As filed with the Securities and Exchange Commission on May 28, 1998
File Nos. __-____
__-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
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THE WINTER HARBOR FUND
511 Congress Street
Portland, Maine 04101
(207) 774-7455
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Max Berueffy, Esquire
Forum Financial Services, Inc.
Two Portland Square
Portland, Maine 04101
Copies to:
Wayne E. Tumlin, Esquire
Verrill & Dana L.L.P.
One Portland Square
Portland, Maine 04112-0586
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Approximate Date of Proposed Public Offering: As soon as practicable after
the effectiveness of the registration under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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Total number of pages:
Index to Exhibits is located on page:
CROSS REFERENCE SHEET
(Pursuant to Rule 404)
Part A
<TABLE>
<S> <C>
Item of Form N-1A CAPTION or Location in Prospectus
I. Cover Page Cover Page
II. Synopsis FUND EXPENSES
III. Condensed Financial Information FINANCIAL HIGHLIGHTS
IV. General Description of Registrant INVESTMENT OBJECTIVES,
INVESTMENT POLICIES, INVESTMENT RISKS,
INVESTMENT LIMITATIONS, SIZE LIMITATIONS,
GENERAL INFORMATION
V. Management of the Fund MANAGEMENT OF THE TRUST, GENERAL
INFORMATION
V.A. Management's Discussion of Fund
Performance INVESTMENT PERFORMANCE
VI. Capital Stock and Other Securities. GENERAL INFORMATION, DIVIDENDS,
DISTRIBUTIONS AND TAXES, IMPORTANT ACCOUNT
INFORMATION, REDEEMING YOUR SHARES,
TRANSFERRING OWNERSHIP, OTHER SERVICES
VII. Purchase of Securities Being Offered INVESTMENT POLICIES, NET ASSET VALUE PER
SHARE, OPENING AN ACCOUNT AND PURCHASING
SHARES, EXCHANGE
PRIVILEGE, OTHER SERVICES
VIII. Redemption or Repurchase REDEEMING YOUR SHARES
IX. Pending Legal Proceedings n/a
</TABLE>
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CROSS REFERENCE SHEET
(Pursuant to Rule 404)
Part B
<TABLE>
<S> <C>
Item of Form N-1A CAPTION or Location in Statement of Additional Information
X. Cover Page Cover Page
XI. Table of Contents TABLE OF CONTENTS
XII. General Information and History GENERAL INFORMATION
XIII. Investment Objectives and Policies INVESTMENT POLICIES AND LIMITATIONS, RISK
FACTORS AND SPECIAL CONSIDERATIONS
XIV. Management of the Fund MANAGEMENT OF THE TRUST
XV. Control Persons and Principal Holders
of Securities MANAGEMENT OF THE TRUST, PRINCIPAL HOLDERS
OF SHARES
XVI. Investment Advisory and Other Services MANAGEMENT OF THE TRUST, INVESTMENT
ADVISORY SERVICES, CUSTODIAN, INDEPENDENT
ACCOUNTANTS
XVII. Brokerage Allocation and Other Practices PORTFOLIO TRANSACTIONS
XVIII. Capital Stock and Other Securities DESCRIPTION OF THE TRUST
XIX. Purchase, Redemption and Pricing of
Securities Being Offered PRICING OF SHARES BEING OFFERED, REDEMPTIONS
IN KIND
XX. Tax Status TAXATION
XXI. Underwriters n/a
XXII. Calculation of Performance Data PERFORMANCE DATA
XXIII. Financial Statements
</TABLE>
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PROSPECTUS
May XX, 1998
The REvest Small Cap Value Fund
A No-Load Mutual Fund Managed in Maine
Managed by Ebright Investments, Inc.(formerly Royce, Ebright & Associates, Inc.)
A Series of The Winter Harbor Fund
The REvest Small Cap Value Fund
Prospectus -- [date]
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NEW ACCOUNT AND GENERAL INFORMATION: Investor Information -- 1-800-277-5573
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SHAREHOLDER SERVICES -- 1-877-4REVEST (877-473-8378)
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INVESTMENT OBJECTIVES AND POLICIES
The REvest Small Cap Value Fund (the "Fund") primarily seeks long-term growth
and secondarily current income by investing in a broadly diversified portfolio
of common stocks and convertible securities. Prospective portfolio investments
are selected on a value basis and are limited to small and medium-sized
companies viewed by the Fund's investment adviser as having attractive financial
characteristics and/or "vitality factors". Vitality factors are those factors
that should allow a company to build future, incremental value for shareholders
(i.e., an active acquisition program, stock buy-back programs and/or cost
reduction programs). There can be no assurance that the Fund will achieve its
objectives.
The Fund is a no-load series of The Winter Harbor Fund (the "Trust"), a
diversified open-end management investment company. The Trust is currently
offering shares of only one series. The Fund's predecessor, The REvest Growth &
Income Fund, was a series of The Royce Fund.
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ABOUT THIS PROSPECTUS
This Prospectus sets forth concisely the information that you should know about
the Fund before you invest. It should be retained for future reference. A
"Statement of Additional Information" ("SAI"), containing further information
about the Fund and the Trust, has been filed with the Securities and Exchange
Commission. The SAI is dated May XX, 1998 and has been incorporated by reference
into this Prospectus. A copy may be obtained without charge by writing to the
Trust or calling Investor Information.
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TABLE OF CONTENTS Page
Fund Expenses Open Item
Financial Highlights Open Item
Investment Performance Open Item
Investment Objectives Open Item
Investment Policies Open Item
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Investment Risks Open Item
Investment Limitations Open Item
Management of the Trust Open Item
Size Limitations Open Item
General Information Open Item
Dividends, Distributions and Taxes Open Item
Net Asset Value Per Share Open Item
SHAREHOLDER GUIDE Open Item
Opening an Account and Purchasing Shares Open Item
Choosing a Distribution Option Open Item
Important Account Information Open Item
Redeeming Your Shares Open Item
Exchange Privilege Open Item
Transferring Ownership Open Item
Other Services Open Item
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The Securities and Exchange Commission has not approved any fund's shares as an
investment or determined whether this prospectus is accurate or complete. Anyone
who tells you otherwise is committing a crime.
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A Series of The Winter Harbor Fund
FUND EXPENSES
The Fund is no-load and has no 12b-1 fees.
The following table illustrates all expenses and fees that you would incur as a
shareholder of the Fund.
Shareholder Transaction Expenses
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Redemption Fee:
1 Year or More After Initial Purchase None
Early Redemption Fee:
Less Than 1 Year After Initial Purchase 1.00%
Annual Fund Operating Expenses
Management Fees 1.00%
Other Expenses .26%
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Total Operating Expenses 1.26%
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The amounts of expenses and fees are those incurred during the Fund's
most recent fiscal year ended December 31, 1997. As a sign of good faith, the
adviser has agreed to cap the Fund's expense ratio 1.30% through December 31,
1999. The adviser and sub-adviser have agreed to waive fees, in equal amounts,
in order to maintain this expense ratio. For a further discussion of these fees,
see "Management of the Trust".
The purpose of the above table is to assist you in understanding the
various costs and expenses that you would bear directly or indirectly as an
investor in the Fund.
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The following examples illustrate the expenses that you would incur on
a $1,000 investment over various periods, assuming a 5% annual rate of return
and redemption at the end of each period.
1 Year 3 Years 5 Years 10 Years
$13 $40 $69 $152
These examples should not be considered a representation of past or
future expenses or performance. Actual expenses may be higher or lower than
those shown.
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FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
The Fund was formerly known as The REvest Growth & Income Fund. The
following financial highlights are those of The REvest Growth & Income Fund. The
REvest Growth & Income Fund's financial statements and financial highlights for
the years ended December 31, 1997, 1996 and 1995 and for the period August 1,
1994 (commencement of operations) to December 31, 1994 have been audited by
Coopers & Lybrand L.L.P., independent accountants. Such financial statements,
accompanying notes and Coopers & Lybrand L.L.P.'s reports thereon are included
in The REvest Growth & Income Fund's Annual Report to Shareholders for 1997 and
are incorporated by reference into the Statement of Additional Information and
this Prospectus. Further information about the fund's performance is contained
elsewhere in this Prospectus and in The REvest Growth & Income Fund's Annual
Report to Shareholders for 1997, which may be obtained without charge by calling
Investor Information.
<TABLE>
<S> <C> <C> <C> <C>
YEAR YEAR YEAR 8/1/94
ENDED ENDED ENDED TO
12/31/97 12/31/96 12/31/95 12/31/94
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Net Asset Value, Beginning of Period $12.21 $10.73 $9.66 $10.00
INVESTMENT OPERATIONS:
Net investment income 0.21 0.21 0.18 0.04
Net realized and unrealized gain (loss)
on investments 2.64 2.16 1.38 (0.33)
Total from Investment Operations 2.85 2.37 1.56 (0.29)
DIVIDENDS AND DISTRIBUTIONS:
Net investment income (0.19) (0.21) (0.17) (0.05)
Net realized gain on investments (1.87) (0.68) (0.32) -------
Total Dividends and Distributions (2.06) (0.89) (0.49) (0.05)
NET ASSET VALUE, END OF PERIOD $13.00 $12.21 $10.73 $9.66
TOTAL RETURN: 23.5% 22.3% 16.2% (2.9%)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, End of Period (000's) $38,886 $42,099 $35,804 $21,676
Ratio of Expenses to
Average Net Assets (a) 1.26% 1.29% 1.30% 1.42%*
Ratio of Net Investment Income
to Average Net Assets (a) 1.60% 1.78% 1.73% 1.45%*
Portfolio Turnover Rate 54% 64% 53% 5%
Average Commission Rate Paid+ $0.0594 $0.0580 ------- -------
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</TABLE>
* Annualized.
(a) The ratio of expenses to average net assets before waiver of fees by the
investment adviser for the Fund would have been 1.78% for the period ended
December 31, 1994.
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+ For fiscal years beginning in 1996, The REvest Growth & Income Fund is
required to disclose its average commission rate paid per share for purchases
and sales of investments.
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INVESTMENT PERFORMANCE
Total return is the change in value over a given period for a
continuous shareholder, assuming reinvestment of dividends and capital gains
distributions.
From time to time, the Fund may include in communications to current or
prospective shareholders figures reflecting total return over various time
periods. "Total return" is the rate of return on an amount invested in the Fund
from the beginning to the end of the stated period and assumes redemption at the
end of the period. "Average annual total return" is the annual compounded
percentage change in the value of an amount invested in the Fund from the
beginning until the end of the stated period.
Total returns are historical measures of past performance and are not
intended to indicate future performance. Both rates of return assume the
reinvestment of all net investment income dividends and capital gains
distributions. The figures below are those of The REvest Growth & Income Fund.
These figures are used since The REvest Growth & Income Fund's investment
objectives and investment policies, strategies and risks are substantially
identical to those of the Fund. The figures do not reflect the Fund's early
redemption fee because it applies only to redemptions in accounts open for less
than one year. Total return and principal value of an investment in the Fund
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
The average annual total returns for the Fund (formerly The REvest
Growth & Income Fund), the S&P 500 and the Russell 2000 for the periods
indicated below were:
<TABLE>
<S> <C> <C> <C>
YEAR 3-YEARS 8/1/94*
ENDED ENDED TO
12/31/97 12/31/97 12/31/97
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REvest average annual total return 23.5% 20.6% 16.9%
S&P 5001 average annual total return 33.4% 31.3% 27.5%
Russell 20002 average annual total return 22.4% 22.3% 20.5%
</TABLE>
1The S&P 500 Composite Stock Price Index is an unmanaged index of common stocks
frequently used as a general measure of stock market performance. The Index's
performance figures reflect changes of market prices and quarterly reinvestment
of all distributions.
2The Russell 2000 Index, prepared by the Frank Russell Company, tracks the
return of the common stocks of the 2,000 smallest out of the 3,000 largest
publicly traded U.S.-domiciled companies by market capitalization. The Russell
2000 tracks the return based on price appreciation or depreciation and includes
dividends.
* Commencement of Operations - August 1, 1994
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INVESTMENT OBJECTIVES
The Fund primarily seeks long-term growth and secondarily current
income by investing in a broadly diversified portfolio of common stocks and
convertible securities. Prospective portfolio investments are selected on a
value basis and are limited to small and medium-sized companies viewed by the
Fund's investment adviser as having attractive financial characteristics and/or
"vitality factors". Vitality factors are those factors that should, in the
investment adviser's judgment, allow a company to build future, incremental
value for shareholders (i.e., an active acquisition program, stock buy-back
programs and/or cost reduction programs). Since certain risks are inherent in
owning any security, there can be no assurance that the Fund will achieve its
objectives.
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The investment objectives of primarily long-term growth and secondarily
current income are fundamental and may not be changed without the approval of a
majority of the Fund's voting shares, as that term is defined in the Investment
Company Act of 1940 (the "1940 Act").
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INVESTMENT POLICIES
THE FUND INVESTS ON A "VALUE" BASIS
Ebright Investments, Inc. (formerly Royce, Ebright & Associates, Inc.),
the Fund's investment adviser, uses a "value" method in managing the Fund's
assets. In its selection process, Ebright Investments, Inc. ("EII") considers a
company's cash flows, its balance sheet quality, an understanding of various
internal returns indicative of profitability and its growth prospects in trying
to relate such factors to the price of a given security. With regard to each
portfolio security in which the Fund invests, EII seeks to identify a "valuation
discrepancy" between the security's then current market price and its "business
worth," that is, what a knowledgeable buyer would pay for the entire company,
based on an appraisal of its financial characteristics and/or growth prospects.
After this appraisal of value process is completed, EII then, in
addition, seeks to identify and evaluate "vitality factors", which are those
characteristics of a portfolio company that could result in the building of
future value for shareholders. Examples of such "vitality factors" include
research and development efforts, new products, new market development efforts,
the redeployment of underutilized assets, an active acquisition program, stock
buy-back programs, cost reduction programs and investments in new technologies
or processes.
The portfolio, therefore, is a collection of securities that EII
believes have all been purchased at a discount to their real "business worth"
and possess, in addition, "vitality factors" that should allow them to build
future incremental value for shareholders. EII believes that profits can come
both from the continued success and growth of each portfolio company as well as
the eventual elimination of each security's valuation discrepancy.
THE FUND INVESTS PRIMARILY IN SMALL AND MEDIUM-SIZED COMPANIES.
EII believes that there are many high quality companies in the
"small-cap" and "mid-cap" sectors that have above average growth prospects but
are not widely followed or understood by investors. EII seeks to identify and
invest in such companies when their securities can be purchased at appropriate
discounts to EII's assessment of their "business worth".
In accordance with its objectives of seeking primarily long-term growth
(realized and unrealized) and secondarily current income, the Fund will normally
invest at least 90% of its assets in common stocks, convertible preferred stocks
and convertible bonds. At least 80% of these securities will be
income-producing, and 80% of these securities will be issued by companies with
stock market capitalizations between $200 million and $2 billion at the time of
investment. The Fund will normally have a weighted average market capitalization
size in excess of $500 million. The remainder of the Fund's assets may be
invested in securities with lower or higher market capitalizations, non-dividend
paying common stocks and non-convertible fixed income securities. The securities
in which the Fund invests may be traded on securities exchanges or in the
over-the-counter market. While most of the Fund's securities will be
income-producing, the composite yield of the Fund's securities may be either
higher or lower than the composite yield of the stocks in the S&P 500 Index.
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INVESTMENT RISKS
The Fund is subject to certain investment risks.
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As a mutual fund investing primarily in common stocks and/or securities
convertible into common stocks, the Fund is subject to market risk, that is, the
possibility that common stock prices will decline over short or even extended
periods. The Fund may invest in securities of companies that are not well-known
to the investing public, may not have significant institutional ownership and
may have cyclical, static or only moderate growth prospects. The stocks of such
companies may be more volatile in price and have lower trading volumes than the
larger capitalization stocks included in the S&P 500 Index. Accordingly, EII's
investment method requires a long-term investment horizon. The Fund should not
be used to play short-term swings in the market.
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INVESTMENT LIMITATIONS
The Fund has adopted a number of fundamental investment policies,
designed to reduce its exposure to specific situations, which may not be changed
without the approval of a majority of its outstanding voting shares, as that
term is defined in the 1940 Act. These policies are set forth in the Statement
of Additional Information and provide, among other things, that the Fund will
not:
(1) with respect to 75% of its assets, invest more than 5% of its
assets in the securities of any one issuer (excluding obligations of
the U.S. Government), or acquire more than 10% of the outstanding
voting securities of any one issuer;
(2) invest more than 25% of its assets in any one industry; or
(3) invest in companies for the purpose of exercising control of
management.
Other Investment Practices:
In addition to investing primarily in the equity and fixed income
securities described above, the Fund may follow a number of additional
investment practices.
Short-term fixed income securities:
The Fund may invest in short-term fixed income securities for temporary
defensive purposes, to invest uncommitted cash balances or to maintain liquidity
to meet shareholder redemptions. These securities consist of United States
Treasury bills, domestic bank certificates of deposit, high-quality commercial
paper and repurchase agreements collateralized by U.S. Government securities. In
a repurchase agreement, a bank sells a security to the Fund at one price and
agrees to repurchase it at the Fund's cost plus interest within a specified
period of seven or fewer days. In these transactions, which are, in effect,
secured loans by the Fund, the securities purchased by the Fund will have a
value equal to or in excess of the value of the repurchase agreement and will be
held by the Fund's custodian bank until repurchased. Should the Fund implement a
temporary defensive investment policy, its investment objectives may not be
achieved.
Foreign securities
The Fund may invest up to 5% of its net assets in debt and/or equity
securities of foreign issuers. Foreign investments involve certain risks, such
as political or economic instability of the issuer or of the country of issue,
fluctuating exchange rates and the possibility of imposition of exchange
controls. These securities may also be subject to greater fluctuations in price
than the securities of U.S. corporations, and there may be less publicly
available information about their operations. Foreign companies may not be
subject to accounting standards or governmental supervision comparable to U.S.
companies, and foreign markets may be less liquid or more volatile than U.S.
markets and may offer less protection to investors such as the Fund.
Lower-rated debt securities
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The Fund may also invest no more than 5% of its net assets in
lower-rated (high-risk) non-convertible debt securities, which are below
investment grade. The Fund does not expect to invest in non-convertible debt
securities that are rated lower than Caa by Moody's Investors Service, Inc. or
CCC by Standard & Poor's Corporation or, if unrated, determined to be of
comparable quality.
Portfolio Turnover
Although the Fund generally seeks to invest for the long term, it
retains the right to sell securities regardless of how long they have been held.
For the years ended December 31, 1997, 1996 and 1995, The REvest Growth & Income
Fund experienced portfolio turnover rates of 54%, 64% and 53%, respectively.
Higher portfolio turnover rates will increase the Fund's transaction costs,
including brokerage commissions.
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MANAGEMENT OF THE TRUST
Investment Adviser
The Trust's business and affairs are managed under the direction of its
Board of Trustees. Ebright Investments, Inc. ("EII"), the Fund's investment
adviser, is responsible for the management of the Fund's portfolio of
investments, subject to the authority of the Board of Trustees. EII was formerly
known as Royce, Ebright & Associates, Inc.. EII was organized in June 1994. EII
was the investment adviser to The REvest Growth & Income Fund, which commenced
operations as a series of The Royce Fund on August 1, 1994. On {OPEN ITEM},
1998, The REvest Growth & Income Fund ceased to be a series of The Royce Fund
and was reorganized into the Fund as the sole series of the Trust. This
reorganization consisted of the transfer of all of the assets of The REvest
Growth & Income Fund to the Fund in exchange solely for shares of beneficial
interest of the Fund, the assumption of all of the liabilities of The REvest
Growth & Income Fund and the distribution of shares of the Fund to shareholders
of The REvest Growth & Income Fund upon liquidation of The REvest Growth &
Income Fund.
The Fund's portfolio is managed by Ms. Jennifer E. Goff, President of EII.
She has been a director and a shareholder of EII since its inception. Jennifer
succeeded her father, Thomas R. Ebright, as President when Mr. Ebright passed
away in 1997. Prior to assuming the office of President, Ms. Goff was Vice
President and Assistant Portfolio Manager. During the last five years, Ms. Goff
has worked full-time as a security analyst at Royce & Associates, Inc. (formerly
Quest Advisory Corp.) and completed her graduate studies in Finance at Columbia
University (M.B.A. `96). While Ms. Goff is responsible for EII's investment
management activities, EII has entered into a sub-advisory agreement with Gouws
Capital Management, Inc. to share resources in growing and managing the Fund.
As compensation for its services to the Fund, EII is entitled to
receive advisory fees equal to 1.00% per annum of the first $50 million of the
Fund's average net assets and 0.75% per annum of any additional average net
assets over $50 million. These fees are payable monthly from the assets of the
Fund. For 1997, the fees paid to EII by The REvest Growth & Income Fund were
1.00% of its average net assets.
Investment Sub-adviser
EII has retained Gouws Capital Management, Inc. ("GCMI") to provide
investment sub-advisory and marketing support services to the Fund. GCMI,
located at 511 Congress Street, Portland, Maine, is an independent investment
advisory firm, founded in 1984 and registered as an investment adviser with the
Securities and Exchange Commission. GCMI's principal and President, Johannes H.
Gouws, is not engaged in any other business or profession other than his
involvement in establishing Acadia Trust, N.A. ("AT"), an affiliated trust
company. GCMI provides investment advisory services to AT, who acts as a
custodian for GCMI's approximately $1 billion in client assets. GCMI has a value
orientation and emphasizes in-depth fundamental analysis and company visitation
similar to EII.
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Although EII alone will determine the investments that will be
purchased, retained or sold by the Fund, GCMI will assist EII in such
determinations. GCMI will also, at the direction of EII, be responsible for
placing purchase and sell orders for investments with broker-dealers, and for
other related transactions. GCMI has agreed to provide services in accordance
with the Fund's investment objectives, policies and restrictions.
Directly assisting EII with the portfolio management of the Fund will be
Jan F. Macleod, a Vice President and Director of Research for GCMI. Prior to
joining GCMI in 1996, Ms. Macleod was with Ram Trust Services in Portland,
Maine. Ms. Macleod received her M.B.A. from the University of Chicago in
Chicago, Illinois. Gregg A. Marston will also directly assist EII. Mr. Marston
is a Senior Vice President for GCMI and the sole manager of GCMI's Small Cap
Value common trust. Mr. Marston received his B.S. from the University of Vermont
in Burlington, Vermont.
As compensation for its services to the Fund, GCMI is entitled to
receive sub-advisory fees from EII equal to one-half the net profit (net profit
shall mean the advisory fee paid to EII minus all of EII's expenses, including
Ms. Goff's salary and benefits, and the preferential distribution). GCMI is also
entitled to a preferential distribution equal to Ms. Goff's salary and benefits.
Concurrent with the reorganization of the Fund and as compensation for their
part in paying half the expenses incurred in the reorganization, two of the
principals of AT, Johannes H. Gouws and Richard E. Curran, will receive
forty-eight percent (48%) of the outstanding voting common stock of EII. Ms.
Goff and her sister, Ellen S. Ebright, will own the remaining fifty-two percent
(52%) of the outstanding voting common stock of EII.
Administrator
Countrywide Fund Services, Inc. ("Countrywide") located at 312 Walnut
Street, 21st Floor, Cincinnati, Ohio 45202, serves as administrator to the Fund.
Countrywide is a wholly-owned indirect subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in the business of residential mortgage lending. As compensation, the Trust
shall pay Countrywide a monthly fee at the annual rate of .09% of the Fund's
average daily net assets up to $100 million; .075% of such assets from $100
million to $200 million; and .05% of such assets in excess of $200 million.
However, Countrywide shall be paid at least $2,000 per month for its services
for each series of the Fund.
Distribution
CW Fund Distributors, Inc. ("CW Fund") located at 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202, acts as distributor of the Fund's shares.
EII may pay, to unaffiliated broker-dealers, financial institutions or other
service providers who introduce investors to the Fund and/or provide certain
administrative services to those of their customers who are Fund shareholders,
up to .25% of the assets invested in the Fund by their customers. Compensation
paid in connection with such programs may include payments from the Fund for
certain shareholder-related services being provided to the Fund. When shares of
the Fund are purchased in this way, the service provider, rather than its
customer, may be the shareholder of record of the Fund's shares. Investors
should read the program materials provided by the service provider, including
information regarding fees which may be charged, in conjunction with this
Prospectus. Certain shareholder servicing features of the Fund may not be
available or may be modified in connection with the program of services offered.
Brokerage Allocation
EII selects the brokers who execute the purchases and sales of the
Fund's portfolio securities and may place orders with brokers who provide
brokerage and research services to EII. EII is authorized, in recognition of the
value of brokerage and research services provided, to pay commissions to a
broker in excess of the amounts which another broker might have charged for the
same transaction.
Custodian
The custodian for the securities, cash and other assets of the Fund is
Star Bank, N.A.
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YEAR 2000 DISCLOSURE
Like other mutual funds, financial and other business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by EII and other service providers to the Fund do not
properly process and calculate date-related information and data from and after
January 1, 2000. EII and the administrator are taking steps to address the Year
2000 issue with respect to the computer systems that they use and to obtain
reasonable assurances that comparable steps are being taken by the Fund's other
major service providers. There can be no assurance, however, that these steps
will be sufficient to avoid adverse impact on the Fund from this problem.
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SIZE LIMITATIONS
If the Fund's assets total $350 million or more on December 31 of any year,
then the Fund will, commencing on March 1 of the next year, cease selling shares
to any new investors and will not resume selling its shares to new investors
unless and until its assets total $250 million or less on the last day of any
subsequent calendar quarter, in which case it may resume sales to new investors
on the first day of the next calendar quarter and continue them subject to the
$350 million limitation.
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GENERAL INFORMATION
The Winter Harbor Fund (the "Trust") is a Delaware business trust
registered with the Securities and Exchange Commission as an open-end,
diversified management investment company. The Trustees have the authority to
issue an unlimited number of shares of beneficial interest, without shareholder
approval, and these shares may be divided into an unlimited number of series.
Shareholders are entitled to one vote per share. Shares vote by individual
series on all matters, except that shares are voted in the aggregate and not by
individual series when required by the 1940 Act and that if the Trustees
determine that a matter affects only one series, then only shareholders of that
series are entitled to vote on that matter.
Meetings of shareholders will not be held except as required by the
1940 Act or other applicable law. A meeting will be held to vote on the removal
of a Trustee or Trustees of the Trust if requested in writing by the holders of
not less than 10% of the outstanding shares of the Trust.
- ----------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Fund pays dividends from net investment income quarterly and
distributes its net realized capital gains annually in December. Dividends and
distributions will be automatically reinvested in additional shares of the Fund
unless the shareholder chooses otherwise.
Shareholders will receive information annually as to the tax status of
distributions made by the Fund for the calendar year. For Federal income tax
purposes, all distributions by the Fund are taxable to shareholders when
declared, whether received in cash or reinvested in shares. Distributions paid
from the Fund's net investment income and short-term capital gains are taxable
to shareholders as ordinary income dividends. A portion of the Fund's dividends
may qualify for the corporate dividends-received deduction, subject to certain
limitations. The portion of the Fund's dividends qualifying for such deduction
is generally limited to the aggregate taxable dividends received by the Fund
from domestic corporations. Distributions paid from long-term capital gains of
the Fund are treated as long-term capital gains, regardless of how long the
shareholder has held Fund shares.
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If a shareholder disposes of shares held for six months or less at a
loss, such loss will be treated as a long-term capital loss to the extent of any
long-term capital gains reported by the shareholder with respect to such shares.
A loss realized on a taxable disposition of Fund shares may be disallowed to the
extent that additional Fund shares are purchased (including by reinvestment of
distributions) within 30 days before or after such disposition.
The redemption of shares is a taxable event, and a shareholder may
realize a capital gain or capital loss. The Fund will report to redeeming
shareholders the proceeds of their redemptions. However, because the tax
consequences of a redemption will also depend on the shareholder's basis in the
redeemed shares for tax purposes, shareholders should retain their account
statements for use in determining their tax liability on a redemption.
At the time of a shareholder's purchase, the Fund's net asset value may
reflect undistributed income or capital gains. A subsequent distribution of
these amounts by the Fund will be taxable to the shareholder even though the
distribution economically is a return of part of the shareholder's investment.
The Fund is required to withhold 31% of taxable dividends, capital
gains distributions and redemptions paid to non-corporate shareholders who have
not complied with Internal Revenue Service taxpayer identification regulations.
Shareholders may avoid this withholding requirement by certifying on the Account
Application Form their proper Social Security or Taxpayer Identification Number
and certifying that they are not subject to backup withholding.
The discussion of Federal income taxes above is for general information
only. The Statement of Additional Information includes an additional description
of Federal income tax aspects that may be relevant to a shareholder.
Shareholders may also be subject to state and local taxes on their investment.
Investors should consult their own tax advisers concerning the tax consequences
of an investment in the Fund.
- ----------------------------------------------
NET ASSET VALUE PER SHARE
Net asset value per share (NAV) is determined as of the close of
regular trading on the New York Stock Exchange (normally 4:00 p.m., Eastern
Time) on each day it is open for business. The New York Stock Exchange is
normally closed on the following days: New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas. Fund shares are purchased and redeemed at their
net asset value per share next determined after an order is received by the
Fund's transfer agent. The net asset value per share is determined by dividing
the total value of the Fund's investments and other assets, less any
liabilities, by the number of outstanding shares of the Fund.
In determining net asset value, securities listed on an exchange or the
Nasdaq National Market System are valued on the basis of the last reported sale
price prior to the time the valuation is made or, if no sale is reported for
that day, at their bid price for exchange-listed securities and at the average
of their bid and ask prices for Nasdaq securities. Quotations are taken from the
market where the security is primarily traded. Other over-the counter securities
for which market quotations are readily available are valued at their bid price.
Securities for which market quotations are not readily available are valued at
their fair value under procedures established and supervised by the Board of
Trustees. Bonds and other fixed income securities may be valued by reference to
other securities with comparable ratings, interest rates and maturities, using
established independent pricing services.
- ----------------------------------------------
SHAREHOLDER GUIDE
OPENING AN ACCOUNT AND PURCHASING SHARES
The Fund's shares are offered on a no-load basis. To open a new
account, other than an IRA or 403(b)(7) account, either by mail, by wire or
through broker-dealers, simply complete and return the Account Application.
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Separate forms must be used for opening IRA's or 403(b)(7) accounts; please call
Investor Information at 1-800-277-5573 if you need these forms. Please indicate
the amount you wish to invest. Your initial purchase must be at least $2,000
except for IRA's and accounts establishing an Automatic Investment Plan, which
have $500 minimums. If you need assistance with the Account Application Form or
have any questions about the Fund, please call Investor Information at
1-800-277-5573.
Subsequent investments may be made by mail, wire, or Automatic
Investment (a system of electronic funds transfer from your bank account), or
Direct Deposit.
- -------------------
Purchasing By Mail:
Complete and sign the enclosed Account Application Form
NEW ACCOUNT
Please include the amount of your initial investment on the Application Form,
make your check payable to "The REvest Small Cap Value Fund", and mail to: The
REvest Small Cap Value Fund P.O. Box 5354 Cincinnati, OH 45201-5354
For express or registered mail, send to:
The REvest Small Cap Value Fund
312 Walnut Street
21st Floor
Cincinnati, OH 45202
ADDITIONAL INVESTMENTS TO EXISTING ACCOUNTS
Additional investments should include the Invest-by-Mail remittance
form attached to your Fund confirmation statements. Please make your check
payable to "The REvest Small Cap Value Fund", write your account number on your
check and, using the return envelope provided, mail to the address indicated on
the Invest-by-Mail form.
All written requests should be mailed to one of the addresses indicated
for new accounts.
- -------------------
Purchasing By Wire:
Before wiring: Please contact Shareholder Services at 1-877-4REVEST for wiring
instructions. To ensure proper receipt, please be sure your bank includes the
name of the Fund and your order number or account number. If you are opening a
new account, you must call Shareholder Services, complete the Account
Application Form and mail it to the "New Account" address above after completing
your wire arrangement. Note: Federal Funds wire purchase orders will be accepted
only when the Fund and Custodian are open for business.
- ------------------
Purchasing By Automatic Investment:
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The Automatic Investment Plan allows you to make regular, automatic
transfers ($50 minimum) from your bank account to purchase shares in your Winter
Harbor Fund account on the 15th or last day of the month. To establish the
Automatic Investment Plan, please provide the appropriate information on the
Account Application Form and ATTACH A VOIDED CHECK.
Purchasing By Direct Deposit
The Payroll Direct Deposit Plan and Government Direct Deposit Plan let
you have investments ($50 minimum) made from your net payroll or government
check into your existing Winter Harbor Fund account each pay period. Your
employer must have direct deposit capabilities through ACH (Automated Clearing
House) available to its employees. You may terminate participation in these
programs by giving written notice to your employer or government agency, as
appropriate. The Fund is not responsible for the efficiency of the employer or
government agency making the payment or any financial institution transmitting
payments.
To initiate a Direct Deposit Plan, you must complete an Authorization
for Direct Deposit form, which may be obtained from Investor Information by
calling 1-800-277-5573.
- ----------------------------------------------
CHOOSING A DISTRIBUTION OPTION
You may select one of three distribution options:
1. Automatic Reinvestment Option: Both net investment income dividends and
capital gains distributions will be reinvested in additional Fund shares. This
option will be selected for you automatically unless you specify one of the
other options.
2. Cash Dividend Option: Your dividends will be paid in cash and your capital
gains distributions will be reinvested in additional Fund shares.
3. All Cash Option: Both dividends and capital gains distributions will be paid
in cash.
You may change your option by calling Shareholder Services at 1-877-4REVEST.
- ----------------------------------------------
IMPORTANT ACCOUNT INFORMATION
The easiest way to establish optional services on your account is to
select the options you desire when you complete your Account Application Form.
If you want to add shareholder options later, you may need to provide additional
information and a signature guarantee. Please call Shareholder Services at
1-877-4REVEST for further assistance.
Signature Guarantees
For our mutual protection, we may require a signature guarantee on
certain written transaction requests. A signature guarantee verifies the
authenticity of your signature and may be obtained from banks, brokerage firms
and any other guarantor that our transfer agent deems acceptable. A signature
guarantee cannot be provided by a notary public.
Broker/Dealer Purchases
If you purchase Fund shares through a registered broker-dealer or
investment adviser, the broker-dealer or adviser may charge a service fee.
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Telephone Transactions
Neither the Fund nor its transfer agent will be liable for following
instructions communicated by telephone that are reasonably believed to be
genuine. The transfer agent uses certain procedures to confirm that telephone
instructions are genuine, which may include requiring some form of personal
identification prior to acting on the instructions, providing written
confirmation of the transaction and/or recording incoming calls, and if it does
not follow such procedures, the Fund or the transfer agent may be liable for any
losses due to unauthorized or fraudulent instructions.
Nonpayment
If your check or wire does not clear, the transaction will be canceled
and you will be responsible for any loss the Fund incurs. If you are already a
shareholder, the Fund can redeem shares from any identically registered account
in the Fund as reimbursement for any loss incurred.
Trade Date for Purchases
Your trade date is the date on which share purchases are credited to
your account. If your purchase is made by check, Federal Funds wire or exchange
and is received by the close of regular trading on the New York Stock Exchange
(generally 4:00 p.m., Eastern time), your trade date is the date of receipt. If
your purchase is received after the close of regular trading on the Exchange,
your trade date is the next business day. Your shares are purchased at the net
asset value determined on your trade date.
In order to prevent lengthy processing delays caused by the clearing of
foreign checks, the Fund will accept only a foreign check which has been drawn
in U.S. dollars and has been issued by a foreign bank with a United States
correspondent bank.
The Trust reserves the right to suspend the offering of Fund shares to
new investors. The Trust also reserves the right to reject any specific purchase
request.
- ----------------------------------------------
REDEEMING YOUR SHARES
You may redeem any portion of your account at any time. You may request
a redemption in writing or by telephone. Redemption proceeds normally will be
sent within two business days after the receipt of the request in Good Order.
- -------------------
Redeeming By Mail
Requests should be mailed to: The REvest Small Cap Value Fund , P.O.
Box 5354, Cincinnati, OH 45201-5354. (For express or registered mail, send your
request to: The REvest Small Cap Value Fund , 312 Walnut Street, 21st Floor,
Cincinnati, OH 45202) The redemption price of shares will be their net asset
value next determined after the Transfer Agent has received all required
documents in Good Order.
Definition of Good Order
Good Order means that the request includes the following:
1. The account number and Fund name.
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2. The amount of the transaction (specified in dollars or shares).
3. Signatures of all owners exactly as they are registered on the account.
4. Signature guarantees if either the value of the shares being redeemed
exceeds $25,000 or if the payment is to be sent to an address other
than the address of record or is to be made to a payee other than the
shareholder.
5. Other supporting legal documentation that might be required, in the
case of retirement plans, corporations, trusts, estates and certain
other accounts.
If you have any questions about what is required as it pertains to your
request, please call Shareholder Services at 1-877-4REVEST.
Redeeming by Telephone
Shareholders who have not established Automatic Withdrawal may redeem
up to $25,000 of their Fund shares by telephone, provided the proceeds are
mailed to their address of record. To redeem shares by telephone, you or your
pre-authorized representative may call Shareholder Services at 1-877-4REVEST.
Redemption requests received by telephone prior to the close of regular trading
on the New York Stock Exchange (generally 4:00 p.m., Eastern time) are processed
on the day of receipt; redemption requests received by telephone after the close
of regular trading on the Exchange are processed on the business day following
receipt. Telephone redemption service is not available for Trust-sponsored
retirement plan accounts or if certificates are held. Telephone redemptions will
not be permitted for a period of sixty days after a change in the address of
record. See also "Important Account Information - Telephone Transactions".
Redeeming By Automatic Withdrawal
If you select the Automatic Withdrawal option, shares will be
automatically redeemed from your Fund account and the proceeds transferred to
your bank account according to the schedule you have selected. You must have at
least $25,000 in your Fund account to establish the Automatic Withdrawal option.
Redeeming By Wire
The Wire Redemption option lets you redeem up to $25,000 of shares from
your Fund account by telephone and transfer the proceeds directly to your bank
account. You may elect Wire Redemptions on the Account Application Form or call
Shareholder Services at 1-877-4REVEST for further assistance. There may be a
charge from the Transfer Agent and/or your bank for this service.
Important Redemption Information
If you are redeeming shares recently purchased by check or Automatic
Investment Plan, the proceeds of the redemption may not be sent until payment
for the purchase is collected, which may take up to fifteen calendar days.
Otherwise, redemption proceeds must be sent to you within seven days of receipt
of your request in Good Order.
If you experience difficulty in making a telephone redemption during
periods of drastic economic or market changes, your redemption request may be
made by regular or express mail. It will be processed at the net asset value
next determined after your request has been received by the Transfer Agent in
Good Order. The Trust reserves the right to revise or terminate the telephone
redemption privilege at any time.
The Trust may suspend the redemption right or postpone payment at times
when the New York Stock Exchange is closed or under any emergency circumstances
as determined by the Securities and Exchange Commission.
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Although redemptions have always been made in cash, the Fund may redeem
in kind under certain circumstances.
Early Redemption Fee
In order to discourage short-term trading, an early redemption fee of
1% of the net asset value of the shares being redeemed is imposed if a
shareholder redeems shares of the Fund less than one year after becoming a
shareholder. The fee is payable to the Fund out of the redemption proceeds
otherwise payable to the shareholder and is used to offset the costs associated
with redemptions. No redemption fee will be payable by shareholders who are (1)
employees or representatives of the Trust or EII or members of their immediate
families or employee benefit plans for them, (2) participants in the Automatic
Withdrawal Plan, (3) certain Trust-approved Group Investment Plans and
charitable organizations, or (4) omnibus and other similar account customers of
certain Trust-approved broker-dealers and other institutions.
Minimum Account Balance Requirement
Due to the relatively high cost of maintaining smaller accounts, the
Trust reserves the right to involuntarily redeem shares in any Fund account that
falls below the minimum initial investment due to redemptions by the
shareholder. If at any time the balance in an account does not have a value at
least equal to the minimum initial investment or if an Automatic Investment Plan
is discontinued before an account reaches the minimum initial investment that
would otherwise be required, you may be notified that the value of your account
is below the Fund's minimum account balance requirement. You would then have
sixty days to increase your account balance before the account is liquidated.
Proceeds would be promptly paid to the shareholder.
TRANSFERRING OWNERSHIP
You may transfer the ownership of any of your Fund shares to another
person by writing to: Countrywide Fund Services, Inc., P.O. Box 5354,
Cincinnati, OH 45201-5354. The request must be in Good Order (see "Redeeming
Your Shares - Definition of Good Order"). Before mailing your request, please
contact Shareholder Services (1-877-4REVEST) for full instructions.
OTHER SERVICES
For more information about any of these services, please call Investor
Information at 1-800-277-5573.
Statements and Reports
A statement will be sent to you each time you have a transaction in
your account and quarterly. Financial reports will be mailed semi-annually. To
reduce expenses, only one copy of most shareholder reports may be mailed to a
household. Please call Investor Information if you need additional copies.
Tax-Sheltered Retirement Plans
Shares of the Fund are available for purchase in connection with
certain types of tax-sheltered retirement plans, including Individual Retirement
Accounts (IRA's) for individuals and 403(b)(7) Plans for employees of certain
tax-exempt organizations.
These plans should be established with the Trust only after an investor
has consulted with a tax adviser or attorney. Information about the plans and
the appropriate forms may be obtained from Investor Information at
1-800-277-5573.
The Winter Harbor Fund
511 Congress Street
Portland, Maine 04101
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Investment Adviser:
- -------------------
Ebright Investments, Inc.
Jennifer E. Goff, President
511 Congress Street
Portland, Maine 04101
Investment Sub-Adviser:
- -----------------------
Gouws Capital Management, Inc.
511 Congress Street
Portland, Maine 04101
Distributor:
- ------------
CW Fund Distributors, Inc.
P.O. Box 5354
Cincinnati, OH 45201-5354
Transfer Agent:
- ---------------
Countrywide Fund Services, Inc.
P.O. Box 5354
Cincinnati, OH 45201-5354
Custodian:
- -----------
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
Officers of the Trust:
- ----------------------
Jennifer E. Goff, President
Robert J. Dorsey, Vice President
Mark J. Seger, Treasurer
John F. Splain, Secretary
Tina D. Hosking, Assistant Secretary
Brian J. Manley, Assistant Secretary
REVEST SMALL CAP VALUE FUND
A SERIES OF THE WINTER HARBOR FUND
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The REvest Small Cap Value Fund
STATEMENT OF ADDITIONAL INFORMATION
The REvest Small Cap Value Fund (the "Fund") is a
professionally-managed series of The Winter Harbor Fund (the "Trust"), a
Delaware business trust and an open-end registered investment company.
The Fund is designed for long-term investors, including those who wish
to use its shares as a funding vehicle for certain tax-deferred retirement plans
(including Individual Retirement Account ("IRA") plans), and not for investors
who intend to liquidate their investments after a short period of time.
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the Trust's current Prospectus for the Fund
(dated May XX, 1998). Please retain this document for future reference. The
audited financial statements included in the Annual Report to Shareholders of
the Fund for the fiscal year ended December 31, 1997, are incorporated herein by
reference. To obtain an additional copy of the Fund's Prospectus or Annual
Report, please call Investor Information at 1-800-277-5573.
Investment Adviser Transfer Agent
Ebright Investments, Inc. ("EII") Countrywide Fund Services, Inc.
Distributor Custodian
CW Fund Distributors, Inc. ("CW Fund") Star Bank, N.A.
TABLE OF CONTENTS
PAGE
INVESTMENT POLICIES AND LIMITATIONS Open Item
RISK FACTORS AND SPECIAL CONSIDERATIONS Open Item
MANAGEMENT OF THE TRUST Open Item
PRINCIPAL HOLDERS OF SHARES Open Item
INVESTMENT ADVISORY SERVICES Open Item
DISTRIBUTOR Open Item
CUSTODIAN Open Item
INDEPENDENT ACCOUNTANTS Open Item
PORTFOLIO TRANSACTIONS Open Item
PRICING OF SHARES BEING OFFERED Open Item
REDEMPTIONS IN KIND Open Item
TAXATION Open Item
DESCRIPTION OF THE TRUST Open Item
PERFORMANCE DATA Open Item
INVESTMENT POLICIES AND LIMITATIONS
The following investment policies and limitations supplement those set
forth in the Fund's Prospectus. Unless otherwise noted, whenever an investment
policy or limitation states a maximum percentage of the Fund's assets that may
be invested in any security or other asset or sets forth a policy regarding
quality standards, the percentage limitation or standard will be determined
immediately after giving effect to the Fund's acquisition of the security or
other asset. Accordingly, any subsequent change in values, net assets or other
circumstances will not be considered in determining whether the investment
complies with the Fund's investment policies and limitations.
The Fund's fundamental investment policies cannot be changed without
the approval of a "majority of the outstanding voting securities" (as defined in
the Investment Company Act of 1940 (the "1940 Act")) of the Fund. Except for the
fundamental investment restrictions set forth below, the investment policies and
limitations described in this Statement of Additional Information are operating
policies and may be changed by the Board of Trustees
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without shareholder approval. However, shareholders will be notified prior to a
material change in an operating policy affecting the Fund.
The Fund may not, as a matter of fundamental policy:
1. Issue any senior securities;
2. Purchase securities on margin or write call options on its
portfolio securities;
3. Sell securities short;
4. Borrow money, except from banks as a temporary measure for
extraordinary or emergency purposes in an amount not exceeding
5% of its total assets;
5. Underwrite the securities of other issuers;
6. Invest more than 5% of its total assets in the securities of
foreign issuers;
7. Invest in restricted securities or in repurchase agreements
which mature in more than seven days;
8. Invest more than 10% of its assets in securities without
readily available market quotations (i.e., illiquid
securities);
9. Invest, with respect to 75% of its total assets, more than 5%
of its assets in the securities of any one issuer (except U.S.
Government securities);
10. Invest more than 25% of its assets in any one industry;
11. Acquire more than 10% of the outstanding voting securities of
any one issuer;
12. Purchase or sell real estate or real estate mortgage loans or
invest in the securities of real estate companies unless such
securities are publicly-traded;
13. Purchase or sell commodities or commodity contracts;
14. Make loans, except for purchases of portions of issues of
publicly-distributed bonds, debentures and other securities,
whether or not such purchases are made upon the original
issuance of such securities, and except that the Fund may loan
up to 5% of its assets to qualified brokers, dealers or
institutions for their use relating to short sales or other
securities transactions (provided that such loans are fully
collateralized at all times);
15. Invest in companies for the purpose of exercising control of
management;
16. Purchase portfolio securities from or sell such securities
directly to any of the Trust's Trustees, officers, employees
or investment adviser, as principal for their own accounts;
17. Invest in the securities of other investment companies; or
18. Purchase any warrants, rights or options, except that the Fund
may, if no value is assigned thereto, acquire warrants in
units with or attached to debt securities or non-convertible
preferred stock.
The Fund may not, as a matter of operating policy:
1. Invest more than 5% of its net assets in lower-rated (high-
risk) non-convertible debt securities; or
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<PAGE>
2. Enter into repurchase agreements with any counterparty other
than the custodian of the Fund's assets or having a term of
more than seven days.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Fund's Rights as Stockholder
As noted above, the Fund may not invest in a company for the purpose of
exercising control of management. However, the Fund may exercise its rights as a
stockholder and communicate its views on important matters of policy to
management, the board of directors and/or stockholders if EII or the Board of
Trustees determine that such matters could have a significant effect on the
value of the Fund's investment in the company. The activities that the Fund may
engage in, either individually or in conjunction with others, may include, among
others, supporting or opposing proposed changes in a company's corporate
structure or business activities; seeking changes in a company's board of
directors or management; seeking changes in a company's direction or policies;
seeking the sale or reorganization of a company or a portion of its assets; or
supporting or opposing third party takeover attempts. This area of corporate
activity is increasingly prone to litigation, and it is possible that the Fund
could be involved in lawsuits related to such activities. EII will monitor such
activities with a view to mitigating, to the extent possible, the risk of
litigation against the Fund and the risk of actual liability if the Fund is
involved in litigation. However, no guarantee can be made that litigation
against the Fund will not be undertaken or liabilities incurred.
The Fund may, at its expense or in conjunction with others, pursue
litigation or otherwise exercise its rights as a security holder to seek to
protect the interests of security holders if EII and the Trust's Board of
Trustees determine this to be in the best interests of the Fund's shareholders.
Securities Lending
The Fund may lend up to 5% of its assets to brokers, dealers and other
financial institutions. Securities lending allows the Fund to retain ownership
of the securities loaned and, at the same time, to earn additional income. Since
there may be delays in the recovery of loaned securities or even a loss of
rights in collateral supplied should the borrower fail financially, loans will
be made only to parties that participate in a Global Securities Lending Program
monitored by the Fund's custodian and who are deemed by it to be of good
standing. Furthermore, such loans will be made only if, in EII's judgment, the
consideration to be earned from such loans would justify the risk.
EII understands that it is the current view of the staff of the
Securities and Exchange Commission that the Fund may engage in such loan
transactions only under the following conditions: (1) the Fund must receive 100%
collateral in the form of cash or cash equivalents (e.g., U.S. Treasury bills or
notes) from the borrower; (2) the borrower must increase the collateral whenever
the market value of the securities loaned determined on a daily basis) rises
above the value of the collateral; (3) after giving notice, the Fund must be
able to terminate the loan at any time; (4) the Fund must receive reasonable
interest on the loan or a flat fee from the borrower, as well as amounts
equivalent to any dividends, interest or other distributions on the securities
loaned and to any increase in market value; (5) the Fund may pay only reasonable
custodian fees in connection with the loan; and (6) the Fund must be able to
vote proxies on the securities loaned, either by terminating the loan or by
entering into an alternative arrangement with the borrower.
Lower-Rated (High-Risk) Debt Securities
The Fund may invest up to 5% of its net assets in lower-rated
(high-risk) non-convertible debt securities. They may be rated from Ba to Caa by
Moody's Investors Service, Inc. or from BB to CCC by Standard & Poor's
Corporation or may be unrated. These securities have poor protection with
respect to the payment of interest and repayment of principal and may be in
default as to the payment of principal or interest. These securities are often
considered to be speculative and involve greater risk of loss or price changes
due to changes in the issuer's capacity
3
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to pay. The market prices of lower-rated (high-risk) debt securities may
fluctuate more than those of higher-rated debt securities and may decline
significantly in periods of general economic difficulty, which may follow
periods of rising interest rates.
While the market for lower-rated (high-risk) corporate debt securities
has been in existence for many years and has weathered previous economic
downturns, the 1980s brought a dramatic increase in the use of such securities
to fund highly leveraged corporate acquisitions and restructurings. Past
experience may not provide an accurate indication of the future performance of
the high-yield/high-risk bond market, especially during periods of economic
recession. In fact, from 1989 to 1991, the percentage of lower-rated (high-risk)
debt securities that defaulted rose significantly above prior levels.
The market for lower-rated (high-risk) debt securities may be thinner
and less active than that for higher-rated debt securities, which can adversely
affect the prices at which the former are sold. If market quotations cease to be
readily available for a lower-rated (high-risk) debt security in which the Fund
has invested, the security will then be valued in accordance with procedures
established by the Board of Trustees. Judgment plays a greater role in valuing
lower-rated (high-risk) debt securities than is the case for securities for
which more external sources for quotations and last sale information are
available. Adverse publicity and changing investor perceptions may affect the
Fund's ability to dispose of lower-rated (high-risk) debt securities.
Since the risk of default is higher for lower-rated (high-risk) debt
securities, EII's research and credit analysis may play an important part in
managing securities of this type for the Fund. In considering such investments
for the Fund, EII will attempt to identify those issuers of lower-rated
(high-risk) debt securities whose financial condition is adequate to meet future
obligations, has improved or is expected to improve in the future. EII's
analysis may focus on relative values based on such factors as interest or
dividend coverage, asset coverage, earnings prospects and the experience and
managerial strength of the issuer.
Foreign Investments
The Fund may invest up to 5% of its total assets in the securities of
foreign issuers. Foreign investments can involve significant risks in addition
to the risks inherent in U.S. investments. The value of securities denominated
in or indexed to foreign currencies and of dividends and interest from such
securities can change significantly when foreign currencies strengthen or weaken
relative to the U.S. dollar. Foreign securities markets generally have less
trading volume and less liquidity than U.S. markets, and prices on some foreign
markets can be highly volatile. Many foreign countries lack uniform accounting
and disclosure standards comparable to those applicable to U.S. companies, and
it may be more difficult to obtain reliable information regarding an issuer's
financial condition and operations. In addition, the costs of foreign investing,
including withholding taxes, brokerage commissions and custodial costs, are
generally higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic or social instability, military action or unrest or adverse diplomatic
developments. There is no assurance that EII will be able to anticipate these
potential events or counter their effects.
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<PAGE>
The considerations noted above are generally intensified for
investments in developing countries. Developing countries may have relatively
unstable governments, economies based on only a few industries and securities
markets that trade a small number of securities.
American Depositary Receipts (ADRs) are certificates held in trust by a
bank or similar financial institution evidencing ownership of shares of a
foreign-based issuer. Designed for use in U.S. securities markets, ADRs are
alternatives to the purchase of the underlying foreign securities in their
national markets and currencies.
ADR facilities may be established as either unsponsored or sponsored.
While ADRs issued under these two types of facilities are in some respects
similar, there are distinctions between them relating to the rights and
obligations of ADR holders and the practices of market participants. A
depository may establish an unsponsored facility without participation by (or
even necessarily the acquiescence of) the issuer of the deposited securities,
although typically the depository requests a letter of non-objection from such
issuer prior to the establishment of the facility. Holders of unsponsored ADRs
generally bear all the costs of such facilities. The depository usually charges
fees upon the deposit and withdrawal of the deposited securities, the conversion
of dividends into U.S. dollars, the disposition of non-cash distributions and
the performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of the deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as deposit and withdrawal
fees). Under the terms of most sponsored arrangements, depositories agree to
distribute notices of shareholder meetings and voting instructions and to
provide shareholder communications and other information to the ADR holders at
the request of the issuer of the deposited securities.
Repurchase Agreements
In a repurchase agreement, the Fund in effect makes a loan by
purchasing a security and simultaneously committing to resell that security to
the seller at an agreed upon price on an agreed upon date within a number of
days (usually not more than seven) from the date of purchase. The resale price
reflects the purchase price plus an agreed upon incremental amount which is
unrelated to the coupon rate or maturity of the purchased security. A repurchase
agreement involves the obligation of the seller to pay the agreed upon price,
which obligation is in effect secured by the value (at least equal to the amount
of the agreed upon resale price and marked to market daily) of the underlying
security.
The Fund may engage in repurchase agreements with respect to any U.S.
Government security. While it does not presently appear possible to eliminate
all risks from these transactions (particularly the possibility of a decline in
the market value of the underlying securities, as well as delays and costs to
the Fund in connection with bankruptcy proceedings), it is the policy of the
Trust to enter into repurchase agreements only with its custodian, Star Bank,
N.A and having a term of seven days or less.
Portfolio Turnover
The Fund will not trade in securities for short-term profits, but, when
circumstances warrant, securities may be sold without regard to the length of
time held. For the years ended December 31, 1997, 1996 and 1995, The Fund, then
known as the The Revest Growth & Income Fund, a series of The Royce Fund,
experienced portfolio turnover rates of 54%, 64% and 53%, respectively. Higher
portfolio turnover rates will increase the Fund's transaction costs, including
brokerage commissions.
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<PAGE>
MANAGEMENT OF THE TRUST
The following table sets forth certain information as to each Trustee
and officer of the Trust:
<TABLE>
<S> <C> <C>
Name and Address Position Held with the Trust Principal Occupations During Past 5 Years
Jennifer E. Goff* (27) Trustee and President Ms. Goff has been the President of Ebright
511 Congress Street Investments, Inc. Portland, Maine 04101
since July 1997. She was its Vice
President from August 1994 to 1997. From
1993 to 1994, Ms. Goff was a Research
Analyst at Royce & Associates, Inc.
(formerly Quest Advisory Corp.) in New
York, New York.
Judith Freyer (49) Trustee Ms. Freyer has for the last five years
been 2000 Market Street the Vice President of Investments and
Philadelphia, Pennsylvania 19103 Treasurer for the Board of Pensions of the
Presbyterian Church (U.S.A.).
Earl Mummert (52) Trustee Mr. Mummert has for the last five years
500 Nationwide Drive been a Vice President for Conrad M. Siegel,
Harrisburg, Pennsylvania 17110 Inc.
Vincent Phillips (52) Trustee Mr. Phillips has for the last five years been
179 Belle Forrest Circle the President of Phillips & Company, Inc.
Suite 202
Nashville, Tennessee 37221
Robert J. Dorsey (41) Vice President Mr. Dorsey is President and Treasurer of
312 Walnut Street Countrywide Fund Services, Inc. ("CFSI")
21st Floor (a registered transfer agent) and Treasurer
Cincinnati, OH 45202 of Countrywide Investments, Inc. ("CII")
(a registered broker-dealer and investment
advisor) and Countrywide Financial Services,
Inc. ("CF") (a financial services company
and parent of CFSI and CII and a wholly owned
subsidiary of Countrywide Credit Industries,
Inc. ("CCI")). He is also Vice President of
Brundage Story and Rose Investment Trust,
PRAGMA Investment Trust, Markman MultiFund
Trust, Dean Family of Funds, The New York State
Opportunity Funds, Lake Shore Family of Funds
and Maplewood Investment Trust, and
Assistant Vice President of Interactive
Investments, Schwartz Investment Trust, The
Tuscarora Investment Trust, Williamsburg Investment
Trust and The Gannett Welsh & Kotler
Funds (all of which are registered investment companies).
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<PAGE>
Mark J. Seger (36) Treasurer Mr. Seger is Vice President of CF and CFSI.
312 Walnut Street He is also Treasurer of Countrywide
21st Floor Investment Trust, Countrywide Tax-Free
Cincinnati, OH 45202 Trust, Countrywide Strategic Trust,
Brundage Story and Rose Investment Trust,
Markman MultiFund Trust, PRAGMA Investment
Trust, Williamsburg Investment Trust, Dean
Family of Funds, The New York State Opportunity
Funds, Lake Shore Family of Funds and Maplewood
Investment Trust, and Assistant Treasurer of
Interactive Investments, The Tuscarora Investment
Trust, Schwartz Investment Trust, and The Gannett
Welsh & Kotler Funds.
John F. Splain (41) Secretary Mr. Splain is Secretary and General Counsel
312 Walnut Street of CFSI, CII and CF. He is also Secretary of
21st Floor Countrywide Investment Trust,
Cincinnati, OH 45202 Countrywide Tax-Free Trust, Countrywide
Strategic Trust, Brundage Story and Rose Investment
Trust, Markman MultiFund Trust, The Tuscarora
Investment Trust, PRAGMA Investment Trust,
Williamsburg Investment Trust, Lake
Shore Family of Funds and Maplewood Investment Trust,
and Assistant Treasurer of Interactive Investments,
Schwartz Investment Trust, Dean Family of Funds,
The New York State Opportunity Funds, and The Gannett
Welsh & Kotler Funds.
Tina D. Hosking (29) Assistant Secretary Ms. Hosking is Counsel of CFSI She is also
312 Walnut Street Secretary of the Dean Family of Funds, The
21st Floor New York State Opportunity Funds, and
Cincinnati, OH 45202 Assistant Secretary of The Gannett Welsh
& Kotler Funds, Wells Family of Real
Estate Funds and Lake Shore Family of
Funds.
Brian J. Manley (34) Assistant Secretary Mr. Manley is Assistant Vice President and
312 Walnut Street Client Services Manager of CFSI.
21st Floor
Cincinnati, OH 45202
</TABLE>
*An "interested person" of the Trust under Section 2(a)(19) of the 1940 Act.
The Board of Trustees has an Audit Committee, comprised of Judith
Freyer and Vincent Phillips. The Audit Committee is responsible for recommending
the selection and nomination of independent auditors for the Fund and for
conducting post-audit reviews of its financial condition with such auditors.
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<PAGE>
The Fund has a Valuation Committee, comprised of Jennifer E. Goff, Judith
Freyer, Vincent Phillips and Brian J. Manley. The Valuation Committee assures
that securities are valued in accordance with the valuation procedures of the
Fund.
Each Trustee of the Trust (other than Jennifer E. Goff, who is an
interested person of the Trust) is paid $500 for each Board meeting attended.
Disinterested Trustees are also reimbursed for travel and related expenses
incurred in attending meetings of the Board. No officer of the Trust is
compensated by the Trust. The Trust has not adopted any form of retirement plan
covering Trustees or officers.
The following table provides the estimated aggregate compensation paid to each
Trustee. Estimates are presented for the fiscal year ended December 31, 1998.
<TABLE>
<S> <C> <C> <C>
Aggregate Pension or Retirement
Compensation Benefits Accrued as Total Compensation
From Trust and Part of Trust from Trust and/or its predecessor
its Predecessor Expenses Paid to Trustees
--------------- -------- ----------------
Jennifer E. Goff* 0 0 0
Trustee
Judith Freyer $1,500 0 $1,500
Trustee
Earl Mummert $1,000 0 $1,000
Trustee
Vincent Phillips $1,500 0 $1,500
Trustee
</TABLE>
PRINCIPAL HOLDERS OF SHARES
As of March 31, 1998, the following persons were known to the Trust to be the
beneficial owners of 5% or more of the outstanding shares of the Fund:
<TABLE>
<S> <C> <C> <C>
Number Type of Percentage of
Name and Address of Shares Ownership Outstanding Shares
- ---------------- --------- --------- ------------------
Charles Schwab & Co. Inc. 452,873 Record 16.6%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
The Carlisle Companies 472,486 Beneficial 17.3%
Defined Benefit Retirement Plan
250 South Clinton Street
Suite 201
Syracuse, NY 13202
</TABLE>
As of such date, all of the trustees and officers of the Trust as a
group owned approximately 0.3% of the Fund's outstanding shares, and all of the
directors, officers and employees of the Fund's investment adviser owned
approximately 3.7% of the Fund's outstanding shares.
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<PAGE>
INVESTMENT ADVISORY SERVICES
As compensation for its services to the Fund, EII is entitled to
receive advisory fees equal to 1.00% per annum of the first $50 million of the
Fund's average net assets and .75% per annum of any additional average net
assets over $50 million. These fees are payable monthly from the assets of the
Fund. For 1997, the fees paid to EII, by the Fund, then known as The REvest
Growth & Income Fund, a series of The Royce Fund, were 1.00% of its average net
assets.
Under the Investment Advisory Agreement, EII (1) determines the
composition of the Fund's portfolio, the nature and timing of the changes in it
and the manner of implementing such changes, subject to any directions it may
receive from the Trust's Board of Trustees; (2) provides the Fund with
investment advisory, research and related services; (3) furnishes, without
expense to the Trust, the services of such members of its organization as may be
duly elected executive officers or Trustees of the Trust; and (4) pays all
executive officers' salaries and executive expenses and all expenses incurred in
performing its investment advisory duties under the Investment Advisory
Agreement.
The Trust pays all administrative and other costs and expenses
attributable to its operations and transactions, including, without limitation,
transfer agent and custodian fees; legal, administrative and clerical services;
rent for its office space and facilities; auditing; preparation, printing and
distribution of its prospectuses, proxy statements, shareholders reports and
notices; supplies and postage; Federal and state registration fees; Federal,
state and local taxes; non-affiliated trustees' fees; and brokerage commissions.
For the years ended December 31, 1997, 1996 and 1995, EII received
advisory fees from the Fund, then known as The REvest Growth & Income Fund, a
series of The Royce Fund, of $447,437; $320,761 and $320,761, respectively.
EII has retained Gouws Capital Management, Inc. ("GCMI") to provide
investment sub-advisory and marketing support services to the Fund. GCMI,
located at 511 Congress Street, Portland, Maine, is an independent investment
advisory firm, founded in 1984 and registered as an investment adviser with the
Securities and Exchange Commission. GCMI's principal and President, Johannes H.
Gouws, is not engaged in any other business or profession other than his
involvement in establishing Acadia Trust, N.A. ("AT"), an affiliated trust
company. GCMI provides investment advisory services to AT, who acts as a
custodian for GCMI's approximately $1 billion in client assets. GCMI has a value
orientation and emphasizes in-depth fundamental analysis and company visitation
similar to EII.
Although EII alone will determine the investments that will be
purchased, retained or sold by the Fund, GCMI will assist EII in such
determinations. GCMI will also, at the direction of EII, be responsible for
placing purchase and sell orders for investments with broker-dealers, and for
other related transactions. GCMI has agreed to provide services in accordance
with the Fund's investment objectives, policies and restrictions.
Directly assisting EII with the portfolio management of the Fund will be
Jan F. Macleod, a Vice President and Director of Research for GCMI. Prior to
joining GCMI in 1996, Ms. Macleod was with Ram Trust Services in Portland,
Maine. Ms. Macleod received her M.B.A. from the University of Chicago in
Chicago, Illinois. Gregg A. Marston will also directly assist EII. Mr. Marston
is a Senior Vice President for GCMI and the sole manager of GCMI's Small Cap
Value common trust. Mr. Marston received his B.S. from the University of Vermont
in Burlington, Vermont.
As compensation for its services to the Fund, GCMI is entitled to
receive sub-advisory fees from EII equal to one-half the net profit (net profit
shall mean the advisory fee paid to EII minus all of EII's expenses, including
Ms. Goff's salary and benefits, and the preferential distribution). GCMI is also
entitled to a preferential distribution equal to Ms. Goff's salary and benefits.
Concurrent with the reorganization of the Fund and as compensation for their
part in paying half the expenses incurred in the reorganization, two of the
principals of AT, Johannes H. Gouws and Richard E. Curran, will receive
forty-eight percent (48%) of the outstanding voting common stock of
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<PAGE>
EII. Ms. Goff and her sister, Ellen S. Ebright, will own the remaining fifty-two
percent (52%) of the outstanding voting common stock of EII.
GCMI shall furnish at its own expense all services, facilities and
personnel necessary to perform their duties under the Sub-advisory Agreement.
The Sub-advisory Agreement provides for an initial term of two years from its
effective date and for its continuance in effect for successive twelve-month
periods thereafter, provided the agreement is specifically approved at least
annually by either the vote of a majority of the disinterested Trustees or by
vote of a majority of the outstanding voting securities of the series.
The Sub-advisory Agreement is terminable without penalty on 60 days'
written notice when authorized either by vote of a majority of the outstanding
voting securities of the series or by a vote of a majority of the Board, or by
EII on not less than 120 days' written notice, and will automatically terminate
in the event of its assignment or upon termination of the Advisory Agreement.
The Sub-advisory Agreement also provides that GCMI shall not be liable for any
error of judgment or mistake of law except for willful misfeasance, bad faith or
gross negligence in the performance of its duties and obligations under the
Sub-advisory Agreement and applicable law. The Sub-advisory Agreement provides
that GCMI may render services to others.
Portfolio Management
The Trust's business and affairs are managed under the direction of its
Board of Trustees. Ebright Investments, Inc. ("EII"), the Fund's investment
adviser, is responsible for the management of the Fund's portfolio of
investments, subject to the authority of the Board of Trustees. EII was formerly
known as Royce, Ebright & Associates, Inc.. EII was organized in June 1994. EII
was the investment adviser to The REvest Growth & Income Fund, which commenced
operations as a series of The Royce Fund on August 1, 1994. On {OPEN ITEM},
1998, The REvest Growth & Income Fund ceased to be a series of The Royce Fund
and was reorganized into the Fund as the sole series of the Trust. This
reorganization consisted of the transfer of all of the assets of The REvest
Growth & Income Fund to the Fund in exchange solely for shares of beneficial
interest of the Fund, the assumption of all of the liabilities of The REvest
Growth & Income Fund and the distribution of shares of the Fund to shareholders
of The REvest Growth & Income Fund upon liquidation of The REvest Growth &
Income Fund.
The Fund's portfolio is managed by Ms. Jennifer E. Goff, President of EII.
She has been a director and a shareholder of EII since its inception. Jennifer
succeeded her father, Thomas R. Ebright, as President when Mr. Ebright passed
away in 1997. Prior to assuming the office of President, Ms. Goff was Vice
President and Assistant Portfolio Manager. During the last five years, Ms. Goff
has worked full-time as a security analyst at Royce & Associates, Inc. (formerly
Quest Advisory Corp.) and completed her graduate studies in Finance at Columbia
University (M.B.A. `96). While Ms. Goff is responsible for EII's investment
management activities, EII has entered into a sub-advisory agreement with Gouws
Capital Management, Inc. to share resources in growing and managing the Fund.
As compensation for its services to the Fund, EII is entitled to
receive advisory fees equal to 1.00% per annum of the first $50 million of the
Fund's average net assets and 0.75% per annum of any additional average net
assets over $50 million. These fees are payable monthly from the assets of the
Fund. For 1997, the fees paid to EII by The REvest Growth & Income Fund were
1.00% of its average net assets.
ADMINISTRATOR
Countrywide Fund Services, Inc. ("Countrywide") located at 312 Walnut
Street, 21st Floor, Cincinnati, Ohio 45202, serves as administrator to the Fund.
Countrywide is a wholly-owned indirect subsidiary of Countrywide Credit
Industries, Inc., a New York Stock Exchange listed company principally engaged
in the business of residential mortgage lending. Countrywide is responsible for
the calculation of the Fund's daily net asset value per share and for the
maintenance of its portfolio and general accounting records and also provides
certain shareholder services. As compensation, the Trust shall pay Countrywide a
monthly fee at the annual rate of .09% of the Fund's average daily net assets up
to $100 million; .075% of such assets from $100 million to $200 million; and
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<PAGE>
.05% of such assets in excess of $200 million. However, Countrywide shall be
paid at least $2,000 per month for its services for each series of the Fund.
DISTRIBUTOR
CW Fund Distributors, Inc. ("CW Fund") located at 312 Walnut Street,
21st Floor, Cincinnati, Ohio 45202, acts as distributor of the Fund's shares.
EII may pay unaffiliated broker-dealers who introduce investors to the Fund and
provide certain administrative services to those of their customers who are Fund
shareholders, up to .25% of the assets invested in the Fund by their customers.
Any such arrangements will be obligations of EII and not of the Fund or CW Fund.
CUSTODIAN
Star Bank, N.A. ("Star Bank") is the custodian for the securities, cash
and other assets of the Fund. The Trust has authorized Star Bank to deposit
certain domestic and foreign portfolio securities in several central depository
systems and to use foreign sub-custodians for certain foreign portfolio
securities, as allowed by Federal law. Star Bank's main office is at 425 Walnut
Street, M/L 6118, 6th Floor, Cincinnati, Ohio 45202.
TRANSFER AGENT
Countrywide is the transfer agent and dividend disbursing agent for the
Fund's shares. It does not participate in the Fund's investment decisions. All
mutual fund transfer, dividend disbursing and shareholder service activities are
performed by Countrywide at 312 Walnut Street, 21st Floor, Cincinnati, OH 45202.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., whose address is 100 East Broad Street, Ste.
2100, Columbus, Ohio 43215-3671 are the independent accountants of the Trust.
PORTFOLIO TRANSACTIONS
EII is responsible for selecting the brokers who, as agents for the
Fund, effect the purchases and sales of the Fund's portfolio securities. No
broker is selected to effect a securities transaction for the Fund unless such
broker is believed by EII to be capable of obtaining the best price and
execution for the security involved in the transaction. In addition to
considering a broker's execution capability, EII generally considers the
brokerage and research services which the broker has provided to it, including
any research relating to the security involved in the transaction and/or to
other securities. Such services may include general economic research, market
and statistical information, industry and technical research, strategy and
company research, and may be written or oral. EII determines the overall
reasonableness of brokerage commissions paid, after considering the amount
another broker might have charged for effecting the transaction and the value
placed by EII upon the brokerage and/or research services provided by such
broker.
EII is authorized, under Section 28(e) of the Securities Exchange Act
of 1934 and under its Investment Advisory Agreement for the Fund, to pay a
brokerage commission in excess of that which another broker might have charged
for effecting the same transaction, in recognition of the value of brokerage and
research services provided by the broker.
EII may also place the Fund's brokerage business with firms which
promote the sale of the Fund's shares, consistent with achieving the best price
and execution. In no event will the Fund's brokerage business be placed with CW
Fund.
EII's purchase and sale orders for the Fund's portfolio securities are
generally placed with broker-dealers through EII, and EII is obligated to
reimburse for any additional out-of-pocket costs and expenses incurred by EII in
rendering this service. Even though investment decisions for the Fund are made
by EII independently from those
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<PAGE>
made by EII for its managed accounts, securities of the same issuer may be
purchased, held or sold by more than one of such accounts. When the Fund and one
or more of the EII managed accounts are simultaneously engaged in the purchase
or sale of the same security, EII seeks to average the transactions as to price
and allocate them as to amount in a manner believed by EII to be equitable to
each. In some cases, these procedures may adversely affect the price paid or
received by the Fund or the size of the position obtainable for the Fund.
For the years ended December 31, 1997, 1996 and 1995, the Fund, then
known as The REvest Growth & Income Fund, a series of The Royce Fund, paid
brokerage commissions of $95,045, $87,201 and $120,802, respectively. For the
same periods, the aggregate amounts of brokerage transactions of the Fund having
a research component were $20,281,837, $21,876,925 and $23,404,622,
respectively, and the amounts of commissions paid by the Fund for such
transactions were $55,612, $66,890 and $87,718, respectively.
The REvest Growth & Income Fund did not acquire any securities of its
regular brokers and dealers, as defined in the 1940 Act, or of their parents,
during the year ended December 31, 1997.
PRICING OF SHARES BEING OFFERED
The purchase and redemption price of the Fund's shares is based on its
current net asset value per share. See "Net Asset Value Per Share" in the Fund's
Prospectus.
As set forth under "Net Asset Value Per Share," the Fund's custodian
determines the net asset value per Fund share at the close of regular trading on
the New York Stock Exchange on each day that the Exchange is open. The Exchange
is open on all weekdays which are not holidays. Thus, it is closed on Saturdays
and Sundays and on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
REDEMPTIONS IN KIND
It is possible that conditions may arise in the future which would, in
the judgment of the Board of Trustees or management, make it undesirable for the
Fund to pay for all redemptions in cash. In such cases, payment may be made in
portfolio securities or other property of the Fund. However, the Trust has
obligated itself under the 1940 Act to redeem for cash all shares presented for
redemption by any one shareholder up to $250,000 (or 1% of the Trust's net
assets if that is less) in any 90-day period. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share for purposes of such redemption. Shareholders
receiving such securities would incur brokerage costs when these securities are
sold.
TAXATION
The Fund has qualified and intends to remain qualified each year for
the tax treatment applicable to a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"). To so qualify,
the Fund must comply with certain requirements of the Code relating to, among
other things, the source of its income and the diversification of its assets.
By so qualifying, the Fund will not be subject to Federal income taxes
to the extent that its net investment income and capital gain net income are
distributed, so long as the Fund distributes, as ordinary income dividends, at
least 90% of its investment company taxable income.
If the Fund were to be unable to satisfy the 90% distribution
requirement or otherwise were to fail to qualify as a RIC in any year, the Fund
would be subject to tax in such year on all of its taxable income, whether or
not the Fund made any distributions to shareholders. To qualify again as a RIC
in a subsequent year, the Fund would be required to distribute to shareholders
as an ordinary income dividend, its earnings and profits attributable to non-RIC
years (less any interest charge hereinafter described), and also would be
required to pay to the Internal Revenue Service ("IRS") an interest charge on
50% of such earnings and profits. In addition, if the Fund failed to qualify as
a RIC for a period greater than one taxable year, then, except as provided in
regulations to be
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<PAGE>
promulgated, the Fund would be required to recognize and pay tax on any net
built-in gains (the excess of aggregate gains, including items of income, over
aggregate losses that would have been realized if the Fund had been liquidated)
in order to qualify as a RIC in a subsequent year.
A non-deductible 4% excise tax will be imposed on the Fund to the
extent that it does not distribute (including by declaration of certain
dividends), during each calendar year, (1) 98% of its ordinary income for such
calendar year, (2) 98% of its capital gain net income for the one-year period
ending October 31 of such calendar year (or the Fund's actual taxable year
ending December 31, if elected) and (3) certain other amounts not distributed in
previous years. To avoid the application of this tax, the Fund will endeavor to
distribute substantially all of its ordinary income and capital gain net income
during the calendar year in which such income is earned and such gains are
recognized.
The Fund will maintain accounts and calculate income by reference to
the U.S. dollar for U.S. Federal income tax purposes. Investments calculated by
reference to foreign currencies will not necessarily correspond to the Fund's
distributable income and capital gains for U.S. Federal income tax purposes as a
result of fluctuations in foreign currency exchange rates. Furthermore, if any
exchange control regulations were to apply to the Fund's investments in foreign
securities, such regulations could restrict the Fund's ability to repatriate
investment income or the proceeds of sales of securities, which may limit the
Fund's ability to make sufficient distributions to satisfy the 90% distribution
requirement and avoid the 4% excise tax.
Income earned or received by the Fund from investments in foreign
securities may be subject to foreign withholding taxes unless a withholding
exemption is provided under an applicable treaty. Any such taxes would reduce
the Fund's cash available for distribution to shareholders. It is currently
anticipated that the Fund will not be eligible to elect to "pass through" such
taxes to its shareholders for purposes of enabling them to claim foreign tax
credits or other U.S. income tax benefits with respect to such taxes.
If the Fund invests in stock of a so-called passive foreign investment
company ("PFIC"), it may be subject to Federal income tax on a portion of any
"excess distribution" with respect to, or gain from the disposition of, such
stock. The tax would be determined by allocating such distribution or gain
ratably to each day of the Fund's holding period for the stock. The amount so
allocated to any taxable year of the Fund prior to the taxable year in which the
excess distribution or disposition occurs would be taxed to the Fund at the
highest marginal income tax rate in effect for such years, and the tax would be
further increased by an interest charge. The amount allocated to the taxable
year of the distribution or disposition would be included in the Fund's
investment company taxable income and, accordingly, would not be taxable to the
Fund to the extent distributed by the Fund as a dividend to shareholders.
The Fund may be able to make an election, in lieu of being taxable in
the manner described above, to include annually in income its pro rata share of
the ordinary earnings and net capital gain (whether or not distributed) of the
PFIC. In order to make this election, the Fund would be required to obtain
annual information from the PFICs in which it invests, which in many cases may
be difficult to obtain. Alternatively, if eligible, the Fund may be able to
elect to mark to market its PFIC stock, resulting in the stock being treated as
sold at fair market value on the last business day of each taxable year. Any
resulting gain would be reported as ordinary income, and any resulting loss
would not be recognized. The Fund may make either of these elections with
respect to its investments (if any) in PFICs.
Investments of the Fund in securities issued at a discount or providing
for deferred interest payments or payments of interest in kind (which investment
are subject to special tax rules under the Code) will affect the amount, timing
and character of distributions to shareholders. For example, if the Fund were to
acquire securities issued at a discount, the Fund would be required to accrue as
ordinary income each year a portion of the discount (even though the Fund may
not have received cash interest payments equal to the amount included in income)
and to distribute such income each year in order to maintain its qualification
as a regulated investment company and to avoid income and excise taxes. In order
to generate sufficient cash to make distributions necessary to satisfy the 90%
distribution requirement and to avoid income and excise taxes, the Fund may have
to dispose of securities that it would otherwise have continued to hold.
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Distributions
For Federal income tax purposes, distributions by the Fund from net
investment income and from any net realized short-term capital gain are taxable
to shareholders as ordinary income, whether received in cash or reinvested in
additional shares. Ordinary income generally cannot be offset by capital losses.
For corporate shareholders, distributions of net investment income (but not
distributions of short-term or long-term capital gains) may qualify in part for
the 70% dividends received deduction for purposes of determining their regular
taxable income. (However, the 70% dividends received deduction is not allowable
in determining a corporate shareholder's alternative minimum taxable income.)
The amount qualifying for the dividends received deduction generally will be
limited to the aggregate dividends received by the Fund from domestic
corporations and to an amount so designated by the Fund. The dividends received
deduction for corporate shareholders may be further reduced or eliminated if the
shares with respect to which dividends are received by the Fund are treated as
debt-financed or are deemed to have been held for fewer than 46 days, or under
other generally applicable statutory limitations.
So long as the Fund qualifies as a regulated investment company and
satisfies the 90% distribution requirement, distributions by the Fund from net
capital gains will be taxable as long-term capital gains, whether received in
cash or reinvested in shares and regardless of how long a shareholder has held
his or its Fund shares. Such distributions are not eligible for the dividends
received deduction. Long-term capital gains of non-corporate shareholders,
although fully includible in income, currently are taxed at a lower maximum
marginal Federal income tax rate than ordinary income. Such long-term capital
gains are generally taxed at maximum marginal rates of either 28% or 20%
depending in part on the holding period and the date of sale of the Fund's
investments which generated the related gains.
Distributions by the Fund in excess of its current and accumulated
earnings and profits will reduce a shareholder's basis in Fund shares (and, to
that extent, will not be taxable) and, to the extent such distributions exceed
the shareholder's basis, will be taxable as capital gain assuming the
shareholder holds Fund shares as capital assets.
A distribution will be treated as paid during a calendar year if it is
declared in October, November or December of the year to shareholders of record
in such month and paid by January 31 of the following year. Such distributions
will be taxable to such shareholders as if received by them on December 31, even
if not paid to them until January. In addition, certain other distributions made
after the close of a taxable year of the Fund may be "spilled back" and treated
as paid by the Fund (other than for purposes of avoiding the 4% excise tax)
during such year. Such distributions would be taxable to the shareholders in the
taxable year in which they were actually made by the Fund.
The Trust will send written notices to shareholders regarding the
amount and Federal income tax status as ordinary income or capital gain of all
distributions made during each calendar year.
Back-up Withholding/Withholding Tax
Under the Code, certain non-corporate shareholders may be subject to
31% withholding on reportable dividends, capital gains distributions and
redemption payments ("back-up withholding"). Generally, shareholders subject to
back-up withholding will be those for whom a taxpayer identification number and
certain required certifications are not on file with the Trust or who, to the
Trust's knowledge, have furnished an incorrect number. In addition, the Trust is
required to withhold from distributions to any shareholder who does not certify
to the Trust that such shareholder is not subject to back-up withholding due to
notification by the Internal Revenue Service that such shareholder has
under-reported interest or dividend income. When establishing an account, an
investor must certify under penalties of perjury that such investor's taxpayer
identification number is correct and that such investor is not subject to or is
exempt from back-up withholding.
Ordinary income distributions paid to shareholders who are non-resident
aliens or which are foreign entities will be subject to 30% United States
withholding tax unless a reduced rate of withholding or a withholding
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exemption is provided under an applicable treaty. Non-U.S. shareholders are
urged to consult their own tax advisers concerning the United States
consequences to them of investing in the Fund.
Timing of Purchases and Distributions
At the time of an investor's purchase, the Fund's net asset value may
reflect undistributed income or capital gains or net unrealized appreciation of
securities held by the Fund. A subsequent distribution to the investor of such
amounts, although it may in effect constitute a return of his or its investment
in an economic sense, would be taxable to the shareholder as ordinary income or
capital gain as described above. Investors should carefully consider the tax
consequences of purchasing Fund shares just prior to a distribution as they will
receive a distribution that is taxable to them.
Sales or Redemptions of Shares
Gain or loss recognized by a shareholder upon the sale, redemption or
other taxable disposition of Fund shares (provided that such shares are held by
the shareholder as a capital asset) will be treated as capital gain or loss,
measured by the difference between the adjusted basis of the shares and the
amount realized on the sale or exchange. For taxable dispositions of shares
after July 28, 1997, gains for non-corporate shareholders will be taxed at a
maximum Federal rate of 20% (long-term rate) for shares held more than 18
months; 28% (mid-term rate) for shares held for more than 12 months but for 18
months or less; and 39.6% (short-term rate) for shares held for 12 months or
less. For regular corporations, the maximum Federal rate on all income is 35%. A
loss will be disallowed to the extent that the shares disposed of are replaced
(including by receiving shares upon the reinvestment of distributions) within a
period of 61 days, beginning 30 days before and ending 30 days after the sale of
the shares. In such a case, the basis of the shares acquired will be increased
to reflect the disallowed loss. A loss recognized upon the sale, redemption or
other taxable disposition of shares held for 6 months or less will be treated as
a long-term capital loss to the extent of any long-term capital gain
distributions received with respect to such shares.
The foregoing relates to Federal income taxation. Distributions, as
well as any gains from a sale, redemption or other taxable disposition of Fund
shares, also may be subject to state and local taxes.
Investors are urged to consult their own tax advisers regarding the
application to them of Federal, state and local tax laws.
DESCRIPTION OF THE TRUST
Trust Organization
The Trust was organized on June 25, 1997 as a Delaware business trust.
The Fund is a successor by reorganization to The REvest Growth & Income Fund,
which was a series of The Royce Fund, a Delaware business trust. The
reorganization was effected on XXXXXXXX, 1998 under an Agreement and Plan of
Reorganization pursuant to which the assets and liabilities of The REvest Growth
& Income Fund were transferred into the Trust, with the Fund (renamed "The
REvest Small Cap Value Fund") becoming the sole series of the Trust and Royce,
Ebright & Associates, Inc. (renamed "Ebright Investments, Inc.") continuing as
investment adviser. A copy of the Trust's Certificate of Trust is on file with
the Secretary of State of Delaware, and a copy of the Trust Instrument, its
principal governing document, is available for inspection by shareholders at the
Trust's offices at 511 Congress Street, Portland, Maine 04101.
The Trust has an unlimited authorized number of shares of beneficial
interest (no par value), which may be divided into an unlimited number of series
and/or classes without shareholder approval. (The Fund presently has only one
class of shares.) These shares are entitled to one vote per share (with
proportional voting for fractional shares). Shares vote by individual series
except as otherwise required by the 1940 Act or when the Trustees determine that
the matter affects shareholders of more than one series.
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Each of the Trustees currently in office were elected by the Trust's
predecessor's shareholders. There will normally be no meeting of shareholders
for the election of Trustees until less than a majority of such Trustees remain
in office, at which time the Trustees will call a shareholders' meeting for the
election of Trustees. In addition, Trustees may be removed from office by
written consents signed by the holders of a majority of the outstanding shares
of the Trust and filed with the Trust's custodian or by a vote of the holders of
a majority of the outstanding shares of the Trust at a meeting duly called for
this purpose upon the written request of holders of at least 10% of the Trust's
outstanding shares. Upon the written request of 10 or more shareholders of the
Trust, who have been shareholders for at least 6 months and who hold shares
constituting at least 1% of the Trust's outstanding shares, stating that such
shareholders wish to communicate with the Trust's other shareholders for the
purpose of obtaining the necessary signatures to demand a meeting to consider
the removal of a trustee, the Trust is required (at the expense of the
requesting shareholders) to provide a list of shareholders or to distribute
appropriate materials. Except as provided above, the Trustees may continue to
hold office and appoint their successors.
Shares are freely transferable, are entitled to distributions as
declared by the Trustees and, in liquidation of the Trust, are entitled to
receive net assets of their series. Shareholders have no preemptive rights. The
Trust's fiscal year ends on December 31.
Shareholder Liability
Generally, shareholders will not be personally liable for the
obligations of their Fund or of the Trust under Delaware law. The Delaware
Business Trust Act provides that a shareholder of a Delaware business trust is
entitled to the same limited liability extended to shareholders of private
corporations for profit organized under the Delaware General Corporation Law. No
similar statutory or other authority limiting business trust shareholder
liability exists in many other states. As a result, to the extent that the Trust
or a shareholder of the Trust is subject to the jurisdiction of courts in those
states, the courts may not apply Delaware law and may thereby subject Trust
shareholders to liability. To guard against this possibility, the Trust
Instrument (1) requires that every written obligation of the Trust contain a
statement that such obligation may be enforced only against the Trust's assets
(however, the omission of this disclaimer will not operate to create personal
liability for any shareholder); and (2) provides for indemnification out of
Trust property of any Trust shareholder held personally liable for the Trust's
obligations. Thus, the risk of a Trust shareholder incurring financial loss
beyond his investment because of shareholder liability is limited to
circumstances in which: (1) a court refuses to apply Delaware law; (2) no
contractual limitation of liability was in effect; and (3) the Trust itself
would be unable to meet its obligations. In light of Delaware law, the nature of
the Trust's business and the nature of its assets, management believes that the
risk of personal liability to a Trust shareholder is extremely remote.
PERFORMANCE DATA
The Fund's performance may be quoted in various ways. All performance
information supplied for the Fund is historical and is not intended to indicate
future returns. The Fund's share price and total returns fluctuate in response
to market conditions and other factors, and the value of the Fund's shares when
redeemed may be more or less than their original cost.
Total Return Calculations
Total returns quoted reflect all aspects of the Fund's return,
including the effect of reinvesting dividends and capital gain distributions and
any change in the Fund's net asset value per share (NAV) over the period.
Average annual total returns are calculated by determining the growth or decline
in value of a hypothetical historical investment in the Fund over a stated
period, and then calculating the annually compounded percentage rate that would
have produced the same result if the rate of growth or decline in value had been
constant over the period. For example, a cumulative return of 100% over ten
years would produce an average annual total return of 7.18%, which is the steady
annual rate of return that would equal 100% growth on a compounded basis in ten
years. While average annual total returns are a convenient means of comparing
investment alternatives, investors should realize that the Fund's performance is
not constant over time, but changes from year to year, and that average annual
total returns represent averaged figures as opposed to the actual year-to-year
performance of the Fund.
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35
<PAGE>
In addition to average annual total returns, the Fund's cumulative
total return, reflecting the simple change in value of an investment over a
stated period, may be quoted. Average annual and cumulative total returns may be
quoted as a percentage or as a dollar amount, and may be calculated for a single
investment, a series of investments or a series of redemptions, over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share prices) in order to
illustrate the relationship of these factors and their contributions to total
return. Total returns and other performance information may be quoted
numerically or in a table, graph or similar illustration.
Historical Fund Results
The following table shows the total returns for the periods indicated
for the Fund, then known as The REvest Growth & Income Fund, a series of The
Royce Fund. Such total returns reflect all income earned, realized and
unrealized appreciation or depreciation of its investments assets and expenses
incurred by the Fund for the stated periods. The table compares the Fund's total
returns to the records of the Russell 2000 Index ("Russell 2000") and the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500") over the same
periods. The comparison to the Russell 2000 shows how the Fund's total returns
compared to the record of a broad index of small capitalization stocks. The S&P
500 comparison is provided to show how the Fund's total returns compared to the
record of a broad average of common stock prices. The Fund had the ability to
invest in securities not included in the indices, and its investment portfolio
may or may not be similar in composition to the indices. Figures for the indices
are based on the prices of unmanaged groups of stocks, and, unlike the Fund,
their returns do not include the effect of paying brokerage commissions and
other costs and expenses of investing in a mutual fund.
<TABLE>
<S> <C> <C> <C>
YEAR 3 YEARS 8/1/94*
ENDED ENDED TO
12/31/97 12/31/97 12/31/97
-------- -------- --------
REvest average annual total return 23.5% 20.6 16.9%
S&P 5001 average annual total return 33.4% 31.3% 27.5%
Russell 20002 average annual total return 22.4% 22.3% 20.5%
</TABLE>
A hypothetical $10,000 initial investment in the Fund on August 1, 1994
(commencement of operations) through December 31, 1997 would have grown to
$17,047 assuming all distributions were reinvested.
The Fund's performance may be compared in advertisements to the
performance of other mutual funds in general or to the performance of particular
types of mutual funds, especially those with similar investment objectives. Such
comparisons may be expressed as mutual fund rankings prepared by Lipper
Analytical Services, Inc. ("Lipper"), an independent service that monitors and
ranks the performance of registered investment companies. Money market funds and
municipal funds are not included in the Lipper survey. The Lipper performance
analysis ranks funds on the basis of total return, assuming reinvestment of
distributions, but does not take sales charges or redemption fees payable by
shareholders into consideration and is prepared without regard to tax
consequences.
1The S&P 500 Composite Stock Price Index is an unmanaged index of
common stocks frequently used as a general measure of stock market performance.
The Index's performance figures reflect changes of market prices and quarterly
reinvestment of all distributions.
2The Russell 2000, prepared by the Frank Russell Company, tracks the
return of the common stocks of the 2,000 smallest out of the 3,000 largest
publicly traded U.S.-domiciled companies by market capitalization. The Russell
2000 tracks the return based on price appreciation or depreciation and includes
dividends.
* Commencement of Operations - August 1, 1994
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<PAGE>
EII may, from time to time, compare the performance of common stocks,
especially small and medium capitalization stocks, to the performance of other
forms of investment over periods of time.
From time to time, in reports and promotional literature, the Fund's
performance also may be compared to other mutual funds tracked by financial or
business publications and periodicals, such as KIPLINGER's, INDIVIDUAL INVESTOR,
MONEY, FORBES, BUSINESS WEEK, BARRON's, FINANCIAL TIMES, FORTUNE, MUTUAL FUNDS
MAGAZINE and THE WALL STREET JOURNAL. In addition, financial or business
publications and periodicals, as they relate to fund management, investment
philosophy and investment techniques, may be quoted.
The Fund's performance may also be compared to those of other
compilations or indices.
Advertising for the Fund may contain examples of the effects of
periodic investment plans, including the principle of dollar cost averaging. In
such a program, an investor invests a fixed dollar amount in a fund at periodic
intervals, thereby purchasing fewer shares when prices are high and more shares
when prices are low. While such a strategy does not assure a profit or guard
against loss in a declining market, the investor's average cost per share can be
lower than if fixed numbers of shares are purchased at the same intervals. In
evaluating such a plan, investors should consider their ability to continue
purchasing shares during periods of low price levels.
The Fund may be available for purchase through retirement plans or
other programs offering deferral of or exemption from income taxes, which may
produce superior after-tax returns over time. For example, a $2,000 annual
investment earning a taxable return of 8% annually would have an after-tax value
of $177,887 after thirty years, assuming tax was deducted from the return each
year at a 28% rate. An equivalent tax-deferred investment would have a value of
$244,692 after thirty years.
Schedule of Investments (at ) Common Stocks and Bonds
Shares or Principal Value/Cost/Value
[Incorporate by reference from the last annual report.]
Statement of Assets and Liabilities (at 12/31/97)
[INSERT COOPERS]
NOTES TO FINANCIAL STATEMENTS
[INSERT COOPERS]
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<PAGE>
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
a. Financial Statements Included in Prospectuses (Part A):
The REvest Growth & Income Fund -- Schedule of Investments at December
31, 1997;
The REvest Growth & Income Fund -- Statement of Assets and
Liabilities at December 31, 1997;
The REvest Growth & Income Fund -- Statement of Changes in Net Assets
for the years ended December 31, 1996 and December 31, 1997;
The REvest Growth & Income Fund -- Statement of Operations for the year
ended December 31, 1997; ]
The REvest Growth & Income Fund -- Financial Highlights for the years
ended December 31, 1997, 1996 and 1995 and the period ended December
31, 1994;
The REvest Growth & Income Fund -- Notes to Financial Statements and
Report of Independent Accountants dated February 10, 1998; Financial
statements, schedules and historical information other than those
listed above have been omitted since they are either inapplicable or
are not required.
b. Exhibits:
(1) Copy of the Trust Instrument of the Registrant dated June 25,
1997, as amended July 10, 1997 (filed herewith)
(2) Not Applicable.
(3) Not Applicable.
(4) (a) Sections 2.02, 2.04 and 2.06 of Registrant's Trust
Instrument provide as follows:
SECTION 2.02 ISSUANCE OF SHARES. Subject to applicable law,
the Trustees in their discretion may, from time to time,
without vote of the Shareholders, issue Shares, in addition to
the then issued and Outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and
type of consideration, including cash or securities, at such
time or times and on such terms as the Trustees may deem
appropriate, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in
connection with, the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the
Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine
the Shares into a greater or lesser number without thereby
changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares
shall be redeemed as, whole Shares and/or 1/1,000th of a Share
or integral multiples thereof.
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided
by the Trustees, Shares shall be transferable on the records
of the Trust only by the record holder thereof or by that
holder's agent thereunto duly authorized in writing, upon
delivery to the Trustees or the Transfer Agent of a duly
executed instrument of transfer and such evidence of the
genuineness of such execution and authorization and of such
other matters as may be required by the Trustees or Transfer
Agent. Upon such delivery the transfer shall be recorded on
the register of the Trust. Until such record is made, the
Shareholder of record shall be deemed to be the holder of such
Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any Transfer Agent or registrar nor any
officer, employee or agent of the Trust shall be affected by
any notice of the proposed transfer.
SECTION 2.06 ESTABLISHMENT OF SERIES OR CLASS. The Trust
created hereby shall consist of one or more Series and
separate and distinct records shall be maintained by the Trust
for each Series and the assets associated with any such Series
shall be held and accounted for separately from the assets of
the Trust or any other Series. The Trustees may divide the
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<PAGE>
Shares of any Series into Classes. The Trustees shall have
full power and authority, in their sole discretion, and
without obtaining any prior authorization or vote of the
Shareholders of any Series, to establish and designate and to
change in any manner any such Series or Class and to fix such
preferences, voting powers, rights and privileges of such
Series or Classes as the Trustees may from time to time
determine, to divide or combine the Shares or any Series or
Classes into a greater or lesser number, to classify or
reclassify any issued Shares of any Series or Classes into one
or more Series or Classes, and to take such other action with
respect to the Shares as the Trustees may deem desirable. The
establishment and designation of any Series or Class shall be
effective when specified in the resolution of the Trustees
setting forth such establishment and designation and the
relative rights and preferences of the Shares of such Series
or Class.
All references to Shares in this Trust Instrument shall be
deemed to be Shares of any or all Series or Classes, as the
context may require. All provisions herein relating to the
Trust shall apply equally to each Series and each Class,
except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal
beneficial interest in the net assets of such Series subject
to Section 2.08 and the preferences, rights and privileges of
each Class of that Series. Each holder of Shares of a Series
or Class thereof shall be entitled to receive the holder's pro
rata share of all distributions made with respect to such
Series or Class thereof. Upon redemption of Shares, such
Shareholder shall be paid solely out of the funds and property
of such Series of the Trust.
Each Series and Class thereof of the Trust and their
attributes will be set forth in Annex A to this Trust
Instrument.
(5) (a) Form of Investment Advisory Agreement between Registrant and
Ebright Investments, Inc. (filed herewith).
(b) Form of Investment Sub-advisory Agreement between Ebright
Investments, Inc. and Gouws Capital Management, Inc. (filed
herewith).
(6) Form of Underwriting Agreement between Registrant and CW
Fund Distributors, Inc. (filed herewith).
(7) None.
(8) (a) Form of Transfer, Dividend Disbursing, Shareholder Service
and Plan Agency Agreement between Registrant and Countrywide
Fund Services, Inc. (filed herewith).
(b) Form of Custody Agreement between Registrant and Star Bank,
N.A. (filed herewith -NEED COPY).
(9) Form of Administration Agreement between Registrant and
Countrywide Fund Services, Inc. (filed herewith).
(10) Opinion of counsel to Registrant (to be filed by amendment).
(11) Consent of independent auditors (to be filed by amendment).
(12) None.
(13) Investment Representation letter of original purchaser of shares
of Registrant (to be filed by amendment).
(14) Not Applicable.
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<PAGE>
(15) None.
(16) None.
Other Exhibits:
Power of Attorney of Jennifer E. Goff (filed herewith)
Power of Attorney of Judith Freyer (filed herewith)
Power of Attorney of Earl Mummert (filed herewith)
Power of Attorney of Vincent Phillips (filed herewith)
Item 25. Persons Controlled by or Under Common Control With Registrant
There are no persons directly or indirectly controlled by or under
common control with the Registrant.
Item 26. Number of Holders of Securities
As of March 31, 1998, the number of record holders of shares of the
Registrant was as follows:
413
Item 27. Indemnification
(a) Article X of the Declaration of Trust of the Registrant provides as follows:
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
LIMITATION OF LIABILITY
"Section 10.01 Limitation of Liability. A Trustee, when acting in such
capacity, shall not be personally liable to any Person other than the Trust or
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the Trust
or to Shareholders 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 the office of Trustee hereunder."
INDEMNIFICATION
"Section 10.02 Indemnification. (a) Subject to the exceptions and
limitations contained in Subsection 10.02(b): (i) every Person who is, or has
been, a Trustee or officer of the Trust (hereinafter referred to as a "Covered
Person") shall be indemnified by the Trust to the fullest extent permitted by
law against liability and against all expenses reasonably incurred or paid by
him in connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the settlement
thereof; (ii) the words "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal or other,
including appeals), actual or threatened while in office or thereafter, and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
40
<PAGE>
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or (ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (x) by the court or other body approving
the settlement; (y) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(z) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any Shareholder may, by appropriate legal proceedings, challenge
any such determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a Person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other Persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) of this Section 10.02 may be paid by the Trust or Series
from time to time prior to final disposition thereof upon receipt of an
undertaking by or on behalf of such Covered Person that such amount will be paid
over by him to the Trust or Series if it is ultimately determined that he is not
entitled to indemnification under this Section 10.02; provided, however, that
either (i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the matter, or independent legal
counsel in a written opinion, shall have determined, based upon a review of
readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such Covered Person will be
found entitled to indemnification under Section 10.02."
(b)(1) Paragraph 8 of the Investment Advisory Agreement by and between the
Registrant and Ebright Investments, Inc. provides as follows:
"8. Protection of the Adviser. The Adviser shall not be liable to the
Fund or to the Series for any action taken or omitted to be taken by the Adviser
in connection with the performance of any of its duties or obligations under
this Agreement or otherwise as an investment adviser for the Series, and the
Series shall indemnify the Adviser and hold it harmless from and against all
damages, liabilities, costs and expenses (including reasonable attorneys' fees
and amounts reasonably paid in settlement) incurred by the Adviser in or by
reason of any pending, threatened or completed action, suit, investigation or
other proceeding (including an action or suit by or in the right of the Fund or
the Series or its security holders) arising out of or otherwise based upon any
action actually or allegedly taken or omitted to be taken by the Adviser in
connection with the performance of any of its duties or obligations under this
Agreement or otherwise as an investment adviser for the Series. Notwithstanding
the preceding sentence of this Paragraph 8 to the contrary, nothing contained
herein shall protect or be deemed to protect the Adviser against or entitle or
be deemed to entitle the Adviser to indemnification in respect of, any liability
to the Fund or to the Series or its security holders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its duties and obligations under this Agreement.
Determinations of whether and the extent to which the Adviser is
entitled to indemnification hereunder shall be made by reasonable and fair
means, including (a) a final decision on the merits by a court or other body
before whom the action, suit or other proceeding was brought that the Adviser
was not liable by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties or (b) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the Adviser was
not liable by reason of such misconduct by (i) the vote of a majority of a
quorum of the Trustees of the Fund who are neither "interested persons" of the
Fund (as defined in Section 2(a)(19) of the Investment Company Act of 1940) nor
parties to the action, suit or other proceeding, or (ii) an independent legal
counsel in a written opinion."
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<PAGE>
(b)(2) Paragraph 7 of the Investment Sub-Advisory Agreement by and between
Ebright Investments, Inc. ("EII") and Gouws Capital Management, Inc.
("Sub-Adviser"). provides as follows:
"7. Limitation of Liability. The Sub-Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Series,
the Trust or its shareholders or by EII in connection with the matters to which
this Agreement relates, except to the extent that such a loss results from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties and obligations under this Agreement and applicable
law."
(c) Paragraphs 8 and 9 of the Distribution Agreement made by and
between the Registrant and CW Fund Distributors, Inc. provides as follows:
"8. INDEMNIFICATION OF TRUST.
Underwriter agrees to indemnify and hold harmless the Trust
and each person who has been, is, or may hereafter be a trustee, officer,
employee, shareholder or control person of the Trust, against any loss, damage
or expense (including the reasonable costs of investigation) reasonably incurred
by any of them in connection with any claim or in connection with any action,
suit or proceeding to which any of them may be a party, which arises out of or
is alleged to arise out of or is based upon any untrue statement or alleged
untrue statement of a material fact, or the omission or alleged omission to
state a material fact necessary to make the statements not misleading, on the
part of Underwriter or any agent or employee of Underwriter or any other person
for whose acts Underwriter is responsible, unless such statement or omission was
made in reliance upon written information furnished by the Trust. Underwriter
likewise agrees to indemnify and hold harmless the Trust and each such person in
connection with any claim or in connection with any action, suit or proceeding
which arises out of or is alleged to arise out of Underwriter's failure to
exercise reasonable care and diligence with respect to its services, if any,
rendered in connection with investment, reinvestment, automatic withdrawal and
other plans for Shares. The term "expenses" for purposes of this and the next
paragraph includes amounts paid in satisfaction of judgments or in settlements
which are made with Underwriter's consent. The foregoing rights of
indemnification shall be in addition to any other rights to which the Trust or
each such person may be entitled as a matter of law.
9. INDEMNIFICATION OF UNDERWRITER.
The Trust agrees to indemnify and hold harmless Underwriter
and each person who has been, is, or may hereafter be a director, officer,
employee, shareholder or control person of Underwriter against any loss, damage
or expense (including the reasonable costs of investigation) reasonably incurred
by any of them in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or negligence on the
part of any of such persons in the performance of Underwriter's duties or from
the reckless disregard by any of such persons of Underwriter's obligations and
duties under this Agreement. The Trust will advance attorneys' fees or other
expenses incurred by any such person in defending a proceeding, upon the
undertaking by or on behalf of such person to repay the advance if it is
ultimately determined that such person is not entitled to indemnification. Any
person employed by Underwriter who may also be or become an officer or employee
of the Trust shall be deemed, when acting within the scope of his employment by
the Trust, to be acting in such employment solely for the Trust and not as an
employee or agent of Underwriter."
Item 28. Business and Other Connections of Investment Advisers
Ebright Investments, Inc.
The descriptions of Ebright Investments, Inc. under the caption "Management
of the Trust" in the Prospectus and Statement of Additional Information of the
Registration Statement are incorporated by reference herein.
42
<PAGE>
The following are the directors and officers of EII including any
business connections of a substantial nature which they have had in the past two
(2) fiscal years.
Jennifer E. Goff, President and Director
Ellen Sue Ebright, Vice President and Director
Auditor, O'Neil Hagaman, 1025 16th Avenue South, Suite 202, Nashville, Tennessee
37212.
Joyce Marie Ebright, Director
Manager, Ebright Properties Limited, 50 Portland Pier, Portland, Maine 04101.
Gouws Capital Management, Inc.
The descriptions of Gouws Capital Management, Inc. ("GCMI") under the
caption "Management of the Trust" in the Prospectus and Statement of Additional
Information of the Registration Statement are incorporated by reference herein.
The following are the directors and officers of GCMI including any
business connections of a substantial nature which they have had in the past two
(2) fiscal years.
Johannes Hendrikus Gouws, President
Chairman, Acadia Trust, N.A., 511 Congress Street, Portland, Maine 04101.
Richard E. Curran, Jr., Senior Vice President
President, Acadia Trust, N.A., 511 Congress Street, Portland, Maine 04101.
Cass Augustus Gilbert, Senior Vice President
Vice President, Acadia Trust, N.A., 511 Congress Street, Portland, Maine 04101.
Frank Edward Kemna, Jr., Senior Vice President
Senior Vice President, Acadia Trust, N.A., 511 Congress Street, Portland, Maine
04101.
Michel J. LePage, Vice President
Vice President, Acadia Trust, N.A., 511 Congress Street, Portland, Maine 04101.
Jan Foster MacLeod, Vice President & Director of Research
Gregg Allen Marston, Senior Vice President
Vice President, Acadia Trust, N.A., 511 Congress Street, Portland, Maine 04101
John Lester Simpson, Senior Vice President
Senior Vice President, Acadia Trust, N.A., 511 Congress Street, Portland, Maine
04101.
Item 29. Principal Underwriters
Inapplicable. The Registrant does not have any principal underwriters.
Item 30. Location of Accounts and Records
The accounts, books and other documents required to be maintained by
the Registrant pursuant to the Investment Company Act of 1940, are maintained at
the following locations:
The Winter Harbor Fund
511 Congress Street
Portland, Maine 04101
43
<PAGE>
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202
Item 31. Management Services
Star Bank, N.A. a national banking association incorporated under the
laws of the United States of America ("Star Bank"), provides certain
management-related services to the Registrant pursuant to a Custodian Contract
made as between the Registrant and Star Bank. Under such Custodian Contract,
Star Bank, among other things, has contracted with the Registrant to keep books
of accounts and render such statements as agreed to in the then current
mutually-executed Fee Schedule or copies thereof from time to time as requested
by the Registrant, and to assist generally in the preparation of reports to
holders of shares of the Registrant, to the Securities and Exchange Commission
and to others, in the auditing of accounts and in other ministerial matters of
like nature as agreed to between the Registrant and. All of these services are
rendered pursuant to instructions received by Star Bank from the Registrant in
the ordinary course of business.
Registrant shall pay the following fees to Star Bank for services
rendered pursuant to the Custodian Contract:
I. Portfolio Transaction Fees:
a. For each repurchase agreement transaction $7.00
b. For each portfolio transaction processed
through DTC of Federal Reserve $9.00
c. For each portfolio transaction processed
through Star Bank's New York Custodian $25.00
d. For each GNMA/Amortized Security Purchase $16.00
e. For each GNMA Prin/Int Paydown, GNMA Sales $8.00
f. For each option/future contract written,
exercised or expired $40.00
g. For each Cedel/Euro clear transaction $80.00
h. For for each disbursement (Fund expenses only) $5.00
II. Market Value Fee:
Based upon an annual rate of: Million
----------------------------- -------
.0002 on First $50
.00015 on Next $150
.00010 on Balance
III. Monthly Minimum Fee (per fund) $300.00
Item 32. Undertakings
Registrant hereby undertakes to furnish each person to whom a
prospectus for any series of the Registrant is delivered with a copy of the
latest annual report to shareholders of such series upon request and without
charge.
Registrant hereby undertakes to call a special meeting of the
Registrant's shareholders upon the written request of shareholders owning at
least 10% of the outstanding shares of the Registrant for the purpose of voting
upon the question of the removal of a trustee or trustees and, upon the written
request of 10 or more shareholders of
44
<PAGE>
the Registrant who have been such for at least 6 months and who own at least 1%
of the outstanding shares of the Registrant, to provide a list of shareholders
or to disseminate appropriate materials at the expense of the requesting
shareholders.
45
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Portland, and State of Maine, on the XXth day of May,
1998.
Jennifer E. Goff, President*
*By: /s/ Max Berueffy
------------------------------
Max Berueffy, Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons on the XX day of May,
1998.
SIGNATURES TITLE
(a) Principal Executive Officer
Jennifer E. Goff* President
and Trustee
*By: /s/ Max Berueffy
---------------------------
Max Berueffy, Attorney-in-Fact
(b) Principal Financial and Accounting Officer
/s/ Max Berueffy
---------------------------
Max Berueffy, Attorney-in-Fact Treasurer
[FORUM WILL NEED HIS POA]
(c) All of the Trustees
Jennifer E. Goff * Trustee
Judith Freyer * Trustee
Earl Mummert* Trustee
Vincent Phillips * Trustee
*By: /s/ Max Berueffy
---------------------------
Max Berueffy, Attorney-in-Fact
A copy of the Declaration of Trust of The Winter Harbor Fund is on file
with the Secretary of State of the State of Delaware, and notice is hereby given
that this instrument is executed on behalf of the Registrant by an officer of
the Registrant as an officer and not individually and that the obligations of or
arising out of this instrument are not binding upon any of the Trustees or
shareholders individually but are binding only upon the assets and property of
the Registrant.
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS PROVIDED IN ITEM 22
[NEED COMPUTATION]
46
<PAGE>
This Schedule illustrates the growth of a $1,000 initial investment in
The REvest Small Cap Value Fund of the Trust by applying the "Annual Total
Return" and the "Average Annual Total Return" percentages set forth in Item 22
of this Registration Statement to the following total return formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment made
at the beginning of the 1, 5 or 10 year or other periods at the end of the 1, 5
or 10 year or other periods.
The REvest Small Cap Fund
(a) 1 Year Ending Redeemable Value ("ERV") of a $1,000 investment for the one
year period ended December 31, 1997:
$1,000 (1+ XXXX)XXX = $XXXXXX ERV{Open Item}
(b) ERV of a $1,000 investment for the period from the Fund's inception on
August 1, 1994 through December 31, 1997:
$1,000 (1+ XXXX)XXXX = $XXXXXXX ERV {Open Item}
FISCAL YEAR END FINANCIALS INCORP BY REF
47
Exhibits:
(1) Copy of the Trust Instrument of the Registrant dated June 25, 1997, as
amended July 10, 1997
(5)(a) Form of Investment Advisory Agreement between Registrant and Ebright
Investments, Inc.
(5)(b) Form of Investment Sub-advisory Agreement between Ebright
Investments, Inc. and Gouws Capital Management, Inc.
(6) Form of Underwriting Agreement between Registrant and CW Fund
Distributors, Inc.
(8)(a) Form of Transfer, Dividend Disbursing, Shareholder Service and Plan
Agency Agreement between Registrant and Countrywide Fund Services, Inc.
(8)(b) Form of Custody Agreement between Registrant and Star Bank, N.A.
(9) Form of Administration Agreement between Registrant and Countrywide
Fund Services, Inc.
Other Exhibits:
Power of Attorney of Jennifer E. Goff
Power of Attorney of Judith Freyer
Power of Attorney of Earl Mummert
Power of Attorney of Vincent Phillips
EXHIBIT (1)
<PAGE>
THE EBRIGHT FUND GROUP
TRUST INSTRUMENT
DATED
JUNE 26, 1997
AS AMENDED, JULY 10, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I NAME AND DEFINITIONS
Section 1.01 Name
Section 1.02 Definitions
ARTICLE II BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest
Section 2.02 Issuance of Shares
Section 2.03 Register of Shares and Share Certificates
Section 2.04 Transfer of Shares
Section 2.05 Treasury Shares
Section 2.06 Establishment of Series or Class
Section 2.07 Investment in the Trust
Section 2.08 Assets and Liabilities of Series
Section 2.09 No Preemptive Rights
Section 2.10 No Personal Liability of Shareholders
Section 2.11 Assent to Trust Instrument and Disclosure
ARTICLE III THE TRUSTEES
Section 3.01 Management of the Trust
Section 3.02 Number of Trustees
Section 3.03 Term of Office
Section 3.04 Vacancies and Appointments
Section 3.05 Temporary Absence
Section 3.06 Effect of Ending of a Trustee's Service
Section 3.07 Ownership of Assets of the Trust
Section 3.08 Meetings of Trustees
Section 3.09 Quorum
Section 3.10 Meeting Actions
ARTICLE IV POWERS OF THE TRUSTEES
Section 4.01 Powers
Section 4.02 Issuance and Repurchase of Shares
Section 4.03 Trustees and Officers as Shareholders
Section 4.04 Principal Transactions
Section 4.05 Delegations and Committees
<PAGE>
ARTICLE V NET ASSET VALUE AND EXPENSES
Section 5.01 Determination of Net Asset Value
Section 5.02 Expenses
ARTICLE VI INVESTMENT ADVISERS AND UNDERWRITERS
Section 6.01 Investment Advisers
Section 6.02 Underwriters
ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers
Section 7.02 Meetings
Section 7.03 Notices
Section 7.04 Quorum and Required Vote
Section 7.05 Voting-Proxies
Section 7.06 Action Without a Meeting
Section 7.07 Establishment of Record Dates
ARTICLE VIII CUSTODIANS
ARTICLE IX DISTRIBUTIONS AND REDEMPTIONS
Section 9.01 Distributions
Section 9.02 Redemptions
Section 9.03 Suspension of the Right of Redemption
Section 9.04 Redemption of Shares in Order to
Qualify as Regulated Investment Company
ARTICLE X LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 10.01 Limitation of Liability
Section 10.02 Indemnification
Section 10.03 Shareholders
Section 10.04 Insurance
ARTICLE XI OFFICERS
Section 11.01 Officers and Appointment
Section 11.02 Resignations
Section 11.03 Surety Bonds
Section 11.04 Removal
<PAGE>
ARTICLE XII MISCELLANEOUS
Section 12.01 Trust Not a Partnership
Section 12.02 Trustee's Good Faith Action,
Expert Advice, No Bond or Surety
Section 12.03 Reorganization
Section 12.04 Termination of Trust or Series
Section 12.05 Derivative Actions
Section 12.06 Parties to Contract
Section 12.07 Filing of Copies, References, Headings
Section 12.08 Governing Law
Section 12.09 Amendments
Section 12.10 Fiscal Year
Section 12.11 Provisions in Conflict with Law
Section 12.12 Execution via Facsimile
Section 12.13 Principal Office
Section 12.14 Inspection of Books
Section 12.15 Seal
<PAGE>
[NAME]
TRUST INSTRUMENT, made by Max Berueffy, David I. Goldstein and Cheryl O.
Tumlin, as Trustees.
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property
contributed to the trust hereunder shall be held and managed in trust under this
Trust Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.01 NAME. The name of the trust created hereby is "The Ebright
Fund Group."
SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) "Affiliated Person" shall have the meaning given it in the 1940
Act, as modified by or interpreted by applicable orders of the Commission or any
rules or regulations adopted by or interpretive releases of the Commission
thereunder.
(b) "Bylaws" means the Bylaws of the Trust as adopted by the Trustees;
(c) "Class" means the class of Shares of a Series established in
accordance with the provisions of Article II, Section 2.06.
(d) "Commission" shall have the meaning given it in the 1940 Act.
(e) "Delaware Act" means to Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time.
(f) "Interested Person" shall have the meaning given it in the 1940
Act, as modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted by or interpretive releases of
the Commission thereunder.
(g) "Majority Shareholder Vote" shall have the same meaning as the term
"vote of a majority of the outstanding voting securities" is given in the 1940
Act, as modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted by or interpretive releases of
the Commission thereunder.
<PAGE>
(h) "Net Asset Value" means the net asset value of each Series of the
Trust or Class thereof determined in the manner provided in Article V, Section
5.01 hereof;
(i) "Outstanding Shares" means those Shares shown from time to time in
the books of the Trust or a Transfer Agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust;
(j) "Person" shall have the meaning given it in the 1940 Act, as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted by or interpretive releases of the
Commission thereunder.
(k) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Article II, Section 2.06.
(l) "Shareholder" means a record owner of Outstanding Shares of the
Trust;
(m) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or Class thereof shall be divided and may include fractions of Shares as
well as whole Shares;
(n) "Transfer Agent" means the transfer agent or such officer or agent
of the Trust as shall maintain the register of a Series.
(o) "Trust" means The Ebright Fund Group and reference to the Trust,
when applicable to one or more Series of the Trust, shall refer to any such
Series;
(p) "Trustees" means the person or persons who has or have signed this
Trust Instrument, so long as each such person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly qualified and serving as Trustees in accordance with the provisions
of Article III hereof and reference herein to a Trustee or to the Trustees shall
refer to the individual Trustees in their capacity as Trustees hereunder;
(q) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or any Series, or the Trustees on behalf of the Trust or any Series.
(r) "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
<PAGE>
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more separate
and distinct Series or Classes of a Series as the Trustees shall from time to
time create and establish. The number of Shares of each Series, and Class
thereof, authorized hereunder is unlimited. All Shares issued hereunder shall be
fully paid and nonassessable.
SECTION 2.02 ISSUANCE OF SHARES. Subject to applicable law, the
Trustees in their discretion may, from time to time, without vote of the
Shareholders, issue Shares, in addition to the then issued and Outstanding
Shares and Shares held in the treasury, to such party or parties and for such
amount and type of consideration, including cash or securities, at such time or
times and on such terms as the Trustees may deem appropriate, and may in such
manner acquire other assets (including the acquisition of assets subject to, and
in connection with, the assumption of liabilities) and businesses. In connection
with any issuance of Shares, the Trustees may issue fractional Shares and Shares
held in the treasury. The Trustees may from time to time divide or combine the
Shares into a greater or lesser number without thereby changing the
proportionate beneficial interests in the Trust. Contributions to the Trust may
be accepted for, and Shares shall be redeemed as, whole Shares and/or 1/1,000th
of a Share or integral multiples thereof.
SECTION 2.03 REGISTER OF SHARES AND SHARE CERTIFICATES.
(a) A register shall be kept at the principal office of the Trust or an
office of a Transfer Agent which shall contain the names and addresses of the
Shareholders of each Series and Class thereof, the number of Shares of that
Series and any Classes thereof held by each Shareholder and a record of all
transfers thereof. No Shareholder shall be entitled to receive payment of any
distribution, nor to have notice given to the Shareholder as herein provided,
until the Shareholder has given its address to the Transfer Agent.
(b) All shares shall be uncertificated except as the Trustees may
otherwise authorize. The Trustees may issue certificates to a Shareholder of any
Series or Class thereof for any purpose and the issuance of a certificate to one
or more Shareholders shall not require the issuance of certificates generally.
Each Shareholder shall be entitled to receive distributions or otherwise to
exercise or enjoy the rights of Shareholders with regard to any Shares owned by
him or her of record, regardless of whether any certificate has been issued for
such Shares. Share certificates shall be in the form prescribed from time to
time by the Trustees and shall be signed by the President or a Vice President
and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary.
Such signatures may be facsimiles if the certificate is signed by a Transfer
Agent or shareholder services agent or by a registrar, other than a Trustee,
officer or employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if the person were such officer at the time of its
issue.
<PAGE>
(c) In the case of the alleged loss or destruction or the mutilation of
a Share certificate, a duplicate certificate may be issued in place thereof,
upon such terms as the Trustees may prescribe or upon the terms generally
employed by the Transfer Agent. The Trustees may at any time discontinue the
issuance of Share certificates and may, by written notice to each Shareholder,
require the surrender of Share certificates to the Trust for cancellation. Such
surrender and cancellation shall not affect the ownership of Shares in the
Trust.
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by that holder's agent thereunto duly authorized in
writing, upon delivery to the Trustees or the Transfer Agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees
or Transfer Agent. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor the Trust, nor any Transfer Agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any notice of the
proposed transfer.
SECTION 2.05 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any distributions declared with
respect to the Shares.
SECTION 2.06 ESTABLISHMENT OF SERIES OR CLASS. The Trust created hereby
shall consist of one or more Series, and separate and distinct records shall be
maintained by the Trust for each Series. The assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees may divide the Shares of any Series into
Classes. The Trustees shall have full power and authority, in their sole
discretion, and without obtaining any prior authorization or vote of the
Shareholders of any Series, to establish and designate and to change in any
manner any such Series or Class and to fix such preferences, voting powers,
rights and privileges of such Series or Classes as the Trustees may from time to
time determine, to divide or combine the Shares or any Series or Classes into a
greater or lesser number, to classify or reclassify any issued Shares of any
Series or Classes into one or more Series or Classes, and to take such other
action with respect to the Shares as the Trustees may deem desirable. The
establishment and designation of any Series or Class shall be effective when
specified in the$resolution of the Trustees setting forth such establishment and
designation and the relative rights and preferences of the Shares of such Series
or Class.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series or Classes, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series and
each Class, except as the context otherwise requires.
<PAGE>
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series subject to Section 2.08 and the
preferences, rights and privileges of each Class of that Series. Each holder of
Shares of a Series or Class thereof shall be entitled to receive the holder's
pro rata share of all distributions made with respect to such Series or Class
thereof. Upon redemption of Shares, such Shareholder shall be paid solely out of
the funds and property of such Series of the Trust.
Each Series and Class thereof of the Trust and their attributes will be
set forth in Annex A to this Trust Instrument.
SECTION 2.07 INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series or Class as the Trustees may from time to time
authorize. At the Trustees' discretion, such investments may be in the form of
cash, securities or other assets in which the affected Series is authorized to
invest, valued as provided in Section 5.01. Investments in a Series shall be
credited to each Shareholder's account in the form of full and fractional Shares
at the Net Asset Value per Share next determined after the investment is
received or accepted as may be determined by the Trustees; provided, however,
that the Trustees may, in their sole discretion, (a) fix the Net Asset Value per
Share of the initial capital contribution or (b) impose a sales or other charge
upon investments in the Trust in such manner and at such time determined by the
Trustees.
SECTION 2.08 ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever from the
same may be, shall be held and accounted for separately from the other assets of
the Trust and of every other Series and may be referred to herein as "assets
belonging to" that Series. The assets belonging to a particular Series shall
belong to that Series for all purposes, and to no other Series, subject only to
the rights of creditors of that Series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as the Trustees, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to that
Series. The assets belonging to a particular Series shall be so recorded upon
the books of the Trust, and shall be held by the Trustees in trust for the
benefit of the holders of Shares of that Series. The assets belonging to a
Series shall be charged with the liabilities of that Series and all expenses,
costs, charges and reserves attributable to that Series, except that
liabilities, expenses, costs, charges and reserves allocated to a particular
Class shall be borne by that Class. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as belonging
to any particular Series or Class shall be allocated and charged by the Trustees
between or among any one or more of the Series of Classes in such manner as the
Trustees in their sole discretion deem
<PAGE>
fair and equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Series for all purposes. Without limitation of the
foregoing provisions of this Section 2.08, but subject to the right of the
Trustees in their discretion to allocate general liabilities, expenses, costs,
changes or reserves as herein provided, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such Series only,
and not against the assets of the Trust generally. Notice of this contractual
limitation on inter-Series liabilities may, in the Trustee's sole discretion, be
set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on inter-Series liabilities (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series.
All Persons extending credit to, contracting with or having any claim
against the Trust or the Trustees shall look only to the assets of the
appropriate Series or (if the Trustees shall have yet to have established
Series) of the Trust for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their agents, whether
past, present or future, shall be personally liable therefor. No Shareholder or
former Shareholder of any Series shall have a claim on or any right to any
assets allocated or belonging to any other Series.
SECTION 2.09 NO PREEMPTIVE RIGHTS. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees, whether of the same or other
Series.
SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDER. No Shareholder of
the Trust or of any Series shall be personally liable for the debts,
liabilities, obligation and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or by or on behalf of any Series. The
Trustees shall have no power to bind any Shareholder personally or to call upon
any Shareholder for the payment of any sum of money or assessment whatsoever
other than such as the Shareholder may at any time personally agree to pay by
way of subscription for any Shares or otherwise. Every note, bond, contract or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or to a Series shall include a recitation limiting the obligation
represented thereby to the Trust or to one or more Series and its or their
assets (but the omission of such a recitation shall not operate to bind any
Shareholder or Trustee of the Trust).
SECTION 2.11 ASSENT TO TRUST INSTRUMENT AND DISCLOSURE. Every
Shareholder, by virtue of having purchased a Share shall become a Shareholder
(i) and shall be held to have expressly assented and agreed to be bound by the
terms hereof (ii) and shall upon demand disclose to the Trustees in writing such
information with respect to direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the requirements of any taxing authority.
<PAGE>
ARTICLE III
THE TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right, but with unlimited powers of delegation except
as may be prohibited by applicable law. The Trustees shall have full power and
authority to conduct the business of the Trust and carry on its operations in
any and all of its branches and maintain offices both within and without the
State of Delaware, in any and all states, commonwealths, territories,
dependencies, colonies or possessions of the United States of America and in any
foreign jurisdiction. The Trustees shall have full power and authority to do any
and all acts and to make and execute any and all contracts and instruments that
they may consider necessary, proper, desirable or appropriate in connection with
the management of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust made by
the Trustees in good faith shall be conclusive. In construing the provisions of
this Trust Instrument, the presumption shall be in favor of a grant of power to
the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
Each Trustee and each committee member may receive such compensation
for his services and reimbursement for his expenses as may be fixed from time to
time by the Trustees.
Except for the Trustees named herein or appointed to fill vacancies
pursuant to Section 3.04 of this Article III, the Trustees shall be elected by
the Shareholders owning a plurality of the Shares voting at a meeting of
Shareholders.
SECTION 3.02 NUMBER OF TRUSTEES. The initial Trustees shall be the
persons named herein. On a date fixed by the Trustees, the Shareholders shall
elect at least one (1) but not more than fifteen Trustees. The number of
Trustees always shall be at least one (1), and otherwise shall be such number as
shall be fixed from time to time by the Trustees, provided, however, that the
number of Trustees shall in no event be more than fifteen (15).
SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust, and until its termination as herein provided; except (a)
that any Trustee may resign his trust by written instrument signed by him and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired, has become physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; (d) that a Trustee shall be removed upon attaining any retirement
age for Trustees
<PAGE>
specified by resolution of the Trustees and (e) that a Trustee may be removed at
any meeting of the Shareholders of the Trust by a vote of Shareholders owning at
least two-thirds of the Outstanding Shares.
SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of the declination to
serve, death, resignation, retirement, removal, physical or mental incapacity by
reason of disease or otherwise, or a Trustee is otherwise unable to serve, or an
increase in the number of Trustees, a vacancy shall occur. Whenever a vacancy in
the Board of Trustees shall occur, until such vacancy is filled, the other
Trustees shall have all the powers hereunder. In the case of a vacancy, the
remaining Trustees shall fill such vacancy by appointing such other Person as
they in their discretion shall see fit consistent with the limitations of
applicable law. Such appointment shall take effect upon the execution of a
written instrument signed by a majority of the Trustees in office or by
resolution of the Trustees, duly adopted.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that said
appointment shall become effective only at or after the effective date of said
retirement, resignation or increase in number of Trustees. As soon as any
Trustee appointed pursuant to this Section 3.04 shall have accepted this trust,
the trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall be
deemed a Trustee hereunder.
SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that at least one Trustee must personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
SECTION 3.06 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The declination
to serve, death, resignation, retirement, removal, incapacity, or inability of
the Trustees, or any one of them, shall not operate to terminate the trust or to
revoke any existing agency created pursuant to the terms of this Trust
Instrument.
SECTION 3.07 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and the
right to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of the Trust, or in the name
of any Person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series. The Shares shall be personal property giving only the
rights specifically set forth in this Trust Instrument.
<PAGE>
SECTION 3.08 ACTION AND MEETINGS OF TRUSTEES. The Trustees shall act by
majority vote (unless a greater amount is specified in this Trust Instrument or
applicable law) at a meeting duly called or by unanimous written consent without
a meeting. Notice of the time, date and place of all meetings of the Trustees
shall be given by the party calling the meeting to each Trustee by telephone,
facsimile or other electronic mechanism sent to his home or business address at
least twenty-four hours in advance of the meeting or by written notice mailed to
his home or business address at least seventy-two hours in advance of the
meeting. Notice need not be given to any Trustee who attends the meeting without
objecting to the lack of notice or who executes a written waiver of notice with
respect to the meeting. Written consents or waivers of the Trustees may be
executed in one or more counterparts. Regular and special meetings of the
Trustees may be held at such places and at such times as the Trustees may from
time to time determine; each Trustee present at such determination shall be
deemed a party calling the meeting and no call or notice will be required to
such Trustee provided that any Trustee who is absent when such determination is
made shall be given notice of the determination by the Chairman or any two other
Trustees. Any meeting may adjourn to any place. Meetings of the Trustees may be
called orally or in writing by the Chairman or any two other Trustees. Except as
otherwise provided, notice of any meeting of the Trustees shall be given by the
party calling the meeting to each Trustee.
SECTION 3.09 QUORUM. A majority of the Trustees shall constitute a
quorum for the transaction of business and an action of a majority of the quorum
shall constitute action of the Trustees except to the extent otherwise provided
for in this Trust Instrument.
SECTION 3.10 MEETING ACTIONS. When all the Trustees shall be present at
any meeting, however called or wherever held, or shall assent to the holding of
the meeting without notice, or shall sign a written assent thereto filed with
the record of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held. Any action by the Trustees may be taken without
a meeting if a written consent thereto is signed by all the Trustees and filed
with the records of the Trustees' meeting. Such consent shall be treated, for
all purposes, as a vote at a meeting of the Trustees held at the principal place
of business of the Trustees. Trustees may participate in a meeting of Trustees
by conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting. Any meeting
conducted by telephone shall be deemed to take place at and from the principal
office of the Trust.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01 POWERS. The Trustees in all instances shall act as
principals, free from the control of the Shareholders. The Trustees shall not in
any way be bound or limited by present or future laws or customs in regard to
trust investments, but shall have full power and authority to make any and all
investments which they, in their sole discretion, shall deem proper to
accomplish the purpose of this Trust without recourse to any court or other
authority. Subject to
<PAGE>
any applicable limitation in this Trust Instrument or the Bylaws, the Trustees
shall have the power and authority:
(a) To invest and reinvest cash and other property, to hold cash or
other property uninvested, and to sell, exchange, lend, pledge, mortgage,
hypothecate, write options on, lease and otherwise dispose of or act with
respect to any or all of the assets of the Trust;
(b) To operate as and carry on the business of an investment company,
and exercise all the powers necessary and appropriate to the conduct of such
operations;
(c) To borrow money and in this connection issue notes or other
evidence of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; to endorse, guarantee, or
undertake the performance of an obligation or engagement of any other Person and
to lend Trust Property;
(d) To provide for the distribution of interests of the Trust either
through a principal underwriter, by the Trust itself, or both, or otherwise
pursuant to a plan of distribution of any kind;
(e) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders; such
Bylaws shall be deemed incorporated and included in this Trust Instrument;
(f) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate;
(g) To employ one or more custodians of any assets of the Trust and to
retain one or more Transfer Agents and shareholder servicing agents, or both;
(h) To consent to, execute or participate in any agreement or plan of
merger, reorganization or consolidation or certificate of merger or similar
document with respect to the Trust or any Series or Class;
(i) To delegate such authority as they consider desirable to any
officers of the Trust and to any investment adviser, manager, custodian,
underwriter or other agent or independent contractor;
(j) To sell or exchange any or all of the assets of the Trust, subject
to the provisions of Article XII, Subsections 12.04(b) and (c);
(k) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such Person or Persons as the Trustees shall deem proper,
granting to such Person or Persons such power and discretion with relation to
securities or property as the Trustees shall deem proper;
<PAGE>
(l) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(m) To hold any security or property in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form; or
either in the name of the Trust or in the name of a custodian or a nominee or
nominees, subject in either case to proper safeguards;
(n) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article II and to establish Classes of such
Series having relative rights, powers and duties as they may provide;
(o) Subject to the provisions of Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series or
Class thereof or to apportion the same between or among two or more Series or
Classes;
(p) To consent to or participate in any plan for the reorganization,
consolidation or merger of any Person or concern or any security of which is
held in the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern; and to pay calls or
subscriptions with respect to any security held in the Trust;
(q) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(r) To make distributions of income, capital gain or otherwise to
Shareholders;
(s) To establish, from time to time, a minimum investment for
Shareholders in the Trust or in one or more Series or Class, and to require the
redemption of the Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder;
(t) To interpret the investment objectives, policies, practices or
limitations of any Series;
(u) To establish a registered office and have a registered agent in the
state of Delaware; and
(v) To terminate a Class, or, subject to the provisions of Section
12.04, the Trust or Series.
(w) In general to carry on any other business in connection with or
incidental to any of the foregoing powers or any other power given to the
Trustees in this Trust Instrument, to do everything necessary, suitable or
proper for the accomplishment of any purpose or the attainment of any object or
the furtherance of any power set forth herein, either alone or in association
with
<PAGE>
others, and to do every other act or thing incidental or appurtenant to or
arising out of or connected with the aforesaid business or purposes, objects or
powers.]
The foregoing clauses shall be construed as objects and powers, and the
foregoing enumeration of specific powers shall not be held to limit or restrict
in any manner the general powers of the Trustees. Any action by one or more of
the Trustees in their capacity as such hereunder shall be deemed an action on
behalf of the Trust or the applicable Series, and not an action in an individual
capacity.
No Trustee hereunder shall have any power to bind personally the
Trust's officers.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust.
No one dealing with the Trustees shall be under any obligation to make
any inquiry concerning the authority of the Trustees, or to oversee the
application of any payments made or property transferred to the Trustees or upon
their order.
SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if the Trustee, officer or other agent were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued and
sold Shares to and buy such Shares from any such trustee, officer or other agent
or any Person in which the trustee, officer or other agent is interested,
subject only to the general limitations herein contained as to the sale and
purchase of such Shares.
SECTION 4.04 PRINCIPAL TRANSACTIONS. Except to the extent prohibited by
applicable law, the Trustees may, on behalf of the Trust, buy any securities
from, sell any securities to, lend any assets of the Trust to, or contract in
any way, whether orally or written, with any Trustee or officer of the Trust or
any other Person, however related to the Trust; or have any dealings of any kind
with any Person.
SECTION 4.05 DELAGATIONS AND COMMITTEES. The Trustees may delegate to
anyone or more of their number the authority to approve particular actions on
behalf of the Trust. The Trustees may establish one or more committees, delegate
any of the powers of the Trustees to any committee and adopt a committee charter
providing for the responsibilities, membership (including Trustees, officers or
other agents of the Trust therein) and any other characteristics of a committee
as the Trustees may deem proper. The Trustees may by resolution appoint a
<PAGE>
committee consisting of less than the whole number of Trustees then in office,
which committee may be empowered to act for and bind the Trustees and the Trust,
as if the acts of such committee were the acts of all the Trustees then in
office, with respect to any and all matters as the Trustees may deem proper.
The Trustees may elect from their own number an executive committee,
which shall have any or all the powers of the Trustees while the Trustees are
not in session.
All members of each committee shall hold such offices at the pleasure
of the Trustees. The Trustees may abolish any committee at any time. Any
committee to which the Trustees delegate any of their powers or duties shall
keep records of its meetings and shall report its actions to the Trustees. The
Trustees shall have power to rescind any action of any committee, but no such
rescission shall have retroactive effect.
ARTICLE V
NET ASSET VALUE AND EXPENSES
SECTION 5.01 DETERMINATION OF NET ASSET VALUE. The "Net Asset Value" of
any Series shall be the amount by which the assets of that Series exceed its
liabilities, all as determined by or under the direction of the Trustees in any
manner the Trustees deem appropriate, that is in accordance with applicable law.
The Net Asset Value of any Class shall be the amount by which the net assets
attributable to that Class exceed any liabilities attributed to that Class as
determined by or under the direction of the Trustees in any manner the Trustees
deem appropriate is in accordance with applicable law. The Trustees or officers
shall from time to time determine the valuation of any securities or other
assets for purposes of calculating a Series' (or Class') Net Asset Value.
SECTION 5.02 EXPENSES. Subject to the provisions of Article II, Section
2.08, the Trustees shall be reimbursed from the estate or the assets belonging
to the appropriate Series for their expenses and disbursements, including,
without limitation, interest charges, taxes, brokerage fees and commissions;
expenses of issue, repurchase and redemption of shares; insurance premiums;
applicable fees, interest charges and expenses of third parties, including the
Trust's investment advisers, managers, administrators, distributors, custodians,
transfer agents and fund accountants; fees of pricing, interest, dividend,
credit and other reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal and
compliance expenses; costs of forming the Trust and maintaining its existence;
costs of preparing and printing the Trust's prospectuses, statements of
additional information and shareholder reports and delivering them to
Shareholders or others; expenses of meetings of Shareholders and proxy
solicitations therefore; costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; fees and expenses of the Trust's;
compensation of the Trust's officers and employees and costs of other personnel
performing services for the Trust; costs of Trustee meetings; registration fees
and related expenses; for such non-recurring items as may arise, including
litigation to which the Trust (or a Trustee acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust, and
<PAGE>
for the payment of such expenses, disbursements, losses and liabilities the
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto.
This section shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.
ARTICLE VI
INVESTMENT ADVISERS AND UNDERWRITERS
SECTION 6.01 INVESTMENT ADVISERS. The Trustees may in their discretion,
from time to time, enter into an investment advisory contract or contracts on
behalf of the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory and other facilities and services upon such terms and
conditions as may be prescribed by the Trustees. Notwithstanding any other
provision of this Trust Instrument, the Trustees may authorize any investment
adviser to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf of the
Trustees, or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the investment
adviser. Any such purchases, sales and exchanges shall be deemed to have been
authorized by all of the Trustees.
The Trustees may authorize the investment adviser to employ, from time
to time, one or more sub-advisers to perform such of the acts and services of
the investment adviser, and upon such terms and conditions, as may be agreed
upon between the investment adviser and sub-adviser. Any reference in this Trust
Instrument to an investment adviser shall be deemed to include such
sub-advisers, unless the context otherwise requires.
SECTION 6.02 UNDERWRITERS. The Trustees may in their discretion from
time to time enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale of Shares, whereby the Trust may either agree
to sell Shares to the other party to the contract or appoint such other party
its sales agent for such Shares. In either case, the contract shall be on such
terms and conditions as may be prescribed by the Trustees; and such contracts
may also provide for the repurchase or sale of Shares by such other party as
principal or as agent of the Trust.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01 VOTING POWERS. The Shareholders shall have power to vote
only (a) for the election of Trustees as provided in Article III, Sections 3.01
and 3.02 ,or (b) for the removal of Trustees as provided in Article III, Section
3.03(e), (c) to amend this Trust Instrument as
<PAGE>
provided for in Section 12.08 and (d) with respect to such additional matters
relating to the Trust as may be required by law, or by this Trust Instrument.
On any matter submitted to a vote of the Shareholders, all Shares shall
be voted separately by individual Series, except (i) when required by applicable
law, Shares shall be voted in the aggregate and not by individual Series; and
(ii) when the Trustees have determined that the matter affects the interests of
more than one Series, then the Shareholders of all such Series shall be entitled
to vote thereon and (iii) when the Trustees have determined that the matter
affects the interests of one of more classes, then the Shareholders of all such
classes shall be entitled to vote. [Each whole Share shall be entitled to one
vote as to any matter on which a Shareholder is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote.] [Each
whole dollar of Net Asset Value of a Share shall be entitled to one vote as to
any matter on which a Shareholder is entitled to vote, and any fraction of a
dollar of Net Asset Value of a Share shall be entitled to a proportionate
fractional vote.] Notwithstanding anything else herein or in the Bylaws, in the
event a proposal by anyone other than the officers or Trustees of the Trust is
submitted to a vote of the Shareholders of one or more Classes, one or more
Series or of the Trust, or in the event of any proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only in person or by written proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Trust Instrument or
the Bylaws to be taken by Shareholders.
SECTION 7.02 MEETINGS. The first Shareholders' meeting shall be held in
order to elect Trustees as specified in Section 3.02 of Article III. Meetings
may be held within or without the State of Delaware as specified by the
Trustees. A meeting of Shareholders shall be called by the Secretary whenever
(i) ordered by the Trustees or (ii) requested in writing by the holder or
holders of at least one third of the Outstanding Shares entitled to vote. If the
Secretary, when so ordered or requested, refuses or neglects for more than 30
days to call such special meeting, the Trustees or the Shareholders so
requesting, may, in the name of the Secretary, call the meeting by giving notice
thereof in the manner required when notice is given by the Secretary. If the
meeting is a meeting of the Shareholders of one or more Series or Classes, but
not a meeting of all Shareholders of the Trust, then only special meetings of
the Shareholders of such one or more Series or Classes shall be called and only
the shareholders of such one or more Series or Classes shall be entitled to
notice of and to vote at such meeting.
SECTION 7.03 NOTICES. Except as provided in Section 7.02, notices of
any meeting of the Shareholders shall be given by the Secretary by delivering or
mailing, postage prepaid, to each Shareholder entitled to vote at said meeting,
written or printed notification of such meeting at least ten (10) days before
the meeting, to such address as may be registered with the Trust by the
Shareholder. Notice of any Shareholder meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the record of such meeting, or to any Shareholder who
shall attend such meeting in person or by proxy. Notice of adjournment of a
Shareholder's meeting to another time or place need not be given, if such time
and place are announced at the meeting or reasonable notice is given to Persons
present at the
<PAGE>
meeting and the adjourned meeting is held within a reasonable time after the
date set for the original meeting.
SECTION 7.04 QUORUM AND REQUIRED VOTE. One-third (or such higher
proportion as the Trustees, in their sole discretion, may determine with respect
to a meeting) of Shares entitled to vote in person or by proxy shall be a quorum
for the transaction of business at a Shareholders' meeting, except that where
any provision of law or of this Trust Instrument permits or requires that
holders of any Series shall vote as a Series (or that holders of a Class shall
vote as a Class), then one-third (or such higher proportion as the Trustees, in
their sole discretion, may determine with respect to a meeting) of the aggregate
number of Shares of that Series (or that Class) entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that Series
(or that Class). Any lesser number shall be sufficient only for holding a vote
to adjourn the meeting. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting, without the
necessity of further notice. Except when a larger vote is required by law or by
any provision of this Trust Instrument or the Bylaws, a majority of the Shares
voted in person or by proxy shall decide any questions and a plurality shall
elect a Trustee, provided that where any provision of law or of this Trust
Instrument permits or requires that the holders of any Series shall vote as a
Series (or that the holders of any Class shall vote as a Class), then a majority
of the Shares present in person or by proxy of that Series (or Class), voted on
the matter in person or by proxy shall decide that matter insofar as that Series
(or Class) is concerned.
SECTION 7.05 VOTING-PROXIES. Shares may be voted in person or by proxy
or in any manner provided for in the Bylaws except as otherwise required by
Section 7.01. Shareholders entitled to vote may vote either in person or by
proxy, provided that either (a) an instrument authorizing such proxy to act is
executed by the Shareholder in writing and dated not more than eleven (11)
months before the meeting, unless the instrument specifically provides for a
longer period or (b) the Trustees or President authorize an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act which authorization is received not more
than eleven (11) months before the meeting. Proxies shall be delivered to the
Secretary of the Trust or other person responsible for recording the proceedings
before being voted. A proxy with respect to Shares held in the name of two or
more Persons shall be valid if executed by one of them unless at or prior to
exercise of such proxy the Trust receives a specific written notice to the
contrary from any one of them. Unless otherwise specifically limited by their
terms, proxies shall entitle the holder thereof to vote at any adjournment of a
meeting. A proxy purporting to be exercised by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden or proving invalidity shall rest on the challenger. At all meetings of
the Shareholders, unless the voting is conducted by inspectors, all questions
relating to the qualifications of voters, the validity of proxies, and the
acceptance or rejection of votes shall be decided by the Chairman of the
meeting. Except as otherwise provided herein, all maters relating to the giving,
voting or validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial interpretations
thereunder, as if the Trust were a Delaware corporation and the Shareholders
were shareholder of a Delaware corporation.
<PAGE>
SECTION 7.06 ACTION WITHOUT A MEETING. Any action to be taken by
Shareholders may be taken without a meeting if all Shareholders entitled to vote
on the matter consent to the action in writing, which may be in one or more
counterparts, and the written consents are filed with the records of meetings of
Shareholders of the Trust. Such consent shall be treated for all purposes as a
vote at a meeting of the Shareholders held at the principal place of business of
the Trust.
SECTION 7.07 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding one hundred twenty
(120) days preceding the date of any meeting of Shareholders, or the date for
the payment of any distributions, or the date for the allotment of rights, or
the date when any change or conversion or exchange of Shares shall go into
effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding one hundred, twenty (120) days
preceding the date of any meeting of Shareholders, or the date for payment of
any distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of Shares, and in such case
such Shareholders and only those Shareholders as shall be Shareholders on the
date so fixed shall be entitled to such notice of, and to vote at, such meeting,
or to receive payment of such distribution, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any such record date
fixed as aforesaid.
ARTICLE VIII
CUSTODIANS
The Trustees shall at all times employ one or more persons permitted to
act as custodian for assets of the Trust under applicable law as custodian with
authority as the Trust's agent, but subject to such restrictions, limitations
and other requirements, if any, as may be contained in the Bylaws: (a) to hold
the securities owned by the Trust and deliver the same upon written order or
oral order confirmed in writing; (b) to receive and receipt for any moneys due
to the Trust and deposit the same in its own banking department or elsewhere as
the Trustees may direct; and (c) to disburse such funds upon orders or vouchers.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees, provided that in
every case such sub-custodian shall be a person permitted to act as custodian
for assets of the Trust under applicable law.
<PAGE>
ARTICLE IX
DISTRIBUTIONS AND REDEMPTIONS
SECTION 9.01 DISTRIBUTIONS.
(a) The Trustees may from time to time declare and pay distributions
with respect to any Series or Class. The amount of such distributions, the
conditions to and timing of their payment and whether they are in cash or any
other Trust Property shall be wholly in the discretion of the Trustees or their
delegates.
(b) Distributions may be paid or made to Shareholders when declared or
the Shareholders of record at such other date or time or dates or times and
subject to such conditions as the Trustees shall determine, which distributions,
at the election of the Trustees, may be paid pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such reinvestment
plans, cash payout plans or related plans with respect to distributions as the
Trustees shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute a stock distribution pro
rata among the Shareholders of a particular Series, or Class thereof, as of the
record date of that Series or Classified as provided in Subsection 9.01(b).
SECTION 9.02 REDEMPTIONS. In case any Shareholder of a particular
Series desires to dispose of the Shareholder's Shares or any portion thereof,
the Shareholder may deposit at the office of the Transfer Agent or other
authorized agent of that Series a written request or such other form of request
as the Trustees may from time to time authorize, requesting that the Series
purchase the Shares in accordance with this Section 9.02; and the Shareholder so
requesting shall be entitled to require the Series to purchase, and the Series
or the principal underwriter of the Series shall purchase the Shares, but only
at the Net Asset Value thereof (as described in Section 5.01 of this Article IX)
reduced by the amount of any sales or other charges applicable to the Shares.
The Series shall make payment for any such Shares to be redeemed, as aforesaid,
in cash or property from the assets of that Series and payment for such Shares
shall be made by the Series or the principal underwriter of the Series to the
Shareholder within seven (7) days after the date upon which the request is
effective. Upon redemption, Shares shall become treasury Shares and may be
re-issued from time to time.
SECTION 9.03 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
with respect to the Trust or any Series or Class thereof as permitted under
applicable law. Such suspension shall take effect at such time as the Trustees
shall specify but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be no right
of redemption or payment until the Trustees shall declare the suspension at an
end. In the case of a suspension of the right of redemption, a Shareholder may
either withdraw his request for
<PAGE>
redemption or receive payment based on the Net Asset Value per Share next
determined after the termination of the suspension
SECTION 9.04 REDEMPTION OF SHARES IN ORDER TO QUALIFY AS REGULATED
INVESTMENT COMPANY. If the Trustees shall, at any time and in good faith, be of
the opinion that direct or indirect ownership of Shares of any Series has
disqualified or may disqualify any Series as a regulated investment company
under the Internal Revenue Code of 1986, as amended, then the Trustees shall
have the power (but not the obligation) by lot or other means deemed equitable
by them (a) to call for redemption by any such Person of a number, or principal
amount, of Shares sufficient to maintain or bring the direct or indirect
ownership of Shares into conformity with the requirements for such qualification
and (b) to refuse to transfer or issue Shares to any Person whose acquisition of
Shares in question would result in such disqualification. The redemption shall
be effected at the redemption price and in the manner provided in this Article
IX.
ARTICLE X
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 10.01 LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any Person other than the Trust or
beneficial owner for any act, omission or obligation of the Trust or any
Trustee. A Trustee shall not be liable for any act or omission or any conduct
whatsoever in his capacity as Trustee, provided that nothing contained herein or
in the Delaware Act shall protect any Trustee against any liability to the Trust
or to Shareholders 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 the office of Trustee hereunder.
SECTION 10.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
10.02(b): (i) every Person who is, or has been, a Trustee or officer of the
Trust (hereinafter referred to as a "Covered Person") shall be indemnified by
the Trust to the fullest extent permitted by law against liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee or officer and against amounts
paid or incurred by him in the settlement thereof; (ii) the words "claim,"
"action," "suit," or "proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals), actual or threatened
while in office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to
<PAGE>
have acted in good faith in the reasonable belief that his action was in the
best interest of the Trust; or (ii) in the event of a settlement, unless there
has been a determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (x) by the court or other body approving
the settlement; (y) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(z) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry); provided,
however, that any Shareholder may, by appropriate legal proceedings, challenge
any such determination by the Trustees or by independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a Person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other Persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit or proceeding of the character described in
Subsection 10.02(a) may be paid by the Trust or Series from time to time prior
to final disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him to the Trust or
Series if it is ultimately determined that he is not entitled to indemnification
under this Section 10.02; provided, however, that either (i) such Covered Person
shall have provided appropriate security for such undertaking, (ii) the Trust is
insured against losses arising out of any such advance payments or (iii) either
a majority of the Trustees who are neither Interested Persons of the Trust nor
parties to the matter, or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
trial-type inquiry or full investigation), that there is reason to believe that
such Covered Person will be found entitled to indemnification under Section
10.02.
SECTION 10.03 SHAREHOLDERS. In case any Shareholder of any Series shall
be held to be personally liable solely by reason of the Shareholder being or
having been a Shareholder of such Series and not because of the Shareholder's
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or the Shareholder's heirs, executors, administrators or other
legal representatives, or, in the case of Shareholder other than an individual,
its corporate or other general successor) shall be entitled out of the assets
belonging to the applicable Series to be held harmless from and indemnified
against all loss and expense arising from such liability. The Trust, on behalf
of the affected Series, shall, upon request by the Shareholder, assume the
defense of any claim made against the Shareholder for any act or obligation of
the Series and satisfy any judgment thereon from the assets of the Series.
SECTION 10.04 INSURANCE. The Trust may purchase and maintain insurance
on behalf of any Covered Person or employee of the Trust or any Shareholder,
including any Covered Person
<PAGE>
or employee of the Trust who is or was serving at the request of the Trust as a
Trustee, officer or employee of another Person, against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the Trustees would have the power to indemnify
him against such liability.
ARTICLE XI
OFFICERS
SECTION 11.01 OFFICERS AND APPOINTMENT. The officers of the Trust shall
be a Chairman of the Board of Trustees, a President, a Treasurer and a
Secretary, each to be elected by the Trustees, and such other officers as the
Trustees may from time to time elect. The Trustees may delegate to one or more
officers or committees the power to elect any subordinate officers or agents and
to prescribe their respective terms of office, authorities and duties. It shall
not be necessary for any Trustee or officer to be a holder of Shares. Two or
more offices may be held by a single person except the offices of President and
Secretary. Subject to the provisions of Section 11.04 hereof, the Chairman, the
President, the Treasurer and the Secretary shall each hold office until their
successors are chosen and qualified and all other officers shall hold office at
the pleasure of the Trustees. Each officer may receive such compensation for his
services and reimbursement for his expenses as may be fixed from time to time by
the Trustees.
(a) The Trustees shall appoint from among their number a Chairman of
the Board of Trustees. When present, the Chairman shall preside at all meetings
of the Shareholders and the Trustees, and he may appoint a Trustee to preside at
such meetings in his absence. The Chairman shall be responsible for the
execution of policies established by the Trustees and the administration of the
Trust. The Chairman shall perform such other duties as the Trustees may from
time to time designate.
(b) The President shall be the chief executive officer of the Trust
and, subject to the direction of the Trustees, shall have general administration
of the business and policies of the Trust. Except as the Trustees may otherwise
order, the President shall have the power to grant, issue, execute or sign such
powers of attorney, proxies, agreements or other documents as may be deemed
advisable or necessary in the furtherance of the interests of the Trust or any
Series. The President shall also have the power to employ attorneys, accountants
and other advisors and agents and counsel for the Trust. The President shall
perform such duties additional to all of the foregoing as the Trustees may from
time to time designate.
(c) The Treasurer shall be the principal financial and accounting
officer of the Trust. The Treasurer shall deliver all funds and securities of
the Trust which may come into his hands to such Person as the Trustees shall
employ as Custodian. The Treasurer shall make annual reports regarding the
business and condition of the Trust, which reports shall be preserved in Trust
records, and he shall furnish such other reports regarding the business and
condition of the Trust as the Trustees may from time to time require. The
Treasurer shall perform such additional duties as the Trustees may from time to
time designate.
<PAGE>
(d) The Secretary shall record in books kept for the purpose all votes
and proceedings of the Trustees and the Shareholders at their respective
meetings. The Secretary shall have the custody of the seal of the Trust. The
Secretary shall perform such additional duties as the Trustees may from time to
time designate.
(e) Any Vice President of the Trust shall perform such duties as the
Trustees or the President may from time to time designate. At the request or in
the absence or disability of the President, the Vice President (or, if there are
two or more Vice Presidents, then the senior of the Vice Presidents present and
able to act) may perform all the duties of the President and, when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President.
(f) Any Assistant Treasurer of the Trust shall perform such duties as
the Trustees or the Treasurer may from time to time designate, and, in the
absence of the Treasurer, the senior Assistant Treasurer, present and able to
act, may perform all the duties of the Treasurer.
(g) Any Assistant Secretary of the Trust shall perform such duties as
the Trustees or the Secretary may from time to time designate, and, in the
absence of the Secretary, the senior Assistant Secretary, present and able to
act, may perform all the duties of the Secretary.
(h) The Trustees from time to time may appoint such officers or agents
as they may deem advisable, each of whom shall have such title, hold office for
such period, have such authority and perform such duties as the Trustees may
determine.
SECTION 11.02 RESIGNATIONS. Any officer of the Trust may resign,
notwithstanding Section 11.01 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.
SECTION 11.03 SURETY BONDS. The Trustees may require any officer or
agent of the Trust to execute a bond (including without limitation, any bond
required by applicable law) to the Trust in such sum and with such surety or
sureties as the Trustees may determine, conditioned upon the faithful
performance of his duties to the Trust including responsibility for negligence
and for the accounting of any of the Trust's property, funds or securities that
may come into his hands.
SECTION 11.04 REMOVAL. Any officer may be removed from office by the
Trustees whenever in the judgment of the Trustees the best interest of the Trust
will be served thereby. In addition, any officer or agent appointed in
accordance with the provisions of Subsection 11.01(h) may be removed, either
with or without cause, by any officer upon whom such power of removal shall have
been conferred by the Trustees.
<PAGE>
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a business trust and not a partnership is created hereby.
SECTION 12.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding. Subject to the provisions of Article X hereof, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Trust Instrument or any other matter, and subject to the
provisions of Article X hereof shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
SECTION 12.03 REORGANIZATION. Notwithstanding anything else herein, the
Trustees may, without Shareholder approval, unless such approval is required by
applicable law, (i) cause the Trust or any Series to merge or consolidate with
or into one or more entities, if the surviving or resulting entity is the Trust
or another company registered as an open-end, management investment company
under the 1940 Act, or a series thereof, (ii) cause any or all Shares to be
exchanged under or pursuant to any state of federal statute to the extent
permitted by law or (iii) cause the Trust to incorporate or organize under the
laws of any state, commonwealth, territory, dependency, colony or possession of
the United States of America or in any foreign jurisdiction.
Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 12.03 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
SECTION 12.04 TERMINATION OF TRUST OR SERIES.
(a) This Trust shall continue without limitation of time but subject to
the provisions of Subsections 12.04(b) and (c).
(b) The Trustees may at any time, in contemplation of the termination
of the Trust or of a Series, subject to a vote of a majority of the Outstanding
Shares of each Series affected by the matter or, if applicable, to a vote of a
majority of the Outstanding Shares of the Trust: (i) sell and convey all or any
portion of the assets of the Trust or the affected Series to another trust,
partnership, association or corporation, or to a separate series of shares
thereof, organized under the laws of any jurisdiction, for adequate
consideration which may include the assumption of all outstanding obligations,
taxes and other liabilities, accrued or contingent, of the Trust of any affected
Series, and which may include shares of beneficial interest, stock or other
ownership
<PAGE>
interest of such trust, partnership, association or corporation or of a series
thereof; or (ii) sell and convert into money all or any portion of the assets of
the Trust or the affected Series.
Upon paying or making reasonable provision for the payment of all known
liabilities of all Series or any affected Series in either (i) or (ii), by such
assumption or otherwise, the Trustees shall distribute the remaining proceeds or
assets (as the case may be) ratably among the Shareholders of all Series or the
affected Series subject to Section 2.08 and the preferences, rights and
privileges of each Class of the Series.
(c) The Trustees may take any of the actions specified in subsection
(b) above without approval of the Shareholders of the Trust or any affected
Series if the Trustees, in their sole discretion, determine that the
continuation of the Trust or the Series is not in the best interests of the
Trust, the Series, or their respective Shareholders. In reaching such
determination, the Trustees may consider any factors the Trustees, in their sole
discretion, deem to be appropriate.
(d) At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated, the Trustees may abolish
that Series and the establishment and designation thereof.
(e) Upon completion of the distribution of the remaining proceeds or
the remaining assets as provided in Subsections 12.04(b) or (c), the Trust or
any affected Series shall terminate and the Trustees and the Trust shall be
discharged of any and all further liabilities and duties hereunder and the
right, title and interest of all parties with respect to the Trust or Series
shall be canceled and discharged. Upon termination of the Trust, following
completion of winding up of its business, the Trustees shall cause a certificate
of cancellation of the Trust's certificate of trust to be filed in accordance
with the Delaware Act, which certificate of cancellation may be signed by any
one Trustee.
SECTION 12.05 DERIVATIVE ACTIONS. Except as provided under applicable
law, no derivative action may be brought by Shareholders unless Shareholders
owning not less than one third of the outstanding Shares of all Series of the
Trust, or of the affected Series or Classes of the Trust, as the case may be,
join in the bringing of the derivative action.
SECTION 12.06 PARTIES TO CONTRACT. Any contract of the character
described in Sections 6.01 or 6.02 or any contract of the character described in
Article VIII and any other contract may be entered into with any Person,
although one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other Person, and no such
contract shall be invalidated or rendered void or voidable by reason of the
existence of any relationship, nor shall any person holding such relationship be
disqualified from voting on or executing the same in his capacity as Shareholder
and/or Trustee, nor shall any Person holding such relationship be liable merely
by reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Trust document. The same Person may be
the other party to one or more
<PAGE>
contracts entered into by the Trust and any Person may be financially interested
or otherwise affiliated with Persons who are parties to any or all of the
contracts entered into by the Trust.
SECTION 12.07 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been make and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
"herein," "hereof' and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his," "he" and "him," shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts each of which shall be deemed an
original.
SECTION 12.08 GOVERNING LAW. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust," and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust under
Delaware law. The Trust specifically reserves the right to exercise any of the
powers or privileges afforded to trusts or actions that may be engaged in by
trusts under the Delaware Act, and the absence of a specific reference herein to
any such power, privilege or action shall not imply that the Trust may not
exercise such power or privilege or take such actions.
<PAGE>
SECTION 12.09 AMENDMENTS. Except as specifically provided herein, the
Trustees may, without shareholder vote, amend or otherwise supplement this Trust
Instrument by making an amendment, a Trust Instrument supplemental hereto or an
amended and restated trust instrument. Shareholders shall have the right to vote
(a) on any amendment which would affect their right to vote granted in Section
7.01 of Article VII, (b) on any amendment to this Section 12.08, (c) on any
amendment as may be required by law and (d) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders which, as the Trustees determine, shall affect the Shareholders of
one or more Series or Classes thereof shall be authorized by vote of the
Shareholders of each Series or Class affected and no vote of shareholders of a
Series or Class not affected shall be required. Notwithstanding anything else
herein, any amendment to Article X hereof shall not limit the rights to
indemnification or insurance provided therein with respect to action or omission
of Covered Persons prior to such amendment.
SECTION 12.10 FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as determined from time to time by the Trustees.
SECTION 12.11 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine that any of
such provisions is in conflict with any applicable law or regulation, the
conflicting provision shall be deemed never to have constituted a part of this
Trust Instrument; provided, however, that such determination shall not affect
any of the remaining provisions of this Trust Instrument or render invalid or
improper any action taken or omitted prior to such determination. If any
provision of this Trust Instrument shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision in such jurisdiction and shall not in any matter affect such
provisions in any other jurisdiction or any other provision of this Trust
Instrument in any jurisdiction.
SECTION 12.12 EXECUTION VIA FACSIMILE. Execution and delivery of any
consent, waiver, certificate, proxy or other document by Trustees, officers or
Shareholders of the Trust or parties contracting with the Trust may be
accomplished by facsimile or other similar electronic mechanism.
SECTION 12.13 PRINCIPAL OFFICE. The principal office of the Trust shall
be located in Portland, Maine, or such other location as the Trustees may from
time to time determine.
SECTION 12.14 INSPECTION OF BOOKS. The Trustees shall from time to time
determine whether and to what extent, and at what times and places, and under
what conditions and regulations the accounts and books of the Trust or any of
them shall be open to the inspection of Shareholders; and no Shareholder shall
have any right to inspect any account or book or document of the Trust except as
conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
SECTION 12.15 SEAL. The seal of the Trust shall be circular in form bearing
the inscription: "The Ebright Fund Group" -- 1997 -- STATE OF DELAWARE.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument as of date first written above.
____________________________
Max Berueffy, Trustee
and not individually
____________________________
David I. Goldstein, Trustee
and not individually
____________________________
Cheryl O. Tumlin, Trustee
and not individually
<PAGE>
ANNEX A
As of June 25, 1997
Series Class Thereof Date Created
- ------ ------------- ------------
The REvest Value Fund
Characteristics and Rights
- --------------------------
EXHIBIT (5)(A)
<PAGE>
FORM OF
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE WINTER HARBOR FUND
(The REvest Small Cap Value Fund)
AND
EBRIGHT INVESTMENTS, INC.
Agreement made this ____ day of ___________, 1998, by and between THE
WINTER HARBOR FUND, a Delaware business trust (the "Fund"), and EBRIGHT
INVESTMENTS, INC. (formerly known as Royce, Ebright & Associates, Inc.), a
Connecticut corporation (the "Adviser").
The Fund and the Adviser hereby agree as follows in respect of The
REvest Small Cap Value Fund, a series of the Fund (the "Series"):
1. DUTIES OF THE ADVISER. The Adviser shall, during the term and
subject to the provisions of this Agreement, (a) determine the composition of
the portfolio of the Series, the nature and timing of the changes therein and
the manner of implementing such changes, and (b) provide the Series with such
investment advisory, research and related services as the Series may, from time
to time, reasonably require for the investment of its funds. The Adviser shall
perform such duties in accordance with the applicable provisions of the Fund's
Trust Instrument, By-Laws and current prospectus and any directions it may
receive from the Fund's Trustees. Notwithstanding any other provision hereof,
the Adviser, with the approval of the Fund, may contract with one or more
sub-advisers to perform any of the investment advisory services; provided,
however, that any compensation paid will be the sole responsibility of the
Adviser.
2. EXPENSES PAYABLE BY THE SERIES. Except as otherwise provided in
Paragraphs 1 and 3 hereof, the Fund shall be responsible for effecting sales and
redemptions of the Series' shares, for determining the net asset value thereof
and for all of the Series' other operations and shall cause the Series to pay
all administrative and other costs and expenses attributable to its operations
and transactions, including, without limitation, transfer agent and custodian
fees; legal, administrative and clerical services; rent for office space and
facilities; auditing; preparation, printing and distribution of its
prospectuses, proxy statements, shareholders' reports and notices; supplies and
postage; Federal and state registration fees; Federal, state and local taxes;
non-affiliated Trustees' fees; and brokerage commissions.
3. EXPENSES PAYABLE BY THE ADVISER. The Adviser shall furnish, without
expense to the Fund or to the Series, the services of those of its officers and
full-time employees who may be duly elected executive officers or Trustees of
the Fund, subject to their individual consent to serve and to any limitations
imposed by law, and shall pay its pro rata share of all of the salaries and
<PAGE>
expenses of the Fund's executive officers. For purposes of this Agreement, only
the President, any Vice President and the Treasurer of the Fund shall be deemed
to be executive officers of the Fund. The Adviser shall also pay all expenses
which it may incur in performing its duties under Paragraph 1 hereof and shall
reimburse the Fund for any space leased by the Fund and occupied by the Adviser.
In the event the Fund shall qualify shares of the Series for sale in any
jurisdiction, the applicable statutes or regulations of which expressly limit
the amount of the Series' total annual expenses, the Adviser agrees to reduce
its annual investment advisory fee for the Series to the extent that such total
annual expenses (other than brokerage commissions and other capital items,
interest, taxes, distribution fees, extraordinary items and other excludable
items, charges, costs and expenses) exceed the limitations imposed on the Series
by the most stringent regulations of any such jurisdiction.
4. COMPENSATION OF THE ADVISER. The Fund agrees to cause the Series to
pay to the Adviser, and the Adviser agrees to accept, as compensation for the
services provided by the Advisor hereunder, advisory fees equal to 1% per annum
of the first $50,000,000 of the Series' average net assets and 0.75% per annum
of additional average net assets over $50,000,000. For purposes of calculating
these fees, average net assets will mean the average net assets of the Series at
the close of business on each day that the value of its net assets is computed
during the year. However, the Fund and the Adviser may agree in writing to
temporarily or permanently reduce such fee. Such compensation shall be accrued
on the Series' books at the close of business on each day that the value of its
net assets is computed during each year and shall be payable to the Adviser
monthly, on the last day of each month, and adjusted as of year-end if required.
5. EXCESS BROKERAGE COMMISSIONS. The Adviser is hereby authorized, to
the fullest extent now or hereafter permitted by law, to cause the Series to pay
a member of a national securities exchange, broker or dealer an amount of
commission for effecting a securities transaction in excess of the amount of
commission another member of such exchange, broker or dealer would have charged
for effecting that transaction, if the Adviser determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and/or research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or its overall
responsibilities with respect to the Series.
6. ACTIVITIES OF THE ADVISER. The Adviser may engage in any other
business or render services to others, provided that the Adviser shall disclose
such activities to the Fund. Nothing in this Agreement shall limit or restrict
the right of any director, officer or employee of the Adviser to engage in any
other business or to devote his or her time and attention in part to any other
business, whether of a similar or dissimilar nature. So long as this Agreement
or any extension, renewal or amendment remains in effect, the Adviser shall be
the only investment adviser for the Series, subject to the Adviser's right to
enter into sub-advisory agreements. The Adviser assumes no responsibility under
this Agreement other than to render the services called for hereunder, and shall
not be responsible for any action of or directed by the Fund's Trustees, or any
committee thereof, unless such action has been caused by the Adviser's gross
negligence, willful
<PAGE>
malfeasance, bad faith or reckless disregard of its obligations and duties under
this Agreement.
7. RESPONSIBILITY OF DUAL DIRECTORS, OFFICERS AND/OR EMPLOYEES. If any
person who is a director, officer or employee of the Adviser is or becomes a
Trustee, officer and/or employee of the Fund and acts as such in any business of
the Fund pursuant to this Agreement, then such director, officer and/or employee
of the Adviser shall be deemed to be acting in such capacity solely for the
Fund, and not as a director, officer or employee of the Adviser or under the
control or direction of the Adviser, although paid by the Adviser.
8. PROTECTION OF THE ADVISER. The Adviser shall not be liable to the
Fund or to the Series for any action taken or omitted to be taken by the Adviser
in connection with the performance of any of its duties or obligations under
this Agreement or otherwise as an investment adviser for the Series, and the
Series shall indemnify the Adviser and hold it harmless from and against all
damages, liabilities, costs and expenses (including reasonable attorneys' fees
and amounts reasonably paid in settlement) incurred by the Adviser in or by
reason of any pending, threatened or completed action, suit, investigation or
other proceeding (including an action or suit by or in the right of the Fund or
the Series or its security holders) arising out of or otherwise based upon any
action actually or allegedly taken or omitted to be taken by the Adviser in
connection with the performance of any of its duties or obligations under this
Agreement or otherwise as an investment adviser for the Series. Notwithstanding
the preceding sentence of this Paragraph 8 to the contrary, nothing contained
herein shall protect or be deemed to protect the Adviser against or entitle or
be deemed to entitle the Adviser to indemnification in respect of, any liability
to the Fund or to the Series or its security holders to which the Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its duties and obligations under this Agreement.
Determinations of whether and the extent to which the Adviser is
entitled to indemnification hereunder shall be made by reasonable and fair
means, including (a) a final decision on the merits by a court or other body
before whom the action, suit or other proceeding was brought that the Adviser
was not liable by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties, or (b) in the absence of such a decision, a
reasonable determination, based upon a review of the facts, that the Adviser was
not liable by reason of such misconduct by (i) the vote of a majority of a
quorum of the Trustees of the Fund who are neither "interested persons" of the
Fund (as defined in Section 2(a) (19) of the Investment Company Act of 1940) nor
parties to the action, suit or other proceeding, or (ii) an independent legal
counsel in a written opinion.
9. EFFECTIVENESS, DURATION AND TERMINATION OF AGREEMENT. This Agreement
shall become effective on the later of (i) the date hereof, or (ii) the date on
which this Agreement is approved by the sole shareholder of the Series. This
Agreement shall remain in effect until the two year anniversary of such
effective date, and thereafter shall continue automatically for successive
annual periods, PROVIDED THAT such continuance is
<PAGE>
specifically approved at least annually by (a) the vote of the Fund's Trustees,
including a majority of such Trustees who are not parties to this Agreement or
"interested persons" (as such term is defined in Section 2(a)(19) of 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, or (b) the vote of a majority
of the outstanding voting securities of the Series and the vote of the Fund's
Trustees, including a majority of such Trustees who are not parties to this
Agreement or "interested persons" (as so defined) of any such party. This
Agreement may be terminated at any time, without the payment of any penalty, on
60 days' written notice by the vote of a majority of the outstanding voting
securities of the Series, or by the vote of a majority of the Fund's Trustees or
by the Adviser, and will automatically terminate in the event of its
"assignment" (as such term is defined for purposes of Section 15(a)(4) of the
Investment Company Act of 1940); PROVIDED, HOWEVER, that the provisions of
Paragraph 8 of this Agreement shall remain in full force and effect, and the
Adviser shall remain entitled to the benefits thereof, notwithstanding any such
termination.
<PAGE>
10. SHAREHOLDER LIABILITY. Notice is hereby given that this Agreement
is entered into on the Fund's behalf by an officer of the Fund in his capacity
as an officer and not individually and that the obligations of or arising out of
this Agreement are not binding upon any of the Fund's Trustees, officers,
employees, agents or shareholders individually, but are binding only upon the
assets and property of the Series.
11. NOTICES. Any notice under this Agreement shall be given in writing,
addressed and delivered or mailed, postage prepaid, to the other party at its
principal office.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed the day and year first above written.
THE WINTER HARBOR FUND
By:_________________________________
Name:
Title:
EBRIGHT INVESTMENTS, INC.
By:__________________________________
Jennifer E. Goff, President
EXHIBIT (5)(B)
<PAGE>
FORM OF
INVESTMENT SUB-ADVISORY AGREEMENT
This Agreement is made as of ____________________, 1998, by and between
EBRIGHT INVESTMENTS, INC. (formerly known as Royce, Ebright & Associates, Inc.),
a Connecticut corporation ("EII"), and GOUWS CAPITAL MANAGEMENT, INC., a Maine
corporation (the "Sub-Adviser").
WHEREAS, EII has entered into an Investment Advisory Agreement dated as
of ______________, 1998, with The Winter Harbor Fund Group (the "Trust"), an
open-end investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act"); and
WHEREAS, EII wishes to retain the Sub-Adviser as sub-adviser to furnish
certain investment advisory services to EII and REvest Small Cap Value Fund, a
series of the Trust (the "Series"), and the Sub-Adviser is willing to furnish
such services.
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. EII hereby appoints the Sub-Adviser as its investment
sub-adviser with respect to the Series for the period and on the terms set forth
in this Agreement. The Sub-Adviser accepts such appointment and agrees to render
the services herein set forth, for the compensation herein provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision of the Trust's Board of Trustees (the
"Board") and EII, the Sub-Adviser will provide a continuous investment program
for the Series, including investment research. Although EII alone will determine
the investments that will be purchased, retained or sold by the Series, the
Sub-Adviser will assist EII in such determinations. The Sub-Adviser will, at the
direction of EII, be responsible for placing purchase and sell orders for
investments with broker-dealers, and for other related transactions. The
Sub-Adviser will provide services under this Agreement in accordance with the
Series's investment objectives, policies and restrictions as stated in the
Series's Prospectus.
(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of the Series, the Sub-Adviser may, in its discretion,
use brokers who provide the Series with analysis and other research services to
execute portfolio transactions on behalf of the Series, and the Sub-Adviser may
pay to those brokers in return for brokerage and research services a higher
commission than may be charged by other brokers, subject to the Sub-Adviser's
determining in good faith that (i) such commission is reasonable in terms either
of the particular transaction or of the overall responsibility of the
Sub-Adviser and its affiliates to the Series and its other clients, and (ii) the
total commissions paid by the Series will be reasonable in relation to the
benefits to
<PAGE>
the Series over the long term. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser, or any affiliated person thereof,
except in accordance with the federal securities laws and the rules and
regulations thereunder. Whenever the Sub-Adviser simultaneously places orders to
purchase or sell the same security on behalf of the Series and one or more other
accounts advised by the Sub-Adviser, such orders will be allocated as to price
and amount among all such accounts in a manner believed to be equitable to each
account. EII recognizes that in some cases this procedure may adversely affect
the results obtained for the Series.
(c) The Sub-Adviser will maintain all books and records required to be
maintained by the Sub-Adviser pursuant to the 1940 Act and the rules and
regulations promulgated thereunder with respect to transactions on behalf of the
Series, and will furnish the Board and EII with such periodic and special
reports as the Board or EII reasonably may request. In compliance with the
requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees
that all records which it maintains for the Series are the property of the
Trust, agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any records which it maintains for the Trust and which are required to
be maintained by Rule 31a-1 under the 1940 Act, and further agrees to surrender
promptly to the Trust any records which it maintains for the Trust upon request
by the Trust.
(d) At such times as shall be reasonably requested by the Board or EII,
the Sub-Adviser will provide the Board and EII with investment analyses and
reports and make available to the Board and EII any statistical and investment
services normally available to similar investment companies based on industry
standards.
3. FURTHER DUTIES. In all matters relating to the performance of this
Agreement, the Sub-Adviser will act in conformity with the Trust's Declaration
of Trust, By-Laws and registration statement under the 1940 Act as may be in
effect from time to time, and any amendments or supplements thereto
("Registration Statement") and with the written instructions and directions of
the Board and EII. The Sub-Adviser will comply with the requirements of the 1940
Act, the Investment Advisers Act of 1940 ("Advisers Act"), the rules thereunder,
and all other applicable federal and state laws and regulations. EII agrees to
provide to the Sub-Adviser, upon request, copies of the Trust's Declaration of
Trust, By-Laws, Registration Statement, written instructions and directions of
the Board and EII, and any amendments or supplements to any of them, as soon as
practicable after such materials become available.
4. SERVICES NOT EXCLUSIVE. The services furnished by the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Sub-Adviser who may also be a
trustee, officer or employee of the Trust, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar nature or a dissimilar nature.
<PAGE>
5. EXPENSES. During the term of this Agreement, the Sub-Adviser will
bear all expenses incurred by it in connection with its services under this
Agreement.
6. COMPENSATION.
(a) For the services provided and the expenses assumed by the
Sub-Adviser pursuant to this Agreement, EII will pay to the Sub-Adviser a fee,
computed daily and payable monthly, at an annual rate equal to 50% of the
Advisory Fee received by EII from the Trust with respect to the Series pursuant
to the Advisory Agreement, less costs and expenses incurred by EII associated
therewith. The Sub-Adviser and EII acknowledge that, in addition to the
compensation set forth herein, each of the Sub-Adviser and EII have rights,
obligations, and duties arising under a certain Letter of Intent by and among
the Sub-Adviser, EII, and Acadia Trust, N.A., dated December 30, 1997 (the
"Letter"). To the extent that the terms of this Section 6 conflict with the
terms of the Letter, the terms of the Letter shall control.
(b) The fee shall be accrued daily and payable monthly to the
Sub-Adviser on or before the last business day of the next succeeding calendar
month.
(c) If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
7. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Series, the
Trust or its shareholders or by EII in connection with the matters to which this
Agreement relates, except to the extent that such a loss results from willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties and obligations under this Agreement and applicable law.
8. REPRESENTATIONS OF SUB-ADVISER. The Sub-Adviser represents, warrants
and agrees as follows:
(a) The Sub-Adviser: (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Agreement; (iii)
has met, and will continue to meet for so long as this Agreement remains in
effect, any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency, necessary to
be met in order to perform the services contemplated by this Agreement; (iv) has
the authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify EII of the occurrence of an event
that would disqualify the Sub-Adviser from serving as an investment adviser of
an investment company pursuant to Section 9(a) of the 1940 Act or otherwise.
<PAGE>
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide EII with a
copy of such code of ethics, together with evidence of its adoption. Within 45
days after the end of the last calendar quarter of each year that this Agreement
is in effect, the president or a vice-president of the Sub-Adviser shall certify
to EII that the Sub-Adviser has complied with the requirements of Rule 17j-1
during the previous year and that there has been no violation of the
Sub-Adviser's code of ethics or, if such a violation has occurred, that
appropriate action was taken in response to such violation. Upon the written
request of EII, the Sub-Adviser shall permit EII, its employees or its agents to
examine the reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1)
and all other records relevant to the Sub-Adviser's code of ethics.
(c) The Sub-Adviser has provided EII with a copy of its Form ADV as
most recently filed with the Securities and Exchange Commission ("SEC") and
will, promptly after filing any amendment to its Form ADV with the SEC, furnish
a copy of such amendment to EII.
9. DURATION AND TERMINATION.
(a) This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved (i) by a vote of a majority of those trustees of the Trust who are
not parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Series's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is specifically approved
at least annually (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Series.
(c) Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Series on 60 days'
written notice to the Trust and the Sub-Adviser. This Agreement may also be
terminated by EII: (i) on 120 days' written notice to the Trust and the
Sub-Adviser, without the payment of any penalty; (ii) upon material breach by
the Sub-Adviser of any of the representations and warranties set forth in
Paragraph 8 of this Agreement, if such breach shall not have been cured within a
20 day period after notice of such breach; or (iii) if the Sub-Adviser becomes
unable to discharge its duties and obligations under this Agreement. The
Sub-Adviser may terminate this Agreement at any time, without the payment of any
penalty, on 120 days' notice to EII. This Agreement will terminate automatically
in the event of its assignment or upon termination of the Advisory Agreement.
<PAGE>
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by vote of a majority of the Series's outstanding
voting securities.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Maine, without giving effect to the conflicts of laws
principles thereof, and the 1940 Act. To the extent that the applicable laws of
the State of Maine conflict with the applicable provisions of the 1940 Act, the
latter shall control.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision or this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"affiliated person," "interested person," "assignment," "broker," "investment
adviser," "net assets," "sale," "sell," and "security" shall have the same
meaning as such terms have in the 1940 Act, subject to such exemption as may be
granted by the SEC by any rule, regulation or order. Where the effect of a
requirement of the federal securities laws reflected in any provision of this
Agreement is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed, as an instrument under seal, by their duly authorized signatories
as of the date and year first above written.
Attest: EBRIGHT INVESTMENTS, INC.
__________________________ By:______________________________
Attest: GOUWS CAPITAL MANAGEMENT, INC.
__________________________ By:_______________________________
EXHIBIT (6)
<PAGE>
UNDERWRITING AGREEMENT
This Agreement made as of , 1998 by and between The Winter Harbor Fund
(the "Trust"), a Delaware business trust and an open-end registered investment
company, and CW Fund Distributors, Inc., a Delaware corporation ("Underwriter").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Trust Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the Securities and
Exchange Commission and a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of each series of shares of the Trust (the "Series");
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. APPOINTMENT.
The Trust hereby appoints Underwriter as its exclusive agent for the
distribution of the Shares, and Underwriter hereby accepts such appointment
under the terms of this Agreement. While this Agreement is in force, the Trust
shall not sell any Shares except on the terms set forth in this Agreement.
Notwithstanding any other provision hereof, the Trust may terminate, suspend or
withdraw the offering of Shares whenever, in its sole discretion, it deems such
action to be desirable.
2. SALE AND REPURCHASE OF SHARES.
(a) Underwriter will have the right, as agent for the Trust,
to enter into dealer agreements with responsible investment dealers, and to sell
Shares to such investment dealers against orders therefor at the public offering
price (as defined in
<PAGE>
subparagraph 2(d) hereof) stated in the Trust's effective Registration Statement
on Form N-1A under the Securities Act of 1933, as amended, including the then
current prospectus and statement of additional information (the "Registration
Statement"). Upon receipt of an order to purchase Shares from a dealer with whom
Underwriter has a dealer agreement, Underwriter will promptly cause such order
to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the
Trust, to sell such Shares to the public against orders therefor at the public
offering price.
(c) Underwriter will also have the right to take, as agent for
the Trust, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
(d) The public offering price for the Shares of each Series
shall be the respective net asset value of the Shares of that Series then in
effect, plus any applicable sales charge determined in the manner set forth in
the Registration Statement or as permitted by the Act and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder. In
no event shall any applicable sales charge exceed the maximum sales charge
permitted by the Rules of the NASD.
(e) The net asset value of the Shares of each Series shall be
determined in the manner provided in the Registration Statement, and when
determined shall be applicable to transactions as provided for in the
Registration Statement. The net asset value of the Shares of each Series shall
be calculated by the Trust or by another entity on behalf of the Trust.
Underwriter shall have no duty to inquire into or liability for the accuracy of
the net asset value per Share as calculated.
(f) On every sale, the Trust shall receive the applicable net
asset value of the Shares promptly, but in no event later than the third
business day following the date on which Underwriter shall have received an
order for the purchase of the Shares.
(g) Upon receipt of purchase instructions, Underwriter will
transmit such instructions to the Trust or its transfer agent for registration
of the Shares purchased.
<PAGE>
(h) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(i) Underwriter, as agent of and for the account of the Trust,
may repurchase the Shares at such prices and upon such terms and conditions as
shall be specified in the Registration Statement.
3. SALE OF SHARES BY THE TRUST.
The Trust reserves the right to issue any Shares at any time
directly to the holders of Shares ("Shareholders"), to sell Shares to its
Shareholders or to other persons approved by Underwriter at not less than net
asset value and to issue Shares in exchange for substantially all the assets of
any corporation or trust or for the shares of any corporation or trust.
4. BASIS OF SALE OF SHARES.
Underwriter does not agree to sell any specific number of
Shares. Underwriter, as agent for the Trust, undertakes to sell Shares on a best
efforts basis only against orders therefor.
5. RULES OF NASD, ETC.
(a) Underwriter will conform to the Rules of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any Shares.
(b) Underwriter will require each dealer with whom Underwriter
has a dealer agreement to conform to the applicable provisions hereof and the
Registration Statement with respect to the public offering price of the Shares,
and neither Underwriter
<PAGE>
nor any such dealers shall withhold the placing of purchase orders so as to make
a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient
copies of any agreements, plans or other materials it intends to use in
connection with any sales of Shares in adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not to
use them until so filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or
broker, or otherwise, under all applicable State or federal laws required in
order that Shares may be sold in such States as may be mutually agreed upon by
the parties.
(e) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those contained
in the then current prospectus and statement of additional information covering
the Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
6. RECORDS TO BE SUPPLIED BY TRUST.
The Trust shall furnish to Underwriter copies of all
information, financial statements and other papers which Underwriter may
reasonably request for use in connection with the distribution of the Shares,
and this shall include, but shall not be limited to, one certified copy, upon
request by Underwriter, of all financial statements prepared for the Trust by
independent public accountants.
<PAGE>
7. FEES AND EXPENSES.
For performing its services under this Agreement, Underwriter
will receive a fee of $5,000 per year. Fees shall be paid monthly in arrears.
The Underwriter shall be promptly reimbursed for any expenses which are to be
paid by the Trust in accordance with the following paragraph.
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and in establishing and maintaining its
relationships with the dealers selling the Shares. All other costs in connection
with the offering of the Shares will be paid by the Trust in accordance with
agreements between them as permitted by applicable law, including the Act and
rules and regulations promulgated thereunder. These costs include, but are not
limited to, licensing fees, filing fees, travel and such other expenses as may
be incurred by Underwriter on behalf of the Trust.
8. INDEMNIFICATION OF TRUST.
Underwriter agrees to indemnify and hold harmless the Trust
and each person who has been, is, or may hereafter be a trustee, officer,
employee, shareholder or control person of the Trust, against any loss, damage
or expense (including the reasonable costs of investigation) reasonably incurred
by any of them in connection with any claim or in connection with any action,
suit or proceeding to which any of them may be a party, which arises out of or
is alleged to arise out of or is based upon any untrue statement or alleged
untrue statement of a material fact, or the omission or alleged omission to
state a material fact necessary to make the statements not misleading, on the
part of Underwriter or any agent or employee of Underwriter or any other person
for whose acts Underwriter is responsible, unless such statement or omission was
made in reliance upon written information furnished by the Trust. Underwriter
likewise agrees to indemnify and hold harmless the Trust and each such person in
connection with any claim or in connection with any action, suit or proceeding
which arises out of
<PAGE>
or is alleged to arise out of Underwriter's failure to exercise reasonable care
and diligence with respect to its services, if any, rendered in connection with
investment, reinvestment, automatic withdrawal and other plans for Shares. The
term "expenses" for purposes of this and the next paragraph includes amounts
paid in satisfaction of judgments or in settlements which are made with
Underwriter's consent. The foregoing rights of indemnification shall be in
addition to any other rights to which the Trust or each such person may be
entitled as a matter of law.
9. INDEMNIFICATION OF UNDERWRITER.
The Trust agrees to indemnify and hold harmless Underwriter
and each person who has been, is, or may hereafter be a director, officer,
employee, shareholder or control person of Underwriter against any loss, damage
or expense (including the reasonable costs of investigation) reasonably incurred
by any of them in connection with the matters to which this Agreement relates,
except a loss resulting from willful misfeasance, bad faith or negligence on the
part of any of such persons in the performance of Underwriter's duties or from
the reckless disregard by any of such persons of Underwriter's obligations and
duties under this Agreement. The Trust will advance attorneys' fees or other
expenses incurred by any such person in defending a proceeding, upon the
undertaking by or on behalf of such person to repay the advance if it is
ultimately determined that such person is not entitled to indemnification. Any
person employed by Underwriter who may also be or become an officer or employee
of the Trust shall be deemed, when acting within the scope of his employment by
the Trust, to be acting in such employment solely for the Trust and not as an
employee or agent of Underwriter.
10. TERMINATION AND AMENDMENT OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of
any penalty, in the event of its assignment. This Agreement may be amended only
if such amendment is approved (i) by Underwriter, (ii) either by action of the
Board of Trustees of the Trust or at a meeting of the Shareholders of the Trust
by the affirmative vote of a majority of
<PAGE>
the outstanding Shares, and (iii) by a majority of the Trustees of the Trust who
are not interested persons of the Trust or of Underwriter by vote cast in person
at a meeting called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. EFFECTIVE PERIOD OF THIS AGREEMENT.
This Agreement shall take effect upon its execution and shall
remain in full force and effect for a period of two (2) years from the date of
its execution (unless terminated automatically as set forth in Section 10), and
from year to year thereafter, subject to annual approval (i) by Underwriter,
(ii) by the Board of Trustees of the Trust or a vote of a majority of the
outstanding Shares, and (iii) by a majority of the Trustees of the Trust who are
not interested persons of the Trust or of Underwriter by vote cast in person at
a meeting called for the purpose of voting on such approval.
12. NEW SERIES.
The terms and provisions of this Agreement shall become
automatically applicable to any additional series of the Trust established
during the initial or renewal term of this Agreement.
Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each series of the Trust are
separate and distinct from the assets and liabilities of each other series and
that no series shall be liable or shall be charged for any debt, obligation or
liability of any other series, whether arising under this Agreement or
otherwise.
13. SUCCESSOR INVESTMENT TRUST.
Unless this Agreement has been terminated in accordance with
Paragraph 10, the terms and provisions of this Agreement shall become
automatically applicable to
<PAGE>
any investment company which is a successor to the Trust as a result of
reorganization, recapitalization or change of domicile.
14. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
15. QUESTIONS OF INTERPRETATION.
(a) This Agreement shall be governed by the laws of the State of
Delaware.
(b) Any question of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a
term or provision of the Act shall be resolved by reference to such
term or provision of the Act and to interpretation thereof, if any, by
the United States courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Act. In addition,
where the effect of a requirement of the Act, reflected in any
provision of this Agreement is revised by rule, regulation or order of
the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
16. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
<PAGE>
17. NOTICES.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
for this purpose shall be
<PAGE>
511 Congress Street, Portland, Maine 04101, and that the address of Underwriter
for this purpose shall be 312 Walnut Street, Cincinnati, Ohio 45202.
IN WITNESS WHEREOF, the Trust and Underwriter have each caused
this Agreement to be signed in duplicate on their behalf, all as of the day and
year first above written.
ATTEST: THE WINTER HARBOR FUND
_____________________________ By:__________________________
Its:President
ATTEST: CW FUND DISTRIBUTORS, INC.
_____________________________ By:__________________________
Its:President
EXHIBIT (8)(A)
<PAGE>
TRANSFER, DIVIDEND DISBURSING, SHAREHOLDER SERVICE
AND PLAN AGENCY AGREEMENT
AGREEMENT dated as of , 1998 between The Winter Harbor Fund, a Delaware
business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
serve as its transfer, dividend disbursing, shareholder service and plan agent;
and
WHEREAS, Countrywide wishes to provide such services under the conditions
set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities and
Exchange Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement
and Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
Countrywide;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving such
forms;
<PAGE>
F. Such other certificates, documents or opinions which
Countrywide may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in
effect;
H. Copies of all Investment Advisory Agreements in
effect; and
I. Copies of all documents relating to special investment or
withdrawal plans which are offered or may be offered in the
future by the Trust and for which Countrywide is to act as
plan agent.
3. COUNTRYWIDE TO RECORD SHARES.
Countrywide shall record the issuance of shares of the Trust
and maintain pursuant to applicable rules of the SEC a record of the total
number of shares of the Trust which are authorized, issued and outstanding,
based upon data provided to it by the Trust. Countrywide shall also provide the
Trust on a regular basis or upon reasonable request the total number of shares
which are authorized, issued and outstanding, but shall have no obligation when
recording the issuance of the Trust's shares, except as otherwise provided in
this Agreement or any other agreement between the parties hereto, to monitor the
issuance of such shares or to take cognizance of any laws relating to the issue
or sale of such shares.
4. COUNTRYWIDE TO VALIDATE TRANSFERS.
Upon receipt of a proper request for transfer and upon
surrender to Countrywide of certificates, if any, in proper form for transfer,
Countrywide shall approve such transfer and shall take all necessary steps to
effectuate the transfer as indicated in the transfer request. Upon approval of
the transfer, Countrywide shall notify the Trust in writing of each such
transaction and shall make appropriate entries on the shareholder records
maintained by Countrywide.
<PAGE>
5. SHARE CERTIFICATES.
If the Trust authorizes the issuance of share certificates and
an investor requests a share certificate, Countrywide will countersign and mail,
by insured first class mail, a share certificate to the investor at his address
as set forth on the transfer books of the Trust, subject to any other
instructions for delivery of certificates representing newly purchased shares
and subject to the limitation that no certificates representing newly purchased
shares shall be mailed to the investor until the cash purchase price of such
shares has been collected and credited to the account of the Trust maintained by
the Custodian. The Trust shall supply Countrywide with a sufficient supply of
blank share certificates and from time to time shall renew such supply upon
request of Countrywide. Such blank share certificates shall be properly signed,
manually or, if authorized by the Trust, by facsimile; and notwithstanding the
death, resignation or removal of any officers of the Trust authorized to sign
share certificates, Countrywide may continue to countersign certificates which
bear the manual or facsimile signature of such officer until otherwise directed
by the Trust. In case of the alleged loss or destruction of any share
certificate, no new certificates shall be issued in lieu thereof, unless there
shall first be furnished an appropriate bond satisfactory to Countrywide and the
Trust, and issued by a surety company satisfactory to Countrywide and the Trust.
6. RECEIPT OF FUNDS.
Upon receipt of any check or other instrument drawn or
endorsed to it as agent for, or identified as being for the account of, the
Trust or the principal underwriter of the Trust (the "Underwriter"), Countrywide
shall stamp the check or instrument with the date of receipt, determine the
amount thereof due the Trust and shall forthwith process the same for
collection. Upon receipt of notification of receipt of funds eligible for share
purchases in accordance with the Trust's then current prospectus and statement
of additional information, Countrywide shall notify the Trust, at the close of
each business day, in writing of the amount of said funds credited to the Trust
and deposited in its account with the Custodian, and shall similarly notify the
Underwriter of the amount of said funds credited to the Underwriter and
deposited in its account with its designated bank.
7. PURCHASE ORDERS.
Upon receipt of an order for the purchase of shares of the
Trust, accompanied by sufficient information to enable Countrywide to establish
a shareholder account, Countrywide shall, as of the next determination of net
asset value after receipt of such order in accordance with the Trust's then
current prospectus and statement of additional information, compute the number
of shares due to the shareholder, credit the share account of the shareholder,
subject to collection of the funds, with the number of shares so purchased,
shall notify the Trust in writing or by computer report at the close of each
business day of such transactions and shall mail to the shareholder and/or
dealer of record a notice of such credit when requested to do so by the Trust.
<PAGE>
8. RETURNED CHECKS.
In the event that Countrywide is notified by the Trust's
Custodian that any check or other order for the payment of money is returned
unpaid for any reason, Countrywide will:
A. Give prompt notification to the Trust and the Underwriter
of the non-payment of said check;
B. In the absence of other instructions from the Trust or the
Underwriter, take such steps as may be necessary to redeem any shares purchased
on the basis of such returned check and cause the proceeds of such redemption
plus any dividends declared with respect to such shares to be credited to the
account of the Trust and to request the Trust's Custodian to forward such
returned check to the person who originally submitted the check; and
C. Notify the Trust and Underwriter of such actions and
correct the Trust's records maintained by Countrywide pursuant to this
Agreement.
9. SALES CHARGE.
In computing the number of shares to credit to the account of
a shareholder, Countrywide will calculate the total of the applicable sales
charges with respect to each purchase as set forth in the Trust's current
prospectus and statement of additional information and in accordance with any
notification filed with respect to combined and accumulated purchases.
Countrywide will also determine the portion of each sales charge payable by the
Underwriter to the dealer of record participating in the sale in accordance with
such schedules as are from time to time delivered by the Underwriter to
Countrywide; provided, however, that Countrywide shall have no liability
hereunder arising from the incorrect selection by Countrywide of the gross rate
of sales charges except that this exculpation shall not apply in the event the
rate is specified by the Underwriter or the Trust and Countrywide fails to
select the rate specified.
10. DIVIDENDS AND DISTRIBUTIONS.
The Trust shall furnish Countrywide with appropriate evidence
of trustee action authorizing the declaration of dividends and other
distributions. Countrywide shall establish procedures in accordance with the
Trust's then current prospectus and statement of additional information and with
other authorized actions of the Trust's Board of Trustees under which it will
have available from the Custodian or the Trust any required information for each
dividend and other distribution. After deducting any amount required to be
withheld by any applicable laws, Countrywide shall, as agent for each
shareholder who so
<PAGE>
requests, invest the dividends and other distributions in full and fractional
shares in accordance with the Trust's then current prospectus and statement of
additional information. If a shareholder has elected to receive dividends or
other distributions in cash, then Countrywide shall disburse dividends to
shareholders of record in accordance with the Trust's then current prospectus
and statement of additional information. Countrywide shall, on or before the
mailing date of such checks, notify the Trust and the Custodian of the estimated
amount of cash required to pay such dividend or distribution, and the Trust
shall instruct the Custodian to make available sufficient funds therefor in the
appropriate account of the Trust. Countrywide shall mail to the shareholders
periodic statements, as requested by the Trust, showing the number of full and
fractional shares and the net asset value per share of shares so credited. When
requested by the Trust, Countrywide shall prepare and file with the Internal
Revenue Service, and when required, shall address and mail to shareholders, such
returns and information relating to dividends and distributions paid by the
Trust as are required to be so prepared, filed and mailed by applicable laws,
rules and regulations.
11. UNCLAIMED DIVIDENDS AND UNCLAIMED REDEMPTION PROCEEDS.
Countrywide shall, at least annually, furnish in writing to
the Trust the names and addresses, as shown in the shareholder accounts
maintained by Countrywide, of all shareholders for which there are, as of the
end of the calendar year, dividends, distributions or redemption proceeds for
which checks or share certificates mailed in payment of distributions have been
returned. Countrywide shall use its best efforts to contact the shareholders
affected and to follow any other written instructions received from the Trust
concerning the disposition of any such unclaimed dividends, distributions or
redemption proceeds.
12. REDEMPTIONS AND EXCHANGES.
A. Countrywide shall process, in accordance with the Trust's then current
prospectus and statement of additional information, each order for the
redemption of shares accepted by Countrywide. Upon its approval of such
redemption transactions, Countrywide, if requested by the Trust, shall mail to
the shareholder and/or dealer of record a confirmation showing trade date,
number of full and fractional shares redeemed, the price per share and the total
redemption proceeds. For each such redemption, Countrywide shall either: (a)
prepare checks in the appropriate amounts for approval and verification by the
Trust and signature by an authorized officer of Countrywide and mail the checks
to the appropriate person, or (b) in the event redemption proceeds are to be
wired through the Federal Reserve Wire System or by bank wire, cause such
proceeds to be wired in federal funds to the bank account designated by the
shareholder, or (c) effectuate such other redemption procedures which are
authorized by the Trust's Board of Trustees or its then current prospectus and
statement of additional information. The requirements as to instruments of
transfer and other documentation, the applicable redemption price and the time
of payment shall be as provided in the then current prospectus and statement of
additional information, subject to such supplemental instructions as may be
furnished by the Trust and accepted by Countrywide. If Countrywide or the Trust
determines that a request for redemption does not comply with the
<PAGE>
requirements for redemptions, Countrywide shall promptly notify the shareholder
indicating the reason therefor.
B. If shares of the Trust are eligible for exchange with
shares of any other investment company, Countrywide, in accordance with the then
current prospectus and statement of additional information and exchange rules of
the Trust and such other investment company, or such other investment company's
transfer agent, shall review and approve all exchange requests and shall, on
behalf of the Trust's shareholders, process such approved exchange requests.
C. Countrywide shall notify the Trust, the Custodian and the
Underwriter on each business day of the amount of cash required to meet payments
made pursuant to the provisions of this Paragraph 12, and, on the basis of such
notice, the Trust shall instruct the Custodian to make available from time to
time sufficient funds therefor in the appropriate account of the Trust.
Procedures for effecting redemption orders accepted from shareholders or dealers
of record by telephone or other methods shall be established by mutual agreement
between Countrywide and the Trust consistent with the Trust's then current
prospectus and statement of additional information.
D. The authority of Countrywide to perform its
responsibilities under Paragraph 7, Paragraph 10, and this Paragraph 12 shall be
suspended with respect to any series of the Trust upon receipt of notification
by it of the suspension of the determination of such series' net asset value.
13. AUTOMATIC WITHDRAWAL PLANS.
Countrywide will process automatic withdrawal orders pursuant
to the provisions of the withdrawal plans duly executed by shareholders and the
current prospectus and statement of additional information of the Trust.
Payments upon such withdrawal order shall be made by Countrywide from the
appropriate account maintained by the Trust with the Custodian on approximately
the last business day of each month in which a payment has been requested, and
Countrywide will withdraw from a shareholder's account and present for
repurchase or redemption as many shares as shall be sufficient to make such
withdrawal payment pursuant to the provisions of the shareholder's withdrawal
plan and the current prospectus and statement of additional information of the
Trust. From time to time on new automatic withdrawal plans a check for payment
date already past may be issued upon request by the shareholder.
14. LETTERS OF INTENT.
Countrywide will process such letters of intent for investing
in shares of the Trust as are provided for in the Trust's current prospectus and
statement of additional information. Countrywide will make appropriate deposits
to the account of the Underwriter for the adjustment of sales charges as therein
provided and will currently report the same to the Underwriter.
<PAGE>
15. WIRE-ORDER PURCHASES.
Countrywide will send written confirmations to the dealers of
record containing all details of the wire-order purchases placed by each such
dealer by the close of business on the business day following receipt of such
orders by Countrywide or the Underwriter, with copies to the Underwriter. Upon
receipt of any check drawn or endorsed to the Trust (or Countrywide, as agent)
or otherwise identified as being payment of an outstanding wire-order,
Countrywide will stamp said check with the date of its receipt and deposit the
amount represented by such check to Countrywide's deposit accounts maintained
with the Custodian. Countrywide will compute the respective portions of such
deposit which represent the sales charge and the net asset value of the shares
so purchased, will cause the Custodian to transfer federal funds in an amount
equal to the net asset value of the shares so purchased to the Trust's account
with the Custodian, and will notify the Trust and the Underwriter before noon of
each business day of the total amount deposited in the Trust's deposit accounts,
and in the event that payment for a purchase order is not received by
Countrywide or the Custodian on the tenth business day following receipt of the
order, will prepare an NASD "notice of failure of dealer to make payment" and
forward such notification to the Underwriter.
16. OTHER PLANS.
Countrywide will process such accumulation plans, group
programs and other plans or programs for investing in shares of the Trust as are
now provided for in the Trust's current prospectus and statement of additional
information and will act as plan agent for shareholders pursuant to the terms of
such plans and programs duly executed by such shareholders.
17. RECORDKEEPING AND OTHER INFORMATION.
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
<PAGE>
18. SHAREHOLDER RECORDS.
Countrywide shall maintain records for each shareholder
account showing the following:
A. Names, addresses and tax identifying numbers;
B. Name of the dealer of record, if any;
C. Number of shares held of each series;
D. Historical information regarding the account of each shareholder,
including dividends and distributions in cash or invested in shares;
E. Information with respect to the source of all dividends and
distributions allocated among income, realized short-term gains and realized
long-term gains;
F. Any instructions from a shareholder including all forms furnished by
the Trust and executed by a shareholder with respect to (i) dividend or
distribution elections and (ii) elections with respect to payment options in
connection with the redemption of shares;
G. Any correspondence relating to the current maintenance of a
shareholder's account;
H. Certificate numbers and denominations for any shareholder
holding certificates;
I. Any stop or restraining order placed against a shareholder's
account;
J. Information with respect to withholding in the case of a
foreign account or any other account for which withholding is required by the
Internal Revenue Code of 1986, as amended; and
K. Any information required in order for Countrywide to perform
the calculations contemplated under this Agreement.
19. TAX RETURNS AND REPORTS.
Countrywide will prepare in the appropriate form, file with
the Internal Revenue Service and appropriate state agencies and, if required,
mail to shareholders of the Trust such returns for reporting dividends and
distributions paid by the Trust as are required to be so prepared, filed and
mailed and shall withhold such sums as are required to be withheld under
applicable federal and state income tax laws, rules and regulations.
20. OTHER INFORMATION TO THE TRUST.
<PAGE>
Subject to such instructions, verification and approval of the
Custodian and the Trust as shall be required by any agreement or applicable law,
Countrywide will also maintain such records as shall be necessary to furnish to
the Trust the following: annual shareholder meeting lists, proxy lists and
mailing materials, shareholder reports and confirmations and checks for
disbursing redemption proceeds, dividends and other distributions or expense
disbursements.
21. ACCESS TO SHAREHOLDER INFORMATION.
Upon request, Countrywide shall arrange for the Trust's
investment adviser to have direct access to shareholder information contained in
Countrywide's computer system, including account balances, performance
information and such other information which is available to Countrywide with
respect to shareholder accounts.
22. COOPERATION WITH ACCOUNTANTS.
Countrywide shall cooperate with the Trust's independent
public accountants and shall take all reasonable action in the performance of
its obligations under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their unqualified
opinion where required for any document for the Trust.
23. SHAREHOLDER SERVICE AND CORRESPONDENCE.
Countrywide will provide and maintain adequate personnel,
records and equipment to receive and answer all shareholder and dealer inquiries
relating to account status, share purchases, redemptions and exchanges and other
investment plans available to Trust shareholders. Countrywide will answer
written correspondence from shareholders relating to their share accounts and
such other written or oral inquiries as may from time to time be mutually agreed
upon, and Countrywide will notify the Trust of any correspondence or inquiries
which may require an answer from the Trust.
24. PROXIES.
Countrywide shall assist the Trust in the mailing of proxy
cards and other material in connection with shareholder meetings of the Trust,
shall receive, examine and tabulate returned proxies and shall, if requested by
the Trust, provide at least one inspector of election to attend and participate
as required by law in shareholder meetings of the Trust.
25. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
<PAGE>
26. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee in accordance with the
schedule attached hereto as Schedule A. The Trust shall promptly reimburse
Countrywide for any out-of-pocket expenses and advances which are to be paid by
the Trust in accordance with Paragraph 27.
27. EXPENSES.
Countrywide shall furnish, at its expense and without cost to
the Trust (i) the services of its personnel to the extent that such services are
required to carry out its obligations under this Agreement and (ii) the use of
data processing equipment. All costs and expenses not expressly assumed by
Countrywide under this Paragraph 27 shall be paid by the Trust, including, but
not limited to, costs and expenses of officers and employees of Countrywide in
attending meetings of the Board of Trustees and shareholders of the Trust, as
well as costs and expenses for postage, envelopes, checks, drafts, continuous
forms, reports, communications, statements and other materials,
<PAGE>
telephone, telegraph and remote transmission lines, use of outside pricing
services, use of outside mailing firms, necessary outside record storage, media
for storage of records (e.g., microfilm, microfiche, computer tapes), printing,
confirmations and any other shareholder correspondence and any and all
assessments, taxes or levies assessed on Countrywide for services provided under
this Agreement. Postage for mailings of dividends, proxies, reports and other
mailings to all shareholders shall be advanced to Countrywide three business
days prior to the mailing date of such materials.
28. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Countrywide to perform any
services for the Trust which services could cause Countrywide to be deemed an
"investment adviser" of the Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene the Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
29. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting solely such printed matter as merely identifies
Countrywide as Administrative Services Agent, Transfer, Shareholder Servicing
and Dividend Disbursing Agent and Accounting Services Agent. The Trust will
submit printed matter requiring approval to Countrywide in draft form, allowing
sufficient time for review by Countrywide and its counsel prior to any deadline
for printing.
30. EQUIPMENT FAILURES.
Countrywide shall take all steps necessary to minimize or
avoid service interruptions, and has entered into one or more agreements making
provision for emergency use of electronic data processing equipment. Countrywide
shall have no liability with respect to equipment failures beyond its control.
31. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by
it to be accurate and reliable. Except as may otherwise be required by the 1940
Act and the rules thereunder, neither Countrywide nor its shareholders,
officers, directors, employees, agents, control persons or affiliates of any
thereof shall be subject to any liability for, or any damages, expenses or
losses incurred by the Trust in connection with, any error of
<PAGE>
judgment, mistake of law, any act or omission connected with or arising out of
any services rendered under or payments made pursuant to this Agreement or any
other matter to which this Agreement relates, except by reason of willful
misfeasance, bad faith or negligence on the part of any such persons in the
performance of the duties of Countrywide under this Agreement or by reason of
reckless disregard by any of such persons of the obligations and duties of
Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee,
shareholder or agent of Countrywide, or any of its affiliates, who may be or
become an officer, trustee, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or acting on any business of the Trust, to
be rendering such services to or acting solely as an officer, trustee, employee
or agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. The Trust shall indemnify and hold harmless Countrywide,
its directors, officers, employees, shareholders, agents, control persons and
affiliates from and against any and all claims, demands, expenses and
liabilities (whether with or without basis in fact or law) of any and every
nature which Countrywide may sustain or incur or which may be asserted against
Countrywide by any person by reason of, or as a result of: (i) any action taken
or omitted to be taken by Countrywide in good faith in reliance upon any
certificate, instrument, order or share certificate reasonably believed by it to
be genuine and to be signed, countersigned or executed by any duly authorized
person, upon the oral instructions or written instructions of an authorized
person of the Trust or upon the opinion of legal counsel for the Trust or its
own counsel; or (ii) any action taken or omitted to be taken by Countrywide in
connection with its appointment in good faith in reliance upon any law, act,
regulation or interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. However, indemnification under
this subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
own negligence, willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
D. Countrywide agrees to indemnify and hold harmless the
Trust, its employees, agents, officers, control persons, affiliates and
Trustees, against and from any and all claims, demands, expenses, judgments,
losses, charges (including attorneys' fees), liabilities (whether with or
without basis in fact or law) and other reasonable expenses arising out of
Countrywide's actions or omissions in the performance of Countrywide's duties or
obligations under this Agreement by reason of Countrywide's, or its director's,
officer's, employee's, shareholder's, agent's, control person's, or affiliate's,
willful misfeasance, bad faith, or negligence, or by reason of reckless
disregard by any of such persons of the obligations and duties of Countrywide
under this Agreement.
<PAGE>
32. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two years from that date
and shall continue in force from year to year thereafter, but only so long as
such continuance is approved (1) by Countrywide, (2) by vote, cast in person at
a meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
fof any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due as
of the date of such termination, and shall likewise reimburse Countrywide for
any out-of-pocket expenses and disbursements reasonably incurred by Countrywide
to such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide's
cognizant personnel in the establishment of books, records and other data by
such successor.
33. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
34. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
<PAGE>
35. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
36. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of
Delaware. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States Courts or
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to said 1940 Act. In addition,
where the effect of a requirement of the 1940 Act, reflected in any provision of
this Agreement, is revised by rule, regulation or order of the SEC, such
provision shall be deemed to incorporate the effect of such rule, regulation or
order.
37. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: The Winter Harbor Fund
511 Congress Street
Portland, Maine 04101
Attention: Jennifer E. Goff
<PAGE>
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 37. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
38. AMENDMENT.
This Agreement may not be amended or modified except by a written agreement
executed by both parties.
<PAGE>
39. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
40. COUNTERPARTS.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
41. SEPARATE LIABILITIES
Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each series of the Trust are
separate and distinct from the assets and liabilities of each other series and
that no series shall be liable or shall be charged for any debt, obligation or
liability of any other series, whether arising under this Agreement or
otherwise.
42. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or
<PAGE>
future law, governmental order, rule or regulation, or shortages of suitable
parts, materials, labor or transportation, such delay or non-performance shall
be excused and a reasonable time for performance in connection with this
Agreement shall be extended to include the period of such delay or
non-performance.
43. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
<PAGE>
THE WINTER HARBOR FUND
By:____________________________
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:____________________________
Its: President
<PAGE>
Schedule A
----------
COMPENSATION
Services Fee
- --------------------------------------------------------------
As Transfer Agent,
Dividend Disbursing Agent
and Shareholder Servicing Agent: (Per Account)
The REvest Small Cap Value Fund
Payable monthly at rate of
$20.00/year; subject to a
minimum of $1,250 per month
EXHIBIT (8)(B)
<PAGE>
CUSTODIAN CONTRACT
Between
THE ROYCE FUND
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities5
2.4 Bank Accounts 5
2.5 Payments for Shares 6
2.6 Investment and Availability of Federal Funds 6
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 7
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased 9
2.10 Payments for Repurchases or Redemptions of Shares of
the Fund9
2.11 Appointment of Agents 10
2.12 Deposit of Trust Assets in Securities Systems 10
2.13 Segregated Account 12
2.14 Ownership Certificates for Tax Purposes 13
2.15 Proxies 13
2.16 Communications Relating to Fund Portfolio
Securities 14
2.17 Proper Instructions 14
2.18 Actions Permitted without Express Authority 15
2.19 Evidence of Authority 15
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income 16
4. Records 16
5. Opinion of Fund's Independent Accountant 17
6. Reports to Fund by Independent Public Accountants 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 18
9. Effective Period, Termination and Amendment 19
<PAGE>
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Additional Funds 21
13. Massachusetts Law to Apply22
14. Prior Contracts 22
15. Shareholder Liability 22
<PAGE>
CUSTODIAN CONTRACT
This Contract between The Royce Fund, a business trust organized and
existing under the laws of Massachusetts, having its principal place of business
at 1414 Avenue of the Americas, New York, New York 10019 hereinafter called the
"Fund", and State Street Bank and Trust Company, a Massachusetts corporation,
having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially shares in three series, the
Equity Income Series, the High Yield Series and the Value Series, (such series,
together with all other series subsequently established by the Fund and made
subject to this Contract in accordance with paragraph 12, being herein referred
to as the "Fund(s)");
NOW THEREFOR, That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
I. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Declaration of Trust. The Fund agrees to
deliver to the Custodian all securities and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest ("Shares") of the Fund as may be issued or sold from time to time. The
Custodian shall not be responsible for any property of the Fund held or received
by the Fund and not delivered to the Custodian.
<PAGE>
Upon receipt of "Proper Instructions" (within the meaning of Section
2.17), the Custodian shall from time to time employ one or more sub-custodians,
but only in accordance with an applicable vote by the Trustees of the Fund, and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the Custodian.
I. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
BY THE CUSTODIAN A. HOLDING SECURITIES. The Custodian shall hold and
physically segregate for the account of the Fund all non-cash property,
including all securities owned by the Fund, other than securities which
are maintained pursuant to Section 2.12 in a clearing agency which acts
as a securities depository or in a book-entry system authorized by the
U.S. Department of the Treasury, collectively referred to herein as
"Securities System". DELIVERY OF SECURITIES. The Custodian shall
release and deliver securities owned by the Fund held by the Custodian
or in a Securities System account of the Custodian only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into
by the Fund;
In the case of a sale effected through a Securities System,
in accordance with the provisions of Section 2.12 hereof;
To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;
To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees
of the Custodian or into the name or nominee name of any
agent appointed pursuant to Section 2.11 or into the name or
nominee name of any sub-custodian appointed pursuant to
Article 1;
or for exchange for a different number of bonds,
certificates or other evidence representing the same
aggregate face amount or number of units;
PROVIDED that, in any such case, the new securities are to
be delivered to the Custodian; To the broker selling the
same for examination in accordance with the "street
delivery" custom;
For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit
agreement;
provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
In the case of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities
for definitive securities; provided that, in any such case,
the new securities and cash, if any, are to be delivered to
the Custodian;
<PAGE>
For delivery in connection with any loans of securities made
by the Fund, BUT ONLY against receipt of adequate collateral
as agreed upon from time to time by the Custodian and the
Fund, which may be in the form of cash or obligations issued
by the United States government, its agencies or
instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S.
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned
by the Fund prior to the receipt of such collateral;
For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Fund, BUT
ONLY against receipt of amounts borrowed;
For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing Corporation and of
any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the
Fund;
For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;
Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such
Transfer Agent or to the holders of shares in connection
with distributions in kind, as may be described from time to
time in the Fund's currently effective prospectus and
statement of additional information ("prospectus"), in
satisfaction of requests by holders of Shares for repurchase
or redemption;
and For any other proper corporate purpose, BUT only upon
receipt of, in addition to Proper Instructions, a certified
copy of a resolution of the Trustees or of the Executive
Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, specifying the
securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purposes
to be proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
REGISTRATION OF SECURITIES. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Fund or
in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund,
UNLESS the Fund has authorized in writing the appointment of a nominee
to be used
<PAGE>
in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.11 or in the name or nominee
name of any sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the Fund under the
terms of this Contract shall be in "street name" or other good
delivery form.
BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract,
and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund,
other than cash maintained by the Fund in a bank account established
and used in accordance with Rule 17f-3 under the Investment Company Act
of 1940. Funds held by the Custodian for the Fund may be deposited by
it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; PROVIDED, however, that every
such bank or trust company shall be qualified to act as a custodian
under the Investment Company Act of 1940 and that each such bank or
trust company and the funds to be deposited with each such bank or
trust company shall be approved by vote of a majority of the Trustees
of the Fund. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be withdrawable by the Custodian only
in that capacity.
PAYMENTS FOR SHARES. The Custodian shall receive from the distributor
for the Fund's Shares or from the Transfer Agent of the Fund and
deposit into the Fund's account such payments as are received for
Shares of the Fund issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund and the Transfer
Agent of any receipt by it of payments for Shares of the Fund.
INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement
between the Fund and the Custodian,, the Custodian shall, upon the
receipt of Proper Instructions,
invest in such instruments as may be set forth in such
instructions on the same day as received all federal funds
received after a time agreed upon between the Custodian and
the Fund; and make federal funds available to the Fund as of
specified times agreed upon from time to time by the Fund and
the Custodian in the amount of checks received in payment for
Shares of the Fund which are deposited into the Fund's
account.
COLLECTION OF INCOME. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or pursuant
to custom in the securities business, and shall collect on a timely
basis all income and other payments with respect to bearer securities
if, on the date of payment by the issuer., such securities are held by
the Custodian or agent thereof and shall credit such income, as
collected, to the Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation as
and when they
<PAGE>
become due and shall collect interest when due on securities held
hereunder. Income due the Fund on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of the
Fund. The Custodian will have nu duty or responsibility in connection
therewith, other than to provide the Fund with such information or
data as may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which the Fund is
properly entitled.
PAYMENT OF FUND MONEYS. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
Upon the purchase of securities, futures contracts or options
on futures contracts for the account of the Fund but only (a)
against the delivery of such securities, or evidence of title
to futures contracts or options on futures contracts, to the
Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified
under the Investment Company Act of 1940, as amended, to act
as a custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in the
case of a purchase effected through a Securities System, in
accordance with the conditions set forth in Section 2.12
hereof or (c) in the case of repurchase agreements entered
into between the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Fund of securities owned by
the Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Fund;
In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
For the redemption or repurchase of Shares issued by the Fund
as set forth in Section 2.10 hereof;
For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
For the payment of any dividends declared pursuant to the
governing documents of the Fund;
<PAGE>
For payment of the amount of dividends received in respect of
securities sold short;
For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Trustees or of the Executive Committee of
the Fund signed by an officer of the Fund and certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be
made.
LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In
any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written
instructions from the Fund to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the same extent as
if the securities had been received by the Custodian, EXCEPT that in
the case of repurchase agreements entered into by the Fund with a bank
which is a member of the Federal Reserve System, the Custodian may
transfer funds to the account of such bank prior to the receipt of
written evidence that the securities subject to such repurchase
agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal
Reserve Bank of Boston or of the safe-keeping receipt, provided that
such securities have in fact been so transferred by book-entry.
PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE FUND. From
such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the
Trustees of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available
for payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In
connection with the redemption or repurchase of Shares of the Fund, the
Custodian is authorized upon receipt of instructions from the Transfer
Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase
of Shares of the Fund, the Custodian shall honor checks drawn on the
Custodian by a holder of Shares, which checks have been furnished by
the Fund to the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are mutually agreed
upon from time to time between the Fund and the Custodian.
APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; PROVIDED, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
<PAGE>
DEPOSIT OF TRUST ASSETS IN SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
The Custodian may keep securities of the Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Fund;
The Custodian shall pay for securities purchased for the
account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) receipt of advice
from the Securities System that payment for such securities
has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account of the Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund
confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall
furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Securities System
for the account of the Fund.
The Custodian shall provide the Fund with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 9 hereof;
Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage
to the Fund resulting from use of the
<PAGE>
Securities System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its agents or of
any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claim
against the Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the-Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the Fund, the
Custodian and a b broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purposes of compliance by
the Fund with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts
by registered investment companies and (iv) for other proper corporate
purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Trustees or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of securities.
PROXIES. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in the
name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
<PAGE>
COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. The Custodian
shall transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from
issuers of the securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Fund shall notify the Custodian
at least three business days prior to the date on which the Custodian
is to take such action.
PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Article 2 means a writing signed or initialed by one or more person or
persons as the Trustees shall have from time to time authorized. Each
such writing shall set forth the specific transaction or type of
transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered
Proper Instructions if the Custodian reasonably believes them to have
been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral
instructions to be confirmed in writing. Upon receipt of a certificate
of the Secretary or an Assistant Secretary as to the authorization by
the Trustees of the Fund accompanied by a detailed description of
procedures approved by the Trustees, Proper Instructions may include
communications effected directly between electromechanical or
electronic devices provided that the Trustees and the Custodian are
satisfied that such procedures afford adequate safeguards for the
Fund's assets.
ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its
discretion, without express authority from the Fund:
make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, PROVIDED that all such payments
shall be accounted for to the Fund;
surrender securities in temporary form for securities in
definitive form;
endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and
in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Fund except as otherwise directed by the Trustees of
the Fund.
<PAGE>
A. EVIDENCE OF AUTHORITY. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Trustees of the
Fund as conclusive evidence (a) of the authority of any person to act
in accordance with such vote or (b) of any determination or of any
action by the Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as in full
force and effect until receipt by the Custodian of written notice to
the contrary. II. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF
ACCOUNT AND CALCULATION OF NET ASSET VALUE AND NET INCOME
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Trustees of the Fund to keep the books
of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
I. RECORDS
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund. All such records shall be the
property of the Fund and shall at all times during the regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by the Fund and held by the Custodian and shall,
when requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
I. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
<PAGE>
I. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports, which
shall be of sufficient scope and in sufficient detail, as may reasonably be
required by the Fund, to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, shall so state.
I. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.
I. RESPONSIBILITY OF CUSTODIAN
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice. Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for
any purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of Fund
assets to the extent necessary to obtain reimbursement.
<PAGE>
I. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; PROVIDED,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Trustees of the Fund have approved the initial use of a
particular Securities System and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Trustees have reviewed the use by
the Fund of such Securities System, as required in each case by Rule 17f-4 under
the Investment Company Act of 1940, as amended; PROVIDED further, however, that
the Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Declaration of
Trust, and further provided, that the Fund may at any time by action of its
Trustees (i) substitute another bank or trust company for the Custodian by:
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements.
I. SUCCESSOR CUSTODIAN
If a successor custodian shall be appointed by the Trustees of the
Fund, the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Trustees of
the Fund, deliver at the office of the Custodian and transfer such securities,
funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Trustees shall have been delivered to the
Custodian on or before the date when such termination shall become effective,
then the Custodian shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the Investment Company Act of 1940, doing
business in Boston, Massachusetts, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other properties held by
the Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract and to transfer to an account of
such successor custodian all of the Fund's securities held in any Securities
System.
<PAGE>
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to or of the
Trustees to appoint a successor custodian, the Custodian shall be entitled to
fair compensation for its services during such period as the Custodian retains
possession of such securities, funds and other properties and the provisions of
this Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
I. INTERPRETIVE AND ADDITIONAL PROVISIONS
In connection with the operation of this Contract, the Custodian and
the Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, PROVIDED that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
I. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of Shares in
addition to the Equity Income Series, the High Yield Series, or the Value
Series, with respect to which it desires to have the Custodian render services
as custodian under the terms hereof, it shall so notify the Custodian in
writing, and if the Custodian agrees in writing to provide such services, such
series of Shares shall become a Fund hereunder.
I. MASSACHUSETTS LAW TO APPLY
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
I. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund and the Custodian relating to the custody of
the Fund's assets.
I. SHAREHOLDER LIABILITY
Notice is hereby given that this Contract is entered into on the Fund's
behalf by an officer of the Fund in his capacity as an officer and not
individually and that the obligations of or arising out of this Contract are not
binding upon any of the Fund's Trustees, officers, employees or shareholders
individually but are binding only upon the assets and property of the Fund.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the ____ day of December, 1985.
ATTEST THE ROYCE FUND
_________________________________ By:_________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
_________________________________ By:_________________________________
Assistant Secretary Vice President
EXHIBIT (9)
<PAGE>
ADMINISTRATION AGREEMENT
AGREEMENT dated as of , 1998 between The Winter Harbor Fund, a Delaware
business trust (the "Trust"), and Countrywide Fund Services, Inc.
("Countrywide"), an Ohio corporation.
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust wishes to employ the services of Countrywide to
serve as its administrative agent; and
WHEREAS, Countrywide wishes to provide such services under the
conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in this Agreement, the Trust and Countrywide agree as follows:
1. APPOINTMENT.
The Trust hereby appoints and employs Countrywide as agent to
perform those services described in this Agreement for the Trust. Countrywide
shall act under such appointment and perform the obligations thereof upon the
terms and conditions hereinafter set forth.
2. DOCUMENTATION.
The Trust will furnish from time to time the following
documents:
A. Each resolution of the Board of Trustees of the Trust
authorizing the original issue of its shares;
B. Each Registration Statement filed with the Securities and
Exchange Commission (the "SEC") and amendments thereof;
C. A certified copy of each amendment to the Agreement
and Declaration of Trust and the Bylaws of the Trust;
D. Certified copies of each resolution of the Board of
Trustees authorizing officers to give instructions to
Countrywide;
E. Specimens of all new forms of share certificates
accompanied by Board of Trustees' resolutions approving such
forms;
<PAGE>
F. Such other certificates, documents or opinions which
Countrywide may, in its discretion, deem necessary or
appropriate in the proper performance of its duties;
G. Copies of all Underwriting and Dealer Agreements in effect;
H. Copies of all Investment Advisory Agreements in effect; and
I. Copies of all documents relating to special investment or
withdrawal plans which are offered or may be offered in the
future by the Trust and for which Countrywide is to act as
plan agent.
3. TRUST ADMINISTRATION.
Subject to the direction and control of the Trustees of the
Trust, Countrywide shall supervise and manage all aspects of the Trust's
operations with respect to each series of the Trust not otherwise supervised by
Ebright Investments, Inc., or any other investment adviser or investment
sub-adviser (collectively, the "Adviser"), or any other service provider
retained by the Trust. Without limiting the generality of the foregoing, with
respect to the Trust or each series, as applicable, Countrywide shall:
A. provide the Trust with, or arrange for the provision
of, the services of persons competent to perform such
legal, administrative and clerical functions not
otherwise described in this Section 3 as are necessary
to provide effective operation of the Trust;
B. oversee (i) the preparation and maintenance by the
Adviser and the Trust's custodian, transfer agent,
dividend disbursing agent and fund accountant in such
form, for such periods and in such locations as may be
required by applicable United States law, of all
documents and records relating to the operation of the
Trust required to be prepared or maintained by the
Trust or its agents pursuant to applicable law; (ii)
the reconciliation of account information and balances
among the Adviser and the Trust's custodian, transfer
agent, dividend disbursing agent and fund accountant;
(iii) the transmission of purchase and redemption
orders for shares of any and each series ("Shares");
(iv) the notification to the Adviser of available funds
for investment; and (v) the performance of fund
accounting, including the calculation of the net asset
value of the Shares;
C. oversee the performance of administrative and
professional services rendered to the Trust by others,
including its custodian, transfer agent, dividend
disbursing agent, and fund accountant, as well as
<PAGE>
legal, auditing, shareholder servicing and other
services performed for each series;
D. file or oversee the filing of each document required to
be filed by the Trust in either written or, if
required, electronic format (e.g., electronic data
gathering analysis and retrieval system or "EDGAR")
with the SEC;
E. assist in and oversee the preparation, filing and
printing and the periodic updating of the Trust's
registration statement and prospectuses;
F. oversee the preparation and filing of the Trust's tax
returns;
G. oversee the preparation of financial statements and
related reports to the Trust's shareholders, the SEC
and state and other securities administrators;
H. assist in and oversee the preparation and printing of
proxy and information statements and any other
communications to shareholders;
I. provide the Trust with adequate general office space
and facilities;
J. assist the Adviser in monitoring series holdings for
compliance with prospectus investment restrictions and
assist in preparation of periodic compliance reports;
K. prepare, file and maintain the Trust's organizational
documents and minutes of meetings of the Trustees,
board committees and shareholders;
L. prepare and disseminate materials for meetings of the
Trustees (with the cooperation of the Trust's counsel,
the Adviser, the officers of the Trust and other
relevant parties);
M. maintain the Trust's existence and good standing under
applicable state law;
<PAGE>
N. monitor sales of Shares, ensure that the Shares are
properly and duly registered with the SEC and register,
or prepare applicable filings with respect to, the
Shares with the various state and other securities
commissions;
O. oversee the calculation of performance data for
dissemination to information services covering the
investment company industry, for sales literature of
the Trust and other appropriate purposes;
P. oversee the determination of the amount of, and
supervise the declaration of, dividends and other
distributions to shareholders as necessary to, among
other things, maintain the qualification of each series
as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"), and
prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other
distributions to shareholders;
Q. advise the Trust and the Trustees on matters concerning
the Trust and its affairs;
R. calculate, review and account for series expenses and
report on series expenses on a periodic basis;
S. authorize the payment of Trust expenses and pay, from
Trust assets, all bills of the Trust (upon approval of
the Adviser);
T. prepare series budgets, pro-forma financial statements,
expense and profit/loss projections and fee
waiver/expense reimbursement projections on a periodic
basis;
U. prepare financial statement expense information;
V. assist the Trust in the selection of other service
providers, such as independent accountants, law firms
and proxy solicitors;
W. perform such other recordkeeping, reporting and other
tasks customarily performed by fund administrators and
as may be specified from time to time in the procedures
adopted by the Trustees; and
X. provide the Trust with personnel suitable to serve as
officers of the Trust if so elected by the Trustees;
provided that the Trust shall reimburse Countrywide for
the reasonable out-of-pocket expenses incurred by such
personnel in attending Trustees' meetings and
shareholders' meetings of the Trust.
4. RECORDKEEPING AND OTHER INFORMATION.
<PAGE>
Countrywide shall create and maintain all records required by
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act and the rules thereunder, as the same
may be amended from time to time, pertaining to the various functions performed
by it and not otherwise created and maintained by another party pursuant to
contract with the Trust. All such records shall be the property of the Trust at
all times and shall be available for inspection and use by the Trust. Where
applicable, such records shall be maintained by Countrywide for the periods and
in the places required by Rule 31a-2 under the 1940 Act. The retention of such
records shall be at the expense of the Trust. Countrywide shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust, any
person retained by the Trust, or any regulatory agency having authority over the
Trust.
5. FURTHER ACTIONS.
Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
6. COMPENSATION.
For the performance of Countrywide's obligations under this
Agreement, each series of the Trust shall pay Countrywide, on the first business
day following the end of each month, a monthly fee at the annual rate of .09% of
such series' average daily net assets up to $100 million; .075% of such assets
from $100 to $200 million; and .05% of such assets in excess of $200 million;
provided, however, that the minimum fee shall be $2,000 per month for each
series.
7. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS.
The parties hereto acknowledge and agree that nothing
contained herein shall be construed to require Countrywide to perform any
services for the Trust which services could cause Countrywide to be deemed an
"investment adviser" of the Trust within the meaning of Section 2(a)(20) of the
1940 Act or to supersede or contravene the Trust's prospectus or statement of
additional information or any provisions of the 1940 Act and the rules
thereunder. Except as otherwise provided in this Agreement and except for the
accuracy of information furnished to it by Countrywide, the Trust assumes full
responsibility for complying with all applicable requirements of the 1940 Act,
the Securities Act of 1933, as amended, and any other laws, rules and
regulations of governmental authorities having jurisdiction.
8. REFERENCES TO COUNTRYWIDE.
The Trust shall not circulate any printed matter which
contains any reference to Countrywide without the prior written approval of
Countrywide, excepting
<PAGE>
solely such printed matter as merely identifies Countrywide as Administrative
Services Agent, Transfer, Shareholder Servicing and Dividend Disbursing Agent
and Accounting Services Agent. The Trust will submit printed matter requiring
approval to Countrywide in draft form, allowing sufficient time for review by
Countrywide and its counsel prior to any deadline for printing.
9. INDEMNIFICATION OF COUNTRYWIDE.
A. Countrywide may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be required by the 1940 Act and
the rules thereunder, neither Countrywide nor its shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under or
payments made pursuant to this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or
negligence on the part of any such persons in the performance of the duties of
Countrywide under this Agreement or by reason of reckless disregard by any of
such persons of the obligations and duties of Countrywide under this Agreement.
B. Any person, even though also a director, officer, employee, shareholder
or agent of Countrywide, or any of its affiliates, who may be or become an
officer, trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust, to be
rendering such services to or acting solely as an officer, trustee, employee or
agent of the Trust and not as a director, officer, employee, shareholder or
agent of or one under the control or direction of Countrywide or any of its
affiliates, even though paid by one of these entities.
C. Notwithstanding any other provision of this Agreement, the Trust shall
indemnify and hold harmless Countrywide, its directors, officers, employees,
shareholders, agents, control persons and affiliates from and against any and
all claims, demands, expenses and liabilities (whether with or
<PAGE>
without basis in fact or law) of any and every nature which Countrywide may
sustain or incur or which may be asserted against Countrywide by any person by
reason of, or as a result of: (i) any action taken or omitted to be taken by
Countrywide in good faith in reliance upon any certificate, instrument, order or
share certificate reasonably believed by it to be genuine and to be signed,
countersigned or executed by any duly authorized person, upon the oral
instructions or written instructions of an authorized person of the Trust or
upon the opinion of legal counsel for the Trust or its own counsel; or (ii) any
action taken or omitted to be taken by Countrywide in connection with its
appointment in good faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter have been
altered, changed, amended or repealed. However, indemnification under this
subparagraph shall not apply to actions or omissions of Countrywide or its
directors, officers, employees, shareholders or agents in cases of its or their
negligence, willful misconduct, bad faith, or reckless disregard of its or their
own duties hereunder.
D. Countrywide agrees to indemnify and hold harmless the Trust, its
employees, agents, officers, control persons, affiliates and Trustees, against
and from any and all claims, demands, expenses, judgments, losses, charges
(including attorneys' fees), liabilities (whether with or without basis in fact
or law) and other reasonable expenses arising out of Countrywide's actions or
omissions in the performance of Countrywide's duties or obligations under this
Agreement by reason of Countrywide's, or its director's, officer's, employee's,
shareholder's, agent's, control person's, or affiliate's, willful misfeasance,
bad faith, or negligence, or by reason of reckless disregard by any of such
persons of the obligations and duties of Countrywide under this Agreement.
10. TERMINATION
A. The provisions of this Agreement shall be effective on the
date first above written, shall continue in effect for two years from that date
and shall continue in force from year to year thereafter, but only so long as
such continuance is approved (1) by Countrywide, (2) by vote, cast in person at
a meeting called for the purpose, of a majority of the Trust's trustees who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party, and (3) by vote of a majority of the Trust's Board of
Trustees or a majority of the Trust's outstanding voting securities.
B. Either party may terminate this Agreement on any date by
giving the other party at least sixty (60) days' prior written notice of such
termination specifying the date fixed therefor. Upon termination of this
Agreement, the Trust shall pay to Countrywide such compensation as may be due as
of the date
<PAGE>
of such termination, and shall likewise reimburse Countrywide for any
out-of-pocket expenses and disbursements reasonably incurred by Countrywide to
such date.
C. In the event that in connection with the termination of
this Agreement a successor to any of Countrywide's duties or responsibilities
under this Agreement is designated by the Trust by written notice to
Countrywide, Countrywide shall, promptly upon such termination and at the
expense of the Trust, transfer all records maintained by Countrywide under this
Agreement and shall cooperate in the transfer of such duties and
responsibilities, including provision for assistance from Countrywide's
cognizant personnel in the establishment of books, records and other data by
such successor.
11. SERVICES FOR OTHERS.
Nothing in this Agreement shall prevent Countrywide or any
affiliated person (as defined in the 1940 Act) of Countrywide from providing
services for any other person, firm or corporation (including other investment
companies); provided, however, that Countrywide expressly represents that it
will undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
12. LIMITATION OF LIABILITY.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and signed by an officer of the Trust,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by any
of them individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Trust.
13. SEVERABILITY.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
14. QUESTIONS OF INTERPRETATION.
This Agreement shall be governed by the laws of the State of Delaware. Any
question of interpretation of any term or
<PAGE>
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States Courts or in the absence of any controlling decision of any such court,
by rules, regulations or orders of the SEC issued pursuant
<PAGE>
to said 1940 Act. In addition, where the effect of a requirement of the 1940
Act, reflected in any provision of this Agreement, is revised by rule,
regulation or order of the SEC, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
15. NOTICES.
All notices, requests, consents and other communications
required or permitted under this Agreement shall be in writing (including telex
and telegraphic communication) and shall be (as elected by the person giving
such notice) hand delivered by messenger or courier service, telecommunicated,
or mailed (airmail if international) by registered or certified mail (postage
prepaid), return receipt requested, addressed to:
To the Trust: The Winter Harbor Fund
511 Congress Street
Portland, Maine 04101
Attention: Jennifer E. Goff
To Countrywide: Countrywide Fund Services, Inc.
312 Walnut Street, 21st Floor
Cincinnati, Ohio 45202
Attention: Robert G. Dorsey
or to such other address as any party may designate by notice complying with the
terms of this Section 15. Each such notice shall be deemed delivered (a) on the
date delivered if by personal delivery; (b) on the date telecommunicated if by
telegraph; (c) on the date of transmission with confirmed answer back if by
telex, telefax or other telegraphic method; and (d) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed.
16. AMENDMENT.
This Agreement may not be amended or modified except by a
written agreement executed by both parties.
17. BINDING EFFECT.
Each of the undersigned expressly warrants and represents that
he has the full power and authority to sign this Agreement on behalf of the
party indicated, and that his signature will operate to bind the party indicated
to the foregoing terms.
18. COUNTERPARTS.
<PAGE>
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
19. SEPARATE LIABILITIES.
Notwithstanding any other provision of this Agreement, the
parties agree that the assets and liabilities of each series of the Trust are
separate and distinct from the assets and liabilities of each other series and
that no series shall be liable or shall be charged for any debt, obligation or
liability of any other series, whether arising under this Agreement or
otherwise.
20. FORCE MAJEURE.
If Countrywide shall be delayed in its performance of services
or prevented entirely or in part from performing services due to causes or
events beyond its control, including and without limitation, acts of God,
interruption of power or other utility, transportation or communication
services, acts of civil or military authority, sabotages, national emergencies,
explosion, flood, accident, earthquake or other catastrophe, fire, strike or
other labor problems, legal action, present or future law, governmental order,
rule or regulation, or shortages of suitable parts, materials, labor or
transportation, such delay or non-performance shall be excused and a reasonable
time for performance in connection with this Agreement shall be extended to
include the period of such delay or non-performance.
21. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
<PAGE>
THE WINTER HARBOR FUND
By:___________________________
Its: President
COUNTRYWIDE FUND SERVICES, INC.
By:___________________________
Its: President
OTHER EXHIBITS
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Jennifer E. Goff constitutes and
appoints Max Berueffy and D. Blaine Riggle and each of them, as true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for her and in her name, place and stead, in any and all capacities to sign the
Registration Statement on Form N-1A, Form N-14 and any or all amendments thereto
of The Winter Harbor Fund, and to file the same, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Jennifer E. Goff
--------------------------------
Jennifer E. Goff
Dated: May 20, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Judith Freyer constitutes and
appoints Max Berueffy and D. Blaine Riggle and each of them, as true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for her and in her name, place and stead, in any and all capacities to sign the
Registration Statement on Form N-1A, Form N-14 and any or all amendments thereto
of The Winter Harbor Fund, and to file the same, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as she might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Judith Freyer
---------------------------
Judith Freyer
Dated: May 20, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Earl Mummert constitutes and
appoints Max Berueffy and D. Blaine Riggle and each of them, as true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign the
Registration Statement on Form N-1A, Form N-14 and any or all amendments thereto
of The Winter Harbor Fund, and to file the same, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Earl Mummert
------------------------
Earl Mummert
Dated: May 20, 1998
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Vincent Phillips constitutes and
appoints Max Berueffy and D. Blaine Riggle and each of them, as true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign the
Registration Statement on Form N-1A, Form N-14 and any or all amendments thereto
of The Winter Harbor Fund, and to file the same, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
/s/ Vincent Phillips
---------------------------
Vincent Phillips
Dated: May 20, 1998
