As filed with the Securities and Exchange Commission on December 6, 1999
1933 Act Registration No. 33-88553
1940 Act Registration No. 811-09609
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. 1 [X]
---
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 1 [X]
---
Eagle Funds
(Exact Name of Registrant as Specified in Charter)
250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (316) 681-3123
Robin K. Pinkerton with a copy to:
President Mark J. Kneedy
Eagle Funds Chapman and Cutler
250 North Rock Road 111 West Monroe Street
Suite 150, Chicago, Illinois 60603
Wichita, Kansas 67206-2241
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering : As soon as practicable following
effectiveness.
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant hereby amends this Registration Statement under the Securities
Act of 1933 on such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to Section 8(a), may determine.
<PAGE>
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and contents:
The Facing Sheet
Part A-Prospectus for The Nasdaq 100 Index Fund (the "Fund")
Part B-Statement of Additional Information for the Fund
Part C-Other Information
Signatures
Index to Exhibits
Exhibits
A-2
<PAGE>
THE
NASDAQ 100 INDEX FUND
DECEMBER 6, 1999
PROSPECTUS
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
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<S> <C>
Section 1 THE FUND 1
Fund Overview 2
Section 2 HOW WE MANAGE YOUR MONEY 5
The Investment Adviser and Distributor of the Fund 5
Management Fees 5
The Nasdaq-100 Index 5
Investment Strategy 7
A Word About Risk 9
Section 3 HOW TO BUY AND SELL SHARES 11
How to Choose a Share Class 11
How to Reduce Your Sales Charge 12
Distribution and Service Plan 13
How to Buy Shares 13
Automatic Investing 14
Automatic Withdrawal Plan 15
Additional Services 15
How to Sell Shares 16
Section 4 DIVIDENDS, DISTRIBUTIONS AND TAXES 17
Section 5 GENERAL INFORMATION 19
Net Asset Value 19
Fund Service Providers 19
Nasdaq-100 Index(Registered Trademark) Licensing Agreement 19
Available Information about the Fund 20
</TABLE>
<PAGE>
THE NASDAQ 100 INDEX FUND
SECTION 1 THE FUND
PROSPECTUS
This prospectus is intended to provide important information to help you
evaluate whether the The Nasdaq 100 Index Fund may be right for you. Please
read it carefully before investing and keep it for future reference.
To learn more about how the Fund can help you achieve your financial goals,
talk with your financial adviser or call us at (877) NASDAQ2 (877-627-3272) for
more information.
1
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FUND OVERVIEW
INVESTMENT OBJECTIVE
The Fund seeks to match the investment results of the Nasdaq-100 Index.
HOW THE FUND PURSUES ITS OBJECTIVE
The Fund invests in the common stocks that comprise the Nasdaq-100 Index.
The Nasdaq-100 Index is composed of 100 of the largest non-financial, domestic
and international common stocks listed on the Nasdaq Stock Market, Inc. The
Nasdaq-100 Index reflects Nasdaq's largest companies across major industry
groups, including computer hardware and software, telecommunications,
retail/wholesale trade and biotechnology.
In managing the Fund, we use a "passively" managed or Index approach. We
seek to create a mix of securities that will track, as closely as possible, the
investment results of the Nasdaq-100 Index. The Fund therefore seeks to invest
all of its assets in all of the stocks of the Nasdaq-100 Index to the extent
feasible, subject to any cash or cash equivalents held for temporary cash
management purposes. The Fund seeks to hold stocks found in the Nasdaq-100
Index in roughly the same proportions as represented by the index itself. The
Fund attempts to be fully invested at all times in the stocks of the Nasdaq-100
Index.
Because the Fund invests in the securities that comprise the index, if the
index is concentrated in an industry or industries, the Fund may also
concentrate in that industry or group of industries. Currently, the Nasdaq-100
Index generally includes a concentration of technology-related companies. The
Fund therefore will likewise be concentrated in such companies.
WHAT ARE THE RISKS OF INVESTING IN THE FUND?
The principal risk of investing in the Fund is market risk. Market risk is
the risk that a particular stock, an industry, or stocks in general may fall in
value. Because the Fund is non-diversified, the Fund is exposed to additional
market risk. A non-diversified fund may invest a relatively high percentage of
its assets in a limited number of issuers. Non-diversified funds are more
susceptible to any single political, regulatory or economic occurrence and to
the financial condition of individual issuers in which it invests. In
addition, in tracking the Nasdaq-100 Index, the Fund may also concentrate in
issuers of a single industry or group of industries. As noted, the Nasdaq-100
Index generally includes a concentration of technology-related companies.
Stocks of these companies will therefore represent a correspondingly large
component of the Fund's investment assets. Technology company stocks have in
the past experienced substantial market price fluctuations. A concentration in
stocks in a single industry entails a higher degree of risk than a portfolio
that does not concentrate.
The Fund may also invest in foreign securities. Foreign companies may be
affected by adverse political, diplomatic and economic developments; changes in
foreign currency exchange rates; taxes; less publicly available information; and
other factors.
The Fund's investment adviser may not be able to cause the Fund's performance
to match the performance of the Nasdaq-100 Index either on a daily or aggregate
basis. The Fund's performance may not correspond exactly to the performance of
the index due to a variety of factors including changes in the securities
markets, the manner in which the total return of the index is calculated, the
size of the Fund's portfolio, the ability of the Fund to own each of the index
stocks with the appropriate weighting at a particular time, tracking errors,
sales loads and Fund expenses, the time that elapses between a change in the
index and a change in the Fund, and the timing, frequency and size of
shareholder purchases and redemptions.
2
<PAGE>
You should also be aware that in the event that one or more stocks which
currently represent a large component of the index were to leave the Nasdaq
Stock Market, a company with a large market capitalization were to list its
shares on the Nasdaq Stock Market, or if there were a significant rebalancing of
the index, then the composition and weighting of the index and correspondingly
the composition and weighting of the securities in the Fund would change
significantly and the performance of the Fund would reflect the performance of
the index as newly reconfigured.
An investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. As with any investment, loss of money is a risk of investing.
IS THIS FUND RIGHT FOR YOU?
This Fund may be an appropriate investment if you are:
* Looking for a simple way to match the performance of a specific stock market
index.
* Seeking a stock mutual fund as part of a balanced and diversified investment
program.
* Seeking growth of your capital over the long term - at least five years.
You should not invest in this Fund if you are:
* Unwilling to accept significant fluctuations in share price.
* Hoping to beat the stock market.
3
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<TABLE>
<CAPTION>
FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)(1)
SHARE CLASS A C Y(2)
-------- ------- -------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price) 2.50%(3) None None
Maximum Deferred Sales Charge (as a percentage of the purchase price) None(3) 1%(4) None
Maximum Sales Charge Imposed on Reinvested Dividends None None None
Redemption Fees None(5) None(5) None(5)
Exchange Fees None None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES(6)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
SHARE CLASS A C Y
-------- ------- -------
<S> <C> <C> <C>
Management Fees .50% .50% .50%
12b-1 Distribution and Service Fees .25% 1.00% .25%
Other Expenses .57% .57% .44%
Total Annual Fund Operating Expenses-Gross . 1.32% 2.07% 1.19%
<FN>
- --------------------
(1) Authorized Dealers and other firms may charge fees for shareholder
transactions or for advisory services. Please see their materials for
details.
(2) Class Y shares may be purchased only under limited circumstances, or by
specified classes of investors. See "How You Can Buy and Sell Shares."
(3) The maximum sales charge imposed on purchases of Class A shares is reduced
for purchases of $100,000 or more. Certain Class A purchases at net asset
value of $1 million or more may bear a contingent deferred sales charge
(CDSC) if redeemed within 18 months of purchase. See "How You Can Buy and
Sell Shares."
(4) Class C shares redeemed within one year of purchase bear a 1% CDSC.
(5) Redemptions by wire will be charged a $10 fee and redemptions from IRA
accounts will be charged a $15 fee.
(6) Long-term holders of Class C shares may pay more in Rule 12b-1 fees and CDSCs
than the economic equivalent of the maximum front-end sales charge permitted
under the National Association of Securities Dealers Conduct Rules. The
percentages shown for "Other Expenses" are based on estimated amounts for the
current fiscal year and include an annual licensing fee the Fund will pay to
Nasdaq. The investment adviser has voluntarily agreed to waive fees and
reimburse expenses through December 31, 2000 in order to prevent Total Annual
Fund Operating Expenses (excluding any distribution or service fees and
extraordinary expenses) from exceeding 1.50% of the average daily net asset
value of any class of Fund shares.
</TABLE>
The following example is intended to help you compare the cost of investing
in the Fund with the cost of investing in other mutual funds. The example
assumes that you invest $10,000 in the Fund for the time periods indicated and
then redeem all of your shares at the end of a period. The example assumes that
your investment has a 5% return each year and that the Fund's operating expenses
remain the same. Your actual returns and costs may be higher or lower.
<TABLE>
<CAPTION>
REDEMPTION NO REDEMPTION
SHARE CLASS A C Y A C Y
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
1 Year $385 $317 $125 $385 $217 $125
3 Years $670 $671 $389 $670 $671 $389
</TABLE>
4
<PAGE>
SECTION 2 HOW WE MANAGE YOUR MONEY
To help you understand the Fund better, this section includes a discussion of
the investment adviser, our investment strategy, the Nasdaq-100 Index and the
risks you face in investing in the Fund. For a more complete discussion of
these matters, please consult the Statement of Additional Information.
THE INVESTMENT ADVISER AND DISTRIBUTOR OF THE FUND
Ranson & Associates, Inc. ("Ranson"), 250 North Rock Road, Suite 150,
Wichita, Kansas 67206-2241, has overall responsibility for management of the
Fund. Ranson manages the Fund's portfolio, manages the Fund's business affairs
and provides certain clerical, bookkeeping and other administrative services.
The Fund's Board of Trustees has general supervisory responsibility for the Fund
and supervises Ranson's duties. Ranson also serves as the selling agent and
distributor of the Fund's shares. In this capacity, Ranson manages the offering
of the Fund's shares and is responsible for all sales and promotional
activities. Ranson and its predecessor companies have been and are active
sponsors of unit investment trusts and currently sponsor trusts with assets in
excess of $2,300,000,000. Ranson is also active in public finance and serves as
financial advisor and underwriter for Kansas municipalities. During its
history, Ranson has served as investment adviser to three mutual funds with
assets under management of approximately $180,000,000.
Alex R. Meitzner, Chairman of the Board and Director of Ranson & Associates,
Inc. will serve as Fund portfolio manager, responsible for the day-to-day
management of the Fund's portfolio. Mr. Meitzner has been active in the
securities business for over 15 years. During that time, he was responsible for
the management of three mutual fund portfolios with assets in excess of
$180,000,000. Since 1996, he has supervised the surveillance and evaluation of
approximately 650 unit investment trusts containing equity, municipal,
government and corporate securities valued at approximately $2,300,000,000.
MANAGEMENT FEES
For providing these services, Ranson is paid an annual Fund management fee of
.50% of the average daily net asset value of the Fund.
THE NASDAQ-100 INDEX
The Fund seeks to match the investment results of the Nasdaq-100 Index (the
"Index"). This objective is fundamental, which means that it cannot be changed
unless a majority of Fund shareholders vote to do so. The Nasdaq-100 Index is
composed of 100 of the largest non-financial, domestic and international common
stocks listed on the Nasdaq Stock Market, Inc. ("Nasdaq"). The Nasdaq, which
began operations in 1971, is one of the first fully electronic stock markets in
the world.
The Nasdaq-100 Index reflects Nasdaq's largest companies across major
industry groups, including computer hardware and software, telecommunications,
retail/wholesale trade and biotechnology. As of October 31, 1999, the Index was
comprised of the following industry sectors: Computers & Office Equipment
(38.7%), Computer Software/Services (33.6%), Telecommunications (18.3%),
Retail/Wholesale Trade (3.4%), Biotechnology (3.2%), Services (1.3%), Healthcare
(0.7%), Manufacturing (0.6%) and Transportation (0.2%). As of October 31, 1999,
one company (Microsoft) represented 12.89% of the Index and the five largest
holdings represented 34.94% of the Index. Eligibility criteria for the
Nasdaq-100 Index includes a minimum average daily trading volume of 100,000
shares. Generally, companies also must have seasoned on Nasdaq or another major
exchange, which means they have been
5
<PAGE>
listed for a minimum of two years (one year if the security would otherwise
qualify to be in the top 25% of the issuers included in the Index based on
market capitalization). If the security is a foreign security, the company must
have a world wide market value of at least $10 billion, a U.S. market value of
at least $4 billion, and average trading volume of at least 200,000 shares per
day. In addition, foreign securities must be eligible for listed-options
trading.
Effective December 21, 1998, the method for calculating the Index was revised
to a "modified capitalization weighted" methodology which resulted in changes to
the weighting of the component securities in the Index after such date. This
new methodology is expected to promote the diversification of the underlying
securities in the Index while retaining in general the economic attributes of
capitalization weighting. Under this methodology, Nasdaq reviews the
composition of the Index on a quarterly basis and will adjust the relative
weightings of the stocks in the Index if certain pre-established weight
distribution requirements for a diversified portfolio are not met. The
composition and weighting of the securities in the Fund will be based upon the
Index as calculated under this new methodology or as it may be modified in the
future.
In addition, Nasdaq annually adjusts the stocks included in the Index to
reflect changes in market capitalization of the Index-eligible securities.
Nasdaq also monitors the securities in the Index for changes in their total
shares outstanding due to secondary offerings, repurchases, conversions or other
corporate actions and may adjust the Index share weights to reflect these
changes. Additionally, Nasdaq may periodically replace one or more securities
in the Index due to mergers, acquisitions, bankruptcies, delistings from the
Index, or other market conditions. Nasdaq may from time to time modify the
Index in any manner including the method used in calculating the Index level,
the Index eligibility criteria, the annual ranking review, and the process for
rebalancing the Index without regard to the Fund. Because the Fund seeks to
match the investment results of the Nasdaq-100 Index, the Fund would adjust the
composition of its portfolio to the extent feasible to conform to any changes to
the Index. For additional information on the Index, please see "Nasdaq-100
Index" in the Statement of Additional Information.
You should note that inclusion of a security in the Index in no way implies
an opinion by the sponsor of the Index as to its attractiveness as an
investment. The Fund is not sponsored, endorsed, sold or promoted by Nasdaq,
the sponsor of the Nasdaq-100 Index, its affiliates or the National Association
of Securities Dealers, Inc.
The following table depicts the Year-End Index Value for the Nasdaq-100 Index
from inception (February 1, 1985) to October 29, 1999 as well as the annual
returns of the Nasdaq-100 Index, the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500") and the Dow Jones Industrial Average ("DJIA"). Investors
should note that the figures below represent past performance of the Nasdaq-100
Index, S&P 500 and the DJIA and not their
6
<PAGE>
future performance or the performance of the Fund (which includes certain fees
and expenses). Past performance is, of course, no guarantee of future results.
<TABLE>
<CAPTION>
YEAR-END NASDAQ-100 INDEX S&P 500 DJIA
NASDAQ-100 ANNUAL ANNUAL ANNUAL
YEAR INDEX VALUE* RETURNS** RETURNS** RETURNS**
<S> <C> <C> <C> <C>
February 1, 1985 125 - - -
1985 132.29 5.84% 31.06% 33.62%
1986 141.41 6.89% 18.54% 27.25%
1987 156.25 10.50% 5.67% 5.55%
1988 177.41 13.54% 16.34% 16.24%
1989 223.83 26.17% 31.23% 32.24%
1990 200.53 (10.41)% (3.14)% (0.54)%
1991 330.86 64.99% 30.00% 24.25%
1992 360.19 8.86% 7.43% 7.40%
1993 398.28 10.58% 9.94% 16.97%
1994 404.27 1.50% 1.29% 5.02%
1995 576.23 42.54% 37.11% 36.94%
1996 821.36 42.54% 22.68% 28.91%
1997 990.80 20.63% 33.10% 24.91%
1998 1,836.01 85.31% 28.60% 18.15%
Year to Date (10/29/99) 2,637.44 43.65% 10.06% 16.86%
Average Annual Return
Since Nasdaq-100
Index's Inception 22.45% 14.66% 15.72%
<FN>
- --------------------
* The table uses data that is adjusted to reflect that the Nasdaq-100 Index
level was halved on January 3, 1994, and does not reflect reinvestment of
dividends for the Nasdaq-100 Index.
** The Nasdaq-100 Index annual returns have been calculated from the year end
values and does not reflect reinvestment of dividends. The S&P 500 annual
returns assume that dividends are reinvested as they are received. The DJIA
annual returns assume dividends are reinvested monthly. The 1, 5, and 10 year
annual returns for the Nasdaq-100 Index are 85.3%, 35.8%, and 26.3%
respectively. The 1, 5, and 10 year annual returns for the S&P 500 are 33.1%,
23.87%, and 18.99% respectively. The 1, 5, and 10 year annual returns for the
DJIA are 18.15%, 22.30%, and 18.84% respectively.
</TABLE>
Because the Fund is sold to the public at net asset value plus the applicable
sales charge, and the Fund has operating expenses, an investment in the Fund, if
it had existed, would have resulted in investment performance to shareholders
somewhat reduced from that reflected in the above table.
INVESTMENT STRATEGY
This section explains how the investment adviser pursues the Fund's objective
of matching the performance of the Nasdaq-100 Index. Unlike the Fund's
investment objective, the adviser's investment strategy is not fundamental and
can be changed by the Fund's Board of Trustees without shareholder approval.
7
<PAGE>
SECURITY SELECTION
The Fund employs a "passively" managed investment-or index-approach. Ranson,
the Fund's adviser, will seek to create a mix of securities that will match the
performance of the Nasdaq-100 Index. The Fund will hold as many of the Nasdaq-
100 Index stocks as is feasible in order to achieve the Fund's objective of
attempting to duplicate substantially the total return of the Nasdaq-100 Index.
The Fund attempts to be fully invested at all times in the stocks that comprise
the Nasdaq-100 Index. The Fund will hold the stocks found in the Nasdaq-100
Index in roughly the same proportion as represented in the Index itself. For
example, if 5% of the Nasdaq-100 Index were made up of the assets of a specific
company, the Fund would invest the same proportion of its assets in that
company. Because of certain diversification requirements imposed on mutual
funds by the federal tax laws; however, the Fund may not be able to duplicate
the Index without being in violation of these tax laws. Subject to these
limitations, we will seek to match the company weightings in the Index. In
seeking to track the Index, the Fund may concentrate in issuers of a single
industry or industries.
The Fund will attempt to achieve a correlation between the performance of its
portfolio and that of the Index, in both rising and falling markets, of at least
.97, without taking into account expenses. A correlation of 1.00 would indicate
perfect correlation, which would be achieved when the Fund's net asset value,
including the value of its dividends and capital gain distributions, increases
or decreases in exact proportion to changes in the Index. The Fund's ability to
correlate its performance with that of the Index, however, may be affected by
several factors including changes in securities markets, the manner in which the
total return of the Nasdaq-100 Index is calculated, the size of the Fund's
portfolio, the ability of the Fund to own each of the index stocks with the
appropriate weighting at a particular time, tracking errors, the time that
elapses between a change in the Index and a change in the Fund, and the timing,
frequency and size of shareholder purchases and redemptions. The Fund also
incurs operating expenses which the Nasdaq-100 Index does not have. Therefore,
while the Fund as an index fund is expected to track its target index as closely
as possible, it will not be able to match the performance of the index exactly.
The Fund will use cash flows from shareholder purchase and redemption activity
to maintain, to the extent feasible, the similarity of its portfolio to the
securities comprising the Nasdaq-100 Index.
PORTFOLIO TURNOVER
Although the Fund seeks to invest for the long term, the Fund retains the
right to sell securities regardless of how long they have been held. Generally,
a passively managed fund sells securities only to respond to redemption requests
or to adjust the number of shares held to reflect a change in the fund's target
index. Because of this, the turnover rate for the Fund is expected to be less
than 10% during normal market conditions.
Before investing in a mutual fund, you should review its portfolio turnover
rate for an indication of the potential effect of transaction costs on the
fund's future returns. In general, the greater the volume of buying and selling
by the fund, the greater the impact that brokerage commissions and other
transaction costs will have on its return. Also, funds with high portfolio
turnover rates may be more likely than low-turnover funds to generate capital
gains that must be distributed to shareholders as taxable income.
FOREIGN INVESTMENTS
The Fund may invest in foreign securities, including American Depositary
Receipts ("ADRs") of foreign companies to the extent necessary to carry outs its
investment strategy of holding all of the stocks that comprise the
8
<PAGE>
Nasdaq-100 Index. ADRs are denominated in U.S. dollars and are typically
issued by a U.S. bank or trust company. An ADR evidences ownership of an
underlying foreign security.
SHORT-TERM INVESTMENTS
Although the Fund attempts to be fully invested at all times in the stocks of
the Nasdaq-100 Index, to keep cash on hand fully invested pending its investment
in securities or to avoid liquidating portfolio securities to meet shareholder
redemptions and distributions, the Fund may invest in short-term investments
including U.S. government securities, time deposits, certificates of deposit,
bankers' acceptances, high-grade commercial paper and repurchase agreements.
See the Statement of Additional Information for a description of these
instruments.
INVESTMENT LIMITATIONS
The Fund has adopted limitations on some of its investment policies. These
limitations include that the Fund will not borrow money, except for temporary or
emergency purposes in an amount not exceeding 33 1/3% of its assets. Whenever
the Fund's outstanding borrowing is more than 5% of its assets, it will stop
making investments. A complete list of the Fund's investment limitations can be
found in the Statement of Additional Information. These limitations are
fundamental and may be changed only by approval of a majority of the Fund's
shareholders.
In addition, as a non-fundamental policy, the Fund currently does not intend
to invest in stock futures and option contracts.
A WORD ABOUT RISK
Risk is inherent in all investing. Investing in a mutual fund - even the
most conservative - involves risk, including the risk that you may receive
little or no return on your investment or even that you may lose part or all of
your investment. Recently, equity markets have experienced significant
volatility. Therefore, before investing you should consider carefully the
following risks that you assume when you invest in the Fund. Because of these
and other risks, you should consider an investment in the Fund to be a long-term
investment.
Market risk: the risk that a particular stock, an industry, or stocks in
general may fall in value. Stock market prices tend to move in cycles, with
periods of rising stock prices and periods of falling stock prices. Market
value may be affected by a variety of factors including: general stock market
movements, changes in the financial condition of an issuer or an industry,
changes in perceptions about an issuer or an industry, interest rates and
inflation, government policies and litigation, and purchases and sales of
securities by the Fund.
Inflation Risk: inflation risk is the risk that the value of assets or
income from investments will be less in the future as inflation decreases the
value of money.
Non-Diversified Status: the Fund is classified as "non-diversified." As a
result, the proportion of the Fund's assets that may be invested in the
securities of a single issuer is not limited by the Investment Company Act of
1940 (the "1940 Act"). A "diversified" investment company is required by the
1940 Act generally, with respect to 75% of its total assets, to invest not more
than 5% of such assets in the securities of a single issuer. Depending upon the
composition of the Nasdaq-100 Index, a relatively high percentage of the Fund's
assets may be invested in the securities of a limited number of issuers. The
Fund therefore is more susceptible to any single economic, political or
regulatory occurrence and to the financial conditions of the issuers in which it
invests.
9
<PAGE>
In addition, in tracking the Nasdaq-100 Index, the Fund may concentrate in
issuers of a single industry or industries. Currently, the Nasdaq-100 Index
generally includes a concentration of technology and technology-related
companies. Consequently, a relatively large portion of the Fund's assets may be
invested in companies in this industry, such as companies that manufacture or
design computers, computer-related equipment, communication systems, electronic
products and other related products or in a particular issuer in this industry,
such as Microsoft. The Fund therefore stands a greater chance of being hurt by
adverse changes affecting the technology industry and such issuers. In the
past, the technology common stocks have experienced extreme price and volume
fluctuations that are often unrelated to the operating performance of such
companies. This market volatility may adversely affect the market price of the
Fund. Although the Fund may be concentrated in certain industries and issuers
as it seeks to track the Nasdaq-100 Index, you should note that to meet federal
tax requirements, at the close of each quarter, the Fund may not have more than
25% of its total assets invested in any one issuer and, with respect to 50% of
its total assets, not more than 5% of its total assets invested in any one
issuer.
Correlation Risk: The Fund's adviser may not be able to cause the Fund's
performance to match the performance of the Nasdaq-100 Index, either on a daily
or aggregate basis. While the Fund does not expect to deviate significantly
from the Nasdaq-100 Index on a daily basis, factors such as sales loads and Fund
expenses, imperfect correlation between the Fund's investments and those of the
Index, rounding of share prices, the time that elapses between a change in the
Index and a change in the Fund, and regulatory policies may affect their ability
to achieve a close correlation.
Foreign Risks: Certain of the securities included in the Fund may be stocks
and American Depositary Receipts (ADRs) of foreign companies. Foreign
securities present risks beyond securities of U.S. issuers. Foreign companies
may be affected by various factors such as adverse political, diplomatic and
economic developments; changes in foreign currency exchange rates; taxes and
less publicly available information.
Litigation: Microsoft Corporation, which currently represents the largest
holding in the Nasdaq-100 Index, is currently engaged in litigation with Sun
Microsystems, Inc., the U.S. Department of Justice, several state Attorneys
General and Caldera, Inc. The complaints against Microsoft include, copyright
infringement, unfair competition, and anti-trust violations. The claims seek
injunctive relief and monetary damages. The court recently found that Microsoft
possesses and exercises monopoly power. This does not represent a final
decision in this litigation. In public statements following the decision,
Microsoft has stated that it will continue to review the court's findings and
analyze their impact. No one can accurately predict the result or impact of
this litigation on Microsoft's operations or perception of the company in the
marketplace.
Year 2000: Ranson and the transfer agent each rely on computer systems to
manage the Fund's investments, process shareholder transactions and provide
shareholder account maintenance. Because of the way computers historically have
stored dates, some of these systems currently may not be able to correctly
process activity occurring in the year 2000. This is commonly known as the
"Year 2000 Problem." Ranson is taking steps that it believes are reasonably
designed to address the Year 2000 Problem with respect to computer systems that
it uses and to obtain reasonable assurances that comparable steps are being
taken by the Fund's other service providers. While Ranson believes the
necessary work on its systems has been substantially completed, there can be no
assurance that these steps will be sufficient to avoid any adverse impact to the
Fund.
The Year 2000 Problem is expected to impact corporations and other parties,
which may include issuers of the securities held by the Fund, to varying degrees
based upon various factors, including, but not limited to their industry
10
<PAGE>
sector and degree of technological sophistication. In addition, foreign
issuers and markets may not be as prepared as their U.S. counterparts to address
the Year 2000 Problem. Ranson is unable to predict what impact, if any, the
Year 2000 Problem will have on issuers of the securities held by the Fund.
SECTION 3 HOW TO BUY AND SELL SHARES
You can choose from three classes of Fund shares, each with a different
combination of sales charges, fees, eligibility requirements and other features.
Your financial adviser can help you determine which class is best for you. We
offer a number of features for your convenience. Please see the Statement of
Additional Information for further details.
HOW TO CHOOSE A SHARE CLASS
In deciding whether to purchase Class A, Class C or Class Y shares, you
should consider:
* the amount of your purchase;
* how long you expect to hold the shares;
* the amount of any up-front sales charge;
* whether a contingent deferred sales charge (CDSC) would apply upon
redemption;
* the amount of any distribution or service fees that you may incur while you
own the shares;
* whether you will be reinvesting income or capital gain distributions in
additional shares;
* whether you qualify for a sales charge waiver or reduction;
* whether you meet the eligibility criteria for the class.
For a summary of the charges and expenses for each class, please see "Fees
and Expenses".
CLASS A SHARES
You can buy Class A shares at the offering price, which is the net asset
value per share plus an up-front sales charge. You may qualify for a reduced
sales charge, or the sales charge may be waived, as described in "How to Reduce
Your Sales Charge." Class A shares are also subject to an annual service fee of
.25% which compensates your financial adviser for providing ongoing service to
you. The up-front Class A sales charge is as follows:
<TABLE>
<CAPTION>
AUTHORIZED DEALER
SALES CHARGE AS % OF SALES CHARGE AS % OF COMMISSION AS % OF
AMOUNT OF PURCHASE PUBLIC OFFERING PRICE NET AMOUNT INVESTED PUBLIC OFFERING PRICE
- ------------------ --------------------- -------------------- ---------------------
<S> <C> <C> <C>
$99,999 or less 2.50% 2.56% 2.00%
$100,000 - $249,999 2.25% 2.30% 1.75%
$250,000 - $499,999 2.00% 2.04% 1.50%
$500,000 - $999,999 1.25% 1.27% 0.85%
$1,000,000 and over * - .25%*
<FN>
* You can buy $1 million or more of Class A shares at net asset value without
an up-front sales charge. Ranson pays Authorized Dealers of record on
these share purchases a sales commission of .25% of the
11
<PAGE>
public offering price. If you redeem your shares within 18 months of
purchase, you will be charged a CDSC of 1% of your purchase price (1.01% of
the net amount invested).
</TABLE>
When you redeem Class A or Class C shares (described below) that are subject
to a CDSC, the Fund will first redeem any shares that are not subject to a CDSC
or that represent an increase in the value of your Fund account due to capital
appreciation, and then redeem the shares you have owned for the longest period
of time. No CDSC or up-front sales charge is imposed on shares you buy through
the reinvestment of dividends and capital gains. The holding period is
calculated on a monthly basis and begins on the first day of the month in which
you buy shares. When you redeem shares subject to a CDSC, the CDSC is
calculated on your purchase price, deducted from your redemption proceeds, and
paid to Ranson.
CLASS C SHARES
You can buy Class C shares at the net asset value per share without any up-
front sales charge so that the full amount of your purchase is invested in the
fund. However, you will pay annual distribution and service fees of 1%. The
annual .25% service fee compensates your financial adviser for providing ongoing
service to you. The annual .75% distribution fee reimburses Ranson for paying
your financial adviser an ongoing sales commission. Ranson advances the first
year's service and distribution fees. If you sell your shares within 12 months
of purchase, you will be charged a 1% CDSC based on your purchase price.
CLASS Y SHARES
Class Y shares are offered at net asset value without any up-front sales
charge to certain institutional investors. Class Y shares are subject to an
annual service fee of .25% which compensates your financial adviser for
providing ongoing service to you. An institutional investor buying Class Y
shares for its customer's accounts, may charge additional fees for such
transactions. Class Y shares have lower ongoing expenses than other classes.
The following institutional investors are eligible to purchase Class Y shares.
* Insurance Companies
* Registered Investment Companies
* Employee Benefit Plans
* Bank Trust Departments
HOW TO REDUCE YOUR SALES CHARGE
We offer a number of ways to reduce or eliminate the up-front sales charge on
Class A shares.
CLASS A SALES CHARGE CLASS A SALES CHARGE
REDUCTIONS WAIVERS
-------------------- --------------------
* Rights of accumulation * Purchases using Ranson Unit Investment
* Letter of intent Trust Distributions
* Group purchase * Retirement plans
* Certain employees and directors of
Ranson or employees of authorized dealers
and certain of their family members
* Certain Bank trust departments
* Wrap Accounts
* Employees of vendors providing services
to the Trust
* Officers, trustees and former trustees
of the Trust
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<PAGE>
Please refer to the Statement of Additional Information for detailed program
descriptions and eligibility requirements. Additional information is available
from your financial adviser or by calling (877) NASDAQ2 (877-627-3272). Your
financial adviser can also help you prepare any necessary application forms.
You or your financial adviser must notify Ranson at the time of each purchase if
you are eligible for any of these programs. The Fund may modify or discontinue
these programs at any time.
DISTRIBUTION AND SERVICE PLAN
Ranson serves as the distributor of the Fund's shares. In this capacity,
Ranson manages the offering of the Fund's shares and is responsible for all
sales and promotional activities. In order to reimburse Ranson for its costs in
connection with these activities, including compensation to authorized dealers,
the Fund has adopted a distribution and service plan under Rule 12b-1 under the
Investment Company Act of 1940 that allows the Fund to pay distribution fees for
the sales of its shares and for services provided to shareholders. Under this
plan, Class A, Class C, and Class Y each pay an annual service fee of up to
0.25% of the average daily net assets of the respective class which compensates
dealers, including Ranson, for providing ongoing service to you. The services
provided may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and services related to the maintenance of shareholder
accounts. In addition, Class C shares pay an annual distribution fee of 0.75%
of average daily net assets of such class. Ranson receives the distribution fee
primarily for providing compensation to Authorized Dealers, including Ranson, in
connection with the distribution of shares. These fees may also compensate
Ranson for other expenses, including printing and distributing prospectuses to
persons other than shareholders, the expenses of preparing, printing and
distributing advertising and sales literature and reports to shareholders used
in connection with the sale of shares. Because these fees are paid out of the
Fund's assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.
HOW TO BUY SHARES
You may open an account with $2,500 ($500 for Traditional or Roth IRA
accounts; $500 for custodial accounts for minors); and make additional
investments at any time with as little as $50. There is no minimum on
additional investments if you are reinvesting Ranson Unit Investment Trust
distributions. The Fund reserves the right to reject any purchase order. The
share price you pay will depend on when the Transfer Agent receives your
purchase request. Orders received before the close of trading on a business day
will receive that day's closing share price, otherwise you will receive the
next business day's price. A business day is any day the New York Stock
Exchange is open for business and normally ends at 4 p.m. Eastern Standard time.
Generally, the Exchange is closed on weekends, national holidays and Good
Friday. The Fund may change the minimum requirements for initial and subsequent
investments at any time.
The Fund will not accept an account if you are investing for another person
as attorney in fact, or an account with "POA" in the New Account Application
registration section.
Investors must make purchases in U.S. dollars or by check drawn on U.S.
banks. The Fund will not accept cash, credit cards, or 3rd party checks.
13
<PAGE>
THROUGH A FINANCIAL ADVISER.
You may buy shares through your financial adviser, who can handle all the
details for you, including opening a new account. Financial advisers can also
help you review your financial needs and formulate long-term investment goals
and objectives. In addition, financial advisers generally can help you develop
a customized financial plan, select investments and monitor and review your
portfolio on an ongoing basis to help assure your investments continue to meet
your needs as circumstances change. Financial advisers may charge you a
separate fee in lieu of a sales charge for ongoing investment advice and
services.
BY MAIL
You may open an account and buy shares by mail by completing the enclosed
application and mailing it along with your check made payable to the:
"The Nasdaq 100 Index Fund"
c/o Sunstone Financial Group, Inc.
P. O. Box 0641
Milwaukee, WI 53201-0641
For overnight delivery:
Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 315
Milwaukee, WI 53202
For subsequent investments, your fund account number should appear on the
check and an investment slip should be enclosed. To obtain additional purchase
applications, contact your financial adviser or a Fund representative at (877)
NASDAQ2 (877-627-3272).
BY WIRE
You may also purchase shares by wire. Wire payments may be made if your bank
account is in a commercial bank that is a member of the Federal Reserve System
or any other bank having a correspondent bank in New York City. Payments may be
transmitted by wire to:
UMB Bank, na
DDA #9870983893
The wire must include your Fund account number, account registration and
dealer number, if applicable. If your initial purchase of Fund shares is by
wire, you must call the Transfer Agent at (800) 894-6510 to obtain your Fund
account number prior to sending your wire payment. You must also complete a New
Account Application prior to the wire purchase and include your Fund account
number on the Account Application and promptly mail the Account Application to
the Fund as no redemptions will be permitted until the Account Application is
received. If you need assistance in arranging your wire transaction, call the
Transfer Agent at (800) 894-6510.
AUTOMATIC INVESTING
Ranson offers many services that make it convenient to buy and sell shares on
an automatic schedule. Once you have established a Fund account, you may make
regular investments through automatic deductions from your bank account (simply
complete the appropriate section of the account application form) or directly
from your paycheck.
14
<PAGE>
One of the benefits of this systematic investing is dollar cost averaging.
Because you regularly invest a fixed amount of money over a period of years
regardless of the share price, you buy more shares when the price is low and
fewer shares when the price is high. As a result, the average share price you
pay should be less than the average share price of fund shares over the same
period. To be effective, dollar cost averaging requires that you invest over a
long period of time, and does not assure that you will profit.
To provide for systematic investing, we offer an Automatic Investment Plan
which allows you to make regular investments of $50 or more per month (on the
5th, 10th, 15th, 20th, 25th or the last business day of the month) by
authorizing us to draw preauthorized checks on your bank account. You can stop
the withdrawals at any time. Investors will receive quarterly statements
confirming these transactions. There is no charge for this plan, but if there
are not sufficient funds to cover the withdrawal, the investor is subject to a
$20.00 fee and the purchase will be canceled and you will be responsible for any
loss to the Fund.
A redemption of all funds from the shareholder's account will automatically
discontinue the Plan. To terminate a shareholder's plan, the shareholder must
send the Fund a written request at least 5 days before his/her withdrawal date
or call the Transfer Agent at (800) 894-6510.
We also offer a Direct Deposit Service. By selecting this service, you can,
with your employer's consent, make regular investments of $25 or more per pay
period (meeting the monthly minimum of $50) by authorizing your employer to
deduct this amount automatically from your paycheck. You can stop the
deductions at any time. There is no charge for this plan. To invest directly
from your paycheck, contact your financial adviser or call the Transfer Agent at
(800) 894-6510.
AUTOMATIC WITHDRAWAL PLAN
If the value of your Fund account is at least $10,000, you may request to
have $50 or more withdrawn automatically from your account. You may elect to
receive payments monthly, quarterly, semi-annually or annually, (on the 5th,
10th, 15th, 20th, 25th or the last business day of the month) and may choose to
receive a check, have the monies transferred directly into your bank account
(see "Additional Services" below), paid to a third party or sent payable to you
at an address other than your address of record. Investors will receive
quarterly statements confirming these transactions. You must complete the
appropriate section of the new account application or Account Update Form to
participate in a fund's systematic withdrawal plan.
ADDITIONAL SERVICES
To help make your investing with us easy and efficient, we also offer you
Electronic Funds Transfer (EFT), an electronic method for buying and selling
shares. EFT links your Fund account to your bank account so you can transfer
money electronically between these accounts and perform a variety of account
transactions, including buying shares by telephone and investing through an
Automatic Investment Plan. You may also have dividends, distributions,
redemption payments or Automatic Withdrawal Plan payments sent directly to your
bank account.
Purchases made via ACH (Automated Clearing House) will receive the NAV next
computed after the Transfer Agent receives the shareholder's properly executed
instructions.
To help you complete the forms for these services, you can call the Transfer
Agent at (800) 894-6510 for copies of the necessary forms.
15
<PAGE>
HOW TO SELL SHARES
You may use one of the following ways to sell (redeem) your shares on any day
the New York Stock Exchange is open. You will receive the share price next
determined after the Transfer Agent has received your properly completed
redemption request. Your redemption request must be received before the close
of trading for you to receive that day's price. The Fund does not charge a
redemption fee, but there is a $10.00 wire fee if you redeem by wire and there
will be a $15.00 fee for tax reporting when redeeming from an IRA account
(detailed in your IRA Disclosure Statement and Custodial Agreement). The Fund
may withhold taxes on IRA redemptions to meet federal law requirements. You may
be assessed a CDSC, if applicable. See "How to Choose a Share Class".
You should be aware that the Fund reserves the right to redeem your account
at its option upon 30 days written notice if the value of your account falls
below $500 as a result of redemptions, unless you have an active Ranson Unit
Investment Trust reinvestment account. The Fund also reserves the right to
redeem in-kind (that is to pay redemption requests in cash and portfolio
securities, or wholly in portfolio securities).
THROUGH YOUR FINANCIAL ADVISER
You may sell your shares through your financial adviser who can prepare the
necessary documentation. Your financial adviser may charge for this.
BY TELEPHONE
If you have authorized telephone redemption privileges, you can redeem your
shares by telephone. A minimum redemption of $500 may be redeemed by telephone.
Checks will be issued only to the shareholder of record and mailed to the
address of record. Shareholders may also receive redemption proceeds via wire.
A $10 wire redemption fee will be deducted from the redemption proceeds. If you
have established electronic funds transfer privileges through ACH, you may have
redemption proceeds transferred electronically to your bank account. There is a
$15.00 fee for redemptions from IRA accounts to cover tax reporting. We will
normally mail your check the next business day. If you purchased shares by
check, your redemption proceeds will not be sent until your check has cleared
or you have a sufficient collected balance in your account to cover the
redemption request. Sunstone Financial Group, Inc., 207 E. Buffalo Street,
Suite 400, Milwaukee, WI 53202, the Funds' transfer agent, will be liable for
losses resulting from unauthorized telephone redemptions only if they do not
follow reasonable procedures designed to verify the identity of the caller. You
should immediately verify your trade confirmations when you receive them.
We will normally mail your check the next business day, but in no event more
than seven days after we receive your request. If you purchased your shares by
check, your redemption proceeds will not be mailed until your check has cleared,
which may take up to 15 days from the date of purchase. Guaranteed signatures
are required if you are redeeming more than $50,000, you want the check payable
to someone other than the shareholder of record or you want the check sent to
another address (or the address of record has been changed within the last 60
days). Signature guarantees must be obtained from a bank, brokerage firm or
other financial intermediary that is a member of an approved Medallion Guarantee
Program or that is otherwise approved by the Fund. A notary public cannot
provide a signature guarantee.
16
<PAGE>
BY MAIL
You can sell your shares at any time by sending an unconditional written
request to the Fund, c/o Sunstone Financial Group, Inc., P. O. Box 0641,
Milwaukee, WI 53201-0641. To properly complete your redemption request, your
request must include the following information:
* The Fund's name;
* Your name and account number;
* The dollar or share amount you wish to redeem;
* The signature of each owner exactly as it appears on the account;
* The name of the person to whom you want your redemption proceeds paid (if
other than to the shareholder of record);
* The address where you want your redemption proceeds sent (if other than the
address of record);
* Any required signature guarantees.
If you are redeeming from an IRA, you must instruct us as to the proper tax
withholding. If no withholding tax instructions are given, the Transfer Agent
will automatically withhold 10% of the redemption proceeds.
We will normally mail your check the next business day, but in no event more
than seven days after we receive your request. If you purchased your shares by
check, your redemption proceeds will not be mailed until your check has cleared,
which may take up to 15 business days from the date of purchase. Guaranteed
signatures are required if you are redeeming more than $50,000, you want the
check payable to someone other than the shareholder of record or you want the
check sent to another address (or the address of record has been changed within
the last 60 days). Signature guarantees must be obtained from a bank, brokerage
firm or other financial intermediary that is a member of an approved Medallion
Guarantee Program or that is otherwise approved by the Fund. A notary public
cannot provide a signature guarantee.
BY WIRE
If you have authorized wire redemption privileges, you may request that
redemption proceeds (minimum $500) be wired to your account at a bank which is a
member of the Federal Reserve System, or a correspondent bank if your bank is
not a member. You may make telephone redemption requests by calling 800-894-
6510. The Statement of Additional Information sets forth instructions for
transmitting redemption requests by wire. If you purchased shares by check,
redemption proceeds will not be wired until your check has cleared, unless you
have a sufficient collected balance in your account to cover the redemption
request.
SECTION 4 DIVIDENDS, DISTRIBUTIONS AND TAXES
Each March, June, September and December, the Fund distributes virtually all
of its income from interest and dividends, if any, to its shareholders. The
Fund distributes any capital gains realized from the sale of securities in
17
<PAGE>
December. In addition, the Fund may occasionally be required to make
supplemental dividend or capital gains distributions at some other time during
the year. Keep in mind that index portfolios tend to provide less in capital
gains distributions than actively managed funds generally do.
The Fund automatically reinvests your dividends in additional Fund shares
unless you request otherwise. You may request to have your dividends paid to
you by check, deposited directly into your bank account. For further
information, contact your financial adviser or call Ranson at (877) NASDAQ2
(877-627-3272). You should note that these distributions are taxable to you
regardless of the manner in which you receive them. It is important to also
note that distributions of dividends and capital gains that are declared in
December-if paid to you by the end of January-are taxed as if they had been paid
to you in December.
TAXES AND TAX REPORTING
The Fund intends to make distributions that may be taxed as ordinary income
or capital gains (which may be taxable at different rates depending on the
length of time the Fund holds its assets). Dividends from the Fund's long-term
capital gains are taxable as capital gains, while dividends from short-term
capital gains and net investment income are generally taxable as ordinary
income. The tax you pay on a given capital gains distribution depends generally
on how long the Fund has held the portfolio securities it sold. It does not
depend on how long you have owned your Fund shares. The tax status of your
dividends from the Fund is not affected by whether you reinvest your dividends
in additional shares or receive them in cash. Taxable dividends may qualify for
a dividends received deduction if you are a corporate shareholder.
If you sell shares, any gain or loss you have is a taxable event, which means
that you may have a capital gain to report as income, or a capital loss to
report as a deduction, when you complete your federal income tax return.
Distributions of dividends or capital gains, and capital gains or losses from
your sale of Fund shares, may be subject to state and local income taxes as
well.
Early in each year, you will receive a statement detailing the amount and
nature of all dividends and capital gains that you were paid during the prior
year. You will receive this statement from the firm where you purchased your
Fund shares if you hold your investment in street name. The Transfer Agent will
send you this statement if you hold your shares in registered form.
The tax information in this prospectus is provided as general information and
will not apply to you if you are investing in a tax-deferred account such as an
IRA. Tax laws also are subject to change, so we urge you to consult your tax
adviser about your particular tax situation and how it might be affected by
current tax law. Please note that if you do not furnish us with your correct
Social Security number or employer identification number, federal law requires
us to withhold federal income tax from your distributions and redemption
proceeds at a rate of 31%.
BUYING OR SELLING SHARES CLOSE TO A RECORD DATE
Buying fund shares shortly before the record date for a taxable dividend is
commonly known as "buying the dividend." The entire dividend may be taxable to
you even though a portion of the dividend effectively represents a return of
your purchase price. Unless you are investing in a tax-deferred retirement
account (such as an IRA), it is not to your advantage to buy shares of a fund
shortly before it makes a distribution, because part of your investment will
come back to you as a taxable distribution. To avoid "buying a dividend," check
the fund's distribution schedule before you invest.
18
<PAGE>
SECTION 5 GENERAL INFORMATION
This section provides a description of the method to calculate net asset
value and other general information.
NET ASSET VALUE
The price you pay for your shares is based on the Fund's net asset value or
NAV per share which is determined as of the close of trading (normally 4:00 p.m.
eastern time) on each day the New York Stock Exchange is open for business plus
a sales charge (for Class A). Net asset value is calculated by dividing the
value of the Fund's net assets (i.e., the value of its assets less liabilities)
by the total number of its shares outstanding. The result, rounded to the
nearest cent, is the net asset value per share. All valuations are subject to
review by the Fund's Board of Trustees or its delegate. The daily net asset
value is useful to you as a shareholder because the NAV multiplied by the number
of Fund shares you own, gives you the dollar amount you would have received had
you sold your shares back to the Fund that day.
In determining net asset value, expenses are accrued and applied daily and
securities and other assets for which market quotations are available are valued
at market value. Common stocks and other equity securities listed on Nasdaq are
valued at the last sales price that day. If the securities, however, did not
trade that day, such securities will be valued at the most recent mean prices.
If market quotations are not readily available, the Fund's investments are based
on fair value as determined in good faith by the Fund's Board. For further
information regarding the methods employed in valuing the Fund's investments,
see "Net Asset Value" in the Statement of Additional Information.
FUND SERVICE PROVIDERS
The custodian of the assets of the Funds is The Bank of New York, 100 Church
Street, 10th Floor, New York, NY 10286. The custodian also provides certain
accounting services to the Fund. The Fund's transfer, shareholder services and
dividend paying agent, Sunstone Financial Group, Inc., 207 East Buffalo Street,
Suite 400, Milwaukee, Wisconsin 53202, performs bookkeeping, data processing and
administrative services for the maintenance of shareholder accounts.
NASDAQ-100(REGISTERED TRADEMARK) INDEX LICENSING AGREEMENT
Ranson has entered into a license agreement with Nasdaq under which the Fund
is granted a license to use the trademarks, service marks and and trade names
"Nasdaq-100 Index," "Nasdaq 100," and "Nasdaq" solely in materials relating to
the creation and issuance, marketing and promotion of the Fund and to indicate
that the Nasdaq-100 Index is being used as the basis for determining the
composition of the Fund's portfolio. As consideration for the grant of the
license, the Fund will pay Nasdaq an annual fee equal to the greater of (a) .04%
of the total assets of the Fund under management or (b) $10,000 per year. The
agreement may continue as long as shares of the Fund are publicly owned.
If the Nasdaq-100 Index ceases to be compiled or made available, the Fund may
continue to be operated using the Nasdaq-100 Index as it existed on the last
date on which it was available, the Fund may be terminated, or the Fund may seek
shareholder approval to change its objective and fundamental policies.
The Fund is not sponsored, endorsed, sold or promoted by The Nasdaq Stock
Market, Inc. (including its affiliates) (the Corporations). The Corporations
have not passed on the legality or suitability of, or the accuracy or
19
<PAGE>
adequacy of descriptions and disclosures relating to, the Fund or Shares of
the Fund. The Corporations make no representation or warranty, express or
implied to the owners of Shares of the Fund or any member of the public
regarding the advisability of investing in securities generally or in Shares of
the Fund particularly, or the ability of the Nasdaq 100-Index (Index) to track
general stock market performance. The Corporations' only relationship to the
Sponsor and the Fund (Licensee) is in the licensing of certain trademarks,
service marks, and trade names of the Corporations and the use of the Index
which is determined, composed and calculated by Nasdaq without regard to the
Licensee, the Fund or Shareholders of the Fund. Nasdaq has no obligation to
take the needs of the Licensee or the owners of the Fund into consideration in
determining, composing or calculating the Index. The Corporations are not
responsible for and have not participated in the determination of the timing of,
prices at, or quantities of the Shares of the Fund to be issued or in the
determination or calculation of the equation by which the Shares of the Fund are
to be converted into cash. The Corporations have no liability in connection
with the administration or operation of the Fund or the marketing or trading of
Shares of the Fund.
THE CORPORATIONS DO NOT GUARANTEE THE ACCURACY AND/OR UNINTERRUPTED
CALCULATION OF THE INDEX OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS
OF SHARES OF THE FUND, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDEX
OR ANY DATA INCLUDED THEREIN. THE CORPORATIONS MAKE NO EXPRESS OR IMPLIED
WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL THE
CORPORATIONS HAVE ANY LIABILITY FOR ANY SPECIAL, INCIDENTAL, PUNITIVE, INDIRECT,
OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE
POSSIBILITY OF SUCH DAMAGES.
AVAILABLE INFORMATION ABOUT THE FUND
Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated by reference into this
prospectus, contains additional information about the Fund. The SAI is
available, without charge, upon request. Call Ranson at (877) NASDAQ2 (877-627-
3272) to request a free copy of the SAI or for other Fund information.
Information about the Fund (including the SAI) can be reviewed and copied at
the Public Reference Room of the Securities and Exchange Commission (SEC) in
Washington D.C. Information about the operation of the Public Reference Room
may be obtained by calling the SEC at 1-800-SEC-0300. Reports and other
information about the Fund are also available on the SEC's Internet site at
http://www.sec.gov. Copies of this information may be obtained, upon payment of
a duplicating fee, by writing the Public Reference Section of the SEC,
Washington D.C. 20549-6009.
RANSON
Ranson & Associates, Inc.
250 North Rock Road,
Suite 150
Wichita, Kansas 67206-2241
(877) NASDAQ2 (877-627-3272)
The Fund's Investment Company Act file no. is 811-9609.
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<PAGE>
Statement of Additional Information
December 6, 1999
Eagle Funds
250 North Rock Road, Suite 150
Wichita, Kansas 67206-2241
THE NASDAQ 100 INDEX FUND
This Statement of Additional Information is not a prospectus. A prospectus
may be obtained without charge from certain securities representatives, banks
and other financial institutions that have entered into sales agreements with
Ranson & Associates, Inc. ("Ranson"), or from the Fund, by making a written
request to the Fund, c/o Ranson & Associates, Inc., 250 North Rock Road, Suite
150, Wichita, Kansas 67206-2241 or by calling 877-NASDAQ2 (877-627-3272). This
Statement of Additional Information relates to, and should be read in
conjunction with, the Prospectus for the Nasdaq 100 Index Fund. The Prospectus
for the Fund is dated December 6, 1999.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
General Information 2
Investment Policies and Restrictions 2
Investment Policies and Techniques 3
Management 8
Portfolio Transactions 11
Net Asset Value 12
Tax Matters 13
Performance Information 16
Additional Information on the Purchase and Redemption of Fund Shares and
Shareholder Programs 19
Distribution and Service Plan 29
Independent Public Accountants and Custodian 30
Financial Statements 31
General Trust Information 35
</TABLE>
<PAGE>
GENERAL INFORMATION
The Nasdaq 100 Index Fund (the "Fund") is an open-end, non-diversified
management investment company organized as a series of the Eagle Funds (the
"Trust"). The Trust is an open-end management series investment company
organized as a Massachusetts business trust on October 4, 1999. The Fund is
currently the only outstanding series of the Trust.
Certain matters under the Investment Company Act of 1940 (the "1940 Act")
which must be submitted to a vote of the holders of the outstanding voting
securities of a series company shall not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the outstanding
voting securities of each series affected by the matter.
INVESTMENT POLICIES AND RESTRICTIONS
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions as fundamental
policies which, like the Fund's investment objective, cannot be changed without
approval by the holders of a "majority of the outstanding voting shares" of the
Fund (as defined in the 1940 Act). The Fund may not:
(1) Borrow money, except from banks for temporary or emergency (not
leveraging) purposes in an amount up to 33 1/3% of the value of the Fund's
total assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of the value of the Fund's
total assets, the Fund will not make any additional investments. If due to
market fluctuations or other reasons, the value of the Fund's assets falls
below 300% of the Fund's borrowings, as determined above, the Fund will
reduce its borrowings within 3 days. To do this, the Fund may have to sell a
portion of its investments at a time when it is disadvantageous to do so.
(2) Purchase more than 3% of the total outstanding voting securities of
another single investment company, invest more than 5% of its total assets in
the securities of any other single investment company, or invest more than
10% of its total assets in the securities of two or more other investment
companies, except as part of a merger, consolidation or acquisition of assets
or received as part of a dividend.
(3) Act as an underwriter of another issuer's securities, except to the
extent that the Fund may be deemed to be an underwriter within the meaning of
the Securities Act of 1933 in connection with the purchase and sale of
portfolio securities.
(4) Make loans to other persons, except through (i) the purchase of debt
securities permissible under the Fund's investment policies, (ii) repurchase
agreements, or (iii) the lending of portfolio securities, provided that no
such loan of portfolio securities may be made by the Fund if, as a result,
the aggregate of such loans would exceed 33-1/3% of the value of the Fund's
total assets.
(5) Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments.
(6) Purchase or sell real estate or oil, gas or other mineral leases or
exploration or development programs unless acquired as a result of ownership
of securities or other instruments (but this shall not prohibit
2
<PAGE>
the Fund from purchasing or selling securities or other instruments backed by
real estate or of issuers engaged in real estate activities).
(7) Issue senior securities in excess of 33 1/3% of its total assets
(including the amount of senior securities issued but excluding any
liabilities and indebtedness not constituting senior securities) or pledge
its assets other than to secure such issuances or in connection with hedging
transactions, short sales, when-issued and forward commitment transactions
and similar investment strategies.
(8) Pledge, hypothecate, mortgage or otherwise encumber its assets, except
to secure borrowings for temporary or emergency purposes. Collateral
arrangements with respect to initial or variation margin for futures
contracts will not be deemed to be pledges of the Fund's assets.
(9) Invest 25% or more of its total assets in the securities of issuers in
any single industry or group of industries (except to the extent the Nasdaq-
100 Index also is so concentrated), provided that there shall be no
limitation on the purchase of obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Except for restriction (1), if a percentage restriction is adhered to at the
time of investment, a later increase in percentage resulting from a change in
market value of the investment or the total assets will not constitute a
violation of that restriction.
The foregoing fundamental investment policies, together with the investment
objective of the Fund, cannot be changed without approval by holders of a
"majority of the Fund's outstanding voting shares." As defined in the
Investment Company Act of 1940, this means the vote of (i) 67% or more of the
Fund's shares present at a meeting, if the holders of more than 50% of the
Fund's shares are present or represented by proxy, or (ii) more than 50% of the
Fund's shares, whichever is less.
In addition to the fundamental investment policies listed above, the Fund is
also subject to the following non-fundamental restrictions and policies, which
may be changed by the Board of Trustees. The Fund may not:
(1) Sell securities short, unless the Fund owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short at no
added cost.
(2) Invest in illiquid securities if, as a result of such investment, more
than 15% of the Fund's net assets would be invested in illiquid securities.
(3) Purchase securities of companies for the purpose of exercising control,
but the Fund will vote the securities it owns in accordance with its views.
INVESTMENT POLICIES AND TECHNIQUES
The following information supplements the discussion of the Fund's investment
objective, policies, and techniques that are described in the Prospectus.
3
<PAGE>
THE NASDAQ-100 INDEX
As described in the Fund's prospectus, we seek to create a mix of securities
that will track as closely as possible the investment results of the Nasdaq-100
Index. The Fund therefore seeks to hold the stocks found in the Nasdaq-100
Index in roughly the same proportions as represented by the index itself.
The Nasdaq-100 Index represents 100 of the largest non-financial domestic and
international issues listed on The Nasdaq Stock Market. Annual adjustments were
first implemented in 1993 and Nasdaq-100 Index options began trading in 1994 on
the Chicago Board Options Exchange under the symbol "NDX." In April 1996,
Nasdaq 100 futures and options on futures began trading on the Chicago
Mercantile Exchange under the ticker "ND."
To be eligible for inclusion in the index, a security must be traded on the
Nasdaq National Market tier of the Nasdaq Stock Market and meet the following
criteria:
* the security must be of a non-financial company;
* only one class of security per issuer is allowed;
* the security may not be issued by an issuer currently in bankruptcy
proceedings;
* the security must have average daily trading volume of at least 100,000
shares per day;
* the security must have "seasoned" on the Nasdaq Stock Market or another
recognized market (generally, a company is considered to be seasoned by Nasdaq
if it has been listed on a market for at least two years; in the case of spin-
offs, the operating history of the spin-off will be considered);
* if a security would otherwise qualify to be in the top 25% of the issuers
included in the index by market capitalization, then a one year "seasoning"
criteria would apply;
* if the security is of a foreign issuer, the company must have a worldwide
market value of at least $10 billion, a U.S. market value of at least $4
billion, and average trading volume on the Nasdaq Stock Market of at least
200,000 shares per day; in addition, foreign securities must be eligible for
listed options trading; and
* the issuer of the security may not have entered into a definitive agreement
or other arrangement which would result in the security no longer being listed
on the Nasdaq Stock Market within the next six months.
These index eligibility criteria may be revised from time to time by the
National Association of Securities Dealers, Inc. without regard to the Fund.
The index securities are evaluated annually as follows (such evaluation is
referred to herein as the "Annual Ranking Review"). Securities listed on the
Nasdaq Stock Market which meet the above eligibility criteria are ranked by
market value. Index-eligible securities which are already in the index and
which are in the top 150 eligible securities (based on market value) are
retained in the index provided that such security was ranked in the top 100
eligible securities as of the previous year's annual review. Securities not
meeting such criteria are replaced. The replacement securities chosen are those
index-eligible securities not currently in the index which have the largest
market capitalization. The list of annual additions and deletions is publicly
announced via a press release in the early part of December. Replacements are
made effective after the close of trading on the third Friday in December.
Moreover, if
4
<PAGE>
at any time during the year an index security is no longer traded on the
Nasdaq Stock Market, or is otherwise determined by Nasdaq to become ineligible
for continued inclusion in the index, the security will be replaced with the
largest market capitalization security not currently in the index and meeting
the index eligibility criteria listed above.
In addition to the Annual Ranking Review, the securities in the index are
monitored every day by Nasdaq with respect to changes in total shares
outstanding arising from secondary offerings, stock repurchases, conversions, or
other corporate actions. Nasdaq has adopted the following quarterly scheduled
weight adjustment procedures with respect to such changes. If the change in
total shares outstanding arising from such corporate action is greater than or
equal to 5.0%, such change is ordinarily made to the index on the evening prior
to the effective date of such corporate action. Otherwise, if the change in
total shares outstanding is less than 5%, then all such changes are accumulated
and made effective at one time on a quarterly basis after the close of trading
on the third Friday in each of March, June, September, and December. In either
case, the index share weights for such index securities are adjusted by the same
percentage amount by which the total shares outstanding have changed in such
index securities. Ordinarily, whenever there is a change in index share weights
or a change in a component security included in the index, Nasdaq adjusts the
divisor to assure that there is no discontinuity in the value of the index which
might otherwise be caused by any such change.
Rebalancing of the Index. Effective after the close of trading on December
18, 1998, the index has been calculated under a "modified capitalization-
weighted" methodology, which is a hybrid between equal weighting and
conventional capitalization weighting. This methodology is expected to: (1)
retain in general the economic attributes of capitalization weighting; (2)
promote portfolio weight diversification; (3) reduce index performance
distortion by preserving the capitalization ranking of companies; and (4) reduce
market impact on the smallest index securities from necessary weight
rebalancings.
Under the methodology employed, on a quarterly basis coinciding with Nasdaq's
quarterly scheduled weight adjustment procedures, the index securities are
categorized as either "Large Stocks" or "Small Stocks" depending on whether
their current percentage weights (after taking into account such scheduled
weight adjustments due to stock repurchases, secondary offerings, or other
corporate actions) are greater than, or less than or equal to, the average
percentage weight in the index (i.e., as a 100-stock index, the average
percentage weight in the index is 1.0%).
Such quarterly examination will result in an index rebalancing if either one
or both of the following two weight distribution requirements are not met: (1)
the current weight of the single largest market capitalization index security
must be less than or equal to 24.0% and (2) the "collective weight" of those
index securities whose individual current weights are in excess of 4.5%, when
added together, must be less than or equal to 48%. If either one or both of
these weight distribution requirements are not met upon quarterly review, a
weight rebalancing will be performed in accordance with the following plan.
First, relating to weight distribution requirement (1) above, if the current
weight of the single largest index security exceeds 24.0%, then the weights of
all Large Stocks will be scaled down proportionately towards 1.0% by enough for
the adjusted weight of the single largest index security to be set to 20.0%.
Second, relating to weight distribution requirement (2) above, for those index
securities whose individual current weights or adjusted weights in accordance
with the preceding step are in excess of 4.5%, if their "collective weight"
exceeds 48.0%, then the weights of all Large Stocks will be scaled down
proportionately towards 1.0% by just enough for the "collective weight", so
adjusted, to be set to 40.0%.
The aggregate weight reduction among the Large Stocks resulting from either
or both of the above rescalings will then be redistributed to the Small Stocks
in the following iterative manner. In the first iteration, the weight of
5
<PAGE>
the largest Small Stock will be scaled upwards by a factor which sets it
equal to the average index weight of 1.0%. The weights of each of the smaller
remaining Small Stocks will be scaled up by the same factor reduced in relation
to each stock's relative ranking among the Small Stocks such that the smaller
the index security in the ranking, the less the scale-up of its weight. This is
intended to reduce the market impact of the weight rebalancing on the smallest
component securities in the index.
In the second iteration, the weight of the second largest Small Stock,
already adjusted in the first iteration, will be scaled upwards by a factor
which sets it equal to the average index weight of 1.0%. The weights of each of
the smaller remaining Small Stocks will be scaled up by this same factor reduced
in relation to each stock's relative ranking among the Small Stocks such that
once again, the smaller the stock in the ranking, the less the scale-up of its
weight.
Additional iterations will be performed until the accumulated increase in
weight among the Small Stocks exactly equals the aggregate weight reduction
among the Large Stocks from rebalancing in accordance with weight distribution
requirement (1) and/or weight distribution requirement (2). Then, to complete
the rebalancing procedure, once the final percent weights of each index security
are set, the index share weights will be determined anew based upon the last
sale prices and aggregate capitalization of the index at the close of trading on
the Thursday in the week immediately preceding the week of the third Friday in
March, June, September, and December. Changes to the index share weights will
be made effective after the close of trading on the third Friday in March, June,
September, and December and an adjustment to the index divisor will be made to
ensure continuity of the index.
The Nasdaq-Amex Market Group, which operates The Nasdaq Stock Market is a
subsidiary of the National Association of Securities Dealers, Inc. (NASDr), the
largest securities-industry, self-regulatory organization in the United States.
The Nasdaq Stock Market lists nearly 5,400 companies and trades more shares
per day than any other major U.S. market. Since making its debut as the world's
first electronic stock market, Nasdaq has been at the forefront of innovation,
using technology to bring millions of investors together with the world's
leading companies. It is among the world's best regulated stock markets,
employing the industry's most sophisticated surveillance systems and regulatory
specialists to protect investors and provide a fair and competitive trading
environment.
Investors should note that the Fund is not sponsored, endorsed or promoted by
or affiliated with The Nasdaq Stock Market, Inc. and The Nasdaq Stock Market,
Inc. makes no representation, express or implied, to the Fund or shareholders
regarding the advisability of investing in an index investment or investment
companies generally or in the Fund specifically or the ability of the indexes to
track general stock market performance.
The information in this section has been taken from publicly available
sources provided by the Nasdaq Stock Market, Inc. or the National Association of
Securities Dealers, Inc. The Fund believes this information to be accurate as
of the date of this Statement of Additional Information but has not
independently reviewed the accuracy of this information. The manner in which
the index level is calculated, index eligibility criteria, the annual ranking
review and the process for rebalancing the index may change in the future.
These factors are solely within the control of The Nasdaq Stock Market, Inc. or
the National Association of Securities Dealers, Inc. and may change without
consideration of or notice to the Fund. In addition, the Nasdaq Stock Market,
Inc. may, at its discretion, temporarily suspend Nasdaq-100 Index securities
from the calculation of the Nasdaq-100 Index or adjust the Nasdaq-100 Index
divisor in those instances where an unusual cash dividend or spin-off might
unduly influence the level of the Nasdaq-100 Index.
6
<PAGE>
SHORT-TERM INVESTMENTS
The following information supplements the discussion of short-term
investments in the Prospectus. The Fund may invest in the circumstances
described "Short-Term Investments" in the Fund's Prospectus, in cash equivalents
and short-term fixed income instruments including the following:
(1) U.S. Government Securities. Securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities that differ in their interest rates, maturities and times of
issuance. Some obligations issued or guaranteed by U.S. Government agencies
and instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others by the right of the issuer to borrow from the Treasury;
others by discretionary authority of the U.S. Government to purchase certain
obligations from the agency or instrumentality; and others only by the credit
of the agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. While the U.S. Government provides financial
support for such U.S. Government-sponsored agencies and instrumentalities, no
assurance can be given that it will always do so since it is not so obligated
by law. The U.S. Government, its agencies, and instrumentalities do not
guarantee the market value of their securities and, consequently, the value
of such securities may fluctuate.
(2) Certificates of Deposit. The Fund may invest in certificates of
deposit issued against funds deposited in a bank or savings and loan
association. Such certificates are for a definite period of time, earn a
specified rate of return, and are normally negotiable. If such certificates
of deposit are non-negotiable, they will be considered illiquid securities
and be subject to the Fund's 15% restriction on investments in illiquid
securities. Pursuant to the certificate of deposit, the issuer agrees to
pay the amount deposited plus interest to the bearer of the certificate on
the date specified thereon. Under current FDIC regulations, the maximum
insurance payable as to any one certificate of deposit is $100,000;
certificates of deposit purchased by the Fund may not be fully insured.
(3) Bankers' Acceptances. The Fund may invest in bankers' acceptances
which are short-term credit instruments used to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank
by an exporter or an importer to obtain a stated amount of funds to pay
for specific merchandise. The draft is then "accepted" by a bank that,
in effect, unconditionally guarantees to pay the face value of the
instrument in its maturity date. The acceptance may then be held by the
accepting bank as an asset or it may be sold in the secondary market at
the going rate of interest for a specific maturity.
(4) Repurchase Agreements. The Fund may invest in repurchase agreements
which involve purchases of debt securities. In such an action, at the time
the Fund purchases the security, it simultaneously agrees to resell and
redeliver the security to the seller, who also simultaneously agrees to buy
back the security at a fixed price and time. This assures a predetermined
yield for the Fund during its holding period since the resale price is always
greater than the purchase price and reflects an agreed-upon market rate.
Such actions afford an opportunity for the Fund to invest temporarily
available cash. The Fund may enter into repurchase agreements with respect
to obligations of the U.S. Government, its agencies or instrumentalities,
bankers' acceptances or certificate of deposit. Repurchase agreements may be
considered loans to the seller, collateralized by the underlying securities.
The risk to the Fund is limited to the ability of the seller to pay the
agreed-upon sum on the repurchase date; in the event of default, the
repurchase agreement provides that the Fund is entitled to sell the
underlying collateral. If the value of the collateral declines after the
agreement is entered into, however, and if the seller defaults under a
repurchase agreement when the value of the underlying collateral is less than
the repurchase price, the Fund could incur a loss of both principal and
interest. The portfolio manager monitors the
7
<PAGE>
value of the collateral at the time the action is entered into and at all
times during the term of the repurchase agreement. The portfolio manager
does so in an effort to determine that the value of the collateral always
equals or exceeds the agreed upon repurchase price to be paid to the Fund.
If the seller were to be subject to a federal bankruptcy proceeding, the
ability of the Fund to liquidate the collateral could be delayed or impaired
because of certain provisions of the bankruptcy laws.
(5) Time Deposits. The Fund may invest in bank time deposits, which are
monies kept on deposit with banks or savings and loan associations for a
stated period of time at a fixed rate of interest. There may be penalties
for the early withdrawal of such time deposits, in which case the yields of
these investments will be reduced.
(6) Commercial Paper. The Fund may invest in commercial paper, which are
short-term, unsecured promissory notes, including variable rate master demand
notes issued by corporations to finance their current operations. Master
demand notes are direct lending arrangements between the Fund and a
corporation. There is no secondary market for the notes. However, they are
redeemable by the Fund at any time. The portfolio manager will consider the
financial condition of the corporation (e.g., earning power, cash flow, and
other liquidity ratios) and will continuously monitor the corporation's
ability to meet all of its financial obligations, because the Fund's
liquidity might be impaired if the corporation were unable to pay principal
and interest on demand. The Fund may only invest in commercial paper which
are at the time of their purchase rated A-1 or better by Standard & Poor's
Ratings Group ("S&P"), Prime 1 or higher by Moody's Investors Service Inc.
("Moody's"), Duff 2 or higher by Duff & Phelps Inc. ("D&P) or Fitch 2 or
higher by Fitch Investors Service, Inc. ("Fitch"), or if unrated, determined
by Ranson to be of comparable quality to those rated obligations which may be
purchased by the Fund.
MANAGEMENT
The management of the Trust, including general supervision of the duties
performed for the Fund under the Management Agreement, is the responsibility of
its Board of Trustees. The number of trustees of the Trust is currently set at
5, 2 of whom are "interested persons" (as the term "interested persons" is
defined in the Investment Company Act of 1940) and 3 of whom are "disinterested
persons." The names and addresses of the trustees and officers of the Trust and
their principal occupations and other affiliations during the past five years
are set forth below, with those trustees who are "interested persons" of the
Trust indicated by an asterisk.
<TABLE>
<CAPTION>
POSITION AND PRINCIPAL OCCUPATIONS
NAME AND ADDRESS AGE OFFICES WITH TRUST DURING PAST FIVE YEARS
<S> <C> <C> <C>
Alex R. Meitzner* 39 Chairman of the Board, Ranson & Associates, Inc.
846 Bramerton Trustee, and Vice President Chairman of the Board
Andover, KS 67002 (since 1996)
Ranson Capital Corporation
(financial adviser and underwriter)
Executive Vice President
(1989-1996)
8
<PAGE>
Robin K. Pinkerton* 44 President, Chief Financial Ranson & Associates, Inc.
431 Sherman Place Officer, Secretary, President, Chief Financial
Newton, KS 67114 Treasurer, Controller Officer, Chief Operation
and Trustee Officer, Chief Compliance
Officer (since 1996)
Ranson Capital Corporation
(financial adviser and underwriter)
Vice President, Chief Financial
Officer, Chief Operation
Officer, Chief Compliance
Officer (1989-1996)
Robert L. Abraham 47 Trustee Metropolitan Water Reclamation
1150 Lincoln District
Glenview, IL 60025 Head Assistant Attorney
(since 1980)
Frank W. Callahan 58 Trustee Harris D. McKinney, Inc.
430 W. Erie (advertising agency)
Suite 400 President (since 1970)
Chicago, IL 60610
Ralph E. Reichert 39 Trustee Fort Dearborn Company
701 Wagner Road (printing company)
Glenview, IL 60025 Vice President and Member of the
Board of Director (since 1989)
Douglas K. Rogers 43 Vice President Ranson & Associates, Inc.
3716 North 143rd Street East Executive Vice President (since 1996)
Wichita, KS 67228
Ranson Capital Corporation
(financial adviser and underwriter)
Vice President
(1990 - 1996)
</TABLE>
The following table sets forth compensation estimated to be paid by the Fund
to each of the Trustees who are not designated "interested persons" during the
Fund's fiscal year ending November 30, 2000 and the total compensation
9
<PAGE>
that the Eagle Funds paid to such Trustees during that one year period. The
Fund has no retirement or pension plans. The officers and trustees affiliated
with Ranson serve without any compensation from the Fund.
<TABLE>
<CAPTION>
ESTIMATED TOTAL COMPENSATION
AGGREGATE FROM FUND AND
COMPENSATION FUND COMPLEX
NAME OF TRUSTEE FROM THE FUND* PAID TO TRUSTEES **
<S> <C> <C>
Robert L. Abraham $2,000 $2,000
Frank W. Callahan $2,000 $2,000
Ralph E. Reichert $2,000 $2,000
<FN>
- --------------------
* Based on the estimated compensation to be paid to the independent trustees for
the one year period, December 1, 1999 through November 30, 2000 for services to
the Fund.
** Based on the compensation paid to the independent trustees for the one year
period, December 1, 1999 through November 30, 2000 for services to the Fund and
the open-end and closed-end funds advised by Ranson in the Fund complex.
Currently, the Fund is the only investment company in the Fund complex.
</TABLE>
Each trustee who is not affiliated with Ranson receives a $500 fee per day
plus expenses for attendance at all Board meetings whether attendance is in
person or by telephone for serving as a director or trustee of all funds for
which Ranson serves as investment adviser or manager. The Fund requires no
employees other than its officers, all of whom are compensated by Ranson.
As of December 6, 1999, Ranson owned all the shares of the Fund with 10,000
shares outstanding (Class A).
FUND MANAGER
Ranson, an investment banking firm created in 1995 by a number of former
owners and employees of Ranson Capital Corporation, acts as the manager of the
Fund with responsibility for the overall management of the Fund. Its address is
250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241. Ranson is
responsible for managing the Fund's business affairs, providing day-to-day
administrative services to the Fund, and managing the Fund's investment
portfolio. For additional information regarding the management services
performed by Ranson, see "How We Manage Your Money - The Investment Adviser and
Distributor of the Fund" in the Prospectus.
Ranson & Associates, Inc. is privately owned by several shareholders. Alex
R. Meitzner, Chairman of the Board is the sole stockholder that holds in excess
of 25% of the outstanding shares of the Corporation. Ranson, a member of the
National Association of Securities Dealers, Inc. is also the principal
underwriter of the Fund's shares. On November 26, 1996, Ranson purchased the
unit trust division of EVEREN Securities, Inc. Accordingly, Ranson is the
successor sponsor to unit investment trusts formerly sponsored by EVEREN
Securities, Inc. Ranson is also the sponsor and successor sponsor of series of
The Kansas Tax-Exempt Trust and Multi-State Series of The Ranson Municipal
Trust. Ranson is the successor to a series of companies, the first of which was
originally organized in Kansas in 1935. During its history, Ranson and its
predecessors have been active in public and corporate finance and serves as
financial advisor and as an underwriter to Kansas municipalities. Ranson
Capital Corporation also served as investment advisor to three open-end
investment companies with assets under management of approximately $180,000,000.
10
<PAGE>
For the Fund management services and facilities furnished by Ranson, the Fund
has agreed to pay an annual management fee at rates set forth in the Prospectus
under "Management Fees." In addition, Ranson agreed to waive all or a portion
of its management fee or reimburse certain expenses of the Fund for the year
ended December 31, 2000 in order to prevent total annual Fund operating expenses
(excluding distribution or service fees and extraordinary expenses) from
exceeding 1.50% of the average daily net asset value of any class of Fund
shares.
ADMINISTRATOR
Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite 400,
Milwaukee, WI 53201-0641 ("Sunstone") serves as administrator of the Fund. In
such capacity, Sunstone agrees to provide to the Fund the following services
including but not limited to preparation of financial statements for annual and
semi-annual reports; prepare board reports, agendas and minutes; compute
performance information; calculate net asset value; assist in preparation and
filing of tax returns; perform security valuations using pricing services;
review compliance with the Fund's policies and limitations; and maintain certain
books and records. For these services, the Fund pays Sunstone an annual fee of
.20% of average net assets on the first $50 million, and decreasing as assets
reach certain levels, subject to a minimum annual fee of $72,250. Such minimum
fee shall be reduced by 25% from December 6, 1999 through June 5, 2000, and by
10% from June 6, 2000 through December 5, 2000. The Fund shall also pay
Sunstone's out-of-pocket or other related expenses.
PORTFOLIO TRANSACTIONS
Ranson is responsible for decisions to buy and sell securities for the Fund
and for the placement of the Fund's securities business, the negotiation of the
commissions to be paid on brokered transactions, the prices for principal trades
in securities, and the allocation of portfolio brokerage and principal business.
It is the policy of Ranson to seek the best execution at the best security price
available with respect to each transaction, and with respect to brokered
transactions, in light of the overall quality of brokerage and research services
provided to the adviser and its advisees. The best price to the Fund means the
best net price without regard to the mix between purchase or sale price and
commission, if any. Purchases may be made from underwriters, dealers, and, on
occasion, the issuers. The purchase price of portfolio securities purchased
from an underwriter or dealer may include underwriting commissions and dealer
spreads. The Fund may pay mark-ups on principal transactions. Commissions will
be paid on securities purchased through brokers. In selecting broker-dealers
and in negotiating commissions, the portfolio manager considers, among other
things, the firm's reliability, the quality of its execution services on a
continuing basis and its financial condition. Brokerage will not be allocated
based on the sale of the Fund's shares.
Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under certain circumstances, to cause an account
to pay a broker or dealer who supplies brokerage and research services a
commission for effecting a transaction in excess of the amount of commission
another broker or dealer would have charged for effecting the transaction.
Brokerage and research services include (a) furnishing advice as to the value of
securities, the advisability of investing, purchasing or selling securities, and
the availability of securities or purchasers or seller of securities; (b)
furnishing analyses and reports concerning issuers, industries, securities,
economic factors and trends, portfolio strategy, and the performance of
accounts; and (c) effecting securities transactions and performing functions
incidental thereto (such as clearance, settlement, and custody).
In light of the above in selecting brokers, Ranson also considers investment
and market information and other research, such as economic, securities, index-
related and performance measurement research, provided by such
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brokers, and the quality and reliability of brokerage services, including
execution capability, performance, and financial responsibility. Ranson may
also receive additional services such as on line quotation or pricing services.
Accordingly, the commissions charged by any such broker may be greater than the
amount another firm might charge if Ranson determines in good faith that the
amount of such commissions is reasonable in relation to the value of the
research information and brokerage services provided by such broker to Ranson or
the Fund. Ranson believes that the research information received in this manner
provides the Fund with benefits by supplementing the research otherwise
available to the Fund. The Management and Investment Advisory Agreement
provides that such higher commissions will not be paid by the Fund unless the
adviser determines in good faith that the amount is reasonable in relation to
the services provided. The investment advisory fees paid by the Fund to Ranson
under the Management Agreement are not reduced as a result of receipt by Ranson
of research and brokerage services.
Ranson places portfolio transactions for other advisory accounts managed by
them. Research services furnished by firms through which the Fund effects its
securities transactions may be used by Ranson in servicing all of its accounts;
and not all of such services may be used by Ranson in connection with the Fund.
Ranson believes it is not possible to measure separately the benefits from
research services to each of the accounts (including the Fund) managed by them.
Because the volume and nature of the trading activities of the accounts are not
uniform, the amount of commissions in excess of those charged by another broker
paid by each account for brokerage and research services will vary. However,
Ranson believes such costs to the Fund will not be disproportionate to the
benefits received by the Fund on a continuing basis. Ranson seeks to allocate
portfolio transactions equitably whenever concurrent decisions are made to
purchase or sell securities by the Fund and another advisory account. In some
cases, this procedure could have an adverse effect on the price or the amount of
securities available to the Fund. In making such allocations between the Fund
and other advisory accounts, the main factors considered by Ranson are the
respective investment objectives, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment and the
size of investment commitments generally held.
Under the Investment Company Act of 1940, the Fund may not purchase portfolio
securities from any underwriting syndicate of which Ranson is a member except
under certain limited conditions set forth in Rule 10f-3. The Rule sets forth
requirements relating to, among other things, the terms of a security purchased
by the Fund, the amount of securities that may be purchased in any one issue and
the assets of the Fund that may be invested in a particular issue. In addition,
purchases of securities made pursuant to the terms of the Rule must be approved
at least quarterly by the Board of Trustees, including a majority of the
trustees who are not interested persons of the Trust.
NET ASSET VALUE
The Fund's net asset value per share is determined as of the close of trading
(normally 4:00 p.m. eastern time) on each day the New York Stock Exchange (the
"Exchange") is open for business. The Exchange currently is not open for
trading on New Year's Day, Martin Luther King, Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. The Fund's net asset value may not be calculated on days during
which the Fund receives no orders to purchase shares and no shares are tendered
for redemption. Net asset value is calculated by taking the value of the Fund's
total assets, including interest or dividends accrued but not yet collected,
less all liabilities, and dividing by the total number of shares outstanding.
The result, rounded to the nearest cent, is the net asset value per share. In
determining net asset value, expenses are accrued and applied daily and
securities and other assets for which market quotations are available are valued
at market value. The Fund's portfolio securities traded on the Nasdaq are
valued at the last sales price; however, securities traded on the Nasdaq for
which there were no transactions on a given day are valued at the most recent
mean prices.
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TAX MATTERS
FEDERAL INCOME TAX MATTERS
The following discussion of federal income tax matters is based upon the
advice of Chapman and Cutler, counsel to the Trust.
The Fund intends to qualify under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code") for tax treatment as a regulated investment
company. In order to qualify as a regulated investment company, a Fund (i) must
elect to be treated as a "regulated investment company" and (ii) for each
taxable year thereafter must satisfy certain requirements relating to the source
of its income, diversification of its assets, and distributions of its income to
shareholders. First, the Fund must derive at least 90% of its annual gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock or securities, foreign
currencies or other income (including but not limited to gains from options,
futures, or forward contracts) derived with respect to its business of investing
in such stock, securities or currencies (the "90% gross income test"). Second,
the Fund must diversify its holdings so that, at the close of each quarter of
its taxable year, (i) at least 50% of the value of its total assets is comprised
of cash, cash items, United States Government securities, securities of other
regulated investment companies and other securities limited in respect of any
one issuer to an amount not greater in value than 5% of the value of the Fund's
total assets and to not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of the Fund's total assets
is invested in the securities of any one issuer (other than United States
Government securities and securities of other regulated investment companies) or
two or more issuers controlled by the Fund and engaged in the same, similar or
related trades of businesses.
As a regulated investment company, the Fund will not be subject to federal
income tax in any taxable year for which it distributes at least 90% of the sum
of (i) its "investment company taxable income" (without regard to its net
capital gain, i.e., the excess of its net long-term capital gain over its short-
term capital loss) and (ii) its net tax-exempt interest (the excess of its gross
tax-exempt interest income over certain disallowed deductions). In addition, to
the extent the Fund timely distributes to shareholders at least 98% of its
taxable income (including any net capital gain), it will not be subject to the
4% excise tax on certain undistributed income of "regulated investment
companies." The Fund intends to make timely distributions in compliance with
these requirements and consequently it is anticipated that they generally will
not be required to pay the excise tax. The Fund may retain for investment its
net capital gain. However, if the Fund retains any net capital gain or any
investment company taxable income, it will be subject to federal income tax at
regular corporate rates on the amount retained. If the Fund retains any net
capital gain, the Fund may designate the retained amount as undistributed
capital gains in a notice to its shareholders who, if subject to federal income
tax on long-term capital gains, (i) will be required to include in income for
federal income tax purposes, as long-term capital gain, their shares of such
undistributed amount, and (ii) will be entitled to credit their proportionate
shares of the tax paid by the Fund against their federal income tax liabilities
if any, and to claim refunds to the extent the credit exceeds such liabilities.
For federal income tax purposes, the tax basis of shares owned by a shareholder
of the Fund will be increased by an amount equal to the difference between the
amount of such includible capital gains and the tax deemed paid by such
shareholder. The Fund intends to distribute at least annually to its
shareholders all or substantially all of its investment company taxable income
and net capital gain.
Treasury regulations permit a regulated investment company, in determining
its investment company taxable income and net capital gain, to elect (unless it
has made a taxable year election for excise tax purposes as discussed
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below) to treat all or part of any net capital loss, any net long-term
capital loss or any net foreign currency loss incurred after October 31 as if
they had been incurred in the succeeding year.
If the Fund engages in hedging transactions involving financial futures and
options, these transactions will be subject to special tax rules, the effect of
which may be to accelerate income to the Fund, defer the Fund's losses, cause
adjustments in the holding periods of the Fund's securities, convert long-term
capital gains into short-term capital gains and convert short-term capital
losses into long-term capital losses. These rules could therefore affect the
amount, timing and character of distributions to shareholders.
Prior to purchasing shares in the Fund, the impact of dividends or
distributions which are expected to be or have been declared, but not paid,
should be carefully considered. Any dividend or distribution declared shortly
after a purchase of such shares prior to the record date will have the effect of
reducing the per share net asset value by the per share amount of the dividend
or distribution and will be subject to federal income tax to the extent it is a
distribution of ordinary income or capital gain.
In any taxable year of the Fund, distributions from the Fund, other than
distributions which are designated as capital gains dividends, will to the
extent of the earnings and profits on the Fund, constitute dividends for federal
income tax purposes which are taxable as ordinary income to shareholders. To
the extent that distributions to a shareholder in any year exceed the Fund's
current and accumulated earnings and profits, they will be treated as a return
of capital and will reduce the shareholder's basis in his or her shares and, to
the extent that they exceed his or her basis, will be treated as gain from the
sale of such shares as discussed below. Distributions of the Fund's net capital
gain which are properly designated as capital gain dividends by the Fund will be
taxable to the shareholders as long-term capital gain, regardless of the length
of time the shares have been held by a shareholder. Distributions will be taxed
in the manner described (i.e., as ordinary income, long-term capital gain,
return of capital or exempt-interest dividends) even if reinvested in additional
shares of a Fund.
Although dividends generally will be treated as distributed when paid,
dividends declared in October, November or December, payable to shareholders of
record on a specified date in one of those months and paid during the following
January, will be treated as having been distributed by the Fund (and received by
the shareholders) on December 31 of the year such dividends are declared.
The redemption of the shares of the Fund normally will result in capital gain
or loss to the shareholders. Generally, a shareholder's gain or loss will be
long-term gain or loss if the shares have been held for more than one year.
Present law taxes both long- and short-term capital gains of corporations at the
rates applicable to ordinary income. The Internal Revenue Service Restructuring
and Reform Act of 1998 (the "1998 Tax Act") provides that for taxpayers other
than corporations, net capital gain (which is defined as net long-term capital
gain over net short-term capital loss for the taxable year) realized from
property (with certain exclusions) is subject to a maximum marginal stated tax
rate of 20% (10% in the case of certain taxpayers in the lowest tax bracket).
Capital gain or loss is long-term if the holding period for the asset is more
than one year, and is short-term if the holding period for the asset is one year
or less. The date on which a share is acquired (i.e., the "trade date") is
excluded for purposes of determining the holding period of the share. Capital
gains realized from assets held for one year or less are taxed at the same rates
as ordinary income. The date on which a share is acquired (i.e., the "trade
date") is excluded for purposes of determining the holding period of the share.
It should be noted that if a sale of shares held for less than six months
results in a loss, the loss will be treated as a long-term capital loss to the
extent of any capital gain distribution made with respect to such shares during
the period those shares are held by the shareholder.
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In addition, please note that capital gains may be recharacterized as
ordinary income in the case of certain financial transactions that are
considered "conversion transactions" effective for transactions entered into
after April 30, 1993. Shareholders and prospective investors should consult
with their tax advisers regarding the potential effect of this provision on
their investment in shares of the Fund.
Under the Code, certain miscellaneous itemized deductions, such as investment
expenses, tax return preparation fees and employee business expenses, will be
deductible by individuals only to the extent they exceed 2% of adjusted gross
income. Miscellaneous itemized deductions subject to this limitation under
present law do not include expenses incurred by the Fund as long as the shares
of the Fund are held by or for 500 or more persons at all times during the
taxable year or another exception is met. In the event the shares of the Fund
are held by fewer than 500 persons, additional taxable income may be realized by
the individual (and other non-corporate) shareholders in excess of the
distributions received from the Fund.
All or a portion of a sales load paid in purchasing shares of the Fund cannot
be taken into account for purposes of determining gain or loss on the redemption
of such shares within 90 days after their purchase to the extent shares of the
Fund are subsequently acquired without payment of a sales load or with the
payment of a reduced sales load pursuant to the reinvestment privilege. Any
disregarded portion of such load will result in an increase in the shareholder's
tax basis in the shares subsequently acquired. Moreover, losses recognized by a
shareholder on the redemption of shares of the Fund held for six months or less
are disallowed to the extent of any distribution of exempt-interest dividends
received with respect to such shares and, if not disallowed, such losses are
treated as long-term capital losses to the extent of any distributions of long-
term capital gains made with respect to such shares. In addition, no loss will
be allowed on the redemption of shares of the Fund if the shareholder purchases
other shares of the Fund (whether through reinvestment of distributions or
otherwise) or the shareholder acquires or enters into a contract or option to
acquire securities that are substantially identical to shares of the Fund within
a period of 61 days beginning 30 days before and ending 30 days after such
redemption or exchange. If disallowed, the loss will be reflected in an
adjustment to the basis of the shares acquired.
If in any year the Fund should fail to qualify under Subchapter M for tax
treatment as a regulated investment company, the Fund would incur a regular
corporate federal income tax upon its income for that year and distributions to
its shareholders would be taxable to shareholders as ordinary dividend income
for federal income tax purposes to the extent of the Fund's available earnings
and profits.
The Fund is required in certain circumstances to withhold 31% of taxable
dividends and certain other payments paid to non-corporate holders of shares who
have not furnished to the Fund their correct taxpayer identification number (in
the case of individuals, their social security number) and certain
certifications, or who are otherwise subject to backup withholding.
A shareholder who is a foreign investor (i.e., an investor other than a
United States citizen or resident or a United States corporation, partnership,
estate or trust) should be aware that, generally, subject to applicable tax
treaties, distributions from a Fund which constitute dividends for Federal
income tax purposes (other than dividends which a Fund designates as capital
gain dividends) will be subject to United States income taxes, including
withholding taxes. However, distributions received by a foreign investor from
a Fund that are designated by the Fund as capital gain dividends should not be
subject to United States Federal income taxes, including withholding taxes, if
all of the following conditions are met (i) the capital gain dividend is not
effectively connected with the conduct by the foreign investor of a trade or
business within the United States, (ii) the foreign investor (if an individual)
is not present in the
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United States for 183 days or more during his or her taxable year, and (iii)
the foreign investor provides all certification which may be required of his
status (foreign investors may contact the Sponsor to obtain a Form W-8 which
must be filed with the Trustee and refiled every three calendar years
thereafter). Foreign investors should consult their tax advisors with respect
to United States tax consequences of ownership of shares. Shares in a Fund and
Fund distributions may also be subject to state and local taxation and
shareholders should consult their tax advisors in this regard.
A corporate shareholder may be entitled to a 70% dividends received deduction
with respect to any portion of such shareholder's ordinary income dividends
which are attributable to dividends received by the Fund on certain Securities
(other than corporate shareholders, such as "S" corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding corporation tax). The Fund will designate the portion of any
taxable dividend which is eligible for this deduction. However, a corporate
shareholder should be aware that Sections 246 and 246A of the Code impose
additional limitations on the eligibility of dividends for the 70% dividends
received deduction. These limitations include a requirement that stock (and
therefore shares of the Fund) must generally be held at least 46 days (as
determined under, and during the period specified in, Section 246(c) of the
Code). Regulations have been issued which address special rules that must be
considered in determining whether the 46 day holding requirement is met.
Moreover, the allowable percentage of the deduction will generally be reduced
from 70% if a corporate shareholder owns shares of the Fund the financing of
which is directly attributable to indebtedness incurred by such corporation. It
should be noted that various legislative proposals that would affect the
dividends received deduction have been introduced. To the extent dividends
received by the Fund are attributable to foreign corporations, a corporate
shareholder will not be entitled to the dividends received deduction with
respect to its share of such foreign dividends since the dividends received
deduction is generally available only with respect to dividends paid by domestic
corporations. It should be noted that payments to the Fund of dividends on
Equity Securities that are attributable to foreign corporations may be subject
to foreign withholding taxes. Corporate shareholders should consult with their
tax advisers with respect to the limitations on, and possible modifications to,
the dividends received deduction.
The foregoing is a general and abbreviated summary of the provisions of the
Code and Treasury Regulations presently in effect as they directly govern the
federal income taxation of the Fund and its shareholders and relates only to the
federal income tax status of the Fund and to tax treatment of distributions by
the Fund to United States shareholders. For complete provisions, reference
should be made to the pertinent Code sections and Treasury Regulations. The
Code and Treasury Regulations are subject to change by legislative or
administrative action, and any such change may be retroactive with respect to
Fund transactions. Shareholders are advised to consult their own tax advisers
for more detailed information concerning the federal taxation of the Fund and
the income tax consequences to their shareholders, as well as with respect to
foreign, state and local tax consequences of ownership of Fund shares.
PERFORMANCE INFORMATION
The Fund may quote its yield, distribution rate, beta, average annual total
return or cumulative total return in reports to shareholders, sales literature
and advertisements each of which will be calculated separately for each class of
shares.
In accordance with a standardized method prescribed by rules of the
Securities and Exchange Commission ("SEC"), yield is computed by dividing the
net investment income per share earned during the specified one month
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<PAGE>
or 30-day period by the maximum offering price per share on the last day of
the period, according to the following formula:
Yield = 2 [ ((a - b)/(cd) + 1)^6 - 1 ]
In the above formula, a = dividends and interest earned during the period; b=
expenses accrued for the period (net of reimbursements); c = the average daily
number of shares outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share on the last day of the
period. In the case of Class A shares, the maximum offering price includes the
current maximum front-end sales charge of 2.50%.
In computing yield, the Fund follows certain standardized accounting
practices specified by SEC rules. These practices are not necessarily
consistent with those that the Fund uses to prepare its annual and interim
financial statements in conformity with generally accepted accounting
principles. Thus, the yield may not equal the income paid to shareholders or
the income reported in a Fund's financial statements.
The Fund may from time to time in its advertising and sales materials report
a quotation of its current distribution rate. The distribution rate represents
a measure of dividends distributed or a specified period. Distribution rate is
computed by taking the most recent dividend per share, multiplying it as needed
to annualize it, and dividing by the appropriate price per share. The
distribution rate differs from yield and total return and therefore is not
intended to be a complete measure of performance. Distribution rate may
sometimes differ from yield because the Fund may be paying out more than it is
earning.
The Fund also may from time to time in its advertising and sales literature
quote its beta. Beta is a standardized measure of a security's risk
(variability of returns) relative to the overall market, i.e. the proportion of
the variation in the security's returns that can be explained by the variation
in the return of the overall market. For example, a security with a beta of
0.85 is expected to have returns that are 85% as variable as overall market
returns. Conversely, a security with a beta of 1.25 is expected to have returns
that are 125% as variable as overall market returns. The beta of the overall
market is by definition 1.00.
The formula for beta is given by:
Beta = Summation A * B / C
where
A = (Xi - X), i = 1,..., N
B = (Yi - Y), i = 1,..., N
C = Summation (Xi - X)^2 , i = 1,..., N
Xi = Security Return in period i
Yi = Market Return in period i
X = Average all of observations Xi
Y = Average of all observations Yi
N = Number of observations in the measurement period
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All total return figures assume the reinvestment of all dividends and measure
the net investment income generated by, and the effect of any realized and
unrealized appreciation or depreciation of, the underlying investments in the
Fund over a specified period to time. Average annual total return figures are
annualized and therefore represent the average annual percentage change over the
specified period. Cumulative total return figures are not annualized and
represent the aggregate percentage or dollar value change over a stated period
of time. Average annual total return and cumulative total return are based upon
the historical results of the Fund and are not necessarily representative of the
future performance of a Fund. The Fund currently does not have any prior
operating history.
The average annual total return quotation is computed in accordance with a
standardized method prescribed by SEC rules. The average annual total return
for a specific period is found by taking a hypothetical $1,000 investment
("initial investment") in Fund shares on the first day of the period, reducing
the amount to reflect the maximum sales charge, and computing the "redeemable
value" of that investment at the end of the period. The redeemable value is
then divided by the initial investment, and this quotient is taken to the Nth
root (N representing the number of years in the period) and 1 is subtracted from
the result, which is then expressed as a percentage. The calculation assumes
that all income and capital gains distributions have been reinvested in Fund
shares at net asset value on the reinvestment dates during the period.
Calculation of cumulative total return is not subject to a prescribed
formula. Cumulative total return for a specific period is calculated by first
taking a hypothetical initial investment in Fund shares on the first day of the
period, deducting (in some cases) the maximum sales charge, and computing the
"redeemable value" of that investment at the end of the period. The cumulative
total return percentage is then determined by subtracting the initial investment
from the redeemable value and dividing the remainder by the initial investment
and expressing the result as a percentage. The calculation assumes that all
income and capital gains distributions by the Fund have been reinvested at net
asset value on the reinvestment dates during the period. Cumulative total
return may also be shown as the increased dollar value of the hypothetical
investment over the period. Cumulative total return calculations that do not
include the effect of the sales charge would be reduced if such charge were
included. Average annual and cumulative total returns may also be presented in
advertising and sales literature without the inclusion of sales charges.
From time to time, the Fund may compare its risk-adjusted performance with
other investments that may provide different levels of risk and return. For
example, the Fund may compare its risk level, as measured by the variability of
its periodic returns, or its risk-adjusted total return, with those of other
funds or groups of funds. Risk-adjusted total return would be calculated by
adjusting each investment's total return to account for the risk level of the
investment.
The risk level for shares of the Fund, and any of the other investments used
for comparison, would be evaluated by measuring the variability of the
investment's return, as indicated by the standard deviation of the investment's
monthly returns over a specified measurement period (e.g., two years). An
investment with a higher standard deviation of monthly returns would indicate
that a fund had greater price variability, and therefore greater risk, than an
investment with a lower standard deviation.
The risk-adjusted total return for shares of the Fund and for other
investments over a specified period would be evaluated by dividing (a) the
remainder of the investment's annualized two-year total return, minus the
annualized total return of an investment in Treasury bill securities
(essentially a risk-free return) over that period, by (b) the standard deviation
of the investment's monthly returns for the period. This ratio is sometimes
referred to as the "Sharpe measure" of return. An investment with a higher
Sharpe measure would be regarded as producing a higher
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<PAGE>
return for the amount of risk assumed during the measurement period than an
investment with a lower Sharpe measure.
Class A shares of the Fund are sold at net asset value plus a maximum sales
charge of 2.50% of the offering price. This current maximum sales charge will
typically be used for purposes of calculating performance figures. Returns and
net asset value of each class of shares of the Fund will fluctuate. Factors
affecting the performance of the Fund include general market conditions,
operating expenses and investment management. Any additional fees charged by a
securities representative or other financial services firm would reduce returns
described in this section. Shares of the Fund are redeemable at net asset
value, which may be more or less than original cost. Class A shares under
certain circumstances and Class C shares may be subject to a contingent deferred
sales load as set forth in the Fund's Prospectus.
In reports or other communications to shareholders or in advertising and
sales literature, the Fund may also compare its performance or the performance
of its portfolio manager with that of, or reflect the performance of: (1) the
Consumer Price Index; (2) mutual funds or mutual fund indexes as reported by
Lipper Analytical Services, Inc. ("Lipper"), Morningstar, Inc. ("Morningstar"),
Wiesenberger Investment Companies Service ("Wiesenberger") and CDA Investment
Technologies, Inc. ("CDA") or similar independent services which monitor the
performance of mutual funds, or other industry or financial publications such as
Barron's, Changing Times, Forbes and Money Magazine; and/or (3) the S&P 500
Index, the Nasdaq-100 Index, or other unmanaged indices. Performance
comparisons by these indexes, services or publications may rank mutual funds
over different periods of time by means of aggregate, average, year-by-year, or
other types of total return and performance figures. Any given performance
quotation or performance comparison should not be considered as representative
of the performance of the Fund for any future period. The Fund may also cite in
its advertisements the aggregate amount of assets committed to index investing
by pension funds and/or other institutional investors, and may refer to or
discuss then-current or past economic conditions, developments or events.
There are differences and similarities between the investments which the Fund
may purchase and the investments measured by the indexes and reporting services
which are described herein. The Consumer Price Index is generally considered to
be a measure of inflation. Lipper, Morningstar, Wiesenberger and CDA are widely
recognized mutual fund reporting services whose performance calculations are
based upon changes in net asset value with all dividends reinvested and which do
not include the effect of any sales charges.
The Fund may also from time to time in its advertising and sales literature
compare its current yield or total return with the yield or total return on
taxable investments such as corporate or U.S. government bonds, bank
certificates of deposit (CDs) or money market funds or indices that represent
these types of investments. U.S. Government bonds are long-term investments
backed by the full faith and credit of the U.S. government. Bank CDs are
generally short-term, FDIC-insured investments, which pay fixed principal and
interest but are subject to fluctuating rollover rates. Money market funds are
short-term investments with stable net asset values, fluctuating yields and
special features enhancing liquidity.
ADDITIONAL INFORMATION ON THE PURCHASE AND
REDEMPTION OF FUND SHARES AND SHAREHOLDER PROGRAMS
As described in the Prospectus, the Fund provides you with alternative ways
of purchasing Fund shares based upon your individual investment needs and
preferences.
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Each class of shares of the Fund represents an interest in the same portfolio
of investments. Each class of shares is identical in all respects except that
each class bears its own class expenses, including distribution and service
fees, and each class has exclusive voting rights with respect to any
distribution or service plan applicable to its shares. As a result of the
differences in the expenses borne by each class of shares, net income per share,
dividends per share and net asset value per share will vary among the Fund's
classes of shares. There are no conversion, preemptive or other subscription
rights.
Shareholders of each class will share expenses proportionately for services
that are received equally by all shareholders. A particular class of shares
will bear only those expenses that are directly attributable to that class,
where the type or amount of services received by a class varies from one class
to another. For example, class-specific expenses generally will include
distribution and service fees.
The expenses to be borne by specific classes of shares may include (i)
transfer agency fees attributable to a specific class of shares, (ii) printing
and postage expenses related to preparing and distributing materials such as
shareholder reports, prospectuses and proxy statements to current shareholders
of a specific class of shares, (iii) Securities and Exchange Commission ("SEC")
and state securities registration fees incurred by a specific class of shares,
(iv) litigation or other legal expenses relating to a specific class of shares,
(vi) directors' fees or expenses incurred as a result of issues relating to a
specific class of shares, (vii) accounting expenses relating to a specific class
of shares and (viii) any additional incremental expenses subsequently identified
and determined to be properly allocated to one or more classes of shares.
INITIAL AND SUBSEQUENT PURCHASE OF SHARES
You may buy fund shares through your financial adviser or by calling Ranson
toll-free at 877-NASDAQ2 (877-627-3272). You may pay for your purchase by
Federal Reserve draft or by check made payable to "The Nasdaq 100 Index Fund,
Class A, C, Y," delivered to your financial adviser or the Transfer Agent. When
making your initial investment, you must also furnish the information necessary
to establish your Fund account by completing and enclosing with your payment the
application form attached to the Prospectus (the "Application Form"). After
your initial investment, you may make subsequent purchases at any time by
forwarding to your financial adviser or Sunstone a check, in the amount of your
purchase, made payable to "The Nasdaq 100 Index Fund, Class A, C, Y" and
indicating on the check your account number. All payments need to be in U.S.
dollars and should be sent directly to Sunstone at its address, P. O. Box 0641,
Milwaukee, WI 53201-0641. A check drawn on a foreign bank or payable other than
to the order of the Fund generally will not be acceptable. You may also wire
Federal Funds directly to Sunstone, but you may be charged a fee for this. For
instructions on how to make Fund purchases by wire transfer, call Ranson toll-
free at 877-NASDAQ2 (877-627-3272).
PURCHASE PRICE
The price at which you purchase a class of Fund shares is based on the next
calculation of the net asset value for that share class after the order is
placed. The net asset value per share of each share class is determined as of
the close of trading (normally 4:00 p.m. eastern time) on each day the New York
Stock Exchange is open for business. See "Net Asset Value," for a description
of how net asset value is calculated.
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MINIMUM INVESTMENT REQUIREMENTS
The minimum initial investment is $2,500; $500 for a Traditional or Roth IRA
Account; and $500 for a Uniform Gifts/Transfer to Minors Act Account.
Additional purchases may be in amounts of $50 or more. These minimums may be
changed at any time by the Fund. There are exceptions to these minimums for
shareholders who qualify under reinvestment programs.
AUTOMATIC INVESTMENT PROGRAMS
The Fund offers you several opportunities to capture the benefits of "dollar
cost averaging" through systematic investment programs. In a regularly followed
dollar cost averaging program, you would purchase more shares when Fund share
prices are lower and fewer shares when Fund share prices are higher, so that the
average price paid for Fund shares is less than the average price of the Fund
shares over the same time period. Dollar cost averaging does not assure profits
or protect against losses in a steadily declining market. Since dollar cost
averaging involves continuous investment regardless of fluctuating price levels,
you should consider your financial ability to continue investing in declining as
well as rising markets before deciding to invest in this way. The Fund offers
the following two systematic investment programs.
AUTOMATIC INVESTMENT PLAN
Once you have established a Fund account, you may make regular investments in
an amount of $50 or more each month by authorizing Sunstone to draw
preauthorized checks on your bank account. There is no obligation to continue
payments and you may terminate your participation at any time at your
discretion. No charge in addition to the applicable sales charge is made in
connection with this Plan, and there is no cost to the Fund. To obtain an
application form for the Automatic Investment Plan, check the applicable box on
the Application Form or call Sunstone toll-free at 800-894-6510.
PAYROLL DIRECT DEPOSIT PLAN
Once you have established a Fund account, you may, with your employer's
consent, make regular investments in Fund shares of $25 or more per pay period
(meeting the monthly minimum of $50) by authorizing your employer to deduct this
amount automatically from your paycheck. There is no obligation to continue
payments and you may terminate your participation at any time at your
discretion. No charge is made for this Plan, and there is no cost to the Fund.
To obtain an application form for the Payroll Direct Deposit Plan, check the
applicable box on the Application Form or call Sunstone toll-free at 800-894-
6510.
ELECTRONIC FUNDS TRANSFER
You can use Electronic Funds Transfer (EFT) to link your Fund account to your
account at a bank or other financial institution. EFT enables you to transfer
money electronically between these accounts and perform a variety of account
transactions. These include purchasing shares by telephone, investing through
the Automatic Investment Plan, and sending dividends, distributions, redemption
payments or Automatic Withdrawal Plan payments directly to your bank account.
Please refer to the Application Form for details, or call Sunstone toll-free at
800-894-6510 for more information.
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<PAGE>
EFT privileges may be requested via an application you obtain by calling 877-
NASDAQ2 (877-627-3272). EFT privileges will apply to each shareholder listed in
the registration on your account as well as to your Authorized Dealer
representative of record unless and until Sunstone receives written instructions
terminating or changing those privileges. After you establish EFT for your
account, any change of bank account information must be made by signature-
guaranteed instructions to Sunstone signed by all shareholders who own the
account.
Purchases may be made by telephone only after your account has been
established. To purchase shares in amounts up to $250,000 through a telephone
representative, call Sunstone at 800-894-6510. The purchase payment will be
debited from your bank account.
CLASS A SHARES
You may purchase Class A Shares at a public offering price equal to the
applicable net asset value per share plus an up-front sales charge imposed at
the time of purchase as set forth in the Prospectus. You may qualify for a
reduced sales charge, or the sales charge may be waived in its entirety, as
described below. Class A Shares are also subject to an annual service fee of
.25%. See "Distribution and Service Plans." Set forth below is an example of
the method of computing the offering price of the Class A shares of the Fund.
The example assumes a purchase on December 3, 1999 of Class A shares from the
Fund aggregating less than $100,000 subject to the schedule of sales charges set
forth in the Prospectus at a price based upon the net asset value of the Class A
shares.
Net Asset Value per share $10.000
Per Share Sales Charge-2.50% of public offering
price (2.56% of net asset value per share) .256
Per Share Offering Price to the Public $10.256
Shares Outstanding (as of December 3, 1999) 10,000
The Fund receives the entire net asset value of all Class A Shares that are
sold. Ranson retains the full applicable sales charge from which it pays the
uniform reallowances shown in the Prospectus to Authorized Dealers.
Certain commercial banks may make Class A Shares of the Fund available to
their customers on an agency basis. Pursuant to the agreements between Ranson
and these banks, some or all of the sales charge paid by a bank customer in
connection with a purchase of Class A Shares may be retained by or paid to the
bank. Certain banks and other financial institutions may be required to
register as securities dealers in certain states.
REDUCTION OR ELIMINATION OF UP-FRONT SALES CHARGE ON CLASS A SHARES PURCHASE
AVAILABILITY
RIGHTS OF ACCUMULATION
You may qualify for a reduced sales charge on a purchase of Class A Shares of
the Fund if the amount of your purchase, when added to the value that day of all
of your prior purchases of shares of the Fund, falls within the amounts stated
in the Class A sales charges and commissions table in "How to Choose a Share
Class" in the Prospectus. You or your financial adviser must notify the Fund's
transfer agent of any cumulative discount whenever you plan to purchase Class A
Shares of the Fund that you wish to qualify for a reduced sales charge.
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LETTER OF INTENT
You may qualify for a reduced sales charge on a purchase of Class A Shares of
the Fund if you plan to purchase Class A Shares of the Fund over the next 13
months and the total amount of your purchases would, if purchased at one time,
qualify you for one of the reduced sales charges shown in the Class A sales
charges and commissions table in "How to Choose a Share Class" in the
Prospectus. In order to take advantage of this option, you must complete the
applicable section of the Application Form or sign and deliver either to an
Authorized Dealer or to the Fund's transfer agent a written Letter of Intent in
a form acceptable to Ranson. A Letter of Intent states that you intend, but are
not obligated, to purchase over the next 13 months a stated total amount of
Class A shares that would qualify you for a reduced sales charge shown above.
You may count shares of the Fund that you already own on which you paid an up-
front sales charge or an ongoing distribution fee and any Class C shares of the
Fund that you purchase over the next 13 months towards completion of your
investment program, but you will receive a reduced sales charge only on new
Class A Shares you purchase with a sales charge over the 13 months. You cannot
count towards completion of your investment program Class A Shares that you
purchase without a sales charge through investment of distributions from a
Ranson Unit Investment Trust.
By establishing a Letter of Intent, you agree that your first purchase of
Class A Shares of the Fund following execution of the Letter of Intent will be
at least 5% of the total amount of your intended purchases. You further agree
that shares representing 5% of the total amount of your intended purchases will
be held in escrow pending completion of these purchases. All dividends and
capital gains distributions on Class A Shares held in escrow will be credited to
your account. If total purchases, less redemptions, prior to the expiration of
the 13-month period equal or exceed the amount specified in your Letter of
Intent, the Class A Shares held in escrow will be transferred to your account.
If the total purchases, less redemptions, exceed the amount specified in your
Letter of Intent and thereby qualify for a lower sales charge than the sales
charge specified in your Letter of Intent, you will receive this lower sales
charge retroactively, and the difference between it and the higher sales charge
paid will be used to purchase additional Class A Shares on your behalf. If the
total purchases, less redemptions, are less than the amount specified, you must
pay Ranson an amount equal to the difference between the amounts paid for these
purchases and the amounts which would have been paid if the higher sales charge
had been applied. If you do not pay the additional amount within 20 days after
written request by Ranson or your financial adviser, Ranson will redeem an
appropriate number of your escrowed Class A Shares to meet the required payment.
By establishing a Letter of Intent, you irrevocably appoint Ranson as attorney
to give instructions to redeem any or all of your escrowed shares, with full
power of substitution in the premises.
You or your financial adviser must notify the Fund's transfer agent whenever
you make a purchase of Fund shares that you wish to be covered under the Letter
of Intent option.
REINVESTMENT OF RANSON UNIT INVESTMENT TRUST DISTRIBUTIONS
You may purchase Class A Shares without an up-front sales charge by
reinvestment of distributions from any of the various unit investment trusts
sponsored by Ranson after an account has been established under the minimum
initial investment guidelines outlined in the Prospectus.
GROUP PURCHASE PROGRAMS
If you are a member of a qualified group, you may purchase Class A Shares of
the Fund at the reduced sales charge applicable to the group's purchases taken
as a whole. A "qualified group" is one which has previously been
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in existence, has a purpose other than investment, has ten or more
participating members, has agreed to include Fund sales publications in mailings
to members and has agreed to comply with certain administrative requirements
relating to its group purchases.
Under any group purchase program, the minimum initial investment in Class A
Shares of the Fund for each participant in the program is $2,500 and the minimum
monthly investment in Class A Shares of the Fund by each participant is $50. No
certificate will be issued for any participant's account. All dividends and
other distributions by the Fund will be reinvested in additional Class A Shares
of the Fund. No participant may utilize a systematic withdrawal program.
To establish a group purchase program, both the group itself and each
participant must fill out application materials, which the group administrator
may obtain from the group's financial adviser, by calling Ranson toll-free at
877-NASDAQ2 (877-627-3272).
REINVESTMENT OF REDEMPTION PROCEEDS FROM UNAFFILIATED FUNDS
You may also purchase Class A Shares at net asset value without a sales
charge by reinvesting the proceeds of the redemption of shares of one or more
registered investment companies not affiliated with Ranson, provided the
reinvestment of these proceeds (together with any shares of the Fund you
currently own) meet the minimum initial investment guidelines outlined in the
prospectus and the purchase takes place through an Authorized Dealer. You must
also provide appropriate documentation that the redemption occurred not more
than one year prior to the reinvestment of the proceeds in Class A Shares, and
that you either paid an up-front sales charge or were subject to a contingent
deferred sales charge in respect of the redemption of such shares of such other
investment company.
ELIMINATION OF SALES CHARGE ON CLASS A SHARES
Class A Shares of the Fund may be purchased at net asset value without a
sales charge by the following categories of investors:
* investors purchasing $1,000,000 or more;
* officers, trustees and former trustees of the Trust;
* bona fide, full-time and retired employees and directors of Ranson or their
immediate family members;
* any person who, for at least 90 days, has been a bona fide employee of any
Authorized Dealer, or their immediate family members;
* bank or broker-affiliated trust departments investing funds over which they
exercise exclusive discretionary investment authority and that are held in
a fiduciary, agency, advisory, custodial or similar capacity; and
* clients of investment advisers, financial planners or other financial
intermediaries that charge periodic or asset-based fees for their services.
* employees of vendors providing services to the Trust
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* retirement plans
* the Trust's investment adviser
Any Class A Shares purchased pursuant to a special sales charge waiver must
be acquired for investment purposes and on the condition that they will not be
transferred or resold except through redemption by the Fund. You or your
financial adviser must notify the Fund's transfer agent whenever you make a
purchase of Class A Shares of the Fund that you wish to be covered under these
special sales charge waivers.
Class A Shares of the Fund may be issued at net asset value without a sales
charge in connection with the acquisition by the Fund of another investment
company. All purchases under the special sales charge waivers will be subject
to minimum purchase requirements as established by the Fund.
In determining the amount of your purchases of Class A Shares of the Fund
that may qualify for a reduced sales charge, the following purchases may be
combined: (1) all purchases by a trustee or other fiduciary for a single trust,
estate or fiduciary account; (2) all purchases by individuals and their
immediate family members (i.e., their spouses, parents, children, grandparents,
grandchildren, parents-in-law, sons- and daughters-in-law, siblings, a sibling's
spouse, and a spouse's siblings); or (3) all purchases made through a group
purchase program as described above.
The reduced sales charge programs may be waived or reduced by the Fund at any
time. To encourage their participation, the Fund waives the sales charge on
Class A shares to trustees and officers of the Trust and other affiliated
persons of the Trust and Ranson as noted above.
For more information about the purchase of Class A Shares or the reduced
sales charge program, or to obtain the required applicable forms, call Ranson
toll-free at 877-NASDAQ2 (877-627-3272).
CLASS Y SHARE PURCHASE ELIGIBILITY
Class Y Shares are available for the following categories of investors:
* Insurance Companies
* Registered Investment Companies
* Employee Benefit Plans
* Bank Trust Departments
* the Trust's investment adviser
The reduced sales charge programs may be modified or discontinued by the Fund
at any time.
CLASS C SHARES
You may purchase Class C shares at a public offering price equal to the
applicable net asset value per share without any up-front sales charge. Class C
Shares are subject to an annual distribution fee of .75% to compensate Ranson
for paying your financial adviser an ongoing sales commission. Class C Shares
are also subject to an annual service fee of .25% to compensate Authorized
Dealers for providing you with on-going financial advice and other account
services. Ranson compensates Authorized Dealers for sales of Class C Shares at
the time of the sale at a rate
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of 1% of the amount of Class C Shares purchased, which represents an advance
of the first year's distribution fee of .75% plus an advance on the first year's
service fee of .25%. See "Distribution and Service Plans."
Redemptions of Class C Shares within 12 months of purchase will be subject to
a contingent deferred sales charge ("CDSC") of 1% of the purchase price of the
shares redeemed. Because Class C Shares do not convert to Class A Shares and
continue to pay an annual distribution fee indefinitely, Class C Shares should
normally not be purchased by an investor who expects to hold shares for
significantly longer than 3 years.
REDEMPTION
You may redeem shares by sending a written request for redemption directly to
The Fund, c/o Sunstone Financial Group, Inc., P. O. Box 0641, Milwaukee, WI
53201-0641 ("Sunstone"). Requests for redemption must be signed by each
shareholder exactly as their name appears on the records of the Fund and, if the
redemption proceeds exceed $50,000 or are payable other than to the shareholder
of record at the address of record (which address may not have changed in the
preceding 60 days), the signature must be guaranteed by a member of an approved
Medallion Guarantee Program or in such other manner as may be acceptable to the
Fund. A signature guarantee is always required from corporations, executors,
administrators, trustees, guardians or associations. You will receive payment
based on the net asset value per share next determined after receipt by the Fund
of a properly executed redemption request in proper form. A check for the
redemption proceeds will be mailed to you within seven days after receipt of
your redemption request. For accounts registered in the name of a broker-
dealer, payment will be forwarded within three business days. However, if any
shares to be redeemed were purchased by check within 15 days prior to the date
the redemption request is received, the Fund will not mail the redemption
proceeds until the check received for the purchase of shares has cleared, which
may take up to 15 days.
TELEPHONE AND ELECTRONIC REDEMPTIONS
If you have authorized telephone redemption and your account address has not
changed within the last 60 days, you can redeem shares by calling Sunstone at
800-894-6510. While you or anyone authorized by you may make telephone
redemption requests, redemption checks will be issued only in the name of the
shareholder of record and will be mailed to the address of record. If your
telephone request is received prior to 4:00 p.m. eastern time, the redemption
check will normally be mailed the next business day. For requests received
after 4:00 p.m. eastern time, the redemption will be effected at 4:00 p.m.
eastern time the following business day and the check will normally be mailed on
the second business day after the request.
If you have authorized electronic fund redemption or established EFT
privileges, you can take advantage of the following expedited redemption
procedures to redeem shares held in non-certificate form that are worth at least
$1,000. You may make electronic fund redemption requests through a phone
representative or EFT redemption requests by calling Sunstone at 800-894-6510.
If a redemption request is received after 4:00 p.m. eastern time, the redemption
will be made as of 4:00 p.m. the following business day. Proceeds of electronic
fund redemptions will normally be wired on the second business day following the
redemption, but may be delayed one additional business day if the Federal
Reserve Bank of Boston or the Federal Reserve Bank of New York is closed on the
day redemption proceeds would ordinarily be wired. The Fund reserves the right
to charge a fee for electronic fund redemption. Proceeds of redemptions through
EFT will normally be wired to your EFT bank account on the second or third
business day after the redemption.
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Before you may redeem shares electronically by phone or through EFT, you need
to complete the telephone redemption authorization section of the Application
Form and return it to Sunstone. If you did not authorize telephone redemption
when you opened your account, you may obtain a telephone redemption
authorization form by writing the Fund or by calling Sunstone toll-free at 800-
894-6510. Proceeds from electronic share redemptions will be transferred by
Federal Reserve wire only to the commercial bank account specified by the
shareholder on the Application Form. You need to send a written request to
Sunstone in order to establish multiple accounts, or to change the account or
accounts designated to receive redemption proceeds. These requests must be
signed by each account owner with signatures guaranteed by a member of an
approved Medallion Guarantee Program or in such other manner as may be
acceptable to a Fund. Further documentation may be required from corporations,
executors, trustees or personal representatives.
For the convenience of shareholders, the Fund has authorized Ranson as its
agent to accept orders from financial advisers by wire or telephone for the
redemption of Fund shares. The redemption price is the first net asset value of
the appropriate share class determined following receipt of an order placed by
the financial adviser. The Fund makes payment for the redeemed shares to the
securities representatives who placed the order promptly upon presentation of
required documents with signatures guaranteed as described above. Neither the
Fund nor Ranson charges any redemption fees. However, your financial adviser
may charge you for serving as agent in the redemption of shares.
The Fund reserves the right to refuse telephone redemptions and, at its
option, may limit the timing, amount or frequency of these redemptions.
Telephone redemption procedures may be modified or terminated at any time, on 30
days' notice, by the Fund. The Fund, the Fund's transfer agent and Ranson will
not be liable for following telephone instructions reasonably believed to be
genuine. The Fund employs procedures reasonably designed to confirm that
telephone instructions are genuine. These procedures include recording all
telephone instructions and requiring up to three forms of identification prior
to acting upon a caller's instructions. If the Fund does not follow reasonable
procedures for protecting shareholders against loss on telephone transactions,
it may be liable for any losses due to unauthorized or fraudulent telephone
instructions.
AUTOMATIC WITHDRAWAL PLAN
If you own Fund shares currently worth at least $10,000, you may establish an
Automatic Withdrawal Plan by completing an application form of the Plan. You
may obtain an application form by checking the applicable box on the Application
Form or by calling Sunstone toll-free at 800-894-6510.
The Plan permits you to request periodic withdrawals on a monthly, quarterly,
semi-annual or annual basis in an amount of $50 or more. Depending upon the
size of the withdrawals requested under the Plan and fluctuations in the net
asset value of Fund shares, these withdrawals may reduce or even exhaust your
account.
SUSPENSION OF RIGHT OF REDEMPTION
The Fund may suspend the right of redemption of Fund shares or delay payment
more than seven days (a) during any period when the New York Stock Exchange is
closed (other than customary weekend and holiday closings), (b) when trading in
the markets the fund normally utilizes is restricted, or an emergency exists as
determined by the Securities and Exchange Commission so that trading of the
Fund's investment or determination of its net asset value is not reasonable
practicable, or (c) for any other periods that the Securities and Exchange
Commission by order may permit for protection of Fund shareholders.
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INVOLUNTARY REDEMPTION
The Fund may, from time to time, establish a minimum total investment for
Fund shareholders, and the Fund reserves the right to redeem your shares if your
investment is less than the minimum after giving you at least 30 days' notice.
If any minimum total investment is established, and if your account is below the
minimum, you will be allowed 30 days following the notice in which to purchase
sufficient shares to meet the minimum.
GENERAL MATTERS
In addition to the types of compensation to dealers to promote sales of Fund
shares that are described in the Prospectus, Ranson may from time to time make
additional reallowances only to certain Authorized Dealers who sell or are
expected to sell certain minimum amounts of shares of the Fund and Ranson unit
investment trusts during specified time periods. Promotional support may
include providing sales literature to and holding informational or educational
programs for the benefit of such Authorized Dealers' representatives, seminars
for the public, and advertising and sales campaigns. Ranson may reimburse a
participating Authorized Dealer for up to one-half of specified media costs
incurred in the placement of advertisements which jointly feature the Authorized
Dealer and the Fund and Ranson unit investment trusts.
To help advisers and investors better understand and more efficiently use the
Fund, to reach their investment goals, the Fund may advertise and create
specific investment programs and systems. For example, this may include
information on how to use the Fund to accumulate assets for future education
needs or periodic payments such as insurance premiums. The Fund may produce
software, electronic information sites, or additional sales literature to
promote the advantages of using the Fund to meet these and other specific
investor needs.
The Fund has authorized one or more brokers to accept on its behalf purchase
and redemptions orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Fund's behalf.
The Fund will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee accepts the
order. Customer orders received by such broker (or their designee) will be
priced at the Fund's net asset value next computed after they are accepted by an
authorized broker (or their designee). Orders accepted by an authorized broker
(or their designee) before the close of regular trading on the New York Stock
Exchange will receive the day's share price; orders accepted after the close of
trading will receive the next business day's share price.
If you choose to invest in the Fund, an account will be opened and maintained
for you by the Transfer Agent. The Fund reserves the right to reject any
purchase order and to waive or increase minimum investment requirements. Shares
will be registered in the name of the investor or the investor's financial
adviser. A change in registration or transfer of shares held in the name of
your financial adviser's firm can only be made by an order in good form from the
financial adviser acting on your behalf.
Authorized Dealers are encouraged to open single master accounts. However,
some Authorized Dealers may wish to use the sub-accounting system of the
Transfer Agent, to minimize their internal recordkeeping requirements. An
Authorized Dealer or other investor requesting shareholder servicing or
accounting other than the master account or sub-accounting service offered by
the Transfer Agent will be required to enter into a separate agreement with
another agent for these services for a fee that will depend upon the level of
services to be provided.
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The Shares are offered continuously. However, subject to the rules and
regulations of the Securities and Exchange Commission, the Fund reserves the
right to suspend the continuous offering of it shares at any time, but no
suspension shall affect your right of redemption.
Ranson serves as the principal underwriter of the shares of the Fund pursuant
to a "best efforts" arrangement as provided by a distribution agreement with the
Trust ("Distribution Agreement"). Pursuant to the Distribution Agreement, the
Trust appointed Ranson to be its agent for the distribution of the Fund's shares
on a continuous offering basis. Ranson sells shares to or through brokers,
dealers, banks or other qualified financial intermediaries (collectively
referred to as "Dealers"), or others, in a manner consistent with the then
effective registration statement of the Trust. Pursuant to the Distribution
Agreement, Ranson, at its own expense, finances certain activities incident to
the sale and distribution of the Fund's shares, including printing and
distributing of prospectuses and statements of additional information to other
than existing shareholders, the printing and distributing of sales literature,
advertising and payment of compensation and giving of concessions to dealers.
Ranson receives for its services the excess, if any, of the sales price of the
Fund's shares less the net asset value of those shares, and reallows a majority
or all of such amounts to the Dealers who sold the shares (Ranson may act as
such a Dealer) as set forth in the Fund's Prospectus. Ranson receives
compensation pursuant to the distribution and service plan adopted by the Trust
pursuant to Rule 12b-1 and described under "Distribution and Service Plan."
Ranson receives any CDSCs imposed on redemption of shares.
DISTRIBUTION AND SERVICE PLAN
The following information supplements and should be read in conjunction with
the section in the Fund's Prospectus entitled "Distribution and Service Plan."
The Fund has adopted a Distribution and Service Plan pursuant to Rule 12b-1
under the 1940 Act (the "Plan") pursuant to which Class C shares will be subject
to an annual distribution fee and Class A shares, Class C shares and Class Y
shares shall be subject to an annual service fee. The distribution fee
applicable to Class C shares under the Fund's Plan will be payable to reimburse
Ranson for services and expenses incurred in connection with the distribution of
Class C shares. These expenses include payments to Authorized Dealers,
including Ranson, who are brokers of record with respect to Class C shares, as
well as, without limitation, expenses of printing and distributing prospectuses
and statements of additional information to persons other than shareholders of
the Fund, expenses of preparing, printing and distributing advertising and sales
literature and reports to shareholders used in connection with the sale of Class
C shares, certain other expenses associated with the distribution of Class C
shares, and any distribution-related expenses that may be authorized from time
to time by the Board of Trustees.
The service fee applicable to Class A shares, Class C shares and Class Y
shares under the Fund's Plan will be paid to Authorized Dealers in connection
with the provision of ongoing account services to shareholders. The services
provided may include personal services relating to shareholder accounts, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and services related to the maintenance of such shareholder
accounts.
The Fund may spend up to .25 of 1% per year of the average daily net assets
of each of Class A shares, Class C shares and Class Y shares as a service fee
under the Plan as applicable to Class A shares, Class C shares and Class Y
shares, respectively. The Fund may spend up to .75 of 1% per year of the
average daily net assets of Class C shares as a distribution fee. The amounts
paid to Ranson under the Plan compensate Ranson for the above services
regardless of the expenses it incurs in providing such services.
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Under the Fund's Plan, the Fund will report quarterly to the Board of
Trustees for its review all amounts expended per class of shares under the Plan.
The Plan may be terminated at any time with respect to any class of shares,
without the payment of any penalty, by a vote of a majority of the Trustees who
are not "interested persons" and who have no direct or indirect financial
interest in the Plan or by vote of a majority of the outstanding voting
securities of such class. The Plan may be renewed from year to year if approved
by a vote of the Board of Trustees and a vote of the non-interested Trustees who
have no direct or indirect financial interest in the Plan cast in person at a
meeting called for the purpose of voting on the Plan. The Plan may be continued
only if the Trustees who vote to approve such continuance conclude, in the
exercise of reasonable business judgment and in light of their fiduciary duties
under applicable law, that there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders. The Plan may not be amended to increase
materially the cost which a class of shares may bear under the Plan without the
approval of the shareholders of the affected class, and any other material
amendments of the Plan must be approved by the non-interested Trustees by a vote
a cast in person at a meeting called for the purpose of considering such
amendments. During the continuance of the Plan, the selection and nomination of
the non-interested Trustees of the Trust will be committed to the discretion of
the non-interested Trustees then in office.
Ranson, the Fund's adviser and underwriter, is a privately held corporation
and the majority of its stock is owned by employees and officers of the firm.
Alex Meitzner, Chairman of the Board of Ranson, is also Chairman, a trustee and
a Vice President of the Fund. Robin Pinkerton, President, Chief Financial
Officer, Chief Compliance Officer and Chief Operations Officer of Ranson is also
President, Secretary, Treasurer, controller and trustee of the Fund. See
"Management." Because Mr. Meitzner and Ms. Pinkerton are shareholders of
Ranson, they may indirectly benefit from the payment of 12b-1 fees by the Fund
to the Underwriter.
INDEPENDENT PUBLIC ACCOUNTANTS AND CUSTODIAN
Ernst & Young LLP, independent public accountants, 233 South Wacker Drive,
Chicago, IL 60606, have been selected as auditors for the Fund. In
addition to audit services, Ernst & Young LLP, will provide consultation and
assistance on accounting, internal control, tax and related matters. The
financial statements to be included in this Statement of Additional Information
will be audited by Ernst & Young LLP, as indicated in their report with respect
thereto, and will be included in reliance upon the authority of said firm as
experts in giving said report.
The custodian of the assets of the Fund is Bank of New York. The custodian
performs custodial, fund accounting and portfolio accounting services.
30
<PAGE>
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
EAGLE FUNDS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 3, 1999
ASSETS
NASDAQ 100 INDEX FUND
---------------------
<S> <C>
Cash $100,000
Receivable from investment adviser 13,500
Prepaid initial registration expenses 31,295
--------
TOTAL ASSETS 144,795
========
<CAPTION>
LIABILITIES AND NET ASSETS
<S> <C>
Accrued expenses 13,500
Payable to investment adviser 31,295
--------
TOTAL LIABILITIES 44,795
--------
NET ASSETS $100,000
========
NET ASSETS CONSIST OF:
Class A shares outstanding, no par value,
unlimited shares authorized 10,000
========
Net asset value and redemption price,
Class A shares (net assets/shares outstanding) $10.00
========
Maximum offering price , Class A shares
(net asset value, plus 2.56% of net asset
value or 2.50% of offering price) $10.26
========
<FN>
- --------------------
The accompanying Notes to the Financial Statements are an integral part of this
statement.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
EAGLE FUNDS
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM OCTOBER 4, 1999 (INCEPTION) TO DECEMBER 3, 1999
NASDAQ 100 INDEX FUND
---------------------
<S> <C>
Organization expenses $ 13,500
Less: Expenses reimbursed by investment adviser (13,500)
---------
NET INVESTMENT INCOME $ -
=========
<FN>
- --------------------
The accompanying Notes to the Financial Statements are an integral part of this
statement.
</TABLE>
EAGLE FUNDS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD FROM OCTOBER 4, 1999 (INCEPTION) TO DECEMBER 3, 1999
NOTE 1 - ORGANIZATION AND REGISTRATION
Eagle Funds (the "Trust") was established on October 4, 1999, as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company. The
Nasdaq 100 Index Fund (the "Fund") is a separate, non-diversified investment
portfolio of the Trust. The Fund has had no operations other than those
relating to organizational matters, including the sale of 10,000 Class A shares
of beneficial interest of the Fund to capitalize the Company, which were sold to
Ranson & Associates, Inc. on December 3, 1999 for cash in the amount of
$100,000.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles
("GAAP").
A. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date
32
<PAGE>
of the financial statements and the reported changes in net assets during the
reporting period. Actual results could differ from those estimates.
B. ORGANIZATION AND PREPAID INITIAL REGISTRATION EXPENSES
Expenses incurred by the Trust in connection with the organization and the
initial public offering of shares are expensed as incurred. These expenses were
advanced by Ranson & Associates, Inc. (the "Adviser"), who serves as the Fund's
investment adviser. The Adviser has agreed to voluntarily reimburse the Fund
for these expenses. Prepaid initial registration expenses are deferred and
amortized over the period of benefit.
C. FEDERAL INCOME TAXES
The Fund intends to qualify annually for treatment as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended, and, if so qualified, will not be liable for federal income taxes to
the extent earnings are distributed to shareholders on a timely basis.
NOTE 3 - INVESTMENT ADVISORY AND OTHER AGREEMENTS
As compensation for its services to the Fund, the Adviser will receive an
investment advisory fee at an annual rate of 0.50% of the average daily net
assets of the Fund, which is accrued daily and paid monthly. The Adviser has
also agreed to voluntarily reduce fees for expenses (exclusive of any
distribution or service fees and extraordinary expenses) that exceed 1.50% of
average daily net assets of the Fund until November 30, 2000.
The Trust has entered into an administration and fund accounting agreement and
transfer agent agreement with Sunstone Financial Group, Inc. The administration
and fund accounting agreement provides for an annual fee of 0.20% which
decreases as the assets of the Fund reach certain levels, subject to a minimum
annual fee, plus out-of-pocket expenses. The transfer agent agreement provides
for an annual base fee per shareholder account, with a minimum annual fee, as
well as certain fees related to set-up costs, processing and out-of-pocket
expenses.
The Trust has entered into a distribution agreement with Ranson & Associates,
Inc. Under the Distribution Agreement, Ranson & Associates, Inc. shall offer
shares of the Fund on a continuous basis and may engage in sales and promotional
activities in connection therewith.
NOTE 4 - CAPITAL STOCK
The Fund is authorized to issue an unlimited number of shares with no par value.
The Fund has three separate classes: Class A, Class C and Class Y. Each class
of shares has a different combination of sales charges, fees and eligibility
requirements. As of December 3, 1999, Class A shares are the only class of
shares outstanding.
33
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees and Shareholder
Eagle Funds
- Nasdaq 100 Index Fund
We have audited the accompanying statement of assets and liabilities of Eagle
Funds - Nasdaq 100 Index Fund as of December 3, 1999 and the related statement
of operations for the period from October 4, 1999 (organization of the Fund) to
December 3, 1999. These financial statements are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Eagle Funds - Nasdaq 100 Index
Fund at December 3, 1999 and the results of its operations for the period from
October 4, 1999 to December 3, 1999, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
December 3, 1999
34
<PAGE>
GENERAL TRUST INFORMATION
The Fund is a series of the Trust. The Trust is an open-end management
investment company under the Investment Company Act of 1940. The Trust was
organized as a Massachusetts business trust on October 4, 1999. The Board of
Trustees of the Trust is authorized to issue an unlimited number of shares in
one or more series or "Funds," which may be divided into classes of shares.
Currently, the Fund is the only series authorized and outstanding and offers
three classes of shares designated as Class A shares, Class C shares and Class Y
shares. Each class of shares represents an interest in the same portfolio of
investments of the Fund. Each class of shares has equal rights as to voting,
redemption, dividends and liquidation, except that each bears different class
expenses, including different distribution and service fees, differences in
eligible investors, class designations, and each has exclusive voting rights
with respect to any distribution or service plan applicable to its shares.
There are no conversion, preemptive or other subscription rights. The Board of
Trustees of the Trust has the right to establish additional series and classes
of shares in the future, to change those series or classes and to determine the
preferences, voting powers, rights and privileges thereof.
The Fund is not required and does not intend to hold annual meetings of
shareholders. Shareholders owning at least 25% of the outstanding shares of the
Fund have the right to call a special meeting (10% of the outstanding shares if
the purpose is to remove a Trustee).
Under Massachusetts law applicable to Massachusetts business trusts,
shareholders of such a trust may, under certain circumstances, be held
personally liable as partners for its obligations. However, the Declaration of
Trust of the Trust contains an express disclaimer of shareholder liability for
acts or obligations of the Trust and requires that notice of this disclaimer be
given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Declaration of Trust further provides for
indemnification out of the assets and property of the Trust for all losses and
expenses of any shareholder held personally liable for the obligations of the
Trust. Thus, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust or Fund itself was unable to meeting its
obligations. The Fund believes the likelihood of the occurrence of these
circumstances is remote.
The Trust and its adviser and principal underwriter have adopted a code of
ethics under rule 17j-1 of the Investment Company Act which permits personnel
subject to the code to invest in securities, including securities that may be
purchased or held by the Fund.
35
<PAGE>
PART C - OTHER INFORMATION
<TABLE>
<CAPTION>
ITEM 23: EXHIBITS:
<S> <C>
(a)(1). Declaration of Trust of Registrant. (1)
(a)(2). Certificate for the Establishment and Designation of Classes for the
Nasdaq 100 Index Fund, dated August 10, 1999.(1)
(b). By-Laws of Registrant.(1)
(c). Not applicable.
(d)(1). Management Agreement between Registrant and Ranson & Associates, Inc. on
behalf of the Nasdaq 100 Index Fund.(2)
(e)(1). Distribution Agreement between Registrant and Ranson & Associates,
Inc.(2)
(e)(2). Dealer Agreements.(2)
(f). Not applicable.
(g). Custodian Agreement between Registrant and the Bank of New York.(2)
(h)(1). Transfer Agency Agreement between Registrant and Sunstone Financial
Group, Inc.(2)
(h)(2). Administration and Fund Accounting Agreement between Registrant and
Sunstone Financial Group, Inc.(2)
(i). Opinion and consent of Chapman and Cutler, dated December 6, 1999.(2)
(j). Consent of Independent Public Accountants.(2)
(k). Not applicable.
(l). Subscription Agreement with Ranson & Associates, Inc.(2)
(m). Distribution and Service Plan Pursuant to Rule 12b-1 for the Shares of the
Fund.(2)
(n). Multi-Class Plan.(2)
(o). Not applicable.
(p). Code of Ethics.(2)
(z)(1). Original Powers of Attorney for Messrs. Meitzner, Abraham, Callahan and
Reichert and Ms. Pinkerton, Trustees authorizing, among others, Alex R.
Meitzner, Robin K. Pinkerton, and Douglas K. Rogers to execute the
Registration Statement.(2)
<FN>
- --------------------
(1) Incorporated by reference to the initial registration statement filed or Form
N-1A for Registrant.
(2) Filed herewith.
</TABLE>
ITEM 24:PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH FUND.
Not Applicable
ITEM 25:INDEMNIFICATION
Article IX of Registrant's Declaration of Trust provides as follows:
Subject to the exceptions and limitations contained in this Section 4, every
person who is, or has been, a Trustee, officer, employee or agent of the Trust,
including persons who serve at the request of the Trust as directors, trustees,
officers, employees or agents of another organization in which the Trust has an
interest as a shareholder, creditor or otherwise (hereinafter referred to as a
"Covered Person"), shall be indemnified by the Trust to the fullest extent
permitted
36
<PAGE>
by law against liability and against all expenses reasonably incurred or paid
by him in connection with any claim, action, suit or proceeding in which he
becomes involved as a party or otherwise by virtue of his being or having been
such a Trustee, director, officer, employee or agent and against amounts paid or
incurred by him in settlement thereof.
No indemnification shall be provided hereunder to a Covered Person:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interests of the Trust; or
(c) in the event of a settlement or other disposition not involving a final
adjudication (as provided in paragraph (a) or (b)) and resulting in a payment by
a Covered Person, unless there has been either a determination that such Covered
Person did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or a
reasonable determination, based on a review of readily available facts (as
opposed to a full trial-type inquiry), that he did not engage in such conduct:
(i) by a vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(ii) by written opinion of independent legal counsel.
The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not affect any other
rights to which any Covered Person may now or hereafter be entitled, shall
continue as to a person who has ceased to be such a Covered Person and shall
inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Covered Persons may be entitled by contract or
otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding subject to a claim for indemnification under this Article
shall be advanced by the Trust prior to final disposition thereof upon receipt
of an undertaking by or on behalf of the recipient to repay such amount if it is
ultimately determined that he is not entitled to indemnification under this
Article, provided that either:
(a) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any such
advances; or
(b) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the matter)
or independent legal counsel in a written opinion shall determine, based upon a
review of the readily available facts (as opposed to a full trial-type inquiry),
that there is a reason to believe that the recipient ultimately will be found
entitled to indemnification.
37
<PAGE>
As used in this Article, a "Disinterested Trustee" is one (a) who is not an
"interested person" of the Trust as defined in the 1940 Act (including anyone
who has been exempted from being an "interested person" by any rule, regulation
or order of the Commission), and (b) against whom none of such actions, suits or
other proceedings or another action, suit or other proceeding on the same or
similar grounds is then or has been pending.
As used in this Article, the words "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits, proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the word
"liability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to the officers, trustees or controlling persons of the
Registrant pursuant to the Declaration of Trust of the Registrant or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by an officer or trustee or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such officer, trustee or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26:BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
(a)Ranson & Associates, Inc. ("Ranson") manages the Registrant. Ranson also
serves as the sponsor of approximately 600 unit investment trusts and has
underwritten more than $2,000,000,000 investment company securities. Ranson
also serves as financial advisor and underwriter for Kansas municipalities. The
principal business address for all of these investment companies is 250 North
Rock Road, Suite 150, Wichita, Kansas 67206-2241.
A description of any other business, profession, vocation or employment of a
substantial nature in which the directors and officers of Ranson who serve as
officers or Trustees of the Registrant have engaged during the last two years
for his or her account or in the capacity of director, officer, employee,
partner or trustee appears under "Management" in the Statement of Additional
Information.
ITEM 27:PRINCIPAL UNDERWRITERS
(a) Ranson & Associates, Inc. ("Ranson") acts as sponsor/principal underwriter
for Ranson Unit Investment Trusts, Kansas Tax-Exempt Trusts, and Ranson Multi-
State Trusts; and as successor sponsor for Kemper Tax-Exempt Trusts, Kemper
Defined Funds and Everen Unit Investment Trusts with assets of approximately
$195,000,000.
38
<PAGE>
(b)
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
Alex R. Meitzner Chairman of the Board Chairman of the Board,
Ranson & Associates, Inc. Trustee, and Vice President
250 N. Rock Road, Suite 150
Wichita, KS 67206
Robin K. Pinkerton President, Director, Chief President, Chief Financial
Ranson & Associates, Inc. Financial Officer, Chief Operation Officer, Secretary/ Treasurer,
250 N. Rock Road, Suite 150 Officer, Chief Compliance Controller and Trustee
Wichita, KS 67206 Officer
Douglas K. Rogers Executive Vice President, Vice President
Ranson & Associates, Inc. Director
250 N. Rock Road, Suite 150
Wichita, KS 67206
</TABLE>
(c)Not applicable.
ITEM 28:LOCATION OF ACCOUNTS AND RECORDS
Ranson & Associates, Inc., 250 North Rock Road, Suite 150, Wichita, Kansas
67206-2241, maintains the Declaration of Trust, By-Laws, minutes of trustees and
shareholder meetings and contracts of the Registrant and all advisory material
of the investment adviser.
The Bank of New York, 100 Church Street, 10th Floor, New York, NY 10286,
maintains all general and subsidiary ledgers, journals, trial balances, records
of all portfolio purchases and sales, and all other required records not
maintained by Ranson or Sunstone.
Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite 400,
Milwaukee, WI 53201-0641, maintains all required records in its capacity as
transfer agent for Registrant.
ITEM 29:MANAGEMENT SERVICES
Not applicable.
ITEM 30:UNDERTAKINGS
(a)Not applicable.
39
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund has duly caused this Registration Statement to be
signed on its behalf of the undersigned, thereunto duly authorized, in the City
of Chicago, and State of Illinois, on the 3rd day of December, 1999.
EAGLE FUNDS
By /s/ Robin K. Pinkerton
----------------------------
Robin K. Pinkerton
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
SIGNATURE TITLE DATE
/s/ Robin K. Pinkerton President, Secretary, Treasurer, December 3, 1999
- ------------------------- Trustee (Controller, Principal
Robin K. Pinkerton Executive Officer)
/s/ Alex R. Meitzner Chairman, Vice President and December 3, 1999
- ------------------------ Trustee
Alex R. Meitzner
/s/ Robert Abraham Trustee December 3, 1999
- ------------------------
Robert Abraham
/s/ Frank W. Callahan Trustee December 3, 1999
- ------------------------
Frank W. Callahan
/s/ Ralph Reichert Trustee December 3, 1999
- ------------------------
Ralph Reichert
40
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NUMBER EXHIBIT NUMBERED PAGE
<S> <C> <C>
(d)(1) Management Agreement between Registrant
and Ranson & Associates, Inc.
(e)(1) Distribution Agreement between Registrant
and Ranson & Associates, Inc.
(e)(2) Dealer Agreements.
(g) Custodian Agreement between Registrant
and Bank of New York.
(h)(1) Transfer Agency Agreement between
Registrant and Sunstone Financial Group, Inc.
(h)(2) Administration and Fund Accounting Agreement
between Registrant and Sunstone Financial Group, Inc.
(i) Opinion and Consent of Chapman and Cutler,
dated December 6, 1999.
(j) Consent of Independent Public Accountants.
(l) Subscription Agreement with Ranson & Associates, Inc.
(m) Distribution and Service Plan Pursuant to Rule 12b-1
for the Shares of the Fund.
(n) Multi-Class Plan.
(p) Code of Ethics.
(z)(1) Original Powers of Attorney for Messrs. Meitzner, Abraham,
Callahan and Reichart and Ms. Pinkerton, Trustees
41
<PAGE>
</TABLE>
EXHIBIT (D)(1)
MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT
This MANAGEMENT AND INVESTMENT ADVISORY AGREEMENT dated as of December 3,
1999 by and between EAGLE FUNDS (the "Fund"), a Massachusetts Business Trust,
and RANSON & ASSOCIATES, INC. (the "Manager"), a Kansas corporation registered
under the Investment Advisers Act of 1940.
1. (a) Retention of Manager by Fund. The Fund hereby employs the Manager
to act as the investment advisor for and to manage the investment and
reinvestment of the assets of The Nasdaq 100 Index Fund (the "Series"), a series
of the Fund, in accordance with such Series' investment objective and policies
and restrictions, and to administer its affairs to the extent requested by, and
subject to the review and supervision of, the trustees of the Fund (the
"Trustees") for the period and upon the terms herein set forth. The investment
of funds shall be subject to all applicable restrictions of the Agreement and
Declaration of Trust and By-laws of the Fund as may from time to time be in
force.
(b) Manager's Acceptance of Employment and Service Provided. The
Manager accepts such employment and agrees during such period to manage the
investment operations of the Fund and Series, subject to the terms of this
Agreement and to the supervision and control of the Trustees. Manager agrees to
perform or arrange for the performance of the following services with respect to
the Series: to supply investment research; to manage the Series' portfolio
(including without limitation the selection of securities or other investments
for the Series to purchase, hold, lend or sell) in a manner consistent with the
Series' investment objectives, policies and restrictions as set forth in written
documents furnished by the Fund to the Manager, the Fund's Agreement and
Declaration of Trust and By-laws, all securities, commodities and tax laws and
regulations applicable to the Fund and Series, and any other written limitations
or directions furnished by the Trustees to the Manager; to select brokers
through whom the Series' portfolio transactions are executed, in accordance with
the policies adopted by the Series and its Board of Trustees; to administer the
business affairs of the Series; to furnish offices and necessary facilities and
equipment to the Series; to provide clerical, bookkeeping and other
administrative services for the Series (other than those services to be provided
by the Fund's underwriter, custodian, transfer agent and administrator pursuant
to the Fund's agreements with these respective parties on behalf of the Series);
to render periodic reports to the Trustees of the Fund; to permit any of its
officers or employees to serve without compensation as Trustees or officers of
the Fund if elected to such positions; to make available to the Fund promptly
upon request all the Series' records and ledgers and any reports or information
reasonably requested by the Fund; to the extent required by law, to furnish to
regulatory authorities any information or reports relating to the services
provided in this Agreement; to make recommendations as to the manner in which
voting rights, rights to consent to Fund or Series action, and any other rights
pertaining to Fund or the Series shall be exercised; and to use reasonable
efforts to manage the Series so that it will qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended.
Except as otherwise instructed from time to time by the Trustees, with
respect to execution of transactions for the Fund on behalf of the Series,
Manager shall place, or arrange for the placement of, all orders for purchases,
<PAGE>
sales, or loans with issuers, brokers, dealers or other counterparts or agents
selected by Manager. In connection with the selection of all such parties for
the placement of all such orders, Manager shall attempt to obtain most favorable
execution and price, but may nevertheless in its sole discretion as a secondary
factor, purchase and sell portfolio securities from and to brokers and dealers
who provide Manager with statistical, research and other information, analysis,
advice, and similar services. In recognition of such services or brokerage
services provided by a broker or dealer, Manager is hereby authorized to pay
such broker or dealer a commission or spread in excess of that which might be
charged by another broker or dealer for the same transaction if the Manager
determines in good faith that the commission or spread is reasonable in relation
to the value of the services so provided.
Manager may, where it deems to be advisable, aggregate orders for its other
customers together with any securities of the same type to be sold or purchased
for the Fund or the Series (or other series of the Trust) in order to obtain
best execution or lower brokerage commissions. In such event, Manager shall
allocate the shares so purchased or sold, as well as the expenses incurred in
the transaction, in a manner it considers to be equitable and fair and
consistent with its fiduciary obligation to the Fund, the Series, and Manager's
other customers.
(c) The Manager may, at its option, retain one or more subadvisors at
Manager's own cost and expense for the purpose of providing one or more of the
services of Manager described in this Agreement with respect to the Fund and the
Series; provided, however, that any appointment of a subadvisor shall be subject
to the initial and periodic approvals required under Section 15 of the
Investment Company Act of 1940 (the "1940 Act"). Retention of a subadvisor
shall in no way reduce the responsibilities or obligations of Manager under this
Agreement, and Manager shall be responsible to the Fund and Series for all acts
or omissions of any subadvisor in connection with the performance of Manager's
duties hereunder. The Manager agrees to give the Fund prompt written notice of
any termination of or notice to terminate any subadvisor agreement.
(d) Independent Contractor. The Manager shall be deemed to be an
independent contractor under this Agreement and, unless otherwise expressly
provided or authorized, shall have no authority to act for or represent the Fund
in any way or otherwise be deemed an agent of the Fund.
(e) Non-Exclusive Agreement. The services of the Manager to the Series
under this Agreement are not to be deemed exclusive, and the Manager shall be
free to render similar services or other services to others, so long as its
services hereunder are not impaired thereby.
2. (a) Fee. For the services and facilities described in Section 1, the
Series will pay to the Manager at the end of each calendar month an investment
management fee equivalent on an annual basis to .50 of 1% of its average daily
net assets.
(b) Proration. For the month and year in which this Agreement becomes
effective or terminates, there shall be an appropriate proration of the
Manager's fee on the basis of the number of days that the Agreement is in effect
during such month and year, respectively.
-2-
<PAGE>
3. Expenses. Except to the extent expressly assumed by Manager herein or
under a separate agreement between Fund and Manager and except to the extent
required by law to be paid by Manager, Manager shall not be obligated to pay any
costs or expenses incidental to the organization, operations or business of the
Fund. Without limitation, such costs and expenses shall include but not be
limited to: the Manager's fees; any expenses for services rendered by a
custodian, depository or other agency for the safekeeping of the Series'
securities or other property, for keeping its books of account, for any other
charges of the custodian, depository, or other agency and for calculating the
net asset value of the Series as provided in the Agreement and Declaration of
Trust of the Fund; all compensation of the Trustees (other than those affiliated
with the Manager and other than those affiliated with the distributors of the
Fund, if the distributors have agreed to pay such compensation), all expenses
incurred in connection with their services to the Fund, and all expenses of
meetings of the Trustees and committees thereof; charges and expenses of
independent accountants, of legal counsel and of any transfer or dividend
disbursing agent; all brokers' commissions and other costs of acquiring,
disposing or lending of portfolio securities; interest (if any) on obligations
incurred by the Fund; costs of share certificates (if any); membership dues in
the Investment Company Institute or any similar organization; costs of reports
and notices to shareholders; all expenses incidental to holding shareholder
meetings, including printing and of supplying each record-date shareholder with
notice and proxy solicitation material, and all other proxy solicitation
expense; all expenses of printing of annual or more recent revisions of Fund
prospectuses and supplying then-existing shareholders with a copy of a revised
prospectus; all expenses of bond and insurance coverage required by law or
deemed advisable by the Board of Trustees; costs of registering shares of the
Fund and maintaining such registration under the Federal securities laws and of
qualifying and maintaining qualification of Fund and of the Fund's shares for
sale under securities laws of various states or other jurisdictions; all charges
for accounting services provided to Fund by Manager or any other provider of
such services; all charges for equipment or services used for obtaining price
quotations or for communication between Manager or Fund and the custodian,
transfer agent or any other agent selected by the Fund; miscellaneous expenses
and all taxes and fees to federal, state or other governmental agencies,
domestic or foreign, including all stamp or other transfer taxes, and the filing
of corporate documents or otherwise. The Fund shall not pay or incur any
obligation for any management or administrative expenses for which the Fund
intends to seek reimbursement from the Manager without first obtaining the
written approval of the Manager. The Manager shall arrange, if desired by the
Fund, for officers or employees of the Manager to serve, without compensation
from the Fund, as Trustees, officers or agents of the Fund if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law.
4. Allocation of Expenses Borne by the Fund. Any expenses borne by the
Fund that are attributable solely to the organization, operation or business of
the Series shall be paid solely out of the Series' assets. Any expense borne by
the Fund which is not solely attributable to the Series, nor solely to any other
series of shares of the Fund, shall be apportioned in such manner as Manager
determines is fair and appropriate, or as otherwise specified by the Board of
Trustees.
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<PAGE>
5. Expenses Borne By Manager. Manager at its own expense shall furnish all
executive and other personnel, office space, and office facilities required to
render the investment management and administrative services set forth in this
Agreement.
In the event that Manager pays or assumes any expenses of the Fund or the
Series not required to be paid or assumed by Manager under this Agreement,
Manager shall not be obligated hereby to pay or assume the same or similar
expense in the future; provided that nothing contained herein shall be deemed to
relieve Manager of any obligation to the Fund or the Series under any separate
agreement or arrangement between the parties.
6. Interested Persons. Subject to applicable statutes and regulations, it
is understood that Trustees, officers, shareholders and agents of the Fund are
or may be interested in the Manager as directors, officers, shareholders and
agents or otherwise, and that the directors, officers, shareholders and agents
of the Manager may be interested in the Fund as Trustees, officers,
shareholders, agents or otherwise.
7. Liability. The Manager shall not be liable for any error of judgment or
of law, or for any loss suffered by the Series in connection with the matters to
which this Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Manager in the performance of
its obligations and duties, or by reason of its reckless disregard of its
obligations and duties under this Agreement.
8. (a) Term. This Agreement shall become effective on the date hereof and
shall remain in full force until the second anniversary of the date hereof
unless sooner terminated as hereinafter provided. This Agreement shall continue
in force from year to year thereafter, but only as long as such continuance is
specifically approved at least annually in the manner required by the 1940 Act.
(b) Termination. This Agreement shall automatically terminate in the
event of its "assignment" as defined in the 1940 Act. This Agreement may be
terminated at any time without the payment of any penalty by the Board of
Trustees of the Fund or by a vote of a majority of the outstanding shares of the
Series, upon sixty (60) days' written notice to the Manager. The Manager may
terminate this Agreement at any time without payment of any penalty upon sixty
(60) days' written notice to the Fund. This Agreement may be terminated at any
time without the payment of any penalty and without advance notice by the
Trustees or by vote of a majority of the outstanding shares of the Series in the
event that it shall have been established by a court or competent jurisdiction
that the Manager or any officer or director of the Manager has taken any action
which results in a breach of the covenants of the Manager set forth herein.
(c) Payment Upon Termination. Termination of this Agreement shall not
affect the right of the Manager to receive payment on any unpaid balance of the
compensation described in Section 2 earned prior to such termination.
9. Amendment. This Agreement may not be amended as to the Fund or the
Series without the affirmative votes (a) of a majority of the Board of Trustees,
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<PAGE>
including a majority of those Trustees who are not "interested persons" of the
Fund or of Manager, voting in person at a meeting called for the purpose of
voting on such approval, and (b) of a "majority of the outstanding shares" of
the Series. The terms "interested persons" and "vote of a majority of the
outstanding shares" shall be construed in accordance with their respective
definitions in the 1940 Act and, with respect to the latter term, in accordance
with Rule 18f-2 under the 1940 Act.
10. Ownership of Records; Interparty Reporting. All records required to be
maintained and preserved by the Fund pursuant to the provisions of rules or
regulations of the Securities and Exchange Commission under Section 31(a) of the
1940 Act or other applicable laws or regulations which are maintained and
preserved by Manager on behalf of the Fund and any other records the parties
mutually agree shall be maintained by Manager on behalf of the Fund are the
property of the Fund and shall be surrendered by Manager promptly on request by
the Fund; provided that Manager may at its own expense make and retain copies of
any such records.
The Fund shall furnish or otherwise make available to Manager such copies
of the financial statements, proxy statements, reports, and other information
relating to the business and affairs of each shareholder in the Series as
Manager may, at any time or from time to time, reasonably require in order to
discharge its obligations under this Agreement.
Manager shall prepare and furnish to the Fund as to the Series statistical
data and other information in such form and at such intervals as the Fund may
reasonably request.
11. References and Headings. In this Agreement and in any such amendment,
references to this Agreement and all expressions such as "herein," "hereof," and
"hereunder" shall be deemed to refer to this Agreement as amended or affected by
any such amendments. Headings are placed herein for convenience of reference
only and shall not be taken as a part hereof or control or affect the meaning,
construction, or effect of this Agreement. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original.
12. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder shall not
be thereby affected.
13. Notices. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
14. All parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust dated August 10, 1999, and all amendments thereto, all
of which are on file with the Secretary of The Commonwealth of Massachusetts,
and the limitation of shareholder and Trustee liability contained therein. This
Agreement has been executed by and on behalf of the Fund by its representatives
as, such representatives and not individually, and the obligations of the Fund
or Series hereunder are not binding upon any of the Trustees, officers or
shareholders of the Fund or Series individually but are binding upon only the
assets and property of the respective Series. With respect to any claim by
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<PAGE>
Manager for recovery of that portion of the investment management fee (or any
other liability of the Fund arising hereunder) allocated to a particular series,
if there is more than one, whether in accordance with the express terms hereof
or otherwise, the Manager shall have recourse solely against the assets of that
series to satisfy such claim and shall have no recourse against the assets of
any other series for such purpose.
15. Use of the Fund Name. The Fund may use the name "Eagle Funds" or any
other name derived from the name "Eagle" and the Series may use the name listed
above only for so long as this Agreement or any extension, renewal, or amendment
hereof remains in effect, including any similar agreement with any organization
which shall have succeeded to the business of Manager as investment adviser. At
such time as this Agreement or any extension, renewal or amendment hereof, or
such other similar agreement shall no longer be in effect, the Series shall
cease to use the name above and the Fund will cease to use any name derived from
the name "Eagle" or otherwise connected with Manager, or with any organization
which shall have succeeded to Manager's business as investment adviser.
IN WITNESS WHEREOF, the Fund and the Manager have caused this Agreement to
be executed on the day and year first above written.
EAGLE FUNDS
By: /s/ ALEX R. MEITZNER
-----------------------------
Alex R. Meitzner
Chairman
RANSON & ASSOCIATES, INC.
By: /s/ ROBIN K. PINKERTON
-----------------------------
Robin K. Pinkerton
President
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EXHIBIT (E)(1)
DISTRIBUTION AGREEMENT
AGREEMENT made as of this 3rd of December, 1999 between EAGLE FUNDS, a
business trust organized under the laws of the Commonwealth of Massachusetts
(the "Fund"), and RANSON & ASSOCIATES, INC., a Kansas corporation (the
"Underwriter").
W I T N E S S E T H
In consideration of the mutual covenants hereinafter contained, it is
hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the distribution
of its shares of beneficial interest, without par value per share, including
such series or classes of shares as may now or hereafter be authorized (the
"Shares") in jurisdictions wherein Shares may legally be offered for sale;
provided, however, that the Fund, in its absolute discretion, may: (a) issue or
sell Shares directly to holders of Shares of the Fund upon such terms and
conditions and for such consideration, if any, as it may determine, whether in
connection with the distribution of subscription or purchase rights, the payment
or reinvestment of dividends or distributions, or otherwise; (b) issue or sell
Shares at net asset value in connection with merger or consolidation with, or
acquisition of the assets of, other investment companies or similar companies;
and (c) in connection with the issue and sale of Shares to Trustees, officers
and employees of the Fund, and to directors, officers and employees of the
investment advisor (or any portfolio manager) of the Fund or any principal
underwriter (including the Underwriter) of the Fund, and to any trust, pension,
profit-sharing or other benefit plan for any of the aforesaid persons or any
other such persons as described in the then current Prospectus of the Fund, as
permitted by Rule 22d-1 under the Investment Company Act of 1940 (the "1940
Act").
2. The Underwriter hereby accepts appointment as agent for the distribution
of the Shares and agrees that it will use its best efforts to sell such part of
the authorized Shares remaining unissued as from time to time shall be
effectively registered under the Securities Act of 1933 ("Securities Act"), at
prices determined as hereinafter provided and on terms hereinafter set forth,
all subject to applicable Federal and State laws and regulations and to the
Agreement and Declaration of Trust of the Fund.
3. The Fund agrees that it will use its best efforts to keep effectively
registered under the Securities Act for sale, as herein contemplated, such
Shares as the Underwriter shall reasonably request and as the Securities and
Exchange Commission shall permit to be so registered.
4. Notwithstanding any other provision hereof, the Fund may terminate,
suspend, or withdraw the offering of the Shares, or Shares of any series or
class, whenever, in its sole discretion, it deems such action to be desirable.
5. The Underwriter shall sell Shares to, or through, brokers, dealers,
banks or other qualified financial intermediaries (hereinafter referred to as
"dealers"), or others, in such manner not inconsistent with the provisions
hereof and the then effective Registration Statement of the Fund under the
<PAGE>
Securities Act (and related Prospectus and Statement of Additional Information)
as the Underwriter may determine from time to time, provided that no dealer, or
other person, shall be appointed nor authorized to act as agent of the Fund
without the prior consent of the Fund. The Underwriter shall have the right to
enter into agreements with dealers of its choice for the sale of Shares and fix
therein the portion of the sales charge which may be allocated to such dealers;
provided that the Fund shall approve the form of such agreements and shall
evidence such approval by filing said form and any amendments thereto as
attachments to this Agreement, which shall be filed as an exhibit to the Fund's
currently effective registration statement under the Securities Act. Shares
sold to dealers shall be for resale by such dealers only at the public offering
price(s) set forth in the Fund's then current Prospectus. The current forms of
such agreements are attached herein as Exhibits 1 and 2.
6. Shares offered for sale, or sold by the Underwriter, shall be so offered
or sold at a price per Share determined in accordance with the then current
Prospectus relating to the sale of Shares except as departure from such prices
shall be permitted by the rules and regulations of the Securities and Exchange
Commission. Any public offering price shall be the net asset value per Share
plus a sales charge of not more than 8.50% of such public offering price.
Shares may be sold at net asset value without a sales charge to such class or
classes of investors or in such class or classes of transactions as may be
permitted under applicable rules of the Securities and Exchange Commission and
as described in the then current Prospectus of the Fund. The net asset value
per Share of each series or class shall be calculated in accordance with the
Agreement and Declaration of Trust of the Fund and shall be determined in the
manner, and at the time, set forth in the then current Prospectus of the Fund
relating to such Shares.
7. The price the Fund shall receive for all Shares purchased from the Fund
shall be the net asset value used in determining the public offering price
applicable to the sale of such Shares. The excess, if any, of the sales price
over the net asset value of Shares sold by the Underwriter as agent shall be
retained by the Underwriter as a commission for its services hereunder. Out of
such commission, the Underwriter may allow commissions or concessions to dealers
in such amounts as the Underwriter shall determine from time to time. Except as
may be otherwise determined by the Underwriter and the Fund from time to time,
such commissions or concessions shall be uniform to all dealers.
8. The Underwriter shall issue and deliver, or cause to be issued and
delivered, on behalf of the Fund such confirmations of sales made by it as
agent, pursuant to this Agreement, as may be required. At, or prior to, the
time of issuance of Shares, the Underwriter will pay, or cause to be paid, to
the Fund the amount due the Fund for the sale of such Shares. Certificates
shall be issued (if any), or Shares registered on the transfer books of the
Fund, in such names and denominations as the Underwriter may specify.
9. The Fund will execute any and all documents, and furnish any and all
information, which may be reasonably necessary in connection with the
qualification of the Shares for sale (including the qualification of the Fund as
a dealer, where necessary or advisable) in such states as the Underwriter may
reasonably request (it being understood that the Fund shall not be required,
without its consent, to comply with any requirement which, in its opinion, is
unduly burdensome).
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<PAGE>
10. The Fund will furnish to the Underwriter, from time to time, such
information with respect to the Fund and the Shares as the Underwriter may
reasonably request for use in connection with the sale of Shares. The
Underwriter agrees that it will not use or distribute, nor will it authorize
dealers or others to use, distribute or disseminate, in connection with the sale
of such Shares, any statements other than those contained in the Fund's current
Prospectus and Statement of Additional Information, except such supplemental
literature or advertising as shall be lawful under Federal and State securities
laws and regulations, and that it will furnish the Fund with copies of all such
material.
11. The Underwriter shall order Shares from the Fund only to the extent that
it shall have received purchase orders therefor. The Underwriter will not make,
nor authorize any dealers or others, to make: (a) any short sale of Shares; or
(b) any sale of Shares to any officer or trustee of the Fund, nor to any officer
or director of the Underwriter, or of any corporation or association furnishing
investment advisory, managerial, or supervisory services to the Fund, nor to any
such corporation or association, unless such sales are made in accordance with
the then current Prospectus relating to the sale of such Shares.
12. In selling Shares for the account of the Fund, the Underwriter will in
all respects conform to the requirements of all Federal and State laws, and the
Conduct Rules of the National Association of Securities Dealers, Inc., relating
to such sales, and will indemnify and save harmless the Fund from any damage or
expense on account of any wrongful act by the Underwriter or any employee,
representative, or agent of the Underwriter. The Underwriter, however, is not
to be responsible for the acts of other dealers except as and to the extent that
they shall be acting for the Underwriter or under its direction or authority.
The Underwriter will observe and be bound by all the provisions of the Agreement
and Declaration of Trust of the Fund (and of any fundamental policies adopted by
the Fund pursuant to the 1940 Act, notice of which shall have been given by the
Fund to the Underwriter) which at the time in any way require, limit, restrict,
prohibit or otherwise regulate any action on the part of the Underwriter.
13. The Underwriter will require each dealer to conform to the provisions
hereof and of the Registration Statement (and related Prospectus) at the time in
effect under the Securities Act with respect to the public offering price of the
Shares, and neither the Underwriter nor any such dealer shall withhold the
placing of purchase orders so as to make a profit thereby.
14. The Fund will pay, or cause to be paid, expenses (including the fees and
disbursements of its own counsel) of any registration of Shares under the
Securities Act; expenses of qualifying or continuing the qualification of the
Shares for sale under the securities laws of various states and, in connection
therewith, of qualifying or continuing the qualification of the Fund as a dealer
or broker under the laws of such states as may be designated by the Underwriter
under the conditions herein specified; expenses incident to the issuance of the
Shares such as the cost of Share certificates (if any); issue or transfer taxes;
all expenses in connection with the printing of any notices of shareholders'
meetings, proxy and proxy statements and enclosures therewith, as well as any
other notice or communication sent to shareholders or otherwise, any annual,
semi-annual or other report of communications sent to the shareholders, and the
expenses of sending prospectuses relating to the Shares to existing
shareholders; and fees of the transfer and shareholder service agent. The
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<PAGE>
Underwriter will pay, or cause to be paid, all expenses (other than expenses
which any dealer may bear pursuant to any agreement with the Underwriter)
incident to the sale and distribution of the Shares issued or sold hereunder,
including, without limiting the generality of the foregoing, all: (a) expenses
of printing and distributing any Prospectus and Statement of Additional
Information (other than deliveries to existing shareholders) and of preparing,
printing and distributing or disseminating any other literature, advertising and
selling aids in connection with such offering of the Shares for sale (except
that such expenses need not include expenses incurred by the Fund in connection
with the preparation, printing and distribution of any report or other
communication to holders of Shares in their capacity as such), and (b) expenses
of advertising in connection with such offering.
15. The Fund agrees to indemnify and hold harmless the Underwriter and each
of its directors and officers and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act against any
loss, liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any Shares, based upon the ground that the
registration statement, Prospectus, shareholder or other information filed or
made public by the Fund (as from time to time amended), included an untrue
statement of a material fact or omitted to state a material fact required to be
stated or necessary in order to make the statements not misleading under the
Securities Act, or any other statute or the common law. However, the Fund does
not agree to indemnify the Underwriter or hold it harmless to the extent that
the statement or omission was made in reliance upon, and in conformity with,
information furnished to the Fund by or on behalf of the Underwriter. In no
case (i) is the indemnity of the Fund in favor of the Underwriter or any person
indemnified to be deemed to protect the Underwriter or any person against any
liability to the Fund or its security holders to which the Underwriter or such
person would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of their duties or by reason of their
reckless disregard of their obligations and duties under this Agreement, or
(ii) is the Fund to be liable under its indemnity agreement contained in this
section with respect to any claim made against the Underwriter or any person
indemnified unless the Underwriter or person, as the case may be, shall have
notified the Fund in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Underwriter or person (or after the
Underwriter or the person shall have received notice or service on any
designated agent). However, failure to notify the Fund of any claim shall not
relieve the Fund from any liability which it may have to the Underwriter or any
person against whom such action is brought otherwise than on account of its
indemnity agreement contained in this paragraph. The Fund shall be entitled to
participate at its own expense in the defense, or, if it so elects, to assume
the defense of any suit brought to enforce any claims, but if the Fund elects to
assume the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Underwriter or persons, defendant or defendants in the suit.
In the event the Fund elects to assume the defense of any suit and retain
counsel, the Underwriter, officers or directors or controlling person or
persons, defendant or defendants in the suit shall bear the fees and expenses of
any additional counsel retained by them. If the Fund does not elect to assume
the defense of any suit, it will reimburse the Underwriter, officers or
directors or controlling person or persons, defendant or defendants in the suit
for the reasonable fees and expenses of any counsel retained by them if they are
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<PAGE>
entitled to the indemnification hereunder. The Fund agrees to notify the
Underwriter promptly of the commencement of any litigation or proceedings
against it or any of its officers or directors in connection with the issuance
or sale of any of the Shares.
The Underwriter also covenants and agrees that it will indemnify and hold
harmless the Fund and each of its Trustees and officers and each person, if any,
who controls the Fund within the meaning of Section 15 of the Securities Act,
against any loss, liability, damages, claim or expense (including the reasonable
cost of investigating or defending any alleged loss, liability, damages, claim
or expense and reasonable counsel fees incurred in connection therewith) arising
by reason of any person acquiring any Shares, based upon the Securities Act or
any other statute or common law, alleging any wrongful act of the Underwriter or
any of its employees or alleging that the registration statement, Prospectus,
shareholder reports or other information filed or made public by the Fund (as
from time to time amended), included an untrue statement of a material fact or
omitted to state a material fact required to be stated or necessary in order to
make the statements not misleading, insofar as the statement or omission was
made in reliance upon, and in conformity with information furnished to the Fund
by or on behalf of the Underwriter. In no case (i) is the indemnity of the
Underwriter in favor of the Fund or any person indemnified to be deemed to
protect the Fund or any person against any liability to which the Fund or such
person would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Underwriter to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Fund or any person
indemnified unless the Fund or person, as the case may be, shall have notified
the Underwriter in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Fund or person (or after the Fund or
such person shall have received notice of service on any designated agent).
However, failure to notify the Underwriter of any claim shall not relieve the
Underwriter from any liability which it may have to the Fund or any person
against whom the action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. In the case of any notice to the
Underwriter, it shall be entitled to participate, at its own expense, in the
defense or, if it so elects, to assume the defense of any suit brought to
enforce the claim, but if the Underwriter elects to assume the defense, the
defense shall be conducted by counsel chosen by it and satisfactory to the Fund,
to its officers and Trustees and to any controlling person or persons, defendant
or defendants in the suit. In the event that the Underwriter elects to assume
the defense of any suit and retain counsel, the Fund or controlling persons,
defendant or defendants in the suit shall bear the fees and expense of any
additional counsel retained by them. If the Underwriter does not elect to
assume the defense of any suit, it will reimburse the Fund, officers and
Trustees or controlling person or persons, defendant or defendants in the suit,
for the reasonable fees and expenses of any counsel retained by them if entitled
to the indemnification hereunder. The Underwriter agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against them in
connection with the issue and sale of any of the Shares.
16. This agreement shall continue in effect until December 3, 2001, unless
and until terminated by either party as hereinafter provided, and will continue
from year to year thereafter, but only so long as such continuance is
specifically approved, at least annually, in the manner required by the 1940
Act. The Underwriter, the Fund acting pursuant to a resolution by the non-
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<PAGE>
interested trustees, or the majority of the outstanding voting securities of the
Fund as defined in the 1940 Act may terminate this agreement on any date,
without payment of any penalty, by giving the other party sixty days' prior
written notice of such termination, specifying the date fixed therefor.
Without prejudice to any other remedies of the Fund in any such event, the
Fund may terminate this Agreement at any time immediately upon any failure of
fulfillment of any of the obligations of the Underwriter hereunder.
17. This Agreement shall automatically terminate in the event of its
"assignment" as defined in the 1940 Act.
18. Any notice under this agreement shall be in writing, addressed, and
delivered or mailed, postage pre-paid, to the other party at such address as
such other party may designate for the receipt of such notice.
19. The parties hereto are expressly put on notice of the Fund's Agreement
and Declaration of Trust dated August 10, 1999 and all amendments thereto, all
of which are on file with the Secretary of The Commonwealth of Massachusetts,
and the limitation of shareholder and Trustee liability contained therein. This
agreement has been executed by and on behalf of the Fund by its representatives
as such representatives and not individually, and the obligations of the Fund
hereunder are not binding upon any of the Trustees, officers or shareholders of
the Fund individually but are binding upon only the assets and property of the
Fund (or applicable portfolio thereof). With respect to any claim by the
Underwriter for recovery of any liability of the Fund arising hereunder
allocated to a particular portfolio, if there is more than one, whether in
accordance with the express terms hereof or otherwise, the Underwriter shall
have recourse solely against the assets of that portfolio to satisfy such claim
and shall have no recourse against the assets of any other portfolio for such
purpose.
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<PAGE>
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this
agreement to be executed on its behalf as of the day and year first above
written.
EAGLE FUNDS
BY /s/ ALEX R. MEITZNER
----------------------------
Chairman
Attest:
Cristine Minneman
[SEAL]
RANSON & ASSOCIATES, INC.
By /s/ ROBIN K. PINKERTON
---------------------------------
President
Attest:
Cristine Minneman
[SEAL]
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EXHIBIT (E)(2)
RANSON & ASSOCIATES, INC.
250 NORTH ROCK ROAD, SUITE 150
WICHITA, KANSAS 67206
DEALER AGREEMENT
Gentlemen:
As principal underwriter of shares of the Eagle Funds, an open-end investment
company (the "Fund"), we invite you to join the selling group for the
distribution of shares of beneficial interest of the Fund, including any
existing or future series or classes thereof (the "Shares"). As exclusive agent
of the Fund, we offer to sell you Shares on the following terms:
1. In all sales of Shares of the Fund to the public you shall act as dealer
for your own account, and in no transaction shall you have any authority to act
as agent for the Fund, for us, or for any other member of the selling group.
2. Orders received from you will be accepted by us only at the public
offering price applicable to each order, as established in the current Fund
Prospectus of the appropriate series, subject to the discounts provided in such
Prospectus. The minimum dollar purchase of Shares of the Fund by any person
shall be the applicable minimum amount described in the then current Fund
Prospectus for the applicable series, and no order for less than such amount
will be accepted hereunder. The public offering price shall be the net asset
value per Share plus with respect to certain classes, a sales charge expressed
as a percentage of the applicable public offering price, as determined and
effective as of the time specified in the then current Fund Prospectus for the
applicable series. [Upon receipt from you of any order to purchase Shares, we
shall confirm to you in writing or by wire to be followed by a confirmation in
writing]. The procedures relating to the handling of orders and payment
therefor shall be subject to additional instructions which we shall forward from
time to time to you. All orders are subject to acceptance or rejection by us in
our sole discretion.
3. You may offer and sell shares only to customers at the applicable public
offering price determined in the manner described in the Fund's current
Prospectus for the applicable series. As of the date of the Agreement, the
sales charge applicable to any sale of a class of Fund Shares by you and the
dealer concession applicable to any offer from you for the purchase of such Fund
Shares accepted by us shall be the percentage of the applicable public offering
price set forth in the then current Fund Prospectus for the applicable series of
the Fund. Reduced sales charges may also be available pursuant to any special
features of a series of the Fund (such as cumulative discounts, letter of
intent, etc. the terms of which shall be as described in the applicable Fund
Prospectus and related forms). You agree to advise us promptly as to the
amounts of any sales made by you to the public qualifying for a reduced sales
charge.
You may receive a distribution fee and/or a service fee with respect to
certain classes(es) of Shares for which such fees are applicable, as provided in
the applicable Prospectus, which distribution fee and/or service fee shall be
payable for such periods and at such intervals as are from time to time
specified by us. Your placement of an order for Shares after the date of any
notice of such amendment shall conclusively evidence your agreement to be bound
thereby.
4. You agree to purchase Shares only from us. If you purchase Shares from
us, you agree that all such purchases shall be made only: (a) to cover orders
already received by you from your customers or (b) for your own bona fide
investment. We, in turn, agree that we will not purchase any securities from
the Fund except for the purpose of covering purchase orders which we have
already received or for bona fide investment.
<PAGE>
5. You shall not withhold placing with us orders received from your customers
so as to profit yourself as a result of such withholding, (e.g., by change in
the net asset value from that used in determining the public offering price to
your customers).
6. We will not accept from you any conditional orders for shares.
7. If any Shares sold to you under the terms of the Agreement are tendered
for redemption, within seven business days after the date of our confirmation of
the original purchase by you, it is agreed that you shall forfeit your right to
any dealer concession received by you on such Shares. We will notify you of any
such redemption within ten business days from the date on which the redemption
order in proper form is delivered to us or to the Fund, and you shall forthwith
refund to us the full concession allowed to you on such sale. We agree, in the
event of any such redemption, to refund to the Fund our share of the concession
allowed to us and upon receipt from you of the refund of the concession allowed
to you, to pay such refund forthwith to the Fund.
8. Payment for Fund Shares by you shall be made on or before the settlement
date specified in our confirmation, at the office of the Fund's transfer agent,
Sunstone Financial Group, Inc., 207 East Buffalo Street, Suite 400, Milwaukee,
WI 53202, and by check payable to the order of the Fund, which reserves the
right to delay issuance or transfer of shares until such check has cleared. If
such a payment is not received by us, we reserve the right, without notice,
forthwith either to cancel the sale, or, at our option, to cause the Fund to
redeem the Shares ordered, and in either case, may hold you responsible for any
loss, including loss of profit, suffered by us or by the Fund resulting from
your failure to make payment as aforesaid.
9. Shares sold hereunder shall be available in book-entry form on the books
of the Fund's transfer agent. If no open account registration of transfer
instructions are received by the Fund's transfer agent within 20 days after
payment by you for shares sold to you, an open account for such shares will be
established in your name. You agree to hold harmless and indemnify us, the
transfer agent, and the Fund for any loss or expenses resulting from such open
account registration of such shares.
10. No person is authorized to make any representations concerning the Shares
or of the Fund except those contained in the then current Prospectus of the
applicable Fund series and in sales literature issued by us supplemental to such
Prospectus. In purchasing Shares from us, you shall rely solely on the
representations contained in such Prospectus and in such sales literature. We
will furnish additional copies of the current Prospectus and such sales
literature and other releases and information issued by us in reasonable
quantities upon request. You agree that you will not offer or sell any Shares
except under circumstances that will result in compliance with the applicable
Federal and state securities laws and that in connection with sales and offers
to sell Shares you will furnish to each person to whom any such sale or offer is
made a copy of the then current Prospectus for the appropriate series of the
Fund (as amended or supplemented) and will not furnish to any persons any
information relating to Shares which is inconsistent in any respect with the
information contained in such then current Prospectus or cause any advertisement
to be published in any newspaper or posted in any public place without our
consent and the consent of the Fund. You shall be responsible for any required
filing of such advertising.
11. All sales shall be made subject to receipt of Shares from the Fund. The
Fund reserves the right in its discretion and we reserve the right in our
discretion, without notice, to modify, suspend or withdraw the offering of
Shares entirely, and upon notice, to change the sales charge, dealer concession
or any other amounts payable hereunder. We reserve the right, upon notice, to
amend, modify, change or cancel the terms of this Agreement.
12. You shall provide such office space and equipment, telephone facilities,
personnel and literature distribution as is necessary or appropriate for
providing information and services to your customers. Such services and
assistance may include, but not be limited to, establishment and maintenance of
shareholder accounts and records, processing purchase and redemption
transactions, answering routine inquiries regarding the Fund, and such other
services as may be agreed upon from time to time and as may be permitted by
applicable statute, rule, or regulation. You shall perform these services in
good faith and with reasonable care. You shall immediately inform the Fund or
us of all written complaints received by you from Fund shareholders relating to
the maintenance of their accounts and shall promptly answer all such complaints.
-2-
<PAGE>
13. This Agreement shall replace any prior agreement with respect to this
Fund between us and your acceptance of this Agreement constitutes your
representation and warranty that you are a registered securities dealer and a
member in good standing of the National Association of Security Dealers, Inc.
You and we agree to abide by the Rules, and Regulations of the National
Association of Security Dealers, Inc., including its Conduct Rules, and all
applicable state and Federal laws, rules and regulations. You will only offer
shares of the Fund for sale in states in which they may be lawfully offered for
sale. References herein to a "Fund Prospectus" or "Prospectus" shall mean the
prospectus and statement of additional information of the Fund as from time to
time in effect. Any changes, modifications, or additions reflected in any such
Fund Prospectus shall be effective on the date of such Fund Prospectus (or
supplement thereto) unless specified otherwise.
14. All communications to us should be sent to the above address. Any notice
to you shall be duly given if mailed or telegraphed to you at the address
specified by you below. This Agreement shall be effective when accepted by you
below and shall be construed under the laws of the State of Kansas. This
Agreement is subject to the Prospectuses and Statements of Additional
Information of the Fund from time to time in effect, and, in the event of a
conflict, the terms of the applicable Prospectus and Statement of Additional
Information shall control.
RANSON & ASSOCIATES, INC.
By ________________________________________
(Authorized Signature)
ACCEPTED:
___________________________________________
(Dealer's Name)
___________________________________________
(Street Address)
___________________________________________
(City) (State) (Zip)
By _______________________________________
(Authorized Signature of Dealer)
-3-
CUSTODY AGREEMENT
AGREEMENT, dated as of December 3, 1999 between EAGLE FUNDS, a business trust
organized and existing under the laws of the State of Massachusetts having its
principal office and place of business at 250 North Rock Road, Suite 150,
Wichita, Kansas 67206-2241 (the "Fund") and The Bank of New York, a New York
corporation authorized to do a banking business having its principal office and
place of business at One Wall Street, New York, New York 10286 ("Custodian").
W I T N E S S E T H:
that for and in consideration of the mutual premises hereinafter set forth the
Fund and Custodian agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words shall have the meanings set
forth below:
1. "Authorized Person" shall be any person, whether or not an officer or
employee of the Fund, duly authorized by the Fund's board to execute any
Certificate or to give any Oral Instruction with respect to one or more
Accounts, such persons to be designated in a Certificate annexed hereto as
Schedule I hereto or such other Certificate as may be received by Custodian from
time to time.
2. "BNY Affiliate" shall mean any office, branch or subsidiary of The Bank of
New York Company, Inc.
3. "Book-Entry System" shall mean the Federal Reserve/Treasury book-entry system
for receiving and delivering securities, its successors and nominees.
4. "Business Day" shall mean any day on which Custodian and relevant
Depositories are open for business.
5. "Certificate" shall mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement to be given to Custodian,
which is actually received by Custodian by letter or facsimile transmission and
signed on behalf of the Fund by an Authorized Person or a person reasonably
believed by Custodian to be an Authorized Person.
6. "Composite Currency Unit" shall mean the Euro or any other composite currency
unit consisting of the aggregate of specified amounts of specified currencies,
as such unit may be constituted from time to time.
7. "Compulsory Depository" shall mean any Foreign Depository the use of which is
mandatory by law or regulation, or because securities cannot be withdrawn from
such Foreign Depository, or because maintaining securities outside such Foreign
Depository is not consistent with prevailing custodial practices in the relevant
market.
8. "Depository" shall include (a) the Book-Entry System, (b) the Depository
Trust Company, (c) any other clearing agency or securities depository registered
with the Securities and Exchange Commission identified to the Fund from time to
time, and (d) the respective successors and nominees of the foregoing.
9. "Foreign Depository" shall mean (a) Euroclear, (b) Cedel, S.A., (c) any
Compulsory Depository, (d) any other security depository or clearing agency
located outside the United States that acts as a system for the central handling
of securities identified to the Fund from time to time, and (e) the respective
successors and nominees of the foregoing.
10. "Instructions" shall mean communications transmitted by electronic or
telecommunications media, including S.W.I.F.T., computer-to-computer interface,
or dedicated transmission lines.
11. "Oral Instructions" shall mean verbal instructions received by Custodian
from an Authorized Person or from a person reasonably believed by Custodian to
be an Authorized Person.
12. "Securities" shall include, without limitation, any common stock and other
equity securities, bonds, debentures and other debt securities, notes, mortgages
or other obligations, and any instruments representing rights to receive,
purchase, or subscribe for the same, or representing any other rights or
interests therein (whether represented by a certificate or held in a Depository
or by a Subcustodian).
13. "Series" shall mean the various portfolios, of any, of the Fund listed on
Schedule II hereto, and if none are listed references to Series shall be
references to the Fund.
14. "Subcustodian" shall mean a bank (including any branch thereof) or other
financial institution (other than a Foreign Depository) located outside the U.S.
which is utilized by Custodian in connection with the purchase, sale or custody
of Securities hereunder and identified to the Fund from time to time, and their
respective successors and nominees.
ARTICLE II
APPOINTMENT OF CUSTODIAN; ACCOUNTS;
REPRESENTATIONS, WARRANTIES, AND COVENANTS
1. (a) The Fund hereby appoints Custodian as custodian of all Securities and
cash at any time delivered to Custodian during the term of this Agreement, and
authorizes Custodian to hold Securities in registered form in its name or the
name of its nominees. Custodian hereby accepts such appointment and agrees to
establish and maintain one or more securities accounts and cash accounts for
each Series in which Custodian will hold Securities and cash as provided
herein. Custodian shall maintain books and records segregating the assets
of each Series from the assets of any other Series. Such accounts (each,
an "Account"; collectively, the "Accounts") shall be in the name of the Fund.
(b) Custodian may from time to time establish on its books and records such
sub-accounts within each Account as the Fund and Custodian may agree upon (each
a "Special Account"), and Custodian shall reflect therein such assets as the
Fund may specify in a Certificate or Instructions.
(c) Custodian may from time to time establish pursuant to a written agreement
with and for the benefit of a broker, dealer, future commission merchant or
other third party identified in a Certificate or Instructions such accounts on
such terms and conditions as the Fund and Custodian shall agree, and Custodian
shall transfer to such account such Securities and money as the Fund may specify
in a Certificate or Instructions.
2. The Fund hereby represents and warrants, which representations and warranties
shall be continuing and shall be deemed to be reaffirmed upon each delivery of a
Certificate or each giving of Oral Instructions or Instructions by the Fund,
that:
(a) It is duly organized and existing under the laws of the jurisdiction of
its organization, with full power to carry on its business as now conducted, to
enter into this Agreement, and to perform its obligations hereunder;
(b) This Agreement has been duly authorized, executed and delivered by the
Fund, approved by a resolution of its board, constitutes a valid and legally
binding obligation of the Fund, enforceable in accordance with its terms, and
there is no statute, regulation, rule, order or judgment binding on it, and no
provision of its charter or by-laws, nor of any mortgage, indenture, credit
agreement or other contract binding on it or affecting its property, which would
prohibit its execution or performance of this Agreement;
(c) It is conducting its business in substantial compliance with all
applicable laws and requirements, both state and federal, and has obtained all
regulatory licenses, approvals and consents necessary to carry on its business
as now conducted;
(d) It will not use the services provided by Custodian hereunder in any
manner that is, or will result in, a violation of any law, rule or regulation
applicable to the Fund;
(e) Its board or its foreign custody manager, as defined in Rule 17f-5 under
the Investment Company Act of 1940, as amended (the "'40 Act"), has determined
that use of each Subcustodian (including any Replacement Custodian), each
Depository, and each Foreign Depository which Custodian or any Subcustodian is
authorized to utilize in accordance with Section 1(a) of Article III hereof,
satisfies the applicable requirements of the '40 Act and Rules 17f-4 or 17f-5
thereunder, as the case may be;
(f) It is fully informed of the protections and risks associated with various
methods of transmitting Instructions and Oral Instructions and delivering
Certificates to Custodian, understands that there may be more secure methods of
transmitting or delivering the same than the methods selected by the Fund,
agrees that the security procedures (if any) to be utilized provide a
commercially reasonable degree of protection in light of its particular needs
and circumstances, and acknowledges and agrees that Instructions need not be
reviewed by Custodian, may conclusively be presumed by Custodian to have been
given by person(s) duly authorized, and may be acted upon as given;
(g) It shall manage it borrowings, including, without limitation, any advance
or overdraft (including any day-light overdraft) in the Accounts, so that the
aggregate of its total borrowings for each Series does not exceed the amount
such Series is permitted to borrow under the '40 Act;
(h) Its transmission or giving of, and Custodian acting upon, Certificates,
Instructions, or Oral Instructions pursuant to this Agreement shall at all times
comply with the '40 Act;
(i) It shall impose and maintain restrictions on the destinations to which
cash may be disbursed by Instructions to ensure that each disbursement is for a
proper purpose; and
(j) It has the right to make the pledge and grant the security interest and
security entitlement to Custodian contained in Section 1 of Article V hereof,
free of any right of redemption or prior claim of any other person or entity,
such pledge and such grants shall have a first priority subject to no setoffs,
counterclaims, or other liens or grants prior to or on a parity therewith, and
it shall take such additional steps as Custodian may require to assure such
priority.
3. The Fund hereby covenants that it shall from time to time complete and
execute and deliver to Custodian upon Custodian's request a Form FR U-1 (or
successor form) whenever the Fund borrows from Custodian any money to be used
for the purchase or carrying of margin stock as defined in Federal Reserve
Regulation U.
ARTICLE III
CUSTODY AND RELATED SERVICES
1. (a) Subject to the terms hereof, the Fund hereby authorizes Custodian to hold
any Securities received by it from time to time for the Fund's account.
Custodian shall be entitled to utilize Depositories, Foreign Depositories and
Subcustodians to the extent possible in connection with its performance
hereunder. Securities and cash held in a Depository or Foreign Depository will
be held subject to the rules, terms and conditions of such entity. Securities
and cash held through Subcustodians shall be held subject to the terms and
conditions of Custodian's agreements with such Subcustodians. Subcustodians may
be authorized to hold Securities in Foreign Depositories in which such
Subcustodians participate. Unless otherwise required by local law or practice
or a particular subcustodian agreement, Securities deposited with Subcustodians
will be held in a commingled account in the name of Custodian as custodian for
its customers. Custodian shall identify on its books and records the Securities
and cash belonging to the Fund, whether held directly or indirectly through
Depositories, Foreign Depositories, or Subcustodians. Custodian shall, directly
or indirectly through Subcustodians, Depositories, or Foreign Depositories,
endeavor, to the extent feasible, to hold Securities in the country or other
jurisdiction in which the principal trading market for such Securities is
located, where such Securities are to be presented for cancellation and/or
payment and/or registration, or where such Securities are acquired. Custodian
at any time may cease utilizing any Subcustodian and/or may replace a
Subcustodian with a different Subcustodian (the "Replacement Subcustodian"). In
the event Custodian selects a Replacement Subcustodian, Custodian shall not
utilize such Replacement Subcustodian until after it has identified the same to
the Fund.
(b) Unless Custodian has received a Certificate or Instructions to the
contrary or applicable law otherwise requires, Custodian shall hold Securities
indirectly through a Subcustodian only if (i) the Securities are not subject to
any right, charge, security interest, lien or claim of any kind in favor of such
Subcustodian or its creditors or operators, including a receiver or trustee in
bankruptcy or similar authority, except for a claim of payment for the safe
custody or administration of Securities on behalf of the Fund by such
Subcustodian, and (ii) beneficial ownership of the Securities is freely
transferable without the payment of money or value other than for safe custody
or administration.
2. Custodian shall furnish the Fund with an advice of daily transactions and a
monthly summary of all transfers to or from the Accounts.
3. With respect to all Securities held hereunder, Custodian shall, unless
otherwise instructed to the contrary:
(a) Receive all income and other payments and advise the Fund as promptly as
practicable of any such amounts due but not paid;
(b) Present for payment and receive the amount paid upon all Securities which
may mature and advise the Fund as promptly as practicable of any such amounts
due but not paid;
(c) Forward to the Fund copies of all information or documents that it may
actually receive from an issuer of Securities which, in the opinion of
Custodian, are intended for the beneficial owner of Securities;
(d) Execute, as custodian, any certificates of ownership, affidavits,
declarations or other certificates under any tax laws now or hereafter in effect
in connection with the collection of bond and note coupons;
(e) Hold directly or through a Depository, a Foreign Depository, or a
Subcustodian all rights and similar Securities issued with respect to any
Securities credited to an Account hereunder; and
(f) Endorse for collection checks, drafts or other negotiable instruments.
4. (a) Custodian shall notify the Fund of such rights or discretionary actions
or of the date or dates by when such rights must be exercised or such action
must be taken provided that Custodian has actually received, from the issuer or
the relevant Depository (with respect to Securities issued in the United States)
or from the relevant Subcustodian, Foreign Depository, or a nationally or
internationally recognized bond or corporate action service to which Custodian
subscribes, timely notice of such rights or discretionary corporate action or of
the date or dates such rights must be exercised or such action must be taken.
Absent actual receipt of such notice, Custodian shall have no liability for
failing to so notify the Fund.
(b) Whenever Securities (including, but not limited to, warrants, options,
tenders, options to tender or non-mandatory puts or calls) confer optional
rights on the Fund or provide for discretionary action or alternative courses of
action by the Fund, the Fund shall be responsible for making any decisions
relating thereto and for directing Custodian to act. In order for Custodian to
act, it must receive the Fund's Certificate or Instructions at Custodian's
offices, addressed as Custodian may from time to time request, not later than
noon (New York time) at least two (2) Business Days prior to the last scheduled
date to act with respect to such Securities (or such earlier date or time as
Custodian may specify to the Fund). Absent Custodian's timely receipt of such
Certificate or Instructions, Custodian shall not be liable for failure to take
any action relating to or to exercise any rights conferred by such Securities.
5. All voting rights with respect to Securities, however registered, shall be
exercised by the Fund or its designee. For Securities issued in the United
States, Custodian's only duty shall be to mail to the Fund any documents
(including proxy statements, annual reports and signed proxies) actually
received by Custodian relating to the exercise of such voting rights. With
respect to Securities issued outside of the United States, Custodian's only duty
shall be to provide the Fund with access to a provider of global proxy services
at the Fund's request. The Fund shall be responsible for all costs associated
with its use of such services.
6. Custodian shall promptly advise the Fund upon Custodian's actual receipt of
notification of the partial redemption, partial payment or other action
affecting less than all Securities of the relevant class. If Custodian, any
Subcustodian, any Depository, or any Foreign Depository holds any Securities in
which the Fund has an interest as part of a fungible mass, Custodian, such
Subcustodian, Depository, or Foreign Depository may select the Securities to
participate in such partial redemption, partial payment or other action in any
non-discriminatory manner that it customarily uses to make such selection.
7. Custodian shall not under any circumstances accept bearer interest coupons
which have been stripped from United States federal, state or local government
or agency securities unless explicitly agreed to by Custodian in writing.
8. The Fund shall be liable for all taxes, assessments, duties and other
governmental charges, including any interest or penalty with respect thereto
("Taxes"), with respect to any cash or Securities held on behalf of the Fund or
any transaction related thereto. The Fund shall indemnify Custodian and each
Subcustodian for the amount of any Tax that Custodian, any such Subcustodian or
any other withholding agent is required under applicable laws (whether by
assessment or otherwise) to pay on behalf of, or in respect of income earned by
or payments or distributions made to or for the account of the Fund (including
any payment of Tax required by reason of an earlier failure to withhold).
Custodian shall, or shall instruct the applicable Subcustodian or other
withholding agent to, withhold the amount of any Tax which is required to be
withheld under applicable law upon collection of any dividend, interest or other
distribution made with respect to any Security and any proceeds or income from
the sale, loan or other transfer of any Security. In the event that Custodian
or any Subcustodian is required under applicable law to pay any Tax on behalf of
the Fund, Custodian is hereby authorized to withdraw cash from any cash account
in the amount required to pay such Tax and to use such cash, or to remit such
cash to the appropriate Subcustodian or other withholding agent, for the timely
payment of such Tax in the manner required by applicable law. If the aggregate
amount of cash in all cash accounts is not sufficient to pay such Tax, Custodian
shall promptly notify the Fund of the additional amount of cash (in the
appropriate currency) required, and the Fund shall directly deposit such
additional amount in the appropriate cash account promptly after receipt of such
notice, for use by Custodian as specified herein. In the event that Custodian
reasonably believes that Fund is eligible, pursuant to applicable law or to the
provisions of any tax treaty, for a reduced rate of, or exemption from, any Tax
which is otherwise required to be withheld or paid on behalf of the Fund under
any applicable law, Custodian shall, or shall instruct the applicable
Subcustodian or withholding agent to, either withhold or pay such Tax at such
reduced rate or refrain from withholding or paying such Tax, as appropriate;
provided that Custodian shall have received from the Fund all documentary
evidence of residence or other qualification for such reduced rate or exemption
required to be received under such applicable law or treaty. In the event that
Custodian reasonably believes that a reduced rate of, or exemption from, any Tax
is obtainable only by means of an application for refund, Custodian and the
applicable Subcustodian shall have no responsibility for the accuracy or
validity of any forms or documentation provided by the Fund to Custodian
hereunder. The Fund hereby agrees to indemnify and hold harmless Custodian and
each Subcustodian in respect of any liability arising from any underwithholding
or underpayment of any Tax which results from the inaccuracy or invalidity of
any such forms or other documentation, and such obligation to indemnify shall be
a continuing obligation of the Fund, its successors and assigns notwithstanding
the termination of this Agreement.
9. (a) For the purpose of settling Securities and foreign exchange transactions,
the Fund shall provide Custodian with sufficient immediately available funds for
all transactions by such time and date as conditions in the relevant market
dictate. As used herein, "sufficient immediately available funds" shall mean
either (i) sufficient cash denominated in U.S. dollars to purchase the necessary
foreign currency, or (ii) sufficient applicable foreign currency, to settle the
transaction. Custodian shall provide the Fund with immediately available funds
each day which result from the actual settlement of all sale transactions, based
upon advices received by Custodian from Subcustodians, Depositories, and Foreign
Depositories. Such funds shall be in U.S. dollars or such other currency as the
Fund may specify to Custodian.
(b) Any foreign exchange transaction effected by Custodian in connection with
this Agreement may be entered with Custodian or a BNY Affiliate acting as
principal or otherwise through customary banking channels. The Fund may issue a
standing Certificate or Instructions with respect to foreign exchange
transactions, but Custodian may establish rules or limitations concerning any
foreign exchange facility made available to the Fund. The Fund shall bear all
risks of investing in Securities or holding cash denominated in a foreign
currency.
(c) To the extent that Custodian has agreed to provide pricing or other
information services in connection with this Agreement, Custodian is authorized
to utilize any vendor (including brokers and dealers of Securities) reasonably
believed by Custodian to be reliable to provide such information. The Fund
understands that certain pricing information with respect to complex financial
instruments (e.g., derivatives) may be based on calculated amounts rather than
actual market transactions and may not reflect actual market values, and that
the variance between such calculated amounts and actual market values may or may
not be material. Where vendors do not provide information for particular
Securities or other property, an Authorized Person may advise Custodian in a
Certificate regarding the fair market value of, or provide other information
with respect to, such Securities or property as determined by it in good faith.
Custodian shall not be liable for any loss, damage or expense incurred as a
result of errors or omissions with respect to any pricing or other information
utilized by Custodian hereunder.
ARTICLE IV
PURCHASE AND SALE OF SECURITIES;
CREDITS TO ACCOUNT
1. Promptly after each purchase or sale of Securities by the Fund, the Fund
shall deliver to Custodian a Certificate or Instructions, or with respect to a
purchase or sale of a Security generally required to be settled on the same day
the purchase or sale is made, Oral Instructions specifying all information
Custodian may reasonably request to settle such purchase or sale. Custodian
shall account for all purchases and sales of Securities on the actual settlement
date unless otherwise agreed by Custodian.
2. The Fund understands that when Custodian is instructed to deliver Securities
against payment, delivery of such Securities and receipt of payment therefor may
not be completed simultaneously. Notwithstanding any provision in this
Agreement to the contrary, settlements, payments and deliveries of Securities
may be effected by Custodian or any Subcustodian in accordance with the
customary or established securities trading or securities processing practices
and procedures in the jurisdiction in which the transaction occurs, including,
without limitation, delivery to a purchaser or dealer therefor (or agent)
against receipt with the expectation of receiving later payment for such
Securities. The Fund assumes full responsibility for all risks, including,
without limitation, credit risks, involved in connection with such deliveries of
Securities.
3. Custodian may, as a matter of bookkeeping convenience or by separate
agreement with the Fund, credit the Account with the proceeds from the sale,
redemption or other disposition of Securities or interest, dividends or other
distributions payable on Securities prior to its actual receipt of final payment
therefor. All such credits shall be conditional until Custodian's actual
receipt of final payment and may be reversed by Custodian to the extent that
final payment is not received. Payment with respect to a transaction will not
be "final" until Custodian shall have received immediately available funds which
under applicable local law, rule and/or practice are irreversible and not
subject to any security interest, levy or other encumbrance, and which are
specifically applicable to such transaction.
ARTICLE V
OVERDRAFTS OR INDEBTEDNESS
1. If Custodian should in its sole discretion advance funds on behalf of any
Series which results in an overdraft (including, without limitation, any
day-light overdraft) because the money held by Custodian in an Account for such
Series shall be insufficient to pay the total amount payable upon a purchase of
Securities specifically allocated to such Series, as set forth in a Certificate,
Instructions or Oral Instructions, or if an overdraft arises in the separate
account of a Series for some other reason, including, without limitation,
because of a reversal of a conditional credit or the purchase of any currency,
or if the Fund is for any other reason indebted to Custodian with respect to a
Series, including any indebtedness to The Bank of New York under the Fund's Cash
Management and Related Services Agreement (except a borrowing for investment or
for temporary or emergency purposes using Securities as collateral pursuant to a
separate agreement and subject to the provisions of Section 2 of this Article),
such overdraft or indebtedness shall be deemed to be a loan made by Custodian to
the Fund for such Series payable on demand and shall bear interest from the date
incurred at a rate per annum ordinarily charged by Custodian to its
institutional customers, as such rate may be adjusted from time to time. In
addition, the Fund hereby agrees that Custodian shall to the maximum extent
permitted by law have a continuing lien, security interest, and security
entitlement in and to any property, including, without limitation, any
investment property or any financial asset, of such Series at any time held by
Custodian for the benefit of such Series or in which such Series may have an
interest which is then in Custodian's possession or control or in possession or
control of any third party acting in Custodian's behalf. The Fund authorizes
Custodian, in its sole discretion, at any time to charge any such overdraft or
indebtedness together with interest due thereon against any balance of account
standing to such Series' credit on Custodian's books.
2. If the Fund borrows money from any bank (including Custodian if the borrowing
is pursuant to a separate agreement) for investment or for temporary or
emergency purposes using Securities held by Custodian hereunder as collateral
for such borrowings, the Fund shall deliver to Custodian a Certificate
specifying with respect to each such borrowing: (a) the Series to which such
borrowing relates; (b) the name of the bank, (c) the amount of the borrowing,
(d) the time and date, if known, on which the loan is to be entered into, (e)
the total amount payable to the Fund on the borrowing date, (f) the Securities
to be delivered as collateral for such loan, including the name of the issuer,
the title and the number of shares or the principal amount of any particular
Securities, and (g) a statement specifying whether such loan is for investment
purposes or for temporary or emergency purposes and that such loan is in
conformance with the '40 and the Fund's prospectus. Custodian shall deliver on
the borrowing date specified in a Certificate the specified collateral against
payment by the lending bank of the total amount of the loan payable, provided
that the same conforms to the total amount payable as set forth in the
Certificate. Custodian may, at the option of the lending bank, keep such
collateral in its possession, but such collateral shall be subject to all rights
therein given the lending bank by virtue of any promissory note or loan
agreement. Custodian shall deliver such Securities as additional collateral as
may be specified in a Certificate to collateralize further any transaction
described in this Section. The Fund shall cause all Securities released from
collateral status to be returned directly to Custodian, and Custodian shall
receive from time to time such return of collateral as may be tendered to it.
In the event that the Fund fails to specify in a Certificate the Series, the
name of the issuer, the title and number of shares or the principal amount of
any particular Securities to be delivered as collateral by Custodian, Custodian
shall not be under any obligation to deliver any Securities.
ARTICLE VI
SALE AND REDEMPTION OF SHARES
1. Whenever the Fund shall sell any Shares it shall deliver to Custodian a
Certificate or Instructions specifying the amount of money to be received by
Custodian for the sale of such Shares and specifically allocated to an Account
for such Series.
2. Upon receipt of such money, Custodian shall credit such money to an Account
in the name of the Series for which such money was received.
3. Except as provided hereinafter, whenever the Fund desires Custodian to make
payment out of the money held by Custodian hereunder in connection with a
redemption of any Shares, it shall furnish to Custodian a Certificate or
Instructions specifying the total amount to be paid for such Shares. Custodian
shall make payment of such total amount to the transfer agent specified in such
Certificate or Instructions out of the money held in an Account of the
appropriate Series.
4. Notwithstanding the above provisions regarding the redemption of any Shares,
whenever any Shares are redeemed pursuant to any check redemption privilege
which may from time to time be offered by the Fund, Custodian, unless otherwise
instructed by a Certificate or Instructions, shall, upon presentment of such
check, charge the amount thereof against the money held in the Account of the
Series of the Shares being redeemed, provided, that if the Fund or its agent
timely advises Custodian that such check is not to be honored, Custodian shall
return such check unpaid.
ARTICLE VII
PAYMENT OF DIVIDENDS OR DISTRIBUTIONS
1. Whenever the Fund shall determine to pay a dividend or distribution on its
Shares it shall furnish to Custodian Instructions or a Certificate setting forth
with respect to the Series specified therein the date of the declaration of such
dividend or distribution, the total amount payable, and the payment date.
2. Upon the payment date specified in such Instructions or Certificate,
Custodian shall pay out of the money held for the account of such Series the
total amount payable to the dividend agent of the Fund specified therein.
ARTICLE VIII
CONCERNING CUSTODIAN
1. (a) Except as otherwise expressly provided herein, Custodian shall not be
liable for any costs, expenses, damages, liabilities or claims, including
attorneys' and accountants' fees (collectively, "Losses"), incurred by or
asserted against the Fund, except those Losses arising out Custodian's own
negligence or willful misconduct. Custodian shall have no liability whatsoever
for the action or inaction of any Depositories or any Foreign Depositories.
With respect to any Losses incurred by the Fund as a result of the acts or any
failures to act by any Subcustodian (other than a BNY Affiliate), Custodian
shall take appropriate action to recover such Losses from such Subcustodian; and
Custodian's sole responsibility and liability to the Fund shall be limited to
amounts so received from such Subcustodian (exclusive of costs and expenses
incurred by Custodian). In no event shall Custodian be liable to the Fund or
any third party for special, indirect or consequential damages, or lost profits
or loss of business, arising in connection with this Agreement, nor shall BNY or
any Subcustodian be liable: (i) for acting in accordance with any Certificate
or Oral Instructions actually received by Custodian and reasonably believed by
Custodian to be given by an Authorized Person; (ii) for acting in accordance
with Instructions without reviewing the same; (iii) for conclusively presuming
that all Instructions are given only by person(s) duly authorized; (iv) for
conclusively presuming that all disbursements of cash directed by the Fund,
whether by a Certificate, an Oral Instruction, or an Instruction, are in
accordance with Section 2(i) of Article II hereof; (v) for holding property in
any particular country, including, but not limited to, Losses resulting from
nationalization, expropriation or other governmental actions; regulation of the
banking or securities industry; exchange or currency controls or restrictions,
devaluations or fluctuations; availability of cash or Securities or market
conditions which prevent the transfer of property or execution of Securities
transactions or affect the value of property; (vi) for any Losses due to forces
beyond the control of Custodian, including without limitation strikes, work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear or
natural catastrophes or acts of God, or interruptions, loss or malfunctions of
utilities, communications or computer (software and hardware) services; (vii)
for the insolvency of any Subcustodian (other than a BNY Affiliate), any
Depository, or any Foreign Depository; or (viii) for any Losses arising from the
applicability of any law or regulation now or hereafter in effect, or from the
occurrence of any event, including, without limitation, any rules or procedures
of a Foreign Depository, which may affect, limit, prevent or impose costs or
burdens on, the transferability, convertibility, or availability of any currency
or Composite Currency Unit in any country or on the transfer of any Securities,
and in no event shall Custodian be obligated to substitute another currency for
a currency (including a currency that is a component of a Composite Currency
Unit) whose transferability, convertibility or availability has been affected,
limited, or prevented by such law, regulation or event, and to the extent that
any such law, regulation or event imposes a cost or charge upon Custodian in
relation to the transferability, convertibility, or availability of any cash
currency or Composite Currency Unit, such cost or charge shall be for the
account of the Fund, and Custodian may treat any account denominated in an
affected currency as a group of separate accounts denominated in the relevant
component currencies.
(b) Custodian may enter into subcontracts, agreements and understandings with
any BNY Affiliate, whenever and on such terms and conditions as it deems
necessary or appropriate to perform its services hereunder. No such
subcontract, agreement or understanding shall discharge Custodian from its
obligations hereunder.
(c) The Fund agrees to indemnify Custodian and hold Custodian harmless from
and against any and all Losses sustained or incurred by or asserted against
Custodian by reason of or as a result of any action or inaction, or arising out
of Custodian's performance hereunder, including reasonable fees and expenses of
counsel incurred by Custodian in a successful defense of claims by the Fund;
provided however, that the Fund shall not indemnify Custodian for those Losses
arising out of Custodian's own negligence or willful misconduct. This indemnity
shall be a continuing obligation of the Fund, its successors and assigns,
notwithstanding the termination of this Agreement.
2. Without limiting the generality of the foregoing, Custodian shall be under no
obligation to inquire into, and shall not be liable for:
(a) Any Losses incurred by the Fund or any other person as a result of the
receipt or acceptance of fraudulent, forged or invalid Securities, or Securities
which are otherwise not freely transferable or deliverable without encumbrance
in any relevant market;
(b) The validity of the issue of any Securities purchased, sold, or written
by or for the Fund, the legality of the purchase, sale or writing thereof, or
the propriety of the amount paid or received therefor;
(c) The legality of the sale or redemption of any Shares, or the propriety of
the amount to be received or paid therefor;
(d) The legality of the declaration or payment of any dividend or
distribution by the Fund;
(e) The legality of any borrowing by the Fund;
(f) The legality of any loan of portfolio Securities, nor shall Custodian be
under an duty or obligation to see to it that any cash or collateral delivered
to it by a broker, dealer or financial institution or held by it at any time as
a result of such loan of portfolio Securities is adequate security for the Fund
against any loss it might sustain as a result of such loan, which duty or
obligation shall be the sole responsibility of the Fund. In addition, Custodian
shall be under no duty or obligation to see that any broker, dealer or financial
institution to which portfolio Securities of the Fund are lent makes payment to
it of any dividends or interest which are payable to or for the account of the
Fund during the period of such loan or at the termination of such loan,
provided, however that Custodian shall promptly notify the Fund in the event
that such dividends or interest are not paid and received when due;
(g) The sufficiency or value of any amounts of money and/or Securities held
in any Special Account in connection with transactions by the Fund; whether any
broker, dealer, futures commission merchant or clearing member makes payment to
the Fund of any variation margin payment or similar payment which the Fund may
be entitled to receive from such broker, dealer, futures commission merchant or
clearing member, or whether any payment received by Custodian from any broker,
dealer, futures commission merchant or clearing member is the amount the Fund is
entitled to receive, or to notify the Fund of Custodian's receipt or non-receipt
of any such payment; or
(h) Whether any Securities at any time delivered to, or held by it or by any
Subcustodian, for the account of the Fund and specifically allocated to a Series
are such as properly may be held by the Fund or such Series under the provisions
of its then current prospectus and statement of additional information, or to
ascertain whether any transactions by the Fund, whether or not involving
Custodian, are such transactions as may properly be engaged in by the Fund.
3. Custodian may, with respect to questions of law specifically regarding an
Account, obtain the advice of counsel and shall be fully protected with respect
to anything done or omitted by it in good faith in conformity with such advice.
4. Custodian shall be under no obligation to take action to collect any amount
payable on Securities in default, or if payment is refused after due demand and
presentment.
5. Custodian shall have no duty or responsibility to inquire into, make
recommendations, supervise, or determine the suitability of any transactions
affecting any Account.
6. The Fund shall pay to Custodian the fees and charges as may be specifically
agreed upon from time to time and such other fees and charges at Custodian's
standard rates for such services as may be applicable. The Fund shall reimburse
Custodian for all costs associated with the conversion of the Fund's Securities
hereunder and the transfer of Securities and records kept in connection with
this Agreement. The Fund shall also reimburse Custodian for out-of-pocket
expenses which are a normal incident of the services provided hereunder.
7. Custodian has the right to debit any cash account for any amount payable by
the Fund in connection with any and all obligations of the Fund to Custodian.
In addition to the rights of Custodian under applicable law and other
agreements, at any time when the Fund shall not have honored any of its
obligations to Custodian, Custodian shall have the right without notice to the
Fund to retain or set-off, against such obligations of the Fund, any Securities
or cash Custodian or a BNY Affiliate may directly or indirectly hold for the
account of the Fund, and any obligations (whether matured or unmatured) that
Custodian or a BNY Affiliate may have to the Fund in any currency or Composite
Currency Unit. Any such asset of, or obligation to, the Fund may be transferred
to Custodian and any BNY Affiliate in order to effect the above rights.
8. The Fund agrees to forward to Custodian a Certificate or Instructions
confirming Oral Instructions by the close of business of the same day that such
Oral Instructions are given to Custodian. The Fund agrees that the fact that
such confirming Certificate or Instructions are not received or that a contrary
Certificate or contrary Instructions are received by Custodian shall in no way
affect the validity or enforceability of transactions authorized by such Oral
Instructions and effected by Custodian. If the Fund elects to transmit
Instructions through an on-line communications system offered by Custodian, the
Fund's use thereof shall be subject to the Terms and Conditions attached as
Appendix I hereto, and Custodian shall provide user and authorization codes,
passwords and authentication keys only to an Authorized Person or a person
reasonably believed by Custodian to be an Authorized Person.
9. The books and records pertaining to the Fund which are in possession of
Custodian shall be the property of the Fund. Such books and records shall be
prepared and maintained as required by the '40 Act and the rules thereunder. The
Fund, or its authorized representatives, shall have access to such books and
records during Custodian's normal business hours. Upon the reasonable request
of the Fund, copies of any such books and records shall be provided by Custodian
to the Fund or its authorized representative. Upon the reasonable request of
the Fund, Custodian shall provide in hard copy or on computer disc any records
included in any such delivery which are maintained by Custodian on a computer
disc, or are similarly maintained.
10. It is understood that Custodian is authorized to supply any information
regarding the Accounts which is required by any law, regulation or rule now or
hereafter in effect. The Custodian shall provide the Fund with any report
obtained by the Custodian on the system of internal accounting control of a
Depository, and with such reports on its own system of internal accounting
control as the Fund may reasonably request from time to time.
11. Custodian shall have no duties or responsibilities whatsoever except such
duties and responsibilities as are specifically set forth in this Agreement, and
no covenant or obligation shall be implied against Custodian in connection with
this Agreement.
ARTICLE IX
TERMINATION
1. Either of the parties hereto may terminate this Agreement by giving to the
other party a notice in writing specifying the date of such termination, which
shall be not less than ninety (90) days after the date of giving of such
notice. In the event such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the board of the Fund, certified
by the Secretary or any Assistant Secretary, electing to
terminate this Agreement and designating a successor custodian
or custodians, each of which shall be a bank or trust company
having not less than $2,000,000 aggregate capital, surplus and undivided
profits. In the event such notice is given by Custodian, the Fund shall, on or
before the termination date, deliver to Custodian a copy of a resolution of the
board of the Fund, certified by the Secretary or any Assistant Secretary,
designating a successor custodian or custodians. In the absence of such
designation by the Fund, Custodian may designate a successor custodian which
shall be a bank or trust company having not less than $2,000,000 aggregate
capital, surplus and undivided profits. Upon the date set forth in such notice
this Agreement shall terminate, and Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to the
successor custodian all Securities and money then owned by the Fund and held by
it as Custodian, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled.
2. If a successor custodian is not designated by the Fund or Custodian in
accordance with the preceding Section, the Fund shall upon the date specified in
the notice of termination of this Agreement and upon the delivery by Custodian
of all Securities (other than Securities which cannot be delivered to the Fund)
and money then owned by the Fund be deemed to be its own custodian and Custodian
shall thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities which cannot be
delivered to the Fund to hold such Securities hereunder in accordance with this
Agreement.
ARTICLE X
MISCELLANEOUS
1. The Fund agrees to furnish to Custodian a new Certificate of Authorized
Persons in the event of any change in the then present Authorized Persons.
Until such new Certificate is received, Custodian shall be fully protected in
acting upon Certificates or Oral Instructions of such present Authorized
Persons.
2. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to Custodian, shall be sufficiently given if addressed to
Custodian and received by it at its offices at 100 Church Street, New York, New
York 10286, or at such other place as Custodian may from time to time designate
in writing.
3. Any notice or other instrument in writing, authorized or required by this
Agreement to be given to the Fund shall be sufficiently given if addressed to
the Fund and received by it at its offices at 250 North Rock Road, Suite 150,
Wichita, Kansas 67206-2241,or at such other place as the Fund may from time to
time designate in writing.
4. Each and every right granted to either party hereunder or under any other
document delivered hereunder or in connection herewith, or allowed it by law or
equity, shall be cumulative and may be exercised from time to time. No failure
on the part of either party to exercise, and no delay in exercising, any right
will operate as a waiver thereof, nor will any single or partial exercise by
either party of any right preclude any other or future exercise thereof or the
exercise of any other right.
5. In case any provision in or obligation under this Agreement shall be invalid,
illegal or unenforceable in any exclusive jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
thereby. This Agreement may not be amended or modified in any manner except by
a written agreement executed by both parties, except that any amendment to the
Schedule I hereto need be signed only by the Fund and any amendment to Appendix
I hereto need be signed only by Custodian. This Agreement shall extend to and
shall be binding upon the parties hereto, and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
either party without the written consent of the other.
6. This Agreement shall be construed in accordance with the substantive laws of
the State of New York, without regard to conflicts of laws principles thereof.
The Fund and Custodian hereby consent to the jurisdiction of a state or federal
court situated in New York City, New York in connection with any dispute arising
hereunder. The Fund hereby irrevocably waives, to the fullest extent permitted
by applicable law, any objection which it may now or hereafter have to the
laying of venue of any such proceeding brought in such a court and any claim
that such proceeding brought in such a court has been brought in an inconvenient
forum. The Fund and Custodian each hereby irrevocably waives any and all rights
to trial by jury in any legal proceeding arising out of or relating to this
Agreement.
7. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
IN WITNESS WHEREOF, the Fund and Custodian have caused this Agreement to be
executed by their respective officers, thereunto duly authorized, as of the day
and year first above written.
EAGLE FUNDS
By:
Title:
Tax Identification No:
THE BANK OF NEW YORK
By:
Title:
SCHEDULE I
CERTIFICATE OF AUTHORIZED PERSONS
(The Fund - Oral and Written Instructions)
The undersigned hereby certifies that he/she is the duly elected and acting
________________________ of EAGLE FUNDS (the "Fund"), and further certifies that
the following officers or employees of the Fund have been duly authorized in
conformity with the Fund's Declaration of Trust and By-Laws to deliver
Certificates and Oral Instructions to The Bank of New York ("Custodian")
pursuant to the Custody Agreement between the Fund and Custodian dated
_______________, and that the signatures appearing opposite their names are true
and correct:
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
_____________________
Name
_____________________
Title
_____________________
Signature
This certificate supersedes any certificate of Authorized Persons you may
currently have on file.
[seal] By:
Title:
Date:
SCHEDULE II
PORTFOLIO
The NASDAQ 100 Index Fund
APPENDIX I
THE BANK OF NEW YORK
ON-LINE COMMUNICATIONS SYSTEM (THE "SYSTEM")
TERMS AND CONDITIONS
1. License; Use. Upon delivery to an Authorized Person or a person reasonably
believed by Custodian to be an Authorized person the Fund of software enabling
the Fund to obtain access to the System (the "Software"), Custodian grants to
the Fund a personal, nontransferable and nonexclusive license to use the
Software solely for the purpose of transmitting Written Instructions, receiving
reports, making inquiries or otherwise communicating with Custodian in
connection with the Account(s). The Fund shall use the Software solely for its
own internal and proper business purposes and not in the operation of a service
bureau. Except as set forth herein, no license or right of any kind is granted
to the Fund with respect to the Software. The Fund acknowledges that Custodian
and its suppliers retain and have title and exclusive proprietary rights to the
Software, including any trade secrets or other ideas, concepts, know-how,
methodologies, or information incorporated therein and the exclusive rights to
any copyrights, trademarks and patents (including registrations and applications
for registration of either), or other statutory or legal protections available
in respect thereof. The Fund further acknowledges that all or a part of the
Software may be copyrighted or trademarked (or a registration or claim made
therefor) by Custodian or its suppliers. The Fund shall not take any action
with respect to the Software inconsistent with the foregoing acknowledgments,
nor shall you attempt to decompile, reverse engineer or modify the Software.
The Fund may not copy, sell, lease or provide, directly or indirectly, any of
the Software or any portion thereof to any other person or entity without
Custodian's prior written consent. The Fund may not remove any statutory
copyright notice or other notice included in the Software or on any media
containing the Software. The Fund shall reproduce any such notice on any
reproduction of the Software and shall add any statutory copyright notice or
other notice to the Software or media upon Custodian's request.
2. Equipment. The Fund shall obtain and maintain at its own cost and expense
all equipment and services, including but not limited to communications
services, necessary for it to utilize the Software and obtain access to the
System, and Custodian shall not be responsible for the reliability or
availability of any such equipment or services.
3. Proprietary Information. The Software, any data base and any proprietary
data, processes, information and documentation made available to the Fund (other
than which are or become part of the public domain or are legally required to be
made available to the public) (collectively, the "Information"), are the
exclusive and confidential property of Custodian or its suppliers. The Fund
shall keep the Information confidential by using the same care and discretion
that the Fund uses with respect to its own confidential property and trade
secrets, but not less than reasonable care. Upon termination of the Agreement
or the Software license granted herein for any reason, the Fund shall return to
Custodian any and all copies of the Information which are in its possession or
under its control.
4. Modifications. Custodian reserves the right to modify the Software from time
to time and the Fund shall install new releases of the Software as Custodian may
direct. The Fund agrees not to modify or attempt to modify the Software without
Custodian's prior written consent. The Fund acknowledges that any modifications
to the Software, whether by the Fund or Custodian and whether with or without
Custodian's consent, shall become the property of Custodian.
5. NO REPRESENTATIONS OR WARRANTIES. CUSTODIAN AND ITS MANUFACTURERS AND
SUPPLIERS MAKE NO WARRANTIES OR REPRESENTATIONS WITH RESPECT TO THE SOFTWARE,
SERVICES OR ANY DATABASE, EXPRESS OR IMPLIED, IN FACT OR IN LAW, INCLUDING BUT
NOT LIMITED TO WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. THE FUND ACKNOWLEDGES THAT THE SOFTWARE, SERVICES AND ANY DATABASE ARE
PROVIDED "AS IS." IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ANY
DAMAGES, WHETHER DIRECT, INDIRECT SPECIAL, OR CONSEQUENTIAL, WHICH THE FUND MAY
INCUR IN CONNECTION WITH THE SOFTWARE, SERVICES OR ANY DATABASE, EVEN IF
CUSTODIAN OR SUCH SUPPLIER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
IN NO EVENT SHALL CUSTODIAN OR ANY SUPPLIER BE LIABLE FOR ACTS OF GOD, MACHINE
OR COMPUTER BREAKDOWN OR MALFUNCTION, INTERRUPTION OR MALFUNCTION OF
COMMUNICATION FACILITIES, LABOR DIFFICULTIES OR ANY OTHER SIMILAR OR DISSIMILAR
CAUSE BEYOND THEIR REASONABLE CONTROL.
6. Security; Reliance; Unauthorized Use. The Fund will cause all persons
utilizing the Software and System to treat all applicable user and authorization
codes, passwords and authentication keys with extreme care, and it will
establish internal control and safekeeping procedures to restrict the
availability of the same to persons duly authorized to give Instructions..
Custodian is hereby irrevocably authorized to act in accordance with and rely on
Instructions received by it through the System. The Fund acknowledges that it
is its sole responsibility to assure that only persons duly authorized use the
System and that Custodian shall not be responsible nor liable for any
unauthorized use thereof.
7. System Acknowledgments. Custodian shall acknowledge through the System its
receipt of each transmission communicated through the System, and in the absence
of such acknowledgment Custodian shall not be liable for any failure to act in
accordance with such transmission and the Fund may not claim that such
transmission was received by Custodian.
8. EXPORT RESTRICTIONS. EXPORT OF THE SOFTWARE IS PROHIBITED BY UNITED STATES
LAW. THE FUND MAY NOT UNDER ANY CIRCUMSTANCES RESELL, DIVERT, TRANSFER,
TRANSSHIP OR OTHERWISE DISPOSE OF THE SOFTWARE (IN ANY FORM) IN OR TO ANY OTHER
COUNTRY. IF CUSTODIAN DELIVERED THE SOFTWARE TO THE FUND OUTSIDE OF THE UNITED
STATES, THE SOFTWARE WAS EXPORTED FROM THE UNITED STATES IN ACCORDANCE WITH THE
EXPORTER ADMINISTRATION REGULATIONS. DIVERSION CONTRARY TO U.S. LAW IS
PROHIBITED. The Fund hereby authorizes Custodian to report its name and address
to government agencies to which Custodian is required to provide such
information by law.
9. ENCRYPTION. The Fund acknowledges and agrees that encryption may not be
available for every communication through the System, or for all data. The Fund
agrees that Custodian may deactivate any encryption features at any time,
without notice or liability to the Fund, for the purpose of maintaining,
repairing or troubleshooting the System or the Software.
TRANSFER AGENCY AGREEMENT
-------------------------
THIS TRANSFER AGENCY AGREEMENT is made as of the 3rd day of December, 1999,
by and between Eagle Funds, a Massachusetts business trust (the "Trust"), and
Sunstone Financial Group, Inc., a Wisconsin corporation, its successors and
assigns ("Sunstone").
R E C I T A L S:
WHEREAS, the Trust is registered under the 1940 Act as an open-end
management investment company; and
WHEREAS, the Trust desires to retain Sunstone to render certain transfer
agency and dividend disbursement services, and Sunstone is willing to render
such services, all in accordance with the terms of this Agreement.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
ARTICLE I
DEFINITIONS
In addition to any terms defined in the body of this Agreement, the
following capitalized terms shall have the meanings set forth hereinafter
whenever they appear in this Agreement:
1.01 1940 ACT shall mean the Investment Company Act of 1940, as amended
from time to time.
1.02 AUTHORIZED PERSON shall mean any individual who is authorized to
provide Sunstone with Instructions and requests on behalf of the Trust, whose
name shall be certified to Sunstone from time to time pursuant to Section 7.01
of this Agreement.
1.03 BOARD OF TRUSTEES shall mean the Board of Trustees of the Trust.
1.04 CUSTODIAN shall mean the financial institution appointed as custodian
under the terms and conditions of the custody agreement between the financial
institution and the Trust, or its successor.
1.05 DECLARATION OF TRUST shall mean the Declaration of Trust or other
similar operational document of the Trust, as the case may be, as the same may
be amended from time to time.
<PAGE>
1.06 EXCHANGE ACT shall mean the Securities Exchange Act of 1934, as
amended from time to time.
1.07 FUND shall mean each separate series of Shares offered by the Trust
representing interests in a separate portfolio of securities and other assets
for which the Trust has appointed Sunstone as transfer agent and dividend
disbursing agent under this Agreement.
1.08 FUND BUSINESS DAY shall mean each day on which the New York Stock
Exchange, Inc. is open for trading.
1.09 INSTRUCTIONS shall mean an oral communication from an Authorized
Person or a written communication signed by an Authorized Person and actually
received by Sunstone. Instructions shall include manually executed originals,
telefacsimile transmissions of manually executed originals or electronic
communications.
1.10 PROSPECTUS shall mean the last Prospectus with respect to a Fund and
any supplement actually received by Sunstone from the Trust with respect to
which the Trust has indicated a registration statement has become effective
under the Securities Act and the 1940 Act, including the Statement of Additional
Information, incorporated by reference herein.
1.11 SECURITIES ACT shall mean the Securities Act of 1933, as amended from
time to time.
1.12 SHARES shall mean such shares of capital stock or beneficial interest,
as the case may be, or class thereof, of each respective Fund of the Trust as
may be issued from time to time.
1.13 SHAREHOLDER shall mean a record owner of Shares of each respective
Fund of the Trust.
ARTICLE II
----------
APPOINTMENT OF TRANSFER AGENT
2.01 APPOINTMENT. The Trust hereby appoints Sunstone as transfer agent and
dividend disbursing agent of all the Shares of the Trust during the term of this
Agreement with respect to each Fund listed on Schedule A hereto, and any
additional Fund the Trust and Sunstone may agree to include on any amended
Schedule A. Sunstone hereby accepts such appointment as transfer agent and
dividend disbursing agent and agrees to perform the duties thereof as
hereinafter set forth.
2.02 DUTIES.
A. Sunstone shall perform the transfer agent and dividend disbursement
services described on Schedule B hereto and such additional services as may be
agreed to by the parties from time to time and set forth in an amendment to
2
<PAGE>
Schedule B (collectively, the "Services"). Sunstone shall have no duties or
responsibilities other than those specifically set forth in this Agreement, and
no covenant or obligation to carry out any other duties or responsibilities
shall be implied in this Agreement against Sunstone.
B. Sunstone may, in its discretion, appoint other parties to carry out
some or all of its responsibilities under this Agreement; provided, however,
that unless the Trust shall enter into a written agreement with any such party,
the party shall be the agent of Sunstone and not the agent of the Trust. In
such event, Sunstone shall be fully responsible for the acts or omissions of
such party and shall not be relieved of any of its responsibilities hereunder by
the appointment of such party.
2.03 DELIVERIES.
A. In connection with Sunstone's appointment as transfer agent and
dividend disbursing agent, the Trust shall deliver or cause the following
documents to be delivered to Sunstone:
(1) A copy of the Declaration of Trust and By-laws of the Trust and
all amendments thereto, certified by the Secretary of the Trust;
(2) A certificate signed by the President and Secretary of the Trust
specifying the number of authorized Shares and the number of such authorized
Shares issued and currently outstanding, if any;
(3) A certified copy of the resolutions of the Board of Trustees of
the Trust appointing Sunstone as transfer agent and dividend disbursing agent
and authorizing the execution of this Transfer Agency Agreement on behalf of the
Trust;
(4) Copies of the Trust's Registration Statement, as amended to date,
and the most recently filed Post-Effective Amendment thereto, filed by the Trust
with the Securities and Exchange Commission under the Securities Act and the
1940 Act, together with any applications filed in connection therewith;
(5) An opinion of counsel for the Trust with respect to the Trust's
organization and existence under the laws of its state of organization, the
validity of the authorized and outstanding Shares, whether such Shares are fully
paid and non-assessable and the status of such Shares under the Securities Act
and any other applicable federal law or regulation (i.e., if subject to
registration, that they have been registered and that the Registration Statement
has become effective, or if exempt, the specific grounds therefor); and
(6) The certificate required by Section 7.01 of this Agreement,
signed by an officer of the Trust and designating the names of the Trust's
initial Authorized Persons.
B. The Trust agrees to deliver or to cause to be delivered to
Sunstone in Milwaukee, Wisconsin, at the Trust's expense, all of its Shareholder
account records in a format acceptable to Sunstone, as well as all other
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documents, records and information that Sunstone may reasonably request in order
for Sunstone to perform the Services hereunder.
ARTICLE III
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COMPENSATION & EXPENSES
3.01 COMPENSATION. As compensation for the performance of the Services, the
Trust agrees to pay Sunstone the fees set forth on Schedule C attached hereto.
The parties may amend Schedule C to include fees for any additional services
requested by the Trust, or to add Funds for which Sunstone has been retained.
The Trust agrees to pay Sunstone's then current rate for any Services added to
Schedule C after the execution of this Agreement.
3.02 EXPENSES. The Trust also agrees to promptly reimburse Sunstone for
all out-of-pocket expenses or disbursements incurred by
Sunstone in connection with the performance of Services
under this Agreement. Out-of-pocket expense shall include,
but not be limited to, those items specified on Schedule C hereto. If
requested by Sunstone, out-of-pocket expenses are payable in advance. Payment
of postage expenses, if prepayment is requested, is due at least seven days
prior to the anticipated mail date. In the event Sunstone requests advance
payment, Sunstone shall not be obligated to incur such expenses or perform the
related Service(s) until payment is received.
3.03 PAYMENT PROCEDURES.
A. The Trust agrees to pay all amounts due hereunder within fifteen
days of the date reflected on the statement for such Services (the "Due Date").
Sunstone shall bill Service fees monthly, and out-of-pocket expenses as incurred
(unless prepayment is requested by Sunstone). Sunstone may, at its option,
arrange to have various service providers submit invoices directly to the Trust
for payment of reimbursable out-of-pocket expenses.
B. The Trust is aware that its failure to remit to Sunstone all
amounts due on or before the Due Date will cause Sunstone to incur costs not
contemplated by this Agreement, including, but not limited to carrying,
processing and accounting charges. Accordingly, in the event that Sunstone does
not receive any amounts due hereunder by the Due Date, the Trust agrees to pay a
late charge on the overdue amount equal to one and one-half percent (1.5%) per
month or the maximum amount permitted by law, whichever is less. In addition,
the Trust shall pay Sunstone's reasonable attorney's fees and court costs if any
amounts due Sunstone are collected by or through an attorney. The parties
hereby agree that such late charge represents a fair and reasonable computation
of the costs incurred by reason of the Trust's late payment. Acceptance of such
late charge shall in no event constitute a waiver by Sunstone of the Trust's
default or prevent Sunstone from exercising any other rights and remedies
available to it.
3.04 ALLOCATION OF RISK. The Trust acknowledges that the fees charged by
Sunstone under this Agreement reflect the allocation of risk between the
parties, including the exclusion of remedies and limitations on liability in
Article VIII. Modifying the allocation of risk from what is stated herein would
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affect the fees that Sunstone charges. Accordingly, in consideration of those
fees, the Trust agrees to the stated allocation of risk.
ARTICLE IV
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PROCESSING AND PROCEDURES
4.01 ISSUANCE, REDEMPTION AND TRANSFER OF SHARES
A. Sunstone agrees to accept purchase orders and redemption requests
with respect to the Shares of each Fund on each Fund Business Day in accordance
with such Fund's Prospectus; provided, however, that Sunstone shall only accept
purchase orders from states in which the Shares are registered, as indicated
from time to time by the Trust. Sunstone shall, as of the time at which the net
asset value of each Fund is computed on each Fund Business Day, issue to and
redeem from the accounts specified in a purchase order or redemption request in
proper form and accepted by the Fund the appropriate number of full and
fractional Shares based on the net asset value per Share of the respective Fund
specified in an advice received on such Fund Business Day from or on behalf of
the Fund. Sunstone shall not be responsible for the payment of any original
issue or other taxes required to be paid by the Trust in connection with the
issuance of any Shares in accordance with this Agreement. Sunstone shall not be
required to issue any Shares after it has received from an Authorized Person or
from an appropriate federal or state authority written notification that the
sale of Shares has been suspended or discontinued, and Sunstone shall be
entitled to rely upon such written notification.
B. Upon receipt of a redemption request and monies paid to it by the
Custodian in connection with a redemption of Shares, Sunstone shall cancel the
redeemed Shares and after making appropriate deduction for any withholding of
taxes required of it by applicable federal law, make payment in accordance with
the Fund's redemption and payment procedures described in the Prospectus.
C. Except as otherwise provided in this paragraph, Sunstone will
transfer or redeem Shares upon presentation to Sunstone of instructions endorsed
for exchange, transfer or redemption, accompanied by such documents as Sunstone
deems necessary to evidence the authority of the person making such transfer or
redemption. Sunstone reserves the right to refuse to transfer or redeem Shares
until it is satisfied that the endorsement or instructions are valid and
genuine. For that purpose, it will require, unless otherwise instructed by an
Authorized Person or except as otherwise provided in this paragraph, a guarantee
of signature by an "Eligible Guarantor Institution" as that term is defined by
SEC Rule 17Ad-15. Sunstone 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 Sunstone, in its judgment, deems
improper or unauthorized, or until it is satisfied that there is no reasonable
basis to any claims adverse to such transfer or redemption. Sunstone may, in
effecting transfers and redemptions of Shares, rely upon those provisions of the
Uniform Act for the Simplification of Fiduciary Security Transfers (or such
other statutes which protect it and the Trust in not requiring complete
fiduciary documentation) and shall not be responsible for any act done or
omitted by it in good faith in reliance upon such laws. Notwithstanding the
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foregoing or any other provision contained in this Agreement to the contrary,
Sunstone shall be fully protected by each Fund in not requiring any instruments,
documents, assurances, endorsements or guarantees, including, without
limitation, any signature guarantees, in connection with a redemption, exchange
or transfer of Shares whenever Sunstone reasonably believes that requiring the
same would be inconsistent with the transfer and redemption procedures described
in the Prospectus.
D. Notwithstanding any provision contained in this Agreement to the
contrary, Sunstone shall not be required or expected to require, as a condition
to any transfer or redemption of any Shares pursuant to a computer tape or
electronic data transmission, any documents to evidence the authority of the
person requesting the transfer or redemption and/or the payment of any stock
transfer taxes, and shall be fully protected in acting in accordance with the
applicable provisions of this Article.
E. In connection with each purchase and each redemption of Shares,
Sunstone shall send such statements as are prescribed by the Federal securities
laws applicable to transfer agents or as described in the Prospectus. It is
understood that certificates for Shares have not been and will not be offered by
the Trust or available to investors.
F. Sunstone and the Trust shall establish procedures for effecting
purchase, redemption or transfer transactions accepted from investors by
telephone or other methods consistent with the terms of the Prospectus.
Sunstone may establish such additional procedures, rules and regulations
governing the purchase, redemption or transfer of Shares, as it may deem
advisable and consistent with the Prospectus and industry practice. Sunstone
shall not be liable, and shall be held harmless by the Trust, for its actions or
omissions which are consistent with the foregoing procedures.
G. The Trust agrees to provide Sunstone with prior notice of any
increase or decrease in the total number of Shares authorized to be issued, or
the issuance of any additional Shares of a Fund pursuant to stock dividends,
stock splits, recapitalizations, capital adjustments or similar transactions,
and to deliver to Sunstone such documents, certificates, reports and legal
opinions as Sunstone may reasonably request.
4.02 DIVIDENDS AND DISTRIBUTIONS.
A. The Trust shall give or cause to be given to Sunstone a copy of a
resolution of its Board of Trustees, that either:
(i) sets forth the date of the declaration of a dividend or
distribution, the date of accrual or payment, as the case may be, thereof, the
record date as of which Shareholders entitled to payment or accrual, as the case
may be, shall be determined, the amount per Share of such dividend or
distribution, the payment date on which all previously accrued and unpaid
dividends are to be paid, and the total amount, if any, payable to Sunstone on
such payment date, or
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(ii) authorizes the declaration of dividends and distributions on a
daily or other periodic basis and further authorizes Sunstone to rely on a
certificate of an Authorized Person setting forth the information described in
subsection (i) of this paragraph.
B. In connection with a reinvestment of a dividend or distribution of
Shares of a Fund, Sunstone shall as of each Fund Business Day, as specified in a
certificate or resolution described in paragraph A, issue Shares of the Fund
based on the net asset value per Share of such Fund specified in an advice
received from or on behalf of the Fund on such Fund Business Day.
C. Upon the mail date specified in such certificate or resolution, as
the case may be, the Trust shall, in the case of a cash dividend or
distribution, cause the Custodian to deposit in an account in the name of
Sunstone on behalf of a Fund, an amount of cash sufficient for Sunstone to make
the payment, as of the mail date specified in such certificate or resolution, as
the case may be, to the Shareholders who were of record on the record date.
Sunstone will, upon receipt of any such cash, make payment of such cash
dividends or distributions to the Shareholders as of the record date. Sunstone
shall not be liable for any improper payments made in accordance with a
certificate or resolution described in the preceding paragraph. If Sunstone
shall not receive from the Custodian sufficient cash to make payments of any
cash dividend or distribution to all Shareholders of a Fund as of the record
date, Sunstone shall, upon notifying the Trust, withhold payment to such
Shareholders until sufficient cash is provided to Sunstone.
D. It is understood that Sunstone in its capacity as transfer agent
and dividend disbursing agent shall in no way be responsible for the
determination of the rate or form of dividends or capital gain distributions due
to the Shareholders pursuant to the terms of this Agreement. It is further
understood that Sunstone shall file with the Internal Revenue Service and
Shareholders such appropriate federal tax forms concerning the payment of
dividend and capital gain distributions but shall in no way be responsible for
the collection or withholding of taxes due on such dividends or distributions
due to shareholders, except and only to the extent, required by applicable
federal law.
4.03 RECORDS.
A. Sunstone shall keep those records specified in Schedule D hereto
in the form and manner, and for such period, as it may deem advisable but not
inconsistent with the rules and regulations of appropriate government
authorities, in particular Rules 31a-2 and 31a-3 under the 1940 Act. Sunstone
may deliver to the Trust from time to time at Sunstone's discretion, for
safekeeping or disposition by the Trust in accordance with law, such records,
papers and documents accumulated in the execution of its duties as transfer
agent, as Sunstone may deem expedient, other than those which Sunstone is itself
required to maintain pursuant to applicable laws and regulations. The Trust
shall assume all responsibility for any failure thereafter to produce any
record, paper, or other document so returned, if and when required. To the
extent required by Section 31 of the 1940 Act and the rules and regulations
thereunder, the records specified in Schedule D hereto maintained by Sunstone,
which have not been previously delivered to the Trust pursuant to the foregoing
provisions of this paragraph, shall be considered to be the property of the
Trust, shall be made available upon request for inspection by the officers,
employees, and auditors of the Trust, and shall be delivered to the Trust
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promptly upon request and in any event upon the date of termination of this
Agreement, in the form and manner kept by Sunstone on such date of termination
or such earlier date as may be requested by the Trust. Notwithstanding anything
contained herein to the contrary, Sunstone shall be permitted to maintain copies
of any such records, papers and documents to the extent necessary to comply with
the recordkeeping requirements of federal and state securities laws, tax laws
and other applicable laws.
B. Sunstone agrees to keep all records and other information relative
to the Trust's Shareholders confidential, except when requested to divulge such
information by duly-constituted authorities or court process, or when requested
by a Shareholder or Shareholder's agent with respect to information concerning
an account as to which such Shareholder has either a legal or beneficial
interest, or when requested by the Trust, the Shareholder, the Shareholder's
agent or the dealer of record with respect to such account. In case of any
requests or demands for the inspection of the Shareholder records of the Trust,
Sunstone will endeavor to notify the Trust promptly and to secure instructions
from an Authorized Person as to such inspection. Sunstone reserves the right,
however, to exhibit the Shareholder records to any person whenever it believes
there is a reasonable likelihood that Sunstone will be held liable for the
failure to exhibit the Shareholder records to such person; provided, however,
that in connection with any such disclosure Sunstone shall promptly notify the
Trust that such disclosure has been made or is to be made. Records and
information which have become known to the public through no wrongful act of
Sunstone or any of its employees, agents or representatives, and information
which was already in the possession of Sunstone prior to receipt thereof, shall
not be subject to this paragraph.
ARTICLE V
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REPRESENTATION AND WARRANTIES
5.01 REPRESENTATIONS OF TRUST. The Trust represents and warrants to
Sunstone that:
A. It is a business trust duly organized and existing under the laws
of the State of Massachusetts; it is empowered under applicable laws and by its
Declaration of Trust and By-laws to enter into and perform this Agreement; and
all requisite corporate proceedings have been taken to authorize it to enter
into and perform this Agreement.
B. Any officer of the Trust has the authority to appoint additional
Authorized Persons, to limit or revoke the authority of any previously
designated Authorized Person, and to certify to Sunstone the names of such
Authorized Persons.
C. It is duly registered as an investment company under the 1940 Act.
D. A registration statement under the Securities Act is currently
effective and will remain effective, and appropriate state securities laws
filings have been made and will continue to be made, with respect to Shares of
the Trust being offered for sale.
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E. All outstanding Shares are validly issued, fully paid and non-
assessable and when Shares are hereafter issued in accordance with the terms of
the Trust's Declaration of Trust and its Prospectus with respect to each Fund,
such Shares shall be validly issued, fully paid and non-assessable.
5.02 REPRESENTATIONS OF SUNSTONE. Sunstone represents and warrants to the
Trust that:
A. It is a corporation duly organized and existing under the laws of
the State of Wisconsin; it is empowered under applicable law and by its Articles
of Incorporation and By-laws to enter into and perform this Agreement; and all
requisite proceedings have been taken to authorize it to enter into and perform
this Agreement.
B. It is duly registered as a transfer agent under Section 17A of the
1934 Act to the extent required.
C. It has received a copy of each Fund's Prospectus which describes
how sales and redemptions of Shares shall be made.
ARTICLE VI
----------
ADDITIONAL COVENANTS AND AGREEMENTS
6.01 INFORMATION UPDATES. During the term of this Agreement the Trust
shall have the ongoing obligation to provide Sunstone with the following
documents as soon as they become effective: (i) certified copies of all
amendments to its Declaration of Trust and By-laws made after the date of this
Agreement; and (ii) a copy of each Fund's currently effective Prospectus. For
purposes of this Agreement, Sunstone shall not be deemed to have notice of any
information contained in any such Prospectus until a reasonable time after it is
actually received by Sunstone.
6.02 SHARE REGISTRATION. The Trust agrees to take or cause to be taken all
requisite steps to register the Shares for sale in all states in which the
Shares shall at the time be offered for sale and require registration. If the
Trust receives notice of any stop order or other proceeding in any such state
affecting such registration or the sale of Shares, or of any stop order or other
proceeding under the federal securities laws affecting the sale of Shares, the
Trust will give prompt notice thereof to Sunstone.
6.03 COMPLIANCE WITH LAWS. The Trust will comply with all applicable
requirements of the Securities Act, the Exchange Act, the 1940 Act, blue sky
laws, and any other applicable laws, rules and regulations.
6.04 ADDITIONAL DUTIES. The Trust agrees that it shall advise Sunstone at
least 30 days prior to effecting any change in the Prospectus which would
increase or alter the duties and obligations of Sunstone hereunder, and shall
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proceed with such change only if it shall have received the written consent of
Sunstone thereto.
6.05 TRANSFER AGENT SYSTEM.
A. Sunstone shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, trade secrets, trademarks and other
related legal rights utilized by Sunstone in connection with the Services
provided by Sunstone to the Trust herein (the "Sunstone System").
B. Sunstone hereby grants the Trust a limited license to use the
Sunstone System for the sole and limited purpose of having Sunstone provide the
Services contemplated hereunder. Nothing contained in this Agreement should be
construed or interpreted otherwise, and such license shall immediately terminate
upon the termination of this Agreement.
6.06 INTERNET SERVICES.
A. In the event Schedule B reflects any Services in the Sunstone
4.netSM category, the Trust agrees to provide, at its cost, all computers,
telecommunications equipment and other equipment and software necessary to
develop and maintain its web site, to design and develop the web site
functionality necessary to facilitate and maintain hypertext links between its
web site and Sunstone's web site, and to provide Sunstone with such Instructions
as it may request from time to time in connection with the performance of
Sunstone's obligations hereunder.
B. Sunstone shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, trade secrets, trademarks and other
related legal rights utilized by Sunstone in connection with the Sunstone
4.netSM services provided by Sunstone to the Trust pursuant to this Agreement
(the "Sunstone 4.netSM System"). The Sunstone 4.netSM System is licensed, not
sold. Sunstone hereby grants the Trust a nonexclusive, limited license to use
the Sunstone 4.netSM System for the sole and limited purpose of having Sunstone
provide the services to the Trust. Such license shall immediately terminate
upon the termination of the Agreement. The Trust agrees that it will not mask,
delete or otherwise alter any disclaimers, trademark or service mark
notifications embedded in or describing the Sunstone 4.netSM System.
C. SUNSTONE IS PROVIDING THE SUNSTONE 4.NETSM SYSTEM TO THE TRUST ON
AN "AS IS" BASIS, AND SPECIFICALLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES,
EXPRESS OR IMPLIED, REGARDING THE SUNSTONE 4.NETSM SYSTEM AND THE SERVICES TO BE
PROVIDED HEREUNDER RELATING THERETO, INCLUDING ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE OPERATION OF
THE SUNSTONE 4.NETSM SYSTEM WILL BE ERROR FREE OR WILL NOT BE INTERRUPTED FROM
TIME TO TIME BY REASON OF A DEFECT THEREIN. The parties acknowledge that
Sunstone's ability to provide the Sunstone 4.netSM services described herein
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depends upon a number of factors beyond Sunstone's control, including, but not
limited to, the Internet and equipment, software, data and services provided by
telecommunications carriers and unrelated vendors and third parties. Sunstone
shall not be liable for its failure to perform any of the services or for the
delay or interruption of any such services, if the failure, delay or
interruption in caused by circumstances beyond Sunstone's reasonable control.
The terms and conditions of this Section shall supercede and control any
conflicting provisions in this Agreement.
ARTICLE VII
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TRUST INSTRUCTIONS
7.01 AUTHORIZED PERSONS. Upon the execution of this Agreement, the Trust
shall provide Sunstone with a certificate containing the names of the initial
Authorized Persons in a form acceptable to Sunstone. Any officer of the Trust
has the authority to appoint additional Authorized Persons, to limit or revoke
the authority of any previously designated Authorized Person, and to certify to
Sunstone the names of the Authorized Persons from time to time. The Trust shall
provide Sunstone with an updated certificate evidencing the appointment, removal
or change of authority of any Authorized Person, it being understood Sunstone
shall not be held to have notice of any change in the authority of any
Authorized Person until receipt of written notice thereof from the Trust.
7.02 ACCEPTANCE OF INSTRUCTIONS. Sunstone, its officers, agents or
employees shall accept Instructions given to them by any person representing or
acting on behalf of the Trust only if such representative is an Authorized
Person. The Trust agrees that when oral Instructions are given, it shall, upon
the request of Sunstone, confirm such Instructions in writing.
7.03 REQUEST FOR INSTRUCTIONS. At any time, Sunstone may request
Instructions from the Trust with respect to any matter arising in connection
with this Agreement. If such Instructions are not received within a reasonable
time, then Sunstone may seek advice from legal counsel for the Trust, or its own
legal counsel at the expense of the Trust, and it shall not be liable for any
action taken or not taken by it in good faith in accordance with such
Instructions or in accordance with advice of counsel.
7.04 RELIANCE ON INSTRUCTIONS. Sunstone shall not be liable for acting
upon any written Instructions reasonably believed by it to be genuine and to
have been signed or made by an Authorized Person or oral Instructions which the
individual receiving the instructions on behalf of Sunstone reasonably believes
to have been given by an Authorized Person.
ARTICLE VIII
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LIMITATION OF LIABILITY; INDEMNIFICATION
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8.01 LIMITATION OF LIABILITY. Notwithstanding anything contained in this
Agreement to the contrary, Sunstone shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust or the Funds in
connection with the matters to which this Agreement relates, except for a loss
resulting from Sunstone's willful misfeasance, bad faith or negligence in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Furthermore, Sunstone shall not be liable for
any action taken or omitted to be taken in accordance with instructions received
by it from an officer or representative of the Trust.
8.02 INDEMNIFICATION. The Trust agrees to indemnify and hold harmless
Sunstone, its employees, agents, officers, directors and
nominees from and against any and all claims, demands,
actions and suits, whether groundless or otherwise, and
from and against any and all judgments, liabilities, losses, damages, costs,
charges, counsel fees and other expenses of every nature and character which may
be asserted against Sunstone or for which Sunstone may be held liable (a
"Claim") arising out of or in any way relating to any of the following:
(a) any action of Sunstone required to be taken, or omitted to be
taken, pursuant to the Agreement, unless a Claim resulted from Sunstone's
willful misfeasance, bad faith, negligence in the performance of its duties or
from reckless disregard by it of its obligations and duties hereunder;
(b) Sunstone's reliance on, or use of information, data, records and
documents received by Sunstone from the Trust, or any third party acting on
behalf of the Trust, in the performance of Sunstone's duties and obligations
hereunder;
(c) the reliance on, or the implementation of, any Instructions or
any other requests of the Trust on behalf of the applicable Fund;
(d) Sunstone's acting upon telephone instructions relating to the
exchange or redemption of Shares received by Sunstone in accordance with
procedures established by Sunstone and the Trust;
(e) the offer or sale of Shares in violation of any requirement under
the securities laws or regulations of any state that such Shares be registered
in such state or in violation of any stop order or determination or ruling by
any state with respect to the offer or sale of such Shares in such state; or
(f) the Trust's refusal or failure to comply with the terms of the
Agreement, or any Claim that arises out of the Trust's negligence or misconduct
or breach of any representation or warranty of the Trust made herein.
8.03 INDEMNIFICATION PROCEDURES. Sunstone will notify the Trust promptly
after identifying any situation which it believes presents or appears likely to
present a Claim for which the Trust may be required to indemnify or hold
Sunstone harmless hereunder. In such event, the Trust shall have the option to
defend Sunstone against any Claim, and, in the event that the Trust so elects,
such defense shall be conducted by counsel chosen by the Trust and approved by
Sunstone in its reasonable discretion. Sunstone shall not confess any Claim or
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make any compromise in any case in which the Trust will be asked to provide
indemnification, except with the Trust's prior written consent. The obligations
of the parties under the Sections 8.02 and 8.03 shall survive the termination of
this Agreement.
8.04 FORCE MAJURE. Sunstone assumes no responsibility hereunder, and shall
not be liable, for any damage, loss of data, errors, delay or any other loss
whatsoever caused by events beyond its reasonable control. Sunstone will,
however, take all reasonable steps to minimize service interruptions for any
period that such interruption continues beyond Sunstone's control.
8.05 CONSEQUENTIAL DAMAGES. In no event and under no circumstances shall
Sunstone, its affiliates or any of its or their officers, directors, agents or
employees be liable to anyone, including, without limitation, the other party,
under any theory of tort, contract, strict liability or other legal or equitable
theory for lost profits, exemplary, punitive, special, indirect or consequential
damages for any act or failure to act under any provision of this Agreement
regardless of whether such damages were foreseeable and even if advised of the
possibility thereof.
8.06 ADDITIONAL LIMITATIONS AND EXCLUSIONS. Notwithstanding any other
provision of this Agreement, Sunstone shall have no duty or obligation under
this Agreement to inquire into, and shall not be liable for:
(a) The legality of the issue or sale of any Shares, including, but
not limited to the sale of any Shares without registration in reliance upon
certain institutional investor exemptions that may be available under state
securities laws, the sufficiency of the amount to be received therefor, or the
authority of the Trust, as the case may be, to request such sale or issuance;
(b) The legality of a transfer of Shares or of a purchase or
redemption of any Shares, the propriety of the amount to be paid therefor, or
the authority of the Trust, as the case may be, to request such transfer or
redemption;
(c) The legality of the declaration of any dividend by the Trust, or
the legality of the issue of any Shares in payment of any stock dividend; or
(d) The legality of any recapitalization or readjustment of Shares.
ARTICLE IX
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TERM AND TERMINATION
9.01 TERM. This Agreement shall remain in full force and effect until
December __, 200_, (the "Initial Term") and thereafter shall automatically
extend for additional, successive twelve (12) month terms unless earlier
terminated as provided below.
9.02 TERMINATION. Either party may terminate this Agreement at any time
after the Initial Term by giving the other party a written notice specifying the
date of such termination (the "Termination Date"), which shall be not less than
sixty (60) days after the date notice is deemed given in accordance with Section
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10.01. In the event such notice is given by the Trust, it shall be accompanied
by a copy of a resolution of the Board of Trustees of the Trust, certified by
the Secretary or any Assistant Secretary, electing to terminate this Agreement
and designating the successor transfer agent or transfer agents. In the event
such notice is given by Sunstone, the Trust shall on or before the Termination
Date, deliver to Sunstone a copy of a resolution of its Board of Trustees
certified by the Secretary or any Assistant Secretary designating a successor
transfer agent or transfer agents. In the absence of such designation by the
Trust, the Trust shall be deemed to be its own transfer agent as of the
Termination Date and Sunstone shall thereby be relieved of all duties and
responsibilities pursuant to this Agreement. Fees and out-of-pocket expenses
incurred by Sunstone, but unpaid by the Trust upon such termination, shall be
immediately due and payable upon and notwithstanding such termination.
9.03 EFFECT OF TERMINATION. Upon the termination of the Agreement as
provided herein, Sunstone, upon the written request of the Trust, shall deliver
the records of the Trust to the Trust or its successor transfer agent in the
form maintained by Sunstone at the expense of the Trust. The Trust shall be
responsible to Sunstone for all out-of-pocket expenses and for the costs and
expenses associated with the preparation and delivery of such media, including,
but not limited to: (a) any custom programming requested by Trust in connection
with the preparation of such media and agreed upon by Sunstone; (b)
transportation of forms and other materials used in connection with the
processing of Trust transactions by Sunstone; and (c) transportation of records
and files in the possession of Sunstone. In addition, Sunstone shall be
entitled to such compensation as the parties may mutually agree for any services
requested by the Trust in connection with the termination of this Agreement or
the liquidation or merger of the Trust. Sunstone shall not reduce the level of
service provided to the Trust prior to termination following notice of
termination by the Trust.
ARTICLE X
---------
MISCELLANEOUS
10.01 NOTICES. Any notice required or permitted to be given by either
party to the other under this Agreement shall be in writing and shall be deemed
to have been given when sent by either an overnight delivery service or by
registered or certified mail, postage prepaid, return receipt requested, to the
addresses listed below, or to such other location as either party may from time
to time designate in writing:
If to Sunstone: Sunstone Financial Group, Inc.
207 East Buffalo Street, Suite 400
Milwaukee, Wisconsin 53202
Attention: President
If to the Trust: Eagle Funds
250 North Rock Road
Suite 150
Wichita, Kansas 67206
Attention: President
14
<PAGE>
10.02 AMENDMENTS/ASSIGNMENTS.
A. This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the formality of this
Agreement.
B. This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns. This Agreement
shall not be assignable by either party without the written consent of the other
party, except that Sunstone may assign this Agreement to an affiliate with
advance written notice to the Trust.
10.03 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Wisconsin, without regard
to its conflict of law provisions.
10.04 SEVERABILITY. If any part, term or provision of this Agreement
is determined by the courts or any regulatory authority having jurisdiction over
the issue to be illegal, in conflict with any law or otherwise invalid, the
remaining portion or portions shall be considered severable and not be affected,
and the rights and obligations of the parties shall be construed and enforced as
if the Agreement did not contain the particular part, term or provision held to
be illegal or invalid.
10.05 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
10.06 NON-EXCLUSIVITY; OTHER AGREEMENTS. The services of Sunstone
hereunder are not deemed exclusive and Sunstone shall be free to render similar
and other services to others. Except as specifically provided herein, this
Agreement does not in any way affect any other agreements entered into among the
parties hereto and any actions taken or omitted by any party hereunder shall not
affect any rights or obligations of any other party hereunder.
10.07 CAPTIONS. The captions in the Agreement are included for
convenience of reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
10.08 TRUST LIMITATIONS. This Agreement is executed by the Trust with
respect to each of the Funds and the obligations hereunder are not binding upon
any of the trustees, officers or shareholders of the Trust individually but are
binding only upon the Fund to which such obligations pertain and the assets and
property of such Fund. All obligations of the Trust under this Agreement shall
apply only on a Fund-by-Fund basis, and the assets of one Fund shall not be
liable for the obligations of another Fund. The Fund's Declaration of Trust is
on file with the Secretary of Massachusetts.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
SUNSTONE FINANCIAL GROUP, INC. EAGLE FUNDS
By: ______________________________ By: ________________________________
(Signature) (Signature)
______________________________ ________________________________
(Name) (Name)
______________________________ ________________________________
(Title) (Title)
______________________________ ________________________________
(Date Signed) (Date Signed)
16
<PAGE>
SCHEDULE A
TO THE
TRANSFER AGENT AGREEMENT
BY AND BETWEEN
EAGLE FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
NAME OF FUND(S)
The NASDAQ 100 Index Fund
17
<PAGE>
SCHEDULE B
TO THE
TRANSFER AGENT AGREEMENT
BY AND BETWEEN
EAGLE FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
SERVICE SCHEDULE
SERVICES
* Set up and maintain shareholder accounts and records, including IRAs and
other retirement accounts
* Store account documents electronically
* Receive and respond to investor account inquiries by telephone, mail, or e-
mail, if desired
* Process purchase and redemption orders, transfers, and exchanges, including
automatic purchases and redemptions
* Process dividend payments by check, wire or ACH, or reinvest dividends
* Issue daily transaction confirmations and monthly or quarterly statements
* Mail prospectus, annual and semiannual reports, and other shareholder
communications to existing shareholders
* File IRS Forms 1099, 5498, 1042, 1042-S and 945 with shareholders and/or
the IRS
* Handle load and multi-class processing, including rights of accumulation
and purchases by letters of intent
* Calculate 12b-1 plan fees
* Give dealers access through NSCC's Fund/SERV and Networking
* Provide standards to structure forms and applications for efficient
processing
18
<PAGE>
OPTIONAL SERVICES
The Fund may contract with Sunstone to provide one or more of the following
optional services. Additional fees apply.
* Personal follow-up calls to prospects who return incomplete applications
* Comprehensive clerical confirmation statements for maintenance transactions
* 4.NET SERVICES, Sunstone's array of Internet services, including Adviser
Services, RIA/Broker Services, Shareholder Services, NAV Services and email
services.
* 4.PROMPT SERVICES, Sunstone's telephone and voice response unit delivering
several tiers of optional services.
* Average cost calculations and cost basis statements
* Shareholder "welcome" packages with initial confirmation
* Access to Sunstone's Tax and Retirement Group to answer questions and
coordinate retirement plan options
* Follow up on IRAs, soliciting beneficiary and other information and sending
required minimum distribution reminder letters
* Money market funds for short-term investment or exchanges
* Dedicated service representatives
* Weekend shareholder services
* Customized reorder form tracking
* Customized forms and applications
19
<PAGE>
SCHEDULE C
TO THE
TRANSFER AGENT AGREEMENT
BY AND BETWEEN
EAGLE FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
FEE SCHEDULE
SERVICES
The following fees are charged for shareholder services:
BASE FEES
* Open account fee (per year)
* No load equity and non-daily accrual fixed income funds $8.50
* Additional for 12b-1 fee $0.75
* Additional for front-end load $1.50
* Additional for CDSC or back-end load $2.00
* Money market and daily accrual fixed income funds $11.00
* Additional for 12b-1 fee $0.75
* Additional for front-end load $1.50
* Additional for CDSC or back-end load $2.00
* Closed account fee (per year) $3.00
* Monthly base (per fund)
* One to three funds in fund family $1,500*
* 4 or more funds in fund family $1,000
* Add for multiclass (per class) 25%
* The monthly base fee will be discounted to $1,000 per month for the first 12
months following the fund's effective date.
ACCOUNT MAINTENANCE FEES (PER OCCURRENCE)
* New account set up $3.00
* Financial transactions $1.50
* Maintenance transactions $1.00
* Research/correspondence $2.50
* Transfer on death (TOD) set-up $7.50
* Fund/SERV
* Initial set-up per fund family $3,500
* Set-up fee per subsequent CUSIP $1,000
* New account set-up $1.00
* Per transaction - no load fund $0.25
* Per transaction - load fund $0.35
* Adjustments and rebills $2.50
20
<PAGE>
* Fund/SERV direct charges at cost
* Commission/SERV (per check) $0.25
* ACH/AIP/SWP/automatic exchanges
* Set-up $1.00
* Per transaction $0.25
* Withholding per eligible account per year $0.25
* Account transcripts older than 2 years
(may be charged to shareholders) $5.00
* Locating lost shareholders $8.00
* Postal clean up per account $3.00
* Tax ID number solicitation $2.50
SHAREHOLDER SERVICING FEES
* Telephone calls (per call) $2.50
* Annual maintenance per omnibus account $150
TAX AND RETIREMENT FEES
* Retirement accounts (IRA/Roth/others)
* Annual maintenance per account (may be
charged to shareholders) $12.50
* Account distribution (may be charged to shareholders) $12.50
* IRA transfer/rollover $7.50
DOCUMENT SERVICES
* Per statement, confirmation and check processing $0.25
* Per tax form processing $0.25
* Per label printing for proxy or marketing purposes $0.10
* Bulk mailings/insert handling charge
* 1 insert $0.06
* 2 - 3 inserts $0.08
* 4 or more inserts as quoted
* Production of ad hoc reports starting at $100
FORMS AND APPLICATIONS
* Standard applications and forms in electronic format no charge
* Customized forms as quoted
SUNSTONE 4.NETSM SERVICES
* Sunstone 4.netSM Shareholder Services
* Set up fee (per fund family) $7,500
* Monthly maintenance
* Less than 5,000 total shareholder accounts $250
* 5,000 to 25,000 total shareholder accounts $350
* 25,001 to 50,000 total shareholder accounts $500
* over 50,000 total shareholder accounts $750
REPROCESSINGS DUE TO NAV ERRORS
21
<PAGE>
This charge applies when shareholder transactions are required to be reprocessed
as a result of NAV errors caused by the adviser or fund accountant unaffiliated
with Sunstone. This charge is not a fund expense and is billed to the adviser.
* Base fee (per occurrence, per day, per fund) $750
* Transaction fee $1.00
FUND/SERV ACCESS
* Use of Sunstone Fund/SERV membership (per fund/per year)
* First three funds in fund family $2,000
* 4 or more funds $1,000
CUSTOM PROGRAMMING
Additional fees at $150 per hour or quoted by project may apply for special
programming to meet your servicing requirements or to create custom reports.
OUT-OF-POCKET EXPENSES
DOCUMENT CHARGES
* Copying charges (per page) $0.15
* Facsimile charges (per fax) $1.25
* Inventory and records storage $20.00/pallet
SUPPLIES AND SERVICES
* Statement paper, check stock, envelopes, tax forms at cost
* Postage and express delivery charges at cost
* Tape/disk storage at cost
* Telephone and long distance at cost
* P.O. box rental at cost
* Toll-free number at cost
BANK CHARGES
* Bank account service fees and any other bank charges at cost
* Outgoing wire fee varies by bank
* Non-sufficient funds varies by bank
* Stopped check on money market funds $25.00
PREMIUM SERVICES
Certain premium services may be purchased on an as-needed basis. Fees for
premium services will be based on Sunstone's current rate at the time services
are purchased.
22
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
THIS AGREEMENT is made as of this 3rd day of December, 1999, by and between
Eagle Funds, a Massachusetts business trust (the "Trust"), and Sunstone
Financial Group, Inc., a Wisconsin corporation (the "Administrator").
WHEREAS, the Trust is an open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") and is authorized to
issue shares of beneficial interests (the "Shares") in separate series with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Trust and the Administrator desire to enter into an agreement
pursuant to which the Administrator shall provide administration and fund
accounting services to such investment portfolios of the Trust as are listed on
Schedule A hereto and any additional investment portfolios the Trust and
Administrator may agree upon and include on Schedule A as such Schedule may be
amended from time to time (such investment portfolios and any additional
investment portfolios are individually referred to as a "Fund" and collectively
the "Funds").
NOW, THEREFORE, in consideration of the mutual promises and agreements herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, do
hereby agree as follows:
1. APPOINTMENT
The Trust hereby appoints the Administrator as administrator and fund
accountant of the Funds for the period and on the terms set forth in this
Agreement. The Administrator accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
2. SERVICES AS ADMINISTRATOR
(a) Subject to the direction and control of the Trust's Board of Trustees and
utilizing information provided by the Trust and its agents, the Administrator
will provide the services listed on Schedule B hereto. The duties of the
Administrator shall be confined to those expressly set forth therein, and no
implied duties are assumed by or may be asserted against the Administrator
hereunder.
(b) The Trustees of the Trust shall cause the officers, investment adviser,
legal counsel, independent accountants, transfer agent, custodian and other
service providers for the Funds to cooperate with the Administrator and to
provide the Administrator with such information, documents and advice relating
to the Funds and the Trust as requested by the Administrator, in order to enable
the Administrator to perform its duties hereunder. In connection with its
duties hereunder, the Administrator shall be entitled to rely, and shall be held
1
<PAGE>
harmless by the Trust when acting in reliance (without investigation or
verification), upon the instruction, advice, information or any documents
relating to the Funds or the Trust provided to the Administrator by an officer
or representative of the Funds or by any of the aforementioned persons. The
Administrator shall be entitled to rely on any document that it reasonably
believes to be genuine and to have been signed or presented by the proper party.
Fees charged by such persons shall be an expense of the Trust. The Administrator
shall not be held to have notice of any change of authority of any officer,
agent, representative or employee of the Trust until receipt of written notice
thereof from the Trust.
(c) To the extent required by Rule 31a-3 under the 1940 Act, the
Administrator hereby agrees that all records which it maintains for the Trust
pursuant to its duties hereunder are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the Trust's
request. Subject to the terms of Section 6, and where applicable, the
Administrator further agrees to preserve for the periods prescribed by Rule 31a-
2 under the 1940 Act the records described in Schedule B which are maintained by
the Administrator for the Trust.
(d) It is understood that in determining security valuations, the
Administrator employs one or more pricing services to determine valuations of
portfolio securities for purposes of calculating net asset values of the Funds.
The Administrator shall identify to the Trust and the Board of Trustees any such
pricing service(s) utilized on behalf of the Trust. The Administrator is
authorized to rely on the prices provided by such service(s) or by the Funds'
investment adviser(s) or other authorized representatives of the Funds, and
shall not be liable for losses to the Trust, its securityholders or otherwise as
a result of its reliance on the valuations provided by the approved pricing
service(s) or representatives or its reliance on security valuation procedures
established by the Trust.
(e) The Trust's Board of Trustees and the Funds' investment adviser have
and retain primary responsibility for all compliance matters relating to the
Funds, including but not limited to compliance with the 1940 Act, the Internal
Revenue Code of 1986, as amended, state securities laws and the policies and
limitations of each Fund relating to the portfolio investments as set forth in
the Prospectus and Statement of Additional Information. The Board and the
investment adviser shall be responsible for determining the legality of the
offer or sale of Shares without registration in reliance upon certain
institutional investor exemptions that may be available under state securities
laws. Sunstone's monitoring and other functions hereunder shall not relieve the
Board and the investment adviser of their primary day-to-day responsibility for
assuring such compliance.
3. FEES; DELEGATION; EXPENSES
(a) In consideration of the services rendered pursuant to this Agreement, the
Trust will pay the Administrator a fee, computed daily and payable monthly, plus
out-of-pocket expenses, each as provided in Schedule C hereto. Fees shall be
paid by each Fund at a rate that would aggregate at least the applicable minimum
fee for each Fund.
(b) For the purpose of determining fees payable to the Administrator, net
asset value shall be computed in accordance with the Trust's Prospectuses and
2
<PAGE>
resolutions of the Trust's Board of Trustees. The fee for the period from the
day of the month this Agreement is entered into until the end of that month
shall be pro-rated according to the proportion that such period bears to the
full monthly period. Upon any termination of this Agreement before the end of
any month, the fee for such part of a month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement. Should the Trust be
liquidated, merged with or acquired by another fund or investment company, any
accrued fees shall be immediately payable.
(c) The Administrator will bear all expenses incurred by it in connection
with the performance of its services under Section 2, except as otherwise
provided herein. The Administrator shall not be required to pay or finance any
costs and expenses incurred in the operation of the Funds, including, but not
limited to: taxes; interest; brokerage fees and commissions; salaries, fees and
expenses of officers and Trustees; Commission fees and state Blue Sky fees;
advisory fees; charges of custodians, transfer agents, dividend disbursing and
accounting services agents and other service providers; security pricing
services; insurance premiums; outside auditing and legal expenses; costs of
organization and maintenance of corporate existence; taxes and fees payable to
federal, state and other governmental agencies; preparation, typesetting,
printing, proofing and mailing of prospectuses, statements of additional
information, supplements, notices and proxy materials for regulatory purposes
and for distribution to current shareholders; preparation, typesetting,
printing, proofing and mailing and other costs of shareholder reports; expenses
in connection with the electronic transmission of documents and information
including electronic filings with the Commission and the states; research and
statistical data services; expenses incidental to holding meetings of the Fund's
shareholders and Trustees; fees and expenses associated with internet, e-mail
and other related activities; and extraordinary expenses. Expenses incurred for
distribution of shares, including the typesetting, printing, proofing and
mailing of prospectuses for persons who are not shareholders of the Trust, will
be borne by the Funds' investment adviser, except for such expenses permitted to
be paid by the Trust under a distribution plan adopted in accordance with
applicable laws. Administrator shall not be required to pay any Blue Sky fees
unless and until it has received the amount of such fees from the Trust.
4. PROPRIETARY AND CONFIDENTIAL INFORMATION
The Administrator agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records relative
to the Funds' shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the
Administrator may be exposed to civil or criminal proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, when subject to governmental or regulatory audit or investigation,
or when so requested by the Trust. Records and information which have become
known to the public through no wrongful act of the Administrator or any of its
employees, agents or representatives, and information which was already in the
possession of the Administrator prior to receipt thereof, shall not be subject
to this paragraph.
3
<PAGE>
5. LIMITATION OF LIABILITY
(a) The Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Funds in connection with the
matters to which this Agreement relates, except for a loss resulting from the
Administrator's willful misfeasance, bad faith or gross negligence in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement. Furthermore, the Administrator shall not be
liable for any action taken or omitted to be taken in accordance with written or
oral instructions received by the Administrator from an officer or
representative of the Trust.
(b) The Administrator assumes no responsibility hereunder, and shall
not be liable, for any default, damage, loss of data, errors, delay or any other
loss whatsoever caused by events beyond its reasonable control. The
Administrator will, however, take all reasonable steps to minimize service
interruptions for any period that such interruption continues beyond its
control.
(c) In no event and under no circumstances shall the Administrator, its
affiliates or any of its or their officers, directors, members, agents or
employees be liable to anyone, including, without limitation, the other party,
under any theory of tort, contract, strict liability or other legal or equitable
theory for lost profits, exemplary, punitive, special, indirect or consequential
damages for any act or failure to act under any provision of this Agreement
regardless of whether such damages were foreseeable and even if advised of the
possibility thereof.
6. TERM
(a) This Agreement shall become effective with respect to each Fund listed on
Schedule A hereof as of the date hereof and, with respect to each Fund not in
existence on that date, on the date an amendment to Schedule A to this Agreement
relating to that Fund is executed. This Agreement shall continue in effect with
respect to each Fund until December __, 200_ (the "Initial Term"). Thereafter,
if not terminated as provided herein, this Agreement shall continue
automatically in effect as to each Fund for successive annual periods.
(b) This Agreement may be terminated with respect to any one or more
particular Funds without penalty after the Initial Term (i) upon mutual consent
of the parties, or (ii) by either party upon not less than sixty (60) days'
written notice to the other party (which notice may be waived by the party
entitled to the notice). The terms of this Agreement shall not be waived,
altered, modified, amended or supplemented in any manner whatsoever except by a
written instrument signed by the Administrator and the Trust.
(c) Notwithstanding anything herein to the contrary, upon the termination of
this Agreement or the liquidation of a Fund or the Trust, the Administrator
shall deliver the records of the Fund(s) and/or Trust as the case may be to the
Trust or person(s) designated by the Trust at the Trust's cost and expense, and
thereafter the Trust or its designee shall be solely responsible for preserving
the records for the periods required by all applicable laws, rules and
regulations. In addition, in the event of termination of this Agreement, or the
proposed liquidation or merger of the Trust or a Fund(s), and the Trust requests
the Administrator to provide services in connection therewith, the Administrator
shall provide such services and be entitled to such compensation as the parties
may mutually agree.
4
<PAGE>
7. NON-EXCLUSIVITY
The services of the Administrator rendered to the Trust are not deemed to be
exclusive. The Administrator may render such services and any other services to
others, including other investment companies. The Trust recognizes that from
time to time directors, officers and employees of the Administrator may serve as
trustees, directors, officers and employees of other entities (including other
investment companies), and that the Administrator or its affiliates may enter
into other agreements with such other entities.
8. GOVERNING LAW; INVALIDITY
This Agreement shall be governed by Wisconsin law, excluding the laws on
conflicts of laws. To the extent that the applicable laws of the State of
Wisconsin, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control, and nothing herein shall
be construed in a manner inconsistent with the 1940 Act or any rule or order of
the Commission thereunder. Any provision of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the parties.
9. NOTICES
Any notice required or permitted to be given by either party to the other
shall be in writing and shall be deemed to have been given when sent by
registered or certified mail, postage prepaid, return receipt requested, as
follows: Notice to the Administrator shall be sent to Sunstone Financial Group,
Inc., 207 East Buffalo Street, Suite 400, Milwaukee, WI, 53202, Attention:
Miriam M. Allison, with a copy to General Counsel, and notice to the Trust shall
be sent to Eagle Funds, 250 North Rock Road, Suite 150, Wichita, Kansas 67206,
Attention: President.
10. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement of the parties hereto.
5
<PAGE>
11. TRUST LIMITATIONS
This Agreement is executed by the Trust with respect to each of the Funds and
the obligations hereunder are not binding upon any of the Trustees, officers or
shareholders of the Trust individually but are binding only upon the Fund to
which such obligations pertain and the assets and property of such Fund. All
obligations of the Trust under this Agreement shall apply only on a Fund-by-Fund
basis, and the assets of one Fund shall not be liable for the obligations of
another Fund. The Fund's Declaration of Trust is on file with the Secretary of
State of Massachusetts.
12. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original agreement but such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer as of the day and year first above
written.
EAGLE FUNDS
(the "Trust")
By:_______________________________________
President
SUNSTONE FINANCIAL GROUP, INC.
("Administrator")
By:_______________________________________
President
6
<PAGE>
SCHEDULE A
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
EAGLE FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
NAME OF FUND(S)
The NASDAQ 100 Index Fund
7
<PAGE>
SCHEDULE B
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
EAGLE FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
SERVICES
Subject to the direction and control of the Trust's Board of Trustees and
utilizing information provided by the Trust and its agents, the Administrator
will:
* provide office space, facilities, equipment and personnel to carry out its
services hereunder
* compile data for and prepare with respect to the Funds timely Notices to
the Securities and Exchange Commission (the "Commission") required pursuant to
Rule 24f-2 under the 1940 Act and Semi-Annual Reports on Form N-SAR;
* assist in the preparation for execution by the Trust and file all federal
income and excise tax returns and state income tax returns (and such other
required tax filings as may be agreed to by the parties) other than those
required to be made by the Trust's custodian or transfer agent, subject to
review and approval of the Trust and the Trust's independent accountants;
* prepare the financial statements for the Annual and Semi-Annual Reports
required pursuant to Section 30(d) under the 1940 Act;
* provide financial and Fund performance information for inclusion in the
Registration Statement for the Trust (on Form N-1A or any replacement
therefor) and any amendments thereto;
* determine and periodically monitor each Fund's income and expense accruals
and cause all appropriate expenses to be paid from Trust assets on proper
authorization from the Trust;
* calculate daily net asset values and income factors of each Fund;
* maintain all general ledger accounts and related subledgers;
* perform security valuations using pricing services;
* assist in the acquisition of the Trust's fidelity bond required by the 1940
Act, monitor the amount of the bond and make the necessary Commission filings
related thereto;
8
<PAGE>
* from time to time as the Administrator deems appropriate, check each Fund's
compliance with the policies and limitations of each Fund relating to the
portfolio investments as set forth in the Prospectus and Statement of
Additional Information and monitor each Fund's status as a regulated
investment company under Subchapter M of the Internal Revenue Code
of 1986, as amended (but these functions shall not relieve the
Trust 's investment adviser and sub-advisers, if any, of their
primary day-to-day responsibility for assuring such compliance);
* maintain, and/or coordinate with the other service providers the
maintenance of, the accounts, books and other documents required pursuant to
Rule 31a-1(a) and (b) under the 1940 Act;
* prepare and/or file securities registration compliance filings, with the
advice of the Trust's legal counsel, in accordance with instructions from the
Trust, which instructions will include the states to qualify in, the
amounts of Shares to initially and subsequently qualify and the warning
threshold to be maintained;
* develop with legal counsel and the secretary of the Trust an agenda for
each board meeting and, if requested by the Trustees, attend board
meetings and prepare minutes;
* prepare Form 1099s for Trustees and other fund vendors;
* calculate dividend and capital gains distributions subject to review and
approval by the Trust and its independent accountants; and
generally assist in the Trust 's administrative operations as mutually
agreed to by the parties.
The duties of the Administrator shall be confined to those expressly set forth
herein, and no implied duties are assumed by or may be asserted against the
Administrator hereunder.
9
<PAGE>
SCHEDULE C
TO THE
ADMINISTRATION AND FUND ACCOUNTING AGREEMENT
BY AND BETWEEN
EAGLE FUNDS
AND
SUNSTONE FINANCIAL GROUP, INC.
<TABLE>
<CAPTION>
ASSET BASED FEES
NAME OF FUND AVERAGE NET ASSETS BASIS POINTS MINIMUM
ANNUAL FEE*
- ------------ ------------------ ------------ -----------
<S> <C> <C> <C>
NASDAQ 100 Index Fund Up to $50 Million 20.0 basis points $72,250
$50 Million to $100 Million 12.0 basis points
$100 Million to $250 Million 11.0 basis points
$250 Million to $500 Million 5.0 basis points
Over $500 Million 3.0 basis points
</TABLE>
The minimum annual fee is subject to an annual escalation of five percent (5%),
which escalation shall be effective commencing one year from the effective date
of the Fund and the corresponding date each year thereafter. No amendment of
this Schedule C shall be required with each escalation. The foregoing fee
schedule assumes three classes of shares for the Fund and a fiscal year end of
November 30. Additional fees shall apply when adding any additional Fund(s)
and/or classes including compensation for the Administrator's services in
connection with the organization of the new Fund(s) or classes. The
Administrator shall provide such services and be entitled to such compensation
as the parties may mutually agree in writing.
* The minimum annual fee shall be reduced by 25% from the effective date of the
Fund through June ___, 2000, and by 10% from June ___, 2000 through December
___, 2000.
OUT-OF-POCKET AND OTHER RELATED EXPENSES
The Trust shall also pay/reimburse the Administrator's out-of-pocket and other
related expenses. Out-of-pocket expenses include, but are not limited to,
travel, lodging and meals in connection with travel in connection with Board
meetings and otherwise on behalf of the Trust, programming and related expenses
(previously incurred or to be incurred by Administrator) in connection with
providing electronic transmission of data between the Administrator and the
Funds' other service providers, brokers, dealers and depositories, fees and
expenses of pricing services, fees of research services including Lexis/Nexis,
Morningstar and Lipper, NASDAQ and other service interface fees, EDGAR related
10
<PAGE>
fees, long distance telephone charges, and photocopying, faxes, postage and
overnight delivery expenses.
EDGAR FILING PRODUCTION MANAGEMENT FEES
* Annual Registration Statements (e.g., 485) $1250
* Follow-up filings to Annual Registration $1000
Statements,
excluding 497J (see below)
* Annual and Semiannual Reports (N30D) $750
* Quarterly Reports (N30B-2) $400
* Notice to Accompany SEC Registration Fees $300
(24f-2)
* Certification of No Change to Prospectus $300
and/or SAI (497J)
* Certificate of Accounting of Securities $300
(N17f-2)
* Performance Ads (482) $300
* Correspondence $300
11
Exhibit (i)
Chapman and Cutler
111 West Monroe
Chicago, IL 60603
December 6, 1999
Eagle Funds
250 North Rock Road, Suite 150
Wichita, Kansas 67206-2241
Re: Eagle Funds
--------------------------
Gentlemen:
We have served as counsel for the Eagle Funds (the"Fund"), which proposes
to offer and sell shares of beneficial interest of the series of the Fund
designated The Nasdaq 100 Index Fund (collectively, the "Shares") in the manner
and on the terms set forth in its Pre-Effective Amendment No. 1 (the
"Amendment") to its Registration Statement to be filed on or about December 6,
1999 with the Securities and Exchange Commission under the Investment Company
Act of 1940, as amended, and the Securities Act of 1933, as amended.
In connection therewith, we have examined such pertinent records and
documents and matters of law as we have deemed necessary in order to enable us
to express the opinions hereinafter set forth, including the Fund's Declaration
of Trust, Bylaws, Registration Statement, actions of the Fund's Board of
Trustees at its organizational meeting and a certificate executed by an
appropriate officer of the Fund certifying and attaching copies of the Fund's
Declaration of Trust, Bylaws, and certain actions of the Board of Trustees of
the Fund authorizing the issuance of Shares.
In such examination, we have assumed the genuineness of all signatures, the
conformity to the originals of all of the documents reviewed by us as copies,
the authenticity and completeness of all original documents reviewed by us in
original or copy form and the legal competence of each individual executing any
document.
Based upon the foregoing, we are of the opinion that:
The Shares of the Fund which are currently being registered by the
Amendment referred to above may be legally and validly issued from time to time
in accordance with the Fund's Declaration of Trust dated August 10, 1990, the
Fund's Bylaws; and subject to compliance with the Securities Act of 1933, as
amended, the Investment Company Act of 1940, as amended, and applicable state
<PAGE>
Eagle Funds
December 6, 1999
Page 2
laws regulating the sale of securities and the receipt by the Fund of a purchase
price of not less than the net asset value per share and such Shares, when so
sold, will be legally issued and outstanding, fully paid and non-assessable,
except that as set forth in the Amendment, shareholders of the Fund may under
certain circumstances be held personally liable for its obligations.
We hereby consent to the filing of this opinion as an exhibit to the
Amendment (File No. 333-88553) relating to the Shares referred to above, to the
use of our name and to the reference to our firm in said Amendment.
Respectfully submitted,
/s/ Chapman and Cutler
-----------------------
CHAPMAN AND CUTLER
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions
"Independent Public Accountants and Custodian" and "Financial
Statements" and to the use of our report dated December 3, 1999
in the Registration Statement (Form N-1A) of the Eagle Funds -
NASDAQ 100 Index Fund and in the Registration Statement filed
with the Securities and Exchange Commission in this Pre-Effective
Amendment No. 1 to the Registration Statement under the
Securities Act of 1933 (File No. 33-88553) and in this Amendment
No. 1 to the Registration Statement under the Investment Company
Act of 1940 (File No. 811-09609).
ERNST & YOUNG LLP
Chicago, Illinois
December 3, 1999
EXHIBIT (L)
EAGLE FUNDS
SUBSCRIPTION AGREEMENT
This Agreement made this 3rd day of December, 1999 by and between Eagle
Funds, a Massachusetts business trust (the "Fund"), and Ranson & Associates,
Inc., a Kansas corporation (the "Subscriber");
WITNESSETH:
WHEREAS, the Fund has been formed for the purposes of carrying on business
as an open-end diversified management investment company; and
WHEREAS, the Subscriber has been selected by the Fund's Board of Trustees
to serve as investment adviser to the Fund; and
WHEREAS, the Subscriber wishes to subscribe for and purchase, and the Fund
wishes to sell to the Subscriber, 10,000 shares of beneficial interest of Class
A shares of the Fund's series, The Nasdaq 100 Index Fund, for a purchase price
of $10.00 per share;
NOW THEREFORE, IT IS AGREED:
1. The Subscriber subscribes for and agrees to purchase from the Fund
10,000 shares of beneficial interest of Class A shares of the Fund's series, The
Nasdaq 100 Index Fund, for a purchase price of $10.00 per share. Subscriber
agrees to make payment for these shares at such time as demand for payment may
be made by an officer of the Fund.
2. The Fund agrees to issue and sell said shares to Subscriber promptly
upon its receipt of the purchase price.
3. To induce the Fund to accept its subscription and issue the shares
subscribed for, the Subscriber represents that it is informed as follows:
(a) That the shares being subscribed for have not been and will not
be registered under the Securities Act of 1933 ("Securities Act");
(b) That the shares will be sold by the Fund in reliance on an
exemption from the registration requirements of the Securities Act;
(c) That the Fund's reliance upon an exemption from the registration
requirements of the Securities Act is predicated in part on the
representations and agreements contained in this Subscription Agreement;
(d) That when issued, the shares will be "restricted securities" as
defined in paragraph (a)(3) of Rule 144 of the General Rules and
Regulations under the Securities Act ("Rule 144") and cannot be sold or
<PAGE>
transferred by Subscriber unless they are subsequently registered under the
Securities Act or unless an exemption from such registration is available;
(e) That there does not appear to be any exemptions from the
registration provisions of the Securities Act available to the Subscriber
for resale of the shares. In the future, certain exemptions may possibly
become available, including an exemption for limited sales in accordance
with the conditions of Rule 144.
The Subscriber understands that a primary purpose of the information
acknowledged in subparagraphs (a) through (e) above is to put it on notice as to
restrictions on the transferability of the shares.
4. To further induce the Fund to accept its subscription and issue the
shares subscribed for, the Subscriber:
(a) Represents and warrants that the shares subscribed for are being
and will be acquired for investment for its own account and not on behalf
of any other person or persons and not with a view to, or for sale in
connection with, any public distribution thereof; and
(b) Agrees that any certificates representing the shares subscribed
for may bear a legend substantially in the following form:
The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933 or any other federal or state securities law. These shares may
not be offered for sale, sold or otherwise transferred unless
registered under said securities laws or unless some exemption from
registration is available.
5. This Subscription Agreement and all of its provisions shall be binding
upon the legal representatives, heirs, successors and assigns of the parties
hereto.
6. The Fund's Declaration of Fund is on file with the Secretary of the
Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund
by the Fund's officers as officers and not individually and the obligations
imposed upon the Fund by this Agreement are not binding upon any of the Fund's
Trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund.
-2-
<PAGE>
IN WITNESS WHEREOF, this Subscription Agreement has been executed by the
parties hereto as of the day and date first above written.
EAGLE FUNDS
By: /s/ ALEX R. MEITZNER
-----------------------------
Chairman
RANSON & ASSOCIATES, INC.
By: /s/ ROBIN K. PINKERTON
--------------------------------
President
-3-
EXHIBIT (M)
PLAN OF DISTRIBUTION AND SERVICE
PURSUANT TO RULE 12B-1
WHEREAS, Eagle Funds, a Massachusetts business trust (the "Fund"), engages
in business as an open-end management investment company and is registered under
the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Fund issues shares in a series (The Nasdaq 100 Index Fund,
herein referred to as the "Series");
WHEREAS, the Fund employs Ranson & Associates (the "Distributor") as
distributor of the shares of the Series (the "Shares") pursuant to a
Distribution Agreement dated as of December 3, 1999 (the "Distribution
Agreement");
WHEREAS, the Series is authorized to issue Shares in three different
classes: Class A, Class C and Class Y (each a "Class" and collectively the
"Classes");
WHEREAS, the Fund desires to adopt a Plan of Distribution and Service
pursuant to Rule 12b-1 under the Act ("Rule 12b-1"), and the Board of Trustees
of the Fund has determined that there is a reasonable likelihood that adoption
of this Plan of Distribution and Service will benefit the Series and its
shareholders;
WHEREAS, the Fund has adopted a Multiple Class Plan Pursuant to Rule 18f-3
(the "Rule 18f-3 Plan") to enable the various Classes of Shares to be granted
different rights and privileges and to bear different expenses;
WHEREAS, as described in the Rule 18f-3 Plan and the Series' prospectus,
the purchase of Class A Shares is generally subject to a front-end sales load
and under certain circumstances a contingent deferred sales load; the purchase
of Class C Shares will not be subject to a front-end sales load, but generally
subject to a contingent deferred sales load; and Class Y Shares will not be
subject to a front-end sales load or a contingent deferred sales load. Class A
Shares, Class C Shares and Class Y Shares shall also be subject to the
distribution and/or services fees adopted hereunder for the respective class.
NOW, THEREFORE, the Series hereby adopts, and the Distributor hereby agrees
to the terms of, this Plan of Distribution and Service (the "Plan") in
accordance with Rule 12b-1, on the following terms and conditions:
1. (a) The Series is authorized to compensate the Distributor for services
performed and expenses incurred by the Distributor in connection with the
distribution of Shares of Class A, Class C and Class Y of the Series and the
servicing of accounts holding such Shares.
<PAGE>
(b) The amount of such compensation paid during any one year shall consist
(i) with respect to Class A Shares of a Service Fee not to
exceed 0.25% of average daily net assets of the Class A Shares of the
Series;
(ii) with respect to Class C Shares of a Service Fee not to
exceed 0.25% of average daily net assets of the Class C Shares of the
Series, plus a Distribution Fee not to exceed .75% of average daily
net assets of the Class C Shares of the Series; and
(iii) with respect to Class Y Shares of a Service Fee not to
exceed 0.25% of average daily net assets of the Class Y Shares of the
Series.
Such compensation shall be calculated and accrued daily and paid monthly or at
such other intervals as the Board of Trustees may determine.
(c) The Distribution Fee applicable to Class C Shares under Section 1(b) of
the Plan may be used to compensate the Distributor for services performed and
expenses incurred in connection with the distribution of Class C shares. These
expenses include, but are not limited to: (a) sales commissions and other fees
paid, together with related financing costs, to brokers, dealers or other
selling entities having a dealer agreement in effect ("Authorized Dealers" which
may include the Distributor) and who were dealer of record for the sale of such
Class C Shares; (b) costs relating to the formulation and implementation of
marketing and promotional activities including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine and other mass media
advertising; (c) costs of printing and distributing prospectuses, statements of
additional information and reports of the Series to other than existing
shareholders; (d) costs involved in preparing, printing and distributing
advertising, sales literature and other selling aids; (e) costs involved in
obtaining whatever information, analyses and reports with respect to marketing
and promotional activities that the Series may, from time to time, deem
advisable; and (f) reasonable compensation for the Distributor's services and
other expenses, including allocable overhead expenses, such as salaries, rent,
printing and communications.
Service fees applicable to Class A Shares, Class C Shares and Class Y
Shares under Section 1(b) of the Plan may be spent by the Distributor for
personal services rendered to the Class A, Class C and Class Y shareholders,
respectively, and/or the maintenance of shareholder accounts of the respective
Class by Authorized Dealers (which may include the Distributor) who are the
dealer of record. Services for which such Authorized Dealers may receive
Service Fee payments include any or all of the following: maintaining account
records for shareholders who beneficially own Shares; answering inquiries
relating to the Series, shareholders' accounts, the policies of the Series and
the performance of their investment; providing assistance and handling
transmission of funds in connection with purchase, redemption and exchange
orders for Shares; providing assistance in connection with changing account
setups and enrolling in various optional fund services; producing and
disseminating shareholder communications or servicing materials; providing
reports and other information to shareholders; the ordinary or capital expenses,
such as equipment, rent, fixtures, salaries, bonuses, reporting and
recordkeeping and third party consultancy or similar expenses, relating to any
- 2 -
<PAGE>
activity for which payment is authorized by the Board; and the financing of any
other activity for which payment is authorized by the Board.
The Distributor may retain any Distribution Fee or Services Fee not paid to
Authorized Dealers or used to pay for expenses incurred with the distribution of
Shares or providing shareholder services.
2. This Plan shall not take effect until the Plan, together with any
related agreement(s), has been approved with respect to the Series and affected
Class thereof by votes of a majority of both (a) the Board of Trustees of the
Fund, and (b) those Trustees of the Fund who are not "interested persons" of the
Fund (as defined in the Act) and who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to it (the "Rule
12b-1 Trustees") cast in person at a meeting (or, meetings) called for the
purpose of voting on the Plan or such related Agreement(s).
3. This Plan shall remain in effect until December 3, 2000, and shall
continue in effect thereafter so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
paragraph 2.
4. During the existence of this Plan, the Distributor shall provide to the
Board of Trustees of the Fund and the Board shall review, at least quarterly, a
written report of distribution- and service-related activities, Distribution
Fees, Service Fees, and the purposes for which such activities were performed
and expenses incurred.
5. This Plan may be terminated as to the Series or as to a given Class of
the Series at any time by vote of a majority of the Rule 12b-1 Trustees or by
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the Series or applicable Class.
6. Any agreement related to the Plan may be terminated at any time, without
the payment of any penalty, by a vote of a majority of the Rule 12b-1 Trustees
or by vote of a majority of the outstanding voting securities (as defined in the
Act) of the Series or applicable Class on not more than sixty days' written
notice to any other party to the agreement and will automatically terminate in
the event of its assignment.
7. This Plan may not be amended to increase materially the amount of
compensation payable by the Series with respect to Class A, Class C or Class Y
Shares under paragraph 1 hereof unless such amendment is approved by a vote of
at least a majority of the outstanding voting Securities of that Class of Shares
of the Series. No material amendment to the Plan shall be made unless approved
in the manner provided in paragraph 2 hereof.
8. While this Plan is in effect, the selection and nomination of the
Trustees who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Trustees who are not such interested
persons.
9. The Fund shall preserve copies of this Plan and any related agreements
and all reports made pursuant to paragraph 4 hereof, for a period of not less
- 3 -
<PAGE>
than six years from the date of the Plan, any such agreement or any such report,
as the case may be, the first two years in an easily accessible place.
10. If any provision of this Plan shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of the Plan shall not be
affected thereby.
11. All parties are expressly put on notice of the Fund's
Agreement and Declaration of Trust dated August 10, 1999, and all amendments
thereto, all of which are on file with the Secretary of the Commonwealth of
Massachusetts, and the limitation of shareholder and Trustee liability contained
therein. Consistent with such limitation of liability, any obligations assumed
by the Fund, Series or Class thereof, and any agreements related to this Plan
shall be limited in all cases to the relevant Series and its assets, or relevant
Class and its assets, as the case may be, and shall not constitute obligations
of any other Series or Class of Shares. All persons having any claim against
the Fund, Series, or any Class thereof, arising in connection with this Plan,
are expressly put on notice of such limitation of shareholder liability, and
agree that any such claim shall be limited in all cases to the relevant Series
and its assets, or relevant Class and its assets, as the case may be, and such
person shall not seek satisfaction of any such obligation from the shareholders
or any shareholder of the Fund, Series or Class; nor shall such person seek
satisfaction of any such obligation from the Trustees or any individual Trustee
of the Fund.
Effective Date: December 3, 1999
- 4 -
EXHIBIT (N)
MULTIPLE CLASS PLAN
ADOPTED PURSUANT TO RULE 18F-3
WHEREAS, Eagle Funds, a Massachusetts business trust (the "Fund"), engages
in business as an open-end management investment company and is registered as
such under the Investment Company Act of 1940, as amended (the "Act");
WHEREAS, the Fund is authorized to and does issue shares of beneficial
interest in separate series, with the shares of each such series representing
the interests in a separate portfolio of securities and other assets (the Fund's
series, The Nasdaq 100 Index Fund, and all other such series subsequently
established by the Fund being referred to herein individually as a "Series");
WHEREAS, the Fund is authorized to and has divided the shares of each
Series into three classes, designated as Class A Shares, Class C Shares and
Class Y Shares; and
WHEREAS, the Board of the Fund as a whole, and the Trustees who are not
"interested persons" of the Fund (as defined in the Act) (the "Non-Interested
Trustees"), after having been furnished and having evaluated information
reasonably necessary to evaluate this Multiple Class Plan (the "Plan"), have
determined in the exercise of their reasonable business judgment that the Plan
is in the best interests of each class of each Series individually and each
Series and the Fund as a whole.
NOW, THEREFORE, the Fund hereby adopts this Plan, effective the date
hereof, in accordance with Rule 18f-3 under the Act:
Section 1. Class Differences. Each class of shares of a Series shall
represent interests in the same portfolio of investments of that Series and,
except as otherwise set forth in this Plan, shall differ solely with respect to:
(i) distribution, service and other charges and expenses as provided for in
Sections 2 and 3 of this Plan; (ii) the exclusive right of each class of shares
to vote on matters submitted to shareholders that relate solely to that class or
for which the interests of one class differ from the interests of another class
or classes; (iii) such differences relating to eligible investors as may be set
forth in the prospectus and statement of additional information of the
respective Series, as the same may be amended or supplemented from time to time
(the "Prospectus" and "SAI"); (iv) the designation of each class of shares; and
(v) any conversion or exchange features.
Section 2. Distribution and Service Arrangements. Class A Shares, Class C
Shares and Class Y Shares of each Series shall differ in the manner in which
such shares are distributed and in the services provided to shareholders of each
such class as follows:
(a) Class A Shares:
(i) Class A Shares shall be sold at net asset value subject to
an up- front sales charge as set forth in the Prospectus;
(ii) Class A Shares shall be subject to an annual service fee
("Service Fee") pursuant to a Plan of Distribution and Service
<PAGE>
pursuant to Rule 12b-1 (the "12b-1 Plan") not to exceed 0.25 of 1% of
the average daily net assets of the Series allocable to Class A
Shares, which, as set forth in the Prospectus, SAI and the 12b-1 Plan,
may be used to compensate certain authorized dealers (which may
include the Series' distributor) for providing ongoing account
services to shareholders;
(iii) Class A Shares shall not be subject to a Distribution Fee
(as hereinafter defined);
(iv) As described in the Prospectus and SAI, certain Class A
Shares purchased at net asset value shall be subject to a contingent
deferred sales charge ("CDSC"); and
(v) Class A Shares may be offered from time to time at net asset
value with a reduced up-front sales charge or without an up-front
sales charge, the terms and conditions of such offer will be described
in the Series' Prospectus, SAI or supplement thereto.
(b) Class C Shares:
(i) Class C Shares shall be sold at net asset value without an
up-front sales charge;
(ii) Class C Shares shall be subject to an annual Service Fee
pursuant to the 12b-1 Plan not to exceed 0.25 of 1% of average daily
net assets of the Series allocable to Class C Shares, which, as set
forth in the Prospectus, SAI and the 12b-1 Plan, may be used to
compensate certain authorized dealers (which may include the Series'
distributor) for providing ongoing account services to shareholders;
(iii) Class C Shares shall be subject to an annual distribution
fee ("Distribution Fee") pursuant to the 12b-1 Plan not to exceed 0.75
of 1% of average daily net assets of the Series allocable to Class C
Shares, which, as set forth in the Prospectus, SAI and the 12b-1 Plan,
will be used to compensate the Series' distributor for services
performed and expenses incurred in connection with the distribution of
Class C Shares, which may include providing compensation to certain
authorized dealers; and
(iv) Class C Shares shall be subject to a CDSC as set forth in
the Series' Prospectus.
(c) Class Y Shares:
(i) Class Y Shares shall be sold at net asset value without an
up-front sales charge to certain institutional investors described in
the Series' Prospectus or SAI;
- 2 -
<PAGE>
(ii) Class Y Shares shall be subject to an annual Service Fee not
to exceed 0.25 of 1% of average daily net assets allocated to Class Y
Shares which, as set forth in the Prospectus, SAI and the 12b-1 Plan,
is used to compensate certain authorized dealers for providing ongoing
account services to shareholders; and
(iii) Class Y Shares shall not be subject to a Distribution Fee or
CDSC.
Section 3. Allocation of Income, Expenses, Gains and Losses.
(a) Investment Income, and Realized and Unrealized Gains and Losses. The
daily investment income, and realized and unrealized gains and losses, of the
Series will be allocated to each class of shares based on each class' relative
percentage of the total value of shares outstanding of the Series at the
beginning of the day, after such net assets are adjusted for the prior day's
capital share transactions.
(b) Series Level Expenses. Expenses that are attributable to a Series, but
not a particular class thereof ("Series level expenses"), will be allocated to
each class of shares based on each class' relative percentage of the total value
of shares outstanding of the Series at the beginning of the day, after such net
assets are adjusted for the prior day's capital share transactions. Series
level expenses include fees for services that are received equally by the
classes under the same fee arrangement. All expenses attributable to a Series
that are not "Class level expenses" (as defined below) shall be Series level
expenses, including but not limited to transfer agency fees and expenses, share
registration expenses, and shareholder reporting expenses.
(c) Class Level Expenses. Expenses that are directly attributable to a
particular class of shares, including the expenses relating to the distribution
of a class' shares, or to services provided to the shareholders of a class, as
set forth in Section 2 of this Plan, will be incurred by that class of shares.
Class level expenses include expenses for services that are unique to a class of
shares in either form or amount. "Class level expenses" shall include, but not
be limited to, 12b-1 Service Fees, 12b-1 Distribution Fees, expenses associated
with the addition of share classes to a Series (to the extent that the expenses
were not fully accrued prior to the issuance of the new classes of shares),
expenses of administrative personnel and services required to support the
shareholders of a specific class, litigation or other legal expenses relating to
a specific class of shares, trustees' fees or expenses incurred as a result of
issues relating to a specific class of shares, and accounting expenses relating
to a specific class of shares.
(d) Fee Waivers and Expense Reimbursements. The investment adviser,
underwriter or any other service provider to a Series may waive fees or
reimburse expenses in a manner in accordance with Rule 18f-3 of the Act.
Section 4. Term and Termination.
(a) The Series. This Plan shall become effective with respect to the
existing Series on the date hereof, and shall continue in effect with respect to
such Class A, Class C and Class Y Shares of the Series until terminated in
accordance with the provisions of Section 4(c) hereof.
- 3 -
<PAGE>
(b) Additional Series or Classes. This Plan shall become effective with
respect to any class of shares of the Series other than Class A, Class C or
Class Y and with respect to each additional Series or class thereof established
by the Fund after the date hereof and made subject to this Plan upon
commencement of the initial public offering thereof (provided that the Plan has
previously been approved with respect to such additional Series or class by
votes of a majority of both (i) the Trustees of the Board of the Fund, as a
whole, and (ii) the Non-Interested Trustees, cast at a meeting held before the
initial public offering of such additional Series or classes thereof), and shall
continue in effect with respect to each such additional Series or class until
terminated in accordance with provisions of Section 4(c) hereof. An addendum
setting forth such specific and different terms of such additional Series or
classes shall be attached to or made part of this Plan.
(c) Termination. This Plan may be terminated at any time with respect to
the Fund, or any Series or any class thereof, as the case may be, without the
payment of any penalty, by vote of a majority of both the Board of Trustees as a
whole, and the Non-Interested Trustees. The Plan may remain in effect with
respect to a particular Series or class thereof even if it has been terminated
in accordance with this Section 4(c) with respect to any other Series or class
thereof.
Section 5. Amendments.
(a) General. Any material amendment to this Plan affecting a Series or
class thereof shall require the approval of a majority of both the Trustees of
the Board of Trustees, as a whole, and the Non-Interested Trustees that the
amendment, including the expense allocation, is in the best interests of each
class of each Series individually and each Series as a whole.
Section 6. Severability. If any provision of this Plan shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of the
Plan shall not be affected thereby.
Section 7. Limitation of Liability. All parties are expressly put on notice
of the Fund's Agreement and Declaration of Trust dated August 10, 1999, and all
amendments thereto, all of which are on file with the Secretary of the
Commonwealth of Massachusetts, and the limitation of shareholder and Trustee
liability contained therein. Consistent with such limitation of liability, any
obligations assumed by the Fund, any Series or class thereof, and any agreements
related to this Plan shall be limited in all cases to the relevant Series and
its assets, or relevant class and its assets, as the case may be, and shall not
constitute obligations of any other Series or class of shares. All persons
having any claim against a Series, or any class thereof, arising in connection
with this Plan, are expressly put on notice of such limitation of shareholder
liability, and agree that any such claim shall be limited in all cases to the
relevant Series and its assets, or relevant class and its assets, as the case
may be, and such person shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Fund, Series or Class; nor shall such
person seek satisfaction of any such obligation from the Trustees or any
individual Trustee of the Fund.
Dated: December 3, 1999
- 4 -
EXHIBIT (P)
EAGLE FUNDS
AND
RANSON & ASSOCIATES, INC.
______________________________
STANDARDS AND PROCEDURES
REGARDING
CONFLICTS OF INTEREST
______________________________
CODE OF ETHICS
AND
REPORTING REQUIREMENTS
Conflicts of interest can arise when certain investment company or
investment adviser personnel (e.g., those who may have knowledge of impending
fund transactions) buy and sell securities for their personal accounts
("personal investment activities"). These conflicts arise because such
personnel have the opportunity to profit from information about fund
transactions, often to the detriment of fund investors.
Section 17(j) of the Investment Company Act of 1940 (the "Act") and rule
17j-1 thereunder are intended to address the potential conflicts arising from
the personal investment activities of investment company personnel, including
the company's investment adviser. Rule 17j-1, among other things, (a) prohibits
fraudulent, deceptive or manipulative acts by fund affiliates and certain other
persons in connection with their personal transactions in securities held or to
be acquired by the investment company, (b) requires funds, their investment
advisers and principal underwriters to adopt codes of ethics reasonably designed
to prevent their "access persons" (generally, personnel that are involved in the
portfolio management process) from engaging in conduct prohibited by the rule,
(c) requires access persons to periodically report their securities holdings and
personal securities transactions, (d) requires the fund, adviser and underwriter
to use reasonable diligence and institute procedures reasonably necessary to
prevent violations of the code, and (e) requires the fund, adviser, and
principal underwriter to report annually to the board issues arising under the
code, including material violations and sanctions, and to certify that they have
adopted procedures reasonably necessary to prevent access persons from violating
the code. Accordingly, the Eagle Funds (the "Fund") and Ranson & Associates,
Inc. ("Ranson"), as the investment adviser and principal underwriter to the
Fund, have each adopted this code of ethics (the "Code").
It should be noted that this Code is applicable to all employees of Ranson
and the Fund and members of the Fund and Ranson's board of trustees or directors
(as applicable), unless otherwise indicated below. The Code addresses personal
transactions in securities within the context of section 17(j) and rule 17j-1 of
the Act. The Code does not encompass all possible areas of potential liability
under the federal securities laws, including the Act. For instance, the federal
securities laws preclude investors from trading on the basis of material,
nonpublic information or communicating this information in breach of a fiduciary
duty ("insider trading" or "tipping"). Other provisions of the Act also address
transactions involving investment companies and their affiliated persons (such
as the investment adviser) which may involve fraud or raise other conflict
issues. For example, section 17(a) of the Act generally prohibits sales or
<PAGE>
purchases of securities or other property between a registered investment
company and an affiliated person (or an affiliated person of such person) and
section 17(d) and rule 17d-1 thereunder generally prohibits an affiliated person
of a registered investment company (or an affiliated person of such person) from
participating in any joint enterprise, arrangement, or profit sharing plan with
the investment company absent an exemptive order from the Securities and
Exchange Commission. Accordingly, persons covered by this Code are advised to
seek advice before engaging in any transactions other than the purchase or
redemption of Fund shares or the regular performance of their normal business
duties if the transaction directly or indirectly involves themselves and the
Fund or other clients of Ranson.
This Code of Ethics consists of six sections - 1. Statement of General
Principles; 2. Definitions; 3. Exempted Transactions; 4. Prohibited Activities;
5. Compliance Procedures; and 6. Sanctions.
I. STATEMENT OF GENERAL PRINCIPLES
The Code is based upon the principle that the officers, directors/trustees
and employees of the Fund and Ranson owe a fiduciary duty to, among others, the
shareholders of the Fund, to conduct their personal securities transactions in a
manner which does not interfere with Fund portfolio transactions or otherwise
take unfair advantage of their relationship to the Fund. In accordance with
this general principle, all Access Persons (as defined below) must: (1) place
the interests of shareholders of the Fund first; (2) execute personal securities
transactions in compliance with the Code; (3) avoid any actual or potential
conflict of interest or any abuse of their positions of trust and
responsibility; and (4) not take inappropriate advantage of their positions.
Persons covered by this Code must adhere to its general principles as well as
comply with the Code's specific provisions. It bears emphasis that technical
compliance with the Code's procedures will not automatically insulate from
scrutiny trades which show a pattern of abuse of the individual's fiduciary
duties to the Fund or its shareholders. In addition, a violation of the general
principles of the Code may constitute a punishable violation.
II. DEFINITIONS
As used herein:
A. "Access Person" shall mean any director or trustee, officer or Advisory
Person of the Fund or Ranson. A list of persons deemed to be Access Persons is
attached as Exhibit A.
B. "Act" means the Investment Company Act of 1940, as amended.
C. "Advisory Person" shall mean:
1. Any employee of the Fund or Ranson (or of any company in a
control relationship to the Fund or Ranson) who, in connection with his or
her regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of Covered Securities by the
-2-
<PAGE>
Fund or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and
2. Any natural person in a control relationship to the Fund or
Ranson who obtains information concerning recommendations made to such Fund
with regard to the purchase or sale of Covered Securities by the Fund.
D. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell a security has been made and communicated
and, with respect to the person making the recommendation, when such person
considers making such recommendation.
E. "Beneficial ownership" shall be interpreted in the same manner as it
would be under rule 16a-1(a)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act") in determining whether a person has beneficial ownership of a
security for purposes of section 16 of the Exchange Act and the rules and
regulations thereunder. In this regard, beneficial ownership will be deemed to
exist if a person, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has a direct or indirect pecuniary
interest in the securities (i.e., an opportunity, directly or indirectly, to
profit or share in any profit derived from a transaction in the securities).
Under this definition, beneficial ownership by a person includes, but is not
limited to, securities held by members of a person's immediate family sharing
the same household, securities held in certain trusts, and a general partner's
proportionate interest in the portfolio securities held by a general or limited
partnership. A person will not be deemed to be the beneficial owner of
securities held in the portfolio of a registered investment company solely by
reason of his or her ownership of shares or units of such registered investment
company.
F. "Compliance Officer" shall be the President of Ranson and the Fund or
his/her designees. A list of the Compliance Officers is attached as Exhibit B.
G. "Control" shall have the same meaning as set forth in section 2(a)(9) of
the Act.
H. "Covered Security" shall mean any stock, bond, debenture, evidence of
indebtedness or in general any other instrument defined to be a security in
section 2(a)(36) of the Act except that it shall not include shares of
registered open-end investment companies, direct obligations of the Government
of the United States, bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt instruments, including
repurchase agreements.
I. "Investment personnel" of the Fund or Ranson shall mean: (1) any
employee of the Fund or Ranson (or of any company in a control relationship to
the Fund or Ranson) who, in connection with his or her regular functions or
duties, makes or participates in making recommendations regarding the purchase
or sale of securities by the Fund, and (2) any natural person who controls the
Fund or Ranson and who obtains information concerning recommendations made to
the Fund regarding the purchase or sale of securities by the Fund. A list of
investment personnel is attached as Exhibit C.
-3-
<PAGE>
J. "Portfolio manager" shall mean any employee of the Fund or Ranson who is
entrusted with the direct responsibility and authority to make investment
decisions affecting the Fund. A list of portfolio managers is attached as
Exhibit D.
K. "Purchase or sale of a Covered Security" includes, among other things,
the writing of an option to purchase or sell a Covered Security.
L. "Ranson" means Ranson & Associates, Inc.
M. "Security held or to be acquired" by the Fund means (a) any Covered
Security which, within the most recent fifteen days (i) is or has been held by
the Fund or (ii) is being or has been considered by the Fund or Ranson for
purchase by the Fund; and (b) any option to purchase or sell, and any security
convertible into or exchangeable for, a Covered Security described in (a) of
this item M.
III. EXEMPTED TRANSACTIONS
The prohibitions of Section IV(A) and IV(C) of this Code of Ethics shall
not apply to:
A. Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
B. Purchases or sales of securities which are not eligible for
purchase or sale by the Fund;
C. Purchases or sales which are non-volitional on the part of either
the Access Person or the Fund (e.g., transactions in corporate mergers,
stock splits, tender offers);
D. Purchases which are part of an automatic dividend reinvestment
plan;
E. Purchases effected upon the exercise of rights issued by an
issuer pro rata to all holders of a class of its securities, to the extent
such rights were acquired from such issuer, and sales of such rights so
acquired; and
F. Purchases or sales which receive the prior approval of the
Compliance Officer because they are only remotely potentially harmful to
the Fund or its shareholders, or because they clearly are not related
economically to the securities to be purchased, sold or held by the Fund.
IV. PROHIBITED ACTIVITIES
A. Access Persons shall not purchase or sell, directly or indirectly, any
Covered Security in which he or she has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership and which to his or her
actual knowledge at the time of such purchase or sale (a) is being considered
-4-
<PAGE>
for purchase or sale by the Fund or Ranson; or (b) is being purchased or sold by
the Fund.
Without limiting the generality of the foregoing (a) no Portfolio manager
may purchase or sell any Covered Security within fifteen calendar days before
and after any portfolio of the Fund which he or she manages trades in that
security, and (b) no Access Person shall purchase or sell any Covered Security
on the same day there is a pending buy or sell order in that security by the
Fund or Ranson. Any profits realized on trades within the proscribed periods
will be disgorged to a charitable organization.
B. Investment personnel shall not acquire directly or indirectly beneficial
ownership in securities pursuant to a private placement or initial public
offering without prior approval from the Compliance Officer described in Section
(V) below.
C. Investment personnel shall not profit in the purchase and sale, or sale
and purchase, of the same (or equivalent) security within sixty calendar days.
Trades made in violation of this prohibition shall be unwound or, if that is
impracticable, any profits must be disgorged to a charitable organization.
D. Investment personnel shall not receive any gift or other thing of more
than de minimis value from any person or entity that does business with or on
behalf of the Fund or any other client of Ranson.
E. Investment personnel shall not serve on the board of directors of a
publicly traded company, without prior authorization by the Compliance Officer.
Investment personnel may submit a request for authorization and such request
shall state the position sought, the reason service is desired and any possible
conflicts of interest known at the time of the request. No such position shall
be accepted without the prior clearance by the Compliance Officer. Service may
be cleared by the Compliance Officer only if such officer determines that
service in that capacity would be consistent with the interests of the Fund, any
shareholders affected, and any other clients of Ranson. In addition, Investment
personnel who receive authorization to serve in such a capacity must be isolated
through "Chinese Wall" procedures from making investment decisions regarding
securities issued by the entity involved.
V. Compliance Procedures
A. Pre-Clearance.
Investment personnel must receive prior approval of their personal investment
transactions in Covered Securities, as defined above, from the Compliance
Officer. A request for approval shall state the title and principal amount of
the security proposed to be purchased or sold, the nature of the transaction,
the price at which the transaction is proposed to be effected, and the name of
the broker, dealer or bank through whom the transaction is proposed to be
effected. Any approval shall be valid for three business days. In determining
whether approval should be granted, the Compliance Officer should consider:
-5-
<PAGE>
1. whether the investment opportunity should be reserved for the
Fund, its shareholders, or other clients of Ranson; and
2. whether the opportunity is being offered to an individual by
virtue of his/her position with the Fund or Ranson's relationship with any
other client.
In the event approval is granted, the Access Person must disclose the
investment when he/she plays a role in any client's, including the Fund's,
subsequent investment decision regarding the same issuer. In such
circumstances, the decision to purchase or sell securities of the issuer will be
subject to an independent review by Investment personnel with no personal
interest in the issuer or another designee.
The pre-clearance requirement shall not apply to Exempted Transactions
listed in Section III.
B. Reporting Requirements.
Unless excepted by Subsection C of this Section V, every Access Person of
the Fund and of Ranson must report to the Compliance Officer the following:
1. Initial Holdings Reports. No later than ten days after the person
becomes an Access Person, the following information:
a. the title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership when the person became an Access Person;
b. the name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were held for the
direct or indirect benefit of the Access Person as of the date the person
became an Access Person; and
c. the date that the report is submitted by the Access Person.
2. Quarterly Transaction Reports. No later than ten days after the end of
the calendar quarter, the following information:
a. With respect to any transaction during the quarter in a Covered
Security in which the Access Person had any direct or indirect beneficial
ownership:
1. The date of the transaction, the title, the interest rate
and maturity date (if applicable), the number of shares and the
principal amount of each Covered Security involved;
2. The nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
-6-
<PAGE>
3. The price of the Covered Security at which the transaction
was effected;
4. The name of the broker, dealer or bank with or through which
the transaction was effected; and
5. The date that the report is submitted by the Access Person.
b. With respect to any account established by the Access Person in
which any securities were held during the quarter for the direct or
indirect benefit of the Access Person:
1. The name of the broker, dealer or bank with whom the Access
Person established the account;
2. The date the account was established; and
3. The date that the report is submitted by the Access Person.
In addition to the above, every Access Person other than trustees who are
not "interested persons" shall direct his or her broker or brokers to supply to
the Compliance Officer, on a timely basis, duplicate copies of confirmations of
all securities transactions and copies of periodic statements for all securities
accounts involving Covered Securities in which such Access Person acquires or
foregoes direct or indirect beneficial ownership. Such duplicate confirmations
and periodic statements received during the proscribed period shall satisfy the
reporting requirements set forth in this paragraph if all the information
required to be included in the Quarterly Report is contained in the broker
confirmations or account statements.
3. Annual Holdings Report. No later than ten days after the end of the
calendar year the following information (which information must be current as of
a date no more than thirty days before the report is submitted):
a. The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect beneficial
ownership;
b. The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held for the direct
or indirect benefit of the Access Person; and
c. The date that the report is submitted by the Access Person.
C. Exceptions to Reporting Requirements.
1. A person need not make a report under Section V(B) of this Code with
respect to transactions effected for, and Covered Securities held in, any
account over which the person has no direct or indirect influence or control.
-7-
<PAGE>
2. A trustee of the Fund who is not an "interested person" of the Fund
within the meaning of section 2(a)(19) of the Act, and who would be required to
make a report solely by reason of being a Fund trustee, need not make:
a. An initial holdings report under Section V(B)(1) of this Code and
an annual holdings report under Section V(B)(3) of this Code; and
b. A quarterly transaction report under Section V(B)(2) of this
Code, unless the trustee knew or, in the ordinary course of fulfilling his
or her official duties as a Fund trustee, should have known that during the
15-day period immediately before or after the trustee's transaction in a
Covered Security, the Fund purchased or sold the Covered Security, or the
Fund or its investment adviser considered purchasing or selling the Covered
Security.
3. An Access Person to Ranson need not make a quarterly transaction report
to the Compliance Officer under Section V(B)(2) of this Code if all the
information in the report would duplicate information required to be recorded
under Rules 204-2(a)(12) or 204-2(a)(13) of the Investment Advisers Act of 1940.
D. Certification.
1. All Access Persons shall certify annually that:
a. They have read and understood the Code and recognize that they
are subject thereto; and
b. They have complied with the requirements of the Code and
disclosed or reported all personal securities transactions required to be
disclosed or reported pursuant to the Code.
E. Duties of the Compliance Officer.
1. Review Reports. The Compliance Officer of the Fund and Ranson shall
review the reports submitted under Section V(B).
2. Notification of Reporting Obligation. The Compliance Officer shall
update Exhibits A, B, C and D as necessary to include new Access Persons,
Investment Personnel and portfolio managers and shall notify those persons of
their reporting obligations hereunder and to update the Compliance Officer or
designee responsible to review reports.
3. Reporting to the Board of Trustees. The Compliance Officer (with the
assistance of the Fund's legal counsel if necessary) shall prepare an annual
written report to the Fund's Board of Trustees which shall:
a. Summarize existing procedures concerning personal investing and
any changes in the procedures made during the past year;
-8-
<PAGE>
b. Describe any issues arising under the Code or procedures since
the last report to the Board of Trustees, including, but not limited to,
information about material violations of the Code or procedures and
sanctions imposed in response to the material violations; and
c. Identify any recommended changes in existing restrictions or
procedures based upon the Fund's experience under its Code, evolving
industry practices, or developments in laws or regulations;
d. Certify that the Fund and Ranson have adopted procedures
reasonably necessary to prevent Access Persons from violating the Code.
4. The Compliance Officer or his designee shall maintain all records
required under rule 17j-1 of the Act for the periods required under the Rule.
VI. SANCTIONS
Upon discovery of a violation of this Code, including either violations of
the enumerated provisions or the general principles provided, the Fund or Ranson
may impose such sanctions as it deems appropriate, including, inter alia, a
letter of censure or suspension or termination of the employment of the
violator.
VII. AMENDMENT TO THIS CODE
The Fund's Board of Trustees must approve any material change to this Code
of Ethics no later than six months after the adoption of the material change.
Dated: December 3, 1999
-9-
<PAGE>
EXHIBIT A
ACCESS PERSONS (AS OF _______________ , 1999)
ACCESS PERSONS (FUND AND RANSON EMPLOYEES AND INTERESTED TRUSTEES)
ACCESS PERSONS (OUTSIDE DIRECTORS)
Directors of Funds Managed by Ranson
-10-
<PAGE>
EXHIBIT B
COMPLIANCE OFFICER AND DESIGNEE (AS OF _______________, 1999)
THE FOLLOWING IS THE COMPLIANCE OFFICER AND HIS/HER DESIGNEE RESPONSIBLE
FOR REVIEWING REPORTS SUBMITTED UNDER THE CODE OF ETHICS OF THE FUND AND RANSON:
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<PAGE>
EXHIBIT C
INVESTMENT PERSONNEL (AS OF _______________, 1999)
INVESTMENT PERSONNEL
-12-
<PAGE>
EXHIBIT D
PORTFOLIO MANAGERS (AS OF _______________, 1999)
PORTFOLIO MANAGERS
-13-
<PAGE>
EXHIBIT E
ACKNOWLEDGMENT OF RECEIPT OF CODE OF ETHICS
I acknowledge that I have received the Code of Ethics dated ___________,
1999, and represent:
1. I have read and understood the Code of Ethics and recognize that I am
subject to its provisions;
2. In accordance with Section V of the Code of Ethics, I will report all
securities transactions in which I have a beneficial interest, except for
transactions exempt from reporting under Section V(C) of the Code of Ethics.
3. I will comply with the Code of Ethics in all other respects.
Access Person Signature
Print Name
Dated: _____________________
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<PAGE>
EXHIBIT F
ANNUAL CERTIFICATION OF COMPLIANCE WITH THE CODE OF ETHICS
I certify that during the past year:
1. I have read and understood the Code of Ethics and recognize that I am
subject to its provisions;
2. In accordance with Section V of the Code of Ethics, I have reported all
securities transactions in which I have a beneficial interest except for
transactions exempt from reporting under Section V(C) of the Code of Ethics and
except to the extent disclosed on an attached schedule.
2. I have complied with the Code of Ethics in all other respects.
Access Person Signature
Print Name
Dated: _____________________
-15-
<PAGE>
EXHIBIT G
EAGLE FUNDS
RANSON & ASSOCIATES, INC.
INITIAL HOLDINGS REPORT
DATE OF BECOMING AN ACCESS PERSON: _______________
To: Compliance Officer
As of the date referred to above, I have direct or indirect beneficial
ownership in the following securities which are required to be reported pursuant
to the Code of Ethics of the Eagle Funds/Ranson & Associates, Inc.
Security Number of Dollar Broker/
(Include Full Shares Amount of Dealer
Name of Issuer) Securities or Bank
holding
the
Securities
:
This report (i) excludes transactions effected for or securities held in
any account over which I had no direct or indirect influence or control,
(ii) excludes other transactions not required to be reported, and (iii) is not
an admission that I have or had any direct or indirect beneficial ownership in
the securities listed above.
-16-
<PAGE>
This report is to be signed, dated and returned within ten days of the
person becoming an Access Person, as defined in the Code of Ethics.
Signature: _________________
Printed name: ___________________
Date: ___________________
Return by [_____________] to Compliance Officer. Questions regarding this
form may be directed to [_____________] at [_____________].
Date Submitted to Compliance Officer: __________________________.
-17-
<PAGE>
EXHIBIT H
EAGLE FUNDS
RANSON & ASSOCIATES, INC.
SECURITIES TRANSACTION REPORT
FOR THE CALENDAR QUARTER ENDED [___________]
To: Compliance Officer
A. During the quarter referred to above, the following transactions were
effected in securities of which I had, or by reason of such transactions
acquired, direct or indirect beneficial ownership, and which are required to be
reported pursuant to the Code of Ethics of the Eagle Funds/Ranson & Associates,
Inc.
SECURITY DATE OF INTEREST NUMBER DOLLAR NATURE BROKER
(INCLUDE TRANSAC RATE OF AMOUNT OF /
FULL NAME TION AND SHARES OF TRANSAC DEALER
OF MATURITY TRANSAC TION: OR
ISSUER) DATE TION (BUY/SELL) PRICE BANK
(IF EFFECTED
APPLICA THROUGH:
BLE)
B. During the quarter referred to above, I established the following
accounts in which securities were held during the quarter for my direct or
indirect benefit:
Date
Account
Name of Broker/Dealer was
or Bank with the establis
Account hed
-18-
<PAGE>
C. In lieu of the information required under A and B above, I represent
that the trade confirmations and/or brokerage account statements attached hereto
represent all transactions which must be reported pursuant to the Code of
Ethics. [ ]
or
No reportable transactions. [ ]
This report (i) excludes transactions effected for or securities held in
any account over which I had no direct or indirect influence or control,
(ii) excludes other transactions not required to be reported, and (iii) is not
an admission that I have or had any direct or indirect beneficial ownership in
the securities listed above.
This report is to be signed, dated and returned within ten days of the end
of the calendar quarter.
Signature: __________
Printed name: __________
Date: __________
Return by [_____________] to Compliance Officer. Questions regarding this
form may be directed to [_____________] at [_____________].
Date Submitted to Compliance Officer: ____________________________.
-19-
<PAGE>
EXHIBIT I
EAGLE FUNDS
RANSON & ASSOCIATES, INC.
ANNUAL HOLDINGS REPORT
FOR THE CALENDAR YEAR ENDED [___________]
To: Compliance Officer
As of _____________, which date shall be within 30 days of the date of
submitting this report, I have direct or indirect beneficial ownership in the
following securities which are required to be reported pursuant to the Code of
Ethics of the Eagle Funds/Ranson & Associates, Inc.
NAME OF
BROKER/DEALER
DOLLAR OR BANK WHO
SECURITY AMOUNT OF MAINTAINS THESE
(INCLUDE FULL NUMBER OF SECURITIES SECURITIES
NAME OF ISSUER) SHARES
This report (i) excludes transactions effected for or securities held in
any account over which I had no direct or indirect influence or control,
(ii) excludes other transactions not required to be reported, and (iii) is not
an admission that I have or had any direct or indirect beneficial ownership in
the securities listed above.
-20-
<PAGE>
This report is to be signed, dated and returned within ten days of the end
of the calendar year.
Signature: __________
Printed name: __________
Date: __________
Return by [_____________] to Compliance Officer. Questions regarding this
form may be directed to [_____________] at [_____________].
Date Submitted to Compliance Officer: __________________________.
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<PAGE>
CERTIFICATE REQUIRED BY RULE 17J-1
OF THE INVESTMENT COMPANY ACT OF 1940
I, Robin K. Pinkerton, President of Ranson & Associates, Inc. ("Ranson")
and Eagle Funds (the "Fund") certify that Ranson and the Fund have adopted
procedures reasonably necessary to prevent their Access Persons (as defined in
Rule 17j-1 of the Investment Company Act of 1940) from violating their Code of
Ethics.
Dated: _____________________________
President
-22-
Exhibit (z)(1)
EAGLE FUNDS
_________
POWER OF ATTORNEY
_________
KNOW ALL MEN ALL THESE PRESENTS, that the undersigned, a trustee of the
above-reference organization, hereby constitutes and appoints ALEX R. MEITZNER
AND DOUGLAS K. ROGERS, and each of them (with full power to each of them to act
alone) his true and lawful attorney-in-fact and agent, for him on his behalf and
in his name, place and stead, in any and all capacities, to sign, execute and
affix his seal thereto and file one or more Registration Statements on Form N-1A
under the Securities Act of 1933 and the Investment Company Act of 1940,
including any amendment or amendments thereto, with all exhibits, and any and
all other documents required to be filed with any regulatory authority, federal
or state, relating to the registration thereof, or the issuance of shares
thereof, without limitation, granting unto said attorneys, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced
organization has hereunto set his hand this 3rd day of December, 1999.
/s/ Robin K. Pinkerton
------------------------
Robin K. Pinkerton
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 3rd day of December 1999, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) /s/ Susan M. Cichowicz
----------------------
Notary Public
My Commission Expires: 4/8/03
<PAGE>
EAGLE FUNDS
_________
POWER OF ATTORNEY
_________
KNOW ALL MEN ALL THESE PRESENTS, that the undersigned, a trustee of the
above-reference organization, hereby constitutes and appoints ROBIN K. PINKERTON
AND DOUGLAS K. ROGERS, and each of them (with full power to each of them to act
alone) his true and lawful attorney-in-fact and agent, for him on his behalf and
in his name, place and stead, in any and all capacities, to sign, execute and
affix his seal thereto and file one or more Registration Statements on Form N-1A
under the Securities Act of 1933 and the Investment Company Act of 1940,
including any amendment or amendments thereto, with all exhibits, and any and
all other documents required to be filed with any regulatory authority, federal
or state, relating to the registration thereof, or the issuance of shares
thereof, without limitation, granting unto said attorneys, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same as fully to all intents and purposes as he might or could do
if personally present, hereby ratifying and confirming all that said attorneys-
in-fact and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced
organization has hereunto set his hand this 3rd day of December, 1999.
/s/ Alex R. Meitzner
--------------------
Alex R. Meitzner
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 3rd day of December 1999, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) /s/ Susan M. Cichowicz
----------------------
Notary Public
My Commission Expires: 4/8/03
<PAGE>
EAGLE FUNDS
_________
POWER OF ATTORNEY
_________
KNOW ALL MEN ALL THESE PRESENTS, that the undersigned, a trustee of the
above-reference organization, hereby constitutes and appoints ALEX R. MEITZNER,
ROBIN K. PINKERTON AND DOUGLAS K. ROGERS, and each of them (with full power to
each of them to act alone) his true and lawful attorney-in-fact and agent, for
him on his behalf and in his name, place and stead, in any and all capacities,
to sign, execute and affix his seal thereto and file one or more Registration
Statements on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced
organization has hereunto set his hand this 3rd day of December, 1999.
/s/ Frank W. Callahan
---------------------
Frank W. Callahan
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 3rd day of December, 1999, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) /s/ Susan M. Cichowicz
----------------------
Notary Public
My Commission Expires: 4/8/03
<PAGE>
EAGLE FUNDS
_________
POWER OF ATTORNEY
_________
KNOW ALL MEN ALL THESE PRESENTS, that the undersigned, a trustee of the
above-reference organization, hereby constitutes and appoints ALEX R. MEITZNER,
ROBIN K. PINKERTON AND DOUGLAS K. ROGERS, and each of them (with full power to
each of them to act alone) his true and lawful attorney-in-fact and agent, for
him on his behalf and in his name, place and stead, in any and all capacities,
to sign, execute and affix his seal thereto and file one or more Registration
Statements on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced
organization has hereunto set his hand this 3rd day of December, 1999.
/s/ Robert L. Abraham
----------------------
Robert L. Abraham
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 3rd day of December, 1999, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) /s/ Susan M. Cichowicz
----------------------
Notary Public
My Commission Expires: 4/8/03
<PAGE>
EAGLE FUNDS
_________
POWER OF ATTORNEY
_________
KNOW ALL MEN ALL THESE PRESENTS, that the undersigned, a trustee of the
above-reference organization, hereby constitutes and appoints ALEX R. MEITZNER,
ROBIN K. PINKERTON AND DOUGLAS K. ROGERS, and each of them (with full power to
each of them to act alone) his true and lawful attorney-in-fact and agent, for
him on his behalf and in his name, place and stead, in any and all capacities,
to sign, execute and affix his seal thereto and file one or more Registration
Statements on Form N-1A under the Securities Act of 1933 and the Investment
Company Act of 1940, including any amendment or amendments thereto, with all
exhibits, and any and all other documents required to be filed with any
regulatory authority, federal or state, relating to the registration thereof, or
the issuance of shares thereof, without limitation, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as he might
or could do if personally present, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
IN WITNESS WHEREOF, the undersigned trustee of the above-referenced
organization has hereunto set his hand this 3rd day of December, 1999.
/s/ Ralph E. Reichert
---------------------
Ralph E. Reichert
STATE OF ILLINOIS )
) SS
COUNTY OF COOK )
On this 3rd day of December, 1999, personally appeared before me, a Notary
Public in and for said County and State, the person named above who is known to
me to be the person whose name and signature is affixed to the foregoing Power
of Attorney and who acknowledged the same to be his voluntary act and deed for
the intent and purposes therein set forth.
(SEAL) /s/ Susan M. Cichowicz
----------------------
Notary Public
My Commission Expires: 4/8/03
