As filed with the Securities and Exchange Commission on February 28, 2000.
File No. 811-_____
----------------------------------------------------------------------
FORM N-1A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940
THE GROWTH MUTUAL FUND PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
P.O. Box 7177, 6000 Memorial Drive
Dublin, Ohio 43017
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 614-766-7000
Donald F. Meeder, P.O. Box 7177, 6000 Memorial Drive, Dublin, OH 43017
(Name and Address of Agent for Service)
Copy to:
James B. Craver
P. O. Box 811
Dover, MA 02030-0811
----------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement of the Growth Mutual Fund Portfolio has been
filed by the Registrant pursuant to Section 8(b) of the Investment Company Act
of 1940, as amended (the "1940 Act"). However, beneficial interests in the
Registrant are not being registered under the Securities Act of 1933, as amended
(the "1933 Act"), since such interests will be offered solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any beneficial interests in the Registrant.
<PAGE>
PART A
Responses to Items 1, 2, 3, 5, and 9 have been omitted pursuant to
paragraph 2 of Instruction B of the General Instructions to Form N-1A.
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND RELATED
RISKS.
Growth Mutual Fund Portfolio (the "Portfolio") is a diversified, open-end
management investment company that was organized as a trust under the laws of
the State of New York on October 30, 1999.
Beneficial interests in the Portfolio are offered solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Portfolio may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" as defined in
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
The Portfolio's investment adviser is R. Meeder & Associates, Inc. (the
"Adviser"). The investment objective of the Portfolio is growth of capital. To
pursue this goal, the Portfolio invests primarily in unaffiliated open-end or
closed-end investment companies (the "underlying funds"). The underlying funds
in which the Portfolio invests seek primarily capital growth or appreciation,
without regard to current income, by investing in common stock or securities
convertible into or exchangeable for common stock (such as convertible preferred
stock, convertible debentures or warrants). The Adviser overweights mutual fund
types that it believes represent above average market potential. The Adviser
continually evaluates market capitalization (for example, blue chip versus small
capitalization) and sector rotation (for example, high tech versus industrial
companies) when selecting mutual funds. Except when it may be necessary to
accumulate cash in order to satisfy minimum purchase requirements of the
underlying funds or to meet anticipated redemptions, the Portfolio normally will
be fully invested in underlying funds.
The Portfolio may invest in unit investment trusts, which are investment
vehicles that purchase a fixed portfolio of securities.
The underlying funds in which the Portfolio invests will consist of mutual
funds and closed end funds that invest primarily in common stock or securities
convertible into or exchangeable for common stock (such as convertible preferred
stock, convertible debentures or warrants), and that seek capital growth or
appreciation, without regard to current income. The Portfolios will not invest
in other funds of the Flex-funds family of funds or the Flex-Partners family of
funds, the corresponding portfolios of which are also managed by the adviser.
A-1
<PAGE>
Investment decisions by the investment advisers of the underlying funds are
made independently of the Portfolio and the Adviser. Therefore, the investment
adviser of one underlying fund may be purchasing shares of the same issuer whose
shares are being sold by the investment adviser of another such fund. The result
of this would be an indirect expense to the Portfolio without accomplishing any
investment purpose.
The Portfolio will generally purchase "no-load" mutual funds, which are
sold and purchased without a sales charge. The Portfolio may also purchase
"load" mutual funds, but only if the load, or sales commission, is waived for
purchases or sales made by the Portfolio.
The Portfolio may also invest in "closed-end" funds. Shares of closed-end
funds are typically offered to the public in a one-time initial public offering
by a group of underwriters who retain a spread or underwriting commission of
between 4% and 6% of the initial public offering price. Such securities are then
listed for trading on the New York Stock Exchange, the American Stock Exchange,
the National Association of Securities Dealers Automated Quotation System
(commonly known as NASDAQ), and in some cases may be traded in other
over-the-counter markets. Because the shares of closed-end funds cannot be
redeemed upon demand by the issuer like shares of a mutual fund, investors seek
to buy and sell shares of closed-end funds in the secondary market.
The Portfolio may invest in shares of closed-end funds that are trading at
a discount to net asset value or at a premium to net asset value. There can be
no assurance that the market discount on shares of any closed-end fund that a
portfolio purchases will ever decrease. In fact, it is possible that this market
discount may increase, and a fund may suffer realized or unrealized capital
losses due to further decline in the market price of the securities of such
closed-end funds, thereby adversely affecting the net asset value of a
portfolio's shares. Similarly, there can be no assurance that any shares of a
closed-end fund purchased by the Portfolio at a premium will continue to trade
at a premium or that the premium will not decrease subsequent to a purchase of
such shares by the Portfolio.
TYPES OF FUNDS. Normally, the Portfolio invests in the following types of
mutual funds: aggressive growth, growth, small capitalization, specialty and
industry sector funds. In addition, the Portfolio may at times desire to gain
exposure to the stock market through the purchase of "index" funds (funds that
purchase stocks represented in popular stock market averages) with a portion of
its assets. The Portfolio may also invest in underlying funds holding foreign
securities. The Adviser will vary the proportion of each type of underlying fund
based on the mix of such funds that may, in the Adviser's view, be most likely
to achieve the funds' investment goals.
A-2
<PAGE>
The Adviser selects underlying funds in which to invest based in part on
their investment goals and strategies, their investment adviser and portfolio
manager, and on the analysis of their past performance (absolute, relative, and
risk-adjusted). The Adviser also considers other factors in the selection of
funds, such as fund size, liquidity, expense ratio, general composition of its
investment portfolio, and current and expected portfolio holdings. Many funds in
which the Portfolio invests may not share the same investment goal and
investment limitations as the Portfolio.
INDEX-BASED INVESTMENTS. The Portfolio may invest in index-based
investments (IBIs), including Standard & Poor's Depositary Receipts (SPDRs).
IBIs are shares of publicly traded unit investment trusts that own the stocks in
the relevant index. For example, SPDRs represent ownership interests in unit
investment trusts holding a portfolio of securities closely reflecting the price
performance and dividend yield of the S&P 500 Index. IBIs, including SPDRs, are
subject to the risk of an investment in a broadly based portfolio of common
stocks, including the risk of declines in the general level of stock prices.
They are also subject to trading halts due to market conditions or other reasons
that, in the view of the American Stock Exchange, make trading IBIs inadvisable.
COMMON STOCKS. The Portfolio may invest in common stocks directly.
DERIVATIVES. The Portfolio may invest up to 100% of its assets directly in,
or in underlying funds investing in, future contracts and options on futures
contracts.
The Portfolio will invest in futures and options: (1) to keep cash on hand
to meet shareholder redemptions or other needs while simulating full investment
in equity securities; (2) to reduce the Portfolio's transaction costs or add
value when these instruments are favorably priced;(3) to forego taxes that would
otherwise have to be paid on gains from the sale of the Portfolio securities;
and (4) to attempt to protect the value of certain securities owned or intended
to be purchased by the Portfolio while the Adviser is making a change in the
Portfolio's investment position.
MAIN RISK FACTORS. When the Portfolio is invested in underlying funds that
own stocks, the value of an investment in the Portfolio will fluctuate in
response to stock market movements.
The underlying funds may invest in smaller or newer companies, which are
more likely to grow, as well as suffer more significant losses, than larger or
more established companies. Investments in such companies can be both more
volatile and more speculative.
The underlying funds may invest in aggressive growth stocks, which may be
more expensive relative to their earnings or assets compared to value or other
stocks. The prices of aggressive growth stocks are based largely on projections
of the issuer's future earnings and revenues. If a company's earnings or
revenues fall short of expectations, its stock price may fall dramatically.
A-3
<PAGE>
The underlying funds may invest in technology companies. The technology
sector has historically been more volatile due to the rapid pace of product
change and development within the sector. The stock prices of companies
operating within this sector may be subject to abrupt or erratic movements.
When the Portfolio invests in underlying funds that use margin, leverage,
short sales and other forms of financial derivatives, such as options and
futures, an investment in the Portfolio may be more volatile than investments in
other mutual funds.
Because the Portfolio invests primarily in underlying funds, the value of
an investment in the Portfolio will fluctuate in response to the performance of
the underlying funds. In addition, investing through the Portfolio in an
underlying portfolio of funds involves additional expenses and tax results that
would not arise if an investor invested directly in the funds that the Portfolio
owns. By investing indirectly in underlying funds through the Portfolio, an
investor will bear not only its proportionate share of the Portfolio's expenses
(including operating costs and investment advisory and administrative fees), but
also, indirectly, similar expenses and charges of the underlying funds. Finally,
an investor may receive taxable capital gains distributions to a greater extent
than would be the case if the investor invested directly in the underlying
funds.
ITEM 6. MANAGEMENT, ORGANIZATION AND CAPITAL STRUCTURE.
The Portfolio's Board of Trustees provides broad supervision over the
affairs of the Portfolio. The address of the Adviser is P.O. Box 7177, 6000
Memorial Drive, Dublin, Ohio 43017. A majority of the Portfolio's Trustees are
not affiliated with the Adviser. Firstar, N.A., Cincinnati ("Firstar") is the
Portfolio's custodian. The address of the custodian is 425 Walnut Street,
Cincinnati, Ohio 45202. Mutual Funds Service Co. provides accounting,
administrative, and transfer agency services to the Portfolio. The address of
Mutual Funds Service Co. is 6000 Memorial Drive, Dublin, Ohio 43017.
The Portfolio has not retained the services of a principal underwriter or
distributor, as interests in the Portfolio are offered solely in private
placement transactions.
The Adviser has been an adviser to individuals and retirement plans since
1974 and has served as investment adviser to registered investment companies
since 1982. The Adviser serves the Portfolio pursuant to an Investment Advisory
Agreement under the terms of which it has agreed to provide an investment
program within the limitations of the Portfolio's investment policies and
restrictions, and to furnish all executive, administrative, and clerical
services required for the transaction of Portfolio business, other than
accounting services and services which are provided by the Portfolio's
custodian, transfer agent, independent accountants and legal counsel.
A-4
<PAGE>
The Adviser was incorporated in Ohio in 1974 and maintains its principal
offices at 6000 Memorial Drive, Dublin, Ohio 43017. The Adviser is a
wholly-owned subsidiary of Muirfield Investors, Inc. ("MII"). MII is controlled
by Robert S. Meeder, Sr. through the ownership of voting common stock. MII
conducts business only through its subsidiaries, which are the Adviser; Mutual
Funds Service Co.; Adviser Dealer Services, Inc., a registered broker-dealer;
Opportunities Management Co., a venture capital investor; Meeder Advisory
Services, Inc., a registered investment adviser; and OMCO, Inc., a registered
commodity trading adviser and commodity pool operator.
The Adviser's officers and directors are as set forth as follows: Robert S.
Meeder, Sr., Chairman and Sole Director; Philip A. Voelker, Senior Vice
President and Chief Investment Officer; Donald F. Meeder, Secretary; Robert S.
Meeder, Jr., President; Thomas E. Line, Chief Operating Officer; Michael J.
Sullivan, Vice President of Sales and Marketing, and Wesley F. Hoag, Vice
President and General Counsel. Mr. Robert S. Meeder, Sr. is President and a
Trustee of the Portfolio. Mr. Robert S. Meeder, Jr. and Philip A. Voelker each
are a Trustee and officer of the Portfolio. Each of Messrs. Donald F. Meeder,
Wesley F. Hoag and Thomas E. Line is an officer of the Portfolio.
Philip A. Voelker is primarily responsible for the day-to-day management of
the Portfolio. Mr. Voelker is a Vice President and Trustee of the Portfolio,
Vice President of The Flex-funds and The Flex-Partners, and Senior Vice
President of the Adviser. Mr. Voelker has been associated with the Adviser since
1975.
The Adviser earns an annual fee, payable in monthly installments, at the
rate of 0.75% of the first $200 million and 0.60% in excess of $200 million of
the Portfolio's average net assets.
TRANSFER AGENT AND CUSTODIAN
The Portfolio has entered into Accounting Services, Administration, and
Transfer Agent Agreements with Mutual Funds Service Co. pursuant to which Mutual
Funds Service Co. acts accountant, administrator, and transfer agent for the
Portfolio, maintains an account for each investor in the Portfolio, performs
other transfer agency functions, and acts as dividend disbursing agent for the
Portfolio. Pursuant to a Custody Agreement, Firstar acts as the custodian of the
Portfolio's assets. See Part B for more detailed information concerning
custodial arrangements.
EXPENSES
The expenses of the Portfolio include the compensation of its Trustees who
are not affiliated with the Adviser; governmental fees; interest charges; taxes;
fees and expenses of independent auditors, of legal counsel and of any transfer
agent, custodian, registrar or dividend disbursing agent of the Portfolio;
insurance premiums; expenses of calculating the net asset value of, and the net
A-5
<PAGE>
income on, the Portfolio; all fees under its Administration and Accounting
Services Agreements; the expenses connected with the execution, recording and
settlement of security transactions; fees and expenses of the Portfolio's
custodian for all services to the Portfolio, including safekeeping of funds and
securities and maintaining required books and accounts; expenses of preparing
and mailing reports to investors and to governmental officers and commissions;
expenses of meetings of investors and Trustees; and the advisory fees payable to
the Adviser under the Investment Advisory Agreement.
ITEM 7. SHAREHOLDER INFORMATION.
CAPITAL STOCK AND OTHER SECURITIES
The Portfolio is organized as a trust under the laws of the State of New
York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Each investor is entitled to a vote in
proportion to the amount of its investment in the Portfolio. Investments in the
Portfolio may not be transferred, but an investor may withdraw all or any
portion of its investment at any time at net asset value. Investors in the
Portfolio (E.G., investment companies, insurance company separate accounts and
common and commingled trust funds) will each be liable for all obligations of
the Portfolio. However, the risk of an investor in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in which
both inadequate insurance existed and the Portfolio itself was unable to meet
its obligations.
The net income of the Portfolio is determined each day on which the New
York Stock Exchange is open for trading (and on such other days as are deemed
necessary in order to comply with Rule 22c-1 under the 1940 Act) ("Fund Business
Day"). This determination is made once during each such day. All the net income
of the Portfolio, as defined below, so determined is allocated PRO RATA among
the investors in the Portfolio at the time of such determination.
For this purpose the net income of the Portfolio (from the time of the
immediately preceding determination thereof) shall consist of (i) all income
accrued, less the amortization of any premium, on the assets of the Portfolio,
less (ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles. Interest income
includes discount earned (including both original issue and market discount) on
discount paper accrued ratably to the date of maturity and any net realized
gains or losses on the assets of the Portfolio.
Investments in the Portfolio have no preemptive or conversion rights and
are fully paid and nonassessable, except as set forth below. The Portfolio is
not required to hold annual meetings of investors but the Portfolio will hold
special meetings of investors when in the judgment of the Trustees it is
necessary or desirable to submit matters for an investor vote. Investors have
the right to communicate with other investors to the extent provided in Section
16(c) of the 1940 Act in connection with requesting a meeting of investors for
A-6
<PAGE>
the purpose of removing one or more Trustees, which removal requires a
two-thirds vote of the Portfolio's beneficial interests. Investors also have
under certain circumstances the right to remove one or more Trustees without a
meeting. Upon liquidation or dissolution of the Portfolio, investors would be
entitled to share PRO RATA in the net assets of the Portfolio available for
distribution to investors.
Under the anticipated method of operation of the Portfolio, the Portfolio
will not be subject to any income tax. However, each investor in the Portfolio
will be taxable on its share (as determined in accordance with the governing
instruments of the Portfolio) of the Portfolio's taxable income, gain, loss,
deductions and credits in determining its income tax liability. The
determination of such share will be made in accordance with the Internal Revenue
Code of 1986, as amended, and regulations promulgated thereunder.
The Portfolio's assets, income and distributions are managed in such a way
that an investor in the Portfolio will be able to satisfy the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended, assuming that the
investor invested all of its investable assets in the Portfolio.
Investor inquiries may be directed to the Portfolio at 6000 Memorial Drive,
Dublin, Ohio 43017.
PURCHASE OF SECURITIES
An investment in the Portfolio may be made without a sales load at the net
asset value next determined after an order is received in "good order" by the
Portfolio. Securities owned by the Portfolio and listed or traded on any
national securities exchange are valued at each closing of the New York Stock
Exchange on the basis of the last sale on such exchange each day that the
exchange is open for business. If there is no sale on that day, or if the
security is not listed, it is valued at its last bid quotation on the exchange
or, in the case of unlisted securities, as obtained from an established market
maker. Futures contracts are valued on the basis of the cost of closing out the
liability; I.E., at the settlement price of a closing contract or at the asked
quotation for such a contract if there has been no sale. Money market
instruments (certificates of deposit, commercial paper, etc.) having maturities
of 60 days or less are valued at amortized cost if not materially different from
market value. Portfolio securities for which market quotations are not readily
available are to be valued by the Adviser in good faith at its own expense under
the direction of the Trustees.
There is no minimum initial or subsequent investment in the Portfolio.
However, since the Portfolio intends to be as fully invested at all times as is
reasonably practicable in order to enhance the return on its assets, investments
must be made in federal funds (I.E., monies credited to the account of the
Portfolio's custodian bank by a Federal Reserve Bank).
A-7
<PAGE>
The Portfolio reserves the right to cease accepting investments at any time
or to reject any investment order.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Fund Business Day. As of 4:00 p.m., New York time, on each
such day, the value of each investor's beneficial interest in the Portfolio will
be determined by multiplying the net asset value of the Portfolio by the
percentage, effective for that day, which represents that investor's share of
the aggregate beneficial interests in the Portfolio. Any additions or
reductions, which are to be effected as of 4:00 p.m., New York time, on such
day, will then be effected. The investor's percentage of the aggregate
beneficial interests in the Portfolio will then be recomputed as the percentage
equal to the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of 4:00 p.m., New York time, on such day plus or
minus, as the case may be, the amount of net additions to or reductions in the
investor's investment in the Portfolio effected as of 4:00 p.m., New York time,
on such day, and (ii) the denominator of which is the aggregate net asset value
of the Portfolio as of 4:00 p.m., New York time, on such day, plus or minus, as
the case may be, the amount of net additions to or reductions in the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined will then be applied to determine the value of the investor's
interest in the Portfolio as of 4:00 p.m., New York time, on the following Fund
Business Day.
REDEMPTION OR REPURCHASE
An investor in the Portfolio may reduce any portion or all of its
investment at any time at the net asset value next determined after a request in
"good order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds normally on the next
business day after the reduction is effected, but in any event within seven
days. Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any reduction
may be suspended or the payment of the proceeds therefrom postponed during any
period in which the New York Stock Exchange is closed (other than weekends or
holidays) or trading on such Exchange is restricted, or, to the extent otherwise
permitted by the 1940 Act, if an emergency exists.
ITEM 8. DISTRIBUTION ARRANGEMENTS.
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
A-8
<PAGE>
PART B
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.
GROWTH MUTUAL FUND PORTFOLIO
6000 Memorial Drive
Dublin, Ohio 43017
STATEMENT OF ADDITIONAL INFORMATION DATED February 28, 2000
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Prospectus of the Growth Mutual Fund Portfolio dated
February 28, 2000. A copy of the Prospectus may be obtained at the above
address, or by calling: 1-800-325-FLEX, or (614) 760-2159. Capitalized terms
used and not otherwise defined herein have the same meanings as defined in the
Prospectus.
TABLE OF CONTENTS
Page
Portfolio History . . . . . . . . . . . . . . . . . . . . . . B-2
Description of the Portfolio and Its Investments and Risks . B-2
Management of the Portfolio . . . . . . . . . . . . . . . . . B-18
Control Persons and Principal Holders of Securities . . . . . B-22
Investment Advisory and Other Services . . . . . . . . . . . B-22
Brokerage Allocation and Other Practices . . . . . . . . . . B-24
Capital Stock and Other Securities . . . . . . . . . . . . . B-26
Purchase, Redemption and Pricing of Securities . . . . . . . B-28
Taxation of the Portfolio . . . . . . . . . . . . . . . . . . B-28
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . B-29
Calculation of Performance Data . . . . . . . . . . . . . . . B-29
Financial Statements . . . . . . . . . . . . . . . . . . . . B-29
B-1
<PAGE>
ITEM 11. PORTFOLIO HISTORY.
The Portfolio was organized as a trust under the laws of the State of New
York on October 30, 1999.
ITEM 12. DESCRIPTION OF THE PORTFOLIO AND ITS INVESTMENTS AND
RISKS.
Part A contains additional information about the investment objective and
policies of the Growth Mutual Fund Portfolio (the "Portfolio"). This Part B
should only be read in conjunction with Part A.
The investment policies set forth below represent the Portfolio's policies
as of the date of this Registration Statement. The investment policies are not
fundamental and may be changed by the Trustees of the Portfolio without investor
approval. No such change would be made, however, without 30 days' written notice
to investors.
R. Meeder & Associates, Inc., investment adviser to the Portfolio (the
"Adviser"), selects underlying funds in which to invest based, in part, on the
industry classifications represented in their portfolios, their investment
objectives and policies, their investment advisor and portfolio manager, and on
analysis of their past performance (absolute, relative and risk-adjusted). The
Adviser also considers other factors in the selection of underlying funds,
including, but not limited to, fund size, liquidity, expense ratio, general
composition of its investment portfolio, and current and expected portfolio
holdings.
The Adviser typically selects underlying funds that invest in small,
medium, and large capitalization companies with strong growth potential across a
wide range of sectors. Although the Portfolio may have exposure to a large
number of sectors, the underlying funds in which it invests may include funds
which concentrate investments in a particular industry sector, or which leverage
their investments.
The Portfolio will not invest in other funds of The Flex-Partners family of
funds or The Flex-funds family of funds, the corresponding portfolios of which
are also managed by the Adviser.
Under normal circumstances, at least 65% of the value of the Portfolio's
total assets will be invested in mutual funds. The Portfolio may at times desire
to gain exposure to the stock market through the purchase of "Index" funds
(funds which purchase stocks represented in popular stock market averages) with
a portion of its assets. "Index" funds may be purchased with a portion of the
Portfolio's assets at times when the Adviser's selection process identifies the
characteristics of a particular index to be more favorable than those of other
mutual funds available for purchase. If, in the Adviser's opinion, the Portfolio
should have exposure to certain stock indices and the Portfolio can efficiently
B-2
<PAGE>
and effectively implement such a strategy by directly purchasing the common
stocks of a desired index for the Portfolio itself, it may invest up to 100% of
its assets to do so.
In purchasing shares of other mutual funds the Portfolio will agree to vote
the shares in the same proportion as the vote of all other holders of such
shares.
OPEN-END INVESTMENT COMPANIES. The Portfolio and its underlying funds may
invest their assets in open-end investment companies. The Portfolio will
generally purchase "no-load" mutual funds, which are sold and purchased without
a sales charge. However, the Portfolio may purchase "load" mutual funds only if
the load, or sales commission, is by previous agreement waived for purchases or
sales made by the Portfolio.
Absent an exemptive order, the Portfolio may only purchase up to 3% of the
total outstanding securities of any underlying mutual fund. The holdings of any
"affiliated persons" of the Portfolio, as defined in the Investment Company Act,
must be included in the computation of the 3% limitation. Accordingly, when
"affiliated persons" hold shares of an underlying mutual fund, the Portfolio
will be limited in its ability to fully invest in that mutual fund. The Adviser
may then, in some instances, select alternative investments.
The Investment Company Act also provides that an underlying mutual fund
whose shares are purchased by the Portfolio may be allowed to delay redemption
of its shares in an amount which exceeds 1% of its total outstanding securities
during any period of less than 30 days. Shares held by the Portfolio in excess
of 1% of a mutual fund's outstanding securities therefore may not be considered
readily disposable securities.
Under certain circumstances, an underlying mutual fund may determine to
make payment of a redemption by the Portfolio wholly or partly by a distribution
in kind of securities from its portfolio, in lieu of cash, in conformity with
rules of the Securities and Exchange Commission. In such cases the Portfolio may
hold securities distributed by an underlying mutual fund until the Adviser
determines that it is appropriate to dispose of such securities.
CLOSED-END INVESTMENT COMPANIES. The Portfolio or its underlying funds may
invest their assets in "closed-end" investment companies (or "closed-end
funds"), subject to the investment restrictions set forth below. The Portfolio,
together with any company or companies controlled by the Portfolio, and any
other investment companies having the Adviser as an investment adviser, may
purchase in the aggregate only up to 3% of the total outstanding voting stock of
any closed-end fund. Shares of closed-end funds are typically offered to the
public in a one-time initial public offering by a group of underwriters who
retain a spread or underwriting commission of between 4% or 6% of the initial
public offering price. Such securities are then listed for trading on the New
York Stock Exchange, the American Stock Exchange, the National Association of
B-3
<PAGE>
Securities Dealers Automated Quotation System (commonly known as "NASDAQ") and,
in some cases, may be traded in other over-the-counter markets. Because the
shares of closed-end funds cannot be redeemed upon demand to the issuer like the
shares of an open-end investment company (such as the Portfolio), investors seek
to buy and sell shares of closed-end funds in the secondary market.
The Portfolio generally will purchase shares of closed-end funds only in
the secondary market. The Portfolio will incur normal brokerage costs on such
purchases similar to the expenses the Portfolio would incur for the purchase of
securities of any other type of issuer in the secondary market. The Portfolio
may, however, also purchase securities of a closed-end fund in an initial public
offering when, in the opinion of the Adviser, based on a consideration of the
nature of the closed-end fund's proposed investments, the prevailing market
conditions and the level of demand for such securities, they represent an
attractive opportunity for growth of capital. The initial offering price
typically will include a dealer spread, which may be higher than the applicable
brokerage cost if the Portfolio purchased such securities in the secondary
market.
The shares of many closed-end funds, after their initial public offering,
frequently trade at a price per share which is less than the net asset value per
share, the difference representing the "market discount" of such shares. This
market discount may be due in part to the investment objective of long-term
appreciation, which is sought by many closed-end funds, as well as to the fact
that the shares of closed-end funds are not redeemable by the holder upon demand
to the issuer at the next determined net asset value but rather are subject to
the principles of supply and demand in the secondary market. A relative lack of
secondary market purchasers of closed-end fund shares also may contribute to
such shares trading at a discount to their net asset value.
The Portfolio may invest in shares of closed-end funds that are trading at
a discount to net asset value or at a premium to net asset value. There can be
no assurance that the market discount on shares of any closed-end fund purchased
by the Portfolio will ever decrease. In fact, it is possible that this market
discount may increase and the Portfolio may suffer realized or unrealized
capital losses due to further decline in the market price of the securities of
such closed-end funds, thereby adversely affecting the net asset value of the
Portfolio's shares. Similarly, there can be no assurance that any shares of a
closed-end fund purchased by the Portfolio at a premium will continue to trade
at a premium or that the premium will not decrease subsequent to a purchase of
such shares by the Portfolio.
Closed-end funds may issue senior securities (including preferred stock and
debt obligations) for the purpose of leveraging the closed-end fund's common
shares in an attempt to enhance the current return to such closed-end fund's
common shareholders. The Portfolio's investment in the common shares of
closed-end funds that are financially leveraged may create an opportunity for
B-4
<PAGE>
greater total return on its investment, but at the same time may be expected to
exhibit more volatility in market price and net asset value than an investment
in shares of investment companies without a leveraged capital structure.
COMMON STOCKS. The Portfolio may invest in common stocks based upon the
criteria described in its investment objectives. Under normal circumstances,
investments in common stocks will not exceed 25% of the Portfolio's net assets.
INDEX-BASED INVESTMENTS. The Portfolio and its underlying funds may invest
their assets in index-based investments (IBIs), including, among others,
Standard & Poor's Depositary Receipts (SPDRs) and DIAMONDS. IBIs are shares of
publicly traded Unit Investment Trusts - investment vehicles registered with the
Securities and Exchange Commission under the Investment Company Act of 1940 -
which own the stocks in the relevant index.
SPDRs are units of beneficial interest in an investment trust sponsored by
a wholly-owned subsidiary of the American Stock Exchange, Inc. (the "Exchange")
that represent proportionate undivided interests in a portfolio of securities
consisting of substantially all of the common stocks of the S&P 500 Index. SPDRs
are listed on the Exchange and may be traded in the secondary market on a
per-SPDR basis. SPDRs are designed to provide investment results that generally
correspond to the price and yield performance of the component of common stocks
of the S&P 500 Index.
DIAMONDS are units of beneficial interest in an investment trust
representing proportionate undivided interests in a portfolio of securities
consisting of all the component common stocks of the Dow Jones Industrial
Average. DIAMONDS are listed on the Exchange and may be traded in the secondary
market on a per-DIAMOND basis. DIAMONDS are designed to provide investment
results that generally correspond to the price and yield performance of the
component common stocks of the Dow Jones Industrial Average.
IBIs are subject to the risk of an investment in a broadly based portfolio
of common stocks, including the risk of declines in the general level of stock
prices. The Portfolio's investment in an IBI may not exactly match the
performance of a direct investment in the respective index to which it is
intended to correspond. Additionally, an IBI may not fully replicate the
performance of its benchmark index due to the temporary unavailability of
certain index securities in the secondary market or due to other extraordinary
circumstances, such as discrepancies between the IBI and the index with respect
to the weighting of securities. IBIs are also subject to trading halts due to
market conditions or other reasons that, in the view of the American Stock
Exchange, make trading IBIs inadvisable.
MONEY MARKET INSTRUMENTS. The Portfolio or an underlying fund may invest in
money market instruments. When investing in money market instruments, the
B-5
<PAGE>
Portfolio will limit its purchases, denominated in U.S. dollars, to the
following securities.
U.S. Government Securities and Securities of its Agencies and
Instrumentalities - obligations issued or guaranteed as to principal or interest
by the United States or its agencies (such as the Export Import Bank of the
United States, Federal Housing Administration, and Government National Mortgage
Association) or its instrumentalities (such as the Federal Home Loan Bank,
Federal Intermediate Credit Banks and Federal Land Bank), including Treasury
bills, notes and bonds.
Bank Obligations and Instruments Secured Thereby - obligations (including
certificates of deposit, time deposits and bankers' acceptances) of domestic
banks having total assets of $1,000,000,000 or more, instruments secured by such
obligations and obligations of foreign branches of such banks, if the domestic
parent bank is unconditionally liable to make payment on the instrument if the
foreign branch fails to make payment for any reason. The Portfolio may also
invest in obligations (including certificates of deposit and bankers'
acceptances) of domestic branches of foreign banks having assets of
$1,000,000,000 or more, if the domestic branch is subject to the same regulation
as United States banks. The Portfolio will not invest at time of purchase more
than 25% of its assets in obligations of banks, nor will the Portfolio invest
more than 10% of its assets in time deposits.
High Quality Commercial Paper - The Portfolio may invest in commercial
paper rated no lower than "A-2" by Standard & Poor's Corporation or "Prime-2" by
Moody's Investors Services, Inc., or, if not rated, issued by a company having
an outstanding debt issue rated at least A by Standard & Poor's or Moody's.
Private Placement Commercial Paper - Private placement commercial paper
consists of unregistered securities which are traded in public markets to
qualified institutional investors, such as the Portfolio. The Portfolio's risk
is that the universe of potential buyers for the securities, should the
Portfolio desire to liquidate a position, is limited to qualified dealers and
institutions, and therefore such securities could have the effect of being
illiquid.
High Grade Corporate Obligations - obligations rated at least A by Standard
& Poor's or Moody's. See rating information below.
Repurchase Agreements - See "Repurchase Agreements" below.
The Adviser exercises due care in the selection of money market
instruments. However, there is a risk that the issuers of the securities may not
be able to meet their obligations to pay interest or principal when due. There
is also a risk that some of the Portfolio's securities might have to be
liquidated prior to maturity at a price less than original amortized cost or
value, face amount or maturity value to meet larger than expected redemptions.
Any of these risks, if encountered, could cause a reduction in net income or in
the net asset value of the Portfolio.
B-6
<PAGE>
RATINGS
1. Moody's Investors Services, Inc.'s Corporate Bond Rating:
Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins or
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length or time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
2. Standard and Poor's Corporation's Corporate Bond Rating:
AAA - Bonds rated AAA are highest grade obligations. They possess the
ultimate degree of protection as to principal and interest. Marketwise they move
with interest rates, and hence provide the maximum safety on all counts.
AA - Bonds rated AA also qualify as high grade obligations, and in the
majority of instances differ from AAA issues only in small degree. Here, too,
prices move with the long-term money market.
A - Bonds rated A are regarded as upper medium grade. They have
considerable investment strength but are not entirely free from the adverse
effect of changes in economic and trade conditions. Interest and principal are
regarded as safe. They predominantly reflect money rates in their market
behavior but, to some extent, also economic conditions.
B-7
<PAGE>
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this category
than for bonds in the A category.
3. Commercial Paper Ratings:
Commercial paper rated A-1 by Standard & Poor's Corporation ("S&P") has the
following characteristics: Liquidity ratios are adequate to meet cash
requirements. Long term senior debt is rated "A" or better. The issuer has
access to at least two additional channels of borrowing. Basic earnings and cash
flow have an upward trend. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned. Relative strength or weakness of the
above factors determines whether the issuer's commercial paper is A-1, A-2, or
A-3.
The rating P-1 is the highest commercial paper rating assigned by Moody's
Investors Service, Inc. ("Moody's"). Among the factors considered by Moody's in
assigning ratings are the following: (1) evaluation of the management of the
issuer; (2) economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain areas; (3)
evaluation of the issuer's products in relation to competition and customer
acceptance; (4) liquidity; (5) amount and quality of long-term debt; (6) trend
of earnings over a period of ten years; (7) financial strength of a parent
company and the relationships which exist with the issuer; and (8) recognition
by the management of obligations which may be present or may arise as a result
of public interest questions and preparations to meet such obligations.
4. Description of Permitted Money Market Investments:
Commercial Paper - refers to promissory notes issued by corporations in
order to finance their short term credit needs.
U.S. Government Obligations - are bills, certificates of indebtedness notes
and bonds issued by the U.S. Treasury and agencies, authorities and
instrumentalities of the U.S. Government established under the authority of an
act of Congress. Some obligations of U.S. Government agencies, authorities and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury, as for example, the Government National Mortgage Association; others
by the right of the issuer to borrow from the Treasury, as in the case of
Federal Farm Credit Banks and Federal National Mortgage Association; and others
only by the credit of the agency, authority or instrumentality; as for example,
Federal Home Loan Mortgage and Federal Home Loan Bank.
B-8
<PAGE>
Repurchase Agreements - See "Repurchase Agreements" below.
Certificates of Deposit - are certificates issued against funds deposited
in a bank, are for a definite period of time, earn a specified or variable rate
of return and are normally negotiable.
Banker's Acceptances - are short-term credit instruments used to finance
the import, export, transfer or storage of goods. They are termed "accepted"
when a bank guarantees their payment at maturity.
Corporate Obligations - include bonds and notes issued by corporations in
order to finance longer term credit needs.
FOREIGN INVESTMENTS. The Portfolio may invest its assets in underlying
funds that hold foreign securities. Foreign investments can involve significant
risks in addition to the risks inherent in U.S. investments. The value of
securities denominated in or indexed to foreign currencies, and of dividends and
interest from such securities, can change significantly when foreign currencies
strengthen or weaken relative to the U.S. dollar. Foreign securities markets
generally have less trading volume and less liquidity than U.S. markets, and
prices on some foreign markets can be highly volatile.
Many foreign countries lack uniform accounting and disclosure standards
comparable to those applicable to U.S. companies, and it may be more difficult
to obtain reliable information regarding an issuer's financial condition and
operations.
In addition, the costs of foreign investing, including withholding taxes,
brokerage commissions, and custodial costs, are generally higher than for U.S.
investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.
Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S. investors, including the possibility of expropriation or
nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
B-9
<PAGE>
diplomatic developments. There is no assurance that the Adviser will be able to
anticipate or counter these potential events.
The considerations noted above generally are intensified for investments in
developing countries. Developing countries may have relatively unstable
governments, economies based on only a few industries, and securities markets
that trade a small number of securities.
The Portfolio may invest in foreign securities that impose restrictions on
transfer within the U.S. or to U.S. persons. Although securities subject to
transfer restrictions may be marketable abroad, they may be less liquid than
foreign securities of the same class that are not subject to such restrictions.
American Depositary Receipts and European Depositary Receipts (ADRs and
EDRs) are certificates evidencing ownership of shares of a foreign-based
corporation held in trust by a bank or similar financial institution. Designed
for use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
markets and currencies.
ILLIQUID INVESTMENTS. The Portfolio and its underlying funds may invest
their assets in illiquid securities. Illiquid securities are investments that
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued. Under the supervision of the
Board of Trustees, the Adviser determines the liquidity of the Portfolio's
investments and, through reports from the Adviser, the Board monitors
investments in illiquid instruments. In determining the liquidity of the
Portfolio's investments, the Adviser may consider various factors, including (1)
the frequency of trades and quotations, (2) the number of dealers and
prospective purchasers in the marketplace, (3) dealer undertakings to make a
market, (4) the nature of the security (including any demand or tender
features), and (5) the nature of the marketplace for trades (including the
ability to assign or offset the Portfolio's rights and obligations relating to
the investment). Investments currently considered by the Portfolio to be
illiquid include shares in excess of 1% of a mutual fund's outstanding
securities, repurchase agreements not entitling the holder to payment of
principal and interest within seven days, over-the-counter options, and
non-government stripped fixed-rate mortgage-backed securities. Also, the Adviser
may determine some restricted securities to be illiquid. However, with respect
to over-the-counter options the Portfolio writes, all or a portion of the value
of the underlying instrument may be illiquid depending on the assets held to
cover the option and the nature and terms of any agreement the Portfolio may
have to close out the option before expiration. In the absence of market
quotations, illiquid investments are priced at fair value as determined in good
faith by the Board of Trustees. If through a change in values, net assets, or
other circumstances, the Portfolio were in a position where more than 15% of its
net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.
B-10
<PAGE>
RESTRICTED SECURITIES. The Portfolio and its underlying funds may invest
their assets in restricted securities. Restricted securities generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the Securities Act of 1933, or in a registered public
offering. Where registration is required, the Portfolio may be obligated to pay
all or part of the registration expense and a considerable period may elapse
between the time it decides to seek registration and the time the Portfolio may
be permitted to sell a security under an effective registration statement. If,
during such a period, adverse market conditions were to develop, the Portfolio
might obtain a less favorable price than prevailed when it decided to seek
registration of the security.
REPURCHASE AGREEMENTS. The Portfolio and its underlying funds may invest
their assets in repurchase agreements. In a repurchase agreement, the Portfolio
purchases a security and simultaneously commits to resell that security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. The resale price reflects the purchase price plus an
agreed upon incremental amount which is unrelated to the coupon rate or maturity
of the purchased security. A repurchase agreement involves the obligation of the
seller to pay the agreed upon price, which obligation is in effect secured by
the value (at least equal to the amount of the agreed upon resale price and
marked to market daily) of the underlying security. The Portfolio may engage in
repurchase agreements with respect to any security in which it is authorized to
invest.
While it does not presently appear possible to eliminate all risks from
these transactions (particularly the possibility of a decline in the market
value of the underlying securities, as well as delays and costs to the Portfolio
in connection with bankruptcy proceedings), it is the Portfolio's current policy
to limit repurchase agreement transactions to parties whose creditworthiness has
been reviewed and found satisfactory by the Adviser.
HEDGING STRATEGIES. The Portfolio may engage in hedging transactions in
carrying out its investment policies. The Adviser may conduct a hedging program
on behalf of the Portfolio for the following reasons: (1) to keep cash on hand
to meet shareholder redemptions or other needs while simulating full investment
in stocks; (2) to reduce the Portfolio's transaction costs or add value when
these instruments are favorably priced; (3) to forego taxes that would otherwise
have to be paid on gains from the sale of the Portfolio's securities; and (4) to
attempt to protect the value of certain securities owned or intended to be
purchased by the Portfolio while the Adviser is making a change in the
Portfolio's investment position.
A hedging program involves entering into an "option" or "futures"
transaction in lieu of the actual purchase or sale of securities. At present,
B-11
<PAGE>
many groups of common stocks (stock market indices) may be made the subject of
futures contracts, while government securities such as Treasury Bonds and Notes
are among debt securities currently covered by futures contracts.
LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. For certain regulatory
purposes, the Commodity Futures Trading Commission ("CFTC") limits the types of
futures positions that can be taken in conjunction with the management of a
securities portfolio for mutual funds, such as the Funds. All futures
transactions for the Portfolio will consequently be subject to the restrictions
on the use of futures contracts established in CFTC rules, such as observation
of the CFTC's definition of "hedging." In addition, whenever the Portfolio
establishes a long futures position, it will set aside cash or cash equivalents
equal to the underlying commodity value of the long futures contracts held by
the Portfolio. Although all futures contracts involve leverage by virtue of the
margin system applicable to trading on futures exchanges, the Portfolio will
not, on a net basis, have leverage exposure on any long futures contracts that
it establishes because of the cash set aside requirement. All futures
transactions can produce a gain or a loss when they are closed, regardless of
the purpose for which they have been established. Unlike short futures contracts
positions established to protect against the risk of a decline in value of
existing securities holdings, the long futures positions established by the
Portfolio to protect against reinvestment risk are intended to protect the
Portfolio against the risks of reinvesting portfolio assets that arise during
periods when the assets are not fully invested in securities.
The Portfolio may not purchase or sell financial futures or purchase
related options if immediately thereafter the sum of the amount of margin
deposits on the Portfolio's existing futures positions and premiums paid for
related options would exceed 5% of the market value of the Portfolio's total
assets.
The above limitations on the Portfolio's investments in futures contracts
and options, and the Portfolio's policies regarding futures contracts and
options discussed elsewhere in this Statement of Additional Information, may be
changed as regulatory agencies permit.
FUTURES CONTRACTS. When the Portfolio purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future date.
When the Portfolio sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and sale
will take place is fixed when the Portfolio enters into the contract.
Some currently available futures contracts are based on indices of
securities-prices, such as the Standard & Poor's 500 Composite Stock Price Index
(S&P 500). Futures can be held until their delivery dates, or can be closed out
before then if a liquid secondary market is available.
B-12
<PAGE>
The value of a futures contract tends to increase and decrease in tandem
with the value of its underlying instrument. Therefore, purchasing futures
contracts will tend to increase the Portfolio's exposure to positive and
negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When the Portfolio sells a futures
contract, by contrast, the value of its futures position will tend to move in a
direction contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much as if the
underlying instrument had been sold.
FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is
not required to deliver or pay for the underlying instrument unless the contract
is held until the delivery date. However, both the purchaser and seller are
required to deposit "initial margin" with a futures broker, known as a futures
commission merchant (FCM), when the contract is entered into. Initial margin
deposits are typically equal to a percentage of the contract's value.
If the value of either party's position declines, that party will be
required to make additional "variation margin" payments to settle the change in
value on a daily basis. The party that has a gain may be entitled to receive all
or a portion of this amount. Initial and variation margin payments do not
constitute purchasing securities on margin for purposes of the Portfolio's
investment limitations. In the event of the bankruptcy of an FCM that holds
margin on behalf of the Portfolio, the Portfolio may be entitled to return of
margin owed to it only in proportion to the amount received by the FCM's other
customers, potentially resulting in losses to the Portfolio.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the Portfolio
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Portfolio pays
the current market price for the option (known as the option premium). Options
have various types of underlying instruments, including specific securities,
indices of securities prices and futures contracts. The Portfolio may terminate
its position in a put option it has purchased by allowing it to expire or by
exercising the option. If the option is allowed to expire, the Portfolio will
lose the entire premium it paid. If the Portfolio exercises the option, it
completes the sale of the underlying instrument at the strike price. The
Portfolio may also terminate a put option position by closing it out in the
secondary market at its current price, if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price does
not fall enough to offset the cost of purchasing the option, a put buyer can
expect to suffer a loss (limited to the amount of the premium paid, plus related
transaction costs).
B-13
<PAGE>
The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price.
A call buyer typically attempts to participate in potential price increases
of the underlying instrument with risk limited to the cost of the option if
security prices fall. At the same time, the buyer can expect to suffer a loss if
security prices do not rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. When the Portfolio writes a put option, it
takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium the Portfolio assumes the obligation to pay
the strike price for the option's underlying instrument if the other party to
the option chooses to exercise it. When writing an option on a futures contract
the Portfolio will be required to make margin payments to an FCM as described
above for futures contracts. The Portfolio may seek to terminate its position in
a put option it writes before exercise by closing out the option in the
secondary market at its current price. If the secondary market is not liquid for
a put option the Portfolio has written, however, the Portfolio must continue to
be prepared to pay the strike price while the option is outstanding, regardless
of price changes and must continue to set aside assets to cover its position.
When the Portfolio writes a put option, it takes the opposite side of the
transaction from the option's purchaser. In return for receipt of the premium,
the Portfolio assumes the obligation to pay the strike price for the option's
underlying instrument if the other party to the option chooses to exercise it.
When writing an option on a futures contract the Portfolio will be required to
make margin payments to an FCM as described above for futures contracts. The
Portfolio may seek to terminate its position in a put option it writes before
exercise by closing out the option in the secondary market at its current price.
If the secondary market is not liquid for a put option the Portfolio has
written, however, the Portfolio must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price changes, and must
continue to set aside assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it received. If
security prices remain the same over time, it is likely that the writer will
also profit because it should be able to close out the option at a lower price.
If security prices fall, the put writer would expect to suffer a loss. This loss
should be less than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should mitigate the
effects of the decline.
B-14
<PAGE>
Writing a call option obligates the Portfolio to sell or deliver the
option's underlying instrument in return for the strike price, upon exercise of
the option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
The Portfolio may write only "covered" call options. An option written on a
security or currency is "covered" when, so long as the Portfolio is obligated
under the option, it owns the underlying security or currency. The Portfolio
will "cover" stock index options and options on futures contracts it writes by
maintaining in a segregated account either marketable securities, which in the
Adviser's judgment correlate to the underlying index or futures contract or an
amount of cash, U.S. government securities or other liquid, high grade debt
securities equal in value to the amount the Portfolio would be required to pay
were the option exercised.
COMBINED POSITIONS. The Portfolio may purchase and write options in
combination with each other or in combination with futures or forward contracts,
to adjust the risk and return characteristics of the overall position. For
example, the Portfolio may purchase a put option and write a call option on the
same underlying instrument, in order to construct a combined position whose risk
and return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one strike
price and buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
CORRELATION OF PRICE CHANGES. Because there are a limited number of types
of exchange traded options and futures contracts, it is likely that the
standardized contracts available will not match the Portfolio's current or
anticipated investments exactly. The Portfolio may invest in options and futures
contracts based on securities with different issuers, maturities, or other
characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Portfolio's other investments.
Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match the Portfolio's
investments well. Options and futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
B-15
<PAGE>
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts.
The Portfolio may purchase or sell options and futures contracts with a
greater or lesser value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in volatility between
the contract and the securities, although this may not be successful in all
cases. If price changes in the Portfolio's options or futures positions are
poorly correlated with its other investments, the positions may fail to produce
anticipated gains or result in losses that are not offset by gains in other
investments.
LIQUIDITY OF OPTIONS AND FUTURES CONTRACTS. There is no assurance a liquid
secondary market will exist for any particular options or futures contract at
any particular time. Options may have relatively low trading volume and
liquidity if their strike prices are not close to the underlying instrument's
current price. In addition, exchanges may establish daily price fluctuation
limits for options and futures contracts, and may halt trading if a contract's
price moves upward or downward more than the limit in a given day. On volatile
trading days when the price fluctuation limit is reached or a trading halt is
imposed, it may be impossible for the Portfolio to enter into new positions or
close out existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could prevent prompt
liquidation of unfavorable positions, and potentially could require the
Portfolio to continue to hold a position until delivery or expiration regardless
of changes in its value. As a result, the Portfolio's access to other assets
held to cover its options or futures positions could also be impaired.
ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. The Portfolio will comply
with guidelines established by the SEC with respect to coverage of options and
futures strategies by mutual funds, and if the guidelines so require, will set
aside appropriate liquid assets in a segregated custodial account in the amount
prescribed. Securities held in a segregated account cannot be sold while the
futures or option strategy is outstanding, unless they are replaced with other
suitable assets. As a result, there is a possibility that segregation of a large
percentage of the Portfolio's assets could impede portfolio management.
SHORT SALES. The Portfolio may enter into short sales "against the box"
with respect to equity securities it holds. For example, if the Adviser
anticipates a decline in the price of a stock the Portfolio holds, it may sell
the stock short "against the box." If the stock price subsequently declines, the
proceeds of the short sale could be expected to offset all or a portion of the
stock's decline. Each Portfolio currently intends to hedge no more than 25% of
its total assets with short sales "against the box" on equity securities under
normal circumstances.
B-16
<PAGE>
When the Portfolio enters into a short sale "against the box", it will be
required to own, or have the right to obtain at no added cost, securities
identical to those sold short "against the box" and will be required to continue
to hold them while the short sale "against the box" is outstanding. The
Portfolio will incur transaction costs, including interest expense, in
connection with opening, maintaining, and closing short sales.
INVESTMENT RESTRICTIONS
The investment restrictions below have been adopted by the Portfolio as
fundamental policies. Under the Investment Company Act of 1940 (the "Act"), a
"fundamental" policy may not be changed without the vote of a majority of the
outstanding voting securities of the Portfolio, which is defined in the Act as
the lesser of (a) 67 percent or more of the shares present at a shareholder
meeting if the holders of more than 50 percent of the outstanding shares are
present or represented by proxy, or (b) more than 50 percent of the outstanding
shares ("Majority Voters). The percentage limitations contained in the
restrictions listed below apply at the time of the purchase of the securities.
The Portfolio may not:
(a) Issue senior securities;
(b) Act as underwriter of securities of other issuers;
(c) Invest in real estate except for office purposes;
(d) Purchase or sell commodities or commodity contracts, except that it may
purchase or sell financial futures contracts involving U.S. Treasury Securities,
corporate securities, or financial indexes;
(e) Lend any security or make any other loan if, as a result, more than 33
1/3% of its total assets would be lent to other parties; but this limitation
does not apply to purchases of debt securities or repurchase agreements;
(f) Purchase more than 10% of any class of securities, including voting
securities of any issuer, except that the purchase of U.S. Treasury debt
instruments shall not be subject to this limitation and the securities of
investment companies shall not be subject to this limitation if an exemptive
order is obtained permitting the Portfolio to exceed this limitation;
(g) Purchase any securities on margin, or participate in any joint or joint
and several trading account, provided, however, that it may open a margin
account to the extent necessary to engage in hedging transactions which are not
precluded by other particular restrictions;
B-17
<PAGE>
(h) Make any so-called "short" sales of securities, except against an
identical portfolio position (i.e., a "short sale against the box"), but this
restriction shall not preclude a futures contract which sells short an index or
group of securities;
(i) Purchase or retain any securities of an issuer, any of whose officers
directors or security holders is an officer or director of the Trust or a
Portfolio, if such officer or director owns beneficially more than 1/2 of 1% of
the issuer's securities or together they own beneficially more than 5% of such
securities;
(j) Invest in securities of companies that have a record of less than three
years' continuous operation if, at the time of such purchase, more than 5% of
its assets (taken at value) would be so invested;
(k) Purchase participations or other direct interests in oil, gas or other
mineral exploration or development programs;
(l) Invest directly in warrants; provided, however, the purchase of the
shares of other investment companies that hold warrants is permitted; and
(m) Invest more than 15% of its net assets in restricted securities and
securities for which market quotations are not readily available and repurchase
agreements that mature in excess of seven days.
The Portfolio's operating policy is not to: (a) Notwithstanding (b) above,
pledge assets having a value in excess of 10% of its gross assets; (b) Invest in
oil, gas or mineral leases or programs; and (c) Purchase real estate limited
partnerships.
ITEM 13. MANAGEMENT OF THE PORTFOLIO.
The Trustees and officers of the Portfolio and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate those Trustees who are "interested
persons" (as defined in the 1940 Act) of the Portfolio. Unless otherwise
indicated, the address of each Trustee and officer is P.O. Box 7177, 6000
Memorial Drive, Dublin, Ohio 43017.
NAME, ADDRESS AND AGE POSITION HELD PRINCIPAL OCCUPATION
- --------------------- ------------- --------------------
ROBERT S. MEEDER, SR.*+, 70 Trustee/President Chairman of R. Meeder &
Associates, Inc., an
investment adviser;
Chairman and Director of
Mutual Funds Service Co.,
the Funds' transfer agent.
B-18
<PAGE>
MILTON S. BARTHOLOMEW, 70 Trustee Retired; formerly a
1424 Clubview Boulevard, S. practicing attorney in
Worthington, OH 43235 Columbus, Ohio; member of
each Fund's Audit
Committee.
ROGER D. BLACKWELL, 59 Trustee Professor of Marketing and
Blackwell Associates, Inc. Consumer Behavior, The
3380 Tremont Road Ohio State University;
Columbus, OH 43221 President of Blackwell
Associates, Inc., a
strategic consulting firm.
ROBERT S. MEEDER, JR.*+, 38 Trustee and President of R. Meeder &
Vice President Associates, Inc.
WALTER L. OGLE, 62 Trustee Executive Vice President
400 Interstate North Parkway of Aon Consulting, an
Suite 1630 employee benefits
Atlanta, GA 30339 consulting group.
CHARLES A. DONABEDIAN, 56 Trustee President, Winston
Winston Financial, Inc. Financial, Inc., which
200 TechneCenter Drive provides a variety of
Suite 200 marketing and consulting
Milford, OH 45150 services to investment
management companies; CEO,
Winston Advisors, Inc., an
investment adviser.
JAMES W. DIDION, 68 Trustee Retired; formerly
8781 Dunsinane Drive Executive Vice President
Dublin, OH 43017 of Core Source, Inc., an
employee benefit and
Workers' Compensation
administration and
consulting firm
(1991-1997).
JACK W. NICKLAUS II, 38 Trustee Designer, Nicklaus Design,
11780 U.S. Highway #1 a golf course design firm
North Palm Beach, FL 33408 and division of Golden
Bear International, Inc.
B-19
<PAGE>
PHILIP A. VOELKER*+, 45 Trustee and Vice Senior Vice President and
President Chief Investment Officer
of R. Meeder & Associates,
Inc.
JAMES B. CRAVER*, 56 Assistant Secretary Assistant Secretary and
42 Miller Hill Road Assistant Treasurer of
Box 811 Adviser Dealer Services,
Dover, MA 02030 Inc.; Practicing Attorney;
Special Counsel to
Flex-Partners, Flex-funds
and their Portfolios;
Senior Vice President of
Signature Financial Group,
Inc. (January 1991 to
August 1995).
DONALD F. MEEDER*+, 60 Secretary Vice President of R.
Meeder & Associates, Inc.;
Secretary of Mutual Funds
Service Co., the Funds'
transfer agent.
WESLEY F. HOAG*+, 42 Vice President Vice President and General
Counsel of R. Meeder &
Associates, Inc. and
Mutual Funds Service Co.
(since July 1993);
Attorney, Porter, Wright,
Morris & Arthur, a law
firm (October 1984 to
June 1993).
B-20
<PAGE>
THOMAS E. LINE*+, 32 Treasurer President, Mutual Funds
Service Co., the
Portfolio's transfer
agent, and Chief Operating
Officer, R. Meeder &
Associates, Inc., the
Portfolio's investment
adviser (since June 1998);
Vice President and
Treasurer, BISYS Fund
Services (December 1996 to
June 1998); Senior Manager
- Financial Services,
KPMG, LLP (September 1989
to December 1996).
BRUCE E. MCKIBBEN*+, 30 Assistant Treasurer Manager/Fund Accounting
and Financial Reporting,
Mutual Funds Service Co.,
the Funds' transfer agent
(since April 1997);
Assistant Treasurer and
Manager/Fund Accounting,
The Ohio Company, a
broker-dealer (April 1991
to April 1997).
* Interested Person of the Portfolio.
+ P.O. Box 7177, 6000 Memorial Drive, Dublin, Ohio 43017.
Robert S. Meeder, Sr. is Robert S. Meeder, Jr.'s father and Donald F.
Meeder's uncle.
The following table shows the compensation paid by the Portfolio and all other
mutual funds advised by the Adviser, including The Flex-funds, The Flex-Partners
and the corresponding Portfolios of The Flex-Partners and The Flex-funds
(collectively, the "Fund Complex") as a whole to the Trustees of the Portfolio
during the fiscal year ended December 31, 1999.
B-21
<PAGE>
COMPENSATION TABLE
Pension or Total
Retirement Compensation
Benefits from
Aggregate Accrued as Estimated Registrant and
Compensation Part of Annual Fund Complex
from the Portfolio Benefits Upon Paid TO
TRUSTEE PORTFOLIO EXPENSE RETIREMENT TRUSTEE1, 2
- ------- ---------- ------- ------------- -----------
Robert S. Meeder, Sr. None None None None
Milton S. Bartholomew $0 None None $16,734
Robert S. Meeder, Jr. None None None None
Walter L. Ogle $0 None None $16,234
Philip A. Voelker None None None None
Roger D. Blackwell $0 None None $15,234
Charles A. Donabedian $0 None None $17,734
James Didion $0 None None $16,234
Jack W. Nicklaus II $0 None None $15,984
1 Compensation figures include cash and amounts deferred at the election of
certain non-interested Trustees. For the calendar year ended December 31, 1999,
participating non-interested Trustees accrued deferred compensation from the
funds as follows: Milton S. Bartholomew - $16,734, Roger D. Blackwell - $15,234,
Charles A. Donabedian - $17,734, Jack W. Nicklaus II - $15,984, and Walter L.
Ogle - $8,647.
2 The Fund Complex consists of 19 investment companies.
Each Trustee who is not an "interested person" is paid a meeting fee of
$250 per regularly scheduled meeting of each Portfolio. In addition, each such
Trustee earns an annual fee, payable quarterly, based on the average net assets
in each Portfolio based on the following schedule: 0.00375% of the amount of
each Portfolio's average net assets exceeding $15 million. Each trustee who
attends a meeting called for special purposes is paid a meeting fee of $500.
Members of the Audit and Strategic Planning Committees for each of The
Flex-funds and The Flex-Partners Trusts, and the Portfolios are paid $500 for
each Committee meeting. All other officers and Trustees serve without
compensation from the Portfolios or the Trust.
The Declaration of Trust provides that the Portfolio will indemnify its
Trustees and officers as described below under Item 18.
The Portfolio and the Adviser have each adopted a Code of Ethics that
permits personnel subject to the Code to invest in securities, including, under
certain circumstances and subject to certain restrictions, securities that may
B-22
<PAGE>
be purchased or held by the Portfolio. However, each such Code restricts
personal investing practices by directors and officers of the Adviser and its
affiliates, and employees of the Adviser with access to information about the
purchase or sale of Portfolio securities. The Code of Ethics for the Portfolio
restricts personal investing practices of trustees of the Portfolio who have
knowledge about recent Portfolio trades. Among other provisions, each Code of
Ethics requires that such directors and officers and employees with access to
information about the purchase or sale of Portfolio securities obtain
preclearance before executing personal trades. Each Code of Ethics prohibits
acquisition of securities without preclearance in, among other events, an
initial public offering or a limited offering, as well as profits derived from
the purchase and sale of the same security within 60 calendar days. These
provisions are designed to put the interests of Portfolio investors before the
interest of people who manage the Portfolio.
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.
Not Applicable.
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.
ADVISER
R. Meeder & Associates, Inc. (the "Adviser") is the investment adviser for
the Portfolio. The Adviser serves the Portfolio pursuant to an Investment
Advisory Agreement which has been approved by a vote of a majority of the
Trustees, including a majority of those Trustees who are not "interested
persons" (as defined in the 1940 Act) of the Portfolio and which will remain in
force so long as renewal thereof is specifically approved at least annually by a
majority of the Trustees or by a majority vote of the investors in the Portfolio
(with the vote of each being in proportion to the amount of its investment)
("Majority Portfolio Vote"), and in either case by vote of a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) at a
meeting called for the purpose of voting on such renewal.
The Investment Advisory Agreement will terminate automatically if assigned
and may be terminated without penalty at any time upon 60 days' prior written
notice by Majority Portfolio Vote, by the Trustees of the Portfolio, or by the
Adviser.
The Adviser earns an annual fee, payable in monthly installments as
follows. The fee for the Portfolio is based upon the average net assets of the
Portfolio and is at the rate of 0.75% of the first $200 million and 0.60% in
excess of $200 million of average net assets.
TRANSFER AGENT
The Portfolio has entered into an Administration and Accounting Services
Agreement with Mutual Funds Service Co., which acts as transfer agent for the
B-23
<PAGE>
Portfolio. Mutual Funds Service Co. maintains an account for each investor in
the Portfolio, performs other transfer agency functions and acts as dividend
disbursing agent for the Portfolio.
The minimum annual fee for accounting services for the Portfolio is $7,500.
Subject to the applicable minimum fee, the Portfolio's annual fee, payable
monthly, is computed at the rate of 0.15% of the first $10 million, 0.10% of the
next $20 million, 0.02% of the next $50 million and 0.01% in excess of $80
million of the Portfolio's average net assets.
CUSTODIAN
Pursuant to a Custody Agreement, Firstar, N.A., Cincinnati, acts as the
custodian of the Portfolio's assets (the "Custodian"). The Custodian's
responsibilities include safeguarding and controlling the Portfolio's cash and
securities, handling the receipt and delivery of securities, determining income
and collecting interest on the Portfolio's investments and maintaining books of
original entry for Portfolio accounting and other required books and accounts.
Securities held by the Portfolio may be deposited into the Federal
Reserve-Treasury Department Book Entry System or the Depository Trust Company
and may be held by a subcustodian bank if such arrangements are reviewed and
approved by the Trustees of the Portfolio. The Custodian does not determine the
investment policies of the Portfolio or decide which securities the Portfolio
will buy or sell. The Portfolio may, however, invest in securities of the
Custodian and may deal with the Custodian as principal in securities
transactions. For its services, the Custodian will receive such compensation as
may from time to time be agreed upon by it and the Portfolio.
INDEPENDENT AUDITORS
KPMG LLP, Two Nationwide Plaza, Columbus, Ohio 43215, serves as the
Portfolio's independent auditors. The auditors audit financial statements for
the Portfolio and provide other assurance, tax, and related services.
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.
All orders for the purchase or sale of portfolio securities are placed on
behalf of the Portfolio by the Adviser pursuant to authority contained in the
investment advisory agreement. The Adviser is also responsible for the placement
of transaction orders for accounts for which it or its affiliates act as
investment adviser. In selecting broker-dealers, subject to applicable
limitations of the federal securities laws, the Adviser considers various
relevant factors, including, but not limited to, the size and type of the
transaction; the nature and character of the markets for the security to be
purchased or sold; the execution efficiency, settlement capability, and
financial condition of the broker-dealer firm; the broker-dealer's execution
B-24
<PAGE>
services rendered on a continuing basis; the reasonableness of any commissions,
and arrangements for payment of Portfolio expenses.
The Portfolio may execute portfolio transactions with broker-dealers that
provide research and execution services to the Portfolio or other accounts over
which the Adviser or its affiliates exercise investment discretion. Such
services may include advice concerning the value of securities; the advisability
of investing in, purchasing or selling securities; the availability of
securities or the purchasers or sellers of securities; furnishing analyses and
reports concerning issuers industries, securities, economic factors and trends,
portfolio strategy, and performance of accounts; and effecting securities
transactions and performing functions incidental thereto (such as clearance and
settlement). The selection of such broker-dealers generally is made by the
Adviser (to the extent possible consistent with execution considerations) in
accordance with a ranking of broker-dealers determined periodically by the
Adviser's investment staff based upon the quality of research and execution
services provided.
The receipt of research from broker-dealers that execute transactions on
behalf of the Portfolio may be useful to the Adviser in rendering investment
management services to the Portfolio or its other clients, and conversely, such
research provided by broker-dealers that have executed transaction orders on
behalf of the Adviser's other clients may be useful to the Adviser in carrying
out its obligations to the Portfolio. The receipt of such research is not
expected to reduce the Adviser's normal independent research activities;
however, it enables the Adviser to avoid the additional expenses that could be
incurred if the Adviser tried to develop comparable information through its own
efforts.
Subject to applicable limitations of the federal securities laws,
broker-dealers may receive commissions for agency transactions that are in
excess of the amount of commissions charged by other broker-dealers in
recognition of their research and execution services. In order to cause the
Portfolio to pay such higher commissions, the Adviser must determine in good
faith that such commissions are reasonable in relation to the value of the
brokerage and research services provided by such executing broker-dealers viewed
in terms of a particular transaction or the Adviser's overall responsibilities
to the Portfolio and its other clients. In reaching this determination, the
Adviser will not attempt to place a specific dollar value on the brokerage and
research services provided or to determine what portion of the compensation
should be related to those services.
The Adviser is authorized to use research services provided by, and to
place portfolio transactions with, brokerage firms that have provided assistance
in the distribution of shares of The Flex-funds funds or The Flex-Partners funds
to the extent permitted by law.
B-25
<PAGE>
The Adviser may allocate brokerage transactions to broker-dealers who have
entered into arrangements with the Adviser under which the broker-dealer
allocates a portion of the commissions paid by the Portfolio toward payment of
the Portfolio's expenses, such as transfer agent fees of Mutual Funds Service
Co. or custodian fees. The transaction quality must, however, be comparable to
those of other qualified broker-dealers.
The Trustees of the Portfolio periodically review the Adviser's performance
of its responsibilities in connection with the placement of portfolio
transactions on behalf of the Portfolio and review the commissions paid by the
Portfolio over representative periods of time to determine if they are
reasonable in relation to the benefits to the Portfolio.
From time to time, the Trustees of the Portfolio will review whether the
recapture for the benefit of the Portfolio of some portion of the brokerage
commissions or similar fees paid by the Portfolio on portfolio transactions is
legally permissible and advisable.
The Portfolio seeks to recapture soliciting broker-dealer fees on the
tender of portfolio securities, but at present no other recapture arrangements
are in effect. The Trustees of the Portfolio intend to continue to review
whether recapture opportunities are available and are legally permissible and,
if so, to determine in the exercise of their business judgment, whether it would
be advisable for the Portfolio to seek such recapture.
Although the Portfolio and other portfolios managed by the Adviser have
substantially the same Trustees and officers, investment decisions for the
Portfolio are made independently from those of other portfolios managed by the
Adviser or accounts managed by affiliates of the Adviser. It sometimes happens
that the same security is held in the portfolio of more than one of these
Portfolios or accounts. Simultaneous transactions are inevitable when several
Portfolios are managed by the same investment adviser, particularly when the
same security is suitable for the investment objective of more than one
Portfolio.
When two or more Portfolios are simultaneously engaged in the purchase or
sale of the same security, the prices and amounts are allocated in accordance
with a policy considered by the Portfolio Trustees to be equitable to each
portfolio. In some cases this system could have a detrimental effect on the
price or value of the security as far as one of the Portfolios is concerned. In
other cases, however, the ability of a Portfolio to participate in volume
transactions will produce better executions and prices for the Portfolio. It is
the current opinion of the Trustees of each Portfolio that the desirability of
retaining the Adviser as investment adviser to each Portfolio outweighs any
disadvantages that may be said to exist from exposure to simultaneous
transactions.
B-26
<PAGE>
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate PRO
RATA in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share PRO RATA in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees of the Portfolio if they
choose to do so and in such event the other investors in the Portfolio would not
be able to elect any Trustee. The Portfolio is not required to hold annual
meetings of investors but the Portfolio will hold special meetings of investors
when in the judgment of the Portfolio's Trustees it is necessary or desirable to
submit matters for an investor vote. No material amendment may be made to the
Portfolio's Declaration of Trust without the affirmative majority vote of
investors (with the vote of each being in proportion to the amount of their
investment).
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of its
investors (with the vote of each being in proportion to the amount of their
investment), except that if the Trustees of the Portfolio recommend such sale of
assets, the approval by vote of a majority of the investors (with the vote of
each being in proportion to the amount of their investment) will be sufficient.
The Portfolio may also be terminated (i) upon liquidation and distribution of
its assets, if approved by the vote of two-thirds of its investors (with the
vote of each being in proportion to the amount of their investment), or (ii) by
the Trustees of the Portfolio by written notice to its investors.
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other liabilities. Thus, the risk of an investor incurring financial loss on
B-27
<PAGE>
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was unable to meet its
obligations.
The Declaration of Trust further provides that obligations of the Portfolio
are not binding upon the Trustees individually but only upon the property of the
Portfolio and that the Trustees will not be liable for any action or failure to
act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Declaration of Trust provides that
the trustees and officers will be indemnified by the Portfolio against
liabilities and expenses incurred in connection with litigation in which they
may be involved because of their offices with the Portfolio, unless, as to
liability to the Portfolio or its investors, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect to any
other matter it is finally adjudicated that they did not act in good faith in
the reasonable belief that their actions were in the best interests of the
Portfolio. In the case of settlement, such indemnification will not be provided
unless it has been determined by a court or other body approving the settlement
or other disposition, or by a reasonable determination, based upon a review of
readily available facts, by vote of a majority of disinterested Trustees or in a
written opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended (the "1933
Act"). Investments in the Portfolio may only be made by investment companies,
insurance company separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" as defined in
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any "security" within
the meaning of the 1933 Act.
The Portfolio determines its net asset value as of 4:00 p.m., New York
time, each Fund Business Day by dividing the value of the Portfolio's net assets
by the value of the investment of the investors in the Portfolio at the time the
determination is made. As of the date of this Registration Statement, the New
York Stock Exchange is open for trading every weekday except for the following
holidays (or days on which such holiday is observed): New Year's Day, Martin
Luther King Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas.) Purchases and reductions will be
B-28
<PAGE>
effected at the time of determination of net asset value next following the
receipt of any purchase or reduction order.
The assets of the Portfolio consist primarily of shares of underlying
mutual funds, which are valued at their respective net asset values under the
1940 Act. The underlying funds value securities in their portfolios for which
market quotations are readily available at their current market value (generally
the last reported sale price) and all other securities and assets at fair value
pursuant to methods established in good faith by the board of directors of the
underlying fund. Money market funds with portfolio securities that mature in one
year or less may use the amortized cost or penny-rounding methods to value their
securities. Securities having 60 days or less remaining to maturity generally
are valued at their amortized cost which approximates market value.
Other assets of the Portfolio are valued at their current market value if
market quotations are readily available and, if market quotations are not
available, they are valued at fair value pursuant to methods established in good
faith by the Board of Trustees. Securities having 60 days or less remaining to
maturity are valued at their amortized cost.
ITEM 19. TAXATION OF THE PORTFOLIO.
The Portfolio is organized as a trust under New York law. Under the method
of operation of the Portfolio, the Portfolio is not subject to any income tax.
However, each investor in the Portfolio is taxable on its share (as determined
in accordance with the governing instruments of the Portfolio) of the
Portfolio's ordinary income and capital gain in determining its income tax
liability. The determination of such share is made in accordance with the
Internal Revenue Code of 1986, as amended, and regulations promulgated
thereunder.
The Portfolio's taxable year-end is December 31. Although, as described
above, the Portfolio is not subject to federal income tax, it files appropriate
federal income tax returns.
The Portfolio's assets, income and distributions are managed in such a way
that an investor in the Portfolio will be able to satisfy the requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended, assuming that the
investor invested all of its investable assets in the Portfolio.
ITEM 20. UNDERWRITERS.
The exclusive placement agent for the Portfolio is Adviser Dealer Services,
Inc., which receives no additional compensation for serving in this capacity.
Investment companies, insurance company separate accounts, common and commingled
trust funds and similar organizations and entities may continuously invest in
the Portfolio.
B-29
<PAGE>
ITEM 21. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 22. FINANCIAL STATEMENTS.
Not applicable.
B-30
<PAGE>
PART C
ITEM 23. EXHIBITS.
(a) Declaration of Trust of the Registrant is filed herewith.
(b) By-Laws of the Registrant are filed herewith.
(c) Not applicable.
(d) Form of Investment Advisory Agreement between the Registrant and R.
Meeder & Associates, Inc. is filed herewith.
(e) Not applicable.
(f) Deferred Compensation Plan for Independent Trustees is filed herewith.
(g) Form of Custody Agreement between the Registrant and Star Bank, N.A.,
Cincinnati is filed herewith.
(h) (i) Form of Administration Agreement between the Registrant and Mutual
Funds Service Co. (MFSCo) is filed herewith.
(ii) Form of Accounting Services Agreement between the Registrant and
MFSCo is filed herewith.
(i) Not applicable.
(j) Not applicable.
(k) Not applicable.
(l) Not applicable.
(m) Not applicable.
(n) Not applicable.
(o) Not applicable.
(p) Codes of Ethics for the Portfolio, Muirfield Investors, Inc. and R.
Meeder & Associates, Inc. are filed herewith.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
C-1
<PAGE>
ITEM 25. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration of
Trust, filed as Exhibit (a) herewith.
The Trustees and officers of the Registrant are insured under an errors and
omissions liability insurance policy and under the fidelity bond required by
Rule 17g-1 under the Investment Company Act of 1940 (the "1940 Act").
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
Not applicable.
ITEM 27. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
NAME ADDRESS
- ---- -------
Mutual Funds Service Co. 6000 Memorial Drive
(transfer and accounting Dublin, OH 43017
services agent)
R. Meeder & Associates, Inc. 6000 Memorial Drive
(investment adviser) Dublin, OH 43017
Firstar, N.A., Cincinnati 425 Walnut Street
(custodian) Cincinnati, OH 45202
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
Not applicable.
C-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Dublin and State of Ohio on the 28th day of February, 2000.
GROWTH MUTUAL FUND PORTFOLIO
By /S/ Wesley F. Hoag
----------------------------------
Wesley F. Hoag, Vice President
THE GROWTH MUTUAL FUND PORTFOLIO
DECLARATION OF TRUST
DATED AS OF OCTOBER 30, 1999
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--THE TRUST
1.1 Name 1
1.2 Definitions 1
ARTICLE II--TRUSTEES
2.1 Number and Qualification 3
2.2 Term and Election 3
2.3 Resignation, Removal and Retirement 4
2.4 Vacancies 4
2.5 Meetings 5
2.6 Officers; Chairman of the Board 5
2.7 By-Laws 5
ARTICLE III--POWERS OF TRUSTEES
3.1 General 6
3.2 Investments 6
3.3 Legal Title 7
3.4 Sale and Increases of Interests 7
3.5 Decreases and Redemptions of Interests 7
3.6 Borrow Money 7
3.7 Delegation; Committees 8
3.8 Collection and Payment 8
3.9 Expenses 8
3.10 Miscellaneous Powers 8
3.11 Further Powers 8
ARTICLE IV--INVESTMENT ADVISORY, ADMINISTRATION AND PLACEMENT
AGENT ARRANGEMENTS
4.1 Investment Advisory and Other Arrangements 9
4.2 Parties to Contract 9
ARTICLE V--LIMITATION OF HOLDERS; LIMITATIONS OF LIABILITY OF
TRUSTEES, OFFICERS, ETC.
5.1 Liability of Holders; Indemnification 10
5.2 Limitations of Liability of Trustees, Officers,
Employees, Agents, Independent Contractors
to Third Parties 10
<PAGE>
5.3 Limitations of Liability of Trustees, Officers,
Employees, Agents, Independent Contractors
to Trust, Holders, etc. 10
5.4 Mandatory Indemnification 10
5.5 No Bond Required of Trustees 11
5.6 No Duty of Investigation; Notice in Trust
Instruments, etc. 11
5.7 Reliance on Experts, etc. 12
ARTICLE VI--INTERESTS
6.1 Interests 12
6.2 Non-Transferability 12
6.3 Register of Interests 12
ARTICLE VII--INCREASES, DECREASES AND REDEMPTIONS OF INTERESTS 13
------------------------ ------------------------
ARTICLE VIII--DETERMINATION OF BOOK CAPITAL ACCOUNT BALANCES
AND DISTRIBUTIONS 13
8.1 Book Capital Account Balances 13
8.2 Allocations and Distributions to Holders 13
8.3 Power to Modify Foregoing Procedures 14
ARTICLE IX--HOLDERS 14
9.1 Rights of Holders 14
9.2 Meetings of Holders 14
9.3 Notice of Meetings 14
9.4 Record Date for Meetings; Distributions, etc. 15
9.5 Proxies, etc. 15
9.6 Reports 15
9.7 Inspection of Records 15
9.8 Holder Action by Written Consent 16
9.9 Notices 16
ARTICLE X--DURATION; TERMINATION; AMENDMENT; MERGERS, ETC.
10.1 Duration 16
10.2 Termination 17
10.3 Dissolution 18
10.4 Amendment Procedure 18
10.5 Merger, Consolidation and Sale of Assets 19
10.6 Incorporation 19
ii
<PAGE>
ARTICLE XI--MISCELLANEOUS
11.1 Certificate of Designation; Agent for Service
of Process 20
11.2 Governing Law 20
11.3 Counterparts 20
11.4 Reliance by Third Parties 20
11.5 Provisions in Conflict with Law or Regulations 20
APPENDIX I--SERIES DESIGNATION
iii
<PAGE>
DECLARATION OF TRUST
OF
THE GROWTH MUTUAL FUND PORTFOLIO
-------------------------
Dated as of October 30, 1999
This DECLARATION OF TRUST of the Growth Mutual Fund Portfolio is made as of
the 30th day of October, 1999 by the parties signatory hereto, as Trustees (as
defined in Section 1.2 hereof).
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a trust fund under the law of the
State of New York for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the trust assets be composed of money and
property contributed thereto by the holders of interests in the trust entitled
to ownership rights in the trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust
all money and property contributed to the trust fund and will manage and dispose
of the same for the benefit of the holders of interests in the Trust and subject
to the provisions hereof, to wit:
ARTICLE I
THE TRUST
1.1. NAME. The name of the trust created hereby (the "Trust") shall be the
Growth Mutual Fund Portfolio and so far as may be practicable the Trustees shall
conduct the Trust's activities, execute all documents and sue or be sued under
that name, which name (and the word "Trust" wherever hereinafter used) shall
refer to the Trustees as Trustees, and not individually, and shall not refer to
the officers, employees, agents or independent contractors of the Trust or
holders of interests in the Trust.
1.2. DEFINITIONS. As used in this Declaration, the following terms shall
have the following meanings:
The term "INTERESTED PERSON" shall have the meaning given it in the 1940
Act.
"ADMINISTRATOR" shall mean a party furnishing services to the Trust
pursuant to any administration contract described in Section 4.1 hereof.
"BOOK CAPITAL ACCOUNT" shall mean, for any Holder at any time, the Book
Capital Account of the Holder for such day, determined in accordance with
Section 8.1 hereof.
<PAGE>
"CODE" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time, as well as any non-superseded provisions of the
Internal Revenue Code of 1954, as amended (or any corresponding provision or
provisions of succeeding law).
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"DECLARATION" shall mean this Declaration of Trust as amended from time to
time. References in this Declaration to "DECLARATION", "HEREOF", "HEREIN" and
"HEREUNDER" shall be deemed to refer to this Declaration rather than the article
or section in which such words appears.
"FISCAL YEAR" shall mean an annual period determined by the Trustees which
ends on December 31 of each year or on such other day as is permitted or
required by the Code.
"HOLDERS" shall mean as of any particular time all holders of record of
Interests in the Trust.
"INSTITUTIONAL INVESTOR(S)" shall mean any regulated investment company,
segregated asset account, foreign investment company, common trust fund, group
trust or other investment arrangement, whether organized within or without the
United States of America, other than an individual, S corporation, partnership
or grantor trust beneficially owned by any individual, S corporation or
partnership.
"INTEREST(S)" shall mean the interest of a Holder in the Trust, including
all rights, powers and privileges accorded to Holders by this Declaration, which
interest may be expressed as a percentage, determined by calculating, at such
times and on such basis as the Trustees shall from time to time determine, the
ratio of each Holder's Book Capital Account balance to the total of all Holders'
Book Capital Account balances. Reference herein to a specified percentage of, or
fraction of, Interests, means Holders whose combined Book Capital Account
balances represent such specified percentage or fraction of the combined Book
Capital Account balances of all, or a specified group of, Holders.
"INVESTMENT ADVISER" shall mean any party furnishing services to the Trust
pursuant to any investment advisory contract described in Section 4.1 hereof.
"MAJORITY INTERESTS VOTE" shall mean the vote, at a meeting of Holders, of
(A) 67% or more of the Interests present or represented at such meeting, if
Holders of more than 50% of all Interests are present or represented by proxy,
or (B) more than 50% of all Interests, whichever is less.
2
<PAGE>
"PERSON" shall mean and include individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
"REDEMPTION" shall mean the complete withdrawal of an Interest of a Holder
the result of which is to reduce the Book Capital Account balance of that Holder
to zero, and the term "redeem" shall mean to effect a Redemption.
"TRUSTEES" shall mean each signatory to this Declaration, 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 have qualified as Trustees in accordance with the provisions
hereof and are then in office, and reference in this Declaration to a Trustee or
Trustees shall refer to such individual or individuals in their capacity as
Trustees hereunder.
"TRUST PROPERTY" shall mean as of any particular time any and all property,
real or personal, tangible or intangible, which at such time is owned or held by
or for the account of the Trust or the Trustees.
The "1940 ACT" shall mean the United States Investment Company Act of 1940,
as amended from time to time, and the rules and regulations thereunder.
ARTICLE II
TRUSTEES
2.1. NUMBER AND QUALIFICATION. The number of Trustees shall be fixed from
time to time by action of the Trustees taken as provided in Section 2.5 hereof;
provided, however, that the number of Trustees so fixed shall in no event be
less than three or more than fifteen. Any vacancy created by an increase in the
number of Trustees may be filled by the appointment of an individual having the
qualifications described in this Section 2.1 made by action of the Trustees
taken as provided in Section 2.5 hereof. Any such appointment shall not become
effective, however, until the individual named in the written instrument of
appointment shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of this Declaration. No reduction in the number
of Trustees shall have the effect of removing any Trustee from office. Whenever
a vacancy occurs, until such vacancy is filled as provided in Section 2.4
hereof, the Trustees continuing in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be an individual
at least 21 years of age who is not under legal disability.
2.2. TERM AND ELECTION. Each Trustee named herein, or elected or appointed
prior to the first meeting of Holders, shall (except in the event of
resignations, retirements, removals, or vacancies pursuant to Section 2.3 or
Section 2.4 hereof) hold office until a successor to such Trustee has been
elected at such meeting and has qualified to serve as Trustee, as required under
3
<PAGE>
the 1940 Act. Subject to the provisions of Section 16(a) of the 1940 Act and
except as provided in Section 2.3 hereof, each Trustee shall hold office during
the lifetime of the Trust and until its termination as hereinafter provided.
2.3. RESIGNATION, REMOVAL AND RETIREMENT. Any Trustee may resign his or her
trust (without need for prior or subsequent accounting) by an instrument in
writing executed by such Trustee and delivered or mailed to the Chairman, if
any, the President or the Secretary of the Trust and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any Trustee may be removed by the affirmative vote of Holders of
two-thirds of the Interests or (provided the aggregate number of Trustees, after
such removal and after giving effect to any appointment made to fill the vacancy
created by such removal, shall not be less than the number required by Section
2.1 hereof) with cause, by the action of two-thirds of the remaining Trustees.
Removal with cause includes, but is not limited to, the removal of a Trustee due
to physical or mental incapacity or failure to comply with such written policies
as from time to time may be adopted by at least two-thirds of the Trustees with
respect to the conduct of the Trustees and attendance at meetings. Any Trustee
who has attained a mandatory retirement age, if any, established pursuant to any
written policy adopted from time to time by at least two-thirds of the Trustees
shall, automatically and without action by such Trustee or the remaining
Trustees, be deemed to have retired in accordance with the terms of such policy,
effective as of the date determined in accordance with such policy. 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 executed by a majority
of the other Trustees, specifying the date of such Trustee's retirement. Upon
the resignation, retirement or removal of a Trustee, or a Trustee otherwise
ceasing to be a Trustee, such resigning, retired, removed or former Trustee
shall execute and deliver such documents as the remaining Trustees shall require
for the purpose of conveying to the Trust or the remaining Trustees any Trust
Property held in the name of such resigning, retired, removed or former Trustee.
Upon the death of any Trustee or upon removal, retirement or resignation due to
any Trustee's incapacity to serve as Trustee, the legal representative of such
deceased, removed, retired or resigning Trustee shall execute and deliver on
behalf of such deceased, removed, retired or resigning Trustee such documents as
the remaining Trustees shall require for the purpose set forth in the preceding
sentence.
2.4. VACANCIES. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, retirement,
adjudicated incompetence or other incapacity to perform the duties of the
office, or removal, of a Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of a vacancy, Holders of at least a majority of
the Interests entitled to vote, acting at any meeting of Holders held in
accordance with Section 9.2 hereof, or, to the extent permitted by the 1940 Act,
a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
4
<PAGE>
2.5. MEETINGS. Meetings of the Trustees shall be held from time to time
upon the call of the Chairman, if any, the President, the Secretary, an
Assistant Secretary or any two Trustees. Regular meetings of the Trustees may be
held without call or notice at a time and place fixed by the By-Laws or by
resolution of the Trustees. Notice of any other meeting shall be mailed or
otherwise given not less than 24 hours before the meeting but may be waived in
writing by any Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such meeting except
in the situation in which a Trustee attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting was
not lawfully called or convened. The Trustees may act with or without a meeting.
A quorum for all meetings of the Trustees shall be a majority of the Trustees.
Unless provided otherwise in this Declaration, any action of the Trustees may be
taken at a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consent of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any,
may act with or without a meeting. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present ( a quorum being present) or
without a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the Trustees,
Trustees who are Interested Persons of the Trust or otherwise interested in any
action to be taken may be counted for quorum purposes under this Section 2.5 and
shall be entitled to vote to the extent permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all individuals participating in the
meeting can hear each other and participation in a meeting by means of such
communications equipment shall constitute presence in person at such meeting.
2.6. OFFICERS; CHAIRMAN OF THE BOARD. The Trustees shall, from time to
time, elect a President, a Secretary and a Treasurer. The Trustees may elect or
appoint, from time to time, a Chairman of the Board who shall preside at all
meetings of the Trustees and carry out such other duties as the Trustees may
designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers, agents or independent contractors with such powers
as the Trustees may deem to be advisable. The Chairman, if any, shall be and
each other officer may, but need not, be a Trustee.
2.7. BY-LAWS. The Trustees may adopt and, from time to time, amend or
repeal By-Laws for the conduct of the business of the Trust.
5
<PAGE>
ARTICLE III
POWERS OF TRUSTEES
3.1. GENERAL. The Trustees shall have exclusive and absolute control over
the Trust Property and over the business of the Trust to the same extent as if
the Trustees were the sole owners of the Trust Property and such business in
their own right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees may perform such acts as in their sole discretion they
deem proper for conducting the business of the Trust. The enumeration of or
failure to mention any specific power herein shall not be construed as limiting
such exclusive and absolute control. The powers of the Trustees may be exercised
without order of or resort to any court.
3.2. INVESTMENTS. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute or
otherwise deal in or dispose of United States and foreign currencies and
related instruments including forward contracts, and securities, including
common and preferred stock, warrants, bonds, debentures, time notes and all
other evidences of indebtedness, negotiable or non-negotiable instruments,
obligations, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, reverse repurchase agreements, convertible
securities, forward contracts, options, futures contracts, and other
securities, including, without limitation, those issued, guaranteed or
sponsored by any state, territory or possession of the United States and
the District of Columbia and their political subdivisions, agencies and
instrumentalities, or by the United States Government, any foreign
government, or any agency, instrumentality or political subdivision of the
United States Government or any foreign government, or any international
instrumentality, or by any bank, savings institution, corporation or other
business entity organized under the laws of the United States or under any
foreign laws; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of any
kind and description, including, without limitation, the right to consent
and otherwise act with respect thereto, with power to designate one or more
Persons to exercise any of such rights, powers and privileges in respect of
any of such investments; and the Trustees shall be deemed to have the
foregoing powers with respect to any additional instruments in which the
Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
6
<PAGE>
3.3. LEGAL TITLE. Legal title to all Trust Property shall be vested in the
Trustees as joint tenants except that the Trustees shall have the power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name or nominee name of any
other Person on behalf of the Trust, on such terms as the Trustees may
determine.
The right, title and interest of the Trustees in the Trust Property shall
vest automatically in each individual who may hereafter become a Trustee upon
his due election and qualification. Upon the resignation, removal or death of a
Trustee, such resigning, removed or deceased Trustee shall automatically cease
to have any right, title or interest in any Trust Property, and the right, title
and interest of such resigning, removed or deceased Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
3.4. SALE AND INCREASES OF INTERESTS. The Trustees, in their discretion,
may, from time to time, without a vote of the Holders, permit any Institutional
Investor to purchase an Interest, or increase its Interest, for such type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day), and on such terms as the Trustees may
deem best, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. Individuals, S corporations, partnerships and
grantor trusts that are beneficially owned by any individual, S corporation or
partnership may not purchase Interests. A Holder which has redeemed its Interest
may not be permitted to purchase an Interest until the later of 60 calendar days
after the date of such Redemption or the first day of the Fiscal Year next
succeeding the Fiscal Year during which such Redemption occurred.
3.5. DECREASES AND REDEMPTIONS OF INTERESTS. Subject to Article VII hereof,
the Trustees, in their discretion, may, from time to time, without a vote of the
Holders, permit a Holder to redeem its Interest, or decrease its Interest, for
either cash or property, at such time or times (including, without limitation,
each business day), and on such terms as the Trustees may deem best.
3.6. BORROW MONEY. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, to endorse, guarantee, or undertake the performance of
any obligation, contract or engagement of any other Person.
3.7. DELEGATION; COMMITTEES. The Trustees shall have power, consistent with
their continuing exclusive and absolute control over the Trust Property and over
the business of the Trust, to delegate from time to time to such of their number
or to officers, employees, agents or independent contractors of the Trust the
doing of such things and the execution of such instruments in either the name of
the Trust or the names of the Trustees or otherwise as the Trustees may deem
expedient.
7
<PAGE>
3.8. COLLECTION AND PAYMENT. The Trustees shall have power to collect all
property due to the Trust; to pay all claims, including taxes, against the Trust
Property; to prosecute, defend, compromise or abandon any claims relating to the
Trust or Trust Property; to foreclose any security interest securing any
obligation, by virtue of which any property is owed to the Trust; and to enter
into releases, agreements and other instruments.
3.9. EXPENSES. The Trustees shall have the power to incur and pay any
expenses which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
compensation from the Trust Property to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees. The Trustees
may pay themselves such compensation for special services, including legal and
brokerage services, as they in good faith may deem reasonable, and reimbursement
for expenses reasonably incurred by themselves on behalf of the Trust.
3.10. MISCELLANEOUS POWERS. The Trustees shall have the power to: (a)
employ or contract with such Persons as the Trustees may deem appropriate for
the transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies insuring the Investment
Adviser, Administrator, placement agent, Holders, Trustees, officers, employees,
or independent contractors of the Trust against all claims arising by reason of
holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not the Trust would have the power to
indemnify such Person against such liability; (d) establish pension,
profit-sharing, and other retirement, incentive and benefit plans for the
Trustees, officers, employees or agents of the Trust; (e) make donations,
irrespective of benefit to the Trust, for charitable, religious, educational,
scientific, civic or similar purposes; (f) to the extent permitted by law,
indemnify any person with whom the Trust has dealings, including the Investment
Adviser, Administrator, placement agent, Holders, Trustees, officers, employees,
agents or independent contractors of the Trust, to such extent as the Trustees
shall determine; (g) guarantee indebtedness or contractual obligations of
others; (h) determine and change the Fiscal Year of the Trust and the method by
which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Trust.
3.11. FURTHER POWERS. The Trustees shall have power to conduct the business
of the Trust and carry on its operations in any and all of its branches and
maintain offices, whether within or without the State of New York, in any and
all states of the United States of America, in the District of Columbia, and in
any and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as
they deem necessary, proper, appropriate or desirable in order to promote the
interests of the Trust although such things are not herein specifically
8
<PAGE>
mentioned. Any determination as to what is in the interests of the Trust which
is made by the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor of a grant of
power to the Trustees. The Trustees shall not be required to obtain any court
order in order to deal with Trust Property.
ARTICLE IV
Investment Advisory, Administration
AND PLACEMENT AGENT ARRANGEMENTS
4.1. INVESTMENT ADVISORY AND OTHER ARRANGEMENTS. The Trustees may in their
discretion, from time to time, enter into investment advisory and administration
contracts or placement agent agreements whereby the other party to such contract
or agreement shall undertake to furnish the Trustees such investment advisory,
administration, placement agent and/or services as the Trustees shall, from time
to time, consider appropriate or desirable and all upon such terms and
conditions as the Trustees may in their sole discretion determine.
Notwithstanding any provision of this Declaration, the Trustees may authorize
any Investment Adviser (subject to such general or specific instructions as the
Trustees may, from time to time, adopt) to effect purchases, sales, loans or
exchanges of Trust Property on behalf of the Trustees or may authorize any
officer, employee or Trustee to effect such purchases, sales, loans or exchanges
pursuant to recommendations of any such Investment Adviser (all without any
further action by the Trustees). Any such purchase, sale, loan or exchange shall
be deemed to have been authorized by the Trustees.
4.2. PARTIES TO CONTRACT. Any contract of the character described in
Section 4.1, 4.2 hereof or in the By-Laws of the Trust may be entered into with
any corporation, firm, trust or association, although one or more of the
Trustees or officers of the Trust may be an officer, director, Trustee,
shareholder or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any individual holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust under
or by reason of any such contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when entered into
was reasonable and fair and not inconsistent with the provisions of this Article
IV or the By-Laws of the Trust. The same Person may be the other party to one or
more contracts entered into pursuant to Sections 4.1 hereof or of the By-Laws of
the Trust, 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 4.2 or in the By-Laws of the Trust.
9
<PAGE>
ARTICLE V
Limitation of Holders; Limitations of
LIABILITY OF TRUSTEES, OFFICERS, ETC.
5.1. LIABILITY OF HOLDERS; INDEMNIFICATION. Each Holder shall be jointly
and severally liable (with rights of contribution INTER SE in proportion to
their respective Interests in the Trust) for the liabilities and obligations of
the Trust in the event that the Trust fails to satisfy such liabilities and
obligations; provided, however, that, to the extent assets are available in the
Trust, the Trust shall indemnify and hold each Holder harmless from and against
any claim or liability to which such Holder may become subject by reason of
being or having been a Holder to the extent that such claim or liability imposes
on the Holder an obligation or liability which, when compared to the obligations
and liabilities imposed on other Holders, is greater than such Holder's Interest
(proportionate share), and shall reimburse such Holder for all legal and other
expenses reasonably incurred by such Holder in connection with any such claim or
liability. The rights accruing to a Holder under this Section 5.1 shall not
exclude any other right to which such Holder may be lawfully entitled, nor shall
anything contained herein restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
provided herein. Notwithstanding the indemnification procedure described above,
it is intended that each Holder shall remain jointly and severally liable to the
Trust's creditors as a legal matter.
5.2. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS,
INDEPENDENT CONTRACTORS TO THIRD PARTIES. No Trustee, officer, employee, agent
or independent contractor (except in the case of an agent or independent
contractor to the extent expressly provided by written contract) of the Trust
shall be subject to any personal liability whatsoever to any Person, other than
the Trust or the Holders, in connection with Trust Property or the affairs of
the Trust; and all such Persons shall look solely to the Trust Property for
satisfaction of claims of any nature against a Trustee, officer, employee, agent
or independent contractor (except in the case of an agent or independent
contractor to the extent expressly provided by written contract) of the Trust
arising in connection with the affairs of the Trust.
5.3. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS,
INDEPENDENT CONTRACTORS TO TRUST, HOLDERS, ETC. No Trustee, officer, employee,
agent or independent contractor (except in the case of an agent or independent
contractor to the extent expressly provided by written contract) of the Trust
shall be liable to the Trust or the Holders for any action or failure to act
(including, without limitation, the failure to compel in any way any former or
acting Trustee to redress any breach of trust) except for such Person's own bad
faith, willful misfeasance, gross negligence or reckless disregard of such
Person's duties.
5.4. MANDATORY INDEMNIFICATION. The Trust shall indemnify, to the fullest
extent permitted by law (including the 1940 Act), each Trustee, officer,
employee, agent or independent contractor (except in the case of an agent or
10
<PAGE>
independent contractor to the extent expressly provided by written contract) of
the Trust (including any Person who serves at the Trust's request as a director,
officer or trustee of another organization in which the Trust has any interest
as a shareholder, creditor or otherwise) against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) reasonably incurred by such Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which such Person may be involved or
with such Person may be threatened, while in office or thereafter, by reason of
such Person being or having been such a Trustee, officer, employee, agent or
independent contractor, except with respect to any matter as to which such
Person shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person's duties;
provided, however, that as to any matter disposed of by a compromise payment by
such Person, pursuant to a consent decree or otherwise, no indemnification
either for such payment or for any other expenses shall be provided unless there
has been a determination that such Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Person's office by the court or other body approving the
settlement or other disposition or by a reasonable determination, based upon a
review of readily available facts (as opposed to a full trial-type inquiry),
that such Person did not engage in such conduct by written opinion from
independent legal counsel approved by the Trustees. The rights accruing to any
Person under these provisions shall not exclude any other right to which such
Person may be lawfully entitled; provided that no Person may satisfy any right
of indemnity or reimbursement granted in this Section 5.4 or in Section 5.2
hereof or to which such Person may be otherwise entitled except out of the Trust
Property. The Trustees may make advance payments in connection with
indemnification under this Section 5.4, provided that the indemnified Person
shall have given a written undertaking to reimburse the Trust in the event it is
subsequently determined that such Person is not entitled to such
indemnification.
SECTION 5.5. NO BOND REQUIRED OF TRUSTEES. No Trustee shall, as such, be
obligated to give any bond or surety or other security for the performance of
any of such Trustee's duties hereunder.
SECTION 5.6. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, or other Person dealing with any Trustee, officer, employee,
agent or independent contractor of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by such
Trustee, officer, employee, agent or independent contractor or be liable for the
application of money or property paid, loaned or delivered to or on the order of
such Trustee, officer, employee, agent or independent contractor. Every
obligation, contract, instrument, certificate or other interest or undertaking
of the Trust, and every other act or thing whatsoever executed in connection
with the Trust shall be conclusively taken to have been executed or done by the
executors thereof only in their capacity as Trustees, officers, employees,
agents or independent contractors of the Trust. Every written obligation,
contract, instrument, certificate or other interest or undertaking of the Trust
made or sold by any Trustee, officer, employee, agent or independent contractor
of the Trust, in such capacity, shall contain an appropriate recital to the
11
<PAGE>
effect that the Trustee, officer, employee, agent or independent contractor of
the Trust shall not personally be bound by or liable thereunder, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim thereunder, and appropriate references shall be made therein to the
Declaration, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to impose
personal liability on any Trustee, officer, employee, agent or independent
contractor of the Trust. Subject to the provisions of the 1940 Act, the Trust
may maintain insurance for the protection of the Trust Property, the Holders,
and the Trustees, officers, employees, agents and independent contractors of the
Trust in such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment shall
deem advisable.
SECTION 5.7. RELIANCE ON EXPERTS, ETC. Each Trustee, officer, employee,
agent or independent contractor of the Trust shall, in the performance of such
Person's duties, be fully and completely justified and protected with regard to
any act or any failure to act resulting from reliance in good faith upon the
books of account or other records of the Trust (whether or not the Trust would
have the power to indemnify such Persons against such liability), upon an
opinion of counsel, or upon reports made to the Trust by any of its officers or
employees or by the Investment Adviser or Administrator, accountant, appraiser
or other experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or expert
may also be a Trustee.
ARTICLE VI
INTERESTS
6.1. INTERESTS. The beneficial interest in the Trust Property shall consist
of non-transferable Interests. The Interests shall be personal property giving
only the rights in this Declaration specifically set forth. The value of an
Interest shall be equal to the Book Capital Account balance of the Holder of the
Interest.
6.2. NON-TRANSFERABILITY. A Holder may not transfer, sell or exchange its
Interest.
6.3. REGISTER OF INTERESTS. A register shall be kept at the Trust under the
direction of the Trustees which shall contain the name, address and Book Capital
Account balance of each Holder. Such register shall be conclusive as to the
identity of the Holders. No Holder shall be entitled to receive payment of any
distribution, nor to have notice given to it as herein provided, until it has
given its address to such officer or agent of the Trust as is keeping such
register for entry thereon.
12
<PAGE>
ARTICLE VII
INCREASES, DECREASES AND REDEMPTIONS OF INTERESTS
Subject to applicable law, to the provisions of this Declaration and to
such restrictions as may from time to time be adopted by the Trustees, each
Holder shall have the right to vary its investment in the Trust at any time
without limitation by increasing (through a capital contribution) or decreasing
(through a capital withdrawal) or by a Redemption of its Interest. An increase
in the investment of a Holder in the Trust shall be reflected as an increase in
the Book Capital Account balance of that Holder and a decrease in the investment
of a Holder in the Trust or the Redemption of the Interest of a Holder shall be
reflected as a decrease in the Book Capital Account balance of that Holder. The
Trust shall, upon appropriate and adequate notice from any Holder increase,
decrease or redeem such Holder's Interest for an amount determined by the
application of a formula adopted for such purpose by resolution of the Trustees;
provided that (a) the amount received by the Holder upon any such decrease or
Redemption shall not exceed the decrease in the Holder's Book Capital Account
balance effected by such decrease or Redemption of its Interest, and (b) if so
authorized by the Trustees, the Trust may, at any time and from time to time,
charge fees for effecting any such decrease or Redemption, at such rates as the
Trustees may establish, and may, at any time and from time to time, suspend such
right of decrease or Redemption. The procedures for effecting decreases or
Redemptions shall be as determined by the Trustees from time to time.
ARTICLE VIII
Determination of Book Capital
ACCOUNT BALANCES AND DISTRIBUTIONS
8.1. BOOK CAPITAL ACCOUNT BALANCES. The Book Capital Account balance of
each Holder shall be determined on such days and at such time or times as the
Trustees may determine. The Trustees shall adopt resolutions setting forth the
method of determining the Book Capital Account balance of each Holder. The power
and duty to make calculations pursuant to such resolutions may be delegated by
the Trustees to the Investment Adviser or Administrator, custodian, or such
other Person as the Trustees may determine. Upon the Redemption of an Interest,
the Holder of that Interest shall be entitled to receive the balance of its Book
Capital Account. A Holder may not transfer, sell or exchange its Book Capital
Account balance.
8.2. ALLOCATIONS AND DISTRIBUTIONS TO HOLDERS. The Trustees shall, in
compliance with the Code, the 1940 Act and generally accepted accounting
principles, establish the procedures by which the Trust shall make (i) the
allocation of unrealized gains and losses, taxable income and tax loss, and
profit and loss, or any item or items thereof, to each Holder, (ii) the payment
of distributions, if any, to Holders, and (iii) upon liquidation, the final
distribution of items of taxable income and expense. Such procedures shall be
set forth in writing and be furnished to the Trust's accountants. The Trustees
may amend the procedures adopted pursuant to this Section 8.2 from time to time.
13
<PAGE>
The Trustees may retain from the net profits such amount as they may deem
necessary to pay the liabilities and expenses of the Trust, to meet obligations
of the Trust, and as they may deem desirable to use in the conduct of the
affairs of the Trust or to retain for future requirements or extensions of the
business.
8.3. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of the
foregoing provisions of this Article VIII, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the net income
of the Trust, the allocation of income of the Trust, the Book Capital Account
balance of each Holder, or the payment of distributions to the Holders as they
may deem necessary or desirable to enable the Trust to comply with any provision
of the 1940 Act or any order of exemption issued by the Commission or with the
Code.
ARTICLE IX
HOLDERS
9.1. RIGHTS OF HOLDERS. The ownership of the Trust Property and the right
to conduct any business described herein are vested exclusively in the Trustees,
and the Holder shall have no right or title therein other than the beneficial
interest conferred by their Interests and they shall have no power or right to
call for any partition or division of any Trust Property.
9.2. MEETINGS OF HOLDERS. Meetings of Holders may be called at any time by
a majority of the Trustees and shall be called by any Trustee upon written
request of Holders holding, in the aggregate, not less than 10% of the
Interests, such request specifying the purpose or purposes for which such
meeting is to be called. Any such meeting shall be held within or without the
State of New York and within or without the United States of America on such day
and at such time as the Trustees shall designate. Holders of one-third of the
Interests, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as may otherwise be required by the 1940
Act, other applicable law, this Declaration or the By-Laws of the Trust. If a
quorum is present at a meeting, an affirmative vote of the Holders present, in
person or by proxy, holding more than 50% of the total Interests of the Holders
present, either in person or by proxy, at such meeting constitutes the action of
the Holders, unless a greater number of affirmative votes is required by the
1940 Act, other applicable law, this Declaration or the By-Laws of the Trust.
All or any one or more Holders may participate in a meeting of Holders by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other and participation
in a meeting by means of such communications equipment shall constitute presence
in person at such meeting.
9.3. NOTICE OF MEETINGS. Notice of each meeting of Holders, stating the
time, place and purposes of the meeting, shall be given by the Trustees by mail
to each Holder, at its registered address, mailed at least 10 days and not more
than 60 days before the meeting. Notice of any meeting may be waived in writing
by any Holder either before or after such meeting. The attendance of a Holder at
14
<PAGE>
a meeting shall constitute a waiver of notice of such meeting except in the
situation in which a Holder attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting was
not lawfully called or convened. At any meeting, any business properly before
the meeting may be considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.
9.4. RECORD DATE FOR MEETINGS; DISTRIBUTIONS, ETC. For the purpose of
determining the Holders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time fix a date, not more than 90 days
prior to the date of any meeting of Holders or the payment of any distribution
or the taking of any other action, as the case may be, as a record date for the
determination of the Persons to be treated as Holders for such purpose.
9.5. PROXIES, ETC. At any meeting of Holders, any Holder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Secretary, or with such other
officer or agent of the Trust as the Secretary may direct, for verification
prior to the time at which such vote is to be taken. A proxy may be revoked by a
Holder at any time before it has been exercised by placing on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, a later dated proxy or written revocation. Pursuant to a resolution of a
majority of the Trustees, proxies may be solicited in the name of the Trust or
of one or more Trustees or of one or more officers of the Trust. Only Holders on
the record date shall be entitled to vote. Each such Holder shall be entitled to
a vote proportionate to its Interest. When an Interest is held jointly by
several Persons, any one of them may vote at any meeting in person or by proxy
in respect of such Interest, but if more than one of them is present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received in respect
of such Interest. A proxy purporting to be executed by or on behalf of a Holder
shall be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger.
9.6. REPORTS. The Trustees shall cause to be prepared and furnished to each
Holder, at least annually as of the end of each Fiscal Year, a report of
operations containing a balance sheet and a statement of income of the Trust
prepared in conformity with generally accepted accounting principles and an
opinion of an independent public accountant on such financial statements. The
Trustees shall, in addition, furnish to each Holder at least semi-annually
interim reports of operations containing an unaudited balance sheet as of the
end of such period and an unaudited statement of income for the period from the
beginning of the then-current Fiscal Year to the end of such period.
9.7. INSPECTION OF RECORDS. The records of the Trust shall be open to
inspection by Holders during normal business hours for any purpose not harmful
to the Trust.
15
<PAGE>
9.8. HOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken by
Holders may be taken without a meeting if Holders holding more than 50% of all
Interests entitled to vote (or such larger proportion thereof as shall be
required by any express provision of this Declaration) consent to the action in
writing and the written consents are filed with the records of the meetings of
Holders. Such consents shall be treated for all purposes as a vote taken at a
meeting of Holders. Each such written consent shall be executed by or on behalf
of the Holder delivering such consent and shall bear the date of such execution.
No such written consent shall be effective to take the action referred to
therein unless, within one year of the earliest dated consent, written consents
executed by a sufficient number of Holders to take such action are filed with
the records of the meetings of Holders.
9.9. NOTICES. Any and all communications, including any and all notices
to which any Holder may be entitled, shall be deemed duly served or given if
mailed, postage prepaid, addressed to a Holder at its last known address as
recorded on the register of the Trust.
ARTICLE X
DURATION; TERMINATION; AMENDMENT; MERGERS, ETC.
10.1 DURATION. Subject to possible termination or dissolution in accordance
with the provisions of Section 10.2 and Section 10.3 hereof, respectively, the
Trust created hereby shall continue until the expiration of 20 years after death
of the last survivor of the initial Trustees named herein and the following
named persons:
NAME ADDRESS DATE OF BIRTH
William Benjamin Knighton 2731 Tipsico Lake Road April 11, 1992
Hartland, MI 48353
Anna Lee Knighton 2731 Tipsico Lake Road July 12, 1994
Hartland, MI 48353
Erin Lynn Chapin 1915 Brandywine Road September 7, 1999
Columbus, OH 43220
Matthew Scott Chapin 1915 Brandywine Road April 20, 1997
Columbus, OH 43220
Daniel Alexander Maxwell 369 Highland Way December 22, 1998
Worthington, OH 43085
Madeline Elizabeth Maxwell 369 Highland Way October 16, 1994
Wortthington, OH 43085
16
<PAGE>
Julia Elizabeth Clemens 3719 Lifford Court September 14, 1999
Columbus, OH 43221
Jason Cameron Clemens 3719 Lifford Court July 23, 1997
Columbus, OH 43221
10.2. TERMINATION.
(a) The Trust may be terminated (i) by the affirmative vote of Holders of
not less than two-thirds of all Interests at any meeting of Holders or by an
instrument in writing without a meeting, executed by a majority of the Trustees
and consented to by Holders of not less than two-thirds of all Interests, or
(ii) by the Trustees by written notice to the Holders. Upon any such
termination,
(i) the Trust shall carry on no business except for the purpose of
winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the Trust
and all the powers of the Trustees under this Declaration shall continue
until the affairs of the Trust have been wound up, including the power to
fulfill or discharge the contracts of the Trust, collect the assets of the
Trust, sell, convey, assign, exchange or otherwise dispose of all or any
part of the Trust Property to one or more Persons at public or private sale
for consideration which may consist in whole or in part of cash, securities
or other property of any kind, discharge or pay the liabilities of the
Trust, and do all other acts appropriate to liquidate the business of the
Trust; provided that any sale, conveyance, assignment, exchange or other
disposition of all or substantially all the Trust Property shall require
approval of the principal terms of the transaction and the nature and
amount of the consideration by the vote of Holders holding more than 50% of
all Interests; and
(iii) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements as they deem necessary for their protection, the Trustees shall
distribute the remaining Trust Property, in cash or in kind or partly each,
among the Holders according to their respective rights as set forth in the
procedures established pursuant to Section 8.2 hereof.
(b) Upon termination of the Trust and distribution to the Holders as herein
provided, a majority of the Trustees shall execute and file with the records of
the Trust an instrument in writing setting forth the fact of such termination
and distribution. Upon termination of the Trust, the Trustees shall thereupon be
discharged from all further liabilities and duties hereunder, and the rights and
interests of all Holders shall thereupon cease.
17
<PAGE>
10.3. DISSOLUTION. Upon the bankruptcy of any Holder, or upon the
Redemption of any Interest, the Trust shall be dissolved effective 120 days
after the event. However, the Holders (other than such bankrupt or redeeming
Holder) may, by a unanimous affirmative vote at any meeting of such Holders or
by an instrument in writing without a meeting executed by a majority of the
Trustees and consented to by all such Holders, agree to continue the business of
the Trust even if there has been such a dissolution.
10.4. AMENDMENT PROCEDURE.
(a) This Declaration may be amended by the vote of Holders of more than 50%
of all Interests at any meeting of Holders or by an instrument in writing
without a meeting, executed by a majority of the Trustees and consented to by
the Holders of more than 50% of all Interests. Notwithstanding any other
provision hereof, this Declaration may be amended by an instrument in writing
executed by a majority of the Trustees, and without the vote or consent of
Holders, for any one or more of the following purposes: (i) to change the name
of the Trust, (ii) to supply any omission, or to cure, correct or supplement any
ambiguous, defective or inconsistent provision hereof, (iii) to conform this
Declaration to the requirements of applicable federal law or regulations or the
requirements of the applicable provisions of the Code, (iv) to change the state
or other jurisdiction designated herein as the state or other jurisdiction whose
laws shall be the governing law hereof, (v) to effect such changes herein as the
Trustees find to be necessary or appropriate (A) to permit the filing of this
Declaration under the law of such state or other jurisdiction applicable to
trusts or voluntary associations, (B) to permit the Trust to elect to be treated
as a "regulated investment company" under the applicable provisions of the Code,
or (C) to permit the transfer of Interests (or to permit the transfer of any
other beneficial interest in or share of the Trust, however denominated), and
(vi) in conjunction with any amendment contemplated by the foregoing clause (iv)
or the foregoing clause (v) to make any and all such further changes or
modifications to this Declaration as the Trustees find to be necessary or
appropriate, any finding of the Trustees referred to in the foregoing clause (v)
or the foregoing clause (vi) to be conclusively evidenced by the execution of
any such amendment by a majority of the Trustees; provided, however, that unless
effected in compliance with the provisions of Section 10.4(b) hereof, no
amendment otherwise authorized by this sentence may be made which would reduce
the amount payable with respect to any Interest upon liquidation of the Trust
and; provided, further, that the Trustees shall not be liable for failing to
make any amendment permitted by this Section 10.4(a).
(b) No amendment may be made under Section 10.4(a) hereof which would
change any rights with respect to any Interest by reducing the amount payable
thereon upon liquidation of the Trust or by diminishing or eliminating any
voting rights pertaining thereto, except with the vote or consent of Holders of
two-thirds of all Interests.
(c) A certification in recordable form executed by a majority of the
Trustees setting forth an amendment and reciting that it was duly adopted by the
Holders or by the Trustees as aforesaid or a copy of the Declaration, as
amended, in recordable form, and executed by a majority of the Trustees, shall
18
<PAGE>
be conclusive evidence of such amendment when filed with the records of the
Trust.
Notwithstanding any other provision hereof, until such time as Interests
are first sold, this Declaration may be terminated or amended in any respect by
the affirmative vote of a majority of the Trustees at any meeting of Trustees or
by an instrument executed by a majority of the Trustees.
10.5. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may merge or
consolidate with any other corporation, association, trust or other organization
or may sell, lease or exchange all or substantially all of the Trust Property,
including good will, upon such terms and conditions and for such consideration
when and as authorized at any meeting of Holders called for such purpose by the
affirmative vote of Holders of not less than two-thirds of all Interests, or by
an instrument in writing without a meeting, consented to by Holders of not less
than two-thirds of all Interests, and any such merger, consolidation, sale,
lease or exchange shall be deemed for all purposes to have been accomplished
under and pursuant to the statutes of the State of New York.
10.6. INCORPORATION. Upon a Majority Interests Vote, the Trustees may cause
to be organized or assist in organizing a corporation or corporations under the
law of any jurisdiction or a trust, partnership, association or other
organization to take over the Trust Property or to carry on any business in
which the Trust directly or indirectly has any interest, and to sell, convey and
transfer the Trust Property to any such corporation, trust, partnership,
association or other organization in exchange for the equity interests thereof
or otherwise, and to lend money to, subscribe for the equity interests of, and
enter into any contract with any such corporation, trust, partnership,
association or other organization, or any corporation, trust, partnership,
association or other organization in which the Trust holds or is about to
acquire equity interests. The Trustees may also cause a merger or consolidation
between the Trust or any successor thereto and any such corporation, trust,
partnership, association or other organization if and to the extent permitted by
law. Nothing contained herein shall be construed as requiring approval of the
Holders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to one or
more such organization or entities.
19
<PAGE>
ARTICLE XI
MISCELLANEOUS
11.1. CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS. The Trust
shall file, with the Department of State of the State of New York, a
certificate, in the name of the Trust and executed by an officer of the Trust,
designating the Secretary of State of the State of New York as an agent upon
whom process in any action or proceeding against the Trust may be served.
11.2. GOVERNING LAW. This Declaration is executed by the Trustees and
delivered in the State of New York and with reference to the laws thereof, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed in accordance with the law of the State
of New York and reference shall be specifically made to the trust law of the
State of New York as to the construction of matters not specifically covered
herein or as to which an ambiguity exists.
11.3. COUNTERPARTS. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any one such original counterpart.
11.4. RELIANCE BY THIRD PARTIES. Any certificate executed by an individual
who, according to the records of the Trust or of any recording office in which
this Declaration may be recorded, appears to be a Trustee hereunder, certifying
to: (a) the number or identity of Trustees or Holders, (b) the due authorization
of the execution of any instrument or writing, (c) the form of any vote passed
at a meeting of Trustees or Holders, (d) the fact that the number of Trustees or
Holders present at any meeting or executing any written instrument satisfies the
requirements of this Declaration, (e) the form of any By-Laws adopted by or the
identity of any officer elected by the Trustees, or (f) the existence of any
fact or facts which in any manner relates to the affairs of the Trust, shall be
conclusive evidence as to the matters so certified in favor of any Person
dealing with the Trustees.
11.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration are severable, and if the Trustees
shall determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, or with other applicable law and regulations, the
conflicting provision shall be deemed never to have constituted a part of this
Declaration; provided however, that such determination shall not affect any of
the remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
20
<PAGE>
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this Declaration of Trust
as of the day and year first above written.
Milton S. Bartholomew
as Trustee and not individually
Roger D. Blackwell
as Trustee and not individually
James W. Didion.
as Trustee and not individually
Charles A. Donabedian
as Trustee and not individually
Robert S. Meeder, Sr.
as Trustee and not individually
Robert S. Meeder, Jr.
as Trustee and not individually
Jack W. Nicklaus II
as Trustee and not individually
Walter L. Ogle
as Trustee and not individually
Philip A. Voelker
as Trustee and not individually
21
GROWTH MUTUAL FUND PORTFOLIO
BY-LAWS
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing the GROWTH MUTUAL FUND PORTFOLIO (the
"Trust"), dated as of October 30, 1999 as from time to time amended (hereinafter
called the "Declaration"). All words and terms capitalized in these By-Laws
shall have the meaning or meanings set forth for such words or terms in the
Declaration.
ARTICLE I
HOLDERS MEETINGS
Section 1.1. CHAIRMAN. The President shall act as Chairman at all meetings
of the Holders, or the Trustee or Trustees present at each meeting may elect a
temporary Chairman for the meeting, who may be one of themselves.
Section 1.2. PROXIES; VOTING. Holders may vote either in person or by duly
executed proxy and each Holder shall be entitled to a vote proportionate to his
Interest in the Trust, all as provided in Article IX of the Declaration. No
proxy shall be valid after eleven (11) months from the date of its execution,
unless a longer period is expressly stated in such proxy.
Section 1.3. FIXING RECORD DATES. For the purpose of determining the
Holders who are entitled to notice of and to vote or act at any meeting,
including any adjournment thereof, or who are entitled to participate in any
distributions, or for any other proper purpose, the Trustees may from time to
time fix a record date in the manner provided in Section 9.3 of the Declaration.
If the Trustees do not, prior to any meeting of the Holders, so fix a record
date, then the date of mailing notice of the meeting shall be the record date.
Section 1.4. INSPECTORS OF ELECTION. In advance of any meeting of the
Holders, the Trustees may appoint Inspectors of Election to act at the meeting
or any adjournment thereof. If Inspectors of Election are not so appointed, the
Chairman, if any, of any meeting of the Holders may, and on the request of any
Holder or his proxy shall, appoint Inspectors of Election of the meeting. The
number of Inspectors shall be either one or three. If appointed at the meeting
on the request of one or more Holders or proxies, a Majority Interests Vote
shall determine whether one or three Inspectors are to be appointed, but failure
to allow such determination by the Holders shall not affect the validity of the
appointment of Inspectors of Election. In case any person appointed as Inspector
fails to appear or fails or refuses to act, the vacancy may be filled by
appointment made by the Trustees in advance of the convening of the meeting or
at the meeting by the person acting as Chairman. The Inspectors of Election
shall determine the Interests owned by Holders, the Interests represented at the
<PAGE>
meeting, the existence of a quorum, the authenticity, validity and effect of
proxies, shall receive votes, ballots or consents, shall hear and determine all
challenges and questions in any way arising in connection with the right to
vote, shall count and tabulate all votes or consents, determine the results, and
do such other acts as may be proper to conduct the election or vote with
fairness to all Holders. If there are three or more Inspectors of Election, the
decision, act or certificate of a majority is effective in all respects as the
decision, act or certificate of all. On request of the Chairman, if any, of the
meeting, or of any Holder or his proxy, the Inspectors of Election shall make a
report in writing of any challenge or question or matter determined by them and
shall execute a certificate of any facts found by them.
Section 1.5. RECORDS AT HOLDER MEETINGS. At each meeting of the Holders
there shall be open for inspection the minutes of the last previous meeting of
Holders of the Trust and a list of the Holders of the Trust, certified to be
true and correct by the Secretary or other proper agent of the Trust, as of the
record date of the meeting. Such list of Holders shall contain the name of each
Holder in alphabetical order and the address and Interests owned by such Holder.
Holders shall have the right to inspect books and records of the Trust during
normal business hours and for any purpose not harmful to the Trust.
ARTICLE II
TRUSTEES
Section 2.1. ANNUAL AND REGULAR MEETINGS. The Trustees shall hold an annual
meeting for the election of officers and the transaction of other business which
may come before such meeting. Regular meetings of the Trustees may be held
without call or notice at such place or places and times as the Trustees may by
resolution provide from time to time.
Section 2.2. SPECIAL MEETINGS. Special meetings of the Trustees shall be
held upon the call of the Chairman, if any, the President, the Secretary or any
two Trustees, at such time, on such day and at such place, as shall be
designated in the notice of the meeting.
Section 2.3. NOTICE. Notice of a meeting shall be given by mail or by
telegram (which term shall include a cablegram) or delivered personally. If
notice is given by mail, it shall be mailed not later than 48 hours preceding
the meeting and if given by telegram, telecopier or personally, such notice
shall be sent or delivery made not later than 24 hours perceding the meeting.
Notice by telephone shall constitute personal delivery for these purposes.
Notice of a meeting of Trustees may be waived before or after any meeting by
signed written waiver. Neither the business to be transacted at, nor the purpose
of, any meeting of the Board of Trustees need be stated in the notice or waiver
of notice of such meeting, and no notice need be given of action proposed to be
taken by written consent. The attendance of a Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Trustee attends a
meeting for the express purpose of objecting, at the commencement of such
2
<PAGE>
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
Section 2.4. CHAIRMAN; RECORDS. The Chairman, if any, shall act as Chairman
at all meetings of the Trustees; in his absence the President shall act as
Chairman; and, in the absence of the Chairman of the Board and the President,
the Trustees present shall elect one of their number to act as temporary
Chairman. The results of all actions taken at a meeting of the Trustees, or by
written consent of the Trustees, shall be recorded by the Secretary.
ARTICLE III
OFFICERS
Section 3.1. OFFICERS OF THE TRUST. The officers of the Trust shall consist
of a Chairman, if any, a President, a Secretary, a Treasurer and such other
officers or assistant officers, including Vice Presidents, as may be elected by
the Trustees. Any two or more of the offices may be held by the same person. The
Trustees may designate a Vice President as an Executive Vice President and may
designate the order in which the other Vice Presidents may act. The Chairman
shall be a Trustee, but no other officer of the Trust, including the President,
need be a Trustee.
Section 3.2. ELECTION AND TENURE. At the initial organization meeting and
thereafter at each annual meeting of the Trustees, the Trustees shall elect the
Chairman, if any, President, Secretary, Treasurer and such other officers as the
Trustees shall deem necessary or appropriate in order to carry out the business
of the Trust. Such officers shall hold office until the next annual meeting of
the Trustees and until their successors have been duly elected and qualified.
The Trustees may fill any vacancy in office or add any additional officers at
any time.
Section 3.3. REMOVAL OF OFFICERS. Any officer may be removed at any time,
with or without cause, by action of a majority of the Trustees. This provision
shall not prevent the making of a contract of employment for a definite term
with any officer and shall have no effect upon any cause of action which any
officer may have as a result of removal in breach of a contract of employment.
Any officer may resign at any time by notice in writing signed by such officer
and delivered or mailed to the Chairman, if any, President, or Secretary, and
such resignation shall take effect immediately, or at a later date according to
the terms of such notice in writing.
Section 3.4. BONDS AND SURETY. Any officer may be required by the Trustees
to be bonded for the faithful performance of his duties in such amount and with
such sureties as the Trustees may determine.
Section 3.5. CHAIRMAN, PRESIDENT AND VICE PRESIDENTS. The Chairman, if any,
shall, if present, preside at all meetings of the Holders and of the Trustees
3
<PAGE>
and shall exercise and perform such other powers and duties as may be from time
to time assigned to him by the Trustees. Subject to such supervisory powers, if
any, as may be given by the Trustee to the Chairman, if any, President shall be
the chief executive officer of the Trust and, subject to the control of the
Trustees, shall have general supervision, direction and control of the business
of the Trust and of its employees and shall exercise such general powers of
management as are usually vested in the office of President of a corporation. In
the absence of the Chairman, if any, the President shall preside at all meetings
of the Holders and, in the absence of the Chairman of the Board, the President
shall preside at all meetings of the Trustees. The President shall be, ex
officio, a member of all standing committees. Subject to direction of the
Trustees, the President shall have the power, in the name and on behalf of the
Trust, to execute any and all loan documents, contracts, agreements, deeds,
mortgages, and other instruments in writing, and to employ and discharge
employees and agents of the Trust. Unless otherwise directed by the Trustees,
the President shall have full authority and power, on behalf of all of the
Trustees, to attend and to act and to vote, on behalf of the Trust at any
meetings of business orgnaizations in which the Trust holds an interest, or to
confer such powers upon any other persons, by executing any proxies duly
authorizing such persons. The President shall have such further authorities and
duties as the Trustees shall from time to time determine. In the absence or
disability of the President, the Vice Presidents in order of their rank or the
Vice President designated by the Trustees, shall perform all of the duties of
President, and when so acting shall have all the powers of and be subject to all
of the restrictions upon the President. Subject to the direction of the
President, each Vice President shall have the power in the name and on behalf of
the Trust to execute any and all loan documents, contracts, agreements, deeds,
mortgages and other instruments in writing, and, in addition, shall have such
other duties and powers as shall be designated from time to time by the Trustees
or by the President.
Section 3.6. SECRETARY. The Secretary (or any Assistant Secretary) shall
keep the minutes of all meetings of, and record all votes of, Holders, Trustees
and the Executive Committee, if any. He shall be custodian of the seal of the
Trust, if any, and he (and any other person so authorized by the Trustees) shall
affix the seal or, if permitted, a facsimile thereof, to any instrument executed
by the Trust which would be sealed by a New York corporation executing the same
or a similar instrument and shall attest the seal and the signature or
signatures of the officer or officers executing such instrument on behalf of the
Trust. The Secretary (or any Assistant Secretary) shall also perform any other
duties commonly incident to such office in a New York corporation, and shall
have such other authorities and duties as the Trustees shall from time to time
determine.
Section 3.7. TREASURER. Except as otherwise directed by the Trustees, the
Treasurer shall have the general supervision of the monies, funds, securities,
notes receivable and other valuable papers and documents of the Trust, and shall
have and exercise under the supervision of the Trustees and of the President all
powers and duties normally incident to his office. He may endorse for deposit or
collection all notes, checks and other instruments payable to the Trust or to
its order. He shall deposit all funds of the Trust as may be ordered by the
Trustees or the President. He shall keep accurate account of the books of the
4
<PAGE>
Trust's transactions which shall be the property of the Trust, and which
together with all other property of the Trust in his possession, shall be
subject at all times to the inspection and control of the Trustees. Unless the
Trustees shall otherwise determine, the Treasurer shall be the principal
accounting officer of the Trust and shall also be the principal financial
officer of the Trust. He shall have such other duties and authorities as the
Trustees shall from time determine. Notwithstanding anything to the contrary
herein contained, the Trustees may authorize any adviser, administrator or
manager to maintain bank accounts and deposit and disburse funds on behalf of
the Trust.
Section 3.8. OTHER OFFICERS AND DUTIES. The Trustees may elect such other
officers and assistant officers as they shall from time to time determine to be
necessary or desirable in order to conduct the business of the Trust. Assistant
officers shall act generally in the absence of the officer whom they assist and
shall assist that officer in the duties of his office. Each officer, employee
and agent of the Trust shall have such other duties and authority as may be
conferred upon him by the Trustees or delegated to him by the President.
ARTICLE IV
MISCELLANEOUS
Section 4.1. DEPOSITORIES. In accordance with Section 7.1 of the
Declaration, the funds of the Trust shall be deposited in such depositories as
the Trustees shall designate and shall be drawn out on checks, drafts or other
orders signed by such officer, officers, agent or agents (including any adviser,
administrator or manager), as the Trustees may from time to time authorize.
Section 4.2. SIGNATURES. All contracts and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents, as
provided in these By-Laws or as the Trustees may from time to time by resolution
provide.
Section 4.3. SEAL. The seal of the Trust, if any, may be affixed to any
document, and the seal and its attestation may be lithographed, engraved or
otherwise printed on any document with the same force and effect as if it had
been imprinted and attested manually in the same manner and with the same effect
as if done by a New York corporation.
Section 4.4. INDEMNIFICATION. Insofar as the conditional advancing of
indemnification monies under Section 5.3 of the Declaration of Trust for actions
based upon the Investment Company Act of 1940 may be concerned, such payments
will be made only on the following conditions: (i) the advances must be limited
to amounts used, or to be used, for the preparation or presentation of a defense
to the action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of a written promise by, or on
behalf of, the recipient to repay that amount of the advance which exceeds that
amount to which it is ultimately determined that he is entitled to receive from
5
<PAGE>
the Trust by reason of indemnification; and (iii) (a) such promise must be
secured by a surety bond, other suitable insurance or an equivalent form of
security which assures that any repayments may be obtained by the Trust without
delay or litigation, which bond, insurance or other form of security must be
provided by the recipient of the advance, or (b) a majority of a quorum of the
Trust's disinterested, non-party Trustees, or an independent legal counsel in a
written opinion, shall determine, based upon a review of readily available
facts, that the recipient of the advance ultimately will be found entitled to
indemnification.
ARTICLE V
NON-TRANSFERABILITY OF INTERESTS
Section 5.1. NON-TRANSFERABILITY OF INTERESTS. Interests shall not be
transferable. Except as otherwise provided by law, the Trust shall be entitled
to recognize the exclusive right of a person in whose name Interests stand on
the record of Holders as the owner of such Interests for all purposes,
including, without limitation, the rights to receive distributions, and to vote
as such owner, and the Trust shall not be bound to recognize any equitable or
legal claim to or interest in any such Interests on the part of any other
person.
Section 5.2. REGULATIONS. The Trustees may make such additional rules and
regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the sale and purchase of Interests of the Trust.
Section 5.3. DISTRIBUTION DISBURSING AGENTS AND THE LIKE. The Trustees
shall have the power to employ and compensate such distribution disbursing
agents, warrant agents and agents for the reinvestment of distributions as they
shall deem necessary or desirable. Any of such agents shall have such power and
authority as is delegated to any of them by the Trustee.
ARTICLE VI
AMENDMENT OF BY-LAWS
Section 6.1. AMENDMENT AND REPEAL OF BY-LAWS. In accordance with Section
2.7 of the Declaration, the Trustees shall have the power to alter, amend or
repeal the By-Laws or adopt new By-Laws at any time. Action by the Trustees with
respect to the By-Laws shall be taken by an affirmative vote of a majority of
the Trustees. The Trusteess shall in no event adopt By-Laws which are in
conflict with the Declaration.
The Declaration refers to the Trustees as Trustees, but not as individuals
or personally; and no Trustee, officer, employee or agent of the Trust shall be
held to any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust.
6
INVESTMENT ADVISORY AGREEMENT
Between
THE GROWTH MUTUAL FUND PORTFOLIO
and
R. MEEDER & ASSOCIATES, INC.
This Agreement is made the 28th day of February, 2000, by and between THE
GROWTH MUTUAL FUND PORTFOLIO, a business Portfolio organized and existing under
the laws of the State of New York, operating as an open-end investment company
(the "Portfolio"), and R. MEEDER & ASSOCIATES, INC., a corporation organized and
existing under the laws of the State of Ohio (the "Adviser").
W I T N E S S E T H :
WHEREAS, the Portfolio is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended; and
WHEREAS, the Adviser is engaged principally in the business of rendering
investment supervisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Portfolio desires to retain the Adviser to render investment
and supervisory services to the Portfolio in the manner and on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
I
INVESTMENT RESPONSIBILITY
(1) In providing the services and assuming the obligations set forth
herein, the Adviser may, at its expense, employ one or more subadvisers.
References herein to the Adviser shall include any subadviser employed by the
Adviser. Any agreement between the Adviser and a subadviser shall be subject to
the renewal, termination and amendment provisions of section V hereof.
The Portfolio hereby retains the Adviser to supervise and assist in the
management of the assets for the Portfolio and to furnish the Portfolio with a
continuous program for the investment of the Portfolio's assets in accordance
with the Portfolio's currently effective registration statement, including:
<PAGE>
a. Recommendations as to specific securities to be purchased for or
eliminated from the Portfolio, and
b. Recommendations as to the portion of the Portfolio's assets that
should be held uninvested.
(2) Notwithstanding the generality of the foregoing, the Adviser may
itself, and at its own expense, contract for such supplementary advisory and
research services as it deems necessary or desirable to fulfill its obligations
under paragraph (1) above, provided that any such contract shall have been
approved by the Portfolio and the Holders of interests therein ("Holders") to
the extent, and in the manner, required by the Investment Company Act of 1940,
as amended.
(3) The Adviser shall furnish to the Portfolio the services of one or more
persons who shall be authorized by the Portfolio to place orders for the
purchase and sale of securities for the account of the Portfolio. Acting through
a person so authorized by the Portfolio, the Adviser shall place such orders for
the Portfolio.
(4) Notwithstanding the generality of paragraph (3) above, and subject to
the provisions of paragraphs (5) and (6) below, the Adviser shall endeavor to
secure for the Portfolio the best possible price and execution of every purchase
and sale for the account of the Portfolio. In seeking such best price and
execution the Adviser shall use its own judgment as to the implementation of its
own investment recommendations, including the Adviser's judgment as to the time
when an order should be placed, the number of securities to be bought or sold in
any one trade that is a part of any particular recommendation, and the market in
which an order should be placed.
(5) The Adviser shall use its own judgment in determining the
broker-dealers who shall be employed to execute orders for the purchase or sale
of securities for the Portfolio, in order to:
a. Secure best price and execution on purchases and sales for the
Portfolio; and
b. Secure supplemental research and statistical data for use in making
its recommendations to the Portfolio.
(6) The Adviser shall use its discretion as to when, and in which market,
the Portfolio's transactions shall be executed, in order to secure for the
Portfolio the benefits of best price and execution, and supplemental research
and statistical data. The use of such discretion shall be subject to review by
the Trustees of the Portfolio at any time and form time to time. The Portfolio,
acting by its Trustees, may withdraw said discretion at any time, and may direct
the execution of portfolio transactions for the Portfolio in any lawful manner
different from that provided for herein. Until a decision is made to withdraw or
limit the discretion herein granted, the Adviser shall not be liable for any
<PAGE>
loss suffered by the Portfolio through the exercise by the Adviser of that
discretion unless the Adviser shall be guilty of gross negligence or willful
misconduct.
II
ADMINISTRATIVE RESPONSIBILITY
During the continuance of this Agreement, Adviser shall provide the
Portfolio with a continuous program of general administration including:
a. Office space, equipment, supplies and utility services as shall be
required to conduct Portfolio business;
b. The provision and supervision of all persons performing the
executive, administrative, and clerical functions necessary for the conduct
of the Portfolio's business except as set forth in g., below;
c. The supervision of accounting, and of records and record-keeping
for the Portfolio;
d. The preparation and distribution of mandatory reports to Holders
and regulatory bodies;
e. The supervision of the daily net asset value of the Portfolio;
f. The preparation and distribution on behalf of the Portfolio of
notices of shareholder and Trustee meetings, agendas, proxies, and proxy
statements; and
g. Other facilities, services, and activities necessary for the
conduct of the Portfolio's business, except for services by the Portfolio's
Custodian, Registrar, Transfer Agent, Accounting Services Agent, Dividend
Disbursing Agent, Auditors, and Legal Counsel.
III
ALLOCATION OF EXPENSES
The Adviser shall pay the Portfolio's pro rata share of the cost and
expenses of the following services, facilities and activities: necessary office
space, equipment, supplies, utility services and all other ordinary office
expenses; the salaries and other compensation of the Portfolio's Trustees,
officers and employees who are affiliated persons of the Adviser; and fees for
supplementary advisory and research services performed for the Adviser. The
Portfolio shall pay all other expenses incurred in the organization and
operation of the Portfolio and the continuous offering of interests in the
Portfolio, including, but not limited to, the following:
<PAGE>
a. The Portfolio's pro rata share of the fees and expenses of counsel
in connection with the organization of the Portfolio.
b. The regular fees or special charges of any Custodian, Transfer
Agent, Registrar, Accounting Services Agent or Dividend Disbursing Agent
allocable to the Portfolio.
c. The Portfolio's pro rata share of the compensation or fees of the
Portfolio's auditors and legal counsel, and compensation and costs relating
to legal or administrative proceedings or to litigation.
d. Income, franchise, stock transfer and other taxes attributable to
the Portfolio.
e. Initial or renewal fees payable to governmental agencies in
connection with the filing of reports, notices, registration statements,
and other material required to be filed in connection with the Portfolio's
business.
f. The Portfolio's pro rata share of any insurance or bond premiums.
g. The Portfolio's pro rata share of association dues or assessments.
h. Brokerage fees or commissions on all Portfolio transactions.
i. The Portfolio's pro rata share of interest on borrowed Portfolios
or otherwise.
j. Any extraordinary expenses attributable directly to the Portfolio.
IV
COMPENSATION
The Portfolio shall pay the Adviser a fee, based on the value of the net
assets of the Portfolio determined in accordance with the Portfolio's
Declaration of Portfolio, and computed as follows:
(a) The annual advisory fee (the "Fee") shall be equal to the sum of (i)
0.75% of the Portfolio's first $200,000,000 in average daily net assets, (ii)
0.60% of the Portfolio's average daily net assets in excess of $200,000,000.
(b) The amounts due the Adviser in payment of the Fee set forth above. The
Fee will be accrued daily and shall be paid to the Adviser in pro rata monthly
installments due and payable on the first business day of each calendar month.
<PAGE>
V
DURATION AND TERMINATION
(1) The term of this Agreement shall begin on the date first written above
and, unless sooner terminated as hereinafter provided, this Agreement shall
remain in effect for a period of two years. Thereafter this Agreement shall
continue in effect from year to year, subject to the termination provisions and
all other terms and conditions hereof; if: (a) such continuation shall be
specifically approved at least annually by vote of the holders of a majority of
the outstanding voting securities of the Portfolio or by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of a
majority of the Trustees of the Portfolio who are not parties to this Agreement
or interested persons of any such party; and (b) the Adviser shall not have
notified the Portfolio, in writing, at least 60 days prior to the expiration of
any term, that it does not desire such continuation. The Adviser shall furnish
to the Portfolio, promptly upon its request, such information as may reasonably
be necessary to evaluate the terms of this Agreement or any extension, renewal
or amendment hereof.
(2) This Agreement may not be amended, transferred, sold or in any manner
hypothecated or pledged, without the affirmative vote of a majority of the
outstanding voting securities of the Portfolio, and this Agreement shall
automatically and immediately terminate in the event of its assignment.
(3) This Agreement may be terminated by either party hereto, without the
payment of any penalty, upon 60 days' notice in writing to the other party,
provided, that in the case of termination by the Portfolio such action shall
have been authorized by resolution of the Trustees of the Portfolio or by vote
of a majority of the outstanding voting securities of the Portfolio.
VI
MISCELLANEOUS
(1) The Adviser shall not deal with the Portfolio as broker or dealer but
the Adviser may enter orders for the purchase or sale of the Portfolio's
securities through a company or companies that are under common control with the
Adviser, provided such company acts as broker and charges a commission that does
not exceed the usual and customary broker's commission if the sale is effected
on a securities exchange, or, 1 per centum of the purchase or sale price of such
securities if the sale is otherwise effected. In connection with the purchase or
sale of portfolio securities for the account of the Portfolio, neither the
Adviser nor any officer or director of the Adviser shall act as a principal.
(2) Except as expressly prohibited in this Agreement, nothing herein shall
in any way limit or restrict the Adviser, or any officers, shareholders or
employees of Adviser, from buying selling or trading in any security for its or
their own account. Neither the Adviser nor any Officer or Director thereof shall
<PAGE>
take a short position in any interests of the Portfolio or otherwise purchase
such interests for any purpose other than that of investment. However, the
Adviser may act as underwriter or distributor provided it does so pursuant to a
written contract approved in the manner specified in the Investment Company Act
of 1940, as amended.
(3) The Adviser may act as investment adviser to, and provide management
services for, other investment companies, and may engage in businesses that are
unrelated to investment companies, without limitation, provided the performance
of such services and the transaction of such businesses does not impair the
Adviser's performance of this Agreement.
(4) The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Portfolio in connection with the matters to
which this Agreement relates (including, but not limited to, loss sustained by
reason of the adoption or implementation of any investment policy or the
purchase, sale or retention of any security), except for loss resulting from
willful misfeasance, bad faith or gross negligence of the Adviser in the
performance of its duties or from reckless disregard by the Adviser of its
obligations and duties under this Agreement.
(5) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act of 1940, as amended, shall be resolved by
reference to such term or provision of the Act and to interpretations thereof,
if any, by the United States courts or, in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission validly issued pursuant to said Act. Specifically, the
terms "vote by a majority of the outstanding voting securities", "annually",
"interested person", "assignment", and "affiliated person", as used herein,
shall have the meanings assigned to them by the Investment Company Act of 1940,
as amended. In addition, where the effect of a requirement of the Investment
Company Act of 1940, as amended, reflected in any provision of this contract is
relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision shall
be deemed to incorporate the effect of such rule, regulation or order.
(6) The Portfolio will provide the Adviser with all information concerning
the investment policies and restrictions of the Portfolio as the Adviser may
from time to time request or which the Portfolio deems necessary. In the event
of any change in the investment policies or restrictions of the Portfolio, the
Portfolio will promptly provide Adviser with all information concerning such
change including, but not limited to, copies of all documents filed by the
Portfolio with the Securities and Exchange Commission.
(7) The Trustees, officers, employees and agents of the Portfolio shall not
be personally bound by or liable hereunder, nor shall resort be had to their
private property for the satisfaction of any obligation or claim hereunder.
<PAGE>
(8) Except to the extent the provisions of this Agreement are governed by
federal law, they shall be governed by the law of Ohio, without reference to its
choice of law rules.
(9) This Agreement represents the entire agreement between the parties
hereto.
(10) This Agreement may be executed in two or more counterparts, each of
which shall be considered an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day and
year first above written.
GROWTH MUTUAL FUND PORTFOLIO
Attest:________________________ By:
Secretary Vice President
R. MEEDER & ASSOCIATES, INC.
Attest:________________________ By:
Secretary Vice President and General Counsel
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
SECTION 1. PURPOSE OF PLAN. The purpose of this Deferred Compensation Plan
(the "Plan") is to permit each Eligible Trustee (as that term is defined below)
of the Funds (as that term is defined below) to defer receipt of all or a
portion of the trustee fees payable by any of the Funds until the time set forth
herein.
SECTION 2. DEFINITIONS OF TERMS AND CONSTRUCTION
2.1 DEFINITIONS. The following terms as used in this Plan shall have the
following meanings:
(a) "Administrator" shall mean the Treasurer of the Funds.
(b) "Beneficiary" shall mean such person or persons designated
pursuant to Section 5.3 hereof to receive benefits after the
death of an Eligible Trustee.
(c) "Boards of Trustees" shall mean the respective Boards of Trustees
of the Funds.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute.
(e) "Compensation" shall mean the amount of trustees' fees (including
fees earned by an Eligible Trustee for serving as a member of any
committee of any of the Boards of Trustees) paid by each of the
Funds to an Eligible Trustee for a Deferral Year prior to
reduction for Deferrals made under this Plan.
(f) "Deferral" shall mean the amount or amounts of an Eligible
Trustee's Compensation deferred under the provisions of Section 4
of this Plan.
(g) "Deferral Account" shall mean the account maintained to reflect
an Eligible Trustee's Deferrals made pursuant to Section 4 hereof
and any other credits or debits thereto.
(h) "Deferral Election" shall mean the Eligible Trustee's annual
election to defer his Compensation under Plan Section 4.1(a).
(i) "Deferral Year" shall mean each calendar year (or the period
beginning on the effective date of the Plan and ending on
1
<PAGE>
December 31 of the calendar year in which the Plan becomes
effective) during which an Eligible Trustee makes, or is entitled
to make, Deferrals under Section 4 hereof.
(j) "Eligible Trustee" shall mean a member of the Board of Trustees
who is not an "interested person" of the Funds, as such term is
defined under Section 2(a)(19) of the Investment Company Act of
1940, as amended.
(k) "Funds" shall mean the following open-end registered investment
companies: the Money Market Portfolio, Bond Portfolio, Growth
Stock Portfolio, Utility Stock Portfolio and Mutual Fund
Portfolio; The Flex-funds' Money Market Fund, U.S. Government
Bond Fund, Highlands Growth Fund, Muirfield Fund, and Total
Return Utilities Fund; The Flex-Partners' International Equity
Fund; and such other open-end registered investment companies (i)
for which R. Meeder & Associates, Inc. (the "Adviser") may in the
future serve as investment adviser or (ii) which invest all of
their investable assets in an investment company so served by the
Adviser, and whose Board of Trustees shall adopt this Plan.
(l) "Hardship and Unforeseeable Emergency" shall mean a severe
financial hardship to an Eligible Trustee resulting from a sudden
and unexpected illness or accident of the Eligible Trustee or a
dependent (within the meaning of Section 152(a) of the Code), of
the Eligible Trustee, loss of the Eligible Trustee's property due
to casualty, or other similar extraordinary and unforeseeable
circumstances, arising from events beyond the Eligible Trustee's
control. Whether circumstances constitute a Hardship and
Unforeseeable Emergency depends on the facts of each case, as
determined by the Administrator, but in any case does not include
a hardship that may be relieved:
(i) through reimbursement or compensation by insurance of
otherwise;
(ii) by liquidation of the Eligible Trustee's assets to the
extent that liquidation itself would not cause such a
severe financial hardship; or
(iii) by ceasing to defer receipt of any compensation not
yet earned.
(m) "Separation from Service" shall mean the date on which an
Eligible Trustee ceases to be a member of any of the Boards of
Trustees.
(n) "Valuation Date" shall mean the last business day of each
calendar year and any other day upon which the Funds make a
valuation of the Deferral Account.
2
<PAGE>
2.2 PLURALS AND GENDER. Where appearing in this Plan the singular shall
include the plural and the masculine shall include the feminine, and vice versa,
unless the context clearly indicates a different meaning.
2.3 HEADINGS. The headings and subheadings in this Plan are inserted for
the convenience of reference only and are to be ignored in any construction of
the provisions hereof.
SECTION 3. PERIOD DURING WHICH DEFERRALS ARE PERMITTED
3.1 COMMENCEMENT OF VOLUNTARY DEFERRALS. An Eligible Trustee may elect, on
a form provided by, and submitted to, the Administrator, to commence voluntary
Deferrals under Section 4.1(a) hereof for the period beginning on the date such
form is submitted to the Administrator.
3.2 TERMINATION OF DEFERRALS. An Eligible Trustee shall not be eligible for
Deferrals after the earlier of the following dates:
(a) his Separation from Service; or
(b) The effective date of the termination of this Plan.
SECTION 4. DEFERRALS
4.1 VOLUNTARY DEFERRAL ELECTIONS.
(a) Prior to the effective date of this Plan or the day the Eligible
Trustee first becomes eligible under this Plan and, for
subsequent Deferral Years, prior to the first day of the Deferral
Year, an Eligible Trustee may elect to defer the receipt of all
or a portion of his Compensation. Such election shall be made on
the form described in Section 3.1 hereof and shall set forth the
amount of such deferral (in whole percentage amounts). Such
election shall continue in effect for all subsequent Deferral
Years unless it is canceled or modified as provided below.
(b) Deferrals described in Section 4.1(a) above shall be withheld,
based upon the percentage amount elected, from each payment of
Compensation which the Eligible Trustee would otherwise have been
entitled but for his election in Section 4.1(a).
(c) The Eligible Trustee may cancel or modify the amount of his
deferral elected under Section 4.1(a) on a prospective basis by
submitting to the Administrator a revised Deferral election form.
Such change will be effective as of the first day of the Deferral
Year following the date such revision is submitted to the
Administrator.
3
<PAGE>
(d) The Eligible Trustee's Deferral Account shall be a bookkeeping
entry only, and each Fund paying Compensation shall fund the
Deferral Account.
4.2 VALUATION OF DEFERRAL ACCOUNT
(a) Each Fund paying Compensation shall establish a bookkeeping
Deferral Account to which will be credited an amount equal to the
Eligible Trustee's Deferrals under this Plan. Deferrals shall be
allocated to the Deferral Account on the first business day
following the date such Deferrals are withheld from the Eligible
Trustee's Compensation. The Deferral Account shall be debited to
reflect any distributions from such Deferral Account. Such debits
shall be allocated to the Deferral Account as of the date such
distributions are made.
(b) As of each Valuation Date, income, gain and loss equivalents
(resulting from the Deferral Account being invested in the manner
set forth under Section 4.3 below) attributable to the period
following the next preceding Valuation Date shall be credited to
and/or deducted from the Eligible Trustee's Deferral Account.
4.3 RETURN ON DEFERRAL ACCOUNT BALANCE
(a) (i) For purposes of measuring the investment return on an
Eligible Trustee's Deferrals, a dollar amount equivalent to the
Eligible Trustee's Deferrals shall be invested and reinvested in
one or more of the Funds, effected at such Fund or Funds' current
net asset value on the date the Eligible Trustee's Deferrals are
credited to the Deferral Account. The Funds used as a basis for
determining the investment return shall be designated by the
Eligible Trustee on a form provided by the Administrator. The
Eligible Trustee's Deferrals shall be credited with a return
(positive or negative) equal to the rate of return on shares of
the Funds selected, assuming reinvestment of dividends and
distributions from the Funds.
(ii) The Eligible Trustee shall make a designation of one or more
of the Funds on a form provided by the Administrator which shall
remain effective until another valid direction has been made by
the Eligible Trustee as herein provided. The Eligible Trustee may
amend his designation of investment return as of the end of any
calendar quarter by giving written direction to the Administrator
at least 15 days prior to the end of such quarter. A timely
change to an Eligible Trustee's designation of investment return
shall become effective on the first day of the calendar quarter
following receipt by the Administrator.
4
<PAGE>
(iii) The investment alternatives made available to the Eligible
Trustee shall be the same as from time to time are communicated
to the Eligible Trustee by the Administrator.
(b) Except as provided below, the Eligible Trustee's Deferral Account
shall receive a return in accordance with his investment
designations, provided such designations conform to the
provisions of this Section. If
(i) the Eligible Trustee does not furnish the Administrator with
a written designation,
(ii) the written designation from the Eligible Trustee is
unclear, or
(iii) less than all of the Eligible Trustee's Deferral Account is
covered by such written designation,
then the entire amount of the Eligible Trustee's Deferral Account
shall be invested in The Money Market Fund until such time as the
Eligible Trustee shall provide the Administrator with
instructions.
The Fund shall provide a statement to the Eligible Trustee quarterly
showing such information as is appropriate, including the aggregate amount in
the Deferral Account, as of a reasonably current date.
SECTION 5. DISTRIBUTIONS FROM DEFERRAL ACCOUNT
5.1 ELIGIBLE TRUSTEE'S ELECTION. An Eligible Trustee shall elect at the
time of his Deferral Election to have the total amount in the Deferral Account,
if any, and the amount of Deferrals for the Deferral Year, plus applicable
investment return, deferred for any number of whole years, greater than two,
specified by the Eligible Trustee in such Deferral Election; provided, however,
that the distribution may in no event be deferred beyond the Eligible Trustee's
Separation from Service. He shall also elect the form of distribution:
(a) Lump sum; or
(b) Generally equal annual installments over a period of up to ten
(10) years.
5
<PAGE>
Such distributions shall commence within ninety (90) days subsequent to the
Valuation Date of the last year of the deferral period elected by the Eligible
Trustee above.
The time period for deferrals and/or the form of distribution may be
amended annually based on mutual agreement between the Eligible Trustee and the
Funds. Any such amendment shall become effective one year following the date the
amendment is submitted to the Administrator and the amendment shall apply to the
entire amount in the Deferral Account on the effective date. Any such agreement
shall be attached to the amendment.
5.2 ACCELERATION OF DISTRIBUTION. Notwithstanding the foregoing, in the
event of the liquidation, dissolution or winding up of a Fund or the
distribution of all or substantially all of a Fund's assets and property to its
shareholders, or in the event of a merger or reorganization of a Fund (unless
prior to such merger or reorganization, the Board of Trustees determines that
the Plan shall survive the merger or reorganization), all unpaid amounts in the
Deferral Accounts maintained by a Fund as of the effective date thereof shall be
paid in a lump sum to the Eligible Trustees on the effective date of such
liquidation, dissolution, winding up, distribution, merger, or reorganization.
For purposes of this Section 5.2, the Valuation Date will be the effective date
of the liquidation, dissolution, winding up, distribution, merger, or
reorganization.
5.3 DEATH PRIOR TO COMPLETE DISTRIBUTION OF DEFERRAL ACCOUNT. Upon the
death of the Eligible Trustee prior to the commencement of the distribution of
the amounts credited to his Deferral Account, the balance of such Account shall
be distributed to his Beneficiary in a lump sum as soon as practicable after the
Eligible Trustee's death. In the event of the death of the Eligible Trustee
after the commencement of such distribution, but prior to the complete
distribution of his Deferral Account, the balance of the amounts credited to his
Deferral Account shall be distributed to his Beneficiary over the remaining
period during which such amounts were distributable to the Eligible Trustee
under Section 5.1 hereof. Notwithstanding the above, the Board of Trustees, in
its sole discretion, may accelerate the distribution of the Deferral Account.
5.4 HARDSHIP AND UNFORESEEABLE EMERGENCY. An Eligible Trustee may request
at any time a withdrawal of part or all of the amount then credited to his
Deferral Account on account of Hardship and Unforeseeable Emergency by
submitting a written request to the Administrator accompanied by evidence that
his financial condition constitutes a Hardship and Unforeseeable Emergency. The
Administrator shall review the Eligible Trustee's request and determine the
extent, if any, to which such request is justified. Any such withdrawal shall be
limited to an amount reasonably necessary to meet the Hardship and Unforeseeable
Emergency, but not more than the amount of benefit to which the Eligible Trustee
would be entitled if his service as trustee were terminated. The Eligible
Trustee shall make any such request on a form provided by, and submitted to, the
Administrator.
6
<PAGE>
5.5 CHANGE IN CONTROL
(a) Notwithstanding anything herein to the contrary, in the event of
a "Change in Control" of a Fund's investment adviser, the Board
of Trustees may accelerate or extend the payment of all amounts
credited to the Deferral Accounts of the Eligible Trustees.
(b) The term "Change in Control" shall mean a change in "control" as
defined in section 2(a)(9) of the Investment Company Act of 1940.
5.6 DESIGNATION OF BENEFICIARY. For the purposes of Section 5.3 hereof, the
Eligible Trustee's Beneficiary shall be the person or persons so designated by
the Eligible Trustee in a written instrument submitted to the Administrator. The
Beneficiary may be changed at any time by the Eligible Trustee's submission of
such a written instrument to the Administrator. In the event the Eligible
Trustee fails to properly designate a Beneficiary or if his Beneficiary
predeceases him, then his beneficiary shall be his surviving spouse or, if none,
his estate.
SECTION 6. AMENDMENTS AND TERMINATION
6.1 AMENDMENTS. The Funds reserve the right to amend, in whole or in part,
and in any manner, any or all of the provisions of this Plan by action of their
Boards of Trustees, except that if any amendment adversely affects the accrued
rights of an Eligible Trustee, such amendment shall not be effective without the
consent of the Trustee.
6.2 TERMINATION. The Funds may terminate this Plan at any time. The
Eligible Trustees' Deferral Accounts shall become payable as of the Valuation
Date next following the effective date of the termination of this Plan.
SECTION 7. MISCELLANEOUS
7.1 RIGHTS OF CREDITORS
(a) This Plan is unfunded. Neither an Eligible Trustee nor any other
persons shall have any interest in any specific asset or assets
of the Funds by reason of any Deferral Account hereunder, nor any
rights to receive distribution of his Deferral Account except and
to the extent expressly provided hereunder. In order to cover
their obligations hereunder, the Funds will purchase investments.
These investments shall continue for all purposes to be a part of
the general assets and property of the Funds, subject to the
claims of its general creditors and no persons other than the
Funds shall by virtue of the provisions of this Plan have any
interest in such assets other than an interest as a general
creditor of the Funds.
7
<PAGE>
(b) The rights of an Eligible Trustee and the Beneficiaries to the
amounts held in the Deferral Account are unsecured and such
amounts shall be subject to the claims of the creditors of the
Funds. With respect to the payment of amounts held under the
Deferral Account, the Eligible Trustee and his Beneficiaries have
the status of unsecured creditors of the Funds. This Plan is
executed on behalf of the Funds by an officer of the Funds as
such and not individually. Any obligation of the Funds hereunder
shall be an unsecured obligation of the Funds and not of any
other person.
7.2 AGENTS. The Funds may employ agents and provide for such clerical,
legal, actuarial, accounting, advisory or other services as it deems necessary
to perform its duties under this Plan. The Funds shall bear the cost of such
services and all other expenses it incurs in connection with the administration
of this Plan.
7.3 LIABILITY AND INDEMNIFICATION. Except for their own negligence, willful
misconduct or willful breach of the terms of this Plan, the Funds shall be
indemnified and held harmless by the Eligible Trustees against liability or
losses occurring by reason of any act or omission of the Funds or any other
person, relating to this Plan.
7.4 INCAPACITY. If the Funds shall receive evidence satisfactory to them
that an Eligible Trustee or any Beneficiary entitled to receive any benefit
under the Plan is, at the time when such benefit becomes payable, a minor, or is
physically or mentally incompetent to receive such benefit and to give a valid
release therefor, and that another person or an institution is then maintaining
or has custody of the Eligible Trustee or Beneficiary and that no guardian,
committee or other representative of the estate of the Eligible Trustee or
Beneficiary shall have been duly appointed, the Funds may make payment of such
benefit otherwise payable to the Eligible Trustee or Beneficiary to such other
person or institution, including a custodian under a Uniform Gifts to Minors
Act, or corresponding legislation (who shall be an adult, a guardian of the
minor or a trust company), and the release of such other person or institution
shall be a valid and complete discharge for the payment of such benefit.
7.5 GOVERNING LAW. This Plan is made and entered into in the State of Ohio
and all matters concerning its validity, construction and administration shall
be governed by the laws of the State of Ohio.
7.6 NON-GUARANTEE OF TRUSTEESHIP. Nothing contained in this Plan shall be
construed as a contract or guarantee of the right of an Eligible Trustee to be,
or remain as, a trustee of any of the Funds or to receive any, or any particular
rate of, Compensation.
7.7 COUNSEL. The Funds may consult with legal counsel with respect to the
meaning or construction of this Plan, its obligations or duties hereunder or
with respect to any action or proceeding or any question of law, and it shall be
fully protected with respect to any action taken or omitted by it in good faith
pursuant to the advice of legal counsel.
8
<PAGE>
7.8 INTERESTS NOT TRANSFERABLE. An Eligible Trustee's and Beneficiaries'
interests in the Deferral Account may not be anticipated, sold, encumbered,
pledged, mortgaged, charged, transferred, alienated, assigned nor become subject
to execution, garnishment or attachment and any attempt to do so by any person
shall be deemed null and void. The Funds shall not recognize the rights of any
party under this Plan except those of the Eligible Trustee or his Beneficiary.
7.9 ENTIRE AGREEMENT. This Plan contains the entire understanding between
the Funds and the Eligible Trustees with respect to the payment of non-qualified
deferred compensation by the Funds to the Eligible Trustees.
7.10 INTERPRETATION OF PLAN. Interpretations of, and determinations related
to, this Plan made by the Funds in good faith, including any determinations of
the amounts of the Deferral Account, shall be conclusive and binding upon all
parties; and the Funds shall not incur any liability to an Eligible Trustee for
any such interpretation or determination so made or for any other action taken
by it in connection with this Plan in good faith.
7.11 SUCCESSORS AND ASSIGNS. This Plan shall be binding upon, and shall
inure to the benefit of, the Funds and their successors and assigns and to the
Eligible Trustees and their heirs, executors, administrators and personal
representatives.
7.12 SEVERABILITY. In the event any one or more provisions of this Plan are
held to be invalid or unenforceable, such illegality or unenforceability shall
not affect the validity or enforceability of the other provisions hereof and
such other provisions shall remain in full force and effect unaffected by such
invalidity or unenforceability.
IN WITNESS WHEREOF, the Funds have caused this Plan to be executed by one
of their duly authorized officers, this ________ day of _____________________,
1997.
[FUNDS]
By:
- -------------------------------- ----------------------------------
Witness
Name:
----------------------------------
Title:
----------------------------------
9
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
DEFERRAL ELECTION FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan"), I
hereby make the following elections:
I. DEFERRAL OF COMPENSATION
You may elect to defer up to 100 percent of your Compensation (as defined under
the Plan), in whole percentage amounts.
Starting August 6, 1998 and for each year thereafter (unless subsequently
amended by completion of a new election form), you may elect any percentage
portion of your Compensation to be credited to your Deferral Account under the
Plan. The Deferral Account shall be further credited with a return on the
Deferral Account balance as provided under the Plan.
- -------------------------------------------------------------------------------
I hereby elect that the following percentage of my Compensation
be deferred under the Plan.
----%
- -------------------------------------------------------------------------------
II. ELECTION OF DEFERRAL PERIOD
You are required under the Plan to elect the time period for which Deferrals
(plus applicable investment return) are to be deferred. Such election shall
specify either (a) a number of years for the deferral, to be not less than two
(2) years, or (b) that the deferral continue until your Separation from Service.
I hereby make the following elections regarding my Deferrals under the Plan:
- -------------------------------------------------------------------------------
|_| The Compensation I elect to defer under the Plan is to be deferred for ___
years beyond the end of the Deferral year.
|_| The Compensation I elect to defer under the Plan is to be deferred until my
Separation from Service.
- -------------------------------------------------------------------------------
10
<PAGE>
III. FORM OF DISTRIBUTION
You are required to elect the form of distribution, which may be either (a) a
lump sum or (b) generally equal annual installments over a period of up to ten
years.
- -------------------------------------------------------------------------------
My distributions from the Plan are to be in the form of:
|_| a lump sum; or
|_| generally equal annual installments over ___ years (not
to exceed 10 years)
- -------------------------------------------------------------------------------
The time period for deferrals under II above and/or the form of distribution
under III above may be amended annually based on mutual agreement between the
Eligible Trustee and the Funds. Any such amendment shall become effective one
year following the date the amendment is submitted to the Administrator and the
amendment shall apply to the entire amount in the Deferral Account on the
effective date. Any such agreement shall be attached to this Form.
I understand that the amounts held in the Deferral Account shall remain the
general assets of the Funds and that, with respect to the payment of such
amounts, I am merely a general creditor of the Funds. I may not sell, encumber,
pledge, assign or otherwise alienate the amounts held under the Deferral
Account.
I hereby agree that the terms of the Plan are incorporated herein and are made a
part hereof.
- ------------------------------- ---------------------------------
Witness ELIGIBLE TRUSTEE
- ------------------------------- ---------------------------------
Witness Date
Accepted by Administrator:
- ------------------------------- ---------------------------------
Administrator Date
11
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
RETURN DESIGNATION FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan") I
hereby elect that the return on my Deferral Account under the Plan be computed
as if the Deferral Account was invested in the following Funds:
- --------------------------------------------------------------------------------
Percentage of Current Percentage of Future
Name of Fund Deferral Account to be Deferral Account Earnings
Attributed to Fund to be Attributed to Fund
- --------------------------------------------------------------------------------
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- -------------------------- -------% -------%
- --------------------------------------------------------------------------------
Please include an attachment to this form if you need space to select additional
portfolios.
I realize that the designation included on this Form shall be effective until I
have filed another valid Return Designation Form with the Administrator. If (a)
I make no written designation, (b) the written designation is unclear or (c)
less than 100% of my Deferral Account is covered by this election, then my
Deferral Account shall be credited with the returns of the Money Market Fund
until I provide the Administrator with appropriate instructions. This form must
be delivered to the Administrator on or before 15 days prior to the end of the
calendar quarter to be effective the following quarter.
- --------------------------------- ---------------------------------
Witness ELIGIBLE TRUSTEE
- --------------------------------- ---------------------------------
Witness Date
12
<PAGE>
Accepted by Administrator:
- --------------------------------- ---------------------------------
Administrator Date
13
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
BENEFICIARY DESIGNATION FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan"), I
hereby make the following beneficiary designations:
I. PRIMARY BENEFICIARY
I hereby select the following as my primary Beneficiary(ies) to receive at my
death in the form of a lump sum (or as otherwise provided in Section 5.3 of the
Plan) the amounts held in my Deferral Account under the Plan. In the event I am
survived by more than one primary Beneficiary, such primary Beneficiaries shall
share equally in the distribution of my Deferral Account unless I indicate
otherwise on an attachment to this form:
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
Please include an attachment to this form if you wish to select additional
primary Beneficiaries.
14
<PAGE>
II. SECONDARY BENEFICIARY
In the event I am not survived by any primary Beneficiary, I hereby appoint the
following as secondary Beneficiary(ies) to receive death benefits in the form of
a lump sum (or as otherwise provided in Section 5.3 of the Plan) under the Plan.
In the event I am survived by more than one secondary Beneficiary, such
secondary Beneficiaries shall share equally in the distribution of my Deferral
Account unless I indicate otherwise on an attachment to this form:
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
- --------------------------------------------------------------------------------
Name (Relationship)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip SSN
Please include an attachment to this form if you wish to select additional
secondary Beneficiaries.
I understand that if I am not survived by any primary or secondary Beneficiary,
my Beneficiary shall be as set forth under the Plan.
- ------------------------------- ----------------------------------
Witness ELIGIBLE TRUSTEE
- ------------------------------- ----------------------------------
Witness Date
Accepted by Administrator:
- ------------------------------- ----------------------------------
Administrator Date
15
<PAGE>
DEFERRED COMPENSATION PLAN
FOR INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------
HARDSHIP WITHDRAWAL FORM
- -------------------------------------------------------------------------------
Under the Deferred Compensation Plan for Independent Trustees (the "Plan"), I
may request at any time a Hardship and Unforeseeable Emergency withdrawal (an
"Emergency withdrawal") of part or all of the amount then credited to my
Deferral Account. The amount of the Emergency withdrawal shall be limited to the
amount necessary to meet the Emergency.
- -------------------------------------------------------------------------------
I request a hardship withdrawal of $____________________ for the
following reason:
|_| My own or a dependent's sudden and unexpected illness.
|_| The loss of my property due to casualty.
|_| Other (explain):
- -------------------------------------------------------------------------------
In addition, I certify that the Emergency may not be relieved through (a)
reimbursement or compensation by insurance or otherwise; (b) liquidation of my
assets to the extent that liquidation itself would not cause an Emergency, or
(c) ceasing to defer receipt of any compensation that I have not yet earned. In
addition, I realize that the Administrator may require additional information
from me before deciding whether to grant this request for an Emergency
withdrawal.
- ----------------------------- ---------------------------------
Witness ELIGIBLE TRUSTEE
- ----------------------------- ---------------------------------
Witness Date
- -------------------------------------------------------------------------------
Administrator: Approved: _____ Denied: ____
- ----------------------------- ---------------------------------
Administrator Date
- -------------------------------------------------------------------------------
16
CUSTODY AGREEMENT
This AGREEMENT, dated as of February 24 2000, by and between THE AGGRESSIVE
GROWTH MUTUAL FUND PORTFOLIO and THE GROWTH MUTUAL FUND PORTFOLIO (the
"Portfolio"), a trust organized under the laws of the state of New York, and
FIRSTAR BANK, N.A., a national banking association (the "Custodian").
W I T N E S S E T H:
WHEREAS, the Portfolio desires that the Portfolio's Securities and cash be
held and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Portfolio is trust registered under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Portfolio and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
1.1 "AUTHORIZED PERSON" means any Officer or other person duly authorized
by resolution of the Board of Trustees to give Oral Instructions and Written
Instructions on behalf of the Portfolio and named in Exhibit A hereto or in such
resolutions of the Board Of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "BOARD OF TRUSTEES" shall mean the Trustees from time to time serving
under the Trust's Agreement and Declaration of Trust, as from time to time
amended.
1
<PAGE>
1.3 "BOOK-ENTRY SYSTEM" shall mean a federal book-entry system as provided
in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of 31 CFR
Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "BUSINESS DAY" shall mean any day recognized as a settlement day by The
New York Stock Exchange, Inc. and any other day for which the Portfolio computes
the net asset value of Shares of the Portfolio.
1.5 "PORTFOLIO CUSTODY ACCOUNT" shall mean any of the accounts in the name
of the Portfolio, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers, Inc.
1.7 "OFFICER" shall mean the Chairman, President, any Vice President, any
Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer,
or any Assistant Treasurer of the Trust.
1.8 "ORAL INSTRUCTIONS" shall mean instructions orally transmitted to and
accepted by the Custodian because such instructions are: (i) reasonably believed
by the Custodian to have been given by an Authorized Person, (ii) recorded and
kept among the records of the Custodian made in the ordinary course of business
and (iii) orally confirmed by the Custodian. The Portfolio shall cause all Oral
Instructions to be confirmed by Written Instructions prior to the end of the
next Business Day. If such Written Instructions confirming Oral Instructions are
not received by the Custodian prior to a transaction, it shall in no way affect
the validity of the transaction or the authorization thereof by the Portfolio.
If Oral Instructions vary from the Written Instructions which purport to confirm
them, the Custodian shall notify the Portfolio of such variance but such Oral
Instructions will govern unless the Custodian has not yet acted.
1.9 "PROPER INSTRUCTIONS" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
2
<PAGE>
1.10 "SECURITIES DEPOSITORY" shall mean The Depository Trust Company and
(provided that Custodian shall have received a copy of a resolution of the Board
Of Trustees, certified by an Officer, specifically approving the use of such
clearing agency as a depository for the Portfolio) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "SECURITIES" shall include, without limitation, common and preferred
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, bankers' acceptances, mortgage-backed securities or other
obligations, and any certificates, receipts, warrants or other instruments or
documents representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interests therein, or any similar
property or assets that the Custodian has the facilities to clear and to
service.
1.12 "SHARES" shall mean, with respect to a Portfolio, the units of
beneficial interest issued by the trust on account of the Portfolio.
1.13 "SUB-CUSTODIAN" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Portfolios based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Portfolios will be adequately
protected against the risk of loss of assets held in accordance
3
<PAGE>
with such contract; (ii) that the Portfolios' assets will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of the
Sub-Custodian or its creditors except a claim of payment for their safe custody
or administration, in the case of cash deposits, liens or rights in favor of
creditors of the Sub-Custodian arising under bankruptcy, insolvency, or similar
laws; (iii) that beneficial ownership for the Portfolios' assets will be freely
transferable without the payment of money or value other than for safe custody
or administration; (iv) that adequate records will be maintained identifying the
assets as belonging to the Portfolios or as being held by a third party for the
benefit of the Portfolios; (v) that the Portfolios' independent public
accountants will be given access to those records or confirmation of the
contents of those records; and (vi) that the Portfolios will receive periodic
reports with respect to the safekeeping of the Portfolios' assets, including,
but not limited to, notification of any transfer to or from a Portfolio's
account or a third party account containing assets held for the benefit of the
Portfolio. Such contract may contain, in lieu of any or all of the provisions
specified above, such other provisions that the Custodian determines will
provide, in their entirety, the same or a greater level of care and protection
for Portfolio assets as the specified provisions, in their entirety.
1.14"WRITTEN INSTRUCTIONS" shall mean (i) written communications actually
received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board Of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 APPOINTMENT. The Portfolio hereby constitutes and appoints the
Custodian as
4
<PAGE>
custodian of all Securities and cash owned by or in the possession of the
Portfolio at any time during the period of this Agreement.
2.2 ACCEPTANCE. The Custodian hereby accepts appointment as such custodian
and agrees to perform the duties thereof as hereinafter set forth.
2.3 DOCUMENTS TO BE FURNISHED. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the Portfolio:
a. A copy of the Declaration of Trust certified by the Secretary;
b. A copy of the Bylaws of the Trust certified by the Secretary;
c. A copy of the resolution of the Board Of Trustees of the Trust
appointing the Custodian, certified by the Secretary;
d. A copy of the then current Prospectus of the Portfolio; and
e. A certification of the Chairman and Secretary of the Trust
setting forth the names and signatures of the current Officers of
the Trust and other Authorized Persons.
2.4 NOTICE OF APPOINTMENT OF DIVIDEND AND TRANSFER AGENT. The Portfolio
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent of the Portfolio.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 SEGREGATION. All Securities and non-cash property held by the Custodian
for the account of the Portfolio (other than Securities maintained in a
Securities Depository or Book-
5
<PAGE>
Entry System) shall be physically segregated from other Securities and non-cash
property in the possession of the Custodian (including the Securities and
non-cash property of the other Portfolios) and shall be identified as subject to
this Agreement.
3.2 PORTFOLIO CUSTODY ACCOUNTS. As to each Portfolio, the Custodian shall
open and maintain in its trust department a custody account in the name of the
Portfolio coupled with the name of the Portfolio, subject only to draft or order
of the Custodian, in which the Custodian shall enter and carry all Securities,
cash and other assets of such Portfolio which are delivered to it.
3.3 APPOINTMENT OF AGENTS. (a) In its discretion, the Custodian may appoint
one or more Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Portfolios and to carry out
such other provisions of this Agreement as it may determine, provided, however,
that the appointment of any such agents and maintenance of any Securities and
cash of the Portfolio shall be at the Custodian's expense and shall not relieve
the Custodian of any of its obligations or liabilities under this Agreement.
(b) If, after the initial approval of Sub-Custodians by the Board Of
Trustees in connection with this Agreement, the Custodian wishes to appoint
other Sub-Custodians to hold property of the Portfolio, it will so notify the
Portfolio and provide it with information reasonably necessary to determine any
such new Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act,
including a copy of the proposed agreement with such Sub-Custodian. The
Portfolio shall at the meeting of the Board Of Trustees next following receipt
of such notice and information give a written approval or disapproval of the
proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Trustees of the placement of the
Securities and cash of the Portfolios with a particular Sub-Custodian and of any
material changes in the Portfolios' arrangements. The Custodian shall promptly
take such steps as may be required to withdraw assets of the Portfolios
6
<PAGE>
from any Sub-Custodian that has ceased to meet the requirements of Rule 17f-5
under the 1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Portfolio that it agrees to exercise reasonable
care, prudence and diligence such as a person having responsibility for the
safekeeping of property of the Portfolios. The Custodian further warrants that a
Portfolio's assets will be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, if maintained with each
Sub-Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation: (i) the Sub-Custodian's practices,
procedures, and internal controls, for certificated securities (if applicable),
the method of keeping custodial records, and the security and data protection
practices; (ii) whether the Sub-Custodian has the requisite financial strength
to provide reasonable care for Portfolio assets; (iii) the Sub-Custodian's
general reputation and standing and, in the case of a Securities Depository, the
Securities Depository's operating history and number of participants; and (iv)
whether the Portfolio will have jurisdiction over and be able to enforce
judgments against the Sub-Custodian, such as by virtue of the existence of any
offices of the Sub-Custodian in the United States or the Sub-Custodian's consent
to service of process in the United States.
(f) The Custodian shall establish a system to monitor the appropriateness
of maintaining the Portfolio's assets with a particular Sub-Custodian and the
contract governing the Portfolios' arrangements with such Sub-Custodian.
3.4 DELIVERY OF ASSETS TO CUSTODIAN. The Portfolio shall deliver, or cause
to be delivered, to the Custodian all of the Portfolios' Securities, cash and
other assets, including (a) all payments of income, payments of principal and
capital distributions received by the Portfolio with respect to such Securities,
cash or other assets owned by the Portfolio at any time during the period of
this Agreement, and (b) all cash received by the Portfolio for the issuance, at
any time
7
<PAGE>
during such period, of Shares. The Custodian shall not be responsible for such
Securities, cash or other assets until actually received by it.
3.5 SECURITIES DEPOSITORIES AND BOOK-ENTRY SYSTEMS. The Custodian may
deposit and/or maintain Securities of the Portfolio in a Securities Depository
or in a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Portfolios in any
Securities Depository or Book-Entry System, the Portfolio shall
deliver to the Custodian a resolution of the Board Of Trustees,
certified by an Officer, authorizing and instructing the Custodian on
an on-going basis to deposit in such Securities Depository or
Book-Entry System all Securities eligible for deposit therein and to
make use of such Securities Depository or Book-Entry System to the
extent possible and practical in connection with its performance
hereunder, including, without limitation, in connection with
settlements of purchases and sales of Securities, loans of Securities,
and deliveries and returns of collateral consisting of Securities.
(b) Securities of the Portfolios kept in a Book-Entry System or
Securities Depository shall be kept in an account ("Depository
Account") of the Custodian in such Book-Entry System or Securities
Depository which includes only assets held by the Custodian as a
fiduciary, custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of the
Portfolio maintained in a Book-Entry System or Securities Depository
shall, by book-entry, identify such Securities as belonging to such
Portfolio.
(d) If Securities purchased by a Portfolio are to be held in a
Book-Entry System or Securities Depository, the Custodian shall pay
for such Securities upon (i) receipt of advice from the Book-Entry
System or Securities Depository that such Securities have been
transferred to the Depository Account, and (ii) the making of an entry
on the records of the Custodian to reflect such payment and transfer
for the account of such Portfolio. If Securities sold by a Portfolio
are held in a Book-Entry System or Securities Depository, the
Custodian shall transfer such Securities upon (i) receipt of advice
from the Book-Entry System or
8
<PAGE>
Securities Depository that payment for such Securities has been
transferred to the Depository Account, and (ii) the making of an entry
on the records of the Custodian to reflect such transfer and payment
for the account of such Portfolio.
(e) The Custodian shall provide the Portfolio with copies of any
report (obtained by the Custodian from a Book-Entry System or
Securities Depository in which Securities of the Portfolio are kept)
on the internal accounting controls and procedures for safeguarding
Securities deposited in such Book-Entry System or Securities
Depository.
(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Portfolio for any loss or damage to
the Portfolio resulting (i) from the use of a Book-Entry System or
Securities Depository by reason of any negligence or willful
misconduct on the part of Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above or any of its or their employees, or
(ii) from failure of Custodian or any such Sub-Custodian to enforce
effectively such rights as it may have against a Book-Entry System or
Securities Depository. At its election, the Portfolio shall be
subrogated to the rights of the Custodian with respect to any claim
against a Book-Entry System or Securities Depository or any other
person from any loss or damage to the Portfolio arising from the use
of such Book-Entry System or Securities Depository, if and to the
extent that the Portfolios has not been made whole for any such loss
or damage.
3.6 DISBURSEMENT OF MONEYS FROM PORTFOLIO CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Portfolio
Custody Account but only in the following cases:
(a) For the purchase of Securities for the Portfolio but only in
accordance with Section 4.1 of this Agreement and only (i) in the case
of Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to the Custodian
(or any Sub-Custodian appointed pursuant to Section 3.3 above) of such
Securities
9
<PAGE>
registered as provided in Section 3.9 below or in proper form for
transfer, or if the purchase of such Securities is effected through a
Book-Entry System or Securities Depository, in accordance with the
conditions set forth in Section 3.5 above; (ii) in the case of options
on Securities, against delivery to the Custodian (or such
Sub-Custodian) of such receipts as are required by the customs
prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to the
Custodian (or such Sub-Custodian) of evidence of title thereto in
favor of the Portfolio or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse repurchase
agreements entered into between the Portfolio and a bank which is a
member of the Federal Reserve System or between the Portfolio and a
primary dealer in U.S. Government securities, against delivery of the
purchased Securities either in certificate form or through an entry
crediting the Custodian's account at a Book-Entry System or Securities
Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Portfolio;
(c) For the payment of any dividends or capital gain distributions
declared by the Portfolio;
(d) In payment of the redemption price of Shares as provided in
Section 5.1 below;
(e) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for the
account of the Portfolio: interest; taxes; administration, investment
advisory, accounting, auditing, transfer agent, custodian, trustee and
legal fees; and other operating expenses of the Portfolio; in all
cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Portfolio, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to compliance
with rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection
with transactions by the Portfolio;
10
<PAGE>
(g) For transfer in accordance with the provision of any agreement
among the Portfolio, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations)
regarding account deposits in connection with transactions by the
Portfolio;
(h) For the Portfolioing of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the
Custodian), which deposit or account has a term of one year or less;
and
(i) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board Of
Trustees, certified by an Officer, specifying the amount and purpose
of such payment, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom such payment is to
be made.
3.7 DELIVERY OF SECURITIES FROM PORTFOLIO CUSTODY ACCOUNT. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from the
Portfolio Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Portfolio but
only against receipt of payment therefor in cash, by certified or
cashiers check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section
3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Portfolio; provided that,
in any such case, the cash or other consideration is to be delivered
to the Custodian;
11
<PAGE>
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Portfolio, the Custodian or any Sub-Custodian appointed
pursuant to Section 3.3 above, or of any nominee or nominees of any of
the foregoing, or (ii) for exchange for a different number of
certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new
Securities are to be delivered to the Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment of the
issuer of such Securities, or pursuant to provisions for conversion
contained in such Securities, or pursuant to any deposit agreement,
including surrender or receipt of underlying Securities in connection
with the issuance or cancellation of depository receipts; provided
that, in any such case, the new Securities and cash, if any, are to be
delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Portfolio;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities
and cash, if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of the
Portfolio, but only against receipt of such collateral as the
Portfolio shall have specified to the Custodian in Proper
Instructions;
(j) For delivery as security in connection with any borrowings by the
Portfolio requiring a pledge of assets by the Portfolio, but only
against receipt by
12
<PAGE>
the Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Portfolio;
(l) For delivery in accordance with the provisions of any agreement
among the Portfolio, the Custodian and a broker-dealer registered
under the 1934 Act and a member of the NASD, relating to compliance
with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar
organization or organizations) regarding escrow or other arrangements
in connection with transactions by the Portfolio;
(m) For delivery in accordance with the provisions of any agreement
among the Portfolio, the Custodian, and a futures commission merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any
contract market (or any similar organization or organizations)
regarding account deposits in connection with transactions by the
Portfolio; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the
Board Of Trustees, certified by an Officer, specifying the Securities
to be delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom delivery of such Securities
shall be made.
3.8 ACTIONS NOT REQUIRING PROPER INSTRUCTIONS. Unless otherwise instructed
by the Portfolio, the Custodian shall with respect to all Securities held for
the Portfolio:
(a) Subject to Section 7.4 below, collect on a timely basis all income
and other payments to which the Portfolio is entitled either by law or
pursuant to
13
<PAGE>
custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on
a timely basis the amount payable upon all Securities which may mature
or be called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in effect,
and prepare and submit reports to the Internal Revenue Service ("IRS")
and to the Portfolio at such time, in such manner and containing such
information as is prescribed by the IRS;
(f) Hold for the Portfolio, either directly or, with respect to
Securities held therein, through a Book-Entry System or Securities
Depository, all rights and similar securities issued with respect to
Securities of the Portfolio; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with Securities and assets of the Portfolio.
3.9 REGISTRATION AND TRANSFER OF SECURITIES. All Securities held for a
Portfolio that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System if eligible therefor. All other Securities held for the
Portfolio may be registered in the name of such Portfolio, the Custodian, or any
Sub-Custodian appointed pursuant to Section 3.3 above, or in the name of any
nominee of any of them, or in the name of a Book-Entry System, Securities
Depository or any nominee of either thereof. The Portfolio shall furnish to the
Custodian appropriate instruments to enable the Custodian to hold or deliver in
proper form for transfer, or to register in the name of any of the nominees
hereinabove referred to or in the name of a Book-Entry System or Securities
Depository, any Securities registered in the name of a Portfolio.
14
<PAGE>
3.10 RECORDS. (a) The Custodian shall maintain, by Portfolio, complete and
accurate records with respect to Securities, cash or other property held for the
Portfolio, including (i) journals or other records of original entry containing
an itemized daily record in detail of all receipts and deliveries of Securities
and all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in physical possession,
(C) monies and Securities borrowed and monies and Securities loaned (together
with a record of the collateral therefor and substitutions of such collateral),
(D) dividends and interest received, and (E) dividends receivable and interest
receivable; and (iii) canceled checks and bank records related thereto. The
Custodian shall keep such other books and records of the Portfolios as the
Portfolio shall reasonably request, or as may be required by the 1940 Act,
including, but not limited to, Section 31 of the 1940 Act and Rule 31a-2
promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Portfolio and in compliance with rules
and regulations of the Securities and Exchange Commission, (ii) be the property
of the Portfolio and at all times during the regular business hours of the
Custodian be made available upon request for inspection by duly authorized
officers, employees or agents of the Portfolio and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained by
Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
3.11 PORTFOLIO REPORTS BY CUSTODIAN. The Custodian shall furnish the
Portfolio with a daily activity statement and a summary of all transfers to or
from each Portfolio Custody Account on the day following such transfers. At
least monthly and from time to time, the Custodian shall furnish the Portfolio
with a detailed statement of the Securities and moneys held by the Custodian and
the Sub-Custodians for the Portfolio under this Agreement.
3.12 OTHER REPORTS BY CUSTODIAN. The Custodian shall provide the Portfolio
with such reports, as the Portfolio may reasonably request from time to time, on
the internal accounting
15
<PAGE>
controls and procedures for safeguarding Securities, which are employed by the
Custodian or any Sub-Custodian appointed pursuant to Section 3.3 above.
3.13 PROXIES AND OTHER MATERIALS. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the Portfolio, to
be promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting materials
and all notices relating to such Securities.
3.14 INFORMATION ON CORPORATE ACTIONS. The Custodian shall promptly deliver
to the Portfolio all information received by the Custodian and pertaining to
Securities being held by the Portfolio with respect to optional tender or
exchange offers, calls for redemption or purchase, or expiration of rights as
described in the Standards of Service Guide attached as Exhibit B. If the
Portfolio desires to take action with respect to any tender offer, exchange
offer or other similar transaction, the Portfolio shall notify the Custodian at
least five Business Days prior to the date on which the Custodian is to take
such action. The Portfolio will provide or cause to be provided to the Custodian
all relevant information for any Security which has unique put/option provisions
at least five Business Days prior to the beginning date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE PORTFOLIO
4.1 PURCHASE OF SECURITIES. Promptly upon each purchase of Securities for
the Portfolio, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities, and the
title or other description thereof, (b) the number of shares, principal amount
(and accrued interest, if any) or other units purchased, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person to whom such amount
is payable. The Custodian shall
16
<PAGE>
upon receipt of such Securities purchased by such Portfolio pay out of the
moneys held for the account of a Portfolio the total amount specified in such
Written Instructions to the person named therein. The Custodian shall not be
under any obligation to pay out moneys to cover the cost of a purchase of
Securities for the Portfolio, if in the Portfolio Custody Account there is
insufficient cash available to the Portfolio for which such purchase was made.
4.2 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED. In
any and every case where payment for the purchase of Securities for a Portfolio
is made by the Custodian in advance of receipt of the Securities purchased but
in the absence of specified Written Instructions to so pay in advance, the
Custodian shall be liable to the Portfolio for such Securities to the same
extent as if the Securities had been received by the Custodian.
4.3 SALE OF SECURITIES. Promptly upon each sale of Securities by a
Portfolio, Written Instructions shall be delivered to the Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Portfolio as specified in such Written Instructions,
the Custodian shall deliver such Securities to the person specified in such
Written Instructions. Subject to the foregoing, the Custodian may accept payment
in such form as shall be satisfactory to it, and may deliver Securities and
arrange for payment in accordance with the customs prevailing among dealers in
Securities.
4.4 DELIVERY OF SECURITIES SOLD. Notwithstanding Section 4.3 above or any
other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final payment therefor. In any such case, the Portfolio shall bear the risk that
final payment for such Securities may not be made or that such Securities
17
<PAGE>
may be returned or otherwise held or disposed of by or through the person to
whom they were delivered, and the Custodian shall have no liability for any for
the foregoing.
4.5 PAYMENT FOR SECURITIES SOLD, ETC. In its sole discretion and from time
to time, the Custodian may credit the Portfolio Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Portfolio, and (iii) income from
cash, Securities or other assets of the Portfolio. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Portfolio to use
Portfolios so credited to the Portfolio Custody Account in anticipation of
actual receipt of final payment. Any such funds shall be repayable immediately
upon demand made by the Custodian at any time prior to the actual receipt of all
final payments in anticipation of which funds were credited to the Portfolio
Custody Account.
4.6 ADVANCES BY CUSTODIAN FOR SETTLEMENT. The Custodian may, in its sole
discretion and from time to time, advance funds to the Portfolio to facilitate
the settlement of a Portfolio's transactions in the Portfolio Custody Account.
Any such advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF PORTFOLIO SHARES
5.1 TRANSFER OF FUNDS. From such Portfolios as may be available for the
purpose in the relevant Portfolio Custody Account, and upon receipt of Proper
Instructions specifying that the Portfolios are required to redeem Shares of the
Portfolio, the Custodian shall wire each amount specified in such Proper
Instructions to or through such bank as the Portfolio may
18
<PAGE>
designate with respect to such amount in such Proper Instructions.
5.2 NO DUTY REGARDING PAYING BANKS. The Custodian shall not be under any
obligation to effect payment or distribution by any bank designated in Proper
Instructions given pursuant to Section 5.1 above of any amount paid by the
Custodian to such bank in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Portfolio,
into which account or accounts may be transferred cash and/or Securities,
including Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the
Portfolio, the Custodian and a broker-dealer registered under the 1934
Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Portfolio and of any registered
national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements
in connection with transactions by the Portfolio,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Portfolio or in
connection with financial futures contracts (or options thereon)
purchased or sold by the Portfolio,
(c) which constitute collateral for loans of Securities made by the
Portfolio,
(d) for purposes of compliance by the Portfolio with requirements
under the
19
<PAGE>
1940 Act for the maintenance of segregated accounts by registered
investment companies in connection with reverse repurchase agreements
and when-issued, delayed delivery and firm commitment transactions,
and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board Of Trustees, certified by an Officer, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
Each segregated account established under this Article VI shall be
established and maintained for a single Portfolio only. All Proper Instructions
relating to a segregated account shall specify the Portfolio involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 STANDARD OF CARE. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Portfolio or any Portfolio for any loss, damage,
cost, expense (including attorneys' fees and disbursements), liability or claim
unless such loss, damage, cost, expense, liability or claim arises from
negligence, bad faith or willful misconduct on its part or on the part of any
Sub-Custodian appointed pursuant to Section 3.3 above. The Custodian shall be
entitled to rely on and may act upon advice of counsel on all matters, and shall
be without liability for any action reasonably taken or omitted pursuant to such
advice. The Custodian shall promptly notify the Portfolio of any action taken or
omitted by the Custodian pursuant to advice of counsel. The Custodian shall not
be under any obligation at any time to ascertain whether the Portfolio is in
compliance with the 1940 Act, the regulations thereunder, the provisions of the
Portfolio's charter documents or by-laws, or its investment objectives and
policies as then in effect.
7.2 ACTUAL COLLECTION REQUIRED. The Custodian shall not be liable for, or
considered to be the custodian of, any cash belonging to a Portfolio or any
money represented by a check, draft or other instrument for the payment of
money, until the Custodian or its agents actually
20
<PAGE>
receive such cash or collect on such instrument.
7.3 NO RESPONSIBILITY FOR TITLE, ETC. So long as and to the extent that it
is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 LIMITATION ON DUTY TO COLLECT. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Portfolio if such Securities
are in default or payment is not made after due demand or presentation.
7.5 RELIANCE UPON DOCUMENTS AND INSTRUCTIONS. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 EXPRESS DUTIES ONLY. The Custodian shall have no duties or obligations
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against the Custodian.
7.7 CO-OPERATION. The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Portfolio to keep the
books of account of the Portfolios and/or compute the value of the assets of the
Portfolios. The Custodian shall take all such reasonable actions as the
Portfolio may from time to time request to enable the Portfolio to obtain, from
year to year, favorable opinions from the Portfolio's independent accountants
with respect to the Custodian's activities hereunder in connection with (a) the
preparation of the Portfolio's reports on Form N-1A and Form N-SAR and any other
reports required by the Securities and Exchange Commission, and (b) the
fulfillment by the Portfolio of any other requirements of the Securities and
Exchange Commission.
21
<PAGE>
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY PORTFOLIO. The Portfolio shall indemnify and hold
harmless the Custodian and any Sub-Custodian appointed pursuant to Section 3.3
above, and any nominee of the Custodian or of such Sub-Custodian, from and
against any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act, and any state or
foreign securities and/or banking laws) or claim arising directly or indirectly
(a) from the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by the Custodian or such
Sub-Custodian (i) at the request or direction of or in reliance on the advice of
the Portfolio, or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or any sub-custody agreement
with a Sub-Custodian appointed pursuant to Section 3.3 above, provided that
neither the Custodian nor any such Sub-Custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such Sub-Custodian's negligence, bad faith
or willful misconduct.
8.2 INDEMNIFICATION BY CUSTODIAN. The Custodian shall indemnify and hold
harmless the Portfolio from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking laws) or claim
arising from the negligence, bad faith or willful misconduct of the Custodian or
any Sub-Custodian appointed pursuant to Section 3.3 above, or any nominee of the
Custodian or of such Sub-Custodian.
8.3 INDEMNITY TO BE PROVIDED. If the Portfolio requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the
22
<PAGE>
Custodian or its nominee becoming liable for the payment of money or incurring
liability of some other form, the Custodian shall not be required to take such
action until the Portfolio shall have provided indemnity therefor to the
Custodian in an amount and form satisfactory to the Custodian.
8.4 SECURITY. If the Custodian advances cash or Securities to the Portfolio
for any purpose, either at the Portfolio's request or as otherwise contemplated
in this Agreement, or in the event that the Custodian or its nominee incurs, in
connection with its performance under this Agreement, any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim
(except such as may arise from its or its nominee's negligence, bad faith or
willful misconduct), then, in any such event, any property at any time held for
the account of such Portfolio shall be security therefor, and should the
Portfolio fail promptly to repay or indemnify the Custodian, the Custodian shall
be entitled to utilize available cash of such Portfolio and to dispose of other
assets of such Portfolio to the extent necessary to obtain reimbursement or
indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Portfolio shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Portfolios in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
23
<PAGE>
ARTICLE X
EFFECTIVE PERIOD; TERMINATION
10.1 EFFECTIVE PERIOD. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
10.2 TERMINATION. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board Of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the
Portfolio and held by the Custodian as custodian, and (b) transfer any
Securities held in a Book-Entry System or Securities Depository to an account of
or for the benefit of the Portfolios at the successor custodian, provided that
the Portfolio shall have paid to the Custodian all fees, expenses and other
amounts to the payment or reimbursement of which it shall then be entitled. Upon
such delivery and transfer, the Custodian shall be relieved of all obligations
under this Agreement. The Portfolio may at any time immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by regulatory authorities or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
10.3 FAILURE TO APPOINT SUCCESSOR CUSTODIAN. If a successor custodian is
not designated by the Portfolio on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or corporation company of its own selection, which (a) is a
"bank" as defined in the 1940 Act and (b) has aggregate capital, surplus and
undivided profits as shown on its then most recent published report of not less
than $25 million, all Securities, cash and other property held by Custodian
under this Agreement and to transfer to an account of or for the Portfolios at
such bank or trust company all Securities of the Portfolios held in a Book-Entry
System or Securities Depository. Upon such delivery and transfer, such bank or
trust company shall be the successor custodian under this Agreement and the
Custodian shall be relieved of all obligations under this Agreement.
24
<PAGE>
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from time to
time by the Portfolio and the Custodian. The fees and other charges in effect on
the date hereof and applicable to the Portfolio are set forth in Exhibit C
attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Portfolio hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Portfolio personally, but shall bind only the
property of the Portfolio as provided in the Portfolio's Agreement and Articles
of Incorporation, as from time to time amended. The execution and delivery of
this Agreement have been authorized by the Trustees, and this Agreement has been
signed and delivered by an authorized officer of the Portfolio, acting as such,
and neither such authorization by the Trustees nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
corporation property of the Portfolio as provided in the above-mentioned
Agreement and Articles of Incorporation.
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be in writing and shall be sent
or delivered to the recipient at the address set forth after its name
hereinbelow:
TO THE PORTFOLIO:
Mutual Funds Service Co.
Attn: President
6000 Memorial Drive
P. O. Box 7177
Dublin, OH 43017
25
<PAGE>
TO CUSTODIAN:
Firstar Bank, N.A.
425 Walnut Street, M.L. CN-WN-06TC
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632-2969
Facsimile: (513) 632-3299
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Ohio.
14.2 REFERENCES TO CUSTODIAN. The Portfolio shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Portfolio and such other printed
matter as merely identifies Custodian as custodian for the Portfolio. The
Portfolio shall submit printed matter requiring approval to Custodian in draft
form, allowing sufficient time for review by Custodian and its counsel prior to
any deadline for printing.
14.3 NO WAIVER. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either
26
<PAGE>
party hereto of any right hereunder shall not preclude the exercise of any other
right, and the remedies provided herein are cumulative and not exclusive of any
remedies provided at law or in equity.
14.4 AMENDMENTS. This Agreement cannot be changed orally and no amendment
to this Agreement shall be effective unless evidenced by an instrument in
writing executed by the parties hereto.
14.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 SEVERABILITY. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 HEADINGS. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the day and year first above written.
ATTEST: THE AGGRESSIVE GROWTH MUTUAL FUND PORTFOLIO
THE GROWTH MUTUAL FUND PORTFOLIO
______________________________ By:_____________________________
ATTEST: FIRSTAR BANK, N.A.
______________________________ By:____________________________
27
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Portfolio to administer the Portfolio Custody Accounts.
AUTHORIZED PERSONS SPECIMEN SIGNATURES
President: ___________________
Secretary: ___________________
Treasurer: ___________________
Vice President: ___________________
Adviser Employees: ___________________
___________________
Transfer Agent/Fund Accountant
Employees: ___________________
___________________
___________________
___________________
___________________
1
<PAGE>
EXHIBIT B
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
STANDARDS OF SERVICE GUIDE
July, 1999
Firstar Bank, N.A. is committed to providing superior quality service to
all customers and their agents at all times. We have compiled this guide as a
tool for our clients to determine our standards for the processing of security
settlements, payment collection, and capital change transactions. Deadlines
recited in this guide represent the times required for Firstar Bank to guarantee
processing. Failure to meet these deadlines will result in settlement at our
client's risk. In all cases, Firstar Bank will make every effort to complete all
processing on a timely basis.
Firstar Bank is a direct participant of the Depository Trust Company, a
direct member of the Federal Reserve Bank of Cleveland, and utilizes the Bankers
Trust Company as its agent for ineligible and foreign securities.
For corporate reorganizations, Firstar Bank utilizes SEI's Reorg Source,
Financial Information, Inc., XCITEK, DTC Important Notices, and the WALL STREET
JOURNAL.
For bond calls and mandatory puts, Firstar Bank utilizes SEI's Bond Source,
Kenny Information Systems, Standard & Poor's Corporation, and DTC Important
Notices. Firstar Bank will not notify clients of optional put opportunities.
Any securities delivered free to Firstar Bank or its agents must be
received three (3) business days prior to any payment or settlement in order for
the Firstar Bank standards of service to apply.
Should you have any questions regarding the information contained in this
guide, please feel free to contact your account representative.
THE INFORMATION CONTAINED IN THIS STANDARDS OF SERVICE GUIDE IS
SUBJECT TO CHANGE. SHOULD ANY CHANGES BE MADE FIRSTAR BANK WILL
PROVIDE YOU WITH AN UPDATED COPY OF ITS STANDARDS OF SERVICE GUIDE.
2
<PAGE>
FIRSTAR BANK SECURITY SETTLEMENT STANDARDS
<TABLE>
<CAPTION>
TRANSACTION TYPE INSTRUCTIONS DEADLINES* DELIVERY INSTRUCTIONS
<S> <C> <C>
DTC 1:30 P.M. on Settlement Date DTC Participant #2803
Agent Bank ID 27895
Institutional #________________
For Account #____________
Federal Reserve Book Entry 12:30 P.M. on Settlement Date Federal Reserve Bank of Cinti/Trust
for Firstar Bank, N.A. ABA# 042000013
For Account #_____________
Fed Wireable FNMA & FHLMC 12:30 P.M. on Settlement Date Bk of NYC/Cust
ABA 021000018
A/C Firstar Bank # 117612
For Account #____________
Federal Reserve Book Entry 1:00 P.M. on Settlement Date Federal Reserve Bank of Cinti/Spec
Repurchase Agreement Collateral for Firstar Bank, N.A. ABA# 042000013
(only) For Account #_____________
PTC Securities 12:00 P.M. on Settlement Date PTC For Account BYORK
(GNMA Book Entry) Firstar Bank / 117612
Physical Securities 9:30 A.M. EST on Settlement Date Bank of New York
(for Deliveries, by 4:00 P.M. on One Wall Street- 3rd Floor - Window A
Settlement Date minus 1) New York, NY 10286
For account of Firstar Bank / Cust #117612
Attn: Donald Hoover
CEDEL/EURO-CLEAR 11:00 A..M. on Settlement Date Cedel a/c 55021
minus 2 FFC: a/c 387000
Firstar Bank / Global Omnibus
Cash Wire Transfer 3:00 P.M. Firstar Bank,N.A. Cinti/Trust ABA# 042000013
Credit Account #9901877
Further Credit to ___________
Account # _______________
<FN>
* All times listed are Eastern Standard Time.
</FN>
</TABLE>
3
<PAGE>
FIRSTAR BANK PAYMENT STANDARDS
SECURITY TYPE INCOME PRINCIPAL
Equities Payable Date
Municipal Bonds* Payable Date Payable Date
Corporate Bonds* Payable Date Payable Date
Federal Reserve Bank Book Entry* Payable Date Payable Date
PTC GNMA's (P&I) Payable Date + 1 Payable Date + 1
CMOs *
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
SBA Loan Certificates When Received When Received
Unit Investment Trust Certificates* Payable Date Payable Date
Certificates of Deposit* Payable Date + 1 Payable Date + 1
Limited Partnerships When Received When Received
Foreign Securities When Received When Received
*Variable Rate Securities
Federal Reserve Bank Book Entry Payable Date Payable Date
DTC Payable Date + 1 Payable Date + 1
Bankers Trust Payable Date + 1 Payable Date + 1
NOTE: If a payable date falls on a weekend or bank holiday, payment will be
made on the immediately following business day.
4
<PAGE>
FIRSTAR BANK CORPORATE REORGANIZATION STANDARDS
<TABLE>
<CAPTION>
TYPE OF ACTION NOTIFICATION TO CLIENT DEADLINE FOR CLIENT INSTRUCTIONS TRANSACTION
TO FIRSTAR BANK POSTING
<S> <C> <C> <C>
Rights, Warrants, Later of 10 business days prior to 5 business days prior to expiration Upon receipt
and Optional Mergers expiration or receipt of notice
Mandatory Puts with Later of 10 business days prior to 5 business days prior to expiration Upon receipt
Option to Retain expiration or receipt of notice
Class Actions 10 business days prior to expiration date 5 business days prior to expiration Upon receipt
Voluntary Tenders, Later of 10 business days prior to 5 business days prior to expiration Upon receipt
Exchanges, expiration or receipt of notice
and Conversions
Mandatory Puts, Defaults, At posting of funds or securities received None Upon receipt
Liquidations, Bankruptcies,
Stock Splits, Mandatory
Exchanges
Full and Partial Calls Later of 10 business days prior to None Upon receipt
expiration or receipt of notice
<FN>
NOTE: Fractional shares/par amounts resulting from any of the above
will be sold.
</FN>
</TABLE>
5
<PAGE>
EXHIBIT C
FIRSTAR BANK, N.A.
CUSTODY FEE SCHEDULE
Firstar Bank, N.A., as Custodian, will receive monthly compensation for services
according to the terms of the following Schedule:
I. PORTFOLIO TRANSACTION FEES:
(a) For each repurchase agreement transaction $7.00
(b) For each portfolio transaction processed through
DTC or Federal Reserve $9.00
(c) For each mutual fund transaction $9.00
(d) For each portfolio transaction processed through
our New York custodian $25.00
(e) For each GNMA/Amortized Security Purchase $16.00
(f) For each GNMA Prin/Int Paydown, GNMA Sales $8.00
(g) For each option/future contract written,
exercised or expired $20.00
(h) For each Cedel/Euro clear transaction $80.00
(i) For each Disbursement (Fund expenses only) $5.00
A transaction is a purchase/sale of a security, free receipt/free delivery
(excludes initial conversion), maturity, tender or exchange:
II. MARKET VALUE FEE
Based upon an annual rate of: MILLION
.000125 (1.25 Basis Points) on Balance
III. MONTHLY MINIMUM FEE-PER FUND $400.00
IV. OUT-OF-POCKET EXPENSES
The only out-of-pocket expenses charged to your account will be shipping
fees or transfer fees.
V. EARNINGS CREDITS
On a monthly basis any earnings credits generated from uninvested custody
balances will be applied against any cash management service fees
generated.
FIRSTAR BANK
CASH MANAGEMENT FEE SCHEDULE
6
<PAGE>
SERVICES UNIT COST MONTHLY COST
D.D.A. Account Maintenance $15.00
Deposits .42
Deposited Items .109
Checks Paid .159
Balance Reporting - P.C. Access 50.00 1st Acct
35.00 each
additional
ACH Transaction .105
ACH Monthly Maintenance 40.00
ACH Additions, Deletions, Changes 6.00
ACH Stop Payment 5.00
ACH Debits .12
Controlled Disbursement 110.00
Deposited Items Returned 6.00
International Items Returned 10.00
NSF 25.00
Stop Payments 22.00
Data Transmission per account 115.00
Drafts Cleared .179
Lockbox Maintenance** 60.00
Lockbox items Processed .34
Miscellaneous Lockbox items .12
Positive Pay .06
Issued Items .015
Invoicing for Service Charge 15.00
Domestic International
Wires - Outgoing (Repetitive) 11.00 Repetitive 35.00
(Non-Repetitive) 11.00 Non-Repetitive 40.00
- Incoming (With Notification) 10.00
PC - initiated wire (outgoing) International
(Repetitive) 10.00 Repetitive 25.00
(Non-Repetitive) 11.00 Non-Repetitive 25.00
Stop Payments 22.00
***UNCOLLECTED CHARGE FIRSTAR BANK PRIME RATE AS OF
FIRST OF MONTH PLUS 4%
7
5
ADMINISTRATION AGREEMENT
Between
The Growth Mutual Fund Portfolio
and
Mutual Funds Service Co.
This Agreement dated as of the 28th day of February, 2000, made by and
between The Growth Mutual Fund Portfolio (the "Trust"), a New York trust
operating as a registered open-end investment company, and Mutual Funds Service
Co. ("Agent"), a corporation organized and existing under the laws of the State
of Ohio.
W I T N E S S E T H
WHEREAS, Agent has agreed to act as Transfer, Dividend Disbursing and
Redemption Agent for the Trust; and
WHEREAS, pursuant to a separate agreement (the "Custodian Agreement"),
State Street Bank and Trust Company (the "Bank") performs the duties of
Custodian of the securities and cash of the Trust;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto, intending to be legally bound, do hereby
agree as follows:
SECTION 1. The Trust hereby appoints Agent as its Transfer, Redemption and
Dividend Disbursing Agent, and Agent accepts such appointments and agrees to act
in such capacities upon the terms set forth in this Agreement.
TRANSFER AGENCY
SECTION 2. Agent will maintain registry records in the usual form in which
it will note the issuance, transfer and redemption of beneficial interests in
the Trust ("Shares"). The Trust shall provide Agent with reports of Share
purchases, redemptions and total Shares outstanding. Agent is authorized to keep
records in which it will note the names and registered addresses of holders of
Shares.
SECTION 3. Agent in its capacity as Transfer Agent will, as requested from
time to time by the Trust, perform the usual duties and functions of a transfer
agent. Agent may rely conclusively and act without further investigation upon
any list, instruction, certification, authorization, or other instrument or
paper believed by it in good faith to be genuine and unaltered, and to have been
signed, countersigned, or executed by a duly authorized person or persons, or
upon the instructions of any officer of the Trust, or upon the advice of counsel
for the Trust or for Agent.
<PAGE>
SECTION 4. In case of any request or demand for the inspection of the Share
records of the Trust, Agent shall endeavor to notify the Trust and to secure
instructions as to permitting or refusing such inspection. However, Agent may
exhibit such records to any person in any case where it is advised by its
counsel that it may be held liable for failure to do so.
SECTION 5. Prior to the daily determination of net asset value in
accordance with the Trust's registration statement, Agent shall process all
purchase orders received since the last determination of the Trust's net asset
value.
Immediately after 4:00 p.m., Columbus time, on each day that the Trust and
Agent are open for business or on any other day on which there is sufficient
degree of trading in the Trust's portfolio securities that the current net asset
value of the Trust's Shares might be materially affected, Agent shall obtain
from the Trust a quotation (on which it may conclusively rely) of the net asset
value per Share determined as of 4:00 p.m., Columbus time, on that day. Agent
shall proceed to calculate the amount available for investment in Shares at the
quoted net asset value, the number of Shares and fractional Shares to be
purchased and the net asset value to be deposited with the Bank. Agent, as agent
for the holders of the Shares, shall place a purchase order daily with the Trust
for the proper number of Shares and fractional Shares to be purchased and
confirm such number to the trust in writing.
SECTION 6. Agent having made the calculations provided for in Section 5,
shall thereupon pay over the net asset value of Shares purchased to the Bank.
The payment shall then be deposited in the account maintained under the
Custodian Agreement.
REDEMPTIONS
SECTION 7. Agent shall, prior to the daily determination of net asset value
in accordance with the Trust's registration statement, process all requests to
redeem Shares by filing with the Bank an appropriate statement and making the
proper distribution and application of the redemption proceeds in accordance
with the Trust's registration statement.
DIVIDENDS
SECTION 8. Prior to the determination of the net asset value on each
business day, the Trust shall notify Agent of the amount of the net income of
the Trust earned since the last previous determination of net asset value. Agent
shall thereupon compute the dividends per Share payable. On or before the
payment date for each dividend, the Trust shall transfer, or cause the Bank to
transfer, to Agent the total amount of the dividends payable on such payment
date.
2
<PAGE>
GENERAL PROVISIONS
SECTION 9. For its services hereunder, Agent shall receive such
compensation from the Trust as may be agreed upon by the parties from time to
time and approved by the Board of Trustees of the Trust.
SECTION 10. Agent agrees to make available upon request and to preserve for
the periods prescribed in Rule 31a-2 under the Investment Company Act of 1940
any records relating to services provided under this Agreement which are
required to be maintained by Rule 31a-1 under said Act.
SECTION 11. In addition to service as Transfer Agent and Dividend
Disbursing Agent as above set forth, Agent will perform other services for the
Trust as agreed from time to time, including but not limited to, preparation of
and mailing Federal Tax Information Forms, mailing semi-annual reports of the
Trust, preparation of lists of holders of Shares, and mailing notices of
meetings, proxies and proxy statements.
SECTION 12. Except as set forth in Section 5, nothing contained in this
Agreement is intended to or shall require Agent in any capacity hereunder, to
perform any functions or duties on any holiday, day of special observance or any
other day on which Agent or the New York Stock Exchange is closed. Functions or
duties normally scheduled to be performed on such days shall be performed on,
and as of, the next business day on which both the New York Stock Exchange and
Agent are open.
SECTION 13. Agent shall not be personally liable for any taxes,
assessments, or governmental charges which may be levied or assessed on any
basis whatsoever, excepting only for taxes assessed against it in its corporate
capacity arising out of its compensation hereunder.
SECTION 14. (a) Except as set forth below in this Section 14, the Trust
shall indemnify Agent and save it harmless from and against all actions, suits
and claims, whether groundless or otherwise, arising directly or indirectly out
of or in connection with its performance under this Agreement and from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liabilities incurred by Agent in connection with any such action,
suit, or claim. Agent shall not be under any obligation to prosecute or to
defend any action, suit or claim arising out of or in connection with its
performance under this Agreement, which, in the opinion of its counsel, may
involve it in expense or liability, and the Trust shall, so often as reasonably
requested, furnish Agent with satisfactory indemnity against such expense or
liability, and upon request of Agent the Trust shall assume the entire defense
of any action, suit, or claim subject to the foregoing indemnity; provided,
however, that Agent shall give the Trust notice and reasonable opportunity to
defend any such action, suit, or claim, in the name of the Trust or Agent or
both.
3
<PAGE>
Without limiting the foregoing:
(i) Agent may rely upon the advice of the Trust, or of counsel, who
may be counsel for the Trust or counsel for Agent, and upon statements of
accountants, brokers and other persons believed by it in good faith to be
expert in the matters upon which they are consulted and for any actions
taken in good faith upon such statements, Agent shall not be liable.
(ii) Agent shall not be liable for any action taken in good faith
reliance upon any written or oral instruction or certified copy of any
resolution of the Board of Trustees of the Trust, and Agent may rely upon
the genuineness of any such document or copy thereof believed in good faith
by Agent to have been validly executed.
(iii) Agent may rely and shall be protected in acting upon any
signature, instruction, request, letter of transmittal, certificate,
opinion of counsel, statement, instrument, report, notice, consent, order,
or other paper or document believed by it to be genuine and to have been
signed or presented by the purchaser, Trust or other proper party or
parties.
(b) Notwithstanding the provisions of Paragraph (a), it is intended that
insofar as Agent may in the future be liable for the consequences of any
payments upon forged instruments or of oversights, errors or omissions by Agent,
such liability shall be borne by Agent's insurance carriers. In the event of any
loss occurring which is attributable to any payment upon a forged instrument,
oversight, error or omission by Agent, Agent shall use its best efforts to have
its insurance carriers bear the loss.
SECTION 15. The Trust shall promptly cause to be turned over to Agent all
records, files, and other materials necessary or appropriate for proper
performance of the functions assumed by Agent under this Agreement.
SECTION 16. The Trust shall file with Agent a certified copy of each
resolution of its Board of Trustees authorizing the execution of written
instructions or the transmittal of oral instructions.
SECTION 17. This Agreement may be amended from time to time by a
supplemental agreement executed by the Trust and the Agent.
SECTION 18. Either the Trust or Agent may give 30 days' written notice to
the other of the termination of this Agreement, such termination to take effect
at the time specified in the notice.
SECTION 19. Any notice or other communication required by or permitted to
be given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
4
<PAGE>
IF TO THE PORTFOLIO:
The Growth Mutual Fund Portfolio
6000 Memorial Drive
Dublin, OH 43017
IF TO AGENT:
Mutual Funds Service Co.
6000 Memorial Drive
Dublin, OH 43017
SECTION 20. The Trust represents and warrants to Agent that the execution
and delivery of this Administration Agreement by the undersigned officers of the
Trust has been duly and validly authorized by resolution of the Trustees of the
Trust.
SECTION 21. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
SECTION 22. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Trust without the written
consent of Agent or by Agent without the written consent of the Trust,
authorized or approved by a resolution of its Trustees.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and their corporate seals hereunto duly
affixed and attested, as of the day and year first above written.
THE GROWTH MUTUAL FUND PORTFOLIO
By:_______________________________
MUTUAL FUNDS SERVICE CO.
By:_______________________________
5
ACCOUNTING SERVICES AGREEMENT
Between
The Growth Mutual Fund Portfolio
and
Mutual Funds Service Co.
AGREEMENT, dated as of February 28, 2000, between THE GROWTH MUTUAL FUND
PORTFOLIO, a New York trust (the "Trust"), and MUTUAL FUNDS SERVICE CO., an Ohio
corporation (the "Agent");
WHEREAS, the Trust desires to appoint the Agent as its Accounting Services
Agent to perform certain accounting and record keeping functions required of a
duly registered investment company; to file certain financial reports; to
maintain and preserve certain books, accounts, and records as the basis for such
reports; and to perform certain daily functions in connection with such accounts
and records;
WHEREAS, the Agent is willing to perform such functions upon the terms and
conditions herein set forth; and
WHEREAS, pursuant to a separate Agreement, the Agent will perform the
duties of administrator, transfer agent, and dividend disbursing agent for the
Trust,
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, hereby
agree as follows:
Section 1. Upon receipt of necessary information and appropriate
instructions from the Trust, the Agent shall maintain and keep current the
following books, accounts, records, journals, or other records of original
entry, relating to the business of the Trust, and necessary or advisable for
compliance with applicable regulations, including Rules 31(a)-1 and 31(a)-2, of
the Investment Company Act of 1940, as amended, and as may be mutually agreed to
between the Trust and the Agent:
(a) Cash Receipts
(b) Cash Disbursements
(c) Dividend Record
(d) Purchase and Sales of Portfolio Securities
(e) Subscription and Redemption Journals
(f) Security Ledger
(g) Broker Ledger
(h) General Ledger
(i) Daily Expense Accruals
(j) Daily Interest Accruals
(k) Securities and Monies borrowed or loaned and collateral
therefor
<PAGE>
(l) Trial Balances
Unless appropriate information necessary to perform the above functions is
furnished to the Agent in a timely manner, the Agent shall incur no liability to
the Trust or any other person.
It shall be the responsibility of the Trust to furnish the Agent with the
declaration, record, and payment dates and amounts of any dividends or income
and any other special actions required concerning each of the Trust's
Securities.
The Agent shall maintain all accounts and records above mentioned as
required by regulation and as agreed upon between the Trust and the Agent.
Section 2. The Agent shall make proper accounting entries in accordance
with instructions received from the Trust therewith. The Trust shall direct that
each broker-dealer, or other person through whom a transaction has occurred,
shall send a confirmation thereof to the Agent. The Agent shall verify this
confirmation against the instructions received from the Trust and forward the
confirmation to the Custodian. The Agent shall promptly notify the Trust of any
discrepancy between the confirmation and the Trust's instructions when received
from the Trust but shall incur no responsibility or liability for such
discrepancy. The Trust shall cause any necessary corrections to be made and
shall advise the Agent and the Custodian accordingly.
Section 3. The Agent shall calculate the Trust's net asset value in
accordance with the Trust's registration statement.
The Agent shall prepare and maintain a daily evaluation of portfolio
securities for which market quotations are available by the Agent's use of
Quotron Financial Information Services; all other Securities shall be evaluated
in accordance with the Trust's instructions, and the Agent shall have no
responsibility or liability for the accuracy of the information supplied by the
Trust.
The Trust assumes all responsibility for computation of "amortized cost",
valuation of securities, and all valuations not ascertainable solely by
mechanical procedures.
Section 4. At the end of each month, the Agent shall obtain from the
Custodian a monthly statement of cash and portfolio transactions, which shall be
reconciled with the Agent's accounts and records maintained for the Trust. The
Agent shall report any discrepancies to the Custodian, and report any
unreconciled items to the Trust.
Section 5. The Agent shall supply daily and periodic reports to the Trust,
as required by law or regulation, and as requested by the Trust and agreed upon
by the Agent.
2
<PAGE>
Section 6. The Trust shall report and confirm to the Transfer Agent all
Share transactions of which it is aware. The Agent shall obtain from the
Transfer Agent daily reports of Share transactions.
The Agent shall reconcile outstanding Shares with the Transfer Agent
periodically and certify at least monthly to the Trust the reconciled Share
balance outstanding.
Section 7. The accounts and records of the Trust maintained by the Agent
shall be the property of the Trust, and shall be made available to the Trust,
within a reasonable period of time, upon demand. The Agent shall assist the
Trust's independent auditors, or upon approval of the Trust, or upon demand, any
regulatory body, in any requested review of the Trust's accounts and records but
shall be reimbursed for all expenses and employee time invested in any such
review outside of routine and normal periodic review. Upon receipt from the
Trust of the necessary information, the Agent shall supply the necessary data
for the Trust's completion of any necessary tax returns, questionnaires,
periodic reports to investors in the Trust, and such other reports and
information requests as the Trust and the Agent shall agree upon from time to
time.
Section 8. The Agent and the Trust may from time to time adopt uniform or
standing procedures, and the Agent may conclusively assume that any procedure
approved by the Trust, or directed by the Trust, does not conflict with or
violate any requirements of its registration statement, Declaration of Trust,
By-Laws, or any rule or regulation of any regulatory body or governmental
agency. The Trust shall be responsible to notify the Agent of any changes in
regulations or rules which might necessitate changes in the Agent's procedures.
Section 9. The Agent may rely upon the advice of the Trust and upon
statements of the Trust's accountants and other persons believed by it in good
faith to be expert in matters upon which they are consulted, and the Agent shall
not be liable for any actions taken in good faith upon such statements.
Section 10. The Agent shall not be liable for any action taken in good
faith reliance upon any authorized oral or written instructions, any certified
copy of any resolution of the Trustees of the Trust or any other document
reasonably believed by the Agent to be genuine and to have been executed or
signed by the proper person or persons. The Trust will send written instructions
to cover oral instructions, and the Agent will compare the information against
the oral instructions previously furnished. The Agent will inform the Trust
immediately of any noted discrepancy or will request, if no written instruction
is received in a reasonable time, that the Trust forward same to Agent.
The Agent shall not be held to have notice of any change of authority of
any officer, employee, or agent of the Trust until receipt of notification
thereof by the Trust.
In addition to indemnification expressly provided elsewhere in this
Agreement, the Trust shall indemnify and hold harmless the Agent from all claims
and liabilities (including reasonable expenses for legal counsel) incurred by or
assessed against the Agent in connection with the performance of this Agreement,
3
<PAGE>
except such as may arise from the Agent's own negligent action, omission, or
willful misconduct; provided, however, that before confessing any claim against
it, the Agent shall give the Trust reasonable opportunity to defend against such
claim in the name of the Trust, the Fund or the Agent or any of them.
Section 11. The Shareholders, Trustees, officers, employees and agents of
the Trust shall not be personally bound by or liable hereunder, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
hereunder.
Section 12. The Trust agrees to pay the Agent compensation for its services
and to reimburse it for expenses, as set forth in a Schedule attached hereto, or
as shall be set forth in amendments to such Schedule approved by the Trust and
the Agent.
Section 13. Nothing contained in this Agreement is intended to or shall
require the Agent, in any capacity hereunder, to perform any functions or duties
on any holiday or other day of special observance on which the New York Stock
Exchange is closed. Functions or duties normally scheduled to be performed on
such days shall be performed on, and as of, the next business day on which both
the New York Stock Exchange and the Agent are open.
Section 14. This Agreement may be terminated by either party upon 60 days'
prior written notice.
Section 15. Any notice or other communication required by or permitted to
be given in connection with this Agreement shall be in writing, and shall be
delivered in person or sent by first class mail, postage prepaid, to the
respective parties as follows:
If to the Trust:
----------------
The Growth Mutual Fund Portfolio
Attention: Robert S. Meeder, President
c/o R. Meeder & Associates, Inc.
6000 Memorial Drive
Box 7177
Dublin, OH 43017
If to the Agent:
----------------
Mutual Funds Service Co.
6000 Memorial Drive
Box 7177
Dublin, OH 43017
4
<PAGE>
Section 16. This Agreement may be executed in two or more counterparts,
each of which when so executed shall be deemed to be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 17. This Agreement shall be binding upon the parties hereto and
their respective successors and assigns; provided, however, that this Agreement
shall not be assignable by the Trust without the written consent of the Agent,
or by the Agent without the written consent of the Trust, authorized or approved
by a resolution of its Trustees.
Section 18. This Agreement shall be governed by the laws of the State of
Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers as of the day and year first above
written.
THE GROWTH MUTUAL FUND PORTFOLIO
By_________________________
MUTUAL FUNDS SERVICE CO.
By__________________________
5
<PAGE>
MUTUAL FUNDS SERVICE COMPANY
FEE SCHEDULE FOR ACCOUNTING SERVICES
CURRENT FEE SCHEDULE
THE GROWTH MUTUAL FUND PORTFOLIO
A. MINIMUM ANNUAL FEE - The Growth Mutual Fund Portfolio, $30,000 (Based on the
Portfolio's average net assets - payable monthly).
BASIS POINT FEE
15 Basis Points on first $10 million of assets
10 Basis Points on next $20 million of assets
2 Basis Points on next $50 million of assets
1 Basis Point on assets over $80 million.
B. In addition, all out-of-pocket expenses shall be separately charged.
6
AMENDED AND RESTATED CODE OF ETHICS
THE GROWTH STOCK PORTFOLIO
THE MUTUAL FUND PORTFOLIO
THE BOND PORTFOLIO
THE MONEY MARKET PORTFOLIO
THE UTILITIES STOCK PORTFOLIO
THE GROWTH MUTUAL FUND PORTFOLIO
THE AGGRESSIVE GROWTH MUTUAL FUND PORTFOLIO
THE FLEX-FUNDS
THE FLEX PARTNERS
The Growth Stock Portfolio, The Mutual Fund Portfolio, The Bond Portfolio,
The Money Market Portfolio, The Utilities Stock Portfolio, The Growth Mutual
Fund Portfolio, The Aggressive Growth Mutual Fund Portfolio, The Flex-funds, The
Flex-Partners (each a "Portfolio" and collectively the "Portfolios") have each
determined to adopt this Code of Ethics (the "Code") as of February 3, 1995, as
amended and restated on February 11, 2000, to specify and prohibit certain types
of personal securities transactions deemed to create a conflict of interest and
to establish reporting requirements and preventive procedures pursuant to the
provisions of Rule 17j-1(b)(1) under the Investment Company Act of 1940 (the
"1940 Act").
I. DEFINITIONS
A. An "Access Person" means (i) any Trustee, Director, officer or
Advisory Person (as defined below) of the Portfolio or any investment
adviser thereof, or (ii) any director or officer of any principal
underwriter or placement agent of the Portfolio who, in the ordinary
course of his or her business, makes, participates in or obtains
information regarding the purchase or sale of securities for the
Portfolio for which the principal underwriter or placement agent so
acts or whose functions or duties as part of the ordinary course of
his or her business relate to the making of any recommendation to the
Portfolio regarding the purchase or sale of securities or (iii)
notwithstanding the provisions of clause (i) above, where the
investment adviser is primarily engaged in a business or businesses
other than advising registered investment companies or other advisory
clients, any trustee, director, officer or Advisory Person of the
investment adviser who, with respect to the Portfolio, makes any
recommendation or participates in the determination of which
recommendation shall be made, or whose principal function or duties
relate to the determination of which recommendation shall be made to
the Portfolio or who in connection with his or her duties, obtains any
information concerning securities recommendations being made by such
investment adviser to the Portfolio.
<PAGE>
B. An "Advisory Person" means any employee of the Portfolio or any
investment adviser thereof (or of any company in a control
relationship to the Portfolio or such investment adviser), who, in
connection with his or her regular functions or duties, makes,
participates in or obtains information regarding the purchase or sale
of securities by the Portfolio or whose functions relate to any
recommendations with respect to such purchases or sales and any
natural person in a control relationship with the Portfolio or adviser
who obtains information regarding the purchase or sale of securities.
C. A "Portfolio Manager" means any person or persons with the direct
responsibility and authority to make investment decisions affecting
the Portfolio.
D. "Access Persons," "Advisory Persons" and "Portfolio Managers" shall
not include any individual who is required to and does file quarterly
reports with the Portfolio's investment adviser, any subadviser, the
administrator or the principal underwriter or placement agent
substantially in conformity with Rule 17j-1 of the 1940 Act or Rule
204-2 of the Investment Advisers Act of 1940.
E. "Beneficial Ownership" shall be interpreted subject to the provisions
of Rule 16a-1(a) (exclusive of Section (a)(1) of such Rule) of the
Securities Exchange Act of 1934.
F. "Control" shall have the same meaning as set forth in Section 2(a)9 of
the 1940 Act.
G. "Disinterested Trustee" means a Trustee who is not an "interested
person" within the meaning of Section 2(a)(19) of the 1940 Act. An
"interested person" includes any person who is a trustee, director,
officer, employee or owner of 5% or more of the outstanding stock of
any investment adviser. Affiliates of brokers or dealers are also
"interested persons", except as provided in Rule 2(a)(19)(1) under the
1940 Act.
H. The "Review Officer" is the person designated by the Portfolio's Board
of Trustees to monitor the overall compliance with this Code. In the
absence of any such designation the Review Officer shall be the
Treasurer or any Assistant Treasurer of the Portfolio.
I. The "Preclearance Officer" is the person designated by the Portfolio's
Board of Trustees to provide preclearance of any personal security
transaction as required by this Code of Ethics.
J. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
2
<PAGE>
K. "Security" shall have the meaning as set forth in Section 2(a)(36) of
the 1940 Act (in effect, all securities), except that it shall not
include direct obligations of the U.S. Government (or any other
"government security" as that term is defined in the 1940 Act),
bankers' acceptances, bank certificates of deposit, commercial paper
and high quality short-term debt instruments, including repurchase
agreements; shares of registered open-end investment companies; and
stock index futures.
L. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell the security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
II. STATEMENT OF GENERAL PRINCIPLES
The following general fiduciary principles shall govern the personal
investment activities of all Access Persons.
Each Access Person shall adhere to the highest ethical standards and
shall:
A. at all times, place the interests of the Portfolio before his personal
interests;
B. conduct all personal securities transactions in a manner consistent
with this Code, so as to avoid any actual or potential conflicts of
interest, or an abuse of position of trust and responsibility; and
C. not take any inappropriate advantage of his position with or on behalf
of the Portfolio.
III. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. BLACKOUT PERIODS
1. No Access Person shall purchase or sell, directly or indirectly,
any security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership on a day
during which he knows or should have known the Portfolio has a
pending "buy" and "sell" order in that same security until that
order is executed or withdrawn.
2. No Advisory Person or Portfolio Manager shall purchase or sell,
directly or indirectly, any security in which he has, or by
reason of such transaction acquires, any direct or indirect
beneficial ownership within at least seven calendar days before
and after the Portfolio trades (or has traded) in that security.
3
<PAGE>
B. INITIAL PUBLIC OFFERINGS
With regard to acquiring any security in an "initial public offering"
(as defined in Rule 17j-1(a)(6) under the 1940 Act) for the personal
account of an Advisory Person, he or she shall
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether the investment opportunity should be reserved
for the Portfolio, and whether such opportunity is being offered
to such Advisory Person by virtue of his position with the
Portfolio) for any acquisition of securities in an initial public
offering; and
2. after authorization to acquire securities in an initial public
offering has been obtained, disclose such personal investment,
with respect to any subsequent consideration by the Portfolio (or
any other investment company for which he acts in a capacity as
an Advisory Person) for investment in that issuer.
C. LIMITED OFFERINGS
With regard to a "limited offering" (as defined in Rule 17j-1(a)(8)
under the 1940 Act), each Advisory Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider among other
factors, whether the investment opportunity should be reserved
for the Portfolio, and whether such opportunity is being offered
to such Advisory Person by virtue of his position with the
Portfolio) for any acquisition of securities in a limited
offering; and
2. after authorization to acquire securities in a limited offering
has been obtained, disclose such personal investment with respect
to any subsequent consideration by the Portfolio (or any other
investment company for which he acts in a capacity as an Advisory
Person) for investment in that issuer.
If the Portfolio decides to purchase securities of an issuer the
shares of which have been previously obtained for personal
investment by an Advisory Person, that decision shall be subject
to an independent review by Advisory Persons with no personal
interest in the issuer.
4
<PAGE>
D. SHORT-TERM TRADING PROFITS
With regard to the purchase and sale, or sale and purchase, within 60
calendar days, of the same (or equivalent) securities of which an Advisory
Person has beneficial ownership, each Advisory Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether such opportunity is being offered to such
Advisory Person by virtue of his position with the Portfolio) for
the closing transaction (whether a purchase or sale) which would
result in the short-term profit; and
2. after authorization to purchase or sell such securities has been
obtained, disclose such personal investment with respect to any
subsequent consideration by the Portfolio (or any other
investment company for which he acts in a capacity as an Advisory
Person) for investment in that issuer.
E. GIFTS
No Advisory Person shall receive any gift or other things of more than
DE MINIMIS value from any person or entity that does business with or
on behalf of the Portfolio.
F. SERVICE AS A DIRECTOR
1. No Advisory Person shall serve on a board of directors of a
publicly traded company without prior authorization from the
Board of Trustees of the Portfolio, based upon a determination
that such board service would be consistent with the interests of
the Portfolio and its investors..
2. If board service of an Advisory Person is authorized by the Board
of Trustees of the Portfolio, such Advisory Person shall be
isolated from the investment making decisions of the Portfolio
with respect to the company of which he is a director.
G. EXEMPTED TRANSACTIONS
The prohibition of Section III shall not apply to:
1. purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
2. purchases or sales that are non-volitional on the part of the
Access Person or the Portfolio, including mergers,
recapitalizations or similar transactions;
5
<PAGE>
3. purchases which are part of an automatic dividend reinvestment
plan;
4. purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired; and
5. purchases and sales that receive prior approval in writing by the
Preclearance Officer as (a) only remotely potentially harmful to
the Portfolio because they would be very unlikely to affect a
highly institutional market, (b) clearly not economically related
to the securities to be purchased or sold or held by the
Portfolio or client or (c) not representing any danger of the
abuses prescribed by Rule 17j-1, but only if in each case the
prospective purchaser has identified to the Review Officer all
factors of which he or she is aware which are potentially
relevant to a conflict of interest analysis, including the
existence of any substantial economic relationship between his or
her transaction and securities held or to be held by the
Portfolio.
IV. COMPLIANCE PROCEDURES
A. PRE-CLEARANCE
An Access Person (other than a Disinterested Trustee) may not,
directly or indirectly, acquire or dispose of beneficial ownership of
a security except as provided below unless:
1. such purchase or sale has been approved by the Preclearance
Officer or, in the case of persons employed by the Portfolio's
investment adviser, by a supervisory person designated by the
investment adviser.
2. the approved transaction is completed on the same day approval is
received; and
3. the Preclearance Officer has not rescinded such approval prior to
execution of the transaction.
B. REPORTING
1. Coverage:
a. Each Access Person, (other than Disinterested Trustees) shall
file with the Review Officer confidential quarterly reports
containing the information required in Sections IV.B.1.b. and
IV.B.2 of this Code with
6
<PAGE>
respect to ALL transactions during the preceding quarter in any
securities in which such person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, PROVIDED that (i) no Access Person shall be required
to report transactions effected for any account over which such
Access Person has no direct or indirect influence or control
(except that such an Access Person must file a written
certification stating that he or she has no direct or indirect
influence or control over the account in question), (ii) an
Access Person who is an Access Person of the investment adviser
of the Portfolio shall file such Access Person's reports with the
investment adviser. To the extent such reports would duplicate
information recorded pursuant to Rules 204-2(a)(12) or
204-2(a)(13) of the Investment Advisers Act of 1940, no such
reports need be filed by such Access Person pursuant to this
Code, and (iii) an Access Person who is an Access Person of the
principal underwriter or placement agent of the Portfolio shall
file such Access Person's reports with the principal underwriter.
All such Access Persons shall file reports, even when no
transactions have been effected, representing that no
transactions subject to reporting requirements were effected.
b. If during such preceding quarter an Access Person establishes
any account in which any securities were held during such quarter
for the direct or indirect benefit of the Access Person, the
Access Person must also include the following information in such
quarterly report: (i) the name of the broker, dealer or bank with
whom the Access Person established the account and (ii) the date
the account was established.
2. Filings: Every report shall be made no later than 10 days after
the end of the calendar quarter in which the transaction to which
the report relates was effected, and, in addition to any
information specified in Section IV.B.1.b. above, shall contain
the following information:
a. the date of the transaction, the title and the number of
shares and the principal amount of each security involved;
b. the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
c. the price at which the transaction was effected;
d. the name of the broker, dealer or bank with or through whom
the transaction was effected; and
e. the date that the report is submitted.
7
<PAGE>
3. Any report may contain a statement that it shall not be construed
as an admission by the person making the report that he or she
has any direct or indirect beneficial ownership in the security
to which the report relates.
C. REVIEW
In reviewing transactions, the Review Officer shall take into account
the exemptions allowed under Section III.G. Before making a
determination that a violation has been committed by an Access Person,
the Review Officer shall give such person an opportunity to supply
additional information regarding the transaction in question.
D. DISCLOSURES OF PERSONAL HOLDINGS
1. Initial Holdings Report: Each Access Person shall report to the
Review Officer within 10 days after becoming an Access Person (i)
the title, number of shares and principal amount of each Security
in which such Access Person had any direct or indirect beneficial
ownership when he or she became an Access Person, (ii) the name
of any broker, dealer or bank with whom such Access Person
maintained an account in which securities were held for the
direct or indirect benefit of such Access Person as of the date
he or she became an Access Person, and (iii) the date the report
is submitted by such Access Person .
2. Annual Holdings Report: On or before January 30, 2001, and
annually thereafter, each Access Person (other than Disinterested
Trustees) shall report (i) the title, number of shares and
principal amount of each Security in which such Access Person had
any direct or indirect beneficial ownership, (ii) the name of any
broker, dealer, or bank with whom such Access Person maintains an
account in which any securities are held for the direct or
indirect benefit of such Access Person, and (iii) the date that
the report is submitted. All of the information in such report
must be current as of a date no more than 30 days before the
report is submitted.
E. CERTIFICATION OF COMPLIANCE
Each Access Person is required to certify annually that he or she has
read and understood the Portfolio's Code and recognizes that he or she
is subject to such Code. Further, each Access Person is required to
certify annually that he or she has complied with all the requirements
of the Code and that he or she has disclosed or reported all personal
securities transactions pursuant to the requirements of the Code.
V. REQUIREMENTS FOR DISINTERESTED TRUSTEES
8
<PAGE>
A. Every Disinterested Trustee shall file with the Review Officer a
quarterly report indicating that he or she had no reportable
transactions or a report containing the information required in
Section IV.B. of this Code with respect to transactions (other than
exempted transactions listed under Section III.G.) in any securities
in which such person has, or by reason of such transactions acquires,
any direct or indirect beneficial ownership, if such Trustee, at the
time of that transaction, knew or should have known, in the ordinary
course of pursuing his or her official duties as Trustee, that during
the 15-day period immediately preceding or after the transaction by
the Trustee:
1. such security was being purchased or sold by the Portfolio; or
2. such security was being considered for purchase or sale by the
Portfolio.
All Disinterested Trustees shall file reports, even when no
transactions have been effected, representing that no transactions
subject to reporting requirements were effected.
B. Notwithstanding the preceding section, any Disinterested Trustee may,
at his or her option, report the information described in section
IV.B.2 with respect to any one or more transactions and may include a
statement that the report shall not be construed as an admission that
the person knew or should have known of portfolio transactions by the
Portfolio in such securities.
VI. REVIEW BY THE BOARD OF TRUSTEES
At least annually, the Review Officer shall report to the Board of Trustees
regarding:
A. All existing procedures concerning Access Persons' personal trading
activities and any procedural changes made during the past year;
B. Any recommended changes to the Portfolios' Code or procedures; and
At least annually, the Review Officer shall furnish the Board of
Trustees a written report that (i) describes any issues arising under
this Code or such procedures, including, but not limited to,
information about any material violations of this Code or such
procedures and any sanctions imposed in response to such violations
and (ii) certifies that the Portfolios have adopted procedures
reasonably necessary to prevent Access Persons from violating this
Code.
VII. SANCTIONS
9
<PAGE>
A. SANCTIONS FOR VIOLATIONS BY ACCESS PERSONS (EXCEPT DISINTERESTED
TRUSTEES).
If the Review Officer determines that a violation of this Code has
occurred, he or she shall so advise the Board of Trustees and the
Board may impose such sanctions as it deems appropriate, including,
inter alia, disgorgement of profits, censure, suspension or
termination of the employment of the violator. All material violations
of the Code and any sanctions imposed as a result thereto shall be
reported in writing at least annually to the Board of Trustees.
B. SANCTIONS FOR VIOLATIONS BY DISINTERESTED TRUSTEES
If the Review Officer determines that any Disinterested Trustee has
violated this Code, he or she shall so advise the President of the
Portfolio and also a committee consisting of the Disinterested
Trustees (other than the person whose transaction is at issue) and
shall provide the committee with a report, including the record of
pertinent actual or contemplated portfolio transactions of the
Portfolio and any additional information supplied by the person whose
transaction is at issue. The committee, at its option, shall either
impose such sanctions as it deems appropriate or refer the matter to
the full Board of Trustees of the Portfolio, which shall impose such
sanctions as it deems appropriate.
VIII. MISCELLANEOUS
A. ACCESS PERSONS
The Review Officer of the Portfolio will identify all Access Persons
who are under a duty to make reports to the Portfolio and will inform
such persons of such duty. Any failure by the Review Officer to notify
any person of his or her duties under this Code shall not relieve such
person of his or her obligations hereunder.
B. RECORDS
The Portfolio shall maintain records in the manner and to the extent
set forth below, which records may be maintained on microfilm under
the conditions described in Rule 31a-2(f) under the 1940 Act, and
shall be available for examination by representatives of the
Securities and Exchange Commission ("SEC"):
1. a copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved
in an easily accessible place;
10
<PAGE>
2. a record of any violation of this Code and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
3. a copy of each report made pursuant to this Code shall be
preserved for a period of not less than five years from the end
of the fiscal year in which it is made, the first two years in an
easily accessible place;
4. a list of all persons who are required, or within the past five
years have been required, to make reports pursuant to this Code
shall be maintained in an easily accessible place; and
5. a record of any decision, and the reasons supporting the
decision, to approve the acquisition by Advisory Persons of
securities under Sections III.B. and C., for at least five years
after the end of the fiscal year in which it is made, the first
two years in an easily accessible place.
11
<PAGE>
C. CONFIDENTIALITY
All reports of securities transactions and any other information filed
pursuant to this Code shall be treated as confidential, except to the
extent required by law.
D. INTERPRETATION OF PROVISIONS
The Board of Trustees of the Portfolio may from time to time adopt
such interpretations of this Code as it deems appropriate.
12
AMENDED AND RESTATED
CODE OF ETHICS
MUIRFIELD INVESTORS, INC.
Muirfield Investors, Inc., a Delaware corporation ("MII"), hereby adopts
this Code of Ethics (the "Code") as of November 1, 1995, as amended and restated
on February 11, 2000, to specify and prohibit certain types of personal
securities transactions deemed to create a conflict of interest and to establish
reporting requirements and preventive procedures pursuant to the provisions of
Rule 17j-1(b)(1) under the Investment Company Act of 1940 (the "1940 Act") and
Rule 204-2 of the Investment Advisers Act of 1940. The Board of Trustees of The
Flex-funds, The Flex-Partners and the Portfolios in which the series of The
Flex-funds and The Flex-Partners are invested (the "Portfolios") approved this
Amended and Restated Code of Ethics on February 11, 2000.
I. DEFINITIONS
A. An "Access Person" means any director or officer of MII or any of its
subsidiaries and any Advisory Person.
B. An "Advisory Person" means any employee of MII who, in connection with
his regular functions or duties, makes, participates in or obtains
information regarding the purchase or sale of securities by an account
or an Investment Company or whose functions relate to any
recommendations with respect to such purchases or sales and any
natural person in a control relationship with MII who obtains
information regarding the purchase or sale of securities.
C. "Beneficial Ownership" shall be interpreted subject to the provisions
of Rule 16a-1(a) (exclusive of Section (a)(1) of such Rule) of the
Securities Exchange Act of 1934.
D. "Control" shall have the same meaning as set forth in Section 2(a)(9)
of the 1940 Act.
E. The "Review Officer" is the person designated by MII's Board of
Directors to monitor the overall compliance with this Code. In the
absence of any such designation the Review Officer shall be the
Treasurer or any Assistant Treasurer of MII.
F. The "Preclearance Officer" is the person designated by MII's Board of
Directors to provide preclearance of any personal security transaction
as required by this Code of Ethics.
G. "Purchase or sale of a security" includes, among other things, the
writing of an option to purchase or sell a security.
H. "Security" shall have the meaning as set forth in Section 2(a)(36) of
the 1940 Act (in effect, all securities), except that it shall not
include direct obligations of the U.S. Government (or any other
"government security" as that term is defined in the 1940 Act);
bankers' acceptances, bank certificates of deposit, commercial paper
and high
1
<PAGE>
quality short-term debt instruments, including repurchase agreements;
shares of registered open-end investment companies; and stock index
futures.
I. A security is "being considered for purchase or sale" when a
recommendation to purchase or sell the security has been made and
communicated and, with respect to the person making the
recommendation, when such person seriously considers making such a
recommendation.
J. "Investment Company" (collectively, the "Investment Companies") means
a company registered as such under the 1940 Act and for which R.
Meeder & Associates, Inc. is the investment adviser.
II. STATEMENT OF GENERAL PRINCIPLES
The following general fiduciary principles shall govern the personal
investment activities of all Access Persons.
Each Access Person shall adhere to the highest ethical standards and
shall:
A. at all times, place the interests of the accounts and the Investment
Companies before his personal interests;
B. conduct all personal securities transactions in a manner consistent
with this Code, so as to avoid any actual or potential conflicts of
interest, or an abuse of position of trust and responsibility; and
C. not take any inappropriate advantage of his position with or on behalf
of the accounts or the Investment Companies.
III. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES
A. BLACKOUT PERIODS
1. No Access Person shall purchase or sell, directly or indirectly,
any security in which he has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership on a day
during which he knows or should have known an account or an
Investment Company has a pending "buy" or "sell" order in that
same security until that order is executed or withdrawn.
2. No Advisory Person shall purchase or sell, directly or
indirectly, any security in which he has, or by reason of such
transaction acquires, any direct or indirect beneficial ownership
within at least seven calendar days before and after an
Investment Company trades (or has traded) in that security.
2
<PAGE>
B. INITIAL PUBLIC OFFERINGS
With regard to acquiring any security in an "initial public
offering" (as defined in Rule 17j-1(a)(6) under the 1940 Act) for the
personal account of an Advisory Person, he or she shall
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether the investment opportunity should be reserved
for an account or an Investment Company, and whether such
opportunity is being offered to such Advisory Person by virtue of
his relationship to an account or his position with an Investment
Company) for any acquisition of securities in an initial public
offering; and
2. after authorization to acquire securities in an initial public
offering has been obtained, disclose such personal investment,
with respect to any subsequent consideration by an account or an
Investment Company for investment in that issuer.
C. LIMITED OFFERINGS
With regard to a "limited offering" (as defined in Rule 17j-1(a)(8)
under the 1940 Act), each Advisory Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider among other
factors, whether the investment opportunity should be reserved
for an account or an Investment Company, and whether such
opportunity is being offered to such Advisory Person by virtue of
his relationship to an account or his position with an Investment
Company) for any acquisition of securities in a limited offering;
and
2. after authorization to acquire securities in a limited offering
has been obtained, disclose such personal investment with respect
to any subsequent consideration by an account or an Investment
Company for investment in that issuer.
If an account or an Investment Company decides to purchase
securities of an issuer the shares of which have been previously
obtained for personal investment by an Advisory Person, that
decision shall be subject to an independent review by Advisory
Persons with no personal interest in the issuer.
D. SHORT-TERM TRADING PROFITS
With regard to the purchase and sale, or sale and purchase,
within 60 calendar days, of the same (or equivalent) securities of
which an Advisory Person has beneficial ownership, each Advisory
Person shall:
1. obtain express prior written approval from the Review Officer
(who, in making such determination, shall consider, among other
factors, whether such opportunity is being offered to such
Advisory Person by virtue of his relationship to an
3
<PAGE>
account or his position with an Investment Company) for the
closing transaction (whether a purchase or sale) which would
result in the short-term profit; and
2. after authorization to purchase or sell such securities has been
obtained, disclose such personal investment with respect to any
subsequent consideration by an account or an Investment Company
for investment in that issuer.
E. GIFTS
No Advisory Person shall receive any gift or other things of more than
DE MINIMIS value from any person or entity that does business with or
on behalf of an account or an Investment Company.
F. SERVICE AS A DIRECTOR
1. No Advisory Person shall serve on a board of directors of a
publicly traded company without prior authorization from the
Board of Directors of MII and the boards of trustees of the
Investment Companies, based upon a determination that such board
service would be consistent with the interests of the accounts,
the Investment Companies and their investors.
2. If board service of an Advisory Person is authorized by the Board
of Directors of MII and the boards of trustees of the Investment
Companies, such Advisory Person shall be isolated from the
investment making decisions of the accounts and the Investment
Companies with respect to the company of which he is a director.
G. EXEMPTED TRANSACTIONS
The prohibition of Section III shall not apply to:
1. purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control;
2. purchases or sales that are non-volitional on the part of the
Access Person, an account or an Investment Company, including
mergers, recapitalizations or similar transactions;
3. purchases which are part of an automatic dividend reinvestment
plan;
4. purchases effected upon the exercise of rights issued by an
issuer PRO RATA to all holders of a class of its securities, to
the extent such rights were acquired from such issuer, and sales
of such rights so acquired; and
5. purchases and sales that receive prior approval in writing by the
Preclearance Officer as (a) only remotely potentially harmful to
an account or an Investment Company because they would be very
unlikely to affect a highly institutional market, (b) clearly not
economically related to the securities to be purchased or sold or
held by an account or an Investment Company or (c) not
representing any
4
<PAGE>
danger of the abuses prescribed by Rule 17j-1 of the Act or Rule
204-2 of the Investment Adviser's Act of 1940, but only if in
each case the prospective purchaser has identified to the Review
Officer all factors of which he or she is aware which are
potentially relevant to a conflict of interest analysis,
including the existence of any substantial economic relationship
between his or her transaction and securities held or to be held
by an account or an Investment Company.
IV. COMPLIANCE PROCEDURES
A. PRE-CLEARANCE
An Access Person may not, directly or indirectly, acquire or dispose
of beneficial ownership of a security except as provided below unless:
1. such purchase or sale has been approved by the Preclearance
Officer;
2. the approved transaction is completed on the same day approval is
received; and
3. the Preclearance Officer has not rescinded such approval prior to
execution of the transaction.
B. REPORTING
1. Coverage:
a. Each Access Person shall file with the Review Officer
confidential quarterly reports containing the information
required in Sections IV.B.1.b. and IV.B.2 of this Code with
respect to ALL transactions during the preceding quarter in any
securities in which such person has, or by reason of such
transaction acquires, any direct or indirect beneficial
ownership, PROVIDED that no Access Person shall be required to
report transactions effected for any account over which such
Access Person has no direct or indirect influence or control
(except that such an Access Person must file a written
certification stating that he or she has no direct or indirect
influence or control over the account in question).
b. If during such preceding quarter an Access Person establishes
any account in which any securities were held during such quarter
for the direct or indirect benefit of the Access Person, the
Access Person must also include the following information in such
quarterly report: (i) the name of the broker, dealer or bank with
whom the Access Person established the account and (ii) the date
the account was established.
2. Filings: Every report shall be made no later than 10 days after
the end of the calendar quarter in which the transaction to which
the report relates was effected, and, in addition to any
information specified in Section IV.B.1.b. above, shall contain
the following information:
5
<PAGE>
a. the date of the transaction, the title and the number of
shares and the principal amount of each security involved;
b. the nature of the transaction (i.e., purchase, sale or any
other type of acquisition or disposition);
c. the price at which the transaction was effected;
d. the name of the broker, dealer or bank with or through whom
the transaction was effected; and
e. the date that the report is submitted.
3. Any report may contain a statement that it shall not be construed
as an admission by the person making the report that he or she
has any direct or indirect beneficial ownership in the security
to which the report relates.
C. REVIEW
In reviewing transactions, the Review Officer shall take into account
the exemptions allowed under Section III.G. Before making a
determination that a violation has been committed by an Access Person,
the Review Officer shall give such person an opportunity to supply
additional information regarding the transaction in question.
D. DISCLOSURES OF PERSONAL HOLDINGS
1. Initial Holdings Report: Each Access Person shall report to the
Review Officer within 10 days after becoming an Access Person (i)
the title, number of shares and principal amount of each Security
in which such Access Person had any direct or indirect beneficial
ownership when such Access Person became an Access Person, (ii)
the name of any broker, dealer or bank with whom such Access
Person maintained an account in which securities were held for
the direct or indirect benefit of such Access Person as of the
date he or she became an Access Person, and (iii) the date the
report is submitted by such Access Person .
2. Annual Holdings Report: On or before January 30, 2001, and
annually thereafter, each Access Person shall report (i) the
title, number of shares and principal amount of each Security in
which such Access Person had any direct or indirect beneficial
ownership, (ii) the name of any broker, dealer, or bank with whom
such Access Person maintains an account in which any securities
are held for the direct or indirect benefit of such Access
Person, and (iii) the date that the report is submitted. All of
the information in such report must be current as of a date no
more than 30 days before the report is submitted.
E. CERTIFICATION OF COMPLIANCE
Each Access Person is required to certify annually that he or she has
read and understood this Code and recognizes that he or she is subject
to this Code. Further,
6
<PAGE>
each Access Person is required to certify annually that he or she has
complied with all the requirements of this Code and that he or she has
disclosed or reported all personal securities transactions pursuant to
the requirements of this Code.
V. REVIEW BY THE BOARDS
At least annually, the Review Officer shall report to the Board of
Directors of MII and the Boards of Trustees of the Investment Companies
regarding:
A. All existing procedures concerning Access Persons' personal trading
activities and any procedural changes made during the past year;
B. Any recommended changes to this Code or procedures.
At least annually, the Review Officer shall furnish each of such Boards a
written report that (i) describes any issues arising under this Code or
such procedures, including, but not limited to, information about any
material violations of this Code or such procedures and any sanctions
imposed in response to such violations and (ii) certifies that MII has
adopted procedures reasonably necessary to prevent Access Persons from
violating this Code.
VI. SANCTIONS
If the Review Officer determines that a violation of this Code has
occurred, he or she shall so advise the Board of Directors of MII and the
Board may impose such sanctions as it deems appropriate, including, inter
alia, disgorgement of profits, censure, suspension or termination of the
employment of the violator. All material violations of this Code and any
sanctions imposed with respect thereto shall be reported in writing at
least annually to the Board of Directors of MII and, if applicable, the
board of trustees of the Investment Company with respect to whose
securities the violation occurred.
VII. MISCELLANEOUS
A. ACCESS PERSONS
The Review Officer will identify all Access Persons who are under a
duty to make reports to MII and will inform such persons of such duty.
Any failure by the Review Officer to notify any person of his or her
duties under this Code shall not relieve such person of his or her
obligations hereunder.
B. RECORDS
MII shall maintain records in the manner and to the extent set forth
below, which records may be maintained on microfilm under the
conditions described in Rule 31a-2(f) under the 1940 Act, and shall be
available for examination by representatives of the Securities and
Exchange Commission ("SEC"):
7
<PAGE>
1. a copy of this Code and any other code which is, or at any time
within the past five years has been, in effect shall be preserved
in an easily accessible place;
2. a record of any violation of this Code and of any action taken as
a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
3. a copy of each report made pursuant to this Code shall be
preserved for a period of not less than five years from the end
of the fiscal year in which it is made, the first two years in an
easily accessible place;
4. a list of all persons who are required, or within the past five
years have been required, to make reports pursuant to this Code
shall be maintained in an easily accessible place; and
5. a record of any decision, and the reasons supporting the
decision, to approve the acquisition by Advisory Persons of
securities under Sections III.B. and C., for at least five years
after the end of the fiscal year in which it is made, the first
two years in an easily accessible place.
C. CONFIDENTIALITY
All reports of securities transactions and any other information filed
pursuant to this Code shall be treated as confidential, except to the
extent required by law.
D. INTERPRETATION OF PROVISIONS
The Board of Directors of MII may from time to time adopt such
interpretations of this Code as it deems appropriate.
8
