As filed with the Securities and Exchange Commission on August 17, 2000
1933 Act Registration No. 333-66181
1940 Act Registration No. 811-09079
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
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Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 4 [ X ]
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and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
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Amendment No. 5
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(Check appropriate box or boxes)
MORGAN KEEGAN SELECT FUND, INC.
(Exact name of registrant as specified in charter)
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
(Address of principal executive offices)
Registrant's telephone number, including area code: (901) 524-4100
ALLEN B. MORGAN, JR.
Morgan Keegan Tower
Memphis, Tennessee 38103
(Name and Address of Agent for Service)
Copies to:
ARTHUR J. BROWN, ESQ.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Ave., N.W.
Washington, D.C. 20036-1800
Telephone: (202) 778-9000
Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement
It is proposed that this filing will become effective (check appropriate box):
/ / Immediately upon filing pursuant to paragraph (b)
/ / On __________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On ___________ pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/ / On _________ pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Morgan Keegan Select Fund, Inc.
Contents of Registration Statement
This Registration Statement consists of the following papers and documents.
Cover Sheet
Contents of Registration Statement
Part A - Prospectus - Morgan Keegan Select Capital Growth Fund
Part B - Statement of Additional Information - Morgan Keegan Select
Capital Growth Fund
Part C - Other Information
Signature Page
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PROSPECTUS
[LOGO Morgan Keegan Select Fund, Inc.]
MORGAN KEEGAN SELECT CAPITAL GROWTH FUND
The fund seeks capital appreciation by investing in equity securities.
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved the fund's shares or determined whether this prospectus
is complete or accurate. To state otherwise is a crime.
MORGAN KEEGAN & COMPANY, INC.
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
(901) 524-4100
(800) 366-7426
_____________, 2000
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TABLE OF CONTENTS
PAGE
Investment Objective...................................................1
Principal Investment Strategies........................................1
Principal Risks........................................................1
Performance............................................................2
Fees and Expenses of the fund..........................................3
Your Account...........................................................4
Buying shares........................................................4
Choosing a Share Class...............................................4
Class Comparison.....................................................5
Policies for Buying Shares...........................................6
To Add to an Account.................................................6
Buying Shares Through an Investment Broker...........................6
Selling Shares.......................................................8
To Sell Some or All of Your Shares...................................8
Account Policies.......................................................9
Additional Policies...................................................10
Investor Services.....................................................10
Management and Investment Adviser.....................................11
Portfolio Manager.....................................................11
Distributor...........................................................11
Distributions.........................................................12
Tax Considerations....................................................12
Financial Highlights..................................................13
Account Application...................................................14
For Additional Information....................................Back Cover
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MORGAN KEEGAN SELECT CAPITAL GROWTH FUND
INVESTMENT OBJECTIVE
The fund seeks capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES
The fund seeks to achieve its objective by investing at least 65% of its assets
in equity securities. The fund's Adviser selects investments primarily based on
a fundamental analysis of specific companies. Analysis includes consideration of
the overall financial health and prospects of given companies, with attention to
the following factors: return on equity, rate of growth of earnings, and price
to earnings ratios, as compared to the company's historic performance and to the
ratios of the industry at large.
The fund will invest primarily in common stock, preferred stock and convertible
debt securities. Normally the fund would not expect to invest more than 35% of
its assets in non-convertible debt securities, including high quality money
market instruments (such as certificates of deposit), repurchase agreements and
cash. The fund will only invest in debt securities that are rated in the top
four credit categories by at least one nationally recognized statistical rating
organization (NRSRO) at the time of purchase or, if not rated, that are
considered by the Adviser to be of comparable quality.
For temporary defensive purposes, the fund may invest up to 100% of its assets
in money market instruments, repurchase agreements and cash. To the extent the
fund uses this strategy, it may not achieve its investment objective.
PRINCIPAL RISKS
An investment in the fund is not guaranteed. As with any mutual fund, the value
of the fund's shares will change and you could lose money by investing in the
fund. In addition, the performance of the fund depends on the Adviser's ability
to implement the investment strategy of the fund. A variety of factors may
influence the fund's investment performance, such as:
O EQUITY SECURITY RISK. Because the fund invests primarily in U.S.-traded
equity securities, it is subject to stock market risk. Stock prices
typically fluctuate more than the values of other types of securities
such as U.S. government securities, corporate bonds and preferred
stock, typically in response to changes in the particular company's
financial condition and factors affecting the market in general. For
example, unfavorable or unanticipated poor earnings performance of a
company may result in a decline in its stock's price, and a broad-based
market drop may also cause a stock's price to fall.
O BOND MARKET RISK. For bonds, market risk generally reflects credit risk
and interest-rate risk. Credit risk is the risk that the issuer of the
bond will not pay or is perceived as less likely to pay the interest
and principal payments when due. Bond value typically declines if the
issuer's credit quality deteriorates. Interest-rate risk is the risk
that interest rates will rise and the value of bonds will fall. A
broad-based market drop may also cause a bond's price to fall.
Interest-rate risk is generally greater the longer the remaining matury
of the bonds. Prices will usually decrease more for a longer-term bond
when interest rates rise.
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PERFORMANCE
RISK/RETURN BAR CHART AND TABLE:
The following bar chart shows the risks of investing in the fund by showing how
the fund's performance has varied from year to year. The fund began investment
operations on September 22, 1986. * The chart does not reflect the effect of
sales charges; if it did, the total returns shown would be lower. The table that
follows the chart shows the average annual returns over several time periods for
the fund's shares compared with those of the S&P 500 Index.* * The table
compares fund returns to returns on a broad-based market index that is unmanaged
and that, therefore, does not include any sales charges or expenses. The fund's
past performance does not necessarily indicate how the fund will perform in the
future.
[UPDATED BAR CHART FOR CALENDAR YEARS 1990-1999]
Year-to-date performance as of 9/30/00: [_____]
Best quarter during years shown: ending December 31, 1998: 24.11%
Worst quarter during years shown: ending September 30, 1990: -19.69%
AVERAGE ANNUAL TOTAL RETURNS
(as of December 31, 1999)
CAPITAL GROWTH FUND S&P 500 INDEX
ONE YEAR _____% 21.00%
FIVE YEARS _____% 28.60%
TEN YEARS _____% 18.20%
* Prior to November 1, 2000, the fund was known as Morgan Keegan Southern
Capital Fund, Inc. and had a policy of investing at least 65% of its assets in
companies headquartered in the Southern United States.
** The S&P 500 is an unmanaged index of U.S. stocks.
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FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses you may pay if you buy and hold
shares of the fund.
SHAREHOLDER FEES (fees paid directly from Class A Class C Class I
your investment)
-------------------------------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases: (as a percentage of offering
price)..................................... 3.00% 0.00% 0.00%
Maximum deferred sales charge (Load) (as a
percentage of the lesser of the offering
price or net asset value) 0.00% 1.00% 0.00%
Maximum Sales Charge (Load) Imposed on
Reinvested Dividends and other
Distributions.............................. None None None
Redemption Fee (as a percentage of amount
redeemed).................................. None None None
Exchange Fee............................... None None None
Maximum Account Fee........................ None None None
ANNUAL FUND OPERATING EXPENSES (expenses Class A Class C Class I
that are deducted from fund assets)
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Management fee............................. 1.00% 1.00% 1.00%
Distribution and Service (12b-1) fees...... 0.50% 1.00% 0.00%
Other expenses............................. 0.24% ____% ____%
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Total annual fund operating expenses....... 1.74% ____% ____%
===========================
EXAMPLE
This Example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
This Example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all your shares at the end of these periods. The
Example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
Class A Class C Class I
-------------------------------------
1 Year $472 $_____ $_____
3 Years $833 $_____ $_____
5 Years $1,219 $_____ $_____
10 Years $2,800 $_____ $_____
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You would pay the following expenses if you did not redeem your shares:
Class A Class C Class I
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1 Year
3 Years
5 Years
10 Years
YOUR ACCOUNT
BUYING SHARES
If you are buying shares through a Morgan Keegan & Company, Inc. ("Morgan
Keegan") investment broker, he or she can assist you with all phases of your
investment.
MINIMUM INITIAL INVESTMENT FOR CLASS A AND CLASS C SHARES:
o $500
o $250 for Individual Retirement Accounts
MINIMUM ADDITIONAL INVESTMENT:
o $250
Initial and subsequent investments in an IRA account established on behalf of a
non working spouse of a shareholder who has an IRA invested in the fund require
a minimum amount of only $250. In addition, once you have established an
account, the minimum amount for subsequent investments will be waived if an
investment in an IRA or similar plan is the maximum amount permitted under the
Internal Revenue Code of 1986, as amended (the "Code").
If you are investing through a large retirement plan or other special program,
follow the instructions in your program materials.
To buy shares without the help of a Morgan Keegan investment broker, please use
the instructions on these pages.
CHOOSING A SHARE CLASS
Each fund offers three share classes. Each class has its own expense structure.
Your investment plans will determine which class is most suitable for you. For
example, if you are investing a substantial amount or if you plan to hold your
shares for a long period, Class A shares may make the most sense for you. If you
are investing for less than five years, you may want to consider Class C shares.
Class I shares are available only to a limited group of investors. If you are
investing through a special program, such as a large employer-sponsored
retirement plan or certain programs available through brokers, you may be
eligible to purchase Class I shares.
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Because all future investments in your account will be made in the share class
you designate when opening the account, you should make your decision carefully.
Your Morgan Keegan investment broker can help you choose the share class that
makes the most sense for you.
CLASS COMPARISON
CLASS A -- FRONT LOAD
o Initial sales charge of 3.00% (as a percentage of offering price which
includes the sales load); see schedule below.
o [Lower sales charges for larger investments of $50,000 or more; no sales
charge for purchases of $1 million or more.]
o Low or no sales charge for certain wrap-fee programs and other sponsored
arrangements.
o Lower annual expenses than Class C shares due to lower distribution (12b-1)
fee of 0.50%.
o "Right of accumulation" allows you to determine the applicable sales load on
a purchase by including the value of your existing Morgan Keegan Fund
investments as part of your current investment.
o "Letter of intent" allows you to count all investments in this or other
Morgan Keegan Funds over the next 24 months as if you were making them all at
once, for purposes of calculating sales charges.
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Morgan Keegan Select Capital Growth Fund
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Class A Sales Charge
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As a % of net
Your investment As a % of offering price amount invested
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up to $49,999 3.00% 3.09%
$50,000 to $99,999 2.40% 2.46%
$100,000 to $249,999 1.80% 1.88%
$250,000 to $499,999 1.20% 1.21%
$500,000 to $999,999 1.00% 1.01%
$1 million and over 0.00% 0.00%
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CLASS C -- LEVEL LOAD
o No initial sales charge.
o Deferred sales charge of 1.00% of the lesser of the purchase price of the
shares or their net asset value at the time of redemption, payable by you if
you sell shares within one year of purchase. In the event of a partial
redemption, the deferred sales charge will be applied to the oldest shares
held first.
o Annual distribution (12b-1) fee of 1.00%.
CLASS I -- NO LOAD
o No sales charges of any kind.
o No distribution (12b-1) fees; annual expenses are lower than other share
classes.
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o Available only to certain retirement accounts, advisory accounts of the
investment manager and broker special programs, including broker programs
with record-keeping and other services; these programs usually involve
special conditions and separate fees (contact your Morgan Keegan investment
broker for information).
POLICIES FOR BUYING SHARES
Once you have chosen a share class, complete the enclosed application. You can
avoid future inconvenience by signing up now for any services you might later
use.
TIMING OF REQUESTS. All requests received by the close of the New York Stock
Exchange ("NYSE") (normally 4:00 p.m. eastern time) will be executed the same
day, at that day's closing share price. Orders received after the closing of the
NYSE will be executed the following day, at that day's closing share price. To
purchase shares at the next computed net asset value, an investor must submit an
order to Morgan Keegan by completing the enclosed purchase application and
sending it along with a check to Morgan Keegan at the address listed in the
application or through a pre-authorized check or transfer plan offered by other
financial institutions.
PURCHASES BY CHECK. Complete the enclosed purchase application. Forward your
application, with all appropriate sections completed, along with a check for
your initial investment payable to your Morgan Keegan investment broker or
Morgan Keegan at 50 North Front Street, Memphis, TN 38103.
Call your Morgan Keegan investment broker or Morgan Keegan at 800-366-7426 or
visit our Web site at www.morgankeegan.com.
TO ADD TO AN ACCOUNT
BY PHONE. Contact Morgan Keegan at 800-366-7426.
BY CHECK. Fill out the investment stub from an account statement, or indicate
the fund name and share class on your check. Make checks payable to "Morgan
Keegan." Mail the check and stub to Morgan Keegan at 50 North Front Street,
Memphis, TN 38103.
SYSTEMATIC INVESTMENT. Call Morgan Keegan to verify that systematic investment
is in place on your account, or to request a form to add it. Investments are
automatic once this is in place.
Call your Morgan Keegan investment broker or Morgan Keegan at 800-366-7426 or
visit our Web site at www.morgankeegan.com.
BUYING SHARES THROUGH AN INVESTMENT BROKER
BY MAIL. Send a completed purchase application to Morgan Keegan at the address
at the bottom of this page. Specify the account number and the dollar value or
number, if any, of shares. Be sure to include any necessary signatures and any
additional documents.
BY TELEPHONE. As long as the transaction does not require a written request, you
or your investment broker can buy shares by calling Morgan Keegan at
800-366-7426. A confirmation will be mailed to you promptly. Purchase requests,
where you do not currently have an account with Morgan Keegan, must be made by
written application and be accompanied by a check to Morgan Keegan.
BY EXCHANGE. Read the prospectus for the fund into which you are exchanging.
Call Morgan Keegan at 800-366-7426 or visit our Web site at
www.morgankeegan.com. All exchanges may be made by telephone and mail.
BY SYSTEMATIC INVESTMENT. See plan information on page __.
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MORGAN KEEGAN & CO., INC.
50 North Front Street, Memphis, TN 38103
Call toll-free: 1-800-366-7426
(8:30 a.m. - 4:30 p.m., business days, central time)
INTERNET
www.morgankeegan.com
--------------------
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<PAGE>
SELLING SHARES
POLICIES FOR SELLING SHARES
CIRCUMSTANCES THAT REQUIRE WRITTEN REQUESTS. Please submit instructions in
writing when any of the following apply:
o You are selling more than $100,000 worth of shares
o The name or address on the account has changed within the last 30 days
o You want the proceeds to go to a name or address not on the account
registration
o You are transferring shares to an account with a different registration or
share class
o You are selling shares held in a corporate or fiduciary account; for these
accounts additional documents are required:
CORPORATE ACCOUNTS: certified copy of a corporate resolution
FIDUCIARY ACCOUNTS: copy of power of attorney or other governing document
To protect your account against fraud, all written requests must bear signature
guarantees. You may obtain a signature guarantee at most banks and securities
dealers. A notary public cannot provide a signature guarantee.
TIMING OF REQUESTS. All requests received by Morgan Keegan before the close of
the NYSE (normally 4:00 p.m. eastern time) will be executed the same day, at
that day's closing price. Requests received after the close of the NYSE will be
executed the following day, at that day's closing share price.
SELLING RECENTLY PURCHASED SHARES. If you sell shares before the payment for
those shares has been collected, you will not receive the proceeds until your
initial payment has cleared. This may take up to 15 days after your purchase
date. Any delay would occur only when it cannot be determined that payment has
cleared.
TO SELL SOME OR ALL OF YOUR SHARES
THROUGH AN INVESTMENT BROKER
BY MAIL. Send a letter of instruction, an endorsed stock power or share
certificates (if you hold certificate shares) to Morgan Keegan at the address at
the bottom of this page. Specify the fund, the share class, the account number
and the dollar value or number of shares. Be sure to include any necessary
signatures and any additional documents.
BY TELEPHONE. As long as the transaction does not require a written request (see
facing page), you or your financial professional can sell shares by calling
Morgan Keegan at 800-366-7426. A check will be mailed to you on the following
business day.
BY EXCHANGE. Read the prospectus for the fund into which you are exchanging.
Call Morgan Keegan at 800-366-7426 or visit our Web site at
www.morgankeegan.com. All exchanges may be made by telephone and mail.
BY SYSTEMATIC WITHDRAWAL. See plan information on page __.
MORGAN KEEGAN & CO., INC.
50 North Front Street, Memphis, TN 38103
Call toll-free: 1-800-366-7426
(8:30 a.m. - 4:30 p.m., business days, central time)
8
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INTERNET
www.morgankeegan.com
ACCOUNT POLICIES
BUSINESS HOURS. The fund is open the same days as the NYSE (generally Monday
through Friday). Representatives of the fund are available normally from 8:30
a.m. to 4:30 p.m. central time on these days.
CALCULATING SHARE PRICE. The offering price of a share is its net asset value
plus a sales charge, if applicable. The fund calculates net asset value (NAV)
every business day at the close of regular trading on the NYSE (usually 4:00
p.m. eastern time) by subtracting the liabilities attributable to shares from
the total assets attributable to such shares and dividing the result by the
number of shares outstanding. Please refer to the Statement of Additional
Information for a listing of days when the NYSE is closed. Investments in
securities traded on national securities exchanges are stated at the last
reported sales price on the day of valuation. Securities traded in the
over-the-counter market and listed securities for which no sale was reported on
that date are stated at the last-quoted bid price. Debt securities with
remaining maturities of 60 days or less are valued at amortized cost, or
original cost plus accrued interest, both of which approximate market. When the
fund believes that a market quote does not reflect a security's true value, the
fund may substitute for the market quote a fair value estimate made according to
methods approved by the Board of Directors. Because foreign markets may be open
on days when U.S. markets are closed, the value of foreign securities could
change on days when you can't buy or sell fund shares.
TELEPHONE REQUESTS. When you open an account you automatically receive telephone
privileges, allowing you to place requests on your account by telephone. Your
investment broker can also use these privileges with your written permission, to
request redemptions.
As long as Morgan Keegan takes certain measures to authenticate telephone
requests on your account, you may be held responsible for unauthorized requests.
Unauthorized telephone requests are rare, but if you want to protect yourself
completely, you can decline the telephone privilege on your application. The
fund may suspend or eliminate the telephone privilege at any time. The fund will
provide 7 days' prior written notice before suspending or eliminating telephone
privileges.
EXCHANGE PRIVILEGES. There is no fee to exchange shares of the fund for shares
of other Morgan Keegan Select Fund, Inc. funds. Your new fund shares will be the
same class as your current shares. Any contingent deferred sales charges will be
calculated from the date of your initial investment.
Frequent exchanges can interfere with fund management and drive up costs for all
shareholders. Because of this, the fund currently limits each account, or group
of accounts under common ownership or control, to six exchanges per calendar
year. The fund may change or eliminate the exchange privilege at any time, may
limit or cancel any shareholder's exchange privilege and may refuse to accept
any exchange request. The fund will provide 60 days' prior written notice before
materially amending, suspending or eliminating exchange privileges.
ACCOUNTS WITH LOW BALANCES. If the value of your account falls below $500 due,
to exchanges and redemption, Morgan Keegan may mail you a notice asking you to
bring the account back up to $500 or close it out. If you do not take action
within 60 days, Morgan Keegan may sell your shares and mail the proceeds to you
at the address of record.
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REINSTATING RECENTLY SOLD SHARES. For 120 days after you sell Class A shares,
you have the right to "reinstate" your investment by putting some or all of the
proceeds into Class A Shares of other Morgan Keegan Select Fund, Inc. funds at
net asset value, without payment of a sales charge.
ADDITIONAL POLICIES
Please note that the fund maintains additional policies and reserves certain
rights, including:
Class A shares may be acquired without a sales charge if the purchase if made
through a Morgan Keegan investment broker who formerly was employed as a broker
with another firm registered as a broker-dealer with the Securities and Exchange
Commission, if the following conditions are met: (1) the purchaser was a client
of the investment executive at the other firm for which the investment executive
previously served as a broker; (2) within 90 days of the purchase of the fund's
shares, the purchaser redeemed shares of one or more mutual funds for which that
other firm or its affiliates served as principal underwriter, provided that
either the purchaser had paid a sales charge in connection with investment in
such funds or a contingent deferred sales charge upon redeeming shares in such
funds; and (3) the aggregate amount of the fund's shares purchased pursuant to
this sales charge waiver does not exceed the amount of the purchaser's
redemption proceeds from the shares of the mutual fund(s) for which the other
firm or its affiliates served as principal underwriter.
The fund may vary its initial or additional investment levels in the case of
exchanges, reinvestments, periodic investment plans, retirement and employee
benefit plans, sponsored arrangements and other similar programs.
At any time, the fund may change or discontinue its sales charge waivers and any
of its order acceptance practices, and may suspend the sale of its shares.
Additionally the fund may suspend the right of redemption.
To permit investors to obtain the current price, dealers are responsible for
transmitting all orders to Morgan Keegan promptly.
Dealers may impose a transaction fee on the purchase or sale of shares by
shareholders.
INVESTOR SERVICES
SYSTEMATIC INVESTMENT PROGRAM (SIP). Use SIP to set up regular automatic
investments in the fund from your bank account. You determine the frequency and
the amount of your investments, and you can skip an investment with three days'
notice. Not available with Class I shares.
SYSTEMATIC WITHDRAWAL PLAN. This plan is designated for retirees and other
investors who want regular withdrawals from their fund account. Certain terms
and minimums apply.
DIVIDEND ALLOCATION PLAN. This plan automatically invests your distributions
from the fund into another fund of your choice, without any fees or sales
charges.
AUTOMATIC BANK CONNECTION. This plan lets you route any distributions or
Systematic Withdrawal Plan payments directly to your bank account.
AUTOMATED INVESTMENTS OR WITHDRAWALS. Set up regular investments or withdrawals
to suit your needs and let Morgan Keegan do the work for you.
MOVE MONEY BY PHONE. Designate this on your application and you can move money
between your bank account and your Morgan Keegan account with a phone call.
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DIVIDEND REINVESTMENT. Have your dividends automatically reinvested at no sales
charge.
EXCHANGES. It's easy to move money from the fund to other funds in Morgan Keegan
Select Fund, Inc., with no exchange fees. (Exchange privilege may be changed or
discontinued at any time.) Call 800-366-7426 or visit our Web site at
www.morgankeegan.com.
OPENING a regular investment or a tax-deferred retirement account at Morgan
Keegan is easy. Your investment broker can help you determine if this fund is
right for you. He or she is trained to understand investments and can help speed
the application process.
TAKE ADVANTAGE of everything your investment broker and Morgan Keegan have to
offer. The services described on this page can make investing easy for you. And
your investment broker can be a valuable source of guidance and additional
services, for planning your investments and for keeping them on track with your
goals.
Morgan Keegan also offers a full range of prototype retirement plans for
individuals, sole proprietors, partnerships, corporations and employees. Call
800-366-7426 for information on retirement plans or any of the services
described above.
MANAGEMENT AND INVESTMENT ADVISER
The fund is managed by Morgan Asset Management, Inc. ("Adviser"), a wholly owned
subsidiary of Morgan Keegan, Inc. Subject to the supervision of the Board of
Directors, the Adviser manages the investment and other affairs of the fund and
directs the investments of the fund in accordance with its investment objective,
policies and limitations pursuant to an Investment Advisory and Management
Agreement between the fund and the Adviser. The Adviser's address is Morgan
Keegan Tower, Fifty Front Street, Memphis, Tennessee 38103. Founded in 1986, the
Adviser has, as of July 31, 2000, more than $1.5 billion in total assets under
management.
The Adviser receives for its services a management fee, calculated daily and
payable quarterly, at an annual rate of 1% of the average daily net assets of
the fund for the first $100 million of average daily net assets and 0.75% of
average daily net assets exceeding $100 million. The Adviser has agreed to waive
its fee and to reimburse the fund to the extent its annual expenses (excluding
brokerage, interest, taxes, and extraordinary expenses) exceed 2.0% of net
assets. The net fee paid to the Adviser for the past fiscal year was $________.
The fund expects to use Morgan Keegan as broker for all or a substantial portion
of its agency transactions in listed securities at commission rates and under
circumstances consistent with the policy of best execution. Morgan Keegan also
provides accounting services to the fund and acts as its transfer and dividend
disbursing agent.
PORTFOLIO MANAGER
E. Elkan Scheidt, a managing director of Morgan Keegan and an employee of Morgan
Asset Management, Inc. serves as the portfolio manager of the fund. From July 1,
1994 to October 31, 2000, Mr. Scheidt served as portfolio manager of Morgan
Keegan Southern Capital Fund, Inc., the fund's predecessor. From November 1990
to July 1, 1994, Mr. Scheidt served as assistant to the portfolio manager of the
fund. Mr. Scheidt joined Morgan Keegan as an investment broker in 1985. He
received a B.A. in Economics from Tulane University in New Orleans, Louisiana.
DISTRIBUTOR
Morgan Keegan & Company, Inc., one of the nation's largest independent regional
financial services firms, acts as the distributor of the fund's shares. It also
is a wholly owned subsidiary of Morgan Keegan, Inc. The fund has adopted a plan
under Rule 12b-1 that allows the fund to pay distribution fees for the sale and
distribution of the Class A and C shares and for shareholder servicing; and
because these fees are paid out of the fund's assets on an ongoing basis, over
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time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
DISTRIBUTIONS
INCOME AND CAPITAL GAIN DISTRIBUTIONS. The fund distributes its net investment
income and net capital gain to shareholders. Net capital gains, if any, are
distributed annually.
You may have your distributions reinvested in shares of the fund or credited to
your brokerage account or mailed out by check. If you do not give Morgan Keegan
other instructions, your distributions will automatically be reinvested in
shares of the fund. Distributions to Keogh plans, 401(k) plans and other
qualified retirement plans are generally reinvested in fund shares (without a
sales charge).
TAX CONSIDERATIONS
TAX EFFECTS OF DISTRIBUTIONS AND TRANSACTIONS. Every year, the fund will send
you information detailing the amount of dividends and net capital gain
distributed to you for the previous year. In general, any dividends and net
short-term capital gain distributions you receive from the fund are taxable as
ordinary income. Distributions of other capital gains are generally taxable as
long-term capital gains. This is true no matter how long you have owned your
shares and whether you reinvest your distributions or take them in cash.
The sale of shares in your account may produce a taxable gain or loss and is a
taxable event. For tax purposes, an exchange is the same as a sale.
Unless your investment is in a tax-deferred account, you may want to avoid:
o Investing a large amount in the fund shortly before a capital gain
distribution payment date (if the fund makes a capital gain distribution, you
will receive some of your investment back as a taxable distribution), or
o Selling shares of the fund at a loss for tax purposes and reinvesting in
shares of the fund within 30 days before or after that sale (such a
transaction is usually considered a "wash sale," and you will not be allowed
to deduct all or part of the tax loss).
Your investment in the fund could have additional tax consequences. Please
consult your tax professional for assistance.
BACKUP WITHHOLDING. By law, the fund must withhold 31% of your distributions and
redemption proceeds if you have not provided complete, correct taxpayer
identification information and 31% of your distributions if you are otherwise
subject to backup withholding.
12
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the fund's
financial performance for the past 5 years.(1) Certain information reflects
financial results for a single Class A fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, independent
accountants, whose report, along with the fund's financial statements, is
included in the fund's Annual Report to Shareholders. Annual Reports may be
obtained without charge by calling 1-800-366-7426.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6/30/00 6/30/99 6/30/98 6/30/97 6/30/96
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period $______ $ 26.56 $ 21.64 $ 18.06 $ 14.34
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (loss) _______ (0.17) (0.16) (0.11) (0.07)
Net Gains on Securities _______ 1.46 5.57 4.64 4.08
Total from Investment Operations _______ 1.29 5.41 4.53 4.01
LESS DISTRIBUTIONS
Dividends (from net investment income) - - - - (0.03)
Distribution (from realized gaines) _______ (0.72) (0.49) (0.87) (0.26)
Distribution (return of capital) _______ (0.03) - (0.08) -
Net Asset Value, end of period $_______ $ 27.10 $ 26.56 $ 21.64 $ 18.06
Total Return** _______% 5.20% 25.32% 26.32% 28.30%
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of period $__________ $95,893,801 $88,207,007 $53,925,76 $37,505,196
Expenses to Average Net Assets+ ______% 1.74% 1.79% 2.00% 2.00%
Net Investment Income to Average
Net Assets ______% (0.7%) (0.7%) (0.6%) (0.5%)
Portfolio Turnover Rate ______% 15% 28% 30% 69%
</TABLE>
** Total return does not include front end sales load.
+ 2.2% before excess reimbursement and fee waiver from Advisor in 1996.
(1) Prior to November 1, 2000, the fund operated as Morgan Keegan Southern
Capital Fund, Inc.
13
<PAGE>
MORGAN KEEGAN SELECT FUND, INC.
MORGAN KEEGAN SELECT CAPITAL GROWTH FUND
----------------------------------------
ACCOUNT APPLICATION
Do not use this Application for IRA or Keogh Plans.
For special forms or if you need assistance completing this Application, Please
call your Morgan Keegan broker or Morgan Keegan at 1-800-366-7426.
Please print all items except signatures.
Please use blue or black ink only.
1. SHARE CHOICE
____ Class A
____ Class C
____ Class I
If you choose to invest in more than one class of shares initially, please
also indicate the total purchase amount and how you wish to have you
initial investment split among Classes.
$__________ to Class A shares
$__________ to Class C shares
$__________ to Class I shares
2. ACCOUNT REGISTRATION (PLEASE CHOOSE ONE)
[ ] Individual or Joint Account*
--------------------------------------------------------------------------------
Owner's name (first, middle initial, last)
and
--------------------------------------------------------------------------------
Joint owner's name (first, middle initial, last)
*Joint tenancy with right of survivorship presumed, unless otherwise indicated.
OR
[ ] UNIFORM GIFTS/TRANSFERS TO MINORS (UGMA/UTMA)
________________________________________________________________as custodian for
Custodian's name (first, middle initial, last - one custodian only)
--------------------------------------------------------------------------------
Minor's name (first, middle initial, last - one minor only)
Under the _________________________________Uniform Gifts/Transfers to Minors Act
State
------/-------/-------
Minor's date of birth
14
<PAGE>
OR
[ ] TRUST
________________________________________________________________As trustee(s) of
Trustee(s) name
______________________________________________________________for the benefit of
Name of trust agreement
--------------------------------------------------------------------------------
Beneficiary's name (if applicable) Date of trust agreement
For Trust Accounts, a Multi-Purpose Certification form may be required to
authorize redemptions and add privileges. Please call your Morgan Keegan broker
or Morgan Keegan Fund Services at 1-800-366-7426 to determine if a Multi-Purpose
Certification Form is required.
OR
[ ] CORPORATION, PARTNERSHIP, ESTATE OR OTHER ENTITY
--------------------------------------------------------------------------------
Name of Corporation, Partnership, Estate or Other Entity
--------------------------------------------------------------------------------
Type of Entity
For Corporation, Partnership, Estate or other Entities, a Multi-Purpose
Certification Form is required to authorize redemptions and add privileges. If
you have any questions please call your Morgan Keegan broker or Morgan Keegan
Fund Services at 1-800-366-7426.
3. ADDRESS
--------------------------------------------------------------------------------
Street or P.O. Box Apt. No.
--------------------------------------------------------------------------------
City State Zip Code
( ) ( )
--------------------------------------------------------------------------------
Daytime phone number Evening phone number
If you are not a citizen or resident alien of the U.S., please specify country
of permanent residence.
--------------------------------------------------------------------------------
Country of permanent residence
15
<PAGE>
4. SOCIAL SECURITY NUMBER OR OTHER TAXPAYER IDENTIFICATION NUMBER
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----- ----- ----- ----- ----- ----- ----- ----- -----
o INDIVIDUAL ACCOUNTS Specify the Social Security number of the owner.
o *JOINT ACCOUNTS Specify the Social Security number of the first named owner.
o UNIFORM GIFTS/TRANSFERS TO MINORS ACCOUNTS Specify the minor's Social
Security number.
o CORPORATIONS, PARTNERSHIPS, ESTATES, OTHER ENTITIES OR TRUST ACCOUNTS Specify
the Taxpayer Identification Number of the legal entity or organization that
will report income and/or gains resulting from your investments in the fund.
*In ADDITION to the above, Joint accounts must ALSO specify the Social Security
number of the second named owner here.
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
----- ----- ----- ----- ----- ----- ----- ----- -----
5. INVESTMENT METHOD (MINIMUM INVESTMENT: $1,000)
[ ] CHECK
Enclosed is a check payable to Morgan Keegan. (Neither initial nor subsequent
investments should be made by third party check.)
FOR $ __________________________________________________________________________
-----
Amount
6. DIVIDEND AND CAPITAL GAIN DISTRIBUTION OPTIONS
CHECK ONE ONLY. IF YOU DO NOT CHECK ONE OF THE FOLLOWING OPTIONS, ALL DIVIDENDS
AND CAPITAL GAIN DISTRIBUTIONS WILL BE REINVESTED.
___ Reinvest all dividends and capital gain distributions.
___ Pay all dividends and capital gain distributions by check.
___ Pay all dividends by check and reinvest all capital gain distributions.
7. SYSTEMATIC INVESTMENT PLAN (SIP)
PERMITS YOU TO PURCHASE SHARES AUTOMATICALLY ON A REGULAR BASIS BY
ELECTRONICALLY TRANSFERRING A SPECIFIED DOLLAR AMOUNT FROM YOUR BANK ACCOUNT TO
YOUR MORGAN KEEGAN FUNDS' MUTUAL FUND ACCOUNT.
___ Yes, I (we) want the Morgan Keegan Funds Systematic Investment Plan (SIP)
You must attach a voided check to this Application. Money will be transferred
only from the bank account indicated on the voided check.
16
<PAGE>
Check the day of the month most convenient for you to have your bank account
debited. You can invest once or twice a month ($250 minimum investment(s)).
___ 1st ___ 15th ___ both dates
Amount you would like to invest each time: $______________
8. TELEPHONE PRIVILEGES
TELEPHONE REDEMPTION permits redemption proceeds paid by check, payable to your
account's registration and mailed to your account's address.
TELEPHONE EXCHANGE permits exchanges by telephone among Morgan Keegan Funds with
the same registration.
Please check one: I (we) do ___, do not ____ want the TELEPHONE REDEMPTION
privilege.
Please check one: I (we) do ___, do not ____ want the TELEPHONE
EXCHANGE privilege.
9. OPTIONAL INFORMATION (we are required by the National Association of
Securities Dealers, Inc. to request this information).
--------------------------------------------------------------------------------
Owner's occupation Owner's date of birth
--------------------------------------------------------------------------------
Owner's employer's name
--------------------------------------------------------------------------------
Owner's employer's address
--------------------------------------------------------------------------------
Joint owner's occupation Joint owner's date of birth
--------------------------------------------------------------------------------
Joint owner's employer's name
--------------------------------------------------------------------------------
Joint owner's employer's address
17
<PAGE>
10. SIGNATURE By signing below, you certify and agree that:
You have received a current Fund Prospectus and agree to its terms. It is your
responsibility to read the Prospectus of any Fund into which you may exchange.
You have full authority and are of legal age to buy and redeem shares
(custodians certify they are duly authorized to act on behalf of the investors).
The Fund's Transfer Agent, Morgan Keegan, Morgan Keegan Select Fund, Inc.,
Morgan Asset Management, Inc., any affiliate and/or any of their directors,
trustees, employees and agents will not be liable for any claims, losses or
expenses (including legal fees) for acting on any instructions or inquiries
reasonably believed to be genuine.
You understand that mutual fund shares are not deposits or obligations of, or
guaranteed by, any bank, the U.S. Government or its Agencies, and are not
federally insured by the Federal Deposit Insurance Corporation, The Federal
Reserve Board or any other Agency. The net asset value of funds of this type
will fluctuate from time to time.
Taxpayer Identification Number Certification
The IRS requires all taxpayers to write their Social Security number or other
Taxpayer Identification Number in Section 4 of this Application and sign this
Certification. Failure by a non-exempt taxpayer to give us the correct Social
Security number or Taxpayer Identification Number will result in the withholding
of 31% of all taxable dividends and other distributions paid to your account and
proceeds from redemptions of your shares (referred to as "backup withholding").
Understanding penalties of perjury, you certify that:
(1) The Social Security Number or other Taxpayer Identification Number on this
Application is correct: and (2) you are not subject to backup withholding
because (a) you are exempt from backup withholding; (b) you have not been
notified by the Internal Revenue Service that you are subject to backup
withholding; or (c) the IRS has notified you that you are no longer subject to
backup withholding.
Cross out item 2 above if it does not apply to you.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
PLEASE SIGN HERE:
X_______________________________________________________________________________
OWNER OR CUSTODIAN
X_______________________________________________________________________________
JOINT OWNER (IF ANY), CORPORATE OFFICER, PARTNER, TRUSTEE, ETC.
Date____________________ Title_______________________________
18
<PAGE>
Mailing Instructions
Please mail the application to:
Your Morgan Keegan broker.
Or
Morgan Keegan Select Fund, Inc.
50 North Front Street
Memphis, TN 38103
THIS APPLICATION MUST BE FILED WITH THE TRANSFER AGENT BEFORE ANY REDEMPTION
REQUEST CAN BE HONORED.
YOU WILL RECEIVE A CONFIRMATION SHOWING YOUR FUND ACCOUNT NUMBER, DOLLAR AMOUNT
RECEIVED, SHARES PURCHASED AND PRICE PAID PER SHARE.
Please do not complete
Account Number _____________________________ Rep Number_________________
19
<PAGE>
FOR ADDITIONAL INFORMATION
A Statement of Additional Information ("SAI"), dated ______________, 2000,
containing further information about the fund has been filed with the Securities
and Exchange Commission ("SEC") and, as amended or supplemented from time to
time, is incorporated by reference in this prospectus.
Additional information about the fund's investments is available in the fund's
annual and semi-annual reports to shareholders. In the fund's annual report you
will find a discussion of the market conditions and investment strategies that
significantly affected the fund's performance during the last fiscal year.
Free copies of the annual and semi-annual reports and SAI may be obtained:
o from your Morgan Keegan investment broker;
o by calling Morgan Keegan at 800-366-7426;
o by writing to Morgan Keegan at the address noted below; or
o by accessing the Edgar Database on the SEC's Internet website at
http://www.sec.gov.
Information about the fund (including shareholder reports and the SAI) also can
be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
(call 202-942-8090 for further information). You may obtain copies of this
information, after you pay a duplicating fee, by e-mail request at
[email protected], or by writing the Public Reference Section of the SEC,
Washington, D.C. 20549-0102.
All shareholder inquiries can be made by contacting Morgan Keegan at the address
listed below:
Morgan Keegan & Company, Inc.
50 North Front Street
Memphis, TN 38103
Investment Company Act File No. 811-09079.
20
<PAGE>
MORGAN KEEGAN SELECT FUND, INC.
MORGAN KEEGAN SELECT CAPITAL GROWTH FUND
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38108
(800) 366-7426
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the fund's Prospectus, dated ________________, 2000,
which has been filed with the Securities and Exchange Commission. A copy of the
current Prospectus is available without charge from Morgan Keegan & Company,
Inc., the fund's distributor, by writing to the above address or by calling the
toll-free number listed above.
Morgan Keegan & Company, Inc.
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103
1-800-366-7426
_______________, 2000
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION..........................................................1
INVESTMENT LIMITATIONS AND POLICIES..........................................1
ADDITIONAL TAX INFORMATION...................................................5
General...................................................................5
Dividends and Other Distributions.........................................5
Redemptions...............................................................6
Hedging Strategies........................................................6
ADDITIONAL DEBT INFORMATION..................................................8
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................8
Letter of Intention.......................................................8
Sales Charge Waivers......................................................8
Additional Information On Redemptions.....................................9
VALUATION OF SHARES.........................................................10
PURCHASE OF SHARES..........................................................10
Class a Shares...........................................................10
Class C Shares...........................................................10
Class I Shares...........................................................11
PERFORMANCE INFORMATION.....................................................11
Total Return Calculations................................................11
Other Information........................................................12
TAX-DEFERRED RETIREMENT PLANS...............................................12
Individual Retirement Accounts - IRAS....................................13
Self-employed Individual Retirement Plans - Keogh Plans..................13
Simplified Employee Pension Plans - SEPPS, and Savings
Incentive Match Plans for Employees - SIMPLES............................13
DIRECTORS AND OFFICERS......................................................13
TABLE OF COMPENSATION.......................................................15
PRINCIPAL SHAREHOLDERS......................................................16
INVESTMENT ADVISER..........................................................16
PORTFOLIO TRANSACTIONS AND BROKERAGE........................................17
DISTRIBUTOR.................................................................19
OTHER INFORMATION...........................................................21
CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND
PORTFOLIO ACCOUNTING SERVICE AGENT.........................................23
LEGAL COUNSEL...............................................................23
CERTIFIED PUBLIC ACCOUNTANTS................................................23
Dated: _________________, 2000
<PAGE>
GENERAL INFORMATION
The Morgan Keegan Select Fund, Inc., is an open-end management investment
company (the "Company") organized as a Maryland corporation on October 27, 1998.
The Morgan Keegan Select Capital Growth Fund is a diversified series of the
Company. The Company has five (5) other series of funds: the Morgan Keegan
Intermediate Bond Fund, the Morgan Keegan High Income Fund, the Morgan Keegan
Core Equity Fund, the Morgan Keegan Utility Fund and the Morgan Keegan Select
Financial Fund. Each fund offers three classes of shares: Class A shares, Class
C shares and Class I shares. The Morgan Keegan Select Capital Growth Fund was
formerly known as Morgan Keegan Southern Capital Fund, Inc. ("Southern
Capital"). On _______________, 2000, the fund assumed all of the assets and
liabilities of Southern Capital.
INVESTMENT LIMITATIONS AND POLICIES
The following policies and limitations supplement those set forth in the
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,
such standard or percentage limitation will be determined at the time of the
fund's acquisition of such security or other asset. Accordingly, any subsequent
change in values, net assets, or other circumstances will not be considered when
determining whether the investment complies with the fund's investment policies
and limitations.
The fund's fundamental investment policies and limitations cannot be
changed without approval by a "majority of the outstanding voting securities"
(as defined in the Investment Company Act of 1940 ("1940 Act")) of the fund.
However, except for the fundamental investment limitations listed below, the
investment policies and limitations described in the SAI are not fundamental and
may be changed without shareholder approval.
INVESTMENT LIMITATION OF THE FUND
THE FOLLOWING ARE THE FUND'S FUNDAMENTAL INVESTMENT LIMITATIONS SET FORTH
IN THEIR ENTIRETY. EACH FUND MAY NOT:
1. issue senior securities, except as permitted under the 1940 Act;
2. borrow money, except that the Fund may borrow for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed
this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with the 33 1/3% limitation;
3. purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities);
1
<PAGE>
4. underwrite the securities issued by others, except to the extent that
the fund may be considered an underwriter within the meaning of the
Securities Act of 1933, in the disposition of restricted securities;
5. lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties, but this
limitation does not apply to purchases of debt securities or to repurchase
agreements;
6. purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business);
7. purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities) if, as a result, 25% or more of the Fund's total assets
would be invested in the securities of companies whose principal business
activities are in the same industry; or
8. with respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result,
(a) more than 5% of the Fund's total assets would be invested in the
securities of that issuer, or (b) the Fund would hold more than 10% of the
outstanding voting securities of that issuer.
THE FOLLOWING INVESTMENT LIMITATIONS ARE NOT FUNDAMENTAL, AND MAY BE
CHANGED BY THE BOARD OF DIRECTORS WITHOUT SHAREHOLDER APPROVAL. THE FUND:
1. may borrow money only (a) from a bank, or (b) by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements are
treated as borrowings for purposes of the above fundamental restriction on
borrowing);
2. may not sell securities short, unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold
short, and provided that transactions in futures contracts and options are
not deemed to constitute selling securities short;
3. may not purchase securities on margin, except that the Fund may
obtain such short-term credits as are necessary for the clearance of
transactions, and provided that margin payments in connection with futures
contracts and options on futures contracts shall not constitute purchasing
securities on margin;
4. may not purchase securities when borrowings exceed 5% of its total
assets; and
5. may not purchase any security if, as a result, more than 10% of its
net assets would be invested in securities that are illiquid because they
are subject to legal or contractual restrictions on resale or because they
2
<PAGE>
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
The following pages contain more detailed information about types of
instruments in which the fund may invest, strategies the Adviser may employ in
pursuit of the fund's investment objective, and a summary of related risks. The
Adviser may not buy all of these instruments or use all of these techniques
unless it believes that doing so will help the fund achieve its goal.
OPTIONS
The fund may from time to time write (sell) covered call options on
certain of its portfolio securities. The fund intends only to engage in
transactions in exchange-traded options. A covered call option is an option to
purchase a portfolio security owned by the fund. In such a transaction, the fund
obligates itself to sell the underlying security to the purchaser of the option
at a fixed price if the purchaser exercises the option during the option period.
In return, the fund receives a premium from the purchaser. During the option
period, the fund foregoes the opportunity to profit from any increase in the
market price of the security above the exercise price of the option, but retains
the risk that the price of the security may decline.
The fund may seek to terminate its obligation as a writer of a call option
prior to its expiration by entering into a "closing purchase transactions."
There is no assurance that the fund will be able to effect a closing purchase
transaction, particularly with respect to thinly traded call options. The
selling of call options could result in an increase in the fund's portfolio
turnover rate, particularly in periods of appreciation in the market price of
the underlying securities. The fund would use such options only as a defensive
strategy and not as a primary investment technique. Although not a fundamental
policy subject to shareholder vote, the fund does not intend during the coming
year to write call options on portfolio securities exceeding 5% of its total
assets or to write options that are not traded on a national securities
exchange. Normally such options will be written only on those portfolio
securities which the Adviser does not expect to have significant short-term
capital appreciation.
LENDING PORTFOLIO SECURITIES
The fund may lend portfolio securities to broker/dealers in corporate or
government securities, banks or other recognized institutional borrowers of
securities, provided that cash or equivalent collateral, equal to at least 100%
of the value of the securities loaned plus any accrued interest, "marked to
market" on a daily basis, is continuously maintained by the borrower with the
3
<PAGE>
fund, and further provided that the Adviser determines that the borrower
presents minimal credit risk. The Adviser will monitor the credit status of the
borrower during the period of the loan.
During the time portfolio securities are on loan, the borrower will pay
the fund an amount equivalent to any dividends or interest paid on such
securities, and the fund may invest the cash collateral and earn additional
income, or it may receive an agreed upon fee from the borrower who has delivered
equivalent collateral. These loans are subject to termination at the option of
the fund or the borrower. The fund may pay reasonable administrative and
custodial fees in connection with a loan and may pay a negotiated portion of the
interest earned on the cash collateral to the borrower or placing broker. The
fund does not have the right to vote securities on loan, but would terminate the
loan and regain the right to vote if such vote were considered important with
respect to the investment. The fund does not intend during the coming year to
loan more than 5% of its portfolio securities at any given time.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS
Available cash may be invested by the fund in repurchase agreements. A
repurchase agreement is an agreement under which U.S. Government obligations are
acquired from a securities dealer or Bank subject to resale at a previously
agreed upon price and date. The resale price reflects an agreed upon interest
rate which is unrelated to the interest rate provided by the securities which
are transferred. The securities will be held for the fund by its custodian as
collateral until retransferred and will be supplemented by additional collateral
(without cost to the fund) if necessary to maintain a total value equal to or in
excess of the value of the repurchase agreement. Repurchase agreements are
usually for periods of one week or less, but may be for longer periods.
To the extent that proceeds from any sale upon a default of the obligation
to repurchase were less than the repurchase price, the fund might suffer a loss.
If bankruptcy proceedings are commenced with respect to the seller of the
security, realization upon the collateral by the fund would be delayed or
limited. However, the fund has adopted standards for the parties with whom it
may enter into repurchase agreements, including monitoring by the Adviser of the
creditworthiness of such parties, which the fund's Board of Directors believes
are reasonably designed to assure that each party presents no serious risk of
becoming involved in bankruptcy proceedings within the time frame contemplated
by the repurchase agreement.
As stated in the fund's investment limitations, the fund may enter into
reverse repurchase agreements for temporary purposes. Because such agreements
are considered to be borrowings, the agreements are subject to the limitation
that the fund may not borrow in an aggregate amount that exceeds 5% of the value
of the fund's total assets at the time of borrowing. Reverse repurchase
agreements involve the sale of securities held by the fund pursuant to the
fund's agreement to repurchase the securities at an agreed upon price, date and
rate of interest. While reverse repurchase transactions are outstanding, the
fund will maintain in a segregated account, cash, U.S. government securities or
other liquid, high grade debt securities of an amount at least equal to the
market value of the securities, plus accrued interests, subject to the
agreement.
4
<PAGE>
ADDITIONAL TAX INFORMATION
The following is a general summary of certain federal income tax
considerations affecting the fund and its shareholders. Investors are urged to
consult their own tax advisers for more detailed information and for information
regarding any state, local or foreign taxes that may be applicable to them.
GENERAL
The fund (which is treated as a separate corporation for federal tax
purposes) intends to continue to qualify for treatment as a regulated investment
company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as
amended ("Code"). To qualify for that treatment, the fund must distribute
annually to its shareholders at least 90% of its investment company taxable
income (generally, net investment income plus net short-term capital gain) and
must meet several additional requirements. Among these requirements are the
following: (1) at least 90% of the fund's gross income each taxable year must be
derived from dividends, interest, payments with respect to securities loans and
gains from the sale or other disposition of securities, or other income
(including gains from options) derived with respect to its business of investing
in securities; (2) at the close of each quarter of the fund's taxable year, at
least 50% of the value of its total assets must be represented by cash and cash
items, U.S. government securities, securities of other RICs and other
securities, with such other securities limited, with respect to any one issuer,
to an amount that does not exceed 5% of the value of the fund's total assets and
that does not represent more than 10% of the issuer's outstanding voting
securities; and (3) at the close of each quarter of the fund's taxable year, not
more than 25% of the value of its total assets may be invested in securities
(other than U.S. government securities or the securities of other RICs) of any
one issuer. If the fund failed to qualify for treatment as a RIC for any taxable
year, (a) it would be taxed as an ordinary corporation on the full amount of its
taxable income for that year without being able to deduct the distributions it
makes to its shareholders and (b) the shareholders would treat all those
distributions, including distributions of net capital gain (the excess of net
long-term capital gain over net short-term capital loss), as dividends (that is,
ordinary income) to the extent of the fund's earnings and profits. In addition,
the fund could be required to recognize unrealized gains, pay substantial taxes
and interest and make substantial distributions before requalifying for RIC
treatment.
The fund will be subject to a nondeductible 4% excise tax ("Excise Tax")
to the extent if fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.
DIVIDENDS AND OTHER DISTRIBUTIONS
A portion of the dividends from the fund's investment company taxable
income (whether paid in cash or reinvested in additional fund shares) is
eligible for the dividends-received deduction allowed to corporations. The
eligible portion may not exceed the aggregate dividends received by the fund
from domestic corporations. However, dividends received by a corporate
shareholder and deducted by it pursuant to the dividends-received deduction are
5
<PAGE>
subject indirectly to the federal alternative minimum tax. Distributions by the
fund of net capital gain do not qualify for the dividends-received deduction.
Dividends and other distributions declared by the fund in December of any
year and payable to shareholders of record on a date in that month will be
deemed to have been paid by the fund and received by the shareholders on
December 31 if they are paid by the fund during the following January.
Accordingly, those distributions will be taxed to the shareholders for the year
in which that December 31 falls.
A dividend or capital gain distribution paid shortly after shares have
been purchased, although in effect a return of investment is subject to federal
taxation. Accordingly, an investor should not purchase fund shares immediately
prior to a dividend or capital gain distribution record date solely for the
purpose of receiving the dividend or distribution.
REDEMPTIONS
A redemption of the fund's shares will result in a taxable gain or loss to
the redeeming shareholder, depending on whether the redemption proceeds are more
or less than the shareholder's adjusted basis for the redeemed shares (which
normally includes any sales load paid on Class A shares). An exchange of shares
of the fund for shares of another Morgan Keegan Fund generally will have similar
tax consequences. Special rules apply when a shareholder disposes of Class A
shares of the fund through a redemption or exchange within 60 days after
purchase thereof and subsequently reacquires Class A shares of the fund or
acquires Class A shares of another fund in the Morgan Keegan family of funds
without paying a sales charge due to the reinstatement privilege or exchange
privilege. In these cases, any gain on the disposition of the original Class A
shares will be increased, or any loss decreased, by the amount of the sales
charge paid when the shareholder acquired those shares, and that amount will
increase the basis of the shares subsequently acquired. In addition, if a
shareholder purchases shares of the fund (whether pursuant to the reinstatement
privilege or otherwise) within 30 days before or after redeeming at a loss other
shares of the fund (regardless of class), all or part of that loss will not be
deductible and instead will increase the basis of the newly purchased shares.
If shares of the fund are sold at a loss after being held for six months
or less, the loss will be treated as long-term, instead of short-term, capital
loss to the extent of any capital gain distributions received on those shares.
HEDGING STRATEGIES
The use of hedging strategies, such as selling (writing) and purchasing
options and futures contracts and entering into forward contracts, involves
complex rules that will determine for income tax purposes the amount, character
and timing of recognition of the gains and losses the fund realizes in
connection therewith. Gains from the disposition of foreign currencies (except
certain gains that may be excluded by future regulations), and gains from
options, futures and forward contracts derived by the fund with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement.
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Certain futures and foreign currency contracts in which the fund may
invest will be "section 1256 contracts." Section 1256 contracts held by the fund
at the end of each taxable year, other than section 1256 contracts that are part
of a "mixed straddle" with respect to which it has made an election not to have
the following rules apply, must be "marked-to-market" (that is, treated as sold
for their fair market value) for federal income tax purposes, with the result
that unrealized gains or losses will be treated as though they were realized.
Sixty percent of any net gain or loss recognized on these deemed sales, and 60%
of any net realized gain or loss from any actual sales of section 1256
contracts, will be treated as long-term capital gain or loss, and the balance
will be treated as short-term capital gain or loss. Section 1256 contracts also
may be marked-to-market for purposes of the Excise Tax. These rules may operate
to increase the amount that the fund must distribute to satisfy the Distribution
Requirement, which will be taxable to the shareholders as ordinary income, and
to increase the net capital gain recognized by the fund, without in either case
increasing the cash available to the fund.
Code section 1092 (dealing with straddles) also may affect the taxation of
options and futures contracts in which the fund may invest. Section 1092 defines
a "straddle" as offsetting positions with respect to personal property; for
these purposes, options and futures contracts are personal property. Section
1092 generally provides that any loss from the disposition of a position in a
straddle may be deducted only to the extent the loss exceeds the unrealized gain
on the offsetting position(s) of the straddle. Section 1092 also provides
certain "wash sale" rules, which apply to transactions where a position is sold
at a loss and a new offsetting position is acquired within a prescribed period,
and "short sale" rules applicable to straddles. If the fund makes certain
elections, the amount, character and timing of the recognition of gains and
losses from the affected straddle positions would be determined under rules that
vary according to the elections made. Because only a few of the regulations
implementing the straddle rules have been promulgated, the tax consequences to
the fund of straddle transactions are not entirely clear.
If the fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward contract,
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract or futures or forward contract entered into by the fund or a
related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract, acquisition of the underlying property or substantially similar
property will be deemed a constructive sale. The foregoing will not apply,
however, to any transaction during any taxable year that otherwise would be
treated as a constructive sale if the transaction is closed within 30 days after
the end of that year and the fund holds the appreciated financial position
unhedged for 60 days after that closing (I.E., at no time during that 60-day
period is the fund's risk of loss regarding that position reduced by reason of
certain specified transactions with respect to substantially similar or related
property, such as having an option to sell, being contractually obligated to
sell, making a short sale or granting an option to buy substantially identical
stock or securities).
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For Federal income tax purposes the fund had a capital loss carryover of
$48,163 which expires in 2007 and 2008.
ADDITIONAL DEBT INFORMATION
The fund will invest in debt securities, within its investment
limitations, only in cases where the Adviser believes there is the potential of
capital appreciation. If a security satisfies the fund's minimum rating criteria
at the time of purchase and is subsequently downgraded below such ratings, the
fund will not be required to dispose of such security. If a downgrade occurs,
the Advisor will consider what action, including the sale of such security, is
in the best interest of the fund and its shareholders. Convertible securities
purchased by the fund will be rated at the time of investment in the top four
credit categories by at least one NRSRO or, if unrated, determined by the
Advisor to be of comparable quality.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
LETTER OF INTENTION
The sales charge applicable to purchases of Class A shares is reduced to
1% pursuant to a Letter of Intention that states that the purchaser intends to
purchase shares equal to at least $1,000,000 within a 24-month period. Investors
may obtain a form of a Letter of Intention ("Letter") from their Morgan Keegan
investment broker or the fund's transfer agent, Morgan Keegan & Company, Inc.
("Transfer Agent"). Under a Letter, purchases of shares of the fund which are
sold with a sales charge made within a 24-month period starting with the first
purchase pursuant to a Letter will be aggregated for purposes of calculating the
sales charges applicable to each purchase. To qualify under a Letter, a minimum
initial purchase of $50,000 must be made; purchases must be made for a single
account; and purchases made for related accounts may not be aggregated under a
single Letter. The Letter is not a binding obligation to purchase any amount of
shares, but its execution will result in paying a reduced sales charge for the
anticipated amount of the purchase. If the total amount of shares purchased does
not equal the amount stated in the Letter (minimum of $1,000,000), the investor
will be notified and must pay, within 20 days of the expiration of the Letter,
the difference between the sales charge on the shares purchased at the reduced
rate and the sales charge applicable to the shares actually purchased under the
Letter. Shares equal to 5% of the intended amount will be held in escrow during
the 24-month period (while remaining registered in the name of the purchaser)
for this purpose.
SALES CHARGE WAIVERS
The sales charge is waived on Class A shares of the fund purchased (1) as
a result of reinvestment of dividends and capital gain distributions and (2) by
officers, directors and full-time employees (and their immediate families, which
includes their spouse, children, mother, father and siblings) of Morgan Keegan &
Company, Inc. (or its direct or indirect subsidiaries), or by directors or
officers (and their immediate families, which includes their spouse, children,
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<PAGE>
mother, father and siblings) of the fund. The sales charge also is waived on
purchases of fund shares in an initial amount of not less than $250,000, and
thereafter for subsequent purchases if the purchaser's fund account balance is
at least $250,000, by (a) common or collective trust funds maintained by a bank,
(b) stock bonus, pension or profit sharing plans qualified under section 401(a)
of the Code (including Keogh Plans and 401(k) Plans), and (c) organizations
exempt from taxation pursuant to section 501(a) of the Code. Also, shares of the
fund may be acquired without a sales charge if the purchase is made through a
Morgan Keegan representative who formerly was employed as a broker with another
firm registered as a broker-dealer with the Securities and Exchange Commission
("SEC"), if the following conditions are met: (i) the purchaser was a client of
the investment executive at the other firm for which the investment executive
previously served as a broker; (ii) within 90 days of the purchase of the fund's
shares, the purchaser redeemed shares of one or more mutual funds for which that
other firm or its affiliates served as principal underwriter, provided that
either the purchaser had paid a sales charge in connection with investment in
such funds or a contingent deferred sales charge upon redeeming shares in such
funds; and (iii) the aggregate amount of the fund's shares purchased pursuant to
this sales charge waiver does not exceed the amount of the purchaser's
redemption proceeds from the shares of the mutual fund(s) for which the other
firm or its affiliates served as principal underwriter. The sales charge is also
waived on purchases through Morgan Keegan Mutual fund "Wrap Accounts." Investors
seeking to avail themselves of this waiver will be required to provide
satisfactory evidence that all the above-noted conditions are met and should
contact their Morgan Keegan representative for more information.
ADDITIONAL INFORMATION ON REDEMPTIONS
Suspension of the right of redemption, or postponement of the date of
payment, may be made (1) for any periods when the New York Stock Exchange (the
"NYSE") is closed (other than customary weekend and holiday closings); (2) when
trading is restricted in markets normally utilized by the fund or when an
emergency, as defined by the rules and regulations of the SEC exists, making
disposal of the fund's investments or determination of its net asset value not
reasonably practicable; or (3) for such other periods as the SEC by order may
permit for protection of the fund's shareholders. In the case of any such
suspension, you may either withdraw your request for redemption or receive
payment based upon the net asset value next determined after the suspension is
lifted.
The fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption by making payment in whole or
in part by securities valued in the same way as they would be valued for
purposes of computing the fund's per share net asset value. However, the fund
has committed itself to pay in cash all requests for redemption by any
shareholder of record, limited in amount with respect to each shareholder during
any ninety-day period to the lesser of (1) $250,000, or (2) 1% of the net asset
value of the fund at the beginning of such period. If payment is made in
securities, a shareholder will incur brokerage or transactional expenses in
converting those securities into cash, will be subject to fluctuation in the
market price of those securities until they are sold.
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VALUATION OF SHARES
Net asset value of a fund share will be determined daily as of the close
of the NYSE, on every day that the NYSE is open for business, by dividing the
value of the total assets of the fund, less liabilities, by the total number of
shares outstanding at such time. Pricing will not be done on days when the NYSE
is closed. Currently, the NYSE is closed on weekends and on certain days
relating to the following holidays: New Year's Day, Martin Luther King Jr.'s
Birthday, President's Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving, and Christmas. Securities owned by the fund for which market
quotations are readily available will be valued at current market value, or, in
their absence, at fair value as determined under procedures adopted by the
fund's Board of Directors. Securities traded on an exchange or the NASD National
Market System (including debt securities) will normally be valued at their last
sale price. Other over-the-counter securities (including debt securities), and
securities traded on exchanges for which there is no sale on a particular day
(including debt securities), will be valued by a method which the fund's Board
of Directors believes accurately reflects fair value. Premiums received on the
sale of call options are included in the fund's net asset value, and the current
market value of options sold by the fund will be subtracted from net assets.
PURCHASE OF SHARES
CLASS A SHARES
Class A shares are offered on a continuous basis at a price equal to their
net asset value plus the applicable "initial sales charge" described in the
Prospectus. Proceeds from the initial sales charge are paid to Morgan Keegan and
are used by Morgan Keegan to defray expenses related to providing
distribution-related services to the funds in connection with sales of Class A
shares, such as the payment of compensation to Morgan Keegan brokers for selling
Class A shares. No initial sales charge is imposed on Class A shares issued as a
result of the automatic reinvestment of dividends or capital gains distribution.
CLASS C SHARES
Class C shares are offered on a continuous basis at a price equal to their
net asset value. Class C shares that are redeemed within one year of purchase
are subject to a contingent deferred sales charge ("CDSC") charged as a
percentage of the dollar amount subject thereto. In determining whether a Class
C CDSC is applicable to a redemption, the calculation will be determined in the
manner that results in the lowest possible rate being charged. The charge will
be assessed on an amount equal to the lesser of the proceeds of redemption or
the cost of the shares being redeemed. Accordingly, no Class C CDSC will be
imposed on increases in net asset value above the initial purchase price. In
addition, no Class C CDSC will be assessed on shares derived from reinvestment
of dividends or capital gains distributions. The charge will not be applied to
dollar amounts representing an increase in the net asset value since the time of
purchase. Proceeds from the CDSC are paid to Morgan Keegan to defray the
expenses Morgan Keegan incurs in providing distribution-related services to the
Class C shares.
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CLASS I SHARES
Class I shares are offered on a continuous basis at a price equal to their
net asset value, without an initial sales charge or CDSC.
PERFORMANCE INFORMATION
The fund's performance information and quoted rankings used in advertising
and other promotional materials ("Performance Advertisements") are indicative
only of past performance and are not intended to and do not represent future
investment results. The fund's share price will fluctuate and your shares, when
redeemed, may be worth more or less than you originally paid for them.
TOTAL RETURN CALCULATIONS
Average annual total return quotes ("Standardized Return") used in the
fund's Performance Advertisements are calculated according to the following
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 payment made at the beginning of that period
Because each class of the funds has its own sales charge and fee
structure, the classes have different performance results. In the case of each
class, this calculation assumes the maximum sales charge is included in the
initial investment or the CDSC is applied at the end of the period,
respectively. This calculation assumes that all dividends and other
distributions are reinvested at net asset value on the reinvestment dates during
the period. The "distribution rate" is determined by annualizing the result of
dividing the declared distributions of each fund during the period stated by the
maximum offering price or net asset value at the end of the period. Excluding
the funds' sales charge or Class A shares and the CDSC on Class C shares from
the
Under the foregoing formula, the time periods used in Performance
Advertisements will be based on rolling calendar quarters, updated at least to
the last day of the most recent quarter prior to submission of the Performance
Advertisements for publication. Total return, or "T" in the formula above, is
computed by finding the average annual change in the value of an initial $1,000
investment over the period. In calculating the ending redeemable value, all
dividends and other distributions by the fund are assumed to have been
reinvested at net asset value.
The fund also may refer in Performance Advertisements to total return
performance data that are not calculated according to the formula set forth
above ("Non-Standardized Return"). The fund calculates Non-Standardized Return
for specified periods of time by assuming an investment of $1,000 in fund shares
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and assuming the reinvestment of all dividends and other distributions. The rate
of return is determined by subtracting the initial value of the investment from
the ending value and by dividing the remainder by the initial value. Initial
sales charges are not taken into account in calculating Non-Standardized Return;
the inclusion of those charges would reduce the return.
OTHER INFORMATION
From time to time the fund may compare its performance in Performance
Advertisements to the performance of other mutual funds or various market
indices. The fund may also quote rankings and ratings, and compare the return of
the fund with data published by Lipper Analytical Services, Inc., IBC/Donaghue's
Money Market fund Report, CDA Investment Technologies, Inc., Wiesenberger
Investment Companies Service, Investment Company Data Inc., Morningstar Mutual
funds, Value Line and other services or publications that monitor, compare, rank
and/or rate the performance of mutual funds. The fund may refer in such
materials to mutual fund performance rankings, ratings or comparisons with funds
having similar investment objectives, and other mutual funds reported in
independent periodicals, including, but not limited to, The Wall Street Journal,
Money Magazine, Forbes, Business Week, Financial World, Barron's Fortune, The
New York Times, The Chicago Tribune, The Washington Post and The Kiplinger
Letters.
The fund may also compare its performance with, or may otherwise discuss,
the performance of bank certificates of deposit ("CDs") and other bank deposits,
and may quote from organizations that track the rates offered on such deposits.
In comparing the fund or its performance to CDs investors should keep in mind
that bank CDs are insured up to specified limits by an agency of the U.S.
government. Shares of the fund are not insured or guaranteed by the U.S.
government, the value of fund shares will fluctuate and your shares, when
redeemed, may be worth more or less than you originally paid for them. Unlike
the interest paid on many CDs, which remains as a specified rate for a specified
period of time, the return on the fund's shares will vary.
The fund's Performance Advertisements may reference the history of the
fund's distributor and its affiliates or biographical information of key
investment and managerial personnel including the portfolio manager. The fund
may illustrate hypothetical investment plans designed to help investors meet
long-term financial goals, such as saving for a college education or for
retirement. The fund may discuss the advantages of saving through tax-deferred
retirement plans or accounts.
TAX-DEFERRED RETIREMENT PLANS
As noted in the fund's Prospectus, an investment in fund shares may be
appropriate for various types of tax-deferred retirement plans. In general,
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income earned through the investment of assets of such a plan is not taxed to
the beneficiaries until the income is distributed to them. Investors who are
considering establishing such a plan may wish to consult their attorneys or
other tax advisers with respect to individual tax questions. Additional
information with respect to these plans is available upon request from any
Morgan Keegan broker.
INDIVIDUAL RETIREMENT ACCOUNTS - IRAS
If you have earned income from employment (including self-employment), you
can contribute each year to an IRA up to the lesser of (1) $2,000 for yourself
or $4,000 for you and your spouse, regardless of whether your spouse is
employed, or (2) 100% of compensation. Some individuals may be able to take an
income tax deduction for the contribution. Regular contributions may not be made
for the year you become 70 1/2 or thereafter. You also may be able to make a
nondeductible contribution to an "education IRA" or "Roth IRA," distributions
from which are not taxable under certain circumstances.
An investment in fund shares through IRA contributions may be
advantageous, regardless of whether the contributions are deductible by you for
tax purposes, because all dividends and capital gain distributions on your fund
shares are not immediately taxable to you or the IRA; they become taxable only
when distributed to you. To avoid penalties, your interest in an IRA must be
distributed, or start to be distributed, to you not later than April 1 following
the calendar year in which you attain age 70 1/2. Distributions made before age
59 1/2, in addition to being taxable, generally are subject to a penalty equal
to 10% of the distribution, except in the case of death or disability, where the
distribution is rolled over into another qualified plan, or in certain other
situations.
SELF-EMPLOYED INDIVIDUAL RETIREMENT PLANS - KEOGH PLANS
Morgan Keegan will assist self-employed individuals to set up retirement
plans through which fund shares may be purchased. Morgan Keegan generally
arranges for a bank to serve as trustee for the plan and performs custodian
services for the trustee and the plan by holding and handling securities.
However, you have the right to use a bank of your choice to provide these
services at your cost. There are penalties for distributions from a Keogh Plan
prior to age 59 1/2, except in the case of death or disability.
SIMPLIFIED EMPLOYEE PENSION PLANS - SEPPS, AND
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES - SIMPLES
Morgan Keegan also will make available to corporate and other employers a
SEPP or SIMPLE for investment in fund shares.
DIRECTORS AND OFFICERS
The fund's officers are responsible for the operation of the fund under
the direction of the Board of Directors. The officers and directors of the fund
and their principal occupations during the past five years are set forth below.
An asterisk (*) indicates officers and/or directors who are interested persons
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<PAGE>
of the fund as defined by the 1940 Act. The address of each officer and director
is Morgan Keegan Tower, 50 Front Street, Memphis, Tennessee 38103, unless
otherwise indicated.
Position with the fund and
Name Principal Occupation During Past Five Years
---- -------------------------------------------
Allen B. Morgan, Jr.* President and Director Mr. Morgan is Chairman
Age 58 and Chief Executive
Officer and Executive
Managing Director of
Morgan Keegan & Company,
Inc. He also is a
Chairman of Morgan
Keegan, Inc., a Director
of Morgan Asset
Management, Inc., and a
Director of Catherine's
Stores, Inc.
James D. Witherington, Jr. Director Mr. Witherington is
845 Crossover Lane, President of SSM Corp.
Suite 140 (management of venture
Memphis, Tennessee 38117 capital funds). He also
Age 51 serves as a Director for
several private
companies.
William F. Hughes, Jr.* Director Mr. Hughes is an
Age 56 Executive Managing
Director of Morgan
Keegan & Company, Inc.
He also is President of
Morgan Asset Management,
Inc.
William Jefferies Mann Director Mr. Mann is Chairman and
675 Oakleaf Office Lane President of Mann
Suite 100 Investments, Inc. (hotel
Memphis, Tennessee 38117 investments/
Age 68 consulting). He also
serves as a Director for
Heavy Machines,
Inc.(__________)
James Stillman R. McFadden Director Mr. McFadden is Vice
c/o Sterling Equities, Inc. President of Sterling
6305 Humphreys Boulevard Equities, Inc. (private
Memphis, Tennessee 38120 equity financings). He
Age 43 is also President and
Director of 1703 Inc.
and a Director of Staff
Printing Co.
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Position with the fund and
Name Principal Occupation During Past Five Years
---- -------------------------------------------
Joseph C. Weller* Vice President, Treasurer Mr. Weller is Executive
Age 61 & Assistant Secretary Vice President and Chief
Financial Officer and
Executive Managing
Director of Morgan
Keegan & Company, Inc.
He also is a Director of
Morgan Asset Management,
Inc.
Charles D. Maxwell* Secretary and Assistant Mr. Maxwell is a
Age 46 Treasurer Managing Director and
Assistant Treasurer of
Morgan Keegan & Company,
Inc., and
Secretary/Treasurer of
Morgan Asset Management,
Inc. He was formerly a
senior manager with
Ernst & Young
(accountants) (1976-86).
TABLE OF COMPENSATION(1)
Pension or Total
Retirement Compensation
Benefits Estimated From Fund and
Name and Aggregate Accrued As Annual Fund Complex
Position Compensation Part of Fund Benefits Upon Paid to
With the Company From the Fund Expenses Retirement Directors
--------------- ------------- -------- ---------- ---------
Allen B. Morgan $0 $0 $0 $0
Jr.
President and
Director
James D. $2,000 $0 $0 $12,000
Witherington, Jr.
Director
William F. $0 $0 $0 $0
Hughes, Jr.
Director
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Pension or Total
Retirement Compensation
Benefits Estimated From Fund and
Name and Aggregate Accrued As Annual Fund Complex
Position Compensation Part of Fund Benefits Upon Paid to
With the Company From the Fund Expenses Retirement Directors
--------------- ------------- -------- ---------- ---------
William Jeffries $2,000 $0 $0 $12,000
Mann
Director
James Stillman $2,000 $0 $0 $12,000
R. McFadden
Director
(1) These numbers are based on the compensation schedule adopted annually by the
Company for its operation.
Officers and directors of the fund who are interested persons of the fund
receive no salary or fees from the fund. Directors of the fund who are not
interested persons of the fund will receive an annual retainer of $1,000 and a
fee of $250 and reimbursement for related expenses for each meeting of the Board
of Directors attended by them.
PRINCIPAL SHAREHOLDERS
On July 31, 2000 there were ____________ shares of the fund outstanding of
which all the officers and directors of the fund as a group (7 persons) owned
approximately _____% shares. Management of the fund is not aware of any
shareholder who owned of record or beneficially 5% or more of any class of the
fund's outstanding common stock as of that date.
INVESTMENT ADVISER
Morgan Asset Management, Inc., formerly Southern Capital Advisors, Inc.,
("Adviser"), an affiliate of Morgan Keegan, serves as the fund's investment
adviser and manager under an Investment Advisory and Management Agreement
("Advisory Agreement"). The Advisory Agreement became effective as of
_______________, 2000. The Advisory Agreement provides that, subject to overall
supervision by the Board of Directors of the fund, the Adviser manages the
investment and other affairs of the fund. The Adviser is responsible for
managing the fund's portfolio securities and for making purchases and sales of
portfolio securities consistent with the fund's investment objective, policies
and limitations described in the Prospectus and this Statement of Additional
Information. The Adviser is obligated to furnish the fund with office space as
well as with executive and other personnel necessary for the operation of the
fund. In addition, the Adviser is obligated to supply the Board of Directors and
officers of the fund with certain statistical information and reports, to
oversee the maintenance of various books and records and to arrange for the
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preservation of records in accordance with applicable federal law and
regulations. The Adviser and its affiliates also are responsible for the
compensation of directors and officers of the fund who are employees of the
Adviser and/or its affiliates.
The fund bears all its other expenses that are not assumed by the Adviser.
These expenses include, among others: legal and audit expense; organizational
expenses; interest; taxes; governmental fees; membership fees for investment
company organizations: the cost (including brokerage commissions or charges, if
any) of securities purchased or sold by the fund and any losses incurred in
connection therewith; fees of custodians, transfer agents, registrars or other
agents; distribution fees; expenses of preparing share certificates; expenses
relating to the redemption of the fund's shares; expenses of registering and
qualifying fund shares for sale under applicable federal and state laws and
maintaining such registrations and qualifications; expenses of preparing,
setting in print, printing and distributing prospectuses, proxy statements,
reports, notices and dividends to fund shareholders; costs of stationery; costs
of shareholders' and other meetings of the fund; compensation and expenses of
the independent directors; and insurance covering the fund and its officers and
directors. The fund also is liable for such nonrecurring expenses as may arise,
including litigation to which the fund may be party. The fund also may have an
obligation to indemnify its directors and officers with respect to any such
litigation.
The Adviser receives for its services a management fee, calculated daily
and payable quarterly, at an annual rate of 1.0% of the average daily net assets
of the fund for the first $100 million of average daily net assets and 0.75% of
average daily net assets exceeding $100 million. The Adviser has agreed to
reimburse the fund for certain expenses, including waiving the advisory fees
received by it, in any fiscal year in which the fund's annual expenses
(excluding interest, taxes, brokerage fees and commissions, and certain
extraordinary charges), exceed 2.0% of the fund's average net assets. For the
fiscal year ended June 30, 1998, the advisory fee was $695,785. For the fiscal
year ended June 30, 1999, the advisory fee was $877,482. For the fiscal year
ended June 30, 2000, the advisory fee was $______________.
The Advisory Agreement will remain in effect from year to year, provided
such continuance is approved by a majority of the Board of Directors or by vote
of the holders of a majority of the outstanding voting securities of the fund.
Additionally, the Advisory Agreement must be approved annually by vote of a
majority of the directors of the fund who are not parties to the Agreement or
"interested persons" of such parties as that term is defined in the 1940 Act.
The Advisory Agreement may be terminated by the Adviser or the fund, without
penalty, on 60 days' written notice to the other, and will terminate
automatically in the event of its assignment.
Under the Advisory Agreement, the fund will have the non-exclusive right
to use the name "Morgan Keegan" until the Agreement is terminated, or until the
right is withdrawn in writing by the Adviser.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Under the Advisory Agreement, the Adviser is responsible for the execution
of the fund's portfolio transactions and must seek the most favorable price and
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<PAGE>
execution for such transactions, subject to the possible payment, as described
below, of higher commissions to brokers who provide research and analysis. The
fund may not always pay the lowest commission or spread available. Rather, the
fund also will take into account such factors as size of the order, difficulty
of execution, efficiency of the executing brokers facilities (including the
services described below) and any risk assumed by the executing broker.
The Adviser may give consideration to research, statistical and other
services furnished by broker/dealers to the Adviser for its use, may place
orders with broker/dealers who provide supplemental investment and market
research and securities and economic analysis, and may pay to those brokers a
higher brokerage commission or spread than may be charged by other brokers. Such
research and analysis may be useful to the Adviser in connection with services
to clients other than the fund. The Adviser's fee is not reduced by reason of
its receipt of such brokerage and research services. During the fiscal year
ended June 30, 2000, the fund paid brokerage commissions of $_______ to brokers
who provided research services.
From time to time the fund may use Morgan Keegan & Company, Inc. ("Morgan
Keegan") as broker for agency transactions in listed and over-the-counter
securities at commission rates and under circumstances consistent with the
policy of best execution. The Adviser will not cause the fund to pay Morgan
Keegan any commission for effecting a securities transaction for the fund in
excess of the usual and customary amount other broker/dealers would have charged
for the transaction. Rule 17e-1 under the 1940 Act defines "usual and customary"
commissions to include amounts which are "reasonable and fair compared to the
commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time."
The Adviser may also select other brokers to execute portfolio
transactions. In the over-the-counter market, the fund generally deals with
responsible primary market-makers unless a more favorable execution can
otherwise be obtained through brokers. For the fiscal year ended June 30, 2000,
brokerage commissions paid to Morgan Keegan constituted approximately __ % of
all brokerage commissions paid by the fund in connection with __ % of the
aggregate dollar amount of transactions involving the payment of commissions
effected by the fund in that year. Brokerage commissions paid to Morgan Keegan
were $_____, $3,425 and $8,100 for the fiscal years ended June 30, 2000, 1999
and 1998, respectfully.
The fund may not buy securities from, or sell securities to, Morgan Keegan
as principal. The fund's Board of Directors has adopted procedures in conformity
with Rule 10f-3 under the 1940 Act whereby the fund may purchase securities that
are offered in underwritings in which Morgan Keegan is a participant.
Section 11(a) of the Securities Exchange Act of 1934 prohibits Morgan
Keegan from executing transactions on an exchange for the fund except pursuant
to the provisions of Rule 11a2-2(T) thereunder. That rule permits Morgan Keegan,
as a member of a national securities exchange, to perform functions other than
execution in connection with a securities transaction for the fund on that
exchange only if the fund expressly consents by written contract. The Advisory
Agreement expressly provides such consent in accordance with Rule 11a2-2(T).
18
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Investment decisions for the fund are made independently from those of
other accounts advised by the Adviser. However, the same security may be held in
the portfolios of more that one account. When two or more accounts
simultaneously engage in the purchase or sale of the same security, the prices
and amounts will be equitably allocated among the accounts. In some cases, this
procedure may adversely affect the price or quantity of the security available
to a particular account. In other cases, however, an account's ability to
participate in large volume transactions may produce better executions and
prices.
Morgan Keegan personnel may invest in securities for their own accounts
pursuant to a code of ethics that describes the fiduciary duty owed to
shareholders by all Morgan Keegan directors, officers and employees, establishes
procedures for personal investing and restricts certain transactions. For
example, personal trading in most securities requires pre-clearance. In
addition, the code of ethics places restrictions on the timing of personal
investing in relation to trades by the fund.
DISTRIBUTOR
Morgan Keegan acts as distributor of the fund's shares pursuant to an
Underwriting Agreement between the fund and Morgan Keegan dated February 26,
1999 ("Underwriting Agreement"). The shares of the fund are offered
continuously. The Underwriting Agreement obligates Morgan Keegan to provide
certain services and to bear certain expenses in connection with the offering of
fund shares, including, but not limited to: printing and distribution of
prospectuses and reports to prospective shareholders; preparation and
distribution of sales literature, and advertising; administrative and overhead
cost of distribution such as the allocable costs of executive office time
expended on developing, managing and operating the distribution program;
operating expenses of branch offices, sales training expenses, and telephone and
other communication expenses. Morgan Keegan also compensates investment brokers
of Morgan Keegan and other persons who engage in or support distribution of
shares and shareholder service based on the sales for which they are responsible
and the average daily net asset value of fund shares in accounts of their
clients. Morgan Keegan also pays special additional compensation and promotional
incentives from time to time, to investment brokers for sales of fund shares.
Pursuant to the Underwriting Agreement, as currently in effect, Morgan
Keegan will receive as compensation for its services a 3.0% sales charge on
purchased shares. The sales charge is reduced to 1.0% on sales of $1 million or
more, and is waived on certain purchases of fund shares.
The fund has adopted Distribution Plans with respect to the Class A shares
and Class C shares (each a "Plan," collectively, the "Plans") pursuant to Rule
12b-1 under the 1940 Act. Under the fund's Rule 12b-1 Plans, distribution and
service fees will be paid at an aggregate annual rate of up to 0.50% for Class A
shares, and ____% for Class C shares of the fund's average daily net assets
attributable to shares of that class. Class I shares are not subject to a
distribution and service fee.
Service fees and distribution fees paid by the fund to Morgan Keegan under
the Plans may exceed or be less than Morgan Keegan's expenses thereunder. For
the fiscal year ended June 30, 2000, the fund paid service fees and distribution
fees to Morgan Keegan of $_________. For the fiscal year ended June 30, 2000,
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expenses paid for by Morgan Keegan included $______ for commissions and other
compensation to employees, $______ for printing and mailing, and $______ for
promotional materials. No interested person of the fund or non-interested
director had a direct or indirect interest in the Plans or related agreements.
The fund benefits from the Plans by virtue of an ongoing broker's involvement
with individual customers as well as the benefit from continued promotion. For
the fiscal year ended June 30, 1998, Morgan Keegan retained sales charges of
$624,000 received on sales of the fund's shares; for the fiscal year ended June
30, 1999, Morgan Keegan retained sales charges of $224,000 received on sales of
the fund's shares; and for the fiscal year ended June 30, 2000, Morgan Keegan
retained sales charges of $_______ received on sales of the fund's shares.
The Plans were approved by the Initial Shareholder on __________, 2,000,
and as required by Rule 12b-1 under the 1940 Act, by the Board of Directors on
_____________, 2000, including a majority of the directors who are not
"interested persons" of the funds, as that term is defined in the 1940 Act and
who have no direct or indirect financial interest in the operation of the Plans
or the Underwriting Agreement (the "Qualified Directors").
In approving the Plans, in accordance with the requirements of Rule 12b-1,
the Directors determined that the service and distribution fees were reasonable
in view of the compensation Morgan Keegan investment brokers can receive
relative to the compensation offered by competing equity funds sold with
front-end sales loads, with or without distribution fees. The Plans permits the
fund's shares to be sold to investors with a front-end sales load of 3%, while
some competing equity funds traditionally have been sold with front-end sales
loads in an amount up to 8 1/2% of the purchase price (9.29% of the net amount
invested). The Board also determined that the fees are reasonable in light of
the service and distribution fees paid by other similar funds. Finally, the
Directors determined that there was a reasonable likelihood that the Plans would
benefit the fund and its shareholders. This determination was based, in part, on
the belief that the Plans enable the fund to have Morgan Keegan investment
brokers available to promote and sell the fund, thereby assisting the fund to
attract assets. Growth of assets is expected to benefit both the fund and the
Adviser. The fund is expected to benefit from the potential for economies of
scale in its operations that can arise from growth in assets, as well as from
the increased potential for flexibility in portfolio management resulting from a
net inflow of assets, as opposed to net redemptions. Shareholders of the fund
are expected to benefit from continuing services provided by investment brokers
and other staff members of Morgan Keegan as Distributor. The Adviser and Morgan
Keegan are expected to benefit from the fact that their advisory, service and
distribution fees, which are based on a percentage of assets, increase as fund
assets grow and that their brokerage commissions and transfer fees will also
increase as assets grow. The Directors acknowledged, however, that there is no
assurance that benefits to the fund will be realized as a result to the Plan.
The Plans may be terminated by vote of a majority of the Qualified
Directors or by vote of a majority of the fund's outstanding voting securities
of the applicable class. Termination of the Plans terminates any obligation of
the fund to pay service and distribution fees to Morgan Keegan, other than
service and distribution fees that may have accrued but that have not been paid
as of the date of termination. Any change in the Plans that would materially
increase the service and distribution costs to the fund requires shareholder
approval; otherwise the Plans may be amended by the Directors, including a
majority of the Qualified Directors, as described above.
20
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The Plans, as currently in effect, will continue for successive one-year
periods, provided that each such continuance specifically is approved by (1) the
vote of a majority of the Qualified Directors and (2) the vote of a majority of
the entire Board of Directors.
Rule 12b-1 requires that any person authorized to direct the disposition
of monies paid or payable by the fund pursuant to the Plans or any related
agreement shall provide to the fund's Board of Directors, and the Directors
shall review, at least quarterly, a written report of the amounts so expended
and the purposes for which expenditures were made. Rule 12b-1 also provides that
the fund may rely on that rule only if the selection and nomination of the
fund's independent directors are committed to the discretion of such independent
directors.
The Underwriting Agreement was approved by vote of the Board and the
Qualified Directors on November 16, 1998. The Underwriting Agreement is subject
to the same provisions for annual renewal as the Plans. In addition, the
Underwriting Agreement will terminate upon assignment or upon 60 days' notice
from Morgan Keegan. The fund may terminate the Underwriting Agreement, without
penalty, upon 60 days' notice, by a majority vote of either its Board of
Directors, the Qualified Directors, or the outstanding voting securities of the
fund.
OTHER INFORMATION
The Company is incorporated as a Maryland corporation. The Articles of
Incorporation permit the Board of Directors the right to issue two billion
shares (2,000,000,000), par value of one tenth of one cent ($.001). Under the
Articles of Incorporation, the Directors have the authority to divide or combine
the shares into a greater or lesser number, to classify or reclassify any
unissued shares of the Company into one or more separate series or class of
shares, without further action by the shareholders. As of the date of this SAI,
the Directors have authorized six series of shares which are the Morgan Keegan
Select Capital Growth Fund, the Morgan Keegan Intermediate Bond Fund, the Morgan
Keegan High Income Fund, the Morgan Keegan Select Financial Fund, the Morgan
Keegan Core Equity Fund and the Morgan Keegan Utility Fund and the issuance of
three classes of shares of each fund, designated as Class A, Class C and Class
I. Shares are freely transferable and have no preemptive, subscription or
conversion rights. When issued, shares are fully paid and non-assessable. As of
________, 2000, the Company assumed all of the assets and liabilities of Morgan
Keegan Southern Capital Fund, Inc., which was incorporated in Maryland on May 5,
1986.
The Articles of Incorporation provide that all dividends and distributions
on shares of each series or class will be distributed pro rata to the holders of
that series or class in proportion to the number of shares of that series or
class held by such holders. In calculating the amount of any dividends or
distributions, (1) each class will be charged with the transfer agency fee
attributable to that class, (2) each class will be charged separately with such
other expenses as may be permitted by the SEC and the Board of Directors and (3)
all other fees and expenses shall be charged to the classes, in the proportion
that the net assets of that class bears to the net assets of the applicable
series.
Each class will vote separately on matters pertaining only to that class,
as the Board of Directors may determine. On all other matters, all classes shall
vote together and every share, regardless of class, shall have an equal vote
21
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with every other share. Except as otherwise provided in the Articles of
Incorporation, the By-laws of the Company or as required by the provisions of
the 1940 Act, all matters will be decided by a vote of a majority of the
outstanding voting securities validly cast at a meeting at which a quorum is
present. One-third of the aggregate number of shares of that series or class
outstanding and entitled to vote shall constitute a quorum for the transaction
of business by that series or class.
Unless otherwise required by the 1940 Act or the Articles of
Incorporation, the fund has no intention of holding annual meetings of
shareholders. The fund's shareholders may remove a Director by the majority of
all votes of the Company's outstanding shares and the Board of Directors shall
promptly call a meeting for such purpose when requested to do so in writing by
the record holders of not less than 25% of the outstanding shares of each fund
of the Company. At least two-thirds of the directors holding office must have
been elected by the shareholders.
The fund, its investment adviser and distributor have adopted Codes of
Ethics under Rule 17j-1 of the 1940 Act. Subject to certain limitations, the
Codes of Ethics permit persons subject to the Code to invest in securities,
including securities that may be purchased or held by the fund.
22
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CUSTODIAN, TRANSFER AGENT,
DIVIDEND DISBURSING AGENT
AND
PORTFOLIO ACCOUNTING SERVICE AGENT
Morgan Keegan & Company, Inc., Morgan Keegan Tower, Fifty Front Street,
Memphis, Tennessee 38103, serves as the transfer and dividend disbursing agent
of the fund. For these services, Morgan Keegan, the fund's distributor, receives
from the fund a fee of $5,000 per month, or $60,000 per year.
Morgan Keegan also provides accounting services to the fund. For these
services, which include portfolio accounting, expense accrual and payment, fund
valuation and financial reporting, tax accounting, and compliance control
services, Morgan Keegan receives from the fund a fee of $2,500 per month, or
$30,000 per year.
Shareholders who request an historical transcript of their account will be
charged a fee based on the number of years researched. The fund reserves the
right, upon 60 days' written notice, to make other charges to investors to cover
administrative costs.
State Street Bank and Trust Company, National Association, 108 Myrtle
Street, Quincy, Massachusetts, 02171, serves as the fund's custodian.
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., Washington,
D.C. 20036-1800, serves as counsel to the fund and has passed upon certain
matters in connection with this offering.
CERTIFIED PUBLIC ACCOUNTANTS
KPMG LLP are the fund's independent certified public accountants. The
financial information under the caption "Financial Highlights" in the Prospectus
has been derived from the fund's financial statements contained in the fund's
Annual Report to shareholders for the period ended June 30, 2000 ("Annual
Report"). Those financial statements have been examined by KPMG LLP whose report
thereon also appears in the Annual Report and have been incorporated by
reference in this Statement of Additional Information. KPMG LLP performs an
audit of the fund's financial statements and reviews the fund's federal and
state income tax returns.
23
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PART C: OTHER INFORMATION
-------------------------
23. Exhibits:
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(a) (1) Articles of Incorporation 1/
(2) Amendment to Articles of Incorporation dated January 12, 1999 2/
(3) Amendment to Articles of Incorporation dated July 21, 2000 (filed herewith)
(4) Amendment to Articles of Incorporation (to be filed)
(b) By-laws 2/
(c) Instruments Defining Rights of Security Holders
(1) Articles of Incorporation 1/
(2) Bylaws 2/
(d) (1) Advisory Agreement between Registrant and Morgan Asset Management, Inc. with respect
to Morgan Keegan Intermediate Bond Fund and Morgan Keegan High Income Fund 2/
(2) Investment Advisory Agreement between Growth Stock Portfolio and Meeder Asset
Management, Inc., formerly known as R. Meeder & Associates, Inc. with respect to
Morgan Keegan Core Equity Fund 4/
(a) Investment Sub-Advisory Agreement with Sector Capital Management L.L.C. 5/
(b) Investment Sub-Subadvisory Agreement with Miller/Howard Investments, Inc. 5/
(c) Investment Sub-Subadvisory Agreement with Hallmark Capital Management, Inc. 5/
(d) Investment Sub-Subadvisory Agreement with Barrow, Hanley, Mewhinney & Strauss, Inc. 5/
(e) Investment Sub-Subadvisory Agreement with The Mitchell Group, Inc. 5/
(f) Investment Sub-Subadvisory Agreement with Ashland Management Incorporated 5/
(g) Investment Sub-Subadvisory Agreement with Delta Capital Management, Inc. 5/
(h) Investment Sub-Subadvisory Agreement with Dresdner RCM Global Investors LLC 5/
(i) Investment Sub-Subadvisory Agreement with Alliance Capital Management L.P. 5/
(3) Investment Advisory Agreement between The Utilities Stock Portfolio and Meeder Asset
Management, Inc., formerly known as R. Meeder & Associates, Inc. with respect to
Morgan Keegan Utility Fund 4/
(a) Investment Sub-Advisory Agreement with Miller/Howard Investment, Inc.
(to be filed)
(4) Investment Advisory and Administration Agreement between Registrant and Morgan Asset
Management, Inc. with respect to the Morgan Keegan Core Equity Fund
and the Morgan Keegan Utility Fund (to be filed)
(a) Fee Waiver Agreement (to be filed)
(5) Investment Advisory and Administration Agreement between Registrant and Morgan Asset
Management, Inc. with respect to Morgan Keegan Select Financial Fund (to be filed)
(a) Sub-Advisory Agreement among Registrant, Morgan Asset Management, Inc.
and T.S.J. Advisory Group, Inc. with respect to Morgan Keegan Select
Financial Fund (to be filed)
(6) Investment Advisory Agreement between Registrant and Morgan Asset Management, Inc.
with respect to Morgan Keegan Select Capital Growth Fund (to be filed)
(a) Fee waiver Agreement (to be filed)
<PAGE>
(e) Underwriting Agreement 2/
(f) Bonus or Profit Sharing Contracts - none
(g) (1) Custodian Agreement between Registrant and State Street Bank & Trust Company
with respect to Morgan Keegan Intermediate Bond Fund,
Morgan Keegan High Income Fund, Morgan Keegan Select Financial Fund and
Morgan Select Capital Growth Fund3/
(2) Custody Agreement between Growth Stock Portfolio and Star Bank, N.A. with respect to
the Morgan Keegan Core Equity Fund 4/
(3) Custody Agreement between Utilities Stock Portfolio and Star Bank, N.A. with respect to
the Utilities Fund 4/
(h) Other Material Contracts
(1) Fund Accounting Services Agreement with respect to Morgan Keegan Intermediate Bond
Fund and Morgan Keegan High Income Fund 2/
(a) Amended and Restated Fund Accounting Services Agreement with respect to
Morgan Keegan Intermediate Bond Fund, Morgan Keegan High Income Fund,
Morgan Keegan Select Financial Fund and Morgan Keegan Select Capital
Growth Fund (to be filed)
(2) Transfer Agency and Service Agreement with respect to Morgan Keegan Intermediate Bond
Fund and Morgan Keegan High Income Fund 2/
(a) Amended and Restated Transfer Agency and Service Agreement with respect to Morgan
Keegan Intermediate Bond Fund, Morgan Keegan High Income Fund, Morgan Keegan Select
Financial Fund, Morgan Keegan Core Equity Fund, Morgan Keegan Utility Fund and
Morgan Keegan Select Capital Growth Fund (to be filed)
(3) Fund Accounting Services Agreement between Registrant and Mutual Funds Service Co.
with respect to the Morgan Keegan Core Equity Fund and the Morgan Keegan Utility Fund
(to be filed)
(6) Participation Agreement among Meeder Asset Management, Inc., Growth Stock Portfolio, Sector
Capital Management, L.L.C. and Morgan Keegan Select Fund, Inc., on behalf of Morgan Keegan
Core Equity Fund (to be filed)
(7) Participation Agreement among Meeder Asset Management, Inc., The Utilities Stock Portfolio,
Miller/Howard Investment, Inc. and Morgan Keegan Select Fund, Inc.,
on behalf of Morgan Keegan Utility Fund (to be filed)
(8) Sub-Administration Agreement for Morgan Keegan Core Equity and Morgan Keegan Utility Fund
(to be filed)
(i) Legal Opinion (to be filed)
(j) Other Opinions
Accountants' Consents (to be filed)
(k) Omitted Financial Statements - none
(l) Initial Capital Agreement 2/
(m) (1) Distribution Plan pursuant to Rule 12b-1 2/
(a) Amended and Restated Distribution Plan pursuant to Rule 12b-1 for
Class A shares with respect to Morgan Keegan Intermediate Bond Fund,
Morgan Keegan High Income Fund, Morgan Keegan Select Financial Fund,
Morgan Keegan Select Capital Growth Fund, Morgan Keegan Core
Equity Fund and Morgan Keegan Utility Fund (to be filed)
(b) Distribution Fee Addendum for Class C shares with respect to Morgan Keegan
Intermediate Bond Fund, Morgan Keegan High Income Fund, Morgan Keegan
Select Financial Fund, Morgan Keegan Select Capital Growth Fund, Morgan Keegan
Core Equity Fund and Morgan Keegan Utility Fund (to be filed)
(n) (1) Multiple Class Plan Pursuant to Rule 18f-3 2/
(a) Amended and Restated Multiple Class Plan with respect to Morgan Keegan
Intermediate Bond Fund, Morgan Keegan High Income Fund, Morgan Keegan Core Equity
Fund, Morgan Keegan Utility Fund, Morgan Keegan Select Financial Fund
and Morgan Keegan Select Capital Growth Fund (to be filed)
<PAGE>
(p) Codes of Ethics
(1) Codes of Ethics for Growth Stock Portfolio and Utilities Stock Portfolio 4/
(2) Code of Ethics for Meeder Financial, Inc. 4/
(3) Amended and Restated Code of Ethics for Morgan Keegan Select Fund, Inc., Morgan Keegan
& Company, Inc. and Morgan Asset Management, Inc. (to be filed)
(4) Code of Ethics for T.S.J. Advisory Group, Inc. (to be filed)
1/ Incorporated by reference to the Registrant's Registration Statement on Form N-1A, SEC File No. 333-66181,
filed on October 27, 1998.
2/ Incorporated by reference to Pre-Effective Amendment No. 1 to the Registrant's Registration Statement on Form N-1A,
SEC File No. 333-66181, filed on January 21, 1999.
3/ Incorporated by reference to Post-Effective Amendment No. 2 to the Registrant's Registration Statement on Form N-1A,
SEC File No. 333-66181, filed on October 28, 1999.
4/ Incorporated by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form N-1A,
SEC File No. 333-66181, filed on June 6, 2000.
5/ Incorporated by reference to Post-Effective Amendment No. 11 to the Registration Statement on Form N-1A for Growth
Stock Portfolio, SEC File No. 811-6647, filed on April 28, 2000.
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Item 24. Persons controlled by or under Common Control with Registrant
-------------------------------------------------------------
None.
Item 25. Indemnification
---------------
Section Eleventh of the Articles of Incorporation of the Corporation states:
Section 11.1. To the maximum extent permitted by applicable law (including Maryland law and
the 1940 Act) as currently in effect or as it may hereafter be amended, no director or
officer of the Corporation shall be liable to the Corporation or its stockholders for money
damages.
Section 11.2. To the maximum extent permitted by applicable law (including Maryland law and
the 1940 Act) currently in effect or as it may hereafter be amended, the Corporation shall
indemnify and advance expenses to its present and past directors, officers, or employees,
and persons who are serving or have served at the request of the Corporation as a director,
officer, employee, partner, trustee or agent, of or in similar capacities, for other
entities. The Board of Directors may determine that the Corporation shall provide
information or advance expenses to an agent.
Section 11.3. Repeal or Modifications. No repeal or modification of this Article ELEVENTH
by the stockholders of the Corporation, or adoption or modification of any other provision
of the Articles of Incorporation or By-Laws inconsistent with this Article ELEVENTH, shall
repeal or narrow any limitation on (1) the liability of any director, officer or employee
of the Corporation or (2) right of indemnification available to any person covered by these
provisions with respect to any act or omission which occurred prior to such repeal,
modification or adoption.
Section 10.01 of the Bylaws of the Corporation states:
The Corporation shall indemnify each person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (the "Proceeding"), by reason of the fact
that he or she is or was a director, officer or employee of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee, partner,
trustee or agent of another corporation, partnership, joint venture, trust, or other
enterprise, against all reasonable expenses (including attorneys' fees) actually incurred,
and judgments, fines, penalties and amounts paid in settlement in connection with such
Proceeding to the maximum extent permitted by law, now existing or hereafter adopted.
Paragraph 7 of the Advisory Agreement between the Corporation and Morgan Asset Management,
Inc. states:
A. Except as provided below, in the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part of the
Adviser, the Adviser shall not be subject to liability to the Fund or to any shareholder of
the Fund or its Portfolios for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security or the making of any investment for or on behalf of the
Fund.
B. No provision of this Agreement shall be construed to protect any Director or officer of
the Fund, or the Adviser, from liability in violation of Sections 17(h), 17(i), 36(a) or
36(b) of the 1940 Act.
Paragraphs 7 and 8 of the Underwriting Agreement between the Corporation and Morgan Keegan
& Company, Inc. state:
7. The Fund agrees to indemnify, defend and hold the Distributor, its several officers and
directors, and any person who controls the Distributor within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all claims, demands, liabilities
and expenses (including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the Distributor,
its officers or directors, or any such controlling person may incur, under the 1933 Act or
under common law or otherwise, arising out of or based upon any alleged untrue statement of
a material fact contained in the Registration Statement or arising out of or based upon any
alleged omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, provided, however, that the Fund shall not
indemnify or defend such persons or hold them harmless with respect to any claims, demands,
<PAGE>
or liabilities based on information provided to the Fund by the Distributor; and provided
further that this indemnification provision shall not inure to the benefit of any person
who is an officer or director of the Fund or who controls the Fund within the meaning of
Section 15 of the 1933 Act, as amended, unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling precedent, that such result
would not be against public policy as expressed in the 1933 Act, as amended, and further
provided that in no event shall anything contained in this Agreement be construed so as to
protect the Distributor against any liability to the Fund or its shareholders to which the
Distributor 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 obligations and duties under this Agreement.
8. The Distributor agrees to indemnify, defend and hold the Fund, its several officers and
directors, and any person who controls the Fund within the meaning of Section 15 of the
1933 Act, free and harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the Fund, its
officers or directors, or any such controlling person may incur, under the 1933 Act or
under common law or otherwise, arising out of or based upon any alleged untrue statement of
a material fact contained in information furnished in writing by the Distributor to the
Fund for use in the Registration Statement or arising out of or based upon any alleged
omission by the Distributor to state a material fact in connection with such information
required to be stated in the Registration Statement or necessary to make such information
not misleading.
Paragraph 3 of the Fund Accounting Service Agreement between Morgan Keegan & Company, Inc.
and Morgan Keegan Select Fund, Inc. states:
RESPONSIBILITY OF MORGAN KEEGAN & Company, Inc. Morgan Keegan shall be held to the
exercise of reasonable care in carrying out the provisions of this Agreement, but shall be
indemnified by and shall be without liability to the Fund for any action taken or omitted
by it in good faith without negligence or willful misconduct. Morgan Keegan shall be
entitled to rely on and may act upon the reasonable advice of the Fund's auditors or of
counsel (who may be counsel of the Fund) on all matters, and shall not be liable for any
action reasonably taken or omitted pursuant to such advice.
In addition, Morgan Keegan shall not be liable for any loss of data or any delay in its
performance under this Agreement to the extent such loss or delay is due to causes beyond
its control, including but not limited to: acts of God, interruption in, loss of or
malfunction in power, significant computer hardware or systems software or telephone
communication service; acts of civil or military authority; sabotage; war or civil
commotion; fire; explosion; or strike beyond delivery of minimum critical services. Morgan
Keegan shall use its best efforts to minimize any such loss or delay by all practical means
and to replace any lost data promptly. Morgan Keegan agrees not to discriminate against the
Fund in favor of any other customer of Morgan Keegan in making computer time and its
personnel available to input and process the transactions hereunder when a loss or delay
occurs.
Paragraph 10 of the Transfer Agency and Service Agreement between the Corporation and
Morgan Keegan & Company, Inc. states:
RESPONSIBILITY OF MORGAN KEEGAN; LIMITATION OF LIABILITY. Morgan Keegan shall be
held to the exercise of reasonable care in carrying out the provisions of this Agreement,
but the Fund shall indemnify and hold Morgan Keegan harmless against any losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting
from any claim, demand, action or suit brought by any person (including a shareholder
naming the Fund as a party) other than the Fund arising out of, or in connection with,
Morgan Keegan's performance of its obligations hereunder, provided, that Morgan Keegan does
not act with bad faith, willful misfeasance, reckless disregard of its obligations and
duties, or gross negligence.
The Fund shall also indemnify and hold Morgan Keegan harmless against any losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting
from any claim, demand, action or suit (except to the extent contributed to by Morgan
Keegan's bad faith, willful misfeasance, reckless disregard of its obligations and duties,
or gross negligence) resulting from the negligence of the Fund, or Morgan Keegan's acting
upon any instructions reasonably believed by it to have been executed or communicated by
any person duly authorized by the Fund, or as a result of Morgan Keegan's acting in
reliance upon advice reasonably believed by Morgan Keegan to have been given by counsel for
the Fund, or as a result of Morgan Keegan's acting in reliance upon any instrument
reasonably believed by it to have been genuine and signed, countersigned or executed by the
proper person.
<PAGE>
In no event shall Morgan Keegan be liable for indirect, special, or consequential damages
(even if Morgan Keegan has been advised of the possibility of such damages) arising from
the obligations assumed hereunder and the services provided for by this Agreement,
including but not limited to lost profits, loss of use of the shareholder accounting
system, cost of capital, cost of substitute facilities, programs or services, downtime
costs, or claims of the Fund's shareholders for such damage.
Article VI, Paragraph 4, of the Investment Advisory Agreement between Growth Stock
Portfolio and R. Meeder & Associates, Inc. states:
(4) The Adviser shall not be liable for any error of judgment or mistake of law or for any
loss suffered by the portfolio in connection with the matters to which this Agreement relates
(including, but not limited to, loss sustained by reason of the adoption or implementation of any
investment policy or the purchase, sale or retention of any security), except for loss resulting
from willful misfeasance, bad faith or gross negligence of the Adviser in the performance of its
duties or from reckless disregard by the Adviser of its obligations and duties under this Agreement.
Article VI, Paragraph 4, of the Investment Advisory Agreement between The
Utilities Stock Portfolio and R. Meeder & Associates, Inc. states:
(4) The Adviser shall not be liable for any error of judgment or mistake of law or for any
loss suffered by the portfolio in connection with the matters to which this Agreement relates
(including, but not limited to, loss sustained by reason of the adoption or implementation of any
investment policy or the purchase, sale or retention of any security), except for loss resulting
from willful misfeasance, bad faith or gross negligence of the Adviser in the performance of its
duties or from reckless disregard by the Adviser of its obligations and duties under this Agreement.
Item 26. Business and Other Connections of Investment Adviser
----------------------------------------------------
Morgan Asset Management, Inc., a Tennessee corporation, the investment adviser to the
Morgan Keegan Intermediate Bond Fund, the Morgan Keegan High Income Fund and the Morgan Keegan
Select Financial Fund, is a registered investment adviser and offers investment management services
to investment companies and other types of investors. Information on its officers and directors is
included in its Form ADV filed on October 22, 1999 with the Securities and Exchange Commission
(registration number 801-27629) and is incorporated herein by reference. T. S. J. Advisory Group,
Inc., the Sub-Adviser to the Morgan Keegan Select Financial Fund is controlled by T. Stephen Johnson
who also controls T. Stephen Johnson & Associates, Inc., a bank consulting firm and investment
manager.
Meeder Asset Management, Inc., formerly known as R. Meeder & Associates, Inc., the
investment adviser to the Morgan Keegan Core Equity Fund and the Morgan Keegan Utility Fund, is an
investment adviser to individuals, pension and profit sharing plans, trusts, charitable
organizations, corporations and other institutions.
Item 27. Principal Underwriter
---------------------
(a) Bedford Money Market Fund
Morgan Keegan Southern Capital Fund, Inc.
(b) Morgan Keegan & Company, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Positions and Positions and
Principal Business Offices With Offices With
Address Underwriter Registrant
------------------ ------------- -------------
<S> <C> <C>
(Principal Business Address,
unless otherwise noted, is:
Morgan Keegan Tower
Fifty Front Street
Memphis, Tennessee 38103)
Allen B. Morgan, Jr. Chairman and Director,
Chief Executive President
Officer, Executive
Managing Director
Joseph C. Weller Chief Financial Vice President,
Officer, Executive Treasurer and
Managing Director, Assistant Secretary
Executive Vice President,
Secretary and Treasurer
John W. Stokes, Jr. Vice Chairman, None
Executive Managing
Director
Robert A. Baird Executive None
Managing Director
G. Douglas Edwards Executive Managing None
Director
James H. Ganier Executive Managing None
Director
Stephen P. Laffey Executive Managing None
Director
Thomas V. Orr, Jr. Executive Managing None
Director
James A. Parish, Jr. Executive Managing None
Director
Minor Perkins Executive Managing None
Director
Allen B. Adler Managing Director None
Franklin P. Allen, III Managing Director None
George E. Arras, Jr. Managing Director None
James N. Augustine, Jr. Managing Director None
<PAGE>
Name and Positions and Positions and
Principal Business Offices With Offices With
Address Underwriter Registrant
------------------ ------------- -------------
<S> <C> <C>
Joseph K. Ayers Managing Director None
Rodney D. Baber, Jr. Managing Director None
George E. Bagwell Managing Director None
Woodley H. Bagwell Managing Director None
Charles E. Bailey Managing Director None
Milton A. Barber Managing Director None
Joseph C. Barkley Managing Director None
Reginald E. Barnes Managing Director None
Glen E. Bascom Managing Director None
W. Preston Battle Managing Director None
Robert C. Berry Managing Director None
John D. Brewer Managing Director None
Susan Leonard Brown Managing Director None
Paul S. Burd Managing Director None
John B. Carr, Jr. Managing Director None
John C. Carson, Jr. Managing Director None
Ted H. Cashion Managing Director None
Marshall A. Clark Managing Director None
William F. Clay Managing Director None
Robert E. Cope Managing Director None
Mark W. Crowl Managing Director None
Harold L. Deaton Managing Director None
William W. Deupree, Jr. Managing Director None
James J. Dieck Managing Director None
Robert H. Dudley, Jr. Managing Director None
Richard H. Eckels Managing Director None
Richard K. Fellows Managing Director None
<PAGE>
Name and Positions and Positions and
Principal Business Offices With Offices With
Address Underwriter Registrant
------------------ ------------- -------------
<S> <C> <C>
Richard S. Ferguson Managing Director None
Robert M. Fockler Managing Director None
James M. Fowler, Jr. Managing Director None
Wilmer J. Freiberg Managing Director None
Graham D.S. Fulton Managing Director None
John H. Geary Managing Director None
Robert D. Gooch, Jr. Managing Director None
James F. Gould Managing Director None
Terry C. Graves Managing Director None
John H. Grayson, Jr. Managing Director None
Gary W. Guinn Managing Director None
David M. Guthrie Managing Director None
Jan L. Gwin Managing Director None
Thomas M. Hahn Managing Director None
Thomas V. Harkins Managing Director None
Michael J. Harris Managing Director None
Haywood Henderson Managing Director None
Roderick E. Hennek Managing Director None
William P. Hinckley Managing Director None
Edwin L. Hoopes, III Managing Director None
William F. Hughes, Jr. Managing Director Director
Joe R. Jennings Managing Director None
Robert Jetmundsen Managing Director None
Ram P. Kasargod Managing Director None
Carol Sue Keathley Managing Director None
Dan T. Keel III Managing Director None
Peter R. Klyce Managing Director None
Peter Stephen Knoop Managing Director None
<PAGE>
Name and Positions and Positions and
Principal Business Offices With Offices With
Address Underwriter Registrant
------------------ ------------- -------------
<S> <C> <C>
W. Lawrence M. Knox, Jr. Managing Director None
E. Carl Krausnick, Jr. Managing Director None
James R. Ladyman Managing Director None
A. Welling LaGrone, Jr. Managing Director None
Benton G. Landers Managing Director None
William M. Lellyett, Jr. Managing Director None
W. G. Logan, Jr. Managing Director None
W. Gage Logan III Managing Director None
Wiley H. Maiden Managing Director None
John Henry Martin Managing Director None
William D. Mathis, III Managing Director None
John Fox Matthews Managing Director None
Francis J. Maus Managing Director None
Charles D. Maxwell Managing Director Secretary and
Assistant Treasurer
John Welsh Mayer Managing Director None
W. Ward Mayer Managing Director None
W. Neal McAtee Managing Director None
Harris L. McCraw III Managing Director None
Thomas J. McQuiston Managing Director None
Edward S. Michelson Managing Director None
G. Rolfe Miller Managing Director None
Gary C. Mills Managing Director None
David Montague Managing Director None
Robert M. Montague Managing Director None
K. Brooks Monypeny Managing Director None
John G. Moss Managing Director None
Lewis A. Moyse Managing Director None
<PAGE>
Name and Positions and Positions and
Principal Business Offices With Offices With
Address Underwriter Registrant
------------------ ------------- -------------
<S> <C> <C>
William G. Mueller Managing Director None
Mortimer S. Neblett Managing Director None
Philip G. Nichols Managing Director None
Michael O'Keefe Managing Director None
Jack A. Paratore Managing Director None
William T. Patterson Managing Director None
J. Christopher Perkins Managing Director None
Logan B. Phillips, Jr. Managing Director None
L. Jack Powell Managing Director None
S. Mark Powell Managing Director None
Richard L. Preis Managing Director None
C. David Ramsey Managing Director None
Hedi H. Reynolds Managing Director None
Donna L. Richardson Managing Director None
R. Michael Ricketts Managing Director None
Kathy L. Ridley Managing Director None
Thomas H. Roberts III Managing Director None
Terry A. Robertson Managing Director None
Darien M. Roche Managing Director None
Kenneth L. Rowland Managing Director None
Michael L. Sain Managing Director None
W. Wendell Sanders Managing Director None
E. Elkan Scheidt Managing Director None
Ronald J. Schuberth Managing Director None
H. Wade Schuessler Managing Director None
Lynn T. Shaw Managing Director None
Fred B. Smith Managing Director None
<PAGE>
Name and Positions and Positions and
Principal Business Offices With Offices With
Address Underwriter Registrant
------------------ ------------- -------------
<S> <C> <C>
Richard J. Smith Managing Director None
Robert L. Snider Managing Director None
John B. Snowden, IV Managing Director None
Thomas A. Snyder Managing Director None
Richard A. Spell Managing Director None
John W. Stokes, III Managing Director None
John Burke Strange Managing Director None
James M. Tait, III Managing Director None
J. Crosby Taylor, Jr. Managing Director None
Phillip C. Taylor Managing Director None
Van C. Thompson Managing Director None
John D. Threadgill Managing Director None
P. Gibbs Vestal Managing Director None
Edmund J. Wall Managing Director None
W. Charles Warner Managing Director None
Richard E. Watson Managing Director None
John E. Wilfong Managing Director None
John S. Wilson Managing Director None
J. William Wyker III Managing Director None
Paul B. Young, Jr. Managing Director None
John J. Zollinger, III Managing Director None
William D. Zollinger Managing Director None
</TABLE>
(c) None
<PAGE>
Item 28. Location of Accounts and Records
--------------------------------
MORGAN KEEGAN INTERMEDIATE BOND FUND, MORGAN KEEGAN HIGH INCOME FUND
AND MORGAN KEEGAN SELECT FINANCIAL FUND AND MORGAN KEEGAN SELECT
CAPITAL GROWTH FUND:
The books and other documents required by paragraphs (b)(4), (c) and
(d) of Rule 31a-1 under the Investment Company Act of 1940 are maintained in the
physical possession of Registrant's adviser, Morgan Asset Management, Inc.,
Morgan Keegan Tower, Fifty Front Street, Memphis, Tennessee 38103. All other
accounts, books and other documents required by Rule 31a-1 are maintained in the
physical possession of Registrant's transfer agent and portfolio accounting
service provider, Morgan Keegan & Co., Morgan Keegan Tower, Fifty Front Street,
Memphis, Tennessee 38103.
Morgan Keegan Core Equity Fund and Morgan Keegan Utility Fund:
--------------------------------------------------------------
The books and other documents required by paragraphs (b) (4), (c) and
(d) of Rule 31a-1 under the Investment Company Act of 1940 are maintained in the
physical possession of Meeder Asset Management, Inc., formerly known as R.
Meeder & Associates, Inc., at 6000 Memorial Drive, Dublin, OH 43017. All other
accounts, books and other documents required by Rule 31a-1 are maintained in the
physical possession of Registrant's transfer agent, Morgan Keegan & Co., Morgan
Keegan Tower, Fifty Front Street, Memphis, Tennessee 38103. Certain custodial
records are in the custody of Firstar Bank, N.A., the Funds' custodian at 425
Walnut Street, Cincinnati, Ohio 45202. All other records are kept in the custody
of Mutual Funds Service Co., 6000 Memorial Drive, Dublin, OH 43017.
Item 29. Management Services
-------------------
Not applicable
Item 30. Undertakings - none
------------
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Morgan Keegan Select Fund, Inc.,
has duly caused this Post-Effective Amendment No. 4 to its Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Memphis and State of Tennessee, on the 16th day
of August, 2000.
MORGAN KEEGAN SELECT FUND, INC.
By: /s/ Allen B. Morgan, Jr.
-------------------------------
Allen B. Morgan, Jr., President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A has
been signed below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
--------- ----- ----
/s/ Allen B. Morgan, Jr. Director and August 16, 2000
------------------------------- President (Chief
Allen B. Morgan, Jr. Executive Officer)
/s/ Joseph C. Weller Vice President and August 16, 2000
------------------------------- Treasurer (Chief
Joseph C. Weller Financial Officer)
/s/ James D. Witherington, Jr. Director August 10, 2000
------------------------------
James D. Witherington, Jr.
/s/ William F. Hughes, Jr. Director August 16, 2000
------------------------------
William F. Hughes, Jr.
/s/ William Jefferies Mann Director August 14, 2000
------------------------------
William Jefferies Mann
/s/ James Stillman R. McFadden Director August 9, 2000
------------------------------
James Stillman R. McFadden
<PAGE>
MORGAN KEEGAN SELECT FUND, INC.
Exhibit Index
Item 23.(a)(3) Amendment to Articles of Incorporation dated July 21, 2000
