<PAGE>
As filed with the Securities and Exchange Commission on October 28, 1999
File No. 333 - 80473
File No. 811 - 09383
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 1 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 3 [X]
HAMBRECHT & QUIST FUND TRUST
(Exact Name of Registrant as Specified on Charter)
One Bush Street
San Francisco, California 94104
(Address of Principal Executive Offices)
(415) 439-3000
(Registrant's Telephone Number)
David R. Krimm
President
Hambrecht & Quist Fund Management, LLC
One Bush Street
San Francisco, California 94104
(Name and Address for Agent of Service)
Copies to:
Andre W. Brewster, Esq.
Howard Rice Nemerovski Canady Falk & Rabkin, A Professional Corporation
Three Embarcadero Center, 7th Floor
San Francisco, CA 94111-4065
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Each of Registrant's Adviser Classes and Common Class Prospectus is herein
incorporated by Reference from Part A of Pre-Effective Amendment No. 2 to the
Registrant's Registration Statement (File Nos. 333-80473 and 811-09383) filed
with the Securities and Exchange Commission on September 15, 1999.
<PAGE>
H&Q IPO & EMERGING COMPANY FUND
Statement of Additional Information
Adviser Classes
Common Class
October 28, 1999
This statement of additional information (SAI) is not a prospectus. It
should be read in conjunction with the H&Q IPO & Emerging Company Fund (Fund)
prospectuses for the Adviser Classes and the Common Class, each dated
September 15, 1999 (as amended from time to time). The Fund is currently the
only series of the Hambrecht & Quist Fund Trust (Trust).
To obtain a copy of the Adviser Classes prospectus, please call your
financial intermediary. To obtain a copy of the Common Class prospectus, please
call your mutual fund supermarket representative or call the Fund's transfer
agent, PFPC Inc., at 877-613-7975, 24 hours a day, or write to PFPC Inc.,
attention: H&Q IPO & Emerging Company Fund, at 400 Bellevue Parkway, Wilmington,
Delaware 19809. For TDD service, call 877-613-7973, 24 hours a day. The
prospectuses also are available on the Internet at funds.hq.com.
TABLE OF CONTENTS
PAGE
OTHER STRATEGIES, RISKS AND LIMITATIONS.......................................2
MANAGEMENT OF THE FUND........................................................9
INVESTMENT ADVISORY AND OTHER SERVICES.......................................11
BROKERAGE ALLOCATION AND OTHER PRACTICES.....................................14
DESCRIPTION OF THE TRUST.....................................................15
PURCHASE, REDEMPTION AND PRICING OF SHARES...................................16
TAXATION.....................................................................22
CALCULATION AND USE OF PERFORMANCE DATA......................................23
FINANCIAL STATEMENTS.........................................................24
<PAGE>
OTHER STRATEGIES, RISKS AND LIMITATIONS
OTHER STRATEGIES AND RISKS
The following discussion supplements and should be read in conjunction
with the sections in the prospectus entitled "Main Strategy" and "Main Risks."
In addition to the Fund's principal investment strategies discussed in the
prospectus, the Fund may invest in other securities and engage in other
investment techniques, at all times in accordance with the limitations set forth
below under "Investment Limitations." Investment policies and limitations that
state a maximum percentage of assets that may be invested in a security or other
asset, or that set forth a quality standard, are measured immediately after and
as a result of the Fund's acquisition of the security or asset unless otherwise
noted. Any subsequent change in values, net assets or other circumstances will
not be considered when determining whether the investment complies with the
Fund's policies and limitations. Unless otherwise indicated, policies and
limitations may be changed by the Trustees without shareholder approval. The
Fund's investment objective may be changed only by vote of a majority of its
shareholders.
EQUITY SECURITIES. The Fund's investment in equity securities,
including IPOs, emerging company shares and securities of issuers which have
capitalizations under $1 billion (small capitalization issuers), represent
ownership interests in corporations, and are commonly called "stocks." Equity
securities historically have outperformed most other securities, although
their prices can fluctuate based on changes in a company's financial
condition, market conditions and political, economic or even company-specific
news. When a stock's price declines, its market value is lowered even though
the intrinsic value of the company may not have changed. Sometimes factors,
such as economic conditions or political events, affect the value of stocks
of companies of the same or similar industry or group of industries, and may
affect the entire stock market. In many instances, the risk factors described
in the prospectus relating to IPOs and emerging company shares are also
applicable to stocks of small capitalization issuers.
Types of equity securities include common stocks, preferred stocks,
convertible securities and warrants. Common stocks, which are probably the most
recognized type of equity security, usually entitle the owner to voting rights
in the election of the corporation's directors and any other matters submitted
to the corporation's shareholders for voting. Preferred stocks do not ordinarily
carry voting rights or may carry limited voting rights, but normally have
preference over the corporation's assets and earnings. For example, preferred
stocks have preference over common stock in the payment of dividends. Preferred
stocks also may pay specified dividends.
Convertible securities are typically preferred stock or bonds that are
exchangeable for a specific number of another form of security (usually the
issuer's common stock) at a specified price or ratio. A corporation may issue a
convertible security that is subject to redemption after a specified date and
usually under certain circumstances. Convertible bonds typically pay a lower
interest rate than nonconvertible bonds of the same quality and maturity,
because of the conversion feature. Due to their fixed income features,
convertible securities provide higher income potential than the issuer's common
stock, but typically are more sensitive to interest rate changes than the
underlying common stock.
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<PAGE>
Warrants are a type of security usually issued with bonds and
preferred stock that entitle the holder to purchase a proportionate amount of
common stock at a specified price for a specific period of time. The prices of
warrants do not necessarily move parallel to the prices of the underlying common
stock. Warrants have no voting rights, receive no dividends and have no rights
with respect to the assets of the issuer. If a warrant is not exercised within
the specified time period, it becomes worthless.
ILLIQUID SECURITIES. The Fund may purchase and hold securities
considered to be illiquid. Illiquid securities generally are any securities
that cannot be disposed of within seven days and in the ordinary course of
business at approximately the amount at which the Fund has valued the
securities. The liquidity of the Fund's investments is monitored under the
supervision and direction of the Trustees. Investments currently not
considered liquid include repurchase agreements not maturing within seven
days, certain restricted securities and securities subject to contractual
restrictions on disposition greater than seven days. From time to time, the
Fund may agree to such contractual restrictions, for periods typically of
between 30 and 180 days, in connection with its purchase of securities in
initial public offerings. The IPOs, emerging company shares and small
capitalization stocks held by the Fund will tend to be less liquid than those
issued by more established companies.
RESTRICTED SECURITIES. The Fund may purchase and hold restricted
securities. Restricted securities are securities that are subject to legal
restrictions on their sale. Restricted securities may be considered to be liquid
if an institutional or other market exists for these securities. In making this
determination, the Fund, under the direction and supervision of the Trustees,
will take into account the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers willing to purchase or sell
the security and the number of potential purchasers; (3) dealer undertakings to
make a market in the security; and (4) the nature of the security and
marketplace trades (E.G., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of transfer). To the extent the Fund
invests in restricted securities that are deemed liquid, the general level of
illiquidity in the Fund's portfolio may be increased if qualified institutional
buyers become uninterested in purchasing these securities.
FUTURES CONTRACTS. The Fund intends to purchase and sell futures
contracts based on equity securities indices as a substitute for purchasing and
selling the individual equity securities represented by the indices. Such
transactions allow the Fund's cash balances to produce returns similar to those
of the indices on which the futures contracts are based. All futures contracts
to which the Fund is a party will be covered by segregating liquid assets equal
to the Fund's obligations under the contracts.
A futures contract on an equity index is an agreement between two
parties that obligates one party to buy and the other party to sell the specific
securities underlying the index at an agreed-upon price on a stipulated future
date. Although futures contracts, by their terms, call for the actual delivery
or acquisition of an asset, in the case of futures contracts relating to an
index, the parties usually agree to deliver the final cash settlement price of
the contract at the close of the transaction. In addition, the contractual
obligation underlying a futures contract is often fulfilled (or "offset") before
the expiration date of the futures contract without having to make or take
delivery of the underlying asset. Offset of a futures contract is accomplished
by buying (or selling, as the case may be) on a commodities exchange an
identical futures contract calling for delivery in the same month. Such a
transaction, which is effected through a member of an exchange, cancels the
obligation to make or take delivery of the underlying asset.
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<PAGE>
When buying or selling futures contracts, the Fund must place a
deposit with its broker equal to a fraction of the contract amount. This amount
is known as "initial margin" and must be in the form of liquid instruments,
including cash, cash-equivalents and U.S. government securities. Subsequent
payments to and from the broker, known as "variation margin" may be made daily,
if necessary, as the value of the futures contracts fluctuate. This process is
known as "marking-to-market." Any margin amount remaining after all contractual
obligations are satisfied will be returned to the Fund upon termination of the
futures contracts. The Fund's aggregate initial and variation margin payments
may not exceed 5% of its net assets.
The ordinary spreads between prices in the cash and futures markets,
due to differences in the natures of those markets, are subject to distortions
that may prevent the Fund from successfully using futures contracts. First, all
participants in the futures markets are subject to initial and variation margin
requirements. Rather than meeting variation margin requirements, investors may
close futures contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second, the liquidity
of the futures markets depends on participants entering into offsetting
transactions rather than making or taking delivery. To the extent participants
make or take delivery, liquidity in the futures markets could be reduced, thus
producing distortion. Third, from the point of view of speculators, margin
requirements in the futures markets are less onerous than margin requirements in
the cash market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
distortion, a correct prediction of market conditions by the Fund may not result
in a successful transaction.
The Fund's ability to engage in transactions involving futures
contracts will depend on the degree to which liquid secondary markets in such
instruments exist. Reasons for the absence of a liquid market include the
following: (i) there may be insufficient trading interest in a particular
instrument; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of futures contracts; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; or (v) one or more exchanges could,
for economic or other reasons, decide or be compelled at some future date to
discontinue the trading of a particular instrument (or a particular class or
series of such instrument). There can be no assurance that a liquid secondary
market will exist for any particular investment at any specific time. Thus it
may not be possible for the Fund to close certain of its positions.
Adverse market movements could cause the Fund to experience
substantial losses when buying and selling futures contracts. Of course, barring
significant market distortions, similar results would have been expected if the
Fund had instead transacted in the underlying securities directly. In such
situations, if the Fund had insufficient cash and were unable to effect a
closing transaction, it might have to sell securities from its portfolio to meet
daily variation margin requirements. Such sales of securities may, but will not
necessarily, be at increased prices that reflect the rising market. The Fund may
also have to sell securities at a time when it may be disadvantageous to do so.
There also is the risk of losing any margin payments held by a broker in the
event of its bankruptcy. To reduce the risk of such a loss, the sub-adviser will
only deposit margin amounts with brokers approved by the Trustees. The Fund
incurs transaction costs, including brokerage fees, when engaging in futures
trading.
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<PAGE>
Under regulations of the Commodity Futures Trading Commission,
investment companies registered under the 1940 Act are excluded from regulation
as commodity pools or commodity pool operators if their use of futures is
limited in certain specified ways. The Fund will use futures in a manner
consistent with the terms of this exclusion.
SECURITIES OF OTHER INVESTMENT COMPANIES. The Fund may invest in
participations in equity indices (index participations), including Standard &
Poor's Depositary Receipts (SPDRs). Index participations are shares of publicly
traded unit investment trusts which own the stocks included in the relevant
index. Index participations, including SPDRs, are subject to the risk of an
investment in a broadly based portfolio of common stocks, including the risk of
declines in the general level of stock prices. They are also subject to trading
halts due to market conditions or other reasons that make trading index
participations inadvisable.
The Fund may also invest its cash reserves in securities issued by
other investment companies, including money market mutual funds managed by the
Fund's custodian. Because other investment companies employ investment advisers
and other service providers, investments by the Fund in other investment
companies may cause shareholders to pay duplicative fees.
U.S. GOVERNMENT SECURITIES, HIGH QUALITY COMMERCIAL PAPER AND
REPURCHASE AGREEMENTS. The Fund may also invest its cash reserves in interest
bearing instruments, including U.S. government securities, high quality
commercial paper and repurchase agreements.
U.S. government securities are debt securities issued by the U.S.
Treasury or issued or guaranteed by the U.S. government or any of its agencies
or instrumentalities. U.S. Treasury securities, include bills, notes and bonds,
and are backed by the full faith and credit of the United States. Not all U.S.
government securities are backed by the full faith and credit of the United
States. Some U.S. government securities are supported by a line of credit the
issuing entity has with the U.S. Treasury. Others are supported solely by the
credit of the issuing agency or instrumentality. There is no assurance that the
U.S. government will provide financial support to U.S. government securities of
its agencies and instrumentalities if it is not obligated to do so. Like other
fixed income securities, U.S. government securities are sensitive to interest
rate changes, which will cause their prices to fluctuate.
Commercial paper is a short-term debt instrument issued by
corporations, financial institutions, governmental entities and other entities,
and may include funding agreements and other short-term debt obligations. The
principal risk associated with commercial paper is the potential insolvency of
the issuer. The Fund will only invest in commercial paper rated Prime 1 by
Moody's Investors Service, Inc. (Moody's) or A-1 by Standard and Poor's Rating
Service (S&P), or if not rated, issued by companies that have an outstanding
debt issue rated Aa or higher by Moody's or AA or higher by S&P.
Repurchase agreements are instruments under which the Fund acquires
ownership of certain securities (usually U.S. government securities) from a bank
or broker-dealer who agrees to repurchase the securities at a mutually
agreed-upon time and price, thereby determining the yield during the buyer's
holding period. The period of repurchase agreements is usually short--from
overnight to one week--although the securities underlying repurchase agreements
may
-5-
<PAGE>
have longer maturity dates. In the event of a bankruptcy or other default of a
repurchase agreement's seller, the Fund might incur expenses in enforcing its
rights, and could experience losses, including a decline in the value of the
underlying securities and loss of income. To reduce the risk of such a loss the
Fund only enters into repurchase agreement with banks or broker-dealers approved
by the Trustees.
BORROWING. The Fund may borrow at times to meet redemption requests
rather than sell portfolio securities to raise the necessary cash. Borrowing may
subject the Fund to interest costs, which may exceed the interest received on
the securities purchased with the borrowed funds.
LENDING. The Fund may engage in security lending arrangements with the
primary objective of increasing its income through investment of the cash
collateral in short-term, interest-bearing obligations, but will do so only to
the extent that it will not lose the tax treatment available to regulated
investment companies. Lending portfolio securities involves the risk that the
borrower may fail to return the securities or provide additional collateral. The
Fund may loan portfolio securities to qualified broker-dealers or other
institutional investors provided: (1) the loan is secured continuously by
collateral consisting of U.S. government securities, letters of credit, cash or
cash equivalents maintained on a daily marked-to-market basis in an amount at
least equal to the current market value of the securities loaned; (2) the Fund
may at any time call the loan and obtain the return of the securities loaned;
(3) the Fund will receive any interest or dividends paid on the loaned
securities, and (4) the aggregate market value of securities loaned will not at
any time exceed one-third of the total assets of the Fund.
YEAR 2000. The year 2000 presents uncertainties and possible risks to
the smooth operations of the Fund and the provision of services to shareholders.
Many computer programs use only two digits to identify a specific year and
therefore may not accurately recognize the upcoming change in the next century.
If not corrected, many computer applications could fail or create erroneous
results by or at year 2000. Due to the Fund's and its service providers'
dependence on computer technology to operate, the nature and impact of year 2000
processing failures on the Fund could be material. The Fund is taking steps to
minimize the risks of year 2000, including seeking assurances from the Fund's
service providers that they are analyzing their systems, testing them for
potential problems and remediating them to the extent possible. There can be no
assurance that these steps will be sufficient to avoid any adverse impact on the
Fund. It is also possible that the Fund's portfolio securities and performance
may be materially affected by year 2000 related problems experienced by issuers
of securities and the securities markets generally.
INVESTMENT LIMITATIONS
THE FOLLOWING FUNDAMENTAL INVESTMENT LIMITATIONS MAY BE CHANGED ONLY
BY VOTE OF A MAJORITY OF THE FUND'S SHAREHOLDERS.
THE FUND MAY NOT:
1) As to 75% of its assets, purchase securities of any issuer (other than
obligations of, or guaranteed by, the U.S. government, its agencies or
instrumentalities or investments in
-6-
<PAGE>
other registered investment companies) if, as a result, more than 5% of the
value of its total assets would be invested in the securities of such
issuer.
2) Purchase more than 10% of any class of securities of any issuer if, as a
result of such purchase, it would own more than 10% of such issuer's
outstanding voting securities. The definition of "securities" does not
include cash and cash items (including receivables), government securities
and the securities of other investment companies, including private
investment companies and qualified purchaser funds.
3) Purchase securities (other than securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities) if, as a result of such
purchase, 25% or more of the value of its total assets would be invested in
any industry.
4) Purchase or sell commodities, commodity contracts or real estate, including
interests in real estate limited partnerships, provided that the Fund may
(1) purchase securities of companies that deal in commodities, real estate
or interests therein and (2) purchase or sell futures contracts, options on
future contracts, equity index participations and index participation
contracts.
5) Lend money to any person, except that the Fund may (1) purchase a portion
of an issue of short-term debt securities or similar obligations (including
repurchase agreements) that are distributed publicly or customarily
purchased by institutional investors, and (2) lend its portfolio
securities.
6) Borrow money or issue senior securities, except that the Fund may borrow
from banks as a temporary measure to satisfy redemption requests or for
extraordinary or emergency purposes and then only in an amount not to
exceed one-third of the value of its total assets (including the amount
borrowed), provided that the Fund will not purchase securities while
borrowings represent more than 5% of its total assets.
7) Pledge, mortgage or hypothecate any of its assets, except that, to secure
allowable borrowings, the Fund may do so with respect to no more than
one-third of the value of its total assets.
8) Underwrite securities issued by others, except to the extent it may be
deemed to be an underwriter, under the federal securities laws, in
connection with the disposition of securities from its investment
portfolio.
THE FOLLOWING NON-FUNDAMENTAL INVESTMENT LIMITATIONS MAY BE CHANGED
WITHOUT SHAREHOLDER APPROVAL.
THE FUND MAY NOT:
1) Purchase or sell puts, calls, straddles, spreads or any combination
thereof.
2) Make short sales.
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<PAGE>
3) Purchase or sell interests in oil, gas or other mineral development
programs or leases, although it may invest in companies that own or invest
in such interests or leases.
4) Purchase securities on margin, except such short-term credits as may be
necessary for the clearance of purchases and sales of securities.
5) Invest more than 15% of its net assets in illiquid securities, including
repurchase agreements with maturities in excess of seven days and
securities subject to contractual restrictions on resale in excess of
seven days.
6) Invest for the purpose of exercising control or management of another
issuer.
7) Purchase securities of other investment companies, except as permitted by
the 1940 Act, including any exemptive relief granted by the Securities and
Exchange Commission (SEC).
With respect to the Fund's policy not to invest more than 25% of the
value of its total assets in any one industry, the Fund deems the following to
be separate industries:
Iron and Steel Health and Medical Services
Precious Metals Drugs and Biosciences
Miscellaneous Metals Medical Equipment/Supplies
Oil and Gas Publishing
Oil Refining Media
Energy Service Leisure Industry
Paper and Forest Products Hotels/Casinos
Agriculture/Foods Transportation/Freight
Construction Transportation
Chemicals Transportation Services
Producer Goods Restaurants
Pollution/Recycling Retail Food/Beverages
Electronics (excluding Semiconductors) Other Retail
Semiconductors and Related Telephone and Related
Aerospace/Defense Electric Utilities
Computer Hardware Gas Utilities
Computer Software Banks
Internet Content and Destinations Thrift Institutions
Internet ISPs and Access Financial Services
E-Commerce Life and Other Insurance
Internet Software and Business Services Real Property
Internet Financial Services Other Services
Cosmetics/Personal Products Miscellaneous
Apparel and Textile
Consumer Goods
Motor Vehicles and Parts
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<PAGE>
MANAGEMENT OF THE FUND
The officers and Trustees of the Fund, their principal occupations
during the past five years and their affiliations, if any, with Hambrecht &
Quist Fund Management, LLC (HQFM), Symphony Asset Management LLC (Symphony)
or Hambrecht & Quist LLC (H&Q) are as follows:
<TABLE>
<CAPTION>
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Name and Age Position With Principal Occupations During Past Five Years
the Trust
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<S> <C> <C>
Daniel H. Case III*, 42 Chairman, Trustee Chairman of Hambrecht & Quist Group (Group)
and H&Q since January 1998 and Chief
Executive Officer of Hambrecht & Quist Group
and H&Q since October 1994; various other
executive positions at Group and H&Q since
joining H&Q in 1981. Director of Rational
Software Corporation (software development
tools), Electronic Arts Inc.(entertainment
software), AMB Property Corporation, National
Science and Technology Medal Foundation,
Technology Network, Bay Area Council and
Securities Industry Association.
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William R. Timken*, 63 Trustee Director of Group and Hambrecht & Quist
California since prior to 1994; various
other senior positions at Group and H&Q,
including Vice Chairman, since joining H&Q in
1969 until his retirement in June 1999. Past
member of the Board of Governors of the
National Association of Securities Dealers,
Inc. and the Board of Governors of the Pacific
Stock Exchange.
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Mark S. Brandin**, 49 Trustee Managing Director of Brandin & Associates
(consulting) since June 1996; Executive
Vice President Marketing and Advertising
of Quick and Reilly, Inc. (broker-dealer)
from prior to 1994 to 1996.
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John A. Campbell**, 60 Trustee Audit Partner of PricewaterhouseCoopers LLP
and its predecessor from 1974 to June
1999.*** Board Member and Treasurer of San
Francisco Food Bank.
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Tom D. Seip**, 49 Trustee General Partner of Seip Investments Ltd.
(private investment firm) since June 1998
and Co-President of Seip Family Foundation
(investments in not-for-profit corporations);
Enterprise President of The Charles Schwab
Corporation (Schwab) from September 1997 to
May 1998 and Executive Vice President -
Retail Brokerage from 1994 to September 1997;
various other executive positions at Schwab
since joining Schwab in 1983. Director of
Offroad Capital, Inc. (broker-dealer holding
company) and MERAD Technologies, Inc.
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David R. Krimm, 45 President Director of Marketing of H&Q since 1998;
President of HQFM since July 1999; Vice
President of ICVerify from 1996 to 1997;
various positions at Intuit from 1994 to
1996,including Director of Marketing,
Automated Financial Services, Director of
Investment Services and President of Quicken
Investments.
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Robert N. Savoie, 42 Chief Financial Officer Tax Director of H&Q since 1997; Chief
Financial Officer of HQFM since July 1999;
Principal of Arthur Andersen LLP from prior
to 1994 to 1997.
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Steven N. Machtinger, 50 Secretary General Counsel and Secretary of Group and
H&Q since 1988 and Managing Director of H&Q
since 1990; Secretary of HQFM since July 1999.
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</TABLE>
* An "interested person" of the Fund as defined in the Investment Company Act
of 1940, as amended.
**Mr. Brandin's address is 275 Willowbrook Drive, Portola Valley, CA 94028.
Mr. Campbell's address is 726 Crossbrook Drive, Moraga, CA 94556. Mr. Seip's
address is 30 Ridge Road, Orinda, CA 94563.
*** PricewaterhouseCoopers LLP is the Fund's independent accountant. Mr.
Campbell's responsibilities at PricewaterhouseCoopers LLP included auditing
investment partnerships of which the sub-adviser or an affiliate of the
sub-adviser was the general partner.
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<PAGE>
Unless otherwise indicated, the address of each of the above listed individuals
is One Bush Street, San Francisco, California 94104.
The business of the Trust is managed under the direction of the
Trustees. The following table provides information as to the expected annual
compensation of the Trustees:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Aggregate
Compensation from Total Compensation
Name of Trustee Trust(1) from Fund Complex(2)
- -----------------------------------------------------------------------
<S> <C> <C>
Daniel H. Case III $0 $0
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William R. Timken $0 $0
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Mark S. Brandin $6,000 $6000
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John A. Campbell $6,000 $6000
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Tom D. Seip $6,000 $6000
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</TABLE>
(1) Trustees who are not "interested persons" of the Trust receive a quarterly
fee of $1,000, plus $500 for each Trust meeting attended. Trustees are also
reimbursed for expenses incurred on behalf of the Trust. The Trust does not
pay any pension or retirement benefits to the Trustees.
(2) A fund complex consists of investment companies that hold themselves out
to investors as related companies for purposes of investment and investor
services, have a common investment adviser or have an investment adviser that
is an affiliated person of the investment adviser of any other investment
companies. Affiliated persons of HQFM and Symphony act as investment advisers
to investment companies other than the Trust. However, none of the Trustees
receives any compensation from these other investment companies.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As part of the Fund's organization, Hambrecht & Quist California, a
California corporation, will purchase 10,000 Class A shares, or 100% of the
Fund's outstanding shares. Hambrecht & Quist California is a wholly-owned
subsidiary of Hambrecht & Quist Group, a Delaware corporation. As long as
their ownership of the Fund exceeds 25% of the shares of the Fund, Hambrecht
& Quist California and Hambrecht & Quist Group may be considered to control
the Fund.
As of the date of this SAI the officers and Trustees, as a group,
owned of record or beneficially none of the outstanding voting securities of
the Fund.
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<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISER
The investment adviser for the Fund is HQFM, which is a direct or
indirect subsidiary of Hambrecht & Quist California and Hambrecht & Quist Group
and an affiliate of H&Q, the Fund's distributor. HQFM oversees the asset
management and administration of the Fund. Services performed for the Fund
include maintaining office facilities; furnishing statistical and research data,
clerical services and stationery and office supplies; and generally assisting in
the operations of the Fund.
As compensation for these services, HQFM receives an advisory fee,
accrued daily and payable monthly in arrears, from the Fund of 0.65% of each
class's average daily net assets, a portion of which is used to pay the Fund's
sub-adviser. From time to time, HQFM may agree to waive or reduce some or all of
the compensation to which it is entitled. HQFM has guaranteed that, through at
least December 31, 2000, the total annual operating expenses of the Class A
shares will not exceed 1.60%, the total annual operating expenses of the Class B
shares will not exceed 2.30%, and the total annual operating expenses of the
Common Class shares will not exceed 1.60%, of such class's average daily net
assets.
The Fund pays all expenses not assumed by HQFM, including, but not
limited to, Trustees' expenses, audit fees, legal fees, interest expenses,
brokerage commissions, fees for registration and notification of shares for sale
with the SEC and various state securities commissions, taxes, insurance
premiums, fees of the Fund's administrator, transfer agent, fund accounting
agent or other service providers, and the cost of obtaining quotations for
portfolio securities and the pricing of Fund shares.
SUB-ADVISER
HQFM has entered into an investment sub-advisory agreement with
Symphony pursuant to which Symphony acts as the Fund's sub-adviser. Symphony
furnishes an investment program for the Fund, determines what securities and
other investments to purchase, retain or sell and places orders for the
purchase and sale of these investments. Symphony makes all investment
decisions for the Fund. Services performed by Symphony also include
furnishing statistical and research data, helping to prepare filings and
reports for the Fund and generally assisting HQFM and the Fund's other
service providers in all aspects of the administration of the Fund.
Symphony utilizes quantitative techniques, proprietary software
models and real-time databases in the performance of its services to the
Fund. Symphony bases its quantitative techniques on data provided by
Quote.com, a leading provider of IPO information, under an agreement granting
Symphony exclusive advance access to certain of Quote.com's IPO databases. In
addition to quantitative techniques, Symphony will apply qualitative
considerations when making investment decisions. Among other considerations,
Symphony may employ fundamental analysis, review issuers' prospectuses
and attend "roadshows" when determining whether to invest in a particular
IPO.
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<PAGE>
For Symphony's services, HQFM pays Symphony an annual investment
sub-advisory fee, payable monthly, of 0.35% of the Fund's average daily net
assets not in excess of $100 million and 0.375% of such assets over $100
million. In the event that HQFM waives its management fee to satisfy the
expense guarantees described above under "Investment Adviser", Symphony has
agreed to waive a pro rata portion of its fee from HQFM, subject to receiving
a minimum sub-advisory fee of 0.20% of the Fund's average daily net assets.
DISTRIBUTOR
Pursuant to a distribution agreement, H&Q, whose address is One
Bush Street, San Francisco, California 94104, is the distributor for shares
of the Fund and is the Fund's agent for the purpose of the continuous
offering of the Fund's shares. H&Q is a wholly-owned subsidiary of Hambrecht
& Quist California and Hambrecht & Quist B/D Subsidiary Corp. and an
affiliate of HQFM, the Fund's investment adviser. The Fund pays for prospectuses
and shareholder reports to be prepared and delivered to existing shareholders.
H&Q pays such costs when the described materials are used in connection with the
offering of shares to prospective investors and for supplementary sales
literature and advertising. For its services under the agreement, H&Q receives
the sales charges collected from sales of Class A shares and redemptions of
Class A and Class B shares and the 12b-1 fees collected on each class of shares
of the Fund.
DISTRIBUTION PLAN
The Fund has adopted a distribution plan (distribution plan) to permit
the Fund to pay distribution fees and defray expenses associated with the
distribution of its shares in accordance with Rule 12b-1 under the 1940 Act. The
distribution plan was adopted because of its anticipated benefits to the Fund.
These benefits include increased sales of the Fund's shares, enhancement of the
Fund's ability to retain assets, potential economies of scale, increased
stability in the Fund's portfolio positions and greater flexibility in achieving
investment objectives.
Pursuant to the distribution plan, the Fund pays H&Q at an annual
rate of .30% of the value of the average daily net assets of Class A shares,
1.00% of the value of the average daily net assets of Class B shares and 0.25%
of the value of the average daily net assets of Common Class shares.
Distribution fees are accrued daily and paid quarterly on Class A and Class B
shares and monthly on Common Class shares. Distribution fees are charged as
expenses of the Fund as accrued.
The fees payable under the distribution plan are used to compensate
H&Q for any expenses intended primarily to result in the sale of the Fund's
shares, including, but not limited to, payments H&Q makes to financial
intermediaries, including broker-dealers and other third parties, payments
made for the preparation, printing and distributing of advertising and sales
literature, and payments made for printing and distributing prospectuses and
shareholder reports to other than existing shareholders of the Fund. A
portion of these fees, not to exceed .25% of the aggregate daily net assets
attributable to each of the Class A, Class B and Common Class shares may
constitute a service fee used to compensate H&Q for expenses H&Q
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<PAGE>
incurs for personal services and/or the maintenance of shareholder accounts.
The full amount of distribution fees are payable to H&Q whether the actual
expenses of H&Q are in excess or less than such fees.
HQFM and/or H&Q may from time to time and from its own funds or
such other resources as are permitted make payments for distribution and
shareholder services. H&Q provides the Trustees with a quarterly report of
the amounts expended under the distribution plan and the purposes for which
such expenditures were incurred.
The distribution plan may not be amended to increase materially the
costs which holders of Class A, Class B or Common Class shares may bear pursuant
to the distribution plan without the approval of the holders of such shares.
Other material amendments of the distribution plan must be approved by the
Trustees, and by a majority of the Trustees who are not "interested persons" of
the Fund and have no direct or indirect financial interest in the operation of
the distribution plan or in any related agreements, by vote cast in person at a
meeting called for the purpose of considering such amendments. The distribution
plan is subject to annual approval by such vote of the Trustees cast in person
at a meeting called for the purpose of voting on the distribution plan. The
distribution plan may be terminated with respect to any class of shares at any
time by vote of a majority of the Trustees who are not "interested persons" and
have no direct or indirect financial interest in the operation of the
distribution plan or in any related agreements or by vote of the holders of a
majority of such class of shares.
ADMINISTRATOR, FUND ACCOUNTANT, TRANSFER AGENT AND DIVIDEND DISBURSING
AGENT
PFPC Inc. (PFPC), whose principal offices are located at 400
Bellevue Parkway, Wilmington, Delaware 19899, serves as the administrator,
fund accountant, dividend disbursing and transfer agent for the Fund. The
services provided by PFPC include day to day maintenance of certain books and
records, calculation of the offering price of the shares, preparation of
reports and liaison with the Fund's custodian. From time to time, the Fund
may employ other entities, including the sponsors of mutual fund
supermarkets, as sub-transfer agents.
CUSTODIAN
PFPC Trust Company, whose principal offices are located at the Airport
Business Center, 200 Stevens Drive, Suite 440, Lester, Pennsylvania 19113,
serves as custodian for the Fund. The custodian is responsible for the daily
safekeeping of securities and cash held by the Fund.
INDEPENDENT ACCOUNTANT
The Fund's independent accountant, PricewaterhouseCoopers LLP, audits
and reports on the annual financial statements of the Fund and reviews certain
regulatory reports and the Fund's federal income tax returns. It also performs
other professional accounting, auditing, tax and advisory services when the Fund
engages it to do so. Its address is 333 Market Street, San Francisco, CA 94105.
LEGAL COUNSEL
Howard Rice Nemerovski Canady Falk & Rabkin, A Professional
Corporation, Three Embarcadero Center, Seventh Floor, San Francisco,
Californina 94111-4065 serves as legal counsel for the Trust, HQFM and H&Q.
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<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
PORTFOLIO TURNOVER
For reporting purposes, the Fund's portfolio turnover rate is
calculated by dividing the value of purchases or sales of portfolio securities
for the year, whichever is less, by the monthly average value of portfolio
securities the Fund owned during the year. When making the calculation, all
securities whose maturities at the time of acquisition were one year or less
("short-term securities") are excluded. A 100% portfolio turnover rate would
occur, for example, if all portfolio securities (aside from short-term
securities) were sold and either repurchased or replaced once during the year.
The turnover rate of the Fund will fluctuate annually and is expected
to exceed 200% in any given year. Funds with high turnover (100% or more) tend
to generate higher taxable income and gains and transaction costs, including
brokerage commissions.
PORTFOLIO TRANSACTIONS
In effecting securities transactions for the Fund, Symphony seeks
to obtain best price and execution. Subject to the supervision of the Fund's
Trustees, the sub-adviser will generally select brokers and dealers for the
Fund primarily on the basis of the quality and reliability of brokerage
services, including execution capability and financial responsibility.
In assessing these criteria, Symphony will, among other things,
monitor the performance of brokers effecting transactions for the Fund to
determine the effect, if any, that the Fund's transactions through those
brokers have on the market prices of the stocks involved. This may be of
particular importance for the Fund's investments in relatively smaller
companies whose stocks are not as actively traded as those of their larger
counterparts. The Fund will seek to buy and sell securities in a manner that
causes the least possible fluctuation in the prices of those stocks in view
of the size of the transactions.
When the execution capability and price offered by two or more
broker-dealers are comparable, Symphony may, in its discretion, in agency
transactions (and not principal transactions) utilize the services of
broker-dealers that provide it with investment information and other research
resources. Commissions charged by such broker-dealers may be higher than
commissions charged by broker-dealers not providing such resources. Such
resources may be used by Symphony when providing advisory services to other
investment advisory clients, including other mutual funds.
In an attempt to obtain best execution for the Fund, Symphony may
place orders directly with market makers or with third market brokers or
brokers on an agency basis. Placing orders with third market brokers may
enable the Fund to trade directly with other institutional
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<PAGE>
holders on a net basis. At times, this may allow the Fund to trade larger blocks
than would be possible trading through a single market maker.
The Fund expects to purchase IPOs from underwriting syndicates of
which H&Q, the Fund's distributor and an affiliate of HQFM, acts as a member
or manager. Such purchases will be effected in accordance with the conditions
set forth in Rule 10f-3 under the 1940 Act and related procedures adopted by
the Fund's Trustees, including a majority of the Trustees who are not
"interested persons" of the Fund. Among the conditions are that the IPO
issuer will have been in operation for at least three years, that not more
than 25% of the underwriting will be purchased by the Fund and any other
investment company having the same investment adviser or sub-adviser, and
that no shares will be purchased from H&Q or any of its affiliates.
DESCRIPTION OF THE TRUST
The Fund is currently the only series of Hambrecht & Quist Fund Trust,
a diversified open-end investment management company organized as a Delaware
business trust on June 7, 1999. The Fund offers three classes of shares,
Class A, Class B and Common Class.
The Fund will not hold regular shareholder meetings, but may hold
special meetings. Shareholders are entitled to vote only in limited
circumstances, as set forth in the Trust's Agreement and Declaration of the
Trust (Declaration of Trust). Generally, shareholders are entitled to vote
(i) for the election of Trustees (as provided in the 1940 Act); (ii) for the
removal of Trustees ; (iii) on the Fund's entry into investment advisory or
management contracts, except when such vote is not required under the 1940
Act; (iv) on the termination of the Trust in certain circumstances; (v) on
amendments to the Declaration of Trust affecting certain shareholder voting
rights; (vi) when such vote is otherwise required under applicable law or the
Trust's then-current Registration Statement, Declaration of Trust or By-laws
or (vii) when such vote is submitted to the shareholders in the Trustees'
discretion. The Declaration of Trust specifically authorizes the Trustees to (i)
sell or convey substantially all of the assets of the Trust or any series to
another series or other open-end investment company or (ii) sell and convert
into money all or substantially all of the assets of the Trust or any series,
in each case without shareholder approval if a majority of the Trustees
determine that the continuation of the Trust or any series is not in the best
interest of the Trust or such series, or their respective shareholders.
Shareholders are entitled to one vote for each dollar of net asset value, and
a proportional fractional vote for each fractional dollar of net asset value,
represented by the shares owned. Shareholders may vote by proxy or in person.
Proxy materials will be mailed to shareholders prior to any meetings, and
will include a voting card and information explaining the matters to be voted
upon.
Shares representing one-third of the total net asset value of
shares of each affected series or class, or shares representing one-third of
the total net asset value of shares of the Trust, entitled to vote will be a
quorum for the transaction of business at a shareholders' meeting. Any lesser
number will be sufficient for adjournments. Except when a larger vote is
required by applicable law, the Declaration of Trust or the By-laws,
shareholders representing a majority of the total net asset value of shares
voting at a shareholders' meeting will decide any matters to be voted upon
with respect to the entire Trust and shareholders representing a plurality of
the total net asset value of such shares will elect a Trustee. If the
Declaration of Trust or applicable law permits or requires that shares be
voted on any matter by individual series or classes, then shareholders
representing a majority of the total net asset value of shares of that series
or class will decide that matter insofar as that series or
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<PAGE>
class is concerned. Shareholders may act as to the Trust or any series or class
by the written consent of shareholders representing a majority (or such other
amount as may be required by applicable law) of the total net asset value of
shares of the Trust or of such series or class.
Generally, Delaware business trust shareholders are not personally
liable for obligations of the Delaware business trust under Delaware law. The
Delaware Business Trust Act (Delaware Act) provides that shareholders of a
Delaware business trust are entitled to the same limitations on liability
extended to shareholders of private for-profit corporations. The Declaration of
Trust expressly provides that the Trust has been organized under the Delaware
Act and that the Declaration of Trust is to be governed by Delaware law. It is
nevertheless possible that a Delaware business trust, such as the Trust, might
become party to an action in another state whose courts refused to apply
Delaware law, in which case the Trust's shareholders could be subject to
personal liability. To guard against this risk, the Declaration of Trust (i)
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides that notice of such disclaimer may be given in each
agreement, obligation and instrument entered into or executed by the Trust or
its Trustees, (ii) provides for the indemnification out of Trust property (from
the applicable series of the Trust) of a shareholder held personally liable
solely by reason of the shareholder's having been a shareholder and (iii)
provides that the Trust will, upon request, assume the defense of any claim made
against such shareholder for any act or obligation of the applicable series of
the Trust and satisfy any judgement thereon. Thus, the risk of a Trust
shareholder incurring financial loss beyond his or her investment because of
shareholder liability is limited to circumstances in which all of the following
factors are present: (1) a court refuses to apply Delaware law; (2) the
liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (3) the Trust itself would be unable to meet its
obligations. In light of Delaware law, the nature of the Trust's business and
the nature of its assets, the risk of personal liability to a Fund shareholder
is remote.
The Trustees may each year, or more frequently, distribute to the
shareholders of each series accrued income less accrued expenses and any net
realized capital gains less accrued expenses. The income and gains of each
series or class will be distributed pro rata to shareholders in proportion to
the number of shares of each series or class held by each of them.
Distributions will be paid in cash or shares or a combination thereof as
determined by the Trustees. Distributions paid in shares will be paid at the
net asset value as determined in accordance with the Declaration of Trust.
Upon liquidation of the Trust, shares of each series or class will be
entitled to a pro rata distribution of all assets of such series or class
remaining after payment or provision for all known liabilities of such series
or class.
Shares of the Trust may be automatically redeemed if held by a
shareholder in an amount less than the minimum required by the Fund or for
any other reason under terms set by the Trustees, including the failure of a
shareholder (i) to supply a taxpayer identification number or other
information or certification required by applicable law, (ii) to invest the
required minimum or (iii) to pay when due shares issued to such shareholder.
The Trust may redeem shares and transfer the proceeds to a government unit,
agency, authority or authorized depository without prior notice to a
shareholder and without liability to such shareholder, if such action is
taken (i) in response to a notice of levy, lien or similar action from the
Internal Revenue Service or state tax authority, (ii) in compliance with
state law governing escheat or abandonment of property, (iii) in satisfaction
of witholding tax requirements (including penalties and interest) applicable
to any prior distribution to a shareholder that were not satisfied at the
time of such distribution or (iv) in compliance with any other applicable
legal requirement.
PURCHASE, REDEMPTION AND PRICING OF SHARES
CLASS A SHARES
Class A shares will normally be more beneficial than Class B shares to
investors who qualify for reduced front-end sales charges on Class A shares, as
set forth in the prospectus. As
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<PAGE>
a result, any order for $250,000 or more for Class B shares may be rejected by
your financial intermediary.
Class A shares are subject to a front-end sales charge, as
described in the prospectus. The portion of this sales charge that is
re-allowed to selected dealers is as follows:
<TABLE>
<CAPTION>
Commission to
selected
dealers as % of
Investment offering price
- -------------------- ---------------
<S> <C>
Less than $50,000 5.00%
$50,000 to $99,999 4.00%
$100,000 to $249,999 3.00%
$250,000 to $499,999 2.25%
$500,000 to $999,999 1.75%
$1,000,000 or more 1.00%
</TABLE>
With respect to purchases of $1,000,000 or more made through
authorized financial intermediaries, the distributor may pay from its own
resources a fee of up to 1% of the amount invested to compensate such financial
intermediaries for their distribution assistance. Proceeds from the CDSC on
Class A shares are used by the distributor to defray these expenses.
No initial sales charge is imposed on Class A shares issued (i)
pursuant to the automatic reinvestment of income and gains distributions, (ii)
upon the automatic conversion of Class B shares to Class A shares or (iii) to an
investor repurchasing shares which the investor sold within the preceding 60
days.
COMBINED PURCHASE PRIVILEGE AND CUMULATIVE QUANTITY DISCOUNT
Certain investors may qualify for a reduced sales charge according to
the Class A sales charge schedule set forth in the prospectus, by combining
purchases of shares of the Fund into a single "purchase" if the resulting
"purchase" equals at least $50,000. For purposes of this Combined Purchase
Privilege, the term "purchase" refers to: (i) a single purchase by an
individual, or concurrent purchases, which in the aggregate are at least equal
to the prescribed amounts, by an individual, his or her spouse and their
children under the age of 21 years; (ii) a single purchase by a trustee or other
fiduciary purchasing shares for a single fiduciary account even though more than
one beneficiary is involved; or (iii) a single purchase for the employee benefit
plans of a single employer. The term "purchase" also includes purchases by a
"company" as the term is defined in the 1940 Act, but does not include purchases
by any such company which has not been in existence for at least six months or
which has no other purpose than the purchase of shares of the Fund or shares of
other registered investment companies. The term "purchase" does not include
purchases by any group of individuals whose sole organizational nexus is that
the participants therein are credit card holders of a company, policy holders of
an insurance company, customers of either a bank or broker-dealer or clients of
an investment adviser.
An investor's purchase of additional Class A shares of the Fund may
qualify for a Cumulative Quantity Discount. The applicable sales charge will be
based on the total of : (i) the investor's current purchase; (ii) the net asset
value (at the close of business on the previous day) of all Class A shares of
the Fund held by the investor; and (iii) the net asset value of all shares
described in (ii) owned by another shareholder eligible to combine his or her
purchase with that of the investor in a single "purchase" as described above.
To qualify for the Combined Purchase Privilege or to obtain the
Cumulative Quantity Discount on purchases made through a financial intermediary,
the investor or financial intermediary must provide the transfer agent with
sufficient information to verify that each purchase qualifies for the privilege
or discount.
STATEMENT OF INTENTION
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<PAGE>
Class A investors may also obtain a reduced sales charge, as set forth
in the prospectus, by means of a written Statement of Intention, which expresses
the investor's intention to invest at least $50,000 within a period of 13 months
in Class A shares of the Fund. Each purchase under a Statement of Intention will
be made at the public offering price at the time of such purchase applicable to
a single transaction of the dollar amount indicated in the Statement of
Intention. At the investor's option, a Statement of Intention may include
purchases of Fund shares made not more than 90 days prior to the date the
investor signs the Statement of Intention; however, the 13 month period during
which the Statement of Intention is in effect will begin on the date of the
earliest purchase included.
The Statement of Intention is not a binding obligation on the investor
to purchase the full amount indicated. The minimum initial investment under a
Statement of Intention will be 5% of such amount. Shares purchased with the
first 5% will be held in escrow (while remaining registered in the name of the
investor) to secure payment of the higher sales charge applicable to the shares
actually purchased if the full amount indicated in the Statement of Intention is
not purchased, and such escrowed shares will be involuntarily redeemed to pay
the additional sales charge, if necessary. Dividends on escrowed shares, whether
paid in cash or reinvested in additional Fund shares, are not subject to escrow.
When the full amount has been purchased, the escrow will be released. To the
extent the investor purchases more than the dollar amount indicated in the
Statement of Intention and qualifies for a further reduced sales charge, the
sales charge will be adjusted for the entire amount purchased at the end of the
13 month period. The difference in the sales charge will be used to purchase
additional Fund shares subject to the rate of the sales charge applicable to the
actual amount of the aggregate purchase.
PRIVILEGE FOR CERTAIN RETIREMENT PLANS
Multiple participant payroll deduction retirement plans, such as
401(k) plans, may also purchase shares of the Fund at a reduced sales charge on
a monthly basis during the 13-month period following the plan's initial
purchase. The sales charge applicable to the initial purchase of shares of the
Fund will be that normally applicable under the sales charge schedule set forth
in the prospectus to an investment 13 times larger than such initial purchase.
The sales charge applicable to each succeeding monthly purchase will be that
normally applicable, under the schedule, to an investment equal to the sum of
(i) the total purchases previously made during the 13-month period and (ii) the
current month's purchase multiplied by the number of months (including the
current month) remaining in the 13-month period. Sales charges previously paid
during such period will not be retroactively adjusted based on later purchases.
EXEMPTION FOR CERTAIN OTHER INVESTORS
The Fund may sell its Class A shares at net asset value (without a
front-end sales charge) and without a CDSC to certain other investors,
including:
(i) HQFM, H&Q, Symphony and their affiliates, and their current
officers, partners, directors and employees, any current or former Trustee or
officer of the Trust, any spouse or sibling, direct ancestor or direct
descendent (collectively "relatives") of any such individual, or
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<PAGE>
any trust, individual retirement account or retirement plan account for the
benefit of any such individual or relative;
(ii) qualified retirement plans of HQFM, H&Q, Symphony and their
affiliates;
(iii) any registered representative of any financial intermediary
authorized to sell Class A or Class B shares of the Fund or their respective
spouses, children and parents;
(iv) banks, trust companies and other types of depository institutions
investing for their own accounts or for their customers' accounts;
(v) any state, county or city, or any instrumentality, department,
authority or agent thereof, which is prohibited by applicable investment laws
from paying a sales charge or commission in connection with the purchase of
shares of the Fund;
(vi) pension and profit sharing plans, pension funds and other
company-sponsored benefit plans that (A) buy shares worth $500,000 or more, or
(B) have at the time of purchase, 100 or more eligible participants, or (C)
certify that they project to have annual plan purchases of $200,000 or more;
(vii) "wrap" accounts for the benefit of clients of H&Q and
broker-dealers, financial institutions or other financial intermediaries that
have entered into an agreement with H&Q; and
(viii) registered investment advisers investing for accounts for which
they receive asset-based fees.
A purchaser's financial intermediary must certify to the transfer
agent that the purchaser is eligible for an exemption from the Class A
front-end sales charge and also notify the transfer agent if a previously
eligible purchaser is no longer eligible for such an exemption. Exemptions will
be granted subject to verification of a purchaser's entitlement. Financial
intermediaries may charge a fee for effecting transactions involving Class A
shares of the Fund sold at net asset value .
The CDSC imposed on certain purchases of Class A shares may be waived
in the same manner as the CDSC on Class B shares may be waived, as described
below under "Class B Shares."
Class A shares are offered at net asset value (without a front-end
sales charge) and without a CDSC to the Trustees and other affiliated persons
of the Fund as an incentive to such persons to purchase shares of the Fund
and thereby to align further the interests of such persons with the interests
of the Fund's shareholders.
CLASS B SHARES
The combination of the CDSC and the distribution fee enables the
Fund to sell the Class B shares without a front-end sales charge being
deducted at the time of purchase. The higher distribution fee incurred by
Class B shares will cause such shares to have a higher expense ratio and to
pay lower dividends than those related to Class A and Common Class shares.
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<PAGE>
Proceeds from the CDSC are payable to H&Q and may be used in whole
or in part to defray H&Q's expenses relating to the provision of distribution-
related services to the Fund in connection with the sale of Class B shares,
including payments to selected dealers. H&Q pays selected dealers a commission
equal to 4.00% of the price of Class B shares sold.
The CDSC may be waived on Class B shares if the redemption relates to:
(a) retirement distributions or loans to participants or beneficiaries from
pension or profit sharing plans, pension funds and other company-sponsored
benefit plans (each a Plan); (b) the death or disability (as defined in Section
72(m)(7) of the Internal Revenue Code of 1986, as amended (Code)) of a
participant in a Plan; (c) hardship withdrawals by a participant or beneficiary
in a Plan; (d) satisfying the minimum distribution requirements of the Code; (e)
the establishment of "substantially equal periodic payments" as described in
Section 72(m)(7) of the Code; (f) the separation from service by a participant
or beneficiary in a Plan; (g) excess contributions distributed from a Plan; (i)
the death or disability (as defined in Section 72(m)(7) of the Code) of a
shareholder if the redemption is made within one year of the event; and (h)
redemption proceeds which are being reinvested in accounts or non-registered
products over which an advisory affiliate of Hambrecht & Quist Group has
investment discretion.
Class B shares convert to Class A shares five years after the end of
the calendar month in which the shareholder's purchase order was accepted. Such
conversion will occur on the basis of the net asset values of the two classes,
without the imposition of any sales load, fee or other charge. The purpose of
the conversion is to reduce the distribution fee paid by Class B shareholders
that have been outstanding long enough for the distributor to have been
compensated for the distribution expenses incurred in the sale of the shares.
For purposes of conversion to Class A shares, Class B shares acquired
through reinvestment of dividends and distributions will convert to Class A
shares based on the date of the initial purchase of the underlying shares on a
pro rata basis.
The conversion of Class B shares to Class A shares is subject to the
availability at the time of conversion of an opinion of counsel or other
assurance to the effect that the conversion of Class B shares to Class A shares
does not constitute a taxable event under federal law. In the event such
assurance is not available, no further conversion of Class B shares would occur
and shares would continue to be subject to a higher distribution fee for an
indefinite period.
PURCHASING AND REDEEMING SHARES OF THE FUND
The Fund has authorized one or more brokers to receive on its
behalf purchase and redemption orders for shares of the Fund. Such brokers
are authorized to designate other intermediaries to receive purchase and
redemption orders on the Fund's behalf. The Fund will be deemed to have
received a purchase or redemption order when an authorized broker or designee
receives the order. An order placed through an authorized broker or designee
will be priced at the Fund's net asset value next computed after receipt of
the order by such broker or designee.
As long as the Fund or PFPC follow reasonable procedures to
confirm that your telephone order is genuine, they will not be liable for any
losses you may experience due to unauthorized or fraudulent instructions. These
procedures may include requiring a form of personal identification before acting
upon any telephone order, providing written confirmation of telephone orders and
tape recording telephone orders.
PFPC does not accept third party checks as payment for Fund
shares. The Fund requires signature guarantees for redemptions in excess of
$25,000. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program, Stock Exchange Medallion Program and the New York
Stock Exchange, Inc.
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<PAGE>
Medallion Signature Program. Signature guarantees that are not part of these
programs will not be accepted.
Share certificates will not be issued in order to avoid additional
administrative costs; however, share ownership records are maintained by the
Fund's transfer agent, PFPC. Twice a year, financial reports will be mailed
to shareholders describing the Fund's performance and investment holdings. In
order to reduce these mailing costs, each household will receive one
consolidated mailing. If you do not want to receive consolidated mailings, you
may write to the Fund and request that your mailings not be consolidated.
The Fund has made an election with the SEC to pay in cash all
redemptions requested by any shareholder of record limited in amount during any
90-day period to the lesser of $250,000 or 1% of its net assets at the beginning
of such period. This election is irrevocable without the SEC's prior approval.
Redemption requests in excess of these limits may be paid, in whole or in part,
in investment securities or in cash, as the Trustees may deem advisable. Payment
will be made wholly in cash unless the Trustees believe that economic or market
conditions exist that would make such payment a detriment to the best interests
of the Fund. If redemption proceeds are paid in investment securities, such
securities will be valued as set forth in "Pricing of Shares." A redeeming
shareholder would normally incur brokerage expenses if he or she were to convert
the securities to cash.
PRICING OF SHARES
Securities traded on stock exchanges are valued at the last quoted
sales price that day on the exchange on which such securities are principally
traded, or, lacking any sales, at the mean between the closing bid and asked
prices. Securities traded in the over-the-counter market are valued at the
last bid price that day.
Futures contracts are valued using the closing settlement price or,
in the absence of such a price, the most recent quoted bid price. If there
are no quotations available on the valuation date, the last available closing
settlement price is used.
Debt instruments having 60 days or less remaining until maturity
are valued at amortized cost if their original maturity was 60 days or less,
or by amortizing their fair values as of the 61st day prior to maturity if
their original maturity exceeded 60 days (unless in either case the Trustees
determine that this method does not represent fair value).
Debt instruments not maturing within 60 days are valued on the
basis of the price provided by a pricing service when such prices are
believed to reflect the fair value of such securities. The prices provided by
a pricing service take into account many factors, including institutional
size trading in similar groups of securities and developments related to
specific securities.
Securities and assets for which market quotations are not readily
available (including restricted securities that are subject to limitations on
their sale and illiquid securities) are valued at fair value as determined in
good faith pursuant to guidelines adopted by the Trustees.
-21-
<PAGE>
The assets attributable to Class A, Class B and Common Class shares
will be invested together in a single portfolio. The net asset value of each
class will be determined separately by subtracting the liabilities allocated to
that class from the assets belonging to that class in conformance with the
provisions of a plan adopted by the Fund in accordance with Rule 18f-3 under the
1940 Act.
TAXATION
FEDERAL TAX INFORMATION FOR THE FUND
It is the Fund's policy to qualify for taxation as a "regulated
investment company" (RIC) by meeting the requirements of Subchapter M of the
Code. By qualifying as a RIC, the Fund expects to eliminate or reduce to a
nominal amount the federal income tax to which it is subject. If the Fund does
not qualify as a RIC under the Code, it will be subject to federal income tax on
its net investment income and any net realized capital gains.
The Code imposes a non-deductible excise tax on RICs that do not
distribute in a calendar year (regardless of whether they otherwise have a
non-calendar taxable year) an amount equal to 98% of their "net ordinary
income" (as defined in the Code) for the calendar year plus 98% of their
capital gain net income for the one-year period ending on October 31 of such
calendar year, plus any undistributed amounts from prior years. The
non-deductible excise tax is equal to 4% of the deficiency. For the foregoing
purposes, the Fund is treated as having distributed any amount on which it is
subject to income tax for any taxable year ending in such calendar year.
The Fund's transactions in futures contracts may be restricted by the
Code and are subject to special tax rules. In a given case, these rules may
accelerate income to the Fund, defer its losses, cause adjustments in the
holding periods of the Fund's assets, convert short-term capital losses into
long-term capital losses or otherwise affect the character of the Fund's income.
These rules could therefore affect the amount, timing and character of
distributions to shareholders. The Fund will endeavor to make any available
elections pertaining to these transactions in a manner believed to be in the
best interest of the Fund and its shareholders.
FEDERAL INCOME TAX INFORMATION FOR SHAREHOLDERS
The discussion of federal income taxation presented below supplements
the discussion in the Fund's prospectus and only summarizes some of the
important federal tax considerations generally affecting shareholders of the
Fund. Accordingly, prospective investors (particularly those not residing or
domiciled in the United States) should consult their own tax advisers regarding
the consequences of investing in the Fund.
Any dividends declared by the Fund in October, November or December
and paid the following January are treated, for tax purposes, as if they were
received by shareholders on December 31 of the year in which they were declared.
Long-term capital gains distributions are taxable as long-term capital gains,
regardless of how long you have held your shares. However, if you receive a
long-term capital gains distribution with respect to Fund shares held for six
months or less, any loss on the sale or exchange of those shares will, to the
extent of the long-
-22-
<PAGE>
term capital gains distribution, be treated as a long-term capital loss. For
corporate investors in the Fund, dividend distributions the Fund designates
to be from dividends received from qualifying domestic corporations will be
eligible for the corporate dividends-received deduction to the extent they
would qualify if the Fund were a regular corporation and if other applicable
requirements are met. Distributions by the Fund also may be subject to state,
local and foreign taxes, and the Fund's treatment under applicable tax laws
may differ from the federal income tax treatment.
The Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends paid to any shareholder who (1) fails
to provide a correct taxpayer identification number certified under penalty of
perjury; (2) is subject to withholding by the Internal Revenue Service for
failure to properly report all payments of interest or dividends; or (3) fails
to provide a certified statement that he or she is not subject to "backup
withholding." Backup withholding is not an additional tax and any amounts
withheld may be credited against the shareholder's ultimate U.S. tax liability.
Foreign shareholders (i.e., nonresident alien individuals and
foreign corporations, partnerships, trusts and estates) are generally subject
to U.S. withholding tax at the rate of 30% (or a lower tax treaty rate) on
distributions derived from net investment income and short-term capital
gains. Distributions to foreign shareholders of long-term capital gains and
any gains from the sale or other disposition of shares of the Fund generally
are not subject to U.S. taxation, unless the recipient is an individual who
meets the Code's definition of "resident alien" or is present in the United
States for more than 183 days during the year. Different tax consequences may
result if the foreign shareholder is engaged in a trade or business within
the United States. In addition, the tax consequences to a foreign shareholder
entitled to claim the benefits of a tax treaty may be different than those
described above.
CALCULATION AND USE OF PERFORMANCE DATA
Average annual total return is a standardized measure of performance
calculated using methods prescribed by SEC rules. It is calculated by
determining the ending value of a hypothetical initial investment of $1,000 made
at the beginning of a specified period. The ending value is then divided by the
initial investment, the result of which is annualized and expressed as a
percentage. It is reported for periods of one, five and 10 years or since
commencement of operations for periods not falling on those intervals. In
computing average annual total return, the Fund assumes reinvestment of all
distributions at net asset value on applicable reinvestment dates.
An after-tax total return for the Fund may be calculated by taking its
total return and subtracting applicable federal taxes from the portions of the
Fund's total return attributable to capital gain and ordinary income
distributions. This after-tax total return may be compared to that of other
mutual funds with similar investment objectives as reported by independent
sources.
The Fund also may report the percentage of its total return that would
be paid to taxes annually (at the applicable federal personal income and capital
gains tax rates) before redemption of Fund shares. This proportion may be
compared to that of other mutual funds with similar investment objectives as
reported by independent sources.
-23-
<PAGE>
The Fund also may advertise its cumulative total return since
inception. This number is calculated using the same formula that is used for
average annual total return except that, rather than calculating the total
return based on a one-year period, cumulative total return is calculated from
commencement of operations to the most recent fiscal year end.
The performance of the Fund may be compared with the performance of
other mutual funds by comparing the ratings of mutual fund rating services,
various indices, U.S. government obligations, bank certificates of deposit, the
consumer price index and other investments for which reliable data is available.
The Fund's performance may also be compared to averages, performance rankings,
or other information prepared by recognized mutual fund statistical services. An
index's performance data assumes the reinvestment of dividends but does not
reflect deductions for administrative, management and trading expenses. The Fund
will be subject to these costs and expenses, while an index does not have these
expenses. In addition, various factors, such as holding a cash balance, may
cause the Fund's performance to be higher or lower than that of an index. The
Fund's annual report may contain additional performance information.
FINANCIAL STATEMENTS
REPORT ON STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 22, 1999
-24-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Trustees of
Hambrecht & Quist Fund Trust:
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of the H&Q IPO &
Emerging Company Fund (the Fund), at October 22, 1999, in conformity with
generally accepted accounting principles. This 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
of this financial statement in accordance with generally accepted auditing
standards which 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, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
San Francisco, California
October 26, 1999
-25-
<PAGE>
H&Q IPO & EMERGING COMPANY FUND OF
HAMBRECHT & QUIST FUND TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 22, 1999
<TABLE>
<S> <C>
ASSETS
Cash $100,000
Deferred offering costs (Note 2) 41,510
-----------------
Total assets $141,510
-----------------
LIABILITIES
Liabilities and accrued expenses 41,510
-----------------
Total liabilities $41,510
-----------------
NET ASSETS $100,000
-----------------
-----------------
NET ASSETS CONSIST OF:
Class A Shares of Common Stock, $.001 par value,
unlimited shares authorized $10
Paid-in Capital in excess of par 99,990
-----------------
NET ASSETS $100,000
-----------------
-----------------
NET ASSET VALUE:
Class A - Based on net assets of $100,000 and 10,000
shares outstanding $10.00
</TABLE>
The accompanying notes are an integral part of this financial statement.
-26-
<PAGE>
H&Q IPO & EMERGING COMPANY FUND OF
HAMBRECHT & QUIST FUND TRUST
NOTES TO FINANCIAL STATEMENT
OCTOBER 22, 1999
1. ORGANIZATION:
Hambrecht & Quist Fund Trust (the "Trust") was organized as a Delaware
business trust on June 8, 1999 and is registered under the Investment
Company Act of 1940 as an open-end diversified investment company. H&Q IPO
& Emerging Company Fund (the "Fund") is a series of the Trust. To date, the
Fund has not had any transactions other than those relating to
organizational matters and the sale of 10,000 Class A shares to Hambrecht &
Quist California, the parent company of Hambrecht & Quist Fund Management,
LLC (the "Adviser").
2. SIGNIFICANT ACCOUNTING POLICIES
Deferred offering Costs: The Fund has deferred certain initial offering
costs. These costs will be amortized by the Fund over the period of
benefit, not to exceed 12 months from the date the Fund commences
operations.
Organization Costs: Costs of $100,000 relating to the organization of the
Trust have been borne by the Adviser.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS:
a. The Trust, on behalf of the Fund, has entered into an investment
advisory agreement with the Adviser. Pursuant to the investment
advisory agreement, the Adviser is responsible for oversight of the
asset management and administration of the Fund. The Fund pays the
Adviser a monthly fee at the annual rate of 0.65% of the Fund's
average daily net assets, a portion of which is used to pay the Fund's
sub-adviser.
b. The Adviser has entered into an investment sub-advisory agreement with
Symphony Asset Management, LLC (Symphony) pursuant to which Symphony
acts as the Fund's sub-adviser. The sub-adviser makes all investment
decisions for the Fund and places all orders for the purchase and sale
of the Fund's securities. For the sub-adviser's services, the Adviser
pays Symphony an annual investment sub-advisory fee, payable monthly,
of 0.35% of the Fund's average daily net assets not in excess of $100
million and 0.375% of such assets over $100 million.
c. The Adviser has guaranteed that, until January 1, 2001, the total
annual operating expenses of the Class A shares will not exceed 1.60%
of such class's average daily net assets. In the event that the
Adviser waives its management fee to satisfy the expense guarantees,
the sub-adviser has agreed to waive a pro rata portion of its fee from
the Adviser, subject to receiving a minimum sub-advisory fee of 0.20%
of the class's average daily net assets.
d. The Fund has adopted a plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended, that allows the Fund to
pay distribution and service fees for the sale and distribution of its
shares and for services provided to shareholders. The plan permits the
Fund to pay Hambrecht & Quist LLC, an affiliate of the Adviser, as
principal distributor, a monthly distribution fee of 0.30% per annum
of the average daily net assets of the Class A shares of the Fund.
e. Certain officers of the Trust are officers of the Adviser. Such
persons are not paid directly by the Trust for serving in those
capacities.
-27-
<PAGE>
HAMBRECHT & QUIST FUND TRUST
Part C - Other Information
<TABLE>
<CAPTION>
Item 23. Exhibits:
---------
<S> <C>
(a) (1) Restated Agreement and Declaration
of Trust dated June 7, 1999(1), as amended September 8, 1999.........Filed herewith.
(2) Certificate of Trust dated June 7, 1999(1)
(b) By-laws(1)
(c) Instruments defining Rights
of Security Holders.....................................................Not applicable.
(d) Investment Advisory Contracts
(1) Investment Advisory Agreement......................................Filed herewith.
(2) Investment Sub-Advisory Agreement..................................Filed herewith.
(e) Distribution Agreement..................................................Filed herewith.
(f) Bonus or Profit Sharing Contracts.......................................None.
(g) Custodian Services Agreement............................................Filed herewith.
(h) Other Material Contracts
(1) Transfer Agency Services Agreement.................................Filed herewith.
(2) Administration and
Accounting Services Agreement......................................Filed herewith.
(i) Legal Opinion(2)
(j) Other Opinions
Consent of Independent
Accountants.............................................................Filed herewith.
(k) Omitted Financial Statements............................................None.
(l) Initial Capital Agreement(2)
(m) Rule 12b-1 Plan.........................................................Filed herewith.
(n) Rule 18f-3 Plan.........................................................Filed herewith.
</TABLE>
<PAGE>
- ----------------------
(1)Incorporated by reference to the Trust's Registration Statement
on Form N-1A filed with the Securities and Exchange Commission on June 11, 1999.
(2)Incorporated by reference to Pre-effective Amendment No. 2 to the
Trust's Registration Statement on Form N-1A filed with the Securities and
Exchange Commission on September 15, 1999.
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Initially, Hambrecht & Quist California, a California corporation
which is a wholly-owned subsidiary of Hambrecht & Quist Group, a
Delaware corporation, will own 100% of the shares of the Fund. As long
as such ownership exceeds 25%, the Fund may be considered to be under
common control with the following direct and indirect subsidiaries of
Hambrecht & Quist Group:
Hambrecht & Quist LLC (Delaware limited liability company)
Hambrecht & Quist B/D Subsidiary Corp. (California corporation)
Hambrecht & Quist Fund Management, LLC
(California limited liability company)
Hambrecht & Quist Capital Management, Inc. (California corporation)
Hambrecht & Quist Management Corporation (California corporation)
Hambrecht & Quist Venture Partners (California limited partnership)
Hambrecht & Quist Guaranty Finance, LLC
(California limited liability company)
H&Q Venture Management, LLC
(Delaware limited liability company)
Item 25. INDEMNIFICATION
The Agreement and Declaration of Trust (Article IV, Section 3) of the
Trust provides that, in the event a Trustee, officer, employee or
agent of the Trust is sued for his or her activities concerning the
Trust, the Trust will indemnify that person to the fullest extent
permitted by law except if that person has been found by a court or
body before which the proceeding was brought to have acted with
willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office or not to
have acted in good faith in the reasonable belief that his action was
in the best interest of the Trust.
The Trust intends to purchase errors and omissions insurance with
Trustees' and officers' liability coverage.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Hambrecht & Quist Fund Management, LLC (adviser), was recently formed
to act as the Fund's investment adviser and has no other businesses of
a substantial nature. Information as to the adviser's officers and
managing member is included in its
2
<PAGE>
Form ADV filed on July 19, 1999 with the Securities and Exchange
Commission (Registration Number 801-5672) and is incorporated herein
by reference.
Symphony Asset Management, LLC (sub-adviser) acts as a sub-adviser to
the Fund pursuant to a sub-advisory contract with the adviser. The
sub-adviser acts as an investment adviser to other accounts, including
registered investment companies. Information as to the sub-adviser's
officers and managing member is included in its Form ADV filed on
August 10, 1999 with the Securities and Exchange Commission
(Registration Number 801-52638) and is incorporated herein by
reference.
Item 27. PRINCIPAL UNDERWRITERS
Hambrecht & Quist LLC (distributor) serves as principal
underwriter of the shares of the Fund. The following table sets
forth information concerning each officer of the distributor.
<TABLE>
<CAPTION>
----------------------------- --------------------------------------- ------------------------------
Name and Principal Business Positions and Offices Position and Offices
Address* with Underwriter with Registrant
----------------------------- --------------------------------------- ------------------------------
<S> <C> <C>
Daniel H. Case III Chairman and Chief Executive Officer Chairman, Trustee
----------------------------- --------------------------------------- ------------------------------
Patrick J. Allen Managing Director and Chief Financial
Officer
---------------------------- ---------------------------------------- ------------------------------
Todd D. Bakar Managing Director and Director of
Research
----------------------------- --------------------------------------- ------------------------------
David G. Golden Managing Director and Co-Director of
Investment Banking
----------------------------- --------------------------------------- ------------------------------
John P. Hullar Managing Director and Director or
Worldwide Sales
----------------------------- --------------------------------------- ------------------------------
Steven N. Machtinger Managing Director, General Counsel and Secretary
Secretary
----------------------------- --------------------------------------- ------------------------------
David M. McAuliffe Chief Operating Officer
----------------------------- --------------------------------------- ------------------------------
Cristina M. Morgan Managing Director and Co-Director of
Investment Banking
----------------------------- --------------------------------------- ------------------------------
</TABLE>
* All addresses are One Bush Street, San Francisco, California 94104.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
Records required to be maintained by Section 31(a) of the 1940 Act and
the rules thereunder relating to the Trust's portfolio transactions
are maintained by the sub-adviser at 555 California Street, San
Francisco, California 94104. Records relating to the Trust's books and
shareholders are maintained by the Trust's administration and
accounting agent, transfer agent, registrar, dividend disbursing agent
and shareholder servicing agent, PFPC Inc., at 400 Bellevue Parkway,
Wilmington, Delaware 19809. Records relating to the physical
possession of securities are maintained by the Trust's custodian, PFPC
Trust Company, at 200 Stevens Drive,
3
<PAGE>
Lester, Pennsylvania 19113. All other records are maintained by the
adviser at One Bush Street, San Francisco, California 94104.
Item 29. MANAGEMENT SERVICES
Not applicable.
Item 30. UNDERTAKINGS
Not applicable.
4
<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
Post-Effective Amendment No. 1 to the Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, duly authorized, in the City of San
Francisco, and State of California, on the 27 day of October, 1999.
HAMBRECHT & QUIST FUND TRUST
(Registrant)
By: /s/ David R. Krimm
-------------------------------
David R. Krimm, President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the date(s) indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Principal Executive Officer
/s/ David R. Krimm President October 27, 1999
- -------------------------------------
David R. Krimm
Principal Financial and
Accounting Officer
/s/ Robert N. Savoie Chief Financial Officer October 27, 1999
- -------------------------------------
Robert N. Savoie
</TABLE>
A majority of the Trustees
Daniel H. Case III
William R. Timken
Mark S. Brandin
John A. Campbell
Tom D. Seip
By /s/ David R. Krimm October 27, 1999
---------------------
David R. Krimm
(Attorney-in-Fact)
5
<PAGE>
HAMBRECHT & QUIST FUND TRUST
Exhibit Index to Part C
<TABLE>
<CAPTION>
Item No. Description
- -------- -----------
<S> <C>
99(a) Restated Agreement and Declaration of Trust
99(d)(1) Investment Advisory Agreement
99(d)(2) Investment Sub-Advisory Agreement
99(e) Distribution Agreement
99(g) Custodian Services Agreement
99(h)(1) Transfer Agency Services Agreement
99(h)(2) Administration and Accounting Services Agreement
99(j) Consent of Independent Accountants
99(m) Rule 12b-1 Plan
99(n) Rule 18f-3 Plan
</TABLE>
6
<PAGE>
EXHIBIT 99(a)
HAMBRECHT & QUIST FUND TRUST
RESTATED AGREEMENT AND DECLARATION OF TRUST
JUNE 7, 1999, AS AMENDED SEPTEMBER 8, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Article I NAME AND DEFINITIONS...........................................................1
Section 1. Name...........................................................................1
Section 2. Definitions....................................................................1
Article II THE TRUSTEES...................................................................3
Section 1. Management of the Trust........................................................3
Section 2. Powers.........................................................................3
Section 3. Certain Transactions...........................................................8
Section 4. Initial Trustee, Number of Trustees............................................8
Section 5. Term of Office of Trustees.....................................................8
Section 6. Vacancies; Appointment of Trustees.............................................8
Section 7. Ownership of Trust Property....................................................8
Section 8. Effect of Trustees Not Serving.................................................9
Section 9. Trustees, etc. as Shareholders.................................................9
Article III CONTRACTS WITH SERVICE PROVIDERS...............................................9
Section 1. Underwriting Contract..........................................................9
Section 2. Advisory or Management Contract...............................................10
Section 3. Administration Agreement......................................................10
Section 4. Service Agreement.............................................................10
Section 5. Transfer Agent................................................................10
Section 6. Custodian.....................................................................10
Section 7. Affiliations of Trustees or Officers, Etc.....................................11
Article IV COMPENSATION, LIMITATION OF LIABILITY AND INDEMNIFICATION.....................11
Section 1. Compensation..................................................................11
Section 2. Limitation of Liability.......................................................12
Section 3. Indemnification...............................................................12
Section 4. Indemnification of Shareholders...............................................13
Section 5. No Bond Required of Trustees..................................................13
Section 6. No Duty of Investigation; Notice in Trust Instruments, Etc....................14
Section 7. Reliance on Experts, etc......................................................14
Article V SERIES; CLASSES; SHARES.......................................................14
Section 1. Establishment of Series or Class..............................................14
Section 2. Shares........................................................................15
</TABLE>
i
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 3. Investment in the Trust.......................................................16
Section 4. Assets and Liabilities of Series..............................................16
Section 5. Ownership and Transfer of Shares..............................................17
Section 6. Status of Shares; Limitation of Shareholder Liability.........................17
Article VI DISTRIBUTIONS AND REDEMPTIONS.................................................18
Section 1. Distributions.................................................................18
Section 2. Redemptions...................................................................19
Section 3. Determination of Net Asset Value..............................................19
Section 4. Suspension of Right of Redemption.............................................20
Section 5. Repurchase by Agreement.......................................................20
Article VII SHAREHOLDERS' VOTING POWERS AND MEETINGS......................................20
Section 1. Voting Powers.................................................................20
Section 2. Quorum; Required Vote.........................................................21
Section 3. Abstentions and Broker Non-Votes..............................................21
Section 4. Action Without Meeting........................................................21
Section 5. Record Dates..................................................................22
Section 6. Additional Provisions.........................................................22
Article VIII EXPENSES OF THE TRUST.........................................................22
Section 1. Payment of Expenses by the Trust..............................................22
Section 2. Payment of Expenses by Shareholders...........................................23
Article IX MISCELLANEOUS.................................................................23
Section 1. Trust Not a Partnership.......................................................23
Section 2. Trustee Action................................................................23
Section 3. Termination of the Trust......................................................23
Section 4. Reorganization................................................................24
Section 5. Declaration of Trust..........................................................25
Section 6. Applicable Law................................................................25
Section 7. Amendments....................................................................26
Section 8. Derivative Actions............................................................26
Section 9. Fiscal Year...................................................................27
Section 10. Severability..................................................................27
</TABLE>
ii
<PAGE>
HAMBRECHT & QUIST FUND TRUST
AGREEMENT AND
DECLARATION OF TRUST
This Restated AGREEMENT AND DECLARATION OF TRUST (this "Declaration") was
made on June 7, 1999 by the undersigned Trustee (together with all other
persons from time to time duly elected, qualified and serving as Trustees in
accordance with the provisions of Article II hereof, the "Trustees"), as
amended by the Trustees on September 8, 1999.
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the Trust shall be held and managed in trust pursuant to this
Declaration.
ARTICLE I
NAME AND DEFINITIONS
Section 1. NAME. The name of the Trust created by this Declaration is
"Hambrecht & Quist Fund Trust."
Section 2. DEFINITIONS. Unless otherwise provided or required by the
context:
(a) "ADMINISTRATOR" means the party, other than the Trust, to the
contract described in Article III, Section 3 hereof.
(b) "BY-LAWS" means the By-laws of the Trust adopted by the
Trustees, as amended from time to time, which By-laws are expressly herein
incorporated by reference as part of the "governing instrument" within the
meaning of the Delaware Act.
(c) "CLASS" means a class of Shares of a Series established pursuant
to Article V.
(d) "COMMISSION," "ELIGIBLE FOREIGN CUSTODIAN," "QUALIFIED FOREIGN
BANK" and "INTERESTED PERSON" have the meanings provided in the 1940 Act.
Except as such term may be otherwise defined by the Trustees in conjunction
with the establishment of any Series of Shares, the term "MAJORITY
SHAREHOLDER VOTE" shall have the same meaning as is assigned to the term
"VOTE OF A MAJORITY OF THE OUTSTANDING VOTING SECURITIES" in the 1940 Act.
(e) "COVERED PERSON" means a Person so defined in Article IV,
Section 3.
(f) "CUSTODIAN" means any Person other than the Trust who has
custody of any Trust Property as required by Section 17(f) of the 1940 Act,
but does not include a system for the central handling of securities
described in said Section 17(f).
1
<PAGE>
(g) "DECLARATION" shall mean this Declaration, as amended or
restated from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein" and "hereunder" shall be deemed to refer to
this Declaration rather than exclusively to the article or section in which
such words appear.
(h) "DELAWARE ACT" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to
time.
(i) "FUND COMPLEX" has the meaning provided in Schedule 14A under
the Securities Exchange Act of 1934, as amended.
(j) "DISTRIBUTOR" means the party, other than the Trust, to the
contract described in Article III, Section 1 hereof.
(k) "HIS" shall include the feminine and neuter, as well as the
masculine, genders.
(l) "INVESTMENT ADVISER" means the party, other than the Trust, to
the contract described in Article III, Section 2 hereof.
(m) "NET ASSET VALUE" means the net asset value of each Series or
Class of the Trust, determined as provided in Article VI, Section 3.
(n) "PERSON" means and includes individuals, corporations,
partnerships, trusts, associations, limited liability companies, joint
ventures, estates and other entities, and governments and agencies and
political subdivisions thereof, whether domestic or foreign.
(o) "SERIES" means a series of Shares established pursuant to
Article V.
(p) "SHAREHOLDER" means a record owner of Outstanding Shares.
2
<PAGE>
(q) "SHARES" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is
divided from time to time (including whole Shares and fractions of Shares).
"Outstanding Shares" means Shares shown in the books of the Trust or its
Transfer Agent as then issued and outstanding, but does not include Shares
which have been repurchased or redeemed by the Trust.
(r) "TRANSFER AGENT" means any Person other than the Trust who
maintains the Shareholder records of the Trust, such as the list of
Shareholders, the number of Shares credited to each account, and the like.
(s) "TRUST" means Hambrecht & Quist Fund Trust established hereby,
and reference to the Trust, when applicable to one or more Series, refers to
that Series.
(t) "TRUSTEES" means the persons who have signed this Declaration
and all other persons who may from time to time be duly qualified and serving
as Trustees in accordance with Article II, in all cases so long as they shall
continue in office in accordance with the terms hereof.
(u) "TRUST PROPERTY" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the Trust or any
Series or the Trustees on behalf of the Trust or any Series.
(v) "1940 ACT" means the Investment Company Act of 1940 and the
Rules and Regulations thereunder, all as amended from time to time.
ARTICLE II
THE TRUSTEES
Section 1. MANAGEMENT OF THE TRUST. The business and affairs of the Trust
shall be managed by or under the direction of the Trustees, and they shall
have all powers necessary or desirable to carry out that responsibility. The
Trustees may execute all instruments and take all action they deem necessary
or desirable to promote the interests of the Trust. Any determination made by
the Trustees in good faith as to what is in the interests of the Trust shall
be conclusive. In construing the provisions of this Declaration, the
presumption shall be in favor of a grant of power to the Trustees.
Section 2. POWERS. The Trustees in all instances shall act as principals,
free of the control of the Shareholders. The Trustees shall have full power
and authority to take or refrain from taking any action and to execute any
contracts and instruments that they may consider necessary or desirable in
the management of the Trust. The Trustees shall not in any way be bound or
limited by current or future laws or customs applicable to trust investments,
but shall have full power and authority to make any investments which they,
in their sole discretion, deem proper to accomplish the purposes of the
Trust. The Trustees may exercise all of their powers without recourse to any
court or other authority.
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Subject to any applicable limitation herein or in the By-laws or resolutions
of the Trust, the Trustees shall have power and authority, without limitation:
(a) To operate as and carry on the business of an investment
company, and exercise all the powers necessary and appropriate to the conduct
of such operations.
(b) To invest in, hold for investment, or reinvest in, cash;
securities, including common, preferred and preference stocks; warrants;
subscription rights; profit-sharing interests or participations and all other
contracts for or evidences of equity interests; bonds, debentures, bills,
time notes and all other evidences of indebtedness; negotiable or
non-negotiable instruments; government securities, including securities of
any state, municipality or other political subdivision thereof, or any
governmental or quasi-governmental agency or instrumentality; money market
instruments, including bank certificates of deposit, finance paper,
commercial paper, bankers' acceptances and all kinds of repurchase
agreements, of any corporation, company, trust, association, firm or other
business organization however established, and of any country, state,
municipality or other political subdivision, or any governmental or
quasi-governmental agency or instrumentality; or any other security, property
or instrument in which the Trust or any of its Series shall be authorized to
invest.
(c) To acquire (by purchase, subscription or otherwise), to hold, to
trade in and deal in, to acquire any rights or options to purchase or sell,
to sell or otherwise dispose of, to lend and to pledge any such securities;
to enter into repurchase agreements, reverse repurchase agreements, firm
commitment agreements and forward foreign currency exchange contracts; to
purchase and sell options on securities, securities indices, currency and
other financial assets, futures contracts, options on futures contracts,
swaps, collars, caps, floors and swaptions of all descriptions; and to engage
in all types of hedging and risk-management transactions.
(d) To exercise all rights, powers and privileges of ownership or
interest in all securities and repurchase agreements included in the Trust
Property, including the right to vote thereon and otherwise act with respect
thereto and to do all acts for the preservation, protection, improvement and
enhancement in value of all such securities and repurchase agreements.
(e) To acquire (by purchase, lease or otherwise) and to hold, use,
maintain, develop and dispose of (by sale or otherwise) any property, real or
personal, including cash or foreign currency, and any interest therein.
(f) To borrow money or other property in the name of the Trust
exclusively for Trust purposes and in this connection issue notes or other
evidences of indebtedness; to secure borrowings by mortgaging, pledging or
otherwise subjecting as security the Trust Property; and to endorse,
guarantee, or undertake the performance of any obligation or engagement of
any other Person and to lend Trust Property.
(g) To aid by further investment any corporation, company, trust,
association or firm, any obligation of or interest in which is included in
the Trust Property
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or in the affairs of which the Trustees have any direct or indirect interest;
to do all acts and things designed to protect, preserve, improve or enhance
the value of such obligation or interest; and to guarantee or become surety
on any or all of the contracts, stocks, bonds, notes, debentures and other
obligations of any such corporation, company, trust, association or firm.
(h) To adopt By-laws not inconsistent with this Declaration
providing for the conduct of the business of the Trust and to amend and
repeal them to the extent such right is not reserved to the Shareholders.
(i) To elect and remove such officers and appoint and terminate such
agents as they deem appropriate.
(j) To employ as Custodian of any assets of the Trust, subject to
any provisions herein or in the By-laws, one or more banks, trust companies
or companies that are members of a national securities exchange, or other
entities permitted by the Commission to serve as such.
(k) To retain one or more Transfer Agents and shareholder servicing
agents, or both.
(l) To provide for the distribution of Shares either through a
Distributor as provided herein or by the Trust itself, or both, or pursuant
to a distribution plan of any kind.
(m) To set record dates in the manner provided for herein or in the
By-laws.
(n) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
Administrator, Investment Adviser, Custodian or underwriter.
(o) To hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form, or (ii) either in the Trust's or Trustees' own name or in
the name of a custodian or a nominee or nominees, subject to safeguards
according to the usual practice of business trusts or investment companies.
(p) To establish separate and distinct Series with separately
defined investment objectives and policies and distinct investment purposes,
and with separate Shares representing beneficial interests in such Series,
and to establish separate Classes, all in accordance with the provisions of
Article V.
(q) To the full extent permitted by Section 3804 of the Delaware
Act, to allocate assets, liabilities and expenses of the Trust to a
particular Series and assets, liabilities and expenses to a particular Class
or to apportion the same between or among two or more Series or Classes,
provided that any liabilities or expenses incurred by a
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particular Series or Class shall be payable solely out of the assets
belonging to that Series or Class as provided for in Article V, Section 4.
(r) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern whose securities are
held by the Trust; to consent to any contract, lease, mortgage, purchase, or
sale of property by such corporation or concern; and to pay calls or
subscriptions with respect to any security held in the Trust.
(s) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy including, but not limited
to, claims for taxes.
(t) To make distributions of income, capital gains, returns of
capital (if any) and redemption proceeds to Shareholders in the manner
hereinafter provided for.
(u) To establish committees for such purposes, with such membership,
and with such responsibilities as the Trustees may consider proper, including
a committee consisting of fewer than all of the Trustees then in office,
which may act for and bind the Trustees and the Trust with respect to the
institution, prosecution, dismissal, settlement, review or investigation of
any legal action, suit or proceeding, pending or threatened.
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire,
hold, resell, reissue, dispose of and otherwise deal in Shares; to establish
terms and conditions regarding the issuance, sale, repurchase, redemption,
cancellation, retirement, acquisition, holding, resale, reissuance,
disposition of or dealing in Shares; and, subject to Articles V and VI, to
apply to any such repurchase, redemption, retirement, cancellation or
acquisition of Shares any funds or property of the Trust or of the particular
Series with respect to which such Shares are issued.
(w) To invest part or all of the Trust Property (or part or all of
the assets of any Series), or to dispose of part or all of the Trust Property
(or part or all of the assets of any Series) and invest the proceeds of such
disposition, in securities issued by one or more other investment companies
registered under the 1940 Act, all without any requirement of approval by
Shareholders. Any such other investment company may (but need not) be a trust
(formed under the laws of the State of Delaware or of any other state) which
is classified as a partnership for federal income tax purposes.
(x) To sell or exchange any or all of the assets of the Trust,
subject to Article IX, Section 4.
(y) To enter into joint ventures, partnerships and other
combinations and associations.
(z) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to
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delegate to them such power and authority with relation to any security
(whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall
deem proper.
(aa) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for the conduct
of the business, including, without limitation, insurance policies insuring
the assets of the Trust or payment of distributions and principal on its
portfolio investments, and, subject to applicable law and any restrictions
set forth in the By-laws, insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, Investment Advisers, Distributors or
independent contractors of the Trust, individually, against all claims and
liabilities of every nature arising by reason of holding Shares, holding,
being or having held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such Person as Trustee, officer,
employee, agent, Investment Adviser, Distributor or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
Person against liability.
(bb) To adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement, incentive
and benefit plans and trusts, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the Trust.
(cc) To enter into contracts of any kind and description.
(dd) To interpret the investment policies, practices or limitations
of any Series or Class.
(ee) To guarantee indebtedness and contractual obligations of others.
(ff) To carry on any other business in connection with or incidental
to any of the foregoing powers, to do everything necessary or desirable to
accomplish any purpose or to further any of the foregoing powers, and to take
every other action incidental to the foregoing business or purposes, objects
or powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers
of the Trustees. Any action by one or more of the Trustees in their capacity
as such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity. No one
dealing with the Trustees shall be under any obligation to make any inquiry
concerning the authority of the Trustees, or to see to the application of any
payments made or property transferred to the Trustees or upon their order. In
construing this Declaration, the presumption shall be in favor of a grant of
power to the Trustees.
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Section 3. CERTAIN TRANSACTIONS. Except as prohibited by applicable law,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of
the Trust or any firm of which any such Trustee or officer is a member acting
as principal, or have any such dealings with any Investment Adviser,
Administrator, Distributor or Transfer Agent for the Trust or with any
Interested Person of such Person. The Trust may employ any such Person or
entity in which such Person is an Interested Person, as broker, legal
counsel, registrar, Investment Adviser, Administrator, Distributor, Transfer
Agent, dividend disbursing agent, Custodian or in any other capacity upon
customary terms.
Section 4. INITIAL TRUSTEE, NUMBER OF TRUSTEES. The initial Trustee shall
be the person signing this Declaration. The number of Trustees shall be fixed
from time to time by a majority of the Trustees; provided, that there shall
be at least one (1) Trustee.
Section 5. TERM OF OFFICE OF TRUSTEES. Each Trustee shall hold office for
life or until his successor is duly elected and qualified or the Trust
terminates; except that (a) any Trustee may resign by delivering to the other
Trustees or to any Trust officer a written resignation effective upon such
delivery or a later date specified therein; (b) any Trustee may be removed
with or without cause at any time by a written instrument signed by at least
a majority of the then Trustees, specifying the effective date of removal;
(c) any Trustee who requests to be retired, who has reached any mandatory
retirement age established by the Trustees, or who is declared bankrupt or
has become physically or mentally incapacitated or is otherwise unable to
serve, may be retired by a written instrument signed by a majority of the
other Trustees, specifying the effective date of retirement; and (d) any
Trustee may be removed at any meeting of the Shareholders by a vote of at
least two-thirds of the Outstanding Shares.
Section 6. VACANCIES; APPOINTMENT OF TRUSTEES. Whenever a vacancy shall
exist in the Trustees, regardless of the reason for such vacancy, the
remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, consistent with the limitations under the
1940 Act. Such appointment shall be made by a written instrument signed by a
majority of the Trustees or by a resolution of the Trustees, duly adopted and
recorded in the records of the Trust, specifying the effective date of the
appointment. The Trustees may appoint a new Trustee as provided above in
anticipation of a vacancy expected to occur because of the retirement,
resignation or removal of a Trustee, or an increase in the number of
Trustees, provided that such appointment shall become effective only at or
after the expected vacancy occurs and provided further that any new Trustee
shall have reached the age of majority in the state in which he resides. As
soon as any such Trustee has accepted his appointment, the trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee hereunder.
Whenever a vacancy in the number of Trustees shall occur, until such vacancy
is filled as provided in this Article II, the Trustees in office, regardless
of their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by the Declaration.
Section 7. OWNERSHIP OF TRUST PROPERTY. The Trust Property of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any
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capacity other than as Trustee hereunder by the Trustees or any successor
Trustees. Legal title in and beneficial ownership of all of the assets of the
Trust shall at all times be considered as vested in the Trust, except that
the Trustees may cause legal title in and beneficial ownership of any Trust
Property to be held by, or in the name of, one or more of the Trustees acting
for and on behalf of the Trust, or in the name of any person as nominee
acting for and on behalf of the Trust. No Shareholder shall be deemed to have
a severable ownership in any individual asset of the Trust or of any Series
or Class or any right of partition or possession thereof, but each
Shareholder shall have, as provided in Article V, a proportionate undivided
beneficial interest in the Trust or Series or Class thereof represented by
Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Trust Instrument. The Trust, or at the
determination of the Trustees one or more of the Trustees or a nominee acting
for and on behalf of the Trust, shall be deemed to hold legal title and
beneficial ownership of any income earned on securities of the Trust issued
by any business entities formed, organized, or existing under the laws of any
jurisdiction, including the laws of any foreign country. Upon the resignation
or removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall
execute and deliver such documents as the remaining Trustees shall require
for the purpose of conveying to the Trust or the remaining Trustees any Trust
Property held in the name of the resigning or removed Trustee. Upon the
incapacity or death of any Trustee, his legal representative shall execute
and deliver on his behalf such documents as the remaining Trustees shall
require as provided in the preceding sentence.
Section 8. EFFECT OF TRUSTEES NOT SERVING. The death, resignation,
retirement, removal, incapacity or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to
revoke any existing agency created pursuant to the terms of this Declaration.
Section 9. TRUSTEES, ETC. AS SHAREHOLDERS. Subject to any restrictions in
the By-laws, any Trustee, officer, agent or independent contractor of the
Trust may acquire, own and dispose of Shares to the same extent as any other
Shareholder. The Trustees may issue and sell Shares to and buy Shares from
any such Person or any firm or company in which such Person is interested,
subject only to any general limitations herein.
ARTICLE III
CONTRACTS WITH SERVICE PROVIDERS
Section 1. UNDERWRITING CONTRACT. The Trustees may in their discretion
from time to time enter into an exclusive or non-exclusive underwriting
contract or contracts providing for the sale of the Shares whereby the
Trustees may either agree to sell the Shares to the other party to the
contract or appoint such other party as their sales agent for the Shares, and
in either case on such terms and conditions, if any, as may be prescribed in
the By-laws, and such further terms and conditions as the Trustees may in
their discretion determine not inconsistent with the provisions of this
Article III or of the
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By-laws; and such contract may also provide for the repurchase of the Shares
by such other party as agent of the Trustees.
Section 2. ADVISORY OR MANAGEMENT CONTRACT. The Trustees may in their
discretion from time to time enter into one or more investment advisory or
management contracts or, if the Trustees establish multiple Series, separate
investment advisory or management contracts with respect to one or more
Series whereby the other party or parties to any such contracts shall
undertake to furnish the Trust or such Series management, investment
advisory, administration, accounting, legal, statistical and research
facilities and services, promotional or marketing activities, and such other
facilities and services, if any, as the Trustees shall from time to time
consider desirable and all upon such terms and conditions as the Trustees may
in their discretion determine. Notwithstanding any provisions of the
Declaration, the Trustees may authorize any such Investment Adviser or
Persons to whom such Investment Adviser delegates certain or all of their
duties, or any of them, under any such contracts (subject to such general or
specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales, loans or exchanges of portfolio securities and other
investments of the Trust on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or
exchanges pursuant to recommendations of such Investment Adviser, or any of
them (and all without further action by the Trustees). Any such purchases,
sales, loans and exchanges shall be deemed to have been authorized by all of
the Trustees.
Section 3. ADMINISTRATION AGREEMENT. The Trustees may in their discretion
from time to time enter into an administration agreement or, if the Trustees
establish multiple Series or Classes, separate administration agreements with
respect to each Series or Class, whereby the other party to such agreement
shall undertake to manage the business affairs of the Trust or of a Series or
Class thereof and furnish the Trust or a Series or a Class thereof with
office facilities, and shall be responsible for the ordinary clerical,
bookkeeping and recordkeeping services at such office facilities, and other
facilities and services, if any, and all upon such terms and conditions as
the Trustees may in their discretion determine.
Section 4. SERVICE AGREEMENT. The Trustees may in their discretion from
time to time enter into service agreements with respect to one or more Series
or Classes of Shares whereby the other parties to such service agreements
will provide administration and/or support services pursuant to
administration plans and service plans, and all upon such terms and
conditions as the Trustees in their discretion may determine.
Section 5. TRANSFER AGENT. The Trustees may in their discretion from time
to time enter into a transfer agency and shareholder services contract
whereby the other party to such contract shall undertake to furnish transfer
agency and shareholder services to the Trust. The contract shall have such
terms and conditions as the Trustees may in their discretion determine. Such
services may be provided by one or more Persons.
Section 6. CUSTODIAN. The Trustees may appoint or otherwise engage one or
more banks or trust companies, each having aggregate capital, surplus and
undivided profits (as
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shown in its last published report) of at least two million dollars
($2,000,000), or any other entity satisfying the requirements of the 1940
Act, to serve as Custodian with authority as its agent, but subject to such
restrictions, limitations and other requirements, if any, as may be contained
in the By-laws of the Trust. The Trustees may also authorize the Custodian to
employ one or more subcustodians as meets the requirements of applicable
provisions of the 1940 Act, and upon such terms and conditions as may be
agreed upon between the Custodian and such sub-custodian, to hold securities
and other assets of the Trust and to perform the acts and services of the
Custodian, subject to applicable provisions of law and resolutions adopted by
the Trustees. The Trustees may delegate to the Trust's officers, Investment
Adviser, Custodian or a Qualified Foreign Bank the responsibility to select
Eligible Foreign Custodians in accordance with the provisions of the 1940 Act
or any rule, regulation or order of the Commission thereunder.
Section 7. AFFILIATIONS OF TRUSTEES OR OFFICERS, ETC. The fact that:
(a) any of the Shareholders, Trustees or officers of the Trust or
any Series thereof is a shareholder, director, officer, partner, trustee,
employee, manager, adviser or distributor of or for any partnership,
corporation, trust, association or other organization, or of or for any
parent or affiliate of any organization, with which a contract of the
character described in this Article III or for services as Custodian,
Transfer Agent or disbursing agent or for related services may have been or
may hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder of or has an interest in the Trust, or
that
(b) any partnership, corporation, trust, association or other
organization with which a contract of the character described in this Article
III or for services as Custodian, Transfer Agent or disbursing agent or for
related services may have been or may hereafter be made also has any one or
more of such contracts with one or more other partnerships, corporations,
trusts, associations or other organizations, or has other business or
interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing
the same or create any liability or accountability to the Trust or its
Shareholders.
ARTICLE IV
COMPENSATION, LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. COMPENSATION. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or
other services and payment for the same by the Trust.
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Section 2. LIMITATION OF LIABILITY. All Persons contracting with or
having any claim against the Trust or a particular Series shall look only to
the assets of all Series or such particular Series for payment under such
contract or claim; and neither the Trustees nor, when acting in such
capacity, any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor. Provided they have
exercised reasonable care and have acted under the reasonable belief that
their actions are in the best interest of the Trust, the Trustees and
officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent,
employee, Investment Adviser or independent contractor of the Trust, but
nothing contained in this Declaration or in the Delaware Act shall protect
any Trustee or officer of the Trust against liability to the Trust or to
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.
Section 3. INDEMNIFICATION. (a) Subject to the exceptions and limitations
contained in subsection (b) below:
(i) every Person who is, or has been, a Trustee or an officer,
employee or agent of the Trust (including any individual who serves at
its request as director, officer, partner, trustee or the like of another
organization in which it has any interest as a shareholder, creditor or
otherwise) ("Covered Person") shall be indemnified by the Trust or the
appropriate Series to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a
Covered Person and against amounts paid or incurred by him in the
settlement thereof; and
(ii) as used herein, the words "claim," "action," "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or other, including appeals), actual or threatened, and
the words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office, or (B) not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office: (A) by the court or other
body approving the settlement; (B) by at least a majority of those
Trustees who are neither Interested Persons of the Trust nor are parties
to the matter based upon a review of readily available facts (as opposed
to a
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full trial-type inquiry); (C) by written opinion of independent legal
counsel based upon a review of readily available facts (as opposed to a
full trial-type inquiry) or (D) by a vote of a majority of the
Outstanding Shares entitled to vote (excluding any Outstanding Shares
owned of record or beneficially by such individual).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now
or hereafter be entitled, and shall inure to the benefit of the heirs,
executors and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in subsection (a) of
this Section may be paid by the Trust or applicable Series from time to time
prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to
the Trust or applicable Series if it is ultimately determined that he is not
entitled to indemnification under this Section; provided, however, that
either (i) such Covered Person shall have provided appropriate security for
such undertaking, (ii) the Trust is insured against losses arising out of any
such advance payments or (iii) either a majority of the Trustees who are
neither Interested Persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have determined, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry) that there is reason to believe that such Covered Person will not be
disqualified from indemnification under this Section.
(e) Any repeal or modification of this Article IV by the
Shareholders, or adoption or modification of any other provision of the
Declaration or By-laws that would be inconsistent with this Article, shall be
prospective only, to the extent that such repeal or modification would, if
applied retrospectively, adversely affect any limitation on the liability of
any Covered Person or indemnification available to any Covered Person with
respect to any act or omission which occurred prior to such repeal,
modification or adoption.
Section 4. INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder or former
Shareholder of any Series shall be held personally liable solely by reason of
his being or having been a Shareholder and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators or other legal representatives or in the
case of any entity, its general successor) shall be entitled out of the
assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Trust, on behalf of the affected Series, shall, upon request by such
Shareholder, assume the defense of any claim made against such Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
Section 5. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated
to give any bond or other security for the performance of any of his duties
hereunder.
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Section 6. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, Transfer Agent or other Person dealing with the Trustees
or any officer, employee or agent of the Trust or a Series thereof shall be
bound to make any inquiry concerning the validity of any transaction
purporting to be made by the Trustees or by said officer, employee or agent
or be liable for the application of money or property paid, loaned or
delivered to or on the order of the Trustees or of said officer, employee or
agent. Every obligation, contract, instrument, certificate, Share, other
security of the Trust or a Series thereof or undertaking, and every other act
or thing whatsoever executed in connection with the Trust, shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their
capacity as officers, employees or agents of the Trust or a Series thereof.
Every written obligation, contract, instrument, certificate, Share, other
security of the Trust or a Series thereof or undertaking made or issued by
the Trustees or officers may recite that the same is executed or made by them
not individually, but as Trustees under the Declaration, and that the
obligations of the Trust or a Series thereof under any such instrument are
not binding upon any of the Trustees, officers, employees, agents or
Shareholders individually, but bind only the Trust Property or the Trust
Property of the applicable Series, and may contain any further recital which
they may deem appropriate, but the omission of such recital shall not operate
to bind the Trustees individually.
Section 7. RELIANCE ON EXPERTS, ETC. Each Trustee, officer or employee of
the Trust or a Series thereof shall, in the performance of his duties, powers
and discretion hereunder be fully and completely justified and protected with
regard to any act or any failure to act resulting from reliance in good faith
upon the books of account or other records of the Trust or a Series thereof,
upon an opinion of counsel, or upon reports made to the Trust or a Series
thereof by any of its officers or employees, by the Investment Adviser, the
Administrator, the Distributor, the Transfer Agent or by dealers,
accountants, appraisers or other experts or consultants selected with
reasonable care by the Trustees, officers or employees of the Trust,
regardless of whether such counsel or Person may also be a Trustee.
ARTICLE V
SERIES; CLASSES; SHARES
Section 1. ESTABLISHMENT OF SERIES OR CLASS. The Trust shall consist of
one or more Series. Without limiting the authority of the Trustees to
establish and designate any further Series, the Trustees hereby establish one
Series which shall be designated as H&Q IPO & Emerging Company Fund.
Each additional Series shall be established and is effective upon the
adoption of a resolution of a majority of the Trustees or any alternative
date specified in such resolution. The Trustees shall designate the relative
rights and preferences of the Shares of each Series. The Trustees may divide
the Shares of any Series into Classes. Without limiting the authority of the
Trustees to establish and designate any further Classes, the Trustees hereby
establish, with respect to H&Q IPO & Emerging Company Fund, three
Classes of Shares which shall initially be designated,
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respectively, as Class A Shares, Class B Shares and Common Class Shares. The
Classes of Shares of the Series herein established and designated and any
Shares of any further Series and Classes that may from time to time be
established and designated by the Trustees shall be established and
designated, and the variations in the relative rights and preferences as
between the different Series or Classes shall be fixed and determined, by the
Trustees; provided, that all Shares shall be identical except for such
variations as shall be fixed and determined between different Series or
Classes by the Trustees in establishing and designating such Series or Class.
Such designation of Series or Classes may be directly set forth by resolution
or may be made by a resolution referring to, or authorizing or approving of,
another document that sets forth such relative rights and preferences of such
Series or Class including, without limitation, any registration statement,
prospectus or statement of additional information of the Trust, or as
otherwise provided in such resolution.
All references to Shares in this Declaration shall be deemed to be
Shares of any or all Series or Classes as the context may require. The Trust
shall maintain separate and distinct records for each Series and hold and
account for the assets thereof separately from the other assets of the Trust
or of any other Series. A Series may issue any number of Shares of any Class
thereof and need not issue Shares. Each Share of a Series shall represent an
equal beneficial interest in the net assets of such Series. Each holder of
Shares of a Series or a Class thereof shall be entitled to receive his pro
rata share of all distributions made with respect to such Series or Class.
Upon redemption of his Shares, such Shareholder shall be paid solely out of
the funds and property of such Series. The Trustees may adopt and change the
name of any Series or Class.
Section 2. SHARES. The beneficial interest in the Trust shall be divided
into transferable Shares of one or more separate and distinct Series or
Classes established by the Trustees. The number of Shares of each Series and
Class is unlimited and each Share shall have a par value of $0.001 per Share
or such other amount as the Trustees may establish. All Shares issued
hereunder, including, without limitation, Shares issued in connection with a
dividend in Shares or a split or reverse split of Shares, shall be fully paid
and nonassessable. Except as otherwise provided by the Trustees, Shareholders
shall have no preemptive or other right to subscribe to any additional Shares
or other securities issued by the Trust. Subject to the further provisions of
this Article V and any applicable requirements of the 1940 Act, the Trustees
shall have full power and authority, in their sole discretion and without
obtaining Shareholder approval, to issue original or additional Shares at
such times and on such terms and conditions as they deem appropriate; to
issue fractional Shares; to establish and to change in any manner Shares of
any Series or Classes with such preferences, terms of conversion, voting
powers, rights and privileges as the Trustees may determine (but the Trustees
may not change Outstanding Shares in a manner materially adverse to the
Shareholders of such Shares); to divide or combine the Shares of any Series
or Classes into a greater or lesser number; to classify or reclassify any
unissued Shares of any Series or Classes into one or more Series or Classes
of Shares; to abolish any one or more Series or Classes of Shares; to issue
Shares to acquire other assets (including assets subject to, and in
connection with, the assumption of liabilities) and businesses; and to take
such other action with respect to the Shares as the Trustees may deem
desirable.
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Section 3. INVESTMENT IN THE TRUST. The Trustees shall accept investments
in any Series or Class from such Persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments,
subject to applicable law, may be in the form of cash or securities in which
that Series is authorized to invest, valued as provided in Article VI,
Section 3. Investments in a Series shall be credited to each Shareholder's
account in the form of full Shares at the Net Asset Value per Share next
determined after the investment is received or accepted as may be determined
by the Trustees; provided, however, that the Trustees may, in their sole
discretion, (a) impose a sales charge upon investments in any Series or
Class, (b) issue fractional Shares, (c) determine the Net Asset Value per
Share of the initial capital contribution or (d) authorize the issuance of
Shares at a price other than Net Asset Value to the extent permitted by the
1940 Act or any rule, order or interpretation of the Commission thereunder.
The Trustees shall have the right to refuse to accept investments in any
Series at any time without any cause or reason therefor whatsoever.
Section 4. ASSETS AND LIABILITIES OF SERIES. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof (including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be), shall be held and accounted for separately from the assets
of every other Series and are referred to as "assets belonging to" that
Series. The assets belonging to a Series shall belong only to that Series for
all purposes, subject only to the rights of creditors of that Series, and to
no other Series. Any assets, income, earnings, profits, and proceeds thereof
which are not readily identifiable as belonging to any particular Series
shall be allocated by the Trustees between and among one or more Series as
the Trustees deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all purposes,
and such assets, earnings, income, profits and proceeds thereof shall be
referred to as assets belonging to that Series. The assets belonging to a
Series shall be so recorded upon the books of the Trust, and shall be held by
the Trustees in trust for the benefit of the Shareholders of that Series. The
assets belonging to a Series shall be charged with the liabilities of that
Series and all expenses, costs, charges and reserves attributable to that
Series, except that liabilities and expenses allocated solely to a particular
Class shall be borne by that Class. Any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily identifiable as
belonging to any particular Series or Class shall be allocated and charged by
the Trustees between or among any one or more of the Series or Classes in
such manner as the Trustees deem fair and equitable. Each such allocation
shall be conclusive and binding upon the Shareholders of all Series or
Classes for all purposes.
Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or
reserves as herein provided, and subject to the statutory provision of
Section 3804 of the Delaware Act referred to below, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular Series shall be enforceable against the assets of
such Series only, and not against the assets of the Trust generally or any
other Series, and none
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of the debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to the Trust generally or any other Series
shall be enforceable against the assets of such Series. Notice of this
contractual limitation on liabilities among Series may, in the Trustees'
discretion, be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant to the Delaware Act, and
upon the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the Delaware Act relating to limitations on
liabilities among Series (and the statutory effect under Section 3804 of
setting forth such notice in the certificate of trust) shall become
applicable to the Trust and each Series. Any Person extending credit to,
contracting with or having any claim against any Series may look only to the
assets of that Series to satisfy or enforce any debt with respect to that
Series. No Shareholder or former Shareholder of any Series shall have a claim
on or any right to any assets allocated or belonging to any other Series.
Section 5. OWNERSHIP AND TRANSFER OF SHARES. The Trust or a Transfer
Agent or similar agent for the Trust shall maintain a register containing the
names and addresses of the Shareholders of each Series and Class thereof, the
number of Shares of each Series and Class held by such Shareholders, and a
record of all Share transfers. The register shall be conclusive as to the
identity of Shareholders of record and the number of Shares held by them from
time to time. The Trustees may authorize the issuance of certificates
representing Shares and adopt rules governing their use. The Trustees may
make rules governing the transfer of Shares, whether or not represented by
certificates. Except as otherwise provided by the Trustees, Shares shall be
transferable on the books of the Trust only by the record holder thereof or
by his duly authorized agent upon delivery to the Trustees or the Transfer
Agent of a duly executed instrument of transfer, together with a Share
certificate if one is outstanding, and such evidence of the genuineness of
each such execution and authorization and of such other matters as may be
required by the Trustees. Upon such delivery, and subject to any further
requirements specified by the Trustees or contained in the By-laws, the
transfer shall be recorded on the books of the Trust. Until a transfer is so
recorded, the Shareholder of record of Shares shall be deemed to be the
holder of such Shares for all purposes hereunder and neither the Trustees nor
the Trust, nor any Transfer Agent or registrar or any officer, employee or
agent of the Trust, shall be affected by any notice of a proposed transfer.
Without limitation of the foregoing, the Trust or its agent may issue
certificates representing Shares and transfer such certificates to a
governmental unit, agency, authority or authorized depository without prior
notice to a Shareholder and without liability to such Shareholder, to the
extent such action is taken (1) in the response to a notice of levy, lien or
similar action from the Internal Revenue Service or a state tax authority,
(2) in compliance with state laws governing escheat or abandonment of
property, or (3) otherwise in compliance with any applicable legal obligation.
Section 6. STATUS OF SHARES; LIMITATION OF SHAREHOLDER LIABILITY. Shares
shall be deemed to be personal property giving Shareholders only the rights
provided in this Declaration. Every Shareholder, by virtue of having acquired
a Share, shall be held expressly to have assented to and agreed to be bound
by the terms of this Declaration and to have become a party hereto. No
Shareholder shall be personally liable for the debts,
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liabilities, obligations and expenses incurred by, contracted for, or
otherwise existing with respect to, the Trust or any Series. The death,
incapacity, dissolution, termination or bankruptcy of a Shareholder during
the existence of the Trust shall not operate to terminate the Trust, nor
entitle the representative of any such Shareholder to an accounting or to
take any action in court or elsewhere against the Trust or the Trustees, but
entitles such representative only to the rights of such Shareholder under
this Trust. Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust Property or right to call
for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. Neither the
Trust nor the Trustees shall have any power to bind any Shareholder
personally or to demand payment from any Shareholder for anything, other than
as agreed by the Shareholder. Shareholders shall have the same limitation of
personal liability as is extended to shareholders of a private corporation
for profit incorporated in the State of Delaware. Every written obligation of
the Trust or any Series may contain a statement to the effect that such
obligation may only be enforced against the assets of the appropriate Series
or all Series; however, the omission of such statement shall not operate to
bind or create personal liability for any Shareholder or Trustee.
ARTICLE VI
DISTRIBUTIONS AND REDEMPTIONS
Section 1. DISTRIBUTIONS. The Trustees, or a committee of one or more
Trustees or of one or more Trustees and one or more officers, may declare and
pay dividends and other distributions, including dividends on Shares of a
particular Series and other distributions from the assets belonging to that
Series. No dividend or distribution, including, without limitation, any
distribution paid upon termination of the Trust or of any Series (or Class)
with respect to, nor any redemption or repurchase of, the Shares of any
Series (or Class) shall be effected by the Trust other than from the assets
held with respect to such Series, nor shall any Shareholder of any particular
Series otherwise have any right or claim against the assets held with respect
to any other Series except to the extent that such Shareholder has such a
right or claim hereunder as a Shareholder of such other Series. The Trustees
shall have full discretion to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders. The amount and payment
of dividends or distributions and their form, whether they are in cash,
Shares or other Trust Property, shall be determined by the Trustees.
Dividends and other distributions may be paid pursuant to a standing
resolution adopted once or more often as the Trustees determine. All
dividends and other distributions on Shares of a particular Series shall be
distributed pro rata to the Shareholders of that Series in proportion to the
number of Shares of that Series they held on the record date established for
such payment, except that such dividends and distributions shall
appropriately reflect expenses allocated to a particular Class of such Series
and shall be reduced by any required backup, nonresident alien, or other
withholding taxes, which shall be deposited by the Trust in accordance with
applicable law. The Trustees may adopt and offer to Shareholders such
dividend
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reinvestment plans, cash dividend payout plans or similar plans as the
Trustees deem appropriate.
Section 2. REDEMPTIONS. Each Shareholder of a Series shall have the right
at such times as may be permitted by the Trustees to require the Series to
redeem all or any part of his Shares at a redemption price per Share equal to
the Net Asset Value per Share at such time as the Trustees shall have
prescribed by resolution, or, to the extent permitted by the 1940 Act, at
such other redemption price and at such times as the Trustees shall prescribe
by resolution. In the absence of such resolution, the redemption price per
Share shall be the Net Asset Value next determined after receipt by the
Series of a request for redemption in proper form, less (1) such charges as
are determined by the Trustees and described in the Trust's Registration
Statement for that Series under the Securities Act of 1933, as amended from
time to time, and (2) any required withholding taxes, which shall be
deposited by the Trust in accordance with applicable law. The Trustees may
specify conditions, prices and places of redemption, may specify binding
requirements for the proper form or forms of requests for redemption and may
specify the amount of any deferred sales charge or redemption fee to be
withheld from redemption proceeds. Payment of the redemption price may be
wholly or partly in securities or other assets at the value of such
securities or assets used in such determination of Net Asset Value, or may be
in cash. Upon redemption, Shares shall be cancelled. The Trustees may require
Shareholders to redeem Shares for any reason under terms set by the Trustees,
including, but not limited to, the failure of a Shareholder to supply a
taxpayer identification number or other information or certification required
by federal or state tax laws, or to have the minimum investment required, or
to pay when due for the purchase of Shares issued to him. To the extent
permitted by law, the Trustees may retain the proceeds of any redemption of
Shares required by them for payment of amounts due and owing by a Shareholder
to the Trust or any Series or Class or any governmental authority. Without
limitation of the foregoing, the Trust may mandatorily redeem shares and the
Trust or its agent may transfer the proceeds of such a redemption to a
governmental unit, agency, authority or authorized depository without prior
notice to a Shareholder and without liability to such shareholder, to the
extent such action is taken (1) in response to a notice of levy, lien or
similar action from the Internal Revenue Service or a state tax authority,
(2) in compliance with state laws governing escheat or abandonment of
property, (3) in satisfaction of withholding tax requirements (including any
applicable interest and penalties) applicable to any prior distribution or
distributions (including a redemption or redemptions) to the Shareholder that
were not satisfied at the time of such distribution or distributions or (4)
otherwise in compliance with any applicable legal obligation. Notwithstanding
the foregoing, the Trustees may postpone payment of the redemption price and
may suspend the right of the Shareholders to require any Series or Class to
redeem Shares during any period of time when and to the extent permissible
under the 1940 Act.
Section 3. DETERMINATION OF NET ASSET VALUE. The Trustees shall cause the
Net Asset Value of Shares of each Series or Class to be determined from time
to time in a manner consistent with applicable laws and regulations. The
Trustees may delegate the power and duty to determine Net Asset Value per
Share to one or more Trustees or officers of the Trust or to a custodian,
depository or other agent appointed for such
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purpose. The Net Asset Value of Shares shall be determined separately for
each Series or Class at such times as may be prescribed by the Trustees or,
in the absence of action by the Trustees, as of the close of regular trading
on the New York Stock Exchange on each day for all or part of which such
Exchange is open for trading.
Section 4. SUSPENSION OF RIGHT OF REDEMPTION. If, as referred to in
Section 2 of this Article, the Trustees postpone payment of the redemption
price and suspend the right of Shareholders to redeem their Shares, such
suspension shall take effect at the time the Trustees shall specify, but not
later than the close of business on the business day next following the
declaration of suspension. Thereafter Shareholders shall have no right of
redemption or payment until the Trustees declare the end of the suspension.
If the right of redemption is suspended, a Shareholder may either withdraw
his request for redemption or receive payment based on the Net Asset Value
per Share next determined after the suspension terminates.
Section 5. REPURCHASE BY AGREEMENT. The Trust may repurchase Shares
directly, or through the Distributor or another agent designated for the
purpose, by agreement with the owner thereof at a price not exceeding the Net
Asset Value per Share determined as of the time when the purchase or contract
of purchase is made or the Net Asset Value as of any time which may be later
determined, provided payment is not made for the Shares prior to the time as
of which such Net Asset Value is determined.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. VOTING POWERS. The Shareholders shall have power to vote only
with respect to (a) the election of Trustees as provided in the 1940 Act; (b)
the removal of Trustees as provided in Article II, Section 5(d); (c) any
investment advisory or management contract entered into pursuant to Article
III, Section 2, unless a shareholder vote is not required pursuant to the
provisions of the 1940 Act; (d) any termination of the Trust to the extent
and as provided in Article IX, Section 3; (e) the amendment of this
Declaration to the extent and as provided in Article IX, Section 7; and (f)
such additional matters relating to the Trust as may be required or
authorized by law, this Declaration, or the By-laws or any registration of
the Trust with the Commission or as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series or Class, except (a) when required by the
1940 Act, Shares shall be voted in the aggregate and not by individual Series
or Class, and (b) when the Trustees have determined that the matter affects
the interests of more than one Series or Class, then the Shareholders of all
such Series or Classes shall be entitled to vote together thereon. On any
matter submitted to a vote of Shareholders, each dollar of Net Asset Value
(number of Shares owned times Net Asset Value per Share of such Series or
Class, as applicable) shall be entitled to one vote and each fractional
dollar amount shall be
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entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy
or in any manner provided for in the By-laws. The By-laws may provide that
proxies may be given by any electronic or telecommunications device or in any
other manner, but if a proposal by anyone other than the officers or Trustees
is submitted to a vote of the Shareholders of any Series or Class, or if
there is a proxy contest or proxy solicitation or proposal in opposition to
any proposal by the officers or Trustees, Shares may be voted only in person
or by written proxy. Until Shares of a Series are issued, as to that Series
the Trustees may exercise all rights of Shareholders and may take any action
required or permitted to be taken by Shareholders by law, this Declaration or
the By-laws. Meetings of Shareholders shall be called and notice thereof and
record dates therefor shall be given and set as provided in the By-laws.
Section 2. QUORUM; REQUIRED VOTE. One-third (33 1/3%) of the net asset
value of the Outstanding Shares of each affected Series or Class, or
one-third (33 1/3%) of the net asset value of the Outstanding Shares of the
Trust, entitled to vote in person or by proxy shall be a quorum for the
transaction of business at a Shareholders' meeting with respect to such
Series or Class, or with respect to the entire Trust, respectively. Any
lesser number shall be sufficient for adjournments. Any adjourned session of
a Shareholders' meeting may be held within a reasonable time without further
notice. Except when a larger vote is required by applicable law, this
Declaration or the By-laws, a majority of the net asset value of the
Outstanding Shares voting at a Shareholders' meeting in person or by proxy
shall decide any matters to be voted upon with respect to the entire Trust
and a plurality of the net asset value of such Outstanding Shares shall elect
a Trustee; provided, that if this Declaration or applicable law permits or
requires that Shares be voted on any matter by individual Series or Classes,
then a majority of the net asset value of the Outstanding Shares of that
Series or Class voting at a Shareholders' meeting in person or by proxy on
the matter shall decide that matter insofar as that Series or Class is
concerned.
Section 3. ABSTENTIONS AND BROKER NON-VOTES. Outstanding Shares
represented in person or by proxy (including Shares which abstain or do not
vote with respect to one or more of any proposals presented for Shareholder
approval) will be counted for purposes of determining whether a quorum is
present at a meeting. Abstentions will be treated as Shares that are present
and entitled to vote for purposes of determining the number of Shares that
are present and entitled to vote with respect to any particular proposal, but
will not be counted as a vote in favor of such proposal. If a broker or
nominee holding Shares in "street name" indicates on the proxy that it does
not have discretionary authority to vote as to a particular proposal, those
Shares will not be considered as present and entitled to vote with respect to
such proposal.
Section 4. ACTION WITHOUT MEETING. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of the net asset
value of the Outstanding Shares entitled to vote on the matter (or such
larger proportion thereof as shall be required by law) consent to the action
in writing and the written consents are filed with the records of the
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meetings of Shareholders. Such consents shall be treated for all purposes as
a vote taken at a meeting of Shareholders.
Section 5. RECORD DATES.
(a) For the purpose of determining the Shareholders of any Series or
Class who are entitled to receive payment of any dividend or of any other
distribution, the Trustees may from time to time fix a date, which shall be
before the date for the payment of such dividend or such other payment, as
the record date for determining the Shareholders of such Series or Class
having the right to receive such dividend or distribution. Without fixing a
record date, the Trustees may for distribution purposes close the register or
transfer books for one or more Series or Classes any time prior to the
payment of a distribution. Nothing in this Section shall be construed as
precluding the Trustees from setting different record dates for different
Series or Classes.
(b) The Trustees may fix in advance a date up to one hundred twenty
(120) days before the date of any Shareholders' meeting, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting, or to
receive any such allotment of rights, or to exercise such rights in respect
of any such change, conversion or exchange of Shares.
Section 6. ADDITIONAL PROVISIONS. The By-laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VIII
EXPENSES OF THE TRUST
Section 1. PAYMENT OF EXPENSES BY THE TRUST. Subject to Article V,
Section 4, the Trust or a particular Series shall pay, or shall reimburse the
Trustees from the assets belonging to all Series or the particular Series,
for their expenses (or the expenses of a Class of such Series) and
disbursements, including, but not limited to, interest charges, taxes,
brokerage fees and commissions; expenses of issue, repurchase and redemption
of Shares; insurance premiums; applicable fees, interest charges and expenses
of third parties, including the Trust's Investment Advisers, managers,
Administrators, Distributors, Custodians, Transfer Agents, and fund
accountants; fees of pricing, interest, dividend, credit and other reporting
services; costs of membership in trade associations; telecommunications
expenses; funds transmission expenses; auditing, legal and compliance
expenses; costs of forming the Trust and its Series and maintaining its
existence; costs of preparing and printing the prospectuses of the Trust and
each Series, statements of additional information and Shareholder reports and
delivering them to Shareholders; expenses of meetings of Shareholders and
proxy solicitations therefor; costs of maintaining books and accounts; costs
of reproduction, stationery and supplies; fees and expenses of the Trustees;
compensation of the Trust's officers and employees
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and costs of other personnel performing services for the Trust or any Series;
costs of Trustee meetings; Commission registration fees and related expenses;
state or foreign securities laws registration and notice fees and related
expenses; and for such non-recurring items as may arise, including litigation
to which the Trust or a Series (or a Trustee or officer of the Trust acting
as such) is a party, and for all losses and liabilities by them incurred in
administering the Trust. The Trustees shall have a lien on the assets
belonging to the appropriate Series, or in the case of an expense allocable
to more than one Series, on the assets of each such Series, prior to any
rights or interests of the Shareholders thereto, for the reimbursement to
them of such expenses, disbursements, losses and liabilities.
Section 2. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Trustees shall have
the power, as frequently as they may determine, to cause each Shareholder, or
each Shareholder of any particular Series, to pay directly, in advance or
arrears, for charges due from such Shareholder of the Trust's Custodian or
transfer, shareholder servicing or similar agent, an amount fixed from time
to time by the Trustees, by setting off such charges from declared but unpaid
dividends owed such Shareholder and/or by reducing the number of Shares in
the account of such Shareholder by that number of full and/or fractional
Shares which represents the outstanding amount of such charges due from such
Shareholder.
ARTICLE IX
MISCELLANEOUS
Section 1. TRUST NOT A PARTNERSHIP. This Declaration creates a trust and
not a partnership. No Trustee shall have any power to bind personally either
the Trust's officers or any Shareholder.
Section 2. TRUSTEE ACTION. The exercise by the Trustees of their powers
and discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing shall be binding upon everyone interested.
Subject to the provisions of Article IV, the Trustees shall not be liable for
errors of judgment or mistakes of fact or law.
Section 3. TERMINATION OF THE TRUST. (a) This Trust shall have perpetual
existence. Subject to the vote of a majority of the Outstanding Shares of the
Trust, or of each Series to be affected, voting at a Shareholders' meeting in
person or by proxy, the Trustees may:
(i) sell and convey all or substantially all of the assets of
all Series or any affected Series to another Series or to another entity
which is an open-end investment company as defined in the 1940 Act, or is
a series thereof, for adequate consideration, which may include the
assumption of all outstanding obligations, taxes and other liabilities,
accrued or contingent, of the Trust or any
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affected Series, and which may include shares of or interests in such
Series, entity, or series thereof; or
(ii) at any time sell and convert into money all or
substantially all of the assets of all Series or any affected Series.
Upon making reasonable provision for the payment of all known
liabilities of all Series or any affected Series in either (i) or (ii), by
such assumption or otherwise, the Trustees shall distribute the remaining
proceeds or assets (as the case may be) ratably among the Shareholders of all
Series or any affected Series; however, the payment to any particular Class
of such Series may be reduced by any fees, expenses or charges allocated to
that Class.
(b) The Trustees may take any of the actions specified in subsection
(a) (i) and (ii) above without obtaining the vote of a majority of the
Outstanding Shares of the Trust or any Series voting at a Shareholders'
meeting in person or by proxy if a majority of the Trustees determines that
the continuation of the Trust or Series is not in the best interests of the
Trust, such Series, or their respective Shareholders as a result of factors
or events adversely affecting the ability of the Trust or such Series to
conduct its business and operations in an economically viable manner. Such
factors and events may include the inability of the Trust or a Series to
maintain its assets at an appropriate size, changes in laws or regulations
governing the Trust or the Series or affecting assets of the type in which
the Trust or Series invests, or economic developments or trends having a
significant adverse impact on the business or operations of the Trust or such
Series.
(c) Upon completion of the distribution of the remaining proceeds or
assets pursuant to subsection (a) the Trustees and the Trust or affected
Series shall be discharged of any and all further liabilities and duties
hereunder with respect thereto and the right, title and interest of all
parties therein shall be canceled and discharged and any such Series shall
terminate. Following completion of winding up of its business, the Trustees
shall cause a certificate of cancellation of the Trust's certificate of trust
to be filed in accordance with the Delaware Act, which certificate of
cancellation may be signed by any one Trustee, and upon filing of such
certificate of cancellation, the Trust shall terminate.
Section 4. REORGANIZATION. (a) Notwithstanding anything else herein, to
change the Trust's form or place of organization, the Trustees may, without
Shareholder approval (unless such approval is required by applicable law),
(i) cause the Trust to merge or consolidate with or into one or more
entities, if the surviving or resulting entity is the Trust or another
open-end management investment company under the 1940 Act, or a series
thereof, that will succeed to or assume the Trust's registration under the
1940 Act, (ii) cause the Shares to be exchanged under or pursuant to any
state or federal statute to the extent permitted by law, or (iii) cause the
Trust to incorporate under the laws of Delaware or any other U.S.
jurisdiction. Any agreement of merger or consolidation or certificate of
merger may be signed by a majority of Trustees and facsimile signatures
conveyed by electronic or telecommunication means shall be valid.
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(b) Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, an agreement of merger or consolidation approved
by the Trustees in accordance with this Section 4 may effect any amendment to
the Declaration or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
(c) The Trustees may create one or more business trusts to which all
or any part of the assets, liabilities, profits or losses of the Trust or any
Series or Class thereof may be transferred and may provide for the conversion
of Shares in the Trust or any Series or Class thereof into beneficial
interests in any such newly created trust or trusts or any series or classes
thereof.
Section 5. DECLARATION OF TRUST. The original or a copy of this
Declaration and of each amendment hereto or Declaration supplemental shall be
kept at the office of the Trust where it may be inspected by any Shareholder.
Anyone dealing with the Trust may rely on a certificate by a Trustee or an
officer of the Trust as to the authenticity of the Declaration or any such
amendments or supplements and as to any matters in connection with the Trust.
The masculine gender herein shall include the feminine and neuter genders.
Headings herein are for convenience only and shall not affect the
construction of this Declaration. This Declaration may be executed in any
number of counterparts, each of which shall be deemed an original.
Section 6. APPLICABLE LAW. This Declaration and the Trust created
hereunder are governed by and construed and administered according to the
Delaware Act and the applicable laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or
this Declaration (a) the provisions of Section 3540 of Title 12 of the
Delaware Code, or (b) any provisions of the laws (statutory or common) of the
State of Delaware (other than the Delaware Act) pertaining to trusts which
relate to or regulate (i) the filing with any court or governmental body or
agency of trustee accounts or schedules of trustee fees and charges, (ii)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of
real or personal property, (iv) fees or other sums payable to trustees,
officers, agents or employees of a trust, (v) the allocation of receipts and
expenditures to income or principal, (vi) restrictions or limitations on the
permissible nature, amount or concentration of trust investments or
requirements relating to the titling, storage or other manner of holding of
trust assets, or (vii) the establishment of fiduciary or other standards of
responsibilities or limitations on the acts or powers of trustees, which are
inconsistent with the limitations or liabilities or authorities and powers of
the Trustees set forth or referenced in this Declaration. The Trust shall be
of the type commonly called a Delaware business trust, and, without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust under Delaware law. The Trust specifically reserves
the right to exercise any of the powers or privileges afforded to trusts or
actions that may be engaged in by trusts under the Delaware Act, and the
absence of a specific reference herein to any such power, privilege or action
shall not imply that the Trust may not exercise such power or privilege or
take such actions.
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Section 7. AMENDMENTS. The Trustees may, without any Shareholder vote,
amend or otherwise supplement this Declaration by making an amendment, a
Declaration supplemental hereto or an amended and restated trust instrument;
provided, that Shareholders shall have the right to vote on any amendment (a)
which would affect the voting rights of Shareholders granted in Article VII,
Section 1, (b) to this Section 7, (c) required to be approved by Shareholders
by law or by the Trust's registration statement(s) filed with the Commission,
or (d) submitted to them by the Trustees in their discretion. Any amendment
submitted to Shareholders which the Trustees determine would affect the
Shareholders of any Series shall be authorized by vote of the Shareholders of
such Series and no vote shall be required of Shareholders of a Series not
affected. Notwithstanding anything else herein, (i) any amendment to Article
IV which would have the effect of reducing the indemnification or other
rights provided thereby to Trustees, officers, employees and agents of the
Trust or to Shareholders or former Shareholders, and any repeal or amendment
of this sentence shall each require the affirmative vote of the holders of
two-thirds of the Outstanding Shares of the Trust entitled to vote thereon
and (ii) no amendment to Article IV that would have the effect of reducing
the indemnification or other rights provided thereby to Trustees, officers,
employees and agents of the Trust or to Shareholders or former Shareholders
shall be effective with respect to any acts or omissions of any such Persons
occurring or otherwise relating to any time period prior to the adoption of
such amendment or shall otherwise have any retroactive effect.
Section 8. DERIVATIVE ACTIONS. In addition to the requirements set forth
in Section 3816 of the Delaware Act, a Shareholder may bring a derivative
action on behalf of the Trust only if the following conditions are met:
(a) Shareholders eligible to bring such derivative action under the
Delaware act who hold at least 10% of the Outstanding Shares of the Trust, or
10% of the Outstanding Shares of the Series or Class to which such action
relates, shall join in the request for the Trustees to commence such action;
(b) the Trustees must be afforded a reasonable amount of time to
consider such shareholder request and to investigate the basis of such claim.
The Trustees shall be entitled to retain counsel or other advisers in
considering the merits of the request and shall require an undertaking by the
Shareholders making such request to reimburse the Trust for the expense of
any such advisers in the event that the Trustees determine not to bring such
action;
(c) Shareholders are not relieved of the conditions in Section 8(a)
and (b) if a Trustee who is not an Interested Person of the Trust or any
Series serves as a trustee of any other investment company in the Fund
Complex; and
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(d) Shareholders of an unaffected Series or Class may not bring a
derivative action on behalf of another Series or Class.
Section 9. FISCAL YEAR. The fiscal year of the Trust shall end on a
specified date as adopted by resolution of the Trustees. The taxable year of
each Series of the Trust shall be as determined by the Trustees from time to
time.
Section 10. SEVERABILITY. The provisions of this Declaration are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other applicable laws
and regulations, the conflicting provision shall be deemed never to have
constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior
to such determination. If any provision hereof shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision only in such jurisdiction and shall not affect
any other provision of this Declaration.
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IN WITNESS WHEREOF, the undersigned being the sole initial Trustee
of the Trust executed this instrument as of June 7, 1999.
/s/ David R. Krimm
-------------------------------
DAVID R. KRIMM
as Trustee and not individually
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INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
AGREEMENT made as of September 21, 1999 between HAMBRECHT & QUIST FUND
TRUST, a Delaware business trust (herein called the "Trust"), and HAMBRECHT &
QUIST FUND MANAGEMENT, LLC, a California limited liability company and
registered investment adviser ("HQFM").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain HQFM to furnish investment
advisory and administrative services to the H&Q IPO & Emerging Company Fund, a
series of the Trust (the "Fund");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints HQFM to act as investment
adviser and administrator to the Fund for the period and on the terms set forth
in this Agreement. HQFM accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. The Trust has furnished HQFM with copies
properly certified or authenticated of each of the following:
(a) the Trust's Agreement and Declaration of Trust, as filed
with the Secretary of State of the State of Delaware on June 7, 1999, and all
amendments thereto or restatements thereof (such Agreement and Declaration of
Trust, as presently in effect and as it shall from time to time be amended or
restated, herein called the "Declaration of Trust");
(b) the Trust's By-Laws and amendments thereto (the "By-Laws");
(c) resolutions of the Trust's Trustees (the "Trustees")
authorizing the appointment of HQFM and approving this Agreement;
(d) the Trust's Notification of Registration on Form N-8A under
the 1940 Act, as filed with the Securities and Exchange Commission ("SEC") on
June 11, 1999, and all amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 333-80473), and under
the 1940 Act (File No. 811-09383), as filed with the SEC on June 11, 1999, and
all amendments thereto insofar as such Registration Statement and amendments
relate to the Fund; and
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(f) the Trust's most recent prospectuses and statement of
additional information for the Fund (such prospectuses and statement of
additional information, as presently in effect, and all amendments and
supplements thereto, herein collectively called the "Prospectus").
The Trust will furnish HQFM from time to time with copies of all
amendments of or supplements to the foregoing.
3. SERVICES. Subject to the supervision of the Trustees, HQFM will
monitor or perform for the Fund all aspects of the operations of the Fund,
except for those performed by the distributor for the Fund. More particularly,
HQFM will furnish an investment program in respect of the Fund, determine what
securities and other investments will be purchased, retained or sold by the Fund
and place orders for the purchase and sale of these investments; maintain office
facilities for the Fund; furnish statistical and research data, clerical
services and stationery and office supplies; help prepare filings and reports
for the Fund; and generally assist the Fund's other service providers in all
aspects of the administration of the Fund.
Subject to the provisions of the Declaration of Trust and the 1940
Act, HQFM, at its expense, may select and contract with one or more investment
sub-advisers (the "Sub-Advisers") for the Fund. HQFM may also delegate or
subcontract some or all of HQFM's other duties under this Agreement.
HQFM further agrees that it:
(a) will monitor the Fund's investments and will comply with the
provisions of the Declaration of Trust, the By-Laws and the Fund's stated
investment objectives, policies and restrictions, as they may be amended from
time to time;
(b) will comply with all applicable federal and state statutes,
rules and regulations pertaining to its services under this Agreement;
(c) will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with an underwriter, market
maker, or broker or dealer. In placing orders with brokers and dealers, HQFM
will attempt to obtain prompt execution of orders in an effective manner at the
most favorable price. Consistent with this obligation, when the execution and
price offered by two or more brokers are comparable, HQFM may, in its
discretion, purchase or sell portfolio securities through brokers who provide
HQFM with research advice and other services. In no instance will portfolio
securities be purchased or sold through, from or to HQFM or any Sub-Adviser, or
any affiliated person of the Trust, HQFM, or any Sub-Adviser, except as may be
permitted under the 1940 Act;
(d) will treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust, and will not
use such records and information for any purpose other than performance of its
responsibilities and duties
2
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hereunder, except after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where HQFM (i) may be exposed to civil or criminal contempt proceedings for
failure to comply, (ii) is requested to divulge such information by duly
constituted authorities or (iii) is so requested by the Trust;
(e) will not make loans to any person to purchase or carry units
of beneficial interest in the Trust or make loans to the Trust;
(f) will direct its personnel, when making investment
recommendations for the Trust, not to inquire or take into consideration whether
the issuers of securities proposed for purchase or sale for the Trust's accounts
are customers of HQFM, any Sub-Adviser or their affiliates. In dealing with such
customers, HQFM and its affiliates will not inquire or take into consideration
whether securities of those customers are held by the Trust;
(g) will provide regular written reports to the Trustees
(including, without limitation, reports on the general investment strategy of
the Fund, the performance of the Fund in relation to standard industry indices
and general conditions affecting the equity markets), will make appropriate
persons available for the purpose of reviewing such reports with the Trustees on
a regular basis at reasonable times, and will provide various other written and
oral reports from time to time as requested by the Trustees; and
(h) will vote proxies received by it in connection with
securities held by the Fund consistent with its fiduciary duties hereunder.
4. BOOKS AND RECORDS. HQFM hereby agrees to maintain and preserve
all accounts, books and records required under the 1940 Act and the Investment
Advisers Act of 1940 and rules thereunder with respect to HQFM's duties
hereunder. HQFM understands and agrees that all records 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.
5. EXPENSES. During the term of this Agreement, HQFM will pay all
expenses incurred by it in connection with its activities under this Agreement,
including, without limitation, all compensation of any Sub-Adviser and any
person employed by or associated with HQFM to assist in the performance of
HQFM's obligations under this Agreement, whether or not such person is also an
officer or employee of the Trust. Other expenses incurred in the operation of
the Fund, including, without limitation, taxes, interest, brokerage fees and
commissions, fees of Trustees who are not officers, directors, shareholders,
members or employees of HQFM or any Sub-Adviser or any affiliate thereof, SEC
and state "blue sky" fees, costs of pricing portfolio securities, fees of the
Fund's investment adviser, distributor, administrator, accounting agent,
transfer and dividend disbursing agent, custodian and other service providers,
insurance premiums, outside auditing and legal expenses, costs of maintaining
the Trust's existence as a
3
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Delaware business trust, typesetting and printing prospectuses for regulatory
purposes and for distribution to current shareholders of the Fund, costs of
shareholders' and Trustees' reports and meetings and any extraordinary expenses,
will be borne by the Fund.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay HQFM, and HQFM will accept as
full compensation therefor, an advisory fee, accrued daily and payable monthly
in arrears, of sixty-five one hundredths of one percent (0.65%) of the Fund's
average daily net assets. From time to time, HQFM may agree to waive or reduce
some or all of the compensation to which it is entitled under this Agreement.
Through December 31, 2000, HQFM will waive its advisory fee and reimburse
expenses so that the total annual operating expenses of the Class A shares of
the Fund will not exceed 1.60%, the total annual operating expenses of the Class
B shares of the Fund will not exceed 2.30% and the total annual operating
expense of the Common Class shares of the Fund will not exceed 1.60%, of such
class's average daily net assets.
7. SERVICES TO OTHERS. The Trust understands that HQFM may in the
future act as an investment adviser, sub-investment adviser, and/or
administrator to other accounts, including other investment companies. The Trust
has no objection to HQFM's acting in such capacities, provided that whenever the
Fund and one or more other investment accounts advised by HQFM have available
funds for investment, investments suitable and appropriate for each will be
allocated in a manner believed by HQFM to be equitable to each account. The
Trust recognizes that in some cases this procedure may adversely affect the size
of the position that the Fund may obtain in a particular security. In addition,
the Trust understands that the persons employed by HQFM to assist in HQFM's
duties under this Agreement will not devote their full time to such service and
nothing contained in this Agreement will be deemed to limit or restrict the
right of HQFM or any of its affiliates to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
8. YEAR 2000 COMPLIANCE. HQFM, or its affiliates on behalf of HQFM,
have (i) initiated a review and assessment of all areas within HQFM's business
and operations (including those affected by its suppliers and vendors) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by HQFM (or its suppliers, vendors and customers) may
be unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) developed a
plan and timeline for addressing the Year 2000 Problem on a timely basis, and
(iii) to date, implemented that plan substantially in accordance with that
timetable. Based on the foregoing, HQFM believes that all computer applications
(including those of its suppliers and vendors) that are material to its business
and operations applicable to this Agreement will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"). HQFM shall obtain a similar
representation from any investment sub-adviser or service provider to whom it
delegates any duties under this Agreement.
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<PAGE>
9. LIMITATION OF LIABILITY. HQFM will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust 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 HQFM in the performance of its duties or from reckless disregard by it
of its obligations and duties under this Agreement. Notwithstanding the
foregoing, the Trust does not waive any right it may have at common law or under
the federal or state securities laws.
10. DURATION AND TERMINATION. This Agreement will become effective as
of the later of (i) the date the Trust's Registration Statement as it relates to
the Fund is declared effective by the SEC, (ii) the date this Agreement has
been approved by a vote of a majority of the outstanding voting securities of
the Fund in accordance with the requirements under the 1940 Act, and (iii)
October 1, 1999.
This Agreement will remain in effect for two years and thereafter
continue for successive one year periods, provided such continuance is
specifically approved at least annually (a) by the vote of a majority of those
Trustees who are not parties to this Agreement or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the vote of the Trustees or by the vote of a majority of
the outstanding voting securities of the Fund. Notwithstanding the foregoing,
this Agreement may be terminated at any time, without the payment of any
penalty, on sixty days' written notice by the Trust (by vote of the Trustees or
by vote of a majority of the outstanding voting securities of the Fund) or by
HQFM. This Agreement will immediately terminate in the event of its assignment.
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
as such terms in the 1940 Act.)
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
12. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the laws of the State of California.
The names "Hambrecht & Quist Fund Trust" and "Trustees of Hambrecht &
Quist Fund Trust" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under the
Declaration of Trust, to which reference is hereby made. The obligations of the
Trust entered into in the name or on behalf thereof by any of its Trustees,
officers, representatives or agents are made not
5
<PAGE>
individually, but in such capacities, and are not binding upon any of the
Trustees, officers, representatives, agents or shareholders of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series of shares of the Trust must look solely to the assets of the Trust
belonging to such series for the enforcement of any claims against the Trust.
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.
HAMBRECHT & QUIST FUND TRUST
By: /s/ David R. Krimm
--------------------------------
Name: David R. Krimm
Title: President
HAMBRECHT & QUIST FUNDMANAGEMENT, LLC
By: /s/ David R. Krimm
--------------------------------
Name: David R. Krimm
Title: President
6
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of September 21, 1999 between HAMBRECHT & QUIST FUND
MANAGEMENT, LLC, a California limited liability company and registered
investment adviser ("HQFM"), and SYMPHONY ASSET MANAGEMENT, LLC, a California
limited liability company and registered investment adviser ("Symphony").
WHEREAS, HQFM is the investment adviser for Hambrecht & Quist Fund
Trust (the "Trust"), an open-end management investment company registered under
the Investment Company Act of 1940, as amended, (the "1940 Act"); and
WHEREAS, HQFM desires to retain Symphony as HQFM's agent to furnish
investment sub-advisory services to the H&Q IPO & Emerging Company Fund, a
series of the Trust (the "Fund");
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. APPOINTMENT. HQFM hereby appoints Symphony to provide investment
sub-advisory services to the Fund for the period and on the terms set forth in
this Agreement. Symphony accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
2. DELIVERY OF DOCUMENTS. HQFM has furnished Symphony with copies
properly certified or authenticated of each of the following:
a. the Trust's Agreement and Declaration of Trust, as filed
with the Secretary of State of the State of Delaware on June 7, 1999, and all
amendments thereto or restatements thereof (such Agreement and Declaration of
Trust, as presently in effect and as it shall from time to time be amended or
restated, herein called the "Declaration of Trust");
b. the Trust's By-Laws and amendments thereto (the "By-Laws");
c. resolutions of the Trust's Trustees (the "Trustees")
authorizing the appointment of Symphony and approving this Agreement;
d. the Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange Commission (the "SEC") on
June 11, 1999, and all amendments thereto;
e. the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 333-80473) and under
the 1940 Act (File No. 811-09383), as filed with the SEC on June 11, 1999 and
all
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<PAGE>
amendments thereto insofar as such Registration Statement and such
amendments relate to the Fund; and
f. the Trust's most recent prospectuses and statement of
additional information for the Fund (such prospectuses and statement of
additional information, as presently in effect, and all amendments and
supplements thereto, herein collectively called the "Prospectus").
HQFM will furnish Symphony from time to time with copies of all
amendments of or supplements to the foregoing.
3. SERVICES. Subject to the supervision of the Trustees and HQFM,
Symphony will furnish an investment program in respect of the Fund, determine
what securities and other investments will be purchased, retained or sold by the
Fund, and place orders for the purchase and sale of these investments; furnish
statistical and research data; help prepare filings and reports for the Fund;
and generally assist HQFM and the Fund's other service providers in all aspects
of the administration of the Fund.
Symphony will utilize quantitative techniques, proprietary software
models and real-time databases (collectively, "quantitative models") in the
performance of the services to be provided under this Agreement. Symphony
represents and warrants that it maintains the full right and authority to use
these quantitative models in connection with the investment management of the
Fund. Symphony further covenants that it will not take any action, or fail to
take any action, including entering into any third party arrangement, that would
restrict its use of the quantitative models in connection with the investment
management of the Fund. Notwithstanding the provisions of Sections 9 and 10
hereto, Symphony agrees to indemnify and hold HQFM and its affiliates and the
Trust harmless from any and all damages, liabilities, costs and expenses,
including attorneys' fees, resulting from a breach of the above representation,
warranty and covenant.
Symphony further agrees that it:
a. will monitor the Fund's investments and comply with the
provisions of the Declaration of Trust, the By-Laws and the Fund's stated
investment objectives, policies and restrictions, as they may be amended from
time to time;
b. will comply with all applicable federal and state statutes,
rules and regulations pertaining to its services under this Agreement;
c. will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with an underwriter, market
maker, or broker or dealer. In placing orders with brokers and dealers, Symphony
will attempt to obtain prompt execution of orders in an effective manner at the
most favorable price. Consistent with this obligation, when the execution and
price ordered by two or more brokers are comparable, Symphony may, in its
discretion, purchase or sell portfolio securities through brokers who provide
Symphony with research advice and other services. In no
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<PAGE>
instance will portfolio securities be purchased or sold through, from or to HQFM
or Symphony, or any affiliated person of the Trust, HQFM or Symphony, except as
may be permitted under the 1940 Act;
d. will treat confidentially and as proprietary information of
the Trust and HQFM and its affiliates all records and other information relative
to the Trust and HQFM and its affiliates, as applicable, and will not use such
records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, or HQFM and its affiliates, as applicable,
which approval shall not be unreasonably withheld and may not be withheld where
Symphony (i) may be exposed to civil or criminal contempt proceedings for
failure to comply, (ii) is requested to divulge such information by duly
constituted authorities, or (iii) is so requested by the Trust, or HQFM and
affiliates, as applicable;
e. will not make loans to any person to purchase or carry units
of beneficial interest in the Trust or make loans to the Trust;
f. will direct its personnel, when making investment
recommendations for the Trust, not to inquire or take into consideration whether
the issuers of securities proposed for purchase or sale for the Trust's accounts
are customers of HQFM, Symphony or their affiliates. In dealing with such
customers, Symphony and its affiliates will not inquire or take into
consideration whether securities of those customers are held by the Trust;
g. will provide regular written reports to HQFM and to the
Trustees (including, without limitation, reports on the general investment
strategy of the Fund, the performance of the Fund in relation to standard
industry indices and general conditions affecting the equity markets), will make
appropriate persons available for the purpose of reviewing such reports with
representatives of HQFM and the Trustees on a regular basis at reasonable times,
and will provide various other written and oral reports from time to time as
requested by HQFM or the Trustees;
h. will vote proxies received by it in connection with
securities held by the Fund consistent with its fiduciary duties hereunder;
i. will act upon instructions from HQFM not inconsistent with
its fiduciary duties hereunder, provided that HQFM shall have no authority to
direct the manner in which the Fund's assets are invested;
j. will not use the name of the Trust, the Fund, HQFM or their
affiliates in any prospectus, advertisement, sales literature or other
communication to the public, except (i) in a general listing of its clients,
(ii) as may be required by law or (iii) as may be agreed to in writing by HQFM,
which agreement shall not be unreasonably withheld;
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<PAGE>
k. will promptly notify HQFM in writing of the occurrence of
any event which could have a material impact on the performance of Symphony's
obligations hereunder, including without limitation:
(1) an event which could disqualify it from serving as an
investment adviser of a registered investment company;
(2) a change in control, as deferred in the 1940 Act;
(3) a change in the portfolio manager of the Fund; or
(4) any pending or threatened audit, investigation,
complaint, examination or other inquiry relating to the Fund conducted by
any state or federal regulatory authority;
l. will maintain, with an insurer reasonably acceptable to
HQFM, professional liability insurance in amounts reasonably acceptable to HQFM;
and
m. will adopt and maintain a written code of ethics complying
with the requirements of Rule 17j-1 under the 1940 Act.
4. BOOKS AND RECORDS. Symphony agrees to maintain and preserve all
accounts, books and records required under the 1940 Act and the Investment
Advisers Act of 1940 and rules thereunder with respect to Symphony's duties
hereunder. Symphony understands and agrees that all records 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.
5. EXPENSES. During the term of this Agreement, Symphony will pay
all expenses incurred by it in connection with its activities under this
Agreement, including, without limitation, the cost of the quantitative models
and all compensation of any person employed by or associated with Symphony to
assist in the performance of Symphony's duties under this Agreement, whether or
not such person is also an officer or employee of the Trust.
6. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, HQFM will pay Symphony, and Symphony will accept as
full compensation therefor, a sub-advisory fee, accrued daily and payable
monthly in arrears, of thirty-five one hundredths of one percent (0.35%) of the
Fund's average daily net assets not in excess of $100 million, and three hundred
seventy-five thousandths of one percent (0.375%) of the Fund's average daily net
assets thereafter. From time to time, Symphony may agree to waive or reduce some
or all of the compensation to which it is entitled under this Agreement. In the
event that HQFM waives any portion of its advisory fee to satisfy any expense
guarantee (as set forth in the Fund's then current registration statement),
Symphony shall waive a pro rata portion of its advisory fee from
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<PAGE>
HQFM, subject to receiving a minimum fee of twenty one hundredths of one percent
(0.20%) of the Fund's average daily net assets.
7. SERVICES TO OTHERS. HQFM understands that Symphony may act as an
investment adviser, sub-investment adviser, and/or administrator to other
accounts, including other investment companies. HQFM has no objection to
Symphony's acting in such capacities, provided that whenever the Trust and one
or more other investment accounts advised by Symphony have available funds for
investment, investments suitable and appropriate for each will be allocated in a
manner believed by Symphony to be equitable to each account. HQFM recognizes
that in some cases this procedure may adversely affect the size of the position
that the Fund may obtain in a particular security. In addition, HQFM understands
that persons employed by Symphony to assist in Symphony's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement will be deemed to limit or restrict the right of Symphony or
any of its affiliates to engage in and devote time and attention to other
businesses or to render services of whatever kind or nature.
8. YEAR 2000 COMPLIANCE. Symphony has (i) initiated a review and
assessment of all areas within its business and operations (including those
affected by its suppliers, vendors and customers) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications used by Symphony (or its suppliers, vendors and customers) may be
unable to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999), (ii) developed a
plan and timeline for addressing the Year 2000 problem on a timely basis, and
(iii) to date, implemented that plan in accordance with that timetable. Based on
the foregoing, Symphony represents that, to the best of its knowledge, all
computer applications (including those of its suppliers, vendors and customers)
that are material to its business and operations will on a timely basis be able
to perform properly date-sensitive functions for all dates before and after
January 1, 2000 (that is, be "Year 2000 compliant").
9. LIMITATION OF LIABILITY. Except as provided in Section 3,
Symphony will not be liable for any error of judgment or mistake of law or for
any loss suffered by HQFM or the Trust 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 Symphony in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. Notwithstanding the foregoing,
neither HQFM nor the Trust waives any right it may have at common law or under
the federal or state securities laws.
10. INDEMNIFICATION. HQFM and Symphony each agree to indemnify the
other and their respective affiliates against any claim against or loss or
liability to such other party (including reasonable attorneys' fees) arising out
of any action on the part of the indemnifying party which constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard.
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<PAGE>
11. DURATION AND TERMINATION. This Agreement will become effective as
of the later of (i) the date the Trust's Registration Statement as it relates to
the Fund is declared effective by the SEC, (ii) the date this Agreement has
been approved by a vote of a majority of the outstanding voting securities of
the Fund in accordance with the requirements under the 1940 Act, and (iii)
October 1, 1999.
This Agreement will remain in effect for two years and thereafter
continue for successive one year periods, provided such continuation is
specifically approved at least annually (a) by the vote of a majority of those
Trustees who are not parties to this Agreement or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the vote of the Trustees or by the vote of a majority of
the outstanding voting securities of the Fund. Notwithstanding the foregoing,
this Agreement may be terminated at any time, without the payment of any
penalty, on sixty days' written notice by the Trust (by vote of the Trustees or
by vote of a majority of the outstanding voting securities of the Fund), by HQFM
or by Symphony. This Agreement will immediately terminate in the event of its
assignment, except as permitted under the 1940 Act. (As used in this Agreement,
the terms "majority of the outstanding voting securities," "interested persons"
and "assignment" have the same meaning as such terms in the 1940 Act.)
12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. NOTICES. Any notice, demand, request or other communication which
is required, called for or contemplated to be given or made hereunder shall be
deemed to have been duly given or made for all purposes if (a) in writing and
sent by (i) messenger or a recognized national overnight courier service for
next day delivery with receipt therefor, or (ii) certified or registered mail,
postage paid, return receipt requested, or (b) sent by facsimile transmission
with a written copy thereof sent on the same day by postage paid first-class
mail or (c) by personal delivery at the following address:
To: HQFM
One Bush Street
San Francisco, CA 94115
Attention: Steven N. Machtinger, Esq.
Facsimile No.: (415) 439-3638
To: Symphony
555 California Street
San Francisco, CA 94104
Attention: Neil L. Rudolph
Facsimile No.: (415) 676-2480
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<PAGE>
14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by the laws of the State of California.
The name "Hambrecht & Quist Fund Trust" and the "Trustees of Hambrecht
& Quist Fund Trust" refer respectively to the Trust created, and the Trustees,
as trustees but not individually or personally, acting from time to time under
the Declaration of Trust, to which reference is hereby made. The obligations of
the Trust entered into in the name or on behalf thereof by any of its Trustees,
officers, representatives or agents are made not individually, but only in such
capacities, and are not binding upon any of the Trustees, officers,
representatives, agents or shareholders of the Trust personally, but bind only
the assets of the Trust, and persons dealing with any series of shares of the
Trust must look solely to the assets of the Trust belonging to such series for
the enforcement of any claims against the Trust.
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.
HAMBRECHT & QUIST FUND
MANAGEMENT, LLC
By: /s/ David R. Krimm
--------------------------------
Name: David R. Krimm
Title: President
SYMPHONY ASSET MANAGEMENT, LLC
By: /s/ Neil L. Rudolph
--------------------------------
Name: Neil L. Rudolph
Title: Chief Operating Officer
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<PAGE>
HAMBRECHT & QUIST FUND TRUST
DISTRIBUTION AGREEMENT
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This Distribution Agreement (the "Agreement") is made as of this 21 day of
September, 1999, by and between Hambrecht & Quist Fund Trust, an open-end
management investment company organized as a Delaware business trust (the
"Trust"), on behalf of each series of the Trust listed in Schedule I attached
hereto, as may be amended from time to time (individually, a "Fund" and,
collectively, the "Funds") and Hambrecht & Quist LLC, a Delaware limited
liability company ("you").
SECTION 1. GENERAL DUTIES AS DISTRIBUTOR OF FUND SHARES
It is hereby agreed that you shall act as principal distributor for each
Fund set forth on Schedule I and any other Fund as the parties may agree
from time to time. Each Fund may be authorized to issue multiple classes of
shares pursuant to Rule l8f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act"). As distributor, you shall have the exclusive right
to distribute, as agent for each Fund, shares of each class authorized and
issued by the Fund and shall use your best efforts to solicit or otherwise
cause sales of such shares. You also agree, as agent for each Fund, to
accept for redemption the shares of each class authorized and issued by the
Fund. Whenever the officers of the Trust deem it advisable for the
protection of shareholders, they may suspend or cancel such authority with
respect to one or more of the Funds. In the performance of these duties, you
shall be guided by the requirements of this Agreement and the Trust's
Agreement and Declaration of Trust and By-laws, all as amended from time to
time, and each Fund's prospectus and statement of additional information,
which are from time to time in effect under the Trust's Registration
Statement filed with the U.S. Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "1933 Act"),
and the 1940 Act. You shall also comply with all applicable federal and
state laws, rules and regulations, all as amended from time to time,
including, without limitation, all rules and regulations of the Commission
and the National Association of Securities Dealers, Inc.
SECTION 2. DEALERS
You may, as agent, solicit qualified dealers for orders to purchase shares
of the Funds and may enter into agreements with any such dealers, the form
thereof to be determined by you.
SECTION 3. SALES LITERATURE AND ADVERTISEMENTS
You may provide, at your own expense, sales literature and advertisements to
be used in connection with the sale of the Funds' shares. All such sales
literature or advertisement must be approved in advance by a Trust officer.
In connection with the sale of the Funds' shares, you are authorized to give
only such information and to make only such statements or representations as
are contained in each Fund's then-current prospectus or in such sales
literature or advertisements.
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<PAGE>
SECTION 4. LIMITATION UPON INVESTMENT IN THE TRUST
You shall not accept any initial or subsequent investment in shares of a
Fund, except as described in the Fund's then-current prospectus.
SECTION 5. OFFERING PRICE; NET ASSET VALUE PER SHARE
Shares of each Fund shall be sold only at the offering price in effect at
the time of such sale, as described in the then-current prospectus and
statement of additional information of each Fund, and each Fund shall
receive not less than the full net asset value thereof. Any front-end sales
charge payable upon purchases and any contingent deferred sales charge
("CDSC") payable upon redemptions shall be retained by you, it being
understood that such amounts shall not exceed those set forth in each Fund's
then-current prospectus. You may re-allow to dealers all or any part of
these sales charges.
Any reference to "net asset value per share" shall refer to each Fund's net
asset value per share computed in accordance with the Trust's Agreement and
Declaration of Trust, each Fund's then-current prospectus and statement of
additional information and the instructions of the Trustees, all as amended
from time to time. The Trust or its agent shall advise you as promptly as
practicable of each Fund's net asset value per share on each day on which it
is determined.
SECTION 6. DUTIES UPON SALE OR REDEMPTION OF SHARES OF THE TRUST
You shall remit, or cause to be remitted, to the Trust's transfer agent the
net asset value per share of all shares of each Fund sold by you. Each Fund
shall, as promptly as practicable, cause the account of the purchaser to be
credited with the number of shares purchased. The Trust shall not issue
share certificates.
You shall process, or cause to be processed, requests received from each
Fund's shareholders for redemption of its shares, in the manner prescribed
in the Fund's then-current prospectus and statement of additional
information. Shares shall be redeemed at their net asset value per share
next computed after receipt of the redemption request, subject to any
applicable CDSC or redemption fee as set forth in the Fund's then current
prospectus. You shall arrange for payment to such shareholders from each
Fund's account with the custodian.
You shall reimburse the respective Fund for any loss caused by the failure
of a shareholder to confirm in writing any purchase or redemption order
accepted by you. In the event that orders for the purchase or redemption of
shares of a Fund are placed and subsequently canceled, you shall pay to that
Fund, on at least an annual basis, an amount equal to the losses (net of any
gains) realized by the Fund as a result of such cancellations.
SECTION 7. INFORMATION RELATING TO THE TRUST
The Trust or its agent shall furnish you, at its own expense, all
information that you may reasonably request in connection with the
distribution of the Funds' shares, including a certified copy of all
financial statements and a signed copy of each report prepared by its
independent public accountants. The Trust shall cooperate fully with you in
your efforts to
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2
<PAGE>
sell the Funds' shares and in the performance by you of all of your duties
under this Agreement.
SECTION 8. FILING OF REGISTRATION STATEMENTS
The Trust or its agent shall from time to time file and furnish to you at
its own expense copies of such registration statements, amendments and
supplements thereto, and reports or other documents as may be required under
the 1933 Act, the 1940 Act, or the laws of the states in which you desire to
sell shares of the Funds and shall take such other actions as may be
reasonably necessary in connection with the registration or qualification of
shares of the Funds under federal and state law.
SECTION 9. MULTIPLE CAPACITIES
Nothing contained in this Agreement shall be deemed to prohibit you or your
affiliates from acting, and being separately compensated for acting, in one
or more capacities on behalf of the Trust, including, but not limited to,
the capacities of adviser, administrator and distributor. The Trust
understands that you may act in one or more such capacities on behalf of
other investment companies and customers. You shall give the Trust equitable
treatment under the circumstances in supplying services in any capacity, but
the Trust recognizes that it is not entitled to receive preferential
treatment from you as compared with the treatment given to any other
investment company or customer. Whenever you shall act in multiple
capacities on behalf of the Trust, you shall maintain the appropriate
separate account and records for each such capacity.
SECTION 10. PAYMENT OF FEES AND EXPENSES
You shall be entitled to receive from the Funds for your services as
distributor the fees payable in accordance with any plans adopted by the
Funds (or class of shares of the respective Funds) pursuant to Rule l2b-1
under the 1940 Act. The foregoing shall not be deemed to limit your right to
receive and retain any front-end sales charges or CDSCs referred to in
Section 5 hereof.
SECTION 11. LIABILITY OF THE DISTRIBUTOR
You shall be liable for your own acts and omissions caused by your willful
misfeasance, bad faith, or gross negligence in the performance of your
duties, or by your reckless disregard of your obligations under this
Agreement, and nothing herein shall protect you against any such liability
to the Trust or its shareholders. Subject to the foregoing, you shall not be
liable for any action taken or omitted on advice, obtained in good faith, of
counsel.
SECTION 12. YEAR 2000
You have (i) initiated a review and assessment of all areas within your
business and operations (including those affected by your suppliers and
vendors) that could be adversely affected by the "Year 2000 Problem" (that
is, the risk that computer applications used by you (or your suppliers,
vendors and customers) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31,
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3
<PAGE>
1999), (ii) developed a plan and timeline for addressing the Year 2000
Problem on a timely basis, and (iii) to date, implemented that plan
substantially in accordance with that timetable. Based on the foregoing, you
believe that all computer applications (including those of your suppliers
and vendors) that are material to your business and operations applicable to
this Agreement will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 compliant").
SECTION 13. TERMINATION OF AGREEMENT; ASSIGNMENT
This Agreement may be terminated at any time, without the payment of any
penalty, on 60 days' written notice (i) by you; (ii) by the Trust as to any
Fund, or class thereof, acting pursuant to a resolution adopted by a
majority of the Trustees who are not interested persons of the Trust and who
have no direct or indirect financial interest in the operation of the 12b-1
plan relating to such Fund or class or in any agreement related to the 12b-1
plan relating to such Fund or class; or (iii) by the vote of the holders of
the lesser of (1) 67% of the shares of such Fund, or class thereof, present
at a meeting if the holders of more than 50% of the outstanding shares are
present in person or represented by proxy, or (2) more than 50% of the
outstanding shares of such Fund, or class thereof. This Agreement shall
automatically terminate in the event of its assignment. Termination shall
not affect the rights of the parties which have accrued prior thereto.
SECTION 14. DURATION
Unless sooner terminated, this Agreement shall continue in effect for one
year from the date herein above first written, and from year to year
thereafter until terminated, provided that the continuation of this
Agreement and the terms hereof are specifically approved annually in
accordance with the requirements of the 1940 Act, as modified or superseded
by any rule, regulation, order or interpretive position of the Commission.
SECTION 15. DEFINITIONS
The terms "assignment" and "interested person" when used in this Agreement
shall have the meanings given such terms in the 1940 Act.
SECTION 16. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC
This Agreement shall be subject to all applicable provisions of law,
including, without being limited to, the applicable provisions of the 1940
Act, the 1933 Act, and the Securities Exchange Act of 1934, as amended; and
to the extent that any provisions of this Agreement are in conflict with
such laws, the latter shall control.
This Agreement is executed and delivered in California, and the laws of the
State of California shall govern the construction, validity and effect of
this Agreement.
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4
<PAGE>
SECTION 17. MISCELLANEOUS.
The obligations of the Trust and each Fund, or each class thereof, 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 or any Fund, but only the relevant Fund's, or class's thereof,
property shall be bound. No Fund shall be liable for the obligations of any
other Fund.
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.
HAMBRECHT & QUIST FUND TRUST
By: /s/ David R. Krimm
------------------------------
Name: David R. Krimm
Title: President
HAMBRECHT & QUIST LLC
By: /s/ Steven N. Machtinger
------------------------------
Name: Steven N. Machtinger
----------------------------
Title: General Counsel, Secretary
---------------------------
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5
<PAGE>
SCHEDULE I
H&Q IPO & Emerging Company Fund
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6
<PAGE>
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of October 28, 1999 by and between PFPC TRUST
COMPANY, a limited purpose trust company incorporated under the laws of Delaware
("PFPC Trust"), and HAMBRECHT & QUIST FUND TRUST, a Delaware business trust (the
"Trust").
WITNESSETH:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Trust and any other
person authorized by the Trust to give Oral or Written Instructions on
behalf of the Trust and listed on the Authorized Persons Appendix
attached hereto or any amendment thereto as may be received by PFPC
Trust. An Authorized Person's scope of authority may be limited by the
Trust by setting forth such limitation in the Authorized Persons
Appendix.
<PAGE>
(d) "BOOK-ENTRY SYSTEM" means the Federal Reserve Treasury book-entry
system for United States and federal agency securities, its successor
or successors, and its nominee or nominees and any book-entry system
or depository or clearing agency which the use hereunder is permitted
by Rule 17f-4 under the 1940 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "ORAL INSTRUCTIONS" mean oral
instructions received by PFPC Trust from an Authorized Person or from
a person reasonably believed by PFPC Trust to be an Authorized Person.
(g) "SEC" means the Securities and Exchange Commission.
(h) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(i) "SHARES" mean the shares of beneficial interest of any series or class
of the Trust.
(j) "PROPERTY" means:
(i) any and all securities and other investment items which the
Trust may from time to time deposit, or cause to be deposited,
with PFPC Trust or which PFPC Trust may from time to time hold
for the Trust;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or investment
items; and
(iv) all proceeds of the sale of securities issued by the Trust,
which are received by PFPC Trust from time to time, from or on
behalf of the Trust.
(k) "WRITTEN INSTRUCTIONS" mean written instructions signed by an
Authorized Person and received by PFPC Trust. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. The Trust hereby appoints PFPC Trust to provide custodian
services to the Trust, on behalf of each of its investment portfolios
(each, a "Portfolio"), and PFPC
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<PAGE>
Trust accepts such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Trust has provided or, where applicable, will
provide PFPC Trust with the following:
(a) certified or authenticated copies of the resolutions of the Trust's
Trustees, approving the appointment of PFPC Trust to provide services;
(b) a copy of the Trust's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution agreement with respect to each class of
Shares;
(e) a copy of each Portfolio's administration agreement;
(f) copies of any shareholder servicing agreements (other than agreements
with financial intermediaries) made in respect of the Trust or a
Portfolio; and
(g) copies (certified or authenticated, where applicable) of any and all
amendments or supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
PFPC Trust undertakes to comply with applicable requirements of the
Securities Laws and laws, rules and regulations of governmental authorities
having jurisdiction with respect to the duties to be performed by PFPC
Trust hereunder. Except as specifically set forth herein, PFPC Trust
assumes no responsibility for such compliance by the Trust or any
Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act only
upon Oral Instructions or Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instructions or
Written Instructions it receives from an Authorized Person (or from a
person reasonably
3
<PAGE>
believed by PFPC Trust to be an Authorized Person) pursuant to this
Agreement. PFPC Trust may assume that any Oral Instructions or Written
Instructions received hereunder are not in any way inconsistent with
the provisions of organizational documents of the Trust or of any
vote, resolution or proceeding of the Trust's Trustees or of the
Trust's shareholders, unless and until PFPC Trust receives Written
Instructions to the contrary.
(c) The Trust agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions (except where such Oral Instructions are
given by PFPC Trust or its affiliates) so that PFPC Trust receives the
Written Instructions by the close of business on the business day
after such Oral Instructions are received. The fact that such
confirming Written Instructions are not received by PFPC Trust shall
in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions. Where Oral
Instructions or Written Instructions reasonably appear to have been
received from an Authorized Person, PFPC Trust shall incur no
liability to the Trust in acting upon such Oral Instructions or
Written Instructions provided that PFPC Trust's actions comply with
the other provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE TRUST. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC Trust may request directions or
advice, including Oral Instructions or Written Instructions, from the
Trust.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any question
of law
4
<PAGE>
pertaining to any action it should or should not take, PFPC Trust may
request advice at its own cost from such counsel of its own choosing
(who may be counsel for the Trust, the Trust's investment adviser or
PFPC Trust, at the option of PFPC Trust).
(c) CONFLICTING ADVICE. In the event of a conflict between directions,
advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Trust, and the advice it receives from counsel, PFPC
Trust shall be entitled to rely upon and follow the advice of counsel.
In the event PFPC Trust so relies on the advice of counsel, PFPC Trust
remains liable for any action or omission on the part of PFPC Trust
which constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard by PFPC Trust of any duties, obligations or
responsibilities set forth in this Agreement.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be protected in any action
it takes or does not take in reliance upon directions, advice or Oral
Instructions or Written Instructions it receives from the Trust or
from counsel and which PFPC Trust believes, in good faith, to be
consistent with those directions, advice or Oral Instructions or
Written Instructions. Nothing in this section shall be construed so as
to impose an obligation upon PFPC Trust (i) to seek such directions,
advice or Oral Instructions or Written Instructions, or (ii) to act in
accordance with such directions, advice or Oral Instructions or
Written Instructions unless, under the terms of other provisions of
this Agreement, the same is a condition of PFPC Trust's properly
taking or not taking such action. Nothing in this subsection shall
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<PAGE>
excuse PFPC Trust when an action or omission on the part of PFPC Trust
constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard by PFPC Trust of any duties, obligations or
responsibilities set forth in this Agreement.
7. RECORDS; VISITS. The books and records pertaining to the Trust and any
Portfolio, which are in the possession or under the control of PFPC Trust,
shall be the property of the Trust and shall be surrendered promptly on
request of the Trust. Such books and records shall be prepared and
maintained by PFPC Trust as required by the 1940 Act and other applicable
securities laws, rules and regulations. The Trust and Authorized Persons
shall have access to such books and records at all times during PFPC
Trust's normal business hours. Upon the reasonable request of the Trust,
copies of any such books and records shall be provided by PFPC Trust to the
Trust or to an authorized representative of the Trust, at the Trust's
expense.
8. CONFIDENTIALITY. PFPC Trust agrees to keep confidential all records of the
Trust and information relating to the Trust and its shareholders, unless
the release of such records or information is otherwise consented to, in
writing, by the Trust. The Trust agrees that such consent shall not be
unreasonably withheld and may not be withheld where PFPC Trust may be
exposed to civil or criminal contempt proceedings or when PFPC Trust is
required to divulge such information or records to duly constituted
authorities.
9. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the Trust's
independent public accountants and shall take all reasonable action to make
such information available to such accountants as is reasonably requested
by the Trust.
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<PAGE>
10. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Trust, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
caused by PFPC Trust's own willful misfeasance, bad faith, gross negligence
or reckless disregard of its duties or obligations under this Agreement.
11. YEAR 2000 READINESS DISCLOSURE. PFPC Trust (a) has reviewed its business
and operations as they relate to the services provided hereunder, (b) has
developed or is developing a program to remediate or replace computer
applications and systems, and (c) has developed a testing plan to test the
remediation or replacement of computer applications/systems, in each case,
to address on a timely basis the risk that certain computer
applications/systems used by PFPC Trust may be unable to recognize and
perform date sensitive functions involving dates prior to, including and
after December 31, 1999, including dates such as February 29, 2000 (the
"Year 2000 Challenge"). To the best of PFPC Trust's knowledge and belief,
the reasonably foreseeable consequences of the Year 2000 Challenge will not
adversely affect PFPC Trust's ability to perform its duties and obligations
under this Agreement.
12. COMPENSATION. As compensation for custody services rendered by PFPC Trust
during the term of this Agreement, the Trust, on behalf of each of the
Portfolios, will pay to
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PFPC Trust a fee or fees as may be agreed to in writing from time to time
by the Trust and PFPC Trust.
13. INDEMNIFICATION. The Trust, on behalf of each Portfolio, agrees to
indemnify and hold harmless PFPC Trust from all taxes, charges,
assessments, claims and liabilities (including, without limitation,
liabilities arising under the Securities Laws and any state or foreign
securities or blue sky laws, and amendments thereto), and expenses,
including (without limitation) attorneys' fees and disbursements, arising
directly or indirectly from any action or omission to act which PFPC Trust
takes (i) at the request or on the direction of or in reliance on the
advice of the Trust or (ii) upon Oral Instructions or Written Instructions.
Notwithstanding the preceding sentence, PFPC Trust shall not be
indemnified, and PFPC Trust shall indemnify and hold harmless the Trust and
its affiliates, against any liability (or any expenses incident to such
liability) arising out of PFPC Trust's willful misfeasance, bad faith,
gross negligence or reckless disregard of its duties under this Agreement.
Any amounts payable by the Trust hereunder shall be satisfied only against
the relevant Portfolio's assets and not against the assets of any other
investment portfolio of the Trust.
14. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action on behalf of the
Trust or any Portfolio except as specifically set forth herein or as
may be specifically agreed to by PFPC Trust in writing. PFPC Trust
shall be obligated to exercise care and diligence in the performance
of its duties hereunder and to act in good faith in performing
services provided for under this Agreement. PFPC Trust shall be
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liable for any damages arising out of PFPC Trust's failure to perform
its duties under this Agreement to the extent such damages arise out
of PFPC Trust's willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties under this Agreement.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC Trust shall not be under any duty or
obligation to inquire into and shall not be liable for (i) the
validity or invalidity or authority or lack thereof of any Oral
Instruction or Written Instruction, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which
PFPC Trust reasonably believes to be genuine; or (ii) subject to
section 10, delays, errors, loss of data or other losses occurring by
reason of circumstances beyond PFPC Trust's control, including acts of
civil or military authority, national emergencies, fire, flood,
catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC Trust nor its affiliates shall be liable to the Trust or to any
Portfolio for any consequential, special or indirect losses or damages
which the Trust may incur or suffer, whether or not the likelihood of
such losses or damages was known by PFPC Trust or its affiliates.
15. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Trust will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Portfolios,
including cash received as a result
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of the distribution of Shares, during the term of this Agreement. PFPC
Trust will not be responsible for such property until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust, acting upon Written
Instructions, shall open and maintain separate accounts in the Trust's
name using all cash received from or for the account of the Trust,
subject to the terms of this Agreement. In addition, upon Written
Instructions, PFPC Trust shall open separate custodial accounts for
each separate Portfolio of the Trust (collectively, the "Accounts")
and shall hold in the Accounts all cash received from or for the
Accounts of the Trust specifically designated to each separate
Portfolio.
PFPC Trust shall make cash payments from or for the Accounts of a
Portfolio only for:
(i) purchases of securities in the name of a Portfolio, PFPC Trust,
PFPC Trust's nominee or a sub-custodian or nominee thereof as
provided in sub-section (j) and for which PFPC Trust has received
a copy of the broker's or dealer's confirmation or payee's
invoice, as appropriate;
(ii) redemption of Shares of the Trust delivered to PFPC Trust;
(iii)payment of, subject to Written Instructions, interest, taxes,
administration, accounting, distribution, advisory, management
fees or similar expenses which are to be borne by a Portfolio;
(iv) payment to, subject to receipt of Written Instructions, the
Trust's transfer agent, as agent for the shareholders, of an
amount equal to the amount of dividends and distributions stated
in the Written Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying the Trust's
transfer agent, PFPC Trust may arrange for the direct payment of
cash dividends and distributions to shareholders in accordance
with procedures mutually agreed upon from time to time by and
among the Trust, PFPC Trust and the Trust's transfer agent.
(v) payments, upon receipt of Written Instructions, in connection
with the conversion, exchange or surrender of securities owned or
subscribed to by the Trust and held by or delivered to PFPC
Trust;
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(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments made to a sub-custodian pursuant to sub-section (c) of
this Section; and
(viii) other payments, upon Written Instructions.
PFPC Trust is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the
Accounts.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PFPC Trust shall hold all securities received by it for the
Accounts in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry System.
All such securities shall be held or disposed of only upon
Written Instructions of the Trust pursuant to the terms of this
Agreement. PFPC Trust shall have no power or authority to assign,
hypothecate, pledge or otherwise dispose of any such securities,
except upon the express terms of this Agreement or upon Written
Instructions authorizing the transaction. In no case may any of
the Trust's Trustees, or any officer, employee or agent of the
Trust, withdraw any securities.
At PFPC Trust's own expense and for its own convenience, PFPC
Trust may enter into sub-custodian agreements with other banks or
trust companies to perform duties described in this sub-section
(c) with respect to domestic assets. Such bank or trust company
shall have an aggregate capital, surplus and undivided profits,
according to its last published report, of at least two million
dollars ($2,000,000), if it is a subsidiary or affiliate of PFPC
Trust, or at least twenty million dollars ($20,000,000) if such
bank or trust company is not a subsidiary or affiliate of PFPC
Trust. In addition, such bank or trust company must be qualified
to act as custodian and agree to comply with the relevant
provisions of applicable rules and regulations. Any such
arrangement will not be entered into without prior written notice
to the Trust (or as otherwise provided in the 1940 Act).
In addition, PFPC Trust may enter into arrangements with
sub-custodians with respect to services regarding foreign assets.
Any such arrangement will be entered into with prior written
notice to the Trust (or as otherwise provided in the 1940 Act).
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PFPC Trust shall remain responsible for the performance of all of
its duties as described in this Agreement and shall indemnify and
hold the Trust and each Portfolio harmless from its own acts or
omissions, under the standards of care provided for herein, and
the acts and omissions of any sub-custodian chosen by PFPC Trust
under the terms of this sub-section (c).
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral Instructions
or Written Instructions and not otherwise, PFPC Trust, directly or
through the use of the Book-Entry System, shall:
(i) deliver any securities held for a Portfolio against the receipt
of payment for the sale of such securities;
(ii) execute and deliver to such persons as may be designated in such
Oral Instructions or Written Instructions, proxies, consents,
authorizations, and any other instruments whereby the authority
of a Portfolio as owner of any securities may be exercised;
(iii)deliver any securities to the issuer thereof, or its agent, when
such securities are called, redeemed, retired or otherwise become
payable at the option of the holder; provided that, in any such
case, the cash or other consideration is to be delivered to PFPC
Trust;
(iv) deliver any securities held for a Portfolio against receipt of
other securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer, merger,
consolidation or recapitalization of any corporation, or the
exercise of any conversion privilege;
(v) deliver any securities held for a Portfolio to any protective
committee, reorganization committee or other person in connection
with the reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement such
certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(vi) make such transfer or exchanges of the assets of the Portfolios
and take such other steps as shall be stated in said Oral
Instructions or Written Instructions to be for the purpose of
effectuating a duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the
Trust;
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(vii) release securities belonging to a Portfolio to any bank or trust
company for the purpose of a pledge or hypothecation to secure
any loan incurred by the Trust on behalf of that Portfolio;
provided, however, that securities shall be released only upon
payment to PFPC Trust of the monies borrowed, except that in
cases where additional collateral is required to secure a
borrowing already made subject to proper prior authorization,
further securities may be released for that purpose; and repay
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing the loan;
(viii)release and deliver securities owned by a Portfolio in
connection with any repurchase agreement entered into on behalf
of the Trust, but only on receipt of payment therefor; and pay
out moneys of the Trust in connection with such repurchase
agreements, but only upon the delivery of the securities;
(ix) release and deliver or exchange securities owned by the Trust in
connection with any conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities to a broker in connection with the
broker's custody of margin collateral relating to futures and
options transactions;
(xi) release and deliver securities owned by the Trust for the purpose
of redeeming in kind shares of the Trust upon delivery thereof to
PFPC Trust; and
(xii)release and deliver or exchange securities owned by the Trust
for other purposes.
PFPC Trust must also receive Written Instructions describing the
nature of the corporate purpose and the name and address of the
person(s) to whom delivery shall be made when such action is
pursuant to sub-paragraph (d)(xii).
(e) USE OF BOOK-ENTRY SYSTEM. PFPC Trust is authorized and instructed, on
a continuous basis and in compliance with Rule 17f-4 (d) under the
1940 Act, to deposit in the Book-Entry System all securities belonging
to the Portfolios eligible for deposit therein and to utilize the
Book-Entry System to the extent
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possible in connection with settlements of purchases and sales of
securities by the Portfolios, and deliveries and returns of securities
loaned, subject to repurchase agreements or used as collateral in
connection with borrowings. PFPC Trust shall continue to perform such
duties until it receives Written Instructions or Oral Instructions
authorizing contrary actions.
PFPC Trust shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which are maintained
in the Book-Entry System, the records of PFPC Trust shall
identify by Book-Entry or otherwise those securities belonging to
each Portfolio.
(ii) Assets of each Portfolio deposited in the Book-Entry System will
at all times be segregated from any assets and cash controlled by
PFPC Trust in other than a fiduciary or custodian capacity but
may be commingled with other assets held in such capacities.
PFPC Trust will provide the Trust with such reports on its own system
of internal control as the Trust may reasonably request from time to
time.
(f) REGISTRATION OF SECURITIES. All Securities held for a Portfolio which
are issued or issuable only in bearer form, except such securities
held in the Book-Entry System, shall be held by PFPC Trust in bearer
form; all other securities held for a Portfolio may be registered in
the name of the Trust on behalf of that Portfolio, PFPC Trust, the
Book-Entry System, a sub-custodian, or any duly appointed nominee of
the Trust, PFPC Trust, the Book-Entry System or sub-custodian. The
Trust reserves the right to instruct PFPC Trust as to the method of
registration and safekeeping of the securities of the Trust. The Trust
agrees to furnish to PFPC Trust appropriate instruments to enable PFPC
Trust to hold or deliver in proper form for transfer, or to register
in the name of its nominee or in the name of the
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Book-Entry System or in the name of another appropriate entity, any
securities which it may hold for the Accounts and which may from time
to time be registered in the name of the Trust on behalf of a
Portfolio.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall vote
any of the securities held pursuant to this Agreement by or for the
account of a Portfolio, except in accordance with Written
Instructions. PFPC Trust, directly or through the use of the
Book-Entry System, shall execute in blank and promptly deliver all
notices, proxies and proxy soliciting materials received by PFPC Trust
as custodian of the Property to the registered holder of such
securities. If the registered holder is not the Trust on behalf of a
Portfolio, then Written Instructions or Oral Instructions must
designate the person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, PFPC Trust is authorized to take the following
actions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of each Portfolio, all
income, dividends, distributions, coupons, option premiums,
other payments and similar items, included or to be included
in the Property, and, in addition, promptly advise each
Portfolio of such receipt and credit such income, as
collected, to each Portfolio's custodian account;
(B) endorse and deposit for collection, in the name of the
Trust, checks, drafts, or other orders for the payment of
money;
(C) receive and hold for the account of each Portfolio all
securities received as a distribution on the Portfolio's
securities as a result of a stock dividend, share split-up
or reorganization, recapitalization, readjustment or other
rearrangement or distribution of rights or
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<PAGE>
similar securities issued with respect to any securities
belonging to a Portfolio and held by PFPC Trust hereunder;
(D) present for payment and collect the amount payable upon all
securities which may mature or be, on a mandatory basis,
called, redeemed, or retired, or otherwise become payable on
the date such securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such income
and other payments and the endorsement for collection of
checks, drafts, and other negotiable instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) PFPC Trust is authorized to deliver or cause to be delivered
Property against payment or other consideration or written
receipt therefor in the following cases:
(1) for examination by a broker or dealer selling for the
account of a Portfolio in accordance with street
delivery custom;
(2) for the exchange of interim receipts or temporary
securities for definitive securities; and
(3) for transfer of securities into the name of the Trust
on behalf of a Portfolio or PFPC Trust or a
sub-custodian or a nominee of one of the foregoing, or
for exchange of securities for a different number of
bonds, certificates, or other evidence, representing
the same aggregate face amount or number of units
bearing the same interest rate, maturity date and call
provisions, if any; provided that, in any such case,
the new securities are to be delivered to PFPC Trust.
(B) unless and until PFPC Trust receives Oral Instructions or
Written Instructions to the contrary, PFPC Trust shall:
(1) present for payment all income items held by it which
call for payment upon presentation and hold the cash
received by it upon such payment for the account of
each Portfolio;
(2) collect interest and cash dividends received, with
notice to
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the Trust, to the account of each Portfolio;
(3) hold for the account of each Portfolio all stock
dividends, rights and similar securities issued with
respect to any securities held by PFPC Trust; and
(4) 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 Trust's name, on
behalf of a Portfolio, on such certificate as the owner
of the securities covered thereby, to the extent it may
lawfully do so.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or Oral
Instructions establish and maintain segregated accounts on its
records for and on behalf of each Portfolio. Such accounts may be
used to transfer cash and securities, including securities in the
Book-Entry System:
(A) for the purposes of compliance by the Trust with the
procedures required by a securities, futures or options
exchange, provided such procedures comply with the 1940 Act
and any releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies; and
(B) upon receipt of Written Instructions, for other corporate
purposes.
(ii) PFPC Trust shall arrange for the establishment of IRA custodian
accounts for such shareholders holding Shares through IRA
accounts, in accordance with the Trust's prospectuses, the
Internal Revenue Code of 1986, as amended (including regulations
promulgated thereunder), and such other procedures as are
mutually agreed upon from time to time by and among the Trust,
PFPC Trust and the Trust's transfer agent.
(j) PURCHASES OF SECURITIES. PFPC Trust shall settle purchased securities
upon receipt of Oral Instructions or Written Instructions that
specify:
(i) the name of the issuer and the title of the securities, including
CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued
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interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through whom the
purchase was made. PFPC Trust shall upon receipt of securities
purchased by or for a Portfolio pay out of the moneys held for
the account of the Portfolio the total amount payable to the
person from whom or the broker through whom the purchase was
made, provided that the same conforms to the total amount payable
as set forth in such Oral Instructions or Written Instructions.
(k) SALES OF SECURITIES. PFPC Trust shall settle sold securities upon
receipt of Oral Instructions or Written Instructions that specify:
(i) the name of the issuer and the title of the security, including
CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Trust upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made;
(vii) the location to which the security must be delivered and
delivery deadline, if any; and
(viii) the Portfolio involved.
PFPC Trust shall deliver the securities upon receipt of the total amount
payable to the Portfolio upon such sale, provided that the total amount
payable is the same as was set
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forth in the Oral Instructions or Written Instructions. Notwithstanding the
other provisions thereof, PFPC Trust may accept payment in such form as
shall be satisfactory to it, and may deliver securities and arrange for
payment in accordance with the customs prevailing among dealers in
securities.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the Trust the following reports:
(A) such periodic and special reports as the Trust may
reasonably request;
(B) a monthly statement summarizing all transactions and entries
for the account of each Portfolio, listing each portfolio
security belonging to each Portfolio with the adjusted
average cost of each issue and the market value at the end
of such month and stating the cash account of each Portfolio
including disbursements;
(C) the reports required to be furnished to the Trust pursuant
to Rule 17f-4 of the 1940 Act; and
(D) such other information as may be agreed upon from time to
time between the Trust and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Trust any proxy
statement, proxy material, notice of a call or conversion or
similar communication received by it as custodian of the
Property. PFPC Trust shall be under no other obligation to inform
the Trust as to such actions or events.
(m) CREDITING OF ACCOUNTS. If PFPC Trust in its sole discretion credits an
Account with respect to (a) income, dividends, distributions, coupons,
option premiums, other payments or similar items on a contractual
payment date or otherwise in advance of PFPC Trust's actual receipt of
the amount due, (b) the proceeds of any sale or other disposition of
assets on the contractual settlement date or otherwise
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in advance of PFPC Trust's actual receipt of the amount due or (c)
provisional crediting of any amounts due, and (i) PFPC Trust is
subsequently unable to collect full and final payment for the amounts
so credited within a reasonable time period using reasonable efforts
or (ii) pursuant to standard industry practice, law or regulation PFPC
Trust is required to repay to a third party such amounts so credited,
or if any Property has been incorrectly credited, PFPC Trust shall
have the absolute right in its sole discretion without demand to
reverse any such credit or payment, to debit or deduct the amount of
such credit or payment from the Account, and to otherwise pursue
recovery of any such amounts so credited from the Trust. Nothing
herein or otherwise shall require PFPC Trust to make any advances or
to credit any amounts until PFPC Trust's actual receipt thereof. The
Trust hereby grants a first priority contractual possessory security
interest in and a right of setoff against the assets maintained in an
Account hereunder in the amount necessary to secure the return and
payment to PFPC Trust of any advance or credit made by PFPC Trust
(including charges related thereto) to such Account.
(n) COLLECTIONS. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PFPC Trust) shall be at the sole risk of the
Trust. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Trust in writing, including copies of all demand letters, any written
responses and memoranda of all oral responses and shall await
instructions from the Trust. PFPC Trust shall not be obliged to take
legal action
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for collection unless and until reasonably indemnified to its
satisfaction. PFPC Trust shall also notify the Trust as soon as
reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Trust with periodic
status reports of such income collected after a reasonable time.
17. DURATION AND TERMINATION. This Agreement shall continue for two years from
the date hereof and continuously thereafter until terminated by the Trust
or PFPC Trust on sixty (60) days' prior written notice to the other party.
During the term of this Agreement, either party may terminate this
Agreement upon written notice if the other party materially breaches this
Agreement and fails to cure such breach within thirty (30) days following
receipt of written notice of breach. In the event this Agreement is
terminated (pending appointment of a successor to PFPC Trust or vote of the
shareholders of the Trust to dissolve or to function without a custodian of
its cash, securities or other property), PFPC Trust shall not deliver cash,
securities or other property of the Portfolios to the Trust. It may deliver
them to a bank or trust company of PFPC Trust's choice, having an aggregate
capital, surplus and undivided profits, as shown by its last published
report, of not less than twenty million dollars ($20,000,000), as a
custodian for the Trust to be held under terms similar to those of this
Agreement. PFPC Trust shall not be required to make any delivery or payment
of assets upon termination until full payment shall have been made to PFPC
Trust of all of its fees, compensation, costs and expenses. PFPC Trust
shall have a security interest in and shall have a right of setoff against
the Property as security for the payment of such fees, compensation, costs
and expenses.
18. NOTICES. All notices and other written communications, including Written
Instructions,
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shall be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device. Notice shall be addressed (a) if to PFPC Trust at
200 Stevens Drive, Lester, Pennsylvania 19113, Attention: Sam Sparhawk; (b)
if to the Trust, at One Bush Street, San Francisco, California, 94104,
Attn: David R. Krimm, with a copy to Steven N. Machtinger, Esq., at One
Bush Street, San Francisco, California, 94104; or (c) if to neither of the
foregoing, at such other address as shall have been given by like notice to
the sender of any such notice or other communication by the other party. If
notice is sent by tested telegram, cable, telex or facsimile sending
device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given three days
after it has been mailed. If notice is sent by messenger, it shall be
deemed to have been given on the day it is delivered.
19. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
20. DELEGATION; ASSIGNMENT. PFPC Trust may assign its rights and delegate its
duties hereunder to any majority-owned direct or indirect subsidiary of
PFPC Trust or of PNC Bank Corp., provided that (i) PFPC Trust gives the
Trust 30 days' prior written notice of such assignment or delegation; (ii)
the assignee or delegate agrees to comply with all the provisions of this
Agreement; (iii) PFPC Trust and such assignee or delegate promptly provide
such information as the Trust may reasonably request, and respond to such
questions as the Trust may reasonably ask, relative to the assignment or
delegation (including, without limitation, the capabilities of the assignee
or delegate); and (iv) PFPC
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Trust remains responsible for all of its obligations under this Agreement.
21. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FURTHER ACTIONS. Each party agrees to perform such further acts and execute
such further documents as are necessary to effectuate the purposes hereof.
23. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof.
(b) CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(c) GOVERNING LAW. This Agreement shall be deemed to be a contract made in
Delaware and governed by Delaware law, without regard to principles of
conflicts of law.
(d) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
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(f) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
(g) LIMITATIONS. The obligations assumed by the Trust under this Agreement
are assumed on behalf of each Portfolio separately, and no Portfolio
shall be liable for the obligations of any other Portfolio. Neither
the Trustees nor any of the Trust's shareholders, officers, employees
or agents, whether past, present or future, shall be personally liable
for the obligations of the Trust or any Portfolio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By: /s/ Joseph Gramlich
-------------------
Title: Senior Vice President
----------------------
HAMBRECHT & QUIST FUND TRUST
By: /s/ David R. Krimm
-------------------
Title: President
----------------
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AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
DAVID R. KRIMM
- -------------------------- -------------------------
ROBERT N. SAVOIE
- -------------------------- -------------------------
STEVEN N. MACHTINGER
- -------------------------- -------------------------
ROBERT L. SCHOOLER
- -------------------------- -------------------------
- -------------------------- -------------------------
- -------------------------- -------------------------
Dated: October 28, 1999
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TRANSFER AGENCY SERVICES AGREEMENT
THIS AGREEMENT is made as of October 28, 1999 by and between PFPC INC.,
a Delaware corporation ("PFPC"), and HAMBRECHT & QUIST FUND TRUST, a Delaware
business trust (the "Trust").
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to retain PFPC to serve as transfer agent,
registrar, dividend disbursing agent and shareholder servicing agent to its
investment portfolios listed on Exhibit A attached hereto and made a part
hereof, as such Exhibit A may be amended from time to time (each a "Portfolio"),
and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as
amended.
(c) "AUTHORIZED PERSON" means any officer of the Trust and any
other person duly authorized by the Trust's Trustees to give
Oral Instructions and Written Instructions on behalf of the
Trust and listed on the Authorized Persons Appendix attached
hereto and made a part hereof or any amendment thereto as may
be received by PFPC. An Authorized Person's scope of authority
may be limited by
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the Trust by setting forth such limitation in the Authorized
Persons Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC
from an Authorized Person or from a person reasonably believed
by PFPC to be an Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940
Act and the CEA.
(h) "SHARES" mean the shares of beneficial interest of any series
or class of the Trust.
(i) "WRITTEN INSTRUCTIONS" mean written instructions signed by an
Authorized Person and received by PFPC. The instructions may
be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. APPOINTMENT. The Trust, on behalf of each Portfolio, hereby appoints
PFPC to serve as transfer agent, registrar, dividend disbursing agent
and shareholder servicing agent to the Trust in accordance with the
terms set forth in this Agreement. PFPC accepts such appointment and
agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Trust has provided or, where applicable,
will provide PFPC with the following:
(a) Certified or authenticated copies of the resolutions of the
Trust's Trustees, approving the appointment of PFPC or its
affiliates to provide services to the Trust and approving this
Agreement;
(b) A copy of the Trust's most recent effective registration
statement;
(c) A copy of the advisory agreement with respect to each
investment Portfolio of the Trust (each, a Portfolio);
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(d) A copy of the distribution agreement with respect to each
class of Shares of the Trust;
(e) A copy of each Portfolio's administration agreements if PFPC
or its affiliate is not providing the Portfolio with such
services;
(f) Copies of any shareholder servicing agreements (other than
agreements with financial intermediaries) made in respect of
the Trust or a Portfolio; and
(g) Copies (certified or authenticated where applicable) of any
and all amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS. PFPC undertakes to comply with
all applicable requirements of the Securities Laws and any laws, rules
and regulations of governmental authorities having jurisdiction with
respect to the duties to be performed by PFPC hereunder. Except as
specifically set forth herein, PFPC assumes no responsibility for such
compliance by the Trust or any of its investment portfolios.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act
only upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or
from a person reasonably believed by PFPC to be an Authorized
Person) pursuant to this Agreement. PFPC may assume that any
Oral Instruction or Written Instruction received hereunder is
not in any way inconsistent with the provisions of the Trust's
organizational documents or of any vote, resolution or
proceeding of the Trust's Trustees or of the Trust's
shareholders, unless and until PFPC receives Written
Instructions to the contrary.
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(c) The Trust agrees to forward to PFPC Written Instructions
confirming Oral Instructions so that PFPC receives the Written
Instructions by the close of business on the business day
after such Oral Instructions are received. The fact that such
confirming Written Instructions are not received by PFPC shall
in no way invalidate the transactions or enforceability of the
transactions authorized by the Oral Instructions. Where Oral
Instructions or Written Instructions reasonably appear to have
been received from an Authorized Person, PFPC shall incur no
liability to the Trust in acting upon such Oral Instructions
or Written Instructions provided that PFPC's actions comply
with the other provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE TRUST. If PFPC is in doubt as to any action it
should or should not take, PFPC may request directions or
advice, including Oral Instructions or Written Instructions,
from the Trust.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any
question of law pertaining to any action it should or should
not take, PFPC may request advice at its own cost from such
counsel of its own choosing (who may be counsel for the Trust,
the Trust's investment adviser or PFPC, at the option of
PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between
directions, advice or Oral Instructions or Written
Instructions PFPC receives from the Trust, and the advice it
receives from counsel, PFPC may rely upon and follow the
advice of counsel. In the event PFPC so relies on the advice
of counsel, PFPC remains liable for any action or omission on
the part of PFPC which constitutes willful misfeasance, bad
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faith, gross negligence or reckless disregard by PFPC of any
duties, obligations or responsibilities set forth in this
Agreement.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it
takes or does not take in reliance upon directions, advice or
Oral Instructions or Written Instructions it receives from the
Trust or from counsel and which PFPC believes, in good faith,
to be consistent with those directions, advice or Oral
Instructions or Written Instructions. Nothing in this section
shall be construed so as to impose an obligation upon PFPC (i)
to seek such directions, advice or Oral Instructions or
Written Instructions, or (ii) to act in accordance with such
directions, advice or Oral Instructions or Written
Instructions unless, under the terms of other provisions of
this Agreement, the same is a condition of PFPC's properly
taking or not taking such action. Nothing in this subsection
shall excuse PFPC when an action or omission on the part of
PFPC constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard by PFPC of any duties,
obligations or responsibilities set forth in this Agreement.
7. RECORDS; VISITS. The books and records pertaining to the Trust, which
are in the possession or under the control of PFPC, shall be the
property of the Trust and shall be surrendered promptly on request of
the Trust. Such books and records shall be prepared and maintained by
PFPC as required by the 1940 Act and other applicable securities laws,
rules and regulations. The Trust and Authorized Persons shall have
access to such books and records at all times during PFPC's normal
business hours. Upon the reasonable request of the Trust, copies of any
such books and records shall be provided by PFPC to
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the Trust or to an Authorized Person, at the Trust's expense.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the
Trust and information relating to the Trust and its shareholders,
unless the release of such records or information is otherwise
consented to, in writing, by the Trust. The Trust agrees that such
consent shall not be unreasonably withheld and may not be withheld
where PFPC may be exposed to civil or criminal contempt proceedings or
when required to divulge such information or records to duly
constituted authorities.
9. COOPERATION WITH ACCOUNTANTS. PFPC shall cooperate with the Trust's
independent public accountants and shall take all reasonable actions in
the performance of its obligations under this Agreement to ensure that
the necessary information is made available to such accountants for the
expression of their opinion, as required by the Trust.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect
with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to
the extent appropriate equipment is available. In the event of
equipment failures, PFPC shall, at no additional expense to the Trust,
take reasonable steps to minimize service interruptions. PFPC shall
have no liability with respect to the loss of data or service
interruptions caused by equipment failure, provided such loss or
interruption is not caused by PFPC's own willful misfeasance, bad
faith, gross negligence or reckless disregard of its duties or
obligations under this Agreement.
11. YEAR 2000 READINESS DISCLOSURE. PFPC (a) has reviewed its business and
operations as they relate to the services provided hereunder, (b) has
developed or is developing a program to remediate or replace computer
applications and systems, and (c) has
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developed a testing plan to test the remediation or replacement of
computer applications/systems, in each case, to address on a timely
basis the risk that certain computer applications/systems used by PFPC
may be unable to recognize and perform properly date sensitive
functions involving dates prior to, including and after December 31,
1999, including dates such as February 29, 2000 (the "Year 2000
Challenge"). To the best of PFPC's knowledge and belief, the reasonably
foreseeable consequences of the Year 2000 Challenge will not adversely
affect PFPC's ability to perform its duties and obligations under this
Agreement.
12. COMPENSATION. As compensation for services rendered by PFPC during the
term of this Agreement, the Trust, on behalf of each Portfolio, will
pay to PFPC a fee or fees as may be agreed to from time to time in
writing by the Trust and PFPC.
13. INDEMNIFICATION. The Trust, on behalf of each Portfolio, agrees to
indemnify and hold harmless PFPC and its affiliates from all taxes,
charges, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Laws and any state
and foreign securities and blue sky laws, and amendments thereto), and
expenses, including (without limitation) attorneys' fees and
disbursements, arising directly or indirectly from (i) any action or
omission to act which PFPC takes (a) at the request or on the direction
of or in reliance on the advice of the Trust or (b) upon Oral
Instructions or Written Instructions or (ii) the acceptance, processing
and/or negotiation of checks or other methods utilized for the purchase
of Shares. Notwithstanding the preceding sentence, neither PFPC, nor
any of its affiliates, shall be indemnified, and PFPC shall indemnify
and hold harmless the Trust and its affiliates, against any liability
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<PAGE>
(or any expenses incident to such liability) arising out of PFPC's or
its affiliates' own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations under this Agreement,
provided that in the absence of a finding to the contrary the
acceptance, processing and/or negotiation of a fraudulent payment for
the purchase of Shares shall be presumed not to have been the result of
PFPC's or its affiliates' own willful misfeasance, bad faith, gross
negligence or reckless disregard of such duties and obligations. Any
amounts payable by the Trust hereunder shall be satisfied only against
the relevant Portfolio's assets and not against the assets of any other
investment portfolio of the Trust.
14. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of
the Trust except as specifically set forth herein or as may be
specifically agreed to by PFPC in writing. PFPC shall be
obligated to exercise care and diligence in the performance of
its duties hereunder, to act in good faith and to use its best
efforts, within reasonable limits, in performing services
provided for under this Agreement. PFPC shall be liable for
any damages arising out of PFPC's failure to perform its
duties under this Agreement to the extent such damages arise
out of PFPC's willful misfeasance, bad faith, gross negligence
or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any
other provision of this Agreement, (i) PFPC shall not be
liable for losses beyond its control, provided that PFPC has
acted in accordance with the standard of care set forth above;
and
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(ii) PFPC shall not be under any duty or obligation to inquire
into and shall not be liable for (A) the validity or
invalidity or authority or lack thereof of any Oral
Instruction or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this
Agreement, and which PFPC reasonably believes to be genuine;
or (B) subject to Section 10, delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control,
including acts of civil or military authority, national
emergencies, labor difficulties, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary,
neither PFPC nor its affiliates shall be liable to the Trust
for any consequential, special or indirect losses or damages
which the Trust may incur or suffer by or as a consequence of
PFPC's or its affiliates' performance of the services provided
hereunder, whether or not the likelihood of such losses or
damages was known by PFPC or its affiliates.
15. DESCRIPTION OF SERVICES.
(a) SERVICES PROVIDED ON AN ONGOING BASIS, IF APPLICABLE.
(i) Calculate 12b-1 payments and sales charges;
(ii) Maintain proper shareholder registrations;
(iii) Review new applications and correspond with
shareholders to complete or correct information;
(iv) Direct payment processing of checks or wires;
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(v) Prepare and certify stockholder lists in conjunction
with proxy solicitations;
(vi) Countersign Share certificates;
(vii) Prepare and mail to shareholders confirmations of
activity;
(viii) Provide toll-free lines for direct shareholder use,
plus customer liaison staff for on-line inquiry
response;
(ix) Mail duplicate confirmations to broker-dealers of
their clients' activity, whether executed through the
broker-dealer or directly with PFPC;
(x) Provide periodic shareholder lists and statistics to
the Trust;
(xi) Provide detailed data for broker confirmations;
(xii) Prepare periodic mailing of year-end tax and
statement information;
(xiii) Notify on a timely basis the investment adviser,
accounting agent, and custodian of Portfolio
activity; and
(xiv) Perform other shareholder services as may be agreed
upon from time to time.
(b) SERVICES PROVIDED BY PFPC UNDER ORAL INSTRUCTIONS OR WRITTEN
INSTRUCTIONS.
(i) Accept and post daily Trust purchases and
redemptions;
(ii) Accept, post and perform shareholder transfers and
exchanges;
(iii) Pay dividends and other distributions;
(iv) Solicit and tabulate proxies; and
(v) Issue and cancel certificates, if any (when requested
in writing by the shareholder).
(c) PURCHASE OF SHARES. PFPC shall issue and credit an account of
an investor, in the manner described in the Trust's
prospectus, once it receives:
(i) A purchase order;
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(ii) Proper information to establish a shareholder
account; and
(iii) Confirmation of receipt or crediting of funds for
such order to the Trust's custodian.
(d) REDEMPTION OF SHARES. PFPC shall redeem Shares only if that
function is properly authorized by the Trust's Declaration of
Trust or resolution of the Trust's Trustees. Shares shall be
redeemed and payment therefor shall be made in accordance with
the Trust's prospectus, when the recordholder submits the
redemption in proper form and directs the method of
redemption. If a redemption submission is received in proper
form, Shares shall be redeemed before the funds are provided
to PFPC from the Trust's custodian (the "Custodian"). If the
recordholder has not directed that redemption proceeds be
wired, when the Custodian provides PFPC with funds, the
redemption check shall be sent to and made payable to the
recordholder, unless:
(i) the surrendered certificate is drawn to the order of
an assignee or holder and transfer authorization is
signed by the recordholder; or
(ii) Transfer authorizations are signed by the
recordholder when Shares are held in book-entry form.
When a broker-dealer notifies PFPC of a redemption desired by
a customer, and the Custodian provides PFPC with funds, PFPC
shall prepare and send the redemption check to the
broker-dealer and made payable to the broker-dealer on behalf
of its customer.
(e) DIVIDENDS AND DISTRIBUTIONS. Upon receipt of a resolution of
the Trust's Trustees authorizing the declaration and payment
of dividends and distributions, PFPC
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shall issue dividends and distributions declared by the Trust
in Shares, or, upon shareholder election, pay such dividends
and distributions in cash, if provided for in the Trust's
prospectus. Such issuance or payment, as well as payments upon
redemption as described above, shall be made after deduction
and payment of the required amount of Trusts to be withheld in
accordance with any applicable tax laws or other laws, rules
or regulations. PFPC shall mail to the Trust's shareholders
such tax forms and other information, or permissible
substitute notice, relating to dividends and distributions
paid by the Trust as are required to be filed and mailed by
applicable law, rule or regulation. PFPC shall prepare,
maintain and file with the IRS and other appropriate taxing
authorities reports relating to all dividends and
distributions paid by the Trust to its shareholders as
required by tax or other law, rule or regulation.
(f) SHAREHOLDER ACCOUNT SERVICES.
(i) PFPC will arrange, in accordance with the prospectus,
for issuance of Shares obtained through:
- Any pre-authorized check plan; and
- Direct purchases through broker wire orders,
checks and applications.
(ii) PFPC will arrange, in accordance with the prospectus,
for a shareholder's:
- Exchange of Shares for shares of another
fund with which the Portfolio has exchange
privileges;
- Automatic redemption from an account where
that shareholder participates in a automatic
redemption plan; and/or
- Redemption of Shares from an account with a
checkwriting privilege.
(g) COMMUNICATIONS TO SHAREHOLDERS. Upon timely Written
Instructions, PFPC shall
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mail all communications by the Trust to its shareholders,
including:
(i) Reports to shareholders;
(ii) Confirmations of purchases and sales of Trust Shares;
(iii) Monthly or quarterly statements;
(iv) Dividend and distribution notices;
(v) Proxy material; and
(vi) Tax form information.
In addition, PFPC will receive and tabulate the proxy cards
for the meetings of the Trust's shareholders.
(h) RECORDS. PFPC shall maintain records of the accounts for each
shareholder showing the following information:
(i) Name, address and United States Tax Identification or
Social Security number;
(ii) Number and class and series of Shares held and number
and class and series of Shares for which
certificates, if any, have been issued, including
certificate numbers and denominations;
(iii) Historical information regarding the account of each
shareholder, including dividends and distributions
paid and the date and price for all transactions in a
shareholder's account;
(iv) Any stop or restraining order placed against a
shareholder's account;
(v) Any correspondence relating to the current
maintenance of a shareholder's account;
(vi) Information with respect to withholdings; and
(vii) Any information required in order for the transfer
agent to perform any calculations contemplated or
required by this Agreement.
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(i) LOST OR STOLEN CERTIFICATES (IF TRUST ISSUES CERTIFICATES).
PFPC shall place a stop notice against any certificate
reported to be lost or stolen and comply with all applicable
federal regulatory requirements for reporting such loss or
alleged misappropriation. A new certificate shall be
registered and issued only upon:
(i) The shareholder's pledge of a lost instrument bond or
such other appropriate indemnity bond issued by a
surety company approved by PFPC; and
(ii) Completion of a release and indemnification agreement
signed by the shareholder to protect PFPC and its
affiliates.
(j) SHAREHOLDER INSPECTION OF STOCK RECORDS. Upon a request from
any Trust shareholder to inspect stock records, PFPC will
notify the Trust and the Trust will issue Written Instructions
granting or denying such request. Unless PFPC has acted
contrary to the Trust's Written Instructions, the Trust agrees
to, and does hereby, release PFPC from any liability for
refusal of permission for a particular shareholder to inspect
the Trust's stock records.
(k) WITHDRAWAL OF SHARES AND CANCELLATION OF CERTIFICATES.
Upon receipt of Written Instructions, PFPC shall cancel
outstanding certificates surrendered by the Trust and reduce
the total amount of outstanding shares by the number of shares
surrendered by the Trust.
16. DURATION AND TERMINATION. This Agreement shall continue for two years
from the date hereof and continuously thereafter until terminated by
the Trust or by PFPC on sixty (60) days' prior written notice to the
other party. During the term of this Agreement, either party may
terminate this Agreement upon written notice if the other party
materially breaches this Agreement and fails to cure such breach within
thirty (30) days following
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receipt of written notice of breach.
17. NOTICES. All notices and other written communications, including
Written Instructions, shall be delivered by hand, mail, tested
telegram, cable, telex or facsimile sending device. Notices shall be
addressed (a) if to PFPC, at 400 Bellevue Parkway, Wilmington, Delaware
19809; (b) if to the Trust, at One Bush Street, San Francisco,
California 94104, Attn: David R. Krimm, with a copy to Steven N.
Machtinger, Esq., at One Bush Street, San Francisco, California 94104;
or (c) if to neither of the foregoing, at such other address as shall
have been given by like notice to the sender of any such notice or
other communication by the other party. If notice is sent by tested
telegram, cable, telex or facsimile sending device, it shall be deemed
to have been given immediately. If notice is sent by first-class mail,
it shall be deemed to have been given three days after it has been
mailed. If notice is sent by messenger, it shall be deemed to have been
given on the day it is delivered.
18. AMENDMENTS. This Agreement, or any term thereof, may be changed or
waived only by a written amendment, signed by the party against whom
enforcement of such change or waiver is sought.
19. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its
duties hereunder to any majority-owned direct or indirect subsidiary of
PFPC or PNC Bank Corp., provided that (i) PFPC gives the Trust 30 days
prior written notice of such assignment or delegation, (ii) the
assignee or delegate agrees to comply with all the provisions of this
Agreement, (iii) PFPC and such assignee or delegate promptly provide
such information as the Trust may reasonably request, and respond to
such questions as the Trust may
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reasonably ask, relative to the assignment or delegation (including,
without limitation, the capabilities of the assignee or delegate), and
(iv) PFPC remains responsible for all of its obligations under this
Agreement.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
21. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the
purposes hereof.
22. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter
hereof.
(b) CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit
any of the provisions hereof or otherwise affect their
construction or effect.
(c) GOVERNING LAW. This Agreement shall be deemed to be a contract
made in Delaware and governed by Delaware law, without regard
to principles of conflicts of law.
(d) PARTIAL INVALIDITY. If any provision of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be
affected thereby.
(e) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to
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the benefit of the parties hereto and their respective
successors and permitted assigns.
(f) FACSIMILE SIGNATURES. The facsimile signature of any party to
this Agreement shall constitute the valid and binding
execution hereof by such party.
(g) LIMITATIONS. The obligations assumed by the Trust under this
Agreement are assumed on behalf of each Portfolio separately,
and no Portfolio shall be liable for the obligations of any
other Portfolio. Neither the Trustees nor any of the Trust's
shareholders, officers, employees or agents, whether past,
present or future, shall be personally liable for the
obligations of the Trust or any Portfolio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: /s/ Joseph Gramlich
-----------------------------
Title: Senior Vice President
--------------------------
HAMBRECHT & QUIST FUND TRUST
By: /s/ David R. Krimm
-----------------------------
Title: President
--------------------------
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EXHIBIT A
THIS EXHIBIT A, dated as of October 28, 1999, is Exhibit A to that
certain Transfer Agency Services Agreement dated as of October 28, 1999 between
PFPC Inc. and Hambrecht & Quist Fund Trust.
PORTFOLIOS
H & Q IPO & Emerging Company Fund
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<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
David R. Krimm
- ----------------------------- --------------------------------
Robert N. Savoie
- ----------------------------- --------------------------------
Steven N. Machtinger
- ----------------------------- --------------------------------
Robert L. Schooler
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
- ----------------------------- --------------------------------
Dated: October 28, 1999
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<PAGE>
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of October 28, 1999 by and between HAMBRECHT &
QUIST FUND TRUST, a Delaware business trust (the "Trust"), and PFPC INC., a
Delaware corporation ("PFPC"), which is an indirect wholly owned subsidiary of
PNC Bank Corp.
W I T N E S S E T H :
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to retain PFPC to provide administration and
accounting services to its investment portfolios listed on Exhibit A attached
hereto and made a part hereof, as such Exhibit A may be amended from time to
time (each a "Portfolio"), and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of the Trust and any other
person duly authorized by the Trust's Trustees to give Oral
Instructions and Written Instructions on behalf of the Trust and
listed on the Authorized Persons Appendix attached hereto and made
a part hereof or any amendment thereto as may be received by PFPC.
An Authorized Person's scope of authority may be limited by the
Trust by setting forth such limitation in the Authorized Persons
Appendix.
<PAGE>
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "Oral Instructions" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to
be an Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
(g) "Securities Laws" means the 1933 Act, the 1934 Act, the 1940 Act
and the CEA.
(h) "Shares" means the shares of beneficial interest of any series or
class of the Trust.
(i) "Written Instructions" mean written instructions signed by an
Authorized Person and received by PFPC. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. The Trust, on behalf of each Portfolio, hereby appoints PFPC
to provide administration and accounting services to each of the
Portfolios, in accordance with the terms set forth in this Agreement.
PFPC accepts such appointment and agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Trust has provided or, where applicable, will
provide PFPC with the following:
(a) certified or authenticated copies of the resolutions of the Trust's
Trustees, approving the appointment of PFPC to provide services to
each Portfolio and approving this Agreement;
(b) a copy of the Trust's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreement or agreements;
(d) a copy of the distribution agreement with respect to each class of
Shares representing an interest in a Portfolio;
(e) a copy of any additional administration agreement with respect to a
Portfolio;
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(f) a copy of any shareholder servicing agreement (other than agreements
with financial intermediaries) made in respect of the Trust or a
Portfolio; and
(g) copies (certified or authenticated, where applicable) of any and
all amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS.
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be performed
by PFPC hereunder. Except as specifically set forth herein, PFPC assumes
no responsibility for such compliance by the Trust or any Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act only
upon Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from
a person reasonably believed by PFPC to be an Authorized Person)
pursuant to this Agreement. PFPC may assume that any Oral
Instruction or Written Instruction received hereunder is not in any
way inconsistent with the provisions of the Trust's organizational
documents or of any vote, resolution or proceeding of the Trust's
Trustees or of the Trust's shareholders, unless and until PFPC
receives Written Instructions to the contrary.
(c) The Trust agrees to forward to PFPC Written Instructions confirming
Oral Instructions (except where such Oral Instructions are given by
PFPC or its affiliates) so that PFPC receives the Written
Instructions by the close of business
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on the business day after such Oral Instructions are received. The
fact that such confirming Written Instructions are not received by
PFPC shall in no way invalidate the transactions or enforceability
of the transactions authorized by the Oral Instructions. Where Oral
Instructions or Written Instructions reasonably appear to have been
received from an Authorized Person, PFPC shall incur no liability to
the Trust in acting upon such Oral Instructions or Written
Instructions provided that PFPC's actions comply with the other
provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE TRUST. If PFPC is in doubt as to any action it should
or should not take, PFPC may request directions or advice, including
Oral Instructions or Written Instructions, from the Trust.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any question of
law pertaining to any action it should or should not take, PFPC may
request advice at its own cost from such counsel of its own choosing
(who may be counsel for the Trust, the Trust's investment adviser or
PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between directions,
advice or Oral Instructions or Written Instructions PFPC receives
from the Trust and the advice PFPC receives from counsel, PFPC may
rely upon and follow the advice of counsel. In the event PFPC so
relies on the advice of counsel, PFPC remains liable for any action
or omission on the part of PFPC which constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard by
PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it takes
or does not
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<PAGE>
take in reliance upon directions, advice or Oral Instructions or
Written Instructions it receives from the Trust or from counsel and
which PFPC believes, in good faith, to be consistent with those
directions, advice and Oral Instructions or Written Instructions.
Nothing in this section shall be construed so as to impose an
obligation upon PFPC (i) to seek such directions, advice or Oral
Instructions or Written Instructions, or (ii) to act in accordance
with such directions, advice or Oral Instructions or Written
Instructions unless, under the terms of other provisions of this
Agreement, the same is a condition of PFPC's properly taking or not
taking such action. Nothing in this subsection shall excuse PFPC
when an action or omission on the part of PFPC constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard by
PFPC of any duties, obligations or responsibilities set forth in
this Agreement.
7. RECORDS; VISITS.
(a) The books and records pertaining to the Trust and the Portfolios
which are in the possession or under the control of PFPC shall be
the property of the Trust and shall be surrendered promptly on
request of the Trust. Such books and records shall be prepared and
maintained by PFPC as required by the 1940 Act and other applicable
securities laws, rules and regulations. The Trust and Authorized
Persons shall have access to such books and records at all times
during PFPC's normal business hours. Upon the reasonable request of
the Trust, copies of any such books and records shall be provided by
PFPC to the Trust or to an Authorized Person, at the Trust's
expense.
(b) PFPC shall keep the following records:
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(i) all books and records with respect to each Portfolio's books
of account;
(ii) records of each Portfolio's securities transactions; and
(iii) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act in connection with the
services provided hereunder.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the Trust
and information relating to the Trust and its shareholders, unless the
release of such records or information is otherwise consented to, in
writing, by the Trust. The Trust agrees that such consent shall not be
unreasonably withheld and may not be withheld where PFPC may be exposed to
civil or criminal contempt proceedings or when required to divulge such
information or records to duly constituted authorities.
9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Trust's
independent public accountants and shall provide account analyses, fiscal
year summaries, and other audit-related schedules with respect to each
Portfolio. PFPC shall take all reasonable action in the performance of its
duties under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion, as
required by the Trust.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provisions
for emergency use of electronic data processing equipment to the extent
appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Trust, take reasonable steps
to minimize service interruptions. PFPC shall have no liability with
respect to the loss of data or service interruptions caused by equipment
failure, provided such loss or interruption is not caused by PFPC's own
willful misfeasance, bad faith,
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gross negligence or reckless disregard of its duties or obligations under
this Agreement.
11. YEAR 2000 READINESS DISCLOSURE. PFPC (a) has reviewed its business and
operations as they relate to the services provided hereunder, (b) has
developed or is developing a program to remediate or replace computer
applications and systems, and (c) has developed a testing plan to test the
remediation or replacement of computer applications/systems, in each case,
to address on a timely basis the risk that certain computer
applications/systems used by PFPC may be unable to recognize and perform
properly date sensitive functions involving dates prior to, including and
after December 31, 1999, including dates such as February 29, 2000 (the
"Year 2000 Challenge"). To the best of PFPC's knowledge and belief, the
reasonably foreseeable consequences of the Year 2000 Challenge will not
adversely affect PFPC's ability to perform its duties and obligations
under this Agreement.
12. COMPENSATION. As compensation for services rendered by PFPC during the
term of this Agreement, the Trust, on behalf of each Portfolio, will pay
to PFPC a fee or fees as may be agreed to in writing by the Trust and
PFPC.
13. INDEMNIFICATION. The Trust, on behalf of each Portfolio, agrees to
indemnify and hold harmless PFPC and its affiliates from all taxes,
charges, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Laws and any state or
foreign securities and blue sky laws, and amendments thereto), and
expenses, including (without limitation) attorneys' fees and
disbursements, arising directly or indirectly from any action or omission
to act which PFPC takes (i) at the request or on the direction of or in
reliance on the advice of the Trust or (ii) upon Oral Instructions or
Written Instructions. Notwithstanding the preceding sentence, neither
PFPC, nor any of
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its affiliates, shall be indemnified and PFPC shall indemnify and hold
harmless the Trust and its affiliates, against any liability (or any
expenses incident to such liability) arising out of PFPC's or its
affiliates' own willful misfeasance, bad faith, gross negligence or
reckless disregard of its duties and obligations under this Agreement. Any
amounts payable by the Trust hereunder shall be satisfied only against the
relevant Portfolio's assets and not against the assets of any other
investment portfolio of the Trust.
14. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of the
Trust or any Portfolio except as specifically set forth herein or
as may be specifically agreed to by PFPC in writing. PFPC shall be
obligated to exercise care and diligence in the performance of its
duties hereunder, to act in good faith and to use its best efforts,
within reasonable limits, in performing services provided for under
this Agreement. PFPC shall be liable for any damages arising out of
PFPC's failure to perform its duties under this Agreement to the
extent such damages arise out of PFPC's willful misfeasance, bad
faith, gross negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC shall not be liable for
losses beyond its control, provided that PFPC has acted in
accordance with the standard of care set forth above; and (ii) PFPC
shall not be liable for (A) the validity or invalidity or authority
or lack thereof of any Oral Instruction or Written Instruction,
notice or other instrument which conforms to the applicable
requirements of this Agreement, and which PFPC reasonably believes
to be genuine; or (B) subject to Section 10, delays or
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errors or loss of data occurring by reason of circumstances
beyond PFPC's control, including acts of civil or military
authority, national emergencies, labor difficulties, fire, flood,
catastrophe, acts of God, insurrection, war, riots or failure of
the mails, transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC nor its affiliates shall be liable to the Trust or to any
Portfolio for any consequential, special or indirect losses or
damages which the Trust or any Portfolio may incur or suffer by or
as a consequence of PFPC's or any affiliates' performance of the
services provided hereunder, whether or not the likelihood of such
losses or damages was known by PFPC or its affiliates.
15. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following accounting services with respect to each
Portfolio:
(i) Journalize investment, capital share and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received from the
investment adviser or subadviser for the Portfolio (the "Adviser")
and transmit trades to the Trust's custodian (the "Custodian") for
proper settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances with the Custodian, and
provide the Adviser with the beginning cash balance available for
investment purposes;
(vi) Update the cash availability throughout the day as required by the
Adviser;
(vii) Post to and prepare the Statement of Assets and Liabilities and
the Statement of Operations;
(viii) Calculate various contractual expenses (E.G., advisory and
custody fees);
(ix) Monitor the expense accruals and notify an officer of the Trust of
any proposed
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adjustments;
(x) Control all disbursements and authorize such disbursements upon
Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing services
approved by the Adviser, or if such quotes are unavailable, then
obtain such prices from the Adviser, and in either case calculate
the market value of the Portfolio's investments in accordance with
procedures adopted by the Trust's Trustees and acceptable to PFPC;
(xiv) Transmit or mail a copy of the daily portfolio valuation to the
Adviser;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense ratios,
portfolio turnover rates, and portfolio average dollar-weighted
maturity; and
(xvii) Prepare a monthly financial statement, which will include the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
16. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following administration services with respect to
each Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii) Supply various normal and customary Portfolio and Trust statistical
data as requested on an ongoing basis;
(iv) Prepare for execution and file the Trust's Federal and state tax
returns;
(v) Prepare and file with the SEC the Trust's Annual and Semi-Annual
Reports on
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Form N-SAR;
(vi) Prepare and file with the SEC the Trust's annual, and semi-annual,
shareholder reports;
(vii) Assist in the preparation of registration statements and other
filings relating to the registration of Shares;
(viii) Monitor the Portfolio's status as a regulated investment company
under Sub-chapter M of the Internal Revenue Code of 1986, as
amended, and assist the Adviser in monitoring the Portfolio's
compliance with its investment policies and procedures;
(ix) Coordinate contractual relationships and communications between
the Trust and its contractual service providers;
(x) Monitor the Trust's compliance with the amounts and conditions of
each state qualification; and
(xi) Prepare and file all notices and other documents relating to the
Shares under state securities laws.
17. DURATION AND TERMINATION. This Agreement shall continue for two years from
the date hereof and continuously thereafter until terminated by the Trust
or by PFPC on sixty (60) days' prior written notice to the other party.
During the term of this Agreement, either party may terminate this
Agreement upon written notice if the other party materially breaches this
Agreement and fails to cure such breach within thirty (30) days following
receipt of written notice of breach.
18. NOTICES. All notices and other written communications, including Written
Instructions, shall be delivered by hand, mail, tested telegram, cable,
telex or facsimile sending device. If notice is sent by tested telegram,
cable, telex or facsimile sending device, it shall be deemed to have been
given immediately. If notice is sent by first-class mail, it shall be
deemed to have been given three days after it has been mailed. If notice
is sent by messenger, it shall be deemed to have been given on the day it
is delivered. Notices shall
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be addressed (a) if to PFPC, at 400 Bellevue Parkway, Wilmington, Delaware
19809; (b) if to the Trust, at One Bush Street, San Francisco, California
94104, Attn: David R. Krimm, with a copy to Steven N. Machtinger, Esq., at
One Bush Street, San Francisco, California 94104; or (c) if to neither of
the foregoing, at such other address as shall have been provided by like
notice to the sender of any such notice or other communication by the
other party.
19. AMENDMENTS. This Agreement, or any term thereof, may be changed or waived
only by written amendment, signed by the party against whom enforcement of
such change or waiver is sought.
20. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its duties
hereunder to any majority-owned direct or indirect subsidiary of PFPC or
PNC Bank Corp., provided that (i) PFPC gives the Trust 30 days prior
written notice of such assignment or delegation, (ii) the assignee or
delegate agrees to comply with all provisions of this Agreement, (iii)
PFPC and such assignee or delegate promptly provide such information as
the Trust may reasonably request, and respond to such questions as the
Trust may reasonably ask, relative to the assignment or delegation
(including, without limitation, the capabilities of the assignee or
delegate), and (iv) PFPC remains responsible for all of its obligations
under this Agreement.
21. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
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23. MISCELLANEOUS.
(a) This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof. The captions
in this Agreement are included for convenience of reference only
and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. Notwithstanding any
provision hereof, the services of PFPC are not, nor shall they be,
construed as constituting legal advice or the provision of legal
services for or on behalf of the Trust or any other person.
(b) This Agreement shall be deemed to be a contract made in Delaware
and governed by Delaware law, without regard to principles of
conflicts of law.
(c) If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall
be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
(d) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such party.
(e) The obligations assumed by the Trust under this Agreement are
assumed on behalf of each Portfolio separately, and no Portfolio
shall be liable for the obligations of any other Portfolio. Neither
the Trustees nor any of the Trust's shareholders, officers,
employees or agents, whether past, present or future, shall be
personally liable for the obligations of the Trust or any
Portfolio.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By: /s/ Stephen M. Wynne
---------------------
Title: Executive Vice President
-------------------------
HAMBRECHT & QUIST FUND TRUST
By: /s/ David R. Krimm
---------------------
Title: President
------------------
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EXHIBIT A
THIS EXHIBIT A, dated as of October 28, 1999, is Exhibit A to that certain
Administration and Accounting Services Agreement dated as of October 28, 1999
between PFPC Inc. and Hambrecht & Quist Fund Trust.
PORTFOLIOS
H & Q IPO & Emerging Company Fund
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AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
David R. Krimm
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Robert N. Savoie
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Steven N. Machtinger
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Robert L. Schooler
- ----------------------------------- -------------------------------
- ----------------------------------- -------------------------------
- ----------------------------------- -------------------------------
Dated: October 28, 1999
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CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the inclusion in the Statement of Additional Information
constituting part of this Post-effective Amendment No. 1 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated
October 26, 1999, on the Statement of Assets and Liabilities of H&Q IPO &
Emerging Company Fund at October 22, 1999, which is also included in the
Registration Statement. We also consent to the reference to us under the
heading "Independent Accountants" in such Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
San Francisco, California
October 26, 1999
<PAGE>
H&Q IPO & EMERGING COMPANY FUND
RULE 12B-1 PLAN
September 8,1999
The following plan (the "Plan") has been adopted pursuant to Rule
l2b-1 under the Investment Company Act of 1940, as amended (the "1940 Act"), by
Hambrecht & Quist Fund Trust (the "Trust") for the Common Class, Class A and
Class B shares (each a "Class") of the H&Q IPO & Emerging Company Fund (the
"Fund"), a series of the Trust. The Plan has been approved by a majority of the
Trust's Trustees, including a majority of the Trustees who are not "interested
persons" of the Trust (as defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan (the "non-interested Trustees"), cast in person at a meeting
called for the purpose of voting on the Plan.
1. ANNUAL FEES
The Fund shall pay to Hambrecht & Quist LLC, the Fund's distributor
(the "Distributor"), a monthly fee equal on an annualized basis to .25% of
the aggregate average daily net assets of the Fund attributable to Common
Class shares, a quarterly fee equal on an annualized basis to .30% of the
aggregate average daily net assets of the Fund attributable to Class A shares
and a quarterly fee equal on an annualized basis to 1.00% of the aggregate
average daily net assets of the Fund attributable to Class B shares.
2. EXPENSES COVERED
Up to .25% of the aggregate average daily net assets of the Fund
attributable to the Class A, Class B and Common Class shares may constitute a
service fee (the "Service Fee") to be used to compensate the Distributor for
any expenses the Distributor incurs for personal services and/or the
maintenance of shareholder accounts within the meaning of National
Association of Securities Dealers rules and interpretations, including, but
not limited to, payment the Distributor makes to broker-dealers or other
third parties.
Except for the Service Fee, fees payable under Section 1 shall be
used to compensate the Distributor for any expenses the Distributor incurs
that are primarily intended to result in the sale of the Fund's shares,
including, but not limited to, payments the Distributor makes to
broker-dealers or other third parties, payments made for the preparation,
printing and distribution of advertisements and sales literature, and
payments made for printing and distributing prospectuses and shareholder
reports to other than existing shareholders of the Fund.
3. EXPENSES IN EXCESS OF OR LESS THAN ANNUAL FEES
The fees provided in Section 1 shall be payable whether the actual
expenses of the Distributor are in excess of or less than such fees. All
expenses in excess of such fees shall be borne by the Distributor.
<PAGE>
4. WRITTEN REPORTS
The Distributor shall furnish to the Trustees for their review, on
a quarterly basis, a written report of the amounts expended under the Plan or
any related agreement and the purposes therefor, and shall furnish to the
Trustees, on an annual basis, such other information as may reasonably be
necessary for the Trustees to make an informed determination of whether the
Plan should be continued.
5. TERMINATION
The Plan may be terminated with respect to any Class at any time,
without the payment of any penalty, by the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of such Class or
by the vote of a majority of the non-interested Trustees. Once terminated, no
further payments shall be made under the Plan.
6. AMENDMENTS
This Plan may not be amended to increase materially the amount to
be spent for distribution of shares of any Class without the approval of the
shareholders of such Class. All material amendments to the Plan must be
approved by the Trustees, including the non-interested Trustees, cast in
person at a meeting called for the purpose of voting on such amendments.
7. SELECTION OF NON-INTERESTED TRUSTEES
So long as the Plan is in effect, the selection and nomination of
the Trust's non-interested Trustees shall be committed to the discretion of
the non-interested Trustees.
8. EFFECTIVE DATE AND CONTINUATION
The Plan shall take effect as of the date hereof and, unless sooner
terminated, shall continue in effect for a period of one year from the date
hereof and thereafter only so long as such continuance is specifically approved
at least annually by a majority of the Trustees, including a majority of the
non-interested Trustees, cast in person at a meeting called for the purpose of
voting on such continuance.
9. PRESERVATION OF MATERIALS
The Trust will preserve copies of the Plan, any agreements relating to
the Plan and any report made pursuant to Section 4 above, for a period of not
less than six years (the first two years in an easily accessible place) from the
date of the Plan, agreement or report.
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H&Q IPO & EMERGING COMPANY FUND
RULE 18F-3 PLAN
September 8, 1999
This Rule 18f-3 Plan (the "Plan") has been adopted by Hambrecht &
Quist Fund Trust (the "Trust") with respect to the Class A, Class B, and Common
Class shares of H&Q IPO & Emerging Company Fund (the "Fund"), a series of the
Trust, in accordance with the provisions of Rule 18f-3 under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Plan has been approved by
a majority of the Trust's Trustees, including a majority of the Trustees who are
not "interested persons" of the Trust (as defined in the 1940 Act).
1. CLASS CHARACTERISTICS
Class A shares are offered at their net asset value ("NAV"), plus a
front-end sales charge, and are subject to a Rule 12b-1 fee, and, under certain
circumstances, a contingent deferred sales charge ("CDSC"), as described in the
Fund's Adviser Classes Prospectus.
Class B shares are offered at their NAV, without a front-end sales
charge, and are subject to a Rule 12b-1 fee and CDSC, as described in the Fund's
Adviser Classes Prospectus.
Common Class shares are offered at their NAV, without a front-end
sales charge or CDSC, and are subject to a Rule l2b-1 fee, as described in the
Fund's Common Class Prospectus (together with the Fund's Adviser Classes
Prospectus, the "Prospectus").
The front-end sales charge on Class A shares and CDSC on Class A and
Class B shares are each subject to reduction or waiver as permitted by the 1940
Act, and as described in the Prospectus and Statement of Additional Information
of the Fund.
Except as otherwise provided herein, each class of shares of the Fund
will be entitled to distributions, if any, calculated in the same manner and at
the same time as each other class of shares of the Fund. For purposes of this
calculation, expenses will be allocated to each class at the same time as to all
other classes. Except as otherwise provided herein, each share will represent an
equal pro rata interest in the Fund, regardless of class, and will have
identical voting, dividend, liquidation and other rights. Each class shall vote
separately with respect to any matter that relates solely to that class.
2. EXPENSE ALLOCATIONS TO EACH CLASS
The following expenses shall be allocated, to the extent practicable,
on a class-by-class basis: (i) Rule 12b-1 fees payable by the Fund to Hambrecht
& Quist
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LLC, the distributor of the Fund's shares (the "Distributor"), according to the
Rule 12b-1 plan adopted by the Fund, and (ii) transfer agency and sub-transfer
agency costs attributable to each class. Subject to the approval of the Fund's
Trustees, including a majority of the Trustees who are not "interested persons"
(as defined in the 1940 Act) of the Trust, the following "Class Expenses" may be
allocated, to the extent practicable, on a class-by-class basis: (a) printing
and postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxy statements to current shareholders
of a specific class, (b) SEC registration fees incurred with respect to a
specific class, (c) blue sky and foreign registration fees and expenses incurred
with respect to a specific class, (d) the expenses of administrative personnel
and services required to support shareholders of a specific class (e) litigation
and other legal expenses relating to a specific class, (f) expenses incurred in
connection with shareholders' meetings as a result of issues relating solely to
a specific class, (g) accounting and consulting expenses relating to a specific
class, (h) any fees imposed pursuant to a non-Rule 12b-1 shareholder services
plan that relate to a specific class, and (i) any additional expenses, not
including advisory or custodial fees or other expenses related to the management
of the Fund's assets, if these expenses are actually incurred in a different
amount with respect to a class, or if services are provided with respect to a
class that are of a different kind or to a different degree than with respect to
one or more other classes.
All expenses not now or hereafter designated as Class Expenses ("Fund
Expenses") will be allocated to each class on the basis of the net asset value
of that class in relation to the net asset value of the Fund.
3. FEE WAIVER OR REIMBURSEMENT
Hambrecht & Quist Fund Management, LLC, the Fund's investment adviser
(the "Adviser"), the Distributor or any other service provider may choose to
waive or reimburse any portion of the Class Expenses, subject to the
requirements of the Internal Revenue Code and the rules and regulations
thereunder. Such waiver or reimbursement may be applicable to some or all of the
classes and may be in different amounts for one or more classes.
4. CONVERSION AND EXCHANGE FEATURES
Class B shares, including shares purchased through dividends and
distributions, automatically convert to Class A shares as described in the
Prospectus and, as described in the Prospectus, such conversion may be suspended
upon the occurrence of certain events.
If the Class A shareholders approve any increase in Class Expenses
allocated to Class A shares, existing Class B shares will stop converting into
Class A shares until the Class B shareholders, voting separately as a class,
approve the increase in such expenses. Pending approval of such increase, or if
such increase is not approved, the Trustees shall take such action as is
necessary to ensure that existing Class B shares are exchanged for or converted
into a new class of shares ("New Class shares") identical in
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<PAGE>
all material respects to Class A shares as existed prior to the implementation
of the increase in expenses, no later than such shares were previously scheduled
to convert to Class A shares. Class B shares sold after the implementation of
the increase in expenses may convert into Class A shares subject to the higher
expenses, provided that the material features of all fees imposed on Class A
shares and the relationship of such fees to the Class B shares are disclosed in
an effective registration statement.
Conversions or exchanges described in this section shall be effected
in a manner that the Trustees believe will not be subject to federal income
taxation.
5. MONITORING
On an ongoing basis, the Trustees, pursuant to their fiduciary
responsibilities under the 1940 Act and otherwise, will monitor the Fund for the
existence of material conflicts between the interests of the classes of shares.
The Adviser and the Distributor shall be responsible for alerting the Trustees
to any material conflicts that may arise.
6. AMENDMENTS
The Plan may be amended from time to time in accordance with the
requirements of Rule 18f-3 under the 1940 Act.
-3-
