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As filed with the Securities and Exchange Commission on January ___, 2000
1933 Act Registration No.
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1940 Act Registration No.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
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Post-Effective Amendment No.
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No.
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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
Part A - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
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Subject to Completion
LIFETIME ACHIEVEMENT FUND, INC.
11605 West Dodge Road
Omaha, Nebraska 68154
(402) 330-1166
Information contained in this Prospectus is subject to completion or amendment.
A registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus is not an offer to sell and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
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. No assurance can be given that the
Fund will achieve this investment objective.
This Prospectus sets forth concisely the information about the Fund that you, as
a prospective investor, should know before investing in the Fund. It should be
read and retained for future reference.
THE SECURITIES OF THE FUND HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus is dated January____, 2000.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
TOPIC PAGE
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THE FUND'S INVESTMENT OBJECTIVE 1
THE FUND'S INVESTMENT STRATEGIES 1
THE PRINCIPAL RISKS OF INVESTING IN THE FUND 3
FEES AND EXPENSES OF THE FUND (FEE TABLE) 7
FEE EXAMPLE 9
MANAGEMENT OF THE FUND 10
INVESTING IN THE FUND 11
DISTRIBUTION ARRANGEMENTS 18
</TABLE>
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THIS PROSPECTUS
This Prospectus is designed to help you make an informed decision about whether
investing in the Fund is appropriate for you. To make this Prospectus easy for
you to read and understand, we have divided it into three sections: "The Fund",
"Management of the Fund", and "Investing in the Fund."
The first section, "The Fund", tells you three important things about the Fund
that you need to know before deciding to invest in the Fund. Those three things
are: (1) the Fund's investment objective; (2) the Fund's principal investment
strategies; and (3) the principal risks of investing in the Fund.
The other two sections of this Prospectus, "Management of the Fund" and
"Investing in the Fund" provide you with information about the businesses and
people who manage the Fund, the services and privileges available to you, how
the Fund's shares are priced, and how to buy and sell the Fund's shares.
THE FUND'S INVESTMENT OBJECTIVE
The Fund's investment objective is long-term growth of capital and growth of
investment income. This objective may not be changed without shareholder
approval. You will receive advance notice of such a change so that you may
consider whether the Fund would still be an appropriate investment for you.
THE FUND'S INVESTMENT STRATEGIES
1. A "Fund of Funds"
The Fund seeks to achieve its objective by investing primarily in shares of
other open-end and closed-end investment companies ("underlying funds"). 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.
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
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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.
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, preferred stock or foreign
securities 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 is "non-diversified", which means that the Fund may invest in fewer
securities at any one time than a diversified fund. 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.
The Fund cannot purchase shares of underlying funds that are not registered with
the Securities and Exchange Commission ("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.
2. Investment in Listed Securities.
In addition to investing in other mutual funds, the Fund may invest a portion of
its assets in the purchase of exchange or NASDAQ listed securities. Individual
securities and options thereon purchased by the Fund will represent not more
than 20% of the Fund's total portfolio.
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3. 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.
4. Short Sales and Purchase Margins
Although not principal strategies of the Fund, the Fund may itself or through an
underlying fund sell securities short or acquire securities on margin.
5. Options
Although not a principal strategy of the Fund, the Fund may itself or through an
underlying fund purchase or write call or put options on listed securities.
THE PRINCIPAL RISKS OF INVESTING IN THE FUND
1. Risks of Investing Generally
You could lose money by investing in the Fund. You should consider your personal
investment goals, time horizon, and tolerance of risk before investing in the
Fund. An investment in the Fund may not be appropriate for all investors and is
not intended or designed to be a complete investment program.
2. Risks of Investment in Other Investment Companies (the "Fund of
Funds")
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
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.
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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.
3. Risks of Investment in 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.
4. Risks of Investment in Listed Securities
The risks that are associated with investing in listed securities include the
financial risk of purchasing individual companies that perform poorly, the risk
that the stock markets in which the Fund invests may experience periods of
turbulence and instability, and the general risk that domestic and foreign
economies may go through periods of decline
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and cycles of change. Many factors affect an individual company's performance,
such as the strength of its management or the demand for its services or
products. You should be aware that the value of a company's share price may
decline as a result of poor decisions made by management or lower demand for the
company's services or products. In addition, a company's share price may also
decline if its earnings or revenues fall short of expectations. There are also
risks associated with the stock market overall. Overtime, stock markets tend to
move in cycles, with periods when stock prices rise generally and periods when
stock prices decline generally. The value of the Fund's investments may increase
or decrease more than the stock market in general.
5. Risks of Non-Diversification
As previously mentioned, the Fund's portfolio is non-diversified. This means
that the Fund can take larger positions in a smaller number of securities than a
diversified portfolio could take. Non-diversification increases the risk that
the value of the Fund could go down because a single investment performs poorly.
6. Risks of Repurchase Agreements
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 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.
7. Risks of Short Sales and Purchases on Margin
In a short sale, a fund sells securities that it does not own, making delivery
with 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 accrued 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. 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
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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.
A fund that purchases securities on margin is entitled to borrow from a
securities broker up to one-half the purchase price of the securities purchased.
The broker thereby obtains a lender's interest in the securities, which it can
take from the fund and sell if the broker is not repaid the amount borrowed.
Moreover, the broker will require additional collateral from a fund in the event
that the market value of the securities purchased on margin falls to a level
which causes the borrowed amount to exceed 70% of the current value of the
margined securities.
More information on short sales and purchases on margin is contained in the
Fund's Statement of Additional Information.
8. Risks Associated with Options
Options can be written (i.e., sold) or purchased (i.e., bought), and are either
"call" or "put" options. When a fund writes a call option it receives a premium
and gives the purchaser the right to buy the underlying security at any time
during the call period (generally nine months or less in the case of common
stock) at a fixed price. If the purchaser exercises its call option, the fund
writing the call option loses any gain from an increase in the market price over
the exercise price. The Fund itself will write call options only if the Fund
owns the optioned securities (i.e., "covered calls"). When a fund purchases a
call it pays a premium in return for the right to purchase the underlying
security at the exercise price at anytime during the option period. The writing
of put options involves the seller's obligation to purchase the underlying
securities at the exercise price during the option period. The purchasing of put
options involves the purchaser's right to sell the underlying securities at the
exercise price during the option period. There can be no assurance that the
Adviser will accurately predict market conditions such that option positions
will be profitable for the Fund.
More information on option transaction is contained in the Fund's Statement of
Additional Information.
9. 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
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Fund or the underlying fund, and increases the potential for short-term
capital gains and taxes. At this time, the Fund estimates a turnover rate of
50% or less per year.
10. 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. You should recognize that you may invest directly in the underlying funds
and that, by investing in the underlying funds indirectly through the Fund, you
will bear not only your 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.
11. Risks Associated with Lack of Operating History and Experience
The Fund is newly organized and has no history of operations. None of the
principals, officers, or directors of the Fund or the Adviser have ever
registered, operated, or supervised the operation of a registered investment
company. There can be no assurances that management's past experiences will
enable it to successfully manage the Fund.
FEES AND EXPENSES OF THE FUND (FEE TABLE)
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
<TABLE>
<CAPTION>
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SHAREHOLDER FEES (fees paid directly from your Percent of
investment) Net Asset
Value
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<S> <C>
Maximum Sales Charge (Load) imposed on purchases (as a 2.5%
percentage of the offering price)
- -------------------------------------------------------------------------
Deferred Sales Charge (Load) (as a percentage of net None
asset at time of purchase or sale)
- -------------------------------------------------------------------------
Sales charge (Load) Imposed on Reinvested Dividends None
- -------------------------------------------------------------------------
Redemption Fee None
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Exchange Fee None
- -------------------------------------------------------------------------
ANNUAL FUND OPERATING
EXPENSES (expenses that are deducted
- -------------------------------------------------------------------------
</TABLE>
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<TABLE>
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<S> <C>
from Fund assets)
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Management Fees .75%
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Distribution (12b-1) Fees .25%
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Other Expenses (a) .50%
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Total Annual Fund Operating Expenses (b) 1.5%
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</TABLE>
(a) "Other Expenses" are based on estimated amounts for the current fiscal year.
(b) The Adviser may elect to waive all or part of its fee. However, it is not
required to do so. Likewise, the Fund may elect to not to seek reimbursement
from the Fund for expenses reasonably incurred on behalf of the Fund. Again,
however, it is not required to do so. If the Adviser elects to waive fees or
reimbursement for certain expenses, such a waiver is irrevocable and the amounts
cannot be recovered by the Adviser at a later time.
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FEE EXAMPLE
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
This Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
After 1 year - $392.00
After 3 years - $705.00
You would pay the following expenses if you did not redeem your shares:
After 1 year - $392.00
After 3 years - $705.00
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MANAGEMENT OF THE FUND
1. The Adviser
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.
The Adviser has acted as the investment adviser to the Fund since the Fund's
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. The Adviser presently has approximately $300
million under management on behalf of approximately 1,200 individual investors.
The Adviser also serves as the investment adviser for two private limited
partnership investment vehicles with a combined value of approximately $50
million.
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.
2. The Portfolio Manager
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. Mr.
Manarin has been a registered investment adviser representative of the Adviser
since its founding in 1983.
3. 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.
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The Fund is authorized to issue one billion shares of common stock 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.
INVESTING IN THE FUND
1. The Distributor
Manarin Securities Corporation, a registered broker-dealer owned by Roland R.
Manarin, has been engaged as the distribution agent (the "Distributor") and is
responsible for the marketing, promotion and sale of the Fund's shares to the
public.
The shares of the Fund are offered to prospective investors on behalf of the
Fund by Distributor, an NASD member and 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.
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2. Pricing of Shares
The price you pay for a share of the Fund, and the price you receive when you
sell or redeem a share of the Fund is called the Fund's "net asset value" (NAV).
The NAV is 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.
The NAV is determined as of the close of regular trading (currently 3:00 p.m.
Omaha time) on the NYSE each day that the New York Stock Exchange ("NYSE") is
open for business. The NAV 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.
3. 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") 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
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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 you initially purchase shares of the Fund, an account is automatically
established for you. Any shares of the Fund that you subsequently purchase or
that you receive as a distribution are credited directly to your account. No
share certificates are issued unless you specifically request 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.
4. Systematic Investment Plan
You may purchase Fund shares through a Systematic Investment Plan. Under such a
plan, your 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 you. The purchase of Fund shares will be effected at their NAV at
the close of regular trading on the NYSE on or about the 15th day of the month.
You 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.
5. 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. If you are considering
establishing such an account or plan, you may wish to consult your attorney or
other tax adviser. The option of investing in these accounts or plans through
regular payroll deductions may be arranged with Distributor and your employer.
Please call Shareholder Services for further details.
6. How Shares May Be Redeemed
You may redeem your shares 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
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(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.
Your 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, your shares will be redeemed at
the NAV on that day. Redemption requests received after the close of regular
trading will be executed at the NAV 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.
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.
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Proceeds resulting from a written or regular telephone redemption request
normally will be mailed to you 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 your Fund
shares were purchased by check and are redeemed within 15 days of such purchase,
you 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 your account if it falls below $100 NAV as a result of
redemptions or exchanges. If the Fund elects to redeem your shares, it will
notify you of its intention to do so and provide you with the opportunity to
increase the amount invested to $100 or more within 30 days of notice.
7. Systematic Withdrawal Plan
If you make an initial investment of at least $10,000 or otherwise accumulate
shares valued at no less that $10,000, you are eligible for a Systematic
Withdrawal Plan. Under such a plan, you may arrange for fixed withdrawal
payments (minimum payment -- $100; maximum payment - 1% per month or 3% per
quarter of the total NAV of the Fund shares in your account at inception of the
Systematic Withdrawal Plan) at regular monthly or quarterly intervals.
Withdrawal payments are made to you or to beneficiaries designated by you. You
are not eligible for a Systematic Withdrawal Plan
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if you are making regular purchase payments pursuant to the Systematic
Investment Plan. You may elect to participate in the Systematic Withdrawal Plan
when filling out the initial application or later by completing the appropriate
form that is available from Shareholder Services.
8. Telephone Transactions
You 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 earlier in this
Prospectus. 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 you automatically, unless you decline this option 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. However, you will
bear the risk of loss due to unauthorized or fraudulent instructions regarding
your account. The Fund may nevertheless be liable if reasonable procedures are
not employed.
9. Dividend and Other Distributions
Dividends from the net investment income (including dividends from underlying
funds), if any, of the Fund, are distributed to shareholders 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 you before the record date,
the Fund will assume you wish to receive both dividends and capital gain
distributions in additional Fund shares. Instructions continue in effect until
you notify the Fund 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' NAV on that day. Account statements
evidencing each reinvestment will be mailed to you. If the Fund has received
instructions that you wish 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 you fail to cash any such check for six months, the
check(s) will be reinvested in Fund shares at the then-current NAV
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per share of the Fund and your election will be changed so that future
distributions will be received in additional Fund shares.
10. Taxation of the Fund
The Fund intends to qualify for treatment as a Regulated Investment Company
("RIC") under the Internal Revenue Code ("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.
11. 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 satisfy the requirements applicable to RICs and
thereby its ability to qualify as a RIC.
12. 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.
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<PAGE>
The Fund will advise you 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.
If you redeem Fund shares, a taxable gain or loss (to you) will result,
depending upon whether the redemption proceeds are more or less than your
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
you purchase 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.
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. Moreover, because
every person's tax situation is different and unique, you should consult your
tax adviser about the tax implications of investing in the Fund.
13. Shareholder Communications
Fund shareholders are kept informed through monthly account statements, and
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.
DISTRIBUTION ARRANGEMENTS
1. Sales Load
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. This sales
load is commonly referred to as a "front-end load." The term "offering price"
includes this sales load.
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The Fund may, from time to time, waive the sales load on shares of the Fund sold
to clients of Distributor, or certain other dealers meeting criteria established
by Distributor. This privilege will apply only to shares of the Fund that are
purchased using proceeds obtained by such clients by redeeming another mutual
fund's shares on which a sales load was paid. Purchasers of Fund shares made
within 60 days of redeeming the other fund's shares.
2. Rule 12b-1 Fee
The Plan was adopted by the Fund pursuant to Rule 12b-1 of the 1940 Act and
includes another monthly fee not to exceed .25% of the average daily net assets
of the Fund on an annual basis. This fee is paid to the Distributor as
reimbursement for Distributor's marketing and promotional activities with
respect to the sale and distribution of the Fund's shares.
3. Dealer Reallowance
The Distributor may be allowed a brokerage fee or dealer reallowance 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.
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<PAGE>
Lifetime Achievement Fund, Inc.
A Statement of Additional Information for the Fund has been filed with the
Securities and Exchange Commission ("SEC"), and includes more detailed
information about the Fund.
Additional Information about the Fund's investments will be available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year.
The Statement of Additional Information and the Fund's annual and semi-annual
reports are available, at no charge, and upon request. Requests for these
documents and for obtaining other shareholder information may be made by calling
toll-free in the U.S. at 1-800-397-1167, or by writing the Fund at the following
address: Lifetime Achievement Fund, Inc., 11605 West Dodge Road, Omaha, Nebraska
68154.
Information about the Fund (including the Statement of Additional Information)
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be obtained
by calling the SEC at 1-800-SEC-0330. Reports and other information about the
Fund are available on the SEC's Internet site at HTTP://WWW.SEC.GOV, and copies
of this information may be obtained upon payment of a duplicating fee, by
writing the SEC's Public Reference Section, Washington, D.C. 20549-6009,
1-800-SEC-0330.
Further information about the Fund is available on the Fund's Internet site at
HTTP://MANARIN.COM.
107278v1
<PAGE>
LIFETIME ACHIEVEMENT FUND, INC.
11605 West Dodge Road
Omaha, Nebraska 68154
(402) 330-1166
STATEMENT OF ADDITIONAL INFORMATION
Information contained in this Statement of Additional Information is subject to
completion or amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission. These securities may
not be sold nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This Statement of Additional Information is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
This Statement of Additional Information sets forth information regarding the
Lifetime Achievement Fund, Inc., Manarin Investment Counsel, Ltd., (the
"Adviser") is the investment adviser 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 January ____,
2000, which may be obtained from:
Lifetime Achievement Fund, Inc.
11605 West Dodge Rd
Omaha, Nebraska 68154
Information from the Adviser's Form ADV filed with the Securities and Exchange
Commission is incorporated by reference into this Statement of Additional
Information.
---------------------------------------
January _____, 2000
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
FUND HISTORY 1
FUND CLASSIFICATION AND POLICIES 1
INVESTMENT STRATEGIES AND RISKS 3
Repurchase Agreements 3
Bank Obligations 3
Commercial Paper 4
Illiquid Securities 4
Short Sales 4
Purchasing Securities on Margin 5
Lending of Portfolio Securities 5
Foreign Securities 6
Warrants 7
Convertible Securities 7
Fixed Income Securities 9
Hedging Strategies, Options, Futures and Forward Currency Exchanges 10
MANAGEMENT OF THE FUND 17
CONTROL PERSONS AND PRINCIPAL HOLDER OF SECURITIES 19
INVESTMENT ADVISORY AND OTHER SERVICES 19
The Advisor 19
Principal Underwriter/Distributor 21
Accounting Services Agent 21
Dealer Reallowances 21
Rule 12b-1 Plan 21
Other Service Providers 22
BROKERAGE ALLOCATIONS AND OTHER PRACTICES 23
PRICING 25
TAXATION OF THE FUND 25
Regulated Investment Company Status 25
Distributions to Shareholders 26
Foreign Income 27
Hedging Transactions 28
CALCULATION OF PERFORMANCE DATA 29
APPENDIX A 31
Description of Moody's Short-Term Debt Ratings 31
Description of Standard & Poor's Commercial Paper Ratings 31
Description of Moody's Long-Term Debt Ratings 31
Description of S & P Corporate Debt Ratings 32
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<CAPTION>
<S> <C>
APPENDIX B 34
Foreign Securities 34
Foreign Currency Transactions 35
PART C. OTHER INFORMATION 36
ITEM 23. EXHIBITS 36
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON
CONTROL WITH THE FUND 37
ITEM 25. INDEMNIFICATION 38
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF
INVESTMENT ADVISER 39
ITEM 27. PRINCIPAL UNDERWRITERS 40
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS 40
ITEM 29. MANAGEMENT SERVICES 40
ITEM 30. UNDERTAKINGS 41
SIGNATURES 42
</TABLE>
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FUND HISTORY
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 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.
FUND CLASSIFICATION AND POLICIES
The Fund is an open-end, non-diversified, management investment company.
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. Issue securities or other obligations senior to the Fund's shares
of beneficial interest;
2. 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 requirements;
3. Underwrite securities of other issuers;
4. 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;
5. Purchase or sell commodities or commodity contracts including
futures contracts;
6. 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;
7. 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
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<PAGE>
that issuer, provided that this limitation does not apply to securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities ("U.S.
Government securities");
8. Purchase, participate, or otherwise direct interests in oil, gas,
or other mineral exploration or development programs;
9. 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);
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. 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
13. 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.
14. 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 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
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<PAGE>
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 STRATEGIES AND RISKS
The following supplements the information contained in the Prospectus concerning
the Fund's investment strategies and risks:
1. 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.
2. 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
3
<PAGE>
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.
3. 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.
4. 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.
5. Short Sales
The Fund may itself sell securities short and may invest in underlying funds
that sell securities short. In this context, a fund sells securities that it
does not own, making delivery with securities "borrowed" from a broker. A 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 a fund. Until the securities are
replaced, a 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, a 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,
4
<PAGE>
to the extent necessary to meet margin requirements, until the short position is
closed out.
As part of selling short, a short seller (e.g., a fund) must also deposit with
the broker acceptable collateral 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 borrowed security. A 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 a fund may be required to pay in connection with the short sale.
6. Purchasing Securities on Margin
The Fund may itself purchase securities on margin provided the Fund does not
borrow more than 30 percent of the value of its portfolio (based on original
cost). The Fund may invest in other funds which also purchase securities for
their portfolio on margin.
A fund that purchases securities on margin is entitled to borrow from a
securities broker up to one-half the purchase price of the securities purchased
under current Federal Reserve regulations. The broker thereby obtains a lender's
interest in the securities, which it can take from a fund and sell if the broker
is not repaid the amount borrowed. Moreover, the broker will require additional
collateral from a fund in the event that the market value of the securities
purchased on margin falls to a level which causes the borrowed amount to exceed
70 percent of the current value of the margined securities.
7. 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
5
<PAGE>
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. 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.
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
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<PAGE>
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 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. See Appendix B to this Statement of Additional
Information for more information on foreign securities and currency
transactions.
9. 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.
10. 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
7
<PAGE>
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 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.
8
<PAGE>
11. 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 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 Appendix A to this 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.
9
<PAGE>
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 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.
12. Hedging Strategies, Options, Futures and Forward Currency Exchanges
The Fund may indirectly through an investment in an underlying fund engage in
certain hedging strategies involving options, futures and forward currency
exchange contracts. Of these strategies, the Fund itself may engage in the
purchase of put or call options. These hedging strategies are described in
detail in the following paragraphs, and are collectively termed "Hedging
Strategies."
10
<PAGE>
Hedging Strategies are used to hedge against price movements in one or more
particular securities positions. Hedging Strategies on stock indices, in
contrast, generally are used to hedge against price movements in broad equity
market sectors in which a 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.
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:
(a) Successful use of most Hedging Strategies depends upon the particular
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 strategy
adopted will succeed.
(b) There might be imperfect correlation, or even no correlation, between
price movements of the Hedging Strategy 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.
(c) 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 investments. For example, if the underlying fund entered
into a short hedge because of a projected 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.
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<PAGE>
(d) The underlying 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.
An underlying fund may use Hedging Strategies for speculative purposes or for
purposes of leverage. Hedging Strategies, other than purchased options, expose
the underlying 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 underlying
fund's assets to cover segregated accounts could impede portfolio management or
the fund's ability to meet redemption requests or other current obligations.
The Fund may itself or through an underlying fund write (I.E., sell) call
options ("calls"). The Fund itself will write calls only 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 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 may also, either itself or through an underlying fund, purchase (i.e.,
buy) call options. When a fund purchases a call, it pays a premium in return for
the right to
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<PAGE>
purchase the underlying security at the exercise price at any time during the
option period.
The Fund, either itself or 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.
A 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 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, 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. The fund, or an underlying fund
may suffer material losses as the result of option positions. 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 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.
A 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
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alternative to permitting such substitute deliveries, the OCC may impose special
exercise settlement procedures.
The Fund may, through an underlying fund, enter into futures contracts for the
purchase or sale of debt securities and stock indexes. A futures contract is an
agreement between two parties to buy and sell a security or an index for a set
price on a 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 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
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<PAGE>
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.
Positions in futures contracts may be closed out only on an exchange or board of
trade that provides a secondary market for such futures. 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 underlying fund would continue to be required to make variation
margin deposits.
An underlying fund may purchase and write (sell) put and call options on futures
contracts. 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 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.
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
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<PAGE>
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 underlying securities. Writing an option on
a futures contract involves risks similar to those arising in the sale of
futures contracts, as described above.
An underlying fund may use forward or foreign currency contracts to protect
against uncertainty in the level of future foreign currency exchange rates.
Additionally, an underlying fund may enter into forward currency contracts with
respect to specific transactions. 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 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.
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 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
underlying 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.
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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 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 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.
MANAGEMENT OF THE FUND
The business of the Fund is managed under the direction of its Board of
Directors (the "Board"), pursuant to the Fund's Amended and Restated Articles of
Incorporation ("Articles") filed with the state of Maryland, and the Fund's
By-Laws. Both of these documents are exhibits to this Statement of Additional
Information. Pursuant to the provisions of the Articles and By-Laws, the Board
elects officers, including a president, secretary and treasurer.
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Information concerning the Directors and officers of the Fund is set forth
below.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
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 Manarin Securities
11605 West Dodge Road Corporation - President
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 Fund as defined in the 1940 Act by virtue of his
position with the Adviser.
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.
18
<PAGE>
<TABLE>
<CAPTION>
Compensation Table*
- ----------------------------------------------------------------------------------------------------------------------
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.
CONTROL PERSONS AND PRINCIPAL HOLDER OF SECURITIES
On January ___, 2000, 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.
INVESTMENT ADVISORY AND OTHER SERVICES
1. The 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. Additionally,
Charles H. Richter is indirectly affiliated with the Adviser in his capacity as
Chief Operating Officer of Distributor, which is wholly owned by Mr. Manarin.
Mr. Richter also serves as a Director, Vice President and Secretary 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
19
<PAGE>
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. No fees
were paid by the Fund to the Adviser during the last fiscal year.
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 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 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
20
<PAGE>
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.
2. Principal Underwriter/Distributor
The principal underwriter and distributor of the Fund's shares is Manarin
Securities Corporation ("Distributor"), 11605 West Dodge Road, Omaha, Nebraska
68154, an SEC registered and NASD member broker-dealer. Distributor is wholly
owned by Roland R. Manarin, and is an affiliate of the Adviser.
3. Accounting Services Agent
Mackenzie Investment Management, Inc. ("MIM") provides certain accounting and
record keeping services to the Fund pursuant to the terms of a Master Fund
Accounting Services Agreement between MIM and the Fund. No fees were paid to MIM
by the fund during the past fiscal year.
4. Dealer Reallowances
Because the Distributor will be the exclusive distributor of Fund shares, the
entire 0.25% front-end sales load may be retained by Distributor on sales of
Fund Shares.
5. Rule 12b-1 Plan
Distributor 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 (adopted under Rule 12b-1 of the 1940 Act), the Fund pays
21
<PAGE>
Distributor, in reimbursement for certain Distributor expenses actually 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.
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. To date there have been no unreimbursed expenses
incurred under the Distribution Plan.
Both Mr. Manarin and Mr. Richter, interested persons of the Fund, had interest
in the operation of the Distribution Plan by virtue of their respective
positions with Distributor.
6. Other Service Providers
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. Brown Brothers Harriman & Company, 40 Water Street,
Boston, Massachusetts, is the custodian for the Fund.
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.
22
<PAGE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
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 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 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 reallowances 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 reallowance exceeds 1% of the public offering price.
Additionally, Distributor may receive a trail fee of .5% of the annualized
assets under management with the underlying fund. This trail fee is received
annually by Distributor from the underlying fund for each year after the year of
acquisition by the Fund in which the Fund continues to hold the shares of the
underlying Fund. In the event the Distributor is unable to execute a particular
transaction, the Adviser will direct such order to another broker-dealer.
23
<PAGE>
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 reallowances 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.
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 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.
In the event that the Fund acquires or sells 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 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 Distributor's principals may receive expense paid travel in connection with
due diligence meetings, which expenses are paid for by the underlying funds or
other issues of securities acquired by the Fund.
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
24
<PAGE>
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 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
Shares of the Fund are sold on a continual basis at the offering price, which is
a sum of the NAV per share next computed following receipt of an order and the
applicable sales charge (load). For more information on how to purchase or
redeem shares, please see the Prospectus.
TAXATION OF THE FUND
1. Regulated Investment Company Status
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 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.
25
<PAGE>
2. Distributions to Shareholders
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 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 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
26
<PAGE>
amount will increase the adjusted basis of the replacement shares that were
subsequently acquired.
3. 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 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.
27
<PAGE>
4. 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 straddles) also may affect the taxation of
options and futures contracts in which the Fund may invest. Section 1092 defines
a "straddle" 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
28
<PAGE>
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, acquisition of the underlying property or substantially
similar property will be deemed a constructive sale.
CALCULATION OF PERFORMANCE DATA
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
n = number of years (1, 5 or 10)
ERV = ending redeemable value of a hypothetical
$1,000 payment made at the
beginning of the 1, 5 or 10
year periods, at the end of
the 1, 5, or 10 year period
(a fractional portion)
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. For purposes of
29
<PAGE>
the calculation, it is assumed that the beginning value is $1,000 and that
dividends and other distributions are reinvested.
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.
30
<PAGE>
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER
AND BOND RATINGS
1. 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.
2. 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, 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.
3. 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
31
<PAGE>
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 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; and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.
4. 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
32
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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
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 BBB- rating. 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 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
FOREIGN SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS
1. 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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2. 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.
35
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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.
Submitted herewith. Executed copy to be submitted by pre-effective
amendment.
(h)(2) Form of Master Fund Accounting Services Agreement. Submitted
herewith. Executed copy to be submitted by pre-effective
amendment.
(i) Form of Opinion and Consent of Counsel. Submitted herewith.
Executed copy to be submitted by pre-effective amendment.
36
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(j) Form of Consent of Independent Accountants. Submitted 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 THE FUND
(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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(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 Bylaws of the Fund contain a similar
provision.
The Investment Advisory Agreement provides that the Adviser will not be
liable for any of its actions (e.g., errors of judgment, mistakes of law, losses
arising out of investments) on behalf of the Fund, provided that nothing shall
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 the Fund, or Investors, from liability in violation
of Section 17(h), 17(i), or 36B of the 1940 Act.
38
<PAGE>
The Distribution Agreement provides that the Fund shall indemnify, defend
and hold Distributor 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 faith 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.
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, 1999 with the Securities and Exchange Commission (registration
number 80119624) and
39
<PAGE>
is incorporated herein by reference. A copy of the Form ADV is available from
the Adviser, without charge, upon request.
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.
41
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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 January, 2000.
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 January ___, 2000
Roland R. Manarin and Treasurer (Principal
Executive Officer)
/s/ Charles H. Richter
- ---------------------------- Director, Vice President January ___, 2000
Charles H. Richter and Secretary
David C. Coker*
- ---------------------------- Director January ___, 2000
David C. Coker
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<PAGE>
Jerry Vincentini*
- ---------------------------- Director January ___, 2000
Jerry Vincentini
Dr. Bodo W. Treu*
- ---------------------------- Director January ___, 2000
Dr. Bodo W. Treu
* By /s/ Charles H. Richter
- ----------------------------
Charles H. Richter
Attorney-in-Fact
43
`<PAGE>
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.
4
<PAGE>
(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.
5
<PAGE>
(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.
6
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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]
101894
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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, and 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/[ILLEGIBLE]
-----------------------------
Title:
------------------------------
100805
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INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of January ____, 2000, 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 factors and trends, and such other information, advice and
expertise as the Adviser may deem appropriate.
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<PAGE>
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.
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
4
<PAGE>
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 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 gross 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
5
<PAGE>
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 gross negligence in
the performance of the their duties, or in reckless
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 gross negligence.
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,
6
<PAGE>
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 Adviser, its directors,
officers, agents and employees, as to its duties and
obligation pursuant to this Agreement, provided that the
Adviser, its directors, officers, agents or employees were
not engaged in willful misfeasance, bad faith or gross
negligence in the performance of the their duties
hereunder, or by reason of reckless 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 gross 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 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
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<PAGE>
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.
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: _________________________________
100812v7
1859-001
8
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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.
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<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 15of 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:
- ------------------------------------ ------------------------------------
100876v4
1859-001
<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.
63-172-006 (06/99) 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.
63-172-006 (06/99) 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.
63-172-006 (06/99) 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.
63-172-006 (06/99) 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.
63-172-006 (06/99) 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.
63-172-006 (06/99) 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.
63-172-006 (06/99) 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).
63-172-006 (06/99) 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.
63-172-006 (06/99) CUSTODIAN AGREEMENT Page No. 9
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 2 - CONTINUATION PAGE
NOTICES
63-172-006 (06/99) CUSTODIAN AGREEMENT Page No. 10
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 3
SUBCUSTODIANS AND DEPOSITORIES
63-172-006 (06/99) CUSTODIAN AGREEMENT Page No. 11
<PAGE>
BROWN BROTHERS HARRIMAN & CO.
EXHIBIT 3 - CONTINUATION PAGE
SUBCUSTODIANS AND DEPOSITORIES
63-172-006 (06/99) 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.
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<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.
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<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
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<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
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<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.
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<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
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<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>
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<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.
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<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.
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<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).
101116
-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>
<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>
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>
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.
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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.:
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ACCEPTANCE OF SUBSCRIPTION
The above Subscription is hereby accepted this 3rd day of
SEPTEMBER, 1999.
LIFETIME ACHIEVEMENT FUND, INC.
/s/ Charles H. Richter
By:------------------------------
Charles H. Richter, Vice President and
Secretary
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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
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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.
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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.
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