As filed with the Securities and Exchange Commission on December 17, 1999
File Nos. 333-84031 and 811-09509
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
Pre-Effective Amendment No. 2
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 2
TrueCrossing Funds
Two Portland Square
Portland, Maine 04101
(207) 879-1900
D. Blaine Riggle, Esq.
Forum Fund Services, LLC
Two Portland Square
Portland, Maine 04101
Copies to:
Harold B. Finn III, Esq.
Finn Dixon & Herling LLP
One Landmark Square
Stamford, Connecticut 06901
- --------------------------------------------------------------------------------
Approximate Date of Proposed Public Offering: As soon as practicable after the
effectiveness of the registration under the Securities Act of 1933.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
Title of Securities Being Registered: TrueCrossing Growth Fund.
<PAGE>
TRUECROSSING FUNDS
PROSPECTUS
DECEMBER 20, 1999
TrueCrossing Growth Fund
The Fund Seeks Long-term Capital Appreciation
Shares of the Fund are Offered to Investors
Without Any Sales Charge.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR
DISAPPROVED THE FUND'S SHARES OR DETERMINED WHETHER THIS
PROSPECTUS IS ACCURATE OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
1
<PAGE>
TABLE OF CONTENTS
Risk/Return Summary 3
Performance 4
Fee Tables 4
Investment Objectives, Principal Investment Strategies
and Principal Risks 5
Management 6
Your Account 8
How to Contact the Fund 8
General Information 8
Buying Shares 9
Selling Shares 11
Exchange Privileges 12
Other Information 15
Financial Highlights 15
2
<PAGE>
RISK/RETURN SUMMARY
TRUECROSSING GROWTH FUND (THE "FUND")
INVESTMENT GOAL Long-term capital appreciation
PRINCIPAL INVESTMENT STRATEGY The Fund's investment adviser, NewBridge Partners,
LLC (the "Adviser"), intends to follow a long-term investment philosophy by
investing primarily in the common stock of Mid-Cap and Large-Cap companies which
appear to have growth prospects that exceed those of the overall stock market.
CONCEPTS TO UNDERSTAND
Growth Investing means to invest in stocks of companies that have
exhibited faster than average earnings growth over the past few years
and are expected to continue to show high levels of profit growth
Mid-cap Stocks mean securities of companies the market value of which
is between $1 billion and $10 billion
Large-cap Stocks mean securities of companies the market value of which
is in excess of $10 billion
PRINCIPAL RISKS OF INVESTING IN THE FUND
You could lose money on your investment in the Fund and the Fund could
under-perform other investments. The principal risks of investing in the Fund
include:
o The stock market goes down
o The stock market undervalues the stocks in the Fund's portfolio
o The Adviser's judgment as to the fundamentals of an issuer proves to be
wrong
o The Fund's particular investment style falls out of favor with the
market
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
governmental agency.
WHO MAY WANT TO INVEST IN THE FUND
You may want to purchase shares of the Fund if:
o You are willing to tolerate significant changes in the value of your
investment
o You are pursuing a long-term goal
o You are willing to accept higher short-term risk
The Fund may NOT be appropriate for you if:
o You want an investment that pursues market trends or focuses
only on particular sectors or industries
o You need regular income or stability of principal
o You are pursuing a short-term goal or investing emergency reserves
3
<PAGE>
PERFORMANCE INFORMATION
Performance information is not provided because the Fund had not commenced
operations prior to the date of this prospectus.
FEE TABLES
The following tables describe the fees and expenses that you will pay if you
invest in the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends
and Other Distributions None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES(1)
(expenses that are deducted from Fund assets)
Advisory Fees 0.70%
Other Expenses 0.80%
TOTAL ANNUAL FUND OPERATING EXPENSES(2) 1.50%
(1) Based on estimated expenses for the Fund's fiscal year ended November 30,
2000.
(2) The Fund has adopted a distribution plan under SEC Rule 12b-1 ("12b-1 Plan")
which requires further Board action and shareholder notification before the
12b-1 Plan can become effective and implemented. See "Distribution Expenses"
below for more information. To the extent the total expenses exceed the amounts
shown in the fee table, the Adviser has undertaken to assume such excess
expenses of the Fund (or waive its fees) through November 30, 2000.
The following is a hypothetical example intended to help you compare the cost of
investing in the Fund to the cost of investing in other mutual funds. This
example assumes that you invest $10,000 in the Fund, that your investment has a
5% annual return, that the Fund's operating expenses remain the same as stated
in the table above, that you reinvest all distributions and redeem your shares
at the end of each period. Although your actual costs may be higher or lower,
under these assumptions your costs would be:
1 year 3 years
$153 $474
4
<PAGE>
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS
INVESTMENT OBJECTIVE
The investment objective of the Fund is to seek long-term capital appreciation
by investing in companies whose growth prospects appear to exceed those of the
overall market. There is no assurance that the Fund will achieve this objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund seeks to achieve its objective by investing primarily in the common
stock of Mid-Cap and Large-Cap companies. The Adviser analyzes the price,
earnings, price histories, balance sheet characteristics, perceived management
skills and perceived prospects for earnings growth when deciding which stocks to
buy and sell for the Fund. The Adviser believes that earnings growth is the
primary determinant of stock prices and that efficient financial markets will
reward consistently above-average earnings growth with greater than average
capital appreciation over the long term. PRINCIPAL INVESTMENT RISKS
There is no assurance the Fund will achieve its investment objective, and its
net asset value and total return will fluctuate based upon changes in the value
of its portfolio securities. Upon redemption, an investment in the Fund may be
worth more or less than its original value. The Fund does not, by itself,
provide a complete investment program.
All investments made by the Fund have some risk. Among other things, the market
value of any security in which the Fund may invest is based upon the market's
perception of value and not necessarily the book value of an issuer or other
objective measure of the issuer's worth. Moreover, stock markets tend to be
cyclical, with periods of generally rising prices and generally declining
prices. These cycles will affect the value of the Fund.
The Fund may be an appropriate investment if you are seeking long-term growth in
your investment and are willing to tolerate significant fluctuations in the
value of your investment in response to changes in the market value of the
stocks the Fund holds. This type of market movement may affect the price of the
securities of a single issuer, a segment of the domestic stock market or the
entire market. The investment style for the Fund could fall out of favor with
the market. In other words, if investors lose interest in "growth" stocks, then
the net asset value of the Fund could also decrease. For the most part, the
Fund's portfolio is comprised of Mid-Cap and Large-Cap companies. Therefore, if
larger companies fall out of favor among investors, the value of the Fund's
shares may decline. Likewise, if smaller companies outperform these larger
companies, the Fund could under-perform broader equity indices. In addition, the
common stock of Mid-Cap companies tend to be less liquid than those of Large-Cap
companies, with the result that the Fund's portfolio may become more volatile if
and to the extent that it increases its investments in Mid-Cap companies. While
the investment professionals employed by the Adviser have a number of years of
prior experience in managing investment portfolios, including a mutual fund,
this is the first time that the Adviser has managed a mutual fund.
5
<PAGE>
TEMPORARY DEFENSIVE POSITION
The Fund may hold cash or cash equivalents, such as high quality money market
instruments, pending investment and to retain flexibility to pay redemptions and
expenses. In addition, in order to respond to adverse market, economic or other
conditions, the Fund may assume a temporary defensive position and invest
without limit in these instruments. As a result, the Fund may be unable to
achieve its investment objectives.
YEAR 2000
Certain computer systems may not process date-related information properly on
and after January 1, 2000. The Adviser and Fund administrator are addressing
this Year 2000 issue and its possible impact on their systems. The Fund's other
service providers have informed the Fund that they are taking similar measures.
This matter, if not corrected, could adversely affect the services provided to
the Fund or the companies in which the Fund invests and, therefore, could lower
the value of your shares.
MANAGEMENT
The business of the Fund is managed under the direction of the Board of Trustees
of TrueCrossing Funds (the "Board"). The Board formulates the general policies
of the Fund and meets periodically to review the Fund's performance, monitor
investment activities and practices, and discuss other matters affecting the
Fund. Additional information regarding the Board, as well as executive officers,
may be found in the Statement of Additional Information ("SAI").
THE ADVISER
NewBridge Partners, LLC, 535 Madison Avenue, 14th Floor, New York, New York
10022 (the "Adviser"), serves as investment adviser to the Fund. Subject to the
general control of the Board, the Adviser makes investment decisions for the
Fund. For its services, the Adviser receives an advisory fee at an annual rate
of 0.70% of the average daily net assets of the Fund.
The Adviser commenced business on March 15, 1999. As of October 31, 1999, the
Adviser had over $3.5 billion of assets under management.
All investment decisions for the Fund are made by a committee of investment
professionals and, no other person is primarily responsible for making
recommendations to that committee.
OTHER SERVICE PROVIDERS
Forum Financial Group, LLC and its affiliates (collectively "Forum"), provide
various services to the Fund. As of October 31, 1999, Forum provided
administration and distribution services to investment companies and collective
investment funds with assets of approximately $93.7 billion.
Forum Fund Services, LLC, a registered broker-dealer and member of the National
Association of Securities Dealers, Inc., is the distributor (principal
underwriter) of the Fund's shares. The distributor acts as the agent of the Fund
in connection with the offering of shares of the Fund. The distributor may enter
into arrangements with banks, broker-dealers or other financial institutions
through which investors may purchase or redeem shares and may, at its own
expense, compensate persons who provide services in connection with the sale or
expected sale of shares of the Fund.
Forum Shareholder Services, LLC (the "Transfer Agent") is the Fund's transfer
agent.
6
<PAGE>
DISTRIBUTION EXPENSES
The Fund has adopted a distribution plan under SEC Rule 12b-1 ("12b-1 Plan").
Although the 12b-1 Plan has been adopted, further Board action and shareholder
notification is required before the 12b-1 Plan can become effective.
Implementing such a 12b-1 Plan would allow the Fund to pay asset-based sales
charges or distribution fees for the distribution and sale of its shares. If the
12b-1 Plan became effective, fees could be charged at an annual rate of up to
0.25 percent of the average daily net assets of the Fund. Because these fees are
paid out of the Fund's assets on an on-going basis, over time these fees could
increase the cost of your investment and may cost you more than paying other
types of sales charges. Because the Board has not yet implemented the 12b-1
Plan, no 12b-1 Distribution Fees currently will be charged.
FUND EXPENSES
The Fund pays for all of its expenses. The Adviser or other service providers
may waive all or any portion of their fees, which are accrued daily and paid
monthly. Any waiver would have the effect of increasing the Fund's performance
for the period during which the waiver was in effect.
7
<PAGE>
YOUR ACCOUNT
HOW TO CONTACT THE FUND
Write to us at:
TrueCrossing Funds
P.O. Box 446
Portland, ME 04112
Telephone us Toll-Free at:
(800) 679-5707
Wire investments (or ACH payments) to us at:
Bankers Trust Company
New York, New York
ABA #021001033 For Credit to:
Forum Shareholder Services, LLC
Account #014-65-547
TrueCrossing Funds
(Your Name)
(Your Account Number)
GENERAL INFORMATION
You may purchase, without any sales charge, and sell (redeem) shares at the net
asset value of a share, or NAV, next calculated after the Transfer Agent
receives your request in proper form. For instance, if the Transfer Agent
receives your transaction request in proper form prior to 4 p.m. (Eastern time),
your transaction will be priced at that day's NAV. If the Transfer Agent
receives your transaction request after 4 p.m., your transaction will be priced
at the next business day's NAV. The Fund will not accept orders that request a
particular day or price for the transaction or any other special conditions.
The Fund does not issue share certificates.
You will receive periodic statements and a confirmation of each transaction. You
should verify the accuracy of all transactions in your account as soon as you
receive your confirmation.
The Fund reserves the right to impose minimum investment amounts and may
temporarily suspend (during unusual market conditions) or discontinue any
service or privilege.
WHEN AND HOW NAV IS DETERMINED The Fund calculates its NAV as of the close of
the New York Stock Exchange (normally 4:00 p.m., Eastern time) on each weekday
except days when the New York Stock Exchange is closed. The time at which NAV is
calculated may be changed in case of an emergency or, if the New York Stock
Exchange closes early. The Fund's NAV is determined by taking the market value
of all securities owned by the Fund (plus all other assets such as cash),
subtracting all liabilities and then dividing the result (net assets) by the
number of shares outstanding. The Fund values securities for which market
quotations are readily available at current market value. If market quotations
are not readily available, the Fund values securities at fair value as
determined by the Board (or its delegate).
TRANSACTIONS THROUGH THIRD PARTIES If you invest through a broker or other
financial institution, the policies and fees charged by that institution may be
different than those of the Fund. Banks, brokers, retirement plans and financial
8
<PAGE>
advisers may charge transaction fees and may set different minimum investments
or limitations on buying or selling shares. Consult a representative of your
financial institution or retirement plan for further information.
BUYING SHARES
All investments must be in U.S. dollars and checks must be drawn on U.S. banks.
CHECKS For individual, Uniform Gifts to Minors Act ("UMGA") or Uniform
Transfer to Minors Act ("UTMA") accounts, the check must be made
payable to "TrueCrossing Funds" or to one or more owners of the account
and endorsed to "TrueCrossing Funds." For all other accounts, the check
must be made payable on its face to "TrueCrossing Funds." No other
method of check payment is acceptable (for instance, you may not pay by
travelers check).
PURCHASES BY AUTOMATED CLEARING HOUSE ("ACH") This service allows the
purchase of additional shares through an electronic transfer of money
from a checking or savings account. When an additional purchase is made
by telephone, the Transfer Agent will automatically debit your
pre-designated bank account for the desired amount. You may call (800)
679-5707 to request an ACH transaction.
WIRES Instruct your financial institution to make a Federal Funds wire
payment to us. Your financial institution may charge you a fee for this
service.
MINIMUM INVESTMENTS The Fund accepts payments in the following minimum amounts:
<TABLE>
<S> <C> <C>
MINIMUM INITIAL INVESTMENT MINIMUM ADDITIONAL INVESTMENT
Standard Account $2,500 $500
Traditional and Roth IRA Accounts $1,000 $100
Electronic Fund Transfers $2,500 $500
Systematic Investment Plans $2,500 $500
Exchange Privileges $2,500 None
</TABLE>
The Adviser or the Fund's administrator may, at its discretion, waive the above
investment minimums.
9
<PAGE>
ACCOUNT REQUIREMENTS
<TABLE>
<S> <C>
TYPE OF ACCOUNT REQUIREMENTS
INDIVIDUAL, SOLE PROPRIETORSHIP AND JOINT ACCOUNTS o Instructions must be signed by all persons
Individual accounts are owned by one person, as are required to sign (you choose who must sign)
sole proprietorship accounts. Joint accounts can exactly as each name appears on the account
have two or more owners (tenants)
GIFTS OR TRANSFERS TO A MINOR (UGMA, UTMA) o Depending on state laws, you can set up a
These custodial accounts provide a way to give money custodial account under the UGMA or the UTMA
to a child and obtain tax benefits. You can give up o The trustee must sign instructions in a
to $10,000 a year per child without paying Federal manner indicating trustee capacity
gift tax.
BUSINESS ENTITIES o For entities with officers, provide an
original or certified copy of a resolution that
identifies the authorized signers for the account
For entities with partners or other interested
parties, provde a certified partnership agreement
or organizational document, that identify the
partners or interested parties
TRUSTS o The trust must be established before an
account can be opened
o Provide a certified trust document, or the
pages from the trust document that identify
the trustees
INVESTMENT PROCEDURES
TO OPEN AN ACCOUNT TO ADD TO YOUR ACCOUNT
BY CHECK BY CHECK
o Call or write us for an account application o Fill out an investment slip from a
o Complete the application confirmation statement Or
o Mail us your application and a check o Write a letter to us
o Write your account number on your check
o Mail us the slip (or your letter) and a
check
BY WIRE BY WIRE
o Call or write us for an account application o Call to notify us of your incoming wire
o Complete the application o Instruct your bank to wire your money to us
o Call us and we will assign you an account
number
o Mail us your application
o Instruct your bank to wire your money to us
BY ACH PAYMENT BY SYSTEMATIC INVESTMENT
o Call or write us for an account application o Complete the Systematic Investment section
o Complete the application of the application
o Call us and we will assign you an account o Attach a voided check to your application
number o Mail us the completed application and the
o Mail us your application voided check
o Make an ACH payment
</TABLE>
10
<PAGE>
SYSTEMATIC INVESTMENTS You may invest a specified amount of money in the Fund
once or twice a month on specified dates. These payments are taken from your
bank account by ACH payment. Systematic investments must be for at least $500.
LIMITATIONS ON PURCHASES The Fund reserves the right to refuse any purchase
(including exchange) request, particularly requests that could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in the Fund's view, is likely to engage in excessive trading (usually
defined as more than four or more substantial redemptions or exchanges within a
calendar year).
CANCELED OR FAILED PAYMENTS The Fund accepts checks and ACH transfers at full
value subject to collection. If your payment for shares is not received or you
pay with a check or ACH transfer that does not clear, your purchase will be
canceled. You will be responsible for any losses or expenses incurred by the
Fund or the Transfer Agent, and the Fund may redeem other shares you own in the
account (or another identically registered account in any other series of
TrueCrossing Funds or Forum Funds) as reimbursement. The Fund and its agents
have the right to reject or cancel any purchase, exchange, or redemption due to
nonpayment.
SELLING SHARES
The Fund processes redemption orders promptly and you will generally receive
redemption proceeds within a week. Delays may occur in cases of very large
redemptions, excessive trading or during unusual market conditions. If the Fund
has not yet collected payment for the shares you are selling, however, it may
delay sending redemption proceeds for up to 15 calendar days.
11
<PAGE>
TO SELL SHARES FROM YOUR ACCOUNT
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The Fund name
o The dollar amount or number of shares you want to sell
o How and where to send your proceeds
o Obtain a signature guarantee (if required)
o Obtain other documentation (if required)
o Mail us your request and documentation
BY WIRE
o Wire requests are only available if:
o You have not declined wire redemption privileges on your account
application and
o Your request is for $10,000 or more
o Call us with your request (if you have not declined telephone
redemption privileges) (See "By Telephone") OR
o Mail us your request (See "By Mail")
BY TELEPHONE
o Telephone requests are only available if you have not declined
telephone redemption privileges
o Call us with your request
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
o Your proceeds will be:
o Mailed to you Or
o Wired to you (if you have not declined wire redemption
privileges) (See "By Wire")
SYSTEMATICALLY
o Complete the systematic withdrawal section of the application
o Attach a voided check to your application
o Mail us your completed application
TELEPHONE REDEMPTION PRIVILEGES You may redeem your shares by telephone unless
you declined telephone redemption privileges on your account application. You
may be responsible for any fraudulent telephone order as long as the Transfer
Agent takes reasonable measures to verify the order.
WIRE REDEMPTION PRIVILEGES You may redeem your shares by wire unless you
declined wire redemption privileges on your account application. The minimum
amount you may redeem by wire is $10,000. If you wish to make your wire request
by telephone, you must also have telephone redemption privileges.
SYSTEMATIC REDEMPTION If you own shares of the Fund with an aggregate value of
at least $10,000, you may request a specified amount of money from your account
once a month or once a quarter on a specified date. These payments are sent from
your account to a designated bank account by ACH payment. Systematic requests
must be for at least $100.
SIGNATURE GUARANTEE REQUIREMENTS To protect you and the Fund against fraud,
signatures on certain requests must have a "signature guarantee." A signature
guarantee verifies the authenticity of your signature. You can obtain one from
most banking institutions or securities brokers, but not from a notary public.
For requests made in writing, a signature guarantee is required for any of the
following:
12
<PAGE>
o Sales of over $50,000 worth of shares
o Changes to a shareholder's record name
o Redemption from an account for which the a ddress or account registration
has changed within the last 30 days
o Sending redemption proceeds to any person, address, brokerage firm or
bank account not on record
o Sending redemption proceeds to an account with a different registration
(name or ownership) from yours
o Changes to systematic investment or withdrawal, distribution, telephone
redemption or exchange option or any other election in connection with your
account
SMALL ACCOUNTS If the value of your account falls below $2,500 (not including
IRAs), the Fund may ask you to increase your balance. If the account value is
still below $2,500 after 60 days, the Fund may close your account and send you
the proceeds. The Fund will not close your account if it falls below these
amounts solely as a result of a reduction in your account's market value.
REDEMPTION IN KIND The Fund reserves the right to pay redemption proceeds in
portfolio securities rather than cash. These redemptions "in kind" usually occur
if the amount to be redeemed is large enough to affect the Fund's operations
(for example, if it represents more than 1% of the Fund's assets).
LOST ACCOUNTS The Transfer Agent will consider your account lost if
correspondence to your address of record is returned as undeliverable, unless
the Transfer Agent determines your new address. When an account is lost, all
distributions on the account will be reinvested in additional shares of the
Fund. In addition, the amount of any outstanding (unpaid for six months or more)
checks for distributions that have been returned to the Transfer Agent will be
reinvested and the checks will be canceled.
13
<PAGE>
EXCHANGE PRIVILEGES
You may sell your Fund shares and buy, also known as an exchange, Investor class
shares of Daily Assets Cash Fund, Daily Assets Government Fund, Daily Assets
Government Obligations Fund, and Investors Bond Fund (series of the Forum Funds)
or any other TrueCrossing Funds account. The minimum amount that is required to
open an account in the Fund through an exchange with another fund is $2,500.
Because exchanges are treated as a sale and purchase, they may have tax
consequences.
REQUIREMENTS You may make exchanges only between identically registered accounts
(name(s), address and taxpayer ID number). There is currently no limit on
exchanges, but the Fund reserves the right to limit exchanges. You may exchange
your shares by mail or telephone, unless you declined the telephone
authorization privileges section on your account application. You may be
responsible for any fraudulent telephone order as long as the Transfer Agent
takes reasonable measures to verify the order.
HOW TO EXCHANGE
BY MAIL
o Prepare a written request including:
o Your name(s) and signature(s)
o Your account number
o The names of the funds out of and into which you are exchanging
o The dollar amount or number of shares you want to exchange
o If opening a new account, complete an account application if
you are requesting different shareholder privileges
o Mail us your request and documentation
BY TELEPHONE
o Call us with your request (unless you declined telephone redemption
privileges on your account application)
o Provide the following information:
o Your account number
o Exact name(s) in which account is registered
o Additional form of identification
RETIREMENT ACCOUNTS
The Fund offers IRA accounts, including traditional and Roth IRAs. Fund shares
may also be an appropriate investment for other retirement plans. Before
investing in any IRA or other retirement plan, you should consult your tax
adviser. Whenever making an investment in an IRA, be sure to indicate the year
in which the contribution is made.
14
<PAGE>
OTHER INFORMATION
DISTRIBUTIONS
The Fund distributes its net investment income quarterly. Any net capital gain
realized by the Fund will be distributed at least annually.
All distributions are reinvested in additional shares, unless you elect to
receive distributions in cash. For Federal income tax purposes, distributions
are treated the same whether they are received in cash or reinvested. Shares
become entitled to receive distributions on the day after the shares are issued.
TAXES
The Fund intends to operate in a manner so that it will not be liable for
Federal income or excise tax.
Distributions of net investment income or short-term capital gain are taxable to
you as ordinary income. A portion of the dividends paid by the Fund may be
eligible for the dividends-received deduction for corporate shareholders.
Distributions of long-term capital gain are taxable to you as long-term capital
gain regardless of how long you have held your shares. Distributions may also be
subject to state and local taxes.
Distributions of capital gain and the Fund's distribution of net investment
income reduce the net asset value of the Fund's shares by the amount of the
distribution. If you purchase shares prior to these distributions, you are taxed
on the distribution even though the distribution represents a return of your
investment. The sale or exchange of Fund shares is a taxable transaction for
Federal income tax purposes.
The Fund may be required to withhold U.S. federal income tax at the rate of 31%
of all taxable distributions payable to you if you fail to provide the Fund with
your correct taxpayer identification number or to make required certifications,
or if you have been notified by the IRS that you are subject to backup
withholding. Backup withholding is not an additional tax. Any amounts withheld
may be credited against your U.S. federal income tax liability.
The Fund will mail reports containing information about the Fund's distributions
during the year to you after December 31 of each year. Consult your tax adviser
about the Federal, state and local tax consequences in your particular
circumstances.
ORGANIZATION
TrueCrossing Funds is a Delaware business trust that is registered with the SEC
as an open-end, management investment company (a "mutual fund"). The Fund is a
series of TrueCrossing Funds. It is not intended that meetings of shareholders
be held except when required by Federal or Delaware law. All shareholders of
TrueCrossing Funds are entitled to vote at shareholders' meetings unless a
matter is determined to affect a series of TrueCrossing Funds (such as approval
of an advisory agreement for the Fund). From time to time, large shareholders
may control the Fund or TrueCrossing Funds.
FINANCIAL HIGHLIGHTS
Financial highlights are not provided because the Fund had not commenced
operations prior to the date of this prospectus.
15
<PAGE>
TRUECROSSING GROWTH FUND
FOR MORE INFORMATION
The following documents will be available free upon request:
ANNUAL/SEMI-ANNUAL REPORTS
The Fund will provide annual and semi-annual reports to shareholders that
will provide additional information about the Fund's investments.In the Fund's
annual report, you will find a discussion of the market conditions
andinvestment strategies that significantly affected the Fund's
performance during its preceding fiscal year.
STATEMENT OF ADDITIONAL INFORMATION ("SAI") The SAI provides
more detailed information about the Fund and is
incorporated by reference into this Prospectus.
CONTACTING THE FUND
You can get free copies of both reports (when available) and the SAI, request
other information and discuss your questions about the Fund by
contacting your broker or the Fund at:
Forum Shareholder Services, LLC
P. O. Box 446
Portland, Maine 04112
800-679-5707
SECURITIES AND EXCHANGE COMMISSION INFORMATION
You can also review the Fund's reports (when available) and SAIs at the
Public Reference Room of the Securities and Exchange Commission. You can
get copies, for a fee, by writing to the following:
TrueCrossing Funds
Public Reference Room P.O. Box 446
Securities and Exchange Commission Portland, ME 04112
Washington, D.C. 20549-6009
E-mail address: [email protected] 800-679-5707
Information on the hours of operation of the Public Reference Room may be
obtained by calling the Commission at 1-202-942-8090. Free copies of the
reports and SAIs are available from the Commission's Internet website at
http://www.sec.gov.
Investment Company Act File No. 811-09509
16
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
DECEMBER 20, 1999
TRUECROSSING FUNDS
TrueCrossing Growth Fund
FUND INFORMATION:
TrueCrossing Funds
Two Portland Square
Portland, Maine 04101
(800) 679-5707
INVESTMENT ADVISER:
NewBridge Partners, LLC
535 Madison Avenue, 14th Floor
New York, New York 10022
ACCOUNT INFORMATION AND SHAREHOLDER SERVICES:
Forum Shareholder Services, LLC
P.O. Box 446
Portland, Maine 04112
(800) 679-5707
This Statement of Additional Information, or SAI, supplements the Prospectus
dated December 20, 1999, as may be amended from time to time, offering shares of
the TrueCrossing Growth Fund (the "Fund"). This SAI is not a prospectus and
should only be read in conjunction with the Prospectus. The Prospectus may be
obtained without charge by contacting shareholder services at the address or
telephone number listed above.
1
<PAGE>
TABLE OF CONTENTS
Glossary ............................................................XX
1. Investment Policies and Risks........................................XX
2. Investment Limitations...............................................XX
3. Performance Data and Advertising.....................................XX
4. Management...........................................................XX
5. Portfolio Transactions...............................................XX
6. Additional Purchase and Redemption Information.......................XX
7. Taxation ............................................................XX
8. Other Matters........................................................XX
Appendix A - Description of Securities Ratings...............................A-1
Appendix B - Statement of Assets and Liabilities.............................B-1
2
<PAGE>
GLOSSARY
"Adviser" means NewBridge Partners, LLC.
"Board" means the Board of Trustees of the Trust.
"CFTC" means the U.S. Commodities Futures Trading Commission.
"Code" means the Internal Revenue Code of 1986, as amended.
"Custodian" means the custodian of the Fund's assets.
"FAdS" means Forum Administrative Services, LLC, administrator of the
Fund.
"FAcS" means Forum Accounting Services, LLC, the accountant of the
Fund.
"FFS" means Forum Fund Services, LLC, distributor of the Fund's shares.
"Fund" means the TrueCrossing Growth Fund.
"Fitch" means Fitch IBCA, Inc.
"IRS" mean Internal Revenue Service.
"Moody's" means Moody's Investors Service.
"NAV" means net asset value.
"NRSRO" means a nationally recognized statistical rating organization.
"SEC" means the U.S. Securities and Exchange Commission.
"S&P" means Standard & Poor's.
"Stock Index Futures" means futures contracts that relate to broadly
based stock indices.
"Transfer Agent" means Forum Shareholder Services, LLC, the transfer
agent and distribution disbursing agent of the Fund.
"Trust" means TrueCrossing Funds.
"U.S.Government Securities" means obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities.
"U.S.Treasury Securities" means obligations issued or guaranteed by
the U.S. Treasury.
"1933 Act" means the Securities Act of 1933, as amended.
"1940 Act" means the Investment Company Act of 1940, as amended.
3
<PAGE>
1. INVESTMENT POLICIES AND RISKS
The following discussion supplements the disclosure in the Prospectus about the
Fund's investment techniques, strategies and risks.
A. SECURITY RATINGS INFORMATION
The Fund may invest in fixed income securities. The Fund's investments in fixed
income securities are subject to credit risk relating to the financial condition
of the issuers of the securities that the Fund holds. To limit credit risk, the
Fund generally may only invest its assets in debt securities that, with the
exception of convertible securities, are considered investment grade. Investment
grade means rated in the top four long-term rating categories or top two
short-term rating categories by an NRSRO, or unrated and determined by the
Adviser to be of comparable quality. The lowest long-term ratings that are
investment grade for corporate bonds, including convertible bonds, are "Baa" in
the case of Moody's and "BBB" in the case of S&P and Fitch; for preferred stock
are "Baa" in the case of Moody's and "BBB" in the case of S&P and Fitch; and for
short-term debt, including commercial paper, are "Prime-2 (P-2)" in the case of
Moody's, "A-2" in the case of S&P and "F-2" in the case of Fitch.
Unrated securities may not be as actively traded as rated securities. The Fund
may retain securities whose rating has been lowered below the lowest permissible
rating category (or that are unrated and determined by the Adviser to be of
comparable quality to securities whose rating has been lowered below the lowest
permissible rating category) if the Adviser determines that retaining such
security is in the best interests of the Fund. Because a downgrade often results
in a reduction in the market price of the security, sale of a downgraded
security may result in a loss.
Moody's, S&P and other NRSROs are private services that provide ratings of the
credit quality of debt obligations, including convertible securities. A
description of the range of ratings assigned to various types of bonds and other
securities by several NRSROs is included in Appendix A to this SAI. The Fund may
use these ratings to determine whether to purchase, sell or hold a security.
Ratings are general and are not absolute standards of quality. Securities with
the same maturity, interest rate and rating may have different market prices. If
an issue of securities ceases to be rated or if its rating is reduced after it
is purchased by the Fund, the Adviser will determine whether the Fund should
continue to hold the obligation. To the extent that the ratings given by a NRSRO
may change as a result of changes in such organizations or their rating systems,
the Adviser will attempt to substitute comparable ratings. Credit ratings
attempt to evaluate the safety of principal and interest payments and do not
evaluate the risks of fluctuations in market value. Also, rating agencies may
fail to make timely changes in credit ratings. An issuer's current financial
condition may be better or worse than a rating indicates.
B. TEMPORARY DEFENSIVE POSITION
The Fund may assume a temporary defensive position and may invest without limit
in money market instruments that are of prime quality. Prime quality instruments
are those instruments that are rated in one of the two highest short-term rating
categories by an NRSRO or, if not rated, determined by the Adviser to be of
comparable quality. Except as noted below with respect to variable master demand
notes, issues of commercial paper normally have maturities of less than nine
months and fixed rates of return.
Money market instruments usually have maturities of one year or less and fixed
rates of return. The money market instruments in which the Fund may invest
include U.S. Government Securities, commercial paper, time deposits, bankers
acceptances and certificates of deposit of banks doing business in the United
States that have, at the time of investment, total assets in excess of one
billion dollars and that are insured by the Federal Deposit Insurance
Corporation, corporate notes and short-term bonds and money market mutual funds.
Some money market instruments in which the Fund may invest have variable or
floating rates of interest. These obligations include master demand notes that
permit investment of fluctuating amounts at varying rates of interest pursuant
to direct arrangement with the issuer of the instrument. The issuer of these
obligations often has the right, after a given period, to prepay the outstanding
principal amount of the obligations upon a specified number of days' notice.
4
<PAGE>
These obligations generally are not traded, and there is generally no
established secondary market for these obligations. To the extent a demand note
does not have a 7-day or shorter demand feature and there is no readily
available market for the obligation, it is treated as an illiquid security.
C. HEDGING AND OPTION INCOME STRATEGIES
The Fund may seek to hedge against a decline in the value of securities it owns
or an increase in the price of securities that it plans to purchase. The Fund
accomplishes a hedge by purchasing options to acquire securities or writing
(selling) covered options on securities in which it has invested, other than for
bona fide hedging purposes, by buying or selling stock index futures based in
whole or in part on securities in which the Fund may invest, as well as by
buying or selling options on such futures contracts.
The Fund will only invest in futures contracts, options on futures contracts and
other options contracts that are subject to the jurisdiction of the CFTC after
filing a notice of eligibility and otherwise complying with the requirements of
Section 4.5 of the rules of the CFTC. Under that section, the Fund may not enter
into any futures contract or option on a futures contract if, as a result, the
aggregate initial margins and premiums required to establish such other
positions would exceed 5% of the Fund's net assets.
The Fund has no current intention of investing in futures contracts and options
thereon for purposes other than hedging.
These instruments are often referred to as "derivatives," which may be defined
as financial instruments whose performance is derived, at least in part, from
the performance of another asset (such as a security, currency or an index of
securities).
The Fund may write any covered options. An option is covered if, as long as the
Fund is obligated under the option, it owns an offsetting position in the
underlying security or maintains cash, U.S. Government Securities or other
liquid, securities with a value at all times sufficient to cover the Fund's
obligation under the option.
No assurance can be given, however, that any hedging or option income strategy
will succeed in achieving its intended result.
1. IN GENERAL
A call option is a contract pursuant to which the purchaser of the call option,
in return for a premium paid, has the right to buy the security (or index)
underlying the option at a specified exercise price at any time during the term
of the option. The writer of the call option, who receives the premium, has the
obligation upon exercise of the option to deliver the underlying security (or a
cash amount equal to the value of the index) against payment of the exercise
price during the option period.
A put option gives its purchaser, in return for a premium, the right to sell the
underlying security (or index) at a specified price during the term of the
option. The writer of the put option, who receives the premium, has the
obligation to buy the underlying security (or receive a cash amount equal to the
value of the index), upon exercise at the exercise price during the option
period.
The amount of premium received or paid for an option is based upon certain
factors, including the market price of the underlying security or index, the
relationship of the exercise price to the market price, the historical price
volatility of the underlying security or index, the option period and interest
rates.
There are a limited number of options contracts on securities indices and option
contracts may not be available on all securities that the Fund may own or seek
to own.
Bond and stock index futures contracts are bilateral agreements in which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the bond or stock index value at the
5
<PAGE>
close of trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the securities comprising the index
is made. Generally, these futures contracts are closed out prior to the
expiration date of the contract.
Options on futures contracts are similar to stock options except that an option
on a futures contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract rather than to purchase or sell
stock, at a specified exercise price at any time during the period of the
option. Upon exercise of the option, the delivery of the futures position to the
holder of the option will be accompanied by transfer to the holder of an
accumulated balance representing the amount by which the market price of the
futures contract exceeds, in the case of a call, or is less than, in the case of
a put, the exercise price of the option on the future.
COVERED CALLS AND HEDGING. The Fund may purchase or sell (write) put and call
options on securities to seek to hedge against a decline in the value of
securities owned by it or an increase in the price of securities which it plans
to purchase. Hedging or option income strategies include the writing and
purchase of exchange-traded and over-the-counter options on individual
securities or financial indices and the purchase and sale of financial futures
contracts and related options. Whether or not used for hedging purposes, these
investment techniques involve risks that are different in certain respects from
the investment risks associated with the other investments of the Fund.
Principal among such risks are: (1) the possible failure of such instruments as
hedging techniques in cases where the price movements of the securities
underlying the options or futures do not follow the price movements of the
portfolio securities subject to the hedge; (2) potentially unlimited loss
associated with futures transactions and the possible lack of a liquid secondary
market for closing out a futures position; and (3) possible losses resulting
from the inability of the Adviser to correctly predict the direction of stock
prices, interest rates and other economic factors. To the extent the Fund
invests in foreign securities, it may also invest in options on foreign
currencies, foreign currency futures contracts and options on those futures
contracts. Use of these instruments is subject to regulation by the SEC, the
options and futures exchanges upon which options and futures are traded or the
CFTC.
Except as otherwise noted in this SAI, the Fund will not use leverage in its
options and hedging strategies. In the case of transactions entered into as a
hedge, the Fund will hold securities, currencies or other options or futures
positions whose values are expected to offset ("cover") its obligations
thereunder. The Fund will not enter into a hedging strategy that exposes it to
an obligation to another party unless at least one of the following conditions
is met. The Fund owns either an offsetting ("covered") position; or it owns
cash, U.S. Government Securities or other liquid securities (or other assets as
may be permitted by the SEC) with a value sufficient at all times to cover its
potential obligations. When required by applicable regulatory guidelines, the
Fund will set aside cash, U.S. Government Securities or other liquid securities
(or other assets as may be permitted by the SEC) in a segregated account in the
prescribed amount. Any assets used for cover or held in a segregated account
cannot be sold or closed out while the hedging or option income strategy is
outstanding, unless they are replaced with similar assets. As a result, there is
a possibility that the use of cover or segregation involving a large percentage
of the Fund's assets could impede portfolio management or the Fund's ability to
meet redemption requests or other current obligations.
OPTIONS STRATEGIES. The Fund may purchase put and call options written by others
and sell put and call options covering specified individual securities,
securities or financial indices or currencies. A put option (sometimes called a
"standby commitment") gives the buyer of the option, upon payment of a premium,
the right to deliver a specified amount of currency to the writer of the option
on or before a fixed date at a predetermined price. A call option (sometimes
called a "reverse standby commitment") gives the purchaser of the option, upon
payment of a premium, the right to call upon the writer to deliver a specified
amount of currency on or before a fixed date, at a predetermined price. The
predetermined prices may be higher or lower than the market value of the
underlying currency. The Fund may buy or sell both exchange-traded and
over-the-counter ("OTC") options. The Fund will purchase or write an option only
if that option is traded on a recognized U.S. options exchange or if the Adviser
believes that a liquid secondary market for the option exists. When the Fund
purchases an OTC option, it relies on the dealer from whom it has purchased the
OTC option to make or take delivery of the currency underlying the option.
Failure by the dealer to do so would result in the loss of the premium paid by
the Fund as well as the loss of the expected benefit of the transaction. OTC
options and the securities underlying these options currently are treated as
illiquid securities by the Fund.
6
<PAGE>
Upon selling an option, the Fund receives a premium from the purchaser of the
option. Upon purchasing an option the Fund pays a premium to the seller of the
option. The amount of premium received or paid by the Fund is based upon certain
factors, including the market price of the underlying securities, index or
currency, the relationship of the exercise price to the market price, the
historical price volatility of the underlying assets, the option period, supply
and demand and interest rates.
The Fund may purchase call options on debt securities that the Fund's Adviser
intends to include in the Fund's portfolio in order to fix the cost of a future
purchase. Call options may also be purchased to participate in an anticipated
price increase of a security on a more limited risk basis than would be possible
if the security itself were purchased. If the price of the underlying security
declines, this strategy would serve to limit the potential loss to the Fund to
the option premium paid. Conversely, if the market price of the underlying
security increases above the exercise price and the Fund either sells or
exercises the option, any profit eventually realized will be reduced by the
premium paid. The Fund may similarly purchase put options in order to hedge
against a decline in market value of securities held in its portfolio. The put
enables the Fund to sell the underlying security at the predetermined exercise
price; thus the potential for loss to the Fund is limited to the option premium
paid. If the market price of the underlying security is lower than the exercise
price of the put, any profit the Fund realizes on the sale of the security would
be reduced by the premium paid for the put option less any amount for which the
put may be sold.
The Adviser may write call options when it believes that the market value of the
underlying security will not rise to a value greater than the exercise price
plus the premium received. Call options may also be written to provide limited
protection, to the extent of the call premium received less any transaction
costs, against a decrease in the market price of a security.
The Fund may purchase and write put and call options on fixed income or equity
security indices in much the same manner as the options discussed above, except
that index options may serve as a hedge against overall fluctuations in the
fixed income or equity securities markets (or market sectors) or as a means of
participating in an anticipated price increase in those markets. The
effectiveness of hedging techniques using index options will depend on the
extent to which price movements in the index selected correlate with price
movements of the securities, which are being hedged. Index options are settled
exclusively in cash.
2. RISKS
The Fund's use of options subjects the Fund to certain investment risks and
transaction costs to which it might not otherwise be subject. These risks
include:
o Dependence on the Adviser's ability to predict movements in the prices of
individual securities and fluctuations in the general securities markets.
o Imperfect correlations between movements in the prices of options and
movements in the price of the securities (or indices) hedged or used for
cover, which may cause a given hedge not to achieve its objective.
o The fact that the skills and techniques needed to trade these instruments
are different from those needed to select the securities in which the Fund
invests.
o Lack of assurance that a liquid secondary market will exist for any
particular instrument at any particular time, which, among other things,
may hinder the Fund's ability to limit exposures by closing its positions.
o The possible need to defer closing out of certain options, futures
contracts and related options to avoid adverse tax consequences.
Other risks include the inability of the Fund, as the writer of covered call
options, to benefit from any appreciation of the underlying securities above the
exercise price, and the possible loss of the entire premium paid for options
purchased by the Fund.
7
<PAGE>
D. FOREIGN INVESTMENT
1. FOREIGN CURRENCY TRANSACTIONS
The Fund may conduct foreign currency exchange transactions, for hedging
purposes, either on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign exchange market or by entering into a forward foreign currency contract.
A forward foreign currency contract ("forward contract") involves an obligation
to purchase or sell a specific amount of a specific currency at a future date,
which may be any fixed number of days (usually less than one year) from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. Forward contracts are considered to be derivatives. The Fund enters
into forward contracts in order to "lock in" the exchange rate between the
currency it will deliver and the currency it will receive for the duration of
the contract. In addition, the Fund may enter into forward contracts to hedge
against risks arising from securities the Fund owns or anticipates purchasing,
or the U.S. dollar value of interest and dividends paid on those securities. The
Fund will not enter into forward contracts for speculative purposes.
If the Fund makes delivery of the foreign currency at or before the settlement
of a forward contract, it may be required to obtain the currency through the
conversion of assets of the Fund into the currency. The Fund may close out a
forward contract obligating it to purchase a foreign currency by selling an
offsetting contract, in which case it will realize a gain or a loss.
Foreign currency transactions involve certain costs and risks. The Fund incurs
foreign exchange expenses in converting assets from one currency to another.
Forward contracts involve a risk of loss if the Adviser is inaccurate in its
prediction of currency movements. The projection of short-term currency market
movements is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. The precise matching of forward contract
amounts and the value of the securities involved is generally not possible.
Accordingly, it may be necessary for the Fund to purchase additional foreign
currency if the market value of the security is less than the amount of the
foreign currency the Fund is obligated to deliver under the forward contract and
the decision is made to sell the security and make delivery of the foreign
currency. The use of forward contracts as a hedging technique does not eliminate
fluctuations in the prices of the underlying securities the Fund owns or intends
to acquire, but it does fix a rate of exchange in advance. Although forward
contracts can reduce the risk of loss due to a decline in the value of the
hedged currencies, they also limit any potential gain that might result from an
increase in the value of the currencies.
In addition, there is no systematic reporting of last sale information for
foreign currencies, and there is no regulatory requirement that quotations
available through dealers or other market sources be firm or revised on a timely
basis. Quotation information available is generally representative of very large
transactions in the interbank market. The interbank market in foreign currencies
is a global around-the-clock market. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, the Fund may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
The Fund has no present intention to enter into currency futures contracts or
options thereon, but may do so in the future, particularly in order to hedge
against the risk of foreign exchange fluctuation on foreign securities the Fund
holds in its portfolio or which it intends to purchase.
2. FOREIGN SECURITIES
All investments, domestic and foreign, involve certain risks. Investments in the
securities of foreign issuers may involve risks in addition to those normally
associated with investments in the securities of U.S. issuers. All foreign
investments are subject to risks of foreign political and economic instability,
adverse movements in foreign exchange rates, the imposition or tightening of
exchange controls or other limitations on repatriation of foreign capital, and
8
<PAGE>
changes in foreign governmental attitudes towards private investment, possibly
leading to nationalization, increased taxation or confiscation of foreign
investors' assets.
Moreover, dividends payable on foreign securities may be subject to foreign
withholding taxes, thereby reducing the income available for distribution to the
Fund's shareholders; commission rates payable on foreign transactions are
generally higher than in the United States; foreign accounting, auditing and
financial reporting standards differ from those in the United States and,
accordingly, less information may be available about foreign companies than is
available about issuers of comparable securities in the United States; and
foreign securities may trade less frequently and with lower volume and may
exhibit greater price volatility than United States securities.
Changes in foreign exchange rates will also affect the value in U.S. dollars of
all foreign currency-denominated securities held by the Fund. Exchange rates are
influenced generally by the forces of supply and demand in the foreign currency
markets and by numerous other political and economic events occurring outside
the United States, many of which may be difficult, if not impossible, to
predict. Income from foreign securities will be received and realized in foreign
currencies, and the Fund is required to compute and distribute income in U.S.
dollars. Accordingly, a decline in the value of a particular foreign currency
against the U.S. dollar occurring after the Fund's income has been earned and
computed in U.S. dollars may require the Fund to liquidate portfolio securities
to acquire sufficient U.S. dollars to make a distribution. Similarly, if the
exchange rate declines between the time the Fund incurs expenses in U.S. dollars
and the time such expenses are paid, the Fund may be required to liquidate
additional foreign securities to purchase the U.S. dollars required to meet such
expenses.
The Fund may purchase foreign bank obligations. In addition to the risks
described above that are generally applicable to foreign investments, the
investments that the Fund makes in obligations of foreign banks, branches or
subsidiaries may involve further risks, including differences between foreign
banks and U.S. banks in applicable accounting, auditing and financial reporting
standards, and the possible establishment of exchange controls or other foreign
government laws or restrictions applicable to the payment of certificates of
deposit or time deposits that may affect adversely the payment of principal and
interest on the securities held by the Fund.
3. DEPOSITORY RECEIPTS
The Fund may invest in the securities of foreign issuers directly or indirectly
through sponsored or unsponsored depositary receipts. A depositary receipt is a
receipt for shares of a foreign-based company that entitles the holder to
distributions on the underlying security. Depositary receipts include sponsored
or unsponsored American Depositary Receipts ("ADRs") or European Depositary
Receipts ("EDRs"), and other similar securities global instruments. ADRs are
typically issued by a U.S. bank or trust company, evidence ownership of
underlying securities issued by a foreign company, and are designed for use in
U.S. securities markets. EDRs are receipts issued by a European financial
institution evidencing an arrangement similar to that of ADRs, and are designed
for use in European securities markets. A fund invests in depository receipts in
order to obtain exposure to foreign securities markets.
Unsponsored depositary receipts may be created without the participation of the
foreign issuer. Holders of these receipts generally bear all the costs of the
depositary receipt facility, whereas foreign issuers typically bear certain
costs in a sponsored depositary receipt. The bank or trust company depository of
an unsponsored depositary receipt may be under no obligation to distribute
shareholder communications received from the foreign issuer or to pass through
voting rights. Accordingly, available information concerning the issuer may not
be current and the prices of unsponsored depositary receipts may be more
volatile than the prices of sponsored depositary receipts.
E. REPURCHASE AGREEMENTS
1. IN GENERAL
The Fund may enter into repurchase agreements. Repurchase agreements are
transactions in which the Fund purchases securities from a bank or securities
dealer and simultaneously commits to resell the securities to the bank or dealer
at an agreed-upon date and at a price reflecting a market rate of interest
unrelated to the purchased security. During the term of a repurchase agreement,
9
<PAGE>
the Fund's custodian maintains possession of the purchased securities and any
underlying collateral, which is maintained at not less than 100% of the
repurchase price. Repurchase agreements allow the Fund to earn income on its
uninvested cash for periods as short as overnight, while retaining the
flexibility to pursue longer-term investments.
2. REVERSE REPURCHASE AGREEMENTS
The Fund may enter into reverse repurchase agreements. Reverse repurchase
agreements are transactions in which the Fund sells a security and
simultaneously commits to repurchase that security from the buyer at an agreed
upon price on an agreed upon future date. The resale price in a reverse
repurchase agreement reflects a market rate of interest that is not related to
the coupon rate or maturity of the sold security. For certain demand agreements,
there is no agreed upon repurchase date and interest payments are calculated
daily, often based upon the prevailing overnight repurchase rate.
F. CONVERTIBLE SECURITIES
1. IN GENERAL
The Fund may invest in convertible securities. Convertible securities, which
include convertible debt, convertible preferred stock and other securities
exchangeable under certain circumstances for shares of common stock, are fixed
income securities or preferred stock which generally may be converted at a
stated price within a specific amount of time into a specified number of shares
of common stock. A convertible security entitles the holder to receive interest
paid or accrued on debt or the dividend paid on preferred stock until the
convertible security matures or is redeemed, converted, or exchanged. Before
conversion, convertible securities have characteristics similar to
nonconvertible debt securities or preferred equity in that they ordinarily
provide a stream of income with generally higher yields than do those of common
stocks of the same or similar issuers. These securities are usually senior to
common stock in a company's capital structure, but usually are subordinated to
non-convertible debt securities.
Convertible securities have unique investment characteristics in that they
generally have higher yields than common stocks, but lower yields than
comparable non-convertible securities. Convertible securities are less subject
to fluctuation in value than the underlying stock since they have fixed income
characteristics; and they provide the potential for capital appreciation if the
market price of the underlying common stock increases.
A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security held by the Fund is called for redemption, the Fund will be
required to permit the issuer to redeem the security, convert it into the
underlying common stock or sell it to a third party.
2. RISKS
Investment in convertible securities generally entails less risk than investment
in the issuer's common stock. The extent to which such risk is reduced, however,
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security.
3. VALUE OF CONVERTIBLE SECURITIES
The value of a convertible security is a function of its "investment value" and
its "conversion value". The investment value of a convertible security is
determined by comparing its yield with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege. The
conversion value is the security's worth, at market value, if converted into the
underlying common stock. The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may affect the convertible
security's investment value. The conversion value of a convertible security is
determined by the market price of the underlying common stock. If the conversion
value is low relative to the investment value, the price of the convertible
10
<PAGE>
security is governed principally by its investment value and generally the
conversion value decreases as the convertible security approaches maturity. To
the extent the market price of the underlying common stock approaches or exceeds
the conversion price, the price of the convertible security will be increasingly
influenced by its conversion value. In addition, a convertible security
generally will sell at a premium over its conversion value determined by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security.
G. ILLIQUID AND RESTRICTED SECURITIES
The Fund may not acquire securities or invest in repurchase agreements if, as a
result, more than 15% of the Fund's net assets (taken at current value) would be
invested in illiquid securities.
1. IN GENERAL
The term "illiquid securities" means securities that cannot be disposed of
within seven days in the ordinary course of business at approximately the amount
at which the Fund has valued the securities. Illiquid securities include
repurchase agreements not entitling the holder to payment of principal within
seven days, over-the-counter options, securities which are not readily
marketable and, with certain exceptions, restricted securities. Restricted
securities are securities subject to contractual or legal restrictions on resale
because they have not been registered under the 1933 Act. The Fund may treat
certain restricted securities as liquid pursuant to guidelines adopted by the
Board of Trustees.
2. RISKS
Certain risks are associated with holding illiquid and restricted securities.
For instance, limitations on resale may have an adverse effect on the
marketability of a security and the Fund might also have to register a
restricted security in order to dispose of it, resulting in expense and delay.
The Fund might not be able to dispose of restricted or illiquid securities
promptly or at reasonable prices and might thereby experience difficulty
satisfying redemptions. There can be no assurance that a liquid market will
exist for any security at any particular time. Any security, including
securities determined by the Adviser to be liquid, can become illiquid.
3. DETERMINING LIQUIDITY
The Board has the ultimate responsibility for determining whether specific
securities are liquid or illiquid and has delegated the function of making
determinations of liquidity to the Adviser, pursuant to guidelines approved by
the Board. The Adviser determines and monitors the liquidity of the portfolio
securities and reports periodically on its decisions to the Board. The Adviser
takes into account a number of factors in reaching liquidity decisions,
including but not limited to: (1) the frequency of trades and quotations for the
security; (2) the number of dealers willing to purchase or sell the security and
the number of other potential buyers; (3) the willingness of dealers to
undertake to make a market in the security; and (4) the nature of the
marketplace trades, including the time needed to dispose of the security, the
method of soliciting offers, and the mechanics of the transfer.
An institutional market has developed for certain restricted securities.
Accordingly, contractual or legal restrictions on the resale of a security may
not be indicative of the liquidity of the security. If such securities are
eligible for purchase by institutional buyers in accordance with Rule 144A under
the 1933 Act or other exemptions, the Adviser may determine that the securities
are not illiquid.
H. WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The Fund may purchase securities offered on a "when-issued" basis and may
purchase or sell securities on a "forward commitment" basis. When such
transactions are negotiated, the price, which is generally expressed in yield
terms, is fixed at the time the commitment is made, but delivery and payment for
the securities take place at a later date. Normally, the settlement date occurs
within two months after the transaction, but delayed settlements beyond two
months may be negotiated. During the period between a commitment and settlement,
no payment is made for the securities purchased by the purchaser and, thus, no
interest accrues to the purchaser from the transaction. At the time the Fund
11
<PAGE>
makes the commitment to purchase securities on a when-issued or delayed delivery
basis, the Fund will record the transaction as a purchase and thereafter reflect
the value each day of such securities in determining its net asset value.
1. RISKS
The use of when-issued transactions and forward commitments enables the Fund to
hedge against anticipated changes in interest rates and prices. For instance, in
periods of rising interest rates and falling bond prices, the Fund might sell
securities that it owned on a forward commitment basis to limit its exposure to
falling prices. In periods of falling interest rates and rising bond prices, the
Fund might sell a security and purchase the same or a similar security on a
when-issued or forward commitment basis, thereby obtaining the benefit of
currently higher cash yields. However, if the Adviser forecasts incorrectly the
direction of interest rate movements, the Fund might be required to complete
such when-issued or forward commitment transactions at prices lower than the
then current market values.
The Fund enters into when-issued and forward commitment transactions only with
the intention of actually receiving or delivering the securities, as the case
may be. If the Fund subsequently chooses to dispose of its right to acquire a
when-issued security or its right to deliver or receive against a forward
commitment before the settlement date, it can incur a gain or loss. When-issued
securities may include bonds purchased on a "when, as and if issued" basis under
which the issuance of the securities depends upon the occurrence of a subsequent
event. Any significant commitment of the Fund's assets to the purchase of
securities on a "when, as and if issued" basis may increase the volatility of
the Fund's NAV.
The Fund will establish and maintain a separate account with cash, U.S.
Government Securities and other liquid securities in an amount at least equal to
its commitments to purchase securities on a when-issued or delayed delivery
basis.
2. INVESTMENT LIMITATIONS
For purposes of all fundamental and nonfundamental investment policies of the
Fund, (i) the term 1940 Act includes the rules thereunder, SEC interpretations
and any exemptive order upon which the Fund may rely and (ii) the term Code
includes the rules thereunder, IRS interpretations and any private letter ruling
or similar authority upon which the Fund may rely.
The Fund has adopted the investment policies listed in this section which are
nonfundamental policies unless otherwise noted. Except for its investment
objective (see "Investment Objective, Strategies and Risks" in the Prospectus),
which is fundamental, the Fund has not adopted any fundamental policies except
as required by the 1940 Act.
Except as required by the 1940 Act or the Code, if any percentage restriction on
investment or utilization of assets is adhered to at the time an investment is
made, a later change in percentage resulting from a change in the market values
of a Fund's assets or purchases and redemptions of shares will not be considered
a violation of the limitation.
A fundamental policy cannot be changed without the affirmative vote of the
lesser of (i) more than 50% of the outstanding shares of the Fund or (ii) 67% of
the shares of the Fund present or represented at a shareholders meeting at
which the holders of more than 50% of the outstanding shares of the Fund
are present or represented.
1. DIVERSIFICATION
The Fund may not, with respect to 75% of its assets, purchase a security (other
than a U.S. Government Security or a security of an investment company) if, as a
result: (i) more than 5% of the Fund's total assets would be invested in the
securities of a single issuer, or (ii) the Fund would own more than 10% of the
outstanding voting securities of any single issuer.
12
<PAGE>
2. INDUSTRY CONCENTRATION
a. The Fund may not purchase a security if, as a result, more than 25% of
the Fund's total assets would be invested in securities of issuers
conducting their principal business activities in the same industry.
For purposes of this limitation, there is no limit on: (i) investments
in U.S. Government securities, in repurchase agreements covering U.S.
Government Securities, in tax-exempt securities issued by the states,
territories or possessions of the United States ("municipal
securities").
b. For purposes of this policy (i) "mortgage related securities," as that
term is defined in the 1934 Act, are treated as securities of an issuer
in the industry of the primary type of asset backing the security, (ii)
financial service companies are classified according to the end users
of their services (for example, automobile finance, bank finance and
diversified finance) and (iii) utility companies are classified
according to their services (for example, gas, gas transmission,
electric and gas, and electric and telephone).
3. BORROWING
The Fund may not borrow money if, as a result, outstanding borrowings would
exceed an amount equal to 10% of the Fund's total assets. For purposes of this
limitation, there is no limit on the following to the extent they are fully
collateralized: (i) the delayed delivery of purchased securities (such as the
purchase of when-issued securities), and (ii) reverse repurchase agreements. The
Fund will not purchase portfolio securities while outstanding borrowings of
money exceed 5% of its total assets.
4. REAL ESTATE
The Fund may not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate,
securities of companies engaged in the real estate business, or in real estate
investment trusts).
5. LENDING
a. The Fund may not make loans to other parties. For purposes of this
limitation, entering into repurchase agreements, lending securities and
acquiring any debt security are not deemed to be the making of loans.
b. The Fund may not lend a security if, as a result, the amount of loaned
securities would exceed an amount equal to 30% of the Fund's total
assets, as determined by SEC guidelines.
6. COMMODITIES
The Fund may not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments (but this shall not
prevent the Fund from purchasing or selling options and futures contracts or
from investing in securities or other instruments backed by physical
commodities).
7. UNDERWRITING
The Fund may not underwrite (as that term is defined in the 1933 Act) securities
issued by other persons except, to the extent that in connection with the
disposition of the Fund's assets, the Fund may be deemed to be an underwriter.
8. SENIOR SECURITIES
The Fund may not issue senior securities except to the extent permitted by the
1940 Act.
13
<PAGE>
9. LIQUIDITY
The Fund may not invest more than 15% of its net assets in illiquid securities
(taken at their current value).
10. EXERCISING CONTROL OF ISSUERS
The Fund may not make investments for the purpose of exercising control of an
issuer. Investments by the Fund in entities created under the laws of foreign
countries solely to facilitate investment in securities in that country will not
be deemed the making of investments for the purpose of exercising control.
11. SHORT SALES AND PURCHASING ON MARGIN
a. The Fund may not sell securities short, unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities
sold short (short sales "against the box"), and provided that
transactions in futures contracts and options are not deemed to
constitute selling securities short.
b. The Fund may not purchase securities on margin, except that the Fund
may use short-term credit for the clearance of the Fund's transactions,
and provided that initial and variation margin payments in connection
with futures contracts and options on futures contracts shall not
constitute purchasing securities on margin.
12. SECURITIES OF INVESTMENT COMPANIES
The Fund may not invest in the securities of any investment company, other than
a money market mutual fund, except in connection with a merger, consolidation,
reorganization, or acquisition of assets or where otherwise permitted by the
1940 Act.
13. OPTIONS, WARRANTS AND FUTURES CONTRACTS
The Fund may invest in futures or options contracts regulated by the CFTC for
(i) bona fide hedging purposes within the meaning of the rules of the CFTC and
(ii) for other purposes if, as a result, no more than 5% of the Fund's net
assets would be invested in initial margin and premiums (excluding amounts
"in-the-money") required to establish the contracts.
3. PERFORMANCE DATA AND ADVERTISING
A. PERFORMANCE DATA
The Fund may quote performance in various ways. All performance information
supplied in advertising, sales literature, shareholder reports or other
materials is historical and is not intended to indicate future returns.
The Fund may compare any of its performance information with:
o Data published by independent evaluators such as Morningstar, Inc.,
Lipper Analytical Services, Inc., IBC/Donoghue, Inc., CDA/Wiesenberger
or other companies which track the investment performance of
investment companies ("Fund Tracking Companies").
o The performance of other mutual funds.
o The performance of recognized stock, bond and other indices, including
but not limited to the Standard & Poor's 500(R) Index, the Russell
2000(R) Index, the Russell MidcapTM Index, the Russell 1000(R) Value
Index, the Russell 2500(R) Index, the Morgan Stanley - Europe,
Australian and Far East Index, the Dow Jones Industrial Average, the
Salomon Brothers Bond Index, the Shearson Lehman Bond Index, U.S.
Treasury bonds, bills or notes and changes in the Consumer Price Index
as published by the U.S. Department of Commerce.
14
<PAGE>
Performance information may be presented numerically or in a table, graph, or
similar illustration.
Indices are not used in the management of the Fund but rather are standards by
which the Adviser and shareholders may compare the performance of the Fund to an
unmanaged composite of securities with similar, but not identical,
characteristics as the Fund.
The Fund may refer to: (1) general market performances over past time periods
such as those published by Ibbotson Associates (for instance, its "Stocks,
Bonds, Bills and Inflation Yearbook"); (2) mutual fund performance rankings and
other data published by Fund Tracking Companies; and (3) material and
comparative mutual fund data and ratings reported in independent periodicals,
such as newspapers and financial magazines.
The Fund's performance will fluctuate in response to market conditions and other
factors.
B. PERFORMANCE CALCULATIONS
The Fund's performance may be quoted in terms of yield or total return.
1. SEC YIELD
Standardized SEC yields for the Fund used in advertising are computed by
dividing the Fund's interest income (in accordance with specific standardized
rules) for a given 30 day or one month period, net of expenses, by the average
number of shares entitled to receive income distributions during the period,
dividing this figure by the Fund's net asset value per share at the end of the
period and annualizing the result (assuming compounding of income in accordance
with specific standardized rules) in order to arrive at an annual percentage
rate.
Capital gains and losses generally are excluded from these calculations.
Income calculated for the purpose of determining the Fund's yield differs from
income as determined for other accounting purposes. Because of the different
accounting methods used, and because of the compounding assumed in yield
calculations, the yield quoted for the Fund may differ from the rate of
distribution of income from the Fund over the same period or the rate of income
reported in the Fund's financial statements.
Although published yield information is useful to investors in reviewing the
Fund's performance, investors should be aware that the Fund's yield fluctuates
from day to day and that the Fund's yield for any given period is not an
indication or representation by the Fund of future yields or rates of return on
the Fund's shares. Financial intermediaries may charge their customers that
invest in the Fund fees in connection with that investment. This will have the
effect of reducing the Fund's after-fee yield to those shareholders.
The yields of the Fund are not fixed or guaranteed, and an investment in the
Fund is not insured or guaranteed. Accordingly, yield information should not be
used to compare shares of the Fund with investment alternatives, which, like
money market instruments or bank accounts, may provide a fixed rate of interest.
Also, it may not be appropriate to compare the Fund's yield information directly
to similar information regarding investment alternatives that are insured or
guaranteed.
Yield quotations are based on amounts invested in the Fund net of any applicable
sales charges that may be paid by an investor. A computation of yield that does
not take into account sales charges paid by an investor would be higher than a
similar computation that takes into account payment of sales charges. The Fund
does not charge any sales charges.
15
<PAGE>
Yield is calculated according to the following formula:
a - b
Yield = 2[(------ + 1)6 - 1]
cd
Where:
a= dividends and interest earned during the period
b= expenses accrued for the period (net of reimbursements)
c= the average daily number of shares outstanding during the period that
were entitled to receive dividends
d= the maximum offering price per share on the last day of the period
2. TOTAL RETURN CALCULATIONS
The Fund's total return shows its overall change in value, including changes in
share price and assuming all of the Fund's distributions are reinvested.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return is calculated using a
formula prescribed by the SEC. To calculate standard average annual total
returns, the Fund: (1) determines the growth or decline in value of a
hypothetical historical investment in the Fund over a stated period; and (2)
calculates the annually compounded percentage rate that would have produced the
same result if the rate of growth or decline in value had been constant over the
period. For example, a cumulative return of 100% over ten years would produce an
average annual total return of 7.18%. While average annual returns are a
convenient means of comparing investment alternatives, investors should realize
that performance is not constant over time but changes from year to year, and
that average annual returns represent averaged figures as opposed to the actual
year-to-year performance of the Fund.
Average annual total return is calculated according to the following formula:
P (1+T) n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the applicable period, of a
hypothetical $1,000 payment made at the beginning of the applicable period
Because average annual returns tend to smooth out variations in the Fund's
returns, shareholders should recognize that they are not the same as actual
year-by-year results.
OTHER MEASURES OF TOTAL RETURN. Standardized total return quotes may be
accompanied by non-standardized total return figures calculated by alternative
methods.
o The Fund may quote unaveraged or cumulative total returns, which reflect
the Fund's performance over a stated period of time.
o Total returns may be stated in their components of income and capital
(including capital gains and changes in share price) in order to illustrate
the relationship of these factors and their contributions to total return.
Any total return may be quoted as a percentage or as a dollar amount, and may be
calculated for a single investment, a series of investments and/or a series of
redemptions over any time period.
16
<PAGE>
Period total return is calculated according to the following formula:
PT = (ERV/P-1)
Where:
PT = period total return
The other definitions are the same as in average annual total return above
C. OTHER MATTERS
The Fund may also include various information in its advertising, sales
literature, shareholder reports or other materials including, but not limited
to: (1) portfolio holdings and portfolio allocation as of certain dates, such as
portfolio diversification by instrument type, by instrument, by location of
issuer or by maturity; (2) statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
by an investor to meet specific financial goals, such as funding retirement,
paying for children's education and financially supporting aging parents; (3)
information (including charts and illustrations) showing the effects of
compounding interest (compounding is the process of earning interest on
principal plus interest that was earned earlier; interest can be compounded at
different intervals, such as annually, quarterly or daily); (4) information
relating to inflation and its effects on the dollar; (for example, after ten
years the purchasing power of $25,000 would shrink to $16,621, $14,968, $13,465
and $12,100, respectively, if the annual rates of inflation were 4%, 5%, 6% and
7%, respectively); (5) information regarding the effects of automatic investment
and systematic withdrawal plans, including the principal of dollar-cost
averaging; (6) biographical descriptions of the Fund's portfolio managers and
the portfolio management staff of the Adviser, summaries of the views of the
portfolio managers with respect to the financial markets, or descriptions of the
nature of the Adviser's and its staff's management techniques; (7) the results
of a hypothetical investment in the Fund over a given number of years, including
the amount that the investment would be at the end of the period; (8) the
effects of earning Federal and, if applicable, state tax-exempt income from the
Fund or investing in a tax-deferred account, such as an individual retirement
account or Section 401(k) pension plan; (9) the net asset value, net assets or
number of shareholders of the Fund as of one or more dates; and (10) a
comparison of the Fund's operations to the operations of other funds or similar
investment products, such as a comparison of the nature and scope of regulation
of the products and the products' weighted average maturity, liquidity,
investment policies, and the manner of calculating and reporting performance.
As an example of compounding, $1,000 compounded annually at 9.00% will grow to
$1,090 at the end of the first year (an increase in $90) and $1,188 at the end
of the second year (an increase in $98). The extra $8 that was earned on the $90
interest from the first year is the compound interest. One thousand dollars
compounded annually at 9.00% will grow to $2,367 at the end of ten years and
$5,604 at the end of 20 years. Other examples of compounding are as follows: at
7.00% and 12.00% annually, $1,000 will grow to $1,967 and $3,106, respectively,
at the end of 10 years and $3,870 and $9,646, respectively, at the end of 20
years. These examples are for illustrative purposes only and are not indicative
of the Fund's performance.
The Fund may advertise information regarding the effects of automatic investment
and systematic withdrawal plans, including the principal of dollar cost
averaging. In a dollar-cost averaging program, an investor invests a fixed
dollar amount in the Fund at period intervals, thereby purchasing fewer shares
when prices are high and more shares when prices are low. While such a strategy
does not insure a profit or guard against a loss in a declining market, the
investor's average cost per share can be lower than if fixed numbers of shares
had been purchased at those intervals. In evaluating such a plan, investors
should consider their ability to continue purchasing shares through periods of
low price levels. For example, if an investor invests $100 a month for a period
of six months in the Fund the following will be the relationship between average
cost per share ($14.35 in the example given) and average price per share:
17
<PAGE>
<TABLE>
<S> <C> <C> <C>
SYSTEMATIC SHARE SHARES
PERIOD INVESTMENT PRICE PURCHASED
------ ---------- ----- ---------
1 $100 $10 10.00
2 $100 $12 8.33
3 $100 $15 6.67
4 $100 $20 5.00
5 $100 $18 5.56
6 $100 $16 6.25
---- --- ----
TOTAL AVERAGE TOTAL
INVESTED $600 PRICE $15.17 SHARES 41.81
</TABLE>
In connection with its advertisements, the Fund may provide "shareholder's
letters" which serve to provide shareholders or investors an introduction into
the Fund's, the Trust's or any of the Trust's service provider's policies or
business practices. For instance, advertisements may provide for a message from
the Adviser that it has for more than 25 years been committed to quality
products and outstanding service to assist its customers in meeting their
financial goals and setting forth the reasons that the Adviser believes that it
has been successful as a portfolio manager.
If the Fund invests in municipal securities and distributes Federally
tax-exempt (and in certain cases state tax-exempt) dividends, the Fund may
advertise the benefits of and other effects of investing in municipal
securities. For instance, the Fund's advertisements may note that municipal
bonds have historically offered higher after tax yields than comparable taxable
alternatives for those persons in the higher tax brackets, that municipal bond
yields may tend to outpace inflation and that changes in tax law have eliminated
many of the tax advantages of other investments. The combined Federal and state
income tax rates for a particular state may also be described and advertisements
may indicate equivalent taxable and tax-free yields at various approximate
combined marginal Federal and state tax bracket rates. All yields so advertised
are for illustration only and not necessarily representative of the Fund's
yield.
4. MANAGEMENT
A. TRUSTEES AND OFFICERS
TRUSTEES AND OFFICERS OF THE TRUST. The business and affairs of the Fund are
managed under the direction of the Board in compliance with the laws of the
state of Delaware. Among its duties, the Board generally meets and reviews on a
quarterly basis the actions of all of the Fund's service providers. This
management also includes a periodic review of the service providers' agreements
and fees charged to the Fund. The names of the Trustees and officers of the
Fund, their position with the Fund, address, date of birth and principal
occupations during the past five years are set forth below. Each Trustee who is
an "interested person" (as defined by the 1940 Act) of the Fund is indicated by
an asterisk.
<TABLE>
<S> <C> <C>
NAME, ADDRESS AND AGE POSITION(S) WITH FUND PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE
YEARS
Eric J. Gleacher Trustee Chairman and Chief Executive Officer, Gleacher
Gleacher & Co. LLC Nominating Committee, Chairperson & Co., LLC
660 Madison Avenue (3)
New York, NY 10021-8405 Audit Committee, Member (2)
Born: April 1940
W. Wallace McDowell Trustee 1994-present, Private Investor.
43 Arch Street Audit Committee, Chairperson 1991-1994. Managing Director, MLGAL Partners.
Greenwich, CT 06830 Nominating Committee, Member 1983-1991. Prospect Capital Corp.
Born: November 1936
18
<PAGE>
Daniel B. Goldman, Esquire* Trustee 1994 - Present. Partner, Kasowitz, Benson,
Kasowitz, Benson, Torres & Audit Committee, Member Torres & Friedman LLP
Friedman LLP Nominating Committee, Member
1301 Avenue of the Americas
New York, NY 10019
Born: April 1960
James B. Cowperthwait* Chairman, Board of Trustees 3/99 - Present. Chairman and Chief Investment
NewBridge Partners, LLC Valuation Committee, Chairperson Officer, NewBridge Partners, LLC
535 Madison Ave., 14th Floor (1) 12/92 - 3/99. Managing Director, Campbell,
New York, NY 10022 Cowperthwait, a division of U. S. Trust Company
Born: September 1937
Erick F. Maronak* Trustee 3/99 - Present. Managing Director and Director
NewBridge Partners, LLC President of Research, NewBridge Partners, LLC.
535 Madison Ave., 14th Floor Valuation Committee, Member 3/96 - 3/99. Vice President and Portfolio
New York, NY 10022 Manager, Campbell Cowperthwait, a division of
Born: January 1966 U.S. Trust Company
2/90 - 3/96. Vice President and Portfolio
Manager, U.S. Trust Company
Jason E. Dahl Vice President 3/99 - Present. NewBridge Partners, LLC
NewBridge Partners, LLC Assistant Treasurer 3/94 - 3/99. Asst. Vice President, Portfolio
535 Madison Ave., 14th Floor Valuation Committee, Member Manager, U.S. Trust Company
New York, NY 10022
Born: December 1967
John Y. Keffer Vice President President and Director, Forum Financial
Two Portland Square Assistant Secretary Services, Inc. for more than five years
Portland, Maine 04101 Director and sole shareholder (directly and
Born: July 1942 indirectly) Forum Financial Group LLC, which
owns (directly or indirectly) Forum
Administrative Services, LLC, Forum Shareholder
Services, LLC, and Forum Fund Services, LLC
Officer, Director or Trustee, various funds
managed and distributed by Forum Administrative
Services, LLC and Forum Fund Services, LLC
19
<PAGE>
Stephen J. Barrett Vice President Manager of Client Services, Forum Financial
Two Portland Square Assistant Secretary Group, LLC since 1996
Portland, ME 04101 Senior Product Manager, Fidelity Investments
Born: November 1968 1994-1996
Officer, various funds managed and distributed
by Forum Administrative Services, LLC and
Forum Fund Services, LLC
D. Blaine Riggle Secretary 1/98 - Present. Counsel, Forum Financial Group,
Two Portland Square LLC
Portland, ME 04101 3/97 - 1/98. Associate Counsel, Wright Express
Born: November 1966 Corporation
1994 - 3/97. Associate at the law firm of Friedman,
Babcock, & Gaythwaite
Officer, various funds managed and distributed by
Forum Fund Services, LLC and Forum Admnistrative
Services, LL
Ronald H. Hirsch Treasurer 9/99 - Present. Managing Director of Operations
Two Portland Square and Finance, Forum Financial Group
Portland, ME 04101 1991-1998 Member of the Board, Citibank Germany
Born: October 1943
Marcella A. Cote Assistant Secretary 6/98 - Present. Senior Fund Specialist, Forum
Two Portland Square Administrative Services, LLC
Portland, ME 04101 1/97 - 12/97. Budget Analyst, Maine Department
Born: January 1947 of Human Services
1991 - 1997. Project Assistant, Maine
Interdepartmental Committee on Transition
Officer, various funds managed and distributed by
Forum Fund Services, LLC and Forum Admnistrative
Services, LLC
Dawn L. Taylor Assistant Treasurer 10/97 - Present. Tax Manager, Forum Financial
Two Portland Square Group, LLC
Portland, ME 04101 1/97 - 10/97. Senior Tax Accountant, Purdy,
Born: May 1964 Bingham & Burrell, LLC
9/94 - 10/97. Senior Fund Accountant, Forum
Financial Group, LLC
Officer, various funds managed and distributed
by Forum Fund Services, LLC and Forum
Administrative Services, LLC
</TABLE>
(1) The Valuation Committee is responsible for determining and monitoring the
value of the Fund's assets.
(2) The Audit Committee is responsible for meeting with the Trust's independent
certified public accountants to (i) review the arrangements and scope of any
audit; (ii) discuss matters of concern relating to the Trust's financial
statements, including any adjustments to such statements recommended by the
accountants, or other results of any audit; (iii) consider the accountants'
comments with respect to the Trust's financial policies, procedures, and
internal accounting controls; and (iv) review any form of opinion the
accountants propose to render to the Trust.
(3) The Nominating Committee is responsible for overseeing the composition
of both the Board as well as the various committees of the Trust to ensure
that these positions are filled by competent and capable candidates.
20
<PAGE>
B. COMPENSATION OF TRUSTEES AND OFFICERS
Each Trustee, other than those affiliated with the Adviser, is paid $1,500 for
each Board meeting attended and $1,000 for each Audit Committee and Nominating
Committee meeting attended on a date when a Board meeting is not held. The
Chairman of the Audit Committee is paid $500 for each meeting attended in
addition to the Chairman's compensation as a Trustee.
Trustees and officers are also reimbursed for travel and related expenses
incurred in attending meetings of the Board and any committee thereof.
Trustees participating in professional development activities relating to the
Trustee's duties and responsibilities as a Trustee is paid $500 per day for each
day or partial day of attendance.
Trustees that are affiliated with the Adviser or other service provider to the
Fund receive no compensation for their services or reimbursement for their
associated expenses. No officer of the Trust is compensated by the Trust.
The following table sets forth the fees that have been, or will be, paid to each
Trustee by the Trust during the current fiscal year ending November 30, 2000.
<TABLE>
<S> <C> <C> <C> <C>
Pension or
Retirement
Aggregate Benefits Accrued Estimated Annual Total
Compensation from as Part of Fund Benefits upon Compensation from
Name, Position Trust Expenses Retirement Trust(1)
- ------------------------------------- ------------------- ------------------- -------------------- -------------------
Eric J. Gleacher $8,000 $0 $0 $8,000
W. Wallace McDowell $8,500 $0 $0 $8,500
Daniel B. Goldman $8,000 $0 $0 $8,000
Erick F. Maronak $0 $0 $0 $0
James B. Cowperthwait $0 $0 $0 $0
</TABLE>
(1) The total compensation reflects payments made since the Trust's inception on
November 23, 1999 through the end of the current fiscal year ending November 30,
2000.
C. INVESTMENT ADVISER
1. SERVICES OF ADVISER
The Adviser serves as investment adviser to the Fund pursuant to an investment
advisory agreement with the Trust. Under that agreement, the Adviser furnishes
at its own expense all services, facilities and personnel necessary in
connection with managing the Fund's investments and effecting portfolio
transactions for the Fund, other than brokerage expenses.
2. OWNERSHIP OF ADVISER/AFFILIATIONS
The Adviser is 100% owned by James B. Cowperthwait.
3. FEES
The Adviser's fee is calculated as a percentage of the applicable Fund's average
net assets. The fee is accrued daily by the Fund and is paid monthly, equal to
0.70% per annum based on average net assets for the previous month.
21
<PAGE>
In addition to receiving its advisory fee from the Fund, the Adviser may also
act and be compensated as investment manager for its clients with respect to
assets that are invested in the Fund. If an investor in the Fund also has a
separately managed account with the Adviser with assets invested in the Fund,
the Adviser will credit an amount equal to all or a portion of the fees received
by the Adviser from the Fund against any investment management fee received from
a client.
4. OTHER PROVISIONS OF ADVISER'S AGREEMENT
The Adviser's agreement must be approved at least annually by the Board or by
vote of the shareholders, and in either case by a majority of the Trustees who
are not parties to the agreement or interested persons of any such party.
The Adviser's agreement is terminable without penalty by the Trust with respect
to the Fund on 30 days' written notice when authorized either by vote of the
Fund's shareholders or by a vote of a majority of the Board, or by the Adviser
on 90 days' written notice to the Trust.
Under its agreement, the Adviser is not liable for any error of judgment,
mistake of law, or for any act or omission in the performance of its duties to
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under the agreement.
5. EXPENSE LIMITATIONS
To the extent the expenses exceed the amounts shown in the fee table in the
Prospectus, the Adviser has undertaken to assume such excess expenses of the
Fund (or waive its fees) through November 30, 2000. This undertaking is designed
to place a maximum limit on expenses (including all fees to be paid to the
Adviser but excluding taxes, interest, brokerage commissions and other portfolio
transaction expenses and extraordinary expenses) for the period of 1.50%.
D. DISTRIBUTOR
1. DISTRIBUTOR; SERVICES AND COMPENSATION OF DISTRIBUTOR
FFS, the distributor (also known as principal underwriter) of the shares of the
Fund, is located at Two Portland Square, Portland, Maine 04101. FFS is a
registered broker-dealer and is a member of the National Association of
Securities Dealers, Inc.
FFS, FAdS, FAcS and the Transfer Agent are each controlled indirectly by Forum
Financial Group, LLC. John Y. Keffer controls Forum Financial Group, LLC.
Under its agreement with the Trust, FFS acts as the agent of the Trust in
connection with the offering of shares of the Fund. FFS continuously distributes
shares of the Fund on a best efforts basis. FFS has no obligation to sell any
specific quantity of Fund shares.
The Fund has adopted a distribution plan under SEC Rule 12b-1 ("12b-1 Plan")
that allows the Fund to pay asset-based sales charges or distribution fees for
the distribution and sale of its shares. Although the Board has adopted the
12b-1 Plan, further Board action and shareholder notification are required
before the 12b-1 Plan can become effective and be implemented. Because the Board
has not yet implemented the 12b-1 Plan, no 12b-1 Distribution Fees currently
will be charged. Because these fees are paid out of the Fund's assets on an
on-going basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges. If charged,
these fees would be paid to FFS. If the Board decides to implement of
the 12b-1 Plan, FFS would be reimbursed for the expenses it
22
<PAGE>
incurs at an annual rate of up to 0.25% of the average daily net assets of the
Fund's shares. FFS may incur expenses for any distribution-related purpose it
deems necessary or appropriate, including the following principal activities:
(i) compensation to employees and expenses, including overhead, travel and
telephone and other communication expenses, of FFS, (ii) the incremental costs
of printing and distributing prospectuses, statements of additional information,
annual reports and other periodic reports for use in connection with the
offering for sale of Fund shares to any prospective investors, (iii) preparing,
printing and distributing sales literature and advertising materials used in
connection with the offering of Fund shares for sale to the public.
2. OTHER PROVISIONS OF DISTRIBUTOR'S AGREEMENT
FFS's distribution agreement must be approved at least annually by the Board or
by vote of the shareholders, and in either case by a majority of the Trustees
who are not parties to the agreement or interested persons of any such party.
FFS's agreement is terminable without penalty by the Trust with respect to the
Fund on 60 days' written notice when authorized either by vote of the Fund's
shareholders or by a vote of a majority of the Board, or by FFS on 60 days'
written notice to the Trust.
Under its agreement, FFS is not liable for any error of judgment or mistake of
law or for any act or omission in the performance of its duties to the Fund,
except for willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of reckless disregard of its obligations and duties
under the agreement.
Under its agreement, FFS and certain related parties (such as FFS's officers and
persons that control FFS) are indemnified by the Trust against any and all
claims and expenses in any way related to FFS's actions (or failures to act)
that are consistent with FFS's contractual standard of care. This means that as
long as FFS satisfies its contractual duties, the Trust is responsible for the
costs of: (1) defending FFS against claims that FFS breached a duty it owed to
the Trust; and (2) paying judgments against FFS. The Trust is not required to
indemnify FFS if the Trust does not receive written notice of and reasonable
opportunity to defend against a claim against FFS in the Trust's own name or in
the name of FFS.
FFS may enter into agreements with selected broker-dealers, banks, or other
financial institutions for distribution of shares of the Fund. These financial
institutions may charge a fee for their services and may receive shareholders
service fees even though shares of the Fund are sold without sales charges or
distribution fees. These financial institutions may otherwise act as processing
agents, and will be responsible for promptly transmitting purchase, redemption
and other requests to the Fund.
Investors who purchase shares in this manner will be subject to the procedures
of the institution through which they purchase shares, which may include
charges, investment minimums, cutoff times and other restrictions in addition
to, or different from, those listed herein. Information concerning any charges
or services will be provided to customers by the financial institution.
Investors purchasing shares of the Fund in this manner should acquaint
themselves with their institution's procedures and should read the Prospectus
and this SAI in conjunction with any materials and information provided by their
institution. The financial institution and not its customers will be the
shareholder of record, although customers may have the right to vote shares
depending upon their arrangement with the institution.
23
<PAGE>
E. OTHER FUND SERVICE PROVIDERS
1. ADMINISTRATOR
As administrator, pursuant to an agreement with the Trust, FAdS is responsible
for the supervision of the overall management of the Trust, providing the Trust
with general office facilities and providing persons satisfactory to the Board
to serve as officers of the Trust.
For its services, FAdS receives a fee from the Fund at an annual rate as
follows: 0.15% of the average daily net assets under $50 million of the Fund,
0.10% of the average daily net assets over $50 million and under $100 million
and 0.05% of the average daily net assets over $100 million of the Fund.
Notwithstanding the above, the minimum fee for the Fund shall be $25,000 per
year. The fee is accrued daily by the Fund and is paid monthly based on average
net assets for the previous month.
FAdS's agreement is terminable without penalty by the Trust or by FAdS with
respect to the Fund on 60 days' written notice. Under the agreement, FAdS is not
liable for any error of judgment or mistake of law or for any act or omission in
the performance of its duties to the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the agreement.
2. FUND ACCOUNTANT
As fund accountant, pursuant to an agreement with the Trust, FAcS provides fund
accounting services to the Fund. These services include calculating the NAV per
share of the Fund and preparing the Fund's financial statements and tax returns.
For its services, FAcS receives a fee from the Fund at an annual rate of $36,000
plus surcharges of $6,000 to $24,000 for specified asset levels. FAcS is paid
additional surcharges of $12,000 per year for each of the following: a portfolio
with more than a specified number of securities positions and/or international
positions; investments in derivative instruments; percentages of assets invested
in asset backed securities; and, a monthly portfolio turnover rate of 10% or
greater. The fee is accrued daily by the Fund and is paid monthly based on the
transactions and positions for the previous month.
FAcS's agreement is terminable without penalty by the Trust or by FAcS with
respect to the Fund on 60 days' written notice. Under the agreement, FAcS is not
liable for any error of judgment or mistake of law or for any act or omission in
the performance of its duties to the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the agreement. Under the
agreement, in calculating the Fund's NAV per share, FAcS is deemed not to have
committed an error if the NAV per share it calculates is within 1/10 of 1% of
the actual NAV per share (after recalculation). In addition, in calculating NAV
per share FAcS is not liable for the errors of others, including the companies
that supply securities prices to FAcS and the Fund.
3. TRANSFER AGENT
As transfer agent and distribution paying agent, pursuant to an agreement with
the Trust, the Transfer Agent maintains an account for each shareholder of
record of the Fund and is responsible for processing purchase and redemption
requests and paying distributions to shareholders of record. The Transfer Agent
is located at Two Portland Square, Portland, Maine 04101 and is registered as a
transfer agent with the SEC.
For its services, the Transfer Agent receives a fee from the Fund at an annual
rate of $24,000 (waived to $18,000 for the first year) and $15.00 per open
shareholder account, $12.00 per open networked shareholder account, $5.00 per
closed shareholder account and $12,000 per additional share class. The fee is
accrued daily by the Fund and is paid monthly.
24
<PAGE>
The Transfer Agent's agreement is terminable without penalty by the Trust or by
the Transfer Agent with respect to the Fund on 60 days' written notice. Under
the agreement, the Transfer Agent is not liable for any error of judgment or
mistake of law or for any act or omission in the performance of its duties to
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under the agreement.
4. CUSTODIAN
As custodian, pursuant to an agreement with the Trust, Forum Trust, LLC (the
"Custodian") safeguards and controls the Fund's cash and securities, determines
income and collects interest on Fund investments. The Custodian may employ
subcustodians. The Custodian is located at Two Portland Square, Portland, Maine
04101. The Custodian has hired Bankers Trust Company, 130 Liberty Street, New
York, New York, 10006, to serve as subcustodian for the Fund.
For its services, the Custodian receives a fee from the Fund at an annual rate
as follows: (1) 0.01% for the first $1 billion in Fund assets; (2) 0.0075% for
Fund assets between $1-$2 billion; and (3) 0.005% for Fund assets greater than
$2 billion. The Custodian is also paid certain transaction fees. These fees are
accrued daily by the Fund and are paid monthly based on average net assets and
transactions for the previous month.
5. LEGAL COUNSEL
Legal matters in connection with the issuance of shares of the Trust are passed
upon by the law firm of Finn Dixon & Herling LLP, One Landmark Square, Stamford,
CT 06901.
6. INDEPENDENT AUDITORS
Ernst & Young, LLP, 787 Seventh Avenue, New York, NY 10019, independent
auditors, have been selected as auditors for the Fund. The auditors audit the
annual financial statements of the Fund and provide the Fund with an audit
opinion. The auditors also review certain regulatory filings of the Fund and the
Fund's tax returns.
5. PORTFOLIO TRANSACTIONS
A. HOW SECURITIES ARE PURCHASED AND SOLD
Purchases and sales of portfolio securities that are fixed income securities
(for instance, money market instruments and bonds, notes and bills) usually are
principal transactions. In a principal transaction, the party from whom the Fund
purchases or to whom the Fund sells is acting on its own behalf (and not as the
agent of some other party such as its customers). These securities normally are
purchased directly from the issuer or from an underwriter or market maker for
the securities. There usually are no brokerage commissions paid for these
securities.
Purchases and sales of portfolio securities that are equity securities (for
instance common stock and preferred stock) are generally effected: (1) if the
security is traded on an exchange, through brokers who charge commissions; and
(2) if the security is traded in the "over-the-counter" markets, in a principal
transaction directly from a market maker. In transactions on stock exchanges,
commissions are negotiated. When transactions are executed in an
over-the-counter market, the Adviser will seek to deal with the primary market
makers; but when necessary in order to obtain best execution, the Adviser will
utilize the services of others.
Purchases of securities from underwriters of the securities include a disclosed
fixed commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market makers include the spread between the
bid and asked price.
In the case of fixed income and equity securities traded in the over-the-counter
markets, there is generally no stated commission, but the price usually includes
an undisclosed commission or markup.
25
<PAGE>
B. ADVISER RESPONSIBILITY FOR PURCHASES AND SALES
The Adviser places orders for the purchase and sale of securities with brokers
and dealers selected by and in the discretion of the Adviser. The Fund has no
obligation to deal with any specific broker or dealer in the execution of
portfolio transactions. Allocations of transactions to brokers and dealers and
the frequency of transactions are determined by the Adviser in its best judgment
and in a manner deemed to be in the best interest of the Fund rather than by any
formula.
The Adviser seeks "best execution" for all portfolio transactions. This means
that the Adviser seeks the most favorable price and execution available. The
Adviser's primary consideration in executing transactions for the Fund is prompt
execution of orders in an effective manner and at the most favorable price
available.
1. CHOOSING BROKER-DEALERS
The Fund may not always pay the lowest commission or spread available. Rather,
in determining the amount of commissions (including certain dealer spreads) paid
in connection with securities transactions, the Adviser takes into account
factors such as size of the order, difficulty of execution, efficiency of the
executing broker's facilities (including the research services described below)
and any risk assumed by the executing broker.
2. OBTAINING RESEARCH FROM BROKERS
The Adviser may give consideration to research services furnished by brokers to
the Adviser for its use and may cause the Fund to pay these brokers a higher
amount of commission than might be charged by other brokers. These services,
which augment the Adviser's own internal research capabilities, include industry
research reports and periodicals, quotation systems, software for portfolio
management and formal databases. They may be used by the Adviser in connection
with services to clients other than the Fund, and not all research services may
be used by the Adviser in connection with the Fund. The Adviser's fees are not
reduced by reason of the Adviser's receipt of research services.
3. COUNTERPARTY RISK
The Adviser monitors the creditworthiness of counterparties to the Fund's
transactions and intends to enter into a transaction only when it believes that
the counterparty presents minimal and appropriate credit risks.
4. TRANSACTIONS THROUGH AFFILIATES
The Adviser may not effect brokerage transactions through affiliates of the
Adviser (or affiliates of those persons). The Board has not adopted respective
procedures.
5. OTHER ACCOUNTS OF THE ADVISER
Investment decisions for the Fund are made independently from those for any
other account or investment company that is or may in the future become managed
by the Adviser of the Fund. Investment decisions are the product of many
factors, including basic suitability for the particular client involved. Thus, a
particular security may be bought or sold for certain clients even though it
could have been bought or sold for other clients at the same time. Likewise, a
particular security may be bought for one or more clients when one or more
clients are selling the security. There are occasions on which portfolio
transactions may be executed as part of concurrent authorizations to purchase or
sell the same securities for more than one account served by the Adviser, some
of which accounts may have similar investment objectives. Such concurrent
authorizations will be effected only when the Adviser believes that to do so
will be in the best interest of all the affected accounts. When such concurrent
authorizations occur, the objective will be to allocate the execution in a
manner, which is deemed equitable to the accounts involved. Clients are
typically allocated securities with prices averaged on a per-share or per-bond
basis.
26
<PAGE>
6. PORTFOLIO TURNOVER
The frequency of portfolio transactions of the Fund (the portfolio turnover
rate) will vary from year to year depending on many factors. Although portfolio
transactions are not a principal strategy to achieving the Fund's investment
objectives, from time to time the Fund may engage in short-term trading to take
advantage of price movements affecting individual issues, groups of issues or
markets. An annual portfolio turnover rate of 100% would occur if all of the
securities in the Fund were replaced once in a period of one year. Higher
portfolio turnover rates may result in increased brokerage costs to the Fund and
a possible increase in short-term capital gains or losses.
C. SECURITIES OF REGULAR BROKER-DEALERS
From time to time the Fund may acquire and hold securities issued by its
"regular brokers and dealers" or the parents of those brokers and dealers. For
this purpose, regular brokers and dealers means the 10 brokers or dealers that:
(1) received the greatest amount of brokerage commissions during the Fund's last
fiscal year; (2) engaged as principal in the largest dollar amount of portfolio
transactions of the Fund during the Fund's last fiscal year; or (3) sold the
largest dollar amount of the Fund's shares during the Fund's last fiscal year.
6. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
A. GENERAL INFORMATION
Shareholders may effect purchases or redemptions or request any shareholder
privilege in person at the Transfer Agent's offices located at Two Portland
Square, Portland, Maine 04101.
The Fund accepts orders for the purchase or redemption of shares on any weekday
except days when the New York Stock Exchange is closed.
B. ADDITIONAL PURCHASE INFORMATION
Shares of the Fund are sold on a continuous basis at NAV per share without any
sales charge. Accordingly, the offering price per share is the same as the NAV
per share, which will be contained in the Fund's financial
The Fund reserves the right to refuse any purchase request in excess of 1%.
Fund shares are normally issued for cash only. In the Adviser's discretion,
however, the Fund may accept portfolio securities that meet the investment
objective and policies of the Fund as payment for Fund shares. The Fund will
27
<PAGE>
only accept securities that: (1) are not restricted as to transfer by law and
are not illiquid; and (2) have a value that is readily ascertainable (and not
established only by valuation procedures).
Shareholders of the Fund's shares may purchase, with the proceeds from a
redemption of all or part of their shares, shares of the same class of any other
Fund of the Trust.
1. IRAS
The Fund may be a suitable investment vehicle for part or all of the assets held
in traditional or Roth individual retirement accounts (collectively, "IRAs").
Call the Fund at 1-800-679-5707 to obtain an IRA account application. Generally,
investment earnings in an IRA will be tax-deferred until withdrawn. If certain
requirements are met, investment earnings held in a Roth IRA will not be taxed
even when withdrawn. You may contribute up to $2,000 annually to an IRA. Only
contributions to traditional IRAs are tax-deductible. However, that deduction
may be reduced if you or your spouse is an active participant in an
employer-sponsored retirement plan and you or your spouse have adjusted gross
income above certain levels. Your ability to contribute to a Roth IRA also may
be restricted if you or, if you are married, you and your spouse have adjusted
gross income above certain levels.
Your employer may also contribute to your IRA as part of a Savings Incentive
Match Plan for Employees, or "SIMPLE plan," established after December 31, 1996.
Under a SIMPLE plan, you may contribute up to $6,000 annually to your IRA, and
your employer must generally match such contributions up to 3% of your annual
salary. Alternatively, your employer may elect to contribute to your IRA 2% of
the lesser of your earned income or $160,000.
This information on IRAs is based on regulations in effect as of January 1, 1999
and summarizes only some of the important federal tax considerations affecting
IRA contributions. These comments are not meant to be a substitute for tax
planning. Consult your tax advisors about your specific tax situation.
All contributions into an IRA through the automatic investing service are
treated as IRA contributions made during the year the investment is received.
2. UGMAS/UTMAS
If the trustee's name is not in the account registration of a gift or transfer
to minor ("UGMA/UTMA") account, the investor must provide a copy of the trust
document.
3. PURCHASES THROUGH FINANCIAL INSTITUTIONS
You may purchase and redeem shares through certain broker-dealers, banks and
other financial institutions. The Fund's transfer agent and distributor or
financial institutions. These financial institutions may charge their customers
a fee for their services and are responsible for promptly transmitting purchase,
redemption and other requests to the Fund.
If you purchase shares through a financial institution, you will be subject to
the financial institution's procedures, which may include charges, limitations,
investment minimums, cutoff times and restrictions in addition to, or different
from, those applicable when you invest in the Fund directly. When you purchase
the Fund's shares through a financial institution, you may or may not be the
shareholder of record and, subject to your institution's procedures, you may
have Fund shares transferred into your name. There is typically a three-day
settlement period for purchases and redemptions through broker-dealers. Certain
financial institutions may also enter purchase orders with payment to follow.
You may not be eligible for certain shareholder services when you purchase
shares through a financial institution. Contact your financial institution for
further information. If you hold shares through a financial institution, the
Fund may confirm purchases and redemptions to the financial institution, which
will provide you with confirmations and periodic statements. The Fund is not
responsible for the failure of any financial institution to carry out its
obligations.
28
<PAGE>
C. ADDITIONAL REDEMPTION INFORMATION
The Fund may redeem shares involuntarily to reimburse the Fund for any loss
sustained by reason of the failure of a shareholder to make full payment for
shares purchased by the shareholder or to collect any charge relating to
transactions effected for the benefit of a shareholder which is applicable to
the Fund's shares as provided in the Prospectus.
1. SUSPENSION OF RIGHT OF REDEMPTION
The right of redemption may not be suspended, except for any period during
which: (1) the New York Stock Exchange is closed (other than customary weekend
and holiday closings) or during which the SEC determines that trading thereon is
restricted; (2) an emergency (as determined by the SEC) exists as a result of
which disposal by the Fund of its securities is not reasonably practicable or as
a result of which it is not reasonably practicable for the Fund fairly to
determine the value of its net assets; or (3) the SEC may by order permit for
the protection of the shareholders of the Fund.
2. REDEMPTION-IN-KIND
Redemption proceeds normally are paid in cash. Payments may be made wholly or
partly in portfolio securities, however, if the Board determines conditions
exist which would make payment in cash detrimental to the best interests of the
Fund. If redemption proceeds are paid wholly or partly in portfolio securities,
brokerage costs may be incurred by the shareholder in converting the securities
to cash. The Trust has filed an election with the SEC pursuant to which the Fund
may only effect a redemption in portfolio securities if the particular
shareholder is redeeming more than $250,000 or 1% of the Fund's total net
assets, whichever is less, during any 90-day period.
3. INVOLUNTARY REDEMPTIONS
In addition to the situations described in the Prospectus with respect to the
redemptions of shares, the Trust may redeem shares involuntarily to reimburse
the Fund for any loss sustained by reason of the failure of a shareholder to
make full payment for shares purchased by the shareholder or to collect any
charge relating to transactions effected for the benefit of a shareholder which
is applicable to the Fund's shares as provided in the Prospectus from time to
time.
D. NAV DETERMINATION
In determining the Fund's NAV per share, securities for which market quotations
are readily available are valued at current market value using the last reported
sale price. If no sale price is reported, the average of the last bid and ask
price is used. If no average price is available, the last bid price is used. If
market quotations are not readily available, then securities are valued at fair
value as determined by the Board (or its delegate).
E. DISTRIBUTIONS
Distributions of net investment income will be reinvested at the Fund's NAV per
share as of the last day of the period with respect to which the distribution is
paid. Distributions of capital gain will be reinvested at the NAV per share of
the Fund on the payment date for the distribution. Cash payments may be made
more than seven days following the date on which distributions would otherwise
be reinvested.
The per share NAV of any other class of shares of the Fund are expected to be
substantially the same. Under certain circumstances, however, the per share NAV
of each class may vary. The per share NAV of each class of the Fund eventually
will tend to converge immediately after the payment of dividends, which will
differ by approximately the amount of the expense accrual differential among the
classes.
29
<PAGE>
F. EXCHANGES
Shareholders may sell their Fund shares, and buy shares in one of the series of
the Forum Funds (see "Exchange Privileges" in the Prospectus). The exchange
procedures (as described in the Prospectus) may be modified or terminated at any
time upon appropriate notice to shareholders. For Federal income tax purposes,
exchanges are treated as sales on which a purchaser will realize a capital gain
or loss depending on whether the value of the shares redeemed is more or less
than the shareholder's basis in such shares at the time of such transaction.
7. TAXATION
The tax information set forth in the Prospectus and the information in this
section relates solely to U.S. federal income tax law and assumes that the Fund
qualifies as a regulated investment company (as discussed below). Such
information is only a summary of certain key federal income tax considerations
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt has been made to present a complete explanation of the
federal tax treatment of the Fund or the implications to shareholders. The
discussions here and in the Prospectus are not intended as substitutes for
careful tax planning.
This "Taxation" section is based on the Code and applicable regulations in
effect on the date hereof. Future legislative or administrative changes or court
decisions may significantly change the tax rules applicable to the Fund and its
shareholders. Any of these changes or court decisions may have a retroactive
effect.
All investors should consult their own tax advisor as to the federal, state,
local and foreign tax provisions applicable to them.
A. QUALIFICATION AS A REGULATED INVESTMENT COMPANY
The Fund intends for each tax year to qualify as a "regulated investment
company" under the Code. This qualification does not involve governmental
supervision of management or investment practices or policies of the Fund.
The tax year-end of the Fund is November 30, 2000 (the same as the Fund's fiscal
year end).
1. MEANING OF QUALIFICATION
As a regulated investment company, the Fund will not be subject to federal
income tax on the portion of its investment company taxable income (i.e.,
taxable interest, dividends, net short-term capital gains and other taxable
ordinary income, net of expenses) and net capital gain (i.e., the excess of net
long-term capital gains over net short-term capital losses) that it distributes
to shareholders. In order to qualify as a regulated investment company the Fund
must satisfy the following requirements:
o The Fund must distribute at least 90% of its investment company
taxable income for the tax year. (Certain distributions made by the
Fund after the close of its tax year are considered distributions
attributable to the previous tax year for purposes of satisfying this
requirement.)
o The Fund must derive at least 90% of its gross income from certain
types of income derived with respect to its business of investing in
securities.
o The Fund must satisfy the following asset diversification test at the
close of each quarter of the Fund's tax year: (1) at least 50% of the
value of the Fund's assets must consist of cash and cash items, U.S.
government securities, securities of other regulated investment
companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in
securities of the issuer and as to which the Fund does not hold more
than 10% of the outstanding voting securities of the issuer); and (2)
no more than 25% of the value of the Fund's total assets may be
invested in the securities of any one issuer (other than U.S.
30
<PAGE>
Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and
which are engaged in the same or similar trades or businesses.
o The Fund generally intends to operate in a manner such that it will
not be liable for federal income tax.
2. FAILURE TO QUALIFY
If for any tax year the Fund does not qualify as a regulated investment company,
all of its taxable income (including its net capital gain) will be subject to
tax at regular corporate rates without any deduction for dividends to
shareholders, and the dividends will be taxable to the shareholders as ordinary
income to the extent of the Fund's current and accumulated earnings and profits.
A portion of these distributions generally may be eligible for the
dividends-received deduction in the case of corporate shareholders.
Failure to qualify as a regulated investment company would thus have a negative
impact on the Fund's income and performance. It is possible that the Fund will
not qualify as a regulated investment company in any given tax year.
B. FUND DISTRIBUTIONS
The Fund anticipates distributing substantially all of its investment company
taxable income for each tax year. These distributions are taxable to
shareholders as ordinary income. A portion of these distributions may qualify
for the 70% dividends-received deduction for corporate shareholders.
The Fund anticipates distributing substantially all of its net capital gain for
each tax year. These distributions generally are made only once a year, usually
in November or December, but the Fund may make additional distributions of net
capital gain at any time during the year. These distributions are taxable to
shareholders as long-term capital gain, regardless of how long a shareholder has
held shares and do not qualify for the dividends-received deduction.
The Fund may have capital loss carryovers (unutilized capital losses from prior
years). These capital loss carryovers (which can be used for up to eight years)
may be used to offset any current capital gain (whether short- or long-term).
All capital loss carryovers are listed in the Fund's financial statements. Any
such losses may not be carried back.
Distributions by the Fund that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital. Return of capital
distributions reduce the shareholder's tax basis in the shares and are treated
as gain from the sale of the shares to the extent the shareholder's basis would
be reduced below zero.
All distributions by the Fund will be treated in the manner described above
regardless of whether the distribution is paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date.
A shareholder may purchase shares whose NAV at the time reflects undistributed
net investment income or recognized capital gain, or unrealized appreciation in
the value of the assets of the Fund. Distributions of these amounts are taxable
to the shareholder in the manner described above, although the distribution
economically constitutes a return of capital to the shareholder.
Shareholders purchasing shares of the Fund just prior to the ex-dividend date of
a distribution will be taxed on the entire amount of the distribution received,
even though the NAV per share on the date of the purchase reflected the amount
of the distribution.
31
<PAGE>
Ordinarily, shareholders are required to take distributions by the Fund into
account in the year in which they are made. A distribution declared in October,
November or December of any year and payable to shareholders of record on a
specified date in those months, however, is deemed to be received by the
shareholders (and made by the Fund) on December 31 of that calendar year if the
distribution is actually paid in January of the following year.
Shareholders will be advised annually as to the U.S. federal income tax
consequences of distributions made (or deemed made) to them during the year.
C. CERTAIN TAX RULES APPLICABLE TO THE FUND'S TRANSACTIONS
For federal income tax purposes, when put and call options purchased by the Fund
expire unexercised, the premiums paid by the Fund give rise to short- or
long-term capital losses at the time of expiration (depending on the length of
the respective exercise periods for the options). When put and call options
written by the Fund expire unexercised, the premiums received by the Fund give
rise to short-term capital gains at the time of expiration. When the Fund
exercises a call, the purchase price of the underlying security is increased by
the amount of the premium paid by the Fund. When the Fund exercises a put, the
proceeds from the sale of the underlying security are decreased by the premium
paid. When a put or call written by the Fund is exercised, the purchase price
(selling price in the case of a call) of the underlying security is decreased
(increased in the case of a call) for tax purposes by the premium received.
Certain listed options, regulated futures contracts and forward currency
contracts are considered "Section 1256 contracts" for federal income tax
purposes. Section 1256 contracts held by the Fund at the end of each tax year
are "marked to market" and treated for federal income tax purposes as though
sold for fair market value on the last business day of the tax year. Gains or
losses realized by the Fund on Section 1256 contracts generally are considered
60% long-term and 40% short-term capital gains or losses. The Fund can elect to
exempt its Section 1256 contracts, which are part of a "mixed straddle" (as
described below) from the application of Section 1256.
Any option, futures contract, or other position entered into or held by the Fund
in conjunction with any other position held by the Fund may constitute a
"straddle" for federal income tax purposes. A straddle of which at least one,
but not all, the positions are Section 1256 contracts, may constitute a "mixed
straddle". In general, straddles are subject to certain rules that may affect
the character and timing of the Fund's gains and losses with respect to straddle
positions by requiring, among other things, that: (1) the loss realized on
disposition of one position of a straddle may not be recognized to the extent
that the Fund has unrealized gains with respect to the other position in such
straddle; (2) the Fund's holding period in straddle positions be suspended while
the straddle exists (possibly resulting in gain being treated as short-term
capital gain rather than long-term capital gain); (3) the losses recognized with
respect to certain straddle positions which are part of a mixed straddle and
which are non-Section 1256 positions be treated as 60% long-term and 40%
short-term capital loss; (4) losses recognized with respect to certain straddle
positions which would otherwise constitute short-term capital losses be treated
as long-term capital losses; and (5) the deduction of interest and carrying
charges attributable to certain straddle positions may be deferred. Various
elections are available to the Fund, which may mitigate the effects of the
straddle rules, particularly with respect to mixed straddles. In general, the
straddle rules described above do not apply to any straddles held by the Fund
all of the offsetting positions of which consist of Section 1256 contracts.
D. FEDERAL EXCISE TAX
A 4% non-deductible excise tax is imposed on a regulated investment company that
fails to distribute in each calendar year an amount equal to: (1) 98% of its
ordinary taxable income for the calendar year; and (2) 98% of its capital gain
net income for the one-year period ended on October 31 (or December 31, if
elected by the Fund) of the calendar year. The balance of the Fund's income must
be distributed during the next calendar year. The Fund will be treated as having
distributed any amount on which it is subject to income tax.
For purposes of calculating the excise tax, the Fund: (1) reduces its capital
gain net income (but not below its net capital gain) by the amount of any net
ordinary loss for the calendar year and (2) excludes foreign currency gains and
losses incurred after October 31 of any year (or December 31 if it has made the
election described above) in determining the amount of ordinary taxable income
32
<PAGE>
for the current calendar year. The Fund will include foreign currency gains and
losses incurred after October 31 in determining ordinary taxable income for the
succeeding calendar year.
The Fund intends to make sufficient distributions of its ordinary taxable income
and capital gain net income prior to the end of each calendar year to avoid
liability for the excise tax. Investors should note, however, that the Fund
might in certain circumstances be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability.
E. SALE OR REDEMPTION OF SHARES
In general, a shareholder will recognize gain or loss on the sale or redemption
of shares of the Fund in an amount equal to the difference between the proceeds
of the sale or redemption and the shareholder's adjusted tax basis in the
shares. All or a portion of any loss so recognized may be disallowed if the
shareholder purchases (for example, by reinvesting dividends) other shares of
the Fund within 30 days before or after the sale or redemption (a so called
"wash sale"). If disallowed, the loss will be reflected in an upward adjustment
to the basis of the shares purchased. In general, any gain or loss arising from
the sale or redemption of shares of the Fund will be considered capital gain or
loss and will be long-term capital gain or loss if the shares were held for
longer than one year. Any capital loss arising from the sale or redemption of
shares held for six months or less, however, is treated as a long-term capital
loss to the extent of the amount of capital gain received on such shares. In
determining the holding period of such shares for this purpose, any period
during which a shareholder's risk of loss is offset by means of options, short
sales or similar transactions is not counted. Capital losses in any year are
deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
F. BACKUP WITHHOLDING
The Fund will be required in certain cases to withhold and remit to the U.S.
Treasury 31% of distributions, and the proceeds of redemptions of shares paid to
any shareholder: (1) who has failed to provide its correct taxpayer
identification number; (2) who is subject to backup withholding by the IRS for
failure to report the receipt of interest or dividend income properly; or (3)
who has failed to certify to the Fund that it is not subject to backup
withholding or that it is a corporation or other "exempt recipient." Backup
withholding is not an additional tax; any amounts so withheld may be credited
against a shareholder's federal income tax or refunded.
G. FOREIGN TAXES
Income received by the Fund may also be subject to foreign income taxes,
including withholding taxes. It is impossible to determine the effective rate of
foreign tax in advance since the amount of the Fund's assets to be invested
within various countries is not known. In the case of the Fund, if more than 50%
of the value of the Fund's total assets at the close of its taxable year
consists of stocks or securities of foreign corporations, the Fund will be
eligible and intends to file an election with the Internal Revenue Service to
pass through to its shareholders the amount of foreign taxes paid by the Fund.
However, there can be no assurance that the Fund will be able to do so. Pursuant
to this election a shareholder will be required to (i) include in gross income
(in addition to taxable dividends actually received) his pro rata share of
foreign taxes paid by the Fund, (ii) treat his pro rata share of such foreign
taxes as having been paid by him, and (iii) either deduct such pro rata share of
foreign taxes in computing his taxable income or treat such foreign taxes as a
credit against United States federal income taxes. Shareholders who are not
liable for federal income taxes, such as retirement plans qualified under
section 401 of the Code, will not be affected by any such pass-through of taxes
by the Fund. No deduction for foreign taxes may be claimed by an individual
shareholder who does not itemize deductions. In addition, certain shareholders
may be subject to rules which limit or reduce their ability to fully deduct, or
claim a credit for, their pro rata share of the foreign taxes paid by the Fund.
A shareholder's foreign tax credit with respect to a dividend received from the
Fund will be disallowed unless the shareholder holds shares in the Fund on the
ex-dividend date and for at least 15 other days during the 30-day period
beginning 15 days prior to the ex-dividend date. Each shareholder will be
notified within 60 days after the close of the Fund's taxable year whether the
foreign taxes paid by the Fund will pass through for that year and, if so, such
33
<PAGE>
notification will designate (i) the shareholder's portion of the foreign taxes
paid to each such country and (ii) the portion of dividends that represents
income derived from sources within each such country.
The federal income tax status of each year's distributions by the Fund will be
reported to shareholders and to the Internal Revenue Service. The foregoing is
only a general description of the treatment of foreign taxes under the United
States federal income tax laws. Because the availability of a foreign tax credit
or deduction will depend on the particular circumstances of each shareholder,
potential investors are advised to consult their own tax advisers.
H. FOREIGN SHAREHOLDERS
Taxation of a shareholder who under the Code is a nonresident alien individual,
foreign trust or estate, foreign corporation, or foreign partnership ("foreign
shareholder"), depends on whether the income from the Fund is "effectively
connected" with a U.S. trade or business carried on by the foreign shareholder.
If the income from the Fund is not effectively connected with a U.S. trade or
business carried on by a foreign shareholder, distributions of ordinary income
(and short-term capital gains) paid to a foreign shareholder will be subject to
U.S. withholding tax at the rate of 30% (or lower applicable treaty rate) upon
the gross amount of the distribution. The foreign shareholder generally would be
exempt from U.S. federal income tax on gain realized on the sale of shares of
the Fund and distributions of net capital gain from the Fund.
If the income from the Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income
distributions, capital gain distributions, and any gain realized upon the sale
of shares of the Fund will be subject to U.S. federal income tax at the rates
applicable to U.S. citizens or U.S.
corporations.
In the case of a noncorporate foreign shareholder, the Fund may be required to
withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding (or taxable at a reduced treaty rate), unless
the shareholder furnishes the Fund with proper notification of its foreign
status.
The tax consequences to a foreign shareholder entitled to claim the benefits of
an applicable tax treaty might be different from those described herein.
The tax rules of other countries with respect to distributions from the Fund can
differ from the U.S. federal income taxation rules described above. These
foreign rules are not discussed herein. Foreign shareholders are urged to
consult their own tax advisers as to the consequences of foreign tax rules with
respect to an investment in the Fund.
I. STATE AND LOCAL TAXES
The tax rules of the various states of the U.S. and their local jurisdictions
with respect to distributions from the Fund can differ from the U.S. federal
income taxation rules described above. These state and local rules are not
discussed herein. Shareholders are urged to consult their tax advisers as to the
consequences of state and local tax rules with respect to an investment in the
Fund.
8. OTHER MATTERS
1. GENERAL INFORMATION
The Trust was organized as a business trust under the laws of the State of
Delaware on July 29, 1999 pursuant to a trust instrument dated July 29, 1999
(the "Trust Instrument") and was amended and restated on November 15, 1999. The
Trust has operated as an investment company since the date of its organization.
The Trust is registered as an open-end, management investment company under the
1940 Act. The Trust offers shares of beneficial interest in the Fund, which is
the first in what may be a series of funds. The Trust has an unlimited number of
authorized shares of beneficial interest. The Board may, without shareholder
approval, divide the authorized shares into an unlimited number of separate
34
<PAGE>
series and may divide series into classes of shares; the costs of doing so will
be borne by the Trust. The Fund is diversified.
The Trust and the Fund will continue indefinitely until terminated.
2. SHAREHOLDER VOTING AND OTHER RIGHTS
Each share of each series of the Trust and each class of shares has equal
dividend, distribution, liquidation and voting rights, and fractional shares
have those rights proportionately, except that expenses related to the
distribution of the shares of each class (and certain other expenses such as
transfer agency, shareholder service and administration expenses) are borne
solely by those shares and each class votes separately with respect to the
provisions of any Rule 12b-1 plan which pertains to the class and other matters
for which separate class voting is appropriate under applicable law. Generally,
shares will be voted in the aggregate without reference to a particular series
or class, except if the matter affects only one series or class or voting by
series or class is required by law, in which case shares will be voted
separately by series or class, as appropriate. Delaware law does not require the
Trust to hold annual meetings of shareholders, and it is anticipated that
shareholder meetings will be held only when specifically required by federal or
state law. There are no conversion or preemptive rights in connection with
shares of the Trust.
All shares, when issued in accordance with the terms of the offering, will be
fully paid and nonassessable.
A shareholder in a series is entitled to the shareholder's pro rata share of all
distributions arising from that series' assets and, upon redeeming shares, will
receive the portion of the series' net assets represented by the redeemed
shares.
Shareholders representing 10% or more of the Trust's (or the Fund's) outstanding
shares may, as set forth in the Trust Instrument, call meetings of the Trust (or
Fund) for any purpose related to the Trust (or Fund), including, in the case of
a meeting of the Trust, the purpose of voting on removal of one or more
Trustees.
3. CERTAIN REORGANIZATION TRANSACTIONS
The Trust or any Fund may be terminated upon the sale of its assets to, or
merger with, another open-end, management investment company or series thereof,
or upon liquidation and distribution of its assets. Generally such terminations
must be approved by the vote of the holders of a majority of the outstanding
shares of the Trust or the Fund. The Trustees may, without prior shareholder
approval, change the form of organization of the Trust by merger, consolidation
or incorporation. Under the Trust Instrument, the Trustees may, without
shareholder vote, cause the Trust to merge or consolidate into one or more
trusts, partnerships or corporations or cause the Trust to be incorporated under
Delaware law, so long as the surviving entity is an open-end, management
investment company that will succeed to or assume the Trust's registration
statement.
B. FUND OWNERSHIP
As of December 15, 1999, and prior to the public offering of the Fund, the
Adviser beneficially owned 100% of and may be deemed to control the Fund. James
B. Cowperthwait, Trustee, owns 100% of the Adviser. As of the same date, no
other officers or Trustees of the Trust owned any of the outstanding shares of
the Fund. From time to time, certain shareholders may own a large percentage of
the shares of the Fund. Accordingly, those shareholders may be able to greatly
affect (if not determine) the outcome of a shareholder vote. It is unlikely,
however, the Adviser will continue to control the Fund. "Control" for these
purposes is the ownership of 25% or more the Fund's voting securities.
C. LIMITATIONS ON SHAREHOLDERS' AND TRUSTEES' LIABILITY
Delaware law provides that Fund shareholders are entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit. In the past, the securities regulators of some states,
however, have indicated that they and the courts in their state may decline to
35
<PAGE>
apply Delaware law on this point. The Trust Instrument contains an express
disclaimer of shareholder liability for the debts, liabilities, obligations and
expenses of the Trust and requires that a disclaimer be given in each contract
entered into or executed by the Trust or the Trustees. The Trust Instrument
provides for indemnification out of each series' property of any shareholder or
former shareholder held personally liable for the obligations of the series. The
Trust Instrument also provides that each series shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the series and satisfy any judgment thereon. Thus, the risk of a shareholder
incurring financial loss on account of shareholder liability is limited to
circumstances in which Delaware law does not apply, no contractual limitation of
liability was in effect, and the portfolio is unable to meet its obligations.
The Trust Instrument provides that the Trustees shall not be liable to any
person other than the Trust or its shareholders. In addition, the Trust
Instrument provides that the Trustees shall not be liable for any conduct
whatsoever, provided that a Trustee is not protected against any liability 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.
D. REGISTRATION STATEMENT
This SAI and the Prospectus do not contain all the information included in the
Trust's registration statement filed with the SEC under the 1933 Act with
respect to the securities offered hereby. The registration statement, including
the exhibits filed therewith, may be examined at the office of the SEC in
Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of any
contract or other documents are not necessarily complete, and, in each instance,
are qualified by, reference is made to the copy of such contract or other
documents filed as exhibits to the registration statement.
E. FINANCIAL STATEMENTS
Financial statements for the Fund are included in this Statement of Additional
Information at Appendix B.
36
<PAGE>
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS
A. CORPORATE BONDS (INCLUDING CONVERTIBLE BONDS)
1. MOODY'S INVESTORS SERVICE
AAA Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally
referred to as "gilt edged." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
AA Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present that make
the long-term risk appear somewhat larger than the Aaa securities.
A Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper-medium-grade obligations. Factors
giving security to principal and interest are considered adequate,
but elements may be present which suggest a susceptibility to
impairment some time in the future.
BAA Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the
present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
BA Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate,
and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this
class.
B Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments
or of maintenance of other terms of the contract over any long
period of time may be small.
CAA Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca Bonds that are rated Ca represent obligations that are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
NOTE Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from Aa through Caa. The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates
a ranking in the lower end of that generic rating category.
-A-1-
<PAGE>
2. STANDARD AND POOR'S CORPORATION
AAA An obligation rated AAA has the highest rating assigned by Standard
& Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
AA An obligation rated AA differs from the highest-rated obligations
only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
A An obligation rated A is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than
obligations in higher-rated categories. However, the obligor's
capacity to meet its financial commitment on the obligation is still
strong.
BBB An obligation rated BBB exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet
its financial commitment on the obligation.
NOTE Obligations rated BB, B, CCC, CC, and C are regarded as having
significant speculative characteristics. BB indicates the least
degree of speculation and C the highest. While such obligations will
likely have some quality and protective characteristics, large
uncertainties or major exposures to adverse conditions may outweigh
these.
BB An obligation rated BB is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that
could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
B An obligation rated B is more vulnerable to nonpayment than
obligations rated BB, but the obligor currently has the capacity to
meet its financial commitment on the obligation. Adverse business,
financial, or economic conditions will likely impair the obligor's
capacity or willingness to meet its financial commitment on the
obligation.
CCC An obligation rated CCC is currently vulnerable to nonpayment, and
is dependent upon favorable business, financial, and economic
conditions for the obligor to meet its financial commitment on the
obligation. In the event of adverse business, financial, or economic
conditions, the obligor is not likely to have the capacity to meet
its financial commitment on the obligation.
CC An obligation rated CC is currently highly vulnerable to nonpayment.
C The C rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
D An obligation rated D is in payment default. The D rating category
is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard
& Poor's believes that such payments will be made during such grace
period. The D rating also will be used upon the filing of a
bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.
NOTE Plus (+) or minus (-). The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing
within the major rating categories.
The `r' symbol is attached to the ratings of instruments with
significant noncredit risks. It highlights risks to principal or
volatility of expected returns that are not addressed in the credit
rating. Examples include: obligations linked or indexed to equities,
currencies, or commodities; obligations exposed to severe prepayment
risk-such as interest-only or principal-only mortgage securities;
and obligations with unusually risky interest terms, such as inverse
floaters.
-A-2-
<PAGE>
3. DUFF & PHELPS CREDIT RATING CO.
AAA Highest credit quality. The risk factors are negligible, being
only slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest
AA but may vary slightly from time to time because of economic
conditions.
A+,A, Protection factors are average but adequate. However,risk factors
are more variable in periods of A- greater economic stress.
BBB+ Below-average protection factors but still considered ufficient for
BBB prudent investment. Considerable variability in risk during
BBB- economic cycles.
BB+ Below investment grade but deemed likely to meet obligations when
BB due. Present or prospective financial protection factors fluctuate
BB- according to industry conditions.Overall quality may move up or down
frequently within this category.
B+ Below investment grade and possessing risk that obligations will not
B be met when due. Financial protection factors will fluctuate
B- widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for frequent changes in the
rating within this category or into a higher or lower rating grade.
CCC Well below investment-grade securities. Considerable uncertainty
exists as to timely payment of principal, interest or preferred
dividends. Protection factors are narrow and risk can be
ubstantial with unfavorable economic/industry conditions, and/or
with unfavorable company developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled
principal and/or interest payments.
DP Preferred stock with dividend arrearages.
4. FITCH IBCA, INC.
INVESTMENT GRADE
AAA Highest credit quality. `AAA' ratings denote the lowest expectation of
credit risk. They are assigned only in case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is
highly unlikely to be adversely affected by foreseeable events.
AA Very high credit quality. `AA' ratings denote a very low expectation
of credit risk. They indicate very strong capacity for timely payment
of financial commitments. This capacity is not significantly
vulnerable to foreseeable events.
A High credit quality. `A' ratings denote a low expectation of credit
risk. The capacity for timely payment of financial commitments is
considered strong. This capacity may, nevertheless, be more vulnerable
to changes in circumstances or in economic conditions than is the case
for higher ratings.
-A-3-
<PAGE>
BBB Good credit quality. `BBB' ratings indicate that there is currently a
low expectation of credit risk. The capacity for timely payment of
financial commitments is considered adequate, but adverse changes in
circumstances and in economic conditions are more likely to impair
this capacity. This is the lowest investment-grade category.
SPECULATIVE GRADE
BB Speculative. `BB' ratings indicate that there is a possibility of
credit risk developing, particularly as the result of adverse
economic change over time; however, business or financial
alternatives may be available to allow financial commitments to be
met. Securities rated in this category are not investment grade.
B Highly speculative. `B' ratings indicate that significant credit risk
is present, but a limited margin of safety remains. Financial
commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and
economic environment.
CCC, High default risk. Default is a real possibility. Capacity for
CC,C meeting financial commitments is solely reliant upon sustained,
favorable business or economic developments. A `CC' rating indicates
that default of some kind appears probable. `C' ratings signal
imminent default.
DDD, Default. Securities are not meeting current obligations and are
DD,D extremely speculative. `DDD' designates the highest potential for
recovery of amounts outstanding on any securities involved. For U.S.
corporates, for example, `DD' indicates expected recovery of 50% -
90% of such outstandings, and `D' the lowest recovery potential, i.e.
below 50%.
PREFERRED STOCK
1. MOODY'S INVESTORS SERVICE
AAA An issue that is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and
the least risk of dividend impairment within the universe of
preferred stocks.
AA An issue that is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance
the earnings and asset protection will remain relatively well
maintained in the foreseeable future.
A An issue that is rated "a" is considered to be an upper-medium
grade preferred stock. While risks are judged to be somewhat
greater than in the "aaa" and "aa" classification, earnings and
asset protection are, nevertheless, expected to be maintained at
adequate levels.
BAA An issue that is rated "baa" is considered to be a medium-grade
preferred stock, neither highly protected nor poorly secured.
Earnings and asset protection appear adequate at present but may be
questionable over any great length of time.
BA An issue which is rated "ba" is considered to have speculative
elements and its future cannot be considered well assured. Earnings
and asset protection may be very moderate and not well safeguarded
during adverse periods. Uncertainty of position characterizes
preferred stocks in this class.
B An issue that is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and
maintenance of other terms of the issue over any long period of
time may be small.
CAA An issue that is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the
future status of payments.
-A-4-
<PAGE>
CA An issue that is rated "ca" is speculative in a high degree and is
likely to be in arrears on dividends with little likelihood of
eventual payments.
C This is the lowest rated class of preferred or preference stock.
Issues so rated can thus be regarded as having extremely poor
prospects of ever attaining any real investment standing.
NOTE Moody's applies numerical modifiers 1, 2, and 3 in each rating
classification: the modifier 1 indicates that the security ranks in
the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking and the modifier 3 indicates that the
issue ranks in the lower end of its generic rating category.
2. STANDARD & POOR'S
AAA This is the highest rating that may be assigned by Standard & Poor's
to a preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.
AA A preferred stock issue rated AA also qualifies as a high-quality,
fixed-income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for
issues rated AAA.
A An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.
BBB An issue rated BBB is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to make payments for a preferred stock in this category
than for issues in the A category.
BB, Preferred stock rated BB, B, and CCC is regarded, on balance,
B, as predominantly speculative with respect to the issuer's capacity
CCC to pay preferred stock obligations. BB indicates the lowest degree
of speculation and CCC the highest. While such issues will likely
have some quality and protective characteristics, large
uncertainties or major risk exposures to adverse conditions outweigh
these.
CC The rating CC is reserved for a preferred stock issue that is in
arrears on dividends or sinking fund payments, but that is currently
paying.
C A preferred stock rated C is a nonpaying issue.
D A preferred stock rated D is a nonpaying issue with the issuer in
default on debt instruments.
N.R. This indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard
& Poor's does not rate a particular type of obligation as a matter
of policy.
NOTE Plus (+) or minus (-). To provide more detailed indications of
preferred stock quality, ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing
within the major rating categories.
C. SHORT TERM RATINGS
1. MOODY'S INVESTORS SERVICE
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:
-A-5-
<PAGE>
o Leading market positions in well-established industries.
o High rates of return on funds employed.
o Conservative capitalization structure with moderate reliance on
debt and ample asset protection.
o Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
o Well-established access to a range of financial markets and assured
sources of alternate liquidity.
PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity
is maintained.
PRIME-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market
compositions may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt
protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
NOT PRIME Issuers rated Not Prime do not fall within any of the Prime
rating categories.
STANDARD & POOR'S
A-1 A short-term obligation rated A-1 is rated in the highest
category by Standard & Poor's. The obligor's capacity to meet
its financial commitment on the obligation is strong. Within
this category, certain obligations are designated with a plus
sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.
A-2 A short-term obligation rated A-2 is somewhat more susceptible
to the adverse effects of changes in circumstances and economic
conditions than obligations in higher rating categories.
However, the obligor's capacity to meet its financial commitment
on the obligation is satisfactory.
A-3 A short-term obligation rated A-3 exhibits adequate protection
parameters. However, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity of
the obligor to meet its financial commitment on the obligation.
B A short-term obligation rated B is regarded as having
significant speculative characteristics. The obligor currently
has the capacity to meet its financial commitment on the
obligation; however, it faces major ongoing uncertainties that
could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.
C A short-term obligation rated C is currently vulnerable to
nonpayment and is dependent upon favorable business, financial,
and economic conditions for the obligor to meet its financial
commitment on the obligation.
D A short-term obligation rated D is in payment default. The D
rating category is used when payments on an obligation are not
made on the date due even if the applicable grace period has not
expired, unless Standard & Poor's believes that such payments
will be made during such grace period. The D rating also will be
used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.
-A-6-
<PAGE>
FITCH IBCA, INC.
F1 Obligations assigned this rating have the highest capacity for
timely repayment under Fitch IBCA's national rating scale for that
country, relative to other obligations in the same country. This
rating is automatically assigned to all obligations issued or
guaranteed by the sovereign state. Where issues possess a
particularly strong credit feature, a "+" is added to the assigned
rating.
F2 Obligations supported by a strong capacity for timely repayment
relative to other obligors in the same country. However, the
relative degree of risk is slightly higher than for issues
classified as `A1' and capacity for timely repayment may be
susceptible to adverse changes in business, economic, or financial
conditions.
F3 Obligations supported by an adequate capacity for timely repayment
relative to other obligors in the same country. Such capacity is
more susceptible to adverse changes in business, economic, or
financial conditions than for obligations in higher categories.
B Obligations for which the capacity for timely repayment is
uncertain relative to other obligors in the same country. The
capacity for timely repayment is susceptible to adverse changes in
business, economic, or financial conditions.
C Obligations for which there is a high risk of default to other
obligors in the same country or which are in default.
-A-7
<PAGE>
APPENDIX B
TRUECROSSING FUNDS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 15, 1999
TRUECROSSING
GROWTH FUND
ASSETS
Cash$100,000
Total assets $100,000
LIABILITIES $0
NET ASSETS $100,000
Shares Outstanding (no par value, shares
authorized is unlimited) 10,000
Net Asset Value, offering and redemption price
per share (10,000 shares outstanding) $10.00
======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS STATEMENT.
-B-1-
<PAGE>
TRUECROSSING FUNDS
NOTES TO STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 15, 1999
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES:
(A) General: TrueCrossing Funds (the "Trust") is an open end management
investment company registered under the Investment Company Act of 1940, as
amended. The Trust was organized as a Delaware business trust on July 29, 1999.
TrueCrossing Growth Fund ("Fund") is a separate, diversified series of the
Trust. As of December 15, 1999, the Fund has had no operations other than
organizational matters and the issuance and sale of initial shares to NewBridge
Partners, LLC on December 15, 1999. Organizational expenses will be borne by
NewBridge Partners, LLC.
(B) Federal Taxes: The Fund intends to qualify for treatment as a regulated
investment company under the Internal Revenue Code and distribute all its
taxable income. In addition, by distributing in each calendar year substantially
all its net investment income, capital gain and certain other amounts, if any,
the Fund will not be subject to Federal excise tax. Therefore, no Federal income
or excise tax provision will be required.
NOTE 2 - INVESTMENT ADVISORY AND OTHER SERVICES
(A) Investment Adviser. The investment adviser for the Fund is NewBridge
Partners, LLC (the "Adviser"). For its services, the Adviser receives a fee at
an annual rate of 0.70% of the Fund's average daily net assets.
(B) Administrator. The administrator for the Fund is Forum Administrative
Services, LLC ("FAdS"). For its services, FAdS receives a fee at an annual rate
of 0.15% of the Fund's average daily net assets under $50 million, 0.10% of the
Fund's average daily net assets between $50 million and $100 million and 0.05%
of the Fund's average daily net assets in excess of $100 million. This fee is
subject to an annual minimum of $25,000.
(C) Distributor. Forum Fund Services, LLC ("FFS"), a registered broker-dealer
and a member of the National Association of Securities Dealers, Inc., acts as
the Fund's distributor. FFS receives no compensation for its services.
(D) Other Service Providers. Forum Accounting Services, LLC is the fund
accountant for the Fund and receives a fee of $36,000 per year, subject to
adjustments for the number and type of portfolio transactions. Forum Shareholder
Services, LLC is the Fund's transfer agent and dividend disbursing agent and
receives a fee of $18,000 per year plus certain other fees and expenses.
(E) Shareholder Servicing Agent. The Trust has adopted a shareholder servicing
plan under which the Trust pays FAdS a shareholder servicing fee at an annual
rate of 0.25% of the average daily net assets of the Fund. FAdS may pay out any
and all amounts of these fees to various institutions that provide shareholder
servicing to their customers who hold shares of the Fund.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholder and Board of Trustees of TrueCrossing Funds
We have audited the accompanying statement of assets and liabilities of
TrueCrossing Growth Fund (a series of TrueCrossing Funds) (the "Fund") as of
December 16, 1999. This statement of assets and liabilities is the
responsibility of the Fund's management. Our responsibility is to express an
opinion on this statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statement of assets and liabilities is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of
TrueCrossing Growth Fund at December 16, 1999, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
December 16, 1999
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Trust Instrument of Registrant (filed herewith).
(b) None.
(c) See Sections 2.02, 2.04, and 2.06 of the Trust Instrument filed as Exhibit
(a).
(d) Investment Advisory Agreement between Registrant and NewBridge Partners,
LLC dated as of December 8, 1999 (filed herewith).
(e) Distribution Agreement between Registrant and Forum Fund Services, LLC,
dated as of December 8, 1999 (filed herewith).
(f) None.
(g) (1) Custodian Agreement between Registrant and Forum Trust, LLC, dated
as of December 8, 1999 (filed herewith).
(2) Transfer Agency and Services Agreement between Registrant and Forum
Financial Services, LLC, dated as of December 8, 1999 (filed
herewith).
(3) Administration Agreement between Registrant and Forum
Administrative Services, LLC, dated as of December 8, 1999 (filed
herewith).
(4) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC dated as of December 8, 1999 (filed herewith).
(h) None.
(i) Opinion of Finn Dixon & Herling LLP dated December 17, 1999 (filed
herewith).
(j) Consent of Independent Auditors dated December 16, 1999 (filed herewith).
(k) None.
(l) Investment Representation Letter of original purchaser of shares of
Registrant (filed herewith).
(m) Distribution (12b-1) Plan adopted by Registrant (filed herewith).
(n) None.
(p) (1) Code of Ethics adopted by Registrant (filed herewith).
(2) Code of Ethics adopted by NewBridge Partners, LLC (filed herewith).
OTHER EXHIBITS:
(1) Power of attorney of James B. Cowperthwait (filed herewith).
(2) Power of attorney of Erick F. Maronak (filed herewith).
(3) Power of attorney of Eric J. Gleacher (filed herewith).
(4) Power of attorney of W. Wallace McDowell (filed herewith).
(5) Power of attorney of Daniel B. Goldman (filed herewith).
- ----------------
Note: Exhibit incorporated by reference as filed in Initial Registration
Statement on Form N-1A via EDGAR on July 29, 1999, accession number
0001004402-99-000338.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
<PAGE>
ITEM 25. INDEMNIFICATION
In accordance with Section 3803 of the Delaware Business Trust Act, Section
9.02 of the Registrant's Trust instrument provides as follows:
SECTION 9.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
9.02(b): (i) every Person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as a "Covered Person") shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit, proceeding or investigation in which he becomes involved as a
party or otherwise by virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof; (ii) the
words "claim," "action," "suit," "proceeding" or "investigation" shall apply to
all claims, actions, suits, proceedings or investigations (civil, criminal or
other, including appeals), formal or informal, actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the Trust; or (ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (x) by the court or other body approving
the settlement; (y) by at least a majority of those Trustees who are neither
Interested Persons of the Trust nor are parties to the matter based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(z) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a Person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other Persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit, proceeding or investigation of the character
described in Subsection 9.02(a) may be paid by the Trust or Series from time to
time prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to the
Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 9.02; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such undertaking,
(ii) the Trust is insured against losses arising out of any such advance
payments or (iii) either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the matter, or independent legal counsel in
a written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled to
indemnification under this Section 9.02.
Section 5 of the Investment Advisory Agreement provides as follows:
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will give
the Trust the benefit of, the Adviser's best judgment and efforts in rendering
its services to the Trust. The Adviser shall not be liable hereunder for any
mistake of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect, or purport to protect,
the Adviser against any liability to the Trust or to the Trust's security
holders to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the Adviser's
duties hereunder, or by reason of the Adviser's reckless disregard of its
obligations and duties hereunder.
(b) The Adviser shall not be responsible or liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control
<PAGE>
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties (other than those related to the Adviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The description of NewBridge Partners, LLC contained in Parts A and B
of this registration statement is incorporated by reference herein.
The following are the directors and principal executive officers of
NewBridge Partners, LLC, including their business connections, which
are of a substantial nature. The address of NewBridge Partners, LLC is
535 Madison Avenue, 14th Floor, New York, NY 10022.
<TABLE>
<S> <C> <C>
Name Title Business Connection
.................................... ................................... ..................................
.................................... ................................... ..................................
James B. Cowperthwait Sole Owner NewBridge Partners, LLC
................................... ..................................
................................... ..................................
Managing Director United States Trust Company of
New York (until 3/99)
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Forum Fund Services, LLC, Registrant's underwriter serves as
underwriter for the following investment companies registered under the
Investment Company Act of 1940, as amended:
o The Cutler Trust
o Forum Funds
o Memorial Funds
o Monarch Funds
o Sound Shore Fund, Inc.
(b) The following officer of Forum Fund Services, LLC, the Registrant's
underwriter, holds the following position with the Registrant. This
officer's business address is Two Portland Square, Portland, Maine
04101.
<TABLE>
<S> <C> <C>
Name Position with Underwriter Position with Registrant
.................................... ................................... ..................................
John Keffer President Vice President, Assistant Secretary
</TABLE>
(c) Not Applicable.
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The majority of the accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and
the Rules thereunder are maintained at the offices of Forum
Administrative Services, LLC and Forum Shareholder Services, LLC, Two
Portland Square, Portland, Maine 04101. The records required to be
maintained under Rule 31a-1(b)(1) with respect to journals of receipts
and deliveries of securities and receipts and disbursements of cash are
maintained at the offices of Registrant's custodian's master
subcustodian, Bankers Trust Company, 16 Wall Street, New York, New York
10005. The records required to be maintained under Rule 31a-1(b)(5),
(6) and (9) are maintained at the offices of the Registrant's adviser,
NewBridge Partners, LLC.
ITEM 29. MANAGEMENT SERVICES
Not Applicable.
ITEM 30. UNDERTAKINGS
None
<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
amendment to its registration statement to be signed on its behalf by the
undersigned, duly authorized in the City of Portland, State of Maine on December
17, 1999.
TRUECROSSING FUNDS
Erick F. Maronak, President
By: /s/ David I. Goldstein
David I. Goldstein, Attorney in Fact*
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons on
December 17, 1999.
(a) Principal Executive Officer
Erick F. Maronak, President
By: /s/ David I. Goldstein
David I. Goldstein, Attorney in Fact*
(b) Principal Financial Officer
/s/ Ronald H. Hirsch
Ronald H. Hirsch, Treasurer
(c) All of the Trustees
James B. Cowperthwait, Trustee
Erick F. Maronak, Trustee
Daniel B. Goldman, Trustee
Eric J. Gleacher, Trustee
W. Wallace McDowell, Trustee
By: /s/ David I. Goldstein
David I. Goldstein, Attorney in Fact*
* Pursuant to powers of attorney filed as Other Exhibits to this Registration
Statement.
<PAGE>
INDEX TO EXHIBITS
(a) Trust Instrument of Registrant.
(d) Investment Advisory Agreement between Registrant and NewBridge Partners,
LLC, dated as of December 8, 1999
(e) Distribution Agreement between Registrant and Forum Fund Services,
LLC, dated as of December 8, 1999.
(g)(1) Custodian Agreement between Registrant and Forum Trust, LLC,
dated as of December 8, 1999.
(g)(2) Transfer Agency and Services Agreement between Registrant and
Forum Financial Services, LLC, dated as of December 8, 1999.
(g)(3) Administration Agreement between Registrant and Forum
Administrative Services, LLC, dated as of December 8, 1999.
(g)(4) Fund Accounting Agreement between Registrant and Forum Accounting
Services, LLC dated as of December 8, 1999
(i) Opinion of Finn Dixon & Herling LLP dated December 17, 1999.
(j) Consent of Independent Auditors dated December 16, 1999.
(l) Investment Representation Letter of Original Purchaser.
(m) Distribution (12b-1) Plan adopted by Registrant.
(p) (1) Code of Ethics adopted by Registrant.
(2) Code of Ethics adopted by NewBridge Partners, LLC.
OTHER EXHIBITS:
(1) Power of attorney of James B. Cowperthwait (filed herewith).
(2) Power of attorney of Erick F. Maronak (filed herewith).
(3) Power of attorney of Eric J. Gleacher (filed herewith).
(4) Power of attorney of W. Wallace McDowell (filed herewith).
(5) Power of attorney of Daniel B. Goldman (filed herewith).
<PAGE>
EXHIBIT (A)
TRUECROSSING FUNDS
TRUST INSTRUMENT
DATED
JULY 29, 1999
AMENDED AND RESTATED
NOVEMBER 15, 1999
<PAGE>
TRUECROSSING FUNDS
TABLE OF CONTENTS
PAGE
ARTICLE I NAME AND DEFINITIONS
Section 1.01 Name ..................................................1
Section 1.02 Definitions............................................2
ARTICLE II BENEFICIAL INTEREST
Section 2.01 Shares of Beneficial Interest..........................2
Section 2.02 Issuance of Shares.....................................2
Section 2.03 Register of Shares and Share Certificates..............3
Section 2.04 Transfer of Shares.....................................3
Section 2.05 Treasury Shares........................................4
Section 2.06 Establishment of Series or Class.......................4
Section 2.07 Investment in the Trust................................4
Section 2.08 Assets and Liabilities of Series.......................5
Section 2.09 No Preemptive Rights...................................6
Section 2.10 No Personal Liability of Shareholders..................6
Section 2.11 Assent to Trust Instrument and Disclosure..............6
ARTICLE III THE TRUSTEES
Section 3.01 Management of the Trust ...............................6
Section 3.02 Number of Trustees.....................................7
Section 3.03 Term of Office.........................................7
Section 3.04 Vacancies and Appointments.............................7
Section 3.05 Temporary Absence......................................8
Section 3.06 Effect of Ending of a Trustee's Service................8
Section 3.07 Ownership of Assets of the Trust.......................8
Section 3.08 Action and Meetings of Trustees........................8
Section 3.09 Quorum.................................................9
Section 3.10 Meeting Actions........................................9
ARTICLE IV POWERS OF THE TRUSTEES
Section 4.01 Powers.................................................9
Section 4.02 Issuance and Repurchase of Shares......................10
Section 4.03 Trustees and Officers as Shareholders..................10
Section 4.04 Principal Transactions.................................10
Section 4.05 Delegations and Committees.............................10
-i-
<PAGE>
ARTICLE V NET ASSET VALUE AND EXPENSES
Section 5.01 Determination of Net Asset Value.......................10
Section 5.02 Expenses...............................................11
ARTICLE VI INVESTMENT ADVISERS, UNDERWRITERS AND CUSTODIANS
Section 6.01 Investment Advisers....................................11
Section 6.02 Underwriters...........................................12
Section 6.03 Custodians.............................................12
ARTICLE VII SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 7.01 Voting Powers..........................................12
Section 7.02 Meetings...............................................13
Section 7.03 Notices................................................13
Section 7.04 Quorum and Required Vote...............................13
Section 7.05 Voting-Proxies.........................................14
Section 7.06 Action Without a Meeting...............................14
Section 7.07 Establishment of Record Dates..........................14
ARTICLE VIII DISTRIBUTIONS AND REDEMPTIONS
Section 8.01 Distributions..........................................15
Section 8.02 Redemptions............................................15
Section 8.03 Suspension of the Right of Redemption..................16
Section 8.04 Redemption of Shares for Tax Purposes..................16
ARTICLE IX LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 9.01 Limitation of Liability................................16
Section 9.02 Indemnification........................................16
Section 9.03 Shareholders...........................................18
Section 9.04 Insurance..............................................18
ARTICLE X OFFICERS
Section 10.01Officers and Appointment...............................18
Section 10.02Resignations...........................................19
Section 10.03Surety Bonds...........................................19
Section 10.04Removal................................................20
-ii-
<PAGE>
ARTICLE XI MISCELLANEOUS
Section 11.01Trust Not a Partnership................................20
Section 11.02Trustee's Good Faith Action, Expert Advice, No Bond or
Surety.................................................20
Section 11.03Reorganization ........................................20
Section 11.04Termination of Trust, Series or Class..................21
Section 11.05Derivative Actions.....................................22
Section 11.06Parties to Contract....................................22
Section 11.07Filing of Copies, References, Headings.................22
Section 11.08Governing Law..........................................22
Section 11.09Amendments.............................................23
Section 11.10Fiscal Year............................................23
Section 11.11Provisions in Conflict with Law........................23
Section 11.12Execution via Facsimile................................23
Section 11.13Principal Office.......................................24
Section 11.14Inspection of Books....................................24
Section 11.15Seal...................................................24
-iii-
<PAGE>
TRUECROSSING FUNDS
TRUST INSTRUMENT, made by the persons executing this Trust Instrument
below, as Trustees.
WHEREAS, the Trustees desire to establish a business trust for the
investment and reinvestment of funds contributed thereto;
NOW THEREFORE, the Trustees declare that all money and property contributed
to the trust hereunder shall be held and managed in trust under this Trust
Instrument as herein set forth below.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.01 NAME. The name of the trust created hereby is "TrueCrossing
Funds".
SECTION 1.02 DEFINITIONS. Wherever used herein, unless otherwise required
by the context or specifically provided:
(a) "Class" means the class of Shares of a Series established in
accordance with the provisions of Section 2.06.
(b) "Commission" shall have the meaning given it in the 1940 Act.
(c) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time.
(d) "Interested Person" shall have the meaning given it in the 1940
Act.
(e) "Net Asset Value" means the net asset value of each Series of the
Trust or Class thereof determined in the manner provided in Section 5.01.
(f) "Outstanding Shares" means those Shares shown from time to time in
the books of the Trust or a Transfer Agent as then issued and outstanding, but
shall not include Shares which have been redeemed or repurchased by the Trust
and which are at the time held in the treasury of the Trust.
(g) "Person" shall have the meaning given it in the 1940 Act.
(h) "Series" means a series of Shares of the Trust established in
accordance with the provisions of Section 2.06.
(i) "Shareholder" means a record owner of Outstanding Shares of the
Trust.
1
<PAGE>
(j) "Shares" means the equal proportionate transferable units of
beneficial interest into which the beneficial interest of each Series of the
Trust or Class thereof shall be divided and may include fractions of Shares as
well as whole Shares.
(k) "Transfer Agent" means the transfer agent of the Trust or such
officer or agent of the Trust as shall maintain the register of a Series.
(l) "Trust" means the trust created hereby and reference to the Trust,
when applicable to one or more Series of the Trust, shall refer to any such
Series.
(m) "Trustees" means each person who has signed this Trust Instrument,
so long as that person shall continue in office in accordance with the terms
hereof, and each other Person who may from time to time be duly qualified and
serving as a Trustee in accordance with the provisions of Article III hereof.
Reference herein to a Trustee or to the Trustees shall refer to the individual
Trustees in their capacity as Trustees hereunder.
(n) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or any Series, or the Trustees on behalf of the Trust or any Series.
(o) "1940 Act" means the Investment Company Act of 1940, as amended
from time to time, and all terms that are defined herein by reference to the
1940 Act shall be interpreted as such term has been modified by or interpreted
by applicable orders of the Commission or any rules or regulations adopted by or
interpretive releases of the Commission or its staff, or "no-action" or other
interpretive letters issued by the staff, under the 1940 Act.
ARTICLE II
BENEFICIAL INTEREST
SECTION 2.01 SHARES OF BENEFICIAL INTEREST. The beneficial interest in
the Trust shall be divided into such transferable Shares of one or more separate
and distinct Series or Classes of a Series as the Trustees shall from time to
time create and establish. The number of Shares of each Series, and Class
thereof, authorized hereunder is unlimited. All Shares issued hereunder shall be
fully paid and nonassessable.
SECTION 2.02 ISSUANCE OF SHARES. The Trustees in their discretion may,
from time to time issue Shares, in addition to the then issued and Outstanding
Shares and Shares held in the treasury of the Trust, to such party or parties
and for such amount and type of consideration, including cash or securities, at
such time or times and on such terms as the Trustees may deem appropriate, and
may in such manner acquire other assets (including the acquisition of assets
subject to, and in connection with, the assumption of liabilities) and
businesses. In connection with any issuance of Shares, the Trustees may issue
fractional Shares and Shares held in the treasury of the Trust. The Trustees may
2
<PAGE>
from time to time divide or combine the Shares into a greater or lesser number
without thereby changing the proportionate beneficial interests in the Trust.
Contributions to the Trust may be accepted for, and Shares shall be redeemed
as1/1,000th of a Share or integral multiples thereof.
SECTION 2.03 REGISTER OF SHARES AND SHARE CERTIFICATES.
(a) A register shall be kept at the principal office of the Trust or an
office of a Transfer Agent which shall contain the names and addresses of the
Shareholders of each Series and Class thereof, the number of Shares of that
Series and any Classes thereof held by each Shareholder and a record of all
transfers thereof. No Shareholder shall be entitled to receive payment of any
distribution, nor to have notice given to the Shareholder as herein provided,
until the Shareholder has given its address to the Transfer Agent.
(b) All shares shall be uncertificated except as the Trustees may
otherwise authorize. The Trustees may issue certificates to a Shareholder of any
Series or Class thereof for any purpose and the issuance of a certificate to one
or more Shareholders shall not require the issuance of certificates generally.
As to Shares for which no certificate has been issued, each Shareholder shall be
entitled to receive distributions or otherwise to exercise or enjoy the rights
of Shareholders. Share certificates shall be in the form prescribed from time to
time by the Trustees and shall be signed by the President or a Vice President
and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary.
Such signatures may be facsimiles if the certificate is signed by a Transfer
Agent or shareholder services agent or by a registrar, other than a Trustee,
officer or employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on a certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if the person were such officer at the time of its
issue.
(c) In the case of the alleged loss or destruction or the mutilation of
a Share certificate, a duplicate certificate may be issued in place thereof,
upon such terms as the Trustees may prescribe or upon the terms generally
employed by the Transfer Agent. The Trustees may at any time discontinue the
issuance of Share certificates and may, by written notice to each Shareholder,
require the surrender of Share certificates to the Trust for cancellation. Such
surrender and cancellation shall not affect the ownership of Shares in the
Trust.
SECTION 2.04 TRANSFER OF SHARES. Except as otherwise provided by the
Trustees, Shares shall be transferable on the records of the Trust only by the
record holder thereof or by that holder's agent thereunto duly authorized in
writing, upon delivery to the Trustees or the Transfer Agent of a duly executed
instrument of transfer and such evidence of the genuineness of such execution
and authorization and of such other matters as may be required by the Trustees
or Transfer Agent. Upon such delivery the transfer shall be recorded on the
register of the Trust. Until such record is made, the Shareholder of record
shall be deemed to be the holder of such Shares for all purposes hereunder and
neither the Trustees nor the Trust, nor any Transfer Agent or registrar nor any
officer, employee or agent of the Trust shall be affected by any notice of the
proposed transfer.
3
<PAGE>
SECTION 2.05 TREASURY SHARES. Shares held in the treasury shall, until
reissued pursuant to Section 2.02 hereof, not confer any voting rights on the
Trustees, nor shall such Shares be entitled to any distributions declared with
respect to the Shares.
SECTION 2.06 ESTABLISHMENT OF SERIES OR CLASS. The Trust created hereby
shall consist of one or more Series. Separate and distinct records shall be
maintained by the Trust for each Series and the assets associated with any such
Series shall be held and accounted for separately from the assets of the Trust
or any other Series. The Trustees may divide the Shares of any Series into
Classes. The Trustees shall have full power and authority in their sole
discretion to establish and designate and to change in any manner any such
Series or Class and to fix such preferences, voting powers, rights and
privileges of such Series or Classes as the Trustees may from time to time
determine, to divide or combine the Shares or any Series or Classes into a
greater or lesser number, to classify or reclassify any issued Shares of any
Series or Classes into one or more Series or Classes, and to take such other
action with respect to the Shares of any Series or Class as the Trustees may
deem desirable. The establishment and designation of any Series or Class shall
be effective when specified in the resolution of the Trustees setting forth such
establishment and designation and the relative rights and preferences of the
Shares of such Series or Class.
All references to Shares in this Trust Instrument shall be deemed to be
Shares of any or all Series or Classes, as the context may require. All
provisions herein relating to the Trust shall apply equally to each Series and
each Class, except as the context otherwise requires.
Each Share of a Series of the Trust shall represent an equal beneficial
interest in the net assets of such Series subject to Section 2.08 and the
preferences, rights and privileges of each Class of that Series. Each holder of
Shares of a Series or Class thereof shall be entitled to receive the holder's
pro rata share of all distributions made with respect to such Series or Class.
Upon redemption of Shares, such Shareholder shall be paid solely out of the
funds and property of such Series of the Trust.
Each Series and Class thereof of the Trust and their attributes will be
set forth in Annex A to this Trust Instrument.
SECTION 2.07 INVESTMENT IN THE TRUST. The Trustees shall accept
investments in any Series or Class thereof as the Trustees may from time to time
authorize. At the Trustees' discretion, such investments may be in the form of
cash, securities or other assets in which the affected Series is authorized to
invest, valued as provided in Section 5.01. Investments in a Series shall be
credited to each Shareholder's account in the form of full and fractional Shares
at the Net Asset Value per Share next determined after the investment is
received or accepted as may be determined by the Trustees; provided, however,
that the Trustees may, in their sole discretion, (a) fix the Net Asset Value per
Share of the initial capital contribution or (b) impose a sales or other charge
upon investments in the Trust in such manner and at such time as may be
determined by the Trustees. The Trustees shall have the right to refuse to
accept any investment in any Series at any time with or without cause and for
any reason whatsoever.
4
<PAGE>
SECTION 2.08 ASSETS AND LIABILITIES OF SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be, shall be held and accounted for separately from the other assets of
the Trust and of every other Series and may be referred to herein as "assets
belonging to" that Series. The assets belonging to a particular Series shall
belong to that Series for all purposes, and to no other Series, subject only to
the rights of creditors of that Series. In addition, any assets, income,
earnings, profits or funds, or payments and proceeds with respect thereto, which
are not readily identifiable as belonging to any particular Series shall be
allocated by the Trustees between and among one or more of the Series in such
manner as the Trustees, in their sole discretion, deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series for all purposes, and such assets, income, earnings, profits or funds, or
payments and proceeds with respect thereto shall be assets belonging to the
Series to which allocated. The assets belonging to a particular Series shall be
so recorded upon the books of the Trust, and shall be held by the Trustees in
trust for the benefit of the 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, expenses, costs, charges and reserves allocated to a particular
Class shall be borne by that Class, as may be determined by the Trustees in
their sole discretion as they deem fair and equitable. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Series or Class shall be allocated
and charged by the Trustees between or among any one or more of the Series of
Classes in such manner as the Trustees in their sole discretion deem fair and
equitable. Each such allocation shall be conclusive and binding upon the
Shareholders of all Series for all purposes.
Without limitation of the foregoing, but subject to the right of the
Trustees in their discretion to allocate general liabilities, expenses, costs,
changes or reserves as herein provided, the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular Series shall be enforceable against the assets of such Series only,
and not against the assets of the Trust generally. Notice of this contractual
limitation on inter-Series liabilities may, in the Trustee's sole discretion, be
set forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on inter-Series liabilities of any
other 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.
All Persons extending credit to, contracting with or having any claim
against the Trust or the Trustees shall look only to the assets of the
appropriate Series or (if the Trustees shall have yet to have established
Series) of the Trust for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of their agents, whether
past, present or future, shall be personally liable therefor. No Shareholder or
former Shareholder of any Series shall have a claim on or any right to any
assets allocated or belonging to any other Series.
5
<PAGE>
SECTION 2.09 NO PREEMPTIVE RIGHTS. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees, whether of the same or other
Series.
SECTION 2.10 NO PERSONAL LIABILITY OF SHAREHOLDERS. No Shareholder of
the Trust or of any Series shall be personally liable for the debts,
liabilities, obligations and expenses incurred by, contracted for, or otherwise
existing with respect to, the Trust or any Series. The Trustees shall have no
power to bind any Shareholder personally or to call upon any Shareholder for the
payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription for
any Shares or otherwise. Every note, bond, contract or other undertaking issued
by or on behalf of the Trust or the Trustees relating to the Trust or to a
Series shall include a recitation limiting the obligation represented thereby to
the Trust or to one or more Series and its or their assets (but the omission of
such a recitation shall not operate to bind any Shareholder or Trustee of the
Trust).
SECTION 2.11 ASSENT TO TRUST INSTRUMENT AND DISCLOSURE. Every
Shareholder, by virtue of having purchased a Share shall become a Shareholder
and shall be held to have expressly assented and agreed (i) to be bound by the
terms hereof and (ii) upon demand to disclose to the Trustees in writing such
information with respect to the direct and indirect ownership of Shares as the
Trustees deem necessary to comply with the requirements of any taxing authority.
ARTICLE III
THE TRUSTEES
SECTION 3.01 MANAGEMENT OF THE TRUST. The Trustees shall have exclusive
and absolute control over the Trust Property and over the business of the Trust
to the same extent as if the Trustees were the sole owners of the Trust Property
and business in their own right but with unlimited powers of delegation. The
Trustees shall have full power and authority to conduct the business of the
Trust and carry on its operations and maintain offices in any governmental
jurisdiction within or without the State of Delaware. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts and instruments that the Trustees may consider necessary, proper,
desirable or appropriate in connection with the management of the Trust although
such things are not herein specifically mentioned. Any determination as to what
is in the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Trust Instrument, the
presumption shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power in this Trust Instrument shall
not be construed as limiting the aforesaid power. The powers of the Trustees may
be exercised without order of or resort to any court.
6
<PAGE>
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.
Each Trustee and each committee member may receive such compensation
for his services and reimbursement for his expenses as may be fixed from time to
time by the Trustees.
When and if elected by Shareholders, a Trustee shall be elected by the
Shareholders owning a plurality of the Shares voting at a meeting of
Shareholders.
A Trustee shall be deemed to be a Trustee hereunder upon accepting this
trust.
SECTION 3.02 NUMBER OF TRUSTEES. The initial Trustees shall be the
persons initially signing this Trust Instrument. On a date fixed by the
Trustees, the Shareholders shall elect at least one (1) Trustee. The number of
Trustees shall be fixed from time to time by the Trustees, provided, however,
that the number of Trustees shall in no event be less than two (2).
SECTION 3.03 TERM OF OFFICE. The Trustees shall hold office during the
lifetime of this Trust and until its termination as herein provided; except that
(a) any Trustee may resign by written instrument signed by the Trustee and
delivered to the other Trustees, which shall take effect upon such delivery or
upon such later date as is specified therein; (b) that any Trustee may be
removed at any time by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired, has become physically or mentally incapacitated by reason of disease or
otherwise, or is otherwise unable to serve, may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; (d) that a Trustee shall be removed upon attaining any retirement
age for Trustees specified by resolution of the Trustees and (e) that a Trustee
may be removed at any meeting of the Shareholders of the Trust by a vote of
Shareholders owning at least two-thirds of the Outstanding Shares.
SECTION 3.04 VACANCIES AND APPOINTMENTS. In case of the death,
resignation, retirement or removal of a Trustee, or if a Trustee is otherwise
unable to serve, or if there is an increase in the number of Trustees, a vacancy
shall occur. Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, the other Trustees shall have all the powers hereunder. In
the case of a vacancy, the remaining Trustees shall fill such vacancy by
appointing such other Person as they in their discretion shall see fit. Such
appointment shall take effect upon the execution of a written instrument signed
by a majority of the Trustees in office or by resolution of the Trustees.
An appointment of a Trustee may be made by the Trustees then in office
in anticipation of a vacancy to occur at a later date, provided that said
appointment shall become effective only at or after the effective date of said
vacancy. As soon as any Trustee appointed pursuant to this Section 3.04 shall
have accepted this trust, the trust estate shall vest in the new Trustee,
together with the continuing Trustees, without any further act or conveyance,
and the new Trustee shall be deemed a Trustee hereunder.
7
<PAGE>
SECTION 3.05 TEMPORARY ABSENCE. Any Trustee may, by power of attorney,
delegate his power for a period not exceeding six months at any time to any
other Trustee or Trustees, provided that at least one Trustee must personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
SECTION 3.06 EFFECT OF ENDING OF A TRUSTEE'S SERVICE. The death,
resignation, retirement or removal or inability to serve of the Trustees, or any
one of them, shall not operate to terminate the Trust or to revoke any existing
agency created pursuant to the terms of this Trust Instrument.
SECTION 3.07 OWNERSHIP OF ASSETS OF THE TRUST. The assets of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. Legal title in all of the assets of the Trust and the
right to conduct any business shall at all times be considered as vested in the
Trustees on behalf of the Trust, except that the Trustees may cause legal title
to any Trust Property to be held by, or in the name of the Trust, or in the name
of any Person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, except as
otherwise provided for herein, a proportionate undivided beneficial interest in
the Trust or Series. The Shares shall be personal property giving only the
rights specifically set forth in this Trust Instrument.
SECTION 3.08 ACTION AND MEETINGS OF TRUSTEES. The Trustees shall act by
majority vote (unless a greater amount is specified in this Trust Instrument or
applicable law) at a meeting duly called at which a quorum is present or by
unanimous written consent without a meeting. Notice of the time, date and place
of all meetings of the Trustees shall be given by the party calling the meeting
to each Trustee by telephone, facsimile or other electronic mechanism sent to
his home or business address at least twenty-four hours in advance of the
meeting or by written notice mailed to his home or business address at least
seventy-two hours in advance of the meeting. Notice need not be given to any
Trustee who attends the meeting without objecting to the lack of notice or who
executes a written waiver of notice with respect to the meeting. Written
consents or waivers of the Trustees may be executed in one or more counterparts.
Meetings of the Trustees may be held at such places and at such times as the
Trustees may from time to time determine; each Trustee present at such
determination shall be deemed a party calling the meeting and no call or notice
will be required to such Trustee provided that any Trustee who is absent when
such determination is made shall be given notice of the determination by the
Chairman of the Board of Trustees or any two other Trustees. Any meeting may
adjourn to any place. Meetings of the Trustees may be called orally or in
writing by the Chairman of the Board of Trustees or any two other Trustees.
Except as otherwise provided, notice of any meeting of the Trustees shall be
given by the party calling the meeting to each Trustee.
SECTION 3.09 QUORUM. One-third of the Trustees shall constitute a
quorum for the transaction of business and an action of a majority of the quorum
shall constitute action of the Trustees except to the extent otherwise provided
for in this Trust Instrument.
8
<PAGE>
SECTION 3.10 MEETING ACTIONS. When all the Trustees shall be present at
any meeting, however called or wherever held, or shall assent to the holding of
the meeting without notice, or shall sign a written assent thereto filed with
the record of such meeting, the acts of such meeting shall be valid as if such
meeting had been regularly held. Any action by the Trustees may be taken without
a meeting if a written consent thereto is signed by all the Trustees and filed
with the records of the Trustees' meeting. Such consent shall be treated, for
all purposes, as a vote at a meeting of the Trustees held at the principal place
of business of the Trustees. Trustees may participate in a meeting of Trustees
by conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting. Any meeting
conducted by telephone shall be deemed to take place at and from the principal
office of the Trust.
ARTICLE IV
POWERS OF THE TRUSTEES
SECTION 4.01 POWERS.
(a) The Trustees shall have the power and authority under this Trust
Instrument to conduct any business and to act in any manner not prohibited by
this Trust Instrument or applicable law. The Trustees also shall have any power
or authority under this Trust Instrument the Trustees may possess under
applicable law, including the power and authority to act on any matter without
and in place of Shareholder approval, if applicable law permits the Trust
Instrument to provide Trustees such power and authority. Powers of the Trustees
specifically enumerated in other sections of this Trust Instrument shall not
limit or restrict in any manner the power and authority of the Trustees provided
by this Section 4.01.
(b) The Trustees in all instances shall act as principals, free from
the control of the Shareholders.
(c) The Trustees shall not in any way be bound or limited by present or
future laws or customs in regard to trust investment from making any investment
which the Trustees, in their sole discretion, shall deem proper to accomplish
the purpose of this Trust. The Trustees shall not be limited to investing in
obligations maturing before the possible termination of the Trust.
(d) No Person dealing with the Trustees shall be under any obligation
to make any inquiry concerning the authority of the Trustees, or to oversee the
application of any payments made or property transferred to the Trustees or upon
their order.
SECTION 4.02 ISSUANCE AND REPURCHASE OF SHARES. The Trustees shall have
the power to issue, sell, repurchase, redeem, retire, cancel, acquire, hold,
resell, reissue, dispose of, and otherwise deal in Shares and, subject to the
provisions set forth in Article II and Article IX, to apply to any such
repurchase, redemption, retirement, cancellation or acquisition of Shares any
funds or property of the Trust, or the particular Series of the Trust, with
respect to which such Shares are issued.
9
<PAGE>
SECTION 4.03 TRUSTEES AND OFFICERS AS SHAREHOLDERS. Any Trustee,
officer or other agent of the Trust may acquire, own and dispose of Shares to
the same extent as if the Trustee, officer or other agent were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued and
sold Shares to and buy such Shares from any such trustee, officer or other agent
or any Person in which the Trustee, officer or other agent is interested,
subject only to the general limitations herein contained as to the sale and
purchase of such Shares.
SECTION 4.04 PRINCIPAL TRANSACTIONS. The Trustees may, on behalf of the
Trust, buy any securities from, sell any securities to, lend any assets of the
Trust to, or contract in any way, whether orally or written, with any Trustee or
officer of the Trust or any other Person, however related to the Trust; or have
any dealings of any kind with any Person.
SECTION 4.05 DELEGATIONS AND COMMITTEES. The Trustees may delegate to
any one or more of their number the authority to approve particular actions on
behalf of the Trust. The Trustees may establish one or more committees
consisting of one or more Trustees, delegate any of the powers of the Trustees
to any committee and adopt a committee charter providing for the
responsibilities, membership (including Trustees, officers or other agents of
the Trust therein) and any other characteristics of a committee as the Trustees
may deem proper. The Trustees may by resolution appoint a committee consisting
of less than the whole number of Trustees then in office, which committee may be
empowered to act for and bind the Trustees and the Trust, as if the acts of such
committee were the acts of all the Trustees then in office, with respect to any
and all matters as the Trustees may deem proper.
All members of each committee shall hold such offices at the pleasure
of the Trustees. The Trustees may abolish any committee at any time. Any
committee to which the Trustees delegate any of their powers or duties shall
keep records of its meetings and shall report its actions to the Trustees. The
Trustees shall have power to rescind any action of any committee, but no such
rescission shall have retroactive effect.
ARTICLE V
NET ASSET VALUE AND EXPENSES
SECTION 5.01 DETERMINATION OF NET ASSET VALUE. The "Net Asset Value" of
any Series shall be the amount by which the assets of that Series exceed its
liabilities, all as determined by or under the direction of the Trustees in any
manner the Trustees deem appropriate. The Net Asset Value of any Class shall be
the amount by which the net assets attributable to that Class exceed any
liabilities attributed to that Class as determined by or under the direction of
the Trustees in any manner the Trustees deem appropriate.
SECTION 5.02 EXPENSES. Subject to the provisions of Section 2.08, the
Trustees shall be reimbursed from the estate or the assets belonging to the
appropriate Series for their expenses and disbursements, including, without
limitation, interest charges, taxes, brokerage fees and commissions; expenses of
issue, repurchase and redemption of shares; insurance premiums; applicable fees,
interest charges and expenses of third parties, including the Trust's investment
advisers, managers, administrators, distributors, custodians, transfer agents
and fund accountants; fees of pricing, interest, dividend, credit and other
10
<PAGE>
reporting services; costs of membership in trade associations;
telecommunications expenses; funds transmission expenses; auditing, legal and
compliance expenses; costs of forming the Trust and maintaining its existence;
costs of preparing and printing the Trust's prospectuses, statements of
additional information and shareholder reports and delivering them to
Shareholders or others; expenses of meetings of Shareholders and proxy
solicitations therefore; costs of maintaining books and accounts; costs of
reproduction, stationery and supplies; fees and expenses of the Trust;
compensation of the Trust's officers and employees and costs of other personnel
performing services for the Trust; costs of Trustees' meetings; registration
fees and related expenses; for such non-recurring items as may arise, including
litigation to which the Trust (or a Trustee acting as such) is a party, and for
all losses and liabilities incurred by any Trustee in administering the Trust,
and for the payment of such expenses, disbursements, losses and liabilities the
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto.
This section shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.
ARTICLE VI
INVESTMENT ADVISERS, UNDERWRITERS AND CUSTODIANS
SECTION 6.01 INVESTMENT ADVISERS. The Trustees may in their discretion,
from time to time, enter into one or more investment advisory contracts on
behalf of the Trust or any Series whereby the other party or parties to such
contract or contracts shall undertake to furnish the Trustees with such
investment advisory and other facilities and services upon such terms and
conditions as may be prescribed by the Trustees. Notwithstanding any other
provision of this Trust Instrument, the Trustees may authorize any investment
adviser to effect purchases, sales or exchanges of portfolio securities, other
investment instruments of the Trust, or other Trust Property on behalf of the
Trustees, or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the investment
adviser. Any such purchases, sales and exchanges shall be deemed to have been
authorized by all of the Trustees.
The Trustees may authorize an investment adviser to employ, from time
to time, with the approval of the Trustees, one or more sub-advisers to perform
such of the acts and services of the investment adviser, and upon such terms and
conditions, as may be agreed upon between the investment adviser and
sub-adviser. Any reference in this Trust Instrument to an investment adviser
shall be deemed to include such sub-advisers, unless the context otherwise
requires.
SECTION 6.02 UNDERWRITERS. The Trustees may in their discretion from
time to time enter into an exclusive or non-exclusive underwriting contract or
contracts providing for the sale of Shares, whereby the Trust may either agree
to sell Shares to the other party to the contract or appoint such other party
the Trust's sales agent for such Shares. In either case, the contract shall be
on such terms and conditions as may be prescribed by the Trustees; and such
contracts may also provide for the purchase of Shares by such other party as
principal or as agent of the Trust.
11
<PAGE>
SECTION 6.03 CUSTODIANS. The Trustees shall at all times employ one or
more persons permitted to act as custodian for assets of the Trust under
applicable law as custodian with authority as the Trust's agent: (a) to hold the
securities owned by the Trust and deliver the same upon written order or oral
order confirmed in writing; (b) to receive and receipt for any moneys due to the
Trust and deposit the same in the custodian's banking department or elsewhere as
the Trustees may direct; and (c) to disburse such funds upon orders or vouchers.
The Trustees may also authorize the custodian to employ from time to
time one or more sub-custodians permitted to act as a custodian for assets of
the Trust under applicable law to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees.
ARTICLE VII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 7.01 VOTING POWERS. The Shareholders shall have power to vote
only (a) for the election of Trustees as provided in Sections 3.01 and 3.02, (b)
for the removal of Trustees as provided in Section 3.03(e), (c) to amend this
Trust Instrument as provided for in Section 11.09 and (d) with respect to such
additional matters relating to the Trust as may be required by law or by this
Trust Instrument. The Shareholders shall have no right or power to vote for any
other matter, whether referenced in this Trust Instrument or not, including the
accomplishment of a merger or consolidation within the meaning of Section 3815
of the Delaware Act, or any successor provision.
On any matter submitted to a vote of the Shareholders, all Shares shall
be voted separately by individual Series, except (i) when required by applicable
law, Shares shall be voted in the aggregate and not by individual Series; (ii)
when the Trustees have determined that the matter affects the interests of more
than one Series, the Shareholders of all such Series shall be entitled to vote
thereon; and (iii) when the Trustees have determined that the matter affects the
interests of one of more Classes, the Shareholders of all such Classes shall be
entitled to vote. Each whole Share shall be entitled to one vote as to any
matter on which a Shareholder is entitled to vote, and each fractional Share
shall be entitled to a proportionate fractional vote. Each whole dollar of Net
Asset Value of a Share shall be entitled to one vote as to any matter on which a
Shareholder is entitled to vote, and any fraction of a dollar of Net Asset Value
of a Share shall be entitled to a proportionate fractional vote. Notwithstanding
anything else herein, in the event a proposal by anyone other than the officers
or Trustees of the Trust is submitted to a vote of the Shareholders of one or
more Classes, one or more Series or of the Trust, or in the event of any proxy
contest or proxy solicitation or proposal in opposition to any proposal by the
officers or Trustees of the Trust, Shares may be voted only in person or by
written proxy. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required or permitted by law or this Trust
Instrument to be taken by Shareholders.
SECTION 7.02 MEETINGS. The first Shareholders' meeting shall be held in
order to elect Trustees as specified in Section 3.02. Meetings may be held
within or without the State of Delaware as specified by the Trustees. A meeting
12
<PAGE>
of Shareholders shall be called by the Secretary whenever (i) ordered by the
Trustees or (ii) requested in writing by the holder or holders of at least one
third of the Outstanding Shares entitled to vote. If the Secretary, when so
ordered or requested, refuses or neglects for more than 30 days to call a
meeting, the Trustees or the Shareholders so requesting, may call the meeting in
the name of the Secretary by giving notice thereof in the manner required when
notice is given by the Secretary. If the meeting is a meeting of the
Shareholders of one or more Series or Classes, but not a meeting of all
Shareholders of the Trust, then only special meetings of the Shareholders of
such one or more Series or Classes shall be called and only the shareholders of
such one or more Series or Classes shall be entitled to notice of and to vote at
such meeting.
SECTION 7.03 NOTICES. Except as provided in Section 7.02, notices of
any meeting of the Shareholders shall be given by the Secretary by any method
authorized by law and the Trustees. In the case of delivering or mailing written
or printed notification, postage prepaid, such notice shall be given to each
Shareholder entitled to vote at said meeting at least ten (10) days before the
meeting, to such address as may be registered with the Trust by the Shareholder.
Notice of any Shareholder meeting need not be given to any Shareholder if a
waiver of notice (in the form required by law) executed before or after such
meeting, is filed with the record of such meeting, or to any Shareholder who
shall attend such meeting in person or by proxy. Notice of adjournment of a
Shareholder's meeting to another time or place need not be given, if such time
and place are announced at the meeting or reasonable notice is given to Persons
present at the meeting and the adjourned meeting is held within a reasonable
time after the date set for the original meeting.
SECTION 7.04 QUORUM AND REQUIRED VOTE. One-third (or such higher
proportion as the Trustees, in their sole discretion, may determine with respect
to a meeting) of Shares entitled to vote in person or by proxy shall be a quorum
for the transaction of business at a Shareholders' meeting, except that when any
provision of law or of this Trust Instrument permits or requires that holders of
any Series shall vote as a Series (or that holders of a Class shall vote as a
Class), then one-third (or such higher proportion as the Trustees, in their sole
discretion, may determine with respect to a meeting) of the aggregate number of
Shares of that Series (or that Class) entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that Series (or that
Class). Any lesser number shall be sufficient only for holding a vote to adjourn
the meeting. Any adjourned session or sessions may be held, within a reasonable
time after the date set for the original meeting, without the necessity of
further notice. Except when a larger vote is required by law or by any provision
of this Trust Instrument, a majority of the Shares voted in person or by proxy
shall decide any questions and a plurality shall elect a Trustee, provided that
when any provision of law or of this Trust Instrument permits or requires that
the holders of any Series shall vote as a Series (or that the holders of any
Class shall vote as a Class), then a majority of the Shares present in person or
by proxy of that Series (or Class), voted on the matter in person or by proxy
shall decide that matter insofar as that Series (or Class) is concerned.
SECTION 7.05 VOTING-PROXIES. Shares may be voted in person or by proxy
or in any manner provided for in this Trust Instrument except as otherwise
required by Section 7.01. Shareholders entitled to vote may vote either in
person or by proxy, provided that either (a) an instrument authorizing such
13
<PAGE>
proxy to act is executed by the Shareholder in writing and dated not more than
eleven (11) months before the meeting, unless the instrument specifically
provides for a longer period or (b) the Trustees or the President of the Trust
authorize an electronic, telephonic, computerized or other alternative to
execution of a written instrument authorizing the proxy to act and authorization
pursuant to that alternative is received not more than eleven (11) months before
the meeting. Proxies shall be delivered to the Secretary of the Trust or other
person responsible for recording the proceedings before being voted. A proxy
with respect to Shares held in the name of two or more Persons shall be valid if
executed by one of them unless at or prior to exercise of such proxy the Trust
receives a specific written notice to the contrary from any one of them. Unless
otherwise specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting. A proxy purporting to be
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. At all meetings of the Shareholders, unless the
voting is conducted by inspectors, all questions relating to the qualifications
of voters, the validity of proxies, and the acceptance or rejection of votes
shall be decided by the Chairman of the meeting. Except as otherwise provided
herein, all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware relating to
proxies, and judicial interpretations thereunder, as if the Trust were a
Delaware corporation and the Shareholders were shareholders of a Delaware
corporation.
SECTION 7.06 ACTION WITHOUT A MEETING. Any action to be taken by
Shareholders of the Trust or any Series or Class may be taken without a meeting
if Shareholders holding at least the percentage of Outstanding Shares of the
Trust, Series or Class that would be required to approve the action at a meeting
of those Shareholders called to vote on the matter consent to the action in
writing, which may be in one or more counterparts, and the written consents are
filed with the records of meetings of Shareholders of the Trust. Such consent
shall be treated for all purposes as a vote at a meeting of the Shareholders
held at the principal place of business of the Trust.
SECTION 7.07 ESTABLISHMENT OF RECORD DATES. The Trustees may close the
Share transfer books of the Trust for a period not exceeding one hundred twenty
(120) days preceding the date of any meeting of Shareholders, or the date for
the payment of any distributions, or the date for the allotment of rights, or
the date when any change or conversion or exchange of Shares shall go into
effect; or in lieu of closing the stock transfer books as aforesaid, the
Trustees may fix in advance a date, not exceeding one hundred twenty (120) days
preceding the date of any meeting of Shareholders, or the date for payment of
any distribution, or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such
distribution, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of Shares, and in such case
such Shareholders and only those Shareholders as shall be Shareholders on the
date so fixed shall be entitled to such notice of, and to vote at, such meeting,
or to receive payment of such distribution, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after the date so fixed.
14
<PAGE>
ARTICLE VIII
DISTRIBUTIONS AND REDEMPTIONS
SECTION 8.01 DISTRIBUTIONS.
(a) The Trustees may from time to time declare and pay distributions
with respect to any Series or Class. The amount of such distributions, the
conditions to and timing of their payment and whether they are in cash or any
other Trust Property shall be wholly in the discretion of the Trustees or their
delegates.
(b) Distributions may be paid or made to Shareholders when declared or
the Shareholders of record at such other date or time or dates or times and
subject to such conditions as the Trustees shall determine, which distributions,
at the election of the Trustees, may be paid pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees may
determine. The Trustees may adopt and offer to Shareholders such reinvestment
plans, cash payout plans or related plans with respect to distributions as the
Trustees shall deem appropriate.
(c) Anything in this Trust Instrument to the contrary notwithstanding,
the Trustees may at any time declare and distribute a Share distribution pro
rata among the Shareholders of a particular Series, or Class thereof, as of the
record date of that Series or Class as provided in Subsection 8.01(b).
SECTION 8.02 REDEMPTIONS. In case any Shareholder of a particular
Series desires to dispose of the Shareholder's Shares or any portion thereof,
the Shareholder may deposit at the office of the Transfer Agent or other
authorized agent of that Series a written request or such other form of request
as the Trustees may from time to time authorize, requesting that the Series
purchase the Shares in accordance with this Section 8.02; and the Shareholder so
requesting shall be entitled to require the Series to purchase, and the Series
or the principal underwriter of the Series shall purchase the Shares, but only
at the Net Asset Value thereof (as described in Section 5.01) reduced by the
amount of any sales or other charges applicable to the Shares. The Series shall
make payment for any such Shares to be redeemed, as aforesaid, in cash or
property from the assets of that Series and payment for such Shares shall be
made by the Series or the principal underwriter of the Series to the Shareholder
within such time as the Trustees determine after the date upon which the request
is effective. Upon redemption, Shares shall become treasury Shares and may be
re-issued from time to time.
SECTION 8.03 SUSPENSION OF THE RIGHT OF REDEMPTION. The Trustees may
declare a suspension of the right of redemption or postpone the date of payment
with respect to the Trust or any Series or Class thereof. Such suspension shall
take effect at such time as the Trustees shall specify but not later than the
close of business on the business day next following the declaration of
suspension, and thereafter there shall be no right of redemption or payment
until the Trustees shall declare the suspension at an end. In the case of a
suspension of the right of redemption, a Shareholder may either withdraw the
15
<PAGE>
request for redemption or receive payment based on the Net Asset Value next
determined after the termination of the suspension.
SECTION 8.04 REDEMPTION OF SHARES FOR TAX PURPOSES. If the Trustees
shall, at any time and in good faith, be of the opinion that direct or indirect
ownership of Shares of any Series has disqualified or may disqualify any Series
as a regulated investment company under the Internal Revenue Code of 1986, as
amended, then the Trustees shall have the power (but not the obligation) by lot
or other means deemed equitable by them (a) to call for redemption by any such
Person of a number, or principal amount, of Shares sufficient to maintain or
bring the direct or indirect ownership of Shares into conformity with the
requirements for such qualification and (b) to refuse to transfer or issue
Shares to any Person whose acquisition of Shares in question would result in
such disqualification. The redemption shall be effected at the redemption price
and in the manner provided in this Article VIII.
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
SECTION 9.01 LIMITATION OF LIABILITY. A Trustee, when acting in such
capacity, shall not be personally liable to any Person other than the Trust or a
Shareholder for any act, omission or obligation of the Trust or any Trustee. A
Trustee shall not be liable for any act or omission or any conduct whatsoever in
his capacity as Trustee, provided that nothing contained herein or in the
Delaware Act shall protect any Trustee against any liability to the Trust or to
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee hereunder.
SECTION 9.02 INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in Subsection
9.02(b): (i) every Person who is, or has been, a Trustee or officer of the Trust
(hereinafter referred to as a "Covered Person") shall be indemnified by the
Trust to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him in connection with any claim,
action, suit, proceeding or investigation in which he becomes involved as a
party or otherwise by virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the settlement thereof; (ii) the
words "claim," "action," "suit," "proceeding" or "investigation" shall apply to
all claims, actions, suits, proceedings or investigations (civil, criminal or
other, including appeals), formal or informal, actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall include,
without limitation, attorneys' fees, costs, judgments, amounts paid in
settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office or (B) not to 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
16
<PAGE>
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office, (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 full trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, shall continue as to a Person who has ceased to be a
Covered Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person. Nothing contained herein shall affect any
rights to indemnification to which Trust personnel, other than Covered Persons,
and other Persons may be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of a
defense to any claim, action, suit, proceeding or investigation of the character
described in Subsection 9.02(a) may be paid by the Trust or Series from time to
time prior to final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over by him to the
Trust or Series if it is ultimately determined that he is not entitled to
indemnification under this Section 9.02; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such undertaking,
(ii) the Trust is insured against losses arising out of any such advance
payments or (iii) either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the matter, or independent legal counsel in
a written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled to
indemnification under this Section 9.02.
SECTION 9.03 SHAREHOLDERS. In case any Shareholder (including former
Shareholders) of any Series shall be held to be personally liable solely by
reason of the Shareholder being or having been a Shareholder of such Series and
not because of the Shareholder's acts or omissions or for some other reason, the
Shareholder (or the Shareholder's heirs, executors, administrators or other
legal representatives, or, in the case of a Shareholder other than an
individual, its corporate or other general successor) shall be entitled out of
the assets belonging to the applicable Series to be held harmless from and
indemnified against all loss and expense arising from such liability. The Trust,
on behalf of the affected Series, shall, upon request by the Shareholder, assume
the defense of any claim made against the Shareholder for any act or obligation
of the Series and satisfy any judgment thereon from the assets of the Series.
SECTION 9.04 INSURANCE. The Trust may purchase and maintain insurance
on behalf of any Covered Person or employee of the Trust or any Shareholder,
including any Covered Person or employee of the Trust who is or was serving at
the request of the Trust as a Trustee, officer or employee of another Person,
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Trustees would
have the power to indemnify him against such liability.
17
<PAGE>
ARTICLE X
OFFICERS
SECTION 10.01 OFFICERS AND APPOINTMENT.
(A) The officers of the Trust shall be a Chairman of the Board of
Trustees, a President, a Treasurer and a Secretary, each to be elected by the
Trustees, and such other officers as the Trustees may from time to time elect.
The Trustees may delegate to one or more officers or committees the power to
elect any subordinate officers or agents and to prescribe their respective terms
of office, authorities and duties. It shall not be necessary for any Trustee or
officer to be a holder of Shares. Two or more offices may be held by a single
person except the offices of President and Secretary. Subject to the provisions
of Section 10.04 hereof, the Chairman, the President, the Treasurer and the
Secretary shall each hold office until their successors are chosen and qualified
and all other officers shall hold office at the pleasure of the Trustees. Each
officer may receive such compensation for his services and reimbursement for his
expenses as may be fixed from time to time by the Trustees.
(b) The Trustees shall appoint from among their number a Chairman of
the Board of Trustees. When present, the Chairman shall preside at all meetings
of the Shareholders and the Trustees, and he may appoint a Trustee to preside at
such meetings in his absence. The Chairman shall perform such duties as the
Trustees may from time to time designate.
(c) The President shall be the chief executive officer of the Trust
and, subject to the direction of the Trustees, shall have general administration
of the business and policies of the Trust. Except as the Trustees may otherwise
order, the President shall have the power to grant, issue, execute or sign such
powers of attorney, proxies, agreements or other documents as may be deemed
advisable or necessary in the furtherance of the interests of the Trust or any
Series. The President shall also have the power to employ attorneys, accountants
and other advisors and agents and counsel for the Trust. The President shall
perform such duties additional to all of the foregoing as the Trustees may from
time to time designate.
(d) The Treasurer shall be the principal financial and accounting
officer of the Trust. The Treasurer shall make annual and semi-annual reports
regarding the business and condition of the Trust and each series, which reports
shall be preserved in Trust records and, if required by applicable law, filed
with any and all regulatory agencies, shall furnish such other reports regarding
the business and condition of the Trust as the Trustees may from time to time
require and shall execute all tax returns and other tax documents of the Trust.
The Treasurer shall perform such additional duties as the Trustees may from time
to time designate.
(e) The Secretary shall record in books kept for the purpose all votes
and proceedings of the Trustees and the Shareholders at their respective
meetings. The Secretary shall have the custody of the seal of the Trust. The
18
<PAGE>
Secretary shall perform such additional duties as the Trustees may from time to
time designate.
(f) Any Vice President of the Trust shall perform such duties as the
Trustees or the President may from time to time designate. At the request or in
the absence or disability of the President, the Vice President (or, if there are
two or more Vice Presidents, then the senior of the Vice Presidents present and
able to act) may perform all the duties of the President and, when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President.
(g) Any Assistant Treasurer of the Trust shall perform such duties as
the Trustees or the Treasurer may from time to time designate, and, in the
absence of the Treasurer, the senior Assistant Treasurer, present and able to
act, may perform all the duties of the Treasurer.
(h) Any Assistant Secretary of the Trust shall perform such duties as
the Trustees or the Secretary may from time to time designate, and, in the
absence of the Secretary, the senior Assistant Secretary, present and able to
act, may perform all the duties of the Secretary.
(i) The Trustees from time to time may appoint such other officers or
agents as they may deem advisable, each of whom shall have such title, hold
office for such period, have such authority and perform such duties as the
Trustees may determine.
SECTION 10.02 RESIGNATIONS. Any officer of the Trust may resign,
notwithstanding Section 10.01 hereof, by filing a written resignation with the
President, the Trustees or the Secretary, which resignation shall take effect on
being so filed or at such time as may be therein specified.
SECTION 10.03 SURETY BONDS. The Trustees may require any officer or
agent of the Trust to execute a bond (including without limitation, any bond
required by applicable law) to the Trust in such sum and with such surety or
sureties as the Trustees may determine, conditioned upon the faithful
performance of the officer's or agent's duties to the Trust including
responsibility for negligence and for the accounting of any of the Trust's
property, funds or securities that may come into the officer's or agent's hands.
SECTION 10.04 REMOVAL. Any officer may be removed from office by the
Trustees whenever in the judgment of the Trustees the best interest of the Trust
will be served thereby. In addition, any officer or agent appointed in
accordance with the provisions of Subsection 10.01(g) may be removed, either
with or without cause, by any officer upon whom such power of removal shall have
been conferred by the Trustees.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 TRUST NOT A PARTNERSHIP. It is hereby expressly declared
that a business trust and not a partnership is created hereby.
19
<PAGE>
SECTION 11.02 TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
in good faith and with reasonable care under the circumstances then prevailing
shall be binding. Subject to the provisions of Article IX hereof, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may obtain the advice of counsel or other experts with respect to the
meaning and operation of this Trust Instrument or any other matter and subject
to the provisions of Article IX hereof shall be under no liability for any act
or omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as Trustees nor any surety.
SECTION 11.03 REORGANIZATION. Notwithstanding anything else in this
Trust Instrument, the Trustees may (i) cause the Trust or any Series to merge or
consolidate with or into one or more entities, if the surviving or resulting
entity is the Trust or another company registered as an open-end, management
investment company under the 1940 Act, or a series thereof, (ii) cause any or
all Shares to be exchanged under or pursuant to any state or federal statute to
the extent permitted by law or (iii) cause the Trust to incorporate or organize
under the laws of any state, commonwealth, territory, dependency, colony or
possession of the United States of America or in any foreign jurisdiction.
Pursuant to and in accordance with the provisions of Section 3815(f) of
the Delaware Act, and notwithstanding anything to the contrary contained in this
Trust Instrument, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 11.03 may (i) effect any amendment to
the Trust Instrument or (ii) effect the adoption of a new trust instrument of
the Trust if the Trust is the surviving or resulting trust in the merger or
consolidation.
SECTION 11.04 TERMINATION OF TRUST, SERIES OR CLASS.
(a) This Trust, each Series and each Class thereof shall continue
without limitation of time but subject to the provisions of this Section 11.04.
The Trustees may provide that any Series or Class thereof shall have a limited
life and shall automatically terminate as determined by the Trustees.
(b) The Trustees may determine to terminate the operations of the
Trust, a Series or a Class thereof. After such determination, the Trustees may
require the redemption of all Shares of the Trust, Series or Class or take such
other action as they deem necessary in order to eliminate all Outstanding Shares
of the Trust, Series or Class, as the case may be.
(c) The Trustees may at any time, in contemplation of the termination
of the Trust or of a Series: (i) sell and convey all or any portion of the
assets of the Trust or the affected Series to another Person organized under the
laws of any jurisdiction, or to a separate series of shares thereof, for
adequate consideration, which may include the assumption of all outstanding and
contingent liabilities of the Trust or any affected Series, and which may
include shares of beneficial interest, stock or other ownership interest of such
Person or series thereof; or (ii) sell and convert into money all or any portion
of the assets of the Trust or the affected Series. Upon paying or making
reasonable provision for the payment of all known liabilities of the Trust or
20
<PAGE>
any affected Series, the Trustees shall distribute the remaining proceeds or
assets (as the case may be) ratably among the Shareholders of all Series or the
affected Series subject to Section 2.08 and the preferences, rights and
privileges of each Class of the Series.
(d) At any time that there are no Outstanding Shares of the Trust, a
Series or a Class, the Trustees may abolish the Trust, Series or Class, as
applicable, and, if applicable, the establishment and designation thereof.
(e) Upon completion of the distribution of the remaining proceeds or
the remaining assets of a Trust or a Series as provided in Subsection 11.04(c),
the Trust or any affected Series shall terminate. Upon the abolishment of the
Trust, a Series or a Class as provided in Subsection 11.04(d), the Trust, Series
or Class, as applicable, shall terminate. Upon such termination, the Trustees
and the Trust shall be discharged of any and all further liabilities and duties
hereunder and the right, title and interest of all parties with respect to the
Trust, Series or Class shall be canceled and discharged.
(f) Upon termination of the Trust, following completion of winding up
of its business, the Trustees shall cause a certificate of cancellation of the
Trust's certificate of trust to be filed in accordance with the Delaware Act,
which certificate of cancellation may be signed by any Trustee.
SECTION 11.05 DERIVATIVE ACTIONS. Except as required under applicable
law, no derivative action may be brought by Shareholders unless Shareholders
owning not less than one-half of the outstanding Shares of all Series of the
Trust, or of the affected Series or Classes of the Trust, as the case may be,
join in the bringing of the derivative action.
SECTION 11.06 PARTIES TO CONTRACT. Any contract may be entered into by
the Trust with any Person, even though one or more of the Trustees or officers
of the Trust may be (i) that Person, (ii) an officer, director, trustee,
shareholder, or member of that Person or (iii) financially interested or
otherwise affiliated with that Person, and no such contract shall be invalidated
or rendered void or voidable by reason of the existence of any relationship, nor
shall any Person holding such relationship be disqualified from voting on or
executing the same in his capacity as Shareholder and/or Trustee, nor shall any
Person holding such relationship be liable merely by reason of such relationship
for any loss or expense to the Trust under or by reason of said contract or
accountable for any profit realized directly or indirectly therefrom, provided
that the contract when entered into was not inconsistent with the provisions of
this Trust Instrument.
SECTION 11.07 FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this Trust Instrument and of each amendment hereof or Trust Instrument
supplemental hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. Anyone dealing with the Trust may rely on a
certificate by an officer or Trustee of the Trust as to whether or not any such
amendments or supplements have been made and as to any matters in connection
with the Trust hereunder, and with the same effect as if it were the original,
may rely on a copy certified by an officer or Trustee of the Trust to be a copy
of this Trust Instrument or of any such amendment or supplemental Trust
Instrument. In this Trust Instrument or in any such amendment or supplemental
Trust Instrument, references to this Trust Instrument, and all expressions like
21
<PAGE>
"herein," "hereof' and "hereunder," shall be deemed to refer to this Trust
Instrument as amended or affected by any such supplemental Trust Instrument. All
expressions like "his," "he" and "him," shall be deemed to include the feminine
and neuter, as well as masculine, genders. Headings are placed herein for
convenience of reference only and in case of any conflict, the text of this
Trust Instrument, rather than the headings, shall control. This Trust Instrument
may be executed in any number of counterparts, each of which shall be deemed an
original.
SECTION 11.08 GOVERNING LAW. The trust set forth in this instrument is
made in the State of Delaware, and the Trust and this Trust Instrument, and the
rights and obligations of the Trustees and Shareholders hereunder, are to be
governed by and construed and administered according to the Delaware Act and the
laws of said State; provided, however, that there shall not be applicable to the
Trust, the Trustees or this Trust Instrument (a) the provisions of Section 3540
of Title 12 of the Delaware Code or (b) any provisions of the laws (statutory or
common) of the State of Delaware (other than the Delaware Act) pertaining to
trusts which relate to or regulate (i) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges,
(ii) affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (iii) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (iv) fees or other sums payable to trustees, officers,
agents or employees of a trust, (v) the allocation of receipts and expenditures
to income or principal, (vi) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding of trust assets, or (vii) the
establishment of fiduciary or other standards of responsibilities or limitations
on the acts or powers of trustees, which are inconsistent with the limitations
or liabilities or authorities and powers of the Trustees set forth or referenced
in this Trust Instrument. The Trust shall be of the type commonly called a
"business trust," and without limiting the provisions hereof, the Trust may
exercise all powers that 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.
SECTION 11.09 AMENDMENTS. Except as specifically provided herein, the
Trustees may amend or otherwise supplement this Trust Instrument. The amendment
or supplement may be made by the Trustees executing an amendment, a Trust
Instrument supplemental hereto or an amended and restated Trust Instrument.
Shareholders shall have the right to vote only (a) on any amendment which would
adversely affect their right to vote granted in Section 7.01, (b) on any
amendment to this Section 11.09 that adversely affects the right of the
Shareholders to vote, (c) on any amendment as may be required by law and (d) on
any amendment submitted to Shareholders by the Trustees. Any amendment required
or permitted to be submitted to Shareholders which, as the Trustees determine,
shall affect the Shareholders of one or more Series or Classes thereof shall be
authorized by vote of the Shareholders of each Series or Class affected and no
vote of shareholders of a Series or Class not affected shall be required.
Notwithstanding anything else herein, any amendment to Article IX hereof shall
not limit the rights to indemnification or insurance provided therein with
22
<PAGE>
respect to action or omission of Covered Persons prior to such amendment.
SECTION 11.10 FISCAL YEAR. The fiscal year of the Trust (or of each
Series) shall end on a specified date as determined from time to time by the
Trustees.
SECTION 11.11 PROVISIONS IN CONFLICT WITH LAW. The provisions of this
Trust Instrument are severable, and if the Trustees shall determine that any of
such provisions is in conflict with any applicable law or regulation, the
conflicting provision shall be deemed never to have constituted a part of this
Trust Instrument; provided, however, that such determination shall not affect
any of the remaining provisions of this Trust Instrument or render invalid or
improper any action taken or omitted prior to such determination. If any
provision of this Trust Instrument shall be held invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall attach only to such
provision in such jurisdiction and shall not in any matter affect such
provisions in any other jurisdiction or any other provision of this Trust
Instrument in any jurisdiction.
SECTION 11.12 EXECUTION VIA FACSIMILE. Execution and delivery of any
consent, waiver, certificate, proxy or other document by Trustees, officers or
Shareholders of the Trust or parties contracting with the Trust may be
accomplished by facsimile or other similar electronic mechanism.
SECTION 11.13 PRINCIPAL OFFICE. The principal office of the Trust shall
be located in Portland, Maine, or such other location as the Trustees may from
time to time determine.
SECTION 11.14 INSPECTION OF BOOKS. The Trustees shall from time to time
determine whether and to what extent, and at what times and places, and under
what conditions and regulations the accounts and books of the Trust or any of
them shall be open to the inspection of Shareholders; and no Shareholder shall
have any right to inspect any account or book or document of the Trust except as
conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
SECTION 11.15 SEAL. The seal of the Trust shall be circular in form
bearing the inscription: "TrueCrossing Funds" -- 1999 The State Of Delaware.
23
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument as of date first written above.
D. Blaine Riggle, as Trustee
and not individually
Stephen J. Barrett, as Trustee
and not individually
David I. Goldstein, as Trustee
and not individually
<PAGE>
TRUECROSSING FUNDS
ANNEX A
As of November 15, 1999
Series Class Thereof Date Created
TrueCrossing Growth Fund Sole class July 29, 1999
Additional Characteristics and Rights
<PAGE>
EXHIBIT (D)
TRUECROSSING FUNDS
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of the 8th day of December, 1999, by and between
TrueCrossing Funds, a Delaware business trust, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust"),
and NewBridge Partners, LLC, a Delaware limited liability company with its
principal office and place of business at 535 Madison Avenue, 14th Floor, New
York, New York 10022 (the "Adviser").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end, management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series; and
WHEREAS, the Trust desires that the Adviser perform investment advisory
services for each series of the Trust listed in Appendix A hereto (each, a
"Fund" and collectively, the "Funds"), and the Adviser is willing to provide
those services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and the Adviser hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby employs Adviser, subject to the direction and
control of the Board, to manage the investment and reinvestment of the assets in
each Fund and, without limiting the generality of the foregoing, to provide
other services as specified herein. The Adviser accepts this employment and
agrees to render its services for the compensation set forth herein.
(b) In connection therewith, the Trust has delivered to the Adviser
copies of (i) the Trust's Trust Instrument, (ii) the Trust's Registration
Statement and all amendments thereto filed with the U.S. Securities and Exchange
Commission ("SEC") pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), or the 1940 Act (the "Registration Statement"), (iii) the
Trust's current Prospectuses and Statements of Additional Information of each
Fund (collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), and (iv) all procedures adopted by the Trust with respect to the
Funds (e.g., repurchase agreement procedures), and shall promptly furnish the
Adviser with all amendments of or supplements to the foregoing. The Trust shall
deliver to the Adviser (x) a certified copy of the resolution of the Board of
Trustees of the Trust (the "Board") appointing the Adviser and authorizing the
execution and delivery of this Agreement, (y) a copy of all proxy statements and
related materials relating to the Funds, and (z) any other documents, materials
or information that the Adviser shall reasonably request to enable it to perform
its duties pursuant to this Agreement.
1
<PAGE>
(c) The Adviser has delivered to the Trust (i) a copy of its Form ADV
as most recently filed with the SEC and (ii) a copy of its code of ethics
complying with the requirements of Rule 17j-1 under the 1940 Act (the "Code").
The Adviser shall promptly furnish the Trust with all amendments of or
supplements to the foregoing at least annually.
SECTION 2. DUTIES OF THE TRUST
In order for the Adviser to perform the services required by this
Agreement, the Trust (i) shall cause all service providers to the Trust to
furnish information to the Adviser, and assist the Adviser as may be required
and (ii) shall ensure that the Adviser has reasonable access to all records and
documents maintained by the Trust or any service provider to the Trust.
SECTION 3. DUTIES OF THE ADVISER
(a) The Adviser will make decisions with respect to all purchases and
sales of securities and other investment assets in each Fund. To carry out such
decisions, the Adviser is hereby authorized, as agent and attorney-in-fact for
the Trust, for the account of, at the risk of and in the name of the Trust, to
place orders and issue instructions with respect to those transactions of the
Funds. In all purchases, sales and other transactions in securities and other
investments for the Funds, the Adviser is authorized to exercise full discretion
and act for the Trust in the same manner and with the same force and effect as
the Trust might or could do with respect to such purchases, sales or other
transactions, as well as with respect to all other things necessary or
incidental to the furtherance or conduct of such purchases, sales or other
transactions.
Consistent with Section 28(e) of the Securities and Exchange Act of
1934, as amended, the Adviser may allocate brokerage on behalf of the Funds to
broker-dealers who provide research services. The Adviser may aggregate sales
and purchase orders of the assets of the Funds with similar orders being made
simultaneously for other accounts advised by the Adviser or its affiliates.
Whenever the Adviser simultaneously places orders to purchase or sell the same
asset on behalf of a Fund and one or more other accounts advised by the Adviser,
the orders will be allocated as to price and amount among all such accounts in a
manner believed to be equitable over time to each account.
(b) The Adviser will report to the Board at each meeting thereof as
requested by the Board all material changes in each Fund since the prior report,
and will also keep the Board informed of important developments affecting the
Trust, the Funds and the Adviser, and on its own initiative, will furnish the
Board from time to time with such information as the Adviser may believe
appropriate for this purpose, whether concerning the individual companies whose
securities are included in the Funds' holdings, the industries in which they
engage, the economic, social or political conditions prevailing in each country
in which the Funds maintain investments, or otherwise. The Adviser will also
furnish the Board with such statistical and analytical information with respect
to investments of the Funds as the Adviser may believe appropriate or as the
Board reasonably may request. In making purchases and sales of securities and
other investment assets for the Funds, the Adviser will bear in mind the
2
<PAGE>
policies set from time to time by the Board as well as the limitations imposed
by the Trust Instrument and Registration Statement, the limitations in the 1940
Act, the Securities Act, the Internal Revenue Code of 1986, as amended, and
other applicable laws and the investment objectives, policies and restrictions
of the Funds.
(c) The Adviser will from time to time employ or associate with such
persons as the Adviser believes to be particularly fitted to assist in the
execution of the Adviser's duties hereunder, the cost of performance of such
duties to be borne and paid by the Adviser. No obligation may be incurred on the
Trust's behalf in any such respect.
(d) The Adviser will report to the Board all material matters related
to the Adviser. On an annual basis, the Adviser shall report on its compliance
with its Code to the Board and upon the written request of the Trust, the
Adviser shall permit the Trust, or its representatives to examine the reports
required to be made to the Adviser under the Code. The Adviser will notify the
Trust of any change of control of the Adviser and any changes in the key
personnel who are either the portfolio manager(s) of the Fund or senior
management of the Adviser, in each case prior to or promptly after such change.
(e) The Adviser will maintain records relating to its portfolio
transactions and placing and allocation of brokerage orders as are required to
be maintained by the Trust under the 1940 Act. The Adviser shall prepare and
maintain, or cause to be prepared and maintained, in such form, for such periods
and in such locations as may be required by applicable law, all documents and
records relating to the services provided by the Adviser pursuant to this
Agreement required to be prepared and maintained by the Adviser or the Trust
pursuant to applicable law. To the extent required by law, the books and records
pertaining to the Trust which are in possession of the Adviser shall be the
property of the Trust, but the Adviser shall be entitled, in any event, to keep
copies of all such books and records as are property of the Trust. The Trust, or
its representatives, shall have access to such books and records at all times
during the Adviser's normal business hours. Upon the reasonable request of the
Trust, copies of any such books and records shall be provided promptly by the
Adviser to the Trust or its representatives.
(f) The Adviser will cooperate with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(g) The Adviser will provide the Funds' custodian and fund accountant
on each business day with such information relating to all transactions
concerning the Funds' assets as the custodian and fund accountant may reasonably
require. In accordance with procedures adopted by the Board, the Adviser is
responsible for assisting in the fair valuation of all Fund assets and will use
its reasonable efforts to arrange for the provision of prices from parties who
are not affiliated persons of the Adviser for each asset for which the Funds'
fund accountant does not obtain prices in the ordinary course of business.
3
<PAGE>
(h) The Adviser shall authorize and permit any of its directors,
officers and employees who may be elected as Trustees or officers of the Trust
to serve in the capacities in which they are elected.
(i) The Adviser shall have no duties or obligations pursuant to this
Agreement (other than the continuation of its preexisting duties and
obligations) during any period in which the Fund invests all (or substantially
all) of its investment assets in a registered, open-end management investment
company, or separate series thereof, in accordance with Section 12(d)(1)(E)
under the 1940 Act.
SECTION 4. COMPENSATION; EXPENSES
(a) In consideration of the foregoing, the Trust shall pay the Adviser,
with respect to each of Fund, a fee at an annual rate as listed in Appendix A
hereto. Such fees shall be accrued by the Trust daily and shall be payable
monthly in arrears on the first day of each calendar month for services
performed hereunder during the prior calendar month. If fees begin to accrue in
the middle of a month or if this Agreement terminates before the end of any
month, all fees for the period from that date to the end of that month or from
the beginning of that month to the date of termination, as the case may be,
shall be prorated according to the proportion that the period bears to the full
month in which the effectiveness or termination occurs. Upon the termination of
this Agreement with respect to a Fund, the Trust shall pay to the Adviser such
compensation as shall be payable prior to the effective date of termination.
(b) The Adviser may reimburse expenses of each Fund or waive its fees.
(c) No fee shall be payable hereunder with respect to a Fund during any
period in which the Fund invests all (or substantially all) of its investment
assets in a registered, open-end, management investment company, or separate
series thereof, in accordance with Section 12(d)(1)(E) under the 1940 Act.
(d) The Trust shall be responsible for and assumes the obligation for
payment of all of its expenses, including: (a) the fee payable under this
Agreement; (b) the fees payable to each administrator under an agreement between
the administrator and the Trust; (c) expenses of issue, repurchase and
redemption of Shares; (d) interest charges, taxes and brokerage fees and
commissions; (e) premiums of insurance for the Trust, its trustees and officers
and fidelity bond premiums; (f) fees and expenses of third parties, including
the Trust's independent accountant, custodian, transfer agent, dividend
disbursing agent and fund accountant; (g) fees of pricing, interest, dividend,
credit and other reporting services; (h) costs of membership in trade
associations; (i) telecommunications expenses; (j) funds transmission expenses;
(k) auditing, legal and compliance expenses; (l) costs of forming the Trust and
maintaining its existence; (m) costs of preparing, filing and printing the
Trust's Prospectuses, subscription application forms and shareholder reports and
other communications and delivering them to existing shareholders, whether of
record or beneficial; (n) expenses of meetings of shareholders and proxy
solicitations therefor; (o) costs of maintaining books of original entry for
portfolio and fund accounting and other required books and accounts, of
calculating the net asset value of Shares and of preparing tax returns; (p)
4
<PAGE>
costs of reproduction, stationery, supplies and postage; (q) fees and expenses
of the Trust's trustees and officers; (r) the costs of personnel (who may be
employees of the Adviser, an administrator or their respective affiliated
persons) performing services for the Trust; (s) costs of Board, Board committee,
shareholder and other corporate meetings; (t) SEC registration fees and related
expenses; (u) state, territory or foreign securities laws registration fees and
related expenses; and (v) all fees and expenses paid by the Trust in accordance
with any distribution or service plan or agreement related to similar manners.
SECTION 5. STANDARD OF CARE
(a) The Trust shall expect of the Adviser, and the Adviser will give
the Trust the benefit of, the Adviser's best judgment and efforts in rendering
its services to the Trust. The Adviser shall not be liable hereunder for any
mistake of judgment or in any event whatsoever, except for lack of good faith,
provided that nothing herein shall be deemed to protect, or purport to protect,
the Adviser against any liability to the Trust or to the Trust's security
holders to which the Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of the Adviser's
duties hereunder, or by reason of the Adviser's reckless disregard of its
obligations and duties hereunder.
(b) The Adviser shall not be responsible or liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties (other than those related to the Adviser's
employees), fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
SECTION 6. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to a Fund
immediately upon approval by a majority of the outstanding voting securities of
that Fund.
(b) This Agreement shall remain in effect with respect to a Fund for a
period of two years from the date of its effectiveness and shall continue in
effect for successive annual periods with respect to the Fund; provided that
such continuance is specifically approved at least annually (i) by the Board or
by the vote of a majority of the outstanding voting securities of the Fund, and,
in either case, (ii) by a majority of the Trust's trustees who are not parties
to this Agreement or interested persons of any such party (other than as
trustees of the Trust); provided further, however, that if the continuation of
this Agreement is not approved as to a Fund, the Adviser may continue to render
to that Fund the services described herein in the manner and to the extent
permitted by the 1940 Act and the rules and regulations thereunder.
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty, (i) by the Board or by a vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser or (ii) by the Adviser on 60 days' written notice to the
Trust. This Agreement shall terminate immediately upon its assignment.
5
<PAGE>
SECTION 7. ACTIVITIES OF THE ADVISER
Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the Adviser's right, or the
right of any of the Adviser's managers, officers or employees to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other corporation, trust, firm, individual or
association.
SECTION 8. REPRESENTATIONS OF ADVISER.
The Adviser represents and warrants that (i) it is either registered as
an investment adviser under the Investment Advisers Act of 1940, as amended
("Advisers Act") (and will continue to be so registered for so long as this
Agreement remains in effect) or exempt from registration under the Advisers Act,
(ii) is not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement, (iii) has met, and will seek to
continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
self-regulatory agency, necessary to be met in order to perform the services
contemplated by this Agreement, and (iv) will promptly notify the Trust of the
occurrence of any event that would disqualify the Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of the 1940
Act or otherwise.
SECTION 9. SUBADVISERS
At its own expense, the Adviser may carry out any of its obligations
under this Agreement by employing, subject to the direction and control of the
Board, one or more persons who are registered as investment advisers pursuant to
the Advisers Act or who are exempt from registration thereunder ("Subadvisers").
Each Subadviser's employment will be evidenced by a separate written agreement
approved by the Board and, if required, by the shareholders of the applicable
Fund. The Adviser shall not be liable hereunder for any act or omission of any
Subadviser, except to exercise good faith in the employment of the Subadviser
and except with respect to matters as to which the Adviser assumes
responsibility in writing.
SECTION 10. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and the Adviser agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Fund to which the Adviser's rights or claims relate in settlement of such rights
or claims, and not to the Trustees of the Trust or the shareholders of the
Funds.
6
<PAGE>
SECTION 11. MISCELLANEOUS
(a) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto and, if required by the 1940 Act, by a vote of a majority of the
outstanding voting securities of any Fund thereby affected.
(b) No amendment to this Agreement or the termination of this Agreement
with respect to a Fund shall affect this Agreement as it pertains to any other
Fund, nor shall any such amendment require the vote of the shareholders of any
other Fund.
(c) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(d) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(e) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(f) This Agreement may be executed by the parties hereto in any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(g) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(h) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(i) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(j) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(k) No affiliated person, employee, agent, director, officer or manager
of the Adviser shall be liable at law or in equity for the Adviser's obligations
under this Agreement.
7
<PAGE>
(l) The terms "vote of a majority of the outstanding voting
securities", "interested person", "affiliated person," "control" and
"assignment" shall have the meanings ascribed thereto in the 1940 Act.
(m) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
TRUECROSSING FUNDS
By:/s/ Stephen J. Barrett
Stephen J. Barrett
Vice President
NEWBRIDGE PARTNERS, LLC
By:/s/James B. Cowperthwait
James B. Cowperthwait
President
<PAGE>
TRUECROSSING FUNDS
INVESTMENT ADVISORY AGREEMENT
APPENDIX A
FEE AS A % OF THE ANNUAL
FUND OF THE TRUST AVERAGE DAILY NET ASSETS OF THE FUND
TrueCrossing Growth Fund 0.70
-A1-
<PAGE>
EXHIBIT (E)
TRUECROSSING FUNDS
DISTRIBUTION AGREEMENT
AGREEMENT made as of the 8th day of December, 1999, by and between
TrueCrossing Funds, a Delaware business trust, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust"),
and Forum Fund Services, LLC, a Delaware limited liability company with its
principal office and place of business at Two Portland Square, Portland, Maine
04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest, no par value ("Shares") in separate
series and classes; and
WHEREAS, Forum is registered under the Securities Exchange Act of 1934,
as amended ("1934 Act"), as a broker-dealer and is engaged in the business of
selling shares of registered investment companies either directly to purchasers
or through other financial intermediaries;
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement being herein
referred to as a "Fund," and collectively as the "Funds") and the Trust may in
the future offer shares of various classes of each Fund as listed in Appendix A
hereto (each such class subsequently established by the Trust in a Fund being
herein referred to as a "Class," and collectively as the "Classes"); and
WHEREAS, the Trust desires that Forum offer, as principal underwriter,
the Shares of each Fund and Class thereof to the public and Forum is willing to
provide those services on the terms and conditions set forth in this Agreement
in order to promote the growth of the Funds and facilitate the distribution of
the Shares;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum do hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
distributor of the Shares for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of (I) the
Trust's Trust Instrument, (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended ("Securities Act"),
or the 1940 Act ("Registration Statement"), (iii) the current prospectuses and
statements of additional information of each Fund and Class thereof
(collectively, as currently in effect and as amended or supplemented, the
"Prospectus"), (iv) each current plan of distribution or similar document
adopted by the Trust under Rule 12b-1 under the 1940 Act ("Plan") and each
current shareholder service plan or similar document adopted by the Trust
("Service Plan"); and (iv) all procedures adopted by the Trust with respect to
the Funds (e.g., repurchase agreement procedures), and shall promptly furnish
Forum with all amendments of or supplements to the foregoing. The Trust shall
1
<PAGE>
deliver to Forum a certified copy of the resolution of the Board of Trustees of
the Trust (the "Board") appointing Forum and authorizing the execution and
delivery of this Agreement.
SECTION 2. EXCLUSIVE NATURE OF DUTIES
Forum shall be the exclusive representative of the Trust to act as
distributor of the Funds except that the rights given under this Agreement to
Forum shall not apply to: (i) Shares issued in connection with the merger,
consolidation or reorganization of any other investment company or series or
class thereof with a Fund or Class thereof; (ii) a Fund's acquisition by
purchase or otherwise of all or substantially all of the assets or stock of any
other investment company or series or class thereof; (iii) the reinvestment in
Shares by a Fund's shareholders of dividends or other distributions; or (iv) any
other offering by the Trust of securities to its shareholders (collectively
"exempt transactions").
SECTION 3. OFFERING OF SHARES
(a) Forum shall have the right to buy from the Trust the Shares needed to fill
unconditional orders for unsold Shares of the Funds as shall then be effectively
registered under the Securities Act placed with Forum by investors or selected
dealers or selected agents (each as defined in Section 11 hereof) acting as
agent for their customers or on their own behalf. Alternatively, Forum may act
as the Trust's agent, to offer, and to solicit offers to subscribe to, unsold
Shares of the Funds as shall then be effectively registered under the Securities
Act. Forum will promptly forward all orders and subscriptions to the Trust. The
price that Forum shall pay for Shares purchased from the Trust shall be the net
asset value per Share, determined as set forth in Section 3(c) hereof, used in
determining the public offering price on which the orders are based. Shares
purchased by Forum are to be resold by Forum to investors at the public offering
price, as set forth in Section 3(b) hereof, or to selected dealers or selected
agents acting as agent for their customers that have entered into agreements
with Forum pursuant to Section 11 hereof or acting on their own behalf. The
Trust reserves the right to sell Shares directly to investors through
subscriptions received by the Trust, but no such direct sales shall affect the
sales charges due to Forum hereunder.
(b) The public offering price of the Shares of a Fund, i.e., the price per Share
at which Forum or selected dealers or selected agents may sell Shares to the
public or to those persons eligible to invest in Shares as described in the
applicable Prospectus, shall be the public offering price determined in
accordance with the then currently effective Prospectus of the Fund or Class
thereof under the Securities Act relating to such Shares. The public offering
price shall not exceed the net asset value at which Forum, when acting as
principal, is to purchase such Shares, plus, in the case of Shares for which an
initial sales charge is assessed, an initial charge equal to a specified
percentage or percentages of the public offering price of the Shares as set
forth in the current Prospectus relating to the Shares. In the case of Shares
for which an initial sales charge may be assessed, Shares may be sold to certain
classes of persons at reduced sales charges or without any sales charge as from
time to time set forth in the current Prospectus relating to the Shares. The
Trust will advise Forum of the net asset value per Share at each time as the net
asset value per Share shall have been determined by the Trust and at such other
times as Forum may reasonably request.
2
<PAGE>
(c) The net asset value per Share of each Fund or Class thereof shall be
determined by the Trust, or its designated agent, in accordance with and at the
times indicated in the applicable Prospectus on each Fund business day in
accordance with the method set forth in the Prospectus and guidelines
established by the Trust's Board.
(d) The Trust reserves the right to suspend the offering of Shares of a Fund or
of any Class thereof at any time in the absolute discretion of the Board, and
upon notice of such suspension Forum shall cease to offer Shares of the Funds or
Classes thereof specified in the notice.
(e) The Trust, or any agent of the Trust designated in writing to Forum by the
Trust, shall be promptly advised by Forum of all purchase orders for Shares
received by Forum and all subscriptions for Shares obtained by Forum as agent
shall be directed to the Trust for acceptance and shall not be binding until
accepted by the Trust. Any order or subscription may be rejected by the Trust;
provided, however, that the Trust will not arbitrarily or without reasonable
cause refuse to accept or confirm orders or subscriptions for the purchase of
Shares. The Trust or its designated agent will confirm orders and subscriptions
upon their receipt, will make appropriate book entries and, upon receipt by the
Trust or its designated agent of payment thereof, will issue such Shares in
certificated or uncertificated form pursuant to the instructions of Forum. Forum
agrees to cause such payment and such instructions to be delivered promptly to
the Trust or its designated agent.
SECTION 4. REPURCHASE OR REDEMPTION OF SHARES BY THE TRUST
(a) Any of the outstanding Shares of a Fund or Class thereof may be tendered for
redemption at any time, and the Trust agrees to redeem or repurchase the Shares
so tendered in accordance with its obligations as set forth in the Trust
Instrument and the Prospectus relating to the Shares. The price to be paid to
redeem or repurchase the Shares of a Fund of Class thereof shall be equal to the
net asset value calculated in accordance with the provisions of Section 3(b)
hereof less, in the case of Shares for which a deferred sales charge is
assessed, a deferred sales charge equal to a specified percentage or percentages
of the net asset value of those Shares as from time to time set forth in the
Prospectus relating to those Shares or their cost, whichever is less. Shares of
a Fund or Class thereof for which a deferred sales charge may be assessed and
that have been outstanding for a specified period of time may be redeemed
without payment of a deferred sales charge as from time to time set forth in the
Prospectus relating to those Shares.
(b) The Trust or its designated agent shall pay (i) the total amount of the
redemption price consisting of the redemption price less any applicable deferred
sales charge to the redeeming shareholder or its agent and (ii) except as may be
otherwise required by the Rules of Fair Practice (the "Rules") of the National
Association of Securities Dealers Regulation, Inc. (the "NASD") and any
interpretations thereof, any applicable deferred sales charges to Forum in
accordance with Forum's instructions on or before the fifth business day (or
such other earlier business day as is customary in the investment company
industry) subsequent to the Trust or its agent having received the notice of
redemption in proper form.
(c) Redemption of Shares or payment therefor may be suspended at times when the
New York Stock Exchange is closed for any reason other than its customary
weekend or holiday closings, when trading thereon is restricted, when an
emergency exists as a result of which disposal by the Trust of securities owned
3
<PAGE>
by a Fund is not reasonably practicable or it is not reasonably practicable for
the Trust fairly to determine the value of a Fund's net assets, or during any
other period when the SEC so requires or permits.
SECTION 5. DUTIES AND REPRESENTATIONS OF FORUM
(a) Forum shall use reasonable efforts to sell Shares of the Funds upon the
terms and conditions contained herein and in the then current Prospectus. Forum
shall devote reasonable time and effort to effect sales of Shares but shall not
be obligated to sell any specific number of Shares. The services of Forum to the
Trust hereunder are not to be deemed exclusive, and nothing herein contained
shall prevent Forum from entering into like arrangements with other investment
companies so long as the performance of its obligations hereunder is not
impaired thereby.
(b) In selling Shares of the Funds, Forum shall use its best efforts in all
material respects duly to conform with the requirements of all federal and state
laws relating to the sale of the Shares. None of Forum, any selected dealer, any
selected agent or any other person is authorized by the Trust to give any
information or to make any representations other than as is contained in a
Fund's Prospectus or any advertising materials or sales literature specifically
approved in writing by the Trust or its agents.
(c) Forum shall adopt and follow procedures for the confirmation of sales to
investors and selected dealers or selected agents, the collection of amounts
payable by investors and selected dealers or selected agents on such sales, and
the cancellation of unsettled transactions, as may be necessary to comply with
the requirements of the NASD.
(d) Forum represents and warrants to the Trust that:
(i) It is a limited liability company duly organized and existing and in
good standing under the laws of the State of Delaware and it is duly
qualified to carry on its business in the State of Maine;
(ii) It is empowered under applicable laws and by its Operating Agreement to
enter into and perform this Agreement;
(iii) All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement;
(iv) It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement;
(v) This Agreement, when executed and delivered, will constitute a legal,
valid and binding obligation of Forum, enforceable against Forum in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties;
4
<PAGE>
(vi) It is registered under the 1934 Act with the SEC as a broker-dealer, it
is a member in good standing of the NASD, it will abide by the rules
and regulations of the NASD, and it will notify the Trust if its
membership in the NASD is terminated or suspended; and
(vii) The performance by Forum of its obligations hereunder does not and will
not contravene any provision of its Articles of Incorporation.
(e) Notwithstanding anything in this Agreement, including the Appendices, to the
contrary, Forum makes no warranty or representation as to the number of selected
dealers or selected agents with which it has entered into agreements in
accordance with Section 11 hereof, as to the availability of any Shares to be
sold through any selected dealer, selected agent or other intermediary or as to
any other matter not specifically set forth herein.
SECTION 6. DUTIES AND REPRESENTATIONS OF THE TRUST
(a) The Trust shall furnish to Forum copies of all financial statements and
other documents to be delivered to shareholders or investors at least two Fund
business days prior to such delivery and shall furnish Forum copies of all other
financial statements, documents and other papers or information which Forum may
reasonably request for use in connection with the distribution of Shares. The
Trust shall make available to Forum the number of copies of the Funds'
Prospectuses as Forum shall reasonably request.
(b) The Trust shall take, from time to time, subject to the approval of the
Board and any required approval of the shareholders of the Trust, all action
necessary to fix the number of authorized Shares (if such number is not limited)
and to register the Shares under the Securities Act, to the end that there will
be available for sale the number of Shares as reasonably may be expected to be
sold pursuant to this Agreement.
(c) The Trust shall execute any and all documents, furnish to Forum any and all
information, otherwise use its best efforts to take all actions that may be
reasonably necessary and cooperate with Forum in taking any action as may be
necessary to register or qualify Shares for sale under the securities laws of
the various states of the United States and other jurisdictions ("States") as
Forum shall designate (subject to approval by the Trust); provided that Forum
shall not be required to register as a broker-dealer or file a consent to
service of process in any State and neither the Trust nor any Fund or Class
thereof shall be required to qualify as a foreign corporation, trust or
association in any State. Any registration or qualification may be withheld,
terminated or withdrawn by the Trust at any time in its discretion. Forum shall
furnish such information and other material relating to its affairs and
activities as may be required by the Trust in connection with such registration
or qualification.
(d) The Trust represents and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good standing
under the laws of the State of Delaware;
(ii) It is empowered under applicable laws and by its Trust Instrument to enter
into and perform this Agreement;
5
<PAGE>
(iii)All proceedings required by the Trust Instrument have been taken to
authorize it to enter into and perform its duties under this Agreement;
(iv) It is an open-end management investment company registered with the SEC
under the 1940 Act;
(v) All Shares, when issued, shall be validly issued, fully paid and
non-assessable;
(vi) This Agreement, when executed and delivered, will constitute a legal, valid
and binding obligation of the Trust, enforceable against the Trust in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
the rights and remedies of creditors and secured parties;
(vii)The performance by Forum of its obligations hereunder does not and will
not contravene any provision of its Operating Agreement.
(viii) The Registration statement will be effective and will remain effective
with respect to all Shares of the Funds and Classes thereof being offered
for sale;
(ix) The Registration Statement and Prospectuses have been or will be, as the
case may be, carefully prepared in conformity with the requirements of the
Securities Act and the rules and regulations thereunder;
(x) The Registration Statement and Prospectuses contain or will contain all
statements required to be stated therein in accordance with the Securities
Act and the rules and regulations thereunder; all statements of fact
contained or to be contained in the Registration Statement or Prospectuses
are or will be true and correct at the time indicated or on the effective
date as the case may be; and neither the Registration Statement nor any
Prospectus, when they shall become effective or be authorized for use, will
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of Shares;
(xi) It will from time to time file such amendment or amendments to the
Registration Statement and Prospectuses as, in the light of then-current
and then-prospective developments, shall, in the opinion of its counsel, be
necessary in order to have the Registration Statement and Prospectuses at
all times contain all material facts required to be stated therein or
necessary to make any statements therein not misleading to a purchaser of
Shares ("Required Amendments");
(xii)It shall not file any amendment to the Registration Statement or
Prospectuses without giving Forum reasonable advance notice thereof;
provided, however, that nothing contained in this Agreement shall in any
way limit the Trust's right to file at any time such amendments to the
Registration Statement or Prospectuses, of whatever character, as the Trust
may deem advisable, such right being in all respects absolute and
unconditional; and
6
<PAGE>
(xiii) Any amendment to the Registration Statement or Prospectuses hereafter
filed will, when it becomes effective, contain all statements required to
be stated therein in accordance with the 1940 Act and the rules and
regulations thereunder; all statements of fact contained in the
Registration Statement or Prospectuses will, when such amendment becomes
effective, be true and correct at the time indicated or on the effective
date as the case may be; and no such amendment, when it becomes effective,
will include an untrue statement of a material fact or will omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares.
SECTION 7. STANDARD OF CARE
(a) Forum shall use its best judgment and reasonable efforts in rendering
services to the Trust under this Agreement but shall be under no duty to take
any action except as specifically set forth herein or as may be specifically
agreed to by Forum in writing. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any error of judgment or mistake of law, for any
loss arising out of any investment, or for any action or inaction of Forum in
the absence of bad faith, willful misfeasance or gross negligence in the
performance of Forum's duties or obligations under this Agreement or by reason
or Forum's reckless disregard of its duties and obligations under this Agreement
(b) Forum shall not be liable for any action taken or failure to act in good
faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably believes
in good faith was transmitted by the person or persons authorized by
the Board to give such oral instruction (Forum shall have no duty or
obligation to make any inquiry or effort of certification of such oral
instruction);
(iii) any written instruction or certified copy of any resolution of the
Board, and Forum may rely upon the genuineness of any such document or
copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) as to genuineness, any signature, instruction, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order, or other document reasonably believed
in good faith by Forum to be genuine and to have been signed or
presented by the Trust or other proper party or parties;
and Forum shall not be under any duty or obligation to inquire into the validity
or invalidity or authority or lack thereof of any statement, oral or written
instruction, resolution, signature, request, letter of transmittal, certificate,
opinion of counsel, instrument, report, notice, consent, order, or any other
document or instrument which Forum reasonably believes in good faith to be
genuine.
7
<PAGE>
(c) Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum's duties caused, directly or indirectly, by the failure or delay of
such third parties in performing their respective duties or cooperating
reasonably and in a timely manner with Forum.
SECTION 8. INDEMNIFICATION
(a) The Trust will indemnify, defend and hold Forum, its employees, agents,
directors and officers and any person who controls Forum within the meaning of
section 15 of the Securities Act or section 20 of the 1934 Act ("Forum
Indemnitees") free and harmless from and against any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character
(including the cost of investigating or defending such claims, demands, actions,
suits or liabilities and any reasonable counsel fees incurred in connection
therewith) which any Forum Indemnitee may incur, under the Securities Act, or
under common law or otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectuses or arising out of or based upon any alleged omission to state a
material fact required to be stated in any one thereof or necessary to make the
statements in any one thereof not misleading, unless such statement or omission
was made in reliance upon, and in conformity with, information furnished in
writing to the Trust in connection with the preparation of the Registration
Statement or exhibits to the Registration Statement by or on behalf of Forum
("Forum Claims").
After receipt of Forum's notice of termination under Section 13(e), the
Trust shall indemnify and hold each Forum Indemnitee free and harmless from and
against any Forum Claim; provided, that the term Forum Claim for purposes of
this sentence shall mean any Forum Claim related to the matters for which Forum
has requested amendment to the Registration Statement and for which the Trust
has not filed a Required Amendment, regardless of whether any statement in or
omission from the Registration Statement was made in reliance upon, or in
conformity with, information furnished to the Trust by or on behalf of Forum.
(b) The Trust may assume the defense of any suit brought to enforce any Forum
Claim and may retain counsel ("counsel" shall be interpreted to include either
an individual attorney or his or her law firm) of good standing chosen by the
Trust and approved by Forum, which approval shall not be withheld unreasonably.
The Trust shall only be required to pay for the fees and expenses of one
counsel; the costs of any additional counsel shall be borne by the retaining
party. The Trust shall advise Forum that it will assume the defense of the suit
and retain counsel within ten (10) days of receipt of the notice of the claim.
If the Trust assumes the defense of any such suit and retains counsel, the
defendants shall bear the fees and expenses of any additional counsel that they
retain. If the Trust does not assume the defense of any such suit, or if Forum
does not approve of counsel chosen by the Trust or has been advised that it may
have available defenses or claims that are not available to or conflict with
those available to the Trust, the Trust will reimburse any Forum Indemnitee
8
<PAGE>
named as defendant in such suit for the reasonable fees and expenses of any
counsel that person retains. A Forum Indemnitee shall not settle or confess any
claim without the prior written consent of the Trust, which consent shall not be
unreasonably withheld or delayed.
(c) Forum will indemnify, defend and hold the Trust and its several officers and
trustees (collectively, the "Trust Indemnitees"), free and harmless from and
against any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character (including the cost of investigating or defending
such claims, demands, actions, suits or liabilities and any reasonable counsel
fees incurred in connection therewith), but only to the extent that such claims,
demands, actions, suits, judgments, liabilities, losses, damages, costs,
charges, reasonable counsel fees and other expenses result from, arise out of or
are based upon:
(i) any alleged untrue statement of a material fact contained in the
Registration Statement or Prospectus or any alleged omission of a
material fact required to be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in
reliance upon, and in conformity with, information furnished to the
Trust in writing in connection with the preparation of the Registration
Statement or Prospectus by or on behalf of Forum; or
(ii) any act of, or omission by, Forum or its sales representatives that
does not conform to the standard of care set forth in Section 7 of this
Agreement ("Trust Claims").
(d) Forum may assume the defense of any suit brought to enforce any Trust Claim
and may retain counsel of good standing chosen by Forum and approved by the
Trust, which approval shall not be withheld unreasonably. Forum shall advise the
Trust that it will assume the defense of the suit and retain counsel within ten
(10) days of receipt of the notice of the claim. If Forum assumes the defense of
any such suit and retains counsel, the defendants shall bear the fees and
expenses of any additional counsel that they retain. If Forum does not assume
the defense of any such suit, or if Trust does not approve of counsel chosen by
Forum or has been advised that it may have available defenses or claims that are
not available to or conflict with those available to Forum, Forum will reimburse
any Trust Indemnitee named as defendant in such suit for the reasonable fees and
expenses of any counsel that person retains. A Trust Indemnitee shall not settle
or confess any claim without the prior written consent of Forum, which consent
shall not be unreasonably withheld or delayed.
(e) The Trust's and Forum's obligations to provide indemnification under this
Section is conditioned upon the Trust or Forum receiving notice of any action
brought against a Forum Indemnitee or Trust Indemnitee, respectively, by the
person against whom such action is brought within twenty (20) days after the
summons or other first legal process is served. Such notice shall refer to the
person or persons against whom the action is brought. The failure to provide
such notice shall not relieve the party entitled to such notice of any liability
that it may have to any Forum Indemnitee or Trust Indemnitee except to the
extent that the ability of the party entitled to such notice to defend such
action has been materially adversely affected by the failure to provide notice.
9
<PAGE>
(f) The provisions of this Section and the parties' representations and
warranties in this Agreement shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any Forum Indemnitee or
Trust Indemnitee and shall survive the sale and redemption of any Shares made
pursuant to subscriptions obtained by Forum. The indemnification provisions of
this Section will inure exclusively to the benefit of each person that may be a
Forum Indemnitee or Trust Indemnitee at any time and their respective successors
and assigns (it being intended that such persons be deemed to be third party
beneficiaries under this Agreement).
(g) Each party agrees promptly to notify the other party of the commencement of
any litigation or proceeding of which it becomes aware arising out of or in any
way connected with the issuance or sale of Shares.
(h) Nothing contained herein shall require the Trust to take any action contrary
to any provision of its Trust Instrument or any applicable statute or regulation
or shall require Forum to take any action contrary to any provision of its
Articles of Incorporation or Bylaws or any applicable statute or regulation;
provided, however, that neither the Trust nor Forum may amend their Trust
Instrument or Operating Agreement, respectively, in any manner that would result
in a violation of a representation or warranty made in this Agreement.
(i) Nothing contained in this section shall be construed to protect Forum
against any liability to the Trust or its security holders to which Forum would
otherwise be subject by reason of its failure to satisfy the standard of care
set forth in Section 7 of this Agreement.
SECTION 9. NOTIFICATION BY THE TRUST
The Trust shall advise Forum immediately: (i) of any request by the SEC
for amendments to the Trust's Registration Statement or Prospectus or for
additional information; (ii) in the event of the issuance by the SEC of any stop
order suspending the effectiveness of the Trust's Registration Statement or any
Prospectus or the initiation of any proceedings for that purpose; (iii) of the
happening of any material event which makes untrue any statement made in the
Trust's then current Registration Statement or Prospectus or which requires the
making of a change in either thereof in order to make the statements therein not
misleading; and (iv) of all action of the SEC with respect to any amendments to
the Trust's Registration Statement or Prospectus which may from time to time be
filed with the Commission under the 1940 Act or the Securities Act.
SECTION 10. COMPENSATION; EXPENSES
(a) In consideration of Forum's services in connection with the distribution of
Shares of each Fund and Class thereof, Forum shall receive: (i) any applicable
sales charge assessed upon investors in connection with the purchase of Shares;
(ii) from the Trust, any applicable contingent deferred sales charge ("CDSC")
assessed upon investors in connection with the redemption of Shares; (iii) from
the Trust, the distribution service fees with respect to the Shares of those
Classes as designated in Appendix A for which a Plan is effective (the
"Distribution Fee"); and (iv) from the Trust, the shareholder service fees with
respect to the Shares of those Classes as designated in Appendix A for which a
Service Plan is effective (the "Shareholder Service Fee"). The Distribution Fee
and Shareholder Service Fee shall be accrued daily by each applicable Fund or
10
<PAGE>
Class thereof and shall be paid monthly as promptly as possible after the last
day of each calendar month but in any event on or before the fifth (5th) Fund
business day after month-end, at the rate or in the amounts set forth in
Appendix A and, as applicable, the Plan(s). The Trust grants and transfers to
Forum a general lien and security interest in any and all securities and other
assets of a Fund now or hereafter maintained in an account at the Fund's
custodian on behalf of the Fund to secure any Distribution Fees and Shareholder
Service Fees owed Forum by the Trust under this Agreement.
(b) The Trust shall cause its transfer agent (the "Transfer Agent") to withhold,
from redemption proceeds payable to holders of Shares of the Funds and the
Classes thereof, all CDSCs properly payable by the shareholders in accordance
with the terms of the applicable Prospectus and shall cause the Transfer Agent
to pay such amounts over to Forum as promptly as possible after the settlement
date for each redemption of Shares.
(c) Except as specified in Sections 8 and 10(a), Forum shall be entitled to no
compensation or reimbursement of expenses for the services provided by Forum
pursuant to this Agreement. Forum may receive compensation from NewBridge
Partners, LLC ("Adviser") for its services hereunder or for additional services
all as may be agreed to between the Adviser and Forum. Notwithstanding anything
in this Agreement to the contrary, to the extent Forum receives compensation
from the Adviser that is disclosed to the Board, the Trust will indemnify,
defend and hold each Forum Indemnitees free and harmless from and against any
and all claims, demands, actions, suits, judgments, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of every
nature and character (including the cost of investigating or defending such
claims, demands, actions, suits or liabilities and any reasonable counsel fees
incurred in connection therewith) related in any way to such payment.
(d) The Trust shall be responsible and assumes the obligation for payment of all
the expenses of the Funds, including fees and disbursements of its counsel and
auditors, in connection with the preparation and filing of the Registration
Statement and Prospectuses (including but not limited to the expense of setting
in type the Registration Statement and Prospectuses and printing sufficient
quantities for internal compliance, regulatory purposes and for distribution to
current shareholders).
(e) The Trust shall bear the cost and expenses (i) of the registration of the
Shares for sale under the Securities Act; (ii) of the registration or
qualification of the Shares for sale under the securities laws of the various
States; (iii) if necessary or advisable in connection therewith, of qualifying
the Trust, the Funds or the Classes thereof (but not Forum) as an issuer or as a
broker or dealer, in such States as shall be selected by the Trust and Forum
pursuant to Section 6(C) hereof; and (iv) payable to each State for continuing
registration or qualification therein until the Trust decides to discontinue
registration or qualification pursuant to Section 6(c) hereof. Forum shall pay
all expenses relating to Forum's broker-dealer qualification.
SECTION 11. SELECTED DEALER AND SELECTED AGENT AGREEMENTS
Forum shall have the right to enter into selected dealer agreements
with securities dealers of its choice ("selected dealers") and selected agent
agreements with depository institutions and other financial intermediaries of
its choice ("selected agents") for the sale of Shares and to fix therein the
portion of the sales charge, if any, that may be allocated to the selected
dealers or selected agents; provided, that the Trust shall approve the forms of
11
<PAGE>
agreements with selected dealers or selected agents and shall review the
compensation set forth therein. Shares of each Fund or Class thereof shall be
resold by selected dealers or selected agents only at the public offering
price(s) set forth in the Prospectus relating to the Shares. Within the United
States, Forum shall offer and sell Shares of the Funds only to such selected
dealers as are members in good standing of the NASD.
SECTION 12. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may:
(i) prepare or assist in the preparation of periodic reports to shareholders
and regulatory bodies such as the SEC;
(ii) provide information typically supplied in the investment company industry
to companies that track or report price, performance or other information
regarding investment companies; and
(iii)release such other information as approved in writing by the Trust, which
approval shall not be unreasonably withheld;
provided, however, that Forum may release any information regarding the Trust
without the consent of the Trust if Forum reasonably believes that it may be
exposed to civil or criminal legal proceedings for failure to comply, when
requested to release any information by duly constituted authorities or when so
requested by the Trust.
SECTION 13. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund on the later
of (i) the date first above written or (ii) the date on which the Trust's
Registration Statement relating to Shares of the Fund becomes effective. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof insofar as such
Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund for a period
of one year from its effectiveness and thereafter shall continue in effect with
respect to a Fund until terminated; provided, that continuance is specifically
approved at least annually (i) by the Board or by a vote of a majority of the
outstanding voting securities of the Fund and (ii) by a vote of a majority of
Trustees of the Trust (I) who are not parties to this Agreement or interested
persons of any such party (other than as Trustees of the Trust) and (II) with
respect to each class of a Fund for which there is an effective Plan, who do not
have any direct or indirect financial interest in any such Plan applicable to
the class or in any agreements related to the Plan, cast in person at a meeting
called for the purpose of voting on such approval.
(c) This Agreement may be terminated at any time with respect to a Fund, without
the payment of any penalty, (i) by the Board or by a vote of a majority of the
outstanding voting securities of the Fund or, with respect to each class of a
12
<PAGE>
Fund for which there is an effective Plan, a majority of Trustees of the Trust
who do not have any direct or indirect financial interest in any such Plan or in
any agreements related to the Plan, on 60 days' written notice to Forum or (ii)
by Forum on 60 days' written notice to the Trust.
(d) This Agreement shall automatically terminate upon its assignment and upon
the termination of Forum's membership in the NASD.
(e) If the Trust shall not file a Required Amendment within fifteen days
following receipt of a written request from Forum to do so, Forum may, at its
option, terminate this Agreement immediately.
(f) The obligations of Sections 5(d), 6(d), 8, 9 and 10 shall survive any
termination of this Agreement.
SECTION 14. NOTICES
Any notice required or permitted to be given hereunder by either party
to the other shall be deemed sufficiently given if personally delivered or sent
by telegram, facsimile or registered, certified or overnight mail, postage
prepaid, addressed by the party giving such notice to the other party at the
last address furnished by the other party to the party giving such notice, and
unless and until changed pursuant to the foregoing provisions hereof each such
notice shall be addressed to the Trust or Forum, as the case may be, at their
respective principal places of business.
SECTION 15. ACTIVITIES OF FORUM
Except to the extent necessary to perform Forum's obligations
hereunder, nothing herein shall be deemed to limit or restrict Forum's right, or
the right of any of Forum's employees, agents, officers or directors who may
also be a trustee, officer or employee of the Trust, or affiliated persons of
the Trust to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
trust, firm, individual or association.
SECTION 16. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The Trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 17. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
13
<PAGE>
(b) No provisions of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by both parties
hereto.
(c) This Agreement shall be governed by, and the provisions of this Agreement
shall be construed and interpreted under and in accordance with, the laws of the
State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof,
whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be illegal, in
conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience only and are
not to be used to construe or interpret this Agreement.
(h) Notwithstanding any other provision of this Agreement, the parties agree
that the assets and liabilities of each Fund are separate and distinct from the
assets and liabilities of each other Fund and that no Fund shall be liable or
shall be charged for any debt, obligation or liability of any other Fund,
whether arising under this Agreement or otherwise.
(i) No affiliated person, employee, agent, officer or director of Forum shall be
liable at law or in equity for Forum's obligations under this Agreement.
(j) Each of the undersigned warrants and represents that they have full power
and authority to sign this Agreement on behalf of the party indicated and that
their signature will bind the party indicated to the terms hereof.
(k) The terms "vote of a majority of the outstanding voting securities,"
"interested person," "affiliated person" and "assignment" shall have the
meanings ascribed thereto in the 1940 Act.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
TRUECROSSING FUNDS
By:/s/ James B. Cowperthwait
James B. Cowperthwait
Chairman
FORUM FUND SERVICES, LLC
By:/s/ David I. Goldstein
David I. Goldstein
Secretary
<PAGE>
TRUECROSSING FUNDS
DISTRIBUTION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF DECEMBER 8, 1999
TrueCrossing Growth Fund
<PAGE>
EXHIBIT (G)(1)
TRUECROSSING FUNDS
CUSTODIAN AGREEMENT
AGREEMENT made as of the 8th day of December, 1999, by and between
TrueCrossing Funds, a Delaware business trust, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust")
and Forum Trust, LLC, a Maine limited liability company doing business as a
nondepository trust company with its principal office and place of business at
Two Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act") and
may offer one or more series of shares, each of which shall represent an
interest in a separate portfolio of Securities and Cash (each as hereinafter
defined) (all such existing and additional series now or hereafter listed on
Exhibit A being hereafter referred to individually as a "Portfolio," and
collectively, as the "Portfolios"); and
WHEREAS, Forum has entered into a certain Master Subcustodian Agreement
with Bankers Trust Company ("Bankers Trust") dated as of April 20, 1999 (the
"Master Subcustodian Agreement") under which Bankers Trust provides certain
sub-custody services on behalf of the Portfolios to Forum; and
WHEREAS, Trust wishes to retain Forum to provide certain custodial
services to Trust for the benefit of the Portfolios, and Forum is willing to
provide such services;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF FORUM
Trust, on behalf of each Portfolio, hereby employs Forum as custodian
of all assets of each Portfolio that are delivered to and accepted by Forum or
any Subcustodian (as that term is defined in Section 4) (the "Property")
pursuant to the terms and conditions set forth herein. For purposes of this
Agreement, "delivery" of Property shall include the acquisition by Trust of a
security entitlement (as that term is defined in the New York Uniform Commercial
Code ("UCC")). Without limitation, such Property shall include stocks and other
equity interests of every type, evidences of indebtedness, other instruments
representing same or rights or obligations to receive, purchase, deliver or sell
same and other non-cash investment property of a Portfolio ("Securities") and
cash from any source and in any currency ("Cash"), provided that Forum shall
have the right, in its sole discretion, to refuse to accept as Property any
property of a Portfolio that Forum considers not to be appropriate or in proper
form for deposit for any reason. Forum shall not be responsible for any property
of a Portfolio held or received by Trust or others and not delivered to Forum or
any Subcustodian.
1
<PAGE>
SECTION 2. MAINTENANCE OF SECURITIES AND CASH AT FORUM AND
SUBCUSTODIAN LOCATIONS
Pursuant to Instructions (as hereinafter defined in Section 15), Trust
shall direct Forum to (a) settle Securities transactions and maintain Cash in
the country or other jurisdiction in which the principal trading market for such
Securities is located, where such Securities are to be presented for payment or
where such Securities are acquired and (b) maintain Cash and cash equivalents in
such countries in amounts reasonably necessary to effect Trust's transactions in
such Securities. Instructions to settle Securities transactions in any country
shall be deemed to authorize the holding of such Securities and Cash in that
country.
SECTION 3. CUSTODY ACCOUNT
Forum agrees to establish and maintain one or more custody accounts on
its books each in the name of Trust on behalf of a Portfolio (each, an
"Account") for any and all Property from time to time received and accepted by
Forum or any Subcustodian for the account of such Portfolio. Upon delivery by
Trust to Forum of any acceptable Property belonging to a Portfolio, Trust shall,
by Instructions, specifically indicate in which Portfolio such Property belongs
or if such Property belongs to more than one Portfolio, shall allocate such
Property to the appropriate Portfolios, and Forum shall allocate such Property
to the Accounts in accordance with the Instructions. Trust, on behalf of each
Portfolio, acknowledges (i) its responsibility as a principal for all of its
obligations to Forum arising under or in connection with this Agreement,
notwithstanding, that it may be acting on behalf of other persons, and (ii)
warrants its authority to deposit in the appropriate Account any Property
received therefor by Forum or a Subcustodian and to give, and authorize others
to give, instructions relative thereto. Forum may deliver securities of the same
class in place of those deposited in the Account.
Forum shall hold, keep safe and protect as custodian for each Account
all Property in such Account and, to the extent such Property constitutes
"financial assets" as defined in the UCC, shall maintain those financial assets
in such Account as security entitlements in favor of the Portfolio in whose name
the Account is maintained. All transactions, including, but not limited to,
foreign exchange transactions, involving the Property shall be executed or
settled solely in accordance with Instructions (which shall specifically
reference the Account for which such transaction is being settled), except that
until Forum receives Instructions to the contrary, Forum will:
(a) Collect all interest and dividends and all other income and payments,
whether paid in cash or in kind, on the Property, as the same become payable and
credit the same to the appropriate Account;
(b) Present for payment all Securities held in an Account that are called,
redeemed or retired or otherwise become payable and all coupons and other income
items that call for payment upon presentation to the extent that Forum or
Subcustodian is actually aware of such opportunities and hold the cash received
in such Account pursuant to this Agreement;
(c) (i) Exchange Securities where the exchange is purely ministerial (including,
without limitation, the exchange of temporary securities for those in definitive
form and the exchange of warrants, or other documents of entitlement to
2
<PAGE>
securities, for the Securities themselves) and (ii) when notification of a
tender or exchange offer (other than ministerial exchanges described in (i)
above) is received for an Account, endeavor to receive Instructions, provided
that if such Instructions are not received in time for Forum to take timely
action, no action shall be taken with respect thereto;
(d) Whenever notification of a rights entitlement or a fractional interest
resulting from a rights issue, stock dividend or stock split is received for an
Account and such rights entitlement or fractional interest bears an expiration
date, if after endeavoring to obtain Instructions such Instructions are not
received in time for Forum to take timely action or if actual notice of such
actions was received too late to seek Instructions, sell in the discretion of
Forum (which sale Trust hereby authorizes Forum to make) such rights entitlement
or fractional interest and credit the Account with the net proceeds of such
sale;
(e) Execute in Trust's name for an Account, whenever Forum deems it appropriate,
such ownership and other certificates as may be required to obtain the payment
of income from the Property in such Account;
(f) Pay for each Account, any and all taxes and levies in the nature of taxes
imposed on interest, dividends or other similar income on the Property in such
Account by any governmental authority. In the event there is insufficient Cash
available in such Account to pay such taxes and levies, Forum shall notify Trust
of the amount of the shortfall and Trust may, or may cause the Portfolio to, at
its option, deposit additional Cash in such Account or take steps to have
sufficient Cash available. Trust, on behalf of the Portfolios agrees, when and
if requested by Forum and required in connection with the payment of any such
taxes, to cooperate with Forum in furnishing information, executing documents or
otherwise;
(g) Appoint brokers and agents for any of the ministerial transactions involving
the Securities described in (a) - (f), including, without limitation, affiliates
of Forum or any Subcustodian; and
(h) In the event of any loss of Securities or Cash, use its best efforts to
ascertain the circumstances relating to such loss and promptly report the same
to Trust.
Forum shall provide cash management services to Trust as referenced in
the "Instructions Regarding Cash Management Services", dated December 8, 1999,
and as may be amended from time to time.
3
<PAGE>
SECTION 4. SUBCUSTODIANS AND SECURITIES SYSTEMS
Trust authorizes and instructs Forum to maintain the Property in each
Account directly in one of its United States ("U.S.") branches or indirectly
through custody accounts that have been established by Forum with the following
other securities intermediaries: (a) another U.S. bank or trust company
(including Bankers Trust pursuant to the Master Subcustodian Agreement) or
branch thereof located in the U.S. that is itself qualified under the 1940 Act,
to act as custodian, or a non-U.S. branch of Forum or of any U.S. Subcustodian,
or a U.S. securities depository or clearing agency or system in which Forum or a
U.S. Subcustodian participates (individually, a "U.S. Securities System") or (b)
one of Forum's majority-owned non-U.S. subsidiaries, a majority-owned subsidiary
of a U.S. Subcustodian or a non-U.S. bank or trust company, acting as custodian
(individually, a "non-U.S. Subcustodian"; U.S. Subcustodians and non-U.S.
Subcustodians, collectively, "Subcustodians"), or a non-U.S. depository or
clearing agency or system in which Forum or any Subcustodian participates
(individually, a "non-U.S. Securities System"; U.S. Securities System and
non-U.S. Securities System, collectively, "Securities System"), provided that in
each case in which a U.S. Subcustodian or U.S. Securities System is employed,
Forum shall notify Trust of the appointment of such U.S. Subcustodian or U.S.
Securities System; provided further that in each case in which a non-U.S.
Subcustodian or non-U.S. Securities System is employed, (a) such Subcustodian or
Securities System either is (I) a "qualified U.S. bank" as defined by Rule 17f-5
under the 1940 Act ("Rule 17f-5") or (ii) an "eligible foreign custodian" within
the meaning of Rule 17f-5 or such Subcustodian or Securities System is the
subject of an order granted by the U.S. Securities and Exchange Commission
("SEC") exempting such agent or the subcustody arrangements thereto from all or
part of the provisions of Rule 17f-5, and (b) the identity of the non-U.S.
Subcustodian and the agreement between Forum and such non-U.S. Subcustodian has
been approved by Instructions; it being understood that Forum shall have no
liability or responsibility for determining whether the approval of any
Subcustodian or Securities System by Instructions is proper under the 1940 Act
or any rule or regulation thereunder. Exhibit D attached hereto lists all
Subcustodians and Securities Systems that have been approved by Instructions.
Notwithstanding Section 20 hereof or any other provision hereof to the contrary,
Exhibit D may be amended solely by the delivery to Forum of Instructions
pursuant to Section 15 hereof.
Upon receipt of Instructions from Trust, Forum agrees to cease the
employment of any Subcustodian or Securities System with respect to Trust, and
if desirable and practicable, appoint a replacement Subcustodian or securities
system in accordance with the provisions of this Section. In addition, Forum
may, at any time in its discretion, upon written notification to Trust,
terminate the employment of any Subcustodian or Securities System.
Forum shall deliver to Trust annually a certificate stating: (a) the
identity of each non-U.S. Subcustodian and non-U.S. Securities System then
acting on behalf of Forum and the name and address of the governmental agency or
other regulatory authority that supervises or regulates such non-U.S
Subcustodian and non-U.S. Securities System; (b) the countries in which each
non-U.S. Subcustodian or non-U.S. Securities System is located; and (c) if
requested by Trust's Board of Trustees or if the Board of Trustees responsible
for any Portfolio directly approves its foreign custody arrangements, such other
information relating to such non-U.S. Subcustodians and non-U.S. Securities
Systems as may reasonably be requested by Trust to ensure compliance with Rule
4
<PAGE>
17f-5. If requested by the Trust's Board of Trustees or if the Board of Trustees
directly approves its foreign custody arrangements, Forum also shall furnish
annually to Forum information concerning such non-U.S. Subcustodians and
non-U.S. Securities Systems similar in kind and scope as that furnished to Trust
in connection with the initial approval of this Agreement. Forum agrees to
promptly notify Trust if, in the normal course of its custodial activities,
Forum learns of a material adverse change in the financial condition of a
non-U.S. Subcustodian or a non-U.S. Securities System suffers a material loss of
Property, or Forum has reason to believe that any non-U.S. Subcustodian or
non-U.S. Securities System has ceased to be a qualified U.S. bank or an eligible
foreign custodian each within the meaning of Rule 17f-5 or has ceased to be
subject to an exemptive order from the SEC.
SECTION 5. USE OF SUBCUSTODIAN
With respect to Property in an Account that is maintained by Forum
through a Subcustodian employed pursuant to Section 4:
(a) Forum will identify on its books as belonging to Trust on behalf of a
Portfolio, any Property maintained through such Subcustodian.
(b) Any Property in the Account held by a Subcustodian will be subject only to
the instructions of Forum or its agents.
(c) Property deposited with a Subcustodian will be maintained in an account
holding only assets for customer of Forum.
(d) Any agreement Forum shall enter into with a non-U.S. Subcustodian with
respect to maintaining Property shall require that (i) the Account will be
adequately indemnified or its losses adequately insured; (ii) the Property so
maintained is not subject to any right, charge, security interest, lien or claim
of any kind in favor of such Subcustodian or its creditors except a claim for
payment in accordance with such agreement for its safe custody or
administration; (iii) beneficial ownership of Securities be freely transferable
without the payment of money or value other than for safe custody or
administration; (iv) adequate records will be maintained identifying the
Property maintained pursuant to such Agreement as belonging to Trust or as being
held by Forum, on behalf of Trust or all its customers; (v) to the extent
permitted by applicable law, officers of or auditors employed by, or other
representatives of or designated by, Forum, including the independent public
accountants of or designated by, Trust be given access to the books and records
of such Subcustodian relating to Property or confirmation of the contents of
those records; and (vi) Forum on behalf of Trust will receive periodic reports
with respect to the safekeeping of the Property, including but not limited to
notification of any transfer of Property into or out of an Account.
5
<PAGE>
SECTION 6. USE OF SECURITIES SYSTEM
With respect to Property in the Account(s) that is maintained by Forum
or any Subcustodian through a Securities System employed pursuant to Section 4:
(a) Forum shall, and the Subcustodian will be required by its agreement with
Forum to, identify on its books such Property as being maintained for the
account of Forum or Subcustodian for its customers.
(b) Any Property maintained through a Securities System for the account of Forum
or a Subcustodian will be subject only to the instructions of Forum or such
Subcustodian, as the case may be.
(c) Property deposited with a Securities System will be maintained in an account
holding only assets for customers of Forum or Subcustodian, as the case may be,
unless precluded by applicable law, rule, or regulation.
(d) Forum shall provide Trust with any report obtained by Forum or Subcustodian
on the Securities System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the Securities System.
SECTION 7. AGENTS
Forum may at any time or times in its sole discretion appoint (or
remove), as its agent to carry out such of the provisions of this Agreement as
Forum may from time to time direct any other U.S. bank or trust company which is
itself qualified under the 1940 Act to act as custodian, including Bankers
Trust; PROVIDED, however, that the appointment of any agent shall not relieve
Forum of its responsibilities or liabilities hereunder. Forum shall provide
reasonable notice to Trust of the appointment or removal of any agent.
SECTION 8. RECORDS, OWNERSHIP OF PROPERTY, STATEMENTS, OPINIONS
OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
(a) The ownership of the Property, whether maintained directly by Forum or
indirectly through a Subcustodian or a Securities System as authorized herein,
shall be clearly recorded on Forum's books as belonging to the appropriate
Account and not to the Forum. Forum shall keep accurate and detailed accounts of
all investments, receipts, disbursements and other transactions for each
Account. All accounts, books and records of Forum relating thereto shall be open
to inspection and audit at all reasonable times during normal business hours by
any person designated by Trust. All such accounts shall be maintained and
preserved in the form reasonably requested by Trust. Forum will supply to Trust
from time to time, as mutually agreed upon, a statement in respect to any
Property in an Account maintained by Forum or by a Subcustodian. In the absence
of the filing in writing with Forum by Trust of exceptions or objections to any
such statement within sixty (60) days of the mailing thereof, Trust shall be
deemed to have approved such statement and in such case or upon written approval
of Trust of any such statement, such statement shall be presumed to be for all
purposes correct with respect to all information set forth therein.
6
<PAGE>
(b) Forum shall take all reasonable action as Trust may request to obtain from
year to year favorable opinions from Trust's independent certified public
accountants with respect to Forum's activities hereunder in connection with the
preparation of Trust's registration statement on Form N-1A and Trust's Form
N-SAR or other periodic reports to the SEC and with respect to any other
requirements of the SEC.
(c) At the request of Trust, Forum shall deliver, and shall cause the
Subcustodians to deliver, to Trust a written report prepared by Forum's
independent certified public accountants with respect to the services provided
by Forum under this Agreement, including, without limitation, Forum's accounting
system, internal accounting control and procedures for safeguarding Cash and
Securities, including Cash and Securities deposited and/or maintained in a
securities system or with a Subcustodian. Such report shall be of sufficient
scope and in sufficient detail as may reasonably be required by Trust and as may
reasonably be obtained by Forum.
(d) Trust may elect to participate in any of the electronic on-line service and
communications systems offered by Forum or a Subcustodian that can provide
Trust, on a daily basis, with the ability to view on-line or to print in hard
copy various reports of Account activity and of Securities and/or Cash being
held in any Account. To the extent that such service shall include market values
of Securities in an Account, Trust hereby acknowledges that Forum or such
Subcustodian now obtains and may in the future obtain information on such values
from outside sources that Forum or such Subcustodian considers to be reliable,
and Trust agrees that Forum and such Subcustodian (i) does not verify or
represent or warrant either the reliability of such service nor the accuracy or
completeness of any such information furnished or obtained by or through such
service and (ii) shall be subject to the standard of care set forth in Section
16 of this Agreement in selecting and utilizing such service or furnishing any
information derived therefrom.
SECTION 9. HOLDING OF SECURITIES, NOMINEES, ETC.
Securities in an Account that are maintained by Forum or any
Subcustodian may be held directly by such entity in the name of Trust or in
bearer form or maintained, on behalf of a Portfolio, in Forum's or
Subcustodian's name or in the name of Forum's or Subcustodian's nominee.
Securities that are maintained through a Subcustodian or which are eligible for
deposit in a Securities System as provided above may be maintained with the
Subcustodian or the Securities System in an account for Forum's or
Subcustodian's customers, unless prohibited by law, rule, or regulation. Forum
or Subcustodian, as the case may be, may combine certificates representing
Securities held in an Account with certificates of the same issue held by Forum
or Subcustodian as fiduciary or as a custodian. In the event that any Securities
in the name of Forum or its nominee or held by a Subcustodian and registered in
the name of such Subcustodian or its nominee are called for partial redemption
by the issuer of such Security, Forum may, subject to the rules or regulations
pertaining to allocation of any Securities System in which such Securities have
been deposited, allot, or cause to be allotted, the called portion of the
respective beneficial holders of such class of security in any manner Forum
deems to be fair and equitable. Securities maintained with a Securities System
shall be maintained subject to the rules of that Securities System governing the
rights and obligations among the Securities System and its participants.
7
<PAGE>
SECTION 10. PROXIES, ETC.
With respect to any proxies, notices, reports or other communications
pertaining to any of the Securities in any Account, Forum shall perform such
services and only such services as are (i) set forth in Section 3 of this
Agreement, (ii) described in the applicable Service Standards (the "Proxy
Service"), and (iii) as may otherwise be agreed upon between Forum and Trust.
The liability and responsibility of Forum in connection with the Proxy Service
referred to in (ii) of the immediately preceding sentence and in connection with
any additional services which Forum and Trust may agree upon as provided in
(iii) of the immediately preceding sentence shall be as set forth in the
description of the Proxy Service and as may be agreed upon by Forum and Trust in
connection with the furnishing of any such additional service and shall not be
affected by any other term of this Agreement. Neither Forum nor its nominees or
agents shall vote upon or in respect of any of the Securities in an Account,
execute any form of proxy to vote thereon, or give any consent or take any
action (except as provided in Section 3) with respect thereto except upon the
receipt of Instructions.
SECTION 11. SEGREGATED ACCOUNT
To assist Trust in complying with the requirements of the 1940 Act and
the rules and regulations thereunder, Forum shall, upon receipt of Instructions,
establish and maintain a segregated account or accounts on its books for and on
behalf of a Portfolio.
SECTION 12. SETTLEMENT PROCEDURES
Securities will be transferred, exchanged or delivered by Forum or a
Subcustodian upon receipt by Forum of Instructions that include all information
required by Forum. Settlement and payment for Securities received for an Account
and delivery of Securities out of such Account may be effected in accordance
with the customary or established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering Securities to the purchaser
thereof or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment for such
Securities from such purchaser or dealer, as such practices and procedures may
be modified or supplemented in accordance with the standard operating procedures
of Forum in effect from time to time for that jurisdiction or market. Forum
shall not be liable for any loss which results from effecting transactions in
accordance with the customary or established securities trading or securities
processing practices and procedures in the applicable jurisdiction or market.
Forum or a Subcustodian may settle purchases and sales against, or
credit income to, an Account, and Forum may, at its sole option upon written
notice to Trust, reverse such credits or debits to the appropriate Account in
the event that the transaction does not settle, or the income is not received in
a timely manner, and Trust agrees to hold Forum harmless from any losses that
may result therefrom. With respect to the activities of Bankers Trust as
Subcustodian under the Master Subcustodian Agreement, such credits and
reversals, if any, shall be on a contractual basis, as outlined in the Bankers
Trust Service Standards, as described below and provided to Trust by Forum.
8
<PAGE>
The applicable Service Standards mean the Global Guide, the Policies
and Standards Manual, and any other documents issued by the Forum, Bankers Trust
and other Subcustodians from time to time specifying the procedures for
communicating with a Trust, the terms of any additional services to be provided
to a Trust, and such other matters as may be agreed between the parties time to
time. Copies of the current Service Standards have been delivered to Trust.
SECTION 13. CONDITIONAL CREDITS
(a) Notwithstanding any other provision of this Agreement, Forum or a
Subcustodian shall not be required to comply with any Instructions to settle the
purchase of any securities for the Account unless there are sufficient
immediately available funds in the relevant currency in the Account; provided
that, if, after all expenses, debits and withdrawals of Cash in the relevant
currency ("Debits") applicable to the Account have been made and if after all
Conditional Credits, as defined below, applicable to the Account have become
final entries as set forth in (c) below, the amount of immediately available
funds of the relevant currency in such Account is at least equal to the
aggregate purchase price of all securities for which Forum has received
Instructions to settle on that date ("Settlement Date"), Forum, upon settlement,
shall credit the Securities to the Account by making a final entry on its books
and records.
(b) Notwithstanding the foregoing, if after all Debits applicable to the Account
have been made, the amount of immediately available funds in a given currency in
such Account are less than the aggregate purchase price in such currency of all
securities for which Forum has received Instructions to settle on any Settlement
Date, Forum, upon settlement, may credit the securities to the Account by making
a conditional entry on its books and records ("Conditional Credit"), pending
receipt of sufficient immediately available funds in the relevant currency in
the Account.
(c) If, within a reasonable time from the posting of a Conditional Credit and
after all Debits applicable to the Account have been made, immediately available
funds in the relevant currency at least equal to the aggregate purchase price in
such currency of all securities subject to a Conditional Credit on a Settlement
Date are deposited into the Account, Forum shall make the Conditional Credit a
final entry on its books and records. In such case, Trust shall be liable to
Forum only for late charges at a rate that Forum customarily charges for similar
extensions of credit.
(d) If (i) within a reasonable time from the posting of a Conditional Credit,
immediately available funds at least equal to the resultant Debit on a
Settlement Date are not deposited in the Account, or (ii) any Proceeding (as
defined below) shall occur, Forum may sell such of the Securities subject to the
Conditional Credit as it selects in its sole discretion and shall apply the net
proceeds of such sale to cover such Debit, including related late charges, and
any remaining proceeds shall be credited to the Account. If such proceeds are
insufficient to satisfy such Debit in full, Trust shall continue to be liable to
Forum for any shortfall. Forum shall make the Conditional Credit a final entry
on its books as to the Securities not required to be sold to satisfy such Debit.
Pending payment in full by Trust of the purchase price for Securities subject to
a Conditional Credit, and Forum's making a Conditional Credit a final entry on
its books, and, unless consented to by Forum, Trust shall have no right to give
further Instructions in respect of Securities subject to a Conditional Credit.
Forum shall have the sole discretion to determine which Securities shall be
9
<PAGE>
deemed to have been paid for by Trust out of funds available in the Account. Any
such Conditional Credit may be reversed (and any corresponding Debit shall be
canceled) by Forum unless and until Forum makes a final entry on its books
crediting such Securities to the Account. The term "Proceeding" shall mean any
insolvency, bankruptcy, receivership, reorganization or similar proceeding
relating to Trust, whether voluntary or involuntary.
(e) Trust agrees that it will not use the Account to facilitate the purchase of
securities without sufficient funds in the Account (which funds shall not
include the expected proceeds of the sale of the purchased securities).
SECTION 14. PERMITTED TRANSACTIONS
Trust agrees that it will cause transactions to be made pursuant to
this Agreement only upon Instructions in accordance with Section 15 (but subject
to Section 3) and only for the purposes listed below.
(a) In connection with the purchase or sale of Securities at prices as confirmed
by Instructions.
(b) When Securities are called, redeemed or retired, or otherwise become
payable.
(c) In exchange for or upon conversion into other securities alone or other
securities and cash pursuant to any plan or merger, consolidation,
reorganization, recapitalization or readjustment.
(d) Upon conversion of Securities pursuant to their terms into other securities.
(e) Upon exercise of subscription, purchase or other similar rights represented
by Securities.
(f) For the payment of interest, taxes, management or supervisory fees,
distributions or operating expenses.
(g) In connection with any borrowings by Trust requiring a pledge of Securities,
but only against receipt of amounts borrowed or in order to satisfy requirements
for additional or substitute collateral.
(h) In connection with any loans, but only against receipt of collateral as
specified in Instructions which shall reflect any restrictions applicable to
Trust.
(i) For the purpose of redeeming shares of the capital stock of Trust against
delivery of the shares to be redeemed to Forum, a Subcustodian or Trust's
transfer agent.
(j) For the purpose of redeeming in kind shares of Trust against delivery of the
shares to be redeemed to Forum, a Subcustodian or Trust's transfer agent.
10
<PAGE>
(k) For delivery in accordance with the provisions of any agreement among Trust,
on behalf of a Portfolio, the Portfolio's investment adviser and a broker-dealer
registered under the Securities Exchange Act of 1934 and a member of the
National Association of Securities Dealers, Inc., relating to compliance with
the rules of The Options Clearing Corporation, the Commodities Futures Trading
Commission or of any registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by Trust.
(l) For release of Securities to designated brokers under covered call options,
provided, however, that such Securities shall be released only upon payment to
Forum of monies for the premium due and a receipt for the Securities which are
to be held in escrow. Upon exercise of the option, or at expiration, Forum will
receive the Securities previously deposited from broker. Forum will act strictly
in accordance with Instructions in the delivery of Securities to be held in
escrow and will have no responsibility or liability for any such Securities
which are not returned promptly when due other than to make proper request for
such return.
(m) For spot or forward foreign exchange transactions to facilitate security
trading or receipt of income from Securities related transactions.
(n) Upon the termination of this Agreement as set forth in Section 21.
(o) For other proper purposes.
Trust agrees that Forum and any Subcustodian shall have no obligation
to verify the purpose for which a transaction is being effected.
SECTION 15. INSTRUCTIONS
The term "Instructions" means instructions from Trust in respect of any
of Forum's duties hereunder that have been received by Forum at its address set
forth in Section 22 below (i) in writing (including, without limitation,
facsimile transmission) or by tested telex signed or given by such one or more
person or persons as Trust shall have from time to time authorized in writing to
give the particular class of Instructions in question and whose name and (if
applicable) signature and office address have been filed with Forum; or (ii)
which have been transmitted electronically through an electronic on-line service
and communications system offered by Forum or other electronic instruction
system acceptable to Forum; or (iii) a telephonic or oral communication by one
or more persons as Trust shall have from time to time authorized to give the
particular class of Instructions in question and whose name has been filed with
Forum; or (iv) upon receipt of such other form of instructions as Trust may from
time to time authorize in writing and which Forum has agreed in writing to
accept. Instructions in the form of oral communications shall be confirmed by
Trust by tested telex or writing in the manner set forth in clause (I) above,
but the lack of such confirmation shall in no way affect any action taken by
Forum in reliance upon such oral instructions prior to Forum's receipt of such
confirmation. Instructions may relate to specific transactions or to types or
classes of transactions, and may be in the form of standing instructions.
11
<PAGE>
Forum shall have the right to assume in the absence of notice to the
contrary from Trust that any person whose name is on file with Forum pursuant to
this Section has been authorized by Trust to give the Instructions in question
and that such authorization has not been revoked. Forum may act upon and
conclusively rely on, without any liability to Trust or any other person or
entity for any losses resulting therefrom, any Instructions reasonably believed
by it to be furnished by the proper person or persons as provided above.
SECTION 16. STANDARD OF CARE
Forum shall be responsible for the performance of only such duties as
are set forth herein or contained in Instructions given to Forum that are not
contrary to the provisions of this Agreement. Forum will use reasonable care and
diligence with respect to the safekeeping of Property in each Account and,
except as otherwise expressly provided herein, in carrying out its obligations
under this Agreement. So long as and to the extent that it has exercised
reasonable care and diligence, Forum shall not be responsible for the title,
validity or genuineness of any Property or other property or evidence of title
thereto received by it or delivered by it pursuant to this Agreement and shall
be held harmless in acting upon, and may conclusively rely on, without liability
for any loss resulting therefrom, any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and to be signed or
furnished by the proper party or parties, including, without limitation,
Instructions, and shall be indemnified by Trust for any losses, damages, costs
and expenses (including, without limitation, reasonable fees and expenses of
counsel) incurred by Forum and arising out of action taken or omitted with
reasonable care by Forum hereunder or under any Instructions. Forum shall be
liable to Trust for any act or omission to act of any Subcustodian to the same
extent as if Forum committed such act itself. With respect to a Securities
System, Forum shall only be responsible or liable for losses arising from
employment of such Securities System caused by Forum's own failure to exercise
reasonable care; provided that in the event of any such loss, Forum shall take
all reasonable steps to enforce such claims as it may have against the
Securities System to protect the interests of the Trust.
In the event of any loss to Trust by reason of the failure of Forum or
a Subcustodian to utilize reasonable care, Forum shall be liable to Trust to the
extent of Trust's actual damages at the time such loss was discovered
(including, without limitation, reasonable fees and expenses of counsel) without
reference to any special conditions or circumstances. In no event shall Forum be
liable for any consequential or special damages.
Forum shall be entitled to rely, and may act, on advice of counsel (who
may be counsel for Forum or Trust) on all matters and shall be without liability
for any action reasonably taken or omitted in good faith pursuant to such
advice, provided that with respect to the performance of any action or omission
of any action upon such advice, the Forum shall be required to conform to the
standard of care set forth in this Section 16.
In the event Trust subscribes to an electronic on-line service and
communications system offered by Forum, Trust shall be fully responsible for the
security of its connecting terminal, access thereto and the proper and
authorized use thereof and the initiation and application of continuing
effective safeguards with respect thereto and agrees to defend and indemnify
Forum and hold Forum harmless from and against any and all losses, damages,
costs and expenses (including the fees and expenses of counsel) incurred by
12
<PAGE>
Forum as a result of any improper or unauthorized use of such terminal by Trust
or by any others.
All collections of funds or other property paid or distributed in
respect of Securities in an Account, including funds involved in third-party
foreign exchange transactions, shall be made at the risk of Trust.
Subject to the exercise of reasonable care, Forum shall have no
liability for any loss occasioned by delay in the actual receipt of notice by
Forum or by a Subcustodian of any payment, redemption or other transaction
regarding Securities in each Account in respect of which Forum has agreed to
take action as provided in Section 3 hereof. Forum shall not be liable for any
loss resulting from, or caused by, or resulting from acts of governmental
authorities (whether de jure or de facto), including, without limitation,
nationalization, expropriation, and the imposition of currency restrictions;
devaluations of or fluctuations in the value of currencies; changes in laws and
regulations applicable to the banking or securities industry; market conditions
that prevent the orderly execution of securities transactions or affect the
value of Property; acts of war, terrorism, insurrection or revolution; strikes
or work stoppages; the inability of a local clearing and settlement system to
settle transactions for reasons beyond the control of Forum; hurricane, cyclone,
earthquake, volcanic eruption, nuclear fusion, fission or radioactivity, or
other acts of God.
Forum shall have no liability in respect of any loss, damage or expense
suffered by Trust, insofar as such loss, damage or expense arises from the
performance of Forum's duties hereunder by reason of Forum's reliance upon
records that were maintained for Trust by entities other than Forum prior to
Forum's employment under this Agreement.
If Forum does not exercise reasonable care, Forum shall indemnify Trust
for any losses, damages, costs and expenses (including, without limitation, the
fees and expenses of counsel) incurred by Trust and arising out of action taken
or omitted without reasonable care by Forum hereunder or under any Instructions.
SECTION 17. INVESTMENT LIMITATIONS AND LEGAL OR CONTRACTUAL
RESTRICTIONS OR REGULATIONS
Neither Forum nor any Subcustodians shall be liable to Trust or a
Portfolio and Trust agrees to indemnify Forum, all Subcustodians and their
nominees, for any loss, damage or expense suffered or incurred by Forum, any
Subcustodian or their nominees arising out of any violation of any investment
restriction or other restriction or limitation applicable to Trust or any
Portfolio pursuant to any contract or any law or regulation.
SECTION 18. FEES AND EXPENSES
Trust agrees to pay to Forum such compensation for its services
pursuant to this Agreement as may be mutually agreed upon in writing from time
to time and Forum's reasonable out-of-pocket or incidental expenses in
connection with the performance of this Agreement, including (but without
limitation) reasonable legal fees as described herein and/or deemed necessary in
the judgment of Forum to keep safe or protect the Property in the Account. The
initial fee schedule is attached hereto as Exhibit B. Such fees will not be
13
<PAGE>
abated by, nor shall Forum be required to account for, any profits or
commissions received by Forum in connection with its provision of custody
services under this agreement. Trust hereby agrees to hold Forum harmless from
any liability or loss resulting from any taxes or other governmental charges,
and any expense related thereto, which may be imposed, or assessed with respect
to any Property in an Account and also agree to hold Forum, its Subcustodians,
and their respective nominees harmless from any liability as a record holder of
Property in such Account. Forum is authorized to charge the applicable Account
for such items, and Forum shall have a lien on the Property in the applicable
Account for any amount payable to Forum under this Agreement, including but not
limited to amounts payable pursuant to Section 13 and pursuant to indemnities
granted by Trust under this Agreement.
SECTION 19. TAX RECLAIMS
With respect to withholding taxes deducted and which may be deducted
from any income received from any Property in an Account, Forum shall perform
such services with respect thereto as are described in the applicable Service
Standards and shall in connection therewith be subject to the standard of care
set forth in such Service Standards. Such standard of care shall not be affected
by any other term of this Agreement.
SECTION 20. AMENDMENT, MODIFICATIONS, ETC.
No provision of this Agreement may be amended, modified or waived
except in a writing signed by the parties hereto (except that Exhibit D may be
amended as provided in Section 4 hereof and Exhibit B may be amended as provided
for therein). In addition, any amendment to Sections 8(c), 8(d), 16, 17, 24, 27
and 28 of this Agreement shall require the written consent of Bankers Trust. No
waiver of any provision hereto shall be deemed a continuing waiver unless it is
so designated. No failure or delay on the part of either party in exercising any
power or right under this Agreement operates as a waiver, nor does any single or
partial exercise of any power or right preclude any other or further exercise
thereof or the exercise of any other power or right.
SECTION 21. TERMINATION
(a) This Agreement may be terminated by Trust or Forum by ninety (90) days'
written notice to the other; provided that notice by Trust shall specify the
names of the persons to whom Forum shall deliver the Securities in each Account
and to whom the Cash in such Account shall be paid. If notice of termination is
given by Forum, Trust shall, within ninety (90) days following the giving of
such notice, deliver to Forum a written notice specifying the names of the
persons to whom Forum shall deliver the Securities in each Account and to whom
the Cash in such Account shall be paid. In either case, Forum will deliver such
Property to the persons so specified, after deducting therefrom any amounts that
Forum determines to be owed to it hereunder. In addition, Forum may in its
discretion withhold from such delivery such Property as may be necessary to
settle transactions pending at the time of such delivery. Trust grants to Forum
a lien and right of setoff against the Account and all Property held therein
from time to time in the full amount of the foregoing obligations. If within
ninety (90) days following the giving of a notice of termination by Forum, Forum
does not receive the aforementioned written notice specifying the names of the
persons to whom Forum shall deliver the Securities in each Account and to whom
the Cash in such Account shall be paid, Forum, at its election, may deliver such
14
<PAGE>
Securities and pay such Cash to a bank or trust company doing business in the
State of New York to be held and disposed of pursuant to the provisions of this
Agreement, or may continue to hold such Securities and Cash until a written
notice as aforesaid is delivered to Forum, provided that from and after the
ninetieth day Forum's obligations shall be limited to safekeeping.
(b) This Agreement may be terminated by Trust or Forum as to one or more
Portfolios (but less than all of the Portfolios) by delivery of an amended
Exhibit A deleting such Portfolios, in which case termination as to such deleted
Portfolios shall take effect ninety (90) days after the date of such delivery,
or such earlier time as mutually agreed. The execution and delivery of an
amended Exhibit A that deletes one or more Portfolios shall constitute a
termination of this Agreement only with respect to such deleted Portfolio(s),
shall be governed by Section 21(a) as to the identification of a successor
custodian and the delivery of Cash and Securities of the Portfolio(s) so deleted
to such successor custodian, and shall not affect the obligations of Forum and
Trust hereunder with respect to the other Portfolios set forth in Exhibit A, as
amended from time to time.
(c) Sections 16, 17, 18, 27 and 30 shall survive the termination of this
Agreement as to one or more or all Portfolios.
SECTION 22. NOTICES
Except as otherwise provided in this Agreement, all requests, demands
or other communications between the parties or notices in connection herewith
(a) shall be in writing, hand delivered or sent by registered mail, telex or
facsimile addressed to such other address as shall have been furnished by the
receiving party pursuant to the provisions hereof and (b) shall be deemed
effective when received, or, in the case of a telex, when sent to the proper
number and acknowledged by a proper answerback.
SECTION 23. SEVERAL OBLIGATIONS OF THE PORTFOLIOS
With respect to any obligations of Trust on behalf of each Portfolio
and each of its related Accounts arising out of this Agreement, Forum shall look
for payment or satisfaction of any obligation solely to the assets and property
of the Portfolio and such Accounts to which such obligation relates as though
Trust had separately contracted with Forum by separate written instrument with
respect to each Portfolio and its related Accounts.
SECTION 24. SECURITY FOR PAYMENT
To secure payment of all obligations due hereunder, Trust hereby grants
to Forum a continuing security interest in and right of setoff against each
Account and all Property held therein from time to time in the full amount of
such obligations; provided that, if there is more than one Account and the
obligations secured pursuant to this Section can be allocated to a specific
Account or the Portfolio related to such Account, such security interest and
right of setoff will be limited to Property held for that Account only and its
related Portfolio. Should Trust fail to pay promptly any amounts owed hereunder,
Forum shall be entitled to use available Cash in the Account or applicable
Account, as the case may be, and to dispose of Securities in the Account or such
applicable Account as is necessary. In any such case and without limiting the
15
<PAGE>
foregoing, Forum shall be entitled to take such other actions or exercise such
other options, powers and rights as Forum now or hereafter has as a secured
creditor under the UCC or any other applicable law, including, without
limitation, granting to any Subcustodian a security interest in such Accounts on
terms similar to those set forth in this Section 24.
SECTION 25. REPRESENTATIONS AND WARRANTIES
(a) Trust hereby represents and warrants to Forum that:
(b) the employment of Forum and the allocation of fees, expenses and other
charges to any Account as herein provided, is not prohibited by law or any
governing documents or contracts to which it is subject;
(c) the terms of this Agreement do not violate any obligation by which Trust is
bound, whether arising by contract, operation of law or otherwise;
(d) this Agreement has been duly authorized by appropriate action and when
executed and delivered will be binding upon Trust and each Portfolio in
accordance with its terms; and
(e) it will deliver to Forum a duly executed Secretary's Certificate in the form
of Exhibit C hereto or such other evidence of such authorization as Forum may
reasonably require, whether by way of a certified resolution or otherwise.
(f) Forum hereby represents and warrants to Trust that:
(g) the terms of this Agreement do not violate any obligation by which Forum is
bound, whether arising by contract, operation of law or otherwise;
(h) this Agreement has been duly authorized by appropriate action and when
executed and delivered will be binding upon Forum in accordance with its terms;
(i) it will deliver to Trust such evidence of such authorization as Trust may
reasonably require, whether by way of a certified resolution or otherwise;
(j) it is qualified as a custodian under Section 26(a) of the 1940 Act and that
it will remain so qualified or upon ceasing to be so qualified shall promptly
notify Trust in writing; and
(k) it is taking steps (a) believed by it in good faith to be reasonably
designed to address the risk that critical computer systems and equipment
containing the embedded microchips that it uses relating to its operations (the
"Systems") may be unable to process properly and calculate date-related
information and data from and after January 1, 2000 (the "Year 2000 Problem"),
and (b) to obtain assurances deemed reasonable by Forum that its material
service providers, including each Subcustodian, Securities System, agent or
other financial institution employed by Forum to provide services to Trust under
this Agreement, are taking reasonable steps to address the Year 2000 Problem.
16
<PAGE>
Forum reasonably expects that the effects of the Year 2000 Problem should not
result in a material adverse effect on the business, financial condition or
ability to timely perform any of its material obligations under this Agreement
(a "Material Adverse Effect"). In addition, Forum agrees to notify Trust
promptly if it has reason to believe that a Material Adverse Effect is likely to
result from a Year 2000 Problem with respect to Forum or its material service
providers.
SECTION 26. GOVERNING LAW AND SUCCESSORS AND ASSIGNS
This Agreement shall be governed by the law of the State of New York
and shall not be assignable by either party, but shall bind the successors in
interest of Trust and Forum.
SECTION 27. THIRD-PARTY BENEFICIARY
Trust hereby acknowledges and agrees that with respect to the Accounts:
(a) Forum is authorized to and, unless otherwise notified, shall appoint Bankers
Trust as a master Subcustodian pursuant to the Master Subcustodian Agreement.
(b) As an inducement to Bankers Trust to act as a master Subcustodian, Trust
authorizes the Forum to bind the Trust to those terms of the Master Subcustodian
Agreement, including Section 23 thereof, which will obligate the Trust to pay
obligations of each Portfolio for Property custodied pursuant to the Master
Subcustodian Agreement.
(c) Bankers Trust may rely, as fully as if it were a party hereto and named as
"Custodian" herein, on the representations, warranties, covenants and
indemnities of Trust set forth in Sections 8(d), 16, 17, 24 and 28 of this
Agreement.
SECTION 28. REPRESENTATIVE CAPACITY AND BINDING OBLIGATION
A copy of the Declaration of Trust of Trust is on file with the
Secretary of State of the State of Delaware (and a copy of the Trust Instrument
of Trust is on file with Trust's secretary). Notice is hereby given that this
Agreement is not executed on behalf of the Trustees of Trust as individuals, and
the obligations of this Agreement are not binding upon any of the Trustees,
officers or shareholders of Trust individually but are binding only upon the
assets and property of the Portfolios.
17
<PAGE>
SECTION 29. SUBMISSION TO JURISDICTION
Any suit, action or proceeding arising out of this Agreement may be
instituted in any State or Federal court sitting in the City of New York, State
of New York, United States of America, and Forum and Trust each irrevocably
submits to the non-exclusive jurisdiction of any such court in any such suit,
action or proceeding and waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of venue of any such
suit, action or proceeding brought in such a court and any claim that such suit,
action or proceeding was brought in an inconvenient forum.
SECTION 30. CONFIDENTIALITY
The parties hereto agree that each shall treat confidentially the terms
and conditions of this Agreement and all information provided by each party to
the other regarding its business and operations. All confidential information
provided by a party hereto shall be used by any other party hereto solely for
the purpose of rendering services pursuant to this Agreement and, except as may
be required in carrying out this Agreement, shall not be disclosed to any third
party without the prior consent of such providing party. The foregoing shall not
be applicable to any information that is publicly available when provided or
thereafter becomes publicly available other than through a breach of this
Agreement, or that is required or requested to be disclosed by any bank or other
regulatory examiner of Forum, Trust, or any Subcustodian, any auditor of the
parties hereto, by judicial or administrative process or otherwise by applicable
law or regulation.
SECTION 31. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Portfolio shall
not be liable for any obligations of the Trust or of the Portfolios under this
Agreement, and Forum agrees that, in asserting any rights or claims under this
Agreement, it shall look only to the assets and property of the Trust or the
Portfolio to which Forum's rights or claims relate in settlement of such rights
or claims, and not to the trustees of the Trust or the shareholders of the
Portfolios.
SECTION 32. SEVERABILITY
If any provision of this Agreement is determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other provision of this Agreement.
SECTION 33. ENTIRE AGREEMENT
This Agreement together with its Exhibits, contains the entire
agreement between the parties relating to the subject matter hereof and
supersedes any oral statements and prior writings with respect thereto.
<PAGE>
SECTION 34. HEADINGS
The headings of the sections hereof are included for convenience of
reference only and do not form a part of this Agreement.
SECTION 35. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original. This Agreement shall become effective when
one or more counterparts have been signed and delivered by each of the parties
hereto.
IN WITNESS WHEREOF, each of the parties has caused its duly authorized
signatories to execute this Agreement as of the date first written above.
TRUECROSSING FUNDS
By:/s/ James B. Cowperthwait
James B. Cowperthwait
Chairman
FORUM TRUST, LLC
By:/s/ John Y. Keffer
John Y. Keffer
President
19
<PAGE>
TRUECROSSING FUNDS
CUSTODIAN AGREEMENT
EXHIBIT A
LIST OF PORTFOLIOS
TrueCrossing Growth Fund
TRUECROSSING FUNDS
By:/s/ James B. Cowperthwait
James B. Cowperthwait
Chairman
FORUM TRUST, LLC
By:/s/ John Y. Keffer
John Y. Keffer
President
-A1-
<PAGE>
TRUECROSSING FUNDS
CUSTODIAN AGREEMENT
EXHIBIT B
FEE SCHEDULE
This Exhibit B shall be amended upon delivery by Forum of a new Exhibit B to
Trust and acceptance thereof by Trust and shall be effective as of the date of
acceptance by Trust or a date agreed upon between Forum and Trust.
1.ACCOUNT MAINTENANCE FEES
Domestic Custody Accounts $3,600 per account per year
2.DOMESTIC CUSTODY FEES
1.SAFEKEEPING CHARGES
Fee as an annualized % of Portfolio assets: 0.0100% of the first $1 billion in
assets
0.0075% of the next $1 billion in
assets
0.0050% thereafter
2. TRANSACTION CHARGES
COST PER
TRANSACTION TYPE TRANSACTION
---------------- -----------
DTC $12
Federal Book Entry $10
PTC $10
Physicals $25
Maturities (Depository) $10
Maturities (Physical) $25
P&I Payments (Book Entry) $3
P&I Payments (Physical) $10
Fed Wires (from Custody account) $8
SHE (Shares Held Elsewhere) Trades $25
Forum Money Market Funds $3
-B1-
<PAGE>
3. NOTES
The standard custody service includes: (i) asset safekeeping, (ii)
trade settlement, (iii) income collection, (iv) corporate action
processing (including proxy voting) and (v) tax reclaims (where
applicable.)
Accounts utilize actual settlement and are subject to the guidelines
indicated in the Bankers Trust POLICIES AND STANDARDS manual.
Out-of-pocket expenses are borne by Trust. Out-of-pocket expenses
include, but are not limited to, postage and legal fees. These charges
are passed on at cost.
-B2-
<PAGE>
TRUECROSSING FUNDS
CUSTODIAN AGREEMENT
EXHIBIT C
FORM OF SECRETARY'S CERTIFICATE
I, [Name], hereby certify that I am the Secretary of TrueCrossing
Funds, a business trust organized under the laws of the State of Delaware (the
"Company"), and as such I am duly authorized to, and do hereby, certify that:
1. ORGANIZATIONAL DOCUMENTS. The Company's organizational documents, and all
amendments thereto, have been filed with the appropriate governmental
officials of Delaware, the Company continues to be in existence and is in
good standing, and no action has been taken to repeal such organizational
documents, the same being in full force and effect on the date hereof.
2. BYLAWS. The Company's Bylaws have been duly adopted and no action has been
taken to repeal such Bylaws, the same being in full force and effect.
3. RESOLUTIONS. Resolutions have been duly adopted on behalf of the Company,
which resolutions (i) have not in any way been revoked or rescinded, (ii)
have been in full force and effect since their adoption, to and including
the date hereof, and are now in full force and effect, and (iii) are the
only corporate proceedings of the Company now in force relating to or
affecting the matters referred to therein, including, without limitation,
confirming that the Company is duly authorized to enter into a certain
custody agreement with Forum Trust, LLC (the "Agreement"), and that certain
designated officers, including those identified in paragraph 4 of this
Certificate, are authorized to execute said Agreement on behalf of the
Company, in conformity with the requirements of the Company's
organizational documents, Bylaws, and other pertinent documents to which
the Company may be bound.
4. INCUMBENCY. The following named individuals are duly elected (or
appointed), qualified, and acting officers of the Company holding those
offices set forth opposite their respective names as of the date hereof,
each having full authority, acting individually, to bind the Company, as a
legal matter, with respect to all matters pertaining to the Agreement, and
to execute and deliver said Agreement on behalf of the Company, and the
signatures set forth opposite the respective names and titles of said
officers are their true, authentic signatures:
NAME TITLE SIGNATURE
[Name] [Position]
[Name] [Position]
[Name] [Position]
-C1-
<PAGE>
IN WITNESS WHEREOF, I have hereunto set my hand this ____ day of
_______, 19__.
TrueCrossing Funds
By:
Name:
Title: Secretary
I, [Name of Confirming Officer], [Title] of the Company, hereby certify
that on this ___ day of ________, 19__, [Name of Secretary] is the duly elected
Secretary of the Company and that the signature above is his genuine signature.
TrueCrossing Funds
By:
Name:
Title:
-C2-
<PAGE>
TRUECROSSING FUNDS
CUSTODIAN AGREEMENT
EXHIBIT D
APPROVED SUBCUSTODIANS AND SECURITIES SYSTEMS
Bankers Trust Company
-D1-
<PAGE>
EXHIBIT (G)(2)
TRUECROSSING FUNDS
TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT made as of the 8th day of December, 1999, by and between
TrueCrossing Funds, a Delaware business trust, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust"),
and Forum Shareholder Services, LLC, a Delaware limited liability company with
its principal office and place of business at Two Portland Square, Portland,
Maine 04101 ("Forum").
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets, and is authorized to divide those series into
separate classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 13, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust may in the future offer shares of various classes of each
Fund as listed in Appendix A hereto (each such class subsequently established by
the Trust in a Fund being herein referred to as a "Class," and collectively as
the "Classes"); and
WHEREAS, the Trust on behalf of the Funds desires to appoint Forum as
its transfer agent and dividend disbursing agent and Forum desires to accept
such appointment;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust, on behalf of the Funds, hereby appoints Forum to act as,
and Forum agrees to act as, (i) transfer agent for the authorized and issued
shares of beneficial interest of the Trust representing interests in each of the
respective Funds and Classes thereof ("Shares"), (ii) dividend disbursing agent
and (iii) agent in connection with any accumulation, open-account or similar
plans provided to the registered owners of shares of any of the Funds
("Shareholders") and set out in the currently effective prospectuses and
statements of additional information (collectively "prospectus") of the
applicable Fund, including, without limitation, any periodic investment plan or
periodic withdrawal program.
(b) The Trust has delivered to Forum copies of (i) the Trust's Trust
Instrument, (ii) the Trust's Registration Statement and all amendments thereto
filed with the U.S. Securities and Exchange Commission ("SEC") pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Investment
Company Act of 1940, as amended ("1940 Act")(the "Registration Statement"),
(iii) the Trust's current Prospectus and Statement of Additional Information of
each Fund (collectively, as currently in effect and as amended or supplemented,
the "Prospectus"), (iv) each current plan of distribution or similar document
adopted by the Trust under Rule 12b-1 under the 1940 Act ("Plan") and each
1
<PAGE>
current shareholder service plan or similar document adopted by the Trust
("Service Plan"), and (v) all procedures adopted by the Trust with respect to
the Funds (i.e., repurchase agreement procedures), and shall promptly furnish
Forum with all amendments of or supplements to the foregoing. The Trust shall
deliver to Forum a certified copy of the resolution of the Board of Trustees of
the Trust (the "Board") appointing Forum and authorizing the execution and
delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a) Forum agrees that in accordance with procedures established from
time to time by agreement between the Trust on behalf of each of the Funds, as
applicable, and Forum, Forum will perform the following services:
(i) provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account
or similar plans (including without limitation any periodic investment
plan or periodic withdrawal program) that are customary for open-end
management investment companies including: (A) maintaining all
Shareholder accounts, (B) preparing Shareholder meeting lists, (C)
mailing proxies to Shareholders, (D) mailing Shareholder reports and
prospectuses to current Shareholders, (E) withholding taxes on U.S.
resident and non-resident alien accounts, (F) preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required by
federal authorities with respect to distributions for Shareholders, (G)
preparing and mailing confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, (H) preparing and
mailing activity statements for Shareholders, and (I) providing
Shareholder account information;
(ii) receive for acceptance orders for the purchase of Shares and
promptly deliver payment and appropriate documentation therefor to the
custodian of the applicable Fund (the "Custodian") or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(iii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the
appropriate documentation therefor to the Custodian or, in the case of
Fund's operating in a master-feeder or fund of funds structure, to the
transfer agent or interestholder recordkeeper for the master portfolios
in which the Fund invests;
(v) as and when it receives monies paid to it by the Custodian with
respect to any redemption, pay the redemption proceeds as required by
the prospectus pursuant to which the redeemed Shares were offered and
as instructed by the redeeming Shareholders;
2
<PAGE>
(vi) effect transfers of Shares upon receipt of appropriate
instructions from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the
Trust with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or
destroyed upon receipt by Forum of indemnification satisfactory to
Forum and protecting Forum and the Trust and, at the option of Forum,
issue replacement certificates in place of mutilated share certificates
upon presentation thereof without requiring indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare
and transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as requested by the Trust and provide periodic reporting to
the Trust or its administrator or other agent;
(xi) maintain records of account for and provide reports and statements
to the Trust and Shareholders as to the foregoing;
(xii) record the issuance of Shares of the Trust and maintain pursuant
to Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as
amended ("1934 Act") a record of the total number of Shares of the
Trust, each Fund and each Class thereof, that are authorized, based
upon data provided to it by the Trust, and are issued and outstanding
and provide the Trust on a regular basis a report of the total number
of Shares that are authorized and the total number of Shares that are
issued and outstanding; and
(xiii) provide a system which will enable the Trust to calculate the
total number of Shares of each Fund and Class thereof sold in each
State.
(b) Forum shall provide the following additional services on behalf of
the Trust and such other services agreed to in writing by the Trust and Forum:
(i) monitor and make appropriate filings with respect to the
escheatment laws of the various states and territories of the United
States; and
(ii) receive and tabulate proxy votes/oversee the activities of proxy
solicitation firms and coordinate the tabulation of proxy and
shareholder meeting votes.
(c) The Trust or its administrator or other agent (i) shall identify to
Forum in writing those transactions and assets to be treated as exempt from
reporting for each state and territory of the United States and for each foreign
jurisdiction (collectively "States") and (ii) shall monitor the sales activity
3
<PAGE>
with respect to Shareholders domiciled or resident in each State. The
responsibility of Forum for the Trust's State registration status is solely
limited to the reporting of transactions to the Trust, and Forum shall have no
obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of the Trust or
its administrator or other agent.
(d) Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for the safekeeping, control, preparation and
use of share certificates, check forms, and facsimile signature imprinting
devices. Forum shall establish and maintain facilities and procedures reasonably
acceptable to the Trust for safekeeping of all records maintained by Forum
pursuant to this Agreement.
(e) Forum shall cooperate with each Fund's independent public
accountants and shall take reasonable action to make all necessary information
available to the accountants for the performance of the accountants' duties.
(f) Except with respect to Forum's duties as set forth in this Section
2 and except as otherwise specifically provided herein, the Trust assumes all
responsibility for ensuring that the Trust complies with all applicable
requirements of the Securities Act, the 1940 Act and any laws, rules and
regulations of governmental authorities with jurisdiction over the Trust. All
references to any law in this Agreement shall be deemed to include reference to
the applicable rules and regulations promulgated under authority of the law and
all official interpretations of such law or rules or regulations.
SECTION 3. RECORDKEEPING
(a) Prior to the commencement of Forum's responsibilities under this
Agreement, if applicable, the Trust shall deliver or cause to be delivered over
to Forum (i) an accurate list of Shareholders of the Trust, showing each
Shareholder's address of record, number of Shares owned and whether such Shares
are represented by outstanding share certificates and (ii) all Shareholder
records, files, and other materials necessary or appropriate for proper
performance of the functions assumed by Forum under this Agreement (collectively
referred to as the "Materials"). The Trust shall on behalf of each applicable
Fund or Class indemnify and hold Forum harmless from and against any and all
losses, damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to any error, omission, inaccuracy or other
deficiency of the Materials, or out of the failure of the Trust to provide any
portion of the Materials or to provide any information in the Trust's possession
or control reasonably needed by Forum to perform the services described in this
Agreement.
(b) Forum shall keep records relating to the services to be performed
under this Agreement, in the form and manner as it may deem advisable and as
required by applicable law. To the extent required by Section 31 of the 1940
Act, and the rules thereunder, Forum agrees that all such records prepared or
maintained by Forum relating to the services to be performed by Forum under this
Agreement are the property of the Trust and will be preserved, maintained and
made available in accordance with Section 31 of the 1940 Act and the rules
thereunder, and will be surrendered promptly to the Trust on and in accordance
4
<PAGE>
with the Trust's request. The Trust and the Trust's authorized representatives
shall have access to Forum's records relating to the services to be performed
under this Agreement at all times during Forum's normal business hours. Upon the
reasonable request of the Trust, copies of any such records shall be provided
promptly by Forum to the Trust or the Trust's authorized representatives.
(c) Forum and the Trust agree that all books, records, information, and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
(d) In case of any requests or demands for the inspection of the
Shareholder records of the Trust, Forum will endeavor to notify the Trust and to
secure instructions from an authorized officer of the Trust as to such
inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant the inspection
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 4. ISSUANCE AND TRANSFER OF SHARES
(a) Forum shall make original issues of Shares of each Fund and Class
thereof in accordance with the Trust's then current prospectus only upon receipt
of (i) instructions requesting the issuance, (ii) a certified copy of a
resolution of the Board authorizing the issuance, (iii) necessary funds for the
payment of any original issue tax applicable to such Shares, and (iv) an opinion
of the Trust's counsel as to the legality and validity of the issuance, which
opinion may provide that it is contingent upon the filing by the Trust of an
appropriate notice with the SEC, as required by Section 24 of the 1940 Act or
the rules thereunder. If the opinion described in (iv) above is contingent upon
a filing under Section 24 of the 1940 Act, the Trust shall indemnify Forum for
any liability arising from the failure of the Trust to comply with that section
or the rules thereunder.
(b) Transfers of Shares of each Fund and Class thereof shall be
registered on the Shareholder records maintained by Forum. In registering
transfers of Shares, Forum may rely upon the Uniform Commercial Code as in
effect in the State of Delaware or any other statutes that, in the opinion of
Forum's counsel, protect Forum and the Trust from liability arising from (i) not
requiring complete documentation, (ii) registering a transfer without an adverse
claim inquiry, (iii) delaying registration for purposes of such inquiry or (iv)
refusing registration whenever an adverse claim requires such refusal. As
Transfer Agent, Forum will be responsible for delivery to the transferor and
transferee of such documentation as is required by the Uniform Commercial Code.
SECTION 5. SHARE CERTIFICATES
(a) The Trust shall furnish to Forum a supply of blank share
certificates of each Fund and Class thereof and, from time to time, will renew
such supply upon Forum's request. Blank share certificates shall be signed
manually or by facsimile signatures of officers of the Trust authorized to sign
5
<PAGE>
by the Trust Instrument of the Trust and, if required by the Trust Instrument,
shall bear the Trust's seal or a facsimile thereof. Unless otherwise directed by
the Trust, Forum may issue or register Share certificates reflecting the manual
or facsimile signature of an officer who has died, resigned or been removed by
the Trust.
(b) New Share certificates shall be issued by Forum upon surrender of
outstanding Share certificates in the form deemed by Forum to be properly
endorsed for transfer and satisfactory evidence of compliance with all
applicable laws relating to the payment or collection of taxes. Forum shall
forward Share certificates in "non-negotiable" form by first-class or registered
mail, or by whatever means Forum deems equally reliable and expeditious. Forum
shall not mail Share certificates in "negotiable" form unless requested in
writing by the Trust and fully indemnified by the Trust to Forum's satisfaction.
(c) In the event that the Trust informs Forum that any Fund or Class
thereof does not issue share certificates, Forum shall not issue any such share
certificates and the provisions of this Agreement relating to share certificates
shall not be applicable with respect to those Funds or Classes thereof.
SECTION 6. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) Shares shall be issued in accordance with the terms of a Fund's or
Class' prospectus after Forum or its agent receives either:
(i) (A) an instruction directing investment in a Fund or Class, (B) a
check (other than a third party check) or a wire or other electronic
payment in the amount designated in the instruction and (C), in the
case of an initial purchase, a completed account application; or
(ii) the information required for purchases pursuant to a selected
dealer agreement, processing organization agreement, or a similar
contract with a financial intermediary.
(b) Shares issued in a Fund after receipt of a completed purchase order
shall be eligible to receive distributions of the Fund at the time specified in
the prospectus pursuant to which the Shares are offered.
(c) Shareholder payments shall be considered Federal Funds no later
than on the day indicated below unless other times are noted in the prospectus
of the applicable Class or Fund:
(i) for a wire received, at the time of the receipt of the wire;
(ii) for a check drawn on a member bank of the Federal Reserve System,
on the Fund Business Day following receipt of the check; and
(iii) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as Forum is credited with Federal
Funds with respect to that check.
6
<PAGE>
SECTION 7. FEES AND EXPENSES
(a) For the services provided by Forum pursuant to this Agreement, the
Trust, on behalf of each Fund, agrees to pay Forum the fees set forth in Clauses
(i) and (ii) of Appendix B hereto. Fees will begin to accrue for each Fund on
the latter of the date of this Agreement or the date of commencement of
operations of the Fund. If fees begin to accrue in the middle of a month or if
this Agreement terminates before the end of any month, all fees for the period
from that date to the end of that month or from the beginning of that month to
the date of termination, as the case may be, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement with respect to a
Fund, the Trust shall pay to Forum such compensation as shall be payable prior
to the effective date of termination. The Trust acknowledges that Forum may from
time to time earn money on amounts in the deposit accounts maintained by Forum
to service the Fund (and other clients serviced by Forum).
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Appendix B hereto. In addition, the Trust, on behalf of
the applicable Fund, shall reimburse Forum for all expenses and employee time
(at 150% of salary) attributable to any review of the Trust's accounts and
records by the Trust's independent accountants or any regulatory body outside of
routine and normal periodic reviews. Should the Trust exercise its right to
terminate this Agreement, the Trust, on behalf of the applicable Fund, shall
reimburse Forum for all out-of-pocket expenses and employee time (at 150% of
salary) associated with the copying and movement of records and material to any
successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(c) All fees and reimbursements are payable in arrears on a monthly
basis and the Trust, on behalf of the applicable Fund, agrees to pay all fees
and reimbursable expenses within five (5) business days following receipt` of
the respective billing notice.
SECTION 8. REPRESENTATIONS AND WARRANTIES
(a) Representations and Warranties of Forum. Forum represents and
warrants to the Trust that:
(i) It is a limited liability company duly organized and existing and
in good standing under the laws of the State of Delaware.
(ii) It is duly qualified to carry on its business in the State of
Maine.
(iii) It is empowered under applicable laws and by its Operating
Agreement to enter into this Agreement and perform its duties under
this Agreement.
(iv) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement.
(v) It has access to the necessary facilities, equipment, and personnel
to perform its duties and obligations under this Agreement.
7
<PAGE>
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of Forum, enforceable against Forum
in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
(vii) It is registered as a transfer agent under Section 17A of the
1934 Act.
(b) Representations and Warranties of the Trust. The Trust represents
and warrants to Forum that:
(i) It is a business trust duly organized and existing and in good
standing under the laws of Delaware.
(ii) It is empowered under applicable laws and by its Trust Instrument
to enter into this Agreement and perform its duties under this
Agreement.
(iii) All requisite proceedings under the Delaware Business Trust Act
have been taken to authorize it to enter into this Agreement and
perform its duties under this Agreement.
(iv) It is an open-end management investment company registered under
the 1940 Act.
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Trust, enforceable against
the Trust in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
(vi) A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate State securities
law filings have been made and will continue to be made, with respect
to all Shares of the Funds and Classes of the Trust being offered for
sale.
SECTION 9. PROPRIETARY INFORMATION
(a) The Trust acknowledges that the databases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals maintained by Forum on databases under the control and ownership of
Forum or a third party constitute copyrighted, trade secret, or other
proprietary information (collectively, "Proprietary Information") of substantial
value to Forum or the third party. The Trust agrees to treat all Proprietary
Information as proprietary to Forum and further agrees that it shall not divulge
any Proprietary Information to any person or organization except as may be
provided under this Agreement.
(b) Forum acknowledges that the Shareholder list and all information
related to Shareholders furnished to Forum by the Trust or by a Shareholder in
connection with this Agreement (collectively, "Customer Data") constitute
proprietary information of substantial value to the Trust. In no event shall
Proprietary Information be deemed Customer Data. Forum agrees to treat all
8
<PAGE>
Customer Data as proprietary to the Trust and further agrees that it shall not
divulge any Customer Data to any person or organization except as may be
provided under this Agreement or as may be directed by the Trust.
SECTION 10. INDEMNIFICATION
(a) Forum shall not be responsible for, and the Trust shall on behalf
of each applicable Fund or Class thereof indemnify and hold Forum harmless from
and against, any and all losses, damages, costs, charges, reasonable counsel
fees, payments, expenses and liability arising out of or attributable to:
(i) all actions of Forum or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken
in good faith and without negligence or willful misconduct;
(ii) the Trust's lack of good faith or the Trust's negligence or
willful misconduct;
(iii) the reliance on or use by Forum or its agents or subcontractors
of information, records, documents or services which have been
prepared, maintained or performed by the Trust or any other person or
firm on behalf of the Trust, including but not limited to any previous
transfer agent or registrar;
(iv) the reasonable reliance on, or the carrying out by Forum or its
agents or subcontractors of, any instructions or requests of the Trust
on behalf of the applicable Fund; and
(v) the offer or sale of Shares in violation of any requirement under
the Federal securities laws or regulations or the securities laws or
regulations of any State that such Shares be registered in such State
or in violation of any stop order or other determination or ruling by
any federal agency or any State with respect to the offer or sale of
such Shares in such State.
(b) Forum shall indemnify and hold the Trust and each Fund or Class
thereof harmless from and against any and all losses, damages, costs, charges,
reasonable counsel fees, payments, expenses and liability arising out of or
attributed to any action or failure or omission to act by Forum as a result of
Forum's lack of good faith, negligence or willful misconduct with respect to the
services performed under or in connection with this Agreement.
(c) At any time Forum may apply to any officer of the Trust for
instructions, and may consult with legal counsel to the Trust or to Forum with
respect to any matter arising in connection with the services to be performed by
Forum under this Agreement, and Forum and its agents or subcontractors shall not
be liable and shall be indemnified by the Trust on behalf of the applicable Fund
for any action taken or omitted by it in reasonable reliance upon such
instructions or upon the advice of such counsel. Forum, its agents and
subcontractors shall be protected and indemnified in acting upon (i) any paper
or document furnished by or on behalf of the Trust, reasonably believed by Forum
to be genuine and to have been signed by the proper person or persons, (ii) any
9
<PAGE>
instruction, information, data, records or documents provided Forum or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Trust, and (iii) any authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to Forum in person or by telephone, vocal telegram or other
electronic means, reasonably believed by Forum to be genuine and to have been
given by the proper person or persons. Forum shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. Forum, its agents and subcontractors shall also be protected and
indemnified in recognizing share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or former registrar or
of a co-transfer agent or co-registrar of the Trust.
(d) If the Trust has the ability to originate electronic instructions
to Forum in order to (i) effect the transfer or movement of cash or Shares or
(ii) transmit Shareholder information or other information, then in such event
Forum shall be entitled to rely on the validity and authenticity of such
instruction without undertaking any further inquiry as long as such instruction
is undertaken in conformity with reasonable security procedures established by
Forum from time to time.
(e) The Trust has authorized or in the future may authorize Forum to
act as a "Mutual Fund Services Member" for the Trust or various Funds. Fund/SERV
and Networking are services sponsored by the National Securities Clearing
Corporation ("NSCC") and as used herein have the meanings as set forth in the
then current edition of NSCC Rules and Procedures published by NSCC or such
other similar publication as may exist from time to time. The Trust shall
indemnify and hold Forum harmless from and against any and all losses, damages,
costs, charges, reasonable counsel fees, payments, expenses and liability
arising directly or indirectly out of or attributed to any action or failure or
omission to act by NSCC.
(f) In order that the indemnification provisions contained in this
Section shall apply, upon the assertion of a claim for which either party may be
required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim or to defend against
said claim in its own name or in the name of the other party. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
SECTION 11. EFFECTIVENESS, DURATION AND TERMINATION
(a) This Agreement shall become effective with respect to each Fund or
Class on December 8, 1999. Upon effectiveness of this Agreement, it shall
supersede all previous agreements between the parties hereto covering the
subject matter hereof insofar as such Agreement may have been deemed to relate
to the Funds.
10
<PAGE>
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. Any
termination shall be effective as of the date specified in the notice. Upon
notice of termination of this Agreement by either party, Forum shall promptly
transfer to the successor transfer agent the original or copies of all books and
records maintained by Forum under this Agreement including, in the case of
records maintained on computer systems, copies of such records in
machine-readable form, and shall cooperate with, and provide reasonable
assistance to, the successor transfer agent in the establishment of the books
and records necessary to carry out the successor transfer agent's
responsibilities.
(d) The obligations of Sections 7, 9 and 10 shall survive any termination
of this Agreement.
SECTION 12. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make and
such series or classes subject to this Agreement.
SECTION 13. ASSIGNMENT
Except as otherwise provided in this Agreement, neither this Agreement
nor any rights or obligations under this Agreement may be assigned by either
party without the written consent of the other party. This Agreement shall inure
to the benefit of and be binding upon the parties and their respective permitted
successors and assigns. Forum may, without further consent on the part of the
Trust, subcontract for the performance hereof with any entity, including
affiliated persons of Forum; provided however, that Forum shall be as fully
responsible to the Trust for the acts and omissions of any subcontractor as
Forum is for its own acts and omissions.
SECTION 14. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails or
any transportation medium, communication system or power supply.
11
<PAGE>
SECTION 15. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 16. TAXES.
Forum shall not be liable for any taxes, assessments or governmental
charges that may be levied or assessed on any basis whatsoever in connection
with the Trust or any Shareholder or any purchase of Shares, excluding taxes
assessed against Forum for compensation received by it under this Agreement.
SECTION 17. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) No provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(c) This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section and paragraph headings in this Agreement are included for
convenience only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal addresses, or at such other address as a
party may have designated in writing, shall be deemed to have been properly
given.
(i) Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity hereunder, to perform any functions or duties on any day
other than a Fund Business Day. Functions or duties normally scheduled to be
performed on any day which is not a Fund Business Day shall be performed on, and
12
<PAGE>
as of, the next Fund Business Day, unless otherwise required by law.
(j) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(k) No affiliated person (as that term is defined in the 1940 Act),
employee, agent, director, officer or manager of Forum shall be liable at law or
in equity for Forum's obligations under this Agreement.
(l) Each of the undersigned expressly warrants and represents that they
have full power and authority to sign this Agreement on behalf of the party
indicated and that their signature will bind the party indicated to the terms
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
TRUECROSSING FUNDS
By: /s/ James B. Cowperthwait
James B. Cowperthwait
Chairman
FORUM SHAREHOLDER SERVICES, LLC
By: /s/ Lisa J. Weymouth
Lisa J. Weymouth
Director
13
<PAGE>
TRUECROSSING FUNDS
TRANSFER AGENCY AND SERVICES AGREEMENT
APPENDIX A
FUNDS AND CLASSES
AS OF DECEMBER 8, 1999
TRUECROSSING GROWTH FUND
-A1-
<PAGE>
TRUECROSSING FUNDS
TRANSFER AGENCY AND SERVICES AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) BASE FEE:
Fee per Fund (single fund only)............................$2,000/month
Fee per Fund (for a series with more than one fund) .......$2,000/month
Fee for each additional Class of the Fund above one ......$1,000/month
The Fee per Fund has been waived down to $1,500 per month for the
fiscal year ended November 30, 2000. The rates set forth above shall
remain fixed through December 31, 2000. On January 1, 2001, and on each
successive January 1, the rates may be adjusted automatically by Forum
without action of the Trust to reflect changes in the Consumer Price
Index for the preceding calendar year, as published by the U.S.
Department of Labor, Bureau of Labor Statistics. Forum shall notify the
Trust each year of the new rates, if applicable.
(II) SHAREHOLDER ACCOUNT FEES:
(a) Open account.........................$15/account/year
(b) Networked account....................$12/account/year
(c) Closed account........................$5/account/year
Shareholder account fees are based upon the number of Shareholder
accounts as of the last Fund Business Day of the prior month.
(III) OUT-OF-POCKET AND RELATED EXPENSES*
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing transfer agency
services, including but not limited to the cost of (or appropriate
share of the cost of): (i) statement, confirmation, envelope and
stationary stock (other than Forum standard), (ii) share certificates,
(iii) postage and delivery services, (iv) telecommunications, (v)
outside proxy solicitors, (vi) NSCC fees and (vii) similar items. In
addition, any other expenses incurred by Forum at the request or with
the consent of the Trust, will be reimbursed by the Trust on behalf of
the applicable Fund.
* These expenses have been waived for the first twelve months ending
November 30, 2000.
-B1-
<PAGE>
EXHIBIT (G)(3)
TRUECROSSING FUNDS
ADMINISTRATION AGREEMENT
AGREEMENT made as of the 8th day of December, 1999, by and between
TrueCrossing Funds, a Delaware business trust, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust"),
and Forum Administrative Services, LLC, a Delaware limited liability company
with its principal office and place of business at Two Portland Square,
Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust may in the future offer shares of various classes of each
Fund as listed in Appendix A hereto (each such class subsequently established by
the Trust in a Fund being herein referred to as a "Class," and collectively as
the "Classes"); and
WHEREAS, the Trust desires that Forum perform certain administrative
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
administrator of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of (i) the
Trust's Trust Instrument, (ii) the Trust's Registration Statement and all
amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as currently in effect and as amended or supplemented, the "Prospectus"), (iv)
each current plan of distribution or similar document adopted by the Trust under
Rule 12b-1 under the 1940 Act ("Plan") and each current shareholder service plan
or similar document adopted by the Trust ("Service Plan"), and (iv) all
procedures adopted by the Trust with respect to the Funds (i.e., repurchase
agreement procedures), and shall promptly furnish Forum with all amendments of
or supplements to the foregoing. The Trust shall deliver to Forum a certified
copy of the resolution of the Board of Trustees of the Trust (the "Board")
appointing Forum and authorizing the execution and delivery of this Agreement.
1
<PAGE>
SECTION 2. DUTIES OF FORUM AND THE TRUST
(a) Subject to the direction and control of the Board, Forum shall manage all
aspects of the Trust's operations with respect to the Funds except those that
are the responsibility of any other service provider hired by the Trust, all in
such manner and to such extent as may be authorized by the Board.
(b) With respect to the Trust or each Fund, as applicable, Forum shall:
(i) at the Trust's expense, provide the Trust with, or arrange for the
provision of, the services of persons competent to perform such legal,
administrative and clerical functions not otherwise described in this
Section 2(b) as are necessary to provide effective operation of the Trust;
(ii) oversee (A) the preparation and maintenance by the Trust's custodian,
transfer agent, dividend disbursing agent and fund accountant in such form,
for such periods and in such locations as may be required by applicable
United States law, of all documents and records relating to the operation
of the Trust required to be prepared or maintained by the Trust or its
agents pursuant to applicable law; (B) the reconciliation of account
information and balances among the Trust's custodian, transfer agent,
dividend disbursing agent and fund accountant; (C) the transmission of
purchase and redemption orders for Shares; and (D) the performance of fund
accounting, including the calculation of the net asset value of the Shares;
(iii)oversee the performance of administrative and professional services
rendered to the Trust by others, including its custodian, transfer agent
and dividend disbursing agent as well as legal, auditing, shareholder
servicing and other services performed for the Funds;
(iv) file or oversee the filing of each document required to be filed by the
Trust in either written or, if required, electronic format (e.g.,
electronic data gathering analysis and retrieval system or "EDGAR") with
the SEC;
(v) assist in and oversee the preparation, filing and printing and the periodic
updating of the Registration Statement and Prospectuses;
(vi) oversee the preparation and filing of the Trust's tax returns;
(vii)oversee the preparation of financial statements and related reports to the
Trust's shareholders, the SEC and state and other securities
administrators;
(viii)assist in and oversee the preparation and printing of proxy and
information statements and any other communications to shareholders;
2
<PAGE>
(ix) provide the Trust with adequate general office space and facilities and
provide persons suitable to the Board to serve as officers of the Trust;
(x) assist the investment advisers in monitoring Fund holdings for compliance
with Prospectus investment restrictions and assist in preparation of
periodic compliance reports, as applicable;
(xi) prepare, file and maintain the Trust's Trust Instrument and minutes of
meetings of Trustees, Board committees and shareholders;
(xii)with the cooperation of the Trust's counsel, investment advisers, the
officers of the Trust and other relevant parties, prepare and disseminate
materials for meetings of the Board, as applicable;
(xiii) maintain the Trust's existence and good standing under applicable state
law;
(xiv)monitor sales of Shares, ensure that the Shares are properly and duly
registered with the SEC and register, or prepare applicable filings with
respect to, the Shares with the various state and other securities
commissions;
(xv) oversee the calculation of performance data for dissemination to
information services covering the investment company industry, for sales
literature of the Trust and other appropriate purposes;
(xvi)oversee the determination of the amount of and supervise the declaration
of dividends and other distributions to shareholders as necessary to, among
other things, maintain the qualification of each Fund as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"), and prepare and distribute to appropriate parties notices
announcing the declaration of dividends and other distributions to
shareholders;
(xvii) advise the Trust and the Board on matters concerning the Trust and its
affairs;
(xviii) calculate, review and account for Fund expenses and report on Fund
expenses on a periodic basis;
(xix)authorize the payment of Trust expenses and pay, from Trust assets, all
bills of the Trust;
(xx) prepare Fund budgets, pro-forma financial statements, expense and
profit/loss projections and fee waiver/expense reimbursement projections on
a periodic basis;
(xxi) prepare financial statement expense information;
3
<PAGE>
(xxii) assist the Trust in the selection of other service providers, such as
independent accountants, law firms and proxy solicitors; and
(xxiii) perform such other recordkeeping, reporting and other tasks as may be
specified from time to time in the procedures adopted by the Board;
provided, that Forum need not begin performing any such task except upon 65
days' notice and pursuant to mutually acceptable compensation agreements.
(c) Forum shall provide such other services and assistance relating to the
affairs of the Trust as the Trust may, from time to time, reasonably request
pursuant to mutually acceptable compensation agreements. In addition, the
lawyers who are employed by Forum or its affiliates shall provide any of the
legal services identified in Appendix C hereto to the Trust, subject to
satisfaction of the conditions contained in Section 9(c) and to the consents and
waivers by the Trust and Forum of any general conflict of interest existing as a
result of the provision of those services. Forum shall not charge the Trust for
providing the legal services identified in Appendix C, except for those matters
designated as Special Legal Services, as to which Forum may charge, and, subject
to review and approval by the Chairman of the Audit Committee or outside counsel
to the Trust, the Trust shall pay, an additional amount as reimbursement of the
cost to Forum of providing the Special Legal Services. Nothing in this Agreement
shall require Forum to provide any of the services listed in Appendix C, and
each of those services may be performed by an outside vendor if appropriate in
the judgment of Forum or the Trust.
(d) Forum shall maintain records relating to its services, such as journals,
ledger accounts and other records, as are required to be maintained under the
1940 Act and Rule 31a-1 thereunder. The books and records pertaining to the
Trust that are in possession of Forum shall be the property of the Trust. The
Trust, or the Trust's authorized representatives, shall have access to such
books and records at all times during Forum's normal business hours. Upon the
reasonable request of the Trust, copies of any such books and records shall be
provided promptly by Forum to the Trust or the Trust's authorized
representatives. In the event the Trust designates a successor that assumes any
of Forum's obligations hereunder, Forum shall, at the expense and direction of
the Trust, transfer to such successor all relevant books, records and other data
established or maintained by Forum under this Agreement.
(e) Nothing contained herein shall be construed to require Forum to perform any
service that could cause Forum to be deemed an investment adviser for purposes
of the 1940 Act or the Investment Advisers Act of 1940, as amended, or that
could cause a Fund to act in contravention of the Fund's Prospectus or any
provision of the 1940 Act. Except with respect to Forum's duties as set forth in
this Section 2 and except as otherwise specifically provided herein, the Trust
assumes all responsibility for ensuring that the Trust complies with all
applicable requirements of the Securities Act, the 1940 Act and any laws, rules
and regulations of governmental authorities with jurisdiction over the Trust.
All references to any law in this Agreement shall be deemed to include reference
to the applicable rules and regulations promulgated under authority of the law
and all official interpretations of such law or rules or regulations.
4
<PAGE>
(f) In order for Forum to perform the services required by this Section 2, the
Trust (I) shall cause all service providers to the Trust to furnish any and all
information to Forum, and assist Forum as may be required and (ii) shall ensure
that Forum has access to all records and documents maintained by the Trust or
any service provider to the Trust.
SECTION 3. STANDARD OF CARE AND RELIANCE
(a) Forum shall be under no duty to take any action except as specifically set
forth herein or as may be specifically agreed to by Forum in writing. Forum
shall use its best judgment and efforts in rendering the services described in
this Agreement. Forum shall not be liable to the Trust or any of the Trust's
shareholders for any action or inaction of Forum relating to any event
whatsoever in the absence of bad faith, willful misfeasance or gross negligence
in the performance of Forum's duties or obligations under this Agreement or by
reason of Forum's reckless disregard of its duties and obligations under this
Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its employees,
agents, directors, officers and managers and any person who controls Forum
within the meaning of section 15 of the Securities Act or section 20 of the
Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against and
from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(d) (a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) Forum agrees to indemnify and hold harmless the Trust, its employees,
agents, trustees and officers against and from any and all claims, demands,
actions, suits, judgments, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character arising
out of Forum's actions taken or failures to act with respect to a Fund that are
not consistent with the standard of care set forth in Section 3(a). Forum shall
not be required to indemnify the Trust if, prior to confessing any Claim against
the Trust, the Trust does not give Forum written notice of and reasonable
opportunity to defend against the claim in its own name or in the name of the
Trust.
(d) A Forum Indemnitee shall not be liable for any action taken or failure to
act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the Trust or
counsel to Forum, and upon statements of accountants, brokers and other
persons reasonably believed in good faith by Forum to be experts in the
matter upon which they are consulted;
5
<PAGE>
(ii) any oral instruction which it receives and which it reasonably believes in
good faith was transmitted by the person or persons authorized by the Board
to give such oral instruction. Forum shall have no duty or obligation to
make any inquiry or effort of certification of such oral instruction;
(iii)any written instruction or certified copy of any resolution of the Board,
and Forum may rely upon the genuineness of any such document or copy
thereof reasonably believed in good faith by Forum to have been validly
executed; or
(iv) as to genuineness, any signature, instruction, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order, or other document reasonably believed in
good faith by Forum to be genuine and to have been signed or presented by
the Trust or other proper party or parties;
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(e) Forum shall not be liable for the errors of other service providers to the
Trust including the errors of printing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the administrative services provided by Forum pursuant
to this Agreement, the Trust shall pay Forum, with respect to each Class of each
of the Funds, the fees set forth in Appendix B hereto. These fees shall be
accrued by the Trust daily and shall be payable monthly in arrears on the first
day of each calendar month for services performed under this Agreement during
the prior calendar month.
If fees begin to accrue in the middle of a month or if this Agreement
terminates before the end of any month, all fees for the period from that date
to the end of that month or from the beginning of that month to the date of
termination, as the case may be, shall be prorated according to the proportion
that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement with respect to a
Fund, the Trust shall pay to Forum such compensation as shall be payable prior
to the effective date of termination.
(b) Notwithstanding anything in this Agreement to the contrary, Forum and its
affiliated persons may receive compensation or reimbursement from the Trust with
respect to (i) the provision of services on behalf of the Funds in accordance
with any Plan or Service Plan, (ii) the provision of shareholder support or
other services, (iii) service as a trustee or officer of the Trust and (iv)
services to the Trust, which may include the types of services described in this
Agreement, with respect to the creation of any Fund and the start-up of the
Fund's operations.
6
<PAGE>
(c) The Trust shall be responsible for and assumes the obligation for payment of
all of its expenses, including: (a) the fee payable under this Agreement; (b)
the fees payable to each investment adviser under an agreement between the
investment adviser and the Trust; (c) expenses of issue, repurchase and
redemption of Shares; (d) interest charges, taxes and brokerage fees and
commissions; (e) premiums of insurance for the Trust, its trustees and officers
and fidelity bond premiums; (f) fees, interest charges and expenses of third
parties, including the Trust's independent accountant, custodian, transfer
agent, dividend disbursing agent and fund accountant; (g) fees of pricing,
interest, dividend, credit and other reporting services; (h) costs of membership
in trade associations; (I) telecommunications expenses; (j) funds transmission
expenses; (k) auditing, legal and compliance expenses; (l) costs of forming the
Trust and maintaining its existence; (m) costs of preparing, filing and printing
the Trust's Prospectuses, subscription application forms and shareholder reports
and other communications and delivering them to existing shareholders, whether
of record or beneficial; (n) expenses of meetings of shareholders and proxy
solicitations therefore; (o) costs of reproduction, stationery, supplies and
postage; (p) fees and expenses of the Trust's trustees; (q) compensation of the
Trust's officers and employees and costs of other personnel (who may be
employees of the investment adviser, Forum or their respective affiliated
persons) performing services for the Trust; (R) costs of Board, Board committee,
shareholder and other corporate meetings; (s) SEC registration fees and related
expenses; (t) state, territory or foreign securities laws registration fees and
related expenses; and (u) all fees and expenses paid by the Trust in accordance
with any Plan or Service Plan or agreement related to similar manners.
(d) Should the Trust exercise its right to terminate this Agreement, the Trust,
on behalf of the applicable Fund, shall reimburse Forum for all out-of-pocket
expenses and employee time (at 150% of salary) associated with the copying and
movement of records and material to any successor person and providing
assistance to any successor person in the establishment of the accounts and
records necessary to carry out the successor's responsibilities.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund on December
1, 1997. Upon effectiveness of this Agreement, it shall supersede all previous
agreements between the parties hereto covering the subject matter hereof insofar
as such Agreement may have been deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund until
terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
7
<PAGE>
(c) This Agreement may be terminated with respect to a Fund at any time, without
the payment of any penalty (i) by the Board on 60 days' written notice to Forum
or (ii) by Forum on 60 days' written notice to the Trust. The obligations of
Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement otherwise
shall not be assignable by either Forum or the Trust except by the specific
written consent of the other party. All terms and provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may
(a) prepare or assist in the preparation of periodic reports to shareholders
and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company industry to
companies that track or report price, performance or other information regarding
investment companies; and
(c) release such other information as approved in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where Forum
may be exposed to civil or criminal contempt proceedings for failure to release
the information, when requested to divulge such information by duly constituted
authorities or when so requested by the Trust.
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
8
<PAGE>
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under this
Agreement, nothing herein shall be deemed to limit or restrict Forum's right, or
the right of any of Forum's managers, officers or employees who also may be a
trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant to this
Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
(c) Without limiting the generality of the Sections 9(a) and (b), the Trust
acknowledges that certain legal services may be provided to it by lawyers who
are employed by Forum or its affiliates and who render services to Forum and its
affiliates. A lawyer who provides such services to the Trust, and any lawyer who
supervises such lawyer, although employed generally by Forum or its affiliates,
will have a direct professional attorney-client relationship with the Trust.
Those services for which such a direct relationship will exist are listed in
Appendix C hereto. Provided (i) Forum agrees with any attorney performing legal
services for the Trust to not direct the professional judgment of the attorney
in performing those legal services and (ii) the attorney agrees to disclose to
the Chairman of the Audit Committee or to outside counsel to the Trust any
circumstance in which a legal service the attorney proposes to provide relates
to a matter in which the Trust and Forum or the Trust and any other investment
company to which the attorney is providing legal services have or may have
divergent legal or economic interests, each of Forum and the Trust hereby
consents to the simultaneous representation by the attorney of both Forum and
the Trust and waives any general conflict of interest existing in such
simultaneous representation, and the Trust agrees that, in the event the
attorney ceases to represent the Trust, whether at the request of the Trust or
otherwise, the attorney may continue thereafter to represent Forum, and the
Trust expressly consents to such continued representation.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
9
<PAGE>
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance with
Section 6, no provisions of this Agreement may be amended or modified in any
manner except by a written agreement properly authorized and executed by both
parties hereto.
(c) This Agreement shall be governed by, and the provisions of this Agreement
shall be construed and interpreted under and in accordance with, the laws of the
State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter hereof,
whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be illegal, in
conflict with any law or otherwise invalid, the remaining portion or portions
shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience only and are
not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the parties
at their respective principal places of business, or at such other address as a
party may have designated in writing, shall be deemed to have been properly
given.
(i) Notwithstanding any other provision of this Agreement, the parties agree
that the assets and liabilities of each Fund of the Trust are separate and
10
<PAGE>
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
(j) No affiliated person, employee, agent, director, officer or manager of Forum
shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full power
and authority to sign this Agreement on behalf of the party indicated and that
their signature will bind the party indicated to the terms hereof and each party
hereto warrants and represents that this Agreement, when executed and delivered,
will constitute a legal, valid and binding obligation of the party, enforceable
against the party in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting securities,"
"interested person," and "affiliated person" shall have the meanings ascribed
thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
TRUECROSSING FUNDS
By:/s/ James B. Cowperthwait
James B. Cowperthwait
Chairman
FORUM ADMINISTRATIVE SERVICES, LLC
By: /s/ David I. Goldstein
David I. Goldstein
Director
11
<PAGE>
TRUECROSSING FUNDS
ADMINISTRATION AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF DECEMBER 8, 1999
TRUECROSSING GROWTH FUND
-A1-
<PAGE>
TRUECROSSING FUNDS
ADMINISTRATION AGREEMENT
APPENDIX B
FEES AND EXPENSES
Fee as a % of the Annual Average
Portfolio Daily Net Assets of the Portfolio
TrueCrossing Growth Fund 0.15% of the first $50 million in assets
0.10% of the second $50 million in assets
0.05% thereafter
Notwithstanding the table above, the minimum fee per Portfolio shall be $25,000
per year ($2083.33 per month).
-B1-
<PAGE>
TRUECROSSING FUNDS
ADMINISTRATION AGREEMENT
APPENDIX C
LEGAL SERVICES
1. Advise the Trust on compliance with applicable U.S. laws and regulations
with respect to matters that are within the ordinary course of the Trust's
business.
2. Advise the Trust on compliance with applicable U.S. laws and regulations
with respect to matters that are outside the ordinary course of the Trust's
business(*).
3. Liaison with the SEC.
4. Draft correspondences to SEC and respond to SEC comments.
5. Liaison with the Trust's outside counsel.
6. Provide attorney letters to the Trust's auditors.
7. Assist Trust outside counsel in the preparation of exemptive applications,
no-action letters, prospectuses, registration statements and proxy
statements and related material.
8. Prepare exemptive applications, no-action letters, prospectuses,
registration statements and proxy statements and related material, and
draft correspondences to SEC and respond to SEC comments with respect
thereto(*).
9. Prepare prospectus supplements.
10. Review and authorize Section 24 filings.
11. Prepare and/or review agendas and minutes for and respond to inquiries at
board and shareholder meetings regarding applicable U.S. laws and
regulations.
12. Prepare and/or review agreements between the Trust and any third parties.
-C1-
<PAGE>
Note: Items designated with an (*) are Special Legal Services.
- -C2-
<PAGE>
EXHIBIT (G)(4)
TRUECROSSING FUNDS
FUND ACCOUNTING AGREEMENT
AGREEMENT made as of the 8th day of December, 1999, by and between
TrueCrossing Funds, a Delaware business trust, with its principal office and
place of business at Two Portland Square, Portland, Maine 04101 (the "Trust"),
and Forum Accounting Services, LLC, a Delaware limited liability company with
its principal office and place of business at Two Portland Square, Portland,
Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and may issue its shares of beneficial interest, no par value (the "Shares"), in
separate series and classes; and
WHEREAS, the Trust offers shares in various series as listed in
Appendix A hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 6, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust may in the future offer shares of various classes of each
Fund as listed in Appendix A hereto (each such class subsequently established by
the Trust in a Fund being herein referred to as a "Class," and collectively as
the "Classes");
WHEREAS, the Trust desires that Forum perform certain fund accounting
services for each Fund and Class thereof and Forum is willing to provide those
services on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Trust hereby appoints Forum, and Forum hereby agrees, to act as
fund accountant of the Trust for the period and on the terms set forth in this
Agreement.
(b) In connection therewith, the Trust has delivered to Forum copies of
(i) the Trust's Trust Instrument, (ii) the Trust's Registration Statement and
all amendments thereto filed with the U.S. Securities and Exchange Commission
("SEC") pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), or the 1940 Act (the "Registration Statement"), (iii) the Trust's current
Prospectus and Statement of Additional Information of each Fund (collectively,
as currently in effect and as amended or supplemented, the "Prospectus") and
(iv) all procedures adopted by the Trust with respect to the Funds (i.e.,
repurchase agreement procedures), and shall promptly furnish Forum with all
amendments of or supplements to the foregoing. The Trust shall deliver to Forum
a certified copy of the resolution of the Board of Trustees of the Trust (the
"Board") appointing Forum and authorizing the execution and delivery of this
Agreement.
1
<PAGE>
SECTION 2. DUTIES OF FORUM
(a) Forum and the Trust's administrator, Forum Administrative
Services, LLC (the "Administrator"), may from time to time adopt
such procedures as they agree upon to implement the terms of this
Section. With respect to each Fund, Forum shall perform the
following services:
(i) calculate the net asset value per share with the frequency
prescribed in each Fund's then-current Prospectus;
(ii) calculate each item of income, expense, deduction, credit, gain
and loss, if any, as required by the Trust and in conformance with
generally accepted accounting practice ("GAAP"), the SEC's Regulation
S-X (or any successor regulation) and the Internal Revenue Code of
1986, as amended (or any successor laws)(the "Code");
(iii) maintain each Fund's general ledger and record all income,
expenses, capital share activity and security transactions of each
Fund;
(iv) calculate the yield, effective yield, tax equivalent yield and
total return for each Fund, and each Class thereof, as applicable, and
such other measure of performance as may be agreed upon between the
parties hereto;
(v) provide the Trust and such other persons as the Administrator may
direct with the following reports (A) a current security position
report, (B) a summary report of transactions and pending maturities
(including the principal, cost, and accrued interest on each portfolio
security in maturity date order), and (C) a current cash position and
projection report;
(vi) prepare and record, as of each time when the net asset value of a
Fund is calculated or as otherwise directed by the Trust, either, as
requested by the Trust, (A) a valuation of the assets of the Fund
(unless otherwise specified in or in accordance with this Agreement,
based upon the use of outside services normally used and contracted for
this purpose by Forum in the case of securities for which information
and market price or yield quotations are readily available and based
upon evaluations conducted in accordance with the Trust's instructions
in the case of all other assets) or (B) a calculation confirming that
the market value of the Fund's assets does not deviate from the
amortized cost value of those assets by more than a specified
percentage;
(vii) make such adjustments over such periods as Forum deems necessary
to reflect over-accruals or under-accruals of estimated expenses or
income;
2
<PAGE>
(viii) request any necessary information from the Administrator and the
Trust's transfer agent and distributor in order to prepare, and
prepare, the Trust's Form N-SAR;
(ix) provide appropriate records to assist the Trust's independent
accountants and, upon approval of the Trust or the Administrator, any
regulatory body in any requested review of the Trust's books and
records maintained by Forum;
(x) prepare semi-annual financial statements and oversee the production
of the semi-annual financial statements and any related report to the
Trust's shareholders prepared by the Trust or its investment advisers,
as applicable;
(xi) file the Funds' semi-annual financial statements with the SEC or
ensure that the Funds' semi-annual financial statements are filed with
the SEC;
(xii) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information with respect to investment companies;
(xiii) provide the Trust or Administrator with the data requested by
the Administrator that is required to update the Trust's registration
statement;
(xiv) provide the Trust or independent accountants with all information
requested with respect to the preparation of the Trust's income, excise
and other tax returns;
(xv) prepare or prepare, execute and file all Federal income and excise
tax returns and state income and other tax returns, including any
extensions or amendments, each as agreed between the Trust and Forum;
(xvi) produce quarterly compliance reports for investment advisers, as
applicable, to the Trust and the Board and provide information to the
Administrator, investment advisers to the Trust and other appropriate
persons with respect to questions of Fund compliance;
(xvii) determine the amount of distributions to shareholders as
necessary to, among other things, maintain the qualification of each
Fund as a regulated investment company under the Code, and prepare and
distribute to appropriate parties notices announcing the declaration of
dividends and other distributions to shareholders;
(xviii) transmit to and receive from each Fund's transfer agent
appropriate data to on a daily basis and daily reconcile Shares
outstanding and other data with the transfer agent;
(xix) periodically reconcile all appropriate data with each Fund's
custodian;
(xx) verify investment trade tickets when received from an investment
adviser, as applicable, and maintain individual ledgers and historical
tax lots for each security; and
(xxi) perform such other recordkeeping, reporting and other tasks as
may be specified from time to time in the procedures adopted by the
Board; provided, that Forum need not begin performing any such task
except upon 65 days' notice and pursuant to mutually acceptable
compensation agreements.
3
<PAGE>
(b) Forum shall prepare and maintain on behalf of the Trust the
following books and records of each Fund, and each Class thereof, pursuant to
Rule 31a-1 under the 1940 Act (the "Rule"):
(i) Journals containing an itemized daily record in detail of all
purchases and sales of securities, all receipts and disbursements of
cash and all other debits and credits, as required by subsection (b)(1)
of the Rule;
(ii) Journals and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, as required by
subsection (b)(2) of the Rule (but not including the ledgers required
by subsection (b)(2)(iv);
(iii) A record of each brokerage order given by or on behalf of the
Trust for, or in connection with, the purchase or sale of securities,
and all other portfolio purchases or sales, as required by subsections
(b)(5) and (b)(6) of the Rule;
(iv) A record of all options, if any, in which the Trust has any direct
or indirect interest or which the Trust has granted or guaranteed and a
record of any contractual commitments to purchase, sell, receive or
deliver any property as required by subsection (b)(7) of the Rule;
(v) A monthly trial balance of all ledger accounts (except shareholder
accounts) as required by subsection (b)(8) of the Rule; and
(vi) Other records required by the Rule or any successor rule or
pursuant to interpretations thereof to be kept by open-end management
investment companies, but limited to those provisions of the Rule
applicable to portfolio transactions and as otherwise agreed upon
between the parties hereto.
(c) The books and records maintained pursuant to Section 2(b) shall be
prepared and maintained in such form, for such periods and in such locations as
may be required by the 1940 Act. The books and records pertaining to the Trust
that are in possession of Forum shall be the property of the Trust. The Trust,
or the Trust's authorized representatives, shall have access to such books and
records at all times during Forum's normal business hours. Upon the reasonable
request of the Trust or the Administrator, copies of any such books and records
shall be provided promptly by Forum to the Trust or the Trust's authorized
representatives at the Trust's expense. In the event the Trust designates a
successor that shall assume any of Forum's obligations hereunder, Forum shall,
at the expense and direction of the Trust, transfer to such successor all
relevant books, records and other data established or maintained by Forum under
this Agreement.
(d) In case of any requests or demands for the inspection of the
records of the Trust maintained by Forum, Forum will endeavor to notify the
Trust and to secure instructions from an authorized officer of the Trust as to
such inspection. Forum shall abide by the Trust's instructions for granting or
denying the inspection; provided, however, that Forum may grant the inspection
4
<PAGE>
without instructions if Forum is advised by counsel to Forum that failure to do
so will result in liability to Forum.
SECTION 3. STANDARD OF CARE; RELIANCE
(a) Forum shall be under no duty to take any action except as
specifically set forth herein or as may be specifically agreed to by Forum in
writing. Forum shall use its best judgment and efforts in rendering the services
described in this Agreement. Forum shall not be liable to the Trust or any of
the Trust's shareholders for any action or inaction of Forum relating to any
event whatsoever in the absence of bad faith, willful misfeasance or negligence
in the performance of Forum's duties or obligations under this Agreement or by
reason of Forum's negligent disregard of its duties and obligations under this
Agreement.
(b) The Trust agrees to indemnify and hold harmless Forum, its
employees, agents, directors, officers and managers and any person who controls
Forum within the meaning of section 15 of the Securities Act or section 20 of
the Securities Exchange Act of 1934, as amended, ("Forum Indemnitees") against
and from any and all claims, demands, actions, suits, judgments, liabilities,
losses, damages, costs, charges, reasonable counsel fees and other expenses of
every nature and character arising out of or in any way related to Forum's
actions taken or failures to act with respect to a Fund that are consistent with
the standard of care set forth in Section 3(a) or based, if applicable, on good
faith reliance upon an item described in Section 3(c)(a "Claim"). The Trust
shall not be required to indemnify any Forum Indemnitee if, prior to confessing
any Claim against the Forum Indemnitee, Forum or the Forum Indemnitee does not
give the Trust written notice of and reasonable opportunity to defend against
the claim in its own name or in the name of the Forum Indemnitee.
(c) A Forum Indemnitee shall not be liable for any action taken or
failure to act in good faith reliance upon:
(i) the advice of the Trust or of counsel, who may be counsel to the
Trust or counsel to Forum;
(ii) any oral instruction which it receives and which it reasonably
believes in good faith was transmitted by the person or persons
authorized by the Board to give such oral instruction (Forum shall have
no duty or obligation to make any inquiry or effort of certification of
such oral instruction.);
(iii) any written instruction or certified copy of any resolution of
the Board, and Forum may rely upon the genuineness of any such document
or copy thereof reasonably believed in good faith by Forum to have been
validly executed; or
(iv) as to genuineness, any signature, instruction, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument,
report, notice, consent, order, or other document reasonably believed
in good faith by Forum to be genuine and to have been signed or
presented by the Trust or other proper party or parties;
5
<PAGE>
and no Forum Indemnitee shall be under any duty or obligation to inquire into
the validity or invalidity or authority or lack thereof of any statement, oral
or written instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which Forum reasonably believes in good faith
to be genuine.
(d) Forum shall not be liable for the errors of other service providers
to the Trust, including the errors of pricing services (other than to pursue all
reasonable claims against the pricing service based on the pricing services'
standard contracts entered into by Forum) and errors in information provided by
an investment adviser (including prices and pricing formulas and the untimely
transmission of trade information), custodian or transfer agent to the Trust.
(e) With respect to Funds which do not value their assets in accordance
with Rule 2a-7 under the 1940 Act, notwithstanding anything to the contrary in
this Agreement, Forum shall not be liable to the Trust or any shareholder of the
Trust for (i) any loss to the Trust if an NAV Difference for which Forum would
otherwise be liable under this Agreement is less than or equal to 0.001 (1/10 of
1%) or (ii) any loss to a shareholder of the Trust if the NAV Difference for
which Forum would otherwise be liable under this Agreement is less than or equal
to 0.005 (1/2 of 1%) or if the loss in the shareholder's account with the Trust
is less than or equal to $10. Any loss for which Forum is determined to be
liable hereunder shall be reduced by the amount of gain which inures to
shareholders, whether to be collected by the Trust or not.
(f) For purposes of this Agreement, (i) the NAV Difference shall mean
the difference between the NAV at which a shareholder purchase or redemption
should have been effected ("Recalculated NAV") and the NAV at which the purchase
or redemption is effected, divided by the Recalculated NAV, (ii) NAV Differences
and any Forum liability therefrom are to be calculated each time a Fund's (or
class's) NAV is calculated, (iii) in calculating any NAV Difference for which
Forum would otherwise be liable under this Agreement for a particular NAV error,
Fund losses and gains shall be netted and (iv) in calculating any NAV Difference
for which Forum would otherwise be liable under this Agreement for a particular
NAV error that continues for a period covering more than one NAV determination,
Fund losses and gains for the period shall be netted.
(g) Nothing contained herein shall be construed to require Forum to
perform any service that could cause Forum to be deemed an investment adviser
for purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended,
or that could cause a Portfolio to act in contravention of a Portfolio's
Offering Document or any provision of the 1940 Act. Except as otherwise
specifically provided herein, the Trust assumes all responsibility for ensuring
that the Trust complies with all applicable requirements of the Securities Act,
the 1940 Act and any laws, rules and regulations of governmental authorities
with jurisdiction over the Trust. All references to any law in this Agreement
shall be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
6
<PAGE>
SECTION 4. COMPENSATION AND EXPENSES
(a) In consideration of the services provided by Forum pursuant to this
Agreement, the Trust shall pay Forum, with respect to each Fund, the fees set
forth in Clause (i) of Appendix B hereto. In consideration of the services
provided by Forum to begin the operations of a new Fund, the Trust shall pay
Forum, with respect to each Fund, the fees set forth in clause (ii) of Appendix
B hereto. In consideration of additional services provided by Forum to perform
certain functions, the Trust shall pay Forum, with respect to each Fund the fees
set forth in clause (iii) of Appendix B hereto.
All fees payable hereunder shall be accrued daily by the Trust. The
fees payable for the services listed in clauses (i) and (iii) of Appendix B
hereto shall be payable monthly in advance on the first day of each calendar
month for services to be performed during the following calendar month. The fees
payable for the services listed in clause (ii) and for all reimbursements as
described in Section 4(b) shall be payable monthly in arrears on the first day
of each calendar month (the first day of the calendar month after the Fund
commences operations in the case of the fees listed in clause (ii) of Appendix B
hereto) for services performed during the prior calendar month. If fees payable
for the services listed in clause (i) begin to accrue in the middle of a month
or if this Agreement terminates before the end of any month, all fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be prorated
according to the proportion that the period bears to the full month in which the
effectiveness or termination occurs. Upon the termination of this Agreement with
respect to a Fund, the Trust shall pay to Forum such compensation as shall be
payable prior to the effective date of termination.
(b) In connection with the services provided by Forum pursuant to this
Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for the
expenses set forth in Clause (iv) of Appendix B hereto. In addition, the Trust,
on behalf of the applicable Fund, shall reimburse Forum for all expenses and
employee time (at 150% of salary) attributable to any review of the Trust's
accounts and records by the Trust's independent accountants or any regulatory
body outside of routine and normal periodic reviews. Should the Trust exercise
its right to terminate this Agreement, the Trust, on behalf of the applicable
Fund, shall reimburse Forum for all out-of-pocket expenses and employee time (at
150% of salary) associated with the copying and movement of records and material
to any successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
SECTION 5. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective with respect to each Fund or
Class on the later of the date on which the Trust's Registration Statement
relating to the Shares of the Fund or Class becomes effective or the date of the
commencement of operations of the Fund or Class. Upon effectiveness of this
Agreement, it shall supersede all previous agreements between the parties hereto
7
<PAGE>
covering the subject matter hereof insofar as such Agreement may have been
deemed to relate to the Funds.
(b) This Agreement shall continue in effect with respect to a Fund
until terminated; provided, that continuance is specifically approved at least
annually (i) by the Board or by a vote of a majority of the outstanding voting
securities of the Fund and (ii) by a vote of a majority of Trustees of the Trust
who are not parties to this Agreement or interested persons of any such party
(other than as Trustees of the Trust).
(c) This Agreement may be terminated with respect to a Fund at any
time, without the payment of any penalty (i) by the Board on 60 days' written
notice to Forum or (ii) by Forum on 60 days' written notice to the Trust. The
obligations of Sections 3 and 4 shall survive any termination of this Agreement.
(d) This Agreement and the rights and duties under this Agreement
otherwise shall not be assignable by either Forum or the Trust except by the
specific written consent of the other party. All terms and provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
SECTION 6. ADDITIONAL FUNDS AND CLASSES
In the event that the Trust establishes one or more series of Shares or
one or more classes of Shares after the effectiveness of this Agreement, such
series of Shares or classes of Shares, as the case may be, shall become Funds
and Classes under this Agreement. Forum or the Trust may elect not to make any
such series or classes subject to this Agreement.
SECTION 7. CONFIDENTIALITY
Forum agrees to treat all records and other information related to the
Trust as proprietary information of the Trust and, on behalf of itself and its
employees, to keep confidential all such information, except that Forum may
(a) prepare or assist in the preparation of periodic reports to
shareholders and regulatory bodies such as the SEC;
(b) provide information typically supplied in the investment company
industry to companies that track or report price, performance or other
information regarding investment companies; and
(c) release such other information as approved in writing by the Trust,
which approval shall not be unreasonably withheld and may not be withheld where
Forum may be exposed to civil or criminal contempt proceedings for failure to
release the information, when requested to divulge such information by duly
constituted authorities or when so requested by the Trust.
8
<PAGE>
SECTION 8. FORCE MAJEURE
Forum shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdowns, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply. In addition, to the extent
Forum's obligations hereunder are to oversee or monitor the activities of third
parties, Forum shall not be liable for any failure or delay in the performance
of Forum's duties caused, directly or indirectly, by the failure or delay of
such third parties in performing their respective duties or cooperating
reasonably and in a timely manner with Forum.
SECTION 9. ACTIVITIES OF FORUM
(a) Except to the extent necessary to perform Forum's obligations under
this Agreement, nothing herein shall be deemed to limit or restrict Forum's
right, or the right of any of Forum's managers, officers or employees who also
may be a trustee, officer or employee of the Trust, or persons who are otherwise
affiliated persons of the Trust to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, trust, firm, individual or association.
(b) Forum may subcontract any or all of its responsibilities pursuant
to this Agreement to one or more corporations, trusts, firms, individuals or
associations, which may be affiliated persons of Forum, who agree to comply with
the terms of this Agreement; provided, that any such subcontracting shall not
relieve Forum of its responsibilities hereunder. Forum may pay those persons for
their services, but no such payment will increase Forum's compensation from the
Trust.
SECTION 10. COOPERATION WITH INDEPENDENT ACCOUNTANTS
Forum shall cooperate, if applicable, with each Fund's independent
public accountants and shall take reasonable action to make all necessary
information available to the accountants for the performance of the accountants'
duties.
SECTION 11. SERVICE DAYS
Nothing contained in this Agreement is intended to or shall require
Forum, in any capacity under this Agreement, to perform any functions or duties
on any day other than a business day of the Trust or of a Fund. Functions or
duties normally scheduled to be performed on any day which is not a business day
of the Trust or of a Fund shall be performed on, and as of, the next business
day, unless otherwise required by law.
9
<PAGE>
SECTION 12. LIMITATION OF SHAREHOLDER AND TRUSTEE LIABILITY
The trustees of the Trust and the shareholders of each Fund shall not
be liable for any obligations of the Trust or of the Funds under this Agreement,
and Forum agrees that, in asserting any rights or claims under this Agreement,
it shall look only to the assets and property of the Trust or the Fund to which
Forum's rights or claims relate in settlement of such rights or claims, and not
to the trustees of the Trust or the shareholders of the Funds.
SECTION 13. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party
for consequential damages under any provision of this Agreement.
(b) Except for Appendix A to add new Funds and Classes in accordance
with Section 6, no provisions of this Agreement may be amended or modified in
any manner except by a written agreement properly authorized and executed by
both parties hereto.
(c) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(d) This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof, whether oral or written.
(e) This Agreement may be executed by the parties hereto on any number
of counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(f) If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
(g) Section headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
(h) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(i) Notwithstanding any other provision of this Agreement, the parties
agree that the assets and liabilities of each Fund of the Trust are separate and
distinct from the assets and liabilities of each other Fund and that no Fund
shall be liable or shall be charged for any debt, obligation or liability of any
other Fund, whether arising under this Agreement or otherwise.
10
<PAGE>
(j) No affiliated person, employee, agent, director, officer or manager
of Forum shall be liable at law or in equity for Forum's obligations under this
Agreement.
(k) Each of the undersigned warrants and represents that they have full
power and authority to sign this Agreement on behalf of the party indicated and
that their signature will bind the party indicated to the terms hereof and each
party hereto warrants and represents that this Agreement, when executed and
delivered, will constitute a legal, valid and binding obligation of the party,
enforceable against the party in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and secured parties.
(l) The terms "vote of a majority of the outstanding voting
securities," "interested person" and "affiliated person" shall have the meanings
ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
TRUECROSSING FUNDS
By:/s/ James B. Cowperthwait
James B. Cowperthwait
Chairman
FORUM ACCOUNTING SERVICES, LLC
By:/s/ Stacey E. Hong
Stacy E. Hong
Director
11
<PAGE>
TRUECROSSING FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF DECEMBER 8, 1999
TRUECROSSING GROWTH FUND
-A1-
<PAGE>
TRUECROSSING FUNDS
FUND ACCOUNTING AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) BASE FEE
A. Standard Fee
Fee per Fund (domestic).........................................$3,000/month
Fee per Fund (international)....................................$5,000/month
Fee for each additional Class of the Fund above one.............$1,000/month
B. Plus additional surcharges for each of:
(i) Portfolios with asset levels exceeding $100 million.......$500/month
Portfolios with asset levels exceeding $250 million......$1000/month
Portfolios with asset levels exceeding $500 million.....$1,500/month
Portfolios with asset levels exceeding $1,000 million...$2,000/month
(ii) Portfolios requiring international custody..............$1,000/month
(iii) Portfolios with more than 30 international positions ...$1,000/month
(iv) Tax free money market Funds.............................$1,000/month
(v) Portfolios with more than 25% of net assets invested in
asset backed securities.................................$1,000/month
Portfolios with more than 50% of net assets invested in
asset backed securities.................................$2,000/month
(vii) Portfolios with more than 100 security positions........$1,000/month
(viii) Portfolios with a monthly portfolio turnover rate of 10%
or greater..............................................$1,000/month
C. Standard Fee per Gateway Fund (a Fund operating pursuant to
Section 12(d)(1)(E) of the 1940 Act)
Standard Fee per Fund........................................$1,000/month
Standard Fee per Fund that invests inone or more instruments
in addition to the fund in which it invests..................$2,000/month
Fee for each additional Class of a Fund above one............$1,000/month
Additional surcharges listed above do not apply
D. Standard Fee per Gateway Fund (a Fund operating pursuant to
Section 12(d)(1)(G) of the 1940 Act or in a similar structure)
Standard Fee per Fund........................................$1,000/month
Fee for each additional Class of a Fund above one............$1,000/month
Plus additional surcharges listed above if the Fund invests in
securities other than investment companies (calculated as if
the securities were the Fund's only assets)
-A1-
<PAGE>
Note 1: Surcharges are determined based upon the total assets,
security positions or other factors as of the end of the prior
month and on the portfolio turnover rate for the prior month.
Portfolio turnover rate shall have the meaning ascribed thereto
in SEC Form N-1A.
Note 2: The rates set forth above shall remain fixed through December
31, 1999. On January 1, 2000, and on each successive January 1,
the rates may be adjusted automatically by Forum without action
of the Trust to reflect changes in the Consumer Price Index for
the preceding calendar year, as published by the U.S. Department
of Labor, Bureau of Labor Statistics. Forum shall notify the
Trust each year of the new rates, if applicable.
(II) OTHER SERVICES (payable in equal installments monthly)
TAX SERVICES. Preparation of Federal income and excise tax
returns and preparation, execution and filing of state income
tax returns, including any extensions or amendments
Standard Fee.......................................$3,000/fiscal period
Fee per Gateway Fund (a Fund described
in (i)(C) or (D) above)............................$1,500/fiscal period
Fee per Gateway Fund (a Fund described in (i)(C) or (D) above)
that invests in more than one instrument in addition to the
fund(s) in which
it invests.........................................$3,000/fiscal period
(III) OUT-OF-POCKET AND RELATED EXPENSES
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to the cost of
(or appropriate share of the cost of): (i) pricing, paydown, corporate
action, credit and other reporting services, (ii) taxes, (iii) postage
and delivery services, (iv) telephone services, (v) electronic or
facsimile transmission services, (vi) reproduction, (vii) printing and
distributing financial statements, (xiii) microfilm and microfiche and
(ix) Trust record storage and retention fees. In addition, any other
expenses incurred by Forum at the request or with the consent of the
Trust, will be reimbursed by the Trust on behalf of the applicable
Fund.
-A2-
<PAGE>
EXHIBIT (I)
FINN DIXON & HERLING LLP
ATTORNEYS AT LAW
ONE LANDMARK SQUARE
STAMFORD, CONNECTICUT 06901-2689
TELEPHONE (203) 325-5000
FACSIMILE (203) 348-5777
December 17, 1999
TrueCrossing Funds
Two Portland Square
Portland, Maine 04101
Ladies and Gentlemen:
We have acted as special counsel for TrueCrossing Funds, a Delaware
business trust with transferable shares (the "Trust"), in connection with the
organization of the Trust, and the registration statement on Form N-1A (the
"Registration Statement") of (a) the Trust under the Investment Company Act of
1940, as amended (the "1940 Act") and (b) an indefinite number of shares of
beneficial interest of each of the Trust's TrueCrossing Growth Fund (the "Fund")
under the Securities Act of 1933, as amended, filed with the Securities and
Exchange Commission on July 29, 1999 (File Nos. 811-09509 and 333-84031,
respectively), as amended.
In rendering the opinion set forth herein, we have participated in the
preparation of the Registration Statement and the prospectus contained therein
(the "Prospectus") relating to such shares and we have examined originals,
telecopies or photocopies, certified or otherwise identified to our
satisfaction, of such records of the Trust and all such agreements, certificates
of public officials, certificates of officers or representatives of the Trust
and others, and such other documents, certificates and corporate or other
records as we have deemed necessary or appropriate as a basis for this opinion.
As to all matters of fact (including, without limitation, matters of fact set
forth in this opinion), we have relied upon and assumed the accuracy of
statements and representations of officers and other representatives of the
Trust and others. In our examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons signing or delivering any
instrument, the authority of all persons signing the Registration Statement, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as copies, certified or
otherwise, and the authenticity of the originals of such documents.
Based on the foregoing, and in reliance thereon, and subject to the
qualifications, assumptions and exceptions heretofore and hereinafter set forth,
we are of the opinion that:
1. The Trust has been duly organized and is validly existing as a
business trust with transferable shares of the type commonly called a Delaware
business trust.
2. The Trust is authorized to issue an unlimited number of shares. The
shares to be offered for sale by the Prospectus (the "Shares") have been duly
and validly authorized by all requisite action of the Trustees of the Trust and
no action of the shareholders of the Trust is required in connection therewith.
1
<PAGE>
3. When the Shares have been duly sold, issued and paid for as
contemplated by the Prospectus, they will be validly and legally issued, fully
paid and non-assessable by the Trust.
We do not express, or purport to express, any opinion with respect to
the laws of any jurisdiction other than the laws of the State of Connecticut,
the Delaware business trust laws and the federal securities laws of the United
States of America. This opinion does not extend to the securities or "blue sky"
laws of any state.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and further consent to the use of our name under the
heading "Legal Counsel" in the Statement of Additional Information of the Fund.
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter occur or come to our attention or any changes in law which may
hereafter occur.
Very truly yours,
/s/ FINN DIXON & HERLING LLP
FINN DIXON & HERLING LLP
2
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference made to our firm under the caption "Independent
Auditors" and to the use of our report dated December 16, 1999 in this
Registration Statement (Form N-1A No. 333-84031) of TrueCrossing Funds.
ERNST & YOUNG LLP
New York, New York
December 16, 1999
<PAGE>
EXHIBIT (l)
[NEWBRIDGE PARTNERS, LLC LETTERHEAD]
December 15, 1999
Board of Trustees
TrueCrossing Funds
Two Portland Square
Portland, Maine 04101
Ladies and Gentlemen:
This letter will confirm that NewBridge Partners, LLC is purchasing 10,000
shares of the TrueCrossing Growth Fund, the single series of TrueCrossing Funds,
for certain consideration of $10.00 per share for investment purposes only
and not with a view to reselling or otherwise distributing those shares.
Sincerely,
/s/ James B. Cowperthwait
James B. Cowperthwait
President
EXHIBIT (M)
TRUECROSSING FUNDS
DISTRIBUTION PLAN
December 8, 1999
Distribution Plan (the "Plan") of TrueCrossing Funds (the "Trust") with
respect to shares of the TrueCrossing Growth Fund (the "Fund") adopted in
accordance with the provisions of Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act").
SECTION 1. DISTRIBUTOR; ADVISER
The Trust has entered into a Distribution Agreement with Forum Fund
Services, LLC (the "Distributor") whereby the Distributor acts as principal
underwriter of the Fund's shares (the "Shares"), and has entered into an
investment advisory agreement with NewBridge Partners, LLC (the "Adviser")
whereby the Adviser acts as investment adviser to the Fund.
SECTION 2. DISTRIBUTION EXPENSES
The Trust may reimburse the Distributor for the distribution expenses
incurred by the Distributor on behalf of the Fund of up to 0.25% per annum of
the Fund's average daily net assets in accordance with the following:
(a) The Distributor may incur distribution expenses for any
distribution-related purpose it deems necessary or appropriate, including: (i)
the incremental costs of printing (excluding typesetting) prospectuses,
statements of additional information, annual reports and other periodic reports
for use in connection with the offering or sale of Shares, to any prospective
investor, (ii) preparing, printing and distributing any other literature used by
the Distributor in connection with the offering of Shares for sale to the public
and the cost of administering the program, compensation to and expenses
(including overhead and telephone) of employees of the Distributor who engage in
sales support and distribution activities, (iii) compensating other persons for
providing assistance in distributing the Shares and (iv) reimbursement to the
Adviser of the Adviser's distribution-related expenses, including expenses of
employees of the Adviser who train or educate others with respect to the Fund
and the investment techniques employed to achieve the Fund's investment
objective.
(b) The schedule of such reimbursements and the basis upon which they
will be paid shall be determined from time to time by the Trust's Board of
Trustees (the "Board"). Unreimbursed distribution expenses of the Distributor
incurred during a fiscal year of the Fund may not be reimbursed by the Trust in
subsequent fiscal years.
1
<PAGE>
SECTION 3. REVIEW AND RECORDS
(a) The Distributor shall prepare and furnish to the Board, and the
Board shall review at least quarterly, written reports setting forth all amounts
expended under the Plan by the Trust and the Distributor and identifying the
activities for which the expenditures were made.
(b) The Trust shall preserve copies of the Plan, each agreement related
to the Plan and each report prepared and furnished pursuant to this Section in
accordance with Rule 12b-1 under the 1940 Act.
SECTION 4. EFFECTIVENESS; DURATION; AND TERMINATION
(a) The Plan shall become effective with respect to the Fund upon
approval by the Board, including 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 Plan or in any agreement related to the Plan
(the "Plan Trustees"), pursuant to a vote cast in person at a meeting called for
the purpose of voting on approval of the Plan.
(b) The Plan shall remain in effect with respect to the Fund for a
period of one year from the date of its effectiveness, unless earlier terminated
in accordance with this Section, and thereafter shall continue in effect for
successive twelve-month periods, provided that such continuance is specifically
approved at least annually by the Board and a majority of the Plan Trustees
pursuant to a vote cast in person at a meeting called for the purpose of voting
on continuance of the Plan.
(c) The Plan may be terminated with respect to the Fund without penalty
at any time by a vote of (i) a majority of the Plan Trustees or (ii) a vote of a
majority of the outstanding voting securities of the Fund.
SECTION 5. AMENDMENT
The Plan may be amended with respect to the Fund at any time by the
Board, provided that (i) any material amendments to the Plan shall be effective
only upon approval of the Board and a majority of the Plan Trustees pursuant to
a vote cast in person at a meeting called for the purpose of voting on the
amendment to the Plan, and (ii) any amendment which increases materially the
amount which may be spent by the Trust on behalf of the Fund pursuant to the
Plan shall be effective only upon the additional approval a majority of the
outstanding voting securities of the Fund.
SECTION 6. NOMINATION OF DISINTERESTED TRUSTEES
While the Plan is in effect, the selection and nomination of the
Trustees of the Trust who are not interested persons of the Trust shall be
committed to the discretion of the Trustees of the Trust who are not interested
persons of the Trust.
2
<PAGE>
SECTION 7. MISCELLANEOUS
(a) The terms "majority of the outstanding voting securities" and
"interested person" shall have the meanings ascribed thereto in the 1940 Act.
(b) If any provision of the Plan shall be held invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
3
<PAGE>
EXHIBIT (P)(1)
TRUECROSSING FUNDS
CODE OF ETHICS
December 8, 1999
SECTION 1. INTRODUCTION
This Code of Ethics ("Code") has been adopted by TrueCrossing Funds
(the "Trust") with respect to each of its investment portfolios (each a "Fund")
to establish standards and procedures for the detection and prevention of
activities by which persons having knowledge of the investments and investment
intentions of a Fund may abuse their fiduciary duties to the Trust and to deal
with other types of conflict of interest situations.
Upon discovering a violation of the Code, the Board may impose such
sanctions as it deems appropriate, including, among other things, a letter of
censure or suspension or termination of the employment or other position of the
violator.
SECTION 2. DEFINITIONS
(a) Access Person means:
(i) all Trust officers;
(ii) all trustees, including independent trustees; and
(iii) individuals in a control relationship with a Fund who obtains
information concerning recommendations made to a Fund about
the purchase or sale of a security.
(b) Beneficial Owner means "beneficial owner" as defined in Rule
16a-1(a)(2) under the Securities and Exchange Act of 1934 except that the
determination of direct or indirect beneficial ownership shall apply to all
Covered Securities which an Access Person owns or acquires. A beneficial owner
of a security is any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise, has or shares a direct or
indirect pecuniary interest (the opportunity, directly or indirectly, to profit
or share in any profit derived from a transaction in the subject securities) in
a security.
Indirect pecuniary interest in a security includes securities held by a
person's immediate family sharing the same household. Immediate family means any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law (including adoptive relationships).
(c) Control means the power to exercise a controlling influence over
the management or policies of a company, unless such power is solely the result
of an official position with such company.
1
<PAGE>
(d) Covered Security means any security except:
(i) direct obligations of the Government of the United States;
(ii) bankers' acceptances and bank certificates of deposit;
(iii) commercial paper and debt instruments with a maturity at
issuance of less than 366 days and that are rated in one of
the two highest rating categories by a nationally recognized
statistical rating organization;
(iv) repurchase agreements covering any of the foregoing; and (vi)
shares of registered open-end investment companies.
(e) Investment Personnel means any individual who controls the Trust
and who obtains information concerning recommendations made to the Trust
regarding the purchase or sale of securities by the Trust.
(f) Security Held or to be Acquired by the Trust means
(i) any Covered Security which, within the most recent 15 days (x)
is or has been held by the Trust or (y) is being or has been
considered by the Trust or an investment adviser to the Trust
for purchase by the applicable Trust; and
(ii) any option to purchase or sell, and any security convertible
into or exchangeable for, a Covered Security.
(g) Purchase or sale includes, among other things, the writing of an
option to purchase or sell.
SECTION 3. PROHIBITED TRANSACTIONS
(a) Prohibition Against Fraudulent Conduct. No Access Person shall use
any information concerning the investments or investment intentions of a Fund,
or the Access Person's ability to influence such investment intentions, for
personal gain or in a manner detrimental to the interests of a Fund.
In addition, no Access Person of a Fund shall, directly or indirectly
in connection with the purchase or sale of a security held or to be acquired by
a Fund:
(i) employ any device, scheme or artifice to defraud a Fund;
(ii) make to a Fund or to a Fund's investment advisers or
distributor any untrue statement of a material fact or omit to
state to any of the foregoing a material fact necessary in
order to make the statements made, in light of the
circumstances under which they are made, not misleading;
(iii) engage in any act, practice, or course of business that
operates or would operate as a fraud or deceit upon a Fund; or
(iv) engage in any manipulative practice with respect to a Fund.
(b) Other Prohibited Transactions. Access Persons are prohibited
from:
2
<PAGE>
(i) inducing or causing a Fund to take action or to fail to take
action, for personal benefit rather than for the benefit of
such Fund;
(ii) accepting anything other than of DE MINIMUS value or any other
preferential treatment from any entity with which a Fund does
business;
(iii) establishing or maintaining an account at any entity through
which securities transactions may be effected without written
notice to the designated Review Officer prior to establishing
such an account;
(iv) using knowledge of portfolio transactions of a Fund for their
personal benefit or the personal benefit of their friends or
relatives;
(v) violating the anti-fraud provisions of the federal or state
securities laws;
(vi) serving on the boards of directors of publicly traded
companies, absent prior authorization based upon a
determination that the board service would be consistent
with the interests of a Fund and its shareholders.
(c) Undue Influence; Disclosure of Personal Interest. No Access Person
shall cause or attempt to cause any Fund to purchase, sell or hold any security
in a manner calculated to create any personal benefit to the Access Person. No
Access Person shall recommend any securities transactions for a Fund without
having disclosed the Access Person's interest, if any, in such securities or the
issuer thereof, including, without limitation:
(i) the Access Person's direct or indirect beneficial ownership
of any securities of such issuer;
(ii) any position with such issuer or its affiliates: and
(iii) any present or proposed business relationship between such
issuer or its affiliates, on the one hand, and such person or
any party in which such person has a significant interest, on
the other hand.
(d) Corporate Opportunities. All Access Persons are prohibited from
taking personal advantage of any opportunity properly belonging to a Fund.
(e) Confidentiality. Except as required in the normal course of
carrying out an Access Person's business responsibilities, Access Persons are
prohibited from revealing information relating to the investment intentions or
activities of any Fund, or securities that are being considered for purchase or
sale on behalf of any Fund.
SECTION 4. REPORTING REQUIREMENTS
(a) Access Person Reporting. All Access Persons must report the
information described in this Section with respect to transactions in any
Covered Security in which the Access Person has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership. All Access
Persons and Investment Personnel must report to the Review Officer unless they
are otherwise required to report to the distributor or an investment adviser of
the Trust or a Fund pursuant to a Code of Ethics adopted by those entities and
approved by the Trust.
3
<PAGE>
(b) Trustee Reporting. An independent trustee (a trustee who is not an
interested person of the Trust as defined in Section 2(a)(19) of the Investment
Company Act of 1940 Act) need only report a transaction if the trustee knew at
the time of the transaction or, in the ordinary course of fulfilling the
trustee's official duties as a trustee, should have known that, during the 15
day period immediately preceding or after the date of the transaction in a
Covered Security by the trustee, such Covered Security is or was purchased or
sold or was being considered for purchase or sale by a Fund or an investment
adviser to the Trust or a Fund.
(c) Exclusions from Reporting. Purchases or sales over which an Access
Person has no direct or indirect influence or control are not subject to the
reporting requirements of this Section. For this purpose an Access Person is
deemed to have no direct or indirect influence or control over
(i) purchases which are part of an automatic dividend
reinvestment plan and
(ii) purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities
(to the extent such rights were acquired from such issuer).
(d) Initial Holding Reports. No later than ten (10) days after the
person becomes an Access Person, an Access Person must make the following
reports:
(i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership when the person became and
Access person;
(ii) the name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were held
for the direct or indirect benefit of the Access Person as of
the date the person became an Access Person; and
(iii) the date that the report is submitted by the Access Person.
(e) Quarterly Transaction Reports. No later than ten (10) days after
the end of a calendar quarter, an Access Person must make the following reports:
(i) with respect to any transaction during the quarter in a
Covered Security in which the Access Person had, or by reason
of such transaction acquired, any direct or indirect
beneficial ownership:
(1) the date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of
shares and the principal amount of each Covered
Security involved;
(2) the nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition;
(3) the price of the Covered Security at which the
transactions was effected;
(4) the name of the broker,dealer or bank with or through
which the transaction was effected;and
(5) the date that the report is submitted by the Access
Person.
4
<PAGE>
(ii) with respect to any account established by the Access Person
in which any securities were held during the quarter for the
direct or indirect benefit of the Access Person:
(1) the name of the broker, dealer or bank with whom the
Access Person established the account;
(2) the date the account was established; and
(3) the date that the report is submitted by the Access
Person.
(f) Annual Holdings Reports. Annually, an Access Person must make the
following reports (which information must be current as of a date no more than
thirty (30) days before the report is submitted):
(i) the title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct or
indirect beneficial ownership;
(ii) the name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and
(iii) the date that the report is submitted by the Access Person.
(g) Certification of Compliance. Each Access Person is required to
certify annually (in the form of Appendix A) that the Access Person has read and
understood the Code and recognizes that the Access Person is subject to the
Code. Further, each Access Person is required to certify annually that the
Access Person has complied with all the requirements of the Code and that the
Access Person has disclosed or reported all personal securities transactions
pursuant to the requirements of the Code.
(h) Alternative Reporting. The filing of duplicate confirms and
statements on all Covered Securities transactions shall be deemed to satisfy
these reporting requirements. The annual holdings report may be satisfied by
confirming annually, in writing, the accuracy of the records maintained by the
Review Officer and recording the date of the confirmation.
(i) Report Qualification. Any report may contain a statement that the
report shall not be construed as an admission by the person making the report
that he or she has any direct or indirect beneficial ownership in the Covered
Securities to which the report relates.
(j) Account Opening Procedures. Access Persons shall provide written
notice to the Review Officer prior to opening any account with any entity
through which a Covered Securities transaction may be effected. In addition, all
Access Persons will promptly:
(i) provide full access to the Trust, its agents and attorneys to
any and all records and documents which the Trust considers
relevant to any securities transactions or other matters
subject to the Code;
5
<PAGE>
(ii) cooperate with the Trust, or its agents and attorneys, in
investigating any securities transactions or other matter
subject to the Code;
(iii) provide the Trust, its agents and attorneys with an
explanation (in writing if requested) of the facts and
circumstances surrounding any securities transaction or other
matter subject to the Code; and
(iv) promptly notify the Review Officer or such other individual as
the Trust may direct, in writing, from time to time, of any
incident of noncompliance with the Code by any Access Person.
SECTION 5. REVIEW OFFICER
(a) Duties of Review Officer. A Review Officer shall be appointed
by the Trust's President to:
(i) review all securities transaction and holdings reports and
shall maintain the names of persons responsible for reviewing
these reports;
(ii) identify all Access Persons who are required to make these
reports and promptly inform each Access Person of the
requirements of this Code;
(iii) compare, on a quarterly basis, all Access Person Covered
Securities transactions with each Fund's completed portfolio
transactions to determine whether a Code violation may have
occurred;
(iv) maintain a signed acknowledgment by each person who is then an
Access Person, in the form of Appendix A; and
(v) identify persons who are Investment Personnel of the Trust and
inform those persons of their requirements to obtain prior
written approval from the Review Officer prior to directly or
indirectly acquiring ownership of a security in any private
placement or initial public offering.
(b) Potential Trade Conflict. When there appears to be a transaction
that conflicts with the Code, the designated Review Officer shall request a
written explanation of the Access Person's transaction. If after post-trade
review, it is determined that there has been a violation of the Code, a report
will be made by the designated Review Officer with a recommendation of
appropriate action to the Board.
(c) Required Records. The Review Officer shall maintain and cause to be
maintained:
(i) a copy of any code of ethics adopted by the Trust which has
been in effect during the previous five (5) years in an easily
accessible place;
(ii) a record of any violation of any code of ethics, and of any
action taken as a result of such violation, in an easily
accessible place for at least five (5) years after the end of
the fiscal year in which the violation occurs;
(iii) a copy of each report made by an Access Person as required by
Section 4 of this Code for at least five (5) years after the
end of the fiscal year in which the report is made, the first
two (2) years in an easily accessible place;
(iv) a list of all persons who are, or within the past five years
have been, required to make reports or who were responsible
for reviewing these reports pursuant to any code of ethics
adopted by a Trust, in an easily accessible place;
6
<PAGE>
(v) a copy of each written report and certification required
pursuant to Section 5(c) of this Code for at least five (5)
years after the end of the fiscal year in which it is made,
the first two (2) years in an easily accessible place; and
(vi) a record of any decision, and the reasons supporting the
decision, approving the acquisition by Investment Personnel of
securities under Section 5(a)(5) of this Code, for at least
five (5) years after the end of the fiscal year in which the
approval is granted.
SECTION 6. BOARD REVIEW
The Board of Trustees, including a majority of the independent
trustees, shall:
(i) approve the code of ethics of the Trust, the code of ethics of
each investment adviser and principal underwriter of the Trust
before initially retaining their services, and any material
changes to these codes within six months of such change;
(ii) base its approval of a code of ethics, and any material
changes to a code of ethics, on a determination that the code
contains provisions reasonably necessary to prevent access
persons (as defined in the respective codes) from engaging in
prohibited conduct;
(iii) receive, prior to approving a code of ethics or any amendment
to a code of ethics, a certification from the Trust,
investment adviser or principal underwriter that it has
adopted procedures reasonably necessary to prevent access
persons from violating such code; and
(iv) receive and consider, no less frequently than annually:
(1) a written report from the Trust, investment adviser,
or principal underwriter describing any issues,
material violations or sanctions arising under the
Code; and
(2) a written certification from the Trust, investment
adviser, or principal underwriter, as applicable,
that it has adopted procedures reasonably necessary
to prevent Access Persons from violating its code of
ethics.
7
<PAGE>
A-1
TRUECROSSING FUNDS
CODE OF ETHICS
NOVEMBER 23, 1999
APPENDIX A
ACCESS PERSON ACKNOWLEDGEMENT
I understand that I am an Access person as defined in the TrueCrossing Funds
Code of Ethics. I have read and I understand the Code of Ethics and will comply
with it in all respects. In addition, I certify that I have complied with the
requirements of the Code of Ethics and I have disclosed or reported all personal
securities transactions required to be disclosed or reported pursuant to the
requirements of the Code.
Signature Date
Printed Name
This form must be completed and returned to the Trust's Review Officer:
Nanette K. Chern
c/o TrueCrossing Funds
Two Portland Square
Portland , ME 04101
-A1-
EXHIBIT P(2)
NEWBRIDGE PARTNERS, LLC
CODE OF PROFESSIONAL RESPONSIBILITY
(Revised December 1999)
NewBridge Partners is an investment management firm. Our clients have
entrusted us with the extraordinary responsibility of managing their assets to
the best of our ability. As a consequence, we owe our clients, both as a matter
of principle and as a matter of law, a fiduciary duty, that is, a duty of
loyalty and a duty of care. In addition, as employees of the Firm, each of us
owes a duty of loyalty to the Firm. Moreover, each of us is required to comply
with certain express requirements of the Investment Advisers Act of 1940 (the
"Advisers Act"). This Code of Professional Responsibility describes our duties
to our clients and the Firm, as well as our additional obligations under the
Advisers Act, and sets forth certain rules that have been adopted by the Firm
with a view toward ensuring that the Firm and its employees will fulfill such
duties and obligations.
FIDUCIARY DUTY TO OUR CLIENTS.
The Advisers Act imposes a fiduciary duty upon each of us at NewBridge
Partners, which means that we owe our clients a duty of loyalty and a duty of
care.
Under the duty of care, we are obligated:
o to exercise a high degree of care in evaluating investment
alternatives, in making investment recommendations to our
clients and, when applicable, in exercising our discretionary
power to make investments on behalf of our clients;
o to ensure that all information provided to our clients is
accurate in all material respects;
o to ensure that all of our recommendations to our clients, and,
if applicable, the investments made by us on their behalf, are
suitable in light of each client's needs, financial
circumstances and investment objectives; and
o to obtain best execution for our clients' securities
transactions where the Firm is in a position to direct
brokerage transactions.
Under the duty of loyalty, we are obligated:
o always to act in the best interests of our clients;
o to render disinterested and impartial advice to our clients;
1
<PAGE>
o to avoid engaging in any activity that conflicts with the
interests of our clients; and
o to disclose to our clients any potential conflict of interest.
In conformity with the requirements of the duty of loyalty, we have
advised our clients in Part II of our Form ADV, which is provided to each
client, that any of us may, from time to time, engage in securities transactions
that are the same as or similar to those that the Firm has recommended to its
clients or has effected for their account. However, while such disclosure makes
it permissible for each of us to engage in securities transactions that are the
same as or similar to those that we are recommending to our clients or are
effecting for their accounts, we can never:
o engage in "front running," which means that we cannot purchase
(or sell) securities for our own account prior to recommending
the purchase or sale of such securities to, or purchasing (or
selling) such securities for, our clients if our purchases (or
sales) might disadvantage our clients by causing them to
purchase (or sell) such securities at a possible higher (or
lower) price than we might pay (or receive) as a result of our
own purchases (or sales) of such securities; or
o misappropriate an investment opportunity, which means, by way
of illustration, that we cannot purchase securities for our
own account if our purchase would preclude or hinder our
clients from purchasing securities that we would have
otherwise recommended to them.
Similarly, under the duty of loyalty, we cannot favor one client over
another. Thus we must endeavor to spread unique investment opportunities amongst
our clients in a fair manner; and, while the bunching of trades is permissible,
we must take care to ensure that the savings that are realized from such
bunching are fairly allocated amongst our clients.
The duty of loyalty also imposes a duty upon the Firm itself not to
accept any compensation for directing trades to a particular broker except in
the very narrow circumstances under which the payment of so-called "soft
dollars" is permitted under Section 28(e) of the Securities Exchange Act of
1934. In order to ensure fulfill of this duty, the Firm has determined that it
will not accept any compensation from any broker in connection with brokerage
transactions, including any "soft dollar" compensation.
SPECIFICALLY PROHIBITED CONDUCT.
In addition to imposing a fiduciary duty upon the Firm and its
employees, the Advisers Act expressly prohibits the Firm and its employees from:
2
<PAGE>
o purchasing any security from, or selling a security to, a
client for the account of the Firm or for the account of an
employee of the Firm, without the express consent of the
client;
o engaging in false or misleading advertising, including the use
of testimonials and certain references to past recommendations;
o receiving performance fees (except in certain specified
circumstances);
o making payments to outside olicitors, except in compliance
with certain specific requirements; and
o engaging in any insider trading.
To ensure that the Firm and its employees will not inadvertently engage
in any of these specifically prohibited transactions, the Firm has adopted the
following rules:
1. The Firm and its employees may not purchase (or sell) a
security from (or to) a client for the account of the Firm or
for any account in which an employee of the Firm has a
Beneficial Interest without the prior approval of the Firm's
Compliance Officer. For purposes of the Code of Professional
Responsibility, an employee will be deemed to have a
"Beneficial Interest" in an account, in a security or in a
transaction, if any of the following persons or entities has
the opportunity to profit or share directly or indirectly in
any profit derived from such security or transaction:
o the employee himself or herself;
o any member of the employee's immediate family sharing
the same household;
o any partnership as to which the employee is a general
partner;
o any corporation or similar entity in which the
employee owns securities if the employee is a
controlling shareholder of the entity and has or
shares investment control over the entity's
portfolio; or
o any trust as to which (a) the employee is the trustee
and such employee or any member of his immediate
family is a beneficiary, (b) the employee is a
beneficiary and controls or shares control of the
trust's investments, or (c) the employee is a
settlor, has the power to revoke the trust without
the consent of another person and shares investment
control over the trust's investments.1
- -----------------------
1The Applicable rules that have been promulgated under both the Advisers
Act and the Investment Company Act define the term "Beneficial Interest" by
reference to Rule 16a-1(a)(2) of the rules and regulations promulgated under the
Exchange Act of 1934, to which reference should be made if there is any question
as to whether an employee has a Beneficial Interest in any transaction or
security. The term "immediate family" includes children, grandchildren, parents
grandparents, parents-in-law, siblings-in-law and children-in-law.
3
<PAGE>
2. Pursuant to the Firm's Policies and Procedures relating to
Advertising, a copy of which is attached as Exhibit A to this
Code of Professional Responsibility, all advertising by the
Firm (which includes any written communication to more than
one person) will be reviewed by the Firm's Compliance Officer
(or his or her designee) prior to the dissemination thereof.
3. The Firm will not accept any performance fees except pursuant
to arrangements that have been approved by the Firm's
Compliance Officer (or his or her designee).
4. The Firm will not engage any outside solicitors except
pursuant to arrangements that have been approved by the Firm's
Compliance Officer (or his or her designee).
5. Each employee of the Firm will be required to read and agree
to abide by the Firm's Written Policy on Insider Trading, a
copy of which is attached as Exhibit B to this Code of
Professional Responsibility.
PERSONAL SECURITIES TRANSACTIONS.
The rules promulgated under both the Advisers Act and the Investment
Company Act of 1940 (the "Investment Company Act") expressly require that the
Firm maintain records with respect to each security transaction that is entered
into by the Firm or any employee of the Firm who possesses knowledge about the
Firm's investment recommendations. In order to ensure compliance with these
rules, each employee of the Firm must provide a securities transaction report to
the Firm's Compliance Officer (or his or her designee) within 10 days of the end
of each calendar quarter which sets forth, as to each transaction in which the
employee has a Beneficial Interest (as defined above):
o the date of the transaction, the title, the interest rate and
maturity date (if applicable), the number of shares and the
principal amount of each security involved in a transaction
that was effected during such quarter;
o the nature of the transaction (I.E., purchase, sale or
other acquisition or disposition);
o the price of the security at which the transaction was
effected;
o the name of the broker, dealer or bank with or through whom
the transaction was effected; and
o the date that the report is submitted by such employee;
4
<PAGE>
provided, however, that an employee need not report (a) any transactions
effected in any account over which neither the Firm nor such employee has any
direct or indirect influence or control or (b) any transaction in any of the
following securities: direct obligations of the Government of the United States,
bankers' acceptances, bank certificates of deposit, commercial paper, and high
quality short-term debt instruments, including repurchase agreements, and shares
issued by open-end investment companies that are registered under the Investment
Company Act.
If no securities transaction in which such employee has a direct or
indirect beneficial interest occurred during the prior quarter, that fact must
be stated in the quarterly securities transaction report.
An employee of the Firm may satisfy the foregoing reporting requirement
by supplying or directing his or her broker to supply to the Firm's Compliance
Officer (or his or her designee) copies of confirmations of all personal
securities transactions or copies of all periodic statements for all securities
accounts as to which the employee has a direct or indirect beneficial interest,
provided that such confirmations or statements are delivered to the Firm's
Compliance Officer within 10 days of the end of the applicable quarter.
In addition, if, during any quarter, an employee of the Firm
establishes an account that holds securities as to which the employee has a
Beneficial Interest, the employee must report the following information to the
Firm's Compliance Officer (or his or her designee) within 10 days after the end
of such calendar quarter:
o the name of the broker, dealer or bank with whom the employee
established the account;
o the date the account was established; and
o the date that the report is submitted by such employee.
In order to ensure that the personal securities transactions of
employees of the Firm will not even have the appearance of a conflict of
interest, the Firm has adopted the following restrictions on, and requirements
relating to, personal investing activities:
1. No employee of the Firm may execute a transaction relating to
an Investment Security, as to which the employee has or would
have a Beneficial Interest, on a day when the Firm has a block
trade pending for the accounts of its clients in that same
security until such trade is executed or withdrawn without the
prior approval of the Firm's Compliance Officer (or his or her
designee); and
2. Each employee of the Firm must preclear with the Firm's
Compliance Officer (or his or her designee) any transaction
involving an Investment Security as to which the employee has
or would have a Beneficial Interest;
5
<PAGE>
provided, however, that such preclearance shall not be required with
respect to transactions involving 1000 shares or less or, in the case
of Investment Securities of companies with a market capitalization in
excess of $10 Billion, with respect to transactions involving 10,000
shares or less. For purposes of this Code of Professional
Responsibility, an "Investment Security" shall mean an equity security
of a company whose securities are listed for trading in the United
States and which has a market capitalization in excess of $1 Billion.
ADDITIONAL RESTRICTIONS AND LIMITATIONS APPLICABLE TO INVESTMENT COMPANY
ADVISERS
In accordance with certain of the Recommendations contained in the May
9, 1994, Report of the Advisory Group on Personal Investing of the Investment
Company Institute and Rule 17j-1 of the rules and regulations promulgated under
the Investment Company Act of 1940, the Firm has adopted the following
additional restrictions on, and requirements relating to, personal investing
activities, which restrictions and limitations will become effective at such
time as the Firm commences to provide investment advice to a registered
investment company:
1. Initial Public Offerings
No employee of the Firm may purchase any "Covered Security"
that is being offered in an initial public offering without
the prior approval of the Firm's Compliance Officer (or his or
her designee). For purposes of this Code of Conduct, a
"Covered Security" is any security other than direct
obligations of the Government of the United States, bankers'
acceptances, bank certificates of deposit, commercial paper,
and high quality short-term debt instruments, including
repurchase agreements, and shares issued by open-end
investment companies that are registered under the Investment
Company Act.
2. Limited Offerings (Private Placements)
No employee of the Firm may purchase a Covered Security in a
private placement without the prior approval of the Firm's
Compliance Officer (or his or her designee).
3. Additional Blackout Periods
No employee of the Firm may, without the prior approval of the
Firm's Compliance Officer (or his or her designee) execute a
transaction relating to an Covered Security on a day when any
6
<PAGE>
registered investment company as to which the Firm is an
investment adviser has pending a buy or sell order in that
same security until such order is executed or withdrawn; in
addition, no member of the Investment Policy Committee of the
Firm may, without the prior approval of the Firm's Compliance
Officer (or his or her designee) purchase or sell any Covered
Security within five calendar days before and two calendar
days after any investment company as to which the Firm acts as
an investment adviser purchases or sells that same security;
provided, however, that such preclearance shall not be
required with respect to transactions in Investment Securities
involving 1000 shares or less or, in the case of Investment
Securities of companies with a market capitalization in excess
of $10 Billion, with respect to transactions involving 10,000
shares or less. The Firm reserves the right to require any
employee who had engaged in transactions that are prohibited
during such blackout periods to disgorge any profits realized
in connection with such transaction.
4. Gifts
No employee of the Firm may accept any gift or other thing of
more than DE MINIMIS value from any person or entity that does
business with or on behalf of any investment company as to
which the Firm serves as an investment adviser.
5. Service as a Director
No employee of the Firm may serve on the board of directors of
any publicly traded company absent prior approval of the
Firm's Compliance Officer (or his or her designee) based upon
a determination that such board service would be consistent
with the interests of any investment company as to which the
Firm serves as an investment adviser and its shareholders.
6. Disclosure of Personal Holdings.
Each employee of the Firm, upon commencement of employment and
annually thereafter, shall be required to report the following
information to the Firm's Compliance Officer, as of a date not
more than 30 days prior to the date on which the report in
submitted, (a) the title, number of shares and principal
amount of all Covered Securities in which the employee has a
direct or indirect Beneficial Interest (as defined above), (b)
the name of any broker, dealer or bank with whom the employee
maintains an account in which any securities are held, either
directly or indirectly, for the benefit of such employee, and
(c) the date that the report is submitted by such employee;
provided, however, that such employee need not make a report
with respect to any account over which the employee has no
direct or indirect influence or control.
7
<PAGE>
7. Certification of Compliance with Code of Professional Responsibility
Each employee shall be required to certify annually that he or
she (i) has read and understood the Code of Professional
Responsibility, (ii) recognizes that he or she is subject
thereto, (iii) has complied with the requirements of the Code
of Professional Responsibility and (iv) has disclosed or
reported all personal securities transactions required to be
disclosed or reported pursuant to the requirements of the Code
of Professional Responsibility.
8. Review Procedures
The Compliance Officer (or his or her designee) shall, among
other things review all securities transaction and holdings
reports and compare, on a quarterly basis, all employee
securities transactions with each Fund's completed portfolio
transactions to determine whether a Code violation may have
occurred. When there appears to be a transaction that
conflicts with the Code, the Compliance Officer shall request
a written explanation of the employee's transaction. If after
post-trade review, it is determined that there has been a
violation of the Code, a report will be made by the designated
Compliance Officer with a recommendation of appropriate action
to the Board.
PRESERVATION OF CONFIDENTIAL INFORMATION.
Many of our clients have provided personal and financial information to
us on the understanding that such information will be held in the strictest
confidence. At the same time, each of us has learned, during the course of our
employment, confidential information about the firm, including its investment
management strategies and practices, its marketing plans and strategies, and its
financial circumstances, as well as confidential information relating to our
clients. All such confidential information must be held by each of us in strict
confidence and not discussed or otherwise disclosed to anyone outside the Firm
except as required by law. Any order, subpoena or other demand for any such
confidential information should be immediately referred to the Firm's General
Counsel.
DUTY OF LOYALTY TO THE FIRM.
The success of the Firm is dependent upon the dedication of its
employees to the achievement of that success. Accordingly, it is the policy of
the Firm that no employee of the Firm may accept any position with any
organization, whether for profit or otherwise, including governmental positions,
without the prior approval of the Firm's Compliance Officer (or his or her
designee). Such approval will not be given by the Firm's Compliance Officer (or
his or her designee) if such organization competes with the business of the Firm
or if the acceptance of the position with such organization would inhibit the
employee from devoting substantially all of his or her business effort to the
business of the Firm or might otherwise adversely affect the Firm.
8
<PAGE>
EXHIBIT A
NEWBRIDGE PARTNERS, LLC
POLICIES AND PROCEDURES RELATING TO ADVERTISING
The maintenance of the Firm's reputation for honesty in its
relationships with its clients and prospective clients is essential to the
Firm's future success. For this reason, the Firm must exercise extraordinary
care to ensure that its communications to its clients and the public are
accurate and complete, do not contain any potentially misleading information,
are based upon solid factual data and do not contain promises or predictions as
to future results. In addition, the Securities and Exchange Commission (the
"SEC") has expressly prohibited certain types of advertising, including
testimonials and, except in certain specified circumstances, references to past
specific recommendations. TO ENSURE PRESERVATION OF ITS REPUTATION AND
COMPLIANCE WITH THE REQUIREMENTS OF THE SEC, THE FIRM HAS DETERMINED THAT ALL
ADVERTISING AND SOLICITATION MATERIALS (INCLUDING ANY WRITTEN COMMUNICATION
ADDRESSED TO MORE THAN ONE PERSON) MUST BE SUBMITTED TO THE FIRM'S COMPLIANCE
OFFICER (OR HIS OR HER DESIGNEE) FOR REVIEW AND APPROVAL PRIOR TO THE
DISSEMINATION THEREOF.
In addition, in accordance with the requirements of the SEC, the Firm's
Compliance Officer (or his or her designee) will keep and maintain the following
records that relate to advertising:
o A copy of each notice, circular, advertisement, newspaper article,
investment letter, bulletin or other communication that the Firm circulates
or distributes, directly or indirectly, to more than ten persons (other
than persons connected with the Firm).
o A copy of each written communication that the firm sends to any client or
prospective client relating to any recommendation made or proposed to be
made or any advice given or proposed to be given, together with the names
and addresses of each person, if any, to whom such communication was
specifically addressed; provided, however, that if the Firm sends or
otherwise delivers any such communication to -------- ------- more than 10
persons, the Firm is not required to keep a record of the names and
addresses of the persons to whom it was sent; except that if such
communication is distributed to persons named on any list, the Firm is
required to retain with the copy of such communication a memorandum
describing the list and the source thereof.
o Copies of any records or documents, including internal working papers, that
are necessary to form the basis for or demonstrate the calculation of the
performance or rate of return of any or all managed accounts or securities
recommendations in any notice, circular, advertisement, newspaper article,
investment letter, bulletin or other communication that the Firm circulates
or distributes, directly or indirectly, to 10 or more persons (other than
persons connected with the Firm). The Compliance Officer need not keep a
copy of any account records that are used to calculate the performance of
managed accounts so long as the Firm keeps copies of all account statements
for its clients and such account statements reflect all debits, credits and
other transactions for each account period.
o A copy of each Part II of the Firm's Form ADV, and any amendment thereof,
that is delivered to any prospective client, together with a record of the
date of delivery.
9
<PAGE>
NEWBRIDGE PARTNERS, LLC
WRITTEN POLICY ON INSIDER TRADING
NewBridge Partners, LLC (the "Firm") prohibits anyone who is associated
with the Firm, including any officer or employee of the Firm (an "Associated
Person") from trading, either personally or on behalf of others, on material
non-public information or communicating material non-public information to
others in violation of the Insider Trading and Securities Fraud Enforcement Act
of 1988. This conduct is frequently referred to as "insider trading." Any
questions regarding this policy should be referred to the Firm's Compliance
Officer.
The term "insider trading" is not clearly defined in federal or state
securities laws, but generally is used to refer to the use of material
non-public information to trade in securities (whether or not one is an
"insider") or to communications of material non-public information to others.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
o trading by an insider on the basis of material non-public
information;
o trading by a non-insider on the basis of material non-public
information, where the information either was disclosed to the
non-insider in violation of an insider's duty to keep it
confidential or was misappropriated; or,
o communicating material non-public information to others.
I. WHO IS AN INSIDER?
The term "insider" is broadly defined. It includes officers, directors
and employees of a company. In addition, a person can be a "temporary insider"
if he or she enters into a special confidential relationship with the company
and, as a result, is given access to information that is intended to be used
solely for the company's purposes. A temporary insider can include, among
others, a company's attorneys, accountants, consultants, bank lending officers,
and the employees of such organizations. In addition, the Firm may become a
temporary insider of a client company it advises or for which it performs other
services. If a client company expects the Firm to keep the disclosed non-public
information confidential and the relationship implies such a duty, then the Firm
and its Associated Persons who have knowledge of such information will be
considered insiders.
II. WHAT IS MATERIAL INFORMATION?
Trading on insider information is not a basis for liability unless the
information is material. "Material information" generally is defined as
10
<PAGE>
information that a reasonable investor would consider important in making their
investment decisions, or information that is likely to have a substantial effect
on the price of a company's securities, regardless of whether the information is
related directly to the company's business. Information that Associated Persons
of the Firm should consider material includes, but is not limited to: dividend
changes; earnings estimates; changes in previously released earnings estimates;
significant merger or acquisition proposals or agreements; major litigation;
liquidation problems; and, extraordinary management developments.
III WHAT IS NON-PUBLIC INFORMATION?
Information is non-public until it has been effectively communicated to
the marketplace. For example, information found in a report filed with the SEC,
or appearing in Dow Jones, Reuters Economic Services, The Wall Street Journal or
other publications of general circulation would be considered public
information.
IV. PENALTIES FOR INSIDER TRADING
Penalties for trading on or communicating material non-public
information are severe, both for individuals involved in such unlawful conduct
and their employers. A person can be subject to some or all of the penalties
described below even if they do not personally benefit from the activities
surrounding the violation. Penalties include: civil injunctions; treble damages;
disgorgement of profits; jail sentences; fines for the person who committed the
violation of up to three times the profit gained or loss avoided, whether or not
the person actually benefitted; and, fines for the employer or other controlling
person of up to the greater of $1,000,000 or three times the amount of the
profit gained or loss avoided. In addition, any violation of this policy
statement can be expected to result in serious sanctions by the Firm, including
dismissal of the persons involved.
V. PROCEDURES TO IMPLEMENT INSIDER TRADING POLICY
The following procedures have been established to aid the Associated
Persons of the Firm in avoiding insider trading. Failure to follow these
procedures may result in dismissal, regulatory sanctions and criminal penalties.
A. IDENTIFY INSIDER INFORMATION
Before trading or making investment recommendations for any
account on the basis of information about a company that is not
generally available to the public, each Associated Person of the Firm
should ask himself or herself the following questions:
1. Is the information material? Is this information that
an investor would consider important in making an
11
<PAGE>
investment decision? Is this information that would
substantially effect the market price of the
securities if generally disclosed?
2. Is the information non-public? To whom has this
information been provided? Has the information been
effectively communicated to the market place, such as
by being published in publications of general
circulation?
B. REPORT TO COMPLIANCE OFFICER.
If, after consideration of the above, the Associated Person
concludes that the information is material and non-public, or if he or
she has further questions as to whether the information is material and
non-public, the following procedures shall be followed:
1. The Associated Person should report the matter
immediately to the Firm's Compliance Officer, who
should advise the Associated Person as to the proper
course of action to take after review of the matter.
2. Pending receipt of the advice of the Firm's
Compliance Officer, the Associated Person should not
purchase, sell or recommend securities on behalf of
himself or herself or others, including accounts
managed by the Firm.
3. The Associated Person should not communicate the
information inside or outside the Firm other than to
the Firm's Compliance Officer.
C. PERSONAL SECURITIES TRADING
As described in the Firm's Code of Professional
Responsibility, all employees of the Firm are required to submit a
report to the Firm of every securities transaction in which they have a
direct or indirect beneficial interest within ten (10) days after the
end of the calendar quarter in which the transactions were effected.
This report shall include, among other things, the names of the
securities, dates of the transactions, quantities, prices and
broker/dealer or other entity through which the transactions were
effected.
D. RESTRICTING ACCESS TO MATERIAL NON-PUBLIC INFORMATION
Information in an Associated Person's possession that he or
she has identified as material and non-public may not be communicated
to anyone, including persons within the Firm except as provided in
paragraph B above. In addition, care should be taken so that such
information is secure. For example, files containing material
non-public information should be sealed and kept in a secure storage
space.
12
<PAGE>
ACKNOWLEDGMENT
By affixing my signature below, I acknowledge that I have read and understood
the foregoing Code of Professional Responsibility (Revised December 1999) and
the Exhibits thereto, including the Written Policy on Insider Trading, and agree
that I will comply in all respects with such Code of Professional
Responsibility, including such policy.
- --------------------------------- ----------------
Name Date
13
<PAGE>
OTHER EXHIBIT (1)
TRUECROSSING FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that JAMES B. COWPERTHWAIT constitutes
and appoints David I. Goldstein and D. Blaine Riggle, and each of them, as true
and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of TrueCrossing Funds and to file the same with the
Securities and Exchange Commission, granting unto the said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes may lawfully do or cause to be done by virture hereof.
/s/ James B. Cowperthwait
-------------------------------------
James B. Cowperthwait
Dated: November 30, 1999
1
<PAGE>
OTHER EXHIBIT (2)
TRUECROSSING FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that ERICK F. MARONAK constitutes and
appoints David I. Goldstein and D. Blaine Riggle, and each of them, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for her and in her name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of TrueCrossing Funds and to file the same with the
Securities and Exchange Commission, granting unto the said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or her substitute
or substitutes may lawfully do or cause to be done by virture hereof.
/s/ Erick F. Maronak
-------------------------------------
Erick F. Maronak
Dated: November 30, 1999
1
<PAGE>
OTHER EXHIBIT (3)
TRUECROSSING FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that ERIC J. GLEACHER constitutes and
appoints David I. Goldstein and D. Blaine Riggle, and each of them, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of TrueCrossing Funds and to file the same with the
Securities and Exchange Commission, granting unto the said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes may lawfully do or cause to be done by virture hereof.
/s/ Eric J. Gleacher
-------------------------------------
Eric J. Gleacher
Dated: November 30, 1999
1
<PAGE>
OTHER EXHIBIT (4)
TRUECROSSING FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that W. WALLACE McDOWELL constitutes
and appoints David I. Goldstein and D. Blaine Riggle, and each of them, as true
and lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of TrueCrossing Funds and to file the same with the
Securities and Exchange Commission, granting unto the said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes may lawfully do or cause to be done by virture hereof.
/s/ W. Wallace McDowell
-------------------------------------
W. Wallace McDowell
Dated: December 2, 1999
1
<PAGE>
OTHER EXHIBIT (5)
TRUECROSSING FUNDS
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that DANIEL B. GOLDMAN constitutes and
appoints David I. Goldstein and D. Blaine Riggle, and each of them, as true and
lawful attorneys-in-fact and agents with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form N1-A and any or all
amendments thereto of TrueCrossing Funds and to file the same with the
Securities and Exchange Commission, granting unto the said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or their or his substitute
or substitutes may lawfully do or cause to be done by virture hereof.
/s/ Daniel B. Goldman
-------------------------------------
Daniel B. Goldman
Dated: November 29, 1999
1
<PAGE>
