<PAGE>
As filed with the Securities and Exchange Commission on December 23, 1999
1933 Act Registration No.
--------
1940 Act Registration No.
--------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No.
---------
Post-Effective Amendment No.
---------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment No.
---------
LIFETIME ACHIEVEMENT FUND, INC.
(Exact Name of Registrant as Specified in Charter)
11605 West Dodge Road, Omaha, Nebraska 68154
(Address of Principal Executive Offices)
Registrant's Telephone Number: (402) 330-1166
ROLAND R. MANARIN, President
Lifetime Achievement Fund, Inc.
11605 West Dodge Road
Omaha, Nebraska 68154
(Name and Address of Agent for Service)
Copies To:
John D. Ellsworth, Esq.
Michael C. Pallesen, Esq.
Lieben, Whitted, Houghton, Slowiaczek & Cavanagh, P.C.
100 Scoular Building
2027 Dodge Street
Omaha, Nebraska 68102
Telephone: (402) 344-4000
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the Registration Statement under the Securities
Act of 1933.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
<PAGE>
Lifetime Achievement Fund, Inc.
Contents of Registration Statement
This registration statement consists of the following papers and documents.
Cover Sheet
Contents of Registration Statement
Cross Reference Sheets
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
ii
<PAGE>
LIFETIME ACHIEVEMENT FUND, INC.
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
PART A ITEM NO. AND CAPTION PROSPECTUS CAPTION
--------------------------- ------------------
- -------------------------------------------------------------------------------------------------
<S> <C>
1. Cover Page ....................................... Cover Page
- -------------------------------------------------------------------------------------------------
2. Risk/Return Summary............................... Investment Objectives and
Policies; Other Investment
Policies; Certain Risks and Other
Considerations
- -------------------------------------------------------------------------------------------------
3. Risk/Return Summary Fee Table..................... Table of Fund Expenses
- -------------------------------------------------------------------------------------------------
4. Investment Objectives, Principal Investment Investment Objectives and
Strategies, and Related Risks..................... Policies; Other Investment
Policies; Certain Risks and Other
Considerations; Year 2000 Issue;
Appendix A; Appendix B
- -------------------------------------------------------------------------------------------------
5. Management`s Discussion of Fund Not Applicable
Performance.......................................
- -------------------------------------------------------------------------------------------------
6. Management, Organization and Capital Management of the Fund; Fund
Structure ........................................ Shares
- -------------------------------------------------------------------------------------------------
7. Shareholder Information........................... Purchase of Fund Shares;
Determining Net Asset Value;
Redemption of Fund Shares;
Dividends, Other Distributions
and Taxes
- -------------------------------------------------------------------------------------------------
8. Distribution Arrangements......................... Purchase of Fund Shares
- -------------------------------------------------------------------------------------------------
9. Financial Highlights Information.................. Not Applicable
- -------------------------------------------------------------------------------------------------
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
STATEMENT OF
PART B ITEM NO. ADDITIONAL INFORMATION
AND CAPTION CAPTION
----------- -------
- -------------------------------------------------------------------------------------------------
<S> <C>
10. Cover Page........................................ Cover Page
- -------------------------------------------------------------------------------------------------
11. Fund History...................................... General
- -------------------------------------------------------------------------------------------------
12. Description of the Fund and Its Investments Investment Restrictions;
and Risks......................................... Investment Policies; Portfolio
Transactions; Appendix A;
Appendix B
- -------------------------------------------------------------------------------------------------
13. Management of the Fund ........................... Management of the Fund
- -------------------------------------------------------------------------------------------------
14 Control Persons and Principal Holders of Principal Holder of Securities
Securities........................................
- -------------------------------------------------------------------------------------------------
15 Investment Advisory and Other Services............ Management of the Fund
Distribution of Fund Shares;
Custodian, Transfer and
Shareholder Services Agent;
Accounting Services Agent;
Independent Accountants
- -------------------------------------------------------------------------------------------------
16 Brokerage Allocations and Other Practices......... Portfolio Transactions
- -------------------------------------------------------------------------------------------------
17 Capital Stock and Other Securities................ Fund Shares (in Prospectus)
- -------------------------------------------------------------------------------------------------
18 Purchase, Redemption and Pricing of Pricing and Additional
Shares............................................ Exchanges
- -------------------------------------------------------------------------------------------------
19. Taxation of the Fund.............................. Taxation
- -------------------------------------------------------------------------------------------------
20. Underwriters ..................................... Distribution of Fund shares
- -------------------------------------------------------------------------------------------------
21. Calculation of Performance Data .................. Not Applicable
- -------------------------------------------------------------------------------------------------
22. Financial Statements.............................. Ommitted - See Item 23(k) and
Item 30.
- -------------------------------------------------------------------------------------------------
</TABLE>
iv
<PAGE>
SUBJECT TO COMPLETION
LIFETIME ACHIEVEMENT FUND, INC.
11605 West Dodge Road
Omaha, Nebraska 68154
(402) 330-1166
This Prospectus relates to shares of Lifetime Achievement Fund, Inc. (the
"Fund"), a non-diversified, open-end mutual fund which seeks long-term capital
appreciation and growth of investment income primarily by investing in shares of
other open-end and closed-end mutual funds, and, secondarily, investing in
listed securities.
No assurance can be given that the Fund will achieve this investment objective.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. It should be read and
retained for future reference. A Statement of Additional Information for the
Fund, dated December 13, 1999, has been filed with the Securities and Exchange
Commission ("SEC") and, as amended from time to time, is incorporated by
reference herein. The Statement of Additional Information is available, at no
charge, by contacting the Fund at the address or telephone numbers provided
above. It is also available, along with other related materials, on the SEC's
Web site (http://www.sec.gov). Additional information about the Fund may also be
obtained on the Web at http://www.manarin.com.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR GUARANTEED
BY, ANY BANK, NOR ARE THEY FEDERALLY INSURED OR OTHERWISE PROTECTED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OF ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This Prospectus is dated December ____, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
TOPIC PAGE
- ----- ----
<S> <C>
TABLE OF FUND EXPENSES...................................................3
INVESTMENT OBJECTIVES AND POLICIES.......................................5
OTHER INVESTMENT POLICIES................................................5
RISK AND OTHER CONSIDERATIONS............................................7
YEAR 2000 ISSUE..........................................................9
MANAGEMENT OF THE FUNDS..................................................9
PURCHASE OF FUND SHARES.................................................10
DETERMINING NET ASSET VALUE.............................................12
REDEMPTION OF FUND SHARES...............................................13
TELEPHONE TRANSACTIONS..................................................15
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES................................16
PERFORMANCE INFORMATION.................................................18
FUND SHARES.............................................................19
CUSTODIANS, TRANSFER AND DIVIDEND DISBURSING AGENT......................20
GENERAL INFORMATION.....................................................20
APPENDIX A..............................................................21
APPENDIX B..............................................................23
</TABLE>
2
<PAGE>
TABLE OF FUND EXPENSES
The following tables are intended to assist investors in understanding the
expenses associated with investing in the Fund.
<TABLE>
<CAPTION>
- --------------------------------------------------------------
SHAREHOLDER TRANSACTION Percent
EXPENSES of Net
Asset
Value
- --------------------------------------------------------------
<S> <C>
Sales load imposed on purchases 2.5%
(Front-End Sales Load)
- --------------------------------------------------------------
Maximum contingent deferred sales None
charge fees (as a percentage of net asset
at time of purchase or sale, whichever is
less)
- --------------------------------------------------------------
Sales load imposed on reinvested None
dividends
- --------------------------------------------------------------
Redemption fees None
- --------------------------------------------------------------
- --------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES (as percentage of average
net assets)
- --------------------------------------------------------------
Management Fees (after waivers) .75%
- --------------------------------------------------------------
12b-1 Fees .25%
- --------------------------------------------------------------
*Other Expenses (after reimbursements .50%
or waivers) ----
- --------------------------------------------------------------
- --------------------------------------------------------------
Total Fund Operating Expenses (after 1.5%
waivers and reimbursements)
- --------------------------------------------------------------
</TABLE>
* "Other Expenses" are based on estimated amounts for the current fiscal year.
3
<PAGE>
EXAMPLE
This Example is intended to help investors compare the cost of investing in the
Fund with the cost of investing in other mutual funds. A shareholder would pay
the following expenses on a $10,000 investment assuming (1) a 5% annual return;
and (2) redemption at the end of each period.
After 1 year - $392.00
After 3 years - $705.00
* Without redemption, a shareholder would pay expenses after one year and
after three years. Expenses after five years and ten years would be the
same as those shown above.
The Example assumes that all dividends and other distributions are reinvested
and that the percentage amounts listed under Annual Fund Operating Expenses
remain the same in the years shown. The 5% annual return assumed in the Example
is required by regulations of the SEC and is not a prediction of, and does not
represent, the projected or actual performance of Fund shares. THE EXAMPLE
SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL
EXPENSES OF THE FUNDS MAY BE GREATER OR LESSER THAN THOSE SHOWN.
For further descriptions of the operating expenses, please refer to the
"Management of the Fund" section of this Prospectus. Costs and expenses are
described in additional detail in the Fund's Statement of Additional
Information.
4
<PAGE>
INTRODUCTION
The Fund is a non-diversified, open-end management investment company commonly
known as a "mutual fund." The investment objective and certain policies of the
Fund may not be changed without the affirmative vote of a majority of the Fund's
outstanding voting securities as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"). Certain other investment limitations that apply to
the Fund may not be changed without shareholder approval, as described in the
Statement of Additional Information for the Fund. All other investment policies,
unless otherwise indicated, may be changed by the Fund's Board of Directors
without shareholder approval.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term growth of capital and growth of
investment income. The Fund seeks to achieve its objective by investing
primarily in shares of other open-end and closed-end investment companies
("underlying funds") and, secondarily, investing in listed securities. The
underlying funds that the Fund is most likely to invest in will themselves have
as their investment objective long-term capital appreciation through investing
primarily in common stock or securities convertible into or exchangeable for
common stock (such as convertible preferred stock, convertible debentures or
warrants ("convertible securities")). See Appendix B.
The Fund may also invest in underlying funds that hold primarily long- or
short-term bonds and other fixed-income securities, (securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities ("U.S.
Government securities")), commercial paper and preferred stock whenever the
Fund's investment adviser, Manarin Investment Counsel, Ltd. (the "Adviser"),
believes that these underlying funds offer a potential for capital appreciation,
such as during periods of declining interest rates. The Fund may invest in
underlying funds that hold a substantial portion of their assets in foreign
securities. See Appendix A.
OTHER INVESTMENT POLICIES
INVESTMENT IN UNDERLYING FUNDS
The Fund may invest up to 10% of its total assets in any one underlying fund.
The Fund and its affiliates may not hold more than 3% of an underlying fund's
outstanding voting stock.
5
<PAGE>
The Fund cannot purchase shares of underlying funds that are not registered with
the SEC. The Fund only invests in underlying funds that are represented to be
regulated investment companies ("RICs") under the Internal Revenue Code of 1986,
as amended (the "Code").
The Adviser selects underlying funds in which to invest based, in part, upon an
analysis of their past performance and their investment objectives, policies and
the investment strategies of their advisers. In selecting open-end funds in
which to invest, the Adviser considers, among other factors, the underlying
fund's size, administrative and other costs, shareholder services and the
reputation and stability of its investment adviser. In selecting closed-end
funds in which to invest, the Adviser also considers the underlying fund's
historical market discount, portfolio characteristics, repurchase, tender offer
and dividend reinvestment terms, and provisions for converting to an open-end
fund. The Fund may invest in the securities of a closed-end fund that is then
either trading at a discount or at a premium to its net asset value.
The underlying funds in which the Fund invests may include new funds or funds
with limited operating histories. Underlying funds may, but need not, have the
same investment objective, policies and limitations as the Fund.
INVESTMENT IN LISTED SECURITIES
As part of seeking to achieve its investment objective, the Fund may invest
a portion of its assets in the purchase of exchange or NASDAQ listed securities.
The Fund can purchase options with respect to any security, but it cannot
purchase futures or commodities contracts. Individual securities and options
thereon purchased by the Fund represent not more than 20% of the Fund's total
portfolio.
TEMPORARY INVESTMENTS
For liquidity purposes or when the Adviser believes market conditions warrant a
defensive strategy, the Fund may temporarily hold cash, money market mutual
funds or money market instruments, including repurchase agreements. A repurchase
agreement involves a transaction in which the Fund purchases securities from a
bank or recognized securities dealer and simultaneously commits to resell the
securities to the bank or dealer at an agreed-upon date and price reflecting a
market rate of interest unrelated to the coupon rate or maturity of the
purchased securities.
Repurchase agreements carry certain risks not associated with direct investments
in securities, including possible decline in the market value of the underlying
securities and delays and costs to the Fund if the other party to the repurchase
agreement becomes bankrupt. The Fund intends to enter into repurchase agreements
only with
6
<PAGE>
banks and dealers in transactions believed by the Adviser to present minimal
credit risks in accordance with guidelines established by the Fund's Board of
Directors. To the extent the Fund invests more that $100,000 in a single bank or
savings association, the investment is not protected by federal insurance. The
underlying funds also may invest under similar circumstances in cash equivalent
instruments.
SALES LOADS
The Fund may purchase shares of underlying open-end funds whether or not
they impose a front end sales commission ("sales load"). However, the Fund does
not acquire the shares of any underlying fund having a sales load unless that
underlying fund agrees to waive completely its sales load pursuant to a letter
of intent issued by the Fund at the time of purchase. In addition, the Fund
either acquires underlying funds that either do not impose a share redemption
fee or charge, or if such a fee or charge is normally imposed in connection with
a redemption, the underlying fund agrees to waive that fee or charge at the time
of purchase by the Fund.
BORROWING AND OTHER POLICIES
The Fund may temporarily borrow money from banks for extraordinary or emergency
purposes, but not in excess of the lesser of 10% of its total assets (valued at
cost) or 5% of its total assets (valued at market). The Fund may borrow up to
30% of the Fund's assets (valued at cost) from non-banks subject to Federal
Reserve requirements.
The Fund may invest up to 10% of its net assets in securities for which no
active trading market exists and may lend securities constituting up to 5% of
its net assets.
CERTAIN RISKS AND OTHER CONSIDERATIONS
INVESTMENT IN OTHER INVESTMENT COMPANIES
Any investment in an open-end or closed-end mutual fund involves investment
risk. Although the Fund invests in a number of underlying funds, this practice
of diversification cannot eliminate investment risk. Investment decisions by the
investment advisers of the underlying funds are made independently of the Fund
and the Adviser. For instance, one underlying fund may be purchasing securities
of the same issuer whose securities are being sold by another underlying fund.
The result would be an indirect cost to the Fund while potentially leaving the
value of the Fund's portfolio unchanged.
7
<PAGE>
Some underlying funds acquired by the Fund will intentionally assume more
investment risk than others. The underlying funds in which the Fund invests may
have policies themselves that, among other things, permit them to take
investment actions that the Fund's fundamental policies do not permit it to take
directly. The risks associated with investments in underlying funds are further
described in the Fund's Statement of Additional Information.
CLOSED-END FUNDS
Shares of closed-end funds are typically offered to the public in an initial
public offering which includes an underwriting spread or commission. Such
securities are typically listed for trading on an exchange or on NASDAQ where
they can be bought and sold by investors.
The Fund generally will purchase shares of closed-end funds in the secondary
market. The Fund will incur normal brokerage costs on such purchases similar to
the expenses it would incur for the purchase of securities in the secondary
market. The Fund may invest in shares of closed-end funds that are trading at a
discount to their net asset value or at a premium to net asset value.
The Fund may also purchase securities of a closed-end fund in an initial public
offering when, in the opinion of the Adviser, based on a consideration of the
nature of the closed-end fund's proposed investments, the prevailing market
conditions and the level of demand for such securities, they represent an
attractive opportunity for growth of capital. The initial offering price will
include an underwriting spread (commission).
Closed-end funds may issue senior securities (including preferred stock and debt
obligations) or borrow money for the purpose, and with the effect, of leveraging
the closed-end fund's common shares in an attempt to enhance the current return
to such closed-end fund's common shareholders. The Fund's investment in the
common shares of closed-end funds that are financially leveraged may create an
opportunity for greater total return on its investment, but at the same time may
be expected to exhibit more volatility in market price and net asset value than
an investment in shares of investment companies without a leveraged capital
structure. The Fund will only invest in common shares of closed-end funds and
will not invest in any senior securities issued by closed-end funds.
8
<PAGE>
TURNOVER RATE
The Fund's portfolio turnover rate may vary greatly from year to year and will
not be a limiting factor when the Adviser deems portfolio changes appropriate. A
high portfolio turnover rate (100% or more), whether incurred by the Fund or an
underlying fund, involves correspondingly greater transaction costs, which will
be borne directly by the Fund or the underlying fund, and increases the
potential for short-term capital gains and taxes.
ADDITIONAL COSTS
Investing in the Fund involves certain additional expenses and certain tax
consequences that would not be present with direct investments in the underlying
funds. An investor in the Fund should recognize that he or she may invest
directly in the underlying funds and that, by investing in the underlying funds
indirectly through the Fund, he or she will bear not only his or her
proportionate share of the expenses of the Fund (including operating costs and
investment advisory and administrative fees) but also, indirectly, similar
expenses of the underlying funds.
YEAR 2000 ISSUE
Like other investment companies, financial and business organizations and
individuals around the world, the Fund could be adversely affected if the
computer systems used by the Adviser and the Fund's other service providers do
not properly process and calculate date-related information and data after
January 1, 2000. This is commonly known as the "Year 2000 Problem." The Adviser
is taking steps that it believes are reasonably designed to address the Year
2000 Problem with respect to the computer systems that it uses, and to obtain
assurances that comparable steps are being taken by the Fund's other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact on the Fund.
MANAGEMENT OF THE FUND
The Fund's Board of Directors has overall responsibility for the operation of
the Fund. Pursuant to that responsibility, the Board has selected the Adviser to
act as investment adviser for the Fund. Services provided by the Adviser
include, but are not limited to, the provision of a continuous investment
program for the Fund and supervision of all matters relating to the operation of
the Fund. Among other things, the Adviser is responsible for making investment
decisions and placing orders to buy, sell or hold particular securities.
9
<PAGE>
The Adviser has acted as the investment adviser to the Fund since its inception.
The Adviser, whose address is 11605 West Dodge Road, Omaha, Nebraska 68154, was
incorporated under the laws of the State of Nebraska in 1983 and is controlled
by Roland R. Manarin. Mr. Manarin serves as the Fund's portfolio manager on
behalf of the Adviser. He has served in that capacity since commencement of the
Fund's operations.
The Fund pays the Adviser a monthly fee for its services calculated at the
annual rate of .75% of the average daily net assets of the Fund. The fees paid
to the Adviser are reviewed at least annually by the Fund's Board of Directors.
The Adviser places orders for the purchase and sale of portfolio investments for
the account of the Fund with broker-dealers, selected by it in its discretion,
including the distributor identified below. Factors in the selection of a
broker-dealer include the receipt of research, analysis and advice and similar
services by the Adviser, and the amount of Fund shares sold by the
broker-dealer.
Manarin Securities Corporation, a registered broker-dealer owned by Roland R.
Manarin, has been engaged as the distribution agent (the "Distributor")
responsible for the marketing, promotion and sale of the Fund's shares to the
public. The Distributor also may assist in the execution of the Fund's portfolio
transactions to purchase open-end fund shares for which it may receive
distribution payments from the funds or their underwriter in accordance with the
distribution plans of those funds.
PURCHASE OF FUND SHARES
DISTRIBUTION ARRANGEMENTS
The shares of the Fund are offered to prospective investors on behalf of the
Fund by Distributor, an NASD member, registered broker-dealer, as well as other
registered broker-dealer firms that may be selected from time to time by
Distributor and the Fund to assist in the promotion and distribution of the
Fund's shares. The address of Distributor is as follows: Manarin Securities
Corporation, 11605 West Dodge Road, Omaha, Nebraska, 68154. Distributor is
controlled by Roland R. Manarin, who also controls the Adviser.
Shares of the Fund are purchased at a price equal to the Fund's net asset value,
determined immediately after an order is received and accepted by the Fund, plus
a sales load which is a 2.5% of the share price.
10
<PAGE>
Under a plan of distribution (the "Plan") adopted by the Fund's Board of
Directors and approved by the shareholders, the Fund pays the Distributor the
sales load (2.5%) as compensation for its distribution activities. Another
monthly fee not to exceed .25% of the average daily net assets of the Fund on an
annual basis is paid to the Distributor as reimbursement for Distributor's
marketing and promotional activities with respect to the Fund and its
shareholders.
The Distributor may be allowed a brokerage fee or dealer re-allowance of up to
100 basis points (1% of the public offering price) paid by an underlying fund in
connection with the Fund's acquisition of shares in the underlying fund. This
fee is not part of the Fund's purchase price of the underlying fund's shares.
However, in the event the Fund redeems its shares in the underlying fund within
12 months after acquiring them and does not exchange into an affiliated
underlying fund, then the fee which was paid to the Distributor by the
underlying fund is recoverable from the Fund itself. In that event, the Fund
will require reimbursement from the Distributor.
HOW SHARES MAY BE PURCHASED
Application forms for the purchase of shares of the Fund can be obtained by
contacting the shareholder services department ("Shareholder Services") of the
Fund's transfer agent at the address or telephone number shown on the back of
this Prospectus.
The minimum initial investment in the Fund is $10,000, and the minimum for
additional investments is $500. Exceptions to these minimums can be granted for
investments made pursuant to special plans or if approved by the Distributor.
All orders are executed at the net asset value per share next computed after
receipt and acceptance of the order by Shareholder Services. The Fund and the
Distributor reserve the right to reject any purchase order.
When shares of the Fund are initially purchased, an account is automatically
established for the shareholder. Any shares of the Fund subsequently purchased
or received as a distribution are credited directly to the shareholder's
account. No share certificates are issued unless specifically requested in
writing to the Fund. Certificates are issued in full shares only. In addition,
no certificates are issued for shares purchased by check until 15 business days
have elapsed, unless the Fund is reasonably assured that payment for the shares
has been collected. There is no charge for certificate issuance.
11
<PAGE>
SYSTEMATIC INVESTMENT PLAN
Shareholders may purchase Fund shares through a Systematic Investment Plan.
Under such a plan, a shareholder's bank checking account will automatically be
debited monthly or quarterly in an amount equal to at least the minimum for
additional investments in the Fund (subject to the minimum initial investment
for the Fund), as specified by the shareholder. The purchase of Fund shares will
be effected at their net asset value at the close of regular trading on the New
York Stock Exchange, Inc. ("NYSE") on or about the 15th day of the month.
Shareholders may elect to participate in a Systematic Investment Plan when
filling out the initial application or may elect to participate later by
completing the appropriate form that is available from Shareholders Services.
DETERMINING NET ASSET VALUE
The net asset value of the Fund's shares is determined as of the close of
regular trading (currently 3:00 p.m. Omaha time) on the NYSE each day that the
NYSE is open for business. The net asset value per share is computed by dividing
the value of the Fund's securities plus any cash and other assets (including
dividends accrued but not yet collected) minus all liabilities (including
accrued expenses) by the total number of the Fund's shares outstanding.
The assets of the Fund consist primarily of shares of underlying funds. Shares
of open-end funds are valued at their respective net asset values under the 1940
Act. An open-end fund values securities in its portfolio for which market
quotations are readily available at their current market value (generally the
last reported sales price) and all other securities and assets at fair value
pursuant to methods established in good faith by the board of directors/trustees
of the underlying fund. Money market funds with portfolio securities that mature
in 397 days or less may use the amortized cost or penny-rounding methods to
value their securities. Shares of closed-end funds that are listed on U.S.
exchanges are valued at the last sales price on the day the securities are
valued or, lacking any sales on such day, at the last available bid price.
Shares of closed-end funds listed on NASDAQ are valued at the last trade price
on NASDAQ at 4:00 p.m. Eastern time; other shares traded in the OTC market are
valued at the last bid price available prior to valuation.
Other Fund assets are valued at current market value or, where unavailable, at
fair value as determined in good faith by or under the direction of the Board of
Directors. Securities having 60 days or less remaining to maturity are valued at
their amortized cost. Any investments denominated in foreign currency are valued
daily in U.S. dollars on the basis of the then-prevailing exchange rate.
12
<PAGE>
REDEMPTION OF FUND SHARES
HOW SHARES MAY BE REDEEMED
Fund shares may be redeemed in three different ways: (1) by mailing written
redemption requests for a check or wire representing the redemption proceeds to
Shareholder Services; (2) by making a telephone request for redemption by check
(provided that the amount to be redeemed is not more that $25,000 and the check
is being sent to the record address for the account, which has not changed in
the prior three months); (3) or by making a telephone request for redemption
proceeds to be wired to a predesignated bank.
A written request for redemption must include the following information: your
account number, the exact name(s) in which your shares are registered, the
number of shares or the dollar amount to be redeemed and mailing or wiring
instructions. Upon receipt by Shareholder Services of a valid and complete
redemption request, as determined by the Fund, the shares will be redeemed at
the net asset value per share computed at the close of regular trading on the
NYSE on that day. Redemption requests received after the close of regular
trading will be executed at the net asset value per share next computed. The
signature(s) on all redemptions of $25,000 or more or redemptions requesting
that the proceeds check be made payable to someone other than the registered
owner(s) or sent to an address other than the record address (or sent to the
record address if that address has been changed in the previous three months)
must be guaranteed with respect to share certificates.
To redeem shares by telephone, call Shareholder Services directly at
(402) 330-1166. See "Telephone Transactions." Telephone redemptions are not
available for retirement plans. When a redemption request is made by telephone,
a shareholder may choose to receive redemption proceeds either by having a check
mailed to the address of record on the account, provided the address has not
changed during the past three months and the redemption amount does not exceed
$25,000, or by having a wire sent to a previously designated bank account.
Telephone redemptions by check are available to all shareholders of the Fund
automatically unless this option is declined in the application or in writing.
Shareholders may select the telephone redemption wire service when filling out
the initial application or may select it later by completing the appropriate
form that is available from Shareholder Services.
A telephone redemption request must be received by Shareholder Services prior to
the close of regular trading on the NYSE. If a telephone request is made after
the close of regular trading on the NYSE or on a day when the NYSE is not open
for business, the Fund cannot accept the request and a new request will be
necessary.
13
<PAGE>
Wire redemptions by telephone may be made only if the bank is a member of the
Federal Reserve System or has a correspondent bank that is a member of such
system. If the account is with a savings bank, it must have only one
correspondent bank that is a member of the Federal Reserve System. A wire fee
(currently $5) will be deducted from the proceeds. If a shareholder decides to
change the bank account to which proceeds are to be wired, the change must be
effected by filling out the appropriate form that is available from Shareholder
Services.
Proceeds resulting from a written or regular telephone redemption request
normally will be mailed to shareholders within seven days after receipt of a
request in good order. Telephone wire redemption proceeds normally will be wired
to a bank within seven days following receipt of a proper redemption request. If
Fund shares were purchased by check and are redeemed within 15 days of such
purchase, a shareholder may experience delays in receiving redemption proceeds.
The Fund generally will postpone sending redemption proceeds from such
investment until the Fund can verify that the check has been or will be
collected. There will be no such delay for redemptions following investments
paid for by federal funds wire or by bank cashier's check or certified check. If
checks representing redemption proceeds are returned "undeliverable" or remain
uncashed for six months, such checks shall be cancelled and such proceeds shall
be reinvested in the Fund at the per share net asset value determined as of the
date of cancellation of such checks. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
Other supporting legal documents may be required from corporations or other
organizations, fiduciaries or persons other than the stockholder of record
making the redemption request. If there is a question concerning the redemption
of Fund shares, contact Shareholder Services.
The Fund may not suspend the right of redemption, or postpone payment for more
than seven days, except when the NYSE is closed for other than weekends or
holidays, when trading on the NYSE is restricted during an emergency (as
determined by the SEC) that makes it impracticable to dispose or its securities
or to determine fairly the value of its net assets, or during any other period
permitted by the SEC for the protection of investors.
Because of the high cost of maintaining small accounts, the Fund reserves the
right to redeem shareholder accounts of less than $100 net asset value resulting
from redemptions or exchanges. If the Fund elects to redeem such shares, it will
notify the shareholder of its intention to do so and provide the shareholder
with the opportunity to increase the amount invested to $100 or more within 30
days of notice.
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<PAGE>
SYSTEMATIC WITHDRAWAL PLAN
An investor who has made an initial investment of at least $10,000 or otherwise
has accumulated shares valued at no less that $10,000 is eligible for a
Systematic Withdrawal Plan. If so eligible, the investor may arrange for fixed
withdrawal payments (minimum payment -- $100; maximum payment - 1% per month or
3% per quarter of the total net asset value of the Fund shares in the
shareholder account at inception of the Systematic Withdrawal Plan) at regular
monthly or quarterly intervals. Withdrawal payments are made to the investor or
to the beneficiaries designated by him or her. An investor is not eligible for a
Systematic Withdrawal Plan if he or she is making regular purchase payments
pursuant to the Systematic Investment Plan described above. Shareholders may
elect to participate in the Systematic Withdrawal Plan when filling out the
initial application or may elect to participate later by completing the
appropriate form that is available from Shareholder Services.
TELEPHONE TRANSACTIONS
Shareholders may initiate three types of transactions by telephone: telephone
exchanges; telephone redemptions by wire; and telephone redemptions by check.
The terms and provisions for each of those services are explained fully in the
preceding sections. Once a telephone transaction request has been placed, it
cannot be revoked.
The telephone exchange privilege and/or telephone redemptions by wire privilege
must be elected by you when you fill out your initial application or you may
select either option later by completing the appropriate form(s) that is
available from Shareholders Services. The telephone redemptions by check
privilege is available to shareholders of the Fund automatically, unless this
option is declined in the application or in writing.
The Fund will employ reasonable procedures to confirm that instructions received
by telephone (including instructions with respect to changes in addresses) are
genuine, such as request personal identification information that appears on an
account application and recording the telephone conversation. A shareholder will
bear the risk of loss due to unauthorized or fraudulent instructions regarding
his or her account, although the Fund may be liable if reasonable procedures are
not employed.
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<PAGE>
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES
DIVIDEND AND OTHER DISTRIBUTIONS
Dividends from the net investment income (including dividends from underlying
funds), if any, of the Fund, are distributed at least annually. Any net capital
gain (the excess of net long-term capital gain over net short-term capital loss)
realized from the sale of portfolio securities, including shares of underlying
funds, by the Fund, as well as gains from any foreign currency transactions,
also are distributed at least annually. Unless the Fund receives instructions to
the contrary from a shareholder before the record date, it will be assumed that
the shareholder wishes to receive both dividends and capital gain distributions
in additional Fund shares. Instructions continue in effect until the Fund is
notified in writing that a change is desired. All reinvested dividends and
capital gain distributions are reinvested in additional Fund shares on the
payment date at those shares' net asset value on that day. Account statements
are mailed to shareholders evidencing each reinvestment. If the Fund has
received instructions that a shareholder wishes to receive dividends and capital
gain distributions in cash, and the U.S. Postal Service cannot deliver a check
representing the payment thereof, or if any such check remains uncashed for six
months, the check(s) will be reinvested in Fund shares at the then-current net
asset value per share of the Fund and the shareholder's election will be changed
so that future distributions will be received in additional Fund shares.
TAXATION OF THE FUND
The Fund intends to qualify for treatment as a RIC under the Code so that it
will be relieved of federal income tax on the part of its investment company
taxable income (consisting generally of net investment income, net short-term
capital gain and net gains from certain foreign currency transactions, if any)
and net capital gain that it distributes to its shareholders. To the extent,
however, that the Fund does not distribute to its shareholders by the end of any
calendar year substantially all of its ordinary income for the year and
substantially all of its capital gain net income for the one-year period ending
on October 31 of that year, plus certain other amounts, a 4% excise tax will be
imposed on the Fund.
TAXATION OF UNDERLYING FUNDS
The Fund intends to invest only in underlying funds that intend to qualify for
treatment as RICs under the Code. No assurance can be given, however, that an
underlying fund will qualify for treatment as a RIC. If an underlying fund fails
to qualify as a RIC, it may be subject to federal income tax and may adversely
affect the Fund's ability to
16
<PAGE>
satisfy the diversification requirement applicable to RICs (see "Taxation" in
the Statement of Additional Information) and thereby its ability to qualify as a
RIC.
TAXATION OF SHAREHOLDERS
Dividends from the Fund's taxable income are taxable to its shareholders, other
than tax-exempt entities (including individual retirement accounts and qualified
retirement plans) as ordinary income, whether received in cash or reinvested in
additional Fund shares, to the extent of the Fund's earnings and profits.
Distributions of the Fund's net capital gain, when designated as such, are
taxable to those shareholders as long-term capital gains, whether received in
cash or reinvested in additional Fund shares and regardless of the length of
time the shares have been held. Under the Taxpayer Relief Act of 1997, as
modified by recent legislation, the maximum tax rate applicable to a
non-corporate taxpayer's net capital gain recognized on the disposition of
capital assets held for more than one year is 20% (10% for taxpayers in the 15%
marginal tax bracket).
If the Fund realizes gain from the disposition of shares of any underlying fund
it held as capital assets for more than one year, or if the Fund receives a
distribution from any underlying fund that is designated as a capital gain
distribution (regardless of how long the Fund held the shares), the amount of
that gain or distribution is included in any capital gain distribution made by
the Fund to its shareholders. Any other gain on disposition of shares of an
underlying fund and any other distribution received therefrom is included in the
Fund's investment company taxable income.
The Fund advises its shareholders of the tax status of distributions following
the end of each calendar year. The Fund is required to withhold 31% of all
dividends, capital gain distributions and redemption proceeds payable to any
individuals and certain other non-corporate shareholders who do not provide the
Fund with a correct taxpayer identification number. Withholding also is required
from dividends and capital gain distributions payable to those shareholders who
otherwise are subject to backup withholding.
A redemption of Fund shares will result in taxable gain or loss to the redeeming
shareholder, depending upon whether the redemption proceeds are more or less
than the shareholder's adjusted basis for the redeemed shares. Capital gain on
the redemption of Fund shares held for more than one year will be long-term
capital gain, in which event it will be subject to federal income tax at the
rates indicated above. If a shareholder purchases Fund shares within thirty days
after redeeming other Fund shares at a loss, all or part of that loss will not
be deductible and instead will increase the basis of the newly purchased shares.
17
<PAGE>
The foregoing is only a summary of some of the important federal income tax
considerations generally affecting the Fund and its shareholders; see the
Statement of Additional Information for a further discussion. Because other
federal, state or local tax considerations may apply, investors are urged to
consult their tax advisers.
QUALIFIED RETIREMENT PLANS
An investment in Fund shares may be appropriate for individual retirement
accounts (including "Roth IRAs"), tax deferred annuity plans under section
403(b) of the Code, self-employed individual retirement plans (commonly referred
to as "Keogh plans"), simplified employee pension plans and other qualified
retirement plans (including section 401(k) plans). Capital gain distributions
and dividends received on Fund shares held by any of these accounts or plans are
automatically reinvested in additional Fund shares, and taxation thereof is
deferred until distributed by the account or plan. Investors who are considering
establishing such an account or plan may wish to consult their attorneys or
other tax advisers with respect to individual tax questions. The option of
investing in these accounts or plans through regular payroll deductions may be
arranged with Distributor and the investor's employer.
PERFORMANCE INFORMATION
From time to time, quotations of the Fund's average annual total return
("Standardized Return") may be included in advertisements, sales literature or
shareholder reports. Standardized Return shows percentage rates reflecting the
average annual change in the value of an assumed initial investment of $10,000,
assuming the investment has been held for periods of one year, five years and
ten years as of a stated ending date. If a five- and/or ten-year period has not
yet elapsed, data will be provided as of the end of a period corresponding to
the life of the Fund. Standardized Return assumes that all dividends and capital
gain distributions were reinvested in shares of the Fund.
In addition, other total return performance data ("Non-Standardized Return")
regarding the Fund may be included in advertisements, sales literature or
shareholder reports. Non-Standardized Return shows a percentage rate of return
encompassing all elements of return (I.E., income and capital appreciation or
depreciation); and it assumes reinvestment of all dividends and capital gain
distributions. Non-Standardized Return may be quoted for the same or different
periods as those for which Standardized Return is quoted. Non-Standardized
Return may consist of cumulative total returns, average annual total returns,
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in the Fund for
various periods. Average annual total return refers to the annual compound rate
of return of an investment in the Fund. The total return of the Fund is
increased to the
18
<PAGE>
extent that the Adviser has waived all or a portion of its advisory fee or
reimbursed all or a portion of the Fund's expenses. Total return futures are
based on historical performance of the Fund, show the performance of a
hypothetical investment and are not intended to indicate future performance.
Additional information about the Fund's performance is contained in the
Statement of Additional Information and the Fund's annual report to
shareholders, both of which may be obtained without charge by contacting the
Fund at the address or telephone numbers on the cover of this Prospectus.
FUND SHARES
The Fund was organized as a Maryland corporation on September 2, 1999, under the
name Manarin Diversified Growth Fund, Inc. The Fund subsequently changed its
corporate name to Lifetime Achievement Fund, Inc., by amending its articles of
incorporation in Maryland effective October 15, 1999. The Fund currently
consists of one series of common stock. The Board of Directors may elect to add
additional series in the future, although it has no present plan to do so. This
Prospectus relates only to shares of the Fund.
The Fund is authorized to issue one billion shares of beneficial interest with a
par value of $.001 per share (aggregate par value of $1,000,000). Shares of
beneficial interest of the Fund, when issued, are fully paid, nonassessable,
fully transferable, redeemable at the option of the shareholder and have equal
dividend and liquidation rights and noncumulative voting rights.
The Fund does not hold annual meetings of shareholders. There will normally be
no meeting of shareholders for the purpose of electing directors unless and
until such time as less than a majority of the directors holding office have
been elected by shareholders, at which time the directors then in office will
call a shareholders' meeting for the election of directors. Under the 1940 Act,
shareholders of record of no less than two-thirds of the outstanding shares of
the Fund may remove a director by vote cast in person or by proxy at a meeting
called for that purpose. The directors are required to call a meeting of
shareholders for the purpose of voting upon the question of removal of any
director when requested in writing to do so by the shareholders of record of not
less than 10% of the Fund's outstanding shares.
In accordance with the 1940 Act, if an underlying fund submits a matter to
shareholders for vote, the Fund will either vote the shares (i) in accordance
with instructions received from Fund shareholders or (ii) in the same proportion
as the vote of all other holders of such securities.
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<PAGE>
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
Brown Brothers Harriman & Company as the custodian for the Fund. Ivy Mackenzie
Services Corp., Via Mizner Financial Plaza, 700 South Federal Highway, Suite
300, Boca Raton, Florida 33432, is the Fund's transfer and dividend disbursing
agent.
GENERAL INFORMATION
Fund shareholders are kept informed through semi-annual and annual reports. Any
inquiries should be directed in writing to the Fund at 11605 West Dodge Road,
Omaha, Nebraska 68154. Shareholders may direct general telephone inquiries to
the Fund at the numbers listed on the back cover of this Prospectus. Telephone
inquiries regarding shareholder account information should be directed to
Shareholder Services at the number listed on the back cover of this Prospectus.
20
<PAGE>
APPENDIX A
FOREIGN SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS
FOREIGN SECURITIES
Through an underlying fund, the Fund may invest in foreign securities.
Investments in foreign securities involve risks relating to political and
economic developments abroad as well as those that may result from the
differences between the regulations to which U.S. issuers are subject and that
applicable to foreign issuers. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends and interest, limitations
on the use or transfer of a fund's assets and political or social instability or
diplomatic developments. These risks often are heightened to the extent a fund
invests in issuers located in emerging markets.
Individual foreign economics may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of payments
position. Securities of many foreign companies may be less liquid and their
prices more volatile than securities of comparable U.S. companies. Moreover,
funds generally calculate their net asset values and complete orders to
purchase, exchange or redeem shares only on days when the NYSE is open. However,
foreign securities in which funds may invest may be listed primarily on foreign
stock exchanges that may trade on other days (such as U.S. holidays and
weekends). As a result, the net asset value of a fund's portfolio may be
significantly affected by such trading on days when the NYSE is not open and
shareholders do not have access to a fund.
Additionally, because foreign securities ordinarily are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect a fund's net asset value, the value of dividends and interest
earned, gains and losses realized on the sale of securities and net investment
income and capital gain, if any, to be distributed to shareholders by the fund.
If the value of a foreign currency rises against the U.S. dollar, the value of
the fund's assets denominated in that currency will increase; correspondingly,
if the value of a foreign currency declines against the U.S. dollar, the value
of the fund's assets denominated in that currency will decrease. The exchange
rates between the U.S. dollar and other currencies are determined by supply and
demand in the currency exchange markets, international balances of payments,
governmental intervention, speculation and other economic and political
conditions. The costs attributable to foreign investing that a fund must bear
frequently are higher than those attributable to domestic investing. For
example, the costs of maintaining custody of foreign securities exceed custodian
costs related to domestic securities.
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<PAGE>
FOREIGN CURRENCY TRANSACTIONS
In connection with its portfolio transactions in securities traded in a foreign
currency, a fund may enter into forward contracts to purchase or sell an agreed
upon amount of a specific currency at a future date that may be any fixed number
of days from the date of the contract agreed upon by the parties at a price set
at the time of the contract. Under such an arrangement, concurrently with the
entry into a contract to acquire a foreign security for a specified amount of
currency, the fund would purchase with U.S. dollars the required amount of
foreign currency for delivery at the settlement date of the purchase; the fund
would enter into similar forward currency transactions in connection with the
sale of foreign securities. The effect of such transactions would be to fix a
U.S. dollar price for the security to protect against a possible loss resulting
from an adverse change in the relationship between the U.S. dollar and the
subject foreign currency during the period between the date the security is
purchased or sold and the date on which payment is made or received, the normal
range of which is three to fourteen days. These contracts are traded in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades.
Although such contracts tend to minimize the risk of loss due to a decline in
the value of the subject currency, they tend to limit commensurately any
potential gain that might result should the value of such currency increase
during the contract period.
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<PAGE>
APPENDIX B
WARRANTS, CONVERTIBLE SECURITIES
AND FIXED-INCOME SECURITIES
WARRANTS
Warrants are instruments that provide the owner with the right to purchase a
specified security, usually an equity security such as common stock, at a
specified price (usually representing a premium over the applicable market value
of the underlying equity security at the time of the warrant's issuance) and
usually during a specified period of time. Moreover, they are usually issued by
the issuer of the security to which they relate. While warrants may be traded,
there is often no secondary market for them. The Fund may invest in publicly
traded warrants only though an underlying fund. To the extent that the market
value of the security that may be purchased upon exercise of the warrant rises
above the exercise price, the value of the warrant will tend to rise. To the
extent that the exercise price equals or exceeds the market value of such
security, the warrants will have little or no market value. If warrants remain
unexercised at the end of the specified exercise period, they lapse and the
Fund's investment in them will be lost. The Fund may not invest more than 5% of
its net assets in warrants.
CONVERTIBLE SECURITIES
The Fund may indirectly, through an underlying fund, invest in a convertible
security, which is a bond, debenture, note, preferred stock or other security
that may be converted into or exchanged for a prescribed amount of common stock
of the same or a different issuer within a particular period of time at a
specified price or formula. A convertible security entitles the holder to
receive interest paid or accrued on debt or the dividends paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Before conversion, convertible securities have characteristics
similar to non-convertible debt securities in that they ordinarily provide a
stable stream of income with generally higher yields than those of common stocks
of the same or similar issuers. Convertible securities rank senior to common
stock in a corporation's capital structure but are usually subordinated to
comparable non-convertible securities. While no securities investment is without
some risk, investments in convertible securities generally entail less risk than
the issuer's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security. Convertible securities have unique
investment characteristics in that they generally (1) have higher
23
<PAGE>
yields than common stocks, but lower yields than comparable nonconvertible
securities, (2) are less subject to fluctuation in value than the underlying
stock since they have fixed income characteristics, and (3) provide the
potential for capital appreciation if the market price of the underlying common
stock increases.
The value of a convertible security is a function of its "investment value"
(determined by its yield comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
conversion value decreases as the convertible security approaches maturity. To
the extent the market price of the underlying common stock approaches or exceeds
the conversion price, the price of the convertible security will be increasingly
influenced by its conversion value. In addition, a convertible security
generally will sell at a premium over its conversion value determined by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security.
A convertible security may be subject to redemption at the option of the issuer
at a price established in the convertible security's governing instrument. If a
convertible security held by the fund is called for redemption, the fund will be
required to permit the issuer to redeem the security, convert it into the
underlying common stock or sell it to a third party.
FIXED INCOME SECURITIES
The market value of fixed-income securities is affected by changes in interest
rates. If interest rates fall, the market value of fixed-income securities tends
to rise; if interest rates rise, the value of fixed-income securities tends to
fall. Moreover, the longer the remaining maturity of a fixed-income security,
the greater the effect of interest rate changes on the market value of the
security. This market risk affects all fixed-income securities, but U.S.
Government securities are generally subject to less market risk.
The Fund may indirectly, through an underlying fund, invest in debt securities
rated at least investment grade (BBB and above/Baa and above) by Standard &
Poor's Ratings Services ("S&P") or Moody's Investors Service, Inc. ("Moody's"),
or in debt securities that are rated below investment grade by S&P or Moody's.
Investment grade debt
24
<PAGE>
securities are those that at the time of purchase have been assigned one of the
four highest ratings by S&P or Moody's or, if unrated, are determined by the
underlying fund's investment adviser to be of comparable quality. This includes
debt securities rated BBB by S&P or Baa by Moody's. Moody's considers securities
rated Baa to have speculative characteristics. Changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity for such
securities to make principal and interest payments than is the case for higher
grade debt securities. Debt securities rated below investment grade (commonly
referred to as "junk bonds"), which include debt securities rated BB, B, CCC and
CC by S&P and Ba, B, Caa, Ca and C by Moody's, are deemed by these agencies to
be predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal and may involve major risk exposure to adverse
conditions. Debt securities rated lower than B may include securities that are
in default or face the risk of default with respect to principal or interest.
Ratings of debt securities represent the rating agencies' opinions regarding
their quality and are not a guarantee of quality. Subsequent to its purchase by
an underlying fund, the rating of an issue of debt securities may be reduced
below the minimum rating required for purchase by that fund. Credit ratings
attempt to evaluate the safety of principal and interest payments and do not
evaluate the risks of fluctuations in market value. Also, rating agencies may
fail to make timely changes in credit ratings in response to subsequent events,
so that an issuer's current financial condition may be better or worse than the
rating increases. See the Statement of Additional Information for more
information about S&P and Moody's ratings.
Lower rated debt securities generally offer a higher current yield than that
available from higher grade issues. However, lower rated securities involve
higher risks, in that they are especially subject to adverse changes in general
economic conditions and in the industries in which the issuers are engaged, to
changes in the financial condition of the issuers and to price fluctuation in
response to changes in interest rates.
Accordingly, the yield on lower rated debt securities will fluctuate over time.
During periods of economic downturn or rising interest rates, highly leveraged
issuers may experience financial stress that could adversely affect their
ability to make payments of principal and interest and increase the possibility
of default. In addition, the market for lower rated securities has expanded
rapidly in recent years, and its growth paralleled a long economic expansion. In
the past, the prices of many lower rated debt securities declined substantially,
reflecting an expectation that many issuers of such securities might experience
financial difficulties. As a result, the yields on lower rated debt securities
rose dramatically, but such higher yields did not reflect the value of the
income stream that holders of such securities expected, but rather the risk that
holders of such securities could lose a substantial portion of their value as a
result of the issuers' financial restructuring or default. The market for lower
rated debt securities may be thinner and less active than that for higher
quality securities, which may limit an
25
<PAGE>
underlying fund's ability to sell such securities at their fair value in
response to changes in the economy or the financial markets. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower rated securities, especially in a
thinly traded market.
An underlying fund may invest in zero coupon securities and payment-in-kind
securities. Zero coupon securities pay no interest to holders prior to maturity
and payment-in-kind securities pay interest in the form of additional
securities. However, a portion of the original issue discount on the zero coupon
securities, and the "interest" on payment-in-kind securities, must be included
in the underlying fund's income. Accordingly, to continue to qualify for tax
treatment as a regulated investment company and to avoid certain excise taxes,
these funds may be required to distribute as a dividend an amount that is
greater than the total amount of cash they actually receive. These distributions
must be made from a fund's cash assets or, if necessary, from the proceeds of
sales portfolio securities. A fund will not be able to purchase additional
income-producing securities with cash used to make such distributions, and its
current income ultimately may be reduced as a result. Zero coupon and
payment-in-kind securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest in cash.
26
<PAGE>
SHAREHOLDER SERVICES
Lifetime Achievement Fund, Inc.
Shareholder Services Department
11605 West Dodge Road
Omaha, Nebraska 68154
EXECUTIVE OFFICES
Lifetime Achievement Fund, Inc.
11605 West Dodge Road
Omaha, Nebraska 68154
INDEPENDENT AUDITORS
Dolleck & Frederes, P. C.
Certified Public Accountants
10730 Pacific Street
Suite 242
Omaha, Nebraska 68114-4761
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the offering
made by this Prospectus and, if given or made, such information and
representations must not be relied upon as having been authorized by the Fund or
its distributor. This Prospectus does not constitute an offering by the Fund or
its distributor in any jurisdiction to any person to whom such offering may not
lawfully be made.
27
<PAGE>
LIFETIME ACHIEVEMENT FUND, INC.
11605 West Dodge Road
Omaha, Nebraska 68154
(402) 330-1166
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information sets forth information
regarding Lifetime Achievement Fund, Inc., Manarin Investment Counsel, Ltd.,
(the "Adviser") is the investment adviser of the Fund. Mackenzie Investment
Management, Inc., (the "Administrator") is the administrator of the Fund.
Manarin Securities Corporation (the "Distributor") is the distributor of the
Fund.
-----------------------
This Statement of Additional Information is not a prospectus and should
be read only in conjunction with the Fund's current Prospectus, dated December
____, 1999, which may be obtained from:
Lifetime Achievement Fund, Inc.
11605 West Dodge Rd
Omaha, Nebraska 68154
-----------------------
December ____, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL.............................................................................................1
INVESTMENT RESTRICTIONS.............................................................................1
INVESTMENT POLICIES.................................................................................4
Repurchase Agreements............................................................................5
Bank Obligations.................................................................................5
Commercial Paper.................................................................................6
Illiquid Securities..............................................................................6
Short Sales......................................................................................6
Lending of Portfolio Securities..................................................................8
Foreign Securities...............................................................................9
Other Investment Companies......................................................................11
Warrants........................................................................................11
Hedging Strategies..............................................................................11
MANAGEMENT OF THE FUND.............................................................................12
Investment Adviser..............................................................................12
Investment Adviser Affiliate....................................................................15
Directors and Officers..........................................................................16
Compensation Table..............................................................................17
Principal Holder of Securities..................................................................18
DISTRIBUTION OF FUND SHARES........................................................................18
PORTFOLIO TRANSACTIONS.............................................................................19
PRICING AND ADDITIONAL EXCHANGES...................................................................23
Determining Net Asset Value.....................................................................23
Total Return Calculations.......................................................................23
Other Information...............................................................................25
TAXATION...........................................................................................25
General.........................................................................................25
Distributions...................................................................................26
Foreign Income..................................................................................28
Hedging Transactions............................................................................30
CUSTODIAN, TRANSFER AND SHAREHOLDER SERVICES AGENT, ACCOUNTING SERVICES AGENT......................32
INDEPENDENT ACCOUNTANTS............................................................................32
OTHER INFORMATION..................................................................................33
FINANCIAL STATEMENTS...............................................................................33
APPENDIX A.........................................................................................34
Description of Moody's Short-Term Debt Ratings..................................................34
Description of Standard & Poor's Commercial Paper Ratings.......................................34
<PAGE>
Description of Moody's Long-Term Debt Ratings...................................................35
Description of S & P Corporate Debt Ratings.....................................................37
APPENDIX B.........................................................................................40
General Description of Hedging Strategies.......................................................40
Special Risks of Hedging Strategies.............................................................41
Cover for Hedging Strategies....................................................................43
Options Activities..............................................................................43
Futures Contracts...............................................................................46
Options on Futures Contracts....................................................................49
Forward and Foreign Currency Contracts..........................................................51
PART C. OTHER INFORMATION.........................................................................55
ITEM 23. EXHIBITS.........................................................................55
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH REGISTRANT..................................................................56
ITEM 25. INDEMNIFICATION..................................................................57
ITEM 26: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT
ADVISER..........................................................................58
ITEM 27: PRINCIPAL UNDERWRITERS...........................................................59
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.................................................59
ITEM 29. MANAGEMENT SERVICES..............................................................59
ITEM 30. UNDERTAKINGS.....................................................................60
SIGNATURES.........................................................................................61
</TABLE>
<PAGE>
GENERAL
The Fund was organized as a Maryland corporation in September 2, 1999,
under the name Manarin Diversified Growth Fund, Inc. The Fund subsequently
changed its corporate name to Lifetime Achievement Fund, Inc., by amending its
articles of incorporation in Maryland effective October 15, 1999. The Fund is
registered with the Securities and Exchange Commission ("SEC") under the
Investment Company Act of 1940 (the "1940 Act") as an open-end management
investment company.
The following information supplements the discussion of the Fund's
investment objective and policies found in the Prospectus.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental and, like the Fund's
investment objectives, may not be changed without the affirmative vote of the
lesser of (1) more than 50% of the outstanding shares of the Fund, or (2) 67% or
more of the shares of the Fund present at a shareholders' meeting if more than
50% of the outstanding shares of the Fund are represented at the meeting in
person or by proxy.
The Fund will not as a matter of fundamental policy:
1. Purchase any security if, as a result of such purchase, more than 10% of
the value of the Fund's total assets would be invested in the securities of a
single issuer or the Fund would own or hold more than 3% of the outstanding
voting securities of that issuer, provided that this limitation does not apply
to securities issued or
<PAGE>
guaranteed by the U.S. Government, its agencies or instrumentalities ("U.S.
Government securities");
2. Purchase or sell real estate except that the Fund may invest in the
securities of companies whose business involves the purchase or sale of real
estate;
3. Purchase or sell commodities or commodity contracts including futures
contracts;
4. Make loans, except when (a) purchasing a portion of an issue of debt
securities; or (b) engaging in securities loan transactions limited to 5% of the
Fund's total assets;
5. Purchase any security if, as a result of such purchase, more than 5% of
the value of the Fund's total assets would be invested in the securities of
issuers which at the time of purchase had been in operation for less than three
years, except U.S. Government securities (for this purpose, the period of
operation of any issuer shall include the period of operation of any predecessor
issuer) ;
6. Purchase participants or other direct interests in oil, gas, or other
mineral exploration or development programs;
7. Make short sales of securities or purchase securities on margin, except
for such short-term credits as may be necessary for the clearance of purchases
of portfolio securities;
8. Mortgage, pledge or hypothecate securities, if the total amount borrowed
exceeds 30% of the Fund's assets (valued at cost) and further subject to Federal
Reserve Regulation requirement;
-2-
<PAGE>
9. Underwrite securities issued by other persons;
10. Invest in companies for the purpose of exercising management or
control;
11. Purchase or retain the securities of any issuer if, to the knowledge of
the Fund's management, the officers or directors of the Fund and the officers
and directors of the Adviser who each own beneficially more than 0.50% of the
outstanding securities of such issuer together own beneficially more than 5% of
such securities;
12. Issue securities or other obligations senior to the Fund's share of
beneficial interest;
13. Purchase any securities that would cause more than 2% of the value of
the Fund's total assets at the time of such purchase to be invested in warrants
that are not listed, or more than 5% of the value of its total assets to be
invested in warrants or stock options whether or not listed, such warrants or
options in each case to be valued at the lesser of cost or market, but assigning
no value to warrants acquired by the Fund in units with or attached to debt
securities; or
14. Purchase any security if, as a result of such purchase, more than 10%
of the value of the Fund's total assets would be invested in illiquid securities
or foreign securities which are not publicly traded in the United States.
15. Purchase any individual equity security unless the issuer is listed on
the NASDAQ system and has, at the time of purchase, a market capitalization of
at least $200,000,000.
Whenever an investment objective or fundamental policy of the Fund states a
maximum percentage of the Fund's assets that may be invested in any security or
other
-3-
<PAGE>
asset or sets forth a policy regarding quality standards, that percentage shall
be determined, or that standard shall be applied immediately after the Fund's
acquisition of the investment. Accordingly, any later increase or decrease
resulting from a change in the market value of a security or in the Fund's net
or total assets will not cause the Fund to violate a percentage limitation.
Similarly, any later change in quality, such as a rating downgrade or the
de-listing of a warrant, will not cause the Fund to violate a quality standard.
The following investment limitations may be changed by the vote of the Fund's
Board of Directors (the "Board") without shareholder approval.
The Fund shall not:
1. Purchase or otherwise acquire the securities of any registered
investment company (except in connection with a merger, consolidation,
acquisition of substantially all of the assets or reorganization of another
investment company) if, as a result, the Fund and all of its affiliates would
own more than 3% of the total outstanding stock of that company; or
2. Invest directly in real estate limited partnerships.
The underlying funds in which the Fund invests may, but need not, have the
same investment objectives and fundamental policies as the Fund.
INVESTMENT POLICIES
The following supplements the information contained in the Prospectus
concerning the Fund's investment policies.
-4-
<PAGE>
REPURCHASE AGREEMENTS. The Fund may invest indirectly in repurchase
agreements secured by U.S. Government securities with U.S. banks and dealers
through the Fund's investments in underlying funds. A repurchase agreement is a
transaction in which the Fund purchases a security from a bank or recognized
securities dealer and simultaneously commits to resell that security to the bank
or dealer at an agreed-upon date and price reflecting a market rate of interest
unrelated to the coupon rate or maturity of the purchased security. The Fund
maintains custody of the underlying security prior to its repurchase; thus, the
obligation of the bank or securities dealer to pay the repurchase price on the
date agreed to is, in effect, secured by such security. If the value of such
security is less than the repurchase price, the other party to the agreement
shall provide additional collateral so that at all times the collateral is at
least equal to the repurchase price.
BANK OBLIGATIONS. The Fund may invest indirectly in instruments (including
certificates of deposit and bankers' acceptances) of U.S. banks and savings
associations that are insured by the Federal Deposit Insurance Corporation
through the Fund's investment in underlying funds. A certificate of deposit is
an interest-bearing negotiable certificate issued by a bank against funds
deposited in the bank. A bankers' acceptance is a short-term draft drawn on a
commercial bank by a borrower, usually in connection with an international
commercial transaction. Although the borrower is liable for payment of the
draft, the bank unconditionally guarantees to pay the draft at its face value on
the maturity date.
-5-
<PAGE>
COMMERCIAL PAPER. The Fund may invest in commercial paper. Commercial paper
represents short-term unsecured promissory notes issued in bearer form by bank
holding companies, corporations and finance companies. The commercial paper
purchased by the Fund consists of direct obligations of domestic issuers that,
at the time of investment, are (i) rated Prime-1 by Moody's or A-1 by S&P, (ii)
issued or guaranteed as to principal and interest by issuers or guarantors
having an existing debt security rating of Aa or better by Moody's or AA or
better by S&P, or (iii) securities that, if not rated, are, in the opinion of
the Adviser, of an investment quality comparable to rated commercial paper in
which the Fund may invest. See Appendix A to this Statement of Additional
Information for more information on ratings assigned to commercial paper.
ILLIQUID SECURITIES. The Fund may invest in illiquid securities indirectly
through underlying funds. An underlying open-end fund may invest up to 15% of
its net assets in securities for which no readily available market exists
("illiquid securities") or securities the disposition of which would be subject
to legal restrictions (so-called "restricted securities") and repurchase
agreements maturing in more than seven days. An underlying closed-end fund may
invest without limit in such securities. A considerable period may elapse
between a decision to sell such securities and the time when such securities can
be sold. If, during such a period, adverse market conditions were to develop, an
underlying fund might obtain a less favorable price than prevailed when it
decided to sell.
SHORT SALES. The Fund may invest in underlying funds that sell securities
short. In a short sale, a fund sells securities that it does not own, making
delivery with
-6-
<PAGE>
securities "borrowed" from a broker. The fund is then obligated to replace the
borrowed securities by purchasing them at the market price at the time of
replacement. This price may or may not be less than the price at which the
securities were sold by the fund. Until the securities are replaced, the fund is
required to pay to the lender any dividends or interest that accrue during the
period of the loan. In order to borrow the securities, the fund may also have to
pay a premium that would increase the cost of the securities sold. The proceeds
of the short sale will be retained by the broker, to the extent necessary to
meet margin requirements, until the short position is closed out.
The fund also must deposit in a segregated account an amount of cash or
U.S. Government securities equal to the difference between (a) the market value
of the securities sold short at the time they were sold short, and (b) the value
of the collateral deposited with the broker in connection with the sale (not
including the proceeds from the short sale). Each day the short position is
open, the fund must maintain the segregated account at such a level that the
amount deposited in it plus the amount deposited with the broker as collateral
(1) equals the current market value of the securities sold short, and (2) is not
less than the market value of the securities at the time they were sold short.
Depending upon market conditions, up to 80% of the value of a fund's net assets
may be deposited as collateral for the obligation to replace securities borrowed
to effect short sales and allocated to a segregated account in connection with
short sales.
A fund will incur a loss as a result of a short sale if the price of
the security increases between the date of the short sale and the date on which
the fund replaces the
-7-
<PAGE>
borrowed security. The fund will realize a gain if the security declines in
price between those dates. The amount of any gain will be decreased and the
amount of any loss increased by the amount of any premium, dividends or interest
the fund may be required to pay in connection with the short sale.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend a portion of its
portfolio securities constituting up to 5% of its respective net assets to
brokers, dealers, banks or other institutional investors, provided that (1) the
loan is secured by cash or equivalent collateral equal to at least 100% of the
current market value of the loaned securities that is maintained with the Fund's
custodian while portfolio securities are on loan, and (2) the borrower pays the
Fund an amount equivalent to any dividends or interest received on such
securities. The Fund may pay reasonable administrative and custodial fees in
connection with a loan and may pay a negotiated portion of the interest earned
on the cash or equivalent collateral to the borrower or placing broker. Although
the Fund does not have the right to vote securities on loan, the Fund could
terminate the loan and regain the right to vote if the vote were considered
important. Any underlying fund also may lend its portfolio securities pursuant
to similar conditions in an amount not in excess of one-third of its total
assets. Loans of securities involve a risk that the borrower may fail to return
the securities or may fail to provide additional collateral. In order to
minimize these risks, the Fund will make loans of securities only to firms
deemed creditworthy by the Adviser and only when, in the judgment of the
Adviser, the consideration that the Fund will receive from the borrower
justifies the risk.
-8-
<PAGE>
FOREIGN SECURITIES. The Fund may invest in securities of foreign
issuers directly or through an underlying fund. Investments in foreign
securities involve risks relating to political and economic developments abroad
as well as those that may result from the differences between the regulation to
which U.S. issuers are subject and that are applicable to foreign issuers. These
risks may include expropriation, confiscatory taxation, withholding taxes on
dividends and interest, limitations on the use or transfer of an underlying
fund's assets, and political or social instability or diplomatic developments.
These risks often are heightened to the extent an underlying fund invests in
issuers located in emerging markets or a limited number of countries.
Individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficient and balance of
payments position. Securities of many foreign companies may be less liquid and
their prices more volatile than securities of comparable U.S. companies.
Moreover, the underlying funds generally calculate their net asset values and
complete orders to purchase, exchange or redeem shares only on days when the New
York Stock Exchange ("NYSE") is open. However, foreign securities in which the
underlying funds may invest may be listed primarily on foreign stock exchanges
that may trade on other days (such as U.S. holidays and weekends). As a result,
the net asset value of an underlying fund's portfolio may be significantly
affected by such trading on days when the Adviser does not have access to the
underlying funds and shareholders do not have access to the Fund.
-9-
<PAGE>
Additionally, because foreign securities ordinarily are denominated in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect an underlying fund's net asset value, the value of dividends
and interest earned, gains and losses realized on the sale of securities, and
net investment income and capital gain, if any, to be distributed to
shareholders by the underlying fund. If the value of a foreign currency rises
against the U.S. dollar, the value of the underlying fund's assets denominated
in that currency will increase; correspondingly, if the value of a foreign
currency will increase; correspondingly, if the value of a foreign currency
declines against the U.S. dollar, the value of the underlying fund's assets
denominated in that currency will decrease. The exchange rates between the U.S.
dollar and other currencies are determined by supply and demand in the currency
exchange markets, international balances of payments, government intervention,
speculation and other economic and political conditions. The costs attributable
to foreign investing that an underlying fund must bear frequently are higher
than those attributable to domestic investing. For example, the costs of
maintaining custody of foreign securities exceed custodian costs related to
domestic securities.
Investment income on certain foreign securities in which the funds may
invest may be subject to foreign withholding or other taxes that could reduce
the return on these securities. Tax treaties between the United States and
foreign countries, however, may reduce or eliminate the amount of foreign taxes
to which the funds would be subject.
-10-
<PAGE>
OTHER INVESTMENT COMPANIES. The Fund seeks to achieve its investment
objectives by investing in shares of underlying funds. Accordingly, the
shareholders of the Fund may be subject to duplicative management fees and other
expenses.
WARRANTS. The Fund may invest in warrants directly or indirectly
through an investment in an underlying fund. Warrants are a type of option to
purchase a specified security, usually an equity security such as common stock,
at a specified price (usually representing a premium over the applicable market
value of the underlying equity security at the time of the warrant's issuance)
and usually during a specified period of time. Moreover, they are usually issued
by the issuer of the security to which they relate. While warrants may be
traded, there is often no secondary market for them. The prices of warrants do
not necessarily move parallel to the prices of the underlying securities.
Holders of warrants have no voting rights, receive no dividends and have no
right with respect to the assets of the issuer. To the extent that the market
value of the security that may be purchased upon exercise of the warrant rises
above the exercise price, the value of the warrant will tend to rise. To the
extent that the exercise price equals or exceeds the market value of such
security, the warrants will have little or no market value. If a warrant is not
exercised within the specified time period, it will become worthless and the
fund will lose the purchase price paid for the warrant and the right to purchase
the underlying security.
HEDGING STRATEGIES. The Fund may indirectly through an investment in an
underlying fund engage in certain hedging strategies involving options, futures
and
-11-
<PAGE>
forward currency exchange contracts. These hedging strategies are described
below in Appendix B.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
The Adviser provides investment advisory services for the Fund pursuant to
an Investment Advisory Agreement ("Advisory Agreement") with the Fund. The
Adviser is controlled, by Roland R. Manarin, who owns all of its outstanding
shares. Mr. Manarin is the President, Treasurer and Chairman of the Fund.
The Advisory Agreement provides that, subject to overall supervision by the
Board, the Adviser shall act as investment adviser and shall manage the
investment and reinvestment of the assets of the Fund, obtain and evaluate
pertinent economic data relative to the investment policies of the Fund, place
orders for the purchase and sale of securities on behalf of the Fund, and report
to the Board periodically to enable it to determine that the investment policies
of the Fund and all other provisions of its Advisory Agreement are being
properly observed and implemented. The Adviser is paid a monthly fee for its
services calculated at the annual rate of .75% of the average daily net assets
of the Fund.
The Advisory Agreement provides that it will remain in effect for two
years and may be renewed from year to year thereafter, provided that renewal is
specifically approved at least annually by the vote of a majority of the
outstanding voting securities of the Fund, or by the Board, including a majority
of the Directors who are not parties to
-12-
<PAGE>
the Advisory Agreement or "interested persons" of any such party (by vote cast
in person at a meeting called for that purpose).
The Advisory Agreement provides that the Adviser will not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of the Advisory Agreement, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard of its
duties and obligations thereunder. The Advisory Agreement may be terminated at
any time without penalty by the Board or by the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund, on 60
days' written notice to the Adviser or by the Adviser on 60 days' written notice
to the Fund. The Advisory Agreement may not be terminated by the Adviser unless
another investment advisory agreement has been approved by the Fund in
accordance with the 1940 Act. The Advisory Agreement terminates automatically
upon assignment (as defined in the 1940 Act).
In addition to the advisory fees, the Fund is obligated to pay certain
expenses that are not assumed by the Adviser or Manarin Securities Corporation,
the initial distributor of the Funds' shares.. These expenses include, among
others, securities registration fees, compensation for non-interested directors,
interest expense, taxes, brokerage fees, commissions and sales loads, custodian
charges, transfer agency fees, certain distribution expenses pursuant to a plan
of distribution adopted in the manner prescribed under Rule 12b-1 under the 1940
Act (a "Distribution Plan"), if any, legal expenses, insurance expenses,
association membership dues, and the expense of reports
-13-
<PAGE>
to the shareholders, shareholders' meetings and proxy solicitations. The Fund is
also liable for nonrecurring expenses as may arise, including litigation to
which the Fund may be a party.
Although it is not specifically provided for in the Advisory Agreement, the
Adviser may elect to waive all or any portion of its fee otherwise owed to
Adviser by the Fund. The Adviser may also elect not to seek reimbursement from
the Fund for expenses reasonably incurred on behalf of the Fund and otherwise
properly reimbursable to the Adviser. In the event the Adviser elects to waive
its fees or reimbursement for expenses, it will so notify the Fund's management
in writing and in a timely manner. Any such waiver is irrevocable and forever
releases the Fund from any payment obligation.
The reason the Adviser may elect to waive such payments is to avoid the
Fund's costs (including the Adviser's fees and reimbursable expenses) from
constituting an unduly large amount in relation to the size of the Fund during
the Fund's initial start-up period (e.g. the first twelve to eighteen months).
The waiver of fees and reimbursements by the Adviser will improve the Fund's
performance for the period(s) in which the waivers are applicable compared to
the Fund's performance if it had incurred and paid the waived fees and
reimbursements.
-14-
<PAGE>
INVESTMENT ADVISER AFFILIATE
The distributor of the Fund's shares and an affiliate of the Adviser is
Manarin Securities Corporation ("Distributor"), an SEC registered and NASD
member broker-dealer. Distributor is wholly owned by Roland R. Manarin.
There will be no sales load or other charges incurred by the Fund when it
purchases or sells the shares of an underlying fund, whether or not that fund is
a no-load fund. However, it is expected that the underlying fund will pay a
finder's fee and a trail fee to Distributor in connection with the Fund's
acquisition of the underlying fund's shares. The finder's fee is a one-time
payment typically amounting to 100 basis points of the total purchase price paid
by the Fund. In addition, Distributor expects to receive a trail fee in an
amount up to 50 basis points of the annualized assets under management with the
Fund. The trail fee is received annually by Distributor from the underlying fund
for each year after the year of the acquisition by the Fund in which the Fund
continues to hold the shares of the underlying fund.
In the event that the Fund acquires or sells directly U.S. Government
securities, it will pay a commission to Distributor of not more than 1% of the
acquisition price. In the event that the Fund acquires or sells directly stocks
or bonds of an issuer that is not a registered investment company, Distributor
will receive no commission in connection with its activities as a broker in
effectuating the transaction on behalf of the Fund, but may be entitled to
recover its costs associated with acquiring the security (e.g., clearing fees).
The principals in Distributor may receive expense paid travel in connection with
-15-
<PAGE>
due diligence meetings, which expenses are paid for by the underlying funds or
another issuer of securities acquired by the Fund.
The aggregate investment by Roland R. Manarin and his affiliates in the
Fund will not exceed two hundred and fifty thousand dollars ($250,000.00).
DIRECTORS AND OFFICERS
Information concerning the Directors and officers of the Fund is set
forth below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name, Age, Position(s) Principal Occupation(s)
Held With the Fund and During the Past Five Years
Address
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Roland R. Manarin* (54) President, Director and Investment Adviser Representative, Manarin
President, Treasurer and Director Investment Counsel, Ltd; Registered Representative LINSCO/Private Ledger
11605 West Dodge Road
Omaha, Nebraska 68154
- ----------------------------------------------------------------------------------------------------------------------
Charles H. Richter* (42) Chief Operating Officer, Manarin Securities Corporation; President,
Vice President, Secretary, Investors First Securities, Principal, Broker-dealer Services, LLC;
and Director Principal, Kuehl Capital Corporation
11605 West Dodge Road
Omaha, Nebraska 68154
- ----------------------------------------------------------------------------------------------------------------------
David C. Coker (52) Development Director, Nebraska Lutheran Outreach Ministries (non-profit
Director religious organization)
11605 West Dodge Road
Omaha, Nebraska 68154
- ----------------------------------------------------------------------------------------------------------------------
Jerry Vincentini (59) Sales Marketing Manager, Willsie Company (graduation supplies)
Director
11605 West Dodge Road
Omaha, Nebraska 68154
- ----------------------------------------------------------------------------------------------------------------------
Dr. Bodo Treu (42) Physician, Alegent Family Care Clinic (family practice clinic)
Director
11605 West Dodge Road
Omaha, Nebraska 68154
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
"Interested Person" of the Trust as defined in the 1940 Act by virtue of
his position with the Adviser.
-16-
<PAGE>
Because the Adviser performs substantially all of the services necessary
for the operation of the Fund, the Fund requires no employees. No officer,
director or employee of the Adviser currently receives any compensation from the
Fund for acting as a Director or officer.
The Fund pays Directors who are not "interested persons" of the Fund
$100.00 per meeting of the Board. There is no pension or retirement benefits
accrued as part of the Fund's expenses and there are no estimated annual
benefits to be paid upon retirement. (The following table shows the fees paid to
the Directors as of December ____, 1999, for their services to the Fund.
COMPENSATION TABLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Name of Person, Aggregate of Pension or Estimated Total
Position Compensation Retirement Annual Benefits Compensation
from Fund Benefits Accrued Upon Retirement from Fund and
as Part of Fund Fund Complex
Expenses Paid to Directors
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Roland R. Manarin, $0 $0 $0 N/A
Director
- -------------------------------------------------------------------------------------------------------------------
Charles H. Richter, $0 $0 $0 N/A
Director
- -------------------------------------------------------------------------------------------------------------------
David C. Coker, Director $500 $0 $0 N/A
- -------------------------------------------------------------------------------------------------------------------
Jerry Vincentini, $500 $0 $0 N/A
Director
- -------------------------------------------------------------------------------------------------------------------
Dr. Bodo Treu, Director $500 $0 $0 N/A
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The Fund has not completed its first full year since organization.
Therefore the information provided in the foregoing Compensation Table is for
the current fiscal year and estimates payments that would be made under an
existing agreement or understanding. The period for which the information is
given is fiscal 1999.
-17-
<PAGE>
PRINCIPAL HOLDER OF SECURITIES
On December ___, 1999, Roland R. Manarin owned all of the outstanding
shares of the Fund which were issued privately to him in connection with the
organization of the Fund. The other Directors and officers of the Fund, as a
group owned beneficially, or may be deemed to have owned beneficially, none of
the outstanding shares of the Fund.
DISTRIBUTION OF FUND SHARES
Distributor, Manarin Securities Corporation, located at 11605 West Dodge
Road, Omaha, Nebraska, 68154, acts as the exclusive distributor of shares of the
Fund under a Distribution Agreement with the Fund ("Distribution Agreement")
that requires Distributor to use its best efforts to sell shares of the Fund.
Shares of the Fund are offered continuously. Payments by the Fund to compensate
the Distributor for its activities are authorized under the Distribution
Agreement. The Distribution Agreement provides for the Fund to pay to the
Distributor a sales charge in an amount provided for in the Fund's Prospectus
and to reimburse the Distributor for certain distribution expenses as set forth
in the Distribution Plan which accompanies the Distribution Agreement. Under the
Distribution Plan, the Fund pays Distributor, in reimbursement for certain
Distributor expenses incurred in connection with the Distributor's activities on
behalf of the Fund, a fee of up to 0.25% per annum, accrued daily and paid
monthly, based on the Fund's average daily net assets.
-18-
<PAGE>
The Distribution Agreement, including the Distribution Plan, was
unanimously approved by all of the Directors, including those Directors who are
not "interested persons" of the Fund, on October 15, 1999. In approving the
Distribution Agreement, the Board considered that the compensation to be
received by Distributor under the Distribution Agreement and the benefits that
accrue to the Adviser, in that the Adviser receives advisory fees that are
calculated based upon a percentage of the average net assets of the Fund, which
fees increase to the extent that the Distribution Agreement causes the Fund to
attain higher asset levels.
The Distribution Agreement continues in effect for successive periods of
one year each so long as such continuance is specifically approved by a vote of
a majority of both (a) the Board and (b) those Directors who are not "interested
persons" of the Fund, as defined in the 1940 Act, and have no direct or indirect
financial interest in the operation of the Distribution Agreement or any
agreements related to it, cast in person at a meeting called for the purpose of
voting on the Distribution Agreement and such related agreements. In any event,
the Distribution Agreement may be terminated at any time by vote of a majority
of the disinterested Directors or by vote of a majority of the outstanding
voting securities of the Fund.
PORTFOLIO TRANSACTIONS
Subject to policies established by the Board, the Adviser is responsible
for the execution of the Fund's portfolio transactions and the allocation of
brokerage transactions. In effecting portfolio transactions, the Adviser seeks
to obtain the best net
-19-
<PAGE>
results for the Fund. This determination involves a number of considerations,
including the economic effect on the Fund (involving both price paid or received
and any commissions and other costs), the efficiency with which the transaction
is effected where a large block is involved, the availability of the broker to
stand ready to execute potentially difficult transactions, and the financial
strength and stability of the broker. Such considerations are judgmental and are
weighed by the Adviser in determining the overall reasonableness of brokerage
commissions paid. Purchases from underwriters include an underwriting commission
or concession, and purchases from dealers serving as market makers include the
spread between the bid and asked price. Where transactions are made in the
over-the-counter market, the Fund will deal with the primary market makers
unless more favorable prices are obtainable elsewhere.
Under the 1940 Act, a mutual fund must sell its shares at the price
(including sales load, if any) described in its prospectus, and current rules
under the 1940 Act do not permit negotiations of sales loads. However, the Fund
will not acquire securities of an underlying fund that has a sales load unless
the size of the acquisition is significant enough to eliminate the sales load in
accordance with the terms of the prospectus of the underlying fund. The Adviser,
to the extent possible, also seeks to eliminate the sales load imposed by
purchasing shares pursuant to (i) letters of intent, permitting purchases over
time; (ii) rights of accumulation, permitting it to waive sales charges as it
purchases additional shares of an underlying fund; and (iii) rights to waive
sales charges by aggregating its purchases of several funds within a "family" of
mutual
-20-
<PAGE>
funds. The Adviser also takes advantage of exchange or conversion privileges
offered by any "family" of mutual funds.
With respect to purchases of shares of underlying funds subject to a
front-end sales load at the time of purchase ("load fund shares"), the Adviser
may direct, to the extent possible, substantially all of the orders to
Distributor. Where Distributor acts as the dealer with respect to purchases of
load fund shares, it retains dealer re-allowances on those purchases up to a
maximum of 1% of the public offering price of the shares. Distributor is not
designated as the dealer on any sales where such re-allowance exceeds 1% of the
public offering price. In the event the Distributor is unable to execute a
particular transaction, the Advisor will direct such order to another
broker-dealer.
Distributor may assist in the execution of Fund portfolio transactions to
purchase underlying fund shares for which it may receive distribution payments
from the underlying funds or their underwriters or sponsors in accordance with
the normal distribution arrangements of those funds. These payments are separate
from the dealer re-allowances noted above. In providing execution assistance,
Distributor receives orders from the Adviser; places them with the underlying
fund's distributor, transfer agent or other person, as appropriate; confirms the
trade, price and number of shares purchased; and assures prompt payment by the
Fund and proper completion of the order. The compensation arrangements to the
Distributor are discussed in the section "MANAGEMENT OF THE FUND - Investment
Adviser Affiliate".
A factor in the selection of brokers to execute the Fund's portfolio
transactions is the receipt of research, analysis, advice and similar services.
To the extent that research
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services of value are provided by brokers with or through whom the Adviser
places the Fund's portfolio transactions, the Adviser may be relieved of
expenses that it might otherwise bear. Research and other services provided by
brokers to the adviser of the Fund is in addition to, and not in lieu of,
services required to be performed by the Adviser under its Advisory Agreement.
The Fund expects that purchases and sales of money market instruments will
usually be principal transactions, and purchases and sales of other debt
securities may be principal transactions. Thus, the Fund will normally not pay
brokerage commissions in connection with principal transactions. Money market
instruments are generally purchased directly from the issuer, an underwriter or
market maker for the securities, and other debt securities may be purchased in a
similar manner. Purchases from underwriters include an underwriting commission
or concession, and purchases from dealers serving as market makers include the
spread between the bid and asked price. Where transactions are made in the
over-the-counter market, the Fund will deal with the primary market makers
unless more favorable prices are obtainable elsewhere.
The policy of the Fund with respect to brokerage is reviewed by the Board
from time to time. Because of the possibility of further regulatory developments
affecting the securities exchanges and brokerage practices generally, the
foregoing practices may be modified.
The portfolio turnover rate may vary greatly from year to year for the Fund
and will not be a limiting factor when the Adviser deems portfolio changes
appropriate. The annual portfolio turnover rate is calculated by dividing the
lesser of the Fund's
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annual sales or purchases of portfolio securities (exclusive of purchases or
sales of securities whose maturities at the time of acquisition were one year or
less) by the monthly average value of the securities in the Fund during the
year.
PRICING AND ADDITIONAL EXCHANGES
DETERMINING NET ASSET VALUE
The Fund determines its net asset value per share as of the close of
regular trading (currently 3:00 p.m. Omaha time) on the NYSE on each business
day, which is defined as each Monday through Friday when the NYSE is open.
Currently, the NYSE is closed on New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The net asset value per share of the Fund is determined by dividing the Fund's
total net assets by the number of shares outstanding at the time of calculation.
Total net assets are determined by adding the total current value of portfolio
securities, cash, receivables and other assets and subtracting liabilities.
TOTAL RETURN CALCULATIONS
Average annual total return quotes ("Standardized Return") used in the
Fund's Performance Advertisements are calculated according to the following
formula:
P (1 + T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
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n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of
that period.
Under the foregoing formula, the time periods used in Performance
Advertisements will be based on rolling calendar quarters, updated to the last
day of the most recent quarter prior to submission of the advertisement for
publication. In calculating the ending redeemable value, all dividends and
distributions by the Fund are assumed to have been reinvested at net asset value
on the reinvestment dates during the period. Total return, or "T" in the formula
above, is computed by finding the average annual compounded rate of return over
the period that would equate the initial amount invested to the ending
redeemable value.
In addition to Standardized Return, the Fund also may include other total
return performance data in Performance Advertisements ("Non-Standardized
Return"). Non-Standardized Return is calculated separately and may be calculated
according to several different formulas. Non-Standardized Returns may be quoted
for the same or different time periods for which Standardized Returns are
quoted.
In addition, the Fund may include aggregate Non-Standardized Return in
Performance Advertisements. Aggregate Non-Standardized Return is calculated by
subtracting the beginning value of an investment in the Fund from the value of
the investment at the end of the period and dividing the remainder by the
beginning value.
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For purposes of the calculation, it is assumed that the beginning value is
$1,000 and that dividends and other distributions are reinvested.
OTHER INFORMATION
In connection with communicating the Fund's performance information to
current or prospective shareholders, the Fund also may compare these figures to
the performance of other mutual funds tracked by mutual fund rating services or
other unmanaged indexes that may assume reinvestment of distributions but
generally do not reflect deductions for administrative and management costs.
TAXATION
GENERAL
To qualify for treatment as a regulated investment company ("RIC")
under the Internal Revenue Code of 1986, as amended (the "Code"), the Fund must
distribute annually to its shareholders at least 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain and net gains from certain foreign currency transactions, if any)
("Distribution Requirement") and must meet several additional requirements.
These requirements include the following: (1) 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
securities or foreign currencies and other income (including gains from options,
futures or forward contracts) derived with respect to its business of investing
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in securities or those currencies ("Income Requirement"); (2) 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 these other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of the Fund's total assets and that does not represent more than 10%
of the issuer's outstanding voting securities; and (3) at the close of each
quarter of the Fund's taxable year, not more than 25% of the value of its total
assets may be invested in securities (other than U.S. Government securities or
securities of other RICs) of any one issuer.
DISTRIBUTIONS
Dividends and other distributions declared by the Fund in October, November
and December of any year and payable to shareholders of record on a date in any
one of these months will be deemed to have been paid by the Fund and received by
the shareholders on December 31 of that year if the distributions are paid by
the Fund during the following January. Accordingly, those distributions will be
taxed to shareholders for the year in which that December 31 falls.
A portion of the dividends from the Fund's investment company taxable
income (whether paid in cash or reinvested in additional Fund shares) may be
eligible for the dividends-received deduction allowed to corporations. The
eligible portion for the Fund may not exceed the aggregate dividends it receives
either directly from U.S. corporations (excluding RIC, among others) or
indirectly from such corporations
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through underlying funds in which it invests. However, dividends received by a
corporate shareholder and deducted by it pursuant to the dividends-received
deduction are subject indirectly to the alternative minimum tax.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax") to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares. Investors
also should be aware that if shares are purchased shortly before the record date
for any dividend or capital gain distribution, the shareholder will pay full
price for the shares and receive some portion of the price back as a taxable
distribution.
Generally, a redemption by the Fund of an underlying fund's shares will
result in taxable gain or loss to the Fund, depending on whether the redemption
proceeds are more or less than the Fund's adjusted basis for the redeemed shares
(which normally includes any sales charge paid); an exchange of an underlying
fund's shares for shares of another underlying fund normally will have similar
tax consequences. However, if the Fund disposes of an underlying fund's shares
("original shares") within 90 days after its purchase thereof and subsequently
reacquires shares of that underlying fund or acquires shares of another
underlying fund on which a sales charge normally is imposed ("replacement
shares"), without paying the sales charge (or paying a reduced
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charge) due to an exchange privilege or a reinstatement privilege, then (1) any
gain on the disposition of the original shares will be increased, or the loss
thereon decreased, by the amount of the sales charge paid when the original
shares were acquired, and (2) that amount will increase the adjusted basis of
the replacement shares that were subsequently acquired.
FOREIGN INCOME
The Fund may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation - other than a "controlled
foreign corporation" (I.E., a foreign corporation in which, on any day during
its taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly,
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly, or constructively, at least 10% of that
voting power) as to which the Fund is a U.S. shareholder - that, in general,
meets either of the following tests: (1) at least 75% of its gross income is
passive, or (2) an average of at least 50% of its assets produce, or are held
for the production of, passive income. Under certain circumstances, the Fund
will be subject to federal income tax on a portion of any "excess distribution"
received on the stock of a PFIC or of any gain from disposition of that stock
(collectively "PFIC income"), plus interest thereon, even if the Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the
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extent it distributes that income to its shareholders. If the Fund invests in a
PFIC and elects to treat the PFIC as a "qualified electing fund" ("QEF"), then
in lieu of the foregoing tax and interest obligation, the Fund will be required
to include in income each year its pro rata share of the QEF's annual ordinary
earnings and net capital gain - which probably would have to be distributed to
satisfy the Distribution Requirement and avoid imposition of the Excise Tax -
even if those earnings and gain were not received by the Fund from the QEF. In
most instances it will be very difficult, if not impossible, to make this
election because of certain requirements thereof.
The Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of the PFIC's stock
over the Fund's adjusted basis therein as of the end of that year. Pursuant to
the election, the Fund also will be allowed to deduct (as an ordinary, not
capital, loss) the excess, if any, of its adjusted basis in PFIC stock over the
fair market value thereof as of the taxable year-end, but only to the extent of
any net mark-to-market gains with respect to that stock included by the Fund for
prior taxable years. The Fund's adjusted basis in each PFIC's stock with respect
to which it makes this election will be adjusted to reflect the amounts of
income included and deductions taken under the election. Regulations proposed in
1992 provided a similar election with respect to the stock of certain PFICs.
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HEDGING TRANSACTIONS
The use of hedging strategies, such as writing (selling) and purchasing
options and futures contracts and entering into forward contracts, involves
complex rules that will determine for income tax purposes the amount, character
and timing of recognition of the gains and losses a Fund realizes in connection
therewith. Gains from the disposition of foreign currencies (except certain
gains that may be excluded by future regulations), and gains from options,
futures and forward contracts derived by the Fund with respect to its business
of investing in securities or those currencies, will qualify as permissible
income under the Income Requirement.
Certain futures and forward contracts in which the Fund may invest will be
"section 1256 contracts." Section 1256 contracts held by the Fund at the end of
each taxable year, other than section 1256 contracts that are part of a "mixed
straddle" with respect to which the Fund has made an election or to have the
following rules apply, must be "marked-to-market" (that is, treated as sold for
their fair market value) for federal income tax purposes, with the result that
unrealized gains or losses will be treated as though they were realized. Sixty
percent of any net gain or loss recognized on these deemed sales, and 60% of any
net realized gain or loss from any actual sales of section 1256 contracts, will
be treated as long-term capital gain or loss, and the balance will be treated as
short-term capital gain or loss. Section 1256 contracts also may be
marked-to-market for purposes of the Excise Tax.
Code section 1092 (dealing with staddles) also may affect the taxation of
options and futures contracts in which the Fund may invest. Section 1092 defines
a "straddle"
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as offsetting positions with respect to personal property; for these purposes,
options and futures contracts are personal property. Section 1092 generally
provides that any loss from the disposition of a position in a straddle may be
deducted only to the extent the loss exceeds the unrealized gain on the
offsetting position(s) of the straddle. Section 1092 also provides certain "wash
sale" rules, which apply to transactions where a position is sold at a loss and
a new offsetting position is acquired within a prescribed period, and "short
sale" rules applicable to straddles. If the Fund makes certain elections, the
amount, character, and timing of recognition of the gains and losses from the
affected straddle positions would be determined under rules that vary according
to the elections made. Because only a few of the regulations implementing the
straddle rules have been promulgated, the tax consequences to the Fund of
straddle transactions are not entirely clear.
If the Fund has an "appreciated financial position" - generally, an
interest (including an interest through an option, futures or forward contract
or short sale) with respect to any stock, debt instrument (other than "straight
debt") or partnership interest the fair market value of which exceeds its
adjusted basis - and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract or futures or forward contract entered into by the Fund or a
related person with respect to the same or substantially similar property. In
addition, if the appreciated financial position is itself a short sale or such a
contract,
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acquisition of the underlying property or substantially similar property will be
deemed a constructive sale.
CUSTODIAN, TRANSFER AND SHAREHOLDER
SERVICES AGENT, ACCOUNTING SERVICES AGENT
Ivy Mackenzie Services Corp., Via Mizner Financial Plaza, 700 South Federal
Highway, Suite 300, Boca Raton, Florida 33432, is the Fund's transfer and
shareholder services agent. Mackenzie Investment Management, Inc., Via Mizner
Financial Plaza, 700 South Federal Highway, Suite 300, Boca Raton, Florida
33432, provides the Fund with certain accounting and recordkeeping services.
Brown Brothers Harriman & Company, 40 Water Street, Boston, Massachusetts, is
the custodian for the Fund.
INDEPENDENT ACCOUNTANTS
Dolleck & Frederes, P.C., was appointed by the Directors to serve as the
Fund's independent certified public accountants, providing professional services
including (1) audit of the annual financial statements, (2) assistance and
consultation in connection with SEC filings and semi-annual reports, including
semi-annual financial statements, and (3) preparation of the federal income tax
returns filed on behalf of the Fund.
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OTHER INFORMATION
The Fund is organized as a Maryland corporation and is registered with the
SEC as a diversified, open-end management investment company. Such registration
does not involve supervision by the SEC of the management or policies of the
Fund.
The Prospectus relating to the Fund and this Statement of Additional
Information do not contain all the information included in the Fund's
registration statement filed with the SEC under the Securities Act of 1933 and
the 1940 Act with respect to the securities offered hereby, certain portions of
which have been omitted pursuant to the rules and regulations of the SEC. The
registration statement, including the exhibits filed therewith, may be examined
at the offices of the SEC in Washington, D.C. It is also available on the SEC's
web-site (http://www.sec.gov).
Statements contained in the Prospectus and this Statement of Additional
Information as to the contents of any contract or other documents referred to
are not necessarily complete, and in each instance reference is made to the copy
of such contracts or other documents filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference. Annual and semi-annual reports of the Fund will be mailed to each
shareholder of record.
FINANCIAL STATEMENTS
To be submitted by pre-effective amendment.
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APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER
AND BOND RATINGS
DESCRIPTION OF MOODY'S SHORT-TERM DEBT RATINGS
Prime-1. Issuers (or supporting institutions) rated Prime-1 ("P-1") have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries; high
rates of return on funds employed; conservative capitalization structure with
moderate reliance on debt and ample asset protection; broad margins in earnings
coverage of fixed financial charges and high internal cash generation;
well-established access to a range of financial markets and assured sources of
alternate liquidity. Prime-2. Issuers (or supporting institutions) rated Prime-2
("P-2") have a strong ability for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the characteristics
cited above but to a lesser degree. Earnings trends and coverage ratios, while
sound, may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
DESCRIPTION OF STANDARD & POOR'S COMMERCIAL PAPER RATINGS
A. Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1,
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2, and 3 to indicate the relative degree of safety. A-1. This designation
indicates that the degree of safety regarding timely payment is strong. Those
issues determined to possess extremely strong safety characteristics are denoted
with a plus (+) sign designation. A-2. Capacity for timely payment on issues
with this designation is satisfactory. However, the relative degree of safety is
not as high as for issues designated A-1.
DESCRIPTION OF MOODY'S LONG-TERM DEBT RATINGS
Aaa. Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues. Aa. Bonds which are rated Aa
are judged to be of high quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities. A. Bonds which are rated A possess many
favorable investment attributes and are considered as upper-medium grade
obligations. Factors giving security to principal and interest are considered
adequate, but elements may be present which suggest a susceptibility to
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impairment some time in the future. Baa. Bonds which are rated Baa are
considered as medium-grade obligations (I.E., they are neither highly protected
nor poorly secured). Interest payments and principal security appear adequate
for the present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well. Ba. Bonds which are rated Ba are judged to have
speculative elements; their future cannot be considered as well-assured. Often
the protection of interest and principal payments may be very moderate, and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. B. Bonds which are
rated B generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small. Caa. Bonds which are rated Caa are of
poor standing. Such issues may be in default or there may be present elements of
danger with respect to principal or interest. Ca. Bonds which are rated C are
present obligations which are speculative in a high degree. Such issues are
often in default or have other marked shortcomings. C. Bonds which are rated C
are the lowest rated class of bonds, and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from Aa to B. The modifier 1 indicates that the Company
ranks in the higher end of its general rating category; the modifier 2 indicates
a mid-range ranking;
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and the modifier 3 indicates that the company ranks in the lower end of its
generic rating category.
DESCRIPTION OF S & P CORPORATE DEBT RATINGS
AAA. Debt rated AAA has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong. AA. Debt rated AA has a very
strong capacity to pay interest and repay principal and differs from the higher
rated issues only in small degree. A. Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions that debt in
higher rated categories. BBB. Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories. BB,
B, CCC, CC and C. Debt rated BB, B, CCC, CC, and C is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
BB. Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic
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conditions which could lead to inadequate capacity to meet timely interest and
principal payments. The BB rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BBBrating. B. Debt rated B has
a greater vulnerability to default but currently has the capacity to meet
interest payments and principal repayments. Adverse business, financial, or
economic conditions will likely impair capacity or willingness to pay interest
and repay principal. The B rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating. CCC. Debt
rated CCC has a currently identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating. CC. The rating CC is typically applied to debt subordinated to
senior debt that is assigned an actual or implied CCC rating. C. The rating C is
typically applied to debt subordinated to senior debt which is assigned an
actual or implied CCC- debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued. CI. The rating CI is reserved for income bonds on which no
interest is being paid. D. Debt rated D is in payment default. The D rating
category is used when interest payments or principal payments are not made on
the date due even if the applicable grace period has not expired, unless S&P
believes
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that such payments will be made during such grace period. The D rating
also will be used upon the filing of a bankruptcy petition if debt service
payments are in jeopardy.
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APPENDIX B
HEDGING STRATEGIES
GENERAL DESCRIPTION OF HEDGING STRATEGIES
As discussed in the Prospectus, an underlying fund may engage in a variety
of strategies ("Hedging Strategies") involving the use of certain financial
instruments, including options, and futures contracts (collectively, "Hedging
Securities").
Hedging Strategies are used to hedge against price movements in one or more
particular securities positions that the Fund owns or intends to acquire.
Hedging Strategies on stock indices, in contrast, generally are used to hedge
against price movements in broad equity market sectors in which the fund has
invested or expects to invest. Hedging Strategies on debt securities may be used
to hedge either individual securities or broad fixed income market sectors.
The use of Hedging Strategies is subject to applicable regulations of the
SEC, the several options and futures exchanges upon which they are traded, the
Commodity Futures Trading Commission ("CFTC") and various state regulatory
authorities. In addition, a fund's ability to use Hedging Strategies will be
limited by tax considerations.
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SPECIAL RISKS OF HEDGING STRATEGIES
The use of Hedging Strategies involves special considerations and risks, as
described below. Risks pertaining to particular instruments are described in the
sections that follow:
(1) Successful use of most Hedging Strategies depends upon the Adviser's or
the underlying fund's ability to predict movements of the overall securities and
interest rate markets, which requires different skills than predicting changes
in the prices of individual securities. There can be no assurance that any
particular hedging strategy adopted will succeed.
(2) There might be imperfect correlation, or even no correlation, between
price movements of the Hedging Security and price movements of the investments
being hedged. For example, if the value of an instrument used in a short hedge
increased by less than the decline in value of the hedged investment, the hedge
would not be fully successful. Such a lack of correlation might occur due to
factors unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which hedging instruments are
traded. The effectiveness of Hedging Strategies on indices will depend on the
degree of correlation between price movements in the index and price movements
in the securities being hedged.
(3) Hedging Strategies, if successful, can reduce risk of loss by wholly or
partially offsetting the negative effect of unfavorable price movements in the
investments being hedged. However, Hedging Strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged
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investments. For example, if the Fund entered into a short hedge because the
Adviser projected a decline in the price of a security in the Fund's portfolio,
and the price of that security increased instead, the gain from that increase
might be wholly or partially offset by a decline in the price of the hedging
instrument. Moreover, if the price of the hedging instrument declined by more
than the increase in the price of the security, the Fund could suffer a loss. In
either such case, the Fund would have been in a better position had it not
hedged at all.
(4) The Fund might be required to maintain assets as "cover," maintain
segregated accounts or make margin payments when it takes positions in hedging
instruments involving obligations to third parties (I.E., hedging instruments
other than purchased options). If the Fund were unable to close out its
positions in such hedging instruments, it might be required to continue to
maintain such assets or accounts or make such payments until the positions
expired or matured. These requirements might impair the Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
disadvantageous time. The Fund's ability to close out a position in an
instrument prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the opposite party to the transaction to enter into a transaction
closing out the position. Therefore, there is no assurance that any hedging
position can be closed out at a time and price that is favorable to the Fund.
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COVER FOR HEDGING STRATEGIES
The Fund will not use Hedging Strategies for speculative purposes or for
purposes of leverage, although an underlying fund may do so. Hedging Strategies,
other than purchased options, expose the Fund to an obligation to another party.
The Fund will not enter into any such transactions unless they own either (1) an
offsetting ("covered") position in securities or other options or futures
contracts, or (2) cash, receivables and short-term debt securities, with a value
sufficient at all times to cover its potential obligations to the extent not
covered as provided in (1) above. The Fund will comply with SEC guidelines
regarding cover for Hedging Strategies and will, if the guidelines so require,
set aside cash or liquid, high-grade debt securities in a segregated account
with their custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding instrument is open, unless they are replaced
with similar assets. As a result, the commitment of a large portion of the
Fund's assets to cover segregated accounts could impede portfolio management or
the Fund's ability to meet redemption requests or other current obligations.
OPTIONS ACTIVITIES
The Fund may write (I.E., sell) call options ("calls") if the calls are
"covered" throughout the life of the option. A call is "covered" if the fund
owns the optioned securities. When a fund writes a call, it receives a premium
and gives the purchaser the right to buy the underlying security at anytime
during the call period (usually not more
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than nine months in the case of common stock) at a fixed exercise price
regardless of market price changes during the call period. If the call is
exercised, the fund will forego any gain from an increase in the market price of
the underlying security over the exercise price. The Fund also is authorized to
write covered call options, but has no intention of doing so during the current
fiscal year.
The Fund, through an underlying fund, may purchase a call on securities
only to effect a "closing transaction" which is the purchase of a call covering
the same underlying security and having the same exercise price and expiration
date as a call previously written by the fund on which it wishes to terminate
its obligation. If the fund is unable to effect a closing transaction, it will
not be able to sell the underlying security until the call previously written by
the fund expires (or until the call is exercised and the fund delivers the
underlying security).
The Fund, through an underlying fund, may also write and purchase put
options ("puts"). When a fund writes a put, it receives a premium and gives the
purchaser of the put the right to sell the underlying security to the fund at
the exercise price at any time during the option period. When a fund purchases a
put, it pays a premium in return for the right to sell the underlying security
at the exercise price at any time during the option period. An underlying fund
also may purchase stock index puts, which differ from puts on individual
securities in that they are settled in cash based on the values of the
securities in the underlying index rather than by delivery of the underlying
securities. Purchase of a stock index put is designed to protect against a
decline in the value of the portfolio generally rather than an individual
security in the
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portfolio. If any put is not exercised or sold, it will become worthless on its
expiration date.
A fund's option positions may be closed out only on an exchange that
provides a secondary market for options of the same series, but there can be no
assurance that a liquid secondary market will exist at any given time for any
particular option. In this regard, trading in options on certain securities
(such as U.S. Government securities) is relatively new, so that it is impossible
to predict to what extent liquid markets will develop or continue. Closing
transactions may be effected with respect to options traded in the OTC markets
(currently the primary markets for options on debt securities) only by
negotiating directly with the other party to the option contract or in a
secondary market for the option if such market exists. Although the funds will
enter into OTC options with dealers that agree to enter into, and that are
expected to be capable of entering into, closing transactions with the fund,
there can be no assurance that the fund would be able to liquidate an OTC option
at a favorable price at any time prior to expiration. In the event of insolvency
of the contra-party, the fund may be unable to liquidate an OTC option.
Accordingly, it may not be possible to effect closing transactions with respect
to certain options, which would result in the fund having to exercise those
options that it has purchased in order to realize any profit. With respect to
options written by the fund, the inability to enter into a closing transaction
may result in material losses to the fund. For example, because the fund must
maintain a covered position with respect to any call option it writes on a
security or stock index, the fund may not sell the underlying security or invest
any cash, U.S. Government
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securities or short-term debt securities used to cover the option during the
period it is obligated under such option. This requirement may impair the fund's
ability to sell a portfolio security or make an investment at a time when such a
sale or investment might be advantageous.
An underlying fund's custodian, or a securities depository acting for it,
generally acts as escrow agent as to the securities on which the fund has
written puts or calls, or as to other securities acceptable for such escrow so
that no margin deposit is required of the fund. Until the underlying securities
are released from escrow, they cannot be sold by the fund.
In the event of a shortage of the underlying securities deliverable on
exercise of an option, the Options Clearing Corporation ("OCC") has the
authority to permit other generally comparable securities to be delivered in
fulfillment of option exercise obligations. If the OCC exercises its
discretionary authority to allow such other securities to be delivered, it may
also adjust the exercise prices of the affected options by setting different
prices at which otherwise ineligible securities may be delivered. As an
alternative to permitting such substitute deliveries, the OCC may impose special
exercise settlement procedures.
FUTURES CONTRACTS
The Fund may enter into futures contracts for the purchase or sale of
debt securities and stock indexes through an underlying fund. A futures contract
is an agreement between two parties to buy and sell a security or an index for a
set price on a
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future date. Futures contracts are traded on designated "contract markets" that,
through their clearing corporation, guarantee performance of the contracts.
Generally, if market interest rates increase, the value of outstanding debt
securities declines (and vice versa). Entering into a futures contract for the
sale of debt securities has an effect similar to the actual sale of securities,
although sale of the futures contract might be accomplished more easily and
quickly. For example, if an underlying fund holds long-term U.S. Government
securities and it anticipates a rise in long-term interest rates (and therefore
a decline in the value of those securities), it could, in lieu of disposing of
those securities, enter into futures contracts for the sale of similar long-term
securities. If rates thereafter increase and the value of the fund's portfolio
securities thus declines, the value of the fund's futures contracts would
increase, thereby protecting the fund by preventing the net asset value from
declining as much as it otherwise would have. Similarly, entering into futures
contracts for the purchase of debt securities has an effect similar to the
actual purchase of the underlying securities, but permits the continued holding
of securities other than the underlying securities. For example, if an
underlying fund expects long-term interest rates to decline, it might enter into
futures contracts for the purchase of long-term securities so that it could gain
rapid market exposure that may offset anticipated increases in the cost of
securities it intends to purchase while continuing to hold higher-yield
short-term securities or waiting for the long-term market to stabilize.
A stock index futures contract may be used to hedge an underlying fund's
portfolio with regard to market risk as distinguished from risk relating to a
specific
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security. A stock index futures contract does not require the physical delivery
of securities, but merely provides for profits and losses resulting from changes
in the market value of the contract to be credited or debited at the close of
each trading day to the respective accounts of the parties to the contract. On
the contract's expiration date, a final cash settlement occurs. Changes in the
market value of a particular stock index futures contract reflect changes in the
specified index of equity securities on which the contract is based.
There are several risks in connection with the use of futures contracts. In
the event of an imperfect correlation between the futures contract and the
portfolio position that is intended to be protected, the desired protection may
not be obtained and the fund may be exposed to risk of loss. Further
unanticipated changes in interest rates or stock price movements may result in a
poorer overall performance for the fund than if it had not entered into futures
contracts on debt securities or stock indexes.
In addition, the market prices of futures contracts may be affected by
certain factors. First, all participants in the futures market are subject to
margin deposit and maintenance requirements. Rather than meeting additional
margin deposit requirements, investors may close futures contracts through
offsetting transactions that could distort the normal relationship between the
securities and futures markets. Second, from the point of view of speculators,
the deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may also cause temporary price distortions.
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<PAGE>
Positions in futures contracts may be closed out only on an exchange or
board of trade that provides a secondary market for such futures. Although the
Fund intends to purchase or sell futures only on exchanges or boards of trade
where there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an exchange or board of trade will exist for any
particular contract at any particular time. In such event, it may not be
possible to close a futures position, and in the event of adverse price
movements, the Fund would continue to be required to make variation margin
deposits.
As is the case with options, the Fund's activities in the futures markets
may result in a higher portfolio turnover rate and additional transactions costs
in the form of added brokerage commissions; however, the Fund also may save on
commissions by using futures contracts as a hedge rather than buying or selling
individual securities in anticipation of or as a result of market movements.
OPTIONS ON FUTURES CONTRACTS
The Fund may purchase and write (sell) put and call options on futures
contracts through an underlying fund. An option on a futures contract gives the
purchaser the right, in return for the premium paid, to assume a position in a
futures contract (a long position if the option is a call and a short position
of the option is a put), at a specified exercise price at any time during the
option period. When an option on a futures contract is exercised, delivery of
the futures position is accompanied by cash representing the difference between
the current market price of the futures contract and
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the exercise price of the option. A fund may purchase put options on futures
contracts in lieu of, and for the same purpose as, a sale of a futures contract.
It also may purchase such put options in order to hedge a long position in the
underlying futures contract in the same manner as it purchases "protective puts"
on securities.
The Fund, indirectly through an underlying fund, also may purchase put
options on interest rate and stock index futures contracts. As with options on
securities, the holder of an option on a futures contract may terminate its
position by selling an option of the same series. There is no guarantee that
such closing transactions can be effected. An underlying fund is required to
deposit initial margin and variation margin with respect to put and call options
on futures contracts written by it pursuant to brokers' requirements similar to
those applicable to futures contracts described above and, in addition, net
option premiums received will be included as initial margin deposits.
In addition to the risks that apply to all options transactions, there are
several special risks relating to options on futures contracts. The ability to
establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. There can be no
certainty that liquid secondary markets for all options on futures contracts
will develop. Compared to the use of futures contracts, the purchase of options
on futures contracts involves less potential risk to an underlying fund because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of a futures contract
would not, such as when there is no movement in the prices of the
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underlying securities. Writing an option on a futures contract involves risks
similar to those arising in the sale of futures contracts, as described above.
FORWARD AND FOREIGN CURRENCY CONTRACTS
The Fund may use forward or foreign currency contracts to protect against
uncertainty in the level of future foreign currency exchange rates through an
underlying fund. The Fund will not speculate with forward currency contracts or
foreign currency exchange rates.
The Fund may enter into forward currency contracts with respect to specific
transactions through an underlying fund. For example, when a fund enters into a
contract for the purchase or sale of a security denominated in a foreign
currency, or the fund anticipates the receipt in a foreign currency of dividend
or interest payments on a security that it holds or anticipates purchasing, the
fund may desire to "lock in" the U.S. dollar price of the security or the U.S.
dollar equivalent of such payment, as the case may be, by entering into a
forward currency, of the amount of foreign currency involved in the underlying
transaction. The fund will thereby be able to protect itself against a possible
loss resulting from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the security is
purchased or sold, or on which the payment is declared, and the date on which
such payments are made or received. These contracts are traded in the interbank
market conducted directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no deposit
requirement, and no
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commissions are charged at any stage for trades. Although such contracts tend to
minimize the risk of loss due to a decline in the value of the subject currency,
they tend to limit commensurately any potential gain that might result should
the value of such currency increase during the contract period.
The Fund, through an underlying fund, also may hedge by using forward
currency contracts in connection with portfolio positions to lock in the U.S.
dollar value of those positions, to increase the Fund's exposure to foreign
currencies that the Adviser believes may rise in value relative to the U.S.
dollar or to shift the Fund's exposure to foreign currency fluctuations from one
country to another. For example, when the Fund believes that the currency of a
particular foreign country may suffer a substantial decline relative to the U.S.
dollar or another currency, it may enter into a forward contract to sell the
amount of the former foreign currency approximating the value of some or all of
the fund's portfolio securities denominated in such foreign currency. This
investment practice generally is referred to as "cross-hedging" when another
foreign currency is used.
The precise matching of the forward amounts and the value of the securities
involved will not generally be possible because the future value of such
securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for
the fund to purchase additional foreign currency on the spot (that is, cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is
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obligated to deliver and if a decision is made to sell the security and make
delivery of the foreign currency. Conversely, it may be necessary to sell on the
spot market some of the foreign currency received upon the sale of the portfolio
security if the market value of the security exceeds the amount of foreign
currency the fund is obligated to deliver. The projection of short-term currency
market movements is extremely difficult and the successful execution of a
short-term hedging strategy is highly uncertain. Forward contracts involve the
risk that anticipated currency movements will not be accurately predicted,
causing the Fund to sustain losses on these contracts and transactions costs.
The cost to the fund of engaging in forward currency contracts varies with
factors such as the currencies involved, the length of the contract period and
the market conditions then prevailing. Because forward currency contracts are
usually entered into on a principal basis, no fees or commissions are involved.
The use of forward currency contracts does not eliminate fluctuations in the
prices of the underlying securities the fund owns or intends to acquire, but it
does fix a rate of exchange in advance. In addition, although forward currency
contracts limit the risk of loss due to a decline in the value of the hedged
currencies, at the same time they limit any potential gain that might result
should the value of the currencies increase.
Although the Fund values its assets daily in terms of U.S. dollars, it does
not intend to convert its holdings of foreign currencies into U.S. dollars on a
daily basis. The Fund may convert foreign currency from time to time and
investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference between the
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prices at which they are buying and selling various currencies. Thus, a dealer
may offer to sell a foreign currency to the Fund at one rate, while offering a
lesser rate of exchange should the Fund desire to sell that currency to the
dealer.
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PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Incorporation as now in effect. Submitted herewith.
(b) By-laws. Submitted herewith.
(c) Specimen of common share certificate to be issued. To be submitted
by pre-effective amendment.
(d) Form of Investment Advisory Agreement. Submitted herewith. Executed
copy to be submitted by pre-effective amendment.
(e) Form of Distribution Agreement. Submitted herewith. Executed copy to
be submitted by pre-effective amendment.
(f) Bonus, Profit Sharing, Pension or Other Similar Contracts - Not
applicable.
(g) Form of Custodian Agreement. Submitted herewith. Executed copy to be
submitted by pre-effective amendment.
(h)(1) Form of Transfer Agency and Shareholder Services Agreement. Filed
herewith. Executed copy to be submitted by pre-effective amendment.
(h)(2) Form of Master Fund Accounting Services Agreement. Filed herewith.
Executed copy to be submitted by pre-effective amendment.
(i) Form of Opinion and Consent of Counsel. Filed herewith. Executed
copy to be submitted by pre-effective amendment.
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(j) Form of Consent of Independent Accountants. Filed herewith. Executed
copy to be submitted by pre-effective amendment.
(k) Financial Statements. Omitted from Item 22 - To be submitted in
accordance with Item 30.
(l) Initial Capitalization Agreements. Submitted herewith.
(m) Rule 12b-1 Plan. Submitted herewith.
(n) Rule 18f-3 Plan - Not applicable.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
(a) The Fund, a Maryland corporation, was founded in 1999 by Roland R.
Manarin, who is the sole initial shareholder.
(b) Manarin Investment Counsel, Ltd., a Nebraska corporation, and the
Fund's Investment Adviser is controlled by Roland R. Manarin, the
President, Treasurer, and Chairman of the Fund. Mr. Manarin owns 100%
of the outstanding stock of Manarin Investment Counsel, Ltd.
(c) Manarin Securities Corporation, a Nebraska corporation and the
exclusive distributor of the Fund's shares is controlled by Roland R.
Manarin, the President, Treasurer, and Chairman of the Fund. Mr.
Manarin owns 100% of the outstanding stock of Manarin Securities
Corporation.
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<PAGE>
(d) Charles H. Richter, Vice President, Secretary, and Director of the
Fund, is employed by Manarin Securities Corporation as its Chief
Operating Officer.
ITEM 25. INDEMNIFICATION
The Fund's corporate charter provides for limiting the liability of
officers and directors to the full extent permitted by Maryland General
Corporation Law and that the officers and directors are to be indemnified or
have expenses advanced to the fullest extent permitted by Maryland General
Corporation Law. However, notwithstanding the foregoing, the Charter states that
the Fund will not protect any officer or director against liability to the Fund
and its shareholders by reason of its willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
officer's or director's office.
The Investment Advisory Agreement provides that Manarin Investment Counsel,
Ltd. will not be liable for any error of judgment or mistake of law, for any
loss arising out of any investment, or in any event whatsoever, provided that
nothing shall be deemed to protect, or purport to protect, the Adviser against
any liability to the Fund or to the security holders of the Fund to which it
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of reckless disregard
of its obligations and duties. No provision of the Investment Advisory Agreement
is to be construed to protect any director or officer of
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the Fund, or Investors, from liability in violation of Section 17(h), 17(i), or
36B of the 1940 Act.
The Distribution Agreement provides that the Fund shall indemnify, defend
and hold Manarin Securities Corporation harmless from any and all claims,
demands, liabilities and expenses (including certain costs of investigation and
attorneys' fees) incurred under the Securities Act of 1933 (the "1933 Act"), or
under the common law or otherwise, arising out of or based upon any alleged
untrue statements of a material fact contained in the Fund's Registration
Statement and Exhibits, Prospectus or Statement of Additional Information, or
arising out of or based upon any alleged omission to state a material fact
required to be stated in such documents or necessary to make these statements in
them not misleading except for the same is determined by a court of competent
jurisdiction to be against public policy as expressed in the 1933 Act, or where
the Distributor would otherwise be subject by reason of willful misfeasance, bad
aith or gross negligence, and the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under the Distribution
Agreement.
Charter Registrant undertakes to carry out all indemnification provisions
of its Bylaws, and the above-described contracts in accordance with the
Investment Company Act Release No. 11330 (September 4, 1980) and successor
releases.
ITEM 26: BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Information regarding the officers and directors of the Fund's Adviser,
Manarin Investment Counsel, Ltd., is included in its Form ADV (as amended) filed
on March 26,
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1999 with the Securities and Exchange Commission (registration number 80119624)
and is incorporated herein by reference.
ITEM 27: PRINCIPAL UNDERWRITERS
Manarin Securities Corporation is the Distributor of the Fund's shares and
does not act as a principal underwriter, depositor or investment adviser for any
other investment company at this time. The Directors of the Distributor are
Roland R. Manarin and Charles H. Richter. Mr. Manarin also serves as President
and Treasurer, and Mr. Richter serves as Chief Operating Officer and Secretary
of the Distributor. Mr. Manarin is a Director, the President and Treasurer
(Principal Executive Officer) of the Fund. Mr. Richter is a Director, Vice
President and Secretary of the Fund.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Mackenzie Investment Management, Inc., via Mizner Financial Plaza, 700
South Federal Highway, Suite 300, Boca Raton, Florida 33432, maintains the
books, accounts, and records required to be maintained by Section 31(a) of the
1940 Act and the rules promulgated thereunder.
ITEM 29. MANAGEMENT SERVICES
None.
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ITEM 30. UNDERTAKINGS
The Registrant undertakes to file a post-effective amendment with certified
financial statements showing the initial capital received before accepting
subscriptions from more than 25 persons based upon its intent to raise initial
capital under Section 14(a)(3) of the 1940 Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Lifetime Achievement Fund, Inc.,
certifies that it meets all of the requirements for effectiveness of this
registration statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this registration statement to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of Omaha and State of
Nebraska on the ____ day of December, 1999.
LIFETIME ACHIEVEMENT FUND, INC.
By: Roland R. Manarin *
-----------------------------------
Roland R. Manarin, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
Roland R. Manarin * Director, President December ___, 1999
- --------------------------- and Treasurer
Roland R. Manarin (Principal Executive
Officer)
/s/ Charles H. Richter Director, Vice December ___, 1999
- --------------------------- President and
Charles H. Richter Secretary
David C. Coker * Director December ___, 1999
- ---------------------------
David C. Coker
Jerry Vincentini * Director December ___, 1999
- ---------------------------
Jerry Vincentini
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Dr. Bodo W. Treu * Director December ___, 1999
- ---------------------------
Dr. Bodo W. Treu
* By /s/ Charles H. Richter
- ---------------------------
Charles H. Richter
Attorney-in-Fact
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LIFETIME ACHIEVEMENT FUND, INC.
(formerly MANARIN DIVERSIFIED GROWTH FUND, INC.)
ARTICLES OF AMENDMENT AND RESTATEMENT
Manarin Diversified Growth Fund, Inc., a Maryland corporation having its
principal office at 300 East Lombard Street, Baltimore, Maryland, 21202, and
having The Corporation Trust Incorporated as its resident agent located at 300
East Lombard Street, Baltimore, Maryland, 21202.
FIRST: The charter of the Corporation is hereby amended by striking out
Article Second of the articles of incorporation and inserting in lieu thereof
the following:
The name of the corporation (herein called the "Corporation") is
Lifetime Achievement Fund, Inc.
SECOND: The charter of the Corporation is hereby amended by striking out
Article Third (1) of the articles of incorporation and inserting in lieu
thereof the following:
(1) The purpose for which the Corporation is formed is to conduct,
operate and carry on the business of an investment company organized
as an unaffiliated fund of funds under the applicable exemption of
the Investment Company Act of 1940 (as amended) (the " '40 Act").
THIRD: The charter of the Corporation is hereby amended by adding to
Article Seventh of the articles of incorporation new subparagraph (c) as
follows and re-lettering subsequent subparagraphs (d) and (e) accordingly:
(c) Any material amendment to or deletion of a fundamental policy
set forth in the Fund's current Statement of Additional Information
and amendments thereto filed with the United States Securities and
Exchange Commission shall require in order to become a valid,
binding and effective change to a fundamental policy of the
Corporation, the affirmative vote of the lesser of (1) more than 50%
of the outstanding Common Stock of the Corporation of (2) not less
than 67% of the Common Stock voted at a duly authorized
shareholders' meeting at which at least 50% of the outstanding
shares are voted in person or by proxy.
FOURTH: The charter of the Corporation is hereby amended by striking out
Article Sixth of the articles of incorporation and inserting in lieu thereof the
following:
<PAGE>
The number of initial directors of the Corporation shall be five
(5). The number of directors of the Corporation may be changed
pursuant to the By-laws of the Corporation. The names of the persons
who shall act as directors of the Corporation until the first annual
meeting of shareholders or until their respective successors are
duly chosen and qualified are: Roland R. Manarin, Charles H.
Richter, David C. Coker, Jerry Vincentini, and Dr. Bodo Treu.
and accordingly, Articles Second through Ninth of the Articles of Incorporation
of the Corporation are hereby restated to read as follows:
SECOND:
The name of the Corporation is Lifetime Achievement Fund, Inc.
THIRD:
(1) The purpose for which the Corporation is formed is to conduct,
operate and carry on the business of an investment company organized as an
unaffiliated fund of funds under the applicable exemption of the
Investment Company Act of 1940 (as amended) (the " '40 Act").
(2) The Corporation may engage in any other business and shall
have all powers conferred upon or permitted to corporations by the
Maryland General Corporation Law.
FOURTH:
The post office address of the principal office of the Corporation
within the State of Maryland is 300 East Lombard Street, Baltimore,
Maryland, in care of The Corporation Trust Incorporated, and the resident
agent of the Corporation in the State of Maryland is The Corporation Trust
Incorporated, 300 East Lombard Street, Baltimore, Maryland, 21202.
FIFTH:
(1) The total number of shares of stock of all classes which the
Corporation shall have authority to issue is one billion (1,000,000,000),
all of which shall be common stock (hereinafter "Common Stock") having a
par value of one-tenth of one cent (.001) per share and an aggregate par
value of One Million Dollars ($1,000,000.00). Such shares and the holders
thereof shall be subject to the following provisions:
2
<PAGE>
(a) Each holder of Common Stock may require the Corporation to
redeem all or any party of the Common Stock owned by that holder, upon
request to the Corporation or its designated agent, at the net asset value
of the shares of Common Stock next determined following receipt of the
request in a form approved by the Corporation and accompanied by surrender
of the certificate or certificates for the shares, if any, less the amount
of any applicable redemption charge or deferred sales charge imposed by
the Board of Directors (to the extent consistent with applicable law). The
Board of Directors may establish procedures for redemption of Common
Stock.
(b)
(i) The term "Minimum Amount" when used herein shall mean
Two Hundred Dollars ($200.00) unless otherwise fixed by the Board of
Directors from time to time, provided that Minimum Amount may not in
any event exceed Twenty-Five Thousand Dollars ($25,000.00). The
Board of Directors may establish differing Minimum Amounts for
categories of holders of Common Stock based on such criteria as the
Board of Directors may deem appropriate.
(ii) If the net asset value of the shares of Common Stock
held by a stockholder shall be less than the Minimum Amount then in
effect with respect to the category of holder in which the
stockholder is included, the Corporation may redeem all of those
shares, upon notice given to the holder in accordance with paragraph
(iii) of this subsection (b), to the extent that the Corporation may
lawfully effect such redemption under the laws of the State of
Maryland.
(iii) The notice referred to in paragraph (ii) of this
subsection (b) shall be in writing personally delivered or deposited
in the mail, at least thirty (30) days (or such other number of days
as may be specified from time to time by the Board of Directors)
prior to such redemption. If mailed, the notice shall be addressed
to the stockholder at his post office address as shown on the books
of the Corporation, and sent by first class mail, postage prepaid.
The price for shares acquired by the Corporation pursuant to this
subsection (b) shall be an amount equal to the net asset value of
such shares.
(c) Payment by the Corporation for shares of Common Stock
surrendered to it for redemption shall be made by the Corporation within
seven business days of such surrender out of the funds legally available
therefor, provided that the Corporation may suspend the right of the
stockholders to redeem shares of Common Stock and may postpone the right
of those holders to receive payment for any shares when permitted or
required to do so by applicable statutes or
3
<PAGE>
regulations. Payment of the aggregate price of shares surrendered for
redemption may be made in cash or, at the option of the corporation,
wholly or partly in such portfolio securities of the Corporation as the
Corporation shall select.
(d) Shares of Common Stock shall be entitled to dividends or
distributions, in cash, in property or in shares of Common Stock, as may
be declared from time to time by the Board of Directors, acting in its
sole discretion, out of the assets lawfully available therefor. The Board
of Directors may provide that dividends shall be payable only with respect
to those shares of Common Stock that have been held of record continuously
by the stockholder for a specified period, not to exceed 72 hours, prior
to the record date of the dividend.
(e) On each matter submitted to a vote of the stockholders, each
holder of Common Stock shall be entitled to one vote for each share
standing in his name on the books of the Corporation.
(f) The Board of Directors is authorized to classify or to
reclasssify from time to time, any unissued shares of stock of the
Corporation, whether now or hereafter authorized, by setting, changing or
eliminating the preferences, conversation or other rights, voting powers,
restrictions, limitations as to dividends, qualifications or terms and
conditions of or rights to require redemption of the stock.
(g) The Corporation may issue shares of Common Stock in fractional
denominations to the same extent as its whole shares, and shares in
fractional denominations shall be shares of stock having proportionately
to the respective fractions represented thereby all the right to vote, the
right to receive dividends and distributions, and the right to participate
upon liquidation of the Corporation, but excluding the right to receive a
stock certificate representing fractional shares.
(h) For the purpose of allowing the net asset value per share of
the Common Stock to remain constant, the Corporation shall be entitled to
declare and pay or credit as dividends daily the net income (which may
include or give effect to realized and unrealized gains and losses, as
determined in accordance with the Corporation's account and portfolio
valuation policies) of the Corporation. If the amount so determined for
any day is negative, the Corporation shall be entitled, without the
payment of monetary compensation but in consideration of the interest of
the Corporation and its stockholders in maintaining a constant net asset
value per share of the Common Stock, to redeem pro rata from all the
holders of record of shares of Common Stock at the time of such redemption
(in proportion to their respective holdings thereof sufficient outstanding
shares of Common Stock, or fractions thereof, as shall permit the net
asset value per share of the Common Stock to remain constant.
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(2) No stockholder shall be entitled to any preemptive right other
than as the Board of Directors may establish.
SIXTH:
The number of initial directors of the Corporation shall be five
(5). The number of directors of the Corporation may be changed pursuant to
the By-laws of the Corporation. The names of the persons who shall act as
directors of the Corporation until the first annual meeting of
shareholders or until their respective successors are duly chosen and
qualified are: Roland R. Manarin, Charles H. Richter, David C. Coker,
Jerry Vincentini, and Dr. Bodo W. Treu.
SEVENTH:
The following provisions are inserted for the purpose of defining,
limiting and regulating the powers of the Corporation and of the Board of
Directors and stockholders.
(a) In addition to its other powers explicitly or implicitly
granted under these Articles of Incorporation, by law or otherwise, the
Board of Directors of the Corporation;
(i) is expressly authorized to make, alter amend or repeal
the Bylaws of the Corporation;
(ii) may from time to time determine whether, to what extent,
at what times and places, and under what conditions and regulations
the accounts and books of the Corporation, or any of them, shall be
open to the inspection of the stockholders, and no stockholder shall
have any right to inspect any account, book or document of the
Corporation except as conferred by statute or as authorized by the
Board of Directors of the Corporation;
(iii) is empowered to authorize, without stockholder approval,
the issuance and sale from time to time of shares of stock of the
Corporation whether now or hereafter authorized; and
(iv) is authorized to adopt procedures for determination of
and to maintain constant the net asset value of shares of any class
of the Corporation's stock.
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(b) Notwithstanding any provision of the Maryland General
Corporation Law requiring a greater proportion than a majority of the
votes of the Corporation's Common Stock entitled to be cast in order to
take or authorize any action, any such action may be taken or authorized
upon the concurrence of a majority of the aggregate number of votes
entitled to be cast thereon subject to any applicable requirements of the
'40 Act, as from time to time in effect, or rules or orders of the
Securities and Exchange Commission or any successor thereto.
(c) Any material amendment to or deletion of a fundamental policy
set forth in the Fund's current Statement of Additional Information and
amendments thereto filed with the United States Securities and Exchange
Commission shall require, in order to become a valid, binding and
effective change to a fundamental policy of the Corporation, the
affirmative vote of the lesser of (1) more than 50% of the outstanding
Common Stock of the Corporation or (2) not less than 67% of the Common
Stock voted at a duly authorized shareholders' meeting at which at least
50% of the outstanding shares are voted in person or by proxy.
(d) The presence in person or by proxy of the holders of shares
entitled to cast one-third of the votes entitled to be cast shall
constitute a quorum at any meeting of the stockholders, except with
respect to any matter which, under applicable statutes or regulatory
requirements, requires approval by a separate vote of one or more classes
of stock, in which case the presence in person or by proxy of the holders
of shares entitled to cast one-third of the votes entitled to be cast by
each class entitled to vote as a class on the matter shall constitute a
quorum.
(e) Any determination made in good faith by or pursuant to the
direction of the Board of Directors, as to the amount of the assets,
debts, obligations or liabilities of the Corporation, as to the amount of
any reserves or changes (whether or not any debt, obligation or liability
for which such reserves or charges shall have been created shall be then
or thereafter required to be paid or discharged), as to the value of or
the method of valuing any investment owned or held by the Corporation, as
to market value or fair value of any investment or fair value of any other
asset of the Corporation, as to the allocation of any asset of the
Corporation to a particular class or classes of the Corporation's stock,
as to the number of shares of the Corporation outstanding, as to the
estimated expense to the Corporation in connection with purchases of its
shares, as to the ability to liquidate investments in an orderly fashion,
or as to any other matters relating to the issue, sale, redemption or
other acquisition or disposition of investments or shares of the
Corporation, shall be final and conclusive and shall be binding upon the
Corporation and all holders of its shares, past, present and future, and
shares of the Corporation are issued and sold on the condition and
understanding that any and all such determinations shall be binding as
aforesaid.
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EIGHTH:
(1) To the full extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation
Law, no director or officer of the Corporation shall have any liability to
the Corporation or its stockholders for damages. This limitation on
liability applies to events occurring at the time a person serves as a
director or officer of the Corporation whether or not that person is a
director or officer at the time of any proceeding in which liability is
asserted.
(2) The Corporation shall indemnify and advance expenses to its
currently acting and its former directors to the full extent that
indemnification of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify and advance expenses to
its officers to the same extent as its directors and may do so to such
further extent as is consistent with Maryland General Corporation Law. The
Board of Directors may by Bylaw, resolution or agreement make further
provision for indemnification of directors, officers, employees and agents
to the full extent permitted by the Maryland General Corporation Law.
(3) No provision of this Article shall be effective to protect or
purport to protect any director or officer of the Corporation against any
liability to the Corporation or its stockholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office.
(4) References to the Maryland General Corporation Law in this
Article are to that law as from time to time amended. No amendment to the
charter of the Corporation shall affect any right of any person under this
Article based on any event, omission or proceeding prior to that
amendment.
NINTH:
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation or in any
amendment hereto in the manner now or hereafter prescribed by the laws of
the State of Maryland, including any amendment which alters the contract
rights, as expressly set forth in these Articles of Incorporation, of any
outstanding stock, and all rights conferred upon stockholders herein are
granted subject to this reservation.
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FIFTH: The amendment and restatement of the charter of the Corporation
herein above set forth were approved by the consent in writing setting forth
said amendment and restatement of the charter, signed by all the stockholders
entitled to notice of a meeting of stockholders who thereby waived in writing
any rights which they may have to dissent from such amendment, such consent and
waiver having been filed with the records of stockholders meetings.
The Articles of Amendment and Restatement shall become effective on the
15th day of October, 1999.
IN WITNESSETH WHEREOF, Lifetime Achievement Fund, Inc. has caused these
presents to be signed in its name and on its behalf by its President (or Vice
President) attested by its Secretary on October 15, 1999.
LIFETIME ACHIEVEMENT FUND, INC.
By: /s/Roland R. Manarin
---------------------------------
Roland R. Manarin, President
Attest: /s/Charles H. Richter
--------------------------------
Charles H. Richter, Secretary
THE UNDERSIGNED, President of Lifetime Achievement Fund, Inc., who executed on
behalf of said corporation the foregoing Articles of Amendment and Restatement
of Charter, of which this certificate is made a part, hereby acknowledges, in
the name and on behalf of said corporation, the foregoing Articles of Amendment
and Restatement of Charter to the corporate act of said corporation and further
certifies that, to the best of his knowledge, information and belief, the
matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
/s/Dixie L. Rohlfs
---------------------------
Notary Public
[SEAL]
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BYLAWS
OF
LIFETIME ACHIEVEMENT FUND, INC.
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE IN MARYLAND. The Corporation shall have a
principal office in the City of Baltimore, State of Maryland.
Section 2. OTHER OFFICES. The Corporation may have offices also at
such other places within and without the State of Maryland as the Board of
Directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. PLACE OF MEETING. Meetings of stockholders shall be held at
such place, either within the State of Maryland or at such other place within
the United States, as shall be fixed from time to time by the Board of
Directors.
Section 2. ANNUAL MEETINGS. Annual meetings of stockholders shall be
held on a date fixed from time to time by the Board of Directors not less than
ninety nor more than two hundred and ten days following the end of each fiscal
year of the Corporation, for the election of directors and the transaction of
any other business within the powers of the Corporation; provided, however, that
the Corporation shall not be required to hold an annual meeting in any year in
which the election of directors is not required to be acted on by stockholders
under the Investment Company Act of 1940, as amended and any rules and
regulations promulgated thereunder (collectively the "'40 Act").
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Section 3. NOTICE OF ANNUAL MEETING. Written or printed notice of the
annual meeting, stating the place, date and hour thereof, shall be given to each
stockholder entitled to vote thereat and each other stockholder entitled to
notice thereof not less than ten nor more than ninety days before the date of
the meeting.
Section 4. SPECIAL MEETINGS. Special meetings of the stockholders may
be called by the chairman, the president or by the Board of Directors and shall
be called by the secretary upon the written request of holders of shares
entitled to cast not less than twenty-five percent (25%) of all the votes
entitled to be cast at such meeting. Such request shall state the purpose or
purposes of such meeting and the matters proposed to be acted on thereat. In the
case of such request for a special meeting, upon payment by such stockholders to
the Corporation of the estimated reasonable cost of the preparing and mailing
notice of such meeting, the secretary shall give the notice of such meeting. The
secretary shall not be required to call a special meeting to consider any matter
which is substantially the same as a matter acted upon at any special meeting of
stockholders held within the preceding twelve months unless requested to do so
by holders of shares entitled to cast not less than a majority of all votes
entitled to be cast at such meeting. Notwithstanding the foregoing, to the
extent required by the '40 Act, special meetings of stockholders for the purpose
of voting upon the question of removal of any director or directors of the
Corporation shall be called by the secretary upon the written request of holders
of shares entitled to cast not less than ten percent of all the votes entitled
to be cast at such meeting.
Section 5. NOTICE OF SPECIAL MEETING. Written or printed notice of a
special meeting of stockholders, stating the place, date, hour and purpose
thereof, shall be given by the secretary to each stockholder entitled to vote
thereat and each other stockholder entitled to notice thereof not less than ten
nor more than ninety days before the date fixed for the meeting.
Section 6. BUSINESS OF SPECIAL MEETINGS. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice thereof.
Section 7. QUORUM. The holders of shares entitled to cast one-third of
the votes entitled to be cast thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business, except with respect to any matters which, under
applicable statutes or regulatory requirements, requires approval by a separate
vote of one or more classes of stock, in which case the presence in person or by
proxy of the holders of one-third of the shares of each class required to vote
as a class on the matter shall constitute a quorum.
Section 8. VOTING. When a quorum is present at any meeting, the
affirmative vote of a majority of the votes cast, or, with respect to any matter
requiring a class vote,
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the affirmative vote of a majority of the votes cast of each class entitled to
vote as a class on the matter, shall decide any question brought before such
meeting (except that directors may be elected by the affirmative vote of a
plurality of the votes cast), unless the question is one upon which by express
provision of the '40 Act, as from time to time in effect, or other statutes or
rules or orders of the Securities and Exchange Commission or any successor
thereto or of the Articles of Incorporation, as may be amended and restated from
time to time, of a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 9. PROXIES. Each stockholder shall at every meeting of
stockholders be entitled to one vote in person or by proxy for each share of the
stock having voting power held by such stockholder, but no proxy shall be voted
after eleven months from its date, unless otherwise provided in the proxy.
Section 10. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, to express consent to corporate action in writing
without a meeting or to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any record date
which shall be not more than ninety days and, in the case of a meeting of
stockholders, not less than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. In lieu of
fixing a record date, the Board of Directors may provide that the stock transfer
books shall be closed for a stated period, but not to exceed, in any case,
twenty days. If the stock transfer books are closed for the purpose of
determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days immediately
preceding such meeting. If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders: (1) the record date for
the determination of stockholders entitled to receive payment of a dividend or
an allotment of any rights shall be at the close of business on the day on which
notice of the meeting of stockholders is mailed or the day thirty days before
the meeting, whichever is the closer date to the meeting; and (2) the record
date for the determination of stockholders entitled to receive payment of a
dividend or an allotment of any rights shall be at the close of business on the
day on which the resolution of the Board of Directors, declaring the dividend or
allotment of rights, is adopted, provided that the payment or allotment date
shall not be more than sixty days after the date of the adoption of such
resolution.
Section 11. INSPECTORS OF ELECTION. The directors, in advance of any
meeting, may, but need not, appoint one or more inspectors to act at the meeting
or any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case
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any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares outstanding and the voting power of each,
the shares represented at the meeting, the existence of a quorum, the validity
and effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting or any
stockholder, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
Section 12. INFORMAL ACTION BY STOCKHOLDERS. Except to the extent
prohibited by the '40 Act, as from time to time in effect, or rules or orders of
the Securities and Exchange Commission or any successor thereto, any action
required or permitted to be taken at any meeting of stockholders may be taken
without a meeting if a consent in writing, setting forth such action, is signed
by all the stockholders entitled to notice of a meeting of stockholders (but not
to vote thereat) have waived in writing any rights which they may have to
dissent from such action, and such consent and waiver are filed with the records
of the Corporation.
ARTICLE III
BOARD OF DIRECTORS
Section 1. NUMBER OF DIRECTORS. The number of directors constituting
the entire Board of Directors (which initially was fixed at five in the
Corporation's Articles of Incorporation) may be increased or decreased from time
to time by the vote of a majority of the entire Board of Directors within the
limits permitted by law but at no time may be more than twenty, and the tenure
of a director in office at the time of any decrease in the number of directors
shall not be affected as a result thereof. The directors shall be elected to
hold offices at the annual meeting of stockholders, except as provided in
Section 2 of this Article, and each director shall hold office until the next
annual meeting of stockholders or until his successor is elected and qualified.
Any director may resign at any time upon written notice to the Corporation. Any
director may be removed, either with or without cause, at any meeting of
stockholders duly called and at which a quorum is present by the affirmative
vote of the majority of the
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votes entitled to be cast thereon, and the vacancy in the Board of Directors
caused by such removal , may be filled by the stockholders at the time of
such removal. Directors need not be stockholders.
Section 2. VACANCIES AND NEWLY-CREATED DIRECTORSHIPS. Any vacancy
occurring in the Board of Directors for any cause of other than by reason of an
increase in the number of directors may be filled by a majority of the remaining
members of the Board of Directors although such majority is less than a quorum.
Any vacancy occurring by reason of an increase in the number of directors may be
filled by a majority of the entire Board of Directors. A director elected by the
Board of Directors to fill a vacancy shall be elected to hold office until the
next annual meeting of stockholders or until his successor is elected and
qualified.
Section 3. POWERS. The business and affairs of the Corporation shall
be managed by or under the direction of the Board of Directors which may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
Bylaws conferred upon or reserved to the stockholders.
Section 4. MEETINGS. The Board of Directors of the Corporation or any
committee thereof may hold meetings, both regular and special, either within or
without the State of Maryland. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board of Directors. Special meetings of the Board of Directors
may be called by the chairman, the president or by two or more directors. Notice
of special meetings of the Board of Directors shall be given by the secretary to
each director at least three days before the meting if by mail or at least 24
hours before the meeting if given in person or by telephone, facsimile or
electronic mail. The notice need not specify the business to be transacted.
Section 5. QUORUM AND VOTING. During such time when the Board of
Directors shall consist of more than one director, a quorum for the transaction
of business at meetings of the Board of Directors shall consist of two of the
directors in office at the time but in no event shall a quorum consist of less
than one-third of the entire Board of Directors. The action of a majority of the
directors present at a meeting at which a quorum is present shall be the action
of the Board of Directors. If a quorum shall not be present at any meeting of
the Board of Directors, the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present.
Section 6. INVESTMENT COMMITTEE. The Board of Directors may appoint an
Investment Committee, consisting of three or more members, all of whom shall be
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members of the Board of Directors. The Board of Directors may remove any member
and may appoint new alternate or additional members of the Investment Committee,
and may request persons who are not directors to serve as ex officio members. It
shall be the function of the Investment Committee to advise the Board of
Directors as to the investment of the assets of the Corporation. The Investment
Committee shall have no power or authority to make any contract or incur any
liability whatever or to take any action binding upon the Corporation, the
officers, the Board of Directors or the stockholders.
Section 8. OTHER COMMITTEES. In addition to the Investment Committee
specified in Article III, Section 6, the Board of Directors may appoint from
among its members an executive committee and other committees of the Board of
Directors, each committee to be composed of two or more of the directors of the
Corporation. The Board of Directors may delegate to such committees any of the
powers of the Board of Directors except those which may not by law be delegated
to a committee. Such committee or committees shall have the name or names as may
be determined from time to time by resolution adopted by the Board of Directors.
Unless the Board of Directors designates one or more directors as alternate
members of any committee, who may replace an absent or disqualified member at
any meeting of the committee, the members of any such committee present at any
meeting and not disqualified form voting may, whether or not they constitute a
quorum, appoint another member of the Board of Directors to act at the meeting
in the place of any absent or disqualified member of such committee. At meetings
of any such committee, a majority of the members or alternate member of such
committee shall constitute a quorum for the transaction of business and the act
of a majority of the members or alternate members present at any meeting at
which a quorum is present shall be the act of the committee.
Section 9. MINUTES OF COMMITTEE MEETINGS. The committees shall keep
regular minutes of their proceedings.
Section 10. INFORMAL ACTION BY BOARD OF DIRECTORS AND COMMITTEES. Any
action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting if a
written consent thereto is signed by all members of the Board of Directors or of
such committee, as the case may be, and such written consent is filed with the
minutes of proceedings of the Board of Directors or committee, provided,
however, that such written consent shall not constitute approval of any matter
which pursuant to the '40 Act and the rules thereunder requires the approval of
directors by vote cast in person at a meeting. Written consent by means of a
telecopy shall constitute a valid consent as of the time of receipt.
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Section 11. MEETINGS BY CONFERENCE TELEPHONE. The members of the Board
of Directors or any committee thereof may participate in a meeting of the Board
of Directors or committee by means of a conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other at the same time and such participation shall
constitute presence in person with respect to matters which pursuant to the '40
Act and the rules thereunder require the approval of directors by vote cast in
person at a meeting.
Section 12. FEES AND EXPENSES. The directors may be paid their expenses
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors, a stated retainer
as director and/or such other compensation as the Board of Directors may
approve. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like reimbursement and
compensation for attending committee meetings.
ARTICLE IV
NOTICES
Section 1. GENERAL. Notices to directors and stockholders mailed to
them at their post office addresses appearing on the books of the Corporation
shall be deemed to be given at the time when deposited in the United States
mail.
Section 2. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes, of the Articles of Incorporation or
of these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed the equivalent of notice and such waiver shall be filed with the
records of the meeting. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting to the
transaction of any business because the meeting is not lawfully called or
convened.
ARTICLE V
OFFICERS
Section 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors at its first meeting after each annual meeting of
stockholders and
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shall be a chairman of the Board of Directors, a president, a secretary and a
treasurer. The Board of Directors may choose also such vice president and
additional officers or assistant officers as it may deem advisable. Any number
of offices, except the offices of president and vice president and chairman and
vice president, may be held by the same person. No officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required by law to be executed, acknowledged or verified by two or
more officers.
Section 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such other officers and agents as it desires who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the Board of Directors.
Section 3. TENURE OF OFFICERS. The officers of the Corporation shall
hold office at the pleasure of the Board of Directors. Each officer shall hold
his office until his successor is elected and qualified or until his earlier
resignation or removal. Any officer may resign at any time upon written notice
to the Corporation. Any officer elected or appointed by the Board of Directors
when, in its judgment, the best interests of the Corporation will be served
thereby. A vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise shall be filled by the Board of Directors.
Section 4. CHAIRMAN OF THE BOARD OF DIRECTORS. The chairman of the
Board of Directors shall preside at all meetings of the stockholders and of the
Board of Directors. He shall be the chief executive officer and shall have
general and active management of the business of the Corporation and shall see
that all orders and resolutions of the Board of Directors are carried into
effect. He shall be ex officio a member of all committees designated by the
Board of Directors. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the Corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing ad execution thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation.
Section 5. PRESIDENT. The president shall act under the direction of
the chairman and in the absence or disability of the chairman shall perform the
duties and exercise the powers of the chairman. He shall perform such other
duties and have such other powers as the chairman or the Board of Directors may
from time to time prescribe. He shall execute on behalf of the Corporation, and
may affix the seal or cause the seal to be affixed to, all instruments requiring
such execution except to the extent that signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the Corporation.
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Section 6. VICE PRESIDENTS. The vice presidents shall act under the
direction of the president and in the absence or disability of the president
shall perform the duties and exercise the powers of the president. They shall
perform such other duties and have such other powers as the chairman or the
Board of Directors may from time to time prescribe. The Board of Directors may
designate one or more executive vice presidents or may otherwise specify the
order of seniority of the vice presidents and, in that event, the duties and
powers of the president shall descend to the vice presidents in the specified
order of seniority.
Section 7. SECRETARY. The secretary shall act under the direction of
the chairman. Subject to the direction of the chairman he shall attend all
meetings of the Board of Directors and all meeting of stockholders and record
the proceedings in a book to be kept for that purpose and shall perform like
duties for the committees designated by the Board of Directors when required. He
shall give, or cause to be given, notice of all meetings of stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the chairman or the Board of Directors. He shall keep in
safe custody the seal of the Corporation and shall affix the seal or cause it to
be affixed to any instrument requiring it.
Section 8. ASSISTANT SECRETARIES. The assistant secretaries in the
order of their seniority, unless otherwise determined by the chairman or the
Board of Directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary. They shall perform
such other duties and have such other powers as the chairman or the Board of
Directors may from time to time prescribe.
Section 9. TREASURER. The treasurer shall act under the direction of
the chairman. Subject to the direction of the chairman he shall have the custody
of the corporate funds and securities and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the Corporation and shall
deposit all monies and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the chairman or the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the chairman and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
Corporation.
Section 10. ASSISTANT TREASURERS. The assistant treasurers in the order
of their seniority, unless otherwise determined by the chairman or the Board of
Directors, shall in the absence or disability of the treasurer, perform the
duties and exercise the powers of the treasurer. They shall perform such other
duties and have such other powers as the chairman or the Board of Directors may
from time to time prescribe.
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ARTICLE VI
CERTIFICATES OF STOCK
Section 1. GENERAL. Every holder of stock of the Corporation who has
made full payment of the consideration for such stock shall be entitled upon
request to have a certificate, signed by, or in the name of the Corporation by,
the chairman, the president or vice president and countersigned by the treasurer
or an assistant treasurer or the secretary or an assistant secretary of the
Corporation, certifying the number and, if additional shares of stock should be
authorized, the class of whole shares of stock owned by him in the Corporation.
Section 2. FRACTIONAL SHARE INTERESTS. The Corporation may issue
fractions of a share of stock. Fractional shares of stock shall have
proportionately to the respective fractions represented thereby all the rights
of whole shares, including the right to vote, the right to receive dividends and
distributions and the right to participate upon liquidation of the Corporation,
excluding, however, the right to receive stock certificates representing such
fractional shares.
Section 3. SIGNATURES ON CERTIFICATES. Any of or all the signatures on
a certificate may be a facsimile. In case any officer who has signed or whose
facsimile signature has been placed upon a certificate shall cease to be such
officer before such certificate is issued, it may be issued with the same effect
as if he were such officer at the date of issue. The seal of the Corporation or
a facsimile thereof, may, but need not, be affixed to certificates of stock.
Section 4. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon making of any affidavit of that fact
by the person claiming the certificate or certificates to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed.
Section 5. TRANSFER OF SHARES. Upon request by the registered owner of
shares, and if a certificate has been issued to represent such shares upon
surrender to the Corporation or a transfer agent of the Corporation of a
certificate for shares of stock
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duly endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, it shall be the duty of the Corporation, if it is
satisfied that all provisions of the Articles of Incorporation, of the Bylaws
and of the law regarding the transfer of shares have been duly complied with, to
record the transaction upon its books, issue a new certificate to the person
entitled thereto upon request for such certificate, and cancel the old
certificate, if any.
Section 6. REGISTERED OWNERS. The Corporation shall be entitled to
recognize the person registered on its books as the owner of shares to be the
exclusive owner for all purposes including voting and dividends, and the
Corporation shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
the laws of Maryland.
ARTICLE VII
NATURE OF THE FUND
The Corporation shall operate as a "fund of funds" in compliance with the
'40 Act, as amended from time to time, and any applicable rules, regulations and
SEC orders thereunder.
ARTICLE VII
MISCELLANEOUS
Section 1. RESERVES. There may be set aside out of any funds of the
Corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for such other purpose as the Board of
Directors shall think conducive to the interest of the Corporation, and the
Board of Directors may modify or abolish any such reserve.
Section 2. DIVIDENDS. Dividends upon the stock of the Corporation may,
subject to the provisions of the Articles of Incorporation and of applicable
law, be declared by the Board of Directors at any time. Dividends may be paid in
cash, in property or in shares of the Corporation's stock, subject to the
provisions of the Articles of Incorporation and of applicable law.
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It shall be the policy of the Corporation to distribute to its
shareholders, at least annually, sufficient net investment income and realized
capital gains in order to comply with the provisions of the United States
Internal Revenue Code which excludes investment companies from federal income
tax. The Board of Directors may provide to the stockholders a plan for
reinvesting such net investment income and capital gains under such terms and
conditions as the Board of Directors in its discretion, shall deem desirable.
Section 3. CAPITAL GAINS DISTRIBUTIONS. The amount and number of
capital gains distributions paid to the stockholders during each fiscal year
shall be determined by the Board of Directors. Each such payment shall be
accompanied by a statement as to the source of such payment, to the extent
required by law.
Section 4. CHECKS. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 5. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
Section 6. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its organization and the words "Corporate
Seal, Maryland". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in another manner reproduced.
Section 7. INSURANCE AGAINST CERTAIN LIABILITIES. The Corporation
shall not bear the cost of insurance that protects or purports to protect
directors and officers of the Corporation against any liabilities to the
Corporation or its security holders to which any such director or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Section 8. REPORTS TO STOCKHOLDERS. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each fiscal period of the Corporation and at such other times, if
any, as may be directed by the Board of Directors of the Corporation. A report
to the stockholders based upon each such examination shall be mailed to each
stockholder of the Corporation of record on such date with respect to each
report as may be determined by the Board of Directors, at his address as the
same appears on the books of the Corporation. Each such report shall show the
assets and liabilities of the Corporation as of the close of the period covered
by the report and the securities in which the funds of the Corporation were then
invested; such report shall also show the Corporation's income and expenses
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for the period from the end of the Corporation's preceding fiscal year to the
close of the period covered by the report and any amount paid during such period
to any security dealer, legal counsel, transfer agent, dividend disbursing
agent, registrar or custodian having a partner, officer or director who was also
an officer or director of the Corporation at any time during such period, and
shall set forth such other matters as the Board of Directors or such independent
firm of public accounts shall determine.
Section 9. APPROVAL OF FIRM OF INDEPENDENT PUBLIC ACCOUNTS. At every
annual meeting of the stockholders of the Corporation there shall be submitted
for ratification or rejection the name of the firm of independent public
accountants which has been selected for the current fiscal year in which such
annual meeting is held by a majority of those members of the Board of Directors
who are not investment advisors of, or affiliated persons of an investment
advisor of, or officers or employees of, the Corporation, as such terms are
defined in the '40 Act.
Section 10. CUSTODIANSHIP. All securities owned by the Corporation
shall, as hereinafter provided, be held by or deposited with a bank or trust
company (which bank or trust company is hereby designated "Custodian"). The
Corporation may also deposit all or any part of its cash with such Custodian.
The Corporation shall enter into a written contract with the Custodian
regarding the powers, duties and compensation of the Custodian with respect to
the cash and securities of the Corporation held by the Custodian. Said contract
and all amendments thereto shall be approved by the Board of Directors. Said
contract shall authorize the Custodian as the Corporation's agent to hold the
securities owned by the Corporation and deliver the same upon written order, to
receive and receipt for any monies due to the Corporation, and deposit the same
in its own banking department or elsewhere, ad the Board of Directors may
direct, and to disburse such funds upon orders or vouchers. Said contract may
authorize the Custodian as the Corporation's agent to keep the books and
accounts of the Corporation, to furnish clerical and accounting services, to
compute the net asset value of the shares of the Corporation in accordance with
Article X of the Articles of Incorporation, and to perform such other duties as
may be agreed upon.
The contract with the Custodian shall provide that it is terminable by
either party upon written notice to the other within such time not exceeding
sixty (60) days as may be specified in the contract; provided, however, that
upon termination of the contract or inability of the Custodian to continue to
serve, the Custodian shall, upon written notice of appointment of another bank
or trust company as custodian, deliver and pay over to such successor Custodian
all securities and monies held by it for account of the Corporation. In such
case, the Board of Directors shall promptly appoint a successor Custodian, but
in the event that no successor Custodian can be found having the required
qualifications and willingness to serve, it shall be the duty of the Board of
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Directors to call as promptly as possible a special meeting of the shareholders
to determine whether the Corporation shall function.
Section 11. INFORMATION TO ACCOMPANY DIVIDENDS. At the time of the
payment by the Corporation of any dividend to its stockholders, each stockholder
to whom such dividend is paid shall be notified of the account or accounts from
which it is paid and of the amount thereof paid from each such account.
Section 12. AMENDMENT OF THIS ARTICLE. This Article may be altered,
amended or repealed only upon the affirmative vote of the holders of a majority
of all the shares of the common stock of the Corporation at the time outstanding
and entitled to vote. The Corporation shall notify the stockholders in its next
subsequent regular report to the stockholders of any such alteration, amendment
or repeal.
ARTICLE VIII
INDEMNIFICATION
Section 1. INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Corporation) by reason of the fact that he
is or was a director, officer, employee or agent of the Corporation, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith, not negligently, and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a
presumption that the person acted negligently or did not act in good faith and
in a manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation or, with respect to any criminal action or
proceedings, that the person had reasonable cause to believe that his conduct
was unlawful.
The Corporation shall indemnify any person who was or is a party or
threatened to be made a party to any threatened, pending or completed action of
suit by or in the right of the Corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the Corporation, against expenses
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(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith, not negligently, and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the court in which such action of suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnify for such expenses which the court
shall deem proper.
To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in this Article VIII, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Any indemnification under this Article VIII (unless ordered by a court)
shall be made by the Corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in this Article VIII. Such determination shall be made (1) by
the Board of Directors by a majority action, suit, or proceeding, or (2) if such
a quorum is not obtainable, by independent legal counsel in a written opinion,
or (3) by a majority vote of a quorum of the shareholders of the Corporation.
Section 2. ADVANCES. Expenses (including attorneys' fees) incurred by
an officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation as authorized in this Article VIII. Such expenses
incurred by other employees or agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this Article VIII shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled elsewhere under the Bylaws of the
Corporation, any agreement or vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
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Section 3. INSURANCE. The Corporation shall have the power to purchase
and maintain insurance on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the Corporation would have the power to indemnify
him against such liability under the provisions of this Article VIII.
Section 4. REFERENCES TO "CORPORATION". For purposes of this Article
VIII, reference to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under the provisions
of this Article VIII with respect to the resulting or surviving corporation as
he would have with respect to such constituent corporation if its separate
existence had continued.
Section 5. FORMER DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The
indemnification and advancement of expenses provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
or such a person.
Section 6. APPLICABLE LAWS. This Article VIII shall be interpreted
consistent with, and subject to any limitations of, the Maryland General
Corporation Law and the `40 Act.
ARTICLE IX
AMENDMENTS
Except as otherwise provided in these Bylaws, the Board of Directors
shall have the power to make, alter, amend or repeal bylaws of the Corporation.
No amendment of these Bylaws shall effect any right of any person under this
Article based on any event, omission or proceeding prior to the amendment.
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ARTICLE X
VOTING OF PORTFOLIO SHARES
Unless otherwise ordered by the Board of Directors, any and all shares of
stock owned or held by this Corporation in any other corporation shall be
represented and voted at any meeting of the stockholders of any such corporation
by any one of the following officers of this Corporation in the following order
who shall attend such meeting, i.e.: the President, a Vice President, or the
Treasurer, and such representation by any one of the officers above named shall
be deemed and considered a representation in person by this Corporation at such
meeting. When for any reason it shall be impossible or inconvenient for any of
the officers named above to attend any meeting of the stockholders of any such
corporation in which this corporation owns or holds shares of stock, then, in
that event, any one of the officers above named may execute a proxy to represent
this Corporation at such stockholders' meeting and to vote all shares of such
corporation owned or held by this Corporation with all power and authority in
the premises that any of the officers above named would possess if personally
present. The Board of Directors by resolution may from time to time confer like
powers upon any other person or persons. Voting of portfolio shares shall at all
times comply with any and all requirements of the '40 Act as amended from time
to time, and the new and regulations thereunder.
APPROVED:
Date: October ____, 1999 By: /s/Roland R. Manarin
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Title: President
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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of December ____, 1999, by and between Lifetime
Achievement Fund, Inc. (the "Fund"), a Maryland corporation registered with the
U.S. Securities and Exchange Commission as an open-end, investment company under
the Investment Company Act of 1940, as amended ("1940 Act") and Manarin
Investment Counsel, Ltd., (the "Adviser"), a Nebraska corporation registered as
an investment adviser under the Investment Advisers Act of 1940, as amended.
WHEREAS, the Fund proposes to offer for public sale shares of beneficial
interest; and
WHEREAS, the Fund desires to retain Adviser as investment adviser to
furnish certain investment advisory services to the Fund, and Adviser desires to
furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Adviser and the Fund agree as follows:
1. APPOINTMENT. The Fund hereby appoints Adviser as the investment
adviser to manage the investment and reinvestment of the assets of the Fund, and
to perform the other services herein set forth, subject to the supervision of
the Fund's Board of Directors, for the period and on the terms herein set forth.
Adviser hereby accepts such appointment and agrees to render the services herein
set forth for the compensation herein provided.
2. DUTIES AS INVESTMENT ADVISER.
a. Adviser shall act as investment adviser for the Fund, and
shall manage the investment and reinvestment of the assets of the Fund at all
times in accordance with the investment objectives and policies of the Fund as
is set forth in the Fund's currently effective Registration Statement. Adviser
shall assume responsibility for the management of the assets of the Fund and
making all investment decisions for the Fund subject to the overall supervision
of the Fund's Board of Directors.
b. Adviser will obtain and evaluate pertinent economic
information and evaluate economic conditions, securities markets and investment
performance relevant to the investment policies of the Fund and place orders for
the purchase and sale of securities on behalf of the Fund. In placing such
orders, Adviser is authorized to use the facilities of
<PAGE>
brokers-dealers, who render satisfactory services at competitive rates, and to
allocate orders to such brokers-dealers who also provide research, statistical
and other services to the Fund, such determinations to be made by Adviser in its
own reasonable judgment, consistent with applicable laws and regulations.
c. Adviser will provide investment supervisory services for
the assets of the Fund as set forth in its current Registration Statements.
d. Adviser will provide or cause the brokers-dealers it
selects to provide complete records of the securities purchased, sold or
otherwise disposed of by the Fund including the pricing and amounts of such
transactions.
e. Adviser will report to the Fund's Board of Directors, or to
any committee or officers of the Fund acting pursuant to the authority of the
Board, at such times and in such detail as the Board may deem appropriate in
order to enable the Fund to determine that its investment policies are being
observed and implemented and that the obligations of Adviser under this
Agreement are being fulfilled. Any investment program undertaken by Adviser
pursuant to this Agreement and any other activities undertaken by Adviser on
behalf of the Fund shall at all times be subject to any directives of the Fund's
Board of Directors or any duly constituted committee or officer of the Fund
acting pursuant to authority of the Fund's Board of Directors.
f. Adviser will furnish or place at the disposal of the Fund
such information evaluations, analysis, advice and recommendations formulated or
prepared by it as it deems necessary and appropriate in the reasonable discharge
of its duties or as the Fund may otherwise reasonably request of it.
g. Adviser will permit its employees and its affiliates to
serve without compensation from the Fund as officers, Directors or agents of the
Fund, if desired by the Fund's Board of Directors.
3. EXPENSES OF FUND. During the term of this Agreement, the Fund will
bear all expenses, not specifically assumed by Adviser, incurred in its
operation and the offering of its shares, including but not limited to:
a. Costs of preparation, printing and mailing of reports,
notices, proxy solicitation materials and prospectuses and statements of
additional information to existing Fund shareholders or to regulatory
authorities;
b. Charges and expenses of any custodian or depository
appointed by the Fund for the safekeeping of its assets, or for other custodial
services;
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c. Advisory, administrative and distribution fees;
d. Charges and expenses of any transfer agents and registrars
appointed by the Fund;
e. Charges and expenses of any agents appointed by the Fund to
provide accounting and daily pricing services;
f. Costs of share certificates representing shares of the
Fund;
g. Fees and expenses, including legal, incurred in maintaining
the registration for the Fund and of its shares with the Securities and Exchange
Commission;
h. Broker's commissions and issue and transfer taxes
chargeable to the Fund in connection with securities transactions to which the
Trust is a party;
i. Taxes and all registration, filing and other similar fees
payable by the Fund to federal, state or other governmental agencies;
j. Expenses of shareholders' and directors' meetings and of
preparing and printing reports to shareholders;
k. Premiums for fidelity bonds maintained by the Fund pursuant
to the requirements of the 1940 Act and for other insurance;
l. Directors' fees and expenses;
m. Interest expenses; and
n. Legal, accounting and auditing expenses.
4. EXPENSES OF ADVISER.
a. The Adviser shall, at its own expense, maintain such staff
and employ such personnel and consult with such other persons as it shall
determine to be necessary or useful to the performance of its obligations under
this Agreement.
b. Without limiting the generality of the foregoing, the staff
and personnel of the Adviser shall be deemed to include persons employed or
otherwise retained by the Adviser to furnish statistical or factual data, advice
regarding economic
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factors and trends, and such other information, advice and expertise as the
Adviser may deem appropriate.
c. The Adviser shall, at its own expense, maintain records
regarding its Fund activities as are required under the 1940 Act and the
Investment Adviser's Act of 1940. Such records shall be available for inspection
by the Fund on reasonable notice to the Adviser.
5. SERVICES NOT EXCLUSIVE. The services of Adviser to the Fund
hereunder are not to be deemed exclusive, and Adviser shall be free to render
similar services to others so long as its services and responsibilities
hereunder are not impaired thereby. Adviser shall be an independent contractor
and shall have no authority to act for or represent the Fund in its investment
commitments unless otherwise provided.
6. COMPENSATION.
a. As full compensation for all services rendered hereunder,
Adviser shall receive from the Fund a monthly fee at an annual rate of .75% of
the average daily net assets of the Fund. Such compensation shall be accrued
daily and payable monthly. The compensation for each month shall be payable to
Adviser not later than the tenth day of the following month.
b. If the aggregate expenses of the Fund in any fiscal year
exceed the highest expense limitation established pursuant to the statutes or
regulations of any jurisdiction in which the shares of the Fund are qualified or
registered for offer and sale, Adviser agrees to waive such portion of its
advisory fee as may be necessary to provide for any such expenses, but such
waiver shall not exceed the full amount of the advisory fee for such year except
as may be elected by Adviser in its discretion. For this purpose, aggregate
expenses of the Fund shall include the compensation of Adviser, but shall
exclude interest, taxes, brokerage fees on portfolio transactions, fees and
expenses incurred in connection with the distribution of shares, and
extraordinary expenses including litigation expenses.
7. INTERESTED PERSONS OF THE FUND OR ADVISER. It is understood that
the directors, officers, agents and shareholders of the Fund are or may be
interested persons of the Fund as directors, officers, shareholders or
otherwise, that Adviser may be an interested person of the Fund and that the
existence of such dual interest shall not affect the validity of any
transactions except as otherwise provided in the Articles of Incorporation of
the Fund and the Articles of Incorporation of Adviser, respectively, or by
specific provision of applicable law.
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8. DURATION AND TERMINATION.
a. The term of this Agreement shall begin on the date first
above written, and unless sooner terminated as hereinafter provided, shall
remain in the effect for one year from the above written date. Thereafter, if
not terminated, this Agreement shall continue in effect from year to year, as to
the Fund, if such continuation shall be specifically approved at least annually
(i) by vote of a majority of the Fund's Board of Directors 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 (ii) by vote of a
majority of the outstanding voting securities of the Fund.
b. This Agreement may be terminated as to the Fund at any
time, without payment of any penalty, by vote of the Fund's Board of Directors
or by the vote of a majority of the outstanding voting securities (as defined in
the 1940 Act) of the Fund, on sixty (60) days' written notice to Adviser or by
Adviser at any time without payment of any penalty on sixty (60) days' written
notice to the Fund; provided, however, that this Agreement has been approved by
the Fund in accordance with the 1940 Act.
c. In the event of a termination as a result of paragraph 8
above, before such termination shall be effective, the Fund's Board of Directors
shall, if it elects to do so, and subject to compliance with the 1940 Act, the
Securities Exchange Act of 1934, and the corporate laws of the State of
Maryland, have such time as is reasonably necessary in order to negotiate and
close a sale of the Fund's assets to another fund in exchange for shares of such
other funds selected by the Adviser but in no event more than 120 days; or the
Fund's Board of Directors shall, if it elects to do so, have not more than 90
days to cause an orderly liquidation of the Fund's assets and the distribution
of proceeds to its shareholders.
d. This Agreement terminates automatically in the event of its
"assignment" as defined in the 1940 Act.
9. AMENDMENT OF THIS AGREEMENT. This Agreement may be modified from
time to time by mutual consent of the parties; however, such consent on the part
of the Fund requires a vote of a majority of the outstanding voting securities
of the Fund and a vote of a majority of the Fund's Board of Directors (including
a majority of the members of the Board of Directors who are not interested
persons of the Fund other than as director) or Adviser and who have no direct or
indirect interest in the operations of the Fund, this Agreement or Adviser, cast
in person at a meeting called for that purpose.
10. LIMITATION OF LIABILITY OF ADVISER. Adviser assumes no
responsibility under this Agreement other than to render the services called for
hereunder. Adviser shall not be liable for any error of judgment or mistake of
law, for any loss arising
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out of any investment, or in any event whatsoever, provided that nothing herein
shall be deemed to protect, or purport to protect, Adviser against any liability
to the Fund or to the securityholders of the Fund to which it would otherwise be
subject by reason of willful misfeasance, bad faith or negligence in the
performance of its duties hereunder, or by reason of reckless disregard of its
obligations and duties hereunder. No provision of this Agreement shall be
construed to protect any director or officer of the Fund, or any director or
officer of Adviser, from liability for violation of Sections 17(h), 17(i) or 26
(b) of the 1940 Act.
This Agreement may be amended by agreement of 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,
as if deemed necessary to conform to requirements of applicable Federal and
State laws and regulations.
11. LIMITATION OF LIABILITY OF THE DIRECTORS AND SHARE-HOLDERS OF THE
FUND. The Board of Directors of the Fund and the shareholders of the Fund shall
not be liable for any obligations of the Fund under this Agreement, and Adviser
agrees that, in asserting any rights of claims under this Agreement, it shall
look only to the assets and property of the Fund in settlement of such right or
claim, and not to such directors or shareholders.
12. INDEMNIFICATION OF FUND.
a. The Adviser will indemnify and hold the Fund and its directors,
officers, agents, and employees free and harmless from any loss, claim, damages,
tax, penalty, liability, disbursement, litigation expenses, attorneys fees, and
expenses or court costs arising out of, or in any way relating to:
(i) The enforcement of this agreement;
(ii) All actions or omissions of the Fund, its directors,
officers, agents and employees, provided that the Fund, its
directors, officers, agents or employees were not engaged
in willful misfeasance, bad faith or negligence in the
performance of the their duties, or in wreckless disregard
of their obligations and duties hereunder; and,
(iii) The Adviser's refusal or failure to comply with the terms
with this Agreement which arise out of the Adviser's
willful misfeasance, bad faith or negligence.
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Notwithstanding the foregoing, indemnification shall not extend to the
Fund, its directors, officers, agents or employees to the extent that any
enforcement action is instituted by such party and the action is not settled and
does not result in any final judgment in favor of such party.
b. The Fund will indemnify and hold the Adviser and its directors,
officers, agents and employees free and harmless from any loss, claim, damages,
tax, penalty, liability, disbursement, litigation expenses, attorneys fees and
expenses or court costs arising out of, or in any way relating to:
(i) The enforcement of this Agreement;
(ii) All actions or omissions of the Advisor, its directors,
officers, agents and employees, as to its duties and
obligation pursuant to this Agreement, provided that the
Advisor, its directors, officers, agents or employees were
not engaged in willful misfeasance, bad faith or negligence
in the performance of the their duties hereunder, or by
reason of wreckless disregard of their obligations and
duties hereunder;
(iii) The Fund's refusal or failure to comply with the terms with
this Agreement which arise out of the Fund's willful
misconduct, bad faith or negligence;
(iv) The reliance on, or the carrying out, any instructions of
the officers or Directors of the Fund; and,
(v) The offer or sale by other than the Adviser of the Fund's
shares in violation of any requirement under Federal
Securities laws or regulations or the Securities laws or
regulations or any state or in violation of any stop order
or other determination or ruling by a Federal or State
agency, with respect to the offer or sale of such shares,
in such state.
Notwithstanding the foregoing, indemnification shall not extend to the
Adviser, its directors, officers, agents and employees to the extent that any
enforcement action is instituted by such party and the action is not settled and
does not result in a final judgment in favor of such party. At any time the
Adviser may apply to any officer of the Fund for instructions, and may consult
with legal counsel for the Fund with respect to any matter arising in connection
with the services to be performed by the Adviser under this Agreement and the
Adviser shall not be liable and shall be indemnified by the Fund for
7
<PAGE>
any action taken or omitted by it in good faith in reliance upon such
instructions or upon the opinion of such counsel. The Adviser shall be protected
and indemnified in acting upon any paper or document believed by it to be
genuine and to have been signed by the proper person or persons and shall not be
held to have notice of any change of authority of any person, until receipt of
written notice thereof from the Fund.
13. BOOKS AND RECORDS RETENTION. Adviser and the Fund agree to
maintain and preserve for such period or periods as the Securities and Exchange
Commission may prescribe by rules and regulations, such account, books and other
documents as constitute the records forming the basis for all reports, including
financial statements required to be filed pursuant to the 1940 Act and for the
Fund's auditor certification relating thereto. Adviser and the Fund agree that
all accounts, books and other records maintained and preserved by each as
required hereby shall be subject at any time, and from time to time, to such
reasonable periodic, special and other examinations by the Securities and
Exchange Commission, the Fund's auditors, the Fund or any representative of the
Fund, or any governmental agency or other instrumentality having regulatory
authority over the Fund. It is expressly understood and agreed that the books
and records maintained by Adviser on behalf of the Fund shall, at all times,
remain the property of the Fund. Moreover, the Fund agrees to supply Adviser
with copies of all documents filed with the Securities and Exchange Commission,
and with such other information relating to the Fund's affairs as Adviser may
reasonably request.
14. GOVERNING LAW. This Agreement is executed and delivered in the
State of Nebraska and shall be governed by the laws of Nebraska and the 1940
Act. To the extent that the applicable laws of the State of Nebraska conflict
with the applicable provisions of the 1940 Act, the latter shall control.
15. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be bind upon and shall inure to the
benefit of the parties hereto and their respective successors. The terms "vote
of a majority of the outstanding voting securities", "arrangement", "affiliated
person", and "interested person" shall have the respective meanings specified in
the 1940 Act.
8
<PAGE>
IN WITNESS WHEREOF, Adviser and the Fund have executed this Agreement on
the day first above written.
Lifetime Achievement Fund, Inc.
Attest:
By:
- --------------------------------- ---------------------------------
Attest: Manarin Investment Counsel, Ltd.
By:
- --------------------------------- ---------------------------------
9
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT, made this ___ day of December, 1999, by and between Lifetime
Achievement Fund, Inc. (the "Fund"), a corporation organized and existing under
the laws of the State of Maryland and Manarin Securities Corporation
("Distributor"), a Nebraska corporation.
WHEREAS, the Distributor is a broker-dealer registered with the Securities
and Exchange Commission under the Securities Exchange Act of 1934 and is a
member of the National Association of Securities Dealers, Inc. ("NASD"); and
WHEREAS, the Fund is an open-end diversified investment company registered
with the Securities and Exchange Commission under the Investment Company Act of
1940 ("1940 Act"); and
WHEREAS, the Fund proposes to offer for public sale shares of beneficial
interest ("Shares"); and
WHEREAS, the Fund desires the Distributor to act as distributor, on an
agency basis, in offering the Shares of the Fund for sale to the public and
Distributor desires to so act;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants set forth herein and for other good and valuable consideration,
receipt of which is acknowledged, the Fund and Distributor mutually agree that
Distributor will provide distribution services for the Fund as follows:
1. APPOINTMENT OF DISTRIBUTOR. The Fund hereby appoints Distributor and
Distributor hereby accepts the appointment as the exclusive distributor of Fund
Shares issued by the Fund on an agency basis.
2. ACCEPTANCE OF APPOINTMENT. Distributor hereby accepts the appointment
and agrees to use its best efforts to promote, offer for sale and sell the
Shares of the Fund to the public on a continuous basis whenever and wherever it
is legally authorized to do so. In so doing, Distributor shall conduct its
affairs in accordance with the Conduct Rules of the NASD and all other
applicable laws and regulations.
3. PRICE OF SHARES. The price at which the Shares of the Fund may be sold
to the public shall be the net asset value per share as determined in accordance
with the provisions of the 1940 Act plus the applicable initial sales charge, if
any, computed as set forth in the Fund's Registration Statement.
<PAGE>
4. DISTRIBUTOR NOT AGENT IN CERTAIN CIRCUMSTANCES. Distributor is
authorized to enter into dealer agreements for the sale of Fund Shares with
registered broker-dealers who are members of NASD. Distributor may also
distribute Fund Shares directly through its own registered representatives. In
either event, Distributor shall be responsible for the payment of any and all
fees or commissions to such broker-dealers or representatives as set forth in
paragraph 6. In making agreements with its salesmen, broker-dealers, financial
institutions, and other institutions, organizations, and associations, the
Distributor shall act only in its own behalf as principal and not as agent for
the Fund. The Distributor shall be agent for the Fund only in respect to sales
of the Fund's Shares.
5. DISTRIBUTOR'S COMPENSATION. As compensation for all of its services
provided and its costs assumed under this Agreement, Distributor shall receive
the following forms and amounts of compensation:
(a) On sales of Shares of the Fund affected by or on behalf of the
Distributor pursuant to the Agreement or any dealer sales agreement entered
into by the Distributor for the distribution of the Shares, the Distributor
shall receive the Sales Charge according to the schedule which is mutually
agreed upon and designated from time to time in an effective Registration
Statement for the Fund.
(b) The Fund shall reimburse the Distributor for actual
out-of-pocket costs that are distribution-related expenses, as defined in
the Fund's Distribution Plan ("Plan", a copy of which is attached hereto as
Exhibit A and incorporated herein by this reference), incurred with respect
to the Fund. Such reimburse-ments shall be subject to the following
limitations:
(i) Expense reimbursement shall not exceed .25 percent of the
average daily net assets of the Fund (as determined from time to time by
resolution of the Board of Directors of the Fund as reflected from time to
time in an effective Registration Statement for the Fund) on an annual
basis.
(ii) At the end of each month (or at such other intervals as the
Board of Directors of the Fund shall determine), the Distributor shall
provide the Fund with an itemized list of distribution expenses actually
incurred during the preceding month which are reimbursable under this
Agreement and the Plan for which the Distributor desires to be reimbursed,
and the Fund shall reimburse such costs. The Fund may, in any month,
reimburse the Distributor for expenses in excess of one-twelfth (1/12) of
the annual limitations of paragraph (b)(i) above, but in no event shall the
total reimbursement made by the Fund in any fiscal year exceed the
limitations of paragraph (b)(i).
2
<PAGE>
6. ALLOCATION OF EXPENSES. Distributor shall be responsible for all costs
and expenses incurred in its distribution of Fund Shares consisting of the
following: (i) compensation and expenses of sales and marketing personnel of the
Distributor; (ii) compensation (in addition to Sales Charges, if any) paid to
registered representatives of Distributor and other broker-dealers that have
entered into written dealer sales agreements with the Distributor; and (iii)
compensation to financial institutions and other institutions, organizations and
associations which have rendered assistance in the distribution of the Shares.
The Fund shall pay for or cause to be paid all expenses, costs and fees incurred
by the Fund which are not specifically assumed by the Distributor pursuant to
this Distribution Agreement.
7. FUND TO SUPPLY NET ASSET VALUE. The Fund shall determine in the manner
provided by resolution of the Board of Directors of the Fund as reflected from
time to time in an effective Registration Statement of Fund, and promptly
furnish to the Distributor, a statement of the net asset value per share as
often and at such times as the Board of Directors of the Fund shall be
resolution determine, but not less than daily as of the close of business of the
New York Stock Exchange on any business day on which the New York Stock Exchange
is open for unrestricted trading. The net asset value shall become effective at
such time and shall remain in effect during such period as may be stated in a
statement thereof furnished to the Distributor by the Fund.
8. ISSUANCE OF SHARES. The Fund shall not issue certificates representing
Fund shares unless requested by a shareholder. If such request is transmitted
through Distributor, the Fund will cause certificates evidencing the shares
owned to be issued in the names and denominations as Distributor shall from time
to time direct. Nothing herein shall prevent the Fund from issuing directly,
without payment of any sales charge to Distributor, Fund Shares as a dividend or
distribution to its shareholders or in a reorganization.
9. MODIFICATION OF AGREEMENT. The terms and provisions of this Agreement,
shall be modified automatically to conform with the requirements imposed by the
1940 Act and by the Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder. Otherwise, this Agreement may be modified
only if the modification is approved either: (a) by action of a majority of the
Fund's directors and by a majority of those directors of the Fund who are not
interested or affiliated persons of the Distributor or officers of the Fund, or
(b) at a meeting by affirmative vote of the holders of or majority of the
outstanding voting securities of the Fund.
10. TERM AND RENEWAL. This Agreement shall take effect upon its execution.
Thereafter, this Agreement shall continue in effect, unless sooner terminated as
hereinafter
3
<PAGE>
provided, for one year periods so long as its continuance is approved by the
Fund's Board of Directors including the vote of a majority of the Fund's Board
of Directors 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 in accordance with the procedures and requirements of the 1940 Act.
Notwithstanding the foregoing, this Distribution Agreement (and the Distribution
Plan) may be terminated at any time by a vote of a majority of disinterested
Directors or by a vote of a majority of Fund shares voting at a duly called and
authorized meeting of the Fund shareholders.
11. ASSIGNMENT TERMINATES AGREEMENT. This Agreement shall automatically
terminate in the event of its assignment, as defined in the 1940 Act.
12. TERMINATION UPON NOTICE. Either party hereto shall have the right to
terminate this Agreement without payment of a penalty upon sixty (60) days'
written notice to the other party, which notice may be waived by such other
party; termination by the Fund shall be effected by vote of a majority of the
Fund's Board of Directors including a majority of the Fund's Board of Directors
who are not parties to this Agreement or interested persons of any such party.
13. INDEPENDENT CONTRACTOR. Distributor shall be deemed to be an
independent contractor and shall be free to render to other similar or
dissimilar services as those rendered under this Agreement.
14. INFORMATION FURNISHED BY FUND TO UNDERWRITER. The Fund shall furnish
the Distributor from time to time for use in connection with the registration of
the Fund and its securities under the Federal securities laws and with the sale
of its Shares, such information with the respect to the Fund and its Shares as
the Distributor may reasonable request, all of which shall be signed by one or
more the Fund's duly authorized officers. The Fund warrants that the statements
containing any such information when so signed by its officers shall be true and
correct in all material respects. The Fund shall also furnish the Distributor
with any audits of its books and accounts made by independent public
accountants; with a monthly itemized list of the securities in its portfolio;
with monthly balance sheets as soon as practical after the end of each month;
and from time to time with such additional information regarding its financial
condition as the Distributor may reasonably request. The Fund shall cooperate
fully in the efforts of the Distributor to perform its duties under this
Agreement, and the Fund shall execute all documents reasonably necessary to
enable registration of the Fund and its Shares under the Federal and State
securities laws and to maintain such registration as current.
15. REGISTRATION AND QUALIFICATION. In connection with the organization of
the Fund and the offering of its Shares the Fund shall assume all expenses
4
<PAGE>
of preparation, registration and qualification of Shares of the Fund under
Federal and State laws and the filing of registration statements and copies of
corporate documents, agreements and any other related documents; specifically
the Fund shall pay all legal, county, registration and filing fees incident to
such registrations and filings. During such organizational and initial offering,
the Fund will also pay for the preparation and printing of Registration
Statements, Prospectuses and Statements of Additional Information when such
documents are distributed to persons who are not already shareholders of the
Fund.
16. INDEMNITIES.
(a) The Fund agrees to indemnify, defend and hold Distributor, its officers
and directors and any person who controls Distributor within the meaning of
Section 15 of the Securities Act of 1933, free and harmless from and
against any and all claims, demands, liabilities and expenses (including
the costs of investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which Distributor,
its officers and directors or any such controlling person may incur under
the Securities Act of 1933, or under the common law or otherwise, arising
out of or based upon any alleged untrue statements of a material fact
contained in the Fund's Registration Statement and Exhibits, Prospectuses,
or Statement of Additional Information or arising out of or based upon any
alleged omission to state a material fact required to be stated in such
documents or necessary to make the statements in them not misleading;
provided, however, that this indemnity, to the extent that it might require
indemnity of a person who is an officer or director or controlling person
of Distributor and who is also a director or officer of the Fund, shall not
inure to the benefit of such officer or director or controlling person
unless a court of competent jurisdiction shall determine, or it shall have
been determined by controlling precedent, that such result would not be
against public policy as expressed in the Securities Act of 1933; and
further provided that in no event shall anything herein contained be so
construed as to protect Distributor (or its officers and directors or any
controlling persons) against any liability to the Fund or its stockholders
to which Distributor would otherwise be subject by reason of willful
misfeasance, bad faith or negligence, in the performance of its duties or
by reason of its reckless disregard of its obligations and duties under
this Agreement. The Fund's agreement to indemnify Distributor, its officers
and directors and any such controlling person as aforesaid is expressly
conditioned upon its being notified of any action brought against
Distributor, its officers and directors or any such controlling person,
such notification to be given by letter or telegram address to the Fund at
its principal office in Omaha, Nebraska, and sent to it by the person
against whom such action is brought, within ten (10) days after the summons
or legal process shall have been serviced. The failure to so notify the
Fund of any such action shall not relieve it
5
<PAGE>
from any liability which it may have to the person against whom such action
is brought by reason of any such alleged untrue statement or omission
otherwise than on the account of the indemnity contained in the this
paragraph. The Fund will be entitled at its election, to assume the defense
of any suit brought to enforce any such claim, demand or liability, but, in
such case, such defense shall be conducted by counsel of good standing
chosen by the Fund and approved by the Distributor. In the event that the
Fund does elect to assume the defense of any such suit and retain counsel
of good standing approved by the Distributor, the defendant or defendants
in such suit shall bear the fees and expenses of any additional counsel
retained by any of them; but in case the Fund does not elect to assume the
defense of any such suit, or in case Distributor does not approve of
counsel chosen the Fund will reimburse Distributor, its officers and
directors, or the controlling person named as defendant or defendants in
such suit, for the reasonable fees and expenses of any counsel retained by
Distributor or them. The indemnification contained in this paragraph and
the representations and warranties in this Agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of Distributor, its officers and directors, or any controlling
person, and shall survive the delivery of any Shares of the Fund hereunder.
This indemnity will inure exclusively to Distributor's benefit, to the
benefit of its successors, to the benefit of its officers and directors and
their respective estates, and to the benefit of any controlling person and
its successors. The Fund agrees promptly to notify Distributor of the
commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of its Shares.
(b) The Distributor agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls the Fund within
the meaning of the Section 15 of the Securities Act of 1933, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the costs of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection
therewith) which Fund, its officers or directors, or any such controlling
person may incur under the Securities Act of 1933 or under the common law
or otherwise; but only to the extent that such liability or expense
incurred by the Fund, its officers or directors or such controlling person
resulting from such claims or demands shall arise out of or be based upon
any alleged untrue statement of a material fact contained information
furnished in writing by Distributor to the Fund for use in the Fund's
Registration Statement and Exhibits, Prospectuses or Statement of
Additional Information or shall arise out of or be based upon any alleged
omission to stating material fact in connection with such information
required to be stated in such document and necessary to make the statements
in them not misleading. Distributor's agreement to indemnify the Fund, its
officers and directors, and any such controlling person as aforesaid is
expressly conditioned
6
<PAGE>
upon Distributor being notified of any action brought against Fund, its
officers or directors, or any such controlling person, such notification to
be given by letter or telegram addressed to the Distributor at its
principal office in Omaha, Nebraska, and sent to it by the person against
whom such action is brought, within ten (10) days after the summons or
other first legal process shall have been served. Distributor shall have a
right to control the defense of such action, with counsel of its own
choosing, satisfactory to the Fund, if such action is based solely upon
such alleged misstatement or omission on its part, and in any other event
the Distributor or such controlling person shall each have the right to
participate in the defense or preparation of the defense of any such
action. Failure to so notify Distributor of any such action shall not
relieve Distributor from any liability which Distributor may have to the
Fund, it officers or directors, or to such controlling person by reason of
such untrue statement or omission on Distributor's part otherwise than on
account of its indemnity contained in this paragraph.
17. LIMITATION OF LIABILITY OF FUND DIRECTORS. The Fund's Board of
Directors and the shareholders of the Fund shall not be liable for any
obligations of the Fund under this agreement, and Distributor agrees that, in
asserting any rights of claims under this agreement, it shall look only to the
assets and property of the Fund in settlement of such right or claim, and not to
such Directors or shareholders.
18. REGISTRATION AND QUALIFICATION OF DISTRIBUTOR. Distributor is
registered and qualified as a broker-dealer with the U.S. Securities and
Exchange Commission and the Securities Commission of the States where the Shares
of the Fund will be offered, and is a member of the NASD. Distributor will
comply with all Federal and State Securities laws applicable to the offer and
sale of the securities into the operation and conduct of the business of a
broker-dealer.
19. INTERESTED PERSONS. Absent law or regulation to the contrary, neither
this Agreement nor any transaction entered into pursuant hereto, shall be
invalidated or in any way affected by the fact that the Fund's Board of
Directors, officers or stockholders of the Fund are or may be interested persons
of Distributor as directors, officer or stockholders or otherwise; or that
directors, officers or stockholders of Distributor may be interested persons of
the Fund as directors, officers, shareholders, or otherwise.
20. NOTICES. Any notice under this Agreement shall be in writing and shall
be addressed and delivered, or mailed, postage prepaid, to the other party's
principal place of business, or to such other address as shall have been
previously specified by written notice given to the other party.
7
<PAGE>
21. GOVERNING LAW. This Agreement is executed and delivered in the State
of Nebraska and shall be governed by the laws of Nebraska without regard to
Nebraska's conflicts of laws principles and the 1940 Act.
22. DEFINITIONS. For the purpose of this Agreement, the terms "vote of the
majority of the outstanding securities", "assignment", "affiliated person" and
"interested person" shall have the respective meanings specified in the 1940
Act, as amended.
23. This writing constitutes the entire Distribution Agreement between the
parties and no conditions or warranties shall be implied herefrom unless
expressly set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day first above written.
Manarin Securities Corporation
Attest:
- ----------------------------------- ------------------------------------
Lifetime Achievement Fund, Inc.
Attest:
- ------------------------------------ ------------------------------------
8
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
Brown Brothers Harriman & Co. Date: December 10, 1999
Ladies And Gentlemen:
The undersigned Lifetime Achievement Fund, Inc., a Maryland corporation, (the
"Client") requests Brown Brothers Harriman & Co. (the "Custodian") to open and
maintain Custody Account(s) and Cash Account(s) denominated in United States
Dollars and in such other currencies as may be appropriate under the
circumstances. All Cash Accounts shall be operated pursuant to the attached
Exhibit 1 and the Custodian may take such actions in respect thereof as the
Custodian may be instructed to take pursuant to an Instruction (as hereinafter
defined). The Custodian shall hold or dispose of any property in the Custody
Account(s) subject at all times to the Client's order and the following standing
instructions which shall be effective until the Custodian receives written
notice of change from the Client.
INSTRUCTIONS - The Custodian may act on any notice from the Client instructing
the Custodian to act ("Instruction") provided the Custodian reasonably believes
such notice to be authorized. It shall be the Client's responsibility to send
Instructions to the Custodian through secured or electro-mechanical means
including SWIFT and tested telex, but the Custodian shall be protected in acting
upon an Instruction sent by telefax, in writing or orally, provided the
Custodian believes such Instruction to be authorized. In the event the Client
elects to send Instructions via telefax, the Client acknowledges that the
Custodian cannot assure receipt of such telefax Instructions, that the Custodian
cannot verify that authorized signatures on a telefax are original or properly
affixed, and that the Custodian shall not be responsible for actions taken in
reliance on inaccurately stated, illegible or unauthorized telefax Instructions.
INCOME - Interest, dividends and other cash distributions are to be collected by
the Custodian in current United States Dollars or other foreign currencies and
credited to the Client's account(s) with the Custodian or with a subcustodian.
PRINCIPAL - Matured or called securities or other cash payments on account of
principal are to be collected by the Custodian in current United States Dollars
or other foreign currencies and credited to the Client's account(s) with the
Custodian or with a subcustodian.
REGISTRATION - Except as set forth in the following two sentences of this
paragraph, securities to be held by the Custodian in form requiring registration
are to be registered in the name of the Custodian or in the name of a nominee of
the Custodian or, in the case of foreign securities, in the name of a
subcustodian or in the name of a nominee of a subcustodian. Unless prior,
written authority has been obtained from the Custodian, securities subject to
transfer restrictions may not generally be registered in the name of the
Custodian or a subcustodian nor in the name of a nominee of the Custodian or a
subcustodian. Such restricted securities, when received by the Custodian or the
subcustodian, which are registered counter to these limitations will, on
Instructions provided by the Client at the request of the Custodian, be
appropriately re-registered.
CUSTODIAN AGREEMENT Page No. 1
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
SECURITIES - The Custodian may, without specific instruction from the Client,
take such actions in respect of securities held in the Client's Custody
Account(s) as the Custodian customarily takes in the course of administering
custody duties. The Custodian shall take any other actions (including, without
limitation, in respect of corporate actions requiring investment decisions) only
upon receipt of an Instruction. The Custodian may effect any Instruction to
deliver or receive securities against payment in accordance with local custom or
practice, even if market practice does not call for delivery or receipt against
payment.
RESPONSIBILITY - As custodian of the securities held for the Client, the
Custodian will exercise reasonable care and diligence under the circumstances
prevailing in the market in which action is taken or securities are held. The
Client hereby indemnifies and holds the Custodian harmless against any losses,
costs or expenses the Custodian may suffer or incur as a result of (i) any
actions taken under this Agreement except those resulting from the Custodian's
negligence, bad faith or willful misconduct, (ii) any legal action the Custodian
undertakes in good faith in respect of securities held in its custody pursuant
to the Client's Instruction, (iii) any actions taken in reliance on
Instructions, and (iv) any taxes incurred or assessed against the Custodian in
respect of securities or other property the Custodian holds on the Client's
behalf. The Custodian will not be held accountable for delays or losses
resulting from (i) failure to receive timely and suitable notification
concerning income, redemptions, exchanges and other developments in securities
in the Client's Account(s) with the Custodian; (ii) force majeure, acts of God,
investment risks and other events beyond the Custodian's reasonable control, and
(iii) acts of a government, whether de facto or de jure, that prevent or delay
the Custodian from acting in accordance with the terms hereof, including,
without limitation, expropriation, confiscation and currency devaluation. The
Client understands that the Custodian may avail itself of the services of a
central depository or clearing corporation, including, without limitation, The
Depository Trust Company, The Participants Trust Company and The Federal Reserve
Bank in the United States. Securities held in such central depositories or
clearing corporations shall be held subject to the rules and regulations of such
institutions and shall, where appropriate, be registered in accordance with
their normal practice. The Custodian shall not be responsible to the Client for
any loss or damage to property held at such central depository or clearing
corporation except to the extent the Custodian recovers from such central
depository or clearing corporation. In no event shall the Custodian be liable
hereunder for any special, indirect, punitive or consequential damages arising
out of, pursuant to or in connection with this Agreement even if the Custodian
has been advised of the possibility of such damages.
The Client understands that the Custodian may, from time to time and in the
Custodian's sole discretion, advance funds on behalf of the Client to facilitate
the settlement of securities transactions or the administration of the
account(s). In the event of such an advance, the Custodian shall have all the
rights afforded the Custodian by common law or by statute, including, without
limitation, the rights of a financial intermediary under the Uniform Commercial
Code in effect in New York. The Custodian shall have a first priority security
interest in securities and cash in the account(s) to the extent and for the
duration of any such advance.
CUSTODIAN AGREEMENT Page No. 2
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
CONFIDENTIALITY. - The Custodian agrees that all information in relation to the
Client and to the assets and liabilities of the Client, which is given to or
obtained by the Custodian in whatever capacity (all such information being
referred to hereafter as "Information"), shall be treated as confidential and
held in confidence, except that the Custodian, its affiliates and the partners,
officers, employees, auditors and counsel of the Custodian (all such entities
and persons are referred to hereafter as a "Representative") are hereby granted
permission to disclose Information as follows:
(a) to any person or entity at the request or with the permission of the
Client;
(b) to any Representative; and
(c) to any person or entity in response to a lawful request, examination or
inquiry by a United States federal or state government agency; a subpoena
or other order issued by any court, administrative agency or securities
regulator having jurisdiction over the Representative responding thereto;
or otherwise in accordance with the laws or regulations applicable to the
Representative responding thereto.
(d) Representative is permitted to obtain and retain Information regarding
the account at the office of the relevant affiliate in order to comply
with applicable laws and regulations.
The authorization contained herein may not be withdrawn or limited in any way as
to scope or time and constitutes a waiver which may not be withdrawn or limited
by the Client or any statutory or common law rights of confidentiality or duties
of confidentiality applicable under the laws of those jurisdictions of the
Representatives and the Client as such laws currently exist or may be amended in
the future. Any Representative who relies in good faith on the advice of counsel
in acting under this section shall be deemed authorized by this section and
protected in so acting.
SECURITIES OF FOREIGN ISSUE OR PRECIOUS METALS - In the event that the Client
instructs the Custodian to hold in custody securities of foreign issue or
precious metals, the Custodian is authorized to engage the banks and other
financial organizations listed on the attached Exhibit 3 (as such Exhibit may be
updated from time to time in a writing signed by the Client) as its
subcustodians in holding or servicing securities of foreign issue or precious
metals that may be held for the Client's account(s). The Custodian will not be
held accountable for the default or negligence of such subcustodians or any
securities depository whose services they utilize or for their inability to
comply with the Client's Instructions. Securities of foreign issue may be held
in or through central depositories or clearing corporations in accordance with
local market practice or convention. Neither the Custodian nor any subcustodian
shall be responsible to the Client for any loss or damage to property held at
such central depository or clearing corporation except to the extent the
Custodian recovers from such central depository or clearing corporation.
CUSTODIAN AGREEMENT Page No. 3
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
ORDERS FOR THE SALE OF SECURITIES - The Client hereby certifies that, in the
event the Custodian receives from the Client an order to sell securities that
are not held in the Client's Custody Account(s) or are not to the Custodian's
knowledge in transit, such order shall constitute a designation by the Client
that such securities either have been forwarded to the Custodian for the
Client's account(s) or will be so forwarded promptly.
COMMUNICATION WITH ISSUING COMPANIES - The Securities and Exchange Commission
has adopted a rule to provide a means of direct communication between issuing
companies and certain other third parties and their beneficial shareholders
whose securities are registered in the name of a bank or other intermediary or
its nominee. Under this rule, beneficial owners of securities have the right to
decide whether they wish to have their names, addresses and security positions
disclosed to authorized third parties.
_______ YES - The Custodian is authorized to disclose the Client's name and
address and the number of units held for any security positions.
_______ NO - The Custodian is instructed NOT to disclose the Client's name and
address and the number of units held for any security positions.
BY SIGNING THIS AGREEMENT, THE CLIENT ACKNOWLEDGES THAT ITS FAILURE TO INDICATE
A CHOICE WILL REQUIRE THE CUSTODIAN TO DISCLOSE THE APPROPRIATE INFORMATION IF
REQUESTED.
FEES AND CHARGES - The Client shall pay the Custodian the fees and charges as to
which Client and Custodian agree from time to time.
GOVERNING LAW - THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND BE
GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICTS OF LAW OF SUCH STATE. BY SIGNING THIS AGREEMENT, THE CLIENT AND THE
CUSTODIAN IRREVOCABLY CONSENT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE FEDERAL COURTS LOCATED IN NEW YORK CITY IN THE BOROUGH
OF MANHATTAN.
NOTICES - Any notices to be sent or delivered under this Agreement shall be sent
in accordance with the attached Exhibit 2.
DURATION AND TERMINATION OF AGREEMENT - This Agreement has an unlimited duration
and will be valid as of the date first written above. Either party may terminate
this Agreement upon sixty (60) days' written notice to the other party. Any
termination of this Agreement shall not affect any Instruction received by the
Custodian prior to the effective date of such termination or any obligations
arising in respect thereto. Additionally, any indemnifications granted under
this Agreement shall not be affected by such termination.
CUSTODIAN AGREEMENT Page No. 4
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
Except as specifically provided herein, this Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof.
Accordingly, this Agreement supercedes any custody agreement or other oral or
written agreements heretofore in effect between us with respect to the custody
of securities or other property of the Client.
The Client may terminate this Agreement at any time by notice to the Custodian
effective immediately if:
a) the Custodian shall fail in any material respect to perform its
obligations under this Agreement;
b) the Custodian shall be adjudged bankrupt or insolvent, or there shall be
commenced against the Custodian a case under any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect;
c) any change in any applicable law, rule or regulation or in the
interpretation or administration thereof that may reasonably be expected
to have an adverse effect on the Client with respect to any securities or
cash or the services provided under this Agreement.
Upon termination of this Agreement, the Custodian shall deliver to the Client a
full and complete report of all transactions which have occurred from the date
of its last report to the date of termination. Upon receiving a notice of
termination, the Custodian shall deliver the securities held in the Custody
Account(s) and pay cash in the Cash Account(s) as designated by the Client in
written Instructions. The Custodian shall continue to hold such securities and
cash subject to this Agreement until such Instructions are given.
CUSTODIAN AGREEMENT Page No. 5
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
Very truly yours,
LIFETIME ACHIEVEMENT FUND, INC.
- --------------------------------
Printed Name of Account(s) Owner
[Use this column for a
second signature if required.]
--------------------------- ----------------------------
Signature Signature
--------------------------- ----------------------------
Printed Name Printed Name
--------------------------- ----------------------------
Capacity Capacity
Please enter the capacity in which you are signing if other than
individually or as joint tenant. ( Examples: Corporate Officer, General
Partner, Manager, Member, Trustee,
Executor, Guardian, Attorney-in-Fact )
Accepted and agreed:
- --------------------------------
per pro Brown Brothers Harriman & Co.
- --------------------------------
Printed Name and Title
THE CUSTODIAN IS A LICENSED PRIVATE BANK AND A MEMBER FIRM OF THE NEW YORK STOCK
EXCHANGE ("NYSE") AND OTHER MAJOR STOCK EXCHANGES IN THE UNITED STATES. IN THE
CONDUCT OF ITS BUSINESS, THE CUSTODIAN IS GOVERNED BY THE RULES AND REGULATIONS
OF THE BANKING DEPARTMENT OF THE STATE OF NEW YORK AND OF THE NYSE.
AS A MEMBER FIRM OF THE NYSE, THE CUSTODIAN EXECUTES ORDERS FOR THE PURCHASE AND
SALE OF SECURITIES SOLELY AS AGENT FOR ITS CUSTOMERS. AS A BANK, THE CUSTODIAN
IS NOT PERMITTED TO UNDERWRITE SECURITIES AND IT DOES NOT, FOR ITS OWN ACCOUNT,
DEAL IN SECURITIES, OTHER THAN UNITED STATES GOVERNMENT SECURITIES AND GENERAL
OBLIGATIONS OF STATES AND MUNICIPALITIES OF THE UNITED STATES. THE CUSTODIAN
DOES NOT MAINTAIN MARGIN ACCOUNTS NOR DOES THE CUSTODIAN ACCEPT ORDERS FOR
"SHORT" SALES. BROWN BROTHERS HARRIMAN & CO.
CUSTODIAN AGREEMENT Page No. 6
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 1
CASH ACCOUNTS
GENERAL TERMS AND CONDITIONS
Following are the general terms and conditions in respect of all cash accounts
(including Demand Deposit Bank Accounts) held by Brown Brothers Harriman & Co.
("BBH&Co.") pursuant to a Custodian Agreement.
Cash accounts opened and maintained on the books of BBH&Co. ("BBH Accounts")
shall be opened in the name of the depositor. Subject always to the force
majeure provisions of the Custodian Agreement, the Custodian shall be liable for
repayment of any and all deposits carried on its books as principal, whether
denominated in United States Dollars or in other currencies.
Where applicable, cash accounts opened and maintained on the books of a duly
appointed subcustodian may be opened in the name of the depositor or BBH&Co. or
in the name of BBH&Co. for its customers generally ("Agency Accounts"). Such
deposits shall be treated as portfolio securities, and accordingly, BBH&Co.
shall be responsible for the exercise of reasonable care in respect of the
administration of such Agency Accounts but shall not be liable for their
repayment in the event the subcustodian fails to make repayment (including in
the event of the subcustodian's bankruptcy or insolvency). Agency Accounts shall
also have the benefit of the force majeure provisions of the Custodian
Agreement.
BBH&Co. shall not be liable for any loss or damage arising from the
applicability of any law or regulation now or hereafter in effect, or from the
occurrence of any event, which may delay or affect the transferability,
convertibility or availability of any currency in the country (i) in which such
BBH or Agency Accounts are maintained or (ii) in which such currency is issued,
and in no event shall BBH&Co. be obligated to make payment of a deposit
denominated in a currency during the period during which its transferability,
convertibility or availability has been affected by any such law, regulation or
event. Without limiting the generality of the foregoing, neither BBH&Co. nor any
subcustodian shall be required to repay any deposit made at a foreign branch of
either BBH&Co. or such subcustodian if such branch cannot repay the deposit due
to (i) an act of war, insurrection or civil strife; or (ii) an action by a
foreign government or instrumentality, whether de jure or de facto, in the
country in which the branch is located preventing such repayment, unless BBH&Co.
or such subcustodian expressly agrees in writing to repay the deposit under such
circumstances.
CUSTODIAN AGREEMENT Page No. 7
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 1 - CONTINUED
CASH ACCOUNTS
GENERAL TERMS AND CONDITIONS
All currency transactions in any account opened pursuant to a Custodian
Agreement are subject to exchange control regulations of the United States and
of the country where such currency is the lawful currency or where the account
is maintained. Any taxes, costs, charges or fees imposed on the convertibility
of a currency held by the depositor shall be for the account of the depositor.
BBH&Co. shall make payments from or deposits to any account in the course of its
administrative duties including, but not limited to income collection with
respect to a depositor's investments, and otherwise in accordance with
Instructions. BBH&Co. and its subcustodians shall be required to credit amounts
to the cash account(s) only when monies are actually received in cleared funds
in accordance with banking practice in the country and currency of deposit. Any
credit made to any BBH Account or Agency Account before actual receipt of good
funds shall be provisional and may be reversed by BBH&Co. in the event such
payment is not actually collected. Unless otherwise specifically agreed in
writing by BBH&Co. or any subcustodian, all deposits shall be payable only at
the branch of BBH&Co. or subcustodian where the deposit is made or carried.
For purposes hereof, deposits maintained in all BBH Accounts (whether or not
denominated in United States Dollars) shall collectively constitute a single and
indivisible current account with respect to the depositor's obligations to
BBH&Co., or its assignee, and balances in such BBH Accounts shall be available
for satisfaction of the depositor's obligations hereunder. BBH&Co. shall further
have a right of offset against the balances in any Agency Account maintained
hereunder to the extent that the aggregate of all BBH Accounts is overdrawn.
In the event that a Funds Transfer Agreement is executed between us, such
Agreement shall comprise a designation of form of a means of delivering
instructions in respect of the Cash Account(s).
CUSTODIAN AGREEMENT Page No. 8
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 2
NOTICES
Notices and other writings contemplated by this Agreement, other than
Instructions, shall be delivered (a) by hand, (b) by first class registered or
certified mail, postage prepaid, return receipt requested, (c) by a nationally
recognized overnight courier or (d) by facsimile transmission, provided that any
notice or other writing sent by facsimile transmission shall also be mailed,
postage prepaid, to the party to whom such notice is addressed. All such notices
shall be addressed, as follows:
If to the Client: Lifetime Achievement Fund, Inc.
11605 West Dodge Road
Omaha, NE 68154
Attention: Charles Richter
Telephone: (402) 330-1166
Telefax: (402) 333-4297
If to the Custodian: Brown Brothers Harriman & Co.
40 WATER STREET
BOSTON, MA 02109
Attention: MANAGER, INVESTOR SERVICES DEPARTMENT
Telephone: (617) 772-1818
Telefax: (617) 772-2263
or at such other address as the Client or the Custodian may have designated in
writing to the other.
CUSTODIAN AGREEMENT Page No. 9
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 2 - CONTINUATION PAGE
NOTICES
CUSTODIAN AGREEMENT Page No. 10
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 3
SUBCUSTODIANS AND DEPOSITORIES
CUSTODIAN AGREEMENT Page No. 11
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 3 - CONTINUATION PAGE
SUBCUSTODIANS AND DEPOSITORIES
CUSTODIAN AGREEMENT Page No. 12
<PAGE>
TRANSFER AGENCY AND SHAREHOLDER
SERVICES AGREEMENT
AGREEMENT made as of the ____ day of ______ , 1999, by and between Lifetime
Achievement Fund, Inc. (the "Fund") and Ivy Mackenzie Services Corporation
("IMCS"). Unless otherwise noted, capitalized terms used herein shall have the
meanings set forth in Section 15 hereof.
WHEREAS, the Fund is an open-end investment company registered with the
Securities and Exchange Commission ("the SEC") under the Investment Company Act
of 1940 (the "1940 Act");
WHEREAS, the fund desires transfer agency functions for the purpose of
recording the transfer, issuance and redemption of Shares and funds,
transferring Shares, disbursing dividends and other distributions to
Shareholders of the Fund and performing such other services as further agreed
between Fund and IMSC; and
WHEREAS, the Fund desires certain shareholder services of IMSC with respect
to the Fund as further agreed between the Fund and IMSC;
NOW, THEREFORE, in consideration of the promises and the mutual covenants
herein contained, the parties agree as follows:
1. APPOINTMENT. The Fund hereby appoints IMSC to provide the transfer
agency and shareholder services specified in this Agreement and any schedules to
this Agreement, and IMSC hereby accepts such appointment.
2. COMPENSATION.
(a) The Fund will compensate IMSC for the performance of its obligations
hereunder in accordance with the fees set forth in the written schedule of fees
attached hereto as Schedule A and incorporated by reference herein. Schedule A
does not include out-of-pocket expenses of IMSC, for which the Fund will
reimburse IMSC monthly.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items specified in the written schedule of out-of-pocket charges
attached hereto as Schedule B and incorporated by reference herein. Schedule B
may be modified by IMSC upon not less than 30 days prior written notice to the
Fund, as mutually agreed upon. Unspecified out-of-pocket expenses shall be
limited to those out-of-pocket expenses reasonably incurred by IMSC in the
performance of its obligations hereunder.
<PAGE>
(b) Any compensation agreed to hereunder may be adjusted from time to
time by replacing Schedule A of this Agreement with a revised Fee Schedule,
dated and signed by a duly authorized officer of each party hereto.
3. DUTIES OF IMSC.
(a) IMSC shall be responsible for administering and/or performing
transfer agent functions; for acting as service agent in connection with
dividend and distribution functions; and for providing certain shareholder
services. The operating standards and procedures to be followed shall be
determined by agreement between IMSC and the Fund and shall be expressed in a
written schedule of the duties of IMSC, attached hereto as Schedule C and
incorporated by reference herein.
(b) In addition to the duties expressly set forth in Schedule C to
this Agreement, IMSC shall perform such other duties and functions, and shall be
paid such amounts therefor, as may from time to time be agreed upon in writing
between the Fund and IMSC. Such other duties and functions shall be reflected in
a written amendment to Schedule C, dated and signed by a duly authorized officer
of each party hereto. The compensation for such other duties and functions shall
be reflected in a written amendment to Schedule A pursuant to subparagraph 2(b)
hereof.
(c) In rendering the services required under this Agreement, IMSC may,
at its expense, employ, consult or associate with itself such person or persons
as it believes necessary to assist it in carrying out its obligation under this
Agreement; provided that any such action shall not relieve IMSC of its
responsibilities hereunder.
(d) In the event that IMSC provides any services to the Fund or pays
or assumes any expenses of the Fund that IMSC is not obligated to provide, pay
or assume under this Agreement, IMSC shall not be obligated hereby to provide
the same or any similar service to the Fund or to pay or assume the same or any
similar expenses of the Fund in the future; provided that nothing contained
herein shall be deemed to relieve IMSC of any obligations to the Fund under any
separate agreement or arrangement between the parties.
4. DOCUMENTS. In connection with the appointment of IMSC (or as soon as
practicable thereafter), the Fund shall furnish IMSC with the following
documents:
(a) A copy of the resolutions of the Fund's Board of Directors
authorizing the execution and delivery of this Agreement;
(b) A specimen of the certificate for Shares of the Fund in the form
approved by the Fund's Board of Directors;
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<PAGE>
(c) Specimens of all account application forms and other documents
relating to Shareholder accounts or to any plan, program or service offered by
the Fund;
(d) A list of Shareholders of the Fund with the name, address and
taxpayer identification number of each Shareholder, and the number of Shares of
the Fund held by each, certificate numbers and denominations (if any
certificates have been issued) and lists of any accounts against which stop
transfer orders have been placed, together with the reasons therefor; and
(e) A signature card bearing the signatures of any officer of the Fund
or other Authorized Person who will sign Written Instructions.
5. FURTHER DOCUMENTATION. The Fund will also furnish from time to time the
following documents:
(a) Each resolution of the Fund's Board of Directors authorizing the
original issuance of Shares;
(b) The Registration Statement of the Fund and all pre-effective and
post-effective amendments thereto filed with the SEC;
(c) A copy of each amendment to the Articles of Incorporation and the
By-laws of the Fund;
(d) Copies of each vote of the Fund's Board of Directors designating
Authorized Persons;
(e) Certificates as to any change in any officer or Director of the
Fund;
(f) Such other certificates, documents or opinions as IMSC reasonably
deems appropriate or necessary for the proper performance of its duties
hereunder.
6. RECORDS. All records required to be maintained and preserved by the Fund
pursuant to the provisions or rules or regulations of the SEC under Section
31(a) of the 1940 Act and maintained and preserved by IMSC on behalf of the
Fund, including any such records maintained by IMSC in connection with the
performance of its obligations hereunder, are the property of the Fund and shall
be surrendered by IMSC, at the expense of the Fund, promptly on request by the
Fund; PROVIDED, that IMSC may, at the Fund's expense, make and retain copies of
any such records. Upon the reasonable request of the Fund or its agents, copies
of any such records shall be provided by IMSC to the Fund or to an Authorized
Person, at the Fund's expense.
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<PAGE>
7. SOFTWARE AND RELATED MATERIALS. All computer programs, written
procedures, and similar items developed or acquired and used by IMSC in
performing its obligations under this Agreement shall be the property of IMSC,
and the Fund will not acquire any ownership interest therein or property rights
with respect thereto.
8. SERVICES TO OTHER CLIENTS. Nothing contained herein shall limit the
freedom of IMSC or any affiliated person of IMSC to render services of the types
contemplated hereby to other persons, firms or corporations, including but not
limited to other investment companies, or to engage in other business
activities.
9. STANDARD OF CARE.
(a) IMSC shall give the Fund the benefit of IMSC's best judgment and
reasonable efforts in rendering to the Fund transfer agency and shareholder
services pursuant to paragraph 3 of this Agreement. As an inducement to IMSC's
undertaking to render these services, the Fund agrees that IMSC shall not be
liable under this Agreement for any mistake in judgment or in any other event
whatsoever, except for lack of good faith, provided that nothing in this
Agreement shall be deemed to protect or purport to protect IMSC against any
liability to the Fund or its Shareholders to which IMSC would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of IMSC's duties under this Agreement or by reason of IMSC's
reckless disregard of its obligations and duties hereunder.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) IMSC shall not be liable for losses beyond its
control, provided that IMSC has acted in accordance with the standard of care
set forth above; and (ii) IMSC shall not be under any duty or obligation to
inquire into and shall not be liable for (A) the validity or invalidity or
authority or lack thereof of any Oral or Written Instruction, notice or other
instrument which confirms to the applicable requirements of this Agreement, and
IMSC reasonably believes to be genuine; or (B) delays or errors or loss of data
occurring by reason of circumstances beyond IMSC's control, including service
interruptions caused by equipment failure, acts of civil or military authority,
national emergencies, labor difficulties, fire, flood, catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
or power supply.
(c) Notwithstanding anything in this Agreement to the contrary,
neither IMSC nor its affiliates shall be liable to the Fund for any
consequential, special or indirect losses or damages which the Fund may incur or
suffer by or as a consequence of IMSC's or its affiliates' performance of the
services provided hereunder, whether or not the likelihood of such losses or
damages was known by IMSC or its affiliates.
-4-
<PAGE>
10. INSTRUCTIONS.
(a) IMSC will be protected in acting upon Written Instructions or Oral
Instructions reasonably believed to have been executed or orally communicated by
an Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. IMSC may assume that any Written Instructions or Oral Instructions
received hereunder are not in any way inconsistent with the provisions of the
organizational documents of the Fund, or of any vote, resolution or proceeding
of the Fund's Board of Directors or of the Fund's Shareholders, unless and until
IMSC receives Written Instructions to the contrary. IMSC will also be protected
in processing Share Certificates that it reasonably believes to bear the proper
manual or facsimile signatures of a duly authorized officer of the Fund and that
bear the proper countersignatures of IMSC.
(b) IMSC may at any time apply to any Authorized Person of the Fund
for Oral or Written Instructions and may, at the Fund's expense, consult legal
counsel for the Fund, or its own legal counsel, with respect to any matter
arising in connection with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good faith in accordance with
such Written Instructions or in accordance with the opinion of counsel for the
Fund. Written Instructions requested by IMSC will be provided by the Fund within
a reasonable period of time. In addition, IMSC and its officers, agents or
employees, shall accept Oral Instructions or Written Instructions given to them
by any person representing or acting on behalf of the Fund, its officers, agents
or employees, as an Authorized Person. IMSC shall have no duty or obligation to
inquire into, nor shall IMSC be responsible for the legality of any act done by
it in reasonable reliance upon the request or direction of an Authorized Person.
(c) Notwithstanding any of the foregoing provisions of this Agreement,
IMSC shall be under no duty or obligation to inquire into, and shall not be
liable for: (i) the legality of the issuance or sale of any Shares or the
sufficiency of the amount to be received therefor; (ii) the legality of the
redemption of any Shares, or the propriety of the amount to be paid therefor;
(iii) the legality of the declaration of any dividend by the Fund's Board of
Directors, or the legality of the issuance of any Shares in payment of any
dividend; or (iv) the legality of any recapitalization or readjustment of the
Shares.
11. INDEMNIFICATION. The Fund will indemnify IMSC against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
resulting from any claim, demand, action or suit not resulting from the willful
misfeasance, bad faith or gross negligence of IMSC or its agents or
subcontractors, and arising out of, or in connection with, its duties on behalf
of the Fund hereunder, or by reason of IMSC's reckless disregard of its
obligations and duties hereunder.
-5-
<PAGE>
In any case in which the Fund may be asked to indemnify or hold IMSC
harmless, the Fund shall be advised of all pertinent facts concerning the
situation in question and IMSC will use reasonable care to identify and notify
the Fund promptly concerning any situation which presents or appears likely to
present a claim for indemnification against the Fund. The Fund shall have the
option to defend IMSC against any claim that may be the subject of any such
indemnification, and, in the event that the Fund so elects, such defense shall
be conducted by counsel chosen by the Fund and satisfactory to IMSC, and
thereupon the Fund shall take over complete defense of the claim and IMSC shall
sustain no further legal or other expenses in such situation for which it seeks
indemnification under this Section 11. IMSC will not confess any claim or make
any compromise in any case in which the Fund will be asked to provide
indemnification, except with the Fund's prior written consent. The obligations
of the parties pursuant to this section shall survive the termination of this
Agreement.
12. AMENDMENT. Except as may be provided otherwise herein, this Agreement
may not be amended or modified in any manner except by a written agreement
executed by both parties.
13. ASSIGNMENT.
(a) Except as provided in Section 13(c) below, neither this Agreement
nor any rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
(b) This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
(c) IMSC may, with notice to and consent on the part of the Fund,
which consent shall not be unreasonably withheld, subcontract for the
performance of certain services under this Agreement to qualified service
providers, which shall be registered as transfer agents under Section 17A of the
Securities Exchange Act of 1934 if such registration is required; provided,
however, that IMSC shall be as fully responsible to the Fund for the acts and
omissions of any subcontractor as it is for its own acts and omissions.
14. TERMINATION OF AGREEMENT. This Agreement may be terminated by either
party upon at least sixty (60) days' prior written notice to the other party.
This Agreement shall automatically and immediately terminate in the event of its
assignment, except as provided in Section 13 hereof.
15. SUCCESSOR. In the event that in connection with the termination of this
Agreement, a successor of any of IMSC's duties or responsibilities hereunder is
designated by the Fund by written notice to IMSC, IMSC will cooperate in the
transfer
-6-
<PAGE>
of such duties and responsibilities and the Fund shall pay any
reasonable expenses associated with transferring the books and records of the
Fund.
16. DURATION AND TERMINATION. This Agreement shall continue until
terminated by the Fund or by IMSC on sixty (60) days' prior written notice to
the other party. This Agreement shall automatically and immediately terminate in
the event of its assignment, except as provided in Section 13 hereof.
17. INTERPRETATION AND DEFINITION OF TERMS. Any question or interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretation thereof, if any.
Specifically, the terms "interested person," "assignment," and "affiliated
person," as used in this Agreement, shall have the meanings assigned to them by
Section 2(a) of the 1940 Act. In addition, whenever used in this Agreement, the
following words and phrases, unless the context requires, shall have the
following meaning.
(a) "Authorized Person" shall be deemed to include the President, any
Vice President, the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer of the Fund, or any other person, whether or not such person
is an officer or employee of the Fund, duly authorized to give Oral Instructions
or Written Instructions on behalf of the Fund;
(b) "Custodian" refers to the custodian and any subcustodian of all
securities and other property that the Fund may from time to time deposit, or
cause to be deposited or held under the name or account of such custodian;
(c) "Articles of Incorporation" shall mean the Articles of
Incorporation of the Fund as amended by the Articles of Amendment and
Restatement dated October 15, 1999, and as may be further amended from time to
time;
(d) "Oral Instructions" shall mean instructions, other than Written
Instructions, actually received by IMSC from a person reasonably believed by
IMSC to be an Authorized Person;
(e) "Prospectus" shall mean the Fund's current prospectus and
statement of additional information relating to the registration of the Fund's
Shares under the Securities Act of 1933, as amended, and the 1940 Act;
(f) "Shares" refers to Shares of beneficial interest in the Fund;
(g) "Shareholder" means a record owner of Shares; and
-7-
<PAGE>
(h) "Written Instructions" shall mean a written communication signed
by a person reasonably believed by IMSC to be an Authorized Person and actually
received by IMSC.
18. MISCELLANEOUS.
(a) This Agreement shall be construed in accordance with the laws of
the State of Florida, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act.
(b) The captions in this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect.
(c) The Fund's Articles of Incorporation has been filed with the
Secretary of State of the Commonwealth of Massachusetts. The obligations of the
Fund are not personally binding upon, nor shall resort be had to the private
property of, any of the Directors, Shareholders, officers, employees or agents
of the Fund, but only the Fund's property shall be bound.
(d) This Agreement may be executed by the parties hereto in any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
(e) All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices shall be addressed (a) if to IMSC, at Via
Mizner Financial Plaza, 700 South Federal Highway, Suite 300 Boca Raton, FL
33432, Attn: C. William Ferris; (b) if to the Fund, at 11605 West Dodge Road,
Omaha, Nebraska 68154, Attn: Roland R. Manarin, or (c) if to neither of the
foregoing, at such other address as shall have been given by like notice to the
sender of any such notice or other communication by the other party. If notice
is sent during regular business hours, by confirming telegram, cable, telex or
facsimile sending device, it shall be deemed to have been given immediately. If
notice is sent by first-class mail, it shall be deemed to have been given three
days after it has been mailed. If notice is sent by messenger or overnight mail,
it shall be deemed to have been given on the day it is delivered.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
LIFETIME ACHIEVEMENT FUND, INC.
By:
-----------------------------
Roland R. Manarin, President
IVY MACKENZIE SERVICES CORP.
By:
-----------------------------
C. William Ferris, President
-9-
<PAGE>
SCHEDULE A
The transfer agency and shareholder service fees are based on an annual per
account fee. These fees are payable monthly at the rate of 1/12 of the annual
fee and are charged with respect to all open accounts.
<TABLE>
<CAPTION>
CLASS OF SHARES ANNUAL FEE RATE PER ACCOUNT
--------------- ---------------------------
<S> <C>
[List each class] $20.00
</TABLE>
-10-
<PAGE>
SCHEDULE B
Out-of-Pocket Expenses
The Fund shall reimburse IMSC monthly for the following out-of-pocket expenses:
- postage and mailing (of Shareholder statements, confirmations,
dividend checks, year-end tax information returns, and other
Shareholder or custodian communications)
- mailing including labor charges - forms (statement stock, envelopes,
internal forms)
- proxy mailings
- outgoing wire charges
- checkwriting drafts
- National Securities Clearing Corporation transactions
- Fed check clearing charges
- dedicated toll-free telephone charges
- if applicable, magnetic tape and freight
- long-term off-site retention of records
- microfilm/microfiche
- stationery
- terminals, transmission lines and any expenses incurred in connection
with such terminals and lines (between IMSC and the Custodian)
- any other miscellaneous expenses reasonably incurred by IMSC as
mutually agreed upon.
The Fund agrees that postage and mailing expenses will be paid on the day of or
prior to mailing as agreed with IMSC. In addition, the Fund will promptly
reimburse IMSC for any other expenses incurred by IMSC as to which the Fund and
IMSC mutually agree in writing that such expenses are not otherwise properly
borne by IMSC as part of its duties and obligations under the Agreement.
-11-
<PAGE>
SCHEDULE C
Duties of IMSC
(See Exhibit 1 for Summary of Services)
1. SHAREHOLDER INFORMATION. IMSC shall maintain a record of the
number of Shares held by each holder of record which shall include their
addresses and taxpayer identification numbers and which shall indicate
whether such Shares are held in certificated or uncertificated form.
2. SHAREHOLDER SERVICES. IMSC shall at its expense provide such of the
following shareholder and shareholder-related services as are required by the
Fund or its Shareholders:
(i) processing wire order purchase and redemption requests
transmitted or delivered to IMSC's office;
(ii) coordinating and monitoring purchase, redemption and
transfer requests transmitted by dealers to IMSC through the
facilities of the National Securities Clearing Corporation;
(iii) responding to written, telephonic and in-person inquiries
from existing Shareholders requesting information regarding
matters such as Shareholder account or transaction status,
the net asset value of the Fund's Shares, the Fund's
performance, the Fund's services and options, the Fund's
investment policies and portfolio holdings, and the Fund's
distribution and the taxation thereof.
(iv) resolving Shareholder account problems that are identified by
either Shareholders or brokers;
(v) dealing with Shareholder complaints and other correspondence
directed to or brought to the attention of IMSC;
(vi) generating or developing and distributing special data,
notices, reports, programs and literature required by large
Shareholders, by Shareholders with specialized informational
needs, or by Shareholders generally in light of developments
such as changes in tax or securities laws; and
(vii) providing executive, clerical and secretarial personnel
competent to carry out the above responsibilities.
-12-
<PAGE>
3. STATE REGISTRATION REPORTS. IMSC shall furnish the Fund on a
state-by-state basis sales reports, such periodic and special reports as the
Fund may reasonably request, and such other information, including Shareholder
lists and statistical information concerning accounts, as may be agreed upon
from time to time between the Fund and IMSC.
4. SHARE CERTIFICATES.
(a) At the expense of the Fund, IMSC shall maintain an adequate supply
of blank share certificates for the Fund to meet the Fund's requirements
therefor. Such share certificates shall be properly signed by facsimile. The
Fund agrees that, notwithstanding the death, resignation, or removal of any
officer of the Fund whose signature appears on such certificates, IMSC may
continue to countersign certificates which bear such signatures until otherwise
directed by the Fund.
(b) IMSC shall issue replacement share certificates in lieu of certificates
which have been lost, stolen or destroyed without any further action by the
Fund's Board of Directors or any officer of the Fund, upon receipt by IMSC of
properly executed affidavits and lost certificate bonds, in form satisfactory to
IMSC, with the Fund and IMSC as obligees under the bond.
(c) IMSC shall also maintain a record of each certificate issued, the
number of Shares represented thereby and the holder of record. With respect to
Shares held in open accounts or uncertificated form, I.E., no certificate being
issued with respect thereto, IMSC shall maintain comparable records of the
record holders thereof, including their names, addresses and taxpayer
identification numbers. IMSC shall further maintain a stop transfer record on
lost and/or replaced certificates.
5. MAILING COMMUNICATIONS TO SHAREHOLDERS: PROXY MATERIALS. IMSC will
address and mail to Shareholders of the Fund all reports to Shareholders,
dividend and distribution notices and proxy material for the Fund's meetings of
Shareholders. In connection with meetings of Shareholders, IMSC will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
6. SALES OF SHARES.
(a) PROCESSING OF INVESTMENT CHECKS OR OTHER INVESTMENTS. Upon receipt
of any check or other instrument drawn or enclosed to it as agent for, or
identified as being for the account of the Fund, or drawn or endorsed to the
Fund for the purchase of Shares, IMSC shall stamp the check with the date of
receipt, shall forthwith process the same for collection, and shall record the
number of Shares sold,
-13-
<PAGE>
the trade date and price per Share, and the amount of money to be delivered to
the Custodian for the sale of such Shares.
(b) ISSUANCE OF SHARES. Upon receipt of notification that the
Custodian has received the amount of money specified in the immediately
preceding paragraph, IMSC shall issue to and hold in the account of the
purchaser/Shareholder, or if no account is specified therein, in a new account
established in the name of the purchaser, the number of Shares such purchaser is
entitled to receive, as determined in accordance with applicable laws or
regulations.
(c) CONFIRMATION. IMSC shall send to the purchaser/Shareholder a
confirmation of each purchase which will show the new share balance, the Shares
held under a particular plan, if any, for withdrawing investments, the amount
invested and the price paid for the newly purchased Shares, or will be in such
other form as the Fund and IMSC may agree from time to time.
(d) SUSPENSION OF SALES OF SHARES. IMSC shall not be required to issue
any Shares of the Fund where it has received a Written Instruction from the Fund
or written notice from any appropriate federal or state authority that the sale
of the Shares of the Fund has been suspended or discounted, and IMSC shall be
entitled to rely upon such Written Instructions or written notification.
(e) TAXES IN CONNECTION WITH ISSUANCE OF SHARES. Upon the issuance of
any Shares in accordance with the foregoing provisions of this paragraph, IMSC
shall not be responsible for the payment of any original issue or other taxes
required to be paid in connection with such issuance.
(f) RETURNED CHECKS. In the event that any check or other order for
the payment of money is returned unpaid for any reason, IMSC shall: (i) give
prompt notice of such return to the Fund or its designee; (ii) place a stop
transfer order against all Shares issued as a result of such check or order; and
(iii) take such actions as IMSC may from time to time deem appropriate.
7. REDEMPTIONS.
(a) REQUIREMENTS FOR TRANSFER OF REDEMPTION OF SHARES. IMSC shall
process all requests from Shareholders to transfer or redeem Shares in
accordance with the procedures set forth in the Fund's Prospectus or as
authorized by the Fund pursuant to Written Instructions, including, but not
limited to, all requests from Shareholders to redeem Shares of the Fund and all
determinations of the number of Shares required to be redeemed to fund
designated monthly payments, automatic payments or any other such distribution
or withdrawal plan.
-14-
<PAGE>
IMSC will transfer or redeem Shares upon receipt of Written
Instructions and Share certificates, if any, properly endorsed for transfer or
redemption, accompanied by such documents as IMSC reasonably may deem necessary
to evidence the authority of the person making such transfer or redemption, and
bearing satisfactory evidence of the payment of stock transfer taxes, if any.
IMSC reserves the right to refuse to transfer or redeem Shares
until it is satisfied that the endorsement on the instructions is valid and
genuine, and for that purpose it will require a guarantee of signature by a
guarantor meeting eligibility standards as may be adopted by IMSC from time to
time in accordance with applicable law. IMSC also reserves the right to refuse
to transfer or redeem Shares until it is satisfied that the requested transfer
or redemption is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or redemptions which IMSC, in its
reasonable judgment, deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such transfer or
redemption.
IMSC may, in effecting transactions, rely upon the provisions of
the Uniform Act for the Simplification of Fiduciary Security Transfers or the
provisions of Article 8 of the Uniform Commercial Code, as the same may be
amended from time to time in the Commonwealth of Massachusetts, which in the
opinion of legal counsel for the Fund or of its own legal counsel protect it in
not requiring certain documents in connection with the transfer or redemption of
Shares. The Fund may authorize IMSC to waive the signature guarantee in certain
cases by Written Instructions.
(b) NOTICE TO CUSTODIAN AND FUND. When Shares are redeemed, IMSC
shall, upon receipt of the instructions and documents in proper form, deliver to
the Custodian and the Fund a notification setting forth the number of Shares to
be redeemed. Such redemptions shall be reflected on appropriate accounts
maintained by IMSC reflecting outstanding Shares of the Fund and Shares
attributed to individual accounts and, if applicable, any individual withdrawal
or distribution plan.
(c) PAYMENT OF REDEMPTION PROCEEDS. IMSC shall, upon receipt of the
monies paid to it by the Custodian for the redemption of Shares, pay to the
Shareholder, or his authorized agent or legal representative, such monies are
received from the Custodian, all in accordance with the redemption procedures
described in the Fund's Prospectus. The Fund shall indemnify IMSC for any
payment of redemption proceeds or refusal to make such payment if the payment or
refusal to pay is in accordance with said written procedures.
IMSC shall not process or effect any redemption pursuant to a
plan of distribution or redemption or in accordance with any other Shareholder
request upon
-15-
<PAGE>
the receipt by IMSC of notification of the suspension of the determination of
the Fund's net asset value.
8. DIVIDENDS.
(a) NOTICE TO IMSC AND CUSTODIAN. Upon the declaration of each
dividend and/or distribution by the Fund with respect to Shares of the Fund, the
Fund shall notify IMSC, with respect to Shares of (i) the date of the
declaration of such dividend or distribution, (ii) the ex-dividend date, (iii)
the date of payment thereof, (iv) the record date as of which Shareholders
entitled top payment shall be determined, (v) the amount payable per Share to
the Shareholders of record as of that date, (vi) the total amount payable to
IMSC on the payment date and (vii) whether such dividend or distribution is to
be paid in Shares of such class at net asset value.
On or before the payment date, the Fund will direct the Custodian
of the Fund to pay to IMSC sufficient cash to make payment of the dividend
and/or distribution to the Shareholders of record as of such payment date.
(b) PAYMENT OF DIVIDENDS BY IMSC. Unless otherwise elected by a
Shareholder, IMSC will, on the designated payment date, automatically reinvest
all dividends in additional Shares at net asset value (determined on dividend
reinvestment valuation date established by the Fund), and mail to each
Shareholder at his address of record, or such other address as the Shareholder
may have designated, a statement showing the number of full and fractional
Shares (rounded to three decimal places) then currently owned by the Shareholder
and the net asset value of the Shares so credited to the Shareholder's account.
All other dividends shall be paid in cash, by check, to Shareholders or their
designees.
(c) INSUFFICIENT FUNDS FOR PAYMENTS. If IMSC does not receive
sufficient cash from the Custodian to make total dividend and/or distribution
payments to all Shareholders of the Fund as of the record date, IMSC will, upon
notifying the Fund, withhold payment to all Shareholders of record as of the
record date until such sufficient cash is provided to IMSC.
(d) INFORMATION RETURNS. It is understood that IMSC shall file such
appropriate information returns concerning the payment of dividends, return of
capital and capital gain distributions with the proper federal, state and local
authorities as are required by law to be filed and shall be responsible for the
withholding of taxes, if any, due on such dividends or distributions to
Shareholders when required to withhold taxes under applicable law.
-16-
<PAGE>
EXHIBIT 1
(to Schedule C)
Summary of Services
The services to be performed by IMSC shall be as follows:
A. DAILY RECORDS
Maintain daily on disc the following information with respect to each
Shareholder account as received:
- Name and Address (Zip Code)
- Balance of Shares held by IMSC
- State of residence code
- Beneficial owner code: I.E., male, female, joint tenant
(etc.) - Dividend code (reinvestment)
- Number of Shares held in certificate form
- Telephone number
- Tax information (certified tax information number, any
back-up withholding)
B. OTHER DAILY ACTIVITY
- Answer written inquiries received by IMSC relating to
Shareholder accounts (matters relating to portfolio
management, distribution of Shares and other management
policy questions will be referred to Fund).
- Furnish a Statement of Additional Information to any
Shareholder who requests (in writing or by telephone) such
statement from IMSC.
- Examine and process Share purchase applications in
accordance with the Fund's Prospectus.
- Furnish Forms W-9 and W-8 to all Shareholders whose initial
subscriptions for Shares did not include taxpayer
identification numbers.
-17-
<PAGE>
- Process additional payments into established Shareholder
accounts in accordance with the Fund's Prospectus.
- Upon receipt of proper instructions and all required
documentation, process requests for redemption of Shares.
- Accounting for the Fund's front-end sales commissions and
broker's commissions.
- Identify redemption requests made with respect to accounts
in which Shares have been purchased within an agreed-upon
period of time for determining whether good funds have been
collected with respect to such purchase and process as
agreed by IMSC and the Fund.
- Examine and process all transfers of Shares, ensuring that
all transfer requirements and legal documents have been
supplied.
- Issue and mail replacement checks.
C. REPORTS PROVIDED TO THE FUND
Furnish the following reports to the Fund:
- Daily financial totals
- Monthly Form N-SAR information (sales/redemption)
- Monthly report of outstanding Shares
- Monthly analysis of accounts by beneficial owner code
- Monthly analysis of accounts by share range
D. DIVIDEND ACTIVITY
- Calculate and process Share dividends and distributions as
instructed by the Fund.
- Compute, prepare and mail all necessary reports to
Shareholders, federal and/or state authorities as requested
by the Fund.
-18-
<PAGE>
E. MEETINGS OF SHAREHOLDERS
- Cause to be mailed proxy and related material for all
meetings of Shareholders. Tabulate returned proxies (proxies
must be adaptable to mechanical equipment of IMSC or its
agents) and supply daily reports when proxies are being
solicited.
- Prepare and submit to the Fund an Affidavit of Mailing.
- At the time of the meeting, furnish a certified list of
Shareholders, hard copy, microfilm and/or microfiche, if
requested by the Fund.
F. PERIODIC ACTIVITIES
- Cause to be mailed reports, Prospectuses and any other
enclosures requested by the Fund (material must be adaptable
to mechanical equipment of IMSC or its agents).
-19-
<PAGE>
MASTER FUND ACCOUNTING SERVICES AGREEMENT
AGREEMENT made as of the ____ day of ____________, 1999, by and between
Lifetime Achievement Fund, Inc. (the "Fund") and Mackenzie Investment
Management, Inc. (the "Agent").
WHEREAS, the Fund is an open-end investment company registered with the
Securities and Exchange Commission (the "SEC") under the Investment Company Act
of 1940 (the "1940 Act");
WHEREAS, the Fund desires certain accounting and pricing services of the
Agent as shall be designated in supplements to this Agreement as further agreed
between the Fund and the Agent; and
WHEREAS, the Agent has developed the capability to provide certain of the
accounting and pricing services required by the Fund.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties agree as follows:
1. DUTIES OF AGENT - GENERAL.
The Agent is authorized to act under the terms of this Agreement as the
Fund's agent, and as such will:
a. Maintain and preserve the Fund's accounts, books, records and other
documents as are required of the Fund under Section 31 of the 1940 Act
and Rules 31a-1 and 31a-2 thereunder;
b. Record the current day's trading activity and such other proper
bookkeeping entries as are necessary for determining that day's net
asset value for the Fund;
c. Render statements or copies of records for the Fund from time to time
as requested by the Fund (see Exhibit A);
d. Facilitate audits of accounts by the Fund auditors or by any other
auditors employed or engaged by the Fund or by any regulatory body
with jurisdiction over the Fund; and
e. Compute the Fund's net asset value per share and, if applicable, its
public offering price, total returns and yields, and notify the Fund
and such other
<PAGE>
persons as the Fund may reasonably request of the net asset value per
share, the public offering price and/or the total return or yield.
2. VALUATION OF SERVICES.
Securities will be valued in accordance with the specific provisions of the
Fund's Prospectus.
3. COMPUTATION OF NET ASSET VALUE, PUBLIC OFFERING PRICE, TOTAL RETURNS AND
YIELDS.
The Agent will compute the Fund's net asset value in a manner consistent
with the specific provisions of the Fund's Prospectus. [In general, such
computation will be made by dividing the value of the Fund's portfolio
securities, cash and any other assets, less its liabilities, by the number of
shares of the Fund outstanding, adjusted to the nearest cent. Such computation
will be made as of the close of regular trading on the New York Stock Exchange
(normally 4:00 p.m. Eastern time) on each day that the New York Stock Exchange
is open for trading. If applicable, the Agent will also compute the public
offering price by dividing the net asset value per share by the appropriate
factor as provided by the Fund; the total return; and the yield.]
4. AGENT'S RELIANCE ON INSTRUCTIONS AND ADVICE.
In maintaining the Fund's books of account and making the necessary
computations, the Agent shall be entitled to receive, and may rely upon, (i)
information furnished by a pricing or other similar service pursuant to an
agreement between the Agent, on behalf of the Fund, and such service provider,
approved by the Fund's Board of Directors, and (ii) information furnished it by
any authorized officer of the Fund relating to:
a. The manner and amount of accrual of expenses other than management
fees to be recorded on the books of the Fund;
b. If applicable, the source of quotations to be used for such portfolio
securities as may not be available through the Agent's normal pricing
services;
c. If applicable, the value to be assigned to any portfolio security or
other asset for which no price quotations are readily available;
d. If applicable, the manner of computation of the public offering price
and such other computations as may be necessary; and
e. Notification of transactions in portfolio securities.
-2-
<PAGE>
The Agent shall be entitled to rely upon any certificate, letter or other
instrument or telephone call reasonably believed by the Agent to be genuine and
to have been properly made or signed by an officer or other authorized agent of
the Fund, on behalf of the fund, and shall be entitled to receive as conclusive
proof of any fact or matter required to be ascertained by it hereunder a
certificate signed by an officer of the Fund, on behalf of the Fund or any other
person authorized by the Fund's Board of Directors. The Agent may assume that
any certificate, letter or other instrument or telephone call received hereunder
is not in any way inconsistent with the provisions of organizational documents
or this Agreement or of any vote, resolution or proceeding of the Fund's Board
of Directors or of the Fund's shareholders, unless and until the Agent receives
written notice to the contrary.
The Agent shall be entitled to receive and act upon advice of counsel
(which may be counsel for the Fund) at the expense of the Fund and shall be
without liability for any action taken or thing done in good faith in reliance
upon such advice.
The Fund agrees to furnish the Agent with a copy of the Fund's Prospectus
as in effect from time to time.
5. DUTY OF CARE AND INDEMNIFICATION.
The Agent shall at all times use reasonable care and act in good faith in
performing its duties hereunder. The Agent shall incur no liability to the Fund
in connection with its performance of services hereunder, except to the extent
that it does not comply with the foregoing standards.
The Fund agrees to indemnify and hold harmless the Agent and its employees,
agents and nominees from all taxes, charges, expenses, assessments, claims and
liabilities (including attorneys' fees) incurred or assessed against them in
connection with the performance of this Agreement, except such as may arise from
the Agent's own willful misfeasance, bad faith, gross negligence, or reckless
disregard of its duties, obligations or responsibilities set forth in this
Agreement.
Notwithstanding anything in this Agreement to the contrary, neither the
Agent nor its affiliates shall be liable to the Fund for any consequential,
special or indirect losses or damages which the Fund may incur or suffer by or
as a consequence of the Agent's or its affiliates' performance of the services
provided hereunder, whether or not the likelihood of such losses or damages was
known by the Agent or its affiliates.
Without limiting the generality of the foregoing, the Agent's
responsibility for damage or loss arising from service interruptions caused by
equipment failure, military power, war, insurrection, or nuclear fission, fusion
or radioactivity shall be limited to
-3-
<PAGE>
the use of the Agent's reasonable efforts to recover the Fund's records
determined to be lost, missing or destroyed.
6. COMPENSATION AND AGENT'S EXPENSES.
The Agent shall be paid for its services pursuant to this Agreement such
compensation as may from time to time be agreed upon in writing between the two
parties. The Agent shall be entitled to recover its reasonable telephone,
delivery and other out-of-pocket expenses as incurred.
The Fund shall pay the Agent a monthly fee based upon the rate(s) set forth
in a Fee Schedule attached to this Agreement as Exhibit B. The Fund shall be
responsible for fees incurred in connection with a pricing or other similar
service furnishing information pursuant to Section 4 of this Agreement.
If the fees payable to the Agent pursuant to this Section begin to accrue
before the end of any month or if this Agreement terminates before the end of
any month, the fees for the period from that date to the end of that month or
for the period from the beginning of that month to the date of termination, as
the case may be, shall be prorated according to the proportion which the period
bears to the full month in which the effectiveness or termination occurs. For
purposes of calculating the monthly fees, the value of the net assets of the
Fund shall be computed in the manner specified in the Fund's Prospectus for the
computation of its net asset value.
7. TERMINATION AGREEMENT.
This Agreement may be terminated by either party upon at least sixty (60)
days' prior written notice to the other party. Upon termination of this
Agreement with respect to the Fund, the Agent will turn over to the Fund, at the
Fund's expense, and cease to retain in the Agent's files, records of the
calculations of the net asset value of the Fund and other records pertaining to
its services hereunder; PROVIDED, that the Agent may, at the Fund's expense,
make and retain copies of any such records. In the event that in connection with
the termination of this Agreement with respect to the Fund, a successor to any
of the Agent's duties or responsibilities hereunder is designated by the Fund by
written notice to the Agent, the Agent will cooperate in the transfer of such
duties and responsibilities, and the Fund shall pay any reasonable expenses
associated with transferring the books and records of the Fund.
8. REPORTS AND MAINTENANCE OF RECORDS BY AGENT.
The Agent will furnish to the Fund and to properly authorized auditors,
examiners, distributors, dealers, underwriters, salesmen, insurance companies,
-4-
<PAGE>
investors, and others designated by the Fund in writing, such books, records,
and reports at such times as are prescribed for each service in Exhibit A
attached hereto. The Fund shall examine or shall cause any other authorized
recipient to examine promptly each such book, record, or report, or copy
thereof, and shall report or shall cause to be reported any errors or
discrepancies therein, but the Fund's failure to observe or report any such
error or discrepancy shall not relieve the Agent of its responsibilities or
liabilities as agreed to under the terms of this Agreement. The Agent may at its
option at any time and shall forthwith upon the Fund's demand turn over to the
Fund and cease to retain in the Agent's files, records and documents created and
maintained by the Agent pursuant to this Agreement that are no longer needed by
the Agent in the performance of its services or for its protection.
If not so turned over to the Fund, such documents and reports will be
retained by the Agent for six years from the year of creation, during the first
two of which the same will be in readily accessible form. At the end of six
years, such records and documents shall be turned over to the Fund by the Agent
unless the Fund authorizes their destruction.
Upon the reasonable request of the Fund or its agents, copies of any such
records shall be provided by the Agent to the Fund or to an authorized person of
the Fund, at the Fund's expense.
9. TERM.
The term of this Agreement shall begin as of the date first set forth above
and unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect for a period of one year from that date. Thereafter, this
Agreement shall continue in effect with respect to the Fund from year to year,
subject to the termination provisions and all other terms and conditions hereof.
10. INTERPRETATION AND DEFINITION OF TERMS.
Any question or interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act, as amended, shall be resolved by reference to such term or provision
of the 1940 Act and to interpretation thereof, if any. Specifically, the terms
"interested persons," "affiliated person," and "assignment," as used in this
Agreement, shall have the meanings assigned to them by Section 2(a) of the 1940
Act.
11. SOFTWARE AND RELATED MATERIALS.
All computer programs, written procedures, and similar items developed
or acquired and used by the Agent in performing its obligations under this
Agreement
-5-
<PAGE>
shall be the property of the Agent, and the Fund will not acquire any ownership
interest therein or property rights with respect thereto.
12. SERVICES TO OTHER CLIENTS.
Nothing herein contained shall limit the freedom of the Agent or any
affiliated person of the Agent to render services of the types contemplated
hereby to other persons, firms or corporations, including but not limited to
other investment companies, or to engage in other business activities.
13. MISCELLANEOUS.
a. This Agreement shall be governed and construed in accordance with the
laws of Florida, provided that nothing herein shall be construed in a
manner inconsistent with the 1940 Act.
b. This Agreement may not be assigned by either party without the written
consent of the other party. The Agent may, with notice to and consent
on the part of the Fund, which consent shall not be unreasonably
withheld, subcontract for the performance of certain services under
this Agreement to qualified service providers.
c. The captions of this Agreement are included for convenience of
reference only and in no way define or delineate any of the provisions
hereof or otherwise affect their construction or effect.
d. The Fund's Articles of Incorporation, together with any amendments
thereto, have been filed with the Secretary of State of the State of
Maryland. The obligations of the Fund are not personally binding upon,
nor shall resort be had to the private property of, any of the
trustees, shareholders, officers, employees or agents of the Fund, but
only the Fund's property shall be bound.
e. In connection with the operation of this Agreement, the Fund and the
Agent may agree from time to time on such provisions interpretive of
or in addition to the provisions of this Agreement as in their joint
opinions may be consistent with the general tenor of this Agreement.
Any such interpretive or additional provisions are to be signed by
both parties and annexed hereto, but no provision shall be deemed to
be an amendment of this Agreement.
f. Nothing in this Agreement shall give or be construed to give any
shareholder of the Fund any rights against the Agent.
-6-
<PAGE>
g. All notices and other communications shall be in writing or by
confirming telegram, cable, telex or facsimile sending device. Notices
shall be addressed (a) if to the Agent, at Via Mizner Financial Plaza,
700 South Federal Highway, Suite 300 Boca Raton, FL 33432, Attn: C.
William Ferris; (b) if to the Fund, at 11605 West Dodge Road, Omaha,
Nebraska 68154, Attn: Roland R. Manarin; or (c) if to neither of the
foregoing, at such other address as shall have been given by like
notice to the sender of any such notice or other communication by the
other party. If notice is sent during regular business hours, by
confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given immediately. If notice is sent by
first-class mail, it shall be deemed to have been given three days
after it has been mailed. If notice is sent by messenger or overnight
mail, it shall be deemed to have been given on the day it is
delivered.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
LIFETIME ACHIEVEMENT FUND, INC.
By:
-------------------------------
Roland H. Manarin, President
MACKENZIE INVESTMENT
MANAGEMENT, INC.
By:
-------------------------------
C. William Ferris, Senior Vice
President
-7-
<PAGE>
EXHIBIT A
Fund Accounting Services Agreement
STANDARD REPORTS AND AVAILABILITY
The following reports will be provided to the Fund on a regular basis with
availability as indicated:
A. Daily
1. Printed Trial Balance
2. Net Asset Value Worksheet
3. Cash Forecast
4. Yield Computation, if applicable
B. Weekly - Tax Lot Ledgers
C. Monthly
1. Tax Lot Ledgers as of month-end
2. Working Appraisal as of month-end
3. Purchase and Sale Journal for the month
4. Summary of Gains and Losses on Securities for the month
5. Dividend Ledger for the month (receivable as of month-end and earned)
6. Interest Income Analysis for the month (receivable as of month-end and
earned)
7. Trial Balance as of month-end
8. Net Asset Value Worksheet as of month-end
9. Open Trades (payable and receivable for unsettled securities
transactions)
D. Annually
1. Purchase and Sale Journal for the year
2. Summary of Gains and Losses on Securities for the year
3. Broker Allocation Report for the year
-8-
<PAGE>
EXHIBIT B
Fund Accounting Services Agreement
Fee Schedule
<TABLE>
<CAPTION>
NET ASSETS OF FUND AT PRECEDING MONTH'S END MONTHLY FEE
- ------------------------------------------- -----------
<S> <C>
$0 - $10 million $1,250
$10 million - $40 million $2,500
$40 million - $75 million $5,000
Over $75 million $6,500
</TABLE>
-9-
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Lifetime Achievement Fund, Inc.
We hereby consent to the inclusion in the Registration Statement under the
Securities Act of 1933 and Investment Company Act of 1940 on Form N-1A of our
report dated _________________________, on our audit of the statement of assets
and liabilities of Lifetime Achievement Fund, Inc., as of _____________________,
which is included in Pre-Effective Amendment No. ___ to the Registration
Statement. We further consent to the reference to our firm under the caption
"Auditors" in both the Prospectus and Part B of the Registration Statement.
-------------------------------
Dolleck & Frederes, P.C.
Omaha, Nebraska
December ___, 1999
<PAGE>
December ___, 1999
Lifetime Achievement Fund, Inc.
11605 West Dodge Road
Omaha, Nebraska 68154
Gentlemen:
Through your securities counsel, Lieben Whitted Houghton Slowiaczek &
Cavanagh, P.C., you have requested our opinion as Maryland counsel with respect
to shares of capital stock to be issued by you in connection with a registered
offering of said capital stock.
The pertinent facts are understood by us to be that Lifetime Achievement
Fund, Inc. (the "Fund") is a corporation incorporated under the laws of the
State of Maryland on September 2, 1999, having its principal place of business
in Omaha, Nebraska. The Fund's authorized capital consists of one billion
(1,000,000,000) shares (hereinafter "Shares") of capital stock, with a par value
of one-tenth of one cent ($0.001) per Share.
We understand that you are in the process of making filings with the
United States Securities and Exchange Commission and with various state
securities administrators for the purpose of registering the Shares under
federal and state securities laws.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of the Charter, the By-Laws and records of corporate
proceedings of the Fund and such additional documents that we have obtained from
officers of the Fund and from public officials as we have deemed necessary or
appropriate for purposes of this opinion.
Based on the foregoing, we are of the opinion that the Fund may legally
and validly issue the Shares from time to time at a per Share consideration
equal to the Fund's per Share net asset value at the time of issuance, with such
consideration to be paid in cash. We are further of the opinion that when issued
and acquired as herein provided, such Shares will be legally issued, fully paid
and non-assessable. In rendering the foregoing
<PAGE>
opinions, we have assumed that at no time will the number of Shares that are
issued or reserved for issuance exceed one billion (1,000,000,000) or the Fund's
existing authorization of the Shares be amended, repealed or revised.
We express no opinion as to the Fund's or the Shares' compliance with the
Securities Act of 1933 as amended, the Investment Company Act of 1940 as
amended, or the securities laws of any state with respect to the issuance of the
Shares.
We consent to your filing including this opinion with the filings you
make pursuant to Federal and state securities laws in connection with the
registration of the Shares.
Yours very truly,
-----------------------------------
<PAGE>
SUBSCRIPTION AGREEMENT
The undersigned hereby subscribes for 100,000 shares of the common stock
of Lifetime Achievement Fund, Inc., a Maryland corporation (hereinafter referred
to as the "Corporation"), at a purchase price of $1.20 per share or a total
purchase for all shares subscribed for hereunder of $120,000.00. The undersigned
understands and agrees that the acceptance of this subscription will be subject
to approval by the Corporation and agrees to make payment in cash for such
shares herein subscribed for within ten (10) days of the date of acceptance of
this subscription by the Corporation.
The undersigned hereby represents and warrants as follows:
a. The undersigned has his principal residence in the State of
Nebraska.
b. The undersigned has such knowledge of the business and
financial affairs of the Corporation and possesses a sufficient
degree of sophistication, knowledge and experience in financial
and business matters such that he is capable of evaluating the
common stock of the Corporation and the economic risks of
acquiring the same.
c. The purchase of the shares of common stock of the Corporation
is being made for investment and not with a view to the resale
or distribution of such shares within the meaning of the
Securities Act of 1933, as amended, and such shares are being
acquired by the undersigned for his own account and with his
own funds and no other person has a direct or indirect
beneficial interest in such shares.
d. The undersigned has been informed in writing, by being provided
with a copy of this Subscription Agreement, that because the
shares for which he is subscribing have not yet been registered
under the Securities Act of 1933, as amended, nor the
Securities Act of Maryland or Nebraska, and because the
Corporation may not successfully effect such registration, the
undersigned may have to continue to bear the economic risk of
the investment in such shares for an indefinite period.
e. The undersigned understands that he may not transfer said
shares, or any interest therein, without compliance with the
provisions of any existing Stock Purchase Agreement, including
the delivery to the Corporation of an opinion of counsel
satisfactory to the Corporation to the effect that the transfer
does not violate applicable state or federal securities laws
and that it is possible that he may be unable to make a public
resale of such interest.
<PAGE>
The undersigned hereby agrees as follows:
a. That all certificates for the shares of common stock to be
purchased pursuant to this Subscription Agreement and all
certificates in exchange therefor or in replacement thereof shall
contain a legend in substantially the following language:
"These securities have not been registered
under the Securities Act of 1933, as amended, nor
under any applicable state securities law. They
may not be sold, transferred or otherwise
disposed of unless they are registered under the
Securities Act of 1933, as amended, or any
applicable state securities law or unless an
exemption from such registration is then
available in the opinion of counsel satisfactory
to the Corporation."
b. That the Corporation may make a notation in its records or in the
records of any transfer agent with respect to the restriction upon
transferability of the subject shares to be purchased under this
Subscription Agreement.
c. To indemnify the Corporation, its officers, directors and
shareholders and to hold such persons and firm harmless of
liability, costs, or expenses (including reasonable attorneys'
fees) arising as a result of the sale, transfer, offers for sale
or distribution of the shares to be purchased hereunder by him in
violation of the Securities Act of 1933, as amended, or any other
applicable law.
d. That his rights hereunder are not assignable.
e. That the certificate representing the shares to be purchased by
the undersigned in accordance with this Subscription Agreement
shall be registered in the following manner:
Roland R. Manarin
DATED this 3rd day of September, 1999.
Roland R. Manarin, Subscriber
/s/Roland R. Manarin
-------------------------------------------
Signature of Subscriber
Address:
Telephone Number:
Social Security No.:
2
<PAGE>
ACCEPTANCE OF SUBSCRIPTION
The above Subscription is hereby accepted this 3rd day of
September, 1999.
LIFETIME ACHIEVEMENT FUND, INC.
By: /s/Charles H. Richter
----------------------------------------
Charles H. Richter, Vice President and
Secretary
3
<PAGE>
DISTRIBUTION PLAN
OF
LIFETIME ACHIEVEMENT FUND, INC.
ARTICLE I.
THIS PLAN
This Plan (the "Plan") sets forth the terms and conditions on which
Lifetime Achievement Fund, Inc. (the "Fund") will, after the effective date
hereof, pay certain amounts to Manarin Securities Corporation (the
"Distributor") in connection with the provision by the Distributor of certain
services to the Fund and its shareholders, as set forth herein. Certain of such
payments by the Fund may, under Rule 12b-1 of the Securities and Exchange
Commission, as from time to time amended (the "Rule"), under the Investment
Company Act of 1940, as amended (the "Act"), be deemed to constitute the
financing of distribution by the Fund of its shares. This Plan describes all
material aspects of such financing as contemplated by the Rule and shall be
administered and interpreted, and implemented and continued, in a manner
consistent with the Rule. The Fund and the Distributor have entered into a
Distribution Agreement dated December _____, 1999 (the "Distribution
Agreement"), the terms of which, as heretofore and from time to time continued,
are incorporated herein by reference.
ARTICLE II.
SHAREHOLDER AND SALES SERVICES
The Fund shall pay to the Distributor a fee in the amount specified in
Article III hereof. Such fee is to reimburse the Distributor for expenses
primarily intended to result in the sale of shares of the Fund consisting of:
(i) compensation and expenses of sales and marketing personnel of the
Distributor, (ii) compensation (in addition to sales charges, if any) paid to
registered representatives of the Distributor and other broker-dealers that have
entered into written sales agreements with the Distributor; (iii) compensation
to financial institutions and other institutions, organizations and associations
which have provided access to their customers or otherwise assisted in the
distribution process but have not been involved in the offer or sale of the
Shares; (iv) costs of preparing and running advertisements; and (v) other
distribution-related expenses.
ARTICLE III.
MAXIMUM EXPENDITURES
The expenditures to be made by the Fund in connection with the
distribution services performed pursuant to this Plan, and the basis upon
which such expenditures will be made, shall be determined by the Fund, but in
no event shall such expenditures
<PAGE>
exceed the lesser of: (a) .25% of the average daily net assets of the Fund
(determined as outlined from time to time in an effective registration
statement for the fund) on an annual basis, or (b) distribution expenses
which the Distributor actually incurred during the Fund's fiscal year. At the
end of each month (or as such other intervals as the Board of Directors of
the Fund shall determine), the Distributor shall provide the Fund with an
itemized list of distribution expenses actually incurred during the preceding
month which are reimbursable under the Plan for which the Distributor desires
to be reimbursed, and the Fund shall reimburse such costs. The Fund may, in
any month, reimburse the Distributor for expenses in excess of one-twelfth
(1/12) of the annual limitations stated above, but in no event shall the
total reimbursement made by the Fund in any fiscal year exceed the
limitations stated above.
ARTICLE IV.
EXPENSES BORNE BY THE FUND
Notwithstanding any other provision of the Plan, the Fund, Manarin
Investment Counsel, Ltd., Manarin Securities Corporation, Mackenzie Investment
Management, Inc. and Ivy Mackenzie Services Corp. shall bear the respective
expenses under the Investment Advisory Agreement dated ___________, 1999, the
Distribution Agreement dated ___________, 1999, the Master Fund Accounting
Services Agreement dated ___________, 1999, and the Transfer Agent and
Shareholder Services Agreement dated ___________, 1999, as amended.
ARTICLE V.
APPROVAL BY DIRECTORS
This Plan shall not take effect until it has been approved, together with
any related Agreements, by votes, cast in person at a meeting called for the
purpose of voting on this Plan or such Agreements, of a majority (or whatever
greater percentage may, from time to time, be required by Section 12(b) of the
Act or the rules and regulations thereunder) of: (a) all of the Directors of the
Fund, and (b) those Directors of the Fund who are not "interested persons" of
the Fund as such term may be from time to time defined under the Act, and have
no direct or indirect financial interest in the operation of this Plan or any
Agreements related to it (the "Independent Directors").
ARTICLE VI.
CONTINUANCE
This Plan and any related Agreements shall continue in effect for so long
as such continuance is specifically approved at least annually in advance in the
manner provided for the approval of this Plan in Article V.
-2-
<PAGE>
ARTICLE VII.
INFORMATION
The Distributor will furnish the Fund and its Directors at least
quarterly as required by the Rule, or at such other intervals as the Fund shall
specify, a written report of amounts expended or incurred pursuant to this Plan
and the purposes for which such expenditures were made and such other
information as the Directors may request.
ARTICLE VIII.
TERMINATION
This Plan may be terminated: (a) at any time by vote of a majority of the
Directors, a majority of the Independent Directors, or a majority of the Fund's
outstanding voting securities, or (b) by the Underwriter on 60 days' notice in
writing to the Fund.
ARTICLE IX.
AGREEMENTS
Each Agreement with any person relating to implementation of this Plan
shall be in writing, and each Agreement related to this Plan shall provide:
a. That such Agreement may be terminated at any time, without payment
of any penalty, by vote of a majority of the Independent Directors
or by vote of a majority of the Fund's then-outstanding voting
securities.
b. That such Agreement shall terminate automatically in the event of
its assignment.
ARTICLE X.
AMENDMENTS
This Plan may not be amended to increase materially the maximum amount of
the fees payable by the Fund hereunder without the approval of a majority of the
outstanding voting securities of the Fund. No material amendment to the Plan
shall, in any event, be effective unless it is approved in the same manner as is
provided for approval of this Plan in Article V.
-3-
