As filed with the Securities and Exchange Commission on September 2, 1999
Securities Act File No. 333-78815
Investment Company Act File No. 811-09345
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. 2 [X]
Post-Effective Amendment No. ___ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. 2 [X]
(Check appropriate box or boxes.)
WOODLAWN FUNDS TRUST
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(Exact Name of Registrant as Specified in Charter)
105 North Washington Street, P.O. Box 69, Rocky Mount, NC 27802-0069
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (252) 972-9922
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C. Frank Watson, III
105 North Washington Street, P.O. Box 69, Rocky Mount, NC 27802-0069
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(Name and Address of Agent for Service)
With copies to:
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Jane A. Kanter
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, DC 20006-2401
Approximate Date of Proposed Public Offering: As soon as practicable after the
Effective Date of this Amendment
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The Registrant hereby amends this Registration Statement, which shall become
effective in accordance with Section 8(a) of the Securities Act of 1933 on the
20th day after the filing of this amendment or on such earlier date as the
Commission, acting pursuant to said Section 8(a), may determine.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
WOODLAWN FUNDS TRUST
Contents of Registration Statement
This registration statement consists of the following papers and documents:
Cover Sheet
Contents of Registration Statement
The Internet 100 Funds
-Part A - Prospectus
-Part B - Statement of Additional Information
Part C - Other Information and Signature Page
Exhibit Index
Exhibits
<PAGE>
PART A
======
Internet 100 Fund Cusip Number ______________
Internet 100 Equal Weighted Fund Cusip Number ___________
________________________________________________________________________________
THE INTERNET 100 FUNDS^SM
No Load Funds
________________________________________________________________________________
PROSPECTUS
September __, 1999
The Internet 100 Funds^SM (the "Funds") seek capital appreciation. In seeking to
achieve their objectives, the Funds will invest in equity securities of the 100
largest Internet companies traded on the New York Stock Exchange (the "NYSE"),
the American Stock Exchange (the "AMEX"), and the National Association of
Securities Dealers Automated Quotation stock market (the "NASDAQ").
Investment Advisor
------------------
Internet 100 Advisors, L.L.C.
354 Broadway
New York, New York 10013
1-877-655-1110
www.internet100fund.com
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The Securities and Exchange Commission has not approved or disapproved the
securities being offered by this prospectus or determined whether this
prospectus is accurate and complete. Any representation to the contrary is a
criminal offense.
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TABLE OF CONTENTS
INTRODUCTION...................................................................2
WHAT IS THE INTERNET 100 INDEX^SM?..........................................2
THE FUNDS......................................................................2
INVESTMENT OBJECTIVE........................................................2
PRINCIPAL INVESTMENT STRATEGIES.............................................2
PRINCIPAL RISKS OF INVESTING IN THE FUND.......................................3
MARKET RISK.................................................................3
PASSIVE INVESTMENT MANAGEMENT RISK..........................................3
CONCENTRATION RISK..........................................................4
SECTOR RISK.................................................................4
SMALL COMPANY RISK..........................................................4
DERIVATIVES.................................................................4
YEAR 2000...................................................................4
PERFORMANCE INFORMATION........................................................4
FEES AND EXPENSES OF THE FUNDS.................................................5
MANAGEMENT OF THE FUNDS........................................................6
THE INVESTMENT ADVISOR......................................................6
THE ADMINISTRATOR...........................................................6
THE TRANSFER AGENT..........................................................7
THE DISTRIBUTOR.............................................................7
OTHER EXPENSES..............................................................7
INVESTING IN THE FUNDS.........................................................7
MINIMUM INVESTMENT..........................................................7
DETERMINING THE FUNDS'NET ASSET VALUE.......................................8
OTHER MATTERS...............................................................8
PURCHASING SHARES IN THE FUNDS..............................................8
REDEEMING SHARES IN THE FUNDS..............................................10
OTHER IMPORTANT INVESTMENT INFORMATION........................................12
DIVIDENDS, DISTRIBUTIONS AND TAXES.........................................12
FINANCIAL HIGHLIGHTS.......................................................13
ADDITIONAL INFORMATION................................................BACK COVER
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INTRODUCTION
WHAT IS THE INTERNET 100 INDEX^SM?
The Internet 100 Index^SM has been developed by Internet 100 Advisors, L.L.C.,
investment advisor to the Funds. The Internet 100 Index^SM is a portfolio of
stocks comprised of the 100 largest publicly traded "pure play" Internet stocks
in terms of market capitalization. The Advisor defines a "pure play" Internet
company as a company that derives the majority of its sales and customers from
products and/or services directly tied to the Internet. The Internet 100
Index^SM was developed as a proxy for the performance of the entire universe of
Internet stocks. It provides broad exposure to the major sectors of the
Internet, including:
o E-commerce
o Content portals
o Access providers
o Financial services
o Software
o Internet services
o Infrastructure
As this rapidly growing and changing segment of the economy develops, additional
companies and sectors may become relevant. The overriding criteria for inclusion
in the Internet 100 IndexSM will be that a company is primarily dependent on the
Internet for the majority of its revenues.
THE FUNDS
INVESTMENT OBJECTIVE
The Internet 100 Funds seek capital appreciation. In seeking to achieve their
objectives, the Funds will invest in equity securities of the 100 largest
Internet companies traded on the NYSE, the AMEX, and the NASDAQ stock market.
PRINCIPAL INVESTMENT STRATEGIES
The Internet 100 Funds attempt to provide the investor with broad investment
exposure to the Internet sector of our economy. Each Fund will seek capital
appreciation by investing in the equity securities of the stocks included in the
Internet 100 Index^SM, as defined herein, with a variation only as to how each
equity is weighted in its particular portfolio. By varying the composition of
the two funds, the investor is presented with two distinct investment strategies
for participating in the potential growth of Internet companies:
o The Internet 100 Fund holds all stocks in the Internet 100 Index^SM, or a
representative sample, and weights each stock using a formula that is based
on each company's market capitalization.
o The Internet 100 Equal Weighted Fund holds all stocks in the Internet 100
Index^SM, or a representative sample, but equally weights each stock.
The primary difference between the two Funds is the weighting each stock
receives in the two Funds.
Each of the Funds will operate as a non-diversified fund. The Advisor may choose
to limit the holdings of the largest stocks in the portfolio such that stocks
comprising more than 5% of the portfolio will not comprise more than 50% of the
total portfolio. A listing of the stocks in the Internet 100 and their relative
capitalization weighting will be available on the Funds' website at
www.internet100fund.com.
2
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Each Fund intends to remain fully invested at all times, investing approximately
95% of its net assets in equity securities. Approximately 5% will be left in
cash to meet liquidity needs of each Fund. As shareholder purchases are received
by the Funds, the percentage of cash will increase temporarily, while those
funds await investment in additional equity securities.
Internet 100 Fund - Modified Capitalization Weighting
The Internet 100 Fund consists of securities included in the Internet 100
Index^SM. The Internet 100 Index^SM is a portfolio of stocks comprised of the
100 largest publicly traded "pure play" Internet stocks. Each stock is weighted
using a formula that is based on market capitalization.
In order to enhance diversification, while still retaining the general
characteristics of a capitalization weighted portfolio, the Internet 100 Fund
utilizes a modified capitalization weighting methodology. This methodology
places a maximum limit on the percentage weighting each holding receives in the
portfolio. The end result is a more diversified portfolio than would have been
achieved under a strict market capitalization weighting methodology.
Internet 100 Equal Weighted Fund-Equal Weighting
As the name implies, this methodology equally weights each stock in the
portfolio. For a 100 stock portfolio, this means that each stock receives
approximately a 1% weighting at the beginning of each rebalancing period. The
Internet 100 listing of stocks will be reviewed on a quarterly basis although
this rebalancing period may be changed in the future.
PRINCIPAL RISKS OF INVESTING IN THE FUND
An investment in the Fund is subject to investment risks, including the possible
loss of the principal amount invested, and there can be no assurance that the
Fund will be successful in meeting its objective. The following sections
describe some of the risks involved with portfolio investments of the Fund.
MARKET RISK
Market risk refers to the risk related to investments in securities in general
and the daily fluctuations in the securities markets. Each Fund's performance
per share will change daily based on many factors, including fluctuation in
interest rates, the quality of the instruments in the Funds' investment
portfolio, national and international economic conditions, and general market
conditions.
PASSIVE INVESTMENT MANAGEMENT RISK
The Funds are not actively managed through traditional methods of stock
selection; rather they invest in stocks included in the Internet 100 Index^SM
developed by the Advisor, or in a representative sample of those stocks,
regardless of their investment merit. The Funds may be unable to modify their
investment strategies to respond to changes in the economy and may be
particularly susceptible to a general decline in internet-related stocks. The
Advisor is responsible for managing the Internet 100 Index^SM and the Internet
100 Funds.
CONCENTRATION RISK
Due to the concentration of the Funds in the Internet sector, shares of the
Funds are also subject to risks other than those associated with an investment
in a broad market portfolio. Because of their concentration in Internet stocks,
shares of the Funds do not represent a complete investment program.
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SECTOR RISK
The Internet is a small and highly volatile sub-sector of the economy that is
still in its infancy. Internet companies are subject to intense competition,
obsolescence, and rapid rate of change, which can lead to above average
fluctuations in the market value of these companies. Many Internet stocks have
risen in value based on anticipation of future earnings and company viability.
If these future projections prove to be overly optimistic, shares of the
corresponding companies may experience significant declines in market value.
Many Internet companies are currently operating at a loss and it is not known
when or if they will turn profitable. It is probable that some of today's public
Internet companies will not exist in the future.
SMALL COMPANY RISK
Investing in the securities of small companies generally involves substantially
greater risk than investing in larger, more established companies. Therefore, an
investment in the Funds may involve a substantially greater degree of risk than
an investment in other mutual funds that seek capital growth by investing in
more established, larger companies. These risks are associated with a number of
factors including:
o volatility in the values of the securities than those securities of larger,
more established companies, or the market averages in general, because
securities of small companies usually have more limited marketability;
o difficulty in buying or selling significant amounts of such shares without
an unfavorable impact on prevailing prices because small companies normally
have fewer shares outstanding to be traded than larger companies;
o limited product lines, markets, or financial resources and possible lack
management depth;
o vunerability to greater changes in earnings and business prospects than
larger, more established companies;
o the fact that small companies often are not well-known to the investing
public, followed by the financial press or industry analysts, or have
institutional ownership; and
o presence of greater vulnerability than larger companies to adverse business
or economic developments.
DERIVATIVES
The Funds may invest in derivative investments (e.g., futures and options) to a
limited extent. Derivatives are financial instruments whose values are derived,
in part, from prices of other securities, indices, or rates. The use of
derivatives is a highly specialized activity and there can be no guarantee that
their use will increase the return of the Funds, or protect their assets from
declining in value. In fact, the use of derivatives may reduce the value of your
investment if they are not timed correctly or are executed under adverse market
conditions.
YEAR 2000
Like other mutual funds, the Funds and the service providers for the Funds rely
heavily on the reasonably consistent operation of their computer systems. Many
software programs and certain computer hardware in use today cannot properly
process information after December 31, 1999, because of the method by which
dates are encoded and calculated in such programs and hardware. This problem,
commonly referred to as the "Year 2000 Issue," could, among other things,
negatively impact the processing of trades, the distribution of securities, the
pricing of securities and other investment-related and settlement activities.
The Trust is currently obtaining and assessing information with respect to the
actions that have been taken and the actions that are planned to be taken by
each of its service providers to prepare their computer systems for the Year
2000. While the Trust expects that each of the Funds' service providers will
have adapted their computer systems to address the Year 2000 Issue, there can be
no assurance that this will be the case or that the steps taken by the Trust
will be sufficient to avoid any adverse impact to the Funds.
PERFORMANCE INFORMATION
Because the Funds have no operating history, there is no performance information
for the Funds to be presented. Once the Fund's have an operating history, you
may request this information at no charge by calling the Funds.
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FEES AND EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds:
Shareholder Fees for each Fund
(fees paid directly from your investment)
-----------------------------------------
Maximum sales charge (load) imposed on purchases
(as a percentage of the offering price) .........................None
Redemption fee .......................................................None
Annual Fund Operating Expenses for each Fund
(expenses that are deducted from Fund assets)
---------------------------------------------
Management Fees....................................,,,,........0.75%
Distribution and/or Service (12b-1) Fees.......................0.00%^1
Other Expenses.................................................1.25%
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Total Annual Fund Operating Expenses..........................2.00%^2
Fee Waivers and/or Expense Reimbursement.....................(1.00%)
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Net Expenses..................................................1.00%
====
1 The Funds have approved a 12b-1 Distribution Plan in which
the Funds may deduct up to 0.25% of the average daily net
assets of each Fund to pay for these fees. However, the
Funds have no intention of paying this fee in the
immediate future and shareholders will be notified at
least 30 days prior to commencement of the 12b-1
Distribution Plan. See "Distribution Plan" for more
detailed information.
2 Since the Internet 100 Fund and the Internet 100 Equal
Weighted Fund will commence operations on September 1,
1999, Other Expenses and Total Annual Fund Operating
Expenses for that Fund are based on amounts estimated for
the current fiscal year. The Advisor has entered into a
contractual agreement with the Fund under which it has
agreed to waive or reduce its fees and to assume other
expenses of the Fund, if necessary, in an amount that
limits Total Fund Operating Expenses (exclusive of
interest, taxes, brokerage fees and commissions,
extraordinary expenses, and payments, if any, under a Rule
12b-1 plan) to not more than 1.00% of the average daily
net assets of each Fund for the fiscal year to end June
30, 2000. See "Expense Limitation Agreement" for more
detailed information.
Example. This Example shows you the expenses you may pay over time by investing
in either Fund. Since all funds use the same hypothetical conditions, it should
help you compare the costs of investing in these Funds versus other mutual
funds. The Example assumes the following conditions:
(1) You invest $10,000 in the Fund for the periods shown;
(2) You reinvest all dividends and distributions;
(3) You redeem all of your shares at the end of those periods;
(4) You earn a 5% total return; and
(5) The Fund's expenses remain the same.
Although your actual costs may be higher or lower, the following table shows you
what your costs may be under the conditions listed above.
- --------------------------------------- ---------------- ----------------
Period Invested 1 Year 3 Years
- --------------------------------------- ---------------- ----------------
Your Costs $102 $627
- --------------------------------------- ---------------- ----------------
5
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MANAGEMENT OF THE FUNDS
THE INVESTMENT ADVISOR
Internet 100 Advisors, L.L.C., established as a limited liability corporation in
Virginia in 1999, is the Funds' advisor. The Advisor is a new investment
advisory firm that specializes in investing in Internet companies. They
developed the Internet 100 Index^SM of stocks as a means to replicate the
performance of the overall Internet sector. They also manage the Internet 100
Funds. The Advisor's address is 354 Broadway, New York, New York 10013.
The Advisor has not previously served as an investment manager to any other
registered investment company. However, the executives and members of the
investment advisory staff of the Advisor have extensive experience in other
capacities in managing investments for clients, including mutual funds, trusts,
corporations, foundations, charitable organizations, retirement plans, and
individuals. Paul John de Leon has overall responsibility for the general
management of the Funds. Mr. de Leon has served as President of the Advisor
since 1999 and has served as Vice President and Portfolio Manager for Loomis
Sayles & Co. since 1993.
The Advisor's Compensation
As full compensation for the investment advisory services provided to the Funds,
each Fund pays the Advisor monthly compensation based on that Fund's daily
average net assets at the annual rate of 0.75%.
Expense Limitation Agreement
In the interest of limiting expenses of the Funds, the Advisor has entered into
an expense limitation agreement with the Trust, with respect to each of the
Funds ("Expense Limitation Agreement"), pursuant to which the Advisor has agreed
to waive or limit its fees and to assume other expenses so that the total annual
operating expenses of the Funds (other than interest, taxes, brokerage
commissions, other expenditures which are capitalized in accordance with
generally accepted accounting principles, and other extraordinary expenses not
incurred in the ordinary course of each Fund's business, and amounts, if any,
payable pursuant to a Rule 12b-1 Plan) are limited to 1.00% of the average daily
net assets of the Funds for the fiscal year to end June 30, 2000.
Each of the Funds may at a later date reimburse the Advisor for the management
fees waived or limited, and/or other expenses assumed and paid by the Advisor
pursuant to the Expense Limitation Agreement during any of the previous five (5)
fiscal years, provided that the particular Fund has reached a sufficient asset
size to permit such reimbursement to be made without causing the total annual
expense ratio of the particular Fund to exceed the percentage limits stated
above. Consequently, no reimbursement by a Fund will be made unless: (i) the
Fund's assets exceed $20 million; (ii) the Fund's total annual expense ratio is
less than the percentage stated above; and (iii) the payment of such
reimbursement has been approved by the Trust's Board of Trustees on a quarterly
basis.
Brokerage Practices
In selecting brokers and dealers to execute portfolio transactions, the Advisor
may consider research and brokerage services furnished to the Advisor. Subject
to seeking the most favorable net price and execution available, the Advisor may
also consider sales of shares of the Funds as a factor in the selection of
brokers and dealers.
THE ADMINISTRATOR
Nottingham Fund Administrators assists the Trust in the performance of its
administrative responsibilities to each Fund, coordinates the services of each
vendor of services to the Funds, and provides the Funds with other necessary
administrative, fund accounting and compliance services. In addition, the
Administrator makes available the office space, equipment, personnel and
facilities required to provide such services to the Funds.
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THE TRANSFER AGENT
NC Shareholder Services, L.L.C. ("NCSS") serves as the transfer agent and
dividend-disbursing agent for the Funds. As described in "Investing in the
Fund," NCSS will handle your orders to purchase and redeem shares of the Funds
and will disburse dividends paid by the Funds.
THE DISTRIBUTOR
Capital Investment Group, Inc. (the "Distributor") is the principal underwriter
and distributor of the Funds' shares and serves as each Fund's exclusive agent
for the distribution of Fund shares. The Distributor may sell the Funds' shares
to or through qualified securities dealers or others.
Distribution Plan
Each Fund has adopted a distribution plan in accordance with Rule 12b-1 under
the Investment Company Act of 1940. The Distribution Plan provides that each
Fund will annually pay the Distributor up to 0.25% of the average daily net
assets of each Fund's shares for activities primarily intended to result in the
sale of those shares or the servicing of those shares, including to compensate
entities for providing distribution and shareholder servicing with respect to
the Funds' shares (this compensation is commonly referred to as "12b-1 fees").
Because the 12b-1 fees are paid out of the Fund's assets on an on-going basis,
these fees, over time, will increase the cost of your investment and may cost
you more than paying other types of sales loads.
The Fund does not currently intend to make any 12b-1 payments under the
distribution plan. If the Fund decides to begin making such payments, all
shareholders will be notified at least 30 days in advance of commencing the
accrual for such payments.
OTHER EXPENSES
In addition to the management fees and the 12b-1 fees, the Funds pay all
expenses not assumed by the Funds' Advisor, including, without limitation: the
fees and expenses of its independent auditors and of its legal counsel; the
costs of printing and mailing to shareholders annual and semi-annual reports,
proxy statements, prospectuses, statements of additional information and
supplements thereto; the costs of printing registration statements; bank
transaction charges and custodian's fees; any proxy solicitors' fees and
expenses; filing fees; any federal, state or local income or other taxes; any
interest; any membership fees of the Investment Company Institute and similar
organizations; fidelity bond and Trustees' liability insurance premiums; and any
extraordinary expenses, such as indemnification payments or damages awarded in
litigation or settlements made. All general Trust expenses are allocated among
and charged to the assets of each separate series of the Trust, such as the
Funds, on a basis that the Trustees deem fair and equitable, which may be on the
basis of relative net assets of each series or the nature of the services
performed and relative applicability to each series.
INVESTING IN THE FUNDS
MINIMUM INVESTMENT
Shares of the Funds are sold and redeemed at net asset value. Shares may be
purchased by any account managed by the Advisor and any other institutional
investor or any broker-dealer authorized to sell shares of the Funds. The
minimum initial investment is $1,000 and the minimum additional investment is
$250 ($100 for those participating in the automatic investment plan.) The Funds
may, in the Advisor's sole discretion, accept certain accounts with less than
the minimum investment.
7
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DETERMINING THE FUNDS' NET ASSET VALUE
The price at which you purchase or redeem shares is based on the next
calculation of net asset value after an order is received in good form. An order
is considered to be in good form if it includes a complete and accurate
application and payment in full of the purchase amount. Each Fund's net asset
value per share is calculated by dividing the value of the Fund's total assets,
less liabilities (including Fund expenses, which are accrued daily), by the
total number of outstanding shares of that Fund. The net asset value per share
of each Fund is normally determined at the time regular trading closes on the
New York Stock Exchange (currently 4:00 p.m. Eastern time, Monday through
Friday), except on business holidays when the New York Stock Exchange is closed.
OTHER MATTERS
All redemption requests will be processed and payment with respect thereto will
normally be made within seven days after tenders. The Funds may suspend
redemption, if permitted by the 1940 Act, for any period during which the New
York Stock Exchange is closed or during which trading is restricted by the
Securities Exchange Commission ("SEC") or if the SEC declares that an emergency
exists. Redemptions may also be suspended during other periods permitted by the
SEC for the protection of the Funds' shareholders. Additionally, during drastic
economic and market changes, telephone redemption privileges may be difficult to
implement. Also, if the Trustees determine that it would be detrimental to the
best interest of the Funds' remaining shareholders to make payment in cash, the
Funds may pay redemption proceeds in whole or in part by a distribution in kind
of readily marketable securities.
PURCHASING SHARES IN THE FUNDS
Regular Mail Orders
Payment for shares must be made by check or money order from a U.S. bank and
payable in U.S. dollars. If checks are returned due to insufficient funds or
other reasons, the Funds will charge a $20 fee or may redeem shares of the Funds
already owned by the purchaser to recover any such loss. For regular mail
orders, please complete the attached Fund Shares Application and mail it, along
with your check made payable to the "Internet 100 Fund" or the "Internet 100
Equal Weighted Fund," to:
The Internet 100 Funds
[Name of Fund]
c/o NC Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Please remember to add a reference to the applicable Fund on your check to
ensure proper credit to your account.
The application must contain your social security number or Taxpayer
Identification Number ("TIN"). If you have applied for a social security number
or TIN at the time of completing your account application but you have not
received your number, please indicate this on the application. Taxes are not
withheld from distributions to U.S. investors if certain IRS requirements
regarding the TIN are met.
8
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Bank Wire Orders
Purchases may also be made through bank wire orders. To establish a new account
or add to an existing account by wire, please call the Funds at 1-877-655-1110,
before wiring funds, to advise the Funds of the investment, dollar amount, and
the account identification number. Additionally, please have your bank use the
following wire instructions:
First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For credit to either:
The Internet 100 Fund
Account # 2000001293652
OR
The Internet 100 Equal Weighted Fund
Account # 2000001293144
For further credit to (shareholder's name and SS# or TIN#)
Additional Investments
You may also add to your account by mail or wire at any time by purchasing
shares at the then current public offering price. The minimum additional
investment is $250. Before adding funds by bank wire, please call the Funds at
1-877-655-1110 and follow the above directions for wire purchases. Mail orders
should include, if possible, the "Invest by Mail" stub which is attached to your
fund confirmation statement. Otherwise, please identify your account in a letter
accompanying your purchase payment.
Automatic Investment Plan
The automatic investment plan enables shareholders to make regular monthly or
quarterly investment in shares through automatic charges to their checking
account. With shareholder authorization and bank approval, the Funds will
automatically charge the checking account for the amount specified ($100
minimum), which will be automatically invested in shares at the public offering
price on or about the 21st day of the month. The shareholder may change the
amount of the investment or discontinue the plan at any time by writing to the
Funds.
Exchange Feature
You may exchange shares of the Fund for shares of any other series of the Trust
advised by the Advisor and offered for sale in the state in which you reside.
Shares may be exchanged for shares of any other series of the Trust at the net
asset value plus the percentage difference between that series' sales charge and
any sales charge, previously paid by you in connection with the shares being
exchanged. Prior to making an investment decision or giving us your instructions
to exchange shares, please read the prospectus for the series in which you wish
to invest.
The Advisor does not consider a pattern of frequent purchase and redemption
transactions to be in the best interest of the shareholders of the Funds. Such a
pattern may, at the discretion of the Advisor, be limited by the Funds' refusal
to accept further purchase and/or exchange orders from an investor, after
providing the investor with 60-days' prior notice.
The Board of Trustees reserves the right to suspend, terminate, or amend the
terms of the exchange privilege upon 60-days' written notice to the
shareholders.
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Stock Certificates
You do not have the option of receiving stock certificates for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.
REDEEMING SHARES IN THE FUNDS
Regular Mail Redemptions
Regular mail redemption request should be addressed to:
The Internet 100 Funds
[Name of Fund]
c/o NC Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Regular mail redemption requests should include:
1. Your letter of instruction specifying the fund name, your account number,
and number of shares or the dollar amount to be redeemed. This request
must be signed by all registered shareholders in the exact names in which
they are registered;
2. Any required signature guarantees (see "Signature Guarantees" below); and
3. Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.
Your redemption proceeds normally will be sent to you within 7 days after
receipt of your redemption request. However, a Fund may delay forwarding a
redemption check for recently purchased shares while it determines whether the
purchase payment will be honored. Such delay (which may take up to 15 days from
the date of purchase) may be reduced or avoided if the purchase is made by
certified check or wire transfer. In all cases, the net asset value next
determined after receipt of the request for redemption will be used in
processing the redemption request.
Telephone and Bank Wire Redemptions
You may also redeem shares by telephone and bank wire under certain limited
conditions. The Funds will redeem shares in this manner when so requested by the
shareholder only if the shareholder confirms redemption instructions in writing.
The Funds may rely upon confirmation of redemption requests transmitted via
facsimile (# 252-972-1908). The confirmation instructions must include:
1. The name of the Fund;
2. Shareholder name and account number;
3. Number of shares or dollar amount to be redeemed;
4. Instructions for transmittal of redemption funds to the shareholder;
and
5. Shareholder signature as it appears on the application then on file
with the Fund.
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Redemption proceeds will not be distributed until written confirmation of the
redemption request is received, per the instructions above. You can choose to
have redemption proceeds mailed to you at your address of record, your bank, or
to any other authorized person, or you can have the proceeds sent by bank wire
to your bank ($5,000 minimum). Redemption proceeds cannot be wired on days when
your bank is not open for business. You can change your redemption instructions
anytime you wish by filing a letter including your new redemption instructions
with the Fund. See "Signature Guarantees" below.
The Funds in its discretion may choose to pass through to redeeming shareholders
any charges imposed by the Custodian for wire redemptions. The Custodian
currently charges the Funds $10.00 per transaction for wiring redemption
proceeds. If this cost is passed through to redeeming shareholders by the Funds,
the charge will be deducted automatically from your account by redemption of
shares in your account. Your bank or brokerage firm may also impose a charge for
processing the wire. If wire transfer of funds is impossible or impractical, the
redemption proceeds will be sent by mail to the designated account.
You may redeem shares, subject to the procedures outlined above, by calling the
Funds at 1-877-655-1110. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Funds. Telephone redemption privileges authorize the Funds to act on
telephone instructions from any person representing himself or herself to be the
investor and reasonably believed by the Fund to be genuine. The Funds will
employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine, and if it does not
follow such procedures, the Funds will be liable for any losses due to
fraudulent or unauthorized instructions. The Funds will not be liable for
following telephone instructions reasonably believed to be genuine.
Small Accounts
The Funds reserve the right to redeem involuntarily any account having a net
asset value of less than $1,000 (due to redemptions, exchanges, or transfers,
and not due to market action) upon 60-days' written notice. If the shareholder
brings his account net asset value up to at least $1,000 during the notice
period, the account will not be redeemed. Redemptions from retirement plans may
be subject to federal income tax withholding.
Systematic Withdrawal Plan
A shareholder who owns shares of the Funds valued at $2,500 or more at the
current offering price may establish a Systematic Withdrawal Plan to receive a
monthly or quarterly check in a stated amount not less than $250. Each month or
quarter, as specified, the Funds will automatically redeem sufficient shares
from your account to meet the specified withdrawal amount. The shareholder may
establish this service whether dividends and distributions are reinvested in
shares of the Funds or paid in cash. Call or write the Funds for an application
form.
Signature Guarantees
To protect your account and the Funds from fraud, signature guarantees are
required to be sure that you are the person who has authorized a change in
registration or standing instructions for your account. Signature guarantees are
required for (1) change of registration requests; (2) requests to establish or
to change exchange privileges or telephone and bank wire redemption service
other than through your initial account application; and (3) redemption requests
in excess of $50,000. Signature guarantees are acceptable from a member bank of
the Federal Reserve System, a savings and loan institution, credit union (if
authorized under state law), registered broker-dealer, securities exchange, or
association clearing agency and must appear on the written request for change of
registration, establishment or change in exchange privileges, or redemption
request.
11
<PAGE>
Redemptions in Kind
The Funds do not intend, under normal circumstances, to redeem its securities by
payment in kind. It is possible, however, that conditions may arise in the
future, which would, in the opinion of the Trustees, make it undesirable for the
Funds to pay for all redemptions in cash. In such case, the Board of Trustees
may authorize payment to be made in readily marketable portfolio securities of
the Funds. Securities delivered in payment of redemptions would be valued at the
same value assigned to them in computing the net asset value per share.
Shareholders receiving them would incur brokerage costs when these securities
are sold. An irrevocable election has been filed under Rule 18f-1 of the 1940
Act, wherein the Funds committed themselves to pay redemptions in cash, rather
than in kind, to any shareholder of record of the Fund who redeems during any
ninety-day period, the lesser of (a) $250,000 or (b) one percent (1%) of the
Funds' net asset value at the beginning of such period.
OTHER IMPORTANT INVESTMENT INFORMATION
DIVIDENDS, DISTRIBUTIONS AND TAXES
The following information is meant as a general summary for U.S. taxpayers.
Additional tax information appears in the SAI. Shareholders should rely their
own tax advisers for advice about the particular federal, state and local tax
consequences to them of investing in a Fund.
Each Fund will distribute most of its income and gains to its shareholders every
year. Income dividends, if any, may be paid quarterly and capital gains
distributions, if any, will be made at least annually. Although a Fund will not
be taxed on amounts it distributes, shareholders will generally be taxed,
regardless of whether distributions are received in cash or are reinvested in
additional Fund shares. A particular distribution generally will be taxable as
either ordinary income or long-term capital gains. If a Fund designates a
distribution as a capital gain distribution, it will be taxable to shareholders
as long-term capital gains, regardless of how long they have held their Fund
shares.
If a Fund declares a dividend in October, November or December but pays it in
January, it may be taxable to shareholders as if they received it in the year it
was declared. Each year each shareholder will receive a statement detailing the
tax status of any Fund distributions for that year.
Distributions may be subject to state and local taxes, as well as federal taxes.
Shareholders who hold Fund shares in a tax-deferred account, such as a
retirement plan, generally will not have to pay tax on Fund distributions until
they receive distributions from the account.
A shareholder that sells or redeems shares will generally realize a capital gain
or loss, which will be long-term or short-term, generally depending upon the
shareholder's holding period for the Fund shares.
An exchange of shares may be treated as a sale.
As with all mutual funds, each Fund may be required to withhold U.S. federal
income tax at the rate of 31% of all taxable distributions payable to
shareholders who fail to provide the Fund with their correct taxpayer
identification numbers or to make required certifications, or who have been
notified by the IRS that they are subject to backup withholding. Backup
withholding is not an additional tax; rather, it is a way in which the IRS
ensures it will collect taxes otherwise due. Any amounts withheld may be
credited against a shareholder's U.S. federal income tax liability.
12
<PAGE>
FINANCIAL HIGHLIGHTS
Because the Internet 100 Funds are new funds, there are no financial or
performance information included in this prospectus. Once the information
becomes available, you may request this information at no charge by calling the
Funds.
13
<PAGE>
ADDITIONAL INFORMATION
________________________________________________________________________________
THE INTERNET 100 FUNDS
No Load Funds
________________________________________________________________________________
Additional information about the Funds is included in the Funds' Statement of
Additional Information, available free of charge upon request by contacting us:
By telephone: 1-877-655-1110
By mail: The Internet 100 Funds
c/o NC Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, NC 27803-0365
By e-mail: [email protected]
On the Internet: www.internet100fund.com
Information about the Funds can also be reviewed and copied at the Securities
Exchange Commission's ("Commission") Public Reference Room in Washington, D.C.
Inquiries on the operations of the public reference room may be made by calling
the Commission at 1-800-SEC-0330. Reports and other information about the Funds
are available on the Commission's Internet site at http://www.sec.gov and copies
of this information may be obtained, upon payment of a duplicating fee, by
writing the Public Reference Section of the Commission, Washington, D.C.
20549-6009.
Investment Company Act file number 811-09345
<PAGE>
PART B
======
STATEMENT OF ADDITIONAL INFORMATION
THE INTERNET 100 FUNDS
September __, 1999
Series of the
WOODLAWN FUNDS TRUST (the "Trust")
107 North Washington Street, Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone 1-877-655-1110
Table of Contents
-----------------
OTHER INVESTMENT POLICIES....................................................B-1
INVESTMENT LIMITATIONS.......................................................B-5
PORTFOLIO TRANSACTIONS.......................................................B-7
NET ASSET VALUE..............................................................B-8
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................B-9
DESCRIPTION OF THE TRUST....................................................B-10
ADDITIONAL INFORMATION CONCERNING TAXES.....................................B-11
MANAGEMENT OF THE FUNDS.....................................................B-12
SPECIAL SHAREHOLDER SERVICES................................................B-15
ADDITIONAL INFORMATION ON PERFORMANCE.......................................B-17
APPENDIX A - DESCRIPTION OF RATINGS.........................................B-19
THE INFORMATION IN THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION IS NOT AN OFFER TO SELL THESE SECURITIES AND
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
This Statement of Additional Information (the "SAI") is meant to be read in
conjunction with the Prospectus, dated September __, 1999, for the Internet 100
Fund and the Internet 100 Equal Weighted Fund (collectively, the "Funds") and is
incorporated by reference in its entirety into the Prospectus. Because this SAI
is not itself a prospectus, no investment in shares of the Funds should be made
solely upon the information contained herein. Copies of the Funds' Prospectus
may be obtained at no charge by writing or calling the Funds at the address and
phone number shown above. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.
<PAGE>
OTHER INVESTMENT POLICIES
The Funds were organized in 1999 as non-diversified, open-end management
companies. The following policies supplement the Funds' investment objectives
and policies as set forth in the Prospectus. Attached to this SAI is Appendix A,
which contains descriptions of the rating symbols used by Rating Agencies for
securities in which the Funds may invest.
Repurchase Agreements. Each Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to seven days of the purchase.
Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"), collateralized by the underlying security.
The Trust will implement procedures to monitor on a continuous basis the value
of the collateral serving as security for repurchase obligations. Additionally,
the Advisor to the Funds will consider the creditworthiness of the vendor. If
the vendor fails to pay the agreed upon resale price on the delivery date, the
Fund will retain or attempt to dispose of the collateral. A Fund's risk is that
such default may include any decline in value of the collateral to an amount
which is less than 100% of the repurchase price, any costs of disposing of such
collateral, and any loss resulting from any delay in foreclosing on the
collateral. The Funds will not enter into any repurchase agreement which will
cause more than 10% of their net assets to be invested in repurchase agreements
which extend beyond seven days and other illiquid securities.
Money Market Instruments. Money market instruments may include U.S. Government
Securities or corporate debt securities (including those subject to repurchase
agreements), provided that they mature in thirteen months or less from the date
of acquisition and are otherwise eligible for purchase by the Funds. Money
market instruments also may include Banker's Acceptances and Certificates of
Deposit of domestic branches of U.S. banks, Commercial Paper and Variable Amount
Demand Master Notes ("Master Notes"). Banker's Acceptances are time drafts drawn
on and "accepted" by a bank. When a bank "accepts" such a time draft, it assumes
liability for its payment. When a Fund acquires a Banker's Acceptance the bank
which "accepted" the time draft is liable for payment of interest and principal
when due. The Banker's Acceptance carries the full faith and credit of such
bank. A Certificate of Deposit ("CD") is an unsecured interest-bearing debt
obligation of a bank. Commercial Paper is an unsecured, short-term debt
obligation of a bank, corporation or other borrower. Commercial Paper maturity
generally ranges from two to 270 days and is usually sold on a discounted basis
rather than as an interest-bearing instrument. The Funds will invest in
Commercial Paper only if it is rated one of the top two rating categories by
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Ratings Services
("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps ("D&P") or, if
not rated, of equivalent quality in the Advisor's opinion. Commercial Paper may
include Master Notes of the same quality. Master Notes are unsecured obligations
which are redeemable upon demand of the holder and which permit the investment
of fluctuating amounts at varying rates of interest. Master Notes are acquired
by the Funds only through the Master Note program of the Funds' custodian bank,
acting as administrator thereof. The Advisor will monitor, on a continuous
basis, the earnings power, cash flow and other liquidity ratios of the issuer of
a Master Note held by the Funds.
Illiquid Investments. Each Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of a Fund's investments and, through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of a Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features) and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Funds to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days. If through a change in values, net
assets or other circumstances, a Fund were in a position where more than 10% of
its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity. The Funds may not purchase restricted
securities, which are securities that cannot be sold to the public without
registration under the federal securities laws.
Futures Contracts. A futures contract is a bilateral agreement to buy or sell a
security (or deliver a cash settlement price, in the case of a contract relating
to an index or otherwise not calling for physical delivery at the end of trading
in the contracts) for a set price in the future. Futures contracts are
designated by boards of trade which have been designated "contracts markets" by
the Commodities Futures Trading Commission ("CFTC"). No purchase price is paid
or received when the contract is entered into. Instead, the Fund upon entering
into a futures contract (and to maintain the Fund's open positions in futures
contracts) would be required to deposit with its custodian in a segregated
account in the name of the futures broker an amount of cash, United States
Government securities, suitable money market instruments, or liquid, high-grade
debt securities, known as "initial margin." The margin required for a particular
futures contract is set by the exchange on which the contract is traded, and may
be significantly modified from time to time by the exchange during the term of
the contract. Futures contracts are customarily purchased and sold on margin
that may range upward from less than 5% of the value of the contract being
traded. By using futures contracts as a risk management technique, given the
greater liquidity in the futures market than in the cash market, it may be
possible to accomplish certain results more quickly and with lower transaction
costs.
If the price of an open futures contract changes (by increase in the case of a
sale or by decrease in the case of a purchase) so that the loss on the futures
contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if the
value of a position increases because of favorable price changes in the futures
contract so that the margin deposit exceeds the required margin, the broker will
pay the excess to the Fund. These subsequent payments called "variation margin,"
to and from the futures broker, are made on a daily basis as the price of the
underlying assets fluctuate making the long and short positions in the futures
contract more or less valuable, a process known as "marking to the market." The
Funds expect to earn interest income on their initial and variation margin
deposits.
The Funds will incur brokerage fees when they purchase and sell futures
contracts. Positions taken in the futures markets are not normally held until
delivery or cash settlement is required, but are instead liquidated through
offsetting transactions which may result in a gain or a loss. While futures
positions taken by the Funds will usually be liquidated in this manner, the
Funds may instead make or take delivery of underlying securities whenever it
appears economically advantageous for the Funds to do so. A clearing
organization associated with the exchange on which futures are traded assumes
responsibility for closing out transactions and guarantees that as between the
clearing members of an exchange, the sale and purchase obligations will be
performed with regard to all positions that remain open at the termination of
the contract.
Securities Index Futures Contracts. Purchases or sales of securities index
futures contracts may be used in an attempt to protect the Funds' current or
intended investments from broad fluctuations in securities prices. A securities
index futures contract does not require the physical delivery of securities, but
merely provides for profits and losses resulting from changes in the market
value of the contract to be credited or debited at the close of each trading day
to the respective accounts of the parties to the contract. On the contract's
expiration date a final cash settlement occurs and the futures positions are
simply closed out. Changes in the market value of a particular index futures
contract reflect changes in the specified index of securities on which the
future is based.
By establishing an appropriate "short" position in index futures, the Funds may
also seek to protect the value of its portfolio against an overall decline in
the market for such securities. Alternatively, in anticipation of a generally
rising market, the Funds can seek to avoid losing the benefit of apparently low
current prices by establishing a "long" position in securities index futures and
later liquidating that position as particular securities are in fact acquired.
To the extent that these hedging strategies are successful, the Funds will be
affected to a lesser degree by adverse overall market price movements than would
otherwise be the case.
Options on Futures Contracts. The Funds may purchase exchange-traded call and
put options on futures contracts and write exchange-traded call options on
futures contracts. These options are traded on exchanges that are licensed and
regulated by the CFTC for the purpose of options trading. A call option on a
futures contract gives the purchaser the right, in return for the premium paid,
to purchase a futures contract (assume a "long" position) at a specified
exercise price at any time before the option expires. A put option gives the
purchaser the right, in return for the premium paid, to sell a futures contract
(assume a "short" position), for a specified exercise price, at any time before
the option expires.
The Funds will write only options on futures contracts which are "covered." The
Funds will be considered "covered" with respect to a put option it has written
if, so long as it is obligated as a writer of the put, the Funds segregate with
its custodian cash, United States Government securities or liquid securities at
all times equal to or greater than the aggregate exercise price of the puts it
has written (less any related margin deposited with the futures broker). The
Funds will be considered "covered" with respect to a call option they have
written on a debt security future if, so long as it is obligated as a writer of
the call, the Funds own a security deliverable under the futures contract. The
Funds will be considered "covered" with respect to a call option it has written
on a securities index future if the Funds own, so long as the Funds are
obligated as the writer of the call, the Funds of securities the price changes
of which are, in the opinion of the Manager, expected to replicate substantially
the movement of the index upon which the futures contract is based.
Upon the exercise of a call option, the writer of the option is obligated to
sell the futures contract (to deliver a "long" position to the option holder) at
the option exercise price, which will presumably be lower than the current
market price of the contract in the futures market. Upon exercise of a put, the
writer of the option is obligated to purchase the futures contract (deliver a
"short" position to the option holder) at the option exercise price which will
presumably be higher than the current market price of the contract in the
futures market. When the holder of an option exercises it and assumes a long
futures position, in the case of a call, or a short futures position, in the
case of a put, its gain will be credited to its futures margin account, while
the loss suffered by the writer of the option will be debited to its account and
must be immediately paid by the writer. However, as with the trading of futures,
most participants in the options markets do not seek to realize their gains or
losses by exercise of their option rights. Instead, the holder of an option will
usually realize a gain or loss by buying or selling an offsetting option at a
market price that will reflect an increase or a decrease from the premium
originally paid.
If Funds write options on futures contracts, the particular Fund will receive a
premium but will assume a risk of adverse movement in the price of the
underlying futures contract comparable to that involved in holding a futures
position. If the option is not exercised, the particular Fund will realize a
gain in the amount of the premium, which may partially offset unfavorable
changes in the value of securities held in or to be acquired for the Fund. If
the option is exercised, the Fund will incur a loss in the option transaction,
which will be reduced by the amount of the premium it has received, but which
will offset any favorable changes in the value of its portfolio securities or,
in the case of a put, lower prices of securities it intends to acquire.
Options on futures contracts can be used by the Funds to hedge substantially the
same risks as might be addressed by the direct purchase or sale of the
underlying futures contracts. If the Funds purchase an option on a futures
contract, it may obtain benefits similar to those that would result if it held
the futures position itself. Purchases of options on futures contracts may
present less risk in hedging than the purchase and sale of the underlying
futures contracts since the potential loss is limited to the amount of the
premium plus related transaction costs.
The purchase of put options on futures contracts is a means of hedging the Funds
of securities against a general decline in market prices. The purchase of a call
option on a futures contract represents a means of hedging against a market
advance when the particular Fund is not fully invested.
The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the underlying securities. If the futures price at
expiration is below the exercise price, the Fund will retain the full amount of
the option premium, which provides a partial hedge against any decline that may
have occurred in the value of the Fund's holdings of securities. The writing of
a put option on a futures contract is analogous to the purchase of a futures
contract in that it hedges against an increase in the price of securities the
Fund intends to acquire. However, the hedge is limited to the amount of premium
received for writing the put.
Limitations on Purchase and Sale of Futures Contracts and Options on Futures
Contracts. The Fund will not engage in transactions in futures contracts and
related options for speculation. In addition, the Fund will not purchase or sell
futures contracts or related options unless either (1) the futures contracts or
options thereon are purchased for "bona fide hedging" purposes (as that term is
defined under the CFTC regulations) or (2) if purchased for other purposes, the
sum of the amounts of initial margin deposits on the Fund's existing futures and
premiums required to establish non-hedging positions, less the amount by which
any such options positions are "in-the-money" (as defined under CFTC
regulations) would not exceed 5% of the liquidation value of the Fund's total
assets. In instances involving the purchase of futures contracts or the writing
of put options thereon by the Fund, an amount of cash and cash equivalents,
equal to the cost of such futures contracts or options written (less any related
margin deposits), will be deposited in a segregated account with its custodian,
thereby insuring that the use of such futures contracts and options is
unleveraged. In instances involving the sale of futures contracts or the writing
of call options thereon by the Fund, the securities underlying such futures
contracts or options will at all times be maintained by the Fund or, in the case
of index futures and related options, the Fund will own securities the price
changes of which are, in the opinion of the Manager, expected to replicate
substantially the movement of the index upon which the futures contract or
option is based.
Options. A call option is a contract which gives the purchaser of the option (in
return for a premium paid) the right to buy, and the writer of the option (in
return for a premium received) the obligation to sell, the underlying security
at the exercise price at any time prior to the expiration of the option,
regardless of the market price of the security during the option period. A call
option on a security is covered, for example, when the writer of the call option
owns the security on which the option is written (or on a security convertible
into such a security without additional consideration) throughout the option
period.
Writing Call Options. The Funds will write covered call options both to reduce
the risks associated with certain of its investments and to increase total
investment return through the receipt of premiums. In return for the premium
income, the Fund will give up the opportunity to profit from an increase in the
market price of the underlying security above the exercise price so long as its
obligations under the contract continue, except insofar as the premium
represents a profit. Moreover, in writing the call option, the Fund will retain
the risk of loss should the price of the security decline. The premium is
intended to offset that loss in whole or in part. Unlike the situation in which
the Fund owns securities not subject to a call option, the Fund, in writing call
options, must assume that the call may be exercised at any time prior to the
expiration of its obligation as a writer, and that in such circumstances the net
proceeds realized from the sale of the underlying securities pursuant to the
call may be substantially below the prevailing market price.
The Funds may terminate its obligation under an option it has written by buying
an identical option. Such a transaction is called a "closing purchase
transaction." The Fund will realize a gain or loss from a closing purchase
transaction if the amount paid to purchase a call option is less or more than
the amount received from the sale of the corresponding call option. Also,
because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security, any loss resulting
from the exercise or closing out of a call option is likely to be offset in
whole or part by unrealized appreciation of the underlying security owned by the
Fund. When an underlying security is sold from the Fund's securities portfolio,
the Fund will effect a closing purchase transaction so as to close out any
existing covered call option on that underlying security.
Writing Put Options. The writer of a put option becomes obligated to purchase
the underlying security at a specified price during the option period if the
buyer elects to exercise the option before its expiration date. If the Funds
write a put option, the Fund will be required to "cover" it, for example, by
depositing and maintaining in a segregated account with its custodian cash, U.S.
Government securities or other liquid securities having a value equal to or
greater than the exercise price of the option.
The Funds may write put options either to earn additional income in the form of
option premiums (anticipating that the price of the underlying security will
remain stable or rise during the option period and the option will therefore not
be exercised) or to acquire the underlying security at a net cost below the
current value (e.g., the option is exercised because of a decline in the price
of the underlying security, but the amount paid by the Fund, offset by the
option premium, is less than the current price). The risk of either strategy is
that the price of the underlying security may decline by an amount greater than
the premium received. The premium which the Fund receives from writing a put
option will reflect, among other things, the current market price of the
underlying security, the relationship of the exercise price to that market
price, the historical price volatility of the underlying security, the option
period, supply and demand and interest rates. The Fund may effect a closing
purchase transaction to realize a profit on an outstanding put option or to
prevent an outstanding put option from being exercised.
Purchasing Put and Call Options. The Funds may purchase put options on
securities to protect their holdings against a substantial decline in market
value. The purchase of put options on securities will enable the Fund to
preserve, at least partially, unrealized gains in an appreciated security in its
portfolio without actually selling the security. In addition, the Fund will
continue to receive interest or dividend income on the security. The Fund may
also purchase call options on securities to close out positions. The Fund may
sell put or call options they have previously purchased, which could result in a
net gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the put or call option
which was bought.
Securities Index Options. The Funds may write covered put and call options and
purchase call and put options on securities indexes for the purpose of hedging
against the risk of unfavorable price movements adversely affecting the value of
the Fund's securities or securities it intends to purchase. The Fund writes only
"covered" options. A call option on a securities index is considered covered,
for example, if, so long as the Fund is obligated as the writer of the call, it
holds securities the price changes of which are, in the opinion of the Manager,
expected to replicate substantially the movement of the index or indexes upon
which the options written by the Fund are based. A put on a securities index
written by the Fund will be considered covered if, so long as it is obligated as
the writer of the put, the Fund segregates with its custodian cash, United
States Government securities or other liquid high-grade debt obligations having
a value equal to or greater than the exercise price of the option. Unlike a
stock option, which gives the holder the right to purchase or sell a specified
stock at a specified price, an option on a securities index gives the holder the
right to receive a cash "exercise settlement amount" equal to (i) the difference
between the exercise price of the option and the value of the underlying stock
index on the exercise date, multiplied by (ii) a fixed "index multiplier."
A securities index fluctuates with changes in the market value of the securities
so included. For example, some securities index options are based on a broad
market index such as the S&P 500 Index or the NYSE Composite Index, or a
narrower market index such as the S&P 100 Index. Indexes may also be based on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index.
Forward Commitment & When-Issued Securities. The Funds may purchase securities
on a when-issued basis or for settlement at a future date if the Fund holds
sufficient assets to meet the purchase price. In such purchase transactions, the
Fund will not accrue interest on the purchased security until the actual
settlement. Similarly, if a security is sold for a forward date, the Fund will
accrue the interest until the settlement of the sale. When-issued security
purchases and forward commitments have a higher degree of risk of price movement
before settlement due to the extended time period between the execution and
settlement of the purchase or sale. As a result, the exposure to the
counterparty of the purchase or sale is increased. Although the Funds would
generally purchase securities on a forward commitment or when-issued basis with
the intention of taking delivery, the Funds may sell such a security prior to
the settlement date if the Advisor felt such action was appropriate. In such a
case, the Fund could incur a short-term gain or loss.
INVESTMENT LIMITATIONS
Each Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose, means, with respect to
a Fund, the lesser of (i) 67% of the Fund's outstanding shares represented in
person or by proxy at a meeting at which more than 50% of its outstanding shares
are represented, or (ii) more than 50% of its outstanding shares. Unless
otherwise indicated, percentage limitations apply at the time of purchase.
As a matter of fundamental policy, the Internet 100 Fund and the Internet 100
Equal Weighted Fund:
1. Will not deviate from the Funds' fundamental investment objective and
policy that it will concentrate the Funds' investments in the Internet
sector.
2. May (i) borrow money from banks and (ii) make other investments or
engage in other transactions permissible under the 1940 Act which may
involve a borrowing, provided that the combination of (i) and (ii)
shall not exceed 33 1/3% of the value of the Fund's total assets
(including the amount borrowed), less the Fund's liabilities (other
than borrowings), except that the Fund may borrow up to an additional
5% of its total assets (not including the amount borrowed) from a bank
for temporary or emergency purposes (but not for leverage or the
purchase of investments).
3. May not issue senior securities, except as permitted under the 1940
Act.
4. May not act as an underwriter of another issuer's securities, except to
the extent that the Fund may be deemed to bean underwriter within the
meaning of the 1933 Act in connection with the purchase and sale of
portfolio securities.
5. May not 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, futures
contracts, or other derivative instruments, or from investing in
securities or other instruments backed by physical commodities).
6. May not make loans if, as a result, more than 33 1/3% of the Fund's
total assets would be lent to other persons, except through (i)
purchases of debt securities or other debt instruments, or (ii)
engaging in repurchase agreements.
7. May not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not
prohibit the Fund from purchasing or selling securities or other
instruments backed by real estate or of issuers engaged in real estate
activities).
8. May, notwithstanding any other fundamental investment policy or
restriction, invest all of its assets in the securities of a single
open-end management investment company with substantially the same
fundamental investment objective, policies, and restrictions as the
Fund.
Non-Fundamental Policies
The following are the Fund's non-fundamental operating policies, which may be
changed by the Board of Trustees of the Fund without shareholder approval.
The Fund may not:
1. Sell securities short, unless the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short,
or unless it covers such short sale as required by the current rules
and positions of the SEC or its staff, and provided that transactions
in options, futures contracts, options on futures contracts, or other
derivative instruments are not deemed to constitute selling securities
short.
2. 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 deposits in connection with futures contracts,
options on futures contracts, or other derivative instruments shall not
constitute purchasing securities on margin.
3. Invest in illiquid securities if, as a result of such investment, more
than 15% of its net assets would be invested in illiquid securities, or
such other amounts as may be permitted under the 1940 Act. This
percentage restriction is with respect to the Fund's current holdings
of illiquid securities.
4. Purchase securities of other investment companies except in compliance
with the 1940 Act.
5. Engage in futures or options on futures transactions which are
impermissible pursuant to Rule 4.5 under the Commodity Exchange Act
and, in accordance with Rule 4.5, will use futures or options on
futures transactions solely for bona fide hedging transactions (within
the meaning of the Commodity Exchange Act); provided, however, that the
Fund may, in addition to bona fide hedging transactions, use futures
and options on futures transactions if the aggregate initial margin and
premiums required to establish non-hedging positions, less the amount
by which any such options positions are in the money (within the
meaning of the Commodity Exchange Act), do not exceed 5% of the
liquidation value of the Fund's total assets.
6. Borrow money except (i) from banks or (ii) through reverse repurchase
agreements or mortgage dollar rolls, and will not purchase securities
when bank borrowing exceed 5% of its total assets.
7. Make any loans other than loans of portfolio securities, except through
(i) purchases of debt securities or other debt instruments, or (ii)
engaging in repurchase agreements.
Except for the fundamental investment limitations listed above and the Funds'
investment objective, all other investment policies, limitations and
restrictions described in the Prospectus and this Statement of Additional
Information are not fundamental and may be changed with approval of the Fund's
Board of Trustees. Unless noted otherwise, if a percentage restriction is
adhered to at the time of investment, a later increase or decrease in percentage
resulting from a change in the Fund's assets (i.e., due to cash inflows or
redemptions) or in market value of the investment or the Fund's assets will not
constitute a violation of that restriction.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Trust's Board of Trustees, the Advisor
is responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for the Funds.
The annualized portfolio turnover rate for each Fund is calculated by dividing
the lesser of purchases or sales of portfolio securities for the reporting
period by the monthly average value of the portfolio securities owned during the
reporting period. The calculation excludes all securities whose maturities or
expiration dates at the time of acquisition are one year or less. Portfolio
turnover of each Fund may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements that enable the Fund to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making Fund
decisions, and each Fund may engage in short-term trading to achieve its
investment objectives.
Purchases of money market instruments by the Funds are made from dealers,
underwriters and issuers. The Funds currently do not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased directly from or sold directly to an issuer, no
commissions or discounts are paid.
Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, which may include a dealer mark-up, or otherwise involve
transactions directly with the issuer of an instrument.
The Funds may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. A Fund will engage
in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.
In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for each Fund. In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. The sale of Fund shares may
be considered when determining the firms that are to execute brokerage
transactions for the Funds. In addition, the Advisor is authorized to cause the
Funds to pay a broker-dealer which furnishes brokerage and research services a
higher commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Advisor determines in good
faith that such commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either the particular transaction or the overall responsibilities of the
Advisor to the Funds. Such brokerage and research services might consist of
reports and statistics relating to specific companies or industries, general
summaries of groups of stocks or bonds and their comparative earnings and
yields, or broad overviews of the stock, bond and government securities markets
and the economy.
Supplementary research information so received is in addition to, and not in
lieu of, services required to be performed by the Advisor and does not reduce
the advisory fees payable by the Funds. The Trustees will periodically review
any commissions paid by the Funds to consider whether the commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits inuring to the Funds. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which investment discretion is
exercised by the Advisor. Conversely, the Funds may be the primary beneficiary
of the research or services received as a result of securities transactions
effected for such other account or investment company.
The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution of transactions from
such broker. The Funds will not execute portfolio transactions through, acquire
securities issued by, make savings deposits in or enter into repurchase
agreements with the Advisor or an affiliated person of the Advisor (as such term
is defined in the 1940 Act) acting as principal, except to the extent permitted
by the Securities and Exchange Commission ("SEC"). In addition, the Funds will
not purchase securities during the existence of any underwriting or selling
group relating thereto of which the Advisor, or an affiliated person of the
Advisor, is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Funds may be at a disadvantage because of these limitations
in comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.
Investment decisions for the Funds will be made independently from those for any
other Fund and any other series of the Trust, if any, and for any other
investment companies and accounts advised or managed by the Advisor. Such other
investment companies and accounts may also invest in the same securities as a
Fund. To the extent permitted by law, the Advisor may aggregate the securities
to be sold or purchased for a Fund with those to be sold or purchased for
another Fund or other investment companies or accounts in executing
transactions. When a purchase or sale of the same security is made at
substantially the same time on behalf of a Fund and another investment company
or account, the transaction will be averaged as to price and available
investments allocated as to amount, in a manner which the Advisor believes to be
equitable to the Funds and such other investment company or account. In some
instances, this investment procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or sold by a Fund.
NET ASSET VALUE
The net asset value per share of each Fund is determined at the time normal
trading closes on the New York Stock Exchange (currently 4:00 p.m., New York
time), Monday through Friday, except on business holidays when the New York
Stock Exchange is closed. The New York Stock Exchange recognizes the following
holidays: New Year's Day, Martin Luther King, Jr., Day, President's Day, Good
Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas
Day. Any other holiday recognized by the New York Stock Exchange will be deemed
a business holiday on which the net asset value of each Class of the Funds will
not be calculated.
The net asset value per share of each Fund is calculated separately by adding
the value of the Fund's securities and other assets belonging to the Fund,
subtracting the liabilities charged to the Fund, and dividing the result by the
number of outstanding shares. "Assets belonging to" a Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Assets belonging to a Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net asset values of all of the Trust's series at the time of allocation
or in accordance with other allocation methods approved by the Board of
Trustees. Subject to the provisions of the Declaration of Trust, determinations
by the Board of Trustees as to the direct and allocable liabilities, and the
allocable portion of any general assets, with respect to a Fund are conclusive.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Purchases. Shares of each Fund are offered and sold on a continuous basis and
may be purchased through authorized investment dealers or directly by contacting
the Distributor or the Funds. Selling dealers have the responsibility of
transmitting orders promptly to the Funds. The public offering price of shares
of each Fund equals net asset value. Capital Investment Group, Inc. (the
"Distributor") serves as distributor of shares of the Funds.
Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for each of the Funds pursuant to Rule 12b-1 under the 1940 Act (see "Management
of the Funds - The Distributor - Distribution Plan" in the Funds' Prospectus).
Under the Plan the Fund may expend a percentage of the Funds' Shares average net
assets annually to finance any activity which is primarily intended to result in
the sale of shares of the Funds and the servicing of shareholder accounts,
provided the Trust's Board of Trustees has approved the category of expenses for
which payment is being made. The current fee paid under the Plan are 0.25% of
the average net assets of the Funds' Shares, respectively. Such expenditures
paid as service fees to any person who sells shares of the Fund may not exceed
0.25% of the average annual net asset value of such shares. Potential benefits
of the Plan to the Fund include improved shareholder servicing, savings to the
Fund in transfer agency costs, benefits to the investment process from growth
and stability of assets and maintenance of a financially healthy management
organization.
All of the distribution expenses incurred by the Distributor and others, such as
broker-dealers, in excess of the amount paid by the Fund will be borne by such
persons without any reimbursement from the Fund. Subject to seeking best
execution, the Fund may, from time to time, buy or sell portfolio securities
from or to firms which receive payments under the Plan.
From time to time, the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.
The Plan and the Distribution Agreement with the Distributor have been approved
by the Board of Trustees of the Trust, including a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in the Plan or any related
agreements, by vote cast in person or at a meeting duly called for the purpose
of voting on the Plan and such Agreement. Continuation of the Plan and the
Distribution Agreement must be approved annually by the Board of Trustees in the
same manner as specified above.
Each year the Trustees must determine whether continuation of the Plan is in the
best interest of shareholders of the Fund and that there is a reasonable
likelihood of its providing a benefit to the Fund, and the Board of Trustees has
made such a determination for the current year of operations under the Plan. The
Plan, the Distribution Agreement and the Dealer Agreement with any
broker/dealers may be terminated at any time without penalty by a majority of
those trustees who are not "interested persons" or, with respect to a particular
Fund, by a majority vote of the Fund's outstanding voting stock relating to that
particular Fund. Any amendment materially increasing the maximum percentage
payable under the Plan, with respect to a particular Fund, must likewise be
approved by a majority vote of that Class of Investor Shares' outstanding voting
stock relating to that particular Class, as well as by a majority vote of those
trustees who are not "interested persons." Also, any other material amendment to
the Plan must be approved by a majority vote of the trustees including a
majority of the noninterested Trustees of the Trust having no interest in the
Plan. In addition, in order for the Plan to remain effective, the selection and
nomination of Trustees who are not "interested persons" of the Trust must be
effected by the Trustees who themselves are not "interested persons" and who
have no direct or indirect financial interest in the Plan. Persons authorized to
make payments under the Plan must provide written reports at least quarterly to
the Board of Trustees for their review.
The Fund does not currently intend to make any 12b-1 payments under the
distribution plan. If the Fund decides to begin making such payments, all
shareholders will be notified at least 30 days in advance of commencing the
accrual for such payments.
Redemptions. Under the 1940 Act, each Fund may suspend the right of redemption
or postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange is restricted by applicable rules and regulations of
the SEC; (b) the Exchange is closed for other than customary weekend and holiday
closings; (c) the SEC has by order permitted such suspension; or (d) an
emergency exists as determined by the SEC. Each Fund may also suspend or
postpone the recordation of the transfer of shares upon the occurrence of any of
the foregoing conditions.
In addition to the situations described in the Prospectus under "Investing in
the Funds Redeeming Shares in the Funds," each Fund may redeem shares
involuntarily to reimburse the Fund for any loss sustained by reason of the
failure of a shareholder to make full payment for shares purchased by the
shareholder or to collect any charge relating to a transaction effected for the
benefit of a shareholder which is applicable to Fund shares as provided in the
Prospectus from time to time.
DESCRIPTION OF THE TRUST
The Trust, which is an unincorporated business trust organized under Delaware
law on May 19, 1999, is an open-end non-diversified management investment
company. The Trust's Declaration of Trust authorizes the Board of Trustees to
divide shares into series, each series relating to a separate portfolio of
investments, and to classify and reclassify any unissued shares into one or more
classes of shares of each such series. The Declaration of Trust currently
provides for the shares of two series: the Internet 100 Fund and the Internet
100 Equal Weighted Fund. The Funds are managed by Internet 100 Advisors, L.L.C.
of Arlington, Virginia. The number of shares of each series shall be unlimited.
The Trust does not intend to issue share certificates.
In the event of a liquidation or dissolution of the Trust or an individual
series, such as each Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each shareholder. If there
are any assets, income, earnings, proceeds, funds or payments, that are not
readily identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more of the series as they, in their sole
discretion, deem fair and equitable.
Shareholders of all of the series of the Trust will vote together and not
separately on a series-by-series basis except as otherwise required by law or
when the Board of Trustees determines that the matter to be voted upon affects
only the interests of the shareholders of a particular series or class. Rule
18f-2 under the 1940 Act provides that any matter required to be submitted to
the holders of the outstanding voting securities of an investment company such
as the Trust shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each series
or class affected by the matter. A series or class is affected by a matter
unless it is clear that the interests of each series or class in the matter are
substantially identical or that the matter does not affect any interest of the
series or class. Under Rule 18f-2, the approval of an investment advisory
agreement or any change in a fundamental investment policy would be effectively
acted upon with respect to a series only if approved by a majority of the
outstanding shares of such series. However, the Rule also provides that the
ratification of the appointment of independent accountants, the approval of
principal underwriting contracts and the election of Trustees may be effectively
acted upon by shareholders of the Trust voting together, without regard to a
particular series or class.
When used in the Prospectus or this SAI, a "majority" of shareholders means the
vote of the lesser of (1) 67% of the shares of the Trust or the applicable
series or class present at a meeting if the holders of more than 50% of the
outstanding shares are present in person or by proxy, or (2) more than 50% of
the outstanding shares of the Trust or the applicable series or class.
When issued for payment as described in the Prospectus and this SAI, shares of
each Fund will be fully paid and non-assessable.
The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as such
liability may arise from his or her own bad faith, willful misfeasance, gross
negligence, or reckless disregard of duties. It also provides that all third
parties shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust. With the exceptions stated,
the Declaration of Trust provides that a Trustee or officer is entitled to be
indemnified against all liability in connection with the affairs of the Trust.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional tax considerations generally
affecting each Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of each Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof, such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.
Each series of the Trust, including each Fund, will be treated as a separate
corporate entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect to
be a regulated investment company or have made such an election for a previous
year and must satisfy, in addition to the distribution requirement described in
the Prospectus, certain requirements with respect to the source of its income
for a taxable year. At least 90% of the gross income of each series must be
derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities or foreign
currencies, and other income derived with respect to the series' business of
investing in such stock, securities or currencies. Any income derived by a
series from a partnership or trust is treated as derived with respect to the
series' business of investing in stock, securities or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the series in the same manner as by the
partnership or trust.
An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. Each
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.
Each series of the Trust, including each Fund, will designate any distribution
of long-term capital gains as a capital gain dividend in a written notice mailed
to shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long-term capital loss
to the extent of the capital gain dividends received with respect to the shares.
A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). Each series of the Trust, including each Fund, intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.
If for any taxable year a series does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the series'
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.
Each series of the Trust, including each Fund, will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of taxable dividends or 31% of
gross proceeds realized upon sale paid to shareholders who have failed to
provide a correct tax identification number in the manner required, or who are
subject to withholding by the Internal Revenue Service for failure properly to
include on their return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup withholding
when required to do so or that they are "exempt recipients."
Dividends paid by the Funds derived from net investment income or net short-term
capital gains are taxable to shareholders as ordinary income, whether received
in cash or reinvested in additional shares. Long-term capital gains
distributions, if any, are taxable as long-term capital gains, whether received
in cash or reinvested in additional shares, regardless of how long Fund shares
have been held.
The Funds will send shareholders information each year on the tax status of
dividends and disbursements. A dividend or capital gains distribution paid
shortly after shares have been purchased, although in effect a return of
investment, is subject to federal income taxation. Dividends from net investment
income, along with capital gains, will be taxable to shareholders, whether
received in cash or shares and no matter how long you have held Fund shares,
even if they reduce the net asset value of shares below your cost and thus, in
effect, result in a return of a part of your investment.
MANAGEMENT OF THE FUNDS
Trustees and Officers. The Trustees and executive officers of the Trust, their
addresses, ages, and their principal occupations for the last five years are as
follows:
TRUSTEES
<TABLE>
<S> <C> <C>
- ----------------------------------------------- -------------------------------- ---------------------------------------------
Name, Age and Address Position Principal Occupation(s)
- ----------------------------------------------- -------------------------------- ---------------------------------------------
Jack E. Brinson, 67 Trustee President, Brinson Investment Co.,
1105 Panola Street President, Brinson Chevrolet, Inc.,
Tarboro, North Carolina 27886 Tarboro, North Carolina; and
Independent Trustee-New Providence
Investment Trust, Gardner Lewis
Investment Trust, and Nottingham
Investment Trust II,
Rocky Mount, North Carolina
- ----------------------------------------------- -------------------------------- ---------------------------------------------
Theo H. Pitt, Jr., 63 Chairman, Trustee Senior Partner, Community Financial
116 Candlewood Road Institutions Consulting,
Rocky Mount, North Carolina 27804 Rocky Mount, North Carolina, since 1997;
previously, Chairman & CEO, Standard
Insurance & Realty Corporation,
Rocky Mount, North Carolina; 1992-1997
- ----------------------------------------------- -------------------------------- ---------------------------------------------
Paul John de Leon, 32* President President, Internet 100 Advisors, L.L.C.,
1530 North Key Boulevard, #826 Arlington, Virginia, since 1999;
Arlington, Virginia 22209 Vice President and Portfolio Manager,
Loomis Sayles & Co., L.P., Washington,
District of Columbia, since 1993
- ----------------------------------------------- -------------------------------- ---------------------------------------------
* Indicates that Trustee is an "interested person" of the Trust for
purposes of the 1940 Act because of his position with one of the
investment advisors to the Trust.
OFFICERS
- ----------------------------------------------- -------------------------------- ---------------------------------------------
Name, Age and Address Position Principal Occupation(s)
- ----------------------------------------------- -------------------------------- ---------------------------------------------
Paul John de Leon, 32 President President, Internet 100 Advisors, L.L.C.,
1530 North Key Boulevard, #826 Arlington, Virginia, since 1999;
Arlington, Virginia 22209 Vice President and Portfolio Manager,
Loomis Sayles & Co., L.P., Washington,
District of Columbia, since 1993
- ----------------------------------------------- -------------------------------- ---------------------------------------------
C. Frank Watson, III, 28 Secretary and Assistant Chief Operating Officer, The Nottingham
105 North Washington Street Treasurer Company, Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802
- ----------------------------------------------- -------------------------------- ---------------------------------------------
Julian G. Winters, 30 Treasurer and Assistant Legal and Compliance Director, The
105 North Washington Street Secretary Nottingham Company, Rocky Mount,
Rocky Mount, North Carolina 27802 North Carolina, since 1996; previously,
Operations Manager, Tar Heel Medical,
Nashville, North Carolina
- ----------------------------------------------- -------------------------------- ---------------------------------------------
</TABLE>
Compensation. The officers of the Trust will not receive compensation from the
Trust for performing the duties of their offices. Each Trustee who is not an
"interested person" of the Trust receives a fee of $2,000 each year plus $250
per series of the Trust per meeting attended in person and $100 per series of
the Trust per meeting attended by telephone. All Trustees are reimbursed for any
out-of-pocket expenses incurred in connection with attendance at meetings.
Compensation Table *
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------- ------------------ --------------------- ------------------- --------------------
Pension
Aggregate Retirement Estimated Total
Compensation Benefits Accrued Annual Compensation
from each of As Part of Fund Benefits Upon from the Trust
Name of Person, Position the Funds Expenses Retirement Paid to Trustees
- ------------------------------- ------------------ --------------------- ------------------- --------------------
Jack E. Brinson, Trustee $1,550 None None $3,100
- ------------------------------- ------------------ --------------------- ------------------- --------------------
Theo H. Pitt, Jr., Trustee $1,550 None None $3,100
- ------------------------------- ------------------ --------------------- ------------------- --------------------
</TABLE>
* Figures are estimates for the fiscal year to end June 30, 2000.
Principal Holders of Voting Securities. As of August 1, 1999, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) 0.000% of the then outstanding shares of the Internet 100
Fund, and 0.000% of the Internet 100 Equal Weighted Fund. On the same date the
following shareholders owned of record more than 5% of the outstanding shares of
the Funds. Except as provided below, no person is known by the Trust to be the
beneficial owner of more than 5% of the outstanding shares of the Funds as of
August 1, 1999.
INTERNET 100 FUND
- ---------------------- ------------------------------------ --------------------
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
- ---------------------- ------------------------------------ --------------------
NONE
INTERNET 100 EQUAL WEIGHTED FUND
- ---------------------- ------------------------------------ --------------------
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
- ---------------------- ------------------------------------ --------------------
NONE
Investment Advisor. Information about Internet 100 Advisors, L.L.C., 354
Broadway, New York, New York 10013 (the "Advisor") and its duties and
compensation as Advisor is contained in the Prospectus.
Compensation of the Advisor with regards to the Internet 100 Fund and the
Internet 100 Equal Weighted Fund, based upon the Funds' average daily net
assets, is at the annual rate of 0.75% for each fund.
The Advisor has entered into an expense limitation agreement with the Trust,
with respect to the both the Funds, pursuant to which the Advisor has agreed to
waive or limit its fees and to assume other expenses so that the total annual
operating expenses of the Fund (other than interest, taxes, brokerage
commissions, other expenditures which are capitalized in accordance with
generally accepted accounting principles, other extraordinary expenses not
incurred in the ordinary course of the Fund's business, and amounts, if any,
payable pursuant to a Rule l2b-1 Plan) are limited to 1.00% of the average daily
assets of each of the Funds.
Under the Advisory Agreement, the Advisor is not liable for any error of
judgment or mistake of law or for any loss suffered by the Funds in connection
with the performance of such Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Advisor in the performance of its duties or from its reckless
disregard of its duties and obligations under the Agreement.
Administrator. The Trust has entered into a Fund Accounting and Compliance
Administration Agreement with The Nottingham Company, Inc. (the
"Administrator"), a North Carolina corporation, whose address is 105 North
Washington Street, Post Office Drawer 69, Rocky Mount, North Carolina
27802-0069.
The Administrator performs the following services for the Fund: (1) coordinate
with the Custodian and monitor the services it provides to the Fund; (2)
coordinate with and monitor any other third parties furnishing services to the
Fund; (3) provide the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform administrative and
clerical functions for the Fund; (4) supervise the maintenance by third parties
of such books and records of the Fund as may be required by applicable federal
or state law; (5) prepare or supervise the preparation by third parties of all
federal, state and local tax returns and reports of the Fund required by
applicable law; (6) prepare and, after approval by the Trust, file and arrange
for the distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable law; (7) prepare and, after approval by the
Trust, arrange for the filing of such registration statements and other
documents with the SEC and other federal and state regulatory authorities as may
be required by applicable law; (8) review and submit to the officers of the
Trust for their approval invoices or other requests for payment of Fund expenses
and instruct the Custodian to issue checks in payment thereof; and (9) take such
other action with respect to the Fund as may be necessary in the opinion of the
Administrator to perform its duties under the agreement. The Administrator will
also provide certain accounting and pricing services for the Fund.
Compensation of the Administrator, based upon the average daily net assets of
each fund, is at the following annual rates: 0.175% of the Fund's first $125
million, 0.150% on the next $125 million, and 0.125% on average daily net assets
over $250 million, subject to a minimum fee of $1,000 per month, per fund. In
addition, the Administrator currently receives a monthly fee of $2,250 per Fund
for accounting and recordkeeping services and an additional fee of $750 per
month for each additional Class of shares. The Administrator also charges the
Trust for certain costs involved with the daily valuation of investment
securities and is reimbursed for out-of-pocket expenses.
Transfer Agent. The Trust has entered into a Dividend Disbursing and Transfer
Agent Agreement with NC Shareholder Services, LLC (the "Transfer Agent"), a
North Carolina limited liability company, to serve as transfer, dividend paying,
and shareholder servicing agent for the Funds. The address of the Transfer Agent
is 107 North Washington Street, Post Office Box 4365, Rocky Mount, North
Carolina 27803-0365. The Transfer Agent is compensated for its services based
upon a $15 fee per shareholder per year, subject to a minimum fee of $1,000 per
month, per fund.
Distributor. Capital Investment Group, Inc. (the "Distributor"), Post Office Box
32249, Raleigh, North Carolina 27622, acts as an underwriter and distributor of
each Fund's shares for the purpose of facilitating the registration of shares of
the Fund under state securities laws and to assist in sales of Fund shares
pursuant to a Distribution Agreement (the "Distribution Agreement") approved by
the Board of Trustees of the Trust.
In this regard, the Distributor has agreed at its own expense to qualify as a
broker-dealer under all applicable federal or state laws in those states which
each Fund shall from time to time identify to the Distributor as states in which
it wishes to offer its shares for sale, in order that state registrations may be
maintained for the Fund.
The Distributor is a broker-dealer registered with the SEC and a member in good
standing of the National Association of Securities Dealers, Inc.
The Distribution Agreement may be terminated by either party upon 60-days' prior
written notice to the other party.
Custodian. First Union National Bank of North Carolina (the "Custodian"), Two
First Union Center, Charlotte, North Carolina 28288-1151, serves as custodian
for each Fund's assets. The Custodian acts as the depository for each Fund,
safekeeps its portfolio securities, collects all income and other payments with
respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties as Custodian. For its services
as Custodian, the Custodian is entitled to receive from each Fund an annual fee
based on the average net assets of the Fund held by the Custodian.
Independent Auditors. Deloitte & Touche LLP, 2500 One PPG Place, Pittsburgh,
Pennsylvania 15222-5401, serves as independent auditors for the Funds, audits
the annual financial statements of the Funds, prepares each Fund's federal and
state tax returns, and consults with each Fund on matters of accounting and
federal and state income taxation. A copy of the most recent annual report of
the Fund will accompany this SAI whenever it is requested by a shareholder or
prospective investor.
Legal Counsel. Dechert Price & Rhoads serves as legal counsel to the Woodlawn
Funds Trust and the Funds.
SPECIAL SHAREHOLDER SERVICES
Each Fund offers the following shareholder services:
Regular Account. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year-to-date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.
Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Funds will automatically charge the checking account for the amount specified
($100 minimum) which will be automatically invested in shares at the public
offering price on or about the 21st day of the month. The shareholder may change
the amount of the investment or discontinue the plan at any time by writing to
the Funds.
Systematic Withdrawal Plan. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Funds to redeem the necessary number of shares periodically
(each month, or quarterly in the months of March, June, September and December)
in order to make the payments requested. Each Fund has the capacity of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholder's personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included in the Fund Shares
Application, enclosed in the Prospectus, or available by calling the Funds. If
the shareholder prefers to receive his systematic withdrawal proceeds in cash,
or if such proceeds are less than the $5,000 minimum for a bank wire, checks
will be made payable to the designated recipient and mailed within 7 days of the
valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Investing in the Funds - Redeeming Shares in the Funds -
Signature Guarantees" in the Prospectus). A corporation (or partnership) must
also submit a "Corporate Resolution" (or "Certification of Partnership")
indicating the names, titles and required number of signatures authorized to act
on its behalf. The application must be signed by a duly authorized officer(s)
and the corporate seal affixed. No redemption fees are charged to shareholders
under this plan. Costs in conjunction with the administration of the plan are
borne by the Funds. Shareholders should be aware that such systematic
withdrawals may deplete or use up entirely their initial investment and may
result in realized long-term or short-term capital gains or losses. The
Systematic Withdrawal Plan may be terminated at any time by the Funds upon sixty
days written notice or by a shareholder upon written notice to the Funds.
Applications and further details may be obtained by calling the Funds at
1-877-655-1110, or by writing to:
The Internet 100 Funds
[Name of fund]
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Purchases in Kind. Each Fund may accept securities in lieu of cash in payment
for the purchase of shares in the Fund. The acceptance of such securities is at
the sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long-term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "Investing in the Funds - Determining the Funds' Net Asset Value"
in the Prospectus.
Redemptions in Kind. The Funds do not intend, under normal circumstances, to
redeem their securities by payment in kind. It is possible, however, that
conditions may arise in the future, which would, in the opinion of the Trustees,
make it undesirable for the Funds to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein each Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety-day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net asset value at the beginning of such period.
Transfer of Registration. To transfer shares to another owner, send a written
request to the applicable Fund at the address shown herein. Your request should
include the following: (1) the Fund name and existing account registration; (2)
signature(s) of the registered owner(s) exactly as the signature(s) appear(s) on
the account registration; (3) the new account registration, address, social
security or taxpayer identification number and how dividends and capital gains
are to be distributed; (4) signature guarantees (See the Prospectus under the
heading "Signature Guarantees"); and (5) any additional documents which are
required for transfer by corporations, administrators, executors, trustees,
guardians, etc. If you have any questions about transferring shares, call or
write the Funds.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of each Fund may be quoted in
advertisements, sales literature, shareholder reports or other communications to
shareholders. Each Fund computes the "average annual total return" of each Fund
by determining the average annual compounded rates of return during specified
periods that equate the initial amount invested to the ending redeemable value
of such investment. This is done by determining the ending redeemable value of a
hypothetical $ 1,000 initial payment. This calculation is as follows:
P(1+T)n = ERV
Where: T = average annual total return.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning
of the period.
P = hypothetical initial payment of $1,000 from which the maximum
sales load is deducted.
n = period covered by the computation, expressed in terms of years.
Each Fund may also compute the aggregate total return of each Fund, which is
calculated in a similar manner, except that the results are not annualized.
The calculation of average annual total return and aggregate total return assume
that the maximum sales load is deducted from the initial $1,000 investment at
the time it is made and that there is a reinvestment of all dividends and
capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. Each Fund may also quote other total
return information that does not reflect the effects of the sales load.
Each Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, each Fund may compare its performance to
the S&P 500 Total Return Index. Comparative performance may also be expressed by
reference to a ranking prepared by a mutual fund monitoring service or by one or
more newspapers, newsletters or financial periodicals. Each Fund may also
occasionally cite statistics to reflect its volatility and risk. Each Fund may
also compare its performance to other published reports of the performance of
unmanaged portfolios of companies. The performance of such unmanaged portfolios
generally does not reflect the effects of dividends or dividend reinvestment. Of
course, there can be no assurance that any Fund will experience the same
results. Performance comparisons may be useful to investors who wish to compare
a Fund's past performance to that of other mutual funds and investment products.
Of course, past performance is not a guarantee of future results.
Each Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.
As indicated, from time to time, each Fund may advertise its performance
compared to similar funds or portfolios using certain indices, reporting
services, and financial publications. These may include the following:
o Lipper Analytical Services, Inc. ranks funds in various fund categories by
making comparative calculations using total return. Total return assumes
the reinvestment of all capital gains distributions and income dividends
and takes into account any change in net asset value over a specific period
of time.
o Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.
Investors may use such indices in addition to the Funds' Prospectus to obtain a
more complete view of each Fund's performance before investing. Of course, when
comparing a Fund's performance to any index, factors such as composition of the
index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for each Fund may quote total returns that are calculated
on nonstandardized base periods. The total returns represent the historic change
in the value of an investment in the Fund based on monthly reinvestment of
dividends over a specified period of time.
From time to time each Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the reflects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. Each Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). Each Fund may also depict the historical performance
of the securities in which the Fund may invest over periods reflecting a variety
of market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
Each Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.
<PAGE>
APPENDIX A
DESCRIPTION OF RATINGS
The Funds may acquire from time to time fixed income securities that meet the
following minimum rating criteria ("Investment Grade Debt Securities") or, if
unrated, are in the Advisor's opinion comparable in quality to Investment Grade
Debt Securities. The various ratings used by the nationally recognized
securities rating services are described below.
A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed income
securities in which the Funds may invest should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating is evaluated independently. Ratings are
based on current information furnished by the issuer or obtained by the rating
services from other sources that they consider reliable. Ratings may be changed,
suspended or withdrawn as a result of changes in or unavailability of such
information, or for other reasons.
Standard & Poor's Ratings Services. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Services ("S&P") for bonds which are
deemed to be Investment-Grade Debt Securities by the Advisor:
AAA - This is the highest rating assigned by S&P to a debt obligation
and indicates an extremely strong capacity of the obligor to meet its
financial commitment on the obligation.
AA - Debt rated AA differs from AAA issues only in a small degree. The
obligor's capacity to meet its financial commitment on the obligation
is very strong.
A - Debt rated A is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in
higher-rated categories. However, the obligor's capacity to meet its
financial commitment on the obligation is still strong.
BBB - Debt rated BBB exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
Investment-Grade Debt Securities and are regarded, on balance, as having
significant speculative characteristics with respect to the obligor's capacity
to meet its financial commitment on the obligation. BB indicates the lowest
degree of speculation and C the highest degree of speculation. While such bonds
may have some quality and protective characteristics, these may be outweighed by
large uncertainties or major risk exposures to adverse conditions.
Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-I+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.
The rating SP-1 is the highest rating assigned by S&P to short term notes and
indicates strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation. The rating SP-2 indicates a satisfactory capacity to pay principal
and interest, with some vulnerability to adverse financial and economic changes
over the term of the notes.
Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc. ("Moody's") for bonds which are
deemed to be Investment-Grade Debt Securities by the Advisor:
Aaa - Bonds that are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large
or an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can
be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities.
A - Debt which is rated A possesses many favorable investment
attributes and is to be considered as an upper medium grade obligation.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa - Debt which is rated Baa is considered as a medium grade
obligation, i.e., it is neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such debt
lacks outstanding investment characteristics and in fact has
speculative characteristics as well.
Moody's applies numerical modifiers (1, 2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category. Bonds which are rated Ba, B, Caa, Ca or C by
Moody's are not considered Investment-Grade Debt Securities by the Advisor.
Bonds rated Ba are judged to have speculative elements because their future
cannot be considered as well assured. Uncertainty of position characterizes
bonds in this class, because the protection of interest and principal payments
often may be very moderate and not well safeguarded.
Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period for time may be small. Bonds
which are rated Caa are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or supporting institutions) are considered to have a
superior ability for repayment of short-term promissory obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protection; broad margins in earning
coverage of fixed financial charges and high internal cash generation; and well
established access to a range of financial markets and assured sources of
alternative liquidity. Issuers rated Prime-2 (or supporting institutions) are
considered to have a strong ability for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings' trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriated may be more affected by external
conditions. Ample alternate liquidity is maintained.
The following summarizes the two highest ratings used by Moody's for short-term
notes and variable rate demand obligations:
MIG-1; VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
MIG-2; VMIG-2 - Obligations bearing these designations are of a high
quality with ample margins of protection.
Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds which are
deemed to be Investment-Grade Debt Securities by the Advisor:
AAA - Bonds that are rated AAA are of the highest credit quality. The
risk factors are considered to be negligible, being only slightly more
than for risk-free U.S.
Treasury debt.
AA - Bonds that are rated AA are of high credit quality. Protection
factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions.
A - Bonds rated A have average but adequate protection factors. The
risk factors are more variable and greater in periods of economic
stress.
BBB - Bonds rated BBB have below-average protection factors but are
still considered sufficient for prudent investment. There is
considerable variability in risk during economic cycles.
Bonds rated BB, B and CCC by D&P are not considered Investment-Grade Debt
Securities and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The rating Duff 1 is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff 1+, Duff 1 and
Duff 1- within the highest rating category. Duff 1+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff l- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.
Fitch Investors Service, Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc. ("Fitch") for bonds which are deemed to be
Investment-Grade Debt Securities by the Advisor:
AAA - Bonds are considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by
reasonably foreseeable events.
AA - Bonds are considered to be investment grade and of very high
credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated
AAA. Because bonds rated in the AAA and AA categories are not
significantly vulnerable to foreseeable future developments, short-term
debt of these issuers is generally rated F-1+.
A - Bonds that are rated A are considered to be investment grade and of
high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to
adverse changes in economic conditions and circumstances than bonds
with higher ratings.
BBB - Bonds rated BBB are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and
repay principal is considered to be adequate. Adverse changes in
economic conditions and circumstances, however, are more likely to have
adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment
grade is higher than for bonds with higher ratings.
To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category. A "ratings outlook" is used to describe the
most likely direction of any rating change over the intermediate term. It is
described as "Positive" or "Negative." The absence of a designation indicates a
stable outlook.
Bonds rated BB, B and CCC by Fitch are not considered Investment-Grade Debt
Securities and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The following summarizes the two highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.
The term symbol "LOC" indicates that the rating is based on a letter of credit
issued by a commercial bank.
Bonds rated BB, B and CCC by Fitch are not considered Investment-Grade Debt
Securities and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.
The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:
F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.
F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-l+
F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.
<PAGE>
PART C
======
WOODLAWN FUNDS TRUST
FORM N-1A
OTHER INFORMATION
ITEM 23. Exhibits
--------
(a) Declaration of Trust.^1
(b) By-Laws.^1
(c) Certificates for shares are not issued. Articles II and VII of the
Declaration of Trust, previously filed as Exhibit (a) hereto, define
the rights of holders of Shares.^1
(d) Investment Advisory Agreement between the Woodlawn Funds Trust and
Internet 100 Advisors, L.L.C., as Advisor.
(e) Distribution Agreement between the Woodlawn Funds Trust and Capital
Investment Group, Inc., as Distributor.
(f) Not applicable.
(g) Custodian Agreement between the Woodlawn Funds Trust and First Union
National Bank of North Carolina, as Custodian.
(h)(1) Fund Accounting and Compliance Administration Agreement between the
Woodlawn Funds Trust and The Nottingham Company, Inc., as
Administrator.
(h)(2) Dividend Disbursing and Transfer Agent Agreement between the Woodlawn
Funds Trust and NC Shareholder Services, LLC, as Transfer Agent.
(h)(3) Expense Limitation Agreement between the Woodlawn Funds Trust and
Internet 100 Advisors, L.L.C.
(i) Opinion and Consent of Dechert Price & Rhoads regarding the legality of
securities registered.
(j) Consent of Deloitte & Touche LLP, Independent Public Accountants.
(k) Balance Sheet.
(l) Subscription Agreements.
(m) Distribution Plan under Rule 12b-1 for the Woodlawn Funds Trust.
(n) Not applicable.
(o) Not applicable.
(p) Power of Attorneys.
- -----------------------
1. Incorporated herein by reference to Registrant's Registration Statement on
Form N-1A filed May 19, 1999 (File No. 333-78815).
ITEM 24. Persons Controlled by or Under Common Control with the Registrant
-----------------------------------------------------------------
No person is controlled by or under common control with the Woodlawn
Funds Trust.
ITEM 25. Indemnification
---------------
Reference is made to Article X of the Registrant's Trust Instrument.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to the
Declaration of Trust or otherwise, the Registrant is aware that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and, therefore, is unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by trustees, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, officers or
controlling persons in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 26. Business and other Connections of the Investment Advisor
--------------------------------------------------------
The description of Internet 100 Advisors, L.L.C., under the caption of
"Management of the Funds - The Investment Advisor" in the Prospectus and under
the caption "Management and Other Service Providers - Investment Advisor" in the
Statement of Additional Information constituting Parts A and B, respectively, of
this Registration Statement are incorporated by reference herein. Information
concerning the directors and officers of Internet 100 Advisors, L.L.C. as set
forth in Internet 100 Advisors, L.L.C.'s Form ADV filed with the Securities and
Exchange Commission on July 19, 1999 (File No. 801-*****), and amended through
the date hereof, is incorporated by reference herein.
ITEM 27. Principal Underwriter
---------------------
(a) Capital Investment Group, Inc., the Registrant's distributor, is also
the underwriter and distributor for the Chesapeake Aggressive Growth
Fund, Chesapeake Growth Fund, Chesapeake Core Growth Fund, WST Growth &
Income Fund, CarolinasFund, Capital Value Fund, Investek Fixed Income
Trust, The Brown Capital Management Equity Fund, The Brown Capital
Management Balanced Fund, The Brown Capital Management Small Company
Fund, The Brown Capital Management International Equity Fund, Blue
Ridge Total Return Fund, SCM Strategic Growth Fund, New Providence
Capital Growth Fund, and the Wisdom Fund.
(b) Set forth below is certain information regarding the directors and
officers of Capital Investment Group, Inc.
POSITION(S) AND OFFICE(S)
NAME AND PRINCIPAL WITH CAPITAL INVESTMENT POSITION(S) AND OFFICE(S)
BUSINESS ADDRESS GROUP, INC. WITH REGISTRANT
================== ========================= =========================
Richard K. Bryant President None
17 Glenwood Avenue
Raleigh, NC 27622
E.O. Edgerton, Jr. Vice President None
17 Glenwood Avenue
Raleigh, NC 27622
(c) Not applicable.
ITEM 28. Location of Accounts and Records
--------------------------------
All account books and records not normally held by First Union National
Bank of North Carolina, the Custodian to the Woodlawn Funds Trust, are held by
the Woodlawn Funds Trust, in the offices of The Nottingham Company, Inc., Fund
Accountant and Administrator; NC Shareholder Services, LLC, Transfer Agent; or
Internet 100 Advisors, L.L.C., the Investment Advisor to the Woodlawn Funds
Trust.
The address of The Nottingham Company, Inc. is 105 North Washington
Street, Post Office Box 69, Rocky Mount, North Carolina 27802-0069. The address
of NC Shareholder Services, LLC is 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365. The address of Internet 100
Advisors, L.L.C. is 1530 N. Key Blvd. #826, Arlington, Virginia 22209. The
address of First Union National Bank of North Carolina is Two First Union
Center, Charlotte, North Carolina 28288-1151.
ITEM 29. Management Services
-------------------
Not Applicable.
ITEM 30. Undertakings
------------
Not Applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Rocky Mount, and State of North Carolina on this
2nd day of September, 1999.
WOODLAWN FUNDS TRUST
By: /s/ C. Frank Watson, III
__________________________
C. Frank Watson, III
Secretary
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
* Trustee September 2, 1999
_________________________
Jack E. Brinson
* Trustee September 2, 1999
_________________________
Theo H. Pitt, Jr.
/s/ Julian G. Winters Treasurer September 2, 1999
_________________________
Julian G. Winters
*By: /s/ C. Frank Watson, III Dated: September 2, 1999
___________________________
C. Frank Watson, III
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
(FOR PRE-EFFECTIVE AMENDMENT NO. 2)
-----------------------------------
EXHIBIT NO.
UNDER PART C
OF FORM N-1A NAME OF EXHIBIT
- ------------ ---------------
(d) Investment Advisory Agreement between Woodlawn Funds Trust and
Internet 100 Advisors, L.L.C.
(e) Distribution Agreement between Woodlawn Funds Trust and Capital
Investment Group, Inc.
(g) Custodian Agreement between Woodlawn Funds Trust and First
Union National Bank of North Carolina
(h)(1) Fund Accounting and Compliance Administration Agreement between
Woodlawn Funds Trust and The Nottingham Company, Inc.
(h)(2) Dividend Disbursing and Transfer Agent Agreement between
Woodlawn Funds Trust and NC Shareholder Servces, LLC
(h)(3) Expense Limitation Agreement between Woodlawn Funds Trust
and Internet 100 Advisors, L.L.C.
(i) Opinion and Consent of Dechert Price & Rhoads, Counsel for the
Trust
(j) Consent of Deloitte & Touche LLP, Independent Public
Accountants
(k) Balance Sheet
(l) Subscription Agreements
(m) Distribution Plan under Rule 12b-1 for the Woodlawn Funds Trust
(p) Power of Attorneys
Exhibit (d): Investment Advisory Agreement between Woodlawn Funds Trust
----------- and Internet 100 Advisors, L.L.C.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, dated the date that the Registration Statement becomes effective
with the Securities and Exchange Commission, between WOODLAWN FUNDS TRUST (the
"Trust"), a Delaware Business Trust, and INTERNET 100 ADVISORS, L.L.C. (the
"Advisor"), a Virginia limited liability corporation and registered as an
investment advisor under the Investment Advisors Act of 1940, as amended (the
"Advisors Act").
WHEREAS, the Trust is registered as an open-end management investment company of
the series type under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust desires to retain the Advisor to furnish investment advisory
and administrative services to the series of the Trust as described in the
schedules attached to this Agreement (each a "Fund"), and the Advisor is willing
to furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment. The Trust hereby appoints the Advisor to act as Investment
Advisor to each Fund for the period and on the terms set forth in this
Agreement. The Advisor accepts such appointment and agrees to furnish
the services set forth herein, for the compensation provided in the
attached schedules.
2. Delivery of Documents. The Trust has furnished the Investment Advisor
with copies properly certified or authenticated of each of the
following:
(a) The Trust's Declaration of Trust, as filed with the State of
Delaware (the "Declaration");
(b) The Trust's By-Laws (the "By-Laws");
(c) Resolutions of the Trust's Board of Trustees and the resolution
approved by a majority of the outstanding shares of the Fund
authorizing the appointment of the Advisor and approving this
Agreement;
(d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the "1933
Act"), relating to shares of beneficial interest of the Fund
(the "Shares") as filed with the Securities and Exchange
Commission ("SEC") and all amendments thereto;
(e) The Fund's Prospectus (the "Prospectus").
The Trust will furnish the Advisor from time to time with copies,
properly certified or authenticated, of all amendments of or
supplements to the foregoing at the same time as such documents are
required to be filed with the SEC.
3. Management. Subject to the supervision of the Trust's Board of
Trustees, the Advisor will provide a continuous investment program for
the Fund, including investment research and management with respect to
all securities, investments, cash and cash equivalents in the Fund. The
Advisor will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund. The
Advisor will provide the services under this Agreement in accordance
with the Fund's investment objectives, policies and restrictions as
stated in its Prospectus. The Advisor further agrees that it:
<PAGE>
(a) Will conform its activities to all applicable Rules and
Regulations of the Securities and Exchange Commission and will,
in addition, conduct its activities under this Agreement in
accordance with regulations of any other Federal and State
agencies which may now or in the future have jurisdiction over
its activities under this Agreement;
(b) Will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or
dealer. In placing orders with brokers or dealers, the Advisor
will attempt to obtain the best net price and the most favorable
execution of its orders. Consistent with this obligation, when
the Advisor believes two or more brokers or dealers are
comparable in price and execution, the Advisor may prefer: (i)
brokers and dealers who provide the Fund with research advice
and other services, or who recommend or sell Trust shares, and
(ii) brokers who are affiliated with the Fund or its Advisor;
provided, however, that in no instance will portfolio securities
be purchased from or sold to the Advisor or any affiliated
person of the Advisor in principal transactions;
(c) Will provide certain executive personnel for the Fund as may be
mutually agreed upon from time to time with the Board of
Trustees, the salaries and expenses of such personnel to be
borne by the Advisor unless otherwise mutually agreed upon; and
(d) Will provide, at its own cost, all office space, facilities and
equipment necessary for the conduct of its advisory activities
on behalf of the Fund.
4. Services Not Exclusive. The advisory services furnished by the Advisor
hereunder are not to be deemed exclusive, and the Advisor shall be free
to furnish similar services to others so long as its services under
this Agreement are not impaired thereby; provided, however, that
without the written consent of the Trustees, the Advisor will not serve
as investment advisor to any other investment company having a similar
investment objective to that of the Fund.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Advisor hereby agrees that all records which it
maintains for the benefit of the Fund are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records
upon the Fund's request. The Advisor further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records
required to be maintained by it pursuant to Rule 31a-1 under the 1940
Act that are not maintained by others on behalf of the Fund.
6. Expenses. During the term of this Agreement, the Advisor will pay all
expenses incurred by it in connection with its investment advisory
services pertaining to the Fund. The Advisor will pay, out of the
Advisor's resources, the entire cost of the promotion and sale of Trust
shares, including the preparation of the prospectus and other
documents. The Advisor will provide other information and services,
other than services of outside counsel or independent accountants or
investment advisory services to be provided by any Adviser under an
Advisory Agreement, required in connection with the preparation of all
registration statements and Prospectuses, Prospectus supplements, SAIs,
all annual, semiannual, and periodic reports to shareholders of the
Trust, regulatory authorities, or others, and all notices and proxy
solicitation materials, furnished to shareholders of the Trust or
regulatory authorities, and all tax returns.
Notwithstanding the foregoing, the Fund shall pay the expenses and
costs of the following:
(a) Taxes, interest charges and extraordinary expenses;
(b) Brokerage fees and commissions with regard to portfolio
transactions of the Fund;
(c) Fees and expenses of the custodian of the Fund's portfolio
securities;
(d) Fees and expenses of the Fund's administrator, transfer and
dividend disbursing agent and the Fund's fund accounting agent
or, if the Fund performs any such services without an agent, the
costs of the same;
<PAGE>
(e) Auditing and legal expenses;
(f) Cost of maintenance of the Fund's existence as a legal entity;
(g) Compensation of trustees who are not interested persons of the
Advisor as law defines that term;
(h) Costs of Trust meetings;
(i) Federal and State registration or qualification fees and
expenses;
(j) Costs of setting in type, printing and mailing Prospectuses,
reports and notices to existing shareholders;
(k) The investment advisory fee payable to the Advisor, as provided
in paragraph 7 herein; and
(l) Distribution expenses, but only in accordance with the Plan of
Distribution adopted in accordance with Rule 12b-1 under the
1940 Act.
7. Compensation. The Trust will pay the Advisor and the Advisor will
accept as full compensation an investment advisory fee, based upon the
daily average net assets of each Fund, computed at the end of each
month and payable within five (5) business days thereafter, based upon
the schedules attached hereto.
8.(a) Limitation of Liability. The Advisor shall not be liable for any error
of judgment, mistake of law or for any other loss whatsoever suffered
by the Fund in connection with the performance of this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to
the receipt of compensation for services or a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the
Advisor in the performance of its duties or from reckless disregard by
it of its obligations and duties under this Agreement.
8.(b) Indemnification of Advisor. Subject to the limitations set forth in
this Subsection 8(b), the Fund shall indemnify, defend and hold
harmless (from the assets of the Trust or Trusts to which the conduct
in question relates) the Advisor against all loss, damage and
liability, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Advisor in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before any court
or administrative or legislative body, related to or resulting from
this Agreement or the performance of services hereunder, except with
respect to any matter as to which it has been determined that the loss,
damage or liability is a direct result of (i) a breach of fiduciary
duty with respect to the receipt of compensation for services; or (ii)
willful misfeasance, bad faith or gross negligence on the part of the
Advisor in the performance of its duties or from reckless disregard by
it of its duties under this Agreement (either and both of the conduct
described in clauses (i) and (ii) above being referred to hereinafter
as "Disabling Conduct"). A determination that the Advisor is entitled
to indemnification may be made by (i) a final decision on the merits by
a court or other body before whom the proceeding was brought that the
Advisor was not liable by reason of Disabling Conduct, (ii) dismissal
of a court action or an administrative proceeding against the Advisor
for insufficiency of evidence of Disabling Conduct, or (iii) a
reasonable determination, based upon a review of the facts, that the
Advisor was not liable by reason of Disabling Conduct by, (a) vote of a
majority of a quorum of Trustees who are neither "interested persons"
of the Fund as the quoted phrase is defined in Section 2(a)(19) of the
1940 Act nor parties to the action, suit or other proceeding on the
same or similar grounds that is then or has been pending or threatened
(such quorum of such Trustees being referred to hereinafter as the
"Independent Trustees"), or (b) an independent legal counsel in a
written opinion. Expenses, including accountants' and counsel fees so
incurred by the Advisor (but excluding amounts paid in satisfaction of
judgments, in compromise or as fines or penalties), may be paid from
time to time by the Fund or Trust to which the conduct in question
related in advance of the final disposition of any such action, suit or
proceeding; provided, that the Advisor shall have undertaken to repay
the amounts so paid if it is ultimately determined that indemnification
of such expenses is not authorized under this Subsection 8(b) and if
(i) the Advisor shall have provided security for such undertaking, (ii)
the Fund shall be insured against losses arising by reason of any
lawful advances, or (iii) a majority of the Independent Trustees, or an
independent legal counsel in a written opinion, shall have determined,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Advisor
ultimately will be entitled to indemnification hereunder.
<PAGE>
As to any matter disposed of by a compromise payment by the Advisor
referred to in this Subsection 8(b), pursuant to a consent decree or
otherwise, no such indemnification either for said payment or for any
other expenses shall be provided unless such indemnification shall be
approved (i) by a majority of the Independent Trustees or (ii) by an
independent legal counsel in a written opinion. Approval by the
Independent Trustees pursuant to clause (i) shall not prevent the
recovery from the Advisor of any amount paid to the Advisor in
accordance with either of such clauses as indemnification of the
Advisor is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that the Advisor's action was in or not opposed to the best interest of
the Fund or to have been liable to the Fund or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in its conduct under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not
be exclusive of or affect any of the rights to which the Advisor may be
entitled. Nothing contained in this Subsection 8(b) shall affect any
rights to indemnification to which Trustees, officers or other
personnel of the Fund, and other persons may be entitled by contract or
otherwise under law, nor the power of the Fund to purchase and maintain
liability insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Fund hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Advisor is
entitled to indemnification hereunder and the reasonable amount of any
indemnity due it hereunder, or employ independent legal counsel for
that purpose.
8.(c) Indemnification of Fund. The Adviser agrees to indemnify and hold
harmless the Trust and Trust's Trustees and officers from all loss,
damage and liability, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred
by the Trust in connection with the defense or disposition of any body,
related to or resulting from (i) any breach or violation of this
Agreement by the Adviser; (ii) any breach of fiduciary duty with
respect to the receipt of compensation for services; and (iii) any
willful misfeasance, bad faith or gross negligence on the part of the
Advisor in the performance of its duties or from reckless disregard by
it of its duties under this Agreement.
8.(d) Failure to Perform; Force Majeure. No failure or omission by either
party hereto in the performance of any obligation of this Agreement
(other than payment obligations) shall be deemed a breach of this
Agreement or create any liability if the same shall arise from any
cause or causes beyond the control of the party, including but not
limited to, the following: acts of God, acts or omissions of any
governmental agency; any rules, regulations, or orders issued by any
governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake, war;
rebellion; insurrection; riot; and invasion and provided that such
failure or omission resulting from one of the above causes is cured as
soon as is practicable after the occurrence of one or more of the
above-mentioned causes.
8.(e) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and
protect the Advisor and its directors, officers, employees and agents
and shall inure to the benefit of its/their respective successors,
assigns and personal representatives.
<PAGE>
9. Duration and Termination. This Agreement shall become effective upon
the date the registration statement of the Trust containing the Fund's
Prospectus is declared effective by the Securities and Exchange
Commission and, unless sooner terminated as provided herein, shall
continue in effect for two years. Thereafter, this Agreement shall be
renewable for successive periods of one year each, provided such
continuance is specifically approved annually:
(a) By the vote of a majority of those members of the Board of
Trustees who are not parties to this Agreement or interested
persons of any such party (as that term is defined in the 1940
Act), cast in person at a meeting called for the purpose of
voting on such approval; and
(b) By vote of either the Board of Trustees or a majority (as that
term is defined in the 1940 Act) of the outstanding voting
securities of the Fund.
Notwithstanding the foregoing, this Agreement may be terminated by the
Fund or by the Advisor at any time on sixty (60) days' written notice,
without the payment of any penalty, provided that termination by the
Fund must be authorized either by vote of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Fund.
This Agreement will automatically terminate in the event of its
assignment (as that term is defined in the 1940 Act).
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by a written
instrument signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. No material amendment of
this Agreement shall be effective until approved by vote of the holders
of a majority of the Fund's outstanding voting securities (as defined
in the 1940 Act).
11. Year 2000 Preparedness. The Adviser warrants and represents that the
Adviser has adopted a written plan for Year 2000 compliance for the
correct operation of the Adviser's computer systems because of the
approaching millennium (the "Plan"), that the Plan provides for the
identification, testing and, where appropriate, upgrading of the
Adviser's computer systems, in accordance with reasonable industry
standards, so that both the Adviser's computer systems and their
interfaces with third party computer systems will function accurately
and without interruption before, during and after December 31, 1999 and
that the Adviser is actively in the process of implementing the Plan
and presently has no reason to believe that the Adviser's computer
systems and their interfaces with third party computer systems will not
be able to function accurately and without interruption before, during
and after such date. The Adviser will continue to implement the Plan
and take such other steps as may be necessary and appropriate to be
Year 2000 compliant in a timely and efficient manner and will notify
the Trust of any Year 2000 compliance problems and the nature thereof
on or before September 1, 1999 if the Adviser determines that it is not
or is not likely to be Year 2000 compliant in a timely and efficient
manner. The failure of the Adviser to be Year 2000 compliant shall not
be deemed to be a force majeure event or provide a defense to
performance hereunder.
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the
Agreement shall not be affected thereby. This Agreement shall be
binding and shall inure to the benefit of the parties hereto and their
respective successors.
13. Applicable Law. This Agreement shall be construed in accordance with,
and governed by, the laws of the Commonwealth of North Carolina.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
ATTEST: WOODLAWN FUNDS TRUST
By: /s/ C. Frank Watson, III By: /s/ Theo H. Pitt, Jr.
___________________________ ___________________________
Title: Secretary Title: Trustee
________________________ ________________________
ATTEST: INTERNET 100 ADVISORS, L.L.C.
By: /s/ C. Frank Watson, III By: /s/ Paul de Leon
___________________________ ___________________________
Title: Secretary Title: President
________________________ ________________________
<PAGE>
SCHEDULE A
INVESTMENT ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the INVESTMENT ADVISORY AGREEMENT and rendered to
the INTERNET 100 FUND, the Advisor shall be compensated monthly, as of the last
day of each month, within five business days of the month end, a fee based upon
the daily average net assets of the Fund according to the following schedule:
Annual
Net Assets Fee
-------------- ------
On all assets 0.75%
<PAGE>
SCHEDULE B
INVESTMENT ADVISOR'S COMPENSATION SCHEDULE
For the services delineated in the INVESTMENT ADVISORY AGREEMENT and rendered to
the INTERNET 100 EQUAL WEIGHTED FUND, the Advisor shall be compensated monthly,
as of the last day of each month, within five business days of the month end, a
fee based upon the daily average net assets of the Fund according to the
following schedule:
Annual
Net Assets Fee
-------------- ------
On all assets 0.75%
Exhibit (e): Distribution Agreement between Woodlawn Funds Trust
----------- and Capital Investment Group, Inc.
DISTRIBUTION AGREEMENT
THIS AGREEMENT, entered into as of this 31st day of August, 1999, by and between
Woodlawn Funds Trust (the "Trust"), an unincorporated business trust organized
under the laws of the State of Delaware, and Capital Investment Group, Inc. (the
"Distributor"), a North Carolina corporation.
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest ("Shares"), in separate series representing the interests in
separate funds of securities and other assets; and
WHEREAS, the Shares of the Trust are registered under the Securities Act of
1933, as amended ("1933 Act"), pursuant to a registration statement on Form N-1A
("Registration Statement"), including a prospectus ("Prospectus") and a
statement of additional information ("Statement of Additional Information"); and
WHEREAS, the Trust offers separate series of shares ("Shares") representing
interests in the Trust; and
WHEREAS, the separate series of the Trust advised by Internet 100 Advisors,
L.L.C., which are set forth in Schedule A, as amended from time to time, (each a
"Fund" and collectively the "Funds") currently consists, of one class of Shares;
and
WHEREAS, the Trust is also at this time adopting a Plan of Distribution Pursuant
to Rule 12b-1 under the 1940 Act ("Distribution Plan") with respect to the
Shares of each Fund; and
WHEREAS, Distributor has agreed to act as distributor of the Shares of each Fund
for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of each Fund in jurisdictions wherein such Shares may
be legally offered for sale; provided, however, that the Trust in its absolute
discretion may issue Shares of each Fund in connection with (i) the payment or
reinvestment of dividends or distributions; (ii) any merger or consolidation of
the Trust or of each Fund with any other investment company or trust or any
personal holding company, or the acquisition of the assets of any such entity or
another fund of the Trust; or (iii) any offer of exchange permitted by Section
11 of the 1940 Act.
<PAGE>
(b) Distributor hereby accepts such appointment as exclusive agent for
the distribution of the Shares of each Fund and agrees that it will sell the
Shares as agent for the Trust at prices determined as hereinafter provided and
on the terms hereinafter set forth, all according to applicable federal and
state laws and regulations and to the Agreement and Declaration of Trust of the
Trust.
(c) Distributor may sell Shares of each Fund to or through qualified
securities dealers or others. Distributor will require each dealer or other such
party to conform to the provisions hereof, the Registration Statement and the
Prospectus and Statement of Additional Information, and applicable law; and
neither Distributor nor any such dealers or others shall withhold the placing of
purchase orders for Shares so as to make a profit thereby.
(d) Distributor shall order Shares of each Fund from the Trust only to
the extent that it shall have received purchase orders therefor. Distributor
will not make, or authorize any dealers or others to make: (i) any short sales
of Shares; or (ii) any sales of Shares to any Trustee or officer of the Trust or
to any officer or director of Distributor or of any corporation or association
furnishing investment advisory, managerial or supervisory services to the Trust,
or to any such corporation or association, unless such sales are made in
accordance with the then current Prospectus and Statement of Additional
Information.
(e) Distributor is not authorized by the Trust to give any information
or make any representations regarding the Shares of each Fund, except such
information or representations as are contained in the Registration Statement or
in the current Prospectus or Statement of Additional Information of the Funds,
or in advertisements and sales literature prepared by or on behalf of the Trust
for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares of each Fund whenever, in its sole
discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Shares of each Fund sold under this
Agreement shall be sold at the public offering price per Share in effect at the
time of the sale, as described in the then current Prospectus of the Funds. The
excess, if any, of the public offering price over the net asset value of the
Shares sold by Distributor as agent shall be retained by Distributor as a
commission for its services hereunder. Out of such commission Distributor may
allow commissions or concessions to dealers and may allow them to others in its
discretion in such amounts as Distributor shall determine from time to time.
Except as may be otherwise determined by Distributor, from time to time, such
commissions or concessions shall be uniform to all dealers. At no time shall the
Trust receive less than the full net asset value of the Shares, determined in
the manner set forth in the then current Prospectus and Statement of Additional
Information. Distributor shall also be entitled to such commissions and other
fees and payments as may be authorized by the Trustees of the Trust from time to
time under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor
copies of any information, financial statements and other documents that
Distributor may reasonably request for use in connection with the sale of Shares
of each Fund under this Agreement. The Trust shall also make available a
sufficient number of copies of the Funds' current Prospectus and Statement of
Additional Information for use by the Distributor.
<PAGE>
4. Expenses.
(a) The Trust will pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus and
Statement of Additional Information; (ii) preparation, printing and distribution
of reports and other communications to shareholders; (iii) registration of the
Shares under the federal securities laws; (iv) qualification of the Shares for
sale in certain states; (v) qualification of the Trust as a dealer or broker
under state law as well as qualification of the Trust as an entity authorized to
do business in certain states; (vi) maintaining facilities for the issue and
transfer of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; and (viii) certain taxes applicable
to the sale or delivery of the Shares or certificates therefor.
(b) Except to the extent such expenses are borne by the Trust pursuant
to the Distribution Plan, Distributor will pay or cause to be paid the following
expenses: (i) payments to sales representatives of the Distributor and to
securities dealers and others in respect of the sale or servicing of
shareholders with respect to Shares of each Fund; (ii) payment of compensation
to and expenses of employees of the Distributor and any of its affiliates to the
extent they engage in or support distribution of each Fund's Shares or render
shareholder support services not otherwise provided by the Trust's transfer
agent, administrator, or custodian, including, but not limited to, answering
routine inquiries regarding each Fund, processing shareholder transactions, and
providing such other shareholder services as the Trust may reasonably request;
(iii) formulation and implementation of marketing and promotional activities,
including, but not limited to, direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; (iv) preparation, printing
and distribution of sales literature and of Prospectuses and Statements of
Additional Information and reports of the Trust for recipients other than
existing shareholders of each Fund; and (v) obtaining such information, analyses
and reports with respect to marketing and promotional activities as the Trust
may, from time to time, reasonably request.
(c) Distributor in connection with the Distribution Plan shall prepare
and deliver reports to the Trustees of the Trust on a regular basis, at least
quarterly, showing the expenditures with respect to each Fund pursuant to the
Distribution Plan and the purposes therefor, as well as any supplemental reports
as the Trustees of the Trust, from time to time, may reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of
the Trust may repurchase Shares of each Fund offered for resale to it and redeem
such Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of obligations or duties
hereunder on the part of Distributor, the Trust agrees to indemnify Distributor
and its officers and partners against any and all claims, demands, liabilities
and expenses that Distributor may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus or
Statement of Additional Information of the Funds, or in any advertisements or
sales literature prepared by or on behalf of the Trust for Distributor's use, or
any omission to state a material fact therein, the omission of which makes any
statement contained therein misleading, unless such statement or omission was
made in reliance upon and in conformity with information furnished to the Trust
in connection therewith by or on behalf of Distributor. Nothing herein contained
shall require the Trust to take any action contrary to any provision of its
Agreement and Declaration of Trust or any applicable statute or regulation.
<PAGE>
7. Indemnification by Distributor. Distributor agrees to indemnify the
Trust and its officers and Trustees against any and all claims, demands,
liabilities and expenses which the Trust may incur under the 1933 Act, or common
law or otherwise, arising out of or based upon (i) any alleged untrue statement
of a material fact contained in the Registration Statement or any Prospectus or
Statement of Additional Information of the Funds, or in any advertisements or
sales literature prepared by or on behalf of the Trust for Distributor's use, or
any omission to state a material fact therein, the omission of which makes any
statement contained therein misleading, if such statement or omission was made
in reliance upon and in conformity with information furnished to the trust in
connection therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and others
authorized to sell Shares of each Fund hereunder, or their sales
representatives, that has not been authorized by the Trust in any Prospectus or
Statement of Additional Information of the Funds or by this Agreement.
8. Term and Termination.
(a) With respect to any new Fund of the Trust that is advised by
Internet 100 Advisors, L.L.C., this Agreement shall continue in effect for an
initial two year period from the date such new Fund is added to this Agreement,
as set forth in Exhibit A, unless sooner terminated as provided herein. Unless
terminated as herein provided, this Agreement shall continue in effect, with
respect to each Fund (after its initial two year term), for one year from the
date hereof and shall continue in full force and effect for successive periods
of one year thereafter, but only so long as each such continuance is approved
(i) by either the Trustees of the Trust or by vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund and, in
either event, (ii) by vote of a majority of the Trustees of the Trust who are
not parties to this Agreement or interested persons (as defined in the 1940 Act)
of any such party and who have no direct or indirect financial interest in this
Agreement or in the operation of the Distribution Plan or in any agreement
related thereto ("Independent Trustees"), cast at a meeting called for the
purpose of voting on such approval.
(b) This Agreement may be terminated at any time without the payment of
any penalty by vote of the Trustees of the Trust or a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of any of the Funds or by Distributor,
on sixty (60) days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
9. Limitation of Liability. The obligations of the Trust hereunder
shall not be binding upon any of the Trustees, officers or shareholders of the
Trust personally, but shall bind only the assets and property of the Trust. The
term "Woodlawn Funds Trust" means and refers to the Trustees from time to time
serving under the Agreement and Declaration of Trust of the Trust, a copy of
which in on file with the Secretary of the State of Delaware. The execution and
delivery of this Agreement has been authorized by the Trustees, and this
Agreement has been signed on behalf of the Trust by an authorized officer of the
Trust, acting as such and not individually, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Trust as
provided in the Agreement and Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
WOODLAWN FUNDS TRUST
Attest: /s/ C. Frank Watson, III
_________________________ By: /s/ Theo H. Pitt, Jr.
_________________________
CAPITAL INVESTMENT GROUP, INC.
Attest: /s/ C. Frank Watson, III
__________________________ By: /s/ Richard K. Bryant
_________________________
<PAGE>
SCHEDULE A
The list below, which shall be amended from time to time, sets forth
the Funds of the Woodlawn Funds Trust which are advised by Internet 100
Advisors, L.L.C., and the shares of which are distributed by Capital Investment
Group, Inc.
- ------------------------------------ -------------------------------------------
Funds Date Added to the Agreement
- ----- ---------------------------
- ------------------------------------ -------------------------------------------
Internet 100 Fund August 31, 1999
- ------------------------------------ -------------------------------------------
Internet 100 Equal Weighted Fund August 31, 1999
- ------------------------------------ -------------------------------------------
Exhibit (g): Custodian Agreement between Woodlawn Funds Trust and
----------- First Union National Bank of North Carolina
CUSTODY AGREEMENT
(Mutual Funds)
THIS AGREEMENT is made as of August 31, 1999, by and between WOODLAWN FUNDS
TRUST (the "Trust"), a Delaware business trust, with respect to its existing
series as of the date of this Agreement, and such other series as shall be
designated from time to time by the Trust (the "Fund" or "Funds"), and FIRST
UNION NATIONAL BANK OF NORTH CAROLINA, a national banking association (the
"Custodian").
The Trust desires that its securities and funds shall be hereafter held and
administered by the Custodian pursuant to the terms of this Agreement, and,
pursuant to separate agreements, The Nottingham Company, Inc., a North Carolina
corporation ("Nottingham"), has agreed to perform the duties of Accounting
Services Agent and Administrator for the Fund, and NC Shareholder Services,
LLC, a North Carolina limited liability corporation ("NCSS"), has agreed to
perform the duties of Transfer Agent and Dividend Disbursing Agent for the
Funds.
In consideration of the mutual agreements herein, the Trust and the Custodian
agree as follows:
1. DEFINITIONS.
-----------
As used herein, the following words and phrases shall have the meanings
shown in this Section 1:
"Securities" includes stocks, shares, bonds, debentures, bills, notes,
mortgages, certificates of deposit, bank time deposits, bankers'
acceptances, commercial paper, scrip, warrants, participation
certificates, evidences of indebtedness, or other obligations and any
certificates, receipts, warrants or other instruments representing
rights to receive, purchase, or subscribe for the same, or evidencing
or representing any other rights or interests therein, or in any
property or assets.
"Oral Instructions" shall mean an authorization, instruction, approval,
item or set of data, or information of any kind transmitted to the
Custodian in person or by telephone, telegram, telecopy or other
mechanical or documentary means lacking original signature, by an
officer or employee of the Trust, an employee of Nottingham in its
capacity as Accounting Services Agent and Administrator, or an employee
of NCSS in its capacity as Transfer Agent and Dividend Disbursing
Agent, who has been authorized by a resolution of the Board of Trustees
of the Trust or the Board of Directors of Nottingham to give Written
Instructions on behalf of the Trust.
"Written Instructions" shall mean an authorization, instruction,
approval, item or set of data, or information of any kind transmitted
to the Custodian containing original signatures or a copy of such
document transmitted by telecopy including transmission of such
signature, reasonably believed by the Custodian to be the signature of
an officer or employee of the Trust, an employee of Nottingham in its
capacity as Accounting Services Agent and Administrator, or an employee
of NCSS in its capacity as Transfer Agent and Dividend Disbursing
Agent, who has been authorized by a resolution of the Board of Trustees
of the Trust or Board of Directors of Nottingham to give Written
Instructions on behalf of the Trust.
"Securities Depository" shall mean a system for the central handling of
securities where all securities of any particular class or series of
any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical
delivery of securities.
"Officers' Certificate" shall mean a direction, instruction or
certification in writing signed in the name of the Trust by the
President, Secretary or Assistant Secretary, or the Treasurer or
Assistant Treasurer of the Trust, or any other persons duly authorized
to sign by the Board of Trustees or the Executive Committee of the
Trust.
"Book-Entry Securities" shall mean securities issued by the Treasury of
the United States of America and federal agencies of the United States
of America which are maintained in the book-entry system as provided in
Subpart O of Treasury Circular No. 300, 31 CFR 306, Subpart B of 31 CFR
Part 350, and the book-entry regulations of federal agencies
substantially in the form of Subpart O, and the term Book-Entry Account
shall mean an account maintained by a Federal Reserve Bank in
accordance with the aforesaid Circular and regulations.
<PAGE>
2. DOCUMENTS TO BE FILED BY TRUST.
------------------------------
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of its Board of Trustees authorizing execution
of Written Instructions and the number of signatories required,
together with certified signatures of the officers and other
signatories authorized to sign, which shall constitute conclusive
evidence of the authority of the officers and other signatories
designated therein to act, and shall be considered in full force and
effect and the Custodian shall be fully protected in acting in reliance
thereon until it receives a new certified copy of a resolution adding
or deleting a person or persons with authority to give Written
Instructions. If the certifying officer is authorized to sign Written
Instructions, the certification shall also be signed by a second
officer of the Trust. The Trust also agrees that the Custodian may rely
on Written Instructions received from Nottingham and/or NCSS, as agent
for the Trust, if those Written Instructions are given by persons
having authority pursuant to resolutions of the Board of Trustees of
the Trust.
The Trust shall from time to time file with the Custodian a certified
copy of each resolution of the Board of Trustees authorizing the
transmittal of Oral Instructions and specifying the person or persons
authorized to give Oral Instructions in accordance with this Agreement.
The Trust agrees that the Custodian may rely on Oral Instructions
received from Nottingham and/or NCSS, as agent for the Trust, if those
instructions are given by persons reasonably believed by the Custodian
to have such authority. Any resolution so filed with the Custodian
shall be considered in full force and effect and the Custodian shall be
fully protected in acting in reliance thereon until it actually
receives a new certified copy of a resolution adding or deleting a
person or persons with authority to give Oral Instructions. If the
certifying officer is authorized to give Oral Instructions, the
certification shall also be signed by a second officer of the Trust.
3. RECEIPT AND DISBURSEMENT OF FUNDS.
---------------------------------
(a) The Custodian shall open and maintain a separate account or
accounts in the name of each Fund of the Trust, subject only
to draft or order by the Custodian acting pursuant to the
terms of this Agreement. The Custodian shall hold in
safekeeping in such account or accounts, subject to the
provisions hereof, all funds received by it from or for the
account of the Trust. The Trust will deliver or cause to be
delivered to the Custodian all funds owned by the Trust,
including cash received for the issuance of its shares during
the period of this Agreement. The Custodian shall make
payments of funds to, or for the account of, the Trust from
such funds only:
(i) for the purchase of securities for the portfolio of
the Trust upon the delivery of such securities to the
Custodian (or to any bank, banking firm or trust
company doing business in the United States and
designated by the Custodian as its sub-custodian or
agent for this purpose or any foreign bank qualified
under Rule 17f-5 of the Investment Company Act of
1940 and acting as sub-custodian), registered (if
registerable) in the name of the Trust or of the
nominee of the Custodian referred to in Section 8 or
in proper form for transfer, or, in the case of
repurchase agreements entered into between the Trust
and the Custodian or other bank or broker dealer (A)
against delivery of the securities either in
certificate form or through an entity crediting the
Custodian's account at the Federal Reserve Bank with
such securities or (B) upon delivery of the receipt
evidencing purchase by the Trust of securities owned
by the Custodian along with written evidence of the
agreement by the Custodian bank to repurchase such
securities from the Trust;
(ii) for the payment of interest, dividends, taxes,
management or supervisory fees, or operating expenses
(including, without limitation, Board of Trustees'
fees and expenses, and fees for legal, accounting and
auditing services) and for redemption or repurchase
of shares of the Trust;
<PAGE>
(iii) for payments in connection with the conversion,
exchange or surrender of securities owned or
subscribed to by the Trust held by or to be delivered
to the Custodian;
(iv) for the payment to any bank of interest on all or any
portion of the principal of any loan made by such
bank to the Trust;
(v) for the payment to any person, firm or corporation
who has borrowed the Trust's portfolio securities the
amount deposited with the Custodian as collateral for
such borrowing upon the delivery of such securities
to the Custodian, registered (if registerable) in the
name of the Trust or of the nominee of the Custodian
referred to in Section 8 or in proper form for
transfer; or
(vi) for other proper purposes of the Trust.
Before making any such payment the Custodian shall receive
(and may rely upon) Written Instructions or Oral Instructions
directing such payment and stating that it is for a purpose
permitted under the terms of this subsection (a). In respect
of item (vi), the Custodian will take such action only upon
receipt of an Officers' Certificate and a certified copy of a
resolution of the Board of Trustees or the Executive Committee
of the Trust signed by an officer of the Trust and certified
by the Secretary or an Assistant Secretary, specifying the
amount of such payment, setting forth the purpose for which
such payment is to be made. In respect of item (v), the
Custodian shall make payment to the borrower of securities
loaned by the Trust of part of the collateral deposited with
the Custodian upon receipt of Written Instructions from the
Trust or Nottingham stating that the market value of the
securities loaned has declined and specifying the amount to be
paid by the Custodian without receipt or return of any of the
securities loaned by the Trust. In respect of item (i), in the
case of repurchase agreements entered into with a bank which
is a member of the Federal Reserve System, the Custodian may
transfer funds to the account of such bank, which may be
itself, prior to receipt of written evidence that the
securities subject to such repurchase agreement have been
transferred by book-entry to the Custodian's non-proprietary
account at the Federal Reserve Bank, or in the case of
repurchase agreements entered into with the Custodian, of the
safekeeping receipt and repurchase agreement, provided that
such securities have in fact been so transferred by
book-entry, or in the case of repurchase agreements entered
into with the Custodian, the safekeeping receipt is received
prior to the close of business on the same day.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the
Board of Trustees, appoint (and may at any time remove without
the written approval of the Trust) any other bank or trust
company as its sub-custodian or agent to carry out such of the
provisions of Subsection (a) of this Section 3 as instructions
from the Trust may from time to time request; provided,
however, that the appointment of such sub-custodian or agent
shall not relieve the Custodian of any of its responsibilities
hereunder; and provided, further, that the Custodian shall not
enter into any arrangement with any subcustodian unless such
sub-custodian meets the requirements of Section 26 of the
Investment Company Act of 1940 and Rule 17f-5 thereunder, if
applicable.
(c) The Custodian is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money
received by the Custodian for the accounts of the Trust.
<PAGE>
4. RECEIPT OF SECURITIES.
---------------------
(a) The Custodian shall hold in safekeeping in a separate account,
and physically segregated at all times from those of any other
persons, firms, corporations or trusts or any other series of
the Trust, pursuant to the provisions hereof, all securities
received by it from or for the account of each series of the
Trust, and the Trust will deliver or cause to be delivered to
the Custodian all securities owned by the Trust. All such
securities are to be held or disposed of by the Custodian
under, and subject at all times to the instructions pursuant
to, the terms of this Agreement. The Custodian shall have no
power or authority to assign, hypothecate, pledge, lend or
otherwise dispose of any such securities and investments,
except pursuant to instructions and only for the account of
the Trust as set forth in Section 5 of this Agreement.
(b) Notwithstanding anything herein to the contrary, the Custodian
may at any time or times with the written approval of the
Board of Trustees, appoint (and may at any time without the
written approval of such Board of Trustees remove) any other
bank or trust company as its sub-custodian or agent to carry
out such of the provisions of Subsection (a) of this Section 4
and of Section 5 of this Agreement, as instructions may from
time to time request, provided, however, that the appointment
of such sub-custodian or agent shall not relieve the Custodian
of any of its responsibilities hereunder, and provided,
further, that the Custodian shall not enter into arrangement
with any sub-custodian unless such sub-custodian meets the
requirements of Section 26 of the Investment Company Act of
1940 or Rule 17f-5 thereunder, if applicable.
5. TRANSFER, EXCHANGE, REDELIVERY, ETC. OF SECURITIES.
--------------------------------------------------
The Custodian shall have sole power to release or deliver any
Securities of the Trust held by it pursuant to this Agreement. The
Custodian agrees to transfer, exchange or deliver Securities held by it
on behalf of the Trust hereunder only:
(a) for sales of such Securities for the account of the Trust upon
receipt by the Custodian of Payment therefor;
(b) when such securities mature or are called, redeemed or retired
or otherwise become payable;
(c) for examination by any broker selling any such securities in
accordance with "street delivery" custom;
(d) in exchange for or upon conversion into other Securities alone
or other securities and cash whether pursuant to any plan of
merger, consolidation, reorganization, recapitalization or
readjustment, or otherwise;
(e) upon conversion of such Securities pursuant to their terms
into other Securities;
(f) upon exercise of subscription, purchase or other similar
rights represented by such Securities;
(g) for the purpose of exchanging interim receipts for temporary
Securities for definitive securities;
(h) for the purpose of effecting a loan of the portfolio
Securities to any person, firm, corporation or trust upon the
receipt by the Custodian of cash or cash equivalent collateral
at least equal to the market value of the securities loaned;
(i) to any bank for the purpose of collateralizing the obligation
of the Trust to repay any moneys borrowed by the Trust from
such bank; provided, however, that the Custodian may at the
option of such lending bank keep such collateral in its
possession, subject to the rights of such bank given to it by
virtue of any promissory note or agreement executed and
delivered by the Trust to such bank; or
(j) for other proper purposes of the Trust.
<PAGE>
As to any deliveries made by the Custodian pursuant to items (a), (b),
(c), (d), (e), (f), (g) and (h), Securities or funds receivable in
exchange therefor shall be deliverable to the Custodian. Before making
any such transfer, exchange or delivery, the Custodian shall receive
(and may rely upon) instructions requesting such transfer, exchange, or
delivery and stating that it is for a purpose permitted under the terms
(a), (b), (c), (d), (e), (f), (g), (h), or (i) of this Section 5, and,
in respect of item (j), upon receipt of instructions of a certified
copy of a resolution of the Board of Trustees of the Trust, signed by
an officer of the Trust and certified by its Secretary or an Assistant
Secretary, specifying the Securities to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Trust, and naming the person or persons
to whom delivery of such Securities shall be made. In respect of item
(h), the instructions shall state the market value of the Securities to
be loaned and the corresponding amount of collateral to be deposited
with the Custodian; thereafter, upon receipt of instructions stating
that the market value of the Securities loaned has increased and
specifying the amount of increase, the Custodian shall collect from the
borrower additional cash collateral in such amount.
6. FEDERAL RESERVE BOOK-ENTRY SYSTEM.
---------------------------------
Notwithstanding any other provisions of this Agreement, it is expressly
understood and agreed that the Custodian is authorized in the
performance of its duties hereunder to deposit in the book-entry
deposit system operated by the Federal Reserve Bank (the "System"),
United States government, instrumentality and agency securities and any
other Securities deposited in the System and to use the facilities of
the System, as permitted by Rule 17f-4 under the Investment Company Act
of 1940, in accordance with the following terms and provisions:
(a) The Custodian may keep Securities of the Trust in the System
provided that such Securities are represented in an account
("Account") of the Custodian's in the System which shall not
include any assets of the Custodian other than assets held in
a fiduciary or custodian capacity.
(b) The records of the Custodian with respect to the participation
in the System through the Custodian shall identify by
Book-Entry Securities belonging to the Trust which are
included with other Securities deposited in the Account and
shall at all times during the regular business hours of the
Custodian be open for inspection by duly authorized officers,
employees or agents of the Trust and employees and agents of
the Securities and Exchange Commission.
(c) The Custodian shall pay for Securities purchased for the
account of the Trust upon:
(i) receipt of advice from the System that such
Securities have been transferred to the Account; and
(ii) the making of an entry on the records of the
Custodian to reflect such payment and transfer for
the account of the Trust. The Custodian shall
transfer Securities sold for the account of the Trust
upon:
(1) receipt of advice from the System that
payment for such Securities has been
transferred to the Account; and
(2) the making of an entry on the records of the
Custodian to reflect such transfer and
payment for the account of the Trust. The
Custodian shall send the Trust a
confirmation of any transfers to or from the
account of the Trust.
(d) The Custodian will provide the Trust with any report obtained
by the Custodian on the System's accounting system, internal
accounting control and procedures for safeguarding Securities
deposited in the System. The Custodian will provide the Trust
with reports by independent public accountants on the
accounting system, internal accounting control and procedures
for safeguarding Securities, including Securities deposited in
the System relating to the services provided by the Custodian
under this Agreement; such reports shall detail material
inadequacies disclosed by such examination, and, if there are
no such inadequacies, shall so state, and shall be of such
scope and in such detail as the Trust may reasonably require
and shall be of sufficient scope to provide reasonable
assurance that any material inadequacies would be disclosed.
<PAGE>
7. USE OF CLEARING FACILITIES.
--------------------------
Notwithstanding any other provisions of the Agreement, the Custodian
may, in connection with transactions in portfolio Securities by the
Trust, use the facilities of the Depository Trust Company ("DTC"), and
the Participants Trust Company ("PTC"), as permitted by Rule 17f-4
under the Investment Company Act of 1940, if such facilities have been
approved by the Board of Trustees of the Trust in accordance with the
following:
(a) DTC and PTC may be used to receive and hold eligible
Securities owned by the Trust;
(b) payment for Securities purchased may be made through the
clearing medium employed by DTC and PTC for transactions of
participants acting through them;
(c) Securities of the Trust deposited in DTC and PTC will at all
times be segregated from any assets and cash controlled by the
Custodian in other than a fiduciary or custodian capacity but
may be commingled with other assets held in such capacities.
Subject to the provisions of the Agreement with regard to
instructions, the Custodian will pay out money only upon
receipt of Securities or notification thereof and will deliver
Securities only upon the receipt of money or notification
thereof;
(d) all books and records maintained by the Custodian which relate
to the participation in DTC and PTC shall identify by
Book-Entry Securities belonging to the Trust which are
deposited in DTC and PTC and shall at all times during the
Custodian's regular business hours be open to inspection by
the duly authorized officers, employees, agents and auditors,
and the Trust will be furnished with all the information in
respect of the services rendered to it as it may require;
(e) the Custodian will make available to the Trust copies of any
internal control reports concerning DTC and PTC delivered to
it by either internal or external auditors within ten days
after receipt of such a report by the Custodian; and
(f) confirmations of transactions using the facilities of DTC and
PTC shall be provided as set forth in Rule 17f-4 of the
Investment Company Act of 1940.
8. CUSTODIAN'S ACTS WITHOUT INSTRUCTIONS.
-------------------------------------
Unless and until the Custodian receives instructions to the contrary,
the Custodian shall on behalf of the Trust:
(a) Present for payment all coupons and other income items held by
it for the account of the Trust which call for payment upon
presentation and hold the funds received by it upon such
payment for the Trust;
(b) collect interest and cash dividends received, with notice to
the Trust, for the accounts of the Trust;
(c) hold for the accounts of the Trust hereunder all stock
dividends, rights and similar Securities issued with respect
to any securities held by it hereunder;
(d) execute as agent on behalf of the Trust all necessary
ownership certificates required by the Internal Revenue Code
or the Income Tax Regulations of the United States Treasury
Department or under the laws of any state now or hereafter in
effect, inserting the name of such certificates as the owner
of the Securities covered thereby, to the extent it may
lawfully do so;
<PAGE>
(e) transmit promptly to the Trust all reports, notices and other
written information received by the Custodian from or
concerning issuers of the portfolio Securities; and
(f) collect from the borrower the Securities loaned and delivered
by the Custodian pursuant to item (h) of Section 5 hereof, any
interest or cash dividends paid on such Securities, and all
stock dividends, rights and similar Securities issued with
respect to any such loaned Securities.
With respect to Securities of foreign issuers, it is expected that the
Custodian will use its best efforts to effect collection of dividends,
interest and other income, and to notify the Trust of any call for
redemption, offer of exchange, right of subscription, reorganization,
or other proceedings affecting such Securities, or any default in
payments due thereon. It is understood, however, that the Custodian
shall be under no responsibility for any failure or delay in effecting
such collections or giving such notice with respect to Securities of
foreign issuers, regardless of whether or not the relevant information
is published in any financial service available to it unless (a) such
failure or delay is due to the Custodian's or any sub-custodians'
negligence or (b) any relevant sub-custodian has acted in accordance
with established industry practices. Collections of income in foreign
currency are, to the extent possible, to be converted into United
States dollars unless otherwise instructed in writing, and in effecting
such conversion the Custodian may use such methods or agencies as it
may see fit, including the facilities of its own foreign division at
customary rates. All risk and expenses incident to such collection and
conversion is for the accounts of the Trust and the Custodian shall
have no responsibility for fluctuations in exchange rates affecting any
such conversion.
9. REGISTRATION OF SECURITIES.
--------------------------
Except as otherwise directed by instructions, the Custodian shall
register all Securities, except such as are in bearer form, in the name
of a registered nominee of the Custodian, as defined in the Internal
Revenue Code and any Regulation of the Treasury Department issued
thereunder or in any provision of any subsequent Federal tax law
exempting such transaction from liability for stock transfer taxes, and
shall execute and deliver all such certificates in connection therewith
as may be required by such laws or Regulations or under the laws of any
State. The Custodian shall use its best efforts to the end that the
specific securities held by it hereunder shall be at all times
identifiable in its records.
The Trust, Nottingham, or NCSS shall from time to time furnish to the
Custodian appropriate instruments to enable the Custodian to hold or
deliver in proper form for transfer, or to register in the name of its
registered nominee, any securities which it may hold for the accounts
of the Trust and which may from time to time be registered in the name
of the Trust.
10. SEGREGATED ACCOUNT.
------------------
The Custodian shall upon receipt of written instructions from the
Trust, Nottingham, or NCSS establish and maintain a segregated account
or accounts for and on behalf of the Trust, into which account or
accounts may be transferred cash and/or Securities, including
Securities maintained in an account by the Custodian pursuant to
Section 4 hereof,
(i) in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer
registered under the Securities and Exchange Act of
1934 and a member of the NASD (or any futures
commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules
of The Options Clearing Corporation and of any
registered national securities exchange (or the
commodity Futures Trading Commission or any
registered contract market), or of any similar
organization or organizations, regarding escrow or
other arrangements in connection with transactions by
the Trust;
<PAGE>
(ii) for purposes of segregating cash or government
securities in connection with options purchased, sold
or written by the Trust or commodity futures
contracts or options thereon purchased or sold by the
Trust;
(iii) for the purposes of compliance by the Trust with the
procedures required by the Investment Company Act
Release No. 10666, or any subsequent release or
releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by
registered investment companies; and
(iv) for other proper corporate purposes, but only, in the
case of clause (iv), upon receipt of, in addition to
an Officer's Certificate, a certified copy of a
resolution of the Board of Trustees signed by an
officer of the Trust and certified by the Secretary
or an Assistant Secretary, setting forth the purpose
or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
11. VOTING AND OTHER ACTIONS.
------------------------
Neither the Custodian nor any nominee of the Custodian shall vote any
of the Securities held hereunder by or for the accounts of the Trust,
except in accordance with instructions. The Custodian shall execute and
deliver, or cause to be executed and delivered, to the appropriate
investment advisor of each series of the Trust, all notices, proxies
and proxy soliciting materials with relation to such Securities
(excluding any Securities loaned and delivered by the Custodian
pursuant to item (h) of Section 5 hereof), such proxies to be executed
by the registered holder of such Securities (if registered otherwise
than in the name of the Trust), but without indicating the manner in
which such proxies are to be voted. Such proxies shall be delivered by
regular mail to the appropriate investment advisor of each series of
the Trust.
12. TRANSFER TAX AND OTHER DISBURSEMENTS.
------------------------------------
The Trust shall pay or reimburse the Custodian from time to time for
any transfer taxes payable upon transfers of securities made hereunder
and for all other necessary and proper disbursements and expenses made
or incurred by the Custodian in the performance of this Agreement. The
Custodian shall execute and deliver such certificates in connection
with Securities delivered to it or by it under this Agreement as may be
required under the provisions of the Internal Revenue Code and any
Regulations of the Treasury Department issued thereunder, or under the
laws of any State, to exempt from taxation any exemptible transfers
and/or deliveries of any such securities.
13. CONCERNING THE CUSTODIAN.
(a) The Custodian's compensation shall be paid by the Trust. The
Custodian shall not be liable for any action taken in good
faith upon receipt of instructions as herein defined or a
certified copy of any resolution of the Board of Trustees, and
may rely on the genuineness of any such document which it may
in good faith believe to have been validly executed.
(b) The Custodian shall not be liable for any loss or damage,
resulting from its action or omission to act or otherwise,
except for any such loss or damage arising out of its own
negligence or willful misconduct and except that the Custodian
shall be responsible for the acts of any sub-custodian, or
agent appointed hereunder and approved by the Board of
Trustees of the Trust. At any time, the Custodian may seek
advice from legal counsel for the Trust whose legal fees shall
be paid at the sole expense of the Trust, with respect to any
matter arising in connection with this Agreement, and it shall
not be liable for any action taken or not taken or suffered by
it in good faith in accordance with the opinion of counsel for
the Trust. The Trust and not the Custodian shall be
responsible for any fee or charges by counsel for the Trust in
connection with any such opinion rendered to the Custodian.
<PAGE>
(c) Without limiting the generality of the foregoing, the
Custodian shall be under no duty or obligation to inquire
into, and shall not be liable for:
(i) The validity of the issue of any Securities purchased
by or for the Trust, the legality of the purchase
thereof, or the propriety of the amount paid
therefor;
(ii) The legality of the issue or sale of any Securities
by or for the Trust, or the propriety of the amount
for which the same are sold;
(iii) The legality of the issue or sale of any shares of
the Trust, or the sufficiency of the amount to be
received therefor;
(iv) The legality of the redemption of any shares of the
Trust, or the propriety of the amount to be paid
therefor;
(v) The legality of the declaration of any dividend or
distribution by the Trust, or the legality of the
issue of any Securities of the Trust in payment of
any dividend or distribution in shares;
(vi) The legality of the delivery of any Securities held
for the Trust for the purpose of collateralizing the
obligation of the Trust to repay any moneys borrowed
by the Trust; or
(vii) The legality of the delivery of any Securities held
for the Trust for the purpose of lending said
securities to any person, firm or corporation.
(d) The Custodian shall not be under any duty or obligation to
take action to effect collection of any amount, if the
Securities upon which such amount is payable are in default,
or if payment is refused after due demand or presentation by
the Custodian on behalf of the Trust, unless and until
(i) the Custodian shall be directed to take such action
by written instructions signed in the name of the
Trust on behalf of the Trust by one of its executive
officers; and
(ii) the Custodian shall be assured to its satisfaction of
reimbursement of its costs and expenses in connection
with any such action.
(e) The Custodian shall not be under any duty or obligation to
ascertain whether any securities at any time delivered to or
held by it for the account of the Trust, are such as may
properly be held by the Trust under the provisions of the
Trust's Declaration of Trust or By-Laws as amended from time
to time.
<PAGE>
(f) The Trust agrees to indemnify and hold harmless the Custodian
and its nominees, sub-custodians, depositories and agent from
all taxes, charges, expenses, assessments, liabilities, and
losses (including counsel fees) incurred or assessed against
it or its nominees, sub-custodians, depositories and agents in
connection with the performance of this Agreement, except such
as may arise from its or its nominee's, sub-custodian's,
depositories' and agent's own negligent action, negligent
failure to act, breach of this agreement or willful
misconduct. The Custodian is authorized to charge any account
of the Trust for such items; provided, however, that, except
for overdrafts as to which the Custodian shall have the
immediate right of offset, prior to charging any such account
for such items, the Custodian shall first have forwarded an
invoice for such item to the Trust and 30 days shall have
elapsed from the date of such invoice to the Trust without
payment of the same having been received by the Custodian. In
the event of any advance of funds for any purpose made by the
Custodian resulting from orders or instructions of the Trust,
or in the event that the Custodian or its nominees,
sub-custodians, depositories and agents shall incur or be
assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this
Agreement, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful
misconduct any property at any time held for the accounts of
the Trust shall be security therefor. Nothing in this
paragraph, however, shall be deemed to apply to transaction
and asset holding fees or out of pocket expenses of the
Custodian which are payable by Nottingham and/or NCSS, and as
to such fees and expenses the Custodian shall have no right of
offset or security under this paragraph.
(g) The Custodian agrees to indemnify and hold harmless the Trust
and Trust's Trustees and officers from all taxes, charges,
expenses, assessments, claims liabilities, and losses
(including counsel fees) incurred or assumed against any of
them as a result of any breach or violation of this Agreement
by the Custodian or any act or omission by the Custodian or
its Trustees, officers, employees and agents and resulting
from their negligence or willful misconduct.
(h) In the event that, pursuant to this Agreement, instructions
direct the Custodian to pay for securities on behalf of the
Trust, the Trust hereby grants to the Custodian a security
interest in such Securities, until the Custodian has been
reimbursed by the Trust in immediately available funds. The
instructions designating the Securities to be paid for shall
be considered the requisite description and designation of the
Securities pledged to the Custodian for purposes of the
requirements of the Uniform Commercial Code.
(i) The Custodian represents that it is qualified to act as such
under section 26(a) of the Investment Company Act of 1940.
14. REPORTS BY THE CUSTODIAN.
------------------------
(a) The Custodian shall furnish the Trust and the appropriate
investment advisor of each series of the Trust, daily with a
statement summarizing all transactions and entries for the
accounts of the Trust. The Custodian shall furnish the Trust
at the end of every month with a list of the portfolio
Securities held by it as Custodian for the Trust, adjusted for
all commitments confirmed by instructions as of such time. The
books and records of the Custodian pertaining to its actions
under this Agreement shall be open to inspection and audit at
reasonable times by officers of the Trust, its independent
public accountants and officers of its investment advisers.
(b) The Custodian will maintain such books and records relating to
transactions effected by it as are required by the Investment
Company Act of 1940, as amended, and any rule or regulation
thereunder; or by any other applicable provision of the law to
be maintained by the Trust or its Custodian, with respect to
such transactions, and preserving or causing to be preserved,
any such books and records for such periods as may be required
by any such rule or regulation.
<PAGE>
15. TERMINATION OR ASSIGNMENT.
-------------------------
This agreement may be terminated by the Trust, or by the Custodian, on
sixty (60) days' notice, given in writing and sent by registered mail
to the Custodian, or to the Trust, as the case may be, at the address
hereinafter set forth. Upon any termination of this Agreement, pending
appointment by the Trust of a successor to the Custodian or a vote of
the shareholders of the Trust to dissolve or to function without a
Custodian of its funds, the Custodian shall not deliver funds,
Securities or other property of the Trust to the Trust, but may deliver
them to a bank or trust company of its own selection having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report of not less than ten million dollars ($10,000,000) and
otherwise qualified to act as a custodian to a registered investment
company as a Custodian for the Trust to be held under terms similar to
those of this Agreement; provided, however, that the Custodian shall
not be required to make any such delivery or payment until full payment
shall have been made to the Custodian of all its contractual fees,
compensations, costs and expenses, except for fees and expenses all as
set forth in Section 13 of this Agreement.
16. MISCELLANEOUS.
-------------
(a) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Custodian, shall
be sufficiently given if addressed to the Custodian and mailed
or delivered to it at its office at First Union National Bank
of North Carolina, 401 South Tryon Street, Charlotte, North
Carolina 28288, or at such other place as the Custodian may
from time to time designate in writing.
(b) Any notice or other instrument in writing, authorized or
required by this Agreement to be given to the Trust, shall be
sufficiently given if addressed to the Trust and mailed or
delivered to it at 105 N. Washington Street, Rocky Mount,
North Carolina 27802, or at-such other place as the Trust may
from time to time designate in writing.
(c) This Agreement may not be amended or modified in any manner
except by a written agreement executed by both parties with
the same formality as this Agreement, and authorized or
approved by a resolution of the Board of Trustees of the
Trust.
(d) This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns,
provided, however, that this Agreement shall not be assignable
by the Trust without the written consent of the Custodian or
by the Custodian without the written consent of the Trust,
authorized or approved by a resolution of its Board of
Trustees.
(e) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original, but such
counterparts shall, together, constitute but one instrument.
(f) This Agreement and the rights and obligations of the Trust and
the Custodian hereunder shall be construed and interpreted in
accordance with the laws of the State of North Carolina.
(g) The Declaration of Trust of the Trust has been filed with the
Secretary of State of the State of Delaware. The obligations
of the Trust on behalf of the Funds are not personally binding
upon, nor shall resort be had to the private property of any
of the Trustees, shareholders, officers, employees or agents
of the Trust, but only the Trust's property shall be bound.
<PAGE>
IN WITNESS WHEREOF, the Trust and the Custodian have caused this Agreement to be
signed and witnessed by duly authorized persons as of the date first written
above. Executed in several counterparts, each of which is an original.
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
Attest: /s/ C. Frank Watson, III By: /s/ Jay Bunnell
___________________________ ______________________________
Title: Vice President
__________________________
WOODLAWN FUNDS TRUST
Attest: /s/ C. Frank Watson, III By: Theo H. Pitt, Jr.
___________________________ ______________________________
Title: Trustee
__________________________
Exhibit (h)(1): Fund Accounting and Compliance Administration Agreement between
-------------- Woodlawn Funds Trust and The Nottingham Company, Inc.
FUND ACCOUNTING
AND COMPLIANCE ADMINISTRATION
AGREEMENT
THIS AGREEMENT, made and entered into as of the date that the Registration
Statement becomes effective with the Securities and Exchange Commission, by and
between WOODLAWN FUNDS TRUST, a Massachusetts business trust (the "Trust"), and
THE NOTTINGHAM COMPANY, INC., a North Carolina corporation (the
"Administrator").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Administrator is in the business of providing administrative
services to investment companies.
NOW THEREFORE, the Trust and the Administrator do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Administrator and its subsidiary
The Nottingham Company ("TNC") to act as fund accountant and fund
administrator for each Fund of the Trust. Administrator, at its own
expense, shall render the services and assume the obligations herein
set forth subject to being compensated therefore as herein provided.
2. Delivery of Documents. The Trust has furnished the Administrator with
copies properly certified or authenticated of each of the following:
a) The Trust's Declaration of Trust, as filed with the State of
Massachusetts (such Declaration, as presently in effect and as
it shall from time to time be amended, is herein called the
"Declaration");
b) The Trust's By-Laws (such By-Laws, as presently in effect and
as they shall from time to time be amended, are herein called
the "By-Laws");
c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Administrator and approving this Agreement;
and
d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the
"1933 Act"), including all exhibits, relating to shares of
beneficial interest of, and containing the Prospectus of, each
Fund of the Trust (herein called the "Shares") as filed with
the Securities and Exchange Commission and all amendments
thereto.
The Trust will furnish the Administrator with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Administrator. Subject to the policies and direction of
the Trust's Board of Trustees, the Administrator will provide a
continuous executive management program and day-to-day supervision for
each of the Trust's Funds. Services to be provided shall be in
accordance with the Trust's organizational and registration documents
as listed in paragraph 2 hereof and with the Prospectus of each Fund of
the Trust. The Administrator further agrees that it:
a) Will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will, in addition,
conduct its activities under this Agreement in accordance with
regulations of any other Federal and State agencies which may
now or in the future have jurisdiction over its activities;
b) Will maintain, except as may be required to be maintained by
third parties hired by the Trust under Rule 31a-3 of the 1940
Act, the account books and records of the Trust and each Fund
of the Trust as required by Rule 31a-1 of the 1940 Act and
will preserve such records in accordance with Rule 31a-2 of
the 1940 Act;
<PAGE>
c) Will provide, at its expense the necessary non-executive
personnel and data processing equipment and software to
perform the Portfolio Accounting Services, Expense Accrual and
Payment Services, Fund Valuation and Financial Reporting
Services, Tax Accounting Services, Compliance Control
Services, Registration Services, SEC Filing Services, and
Minutes, Proxy Material Services shown on Exhibit A hereof;
d) Will provide, at its expense, certain executive personnel for
the Trust as may be agreed upon from time to time with the
Board of Trustees; and
e) Will provide all office space and general office equipment
necessary for the activities of the Trust except as may be
provided by third parties pursuant to separate agreements with
the Trust.
Notwithstanding anything contained in this Agreement to the contrary, the
Administrator (including its directors, officers, employees and agents) shall
not be required to perform any of the duties of, assume any of the obligations
or expenses of, or be liable for any of the acts or omissions of, any investment
advisor of a Fund of the Trust or other third party subject to separate
agreements with the Trust. The Administrator shall not be responsible hereunder
for the administration of the Code of Ethics of the Trust which shall be under
the responsibility of the investment advisors, except insofar as the Code of
Ethics applies to the personnel of the Administrator. It is the express intent
of the parties hereto that the Administrator shall not have control over or be
responsible for the placement, investment or reinvestment of the assets of any
Fund of the Trust. The Administrator may from time to time, subject to the
approval of the Trustees (other than with respect to TNC), obtain at its own
expense the services of consultants or other third parties to perform part or
all of its duties hereunder, and such parties may be affiliates of the
Administrator.
4. Services Not Exclusive. The management and administrative services
furnished by the Administrator hereunder are not to be deemed
exclusive, and the Administrator shall be free to furnish similar
services to others so long as its services under this Agreement are not
impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Administrator hereby agrees that all records
which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records
upon the Trust's request.
6. Expenses. During the term of this Agreement, the Administrator will pay
all expenses incurred by it in connection with the performance of its
obligations under this Agreement.
Notwithstanding the foregoing, the Trust shall pay the expenses and
costs of the following:
a) Taxes;
b) Brokerage fees and commissions with regard to portfolio
transaction of the Funds;
c) Interest charges, fees and expenses of the custodian of the
Funds' portfolio securities;
d) Fees and expenses of the Trust's dividend disbursing and
transfer agent;
e) Fees and expenses of the Trust's fund accounting agent and
administrator, in accordance with paragraph 7 herein;
f) Costs, as may be allocable to and agreed upon in advance by
the Trustees and the Administrator, of all non-executive and
clerical personnel and all data processing equipment and
software in connection with the provision of fund accounting
and recordkeeping services functions as contemplated herein;
g) Auditing and legal expenses of the Trust;
h) Cost of maintenance of the Trust's existence as a legal
entity;
i) Cost of special forms, stationery and telephone services (but
not telephone equipment) for the Trust;
j) Compensation of Independent Trustees who are not interested
persons of the Trust as that term is defined by law;
k) Costs of Trust meetings;
l) Federal and State registration fees and expenses;
m) Costs of setting in type, printing and mailing Prospectuses,
reports and notices to existing shareholders;
<PAGE>
n) The Advisory fees payable to each Funds' Investment Advisor;
o) Direct out-of-pocket costs in connection with Trust
activities, such as the costs of long distance telephone and
wire charges, postage and the printing of special forms and
stationery, copying charges, financial publications used in
connection with Trust activities, etc., and
p) Other actual out-of-pocket expenses of the Administrator as
may be agreed upon in writing from time to time by the
Administrator and the Trustees.
q) Distribution expenses, but only in accordance with the Plan of
Distribution adopted in accordance with Rule 12b-1 under the
1940 Act.
7. Compensation. For the services provided and the expenses assumed by the
Administrator pursuant to this Agreement, the Trust will pay the
Administrator and the Administrator will accept as full compensation
the administrative fees and expenses as set forth on Exhibit B attached
hereto. Special projects, not included herein and requested in writing
by the Trustees, shall be completed by the Administrator and invoiced
to the Trust as mutually agreed upon.
8.(a) Limitation of Liability. The Administrator shall not be liable for any
loss, damage or liability related to or resulting from the placement,
investment or reinvestment of assets in any Fund of the Trust or the
acts or omissions of any Fund's investment advisor or any other third
party subject to separate agreements with the Trust. Further, the
Administrator shall not be liable for any error of judgment or mistake
of law or for any loss or damage suffered by the Trust in connection
with the performance of this Agreement or any agreement with a third
party, except a loss resulting directly from (i) a breach of fiduciary
duty on the part of the Administrator with respect to the receipt of
compensation for services; or (ii) willful misfeasance, bad faith or
gross negligence on the part of the Administrator in the performance of
its duties or from reckless disregard by it of its duties under this
Agreement.
(b) Indemnification of Administrator. Subject to the limitations set forth
in this Subsection 8(b), the Trust shall indemnify, defend and hold
harmless (from the assets of the Fund or Funds to which the conduct in
question relates) the Administrator against all loss, damage and
liability, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Administrator in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, related to or resulting
from this Agreement or the performance of services hereunder, except
with respect to any matter as to which it has been determined that the
loss, damage or liability is a direct result of (i) a breach of
fiduciary duty on the part of the Administrator with respect to the
receipt of compensation for services; or (ii) willful misfeasance, bad
faith or gross negligence on the part of the Administrator in the
performance of its duties or from reckless disregard by it of its
duties under this Agreement (either and both of the conduct described
in clauses (i) and (ii) above being referred to hereinafter as
"Disabling Conduct"). A determination that the Administrator is
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought
that the Administrator was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding
against the Administrator for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of
the facts, that the Administrator was not liable by reason of Disabling
Conduct by, (a) vote of a majority of a quorum of Trustees who are
neither "interested persons" of the Trust as the quoted phrase is
defined in Section 2(a)(19) of the 1940 Act nor parties to the action,
suit or other proceeding on the same or similar grounds that is then or
has been pending or threatened (such quorum of such Trustees being
referred to hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Administrator (but
excluding amounts paid in satisfaction of judgments, in compromise or
as fines or penalties), shall be paid from time to time by the Fund or
Funds to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Administrator shall have undertaken to repay the amounts so paid unless
it is ultimately determined that it is entitled to indemnification of
such expenses under this Subsection 8(b) and if (i) the Administrator
shall have provided security for such undertaking, (ii) the Trust shall
be insured against losses arising by reason of any lawful advances, or
(iii) a majority of the Independent Trustees, or an independent legal
counsel in a written opinion, shall have determined, based on a review
of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the Administrator ultimately will
be entitled to indemnification hereunder.
<PAGE>
As to any matter disposed of by a compromise payment by the
Administrator referred to in this Subsection 8(b), pursuant to a
consent decree or otherwise, no such indemnification either for said
payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of the Independent
Trustees or (ii) by an independent legal counsel in a written opinion.
Approval by the Independent Trustees pursuant to clause (i) shall not
prevent the recovery from the Administrator of any amount paid to the
Administrator in accordance with either of such clauses as
indemnification of the Administrator is subsequently adjudicated by a
court of competent jurisdiction not to have acted in good faith in the
reasonable belief that the Administrator's action was in or not opposed
to the best interests of the Trust or to have been liable to the Trust
or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in its conduct
under the Agreement.
The right of indemnification provided by this Subsection 8(b) shall not
be exclusive of or affect any of the rights to which the Administrator
may be entitled. Nothing contained in this Subsection 8(b) shall affect
any rights to indemnification to which Trustees, officers or other
personnel of the Trust, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the
Administrator is entitled to indemnification hereunder and the
reasonable amount of any indemnity due it hereunder, or employ
independent legal counsel for that purpose.
(c) Indemnification of Fund. The Administrator agrees to indemnify and hold
harmless the Trust and Trust's Trustees and officers from all loss,
damage and liability, including but not limited to amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
expenses, including reasonable accountants' and counsel fees, incurred
by the Trust in connection with the defense or disposition of any body,
related to or resulting from (i) any breach or violation of this
Agreement by the Administrator; (ii) any breach of fiduciary duty with
respect to the receipt of compensation for services; and (iii) any
willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless
disregard by it of its duties under this Agreement.
(d) Failure to Perform; Force Majeure. No failure or omission by either
party hereto in the performance of any obligation of this Agreement
(other than payment obligations) shall be deemed a breach of this
Agreement or create any liability if the same shall arise from any
cause or causes beyond the control of the party, including but not
limited to, the following: acts of God, acts or omissions of any
governmental agency; any rules, regulations, or orders issued by any
governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake, war;
rebellion; insurrection; riot; and invasion and provided that such
failure or omission resulting from one of the above causes is cured as
soon as is practicable after the occurrence of one or more of the
above-mentioned causes.
(e) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and
protect the Administrator and its directors, officers, employees and
agents and shall inure to the benefit of its/their respective
successors, assigns and personal representatives.
9. Duration and Termination. This Agreement shall be continued, effective
as of the date first above written, and shall continue in force and
effect for a period of one year thereafter and shall be continued on
its terms from year to year thereafter unless sooner terminated as
permitted herein. This Agreement may be terminated at any time, without
payment of any penalty, by the Trust or the Administrator upon ninety
days' written notice to the other party.
<PAGE>
10. Amendment. This Agreement may be amended by mutual written consent of
the parties. If, at any time during the existence of this Agreement,
the Trust deems it necessary or advisable in the best interests of the
Trust that any amendment of this Agreement be made in order to comply
with the recommendations or requirements of the Securities and Exchange
Commission or state regulatory agencies or other governmental
authority, or to obtain any advantage under state or federal laws, and
shall notify the Administrator of the form of Amendment which it deems
necessary or advisable and the reasons therefor, and if the
Administrator declines to assent to such amendment, the Trust may
terminate this Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed
or delivered, or mailed postpaid to the other party at the principal
place of business of such party.
12. Construction. This Agreement shall be governed and enforced in
accordance with the laws of the State of North Carolina. If any
provision of this Agreement, or portion thereof, shall be determined to
be void or unenforceable by any court of competent jurisdiction, then
such determination shall not affect any other provision of this
Agreement, or portion thereof, all of which other provisions and
portions thereof shall remain in full force and effect. If any
provision of this Agreement, or portion thereof, is capable of two
interpretations, one of which would render the provision, or portion
thereof, void and the other of which would render the provision, or
portion thereof, valid, then the provision, or portion thereof, shall
have the meaning which renders it valid.
13. Year 2000 Preparedness. The Administrator warrants and represents that
the Administrator has adopted a written plan for Year 2000 compliance
for the correct operation of the Administrator's computer systems
because of the approaching millennium (the "Plan"), that the Plan
provides for the identification, testing and, where appropriate,
upgrading of the Administrator's computer systems, in accordance with
reasonable industry standards, so that both the Administrator's
computer systems and their interfaces with third party computer systems
will function accurately and without interruption before, during and
after December 31, 1999 and that the Administrator is actively in the
process of implementing the Plan and presently has no reason to believe
that the Administrator's computer systems and their interfaces with
third party computer systems will not be able to function accurately
and without interruption before, during and after such date. The
Administrator will continue to implement the Plan and take such other
steps as may be necessary and appropriate to be Year 2000 compliant in
a timely and efficient manner and will notify the Trust of any Year
2000 compliance problems and the nature thereof on or before September
1, 1999 if the Administrator determines that it is not or is not likely
to be Year 2000 compliant in a timely and efficient manner. The failure
of the Administrator to be Year 2000 compliant shall not be deemed to
be a force majeure event or provide a defense to performance hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
WOODLAWN FUNDS TRUST
By: /s/ Theo H. Pitt, Jr.
____________________________ (SEAL)
THE NOTTINGHAM COMPANY, INC.
By: /s/ Frank P. Meadows, III
____________________________ (SEAL)
<PAGE>
Exhibit A
---------
FUND ACCOUNTING AND RECORDKEEPING SERVICES
Portfolio Accounting Services:
- ------------------------------
(1) Maintain portfolio records on a trade date basis using security trade
information communicated from the investment manager on a timely basis.
(2) For each valuation date, obtain prices from a pricing source approved
by the Board of Trustees and apply those prices to the portfolio
positions. For those securities where market quotations are not readily
available, the Board of Trustees shall approve, in good faith, the
method for determining the fair market value for such securities.
(3) Identify interest and dividend accrual balances as of each valuation
date and calculate gross earnings on investments for the accounting
period.
(4) Determine gain/loss on security sales and identify them as to short or
long term status. Account for periodic distributions of gain to
shareholders and maintain undistributed gain or loss balances as of
each valuation date.
Expense Accrual and Payment Services:
- -------------------------------------
(5) For each valuation date, calculate the expense accrual amounts as
directed by the Trust as to methodology, rate, or dollar amount.
(6) Issue payments for Fund expenses upon receipt of funds from the Trust's
Custodian.
(7) Account for Fund expenditures and maintain expense accrual balances at
the level of accounting detail specified by the Fund.
(8) Support periodic expense accrual review, i.e., comparison of actual
expense activity versus accrual amounts.
(9) Provide expense accrual and payment reporting.
Fund Valuation and Financial Reporting Services:
- ------------------------------------------------
(10) Account for Fund share purchases, sales, exchanges, transfers, dividend
reinvestments, and other Fund share activity, for each of the Funds, as
reported by the Trust on a timely basis.
(11) Determine net investment income (earnings) for each of the Funds as of
each valuation date. Account for periodic distributions of earnings to
shareholders and maintain undistributed net investment income balances
as of each valuation date.
(12) Maintain a general ledger for each of the Funds in the form defined by
the Trust and produce a set of financial statements as may be agreed
upon from time to time as of each valuation date.
(13) For each day the Funds are opened as defined in the prospectuses,
determine the net asset value of each of the Funds according to the
accounting policies and procedures set forth in the prospectuses.
(14) Calculate per share net asset value, per share net earnings, and other
per share amounts reflective of fund operation at such time as required
by the nature and characteristics of the Funds. Perform the
calculations using the number of shares outstanding reported by the
Trust to be applicable at the time of calculation.
(15) Communicate, at an agreed upon time, the per share price for each
valuation date to parties as agreed upon from time to time.
(16) Prepare monthly reports which document the adequacy of accounting
detail to support month-end ledger balances.
Tax Accounting Services:
- ------------------------
(17) Maintain tax accounting records for each of the Funds' investment
portfolios so as to support tax reporting required for IRS defined
regulated investment companies.
(18) Maintain tax lot detail for the investment portfolio.
(19) Calculate taxable gain/loss on security sales using the tax cost basis
defined for each Fund.
(20) Report the taxable components of income and capital gains distributions
to the Trust to support tax reporting to the shareholders.
<PAGE>
Compliance Control Services:
- ----------------------------
(21) Maintain accounting records to support compliance monitoring by the
Trust.
(22) Support reporting to regulatory bodies and support financial statement
preparation by making the Fund accounting records available to the
Trust, the Securities and Exchange Commission, and the outside
auditors.
(23) Maintain accounting records according to the Investment Company Act of
1940 and regulations provided thereunder.
Registration Services
- ---------------------
(24) Prepare all reports and filings required to maintain the registration
and qualification of the Fund and its shares under federal and state
securities laws, including the annual amendment to its Registration
Statement on From N-1A containing an updated Prospectus and Statement
of Additional Information.
SEC Filing Services
- -------------------
(25) Prepare and make periodic SEC filings, including From N-SAR, annual and
semi-annual shareholder reports, other shareholder reports, and
fidelity bond amendments but not including preparation and filing of
any sales literature and preparation of President's letter contained in
shareholder reports.
Minutes, Proxy Material Services
- --------------------------------
(26) Maintenance of minutes and other records of meetings of the Board of
Trustees.
(27) Preparation of any proxy material and related shareholder meetings and
records.
<PAGE>
Exhibit B
---------
ADMINISTRATOR'S COMPENSATION SCHEDULE
For the services delineated in the FUND ACCOUNTING AND COMPLIANCE ADMINISTRATION
AGREEMENT, the Administrator shall be compensated monthly, as of the last day of
each month, within five business days of the month end, a base fee plus a fee
based upon net assets according to the following schedule. The fee is calculated
based upon the average daily net assets of each Fund:
Base fee: $2,250 per month
--------
Class Fee: $ 750 per month for each additional Class
---------
Asset based fee:
----------------
Annual
Net Assets Fee
---------- ---
On the first $125 million 0.175%
On the next $125 million 0.150%
On all assets over $250 million 0.125%
Securities pricing:
-------------------
$0.20 per equity per pricing day priced
$0.70 per foreign security pricing day
$0.20 per U.S. Treasury
$1.00 per asset backed security per pricing day
$0.40 per corporate bond per pricing day
$2.00 per equity per month for corporate action
Blue Sky administration:
-----------------------
$150 per registration per state per year
Minimum Aggregate Fee:
---------------------
Minimum aggregate fee of $3,000 per fund of the trust per month for all fees
paid to the Administrator (excluding securities pricing and blue sky
administration), analyzed monthly.
Exhibit (h)(2): Dividend Disbursing and Transfer Agent Agreement between
-------------- Woodlawn Funds Trust and NC Shareholder Services, LLC
DIVIDEND DISBURSING
AND TRANSFER AGENT
AGREEMENT
THIS AGREEMENT, made and entered into as of the date that the Registration
Statement becomes effective with the Securities and Exchange Commission, by and
between WOODLAWN FUNDS TRUST, a Delaware business trust (the "Trust"), and NC
SHAREHOLDER SERVICES, LLC, a North Carolina limited liability company (the
"Transfer Agent").
WHEREAS, the Trust is an open-end management investment company of the series
type which is registered under the Investment Company Act of 1940 (the "1940
Act"); and
WHEREAS, the Transfer Agent is in the business of providing dividend disbursing,
transfer agent, and shareholder services to investment companies.
NOW THEREFORE, the Trust and the Transfer Agent do mutually promise and agree as
follows:
1. Employment. The Trust hereby employs Transfer Agent to act as dividend
disbursing and transfer agent for each series of the Trust (each a
"Fund"). Transfer Agent, at its own expense, shall render the services
and assume the obligations herein set forth subject to being
compensated therefore as herein provided.
2. Delivery of Documents. The Trust has furnished the Transfer Agent with
copies properly certified or authenticated of each of the following:
a) The Trust's Declaration of Trust, as filed with the State of
Delaware (such Declaration, as presently in effect and as it
shall from time to time be amended, is herein called the
"Declaration");
b) The Trust's By-Laws (such By-Laws, as presently in effect and
as they shall from time to time be amended, are herein called
the "By-Laws");
c) Resolutions of the Trust's Board of Trustees authorizing the
appointment of the Transfer Agent and approving this
Agreement; and
d) The Trust's Registration Statement on Form N-1A under the 1940
Act and under the Securities Act of 1933 as amended, (the
"1933 Act"), including all exhibits, relating to shares of
beneficial interest of, and containing the Prospectus of each
Fund of the Trust (herein called the "Shares") as filed with
the Securities and Exchange Commission and all amendments
thereto.
The Trust will furnish the Transfer Agent with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing.
3. Duties of the Transfer Agent. Subject to the policies and direction of
the Trust's Board of Trustees, the Transfer Agent will provide
day-to-day supervision for the dividend disbursing, transfer agent, and
shareholder servicing operations of each of the Trust's Funds. Services
to be provided shall be in accordance with the Trust's organizational
and registration documents as listed in paragraph 2 hereof and with the
Prospectus of each Fund of the Trust. The Transfer Agent further agrees
that it:
a) Will conform with all applicable rules and regulations of the
Securities and Exchange Commission and will, in addition,
conduct its activities under this Agreement in accordance with
regulations of any other federal and state agency which may
now or in the future have jurisdiction over its activities.
b) Will provide, at its expense the non-executive personnel and
data processing equipment and software necessary to perform
the Shareholder Servicing functions shown on Exhibit A hereof;
and
c) Will provide all office space and general office equipment
necessary for the dividend disbursing, transfer agent, and
shareholder servicing activities of the Trust except as may be
provided by third parties pursuant to separate agreements with
the Trust.
<PAGE>
Notwithstanding anything contained in this Agreement to the contrary,
the Transfer Agent (including its directors, officers, employees and
agents) shall not be required to perform any of the duties of, assume
any of the obligations or expenses of, or be liable for any of the acts
or omissions of, any investment advisor of a Fund of the Trust or other
third party subject to separate agreements with the Trust. The Transfer
Agent shall not be responsible hereunder for the administration of the
Code of Ethics of the Trust which shall be under the responsibility of
the investment advisors, except insofar as the Code of Ethics applies
to the personnel of the Transfer Agent. It is the express intent of the
parties hereto that the Transfer Agent shall not have control over or
be responsible for the placement (except as specifically directed by a
Shareholder of the Trust), investment or reinvestment of the assets of
any Fund of the Trust. The Transfer Agent may from time to time,
subject to the approval of the Trustees, obtain at its own expense the
services of consultants or other third parties to perform part or all
of its duties hereunder, and such parties may be affiliates of the
Transfer Agent.
4. Services Not Exclusive. The services furnished by the Transfer Agent
hereunder are not to be deemed exclusive, and the Transfer Agent shall
be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Transfer Agent hereby agrees that all records
which it maintains for the Trust are the property of the Trust and
further agrees to surrender promptly to the Trust any of such records
upon the Trust's request.
6. Expenses. During the term of this Agreement, the Transfer Agent will
pay all expenses incurred by it in connection with the performance of
its obligations under this Agreement.
7. Compensation. For the services provided and the expenses assumed by the
Transfer Agent pursuant to this Agreement, the Trust will pay the
Transfer Agent and the Transfer Agent will accept as full compensation
the fees and expenses as set forth on Exhibit B attached hereto.
Special projects, not included herein and requested in writing by the
Trustees, shall be completed by the Transfer Agent and invoiced to the
Trust as mutually agreed upon.
8.(a) Limitation of Liability. The Transfer Agent shall not be liable for any
loss, damage or liability related to or resulting from the placement
(except as specifically directed by a Shareholder of the Trust),
investment or reinvestment of assets in any Fund of the Trust or the
acts or omissions of any Fund's investment advisor or any other third
party subject to separate agreements with the Trust. Further, the
Transfer Agent shall not be liable for any error of judgment or mistake
of law or for any loss or damage suffered by the Trust in connection
with the performance of this Agreement or any agreement with a third
party, except a loss resulting directly from (i) a breach of fiduciary
duty on the part of the Transfer Agent with respect to the receipt of
compensation for services; or (ii) willful misfeasance, bad faith or
gross negligence on the part of the Transfer Agent in the performance
of its duties or from reckless disregard by it of its duties under this
Agreement.
<PAGE>
8.(b) Indemnification of Transfer Agent. Subject to the limitations set forth
in this Subsection 8(b), the Trust shall indemnify, defend and hold
harmless (from the assets of the Fund or Funds to which the conduct in
question relates) the Transfer Agent against all loss, damage and
liability, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses,
including reasonable accountants' and counsel fees, incurred by the
Transfer Agent in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any
court or administrative or legislative body, related to or resulting
from this Agreement or the performance of services hereunder, except
with respect to any matter as to which it has been determined that the
loss, damage or liability is a direct result of (i) a breach of
fiduciary duty on the part of the Transfer Agent with respect to the
receipt of compensation for services; or (ii) willful misfeasance, bad
faith or gross negligence on the part of the Transfer Agent in the
performance of its duties or from reckless disregard by it of its
duties under this Agreement (either and both of the conduct described
in clauses (i) and (ii) above being referred to hereinafter as
"Disabling Conduct"). A determination that the Transfer Agent is
entitled to indemnification may be made by (i) a final decision on the
merits by a court or other body before whom the proceeding was brought
that the Transfer Agent was not liable by reason of Disabling Conduct,
(ii) dismissal of a court action or an administrative proceeding
against the Transfer Agent for insufficiency of evidence of Disabling
Conduct, or (iii) a reasonable determination, based upon a review of
the facts, that the Transfer Agent was not liable by reason of
Disabling Conduct by, (a) vote of a majority of a quorum of Trustees
who are neither "interested persons" of the Trust as the quoted phrase
is defined in Section 2(a)(19) of the 1940 Act nor parties to the
action, suit or other proceeding on the same or similar grounds that is
then or has been pending or threatened (such quorum of such Trustees
being referred to hereinafter as the "Independent Trustees"), or (b) an
independent legal counsel in a written opinion. Expenses, including
accountants' and counsel fees so incurred by the Transfer Agent (but
excluding amounts paid in satisfaction of judgments, in compromise or
as fines or penalties), shall be paid from time to time by the Fund or
Funds to which the conduct in question related in advance of the final
disposition of any such action, suit or proceeding; provided, that the
Transfer Agent shall have undertaken to repay the amounts so paid
unless it is ultimately determined that it is entitled to
indemnification of such expenses under this Subsection 8(b) and if (i)
the Transfer Agent shall have provided security for such undertaking,
(ii) the Trust shall be insured against losses arising by reason of any
lawful advances, or (iii) a majority of the Independent Trustees, or an
independent legal counsel in a written opinion, shall have determined,
based on a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the Transfer
Agent ultimately will be entitled to indemnification hereunder.
As to any matter disposed of by a compromise payment by the Transfer
Agent referred to in this Subsection 8(b), pursuant to a consent decree
or otherwise, no such indemnification either for said payment or for
any other expenses shall be provided unless such indemnification shall
be approved (i) by a majority of the Independent Trustees or (ii) by an
independent legal counsel in a written opinion. Approval by the
Independent Trustees pursuant to clause (i) shall not prevent the
recovery from the Transfer Agent of any amount paid to the Transfer
Agent in accordance with either of such clauses as indemnification of
the Transfer Agent is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief
that the Transfer Agent's action was in or not opposed to the best
interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in its conduct
under the Agreement.
<PAGE>
The right of indemnification provided by this Subsection 8(b) shall not
be exclusive of or affect any of the rights to which the Transfer Agent
may be entitled. Nothing contained in this Subsection 8(b) shall affect
any rights to indemnification to which Trustees, officers or other
personnel of the Trust, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and
maintain liability insurance on behalf of any such person.
The Board of Trustees of the Trust shall take all such action as may be
necessary and appropriate to authorize the Trust hereunder to pay the
indemnification required by this Subsection 8(b) including, without
limitation, to the extent needed, to determine whether the Transfer
Agent is entitled to indemnification hereunder and the reasonable
amount of any indemnity due it hereunder, or employ independent legal
counsel for that purpose.
8.(c) Indemnification of Fund. The Transfer Agent agrees to indemnify and
hold harmless the Trust and Trust's Trustees and officers from all
loss, damage and liability, including but not limited to amounts paid
in satisfaction of judgments, in compromise or as fines and penalties,
and expenses, including reasonable accountants' and counsel fees,
incurred by the Trust in connection with the defense or disposition of
any body, related to or resulting from (i) any breach or violation of
this Agreement by the Transfer Agent; (ii) any breach of fiduciary duty
with respect to the receipt of compensation for services; and (iii) any
willful misfeasance, bad faith or gross negligence on the part of the
Transfer Agent in the performance of its duties or from reckless
disregard by it of its duties under this Agreement.
8.(d) Failure to Perform; Force Majeure. No failure or omission by either
party hereto in the performance of any obligation of this Agreement
(other than payment obligations) shall be deemed a breach of this
Agreement or create any liability if the same shall arise from any
cause or causes beyond the control of the party, including but not
limited to, the following: acts of God, acts or omissions of any
governmental agency; any rules, regulations, or orders issued by any
governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake, war;
rebellion; insurrection; riot; and invasion and provided that such
failure or omission resulting from one of the above causes is cured as
soon as is practicable after the occurrence of one or more of the
above-mentioned causes.
8.(e) The provisions contained in Section 8 shall survive the expiration or
other termination of this Agreement, shall be deemed to include and
protect the Transfer Agent and its directors, officers, employees and
agents and shall inure to the benefit of its/their respective
successors, assigns and personal representatives.
<PAGE>
9. Duration and Termination. This Agreement shall become effective as of
the date hereof and shall thereafter continue in effect unless
terminated as herein provided. This Agreement may be terminated by
either party hereto (without penalty) at any time by giving not less
than 60-days' prior written notice to the other party hereto. Upon
termination of this Agreement, the Trust shall pay to NCSS such
compensation as may be due as of the date of such termination, and
shall likewise reimburse NCSS for any out-of-pocket expenses and
disbursements reasonably incurred by NCSS to such date.
10. Amendment. This Agreement may be amended by mutual written consent of
the parties. If, at any time during the existence of this Agreement,
the Trust deems it necessary or advisable in the best interests of the
Trust that any amendment of this Agreement be made in order to comply
with the recommendations or requirements of the Securities and Exchange
Commission or state regulatory agencies or other governmental
authority, or to obtain any advantage under state or federal laws, the
appropriate officers shall notify the Transfer Agent of the form of
Amendment which it deems necessary or advisable and the reasons
therefor, and if the Transfer Agent declines to assent to such
amendment, the Trust may terminate this Agreement forthwith.
11. Notice. Any notice that is required to be given by the parties to each
other under the terms of this Agreement shall be in writing, addressed
or delivered, or mailed postpaid to the other party at the principal
place of business of such party.
12. Construction. This Agreement shall be governed and enforced in
accordance with the laws of the State of North Carolina. If any
provision of this Agreement, or portion thereof, shall be determined to
be void or unenforceable by any court of competent jurisdiction, then
such determination shall not affect any other provision of this
Agreement, or portion thereof, all of which other provisions and
portions thereof shall remain in full force and effect. If any
provision of this Agreement, or portion thereof, is capable of two
interpretations, one of which would render the provision, or portion
thereof, void and the other of which would render the provision, or
portion thereof, valid, then the provision, or portion thereof, shall
have the meaning which renders it valid.
13. Year 2000 Preparedness. The Transfer Agent warrants and represents that
the Transfer Agent has adopted a written plan for Year 2000 compliance
for the correct operation of the Transfer Agent's computer systems
because of the approaching millennium (the "Plan"), that the Plan
provides for the identification, testing and, where appropriate,
upgrading of the Transfer Agent's computer systems, in accordance with
reasonable industry standards, so that both the Transfer Agent's
computer systems and their interfaces with third party computer systems
will function accurately and without interruption before, during and
after December 31, 1999 and that the Transfer Agent is actively in the
process of implementing the Plan and presently has no reason to believe
that the Transfer Agent's computer systems and their interfaces with
third party computer systems will not be able to function accurately
and without interruption before, during and after such date. The
Transfer Agent will continue to implement the Plan and take such other
steps as may be necessary and appropriate to be Year 2000 compliant in
a timely and efficient manner and will notify the Trust of any Year
2000 compliance problems and the nature thereof on or before September
1, 1999 if the Transfer Agent determines that it is not or is not
likely to be Year 2000 compliant in a timely and efficient manner. The
failure of the Transfer Agent to be Year 2000 compliant shall not be
deemed to be a force majeure event or provide a defense to performance
hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by their duly authorized officers effective as of the date indicated above.
WOODLAWN FUNDS TRUST
By: /s/ Theo H. Pitt, Jr.
___________________________ (SEAL)
NC SHAREHOLDER SERVICES, LLC
By: /s/ John D. Marriott
___________________________ (SEAL)
<PAGE>
Exhibit A
---------
SHAREHOLDER SERVICING FUNCTIONS
(1) Process new accounts.
(2) Process purchases, both initial and subsequent in accordance with
conditions set forth in each Fund's prospectus.
(3) Transfer shares of capital stock to an existing account or to a new
account upon receipt of required documentation in good order.
(4) Distribute dividends and/or capital gain distributions. This includes
disbursement as cash or reinvestment and to change the disbursement
option at the request of shareholders.
(5) Process exchanges between funds, (process and direct purchase/redemption
and initiate new account or process to existing account).
(6) Make miscellaneous changes to records, including, but not necessarily
limited to, address changes and changes in plans (such as systematic
withdrawal, dividend reinvestment, etc.).
(7) Prepare and mail a year-to-date confirmation and statement as each
transaction is recorded in a shareholder account as follows: original to
shareholder. Duplicate confirmations to be available on request within
current year.
(8) Handle telephone calls and correspondence in reply to shareholder
requests except those items otherwise set forth herein.
(9) Daily control and reconciliation of Fund shares.
(10) Prepare address labels or confirmations for four reports to shareholders
per year.
(11) Mail and tabulate proxies for one Meeting of Shareholders annually,
including preparation of certified shareholder list and daily report to
Fund management, if required.
(12) Prepare and mail annual Form 1099, Form W-2P and 5498 to shareholders to
whom dividends or distributions are paid, with a copy for the IRS.
(13) Provide readily obtainable data which may from time to time be requested
for audit purposes.
(14) Replace lost or destroyed checks.
(15) Continuously maintain all records for active and closed accounts
according to the Investment Company Act of 1940 and regulations provided
thereunder.
(16) Furnish shareholder data information for a current calendar year in
connection with IRA and Keogh Plans in a format suitable for mailing to
shareholders.
<PAGE>
Exhibit B
---------
TRANSFER AGENT'S COMPENSATION SCHEDULE
For the services delineated in the DIVIDEND DISBURSING AND TRANSFER AGENT
AGREEMENT, the Transfer Agent shall be compensated monthly a fee calculated
based upon 1/12 of the annual fee calculated using the then current number of
shareholders:
Shareholder servicing fee:
-------------------------
$15.00 per shareholder per year; minimum fee of $750 per month per fund
Exhibit (h)(3): Expense Limitation Agreement between Woodlawn Funds Trust
-------------- and Internet 100 Advisors, L.L.C.
EXPENSE LIMITATION AGREEMENT
WOODLAWN FUNDS TRUST
EXPENSE LIMITATION AGREEMENT, by and between Internet 100 Advisors,
L.L.C. (the "Advisor") and Woodlawn Funds Trust (the "Trust"), on behalf of each
series of the Trust set forth in Schedule A attached hereto (each a "Fund," and
collectively, the "Funds"), effective as of the date that the Funds are
effective with the Securities and Exchange Commission,
WHEREAS, the Trust is a Delaware business trust organized under the
Agreement and Declaration of Trust ("Declaration of Trust"), and is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management company of the series type, and each Fund is a series of the
Trust; and
WHEREAS, the Trust and the Advisor have entered into an Investment
Advisory Agreement dated the date that the Funds are effective with the
Securities and Exchange Commission ("Advisory Agreement"), pursuant to which the
Advisor provides investment advisory services to each Fund listed in Schedule A,
which may be amended from time to time, for compensation based on the value of
the average daily net assets of each such Fund; and
WHEREAS, the Trust and the Advisor have determined that it is
appropriate and in the best interests of each Fund and its shareholders to
maintain the expenses of each Fund, and, therefore, have entered into this
Expense Limitation Agreement, in order to maintain each Fund's expense ratios at
the levels specified Schedule A attached hereto; and
NOW THEREFORE, the parties hereto agree that the Expense Limitation
Agreement provides as follows:
1. Expense Limitation.
1.1. Applicable Expense Limit. To the extent that the aggregate
expenses of every character incurred by a Fund in any fiscal year, including but
not limited to investment advisory fees of the Advisor (but excluding interest,
taxes, brokerage commissions, other expenditures which are capitalized in
accordance with generally accepted accounting principles, other extraordinary
expenses not incurred in the ordinary course of such Fund's business, and
amounts, if any, payable pursuant to a plan adopted in accordance with Rule
12b-1 under the 1940 Act) ("Fund Operating Expenses"), exceed the Operating
Expense Limit, as defined in Section 1.2 below, such excess amount (the "Excess
Amount") shall be the liability of the Advisor.
1.2. Operating Expense Limit. The maximum Operating Expense Limit in
any year with respect to each Fund shall be the amount specified in Schedule A
based on a percentage of the average daily net assets of each Fund.
1.3. Method of Computation. To determine the Advisor's liability with
respect to the Excess Amount, each month the Fund Operating Expenses for each
Fund shall be annualized as of the last day of the month. If the annualized Fund
Operating Expenses for any month of a Fund exceed the Operating Expense Limit of
such Fund, the Advisor shall first waive or reduce its investment advisory fee
for such month by an amount sufficient to reduce the annualized Fund Operating
Expenses to an amount no higher than the Operating Expense Limit. If the amount
of the waived or reduced investment advisory fee for any such month is
insufficient to pay the Excess Amount, the Advisor may also remit to the
appropriate Fund or Funds an amount that, together with the waived or reduced
investment advisory fee, is sufficient to pay such Excess Amount.
<PAGE>
1.4. Year-End Adjustment. If necessary, on or before the last day of
the first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the investment advisory fees
waived or reduced and other payments remitted by the Advisor to the Fund or
Funds with respect to the previous fiscal year shall equal the Excess Amount.
2. Reimbursement of Fee Waivers and Expense Reimbursements.
2.1. Reimbursement. If in any year during which the total assets of a
Fund are greater than $20 million and in which the Advisory Agreement is still
in effect, the estimated aggregate Fund Operating Expenses of such Fund for the
fiscal year are less than the Operating Expense Limit for that year, subject to
quarterly approval by the Trust's Board of Trustees as provided in Section 2.2
below, the Advisor shall be entitled to reimbursement by such Fund, in whole or
in part as provided below, of the investment advisory fees waived or reduced and
other payments remitted by the Advisor to such Fund pursuant to Section 1
hereof. The total amount of reimbursement to which the Advisor may be entitled
(the "Reimbursement Amount") shall equal, at any time, the sum of all investment
advisory fees previously waived or reduced by the Advisor and all other payments
remitted by the Advisor to the Fund, pursuant to Section 1 hereof, during any of
the previous three (3) fiscal years, less any reimbursement previously paid by
such Fund to the Advisor, pursuant to Sections 2.2 or 2.3 hereof, with respect
to such waivers, reductions, and payments. The Reimbursement Amount shall not
include any additional charges or fees whatsoever, including, e.g., interest
accruable on the Reimbursement Amount.
2.2. Board Approval. No reimbursement shall be paid to the Advisor
with respect to any Fund pursuant to this provision in any fiscal quarter,
unless the Trust's Board of Trustees has determined that the payment of such
reimbursement is in the best interests of such Fund and its shareholders. The
Trust's Board of Trustees shall determine quarterly in advance whether any
reimbursement may be paid to the Advisor with respect to any Fund in such
quarter.
2.3. Method of Computation. To determine each Fund's payments, if any,
to reimburse the Advisor for the Reimbursement Amount, each month the Fund
Operating Expenses of each Fund shall be annualized as of the last day of the
month. If the annualized Fund Operating Expenses of a Fund for any month are
less than the Operating Expense Limit of such Fund, such Fund, only with the
prior approval of the Trust's Board of Trustees, shall pay to the Advisor an
amount sufficient to increase the annualized Fund Operating Expenses of that
Fund to an amount no greater than the Operating Expense Limit of that Fund,
provided that such amount paid to the Advisor will in no event exceed the total
Reimbursement Amount.
2.4. Year-End Adjustment. If necessary, on or before the last day of
the first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the actual Fund Operating Expenses of a Fund for
the prior fiscal year (including any reimbursement payments hereunder with
respect to such fiscal year) do not exceed the Operating Expense Limit.
<PAGE>
3. Term and Termination of Agreement.
This Agreement with respect to the Funds shall continue in effect from
the date that the Funds are effective with the Securities and Exchange
Commission, and year to year thereafter, provided each such continuance is
specifically approved by a majority of the Trustees of the Trust who (i) are not
"interested persons" of the Trust or any other party to this Agreement, as
defined in the 1940 Act, and (ii) have no direct or indirect financial interest
in the operation of this Agreement ("Non-Interested Trustees"). Nevertheless,
this Agreement may be terminated by either party hereto, without payment of any
penalty, upon ninety (90) days' prior written notice to the other party at its
principal place of business; provided that, in the case of termination by the
Trust, such action shall be authorized by resolution of a majority of the
Non-Interested Trustees of the Trust or by a vote of a majority of the
outstanding voting securities of the Trust.
4. Miscellaneous.
4.1. Captions. The captions in this Agreement are included for
convenience of reference only and in no other way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
4.2. Interpretation. Nothing herein contained shall be deemed to
require the Trust or the Funds to take any action contrary to the Trust's
Declaration of Trust or By-Laws, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to relieve or
deprive the Trust's Board of Trustees of its responsibility for and control of
the conduct of the affairs of the Trust or the Funds.
4.3. Definitions. Any question of interpretation of any term or
provision of this Agreement, including but not limited to the investment
advisory fee, the computations of net asset values, and the allocation of
expenses, having a counterpart in or otherwise derived from the terms and
provisions of the Advisory Agreement or the 1940 Act, shall have the same
meaning as and be resolved by reference to such Advisory Agreement or the 1940
Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
WOODLAWN FUNDS TRUST
ON BEHALF OF EACH OF ITS SERIES LISTED IN
SCHEDULE A
By: /s/ Theo H. Pitt, Jr.
______________________________
INTERNET 100 ADVISORS, L.L.C.
By: /s/ Paul de Leon
______________________________
<PAGE>
SCHEDULE A
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds of the Trust:
Maximum Operating
Name of Fund Expense Limit
------------ -------------
Internet 100 Fund 1.00%
Internet 100 Equal Weighted Fund 1.00%
Exhibit (i): Opinion and Consent of Dechert Price & Rhoads,
----------- Counsel for the Trust
September 1, 1999
Opinion and Consent of Counsel
Woodlawn Funds Trust
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Ladies and Gentlemen:
This opinion is given in connection with the filing by Woodlawn Funds
Trust, a Delaware business trust ("Trust"), of Pre-Effective Amendment No. 2 to
the Registration Statement on Form N-1A ("Registration Statement") under the
Securities Act of 1933 ("1933 Act") and Amendment No. 2 under the Investment
Company Act of 1940 ("1940 Act"), relating to an indefinite amount of authorized
shares of beneficial interest of the separate series of the Trust ("Funds"). The
authorized shares of beneficial interest of the Funds are hereinafter referred
to as the "Shares."
We have examined the following Trust documents: Declaration of Trust;
By-Laws; Registration Statement on Form N-1A filed on May 19, 1999;
Pre-Effective Amendment No. 1 to Registration Statement filed on August 4, 1999,
pertinent provisions of the laws of the State of Delaware; and such other
corporate records, certificates, documents and statutes that we have deemed
relevant in order to render the opinion expressed herein.
Based on such examination, we are of the opinion that:
1. Woodlawn Funds Trust is a Delaware business trust duly organized, validly
existing, and in good standing under the laws of the State of Delaware; and
2. The Shares to be offered for sale by Woodlawn Funds Trust, when issued in
the manner contemplated by the Registration Statement, will be legally
issued, fully-paid and non-assessable.
This letter expresses our opinion as to the Delaware business trust law
governing matters such as the due organization of Woodlawn Funds Trust and the
authorization and issuance of the Shares, but does not extend to the securities
or "Blue Sky" laws of the State of Delaware or to federal securities or other
laws.
We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to Dechert Price & Rhoads under the caption
"Legal Matters" in the Statement of Additional Information, which is
incorporated by reference into the Prospectus comprising a part of the
Registration Statement.
Very truly yours,
/s/ DECHERT PRICE & RHOADS
DECHERT PRICE & RHOADS
Exhibit (j): Opinion of Deloitte & Touche LLP, Independent Public Accountants
-----------
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees of the WOODLAWN FUNDS TRUST and the Shareholders of
INTERNET 100 FUND:
We have audited the accompanying statement of assets and liabilities of Internet
100 Fund as of August 27, 1999. The financial statement is the responsibility of
the Fund's management. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Internet
100 Fund as of August 27, 1999, in conformity with generally accepted accounting
principles.
/s/ DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
August 30, 1999
Exhibit (k): Balance Sheet
-----------
Internet 100 Fund
Statement of Assets and Liabilities
August 27, 1999
- --------------------------------------------------------------------------------
Assets:
- -------------------------------------------------------
Cash $ 100,000
- -------------------------------------------------------
Total Assets 100,000
- -------------------------------------------------------
Liabilities: ---------
- -------------------------------------------------------
Net Assets for 10,000 shares outstanding $ 100,000
- ------------------------------------------------------- =========
Net Assets Consist of:
- -------------------------------------------------------
Paid in Capital $ 100,000
- ------------------------------------------------------- =========
Net Asset Value, Offering Price and Redemption Proceeds
Per Share:
- -------------------------------------------------------
$100,000 / 10,000 shares outstanding $10.00
- ------------------------------------------------------- =========
Notes:
(1) Internet 100 Fund (the "Fund") is the only existing open-end management
investment company (a mutual fund) in a diversified series of the Woodlawn
Funds Trust (the "Trust"). The Trust was established as a Delaware
business trust under a Declaration of Trust on May 19, 1999 and is
registered under the investment company Act of 1940, as amended. The Fund
has had no operations since that date other than those relating to
organizational matters, including the issuance of 10,000 shares at $10.00
per share. Organizational fees of approximately $26,000 are to be paid by
the Investment Advisor.
(2) Reference is made to the "Management of the Fund" (on page 6),
"Administration of the Fund" (on page 6) and Tax Information (on page 12)
in the prospectus for descriptions of the investment advisory fee,
administrative and other services and federal tax aspects of the Fund.
(3) Certain Officers and Trustees of the Trust are Officers and Directors or
Trustees of the Advisor and the Administrator.
(4) Investment Valuations - Short-term securities are valued at cost which
approximates fair market value.
Exhibit (l): Subscription Agreements
-----------
SUBSCRIPTION AGREEMENT
THIS AGREEMENT by and between Internet 100 Advisors, L.L.C. ("Advisor") and the
Woodlawn Funds Trust ("Trust"), a business trust organized and existing under
and by virtue of the laws of the State of Delaware.
In consideration of the mutual promises set forth herein, the parties agree
as follows:
1. The Trust agrees to sell to the Advisor and the Advisor hereby
subscribes to purchase 7,500 shares ("shares") of beneficial interest of
Internet 100 Fund, a series of the Trust, each with a par value of $0.0001 per
Share, at a price of ten dollars ($10.00) per each Share.
2. The Advisor agrees to pay $75,000 for all such Shares at the time of
their issuance, which shall occur upon call of the President of the Trust, at
any time on or before the effective date of the Trust's Registration Statement
filed by the Trust on Form N-1A with the Securities and Exchange Commission
("Registration Statement").
3. The Advisor acknowledges that the Shares to be purchased hereunder
have not been, and will not be, registered under the federal securities laws and
that, therefore, the Trust is relying on certain exemptions from such
registration requirements, including exemptions dependent on the intent of the
undersigned in acquiring the Shares. The Advisor also understand that any resale
of the Shares, or any part thereof, may be subject to restrictions under the
federal securities laws, and that the Advisor may be required to bear the
economic risk of any investment in the Shares for an indefinite period of time.
4. The Advisor represents and warrants that it is acquiring the Shares
solely for its own account and solely for investment purposes and not with a
view to the resale or disposition of all or any part there of, and that it has
no present plan or intention to sell or otherwise dispose of the Shares or any
part thereof at any time in the near future.
5. The Advisor agrees that it will not sell or dispose of the Shares or
any part thereof, except to the Trust itself, unless the Registration Statement
with respect to such Shares is then in effect under the Securities Act of 1933,
as amended.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized representatives this 25th day of August, 1999.
INTERNET 100 ADVISORS, L.L.C.
By: /s/ John de Leon
________________________
Paul John de Leon
Title: President
WOODLAWN FUNDS TRUST
By: /s/ Julian G. Winters
_________________________
Julian G. Winters
Title: Trustee and Treasurer
<PAGE>
SUBSCRIPTION AGREEMENT
THIS AGREEMENT by and between James Kissane and the Woodlawn Funds Trust
("Trust"), a business trust organized and existing under and by virtue of the
laws of the State of Delaware.
In consideration of the mutual promises set forth herein, the parties agree
as follows:
1. The Trust agrees to sell to James Kissane and James Kissane hereby
subscribes to purchase 2,500 shares ("Shares") of beneficial interest of
Internet 100 Fund, a series of the Trust, each with a par value of $0.0001 per
Share, at a price of ten dollars ($10.00) per each Share.
2. James Kissane agrees to pay $25,000 for all such Shares at the time
of their issuance, which shall occur upon call of the President of the Trust, at
any time on or before the effective date of the Trust's Registration Statement
filed by the Trust on Form N-1A with the Securities and Exchange Commission
("Registration Statement").
3. James Kissane acknowledges that the Shares to be purchased hereunder
have not been, and will not be, registered under the federal securities laws and
that, therefore, the Trust is relying on certain exemptions from such
registration requirements, including exemptions dependent on the intent of the
undersigned in acquiring the Shares. James Kissane also understands that any
resale of the Shares, or any part thereof, may be subject to restrictions under
the federal securities laws, and that James Kissane may be required to bear the
economic risk of any investment in the Shares for an indefinite period of time.
4. James Kissane represents and warrants that he is acquiring the
Shares solely for his own account and solely for investment purposes and not
with a view to the resale or disposition of all or any part there of, and that
he has no present plan or intention to sell or otherwise dispose of the Shares
or any part thereof at any time in the near future.
5. James Kissane agrees that he will not sell or dispose of the Shares
or any part thereof, except to the Trust itself, unless the Registration
Statement with respect to such Shares is then in effect under the Securities Act
of 1933, as amended.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their
duly authorized representatives this 26th day of August, 1999.
By: /s/ James Kissane
________________________
James Kissane
WOODLAWN FUNDS TRUST
By: /s/ Julian G. Winters
_________________________
Julian G. Winters
Title: Trustee and Treasurer
Exhibit (m): Distribution Plan under Rule 12b-1 for the Woodlawn Funds Trust
-----------
PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1
WHEREAS, Woodlawn Funds Trust, a business trust organized and existing under the
laws of the State of Delaware (the "Trust"), engages in business as an open-end
management investment company and is registered as such under the Investment
company Act of 1940, as amended ("1940 Act");
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate portfolios of securities and other assets ("Funds");
WHEREAS, the Trust desires to adopt a Plan of Distribution ("Plan") pursuant to
Rule 12b-1 under the 1940 Act with respect to the Shares of the Funds and any
future Funds established and designated by the Trust and advised by Internet 100
Advisors, L.L.C. (the "Adviser");
WHEREAS, the Board of Trustees of the Trust as a whole, and the Trustees who are
not "interested persons" of the Trust (as that term is defined in the 1940 Act)
and have no direct or indirect financial interest in the operation of the Plan,
which is a compensation type rule 12b-1 Plan, or in any agreement relating
hereto ("Rule 12b-1 Trustees"), having determined, in the exercise of reasonable
business judgment and in light of their fiduciary duties under Section 36(a) and
(b) of the 1940 Act, that there is a reasonable likelihood that this Plan will
benefit the Trust and its shareholders, have approved this Plan by votes cast at
a meeting called for the purpose of voting hereon and on any agreements related
hereto; and
NOW, THEREFORE, in consideration of the foregoing, the Trust hereby adopts this
Plan on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of
the Board of Trustees, each Fund is authorized directly or indirectly, to engage
in any activities primarily intended to result in the sale of Shares or the
servicing of shareholders purchasing Shares, which activities may include, but
are not limited to, the following: (a) payment of compensation to the Trust's
distributor, securities dealers and other appropriate persons in respect of the
sale or servicing of shareholders with respect to Shares of a Fund; (b) payment
of compensation to and expenses of personnel (including personnel of
organizations with whom the Trust has entered into agreements that may be deemed
to be related to this Plan) that engage in or support distribution of Shares of
a Fund or who render shareholder support services not otherwise provided by the
Trust's transfer agent, administrator or custodian, including but not limited
to, answering inquiries regarding the Trust, processing shareholder
transactions, providing personal services and/or the maintenance of shareholder
accounts, providing other shareholder liaison services, responding to
shareholder inquiries, providing information on shareholder investments in a
Fund, and providing such other shareholder services as the Trust may reasonably
request; (c) formulation and implementation of marketing promotional activities
with respect to the sale of shares of a Fund, including, but not limited to,
direct mail promotions and television, radio, newspaper, magazine and other mass
media advertising; (d) preparation, printing and distribution of sales
literature with respect to the sale of shares of a Fund; (e) preparation,
printing and distribution of prospectuses and statements of additional
information and reports of a Fund for potential and existing Shareholders of a
Fund; and (f) obtaining such information, analyses and reports with respect to
marketing and promotional activities as a Fund may, from time to time, deem
advisable with respect to the sale of shares of a Fund. A Fund is authorized to
engage in the activities listed above, and in any other activities primarily
intended to result in the sale of Shares, either directly or through other
persons with which the Trust has entered into agreements related to this Plan.
<PAGE>
2. Expenditures. A Fund shall pay a fee for distribution of its shares
and servicing of shareholders of the Shares at the annual rate of 0.25% of the
average daily net asset value of a Fund attributable to its Shares. Such
payments for distribution and shareholder servicing activities may be made
directly to a Fund's distributor or any shareholder services organization with
which a Fund has entered into agreements related to this Plan.
3. Term and Termination.
(a) This Plan shall become effective as of the 31st day of August 1999.
Unless terminated as herein provided, this Plan shall continue in effect for one
year from the effective date hereof and shall continue in effect for successive
periods of one year thereafter, but only so long as each such continuance is
specifically approved by votes of a majority of both (i) the Trustees of the
Trust and (ii) the Rule 12b-1 Trustees, cast in person at a meeting called for
the purpose of voting on such approval.
(b) This Plan may be terminated at any time with respect to any Fund by
a vote of the majority of the Rule 12b-1 Trustees or by a vote of a majority of
the outstanding voting securities of a Fund's shareholders, as defined in the
1940 Act.
4. Amendments. This Plan may not be amended to materially increase the
distribution and servicing fees and expenses authorized by Section 2 hereof
unless such proposed increase is approved by a vote of the majority of the
outstanding voting securities of a Fund's shareholders, as defined in the 1940
Act, and no material amendment to this Plan shall be made unless approved in the
manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of the Rule 12b-1 Trustees of the Trust shall be
committed to the discretion of such Rule 12b-1 Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of all amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
<PAGE>
7. Recordkeeping. The Trust shall preserve copies of this Plan, any
related agreement and all information and reports provided to the Board of
Trustees pursuant to Section 6 hereof, for a period of not less than six years
from the date of this Plan. All such information shall, for the first two years,
be maintained in an easily accessible place.
8. Agreements. All agreements with any person relating to
implementation of this Plan with respect to the shares of any Fund shall be in
writing, and any agreement related to this Plan with respect to the shares of
any Fund shall provide:
(a) That such agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the Independent Trustees or by vote of
a majority of the outstanding voting securities representing the shares of such
Fund, on not more than 60 days' written notice to any other party to the
agreement; and
(b) That such agreement shall terminate automatically in the event of
its assignment.
IN WITNESS THEREOF, the undersigned has caused this Plan to be executed
as of the date written above.
WOODLAWN FUNDS TRUST
By: /s/ Theo H. Pitt, Jr.
___________________________
Exhibit (p): Power of Attorneys
-----------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned officer
and/or trustee of Woodlawn Funds Trust (the "Trust") hereby appoints C. Frank
Watson, III and/or Julian G. Winters, with full power of substitution, his true
and lawful attorney to execute in his name, place and stead and on his behalf a
registration statement on Form N-1A for the registration, pursuant to the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, of said Trust's shares of beneficial interest, and any and all
amendments to said Registration Statement (including post-effective amendments),
and all instruments necessary or incidental in connection therewith (or in
connection with qualification of such shares for sale in any state) and to file
the same with the U.S. Securities and Exchange Commission (and any and all
states or jurisdictions in which shares of any series of the Trust are sold).
Said attorneys shall have full power and authority, with full power of
substitution, to do and perform in the name and on behalf of the undersigned
every act whatsoever requisite or desirable to be done in the premises in any
and all capacities authorized by the Board of Trustees for such persons to
provide or perform with respect to the Trust, as fully and to all intents and
purposes as the undersigned might or could do, the undersigned hereby ratifying
and approving all such acts of such attorneys.
IN WITNESS WHEREOF, the undersigned has executed this
instrument this 31st day of August, 1999.
/s/ C. Frank Watson, III /s/ Theo H. Pitt, Jr.
____________________________ ___________________________________
Witness Theo H. Pitt, Jr., Trustee and Chairman
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned officer
and/or trustee of Woodlawn Funds Trust (the "Trust") hereby appoints C. Frank
Watson, III and/or Julian G. Winters, with full power of substitution, his true
and lawful attorney to execute in his name, place and stead and on his behalf a
registration statement on Form N-1A for the registration, pursuant to the
Securities Act of 1933, as amended, and the Investment Company Act of 1940, as
amended, of said Trust's shares of beneficial interest, and any and all
amendments to said Registration Statement (including post-effective amendments),
and all instruments necessary or incidental in connection therewith (or in
connection with qualification of such shares for sale in any state) and to file
the same with the U.S. Securities and Exchange Commission (and any and all
states or jurisdictions in which shares of any series of the Trust are sold).
Said attorneys shall have full power and authority, with full power of
substitution, to do and perform in the name and on behalf of the undersigned
every act whatsoever requisite or desirable to be done in the premises in any
and all capacities authorized by the Board of Trustees for such persons to
provide or perform with respect to the Trust, as fully and to all intents and
purposes as the undersigned might or could do, the undersigned hereby ratifying
and approving all such acts of such attorneys.
IN WITNESS WHEREOF, the undersigned has executed this
instrument this 31st day of August, 1999.
/s/ C. Frank Watson, III /s/ Paul de Leon
____________________________ ___________________________________
Witness Paul John de Leon, President
