As filed with the Securities and Exchange Commission on October 8, 1999.
1933 Act Registration File No. 333-83499
1940 Act File No. 811-9493
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. 1 |X|
Post-Effective Amendment No. |_|
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1 |X|
IGAM GROUP FUNDS
(Exact Name of Registrant as Specified in Organizational Documents)
South Kingstown Office Park, Suite A5
24 Salt Pond Road, Wakefield, RI 02879
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (401) 788-0977
Eugene Y. W. Lee, Ph.D. Copy to:
IGAM Group Funds Michael P. O'Hare, Esq.
South Kingstown Office Park, Suite A5 Stradley, Ronon, Stevens & Young, LLP
24 Salt Pond Road, 2600 One Commerce Square
Wakefield, RI 02879 Philadelphia, PA 19103-7098
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practical after the
effective date of this registration statement.
It is proposed that this filing will become effective
/_/ immediately upon filing pursuant to paragraph (b)
/_/ on pursuant to paragraph (b)
/_/ 60 days after filing pursuant to paragraph (a)(1)
/_/ on pursuant to paragraph (a)(1)
/_/ 75 days after filing pursuant to paragraph (a)(2)
/_/ on pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/_/ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant hereby amends this Registration Statement on such 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 this Registration Statement shall become effective on such
date as the Commission, acting pursuant to such Section 8(a), may determine.
<PAGE>
THE INTERNET INDEX FUND
a series of
IGAM GROUP FUNDS
PROSPECTUS
Dated October [__], 1999
An index fund using statistical procedures to parallel the
Dow Jones Internet Index
Investment Manager:
INTEGRITY GLOBAL ASSET MANAGEMENT, INC.
Wakefield, Rhode Island
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
<PAGE>
The Internet Index Fund
Prospectus Dated October __, 1999
Table Of Contents
Risk/Return Summary
Introduction
What is the Fund's Investment Objective?
What is the Dow Jones Internet Index?
What are the Fund's Principal Investment Strategies?
What are the Main Risks of Investing in the Fund?
Who May Want to Invest in the Fund?
What is the Fund's Past Performance?
What are the Fund's Fees and Expenses?
More Information about the Dow Jones Internet Index
More Information about the Fund's Investment Strategies
Management of the Fund
Pricing of Fund Shares
Marketing and Distribution
How to Purchase Shares
How to Redeem Shares
Distributions and Taxation
<PAGE>
Risk/Return Summary
Introduction
The Internet Index Fund is a "no-load" index mutual fund designed to track
the Dow Jones Internet IndexSM and to provide investors with a convenient
and cost-effective way to invest in the Internet and the Internet
industry.
The Internet is a world-wide network of computers that allows users to
easily and efficiently communicate and share data. Currently, the most
popular application on the Internet is the World Wide Web, a
graphic-user-interface that allows information sharing and data transfer
through "web-sites." Other Internet applications include e-mail, Intranet,
extranet and electronic commerce.
The Internet industry consists of various types of companies, including
Internet access providers, software developers, hardware manufacturers,
companies that provide materials or services to access the Internet,
companies that provide content for Internet sites and companies that
specialize in providing security for transactions over the Internet. The
Internet industry also includes companies that engage in electronic
commerce and retailing through Internet web-sites.
What is the Fund's Investment Objective?
The investment objective of the Fund is to provide investment results,
using statistical procedures, that parallel the investment return of the
Dow Jones Internet IndexSM.
What is the Dow Jones Internet IndexSM?
An index is an unmanaged group of securities that is selected because
their overall performance can be used as a standard to measure investment
performance of a particular sector or market.
The Dow Jones Internet IndexSM (Symbol: DJII) is a diversified index of
stocks designed to be an overall indicator of Internet industry stock
performance, and to provide a benchmark against which to measure Internet
investments, The Index includes stocks of companies whose primary focus is
Internet related. For a company to be eligible for the Index, it must
derive at least 50% of its revenue from Internet commerce or services.
The Index is divided into the following two market subsectors, which Dow
Jones believes will remain distinct aspects of the Internet industry in
the future:
Internet Commerce Companies (e*Commerce): Companies that derive the
majority of their revenues from providing goods or services through
an open network.
Internet Service Companies: Companies that derive the majority of
their revenues from providing access to the Internet or providing
services to people using the Internet.
<PAGE>
The use of these market subsectors in the Index is intended to ensure that
the Index provides a balanced representation of stocks in the Internet
industry.
The Index is market capitalization weighted by subsector and currently
includes 40 stocks. Market capitalization weighting means that the
percentage weighting of the stocks in each subsector of the Index is
determined based on their market capitalization relative to the other
stocks in the subsector. The Index is reviewed quarterly by Dow Jones &
Co. to add or remove stocks as needed in order to consistently cover 80%
of the total market capitalization of the companies in each Internet
industry subsector.
To prevent domination by a few large companies, a ceiling weight of 10% is
applied so that no single stock will represent more than 10% of any Index
subsector, regardless of market capitalization.
The historical performance of the Index and a complete listing of the
stocks that are currently included in the Index are included in this
Prospectus in the section entitled "More Information about the Dow Jones
Internet Index.SM" The Fund is neither sponsored by, nor affiliated
with Dow Jones & Co.
What are the Fund's Principal Investment Strategies?
The Fund's investment manager believes that the Internet is
revolutionizing the way individuals and companies around the world obtain
information and communicate, and that Internet and Internet-related
companies have substantial growth potential. Though Internet stocks may be
volatile, the manager believes that the Internet industry as a whole could
outperform the broader securities markets for the foreseeable future.
In view of the rapid pace of development and change within the Internet
industry, it may be very difficult to forecast which companies or industry
sectors will be successful and outperform or outgrow other companies or
sectors. For these reasons, the Fund's investment manager believes that an
"indexing" investment management approach is a particularly effective way
for investors to participate in the investment performance of the Internet
industry over the long term.
An index fund seeks to match, as closely as possible, the performance of
an established securities index. An index fund does this by holding all,
or a representative sample, of the securities in the index. The adviser to
an index fund does not buy and sell securities based on research and
analysis in an attempt to outperform the particular index. Instead, an
index fund seeks to mirror what the target index does, for better or
worse. Index funds have operating expenses and transaction costs, and
generally keep a portion of their assets in cash or cash equivalent
investments, in order to be ready to meet redemption requests. Therefore,
while the performance for an index fund is expected to track the target
index closely, the performance of an index fund will generally be less
than that of the index itself.
In order to track the Index as closely as possible, the Fund seeks to
invest substantially all (more than 95%) of its total assets in the stocks
that make up the Index, in roughly the same proportions as the stocks are
represented in the Index. As the Fund receives cash
<PAGE>
from new investors, or processes redemption requests from shareholders, the
Fund will purchase or sell securities in an effort to attempt to
approximate the return of the Index. Also, the Fund's investments are
reviewed and adjusted each quarter to reflect any quarterly adjustments in
the Index, in an effort to track the Index as closely as possible.
Because the Fund is an index fund, it generally takes a buy-and-hold
approach to investing. The Fund normally sells portfolio securities only
to respond to redemption requests or to adjust the number of its shares to
track the weighting or composition of the Index. As a result, the Fund's
portfolio turnover rate is expected to be extremely low. A low portfolio
turnover rate usually results in low transaction costs and provides tax
efficiencies for shareholders.
What are the Main Risks of Investing in the Fund?
The Fund may involve significantly greater risks than a mutual fund that
diversifies its investments among many industries, or one that does not
invest in the Internet industry. The share price of the Fund will go up
and down and you could lose money.
Any investment in the Internet industry involves special risks because the
Internet industry is subject to rapid technological changes and
developments. Companies in the industry are exposed to a high risk that
their products or services may quickly become obsolete. Also, increasing
competition, rapidly changing markets, frequent mergers or acquisitions of
Internet companies and changes in strategic alliances among various
Internet businesses, all may have a significant effect on the financial
condition of companies in the Internet industry. Changes in government
policies, such as telephone and cable regulations and antitrust
enforcement and the need for regulatory approvals, can also have a
material effect on companies in the industry.
Many of the companies included in the Index have a smaller market
capitalization (less than $1 billion) and may be unseasoned companies
(those with less than a three year operating history). Investments in
smaller and unseasoned companies present greater risks than securities of
larger or more established companies. Small or unseasoned companies may be
developing or marketing new products or services for which markets are not
yet established and may never be established. They also may lack depth or
experience of management and may have difficulty generating or obtaining
funds necessary for growth and development of their businesses. Due to
these and other factors, small and unseasoned companies may suffer
significant losses, as well as realize substantial growth. Historically,
the prices of stocks of smaller companies have been more volatile than
stocks of larger companies and are, therefore, more speculative than
stocks of larger companies. You should expect that the price of the Fund's
shares will also fluctuate more than shares of a mutual fund that invests
primarily in larger stocks.
The Fund is classified as "non-diversified" under the Investment Company
Act of 1940, as amended (the "1940 Act"), which means that, compared to
other funds, it may invest a greater percentage of its assets in a single
issuer. The Fund will, however, always seek to match the level of
diversification of the Index and, in any event, intends to meet the
minimum diversification levels required to qualify as a regulated
investment company
<PAGE>
for purposes of the Internal Revenue Code. A non-diversified fund may be
more susceptible to price volatility resulting from changes in the prices
of securities that it holds.
The Fund is authorized to invest a portion of its assets in futures and
options contracts. Losses (or gains) involving these investments can be
substantial in relation to the amount of money deposited to enter into
the contract. For this reason, the Fumd will not use these types
of investments as leveraged investments.
The Fund could be adversely affected if the computer systems used by the
Fund, its manager or other service providers do not function properly when
processing date-related information on or after January 1, 2000. This is
commonly known as the "Year 2000 Issue." The Fund is taking steps it
believes are reasonably designed to address the Year 2000 Issue for
computer systems that it uses and has obtained reasonable assurances that
similar steps are being taken by its major service providers. Fund
management does not currently anticipate that the Year 2000 Issue will
have any material negative impact to the Fund.
The Year 2000 Issue is also of critical concern to the companies that are
included in the Index, because they are heavily involved in
computer-related technology. If the Year 2000 Issue has a negative impact
on the stock price of any of the companies in the Index, the Fund will be
affected by that impact.
Who May Want to Invest in the Fund?
The Fund may be appropriate for investors who want to participate in the
investment performance of the Internet industry over the long term, by
following a simple, cost-efficient indexing approach.
The Fund is designed for long-term investors who want to allocate a
portion of the investments to aggressive equity investing and who
understand and are willing to accept the risk of loss associated with
investing in Internet stocks. Investors should be willing to accept the
above average price fluctuations that the Fund is expected to experience.
The Fund is not a complete investment program.
What is the Fund's Past Performance?
Since this is a new fund, there is no past performance history. The
performance of the Index since its inception in 1997, however, is set
forth below under the heading "More Information about the Dow Jones
Internet Index.SM"
<PAGE>
What are the Fund's Fees and Expenses?
The following table describes the fees and expenses that you may pay if
you buy and hold shares of the Fund.
Shareholder Fees (fees paid directly from your investment)
Sales Charges (Loads) on Purchases None
Deferred Sales Charges (Loads) None
Sales Charges (Loads) on Reinvested
Dividends and Other Distributions None
Redemption Fee (as a percentage
of amount redeemed, if shares are
redeemed within 90 days of
purchase)1 1.50%
Account Fees2 None
1 The Fund's custodian charges a $12.00 fee for outgoing wire transfers.
2 IRA accounts are subject to an annual trustee fee of $12.50.
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.65%
Distribution and/or Service (12b-1) Fees 0.25%
Other Expenses 0.90%
Total Annual Fund Operating Expenses 1.80%
Less Manager's Fee Waiver/Reimbursement* (0.40%)
Revised Total Annual Fund Operating
Expenses 1.40%
* IGAM has contractually agreed through September 30, 2000
to waive its management fees and/or make payments to limit expenses of the
Fund, if necessary, to ensure that actual Total Annual Fund Operating
Expenses do not exceed 1.40%.
Example
The following Example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated
and then redeem all of your shares at the end of those periods. The Example
also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Please note that only the first
year in each example reflects the effect of the contractual fee waiver.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:
One Year Three Years
$143 $526
More Information about the Dow Jones Internet Index
The following table shows the performance of the Index since its inception in
June 1997. Please note that the performance shown is not the performance of the
Fund and is not intended to predict or suggest the return that might be
experienced by an investor in the Fund. The Fund will attempt to track the Index
as closely as possible, but the performance of the Fund will be less than the
performance of the Index because the Fund is subject to operational and
transaction costs, while the Index is not.
Period Total Return
1997 (last six months) 34.07%
1998 168.41%
1999 (first nine months) 56.31%
The average annual total return of the Index from its date of initial
calculation (July 1, 1997) through September 30, 1999 was 109.64% per year.
The following is a list of the names (and trading symbols) of the forty stocks
that compromised the Index after it was last adjusted in September 1999. The
Index can change quarterly, so this listing is only a "snapshot" of the Index at
one point in time.
- ----------------------------------- ---------------------------------------
E* Commerce Sector Internet Services Sector
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Amazon.com, Inc. AMZN America Online, Inc. AOL
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Ameritrade Holding AMTD AXENT Technologies, Inc. AXNT
Corporation (Class A)
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Beyond.com Corporation BYND BroadVision, Inc. BVSN
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
CNET, Inc. CNET Check Point Software CHKP
Technologies Ltd. *
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
E*trade Group, Inc. EGRP CheckFree Holdings CKFR
Corporation
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
EBay Inc. EBAY CMGI Inc. CMGI
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
eToys, Inc. ETYS Covad Communications Group, COVD
Inc.
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Go2Net, Inc. GNET CyberCash, Inc. CYCH
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Healtheon Corporation HLTH Doubleclick Inc. DCLK
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Infoseek Corporation SEEK Earthlink Network, Inc. ELNK
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Lycos Inc. LCOS Excite@Home Corp. ATHM
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Net.B@nk Inc. NTBK Exodus Communications, Inc. EXDS
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Priceline.com Inc. PCLN High Speed Access Corp. HSAC
- ----------------------------------- ---------------------------------------
- ----------------------------------- ---------------------------------------
Yahoo! Inc. YHOO IDT Corporation IDTC
---------------------------------------
- ----------------------------------- ---------------------------------------
InfoSpace.com, Inc. INSP
---------------------------------------
---------------------------------------
Inktomi Corporation INKT
---------------------------------------
---------------------------------------
MindSpring Enterprises, Inc. MSPG
---------------------------------------
---------------------------------------
Network Solutions, Inc. NSOL
(Class A)
---------------------------------------
---------------------------------------
Open Market, Inc. OMKT
---------------------------------------
---------------------------------------
PSINet Inc. PSIX
---------------------------------------
---------------------------------------
RealNetworks, Inc. RNWK
---------------------------------------
---------------------------------------
Sterling Commerce, Inc. SE
---------------------------------------
---------------------------------------
Ticketmaster Online - TMCS
CitySearch, Inc. (Class B)
---------------------------------------
---------------------------------------
USWeb Corporation USWB
---------------------------------------
---------------------------------------
Verio Inc. VRIO
---------------------------------------
---------------------------------------
VeriSign, Inc. VRSN
---------------------------------------
* This security represents the common stock of a foreign company that trades
directly on a U.S. national securities exchange.
The Index is reviewed quarterly and any changes take effect on the third Friday
of March, June, September and December.
To be eligible for the Index, a company must generate 50% or more of annual
sales/revenues from the Internet. Stocks offered through an initial public
offering must have a minimum of three months' trading history (a spin-off
requires this trading history only if its former parent's stock was trading for
less than three months). To be eligible, a stock must also have a three month
average market capitalization of at least $100 million, a three month average
closing price of at least $10, and sufficient trading activity to ensure
liquidity.
Stocks are selected for the Index based on an equal combination of market
capitalization and trading volume (three month averages for each factor). To be
added to the Index, a new stock must rank in the top two-thirds of the existing
components of the Index at the time of the quarterly review. Once a stock is
included in the Index, it may not be removed for a period of six months, unless
the company is acquired.
"Dow Jones" and "Dow Jones Internet IndexSM" are service marks of Dow Jones
Company, Inc. and have been licensed for use by the Fund's manager, Integrity
Global Asset Management, Inc. The Fund is not sponsored, endorsed, sold or
promoted by Dow Jones, and Dow Jones makes no representation regarding the
advisability of investing in the Fund.
More Information about the Fund's Investment Strategies
As an alternative to holding all of the stocks in the Index at all times, the
Fund may select stocks to be purchased or sold through a "statistical sampling"
techniques intended to be an effective means of substantially duplicating the
performance of the Index. Based on data derived from such techniques, as well as
on information about the issuer and its stock (such as size, projected earnings,
financial strength and debt), the manager will make judgments to actively select
which component stocks from the Index are purchased. The idea will be to select
stocks that, together with the remaining stocks in the Fund's portfolio, will
most closely track the performance of the Index. The Fund will use statistical
sampling techniques when the Fund's net cash flow would make it impractical or
costly to attempt to track the Index by purchasing or selling stocks in the
exact quantities needed to cause the Fund's portfolio to exactly match the
weighting and composition of the Index.
In addition to investing directly in the stocks that make up the Index, the Fund
may enter into futures or options contracts, for the purpose of simulating full
investment in the stocks that make up the index and causing the same effect as
if the Fund held these stocks. These types of investments are used to quickly
and efficiently cause fund assets to be invested pending actual purchases of
stocks in the Index and/or to keep cash on hand to meet redemptions or other
needs. They are also used to reduce transaction costs and are used when the
Fund's investment manager determines that these investments are favorably priced
when compared to direct purchases of securities.
The Fund will limit its futures transactions to the extent that, immediately
after any transaction, no more than 5% of the Fund's assets are applied towards
the deposits required on futures contracts, and the value of all futures
contracts in which the Fund acquires an interest cannot exceed 20% of the Fund's
total assets.
<PAGE>
futures contracts in which the Fund acquires an interest cannot exceed 20% of
the Fund's total assets.
In order to increase the Fund's income, the Fund may lend its portfolio
securities to qualified securities dealers or other institutional investors. The
lending of securities is a common practice in the securities industry.
The investment objective and policies of the Fund are not fundamental and
therefore may be changed by the Board of Trustees without shareholder approval.
However, shareholders would be notified prior to any material change
Management of the Fund
IGAM Group Funds was organized as a Delaware business trust on July 16, 1999 and
is operated under the supervision of a Board of Trustees. The Fund is the first
mutual fund within the IGAM Group Funds family.
Investment Manager. The Fund's investment manager is Integrity Global Asset
Management, Inc. ("IGAM"). IGAM is a federally registered investment advisory
firm founded in April, 1997 that previously provided asset management services
for individuals and institutional clients. The firm no longer manages client
assets outside of the Fund. IGAM's principal office is located at South
Kingstown Office Park, Suite A5, 24 Salt Pond Road, Wakefield, Rhode Island
02879.
Eugene Y.W. Lee, Ph.D., CFA, is the President and founder of IGAM and the Chief
Portfolio Manager for the Fund. He is also the President, Treasurer and
Secretary of IGAM Group Funds, and serves on its Board of Trustees. Dr. Lee is a
Chartered Financial Analyst and received his Master of Arts degree in
Mathematics from the University of Texas at Austin in 1986 followed by his
doctoral degree in Finance in 1986. He joined the faculty of the University of
Rhode Island in 1992 and is currently an Associate Professor of Finance. He has
taken an indefinite sabbatical leave in order to devote his full attention to
the operation of the investment manager. Dr. Lee previously was Assistant
Professor of Finance at University of Missouri - Columbia from 1986 to 1992.
IGAM has entered into an Investment Management Agreement with IGAM Group Funds
under which IGAM is responsible for managing the purchase and sale of securities
held by the Fund. IGAM also tracks the composition and weighting of the stocks
in the index, and continually rebalances the Fund's portfolio of investments in
an effort to track the performance of the index as closely as possible. This
process also involves the use of statistical sampling techniques by which IGAM
actively selects component stocks for purchase or sale to most effectively and
efficiently track the Index. IGAM is also responsible for selecting brokers,
dealers and/or trading systems to execute securities transactions for the Fund.
IGAM also provides business management and administrative services for the Fund
not provided by others, which includes the coordination and management of the
Fund's business activities and its relationship with service providers and
professionals, as well as the provision of office space, personnel and materials
necessary to act as investment and business manager. For its services, IGAM
receives annual fees from the Fund equal to 0.65% of the Fund's average daily
net assets.
Fund Administrator, Accounting and Transfer Agent. Firstar Mutual Fund Services,
LLC, 615 East Michigan Street, Milwaukee, Wisconsin 53202 ("Firstar") serves as
the Fund's administrator, accounting agent and transfer agent. Firstar assists
in the daily business operations of the Fund, provides accounting services which
include the daily pricing of the Fund's shares, maintains shareholder records
and provides shareholder services.
Pricing of Fund Shares
The shares of the Fund are priced at the net asset value per share ("NAV"),
which is determined by the Fund as of the close of regular trading (generally
4:00 p.m. eastern time) on each day that the New York Stock Exchange is open for
unrestricted trading. Purchase and redemption requests are priced at the next
NAV calculated after receipt and acceptance of a completed purchase or
redemption request. The NAV is determined by dividing the value of the Fund's
securities, cash and other assets, minus all expenses and liabilities, by the
number of shares outstanding (assets - liabilities)/no. of shares = NAV. The
expenses and fees of the Fund, which are accrued daily, are reflected in the
calculation of the NAV.
The Fund's portfolio securities are valued each day at their market value, which
usually means the last quoted sale price on the security's principal exchange
that day. If market quotations are not readily available, securities will be
valued at their fair market value as determined in good faith, or under
procedures approved by, the Board of Trustees. The Fund may use independent
pricing services to assist in calculating NAV.
Marketing and Distribution
The principal underwriter and national distributor for the Fund's shares is T.O.
Richardson Securities, Inc. The distributor is a broker-dealer firm that is
registered with the SEC and in all 50 states and is a member in good standing of
the National Association of Securities Dealers, Inc.
Shareholder Servicing and Distribution Plan. Under a plan adopted by the Fund's
Board of Trustees pursuant to Rule 12b-1 under the 1940 Act (the "Plan"), the
Fund is authorized to pay the distributor, the manager or others, shareholder
servicing and/or distribution fees at an annual rate not to exceed 0.25% of the
average daily net assets of the Fund. Such fees will be used to reimburse
persons who provide, or make payments for, administration, shareholder servicing
and distribution assistance for the Fund, including paying for the preparation
of advertising and sales literature and the printing and distribution of such
materials to prospective investors. 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.
Certain broker-dealers, investment advisers, agents and other third parties are
authorized to accept orders on the Fund's behalf. These third parties may charge
transaction fees in connection with Fund transactions. These fees would be in
addition to any amounts paid by the Fund under the Plan.
How to Purchase Shares
<PAGE>
General Information. You may purchase shares of the Fund at net asset value
without a sales charge. For an application or other information, please call
(800) 234-0849 or visit the Fund's web-site at www.internetindexfund.net.
IRAs and
Retirement
Regular Account Accounts
Minimum Initial Purchases $2,500 $1,500
Minimum Additional $250 $250
Purchases
The Fund reserves the right to vary or waive the initial and additional
investment minimum requirements at any time.
Purchases By Mail. You may purchase shares by sending a completed and signed
application, together with a check or money order payable to the Internet Index
Fund to:
Regular Mail: Overnight or Express Mail:
The Internet Index Fund The Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
Transactions using the Internet. You may obtain a prospectus, an account
application and other information regarding the Fund using the Internet by
visiting www.internetindexfund.net. If you elect the online transactions option
on the account application form (or fill out a separate online transaction
request form) you may also use the Internet to purchase (or redeem) shares,
check your account, balance or check your transaction history.
Payments by Wire. You may also purchase shares of the Fund by wiring federal
funds from your bank. Your bank may charge you a fee for this service. If money
is to be wired, you must call the Fund at (800) 234-0849 to set up your account
and obtain an account number. You should be prepared to provide the information
on the Fund's application form to the telephone representative. Then, you should
provide your bank with the following information for purposes of wiring your
investment.
Firstar Mutual Fund Services, LLC Account Name
ABA # 075 000022 (Write in account registration name)
Attn: IGAM Group
- The Internet Index Fund For the Account #
D.D.A. # 112-952-137 (Write in account # assigned by
the Fund)
When making initial purchases by wire, you must send a signed application to the
Fund by regular or overnight mail at the addresses shown above in order to
complete your initial wire purchase. Wire orders will be accepted only on a day
on which the Fund is open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays that may occur in wiring money, including delays that may occur in
processing by the banks, are not the responsibility of the Fund or its agents.
There is presently no fee for the receipt of wire funds, but the right to charge
shareholders for this service is reserved by the Fund.
<PAGE>
Purchasing through Processing Organizations. You may also purchase shares of the
Fund through a "Processing Organization," which is a broker-dealer, bank or
other financial institution that purchases shares for its customers. When you
purchase shares this way, the Processing Organization may be listed as the
shareholder of record of the shares. Such shares may be transferred into your
name following procedures established by the Processing Organization and the
Fund. The minimum initial and subsequent for purchases through a Processing
Organization generally will be set by the Processing Organization. Processing
Organizations may also impose other charges and restrictions in addition to or
different from those applicable to investors who remain the shareholder of
record of their shares. Certain Processing Organizations may receive payments
from the Fund under its Distribution and Shareholder Servicing Plan or payments
from the Fund's manager.
Tax Sheltered Retirement Plans. Shares of the Fund may be used as investments in
retirement plans such as: individual retirement plans (IRAs); simplified
employee pensions (SEPs); 401(k) plans; qualified corporate pension and profit
sharing plans (for employees); tax deferred investment plans (for employees of
public school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Fund for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax advisor regarding
these plans is advisable. Custodial fees and other processing fees for an IRA
will be paid by the shareholder by redemption of sufficient shares of the Fund
from the IRA unless the fees are paid directly to the IRA custodian. You can
obtain information about IRA fees by calling the Fund at (800) 234-0849.
Automatic Investment Plan. The Automatic Investment Plan permits you to purchase
shares of the Fund (minimum initial investment of $500 and minimum subsequent
investments of $50 per transaction) at regular intervals. Provided your bank or
other financial institution allows automatic withdrawals, you may purchase
shares by transferring funds from the account you designate. At your option, the
account designated will be debited in the specific amount, and shares will be
purchased once a month, on the twentieth day. Only an account maintained at a
domestic financial institution which is an Automated Clearing House member may
be so designated. If you desire to participate in the Automatic Investment Plan,
you should call the Fund at (800) 234-0849 to obtain the appropriate forms. The
Automatic Investment Plan does not assure a profit and does not protect against
loss in declining markets. The Fund may modify or terminate the Automatic
Investment Plan at any time or charge a service fee. No such fee is currently
contemplated.
Additional Information. The Fund reserves the right to limit or reject any
purchase request if, in its opinion, it is in the best interests of the Fund to
do so. Federal regulations require that investors provide a certified Taxpayer
Identification Number (a "TIN") upon opening or reopening an account.
Dividends begin to accrue after you become a shareholder. The Fund does not
issue share certificates. All shares are held in non-certificate form registered
on the books of the Fund's transfer agent. If your check or wire does not clear,
a service fee of $25 will be deducted from your account and you will be
responsible for any loss incurred. If you are already a shareholder, the Fund
can redeem shares from any identically registered account in the Fund
<PAGE>
as reimbursement for any loss incurred. You may be prohibited or restricted
from making future purchases in the Fund.
How to Redeem Shares
General. You may request redemption of your Fund shares at any time. When a
request is received in proper form, the Fund will redeem the shares at the next
determined net asset value, subject to a redemption fee (if applicable see
below).
The Fund will normally send you your redemption proceeds on the next business
day (and no later than seven calendar days) after receipt of a redemption
request in proper form. However, if you purchase Fund shares by check and
subsequently submit a redemption request, the redemption proceeds will not be
transmitted until your check has cleared, which may take up to 15 days. If you
have any questions about redemptions or need further information, please call
(800) 234-0849 or visit the Fund's web-site at www.internetindexfund.net.
Redemptions by Mail. Redemption requests by mail must include your signed letter
of instruction (including Fund name, account number(s), account names(s),
address and the dollar amount or number of shares you wish to redeem) and should
be addressed as follows:
Regular Mail: Overnight or Express Mail:
The Internet Index Fund The Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
Redemptions by Telephone. If you elect the telephone redemption option on the
shareholder application form, you may make a telephone redemption request by
calling (800) 234-0849. The Fund or its agents may act on telephone instructions
from any person representing himself or herself to be a shareholder and
reasonably believed the Fund or its agents to be genuine. The Fund and its
agents will employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine and, if such procedures
are followed, neither the Fund nor its agents will be liable for following
telephone instructions reasonably believed to be genuine. IRA account holders
can not redeem by telephone.
During times of drastic economic or market conditions, you may experience
difficulty in contacting the Fund by telephone to request a redemption of Fund
shares. In such cases, you should consider using the other redemption procedures
described herein. Use of these other redemption procedures may result in the
redemption request being processed at a later time than it would have been if
telephone redemption had been used. During the delay, the Fund's net asset value
may fluctuate.
Transactions using the Internet. You may obtain a prospectus, an account
application and other information regarding the Fund using the Internet by
visiting www.internetindexfund.net. If you elect the online transactions option
on the account application form (or fill out a separate online transaction
request form) you may also use the Internet to redeem (or purchase) shares,
check your account, balance or check your transaction history.
<PAGE>
Contingent Redemption Fee. A redemption fee of 1.5% payable to the Fund may be
imposed if you redeem shares within 90 days of the date of purchase. No
redemption fee will be imposed to the extent that the net asset value of the
shares redeemed does not exceed (1) the current net asset value of shares
acquired through reinvestment of dividends or capital gains distributions, plus
(2) increases in the net asset value of your shares above the dollar amount of
all your payments for the purchase of shares held by you at the time of
redemption. If the aggregate value of shares redeemed has declined below their
original cost as a result of the Fund's performance, the applicable redemption
fee will be applied to the then-current net asset value rather than the purchase
price.
In determining whether a redemption fee is applicable to a redemption, the
calculation will be made in a manner that results in the lowest possible rate.
It will be assumed that the redemption is made first of amounts representing
shares acquired pursuant to the reinvestment of dividends and distributions;
then of amounts representing the increase in net asset value of shares above the
total amount of payments for the purchase of shares made during the preceding
year; then of amounts representing shares purchased more than 90 days prior to
the redemption; and finally, of amounts representing the cost of shares
purchased within 90 days prior to the redemption.
Additional Information about Redemptions. You may have redemption proceeds wired
to your brokerage account or a bank account that you designate. A transaction
fee of $12.00 will be charged for payments by wire. Questions about this option,
or redemption requirements generally, should be directed to the Fund at (800)
234-0849.
A signature guarantee is required for requests to redeem a large amount of
shares ($25,000 or more), if your address of record has been changed within the
past 30 days, or if you ask for proceeds to be sent to a different address. A
signature guarantee is used to help protect you and the Fund from fraud. You can
obtain a signature guarantee from most banks or securities dealers, but not from
a notary public. Please call the Fund to learn if a signature guarantee is
needed or to make sure that it is completed appropriately in order to avoid
processing delays.
If your account falls below $2,500 ($1,500 for qualified retirement accounts)
for other than market reasons, the Fund may request that you increase your
balance. If the account is still below the minimum after 60 days, the Fund may
automatically close your account and send you the proceeds. The Fund also
reserves the right to make a "redemption-in-kind" if the amount you are
redeeming is large enough to affect Fund operations or otherwise disrupt the
Fund. When the Fund redeems-in-kind, it pays the shareholder in portfolio
securities rather than cash, and the shareholder may experience additional
expenses such as brokerage commissions in order to sell the securities.
Systematic Withdrawal Plan. If you own shares with a value of $10,000 or more,
you may participate in the Systematic Withdrawal Plan. The Systematic Withdrawal
Plan allows you to make automatic withdrawals of $100 or more from your account
at regular intervals. Amounts will be transferred from your Fund account to the
bank account you choose at the interval you select on the New Account
Application form. If you expect to purchase additional shares, it may not be to
your advantage to participate in the Systematic Withdrawal Plan because of the
possible adverse tax consequences of making purchases and redemptions during the
same or similar time periods.
<PAGE>
If you are an IRA shareholder, you must indicate on your redemption request
whether or not to withhold federal income tax. Requests that do not indicate a
preference will be subject to withholding. IRA shareholders may not redeem
shares by telephone or Internet. Redemptions requests must be in writing.
Distributions and Taxation
The Fund will distribute substantially all of the net investment income and net
capital gains that it has realized in the sale of securities. These income and
gains distributions will generally be paid once each year, on or before December
31. Distributions will automatically be reinvested in additional shares of the
Fund, unless you elect to have the distributions paid to you in cash. There are
no sales charges or transaction fees for reinvested distributions and all shares
will be purchased at NAV.
In general, Fund distributions are taxable to you as either ordinary income or
capital gains. This is true whether you reinvest your distributions in
additional Fund shares or receive them in cash. Any capital gains the Fund
distributes are taxable to you as long-term capital gains no matter how long you
have owned your shares. If the Fund distributes unrealized gains soon after you
purchase shares, a portion of your investment may be returned as a taxable
distribution.
By law, the Fund must withhold 31% of your taxable distributions and proceeds if
you do not provide your correct social security or taxpayer identification
number, or if the IRS instructs the Fund to do so.
Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
When you sell your shares of the Fund, you may have a capital gain or loss. The
individual tax rate on any gain from the sale of your shares depends on your
marginal tax rate and on how long you have held your shares.
Fund distributions and gains from the sale of your shares generally will be
subject to state and local income tax. Non-U.S. investors may be subject to
U.S. withholding and estate tax. You should consult your tax advisor about
the federal, state, local or foreign tax consequences of your investment in
the Fund.
<PAGE>
Prospectus
Dated October __, 1999
Investment Manager
Integrity Global Asset Management, Inc.
Wakefield, Rhode Island
Legal Counsel
Stradley, Ronon, Stevens & Young, LLP
Philadelphia, Pennsylvania
Independent Auditors
Arthur Andersen LLP
Milwaukee, Wisconsin
Transfer Agent, Fund Accounting Agent
and Fund Administrator
Firstar Mutual Fund Services, LLC
Milwaukee, Wisconsin
Custodian
Firstar Bank Milwaukee, N.A.
Milwaukee, Wisconsin
A Statement of Additional Information (SAI) for the Fund contains more
information about the Fund's policies and management and is incorporated by
reference into this prospectus. The Fund's annual and semi-annual reports to
shareholders will contain additional information about the Fund's investments
and a discussion of the market conditions that significantly affected the Fund
and the Index during each fiscal year. You may obtain free copies of these
documents by:
Telephone: 1-800-234-0849
Internet: www.internetindexfund.net
Mail:
Regular Mail: Overnight or Express Mail:
Internet Index Fund Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
You may review and copy the SAI and other information about the Fund by visiting
the Securities and Exchange Commission's Public Reference Room in Washington, DC
or by visiting the Commission's Internet site at http://www.sec.gov. Copies of
this information may also be obtained, upon payment of a duplicating fee, by
writing to the Public Reference Section of the Commission, Washington, DC
20549-6009. You may call the Commission at 1-800-SEC-0330 for information about
the operation of the public reference room.
<PAGE>
1940 Act File No. 811-9493
IGAM Group Funds
South Kingstown Office Park, Suite A5
24 Salt Pond Road
Wakefield, RI 02879
(401) 788-0977
Web-site: www.internetindexfund.net
Statement of Additional Information
for the Internet Index Fund
Dated October __, 1999
This Statement of Additional Information relates to the Internet Index Fund (the
"Fund"), which is the first mutual fund within the IGAM Group Funds family. The
SAI is not a prospectus but should be read in conjunction with the Fund's
current Prospectus dated October __, 1999. To obtain the Prospectus, please
visit the Fund's web-site, call 1-800-234-0849 or write to the Fund as shown
below:
Regular Mail: Overnight or Express Mail:
Internet Index Fund Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
TABLE OF CONTENTS
The Fund 3
Investment Objective and Strategies 3
Investment Restrictions 9
Management of the Fund 11
Investment Manager 14
Code of Ethics 14
Administrative Services 15
Custodian 15
Distributor 15
Distribution and Shareholder Servicing Plan 15
Pricing of Shares 16
Shares of Beneficial Interest 17
Purchasing Shares 17
Redemptions of Shares 18
Portfolio Transactions and Turnover 19
Additional Information on Distributions and Taxes 20
Performance Information 22
Auditors 23
Financial Statements 24
<PAGE>
The Fund
IGAM Group Funds (the "Trust") is a non-diversified, open-end, management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act") which is currently comprised of a single fund called
the Internet Index Fund (the "Fund"). The Trust was organized as a business
trust under the Delaware Business Trust Act on July 16, 1999. The Fund's
registered office in Delaware is The Corporation Trust Company, 1209 Orange
Street, Wilmington, DE 19801 and its principal office is at South Kingstown
Office Park, Suite A5, 24 Salt Pond Road, Wakefield, RI 02879.
Investment Objective and Strategies
The Fund's investment objective is to provide investment results, using
statistical procedures, that parallel the Dow Jones Internet IndexSM, a
diversified index which is comprised of approximately 40 stocks of companies
whose primary focus is Internet related.
The following discussion of investment techniques and instruments supplements
and should be read in conjunction with the investment information set forth in
the Fund's Prospectus. The investment practices described below, except for the
discussion of certain specified investment policies and restrictions, are not
fundamental and may be changed by the Board of Trustees without the approval of
the shareholders. In seeking to meet its investment objective, the Fund may
invest in any type of security whose characteristics are consistent with the
Fund's investment program. The securities in which the Fund may invest include
those described below.
Common and Preferred Stock. Common stocks are units of ownership of a
corporation. Preferred stocks are stocks that often pay dividends at a specific
rate and have a preference over common stocks in dividend payments and
liquidation of assets. Some preferred stocks may be convertible into common
stock. Convertible securities are securities that may be converted into or
exchanged for a specific amount of common stock of the same or different issuer
within a particular period of time at a specified price or formula.
Futures. The Fund may enter into contracts for the purchase or sale for future
delivery of securities including contracts for the purchase or sale for future
delivery of the stocks within an index. The Fund will not use futures contacts
as leveraged investments that magnify the gains and losses of an investment. A
purchase of a futures contract means the acquisition of a contractual right to
obtain delivery to the Fund of the securities or foreign currency called for by
the contract at a specified price and future date. When the Fund enters into a
futures transaction, it must deliver to the futures commission merchant selected
by the Fund an amount referred to as "initial margin." This amount is maintained
by the futures commission merchant in segregated account at the custodian bank.
Thereafter, a "variation margin" may be paid by the Fund to, or drawn by the
Fund from, such account in accordance with controls set for such accounts,
depending upon changes in the price of the underlying securities subject to the
futures contract.
The Fund may enter into futures contracts and engage in options on futures to
the extent that no more than 5% of the Fund's assets are required as futures
contract margin deposits and premiums on options, and may engage in such
transactions to the extent that obligations relating to such
<PAGE>
futures and related options on futures transactions represent not more than 20%
of the Fund's assets.
Although futures contracts by their terms call for actual delivery or acceptance
of the underlying securities, in most cases the contracts are closed out before
the settlement date without the making or taking of delivery. Closing out an
open futures position is done by taking an opposite position ("buying" a
contract which has previously been "sold," or "selling" a contract previously
purchased) in an identical contract to terminate the position. Unlike other
futures contracts, a stock index futures contract specifies that no delivery of
the actual stocks making up the index will take place. Instead, settlement in
cash must occur upon the termination of the contract. Brokerage commissions are
incurred when a futures contract is bought or sold.
The Fund will enter into futures transactions on domestic exchanges and, to the
extent such transactions have been approved by the Commodity Futures Trading
Commission for sale to customers in the United States, on foreign exchanges.
Index Options. The Fund may purchase exchange-listed put and call options on
stock indices and sell such options in closing sale transactions. The Fund may
purchase call options on indices to temporarily achieve market exposure when the
Fund is not fully invested. The Fund may also purchase exchange-listed call
options on particular market segment indices to achieve temporary exposure to a
specific industry. While the option is open, the Fund will maintain a segregated
account with its custodian in an amount equal to the market value of the option.
Options on indices are similar to regular options except that an option on an
index gives the holder the right, upon exercise, to receive an amount of cash if
the closing level of the index upon which the option is based is greater than
(in the case of a call) or lesser than (in the case of a put) the exercise price
of the option. This amount of cash is equal to the difference between the
closing price of the index and the exercise price of the option expressed in
dollars times a specified multiple (the "multiplier").
The Fund's purchases of options on indices will subject it to the following
risks described below. First, because the value of an index option depends upon
movements in the level of the index rather than the price of a particular
security, whether the Fund will realize gain or loss on the purchase of an
option on an index depends upon movements in the level of prices in the market
generally or in an industry or market segment rather than movements in the level
of prices in the market generally or in an industry or market segment rather
than movements in the price of a particular security.
Second, index prices may be distorted if trading of a substantial number of
securities included in the index is interrupted causing the trading of options
on that index to be halted. If a trading halt occurred, the Fund would not be
able to close put options which it had purchased and the Fund may incur losses
if the underlying index moved adversely before trading resumed. If a trading
halt occurred and restrictions prohibiting the exercise of options were imposed
through the close of trading on the last day before expiration, exercises on
that day would be settled on the basis of a closing index value that may not
reflect current price information for securities representing a substantial
portion of the value of the index.
<PAGE>
Third, if the Fund holds an index option and exercises it before final
determination of the closing index value for that day, it runs the risk that the
level of the underlying index may change before closing. If such a change causes
the exercised option to fall "out-of-the-money," the Fund will be required to
pay the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer. Although the
Fund may be able to minimize this risk by withholding exercise instructions
until just before the daily cutoff time or by selling rather than exercising the
option when the index level is close to the exercise price, it may not be
possible to eliminate this risk entirely because the cutoff times for index
options may be earlier than those fixed for other types of options and may occur
before definitive closing index values are announced.
U.S. Government Securities. U.S. Government securities are obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities. The U.S.
Government does not guarantee the net asset value of the Funds' shares. Some
U.S. Government securities, such as Treasury bills, notes and bonds, and
securities guaranteed by the Government National Mortgage Association ("GNMA"),
are supported by the full faith and credit of the United States; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the U.S. Treasury; others, such as those of the Federal National
Mortgage Association ("FNMA"), are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others, such
as those of the Student Loan Marketing Association, are supported only by the
credit of the instrumentality. U.S. Government securities include securities
that have no coupons, or have been stripped of their unmatured interest coupons,
individual interest coupons from such securities that trade separately, and
evidences of receipt of such securities. Such securities may pay no cash income,
and are purchased at a deep discount from their value at maturity. Because
interest on zero coupon securities is not distributed on a current basis but is,
in effect, compounded, zero coupon securities tend to be subject to greater
market risk than interest-payment securities, such as CATs and TIGRs, which are
not issued by the U.S. Treasury, and are new therefore not U.S. Government
securities, although the underlying bond represented by such receipt is a debt
obligation of the U.S. Treasury. Other zero coupon Treasury securities (STRIPs
and CUBEs) are direct obligations of the U.S.
Government.
Bank Obligations. Certificates of deposit are short-term obligations of
commercial banks. A bankers' acceptance is a time draft drawn on a commercial
bank by a borrower, usually in connection with international commercial
transactions. Certificates of deposit may have fixed or variable rates.
Loans of Portfolio Securities. The Fund may lend its investment securities to
approved borrowers who need to borrow securities in order to complete certain
transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations, provided that such loans do not
exceed 33 1/3% of the Fund's total assets at the time of the most recent loan.
By lending its investment securities, the Fund attempts to increase its income
through the receipt of interest on the loan. Any gain or loss in the market
price of the securities loaned that might occur during the term of the loan
would be for the account of the Fund. The Fund may lend its investment
securities to qualified brokers, dealers, domestic and foreign banks or other
financial institutions, so long as the terms, the structure and the aggregate
amount of such loans are not inconsistent with the 1940 Act or the rules and
regulations or interpretations of the Securities and Exchange Commission (the
"SEC") thereunder, which currently require that:
<PAGE>
(a) the borrower pledge and maintain with a Fund collateral consisting of cash,
an irrevocable letter of credit issued by a bank or securities issued or
guaranteed by the United States Government having a value at all times not less
than 100% of the value of the securities loaned; (b) the borrower add to such
collateral whenever the price of the securities loaned rises (i.e., the borrower
"marks to the market" on a daily basis); (c) the loan be made subject to
termination by a Fund at any time; and (d) the Fund receives reasonable interest
on the loan (which may include the Fund investing any cash collateral in
interest bearing short-term investments). All relevant facts and circumstances,
including the creditworthiness of the broker, dealer or institution, will be
considered in making decisions with respect to the lending of securities,
subject to review by the Board of Trustees.
At the present time, the staff of the SEC does not object if an investment
company pays reasonable negotiated fees in connection with loaned securities so
long as such fees are set forth in a written contract and approved by the
investment company's Board of Trustees. In addition, voting rights may pass with
the loaned securities, but if a material event occurs affecting an investment on
a loan, the loan must be called and the securities voted.
Repurchase Agreements. When the Fund enters into a repurchase agreement, it
purchases securities from a bank or broker-dealer which simultaneously agrees to
repurchase the securities at a mutually agreed upon time and price, thereby
determining the yield during the term of the agreement. As a result, a
repurchase agreement provides a fixed rate of return insulated from market
fluctuations during the term of the agreement. The term of a repurchase
agreement generally is short, possibly overnight or for a few days, although it
may extend over a number of months (up to one year) from the date of delivery.
Repurchase agreements will be fully collateralized and the collateral will be
marked-to-market daily. The Fund may not enter into a repurchase agreement
having more than seven days remaining to maturity if, as a result, such
agreement, together with any other illiquid securities held by the Fund, would
exceed 15% of the value of the net assets of the Fund.
In the event of bankruptcy or other default by the seller of the security under
a repurchase agreement, the Fund may suffer time delays and incur costs or
possible losses in connections with the disposition of the collateral. In such
event, instead of the contractual fixed rate of return, the rate of return to
the Fund would be dependent upon intervening fluctuations of the market value of
the underlying security and the accrued interest on the security. Although the
Fund would have rights against the seller for breach of contract with respect to
any losses arising from market fluctuations following the failure of the seller
to perform, the ability of the Fund to recover damages from a seller in
bankruptcy or otherwise in default would be reduced.
Repurchase agreements are securities for purposes of the tax diversification
requirements that must be met for pass-through treatment under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"). Accordingly, the
Fund will limit the value of its repurchase agreements on each of the quarterly
testing dates to ensure compliance with Subchapter M of the Code.
Reverse Repurchase Agreements. Reverse repurchase agreements involve sales of
portfolio securities of the Fund to member banks of the Federal Reserve System
or securities dealers believed creditworthy, concurrently with an agreement by
the Fund to repurchase the same
<PAGE>
securities at a later date at a fixed price which is generally equal to the
original sales price plus interest. The Fund retains record ownership and the
right to receive interest and principal payments on the portfolio securities
involved. In connection with each reverse repurchase transaction, the Fund will
direct its custodian bank to place cash, U.S. government securities, equity
securities and/or investment and non-investment grade debt securities in a
segregated account of the Fund in an amount equal to the repurchase price. Any
assets held in any segregated securities, options, futures, forward contracts or
other derivative transactions shall be liquid, unencumbered and marked-to-market
daily (any such assets held in a segregated account are referred to in this
Statement of Additional Information as "Segregated Assets").
A reverse repurchase agreement involves the risk that the market value of the
securities retained by the Fund may decline below the price of the securities
the Fund has sold but is obligated to repurchase under the agreement. In the
event the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds of the agreement
may be restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the securities.
Reverse repurchase agreements are considered borrowings and as such, are subject
to the same investment limitations.
Borrowing. The Fund may borrow money as a temporary measure or for extraordinary
purposes or to facilitate redemptions subject to the fundamental investment
restriction described below under the heading "Investment Restrictions." The
Fund will not borrow money in excess of 33 1/3% of the value of its total
assets. Any borrowing above 5% of the Fund's total assets will be done from a
bank with the required asset coverage of at least 300%. In the event that such
asset coverage shall at any time fall below 300%, the Fund shall, within three
days thereafter (not including Sundays or holidays), or such longer period as
the SEC may prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such borrowings shall be
at least 300%.
Other Investments. The Board of Trustees may, in the future, authorize the Fund
to invest in securities other than those listed in this SAI and in the
prospectus, provided such investment would be consistent with the Fund's
investment objective and that it would not violate any fundamental investment
policies or restrictions.
Investment Restrictions
Fundamental Investment Policies and Restrictions. The Fund has adopted the
following fundamental investment policies and restrictions which cannot be
changed without the approval of a "majority of the outstanding voting
securities" of the Fund. Under the 1940 Act, a "majority of the outstanding
voting securities" of a fund means the vote of: (i) more than 50% of the
outstanding voting securities of the fund; or (ii) 67% or more of the voting
securities of the fund present at a meeting, if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, whichever
is less.
Concentration. The Fund has adopted a policy of concentrating in securities
issued by companies within the Internet industry but will, otherwise, not make
investments that result in the concentration (as that term may be defined in the
1940 Act, any rule or order thereunder, or U.S. Securities and Exchange
Commission ("SEC") staff interpretation thereof) of its
<PAGE>
investments in the securities of issuers primarily engaged in the same industry.
This restriction, however, does not limit the Fund from investing in obligations
issued or guaranteed by the U.S. government, or its agencies or
instrumentalities. The SEC staff currently takes the position that a fund
concentrates its investments in a particular industry if more than 25% of its
net assets is invested in issuers within the industry.
Senior Securities & Borrowing. The Fund may not borrow money or issue senior
securities, except as the 1940 Act, any rule or order thereunder, or SEC staff
interpretation thereof, may permit.
Underwriting. The Fund may not underwrite the securities of other issuers,
except that the Fund may engage in transactions involving the acquisition,
disposition or resale of its portfolio securities, under circumstances where it
may be considered to be an underwriter under the Securities Act of 1933.
Real Estate. The Fund may not purchase or sell real estate, unless acquired as a
result of ownership of securities or other instruments and provided that this
restriction does not prevent the Fund from investing in issuers which invest,
deal or otherwise engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or interests therein.
Commodities. The Fund may not purchase or sell physical commodities, unless
acquired as a result of ownership of securities or other instruments and
provided that this restriction does not prevent the Fund from engaging in
transactions involving futures contracts and options thereon or investing in
securities that are secured by physical commodities.
Lending. The Fund may not make loans, provided that this restriction does not
prevent the Fund from purchasing debt obligations, entering into repurchase
agreements, loaning its assets to broker/dealers or institutional investors and
investing in loans, including assignments and participation interests.
Non-Fundamental Policies and Restrictions. In addition to the fundamental
policies and investment restrictions described above, and the various general
investment policies described in the Prospectus and this SAI, the Fund will be
subject to the following investment restrictions, which are considered
non-fundamental and may be changed by the Board of Trustees without shareholder
approval.
Other Investment Companies. The Fund is permitted to invest in other investment
companies, including open-end, closed-end or unregistered investment companies,
either within the percentage limits set forth in the 1940 Act, any rule or order
thereunder, or SEC staff interpretation thereof, or without regard to percentage
limits in connection with a merger, reorganization, consolidation or other
similar transaction. However, the Fund may not operate as a "fund of funds"
which invests primarily in the shares of other investment companies as permitted
by Section 12(d)(1)(F) or (G) of the 1940 Act, if its own shares are utilized as
investments by such a "fund of funds."
<PAGE>
Illiquid Securities. The Fund may not invest more than 15% of its net assets in
securities which it can not sell or dispose of in the ordinary course of
business within seven days at approximately the value at which the Fund has
valued the investment.
Non-Diversified Fund. The Fund is non-diversified under the 1940 Act, which
means that there is no restriction under the 1940 Act on how much the Fund may
invest in the securities of any one issuer. However, to qualify for tax
treatment as a regulated investment company under the Internal Revenue Code
("Code"), the Fund intends to comply, as of the end of each taxable quarter,
with certain diversification requirements imposed by the Code. Pursuant to these
requirements, the Fund will, among other things, limit its investments in the
securities of any one issuer (other than U. S. Government securities or
securities of other regulated investment companies) to no more than 25% of the
value of the Fund's total assets. In addition, the Fund, with respect to 50% of
its total assets, will limit its investments in the securities of any issuer to
5% of the Fund's total assets, and will not purchase more than 10% of the
outstanding voting securities of any one issuer.
In applying the Fund's fundamental policy concerning concentration that is
described above, it is a matter of non-fundamental policy that investments in
certain categories of companies will not be considered to be investments in a
particular industry. For example: (i) financial service companies will be
classified according to the end users of their services, for example, automobile
finance, bank finance and diversified finance will each be considered a separate
industry; (ii) technology companies will be divided according to their products
and services, for example, hardware, software, information services and
outsourcing, or telecommunications will each be a separate industry; (iii)
asset-backed securities will be classified according to the underlying assets
securing such securities; and (iv) utility companies will be divided according
to their services, for example, gas, gas transmission, electric and telephone
will each be considered a separate industry.
Management of the Fund
The Trust is governed by a Board of Trustees. The Board of Trustees consists of
four individuals, three of whom are not "interested persons" of the Trust as
that term is defined in Section 2(a)(19) of the 1940 Act. The Trustees are
experienced business persons who meet throughout the year to oversee the Trust's
activities, review contractual arrangements with companies that provide services
to the Fund, and review performance. The names and business addresses of the
Trustees and officers of the Trust, together with information as to their
principal occupations during the past five years, are listed below.
<PAGE>
- ----------------------------------------------------------------------
Name and Address Age Position Principal Occupations
during the Past Five Years
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Edward M. Mazze, Ph.D. 58 Chairman Presently, Dean, College
The University of of the of Business Administration
Rhode Island Board of of the University of Rhode
College of Business Trustees Island since 1998;
Administration Director, Technitrol
7 Lippit Road Incorporated since 1985;
301 Ballentine Hall Director, McGettigan
Kingston, RI Partners, 1989-1993, 1997
02881-0802 to present; Honorary Board
Member, Delaware Valley College of
Science and Agriculture, since 1997;
Accreditation Panel Member, Middle
States Association of Colleges and
Secondary School Commission of Higher
Education, since 1981; Previously, Dr.
Mazze held the position of Dean at the
University of North Carolina at
Charlotte's Belk College of Business
Administration (1993-1998), at the
School of Business and Management at
Temple University (1979-1986,
professor from 1979-1993) and at Seton
Hall University's W. Paul Stillman
School of Business (1975-1979). From
1984 to 1997, Dr. Mazze was a
Bankruptcy Trustee for the United
States Bankruptcy Court in the Eastern
District of Pennsylvania and from 1985
to 1987, he served as the Chairman of
the Board and Chief Executive Officer
of the William Penn Bank in
Philadelphia (now part of Mellon
Bank). He also previously served on
the Boards of numerous public and
private businesses, educational
organizations and foundations and held
numerous governmental, professional
and academic appointments.
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Eugene Y.W. Lee, Ph.D.* 48 Trustee, President, Integrity
Integrity Global Asset President,Global Asset Management,
Management, Inc. Treasurer Inc. since 1997; Associate
South Kingstown Office and Professor of Finance,
Park Secretary University of Rhode Island
Suite A5 (faculty member since
24 Salt Pond Road 1992).
Wakefield, RI 02879
<PAGE>
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Andrew Laviano 57 Trustee Professor, University of
The University of and Rhode Island since 1976;
Rhode Island Chairman previously, attorney in
College of Business of Audit private practice.
Administration Committee
7 Lippit Road
349 Ballentine Hall
Kingston, RI
02881-0802
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
Harris N. Rosen 66 Trustee At the University of Rhode
76 Sundance Trail Island, presently serves
Wakefield, RI 02879 as Special Assistant to
the Dean of the University, and in
1998, as Executive in Residence,
teaching courses in Supervision,
Management and Introduction to
Business; previously, President of
School House Candy Company, Pawtucket,
RI since 1969; Mr. Rosen also serves
as the Director of the Jewish
Federation of Rhode Island and has
served in various capacities since
1970; Trustee of Women and Infants'
Hospital, Rhode Island, since 1978;
Corporator of Rhode Island Hospital
since 1982; and has held numerous
business and community service
positions in the Rhode Island area
over the years.
- ----------------------------------------------------------------------
* This trustee is deemed to be an "interested person" of the Trust as that term
is defined in Section 2(a)(19) of the 1940 Act.
Trustee Compensation. For their service as trustees, the independent trustees
receive annual fees of $8,000, as well as reimbursement for expenses incurred in
connection with attendance at Board meetings. The Chairman of the Board receives
additional annual compensation of $8,000 for his service as chairman, and the
Chairman of the Audit Committee receives additional compensation of $2,000 for
his service as chairman. Dr. Lee is an interested trustee and, therefore, is
paid by the investment manager and does not receive any compensation from the
Fund for his service as a trustee.
Control Persons, Principal Holders of Securities and Management Ownership. As of
September 30, 1999, which was prior to the public offering of the Fund's shares,
Dr. Eugene Lee was the holder of 100% of the Fund's shares, and there were
otherwise no control persons or principal holders of securities of the Fund.
Control persons are persons deemed to control the Fund because they own
beneficially over 25% of the outstanding equity securities. Principal holders
are persons that own beneficially 5% or more of the Fund's outstanding equity
securities.
<PAGE>
Investment Manager
Integrity Global Asset Management, Inc., is a Delaware corporation that serves
as an investment manager to the Fund pursuant to an Investment Management
Agreement dated as of September 13, 1999.
This Investment Management Agreement is effective for an initial term of two
years and will continue on a year-to-year basis thereafter, provided that
specific approval is voted at least annually by the Board of Trustees of the
Trust or by the vote of the holders of a majority of the outstanding voting
securities of the Fund. In either event, it must also be approved by a majority
of the trustees of the Trust who are neither parties to the Agreement nor
interested persons of any such party as defined in the 1940 Act at a meeting
called for the purpose of voting on such approval. The Investment Manager's
decisions are made subject to direction of the Board of Trustees. The Agreement
may be terminated at any time, without the payment of any penalty, by vote of a
majority of the outstanding voting securities of the Fund.
For the services provided by the Investment Manager under the Agreement, the
Trust, on behalf of the Fund, has agreed to pay to Integrity Global Asset
Management, Inc. an annual fee of 0.65% of the Fund's average daily net assets.
All fees are computed on the average daily closing net asset value of the Fund
and are payable monthly. The fee is higher than the fee paid by most other index
mutual funds.
Code of Ethics
Both the Trust and the Investment Manager have adopted Codes of Ethics that
govern the conduct of employees of the Trust and Investment Manager who may have
access to information about the Fund's securities transactions. The Codes
recognize that such persons owe a fiduciary duty to the Fund's shareholders and
must place the interests of shareholders ahead of their own interests. Among
other things, the Codes require preclearance of personal securities
transactions; certain blackout periods for personal trading of securities which
may be considered for purchase or sale by the Fund or other clients of the
Investment Manager; annual and quarterly reporting of personal securities
holdings; and limitations on personal trading of initial public offerings.
Violations of the Codes are subject to review by the Trustees and could result
in severe penalties.
Administrative Services
Firstar Mutual Fund Services, LLC, a subsidiary of Firstar Bank Milwaukee, N.A.,
provides administrative personnel and services (including blue-sky services) to
the Fund. Administrative services include, but are not limited to, providing
office space, equipment, telephone facilities, various personnel, including
clerical and supervisory, and computers, as is necessary or beneficial to
provide compliance services to the Fund. Firstar Mutual Fund Services, LLC also
will serve as fund accountant and transfer agent under separate agreements.
Custodian
Firstar Bank Milwaukee, N.A. is custodian for the securities and cash of the
Fund. Under the Custodian Agreement, Firstar Bank Milwaukee, N.A. holds the
Fund's portfolio securities in safekeeping and keeps all necessary records and
documents relating to its duties.
<PAGE>
Distributor
T.O. Richardson Securities, Inc. serves as the principal underwriter and
national distributor for the shares of the Fund pursuant to a Distribution
Agreement with the Trust dated as of September 13, 1999 (the "Distribution
Agreement"). T.O. Richardson Securities, Inc. is registered as a broker-dealer
under the Securities Exchange Act of 1934 and each state's securities laws and
is a member of the NASD. The offering of the Fund's shares is continuous. The
Distribution Agreement provides that the Distributor, as agent in connection
with the distribution of Fund shares, will use its best efforts to distribute
the Fund's shares.
Distribution and Shareholder Servicing Plan. The Board of Trustees has adopted a
Distribution and Shareholder Serving Plan on behalf of the Fund, in accordance
with Rule 12b-1 (the "Plan") under the 1940 Act. The Fund is authorized under
the Plan to use the assets of the Fund to reimburse the Investment Manager, the
Distributor or others for certain activities relating to the distribution of
shares of the Fund to investors and the provision of shareholder services. The
maximum amount payable under the Plan is 0.25% of the Fund's average net assets
on an annual basis.
The NASD's maximum sales charge rule relating to mutual fund shares establishes
limits on all types of sales charges, whether front-end, deferred or
asset-based. This rule may operate to limit the aggregate distribution fees to
which shareholders may be subject under the terms of the Plan.
The Plan authorizes the use of Fund assets to pay, or reimburse expenses
incurred by, banks, broker/dealers and other institutions which provide
distribution assistance and/or shareholder services including, but not limited
to, printing and distributing prospectuses to persons other than Fund
shareholders, printing and distributing advertising and sales literature and
reports to shareholders used in connection with selling shares of the Fund,
furnishing personnel and communications equipment to service shareholder
accounts and prospective shareholder inquiries.
The Plan requires that any person authorized to direct the disposition of monies
paid or payable by the Fund pursuant to the Plan or any related agreement
prepare and furnish to the Trustees for their review, at least quarterly,
written reports complying with the requirements of the Rule and setting out the
amounts expended under the Plan and the purposes for which those expenditures
were made. The Plan provides that so long as it is in effect the selection and
nomination of Trustees who are not interested persons of the Trust will be
committed to the discretion of the Trustees then in office who are not
interested persons of the Trust.
Neither the Plan nor any related agreements can take effect until approved by a
majority vote of both all the Trustees and those 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 agreements related to the Plan, cast in
person at a meeting called for the purpose of voting on the Plan and the related
agreements. The Trustees approved the Plan on September 13, 1999.
The Plan will continue in effect only so long as its continuance is specifically
approved at least annually by the Trustees in the manner described above for
Trustee approval of the Plan. The Plan for the Fund may be terminated at any
time by a majority vote of the Trustees who are not
<PAGE>
interested persons of the Trust and who have no direct or indirect financial
interest in the operations of the Plan or in any agreement related to the Plan
or by vote of a majority of the outstanding voting securities of the Fund.
The Plan may not be amended so as to materially increase the amount of the
distribution fees for the Fund unless the amendment is approved by a vote of at
least a majority of the outstanding voting securities of the Fund. In addition,
no material amendment may be made unless approved by the Trustees in the manner
described above for Trustee approval of the Plan.
Pricing of Shares
Shares of the Fund are sold on a continual basis at the net asset value per
share next computed following acceptance of an order by the Fund. The Fund's net
asset value per share for the purpose of pricing purchase and redemption orders
is determined at the close of normal trading (currently 4:00 p.m. Eastern Time)
on each day the New York Stock Exchange is open for trading. The NYSE is closed
on the following holidays: New Year's Day, Martin Luther King, Jr.'s Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
Securities listed on a U. S. securities exchange or Nasdaq for which market
quotations are readily available at the last quoted sale price on the day the
valuation is made. Price information on listed securities is taken from the
exchange where the security is primarily traded. Options, futures, unlisted
U. S. securities and listed U. S. securities not traded on the valuation date
for which market quotations are readily available are valued at the most
recent quoted bid price.
Fixed-income securities (other than obligations having a maturity of 60 days or
less) are normally valued on the basis of quotes obtained from pricing services,
which take into account appropriate factors such as institutional sized trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. Fixed-income securities
purchased with remaining maturities of 60 days or less are valued at amortized
cost if it reflects fair value. In the event that amortized cost does not
reflect market, market prices as determined above will be used. Other assets and
securities for which no quotations are readily available (including restricted
securities) will be valued in good faith at fair value using methods determined
by the Board of Trustees of the Fund.
Shares of Beneficial Interest
The Trust is a series business trust that currently offers one series of shares.
The beneficial interest of the Trust is divided into an unlimited number of
shares, with no par value. Each share has equal dividend, voting, liquidation
and redemption rights. There are no conversion or preemptive rights. Shares,
when issued, will be fully paid and nonassessable. Fractional shares have
proportional voting rights. Shares of the Fund do not have cumulative voting
rights, which means that the holders of more than 50% of the shares voting for
the election of trustees can elect all of the trustees if they choose to do so
and, in such event, the holders of the remaining shares will not be able to
elect any person to the Board of Trustees. Shares will be maintained in open
accounts on the books of the Transfer Agent, and certificates for shares will
generally not be issued.
<PAGE>
If they deem it advisable and in the best interests of shareholders, the
Trustees may create additional series of shares, each of which represents
interests in a separate portfolio of investments and is subject to separate
liabilities, and may create multiple classes of shares of such series, which may
differ from each other as to expenses and dividends. If additional series or
classes of shares are created, shares of each series or class are entitled to
vote as a series or class only to the extent required by the 1940 Act or as
permitted by the Trustees. Upon the Trust's liquidation, all shareholders of a
series would share pro-rata in the net assets of such series available for
distribution to shareholders of the series, but, as shareholders of such series,
would not be entitled to share in the distribution of assets belonging to any
other series.
Purchasing Shares
Shares of the Fund are sold in a continuous offering and may be purchased on any
business day through authorized investment dealers or directly from the Fund.
Stock Certificates and Confirmations
The Fund does not intend to issue stock certificates representing shares
purchased. Confirmations of the opening of an account and of all subsequent
transactions in the account are forwarded by the Fund to the stockholder's
address of record.
Special Incentive Programs
At various times the Fund may implement programs under which a dealer's sales
force may be eligible to win nominal awards for certain sales efforts or
recognition program conforming to criteria established by the Fund, or
participate in sales programs sponsored by the Fund. In addition, the investment
manager or distributor, in their discretion may from time to time, pursuant to
objective criteria, sponsor programs designed to reward selected dealers for
certain services or activities that are primarily intended to result in the sale
of shares of the Fund. These programs will not change the price you pay for your
shares or the amount that the Fund will receive from the sale.
Redemption of Shares
To redeem shares, shareholders may send a written request to:
Regular Mail: Overnight or Express Mail:
The Internet Index Fund The Internet Index Fund
c/o Firstar Mutual Fund Services, LLC c/o Firstar Mutual Fund Services, LLC
P.O. Box 701 615 East Michigan Street, 3rd Floor
Milwaukee, WI 53201-0701 Milwaukee, WI 53202
The written letter of instructions must include
o the investor's social security number or tax identification number,
o the fund name,
<PAGE>
o the account number,
o the share or dollar amount to be redeemed, and
o signature by all shareholders on the account.
The proceeds will be wired to the bank account of record or sent to the address
of record within seven days.
If a shareholder requests that redemption proceeds be sent to an address other
than that on record with the Fund or proceeds be made payable to someone other
than to the shareholder(s) of record, the written request must have signatures
guaranteed by:
o a trust company or commercial bank whose deposits are insured by the
BIF, which is administered by the FDIC;
o a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchange;
o a savings bank or savings association whose deposits are insured by the
SAIF, which is administered by the FDIC; or
o any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.
The Fund does not accept signatures guaranteed by a notary public.
The Fund and its transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Fund may elect in the future to
limit eligible signature guarantors to institutions that are members of a
signature guarantor program. The Fund and its transfer agent reserve the right
to amend these standards at any time without notice.
Portfolio Transactions and Turnover
The Fund's portfolio securities transactions are placed by the Investment
Manager. The objective of the Fund is to obtain the best available execution in
its portfolio transactions, taking into account the costs, promptness of
executions and other qualitative considerations. There is no pre-existing
commitment to place orders with any broker, dealer or member of an exchange. The
Investment Manager evaluates a wide range of criteria in seeking the most
favorable price and market for the execution of transactions, including the
broker's commission rate, execution capability, positioning and distribution
capabilities, information in regard to the availability of securities, trading
patterns, statistical or factual information, opinions pertaining to trading
strategy, back office efficiency, ability to handle difficult trades, financial
stability, and prior performance in servicing the Investment Manager and its
clients. In transactions on equity securities and U.S. Government securities
executed in the over-the-counter market, purchases and sales are transacted
directly with principal market-makers except in those circumstances where, in
the opinion of the Investment Manager, better prices and executions are
available elsewhere.
<PAGE>
The Investment Manager, when effecting purchases and sales of portfolio
securities for the account of the Fund, will seek execution of trades either (i)
at the most favorable and competitive rate of commission charged by any broker,
dealer or member of an exchange, or (ii) at a higher rate of commission charges,
if reasonable, in relation to brokerage and research services provided to the
Fund or the Investment Manager by such member, broker, or dealer. Such services
may include, but are not limited to, any one or more of the following;
information as to the availability of securities for purchase or sale,
statistical or factual information, or opinions pertaining to investments. The
Investment Manager may use research and services provided by brokers and dealers
in servicing all its clients, including the Fund, and not all such services will
be used by the Investment Manager in connection with the Fund. In accordance
with the provisions of Section 28(e) of the 1934 Act, the Manager may from
time-to-time receive services and products which serve both research and
non-research functions. In such event, the Manager makes a good faith
determination of the anticipated research and non-research use of the product or
service and allocates brokerage only with respect to the research component.
Brokerage may also be allocated to dealers in consideration of the Fund's share
distribution but only when execution and price are comparable to that offered by
other brokers.
If the Investment Manager provides investment advisory services to individuals
and other institutional clients, there may be occasions on which other
investment advisory clients advised by the Investment Manager may also invest in
the same securities as the Fund. When these clients buy or sell the same
securities at substantially the same time, the Investment Manager may average
the transactions as to price and allocate the amount of available investments in
a manner which is believes to be equitable to each client, including the Fund.
On the other hand, to the extent permitted by law, the Investment Manager may
aggregate the securities to be sold or purchased for the Fund with those to be
sold or purchased for other clients managed by it in order to obtain lower
brokerage commissions, if any.
Because of the Fund's indexing investment strategy, it generally only sells
securities to generate cash to satisfy redemption requests, or to rebalance its
portfolio to track the target index. As a result, the Fund's portfolio turnover
rate is expected to be extremely low. However, the Fund is not managed in a
manner designed to maximize tax efficiencies or reduce transaction costs, and
securities will be purchased and sold without regard to such factors as the
manager deems appropriate. Of course, when selling portfolio securities, the
manager will attempt to minimize taxable gains. The portfolio turnover rate is
calculated by dividing the lesser of the Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of securities whose
maturities at the time of acquisition were one year or less) by the monthly
average value of the securities in the portfolio during the year.
Additional Information on Distributions and Taxes
Distributions.
A shareholder will automatically receive all income dividends and capital gain
distributions in additional full and fractional shares of the Fund at their net
asset value as of the date of payment unless the shareholder elects to receive
such dividends or distributions in cash. The reinvestment date normally precedes
the payment date by about seven days although the exact timing is
<PAGE>
subject to change. Shareholders will receive a confirmation of each new
transaction in their account. The Trust will confirm all account activity,
including the payment of dividend and capital gain distributions and
transactions made as a result of an Automatic Withdrawal Plan or an Automatic
Investment Plan. Shareholders may rely on these statements in lieu of stock
certificates. Stock certificates representing shares of the Fund will not be
issued.
Taxes
Distributions of net investment income. The Fund receives income generally in
the form of dividends and interest on its investments. This income, less
expenses incurred in the operation of the Fund, constitutes the Fund's net
investment income from which dividends may be paid to you. Any distributions by
the Fund from such income will be taxable to you as ordinary income, whether you
take them in cash or in additional shares.
Distributions of capital gains. The Fund may derive capital gains and losses in
connection with sales or other dispositions of its portfolio securities.
Distributions from net short-term capital gains will be taxable to you as
ordinary income. Distributions from net long-term capital gains will be taxable
to you as long-term capital gain, regardless of how long you have held your
shares in the Fund. Any net capital gains realized by the Fund generally will be
distributed once each year, and may be distributed more frequently, if
necessary, in order to reduce or eliminate excise or income taxes on the Fund.
Information on the tax character of distributions. The Fund will inform you of
the amount of your ordinary income dividends and capital gains distributions at
the time they are paid, and will advise you of their tax status for federal
income tax purposes shortly after the close of each calendar year. If you have
not held Fund shares for a full year, the Fund may designate and distribute to
you, as ordinary income or capital gain, a percentage of income that is not
equal to the actual amount of such income earned during the period of your
investment in the Fund.
Election to be taxed as a regulated investment company. The Fund intends to
elect to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code and intends to so qualify during the current fiscal year.
As a regulated investment company, the Fund generally pays no federal income tax
on the income and gains it distributes to you. The board reserves the right not
to maintain the qualification of the Fund as a regulated investment company if
it determines such course of action to be beneficial to shareholders. In such
case, the Fund will be subject to federal, and possibly state, corporate taxes
on its taxable income and gains, and distributions to you will be taxed as
ordinary dividend income to the extent of the Fund's earnings and profits.
Excise tax distribution requirements. To avoid federal excise taxes, the
Internal Revenue Code requires the Fund to distribute to you by December 31 of
each year, at a minimum, the following amounts: 98% of its taxable ordinary
income earned during the calendar year; 98% of its capital gain net income
earned during the twelve month period ending October 31; and 100% of any
undistributed amounts from the prior year. The Fund intends to declare and pay
these amounts in December (or in January that are treated by you as received in
December) to avoid these excise taxes, but can give no assurances that its
distributions will be sufficient to eliminate all taxes.
<PAGE>
Redemption of Fund shares. Redemptions and exchanges of Fund shares are taxable
transactions for federal and state income tax purposes. If you redeem your Fund
shares, the IRS will require that you report a gain or loss on your redemption
or exchange. If you hold your shares as a capital asset, the gain or loss that
you realize will be capital gain or loss and will be long-term or short-term,
generally depending on how long you hold your shares. Any loss incurred on the
redemption or exchange of shares held for six months or less will be treated as
a long-term capital loss to the extent of any long-term capital gains
distributed to you by the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of your Fund
shares will be disallowed to the extent that you buy other shares in the Fund
(through reinvestment of dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under these rules will be added to
your tax basis in the new shares you buy.
U.S. government obligations. Many states grant tax-free status to dividends paid
to you from interest earned on direct obligations of the U.S. government,
subject in some states to minimum investment requirements that must be met by
the Fund. Investments in Government National Mortgage Association or Federal
National Mortgage Association securities, bankers' acceptances, commercial paper
and repurchase agreements collateralized by U.S. government securities do not
generally qualify for tax-free treatment. The rules on exclusion of this income
are different for corporations.
Dividends-received deduction for corporations. If you are a corporate
shareholder, you should note that it is expected that a portion of the dividends
paid by the Fund will qualify for the dividends-received deduction. In some
circumstances, you will be allowed to deduct these qualified dividends, thereby
reducing the tax that you would otherwise be required to pay on these dividends.
The dividends-received deduction will be available only with respect to
dividends designated by the Fund as eligible for such treatment. All dividends
(including the deducted portion) must be included in your alternative minimum
taxable income calculation.
Investment in complex securities. The Fund may invest in complex securities.
These investments may be subject to numerous special and complex tax rules.
These rules could affect whether gains and losses recognized by the Fund are
treated as ordinary income or capital gain, accelerate the recognition of income
to the Fund and/or defer the Fund's ability to recognize losses. In turn, these
rules may affect the amount, timing or character of the income distributed to
you by the Fund.
Performance Information
Total Return. Average annual total return quotations used in the Fund's
advertising and promotional materials are calculated according to the
following formula:
P(1 + R)n = ERV
where P equals a hypothetical initial payment of $1,000; R equals average annual
total return; n equals the number of years; and ERV equals the ending redeemable
value at the end of the period of a hypothetical $1,000 payment made at the
beginning of the period.
<PAGE>
Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication. Average annual total
return, or "T" in the above formula, is computed by finding the average annual
compounded rates of return over the period that would equate the initial amount
invested to the ending redeemable value. Average annual total return assumes the
reinvestment of all dividends and distributions.
Cumulative Total Return. Cumulative total return represents the simple change in
value of an investment over a stated period and may be quoted as a percentage or
as a dollar amount. Total returns may be broken down into their components or
income and capital (including capital gains and changes in share price) in order
to illustrate the relationship between these factors and their contributions to
total return.
Other Information. The Fund's performance data quoted in advertising and other
promotional materials represents past performance and is not intended to predict
or indicate future results. The return and principal value of an investment in a
Fund will fluctuate, and an investor's redemption proceeds may be more or less
than the original investment amount.
If permitted by applicable law, the Fund may be compared to data prepared by
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Morningstar, Inc., the Donoghue Organization, Inc. or other independent services
which monitor the performance of investment companies, and may be quoted in
advertising in terms of its ranking in each applicable universe. In addition,
the Fund may use performance data reported in financial and industry
publications, including Barron's, Business Week, Forbes, Fortune, Investor's
Daily, IBC/Donoghue's Money Fund Report, Money Magazine, The Wall Street Journal
and USA Today.
In addition to the Index, the Fund may from time to time use the following
unmanaged indices for performance comparison purposes:
o S&P 500 - The S&P 500 is an index of 500 stocks designed to track the
overall equity market's industry weightings. Most, but not all, large
capitalization stocks are in the index. There are also some small
capitalization names in the index. The list is maintained by Standard &
Poor's Corporation. It is market capitalization weighted. There are always
500 issuers in the S&P 500. Changes are made by Standard & Poor's as
needed.
o Russell 2000 - The Russell 2000 is composed of the 2,000 smallest stocks
in the Russell 3000, a market value weighted index of the 3,000 largest
U. S. publicly-traded companies.
o The Nasdaq Composite Index - The Nasdaq Composite Index is a broad-based
market capitalization-weighted index of all Nasdaq stocks.
Auditors
Arthur Andersen, LLP serves as the Fund's independent auditors, whose services
include examination of the Fund's financial statements and the performance of
other related audit and tax services.
<PAGE>
Financial Statements
The Internet Index Fund
Statement of Assets and Liabilities
As of September 22, 1999
ASSETS:
Cash $100,000.00
Receivable from Manager 50,322.30
Prepaid Blue Sky 20,955.00
Prepaid Insurance 16,552.00
---------
Total Assets $187,829.30
LIABILITIES:
Payable to Manager $87,829.30
Total Liabilities $87,829.30
NET ASSETS $100,000.00
Capital Shares, no par value; unlimited 10,000
shares authorized
Net Asset Value, offering and redemptio $10.00
======
price per share (net assets/shares
outstanding)
See accompanying notes to the financial statements.
<PAGE>
The Internet Index Fund
Statement of Operations
For the Period July 15, 1999 through September 22, 1999
EXPENSES:
Organizational expenses $50,322.30
Less: Expenses to be paid by ($50,322.30)
------------
Manager
Net income/(loss) $0.00
See accompanying notes to the financial statements.
<PAGE>
The Internet Index Fund
Notes to the Financial Statements
1. Organization
IGAM Group Funds (the "Trust") was organized as a Delaware business trust
on July 15, 1999, and is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment
company issuing its shares in series, each series representing a distinct
portfolio with its own investment objectives and policies. The series
presently authorized is the Internet Index Fund (the "Fund"). The Fund
will be non-diversified. The Fund has had no operations other than those
related to organizational matters, including the sale of 10,000 shares for
cash in the amount of $100,000 of the Fund to the President of the Trust,
Dr. Eugene Lee, on September 17, 1999.
2. Significant Accounting Policies
(a) Organization and Prepaid Initial Registration Expense
Expenses incurred by the Trust in connection with the organization
are expensed as incurred. These expenses were advanced by
Integrity Global Asset Management, Inc. ("IGAM" also referred to as
the "Manager"), and the Manager has contractually agreed to bear
these expenses, subject to potential recovery (see Note 3).
Prepaid initial state registration and prepaid insurance expenses
are deferred and amortized over the period of benefit.
(b) Federal Income Taxes
The Fund intends to comply with the requirements of the Internal
Revenue Code necessary to qualify as a regulated investment company
and to make the requisite distributions of income and capital gains
to shareholders sufficient to relieve it from all or substantially
all Federal income taxes.
(c) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and use assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
3. Investment Manager
The Trust has entered into an Investment Management Agreement (the
"Agreement") with the Manager, with whom certain Officers and Trustees of
the Trust are affiliated, to furnish investment and business management
services to the Fund. Under the terms of the Agreement, the Trust, on
behalf of the Fund, compensates the Manager for its management services at
the annual rate of 0.65% of the Fund's average daily assets.
The Manager has contractually agreed to waive, through 9/30/2000, its
management fee and/or to make payments to limit the Fund's other expenses,
including organization expenses, to the extent necessary to ensure that
the Fund's annual operating expenses, do not exceed 1.40% of its average
daily net assets. Any such waiver or payment is subject to later
adjustment to allow the Manager to recoup amounts waived or paid to the
extent actual fees and expenses for a period are less than the expense
limitation cap of 1.40%, provided, however, that the Manager shall only be
entitled to recoup such amounts for a period of three (3) years from the
date such amount was waived or paid.
4. Distribution Plan
The Trust, on behalf of the Fund, has adopted a Distribution and
Shareholder Servicing Plan pursuant to Rule 12b-1 under the 1940 Act (the
"12b-1 Plan"), which authorizes the Fund to reimburse the Manager, the
Fund's distributor, or others for amounts expended for distribution or
shareholder servicing activities in amounts not to exceed an annual rate
of 0.25% of the average daily net assets of the Fund. Payments made under
the 12b-1 Plan are tied to actual expenses incurred.
<PAGE>
ARTHUR ANDERSEN LLP
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Trustees of the IGAM Group Funds:
We have audited the statement of assets and liabilities of the Internet Index
Fund (the "Fund"), a series of IGAM Group Funds (a Delaware business trust), as
of September 22,1999 and the statement of operations for the period July 15,
1999 through September 22, 1999. These financial statements are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements based upon our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 net assets of the Fund as of
September 22, 1999 and the results of its operations for the period then ended,
in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
September 23, 1999
<PAGE>
IGAM GROUP FUNDS
File Nos.: 333-83499
811-09493
PART C
OTHER INFORMATION
Item 23. EXHIBITS
(a) Organizational Documents of Registrant.
(1) Registrant's Certificate of Trust as filed in Delaware on July
16, 1999.
Incorporated herein by reference to:
Filing: Initial Registration Statement
of Registrant on Form N-1A.
Filing Date: July 22, 1999
(2) Registrant's Agreement and Declaration of Trust as of July 15,
1999.
Filing: Filed herewith as Exhibit EX-99.B1.a.
(3) Secretary's Certificate dated September 30, 1999, evidencing
creation of the Internet Index Fund series of the Registrant
Filing: Filed herewith as Exhibit EX-99.B1.b.
(b) By-Laws of Registrant. Incorporated herein by reference to:
Filing: Initial Registration Statement
of Registrant on Form N-1A.
Filing Date: July 22, 1999
(c) Instruments Defining the Rights of Holders.
See Articles III, V and VI of the Registrant's Agreement and
Declaration of Trust (Exhibit 23(a)(2)) and the resolution of
the Registrant's Board of Trustees contained in the Secretary's
Certificate dated September 30, 1999 (Exhibit 23(a)(3)).
(d) Form of Investment Management Agreement between the Registrant, on
behalf of the Internet Index Fund, and Integrity Global Asset
Management, Inc.
Filing: Filed herewith as Exhibit EX-99.B5.
(e) Form of Distribution Agreement between the Registrant, on behalf of
the Internet Index Fund, and T.O. Richardson Securities, Inc.
Filing: Filed herewith as Exhibit EX-99.B6.
(f) Bonus, Profit Sharing, Pension or Other Similar Plans.
Not Applicable.
<PAGE>
(g) Form of Custodian Servicing Agreement between the Registrant and
Firstar Bank Milwaukee, N.A.
Incorporated herein by reference to:
Filing: Initial Registration Statement
of Registrant on Form N-1A.
Filing Date: July 22, 1999
(h) Other Material Contracts.
(1) Form of Fund Accounting Servicing Agreement between Firstar
Mutual Fund Services, LLC and the Registrant.
Incorporated herein by reference to:
Filing: Initial Registration Statement
of Registrant on Form N-1A.
Filing Date: July 22, 1999
(2) Form of Fund Administration Servicing Agreement between
Firstar Mutual Fund Services, LLC and the Registrant.
Incorporated herein by reference to:
Filing: Initial Registration Statement
of Registrant on Form N-1A.
Filing Date: July 22, 1999
(3) Form of Transfer Agent Servicing Agreement between Firstar
Mutual Fund Services, LLC and the Registrant.
incorporated herein by reference to:
Filing: Initial Registration Statement
of Registrant on Form N-1A.
Filing Date: July 22, 1999
(i) Opinion and Consent of Counsel dated October 4, 1999.
Filing: Filed herewith as Exhibit EX-99.B10.
(j) Other Opinions and Consents.
(1) Consent of Independent Public Accountants provided
by Arthur Andersen LLP dated September 23,1999.
Filing: Filed herewith as Exhibit EX-99.B11.
(2) Power of Attorney dated September 13, 1999
Filing: Filed herewith as Exhibit EX-99.
(k) Financial Statements Omitted from Item 22.
Not applicable.
(l) Initial Capital Agreements.
Not applicable
<PAGE>
(m) Rule 12b-1 Plans.
Distribution and Shareholder Servicing Plan adopted by the
Registrant for the Internet Index Fund series.
Filing: Filed herewith as Exhibit EX-99.B15.
(n) Multiple Class Plans Under Rule 18f-3.
Not applicable.
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL OF THE REGISTRANT.
None.
Item 25. INDEMNIFICATION.
Under the terms of the Delaware Business Trust Act (the "Delaware
Act") and the Registrant's Agreement and Declaration of Trust and
By-Laws, no officer or trustee of the Registrant shall have any
liability to the Registrant or its shareholders for damages, except to
the extent such limitation of liability is precluded by the Delaware
Act, the Agreement and Declaration of Trust, or the By-Laws.
Subject to the standards and restrictions set forth in the
Registrant's Agreement and Declaration of Trust, Section 3817 of the
Delaware Act permits a business trust to indemnify any trustee,
beneficial owner, or other person from and against any claims and
demands whatsoever. Section 3803 of the Delaware Act protects a
trustee, when acting in such capacity, from liability to any person
other than the business trust or beneficial owner for any act,
omission, or obligation of the business trust or any trustee thereof,
except as otherwise provided in the Agreement and Declaration of
Trust.
The Agreement and Declaration of Trust provides that the officers
and trustees shall not be liable for any act or omission of any agent
or employee of the Registrant, any investment adviser or principal
underwriter of the Registrant, or with respect to each trustee or
officer, the act or omission of any other trustee or officer. Subject
to the provisions of the By-Laws, the Registrant, out of its assets,
shall indemnify and hold harmless each and every officer and trustee
from and against any and all claims and demands whatsoever arising out
of or related to such officer's or trustee's performance of his or her
duties as an officer or trustee of the Registrant. This limitation on
liability applies to events occurring at the time a person serves as a
trustee or officer of the Registrant whether or not such person is a
trustee or officer at the time of any proceeding in which liability is
asserted. Nothing herein contained shall indemnify, hold harmless or
protect any officer or trustee from or against any liability to the
Registrant or any shareholder to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such
person's office.
<PAGE>
The By-Laws provide that in actions by others than the
Registrant, the Registrant shall indemnify any person who was or is a
party or is threatened to be made a party to any proceeding (other
than an action by or in the right of the Registrant) by reason of the
fact that such person is or was an agent of the Registrant, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding if such person
acted in good faith and in a manner that such person reasonably
believed to be in the best interests of the Registrant and in the case
of a criminal proceeding, had no reasonable cause to believe the
conduct of such person was unlawful. The termination of any proceeding
by judgment, order, settlement, conviction or plea of nolo contendere
or its equivalent shall not of itself create a presumption that the
person did not act in good faith or in a manner which the person
reasonably believed to be in the best interests of the Registrant or
that the person had reasonable cause to believe that the person's
conduct was unlawful. The By-laws provide that in actions by the
Registrant, the Registrant shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action by or in the right of the Registrant to procure a
judgment in its favor by reason of the fact that the person is or was
an agent of the Registrant, against expenses actually and reasonably
incurred by that person in connection with the defense or settlement
of that action if that person acted in good faith, in a manner that
person believed to be in the best interests of the Registrant and with
such care, including reasonable inquiry, as an ordinarily prudent
person in a like position would use under similar circumstances.
Notwithstanding any provision to the contrary contained in the
By-laws, there shall be no right to indemnification for any liability
arising by reason of willful misfeasance, bad faith, gross negligence,
or the reckless disregard of the duties involved in the conduct of the
agent's office with the Registrant.
No indemnification shall be made under the provisions of the
By-laws:
(a) In respect of any claim, issue or matter as to which
that person shall have been adjudged to be liable in the
performance of that person's duty to the Trust, unless and only
to the extent that the court in which that action was brought
shall determine upon application that in view of all the
circumstances of the case, that person was not liable by reason
of the disabling conduct set forth in the preceding paragraph and
is fairly and reasonably entitled to indemnity for the expenses
which the court shall determine; or
(b) In respect of any claim, issue, or matter as to which
that person shall have been adjudged to be liable on the basis
that personal benefit was improperly received by him, whether or
not the benefit resulted from an action taken in the person's
official capacity; or
(c) Of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval, or
of expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval,
unless the required approval set forth in Section 6 of this
Article is obtained.
<PAGE>
To the extent that an agent of the Registrant has been successful
on the merits in defense of any proceeding referred to in the above
paragraphs or in defense of any claim, issue or matter therein, before
the court or other body before whom the proceeding was brought, the
agent shall be indemnified against expenses actually and reasonably
incurred by the agent in connection therewith, provided that the Board
of Trustees, including a majority who are disinterested, non-party
trustees, also determines that based upon a review of the facts, the
agent was not liable by reason of the disabling conduct referred to
above and as set forth in the By-laws.
Except as provided in the above paragraph concerning a successful
defense, any indemnification under the provisions of the By-laws shall
be made by the Registrant only if authorized in the specific case on a
determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of
conduct set forth in the By-laws and is not prohibited from
indemnification because of the disabling conduct referred to above and
as set forth in the By-laws :
(a) A majority vote of a quorum consisting of trustees who
are not parties to the proceeding and are not "interested
persons" of the Trust (as defined in the 1940 Act); or
(b) A written opinion by an independent legal counsel.
To the fullest extent permitted by applicable law, the officers
and trustees shall be entitled and have the authority to purchase with
the assets of the Registrant, insurance for liability and for all
expenses reasonably incurred or paid or expected to be paid by a
trustee or officer in connection with any claim, action, suit or
proceeding in which such person becomes involved by virtue of such
person's capacity or former capacity with the Registrant, whether or
not the Registrant would have the power to indemnify such person
against such liability under the provisions of Article VII of its
Agreement and Declaration of Trust.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER.
In addition to acting as the investment manager of the
Registrant, Integrity Global Asset Management, Inc. intends to provide
investment advisory services to institutional and individual
investors.
Eugene Y.W. Lee, Ph.D., the President of the Integrity Global
Asset Management, Inc. is an Associate Professor of Finance at the
College of Business of the University of Rhode Island, in Kingston,
Rhode Island. Though still a faculty member, Dr. Lee has taken an
indefinite sabbatical leave from the University in order to devote his
full attention to the operation of Integrity Global Management, Inc.
Item 27. PRINCIPAL UNDERWRITERS.
(a) T.O. Richardson Securities, Inc., the principal underwriter
of the Registrant, acts as principal underwriter, depositor or
investment advisor for the following other investment companies:
<PAGE>
The Internet Fund
The Medical Fund
The Gran Prix Fund
T.O. Richardson Trust
The Barrett Funds
The Simms Funds
(b) Herewith is the information required by the following table
with respect to each director, officer or partner of the only
underwriter named in answer to Item 20 of Part B:
Name and Principal Business Address Position and Position and
Offices with Offices with
Underwriter Registrant
Samuel Bailey, Jr. President and None
Two Bridgewater Road Director
Farmington, CT 06032-2256
L. Austine Crowe Vice President None
Two Bridgewater Road and Director
Farmington, CT 06032-2256
Kathleen M. Russo Secretary None
Two Bridgewater Road
Farmington, CT 06032-2256
(c) Not Applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS.
All records described in Section 31(a) of the Investment Company
Act of 1940, as amended, and the Rules [17 CFR 270.31a-1 to 31a-3]
promulgated thereunder, are maintained by the Registrant's Investment
Manager, Integrity Global Asset Management, Inc., South Kingston
Office Park, Suite A5, 24 Salt Pond Road, Wakefield, RI 02879, except
for those maintained by the Registrant's custodian, Firstar Bank
Milwaukee, N.A., 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
and the Registrant's Administrator, Transfer, Redemption, Dividend
Disbursing and Accounting Agent, Firstar Mutual Fund Services, LLC,
615 East Michigan Street, Milwaukee, Wisconsin 53202.
Item 29. MANAGEMENT SERVICES.
Not applicable.
Item 30. UNDERTAKINGS.
<PAGE>
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Wakefield and State of Rhode Island on the 6th day of October, 1999.
IGAM GROUP FUNDS
(Registrant)
By: /s/ Eugene Y.W. Lee, Ph.D.
Eugene Y.W. Lee, Ph.D.
Trustee, President, Treasurer and Secretary
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Title Date
/s/ Edward M. Mazze, Ph.D. Chairman of the October 6, 1999
Edward M. Mazze, Ph.D.* Board of Trustees
/s/ Andrew Laviano Trustee October 6, 1999
Andrew Laviano*
/s/ Eugene Y.W. Lee, Ph.D. Trustee, President, October 6, 1999
Eugene Y.W. Lee, Ph.D. Treasurer and Secretary
/s/ Harris N. Rosen Trustee October 6,1999
Harris N. Rosen
* By Eugene Y.W. Lee, Ph.D., pursuant to Power of Attorney filed herewith as
Exhibit 23(j)(2).
<PAGE>
EXHIBIT INDEX
Status
- --- Registrant's Certificate of Trust filed *
in Delaware on July 16, 1999
EX-99.B1.a Registrant's Agreement and Declaration Filed
of Trust Herewith
EX-99.B1.b. Secretary's Certificate dated September Filed
30, 1999 Herewith
- --- By-Laws of Registrant *
EX-99.B5. Form of Investment Management Agreement Filed
between Integrity Global Asset Herewith
Management, Inc. and the Registrant on
behalf of the Internet Index Fund.
EX-99.B6. Form of Distribution Agreement between Filed
T.O. Richardson Securities, Inc. and the Herewith
Registrant on behalf of the Internet
Index Fund.
- --- Form of Custodian Agreement between *
Registrant and Firstar Bank Milwaukee,
N.A.
- --- Form of Fund Accounting Servicing *
Agreement between Registrant and Firstar
Mutual Fund Services, LLC
- --- Form of Fund Administration Servicing *
Agreement between Registrant and Firstar
Mutual Fund Services, LLC
- --- Form of Transfer Agent Servicing *
Agreement between Registrant and Firstar
Mutual Fund Services, LLC
EX-99.B10. Opinion and Consent of Counsel Filed
Herewith
EX-99.B11. Consent of Arthur Andersen LLP Filed
Herewith
EX-99. Power of Attorney Filed
Herewith
EX-99.B15. Distribution and Shareholder Servicing Filed
Plan Herewith
* Previously filed and incorporated by reference.
AGREEMENT AND DECLARATION OF TRUST
of
IGAM Group Funds
a Delaware Business Trust
July 15, 1999
TABLE OF CONTENTS
Page
ARTICLE I. Name and Definitions..................................2
Section 1. Name............................................2
Section 2. Registered Agent and Registered Office;
Principal Place of Business.....................2
(a) Registered Agent and Registered Office............2
(b) Principal Place of Business.......................2
Section 3. Definitions.....................................2
(a) "1940 Act"........................................2
(b) "Affiliate".......................................2
(c) "Board of Trustees"...............................2
(d) "By-Laws".........................................2
(e) "Certificate of Trust"............................3
(f) "Code"............................................3
(g) "Commission"......................................3
(h) "DBTA"............................................3
(i) "Declaration of Trust"............................3
(j) "General Liabilities".............................3
(k) "Interested Person"...............................3
(l) "Investment Adviser" or "Adviser".................3
(m) "National Financial Emergency"....................3
(n) "Person"..........................................4
(o) "Principal Underwriter"...........................4
(p) "Series"..........................................4
(q) "Shares"..........................................4
(r) "Shareholder".....................................4
(s) "Trust"...........................................4
(t) "Trust Property"..................................4
(u) "Trustee" or "Trustees"...........................4
ARTICLE II. Purpose of Trust.....................................4
ARTICLE III. Shares..............................................8
Section 1. Division of Beneficial Interest.................8
Section 2. Ownership of Shares............................10
Section 3. Investments in the Trust.......................10
Section 4. Status of Shares and Limitation
of Personal Liability........................11
Section 5. Power of Board of Trustees to
Change Provisions Relating to Shares...........11
Section 6. Establishment and Designation of Series........12
(a) Assets Held with Respect to a
Particular Series............................12
(b) Liabilities Held with Respect to a Particular
Series.......................................13
(c) Dividends, Distributions, Redemptions and
Repurchases..................................14
(d) Voting.........................................14
(e) Equality.......................................15
(f) Fractions......................................15
(g) Exchange Privilege.............................15
(h) Combination of Series..........................15
(i) Elimination of Series..........................15
Section 7. Indemnification of Shareholders................16
ARTICLE IV. The Board of Trustees...............................16
Section 1. Powers.........................................16
Section 2. Payment of Expenses by the Trust...............18
Section 3. Payment of Expenses by Shareholders............18
Section 4. Ownership of Trust Property....................18
Section 5. Service Contracts..............................19
Section 6. Effect of Death, Resignation,
Removal, etc. of a Trustee..............20
ARTICLE V. Shareholders' Voting Powers..........................21
Section 1. Voting Powers and Required Vote................21
Section 2. Additional Provisions..........................21
ARTICLE VI. Net Asset Value, Distributions and Redemptions......21
Section 1. Determination of Net Asset Value, Net Income and
Distributions..........................22
Section 2. Redemptions at the Option of a Shareholder.....22
Section 3. Redemptions at the Option of the Trust.........24
ARTICLE VII. Compensation and Limitation of Liability of
Officers and Trustees..................24
Section 1. Compensation...................................24
Section 2. Indemnification and Limitation of Liability....24
Section 3. Officers and Trustees' Good Faith
Action, Expert Advice, No Bond
or Surety..............................25
Section 4. Insurance......................................25
ARTICLE VIII. Miscellaneous.....................................26
Section 1. Liability of Third Persons
Dealing with Trustees...................26
Section 2. Dissolution of Trust or Series.................26
Section 3. Merger and Consolidation; Conversion...........27
(a) Merger and Consolidation.........................27
(b) Conversion.......................................28
Section 4. Reorganization.................................28
Section 5. Amendments.....................................29
Section 6. Filing of Copies, References, Headings.........29
Section 7. Applicable Law.................................30
Section 8. Provisions in Conflict with Law or Regulations.30
Section 9. Business Trust Only............................30
Section 10. Use of the Names "IGAM Group" and "Integrity
Global Asset Management"....................31
Section 11. Counterparts..................................32
AGREEMENT AND DECLARATION OF TRUST
OF
IGAM GROUP FUNDS
AGREEMENT AND DECLARATION OF TRUST made as of this 15th day of July, 1999,
by the Trustees hereunder, and by the holders of shares of beneficial interest
to be issued hereunder as hereinafter provided. This Agreement and Declaration
of Trust shall be effective upon the filing of the Certificate of Trust in the
office of the Secretary of State of the State of Delaware.
W I T N E S S E T H:
WHEREAS this Trust has been formed to carry on the business
of an investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate Series, and to issue classes of Shares of any Series or
divide Shares of any Series into two or more classes, all in accordance with the
provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into their
hands as trustees of a Delaware business trust in accordance with the provisions
of the Delaware Business Trust Act (12 Del. C. ss.3801, et seq.), as from time
to time amended and including any successor statute of similar import (the
"DBTA"), and the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets which they may from time to time acquire in any
manner as Trustees hereunder IN TRUST to manage and dispose of the same upon the
following terms and conditions for the benefit of the holders from time to time
of shares of beneficial interest in this Trust and the Series created hereunder
as hereinafter set forth.
ARTICLE I.
Name and Definitions
Section 1. Name. This trust shall be known as "IGAM Group Funds" and the
Trustees shall conduct the business of the Trust under that name, or any other
name as they may from time to time determine.
Section 2. Registered Agent and Registered Office; Principal Place
of Business.
(a) Registered Agent and Registered Office The name of the registered
agent of the Trust and the address of the registered office of the Trust are as
set forth on the Certificate of Trust.
(b) Principal Place of Business The principal place of business of the
Trust is Wakefield, Rhode Island or such other location within or outside of the
State of Delaware as the Board of Trustees may determine from time to time.
Section 3. Definitions. Whenever used herein, unless otherwise required by
the context or specifically provided:
(a) "1940 Act"shall mean the Investment Company Act of 1940 and the rules
and regulations thereunder, all as adopted or amended from time to time.
(b) "Affiliate"shall have the meaning given to "Affiliated Person" in
Section 2(a)(3) of the 1940 Act when used with reference to a specified Person.
(c) "Board of Trustees"shall mean the governing body of the Trust, which
is comprised of the Trustees of the Trust.
(d) "By-Laws"shall mean the By-Laws of the Trust, as amended from time to
time in accordance with Article X of the By-Laws, and incorporated herein by
reference.
(e) "Certificate of Trust"shall mean the certificate of trust filed with
the Office of the Secretary of State of the State of Delaware as required under
the DBTA to form the Trust.
(f) "Code"shall mean the Internal Revenue Code of 1986, and the rules and
regulations thereunder, all as adopted or amended from time to time.
(g) "Commission"shall have the meaning given to it in
Section 2(a)(7) of the 1940 Act.
(h) "DBTA"shall mean the Delaware Business Trust Act, (12
Del. C. ss.3801, et seq.), as amended from time to time.
(i) "Declaration of Trust"shall mean this Agreement and Declaration of
Trust, as amended or restated from time to time.
(j) "General Liabilities"shall have the meaning given it in Article III,
Section 6(b) of this Declaration Trust.
(k) "Interested Person"shall have the meaning given to it
in Section 2(a)(19) of the 1940 Act.
(l) "Investment Adviser" or "Adviser"shall mean a party furnishing
services to the Trust pursuant to any contract described in Article IV, Section
5(a) hereof.
(m) "National Financial Emergency"shall mean the whole or any part of any
period set forth in Section 22(e) of the 1940 Act. The Board of Trustees may, in
its discretion, declare that the suspension relating to a National Financial
Emergency shall terminate, as the case may be, on the first business day on
which the New York Stock Exchange shall have reopened or the period specified in
Section 22(e) of the 1940 Act shall have expired (as to which, in the absence of
an official ruling by the Commission, the determination of the Board of Trustees
shall be conclusive).
(n) "Person"shall include a natural person, partnership, limited
partnership, trust, estate, association, corporation, custodian, nominee or any
other individual or entity in its own or any representative capacity.
(o) "Principal Underwriter"shall have the meaning given to
it in Section 2(a)(29) of the 1940 Act.
(p) "Series"shall refer to each series of Shares established and
designated under or in accordance with the provisions of Article III and shall
mean an entity such as that described in Section 18(f)(2) of the 1940 Act, and
subject to Rule 18f-2 thereunder.
(q) "Shares"shall mean the outstanding shares of beneficial interest into
which the beneficial interest in the Trust shall be divided from time to time,
and shall include fractional and whole shares.
(r) "Shareholder"shall mean a record owner of Shares.
(s) "Trust"shall refer to the Delaware business trust established by this
Declaration of Trust, as amended from time to time.
(t) "Trust Property"shall mean any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or one or more of any Series, including, without limitation, the rights
referenced in Article VIII, Section 2 hereof.
(u) "Trustee" or "Trustees"shall refer to each signatory to this
Declaration of Trust as a trustee, so long as such signatory continues in office
in accordance with the terms hereof, and all other Persons who may, from time to
time, be duly elected or appointed, qualified and serving on the Board of
Trustees in accordance with the provisions hereof. Reference herein to a Trustee
or the Trustees shall refer to such Person or Persons in their capacity as
trustees hereunder.
ARTICLE II.
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of a registered management investment company registered under the 1940 Act
through one or more Series investing primarily in securities and, in addition to
any authority given by law, to exercise all of the powers and to do any and all
of the things as fully and to the same extent as any private corporation
organized for profit under the general corporation law of the State of Delaware,
now or hereafter in force, including, without limitation, the following powers:
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold,
pledge, sell, assign, mortgage, transfer, exchange, distribute, write options
on, lend or otherwise deal in or dispose of contracts for the future acquisition
or delivery of fixed income or other securities, and securities or property of
every nature and kind, including, without limitation, all types of bonds,
debentures, stocks, preferred stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, bankers' acceptances, and other
securities of any kind, issued, created, guaranteed, or sponsored by any and all
Persons, including, without limitation, states, territories, and possessions of
the United States and the District of Columbia and any political subdivision,
agency, or instrumentality thereof, any foreign government or any political
subdivision of the U.S. Government or any foreign government, or any
international instrumentality, or by any bank or savings institution, or by any
corporation or organization organized under the laws of the United States or of
any state, territory, or possession thereof, or by any corporation or
organization organized under any foreign law, or "when issued" contracts for any
such securities, or to change the investments of the assets of the Trust;
(b) To exercise any and all rights, powers and privileges with reference
to or incident to ownership or interest, use and enjoyment of any of such
securities and other instruments or property of every kind and description,
including, but without limitation, the right, power and privilege to own, vote,
hold, purchase, sell, negotiate, assign, exchange, lend, transfer, mortgage,
hypothecate, lease, pledge or write options with respect to or otherwise deal
with, dispose of, use, exercise or enjoy any rights, title, interest, powers or
privileges under or with reference to any of such securities and other
instruments or property, the right to consent and otherwise act with respect
thereto, with power to designate one or more Persons, to exercise any of said
rights, powers, and privileges in respect of any of said instruments, and to do
any and all acts and things for the preservation, protection, improvement and
enhancement in value of any of such securities and other instruments or
property;
(c) To sell, exchange, lend, pledge, mortgage, hypothecate, lease or
write options with respect to or otherwise deal in any property rights relating
to any or all of the assets of the Trust or any Series, subject to any
requirements of the 1940 Act;
(d) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees shall
deem proper, granting to such person or persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;
(e) To exercise powers and right of subscription or
otherwise which in any manner arise out of ownership of
securities;
(f) To hold any security or property in a form not indicating that it is
trust property, whether in bearer, unregistered or other negotiable form, or in
its own name or in the name of a custodian or subcustodian or a nominee or
nominees or otherwise or to authorize the custodian or a subcustodian or a
nominee or nominees to deposit the same in a securities depository, subject in
each case to proper safeguards according to the usual practice of investment
companies or any rules or regulations applicable thereto;
(g) To consent to, or participate in, any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or sale
of property by such corporation or issuer; and to pay calls or subscriptions
with respect to any security held in the Trust;
(h) To join with other security holders in acting through a committee,
depositary, voting trustee or otherwise, and in that connection to deposit any
security with, or transfer any security to, any such committee, depositary or
trustee, and to delegate to them such power and authority with relation to any
security (whether or not so deposited or transferred) as the Trustees shall deem
proper, and to agree to pay, and to pay, such portion of the expenses and
compensation of such committee, depositary or trustee as the Trustees shall deem
proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to
claims for taxes;
(j) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(k) To endorse or guarantee the payment of any notes or other obligations
of any Person; to make contracts of guaranty or suretyship, or otherwise assume
liability for payment thereof;
(l) To purchase and pay for entirely out of Trust Property such insurance
as the Trustees may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, Investment Advisers, Principal Underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding Shares, holding, being
or having held any such office or position, or by reason of any action alleged
to have been taken or omitted by any such Person as Trustee, officer, employee,
agent, Investment Adviser, Principal Underwriter, or independent contractor, to
the fullest extent permitted by this Declaration of Trust, the Bylaws and by
applicable law;
(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust;
(n) To purchase or otherwise acquire, own, hold, sell, negotiate,
exchange, assign, transfer, mortgage, pledge or otherwise deal with, dispose of,
use, exercise or enjoy, property of all kinds;
(o) To buy, sell, mortgage, encumber, hold, own, exchange, rent or
otherwise acquire and dispose of, and to develop, improve, manage, subdivide,
and generally to deal and trade in real property, improved and unimproved, and
wheresoever situated; and to build, erect, construct, alter and maintain
buildings, structures, and other improvements on real property;
(p) To borrow or raise moneys for any of the purposes of the Trust, and
to mortgage or pledge the whole or any part of the property and franchises of
the Trust, real, personal, and mixed, tangible or intangible, and wheresoever
situated;
(q) To enter into, make and perform contracts and undertakings of every
kind for any lawful purpose, without limit as to amount; and
(r) To issue, purchase, sell and transfer, reacquire, hold, trade and
deal in Shares, bonds, debentures and other securities, instruments or other
property of the Trust, from time to time, to such extent as the Board of
Trustees shall, consistent with the provisions of this Declaration of Trust,
determine; and to repurchase, re-acquire and redeem, from time to time, its
Shares or, if any, its bonds, debentures and other securities.
The Trust shall not be limited to investing in obligations maturing before
the possible dissolution of the Trust or one or more of its Series. The Trustees
shall not in any way be bound or limited by any present or future law or custom
in regard to investment by fiduciaries. Neither the Trust nor the Trustees shall
be required to obtain any court order to deal with any assets of the Trust or
take any other action hereunder.
The foregoing clauses shall each be construed as purposes, objects and
powers, and it is hereby expressly provided that the foregoing enumeration of
specific purposes, objects and powers shall not be held to limit or restrict in
any manner the powers of the Trust, and that they are in furtherance of, and in
addition to, and not in limitation of, the general powers conferred upon the
Trust by the DBTA and the other laws of the State of Delaware or otherwise; nor
shall the enumeration of one thing be deemed to exclude another, although it be
of like nature, not expressed.
ARTICLE III.
Shares
Section 1. Division of Beneficial Interest. The beneficial interest in the
Trust shall at all times be divided into Shares, all without par value. The
number of Shares authorized hereunder is unlimited. The Board of Trustees may
authorize the division of Shares into separate and distinct Series and the
division of any Series into separate classes of Shares. The different Series and
classes shall be established and designated, and the variations in the relative
rights and preferences as between the different Series and classes shall be
fixed and determined by the Board of Trustees without the requirement of
Shareholder approval. If no separate Series or classes shall be established, the
Shares shall have the rights and preferences provided for herein and in Article
III, Section 6 hereof to the extent relevant and not otherwise provided for
herein, and all references to Series and classes shall be construed (as the
context may require) to refer to the Trust. The fact that a Series shall have
initially been established and designated without any specific establishment or
designation of classes (i.e., that all Shares of such Series are initially of a
single class) shall not limit the authority of the Board of Trustees to
establish and designate separate classes of said Series. The fact that a Series
shall have more than one established and designated class, shall not limit the
authority of the Board of Trustees to establish and designate additional classes
of said Series, or to establish and designate separate classes of the previously
established and designated classes.
The Board of Trustees shall have the power to issue Shares of the Trust,
or any Series or class thereof, from time to time for such consideration (but
not less than the net asset value thereof) and in such form as may be fixed from
time to time pursuant to the direction of the Board of Trustees.
The Board of Trustees may hold as treasury shares, reissue for such
consideration and on such terms as they may determine, or cancel, at their
discretion from time to time, any Shares of any Series reacquired by the Trust.
The Board of Trustees may classify or reclassify any unissued Shares or any
Shares previously issued and reacquired of any Series or class into one or more
Series or classes that may be established and designated from time to time.
Notwithstanding the foregoing, the Trust and any Series thereof may acquire,
hold, sell and otherwise deal in, for purposes of investment or otherwise, the
Shares of any other Series of the Trust or Shares of the Trust, and such Shares
shall not be deemed treasury shares or cancelled.
Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof, and the Shareholders
of any Series shall be entitled to receive dividends and distributions, when, if
and as declared with respect thereto in the manner provided in Article IV,
Section 1 hereof. No Share shall have any priority or preference over any other
Share of the same Series or class with respect to dividends or distributions
paid in the ordinary course of business or distributions upon dissolution of the
Trust or of such Series or class made pursuant to Article VIII, Section 2
hereof. All dividends and distributions shall be made ratably among all
Shareholders of a particular class of Series from the Trust Property held with
respect to such Series according to the number of Shares of such class of such
Series held of record by such Shareholders on the record date for any dividend
or distribution. Shareholders shall have no preemptive or other right to
subscribe to new or additional Shares or other securities issued by the Trust or
any Series. The Trustees may from time to time divide or combine the Shares of
any particular Series into a greater or lesser number of Shares of that Series.
Such division or combination may not materially change the proportionate
beneficial interests of the Shares of that Series in the Trust Property held
with respect to that Series or materially affect the rights of Shares of any
other Series.
Any Trustee, officer or other agent of the Trust, and any organization in
which any such Person is interested, may acquire, own, hold and dispose of
Shares of the Trust to the same extent as if such Person were not a Trustee,
officer or other agent of the Trust; and the Trust may issue and sell or cause
to be issued and sold and may purchase Shares from any such Person or any such
organization subject only to the general limitations, restrictions or other
provisions applicable to the sale or purchase of such Shares generally.
Section 2. Ownership of Shares. The ownership of Shares shall be recorded
on the books of the Trust kept by the Trust or by a transfer or similar agent
for the Trust, which books shall be maintained separately for the Shares of each
Series and class thereof that has been established and designated. No
certificates certifying the ownership of Shares shall be issued except as the
Board of Trustees may otherwise determine from time to time. The Board of
Trustees may make such rules not inconsistent with the provisions of the 1940
Act as they consider appropriate for the issuance of Share certificates, the
transfer of Shares of each Series or class and similar matters. The record books
of the Trust as kept by the Trust or any transfer or similar agent, as the case
may be, shall be conclusive as to who are the Shareholders of each Series or
class thereof and as to the number of Shares of each Series or class thereof
held from time to time by each such Shareholder.
Section 3. Investments in the Trust. Investments may be accepted by the
Trust from such Persons, at such times, on such terms, and for such
consideration as the Board of Trustees may, from time to time, authorize. Each
investment shall be credited to the individual Shareholder's account in the form
of full and fractional Shares of the Trust, in such Series or class as the
purchaser may select, at the net asset value per Share next determined for such
Series or class after receipt of the investment; provided, however, that the
Principal Underwriter may, in its sole discretion, impose a sales charge upon
investments in the Trust.
Section 4. Status of Shares and Limitation of Personal Liability. Shares
shall be deemed to be personal property giving to Shareholders only the rights
provided in this Declaration of Trust and under applicable law. Every
Shareholder by virtue of having become a Shareholder shall be held to have
expressly assented and agreed to the terms hereof and to have become a party
hereto. The death of a Shareholder during the existence of the Trust shall not
operate to dissolve the Trust or any Series, nor entitle the representative of
any deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees or any Series, but entitles such
representative only to the rights of said deceased Shareholder under this
Declaration of Trust. Ownership of Shares shall not entitle the Shareholder to
any title in or to the whole or any part of the Trust Property or right to call
for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. Neither the Trust
nor the Trustees, nor any officer, employee or agent of the Trust, shall have
any power to bind personally any Shareholder, nor, except as specifically
provided herein, 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. All Shares, when issued on the terms determined by
the Board of Trustees, shall be fully paid and nonassessable. As provided in the
DBTA, Shareholders of the Trust shall be entitled to the same limitation of
personal liability extended to stockholders of a private corporation organized
for profit under the general corporation law of the State of Delaware.
Section 5. Power of Board of Trustees to Change Provisions Relating to
Shares. Notwithstanding any other provision of this Declaration of Trust and
without limiting the power of the Board of Trustees to amend this Declaration of
Trust or the Certificate of Trust as provided elsewhere herein, the Board of
Trustees shall have the power to amend this Declaration of Trust, or the
Certificate of Trust, at any time and from time to time, in such manner as the
Board of Trustees may determine in its sole discretion, without the need for
Shareholder action, so as to add to, delete, replace or otherwise modify any
provision relating to the Shares contained in this Declaration of Trust;
provided that before adopting any such amendment without Shareholder approval,
the Board of Trustees shall determine that it is consistent with the fair and
equitable treatment of all Shareholders and that Shareholder approval is not
otherwise required by the 1940 Act or other applicable law; provided, however
that if Shares have been issued, Shareholder approval shall be required to adopt
any amendment to this Declaration of Trust which would adversely affect to a
material degree the rights and preferences of the Shares of any Series or class
already issued; provided, however, that in the event that the Board of Trustees
determines that the Trust shall no longer be operated as an investment company
in accordance with the provisions of the 1940 Act, the Board of Trustees may
adopt such amendments to this Declaration of Trust to delete those terms the
Board of Trustees identifies as being required by the 1940 Act.
Subject to the foregoing paragraph, the Board of Trustees may amend any
provision set forth in paragraphs (a) through (i) of Section 6 of this Article
III.
Notwithstanding the foregoing paragraphs, the Board of Trustees shall have
the power, in its discretion, to make such elections as to the tax status of the
Trust as may be permitted or required under the Code as currently in effect or
as amended, without the vote of any Shareholder.
Section 6. Establishment and Designation of Series. The establishment and
designation of any Series or class of Shares shall be effective upon the
resolution by a majority of the then Board of Trustees, adopting a resolution
which sets forth such establishment and designation and the relative rights and
preferences of such Series or class. Each such resolution shall be incorporated
herein by reference upon adoption.
Each Series shall be separate and distinct from any other Series and shall
maintain separate and distinct records on the books of the Trust, and the assets
and liabilities belonging to any such Series shall be held and accounted for
separately from the assets and liabilities of the Trust or any other Series.
Shares of each Series or class established pursuant to this Section 6,
unless otherwise provided in the resolution establishing such Series, shall have
the following relative rights and preferences:
(a) Assets Held with Respect to a Particular 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 from whatever source
derived, including, without limitation, 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
irrevocably be held with respect to that Series for all purposes, subject only
to the rights of creditors with respect to such Series, and shall be so recorded
upon the books of account of the Trust. Such consideration, assets, income,
earnings, profits and proceeds thereof, from whatever source derived, including,
without limitation, 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, are herein referred to as "assets
held with respect to" such Series. In the event that there are any assets,
income, earnings, profits and proceeds thereof, funds or payments which are not
readily identifiable as assets held with respect to any particular Series
(collectively "General Assets"), the Board of Trustees shall allocate such
General Assets to, between or among any one or more of the Series in such manner
and on such basis as the Board of Trustees, in its sole discretion, deems fair
and equitable, and any General Asset so allocated to a particular Series shall
be held with respect to that Series. Each such allocation by the Board of
Trustees shall be conclusive and binding upon the Shareholders of all Series for
all purposes.
(b) Liabilities Held with Respect to a Particular Series. The assets of
the Trust held with respect to each particular Series shall be charged against
the liabilities of the Trust held with respect to that Series and all expenses,
costs, charges and reserves attributable to that Series, and any liabilities,
expenses, costs, charges and reserves of the Trust that are not readily
identifiable as being held with respect to any particular Series (collectively
"General Liabilities") shall be allocated and charged by the Board of Trustees
to and among any one or more of the Series in such manner and on such basis as
the Board of Trustees in its sole discretion deems fair and equitable. The
liabilities, expenses, costs, charges, and reserves so charged to a Series are
herein referred to as "liabilities held with respect to" such Series. Each
allocation of liabilities, expenses, costs, charges and reserves by the Board of
Trustees shall be conclusive and binding upon the Shareholders of all Series for
all purposes. All Persons who have extended credit that has been allocated to a
particular Series, or who have a claim or contract that has been allocated to
any particular Series, shall look, and shall be required by contract to look
exclusively, to the assets of that particular Series for payment of such credit,
claim, or contract. In the absence of an express contractual agreement so
limiting the claims of such creditors, claimants and contract providers, each
creditor, claimant and contract provider will be deemed nevertheless to have
impliedly agreed to such limitation unless an express provision to the contrary
has been incorporated in the written contract or other document establishing the
creditor, claimant or contract provider relationship.
Subject to the right of the Board of Trustees in its discretion to
allocate General Liabilities as provided herein, the debts, liabilities,
obligations and expenses incurred, contracted for or otherwise existing with
respect to a particular Series, whether such Series is now authorized and
existing pursuant to this Declaration of Trust or is hereafter authorized and
existing pursuant to this Declaration of Trust, shall be enforceable against the
assets held with respect to such particular Series only, and not against the
assets of any other Series or the General Assets of the Trust and none of the
General Liabilities of the Trust or the debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to any
other Series thereof shall be enforceable against the assets held with respect
to such particular Series. Notice of this limitation on liabilities between and
among Series shall 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 DBTA, and upon
the giving of such notice in the Certificate of Trust, the statutory provisions
of Section 3804 of the DBTA relating to limitations on liabilities between and
among Series (and the statutory effect under Section 3804 of setting forth such
notice in the Certificate of Trust) shall become applicable to the Trust and
each Series.
(c) Dividends, Distributions, Redemptions and Repurchases. Notwithstanding
any other provision of this Declaration of Trust, including, without limitation,
Article VI, no dividend or distribution, including without limitation, any
distribution paid upon dissolution of the Trust or of any Series with respect
to, nor any redemption or repurchase of, the Shares of any Series or class shall
be effected by the Trust other than from the assets held with respect to such
Series, nor, except as specifically provided in Section 7 of this Article III,
shall any Shareholder of any particular Series otherwise have any right or claim
against the assets held with respect to any other Series or the General Assets
of the Trust except to the extent that such Shareholder has such a right or
claim hereunder as a Shareholder of such other Series. The Board of Trustees
shall have full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital, and
each such determination and allocation shall be conclusive and binding upon the
Shareholders.
(d) Voting All Shares of the Trust entitled to vote on a matter shall vote
on the matter, separately by Series and, if applicable, by class; provided, that
(1) where the 1940 Act requires all Shares of the Trust to be voted in the
aggregate, without differentiation between the separate Series or classes, on
any matter, then all of the Trust's Shares shall be entitled to vote in the
aggregate on the matter; and (2) if any matter affects only the interests of
some but not all Series or classes, then only the Shares of such affected Series
or classes shall be entitled to vote on the matter.
(e) Equality All Shares of each particular Series shall represent an equal
proportionate undivided beneficial interest in the assets held with respect to
each such Series (subject to the liabilities held with respect to such Series
and such rights and preferences as may have been established and designated with
respect to classes of Shares within such Series), and each Share of any
particular Series shall be equal to each other Share of such Series (subject to
the rights and preferences with respect to separate classes of such Series).
(f) Fractions Any fractional Share of a Series shall carry proportionately
to the fractional amount of such Share all the rights and obligations of a whole
Share of such Series, including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares and dissolution of the Trust
or such Series.
(g) Exchange Privilege The Board of Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right to
exchange said Shares for Shares of one or more other Series in accordance with
such requirements and procedures as may be established by the Board of Trustees,
and in accordance with the 1940 Act and the rules and regulations thereunder.
(h) Combination of Series The Board of Trustees shall have the authority,
without the approval of the Shareholders of any Series unless otherwise required
by applicable law, to combine the assets and liabilities held with respect to
any two or more Series into assets and liabilities held with respect to a single
Series; provided that upon completion of such combination of Series, the
proportionate interest of each Shareholder of each Series that is combined, in
the assets and liabilities held with respect to the combined Series shall equal
the proportionate interest that each such Shareholder held in the assets and
liabilities held with respect to the particular Series that is combined.
(i) Elimination of Series At any time that there are no Shares outstanding
of any particular Series or class previously established and designated, the
Board of Trustees may by resolution of a majority of the then Board of Trustees
abolish that Series or class and rescind the establishment and designation
thereof. Each such resolution shall be incorporated herein by reference upon
adoption.
Section 7. Indemnification of Shareholders If any Shareholder or former
Shareholder shall be exposed to liability by reason of a claim or demand
relating solely to his or her being or having been a Shareholder of the Trust
(or by having been a Shareholder of a particular Series), and not because of
such Person's acts or omissions, the Shareholder or former Shareholder (or, in
the case of a natural person, his or her heirs, executors, administrators, or
other legal representatives or, in the case of a corporation or other entity,
its corporate or other general successor) shall be entitled to be held harmless
from, and indemnified out of the assets of the Trust or out of the assets of the
applicable Series (as the case may be) against, all loss and expense arising
from such claim or demand; provided, however, that there shall be no liability
or obligation of the Trust (or any particular Series) arising hereunder to
reimburse any Shareholder for taxes paid by reason of such Shareholder's
ownership of any Shares.
ARTICLE IV.
The Board of Trustees
Section 1. Powers Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Board of Trustees, and such
Board of Trustees shall have all powers necessary or convenient to carry out
that responsibility, including, without limitation, the power to engage in
securities or other transactions of all kinds on behalf of the Trust. The Board
of 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 it may consider
necessary or appropriate in connection with the administration of the Trust. The
Trustees shall not be bound or limited by present or future laws or customs with
regard to investment by trustees or fiduciaries, but shall have full authority
and absolute power and control over the assets of the Trust and the business of
the Trust to the same extent as if the Trustees were the sole owners of the
assets and business of the Trust in their own right, including such authority,
power and control to do all acts and things as they, in their sole discretion,
shall deem proper to accomplish the purposes of this Trust. Without limiting the
foregoing, the Trustees may (1) adopt, amend and repeal By-Laws, not
inconsistent with this Declaration of Trust, that provide for the regulation and
management of the affairs of the Trust; (2) fill vacancies in or remove from
their number in accordance with this Declaration of Trust or the By-Laws, and
may elect and remove such officers and appoint and terminate such agents as they
consider appropriate; (3) appoint from their own number and establish and
terminate one or more committees consisting of two or more Trustees which may
exercise the powers and authority of the Board of Trustees to the extent that
the Board of Trustees determine; (4) employ one or more custodians of the Trust
Property and may authorize such custodians to employ subcustodians and to
deposit all or any part of such Trust Property in a system or systems for the
central handling of securities or with a Federal Reserve Bank; (5) retain a
transfer agent, dividend disbursing agent, a shareholder servicing agent or
administrative services agent, or all of them; (6) provide for the issuance and
distribution of Shares by the Trust directly or through one or more Principal
Underwriters or otherwise; (7) retain one or more Investment Advisers; (8)
redeem, repurchase or transfer Shares pursuant to applicable law; (9) set record
dates for the determination of Shareholders with respect to various matters, in
the manner provided in the By-Laws; (10) declare and pay dividends and
distributions to Shareholders from the Trust Property; (11) establish from time
to time, in accordance with the provisions of Article III, Section 6 hereof, any
Series or class of Shares, each such Series to operate as a separate and
distinct investment medium and with separately defined investment objectives and
policies and distinct investment purposes; and (12) in general, delegate such
authority as they consider desirable to any officer of the Trust, any committee
of the Board of Trustees, any agent or employee of the Trust, or any such
custodian, transfer agent, dividend disbursing agent, shareholder servicing
agent, administrative services agent, Principal Underwriter or Investment
Adviser. Any determination as to what is in the best interests of the Trust made
by the Board of Trustees in good faith shall be conclusive.
In construing the provisions of this Declaration of Trust, the presumption
shall be in favor of a grant of power to the Trustees. Unless otherwise
specified herein or required by law, any action by the Board of Trustees shall
be deemed effective if approved or taken by a majority of the Trustees then in
office.
Any action required or permitted to be taken by the Board of Trustees, or
a committee thereof, may be taken without a meeting if a majority of the members
of the Board of Trustees, or committee thereof, as the case may be, shall
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a majority vote of the
Board of Trustees, or committee thereof, as the case may be. Such written
consent or consents shall be filed with the minutes of the proceedings of the
Board of Trustees, or committee thereof, as the case may be.
The Trustees shall devote to the affairs of the Trust such time as may be
necessary for the proper performance of their duties hereunder, but the Trustees
are not expected to devote their full time to the performance of such duties.
The Trustees, or any Affiliate partner or employee thereof, may engage in, or
possess an interest in, any other business or venture of any nature and
description, independently or with or for the account of others.
Section 2. Payment of Expenses by the Trust The Board of Trustees is
authorized to pay or cause to be paid out of the principal or income of the
Trust or any particular Series or class of Shares, or partly out of the
principal and partly out of the income of the Trust or any particular Series or
class of Shares and to charge or allocate the same to, between or among such one
or more of the Series or classes of Shares, as the Board of Trustees deems fair
and in compliance with this Declaration of Trust, including particularly Article
III, Section 6 hereof, all expenses, fees, charges, taxes and liabilities
incurred by or arising in connection with the maintenance or operation of the
Trust or a particular Series or class of Shares, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
and such expenses, fees, charges, taxes and liabilities for the services of the
Trust's officers, employees, Investment Adviser, Principal Underwriter,
auditors, counsel, custodian, sub-custodian (if any), transfer agent, dividend
disbursing agent, shareholder servicing agent, administrative services agent,
and such other agents or independent contractors and such other expenses, fees,
charges, taxes and liabilities as the Board of Trustees may deem necessary or
proper to incur.
Section 3. Payment of Expenses by Shareholders. The Board of Trustees shall
have the power, as frequently as it may determine, to cause each Shareholder of
the Trust, or each Shareholder of any particular Series, to pay directly, in
advance or arrears, for charges of the Trust's custodian or transfer, dividend
disbursing, shareholder servicing, administrative services or similar agent, an
amount fixed from time to time by the Board of Trustees, by setting off such
charges due from such Shareholder from declared but unpaid dividends or
distributions owed such Shareholder and/or by reducing the number of Shares in
the account of such Shareholder by that number of full and/or fractional Shares
which represents the outstanding amount of such charges due from such
Shareholder.
Section 4. Ownership of Trust Property. Legal title to all of the Trust
Property shall at all times be considered to be vested in the Trust, except that
the Board of Trustees shall have the power to cause legal title to any Trust
Property to be held by or in the name of any Person as nominee, on such terms as
the Board of Trustees may determine, in accordance with applicable law.
Section 5. Service Contracts. (a) Subject to such requirements and
restrictions as may be set forth in the By-Laws and/or the 1940 Act, the Board
of Trustees may, at any time and from time to time, contract for exclusive or
nonexclusive advisory, management and/or administrative services for the Trust
or for any Series with any corporation, trust, association or other
organization, including any Affiliate; and any such contract may contain such
other terms as the Board of Trustees may determine, including without
limitation, authority for the Investment Adviser or administrator to determine
from time to time without prior consultation with the Board of Trustees what
securities and other instruments or property shall be purchased or otherwise
acquired, owned, held, invested or reinvested in, sold, exchanged, transferred,
mortgaged, pledged, assigned, negotiated, or otherwise dealt with or disposed
of, and what portion, if any, of the Trust Property shall be held uninvested and
to make changes in the Trust's or a particular Series' investments, or such
other activities as may specifically be delegated to such party.
(b) The Board of Trustees may also, at any time and from time to time,
contract with any corporation, trust, association or other organization,
including any Affiliate, appointing it or them as the exclusive or nonexclusive
distributor or Principal Underwriter for the Shares of the Trust or one or more
of the Series or classes thereof or for other securities to be issued by the
Trust, or appointing it or them to act as the custodian, transfer agent,
dividend disbursing agent and/or shareholder servicing agent for the Trust or
one or more of the Series or classes thereof.
(c) The Board of Trustees is further empowered, at any time and from time
to time, to contract with any Persons to provide such other services to the
Trust or one or more of its Series, as the Board of Trustees determines to be in
the best interests of the Trust or one or more of its Series.
(d) The fact that:
(i) any of the Shareholders, Trustees, employees or officers of
the Trust is a shareholder, director, officer, partner, trustee,
employee, manager, Adviser, Principal Underwriter, distributor, or
Affiliate or agent of or for any corporation, trust, association, or
other organization, or for any parent or Affiliate of any
organization, with which an Adviser's, management or administration
contract, or Principal Underwriter's or distributor's contract, or
custodian, transfer, dividend disbursing, shareholder servicing or
other type of service contract may have been or may hereafter be
made,
(ii) any such organization, or any parent or Affiliate thereof,
is a Shareholder or has an interest in the Trust, or
(iii) any corporation, trust, association or other organization
with which an Adviser's, management or administration contract or
Principal Underwriter's or distributor's contract, or custodian,
transfer, dividend disbursing, shareholder servicing or other type of
service contract may have been or may hereafter be made also has an
Adviser's, management or administration contract, or Principal
Underwriter's or distributor's contract, or custodian, transfer,
dividend disbursing, shareholder servicing or other service contract
with one or more other corporations, trusts, associations, or other
organizations, or has other business or interests,
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee, employee or officer of the Trust from voting upon or
executing the same, or create any liability or accountability to the Trust or
its Shareholders, provided that the establishment of and performance under each
such contract is permissible under the provisions of the 1940 Act.
(e) Every contract referred to in this Section 5 shall comply with such
requirements and restrictions as may be set forth in the By-Laws or the 1940 Act
or stipulated by resolution of the Board of Trustees. Any such contract may
contain such other terms as the Board of Trustees may determine.
Section 6. Effect of Death, Resignation, Removal, etc. of a Trustee. The
death, resignation, removal, declaration as bankrupt or incapacity of one or
more Trustees, or of all of them, shall not operate to dissolve the Trust or any
Series or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust. Whenever a vacancy in the Board of Trustees shall occur,
until such vacancy is filled as provided in the By-Laws, the Trustee(s) in
office, regardless of the number, shall have all the powers granted to the Board
of Trustees and shall discharge all the duties imposed upon the Board of
Trustees by this Declaration of Trust.
ARTICLE V.
Shareholders' Voting Powers
Section 1. Voting Powers and Required Vote. Subject to the provisions of
Article III, Section 6(d), the Shareholders shall have power to vote only (i)
for the election of Trustees, including the filling of any vacancies in the
Board of Trustees; (ii) with respect to such additional matters relating to the
Trust as may be required by this Declaration of Trust, the By-Laws, the 1940 Act
or any registration statement of the Trust filed with the Commission; and (iii)
on such other matters as the Board of Trustees may consider necessary or
desirable.
The Shareholder of record (as of the record date established pursuant to
Article II, Section 11 of the By-Laws) of each Share shall be entitled to one
vote for each full Share, and a fractional vote for each fractional Share.
Shareholders shall not be entitled to cumulative voting in the election of
Trustees or on any other matter. Shares may be voted in person or by proxy.
Subject to the provisions of Article III, Section 6(d), Article VIII,
Section 4 and any other provision of this Declaration of Trust, the By-Laws or
applicable law which requires a different vote: (1) in all matters other than
the election of Trustees, the affirmative vote of the majority of votes cast at
a Shareholders' meeting at which a quorum is present shall be the act of the
Shareholders; and (2) Trustees shall be elected by a plurality of the votes cast
at a Shareholders' meeting at which a quorum is present.
Section 2. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and related matters.
ARTICLE VI.
Net Asset Value, Distributions and Redemptions
Section 1. Determination of Net Asset Value, Net Income and Distributions
Subject to Article III, Section 6 hereof, the Board of Trustees shall have the
power to fix an initial offering price for the Shares of the Trust, or any
Series or class thereof which shall yield to the Trust, such Series or class not
less than the net asset value thereof, at which price the Shares of the Trust,
such Series or class shall be offered initially for sale, and to determine from
time to time thereafter the offering price which shall yield to the Trust, such
Series or class not less than the net asset value thereof from sales of the
Shares of the Trust, such Series or class; provided, however, that no Shares of
the Trust or Series or class thereof shall be issued or sold for consideration
which shall yield to the Trust, such Series or class less than the net asset
value of the Shares of the Trust, such Series or class next determined after the
receipt of the order (or at such other times set by the Board of Trustees),
except in the case of Shares of the Trust, such Series or class issued in
payment of a dividend properly declared and payable.
Subject to Article III, Section 6 hereof, the Board of Trustees, in their
absolute discretion, may prescribe and shall set forth in the By-laws or in a
duly adopted vote of the Board of Trustees such bases and time for determining
the per Share or net asset value of the Shares of the Trust, any Series or class
of a Series or net income attributable to the Shares of the Trust, any Series or
class of a Series, or the declaration and payment of dividends and distributions
on the Shares of the Trust, any Series or class of a Series, as they may deem
necessary or desirable.
Section 2. Redemptions at the Option of a Shareholder. Unless otherwise
provided in the prospectus of the Trust relating to the Shares of the Trust or
Series thereof, as such prospectus may be amended from time to time
("Prospectus"):
(a) The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of a proper instrument of
transfer together with a request directed to the Trust or a Person designated by
the Trust that the Trust purchase such Shares or in accordance with such other
procedures for redemption as the Board of Trustees may from time to time
authorize; and the Trust will pay therefor the net asset value thereof, in
accordance with the By-Laws and applicable law. Payment for said Shares shall be
made by the Trust to the Shareholder within seven days after the date on which
the request is received in proper form. The obligation set forth in this Section
2 is subject to the provision that (i) in the event that the New York Stock
Exchange (the "Exchange") is closed for other than weekends or holidays, (ii) if
permitted by the Rules of the Commission during periods when trading on the
Exchange is restricted or during any National Financial Emergency which makes it
impracticable for the Trust to dispose of the investments of the Trust or
applicable Series or to determine fairly the value of the net assets of the
Trust or held with respect to such Series, or (iii) during any other period
permitted by order of the Commission for the protection of investors, such
obligations may be suspended or postponed by the Board of Trustees. If
certificates have been issued to a Shareholder, any such request by such
Shareholder must be accompanied by surrender of any outstanding certificate or
certificates for such Shares in form for transfer, together with such proof of
the authenticity of signatures as may reasonably be required on such Shares and
accompanied by proper stock transfer stamps, if applicable.
(b) Payments for Shares so redeemed by the Trust shall be made in cash,
except payment for such Shares may, at the option of the Board of Trustees, or
such officer or officers as the Board of Trustees may duly authorize in its
complete discretion, be made in kind, or partially in cash and partially in
kind. In case of any payment in kind, the Board of Trustees, or its delegate,
shall have absolute discretion as to what security or securities of the Trust
shall be distributed in kind and the amount of the same; and the securities
distributed shall be valued for purposes of distribution at the value at which
they were appraised in computing the then current net asset value of the Shares,
provided that any Shareholder who cannot legally acquire securities so
distributed in kind by reason of the prohibitions of the 1940 Act or the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), shall receive cash. Shareholders shall bear the expenses of in-kind
transactions, including, but not limited to, transfer agency fees, custodian
fees and costs of disposition of such securities.
(c) Payment for Shares so redeemed by the Trust shall be made by the
Trust as provided above within seven days after the date on which the redemption
request is received in good order; provided, however, that if payment shall be
made other than exclusively in cash, any securities to be delivered as part of
such payment shall be delivered as promptly as any necessary transfers of such
securities on the books of the several corporations whose securities are to be
delivered practicably can be made, which may not necessarily occur within such
seven-day period. Moreover, redemptions may be suspended in the event of a
National Financial Emergency. In no case shall the Trust be liable for any delay
of any corporation or other Person in transferring securities selected for
delivery as all or part of any payment in kind.
(d) The right of Shareholders to receive dividends or other distributions
on Shares may be set forth in a Plan adopted by the Board of Trustees and
amended from time to time pursuant to Rule 18f-3 under the 1940 Act. The right
of any Shareholder of the Trust to receive dividends or other distributions on
Shares redeemed and all other rights of such Shareholder with respect to the
Shares so redeemed by the Trust, except the right of such Shareholder to receive
payment for such Shares, shall cease at the time as of which the purchase price
of such Shares shall have been fixed, as provided above.
Section 3. Redemptions at the Option of the Trust. The Board of Trustees
may, from time to time, without the vote or consent of the Shareholders, and
subject to the 1940 Act, redeem Shares or authorize the closing of any
Shareholder account, subject to such conditions as may be established by the
Board of Trustees.
ARTICLE VII.
Compensation and Limitation of Liability of Officers and Trustees
Section 1. Compensation. Except as set forth in the last sentence of this
Section 1, the Board of Trustees may, from time to time, fix a reasonable amount
of compensation to be paid by the Trust to the Trustees and officers of the
Trust. Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
Section 2. Indemnification and Limitation of Liability. (a) To the fullest
extent that limitations on the liability of Trustees and officers are permitted
by the DBTA, the officers and Trustees shall not be responsible or liable in any
event for any act or omission of any agent, employee, Investment Adviser or
Principal Underwriter of the Trust; or with respect to each Trustee and officer,
the act or omission of any other Trustee or officer, respectively. The Trust,
out of the Trust Property, shall indemnify and hold harmless each and every
officer and Trustee from and against any and all claims and demands whatsoever
arising out of or related to such officer's or Trustee's performance of his or
her duties as an officer or Trustee of the Trust. This limitation on liability
applies to events occurring at the time a Person serves as a Trustee or officer
of the Trust whether or not such Person is a Trustee or officer at the time of
any proceeding in which liability is asserted. Nothing herein contained shall
indemnify, hold harmless or protect any officer or Trustee from or against any
liability to the Trust or any Shareholder to which such Person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of such Person's
office.
(b) Every note, bond, contract, instrument, certificate or undertaking
and every other act or document whatsoever issued, executed or done by or on
behalf of the Trust, the officers or the Trustees or any of them in connection
with the Trust shall be conclusively deemed to have been issued, executed or
done only in such Person's capacity as Trustee and/or as officer, and such
Trustee or officer, as applicable, shall not be personally liable therefore,
except as described in the last sentence of the first paragraph of this Section
2 of this Article VII.
Section 3. Officers and Trustees' Good Faith Action, Expert Advice, No Bond
or Surety. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. An officer or Trustee shall
be liable to the Trust and to any Shareholder solely for such officer's or
Trustee's own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of such officer or
Trustee, and for nothing else, and shall not be liable for errors of judgment or
mistakes of fact or law. The officers and Trustees may obtain the advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust and their duties as officers or Trustees. No such officer
or Trustee shall be liable for any act or omission in accordance with such
advice and no inference concerning liability shall arise from a failure to
follow such advice. The officers and Trustees shall not be required to give any
bond as such, nor any surety if a bond is required.
Section 4. Insurance. To the fullest extent permitted by applicable law,
the officers and Trustees shall be entitled and have the authority to purchase
with Trust Property, insurance for liability and for all expenses reasonably
incurred, paid or expected to be paid by a Trustee or officer in connection with
any claim, action, suit or proceeding in which such Person becomes involved by
virtue of such Person's capacity or former capacity with the Trust, whether or
not the Trust would have the power to indemnify such Person against such
liability under the provisions of this Article.
ARTICLE VIII.
Miscellaneous
Section 1. Liability of Third Persons Dealing with Trustees. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any actions made or to be made by the Trustees.
Section 2. Dissolution of Trust or Series. Unless dissolved as provided
herein, the Trust shall have perpetual existence. The Trust may be dissolved at
any time by vote of a majority of the Shares of the Trust entitled to vote or by
the Board of Trustees by written notice to the Shareholders. Any Series may be
dissolved at any time by vote of a majority of the Shares of that Series or by
the Board of Trustees by written notice to the Shareholders of that Series.
Upon dissolution of the Trust, the Trustees shall (in accordance with ss.
3808 of the DBTA) pay or make reasonable provision to pay all claims and
obligations of the Trust and/or each Series, including all contingent,
conditional or unmatured claims and obligations known to the Trust, and all
claims and obligations which are known to the Trust but for which the identity
of the claimant is unknown. If there are sufficient assets held with respect to
the Trust and/or each Series of the Trust, such claims and obligations shall be
paid in full and any such provisions for payment shall be made in full. If there
are insufficient assets held with respect to the Trust and/or each Series of the
Trust, such claims and obligations shall be paid or provided for in accordance
with Article III, Section 6, according to their priority and, among claims and
obligations of equal priority, ratably to the extent of assets available
therefor. Any remaining assets (including without limitation, cash, securities
or any combination thereof) held with respect to the Trust and/or each Series of
the Trust shall be distributed to the Shareholders of the Trust and/or such
Series in accordance with Article III, Section 6, and ratably according to the
number of Shares of the Trust and/or such Series held by the several
Shareholders on the record date for such dissolution distribution.
Upon dissolution of a particular Series, the Trustees shall (in accordance
with ss. 3808 of the DBTA) pay or make reasonable provision to pay all claims
and obligations of the particular Series, including all contingent, conditional
or unmatured claims and obligations known to the Trust, and all claims and
obligations which are known to the Trust but for which the identity of the
claimant is unknown. If there are sufficient assets held with respect to the
particular Series, such claims and obligations shall be paid in full and any
such provisions for payment shall be made in full. If there are insufficient
assets held with respect to the particular Series, such claims and obligations
shall be paid or provided for in accordance with Article III, Section 6,
according to their priority and, among claims and obligations of equal priority,
ratably to the extent of assets available therefor. Any remaining assets
(including without limitation, cash, securities or any combination thereof) held
with respect to the particular Series shall be distributed to the Shareholders
of the particular Series in accordance with Article III, Section 6, and ratably
according to the number of Shares of the particular Series held by the several
Shareholders on the record date for such dissolution distribution.
Section 3. Merger and Consolidation; Conversion (a) Merger and
Consolidation. Pursuant to an agreement of merger or consolidation, the Trust,
or any one or more Series, may, by act of a majority of the Board of Trustees,
merge or consolidate with or into one or more business trusts or other business
entities formed or organized or existing under the laws of the State of Delaware
or any other state or the United States or any foreign country or other foreign
jurisdiction. Any such merger or consolidation shall not require the vote of the
Shareholders affected thereby, unless such vote is required by the 1940 Act, or
unless such merger or consolidation would result in an amendment of this
Declaration of Trust which would otherwise require the approval of such
Shareholders. In accordance with Section 3815(f) of the DBTA, an agreement of
merger or consolidation may effect any amendment to this Declaration of Trust or
the By-Laws or effect the adoption of a new declaration of trust or by-laws of
the Trust if the Trust is the surviving or resulting business trust. Upon
completion of the merger or consolidation, the Trustees shall file a certificate
of merger or consolidation in accordance with Section 3815 of the DBTA.
(b) Conversion. A majority of the Board of Trustees may, without the vote
or consent of the Shareholders, cause (i) the Trust to convert to a common-law
trust, a general partnership, limited partnership or a limited liability company
organized, formed or created under the laws of the State of Delaware as
permitted pursuant to Section 3821 of the DBTA; (ii) the Shares of the Trust or
any Series to be converted into beneficial interests in another business trust
(or series thereof) created pursuant to this Section 3 of this Article VIII, or
(iii) the Shares to be exchanged under or pursuant to any state or federal
statute to the extent permitted by law; provided, however, that if required by
the 1940 Act, no such statutory conversion, Share conversion or Share exchange
shall be effective unless the terms of such transaction shall first have been
approved at a meeting called for that purpose by the "vote of a majority of the
outstanding voting securities," as such phrase is defined in the 1940 Act, of
the Trust or Series, as applicable; provided, further, that in all respects not
governed by statute or applicable law, the Board of Trustees shall have the
power to prescribe the procedure necessary or appropriate to accomplish a sale
of assets, merger or consolidation including the power to create one or more
separate business trusts to which all or any part of the assets, liabilities,
profits or losses of the Trust may be transferred and to provide for the
conversion of Shares of the Trust or any Series into beneficial interests in
such separate business trust or trusts (or series thereof).
Section 4. Reorganization. A majority of the Board of Trustees may cause
the Trust to sell, convey and transfer all or substantially all of the assets of
the Trust, or all or substantially all of the assets held with respect to any
one or more Series (the "Acquired Series"), to another trust, business trust,
partnership, limited partnership, limited liability company, association or
corporation organized under the laws of any state, or to one or more separate
series thereof, or to the Trust to be held as assets held with respect to one or
more other Series of the Trust, in exchange for cash, shares or other securities
(including, without limitation, in the case of a transfer to another Series of
the Trust, Shares of such other Series) with such transfer either (a) being made
subject to, or with the assumption by the transferee of, the liabilities of the
Trust or the liabilities held with respect to each Acquired Series, or (b) not
being made subject to, or not with the assumption of, such liabilities;
provided, however, that, if required by the 1940 Act, no assets held with
respect to any particular Series shall be so sold, conveyed or transferred
unless the terms of such transaction shall first have been approved at a meeting
called for that purpose by the "vote of a majority of the outstanding voting
securities," as such phrase is defined in the 1940 Act, of that Series.
Following such sale, conveyance and transfer, the Board of Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities held with respect to the Acquired Series, and any other
differences between or among the Acquired Series), ratably among the
Shareholders of the Trust or the Acquired Series, (giving due effect to the
differences among the various classes within the Trust or each such Acquired
Series); and if all of the assets of the Trust have been so sold, conveyed and
transferred, the Trust shall be dissolved.
Section 5. Amendments Subject to the provisions of the second paragraph of
this Section 5 of this Article VIII, this Declaration of Trust may be restated
and/or amended at any time by an instrument in writing signed by a majority of
the then Board of Trustees and, if required, by approval of such amendment by
Shareholders in accordance with Article V hereof. Any such restatement and/or
amendment hereto shall be effective immediately upon execution and approval or
upon such future date and time as may be stated therein. The Certificate of
Trust of the Trust may be restated and/or amended by a similar procedure, and
any such restatement and/or amendment shall be effective immediately upon filing
with the Office of the Secretary of State of the State of Delaware or upon such
future date as may be stated therein.
Notwithstanding the above, the Board of Trustees expressly reserves the
right to amend or repeal any provisions contained in this Declaration of Trust
or the Certificate of Trust, in accordance with the provisions of Section 5 of
Article III hereof, and all rights, contractual and otherwise, conferred upon
Shareholders are granted subject to such reservation. The Board of Trustees
further expressly reserves the right to amend or repeal any provision of the
By-Laws pursuant to Article X of the By-Laws.
Section 6. Filing of Copies, References, Headings. The original or a copy
of this Declaration of Trust and of each restatement and/or amendment hereto
shall be kept at the principal executive 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 of the Trust as to whether or not any such
restatements and/or amendments 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 of the Trust to be a copy
of this instrument or of any such restatements and/or amendments. In this
Declaration of Trust and in any such restatements and/or amendments, references
to this instrument, and all expressions of similar effect to "herein," "hereof"
and "hereunder," shall be deemed to refer to this instrument as amended or
affected by any such restatements and/or amendments. Headings are placed herein
for convenience of reference only and shall not be taken as a part hereof or
control or affect the meaning, construction or effect of this instrument.
Whenever the singular number is used herein, the same shall include the plural;
and the neuter, masculine and feminine genders shall include each other, as
applicable. This instrument may be executed in any number of counterparts, each
of which shall be deemed an original.
Section 7. Applicable Law. This Declaration of Trust is created under and
is to be governed by and construed and administered according to the laws of the
State of Delaware and the applicable provisions of the 1940 Act and the Code.
The Trust shall be a Delaware business trust pursuant to the DBTA, and without
limiting the provisions hereof, the Trust may exercise all powers that are
ordinarily exercised by such a business trust.
Section 8. Provisions in Conflict with Law or Regulations. (a) The
provisions of this Declaration of Trust are severable, and if the Board of
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the Code, the DBTA, or with other
applicable laws and regulations, the conflicting provision shall be deemed not
to have constituted a part of this Declaration of Trust from the time when such
provisions became inconsistent with such laws or regulations; provided, however,
that such determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration of Trust 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 manner
affect such provision in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.
Section 9. Business Trust Only. It is the intention of the Trustees to
create a business trust pursuant to the DBTA, and thereby to create the
relationship of trustee and beneficial owners within the meaning of the DBTA
between the Trustees and each Shareholder. It is not the intention of the
Trustees to create a general or limited partnership, limited liability company,
joint stock association, corporation, bailment, or any form of legal
relationship other than a business trust pursuant to the DBTA. Nothing in this
Declaration of Trust shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock
association.
Section 10. Use of the Names "IGAM Group" and "Integrity Global Asset
Management" The Trust expressly agrees and acknowledges that the names "IGAM,"
"IGAM Group" and "Integrity Global Asset Management" are the sole property of
Integrity Global Asset Management, Inc. ("IGAM"). IGAM has consented to the use
by the Trust of the identifying words "IGAM," "IGAM Group" and "Integrity Global
Asset Management" and has granted to the Trust a non-exclusive license to use
such names as part of the name of the Trust and the name of any Series of its
Shares. The Trust further expressly agrees and acknowledges that the
non-exclusive license granted herein may be terminated by IGAM if the Trust
ceases to use IGAM or one of its Affiliates as Investment Adviser or to use
other Affiliates or successors of IGAM for such purposes. In such event, the
non-exclusive license granted herein may be revoked by IGAM and the Trust shall
cease using the names "IGAM," "IGAM Group" and "Integrity Global Asset
Management" as part of its name or the name of any Series of Shares, unless
otherwise consented to by IGAM or any successor to its interests in such names.
The Trust further understands and agrees that so long as IGAM and/or any
future advisory Affiliate of IGAM shall continue to serve as the Trust's
Investment Adviser, other mutual funds as may be sponsored or advised by IGAM or
its Affiliates shall have the right permanently to adopt and to use the words
"IGAM," "IGAM Group" or "Integrity Global Asset Management" in their names and
in the names of any Series or class of Shares of such funds.
Section 11. Counterparts. This Declaration of Trust may be
executed in one or more separate counterparts, each when taken
together, constitute the whole.
IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into
this Declaration of Trust as of the date first written above.
/s/ Eugene Y.W. Lee
Eugene Y.W. Lee
Trustee
/s/ George Hadfield III
George Hadfield III
Trustee
/s/ Jong Ho Hwang
Jong Ho Hwang
Trustee
IGAM GROUP FUNDS
OFFICER'S CERTIFICATE
THE UNDERSIGNED, President, Treasurer, and Secretary of IGAM Group Funds, a
Delaware business trust (the "Trust"), does hereby certify that the following
resolution designating a series of shares of the Trust was duly adopted at the
organizational board meeting of the Board of Trustees of the Trust held on
September 13, 1999, all in accordance with the laws of the State of Delaware and
pursuant to Article III, Sections 1, 5 and 6 of the Trust's Agreement and
Declaration of Trust ("Declaration of Trust"), and that such resolution is
incorporated by reference into the Declaration of Trust in accordance with
Article III, Section 6 thereof:
WHEREAS, Section 1 of Article III of the Declaration of Trust of the Trust
provides that the beneficial interest of the Trust is divided into an
unlimited number of shares, and authorizes the Board of Trustees to divide
the shares into separate series, and to divide such series into separate
classes of shares, with such variations in the relative rights and
preferences between the different series or classes as shall be fixed and
determined by the Trustees; and
WHEREAS, the Board desires to establish and designate the initial series
of shares of beneficial interest in the Trust.
NOW, THEREFORE, IT IS RESOLVED, that, pursuant to Article III, Section 6,
of the Trust's Declaration of Trust, a series of shares of beneficial
interest in the Trust is hereby established and designated as the Internet
Index Fund series (the "Series"), and an unlimited number of shares of
beneficial interest are hereby classified and allocated to such Series,
all with the relative rights and preferences as set forth in the
Declaration of Trust or any amendments thereto.
IN WITNESS WHEREOF, I have hereunto set my hand as such officer of the
Trust as of this 6th day of October, 1999.
IGAM GROUP FUNDS
/s/ Eugene Y. W. Lee
Eugene Y. W. Lee, Ph.D.
President, Treasurer, and Secretary
Filed with the minutes of the proceedings of the Trust this 6th day of October,
1999.
IGAM GROUP FUNDS
THE INTERNET INDEX FUND
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, made effective as of the 13th day of September, 1999, by and
between IGAM GROUP FUNDS, a Delaware business trust (the "Trust"), on behalf of
the INTERNET INDEX FUND SERIES (the "Fund"), and INTEGRITY GLOBAL ASSET
MANAGEMENT, INC., a Delaware corporation (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Trust has been organized and operates as an
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act") and engages in the business of investing and
reinvesting its assets in securities; and
WHEREAS, the Investment Manager is a registered investment adviser under
the Investment Advisers Act of 1940, as amended (the "Advisers Act") and engages
in the business of providing investment management services; and
WHEREAS, the Trust has selected the Investment Manager to serve as the
investment manager for the Fund effective as of the date of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and each of the parties hereto intending to be legally bound, it is agreed as
follows:
1. The Trust on behalf of the Fund hereby employs the Investment Manager
to manage the investment and reinvestment of the Fund's assets and to provide
business management and administrative services for the Fund not otherwise
provided by third party service providers, subject to the direction of the Board
of Trustees and officers of the Trust, for the period and on the terms
hereinafter set forth. The Investment Manager hereby accepts such employment and
agrees during such period to render the services and assume the obligations
herein set forth for the compensation herein provided. The Investment Manager
shall for all purposes herein, be deemed to be an independent contractor, and
shall, unless otherwise expressly provided and authorized, have no authority to
act for or to represent the Trust or the Fund in any way, or in any way be
deemed an agent of the Trust or the Fund. The Investment Manager shall regularly
make decisions as to what securities and other investments to purchase and sell
on behalf of the Fund and shall effect the purchase and sale of such investments
in furtherance of the Fund's objectives and policies. The Investment Manager
shall record and implement such decisions and shall furnish the Board of
Trustees of the Trust with such information and reports regarding the Fund's
investments as the Investment Manager deems appropriate or as the Trustees of
the Trust may reasonably request. Subject to compliance with the requirements of
the 1940 Act, the Investment Manager may retain as a sub-adviser to the Fund, at
the Investment Manager's own expense, any investment adviser registered under
the Advisers Act. The Investment Manager shall also coordinate and manage the
Fund's business activities and its relationship with service providers and
professionals. The Investment Manager will provide office space personnel and
materials reasonably necessary to perform the investment and business management
services outlined herein.
2. (a) The Trust shall conduct its own business and affairs and shall bear
the expenses and salaries necessary and incidental thereto including, but not in
limitation of the foregoing, the costs incurred in: the maintenance of its
corporate existence; the maintenance of its own books, records and procedures;
dealing with its own shareholders; the payment of dividends; transfer of stock,
including issuance, redemption and repurchase of shares; preparation of share
certificates; reports and notices to shareholders; calling and holding of
shareholders' meetings; miscellaneous office expenses; brokerage commissions;
custodian fees; legal and accounting fees; taxes, and state and federal
registration fees. Directors, officers, and employees of the Investment Manager
may be trustees/directors, officers and employees of the funds for which the
Investment Manager serves as investment manager. Directors, officers and
employees of the Investment Manager who are trustees, officers and/or employees
of the Trust shall not receive any compensation from the Trust for acting in
such dual capacity.
In the conduct of the respective businesses of the parties hereto and
in the performance of this Agreement, the Trust and the Investment Manager may
share facilities common to each, with appropriate proration of expenses between
them.
(b) To the extent the Investment Manager incurs any costs by assuming
expenses which are an obligation of the Fund as set forth herein, the Fund shall
promptly reimburse the Investment Manager for such costs and expenses, except to
the extent the Investment Manager has otherwise agreed to bear such expenses. To
the extent the services for which the Fund is obligated to pay are performed by
the Investment Manager, the Investment Manager shall be entitled to recover from
the Fund to the extent of the Investment Manager's actual costs for providing
such services.
3. (a) The Investment Manager shall place and execute Fund orders for the
purchase and sale of portfolio securities with broker-dealers. Subject to
obtaining the best available execution, the Investment Manager is authorized to
place orders for the purchase and sale of portfolio securities for the Fund with
such broker-dealers as it may select from time to time. Subject to subparagraph
(b) below, the Investment Manager is also authorized to place transactions with
broker-dealers who provide research or statistical information or analyses to
the Fund, to the Investment Manager, or to any other client for which the
Investment Manager provides investment management services. Subject to obtaining
the best available execution, the Investment Manager may also place brokerage
transactions with broker-dealers who sell shares of the Fund. Broker-dealers who
sell shares of the Fund shall only receive orders for the purchase or sale of
portfolio securities to the extent that the placing of such orders is in
compliance with the rules of the U.S. Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. The Investment Manager also
agrees that it will cooperate with the Trust to execute instructions from the
Trust that brokerage transactions be allocated to broker-dealers who provide
benefits directly to the Fund.
(b) Notwithstanding the provisions of subparagraph (a) above and
subject to such policies and procedures as may be adopted by the Board of
Trustees and officers of the Trust, the Investment Manager is authorized to pay
a member of an exchange, broker or dealer an amount of commission for effecting
a securities transaction in excess of the amount of commission another member of
an exchange, broker or dealer would have charged for effecting that transaction,
in such instances where the Investment Manager has determined in good faith that
such amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such member, broker or dealer,
viewed in terms of either that particular transaction or the Investment
Manager's overall responsibilities with respect to the Fund and to other clients
for which the Investment Manager exercises investment discretion.
(c) The Investment Manager is authorized to direct portfolio
transactions to a broker-dealer which is an affiliated person of the Investment
Manager or the Fund in accordance with such standards and procedures as may be
approved by the Board in accordance with 1940 Act Rule 17e-1, or other rules
promulgated by the Securities and Exchange Commission. Any transaction placed
with an affiliated broker-dealer must (i) be placed at the best available
execution, and (ii) may not be a principal transaction.
4. (a) As compensation for the investment management, business management
and administrative services to be rendered to the Fund by the Investment Manager
under the provisions of this Agreement, the Trust on behalf of the Fund shall
pay to the Investment Manager from the Fund's assets an annual fee equal to
0.65% of the average daily net assets of the Fund, payable on a monthly basis.
(b) If this Agreement is terminated prior to the end of any calendar
month, the management fee shall be prorated for the portion of any month in
which this Agreement is in effect according to the proportion which the number
of calendar days, during which the Agreement is in effect, bears to the number
of calendar days in the month, and shall be payable within 10 days after the
date of termination.
(c) The Investment Manager may voluntarily or contractually agree to
reduce any portion of the compensation or reimbursement of expenses due to it
pursuant to this Agreement and may similarly agree to make payments to limit
expenses which are the responsibility of the Fund under this Agreement. Any
voluntary reduction or payment shall be applicable only to such specific
reduction or payment and shall not constitute an agreement to reduce any future
compensation or reimbursement due to the Investment Manager hereunder or to
continue future payments. Any such reduction will be agreed upon prior to
accrual of the related expense or fee and will be estimated daily. Any fee
withheld shall be voluntarily reduced and any Fund expense paid by the
Investment Manager voluntarily or pursuant to an agreed expense limitation shall
be reimbursed by the Fund to the Investment Manager in the first, second, or
third (or any combination thereof) fiscal year next succeeding the fiscal year
of the withholding, reduction, or payment to the extent permitted by applicable
law if the aggregate expenses for the next succeeding fiscal year, second fiscal
year or third succeeding fiscal year do not exceed any limitation to which the
Investment Manager has agreed. Such reimbursement may be paid prior to the
Fund's payment of current expenses if so requested by the Investment Manager
even if such payment may require the Investment Manager to waive or reduce its
fees hereunder or to pay current Fund expenses.
5. The services to be rendered by the Investment Manager to the Trust on
behalf of the Fund under the provisions of this Agreement are not to be deemed
to be exclusive, and the Investment Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
6. The Investment Manager, its directors, officers, employees, and agents
may engage in other businesses, may render investment management services to
other investment companies, or to any other corporation, association, firm or
individual.
7. In the absence of willful misfeasance, bad faith, gross negligence, or
a reckless disregard of the performance of duties of the Investment Manager to
the Fund, the Investment Manager shall not be subject to liabilities to the Fund
or to any shareholder of the Fund for any action or omission in the course of,
or connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security, or otherwise.
8. In accordance with the Agreement and Declaration of Trust of the Trust,
in the event that the Investment Manager ceases to be the Fund's investment
manager for any reason, the Trust will (unless the Investment Manager otherwise
agrees in writing) take all necessary steps to cause itself and the Fund to
cease using the terms, words or phrases "IGAM," or "Integrity Global Asset
Management" in its (or the Fund's) names within a reasonable period of time.
9. This Agreement shall be executed and become effective as of the date
written above if approved by the vote of a majority of the outstanding voting
securities of the Fund. It shall continue in effect for an initial period of two
years and may be renewed thereafter for one year periods only so long as such
renewal and continuance is specifically approved at least annually by the Board
of Trustees or by vote of a majority of the outstanding voting securities of the
Fund and only if the terms and the renewal hereof have been approved by the vote
of a majority of the Trustees of the Trust who are not parties hereto or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval. Notwithstanding the foregoing, this
Agreement may be terminated by the Trust at any time, without the payment of a
penalty, on sixty days written notice to the Investment Manager of the Trust's
intention to do so, pursuant to action by the Board of Trustees of the Trust or
pursuant to a vote of a majority of the outstanding voting securities of the
Fund. The Investment Manager may terminate this Agreement at any time, without
the payment of penalty on sixty days written notice to the Trust of its
intention to do so. Upon termination of this Agreement, the obligations of all
the parties hereunder shall cease and terminate as of the date of such
termination, except for any obligation to respond to a breach of this Agreement
committed prior to such termination, and except for the obligation of the Trust
to pay to the Investment Manager the fee provided in Paragraph 4 hereof,
prorated to the date of termination. This Agreement shall automatically
terminate in the event of its assignment.
10. This Agreement shall extend to and bind the heirs, executors,
administrators and successors of the parties hereto.
11. For the purposes of this Agreement, the terms "vote of a majority of
the outstanding voting securities"; "interested persons"; and "assignment" shall
have the meaning defined in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused their corporate seals
to be affixed and duly attested and their presents to be signed by their duly
authorized officers.
IGAM GROUP FUNDS
By:
Name and Title:
Attest:
Name:
INTEGRITY GLOBAL ASSET MANAGEMENT
By:
Name and Title:
Attest:
Name:
DISTRIBUTION AGREEMENT
between
IGAM Group Funds
and
T. O. Richardson Securities, Inc.
THIS AGREEMENT is made effective as of the 13th day of September, 1999, by
and between IGAM Group Funds, a Delaware business trust (the "Fund") and T.O.
Richardson Securities, a corporation organized and existing under the laws of
the State of Connecticut ("TORS").
WHEREAS the Fund is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company, and
will register one or more distinct series of shares of beneficial interest
("Shares") for sale to the public under the Securities Act of 1933, as amended
(the "1933 Act"), and will qualify its shares for sale to the public under
various state securities laws; and
WHEREAS, TORS is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and under each state's
securities laws, and is also a member of the National Association of Securities
Dealers, Inc. (the "NASD"); and
WHEREAS the Fund desires to retain TORS as principal underwriter and
national distributor in connection with the offering and sale of the Shares of
each series listed on Schedule A (as amended from time to time) to this
Agreement and TORS is willing to act as principal underwriter and national
distributor for the Fund on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints TORS as its agent to be the
principal underwriter and national distributor of its Shares (as listed on
Schedule A) and to hold itself out as available to receive and accept orders for
the purchase and redemption of the Shares on behalf of the Fund, subject to the
terms and for the period set forth in this Agreement. TORS hereby accepts such
appointment and agrees to act hereunder. The Fund understands that any
solicitation activities conducted on behalf of the Fund will be conducted
primarily by employees of the Fund's sponsor who shall become registered
representatives of TORS
2. Services and Duties of TORS
(a) TORS agrees to distribute Shares on a best efforts basis from time to
time during the term of this Agreement as agent for the Fund and upon the terms
described in the Registration Statement. As used in this Agreement, the term
"Registration Statement" shall mean the currently effective registration
statement of the Fund, and any supplements thereto, under the 1933 Act and the
1940 Act.
(b) TORS, with the operational assistance of the Fund's transfer agent,
will hold itself available to receive purchase and redemption orders
satisfactory to TORS for shares and will accept such orders on behalf of the
Fund. Such purchase orders shall be deemed effective at the time and in the
manner set forth in the Registration Statement.
(c) TORS, with the operational assistance of the Fund's transfer agent,
shall make Shares available through the National Securities Clearing
Corporation's Fund/SERV System.
(d) TORS and its registered personnel shall provide to investors and
potential investors only such information regarding the Fund as the Fund shall
provide or approve. TORS shall review and file all proposed advertisements and
sales literature with regulators, as appropriate, and consult with the Fund
regarding any comments provided by regulators with respect to such materials.
(e) The offering price of the Shares shall be the price determined in
accordance with, and in the manner set forth in, the most-current Prospectus.
The Fund shall make available to TORS a statement of each computation of net
asset value and the details of entering into such computation.
(f) TORS in its sole discretion may repurchase Shares offered for sale by
the shareholders. Repurchase of Shares by TORS shall be at the price determined
in accordance with, and in the manner set forth in, the most current Prospectus.
At the end of each business day, TORS shall notify, by any appropriate means,
the Fund and its transfer agent of the orders for repurchase of Shares received
by TORS since the last such report, the amount to be paid for such Shares, and
the identity of the shareholders offering Shares for repurchase. The Fund
reserves the right to suspend such repurchase right upon written notice to TORS.
TORS further agrees to act as agent for the Fund to receive and transmit
promptly to the Fund's transfer agent shareholder requests for redemption of
Shares.
(g) TORS shall not be obligated to sell any certain number of Shares.
(h) TORS shall prepare reports for the Board regarding its activities
under this Agreement as from time to time shall be reasonably requested by the
Board.
(i) TORS shall at all times during the term of this Agreement remain
registered as a broker-dealer under the 1934 Act and with all 50 states, and
shall also remain a member in good standing of the NASD. TORS shall immediately
notify the Fund in writing if it receives written notification that such
registrations or membership have been temporarily or permanently suspended,
limited or terminated.
(j) TORS will serve as licensing/regulatory agent for employees and other
personnel of the Fund's sponsor, Integrity Global Asset Management, Inc., who
will be registered as TORS broker-dealer representatives.
3. Duties of the Fund.
(a) The Fund shall keep TORS fully informed of its affairs and shall
provide to TORS from time to time copies of all information, financial
statements, and other papers that TORS may reasonably request for use in
connection with the distribution of Shares, including, without limitation,
certified copies of any financial statements prepared for the Fund by its
independent public accountant and such reasonable number of copies of the most
current Prospectus, Statement of Additional Information ("SAI"), and annual and
interim reports as TORS may request, and the Fund shall fully cooperate in the
efforts of TORS to distribute and arrange for the distribution of Shares.
(b) The Fund shall maintain a currently effective Registration Statement
on Form N-1A with the Securities and Exchange Commission (the "SEC"), satisfy
proper notice filing and fee payment provisions of applicable states and file
such reports and other documents as may be required under applicable federal and
state laws. The Fund shall notify TORS in writing of the states in which the
Shares may be sold and shall notify TORS in writing of any changes to such
information. The Fund shall bear all expenses related to preparing and
typesetting such Prospectuses, SAI and other materials required by law and such
other expenses, including printing and mailing expenses, related to the Fund's
communication with persons who are shareholders.
(c) The Fund shall not use any advertisements or other sales materials
that have not been (i) submitted to TORS for its review and approval, and (ii)
if required, filed with the appropriate regulators.
(d) The Fund represents and warrants that its Registration Statement and
any advertisements and sales literature (excluding statements relating to TORS
and the services it provides that are based upon written information furnished
by TORS expressly for inclusion therein) of the Fund shall not contain any
untrue statement of material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein not misleading,
and that all statements or information furnished to TORS pursuant to Section
3(a) hereof, shall be true and correct in all material respects.
4. Other Fund Operating Agreements. The parties hereto acknowledge that
Firstar Mutual Fund Services, LLC ("FMFS") provides fund administration, fund
accounting, transfer agency and fulfillment services to the Fund, and that fund
operating agreements between the Fund and FMFS are in effect for each such
service. The parties also acknowledge and agree that TORS is not responsible for
any of the duties enumerated in such operating agreements between the Fund and
FMFS, nor shall it be responsible for any duplication of such duties.
In addition, the Fund agrees to promptly provide written notice to TORS in
the event the Fund determines to terminate any one or more of the fund operating
agreements with FMFS that are described above.
5. Other Broker-Dealers. TORS, in its discretion shall enter into
agreements to sell Shares to such registered and qualified retail dealers, as
reasonably requested by the Fund. In making agreements with such dealers, TORS
shall act only as principal and not as agent for the Fund. The form of any such
dealer agreement shall be mutually agreed upon and approved by the Fund and
TORS.
6. Withdrawal of Offering. The Fund reserves the right at any time to
withdraw all offerings of any or all Shares by written notice to TORS at its
principal office. No Shares shall be offered by either TORS or the Fund under
any provisions of this Agreement and no orders for the purchase of Shares
hereunder shall be accepted by the Fund if and so long as effectiveness of the
Registration Statement then in effect or any necessary amendments thereto shall
be suspended under any of the provisions of the 1933 Act, or if and so long as a
current prospectus as required by Section 5(b)(2) of the 1933 Act is not on file
with the SEC.
7. Services Not Exclusive. The services furnished by TORS hereunder are
not to be deemed exclusive. The Fund reserves the right to (i) sell Shares to
investors on applications received and accepted by the Fund; (ii) issue Shares
in connection with a merger, consolidation, or recapitalization of the Fund;
(iii) issue additional Shares to holders of Shares; or (iv) issue Shares in
connection with any offer of exchange permitted by Section 11 of the 1940 Act.
8. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the SEC and state and other regulatory bodies, and
shall assume expenses related to communications with shareholders of the Fund
including, but not limited to, (i) fees and disbursements of its counsel and
independent public accountant; (ii) the preparation, filing, and printing of
Registration Statements and/or Prospectuses or SAIs; (iii) the preparation and
mailing of annual and interim reports, Prospectuses, SAIs, and proxy materials
to shareholders; (iv) such other expenses related to the communications with
persons who are shareholders of the Fund; and (v) the qualifications of Shares
for sale under the securities laws of such jurisdictions as shall be selected by
the Fund pursuant to the Paragraph 3(b) hereof, and the costs and expenses
payable to each jurisdiction for continuing qualification therein. In addition,
the Fund shall bear all costs of preparing, printing, mailing, and filing any
advertisements and sales literature. TORS does not assume responsibility for any
expenses not assumed hereunder.
9. Compensation. As compensation for the services performed and the
expenses assumed by TORS under this Agreement including, but not limited to, any
commissions paid for sales of Shares, TORS shall be entitled to the fees and
expenses set forth in Schedule B to this Agreement which are payable promptly
after the last day of each month. Such fees shall be paid to TORS by the Fund
pursuant to its Rule 12b-1 plan or, if Rule 12b-1 payments are not sufficient to
pay such fees and expenses, or if the Rule 12b-1 plan is discontinued, or if the
Fund's sponsor, Integrity Global Asset Management, Inc. ("IGAM") otherwise
determines that Rule 12b-1 fees shall not, in whole or in part, be used to pay
TORS, IGAM shall be responsible for the payment of the amount of such fees not
covered by Rule 12b-1 payments. In such a case, IGAM agrees to arrange for the
monthly payment to be paid directly by Firstar's Fund Administration and
Compliance department from amounts payable to IGAM until such time that 12b-1
fees can be used to satisfy such payments.
10. Status of TORS. TORS is an independent contractor and shall be agent
of the Fund only with respect to the sale and redemption of Shares.
11. Indemnification.
(a) The Fund agrees to indemnify, defend, and hold TORS, its officers, and
directors, and any person who controls TORS within the meaning of Section 15 of
the 1933 Act, free and harmless from and against any and all claims, demands, or
liabilities, and expenses (including the cost of investigating or defending such
claims, demands, liabilities, and any counsel fees incurred in connection
therewith) that TORS, its officers and directors, or any such controlling person
may incur under the 1933 Act, or under common law or otherwise, arising out of
or based upon any (i) any and all actions and/or omissions by the Fund or its
investment manager prior to the effective date of this Agreement; (ii) alleged
untrue statement of a material fact contained in the Registration Statement,
Prospectus, SAI, or sales literature; (iii) alleged omission to state a material
fact required to be stated in the Fund's registration statement or necessary to
make the statements therein not misleading; or (iv) failure by the Fund to
comply with the terms of the Agreement; provided, that in no event shall
anything contained herein be so construed as to protect TORS against any
liability to the Fund or its shareholders to which TORS would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations under this Agreement.
(b) The Fund shall not be liable to TORS under this Agreement with respect
to any claim made against TORS or any person indemnified unless TORS or other
such person shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon TORS or such
other person (or after TORS or other person shall have received notice of
service on any designated agent). However, failure to notify the Fund of any
claim shall not relieve the Fund from any liability that it may have to TORS or
any person against whom such action is brought otherwise than on account of this
Agreement.
(c) The Fund shall be entitled to participate at its own expense in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce any claims subject to this Agreement. If the Fund elects to assume the
defense of any such claim, the defense shall be conducted by counsel chosen by
the Fund and satisfactory indemnified defendants in the suit whose consent shall
not be unreasonably withheld. In the event that the Fund elects to assume the
defense of any suit and retain counsel, the indemnified defendants shall bear
the fees and expenses of any additional counsel retained by them. If the Fund
does not elect to assume the defense of a suit, it will reimburse the
indemnified defendants for the reasonable fees and expenses of any counsel
retained by the indemnified defendants. The Fund agrees to promptly notify TORS
of the commencement of any litigation or proceedings against it or any of its
officers and directors in connection with the issuance or sale of any of its
Shares.
(d) TORS agrees to indemnify, defend, and hold the Fund, its officers and
directors, and any person who controls the Fund within the meaning of Section 15
of the 1933 Act, free and harmless from and against any and all claims, demands,
liabilities, and expenses (including the cost of investigating or defending
against such claims, demands, or liabilities, and any counsel fees incurred in
connection therewith) that the Fund, its directors and officers, or any such
controlling person may incur under the 1933 Act, or under common law or
otherwise, resulting from TORS' willful misfeasance, bad faith, or gross
negligence in the performance of its obligations and duties under this
Agreement, or arising out of or based upon any alleged untrue statement of a
material fact contained in information furnished in writing by TORS to the Fund
for use in the Registration Statement, Prospectus, or SAI arising out of or
based upon any alleged omission to state a material fact in connection with such
information required to be stated in any such document or necessary to make such
information not misleading.
(e) TORS shall be entitled to participate, at its own expense, in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if TORS elects to assume the defense, the defense shall
be conducted by counsel chosen by TORS and satisfactory to the indemnified
defendants whose approval shall not be unreasonably withheld. In the event that
TORS elects to assume the defense of any suit and retain counsel, the defendants
in the suit shall bear the fees and expenses of any additional counsel retained
by them. If TORS does not elect to assume the defense of any suit, it will
reimburse the indemnified defendants in the suit for the reasonable fees and
expenses of any counsel retained by them.
12. Duration and Termination.
(a) This Agreement shall become effective on the date first written above
(or, as to a particular series of Shares of the Fund, such later date as
indicated on Schedule A) and, unless sooner terminated as provided herein, will
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Agreement shall continue in effect for successive annual
periods, provided that such continuance is specifically approved at least
annually (i) by a vote of a majority of the Fund's Board who are neither
interested persons (as defined in the 1940 Act) of the Fund or any party to this
Agreement ("Independent Trustees") cast in person at a meeting called for the
purpose of voting on such approval, and (ii) by the Board or by vote of a
majority of the outstanding voting securities of the Fund, or, as to a
particular series of Shares of the Fund, of that series.
(b) Notwithstanding the foregoing, this Agreement may be terminated in its
entirety at any time, without payment of any penalty, by vote of the Board, by
vote of a majority of the Independent Trustees, or, as to any series of Shares
of the Fund, by vote of a majority of the outstanding voting securities of that
series on sixty days' written notice to TORS or by TORS at any time, on sixty
days' written notice to the Fund. This Agreement will automatically terminate in
the event of its assignment.
13. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought. This Agreement may be amended with the
approval of the Board or of a majority of the outstanding voting securities of
the Fund (or individual series of the Fund, as appropriate); provided, that in
either case, such amendment also shall be approved by a majority of the
Independent Trustees.
14. Limitation of Liability. The Board and shareholders of the Fund shall
not be personally liable for obligations of the Fund in connection with any
matter arising from or in connection with this Agreement. This Agreement is not
binding upon any trustee, officer, or shareholder of the Fund individually, and
no such person shall be individually liable with respect to any action or
inaction resulting from this Agreement.
15. Notice. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient upon receipt in writing at the other
party's principal offices.
16. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person," and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
17. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Delaware and the 1940 Act (without regard, however, to
the conflicts of law principles). To the extent that the applicable laws of the
state of Delaware conflict with the applicable provisions of the 1940 Act, the
latter shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
IGAM Group Funds T. O. Richardson
Securities, Inc.
Integrity Global Asset Management, Inc.
By:_____________________________
By:___________________________
Print:____________________________
Print:_________________________
Title:____________________________
Title:_________________________
Date:____________________________
Date:_________________________
Attest:___________________________
Attest:________________________
Print:____________________________
Print:_________________________
SCHEDULE A
to the
DISTRIBUTION AGREEMENT
between
IGAM Group Funds
and
T.O. Richardson Securities, Inc.
Pursuant to Section 1 of the Distribution Agreement between IGAM Group
Funds (the "Fund") and T.O. Richardson Securities, Inc. ("TORS"), the Fund
hereby appoints TORS as its agent to be the principal underwriter and national
distributor of the following series of the Fund's Shares:
The Internet Index Fund
Dated: September 13, 1999
SCHEDULE B
to the
DISTRIBUTION AGREEMENT
between
IGAM Group Funds
and
T.O. Richardson Securities, Inc.
As compensation pursuant to Section 9 of the Distribution
Agreement between The Internet Index Fund ("Fund") and T.O.
Richardson Securities, Inc. ("TORS"), the Fund shall pay to TORS
the sum of :
1. an annual fee of $15,000 for the first series of the Fund and $3,000
for each series thereafter or .01% (1 basis point) of the average
daily net assets of each series computed daily and paid monthly,
whichever is greater;
2. an annual compliance fee of $600 for each employee of the Fund's
investment adviser who is designated by the Fund to become a series 6
or series 7 registered representative of TORS (compliance costs for
other types of licenses may vary) , as well as the ongoing license
fees and incidental costs associated with such registrations;
3. the compensation paid by TORS to such registered representatives in
accordance with compensation schedules, as agreed upon by TORS and
the Fund from time to time;
4. the reasonable fees associated with listing and maintaining shares on
the National Securities Clearing Corporation's Fund/SERV System, on a
"pass through" basis, as agreed upon by TORS and the Fund and as
reflected in the attached NSCC fee schedule, which may change without
notice; and
5. incidental expenses associated with printing and distribution
advertising and sales literature;
6. fees for legal review of advertisements and sales literature at the
rate of $150 per job for the first ten pages of an advertisement and
$20 per page thereafter, plus NASD filing fees which are billed on an
out of pocket basis;
7. plus out of pocket expenses including, but not limited to travel
expenses and retention of records.
Dated: September 13, 1999
Law Office
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
(215) 564-8000
Direct Dial: (215) 564-8115
October 7, 1999
IGAM Group Funds
South Kingstown Office Park
Suite A5
24 Salt Pond Road
Wakefield, RI 02879
Re: Legal Opinion-Securities Act of 1933
Ladies and Gentlemen:
We have examined the Certificate of Trust, the Agreement and
Declaration of Trust (the "Agreement"), of IGAM Group Funds (the "Fund"), a
series business trust organized under Delaware law, the By-Laws of the Fund, and
its proposed form of share certificates (if any), and the various pertinent
corporate proceedings we deem material. We have also examined the Notification
of Registration and the Registration Statement filed under the Investment
Company Act of 1940, as amended, (the "Investment Company Act") and the
Securities Act of 1933, as amended, (the "Securities Act"), all as amended to
date, as well as other items we deem material to this opinion.
The Fund is authorized by the Agreement to issue an unlimited number
of shares of beneficial interest with no par value. To date, a single series of
shares has been established and designated as the Internet Index Fund series of
shares, and an unlimited number of shares of beneficial interest have been
allocated to such series. The Agreement also empowers the Board to establish and
designate any additional series or classes and allocate shares of beneficial
interest to such series or classes.
The Fund has filed with the U.S. Securities and Exchange Commission,
a registration statement under the Securities Act and the Investment Company
Act, which registration statement will be deemed to register an indefinite
number of shares of beneficial interest of the Fund pursuant to the provisions
of Section 24(f) of the Investment Company Act. You have further advised us that
each year hereafter the Fund will timely file a Notice pursuant to Rule 24f-2
under the Investment Company Act perfecting the registration of the shares of
beneficial interest sold by the Fund during each fiscal year during which such
registration of an indefinite number of shares of beneficial interest remains in
effect.
You have also informed us that the shares of beneficial interest of
the Fund will be sold in accordance with the Fund's usual method of distributing
its registered shares, under which prospectuses are made available for delivery
to offerees and purchasers of such shares of beneficial interest in accordance
with Section 5(b) of the Securities Act.
Based upon the foregoing information and examination, it is our
opinion that so long as the Fund remains a valid and subsisting entity under the
laws of its state of organization, and the registration of an indefinite number
of shares of beneficial interest of the Fund remains effective, the authorized
shares of the Fund when issued for the consideration set by the Board of
Trustees pursuant to the Agreement, and subject to compliance with Rule 24f-2,
will be legally outstanding, fully-paid, and non-assessable shares, and the
holders of such shares of beneficial interest will have all the rights provided
for with respect to such holding by the Agreement and the laws of the State of
Delaware.
We hereby consent to the filing of this opinion with the U.S.
Securities and Exchange Commission, as an exhibit to the Fund's Registration
Statement, along with any amendments thereto, covering the registration of the
shares of beneficial interest of the Fund under the Securities Act and the
applications, registration statements or notice filings, and amendments thereto,
to be filed in accordance with the securities laws of the several states in
which shares of beneficial interest of the Fund are to be offered, and we
further consent to reference to us in the registration statement of the Fund as
legal counsel who have passed upon the legality of the offering of the Fund's
shares of beneficial interest.
Very truly yours,
STRADLEY, RONON, STEVENS & YOUNG, LLP
BY: /s/ Bruce G. Leto
Bruce G. Leto
Arthur Anderson LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all reference to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
September 23, 1999
POWER OF ATTORNEY
The undersigned Trustees of IGAM Group Funds (the "Trust") hereby appoint
Eugene Y.W. Lee, Ph.D. as attorney-in-fact and agent, in all capacities, to
execute, and to file any amendments to the Trust's Registration Statement on
Form N-1A under the Investment Company Act of 1940, as amended, (the "Act") and
under the Securities Act of 1933, that are required to complete the initial
registration of the Trust as an investment company and the sale of shares of the
series of the Trust, including all exhibits and any and all documents required
to be filed with respect thereto with any regulatory authority, including
applications for exemptive order rulings. Each of the undersigned grants to the
said attorney full authority to do every act necessary to be done in order to
effectuate the same as fully, to all intents and purposes, as he could do if
personally present, thereby ratifying all that said attorneys-in-fact and agents
may lawfully do or cause to be done by virtue hereof.
The undersigned Trustees hereby execute this Power of Attorney as of this 13th
day of September, 1999.
Name Title
/s/ Edward Mazze, Ph.D.
Edward Mazze, Ph.D. Trustee
/s/ Andrew Laviano
Andrew Laviano Trustee
IGAM GROUP FUNDS
DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The following Distribution and Shareholder Servicing Plan (the
"Plan") has been adopted pursuant to Rule 12b-1 under the Investment Company Act
of 1940, as amended (the "1940 Act") by IGAM Group Funds (the "Trust") on behalf
of the Internet Index Fund series of the Trust (the "Fund") and its shares. The
Plan has been approved by the vote of a majority of the Board of Trustees of the
Trust, 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 (the "Independent Trustees"), cast in person at a meeting called for
the purpose of voting on such Plan.
In reviewing the Plan, the Board of Trustees considered the proposed
schedule and nature of payments and terms of the Investment Management Agreement
between the Trust on behalf of the Fund and Integrity Global Asset Management,
Inc. (the "Manager"), and Distribution Agreement between the Trust on behalf of
the Fund and T.O. Richardson Securities, Inc (the "Distributor"). The Board of
Trustees concluded that the proposed compensation of the Manager under the
investment management agreement and the compensation of the Distributor under
the Distribution Agreement, is fair and not excessive. Accordingly, the Board
determined that the Plan should provide for the payments described herein and
that adoption of the Plan would be prudent and in the best interests of the Fund
and its shareholders. Such approval included a determination that in the
exercise of their reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will benefit the Fund and
its shareholders.
The Provisions of the Plan are:
1. The Trust shall reimburse the Manager, the Distributor or others a
monthly fee of up to 0.25% per annum of the average daily net assets of the
Fund's shares for expenses incurred by such parties in the promotion and
distribution of the Fund's shares, including but not limited to, the printing of
prospectuses and reports used for sales purposes, expenses of preparation of
sales literature and related expenses, advertisements, and other
distribution-related expenses, as well as any distribution fees paid to
securities dealers or others.
Such amounts may also be used to reimburse the Manager, the
Distributor or others for, among other things, furnishing personal services and
maintaining shareholder accounts, which services include, among other things,
assisting in, establishing and maintaining customer accounts and records,
assisting with purchase and redemption requests, arranging for bank wires,
monitoring dividend payments from the Fund to customers, receiving and answering
correspondence, and aiding in maintaining their respective customers; all such
services being provided in connection with the Fund's shares.
Any amounts paid under this paragraph 1 shall be shall be paid
pursuant to a distribution, servicing or other agreement which form of agreement
has been approved from time to time by Board, including the Independent
Trustees.
2. The payments described in paragraph 1 shall be made monthly by the
Trust on behalf of the Fund. In no event, shall the payments made under the
Plan, plus any other payments deemed to be made pursuant to the Plan, exceed the
amount permitted to be paid pursuant to the Conduct Rules of the National
Association of Securities Dealers, Inc.
3. The Manager, the Distributor or their agents shall collect and
monitor the documentation of payments made under paragraphs 1 and 2 above, and
shall furnish to the Board of Trustees of the Trust, for their review, on a
quarterly basis, a written report of the monies paid under the Plan, as well as
the purpose(s) for which such payments were made, and shall furnish the Board of
Trustees of the Trust with such other information as the Board may reasonably
request in connection with the payments made under the Plan as to the Fund's
shares in order to enable the Board to make an informed determination of whether
the Plan should be continued.
4. The Plan shall continue in effect for a period of more than one
year only so long as such continuance is specifically approved at least annually
by the Trust's Board of Trustees, including a majority of the Independent
Trustees cast in person at a meeting called for the purpose of voting on the
Plan.
5. The Plan, or any agreements entered into pursuant to the Plan, may
be terminated at any time, without penalty, on not more than sixty (60) days
written notice by (a) the vote of a majority of the outstanding voting
securities of the Fund, or (b) the vote of a majority of the Independent
Trustees cast in person at a meeting called for the purpose of voting on the
Plan.
6. The Plan and any agreements entered into pursuant to the Plan may
not be amended to increase materially the amount to be spent by the Trust on
behalf of the Fund shares pursuant to Paragraphs 1 or 2 hereof without approval
by a majority of the outstanding voting securities of the Fund.
7. All material amendments to the Plan, or any agreements entered
into pursuant to this Plan, shall be approved by the Independent Trustees cast
in person at a meeting called for the purpose of voting on any such amendment or
agreements.
8. So long as the Plan is in effect, the selection and nomination of
the Independent Trustees of the Trust shall be committed to the discretion of
such Independent Trustees.
9. This Plan shall take effect on the 13 day of September, 1999.
