As filed with the Securities and Exchange Commission on October 6, 1999
1933 Act Registration No. 33-_____
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 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. ____ [ ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. ____ [ ]
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 __, 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
<S> <C>
Section 1 THE FUND 1
Fund Overview 2
Section 2 HOW WE MANAGE YOUR MONEY 4
The Investment Adviser and Distributor of the Fund 4
Management Fees 4
The Nasdaq-100 Index 4
Investment Strategy 6
A Word About Risk 7
Section 3 HOW TO BUY AND SELL SHARES 9
How to Choose a Share Class 9
How to Reduce Your Sales Charge 10
How to Buy Shares 11
Automatic Investing 11
Automatic Withdrawal Plan 12
Additional Services 12
How to Sell Shares 12
Section 4 DIVIDENDS, DISTRIBUTIONS AND TAXES 14
Section 5 GENERAL INFORMATION 15
Distribution and Service Plan 16
Net Asset Value 16
Fund Service Providers 16
Nasdaq-100(Registered Trademark) Index Licensing Agreement 17
Available Information about the Fund 17
</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 (888) _____-_______ for more
information.
1
<PAGE>
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 seeks to invest in the stocks that comprise the Nasdaq-100 Index.
In managing the Fund, 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 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 to the extent
feasible.
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 concentrate in issuers
of a single industry or group of industries. 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 more diversified
portfolio.
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.
2
<PAGE>
FEES AND EXPENSES
The following table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund.
<TABLE>
<CAPTION>
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% 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 None None
Exchange Fees None None None
<CAPTION>
ANNUAL FUND OPERATING EXPENSES(5)
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
SHARE CLASS A C Y
--- ----- ---
Management Fees .50% .50% .50%
12b-1 Distribution and Service Fees .25% 1.00% .25%
Other Expenses .20% .20% .10%
Total Annual Fund Operating Expenses-Gross . .95% 1.70% .85%
<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) Reduced Class A sales charges apply to purchases of $50,000 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) 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 are based on estimated amounts for the current fiscal year.
The investment adviser has 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 $348 $279 $69 $348 $179 $69
3 Years $554 $553 $214 $554 $553 $214
</TABLE>
3
<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 oversees the management of 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 $2,000,000,000.
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 August 31, 1999, the Index was
comprised of the following industry sectors: Electronic Technology
(manufacturers of computer chips and other computer hardware) (40.0%),
Technology Services (publishers of software and operating systems) (33.4%),
Telecommunications (16.0%), Biotechnology (3.9%), and Other (6.7%). As of
August 31, 1999, one company (Microsoft) represented 14.73% of the Index and the
five largest holdings represented 40.75% 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
4
<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. Nasdaq reviews the composition of the Index on a quarterly basis and
will adjust the weightings of the stocks in the Index if certain pre-established
weight distribution requirements are not met. In addition, Nasdaq also annually
adjusts the stocks included in the Index to reflect changes in market
capitalization of the Index-eligible securities. 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) through September 1, 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 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>
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 (8/31/99) 2,396.87 30.55% 7.42% 17.95%
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 formula used in calculating the Index
Value has been set forth in the Statement of Additional Information.
5
<PAGE>
** 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.
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 certain stocks at a particular time,
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.
6
<PAGE>
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. The average
turnover rate for passively managed domestic index funds investing in common
stocks is roughly 20%. (A turnover rate of 100% would occur, for example, if a
portfolio sold and replaced securities valued at 100% of its total net assets
within a one-year period.)
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 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.
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.
7
<PAGE>
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.
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. As of December 31, 1998, Microsoft's
management asserted that resolving these matters will not have a material
adverse impact on its financial position or its results of operation.
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. Ranson is working with the Fund's
service providers to adapt their systems to address this "Year
8
<PAGE>
2000" issue. Ranson and the Fund expect, but there can be no absolute
assurance, that the necessary work will be completed on a timely basis.
SECTION 3HOW 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>
Less than $99,999 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 first
9
<PAGE>
$1 million, plus .15% of the next $1.5 million, plus .05% of the amount
over $2.5 million. If you redeem your shares within 18 months of purchase,
you will be charged a CDSC of 1% of your purchase price.
</TABLE>
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 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
* Certain Bank trust departments
* Wrap Accounts
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 (888) ________. 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.
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HOW TO BUY SHARES
You may open an account with $2,500 ($500 for Traditional/Roth/Education 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 Ranson receives your order. 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. New York 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.
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 [T/A]. For subsequent investments, your fund
account number should appear on the check and an investment slip should be
enclosed.
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 ________________, together with the Fund's DDA
#___________, for purchase of Fund shares in your name. 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, please call the Transfer
Agent after completing your wire payment to obtain your Fund account number.
Please 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) ________.
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.
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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 by
authorizing us to draw preauthorized checks on your bank account. You can stop
the withdrawals at any time. There is no charge for this plan.
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) __________.
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, 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. You must complete the
appropriate section of the 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.
To help you complete the forms for these services, you can call the Transfer
Agent at (800) ________ for copies of the necessary forms.
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 Ranson 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. While the fund does not charge a redemption fee, you
may be assessed a CDSC, if applicable. When you redeem Class A or Class C
shares 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 is imposed on shares you buy through
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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.
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, 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. Checks will be issued only to the shareholder of record
and mailed to the address of record. If you have established electronic funds
transfer privileges through EFT, you may have redemption proceeds transferred
electronically to your bank account. 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. [Insert Name & Address
of Transfer Agent] ______________, 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 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 MAIL
You can sell your shares at any time by sending a written request to the
Fund, c/o [insert name and address of Transfer Agent]. 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;
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<PAGE>
* 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.
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 $1,000) 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. Holders of jointly registered Fund or bank accounts may have
redemption proceeds of not more than $250,000 wired within any 30-day period.
You may telephone redemption requests by calling 800-_________. 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 4DIVIDENDS, 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
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 (888) ___________.
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.
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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.
SECTION 5GENERAL INFORMATION
This section provides a description of the Fund's Distribution and Services
Plan, the method to calculate net asset value and other general information.
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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.
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. 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 bid 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 [Insert name and address]. The
custodian also provides certain accounting services to the Fund. The Fund's
transfer, shareholder services and dividend paying agent [Insert Name and
Address] performs bookkeeping, data processing and administrative services for
the maintenance of shareholder accounts.
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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.
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 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 has 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 detailed information on the Fund's policies and operation.
Call Ranson at (888) ________ to request a free copy of the SAI or for other
Fund information.
You may also obtain this and other Fund information directly from the
Securities and Exchange Commission (SEC). The SEC may charge a copying fee for
this information. Visit the SEC on-line at http://www.sec.gov or in person at
the SEC's Public Reference Room in Washington, D.C. Call the SEC at (800) SEC-
0330 for room hours
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<PAGE>
and operation. You may also request Fund information by writing to the SEC's
Public Reference Section, Washington, D.C. 20549. The Investment Company File
Number for this Fund is 811-______.
RANSON
Ranson & Associates, Inc.
250 North Rock Road,
Suite 150
Wichita, Kansas 67206-2241
(888)___________
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Statement of Additional Information
December __, 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 writing a written
request to the Fund, c/o Ranson & Associates, Inc., 250 North Rock Road, Suite
150, Wichita, Kansas 67206-2241 or by calling (888)_________. 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 __, 1999.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
General Information 2
Investment Policies and Restrictions 2
Investment Policies and Techniques 3
Management 5
Portfolio Transactions 8
Net Asset Value 9
Tax Matters 9
Performance Information 13
Additional Information on the Purchase and Redemption
of Fund Shares and Shareholder Programs 16
Distribution and Service Plan 25
Independent Public Accountants and Custodian 26
Financial Statements 27
General Trust Information 27
</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 business 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 securities of other investment companies, except to the extent
permitted under the 1940 Act.
(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 the Fund from
purchasing or selling securities or other instruments backed by real estate
or of issuers engaged in real estate activities).
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(7) Issue senior securities, except as permitted under the Investment Company
Act of 1940.
(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 more than 25% of its assets in the securities of issuers in any
single industry (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.
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 the largest and most active non-financial
domestic and international issues listed on The Nasdaq Stock Market. Annual
adjustments were first implemented in 1993 when Nasdaq 100 Index
3
<PAGE>
options began trading 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."
All securities in the index are among the top 150 eligible securities based
on closing prices as of October 30, 1998 and the available total shares
outstanding as of December 1, 1998. Nasdaq 100 issues ranked 101 through 150 in
market value will be replaced by larger eligible securities unless the security
was in the top 100 eligible securities during the previous year's ranking.
Eligibility criteria for the 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 listed for a
minimum of two years. 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 Nasdaq 100 Index is calculated based upon a
modified capitalization weighted methodology. To accomplish this, Nasdaq
reviews the composition of the Nasdaq 100 Index on a quarterly basis, and
adjusts the weightings of index components using a proprietary algorithm
whenever: (1) any individual component securities represent more than 24
percent of the total market value of the index; and/or (2) the combined weight
of all securities having individual weightings of at least 4.5 percent exceeds
48 percent of the total market value of the index. The index will be
subsequently readjusted only if the index weights exceed the 24 percent and/or
48 percent thresholds.
The precise post-diversification weightings of component securities in the
index was determined based upon closing prices on December 10, 1998. The
aggregate weight of the five largest stocks in the index, approximately 61
percent, was scaled down to 40 percent. Weightings of all index securities are
reset by reducing or enlarging such weights toward 1.0 percent, the average
weight. The value of the adjusted index will continue to be disseminated under
the current symbol NDX.
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.
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
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<PAGE>
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 business 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 and Trustee Chairman of the Board
Andover, KS 67002 (since 1996)
Ranson Capital Corporation
Executive Vice President
(1989-1996)
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
Vice President, Chief Financial
Officer, Chief Operation
Officer, Chief Compliance
Officer (1989-1996)
</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 ____________ and the total compensation that the Eagle
Funds paid to such trustees during the 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>
[INSERT TRUSTEES]
5
<PAGE>
<FN>
- --------------------
* Based on the estimated compensation to be paid to the independent trustees
for the one year period, ______________________ for services to the Fund.
** Based on the compensation paid to the independent trustees for the one year
period _________________ 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 $[ ]
annual retainer for serving as a director or trustee of all funds for which
Ranson serves as investment adviser or manager and a [$ ] fee
per day plus expenses for attendance at all meetings held on a day on which a
regularly scheduled Board meeting is held, a [$ ] fee per day
plus expenses for attendance in person or a [$ ] fee per day
plus expenses for attendance by telephone at a meeting held on a day on which no
regular Board meeting is held and a [$ ] fee per day plus
expenses for attendance in person or by telephone at a meeting held solely to
declare dividends. The Fund requires no employees other than its officers, all
of whom are compensated by Ranson.
As of ____________, Ranson owned all the shares of the Fund with _________
shares outstanding (Class A, Class C and Class Y).
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 all
existing unit investment trusts formerly sponsored by 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.
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.
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<PAGE>
Administrator
Ranson serves as administrator of the Fund. In such capacity, Ranson agrees
to provide or obtain at its expense for the Fund the following services
including but not limited to preparation of financial statements for annual and
semi-annual reports; facilitate audits; prepare board reports, agendas and
minutes; compute performance information; and prepare shareholder tax
notifications. For these services, each class pays the Administrator an annual
fee of .18%.
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 and
performance measurement research, provided by such brokers, and the quality and
reliability of brokerage services, including execution capability, performance,
and financial responsibility. 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
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 services.
Ranson places portfolio transactions for other advisory accounts managed by
them. Research services furnished by firms through which the Fund effects their
securities transactions may be used by Ranson in servicing all of its
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<PAGE>
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
bid prices.
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,
8
<PAGE>
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 under current law to 65% of the
amount of undistributed net capital gains included in the shareholder's gross
income. 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 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
9
<PAGE>
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. It should be noted that certain
legislative proposals have been made which could affect the calculation of basis
for shareholders holding securities that are substantially identical to the
Fund's securities. 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. The
legislation is generally effective retroactively for amounts properly taken into
account on or after January 1, 1998. 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
legislative proposals are introduced from time to time that affect tax rates and
could affect relative differences at which ordinary income and capital gains are
taxed.
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
10
<PAGE>
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.
Shareholders who are non-resident aliens are subject to U.S. withholding
taxes on ordinary income dividends at a rate of 30% or such lower rate as
prescribed by an applicable tax treaty.
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
11
<PAGE>
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 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.
12
<PAGE>
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
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
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<PAGE>
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 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
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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.
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
administration expenses, 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.
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INITIAL AND SUBSEQUENT PURCHASE OF SHARES
You may buy fund shares through your financial adviser or by calling Ranson
toll-free at 888-____-_____. 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 [T/A] 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 [T/A] at its address [______________]. 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 [T/A], 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 888-____-_____.
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.
Minimum Investment Requirements
The minimum initial investment is $2,500; $500 for a Traditional/Roth
Education IRA Accounts; 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 the [T/A] 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
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application form for the Automatic Investment Plan, check the applicable box on
the Application Form or call [T/A] toll-free at 888-____-_____.
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 [T/A] toll-free at 888-____-
_____.
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 [T/A] toll-free
at 888-____-_____ for more information.
EFT privileges may be requested via an application you obtain by calling 888-
____-_____. 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 T/A 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
[T/A] 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 [T/A] at 888-____-_____. 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 October 6, 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 $9.75
Per Share Sales Charge-2.50% of public offering price
(2.56% of net asset value per share) .25
Per Share Offering Price to the Public $10.00
Shares Outstanding (_______________) ___________
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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.
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
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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 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 [___________________]
toll-free at (888) ______________.
Reinvestment of Redemption Proceeds from Unaffiliated Funds
You may also purchase Class A Shares at net asset value without a sales
charge using the reinvestment of 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.
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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 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.
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 (888) __________.
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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 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 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 ____________________________________________. 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.
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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 T/A at 888-
____-_____. 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 [T/A] at 888-____-_____.
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.
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 [T/A]. 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 [T/A] toll-free at 888-____-_____.
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 [the T/A] 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
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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 T/A toll-free at 888-____-_____.
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.
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.
Redemption Commitment
The Fund has made an election with the Commission to pay in cash all
redemptions requested by any shareholder of record limited in amount during any
90-day period to the lesser of $250,000 or 1% of the net assets of a Portfolio
at the beginning of such period. Such commitment is irrevocable without the
prior approval of the Commission. Redemptions in excess of the above limits may
be paid in whole or in part, in investment securities or in cash, as the
Trustees may deem advisable; however, payment will be made wholly in cash unless
the Trustees believe that economic or market conditions exist which would make
such a practice detrimental to the best interests of the Trust. If redemptions
are paid in investment securities, such securities will be valued as set forth
in the Prospectus, and a redeeming shareholder would normally incur brokerage
expenses if he converted these securities to cash.
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
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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 or 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.
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
24
<PAGE>
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 Funds 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
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.
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
25
<PAGE>
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 owned by Alex R. Meitzner and
Robin K. Pinkerton. Alex Meitzner, Chairman of the Board of Ranson, is also
Chairman and a trustee of the Fund. Robin Pinkerton, President, Chief Financial
Officer, Chief Compliance Officer and Chief Operations Officer of Ranson is also
President, Secretary, Treasurer, comptroller 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, independent public accountants, One Kansas City Place, 1200
Main Street, Kansas City, MO, have been selected as auditors for the Fund. In
addition to audit services, Ernst & Young, 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, 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
________________________________________. The custodian performs custodial,
fund accounting and portfolio accounting services.
FINANCIAL STATEMENTS
To be filed by Pre-Effective Amendment.
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 ___________, 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, 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).
26
<PAGE>
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.
27
<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). Form of Management Agreement between Registrant and Ranson &
Associates, Inc. on behalf of the Nasdaq 100 Index Fund.*
(e)(1). Form of Distribution Agreement between Registrant and Ranson &
Associates, Inc. dated __________.*
(e)(2). Dealer Management Agreement dated ____________.*
(f). Not applicable.
(g). Form of Custodian Agreement between Registrant and
the _______________.*
(h)(1). Form of Transfer Agency Agreement between Registrant
and _____________.*
(i)(1). Opinion and consent of Chapman and Cutler, dated __________.*
(j). Consent of Independent Public Accountants.*
(k). Not applicable.
(l). Subscription Agreement with Ranson & Associates, Inc.*
(m)(1). Distribution and Service Plan Pursuant to Rule 12b-1 for the
Shares of the Fund.*
(n). Not applicable.
(o). Multi-Class Plan.*
(z)(1). Original Powers of Attorney for Messrs. ____________, Trustees
authorizing, among others, __________to execute the Registration
Statement.*
(z)(2). Code of Ethic and Reporting Requirements.*
<FN>
- --------------------
* To be filed by pre-effective amendment.
1 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 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.
28
<PAGE>
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.
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.
29
<PAGE>
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.
The trustees and officers of the Registrant are covered by Investment Trust
Errors and Omission policies in the aggregate amount of $[ ] (with
a maximum deductible of $[ ] against liability and expenses of claims
of wrongful acts arising out of their position with the Registrant, except for
matters which involved willful acts, bad faith, gross negligence and willful
disregard of duty (i.e., where the insured did not act in good faith for a
purpose he or she reasonably believed to be in the best interest of Registrant
or where he or she shall have had reasonable cause to believe this conduct was
unlawful).
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 ("Ranson") manages the Registrant. Ranson also serves
as the sponsor of approximately 650 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
30
<PAGE>
"Management" in the Statement of Additional Information. Such information for
the remaining senior officers of Ranson appears below:
OTHER BUSINESS, PROFESSION, VOCATION OR
NAME AND POSITION WITH RANSON EMPLOYMENT DURING PAST TWO YEARS
Douglas K. Rogers None
Executive Vice President
and Director
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.
(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. and Trustee
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,
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 ___________________ [insert address], 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 [Transfer
Agent].
31
<PAGE>
[Insert name and address of Transfer Agent], maintains all required records
in its capacity as transfer agent for Registrant.
ITEM 29:MANAGEMENT SERVICES
Not applicable.
ITEM 30:UNDERTAKINGS
(a) Not applicable.
32
<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 Wichita, and State of Kansas, on the 6th day of October, 1999.
EAGLE FUNDS
By
----------------------------------------
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
President, Secretary, Treasurer, October 6, 1999
- -------------------- Trustee (Controller, Principal
Robin K. Pinkerton Executive Officer)
33
<PAGE>
EXHIBIT INDEX
EXHIBIT SEQUENTIAL
NUMBER EXHIBIT NUMBERED PAGE
(a)(1) Declaration of Trust of Registrant.
(a)(2) Cetificate for the Establishement
and Designation of Classes for the
Nasdaq 100 Index Fund.
(b) By-Laws of Registrant.
34
EAGLE FUNDS
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made this 10th day of August, 1999, by
the Trustee whose signature is set forth below (together with all other persons
from time to time duly elected, qualified and serving as Trustees in accordance
with the provision of Article IV hereof, the "Trustees"), and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH
WHEREAS, the Trustees hereunder are desirous of forming a trust for the
purposes of carrying on the business of a management investment company; and
WHEREAS, in furtherance of such purposes, the Trustees are acquiring and
may hereafter acquire assets and properties, to hold and manage as trustees of a
Massachusetts business trust with transferable shares in accordance with the
provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets and properties, which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose of
the same upon the following terms and conditions for the pro rata benefit of the
holders from time to time of Shares in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.NAME, REGISTERED AGENT AND PRINCIPAL PLACE OF BUSINESS
This Trust shall be known as the "Eagle Funds" and the Trustees shall
conduct the business of the Trust under that name or any other name as they
may from time to time determine. The registered agent for the Trust in
Massachusetts shall be Lexis Document Services, Inc., 73 Tremont Street,
5th Floor, Boston, MA 02108, or such other person as the Trustees may from
time to time designate. The principal place of business of the Trust is
250 North Rock Road, Suite 150, Wichita, Kansas 67206-2241. The Trustees
may, without the approval of shareholders, change the registered agent and
the principal place of business of the Trust.
SECTION 2.DEFINITIONS
Whenever used herein, unless otherwise required by the context or
specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established by
this Agreement and Declaration of Trust, as amended from time to time,
pursuant to Massachusetts General Laws, Chapter 182.
(b) "Trustee" or "Trustees" refers to the signatory to this Agreement and
Declaration of Trust so long as such signatory shall continue in
office in accordance with the terms hereof, and all other individuals
who at the time in question have been duly elected or appointed and
qualified in accordance with Article IV and are then in office.
(c) "Shares" mean the shares of beneficial interest described in Article
III hereof and include fractions of shares as well as whole shares;
<PAGE>
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 (and any
successor statute) and the Rules and Regulations thereunder, all as
amended from time to time;
(f) The terms "Affiliated Person," "Assignment," "Commission," "Interested
Person," "Principal Underwriter" and "vote of a majority of the
outstanding voting securities" shall have the meanings given them in
the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration of
Trust as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from time to
time; and
(i) "Net Asset Value" shall have the meaning set forth in Section 6 of
Article VII hereof.
ARTICLE II
NATURE AND PURPOSE
The Trust is a voluntary association (commonly known as a business trust)
of the type referred to in Chapter 182 of the General Laws of the Commonwealth
of Massachusetts. The Trust is not intended to be, shall not be deemed to be,
and shall not be treated as, a general or a limited partnership, joint venture,
corporation or joint stock company, nor shall the Trustees or Shareholders or
any of them for any purpose be deemed to be, or be treated in any way whatsoever
as though they were, liable or responsible hereunder as partners or joint
venturers. The purpose of the Trust is to engage in, operate and carry on the
business of an open-end management investment company and to do any and all acts
or things as are necessary, convenient, appropriate, incidental or customary in
connection therewith.
ARTICLE III
SHARES
SECTION 1.DIVISION OF BENEFICIAL INTEREST
(a) Shares of Beneficial Interest. The beneficial interest in the Trust
shall be divided into such transferable Shares of beneficial interest,
of such series or classes, and of such designations and par values (if
any) and with such rights, preferences, privileges and restrictions as
shall be determined by the Trustees in their sole discretion, without
Shareholder approval, from time to time. Without limiting the
authority of the Trustees set forth in this Article to establish and
designate any further series or classes, the Trustees hereby establish
and designate a single series of shares to be known as the "The
Nasdaq 100 Index Fund Series" which shall initially consist of three
classes of transferable shares (without par value). The number of
Shares is unlimited and each Share shall be fully paid and
nonassessable. The Trustees shall have full power and authority, in
their sole discretion and without obtaining any prior authorization
or vote of the Shareholders of the Trust or of the Shareholders of
any series or class of Shares, to create and establish (and to change
in any manner) Shares or any series or classes thereof with such
preferences, voting powers, rights and privileges as the Trustees may
from time to time determine; to divide or combine the Shares or the
Shares of any series or classes thereof into a greater or lesser
number; to classify or reclassify any issued Shares into one or more
series or classes of Shares; to abolish any one or more series or
classes of Shares; and to take such other action with respect to the
Shares as the Trustees may deem desirable. Except as may be
specifically set forth in subsection (b) of Section 1 of this
Article III or in an instrument establishing and
2
<PAGE>
designating classes or series of Shares, the Shares shall have the
powers, preferences, rights, qualifications, limitations and
restrictions described below:
(i) In the event of the termination of the Trust, the holders of the
Shares shall be entitled to receive pro rata the net
distributable assets of the Trust.
(ii) Each holder of Shares shall be entitled to one vote for each
Share held on each matter submitted to a vote of Shareholders,
and the holders of outstanding Shares shall vote together as
a single class.
(iii) Dividends or other distributions to Shareholders, when, as and
if declared or made by the Trustees, shall be shared equally by
the holders of Shares on a share for share basis, such dividends
or other distributions or any portion thereof to be paid in cash
or to be reinvested in full and fractional Shares of the Trust
as the Trustees shall direct.
(iv) Any Shares purchased, redeemed or otherwise reacquired by the
Trust shall be cancelled automatically upon redemption or
repurchase and the number of issued and outstanding Shares
shall thereupon be reduced by such amount.
(v) Shares may be issued from time to time, without the vote of the
Shareholders (or, if the Trustees in their sole discretion deem
advisable with a vote of Shareholders), either for cash or for
such other consideration (which may be in any one or more
instances a certain specified consideration or certain
specified considerations) and on such terms as the Trustees,
from time to time, may deem advisable, and the Trust may in
such manner acquire other assets (including the acquisition of
assets subject to, and in connection with the assumption of
liabilities).
(vi) The Trust may issue Shares in fractional denominations to the
same extent as its whole Shares, and Shares in fractional
denominations shall be Shares having proportionately to the
respective fractions represented thereby all the rights of
whole Shares, including, without limitation, and the right to
vote, the right to receive dividends and distributions and the
right to participate upon termination of the Trust. The
Trustees may from time to time, without the vote of
Shareholders, divide or combine Shares into a greater or
lesser number without thereby changing their proportionate
beneficial interest in the Trust.
(b) Establishment of Series and Classes of Shares.
(i) Series. The Trustees, in their sole discretion, without
obtaining any prior authorization or vote of the Shareholders
of the Trust or of the Shareholders of any series or class of
Shares, from time to time may authorize the division of Shares
into two or more series, the number and relative rights,
privileges and preferences of which shall be established and
designated by the Trustees, in their discretion, upon and
subject to the following provisions:
(1) All Shares shall be identical except that there may be such
variations as shall be fixed and determined by the Trustees between
different series as to purchase price, right of redemption, and the
price, terms and manner of redemption, and special and relative rights
as to dividends and on liquidation.
(2) The number of authorized Shares and the number of Shares of
each series that may be issued shall be unlimited. The Trustees may
classify or reclassify any unissued Shares or any Shares previously
issued and reacquired of any series into one or more series that may
be established and designated from time to time. The Trustees may
hold as treasury shares (of the same or some other series), reissue
for such consideration and on such terms as they may determine, or
cancel any Shares of any series reacquired by the Trust at their
discretion from time to time.
3
<PAGE>
(3) The power of the Trustees to invest and reinvest the assets
of the Trust allocated or belonging to any particular series shall be
governed by Section 2, Article IV hereof unless otherwise provided in
the instrument of the Trustees establishing such series which is
hereinafter described.
(4) Each Share of a series shall represent a beneficial interest
in the net assets allocated or belonging to such series only, and such
interest shall not extend to the assets of the Trust generally.
Dividends and distributions on Shares of a particular series may be
paid with such frequency as the Trustees may determine, which may be
monthly or otherwise, pursuant to a standing vote or votes adopted
only once or with such frequency as the Trustees may determine, to the
Shareholders of that series only, from such of the income and capital
gains, accrued or realized, from the assets belonging to that series.
All dividends and distributions on Shares of a particular series shall
be distributed pro rata to the Shareholders of that series in
proportion to the number of Shares of that series held by such
Shareholders at the date and time of record established for the
payment of such dividends or distributions. Shares of any particular
series of the Trust may be redeemed solely out of the assets of the
Trust allocated or belongings to that series. Upon liquidation or
termination of a series of the Trust, Shareholders of such series
shall be entitled to receive a pro rata share of the net assets of
such series only.
(5) Notwithstanding any provision hereof to the contrary, on
any matter submitted to a vote of the Shareholders of the Trust, all
Shares then entitled to vote shall be voted by individual series,
except that (i) when required by the 1940 Act to be voted in the
aggregate, Shares shall not be voted by individual series, (ii) when
the Trustees have determined that the matter affects only the
interests of Shareholders of one or more series, only Shareholders
of such series shall be entitled to vote thereon, and (iii) all
series shall vote together on the election of Trustees.
(6) The establishment and designation of any series of Shares (in
addition to the initial series noted in Subsection (a) of Section 1 of
this Article) shall be effective upon the execution by a majority of
the Trustees of an instrument setting forth such establishment and
designation and the relative rights and preferences of such series or
as otherwise provided in such instrument.
(ii) Classes. Notwithstanding anything in this Declaration of
Trust to the contrary, the Trustees may, in their discretion,
without obtaining any prior authorization or vote of the
Shareholders of the Trust or of the Shareholders of any series
or class of Shares, from time to time authorize the division
of Shares of the Trust or any series thereof into Shares of
one or more classes upon the execution by a majority of the
Trustees of an instrument setting forth such establishment
and designation and the relative rights and preferences of
such class or classes. All Shares of a class shall be
identical with each other and with the Shares of each other
class of the same series except for such variations between
classes as may be approved by the Board of Trustees and set
forth in such instrument of establishment and designation and
be permitted under the 1940 Act or pursuant to any exemptive
order issued by the Commission.
SECTION 2.OWNERSHIP OF SHARES
The ownership and transfer of Shares shall be recorded on the books of the
Trust or its transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent of the Trust, as the case may be, shall be conclusive
as to who are the Shareholders of each series and class and as to the number of
Shares of each series and class held from time to time by each Shareholder.
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SECTION 3.INVESTMENTS IN THE TRUST; ASSETS OF A SERIES
The Trustees may issue Shares of the Trust to such persons and on such
terms and, subject to any requirements of law, for such consideration, which may
consist of cash or tangible or intangible property or a combination thereof, as
they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
a particular series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to such series of
Shares for all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust and are, together with any
General Items (as hereinafter defined) allocated to that series as provided in
the following sentence. In the event that there are any assets, income,
earnings, profits or proceeds thereof, funds or payments which are not readily
identifiable as belonging to any particular series (collectively "General
Items"), the Trustees shall allocate such General Items to and among any one or
more of the series created from time to time in such manner and on such basis as
they, in their sole discretion, deem fair and equitable; and any General Items
allocated to a particular series shall belong to that series. Each such
allocation by the Trustees shall be conclusive and binding upon the Shareholders
of all series for all purposes.
SECTION 4.RIGHT TO REFUSE ORDERS
The Trust by action of its Trustees shall have the right to refuse to
accept any subscription for its Shares at any time without any cause or reason
therefore whatsoever. Without limiting the foregoing, the Trust shall have the
right not to accept subscriptions under circumstances or in amounts as the
Trustees in their sole discretion consider to be disadvantageous to existing
Shareholders and the Trust may from time to time set minimum and/or maximum
amounts which may be invested in Shares by a subscriber.
SECTION 5.ORDER IN PROPER FORM
The criteria for determining what constitutes an order in proper form and
the time of receipt of such an order by the Trust shall be prescribed by
resolution of the Trustees.
SECTION 6.WHEN SHARES BECOME OUTSTANDING
Shares subscribed for and for which an order in proper form has been
received shall be deemed to be outstanding as of the time of acceptance of the
order therefore and the determination of the net price thereof, which price
shall be then deemed to be an asset of the Trust.
SECTION 7.MERGER OR CONSOLIDATION
In connection with the acquisition of all or substantially all the assets
or stock of another investment company, investment trust, or of a company
classified as a personal holding company under Federal Income Tax laws, the
Trustees may issue or cause to be issued Shares of a series and accept in
payment therefor, in lieu of cash, such assets at their market value, or such
stock at the market value of the assets held by such investment company or
investment trust, either with or without adjustment for contingent costs or
liabilities.
SECTION 8.NO PREEMPTIVE RIGHTS, ETC.
Shareholders shall have no preemptive or other right to acquire, purchase
or subscribe for any additional Shares or other securities issued by the Trust
other than such right, if any, as the Trustees in their discretion may
determine.
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The Shareholders shall have no appraisal rights with respect to their Shares
and, except as otherwise determined by the Trustees in their sole discretion,
shall have no exchange or conversion rights with respect to their Shares.
SECTION 9.STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the terms of
the Declaration of Trust and to have become a party thereto. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the same nor entitle the representative of any deceased Shareholder to an
accounting or to take any action in court or elsewhere against the Trust or the
Trustees, but only to the rights of said decedent under this Trust. Ownership
of Shares shall not entitle the Shareholder to any title in or to the whole or
any part of the Trust property or right to call for a partition or division of
the same or for an accounting, nor shall the ownership of Shares constitute the
Shareholders partners. Neither the Trust nor the Trustees, nor any officer,
employee or agent of the Trust shall have any power to bind personally any
Shareholder, nor to call upon any Shareholder for the payment of any sum of
money or assessment whatsoever other than such as the Shareholder may at any
time personally agree to pay.
SECTION 10.SHAREHOLDER INSPECTION RIGHTS
Any Shareholder or his agent may inspect and copy during normal business
hours any of the following documents of the Trustee: the Declaration of Trust,
By-Laws, minutes of the proceedings of the Shareholders and annual financial
statements of the Trust, including a balance sheet and financial statements of
operations. The foregoing rights of inspection of Shareholders of the Trust are
the exclusive and sole rights of the Shareholders with respect thereto and no
shareholder of the Trust shall have, as a Shareholder, the right to inspect or
copy any of the books, records or other documents of the Trust except as
specifically provided in this Section 10 of this Article III or except as
otherwise determined by the Trustees.
ARTICLE IV
THE TRUSTEES
SECTION 1.NUMBER, DESIGNATION, ELECTION, TERM, ETC.
(a) Initial Trustee. Upon her execution of this Declaration of Trust or a
counterpart hereof or some other writing in which she accepts such
Trusteeship and agrees to the provisions hereof, Robin K. Pinkerton shall
become a Trustee hereof.
(b) Qualification and Number. Each Trustee shall be a natural person. A
Trustee need not be a Shareholder, a citizen of the United States, or a
resident of the Commonwealth of Massachusetts. The Trustees serving as
such, whether named above or hereafter becoming Trustees, may by vote or
consent of a majority of Trustees then in office increase or decrease the
number of Trustees to a number other than the number heretofore determined
which number shall not be less than three nor more than fifteen except
during the period that the initial Trustee named above is sole Trustee.
No decrease in the number of Trustees shall have the effect of removing
any Trustee from office prior to the expiration of his term, but the
number of Trustees may be decreased in conjunction with the removal of a
Trustee pursuant to subsection (d) of this Section 1.
(c) Term. Each Trustee, whether named above or hereafter becoming a Trustee,
shall serve as a Trustee until the next meeting of Shareholders, if any,
called for the purpose of considering the election or re-election of such
Trustee or of a successor to such Trustee, and until his successor is
elected and qualified, if any, elected at such meeting, or until such
Trustee sooner dies, resigns, retires or is removed. Any Trustee who is
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appointed by the Trustees in the interim to fill a vacancy as provided
hereunder shall have the same remaining term as that of his predecessor,
if any, or such term as the Trustees may determine. Prior to any sale of
Shares pursuant to any public offering, the initial Trustee named above
shall have the right to appoint other persons as Trustees each to serve
with such initial Trustee as aforesaid until the first meeting of
Shareholders called for the purpose of the election or re-election of such
Trustee or of a successor to such Trustee.
(d) Resignation and Removal. Any Trustee may resign his trust or retire as a
Trustee (without need for prior or subsequent accounting except in the
event of removal) by an instrument in writing signed by him and delivered
or mailed to the Chairman, if any, the President or the Secretary, and
such resignation or retirement shall be effective upon such delivery, or
at a later date according to the terms of the instrument. Any Trustee
who has become incapacitated by illness or injury as determined by a
majority of the other Trustees, may be retired by written instrument
signed by a majority of the other Trustees. Except as aforesaid, any
Trustee may be removed from office only for "Cause" (as hereinafter
defined) and only (i) by action of at least sixty-six and two-thirds
percent (66-2/3%) of the outstanding Shares, or (ii) by written
instrument, signed by at least sixty- six and two-thirds percent
(66-2/3%) of the remaining Trustees, specifying the date when such
removal shall become effective. "Cause" shall require willful
misconduct, dishonesty, fraud or a felony conviction.
(e) Vacancies. Any vacancy or anticipated vacancy resulting from any reason,
including without limitation the death, resignation, retirement, removal
or incapacity of any of the Trustees, or resulting from an increase in
the number of Trustees by the other Trustees may (but so long as there
are at least three remaining Trustees as required by Section 1(b) of
this Article, need not unless required by the 1940 Act) be filled either
by a majority of the remaining Trustees through the appointment in
writing of such other person as such remaining Trustees in their
discretion shall determine or, whenever deemed appropriate by the
remaining Trustees, by the election by the Shareholders, at a meeting
called for such purpose, of a person to fill such vacancy, and such
appointment or election shall be effective upon the written acceptance
of the person named therein to serve as a Trustee and agreement by such
person to be bound by the provisions of this Declaration of Trust,
except that any such appointment or election in anticipation of a
vacancy to occur by reason of retirement, resignation, or increase in
number of Trustees to be effective at a later date shall become
effective only at or after the effective date of said retirement,
resignation, or increase in number of Trustees. As soon as any Trustee
so appointed or elected shall have accepted such appointment or election
and shall have agreed in writing to be bound by this Declaration of
Trust and the appointment or election is effective, the Trust estate
shall vest in the new Trustee, together with the continuing Trustees,
without any further act or conveyance.
Whenever a vacancy in the number of Trustees shall occur, until such
vacancy is filled as provided herein, or the number of Trustees as fixed
is reduced, the Trustees in office, regardless of their number, shall
have all the powers granted to the Trustees, and during the period
during which any such vacancy shall occur, only the Trustees then in
office shall be counted for the purposes of the existence of a quorum
or any action to be taken by such Trustees.
(f) Mandatory Election by Shareholders. Notwithstanding the foregoing
provisions of this Section 1, the Trustees shall call a meeting of the
Shareholders for the election of one or more Trustees at such time or
times as may be required in order that the provisions of the 1940 Act
may be complied with, and the authority hereinabove provided for the
Trustees to appoint any successor Trustee or Trustees shall be
restricted if such appointment would result in failure of the Trust to
comply with any provision of the 1940 Act.
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(g) Effect of Death, Resignation, Etc. The death, resignation, retirement,
removal or incapacity of the Trustees, or any one of them, shall not
operate to annul or terminate the Trust or to revoke or terminate any
existing agency or contract created or entered into pursuant to the
terms of this Declaration of Trust.
(h) No Accounting. Except under circumstances which would justify his
removal for cause, no person ceasing to be a Trustee as a result of his
death, resignation, retirement, removal or incapacity (nor the estate
of any such person) shall be required to make an accounting to the
Shareholders or remaining Trustees upon such cessation.
(i) Voting Requirements. In addition to the voting requirements imposed by
law or by any other provision of this Declaration of Trust, the
provisions set forth in this Article IV may not be amended, altered or
repealed in any respect, nor may any provision inconsistent with this
Article IV be adopted, without the affirmative vote of the holders of at
least sixty-six and two-thirds percent (66-2/3%) of the outstanding
Shares. In the event the holders of the outstanding shares of any
series or class are required by law or any other provision of this
Declaration of Trust to approve such an action by a class vote of such
holders, such action must be approved by the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the outstanding Shares of
such series or class or such lower percentage as may be required by law.
SECTION 2.POWERS
The Trustees, subject only to the specific limitations contained in this
Declaration of Trust or otherwise imposed by the 1940 Act or other applicable
law, shall have, without further or other authorization and free from any power
or control of the Shareholders, full, absolute and exclusive power, control and
authority over the Trust assets and the business and affairs of the Trust to the
same extent as if the Trustees were the sole and absolute owners thereof in
their own right and to do all such acts and things as in their sole judgment and
discretion are necessary and incidental to, or desirable for the carrying out of
any of the purposes of the Trust or conducting the business of the Trust. Any
determination made in good faith by the Trustees of the purposes of the Trust or
the existence of any power or authority hereunder shall be conclusive. The
enumeration of any power herein shall not be construed as limiting the aforesaid
powers. In construing the provisions of this Declaration of Trust, there shall
be a presumption in favor of the grant of power and authority to the Trustees.
Without limiting the foregoing, the Trustees may adopt By-Laws not inconsistent
with this Declaration of Trust containing provisions relating to the business of
the Trust, the conduct of its affairs, its rights or powers and the rights or
powers of its Shareholders, Trustees, officers, employees and other agents and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; fill vacancies in their number, including vacancies
resulting from increases in their number, unless a vote of the Trust's
Shareholders is required to fill such vacancies pursuant to the 1940 Act; elect
and remove such officers and appoint and terminate such agents as they consider
appropriate; appoint from their own number, and terminate, any one or more
committees consisting of two or more Trustees, including an executive committee
which may, when the Trustees are not in session, exercise some or all of the
powers and authority of the Trustees as the Trustees may determine; appoint an
advisory board, the members of which shall not be Trustees and need not be
Shareholders; employ one or more investment advisers or managers as provided in
Section 5 of this Article IV; employ one or more custodians of the assets of the
Trust and authorize such custodians to employ subcustodians and to deposit all
or any part of such assets in a system or systems for the central handling of
securities; retain a transfer agent or a Shareholder services agent, or both;
provide for the distribution of Shares by the Trust, through one or more
principal underwriters or otherwise; set record dates for any purpose; and in
general delegate such authority as they consider desirable to any officer of the
Trust, to any committee of the Trustees and to any employee of the Trust or to
any such investment adviser, investment subadviser, transfer agent, custodian,
underwriter or other independent contractor or agent of the Trust.
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In furtherance of and not in limitation of the foregoing, the Trustees
shall have power and authority:
(a) To invest and reinvest in, to buy or otherwise acquire, to hold, for
investment or otherwise, to sell or otherwise dispose of, to lend or to
pledge, to trade in or deal in securities or interests of all kinds,
however evidenced, or obligations of all kinds, however evidenced, or
rights, warrants, or contracts to acquire such securities, interests, or
obligations, of any private or public company, corporation, association,
general or limited partnership, trust or other enterprise or organization,
foreign or domestic, or issued or guaranteed by any national or state
government, foreign or domestic, or their agencies, instrumentalities or
subdivisions (including but not limited to, bonds, debentures, bills, time
notes and all other evidences of indebtedness); negotiable or non-
negotiable instruments; any and all options and futures contracts,
derivatives or structured securities; government securities and money
market instruments (including but not limited to, bank certificates of
deposit, finance paper, commercial paper, bankers acceptances, and all
kinds of repurchase agreements) and, without limitation, all other kinds
and types of financial instruments;
(b) To invest and reinvest in, to buy or otherwise acquire, to hold for
investment or otherwise, to sell or otherwise dispose of foreign
currencies and funds, and to make deposits in banks, savings banks,
trust companies, and savings and loan associations, foreign or domestic;
(c) To acquire (by purchase, lease or otherwise) and to hold, use, maintain,
develop, and dispose of (by sale or otherwise) any property, real or
personal, and any interest therein;
(d) To sell, exchange, lend, pledge, mortgage, hypothecate, write options on
and lease any or all of the assets of the Trust;
(e) To vote or give assent, or exercise any rights of ownership, with respect
to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and
discretion with relation to securities or property as the Trustees shall
deem proper;
(f) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(g) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or otherwise;
(h) To allocate assets, liabilities and expenses of the Trust to a particular
series or class of Shares or to apportion the same among two or more
series or classes, provided that any liabilities or expenses incurred by a
particular series or class shall be payable solely out of the assets of
that series or class;
(i) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or
property of which is or was held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any security
held in the Trust;
(j) To join with other security holders in acting through a committee,
depository, voting trustee or otherwise, and in that connection to deposit
any security with, or transfer any security to, any such committee,
depository or trustee, and to delegate to them such power and authority
with relation to any security (whether or not so deposited or transferred)
as the Trustees shall deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such committee, depository or
trustee as the Trustees shall deem proper;
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(k) To compromise, arbitrate or otherwise adjust claims in favor of or against
the Trust or any matter in controversy, including but not limited to
claims for taxes;
(1) To enter into joint ventures, general or limited partnerships and any
other combinations or associations;
(m) To borrow funds;
(n) To endorse or guarantee the payment of any notes or other obligations of
any person; to make contracts of guaranty or suretyship, or otherwise
assume liability for payment thereof; and to mortgage and pledge the Trust
property or any part thereof to secure any of or all such obligations;
(o) To purchase and pay for entirely out of Trust property such insurance as
they may deem necessary or appropriate for the conduct of the business,
including, without limitation, insurance policies insuring the assets of
the Trust and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually against
all claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such person as
Shareholder, Trustee, officer, employee, agent, investment adviser or
manager, principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute negligence,
whether or not the Trust would have the power to indemnify such person
against such liability;
(p) To pay pensions for faithful service, as deemed appropriate by the
Trustees, and to adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement,
incentive and benefit plans, trusts and provisions, including the
purchasing of life insurance and annuity contracts as a means of providing
such retirement and other benefits, for any or all of the Trustees,
officers, employees and agents of the Trust;
(q) Subject to Article X, Section 1 hereof, to merge, or consolidate the Trust
with any other corporation, association, trust or other organization; or
to sell, convey, transfer, or lease all or substantially all of the
assets of the Trust;
(r) To issue, sell, repurchase, retire, cancel, acquire, hold, resell,
reissue, dispose of, transfer and otherwise deal in Shares and in any
options, warrants or other rights to purchase Shares or any other
interests in the Trust other than Shares;
(s) To set apart, from time to time, out of any funds of the Trust a reserve
or reserves for any proper purpose, and to abolish any such reserve;
(t) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any
Shareholders whose investment is less than such minimum upon such terms as
shall be established by the Trustees; and
(u) To make distributions to Shareholders.
Except as otherwise provided herein, in the By-Laws or the 1940 Act, any
action to be taken by the Trustees may be taken by a majority of the Trustees
present at a meeting of Trustees (if a quorum be present), within or without
Massachusetts, including any meeting held by means of a conference telephone or
other communications equipment by means of which all persons participating in
the meeting can communicate with each other simultaneously and participation by
such means shall constitute presence in person at a meeting, or by written
consents of a majority of the Trustees then in office.
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SECTION 3.PAYMENT OF EXPENSES, ALLOCATION OF LIABILITIES
The Trustees are authorized to pay or to cause to be paid out of the
principal or income of the Trust, or partly out of principal and partly out of
income, as they deem fair, all expenses, fees, charges, taxes and liabilities
incurred or arising in connection with the Trust, or in connection with the
management thereof, including, but not limited to, the Trustees' compensation
(including reimbursements to themselves for expenses and disbursements) and such
expenses and charges for the services of the Trust's officers, employees,
investment adviser or manager, principal underwriter, auditor, counsel,
custodian, transfer agent, shareholder servicing agent, and such other agents or
independent contractors and such other expenses and charges as the Trustees may
deem necessary or proper to incur.
The assets of a particular series of Shares shall be charged with the
liabilities incurred in respect of such series and with all expenses, costs,
charges, and reserves attributable to that series (including, in the discretion
of the Trustees, or their delegate, accrued expenses and reserves) and shall be
so recorded upon the books of the Trust. Liabilities, expenses, costs, charges
and reserves charged to a particular series, together with any General Items (as
hereinafter defined) allocated to that series as provided in the following
sentence, are herein referred to as "liabilities of" that series. In the event
there are any general liabilities, expenses, costs, charges or reserves of the
Trust which are not readily identifiable as belonging to any particular series
(collectively "General Items"), the Trustees shall allocate and charge such
General Items to and among any one or more of the series created from time to
time in such manner and on such basis as the Trustees in their sole discretion
deem fair and equitable; and any General Items so allocated and charges to a
particular series shall belong to that series. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all series for
all purposes. The Trustees may delegate from time to time the power to make
such allocation to one or more Trustees or to an agent of the Trust appointed
for such purpose.
SECTION 4.OWNERSHIP OF ASSETS OF THE TRUST
The assets of each Series of the Trust and of the Trust shall be held
separate and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or any successor Trustees. All of the
assets of each Series of the Trust and of the Trust shall at all times be
considered as automatically vested in the Trustees as shall be from time to time
in office. Upon the resignation, retirement, removal, incapacity or death of a
Trustee, such Trustee shall automatically cease to have any right, title or
interest in any of the Trust property, and the right, title and interest of such
Trustee in the Trust property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective without the
execution or delivery of any conveyancing or other instruments. No Shareholder
shall be deemed to have a severable ownership in any individual asset of the
Trust or any Series thereof or any right of partition or possession thereof.
SECTION 5.ADVISORY, MANAGEMENT AND DISTRIBUTION
Subject to approval by the vote of a majority of the outstanding voting
securities of a series of the Trust to the extent required by the 1940 Act, the
Trustees may on behalf of such series, at any time and from time to time,
contract for exclusive or nonexclusive advisory and/or management services with
a corporation, trust, association or other organization, every such contract to
comply with such requirements and restrictions as may be set forth in the By-
Laws; and any such contract may contain such other terms interpretive of or in
addition to said requirements and restrictions as the Trustees may determine,
including, without limitation, authority to determine from time to time what
investments shall be purchased, held, sold or exchanged and what portion, if
any, of the assets of such series shall be held uninvested and to make changes
in such series' investments. The Trustees may also, at any time and from time
to time, contract with a corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or principal underwriter for
the Shares, every such contract to comply with such requirements and
restrictions as may be set forth in the By-Laws; and any such contract may
contain such other terms interpretive of or in addition to said requirements and
restrictions as the Trustees may determine. The Trustees may also in their
discretion from time to time enter into transfer agency and/or shareholder
service contracts, in each case,
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with such terms and conditions, and providing for such compensation, as the
Trustees may in their discretion deem advisable.
The fact that:
(a) any of the Shareholders, Trustees, or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
advisor, principal underwriter, or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for any
parent or affiliate of any organization, with which an advisory or
management or principal underwriter's or distributor's contract, or
transfer, Shareholder services or other agency contract or contract of the
character described in Article VI (a "custodial contract") may have been
or may hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the Trust, or
that
(b) any corporation, trust, association or other organization with which an
advisory or management or principal underwriter's or distributor's
contract, custodial contract or transfer, Shareholder services or other
agency contract may have been or may hereafter be made also has an
advisory or management contract, or principal underwriter's or
distributor's contract, custodial contract or transfer, Shareholder
services or other agency contract with one or more other corporations,
trusts, associations, or other organizations, or has other businesses or
interests shall not affect the validity of any such contract or
disqualify any Shareholder, Trustee or officer of the Trust from voting
upon or executing the same or create any liability or accountability to
the Trust or its Shareholders.
In addition to the foregoing, the same person (including a firm, corporation,
partnership, trust or association) may be the other party to contracts entered
into pursuant to this section or Article VI and any individual may be
financially interested or otherwise affiliated with persons who are parties to
any or all of the contracts mentioned in this section and Article VI.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
SECTION 1.VOTING POWERS
The Shareholders shall have power to vote only: (a) for the election or
removal of Trustees as provided in Article IV, Section 1; (b) with respect to
any investment advisor or manager as provided in Article IV, Section 5 to the
extent required by the 1940 Act; (c) with respect to any termination or
reorganization of the Trust or any series thereof to the extent and as provided
in Article X, Section 1; (d) with respect to any amendment of this Declaration
of Trust to the extent and as provided in Article X, Section 4 or Article IV,
Section 1(i); (e) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders; and (f) with respect to such
additional matters relating to the Trust as may be required by law, the 1940
Act, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Securities and Exchange Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable. Nothing
contained herein shall be construed as requiring approval of Shareholders for
any transaction, whether deemed a reorganization, merger, consolidation or
otherwise whereby the Trust issues shares in connection with the acquisition of
assets (including those subject to liabilities) from any other investment
company or similar entity.
Each whole share shall be entitled to one vote as to any matter on which it
is entitled to vote and each fractional share shall be entitled to a
proportionate fractional vote except that Shares held in the treasury (if any)
of the Trust shall not be voted. Notwithstanding any other provision of the
Declaration of Trust, on any matter submitted to a vote
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of Shareholders all Shares of the Trust then entitled to vote shall be voted by
individual series and not in the aggregate, except as provided in Sections
1(b)(i)(5) and 1(b)(ii) of Article III. There shall be no cumulative voting in
the election of Trustees or on any matter submitted to a vote by Shareholders.
Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons shall
be valid if executed by any one of them unless at or prior to the exercise of
the proxy the Trust receives a specific written notice to the contract from any
one of them. A proxy purporting to be executed by or on behalf of a Shareholder
shall be deemed valid unless challenged at or prior to its exercise and the
burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the By-
Laws to be taken by Shareholders.
SECTION 2.SHAREHOLDER MEETINGS
Meetings of Shareholders (including meetings involving only one or more but
less than all series) may be called and held from time to time for the purpose
of taking action upon any matter requiring the vote or authority of the
Shareholders as herein provided or upon any other matter deemed by the Trustees
to be necessary or desirable. Such meetings shall be held at the principal
office of the Trust as set forth in the By-Laws of the Trust, or at any such
other place within the United States as may be designated in the call thereof,
which call shall be made by the Trustees or the Chairman of the Trust. Meetings
of Shareholders may be called by the Trustees or such other person or persons as
may be specified in the By-Laws and shall be called by the Trustees or such
other person or persons as may be specified in the By-Laws upon written
application by Shareholders holding at least 25% (or ten percent (10%) if the
purpose of the meeting is to determine if a Trustee is to be removed from
office) of the Shares then outstanding requesting a meeting be called for a
purpose requiring action by the Shareholders as provided herein or in the By-
Laws which purpose shall be specified in any such written application.
Shareholders shall be entitled to at least ten days' written notice of any
meeting of the Shareholders, except where the meeting is an adjourned meeting
and the date, time and place were announced at the time of adjournment.
SECTION 3.QUORUM AND REQUIRED VOTE
The presence at a meeting of Shareholders in person or by proxy of
Shareholders entitled to vote at least thirty percent (30%) of all votes
entitled to be cast at the meeting of each series entitled to vote as a series
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that the holders of Shares shall vote in the aggregate and not as a
series, then the presence in person or by proxy of Shareholders entitled to vote
at least thirty percent (30%) of all votes entitled to be cast at the meeting
(without regard to series) shall constitute a quorum. If a quorum is present
when a duly called or held meeting is convened, the Shareholders present may
continue to transact business until adjournment, even though the withdrawal of a
number of Shareholders originally present leaves less than the proportion or
number otherwise required for a quorum.
Except when a larger vote is required by any provisions of the 1940 Act, this
Declaration of Trust or the By-Laws, a majority of the Shares of each series
voted on any matter shall decide such matter insofar as that series is
concerned, provided that where any provision of law or of this Declaration of
Trust permits or requires that the holders of Shares vote in the aggregate and
not as a series, then a majority of the Shares voted on the matter (without
regard to series) shall decide such matter and a plurality shall elect a
Trustee.
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SECTION 4.ACTION BY WRITTEN CONSENT
Any action taken by Shareholders may be taken without a meeting if
Shareholders entitled to vote more than fifty percent (50%) of the votes
entitled to be cast on the matter of each series or, where any provision of law
or of this Declaration of Trust permits or requires that the holders of Shares
vote in the aggregate and not as a series, if Shareholders entitled to vote more
than fifty percent (50%) of the votes entitled to be cast thereon (without
regard to series) (or in either case such larger vote as shall be required by
any provision of this Declaration of Trust or the By-Laws) consent to the action
in writing and such written consents are filed with the records of the meetings
of Shareholders. Such consent shall be treated for all purposes as a vote taken
at a meeting of Shareholders.
SECTION 5.ADDITIONAL PROVISIONS
The By-Laws may include further provisions for Shareholders' votes and
meetings and related matters not inconsistent with the provisions hereof.
ARTICLE VI
CUSTODIAN
All securities and cash of the Trust shall be held by one or more custodians
and subcustodians, each meeting the requirements for a custodian contained in
the 1940 Act, or shall otherwise be held in accordance with the 1940 Act.
ARTICLE VII
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
SECTION 1.DISTRIBUTIONS
The Trustees may in their sole discretion from time to time declare and pay
or may prescribe and set forth in a duly adopted vote or votes of the Trustees,
the bases and time for the declaration and payment to the Shareholders of any
series such dividends and distributions, as the Trustees may determine, after
providing for actual and accrued expenses and liabilities of such series
(including such reserves as the Trustees may establish) determined in accordance
with good accounting practices. The Trustees shall have full discretion to
determine which items shall be treated as income and which items as capital and
their determination shall be binding upon the Shareholders. Distributions of
any series, if any be made, shall be in Shares of such series or a class
thereof, in cash or otherwise and on a date or dates determined by the Trustees.
At any time and from time to time in their discretion, the Trustees may
distribute to the Shareholders of any series as of a record date or dates
determined by the Trustees, in Shares of such series thereof, in cash or
otherwise, all or part of any gains realized on the sale or disposition of
property of the series or otherwise, or all or part of any other principal of
the Trust attributable to the series thereof. Any distribution paid in Shares
will be paid at the net asset value thereof as determined in accordance with
this Declaration of Trust. The Trustees have the power, in their discretion, to
distribute for any year amounts sufficient to enable the Trust as a "regulated
investment company" under the Internal Revenue Code of 1954 as amended (or any
successor thereto) to avoid any liability for federal income tax in respect of
that year.
SECTION 2.REDEMPTIONS AND REPURCHASES
Any holder of Shares of the Trust may upon presentation of a request in
proper form, together with his certificates, if any, for such Shares, in proper
form for transfer to the Trust or duly authorized agent of the Trust, request
redemption of his shares for the net asset value thereof determined and computed
in accordance with the
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provisions of this Section 2 and the provisions of Section 6 of this Article VII
(less any applicable sales charge and redemption fee).
Upon receipt by the Trust or its duly authorized agent, as the case may be,
of such a request for redemption of Shares in proper form, such Shares shall be
redeemed at the net asset value per share of the particular series or class
thereof (less any applicable sales charge or redemption fee) next determined
after such request is received or determined as of such other time fixed by the
Trustees as may be permitted or required by the 1940 Act. The criteria for
determining what constitutes a proper request for redemption and the time of
receipt of such request shall be fixed by the Trustees.
The obligation of the Trust to redeem its Shares of each series or class
thereof as set forth above in this Section 2 shall be subject to the condition
that such obligation may be suspended by the Trust by or under authority of the
Trustees during any period or periods when and to the extent permissible under
the 1940 Act. If there is such a suspension, any Shareholder may withdraw any
request for redemption which has been received by the Trust during any such
period and the applicable net asset value with respect to which would but for
such suspension be calculated as of a time during such period. Upon such
withdrawal, the Trust shall return to the Shareholder the certificates therefor,
if any.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustees may from time to time authorize at a price not exceeding the net
asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or the purchase is made. Shares of any series redeemed or
repurchased by the Trust hereunder shall be cancelled upon such redemption or
repurchase without further action by the Trust or the Trustees and the number of
issued and outstanding Shares of such series shall thereupon be reduced by such
amount, unless the Trustees determine to hold such required Shares in the
treasury of the Trust or otherwise.
SECTION 3.PAYMENT FOR SHARES REDEEMED
Payment of the redemption price for Shares of the Trust or any series or
class thereof redeemed pursuant to this Article VII shall be made by the Trust
or its duly authorized agent after receipt by the Trust or its duly authorized
agent of a request for redemption in proper form (together with any certificates
for such Shares as provided in Section 2 above) in accordance with procedures
and subject to conditions prescribed by the Trustees; provided, however, that
payment may be postponed during the period in which the redemption of Shares is
suspended under Section 2 above. Subject to any generally applicable limitation
imposed by the Trustees, any payment on redemption, purchase or repurchase by
the Trust of Shares may, if authorized by the Trustees, be made wholly or partly
in kind. Such payment in kind shall be made by distributing securities or other
property, constituting, in the opinion of the Trustees, a fair representation of
the various types of securities and other property then held by the series of
Shares being redeemed, purchased or repurchased (but not necessarily involving a
portion of each of the series' holdings) and taken at their value used in
determining the net asset value of the Shares in respect of which payment is
made.
SECTION 4.REDEMPTIONS AT THE OPTION OF THE TRUST
The Trustees, in their sole discretion, may cause the Trust to redeem Shares
of the Trust or one or more series thereof held by any Shareholder at the net
asset value thereof as determined in accordance with Section 6 of this Article
VII, if at such time such Shareholder owns fewer Shares of a series than, or
Shares of a series having an aggregate net asset value of less than, the minimum
amount determined from time to time by the Trustees. Any such redemption at the
option of the Trust shall be made in accordance with such other criteria and
procedures for determining the Shares to be redeemed, the redemption date and
the means of effecting such redemption as the Trustees may from time to time
authorize.
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SECTION 5.ADDITIONAL PROVISIONS RELATING TO REDEMPTIONS AND REPURCHASES
The completion of redemption, purchase or repurchase of Shares shall
constitute a full discharge of the Trust or series thereof and the Trustees with
respect to such Shares. No dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust or of any
series) with respect to, nor any redemption or repurchase of, the Shares of any
series shall be effected by the Trust other than from the assets of such series.
SECTION 6.DETERMINATION OF NET ASSET VALUE
The Trustees may in their sole discretion from time to time prescribe and
shall set forth in the By-Laws or in a duly adopted vote or votes of the
Trustees such bases and times for determining the per Share net asset value of
the Shares and the valuation of portfolio assets as they deem necessary or
desirable.
The Trust may suspend the determination of net asset value during any period
when it may suspend the right of the holders of Shares to require the Trust to
redeem Shares.
SECTION 7.HOW LONG SHARES ARE OUTSTANDING
Shares of the Trust surrendered to the Trust for redemption by it pursuant to
the provisions of Section 2 of this Article VII shall be deemed to be
outstanding until the redemption price thereof is determined pursuant to this
Article VII and, thereupon and until paid, the redemption price thereof shall be
deemed to be a liability of the Trust. Shares of the Trust purchased by the
Trust in the open market shall be deemed to be outstanding until confirmation of
purchase thereof by the Trust and, thereupon and until paid, the redemption
price thereof shall be deemed to be a liability of the Trust. Shares of the
Trust redeemed by the Trust pursuant to Section 4 of this Article VII shall be
deemed to be outstanding until said Shares are deemed to be redeemed in
accordance with procedures adopted by the Trustees pursuant to said Section 4.
ARTICLE VIII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES
SECTION 1.COMPENSATION
The Trustees as such shall be entitled to reasonable compensation from the
Trust if the rate thereof is prescribed in advance by such Trustees. Nothing
herein shall in any way prevent the employment of any Trustee for advisory,
management, legal, accounting, investment banking or other services and payment
for the same by the Trust, it being recognized that such employment may result
in such Trustee being considered an Affiliated Person or an Interested Person.
SECTION 2.LIMITATION OF LIABILITY
No personal liability for any debt or obligation of the Trust shall attach to
any Trustee of the Trust. Without limiting the foregoing, a Trustee shall not
be responsible or liable in any event for any neglect or wrongdoing of any
officer, agent, employee, investment advisor or subadvisor or manager, principal
underwriter or custodian, nor shall any Trustee be responsible for the act or
omission of any other Trustee. Nothing in this Declaration of Trust shall
protect any Trustee against any liability to which such Trustee would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee.
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Every note, bond, contract, instrument, certificate, Share or undertaking and
every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been executed or done only in or with respect to
their or his or her capacity as Trustees or Trustee and neither such Trustees or
Trustee nor the Shareholders shall be personally liable thereon.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust by them as Trustees or Trustee or as officers or officer and
not individually and that the obligations of such instrument are not binding
upon any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust or a particular series of Shares, and may
contain such further recital as he or she or they may deem appropriate, but the
omission thereof shall not operate to bind any Trustees or Trustee or officers
or officer or Shareholders or Shareholder individually.
All persons extending credit to, contracting with or having any claim against
the Trust or a particular series of Shares shall look only to the assets of the
Trust or the assets of that particular series of Shares, as the case may be, for
payment under such credit, contract or claim; and neither the Shareholders nor
the Trustees, nor any of the Trust's officers, employees or agent, whether past,
present or future, shall be personally liable therefor.
SECTION 3.TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
The exercise by the Trustees of their powers and discretions hereunder shall
be binding upon everyone interested. A Trustee shall be liable only for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust and their duties as Trustees
hereunder, and shall be under no liability for any act or omission in accordance
with such advice or for failing to follow such advice. In discharging their
duties, the Trustees, when acting in good faith, shall be entitled to rely upon
the books of account of the Trust and upon written reports made to the Trustees
by any officer appointed by them, any independent public accountant and (with
respect to the subject matter of the contract involved) any officer, partner or
responsible employee of any other party to any contract entered into hereunder.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is required.
SECTION 4.LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
No person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the Trustees or
to see to the application of any payments made or property transferred to the
Trust or upon its order.
ARTICLE IX
INDEMNIFICATION
Subject to the exceptions and limitations contained in this Article, 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, officers,
trustees, 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 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.
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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 reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (a) who is not an
"interested person" of the Trust (as defined by the 1940 Act (including anyone
who has been exempted from being an "interested person" by any rule, regulation
or order of the Securities and Exchange 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 or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the words
"liability" and "expenses" shall include without limitation, attorneys' fees,
costs, judgments, accounts paid in settlement, fines, penalties and other
liabilities.
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No personal liability for any debt or obligation of the Trust shall attach to
any Shareholder or former Shareholder of the Trust. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by reason of his
or her being or having been a Shareholder and not because of his or her acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his or her heirs, executors, administrators or other legal representatives or in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the particular series of
Shares of which he or she is or was a Shareholder to be held harmless from and
indemnified against all loss and expense arising from such liability; provided,
however, there shall be no liability or obligation of the Trust arising
hereunder to reimburse any Shareholder for taxes paid by reason of such
Shareholder's ownership of Shares or for losses suffered by reason of any
changes in value of any Trust assets. The Trust shall, upon request of the
Shareholder or former Shareholder, assume the defense of any claim made against
the Shareholder for any act or obligation of the Trust and satisfy any judgment
thereon.
ARTICLE X
MISCELLANEOUS
SECTION 1.DURATION, TERMINATION AND REORGANIZATION OF TRUST
Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by the Trustees by
written notice to the Shareholders without a vote of the Shareholders of the
Trust, or the Trust may be terminated by the vote of the Shareholders entitled
to vote more than fifty percent (50%) of the votes entitled to be cast on the
matter. If the Trust has more than one series, any series of Shares may be
terminated at any time by the Trustees by written notice to the Shareholders of
such series without a vote of the Shareholders of such series or by the vote of
the Shareholders of such series entitled to vote more than fifty percent (50%)
of the votes entitled to be cast on the matter.
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the particular series as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets of the
particular series to distributable form in cash or other securities, or any
combination thereof, and distribute the proceeds to the Shareholders of the
Trust or the series involved, in the manner set forth by resolution of the
Trustees.
At any time by the affirmative vote of the Shareholders of the affected
series entitled to vote more than fifty percent (50%) of the votes entitled to
be cast on the matter, the Trustees may sell, convey and transfer the assets of
the Trust, or the assets belonging to any one or more series, to another trust,
partnership, association or corporation organized under the laws of any state of
the United States, or to the Trust to be held as assets belonging to another
Series of the Trust, in exchange for cash, shares or other securities
(including, in the case of a transfer to another series of the Trust, Shares of
such other series) with such transfer being made subject to, or with the
assumption by the transferee of, the liability belonging to each series the
assets of which are so distributed. Following such transfer, the Trustees shall
distribute such cash, shares or other securities (giving due effect to the
assets and liabilities belonging to the affected series) among the Shareholders
of the series the assets belonging to which have been so transferred; and if all
of the assets of the Trust (or series as the case may be) have been so
transferred, the Trust (or series) shall be terminated.
SECTION 2.FILING OF COPIES, REFERENCES, HEADINGS
The original or a copy of this instrument and of each amendment hereto shall
be kept at the office of the Trust where it may be inspected by any Shareholder.
A copy of this instrument and of each amendment hereto shall be filed by the
Trust with the Secretary of The Commonwealth of Massachusetts, as well as any
other governmental
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office where such filing may from time to time be required, provided,
however, that failure to so file will not invalidate this instrument or any
properly authorized amendment thereto. Anyone dealing with the Trust may rely
on a certificate by an officer of the Trust as to whether or not any such
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such amendments. In this instrument and in any such amendment, references to
this instrument, and all expressions like "herein," "hereof" and "hereunder"
shall be deemed to refer to this instrument as a whole and as amended from time
to time. Masculine pronouns used herein shall be deemed to include the feminine
and the neuter, as the case requires. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or effect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
SECTION 3.APPLICABLE LAW
The Trust set forth in this instrument shall be deemed made in The
Commonwealth of Massachusetts, and it is created under and is to be governed by
and construed and administered according to the laws of said Commonwealth. The
Trust shall be of the type commonly called a Massachusetts business trust, and
without limiting the provisions hereof, the Trust may exercise all powers which
are ordinarily exercised by such a trust. No provision of this Declaration
shall be effective to require a waiver of compliance with any provisions of the
Securities Act of 1933, as amended, or the 1940 Act, or of any valid rule,
regulation or of the Commission thereunder.
SECTION 4.AMENDMENTS
Except as otherwise specifically provided in this Declaration of Trust, this
Declaration of Trust may be amended at any time by an instrument in writing
signed by a majority of the then Trustees when authorized so to do by vote of
Shareholders holding more than fifty percent (50%) of the Shares entitled to
vote, except that an amendment which shall affect the holders of one or more
series or classes of Shares but not the holders of all outstanding series or
classes shall be authorized by vote of the Shareholders holding more than fifty
percent (50%) of the Shares entitled to vote of each series and class affected
and no vote of Shareholders of a series or class not affected shall be required.
In addition, notwithstanding any other provisions to the contrary contained in
this Declaration of Trust, the Trustees may amend this Declaration of Trust
without the vote or consent of Shareholders (i) at any time if the Trustees deem
it necessary in order for the Trust or any series or class thereby to meet the
requirements of applicable Federal or State laws or regulations, or the
requirements of the regulated investment company provisions of the Internal
Revenue Code, (ii) to designate series or classes or exercise other powers with
respect thereto in accordance with Section 1 of Article III hereof, (iii) change
the name of the Trust or to supply any omission, cure any ambiguity or cure,
correct or supplement any defective or inconsistent provision contained herein,
or (iv) for any reason at any time before a registration statement under the
Securities Act of 1933, as amended, covering the initial public offering of
Shares has become effective.
SECTION 5.TRUSTEES MAY RESOLVE AMBIGUITIES
The Trustees may construe any of the provisions of this Declaration insofar
as the same may appear to be ambiguous or inconsistent with any other provisions
hereof, and any such construction hereof by the Trustees in good faith shall be
conclusive as to the meaning to be given to such provisions.
SECTION 6.USE OF THE NAME
The Trust is adopting its trust name and the name of the first Series of the
proposed fund by permission of Ranson & Associates ("RAI"), and the Trust's
right to use the name "Eagle Funds" and the name "The Nasdaq 100 Index Fund" is
subject to the right of RAI or its successors or assigns at any time to control
the usage of the name
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"Eagle Funds" and the name "The Nasdaq 100 Index Fund" by the Trust and to
direct that the Trust stop using the name "Eagle Funds" and/or the name "The
Nasdaq 100 Index Fund" in any form or combination as part of its name, service
mark, as a Series of the Trust, and in any literature or reference whatsoever.
All proprietary interest in the names "Eagle Funds" and "The Nasdaq 100 Index
Fund" shall remain exclusively the property of RAI, and at the written request
of RAI or its successors or assigns, delivered to the Trust at its registered
office in Boston, Massachusetts, if any, and if none, at its principal office,
the Trust shall forthwith stop using the name "Eagle Funds" and/or the name "The
Nasdaq 100 Index Fund" in accordance with the provisions of such request. The
provisions hereof are binding upon the Trust, its trustees, officers,
Shareholders, creditors, successors or assigns, and all other persons claiming
under or through it. The terms of this Section 6 do not preclude the use of the
names "Eagle Funds" or "The Nasdaq 100 Index Fund" by any other person or
organization, whether now existing or hereafter created, to which RAI may grant
the right to such name.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal for
himself and his assigns, as of the day and year first above written.
(SEAL) /s/ Robin K. Pinkerton
--------------------------
Robin K. Pinkerton
Suite 150
250 N. Rock Road
Wichita, Kansas 67206
STATE OF KANSAS )
) SS.
COUNTY OF SEDGWICK )
Then personally appeared the above-named Robin K. Pinkerton who acknowledged
the foregoing instrument to be his free act and deed, before me this 1st day of
October, 1999.
/s/ Cristine Minneman
--------------------------
Notary Public
My Commission Expires: 4/9/01
----------
21
ESTABLISHMENT AND DESIGNATION OF CLASSES
The undersigned, being the sole Trustee of the Eagle Funds, a Massachusetts
business trust (the "Trust"), acting pursuant to Section 1 of Article III of the
Declaration of Trust dated August 10, 1999 (the "Declaration"), does hereby
divide the Shares of its series, whether currently existing or created in the
future, into three Classes of Shares effective as of the date hereof, as
follows:
1.The three Classes of Shares are designated "Class A Shares," "Class C
Shares" and "Class Y Shares".
2.Class A Shares, Class C Shares and Class Y Shares shall be entitled to all
the rights and preferences accorded to Shares under the Declaration.
3.The number of Shares of each Class designated hereby shall be unlimited.
4.The purchase price of Class A Shares, Class C Shares and Class Y Shares,
the method of determination of the net asset value of Class A Shares, Class C
Shares and Class Y Shares, the price, terms and manner of redemption of Class A
Shares, Class C Shares and Class Y Shares, any conversion or exchange feature or
privilege of Class A Shares, Class C Shares and Class Y Shares, and the relative
dividend rights of the holders of Class A Shares, Class C Shares and Class Y
Shares shall be established by the Trustees of the Trust in accordance with the
Declaration and shall be set forth in the current prospectus and statement of
additional information of the Trust or any series thereof, as amended from time
to time, contained in the Trust's registration statement under the Securities
Act of 1933, as amended (the "Prospectus").
5.Each of the Class A Shares, Class C Shares and Class Y Shares shall bear
the expenses of payments under any distribution and service agreements entered
into by or on behalf of the Trust with respect to that Class, and any other
expenses that are properly allocated to such Class in accordance with the
Investment Company Act of 1940, or any rule or order issued thereunder and
applicable to the Trust (the "1940 Act").
6.As to any matter on which shareholders are entitled to vote, Class A
Shares, Class C Shares and Class Y Shares of a series shall vote together as a
single class; provided however, that notwithstanding the provisions of Section 1
of Article V of the Declaration to the contrary, (a) as to any matter with
respect to which a separate vote of any Class is required by the 1940 Act or is
required by a separate agreement applicable to such Class, such requirements as
to a separate vote by the Class shall apply, (b) except as required by (a)
above, to the extent that a matter affects more than one Class and the interests
of two or more Classes in the matter are not materially different, then the
Shares of such Classes whose interests in the matter are not materially
different shall vote together as a single Class, but to the extent that a matter
affects more than one Class and the interests of a Class in the matter are
materially different from that of each other Class, then the Shares of such
Class shall vote a separate class; and (c) except as required by (a) above or as
otherwise required by the 1940 Act, as to any matter which does not affect the
interests of a particular Class, only the holders of Shares of the one or more
affected Classes shall be entitled to vote.
7.The designation of Class A Shares, Class C Shares and Class Y Shares hereby
shall not impair the power of the Trustees from time to time to designate
additional classes of Shares of the Trust.
8.Subject to the applicable provisions of the 1940 Act, the Trustees may from
time to time modify the preferences, voting powers, rights and privileges of any
of the Classes designated hereby or redesignate any of the Classes designated
hereby without any action or consent of the Shareholders.
<PAGE>
In Witness Whereof, the undersigned, being the sole Trustee of the Trust, has
executed this instrument as of this 10th day of August, 1999.
/s/ Robin K. Pinkerton
(SEAL) --------------------------------
Robin K. Pinkerton
as Trustee
Suite 150
250 N. Rock Road
Wichita, Kansas 67206
STATE OF KANSAS )
) SS.
COUNTY OF SEDGWICK )
Then personally appeared the above-named person who is known to me to be a
Trustee of the Trust whose name and signature is affixed to the foregoing
Establishment and Designation of Classes and who acknowledged the same to be her
free act and deed, before me this 4th day of October, 1999.
/s/ Cristine Minneman
--------------------------
Notary Public
My Commission Expires: 4/9/01
----------
2
BY-LAWS
OF
EAGLE FUNDS
SECTION 1. AGREEMENT AND DECLARATION OF
TRUST AND PRINCIPAL OFFICE
SECTION 1.1. AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be
subject to the Agreement and Declaration of Trust, as from time to time in
effect (the "Declaration of Trust"), of Eagle Funds, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").
SECTION 1.2. PRINCIPAL OFFICE OF THE TRUST; RESIDENT AGENT. The
principal office of the Trust shall be located at 250 North Rock Road, Suite
150, Wichita, Kansas 67206-2241. The Trustees may, without the approval of
shareholders, change the principal place of business of the Trust. The Trust
may also have such other offices and places of business within or without the
Commonwealth of Massachusetts as the Board of Trustees shall determine.
Resident agent in Massachusetts shall be Lexis Document Services, Inc., 73
Tremont Street, 5th Floor, Boston, Massachusetts, 02108 or such other person as
the Trustees may from time to time select.
SECTION 2. SHAREHOLDERS
SECTION 2.1. SHAREHOLDER MEETINGS. Meetings of the shareholders may be
called at any time by two or more Trustees, by the Chairman or, if the Trustees
and the Chairman shall fail to call any meeting of shareholders for a period of
30 days after written application of one or more shareholders who hold at least
25% of all shares issued and outstanding and entitled to vote at the meeting (or
10% if the purpose of the meeting is to determine if a Trustee is to be removed
from office), then such shareholders may call such meeting. Each call of a
meeting shall state the place, date, hour and purposes of the meeting.
SECTION 2.2. PLACE OF MEETINGS. All meetings of the shareholders shall
be held at the principal office of the Trust, or, to the extent permitted by the
Declaration of Trust, at such other place within the United States as shall be
designated by the Trustees or the Chairman of the Trust.
SECTION 2.3. NOTICE OF MEETINGS. A written notice of each meeting of
shareholders, stating the place, date and hour and the purposes of the meeting,
shall be given at least ten days, but no more than sixty days, before the
meeting to each shareholder entitled to vote thereat by leaving such notice at
the shareholder's residence or usual place of business or by mailing it, postage
prepaid, and addressed to such shareholder at his address as it appears in the
records of the Trust. Such notice shall be given by the secretary or an
assistant secretary or by an officer designated by the Trustees. No notice of
any meeting of shareholders need be given to a shareholder if a written waiver
of notice executed before or after the meeting by such shareholder or his
attorney thereunto duly authorized, is filed with the records of the meeting or
by the shareholder's attendance at the meeting in person or by proxy. No notice
of any meeting need be given if the meeting is an adjourned meeting and the
date, time and place of the meeting were announced at the time of the
adjournment.
SECTION 2.4. ADJOURNED MEETINGS. Any meeting of shareholders may be
adjourned to a designated time and place by the vote of the holders of a
majority of the shares present and entitled to vote thereat even though less
than a quorum is so present without any further notice except by announcement at
the meeting. An adjourned meeting may reconvene as designed, and when a quorum
is present, any business may be transacted which might have been transacted at
the meeting as originally called.
SECTION 2.5. BALLOTS. No ballot shall be required for any election
unless requested by a shareholder present or represented at the meeting and
entitled to vote in the election.
<PAGE>
SECTION 2.6. PROXIES AND VOTING. At each meeting of shareholders,
shareholders entitled to vote may vote either in person or by proxy in writing
dated not more than six months before the meeting named therein unless a shorter
period is expressed in the appointment, which proxies shall be filed with the
secretary or other officer responsible to record the proceedings of the meeting
before being voted. Unless otherwise specifically limited by their terms, such
proxies shall entitle the holders thereof to vote at any adjournment of such
meeting but shall not be valid after the final adjournment of such meeting. No
proxy is irrevocable unless the appointment is coupled with an interest in the
shares of the Trust. At all meetings of shareholders, unless the voting is
conducted by inspectors, all questions relating to the qualification of voters,
the validity of proxies and the acceptance or rejection of votes shall be
decided by the Chairman of the meeting.
SECTION 3. TRUSTEES
SECTION 3.1. COMMITTEES AND ADVISORY BOARD. The Trustees may appoint
from their number an executive committee and other committees. Any such
committee may be abolished and reconstituted at any time and from time to time
by the Trustees. Except as the Trustees may otherwise determine, any such
committee may make rules for conduct of its business. The Trustees may appoint
an advisory board to consist of not less than two nor more than five members.
The members of the advisory board shall be compensated in such manner as the
Trustees may determine and shall confer with and advise the Trustees regarding
the investments and other affairs of the Trust. Each member of the advisory
board shall hold office until the first meeting of the Trustees following the
meeting of the shareholders, if any, next following his appointment and until a
successor is appointed and qualified, or until he sooner dies, resigns, is
removed, or becomes disqualified, or until the advisory board is sooner
abolished by the Trustees.
SECTION 3.2. REGULAR MEETINGS. Regular meetings of the Trustees may be
held without call or notice at such places and at such times as the Trustees may
from time to time determine, provided that notice of the regular meeting
following any such determination shall be given to absent Trustees. A regular
meeting of the Trustees may be held without call or notice immediately after and
at the same place as any meeting of the shareholders.
SECTION 3.3. SPECIAL MEETINGS. Special meetings of the Trustees may be
held at any time and at any place designated in the call of the meeting, when
called by the Chairman, the President or by two or more Trustees. Unless
otherwise waived by each Trustee, each Trustee must be given sufficient notice
of the meeting by the Secretary or an Assistant Secretary or by the officer or
one of the Trustees calling the meeting.
SECTION 3.4. PLACE OF MEETINGS. Notice of special meetings need not
state the purpose or purposes thereof. Meetings of the Trustees may be held at
any place within or outside the Commonwealth of Massachusetts. A conference
among Trustees by any means of communication through which the Trustees may
simultaneously hear each other during the conference constitutes a meeting of
the Trustees or of a committee of the Trustees, if the notice requirements have
been met (or waived) and if the number of Trustees participating in the
conference would be sufficient to constitute a quorum at such meeting.
Participation in such meeting by that means constitutes presence in person at
the meeting.
SECTION 3.5. NOTICE. It shall be sufficient notice to a Trustee to send
notice by mail at least three days or by telegram at least twenty-four hours
before the meeting addressed to the Trustee at his or her usual or last known
business or residence address or to give notice to him or her in person or by
telephone at least twenty-four hours before the meeting. Notice of a meeting
need not be given to any Trustee if a written waiver of notice, executed by him
or her before or after the meeting, is filed with the records of the meeting, or
to any Trustee who attends the meeting without protesting prior thereto or at
its commencement the lack of notice to him or her. Neither notice of a meeting
nor a waiver of a notice need specify the purposes of the meeting.
SECTION 3.6. QUORUM. At any meeting of the Trustees, a majority of the
Trustees then in office, or in the case of a meeting of a committee of the
Trustees, a majority of the members of such committee, shall constitute a quorum
for the transaction of business at the meeting. If a quorum is present when a
duly called or held meeting is convened, the Trustees present may continue to
transact business until adjournment, even though withdrawal of a number of
Trustees originally present leaves less than the proportion or number otherwise
required for a quorum. At any duly held meeting at which a quorum is present,
the affirmative vote of the majority of the Trustees present shall
<PAGE>
be the act of the Trustees or the committee, as the case may be, on any question
except where the act of a greater number is required by these By-Laws or by the
Declaration of Trust. Any meeting may be adjourned from time to time by a
majority of the votes cast upon the question, whether or not a quorum is
present, and the meeting may be held as adjourned without further notice.
SECTION 3.7. ACTION BY WRITTEN CONSENT IN LIEU OF MEETINGS OF TRUSTEES.
An action which is required or permitted to be taken at a meeting of the
Trustees or a committee of the Trustees may be taken by written action signed by
the number of Trustees that would be required to take the same action at a
meeting of the Trustees or committee, as the case may be, at which all Trustees
were present. The written action is effective when signed by the required
number of Trustees, unless a different effective time is provided in the written
action. When written action is taken by less than all Trustees, all Trustees
shall be notified immediately of its text and effective date.
SECTION 4. OFFICERS AND AGENTS
SECTION 4.1. NUMBER AND QUALIFICATIONS. The officers of the Trust shall
be a Chairman of the Board, a President, a Treasurer, a Secretary, a Controller
and such other officers, if any, as the Trustees from time to time may in their
discretion elect or appoint. The Trust may also have such agents, if any, as
the Trustees from time to time may in their discretion appoint. Any officer may
be, but none need be, a Trustee or shareholder. Any two or more offices may be
held by the same person.
SECTION 4.2. POWERS. Subject to the other provisions of these By-Laws,
each officer shall have, in addition to the duties and powers herein and in the
Declaration of Trust set forth, such duties and powers as are commonly incident
to his or her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
SECTION 4.3. ELECTION. The Chairman, the President, the Treasurer, the
Secretary and Controller shall be elected annually by the Trustees at their
first meeting in each calendar year or at such later meeting in such year as the
Trustees shall determine. Other officers or agents, if any, may be elected or
appointed by the Trustees at said meeting or at any other time.
SECTION 4.4. TENURE. The Chairman, President, Treasurer, Secretary and
Controller shall hold office until the first meeting of Trustees in each
calendar year and until their respective successors are chosen and qualified, or
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent shall retain
his or her authority at the pleasure of the Trustees.
SECTION 4.5. CHAIRMAN OF THE BOARD. The Chairman of the Board of
Trustees (sometimes referred to herein as the "Chairman") shall be the Chief
Executive Officer of the Trust; shall, subject to the control of the Trustees,
have general charge and supervision of the Trust; when present, shall preside at
all meetings of the shareholders and of the Trustees; and shall see that all
orders and resolutions of the Board of Trustees are carried into effect.
SECTION 4.6. PRESIDENT AND VICE PRESIDENTS. The President shall be the
Chief Administrative Officer of the Trust. Subject to the Chairman of the
Board, the President shall have general authority over and general management
and control of the business and officers of the Trust. The President shall at
the request or in the absence or disability of the Chairman, exercise the powers
of the Chairman. The President shall perform such other duties and have such
other powers as the Trustee shall prescribe from time to time. Any Vice
President shall at the request or in the absence or disability of the President
exercise the powers of the President and perform such other duties and have such
other powers as shall be designated from time to time by the Trustees.
SECTION 4.7. TREASURER. The Treasurer shall be the Chief Financial
Officer of the Trust. Subject to any arrangement made by the Trustees with a
bank or trust company or other organization as custodian of the securities and
cash of the Trust as required by Section 11.1 of these By-Laws, the Treasurer
shall be in charge of and responsible for the funds and securities of the
Trust. The Treasurer shall have such other duties and powers as may be
designated from time to time by the Trustees, by the Chairman or by the
President. Any Assistant Treasurer shall have such duties and powers as shall
be designated from time to time by the Trustees.
<PAGE>
SECTION 4.8. CONTROLLER. The Controller shall be the Chief Accounting
Officer of the Trust and shall be in charge of its books of account and
accounting records. The Controller shall be responsible for preparation of
financial statements of the Trust and shall have such other duties and powers as
may be designated from time to time by the Trustees, the Chairman, or the
President.
SECTION 4.9. SECRETARY AND ASSISTANT SECRETARIES. The Secretary shall
record all proceedings of the shareholders and the Trustees in books to be kept
therefor, which books shall be kept at the principal office of the Trust. In
the absence of the secretary from any meeting of shareholders or Trustees, an
assistant secretary, or if there be none or he or she is absent, a temporary
clerk chosen at the meeting shall record the proceedings thereof in the
aforesaid books. The Secretary shall be custodian of the records of the Trust
subject to any arrangement made with the Fund's custodian or a transfer or
shareholder services agent to maintain certain records; shall see that all
notices are duly given in accordance with these By-Laws, the Declaration of
Trust and as required by statute; shall see that the books, records, statements,
certificates and other documents and records required by statute to be kept and
filed are properly kept and filed; and shall have such other duties and powers
as from time to time be assigned to him or her by the Trustees, the Chairman or
the President.
SECTION 4.10. SALARIES. The salaries of the officers shall be fixed by
the Trustees.
SECTION 5. RESIGNATIONS AND REMOVALS
Any Trustee, officer or advisory board member may resign at any time by
delivering or mailing his or her written resignation (signed by him or her) to
the Chairman of the Board (if any), the President or the Secretary. Any such
resignation shall take effect at the time specified therein or, if the time when
it shall become effective shall not be specified therein, immediately upon its
receipt, and, unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective. The Trustees may
remove any officer or advisory board member elected or appointed by them with or
without cause by the vote of a majority of the Trustees then in office. Except
to the extent expressly provided in a written agreement with the Trust, no
Trustee, officer, or advisory board member resigning, and no officer or advisory
board member removed (or a Trustee removed in accordance with the Declaration
of Trust) shall have any right to any compensation for any period following his
or her resignation or removal, or any right to damages on account of such
removal.
SECTION 6. VACANCIES
A vacancy in the office of Trustee shall be filled in accordance with the
Declaration of Trust. Vacancies resulting from death, resignation, incapacity
or removal of any officer may be filled by the Trustees. Each successor of any
such officer shall hold office for the unexpired term, and in the case of the
Chairman, the President, the Treasurer, the Secretary and the Controller until
his or her successor is chosen and qualified, or in each case until he or she
sooner dies, resigns, is removed or becomes disqualified.
SECTION 7. SHARES OF BENEFICIAL INTEREST
SECTION 7.1. SHARE CERTIFICATES. No certificates certifying the
ownership of shares shall be issued except as the Trustees may otherwise
authorize. In the event that the Trustees authorize the issuance of share
certificates, subject to the provisions of Section 7.3, each shareholder shall
be entitled to a certificate stating the number of shares owned by him or her,
in such form as shall be prescribed from time to time by the Trustees. Such
certificate shall be signed by the Chairman, the President or a Vice President
and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary.
Such signatures may be facsimiles if the certificate is signed by a transfer or
shareholder services agent or by a registrar, other than a Trustee, officer or
employee of the Trust. In case any officer who has signed or whose facsimile
signature has been placed on such certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the Trust with
the same effect as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall
<PAGE>
in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
SECTION 7.2. SHARE TRANSFERS. Upon compliance with any provisions
restricting the transferability of shares that may be set forth in the
Declaration of Trust, these By-Laws, or any resolution or written agreement in
respect thereof, transfers of shares of the Trust shall be made only on the
books of the Trust by the registered holder thereof, or by his attorney
thereunto authorized by power of attorney duly executed and filed with an
officer of the Trust, or with a transfer agent or a registrar and on surrender
of any certificate or certificates for such shares properly endorsed and the
payment of all taxes thereon. Except as may be otherwise provided by law or
these By-Laws, the person in whose name shares stand on the books of the Trust
shall be deemed the owner thereof for all purposes as regards the Trust;
provided that whenever any transfer of shares shall be made for collateral
security, and not absolutely, such fact, if known to an officer of the Trust,
shall be so expressed in the entry of transfer.
SECTION 7.3. LOSS OF CERTIFICATES. In the case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate certificate
may be issued in place thereof, upon such terms as the Trustees may prescribe.
Notwithstanding the foregoing, the Trustees, in their absolute discretion, may
refuse to issue any such new certificate, except as otherwise required by law.
SECTION 7.4. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees
may at any time discontinue the issuance of share certificates and may, by
written notice to each shareholder, require the surrender of share certificates
to the Trust for cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Trust.
SECTION 8. RECORD DATE AND CERTIFICATION OF
BENEFICIAL OWNER
SECTION 8.1. The Trustees may fix in advance a date, which shall not be
more than 60 days before the date of, any meeting of shareholders or the date
for the payment of any dividend or making of any other distribution to
shareholders, as the record date for determining the shareholders having the
right to notice and to vote at such meeting and any adjournment thereof or the
right to receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date. The Trustees may also fix a date for determining shareholders
entitled to any allotment of rights or to exercise any rights in respect of any
change, conversion or exchange of shares.
SECTION 8.2. A resolution approved by the affirmative vote of a majority
of the Trustees present may establish a procedure whereby a shareholder may
certify in writing to the Trust that all or a portion of the shares registered
in the name of the shareholder are held for the account of one or more
beneficial owners. Upon receipt by the Trust of the writing, the persons
specified as beneficial owners, rather than the actual shareholders, are deemed
the shareholders for the purposes specified in the writing.
SECTION 9. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and any transfers of securities standing in the name
of the Trust shall be executed, by the Chairman or the President or by one of
the Vice Presidents or by the Treasurer or by whomsoever else shall be
designated for that purpose by the vote of the Trustees.
SECTION 10. FISCAL YEAR
The fiscal year of the Trust shall end on such date in each year as the
Trustees shall from time to time determine.
<PAGE>
SECTION 11. CUSTODIAN
SECTION 11.1. CUSTODIAN. All securities and cash owned by the Trust
shall be maintained in the custody of one or more banks or trust companies that
meet the definition of "bank" under the Investment Company Act of 1940 and have
(according to its last published report) not less than two million dollars
($2,000,000) aggregate capital, surplus and undivided profits (any such bank or
trust company is hereinafter referred to as the "custodian"); provided, however,
the custodian may deliver securities as collateral on borrowings effected by the
Trust, provided, that such delivery shall be conditioned upon receipt of the
borrowed funds by the custodian except where additional collateral is being
pledged on an outstanding loan and the custodian may deliver securities lent by
the Trust against receipt of initial collateral specified by the Trust. Subject
to such rules, regulations and orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any custodian to, deposit all
or any part of the securities owned by the Trust in a system for the central
handling of securities operated by the Federal Reserve Banks, or established by
a national securities exchange or national securities association registered
with said Commission under the Securities Exchange Act of 1934, or such other
person as may be permitted by said Commission, pursuant to which system all
securities of any particular class or series of any issue deposited with the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry, without physical delivery of such securities.
The Trust shall upon the resignation or inability to serve as its custodian
or upon change of the custodian:
(a) in the case of such resignation or inability to serve, use its best
efforts to obtain a successor custodian;
(b) require that the cash and securities owned by the Trust be delivered
directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities
owned by the Trust otherwise than to a successor custodian; the
question whether or not the Trust shall be liquidated or shall
function without a custodian.
SECTION 12. AMENDMENTS
These By-Laws may be amended or repealed, in whole or in part or new
By-Laws may be adopted, by a majority of the Trustees then in office at any
meeting of the Trustees, or by one or more writings signed by such majority.
