<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 20, 1999
FILE NO. 333-88287
FILE NO. 811-09601
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
PRE EFFECTIVE AMENDMENT NO. 1 /X/
-----------------------------
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT ACT OF 1940
AMENDMENT NO. 1 /X/
---------------
FRIENDS IVORY FUNDS
(Exact Name of Registrant as Specified in Charter)
THE CORPORATION TRUST COMPANY
1209 ORANGE STREET
WILMINGTON, DELAWARE 19801, COUNTY OF NEW CASTLE
(Name and Address of Agent for Service)
Copies to:
GEORGE WALKER JOHN H. GRADY, Jr., ESQUIRE
Friends Ivory & Sime, Inc. Morgan, Lewis & Bockius LLP
One World Trade Center, Suite 2101 1701 Market Street
New York, New York 10048 Philadelphia, PA 19103
- --------------------------------------------------------------------------------
/X/ Approximate date of Proposed Public Offering:
As soon as practicable after the
effective date of this Registration Statement
- --------------------------------------------------------------------------------
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
<PAGE>
FRIENDS IVORY FUNDS
INSTITUTIONAL SHARES AND ADVISOR SHARES
PROSPECTUS
DECEMBER ____, 1999
FRIENDS IVORY SOCIAL AWARENESS FUND
FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND
INVESTMENT ADVISER
FRIENDS IVORY & SIME, INC.
INVESTMENT SUB-ADVISER
FRIENDS IVORY & SIME PLC
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Page 1 of 20
<PAGE>
ABOUT THIS PROSPECTUS
Friends Ivory Funds (the "Trust") is a mutual fund family that offers different
classes of shares in separate socially responsible investment portfolios
(Funds). The Funds have individual investment goals and strategies. This
prospectus gives you important information about the Institutional Shares and
Advisor Shares of the Funds that you should know before investing. Please read
this prospectus and keep it for future reference.
Institutional Shares and Advisor Shares have different expenses and other
characteristics. Before investing, you should consider the amount you want to
invest, how long you plan to have it invested, and whether you plan to make
additional investments.
INSTITUTIONAL SHARES
- NO SALES CHARGE
- NO 12b-1 OR SHAREHOLDER FEES
- $250,000 MINIMUM INITIAL INVESTMENT
ADVISOR SHARES
- NO SALES CHARGE
- 12b-1/SHAREHOLDER FEES
- $2,500 MINIMUM INITIAL INVESTMENT
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO THE FUNDS.
FOR MORE DETAILED INFORMATION ABOUT EACH FUND, PLEASE SEE:
<TABLE>
<CAPTION>
PAGE
<S> <C>
FRIENDS IVORY SOCIAL AWARENESS FUND................................................XXX
FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND.......................................XXX
MORE INFORMATION ABOUT RISK........................................................XXX
MORE INFORMATION ABOUT FUND INVESTMENTS............................................XXX
THE INVESTMENT ADVISER, SUB-ADVISER
AND PORTFOLIO MANAGERS.............................................................XXX
PURCHASING, SELLING AND EXCHANGING FUND SHARES.....................................XXX
DIVIDENDS AND DISTRIBUTIONS........................................................XXX
TAXES..............................................................................XXX
FINANCIAL HIGHLIGHTS...............................................................XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
FRIENDS IVORY FUNDS............................................................Back Cover
</TABLE>
Page 2 of 20
<PAGE>
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using a
professional investment manager, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The
investment manager invests Fund assets in a way that it believes will help a
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. The investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In addition, the Funds' bias
toward investing in socially responsible companies may cause them to
underperform funds that operate without such constraints. In fact, no matter how
good a job the investment manager does, you could lose money on your investment
in the Fund, just as you could with other investments. A Fund share is not a
bank deposit and it is not insured or guaranteed by the FDIC or any government
agency.
The value of your investment in a Fund is based on the market prices of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely the Fund diversifies its holdings.
- --------------------------------------------------------------------------------
FRIENDS IVORY & SIME'S APPROACH TO SOCIALLY RESPONSIBLE INVESTING:
The Funds' investment manager, Friends Ivory & Sime, Inc., utilizes an
investment approach that extends beyond the traditional obligation to
safeguard return to include the use of money in a socially responsible
manner. Friends Ivory & Sime's approach to socially responsible investing
makes use of a screening process referred to as a positive social screen.
This positive social screen is implemented by Friends Ivory & Sime's Ethics
Team, which is led by Karina Litvack in Europe and Elizabeth Elliott McGeveran
in the USA. The investment process results in a list of companies that, in
the view of the Funds' managers, will both meet their stated financial and
investment criteria and provide quality products that enhance or sustain
society or the environment, pursue diversity and progressive employment
practices, protect the environment, demonstrate corporate accountability and
are proactive in improving human rights. The investment process also filters
out companies with substantial involvement in military contracting,
environmental damage or pollution, nuclear power and promoting tobacco,
alcohol or gambling. Friends Ivory & Sime's Ethics Team has developed and
continually updates the social screening criteria and ensures that each
individual investment complies.
- --------------------------------------------------------------------------------
Page 3 of 20
<PAGE>
FRIENDS IVORY SOCIAL AWARENESS FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth
INVESTMENT FOCUS U.S. common stocks
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Purchasing primarily stocks of
large, well-established companies
with above-average growth potential
that meet the Fund's ethical policy
criteria
INVESTOR PROFILE Investors who can withstand the
share price volatility associated
with equity fund investing, and who
want ethical factors to play a role
in their investment portfolio
INVESTMENT STRATEGY
The Friends Ivory Social Awareness Fund invests primarily in common stocks
issued by large, well-established U.S. companies that the Fund's investment
manager, Friends Ivory & Sime, Inc., believes have above-average growth
potential and that meet the Fund's ethical screening criteria. The portfolio
will be diversified across various industries and among eligible issuers.
The investment manager initially screens companies using core growth oriented
investing criteria. It looks for companies which:
- - are expected to sustain above average growth in earnings per share;
- - have an improving business outlook; and
- - are expected to demonstrate above average consistency in the progression of
earnings per share.
ETHICAL POLICIES
Among the companies that meet these investment criteria, the investment
manager's Ethics Team then searches out those companies whose products and
services deliver real benefits to society or the natural environment, and whose
practices demonstrate a commitment to corporate responsibility and shareholder
dialogue. Such companies will typically have the following characteristics:
ENVIRONMENTAL CONCERN - The investment manager will favor companies which
produce environmentally responsible products and which demonstrate a commitment
to environmental responsibility, high quality environmental reporting and
environmental management systems (EMS). The investment manager will also
encourage companies which operate in high environmental-impact sectors to
achieve high standards of environmental reporting.
Page 4 of 20
<PAGE>
SOCIALLY/ENVIRONMENTALLY RESPONSIBLE PRODUCTS - The investment manager will
favor companies whose products or services enhance or sustain society or the
natural environment.
EQUAL OPPORTUNITY/DIVERSITY - The investment manager will favor companies that
have demonstrated a commitment to employee welfare, and will encourage companies
to adopt policies and practices that support this commitment. The investment
manager will also seek to invest in companies which foster diversity in the
workplace at all levels, and guarantee equal opportunities in terms of gender,
ethnic origin and sexual orientation in hiring, promotion and purchasing from
and subcontracting with outside vendors.
HUMAN RIGHTS - For companies in sectors particularly exposed to human rights
issues, the investment manager will favor companies that are proactive in
improving human rights in their countries of operation. The investment manager
would encourage companies to adopt effective policies and practices on human
rights to insure that issues are dealt with effectively.
The investment manager will also focus on companies which embody good corporate
citizenship practices and which do not derive a significant percentage of their
revenues from businesses relating to the production of alcohol, tobacco,
gambling, military or weapons, pornography or nuclear power.
Stocks may be sold if they experience fundamental change in the investment
outlook, no longer meet the Fund's ethical criteria, or if a better investment
opportunity arises.
The Fund has the ability to change the above ethical criteria as circumstances
change without shareholder approval, but does not currently intend to do so.
***
PRINCIPAL RISKS OF INVESTING IN THE FRIENDS IVORY SOCIAL AWARENESS FUND
EQUITY RISK - Since it purchases common stocks, the Fund is subject to the risk
that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of the
Fund's securities may fluctuate significantly from day to day. Individual
companies may report poor results or be negatively affected by industry and/or
economic trends and developments. The prices of securities issued by such
companies may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Fund.
ETHICAL INVESTING RISK - The Fund's ethical standards will bar the Fund from
investing in certain types of companies. As a result, the Fund may miss
opportunities to invest in certain companies that are providing superior
performance to the market as a whole. While these consequences may at times
adversely affect Fund performance when compared to broad market indices or to
similar funds managed without similar ethical investment constraints, the Fund
may outperform these market indices and other funds over certain time periods.
INVESTMENT STYLE RISK - The manager's investment approach favors growth-oriented
companies. Stocks of growth-oriented companies may underperform stocks of other
types of companies (e.g., "value" stocks) during a given period. Also, the Fund
will have an investment focus on large capitalization companies, and the stocks
of such companies may underperform those issued by smaller entities. As a
result, the Fund may underperform funds with a value investing tilt or with
Page 5 of 20
<PAGE>
a bias to smaller or mid-sized companies. The Fund is also subject to the risk
that U.S. equity securities may underperform other segments of the world equity
markets.
PERFORMANCE INFORMATION
The information set forth below represents the performance of the Adviser's
similarly managed private account. The private account commenced operations
before the Fund's registration statement became effective. This past performance
has been adjusted to reflect current expenses for the Advisor Shares of the
Fund. Advisor Shares have different expenses than the private account, which
will result in different performance. The Adviser's private account was not a
registered mutual fund, so it was not subject to the same investment and tax
restrictions as the Fund. If it had been, the private account's performance may
have been lower. Nevertheless, the Adviser believes that the private account
has been managed in a manner that is equivalent in all material respects to
how the Fund will be managed. The performance information provided was
prepared in accordance with the standards set by the Association of
Investment Management and Research. The performance was calculated before
fees and expenses were deducted, and the performance results were verified by
WM Company, a U.K. performance measurement firm. Thereafter, the Adviser
deducted expenses to reflect the charges applicable to Advisor Shares of the
Funds. The net performance information supplied by the Adviser has not been
audited or verified, but the Trust believes that the information is reliable.
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, past performance does not
necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's predecessor
separate account from year to year for 2 years.
<TABLE>
<CAPTION>
1997 36.61%
1998 32.28%*
BEST QUARTER WORST QUARTER
<S> <C> <C>
25.43% (9.90%)
12/31/98 (09/30/98)
</TABLE>
* For the period from 1/1/99 to 9/30/99, the predecessor private account's
total return was 0.32%. The assets of the predecessor private account
(approximately $27.5 million) were transferred to the Fund on December 29, 1999.
THIS TABLE COMPARES THE PREDECESSOR PRIVATE ACCOUNT'S AVERAGE ANNUAL TOTAL
RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1998 TO THOSE OF THE STANDARD &
POOR'S 500 COMPOSITE INDEX.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
FRIENDS IVORY SOCIAL AWARENESS FUND - ADVISOR SHARES 32.28% 33.31%*
STANDARD & POOR'S 500 COMPOSITE INDEX 28.76% 31.84%**
</TABLE>
* The predecessor private account commenced operations on October 1, 1996. On
December 29, 1999, the Fund acquired the assets of the private account.
Information shown for periods prior to December 29, 1999, relates to the
private account, and has been adjusted to reflect the current expenses of
the Fund.
** Since October 1, 1996.
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Composite Index is a widely-recognized,
market value-weighted (higher market value stocks have more influence than lower
market value stocks) index of 500 stocks designed to mimic the overall equity
market's industry weightings.
Page 6 of 20
<PAGE>
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES ADVISOR SHARES
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees 0.75% 0.75%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.73% 0.73%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.48% 1.73%
Fee Waivers and Expense Reimbursements (0.48)% (0.48)%
------- -------
NET OPERATING EXPENSES 1.00%* 1.25%*
- ------------------------------------------------------------------------------------------
</TABLE>
* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 1.25% for the
Advisor Shares and 1.00% for the Institutional Shares for a period of one year.
After that time, the Adviser has the option to renew this agreement. For more
information about these fees, see "Investment Adviser and Sub-Adviser" and
"Distribution of Fund Shares."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
INSTITUTIONAL SHARES $102 $421
ADVISOR SHARES $127 $498
</TABLE>
Page 7 of 20
<PAGE>
FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital growth
INVESTMENT FOCUS European common stocks
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Purchasing stocks of large
capitalization European companies with
above-average growth potential that
meet the Fund's ethical policy criteria
INVESTOR PROFILE Investors who can withstand the share
price volatility associated with
international equity fund investing and
who want ethical factors to play a role
in their investment portfolio
INVESTMENT STRATEGY
***
The Friends Ivory European Social Awareness Fund invests primarily in common
stocks issued by large, well-established European companies that the Fund's
investment manager, Friends Ivory & Sime plc, believes have above-average growth
potential and that meet the Fund's ethical screening criteria. The portfolio
will be diversified across various industries and among eligible issuers.
The Fund seeks to reduce risk by diversifying the Fund's portfolio across
countries, issuers and industries. The investment manager will focus on stocks
of companies located in the more developed European markets, including Austria,
Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands,
Portugal, Spain, Sweden, Switzerland and the United Kingdom, and may invest in
some emerging market issuers.
The investment manager initially screens companies using core growth oriented
investing criteria. It looks for companies which:
- - are expected to sustain above average growth in earnings per share;
- - have an improving business outlook; and
- - are expected to demonstrate above average consistency in the progression of
earnings per share.
ETHICAL POLICIES
Among the companies that meet these investment criteria, the investment
manager's Ethics Team then searches out those companies whose products and
services deliver real benefits to society or the natural environment, and whose
practices demonstrate a commitment to corporate
Page 8 of 20
<PAGE>
responsibility and shareholder dialogue. Such companies will typically have the
following characteristics:
ENVIRONMENTAL CONCERN - The investment manager will favor companies which
produce environmentally responsible products and which demonstrate a commitment
to environmental responsibility, high quality environmental reporting and
environmental management systems (EMS). The investment manager will also focus
on companies which operate in high environmental-impact sectors to achieve high
standards of environmental reporting and EMS.
SOCIALLY/ENVIRONMENTALLY RESPONSIBLE PRODUCTS - The investment manager will
favor companies whose products or services enhance or sustain society or the
natural environment.
EQUAL OPPORTUNITY/DIVERSITY - The investment manager will favor companies that
have demonstrated a commitment to employee welfare, and will encourage companies
to adopt policies and practices that support this commitment. The investment
manager will also seek to invest in companies which foster diversity in the
workplace at all levels, and guarantee equal opportunities in terms of gender,
ethnic origin and sexual orientation in hiring, promotion and purchasing from
and subcontracting with outside vendors.
HUMAN RIGHTS - For companies in sectors particularly exposed to human rights
issues, the investment manager will favor companies that are proactive in
improving human rights in their countries of operation. The investment manager
would encourage companies to adopt effective policies and practices on human
rights to insure that issues are dealt with effectively.
The investment manager will also focus on companies which embody good corporate
citizenship practices and which do not derive a significant percentage of their
revenues from businesses relating to the production of alcohol, tobacco,
gambling, military or weapons, pornography or nuclear power.
Stocks may be sold if they experience fundamental change in the investment
outlook, no longer meet the Fund's ethical criteria, or if a better investment
opportunity arises.
The Fund has the ability to change the above ethical criteria as circumstances
change without shareholder approval, but does not currently intend to do so.
***
PRINCIPAL RISKS OF INVESTING IN THE FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND
EQUITY RISK - Since it purchases common stocks, the Fund is subject to the risk
that stock prices will fall over short or extended periods of time.
Historically, the equity markets have moved in cycles, and the value of the
Fund's securities may fluctuate significantly from day to day. Individual
companies may report poor results or be negatively affected by industry and/or
economic trends and developments. The prices of securities issued by such
companies may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Fund.
ETHICAL INVESTING RISK - The Fund's ethical standards will bar the Fund from
investing in certain types of companies. As a result, the Fund may miss
opportunities to invest in certain companies that are providing superior
performance to the market as a whole. While these consequences may
Page 9 of 20
<PAGE>
at times adversely affect Fund performance when compared to broad market indices
or to similar funds managed without similar ethical investment constraints, the
Fund may outperform these market indices and other funds over certain time
periods.
FOREIGN SECURITY RISKS - Transaction costs in European countries are generally
higher than those in the U.S., and expenses for custodial arrangements of
foreign securities may be somewhat greater than typical expenses for custodial
arrangements of similar U.S. securities. Investing in foreign countries poses
additional market risks since political and economic events unique to a country
or region will affect those markets and their issuers. These events will not
necessarily affect the U.S. economy or similar issuers located in the United
States. These various risks will be even greater for investments in emerging
market countries since political turmoil and rapid changes in economic
conditions are more likely to occur in these countries. In addition, the Fund's
investments in foreign countries are generally denominated in a foreign
currency, and changes in the value of those currencies compared to the U.S.
dollar may affect (positively or negatively) the value of the Fund's
investments. These currency movements may happen separately from events that
otherwise affect the value of the security in the issuer's home country. The
Fund at times may attempt to hedge against variations in foreign exchange rates.
INVESTMENT STYLE RISK - The manager's investment approach favors growth-oriented
companies. Stocks of growth-oriented companies may underperform stocks of other
types of companies (e.g., "value" stocks) during a given period. Also, the Fund
will have an investment focus on large capitalization companies, and the stocks
of such companies may underperform those issued by smaller entities. As a
result, the Fund may underperform funds with a value investing tilt or with a
bias to smaller or mid-sized companies. The Fund is also subject to the risk
that European equity securities may underperform other segments of the world
equity markets.
PERFORMANCE INFORMATION
As of December 31, 1999, the Friends Ivory European Social Awareness Fund had
not commenced operations, and did not have a performance history.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<CAPTION>
INSTITUTIONAL SHARES ADVISOR SHARES
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees 0.85% 0.85%
Distribution (12b-1) Fees None 0.25%
Other Expenses 0.94% 0.94%
----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.79% 2.04%
Fee Waivers and Expense Reimbursements (0.34)% (0.34)%
------- -------
NET OPERATING EXPENSES 1.45%* 1.70%*
- --------------------------------------------------------------------------------------------------
</TABLE>
* The Fund's Adviser has contractually agreed to waive fees and to reimburse
expenses in order to keep total operating expenses from exceeding 1.70% for the
Advisor Shares and 1.45% for the Institutional Shares for a period of one year.
After that time, the Adviser has the option to renew this agreement.
Page 10 of 20
<PAGE>
For more information about these fees, see "Investment
Adviser and Sub-Adviser" and "Distribution of Fund Shares."
EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
INSTITUTIONAL SHARES $148 $530
ADVISOR SHARES $173 $607
</TABLE>
MORE INFORMATION ABOUT RISK
YEAR 2000 RISK -- The Funds depend on the smooth functioning of computer systems
in almost every aspect of their business. Like other mutual funds, businesses
and individuals around the world, the Funds could be adversely affected if the
computer systems used by their service providers do not properly process dates
on and after January 1, 2000, and distinguish between the year 2000 and the year
1900. Furthermore, many foreign countries are not as prepared as the U.S. for
the year 2000 transition. As a result, computer difficulties in foreign markets
and with foreign institutions as a result of the year 2000 may add to the
possibility of losses.
The Funds have asked their mission-critical service providers whether they
expect to have their computer systems adjusted for the year 2000 transition, and
have sought and received assurances from such service providers that they are
devoting significant resources to prevent material adverse consequences to the
Funds. While such assurances have been received, the Funds and their
shareholders may experience losses if these assurances prove to be incorrect or,
as a result of year 2000 computer difficulties experienced by issuers of
portfolio securities or third parties, such as custodians, banks, broker-dealers
or others with which the Funds do business.
MASTER/FEEDER OPTION
The Trust, or any Fund thereof, may in the future seek to achieve any Fund's
investment objective by investing all of that Fund's assets in another
investment company having the same investment objective and substantially the
same investment policies and restrictions as those applicable to that Fund.
Also, in the future, additional Funds may be established as master/feeder funds.
The initial shareholder(s) of each Fund voted to vest such authority in the sole
discretion of the Trustees and such investment may be made without further
approval of the shareholders of the Funds. However, shareholders of the Funds
will be given at least 30 days' prior notice of any such investment. Such
investment would be made only if the Trustees determine it to be in the best
interests of a Fund and its shareholders. In making that determination, the
Trustees will consider, among other things, the benefits to shareholders and/or
the opportunity to reduce costs and achieve operational efficiencies. Although
the Funds believe that the Trustees will not approve an arrangement that is
likely to result in higher costs, no assurance is given that costs will be
materially reduced if this option is implemented.
Page 11 of 20
<PAGE>
MORE INFORMATION ABOUT FUND INVESTMENTS
The investments and strategies described in this prospectus are those that the
Funds use under normal conditions and each Fund will normally invest at least
65% of its assets in the types of securities described in this prospectus.
During unusual economic or market conditions, or for temporary defensive or
liquidity purposes, each Fund may invest up to 100% of its assets in cash,
repurchase agreements and short-term obligations that would not ordinarily be
consistent with a Fund's objectives. A Fund will do so only if the Adviser
believes that the risk of loss outweighs the opportunity for capital gains. Of
course, the Funds cannot guarantee that any Fund will achieve its investment
goal.
In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information.
INVESTMENT ADVISER AND SUB-ADVISER
***
Friends Ivory & Sime, Inc. (the "Adviser") serves as the Adviser to the Friends
Ivory Social Awareness Fund and the Friends Ivory European Social Awareness
Fund. The Adviser makes investment decisions for the Friends Ivory Social
Awareness Fund and continuously reviews, supervises and administers the Fund's
investment program. Friends Ivory & Sime plc (the "Sub-Adviser"), Sub-Adviser to
the Friends Ivory European Social Awareness Fund, makes investment decisions for
the assets of the Fund and administers the Fund's investment program under the
supervision of the Adviser.
The Board of Trustees of Friends Ivory Funds supervises the Adviser and
Sub-Adviser and establishes policies that the Adviser and Sub-Adviser follow in
their management activities.
As of September 30, 1999, the Adviser had approximately $4.2 billion in assets
under management, and the Sub-Adviser had approximately $52.1 billion in assets
under management. For its services to the Funds, the Adviser is entitled to
receive investment advisory fees from the Funds as follows:
<TABLE>
<S> <C>
FRIENDS IVORY SOCIAL AWARENESS FUND 0.75%
FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND 0.85%
</TABLE>
The Adviser will compensate the Sub-Adviser out of its advisory fee for the
Friends Ivory European Social Awareness Fund. The Adviser intends to use up to
10% of the advisory fees it receives from the Funds to support charitable
causes.
***
PORTFOLIO MANAGERS
The Friends Ivory Social Awareness Fund is managed by a team of investment
professionals. The lead manager is Mr. Andrew Pringle. Mr. Pringle served in
portfolio management positions with Friends Provident Asset Management,
predecessor to Friends Ivory & Sime, Inc., since 1985. Mr. Pringle has served
as Director & Senior Vice President at Friends Ivory & Sime, Inc. since 1998.
He has managed U.S. ethical equity portfolios since 1996. He has more than 14
years of investment experience. Mr. Gerard Sullivan will also serve as a
Portfolio Manager to the Fund. Mr. Sullivan has served as Director and Senior
Vice President at Friends Ivory & Sime, Inc. since October 1999, and has over
13 years of investment experience. Prior to joining Friends Ivory & Sime,
Inc., Mr. Sullivan was a Portfolio Manager at Franklin Resources. Elizabeth
Elliott McGeveran is Vice President of Ethical Research at Friends Ivory &
Sime, Inc. Prior to joining Friends Ivory & Sime, Inc. in November 1999, Ms.
McGeveran was the Managing Director of Co-op America.
Ms. Debbie Clarke is the lead manager of a team of Friends Ivory & Sime plc
investment professionals who make investment decisions for the Friends Ivory
European Social Awareness Fund. She is currently Head of the firm's Large
Companies Team, responsible for the management of U.K. and pan-European
portfolios, as well as coordinator of the Pan-European Large Cap Research
Team. In 1998, Ms. Clarke joined London & Manchester Group plc which was
acquired by Friends Ivory & Sime plc, in 1999. Ms. Clarke is responsible for
a team of pan-European analysts and portfolio managers. She has over 15 years
of investment experience. Mr. Ian Peart is Director of Pan-European Equities.
He is responsible for managing continental European and pan-European
portfolios. He was previously based at Friends Ivory & Sime, Inc.'s New York
office, managing U.S. and Canadian institutional and retail equity
portfolios, including insurance, pension and mutual fund assets. Mr. Peart
joined the firm in 1992. He has over 11 years of investment experience. Ms.
Liz Feinstein is fund manager of Pan-European Equities. She is currently a
member of the Pan-European Team and is responsible for continental European
portfolios, including ethical mandates. Ms. Feinstein is also a member of the
Pan-European Large Company Research Team. Prior to joining the firm, she was
responsible for managing Latin American equity portfolios. She has over 12
years of investment experience. Mr. Nick Hawken is Assistant Director of
Unitized Funds. He is responsible for managing the UK Equity, UK Growth and
UK Focus unit trusts, together with the FPLAL Closed Fund. Prior to joining
the firm, Mr. Hawken worked at Confederation Life. He has over 12 years of
investment experience. Mr. David Moss is an Analyst with the firm. He is
currently a member of the Pan-European Large Company Research Team,
specializing in the general retailing and beverage sectors. Mr. Moss joined
the London & Manchester Group in 1996 as a Fixed Interest Analyst. In 1998,
Mr. Moss began working on the UK Equities Team as an Analyst, specializing in
seven sectors including retailers and media. He has over 3 years of
investment experience. Karina Litvack is Director of Socially Responsible
Investing Research. Ms. Litvack joined the firm in 1998 and previously was a
Green Development project manager for New York City Economic Development
Corporation and was also an Environmental Researcher for Oko Vision based in
Frankfurt, Germany.
Page 12 of 20
<PAGE>
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange Institutional Shares and Advisor Shares of the Funds.
Institutional and Advisor Shares have different expenses and other
characteristics.
INSTITUTIONAL SHARES
- NO SALES CHARGE
- NO 12b-1 OR SHAREHOLDER FEES
- $250,000 MINIMUM INITIAL INVESTMENT
ADVISOR SHARES
- NO SALES CHARGE
- 12b-1 FEES/SHAREHOLDER FEES
- $2,500 MINIMUM INITIAL INVESTMENT
For some investors the minimum initial investment for Institutional Shares and
Advisor Shares may be lower.
HOW TO PURCHASE FUND SHARES
***
You may purchase shares directly by:
- - Mail
- - Telephone
- - Wire
- - Direct Deposit, or
- - Automated Clearing House (ACH).
To purchase shares directly from us, complete and send in the enclosed
application. If you need an application or have questions, please call
1-800-481-4404. Unless you arrange to pay by wire or through direct deposit or
ACH, write your check, payable in U.S. dollars, to "Friends Ivory
Page 13 of 20
<PAGE>
Funds" and include the name of the appropriate Fund(s) on the check. A Fund
cannot accept third-party checks, credit cards, credit card checks or cash.
You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its procedures
which may be different from the procedures for investing directly. Your broker
or institution may charge a fee for its services, in addition to the fees
charged by the Fund. You will also generally have to address your correspondence
or questions regarding a Fund to your institution.
***
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).
A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order (including a
completed application and payment).
Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the New York Stock Exchange (normally, 4:00 p.m.,
Eastern time). So, for you to receive the current Business Day's NAV, generally
a Fund must receive your purchase order before each Fund calculates its NAV
(generally, 4:00 p.m., Eastern time).
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
In calculating NAV, a Fund generally values its investment portfolio at market
price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
The Friends Ivory European Social Awareness Fund holds securities that are
listed on foreign exchanges. These securities may trade on weekends or other
days when the Fund does not calculate its NAV. As a result, the market value of
the Fund's investments may change on days when you cannot purchase or sell Fund
shares.
MINIMUM PURCHASES
***
To purchase shares for the first time, you must invest in either Fund at least:
<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Institutional $250,000
Advisor $2,500
</TABLE>
To open an IRA account, you must invest at least $1,000 in any Fund.
Page 14 of 20
<PAGE>
Your subsequent investments in any Fund must be made in amounts of at least
$50.
A Fund may accept investments of smaller amounts for either class of shares at
our discretion.
SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with a bank, you may purchase
Social Awareness and European Social Awareness shares automatically through
regular deductions from your account in amounts of at least $50 per month
following your initial investment in the Funds.
HOW TO SELL YOUR FUND SHARES
Holders of the Funds may sell shares by following the procedures established
when they opened their account or accounts. If you have questions, call
1-800-481-4404.
If you own your shares directly, you may sell (sometimes called "redeem") your
shares on any Business Day by contacting a Fund directly by mail or telephone at
1-800-481-4404. The minimum amount for telephone redemptions is
$250.
If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares. Your broker or
institution may charge a fee for its services, in addition to the fees charged
by the Fund.
If you would like to sell $50,000 or more of your shares, please notify the Fund
in writing and include a signature guarantee by a bank or other financial
institution (a notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $100 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have a checking or
savings account with a bank, electronically transferred to your account.
Page 15 of 20
<PAGE>
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account (subject to a $10
fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR
THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS
CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).
REDEMPTIONS IN KIND
We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.
INVOLUNTARY SALES OF YOUR SHARES
***
If your account balance drops below the required minimum as a result of a
redemption, you may be required to sell your shares. The account balance
minimums are:
<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Institutional $100,000
Advisor $1,000
</TABLE>
But, we will always give you at least 60 days' written notice to give you time
to add to your account and avoid the sale of your shares.
***
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the New York Stock Exchange
restricts trading, the SEC declares an emergency or for other reasons. More
information about this is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting us directly by
mail or telephone.
You may also exchange shares through your financial institution by mail
or telephone. Exchange requests must be for an amount of at least
$100.
Page 16 of 20
<PAGE>
IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO
EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS
FROM YOUR DATE OF PURCHASE). This exchange privilege may be changed or canceled
at any time upon 60 days' notice.
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact business with the Fund over the telephone,
you will generally bear the risk of any loss.
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a distribution plan for Advisor Shares that allows the
Fund to pay distribution fees for the sale and distribution of Advisor Shares.
Because these fees are paid out of a Fund's assets continuously, over time
these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.
Distribution fees for Advisor Shares, as a percentage of average daily net
assets, are 0.25% for each Fund.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide incentives, in the
form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling shares of the Funds.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income annually.
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive
these distributions.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
Page 17 of 20
<PAGE>
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.
Each Fund will distribute substantially all of its income and realized capital
gains, if any. The dividends and distributions you receive may be subject to
federal, state and local taxation, depending upon your tax situation.
Distributions you receive from a Fund may be taxable whether or not you reinvest
them. Income distributions are generally taxable at ordinary income tax rates.
Capital gains distributions are generally taxable at the rates applicable to
long-term capital gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE
EVENT.
Some foreign governments levy withholding taxes against dividend and interest
income. Although in some countries a portion of these taxes is recoverable, the
non-recovered portion will reduce the income received from the securities
comprising the portfolio of the Friends Ivory European Social Awareness Fund.
THE FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND MAY BE ABLE TO PASS ALONG A TAX
CREDIT FOR FOREIGN INCOME TAXES IT PAYS. THE FUND WILL NOTIFY YOU IF IT GIVES
YOU THE CREDIT.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 18 of 20
<PAGE>
FRIENDS IVORY FUNDS
INVESTMENT ADVISER
Friends Ivory & Sime, Inc.
One World Trade Center
Suite 2101
New York, NY 10048
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, Pennsylvania 19103
More information about each Fund is available upon request and without charge
through the following:
STATEMENT OF ADDITIONAL
INFORMATION (SAI)
The SAI dated December __, 1999 includes detailed information about the Friends
Ivory Funds. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports will contain each Fund's holdings and contain information from the
Fund's managers about strategies, and recent market conditions and trends and
their impact on Fund performance. The reports will also contain detailed
financial information about the Funds.
TO OBTAIN MORE INFORMATION:
BY TELEPHONE: Call 1-800-481-4404
BY MAIL: Write to us at:
Friends Ivory Funds
P.O. Box 446
Portland, ME 04112
BY E-MAIL: _______@______
BY INTERNET:
www.friendsivoryfunds.com
Page 19 of 20
<PAGE>
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the Friends Ivory Funds, from the EDGAR
Database on the SEC's website ("http://www.sec.gov"). You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information on
the operation of the Public Reference Room, call 1-202-942-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102. You may also obtain this information, upon payment of
a duplicating fee, by e-mailing the SEC at the following address:
[email protected]. Friends Ivory Funds' Investment Company Act registration
number is 811-09601.
Page 20 of 20
<PAGE>
FRIENDS IVORY FUNDS
FRIENDS IVORY SOCIAL AWARENESS FUND
FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND
INVESTMENT ADVISER:
FRIENDS IVORY & SIME, INC.
INVESTMENT SUB-ADVISER:
FRIENDS IVORY & SIME PLC
This Statement of Additional Information is not a prospectus and relates only to
the Friends Ivory Social Awareness Fund ("Social Awareness") and the Friends
Ivory European Social Awareness Fund ("European Social Awareness") (each a
"Fund" and, together, the "Funds"). It is intended to provide additional
information regarding the activities and operations of the Friends Ivory Funds
(the "Trust"), and should be read in conjunction with the Funds' Prospectus
dated December ___, 1999. The Prospectus may be obtained without charge by
calling 1-800-481-4404.
TABLE OF CONTENTS
THE TRUST ..................................................................S-2
INVESTMENT OBJECTIVES.......................................................S-2
INVESTMENT POLICIES.........................................................S-2
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS.......................S-3
INVESTMENT LIMITATIONS......................................................S-10
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.........................S-11
THE ADVISER.................................................................S-11
THE SUB-ADVISER.............................................................S-12
THE ADMINISTRATOR...........................................................S-12
DISTRIBUTION AND SHAREHOLDER SERVICES.......................................S-13
TRUSTEES AND OFFICERS OF THE TRUST..........................................S-14
COMPUTATION OF YIELD AND TOTAL RETURN.......................................S-15
PURCHASE AND REDEMPTION OF SHARES...........................................S-15
DETERMINATION OF NET ASSET VALUE............................................S-16
TAXES.......................................................................S-16
PORTFOLIO TRANSACTIONS......................................................S-18
VOTING......................................................................S-19
DESCRIPTION OF SHARES.......................................................S-19
INDEPENDENT AUDITORS....................................................... S-20
CUSTODIAN...................................................................S-20
LEGAL COUNSEL...............................................................S-20
FINANCIAL STATEMENTS........................................................S-21
December ___, 1999
S-1
<PAGE>
THE TRUST
This Statement of Additional Information relates only to the Friends Ivory
Social Awareness Fund ("Social Awareness") and Friends Ivory European Social
Awareness Fund ("European Social Awareness") (each a "Fund" and, together the
"Funds"). Each is a separate series of Friends Ivory Funds (the "Trust"), an
open-end management investment company established as a Delaware business
trust under a Declaration of Trust dated September 14, 1999. The Declaration
of Trust permits the Trust to offer separate series of units of beneficial
interest (the "shares") and separate classes of funds. Each portfolio is a
separate mutual fund and each share of each portfolio represents an equal
proportionate interest in that portfolio. Shareholders may purchase shares
through two separate classes, Institutional Shares and Advisor Shares, which
provide for variations in distribution and shareholder servicing costs,
transfer agent fees, voting rights and dividends. Except for these
differences between the Institutional Shares and the Advisor Shares, each
share of each series represents an equal proportionate interest in that
series. Please see "Description of Shares" for more information.
INVESTMENT OBJECTIVES
FRIENDS IVORY SOCIAL AWARENESS FUND -- The Friends Ivory Social Awareness Fund
seeks long-term capital growth.
FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND -- The Friends Ivory European
Social Awareness Fund seeks long-term capital growth.
INVESTMENT POLICIES
FRIENDS IVORY SOCIAL AWARENESS FUND--The Friends Ivory Social Awareness Fund
invests primarily (and, under normal conditions, at least 65% of its total
assets) in a diversified portfolio of common stocks of U.S. issuers that the
Adviser believes have above-average earnings growth potential. The Fund seeks to
purchase securities that are well diversified across industries and issuers. The
Fund will limit its exposure to any single issuer to a maximum of 10% of its
assets. The Fund expects its investments to emphasize large capitalization
(companies with market capitalizations of over $1 billion) core growth
companies, but will typically invest in companies with market capitalizations of
over $10 billion.
Any remaining assets may be invested in other equity securities, including
convertible and preferred stocks, warrants and rights to purchase common
stocks, and the Fund may invest up to 10% of its total assets in American
Depository Receipts ("ADRs"). The Fund will only purchase securities that are
traded on registered exchanges or the over-the-counter market in the United
States. The Fund may purchase shares of other investment companies and
foreign securities, and may engage in securities lending transactions.
The Fund's investment manager, Friends Ivory & Sime, Inc., utilizes an
investment approach of socially responsible investing. The investment process
entails performing a disciplined bottom-up analysis to identify a company's
earnings and growth potential. Friends Ivory & Sime then employs fundamental
analyses to identify companies that qualify for further in-depth analysis,
including consideration of their current and historic earnings trends, quality
of management, recent developments and shareholder value. After appropriate
companies have been identified, Friends Ivory & Sime's Ethics Team conducts
social screens based on the Fund's ethical policies. This investment process
results in a list of companies that provide quality products that enhance or
sustain society or the environment, pursue diversity and progressive employment
practices, protect the environment, and demonstrate corporate accountability.
The investment process also filters out companies engaged in military
contracting, environmental damage or pollution, and promoting tobacco, alcohol
or gambling. Friends Ivory & Sime has developed and continually updates the
social screening criteria and ensures that each individual investment complies.
The result is a portfolio of companies, which are continually reviewed to
determine whether they meet the established ethical and investment criteria. If
an issuer is found to have breached the ethical criteria, the Fund will sell the
investment within 90 days of the discovery of the breach.
FRIENDS IVORY EUROPEAN SOCIAL AWARENESS FUND -- The Friends Ivory European
Social Awareness Fund invests primarily (and, under normal conditions, at least
65% of its total assets) in a diversified portfolio of equity securities of
issuers located in Austria, Belgium, Denmark, Finland, France, Germany, Ireland,
Italy, Netherlands, Portugal, Spain,
S-2
<PAGE>
Sweden, Switzerland and the United Kingdom. The Fund may also invest up to
10% of its assets in securities of European emerging market issuers.
The securities purchased by the Fund will be listed on recognized foreign
exchanges, but securities may be purchased in over-the-counter markets or in the
form of sponsored or unsponsored ADRs traded on registered exchanges or NASDAQ,
or sponsored or unsponsored European Depositary Receipts ("EDRs"), Continental
Depositary Receipts ("CDRs") or Global Depositary Receipts ("GDRs"). The Fund
expects its investments to emphasize large capitalization (companies with market
capitalizations of over $1 billion) growth companies.
The Fund may also invest in warrants and rights to purchase common stocks,
convertible and preferred stocks, and securities of other investment companies.
Although permitted to do so, the Fund does not currently intend to invest in
securities issued by passive foreign investment companies or to engage in
securities lending.
The Fund's investment manager, Friends Ivory & Sime plc, utilizes an investment
approach of socially responsible investing. The investment process entails
performing a disciplined bottom-up analysis to identify a company's earnings and
growth potential. Friends Ivory & Sime plc then employs fundamental analyses to
identify companies that qualify for further in-depth analysis, including
consideration of their current and historic earnings trends, quality of
management, recent developments and shareholder value. After appropriate
companies have been identified, Friends Ivory & Sime plc's Ethics Team conducts
social screens based on the Fund's ethical policies. This investment process
results in a list of companies that provide quality products that enhance or
sustain society or the environment, pursue diversity and progressive employment
practices, protect the environment, and demonstrate corporate accountability.
The investment process also filters out companies engaged in military
contracting, environmental damage or pollution, and promoting tobacco, alcohol
or gambling. Friends Ivory & Sime plc has developed and continually updates the
social screening criteria and ensures that each individual investment complies.
The result is a portfolio of companies, which are continually reviewed to
determine whether they meet the established ethical and investment criteria. If
an issuer is found to have breached the ethical criteria, the Fund will sell the
investment within 90 days of the discovery of the breach.
GENERAL INVESTMENT POLICIES
Each Fund may purchase securities on a when-issued basis and borrow money.
Each Fund may enter into futures and options transactions.
Each Fund may invest up to 15% of its net assets in illiquid securities.
Each Fund may purchase convertible securities.
Each Fund may enter into repurchase agreements.
Each Fund may purchase Rule 144A securities and other restricted securities.
Each Fund may purchase obligations of supranational entities.
Each Fund may, for temporary defensive purposes, invest up to 100% of its total
assets in money market instruments (including U.S. Government securities, bank
obligations, commercial paper rated in the highest rating category by an NRSRO,
repurchase agreements involving the foregoing securities), shares of money
market investment companies and cash.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
AMERICAN DEPOSITARY RECEIPTS ("ADRs")
S-3
<PAGE>
ADRs are securities, typically issued by a U.S. financial institution (a
"depositary"), that evidence ownership interests in a security or a pool of
securities issued by a foreign issuer and deposited with the depositary. ADRs
may be available through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the security underlying the
receipt and a depositary, whereas an unsponsored facility may be established by
a depositary without participation by the issuer of the underlying security.
Holders of unsponsored depositary receipts generally bear all the costs of the
unsponsored facility. The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through, to the holders of the
receipts, voting rights with respect to the deposited securities.
BORROWING
The Funds may borrow money equal to 5% of their total assets for temporary
purposes to meet redemptions or to pay dividends. Borrowing may exaggerate
changes in the net asset value of a Fund's shares and in the return on the
Fund's portfolio. Although the principal of any borrowing will be fixed, a
Fund's assets may change in value during the time the borrowing is outstanding.
The Funds may be required to liquidate portfolio securities at a time when it
would be disadvantageous to do so in order to make payments with respect to any
borrowing. The Funds may be required to segregate liquid assets in an amount
sufficient to meet their obligations in connection with such borrowings. In an
interest rate arbitrage transaction, a Fund borrows money at one interest rate
and lends the proceeds at another, higher interest rate. These transactions
involve a number of risks, including the risk that the borrower will fail or
otherwise become insolvent or that there will be a significant change in
prevailing interest rates.
CONVERTIBLE SECURITIES
Convertible securities are corporate securities that are exchangeable for a set
number of another security at a prestated price. Convertible securities
typically have characteristics of both fixed income and equity securities.
Because of the conversion feature, the market value of a convertible security
tends to move with the market value of the underlying stock. The value of a
convertible security is also affected by prevailing interest rates, the credit
quality of the issuer and any call provisions.
DERIVATIVES
Derivatives are securities that derive their value from other securities,
financial instruments or indices. The following are considered derivative
securities: options on futures, futures, options (E.G., puts and calls), swap
agreements, mortgage-backed securities (E.G., CMOs, REMICs, IOs and POs), when
issued securities and forward commitments, floating and variable rate
securities, convertible securities, "stripped" U.S. Treasury securities (E.G.,
Receipts and STRIPs), privately issued stripped securities (E.G., TGRs, TRs, and
CATs). See elsewhere in the "Description of Permitted Investments" for
discussions of these various instruments.
EQUITY SECURITIES
Equity securities include common stocks, preferred stocks, warrants, rights to
acquire common or preferred stocks, and securities convertible into or
exchangeable for common stocks. Investments in equity securities in general are
subject to market risks that may cause their prices to fluctuate over time. The
value of securities convertible into equity securities, such as warrants or
convertible debt, is also affected by prevailing interest rates, the credit
quality of the issuer and any call provision. Fluctuations in the value of
equity securities in which an equity Fund invests will cause the net asset value
of the Fund to fluctuate. An investment in an equity Fund may be more suitable
for long-term investors who can bear the risk of short-term principal
fluctuations. Equity securities are the principal investments of the Funds.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the
S-4
<PAGE>
term of the option. The Friends Ivory European Social Awareness Fund may use
futures contracts and related options for BONA FIDE hedging purposes, to offset
changes in the value of securities held or expected to be acquired or be
disposed of, to minimize fluctuations in foreign currencies, or to gain exposure
to a particular market or instrument. A Fund will minimize the risk that it will
be unable to close out a futures contract by only entering into futures
contracts which are traded on national futures exchanges. In addition, a Fund
will only sell covered futures contracts and options on futures contracts.
Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond index
futures contracts obligate the seller to deliver (and the purchaser to take) an
amount of cash equal to a specific dollar amount times the difference between
the value of a specific stock or bond index at the close of the last trading day
of the contract and the price at which the agreement is made.
Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to a
specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the futures
contract is originally struck. No physical delivery of the stocks or bonds
comprising the index is made; generally contracts are closed out prior to the
expiration date of the contracts.
No price is paid upon entering into futures contracts. Instead, a Fund would be
required to deposit an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin is in the nature of
a performance bond or good-faith deposit on a futures contract.
There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to predict movements
in the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund and the prices of
futures and options on futures; (3) there may not be a liquid secondary market
for a futures contract or option; (4) trading restrictions or limitations may be
imposed by an exchange; and (5) government regulations may restrict trading in
futures contracts and futures options.
A Fund may enter into futures contracts and options on futures contracts traded
on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"),
as long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of a Fund's net assets. A Fund may buy and sell futures contracts and related
options to manage its exposure to changing interest rates and securities prices.
Some strategies reduce a Fund's exposure to price fluctuations, while others
tend to increase its market exposure. Futures and options on futures can be
volatile instruments and involve certain risks that could negatively impact a
Fund's return.
In order to avoid leveraging and related risks, when a Fund purchases futures
contracts, it will collateralize its position by depositing an amount of cash or
liquid securities equal to the market value of the futures positions held, less
margin deposits, in a segregated account with its custodian. Collateral equal to
the current market value of the futures position will be marked to market on a
daily basis.
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HEDGING
Hedging is a strategy designed to offset investment risks. Hedging activities
include, among other things, the use of forwards, options and futures. There are
risks associated with hedging activities, including: (i) the success of a
hedging strategy may depend on an ability to predict movements in the prices of
individual securities, fluctuations in markets, and movements in interest and
currency exchange rates; (ii) there may be an imperfect or no correlation
between the changes in market value of the securities held by a Fund or the
currencies in which those securities are denominated and the prices of forward
contracts, futures and options on futures; (iii) there may not be a liquid
secondary market for a futures contract or option; and (iv) trading restrictions
or limitations may be imposed by an exchange, and government regulations may
restrict trading in currencies, futures contracts and options.
ILLIQUID SECURITIES
Illiquid securities are securities that cannot be disposed of within seven
business days at approximately the price at which they are being carried on the
Fund's books. Illiquid securities include demand instruments with demand notice
periods exceeding seven days, securities for which there is no active secondary
market, and repurchase agreements with durations or maturities over seven days
in length.
INVESTMENT COMPANY SHARES
Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, a Fund is prohibited from acquiring the
securities of another investment company if, as a result of such acquisition:
(1) the Fund owns more than 3% of the total voting stock of the other company;
(2) securities issued by any one investment company represent more than 5% of
the Fund's total assets; or (3) securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Fund. See also "Investment Limitations."
MONEY MARKET INSTRUMENTS
Money market securities are high-quality, dollar-denominated, short-term debt
instruments. They consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S. banks and U.S. branches
of foreign banks; (ii) U.S. Treasury obligations and obligations issued or
guaranteed by the agencies and instrumentalities of the U.S. Government; (iii)
high-quality commercial paper issued by U.S. and foreign corporations; (iv) debt
obligations with a maturity of one year or less issued by corporations with
outstanding high-quality commercial paper ratings; and (v) repurchase agreements
involving any of the foregoing obligations entered into with highly-rated banks
and broker-dealers.
OPTIONS
A put option gives the purchaser of the option the right to sell, and the writer
of the option the obligation to buy, the underlying security at any time during
the option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer is
the consideration for undertaking the obligations under the option contract. The
initial purchase (sale) of an option contract is an "opening transaction." In
order to close out an option position, a Fund may enter into a "closing
transaction," which is simply the sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened. If a Fund is unable to effect a closing purchase
transaction with respect to an option it has written, it will not be able to
sell the underlying security until the option expires or the Fund delivers the
security upon exercise.
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A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to anticipate an increase in
the market value of securities that the Fund may seek to purchase in the future.
A Fund purchasing put and call options pays a premium therefor. If price
movements in the underlying securities are such that exercise of the options
would not be profitable for a Fund, loss of the premium paid may be offset by an
increase in the value of the Fund's securities or by a decrease in the cost of
acquisition of securities by the Fund.
A Fund may write covered call options as a means of increasing the yield on its
portfolio and as a means of providing limited protection against decreases in
its market value. When a Fund sells an option, if the underlying securities do
not increase or decrease to a price level that would make the exercise of the
option profitable to the holder thereof, the option generally will expire
without being exercised and the Fund will realize as profit the premium received
for such option. When a call option written by a Fund is exercised, the Fund
will be required to sell the underlying securities to the option holder at the
strike price, and will not participate in any increase in the price of such
securities above the strike price. When a put option written by a Fund is
exercised, the Fund will be required to purchase the underlying securities at
the strike price, which may be in excess of the market value of such securities.
A Fund may purchase and write options on an exchange or over the counter. Over
the counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the SEC that OTC options are generally illiquid.
A Fund may purchase and write put and call options on foreign currencies (traded
on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency. With respect to put options on foreign currency
written by a Fund, the Fund will establish a segregated account with its
Custodian consisting of cash or liquid, high grade debt securities in an amount
equal to the amount the Fund would be required to pay upon exercise of the put.
A Fund may purchase and write put and call options on indices and enter into
related closing transactions. Put and call options on indices are similar to
options on securities except that options on an index give the holder the right
to receive, upon exercise of the option, an amount of cash if the closing level
of the underlying index is greater than (or less than, in the case of puts) 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 multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain or loss depends on
price movements in the particular market represented by the index generally,
rather than the price movements in individual securities. A Fund may choose to
terminate an option position by entering into a closing transaction. The ability
of a Fund to enter into closing transactions depends upon the existence of a
liquid secondary market for such transactions.
All options written on indices must be covered. When a Fund writes an option on
an index, it will establish a segregated account containing cash or liquid
securities with its custodian in an amount at least equal to the market value of
the option and will maintain the account while the option is open or will
otherwise cover the transaction.
RISK FACTORS: Risks associated with options transactions include: (1) the
success of a hedging strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation between the movement
in prices of options and the securities underlying them; (3) there may not be a
liquid secondary market for options; and (4) while a Fund will receive a premium
when it writes covered call options, it may not participate fully in a rise in
the market value of the underlying security.
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PORTFOLIO TURNOVER
It is possible that an annual portfolio turnover rate in excess of 100% may
result from the Adviser's investment strategy. Portfolio turnover rates in
excess of 100% may result in higher transaction costs, including increased
brokerage commissions, and higher levels of taxable capital gain. Under normal
circumstances a typical turnover for similar accounts run by the Adviser has
been 30%-50%.
REITS
The Funds may invest in real estate investment trusts ("REITs"), which pool
investors' funds for investment in income producing commercial real estate or
real estate related loans or interests.
A REIT is not taxed on income distributed to its shareholders or unitholders if
it complies with regulatory requirements relating to its organization,
ownership, assets and income, and with a regulatory requirement that it
distribute to its shareholders or unitholders at least 95% of its taxable income
for each taxable year. Generally, REITs can be classified as Equity REITs,
Mortgage REITs and Hybrid REITs. Equity REITs invest the majority of their
assets directly in real property and derive their income primarily from rents
and capital gains from appreciation realized through property sales. Mortgage
REITs invest the majority of their assets in real estate mortgages and derive
their income primarily from interest payments. Hybrid REITs combine the
characteristics of both Equity and Mortgage REITs. A shareholder in a Fund
should realize that by investing in REITs indirectly through the Fund, he or she
will bear not only his or her proportionate share of the expenses of the Fund,
but also indirectly, similar expenses of underlying REITs.
A Fund may be subject to certain risks associated with the direct investments of
the REITs. REITs may be affected by changes in the value of their underlying
properties and by defaults by borrowers or tenants. Mortgage REITs may be
affected by the quality of the credit extended. Furthermore, REITs are dependent
on specialized management skills. Some REITs may have limited diversification
and may be subject to risks inherent in financing a limited number of
properties. REITs depend generally on their ability to generate cash flow to
make distributions to shareholders or unitholders, and may be subject to
defaults by borrowers and to self-liquidations. In addition, the performance of
a REIT may be affected by its failure to qualify for tax-free pass-through of
income under the Code or its failure to maintain exemption from registration
under the 1940 Act.
RIGHTS
Rights give existing shareholders of a corporation the right, but not the
obligation, to buy shares of the corporation at a given price, usually below the
offering price, during a specified period.
RULE 144A SECURITIES
Rule 144A securities are securities exempt from registration on resale pursuant
to Rule 144A under the 1933 Act. Rule 144A securities are traded in the
institutional market pursuant to this registration exemption, and, as a result,
may not be as liquid as exchange-traded securities since they may only be resold
to certain qualified institutional investors. Due to the relatively limited size
of this institutional market, these securities may affect the Fund's liquidity
to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing such securities. Nevertheless, Rule 144A securities
may be treated as liquid securities pursuant to guidelines adopted by the
Trust's Board of Trustees.
SECURITIES LENDING
In order to generate additional income, a Fund may lend its securities pursuant
to agreements requiring that the loan be continuously secured by collateral
consisting of cash or securities of the U.S. Government or its agencies equal to
at least 100% of the market value of the loaned securities. A Fund continues to
receive interest on the loaned securities while simultaneously earning interest
on the investment of cash collateral. Collateral is marked to market daily.
There may be risks of delay in recovery of the securities or even loss of rights
in the collateral should the borrower of the securities fail financially or
become insolvent.
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SECURITIES OF FOREIGN ISSUERS
The Funds may invest in securities of foreign issuers with a strong U.S. trading
presence and in sponsored and unsponsored ADRs. Investments in the securities of
foreign issuers may subject the Funds to investment risks that differ in some
respects from those related to investments in securities of U.S. issuers. Such
risks include future adverse political and economic developments, possible
imposition of withholding taxes on income, possible seizure, nationalization or
expropriation of foreign deposits, possible establishment of exchange controls
or taxation at the source or greater fluctuation in value due to changes in
exchange rates. Foreign issuers of securities often engage in business practices
different from those of domestic issuers of similar securities, and there may be
less information publicly available about foreign issuers. In addition, foreign
issuers are, generally speaking, subject to less government supervision and
regulation than are those in the United States. Investments in securities of
foreign issuers are frequently denominated in foreign currencies and the value
of a Fund's assets measured in U.S. dollars may be affected favorably or
unfavorably by changes in currency rates and in exchange control regulations,
and the Funds may incur costs in connection with conversions between various
currencies. Moreover, investments in emerging market nations may be considered
speculative, and there may be a greater potential for nationalization,
expropriation or adverse diplomatic developments (including war) or other events
which could adversely effect the economies of such countries or investments in
such countries. Securities of foreign issuers are the principal investments of
the Friends Ivory European Social Awareness Fund.
U.S. GOVERNMENT SECURITIES
U.S. Government Securities are bills, notes and bonds issued by the U.S.
Government and backed by the full faith and credit of the United States.
U.S. TREASURY OBLIGATIONS
U.S. Treasury Obligations are bills, notes and bonds issued by the U.S.
Treasury, and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interested and Principal Securities ("STRIPS") and
Coupon Under Book Entry Safekeeping ("CUBES").
WARRANTS
Warrants are instruments giving holders the right, but not the obligation, to
buy equity or fixed income securities of a company at a given price during a
specified period.
YEAR 2000
The Funds depend on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Funds could be adversely affected if the computer systems
used by their service providers do not properly process dates on and after
January 1, 2000 and distinguish between the year 2000 and the year 1900. The
Funds have asked their mission critical service providers whether they expect to
have their computer systems adjusted for the year 2000 transition, and have
sought and received assurances from such service providers that they are
devoting significant resources to prevent material adverse consequences to the
Funds. While such assurances have been received, the Funds and their
shareholders may experience losses if these assurances prove to be incorrect or
as a result of year 2000 computer difficulties experienced by issuers of
portfolio securities or third parties, such as custodians, banks, broker-dealers
or others with which the Funds do business.
Furthermore, many foreign countries are not as prepared as the U.S. for the year
2000 transition. As a result, computer difficulties in foreign markets and with
foreign institutions as a result of the year 2000 may add to the possibility of
losses to the Funds and their shareholders.
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INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations are fundamental policies of each Fund which
cannot be changed with respect to a Fund without the consent of the holders of a
majority of that Fund's outstanding shares. The term "majority of the
outstanding shares" means the vote of (i) 67% or more of a Fund's shares present
at a meeting, if more than 50% of the outstanding shares of a Fund are present
or represented by proxy, or (ii) more than 50% of a Fund's outstanding shares,
whichever is less.
No Fund may:
1. (i) Purchase securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies or
instrumentalities and repurchase agreements involving such securities) if,
as a result, more than 5% of the total assets of the Fund would be invested
in the securities of such issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer. This restriction applies
to 75% of each Fund's total assets.
2. Purchase any securities which would cause 25% or more of the total assets
of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and repurchase agreements involving such securities.
3. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate the Fund to purchase securities or require
the Fund to segregate assets are not considered to be borrowings. Asset
coverage of at least 300% is required for all borrowings, except where the
Fund has borrowed money for temporary purposes in amounts not exceeding 5%
of its total assets. Each Fund will not purchase securities while its
borrowings exceed 5% of its total assets.
4. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that each Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii)
enter into repurchase agreements; and (iii) lend its securities.
5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase: (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts; and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
6. Issue senior securities (as defined in the Investment Company Act of 1940
(the "1940 Act")) except as permitted by rule, regulation or order of the
Securities and Exchange Commission (the "SEC").
7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
The foregoing percentages (except with respect to the limitation on borrowing)
will apply at the time of the purchase of a security and shall not be
considered violated unless an excess or deficiency occurs immediately after or
as a result of a purchase of such security.
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NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of each Fund
and may be changed with respect to a Fund by the Board of Trustees.
No Fund may:
1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Fund's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each Fund
may (i) obtain short-term credits as necessary for the clearance of
security transactions; (ii) provide initial and variation margin payments
in connection with transactions involving futures contracts and options on
such contracts; and (iii) make short sales "against the box" or in
compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities.
Unregistered securities sold in reliance on the exemption from registration in
Section 4(2) of the 1933 Act and securities exempt from registration on re-sale
pursuant to Rule 144A of the 1933 Act may be treated as liquid securities under
procedures adopted by the Board of Trustees.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To Fund management's knowledge, the following persons owned beneficially 5%
or more of each Fund's outstanding shares, as of December 15, 1999. Friends
Ivory & Sime, Inc., One World Trade Center, Suite 2101, New York, NY 10048,
owned 100% of each Fund's outstanding shares.
THE ADVISER
Friends Ivory & Sime, Inc., One World Trade Center, Suite 2101, New York, NY
10048, is a professional investment management firm whose predecessor was
founded on May 2, 1975. Friends Ivory & Sime plc is the controlling shareholder
of the Adviser, and Peter Derek Jones is the Chairman of the Adviser. As of
September 30, 1999, the Adviser had discretionary management authority with
respect to approximately $4.2 billion of assets.
The Adviser serves as the investment adviser for each Fund under an investment
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement, the
Adviser makes the investment decisions for the assets of each Fund and
continuously reviews, supervises and administers each Fund's investment program,
subject to the supervision of, and policies established by, the Trustees of the
Trust.
The Advisory Agreement provides that the Adviser shall not be protected against
any liability to the Trust or its shareholders by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard of its obligations or duties thereunder.
The continuance of the Advisory Agreement as to any Fund after the first two
years must be specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of that Fund, and (ii) by the vote of
a majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust or, with respect to any Fund,
by a majority of the outstanding shares of that Fund, on not less than 30 days'
nor more than 60 days' written notice to the Adviser, or by the Adviser on 90
days' written notice to the Trust.
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THE SUB-ADVISER
Friends Ivory & Sime plc, 15 Old Bailey, London EC4M 7AP, United Kingdom, is
a professional investment management firm whose predecessor was founded in
1895. Peter Derek Jones is the CEO of the Sub-Adviser and John Stubbs is the
Director of the Sub-Adviser. As of September 30, 1999, the Sub-Adviser had
discretionary management authority with respect to approximately $52 billion
of assets.
The Sub-Adviser serves as the investment adviser for the Friends Ivory European
Social Awareness Fund ("European Social Awareness") under an investment
sub-advisory agreement (the "Sub-Advisory Agreement"). Under the Sub-Advisory
Agreement, the Sub-Adviser makes the investment decisions for the assets of
Friends Ivory European Social Awareness and continuously reviews, supervises and
administers Friends Ivory European Social Awareness Fund's investment program,
subject to the supervision of, and policies established by, the Trustees of the
Trust.
The Sub-Advisory Agreement provides that the Sub-Adviser shall not be protected
against any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard of its obligations or duties thereunder.
The continuance of the Sub-Advisory Agreement as to any Fund after the first two
years must be specifically approved at least annually (i) by the vote of the
Trustees or by a vote of the shareholders of that Fund, and (ii) by the vote of
a majority of the Trustees who are not parties to the Sub-Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Sub-Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at any
time without penalty by the Trustees of the Trust or, with respect to any Fund,
by a majority of the outstanding shares of that Fund, on not less than 30 days'
nor more than 60 days' written notice to the Sub-Adviser, or by the Sub-Adviser
on 90 days' written notice to the Trust.
THE ADMINISTRATOR
The Trust and SEI Investments Mutual Funds Services (the "Administrator") have
entered into an administration agreement (the "Administration Agreement"). The
Administration Agreement provides that the Administrator shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which the Administration Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Administrator in the performance of its duties or from
reckless disregard by it of its duties and obligations thereunder. The
Administration Agreement shall remain in effect for an Initial Term of three (3)
years after the effective date of the agreement and thereafter, for successive
periods of two (2) years unless terminated by either party on not less than 90
days' prior written notice to the other party.
The continuance of the Administration Agreement must be specifically approved at
least annually (i) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Fund, and (ii) by the vote
of a majority of the Trustees of the Trust who are not parties to the
Administration Agreement or an "interested person" (as that term is defined in
the 1940 Act) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement may be terminated only: (a)
by the mutual written agreement of the parties; (b) by either party hereto on 90
days' written notice, as of the end of the Initial Term or the end of any
Renewal Term; (c) by either party hereto on such date as is specified in written
notice given by the terminating party, in the event of a material breach of this
Agreement by the other party, provided the terminating party has notified the
other party of such breach at least 45 days prior to the specified date of
termination and the breaching party has not remedied such breach by the
specified date; (d) effective upon the liquidation of the Administrator; or (e)
as to any Fund or the Trust, effective upon the liquidation of such Fund or the
Trust, as the case may be. For purposes of this Agreement, the term
"liquidation" shall mean a transaction in which the assets of the Administrator,
the Trust or a Fund are sold or otherwise disposed of and proceeds therefrom are
distributed in cash to the shareholders in complete liquidation of the interests
of such shareholders in the entity.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Administrator. SEI Investments and its
subsidiaries and
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affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors, and
money managers. The Administrator and its affiliates also serve as administrator
or sub-administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, Alpha Select Funds, Amerindo Funds,
Inc., The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CNI Charter Funds, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis
Fund, Inc., Oak Associates Funds, The Parkstone Advantage Fund, The PBHG
Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
International Trust, SEI Institutional Investments Trust, SEI Institutional
Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic
Funds, STI Classic Variable Trust, TIP Funds, UAM Funds Trust, UAM Funds,
Inc. II and UAM Funds, Inc.
DISTRIBUTION AND SHAREHOLDER SERVICES
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned subsidiary
of SEI Investments, and the Trust are parties to a distribution agreement (the
"Distribution Agreement") with respect to shares of the Funds. The Distributor
receives no compensation for distribution of shares of the Funds.
The Distribution Agreement shall remain in effect for a period of two years
after the effective date of the agreement and is renewable annually. The
Distribution Agreement may be terminated by the Distributor, by a majority vote
of the Trustees who are not interested persons and have no financial interest in
the Distribution Agreement or by a majority vote of the outstanding securities
of the Trust upon not more than 60 days' written notice by either party or upon
assignment by the Distributor.
The Trust has adopted a Distribution Plan (the "Plan") for the Advisor Shares
of the Funds in accordance with the provisions of Rule 12b-1 under the 1940
Act which regulates circumstances under which an investment company may
directly or indirectly bear expenses relating to the distribution of its
shares. In this regard, the Board of Trustees has determined that the Plan is
in the best interests of the shareholders. Continuance of the Plan must be
approved annually by a majority of the Trustees of the Trust and by a
majority of the Qualified Trustees, as defined in the Plan. The Plan requires
that quarterly written reports of amounts spent under the Plan and the
purposes of such expenditures be furnished to and reviewed by the Trustees.
The Plan may not be amended to increase materially the amount which may be
spent thereunder without approval by a majority of the outstanding shares of
the Fund or class affected. All material amendments of the Plan will require
approval by a majority of the Trustees of the Trust and of the Qualified
Trustees.
The Plan provides that the Trust will pay a fee of up to 0.25% of the average
daily net assets of each Fund's Advisor Shares that the Distributor can use
to compensate broker-dealers and service providers, including SEI Investments
Distribution Co. and its affiliates, which provide distribution-related
services to the Funds' Advisor shareholders or their customers who
beneficially own Advisor Shares.
The distribution-related services that may be provided under the Plan include
shareholder services such as establishing and maintaining customer accounts and
records; aggregating and processing purchase and redemption requests from
customers; placing net purchase and redemption orders with the Distributor;
and automatically investing customer account cash balances.
Except to the extent that the Adviser benefitted through increased fees from an
increase in the net assets of the Trust which may have resulted in part from the
expenditures, no interested person of the Trust nor any Trustee of the Trust who
is not an interested person of the Trust had a direct or indirect financial
interest in the operation of the Plan or related agreements.
S-13
<PAGE>
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws of the State of Delaware. The Trustees have approved contracts under which,
as described above, certain companies provide essential management services to
the Trust. The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth below. Each may have held
other positions with the named companies during that period. The Trust pays the
fees for unaffiliated Trustees.
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during
that period. Unless otherwise noted, the business address of each Trustee and
each Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456.
Certain officers of the Trust also serve as officers of some or all of the
following: The Achievement Funds Trust, The Advisors' Inner Circle Fund,
Alpha Select Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CNI Charter Funds, CUFUND,
The Expedition Funds, First American Funds, Inc., First American Investment
Funds, Inc., First American Strategy Funds, Inc., HighMark Funds, Huntington
Funds, The Nevis Fund, Inc., Oak Associates Funds, The Parkstone Advantage
Fund, The Parkstone Group of Funds, The PBHG Funds, Inc., PBHG Insurance
Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust, and TIP Funds, each of which is an open-end management investment
company managed by SEI Investments Mutual Funds Services or its affiliates
and distributed by SEI Investments Distribution Co.
TRUSTEES
* J. ROBERT BLOOM, JR. (DOB 08/15/41) - Trustee - President and CEO, Friends
Ivory & Sime, Inc., since 1986.
STEPHEN VIEDERMAN (DOB 03/21/35) - Trustee - President and Director, Jessie
Smith Noyes Foundation (Philanthropy) since 1986.
MARK BOLES (DOB 05/25/60) - Trustee - Teacher, Perth Amboy Adult School since
1995; Teacher, St. Anthony's High School, 1994-1995.
VIDETTE BULLOCK MIXON (DOB 08/27/52) - Trustee - Director of Corporate Relations
and Social Concerns, General Board of Pension and Health Benefits, the United
Methodist Church, since May 1981.
OFFICERS
GEORGE WALKER (DOB 07/25/61) - President - Chief Marketing Officer, Friends
Ivory & Sime, Inc., since 1991.
ANDREW M. PRINGLE (DOB 10/27/59) - Senior Vice President - Director and
Investment Manager, Friends Ivory & Sime, Inc., since 1985.
DEBRA L. LISS (DOB 10/29/57) - Vice President - Vice President, Intermediary
Marketing, Friends Ivory & Sime, Inc., since 1999. Regional Sales
Representative, Oppenheimer Funds (mutual funds), 1993-1998.
JOHN H. GRADY, JR. (DOB 06/01/61) - Secretary - 1701 Market Street,
Philadelphia, Pennsylvania 19103, Partner, Morgan, Lewis & Bockius LLP (law
firm), counsel to the Trust, SEI Investments, the Administrator and the
Distributor.
S-14
<PAGE>
JAMES F. VOLK - (DOB 08/28/62) - Treasurer - Accounting Director of the
Administrator since 1996. Assistant Chief Accountant, U.S. Securities and
Exchange Commission, Division of Investment Management, 1993-1996.
JAMES R. FOGGO (DOB 06/30/64) - Assistant Secretary - Vice President and
Assistant Secretary of SEI Investments since 1998 and Vice President and
Assistant Secretary of the Administrator and Distributor since 1999.
Associate, Paul Weiss, Rifkind, Wharton & Garrison (law firm), 1998.
Associate, Baker & McKenzie (law firm), 1995-1998. Associate, Battle Fowler,
L.L.P. (law firm), 1993-1995. Operations Manager, The Shareholder Services
Group, Inc., 1986-1990.
EDWARD T. SEARLE (DOB 04/03/54) - Assistant Treasurer - Vice President and
Assistant Secretary of the Administrator and Distributor since 1999;
Associate, Drinker Biddle & Reath LLP (law firm), 1998-1999; Associate,
Ballard Spahr Andrews & Ingersoll LLP (law firm), 1995-1998.
- ------
* A Trustee who is an "interested person" as defined in the Investment
Company Act.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust compensates the Independent Trustees in the
amount of $2,000 per meeting, ($8,000 per year if all meetings attended),
plus reimbursement for all out-of-pocket expenses.
COMPUTATION OF YIELD AND TOTAL RETURN
From time to time the Trust may advertise yield and total return of the Funds.
These figures will be based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The yield
is calculated by assuming that the income generated by the investment during
that 30-day period is generated in each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:
Yield = 2[((a-b)/cd + 1) TO THE POWER OF 6 - 1] where a = dividends and
interest earned during the period; b = expenses accrued for the period (net
of reimbursement); c = the current daily number of shares outstanding during
the period that were entitled to receive dividends; and d = the maximum
offering price per share on the last day of the period.
The total return of a Fund refers to the average compounded rate of return to a
hypothetical investment for designated time periods (including, but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula: P (1 + T) TO THE POWER OF n = ERV, where P = a
hypothetical initial payment of $1,000; T = average annual total return; n =
number of years; and ERV = ending redeemable value, as of the end of the
designated time period, of a hypothetical $1,000 payment made at the
beginning of the designated time period.
PURCHASE AND REDEMPTION OF SHARES
Purchases and redemptions may be made through Forum Financial Group, (the
"Transfer Agent") on days when the New York Stock Exchange is open for business.
Currently, the weekdays on which the Fund is closed for business are: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Shares of each
Fund are offered on a continuous basis.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions
in whole or in part by a distribution in-kind of securities held by a Fund in
lieu of cash. However, a shareholder will at all times be entitled to
aggregate cash redemptions from all Funds of the Trust during any 90 day
period of up to the lesser of $25,000 or 1% of the Trust's net assets.
Shareholders may incur brokerage charges on the sale of any such securities
so received in payment of redemptions.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of
which disposal or valuation of a Fund's securities is not reasonably
practicable, or for such other periods as the SEC has by order permitted. The
Trust also reserves the right to suspend sales of shares of any Fund for any
period during which the New York Stock Exchange, the Adviser, the
Administrator, the Transfer Agent and/or the Custodian are not open for
business.
S-15
<PAGE>
DETERMINATION OF NET ASSET VALUE
The securities of each Fund are valued by the Administrator. The Administrator
may use an independent pricing service to obtain valuations of securities. The
pricing service relies primarily on prices of actual market transactions as well
as on trade quotations obtained from third parties. However, the pricing service
may use a matrix system to determine valuations of fixed income securities. This
system considers such factors as security prices, yields, maturities, call
features, ratings and developments relating to specific securities in arriving
at valuations. The procedures used by the pricing service and its valuation are
reviewed by the officers of the Trust under the general supervision of the
Trustees.
If there is no readily ascertainable market value for a security, the
Administrator will make a good faith determination as to the "fair value" of the
security.
Securities with remaining maturities of 60 days or less will be valued by the
amortized cost method, which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization of maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by this method, is higher or lower than the
price the Trust would receive if it sold the instrument.
TAXES
The following is only a summary of certain tax considerations generally
affecting the Funds and their shareholders, and is not intended as a substitute
for careful tax planning. Shareholders are urged to consult their tax advisors
with specific reference to their own tax situations, including their state and
local tax liabilities.
FEDERAL INCOME TAX
The following is only a summary of certain additional federal tax considerations
generally affecting the Funds and their shareholders that are not discussed in
the Funds' Prospectus. No attempt is made to present a detailed explanation of
the federal, state or local tax treatment of the Funds or their shareholders and
the discussion here and in the Funds' Prospectus is not intended as a substitute
for careful tax planning.
The discussion of federal income tax consequences is based on the Internal
Revenue Code of 1986 (the "Code") and the regulations issued thereunder as in
effect on the date of this Statement of Additional Information. New legislation,
as well as administrative changes or court decisions, may significantly change
the conclusions expressed herein, and may have a retroactive effect with respect
to the transactions contemplated herein.
Each Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each Fund
expects to eliminate or reduce to a nominal amount the federal taxes to which it
may be subject.
In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, or certain other income (including
gains from options, futures or forward contracts); (ii) at the close of each
quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. Government securities,
securities of other RICs and other securities, with such other securities
limited, in respect to any one issuer, to an amount that does not exceed 5% of
the value of the Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iii) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its assets
may be invested in
S-16
<PAGE>
securities (other than U.S. Government securities or the securities of other
RICs) of any one issuer, or of two or more issuers which are engaged in the
same, similar or related trades or business if the Fund owns at least 20% of
the voting power of such issuer.
Notwithstanding the Distribution Requirement described above, which requires
only that the Fund distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), a
Fund will be subject to a nondeductible 4% federal excise tax to the extent it
fails to distribute by the end of any calendar year 98% of its ordinary income
for that year and 98% of its capital gain net income (the excess of short- and
long-term capital gains over short- and long-term capital losses) for the
one-year period ending on October 31 of that year, plus certain other amounts.
Each Fund intends to make sufficient distributions to avoid liability for the
federal excise tax. A Fund may in certain circumstances be required to liquidate
Fund investments in order to make sufficient distributions to avoid federal
excise tax liability at a time when the investment advisor might not otherwise
have chosen to do so, and liquidation of investments in such circumstances may
affect the ability of a Fund to satisfy the requirements for qualification as a
RIC.
Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than twelve months, and otherwise will be treated
as short-term capital gain or loss. However, if shares on which a shareholder
has received a net capital gain distribution are subsequently sold, exchanged or
redeemed and such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent of the net
capital gain distribution. Long-term capital gains are currently taxed at a
maximum federal rate of 20% and short-term capital gains are currently taxed at
ordinary income tax rates.
In certain cases, a Fund will be required to withhold, and remit to the United
States Treasury, 31% of any distributions paid to a shareholder who (1) has
failed to provide a correct taxpayer identification number, (2) is subject to
backup withholding by the Internal Revenue Service, or (3) has not certified to
that Fund that such shareholder is not subject to backup withholding.
If any Fund fails to qualify as a RIC for any taxable year, it will be taxable
at regular corporate rates. In such an event, all distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits, and such
distributions may generally be eligible for the corporate dividends-received
deduction.
Funds may, in certain circumstances involving tax-free reorganizations, accept
securities that are appropriate investments as payment for Fund shares (an
"In-Kind Purchase"). An In-Kind Purchase may result in adverse tax consequences
under certain circumstances to either the investors transferring securities for
shares (an "In-Kind Investors") or to investors who acquire shares of the Fund
after a transfer ("new shareholders"). As a result of an In-Kind Purchase, the
Funds may acquire securities that have appreciated in value or depreciated in
value from the date they were acquired. If appreciated securities were to be
sold after an In-Kind Purchase, the amount of the gain would be taxable to new
shareholders as well as to In-Kind Investors. The effect of this for new
shareholders would be to tax them on a distribution that represents a return of
the purchase price of their shares rather than an increase in the value of their
investment. The effect on In-Kind Investors would be to reduce their potential
liability for tax on capital gains by spreading it over a larger asset base. The
opposite may occur if the Funds acquire securities having an unrealized capital
loss. In that case, In-Kind Investors will be unable to utilize the loss to
offset gains, but, because an In-Kind Purchase will not result in any gains, the
inability of In-Kind Investors to utilize unrealized losses will have no
immediate tax effect. For new shareholders, to the extent that unrealized losses
are realized by the Funds, new shareholders may benefit by any reduction in net
tax liability attributable to the losses. The Adviser cannot predict whether
securities acquired in any In-Kind Purchase will have unrealized gains or losses
on the date of the In-Kind Purchase. Consistent with its duties as investment
adviser, the Adviser will, however, take tax consequences to investors into
account when making decisions to sell portfolio assets, including the impact of
realized capital gains on shareholders of the Funds.
S-17
<PAGE>
The Funds may use a tax management technique known as "highest in, first out."
Using this technique, the portfolio holdings that have experienced the smallest
gain or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.
STATE TAXES
No Fund is liable for any income or franchise tax in Delaware if it qualifies as
a RIC for federal income tax purposes. Distributions by any Fund to shareholders
and the ownership of shares may be subject to state and local taxes.
PORTFOLIO TRANSACTIONS
The Adviser and Sub-Adviser are authorized to select brokers and dealers to
effect securities transactions for the Funds. The Adviser and Sub-Adviser will
seek to obtain the most favorable net results by taking into account various
factors, including price, commission, if any, size of the transactions and
difficulty of executions, the firm's general execution and operational
facilities and the firm's risk in positioning the securities involved. While the
Adviser and Sub-Adviser generally seek reasonably competitive spreads or
commissions, a Fund will not necessarily be paying the lowest spread or
commission available. The Adviser and Sub-Adviser seek to select brokers or
dealers that offer a Fund best price and execution or other services which are
of benefit to the Fund.
The Adviser and Sub-Adviser may, consistent with the interests of the Funds,
select brokers on the basis of the research services they provide to the Adviser
(or Sub-Adviser). Such services may include analyses of the business or
prospects of a company, industry or economic sector, or statistical and pricing
services. Information so received by the Adviser and Sub-Adviser will be in
addition to and not in lieu of the services required to be performed by the
Adviser (or Sub-Adviser) under the Advisory Agreement (or Sub-Advisory
Agreement). If, in the judgment of the Adviser (or Sub-Adviser), a Fund or other
accounts managed by the Adviser (or Sub-Adviser) will be benefitted by
supplemental research services, the Adviser (or Sub-Adviser) is authorized to
pay brokerage commissions to a broker furnishing such services which are in
excess of commissions which another broker may have charged for effecting the
same transaction. These research services include advice, either directly or
through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on economic factors and trends; assisting in determining portfolio
strategy; providing computer software used in security analyses; and providing
portfolio performance evaluation and technical market analyses. The expenses of
the Adviser (or Sub-Adviser) will not necessarily be reduced as a result of the
receipt of such supplemental information, such services may not be used
exclusively, or at all, with respect to a Fund or account generating the
brokerage, and there can be no guarantee that the Adviser (or Sub-Adviser) will
find all of such services of value in advising that Fund.
The Funds may execute brokerage or other agency transactions through the
Distributor, which is a registered broker-dealer, for a commission in conformity
with the 1940 Act, the Securities Exchange Act of 1934 and rules promulgated by
the SEC. Under these provisions, the Distributor is permitted to receive and
retain compensation for effecting portfolio transactions for a Fund on an
exchange if a written contract is in effect between the Trust and the
Distributor expressly permitting the Distributor to receive and retain such
compensation. These rules further require that commissions paid to the
Distributor by a Fund for exchange transactions not exceed "usual and customary"
brokerage commissions. The rules define "usual and customary" commissions to
include amounts which are "reasonable and fair compared to the commission, fee
or other remuneration received or to be received by other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time." The Trustees,
including those who are not "interested persons" of the Trust, have adopted
procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically.
It is not the Funds' practice to allocate brokerage or principal business on the
basis of sales of its shares which may be made through such firms. However, the
Adviser (or Sub-Adviser) may place portfolio orders with qualified
broker-dealers who recommend a Fund's shares to clients, and may, when a number
of brokers and dealers can provide best
S-18
<PAGE>
net results on a particular transaction, consider such recommendations by a
broker or dealer in selecting among broker-dealers.
VOTING
Each share held entitles the shareholder of record to one vote for each dollar
invested. In other words, each shareholder of record is entitled to one vote for
each dollar of net asset value of the shares held on the record date for the
meeting. Shares issued by each Fund have no preemptive, conversion, or
subscription rights. Each whole share shall be entitled to one vote and each
fractional share shall be entitled to a proportionate fractional vote. Each
Fund, as a separate series of the Trust, votes separately on matters affecting
only that Fund. Voting rights are not cumulative. Shareholders of each Class of
each Fund will vote separately on matters pertaining solely to that Fund or that
Class. As a Delaware business trust, the Trust is not required to hold annual
meetings of shareholders, but approval will be sought for certain changes in the
operation of the Trust and for the election of Trustees under certain
circumstances.
In addition, a Trustee may be removed by the remaining Trustees or by
shareholders at a special meeting called upon written request of shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested, the Trust will provide appropriate assistance and
information to the shareholders requesting the meeting.
Where the Trust's Prospectuses or Statements of Additional Information state
that an investment limitation or a fundamental policy may not be changed without
shareholder approval, such approval means the vote of (i) 67% or more of the
affected Fund's shares present at a meeting if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the affected Fund's outstanding shares, whichever is less.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
portfolios and shares of each portfolio. Each share of a portfolio represents
an equal proportionate interest in that portfolio with each other share.
Shares are entitled upon liquidation to a PRO RATA share in the net assets of
the portfolio, after taking into account additional distribution and
shareholder servicing expenses attributable to the Advisor Class Shares.
Shareholders have no preemptive rights. The Declaration of Trust provides
that the Trustees of the Trust may create additional series of shares or
separate classes of funds. All consideration received by the Trust for shares
of any portfolio or separate class and all assets in which such consideration
is invested would belong to that portfolio or separate class and would be
subject to the liabilities related thereto. Share certificates representing
shares will not be issued.
S-19
<PAGE>
CUSTODIAN
Chase Manhattan Bank acts as the custodian (the "Custodian") of the Trust. The
Custodian holds cash, securities and other assets of the Trust as required by
the 1940 Act, as amended.
INDEPENDENT AUDITORS
Ernst & Young LLP, 2 Commerce Square, 2001 Market Street, Suite 4000,
Philadelphia, Pennsylvania 19103, serves as independent auditors to the Trust.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, Pennsylvania
19103, serves as counsel to the Trust.
FINANCIAL STATEMENTS
see next page.
S-20
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- -------------------------------------------------------------------------------
FRIENDS IVORY FUNDS
DECEMBER 15, 1999
<TABLE>
<CAPTION>
------------------- ----------------------
SOCIAL EUROPEAN
AWARENESS SOCIAL
FUND AWARENESS
FUND
------------------- ----------------------
<S> <C> <C>
ASSETS:
Cash $ 50,000 $ 50,000
Total Assets $ 50,000 $ 50,000
LIABILITIES: - -
NET ASSETS: $ 50,000 $ 50,000
-------- --------
Shares of beneficial interest issued and
outstanding (unlimited authorization--no par
value)- Advisor Shares $ 5,000 $ 5,000
-------- --------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION
PRICE PER SHARE - ADVISOR SHARES $ 10.00 $ 10.00
-------- --------
</TABLE>
SEE ACCOMPANY NOTES ON THE FOLLOWING PAGE.
S-21
<PAGE>
NOTES TO FINANCIAL STATEMENTS
FRIENDS IVORY FUNDS
DECEMBER 15, 1999
1. ORGANIZATION
Friends Ivory Funds (the "Trust") was organized as a Delaware business trust on
September 29, 1999. The Trust is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company consisting of two
Funds: Friends Ivory Social Awareness Fund and Friends Ivory European Social
Awareness Fund (collectively the "Funds", and each of these, a "Fund"). The
Funds' prospectus provides a description of each Fund's investment objectives,
policies and strategies. The assets of each Fund are segregated, and a
shareholder's interest is limited to the Fund in which shares are held. The
Funds are authorized to offer an unlimited number of shares of beneficial
interest with no par value. The Trust has not commenced operations except those
related to organizational matters and the sale of initial shares of beneficial
interest to Friends Ivory & Sime, Inc. (the "Manager") on December 15, 1999. The
Manager absorbed all expenses of organizing the Trust.
The Trust offers Institutional and Advisor shares. There are currently no
Institutional shares outstanding. Advisor shares are subject to a
12b-1/shareholder fee of 0.25% per year.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Funds are as follows:
FEDERAL INCOME TAXES: Each 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 taxable income and gains to its
shareholders which will be sufficient to relieve it from all federal income
taxes. Therefore, no provision for federal income tax has been made.
USE OF ESTIMATES: Estimates and assumptions are required to be made regarding
assets and liabilities when financial statements are prepared. Changes in the
economic environment, financial markets and any other parameters used in
determining these estimates could cause actual results to differ from the
amounts recorded.
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Trust intends to enter into the following service agreements:
Under an Investment Advisory Agreement with the Trust, the Manager will act
as investment adviser to each Fund. Friends, Ivory & Sime plc, an affiliate
of the Manager, serves as the sub-adviser to the Friends Ivory European
Social Awareness Fund and administers the Fund's investment program under the
supervision of the Adviser. For its investment advisory services to the
Trust, the Manager, will receive an annual fee which is calculated daily and
paid monthly based on the aggregate average daily net assets of the Trust as
follows: Friends Ivory Social Awareness Fund, 0.75%; and Friends Ivory
European Social Awareness Fund, 0.85%. The sub-adviser receives a
sub-advisory fee from the Manager for its services calculated at the rate of
0.15% of the aggregate average daily net assets of the Friends Ivory European
Social Awareness Fund. The Manager has agreed, on a voluntary basis, to waive
all or a portion of its investment advisory fee. In addition, the Manager
reserves the right to terminate its waivers and to reimburse expenses in
order to keep total operating expenses from exceeding 0.65% for the Friends
Ivory Social Awareness Fund and 0.86% for the Friends Ivory European Social
Awareness Fund for a period of six months or from exceeding 1.25% and 1.70%,
respectively, for a period of one year.
S-22
<PAGE>
Under an Administration Agreement with the Trust, SEI Investments Management
Corporation (the "Administrator") will provide the Trust with overall
administrative and accounting services. For its services, the Administrator will
receive an annual fee which is calculated daily and paid monthly based on the
aggregate average daily net assets of the Trust as follows: 0.15% up to $100
million; 0.12% from $100 million to $300 million; 0.10% from $300 million to
$600 million; and 0.08% in excess of $600 million. Each Fund pays the
Administrator a minimum annual fee of $85,000 with a minimum of $10,000 per each
additional class.
Under a Distribution Agreement with the Trust, SEI Investments Distribution Co.
(the "Distributor") will provide the Trust with distribution services.
Under a Custodian Agreement with the Trust, Chase Manhattan Bank will serve as
custodian for the assets of the Trust.
S-23
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholder and Board of Trustees
Friends Ivory Funds
We have audited the accompanying statements of assets and liabilities of Friends
Ivory Funds (comprising, respectively, the Friends Ivory Social Awareness Fund
and the Friends Ivory European Social Awareness Fund (the "Funds")) as of
December 15, 1999. These statements of assets and liabilities are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these statements of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the statements of assets and liabilities are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements of assets and
liabilities. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the statements of assets and liabilities referred to above
present fairly, in all material respects, the financial position of the
respective Funds at December 15, 1999, in conformity with generally accepted
accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
December 16, 1999
S-24
<PAGE>
PART C: OTHER INFORMATION
Item 23. Exhibits:
(a)(1) Certificate of Trust dated September 29, 1999, is incorporated by
reference to Exhibit (a)(1) of the Registrant's Initial
Registration Statement as filed via EDGAR (Accession No.
0001047469-99-037533) on October 1, 1999.
(a)(2) Declaration of Trust of Friends Ivory & Sime Funds, dated
September 14, 1999, is incorporated by reference to Exhibit (a)(2)
of the Registrant's Initial Registration Statement as filed via
EDGAR (Accession No. 0001047469-99-037533) on October 1, 1999.
(b) By-Laws are incorporated by reference to Exhibit (b) of the
Registrant's Initial Registration Statement as filed via EDGAR
(Accession No. 0001047469-99-037533) on October 1, 1999.
(c) Instruments defining rights of Security Holders incorporated by
reference to the Declaration of Trust of Friends Ivory & Sime
Funds, filed via EDGAR (Accession No. 0001047469-99-037533) on
October 1, 1999 as Exhibit (a)(2) to the Registrant's Initial
Registration Statement on October 1, 1999, and the By-Laws, filed
via EDGAR (Accession No. 0001047469-99-037533) on October 1, 1999
as Exhibit (b) to the Registrant's Initial Registration Statement
on October 1, 1999.
(d)(1) Form of Investment Advisory Agreement between the Registrant and
Friends Ivory & Sime, Inc. is filed herewith.
(d)(2) Form of Investment Sub-Advisory Agreement between the Registrant
and Friends Ivory & Sime plc is filed herewith.
(e) Form of Distribution Agreement between the Registrant and SEI
Investments Distribution Company is filed herewith.
(f) Not applicable.
(g) Form of Custodian Agreement between the Registrant and Chase
Manhattan Bank is filed herewith.
(h)(1) Form of Administration Agreement between the Registrant and SEI
Investments Mutual Funds Services is filed herewith.
(h)(2) Form of Transfer Agency Agreement between the Registrant and Forum
Financial Services is filed herewith.
<PAGE>
(i) Opinion and Consent of Counsel is filed herewith.
(j) Consent of Independent Auditors is filed herewith.
(k) Not applicable.
(l) Not applicable.
(m) Distribution Plan for the Advisor Shares of the Friends Ivory
Funds (Rule 12b-1 Plan) is filed herewith.
(n) Not applicable.
(o) Rule 18f-3 Multiple Class Plan is filed herewith.
(p) To be completed by Amendment.
(q) Powers of Attorney for George Walker, Edward T. Searle, James R.
Foggo, J. Robert Bloom, Stephen Viederman, Mark Boles, Vidette
Bullock Mixon, and James F. Volk are filed herewith.
Item 24. Persons Controlled by or under Common Control with the Trust
Not applicable.
Item 25. Indemnification
Article III, Section 8. of the Declaration of Trust filed as Exhibit (a)(2) to
this Registration Statement is incorporated herein by reference.
SECTION 8. INDEMNIFICATION OF SHAREHOLDERS. If any Shareholder or
former Shareholder shall be exposed to liability by reason of a claim or demand
relating to his or her being or having been a Shareholder, and not because of
his or her acts or omissions, the Shareholder or former Shareholder (or 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 against all loss and expense arising from such claim or demand, but
only out of the assets held with respect to the particular Series or Class of
which such Person is or was a Shareholder and from or in relation to which such
liability arose.
Article XI of the By-Laws filed as Exhibit (b) to this Registration Statement is
incorporated herein by reference.
<PAGE>
Article XI Indemnification of Trustees, Officers, Employees and Other Agents.
SECTION 1. AGENTS, PROCEEDINGS, EXPENSES. For the purpose of this
Article, "agent" means any Person who is or was a Trustee, officer, employee or
other agent of the Trust or is or was serving at the request of the Trust as a
director, officer, employee or agent of another organization in which the Trust
has any interest as a shareholder, creditor or otherwise; "proceeding" means any
threatened, pending or completed claim, action, suit or proceeding, whether
civil, criminal, administrative or investigative (including appeals);and
"expenses" includes, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and all other liabilities
whatsoever.
SECTION 2. INDEMNIFICATION. Subject to the exceptions and limitations
contained in Section 3 below, every agent shall be indemnified by the Trust to
the fullest extent permitted by law against all liabilities and against all
expenses reasonably incurred or paid by him or her in connection with any
proceeding in which he or she becomes involved as a party or otherwise by virtue
of his or her being or having been an agent.
SECTION 3. LIMITATIONS, SETTLEMENTS. No indemnification shall be
provided hereunder to an agent:
(a) who shall have been adjudicated by the court or other body before
which the proceeding was brought to be liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office
(collectively, "disabling conduct"); or
(b) with respect to any proceeding disposed of (whether by settlement,
pursuant to a consent decree or otherwise) without an adjudication by the court
or other body before which the proceeding was brought that such agent was liable
to the Trust or its Shareholders by reason of disabling conduct, unless there
has been a determination that such agent did not engage in disabling conduct:
(i) by the court or other body before which the proceeding was
brought;
(ii) by at least a majority of those Directors who are neither
Interested Persons of the Trust nor are parties to the proceeding based upon a
review of readily available facts (as opposed to a full trial-type inquiry); or
(iii) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type inquiry);
provided, however, that indemnification shall be provided hereunder to an agent
with respect to any proceeding in the event of (1) a final decision on the
merits by the court or other body before which the proceeding was brought that
the agent was not liable by reason of disabling conduct, or (2) the dismissal of
the proceeding by the court or other body before which it was brought for
insufficiency of evidence of any disabling conduct with which such agent has
been charged.
<PAGE>
SECTION 4. INSURANCE, RIGHTS NOT EXCLUSIVE. The rights of
indemnification herein provided may be insured against by policies maintained by
the Trust on behalf of any agent, shall be severable, shall not be exclusive of
or affect any other rights to which any agent may now or hereafter be entitled
and shall inure to the benefit of the heirs, executors and administrators of any
agent.
SECTION 5. ADVANCE OF EXPENSES. Expenses incurred by an agent in
connection with the preparation and presentation of a defense to any proceeding
shall be paid by the Trust from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such agent that such amount
will be paid over by him or her to the Trust if it is ultimately determined that
he or she is not entitled to indemnification under this Article XI; provided,
however, that (a) such agent shall have provided appropriate security for such
undertaking, (b) the Trust is insured against losses arising out of any such
advance payments or (c) either a majority of the Directors who are neither
Interested Persons of the Trust nor parties to the proceedings, or independent
legal counsel in a written opinion, shall have determined, based upon a review
of readily available facts (as opposed to a trial-type inquiry or full
investigation), that there is reason to believe that such agent will be found
entitled to indemnification under this Article XI.
SECTION 6. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. The Article does not
apply to any proceeding against any director, investment manager or other
fiduciary of an employee benefit plan in that person's capacity as such, even
though that person may also be an agent of this Trust as defined in Section 1 of
this Article. Nothing contained in this Article shall limit any right to
indemnification to which such director, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.
Item 26. Business and other Connections of the Investment Adviser and
Sub-Advisers:
Other business, profession, vocation, or employment of a substantial nature in
which each director or principal officer of the Adviser is or has been, at any
time during the last two fiscal years, engaged for his own or in the capacity of
director, officer, employee, partner or trustee are as follows:
FRIENDS IVORY & SIME, INC.
Friends Ivory & Sime, Inc. is the Investment Adviser for the Registrant. Their
principal business address is One World Trade Center, Suite 2101, New York, New
York 10048. Friends Ivory & Sime, Inc. is an investment adviser registered under
the Investment Advisers Act of 1940.
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH POSITION WITH OTHER
INVESTMENT ADVISER OTHER COMPANY COMPANY
<S> <C> <C>
George Walker
Director
J. Robert Bloom Friends Vilas Fischer Trust Company President
President
Debra L. Liss
Vice President
Christopher J. Brancazio
Compliance Officer
Peter Derek Jones
Chief Executive Officer
Andrew Mark Pringle
Portfolio Manager
Ken Back
Chief Operating Officer
Gerard Peter Sullivan
Portfolio Manager
Biagio Manieri
Securities Analyst
John Keith Charles Edwards
Director
Ronald Peter Cornelis Op het Veld
Securities Analyst
<PAGE>
Philip Otto Wendt
Securities Analyst LF Wasa, Stockholm, Sweden Head of Equity Research
</TABLE>
FRIENDS IVORY & SIME PLC
Friends Ivory & Sime plc is a Sub-Adviser for the Registrant's Friends Ivory
European Social Awareness Fund. Their principal business address is 15 Old
Bailey, London, England EC4M7AP Friends Ivory & Sime plc, a U.K. company, is
listed on the London Stock Exchange and regulated by the Investment Management
Regulatory Organization in the United Kingdom. Friends Ivory & Sime plc owns
100% of the Registrant.
<TABLE>
<CAPTION>
NAME AND POSITION WITH CONNECTION WITH OTHER
INVESTMENT SUB-ADVISER OTHER COMPANY COMPANY
<S> <C> <C>
Peter Derek Jones
Chief Executive Officer
John Stubbs
Director
Howard Carter
Chief Investment Officer
Julie Ann Dent
Investment Management
Gregory Peter Richmond FP Asset Management, Investment Manager
owned by Sub-Adviser
Timothy Moorhouse
FP Asset Management, Investment Management
owned by Sub-Adviser
</TABLE>
<PAGE>
Item 27. Principal Underwriters
Not applicable.
Item 28. Location of Accounts and Records
Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and
(b); (3); (6); (8); (12); and 31a-1(d), the required books and
records will be maintained at the offices of Registrant's
Adviser, Sub-Advisers and Custodian:
ADVISER:
Friends Ivory & Sime, Inc.
One World Trade Center
Suite 2101
New York, NY 10048
SUB-ADVISER:
Friends Ivory & Sime plc
15 Old Bailey
London, England EC4 M7AP
CUSTODIAN:
Chase Manhattan Bank
270 Park Avenue
New York, New York 10048
Item 29. Management Services
Not applicable.
Item 30. Undertakings
Not applicable.
<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
Pre-Effective Amendment (File No. 333- 88287) to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on this 16th day of December, 1999.
Friends Ivory Funds
By: /s/ George Walker
-----------------------
George Walker
President
Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment has been signed below by the following persons in the
capacity on the dates indicated.
By: /s/ George Walker President December 16, 1999
-----------------
George Walker
By: * Secretary December 16, 1999
-----------------
Edward T. Searle
By: * Trustee December 17, 1999
-----------------
James R. Foggo
By: * Trustee December 16, 1999
-----------------
J. Robert Bloom
By: * Trustee December 16, 1999
-----------------
Stephen Viederman
By: * Trustee December 16, 1999
-----------------
Mark Boles
By: * Trustee December 16, 1999
-----------------
Vidette Bullock Mixon
By: * Treasurer December 15, 1999
-----------------
James F. Volk
*By: /s/ George Walker
-----------------
George Walker, Attorney-in-Fact
Pursuant to Powers of Attorney
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
NAME EXHIBIT PAGE
- ---- ------------
<S> <C>
Certificate of Trust of the Registrant, dated September 29, 1999 B(a)(1)
(incorporated herein by reference to Exhibit a(1) of the Initial
Registration Statement filed October 1, 1999).
Declaration of Trust of Friends Ivory & Sime Funds dated B(a)(2)
September 14, 1999 (incorporated herein by reference to Exhibit
a(2) of the Initial Registration Statement filed October 1, 1999).
By-Laws of the Registrant (incorporated herein by reference B(b)
to Exhibit (b) of the Initial Registration Statement filed
October 1, 1999).
Instruments defining rights of Security Holders incorporated by B(c)
reference to the Declaration of Trust of Friends Ivory & Sime
Funds, filed via EDGAR (Accession No. 0001047469-99-037533) on
October 1, 1999 as Exhibit (a)(2) to the Registrant's Initial
Registration Statement on October 1, 1999, and the By-Laws,
filed via EDGAR (Accession No. 0001047469-99-037533) on
October 1, 1999 as Exhibit (b) to the Registrant's Initial
Registration Statement on October 1, 1999.
Form of Investment Advisory Agreement between the Registrant EX-99.B(d)(1)
and Friends Ivory & Sime, Inc. is filed herewith.
Form of Sub-Advisory Agreement between the Friends Ivory & EX-99.B(d)(2)
Sime, Inc. and Friends Ivory & Sime plc is filed herewith.
Form of Distribution Agreement between the Registrant and EX-99.B(e)
SEI Investments Distribution Co. is filed herewith.
Form of Custodian Agreement between the Registrant and Chase EX-99.B(g)
Manhattan Bank is filed herewith.
<PAGE>
Form of Administration Agreement between the Registrant and EX-99.B(h)(1)
SEI Investments Mutual Funds Services is filed herewith.
Form of Transfer Agency Agreement between the Registrant and EX-99.B(h)(2)
Forum Financial Services is filed herewith.
Opinion and Consent of Counsel is filed herewith. EX-99.B(i)
Consent of Independent Auditors is filed herewith. Ex-99.B(j)
Distribution Plan for the Retail Shares of the Friends EX-99.B(m)
Ivory Funds (Rule 12b-1 Plan) is filed herewith.
Rule 18f-3 Multiple Class Plan is filed herewith. EX-99.B(o)
Powers of Attorney for George Walker, Edward T. Searle, EX-99.B(q)
James R. Foggo, J. Robert Bloom, Stephen Viederman, Mark Boles,
Vidette Bullock Mixon, and James F. Volk is filed herewith.
</TABLE>
<PAGE>
FORM OF INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this____day of_________, 1999, by and between Friends
Ivory Funds, a Delaware business trust (the "Trust"), and Friends Ivory &
Sime, Inc. (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940 (the "1940 Act"), as
amended, which may consist of several series of shares, each having its own
investment policies (each, a "Fund"); and
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to such Funds as the Trust and the Adviser may
agree upon and as are set forth in the attached schedule, and the Adviser is
willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets of the Fund(s), and
to hire (subject to the approval of the Trust's Board of
Trustees and, except as otherwise permitted under the terms of
any exemptive relief obtained in the future by the Adviser
from the Securities and Exchange Commission ("SEC"), or by
rule or regulation, a majority of the outstanding voting
securities of the Fund(s)) and to supervise the investment
activities of one or more sub-advisers deemed necessary to
carry out the investment program of the Trust, and to
continuously review, supervise and (where appropriate)
administer the investment program of the Trust, to determine
in its discretion (where appropriate) the securities to be
purchased or sold, to provide the Trust with records
concerning the Adviser's activities which the Trust is
required to maintain, and to render regular reports to the
Trust's officers and Trustees concerning the Adviser's
discharge of the foregoing responsibilities. The retention of
a sub-adviser by the Adviser shall not relieve the Adviser of
its responsibilities under this Agreement.
The Adviser shall discharge the foregoing responsibilities
subject to the control of the Board of Trustees of the Trust
and in compliance with such policies as the Trustees may from
time to time establish, and in compliance with the objectives,
policies, and limitations for each such Fund set forth in the
Funds' prospectus and statement of additional information as
amended from time to time, and applicable laws and
regulations.
The Adviser accepts such employment and agrees, at its own
expense, to render the services and to provide the office
space, furnishings and equipment and the personnel (including
any sub-advisers) required by it to perform the services on
the terms and for the compensation provided herein. The
Adviser will not, however, pay for the cost of securities,
commodities, and other investments (including brokerage
commissions and other transaction charges, if any) purchased
or sold for the Trust.
<PAGE>
2. FUND TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales
of fund securities for the Trust and is directed to use its
best efforts to obtain the best net results as described from
time to time in the Funds' Prospectus and Statement of
Additional Information. The Adviser will promptly communicate
to the officers and the Trustees of the Trust such information
relating to fund transactions as they may reasonably request.
It is understood that the Adviser will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the
Trust or be in breach of any obligation owing to the Trust
under this Agreement, or otherwise, by reason of its having
directed a securities transaction on behalf of the Trust to a
broker-dealer in compliance with the provisions of Section
28(e) of the Securities Exchange Act of 1934 or as described
from time to time by the Funds' Prospectus and Statement of
Additional Information.
3. COMPENSATION OF THE ADVISER. For the services to be rendered
by the Adviser as provided in Sections 1 and 2 of this
Agreement, the Trust shall pay to the Adviser compensation at
the rate specified in the Schedule(s) which are attached
hereto and made a part of this Agreement. Such compensation
shall be paid to the Adviser at the end of each month, and
calculated by applying a daily rate, based on the annual
percentage rates as specified in the attached Schedule(s), to
the assets. The fee shall be based on the average daily net
assets for the month involved (less any assets of such Funds
held in non-interest bearing special deposits with a Federal
Reserve Bank). The Adviser may, in its discretion and from
time to time, waive a portion of its fee.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the
termination of this Agreement.
4. OTHER EXPENSES. The Trust shall pay all expenses relating to
mailing to existing shareholders prospectuses, statements of
additional information, proxy solicitation material and
shareholder reports.
5. EXCESS EXPENSES. If the expenses for any Fund for any fiscal
year (including fees and other amounts payable to the Adviser,
but excluding interest, taxes, brokerage costs, litigation,
and other extraordinary costs) as calculated every business
day would exceed the expense limitations imposed on investment
companies by any applicable statute or regulatory authority of
any jurisdiction in which shares of a Fund are qualified for
offer and sale, the Adviser shall bear such excess cost.
However, the Adviser will not bear expenses of any Trust which
would result in the Trust inability to qualify as a regulated
investment company under provisions of the Internal Revenue
Code.
<PAGE>
6. REPORTS. The Trust and the Adviser agree to furnish to each
other, if applicable, current prospectuses, proxy statements,
reports to shareholders, certified copies of their financial
statements, and such other information with regard to their
affairs as each may reasonably request.
7. STATUS OF ADVISER. The services of the Adviser to the Trust
are not to be deemed exclusive, and the Adviser shall be free
to render similar services to others so long as its services
to the Trust are not impaired thereby. The Adviser shall be
deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority
to act for or represent the Trust in any way or otherwise be
deemed an agent of the Trust.
8. CERTAIN RECORDS. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule
31a-2 promulgated under the 1940 Act which are prepared or
maintained by the Adviser on behalf of the Trust are the
property of the Trust and will be surrendered promptly to the
Trust on request.
9. LIMITATION OF LIABILITY OF ADVISER. The duties of the Adviser
shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the
Adviser hereunder. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its
obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law or Federal
securities law which cannot be waived or modified hereby. (As
used in this Paragraph 9, the term "Adviser" shall include
directors, officers, employees and other corporate agents of
the Adviser as well as that entity itself.)
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders
of the Trust are or may be interested in the Adviser (or any
successor thereof) as directors, partners, officers, or
shareholders, or otherwise; directors, partners, officers,
agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees, shareholders or
otherwise; and the Adviser (or any successor) is or may be
interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected
through affiliates of the Adviser if approved by the Board of
Trustees, subject to the rules and regulations of the SEC.
11. LICENSE OF ADVISER'S NAME. The Adviser hereby agrees to grant
a license to the Trust for use of its name in the name of the
Trust and names of the Funds for the term of this Agreement
and such license shall terminate upon termination of this
Agreement.
<PAGE>
12. DURATION AND TERMINATION. This Agreement, unless sooner
terminated as provided herein, shall remain in effect until
two years from date of execution, and thereafter, for periods
of one year so long as such continuance thereafter is
specifically approved at least annually (a) by the vote of a
majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on
such approval, and (b) by the Trustees of the Trust or by vote
of a majority of the outstanding voting securities of each
Fund; provided, however, that if the shareholders of any Fund
fail to approve the Agreement as provided herein, the Adviser
may continue to serve hereunder in the manner and to the
extent permitted by the 1940 Act and rules and regulations
thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall
be construed in a manner consistent with the 1940 Act and the
rules and regulations thereunder.
This Agreement may be terminated as to any Fund at any time,
without the payment of any penalty by vote of a majority of
the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund on not less than 30
days nor more than 60 days written notice to the Adviser, or
by the Adviser at any time without the payment of any penalty,
on 90 days written notice to the Trust. This Agreement will
automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the
other party at any office of such party.
As used in this Section 12, the terms "assignment,"
"interested persons," and a "vote of a majority of the
outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and
regulations thereunder; subject to such exemptions as may be
granted by the SEC under said Act.
13. NOTICE. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by
the party giving notice to the other party at the last address
furnished by the other party to the party giving notice: if to
the Trust, at One World Trade Center, Suite 2101, New York, NY
10048, and if to the Adviser at One World Trade Center, Suite
2101, New York, NY 10048.
14. SEVERABILITY. 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.
15. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Delaware and the applicable
provisions of the 1940 Act. To the extent that the applicable
laws of the State of Delaware, or any of the provisions
herein, conflict with the applicable provisions of the 1940
Act, the latter shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
FRIENDS IVORY FUNDS
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Attest:
-----------------------
FRIENDS IVORY & SIME, INC.
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Attest:
-----------------------
<PAGE>
SCHEDULE A DATED_______ ____, 1999
TO THE
INVESTMENT ADVISORY AGREEMENT DATED_______ ____, 1999
BETWEEN
FRIENDS IVORY FUNDS
AND
FRIENDS IVORY & SIME, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
<S> <C>
Friends Ivory Social Awareness Fund 0.75% (75 basis points)
Friends Ivory European Social Awareness Fund 0.85% (85 basis points)
</TABLE>
<PAGE>
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ____ day of ________, 1999 by and between
Friends Ivory & Sime, Inc., a Delaware corporation (herein referred to as the
"Adviser"), and Friends Ivory & Sime plc, a U.K. corporation, (herein
referred to as the "Sub-Adviser").
WHEREAS, Friends Ivory Funds (herein referred to as the "Trust") is
engaged in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
with the Trust dated ____ , 1999 (the "Investment Advisory Agreement"), wherein
the Adviser has agreed to provide investment management services to the various
portfolios of the Trust; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as an
investment adviser; and
WHEREAS, the Adviser desires to retain the services of the Sub-Adviser
to render investment advisory services for the funds of the Trust (each a
"Fund") in the manner and on the terms and conditions hereinafter set forth in
Schedule A hereto; and
WHEREAS, the Sub-Adviser desires to be retained by the Adviser to
perform services on said terms and conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Subject to supervision by the Adviser and the Trust's Board of
Trustees, the Sub-Adviser shall carry out the advisory services
hereunder with respect to all of the securities and other assets of the
Fund entrusted to it hereunder (the "Assets"), including the purchase,
retention and disposition of the Assets, in accordance with the Fund's
investment objectives, policies and restrictions as stated in the
Fund's prospectus and statement of additional information, as currently
in effect and as amended or supplemented from time to time (referred to
collectively as the "Prospectus"), and subject to the following:
(a) The Sub-Adviser shall determine from time to time what Assets will be
purchased, retained or sold by the Fund, and what portion of the Assets
will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement,
the Sub-Adviser shall act in conformity with the Trust's Declaration of
Trust (as defined herein) and the Prospectus and with the instructions
and directions of the Adviser and of the Board of Trustees of the Trust
and will conform to and comply with the
<PAGE>
requirements of all applicable federal and state laws and regulations,
as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by
the Fund as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Fund's Registration Statement (as
defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal
securities laws. In executing Fund transactions and selecting brokers
or dealers, the Sub-Adviser will use its best efforts to seek on behalf
of the Fund the best overall terms available. In assessing the best
overall terms available for any transaction, the Sub-Adviser shall
consider all factors that it deems relevant, including the breadth of
the market in the security, the price of the security, the financial
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker-dealer to execute a
particular transaction, the Sub-Adviser may also consider the brokerage
and research services provided (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934). Consistent with any
guidelines established by the Board of Trustees of the Trust, the
Sub-Adviser is authorized to pay to a broker or dealer who provides
such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction if, but only if, the Sub-Adviser determines in good
faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer -
- viewed in terms of that particular transaction or terms of the
overall responsibilities of the Sub-Adviser to the Fund. In addition,
the Sub-Adviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that
are affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) to take into account the sale of shares of the Trust if
the Sub-Adviser believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified
firms. In no instance, however, will the Fund's Assets be purchased
from or sold to the Adviser, Sub-Adviser, the Trust's principal
underwriter, or any affiliated person of either the Trust, Adviser, the
Sub-Adviser or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Adviser shall provide to the Adviser or the Board of
Trustees such periodic and special reports, balance sheets or financial
information, and such other information with regard to its affairs as
the Adviser or Board of Trustees may reasonably request.
<PAGE>
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and
shall timely furnish to the Adviser all information relating to the
Sub-Adviser's services under this Agreement needed by the Adviser to
keep the other books and records of the Fund required by Rule 31a-1
under the 1940 Act. The Sub-Adviser shall also furnish to the Adviser
any other information relating to the Assets that is required to be
filed by the Adviser or the Trust with the SEC or sent to shareholders
under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Trust obtains from
the SEC. The Sub-Adviser agrees that all records that it maintains on
behalf of the Fund are property of the Fund and the Sub-Adviser will
surrender promptly to the Fund any of such records upon the Fund's
request; provided, however, that the Sub-Adviser may retain a copy of
such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2
under the 1940 Act any such records as are required to be maintained by
it pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if
there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Fund's custodian on each business day
with information relating to all transactions concerning the Fund's
Assets and shall provide the Adviser with such information upon request
of the Adviser.
(f) The Adviser acknowledges that the Sub-Adviser performs investment
advisory services for various other clients and may give advice, and
take action, with respect to any of those other clients which may
differ from the advice given, or the timing or nature of action taken,
with respect to the Fund, provided that over a period of time the
Sub-Adviser, to the extent practical, will allocate investment
opportunities to the Fund on a fair and equitable basis relative to
other similarly-situated accounts and will attempt to minimize any
dispersion of returns between the Fund and such accounts.
The Adviser also acknowledges that the Sub-Adviser, its principals,
employees and affiliates, and other clients of the Sub-Adviser may
have, acquire, increase, decrease, or dispose of securities or
interests therein at or about the same time that the Sub-Adviser is
purchasing or selling securities or interests therein for the Fund
which are or may be deemed to be inconsistent with the actions taken by
such persons. The Sub-Adviser shall not have any obligations to
purchase or sell, or recommend the purchase or sale, for the Fund any
securities transactions that the Sub-Adviser, its principals, employees
or affiliates, or other clients undertake.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill
its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and shall
provide the Fund's custodian with instructions for voting all proxies
in relation to the securities held in the Fund. The Adviser shall
instruct the custodian and other parties
<PAGE>
providing services to the Fund to promptly forward misdirected proxies
to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners,
officers or employees.
2. The Sub-Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as
it shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without limiting
the generality of the foregoing, the staff and personnel of the
Sub-Adviser shall be deemed to include persons employed or otherwise
retained by the Sub-Adviser to furnish statistical and other factual
data, advice regarding economic factors and trends, information with
respect to technical and scientific developments, and such other
information, advice and assistance as the Adviser may desire. The
Sub-Adviser shall maintain whatever records as may be required to be
maintained by it under the 1940 Act. All such records so maintained
shall be made available to the Trust, upon the request of the Adviser
or the Trust.
3. The Trust will, from time to time, furnish or otherwise make available
to the Sub-Adviser such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Sub-Adviser may reasonably require in order to discharge its duties and
obligations hereunder or to comply with any applicable law and
regulations and the investment objectives, policies and restrictions
from time to time prescribed by the Directors of the Trust.
4. The Sub-Adviser shall bear the cost of rendering the investment
advisory services to be performed by it under this Agreement, and
shall, at its own expense, pay the compensation of the officers and
employees, if any, of the Trust, employed by the Sub-Adviser, and such
clerical help and bookkeeping services as the Sub-Adviser shall
reasonably require in performing its duties hereunder.
5. For the services to be provided by the Sub-Adviser pursuant to this
Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser
agrees to accept as full compensation therefor, a sub-advisory fee at
the rate specified in the Schedules which are attached hereto and made
part of this Agreement. The fee will be calculated based on the average
daily net assets under the Sub-Adviser's management and will be paid to
the Sub-Adviser monthly. Except as may otherwise be prohibited by law
or regulation (including any then current SEC staff interpretation),
the Sub-Adviser may, in its discretion and from time to time, waive a
portion of its fee.
6. The Sub-Adviser will use its best efforts in the performance of
investment activities on behalf of the Trust, but in the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations hereunder, the Sub-Adviser shall not be liable to
the Adviser or the Trust or any of its investors for any
<PAGE>
error of judgment or mistake of law or for any act or omission by the
Sub-Adviser or for any losses sustained by the Trust or its investors.
7. It is understood that any of the shareholders, Trustees, officers and
employees of the Trust may be a shareholder, director, officer or
employee of, or be otherwise interest in, the Sub-Adviser, and in any
person controlled by or under common control with the Sub-Adviser, and
that the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser may have an interest in the Trust. It is
also understood that the Sub-Adviser and any affiliated persons thereof
or any persons controlled by or under common control with the
Sub-Adviser have and may have advisory, management service or other
contracts with other organizations and persons, and may have other
interests and businesses, and further may purchase, sell or trade any
securities or commodities for their own accounts or for the account of
others for whom they may be acting.
8. This Agreement, unless sooner terminated as provided herein, shall
remain in effect until two years from date of execution, and
thereafter, for periods of one year so long as such continuance
thereafter is specifically approved at least annually (a) by the vote
of a majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b)
by the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of each Fund; provided, however, that if
the shareholders of any Fund fail to approve the Agreement as provided
herein, the Adviser may continue to serve hereunder in the manner and
to the extent permitted by the 1940 Act and rules and regulations
thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
This Agreement may be terminated as to any Fund at any time, without
the payment of any penalty by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of
the Fund on not less than 30 days nor more than 60 days written notice
to the Adviser, or by the Adviser at any time without the payment of
any penalty, on 90 days written notice to the Trust. This Agreement
will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any
office of such party.
As used in this Section 12, the terms "assignment," "interested
persons," and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder; subject to such
exemptions as may be granted by the SEC under said Act.
9. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to
cure, correct or supplement any ambiguous, defective or inconsistent
provision hereof, or if they deem it
<PAGE>
necessary to conform this Agreement to the requirements of applicable
federal laws or regulations, but neither the Trust, the Adviser nor the
Sub-Adviser shall be liable for failing to do so.
10. This Agreement shall be construed in accordance with the law of the
State of Delaware and the applicable provisions of the 1940 Act. To the
extent the applicable law of the State of Delaware, or any of the
provisions herein, conflict with the applicable provisions of the 1940
Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in _________, _____________.
FRIENDS IVORY & SIME, Inc.
By:
-----------------------------------
Name:
---------------------------------
Attest:
-------------------------------
FRIENDS IVORY & SIME plc
By:
-----------------------------------
Name:
---------------------------------
Attest:
-------------------------------
Accepted and agreed to as of the day and year first above written:
FRIENDS IVORY FUNDS
By:
-----------------------------------
Name:
---------------------------------
Attest:
-------------------------------
<PAGE>
SCHEDULE A DATED________ ____, 1999
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT DATED________ ____, 1999
BETWEEN
FRIENDS IVORY & SIME, INC.
AND
FRIENDS IVORY & SIME PLC
Pursuant to Article 5, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
<TABLE>
<CAPTION>
FUND ANNUAL FEE
<S> <C>
Friends Ivory European Social Awareness Fund 0.85% (85 basis points)
</TABLE>
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this __ day of _____________, 199_ between
Friends Ivory Funds ("the Trust"), a Delaware business trust and SEI Investments
Distribution Co. (the "Distributor"), a Pennsylvania corporation.
WHEREAS, the Trust is registered as an investment company with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940, as amended (the "1940 Act"), and its shares are registered with the SEC
under the Securities Act of 1933, as amended (the "1933 Act"); and
WHEREAS, the Distributor is registered as a broker-dealer with the SEC
under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and Distributor hereby agree as follows:
ARTICLE 1. SALE OF SHARES. The Trust grants to the Distributor the
exclusive right to sell units (the "Shares") of the funds (the "Funds") of the
Trust at the net asset value per Share, plus any applicable sales charges in
accordance with the current prospectus, as agent and on behalf of the Trust,
during the term of this Agreement and subject to the registration requirements
of the 1933 Act, the rules and regulations of the SEC and the laws governing the
sale of securities in the various states ("Blue Sky Laws").
ARTICLE 2. SOLICITATION OF SALES. In consideration of these rights
granted to the Distributor, the Distributor agrees to use all reasonable efforts
in connection with the distribution of Shares of the Trust; provided, however,
that the Distributor shall not be prevented from entering into like arrangements
with other issuers. The provisions of this paragraph do not obligate the
Distributor to register as a broker or dealer under the Blue Sky Laws of any
jurisdiction when it determines it would be uneconomical for it to do so or to
maintain its registration in any jurisdiction in which it is now registered or
obligate the Distributor to sell any particular number of Shares.
ARTICLE 3. AUTHORIZED REPRESENTATIONS. The Distributor is not
authorized by the Trust to give any information or to make any representations
other than those contained in the current registration statements and
prospectuses of the Trust filed with the SEC or contained in Shareholder reports
or other material that may be prepared by or on behalf of the Trust for the
Distributor's use. The Distributor may prepare and distribute sales literature
and other material as it may deem appropriate, provided that such literature and
materials have been prepared in accordance with applicable rules and
regulations.
<PAGE>
ARTICLE 4. REGISTRATION OF SHARES. The Trust agrees that it will take
all action necessary to register Shares under the federal and state securities
laws so that there will be available for sale the number of Shares the
Distributor may reasonably be expected to sell and to pay all fees associated
with said registration. The Trust shall make available to the Distributor such
number of copies of its currently effective prospectus and statement of
additional information as the Distributor may reasonably request. The Trust
shall furnish to the Distributor copies of all information, financial statements
and other papers which the Distributor may reasonably request for use in
connection with the distribution of Shares of the Trust.
ARTICLE 5. COMPENSATION. As compensation for providing the services
under this Agreement:
(a) The Distributor shall receive from the Trust:
(1) all distribution and service fees, as applicable, at the
rate and under the terms and conditions set forth in each
Distribution and Shareholder Services Plan adopted by the
appropriate class of shares of each of the Funds, as such
Plans may be amended from time to time, and subject to any
further limitations on such fees as the Board of Trustees of
the Trust may impose;
(2) all contingent deferred sales charges ("CDSCs") applied on
redemptions of CDSC Class Shares of each Fund on the terms and
subject to such waivers as are described in the Trust's
Registration Statement and current prospectuses, as amended
from time to time, or as otherwise required pursuant to
applicable law; and
(3) all front-end sales charges, if any, on purchases of Class
A Shares of each Fund sold subject to such charges as
described in the Trust's Registration Statement and current
prospectuses, as amended from time to time. The Distributor,
or brokers, dealers and other financial institutions and
intermediaries that have entered into sub-distribution
agreements with the Distributor, may collect the gross
proceeds derived from the sale of such Class A Shares, remit
the net asset value thereof to the Trust upon receipt of the
proceeds and retain the applicable sales charge.
(b) The Distributor may allow any or all of the distribution or service
fees, contingent deferred sales charges and front-end sales charges
which it is paid by the Trust to such brokers, dealers and other
financial institutions and intermediaries as the Distributor may from
time to time determine.
ARTICLE 6. INDEMNIFICATION OF DISTRIBUTOR. The Trust agrees to
indemnify and hold harmless the Distributor and each of its directors and
officers and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act against any loss, liability, claim,
damages or expense (including the reasonable cost of investigating or defending
any alleged loss,
<PAGE>
liability, claim, damages, or expense and reasonable counsel fees and
disbursements incurred in connection therewith), arising by reason of any person
acquiring any Shares, based upon the ground that the registration statement,
prospectus, Shareholder reports or other information filed or made public by the
Trust (as from time to time amended) included an untrue statement of a material
fact or omitted to state a material fact required to be stated or necessary in
order to make the statements made not misleading. However, the Trust does not
agree to indemnify the Distributor or hold it harmless to the extent that the
statements or omission was made in reliance upon, and in conformity with,
information furnished to the Trust by or on behalf of the Distributor.
In no case (i) is the indemnity of the Trust to be deemed to protect
the Distributor against any liability to the Trust or its Shareholders to which
the Distributor or such person otherwise would be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under this
Agreement, or (ii) is the Trust to be liable to the Distributor under the
indemnity agreement contained in this paragraph with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other person shall have notified the Trust 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 the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Trust of any claim shall not relieve the Trust from any liability
which it may have to the Distributor or any person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph.
The Trust 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 indemnity provision. If the Trust elects to
assume the defense of any such claim, the defense shall be conducted by counsel
chosen by the Trust and satisfactory to the indemnified defendants in the suit
whose approval shall not be unreasonably withheld. In the event that the Trust
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 Trust 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 Trust agrees to notify the Distributor promptly of the commencement
of any litigation or proceedings against it or any of its officers or Trustees
in connection with the issuance or sale of any of its Shares.
ARTICLE 7. INDEMNIFICATION OF TRUST. The Distributor covenants and
agrees that it will indemnify and hold harmless the Trust and each of its
Trustees and officers and each person, if any, who controls the Trust within the
meaning of Section 15 of the 1933 Act, against any loss, liability, damages,
claim or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, damages, claim or expense and reasonable counsel
fees incurred in connection therewith) based upon the 1933 Act or any other
statute or common law and arising by reason of
<PAGE>
any person acquiring any Shares, and alleging a wrongful act of the Distributor
or any of its employees or alleging that the registration statement, prospectus,
Shareholder reports or other information filed or made public by the Trust (as
from time to time amended) included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order to
make the statements not misleading, insofar as the statement or omission was
made in reliance upon and in conformity with information furnished to the Trust
by or on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of the
Trust or any other person indemnified to be deemed to protect the Trust or any
other person against any liability to which the Trust or such other person would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or person, as the case may be, shall have notified
the Distributor 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 the Trust or upon any person (or after the
Trust or such person shall have received notice of service on any designated
agent). However, failure to notify the Distributor of any claim shall not
relieve the Distributor from any liability which it may have to the Trust or any
person against whom the action is brought otherwise than on account of its
indemnity agreement contained in this paragraph.
The Distributor 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 the Distributor elects to assume the defense, the
defense shall be conducted by counsel chosen by the Distributor and satisfactory
to the indemnified defendants whose approval shall not be unreasonably withheld.
In the event that the Distributor 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 the Distributor 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.
The Distributor agrees to notify the Trust promptly of the commencement
of any litigation or proceedings against it or any of its officers in connection
with the issue and sale of any of the Trusts' Shares.
ARTICLE 8. CONSEQUENTIAL DAMAGES. In no event and under no
circumstances shall either party to this Agreement be liable to anyone,
including, without limitation, the other party, for consequential damages for
any act or failure to act under any provision of this Agreement if advised of
the possibility thereof.
ARTICLE 9. EFFECTIVE DATE. This Agreement shall be effective upon its
execution, and unless terminated as provided, shall continue in force for two
year(s) from the effective date and thereafter from year to year, provided that
such annual continuance is approved by (i) either the
<PAGE>
outstanding voting securities of the Trust, and (ii) the vote of a majority
of those Trustees of the Trust who are not parties to this Agreement or the
Trust's Distribution Plan or interested persons of any such party ("Qualified
Trustees"), cast in person at a meeting called for the purpose of voting on
the approval. This Agreement shall automatically terminate in the event of
its assignment. As used in this paragraph the terms "vote of a majority of
the outstanding voting securities", "assignment" and "interested person"
shall have the respective meanings specified in the 1940 Act. In addition,
this Agreement may at any time be terminated without penalty by the
Distributor, by a vote of a majority of Qualified Trustees or by vote of a
majority of the outstanding voting securities of the Trust upon not less than
sixty days prior written notice to the other party.
ARTICLE 10. NOTICES. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at One World Trade Center, Suite 2101, New York, New
York 10048, and if to the Distributor, One Freedom Valley Drive, Oaks,
Pennsylvania 19456.
ARTICLE 11. LIMITATION OF LIABILITY. A copy of the Certificate of Trust
of the Trust is on file with the Secretary of State of the State of Delaware,
and notice is hereby given that this Agreement is executed on behalf of the
Trustees of the Trust as Trustees and not individually and that the obligations
of this instrument are not binding upon any of the Trustees, officers or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
ARTICLE 12. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the entire agreement between the parties hereto and supersedes any prior
agreement, draft or agreement or proposal with respect to the subject matter
hereof. This Agreement or any part hereof may be changed or waived only by an
instrument in writing signed by the party against which enforcement of such
change or waiver is sought.
ARTICLE 13. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 14. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 15. SEVERABILITY. If any part, term or provision of this
Agreement is held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision
<PAGE>
held to be illegal or invalid.
<PAGE>
IN WITNESS WHEREOF, the Trust and Distributor have each duly executed
this Agreement, as of the day and year above written.
FRIENDS IVORY FUNDS
By:
---------------------------
Attest:
-----------------------
SEI INVESTMENTS DISTRIBUTION CO.
By:
---------------------------
Attest:
-----------------------
<PAGE>
[LOGO]
-------------------------------------------------------
FORM OF GLOBAL CUSTODY AGREEMENT
BETWEEN
FRIENDS IVORY & SIME FUNDS
AND
THE CHASE MANHATTAN BANK
Novemeber ,1999
<PAGE>
GLOBAL CUSTODY AGREEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
1 . INTENTION OF THE PARTIES; DEFINITIONS----------------------------------------------------2
1.1 INTENTION OF THE PARTIES---------------------------------------------------------------2
1.2 DEFINITIONS----------------------------------------------------------------------------2
2. WHAT BANK IS REQUIRED TO DO---------------------------------------------------------------4
2.1 SET UP ACCOUNTS------------------------------------------------------------------------4
2.2 CASH ACCOUNT---------------------------------------------------------------------------5
2.3 SEGREGATION OF ASSETS; NOMINEE NAME----------------------------------------------------5
2.4 SETTLEMENT OF TRADES-------------------------------------------------------------------5
2.5 CONTRACTUAL SETTLEMENT DATE ACCOUNTING-------------------------------------------------5
2.6 ACTUAL SETTLEMENT DATE ACCOUNTING------------------------------------------------------6
2.7 INCOME COLLECTION; AUTOCREDIT----------------------------------------------------------6
2.8 FRACTIONS/ REDEMPTIONS BY LOT----------------------------------------------------------7
2.9 PRESENTATION OF COUPONS; CERTAIN OTHER MINISTERIAL ACTS--------------------------------7
2.10 CORPORATE ACTIONS----------------------------------------------------------------------7
2.11 PROXY VOTING---------------------------------------------------------------------------7
2.12 STATEMENTS-----------------------------------------------------------------------------9
2.13 ACCESS TO BANK'S RECORDS---------------------------------------------------------------9
2.14 MAINTENANCE OF FINANCIAL ASSETS AT BANK AND SUBCUSTODIAN LOCATIONS---------------------9
2.15 TAX RECLAIMS--------------------------------------------------------------------------10
2.16 FOREIGN EXCHANGE TRANSACTIONS---------------------------------------------------------10
3. INSTRUCTIONS-----------------------------------------------------------------------------10
3.1 ACTING ON INSTRUCTIONS; UNCLEAR INSTRUCTIONS------------------------------------------10
3.2 CONFIRMATION OF ORAL INSTRUCTIONS/ SECURITY DEVICES-----------------------------------11
3.3 INSTRUCTIONS; CONTRARY TO LAW/MARKET PRACTICE-----------------------------------------11
3.4 CUT-OFF TIMES---------------------------------------------------------------------------11
4. FEES EXPENSES AND OTHER AMOUNTS OWING TO BANK--------------------------------------------12
4.1 FEES AND EXPENSES---------------------------------------------------------------------12
i
<PAGE>
4.2 OVERDRAFTS----------------------------------------------------------------------------12
4.3 BANK'S RIGHT OVER SECURITIES; SET-OFF------------------------------------------------12
5. SUBCUSTODIANS, SECURITIES DEPOSITORIES AND OTHER AGENTS----------------------------------12
5.1 APPOINTMENT OF SUBCUSTODIANS----------------------------------------------------------12
5.2 LIABILITY FOR SUBCUSTODIANS-----------------------------------------------------------13
5.3 USE OF AGENTS-------------------------------------------------------------------------14
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER-----------------------------------------------14
6.1 REPRESENTATIONS OF CUSTOMER-----------------------------------------------------------14
6.2 CUSTOMER TO PROVIDE CERTAIN INFORMATION TO BANK---------------------------------------14
6.3 CUSTOMER IS LIABLE TO BANK EVEN IF IT IS ACTING FOR ANOTHER PERSON--------------------15
7. WHEN BANK IS LIABLE TO CUSTOMER----------------------------------------------------------15
7.1 STANDARD OF CARE; LIABILITY-----------------------------------------------------------15
7.2 FORCE MAJEURE-------------------------------------------------------------------------16
7.3 BANK CAN CONSULT WITH COUNSEL---------------------------------------------------------16
7.4 BANK PROVIDES DIVERSE FINANCIAL SERVICES AND MAY GENERATE PROFITS AS A RESULT---------16
8. TAXATION---------------------------------------------------------------------------------16
8.1 TAX OBLIGATIONS-----------------------------------------------------------------------16
8.2 TAX RECLAIMS--------------------------------------------------------------------------17
9. TERMINATION------------------------------------------------------------------------------18
10. MISCELLANEOUS----------------------------------------------------------------------------18
10.1 NOTICES-------------------------------------------------------------------------------18
10.2 SUCCESSORS AND ASSIGNS----------------------------------------------------------------18
10.3 INTERPRETATION------------------------------------------------------------------------18
10.4 ENTIRE AGREEMENT----------------------------------------------------------------------19
10.5 INFORMATION CONCERNING DEPOSITS AT BANK'S LONDON BRANCH-------------------------------19
10.6 CONFIDENTIALITY-----------------------------------------------------------------------19
10.7 INSURANCE-----------------------------------------------------------------------------19
10.8 GOVERNING LAW AND JURISDICTION.CERTIFICATION OF RESIDENCY-----------------------------19
ii
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10.9 SEVERABILITY AND WAIVER---------------------------------------------------------------20
10.10 COUNTERPARTS--------------------------------------------------------------------------20
</TABLE>
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GLOBAL CUSTODY AGREEMENT
This Agreement, dated November , 1999 is between THE CHASE MANHATTAN BANK
("BANK"), with a place of business at 270 Park Ave., New York, New York
10017-2070, and FRIENDS IVORY & SIME INC ("CUSTOMER") with a place of business
at One Trade Center, Suite 2101, New York, New York 10048.
1. INTENTION OF THE PARTIES; DEFINITIONS
1.1 INTENTION OF THE PARTIES.
(a) This Agreement sets out the terms governing custodial, settlement and
certain other associated services offered by Bank to Customer. Bank will be
responsible for the performance of only those duties that are set forth in this
Agreement or expressly contained in Instructions that are consistent with the
provisions of this Agreement and with Bank's operations and procedures. Customer
acknowledges that Bank is not providing any legal, tax or investment advice in
providing the services hereunder.
(b) Investing in foreign markets may be a risky enterprise. The holding
of Financial Assets and cash in foreign jurisdictions may involve risks of loss
or other special features. Bank will not be liable for any loss that results
from the general risks of investing or Country Risk.
1.2 DEFINITIONS.
(a) As used herein, the following terms have the meaning hereinafter
stated.
"ACCOUNT" has the meaning set forth in Section 2.1 of this Agreement.
"AFFILIATE" means an entity controlling, controlled by, or under common
control with, Bank.
"AFFILIATED SUBCUSTODIAN" means a Subcustodian that is an Affiliate.
"APPLICABLE LAW" means any statute, whether national, state or local,
applicable in the United States or any other country, the rules of the
treaty establishing the European Community, any other law, rule,
regulation or interpretation of any governmental entity, any applicable
common law, and any decree, injunction, judgment, order, ruling, or writ
of any governmental entity.
"AUTHORIZED PERSON" means any person (including an investment manager or
other agent) who has been designated by written notice from Customer or
its designated agent to act on behalf of Customer hereunder. Such
persons will continue to be
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Authorized Persons until such time as Bank receives Instructions from
Customer or its designated agent that any such person is no longer an
Authorized Person.
"BANK INDEMNITEES" means Bank, its Subcustodians, and their respective
nominees, directors, officers, employees and agents.
"BANK'S LONDON BRANCH" means the London branch office of The Chase Manhattan
Bank.
"CASH ACCOUNT" has the meaning set forth in Section 2.1(a)(ii).
"CORPORATE ACTION" means any subscription right, bonus issue, stock
repurchase plan, redemption, exchange, tender offer, or similar matter
with respect to a Financial Asset in the Securities Account that require
discretionary action by the holder, but does not include proxy voting.
"COUNTRY RISK" means the risk of investing or holding assets in a particular
country or market, including, but not limited to, risks arising from:
nationalization, expropriation or other governmental actions; the
country's financial infrastructure, including prevailing custody and
settlement practices; laws applicable to the safekeeping and recovery of
Financial Assets and cash held in custody; the regulation of the banking
and securities industries, including changes in market rules; currency
restrictions, devaluations or fluctuations; and market conditions
affecting the orderly execution of securities transactions or the value
of assets.
"ENTITLEMENT HOLDER" means the person named on the records of a Securities
Intermediary as the person having a Securities Entitlement against the
Securities Intermediary.
"FINANCIAL ASSET" means, as the context requires, either the asset itself or
the means by which a person's claim to it is evidenced, including a
Security, a security certificate, or a Securities Entitlement.
"FINANCIAL ASSET" does not include cash.
"INSTRUCTIONS" has the meaning set forth in Section 3.1 of this Agreement.
"LIABILITIES" means any liabilities, losses, claims, costs, damages,
penalties, fines, obligations, or expenses of any kind whatsoever
(including, without limitation, reasonable attorneys', accountants',
consultants' or experts' fees and disbursements).
"SECURITIES" means stocks, bonds, rights, warrants and other negotiable and
non-negotiable instruments, whether issued in certificated or
uncertificated form, that are commonly traded or dealt in on securities
exchanges or financial markets. "SECURITIES" also means other
obligations of an issuer, or shares, participations and interests in an
issuer recognized in the country in which it is issued or dealt in as a
medium for investment and any other property as may be acceptable to
Bank for the Securities Account.
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"SECURITIES ACCOUNT" means each Securities custody account on Bank's records
to which Financial Assets are or may be credited pursuant hereto.
"SECURITIES DEPOSITORY" has the meaning set forth in Section 5.1 of this
Agreement.
"SECURITIES ENTITLEMENT" means the rights and property interest of an
Entitlement Holder with respect to a Financial Asset as set forth in
Part 5 of Article 8 of the Uniform Commercial Code of the State of New
York, as the same may be amended from time to time.
"SECURITIES INTERMEDIARY" means Bank, a Subcustodian, a Securities
Depository, and any other financial institution which in the ordinary
course of business maintains custody accounts for others and acts in
that capacity.
"SUBCUSTODIAN" has the meaning set forth in Section 5.1 and includes
Affiliated Subcustodians.
(b) All terms in the singular will have the same meaning in the plural
unless the context otherwise provides and visa versa.
2. WHAT BANK IS REQUIRED TO DO
2.1 SET UP ACCOUNTS.
(a) Bank will establish and maintain the following accounts ("ACCOUNTS"):
(i) a Securities Account in the name of Customer for Financial
Assets, which may be received by Bank or its Subcustodian for
the account of Customer, including as an Entitlement Holder; and
(ii) an account in the name of Customer ("CASH ACCOUNT") for any and
all cash in any currency received by Bank or its Subcustodian
for the account of Customer.
Notwithstanding paragraph (ii), cash held in respect of those markets where
Customer is required to have a cash account in its own name held directly with
the relevant Subcustodian will be held in that manner and will not be part of
the Cash Account.
(b) At the request of Customer, additional Accounts may be opened in the
future, which will be subject to the terms of this Agreement.
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2.2 CASH ACCOUNT.
Except as otherwise provided in Instructions acceptable to Bank, all cash
held in the Cash Account will be deposited during the period it is credited to
the Accounts in one or more deposit accounts at Bank or at Bank's London Branch.
Any cash so deposited with Bank's London Branch will be payable exclusively by
Bank's London Branch in the applicable currency, subject to compliance with any
applicable laws, regulations, governmental decrees or similar orders.
2.3 SEGREGATION OF ASSETS; NOMINEE NAME.
(a) Bank will identify in its records that Financial Assets credited to
Customer's Securities Account belong to Customer (except as otherwise may be
agreed by Bank and Customer).
(b) Bank will require each Subcustodian to identify in its own records
that Financial Assets credited to Customer's Securities Account belong to
customers of Bank (to the extent permitted by Applicable Law or market
practice), such that it is readily apparent that the Financial Assets do not
belong to Bank or the Subcustodian.
(c) Bank is authorized, in its discretion, to hold in bearer form, such
Financial Assets as are customarily held in bearer form; and to register in the
name of the Customer, Bank, a Subcustodian, a Securities Depository, or their
respective nominees, such Financial Assets as are customarily held in registered
form. Customer authorizes Bank or its Subcustodian to hold Financial Assets in
omnibus accounts and will accept delivery of Financial Assets of the same class
and denomination as those deposited with Bank or its Subcustodian.
2.4 SETTLEMENT OF TRADES.
When Bank receives an Instruction directing settlement of a trade in
Financial Assets that includes all information required by Bank, Bank will use
reasonable care to effect such settlement as instructed. Settlement of purchases
and sales of Financial Assets will be conducted in accordance with prevailing
standards of the market in which the transaction occurs. The risk of loss will
be Customer's whenever Bank delivers Financial Assets or payment in accordance
with applicable market practice in advance of receipt or settlement of the
expected consideration. In the case of the failure of Customer's counterparty to
deliver the expected consideration as agreed, Bank will contact the counterparty
to seek settlement, but Bank will not be obligated to institute legal
proceedings, file proof of claim in any insolvency proceeding, or take any
similar action.
2.5 CONTRACTUAL SETTLEMENT DATE ACCOUNTING.
(a) Bank will effect book entries on a "contractual settlement date
accounting" basis as described below with respect to the settlement of trades in
those markets where Bank
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generally offers contractual settlement day accounting and will notify Customer
of these markets from time to time.
(i) SALES: On the settlement date for a sale, Bank will credit
the Cash Account with the sale proceeds of the sale and
transfer the relevant Financial Assets to an account pending
settlement of the trade if not already delivered.
(ii) PURCHASES: On the settlement date for the purchase (or
earlier, if market practice requires delivery of the
purchase price before the settlement date), Bank will debit
the Cash Account with the settlement monies and credit a
separate account. Bank then will post the Securities Account
as awaiting receipt of the expected Financial Assets.
Customer will not be entitled to the delivery of Financial
Assets that are awaiting receipt until Bank or a
Subcustodian actually receives them.
Bank reserves the right to restrict in good faith the availability of
contractual day settlement accounting for credit reasons.
(b) Bank may (in its absolute discretion) upon oral or written
notification to Customer reverse any debit or credit made pursuant to Section
2.5(a) prior to a transaction's actual settlement, and Customer will be
responsible for any costs or liabilities resulting from such reversal. Customer
acknowledges that the procedures described in this sub-section are of an
administrative nature, and Bank does not undertake to make loans and/or
Financial Assets available to Customer.
2.6 ACTUAL SETTLEMENT DATE ACCOUNTING.
With respect to any sale or purchase transaction that is not posted to the
Account on the contractual settlement date as referred to in Section 2.5, Bank
will post the transaction on the date on which the cash or Financial Assets
received as consideration for the transaction is actually received by Bank.
2.7 INCOME COLLECTION; AUTOCREDIT.
(a) Bank will credit the Cash Account with income and redemption proceeds
on Financial Assets in accordance with the times notified by Bank from time to
time on or after the anticipated payment date, net of any taxes that are
withheld by Bank or any third party. Where no time is specified for a particular
market, income and redemption proceeds from Financial Assets will be credited
only after actual receipt and reconciliation. Bank may reverse such credits upon
oral or written notification to Customer that Bank believes that the
corresponding payment will not be received by Bank within a reasonable period or
such credit was incorrect.
(b) Bank will make reasonable endeavors in its discretion to contact
appropriate parties to collect unpaid interest, dividends or redemption
proceeds, but neither Bank nor its
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Subcustodians will be obliged to file any formal notice of default, institute
legal proceedings, file proof of claim in any insolvency proceeding, or take any
similar action.
2.8 FRACTIONS/ REDEMPTIONS BY LOT.
Bank may sell fractional interests in Financial Assets and credit the Cash
Account with the proceeds of the sale. If some, but not all, of an outstanding
class of Financial Asset is called for redemption, Bank may allot the amount
redeemed among the respective beneficial holders of such class of Financial
Asset in any manner Bank deems to be fair and equitable.
2.9 PRESENTATION OF COUPONS; CERTAIN OTHER MINISTERIAL ACTS.
Until Bank receives Instructions to the contrary, Bank will:
(a) present all Financial Assets for which Bank has received
notice of a call for redemption or that have otherwise
matured, and all income and interest coupons and other
income items that call for payment upon presentation;
(b) execute in the name of Customer such certificates as may be
required to obtain payment in respect of Financial Assets;
and
(c) exchange interim or temporary documents of title held in the
Securities Account for definitive documents of title.
2.10 CORPORATE ACTIONS.
(a) Bank will follow Corporate Actions and advise Customer of those
Corporate Actions of which Bank's central corporate actions department receives
notice from the issuer or from the Securities Depository in which such Financial
Assets are maintained or notice published in publications and reported in
reporting services routinely used by Bank for this purpose.
(b) If an Authorized Person fails to provide Bank with timely
Instructions with respect to any Corporate Action, neither Bank nor its
Subcustodians or their respective nominees will take any action in relation to
that Corporate Action, except as otherwise agreed in writing by Bank and
Customer or as may be set forth by Bank as a default action in the advice it
provides under Section 2.10 (a) with respect to that Corporate Action.
2.11 PROXY VOTING.
(a) Subject to and upon the terms of this sub-section, Bank will provide
Customer with information which it receives on matters to be voted upon at
meetings of holders of Financial Assets ("NOTIFICATIONS"), and Bank will act in
accordance with Customer's Instructions in relation to such Notifications ("THE
ACTIVE PROXY VOTING SERVICE"). If
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information is received by Bank at its proxy voting department too late to
permit timely voting by Customer, Bank's only obligation is to provide, so far
as reasonably practicable, a Notification (or summary information concerning a
Notification) on an "information only" basis.
(b) The active proxy voting service is available only in certain markets,
details of which are available from Bank on request. Provision of the active
proxy voting service is conditional upon receipt by Bank of a duly completed
enrollment form as well as additional documentation that may be required for
certain markets.
(c) Bank will act upon Instructions to vote on matters referred to in a
Notification, provided Instructions are received by Bank at its proxy voting
department by the deadline referred to in the relevant Notification. If
Instructions are not received in a timely manner, Bank will not be obligated to
provide further notice to Customer.
(d) Bank reserves the right to provide Notifications or parts thereof in
the language received. Bank will attempt in good faith to provide accurate and
complete Notifications, whether or not translated.
(e) Customer acknowledges that Notifications and other information
furnished pursuant to the active proxy voting service ("INFORMATION") are
proprietary to Bank and that Bank owns all intellectual property rights,
including copyrights and patents, embodied therein. Accordingly, Customer will
not make any use of such information except in connection with the active proxy
voting service.
(f) In markets where the active proxy voting service is not available or
where Bank has not received a duly completed enrollment form or other relevant
documentation, Bank will not provide Notifications to Customer but will endeavor
to act upon Instructions to vote on matters before meetings of holders of
Financial Assets where it is reasonably practicable for Bank (or its
Subcustodians or nominees as the case may be) to do so and where such
Instructions are received in time for Bank to take timely action (the "PASSIVE
PROXY VOTING SERVICE").
(g) Customer acknowledges that the provision of proxy voting services
(whether active or passive) may be precluded or restricted under a variety of
circumstances. These circumstances include, but are not limited to: (i) the
Financial Assets being on loan or out for registration, (ii) the pendency of
conversion or another corporate action, or (iii) Financial Assets being held at
Customer's request in a name not subject to the control of Bank or its
Subcustodian, in a margin or collateral account at Bank or another bank or
broker, or otherwise in a manner which affects voting, local market regulations
or practices, or restrictions by the issuer. Additionally, in some cases Bank
may be required to vote all shares held for a particular issue for all of Bank's
customers in the same way. Bank will inform Customer where this is the case.
(h) Notwithstanding the fact that Bank may act in a fiduciary capacity
with respect
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to Customer under other agreements or otherwise hereunder, in
performing active or passive voting proxy services Bank will be acting solely as
the agent of Customer, and will not exercise any discretion with regard to such
proxy services or vote any proxy except when directed by an Authorized Person.
2.12 STATEMENTS AND INFORMATION AVAILABLE ON-LINE.
(a) Bank will issue statements to Customer at times mutually agreed
identifying the Financial Assets and cash in the Accounts. Bank also will
provide additional statements containing this information upon Customer's
request. Additionally, Bank will send (or make available on-line to) Customer an
advice or notification of any transfers of cash or Financial Assets with respect
to the Accounts. Bank will be not be liable with respect to any matter set forth
in those portions of any such statement (or reasonably implied therefrom) to
which Customer has not given Bank a written exception or objection within sixty
(60) days of receipt of the statement.
(b) Prices and other information obtained from third parties which may be
contained in any statement sent to Customer have been obtained from sources Bank
believes to be reliable. Bank does not, however, make any representation as to
the accuracy of such information or that the prices specified necessarily
reflect the proceeds that would be received on a disposal of the relevant
Financial Assets. References in this Agreement to statements include any
statements in electronic form.
(c) Customer acknowledges that records and unaudited reports available to
it on-line will be unaudited and may not be accurate due to inaccurate pricing,
delays in updating Account records, and other causes. Bank will not be liable
for any loss or damage arising out of the inaccuracy of any such records or
unaudited reports accessed on-line.
2.13 ACCESS TO BANK'S RECORDS.
Bank will allow Customer's independent public accountants such reasonable
access to the records of Bank relating to Financial Assets as is required in
connection with their examination of books and records pertaining to Customer's
affairs. Subject to restrictions under Applicable Law, Bank will also obtain an
undertaking to permit Customer's independent public accountants reasonable
access to the records of any Subcustodian of Securities held in the Securities
Account as may be required in connection with such examination.
2.14 MAINTENANCE OF FINANCIAL ASSETS AT BANK AND SUBCUSTODIAN LOCATIONS.
(a) Unless Instructions (as detailed in Article 3) require another
location acceptable to Bank, Financial Assets will be held in the country or
jurisdiction in which their principal trading market is located, where such
Financial Assets may be presented for payment, where such Financial Assets were
acquired, or where such Financial Assets are held. Bank reserves the right to
refuse to accept delivery of Financial Assets or cash in countries and
jurisdictions
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other than those referred to in Schedule 1 to this Agreement, as in effect from
time to time.
(b) Bank will not be obliged to follow an Instruction to hold Financial
Assets with, or have them registered or recorded in the name of, any person not
chosen by Bank. However, if Customer does instruct Bank to hold Securities with
or register or record Securities in the name of a person not chosen by Bank, the
consequences of doing so are at Customer's own risk and Bank will not be liable
therefor.
2.15 TAX RECLAIMS.
Bank will provide tax reclamation services as provided in Section 8.2.
2.16 FOREIGN EXCHANGE TRANSACTIONS.
To facilitate the administration of Customer's trading and investment
activity, Bank may, but will not be obliged to, enter into spot or forward
foreign exchange contracts with Customer, or an Authorized Person, and may also
provide foreign exchange contracts and facilities through its Affiliates or
Subcustodians. Instructions, including standing instructions, may be issued with
respect to such contracts, but Bank may establish rules or limitations
concerning any foreign exchange facility made available. In all cases where
Bank, its Affiliates or Subcustodians enter into a master foreign exchange
contract that covers foreign exchange transactions for the Accounts, the terms
and conditions of that foreign exchange contract and, to the extent not
inconsistent, this Agreement, will apply to such transactions.
3. INSTRUCTIONS
3.1 ACTING ON INSTRUCTIONS; UNCLEAR INSTRUCTIONS.
(a) Bank is authorized to act under this Agreement (or to refrain from
taking action) in accordance with the instructions received by Bank, via
telephone, telex, facsimile transmission, or other teleprocess or electronic
instruction or trade information system acceptable to Bank ("Instructions").
Bank will have no responsibility for the authenticity or propriety of any
Instructions that Bank believes in good faith to have been given by Authorized
Persons or which are transmitted with proper testing or authentication pursuant
to terms and conditions that Bank may specify. Customer authorizes Bank to
accept and act upon any Instructions received by it without inquiry. Customer
will indemnify the Bank Indemnitees against, and hold each of them harmless
from, any Liabilities that may be imposed on, incurred by, or asserted against
the Bank Indemnitees as a result of any action or omission taken in accordance
with any Instructions or other directions upon which Bank is authorized to rely
under the terms of this Agreement.
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(b) Unless otherwise expressly provided, all Instructions will continue
in full force and effect until canceled or superseded.
(c) Bank may (in its sole discretion and without affecting any part of
this Section 3.1) seek clarification or confirmation of an Instruction from an
Authorized Person and may decline to act upon an Instruction if it does not
receive clarification or confirmation satisfactory to it. Bank will not be
liable for any loss arising from any delay while it seeks such clarification or
confirmation.
(d) In executing or paying a payment order Bank may rely upon the
identifying number (e.g. Fedwire routing number or account) or any party as
instructed in the payment order. Customer assumes full responsibility for any
inconsistency between the name and identifying number of any party in payment
orders issued to Bank in Customer's name.
3.2 CONFIRMATION OF ORAL INSTRUCTIONS/ SECURITY DEVICES.
Any Instructions delivered to Bank by telephone will promptly thereafter be
confirmed in writing by an Authorized Person. Each confirmation is to be clearly
marked "Confirmation." Bank will not be liable for having followed such
Instructions notwithstanding the failure of an Authorized Person to send such
confirmation in writing or the failure of such confirmation to conform to the
telephone Instructions received. Either party may record any of their telephonic
communications. Customer will comply with any security procedures reasonably
required by Bank from time to time with respect to verification of Instructions.
Customer will be responsible for safeguarding any test keys, identification
codes or other security devices that Bank will make available to Customer or any
Authorized Person.
3.3 INSTRUCTIONS; CONTRARY TO LAW/MARKET PRACTICE.
Bank need not act upon Instructions which it reasonably believes to be
contrary to law, regulation or market practice but will be under no duty to
investigate whether any Instructions comply with Applicable Law or market
practice.
3.4 CUT-OFF TIMES.
Bank has established cut-off times for receipt of some categories of
Instruction, which will be made availableto Customer. If Bank receives an
Instruction after its established cut-off time, it will attempt to act upon the
Instruction on the day requested if Bank deems it practicable to do so or
otherwise as soon as practicable after that day.
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4. FEES, EXPENSES AND OTHER AMOUNTS OWING TO BANK
4.1 FEES AND EXPENSES.
Customer will pay Bank for its services hereunder the fees set forth in
Schedule B hereto or such other amounts as may be agreed upon in writing from
time to time, together with Bank's reasonable out-of-pocket or incidental
expenses, including, but not limited to, legal fees. Customer authorizes Bank to
charge any Cash Accounts, for any such fees or expenses.
4.2 OVERDRAFTS.
If a debit to any currency in the Cash Account results in a debit balance
in that currency (without regard to any Cash Account investments) then Bank may,
in its discretion, advance an amount equal to the overdraft and such an advance
will be deemed a loan to Customer, payable on demand, bearing interest at the
rate charged by Bank from time to time, for overdrafts incurred by customers
similar to Customer, from the date of such advance to the date of payment (both
after as well as before judgment) and otherwise on the terms on which Bank makes
similar overdrafts available from time to time. No prior action or course of
dealing on Bank's part with respect to the settlement of transactions on
Customer's behalf will be asserted by Customer against Bank for Bank's refusal
to make advances to the Cash Account or to settle any transaction for which
Customer does not have sufficient available funds in the applicable currency in
the Account.
4.3 BANK'S RIGHT OVER SECURITIES; SET-OFF.
(a) Customer grants Bank a security interest in and a lien on the
Financial Assets held in the Securities Account as security for any and all
amounts which are now or become owing to Bank under any provision of this
Agreement, whether or not matured or contingent ("Indebtedness").
(b) Bank will be further entitled to set any such Indebtedness off
against any cash or deposit account with Bank or any of its Affiliates of which
Customer is the beneficial owner, regardless of the currency involved. Bank will
notify Customer in advance of any such charge unless Bank reasonably believes
that it might prejudice its interests to do so and, in such event, Bank will
notify Customer promptly afterwards.
5. SUBCUSTODIANS, SECURITIES DEPOSITORIES, AND OTHER AGENTS
5.1 APPOINTMENT OF SUBCUSTODIANS; USE OF SECURITIES DEPOSITORIES.
(a) Bank is authorized under this Agreement to act through and hold
Customer's Financial Assets with subcustodians, being at the date of this
Agreement the entities listed in
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Schedule 1 and/or such other entities as Bank may appoint as subcustodians
("Subcustodians"). Bank will use reasonable care in the selection and continued
appointment of such Subcustodians. In addition, Bank and each Subcustodian may
deposit Financial Assets with, and hold Financial Assets in, any securities
depository, settlement system, dematerialized book entry system or similar
system (together a "SECURITIES DEPOSITORY") on such terms as such systems
customarily operate and Customer will provide Bank with such documentation or
acknowledgements that Bank may require to hold the Financial Assets in such
systems.
(b) Any agreement Bank enters into with a Subcustodian for holding Bank's
customers' assets shall provide that such assets shall not be subject to any
right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian or its creditors except a claim of payment for their safe custody
or administration or, in the case of cash deposits, except for liens or rights
in favor of creditors of the Subcustodian arising under bankruptcy, insolvency
or similar laws, and that the beneficial ownership of such assets shall be
freely transferable without the payment of money or value other than for safe
custody or administration. Where a Subcustodian deposits Securities with a
Securities Depository, Bank will cause the Subcustodian to identify on its
records as belonging to Bank, as agent, the Securities shown on the
Subcustodian's account at such Securities Depository. The foregoing will not
apply to the extent of any special agreement or arrangement made by Customer
with any particular Subcustodian.
(c) Bank will have no responsibility for any act or omission by (or the
insolvency of) any Securities Depository. In the event Customer incurs a loss
due to the negligence, willful misconduct, or insolvency of a Securities
Depository, Bank will make reasonable endeavors, in its discretion, to seek
recovery from the Securities Depository.
5.2 LIABILITY FOR SUBCUSTODIANS.
(a) Subject to Section 7.1(b), Bank will be liable for direct losses
incurred by Customer that result from:
(i) the failure by the Subcustodian to use reasonable care in the
provision of custodial services by it in accordance with the
standards prevailing in the relevant market or from the fraud or
willful default of such Subcustodian in the provision of
custodial services by it; or
(ii) the insolvency of any Affiliated Subcustodian.
(b) Subject to Section 5.1(a) (i) and Bank's duty to use reasonable care
in the monitoring of a Subcustodian's financial condition as reflected in its
published financial statements and other publicly available financial
information concerning it, Bank will not be responsible for the insolvency of
any Subcustodian which is not a branch or an Affiliated Subcustodian.
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(c) Bank reserves the right to add, replace or remove Subcustodians. Bank
will give prompt notice of any such action, which will be advance notice if
practicable. Upon request by Customer, Bank will identify the name, address and
principal place of business of any Subcustodian and the name and address of the
governmental agency or other regulatory authority that supervises or regulates
such Subcustodian.
5.3 USE OF AGENTS.
(a) Bank may provide certain services under this Agreement through third
parties. These third parties may be Affiliates. Except to the extent provided in
Section 5.2 with respect to Subcustodians, Bank will not be responsible for any
loss as a result of a failure by any broker or any other third party that it
selects and retains using reasonable care to provide ancillary services, such as
pricing, proxy voting, and corporate action services, that it does not
customarily provide itself. Nevertheless, Bank will be liable for the
performance of any such service provider selected by Bank that is an Affiliate
to the same extent as Bank would have been liable if it performed such services
itself.
(b) Bank will execute transactions involving Financial Assets of United
States origin through a broker which is an Affiliate (i) in the case of the sale
under Section 2.8 of a fractional interest or (ii) if an Authorized Person
directs Bank to use the affiliated broker or otherwise requests that Bank select
a broker for that transaction, unless, in either case, the Affiliate does not
execute similar transactions in such Financial Assets. The affiliated broker may
charge its customary commission (or retain its customary spread) with respect to
either such transaction.
6. ADDITIONAL PROVISIONS RELATING TO CUSTOMER
6.1 REPRESENTATIONS OF CUSTOMER.
Customer represents and warrants that (i) it has full authority and power,
and has obtained all necessary authorizations and consents, to deposit and
control the Financial Assets and cash in the Accounts, to use Bank as its
custodian in accordance with the terms of this Agreement and to incur
indebtedness, pledge Financial Assets as contemplated by Section 4.3, and enter
into foreign exchange transactions; and (ii) this Agreement is its legal, valid
and binding obligation, enforceable in accordance with its terms and it has full
power and authority to enter into and has taken all necessary corporate action
to authorize the execution of this Agreement. Bank may rely upon the above or
the certification of such other facts as may be required to administer Bank's
obligations hereunder.
6.2 CUSTOMER TO PROVIDE CERTAIN INFORMATION TO BANK.
Upon request, Customer will promptly provide to Bank such information about
itself and its financial status as Bank may reasonably request, including
Customer's organizational documents and its current audited and unaudited
financial statements.
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6.3 CUSTOMER IS LIABLE TO BANK EVEN IF IT IS ACTING FOR ANOTHER PERSON.
If Customer is acting as an agent for a disclosed or undisclosed principal
in respect of any transaction, cash, or Financial Asset, Bank nevertheless will
treat Customer as its principal for all purposes under this Agreement. In this
regard, Customer will be liable to Bank as a principal in respect of any
transactions relating to the Account. The foregoing will not affect any rights
Bank might have against Customer's principal.
7. WHEN BANK IS LIABLE TO CUSTOMER
7.1 STANDARD OF CARE; LIABILITY.
(a) Bank will use reasonable care in performing its obligations under
this Agreement. Bank will not be in violation of this Agreement with respect to
any matter as to which it has satisfied its obligation of reasonable care.
(b) Bank will be liable for Customer's direct damages to the extent they
result from Bank's negligence or willful misconduct in performing its duties as
set out in this Agreement and to the extent provided for in Section 5.2(a).
Nevertheless, under no circumstances will Bank be liable for any indirect,
consequential or special damages (including, without limitation, lost profits)
of any form, whether or not foreseeable and regardless of the type of action in
which such a claim may be brought, with respect to the Accounts or Bank's
performance hereunder or its role as custodian.
(c) Customer will indemnify the Bank Indemnitees against, and hold them
harmless from, any Liabilities that may be imposed on, incurred by or asserted
against any of the Bank Indemnitees in connection with or arising out of Bank's
performance under this Agreement, provided the Bank Indemnitees have not acted
with negligence or engaged in fraud or willful misconduct in connection with the
Liabilities in question. Nevertheless, Customer will not be obligated to
indemnify any Bank Indemnitee under the preceding sentence with respect to any
Liability for which Bank is liable under Section 5.2 of this Agreement.
(d) Without limiting Subsections 7.1 (a), (b) or (c), Bank will have no
duty or responsibility to: (i) question Instructions or make any suggestions to
Customer or an Authorized Person regarding such Instructions; (ii) supervise or
make recommendations with respect to investments or the retention of Financial
Assets; (iii) advise Customer or an Authorized Person regarding any default in
the payment of principal or income of any security other than as provided in
Section 2.7(b) of this Agreement; (iv) evaluate or report to Customer or an
Authorized Person regarding the financial condition of any broker, agent or
other party to which Bank is instructed to deliver Financial Assets or cash; or
(v) review or reconcile trade confirmations received from brokers (and Customer
or its Authorized Persons
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issuing Instructions will bear any responsibility to review such confirmations
against Instructions issued to and statements issued by Bank).
7.2 FORCE MAJEURE.
Bank will maintain and update from time to time business continuation and
disaster recovery procedures with respect to its global custody business that it
determines from time to time meet reasonable commercial standards. Bank will
have no liability, however, for any damage, loss, expense or liability of any
nature that Customer may suffer or incur, caused by an act of God, fire, flood,
civil or labor disturbance, war, act of any governmental authority or other act
or threat of any authority (de jure or de facto), legal constraint, fraud or
forgery, malfunction of equipment or software (except to the extent such
malfunction is primarily attributable to Bank's negligence in maintaining the
equipment or software), failure of or the effect of rules or operations of any
external funds transfer system, inability to obtain or interruption of external
communications facilities, or any cause beyond the reasonable control of Bank
(including without limitation, the non-availability of appropriate foreign
exchange).
7.3 BANK MAY CONSULT WITH COUNSEL.
Bank will be entitled to rely on, and may act upon the advice of
professional advisers in relation to matters of law, regulation or market
practice (which may be the professional advisers of Customer), and will not be
liable to Customer for any action reasonably taken or omitted pursuant to such
advice.
7.4 BANK PROVIDES DIVERSE FINANCIAL SERVICES AND MAY GENERATE PROFITS AS A
RESULT.
Customer acknowledges that Bank or its Affiliates may have a material
interest in the transaction or that circumstances are such that Bank may have a
potential conflict of duty or interest. For example, Bank or its Affiliates may
act as a market maker in the Financial Assets to which Instructions relate,
provide brokerage services to other customers, act as financial adviser to the
issuer of such Financial Assets, act in the same transaction as agent for more
than one customer, have a material interest in the issue of the Financial
Assets; or earn profits from any of these activities. Customer acknowledges that
Bank or its Affiliates may be in possession of information tending to show that
the Instructions received may not be in the best interests of Customer. Bank is
not under any duty to disclose any such information.
8. TAXATION
8.1 TAX OBLIGATIONS.
(a) Customer confirms that Bank is authorized to deduct from any cash
received or credited to the Cash Account any taxes or levies required by any
revenue or governmental authority for whatever reason in respect of Customer's
Accounts.
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(b) If Bank does not receive appropriate declarations, documentation and
information then additional United Kingdom taxation will be deducted from all
income received in respect of the Financial Assets issued outside the United
Kingdom (WHICH SHALL FOR THIS PURPOSE include United Kingdom Eurobonds) and any
applicable United States tax (including, but not limited to, non-resident alien
tax) will be deducted from United States source income. Customer will provide to
Bank such certifications, documentation, and information as it may require in
connection with taxation, and warrants that, when given, this information is
true and correct in every respect, not misleading in any way, and contains all
material information. Customer undertakes to notify Bank immediately if any
information requires updating or correcting.
(c) Customer will be responsible for the payment of all taxes relating to
the Financial Assets in the Securities Account, and Customer will pay, indemnify
and hold Bank harmless from and against any and all liabilities, penalties,
interest or additions to tax with respect to or resulting from, any delay in, or
failure by, Bank (1) to pay, withhold or report any U.S. federal, state or local
taxes or foreign taxes imposed on, or (2) to report interest, dividend or other
income paid or credited to the Cash Account, whether such failure or delay by
Bank to pay, withhold or report tax or income is the result of (x) Customer's
failure to comply with the terms of this paragraph, or (y) Bank's own acts or
omissions; provided however, Customer will not be liable to Bank for any penalty
or additions to tax due as a result of Bank's failure to pay or withhold tax or
to report interest, dividend or other income paid or credited to the Cash
Account solely as a result of Bank's negligent acts or omissions.
8.2 TAX RECLAIMS.
(a) Subject to the provisions of this Section, Bank will apply for a
reduction of withholding tax and any refund of any tax paid or tax credits in
respect of income payments on Financial Assets credited to the Securities
Account that Bank believes may be available.
(b) The provision of a tax reclamation service by Bank is conditional
upon Bank receiving from Customer (i) a declaration of its identity and place of
residence and (ii) certain other documentation (pro forma copies of which are
available from Bank). If Financial Assets credited to the Account are
beneficially owned by someone other than Customer, this information will be
necessary with respect to the beneficial owner. Customer acknowledges that Bank
will be unable to perform tax reclamation services unless it receives this
information.
(c) Bank will perform tax reclamation services only with respect to
taxation levied by the revenue authorities of the countries advised to Customer
from time to time and Bank may, by notification in writing, in its absolute
discretion, supplement or amend the countries in which the tax reclamation
services are offered. Other than as expressly provided in this Section 8.2 Bank
will have no responsibility with regard to Customer's tax position or status in
any jurisdiction.
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(d) Customer confirms that Bank is authorized to disclose any information
requested by any revenue authority or any governmental body in relation to the
processing of any tax reclaim.
9. TERMINATION
Either party may terminate this Agreement on sixty days' notice in writing
to the other party. If Customer gives notice of termination, it must provide
full details of the persons to whom Bank must deliver Financial Assets and cash.
If Bank gives notice of termination, then Customer must, within sixty days,
notify Bank of details of its new custodian, failing which Bank may elect (at
any time after the sixty day notice period) either to retain the Financial
Assets and cash until such details are given, continuing to charge fees due (in
which case Bank's sole obligation will be for the safekeeping of the Financial
Assets and cash), or deliver the Financial Assets and cash to Customer. Bank
will in any event be entitled to deduct any amounts owing to it prior to
delivery of the Financial Assets and cash (and, accordingly, Bank will be
entitled to sell Financial Assets and apply the sale proceeds in satisfaction of
amounts owing to it). Customer will reimburse Bank promptly for all
out-of-pocket expenses it incurs in delivering Financial Assets upon
termination. Termination will not affect any of the liabilities either party
owes to the other arising under this Agreement prior to such termination.
10. MISCELLANEOUS
10.1 NOTICES.
Notices (other than Instructions) will be served by registered mail or hand
delivery to the address of the respective parties as set out on the first page
of this Agreement, unless notice of a new address is given to the other party in
writing. Notice will not be deemed to be given unless it has been received.
10.2 SUCCESSORS AND ASSIGNS.
This Agreement will be binding on each of the parties' successors and
assigns, but the parties agree that neither party can assign its rights and
obligations under this Agreement without the prior written consent of the other
party, which consent will not be unreasonably withheld.
10.3 INTERPRETATION.
Headings are for convenience only and are not intended to affect
interpretation. References to sections are to sections of this Agreement and
references to sub-sections and paragraphs are to sub-sections of the sections
and paragraphs of the sub-sections in which they appear.
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10.4 ENTIRE AGREEMENT.
(a) The following Rider(s) are incorporated into this Agreement:
Cash Trade Execution;
-----
X Mutual Fund
-----
Domestic
-----
(b) This Agreement, including the Schedules, Exhibits, and Riders (and
any separate agreement which Bank and Customer may enter into with respect to
any Cash Account), sets out the entire Agreement between the parties in
connection with the subject matter, and this Agreement supersedes any other
agreement, statement, or representation relating to custody, whether oral or
written. Amendments must be in writing and signed by both parties.
10.5 INFORMATION CONCERNING DEPOSITS AT BANK'S LONDON BRANCH.
Bank's London Branch is a member of the United Kingdom Deposit Protection
Scheme (the "SCHEME") established under Banking Act 1987 (as amended). The
Scheme provides that in the event of Bank's insolvency payments may be made to
certain customers of Bank's London Branch. Payments under the Scheme are limited
to 90% of a depositor's total cash deposits subject to a maximum payment to any
one depositor of (pound)18,000 (or ECU 20,000 if greater). Most deposits
denominated in sterling and other European Economic Area Currencies and ECU made
with Bank within the United Kingdom are covered. Further details of the Scheme
are available on request.
10.6 CONFIDENTIALITY.
Bank will not disclose any confidential information concerning the
Financial Assets and/or cash held for Customer except as is reasonably necessary
to provide services to Customer, as required by law or regulation or the
organizational documents of the issuer of any Financial Asset, or otherwise with
the consent of Customer. Customer agrees to keep this Agreement confidential
and, except where disclosure is required by law or regulation, will only
disclose it (or any part of it) with the prior written consent of Bank.
10.7 INSURANCE.
Bank will not be required to maintain any insurance coverage for the
benefit of Customer.
10.8 GOVERNING LAW AND JURISDICTION. CERTIFICATION OF RESIDENCY. .
This Agreement will be construed, regulated, and administered under the
laws of
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the United States or State of New York, as applicable, without regard to New
York's principles regarding conflict of laws. The United States District Court
for the Southern District of New York will have the sole and exclusive
jurisdiction over any lawsuit or other judicial proceeding relating to or
arising from this Agreement. If that court lacks federal subject matter
jurisdiction, the Supreme Court of the State of New York, New York County will
have sole and exclusive jurisdiction. Either of these courts will have proper
venue for any such lawsuit or judicial proceeding, and the parties waive any
objection to venue or their convenience as a forum. The parties agree to submit
to the jurisdiction of any of the courts specified and to accept service of
process to vest personal jurisdiction over them in any of these courts. The
parties further hereby knowingly, voluntarily and intentionally waive, to the
fullest extent permitted by applicable law, any right to a trial by jury with
respect to any such lawsuit or judicial proceeding arising or relating to this
Agreement or the transactions contemplated hereby. (B) Customer certifies that
it is a resident of the United States and shall notify Bank of any changes in
residency. Bank may rely upon this certification or the certification of such
other facts as may be required to administer Bank's obligations hereunder.
Customer shall indemnify Bank against all losses, liability, claims or demands
arising directly or indirectly from any such certifications.
10.9 SEVERABILITY AND WAIVER.
(a) If one or more provisions of this Agreement are held invalid, illegal
or unenforceable in any respect on the basis of any particular circumstances or
in any jurisdiction, the validity, legality and enforceability of such provision
or provisions under other circumstances or in other jurisdictions and of the
remaining provisions will not in any way be affected or impaired.
(b) Except as otherwise provided herein, no failure or delay on the part
of either party in exercising any power or right hereunder operates as a waiver,
nor does any single or partial exercise of any power or right preclude any other
or further exercise, or the exercise of any other power or right. No waiver by a
party of any provision of this Agreement, or waiver of any breach or default, is
effective unless in writing and signed by the party against whom the waiver is
to be enforced.
10.10 COUNTERPARTS.
This Agreement may be executed in several counterparts each of which will
be deemed to be an original and together will constitute one and the same
agreement.
FRIENDS IVORY & SIME FUNDS
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By:
---------------------------------
Title:
Date:
THE CHASE MANHATTAN BANK
By:
---------------------------------
Title:
Date:
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Investment Company Rider to Global Custody Agreement
Between THE CHASE MANHATTAN BANK and
FRIENDS IVORY & SIME FUNDS
effective November , 1999
The following modifications are made to the Agreement:
A. Add a new Section 2.17 to the Agreement as follows:
"2.17. COMPLIANCE WITH SEC RULE 17F-5.
(a) Customer's board of directors (or equivalent body) (hereinafter
`Board') hereby delegates to Bank, and, except as to the country or countries as
to which Bank may, from time to time, advise Customer that it does not accept
such delegation, Bank hereby accepts the delegation to it, of the obligation to
perform as Customer's `Foreign Custody Manager' (as that term is defined in
Securities and Exchange Commission ("SEC") rule 17f-5(a)(2) as promulgated under
the Investment Company Act of 1940, as amended ("1940 Act")), both for the
purpose of selecting Eligible Foreign Custodians (as that term is defined in SEC
rule 17f-5(a)(1), and as the same may be amended from time to time, or that have
otherwise been made exempt pursuant to an SEC exemptive order) to hold Financial
Assets and Cash and of evaluating the contractual arrangements with such
Eligible Foreign Custodians (as set forth in SEC rule 17f-5(c)(2)); provided
that, the term Eligible Foreign Custodian shall not include any `Eligible
Securities Depository.' An Eligible Securities Depository for purposes hereof
shall have the same meaning as in SEC rule 17f-7 as proposed on April 29, 1999.
(Eligible Securities Depositories used by Bank as of the date hereof are set
forth in Appendix 1-A hereto, and as the same may be amended on notice to
Customer from time to time.)
(b) In connection with the foregoing, Bank shall:
(i) provide written reports notifying Customer's Board of the placement of
Financial Assets and Cash with particular Eligible Foreign Custodians and
of any material change in the arrangements with such Eligible Foreign
Custodians, with such reports to be provided to Customer's Board at such
times as the Board deems reasonable and appropriate based on the
circumstances of Customer's foreign custody arrangements (and until further
notice from Customer such reports shall be provided not less than quarterly
with respect to the placement of Financial Assets and Cash with particular
Eligible Foreign Custodians and with reasonable promptness upon the
occurrence of any material change in the arrangements with such Eligible
Foreign Custodians);
(ii) exercise such reasonable care, prudence and diligence in performing as
Customer's Foreign Custody Manager as a person having responsibility for
the safekeeping of Financial Assets and cash would exercise;
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(iii) in selecting an Eligible Foreign Custodian, first have determined
that Financial Assets and cash placed and maintained in the safekeeping of
such Eligible Foreign Custodian shall be subject to reasonable care, based
on the standards applicable to custodians in the relevant market, after
having considered all factors relevant to the safekeeping of such Financial
Assets and cash, including, without limitation, those factors set forth in
SEC rule 17f-5(c)(1)(i)-(iv);
(iv) determine that the written contract with an Eligible Foreign Custodian
requires that the Eligible Foreign Custodian will provide reasonable care
for Financial Assets and Cash based on the standards applicable to
custodians in the relevant market.
(v) have established a system to monitor the continued appropriateness of
maintaining Financial Assets and cash with particular Eligible Foreign
Custodians and of the governing contractual arrangements; it being
understood, however, that in the event that Bank shall have determined that
the existing Eligible Foreign Custodian in a given country would no longer
afford Financial Assets and cash reasonable care and that no other Eligible
Foreign Custodian in that country would afford reasonable care, Bank shall
promptly so advise Customer and shall then act in accordance with the
Instructions of Customer with respect to the disposition of the affected
Financial Assets and cash.
Subject to (b)(i)-(v) above, Bank is hereby authorized to place and maintain
Financial Assets and cash on behalf of Customer with Eligible Foreign Custodians
pursuant to a written contract deemed appropriate by Bank.
(c) Except as expressly provided herein, Customer shall be solely
responsible to assure that the maintenance of Financial Assets and cash
hereunder complies with the rules, regulations, interpretations and exemptive
orders as promulgated by or under the authority of the SEC.
(d) Bank represents to Customer that it is a U.S. Bank as defined in Rule
17f-5(a)(7). Customer represents to Bank that: (1) the Financial Assets and cash
being placed and maintained in Bank's custody are subject to the 1940 Act, as
the same may be amended from time to time; (2) its Board: (i) has determined
that it is reasonable to rely on Bank to perform as Customer's Foreign Custody
Manager (ii) or its investment adviser shall have determined that Customer may
maintain Financial Assets and cash in each country in which Customer's Financial
Assets and cash shall be held hereunder and determined to accept Country Risk.
Nothing contained herein shall require Bank to make any selection or to engage
in any monitoring on behalf of Customer that would entail consideration of
Country Risk.
(e) Bank shall provide to Customer such information relating to Country
Risk as is specified in Appendix 1-B hereto. Customer hereby acknowledges that:
(i) such information is solely designed to inform Customer of market conditions
and procedures and is not intended as a recommendation to invest or not invest
in particular markets; and
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(ii) Bank has gathered the information from sources it considers reliable, but
that Bank shall have no responsibility for inaccuracies or incomplete
information.
B. Add the following after the first sentence of Section 5.1(a) of the
Agreement: "At the request of Customer, Bank may, but need not, add to Schedule
1-A an Eligible Foreign Custodian where Bank has not acted as Foreign Custody
Manager with respect to the selection thereof. Bank shall notify Customer in the
event that it elects to add any such entity."
C. Add the following language as Section 5.1(d) of the Agreement:
" (d) The term Subcustodian as used herein shall mean the following:
(i) a `U.S. Bank,' which shall mean a U.S. bank as defined in SEC rule
17f-5(a)(7);
(ii) an `Eligible Foreign Custodian,' which shall mean: (i) a banking
institution or trust company, incorporated or organized under the laws
of a country other than the United States, that is regulated as such
by that country's government or an agency thereof, (ii) a
majority-owned direct or indirect subsidiary of a U.S. bank or bank
holding company which subsidiary is incorporated or organized under
the laws of a country other than the United States; and (iii) any
other entity (other than an Eligible Securities Depository) that shall
have been so qualified by exemptive order, rule or other appropriate
action of the SEC.
For purposes of clarity, it is agreed that as used in Section 5.3(a), the term
Subcustodian shall not include any Eligible Foreign Custodian as to which Bank
has not acted as Foreign Custody Manager."
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Appendix 1-A
DEPOSITORIES
<PAGE>
Appendix 1-B
INFORMATION REGARDING COUNTRY RISK
1. To aid Customer in its determinations regarding Country Risk, Bank shall
furnish annually and upon the initial placing of Financial Assets and cash into
a country the following information (check items applicable):
A Opinions of local counsel concerning:
i. Whether applicable foreign law would restrict the access afforded
Customer's independent public accountants to books and records kept by
an eligible foreign custodian located in that country.
ii. Whether applicable foreign law would restrict the Customer's ability
to recover its Financial Assets and cash in the event of the
bankruptcy of an Eligible Foreign Custodian located in that country.
iii. Whether applicable foreign law would restrict the Customer's ability
to recover Financial Assets that are lost while under the control of
an Eligible Foreign Custodian located in the country.
B. Written information concerning:
i. The foreseeability of expropriation, nationalization, freezes, or
confiscation of Customer's Financial Assets.
ii. Whether difficulties in converting Customer's cash and cash
equivalents to U.S. dollars are reasonably foreseeable.]
C. A market report with respect to the following topics:
(i) securities regulatory environment, (ii) foreign ownership
restrictions, (iii) foreign exchange, (iv) securities settlement and
registration, (v) taxation, and (vi) depositories (including
depository evaluation), if any.
2. To aid Customer in monitoring Country Risk, Bank shall furnish board
the following additional information:
Market flashes, including with respect to changes in the information in
market reports.
<PAGE>
DOMESTIC AND GLOBAL
SPECIAL TERMS AND CONDITIONS RIDER
DOMESTIC CORPORATE ACTIONS AND PROXIES
With respect to domestic U.S. and Canadian Financial Assets (the latter if held
in The Depository Trust Company), the following provisions shall apply rather
than the pertinent provisions of Sections 2.10-2.11 of the Agreement:
Bank shall send to Customer or the Authorized Person for a Custody
Account, such proxies (signed in blank, if issued in the name of
Bank's nominee or the nominee of a central depository) and
communications with respect to Financial Assets in the Custody Account
as call for voting or relate to legal proceedings within a reasonable
time after sufficient copies are received by Bank for forwarding to
its customers. In addition, Bank shall follow coupon payments,
redemptions, exchanges or similar matters with respect to Financial
Assets in the Custody Account and advise Customer or the Authorized
Person for such Account of rights issued, tender offers or any other
discretionary rights with respect to such Financial Assets, in each
case, of which Bank has received notice from the issuer of the
Financial Assets, or as to which notice is published in publications
routinely utilized by Bank for this purpose.
<PAGE>
ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of this __ day of _______, 1999, by and
between Friends Ivory Funds, a Delaware business trust, (the "Trust"), and SEI
Investments Mutual Funds Services (the "Administrator"), a Delaware business
trust.
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares of beneficial interest ("Shares");
and
WHEREAS, the Trust desires the Administrator to provide, and the
Administrator is willing to provide, administrative and accounting services to
such funds of the Trust as the Trust and the Administrator may agree on
("Funds") and as listed on the schedules attached hereto ("Schedules") and made
a part of this Agreement, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Administrator hereby agree as follows:
ARTICLE 1. RETENTION OF THE ADMINISTRATOR. The Trust hereby retains the
Administrator to act as the administrator of the Funds and to furnish the Funds
with the management and administrative services as set forth in Article 2 below.
The Administrator hereby accepts such employment to perform the duties set forth
below.
The Administrator shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust.
ARTICLE 2. ADMINISTRATIVE AND ACCOUNTING SERVICES. The Administrator
shall perform or supervise the performance by others of other administrative
services in connection with the operations of the Funds, and, on behalf of the
Trust, will investigate, assist in the selection of and conduct relations with
custodians, depositories, accountants, legal counsel, underwriters, brokers and
dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Funds' operations. The
Administrator shall provide the Trustees of the Trust with such reports
regarding investment performance and compliance with investment policies and
applicable laws, rules and regulations as they may reasonably request but shall
have no responsibility for supervising the performance by any investment adviser
or sub-adviser of its responsibilities. The Administrator may appoint a
sub-administrator to perform certain of the services to be performed by the
Administrator hereunder.
The Administrator shall provide the Trust with administrative services,
regulatory reporting, fund accounting and related Fund accounting services, all
necessary office space, equipment, personnel, compensation and facilities
(including facilities for Shareholders' and Trustees' meetings) for handling the
affairs of the Funds and such other services as the Trustees may, from time to
time, reasonably request and the Administrator shall, from time to time,
reasonably
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determine to be necessary to perform its obligations under this Agreement. In
addition, at the request of the Trust's Board of Trustees (the "Trustees"), the
Administrator shall make reports to the Trustees concerning the performance of
its obligations hereunder.
Without limiting the generality of the foregoing, the Administrator shall:
(A) calculate contractual Trust expenses and control all
disbursements for the Trust and, as appropriate, compute the
Trust's yields, total return, expense ratios, Fund turnover
rate and, if required, Fund average dollar-weighed maturity;
(B) assist Trust counsel with the preparation of prospectuses,
statements of additional information, registration statements,
and proxy materials;
(C) prepare such reports, applications and documents (including
reports regarding the sale and redemption of Shares as may be
required in order to comply with Federal and state securities
law) as may be necessary or desirable to register the Trust's
Shares with state securities authorities, monitor sale of
Trust Shares for compliance with state securities laws, and
file with the appropriate state securities authorities the
registration statements and reports for the Trust and the
Trust's Shares and all amendments thereto, as may be necessary
or convenient to register and keep effective the Trust and the
Trust's Shares with state securities authorities to enable the
Trust to make a continuous offering of its Shares;
(D) develop and prepare communications to shareholders, including
the annual reports to shareholders, coordinate mailing
prospectuses, notices, proxy statements, proxies and other
reports to Trust shareholders, and supervise and facilitate
the solicitation of proxies solicited by the Trust for all
shareholder meetings, including tabulation process for
shareholder meetings;
(E) coordinate with Trust counsel the preparation and negotiation
of, and administer contracts on behalf of the Trust with,
among others, the Trust's investment adviser, distributor,
custodian, and transfer agent;
(F) maintain the Trust's general ledger and prepare the Trust's
financial statements, including expense accruals and payments,
determine the net asset value of the Trust's assets and of the
Trust's Shares, and supervise the Trust's transfer agent with
respect to the payment of dividends and other distributions to
shareholders;
(G) calculate performance data of the Trust and its Funds for
dissemination to information services covering the investment
company industry;
(H) coordinate and supervise the preparation and filing of the
Trust's tax returns;
(I) examine and review the operations and performance of the
various organizations providing services to the Trust or any
Fund of the Trust, including, without
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limitation, the Trust's investment adviser, distributor,
custodian, transfer agent, outside legal counsel and
independent public accountants, and at the request of the
Trustees, report to the Trustees on the performance of
organizations;
(J) assist with the layout and printing of publicly disseminated
prospectuses and assist with and coordinate layout and
printing of the Trust's semi-annual and annual reports to
shareholders;
(K) provide internal legal and administrative services as
reasonably requested by the Trust from time to time;
(L) assist with the design, development, and operation of the
Trust, including new Fund and class investment objectives,
policies and structure;
(M) provide individuals acceptable to the Trustees for nomination,
appointment, or election as officers of the Trust, who will be
responsible for the management of certain of the Trust's
affairs as determined by the Trustees;
(N) advise the Trust and its Trustees on matters concerning the
Trust and its affairs;
(O) obtain and keep in effect fidelity bonds and directors and
officers/errors and omissions insurance policies for the Trust
in accordance with the requirements of Rule 17g-1 and
paragraph (d)(7) of Rule 17d-1 under the 1940 Act as such
bonds and policies are approved by the Trust's Board of
Trustees;
(P) monitor and advise the Trust and its Funds on their regulated
investment company status under the Internal Revenue Code of
1986, as amended;
(Q) perform all administrative services and functions of the Trust
and each Fund to the extent administrative services and
functions are not provided to the Trust or such Fund pursuant
to the Trust's or such Fund's investment advisory agreement,
distribution agreement, custodian agreement and transfer agent
agreement;
(R) furnish advice and recommendations with respect to other
aspects of the business and affairs of the Funds as the Trust
and the Administrator shall determine desirable; and
(S) prepare and file with the SEC the semi-annual report for the
Trust on Form N-SAR and all required notices pursuant to Rule
24f-2.
Also, the Administrator will perform other services for the Trust as agreed from
time to time, including, but not limited to performing secondary Fund compliance
review and reporting; internal audit examinations; mailing the annual reports of
the Funds; preparing an annual list of shareholders; and mailing notices of
shareholders' meetings, proxies and proxy statements, for all of which the Trust
will pay the Administrator's reasonable out-of-pocket expenses.
3
<PAGE>
ARTICLE 3. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE ADMINISTRATOR. The Administrator shall furnish at its own
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Administrator shall also provide the
items which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Administrator or any affiliated
corporation of the Administrator; provided, however, that unless otherwise
specifically provided, the Administrator shall not be obligated to pay the
compensation of any employee of the Trust retained by the Trustees of the Trust
to perform services on behalf of the Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Shareholders, all expenses
incurred in connection with issuing and redeeming Shares, the costs of pricing
services, the costs of custodial services, the cost of initial and ongoing
registration of the Shares under Federal and state securities laws, reasonable
fees and out-of-pocket expenses of Trustees who are not affiliated persons of
the Administrator or the investment adviser to the Trust or any affiliated
corporation of the Administrator or the investment Adviser, the reasonable costs
of Trustees' meetings, insurance, interest, brokerage costs, litigation and
other extraordinary or nonrecurring expenses, and all reasonable fees and
charges of investment advisers to the Trust.
ARTICLE 4. COMPENSATION OF THE ADMINISTRATOR.
(A) ADMINISTRATION FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Administrator pursuant to this
Agreement, the Trust shall pay to the Administrator compensation at an annual
rate specified in the Schedules to this Agreement. Such compensation shall be
calculated and accrued daily, and paid to the Administrator monthly. The Trust
shall also reimburse the Administrator for its reasonable out-of-pocket
expenses, including the travel and lodging expenses incurred by its officers and
employees in connection with attendance at meetings of the Trust's Board of
Trustees.
If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of the month in which this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Payment of the Administrator's compensation for the preceding month
shall be made promptly.
(B) COMPENSATION FROM TRANSACTIONS. The Trust hereby authorizes any
entity or person associated with the Administrator which is a member of a
national securities exchange to effect any transaction on the exchange for the
account of the Trust which is permitted by Section 11 (a) of the
4
<PAGE>
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust
hereby consents to the retention of compensation for such transactions in
accordance with Rule 11a2-2(T) (a) (2) (iv).
ARTICLE 5. LIMITATION OF LIABILITY OF THE ADMINISTRATOR. The duties of
the Administrator shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder. The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in carrying out its duties hereunder, except a loss resulting from
willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and duties
hereunder, except as may otherwise be provided under provisions of applicable
law which cannot be waived or modified hereby. (As used in this Article 5, the
term "Administrator" shall include directors, officers, employees and other
agents of the Administrator as well as that entity itself.) Under no
circumstances shall the Administrator be liable to the Trust for consequential,
indirect or punitive damages.
So long as the Administrator, or its agents, acts in good faith and
with due diligence the Trust assumes full responsibility and shall indemnify the
Administrator and hold it harmless from and against any and all actions, suits
and claims, whether groundless or otherwise, and from and against any and all
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of administration, accounting, and dividend
disbursing relationships to the Trust under this Agreement or any other service
rendered to the Trust hereunder. The indemnity and defense provisions set forth
herein shall indefinitely survive the termination of this Agreement.
The rights hereunder shall include the right to reasonable advances of
defense expenses in the event of any pending or threatened litigation with
respect to which indemnification hereunder may ultimately be merited. In order
that the indemnification provisions contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Administrator harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Administrator will use all reasonable care to identify and
notify the Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for indemnification against
the Trust, but failure to do so in good faith shall not affect the rights
hereunder. In no event and under no circumstances shall either party to this
Agreement be liable to anyone, including, without limitation, the other party,
for consequential damages for any act or failure to act under any provision of
this Agreement if advised of the possibility thereof.
The Trust shall be entitled to participate at its own expense or, if it
so elects, to assume the defense of any suit brought to enforce any claims
subject to this indemnity provision. If the Trust elects to assume the defense
of any such claim, the defense shall be conducted by counsel chosen by the Trust
and satisfactory to the Administrator, whose approval shall not be unreasonably
withheld. In the event that the Trust elects to assume the defense of any suit
and retain counsel, the Administrator shall bear the fees and expenses of any
additional counsel retained by it. If the Trust does not elect to assume the
defense of a suit, it will reimburse the Administrator for the reasonable fees
and expenses of any counsel retained by the Administrator.
5
<PAGE>
The Administrator may apply to the Trust at any time for instructions
and may consult counsel for the Trust or its own counsel and with accountants
and other experts with respect to any matter arising in connection with the
Administrator's duties, and the Administrator shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Administrator shall be protected in acting upon any document
which it reasonably believes to be genuine and to have been signed or presented
by the proper person or persons. Nor shall the Administrator be held to have
notice of any change of authority of any officers, employee or agent of the
Trust until receipt of written notice thereof from the Trust.
ARTICLE 6. ACTIVITIES OF THE ADMINISTRATOR. The services of the
Administrator rendered to the Trust are not to be deemed to be exclusive. The
Administrator is free to render such services to others and to have other
businesses and interests. It is understood that Trustees, officers, employees
and Shareholders of the Trust are or may be or become interested in the
Administrator, as directors, officers, employees and shareholders or otherwise
and that directors, officers, employees and shareholders of the Administrator
and its counsel are or may be or become similarly interested in the Trust, and
that the Administrator may be or become interested in the Trust as a Shareholder
or otherwise.
ARTICLE 7. CONFIDENTIALITY. The Administrator agrees on behalf of
itself and its employees to treat confidentially all records and other
information relative to the Trust and its prior, present or potential
Shareholders and relative to the Adviser and its prior, present or potential
customers, except, after prior notification to and approval in writing by the
Trust, which approval shall not be unreasonably withheld and may not be withheld
where the Administrator may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
ARTICLE 8. EQUIPMENT FAILURES. In the event of equipment failures
beyond the Administrator's control, the Administrator shall, at no additional
expense to the Trust, take reasonable and prompt steps to minimize service
interruptions but shall have no liability with respect thereto. The
Administrator shall develop and maintain a plan for recovery from equipment
failures which may include contractual arrangements with appropriate parties
making reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available.
ARTICLE 9. YEAR 2000 COMPLIANT. The Administrator warrants that all
software code owned or under control by it, used in the performance of its
obligations hereunder will be Year 2000 Compliant. For purposes of this
paragraph, "Year 2000 Compliant" means that the software will continue to
operate beyond December 31, 1999 without creating any logical or mathematical
inconsistencies concerning any date after December 31, 1999 and without
decreasing the functionality of the system applicable to dates prior to January
1, 2000 including, but not limited to, making changes to (a) date and data
century recognition; (b) calculations which accommodate same- and multi- century
formulas and date values; and (c) input/output of
6
<PAGE>
date values which reflect century dates. All changes described in this paragraph
will be made at no additional cost to the Fund.
ARTICLE 10. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The
Administrator undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act, the 1940 Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by the Administrator hereunder.
ARTICLE 11. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement
shall become effective on the date set forth in the Schedules and shall remain
in effect for the initial term of the Agreement (the "Initial Term") and each
renewal term thereof (each, a "Renewal Term"), each as set forth in the
Schedules, unless terminated in accordance with the provisions of this Article
11. This Agreement may be terminated only: (a) by the mutual written agreement
of the parties; (b) by either party hereto on 90 days' written notice, as of the
end of the Initial Term or the end of any Renewal Term; (c) by either party
hereto on such date as is specified in written notice given by the terminating
party, in the event of a material breach of this Agreement by the other party,
provided the terminating party has notified the other party of such breach at
least 45 days prior to the specified date of termination and the breaching party
has not remedied such breach by the specified date; (d) effective upon the
liquidation of the Administrator; or (e) as to any Fund or the Trust, effective
upon the liquidation of such Fund or the Trust, as the case may be. For purposes
of this Article 10, the term "liquidation" shall mean a transaction in which the
assets of the Administrator, the Trust or a Fund are sold or otherwise disposed
of and proceeds therefrom are distributed in cash to the shareholders in
complete liquidation of the interests of such shareholders in the entity.
This Agreement shall not be assignable by the Administrator, without
the prior written consent of the Trust, except to an entity that is controlled
by, or under common control with, the Administrator.
ARTICLE 12. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the entire agreement between the parties hereto and supersedes any prior
agreement, draft or agreement or proposal with respect to the subject matter
hereof. This Agreement or any part hereof may be changed or waived only by an
instrument in writing signed by the party against which enforcement of such
change or waiver is sought.
ARTICLE 13. CERTAIN RECORDS. The Administrator shall maintain customary
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made available
to or surrendered promptly to the Trust on request.
In case of any request or demand for the inspection of such records by
another party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case
7
<PAGE>
where it is advised by its counsel that it may be held liable for failure to do
so, unless (in cases involving potential exposure only to civil liability) the
Trust has agreed to indemnify the Administrator against such liability.
ARTICLE 14. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 15. NOTICE. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice to the
other party at the last address furnished by the other party to the party giving
notice: if to the Trust, at Friends Ivory Funds, P.O. Box 446, Portland, ME
04112; and if to the Administrator at One Freedom Valley Drive, Oaks,
Pennsylvania, 19456.
ARTICLE 16. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the State of
Delaware, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
ARTICLE 17. MULTIPLE ORIGINALS. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
ARTICLE 18. BINDING AGREEMENT. This Agreement, and the rights and
obligations of the parties and the Funds hereunder, shall be binding on, and
inure to the benefit of, the parties and the Funds and the respective successors
and assigns of each of them.
ARTICLE 19. SEVERABILITY. If any part, term or provision of this
Agreement is held to be illegal, in conflict with any law or otherwise invalid,
the remaining portion or portions shall be considered severable and not be
affected, and the rights and obligations of the parties shall be construed and
enforced as if the Agreement did not contain the particular part, term or
provision held to be illegal or invalid.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
FRIENDS IVORY FUNDS
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Attest:
------------------------
SEI INVESTMENTS MUTUAL FUNDS SERVICES
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Attest:
------------------------
9
<PAGE>
SCHEDULE
TO THE ADMINISTRATION AGREEMENT
DATED AS OF ______________, 1999
BETWEEN
FRIENDS IVORY FUNDS
AND
SEI INVESTMENTS MUTUAL FUNDS SERVICES
Funds: This Agreement shall apply to all Funds of the Trust, either now
in the future created. The following is a listing of the current
Funds of the Trust (collectively, the "Funds"): Friends Ivory
Social Awareness Fund and Friends Ivory European Social Awareness
Fund.
Fees: Pursuant to Article 4, Section A, the Trust shall pay the
Administrator compensation for services rendered to the Funds at
an annual rate, which is calculated daily and paid monthly,
according to the following schedule:
<TABLE>
<CAPTION>
--------------------------------------------------------------------
FEE (AS A PERCENTAGE OF AGGREGATE TRUST ASSETS
AGGREGATE AVERAGE ANNUAL
ASSETS)
--------------------------------------------------------------------
<S> <C>
0.15% to $100 million
--------------------------------------------------------------------
0.12% next $200 million
--------------------------------------------------------------------
0.10% next $300 million
--------------------------------------------------------------------
0.08% over $600 million
--------------------------------------------------------------------
</TABLE>
The minimum annual fee for each Fund will be $85,0000, payable monthly. The
minimum annual fee for each additional class of Shares after the first class of
Shares is $10,000.
Term: This Agreement shall become effective on ___________, 1999 and
shall remain in effect for an Initial Term of three (3) years from
such date and, thereafter, for successive Renewal Terms of two
(2) years each, unless and until this Agreement is terminated in
accordance with the provisions of Article 10 hereof.
<PAGE>
FRIENDS IVORY FUNDS
FORM OF TRANSFER AGENCY AND SERVICES AGREEMENT
AGREEMENT made as of the ____________ day of ______________, 1999, by and
between Friends Ivory Funds, a Delaware business trust, with its principal
office and place of business at One World Trade Center, Suite 2101, New York,
NewYork 10048-0080 (the "Trust"), and Forum Shareholder Services, LLC, a
Delaware limited liability company with its principal office and place of
business at Two Portland Square, Portland, Maine 04101 ("Forum").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and
may issue its shares of beneficial interest (the "Shares"), in separate series
and classes; and
WHEREAS, the Trust offers shares in various series as listed in Appendix A
hereto (each such series, together with all other series subsequently
established by the Trust and made subject to this Agreement in accordance with
Section 12, being herein referred to as a "Fund," and collectively as the
"Funds") and the Trust offers shares of various classes of each Fund as listed
in Appendix A hereto (each such class together with all other classes
subsequently established by the Trust in a Fund being herein referred to as a
"Class," and collectively as the "Classes");
WHEREAS, the Trust on behalf of the Funds desires to appoint Forum as its
transfer agent and dividend disbursing agent and Forum desires to accept such
appointment on the terms and conditions set forth in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Trust and Forum hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) APPOINTMENT. The Trust, on behalf of the Funds, hereby appoints Forum
to act as, and Forum agrees to act as, (i) transfer agent for the authorized and
issued shares of beneficial interest of the Trust representing interests in each
of the respective Funds and Classes thereof ("Shares"), (ii) dividend disbursing
agent and (iii) agent in connection with any accumulation, open-account or
similar plans provided to the registered owners of shares of any of the Funds
("Shareholders") and set out in the currently effective prospectuses and
statements of additional information (collectively "prospectus") of the
applicable Fund, including, without limitation, any periodic investment plan or
periodic withdrawal program.
(b) DOCUMENT DELIVERY. The Trust has delivered to Forum copies of (i) the
Trust's Trust Instrument and Bylaws (collectively, as amended from time to time,
"Organic Documents"), (ii) the Trust's Registration Statement and all amendments
thereto filed with the U.S. Securities and Exchange Commission ("SEC") pursuant
to the Securities Act of 1933, as
<PAGE>
amended (the "Securities Act"), or the 1940 Act (the "Registration Statement"),
(iii) the Trust's current Prospectus and Statement of Additional Information of
each Fund (collectively, as currently in effect and as amended or supplemented,
the "Prospectus"), (iv) each current plan of distribution or similar document
adopted by the Trust under Rule 12b-1 under the 1940 Act ("Plan") and each
current shareholder service plan or similar document adopted by the Trust
("Service Plan"), and (v) all procedures adopted by the Trust with respect to
the Funds (i.e., repurchase agreement procedures), and shall promptly furnish
Forum with all amendments of or supplements to the foregoing. The Trust shall
deliver to Forum a certified copy of the resolution of the Board of Trustees of
the Trust (the "Board") appointing Forum and authorizing the execution and
delivery of this Agreement.
SECTION 2. DUTIES OF FORUM
(a) SERVICES. Forum agrees that in accordance with procedures established
from time to time by agreement between the Trust on behalf of each of the Funds,
as applicable, and Forum, Forum will perform the following services:
(i) provide the services of a transfer agent, dividend disbursing agent
and, as relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment plan or
periodic withdrawal program) that are customary for open-end management
investment companies including: (A) maintaining all Shareholder accounts,
(B) preparing Shareholder meeting lists, (C) mailing proxies and related
materials to Shareholders, (D) mailing Shareholder reports and prospectuses
to current Shareholders, (E) withholding taxes on U.S. resident and
non-resident alien accounts, (F) preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate forms required by federal
authorities with respect to distributions for Shareholders, (G) preparing
and mailing confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, (H) preparing and mailing activity
statements for Shareholders, and (I) providing Shareholder account
information;
(ii) receive for acceptance orders for the purchase of Shares and promptly
deliver payment and appropriate documentation therefor to the custodian of
the applicable Fund (the "Custodian") or, in the case of Fund's operating
in a master-feeder or fund of funds structure, to the transfer agent or
interestholder recordkeeper for the master portfolios in which the Fund
invests;
(iii) pursuant to purchase orders, issue the appropriate number of Shares
and hold such Shares in the appropriate Shareholder account;
(iv) receive for acceptance redemption requests and deliver the appropriate
documentation therefor to the Custodian or, in the case of Fund's operating
in a master-feeder structure, to the transfer agent or interestholder
recordkeeper for the master fund in which the Fund invests;
-2-
<PAGE>
(v) as and when it receives monies paid to it by the Custodian with respect
to any redemption, pay the redemption proceeds as required by the
prospectus pursuant to which the redeemed Shares were offered and as
instructed by the redeeming Shareholders;
(vi) effect transfers of Shares upon receipt of appropriate instructions
from Shareholders;
(vii) prepare and transmit to Shareholders (or credit the appropriate
Shareholder accounts) payments for all distributions declared by the Trust
with respect to Shares;
(viii) issue share certificates and replacement share certificates for
those share certificates alleged to have been lost, stolen, or destroyed
upon receipt by Forum of indemnification satisfactory to Forum and
protecting Forum and the Trust and, at the option of Forum, issue
replacement certificates in place of mutilated share certificates upon
presentation thereof without requiring indemnification;
(ix) receive from Shareholders or debit Shareholder accounts for sales
commissions, including contingent deferred, deferred and other sales
charges, and service fees (i.e., wire redemption charges) and prepare and
transmit payments to underwriters, selected dealers and others for
commissions and service fees received;
(x) track shareholder accounts by financial intermediary source and
otherwise as reasonably requested by the Trust and provide periodic
reporting to the Trust or its administrator or other agent;
(xi) maintain records of account for and provide reports and statements to
the Trust and Shareholders as to the foregoing;
(xii) record the issuance of Shares of the Trust and maintain pursuant to
Rule 17Ad-10(e) under the Securities Exchange Act of 1934, as amended
("1934 Act") a record of the total number of Shares of the Trust, each Fund
and each Class thereof, that are authorized, based upon data provided to it
by the Trust, and are issued and outstanding and provide the Trust on a
regular basis a report of the total number of Shares that are authorized
and the total number of Shares that are issued and outstanding;
(xiii) provide a system which will enable the Trust to calculate the total
number of Shares of each Fund and Class thereof sold in each State;
(xiv) monitor and make appropriate filings with respect to the escheatment
laws of the various states and territories of the United States; and
(xv) oversee the activities of proxy solicitation firms.
-3-
<PAGE>
(b) OTHER SERVICES. Forum shall receive and tabulate proxy votes,
coordinate the tabulation of proxy and shareholder meeting votes and perform
such other additional services as may be specified from time to time by the
Trust, all pursuant to mutually acceptable compensation and implementation
agreements.
(c) BLUE SKY MATTERS. The Trust or its administrator or other agent (i)
shall identify to Forum in writing those transactions and assets to be treated
as exempt from reporting for each state and territory of the United States and
for each foreign jurisdiction (collectively "States") and (ii) shall monitor the
sales activity with respect to Shareholders domiciled or resident in each State.
The responsibility of Forum for the Trust's State registration status is solely
limited to the reporting of transactions to the Trust, and Forum shall have no
obligation, when recording the issuance of Shares, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the issue or sale of
such Shares, which functions shall be the sole responsibility of the Trust or
its administrator or other agent.
(d) SAFEKEEPING. Forum shall establish and maintain facilities and
procedures reasonably acceptable to the Trust for the safekeeping, control,
preparation and use of share certificates, check forms, and facsimile signature
imprinting devices. Forum shall establish and maintain facilities and procedures
reasonably acceptable to the Trust for safekeeping of all records maintained by
Forum pursuant to this Agreement.
(e) COOPERATION WITH ACCOUNTANTS. Forum shall cooperate with each Fund's
independent public accountants and shall take reasonable action to make all
necessary information available to the accountants for the performance of the
accountants' duties.
(f) RESPONSIBILITY FOR COMPLIANCE WITH LAW. Except with respect to Forum's
duties as set forth in this Section 2 and except as otherwise specifically
provided herein, the Trust assumes all responsibility for ensuring that the
Trust complies with all applicable requirements of the Securities Act, the 1940
Act and any laws, rules and regulations of governmental authorities with
jurisdiction over the Trust. All references to any law in this Agreement shall
be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
SECTION 3. RECORDKEEPING
(a) PREDECESSOR RECORDS. Prior to the commencement of Forum's
responsibilities under this Agreement, if applicable, the Trust shall deliver or
cause to be delivered over to Forum (i) an accurate list of Shareholders of the
Trust, showing each Shareholder's address of record, number of Shares owned and
whether such Shares are represented by outstanding share certificates and (ii)
all Shareholder records, files, and other materials necessary or appropriate for
proper performance of the functions assumed by Forum under this Agreement
(collectively referred to as the "Materials"). The Trust shall on behalf of each
applicable Fund or Class indemnify and hold Forum harmless from and against any
and all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any error, omission, inaccuracy or
other deficiency of the Materials, or out of the failure of the Trust to
-4-
<PAGE>
provide any portion of the Materials or to provide any information in the
Trust's possession or control reasonably needed by Forum to perform the
services described in this Agreement.
(b) RECORDKEEPING. Forum shall keep records relating to the services to be
performed under this Agreement, in the form and manner as it may deem advisable
and as required by applicable law. To the extent required by Section 31 of the
1940 Act, and the rules thereunder, Forum agrees that all such records prepared
or maintained by Forum relating to the services to be performed by Forum under
this Agreement are the property of the Trust and will be preserved, maintained
and made available in accordance with Section 31 of the 1940 Act and the rules
thereunder, and will be surrendered promptly to the Trust on and in accordance
with the Trust's request. The Trust and the Trust's authorized representatives
shall have access to Forum's records relating to the services to be performed
under this Agreement at all times during Forum's normal business hours. Upon the
reasonable request of the Trust, copies of any such records shall be provided
promptly by Forum to the Trust or the Trust's authorized representatives.
(c) CONFIDENTIALITY OF RECORDS. Forum and the Trust agree that all books,
records, information, and data pertaining to the business of the other party
which are exchanged or received pursuant to the negotiation or the carrying out
of this Agreement shall remain confidential, and shall not be voluntarily
disclosed to any other person, except as may be required by law.
(d) INSPECTION OF RECORDS BY OTHERS. In case of any requests or demands for
the inspection of the Shareholder records of the Trust, Forum will endeavor to
notify the Trust and to secure instructions from an authorized officer of the
Trust as to such inspection. Forum shall abide by the Trust's instructions for
granting or denying the inspection; provided, however, that Forum may grant the
inspection without instructions if Forum is advised by counsel to Forum that
failure to do so will result in liability to Forum.
SECTION 4. ISSUANCE AND TRANSFER OF SHARES
(a) ISSUANCE OF SHARES. Forum shall make original issues of Shares of each
Fund and Class thereof in accordance with the Trust's then current prospectus
only upon receipt of (i) instructions requesting the issuance, (ii) a certified
copy of a resolution of the Board authorizing the issuance, (iii) necessary
funds for the payment of any original issue tax applicable to such Shares, and
(iv) an opinion of the Trust's counsel as to the legality and validity of the
issuance, which opinion may provide that it is contingent upon the filing by the
Trust of an appropriate notice with the SEC, as required by Section 24 of the
1940 Act or the rules thereunder. If the opinion described in (iv) above is
contingent upon a filing under Section 24 of the 1940 Act, the Trust shall
indemnify Forum for any liability arising from the failure of the Trust to
comply with that section or the rules thereunder.
(b) TRANSFER OF SHARES. Transfers of Shares of each Fund and Class thereof
shall be registered on the Shareholder records maintained by Forum. In
registering transfers of Shares, Forum may rely upon the Uniform Commercial Code
as in effect in the State of Delaware or any other statutes that, in the
reasonable opinion of Forum's counsel, protect Forum and the Trust
-5-
<PAGE>
from liability arising from (i) not requiring complete documentation, (ii)
registering a transfer without an adverse claim inquiry, (iii) delaying
registration for purposes of such inquiry or (iv) refusing registration whenever
an adverse claim requires such refusal. As Transfer Agent, Forum will be
responsible for delivery to the transferor and transferee of such documentation
as is required by the Uniform Commercial Code.
SECTION 5. SHARE CERTIFICATES
(a) CERTIFICATES. The Trust shall furnish to Forum a supply of blank share
certificates of each Fund and Class thereof and, from time to time, will renew
such supply upon Forum's request. Blank share certificates shall be signed
manually or by facsimile signatures of officers of the Trust authorized to sign
by the Organic Documents of the Trust and, if required by the Organic Documents,
shall bear the Trust's seal or a facsimile thereof. Unless otherwise directed by
the Trust, Forum may issue or register Share certificates reflecting the manual
or facsimile signature of an officer who has died, resigned or been removed by
the Trust.
(b) ENDORSEMENT; TRANSPORTATION. New Share certificates shall be issued by
Forum upon surrender of outstanding Share certificates in the form deemed by
Forum to be properly endorsed for transfer and satisfactory evidence of
compliance with all applicable laws relating to the payment or collection of
taxes. Forum shall forward Share certificates in "non-negotiable" form by
first-class or registered mail, or by whatever means Forum deems equally
reliable and expeditious. Forum shall not mail Share certificates in
"negotiable" form unless requested in writing by the Trust and fully indemnified
by the Trust to Forum's satisfaction.
(c) NON-ISSUANCE OF CERTIFICATES. In the event that the Trust informs Forum
that any Fund or Class thereof does not issue share certificates, Forum shall
not issue any such share certificates and the provisions of this Agreement
relating to share certificates shall not be applicable with respect to those
Funds or Classes thereof.
SECTION 6. SHARE PURCHASES; ELIGIBILITY TO RECEIVE DISTRIBUTIONS
(a) PURCHASE ORDERS. Shares shall be issued in accordance with the terms of
a Fund's or Class' prospectus after Forum or its agent receives either:
(i) (A) an instruction directing investment in a Fund or Class, (B) a check
(other than a third party check) or a wire or other electronic payment in
the amount designated in the instruction and (C), in the case of an initial
purchase, a completed account application; or
(ii) the information required for purchases pursuant to a selected dealer
agreement, processing organization agreement, or a similar contract with a
financial intermediary.
(b) DISTRIBUTION ELIGIBILITY. Shares issued in a Fund after receipt of a
completed purchase order shall be eligible to receive distributions of the Fund
at the time specified in the prospectus pursuant to which the Shares are
offered.
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<PAGE>
(c) DETERMINATION OF FEDERAL FUNDS. Shareholder payments shall be
considered Federal Funds no later than on the day indicated below unless other
times are noted in the prospectus of the applicable Class or Fund:
(i) for a wire received, at the time of the receipt of the wire;
(ii) for a check drawn on a member bank of the Federal Reserve System, on
the next Fund Business Day following receipt of the check; and
(iii) for a check drawn on an institution that is not a member of the
Federal Reserve System, at such time as Forum is credited with Federal
Funds with respect to that check.
SECTION 7. FEES AND EXPENSES
(a) FEES. For the services provided by Forum pursuant to this Agreement,
the Trust, on behalf of each Fund, agrees to pay Forum the fees set forth in
Clauses (i) and (ii) of Appendix B hereto. Fees will begin to accrue for each
Fund on the latter of the date of this Agreement or the date of commencement of
operations of the Fund. If fees begin to accrue in the middle of a month or if
this Agreement terminates before the end of any month, all fees for the period
from that date to the end of that month or from the beginning of that month to
the date of termination, as the case may be, shall be prorated according to the
proportion that the period bears to the full month in which the effectiveness or
termination occurs. Upon the termination of this Agreement with respect to a
Fund, the Trust shall pay to Forum such compensation as shall be payable prior
to the effective date of termination. The Trust acknowledges that Forum may from
time to time earn money on amounts in the deposit accounts maintained by Forum
to service the Funds (and other clients serviced by Forum).
(b) EXPENSES. In connection with the services provided by Forum pursuant to
this Agreement, the Trust, on behalf of each Fund, agrees to reimburse Forum for
the expenses set forth in Appendix B hereto. In addition, the Trust, on behalf
of the applicable Fund, shall reimburse Forum for all reasonable incurred
out-of-pocket expenses and costs attributable to any review of the Trust's
accounts and records by the Trust's independent accountants or any regulatory
body outside of regular business practices. Should the Trust exercise its right
to terminate this Agreement, the Trust, on behalf of the applicable Fund, shall
reimburse Forum for all reasonable incurred out-of-pocket expenses and costs
associated with the copying and movement of records and material to any
successor person and providing assistance to any successor person in the
establishment of the accounts and records necessary to carry out the successor's
responsibilities.
(c) PAYMENT. All fees and reimbursements are payable in arrears on a
monthly basis and the Trust, on behalf of the applicable Fund, agrees to pay all
fees and reimbursable expenses within five (5) business days following receipt
of the respective billing notice.
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<PAGE>
SECTION 8. REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES OF FORUM. Forum represents and warrants
to the Trust that:
(i) It is a limited liability company duly organized and existing and in
good standing under the laws of the State of Delaware.
(ii) It is duly qualified to carry on its business in the State of Maine.
(iii) It is empowered under applicable laws and by its Operating Agreement
to enter into this Agreement and perform its duties under this Agreement.
(iv) All requisite corporate proceedings have been taken to authorize it to
enter into this Agreement and perform its duties under this Agreement.
(v) It has access to the necessary facilities, equipment, and personnel to
perform its duties and obligations under this Agreement.
(vi) This Agreement, when executed and delivered, will constitute a legal,
valid and binding obligation of Forum, enforceable against Forum in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
the rights and remedies of creditors and secured parties.
(vii) It is registered as a transfer agent under Section 17A of the 1934
Act.
(b) REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust represents and
warrants to Forum that:
(i) It is a business trust duly organized and existing and in good standing
under the laws of Delaware.
(ii) It is empowered under applicable laws and by its Organic Documents to
enter into this Agreement and perform its duties under this Agreement.
(iii) All requisite corporate proceedings have been taken to authorize it
to enter into this Agreement and perform its duties under this Agreement.
(iv) It is an open-end management investment company registered under the
1940 Act.
(v) This Agreement, when executed and delivered, will constitute a legal,
valid and binding obligation of the Trust, enforceable against the Trust in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
the rights and remedies of creditors and secured parties.
-8-
<PAGE>
(vi) A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate State securities law
filings have been made and will continue to be made, with respect to all
Shares of the Funds and Classes of the Trust being offered for sale.
SECTION 9. PROPRIETARY INFORMATION
(a) PROPRIETARY INFORMATION OF FORUM. The Trust acknowledges that the
databases, computer programs, screen formats, report formats, interactive design
techniques, and documentation manuals maintained by Forum on databases under the
control and ownership of Forum or a third party constitute copyrighted, trade
secret, or other proprietary information (collectively, "Proprietary
Information") of substantial value to Forum or the third party. The Trust agrees
to treat all Proprietary Information as proprietary to Forum and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided under this Agreement.
(b) PROPRIETARY INFORMATION OF THE TRUST. Forum acknowledges that the
Shareholder list and all information related to Shareholders furnished to Forum
by the Trust or by a Shareholder in connection with this Agreement
(collectively, "Customer Data") constitute proprietary information of
substantial value to the Trust. In no event shall Proprietary Information be
deemed Customer Data. Forum agrees to treat all Customer Data as proprietary to
the Trust and further agrees that it shall not divulge any Customer Data to any
person or organization except as may be provided under this Agreement or as may
be directed by the Trust.
SECTION 10. INDEMNIFICATION
(a) INDEMNIFICATION OF FORUM. Forum shall not be responsible for, and the
Trust shall on behalf of each applicable Fund or Class thereof indemnify and
hold Forum harmless from and against, any and all losses, damages, costs,
charges, reasonable counsel fees, payments, expenses and liability arising out
of or attributable to:
(i) all actions of Forum or its agents or subcontractors required to be
taken pursuant to this Agreement, provided that such actions are taken in
good faith and without gross negligence or willful misconduct;
(ii) the Trust's lack of good faith or the Trust's gross negligence or
willful misconduct;
(iii) the reliance on or use by Forum or its agents or subcontractors of
information, records, documents or services which have been prepared,
maintained or performed by the Trust or any other person or firm on behalf
of the Trust, including but not limited to any previous transfer agent or
registrar;
-9-
<PAGE>
(iv) the reasonable reliance on, or the carrying out by Forum or its agents
or subcontractors of, any instructions or requests of the Trust on behalf
of the applicable Fund; and
(v) the offer or sale of Shares in violation of any requirement under the
Federal securities laws or regulations or the securities laws or
regulations of any State that such Shares be registered in such State or in
violation of any stop order or other determination or ruling by any federal
agency or any State with respect to the offer or sale of such Shares in
such State.
(b) INDEMNIFICATION OF TRUST. Forum shall indemnify and hold the Trust and
each Fund or Class thereof harmless from and against any and all losses,
damages, costs, charges, reasonable counsel fees, payments, expenses and
liability arising out of or attributed to any action or failure or omission to
act by Forum as a result of Forum's lack of good faith, gross negligence or
willful misconduct with respect to the services performed under or in connection
with this Agreement.
(c) RELIANCE. At any time Forum may apply to any officer of the Trust for
instructions, and may consult with legal counsel to the Trust or to Forum with
respect to any matter arising in connection with the services to be performed by
Forum under this Agreement, and Forum and its agents or subcontractors shall not
be liable and shall be indemnified by the Trust on behalf of the applicable Fund
for any action taken or omitted by it in reasonable reliance upon such
instructions or upon the advice of such counsel. Forum, its agents and
subcontractors shall be protected and indemnified in acting upon (i) any paper
or document furnished by or on behalf of the Trust, reasonably believed by Forum
to be genuine and to have been signed by the proper person or persons, (ii) any
instruction, information, data, records or documents provided Forum or its
agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Trust, and (iii) any authorization,
instruction, approval, item or set of data, or information of any kind
transmitted to Forum in person or by telephone, vocal telegram or other
electronic means, reasonably believed by Forum to be genuine and to have been
given by the proper person or persons. Forum shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Trust. Forum, its agents and subcontractors shall also be protected and
indemnified in recognizing share certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Trust, and
the proper countersignature of any former transfer agent or former registrar or
of a co-transfer agent or co-registrar of the Trust.
(d) RELIANCE ON ELECTRONIC INSTRUCTIONS. If the Trust has the ability to
originate electronic instructions to Forum in order to (i) effect the transfer
or movement of cash or Shares or (ii) transmit Shareholder information or other
information, then in such event Forum shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further inquiry as
long as such instruction is undertaken in conformity with security procedures
established by Forum from time to time.
-10-
<PAGE>
(e) USE OF FUND/SERV AND NETWORKING. The Trust has authorized or in the
future may authorize Forum to act as a "Mutual Fund Services Member" for the
Trust or various Funds. Fund/SERV and Networking are services sponsored by the
National Securities Clearing Corporation ("NSCC") and as used herein have the
meanings as set forth in the then current edition of NSCC RULES AND PROCEDURES
published by NSCC or such other similar publication as may exist from time to
time. The Trust shall indemnify and hold Forum harmless from and against any and
all losses, damages, costs, charges, reasonable counsel fees, payments, expenses
and liability arising directly or indirectly out of or attributed to any action
or failure or omission to act by NSCC.
(f) NOTIFICATION OF CLAIMS. In order that the indemnification provisions
contained in this Section shall apply, upon the assertion of a claim for which
either party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments concerning
such claim. The party who may be required to indemnify shall have the option to
participate with the party seeking indemnification in the defense of such claim
or to defend against said claim in its own name or in the name of the other
party. The party seeking indemnification shall in no case confess any claim or
make any compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
SECTION 11. EFFECTIVENESS, DURATION AND TERMINATION
(a) EFFECTIVENESS. This Agreement shall become effective with respect to
each Fund or Class on ___________________________. Upon effectiveness of this
Agreement, it shall supersede all previous agreements between the parties hereto
covering the subject matter hereof insofar as such Agreement may have been
deemed to relate to the Funds.
(b) DURATION. This Agreement shall continue in effect with respect to a
Fund until terminated; provided, that continuance is specifically approved at
least annually (i) by the Board or by a vote of a majority of the outstanding
voting securities of the Fund and (ii) by a vote of a majority of Trustees of
the Trust who are not parties to this Agreement or interested persons of any
such party (other than as Trustees of the Trust).
(c) TERMINATION. This Agreement may be terminated with respect to a Fund at
any time, without the payment of any penalty (i) by the Board on 60 days'
written notice to Forum or (ii) by Forum on 60 days' written notice to the
Trust. Any termination shall be effective as of the date specified in the
notice. Upon notice of termination of this Agreement by either party, Forum
shall promptly transfer to the successor transfer agent the original or copies
of all books and records maintained by Forum under this Agreement including, in
the case of records maintained on computer systems, copies of such records in
machine-readable form, and shall cooperate with, and provide reasonable
assistance to, the successor transfer agent in the establishment of the books
and records necessary to carry out the successor transfer agent's
responsibilities.
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<PAGE>
(d) SURVIVAL. The obligations of Sections 3, 7, 8, 9, 10, 14, 15, 17 and 18
shall survive any termination of this Agreement.
SECTION 12. ADDITIONAL FUNDS AND CLASSES. In the event that the Trust
establishes one or more series of Shares or one or more classes of Shares after
the effectiveness of this Agreement, such series of Shares or classes of Shares,
as the case may be, shall become Funds and Classes under this Agreement. Forum
or the Trust may elect not to make and such series or classes subject to this
Agreement.
SECTION 13. ASSIGNMENT. Except as otherwise provided in this Agreement,
neither this Agreement nor any rights or obligations under this Agreement may be
assigned by either party without the written consent of the other party. This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective permitted successors and assigns. Forum may, without further
consent on the part of the Trust, subcontract for the performance hereof with
any entity, including affiliated persons of Forum; provided however, that Forum
shall be as fully responsible to the Trust for the acts and omissions of any
subcontractor as Forum is for its own acts and omissions.
SECTION 14. FORCE MAJEURE. Forum and the Trust shall not be responsible or
liable for any failure or delay in performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control including, without limitation, acts of civil or
military authority, national emergencies, labor difficulties, fire, mechanical
breakdowns, flood or catastrophe, acts of God, insurrection, war, riots or
failure of the mails or any transportation medium, communication system or power
supply.
SECTION 15. LIMITATIONS OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS,
OFFICERS, EMPLOYEES AND AGENTS. The trustees of the Trust and the shareholders
of each Fund shall not be liable for any obligations of the Trust or of the
Funds under this Agreement, and Forum agrees that, in asserting any rights or
claims under this Agreement, it shall look only to the assets and property of
the Trust or the Fund to which Forum's rights or claims relate in settlement of
such rights or claims, and not to the trustees of the Trust or the shareholders
of the Funds.
SECTION 16. TAXES. Forum shall not be liable for any taxes, assessments or
governmental charges that may be levied or assessed on any basis whatsoever in
connection with the Trust or any Shareholder or any purchase of Shares,
excluding taxes assessed against Forum for compensation received by it under
this Agreement.
-12-
<PAGE>
SECTION 17. YEAR 2000. Forum confirms that it has taken all reasonable
business steps to ensure that any system or software used in the operation of
its business that is in any way related to the services provided herein: (i)
manages and manipulates data involving all dates from the 20th and 21st
centuries without functional or data abnormality related to such dates; (ii) has
user interfaces and data fields formatted to distinguish between dates from the
20th and 21st centuries; and (iii) represents all data to include indications of
the millennium, century, and decade, as well as the actual year.
SECTION 18. MISCELLANEOUS
(a) NO CONSEQUENTIAL DAMAGES. Neither party to this Agreement shall be
liable to the other party for consequential damages under any provision of this
Agreement.
(b) AMENDMENTS. Except for Appendix A to add new Funds and Classes in
accordance with Section 12, no provisions of this Agreement may be amended or
modified in any manner except by a written agreement properly authorized and
executed by both parties hereto.
(c) CHOICE OF LAW. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Delaware.
(d) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
(e) COUNTERPARTS. This Agreement may be executed by the parties hereto on
any number of counterparts, and all of the counterparts taken together shall be
deemed to constitute one and the same instrument.
(f) SEVERABILITY. If any part, term or provision of this Agreement is held
to be illegal, in conflict with any law or otherwise invalid, the remaining
portion or portions shall be considered severable and not be affected, and the
rights and obligations of the parties shall be construed and enforced as if the
Agreement did not contain the particular part, term or provision held to be
illegal or invalid.
(g) HEADINGS. Section and paragraph headings in this Agreement are included
for convenience only and are not to be used to construe or interpret this
Agreement.
(h) NOTICES. Notices, requests, instructions and communications received by
the parties at their respective principal addresses, or at such other address as
a party may have designated in writing, shall be deemed to have been properly
given.
(i) BUSINESS DAYS. Nothing contained in this Agreement is intended to or
shall require Forum, in any capacity hereunder, to perform any functions or
duties on any day other than a Fund Business Day. Functions or duties normally
scheduled to be performed on any day
-13-
<PAGE>
which is not a Fund Business Day shall be performed on, and as of, the next Fund
Business Day, unless otherwise required by law.
(j) DISTINCTION OF FUNDS. Notwithstanding any other provision of this
Agreement, the parties agree that the assets and liabilities of each Fund of the
Trust are separate and distinct from the assets and liabilities of each other
Fund and that no Fund shall be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under this Agreement
or otherwise.
(k) NONLIABILITY OF AFFILIATES. No affiliated person (as that term is
defined in the 1940 Act), employee, agent, director, officer or manager of Forum
shall be liable at law or in equity for Forum's obligations under this
Agreement.
(l) REPRESENTATION OF SIGNATORIES. Each of the undersigned expressly
warrants and represents that they have full power and authority to sign this
Agreement on behalf of the party indicated and that their signature will bind
the party indicated to the terms hereof.
(m) CERTAIN DEFINITIONS. The terms and "affiliated person," "assignment"
and "vote of a majority of the outstanding voting securities" shall have the
meanings ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
persons, as of the day and year first above written.
FRIENDS IVORY FUNDS
By:_____________________________
Officer name:
Title:
FORUM SHAREHOLDER SERVICES, LLC
By:_____________________________
Lisa J. Weymouth
Director
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<PAGE>
FRIENDS IVORY FUNDS
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX A
FUNDS AND CLASSES OF THE TRUST
AS OF ________________
FUNDS:
Social Awareness Fund
European Social Awareness Fund
CLASSES:
Institutional Shares
Advisor Shares
-A1-
<PAGE>
FRIENDS IVORY FUNDS
TRANSFER AGENCY AND SERVICE AGREEMENT
APPENDIX B
FEES AND EXPENSES
(I) BASE FEE:
<TABLE>
<S> <C>
Fees per Fund with single Class.......................................................$2,000/month
Fees per Additional Fund or Class (2nd through 5th Fund or Class).....................$1,800/month
Fees per Additional Fund or Class (6th or greater Fund or Class)......................$1,500/month
</TABLE>
(II) SHAREHOLDER ACCOUNT FEES:
<TABLE>
<S> <C>
(a) Open account..........................................................$1.50/account/month
(b) Closed account........................................................$0.25/account/month
</TABLE>
Shareholder account fees are based upon the number of Shareholder
accounts as of the last Fund Business Day of the prior month.
(III) INTERNET RELATED FEES:
<TABLE>
<S> <C>
Fees per each Fund or Class...........................................................$500/month
</TABLE>
(IV) OUT-OF-POCKET AND RELATED EXPENSES:
The Trust, on behalf of the applicable Fund, shall reimburse Forum for
all out-of-pocket and ancillary expenses in providing the services
described in this Agreement, including but not limited to, the cost of
(or appropriate share of the cost of): (i) statement, confirmation,
envelope and stationary stock, (ii) share certificates, (iii) printing
of checks and drafts, (iv) postage, (v) telecommunications, (vi)
banking services (DDA account, wire and ACH, check and draft clearing
and lock box fees and charges), (vii) NSCC Mutual Fund Service Member
fees and expenses, (viii) outside proxy solicitors and tabulators, (ix)
proxy solicitation fees and (ix) microfilm and microfiche. In addition,
any other expenses incurred by Forum at the request or with the consent
of the Trust, will be reimbursed by the Trust on behalf of the
applicable Fund.
-B1-
<PAGE>
[LETTERHEAD OF MORGAN, LEWIS & BOCKIUS LLP]
December 17, 1999
Friends Ivory Funds
One World Trade Center
Suite 2101
New York, New York 10048
Re: Opinion of Counsel regarding Pre-Effective Amendment No. 1 to the
Registration Statement filed on Form N-1A under the Securities Act
of 1933 (File No. 333-88287).
---------------------------------------------------------------------
Ladies and Gentlemen:
We are furnishing this opinion with respect to the proposed offer and sale from
time to time of an indefinite number of units of beneficial interest, without
par value (the "Shares"), of Friends Ivory Funds (the "Trust"), a Delaware
business trust, in registration under the Securities Act of 1933 by a
Registration Statement on Form N-1A (File No. 333-88287) as amended from time to
time (the "Registration Statement").
We have acted as counsel to the Trust since its inception, and we are familiar
with the actions taken by its Trustees to authorize the issuance of the Shares.
We have reviewed the Declaration of Trust, the By-laws, and the minute books of
the Trust, and such other certificates, documents and opinions of counsel as we
deem necessary for the purpose of this opinion.
We have reviewed the Trust's Notification of Registration on Form N-8A under the
Investment Company Act of 1940 (File No. 811-09601). We have assisted in the
preparation of the Trust's Registration Statement, including all pre-effective
amendments thereto, filed or to be filed with the Securities and Exchange
Commission.
In our review we have assumed the genuineness of all signatures, the
authenticity and completeness of all documents purporting to be originals
(whether reviewed by us in original or in copy form), and the conformity to the
originals of all documents purporting to be copies.
<PAGE>
Friends Ivory Funds
December 17, 1999
Page 2
We have assumed the appropriate action will be taken to register or qualify the
sale of the Shares under any applicable state and federal laws regulating sales
and offerings of securities.
Based upon the foregoing, we are of the opinion that:
1. The Trust is a business trust validly existing under the laws of the State
of Delaware. The Trust is authorized under its Declaration of Trust to
issue an unlimited number of Shares in series representing interests in
Institutional Shares of the Friends Ivory Social Awareness Fund, Advisor
Shares of the Friends Ivory Social Awareness Fund, Institutional Shares of
the Friends Ivory European Social Awareness Fund, Advisor Shares of the
Friends Ivory European Social Awareness Fund, and in such other series or
classes as the Trustees may hereafter duly authorize.
2. Upon the issuance of any Shares of any of the series or classes of the
Trust for payment therefor as described in, and in accordance with the
Registration Statement and the Declaration of Trust and By-laws of the
Trust, the Shares so issued will be validly issued, fully paid and
non-assessable.
This opinion is intended only for your use in connection with the offering of
Shares and may not be relied upon by any other person.
We hereby consent to the inclusion of this opinion as Exhibit (i) to the Trust's
Pre-Effective Amendment No. 1 to be filed with the Securities and Exchange
Commission and to the reference to our firm under the caption "Legal Counsel" in
the Statement of Additional Information filed as part of such Amendment.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
<PAGE>
Prepared by:
/s/ Edward B. Baer
- ------------------------
Edward B. Baer
Reviewed by:
/s/ John H. Grady
- ------------------------
John H. Grady
Signed by:
/s/ Richard W. Grant
- ------------------------
Richard W. Grant
<PAGE>
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption "Independent Auditors"
in the Statement of Additional Information and to the use of our report dated
December 16, 1999 in Pre-Effective Amendment No. 1 to the Registration Statement
on Form N-1A (No. 333-88287/811-09601) of Friends Ivory Funds.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
December 16, 1999
<PAGE>
DISTRIBUTION PLAN
FRIENDS IVORY FUNDS
ADVISOR SHARES
WHEREAS, Friends Ivory Funds (the "Trust") is engaged in business as an
open-end investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act"); and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the
funds of the Trust listed on Exhibit A hereto (the "Funds") and the owners of
the Advisor Shares of such Funds (the "Shares");
NOW, THEREFORE, the Trustees of the Trust hereby adopt this Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust has adopted this Advisor Shares Distribution Plan
(the "Plan") to enable the Trust to directly or indirectly bear expenses
relating to the distribution of the Shares of the Trust.
SECTION 2. (a) In connection with the distribution-related services
provided in respect of Advisor Shares, the Trust will pay the Distributor a fee,
calculated and payable monthly, on the Advisor Shares of the Funds up to the
amount set forth on Exhibit A. The Distributor may use this fee to provide
initial and ongoing sales compensation to its investment executives and to other
broker-dealers and financial intermediaries in respect of sales of Advisor
Shares, to compensate third parties for the provision of recordkeeping and other
distribution-related services relating to Advisor Shares, and to pay for
advertising and promotional expenses in connection with the distribution of
Advisor Shares. These advertising and promotional expenses include, by way of
example but not by way of limitation, costs of printing and mailing
prospectuses, statements of additional information and shareholder reports to
prospective investors; preparation and distribution of sales literature;
advertising of any type; an allocation of other expenses of the Distributor
related to the distribution of Advisor Shares; and payments to, and expenses of,
officers, employees or representatives of the Distributor, of other
broker-dealers, banks or other financial institutions, and of any other persons
who provide support services in connection with the distribution of the Advisor
Shares.
(b) Payments under this Section of the Plan are not tied exclusively to the
expenses for distribution-related activities actually incurred by the
Distributor, so that such payments may exceed expenses actually incurred by the
Distributor. The Trust's Board of Trustees will evaluate the appropriateness of
the Plan and its payment terms on a continuing basis and in doing so will
consider all relevant factors, including expenses borne by the Distributor and
amounts it receives under the Plan.
(c) The Trust's investment adviser and the Distributor may, at their option and
in their sole
<PAGE>
discretion, make payments from their own resources to cover additional costs
associated with the provision of distribution services to the Trust.
SECTION 3. This Plan shall not take effect with respect to any Fund until
it has been approved (a) by a vote of at least a majority of the outstanding
voting securities of the Shares of such Fund; and (b) together with any related
agreements, by votes of the majority of both (i) the Trustees of the Trust and
(ii) the Qualified Trustees, cast in person at a Board of Trustees meeting
called for the purpose of voting on this Plan or such agreement.
SECTION 4. This Plan shall continue in effect for a period of more than
one year after it takes effect only for so long as such continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 3 herein for the approval of this Plan.
SECTION 5. Any person authorized to direct the disposition of monies paid
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
SECTION 6. This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of the outstanding
voting securities of the Shares of the Funds.
SECTION 7. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the vote of a majority of the Qualified Trustees or by the
vote of a majority of the Trust's outstanding voting securities of the Shares of
the Funds, on not more than 60 days' written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 8. This Plan may not be amended to increase materially the amount
of distribution expenses permitted pursuant to Section 2 hereof without the
approval of Shareholders holding a majority of the outstanding voting securities
of the Shares of the Funds, and all material amendments to this Plan shall be
approved in the manner provided in Part (b) of Section 3 herein for the approval
of this Plan.
SECTION 9. As used in this Plan, (a) the term "Qualified Trustees" shall
mean those Trustees of the Trust who are not interested persons of the Trust,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it, and (b) the terms "assignment" and "interested
person" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
<PAGE>
SECTION 10. While this Plan is in effect, the selection and nomination of
those Trustees who are not interested persons of the Trust within the meaning of
Section 2(a)(19) of the 1940 Act shall be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
SECTION 11. This Plan shall not obligate the Trust or any other party to
enter into an agreement with any particular person.
<PAGE>
EXHIBIT A
<TABLE>
<S> <C>
Friends Ivory Social Awareness Fund.................................. 0.25%
Friends Ivory European Social Awareness Fund.......................... 0.25%
</TABLE>
<PAGE>
FRIENDS IVORY FUNDS
RULE 18F-3
MULTIPLE CLASS PLAN
DECEMBER _____, 1999
Friends Ivory Funds (the "Trust"), a registered investment company that
currently consists of a number of separately managed funds, has elected to rely
on Rule 18f-3 under the Investment Company Act of 1940, as amended (the "1940
Act"), in offering multiple classes of shares in the funds listed on Schedule A
hereto (each a "Fund" and together the "Funds").
A. ATTRIBUTES OF SHARE CLASSES
1. The rights of each class of shares of the Funds shall be as set
forth in the respective Certificate of Class Designation for each class (each a
"Certificate") as each such Certificate is approved by the Trust's Board of
Trustees and as attached hereto as Exhibits.
2. With respect to each class of shares created hereunder, each share
of a Fund will represent an equal PRO RATA interest in the Fund and will have
identical terms and conditions, except that: (i) each new class will have a
different class name (or other designation) that identifies the class as
separate from any other class; (ii) each class will be offered and sold only to
investors meeting the qualifications set forth in the Certificate and disclosed
in the Trust's Prospectus; (iii) each class will separately bear any
distribution fees that are payable in connection with a distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act (a "Distribution Plan"), and
separately bear any other service fees ("service fees") that are payable under
any service agreement entered into with respect to that class which are not
contemplated by or within the scope of the Distribution Plan; (iv) each class
may bear, consistent with rulings and other published statements of position by
the Internal Revenue Service, the expenses of the Fund's operations which are
directly attributable to such class ("Class Expenses"); and (v) shareholders of
each class will have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to such class (such as a Distribution Plan or
service agreement relating to such class), and will have separate voting rights
on any matter submitted to shareholders in which the interests of that class
differ from the interests of any other class.
B. EXPENSE ALLOCATIONS
With respect to each Fund, the expenses of each class shall be
allocated as follows: (i) any Rule 12b-1 fees relating to a particular class of
shares associated with a Distribution Plan or service fees relating to a
particular class of shares are (or will be) borne exclusively by that class;
(ii) any incremental transfer agency fees relating to a particular class are (or
will be) borne exclusively by that class; and (iii) Class Expenses relating to a
particular class are (or will be) borne exclusively by that class.
<PAGE>
Non-class specific expenses shall be allocated in accordance with Rule
18f-3(c).
C. AMENDMENT OF PLAN; PERIODIC REVIEW
This Plan must be amended to properly describe (through additional
exhibits hereto) each new class of shares upon its approval by the Board.
The Board of Trustees of the Trust, including a majority of the
Trustees who are not "interested persons" of the Trust as defined in the 1940
Act, must review this Plan at least annually for its continued appropriateness,
and must approve any material amendment of the Plan as it relates to any class
of any Fund covered by the Plan. In approving any material amendment to the
Plan, the Trustees, including a majority of the Trustees who are not interested
persons of the Trust, must find that the amendment is in the best interests of
each class individually and the Trust as a whole.
<PAGE>
SCHEDULE A
FRIENDS IVORY FUNDS
ADVISOR SHARES
Friends Ivory Social Awareness Fund
Friends Ivory European Social Awareness Fund
INSTITUTIONAL SHARES
Friends Ivory Social Awareness Fund
Friends Ivory European Social Awareness Fund
<PAGE>
EXHIBIT A
FRIENDS IVORY FUNDS
CERTIFICATE OF CLASS DESIGNATION
ADVISOR SHARES
1. CLASS-SPECIFIC DISTRIBUTION ARRANGEMENTS; OTHER EXPENSES.
Advisor Shares are sold without a sales charge and are subject to a
0.25% Rule 12b-1 fee. Additionally, Advisor Shares are subject to shareholder
servicing fees including: maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services provided for
investments; changing dividend options; account designation and addresses;
providing sub-accounting; providing information on share positions to
clients; forwarding shareholder communications to clients; processing
purchase, exchange and redemption orders; and processing dividend payments.
2. ELIGIBILITY OF PURCHASERS
Advisor Shares are offered to individual investors with a $5,000 minimum
initial investment.
3. EXCHANGE PRIVILEGES
Advisor Shares of each Fund may be exchanged for Advisor Shares of each
other Fund of the Trust in accordance with the procedures disclosed in the
Funds' Prospectus and subject to any applicable limitations resulting from
the closing of Funds to new investors.
4. VOTING RIGHTS
Each Advisor shareholder will have one vote for each full Advisor Share
held and a fractional vote for each fractional Advisor Share held. Advisor
shareholders will have exclusive voting rights regarding any matter submitted
to shareholders that relates solely to Advisor Shares (such as a distribution
plan or service agreement relating to Advisor Shares), and will have separate
voting rights on any other matter submitted to shareholders in which the
interests of the Advisor Shareholders differ from the interests of holders of
any other class.
5. CONVERSION RIGHTS
Advisor Shares do not have a conversion feature.
<PAGE>
EXHIBIT B
FRIENDS IVORY FUNDS
CERTIFICATE OF CLASS DESIGNATION
INSTITUTIONAL SHARES
1. CLASS-SPECIFIC DISTRIBUTION ARRANGEMENTS; OTHER EXPENSES.
Institutional Shares are sold without a sales charge and are not subject to
a Rule 12b-1 fee.
2. ELIGIBILITY OF PURCHASERS
Institutional Shares are offered to institutional investors with a $250,000
minimum initial investment.
3. EXCHANGE PRIVILEGES
Institutional Shares of each Fund may be exchanged for Institutional Shares
of each other Fund of the Trust in accordance with the procedures disclosed in
the Funds' Prospectus and subject to any applicable limitations resulting from
the closing of Funds to new investors.
4. VOTING RIGHTS
Each Institutional shareholder will have one vote for each full
Institutional Share held and a fractional vote for each fractional Institutional
Share held. Institutional shareholders will have exclusive voting rights
regarding any matter submitted to shareholders that relates solely to the
Institutional Shares (such as a distribution plan or service agreement relating
to the Institutional Shares), and will have separate voting rights on any other
matter submitted to shareholders in which the interests of Institutional
shareholders differ from the interests of holders of any other class.
5. CONVERSION RIGHTS
Institutional Shares do not have a conversion feature.
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints
Edward T. Searle and James R. Foggo, each of them singly, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him and in his name, place and stead, and in the capacity indicated
below, to sign any and all Registration Statements and all amendments thereto
relating to the offering of the Trust's shares under the provisions of the
Investment Company Act of 1940 and/or the Securities Act of 1933, each such Act
as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite
or necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ George Walker Date: December 16, 1999
- -------------------------------
George Walker, President
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints George
Walker and James R. Foggo, each of them singly, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him and in his name, place and stead, and in the capacity indicated
below, to sign any and all Registration Statements and all amendments thereto
relating to the offering of the Trust's shares under the provisions of the
Investment Company Act of 1940 and/or the Securities Act of 1933, each such Act
as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Edward T. Searle Date: December 16, 1999
- -------------------------------------
Edward T. Searle, Assistant Treasurer
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints Edward
T. Searle and George Walker, each of them singly, his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
to sign for him and in his name, place and stead, and in the capacity indicated
below, to sign any and all Registration Statements and all amendments thereto
relating to the offering of the Trust's shares under the provisions of the
Investment Company Act of 1940 and/or the Securities Act of 1933, each such Act
as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ James R. Foggo Date: December 17, 1999
- -----------------------------------
James R. Foggo, Assistant Secretary
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints George
Walker, Edward T. Searle and James R. Foggo, each of them singly, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ J. Robert Bloom Date: December 16, 1999
- --------------------------------
J. Robert Bloom, Trustee
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints George
Walker, Edward T. Searle and James R. Foggo, each of them singly, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Stephen Viederman Date: December 16, 1999
- ------------------------------------
Stephen Viederman, Trustee
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints George
Walker, Edward T. Searle and James R. Foggo, each of them singly, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Mark Boles Date: December 16, 1999
- ----------------------------
Mark Boles, Trustee
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints George
Walker, Edward T. Searle and James R. Foggo, each of them singly, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ Vidette Bullock Mixon Date: December 16, 1999
- -----------------------------------------
Vidette Bullock Mixon, Trustee
<PAGE>
FRIENDS IVORY FUNDS
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced fund (the "Trust"), a business trust organized
under the laws of the State of Delaware, hereby constitutes and appoints George
Walker, Edward T. Searle and James R. Foggo, each of them singly, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
as of the date set forth below.
/s/ James F. Volk Date: December 15, 1999
- -------------------------------
James F. Volk, Treasurer
