative fees,
service fees, or other fees, however designated, in such amounts as may be
established by the Board of Directors from time to time in accordance with the
Investment Company Act of 1940.
(b) Expenses related solely to a particular Class of
a Series (including, without limitation, distribution expenses under a Rule
12b-1 plan and administrative expenses under an administration or service
agreement, plan or other arrangement, however designated) shall be borne by that
Class and shall be appropriately reflected (in the manner determined by the
Board of Directors) in the net asset value, dividends, distributions and
liquidation rights of the shares of that Class.
(c) As to any matter with respect to which a separate
vote of any Class of a Series is required by the Investment Company Act of 1940
or by the Maryland General Corporation Law (including, without limitation,
approval of any plan, agreement or other arrangement referred to in subsection
(b) above), such requirement as to a separate vote by that Class shall apply in
lieu of Single Class Voting, and if permitted by the Investment Company Act of
1940 or the Maryland General Corporation Law, the Classes of more than one
Series shall vote together as a single class on any such matter which shall have
the same effect on each such Class. As to any matter which does not affect the
interest of a particular Class of a Series, only the holders of shares of the
affected Classes of that Series shall be entitled to vote.
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(d) At such times as may be determined by the Board
of Directors (or with the authorization of the Board of Directors, by the
officers of the Corporation) in accordance with the Investment Company Act of
1940, applicable rules and regulations thereunder and applicable rules and
regulations of the National Association of Securities Dealers, Inc. and from
time to time reflected in the registration statement of the Corporation (the
"Corporation's Registration Statement"), shares of a particular Class of a
Series of the Corporation or certain shares of a particular Class of a Series of
the Corporation may be automatically converted into shares of another Class of
that Series of the Corporation based on the relative net asset values of such
Classes at the time of conversion; subject, however, to any conditions of
conversion that may be imposed by the Board of Directors (or with the
authorization of the Board of Directors, by the officers of the Corporation) and
reflected in the Corporation's Registration Statement. The terms and conditions
of such conversion may vary within and among the Classes of a Series, and among
the Classes of the various Series, to the extent determined by the Board of
Directors (or with the authorization of the Board of Directors, by the officers
of the Corporation) and set forth in the Corporation's Registration Statement.
(9) The Corporation may issue and sell fractions of shares of
capital stock having pro rata all the rights of full shares, including, without
limitation, the right to vote and to receive dividends, but excluding any right
to receive a stock certificate representing fractional shares and wherever the
words "share" or "shares" are used in the charter or By-Laws of the Corporation,
they shall be deemed to include fractions of shares where the context does not
clearly indicate that only full shares are intended.
(10) The Corporation shall not be obligated to issue
certificates representing shares of any Class or Series of capital stock. At the
time of issue or transfer of shares without certificates, the Corporation shall
provide the stockholder with such information as may be required under the
Maryland General Corporation Law.
(11) No holder of any shares of stock of the Corporation shall
be entitled as of right to subscribe for, purchase, or otherwise acquire any
such shares which the Corporation shall issue or propose to issue; and any and
all of the shares of stock of the Corporation, whether now or hereafter
authorized, may be issued, or may be reissued or transferred if the same have
been reacquired and have treasury status, by the Board of Directors to such
persons, firms, corporations and associations, and for such lawful
consideration, and on such terms, as the Board of Directors in its discretion
may determine, without first offering same, or any thereof, to any said holder.
(12) All persons who shall acquire stock or other securities
of the Corporation shall acquire the same subject to the provisions of these
Articles of Incorporation, as from time to time amended.
SEVENTH: The number of directors of the Corporation, until
such number shall be increased pursuant to the By-Laws of the Corporation, shall
be two. The
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number of directors shall never be less than the number prescribed by the
General Corporation Law of the State of Maryland and shall never be more than
twenty. The names of the persons who shall act as directors of the Corporation
until their successors are duly chosen and qualify are Robert A. Dowlett and N.
Joseph Nahas.
EIGHTH: The following provisions are inserted for the
purpose of defining, limiting and regulating the powers of the Corporation and
of the Board of Directors and stockholders.
(1) The business and affairs of the Corporation shall
be managed under the direction of the Board of Directors which shall have and
may exercise all powers of the Corporation except those powers which are by law,
by these Articles of Incorporation or by the By-Laws conferred upon or reserved
to the stockholders. In furtherance and not in limitation of the powers
conferred by law, the Board of Directors shall have power:
(a) to make, alter and repeal the By-Laws of the
Corporation;
(b) to issue and sell, from time to time, shares
of any class or series of the Corporation's stock in such amounts and on such
terms and conditions, and for such amount and kind of consideration, as the
Board of Directors shall determine;
(c) from time to time to set apart out of any
assets of the Corporation otherwise available for dividends a reserve or
reserves for working capital or for any other proper purpose or purposes, and to
reduce, abolish or add to any such reserve or reserves from time to time as said
Board of Directors may deem to be in the best interests of the Corporation; and
to determine in its discretion what part of the assets of the Corporation
available for dividends in excess of such reserve or reserves shall be declared
in dividends and paid to the stockholders of the Corporation; and
(d) from time to time to determine to what
extent and at what times and places and under what conditions and regulations
the accounts, books and records of the Corporation, or any of them, shall be
open to the inspection of the stockholders; and no stockholder shall have any
right to inspect any account or book or document of the Corporation, except as
conferred by the laws of the State of Maryland, unless and until authorized to
do so by resolution of the Board of Directors of the Corporation.
(2) Notwithstanding any provision of the General
Corporation Law of the State of Maryland requiring a greater proportion than a
majority of the votes of all classes or of any class of the Corporation's stock
entitled to be cast in order to take or authorize any action, any such action
may be taken or authorized upon the concurrence of a majority of the aggregate
number of votes entitled to be cast thereon subject to any applicable
requirements of the Investment Company Act of 1940,
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as from time to time in effect, or rules or orders of the Securities and
Exchange Commission or any successor thereto.
(3) The presence in person or by proxy of the holders
of one-third of the shares of stock of the Corporation entitled to vote (without
regard to series or class) shall constitute a quorum at any meeting of the
stockholders except with respect to any matter which, under applicable statutes
or regulatory requirements requires approval by a separate vote of one or more
series or classes of stock, in which case the presence in person or by proxy of
the holders of one-third of the shares of stock of each Series or class required
to vote separately shall constitute a quorum.
(4) Any determination made in good faith and, so far
as accounting matters are involved, in accordance with generally accepted
accounting principles by or pursuant to the discretion of the Board of
Directors, as to the amount of the assets, debts, obligations, or liabilities of
the Corporation, as to the amount of any reserves or charges set up and the
propriety thereof, as to the time of or purposes for creating such reserves or
charges, as to the use, alteration or cancellation of any reserves or charges
(whether or not any debt, obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged or shall by
then or thereafter required to be paid or discharged), as to the value of or the
method of valuing any investment owned or held by the Corporation, as to the
market value or fair value of any investment or fair value of any other asset of
the Corporation, as to the allocation of any asset of the Corporation to a
particular class or classes of the Corporation's stock, as to the charging of
any liability of the Corporation to a particular class or classes of the
Corporation's stock, as to the number of shares of the Corporation or of any
class outstanding, as to the estimated expense to the Corporation in connection
with purchases of its shares, as to the ability to liquidate investments in
orderly fashion, or as to any other matters relating to the issue, sale,
purchase and/or other acquisition or disposition of investments or shares of the
Corporation, shall be final and conclusive and shall be binding upon the
Corporation and all holders of its shares, past, present and future, and shares
of the Corporation are issued and sold on the condition and understanding that
any and all such determinations shall be binding as aforesaid.
(5) Except to the extent prohibited by the Investment
Company Act of 1940, as amended, or rules, regulations or orders thereunder
promulgated by the Securities and Exchange Commission or any successor thereto
or by the By-Laws of the Corporation, a director, officer or employee of the
Corporation shall not be disqualified by his position from dealing or
contracting with the Corporation, nor shall any transaction or contract of the
Corporation be void or voidable by reason of the fact that any director, officer
or employee or any firm of which any director, officer or employee is a member
or any corporation of which any director, officer or employee is a stockholder,
officer or director, is in any way interested in such transaction or contract;
provided that in case a director, or a firm or corporation of which a director
is a member, stockholder, officer or director, is so interested, such fact shall
be disclosed to or shall have been known by the
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Board of Directors or a majority thereof; and any director of the Corporation
who is so interested, or who is a member, stockholder, officer or director of
such firm or corporation, may be counted in determining the existence of a
quorum at any meeting of the Board of Directors of the Corporation which shall
authorize any such transaction or contract, with like force and effect as if he
were not such director, or member, stockholder, officer or director of such firm
or corporation.
(6) Specifically and without limitation of the
foregoing subsection (e) but subject to the exception therein prescribed, the
Corporation may enter into management or advisory, underwriting, distribution
and administration contracts and other contracts, and may otherwise do business,
with Furman Selz Incorporated, and any parent, subsidiary, partner, or affiliate
of such firm or any affiliates of any such affiliate, or the stockholders,
members, directors, officers, partners and employees thereof, and may deal
freely with one another notwithstanding that the Board of Directors of the
Corporation may be composed in part of directors, officers, partners or
employees of such firm and/or its parents, subsidiaries or affiliates and that
officers of the Corporation may have been, be or become directors, officers, or
employees of such firm, and/or its parents, subsidiaries or affiliates, and
neither such management or advisory, underwriting, distribution or
administration contracts nor any other contract or transaction between the
Corporation and such firm and/or its parents, subsidiaries or affiliates shall
be invalidated or in any way affected thereby, nor shall any director or officer
of the Corporation be liable to the Corporation or to any stockholder or
creditor thereof or to any person for any loss incurred by it or him under or by
reason of such contract or transaction; provided that nothing herein shall
protect any director or officer of the Corporation against any liability to the
Corporation or to its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
NINTH: (1) The Corporation shall indemnify (i) its currently
acting and former directors and officers, whether serving the Corporation or at
its request any other entity, to the fullest extent required or permitted by the
General Laws of the State of Maryland now or hereafter in force, including the
advance of expenses under the procedures and to the fullest extent permitted by
law, and (ii) other employees and agents to such extent as shall be authorized
by the Board of Directors or the By-Laws and as permitted by law. Nothing
contained herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The foregoing rights of indemnification shall not be exclusive of
any other rights to which those seeking indemnification may be entitled. The
Board of Directors may take such action as is necessary to carry out these
indemnification provisions and is expressly empowered to adopt, approve and
amend from time to time such by-laws, resolutions or contracts implementing such
provisions or such indemnification arrangements as may be permitted by law. No
amendment of the charter of the Corporation or repeal of any of its
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provisions shall limit or eliminate the right of indemnification provided
hereunder with respect to acts or omissions occurring prior to such amendment or
repeal.
(2) To the fullest extent permitted by Maryland
statutory or decisional law, as amended or interpreted, and the Investment
Company Act of 1940, no director or officer of the Corporation shall be
personally liable to the Corporation or its stockholders for money damages;
provided, however, that nothing herein shall be construed to protect any
director or officer of the Corporation against any liability to the Corporation
or its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office. No amendment of the charter of the
Corporation or repeal of any of its provisions shall limit or eliminate the
limitation of liability provided to directors and officers hereunder with
respect to any act or omission occurring prior to such amendment or repeal.
TENTH: The Corporation reserves the right to amend, alter,
change or repeal any provision contained in the Charter of the Corporation,
including, without limitation, any amendments which alter the contract rights of
any series or class of outstanding stock as expressly set forth in the Charter
and all rights conferred upon stockholders herein are granted subject to this
reservation.
SECOND: The current name and address of the Corporation's
resident agent and address of the principal office of the Corporation in
Maryland are as set forth herein. The number of directors is currently set at
two and their names are Robert A. Dowlett and N. Joseph Nahas.
THIRD: The Corporation desires to amend and restate its
Charter as currently in effect. The provisions set forth in these Articles of
Amendment are all of the provisions of the Charter currently in effect as herein
amended. The amendment and restatement of the Charter of the Corporation as
hereinabove set forth has been duly approved by a majority of the entire Board
of Directors of the Corporation. No stock entitled to vote on the amendment and
restatement was outstanding or subscribed for at the time of approval.
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IN WITNESS WHEREOF, The Millennium RHIM Funds, Inc. has caused these
Articles of Amendment and Restatement to be signed in its name and on its behalf
by its President and witnessed by its [Assistant] Secretary, as of this 28th day
of May, 1998.
The undersigned President acknowledges these Articles of Amendment and
Restatement to be the corporate act of the Corporation and states that to the
best of his knowledge, information and belief, the matters and facts set forth
in these Articles with respect to the authorization and approval of the
amendment and restatement of the Corporation's Charter are true in all material
respects and that this statement is made under penalties of perjury.
The MILLENNIUM RHIM FUNDS, INC.
By: /s/ Robert A. Dowlett
-------------------------------
Robert A. Dowlett
President
WITNESS:
By: /s/ N. Joseph Nahas
--------------------------------
N. Joseph Nahas
Secretary
<PAGE>
Exhibit 2.2
AMENDED AND RESTATED
BY-LAWS
OF
THE MILLENNIUM RHIM FUNDS, INC.
a Maryland corporation
ARTICLE I
Offices
Section 1. Principal Office in Maryland. The Corporation shall
have a principal office in the City of Baltimore, State of Maryland.
Section 2. Other Offices. The Corporation may have offices
also at such other places within and without the State of Maryland as the Board
of Directors may from time to time determine or as the business of the
Corporation may require.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meeting. Meetings of stockholders shall be
held at such place, either within the State of Maryland or at such other place
within the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. Annual Meetings. The Corporation shall not be
required to hold an annual meeting of its stockholders in any year in which the
election of directors is not required to be acted on by the holders of any class
or series of stock under the Investment Company Act of 1940. In the event that
the Corporation shall be required to hold an annual meeting of stockholders by
the Investment Company Act of 1940, such meeting of stockholders shall be held
on a date fixed from time to time by the Board of Directors within one hundred
twenty days after the occurrence of the event requiring the meeting. The Board
of Directors, in its discretion, may call annual meetings in other years, which
shall be held on a date fixed by the Board of Directors not less than ninety nor
more than one hundred and twenty days following the end of such fiscal year of
the Corporation.
Section 3. Notice of Annual Meeting. Written or printed notice
of an annual meeting, stating the place, date and
<PAGE>
hour thereof, shall be given to each stockholder entitled to vote thereat not
less than ten nor more than ninety days before the date of the meeting.
Section 4. Special Meetings. Special meetings of stockholders
may be called by the chairman, the president or by the Board of Directors and
shall be called by the secretary upon the written request of holders of shares
entitled to cast not less than twenty-five percent of all the votes entitled to
be cast at such meeting. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. In the case of
such request for a special meeting, upon payment by such stockholders to the
Corporation of the estimated reasonable cost of preparing and mailing a notice
of such meeting, the secretary shall give the notice of such meeting. The
secretary shall not be required to call a special meeting to consider any matter
which is substantially the same as a matter acted upon at any special meeting of
stockholders held within the preceding twelve months unless requested to do so
by the holders of shares entitled to cast not less than a majority of all votes
entitled to be cast at such meeting. Notwithstanding anything to the contrary
herein, a special meeting of stockholders shall be called for the specific
purpose of the removal of directors upon the written request of holders of
shares entitled to cast not less than ten percent of all of the votes entitled
to be cast at such meeting.
Section 5. Notice of Special Meeting. Written or printed
notice of a special meeting of stockholders, stating the place, date, hour and
purpose thereof, shall be given by the secretary to each stockholder entitled to
vote thereat not less than ten nor more than ninety days before the date fixed
for the meeting.
Section 6. Business of Special Meetings. Business transacted
at any special meeting of stockholders shall be limited to the purposes stated
in the notice thereof.
Section 7. Quorum. The holders of one-third of the stock
issued and outstanding and entitled to vote thereat (without regard to Series or
Class), present in person or represented by proxy, shall constitute a quorum at
all meetings of the stockholders for the transaction of business, except with
respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more Series or
Classes of stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each Series or Class required to
vote separately on the matter shall constitute a quorum with respect to such
Series or Class. In the absence of a quorum, the stockholders present in person
or by proxy, by a majority vote and without notice other than announcement at
the meeting, may
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adjourn the meeting from time to time, but not for a period exceeding 120 days
after the original date, until a quorum shall attend. Any business may be
transacted at the adjourned meeting that could have been transacted at the
meeting originally called.
Section 8. Voting. When a quorum is present at any meeting,
the affirmative vote of a majority of the votes cast shall decide any question
brought before such meeting (except with respect to election of directors which
shall be by plurality of votes cast), unless the question is one upon which by
express provision of the Investment Company Act of 1940, as from time to time in
effect, or other statutes or rules or orders of the Securities and Exchange
Commission or any successor thereto or of the Charter or Maryland law, a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 9. Proxies. Each stockholder shall at every meeting of
stockholders be entitled to one vote in person or by proxy for each share of the
stock having voting power held by such stockholder, but no proxy shall be voted
after eleven months from its date, unless otherwise provided in the proxy.
Section 10. Record Date. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, to express consent to corporate action
in writing without a meeting, or to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date
which shall be not more than ninety days and, in the case of a meeting of
stockholders, not less than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, the Board of Directors may provide that the stock transfer
books shall be closed for a stated period, but not to exceed, in any case,
twenty days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) the record date for
the determination of stockholders entitled to notice of, or to vote at, a
meeting of stockholders shall be at the close of business on the day on which
notice of the meeting of stockholders is mailed or the day thirty days before
the meeting, whichever is the closer date to the meeting; and (2) the record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on the
day on which the resolution of the
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Board of Directors, declaring the dividend or allotment of rights, is adopted,
provided that the payment or allotment date shall not be more than sixty days
after the date of the adoption of such resolution.
Section 11. Inspectors of Election. The directors, in advance
of any meeting, may, but need not, appoint one or more inspectors to act at the
meeting or any adjournment thereof. If an inspector or inspectors are not
appointed, the person presiding at the meeting may, but need not, appoint one or
more inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his or her duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his or her
ability. The inspectors, if any, shall determine the number of shares
outstanding and the voting power of each, the shares represented at the meeting,
the existence of a quorum, and the validity and effect of proxies, and shall
receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote, count and tabulate all
votes, ballots or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting or any stockholder, the inspector or
inspectors, if any, shall make a report in writing of any challenge, question or
matter determined by him or her or them and execute a certificate of any fact
found by him or her or them.
Section 12. Informal Action by Stockholders. Except to the
extent prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, any action required or permitted to be taken at any meeting
of stockholders may be taken without a meeting if a consent in writing, setting
forth such action, is signed by all the stockholders entitled to vote on the
subject matter thereof and any other stockholders entitled to notice of a
meeting of stockholders (but not to vote thereat) have waived in writing any
rights which they may have to dissent from such action, and such consent and
waiver are filed with the records of the Corporation.
ARTICLE III
Board of Directors
Section 1. Number of Directors. The number of directors shall
be fixed at no less than two, or such greater
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number as required by Maryland law, nor more than twenty. Within the limits
specified above, the number of directors shall be fixed from time to time by the
Board of Directors, but the tenure of office of a director in office at the time
of any decrease in the number of directors shall not be affected as a result
thereof. The directors shall be elected to hold office at the annual meeting of
stockholders, except as provided in Section 2 of this Article, and each director
shall hold office until the next annual meeting of stockholders or until his
successor is elected and qualified. Any director may resign at any time upon
written notice to the Corporation. Any director may be removed, either with or
without cause, at any meeting of stockholders duly called and at which a quorum
is present by the affirmative vote of the majority of the votes entitled to be
cast thereon, and the vacancy in the Board of Directors caused by such removal
may be filled by the stockholders at the time of such removal.
Directors need not be stockholders.
Section 2. Vacancies and Newly Created Directorships. Any
vacancy occurring in the Board of Directors for any cause, including an increase
in the number of directors, may be filled by the stockholders or by a majority
of the remaining members of the Board of Directors even if such majority is less
than a quorum. So long as the Corporation is a registered investment company
under the Investment Company Act of 1940, vacancies in the Board of Directors
may be filled by a majority of the remaining members of the Board of Directors
only if, immediately after filing any such vacancy, at least two-thirds of the
directors then holding office shall have been elected to such office at a
meeting of stockholders. A director elected by the Board of Directors to fill a
vacancy shall be elected to hold office until the next annual meeting of
stockholders or until his successor is elected and qualifies.
Section 3. Powers. The business and affairs of the Corporation
shall be managed under the direction of the Board of Directors which shall
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
By-Laws conferred upon or reserved to the stockholders.
Section 4. Meetings. The Board of Directors of the Corporation
or any committee thereof may hold meetings, both regular and special, either
within or without the State of Maryland. Regular meetings of the Board of
Directors may be held without notice at such time and at such place as shall
from time to time be determined by the Board of Directors. Special meetings of
the Board of Directors may be called by the chairman, the president or by two or
more directors. Notice of special meetings of the Board of Directors shall be
given by the secretary to each director at least three days before the meeting
if by mail or at least 24 hours before the meeting if given in
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person or by telephone, facsimile or by telegraph. The notice need not specify
the business to be transacted.
Section 5. Quorum and Voting. At meetings of the Board of
Directors, two of the directors in office at the time, but in no event less than
one-third of the entire Board of Directors, shall constitute a quorum for the
transaction of business. When required pursuant to Section 15(c) under the
Investment Company Act of 1940 or Rule 12b-1 thereunder a quorum shall also
require the presence in person of a majority of directors who are not parties to
a contract or agreement to be voted upon or interested persons of any such
party. The action of a majority of the directors present at a meeting at which a
quorum is present shall be the action of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors, the directors
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present.
Section 6. Committees. The Board of Directors may, by
resolution passed by a majority of the entire Board of Directors, appoint from
among its members an executive committee and other committees of the Board of
Directors, each committee to be composed of two or more of the directors of the
Corporation. The Board of Directors may, to the extent provided in the
resolution, delegate to such committees, in the intervals between meetings of
the Board of Directors, any or all of the powers of the Board of Directors in
the management of the business and affairs of the Corporation, to the extent
permitted by law. Such committee or committees shall have the name or names as
may be determined from time to time by resolution adopted by the Board of
Directors. Unless the Board of Directors designates one or more directors as
alternate members of any committee, who may replace an absent or disqualified
member at any meeting of the committee, the members of any such committee
present at any meeting and not disqualified from voting may, whether or not they
constitute a quorum, unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any absent or disqualified
member of such committee. At meetings of any such committee, a majority of the
members or alternate members of such committee shall constitute a quorum for the
transaction of business and the act of a majority of the members or alternate
members present at any meeting at which a quorum is present shall be the act of
the committee.
Section 7. Minutes of Committee Meetings. The committees shall
keep regular minutes of their proceedings.
Section 8. Informal Action by Board of Directors and
Committees. Any action, except approving the Rule 12b-1 Plan and the Advisory
Agreement, required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may
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be taken without a meeting if a written consent thereto is signed by all members
of the Board of Directors or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the Board of
Directors or committee.
Section 9. Meetings by Conference Telephone. Except to the
extent prohibited by the Investment Company Act of 1940, as from time to time in
effect, or rules or orders of the Securities and Exchange Commission or any
successor thereto, the members of the Board of Directors or any committee
thereof may participate in a meeting of the Board of Directors or committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time and such participation shall constitute presence in person at such meeting.
Section 10. Fees and Expenses. The directors may be paid their
expenses of attendance at each meeting of the Board of Directors and may be paid
a fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
Notices
Section 1. General. Notices to directors and stockholders
mailed to them at their post office addresses appearing on the books of the
Corporation shall be deemed to be given at the time when deposited in the United
States mail.
Section 2. Waiver of Notice. Whenever any notice is required
to be given under the provisions of the statutes, of the Articles of
Incorporation or of these By-Laws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed the equivalent of notice. Attendance of a person
at a meeting shall constitute a waiver of notice of such meeting except when the
person attends a meeting for the express purpose of objecting, at the beginning
of the meeting, to the transaction of any business because the meeting is not
lawfully called or convened.
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ARTICLE V
Officers
Section 1. General. The officers of the Corporation shall be
chosen by the Board of Directors at its first meeting of each fiscal year and
shall be a Chairman of the Board of Directors, a president, a secretary and a
treasurer. The Board of Directors may also choose such vice presidents and
additional officers or assistant officers as it may deem advisable. Any number
of offices, except the offices of president and vice president, may be held by
the same person. No officer shall execute, acknowledge or verify any instrument
in more than one capacity if such instrument is required by law to be executed,
acknowledged or verified by two or more officers.
Section 2. Other Officers and Agents. The Board of Directors
may appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 3. Tenure of Officers. The officers of the Corporation
shall hold office at the pleasure of the Board of Directors. Each officer shall
hold his or her office until his or her successor is elected and qualifies or
until his or her earlier resignation or removal. Any officer may resign at any
time upon written notice to the Corporation. Any officer elected or appointed by
the Board of Directors may be removed at any time by the Board of Directors
when, in its judgment, the best interests of the Corporation will be served
thereby. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors.
Section 4. Chairman of the Board of Directors. The Chairman of
the Board of Directors shall be the chief executive officer of the Corporation,
shall preside at all meetings of the stockholders and of the Board of Directors,
shall have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of Directors are carried
into effect. The chairman shall execute on behalf of the Corporation, and may
affix the seal or cause the seal to be affixed to, all instruments requiring
such execution except to the extent that signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
Section 5. President. The president shall, in the absence of
the chairman of the Board of Directors, preside at all meetings of the
stockholders or of the Board of Directors. The president shall have general and
active management of the business of the Corporation and shall see that all
orders and
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resolutions of the Board of Directors are carried into effect. The president
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the Corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the Board of Directors to some other officer or
agent of the Corporation.
Section 6. Vice Presidents. The vice presidents shall act
under the direction of the president and in the absence or disability of the
president shall perform the duties and exercise the power of the president. They
shall perform such other duties and have such other powers as the president or
the Board of Directors may from time to time prescribe. The Board of Directors
may designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the duties and
powers of the president shall descend to the vice presidents in the specified
order of seniority.
Section 7. Secretary. The secretary shall act under the
direction of the president. Subject to the direction of the president, the
secretary shall attend all meetings of the Board of Directors and all meetings
of stockholders and record the proceedings in a book to be kept for that purpose
and shall perform like duties for the committees designated by the Board of
Directors when required. The secretary shall give, or cause to be given, notice
of all meetings of stockholders and special meetings of the Board of Directors,
and shall perform such other duties as may be prescribed by the president or the
Board of Directors. The secretary shall keep in safe custody the seal of the
Corporation and shall affix the seal or cause it to be affixed to any instrument
requiring it.
Section 8. Assistant Secretaries. The assistant secretaries in
the order of their seniority, unless otherwise determined by the president or
the Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
Section 9. Treasurer. The treasurer shall act under the
direction of the president. Subject to the direction of the president he shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The treasurer shall disburse the funds of the
Corporation as may be ordered by the president or the Board of Directors, taking
proper vouchers for
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such disbursements, and shall render to the president and the Board of
Directors, at its regular meetings, or when the Board of Directors so requires,
an account of all his or her transactions as treasurer and of the financial
condition of the Corporation.
Section 10. Assistant Treasurers. The assistant treasurers in
the order of their seniority, unless otherwise determined by the president or
the Board of Directors, shall, in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer. They shall perform
such other duties and have such other powers as the president or the Board of
Directors may from time to time prescribe.
ARTICLE VI
Certificates of Stock
Section 1. General. Every holder of stock of the Corporation
who has made full payment of the consideration for such stock shall be entitled
upon request to have a certificate, signed by, or in the name of the Corporation
by, the Chairman, the president or any vice president and countersigned by the
treasurer or an assistant treasurer or the secretary or an assistant secretary
of the Corporation, certifying the number and class of whole shares of stock
owned by such holder in the Corporation.
Section 2. Signatures on Certificates. Any of or all the
signatures on a certificate may be a facsimile. In case any officer who has
signed or whose facsimile signature has been placed upon a certificate shall
cease to be such officer before such certificate is issued, it may be issued
with the same effect as if he or she were such officer at the date of issue. The
seal of the Corporation or a facsimile thereof may, but need not, be affixed to
certificates of stock.
Section 3. Lost, Stolen or Destroyed Certificates. The Board
of Directors may direct a new certificate or certificates to be issued in place
of any certificate or certificates theretofore issued by the Corporation alleged
to have been lost, stolen or destroyed, upon the making of any affidavit of that
fact by the person claiming the certificate or certificates to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his or her legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made
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against the Corporation with respect to the certificate or certificates alleged
to have been lost, stolen or destroyed.
Section 4. Transfer of Shares. Upon request by the registered
owner of shares, and if a certificate has been issued to represent such shares
upon surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock duly endorsed or accompanied by proper evidence
of succession, assignment or authority to transfer, subject to the Corporation's
rights to redeem or purchase such shares, it shall be the duty of the
Corporation, if it is satisfied that all provisions of the Articles of
Incorporation, of the By-Laws and of the law regarding the transfer of shares
have been duly complied with, to record the transactions upon its books, issue a
new certificate to the person entitled thereto upon request for such
certificate, and cancel the old certificate, if any.
Section 5. Registered Owners. The Corporation shall be
entitled to recognize the person registered on its books as the owner of shares
to be the exclusive owner for all purposes including, redemption, voting and
dividends, and the Corporation shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
ARTICLE VII
Miscellaneous
Section 1. Reserves. There may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for repairing or maintaining any
property of the Corporation, or for the purchase of additional property, or for
such other purpose as the Board of Directors shall think conducive to the
interest of the Corporation, and the Board of Directors may modify or abolish
any such reserve.
Section 2. Dividends. Dividends upon the stock of the
Corporation may, subject to the provisions of the Articles of Incorporation and
of the provisions of applicable law, be declared by the Board of Directors at
any time. Dividends may be paid in cash, in property or in shares of the
Corporation's stock, subject to the provisions of the Articles of Incorporation
and of applicable law.
Section 3. Capital Gains Distributions. The amount and number
of capital gains distributions paid to the stockholders during each fiscal year
shall be determined by the
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Board of Directors. Each such payment shall be accompanied by a statement as to
the source of such payment, to the extent required by law.
Section 4. Checks. All checks or demands for money and notes
of the Corporation shall be signed by such officer or officers or such other
person or persons as the Board of Directors may from time to time designate.
Section 5. Fiscal Year. The fiscal year of the Corporation
shall be fixed by resolution of the Board of Directors.
Section 6. Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words,
"Corporate Seal, Maryland". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or in another manner reproduced.
Section 7. Filing of By-Laws. A certified copy of the By-Laws,
including all amendments, shall be kept at the principal office of the
Corporation in the State of Maryland.
Section 8. Annual Report. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each annual fiscal period of the Corporation and at such other
times, if any, as may be directed by the Board of Directors of the Corporation.
Within one hundred and twenty days of the close of each annual fiscal period a
report based upon such examination at the close of that fiscal period shall be
mailed to each stockholder of the Corporation of record at the close of such
annual fiscal period, unless the Board of Directors shall set another record
date, at his address as the same appears on the books of the Corporation. Each
such report shall contain such information as is required to be set forth
therein by the Investment Company Act of 1940 and the rules and regulations
promulgated by the Securities and Exchange Commission thereunder. Such report
shall also be submitted at the annual meeting of the stockholders and filed
within twenty days thereafter at the principal office of the Corporation in the
State of Maryland but, in any event, within one hundred and twenty days after
the end of the fiscal year.
Section 9. Stock Ledger. The Corporation shall maintain at its
principal office outside of the State of Maryland an original or duplicate stock
ledger containing the names and addresses of all stockholders and the number of
shares of stock held by each stockholder. Such stock ledger may be in written
form or in any other form capable of being converted into written form within a
reasonable time for visual inspection.
-12-
<PAGE>
Section 10. Ratification of Accountants by Stockholders. At
every annual meeting of the stockholders of the Corporation otherwise called
there shall be submitted for ratification or rejection the name of the firm of
independent public accountants which has been selected for the current fiscal
year in which such annual meeting is held by a majority of those members of the
Board of Directors who are not investment advisers of, or interested person (as
defined in the Investment Company Act of 1940) of an investment adviser of, or
officers or employees of, the Corporation.
Section 11. Investment Advisers. The Corporation may enter
into one or more management or advisory, underwriting, distribution or
administration contracts with any person, firm, partnership, association or
corporation but such contract or contracts shall continue in effect only so long
as such continuance is specifically approved annually by a majority of the Board
of Directors or by vote of the holders of a majority of the voting securities
(as defined in the Investment Company Act of 1940)of the Corporation, and in
either case by vote of a majority of the directors who are not parties to such
contracts or interested persons (as defined in the Investment Company Act of
1940) of any such party cast in person at a meeting called for the purpose of
voting on such approval.
ARTICLE VIII
Indemnification and Insurance
Section 1. Indemnification of Directors and Officers. Any
person who was or is a party or is threatened to be made a party in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is a current or former director or officer of the Corporation, or is or
was serving while a director or officer of the Corporation at the request of the
Corporation as a director, officer, partner, trustee, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust, enterprise
or employee benefit plan, shall be indemnified by the Corporation against
judgments, penalties, fines, excise taxes, settlements and reasonable expenses
(including attorneys' fees) actually incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under the
Maryland General Corporation Law, the Securities Act of 1933, as amended (the
'Securities Act"), and the Investment Company Act of 1940, as such statutes are
now or hereafter in force, except that such indemnity shall not protect any such
person against any liability to the Corporation or any stockholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith,
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<PAGE>
gross negligence or reckless disregard of the duties involved in the conduct of
his office ("disabling conduct").
Section 2. Advances. Any current or former director or officer
of the Corporation claiming indemnification within the scope of this Article
VIII shall be entitled to advances from the Corporation for payment of the
reasonable expenses incurred by him in connection with proceedings to which he
is a party in the manner and to the full extent permissible under the Maryland
General Corporation Law, the Securities Act and the Investment Company Act of
1940, as such statutes are now or hereafter in force; provided, however, that
the person seeking indemnification shall provide to the Corporation a written
affirmation of his good faith belief that the standard of conduct necessary for
indemnification by the Corporation has been met and a written undertaking to
repay any such advance unless it is ultimately determined that he is entitled to
indemnification, and provided further that at least one of the following
additional conditions is met: (a) the person seeking indemnification shall
provide a security in form and amount acceptable to the Corporation for his
undertaking; (b) the Corporation is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of directors of the Corporation who
are neither "interested persons" as defined in Section 2(a)(19) of the
Investment Company Act of 1940, nor parties to the proceeding ("disinterested
non- party directors"), or independent legal counsel, in a written opinion,
shall determine, based on a review of facts readily available to the Corporation
at the time the advance is proposed to be made, that there is reason to believe
that the person seeking indemnification will ultimately be found to be entitled
to indemnification.
Section 3. Procedure. At the request of any current or former
director or officer, or any employee or agent whom the Corporation proposes to
indemnify, the Board of Directors shall determine, or cause to be determined, in
a manner consistent with the Maryland General Corporation Law, the Securities
Act and the Investment Company Act of 1940, as such statutes are now or
hereafter in force, whether the standards required by this Article VIII have
been met; provided, however, that indemnification shall be made only following:
(a) a final decision on the merits by a court or other body before whom the
proceeding was brought that the person to be indemnified was not liable by
reason of disabling conduct; or (b) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the person to
be indemnified was not liable by reason of disabling conduct by, (I) the vote of
a majority of a quorum of disinterested non-party directors, or (ii) an
independent legal counsel in a written opinion.
Section 4. Indemnification of Employees and Agents.
Employees and agents who are not officers or directors of the
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<PAGE>
Corporation may be indemnified, and reasonable expenses may be advanced to such
employees or agents, in accordance with the procedures set forth in this Article
VIII to the extent permissible under the Investment Company Act of 1940, the
Securities Act and Maryland General Corporation Law, as such statutes are now or
hereafter in force, to the extent, consistent with the foregoing, as may be
provided by action of the Board of Directors or by contract.
Section 5. Other Rights. The indemnification provided by this
Article VIII shall not be deemed exclusive of any other rights, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of stockholders or
disinterested directors or otherwise, both as to action by a director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
Section 6. Insurance. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or who, while a
director, officer, employee or agent of the Corporation, is or was serving at
the request of the Corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint venture,
trust, enterprise or employee benefit plan, against any liability asserted
against and incurred by him in any such capacity, or arising out of his status
as such, provided that no insurance may be obtained by the Corporation for
liabilities against which it would not have the power to indemnify him under
this Article VIII or applicable law.
ARTICLE IX
Amendments
The Board of Directors shall have the power, by a majority
vote of the entire Board of Directors at any meeting thereof, to make, alter and
repeal By-Laws of the Corporation.
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<PAGE>
Exhibit 9.1
ADMINISTRATIVE SERVICE AGREEMENT
between
The Millennium RHIM Funds, Inc.
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
<PAGE>
- -------------------------------------------------------------------------------
INDEX
- -------------------------------------------------------------------------------
1. DUTIES OF THE ADMINISTRATOR........................................... 3
2. COMPENSATION OF THE ADMINISTRATOR..................................... 4
3. RESPONSIBILITY AND INDEMNIFICATION.................................... 4
4. REPORTS................................................................ 5
5. ACTIVITIES OF THE ADMINISTRATOR........................................ 5
6. RECORDS................................................................ 5
7. CONFIDENTIALITY........................................................ 6
8. DURATION AND TERMINATION OF THE AGREEMENT.............................. 6
9. ASSIGNMENT............................................................. 6
10. NEW YORK LAWS TO APPLY................................................. 6
11. AMENDMENTS TO THIS AGREEMENT........................................... 6
12. MERGER OF AGREEMENT.................................................... 6
13. NOTICES................................................................ 6
SCHEDULE A................................................................. 8
(A) ADMINISTRATIVE SERVICE FEE:............................................ 8
FEE INCREASES.......................................................... 8
(B) EXPENSES............................................................... 8
(C) STATE REGISTRATION (BLUE SKY) SURCHARGE:............................... 8
(D) SPECIAL REPORTS........................................................ 9
(E) SERVICE DEPOSIT........................................................ 9
SCHEDULE B................................................................. 10
2
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the ______ day of _________ 1998, by and between The Millennium
RHIM Funds, Inc., a Maryland Corporation, having its principal office and place
of business at 303 Twin Dolphin Drive, Suite 530, Redwood Shores, CA 94065 (the
"Fund"), and American Data Services, Inc., a New York corporation having its
principal office and place of business at the Hauppauge Corporate Center, 150
Motor Parkway, Suite 109, Hauppauge, New York 11788 (the "Administrator").
BACKGROUND
WHEREAS, the Fund is a diversified open-end management investment
company registered with the United States Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator is a corporation experienced in
providing administrative services to mutual funds and possesses facilities
sufficient to provide such services; and
WHEREAS, the Fund desires to avail itself of the experience,
assistance and facilities of the Administrator and to have the Administrator
perform for the Fund certain services appropriate to the operations of the Fund
and the Administrator is willing to furnish such services in accordance with the
terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual
covenants hereinafter contained, the Fund and the Administrator hereby agree to
the following:
1. DUTIES OF THE ADMINISTRATOR.
The Administrator will provide the Fund with the necessary office
space, communication facilities and personnel to perform the following services
for the Fund:
(a) Monitor all regulatory (1940 Act and IRS) and
prospectus restrictions for compliance;
(b) Prepare and coordinate the printing of semi-annual and
annual financial statements;
(c) Prepare selected management reports for performance and
compliance analyses as agreed upon by the Fund and
Administrator from time to time;
(d) Prepare selected financial data required for directors'
meetings as agreed upon by the Fund and the Administrator
from time to time and coordinate directors meeting agendas
with outside legal counsel to the Fund;
(e) Determine income and capital gains available for
distribution and calculate distributions required to meet
regulatory, income, and excise tax requirements, to be
reviewed by the Fund's independent public accountants;
(f) Prepare the Fund's federal, state, and local tax returns
to be reviewed by the Fund's independent public
accountants;
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<PAGE>
(g) Prepare and maintain the Fund's operating expense budget
to determine proper expense accruals to be charged to the
Fund in order to calculate it's daily net asset value;
(h) 1940 ACT filings -
In conjunction with the Fund's outside legal counsel
the Administrator will:
* Prepare the Fund's Form N-SAR reports;
* Update all financial sections of the Fund's Statement
of Additional Information and coordinate its
completion;
* Update all financial sections of the Fund's prospectus
and coordinate its completion;
* Update all financial sections of the Fund's proxy
statement and coordinate its completion;
* Prepare an annual update to Fund's 24f-2 filing (if
applicable);
(i) Monitor services provided by the Fund's custodian bank as
well as any other service providers to the Fund;
(j) Provide appropriate financial schedules (as requested by
the Fund's independent public accountants or SEC
examiners), coordinate the Fund's annual or SEC audit,
and provide office facilities as may be required;
(k) Attend management and board of directors meetings as
requested;
(l) The preparation and filing (filing fee to be paid by the
Fund) of applications and reports as necessary to
register or maintain the Funds registration under the
securities or "Blue Sky" laws of the various states
selected by the Fund or its Distributor.
The Administrator shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by the Administrator
as set forth herein for each portfolio listed in Schedule B, the Administrator
shall be entitled to receive compensation and reimbursement for all reasonable
out-of-pocket expenses. The Fund agrees to pay the Administrator the fees and
reimbursement of out-of-pocket expenses as set forth in the fee schedule
attached hereto as Schedule A.
3. RESPONSIBILITY AND INDEMNIFICATION.
(a) The Administrator shall be held to the exercise of reasonable care
in carrying out the provisions of the Agreement, but shall be without liability
to the Fund for any action taken or omitted by it in good faith without
negligence, bad faith, willful misconduct or reckless disregard of its duties
hereunder. It shall be entitled to rely upon and may act upon the accounting
records and reports generated by the Fund, advice of the Fund, or of counsel for
the Fund and upon statements of the Fund's independent accountants, and shall be
without liability for any action reasonably taken or omitted pursuant to such
records and reports or advice, provided that such action is not, to the
knowledge of the Administrator, in violation of applicable federal or state laws
or regulations, and provided further that such action is taken without
negligence, bad faith, willful misconduct or reckless disregard of its duties.
4
<PAGE>
(b) The Administrator shall not be liable to the Fund for any error of
judgment or mistake of law or for any loss arising out of any act or omission by
the Administrator in the performance of its duties hereunder except as
hereinafter set forth. Nothing herein contained shall be construed to protect
the Administrator against any liability to the Fund or its security holders to
which the Administrator shall otherwise be subject by reason of willful
misfeasance, bad faith, negligence in the performance of its duties on behalf of
the Fund, reckless disregard of the Administrator's obligations and duties under
this Agreement or the willful violation of any applicable law.
(c) Except as may otherwise be provided by applicable law, neither the
Administrator nor its stockholders, officers, directors, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons harmless
from and against, any liability for and any damages, expenses or losses incurred
by reason of the inaccuracy of information furnished to the Administrator by the
Fund or its authorized agents or in connection with any error in judgment or
mistake of law or any act or omission in the course of, connected with or
arising out of any services to be rendered hereunder, except by reason of
willful misfeasance, bad faith or negligence in the performance of its duties,
by reason of reckless disregard of the Administrator's obligations and duties
under this Agreement or the willful violation of any applicable law.
4. REPORTS.
(a) The Fund shall provide to the Administrator on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to the Administrator during the preceding quarter was
true, complete and correct to the best of its knowledge. The Administrator shall
not be responsible for the accuracy of any information furnished to it by the
Fund, and the Fund shall hold the Administrator harmless in regard to any
liability incurred by reason of the inaccuracy of such information.
(b) The Administrator shall provide to the Board of Directors of the
Fund, on a quarterly basis, a report, in such a form as the Administrator and
the Fund shall from time to time agree, representing that, to its knowledge, the
Fund was in compliance with all requirements of applicable federal and state
law, including without limitation, the rules and regulations of the Securities
and Exchange Commission and the Internal Revenue Service, or specifying any
instances in which the Fund was not so in compliance. Whenever, in the course of
performing its duties under this Agreement, the Administrator determines, on the
basis of information supplied to the Administrator by the Fund, that a violation
of applicable law has occurred, or that, to its knowledge, a possible violation
of applicable law may have occurred or, with the passage of time, could occur,
the Administrator shall promptly notify the Fund and its counsel of such
violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
6. RECORDS.
The records maintained by the Administrator shall be the property of
the Fund, and shall be surrendered to the Fund, at the expense of the Fund,
promptly upon request by the Fund, provided that all service fees and expenses
charged by the Administrator in the performance of its duties hereunder have
been fully paid to the satisfaction of the Administrator, in the form in which
such accounts and records have been maintained or preserved. The Administrator
agrees to maintain a back-up set of accounts and records of the Fund (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. The Administrator
shall assist the Fund's independent auditors, or, upon approval of the Fund, any
regulatory body, in any requested review of the
5
<PAGE>
Fund's accounts and records. The Administrator shall preserve the accounts and
records as they are required to be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its
officers and employees, treat all transactions contemplated by this Agreement,
and all other information germane thereto, as confidential and such information
shall not be disclosed to any person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, upon
ninety (90) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, the Administrator reserves the right to charge for any
other reasonable expenses associated with such termination.
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of the Administrator, or by the Administrator without the prior written consent
of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when delivered in person or by certified
mail, return receipt requested, and shall be given to the following addresses
(or such other addresses as to which notice is given):
6
<PAGE>
To the Fund: To the Administrator:
Robert Dowlett Michael Miola
President President
The Millennium RHIM Funds, Inc. American Data Services, Inc.
303 Twin Dolphin Drive, Suite 530 150 Motor Parkway, Suite 109
Redwood Shores, CA 94065 Hauppauge, NY 11788
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE MILLENNIUM RHIM FUNDS, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Robert Dowlett, President Michael Miola, President
7
<PAGE>
SCHEDULE A
(a) ADMINISTRATIVE SERVICE FEE:
For the services rendered by the Administrator in its capacity as
administrator, as specified in Paragraph 1. DUTIES OF THE ADMINISTRATOR, the
Fund shall pay the Administrator within ten (10) days after receipt of an
invoice from the Administrator at the beginning of each month, a fee equal to
the greater of:
NOTE: The following fees are per portfolio serviced.
1/12th of 0.35% (35 basis points) of average net assets of
portfolio for month.
FEE INCREASES
On each annual anniversary date of this Agreement, the fees enumerated
above will be increased by the change in the Consumer Price Index for the
Northeast region (CPI) for the twelve-month period ending with the month
preceding such annual anniversary date.
(b) EXPENSES.
The Fund shall reimburse the Administrator for any out-of-pocket
expenses, exclusive of salaries, advanced by the Administrator in connection
with but not limited to the printing or filing of documents for the Fund,
travel, telephone, quotation services, facsimile transmissions, stationery and
supplies, record storage, postage, telex, and courier charges, incurred in
connection with the performance of its duties hereunder. The Administrator shall
provide the Fund with a monthly invoice of such expenses and the Fund shall
reimburse the Administrator within fifteen (15) days after receipt thereof.
(c) STATE REGISTRATION (BLUE SKY) SURCHARGE:
The fees enumerated in paragraph (a) above include the initial state
registration, renewal and maintenance of registrations (as detailed in Paragraph
1(l) DUTIES OF THE ADMINISTRATOR) for three (3) states. Each additional state
registration requested will be subject to the following fees:
Initial registration ............... $295.00
Registration renewal ............... $150.00
Sales reports (if required) ........ $ 25.00
8
<PAGE>
(d) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund administrative activities as
specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $ 45.00/hr.
(e) SERVICE DEPOSIT.
The Fund will remit to the Administrator upon execution of this
Agreement a security deposit equal to $3,000. The Fund will have the option to
have the security deposit applied to the last month's service fee, or applied to
any new contract between the Fund and the Administrator.
However, if the Fund elects or is forced to terminate this Agreement for any
reason what-so-ever (including, but not limited to, the voluntary or involuntary
termination of the Fund, liquidation of the Fund's assets, the sale or merger of
the Fund or it's assets to any successor entity) prior to the termination date
of this Agreement as specified in Paragraph 8 of this Agreement, the Fund will
forfeit the Security Deposit paid to the Administrator upon execution of this
Agreement
9
<PAGE>
SCHEDULE B
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
THE MILLENNIUM GROWTH FUND
THE MILLENNIUM GROWTH & INCOME FUND
10
<PAGE>
Exhibit 9.2
TRANSFER AGENCY AND SERVICE AGREEMENT
between
The Millennium RHIM Funds, Inc.
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
<PAGE>
- --------------------------------------------------------------------------------
INDEX
- --------------------------------------------------------------------------------
1. TERMS OF APPOINTMENT; DUTIES OF ADS........................................3
2. FEES AND EXPENSES..........................................................4
3. REPRESENTATIONS AND WARRANTIES OF ADS......................................4
4. REPRESENTATIONS AND WARRANTIES OF THE FUND.................................5
5. INDEMNIFICATION............................................................5
6. COVENANTS OF THE FUND AND ADS..............................................6
7. TERMINATION OF AGREEMENT...................................................7
8. ASSIGNMENT.................................................................7
9. AMENDMENT..................................................................7
10. NEW YORK LAWS TO APPLY.....................................................7
11. MERGER OF AGREEMENT........................................................8
12. NOTICES....................................................................8
FEE SCHEDULE...................................................................9
(A) ACCOUNT MAINTENANCE CHARGE:................................................9
(B) TRANSACTION FEES:..........................................................9
(C) 24 HOUR AUTOMATED VOICE RESPONSE:..........................................9
(D) FUND/SERV..................................................................9
FEE INCREASES.............................................................10
(E) IRA PLAN FEES:............................................................10
(F) EXPENSES:.................................................................10
(G) SPECIAL REPORTS:..........................................................10
(H) SERVICE DEPOSIT:..........................................................11
SCHEDULE A....................................................................12
2
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the ______ day of _________ 1998, by and between The Millennium
RHIM Funds, Inc., a Maryland Corporation, having its principal office and place
of business at 303 Twin Dolphin Drive, Suite 530, Redwood Shores, CA 94065 (the
"Fund"), and American Data Services, Inc., a New York corporation having its
principal office and place of business at the Hauppauge Corporate Center, 150
Motor Parkway, Suite 109, Hauppauge, New York 11788 ("ADS")
WHEREAS, the Fund desires to appoint ADS as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and ADS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement,
the Fund hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of its common stock,
("Shares"), dividend disbursing agent and agent in connection with any
accumulation, open-account or similar plans provided to the shareholders of the
fund ("Shareholders") set out in the currently effective prospectus and
statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund and ADS, ADS shall:
I. Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefore to the Custodian
of the Fund authorized by the Board of Directors of the Fund (the
"Custodian");
II. Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
III. Receive for acceptance redemption requests and redemption directions and
deliver the appropriate documentation therefore to the Custodian;
IV. At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid
over in the appropriate manner such monies as instructed by the redeeming
Shareholders;
V. Effect transfers of Shares by the registered owners thereof upon receipt
of appropriate instructions;
VI. Prepare and transmit payments for dividends and distributions declared by
the Fund;
VII. Maintain records of account for and advise the Fund and its Shareholders
as to the foregoing; and
VIII. Record the issuance of shares of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of shares of the Fund which
are authorized, based upon data provided to it by the
3
<PAGE>
Fund, and issued and outstanding. ADS shall also provide the Fund on a
regular basis with the total number of shares which are authorized and
issued and outstanding and shall have no obligation, when recording the
issuance of shares, to monitor the issuance of such shares or to take
cognizance of any laws relating to the issue or sale of such shares, which
functions shall be the sole responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), ADS shall:
I. Perform all of the customary services of a transfer agent, dividend
disbursing agent, including but not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing
proxies, receiving and tabulating proxies, mailing Shareholder reports and
prospectuses to current Shareholders, withholding taxes on U.S. resident
and non-resident alien accounts, preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required with respect to
dividends and distributions by federal authorities for all Shareholders,
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases redemption's of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing
activity statements for Shareholders, and providing Shareholder account
information and (ii) provide a system and reports which will enable the
Fund to monitor the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to ADS in writing those
transactions and shares to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of such
transactions for each state on the system prior to activation and
thereafter monitor the daily activity for each State as provided
by ADS. The responsibility of ADS for the Fund's blue sky State
registration status is solely limited to the initial establishment
of transactions subject to blue sky compliance by the Fund and the
reporting of such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Fund agrees
to pay ADS an annual maintenance fee for each Shareholder account and
transaction fees for each portfolio or class of shares serviced under this
Agreement (See Schedule A) as set out in the fee schedule attached hereto. Such
fees and out-of pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Fund and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse ADS for out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Fund,
will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to ADS by the Fund at least seven (7)
days prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Fund that:
4
<PAGE>
3.01 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.02 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.03 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.04 ADS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to ADS that;
4.01 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws / Declaration of Trust to enter into and perform this
Agreement.
4.02 All proceedings required by said Articles of Incorporation and
By-Laws / Declaration of Trust have been taken to authorize it to enter into and
perform this Agreement.
4.03 It is an open-end management investment company registered under
the Investment Company Act of 1940.
4.04 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Fund shall indemnify and
hold ADS harmless from and against, any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable
to:
(a) All actions of ADS or its agents or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack good faith, negligence
or willful misconduct or which arise out of the breach of any
representation or warranty of the Fund hereunder.
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its
agents or subcontractors and furnished to it by or on behalf of the
Fund, and (ii) have been prepared and/or maintained by the Fund or any
other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by ADS or its agents or
subcontractors of any instructions or requests of the Fund.
5
<PAGE>
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
5.02 ADS shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by ADS as a result of ADS's lack of good faith, negligence or
willful misconduct.
5.03 At any time ADS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement or for any act
or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6. COVENANTS OF THE FUND AND ADS
6.01 The Fund shall promptly furnish to ADS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6
<PAGE>
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund on and
in accordance with its request.
6.04 ADS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective as of the date hereof and
shall remain in force for a period of three (3) years, provided however, that
both parties to this Agreement have the option to terminate the Agreement upon
ninety (90) days prior written notice.
7.02 Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder may
be assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors / Trustees of the Fund.
7
<PAGE>
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of New York as at the time
in effect and the applicable provisions of the 1940 Act. To the extent that the
applicable law of the State of New York, or any of the provisions herein,
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To ADS:
To the Fund: To ADS:
Robert Dowlett Michael Miola
President President
The Millennium RHIM Funds, Inc. American Data Services, Inc.
303 Twin Dolphin Drive, Suite 530 150 Motor Parkway, Suite 109
Redwood Shores, CA 94065 Hauppauge, NY 11788
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE MILLENNIUM RHIM FUNDS, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Robert Dowlett, President Michael Miola, President
8
<PAGE>
FEE SCHEDULE
For the services rendered by ADS in its capacity as transfer agent, the
Fund shall pay ADS, within ten (10) days after receipt of an invoice from ADS at
the beginning of each month, a fee, calculated as follows:
(a) ACCOUNT MAINTENANCE CHARGE:
Transfer agent account maintenance charge is included in the Administration
fee pursuant to the Administration Agreement executed
in conjunction with this Agreement
(b) TRANSACTION FEES:
<TABLE>
<CAPTION>
<S> <C>
Trade Entry (purchase/liquidation) and maintenance transactions ....................................... $ 1.50 each
New account set-up .................................................................................... $ 3.00 each
Customer service calls ................................................................................ $ 1.25 each
Correspondence/ information requests .................................................................. $ 1.75 each (2)
Check preparation ..................................................................................... $ .50 each
Liquidation's paid by wire transfer ................................................................... $ 3.00 each
ACH charge ............................................................................................ $ .45 each
SWP ................................................................................................... $ 1.00 each
</TABLE>
(c) 24 HOUR AUTOMATED VOICE RESPONSE:
Initial set-up (one-time) charge per portfolio - $750.00
Monthly maintenance charge per portfolio - $50.00
All calls processed through automated voice response will be billed as a
customer service call listed above.
(d) Fund/SERV
All portfolios processed through Fund/SERV will be subject to an additional
monthly charge of $250.00
All transactions processed through Fund/SERV will be billed at the transaction
fee rates listed in (b) above.
9
<PAGE>
FEE INCREASES
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the change in the Consumer Price Index for the Northeast
region (CPI) for the twelve month period ending with the month preceding such
annual anniversary date.
(e) IRA PLAN FEES:
The following fees will be charged directly to the shareholder account:
<TABLE>
<CAPTION>
<S> <C>
Annual maintenance fee .............................................. $15.00/account*
Incoming transfer from prior custodian .............................. $12.00
Distribution to a participant ....................................... $15.00
Refund of excess contribution ....................................... $15.00
Transfer to successor custodian ..................................... $15.00
Automatic periodic distributions ................................... $15.00/year per account
</TABLE>
* Includes $8.00 Bank Custody Fee.
(f) EXPENSES:
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive
of salaries, advanced by ADS in connection with but not limited to the costs for
printing fund documents, (i.e. printing of confirmation forms, shareholder
statements, redemption/dividend checks, envelopes, financial statements, proxy
statement, fund prospectus, etc.) proxy solicitation and mailing expenses,
travel requested by the Fund, telephone toll charges, 800-line costs and fees,
facsimile and data transmission costs, stationery and supplies (related to Fund
records), record storage, postage (plus a $0.085 service charge for all
mailings), pro-rata portion of annual SAS-70 audit letter, telex and courier
charges incurred in connection with the performance of its duties hereunder. ADS
shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(g) SPECIAL REPORTS:
All reports and/or analyses requested by the Fund that are not included
in the fee schedule, shall be subject to an additional charge, agreed upon in
advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $ 45.00/hr.
10
<PAGE>
(h) SERVICE DEPOSIT:
The Fund will remit to ADS upon execution of this Agreement a security
deposit of equal to one (1) month's shareholder service fee. The service deposit
computation will be based either on the total number of shareholder accounts
(open and closed) of each portfolio to be serviced or the minimum fee, whichever
is greater, as of the execution date of this Agreement. The Fund will have the
option to have the security deposit applied to the last month's service fee, or
applied to any new contract between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement
for any reason what-so-ever other than a material breach by ADS (including, but
not limited to, the voluntary or involuntary termination of the Fund,
liquidation of the Fund's assets, the sale or merger of the Fund or it's assets
to any successor entity) prior to the termination date of this Agreement as
specified in Paragraph 7 of this Agreement, the Fund will forfeit the Security
Deposit paid to ADS upon execution of this Agreement
11
<PAGE>
SCHEDULE A
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
12
<PAGE>
Exhiit 9.3
FUND ACCOUNTING SERVICE AGREEMENT
between
The Millennium RHIM Funds, Inc.
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]
<PAGE>
INDEX
1. DUTIES OF ADS.............................................................3
2. COMPENSATION OF ADS.......................................................4
3. LIMITATION OF LIABILITY OF ADS............................................4
4. REPORTS...................................................................5
5. ACTIVITIES OF ADS.........................................................5
6. ACCOUNTS AND RECORDS......................................................5
7. CONFIDENTIALITY...........................................................5
8. DURATION AND TERMINATION OF THIS AGREEMENT................................5
9. ASSIGNMENT................................................................6
10. NEW YORK LAWS TO APPLY....................................................6
11. AMENDMENTS TO THIS AGREEMENT..............................................6
12. MERGER OF AGREEMENT.......................................................6
13. NOTICES...................................................................6
SCHEDULE A....................................................................7
(A) FUND ACCOUNTING SERVICE FEE:..............................................7
FEE INCREASES.............................................................7
(B) EXPENSES..................................................................7
(C) SPECIAL REPORTS...........................................................7
(D) SERVICE DEPOSIT...........................................................8
SCHEDULE B:...................................................................9
<PAGE>
FUND ACCOUNTING SERVICE AGREEMENT
AGREEMENT made the ______ day of _________ 1998, by and between The Millennium
RHIM Funds, Inc., a Maryland Corporation, having its principal office and place
of business at 303 Twin Dolphin Drive, Suite 530, Redwood Shores, CA 94065 (the
"Fund"), and American Data Services, Inc., a New York corporation having its
principal office and place of business at the Hauppauge Corporate Center, 150
Motor Parkway, Suite 109, Hauppauge, New York 11788 ("ADS")
BACKGROUND
WHEREAS, the Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Fund desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Fund certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and ADS hereby agree as follows:
1. DUTIES OF ADS.
ADS will provide the Fund with the necessary office space,
communication facilities and personnel to perform the following services for the
Fund:
(a) Timely calculate and transmit to NASDAQ the Fund's daily net
asset value and communicate such value to the Fund and its
transfer agent;
(b) Maintain and keep current all books and records of the Fund as
required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"),
that are applicable to the fulfillment of ADS's duties
hereunder, as well as any other documents necessary or advisable
for compliance with applicable regulations as may be mutually
agreed to between the Fund and ADS. Without limiting the
generality of the foregoing, ADS will prepare and maintain the
following records upon receipt of information in proper form
from the Fund or its authorized agents:
o Cash receipts journal
o Cash disbursements journal
o Dividend record
o Purchase and sales - portfolio securities journals
o Subscription and redemption journals
o Security ledgers
o Broker ledger
<PAGE>
o General ledger
o Daily expense accruals
o Daily income accruals
o Securities and monies borrowed or loaned and
collateral therefore
o Foreign currency journals
o Trial balances
(c) Provide the Fund and its investment adviser with daily portfolio
valuation, net asset value calculation and other standard
operational reports as requested from time to time.
(d) Provide all raw data available from our fund accounting system
(PAIRS) for management's or the administrators preparation of
the following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1a;
5. Annual proxy statement.
(e) Provide facilities to accommodate annual audit and any audits or
examinations conducted by the Securities and Exchange Commission
or any other governmental or quasi-governmental entities with
jurisdiction.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS shall be held to the exercise of reasonable care in carrying
out the provisions of the Agreement, but shall be without liability to the Fund
for any action taken or omitted by it in good faith without negligence, bad
faith, willful misconduct or reckless disregard of its duties hereunder. It
shall be entitled to rely upon and may act upon the accounting records and
reports generated by the Fund, advice of the Fund, or of counsel for the Fund
and upon statements of the Fund's independent accountants, and shall be without
liability for any action reasonably taken or omitted pursuant to such records
and reports or advice, provided that such action is not, to the knowledge of
ADS, in violation of applicable federal or state laws or regulations, and
provided further that such action is taken without negligence, bad faith,
willful misconduct or reckless disregard of its duties.
(b) Nothing herein contained shall be construed to protect ADS against
any liability to the Fund or its security holders to which ADS shall otherwise
be subject by reason of willful misfeasance, bad faith, negligence in the
performance of its duties on behalf of the Fund, reckless disregard of ADS'
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither ADS
nor its stockholders, officers, directors, employees or agents shall be subject
to, and the Fund shall indemnify and hold such
<PAGE>
persons harmless from and against, any liability for and any damages, expenses
or losses incurred by reason of the inaccuracy of information furnished to ADS
by the Fund or its authorized agents.
4. REPORTS.
(a) The Fund shall provide to ADS on a quarterly basis a report of a
duly authorized officer of the Fund representing that all information furnished
to ADS during the preceding quarter was true, complete and correct in all
material respects. ADS shall not be responsible for the accuracy of any
information furnished to it by the Fund or its authorized agents, and the Fund
shall hold ADS harmless in regard to any liability incurred by reason of the
inaccuracy of such information.
(b) Whenever, in the course of performing its duties under this
Agreement, ADS determines, on the basis of information supplied to ADS by the
Fund or its authorized agents, that a violation of applicable law has occurred
or that, to its knowledge, a possible violation of applicable law may have
occurred or, with the passage of time, would occur, ADS shall promptly notify
the Fund and its counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed
exclusive, and ADS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by ADS shall be the property of the
Fund, and shall be surrendered to the Fund, at the expense of the Fund, promptly
upon request by the Fund, provided that all service fees and expenses charged by
ADS in the performance of its duties hereunder have been fully paid to the
satisfaction of ADS, in the form in which such accounts and records have been
maintained or preserved. ADS agrees to maintain a back-up set of accounts and
records of the Fund (which back-up set shall be updated on at least a weekly
basis) at a location other than that where the original accounts and records are
stored. ADS shall assist the Fund's independent auditors, or, upon approval of
the Fund, any regulatory body, in any requested review of the Fund's accounts
and records. ADS shall preserve the accounts and records as they are required to
be maintained and preserved by Rule 31a-1.
7. CONFIDENTIALITY.
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
<PAGE>
9. ASSIGNMENT.
This Agreement shall extend to and shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that this
Agreement shall not be assignable by the Fund without the prior written consent
of ADS, or by ADS without the prior written consent of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of New York as at the time in effect and
the applicable provisions of the 1940 Act. To the extent that the applicable law
of the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To ADS:
Robert Dowlett Michael Miola
President President
The Millennium RHIM Funds, Inc. American Data Services, Inc.
303 Twin Dolphin Drive, Suite 530 150 Motor Parkway, Suite 109
Redwood Shores, CA 94065 Hauppauge, NY 11788
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
THE MILLENNIUM RHIM FUNDS, INC. AMERICAN DATA SERVICES, INC.
By:____________________________ By:__________________________
Robert Dowlett, President Michael Miola, President
<PAGE>
SCHEDULE A
(a) FUND ACCOUNTING SERVICE FEE:
For the services rendered by ADS in its capacity as fund accounting
agent, as specified in Paragraph 1. DUTIES OF ADS, the Fund shall pay ADS,
within ten (10) days after receipt of an invoice from ADS at the beginning of
each month, a fee equal to:
Fund accounting service fee is included in the Administration fee pursuant
to the Administration Agreement executed in conjunction with this Agreement
MULTI-CLASS PROCESSING CHARGE
$300 per month will be charged for each additional class of stock per portfolio.
FEE INCREASES
On each annual anniversary date of this Agreement, the fees enumerated
above will be increased by the change in the Consumer Price Index for the
Northeast region (CPI) for the twelve month period ending with the month
preceding such annual anniversary date.
(b) EXPENSES.
The Fund shall reimburse ADS for any out-of-pocket expenses , exclusive
of salaries, advanced by ADS in connection with but not limited to the printing
or filing of documents for the Fund, travel, telephone, quotation services
(currently (1) $0.12 per equity valuation, $0.60 per bond valuation, and 1.50
for each foreign quotation or manual quote insertion), facsimile transmissions,
stationery and supplies, record storage, NASDAQ insertion fee ($22 (1) per
month), prorata portion of annual SAS 70 review, postage, telex, and courier
charges, incurred in connection with the performance of its duties hereunder.
ADS shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(1) Rate subject to change on 30 days notice.
(c) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund accounting activities as
specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $ 45.00/hr.
<PAGE>
(d) SERVICE DEPOSIT.
The Fund will remit to ADS upon execution of this Agreement a security
deposit equal to $2,000. The Fund will have the option to have the security
deposit applied to the last month's service fee, or applied to any new contract
between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement
for any reason what-so-ever other than a material breach by ADS (including, but
not limited to, the voluntary or involuntary termination of the Fund,
liquidation of the Fund's assets, the sale or merger of the Fund or it's assets
to any successor entity) prior to the termination date of this Agreement as
specified in Paragraph 8 of this Agreement, the Fund will forfeit the Security
Deposit paid to ADS upon execution of this Agreement.
<PAGE>
SCHEDULE B:
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
THE MILLENNIUM GROWTH FUND
THE MILLENNIUM GROWTH & INCOME FUND
<PAGE>
Exhibit 10
Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
June 9, 1998
The Millennium RHIM Funds, Inc.
303 Twin Dolphin Drive
Suite 530
Redwood Shores, CA 94065
Gentlemen:
We have acted as counsel to The Millennium RHIM Funds, Inc.
(the "Company"), a Maryland corporation, in connection with the preparation and
filing of Registration Statement No. 333-49347; 811-08729 on Form N-1A and the
pre-effective amendment thereto (the "Registration Statement") covering shares
of Common Stock, par value $.001 per share, of the Company's two initial series,
The Millennium Growth Fund and The Millennium Growth & Income Fund (the
"Funds").
We have examined copies of the Articles of Incorporation, the
Articles of Amendment and Restatement, the By-Laws and the Amended and Restated
By-Laws of the Company, the Registration Statement, and such other corporate
records, proceedings and documents, including the consents of the Board of
Directors of the Company, as we have deemed necessary for the purpose of this
opinion. In our examination of such material, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies submitted
to us. As to various questions of fact material to such opinion, we have relied
upon statements and certificates of officers and representatives of the Company
and others.
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not express any opinion as to the laws of
other states or jurisdictions, except as to matters of Federal law. With respect
to Maryland corporate law, we have relied upon the opinion of Venable, Baetjer
and Howard, LLP, special Maryland counsel, a copy of which is attached hereto.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion
that the shares of Common Stock, par value $.001 per share, of the Company, to
be issued in accordance with the terms of the offering, as set forth in the
Prospectus and Statement of Additional Information included as part of the
Registration Statement, and when issued and paid for, will constitute validly
authorized and legally issued shares of Common Stock, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference to us in the Funds'
Prospectus and the Statement of Information, included as part of the
Registration Statement.
Very truly yours,
Spitzer & Feldman P.C.
<PAGE>
June 9, 1998
Spitzer & Feldman, P.C.
405 Park Avenue
New York, NY 10022
Re: The Millennium RHIM Funds, Inc.
Ladies and Gentlemen:
We have acted as special Maryland counsel for The Millennium
RHIM Funds, Inc., a Maryland corporation (the "Fund"), in connection with the
organization of the Fund and the issuance of shares of its common stock, par
value $.001 per share, of The Millennium Growth Fund and The Millennium Growth &
Income Fund (each a "Series" and, collectively, the "Shares").
As special Maryland counsel for the Fund, we are familiar with
its Charter and Bylaws. We have examined the prospectus included in its
Registration Statement on Form N-1A (File Nos. 333-49347; 811-08729) (the
"Registration Statement"), substantially in the form in which it is to become
effective (the "Prospectus"). We have further examined and relied upon a
certificate of the Maryland State Department of Assessments and Taxation to the
effect that the Fund is duly incorporated and existing under the laws of the
State of Maryland and is in good standing and duly authorized to transact
business in the State of Maryland.
We have also examined and relied upon such corporate records
of the Fund and other documents and certificates with respect to factual matters
as we have deemed necessary to render the opinion expressed herein. With respect
to the documents we have received, we have assumed, without independent
verification, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity with originals of all
documents submitted to us as copies.
Based on such examination, we are of the opinion and so advise
you that:
1. The Fund is duly organized and validly existing as a
corporation in good standing under the laws of the
State of Maryland.
<PAGE>
Spitzer & Feldman, P.C.
June 9, 1998
Page 2
2. The Shares of the Fund to be offered for sale
pursuant to the Prospectus are duly authorized, and,
to the extent of the number of Shares of each Series,
respectively, authorized to be issued by the Fund in
its Charter, when sold, issued and paid for as
contemplated by the Registration Statement, will be
validly issued, fully paid and nonassessable.
This letter expresses our opinion with respect to the Maryland
General Corporation Law governing matters such as due organization and the
authorization and issuance of stock. It does not extend to the securities or
"Blue Sky" laws of Maryland, to federal securities laws, or to other laws.
You may rely upon our foregoing opinion in rendering your
opinion to the Fund. We consent to the filing of this opinion as an exhibit to
the Registration Statement. This opinion may not be relied upon by any other
person or for any other purpose without our prior written consent.
Very truly yours,
Venable, Baetjer and Howard, LLP
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the reference to our Firm in Pre-Effective Amendment No. 1
to the Registration Statement on Form N-1A, File No. 333-49347 of Millennium
RHIM Funds, Inc.
McGladrey & Pullen, LLP
New York, New York
June 9, 1998
