As filed with the Securities and Exchange Commission on April 2, 1997
Registration Nos. 333-________
811-________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____
Post-Effective Amendment No. _____
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. _____
DELTA FUNDS
(Exact Name of Registrant as Specified in Charter)
511 Fifth Avenue, Suite 605, New York, NY 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code. (212) 681-7007
John P. Figliolini, President
Berkshire International Finance
551 Fifth Avenue, Suite 605
New York, NY 10017
(Name and Address of Agent for Service)
(with a copy to Hecht & Steckman, P.C., 60 East 42nd St., Suite 5101,
New York, NY 10165-5101)
Approximate Date of Proposed Public Offering:
As soon as practicable after this registration statement becomes effective.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
hereby elects to register an indefinite number of its shares of beneficial
interest.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that the Registration Statement
shall thereafter become effective in accordance with Section 8(A) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(A),
may determine.
<PAGE>
FORM N-1A
CROSS REFERENCE TABLE
Part A
Item Prospectus
- ---- ----------
1 Cover Page.................................................Cover Page
2 Synopsis..........................................Expense Information
3 Condensed Financial Information...................................N/A
4 General Description of Registrant...Investment Objective and Policies
5 Management of the Fund.........................Management of the Fund
5A Management's Discussion of Fund Performance.......................N/A
6 Capital Stock and Other Securities..................Capital Structure
7 Purchase of Securities Being Offered...Investing in the Fund, Plan of
Distribution
8 Redemption or Repurchase....................How to Redeem Fund Shares
9 Legal Proceedings.................................................N/A
Part B STATEMENT OF ADDITIONAL INFORMATION
Item
- ----
10 Cover Page..................................................Cover Page
11 Table of Contents.......................................Not Applicable
12 General Information and History....................General Information
13 Investment Objectives and Policies...Investment Objective and Policies
14 Management of the Registrant.................Management of the Company
15 Control Persons and Principal Holders of Securities.........Management
of the Company
16 Investment Advisory and Other Services.....................The Adviser
17 Brokerage Allocation..............................Plan of Distribution
18 Capital Stock and Other Securities..Agreement and Declaration of Trust
19 Purchase, Redemption and Pricing of Securities
Being Offered........Additional Purchase and Redemption Information
20 Tax Status.....................Additional Information Concerning Taxes
21 Underwriters..............................................Distribution
22 Calculation of Performance Data..Additional Information on Performance
23 Financial Statements..............................Financial Statements
Part C OTHER INFORMATION
Item
- ----
24 Financial Statements and Exhibits.................Financial Statements
25 Persons Controlled by or Under
Common Control............................Management of the Company
- 2 -
<PAGE>
26 Number of Holders of Securities.....................................N/A
27 Indemnification......................Declaration and Agreement of Trust
28 Business and Other Connections of
Investment Adviser.........................Management of the Company,
Management of the Fund
29 Principal Underwriters...Plan of Distribution, Distributorship Agreement
30 Location of Accounts and Records.................Performance Advertising
31 Management Services..................................................N/A
32 Undertakings.....................................................Item 32
- 3 -
<PAGE>
DELTA FUNDS
DELTA MICRO CAP GROWTH FUND
PROSPECTUS
MARCH ___, 1997
Delta Funds ("Trust") is a mutual fund offering its shares in separate
investment portfolios. This Prospectus relates to the Delta Micro Cap Growth
Fund ("Fund"). The Fund seeks capital appreciation through long-term growth of
capital. It pursues its objective by investing primarily in equity securities of
small-sized companies, which have market capitalizations less than $100 million
at the time of purchase ("micro cap companies"). Utopia Capital Management
Corporation ("Adviser") serves as the Fund's investment adviser. See
"Management." Purchasers of shares are charged a 5% front-end sales load. See
"Investing in the Fund."
This Prospectus gives you information about the Fund that you should
know before investing. Please read it carefully and retain it for future
reference. Additional information is contained in the Statement of Additional
Information dated ____________ ("SAI"), which is incorporated by reference into
this Prospectus, and has been filed with the Securities and Exchange Commission
("SEC"). To obtain a copy of the SAI without charge, call the Fund at 1-888
____________________ or ( ) .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
<PAGE>
EXPENSE INFORMATION
The tables and example below are designed to assist you in
understanding the various costs and expenses that you will bear directly or
indirectly as an investor in the Fund. See "Investing in the Fund" and
"Management of the Fund" for more information.
Investor Transaction Expenses
Maximum sales load imposed on purchases 5%
(as a percentage of public offering price)
Maximum sales load imposed on None
reinvested dividends
Deferred sales charges None
Redemption fees(a) None
Annual Fund Operating Expenses(b)
(as a percentage of average net assets)
Management fees(c) 1.00%
12b-1 Fees(d) 0.25%
Other Expenses(e) 0.75%
Total Fund Operating Expenses(f)
(after reimbursement) 2.0%
- --------------------------------
(a) Redemption proceeds sent by wire are subject to an $8.00
processing fee.
(b) The fees and expenses in this table are based on the estimated fees and
expenses that the Fund expects to incur, and on the estimated size of
the Fund, during its initial fiscal year.
- 3 -
<PAGE>
(c) The Adviser's fee is 1% of the Fund's average daily assets on the first
$100 million, 0.85% on the average daily assets of the next $100
million and 0.70% on the average daily assets over $200 million.
(d) Long-term investors of the Fund may pay more in sales charges and 12b-1
fees than the economic equivalent of the maximum front-end sales
charges permitted by the National Association of Securities Dealers,
Inc.
(e) Such expenses include custody, transfer agency, accounting and legal
fees and other customary Fund expenses.
(f) The Fund's Adviser, Utopia Capital Management Corporation ("Adviser")
will voluntarily waive its fees and, if necessary, reimburse the Fund
to the extent that operating expenses exceed 2.00% of the Fund's
average daily net assets.
Example:
<TABLE>
<S> <C> <C>
ONE YEAR THREE YEAR
You would pay the following expenses $20.00 $63.00
on a hypothetical $1,000 investment,
assuming (1) a 5% annual return and
(2) redemption at the end of each
time period.
</TABLE>
This example should not be considered a representation of past or future
expenses or returns which may be more or less than those shown.
INVESTMENT OBJECTIVE AND POLICIES
Delta Funds ("Trust") was organized as an Ohio business trust on March
14, 1997. The Trust is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act").
The Delta Micro Cap
- 4 -
<PAGE>
Growth Fund ("Fund") is a diversified mutual fund series of the Trust. The
Trust does not presently intend to offer any other series but may do so in the
future. This section takes a closer look at the Fund's investment objectives,
policies and the securities in which it invests. If you have any inquiries about
investing in the Funds, please call the Trust at 888- _____________, or write to
American Data Services, Inc., 24 West Carver Street, Huntington, New York 11743.
The Fund's investment objective is capital appreciation through
long-term growth. The Fund pursues its objective by investing, under normal
market conditions, at least 80% of its total assets in equity securities of
companies with market capitalizations of less than $100 million at the time of
purchase ("micro cap companies"). Such securities are common stock, preferred
stock, warrants, options and convertible debt securities.
Although micro cap companies have potential for rapid growth,
investments in micro cap companies often involve greater risks than investments
in larger, more established companies. Micro cap companies may have shorter
operating histories, a relative lack of management experience, financial
resources and product diversification, and less market liquidity than larger
companies. The securities of micro cap companies are, in many cases, traded only
over-the-counter or on regional securities exchanges, and the frequency and
volume of their trading are substantially less than is typical of larger
companies. For these reasons, securities of micro cap companies may be subject
to greater and more abrupt price fluctuations. The Adviser's research skills and
ability to select securities for the Fund are very important because the
securities of micro cap companies are not followed as closely as large company
stocks. Investors in the Fund should consider their holdings to be long-term
investments, given the risks associated with equity investing, especially in
stocks of micro cap companies.
The Adviser's portfolio managers will generally utilize the following
analytical approach. Phase I consists of identifying "micro cap" public
companies which generally have the following characteristics:
- a specified stock price to sales ratio in conjunction
- 5 -
<PAGE>
with appropriate gross margins
- a 1.5 ratio of current assets to current liabilities
- limited potential dilution issuance of securities
- a specified stock price to book value
The Adviser's portfolio managers will also look at the price-earnings
ratio, realizing that many "micro cap" companies are not yet profitable. Current
profitability is not a prerequisite for a Fund investment, but in those cases
where a company is not yet profitable, the Adviser will consider stable or
increasing sales growth coupled with appropriate gross margins.
Once a potential investment satisfies Phase I of the Adviser's
analytical approach, its data is then inserted into a model developed by the
Adviser in an attempt to determine what the stock price will be in two to three
years. The Adviser prefers market niche leaders where it is difficult or
uneconomical for much larger companies to compete, or companies that are unique
in their technology, approach to the market, ability to provide technological
solutions to long-established problems, licensing or patent protection or some
other unique aspect. It will also compare the stock price to other public
companies in the same industry sector and the level of trading liquidity of the
securities to be purchased. The Adviser's portfolio managers will also use
technical analysis to determine the timing of proposed purchase and sale of
investments by the Fund.
The Fund generally invests in micro cap companies its portfolio
manager considers to be well-managed and to have potential for exceptional
growth. So long as a sufficient number of equity securities of such companies
are available, the Fund intends to stay fully invested in these securities
regardless of the movement of stock prices generally. In most circumstances, the
Fund's actual level of cash and cash equivalents will fluctuate between 0% and
10% of total assets with 90% to 100% of its assets committed to equity and
equity equivalent investments. The Fund may invest from time to time a portion
of its assets, not to exceed
- 6 -
<PAGE>
20% at the time of purchase, in companies with market capitalizations greater
than $100 million. The Fund does not intend to effect any short sales or futures
transactions.
The Fund may also invest up to 5% of its net assets in convertible
securities rated below investment grade by Standard & Poor's Ratings Services
("S&P") or Moody's Investors Service, Inc. ("Moody's")(commonly referred to as
junk bonds or lower-rated securities) or unrated securities deemed to be below
investment grade by the Adviser. The Fund does not intend to invest in
securities rated below "B" by S&P or Moody's, or the equivalent. Securities
rated below investment grade are deemed to be predominantly speculative with
respect to the issuer's capacity to pay interest and repay principal and may
involve major risk exposure to adverse conditions. See the Statement of
Additional Information for a discussion of the risks associated with these
lower-rated securities and for a description of corporate bond ratings by S&P
and Moody's.
For temporary defensive purposes during anticipated periods of general
market decline or to receive a return on idle cash, the Fund may invest a
portion of its net assets in money market instruments, including securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements secured thereby, as well as bank certificates of
deposit and banker's acceptances issued by banks having net assets of at least
$1 billion as of the end of their most recent fiscal year, high-grade commercial
paper, and other high quality long-term and short-term debt instruments. Under
normal circumstances, the Fund will not invest more than 10% of its total assets
in short-term instruments to meet cash flow needs, pending investments or for
temporary defensive purposes. See "Other Investment Practices and Risk Factors."
OTHER INVESTMENT PRACTICES AND RISK FACTORS
An investment in the Fund should not be considered a complete
investment program and there is no assurance that the Fund will achieve its
investment objective. Investors should carefully consider their ability to
assume the risks described herein before making an investment in the Fund.
- 7 -
<PAGE>
RIGHTS AND WARRANTS
The Fund may acquire rights and/or warrants which are attached to
other securities in its portfolio, or which are issued as a distribution by the
issuer of a security held in its portfolio. Rights and/or warrants are, in
effect, options to purchase equity securities at a specific price, generally
valid for a specific period of time, and have no voting rights, pay no dividends
and have no rights with respect to the corporation issuing them.
CONVERTIBLE SECURITIES
The Fund may acquire, through purchase or a distribution by the issuer
of a security held in its portfolio, a fixed-income security which is
convertible into common stock of the issuer. Convertible securities rank senior
to common stocks in a corporation's capital structure and, therefore, entail
less risk than the corporation's common stock. The value of a convertible
security is a function of its "investment value" (its value as if it did not
have a conversion privilege), and its "conversion value" (the security's worth
if it were to be exchanged for the underlying security, at market value,
pursuant to its conversion privilege).
To the extent that a convertible security's investment value is
greater than its conversion value, its price will be primarily a reflection of
such investment value and its price will be likely to increase when interest
rates fall and decrease when interest rates rise. As with a fixed-income
security, the credit standing of the issuer and other factors may also have an
effect on the convertible security's value. If the conversion value exceeds the
investment value, the price of the convertible security will rise above its
investment value and, in addition, will sell at some premium over its conversion
value. This premium represents the price investors are willing to pay for the
privilege of purchasing a fixed-income security with a possibility of capital
appreciation due to the conversion privilege. At such times the price of the
convertible security will tend to fluctuate directly with the price of the
underlying equity security. A portion of the convertible securities in which the
Fund may invest may be unrated or, if
- 8 -
<PAGE>
rated, rated below investment grade by a nationally recognized statistical
rating organization.
WHEN-ISSUED AND DELAYED DELIVERY
SECURITIES AND FORWARD COMMITMENTS
From time to time, in the ordinary course of business, the Fund may
purchase securities on a when-issued or delayed delivery basis or may purchase
or sell securities on a forward commitment basis. When such transactions are
negotiated, the price is fixed at the time of the commitment, but delivery and
payment can take place a month or more after the date of the commitment. There
is no overall limit on the percentage of the Fund's assets which may be
committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis. An increase in the percentage of the Fund's assets
committed to the purchase of securities on a when-issued, delayed delivery or
forward commitment basis may increase the volatility of the Fund's net asset
value.
WHEN, AS AND IF ISSUED SECURITIES
The Fund may purchase securities on a "when, as and if issued" basis
under which the issuance of the security depends upon the occurrence of a
subsequent event, such as approval of a merger, corporate reorganization,
leveraged buyout or debt restructuring. If the anticipated event does not occur
and the securities are not issued, the Fund will have lost an investment
opportunity. There is no overall limit on the percentage of the Fund's assets
which may be committed to the purchase of securities on a "when, as and if
issued" basis. An increase in the percentage of the Fund's assets committed to
the purchase of securities on a "when, as and if issued" basis may increase the
volatility of its net asset value.
OPTIONS
The Fund may invest in call and put options on portfolio securities.
However, the Fund is not permitted to write uncovered
-9-
<PAGE>
or naked options. The Fund may purchase listed and over-the-counter ("OTC")
call and put options in amounts equalling up to 5% of its net assets. The Fund
may purchase call options to protect against an increase in the price of a
security it anticipates purchasing, or for the purpose of speculating in the
common stock underlying the call option. The Fund may purchase put options on
securities which it holds in its portfolio to protect itself against a decline
in the value of the security.
SHORT-TERM INSTRUMENTS
The Fund may hold short-term U.S. Government obligations, high quality
money market instruments (i.e., rated A-1 or better by S&P or Prime-1 by Moody's
or unrated instruments deemed by the Adviser to be of comparable quality),
certificates of deposit, bank obligations and cash equivalents, (i) to meet
anticipated redemption requests and other cash flow needs, (ii) when, in the
opinion of the Adviser, other suitable securities are unavailable, or (iii) for
temporary defensive purposes. Under normal conditions, it is not anticipated
that more than 10% of the total assets of the Fund will be invested in
short-term instruments. The foregoing instruments may also include, among other
things, commercial paper, and corporate bonds with remaining maturities of
thirteen months or less, short-term obligations of U.S. banks and money market
mutual funds. In addition to the advisory fees and other expenses the Fund bears
directly in connection with its own operations, when the Fund invests in another
mutual fund, the Fund would bear its pro rata portion of the other mutual fund's
advisory fees and other expenses, and such fees and other expenses will be borne
indirectly by the Fund's investors. See the SAI for a description of S&P's and
Moody's commercial paper ratings.
Borrowings
The Fund may borrow money in an amount up to one-third of the value of
its total assets at the time of entering into the borrowing, for temporary or
emergency purposes (including to meet redemption requests prior to the
settlement of securities already sold or in the process of being sold by the
Fund). If the
-10-
<PAGE>
securities held by a Fund should decline in value while borrowings
are outstanding, the net asset value of the Fund's outstanding shares will
decline in value by proportionately more than the decline in market value of the
Fund's portfolio securities. As a result, the Fund's share price may be subject
to greater fluctuation until the borrowing is repaid.
PORTFOLIO TURNOVER
The Fund may sell a portfolio investment soon after its acquisition if
the Adviser believes that such a disposition is consistent with attaining the
investment objective of the Fund. Portfolio investments may be sold for a
variety of reasons, such as a more favorable investment opportunity or other
circumstances bearing on the desirability of continuing to hold such
investments. A high rate of portfolio turnover (over 100%) may involve
correspondingly greater brokerage commission expenses and other transaction
costs, which must be borne directly by the Fund and ultimately by its investors.
High portfolio turnover may result in the realization of substantial net capital
gains. To the extent short-term net capital gains are realized, distributions
resulting from such gains will be ordinary income for federal income tax
purposes. See "Taxes". The Adviser expects that the annual portfolio turnover
for the Fund will not exceed 200%.
EXPERIENCE OF ADVISER
Although the Fund's portfolio managers and other officers of the
Company have experience in analyzing micro cap companies, the Adviser has only
recently been formed and has no previous experience managing a registered
investment company such as the Fund.
CERTAIN INVESTMENT RESTRICTIONS
The Fund's investment objective and, except as otherwise stated herein
or in the SAI, the investment policies and restrictions are not fundamental and
may be changed by the Board of
-11-
<PAGE>
Trustees without investor approval. As a matter of non-fundamental policy, the
Fund will not, among other matters described herein under "Types of Investments"
and "Other Investment Practices and Risk Factors," (i) engage in short sales or
futures transactions; (ii) write uncovered or naked options; (iii) purchase
restricted or illiquid securities; (iv) invest in foreign securities or ADRs;
(v) purchase securities owned by any of the Arista group of mutual funds; (vi)
lend its securities; or (vii) invest in other investment companies except money
market funds.
Among other fundamental restrictions described in the SAI which cannot
be changed without investor approval, the Fund may not (i) invest more than 25%
of its total assets in securities of issuers in any single industry (other than
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities); (ii) with respect to 75% of its total assets, invest more
than 5% of the fair market value of its assets in securities of any one issuer
(other than securities issued or guaranteed by the U.S. Government, its agencies
or instrumentalities); (iii) invest in a company to get control or manage it or,
with respect to 75% of its total assets, purchase more than 10% of the
outstanding voting securities of an issuer; (iv) invest Fund assets in
restricted securities; (v) issue any senior securities, except for temporary
borrowings permissible under the 1940 Act; (vi) make loans, except to the extent
permitted by the 1940 Act; or (vii) invest in commodities or commodities
options.
You will be notified of any changes to the Fund's investment
objective, policies or restrictions that are considered by the Board of Trustees
to be material. If there is a material change to the Fund's investment
objective, policies or restrictions, you should consider whether the Fund
remains an appropriate investment for you. For further information regarding the
Fund's investment restrictions, see the SAI.
-12-
<PAGE>
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed by the Adviser under
the supervision and direction of the Board of Trustees. The officers of the
Trust are responsible for the Fund's daily operations. The SAI contains the name
and background information of each Trustee and officer of the Trust.
INVESTMENT ADVISER
Utopia Capital Management Corporation ("Adviser"), 551 Fifth Avenue,
New York, New York, serves as the Investment Adviser pursuant to an Investment
Advisory Agreement (the "Agreement"), which provides that the Adviser will
furnish continuous investment advisory services to the Fund. The Adviser
supervises and manages the investment portfolio, and administers the operations,
of the Fund, and subject to such policies as the Board of Trustees of the Fund
may determine, directs the purchase or sale of investment securities in the
day-to-day management of the Fund's investment portfolio. Under the Agreement,
the Adviser, at its own expense and without reimbursement from the Fund,
furnishes office space and all necessary office facilities, equipment and
executive personnel for making the investment decisions necessary for managing
the Fund and maintaining the Company's organization, and pays the salaries and
fees of all officers and Trustees of the Company (except the fees paid to
disinterested Trustees). The Fund pays all of its own expenses, including,
without limitation, the cost of preparing and printing registration statements,
the expense of registering its shares with the SEC and qualifying them for sale
in the various states, advisory fees, costs of organization and maintenance of
corporate existence, the printing and distribution costs of prospectuses mailed
to existing shareholders, reports to shareholders, reports to government
authorities and proxy statements, costs of meetings of shareholders, fees paid
to Trustees who are not interested persons of the Adviser, the cost of office
supplies, travel expenses, interest charges, taxes, legal expenses, association
membership dues, auditing services, insurance premiums, brokerage commissions
and other expenses in connection with portfolio transactions, fees and expenses
of the custodian of the Fund's assets, fees of fund accounting and pricing
services,
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<PAGE>
and the fees and expenses of the Fund's dividend disbursing agent, accounting
services agent, and transfer agent.
For its services, the Adviser receives a management fee from the Fund
computed at the annual rate of 1.00% of the Fund's average daily net assets up
to $100 million. The Agreement provides that the management fee is reduced at
predetermined break points. The management fee is reduced to 0.85% of the Fund's
average daily net assets greater than $100 million but less than or equal to
$200 million. The fee is further reduced to 0.70% of the Fund's daily net asset
value greater than $200 million. The fee is paid monthly.
The Adviser is a recently organized corporation, the sole stockholder
of which is John Figliolini, who is president of both the Advisor and Trust.
The Adviser may serve as investment adviser to individual and
institutional clients, but currently does not do so.
As of the date of this Prospectus the Adviser owned of record all
outstanding shares of the Fund.
-14-
<PAGE>
PORTFOLIO MANAGERS
The portfolio managers of the Fund are Oleg Batratchenko and Peter
Kambolin, who have day-to-day responsibility for management of the Fund's
portfolio.
Oleg Batratchenko has over eight years of financial research and
investment banking experience. Since April 1995, he has served as Vice President
of research at Berkshire International Finance, Inc., a New York corporate
finance and investment banking boutique which also acts as a consultant to the
Arista group of off-shore mutual funds (the "Arista Group"). Mr. Batratchenko
has been managing the firm's equity research department in consulting for the
Arista Group and providing analytical support for monitoring and deal
structuring of companies who retain Berkshire International Finance, Inc. Mr.
Batratchenko would be considered a generalist specializing in small cap firms.
Mr. Batratchenko provides analytical coverage for over 20 U.S. and European
companies, mostly in the high-tech, biomedical, environmental, computer and
electronics sectors. In addition to that, Mr. Batratchenko provides consulting
services to a Swiss-based money management firm, Berkshire Capital Management
Group, Ltd., which acts as the adviser to the Arista Group. From 1993 to 1995,
Mr. Batratchenko was a research analyst with Safian Investment Research, Inc., a
financial research and money management firm, where he was engaged in the
analysis of international markets on both macro- and microeconomic levels. Prior
to that Mr. Batratchenko worked as a Performance Analyst with Neuberger and
Berman, a money management firm.
Mr. Batratchenko has a B.A. in Economics from Moscow State University.
Between 1987 and 1990 Mr. Batratchenko was a research associate at the Moscow
Institute of World Economy and International Relations, where he completed a
Master's program in Economics and was involved in a number of high profile
research projects being conducted by this leading Russian think tank for the
Kremlim. Mr. Batratchenko also has a Master's Degree in International Political
Economy from New York University and is an Associate Member of the Financial
Analysts - Money Managers Society (New York).
-15-
<PAGE>
Peter Kambolin has been an analyst with Berkshire International
Finance, Inc. since May 1996. From November 1995 to May 1996, he was a systems
administrator with Unibank, Inc., a commercial bank, where he was involved in
the bank's currency risk exposure and securities department. Mr. Kambolin has a
B.A. Degree in Finance from Baruch College of New York.
HOW TO PURCHASE SHARES
Your initial investment in the Fund ordinarily must be at least $1,000
($250 for tax-deferred retirement plans). You may purchase additional shares
through the Open Account Program described below. The Fund may, in the Advisor's
sole discretion, accept certain accounts with less than the stated minimum
initial investment. You may open an account and make an initial investment
through securities dealers having a sales agreement with the Fund's principal
underwriter, European Equity Partners, Inc. (the "Underwriter"). You may also
make a direct initial investment by sending a check and a completed account
application form to Delta Micro Cap Growth Fund, 24 West Carver Street,
Huntington, New York 11743. Checks should be made payable to "Delta Micro Cap
Growth Fund". An account application is included in this Prospectus.
Shares of the Fund are sold on a continuous basis at the public
offering price next determined after receipt of a purchase order by the Fund.
Purchase orders received by dealers prior to 4:00 p.m. Eastern Standard time, on
any business day and transmitted to the Fund by 5:00 p.m. Eastern Standard time,
are confirmed that day at the public offering price determined as of the close
of the regular session of trading on the New York Stock Exchange on that day. It
is the responsibility of dealers to transmit properly completed orders so that
they will be received by the Fund by 5:00 p.m. Eastern Standard time. Dealers
may charge a fee for effecting purchase orders. Direct purchase orders received
by the Fund by 4:00 p.m. Eastern Standard time, are confirmed at that day's
public offering price. Direct investments received by the Fund after 4:00 p.m.
Eastern Standard time, and orders received from dealers after 5:00 p.m. Eastern
Standard time, are confirmed at the public offering price next determined on the
following business day.
- 16 -
<PAGE>
The public offering price of the Fund's shares is the next
determined net asset value per share plus a sales load as shown in the following
table.
- 17 -
<PAGE>
<TABLE>
<S> <C> <C> <C>
Reallowance
to
Participating
Selected
Dealer
Sales Load as % of as % of
Public Net Public
Offering Amount Offering
Amount of Investment Price Invested Price
- -----------------------------------------------------------------------------------------------------------------------------
Less than $100,000 5.00% 5.26% 4.25%
- -----------------------------------------------------------------------------------------------------------------------------
$100,000 but less than $250,000 4.00 4.17 3.50
- -----------------------------------------------------------------------------------------------------------------------------
$250,000 but less than $500,000 3.25 3.36 2.75
- -----------------------------------------------------------------------------------------------------------------------------
$500,000 but less than $1,000,000 2.25 2.30 1.75
- -----------------------------------------------------------------------------------------------------------------------------
$1,000,000 or more None None None
=============================================================================================================================
</TABLE>
Under certain circumstances, the Underwriter may increase or decrease the
reallowance to dealers. Dealers engaged in the sale of shares of the Fund may be
deemed to be underwriters under the Securities Act of 1933. The Underwriter
retains the entire sales load on all direct initial investments in the Fund and
on all investments in accounts with no designated dealer of record.
The Fund mails you confirmations of all purchases or redemptions of Fund
shares. Certificates representing shares are not issued. The Fund and the
Underwriter reserve the right to limit the amount of investments and to refuse
to sell to any person.
Investors should be aware that the Fund's account application contains
provisions in favor of the Fund, the Underwriter, American Data and certain of
their affiliates, excluding such entities from certain liabilities (including,
among others, losses resulting from unauthorized shareholder transactions)
relating to the various services made available to investors.
Should an order to purchase shares be canceled because your check does not
clear, you will be responsible for any resulting losses or fees incurred by the
Fund or American Data in the transaction.
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Open Account Program. Please direct inquiries concerning the services
described in this section to the Fund at the address or numbers listed below.
After an initial investment, all investors are considered participants in
the Open Account Program. The Open Account Program helps investors make
purchases of shares of the Fund over a period of years and permits the automatic
reinvestment of dividends and distributions of the Fund in additional shares
without a sales load.
Under the Open Account Program, you may purchase and add shares to your
account at any time either through your securities dealer or by sending a check
to Delta Micro Cap Growth Fund, 24 West Carver Street, Huntington, New York
11743. The check should be made payable to "Delta Micro Cap Growth Fund".
Under the Open Account Program, you may also purchase shares of the Fund by
bank wire. Please telephone the Fund (Nationwide call toll-free 888-___-____)
for instructions. Your bank may impose a charge for sending your wire. There is
presently no fee for receipt of wired funds, but the Fund reserves the right to
charge shareholders for this service upon thirty days' prior notice to
shareholders.
Each additional purchase request must contain the name of your account
and your account number to permit proper crediting to your account. While there
is no minimum amount required for subsequent investments, the Fund reserves the
right to impose such requirement. All purchases under the Open Account Program
are made at the public offering price next determined after receipt of a
purchase order. If a broker-dealer received concessions for selling shares of
the Fund to a current shareholder, such broker-dealer will receive the
concessions described above with respect to additional investments by the
shareholder.
Reduced Sales Load. A "purchaser" (defined below) may use the Right of
Accumulation to combine the cost or current net asset value (whichever is
higher) of his existing Fund shares with the amount of his current purchases in
order to take advantage of the reduced sales loads set forth in the table above.
Purchases made pursuant to a Letter of Intent may also be eligible for the
reduced sales loads. The minimum initial investment under a Letter of Intent is
$10,000. Shareholders should contact the Fund for information about the Right of
Accumulation and Letter of Intent.
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Purchases at Net Asset Value. You may purchase shares of the Fund at
net asset value when the payment for your investment represents the proceeds
from the redemption of shares of any other mutual fund which has a front-end
sales load. Your investment will qualify for this provision if the purchase
price of the shares of the other fund included a sales load and the redemption
occurred within one year of the purchase of such shares and no more than sixty
days prior to your purchase of shares of the Fund. To make a purchase at net
asset value pursuant to this provision, you must submit photocopies of the
confirmations (or similar evidence) showing the purchase and redemption of
shares of the other fund. Your payment may be made with the redemption check
representing the proceeds of the shares redeemed, endorsed to the order of the
Fund. The redemption of shares of the other fund is, for federal income tax
purposes, a sale on which you may realize a gain or loss. These provisions may
be modified or terminated at any time. Contact your securities dealer or the
Fund for further information.
Banks, bank trust departments and savings and loan associations, in
their fiduciary capacity or for their own accounts, may also purchase shares of
the Fund at net asset value. To the extent permitted by regulatory authorities,
a bank trust department may charge fees to clients for whose account it
purchases shares at net asset value. Federal and state credit unions may also
purchase shares at net asset value.
In addition, shares of the Fund may be purchased at net asset value by
broker-dealers who have a sales agreement with the Underwriter, and their
registered personnel and employees, including members of the immediate families
of such registered personnel and employees.
Clients of investment advisors and financial planners may also
purchase shares of the Fund at net asset value if their investment advisor or
financial planner has made arrangements to permit them
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to do so with the Fund and the Distributor. The investment advisor or financial
planner must notify the Fund that an investment qualifies as a purchase at net
asset value. Trustees, directors, officers and employees of the Fund, the
Advisor, the Underwriter or American Data including members of the immediate
family of such individuals and employee benefit plans established by such
entities, may also purchase shares of the Fund at net asset value.
Additional Information. For purposes of determining the applicable
sales load and for purposes of the Letter of Intent and Right of Accumulation
privileges, a purchaser includes an individual, his spouse and their children
under the age of 21, purchasing shares for his or their own account; a trustee
or other fiduciary purchasing shares for a single fiduciary account although
more than one beneficiary is involved; employees of a common employer, provided
that economies of scale are realized through remittances from a single source
and quarterly confirmation of such purchases; or an organized group, provided
that the purchases are made through a central administration, or a single
dealer, or by other means which result in economy of sales effort or expense.
Contact the Fund for additional information concerning purchases at net asset
value or at reduced sales loads.
SHAREHOLDER SERVICES
Contact the Fund (Nationwide call toll-free 888-___-____) for
additional information about the shareholder services described below.
Automatic Withdrawal Plan
If the shares in your account have a value of at least $5,000, you may
elect to receive, or may designate another person to receive, monthly or
quarterly payments in a specified amount of not less than $50 each. There is no
charge for this service. Purchases of additional shares of the Fund while the
plan is in effect are generally undesirable because a sales load is incurred
whenever purchases are made.
Tax-Deferred Retirement Plans
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Shares of the Fund are available for purchase in connection with the
following tax-deferred retirement plans:
-- Keogh Plans for self-employed individuals
-- Individual retirement account (IRA) plans for
individuals and their non-employed spouses
-- Qualified pension and profit-sharing plans including
those profit-sharing plans with a 401(k) provision
-- 403(b)(7) custodial accounts for employees of public school
systems, hospitals, colleges and other non-profit
organizations meeting certain requirements of the Internal
Revenue Code
Direct Deposit Plans
Shares of the Fund may be purchased through direct deposit plans
offered by certain employers and government agencies. These plans enable a
shareholder to have all or a portion of his or her payroll or social security
checks transferred automatically to purchase shares of the Fund.
Automatic Investment Plan
You may make automatic monthly investments in the Fund from your bank,
savings and loan or other depository institution account. The minimum initial
and subsequent investments must be $50 under the plan. The Fund pays the costs
associated with these transfers, but reserves the right, upon thirty days'
written notice, to make reasonable charges for this service. Your depository
institution may impose its own charge for debiting your account which would
reduce your return from an investment in the Fund.
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Reinvestment Privilege
If you have redeemed shares of the Fund, you may reinvest all or part
of the proceeds without any additional sales load. This reinvestment must occur
within ninety days of the redemption and the privilege may only be exercised
once per year.
HOW TO REDEEM SHARES
You may redeem shares of the Fund on each day that the Fund is open
for business by sending a written request to the Fund. The request must state
the number of shares or the dollar amount to be redeemed and your account
number. The request must be signed exactly as your name appears on the Fund's
account records. If the shares to be redeemed have a value of $25,000 or more,
your signature must be guaranteed by any eligible guarantor institution,
including banks, brokers and dealers, municipal securities brokers and dealers,
government securities brokers and dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
You may also redeem shares by placing a wire redemption request
through a securities broker or dealer. Unaffiliated broker-dealers may impose a
fee on the shareholder for this service. You will receive the net asset value
per share next determined after receipt by the Fund or its agent of your wire
redemption request. It is the responsibility of broker-dealers to properly
transmit wire redemption orders.
If your instructions request a redemption by wire, you will be charged
an $8.00 processing fee. The Fund reserves the right, upon thirty days' written
notice, to change the processing fee. All charges will be deducted from your
account by redemption of shares in your account. Your bank or brokerage firm may
also impose a charge for processing the wire. In the event that wire transfer of
funds is impossible or impractical, the redemption proceeds will be sent by mail
to the designated account.
Redemption requests may direct that the proceeds be deposited directly
in your account with a commercial bank or other depository institution via an
Automated Clearing House ("ACH") transaction.
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There is currently no charge for ACH transactions. Contact the Fund for more
information about ACH transactions.
Shares are redeemed at their net asset value per share next determined
after receipt by the Fund of a proper redemption request in the form described
above, less any applicable contingent deferred sales load. Payment is normally
made within three business days after tender in such form, provided that payment
in redemption of shares purchased by check will be effected only after the check
has been collected, which may take up to fifteen days from the purchase date. To
eliminate this delay, you may purchase shares of the Fund by certified check or
wire.
At the discretion of the Fund or American Data, corporate investors
and other associations may be required to furnish an appropriate certification
authorizing redemptions to ensure proper authorization. The Fund reserves the
right to require you to close your account if at any time the value of your
shares is less than $1,000 (based on actual amounts invested including any sales
load paid, unaffected by market fluctuations), or $250 in the case of
tax-deferred retirement plans, or such other minimum amount as the Fund may
determine from time to time. After notification to you of the Fund's intention
to close your account, you will be given thirty days to increase the value of
your account to the minimum amount.
The Fund reserves the right to suspend the right of redemption or to
postpone the date of payment for more than three business days under unusual
circumstances as determined by the Securities and Exchange Commission.
DIVIDENDS AND DISTRIBUTIONS
The Fund expects to distribute substantially all of its net
investment income, if any, on an annual basis. The Fund expects to distribute
any net realized long-term capital gains at least once each year. Management
will determine the timing and frequency of the distributions of any net realized
short-term capital gains.
Distributions are paid according to one of the following options:
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Share Option - income distributions and capital gains
distributions reinvested in additional
shares.
Income Option - income distributions and short-term
capital gains distributions paid in
cash; long-term capital gains
distributions reinvested in
additional shares.
Cash Option - income distributions and
capital gains distributions paid in
cash.
You should indicate your choice of option on your application. If no option is
specified on your application, distributions will automatically be reinvested in
additional shares. All distributions will be based on the net asset value in
effect on the payable date.
If you select the Income Option or the Cash Option and the U.S. Postal
Service cannot deliver your checks or if your checks remain uncashed for six
months, your dividends may be reinvested in your account at the then-current net
asset value and your account will be converted to the Share Option.
An investor who has received in cash any dividend or capital gains
distribution from the Fund may return the distribution within thirty days of the
distribution date to the Fund for reinvestment at the net asset value next
determined after its return. The investor or his dealer must notify the Fund
that a distribution is being reinvested pursuant to this provision.
Distributor
European Equity Partners, Inc., 501 Fifth Avenue, New York, New York
(the "Distributor"), an affiliate of the Advisor, serves as principal
underwriter for the Fund and, as such, is the exclusive agent for the
distribution of shares of the Fund. John Figliolini, a controlling shareholder
of the Advisor and President and a Trustee of the Trust, is a controlling
shareholder of the Distributor.
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Administrator
The Trust has retained American Data Services, Inc., 24 West Carver
Street, Huntington, New York 11743 ("American Data") to serve as the Fund's
transfer agent, dividend paying agent and shareholder service agent.
American Data also provides accounting and pricing services to the
Fund. American Data receives a monthly fee from the Fund for calculating daily
net asset value per share and maintaining such books and records as are
necessary to enable it to perform its duties.
In addition, American Data has been retained to provide administrative
services to the Fund. In this capacity, American Data supplies executive,
administrative and regulatory services, supervises the preparation of tax
returns, and coordinates the preparation of reports to shareholders and reports
to and filings with the Securities and Exchange Commission and state securities
authorities. The Fund pays American Data a fee for these administrative services
at the annual rate of .015% of the average value of its daily net assets
provided, however, that the minimum fee schedule of $1,300 per month for funds
under $10,000,000; $1,600 per month for funds between $10,000,000 and
$20,000,000 and $2,000 per month in funds over $20,000,000.
INVESTING IN THE FUND
Shares of the Fund are sold on a continuous basis at the net asset
value next determined after receipt of a purchase order in proper form less a
sales charge equal to 5% of the amount invested. American Data Services, Inc.,
24 West Carver Street, Huntington, New York 11743 also serves as the Fund's
transfer agent and dividend disbursing agent ("Transfer Agent").
Pursuant to a Distribution Agreement between the Fund and European
Equity Partners, Inc. (the "Distributor"), an affiliate of the Investment
Adviser, shares of the Fund are distributed by the
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Distributor and offered by dealers who have entered into selected dealer
agreements with the Distributor ("Selected Broker-Dealers"). The principal
executive office of the Distributor is located at 551 Fifth Avenue, Suite 605,
New York, NY 10017.
The minimum initial purchase is $1,000. Minimum subsequent purchases
of $100 or more may be made by sending a check, payable to Delta Micro Cap
Growth Fund directly to American Data Services, Inc. (the "Transfer Agent") at
24 West Carver Street, Huntington, New York 11743 or by contacting an account
executive of the Distributor or other Selected Broker-Dealer. In the case of
investments pursuant to Individual Retirement Plans, the Fund, in its
discretion, may accept investments without regard to any minimum amounts which
would otherwise be required if the Fund has reason to believe that additional
investments will increase the investment in all accounts under such Plans to at
least $1,000. Certificates for shares purchased will not be issued unless a
request is made by the shareholder in writing to the Transfer Agent. The
offering price will be the net asset value per share next determined following
receipt of an order (see "Determination of Net Asset Value").
Shares of the Fund are sold through the Distributor on a normal three
business day settlement basis; that is, payment is due on the third business day
(settlement date) after the order is placed with the Distributor. A 5% sales
charge is imposed at the time shares are purchased. Shares of the Fund purchased
through the Distributor are entitled to any dividends declared beginning on the
next business day following settlement date. Since Selected Broker-Dealers
forward investors' funds on settlement date, they will benefit from the
temporary use of the funds if payment is made prior thereto. Shares purchased
through the Transfer Agent are entitled to any dividends declared beginning on
the next business day following receipt of an order. As noted above, orders
placed directly with the Transfer Agent must be accompanied by payment.
Investors will be entitled to receive dividends and capital gains distributions
if their order is received by the close of business on the day prior to the
record date for such distributions. (See "How to Sell (Redeem) Fund Shares".)
Sales personnel are compensated for selling shares of the Fund at the time of
their sale by the Distributor and/or the Selected Broker-Dealer. The
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Fund and the Distributor reserve the right to reject any purchase orders.
PURCHASES BY MAIL
Your purchase application, if properly filled out and accompanied by
payment in the form of a check made payable to "Delta Micro Cap Growth Fund,"
will be processed upon receipt by the Transfer Agent. If the Transfer Agent
receives you order and payment by the close of regular trading (currently 4:00
p.m. Eastern Standard Time) on the New York Stock Exchange, your shares will be
purchased at the net asset value calculated at the close of regular trading on
that day. If received after that time, your shares will be purchased at the net
asset value determined as of the close of regular trading on the next business
day.
HOW TO PURCHASE FUND SHARES
By Mail or Courier to Open an Account
Complete and sign the Purchase Application. Make your check
payable to "Delta Micro Cap Growth Fund."
By Mail, send to:
Delta Micro Cap Growth Fund
c/o American Data Services
24 West Carver Street
Huntington, NY 11743
By Overnight Courier, send to:
Delta Micro Cap Growth Fund
c/o American Data Services
24 West Carver Street
Huntington, NY 11743
If you are investing through a qualified retirement plan, you will need to use a
special application.
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By Telephone
Telephone transactions may not be used for initial purchases. If you want to
make subsequent telephone transactions, please select this service on your
Purchase Application or call ________________ to add telephone transactions to
an existing account.
To Add To An Account
Make your check payable to "_____________" and mail it to
____________________________. Put your account name, address and Fund account
number on your check. Subsequent investment forms will be included with each
investor statement. An investor wishing to add to an account should complete
this form and include it with the check. Alternatively, include with your check
a note indicating your Fund account number, your name and your address.
Call _________________ to make your purchase from a bank checking
or money market account by electronic funds transfer. Specify
account name, address and Fund account number. This service must
be established by you in advance by following the instructions
below:
- -----------------------------------------------------------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------
By Wire
First, call the Fund at _______________ to follow instructions at the left.
Notify them that you intend to purchase shares by wire and to verify wire
instructions. Please note that wires may be rejected if they do not contain
complete account information.
Then, wire funds in care of __________________. Include your name, address and
taxpayer identification number. Your bank may charge a fee for wiring money on
your behalf.
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All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks. No cash will be accepted. A $_________ fee will be charged against an
investor's account for any payment check returned to the Transfer Agent for
insufficient funds, stop payment, closed account or other reasons. The investor
will also be responsible for any losses suffered by the Funds or the Transfer
Agent as a result. For purchases made by corporations, executors,
administrators, trustees, guardians, general partners, managers, agents or
attorneys-in-fact, further documentation may be
requested.
Purchases By Telephone
Telephone transactions may not be used for initial purchases. Your
account must already be established prior to initiating telephone purchases.
Only bank accounts held at domestic financial institutions that are ACH members
can be used for telephone transactions. Your shares will be purchased at the net
asset value determined as of the close of regular trading on the date that the
Transfer Agent receives payment for shares purchased by electronic funds
transfer through the ACH system. Most transfers are completed within three
business days after your call to place the order. To preserve flexibility, the
Fund may revise or remove the ability to purchase shares by phone, or may charge
a fee for such service, although currently the Fund does not expect to charge a
fee. Investors in the Funds may also request by telephone a change of address, a
change in investments made through an Automatic Investment Plan, and a change in
the manner in which dividends are received.
The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
among others, requiring some form of personal identification prior to acting
upon telephone instructions, providing written confirmations of all such
transactions, and/or tape recording all telephone instructions. The Fund
reserves the right to refuse a telephone redemption if it believes it advisable
to do so. Assuming procedures such as the above have been followed, the Funds
will not be liable for any loss, cost, or expense for acting upon an investor's
telephone
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<PAGE>
instructions or for any fraudulent or unauthorized telephone
redemption. As a result of this policy, the investor will bear the risk of any
loss unless the Fund has failed to follow such procedure(s). The telephone
purchase privilege may be modified or terminated by the Fund at any time.
Purchases by Wire
If you purchase your initial shares by wire, you must prepare and file
a Purchase Application, marked "follow-up," with the Transfer Agent. The
Transfer Agent must receive the Purchase Application before any of the shares
purchased can be redeemed. You should contact your bank (which will need to
be a commercial bank that is a member of the Federal Reserve
System) for information on sending funds by wire, including any charges that
your bank may make for these services.
Automatic Investment Plan
The Fund offers an Automatic Investment Plan whereby an investor may
automatically make purchases of shares of a Fund on a convenient monthly basis
($100 minimum per transaction) out of his or her savings or checking account.
The $100,000 minimum initial investment must be met before an Automatic
Investment Plan may be established. Under the Automatic Investment Plan, an
investor's designated bank or other financial institutional debits a
preauthorized amount on the investor's account each month and applies the amount
to the purchase of Fund shares. The Automatic Investment Plan must be
implemented with a financial institution that is an ACH member. In addition, the
Fund must have a currently effective registration in those states in which it is
required. No service fee is currently charged by the Fund for participating in
the Automatic Investment Plan. Applications to establish the Automatic
Investment Plan are available from the Funds by calling (888)_____________.
Miscellaneous Purchase Information
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For reasons of economy and convenience, the Fund will not issue
certificates for shares purchased.
Federal regulations require that you provide a certified taxpayer
identification number whenever you open or reopen an account. Congress has
mandated that if any investor fails to provide and certify to the accuracy of
the investor's Social Security number or other tax-payer identification number,
the Fund will be required to withhold 31% of all dividends, distributions and
payments, including redemption proceeds, from such investor as a backup
withholding procedure.
Payment for shares of a Fund may, in the discretion of the Fund, be
made in the form of liquid securities that are permissible investments for the
Fund, provided that, among other conditions, the investor making the
contribution of securities is a tax-exempt entity and the aggregate amount of
the purchase (including cash and contributed securities) be at least $1,000,000.
Investors considering a contribution of securities to the Fund should consult
with their own tax advisers regarding the tax consequences, if any, of such
contribution. For further information, contact the Fund at 24 West Carver
Street, Huntington, New York 11743.
How To Sell (Redeem) Fund Shares
You may sell (redeem) any or all of your shares on any day the Fund is
open for business at the next determined net asset value. Ordinarily, the Fund
makes payments by check for the shares redeemed within three business days after
it receives your properly completed request. However, the right of redemption
may be suspended or payment may be postponed under unusual circumstances such as
when trading on the New York Stock Exchange is restricted or when it is not
reasonably practical for the Fund to determine the fair market value of its net
assets. Payment of redemption proceeds with respect to shares purchased by check
will not be made until the check or payment received for investment has cleared,
which may take up to 15 calendar days from the purchase date.
Payment of the redemption proceeds for shares of the Fund
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where an investor requests wire payment will normally be made in federal funds
on the next business day. The Transfer Agent will wire redemption proceeds only
to the bank and account designated on the Purchase Application or in written
instructions subsequently received by the Transfer Agent, and only if the bank
is a commercial bank that is a member of the Federal Reserve System. The
Transfer Agent currently charges an $8.00 fee for each payment made by wire of
redemption proceeds, which fee will be deducted from the investor's account.
PROCEDURE FOR REQUESTING REDEMPTION
You may request the sale of your shares either by mail or courier or by
telephone as described below.
By Mail:
Sale (redemption) requests should be mailed to:
Delta Micro Cap Growth Fund
c/o American Data Services, Inc.
24 West Carver Street
Huntington, New York 11743
By Overnight Courier:
Delta Micro Cap Growth Fund
c/o American Data Services, Inc.
24 West Carver Street
Huntington, New York 11743
The requests should be sent to:
Delta Micro Cap Growth Fund
c/o American Data Services, Inc.
24 West Carver Street
Huntington, New York 11743
The selling price of each share being redeemed will be the Fund's per
share net asset value next calculated after receipt of all required documents in
good order. There is no load or charge imposed on redemptions. Good order means
that the request must include:
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o Your account number
o The number of shares or dollar amount to be sold
(redeemed)
o The signatures of all account owners exactly as
they are registered on the account
o Any required signature guarantees
o Any supporting legal documentation that is required in
the case of estates, trusts, corporations or
partnerships
o In the case of shares being redeemed from a qualified
retirement plan, including an IRA or IRA/SEP Plan, a statement
of whether or not federal income tax should be withheld (in
the absence of any statement, federal tax will be withheld)
A signature guarantee of each owner is required to redeem shares in the
following situations: (i) if you change ownership on your account; (ii) when you
want the redemption proceeds sent to a different address from that registered on
the account; (iii) if the proceeds are to be made payable to someone other than
the account's owner(s); (iv) any redemption transmitted by federal wire transfer
to your bank; and (v) if a change of address request has been received by the
Fund or the Transfer Agent within the last 15 days. In addition, signature
guarantees are required for all redemptions of $25,000 or more from any investor
account.
Signature guarantees are designed to protect both you and the Fund
from fraud. Signature guarantees can be obtained from most banks, credit unions
or savings associations, or from broker/dealers, municipal securities
broker/dealers, government securities broker/dealers, national securities
exchanges, registered securities associations or clearing agencies deemed
eligible by the Securities and Exchange Commission. Notaries public cannot
provide signature guarantees.
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By Telephone:
Shares of the Fund may also be sold by calling the Transfer Agent at
(888) - ________. In order to utilize this procedure for telephone redemption,
an investor must have previously elected this procedure in writing, which
election will be reflected in the records of the Transfer Agent, and the
redemption proceeds must be mailed directly to the investor or transmitted to
the investor's predesignated account at a domestic bank. To change the
designated account, send a written request with signature(s) guaranteed to the
Transfer Agent. To change the address, call the Transfer Agent at (888)
- -______________ or send a written request with signature(s) guaranteed to the
Transfer Agent. Any written redemption requests received within 15 days after an
address change made by telephone must be accompanied by a signature guarantee
and no telephone redemptions will be allowed within 15 days of such a change.
The Fund reserves the right to limit the number of telephone redemptions by an
investor. Once made, telephone redemption requests may not be modified or
canceled. The selling price of each share being redeemed will be the Fund's per
share net asset value next calculated after receipt by the Transfer Agent of the
telephone redemption request. There is currently no charge for telephone
redemptions, although a charge may be imposed in the future.
The Fund will not be liable for following instructions communicated by
telephone that it reasonably believes to be genuine. See "Purchases by
Telephone" for discussion of liability for telephone errors.
During periods of substantial economic or market changes, telephone
redemptions may be difficult to implement. If an investor is unable to contact
the Transfer Agent by telephone, shares may also be redeemed by delivering the
redemption request to the Transfer Agent by mail or overnight courier as
previously described.
The Fund reserves the right to modify or terminate this telephone
redemption service at any time.
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REDEMPTION AT THE OPTION OF THE FUND
The Fund reserves the right to redeem shares held in any account if
the net asset value remains below $1,000 in order to relieve the Fund of the
cost of maintaining very small accounts. Before such involuntary redemption, the
Fund will give the investor 30 days written notice to bring the account up to
$1,000 before any action is taken. This minimum balance requirement does not
apply to qualified retirement plan accounts. The right of redemption shall not
apply if the value of an investor's account drops below $1,000 as the result of
market action.
DISTRIBUTIONS
In general, distributions of the Fund's net investment income and net
realized securities gains, if any, are declared and paid annually on or before
December 31 of each year, but the Fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code
in a manner consistent with the provisions of the 1940 Act.
THE OBJECTIVE OF THE FUND IS LONG-TERM CAPITAL GROWTH
AND NOT THE PRODUCTION OF INCOME DISTRIBUTIONS.
Distributions will be reinvested in additional Fund shares unless you
elect to receive them in cash by notifying the Company in writing. Distributions
of less than $10 and distributions on shares purchased within the last 15 days,
however, will not be paid in cash and will be reinvested. You may elect to have
distributions on shares held in qualified retirement plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled. Distribution
checks normally are mailed within seven days after the record date.
The Board of Directors may elect not to distribute capital gains in
whole or in part to take advantage of loss carryovers.
A distribution on shares of a Fund does not increase the value of your
shares or your total return. At any given time the value of your shares includes
the undistributed net gains, if any,
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realized by the Fund on the sale of portfolio securities, and undistributed
dividends and interest received, less Fund expenses. Because such gains and
dividends are included in the value of your shares, when they are
distributed the value of your shares is reduced by the amount of the
distribution. If you buy your shares just before the distribution, you will pay
the full price for your shares, and then receive a portion of the purchase price
back as a taxable distribution.
TAXES
The Fund intends to qualify under Subchapter M of the Internal Revenue
Code, which means that to the extent its earnings and gains are distributed to
investors in a timely manner it pays no income tax. Accordingly, the Fund
intends to distribute to its shareholders substantially all of its net
investment income and net realized gains.
Distributions of net investment income and net short-term capital
gains are taxable to you as ordinary income. Distributions from net long-term
capital gains are taxable as long-term capital gains regardless of the length of
time you have held the shares on which such distributions are paid. However, you
should note that any loss realized upon the sale or redemption of shares held
for six months or more will be treated as a long-term capital loss to the extent
of any distribution of long-term capital gain to you with respect to such
shares. Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) remains the same. In addition, the share price at the time you purchase
shares may include unrealized gains in the securities held in the investment
portfolio of the Fund. If these portfolio securities are subsequently sold and
the gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a distribution of capital gains and will be taxable to you as
short-term or long-term capital gains.
After the end of each calendar year, the Company will send you
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<PAGE>
a Form 1099 notifying you of the federal income tax status of the distributions
paid to you during the year.
If you have not complied with certain provisions of the Internal
Revenue Code and Regulations, the Company is required by federal law to withhold
and remit to the IRS 31% of reportable payments (which may include dividends,
capital gains distributions and redemptions). Those regulations require you to
certify that the social security number or tax identification number you provide
is correct and that you are not subject to 31% withholding for previous
under-reporting to the IRS. You will be asked to make the appropriate
certification on your application.
Redemptions of shares of the Fund will be taxable transactions for
federal income tax purposes and investors will generally recognize gain or loss
in an amount equal to the difference between the basis of the shares redeemed
and the amount received. Assuming that investors hold such shares as a capital
asset, the gain or loss will be a capital gain or loss and will generally be
long term if investors have held such shares for a period of more than one year.
If a loss is realized on the redemption of Fund shares, the reinvestment in
additional Fund shares within 30 days before or after the redemption may be
subject to the "wash sale" rules of the Code, resulting in a postponement of the
recognition of such loss for federal income tax purposes.
The foregoing tax discussion is only general in nature, and each
investor is advised to consult his or her tax adviser for additional
information.
DETERMINATION OF NET ASSET VALUE
The price investors pay when buying shares of the Fund, and the price
investors receive when redeeming shares of the Fund, is the net asset value of
the shares. A 5% sales charge is deducted upon purchases of shares. No charge is
deducted upon a redemption (except for redemption proceeds sent by wire).
The per share net asset value of the Fund is determined by dividing the
total value of its net assets (meaning its assets less
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<PAGE>
its liabilities) by the total number of its shares outstanding at that time.
The net asset value is determined as of the close of regular trading (currently
4:00 p.m. Eastern Standard Time) on the New York Stock Exchange on each day the
New York Stock Exchange is open for trading. This determination is applicable to
all transactions in shares of the Fund prior to that time and after the previous
time as of which net asset value was determined. Accordingly, purchase orders
accepted or shares tendered for redemption prior to the close of regular trading
on a day the New York Stock Exchange is open for trading will be valued as of
the close of trading, and purchase orders accepted or shares tendered for
redemption after that time will be valued as of the close of the next trading
day.
Securities which are traded on a recognized stock exchange are valued
at the last sale price on the securities exchange on which such securities are
primarily traded or at last sale price on the national securities market.
Exchange-traded securities for which there were no transactions are valued at
the current bid prices. Securities traded over-the-counter are valued on the
basis of closing bid prices. Debt securities (other than short-term instruments)
are valued at prices furnished by a national pricing service, subject to review
by the Adviser. Any securities for which market quotations are not readily
available are valued at their fair value as determined in good faith by the
Board of Trustees.
PLAN OF DISTRIBUTION
The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), under which the Fund pays the Distributor a
fee, which is accrued daily and payable monthly, at an annual rate of 0.25% of
the Fund's average daily net assets. This fee is treated by the Fund as an
expense in the year it is accrued.
Amounts paid under the Plan are paid to the Distributor for services
provided and the expenses borne by the Distributor and others in the
distribution of the Fund's shares, including the payment of commissions for
sales of the Fund's shares and incentive
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<PAGE>
compensation to account executives and others who engage in or support
distribution of shares or who service shareholder accounts, including overhead
and telephone expenses; printing and distribution of prospectuses and reports
used in connection with the offering of the Fund's shares to other than current
shareholders; and preparation, printing and distribution of sales literature and
advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan to compensate other Selected Broker-Dealers for their
opportunity costs in advancing such amounts, which compensation would be in the
form of a carrying charge on any unreimbursed expenses.
At any given time, the expenses in distributing shares of the Fund may
be greater than or less than the total of (i) the payments made by the Fund
pursuant to the Plan, and (ii) the proceeds of contingent deferred sales charges
paid by investors upon the purchase of shares.
Because there is no requirement under the Plan that the Distributor be
reimbursed for all distribution expenses or any requirement that the Plan be
continued from year to year, excess amount, if any, does not constitute a
liability of the Fund. Although there is no legal obligation for the Fund to pay
expenses incurred in excess of payments made to the Distributor under the Plan,
and the proceeds of sales charges paid by investors upon purchase of shares, if
for any reason the Plan is terminated the Trustees will consider at that time
the manner in which to treat such expenses.
CAPITAL STRUCTURE
The Trust is a diversified open-end management investment company
registered under the 1940 Act and organized as an Ohio business trust. The Trust
is organized as a series fund which permits it to issue its authorized capital
stock in one or more funds, each such fund representing a separate investment
portfolio. The Trust currently consists of the one diversified equity fund, the
Delta Micro Cap Growth Fund, described in this Prospectus.
The Trust is authorized to issue an indefinite number of
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<PAGE>
shares of the Fund. The Board of Trustees may, in its discretion, create
additional funds within the Trust. Each share outstanding entitles the holder to
one vote. The Trust's Declaration of Trust does not require that meetings of
shareholders be held annually. However, special meetings of shareholders may be
called for purposes such as electing or removing trustees, changing fundamental
policies or approving investment advisory contracts.
Shares have no preemptive, cumulative voting, subscription or
conversion rights, and can be issued as full or fractional shares. A
fractional share has the same kind of rights and privileges as a full share
on a pro rata basis.
Performance Advertising
The Fund may provide from time to time in advertisements, reports to
investors and other communications with investors its cumulative total return or
average annual total return. Cumulative total return data is computed by
considering all elements of return, including reinvestment of dividends and
capital gains distributions, over a stated period of time. Average annual total
return is determined by computing the annual compound return over a stated
period of time that would have produced a Fund's cumulative total return over
the same period if the Fund's performance had remained constant throughout.
The Fund may also advertise total return (a "nonstandardized
quotation") which is calculated differently from average annual total return. A
nonstandardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. A nonstandardized quotation may
also indicate average annual compounded rates of return over periods other than
those specified for average annual total return.
In reports or other communications to investors and in advertising
material, the Fund may also compare their performance to other mutual funds with
similar investment objectives and to
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<PAGE>
the industry as a whole, as quoted by ranking services and publications that
monitor or report on the performance of mutual funds (such as Lipper Analytical
Services, Inc.). Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund performance
may be compared to well-known indices of market performance including the
Standard & Poor's (S&P) 500 Index, the S&P Mid-Cap Index, the NASDAQ Composite
Index, the Dow Jones Industrial Average, Russell 2000 Index, Russell 1000 Index,
Wilshire Top 750 Index and Wilshire Next 1750 Index. Further information on
performance measurement may be found in the SAI.
All performance information advertised by the Fund is historical in
nature and is not intended to represent or guarantee future results. The value
of shares when redeemed may be more or less than their original cost.
DELTA FUNDS
DELTA MICRO CAP GROWTH FUND
INVESTMENT ADVISER
Utopia Capital Management Corporation
551 Fifth Avenue, Suite 605
New York, New York 10017
DISTRIBUTOR
European Equity Partners, Inc.
551 Fifth Avenue, Suite 605
New York, New York 10017
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
American Data Services, Inc.
24 West Carver Street
Huntington, New York 11743
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<PAGE>
LEGAL COUNSEL
Hecht & Steckman, P.C.
60 East 42nd St., Suite 5101
New York, New York 10165-5101
INDEPENDENT ACCOUNTANTS
McCurdy & Associates
27955 Clemens Road, Suite #2
Cleveland, Ohio 44145-1121
<PAGE>
DELTA FUNDS
DELTA MICRO CAP GROWTH FUND
STATEMENT OF ADDITIONAL INFORMATION
March ____, 1997
This Statement of Additional Information is meant to be read in conjunction
with the Prospectus dated March ___, 1997 concerning the Delta Micro Cap Growth
Fund ("Fund"), a series of the Delta Funds (the "Trust"), and is incorporated by
reference in its entirety into the Prospectus. Because this Statement of
Additional Information is not itself a prospectus, no investment in shares of
this Fund should be made solely upon the information contained herein. Copies of
the Prospectus for the Fund may be obtained by writing to the Fund at 24 West
Carver Street, Huntington, New York 11743 or by calling
(888)___________________. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.
TABLE OF CONTENTS
GENERAL INFORMATION
The Trust is a registered open-end management investment company organized
as an Ohio business trust on March ___, 1997. The Trust is authorized to issue
separate series of shares of common stock representing interests in separate
investment portfolios. This Statement of Additional Information pertains to the
Delta Micro Cap Growth Fund ("Fund").
Each share of the Fund represents an equal proportionate interest in the
assets and liabilities belonging to the Fund with each other share of the Fund
and is entitled to such dividends and distributions out of the income belonging
to the Fund as are declared by the Trustees. The shares do not have cumulative
voting rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the
<PAGE>
shares of the Fund into a greater or lesser number of shares of the Fund so
long as the proportionate beneficial interest in the assets belonging to the
Fund are in no way affected. In case of any liquidation of the Fund, the holders
of shares of the Fund will be entitled to receive as a class a distribution out
of the assets, net of the liabilities, belonging to the Fund. No shareholder is
liable to further calls or to assessment by the Fund without his express
consent.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is capital appreciation through
long-term investment. The Fund seeks to achieve its objective by investing
primarily in securities of companies with market capitalizations less than $100
million at the time of purchase ("micro cap companies"). There is no assurance,
however, that the Fund's investment objective will in fact be attained. The
following policies supplement the Fund's investment objective and policies as
set forth in the Prospectus.
The Fund maintains a long-term investment horizon with respect to
investments in equity securities. However, an investment is sold if the Adviser
determines that there has been significant deterioration in the underlying
fundamentals of the security involved since its purchase. Sale proceeds are
either re-invested in money market instruments or in other securities which meet
the Fund's investment criteria.
SHORT-TERM INSTRUMENTS. As described in the Prospectus, the Fund may
invest from time to time in "short-term instruments," a term that includes,
among other things, U.S. bank obligations, commercial paper and corporate bonds
with remaining maturities of thirteen months or less. However, the Fund intends
to stay fully invested and therefore investments in short-term instruments are
expected to represent normally less than 10% of the Fund's net assets.
Bank obligations include bankers' acceptances, negotiable certificates
of deposit and nonnegotiable time deposits. All investments in bank obligations
are limited to the obligations of financial institutions having more than $1
billion in total assets at the time of purchase. Investments by the Fund in
commercial paper will consist of issues rated at the time A-1 and/or P-1 by
Standard & Poor's, Moody's or similar rating by another nationally
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<PAGE>
recognized rating agency. In addition, the Fund may acquire unrated commercial
paper and corporate bonds that are determined by the Adviser at the time of
purchase to be of comparable quality to rated instruments that may be acquired
by the Fund as previously described.
U.S. GOVERNMENT OBLIGATIONS. Examples of the types of U.S. Government
obligations that may be acquired by the Fund include U.S. Treasury bonds, notes
and bills and the obligations of Federal Home Loan Banks, Federal Farm Credit
Banks, Federal Land Banks, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States Small Business
Administration, Government National Mortgage Association, Federal National
Mortgage Association, General Services Administration, Student Loan Marketing
Association, Federal Home Loan Mortgage Corporation, and Resolution Trust Corp.
CONVERTIBLE SECURITIES. The Fund may hold convertible securities.
Convertible securities entitle the holder to receive interest paid or accrued on
debt or the dividend paid on preferred stock until the securities mature or are
redeemed, converted or exchanged. Prior to conversion, convertible securities
have characteristics similar to ordinary debt in that they normally provide a
stable stream of income with generally higher yields than those of common stock
of the same or similar issuers. The prices of convertible securities are
sensitive to changes in interest rates and, thus, an increase in interest rates
can have an adverse effect on the market price of convertible securities
notwithstanding other factors, such as the earnings of the company which would
impact favorably on the trading prices for these securities. Convertible
securities rank senior to common stock in a corporation's capital structure and
therefore generally entail less risk than the corporation's common stock,
although the extent to which such risk is reduced depends in large measure upon
the degree to which the convertible security sells above its value as a fixed
income security.
The Fund may invest a portion of its respective assets (less
than 5% of total assets) in convertible debt securities that are
rated below investment grade. See "Preferred Stock and Corporate
Bond Ratings"
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<PAGE>
WARRANTS. The Fund may invest in warrants. Warrants basically are
options to purchase equity securities at a specific price valid for a specific
period of time. They do not represent ownership of the securities, but only the
right to buy them. They have no voting rights, pay no dividends and have no
rights with respect to the assets of the company issuing them. Warrants differ
from call options in that warrants are issued by the issuer of the security
which may be purchased on their exercise, whereas call options may be written or
issued by anyone. The prices of warrants do not necessarily move parallel to the
prices of the underlying securities.
UNSEASONED COMPANIES. Securities of unseasoned companies, that is,
companies with less than three years of continuous operation, which present
risks considerably greater than do common stocks of more established companies,
may be acquired from time to time by the Fund when the Adviser believes such
investments offer possibilities of attractive capital appreciation.
INVESTMENT LIMITATIONS
The Fund is subject to the investment limitations enumerated below
which may be changed only by a vote of the holders of a majority of a Fund's
outstanding shares (as defined under "Miscellaneous" below).
The Fund may not:
1. With respect to 75% of the Fund's total assets,
invest more than 5% of the fair market value of its assets in
securities of any one issuer (other than securities issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities).
2. Invest more than 25% of its total assets, based on
current market value at the time of purchase, in
securities of issuers conducting their principal
business activity in the same industry (other than
securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities).
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<PAGE>
3. Invest in a company to get control or manage it
or, with respect to 75% of the Fund's total assets, purchase
more than 10% of the outstanding voting securities of an
issuer.
4. Purchase or sell real estate except that the Fund
may purchase securities of issuers which deal in real estate
(including real estate investment trusts) and may purchase
securities which are secured by interests in real estate.
5. Act as an underwriter of securities within the
meaning of the Securities Act of 1933, except insofar as the
Fund may be deemed an underwriter under the Securities Act in
distributing its securities, although it may invest in
companies engaged in such businesses.
6. Purchase or sell commodity contracts, or invest in
oil, gas or mineral exploration or development programs,
except that the Fund may, to the extent appropriate to its
investment objective, purchase publicly traded securities of
companies engaging in whole or in part in such activities.
7. Purchase the security of any issuer where the security
is in the portfolio of any of the Arista group of
mutual funds.
8. Make loans, except that it may (a) acquire publicly
distributed bonds, debentures, notes and other debt
securities.
9. Borrow money or issue senior securities (as
defined in the 1940 Act), except that the Fund may purchase
securities on margin and borrow from banks for temporary
purposes in amounts up to one-third of the value of the total
assets at the time of such borrowing.
10. The Fund may not mortgage, pledge or hypothecate
any assets, except in connection with any such borrowing and
in amounts not in excess of the lesser of the dollar
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<PAGE>
amounts borrowed or one-third of the value of the Fund's total
assets at the time of such borrowing. Securities held in
segregated accounts in connection with the Fund's investment
practices described in this Statement of Additional
Information or in the Prospectus are not deemed to be pledged
for purposes of this limitation. If due to market fluctuations
or other reasons, the total assets of the Fund fall below 300%
of its borrowings, the Fund will reduce its borrowings in
accordance with the 1940 Act.
If a percentage limitation is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in the
value of the Fund's portfolio securities will not constitute a violation of such
limitation.
In accordance with the following non-fundamental policies, which may be
changed without investor approval, the Fund may not:
1. Invest more than 5% of its total assets in preferred
stock, convertible securities and warrants.
2. Engage in short sales or futures transactions.
3. Invest in securities of foreign issuers (including
ADRs).
4. Invest 5% or more of its total assets in debt
securities rated below "investment grade."
5. Lend its securities or enter into reverse repurchase
agreements.
6. Purchase restricted securities.
7. Invest in other investment companies other than money
market funds.
8. Write uncovered or naked options.
Portfolio Turnover
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<PAGE>
The portfolio turnover rate for the Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the reporting period by
the monthly average value of the portfolio securities owned during the reporting
period. The calculation excludes all securities whose maturity dates at the time
of acquisition are one year or less. Portfolio turnover may vary greatly
from year to year as well as within a particular year, and may be affected
by cash requirements for redemption of shares and other factors.
Portfolio turnover will not be a limiting factor in making portfolio decisions,
and the Fund may engage in short-term trading to achieve its investment
objective.
MANAGEMENT OF THE COMPANY
TRUSTEES AND OFFICERS
The Directors and officers of the Fund, their addresses, principal
occupations during the past five years and other affiliations are as follows:
<TABLE>
<S> <C> <C>
Name Age Title
---- --- -----
John Figliolini* 35 President and Trustee
Oleg Batratchenko* 31 Executive Vice
President/Trustee
Anatoly E. Kambolin 32 Trustee
Carmine A. Chiappetta Trustee
Henry Shapiro Trustee
Michael Miola 44 Vice President
Michelle LoCascio 37 Secretary
Michael Miola 44 Treasurer
<FN>
*Denotes Trustees who are "interested persons" of the Fund as
defined in the 1940 Act.
</FN>
</TABLE>
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<PAGE>
The principal occupations of the Trustees and executive officers of the
Fund during the past five years are set forth below:
John Figliolini, 551 Fifth Avenue, Suite 605, New York, NY 10017, is President
of Utopia Capital Management Corporation ("Adviser").
He is President of Berkshire International Finance, Inc., an investment banking
firm. He is Vice President of Berkshire Capital Management Group, Ltd., a
Swiss-based fund manager. He is also President of Fifth Avenue Research and
Advisory Group, Inc., an investment research company. He is also President of
European Equity Partners, Inc., the Fund's distributor. Prior to August 1992, he
was a principal of Berkshire Securities, Inc., an investment banking firm.
Oleg Batratchenko, 551 Fifth Avenue, Suite 605, New York, NY 10017, is the
Executive Vice President and a portfolio manager of the Adviser. He is a
registered representative with European Equity Partners, Inc., the Fund's
distributer. He is Vice President of Research for Berkshire International
Finance, Inc., an investment banking firm. He is Senior Vice President of Fifth
Avenue Research and Advisory Group, Inc., an investment research firm. Prior to
January 1995 he was a broker trainee at Rickel & Associates, Inc., and South
Richmond Securities, Inc., both brokerage firms. Prior to November 1994, he was
a research analyst with Safian Investment Research, Inc., a money management and
investment research firm. Prior to November 1994, he was a free-lance translator
with Corporate Language Services, a translation agency. Prior to November 1993
he was a performance analyst with Neuberger & Berman, Inc., an investment
management firm. Prior to May 1993, he was a project manager for MR
International, Inc., an international trading company. Prior to December 1992,
he was a telemarketer for PageNet, Inc., a paging services company.
Anatoly E. Kambolin, 488 Madison Avenue, Suite 1505, New York, NY 10022, has
been the President of Taj-Amer, Inc., which acts as a consultant to construction
projects for joint ventures in Russia since January 1, 1992. In addition,
Taj-Amer, Inc. is in the business of acting as a consultant to American
companies seeking to do business in what was formerly the Soviet Union and
representing
-8-
<PAGE>
Russian companies and organizations in the United States. Mr.
Kambolin graduated from the Moscow Auto Mechanical Institute with a degree in
mechanical engineering. He received a graduate degree in Economics and
International Trade from the All- Union Academy for Foreign Trade. He is the
father of Peter Kambolin, a portfolio manager with the Adviser.
Carmine Chiappetta, 480 Pine Acres Boulevard, Brightwaters, NY 11718, manages
his own accounting firm specializing in taxes. Prior to March 1996, he was a tax
accountant for United States Trust Company of New York, Tucker Anthony & R.L.
Day and Morgan Stanley & Co., Inc.
Henry Shapiro, 301 Ocean View Avenue, Brooklyn, NY 11235, has been a registered
investment adviser since March 1993. From March 1993 to March 1995, he was a
real estate and mortgage broker, and a certified real estate appraiser. For the
five years prior thereto, he managed Shapiro & Co., a real estate and mortgage
broker, in Fort Lauderdale, Florida. Mr. Shapiro is a regular contributor to
Radio Free Europe/Radio Liberty and was a regular contributor of financial
articles to ITAR-TASS, the Russian State News Agency. Mr. Shapiro also had a
regular financial column for NRS, a Russian daily newspaper, and appeared
regularly on the Russian Television Network.
Michael Miola, 24 West Carver Street, Huntington, New York 11743, is Vice
President and Treasurer of Delta Micro Cap Growth Fund. Since 1984, Mr. Miola
has been the President of American Data Services ("American Data"). American
Data is acting as the Fund's Administrator, Transfer, Dividend and Disbursing
Agent and Accounting Services Manager. Mr. Miola has specialized in serving the
investment company industry since 1974. As a senior staff member of Coopers &
Lybrand, he designed and implemented that firm's audit approach and working
paper documentation model. During his tenure, he was called upon to write
portions of the AICPA's Investment Company Audit Guide. Mr. Miola serves as a
consultant to many mutual fund groups, designing accounting processes for new
and complex financial transactions. Mr. Miola is a Certified Public Accountant,
a member of the American Institute
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<PAGE>
of Certified Public Accountants, and the New York Society of Certified Public
Accountants. Mr. Miola graduated magna cum laude from Fordham University's
College of Business Administration, with a Bachelor of Science Degree.
Michelle LoCascio, 24 West Carver Street, Huntington, New York 11743, is
Corporate Secretary of Delta Micro Cap Growth Fund. Ms. LoCascio has been the
Registration Compliance Officer of American Data from 1995 to the present.
During the ten years prior thereto, Ms. LoCascio worked in both the Fund
Accounting and Stock Transfer Departments, where she attained the title of
Senior Administrator in each Department. She is responsible for the filing of
all state registrations for all funds administered by American Data.
Officers and Trustees who are "interested persons" of the Fund receive
no compensation from the Fund for serving in such capacities. Each
non-interested Trustee receives an annual fee of $5,000, a $500 per meeting
attendance fee and reimbursement of expenses incurred as a Trustee.
THE ADVISER
Utopia Capital Management Corporation is the Investment Adviser to the
Fund. The Adviser was organized as a New York corporation in January 1997 and is
a registered investment adviser. The equity interests of the Adviser are owned
100% by John Figliolini.
The Adviser provides the Fund with overall investment advisory services
pursuant to the Agreement. Subject to such policies as the Board of Trustees may
determine the Adviser makes investment decisions on behalf of the Fund, makes
available research and statistical data in connection therewith, and supervises
the acquisition and disposition of investments by the Fund, including the
selection of broker-dealers to carry out portfolio transactions.
The Agreement will remain in effect until March __, 1999, with respect
to the Fund and continue thereafter from year to year, as long as it is approved
at least annually by the Board of Trustees
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<PAGE>
or by a vote of the outstanding voting securities of the Fund and in either
case by a majority of the Trustees who are not parties to the Agreement or
interested persons of any such party (the "Independent Trustees"). The Agreement
terminates automatically if it is assigned and may be terminated without penalty
by either party on 60 days notice. The Agreement provides that neither the
Adviser nor its personnel shall be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
in the execution and management of the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties under the Agreement.
DISTRIBUTOR
As discussed in the Prospectus, shares of the Fund are distributed by
European Equity Partners, Inc. (the "Distributor"). The Distributor may enter
into agreements to sell shares of the Fund with selected dealers ("Selected
Broker-Dealers"). The Distributor, a Connecticut corporation, is wholly-owned by
John Figliolini, the President of the Fund and the Adviser. The Trustees,
including a majority of the Trustees who are not, and were not at the time they
voted, interested persons of the Fund, as defined in the Act (the "Independent
Directors"), approved, at their meeting held on ___________________, a
Distribution Agreement (the "Distribution Agreement") appointing the Distributor
exclusive distributor of the Fund's shares and providing for the Distributor to
bear distribution expenses not borne by the Fund. By its terms, the Distribution
Agreement continues until ______________, and provides that it will remain in
effect from year to year thereafter if approved by the Board.
PLAN OF DISTRIBUTION
To compensate the Distributor for the services it or any selected
dealer provides and for the expenses it bears under the Distribution Agreement,
the Fund has adopted a Plan of Distribution pursuant to Rule 12b-1 under the Act
(the "Plan") pursuant to which the Fund pays the Distributor compensation
accrued daily and payable monthly at the annual rate of 0.25% of the Fund's
average daily net assets. The Distributor receives the proceeds of the
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<PAGE>
sales charges, which are separate and apart from payments made pursuant to the
Plan.
The Plan has been adopted by a vote of the Trustees of the Fund,
including the vote of a majority of the Trustees of the Fund who are not
"interested persons" of the Fund (as defined in the Act) and who have no direct
or indirect financial interest in the operation of the Plan (the "Independent
12b-1 Trustees"). In making their decision to adopt the Plan, the Trustees
requested from the Distributor and received such information as they deemed
necessary to make an informed determination as to whether or not adoption of the
Plan was in the best interests of the shareholders of the Fund. After due
consideration of the information received, the Trustees, including the
Independent 12b-1 Trustees, determined that adoption of the Plan would benefit
the shareholders of the Fund.
Under its terms, the Plan continues in effect until from year to year,
provided such continuance is approved annually by a vote of the Trustees in the
manner described above. Under the Plan and as required by Rule 12b-1, the
Trustees will receive and review promptly after the end of each fiscal quarter a
written report provided by the Distributor of the amounts expended by the
Distributor under the Plan and the purpose for which such expenditures were
made.
Pursuant to the Plan and as required by Rule 12b-1, the Trustees will
receive and review promptly after the end of each calendar quarter a written
report provided by the Distributor of the amounts expended by the Distributor
under the Plan and the purpose for which such expenditures were made.
At any given time, the expenses in distributing shares of the Fund may
be more or less than the total of (i) the payments made by the Fund pursuant to
the Plan and (ii) the proceeds of sales charges paid by investors upon purchase
of shares. Because there is no requirement under the Plan that the Distributor
be reimbursed for all expenses or any requirements that the Plan by continued
from year to year, this excess amount does not constitute a liability of the
Fund.
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<PAGE>
Mr. Figliolini and Mr. Batratchenko may be deemed to have an interest
in the operation of the Plan or as a result of receiving a portion of the
amounts expended thereunder by the Fund.
The Plan may not be amended to increase materially the amount to be
spent for the services described therein without approval of the shareholders of
the Fund, and all material amendments of the Plan must also be approved by the
Trustees in the manner described above. The Plan may be terminated at any time,
without payment of any penalty, by vote of a majority of the Independent 12b-1
Trustees or by a vote of a majority of the outstanding voting securities of the
Fund (as defined in the Act). So long as the Plan is in effect, the election and
nomination of Independent Trustees shall be committed to the discretion of the
Independent Trustees.
NET ASSET VALUE
The net asset value per share of the Fund is calculated by adding the
value of all portfolio securities and other assets belonging to the Fund,
subtracting the liabilities charged to the Fund, and dividing the result by the
number of outstanding shares of the Fund.
Net asset value calculations are made as of the close of trading each
day that the New York Stock Exchange is open for business, every weekday, Monday
through Friday, except on the following customary national business holidays
which result in the closing of the New York Stock Exchange (New Year's Day,
Washington's Birthday, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas); or days when no security is tendered for redemption
from and no customer purchase order is received.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares of the Fund for which a redemption order is received in proper
form by the Transfer Agent before close of the Exchange (currently 4:00 p.m.
Eastern Standard Time) on a business day will be as of the determination of net
asset value on that day. Orders for a redemption received on a day after the
close of the Exchange
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<PAGE>
or on a non-business day will be priced as of the determination of net
asset value on the next day on which shares of the Fund are priced. If an
investor requests that redemption proceeds be paid by federal funds wire,
the proceeds will be wired to a correspondent member bank if the investor's
designated bank is not a member of the Federal Reserve System.
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment for shares during any period when (a) trading on
the Exchange is restricted by applicable rules and regulations of the Securities
and Exchange Commission ("SEC"); (b) the Exchange is closed for other than
customary weekend and holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC. The Fund may
also suspend or postpone the recording of the transfer of its shares upon the
occurrence of any of the foregoing conditions.
The Funds may redeem an account involuntarily, upon 30 days notice, if
a redemption causes the account's net asset value to fall below $1,000. The Fund
may redeem shares involuntarily to reimburse the Fund for any loss sustained by
reason of the failure of an investor to make full payment for shares purchased
by the Shareholder or to collect any charge relating to a transaction effected
for the benefit of an investor which is applicable to Fund shares as provided in
the Prospectus from time to time.
Special Procedures for In-Kind Securities Payments. Payment for shares
of the Fund may, in the discretion of the Fund, be made in the form of
securities that are permissible investments for the Fund as described in the
Prospectus. In connection with an in-kind securities payment, the Fund will
require, among other things, that the investor making the contribution of
securities be a tax-exempt entity; that the securities be valued on the day of
purchase in accordance with the pricing methods used by the Fund; that the Fund
receive satisfactory assurances that it will have good and marketable title to
the securities received by it; that the securities be in proper form for
transfer to the Fund; that adequate information be provided to the Fund
concerning the basis and other tax matters relating to the securities; and that
the amount of the purchase be at least $1,000,000. The Fund will
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<PAGE>
consider accepting securities as consideration for shares only if such
securities meet the investment objectives and policies of the Fund and otherwise
are deemed by the Adviser to be suitable and appropriate for the Fund, are
acquired for investment and not for resale (although the Fund may sell such
securities in response to market conditions), are liquid and have a value which
is readily ascertainable.
Investors should consult their own tax advisers before contributing
securities to the Fund because of possible adverse tax consequences resulting
from such contributions. See "Additional Information Concerning Taxes."
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Board of Trustees, the
Adviser is responsible for, makes decisions with respect to, and places orders
for all purchases and sales of portfolio securities for the Fund.
Transactions on national or regional stock exchanges involve the
payment of negotiated brokerage commissions. On exchanges on which commissions
are negotiated, the cost of transactions may vary among different brokers.
Transactions in the over-the-counter market are generally principal transactions
with dealers and the costs of such transactions involve dealer spreads rather
than brokerage commissions. With respect to over-the-counter transactions, the
Adviser will normally deal directly with dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere or as described below.
The Fund may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Fund will engage in this practice, however, only when the Adviser, in its
sole discretion, believes such practice to be in the Fund's interests.
In executing portfolio transactions and selecting brokers or dealers,
the Adviser will seek to obtain the best overall terms
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<PAGE>
available. In assessing the best overall terms available for any transaction,
the Adviser shall consider factors it deems relevant, including the breadth of
the market in the security, the price of the security, size of order, the
financial condition and execution capability of the broker or dealer, and the
reasonableness of the commissions and dealer spreads, if any, both for the
specific transaction and on a continuing basis. While the Adviser seeks
reasonably competitive rates, it does not necessarily pay the lowest commission
or spreads available. Transactions in micro cap companies in which the Fund
invests may involve specialized services on the part of the broker and thereby
entail higher commissions or spreads than would be paid in transactions
involving more widely traded securities. Allocation of transactions, including
their frequency, to various broker-dealers is determined by the Adviser in its
best judgment and in a manner deemed fair and reasonable to shareholders. The
primary consideration is prompt and efficient execution of orders in an
effective manner at the most favorable price. Subject to this primary
consideration, the Adviser may also consider the provision of supplemental
research services in the selection of broker-dealers to execute portfolio
transactions. The Adviser is authorized to cause the Fund to pay a broker-dealer
which furnishes brokerage and research services a higher commission that which
might be charged by another broker-dealer for effecting the same transaction,
provided that the Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer, viewed in terms of either the particular
transaction or the overall responsibilities of the Adviser to the Fund. Such
brokerage and research services might consist of reports and statistics relating
to specific companies or industries, general summaries of groups of stocks or
bonds and their comparative earnings and yields, or broad overviews of the
stock, bond and government securities markets and the economy.
Supplementary research information so received is in addition to, and
not in lieu of, services required to be performed by the Adviser and does not
reduce the advisory fees payable to it by the Fund. The Trustees will
periodically review the commissions paid by the Fund to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Fund.
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<PAGE>
Portfolio securities will not be purchased from or sold to the Adviser,
or an affiliated person (as such term is defined in the 1940 Act) of that Trust
or the Adviser, acting as principal.
The Fund will not acquire any securities of an issuer for which
the Adviser or any affiliate of the Adviser is acting as an agent in the
placement of such issuer's securities. This restriction is imposed to eliminate
any potential conflict of interest between the Fund and Berkshire International
Finance, Inc. ("BIF"), which acts as an investment consultant for such issuers
for which BIF receives a fee. BIF also acts as a consultant to the "Arista
group" of mutual funds based in the Cayman Islands, whose shareholders are
non-residents of the United States. The Fund will not acquire any securities of
an issuer which any of the Arista group of funds has a position in such issuer
(except for money market instruments or US government obligations).
ADDITIONAL INFORMATION CONCERNING TAXES
The following is only a summary of certain additional tax
considerations generally affecting the Fund and its investors that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Funds or its investors, and the
discussion here and in the Prospectus is not intended as a substitute for
careful tax planning. Investors are advised to consult their tax advisers with
specific reference to their own tax situations.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). The Fund intends to make sufficient distributions or
deemed distributions of its ordinary taxable income and any capital gain net
income with respect to each calendar year to avoid liability for this excise
tax.
Although the Fund expects to qualify as a "regulated investment
company" and to be relieved of all or substantially all federal income taxes,
depending upon the extent of the Company's
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<PAGE>
activities in states and localities in which its offices are maintained, in
which its agents or independent contractors are located or in which it is
otherwise deemed to be conducting business, the Fund may be subject to the tax
laws of such states or localities. In addition, in those states and localities
which have income tax laws, the treatment of the Fund and its investors under
such laws may differ from their treatment under federal income tax laws.
If for any taxable year the Fund does not qualify for the special
federal income tax treatment afforded regulated investment companies, all of its
taxable income will be subject to federal income tax at regular corporate rates
(without any deduction for distributions to its investors). In such event,
dividend distributions would be taxable as ordinary income to investors to the
extent of the Fund's current and accumulated earnings and profits, and would
be eligible for the dividends received deduction in the case of corporate
investors.
The Fund will designate any distribution of the excess of net long-term
capital gain over net short-term capital loss as a capital gain dividend in a
written notice mailed to investors after the close of a Fund's taxable year.
Investors who contribute securities as payment for an investment in the
Fund should be aware that generally the contribution will result in gain or loss
pursuant to Section 351(e)(1) of the Code, in an amount equal to the difference
between the fair market value of the securities at time of contribution and the
investor's tax basis in the securities.
The foregoing discussion is based on federal tax laws and regulations
which are in effect on the date of this Statement of Additional Information;
such laws and regulations may be changed by legislative or administrative
action.
CUSTODIAN
The Bank of New York, 90 Washington Street, New York, New York 10286,
has been retained to act as Custodian for the Fund's investments. The Bank of
New York acts as the Fund's depository,
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<PAGE>
safekeeps its portfolio securities, collects all income and other payments
with respect thereto, disburses funds as instructed and maintains records in
connection with its duties.
AMERICAN DATA SERVICES, INC.
The Trust's transfer agent, American Data Services, Inc. ("American
Data"), maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other shareholder service functions. American Data receives
from the Fund for its services as transfer agent a fee payable monthly at an
annual rate of $9 per account, provided, however, that the minimum fee received
is $900 per month. In addition, the Fund pays out-of-pocket expenses, including,
but not limited to, postage, envelopes, checks, drafts, forms, reports, record
storage and communication lines.
American Data also provides accounting and pricing services to the
Fund. For calculating daily net asset value per share and maintaining such books
and records as are necessary to enable American Data to perform its duties, the
Fund pays American Data a minimum fee of $1,200 per month, which can be
increased to a maximum of $1,700 per month depending on the level of net assets
under management.
In addition, the Fund pays all costs of external pricing services.
American Data also provides administrative services to the Fund. In
this capacity, American Data supplies non-investment related statistical and
research data, internal regulatory compliance services and executive and
administrative services. American Data supervises the preparation of tax
returns, reports to shareholders of the fund, reports to and filings with the
Securities and Exchange Commission and state securities commissions, and
materials for meetings of the Board of Trustees. For the performance of these
administrative services, the Fund pays American Data a fee at the annual
rate of .015% of the average value of its daily net assets provided,
however, that the minimum fee schedule of $1,300 per month for funds under
$10,000,000;
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<PAGE>
$1,600 per month for funds between $10,000,000 and $20,000,000 and $2,000
per month in funds over $20,000,000.
INDEPENDENT ACCOUNTANTS
McCurdy & Machovina, the Company's independent accountants, serve as
auditors for the Company.
COUNSEL
Hecht & Steckman, P.C., New York, New York, serves as counsel to the
Company and the independent trustees. As to matters of Ohio law, Hecht &
Steckman may rely on the legal opinion of John Splain, Ohio counsel.
ADDITIONAL INFORMATION ON PERFORMANCE
From time to time, the total return of the Micro Cap Fund may be quoted
in advertisements, reports to investors or other communications to investors.
TOTAL RETURN CALCULATIONS.
The Fund computes "average annual total return" by determining the
average annual compounded rates of return during specified periods that equate
the initial amount invested in a particular series to the ending redeemable
value of such investment in the series. This is done by dividing the ending
redeemable value of a hypothetical $1,000 initial payment by $1,000 and raising
the quotient to a power equal to one divided by the number of years (or
fractional portfolio hereof) covered by the computation and subtracting one from
the result. This calculation can be expressed as follows:
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n
P(1+T) = ERV
Where:
P = hypothetical initial payment of $1,000
T = average annual total return.
n = period covered by the computation,
expressed in terms of years.
ERV = ending redeemable value at the end of the
period covered by the computation of a
hypothetical $1,000 payment made at the
beginning of the period.
The calculations of average annual total returns assume the deduction
of the maximum initial sales charge applicable to the Fund and the reinvestment
of all dividends and capital gain distributions on the reinvestment dates during
the period. The ending redeemable value (variable "ERV") is determined by
assuming complete redemption of the hypothetical investment and the deduction of
all nonrecurring charges at the end of the period covered by the computations.
The Fund may also advertise total return (a "nonstandardized
quotation") which is calculated differently from average annual total return. A
nonstandardized quotation of total return may be a cumulative return which
measures the percentage change in the value of an account between the beginning
and end of a period, assuming no activity in the account other than reinvestment
of dividends and capital gains distributions. A nonstandardized quotation may
also indicate average annual compounded rates of return over periods other than
those specified for average annual total return. A nonstandardized quotation of
total return will always be accompanied by the Fund's average annual total
return as described above.
The Fund may also from time to time include discussions or
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illustrations of the effect of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on a series'
investment are reinvested by being paid in additional shares of that series, any
future income or capital appreciation of the Fund would increase the value, not
only of the original Fund investment, but also of the additional Fund shares
received through reinvestment. As a result, the value of a Fund investment would
increase more quickly than if dividends or other distribution had been paid in
cash. The Fund may also include discussions or illustrations of the potential
investment goals of a prospective investor, investment management techniques,
policies or investment suitability of the Fund, economic conditions, the effects
of inflation and historical performance of various asset classes, including but
not limited to, stocks, bonds and Treasury bills. From time to time
advertisements or communications to investors may summarize the substance of
information contained in investor reports (including the investment composition
of the Fund), as well as the views of the Adviser as to market, economic, trade
and interest rate trends, legislative, regulatory and monetary developments,
investment strategies and related matters believed to be of relevance to the
Fund. The Fund may also include in advertisements, charts, graphs or drawings
which illustrate the potential risks and rewards of investment in various
investment vehicles, including but not limited to stocks, bonds, treasury bills
and shares of the Fund. In addition, advertisement or investor communications
may include a discussion of certain attributes or benefits to be derived by an
investment in the Fund. Such advertisements or communications may include
symbols, headlines or other materials which highlight or summarize the
information discussed in more detail therein. The total returns of the Fund may
be compared to the following indices:
S&P 500 Index, an Index of 500 selected
common stocks most of which are listed on the New York Stock
Exchange.
Nasdaq Composite Index, an Index of
unmanaged groups of common stock of domestic companies that
are quoted on the National Association of Securities Quotation
System.
Dow Jones Industrial Average, a recognized
unmanaged Index of common stocks of 30 industrial companies
listed
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on the New York Stock Exchange.
Wilshire Top 750 Index, an Index of all
domestic equity issues which are traded over the national
exchanges.
Any other recognized index of equity
securities comparable to the composition of the Fund's
investment portfolios, including the S&P Mid-Cap Index,
Russell 2000 Index, Russell 1000 Index and Wilshire Next 1750
Index.
MISCELLANEOUS
As used in this Statement of Additional Information and in the
Prospectus, a majority of the outstanding shares of the Fund, with respect to
the approval of an investment advisory agreement or a change in a fundamental
investment policy, the lesser of (1) 67% of the shares of the Fund represented
at a meeting at which the holders of more than 50% of the outstanding shares of
the Fund are present in person or by proxy, or (2) more than 50% of the
outstanding shares of or Fund.
The Prospectus and this Statement of Additional Information do not
contain all the information included in the Registration Statement filed with
the Securities and Exchange Commission under the Securities Act of 1933 with
respect to the securities offered by the Prospectus. Certain portions of the
Registration Statement have been omitted from the Prospectus and this Statement
of Additional Information pursuant to the rules and regulations of the
Securities and Exchange Commission. The Registration Statement, including the
exhibits filed therewith, may be examined at the office of the Securities and
Exchange Commission in Washington, D.C. or via the Commission's worldwide web
site (http://www.sec.gov).
Statements contained in the Prospectus or in this Statement of
Additional Information as to the contents of any contract or other document
referred to are not necessarily complete, and, in each instance, reference is
made to the copy of such contract or other document filed as an exhibit to the
Registration Statement of which the Prospectus and this Statement of Additional
Information for a part, each such statement being qualified in all respects by
such reference.
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<PAGE>
COMMERCIAL PAPER RATINGS
RATINGS BY MOODY'S
Moody's commercial paper ratings are opinions of the ability to repay
punctually promissory obligations. Moody's employs the following three category
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime 1 - highest quality; Prime 2 - higher
quality; Prime 3 - high quality.
RATINGS BY STANDARD & POOR'S
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment. Ratings are graded into four categories,
ranging from "A" for the highest quality obligations to "D" for the lowest.
Issues assigned the highest rating category, A, are regarded
as having the greatest capacity for timely payment. Issues in this category are
delineated with the numbers "1," "2" and "3" to indicate the relative degree of
safety. The designation A-1 indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. A+ designation is applied to
those issues rated "A-1" which possess extremely strong safety characteristics.
Capacity for timely payment on issues with the designation "A-2" is strong.
However, the relative degree of safety is not as high as for issues designated
A-1. Issues carrying the designation A-3 have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effect of
changes in circumstances than obligations carrying the higher designations.
CORPORATE BOND AND PREFERRED STOCK RATINGS
MOODY'S INVESTORS SERVICE, INC. - 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
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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 of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower that the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A - Bonds which are rated to 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 of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
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<PAGE>
MOODY'S PREFERRED STOCK RATINGS
aaa - An issue which is rated aaa is considered to be a top- quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
aa - An issue which is rated aa is considered a high-grade preferred
stock. This rating indicates that there is reasonable assurance that earnings
and asset protection will remain relatively well maintained in the foreseeable
future.
a - An issue which is rated a is considered to be an upper- medium
grade preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
baa - An issue which is rated baa is considered to be medium grade,
neither highly protected nor poorly secured. Earnings and asset protection
appear adequate at present but may be questionable over any great length of
time.
ba - An issue which is rated ba is considered to have speculative
elements and its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse periods.
Uncertainty of position characterizes preferred stocks in this class.
b - An issue which is rated b generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of other
terms of the issue over any long period of time may be small.
STANDARD & POOR'S RATINGS GROUP - BOND RATINGS
AAA - Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA - Bonds rated AA have a very strong capacity to pay
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<PAGE>
interest and repay principal and differ from the highest rated issues only in
small degree.
A - Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.
BB and B - Bonds rated BB and B are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and B the higher degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
STANDARD & POOR'S RATINGS GROUP - PREFERRED STOCK RATINGS
AAA - This is the highest rating that may be assigned by Standard &
Poor's to a preferred stock issue and indicates an extremely strong capacity to
pay the preferred stock obligations.
AA - A preferred stock issue rated AA also qualifies as a high-quality
fixed-income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated AAA.
A - An issue rated A is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the diverse
effects of changes in circumstances and economic conditions.
BBB - An issue-rated BBB is regarded as backed by an adequate capacity
to pay the preferred stock obligations. Whereas it
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<PAGE>
normally exhibits adequate protection parameters, adverse economic conditions
or changing circumstances are more likely to lead to a weakened capacity to make
payments for a preferred stock in this category than for issues in the A
category.
BB and B - Preferred stock rated BB and B are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay preferred
stock obligations. BB indicates the lowest degree of speculation and B the
highest degree of speculation. While such issued will likely have some quality
and protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.
RISK FACTORS OF LOWER-RATED SECURITIES
Lower-rated debt securities (commonly called "junk bonds") may be
subject to certain risk factors to which other securities are not subject to the
same degree. An economic downturn tends to disrupt the market for lower-rated
bonds and adversely affect their values. Such an economic downturn may be
expected to result in increased price volatility of lower-rated bonds and of the
value of the Fund's shares, and an increase in issuers' defaults on such bonds.
Also, many issuers of lower-rated bonds are substantially leveraged,
which may impair their ability to meet their obligations. In some cases, the
securities in which the Fund invests are subordinated to the prior payment of
senior indebtedness, thus potentially limiting the Fund's ability to recover
full principal or to receive payments when senior securities are in default.
The credit rating of a security does not necessarily address its market
value risk. Also, ratings may, from time to time, be changed to reflect
developments in the issuer's financial condition. Lower-rated securities held by
the Fund have speculative characteristics which are apt to increase in number
and significance with each lower rating category.
When the secondary market for lower-rated bonds becomes increasingly
illiquid, or in the absence of readily available
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<PAGE>
market quotations for lower-rated bonds, the relative lack of reliable,
objective data makes the responsibility of the Trustees to value such securities
more difficult, and judgment plays a greater role in the valuation of portfolio
securities. Also, increased illiquidity of the market for lower-rated bonds may
affect the Fund's ability to dispose of portfolio securities at a desirable
price.
In addition, if the Fund experiences unexpected net redemptions, it
could be forced to sell all or a portion of its lower-rated bonds without regard
to their investment merits, thereby decreasing the asset base upon which the
Fund's expenses can be spread, possibly reducing the Fund's rate of return.
Also, prices of lower-rated bonds have been found to be less sensitive to
interest rate changes and more sensitive to adverse economic changes and
individual corporate developments than more highly rated investments. Certain
laws or regulations may have a material effect on the Fund's investments in
lower-rated bonds.
FINANCIAL STATEMENTS
The Statement of Assets and Liabilities, related notes and report of
McCurdy & Machovina independent accountants, showing the initial capital
contributed to the Company, are set forth below.
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<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements *
(b) Exhibits:
1. Agreement and Declaration of Trust of Registrant
2. None
3. None
4. Not Applicable
5. Form of Investment Management Agreement between
Registrant and Utopia Capital Management Corporation
6.(a) Form of Distribution Agreement between Registrant and
European Equity Partners, Inc.
6.(b) Form of Selected Dealer Agreement
7. None
8.(a) Form of Custodian Agreement between Registrant and Bank of
New York*
8.(b) Form of Administrative Service Agreement between Registrant
and American Data Services, Inc.
8.(c) Form of Transfer Agency and Service Agreement between
Registrant and American Data Services, Inc.
8.(d) Form of Fund Accounting Service Agreement between Registrant
and American Data Services, Inc.
9. None
10. Opinion of Hecht & Steckman, P.C.*
- ----------
* To be filed.
<PAGE>
11. Consent of Independent Accountants*
12. None
13. Investment Letter of Utopia Capital Management
Corporation*
14. None
15. Form of Rule 12b-1 Plan between Registrant and European
Equity Partners, Inc.
16. Schedule for Computation of Performance Quotations - to
be filed with first post-effective amendment
17. Financial Data Schedule*
18. None
Other Powers of Attorney
Item 25. Persons Controlled by or Under Common Control with
Registrant
Prior to the effectiveness of this Registration Statement, the
Registrant sold 10,000 of its shares of beneficial interest to
Utopia Capital Management Corporation, a New York corporation.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record Holders
Title of Class at March 24, 1997
Shares of Beneficial Interest 1
Item 27. Indemnification
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Reference is made to Article IV of the registrant's
Declaration of Trust filed as Exhibit No. 1 to Registrant's
Registration Statement with respect to the indemnification of
Registrant's officers and directors, which is set forth below:
ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY
LIABLE; NOTICE. All persons extending credit to, contracting
with or having any claim against the Trust shall look only to
the assets of the Trust for payment under such credit,
contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or
agents, whether past, present or future, shall be personally
liable therefor. Every note, bond, contract, instrument,
certificate or undertaking and every other act or thing
whatsoever executed or done by or on behalf of the Trust or
the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been executed or done only by
or for the Trust or the Trustees and not personally. Nothing
in this Declaration of Trust shall protect any Trustee or
officer against any liability to the Trust or the Shareholders
to which such Trustee or officer would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or
undertaking made or issued by the Trustees or by any officers
or officer shall give notice that this Declaration of Trust is
on file with the Secretary of the State of Ohio and shall
recite to the effect that the same was executed or made by or
on behalf of the Trust or by them as Trustees or Trustee or as
officers or officer and not individually and that the
obligations of such
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instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets
and property of the Trust, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer
or Shareholders or Shareholder individually.
Section 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO
BOND OR SURETY. The exercise by the Trustees of their powers
and discretions hereunder shall be binding upon everyone
interested. A Trustee shall be liable for his own willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office
of Trustee, and for nothing else, and shall not be liable for
errors of judgment or mistakes of fact or law. Subject to the
foregoing, (a) the Trustees shall not be responsible or
liable in any event for any neglect or wrongdoing of any
officer, agent, employee, consultant, adviser, administrator,
distributor or principal underwriter, custodian or transfer,
dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for
the act or omission of any other Trustee; (b) the Trustees
may take advice of counsel or other experts with respect to
the meaning and operation of this Declaration of Trust and
their duties as Trustees, and shall be under no liability for
any act or omission in accordance with such advice or for
failing to follow such advice; and (c) in discharging their
duties, the Trustees, when acting in good faith, shall be
entitled to rely upon the books of account of the Trust and
upon written reports made to the Trustees by any officer
appointed by them, any independent public accountant, and
(with respect to the subject matter of the contract involved)
any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or
surety or any other security for the performance of their
duties. Nothing stated herein is intended to detract from the
protection accorded to Trustees by Ohio Revised Code Sections
1746.08 and
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1701.59, as amended from time to time.
Section 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any
Shareholder or former Shareholder shall be charged or held to
be personally liable for any obligation or liability of the
Trust solely by reason of being or having been a Shareholder
and not because of such Shareholder's acts or omissions or
for some other reason, the Trust (upon proper and timely
request by the Shareholder) shall assume the defense against
such charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case
of a corporation or other entity, its corporate or other
general successor) shall be entitled out of the assets of the
Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability.
Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC.
Subject to and except as otherwise provided in the Securities
Act of 1933, as amended, and the 1940 Act, the Trust shall
indemnify each of its Trustees and officers, including
persons who serve at the Trust's request as directors,
officers or trustees of another organization in which the
Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person")
against all liabilities, including but not limited to amounts
paid in satisfaction of judgments, in compromise or as fines
and penalties, and expenses, including reasonable
accountants' and counsel fees, incurred by any Covered Person
in connection with the defense or disposition of any action,
suit or other proceeding, whether civil or criminal, before
any court or administrative or legislative body, in which
such Covered Person may be or may have been involved as a
party or otherwise or with which such person may be or may
have been threatened, while in office or thereafter, by
reason of being or having been such a Trustee or officer,
director or trustee, and except that no Covered Person shall
be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be
subject by reason of willful
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misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of such Covered Person's
office.
Section 6.5 ADVANCES OF EXPENSES. The Trust shall
advance attorneys' fees or other expenses incurred by a
Covered Person in defending a proceeding to the full
extent permitted by the Securities Act of 1933, as
amended, the 1940 Act, and Ohio Revised Code Chapter
1707, as amended. In the event any of these laws
conflict with Ohio Revised Code Section 1701.13(E), as
amended, these laws, and not Ohio Revised Code Section
1701.13(E), shall govern.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The
right of indemnification provided by this Article VI
shall not be exclusive of or affect any other rights to
which any such Covered Person may be entitled. As used
in this Article VI, "Covered Person" shall include such
person's heirs, executors and administrators. Nothing
contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other
than Trustees and officers, and other persons may be
entitled by contract or otherwise under law, nor the
power of the Trust to purchase and maintain liability
insurance on behalf of any such person.
Section 6.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made
or to be made by the Trustees or to see to the application of
any payments made or property transferred to the Trust or
upon its order.
Item 28. Business and Other Connections of Investment Adviser
See "Management of the Fund" in the Prospectus regarding the
business of the investment adviser. The following information
is given regarding officers of Utopia Capital Management
Corporation. The principal address of the Delta Funds is 551
Fifth Avenue, Suite 605, New York, NY 10017.
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John Figliolini, 551 Fifth Avenue, Suite 605, New York,
NY 10017, is President of Utopia Capital Management
Corporation ("Adviser"). He is President of Berkshire
International Finance, Inc., an investment banking
firm. He is Vice President of Berkshire Capital Management
Group, Ltd., a Swiss-based fund manager. He is also President
of Fifth Avenue Research and Advisory Group, Inc., an
investment research company. He is also President of European
Equity Partners, Inc., the Fund's distributor. Prior to August
1992, he was a principal of Berkshire Securities, Inc., an
investment banking firm.
Oleg Batratchenko, 551 Fifth Avenue, Suite 605, New York, NY
10017, is the Executive Vice President and a portfolio manager
of the Adviser. He is a registered representative with
European Equity Partners, Inc., the Fund's distributer. He is
Vice President of Research for Berkshire International
Finance, Inc., an investment banking firm. He is Senior Vice
President of Fifth Avenue Research and Advisory Group, Inc.,
an investment research firm. Prior to January 1995 he was a
broker trainee at Rickel & Associates, Inc., and South
Richmond Securities, Inc., both brokerage firms. Prior to
November 1994, he was a research analyst with Safian
Investment Research, Inc., a money management and investment
research firm. Prior to November 1994, he was a free-lance
translator with Corporate Language Services, a translation
agency. Prior to November 1993 he was a performance analyst
with Neuberger & Berman, Inc., an investment management firm.
Prior to May 1993, he was a project manager for MR
International, Inc., an international trading company. Prior
to December 1992, he was a telemarketer for PageNet, Inc., a
paging services company.
Anatoly E. Kambolin, 488 Madison Avenue, Suite 1505, New York,
NY 10022, has been the President of Taj-Amer, Inc., which acts
as a consultant to construction projects for joint ventures in
Russia since January 1, 1992. In addition, Taj-Amer, Inc. is
in the business of acting as a consultant to American
companies seeking to do business
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<PAGE>
in what was formerly the Soviet Union and representing Russian
companies and organizations in the United States. Mr. Kambolin
graduated from the Moscow Auto Mechanical Institute with a
degree in mechanical engineering. He received a graduate
degree in Economics and International Trade from the All-Union
Academy for Foreign Trade. He is the father of Peter Kambolin,
a portfolio manager with the Adviser.
Carmine Chiappetta, 480 Pine Acres Boulevard, Brightwaters, NY
11718, manages his own accounting firm specializing in taxes.
Prior to March 1996, he was a tax accountant for United States
Trust Company of New York, Tucker Anthony & R.L. Day and
Morgan Stanley & Co., Inc.
Henry Shapiro, 301 Ocean View Avenue, Brooklyn, NY 11235, has
been a registered investment adviser since March 1993. From
March 1993 to March 1995, he was a real estate and mortgage
broker, and a certified real estate appraiser. For the five
years prior thereto, he managed Shapiro & Co., a real estate
and mortgage broker, in Fort Lauderdale, Florida. Mr. Shapiro
is a regular contributor to Radio Free Europe/Radio Liberty
and was a regular contributor of financial articles to
ITAR-TASS, the Russian State News Agency. Mr. Shapiro also had
a regular financial column for NRS, a Russian daily newspaper,
and appeared regularly on the Russian Television Network.
Michael Miola, 24 West Carver Street, Huntington, New York
11743, is Vice President and Treasurer of Delta Micro Cap
Growth Fund. Since 1984, Mr. Miola has been the President of
American Data Services ("American Data"). American Data is
acting as the Fund's Administrator, Transfer, Dividend and
Disbursing Agent and Accounting Services Manager. Mr. Miola
has specialized in serving the investment company industry
since 1974. As a senior staff member of Coopers & Lybrand, he
designed and implemented that firm's audit approach and
working paper documentation model. During his tenure, he was
called upon to write portions of the AICPA's Investment
Company Audit Guide. Mr. Miola serves as a consultant to many
mutual fund groups, designing
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<PAGE>
accounting processes for new and complex financial
transactions. Mr. Miola is a Certified Public Accountant, a
member of the American Institute of Certified Public
Accountants, and the New York Society of Certified Public
Accountants. Mr. Miola graduated magna cum laude from Fordham
University's College of Business Administration, with a
Bachelor of Science Degree.
Michelle LoCascio, 24 West Carver Street, Huntington, New York
11743, is Corporate Secretary of Delta Micro Cap Growth Fund.
Ms. LoCascio has been the Registration Compliance Officer of
American Data from 1995 to the present. During the ten years
prior thereto, Ms. LoCascio worked in both the Fund Accounting
and Stock Transfer Departments, where she attained the title
of Senior Administrator in each Department. She is responsible
for the filing of all state registrations for all funds
administered by American Data.
Item 29. Principal Underwriter
European Equity Partners, Inc.
Item 30. Location of Accounts and Records
c/o American Data Services, Inc.
24 West Carver Street
Huntington, NY 11743
(a) Adviser: Articles of incorporation,
bylaws, minute books, corporate
records and contracts of the Registrant; general
ledger and certain separate ledger accounts;
transaction journals and confirmations for portfolio
trades.
551 Fifth Avenue, Suite 605
New York, NY 10017
(b) Transfer Agent: Ledger accounts and other records
relating to shareholders of the Fund.
American Data Services, Inc.
24 West Carver Street
Huntington, NY 11743
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<PAGE>
(c) Custodian: Accounts, records and other
documentation required to be maintained by the
custodian for the Funds.
American Data Services, Inc.
24 West Carver Street
Huntington, NY 11743
Item 31. Management Services
Registrant is not a party to any such
management-related service contract.
Item 32. Undertakings
(a) The Registrant undertakes to file an
amendment to the Registration Statement with
certified financial statements showing the initial
capital received before accepting subscriptions from
any persons in excess of 25.
(b) The Registrant undertakes to file a
post-effective amendment, using financial
statements which need not be certified, for the
Funds, within four to six months from the effective
date of this Registration Statement.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of New York, State of New York, on the _____ day of
March 1997.
DELTA FUNDS, INC.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on this _____ day of March 1997, by or on
behalf of the following persons in the capacities indicated.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Charles J. Hecht and Michael Miola or
either of them, with full power of substitution, his or her true and lawful
attorneys-in-fact and agents, for him and in his name, place and stead, in any
and all capacities, to sign in his or her name and on his or her behalf, in any
and all capacities any and all pre-and post-effective amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and any state securities divisions, agencies, departments or
commissions, granting unto said attorneys-in-fact and agents full power and
authority to do and to perform each and every act and things requisite and
necessary to be done in and about the premises, as
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fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents may lawfully
do or cause to be done by virtue hereof.
SIGNATURE TITLE
/s/ John Figliolini President and Trustee
John Figliolini
/s/ Oleg Batratchenko Executive Vice
Oleg Batratchenko President/Trustee
/s/ Anatoly E. Kambolin Trustee
Anatoly E. Kambolin
/s/ Carmine A. Chiapetta Trustee
Carmine A. Chiappetta
/s/ Henry Shapiro Trustee
Henry Shapiro
/s/ Michael Miola Vice President
Michael Miola
/s/ Michelle LoCascio Secretary
Michelle LoCascio
/s/ Michael Miola Treasurer
Michael Miola
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DELTA FUNDS
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made this 11th day of March 1997,
by the Trustees hereunder, and by the holders of Shares of beneficial interest
to be issued hereunder as hereinafter provided.
WITNESSETH:
WHEREAS, this Trust is being formed to carry on the business
of an investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into
their hands as trustees of an Ohio business trust in accordance with the
provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same upon
the following terms and conditions for the benefit of the holders from time to
time of shares of beneficial interest in this Trust as hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 NAME. This Trust shall be known as the "Delta Funds" and
the Trustees shall conduct the business of the Trust under that name.
Section 1.2 DEFINITIONS. Whenever used herein, unless
otherwise required by the context or specifically provided:
(a) The "Trust" refers to the Ohio business trust established
by this Agreement and Declaration of Trust, as amended
from time to time;
(b) "Trustees" refers to the Trustees of the Trust named
herein or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into
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which the beneficial interest in the Trust or any Series of
the Trust (as the context may require) shall be divided from
time to time;
(d) "Series" refers to Series of Shares established and
designated under or in accordance with the provisions of
Article IV;
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(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of
1940 and the Rules and Regulations thereunder, all as
amended from time to time;
(g) "Commission" shall have the meaning given it in the 1940
Act;
(h) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust as amended or restated from time to
time; and
(i) "Bylaws" shall mean the Bylaws of the Trust as amended
from time to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company, to
offer Shareholders one or more investment programs primarily in securities and
debt instruments and to engage in any and all lawful acts or activities for
which business trusts may be formed under Chapter 1746.01 through 1746.99 of the
Ohio Revised Code. Until the Trustees determine otherwise, the principal office
of the Trust is to be located at 551 Fifth Avenue, New York, New York 10017.
ARTICLE III
THE TRUSTEES
Section 3.1 NUMBER, DESIGNATION, ELECTION, TERM, ETC.
----------- -----------------------------------------
(a) Initial Trustees. Upon execution of this Declaration of
Trust or a counterpart hereof or some other writing in
which he accepts such Trusteeship and agrees to the
provisions hereof, John Figliolini and Oleg Batrachenko
shall become Trustees hereof.
(b) Number. The Trustees serving as such, whether named
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<PAGE>
above or hereafter becoming a Trustee, may increase or
decrease the number of Trustees to a number other than
the number theretofore determined. No decrease in the
number of Trustees shall have the effect of removing any
Trustee from office prior to the expiration of his term,
but the number of Trustees may be decreased in
conjunction with the removal of a Trustee pursuant to
subsection (e) of this Section 3.1.
(c) Term. Each Trustee shall serve as a Trustee during the
lifetime of the Trust and until its termination as
hereinafter provided or until such Trustee sooner dies,
resigns, retires or is removed. The Trustees may elect
their own successors and may, pursuant to Section 3.1(f)
hereof, appoint Trustees to fill vacancies; provided
that, immediately after filling a vacancy, at least two-
thirds of the Trustees then holding office shall have
been elected to such office by the Shareholders at an
annual or special meeting. If at any time less than a
majority of the Trustees then holding office were so
elected, the Trustees shall forthwith cause to be held as
promptly as possible, and in any event within 60 days, a
meeting of Shareholders for the purpose of electing
Trustees to fill any existing vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust
or retire as a Trustee, by written instrument signed by him
and delivered to the other Trustees or to any officer of the
Trust, and such resignation or retirement shall take effect
upon such delivery or upon such later date as is specified in
such instrument.
(e) Removal. Any Trustee may be removed with or without
cause at any time: (i) by written instrument, signed by
at least two-thirds of the number of Trustees prior to
such removal, specifying the date upon which such removal
shall become effective, (ii) by vote of the Shareholders
holding not less than two-thirds of the Shares then
outstanding, cast in person or by proxy at any meeting
called for the purpose, or (iii) by a declaration in
writing signed by Shareholders holding not less than two-
thirds of the Shares then outstanding and filed with the
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Trust's Custodian.
(f) Vacancies. Any vacancy or anticipated vacancy resulting
---------
from any reason, including without limitation, the death,
resignation, retirement, removal or incapacity of any of
the Trustees or resulting from an increase in the number
of Trustees by the Trustees, may (but so long as there
are at least three remaining Trustees, need not unless
required by the 1940 Act) be filled either by a majority
of the remaining Trustees through the appointment in
writing of such other person as such remaining Trustees
in their discretion shall determine (unless a shareholder
election is required by the 1940 Act) or by the election
by the Shareholders, at a meeting called for the purpose,
of a person to fill such vacancy, and such appointment or
election shall be effective upon the written acceptance
of the person named therein to serve as a Trustee and
agreement by such person to be bound by the provisions of this
Declaration of Trust, except that any such appointment or
election in anticipation of a vacancy to occur by reason of
retirement, resignation, or increase in number of Trustees to
be effective at a later date shall become effective only at or
after the effective date of said retirement, resignation, or
increase in number of Trustees. As soon as any Trustee so
appointed or elected shall have accepted such appointment or
election and shall have agreed in writing to be bound by this
Declaration of Trust and the appointment or election is
effective, the Trust estate shall vest in the new Trustee,
together with the continuing Trustees, without any further act
or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal, or incapacity of the Trustees, or any one
of them, shall not operate to annul or terminate the Trust or
to revoke or terminate any existing agency or contract created
or entered into pursuant to the terms of this Declaration of
Trust.
(h) No Accounting. Except to the extent required by the 1940 Act
or under circumstances which would justify his
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<PAGE>
removal for cause, no person ceasing to be a Trustee as a
result of his death, resignation, retirement, removal or
incapacity (nor the estate of any such person) shall be
required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
Section 3.2 POWERS OF THE TRUSTEES. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry out
that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt Bylaws not inconsistent with this Declaration
of Trust providing for the conduct of the business and affairs of the Trust and
may amend and repeal them to the extent that such Bylaws do not reserve that
right to the Shareholders; they may as they consider appropriate elect and
remove officers and appoint and terminate agents and consultants and hire and
terminate employees, any one or more of the foregoing of whom may be a Trustee,
and may provide for the compensation of all of the foregoing; they may appoint
from their own number, and terminate, any one or more committees consisting of
two or more Trustees, including without implied limitation an executive
committee, which may, when the Trustees are not in session and subject to the
1940 Act, exercise some or all of the power and authority of the Trustees as the
Trustees may determine; in accordance with Section 3.3 they may employ one or
more advisers, administrators, depositories and custodians and may authorize any
depository or custodian to employ subcustodians or agents and to deposit all or
any part of such assets in a system or systems for the central handling of
securities and debt instruments, retain transfer, dividend, accounting or
Shareholder servicing agents or any of the foregoing, provide for the
distribution of Shares by the Trust through one or more distributors, principal
underwriters or otherwise, set record dates or times for the determination of
Shareholders or various of them with respect to various matters; they may
compensate or provide for the compensation of the Trustees, officers, advisers,
administrators, custodians, other agents, consultants and employees of the Trust
or the Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and to
any employee, adviser, administrator, distributor, principal underwriter,
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<PAGE>
depository, custodian, transfer and dividend disbursing agent, or any
other agent or consultant of the Trust such authority, powers, functions and
duties as they consider desirable or appropriate for the conduct of the business
and affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign documents
and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority:
(a) Investments. To invest and reinvest cash and other
property, and to hold cash or other property uninvested
without in any event being bound or limited by any
present or future law or custom in regard to investments
by trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge,
mortgage, hypothecate, write options on and lease any or
all of the assets of the Trust;
(c) Ownership Powers. To vote or give assent, or exercise
----------------
any rights of ownership, with respect to stock or other
securities, debt instruments or property; and to execute
and deliver proxies or powers of attorney to such person
or persons as the Trustees shall deem proper, granting to
such person or persons such power and discretion with
relation to securities, debt instruments or property as
the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of
subscription or otherwise which in any manner arise out
of ownership of securities or debt instruments;
(e) Form of Holding. To hold any security, debt instrument or
property in a form not indicating any trust, whether in
bearer, unregistered or other negotiable form, or in the name
of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depository or a nominee or nominees or
otherwise;
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<PAGE>
(f) Reorganization, etc. To consent to or participate in any
plan for the reorganization, consolidation or merger of
any corporation or issuer, any security or debt
instrument of which is or was held in the Trust; to
consent to any contract, lease, mortgage, purchase or
sale of property by such corporation or issuer, and to
pay calls or subscriptions with respect to any security
or debt instrument held in the Trust;
(g) Voting Trusts, etc. To join with other holders of any
securities or debt instruments in acting through a
committee, depository, voting trustee or otherwise, and
in that connection to deposit any security or debt
instrument with, or transfer any security or debt
instrument to, any such committee, depository or trustee,
and to delegate to them such power and authority with
relation to any security or debt instrument (whether or
not so deposited or transferred) as the Trustees shall
deem proper, and to agree to pay, and to pay, such
portion of the expenses and compensation of such
committee, depository or trustee as the Trustees shall
deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust
claims in favor of or against the Trust or any matter in
controversy, including but not limited to claims for
taxes;
(i) Partnerships, etc. To enter into joint ventures, general
or limited partnerships and any other combinations or
associations;
(j) Borrowing and Security. To borrow funds and to mortgage
and pledge the assets of the Trust or any part thereof to
secure obligations arising in connection with such
borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any
notes or other obligations of any person; to make contracts of
guaranty or suretyship, or otherwise assume liability for
payment thereof; and to mortgage and pledge
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<PAGE>
the Trust property or any part thereof to secure any of or
all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or
appropriate for the conduct of the business, including,
without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and
principal on its portfolio investments, and insurance
policies insuring the Shareholders, Trustees, officers,
employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal
underwriters, or independent contractors, or any thereof
(or any person connected therewith), of the Trust
individually against all claims and liabilities of every
nature arising by reason of holding, being or having held
any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person
in any such capacity, including any action taken or
omitted that may be determined to constitute negligence;
provided, however, that insurance which protects the
Trustees and officers against liabilities rising from
action involving willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved
in the conduct of their offices may not be purchased;
and,
(m) Pensions, etc. To pay pensions for faithful service, as
deemed appropriate by the Trustees, and to adopt,
establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and
provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such
retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the Bylaws, any action to be taken by the Trustees
may be taken by a majority of the Trustees present at a meeting of Trustees (a
quorum, consisting of at least a majority of the Trustees then in office, being
present), within or without Ohio, including any meeting held by means of a
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conference telephone or other communications equipment by means of which all
persons participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a meeting, or
by written consents of a majority of the Trustees then in office (or such larger
or different number as may be required by the 1940 Act or other applicable law).
Section 3.3 CERTAIN CONTRACTS. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present and
future law or custom in regard to delegation of powers by trustees generally,
the Trustees may, at any time and from time to time and without limiting the
generality of their powers and authority otherwise set forth herein, enter into
one or more contracts with any one or more corporations, trusts, associations,
partnerships, limited partnerships, other type of organizations, or individuals
("Contracting Party") to provide for the performance and assumption of some or
all of the following services, duties and responsibilities to, for or of the
Trust and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set forth
below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the
Trustees and in conformity with the stated policy of the
Trustees with respect to the investments of the Trust or
of the assets belonging to any Series of Shares of the
Trust (as that phrase is defined in subsection (a) of
Section 4.2), to manage such investments and assets, make
investment decisions with respect thereto, and to place
purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of
the Trustees and in conformity with any policies of the
Trustees with respect to the operations of the Trust, to
supervise all or any part of the operations of the Trust,
and to provide all or any part of the administrative and
clerical personnel, office space and office equipment and
services appropriate for the efficient administration and
operations of the Trust;
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(c) Distribution. To distribute the Shares of the Trust, to
be principal underwriter of such Shares, and/or to act as
agent of the Trust in the sale of Shares and the
acceptance or rejection of orders for the purchase of
Shares;
(d) Custodian and Depository. To act as depository for and
to maintain custody of the property of the Trust and
accounting records in connection therewith;
(e) Transfer and Dividend Disbursing Agency. To maintain
records of the ownership of outstanding Shares, the
issuance and redemption and the transfer thereof, and to
disburse any dividends declared by the Trustees and in
accordance with the policies of the Trustees and/or the
instructions of any particular Shareholder to reinvest
any such dividends;
(f) Shareholder Servicing. To provide service with respect
to the relationship of the Trust and its Shareholders,
records with respect to Shareholders and their Shares,
and similar matters; and
(g) Legal, Accounting, Taxes and Other. To handle all or any
part of the legal, accounting, tax or other
responsibilities, whether with respect to the Trust's
properties, Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the services,
duties and responsibilities to, for and of the Trust and/or the Trustees, and
the contracts with respect thereto may contain such terms interpretive of or in
addition to the delineation of the services, duties and responsibilities
provided for, including provisions that are not inconsistent with the 1940 Act
relating to the standard of duty of and the rights to indemnification of the
Contracting Party and others, as the Trustees may determine. Nothing herein
shall preclude, prevent or limit the Trust or a Contracting Party from entering
into subcontractual arrangements relative to any of the matters referred to in
Sections 3.3(a) through (g) hereof.
Subject to the provisions of the 1940 Act, the fact that:
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(i) any of the Shareholders, Trustees or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee,
manager, adviser, principal underwriter or distributor or agent of or
for any Contracting Party, or of or for any parent or affiliate of any
Contracting Party or that the Contracting Party or any parent or
affiliate thereof is a Shareholder or has an interest in the Trust, or
that
(ii) any Contracting Party may have a contract providing for
the rendering of any similar services to one or more other
corporations, trusts, associations, partnerships, limited partnerships
or other organizations, or has other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust and/or the
Trustees or disqualify any Shareholder, Trustee or officer of the Trust from
voting upon or executing the same or create any liability or accountability to
the Trust or its Shareholders, provided that in the case of any relationship or
interest referred to in the preceding clause (i) on the part of any Trustee or
officer of the Trust either (1) the material facts as to such relationship or
interest have been disclosed to or are known by the Trustees not having any such
relationship or interest and the contract involved is approved in good faith
reasonably justified by such facts by a majority of such Trustees not having any
such relationship or interest (even though such unrelated or disinterested
Trustees are less than a quorum of all of the Trustees), or (2) the specific
contract involved is fair to the Trust as of the time it is authorized, approved
or ratified by the Trustees or by the Shareholders.
Section 3.4 PAYMENT OF TRUST EXPENSES AND COMPENSATION OF TRUSTEES. The
Trustees are authorized to pay or to cause to be paid out of the principal or
income of the Trust, or partly out of principal and partly out of income, and to
charge or allocate the same to, between or among such one or more of the Series
that may be established and designated pursuant to Article IV, as the Trustees
deem fair, all expenses, fees, charges, taxes and liabilities incurred or
arising in connection with the Trust, or in connection with the management
thereof, including, but not limited
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to, the Trustees' compensation and such expenses and charges for the services
of the Trust's officers, employees, investment adviser, administrator,
distributor, principal underwriter, auditor, counsel, depository, custodian,
transfer agent, dividend disbursing agent, accounting agent, Shareholder
servicing agent, and such other agents, consultants, and independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur. Without limiting the generality of any other
provision hereof, the Trustees shall be entitled to reasonable
compensation from the Trust for their services as Trustees and may
fix the amount of such compensation.
Section 3.5 OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trustees.
ARTICLE IV
SHARES
Section 4.1 DESCRIPTION OF SHARES. The beneficial interest in the Trust
shall be divided into Shares, all without par value, but the Trustees shall have
the authority from time to time to divide the Shares into two or more Series of
Shares, as they deem necessary or desirable, to establish and designate such
Series, and to fix and determine the relative rights and preferences as between
the different Series of Shares as to right of redemption and the price, terms
and manner of redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase fund provisions,
conversion rights, and conditions under which the several Series shall have
separate voting rights or no voting rights. Except as aforesaid all Shares of
the different Series shall be identical.
The Shares of each Series may be issued or reissued from time to time
in one or more classes ("Classes"), as determined by the Board of Trustees
pursuant to resolution. Each Class shall be appropriately designated, prior to
the issuance of any shares thereof, by some distinguishing letter, number or
title. All Shares within a Class shall be alike in every particular. All Shares
of each Series shall be of equal rank and have the same
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powers, preferences and rights, and shall be subject to the same
qualifications, limitations and restrictions without distinction between the
shares of different Classes thereof, except with respect to such differences
among such Classes, as the Board of Trustees shall from time to time determine
to be necessary or desirable, including differences in the rate or rates of
dividends or distributions. The Board of Trustees may from time to time increase
the number of Shares allocated to any Class already created by providing that
any unissued Shares of the applicable Series shall constitute part of such
Class, or may decrease the number of Shares allocated to any Class already
created by providing that any unissued Shares previously assigned to such Class
shall no longer constitute part thereof. The Board of Trustees is hereby
empowered to classify or reclassify from time to time any unissued Shares of
each Series by fixing or altering the terms thereof and by assigning such
unissued shares to an existing or newly created Class. Notwithstanding anything
to the contrary in this paragraph the Board of Trustees is hereby empowered (i)
to redesignate any issued Shares of any Series by assigning a distinguishing
letter, number or title to such shares and (ii) to reclassify all or any part of
the issued Shares of any Series to make them part of an existing or newly
created Class. The number of authorized Shares and the number of Shares of each
Series that may be issued is unlimited, and the Trustees may issue Shares of any
Series for such consideration and on such terms as they may determine (or for no
consideration if pursuant to a Share dividend or split-up), all without action
or approval of the Shareholders. All Shares when so issued on the terms
determined by the Trustees shall be fully paid and non-assessable (but may be
subject to mandatory contribution back to the Trust as provided in subsection
(g) of Section 4.2). The Trustees may classify or reclassify any unissued Shares
or any Shares previously issued and reacquired of any Series into one or more
Series that may be established and designated from time to time. The Trustees
may hold as treasury Shares (of the same or some other Series), reissue for such
consideration and on such terms as they may determine, or cancel, at their
discretion from time to time, any Shares of any Series reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining
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the holders of Shares entitled to be treated as such, to the extent provided or
referred to in Section 5.3.
The establishment and designation of any Series of Shares in addition
to that established and designated in Section 4.2, or of any Class of Shares,
shall be effective upon the execution by a majority of the then Trustees of an
instrument setting forth such establishment and designation and the relative
rights and preferences of such Series or Class, or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any particular
Series or Class previously established and designated the Trustees may by an
instrument executed by a majority of their number abolish that Series or Class
and the establishment and designation thereof. Each instrument referred to in
this paragraph shall have the status of an amendment to this Declaration of
Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested may acquire, own, hold and dispose of
Shares of any Series of the Trust to the same extent as if such person were not
a Trustee, officer or other agent of the Trust; and the Trust may issue and sell
or cause to be issued and sold and may purchase Shares of any Series from any
such person or any such organization subject only to the general limitations,
restrictions or other provisions applicable to the sale or purchase of Shares of
such Series generally.
Section 4.2 ESTABLISHMENT AND DESIGNATION OF SERIES. Without limiting
the authority of the Trustees set forth in Section 4.1 to establish and
designate any further Series, the Trustees hereby establish and designate one
Series of Shares: the "Delta Micro Cap Growth Fund". The Shares of this Series
and any Shares of any further Series that may from time to time be established
and designated by the Trustees shall (unless the Trustees otherwise determine
with respect to some further Series or Class at the time of establishing and
designating the same) have the following relative rights and preferences:
(a) Assets Belonging to Series. All consideration received
by the Trust for the issue or sale of Shares of a
particular Series, together with all assets in which such
consideration is invested or reinvested, all income,
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earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series for
all purposes, subject only to the rights of creditors,
and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings,
profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such
assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same
may be, together with any General Items allocated to that
Series as provided in the following sentence, are herein
referred to as "assets belonging to" that Series. In the
event that there are any assets, incomes, earnings,
profits, and proceeds thereof, funds, or payments which
are not readily identifiable as belonging to any
particular Series (collectively "General Items"), the Trustees
shall allocate such General Items to and among any one or more
of the Series established and designated from time to time in
such manner and on such basis as they, in their sole
discretion, deem fair and equitable; and any General Items so
allocated to a particular Series shall belong to that Series.
Each such allocation by the Trustees shall be conclusive and
binding upon the Shareholders of all Series for all purposes.
The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall
be treated as income and which items as capital; and each such
determination and allocation shall be conclusive and binding
upon the Shareholders.
(b) Liabilities Belonging to Series. The assets belonging to
each particular Series shall be charged with the
liabilities of the Trust in respect of that Series and
all expenses, costs, charges and reserves attributable to
that Series, and any general liabilities, expenses,
costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular
Series shall be allocated and charged by the Trustees to
and among any one or more of the Series established and
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designated from time to time in such manner and on such
basis as the Trustees in their sole discretion deem fair
and equitable. The liabilities, expenses, costs, charges
and reserves allocated and so charged to a Series are
herein referred to as "liabilities belonging to" that
Series. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive
and binding upon the holders of all Series for all
purposes.
(c) Dividends. Dividends and distributions on Shares of a
particular Series may be paid with such frequency as the
Trustees may determine, which may be daily or otherwise
pursuant to a standing resolution or resolutions adopted
only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Series, from
such of the estimated income and capital gains, accrued
or realized, from the assets belonging to that Series, as
the Trustees may determine, after providing for actual
and accrued liabilities belonging to that Series. All
dividends and distributions on Shares of a particular
Series shall be distributed pro rata to the holders of
that Series in proportion to the number of Shares of that
Series held by such holders at the date and time of
record established for the payment of such dividends or
distributions, except that in connection with any
dividend or distribution program or procedure the
Trustees may determine that no dividend or distribution
shall be payable on Shares as to which the Shareholder's
purchase order and/or payment have not been received by the
time or times established by the Trustees under such program
or procedure, and except that if Classes have been established
for any Series, the rate of dividends or distributions may
vary among such Classes pursuant to resolution, which may be a
standing resolution, of the Board of Trustees. Such dividends
and distributions may be made in cash or Shares or a
combination thereof as determined by the Trustees or pursuant
to any program that the Trustees may have in effect at the
time for the election by each Shareholder of the mode of the
making of such dividend or distribution to that Shareholder.
Any
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such dividend or distribution paid in Shares will be paid
at the net asset value thereof as determined in accordance
with subsection (h) of Section 4.2.
The Trust intends to qualify each Series as a "regulated
investment company" under the Internal Revenue Code of 1986,
as amended, or any successor or comparable statute thereto,
and regulations promulgated thereunder. Inasmuch as the
computation of net income and gains for federal income tax
purposes may vary from the computation thereof on the books of
the Trust, the Board of Trustees shall have the power, in its
sole discretion, to distribute in any fiscal year as
dividends, including dividends designated in whole or in part
as capital gains distributions, amounts sufficient, in the
opinion of the Board of Trustees, to enable each Series to
qualify as a regulated investment company and to avoid
liability of the Series for federal income tax in respect of
that year. However, nothing in the foregoing shall limit the
authority of the Board of Trustees to make distributions
greater than or less than the amount necessary to qualify as a
regulated investment company and to avoid liability of each
Series for such tax.
(d) Liquidation. In event of the liquidation or dissolution
of the Trust, the Shareholders of each Series that has
been established and designated shall be entitled to
receive, as a Series, when and as declared by the
Trustees, the excess of the assets belonging to that
Series over the liabilities belonging to that Series.
The assets so distributable to the Shareholders of any
particular Series shall be distributed among such
Shareholders in proportion to the number of Shares of
that Series held by them and recorded on the books of the
Trust. The liquidation of any particular Series may be
authorized by vote of a majority of the Trustees then in
office subject to the approval of a majority of the
outstanding voting Shares of that Series, as defined in
the 1940 Act.
(e) Voting. All shares of all Series shall have "equal
voting rights" as such term is defined in the Investment
Company Act of 1940 and except as otherwise provided by
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that Act or rules, regulations or orders promulgated
thereunder. On each matter submitted to a vote of the
Shareholders, all Shares of all Series shall vote as a
single class ("Single Class Voting"); provided, however,
that (a) as to any matter with respect to which a
separate vote of any Series is required by the 1940 Act
or rules and regulations promulgated thereunder, or would
be required under the Ohio General Corporation Law if the
Trust were an Ohio corporation, such requirements as to
a separate vote by that Series shall apply in lieu of
Single Class Voting as described above; (b) in the event
that the separate vote requirements referred to in (a)
above apply with respect to one or more Series, then,
subject to (c) below, the Shares of all other Series
shall vote as a single class; and (c) as to any matter
which does not affect the interest of a particular
Series, only the holders of Shares of the one or more
affected Series shall be entitled to vote.
(f) Redemption by Shareholder. Each holder of Shares of a
particular Series shall have the right at such times as
may be permitted by the Trust, but no less frequently
than once each week, to require the Trust to redeem all
or any part of his Shares of that Series at a redemption
price equal to the net asset value per Share of that
Series next determined in accordance with subsection (h)
of this Section 4.2 after the Shares are properly
tendered for redemption. Payment of the redemption price
shall be in cash; provided, however, that if the Trustees
determine, which determination shall be conclusive, that
conditions exist which make payment wholly in cash unwise
or undesirable, the Trust may make payment wholly or
partly in securities or other assets belonging to the
Series of which the Shares being redeemed are part at the
value of such securities or assets used in such
determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment
of the redemption price and may suspend the right of the
holders of Shares of any Series to require the Trust to redeem
Shares of that Series during any period or at any time when
and to the extent permissible under the 1940 Act, and such
redemption is conditioned upon the
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Trust having funds or property legally available therefor.
(g) Redemption by Trust. Each Share of each Series that has
been established and designated is subject to redemption
by the Trust at the redemption price which would be
applicable if such Share was then being redeemed by the
Shareholder pursuant to subsection (f) of this Section 4.2:
(a) at any time, if the Trustees determine in their sole
discretion that failure to so redeem may have materially
adverse consequences to all or any of the holders of the
Shares, or any Series thereof, of the Trust, or (b) upon such
other conditions as may from time to time be determined by the
Trustees and set forth in the then current Prospectus of the
Trust with respect to maintenance of Shareholder accounts of a
minimum amount. Upon such redemption the holders of the Shares
so redeemed shall have no further right with respect thereto
other than to receive payment of such redemption price.
(h) Net Asset Value. The net asset value per Share of any
Series shall be the quotient obtained by dividing the
value of the net assets of that Series (being the value
of the assets belonging to that Series less the
liabilities belonging to that Series) by the total number
of Shares of that Series outstanding, all determined in
accordance with the methods and procedures, including
without limitation those with respect to rounding,
established by the Trustees from time to time.
(i) Transfer. All Shares of each particular Series shall be
transferable, but transfers of Shares of a particular Series
will be recorded on the Share transfer records of the Trust
applicable to that Series only at such times as Shareholders
shall have the right to require the Trust to redeem Shares of
that Series and at such other times as may be permitted by the
Trustees.
(j) Equality. All Shares of each particular Series shall
represent an equal proportionate interest in the assets
belonging to that Series (subject to the liabilities
belonging to that Series), and each Share of any
particular Series shall be equal to each other Share of
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that Series; but the provisions of this sentence shall
not restrict any distinctions permissible under
subsection (c) of this Section 4.2 that may exist with
respect to dividends and distributions on Shares of the
same Series. The Trustees may from time to time divide
or combine the Shares of any particular Series into a
greater or lesser number of Shares of that Series without
thereby changing the proportionate beneficial interest in
the assets belonging to that Series or in any way
affecting the rights of Shares of any other Series.
(k) Fractions. Any fractional Share of any Series or Class, if any
such fractional Share is outstanding, shall carry
proportionately all the rights and obligations of a whole
Share of that Series or Class, including with respect to
voting, receipt of dividends and distributions, redemption of
Shares, and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements
of the 1940 Act, the Trustees shall have the authority to
provide that holders of Shares of any Series shall have the
right to convert said Shares into Shares of one or more other
Series of Shares in accordance with such requirements and
procedures as may be established by the Trustees.
Section 4.3 OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each Series
that has been established and designated. No certificates certifying the
ownership of Shares need be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they consider
appropriate for the issuance of Share certificates, the use of facsimile
signatures, the transfer of Shares and similar matters. The record books of the
Trust as kept by the Trust or any transfer or similar agent, as the case may be,
shall be conclusive as to who are the Shareholders and as to the number of
Shares of each Series and Class held from time to time by each such Shareholder.
Section 4.4 INVESTMENTS IN THE TRUST. The Trustees may
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accept investments in the Trust from such persons and on such terms and for
such consideration, not inconsistent with the provisions of the 1940 Act, as
they from time to time authorize. The Trustees may authorize any distributor,
principal underwriter, custodian, transfer agent or other person to accept
orders for the purchase of Shares that conform to such authorized terms and to
reject any purchase orders for Shares whether or not conforming to such
authorized terms.
Section 4.5 NO PREEMPTIVE RIGHTS. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the continuance of
the Trust shall not operate to terminate the Trust nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but only to the
rights of said decedent under this Trust. Ownership of Shares shall not entitle
the Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders as
partners. Neither the Trust nor the Trustees, nor any officer, employee or agent
of the Trust shall have any power to bind personally any Shareholder, nor except
as specifically provided herein to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
ARTICLE V
---------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
Section 5.1 VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section 3.1,
(ii) with respect to any contract with a
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Contracting Party as provided in Section 3.3 as to which Shareholder approval
is required by the 1940 Act, (iii) with respect to any termination or
reorganization of the Trust or any Series to the extent and as provided in
Sections 7.1 and 7.2, (iv) with respect to any amendment of this Declaration of
Trust to the extent and as provided in Section 7.3, (v) to the same extent as
the stockholders of an Ohio business corporation as to whether or not a court
action, proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vi) with respect to such additional matters relating to the Trust as may be
required by the 1940 Act, this Declaration of Trust, the Bylaws or any
registration of the Trust with the Commission (or any successor agency) or any
state, or as the Trustees may consider necessary or desirable. There shall be no
cumulative voting in the election of any Trustee or Trustees. Shares may be
voted in person or by proxy. A proxy with respect to Shares held in the name of
two or more persons shall be valid if executed by any one of them unless at or
prior to exercise of the proxy the Trust receives a specific written notice to
the contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required by law, this Declaration of Trust or the Bylaws
to be taken by Shareholders.
Section 5.2 MEETINGS. Meetings (including meetings involving only the
holders of Shares of one or more but less than all Series) of Shareholders may
be called by the Trustees from time to time for the purpose of taking action
upon any matter requiring the vote or authority of the Shareholders as herein
provided or upon any other matter deemed by the Trustees to be necessary or
desirable. Written notice of any meeting of Shareholders shall be given or
caused to be given by the Trustees by mailing such notice
at least seven days before such meeting, postage prepaid, stating the time,
place and purpose of the meeting, to each Shareholder at the Shareholder's
address as it appears on the records of the Trust. The Trustees shall promptly
call and give notice of a meeting of Shareholders for the purpose of voting upon
removal of
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any Trustee of the Trust when requested to do so in writing by Shareholders
holding not less than 10% of the Shares then outstanding. If the Trustees shall
fail to call or give notice of any meeting of Shareholders (including a meeting
involving only the holders of Shares of one or more but less than all Series)
for a period of 30 days after written application by Shareholders holding at
least 25% of the Shares then outstanding requesting a meeting be called for any
other purpose requiring action by the Shareholders as provided herein or in the
Bylaws, then Shareholders holding at least 25% of the Shares then outstanding
may call and give notice of such meeting, and thereupon the meeting shall be
held in the manner provided for herein in case of call thereof by the Trustees.
Section 5.3 RECORD DATES. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, or who are entitled to participate in any dividend or distribution, or
for the purpose of any other action, the Trustees may from time to time close
the transfer books for such period, not exceeding 30 days (except at or in
connection with the termination of the Trust), as the Trustees may determine; or
without closing the transfer books the Trustees may fix a date and time not more
than 60 days prior to the date of any meeting of Shareholders or other action as
the date and time of record for the determination of Shareholders entitled to
vote at such meeting or any adjournment thereof or to be treated as Shareholders
of record for purposes of such other action, and any Shareholder who was a
Shareholder at the date and time so fixed shall be entitled to vote at such
meeting or any adjournment thereof or (subject to any provisions permissible
under subsection (c) of Section 4.2 with respect to dividends or distributions
on Shares that have not been ordered and/or paid for by the time or times
established by the Trustees under the applicable dividend or distribution
program or procedure then in effect) to be treated as a Shareholder of record
for purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date and
time shall be so entitled to vote at such meeting or any adjournment thereof or
to be treated as a Shareholder of record for purposes of such other action.
Section 5.4 QUORUM AND REQUIRED VOTE. A majority of the Shares entitled
to vote shall be a quorum for the transaction of
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business at a Shareholders' meeting, but any lesser number shall be sufficient
for adjournments. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting without the
necessity of further notice. A majority of the Shares voted, at a meeting of
which a quorum is present, shall decide any questions and a plurality shall
elect a Trustee, except when a different vote is required or permitted by any
provision of the 1940 Act or other applicable law or by this Declaration of
Trust or the Bylaws.
Section 5.5 ACTION BY WRITTEN CONSENT. Subject to the provisions of the
1940 Act and other applicable law, any action taken by Shareholders may be taken
without a meeting if a majority of Shareholders entitled to vote on the matter
(or such other proportion thereof as shall be required by the 1940 Act or by any
express provision of this Declaration of Trust or the Bylaws) consent to the
action in writing and such written consents are filed with the records of the
meetings of Shareholders. Such consent shall be treated for all purposes as a
vote taken at a meeting of Shareholders.
Section 5.6 INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of an Ohio corporation under the Ohio General Corporation Law.
Section 5.7 ADDITIONAL PROVISIONS. The Bylaws may include
further provisions for Shareholders' votes and meetings and related
matters not inconsistent with the provisions hereof.
ARTICLE VI
----------
LIMITATION OF LIABILITY; INDEMNIFICATION
----------------------------------------
Section 6.1 TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees, nor
any of the Trust's officers, employees or agents, whether past, present or
future,
- 25 -
<PAGE>
shall be personally liable therefor. Every note, bond, contract,
instrument, certificate or undertaking and every other act or thing whatsoever
executed or done by or on behalf of the Trust or the Trustees or any of them in
connection with the Trust shall be conclusively deemed to have been executed or
done only by or for the Trust or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking made
or issued by the Trustees or by any officers or officer shall give notice that
this Declaration of Trust is on file with the Secretary of the State of Ohio and
shall recite to the effect that the same was executed or made by or on behalf of
the Trust or by them as Trustees or Trustee or as officers or officer and not
individually and that the obligations of such instrument are not binding upon
any of them or the Shareholders individually but are binding only upon the
assets and property of the Trust, but the omission thereof shall not operate to
bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.
Section 6.2 TRUSTEE'S GOOD FAITH ACTION; EXPERT ADVICE; NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable for his own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law.
Subject to the foregoing, (a) the Trustees shall not be responsible or liable in
any event for any neglect or wrongdoing of any officer, agent, employee,
consultant, adviser, administrator, distributor or principal underwriter,
custodian or transfer, dividend disbursing, Shareholder servicing or accounting
agent of the Trust, nor shall any Trustee be responsible for the act or omission
of any other Trustee; (b) the Trustees may take
- 26 -
<PAGE>
advice of counsel or other experts with respect to the meaning and operation of
this Declaration of Trust and their duties as Trustees, and shall be under no
liability for any act or omission in accordance with such advice or for failing
to follow such advice; and (c) in discharging their duties, the Trustees, when
acting in good faith, shall be entitled to rely upon the books of account of the
Trust and upon written reports made to the Trustees by any officer appointed by
them, any independent public accountant, and (with respect to the subject matter
of the contract involved) any officer, partner or responsible employee of a
Contracting Party appointed by the Trustees pursuant to Section 3.3. The
Trustees as such shall not be required to give any bond or surety or any other
security for the performance of their duties. Nothing stated herein is intended
to detract from the protection accorded to Trustees by Ohio Revised Code
Sections 1746.08 and 1701.59, as amended from time to time.
Section 6.3 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
or former Shareholder shall be charged or held to be personally liable for any
obligation or liability of the Trust solely by reason of being or having been a
Shareholder and not because of such Shareholder's acts or omissions or for some
other reason, the Trust (upon proper and timely request by the Shareholder)
shall assume the defense against such charge and satisfy any judgment thereon,
and the Shareholder or former Shareholder (or his heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust estate to be held harmless from and indemnified against
all loss and expense arising from such liability.
Section 6.4 INDEMNIFICATION OF TRUSTEES, OFFICERS, ETC. Subject to and
except as otherwise provided in the Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of its Trustees and officers, including
persons who serve at the Trust's request as directors, officers or trustees of
another organization in which the Trust has any interest as a shareholder,
creditor or otherwise (hereinafter referred to as a "Covered Person") against
all liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
- 27 -
<PAGE>
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee or officer, director or trustee, and except that no Covered
Person shall be indemnified against any liability to the Trust or its
Shareholders to which such Covered Person would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office.
Section 6.5 ADVANCES OF EXPENSES. The Trust shall advance attorneys'
fees or other expenses incurred by a Covered Person in defending a proceeding to
the full extent permitted by the Securities Act of 1933, as amended, the 1940
Act, and Ohio Revised Code Chapter 1707, as amended. In the event any of these
laws conflict with Ohio Revised Code Section 1701.13(E), as amended, these laws,
and not Ohio Revised Code Section 1701.13(E), shall govern.
Section 6.6 INDEMNIFICATION NOT EXCLUSIVE, ETC. The right of
indemnification provided by this Article VI shall not be exclusive of or affect
any other rights to which any such Covered Person may be entitled. As used in
this Article VI, "Covered Person" shall include such person's heirs, executors
and administrators. Nothing contained in this article shall affect any rights to
indemnification to which personnel of the Trust, other than Trustees and
officers, and other persons may be entitled by contract or otherwise under law,
nor the power of the Trust to purchase and maintain liability insurance on
behalf of any such person.
Section 6.7 LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
- 28 -
<PAGE>
ARTICLE VII
-----------
MISCELLANEOUS
-------------
Section 7.1 DURATION AND TERMINATION OF TRUST. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by a majority of the Trustees then in office
subject to a favorable vote of a majority of the outstanding voting Shares, as
defined in the 1940 Act, of each Series voting separately by Series.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall in accordance with such procedures
as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash, securities or other property, or any combination
thereof, and distribute the proceeds to the Shareholders, in conformity with the
provisions of subsection (d) of Section 4.2.
Section 7.2 REORGANIZATION. The Trustees may sell, convey and transfer
the assets of the Trust, or the assets belonging to any one or more Series, to
another trust, partnership, association or corporation organized under the laws
of any state of the United States, or to the Trust to be held as assets
belonging to another Series of the Trust, in exchange for cash, shares or other
securities (including, in the case of a transfer to another Series of the Trust,
Shares of such other Series) with such transfer being made subject to, or with
the assumption by the transferee of, the liabilities belonging to each Series
the assets of which are so transferred; provided, however, that if shareholder
approval is required by the 1940 Act, no assets belonging to any particular
Series shall be so transferred unless the terms of such transfer shall have
first been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined in the
1940 Act, of that Series. Following such transfer, the Trustees shall distribute
such cash, shares or other securities (giving due effect to the assets and
liabilities belonging to and any other differences among the various Series the
assets belonging to which have so been transferred) among the Shareholders of
the Series the assets belonging to which have been so transferred; and if all of
the
- 29 -
<PAGE>
assets of the Trust have been so transferred, the Trust shall be terminated.
Section 7.3 AMENDMENTS. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of
the right to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any Shareholder
or Trustee or repeal the prohibition of assessment upon the Shareholders without
the express consent of each Shareholder or Trustee involved. Subject to the
foregoing, the provisions of this Declaration of Trust (whether or not related
to the rights of Shareholders) may be amended at any time by an instrument in
writing signed by a majority of the then Trustees (or by an officer of the Trust
pursuant to the vote of a majority of such Trustees), when authorized so to do
by the vote in accordance with subsection (e) of Section 4.2 of Shareholders
holding a majority of the Shares entitled to vote, except that amendments either
(a) establishing and designating any new Series of Shares not established and
designated in Section 4.2, or any Class or (b) having the purpose of changing
the name of the Trust or the name of any Shares theretofore established and
designated or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any provision hereof which is internally
inconsistent with any other provision hereof or which is defective or
inconsistent with the 1940 Act or with the requirements of the Internal Revenue
Code and applicable regulations for the Trust's obtaining the most favorable
treatment thereunder available to regulated investment companies, shall not
require authorization by Shareholder vote. Subject to the foregoing, any such
amendment shall be effective as provided in the instrument containing the terms
of such amendment or, if there is no provision therein with respect to
effectiveness, upon the execution of such instrument and of a certificate (which
may be a part of such instrument) executed by a Trustee or officer of the Trust
to the effect that such amendment has been duly adopted.
Section 7.4 FILING OF COPIES; REFERENCES; HEADINGS. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each
- 30 -
<PAGE>
amendment hereto shall be filed by the Trust with the Secretary of the State of
Ohio, as well as any other governmental office where such filing may from time
to time be required, but the failure to make any such filing shall not impair
the effectiveness of this instrument or any such amendment. Anyone dealing with
the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made, as to the identities of the Trustees and
officers, and as to any matters in connection with the Trust hereunder; and,
with the same effect as if it were the original, may rely on a copy certified by
an officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein," "hereof" and "hereunder" shall be
deemed to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the feminine
and neuter genders. Headings are placed herein for convenience of reference only
and shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. This instrument may be executed in
any number of counterparts each of which shall be deemed an original.
Section 7.5 APPLICABLE LAW. This Declaration of Trust is created under
and is to be governed by and construed and administered according to the laws of
the State of Ohio, including the Ohio General Corporation Law as the same may be
amended from time to time, but the reference to said Corporation Law is not
intended to give the Trust, the Trustees, the Shareholders or any other person
any right, power, authority or responsibility available only to or in connection
with an entity organized in corporate form. The Trust shall be of the type
referred to in Section 1746.01 of the Ohio Revised Code, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
- 31-
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand
for himself and his assigns, as of the day and year first above written.
/s/ John Figliolini
John Figliolini
/s/ Oleg Batrachenko
Oleg Batrachenko
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Before me, a Notary Public in and for said county and state, personally
appeared the above named John Figliolini and Oleg Batrachenko, who acknowledged
that they did sign the foregoing instrument and that the same is their free act
and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal on this ____ day of ________, 1997.
------------------------
Notary Public
My Commission Expires: _______
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<PAGE>
DELTA FUNDS
-----------
AGREEMENT AND DECLARATION OF TRUST
----------------------------------
PAGE
----
ARTICLE I. NAME AND DEFINITIONS.............................1
- ---------- --------------------
Section 1.1 Name.............................................1
Section 1.2 Definitions......................................1
(a) "Trust".................................1
(b) "Trustees"..............................1
(c) "Shares"................................1
(d) "Series"................................1
(e) "Shareholder"...........................2
(f) "1940 Act"..............................2
(g) "Commission"............................2
(h) "Declaration of Trust"..................2
(i) "Bylaws"................................2
ARTICLE II. PURPOSE OF TRUST.................................2
- ---------- ----------------
ARTICLE III. THE TRUSTEES.....................................2
- ------------ ------------
Section 3.1 Number, Designation, Election, Term, etc.........2
(a) Initial Trustees........................2
(b) Number..................................2
(c) Term....................................3
(d) Resignation and Retirement..............3
(e) Removal.................................3
(f) Vacancies...............................3
(g) Effect of Death, Resignation, etc.......4
(h) No Accounting...........................4
Section 3.2 Powers of the Trustees...........................4
(a) Investments.............................5
(b) Disposition of Assets...................5
(c) Ownership Powers........................5
(d) Subscription............................5
(e) Form of Holding.........................6
(f) Reorganization, etc.....................6
(g) Voting Trusts, etc......................6
(h) Compromise..............................6
(i) Partnerships, etc.......................6
- i -
<PAGE>
(j) Borrowing and Security..................6
(k) Guarantees, etc.........................6
(l) Insurance...............................7
(m) Pensions, etc...........................7
Section 3.3 Certain Contracts................................7
(a) Advisory................................8
(b) Administration..........................8
(c) Distribution............................8
(d) Custodian and Depository................8
(e) Transfer and Dividend Disbursing Agency.8
(f) Shareholder Servicing...................8
(g) Legal, Accounting, Taxes and Other......9
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees.....................................10
Section 3.5 Ownership of Assets of the Trust................10
ARTICLE IV. SHARES..........................................10
- ---------- ------
Section 4.1 Description of Shares...........................10
Section 4.2 Establishment and Designation of Series.........12
(a) Assets Belonging to Series.............12
(b) Liabilities Belonging to Series........13
(c) Dividends..............................13
(d) Liquidation............................14
(e) Voting.................................15
(f) Redemption by Shareholder..............15
(g) Redemption by Trust....................15
(h) Net Asset Value........................16
(i) Transfer...............................16
(j) Equality...............................16
(k) Fractions..............................16
(l) Conversion Rights......................17
Section 4.3 Ownership of Shares.............................17
Section 4.4 Investments in the Trust........................17
Section 4.5 No Preemptive Rights............................17
Section 4.6 Status of Shares and Limitation of Personal
Liability.......................................17
- ii -
<PAGE>
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS........18
- --------- ----------------------------------------
Section 5.1 Voting Powers...................................18
Section 5.2 Meetings........................................18
Section 5.3 Record Dates....................................19
Section 5.4 Quorum and Required Vote........................19
Section 5.5 Action by Written Consent.......................20
Section 5.6 Inspection of Records...........................20
Section 5.7 Additional Provisions...........................20
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION........20
- ---------- ----------------------------------------
Section 6.1 Trustees, Shareholders, etc. Not Personally
Liable; Notice..................................20
Section 6.2 Trustee's Good Faith Action; Expert Advice;
No Bond or Surety...............................21
Section 6.3 Indemnification of Shareholders.................21
Section 6.4 Indemnification of Trustees, Officers, etc......22
Section 6.5 Advances of Expenses............................22
Section 6.6 Indemnification Not Exclusive, etc..............22
Section 6.7 Liability of Third Persons Dealing with
Trustees........................................23
ARTICLE VII. MISCELLANEOUS...................................23
- ----------- -------------
Section 7.1 Duration and Termination of Trust...............23
Section 7.2 Reorganization..................................23
Section 7.3 Amendments......................................24
Section 7.4 Filing of Copies; References; Headings..........24
Section 7.5 Applicable Law..................................25
- iii -
<PAGE>
DELTA FUNDS
AGREEMENT AND DECLARATION OF TRUST
MARCH 11, 1997
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this ____ day of March 1997 by and between Delta Funds,
an Ohio Business Trust (the "Trust") and Utopia Capital Management Corporation,
a New York corporation (the "Adviser").
1. DUTIES OF ADVISER. The Trust hereby appoints the Adviser to act as
investment adviser to the Delta Micro Cap Growth Fund, a series of the Trust
(the "Fund") for the period and on such terms as set forth in this Agreement.
The Trust employs the Adviser to manage the investment and reinvestment of the
assets of the Fund, to continuously review, supervise and administer the
investment program of the Fund, to determine in its discretion the securities to
be purchased or sold and the portion of the Fund's assets to be held uninvested,
to provide the Fund with records concerning the Adviser's activities which the
Fund is required to maintain, and to render regular reports to the Trust's
officers and Board of Trustees concerning the Adviser's discharge of the
foregoing responsibilities. The Adviser shall discharge the foregoing
responsibilities subject to the control of the officers and the Board of
Trustees of the Trust, and in compliance with the objectives, policies and
limitations set forth in the Fund's prospectus and applicable laws and
regulations. The Adviser accepts such employment and agrees to render the
services and to provide, at its own expense, the office space, furnishings and
equipment and the personnel required by it to perform the services on the terms
and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities for
the Fund and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Unless and
until otherwise directed by the Board of Trustees of the Fund, the Adviser is
authorized to effect individual securities transactions at commission rates in
excess of the minimum commission rates available, if the Adviser determines in
good faith that such amount of commission is reasonable in relation to the value
of the brokerage or research services provided by such broker or dealer, viewed
in terms of either that particular transaction or the Adviser's overall
responsibilities with respect to the Fund. The
<PAGE>
execution of such transactions shall not be deemed to represent an
unlawful act or breach of any duty created by this Agreement or otherwise. The
Adviser will promptly communicate to the officers and Trustees of the Trust such
information relating to portfolio transactions as they may reasonably request.
3. COMPENSATION OF THE ADVISER. For the services to be
rendered by the Adviser as provided in Section 1 of this Agreement, the Trust
shall pay to the Adviser, at the end of each month, an
advisory fee calculated based on the annual percentage rates as set forth in
Schedule A attached hereto with respect to the average daily net assets of the
Fund for the month. In the event of termination of this Agreement, the fee
provided in this Section shall be computed on the basis of the period ending on
the last business day on which this Agreement is in effect subject to a pro rata
adjustment based on the number of days elapsed in such month as a percentage of
the total number of days in such month.
4. OTHER SERVICES. At the request of the Trust, the Adviser
in its discretion may make available to the Fund office facilities,
equipment, personnel and other services. Such office facilities,
equipment, personnel and services shall be provided for or rendered
by the Adviser and billed to the Fund at the Adviser's cost.
5. REPORTS. The Trust agrees to furnish to the Adviser
current prospectuses, statements of additional information, proxy
statements, reports to stockholders, certified copies of its
financial statements, and such other information with regard to the
Trust and the Fund as the Adviser may reasonably request.
6. STATUS OF ADVISER. The services of the Adviser to the
Fund are not to be deemed exclusive, and the Adviser shall be free
to render similar services to others.
7. LIABILITY OF ADVISER. In the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the
-2-
<PAGE>
Investment Company Act of 1940, as amended ("1940 Act")), the Adviser shall not
be subject to any liability whatsoever to the Trust, or to any stockholder of
the Trust, for any error of judgment, mistake of law or any other act or
omission in the course of, or connected with, rendering services hereunder
including, without limitation, for any losses that may be sustained in
connection with the purchase, holding, redemption or sale of any security on
behalf of the Fund.
8. PERMISSIBLE INTERESTS. Subject to and in accordance with the
Agreement and Declaration of Trust and the Certificate of Incorporation of the
Adviser, Trustees, officers, agents and shareholders of the Trust are or may be
interested in the Adviser (or any successor thereof) as Trustees, officers,
agents, shareholders or otherwise; Trustees, officers, agents and shareholders
of the Adviser are or may be interested in the Trust as Trustees, officers,
shareholders or otherwise; and the Adviser (or any successor) is or may be
interested in the Fund as a shareholder or otherwise; and that the effect of any
such interrelationships shall be governed by said Agreement and Declaration of
Trust and the provisions of the 1940 Act.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated
as provided herein, shall continue until the earlier of the end of two years
after the date first written above or a date within such two-year period as
specifically approved (a) by the vote of a majority of those members of the
Board of Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the Fund.
This Agreement shall thereafter continue for periods of one year so long as such
continuance is specifically approved at least annually; (a) by the vote of a
majority of those members of the Board of Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Fund; provided, however, that if the
holders of the Fund fail to approve the Agreement as provided herein, the
Adviser may continue to serve in such capacity in the manner and to the extent
permitted
-3-
<PAGE>
by the 1940 Act and rules thereunder. This Agreement may be terminated
with respect to the Fund at any time, without the payment of any penalty, by
vote of a majority of the entire Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Fund on 60 days' written
notice to the Adviser. This Agreement may be terminated by the Adviser at any
time, without the payment of any penalty, upon 90 days' written notice to the
Trust. This Agreement will automatically and immediately terminate in the event
of its assignment, provided that an assignment to a corporate successor to all
or substantially all of the Adviser's business or to a wholly-owned subsidiary
of such corporate successor which does not result in a change of actual control
of the Adviser's business shall not be deemed to be an assignment for the
purposes of this Agreement. Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid, to the other party at any
office of such party and shall be deemed given when received by the addressee.
As used in this Section 9, the terms "assignment," "interested persons," and "a
vote of a majority the outstanding voting securities" shall have the respective
meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section 2(a)(42) of
the 1940 Act.
10. AMENDMENT OF AGREEMENT. This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by vote of a majority
of those members of the Board of Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) by vote of a
majority of the outstanding voting securities of the Fund.
11. USE OF NAME. The Trust agrees that if this Agreement is
terminated and the Adviser shall no longer be the investment adviser to the
Fund, the Trust will, within a reasonable period of time, change its name to
delete reference to "Delta."
12. SEVERABILITY. If any provisions of this Agreement shall
be held or made invalid by a court decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected
thereby.
13. APPLICABLE LAW. This Agreement shall be construed in
-4-
<PAGE>
accordance with the laws of the State of New York, provided, that
nothing herein shall be construed as being inconsistent with the
1940 Act.
14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first written above.
UTOPIA CAPITAL MANAGEMENT DELTA FUNDS
CORPORATION
By: ____________________ By: ______________________
Name: ____________________ Name: ______________________
Title: ____________________ Title: ______________________
-5-
<PAGE>
SCHEDULE A
PORTFOLIO ADVISORY FEES
Assets Percent
First $100 million 1.00
From $100 million to $200 million 0.85
More than $200 million 0.70
- 6 -
DISTRIBUTION AGREEMENT
This Agreement made as of March, 1997 by and between The Delta Funds,
an Ohio business trust (the "Trust"), and European Equity Partners, Inc., a
Connecticut corporation ("Underwriter").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, Underwriter is a broker-dealer registered with the
Securities and Exchange Commission and a member of the National
Association of Securities Dealers, Inc. (the "NASD"); and
WHEREAS, the Trust and Underwriter are desirous of entering into an
agreement providing for the distribution by Underwriter of shares of beneficial
interest (the "Shares") of the Delta Micro-Cap Fund, a series of shares of the
Trust;
WHEREAS, the Trust has adopted a plan of distribution pursuant to Rule
12b-1 under the Investment Company Act with respect to the Shares (the "Plan")
authorizing payment by the Trust to the Distributor with respect to the
distribution of Shares and the maintenance of related shareholder accounts.
NOW, THEREFORE, in consideration of the promises and agreements of the
parties contained herein, the parties agree as follows:
1. Appointment.
The Trust hereby appoints Underwriter as its exclusive agent
for the distribution of the Shares, and Underwriter hereby accepts such
appointment under the terms of this Agreement. While this Agreement is in force,
the Trust shall not sell any Shares except on the terms set forth in this
Agreement. Notwithstanding any other provision hereof, the Trust may terminate,
suspend or withdraw the offering of Shares whenever, in its sole discretion, it
deems such action to be desirable.
2. Sale and Repurchase of Shares.
(a) Underwriter will have the right, as agent for the
<PAGE>
Trust, to sell Shares to responsible investment dealers against orders therefor
at the public offering price (as defined in subparagraph 2(d) hereof). Upon
receipt of an order to purchase Shares from a dealer, Underwriter will promptly
cause such order to be filled by the Trust.
(b) Underwriter will also have the right, as agent for the
Trust, to sell such Shares to the public against orders therefor at the public
offering price.
(c) Underwriter will also have the right to take, as agent for
the Trust, all actions which, in Underwriter's judgment, are necessary to carry
into effect the distribution of the Shares.
(d) The public offering price for the Shares shall be the
respective net asset value of the Shares then in effect, plus any applicable
sales charge determined in the manner set forth in the Trust's effective
Registration Statement on Form N-1A under the Securities Act of 1933, as
amended, including the then current prospectus and statement of additional
information (the "Registration Statement"), or as permitted by the Act and the
rules and regulations of the Securities and Exchange Commission promulgated
thereunder. In no event shall any applicable sales charge exceed the maximum
sales charge permitted by the Rules of Fair Practice of the NASD.
(e) The net asset value of the Shares shall be determined in
the manner provided in the Registration Statement, and when determined shall be
applicable to transactions as proved for in the Registration Statement. The net
asset value of the Shares shall be calculated by the Trust or by another entity
on behalf of the Trust. Underwriter shall have no duty to inquire into or
liability for the accuracy of the net asset value per Share as calculated.
(f) On every sale, the Trust shall receive the applicable net
asset value of the Shares promptly, but in no event later than the tenth
business day following the date on which Underwriter shall have received an
order for the purchase of the Shares. Underwriter shall have the right to retain
the sales charge, if any, less any applicable dealer discount.
(g) Upon receipt of purchase instructions, Underwriter
-2-
<PAGE>
will transmit such instructions to the Trust or its transfer agent for
registration of the Shares purchased.
(h) Nothing in this Agreement shall prevent Underwriter or any
affiliated person (as defined in the Act) of Underwriter from acting as
underwriter or distributor for any other person, firm or corporation (including
other investment companies) or in any way limit or restrict Underwriter or any
such affiliated person from buying, selling or trading any securities for its or
their own account or for the accounts of others for whom it or they amy be
acting; provided, however, that Underwriter expressly represents that it will
undertake no activities which, in its judgment, will adversely affect the
performance of its obligations to the Trust under this Agreement.
(i) Underwriter, as agent of and for the account of the Trust,
may repurchase the Shares at such prices and upon such terms and conditions as
shall be specified in the Registration Statement.
3. Sale of Shares by the Trust.
The Trust reserves the right to issue any Shares at any time
directly to the holders of Shares ("Shareholders"), to sell Shares to its
Shareholders or to other persons approved by Underwriter at not less than net
asset value and to issue Shares in exchange for substantially all the assets of
any corporation or trust or for the shares of any corporation or trust.
4. Basis of Sale of Shares.
Underwriter does not agree to sell any specific number of
Shares. Underwriter, as agent for the Trust, undertakes to sell Shares on a best
efforts basis only against orders therefor.
5. Rules of NASD, etc.
(a) Underwriter will conform to the Rules of Fair Practice of
the NASD and the securities laws of any jurisdiction in which it sells, directly
or indirectly, any Shares.
(b) Underwriter will require each dealer to whom Underwriter
sells Shares to conform to the applicable provisions hereof and the Registration
Statement with respect to the public
-3-
<PAGE>
offering price of the Shares, and neither Underwriter nor any such dealers
shall withhold the placing of purchase orders so as to make a profit thereby.
(c) Underwriter agrees to furnish to the Trust sufficient
copies of any agreements, plans or other materials it intends to use in
connection with any sales of Shares in adequate time for the Trust to file and
clear them with the proper authorities before they are put in use, and not to
use them until so filed and cleared.
(d) Underwriter, at its own expense, will qualify as dealer or
broker, or otherwise, under all applicable State or federal laws required in
order that Shares may be sold in such States as may be mutually agreed upon by
the parties.
(e) Underwriter shall not make, or permit any representative,
broker or dealer to make, in connection with any sale or solicitation of a sale
of the Shares, any representations concerning the Shares except those contained
in the then current prospectus and statement of additional information covering
the Shares and in printed information approved by the Trust as information
supplemental to such prospectus and statement of additional information. Copies
of the then effective prospectus and statement of additional information and any
such printed supplemental information will be supplied by the Trust to
Underwriter in reasonable quantities upon request.
6. Records to be Supplied by Trust.
The Trust shall furnish to Underwriter copies of all
information, financial statement and other papers which Underwriter may
reasonably request for use in connection with the distribution of the Shares,
and this shall include, but shall not be limited to, one certified copy, upon
request by Underwriter, of all financial statements prepared for the Trust by
independent public accountants.
7. Expenses.
In the performance of its obligations under this Agreement,
Underwriter will pay only the costs incurred in qualifying as a broker or dealer
under state and federal laws and
- 4 -
<PAGE>
in establishing and maintaining its relationships with the dealers selling the
Shares. All other costs in connection with the offering of the Shares will be
paid by the Trust or the Trust's investment adviser (the "Adviser") in
accordance with agreements between them as permitted by applicable law,
including the Act and rules and regulations promulgated thereunder.
8. Indemnification of Trust.
Underwriter, to the extent of the net commission, if any,
received by it from the sale of Shares but to no greater amount, agrees to
indemnify and hold harmless the Trust, the Adviser and each person who has been,
is, or amy hereafter be a trustee, director, officer, employee, partner,
shareholder or control person of the Trust or the Adviser, against any loss,
damage or expense (including the reasonable costs of investigation) reasonably
incurred by any of them in connection with any claim or in connection with any
action, suit or proceeding to which any of them may be a party, which arises out
of or is alleged to arise out of or is based upon any untrue statement or
alleged untrue statement of a material fact, or the omission or alleged omission
to state a material fact necessary to make the statements not misleading, on the
part of Underwriter or any agent or employee of Underwriter or any other person
for whose acts Underwriter is responsible, unless such statement or omission was
made in reliance upon written information furnished by the Trust or the Adviser.
Underwriter likewise, to the extent of the net commission received by it from
the sale of Shares but to no greater amount, agrees to indemnify and hold
harmless the Trust, the Adviser and each such person in connection with any
claim or in connection with any action, suit or proceeding which arises out of
or is alleged to arise out of Underwriter's failure to exercise reasonable care
and diligence with respect to its services, if any, rendered in connection with
investment, reinvestment, automatic withdrawal and other loans for Shares. The
term "expenses" for purposes of this and the next paragraph includes amounts
paid in satisfaction of judgments or in settlements which are made with
Underwriter's consent. The foregoing rights of indemnification shall be in
addition to any other rights to which the Trust, the Adviser or each such
person may be entitled as a matter of law.
9. Indemnification of Underwriter.
- 5 -
<PAGE>
Underwriter, its directors, officers, employees, partners,
shareholders and control persons shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust in connection with the
matters to which this Agreement relates, except a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of any of such persons in
the performance of Underwriter's duties or from the reckless disregard by any of
such persons of Underwriter's obligations and duties under this Agreement. The
Trust will advance attorneys' fees or other expenses incurred by any such person
in defending a proceeding, upon the undertaking by or on behalf of such person
to repay the advance if it is ultimately determined that such person is not
entitled to indemnification. Any person employed by Underwriter who may also be
or become any officer or employee of the Trust shall be deemed, when acting
within the scope of his employment by the Trust, to be acting in such employment
solely for the Trust and not as an employee or agent of Underwriter.
10. Termination and Amendment of this Agreement.
This Agreement shall automatically terminate, without the
payment of any penalty, in the event of its assignment. This Agreement may be
amended only if such amendment is approved (i) by Underwriter, (ii) either by
action of the Board of Trustees of the Trust or at a meeting of the Shareholders
of the Trust by the affirmative vote of a majority of the outstanding Shares,
and (iii) by a majority of the Trustees of the Trust who are not interested
persons of the Trust or of Underwriter by vote cast in person at a meeting
called for the purpose of voting on such approval.
Either the Trust or Underwriter may at any time terminate this
Agreement on sixty (60) days' written notice delivered or mailed by registered
mail, postage prepaid, to the other party.
11. Effective Period of this Agreement.
This Agreement shall take effect upon its execution and shall
remain in full force and effect for a period of two (2) years from the date of
its execution (unless terminated automatically as set forth in Section 10), and
from year to year thereafter, subject to annual approval (i) by Underwriter,
(ii) by the Board of Trustees of the Trust or a vote of a majority of the
outstanding Shares, and (iii) by a majority of the Trustees of the Trust who
- 6 -
<PAGE>
are not interested persons of the Trust or of Underwriter by vote cast in person
at a meeting called for the purpose of voting on such approval.
12. Limitation of Liability.
It is expressly agreed that the obligations of the Trust
hereunder shall not be binding upon any of the Trustees, Shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the trust
property of the Trust, as provided in the Agreement and Declaration of Trust of
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees and Shareholders of the Trust and signed by an officer of the
Trust, acting as such, and neither such authorization by such Trustees and
Shareholders 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 trust property of the Trust as provided
in its Agreement and Declaration of Trust.
13. New Series.
The terms and provisions of this Agreement shall become
automatically applicable to any additional series of the Trust established
during the initial or renewal term of this Agreement.
14. Successor Investment Company.
Unless this Agreement has been terminated in accordance with
Paragraph 10, the terms and provisions of this Agreement shall become
automatically applicable to any investment company which is a successor to the
Trust as a result of reorganization, recapitalization or change of domicile.
15. Severability.
In the event any provision of this Agreement is determined to
be void or unenforceable, such determination shall not affect the remainder of
this Agreement, which shall continue to be in force.
16. Questions of Interpretation.
- 7 -
<PAGE>
(a) This Agreement shall be governed by the laws of the
State of New York.
(b) 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 Act shall be resolved by reference to such term or provision of
the Act and to interpretation 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 issued pursuant to said Act,
reflected in any provision of this Agreement is revised by rule, regulation or
order of the Securities and Exchange Commission, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
17. Notices.
Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Trust
for this purpose shall be 312 Walnut Street, Cincinnati, Ohio 45202 and the
address of the Underwriter for this purpose shall be 551 Fifth Avenue, New York,
NY 10022.
IN WITNESS WHEREOF, the Trust and Underwriter have each caused this
Agreement to be signed in duplicate on their behalf, all as of the date and year
first above written.
ATTEST: THE DELTA FUNDS
_______________________ By:/s/ John Figliolini
JOHN FIGLIOLINI
Its: President
ATTEST: EUROPEAN EQUITY PARTNERS, INC.
_______________________ By:____________________________
Its:___________________________
-8-
THE DELTA FUNDS
DEALER'S AGREEMENT
European Equity Partners, Inc. ("Underwriter") invites you, as a selected
dealer, to participate as principal in the distribution of shares of the mutual
funds set forth on Schedule A to this Agreement (the "Funds"), of which it is
the exclusive underwriter. Underwriter agrees to sell to you, subject to any
limitations imposed by the Funds, Shares issued by the Funds and to promptly
confirm each sale to you. All sales will be made according to the following
terms:
1. All offerings of any of the Shares by you must be made at the public
offering prices, and shall be subject to the conditions of offering, set forth
in the then current Prospectus of the Funds and to the terms and conditions
herein set forth, and you agree to comply with all requirements applicable to
you of all applicable laws, including federal and state securities laws, the
rules and regulations of the Securities and Exchange Commission, and the Rules
of Fair Practice of the National Association of Securities Dealers, Inc. (the
"NASD"), including Section 24 of the rules of Fair Practice of the NASD. You
will not offer the Shares for sale in any state or other jurisdiction where they
are not qualified for sale under the Blue Sky Laws and regulations of such state
or jurisdiction, or where you are not qualified to act as a dealer. Upon
application to Underwriter, Underwriter will inform you as to the states or
other jurisdictions in which Underwriter believes the Shares may legally be
sold.
2. (a) You will receive a discount from the public offering price
("concession") on all Shares purchased by you from Underwriter as indicated on
Schedule A, as it may be amended by Underwriter form time to time.
(b) In all transactions in open accounts in which you are
designated as Dealer of Record, you will receive the concessions as set forth on
Schedule A. You hereby authorize Underwriter to act as your agent in connection
with all transactions in open accounts in which you are designated as Dealer of
Record. All designations as Dealer of Record, and all authorizations of
Underwriter to act as your Agent pursuant thereto, shall cease upon the
termination of this Agreement or upon the investor's instructions to transfer
his open account to another Dealer of Record. No dealer concessions will be
allowed on
<PAGE>
purchases generating less than $1.00 in dealer concessions.
(c) As the exclusive underwriter of the Shares, Underwriter
reserves the privilege of revising the discounts specified on Schedule A at any
time by written notice.
3. Concessions will be paid to you at the address of your principal office,
as indicated below in your acceptance of this Agreement.
4. Underwriter reserves the right to cancel this Agreement at any time
without notice if any Shares shall be offered for sale by you at less than the
then current public offering prices determined by, or for, the Funds.
5. All orders are subject to acceptance or rejection by Underwriter in its
sole discretion. The Underwriter reserves the right, in its discretion, without
notice, to suspend sales or withdraw the offering of Shares entirely.
6. Payment shall be made to the Funds and shall be received by its Transfer
Agent within three (3) business days after the acceptance of your order or such
shorter time as may be required by law. With respect to all Shares ordered by
you for which payment has not been received, you hereby assign and pledge to
Underwriter all of your right, title and interest in such Shares to secure
payment therefor. You appoint Underwriter as your agent to execute and deliver
all documents necessary to effectuate any of the transactions described in this
paragraph. If such payment is not received within the required time period,
Underwriter reserves the right, without notice, and at its option, forthwith (a)
to cancel the sale, (b) to sell the Shares ordered by you back to the Funds, or
(c) to assign your payment obligation, accompanied by all pledged Shares, to any
person. You agree that Underwriter may hold you responsible for any loss,
including loss of profit, suffered by the Funds, its Transfer Agent or
Underwriter, resulting from your failure to make payment within the required
time period.
7. No person is authorized to make any representations concerning Shares of
the Funds except those contained in the current applicable Prospectus and
Statement of Additional Information and in sales literature issued and furnished
by Underwriter supplemental to such Prospectus. Underwriter will
2
<PAGE>
furnish additional copies of the current Prospectus and Statement of Additional
Information and such sales literature and other releases and information issued
by Underwriter in reasonable quantities upon request.
8. Under this Agreement, you act as principal and are not employed by
Underwriter as broker, agent or employee. You are not authorized to act for
Underwriter nor to make any representation on its behalf; and in purchasing or
selling Shares hereunder, you rely only upon the current Prospectus and
Statement of Additional Information furnished to you by Underwriter form time to
time and upon such written representations as may hereafter be made by
Underwriter to you over its signature.
9. You appoint the transfer agent for the Funds as your agent to execute
the purchase transactions of Shares in accordance with the terms and provisions
of any account, program, plan or service established or used by your customers
and to confirm each purchase to your customers on your behalf, and you guarantee
the legal capacity of your customers purchasing such Shares and any co-owners of
such Shares.
10. You will (a) maintain all records required by law relating to
transactions in the Share, and upon the request of Underwriter, or the request
of the Funds, promptly make such records available to Underwriter or to the
Funds as are requested, and (b) promptly notify Underwriter if you experience
any difficulty in maintaining the records required in the foregoing clause in an
accurate and complete manner. In addition, you will establish appropriate
procedures and reporting forms and schedules, approved by Underwriter and by the
funds, to enable the parties hereto and the Funds to identify all accounts
opened and maintained by your customers.
11. Each party hereto represents that it is presently, and, at all times
during the term of this Agreement, will be, a member in good standing of the
NASD and agrees to abide by all its Rules of Fair Practice including, but not
limited to, the following provisions:
(a) You shall not withhold placing customers' orders for any
Shares so as to profit yourself as a result of such withholding. You shall not
purchase any Shares from Underwriter
3
<PAGE>
other than for investment, except for the purpose of covering purchase orders
already received.
(b) all conditional orders received by Underwriter must
be at a specified definite price.
(c) If any Shares purchased by you are repurchased by the Funds (or by
Underwriter for the account of the Funds) or are tendered for redemption within
seven business days after confirmation of the original sale of such Shares (1)
you agree to forthwith refund to Underwriter the full concession allowed to you
on the original sale, such refund to be paid by Underwriter to the Funds, and
(2) Underwriter shall forthwith pay to the Funds that part of the discount
retained by Underwriter on the original sale. Notice will be given to you of any
such repurchase or redemption within ten days of the date on which the
repurchase or redemption request is made.
(d) Neither Underwriter, as exclusive underwriter for the Funds, nor
you as principal, shall purchase any Shares form a record holder at a price
lower than the net asset value then quoted by, or for, the Funds. Nothing in
this sub-paragraph shall prevent you from selling Shares for the account of a
record holder to Underwriter or the Funds at the net asset value currently
quoted by, or for, the funds and charging the investor a fair commission for
handling the transaction.
(e) You warrant on behalf of yourself and your registered
representatives and employees that any purchase of Shares at net asset value by
the same pursuant to the terms of the Prospectus of the applicable fund is for
investment purposes only and not for purposes of resale. Shares so purchased may
be resold only to the Funds which issued them.
12. You agree that you will indemnify Underwriter, the Funds, the
Funds' transfer agent, the Funds' investment adviser, and the Funds' custodian
and hold such persons harmless from any claims or assertions relating to the
lawfulness of your company's participation in this Agreement and the
transactions contemplated hereby or relating to any activities of any persons or
entities affiliated with your company which are performed in connection with the
discharge of your responsibilities under this Agreement. If
4
<PAGE>
any such claims are asserted, the indemnified parties shall have the right to
engage in their own defense, including the selection and engagement of legal
counsel of their choosing, and all costs of such defense shall be borne by you.
13. This Agreement will automatically terminate in the event of its
assignment. Either party hereto may cancel this Agreement with penalty upon ten
days' written notice. This Agreement may also be terminated as to any Fund at
any time without penalty by the vote of a majority of the members of the Board
of Trustees of the terminating Fund who are not "interested persons" (as such
terms is defined in the Investment Company Act of 1940) and who have not direct
or indirect financial interest in the applicable fund's Distribution Expense
Plan(s) or any agreement relating to such Plan(s), including this Agreement, or
by a vote of a majority of the outstanding voting securities of the terminating
Fund on ten days' written notice.
14. all communications to Underwriter should be sent to 551 Fifth Avenue,
Suite 605, New York, New York 10017, or at such other address as Underwriter may
designate in writing. Any notice you shall be duly given if mailed or
telegraphed to you at the address of your principal office, as indicated below
in your acceptance of this Agreement.
15. This Agreement supersedes any other agreement with you relating to the
offer and sale of the Shares, and relating to any other matter discussed herein.
16. This Agreement shall be binding (i) upon placing your first order with
Underwriter for the purchase of Shares, or (ii) upon receipt by Underwriter in
New York, New York, of a counterpart of this Agreement duly accepted and signed
by you, whichever shall occur first. This Agreement shall be construed in
accordance with the laws of the State of New York.
17. The undersigned, executing this Agreement on behalf of Dealer, hereby
warrants and represents that he is duly authorized to so execute this Agreement
on behalf of Dealer.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return one copy of this Agreement to the Underwriter.
5
<PAGE>
ACCEPTED BY DEALER:
By: _________________________
Authorized Signature
__________________________________ European Equity Partners, Inc.
Type or Print Name, Position
__________________________________ By: /s/ John Figliolini
Dealer Name John Figliolini
__________________________________ _______________________________
Address Date
__________________________________
Address
__________________________________
Phone
__________________________________
Date
6
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the _____ day
of ___________, 1996 by and between Delta Micro Cap Growth Fund, (the "Fund"),
an open-end diversified investment business trust organized under the laws of
Ohio and having its office at 511 Fifth Avenue, Suite 605, New York, New York
10017 and Star Bank, National Association, (the "Custodian"), a national banking
association having its principal office at 425 Walnut Street, Cincinnati, Ohio,
45202.
WHEREAS, the Fund and the Custodian desire to enter into this
Agreement to provide for the custody and safekeeping of the assets of the Fund
as required by the Investment Company Act of 1940, as amended (the "Act").
WHEREAS, the Fund hereby appoints the Custodian as custodian of all
the Fund's Securities and moneys at any time owned by the Fund during the term
of this Agreement (the "Fund Assets").
WHEREAS, the Custodian hereby accepts such appointment as Custodian
and agrees to perform the duties thereof as hereinafter set forth.
THEREFORE, in consideration of the mutual promises hereinafter set
forth, the Fund and the Custodian agree as follows:
ARTICLE I
DEFINITIONS
The following words and phrases, when used in this Agreement, unless
the context otherwise requires, shall have the following meanings:
Authorized Person - the Chairman, President, Secretary, Treasurer,
Controller, or Senior Vice President of the Fund, or any other person, whether
or not any such person is an officer or employee of the Fund, duly authorized by
the Board of Trustees of the Fund to give Oral Instructions and Written
Instructions on behalf of the Fund, and listed in the Certificate annexed hereto
as Appendix A, or such other Certificate as may be received by the Custodian
from time to time.
Book-Entry System - the Federal Reserve Bank book-entry system for
United States Treasury securities and federal agency securities.
Depository - The Depository Trust Company ("DTC"), a limited purpose
trust company its successor(s) and its nominee(s) or any other person or
clearing agent.
Dividend and Transfer Agent - the dividend and transfer agent
appointed, from time to time, pursuant to a written agreement between the
dividend and transfer agent and the Fund
Foreign Securities - a) securities issued and sold primarily outside
of the United States by a foreign government, a national of any foreign country,
or a trust or other organization incorporated or organized under the laws of any
foreign country or; b) securities issued or guaranteed by the government of the
United States, by any state, by any political subdivision or agency thereof, or
by any entity organized under the laws of the United States or of any state
thereof, which have been issued and sold primarily outside of the United States.
Money Market Security - debt obligations issued or guaranteed as to
principal and/or interest by the government of the United States or agencies or
instrumentalities thereof, commercial paper, obligations (including certificates
of deposit, bankers' acceptances, repurchase agreements and reverse repurchase
agreements with respect to the same), and time deposits of domestic banks and
thrift institutions whose deposits are insured by the Federal Deposit Insurance
Corporation, and short-term corporate obligations where the purchase and sale of
such securities normally require settlement in federal funds or their equivalent
on the same day as such purchase and sale, all of which mature in not more than
thirteen (13) months.
-1-
<PAGE>
Officers - the Chairman, President, Secretary, Treasurer, Controller,
and Senior Vice President of the Fund listed in the Certificate annexed hereto
as Appendix A, or such other Certificate as may be received by the Custodian
from time to time.
Oral Instructions - verbal instructions received by the Custodian from
an Authorized Person (or from a person that the Custodian reasonably believes in
good faith to be an Authorized Person) and confirmed by Written Instructions in
such a manner that such Written Instructions are received by the Custodian on
the business day immediately following receipt of such Oral Instructions.
Prospectus - the Fund's then currently effective prospectus and
Statement of Additional Information, as filed with and declared effective from
time to time by the Securities and Exchange Commission.
Security or Securities - Money Market Securities, common stock,
preferred stock, options, financial futures, bonds, notes, debentures, corporate
debt securities, mortgages, and any certificates, receipts, warrants, or other
instruments representing rights to receive, purchase, or subscribe for the same
or evidencing or representing any other rights or interest therein, or any
property or assets.
Written Instructions - communication received in writing by the
Custodian from an Authorized Person.
ARTICLE II
DOCUMENTS AND NOTICES TO BE FURNISHED BY THE FUND
A The following documents, including any amendments thereto, will be
provided contemporaneously with the execution of the Agreement, to the Custodian
by the Fund:
1. A copy of the Articles of Incorporation of the Fund certified
by the Secretary.
2. A copy of the By-Laws of the Fund certified by the Secretary.
3. A copy of the resolution of the Board of Trustees of the Fund
appointing the Custodian, certified by the Secretary.
4. A copy of the then current Prospectus.
5. A Certificate of the President and Secretary of the Fund
setting forth the names and signatures of the Officers of the
Fund.
B. The Fund agrees to notify the Custodian in writing of the
appointment of any Dividend and Transfer Agent.
ARTICLE III
Receipt of Fund Assets
A. During the term of this Agreement, the Fund will deliver or cause
to be delivered to the Custodian all moneys constituting Fund Assets. The
Custodian shall be entitled to reverse any deposits made on the Fund's behalf
where such deposits have been entered and moneys are not finally collected
within 30 days of the making of such entry.
B. During the term of this Agreement, the Fund will deliver or cause
to be delivered to the Custodian all Securities constituting Fund Assets. The
Custodian will not have any duties or responsibilities with respect to such
Securities until actually received by the Custodian.
C. As and when received, the Custodian shall deposit to the account(s)
of the Fund any and all payments for shares of the Fund issued or sold from time
to time as they are received from the Fund's distributor or Dividend and
Transfer Agent or from the Fund itself.
ARTICLE IV
Disbursement of Fund Assets
A. The Fund shall furnish to the Custodian a copy of the resolution of
the Board of Trustees of the Fund, certified by the Fund's Secretary, either (i)
setting forth the date of the declaration of any dividend or distribution in
respect of shares of the Fund, the date of payment thereof, the record date as
-2-
<PAGE>
of which Fund shareholders entitled to payment shall be determined, the amount
payable per share to Fund shareholders of record as of that date, and the total
amount to be paid by the Dividend and Transfer Agent on the payment date, or
(ii) authorizing the declaration of dividends and distributions in respect of
shares of the Fund on a daily basis and authorizing the Custodian to rely on a
Certificate setting forth the date of the declaration of any such dividend or
distribution, the date of payment thereof, the record date as of which Fund
shareholders entitled to payment shall be determined, the amount payable per
share to Fund shareholders of record as of that date, and the total amount to be
paid by the Dividend and Transfer Agent on the payment date.
On the payment date specified in such resolution or Certificate
described above, the Custodian shall segregate such amounts from moneys held for
the account of the Fund so that they are available for such payment.
B. Upon receipt of Written Instructions so directing it, the Custodian
shall segregate amounts necessary for the payment of redemption proceeds to be
made by the Dividend and Transfer Agent from moneys held for the account of the
Fund so that they are available for such payment.
C. Upon receipt of a Certificate directing payment and setting forth
the name and address of the person to whom such payment is to be made, the
amount of such payment, and the purpose for which payment is to be made, the
Custodian shall disburse amounts as and when directed from the Fund Assets. The
Custodian is authorized to rely on such directions and shall be under no
obligation to inquire as to the propriety of such directions.
D. Upon receipt of a Certificate directing payment, the Custodian
shall disburse moneys from the Fund Assets in payment of the Custodian's fees
and expenses as provided in Article VIII hereof.
ARTICLE V
Custody of Fund Assets
A. The Custodian shall open and maintain a separate bank account or
accounts in the United States in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Agreement, and shall
hold all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used by the Fund
in accordance with Rule 17f-3 under the Act. Moneys held by the Custodian on
behalf of the Fund may be deposited by the Custodian to its credit as Custodian
in the banking department of the Custodian. Such moneys shall be deposited by
the Custodian in its capacity as such, and shall be withdrawable by the
Custodian only in such capacity.
B. The Custodian shall hold all Securities delivered to it in
safekeeping in a separate account or accounts maintained at Star Bank, N.A. for
the benefit of the Fund.
C. All Securities held which are issued or issuable only in bearer
form, shall be held by the Custodian in that form; all other Securities held for
the Fund shall be registered in the name of the Custodian or its nominee. The
Fund agrees to furnish to the Custodian appropriate instruments to enable the
Custodian to hold, or deliver in proper form for transfer, any Securities that
it may hold for the account of the Fund and which may, from time to time, be
registered in the name of the Fund.
D. With respect to all Securities held for the Fund , the Custodian
shall on a timely basis (concerning items 1 and 2 below, as defined in the
Custodian's Standards of Service Guide, as amended from time to time, annexed
hereto as Appendix C):
1.) Collect all income due and payable with respect to such
Securities;
2.) Present for payment and collect amounts payable upon all
Securities which may mature or be called, redeemed, or
retired, or otherwise become payable;
3.) Surrender Securities in temporary form for definitive
Securities; and
4.) Execute, as agent, any necessary declarations or
certificates of ownership under the Federal income tax
laws or the laws or regulations of any other taxing
authority, including any foreign taxing authority, now
or hereafter in effect.
E. Upon receipt of a Certificate and not otherwise, the Custodian
shall:
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1.) Execute and deliver to such persons as may be designated
in such Certificate proxies, consents, authorizations,
and any other instruments whereby the authority of the
Fund as beneficial owner of any Securities may be
exercised;
2.) Deliver any Securities in exchange for other Securities
or cash issued or paid in connection with the
liquidation, reorganization, refinancing, merger,
consolidation, or recapitalization of any trust, or the
exercise of any conversion privilege;
3.) Deliver any Securities to any protective committee,
reorganization committee, or other person in connection
with the reorganization, refinancing, merger,
consolidation, recapitalization, or sale of assets of
any trust, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts
or other instruments or documents as may be issued to it
to evidence such delivery;
4.) Make such transfers or exchanges of the assets of the
Fund and take such other steps as shall be stated in said
Certificate to be for the purpose of effectuating any
duly authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
and
5.) Deliver any Securities held for the Fund to the
depository agent for tender or other similar offers.
F. The Custodian shall promptly deliver to the Fund all notices, proxy
material and executed but unvoted proxies pertaining to shareholder meetings of
Securities held by the Fund. The Custodian shall not vote or authorize the
voting of any Securities or give any consent, waiver or approval with respect
thereto unless so directed by a Certificate or Written Instruction.
G. The Custodian shall promptly deliver to the Fund all information
received by the Custodian and pertaining to Securities held by the Fund with
respect to tender or exchange offers, calls for redemption or purchase, or
expiration of rights.
ARTICLE VI
Purchase and Sale of Securities
A. Promptly after each purchase of Securities by the Fund, the Fund
shall deliver to the Custodian (i) with respect to each purchase of Securities
which are not Money Market Securities, Written Instructions, and (ii) with
respect to each purchase of Money Market Securities, Written Instructions or
Oral Instructions, specifying with respect to each such purchase the;
1.) name of the issuer and the title of the Securities,
2.) principal amount purchased and accrued interest, if any,
3.) date of purchase and settlement,
4.) purchase price per unit,
5.) total amount payable, and
6.) name of the person from whom, or the broker through
which, the purchase was made. The Custodian shall,
against receipt of Securities purchased by or for the
Fund, pay out of the Fund Assets, the total amount
payable to the person from whom or the broker through
which the purchase was made, provided that the same
conforms to the total amount payable as set forth in
such Written Instructions or Oral Instructions, as the
case may be.
B. Promptly after each sale of Securities by the Fund, the Fund shall
deliver to the Custodian (i) with respect to each sale of Securities which are
not Money Market Securities, Written Instructions, and (ii) with respect to each
sale of Money Market Securities, Written Instructions or Oral Instructions,
specifying with respect to each such sale the;
1.) name of the issuer and the title of the Securities,
2.) principal amount sold and accrued interest, if any,
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<PAGE>
3.) date of sale and settlement,
4.) sale price per unit,
5.) total amount receivable, and
6.) name of the person to whom, or the broker through which,
the sale was made.
The Custodian shall deliver the Securities against receipt of the total amount
receivable, provided that the same conforms to the total amount receivable as
set forth in such Written Instructions or Oral Instructions, as the case may be.
C. On contractual settlement date, the account of the Fund will be
charged for all purchased Securities settling on that day, regardless of whether
or not delivery is made. Likewise, on contractual settlement date, proceeds from
the sale of Securities settling that day will be credited to the account of the
Fund, irrespective of delivery.
D. Purchases and sales of Securities effected by the Custodian will be
made on a delivery versus payment basis. The Custodian may, in its sole
discretion, upon receipt of a Certificate, elect to settle a purchase or sale
transaction in some other manner, but only upon receipt of acceptable
indemnification from the Fund.
E. The Custodian shall, upon receipt of a Written Instructions so
directing it, establish and maintain a segregated account or accounts for and on
behalf of the Fund. Cash and/or Securities may be transferred into such account
or accounts for specific purposes, to-wit:
1.) in accordance with the provision of any agreement among
the Fund, the Custodian, and a broker-dealer registered
under the Securities and Exchange Act of 1934, as
amended, and also a member of the National Association
of Securities Dealers (NASD) (or any futures commission
merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of the Options
Clearing Corporation and of any registered national
securities exchange, the Commodity Futures Trading
Commission, any registered contract market, or any
similar organization or organizations requiring escrow
or other similar arrangements in connection with
transactions by the Fund;
2.) for purposes of segregating cash or government
securities in connection with options purchased, sold,
or written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund;
3.) for the purpose of compliance by the fund with the
procedures required for reverse repurchase agreements,
firm commitment agreements, standby commitment
agreements, and short sales by Act Release No. 10666, or
any subsequent release or releases or rule of the
Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered
investment companies; and
4.) for other corporate purposes, only in the case of this
clause 4 upon receipt of a copy of a resolution of the
Board of Trustees of the Fund, certified by the
Secretary of the Fund, setting forth the purposes of
such segregated account.
F. Except as otherwise may be agreed upon by the parties hereto, the
Custodian shall not be required to comply with any Written Instructions to
settle the purchase of any Securities on behalf of the Fund unless there is
sufficient cash in the account(s) at the time or to settle the sale of any
Securities from an account(s) unless such Securities are in deliverable form.
Notwithstanding the foregoing, if the purchase price of such Securities exceeds
the amount of cash in the account(s) at the time of such purchase, the Custodian
may, in its sole discretion, advance the amount of the difference in order to
settle the purchase of such Securities. The amount of any such advance shall be
deemed a loan from the Custodian to the Fund payable on demand and bearing
interest accruing from the date such loan is made up to but not including the
date such loan is repaid at a rate per annum customarily charged by the
Custodian on similar loans.
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ARTICLE VII
Fund Indebtedness
In connection with any borrowings by the Fund, the Fund will cause to
be delivered to the Custodian by a bank or broker requiring Securities as
collateral for such borrowings (including the Custodian if the borrowing is from
the Custodian), a notice or undertaking in the form currently employed by such
bank or broker setting forth the amount of collateral. The Fund shall promptly
deliver to the Custodian a Certificate specifying with respect to each such
borrowing: (a) the name of the bank or broker, (b) the amount and terms of the
borrowing, which may be set forth by incorporating by reference an attached
promissory note duly endorsed by the Fund, or a loan agreement, (c) the date,
and time if known, on which the loan is to be entered into, (d) the date on
which the loan becomes due and payable, (e) the total amount payable to the Fund
on the borrowing date, and (f) the description of the Securities securing the
loan, including the name of the issuer, the title and the number of shares or
the principal amount. The Custodian shall deliver on the borrowing date
specified in the Certificate the required collateral against the lender's
delivery of the total loan amount then payable, provided that the same conforms
to that which is described in the Certificate. The Custodian shall deliver, in
the manner directed by the Fund, such Securities as additional collateral, as
may be specified in a Certificate, to secure further any transaction described
in this Article VII. The Fund shall cause all Securities released from
collateral status to be returned directly to the Custodian and the Custodian
shall receive from time to time such return of collateral as may be tendered to
it.
The Custodian may, at the option of the lender, keep such collateral
in its possession, subject to all rights therein given to the lender because of
the loan. The Custodian may require such reasonable conditions regarding such
collateral and its dealings with third-party lenders as it may deem appropriate.
ARTICLE VIII
Concerning the Custodian
A. Except as otherwise provided herein, the Custodian shall not be
liable for any loss or damage resulting from its action or omission to act or
otherwise, except for any such loss or damage arising out of its own gross
negligence or willful misconduct. The Fund shall defend, indemnify and hold
harmless the Custodian and its directors, officers, employees and agents with
respect to any loss, claim, liability or cost (including reasonable attorneys'
fees) arising or alleged to arise from or relating to the Fund's duties
hereunder or any other action or inaction of the Fund or its Trustees, officers,
employees or agents, except such as may arise from the negligent action,
omission, willful misconduct or breach of this Agreement by the Custodian. The
Custodian may, with respect to questions of law, apply for and obtain the advice
and opinion of counsel, at the expense of the Fund, and shall be fully protected
with respect to anything done or omitted by it in good faith in conformity with
the advice or opinion of counsel. The provisions under this paragraph shall
survive the termination of this Agreement.
B. Without limiting the generality of the foregoing, the Custodian,
acting in the capacity of Custodian hereunder, shall be under no obligation to
inquire into, and shall not be liable for:
1.) The validity of the issue of any Securities purchased by
or for the account of the Fund, the legality of the
purchase thereof, or the propriety of the amount paid
therefor;
2.) The legality of the sale of any Securities by or for the
account of the Fund, or the propriety of the amount for
which the same are sold;
3.) The legality of the issue or sale of any shares of the
Fund, or the sufficiency of the amount to be received
therefor;
4.) The legality of the redemption of any shares of the
Fund, or the propriety of the amount to be paid
therefor;
5.) The legality of the declaration or payment of any
dividend by the Fund in respect of shares of the Fund;
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<PAGE>
6.) The legality of any borrowing by the Fund on behalf of
the Fund, using Securities as collateral;
C. The Custodian shall not be under any duty or obligation to take
action to effect collection of any amount due to the Fund from any Dividend and
Transfer Agent of the Fund nor to take any action to effect payment or
distribution by any Dividend and Transfer Agent of the Fund of any amount paid
by the Custodian to any Dividend and Transfer Agent of the Fund in accordance
with this Agreement.
D. Notwithstanding Section D of Article V, the Custodian shall not be
under any duty or obligation to take action to effect collection of any amount,
if the Securities upon which such amount is payable are in default, or if
payment is refused after due demand or presentation, unless and until (i) it
shall be directed to take such action by a Certificate and (ii) it shall be
assured to its satisfaction (including prepayment thereof) of reimbursement of
its costs and expenses in connection with any such action.
E. The Fund acknowledges and hereby authorizes the Custodian to hold
Securities through its various agents described in Appendix B annexed hereto.
The Fund hereby represents that such authorization has been duly approved by the
Board of Trustees of the Fund as required by the Act. The Custodian acknowledges
that although certain Fund Assets are held by its agents, the Custodian remains
primarily liable for the safekeeping of the Fund Assets.
In addition, the Fund acknowledges that the Custodian may appoint one
or more financial institutions, as agent or agents or as sub-custodian or
sub-custodians, including, but not limited to, banking institutions located in
foreign countries, for the purpose of holding Securities and moneys at any time
owned by the Fund. The Custodian shall not be relieved of any obligation or
liability under this Agreement in connection with the appointment or activities
of such agents or sub-custodians. Any such agent or sub-custodian shall be
qualified to serve as such for assets of investment companies registered under
the Act. Upon request, the Custodian shall promptly forward to the Fund any
documents it receives from any agent or sub-custodian appointed hereunder which
may assist trustees of registered investment companies fulfill their
responsibilities under Rule 17f-5 of the Act.
F. The Custodian shall not be under any duty or obligation to
ascertain whether any Securities at any time delivered to or held by it for the
account of the Fund are such as properly may be held by the Fund under the
provisions of the Articles of Incorporation and the Fund's By-Laws.
G. The Custodian shall treat all records and other information
relating to the Fund and the Fund Assets as confidential and shall not disclose
any such records or information to any other person unless (i) the Fund shall
have consented thereto in writing or (ii) such disclosure is required by law.
H. The Custodian shall be entitled to receive and the Fund agrees to
pay to the Custodian such compensation as shall be determined pursuant to
Appendix D attached hereto, or as shall be determined pursuant to amendments to
such Appendix D. The Custodian shall be entitled to charge against any money
held by it for the account of the Fund, the amount of any of its fees, any loss,
damage, liability or expense, including counsel fees. The expenses which the
Custodian may charge against the account of the Fund include, but are not
limited to, the expenses of agents or sub-custodians incurred in settling
transactions involving the purchase and sale of Securities of the Fund.
I. The Custodian shall be entitled to rely upon any Oral Instructions
and any Written Instructions. The Fund agrees to forward to the Custodian
Written Instructions confirming Oral Instructions in such a manner so that such
Written Instructions are received by the Custodian, whether by hand delivery,
facsimile or otherwise, on the same business day on which such Oral Instructions
were given. The Fund agrees that the failure of the Custodian to receive such
confirming instructions shall in no way affect the validity of the transactions
or enforceability of the transactions hereby authorized by the Fund. The Fund
agrees that the Custodian shall incur no liability to the Fund for acting upon
Oral Instructions given to the Custodian hereunder concerning such transactions.
J. The Custodian will (i) set up and maintain proper books of account
and complete records of all transactions in the accounts maintained by the
Custodian hereunder in such manner as will meet the obligations of the Fund
under the Act, with particular attention to Section 31 thereof and Rules 31a-1
and 31a-2 thereunder and those records are the property of the Fund, and (ii)
preserve for the periods prescribed by applicable Federal statute or regulation
all records required to be so preserved. All such books and records shall be the
property of the Fund, and shall be open to inspection and audit at reasonable
times and with prior notice by Officers and auditors employed by the Fund.
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<PAGE>
K. The Custodian shall send to the Fund any report received on the
systems of internal accounting control of the Custodian, or its agents or
sub-custodians, as the Fund may reasonably request from time to time.
L. The Custodian performs only the services of a custodian and shall
have no responsibility for the management, investment or reinvestment of the
Securities from time to time owned by the Fund. The Custodian is not a selling
agent for shares of the Fund and performance of its duties as custodian shall
not be deemed to be a recommendation to the Fund's depositors or others of
shares of the Fund as an investment.
M. The Custodian shall take all reasonable action, that the Fund may
from time to time request, to assist the Fund in obtaining favorable opinions
from the Fund's independent accountants, with respect to the Custodian's
activities hereunder, in connection with the preparation of the Fund's Form
N-1A, Form N-SAR, or other annual reports to the Securities and Exchange
Commission.
N. The Fund hereby pledges to and grants the Custodian a security
interest in any Fund Assets to secure the payment of any liabilities of the Fund
to the Custodian, whether acting in its capacity as Custodian or otherwise, or
on account of money borrowed from the Custodian. This pledge is in addition to
any other pledge of collateral by the Fund to the Custodian.
ARTICLE IX
Force Majeure
Neither the Custodian nor the Corporation 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; 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, shall use its
best efforts to ameliorate the effects of such failure or delay.
ARTICLE X
Termination
A. Either of the parties hereto may terminate this Agreement for any
reason by giving to the other party a notice in writing specifying the date of
such termination, which shall be not less than ninety (90) days after the date
of giving of such notice. If such notice is given by the Fund, it shall be
accompanied by a copy of a resolution of the Board of Trustees of the Fund,
certified by the Secretary of the Fund, electing to terminate this Agreement and
designating a successor custodian or custodians. In the event such notice is
given by the Custodian, the Fund shall, on or before the termination date,
deliver to the Custodian a copy of a resolution of the Board of Trustees of the
Fund, certified by the Secretary, designating a successor custodian or
custodians to act on behalf of the Fund. In the absence of such designation by
the Fund, the Custodian may designate a successor custodian which shall be a
bank or trust company having not less than $100,000,000 aggregate capital,
surplus, and undivided profits. Upon the date set forth in such notice this
Agreement shall terminate, and the Custodian, provided that it has received a
notice of acceptance by the successor custodian, shall deliver, on that date,
directly to the successor custodian all Securities and moneys then owned by the
Fund and held by it as Custodian. Upon termination of this Agreement, the Fund
shall pay to the Custodian on behalf of the Fund such compensation as may be due
as of the date of such termination. The Fund agrees on behalf of the Fund that
the Custodian shall be reimbursed for its reasonable costs in connection with
the termination of this Agreement.
B. If a successor custodian is not designated by the Fund, or by the
Custodian in accordance with the preceding paragraph, or the designated
successor cannot or will not serve, the Fund shall, upon the delivery by the
Custodian to the Fund of all Securities (other than Securities held in the
Book-Entry System
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<PAGE>
which cannot be delivered to the Fund) and moneys then owned by the
Fund, be deemed to be the custodian for the Fund, and the Custodian shall
thereby be relieved of all duties and responsibilities pursuant to this
Agreement, other than the duty with respect to Securities held in the Book-Entry
System, which cannot be delivered to the Fund, which shall be held by the
Custodian in accordance with this Agreement.
ARTICLE XI
Miscellaneous
A. Appendix A sets forth the names and the signatures of all
Authorized Persons, as certified by the Secretary of the Fund. The Fund agrees
to furnish to the Custodian a new Appendix A in form similar to the attached
Appendix A, if any present Authorized Person ceases to be an Authorized Person
or if any other or additional Authorized Persons are elected or appointed. Until
such new Appendix A shall be received, the Custodian shall be fully protected in
acting under the provisions of this Agreement upon Oral Instructions or
signatures of the then current Authorized Persons as set forth in the last
delivered Appendix A.
B. No recourse under any obligation of this Agreement or for any claim
based thereon shall be had against any organizer, shareholder, Officer,
Director, past, present or future as such, of the Fund or of any predecessor or
successor, either directly or through the Fund or any such predecessor or
successor, whether by virtue of any constitution, statute or rule of law or
equity, or be the enforcement of any assessment or penalty or otherwise; it
being expressly agreed and understood that this Agreement and the obligations
thereunder are enforceable solely against the Fund, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
organizers, shareholders, Officers, Trustees of the Fund or of any predecessor
or successor, or any of them as such. To the extent that any such liability
exists, it is hereby expressly waived and released by the Custodian as a
condition of, and as a consideration for, the execution of this Agreement.
C. The obligations set forth in this Agreement as having been made by
the Fund have been made by the Board of Trustees, acting as such Trustees for
and on behalf of the Fund, pursuant to the authority vested in them under the
laws of the State of Ohio, the Articles of Incorporation and the By-Laws of the
Fund. This Agreement has been executed by Officers of the Fund as officers, and
not individually, and the obligations contained herein are not binding upon any
of the Trustees, Officers, agents or holders of shares, personally, but bind
only the Fund.
D. Provisions of the Prospectus and any other documents (including
advertising material) specifically mentioning the Custodian (other than merely
by name and address) shall be reviewed with the Custodian by the Fund prior to
publication and/or dissemination or distribution, and shall be subject to the
consent of the Custodian.
E. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently given if
addressed to the Custodian and mailed or delivered to it at its offices at Star
Bank Center, 425 Walnut Street, M. L. 6118, Cincinnati, Ohio 45202, attention
Mutual Fund Custody Department, or at such other place as the Custodian may from
time to time designate in writing.
F. Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Fund shall be sufficiently given when
delivered to the Fund or on the second business day following the time such
notice is deposited in the U.S. mail postage prepaid and addressed to the Fund
at its office at 511 Fifth Avenue, Suite 605, New York, New York 10017 or at
such other place as the Fund may from time to time designate in writing.
G. This Agreement, with the exception of the Appendices, may not be
amended or modified in any manner except by a written agreement executed by both
parties with the same formality as this Agreement, and authorized and approved
by a resolution of the Board of Trustees of the Fund.
H. 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 Fund or by the Custodian, and
no attempted assignment by the Fund or the Custodian shall be effective without
the written consent of the other party hereto.
I. This Agreement shall be construed in accordance with the laws of
the State of Ohio.
J. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective Officers, thereunto duly authorized as of the
day and year first above written.
ATTEST: Delta Micro Cap Growth Fund
By: _____________________________
Title:
ATTEST: Star Bank, N.A.
By: _______________________________
Title:
ADMINISTRATIVE SERVICE AGREEMENT
between
DELTA MICRO CAP GROWTH FUND
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]*
*Graphic depicts Delta Micro Cap Growth Fund Logo.
<PAGE>
==============================================================================
INDEX
==============================================================================
1. DUTIES OF THE ADMINISTRATOR..............................................3
2. COMPENSATION OF THE ADMINISTRATOR........................................4
3. RESPONSIBILITY AND INDEMNIFICATION.......................................4
4. REPORTS..................................................................5
5. ACTIVITIES OF THE ADMINISTRATOR..........................................5
6. RECORDS..................................................................5
7. CONFIDENTIALITY..........................................................6
8. DURATION AND TERMINATION OF THE AGREEMENT................................6
9. ASSIGNMENT...............................................................6
10. NEW YORK LAWS TO APPLY..................................................6
11. AMENDMENTS TO THIS AGREEMENT.............................................6
12. MERGER OF AGREEMENT......................................................6
13. NOTICES..................................................................6
SCHEDULE A...................................................................8
(A) ADMINISTRATIVE SERVICE FEE:..............................................8
FEE INCREASES.............................................................8
(B) EXPENSES.................................................................8
(C) STATE REGISTRATION (BLUE SKY) SURCHARGE:.................................9
(D) SPECIAL REPORTS..........................................................9
(E) SECURITY DEPOSIT.........................................................9
SCHEDULE B..................................................................10
2
<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made the 31ST day of March 1997, by and between Delta Micro Cap Growth
Fund, an Ohio Business Trust, having its principal office and place of business
at 551 Fifth Avenue, New York, New York 10017 (the "Fund"), and American Data
Services, Inc., a New York corporation having its principal office and place of
business at 24 West Carver Street., Huntington, New York 11743 (the
"Administrator").
BACKGROUND
WHEREAS, the Fund is a diversified open-end management investment
company registered with the United States Securities and Exchange Commission
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Administrator is a corporation experienced in providing
administrative services to mutual funds and possesses facilities sufficient to
provide such services; and
WHEREAS, the Fund desires to avail itself of the experience,
assistance and facilities of the Administrator and to have the Administrator
perform for the Fund certain services appropriate to the operations of the Fund
and the Administrator is willing to furnish such services in accordance with the
terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and the Administrator hereby agree to the
following:
1. DUTIES OF THE ADMINISTRATOR.
The Administrator will provide the Fund with the necessary office
space, communication facilities and personnel to perform the following services
for the Fund:
(a) Monitor all regulatory (1940 Act and IRS) and prospectus
restrictions for compliance;
(b) Prepare and coordinate the printing of semi-annual and annual
financial statements;
(c) Prepare selected management reports for performance and
compliance analyses as agreed upon by the Fund and Administrator
from time to time;
(d) Prepare selected financial data required for directors'
meetings as agreed upon by the Fund and the Administrator from
time to time and coordinate directors meeting agendas with
outside legal counsel to the Fund;
(e) Determine income and capital gains available for
distribution and calculate distributions required to meet
regulatory, income, and excise tax requirements, to be
reviewed by the Fund's independent public accountants;
(f) Prepare the Fund's federal, state, and local tax returns to be
reviewed by the Fund's independent public accountants;
3
<PAGE>
(g) Prepare and maintain the Fund's operating expense budget to
determine proper expense accruals to be charged to the Fund in
order to calculate it's daily net asset value;
(h) 1940 ACT filings -
In conjunction with the Fund's outside legal counsel the
Administrator will:
- Prepare the Fund's Form N-SAR reports;
- Update all financial sections of the Fund's Statement of
Additional Information and coordinate its completion;
- Update all financial sections of the Fund's prospectus and
coordinate its completion;
- Update all financial sections of the Fund's proxy statement
and coordinate its completion;
- Prepare an annual update to Fund's 24f-2 filing (if
applicable);
(i) Monitor services provided by the Fund's custodian bank as well as
any other service providers to the Fund;
(j) Provide appropriate financial schedules (as requested by the
Fund's independent public accountants or SEC examiners),
coordinate the Fund's annual or SEC audit, and provide office
facilities as may be required;
(k) Attend management and board of directors meetings as requested;
(l) The preparation and filing (filing fee to be paid by the
Fund) of applications and reports as necessary to register or
maintain the Funds registration under the securities or "Blue
Sky" laws of the various states selected by the Fund or its
Distributor.
The Administrator shall, for all purposes herein, be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. COMPENSATION OF THE ADMINISTRATOR.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. RESPONSIBILITY AND INDEMNIFICATION.
(a) The Administrator shall be held to the exercise of reasonable care
in carrying out the provisions of the Agreement, but shall be without liability
to the Fund for any action taken or omitted by it in good faith without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties
hereunder. It shall be entitled to rely upon and may act upon the accounting
records and reports generated by the Fund, advice of the Fund, or of counsel for
the Fund and upon statements of the Fund's independent accountants, and shall be
without liability for any action reasonably taken or omitted pursuant to such
records and reports or advice, provided that such action is not, to the
knowledge of the Administrator, in violation of applicable federal or state laws
or regulations, and provided further that such action is taken without gross
negligence, bad faith, willful misconduct or reckless disregard of its duties.
(b) The Administrator shall not be liable to the Fund for any error of
judgment or mistake of law or for any loss arising out of any act or omission by
the Administrator in the performance of its duties
4
<PAGE>
hereunder except as hereinafter set forth. Nothing herein contained shall be
construed to protect the Administrator against any liability to the Fund or its
security holders to which the Administrator shall otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence in the performance of its
duties on behalf of the Fund, reckless disregard of the Administrator's
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither the
Administrator nor its stockholders, officers, directors, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons harmless
from and against, any liability for and any damages, expenses or losses incurred
by reason of the inaccuracy of information furnished to the Administrator by the
Fund or its authorized agents or in connection with any error in judgment or
mistake of law or any act or omission in the course of, connected with or
arising out of any services to be rendered hereunder, except by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties, by reason of reckless disregard of the Administrator's obligations and
duties under this Agreement or the willful violation of any applicable law.
4. REPORTS.
(a) The Fund shall provide to the Administrator on a quarterly basis a
report of a duly authorized officer of the Fund representing that all
information furnished to the Administrator during the preceding quarter was
true, complete and correct to the best of its knowledge. The Administrator shall
not be responsible for the accuracy of any information furnished to it by the
Fund, and the Fund shall hold the Administrator harmless in regard to any
liability incurred by reason of the inaccuracy of such information.
(b) The Administrator shall provide to the Board of Directors of the
Fund, on a quarterly basis, a report, in such a form as the Administrator and
the Fund shall from time to time agree, representing that, to its knowledge, the
Fund was in compliance with all requirements of applicable federal and state
law, including without limitation, the rules and regulations of the Securities
and Exchange Commission and the Internal Revenue Service, or specifying any
instances in which the Fund was not so in compliance. Whenever, in the course of
performing its duties under this Agreement, the Administrator determines, on the
basis of information supplied to the Administrator by the Fund, that a violation
of applicable law has occurred, or that, to its knowledge, a possible violation
of applicable law may have occurred or, with the passage of time, could occur,
the Administrator shall promptly notify the Fund and its counsel of such
violation.
5. ACTIVITIES OF THE ADMINISTRATOR.
The Administrator shall be free to render similar services to others so
long as its services hereinunder are not impaired thereby.
6. RECORDS.
The records maintained by the Administrator shall be the property of
the Fund, and shall be made available to the Fund promptly upon request by the
Fund in the form in which such records have been maintained or preserved. The
Administrator shall upon approval of the Fund assist the Fund's independent
auditors, or, any regulatory body, in any requested review of the Fund's
accounts and records. The Administrator shall preserve the records in its
possession (at the expense of the Fund) as required by Rule 31a-1 of the 1940
Act.
5
<PAGE>
7. CONFIDENTIALITY.
The Administrator agrees that it will, on behalf of itself and its
officers and employees, treat all transactions contemplated by this Agreement,
and all other information germane thereto, as confidential and such information
shall not be disclosed to any person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THE AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, upon
ninety (90) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
9. ASSIGNMENT.
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 Fund without the prior written consent
of the Administrator, or by the Administrator without the prior written consent
of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed, interpreted and
enforced under New York law as at the time in effect and the applicable
provisions of the 1940 Act. To the extent that the applicable law of the State
of New York, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
13. NOTICES.
To the Fund: To ADS:
John Figliolini Michael Miola
c/o Berkshire International Finance President
551 Fifth Avenue, Suite 605 American Data Services, Inc.
New York, New York 10017 24 West Carver Street
Huntington, New York 11743
6
<PAGE>
With copy to:
Hect & Steckman, P.C., 60 East 42nd Street, Suite 5101,
New York, New York 10165-5101 Attn: Charles J. Hect
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
DELTA MICRO CAP GROWTH FUND AMERICAN DATA SERVICES, INC.
By: /s/ John Figliolini, President By: /s/ Michael Miola, President
John Figliolini, President Michael Miola, President
7
<PAGE>
SCHEDULE A
(a) ADMINISTRATIVE SERVICE FEE:
For the services rendered by ADS in its capacity as administrator, as
specified in Paragraph 1. DUTIES OF THE ADMINISTRATOR., the Fund shall pay ADS
within ten (10) days after receipt of an invoice from ADS at the beginning of
each month, a fee equal to the greater of:
NOTE: The following fees are per portfolio serviced.
MINIMUM FEE:
CALCULATED FEE WILL BE BASED UPON PRIOR MONTH AVERAGE NET ASSETS:
(No prorating partial months)
Each Portfolio
--------------
Under $10 million .....................$1,300
From $10 million to $20 million........ 1,600
From $20 million on.....................2,000
OR,
NET ASSET CHARGE:
1/12th of 0.15% (15 basis points) of average net assets of portfolio for month.
FEE INCREASES
-------------
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the change in the Consumer Price Index for the Northeast
region (CPI) for the twelve month period ending with the month preceding such
annual anniversary date.
(b) EXPENSES.
The Fund shall reimburse ADS for any out-of-pocket expenses , exclusive
of salaries, advanced by ADS in connection with but not limited to the printing
or filing of documents for the Fund, travel, telephone, quotation services,
facsimile transmissions, stationery and supplies, record storage, postage,
telex, and courier charges, incurred in connection with the performance of its
duties hereunder. ADS shall provide the Fund with a monthly invoice of such
expenses and the Fund shall reimburse ADS within fifteen (15) days after receipt
thereof.
8
<PAGE>
(c) STATE REGISTRATION (BLUE SKY) SURCHARGE:
The fees enumerated in paragraph (a) above include the initial state
registration, renewal and maintenance of registrations (as detailed in Paragraph
1(l) DUTIES OF THE ADMINISTRATOR) for five (5) states. Each additional state
registration requested will be subject to the following fees:
Initial registration ............... $295.00
Registration renewal ............... $150.00
Sales reports (if required) ........ $ 25.00
(d) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors,
legal counsel, portfolio manager, or any regulatory agency having jurisdiction
over the Fund, that are not in the normal course of fund administrative
activities as specified in Section 1 of this Agreement shall be subject to an
additional charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $75.00/hr.
Computer time - $45.00/hr.
(e) SECURITY DEPOSIT.
The Fund will remit to ADS upon execution of this Agreement a security
deposit equal to one (1) month's minimum fee under this Agreement, computed in
accordance with the number of portfolios listed in Schedule B of this Agreement.
The Fund will have the option to have the security deposit applied to the last
month's service fee, or applied to any new contract between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement for any
reason what-so-ever (including, but not limited to, the voluntary or involuntary
termination of the Fund, liquidation of the Fund's assets, the sale or merger of
the Fund or it's assets to any successor entity) prior to the termination date
of this Agreement as specified in Paragraph 8 of this Agreement, the Fund will
forfeit the Security Deposit paid to ADS upon execution of this Agreement
9
<PAGE>
SCHEDULE B
----------
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
DELTA MICRO CAP GROWTH FUND
TRANSFER AGENCY AND SERVICE AGREEMENT
between
DELTA MICRO CAP GROWTH FUND
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]*
*Graphic depicts Delta Micro Cap Growth Fund Logo.
<PAGE>
INDEX
================================================================================
1. TERMS OF APPOINTMENT; DUTIES OF ADS......................................3
2. FEES AND EXPENSES........................................................4
3. REPRESENTATIONS AND WARRANTIES OF ADS....................................4
4. REPRESENTATIONS AND WARRANTIES OF THE FUND...............................5
5. INDEMNIFICATION..........................................................5
6. COVENANTS OF THE FUND AND ADS............................................7
7. TERMINATION OF AGREEMENT.................................................7
8. ASSIGNMENT...............................................................7
9. AMENDMENT................................................................8
10. NEW YORK LAWS TO APPLY..................................................8
11. MERGER OF AGREEMENT.....................................................8
12. NOTICES.................................................................8
FEE SCHEDULE.................................................................9
(A) ACCOUNT MAINTENANCE CHARGE:..............................................9
(B) TRANSACTION FEES:........................................................9
(C) 24 HOUR AUTOMATED VOICE RESPONSE:.......................................10
(D) FUND/SERV...............................................................10
FEE INCREASES............................................................10
(E) IRA PLAN FEES:..........................................................10
(F) EXPENSES:...............................................................11
(G) SPECIAL REPORTS:........................................................11
(H) SERVICE DEPOSIT:........................................................11
(I) CONVERSION CHARGE: (EXISTING FUNDS ONLY, NEW FUNDS PLEASE IGNORE).......11
SCHEDULE A..................................................................13
2
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made the 31ST day of March 1997, by and between Delta Micro Cap Growth
Fund, an Ohio Business Trust, having its principal office and place of business
at 551 Fifth Avenue, New York, New York 10017 (the "Fund"), and American Data
Services, Inc., a New York corporation having its principal office and place of
business at 24 West Carver Street., Huntington, New York 11743 ("ADS").
WHEREAS, the Fund desires to appoint ADS as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and ADS desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. TERMS OF APPOINTMENT; DUTIES OF ADS
1.01 Subject to the terms and conditions set forth in this agreement,
the Fund hereby employs and appoints ADS to act as, and ADS agrees to act as its
transfer agent for the Fund's authorized and issued shares of its common stock,
no par value, ("Shares"), dividend disbursing agent and agent in connection with
any accumulation, open-account or similar plans provided to the shareholders of
the fund ("Shareholders") set out in the currently effective prospectus and
statement of additional information ("prospectus") of the Fund.
1.02 ADS agrees that it will perform the following services:
(a) In accordance with procedures established from time to
time by agreement between the Fund and ADS, ADS shall:
I. Receive for acceptance, orders for the purchase of Shares, and promptly
deliver payment and appropriate documentation therefore to the Custodian
of the Fund authorized by the Board of Directors of the Fund (the
"Custodian");
II. Pursuant to purchase orders, issue the appropriate number of Shares and
hold such Shares in the appropriate Shareholder account;
III. Receive for acceptance redemption requests and redemption directions and
deliver the appropriate documentation therefore to the Custodian;
IV. At the appropriate time as and when it receives monies paid to it by the
Custodian with respect to any redemption, pay over or cause to be paid
over in the appropriate manner such monies as instructed by the
redeeming Shareholders;
V. Effect transfers of Shares by the registered owners thereof upon receipt
of appropriate instructions;
VI. Prepare and transmit payments for dividends and distributions declared
by the Fund;
VII. Maintain records of account for and advise the Fund and its Shareholders
as to the foregoing; and
VIII. Record the issuance of shares of the Fund and maintain pursuant to SEC
Rule 17Ad-10(e) a record of the total number of shares of the Fund which
are authorized, based upon data provided to it by the Fund, and issued
and outstanding. ADS shall also provide the Fund on a regular basis with
the total
3
<PAGE>
number of shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of shares, to
monitor the issuance of such shares or to take cognizance of any laws
relating to the issue or sale of such shares, which functions shall be
the sole responsibility of the Fund.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), ADS shall:
Perform all of the customary services of a transfer agent, dividend
disbursing agent, including but not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing
proxies, receiving and tabulating proxies, mailing Shareholder reports
and prospectuses to current Shareholders, withholding taxes on U.S.
resident and non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for all
Shareholders, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases redemption's of Shares and
other confirmable transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and providing Shareholder
account information and (ii) provide a system and reports which will
enable the Fund to monitor the total number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to ADS in writing
those transactions and shares to be treated as exempt from
blue sky reporting for each State and (ii) verify the
establishment of such transactions for each state on the
system prior to activation and thereafter monitor the daily
activity for each State as provided by ADS. The responsibility
of ADS for the Fund's blue sky State registration status is
solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting
of such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established
from time to time by agreement between the Fund and ADS.
2. FEES AND EXPENSES
2.01 For performance by ADS pursuant to this Agreement, the Fund
agrees to pay ADS an annual maintenance fee for each Shareholder account and
transaction fees for each portfolio or class of shares serviced under this
Agreement (See Schedule A) as set out in the fee schedule attached hereto. Such
fees and out-of pocket expenses and advances identified under Section 2.02 below
may be changed from time to time subject to mutual written agreement between the
Fund and ADS.
2.02 In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse ADS for out-of-pocket expenses or advances incurred by ADS
for the items set out in the fee schedule attached hereto. In addition, any
other expenses incurred by ADS at the request or with the consent of the Fund,
will be reimbursed by the Fund.
2.03 The Fund agrees to pay all fees and reimbursable expenses within
five days following the receipt of the respective billing notice. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
shareholder accounts shall be advanced to ADS by the Fund at least seven (7)
days prior to the mailing date of such materials.
3. REPRESENTATIONS AND WARRANTIES OF ADS
ADS represents and warrants to the Fund that:
4
<PAGE>
3.01 It is a corporation duly organized and existing and in good
standing under the laws of The State of New York.
3.02 It is duly qualified to carry on its business in The State of New
York.
3.03 It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
3.06 ADS is duly registered as a transfer agent under the Securities
Act of 1934 and shall continue to be registered throughout the remainder of this
Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to ADS that;
4.01 It is a business trust duly organized and existing and in good
standing under the laws of the state of Ohio.
4.02 It is empowered under applicable laws and by its Agreement and
Declaration of Trust to enter into and perform this Agreement.
4.03 All proceedings required by said Agreement and Declaration of
Trust have been taken to authorize it to enter into and perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940.
4.05 A registration statement under the Securities Act of 1933 is
currently or will become effective and will remain effective, and appropriate
state securities law filings as required, have been or will be made and will
continue to be made, with respect to all Shares of the Fund being offered for
sale.
5. INDEMNIFICATION
5.01 ADS shall not be responsible for, and the Fund shall indemnify
and hold ADS harmless from and against, any and all losses, damages, costs,
charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions of ADS or its agents or subcontractors required to be taken
pursuant to this Agreement, provided that such actions are taken in
good faith and without gross negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack good faith, gross
negligence or willful misconduct or which arise out of the breach of
any representation or warranty of the Fund hereunder.
5
<PAGE>
(c) The reliance on or use by ADS or its agents or subcontractors of
information, records and documents which (i) are received by ADS or its
agents or subcontractors and furnished to it by or on behalf of the
Fund, and (ii) have been prepared and/or maintained by the Fund or any
other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by ADS or its agents or subcontractors
of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
5.02 ADS shall indemnify and hold the Fund harmless from and against
any and all losses, damages, costs, charges, counsel fees, payments, expenses
and liability arising out of or attributable to any action or failure or
omission to act by ADS as a result of ADS's lack of good faith, gross negligence
or willful misconduct.
5.03 At any time ADS may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ADS under this
Agreement, and ADS and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. ADS, its
agents and subcontractors shall be protected and indemnified in acting upon any
paper or document furnished by or on behalf of the Fund, reasonably believed to
be genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ADS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Fund, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ADS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officers of the Fund, and
the proper countersignature of any former transfer agent or registrar, or of a
co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05 Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
act or failure to act hereunder.
5.06 In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party of seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
6
<PAGE>
6. COVENANTS OF THE FUND AND ADS
6.01 The Fund Shall promptly furnish to ADS a certified copy of the
resolution of the Board of Directors of the Fund authorizing the appointment of
ADS and the execution and delivery of this Agreement.
6.02 ADS hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03 ADS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended, and
the Rules thereunder, ADS agrees that all such records prepared or maintained by
ADS relating to the services to be performed by ADS hereunder are the property
of the Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund on and
in accordance with its request.
6.04 ADS and the Fund agree that all books, records, information and
data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required by law.
6.05 In case of any requests or demands for the inspection of the
Shareholder records of the Fund, ADS will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. ADS reserves the right, however, to exhibit the Shareholder records
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person, and shall
promptly notify the Fund of any unusual request to inspect or copy the
shareholder records of the Fund or the receipt of any other unusual request to
inspect, copy or produce the records of the Fund.
7. TERMINATION OF AGREEMENT
7.01 This Agreement shall become effective on the effective date of
the registration statement and shall remain in force for a period of three (3)
years, provided however, that both parties to this Agreement have the option to
terminate the Agreement upon ninety (90) days prior written notice.
7.02 Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, ADS reserves the right to charge for any
other reasonable expenses associated with such termination.
8. ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations hereunder
may be assigned by either party without the written consent of the other party.
8.02 This Agreement shall inure to the benefit of and be binding upon
the parties and their respective permitted successors and assigns.
7
<PAGE>
9. AMENDMENT
9.01 This Agreement may be amended or modified by a written agreement
executed by both parties and authorized or approved by a resolution of the Board
of Directors of the Fund.
10. NEW YORK LAWS TO APPLY
10.01 The provisions of this Agreement shall be construed,
interpreted and enforced under New York law as at the time in effect and the
applicable provisions of the 1940 Act. To the extent that the applicable law of
the State of New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control.
11. MERGER OF AGREEMENT
11.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
12. NOTICES.
All notices and other communications hereunder shall be in writing, shall be
deemed to have been given when received or when sent by telex or facsimile, and
shall be given to the following addresses (or such other addresses as to which
notice is given):
To the Fund: To ADS:
John Figliolini Michael Miola
c/o Berkshire International Finance President
551 Fifth Avenue, Suite 605 American Data Services, Inc.
New York, New York 10017 24 West Carver Street
With copy to: Huntington, New York 11743
Hect & Steckman, P.C.,
60 East 42nd Street, Suite 5101,
New York, New York 10165-5101
Attn: Charles J. Hect
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
DELTA MICRO CAP GROWTH FUND AMERICAN DATA SERVICES, INC.
.
By: /s/ John Figliolini, President By: /s/ Michael Miola, President
John Figliolini, President Michael Miola, President
8
<PAGE>
FEE SCHEDULE
For the services rendered by ADS in its capacity as transfer agent, the
Fund shall pay ADS, within ten (10) days after receipt of an invoice from ADS at
the beginning of each month, a fee, calculated as a combination of account
maintenance charges and transaction charges as follows:
(a) ACCOUNT MAINTENANCE CHARGE:
The Greater of (No prorating for partial months):
(1) Minimum maintenance charge per portfolio/class $900.00/ month
OR,
(2) Based upon the total of all open/closed accounts (1) per portfolio/class
upon the following annual rates
(billed monthly):
Fund Type:
---------
Dividend calculated and
paid annually, semi-annually, quarterly.................... $ 9.00 per account
Dividend calculated and paid monthly........................ $10.50 per account
Dividend accrued daily and paid monthly .................... $14.00 per account
Closed accounts ................. $ 2.00 per account (2)
(1) All accounts closed during a calendar year will be considered as open
accounts for billing purposes until the end of that calendar year.
(2) Closed accounts remain on the shareholder files until all 1099's and
5498's have been distributed to the shareholders and send via mag-media
to the IRS.
(b) TRANSACTION FEES:
Trade Entry (purchase/liquidation) and maintenance transactions..$ 1.35 each
New account set-up .............................................$ 2.50 each
Customer service calls ..........................................$ 1.00 each
Correspondence/ information requests ............................$ 1.25 each (2)
Check preparation ...............................................$ .50 each
Liquidation's paid by wire transfer ........................... $ 3.00 each
ACH charge .................................................... $ .30 each
SWP ........................................................... $ .90 each
9
<PAGE>
(c) 24 HOUR AUTOMATED VOICE RESPONSE:
Initial set-up charge per portfolio - $150.00
Monthly maintenance charge per portfolio - $50.00
All calls processed through automated voice response will be billed as a
customer service call listed above.
(d) Fund/SERV
All portfolios processed through Fund/SERV will be subject to an additional
monthly charge of $250.00
All transactions processed through Fund/SERV will be billed at the transaction
fee rates listed in (b) above.
FEE INCREASES
-------------
On each annual anniversary date of this Agreement, the fees enumerated above
will be increased by the change in the Consumer Price Index for the Northeast
region (CPI) for the twelve month period ending with the month preceding such
annual anniversary date.
(e) IRA PLAN FEES:
The following fees will be charged directly to the shareholder account:
<TABLE>
<S> <C>
Annual maintenance fee .................................$15.00 /account *
Incoming transfer from prior custodian .................$12.00
Distribution to a participant ..........................$15.00
Refund of excess contribution ..........................$15.00
Transfer to successor custodian ........................$15.00
Automatic periodic distributions .......................$15.00/year per account
<FN>
* Includes $8.00 Bank Custody Fee.
</FN>
</TABLE>
10
<PAGE>
(f) EXPENSES:
The Fund shall reimburse ADS for any out-of-pocket expenses, exclusive
of salaries, advanced by ADS in connection with but not limited to the costs for
printing fund documents, (i.e. printing of confirmation forms, shareholder
statements, redemption/dividend checks, envelopes, financial statements, proxy
statement, fund prospectus, etc.) proxy solicitation and mailing expenses,
travel requested by the Fund, telephone toll charges, 800-line costs and fees,
facsimile and data transmission costs, stationery and supplies (related to Fund
records), record storage, postage (plus a $0.085 service charge for all
mailings), pro-rata portion of annual SAS-70 audit letter, telex and courier
charges incurred in connection with the performance of its duties hereunder. ADS
shall provide the Fund with a monthly invoice of such expenses and the Fund
shall reimburse ADS within fifteen (15) days after receipt thereof.
(g) SPECIAL REPORTS:
All reports and/or analyses requested by the Fund that are not included
in the fee schedule, shall be subject to an additional charge, agreed upon in
advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $75.00/hr.
Computer time - $45.00/hr.
(h) SERVICE DEPOSIT:
The Fund will remit to ADS upon execution of this Agreement a security
deposit of equal to one (1) month's shareholder service fee. The service deposit
computation will be based either on the total number of shareholder accounts
(open and closed) of each portfolio to be serviced or the minimum fee, whichever
is greater, as of the execution date of this Agreement. The Fund will have the
option to have the security deposit applied to the last month's service fee, or
applied to any new contract between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement for any
reason what-so-ever other than a material breach by ADS (including, but not
limited to, the voluntary or involuntary termination of the Fund, liquidation of
the Fund's assets, the sale or merger of the Fund or it's assets to any
successor entity) prior to the termination date of this Agreement as specified
in Paragraph 7 of this Agreement, the Fund will forfeit the Security Deposit
paid to ADS upon execution of this Agreement
(i) CONVERSION CHARGE: (existing funds only, new funds please ignore)
There will be a charge to convert the Fund's shareholder accounting
records on to the ADS stock transfer system. In addition, ADS will be reimbursed
for all out-of-pocket expenses, enumerated in paragraph (b) above and data media
conversion costs, incurred during the conversion process.
11
<PAGE>
The conversion charge will be estimated and agreed upon in advance by
the Fund and ADS. The charge will be based upon the quantity of records to be
converted and the condition of the previous service agents records.
12
<PAGE>
SCHEDULE A
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
DELTA MICRO CAP GROWTH FUND
13
FUND ACCOUNTING SERVICE AGREEMENT
between
DELTA MICRO CAP GROWTH FUND
and
AMERICAN DATA SERVICES, INC.
[GRAPHIC OMITTED]*
*Graphic depicts Delta Micro Cap Growth Fund Logo.
<PAGE>
================================================================================
INDEX
================================================================================
1. DUTIES OF ADS.............................................................3
2. COMPENSATION OF ADS.......................................................4
3. LIMITATION OF LIABILITY OF ADS............................................4
4. REPORTS...................................................................5
5. ACTIVITIES OF ADS.........................................................5
6. ACCOUNTS AND RECORDS......................................................5
7. CONFIDENTIALITY...........................................................5
8. DURATION AND TERMINATION OF THIS AGREEMENT................................5
9. ASSIGNMENT................................................................6
10. NEW YORK LAWS TO APPLY..................................................6
11. AMENDMENTS TO THIS AGREEMENT.............................................6
12. MERGER OF AGREEMENT......................................................6
13. NOTICES..................................................................6
SCHEDULE A...................................................................7
(A) FUND ACCOUNTING SERVICE FEE:.............................................7
FEE INCREASES.............................................................7
(B) EXPENSES.................................................................7
(C) SPECIAL REPORTS..........................................................8
(D) SECURITY DEPOSIT.........................................................8
(E) CONVERSION CHARGE........................................................8
SCHEDULE B:..................................................................9
2
<PAGE>
FUND ACCOUNTING SERVICE AGREEMENT
---------------------------------
AGREEMENT made the 31ST day of March 1997, by and between Delta Micro Cap Growth
Fund, an Ohio Business Trust, having its principal office and place of business
at 551 Fifth Avenue, New York, New York 10017 (the "Fund"), and American Data
Services, Inc., a New York corporation having its principal office and place of
business at 24 West Carver Street., Huntington, New York 11743 ("ADS").
BACKGROUND
WHEREAS, the Fund is a diversified, open-end management investment company
registered with the United States Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, ADS is a corporation experienced in providing accounting services to
mutual funds and possesses facilities sufficient to provide such services; and
WHEREAS, the Fund desires to avail itself of the experience, assistance and
facilities of ADS and to have ADS perform for the Fund certain services
appropriate to the operations of the Fund, and ADS is willing to furnish such
services in accordance with the terms hereinafter set forth.
TERMS
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, the Fund and ADS hereby agree as follows:
1. DUTIES OF ADS.
ADS will provide the Fund with the necessary office space, communication
facilities and personnel to perform the following services for the Fund:
(a) Timely calculate and transmit to NASDAQ the Fund's daily
net asset value and communicate such value to the Fund and its
transfer agent;
(b) Maintain and keep current all books and records of the Fund as
required by Rule 31a-1 under the 1940 Act, as such rule or any
successor rule may be amended from time to time ("Rule 31a-1"),
that are applicable to the fulfillment of ADS's duties
hereunder, as well as any other documents necessary or advisable
for compliance with applicable regulations as may be mutually
agreed to between the Fund and ADS. Without limiting the
generality of the foregoing, ADS will prepare and maintain the
following records upon receipt of information in proper form
from the Fund or its authorized agents:
- Cash receipts journal
- Cash disbursements journal
- Dividend record
- Purchase and sales - portfolio securities journals
- Subscription and redemption journals
- Security ledgers
- Broker ledger
- General ledger
3
<PAGE>
- Daily expense accruals
- Daily income accruals
- Securities and monies borrowed orloaned and
collateral therefore
- Foreign currency journals
- Trial balances
(c) Provide the Fund and its investment adviser with daily
portfolio valuation, net asset value calculation and other
standard operational reports as requested from time to time.
(d) Provide all raw data available from our fund accounting
system (PAIRS) for management's or the administrators
preparation of the following:
1. Semi-annual financial statements;
2. Semi-annual form N-SAR;
3. Annual tax returns;
4. Financial data necessary to update form N-1a;
5. Annual proxy statement.
(e) Provide facilities to accommodate annual audit and any
audits or examinations conducted by the Securities and
Exchange Commission or any other governmental or
quasi-governmental entities with jurisdiction.
ADS shall for all purposes herein be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
2. COMPENSATION OF ADS.
In consideration of the services to be performed by ADS as set forth
herein for each portfolio listed in Schedule B, ADS shall be entitled to receive
compensation and reimbursement for all reasonable out-of-pocket expenses. The
Fund agrees to pay ADS the fees and reimbursement of out-of-pocket expenses as
set forth in the fee schedule attached hereto as Schedule A.
3. LIMITATION OF LIABILITY OF ADS.
(a) ADS shall be held to the exercise of reasonable care in carrying
out the provisions of the Agreement, but shall be without liability to the Fund
for any action taken or omitted by it in good faith without gross negligence,
bad faith, willful misconduct or reckless disregard of its duties hereunder. It
shall be entitled to rely upon and may act upon the accounting records and
reports generated by the Fund, advice of the Fund, or of counsel for the Fund
and upon statements of the Fund's independent accountants, and shall be without
liability for any action reasonably taken or omitted pursuant to such records
and reports or advice, provided that such action is not, to the knowledge of
ADS, in violation of applicable federal or state laws or regulations, and
provided further that such action is taken without gross negligence, bad faith,
willful misconduct or reckless disregard of its duties.
(b) Nothing herein contained shall be construed to protect ADS against
any liability to the Fund or its security holders to which ADS shall otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties on behalf of the Fund, reckless disregard of ADS'
obligations and duties under this Agreement or the willful violation of any
applicable law.
(c) Except as may otherwise be provided by applicable law, neither ADS
nor its stockholders, officers, directors, employees or agents shall be subject
to, and the Fund shall indemnify and hold such
4
<PAGE>
persons harmless from and against, any liability for and any damages, expenses
or losses incurred by reason of the inaccuracy of information furnished to
ADS by the Fund or its authorized agents.
4. REPORTS.
(a) The Fund shall provide to ADS on a quarterly basis a report of a
duly authorized officer of the Fund representing that all information furnished
to ADS during the preceding quarter was true, complete and correct in all
material respects. ADS shall not be responsible for the accuracy of any
information furnished to it by the Fund or its authorized agents, and the Fund
shall hold ADS harmless in regard to any liability incurred by reason of the
inaccuracy of such information.
(b) Whenever, in the course of performing its duties under this
Agreement, ADS determines, on the basis of information supplied to ADS by the
Fund or its authorized agents, that a violation of applicable law has occurred
or that, to its knowledge, a possible violation of applicable law may have
occurred or, with the passage of time, would occur, ADS shall promptly notify
the Fund and its counsel of such violation.
5. ACTIVITIES OF ADS.
The services of ADS under this Agreement are not to be deemed
exclusive, and ADS shall be free to render similar services to others so long as
its services hereunder are not impaired thereby.
6. ACCOUNTS AND RECORDS.
The accounts and records maintained by ADS shall be the property of the
Fund, and shall be surrendered to the Fund promptly upon request by the Fund in
the form in which such accounts and records have been maintained or preserved.
ADS agrees to maintain a back-up set of accounts and records of the Fund (which
back-up set shall be updated on at least a weekly basis) at a location other
than that where the original accounts and records are stored. ADS shall assist
the Fund's independent auditors, or, upon approval of the Fund, any regulatory
body, in any requested review of the Fund's accounts and records. ADS shall
preserve the accounts and records as they are required to be maintained and
preserved by Rule 31a-1.
7. CONFIDENTIALITY.
ADS agrees that it will, on behalf of itself and its officers and
employees, treat all transactions contemplated by this Agreement, and all other
information germane thereto, as confidential and not to be disclosed to any
person except as may be authorized by the Fund.
8. DURATION AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective as of the date hereof and shall
remain in force for a period of three (3) years, provided however, that both
parties to this Agreement have the option to terminate the Agreement, without
penalty, upon ninety (90) days prior written notice.
Should the Fund exercise its right to terminate, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Fund. Additionally, ADS reserves the right to charge for any other
reasonable expenses associated with such termination.
5
<PAGE>
9. ASSIGNMENT.
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 Fund without the prior written consent
of ADS, or by ADS without the prior written consent of the Fund.
10. NEW YORK LAWS TO APPLY
The provisions of this Agreement shall be construed, interpreted and
enforced under New York law as at the time in effect and the applicable
provisions of the 1940 Act. To the extent that the applicable law of the State
of New York, or any of the provisions herein, conflict with the applicable
provisions of the 1940 Act, the latter shall control.
11. AMENDMENTS TO THIS AGREEMENT.
This Agreement may be amended by the parties hereto only if such
amendment is in writing and signed by both parties.
12. MERGER OF AGREEMENT
This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
13. NOTICES.
All notices and other communications hereunder shall be in writing,
shall be deemed to have been given when received or when sent by telex or
facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Fund: To ADS:
John Figliolini Michael Miola
c/o Berkshire International Finance President
551 Fifth Avenue, Suite 605 American Data Services, Inc.
New York, New York 10017 24 West Carver Street
With copy to: Huntington, New York 11743
Hect & Steckman, P.C., 60 East 42nd Street,
Suite 5101,
New York, New York 10165-5101
Attn: Charles J. Hect
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
DELTA MICRO CAP GROWTH FUND AMERICAN DATA SERVICES, INC.
By: /s/ John Figliolini, President By: /s/ Michael Miola, President
John Figliolini, President Michael Miola, President
6
<PAGE>
SCHEDULE A
(a) FUND ACCOUNTING SERVICE FEE:
For the services rendered by ADS in its capacity as fund accounting
agent, as specified in Paragraph 1. DUTIES OF ADS, the Fund shall pay ADS,
within ten (10) days after receipt of an invoice from ADS at the beginning of
each month, a fee equal to:
Calculated Fee Will Be Based Upon Prior Month Average Net Assets:
(No prorating partial months)
<TABLE>
<CAPTION>
MONTHLY FEE PER PORTFOLIO:
- -------------------------
<S> <C> <C> <C>
Portfolio Type
Net Assets (in millions) Global Domestic Money Mkt
- ----------------------- ------ -------- ---------
Under $2 ............................ $1,400 $1,200 $1,000
From $2 to $5 ....................... 1,675 1,400 1,200
From $5 to $10 ...................... 1,900 1,600 1,400
From $10 to $20...................... 2,250 1,800 1,600
Over $20 ............................ 2,500 2,000 1,800
Excess of $25 million:
The fee for assets over $20 million,
plus 1/12 of .................... 3.50BP* 2.00BP 2.00BP
<FN>
* Basis Points
</FN>
</TABLE>
MULTI-CLASS PROCESSING CHARGE
- ------------------------------
$300 per month will be charged for each additional class of stock per portfolio.
FEE INCREASES
-------------
On each annual anniversary date of this Agreement, the fees enumerated
above will be increased by the change in the Consumer Price Index for the
Northeast region (CPI) for the twelve month period ending with the month
preceding such annual anniversary date.
(b) EXPENSES.
The Fund shall reimburse ADS for any out-of-pocket expenses , exclusive
of salaries, advanced by ADS in connection with but not limited to the printing
or filing of documents for the Fund, travel, telephone, quotation services,
facsimile transmissions, stationery and supplies, record storage, NASDAQ
insertion fee, pro rata portion of annual SAS 70 review, postage, telex, and
courier charges, incurred in connection with the performance of its duties
hereunder. ADS shall provide the Fund with a monthly invoice of such expenses
and the Fund shall reimburse ADS within fifteen (15) days after receipt thereof.
7
<PAGE>
(c) SPECIAL REPORTS.
All reports and /or analyses requested by the Fund, its auditors, legal
counsel, portfolio manager, or any regulatory agency having jurisdiction over
the Fund, that are not in the normal course of fund accounting activities as
specified in Section 1 of this Agreement shall be subject to an additional
charge, agreed upon in advance, based upon the following rates:
Labor:
Senior staff - $150.00/hr.
Junior staff - $ 75.00/hr.
Computer time - $45.00/hr.
(d) SECURITY DEPOSIT.
The Fund will remit to ADS upon execution of this Agreement a security
deposit equal to one (1) month's minimum fee under this Agreement, computed in
accordance with the number of portfolios listed in Schedule B of this Agreement.
The Fund will have the option to have the security deposit applied to the last
month's service fee, or applied to any new contract between the Fund and ADS.
However, if the Fund elects or is forced to terminate this Agreement for any
reason what-so-ever other than a material breach by ADS (including, but not
limited to, the voluntary or involuntary termination of the Fund, liquidation of
the Fund's assets, the sale or merger of the Fund or it's assets to any
successor entity) prior to the termination date of this Agreement as specified
in Paragraph 8 of this Agreement, the Fund will forfeit the Security Deposit
paid to ADS upon execution of this Agreement.
(e) CONVERSION CHARGE.
NOTE: FOR EXISTING FUNDS ONLY (new funds please ignore):
There will be a charge to convert the Fund's portfolio accounting
records on to the ADS fund accounting system (PAIRS). In addition, ADS will be
reimbursed for all out-of-pocket expenses, enumerated in paragraph (b) above,
incurred during the conversion process.
The conversion charge will be estimated and agreed upon in advance by
the Fund and ADS. The charge will be based upon the quantity of records to be
converted and the condition of the previous service agents records.
8
<PAGE>
SCHEDULE B:
PORTFOLIOS TO BE SERVICED UNDER THIS AGREEMENT:
DELTA MICRO CAP GROWTH FUND
9
PLAN PURSUANT TO RULE 12b-1
Adopted March ___, 1997
WHEREAS, Delta Micro Cap Growth Fund, a diversified series of Delta
Funds, Inc., (the "Fund") intends to engage in business as an open-end
management investment company and is registered as such under the Investment
Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to
Rule 12b-1 under the Act, and the Directors have determined that there is a
reasonable likelihood that adoption of the Plan of Distribution will benefit the
Fund and its shareholders; and
WHEREAS, the Fund and European Equities Partners, Inc. (the
"Distributor") have entered into a separate Distribution Agreement dated as of
this date, pursuant to which the Fund has employed the Distributor in such
capacity during the continuous offering of shares of the Fund.
NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby
agrees to the terms of, this Plan of Distribution (the "Plan") in accordance
with Rule 12b-1 under the Act on the following terms and conditions:
1. The Fund shall pay to the Distributor, as the distributor of
securities of which the Fund is the issuer, compensation for distribution of its
shares at the rate of 0.25% per annum of the Fund's average daily net assets.
Such compensation shall be calculated and accrued daily and paid monthly or at
such other intervals as the Directors shall determine. The Distributor may
direct that all or any part of the amounts receivable by it under this Plan be
paid directly to its affiliates or other broker-dealers who provide distribution
and/or shareholder services. All payments made hereunder pursuant to the Plan
shall be in accordance with the terms and limitations of the Conduct Rules of
the National Association of Securities Dealers, Inc.
2. The amount set forth in paragraph 1 of this Plan shall be paid for
services of the Distributor, its affiliates and other broker-dealers it may
select in connection with the distribution of the Fund's shares, including
personal services to shareholders with respect to their holdings of Fund shares,
and may be spent by the Distributor, its affiliates and such broker-dealers on
any activities or expenses related to the distribution of the Fund's shares or
services to shareholders, including, but not limited to: compensation to, and
expenses of, account executives or other employees of the Distributor, its
affiliates or other broker-dealers; overhead and other branch office
distribution-related expenses and telephone expenses of persons who engage in or
support distribution of shares or who provide personal services to shareholders;
printing of prospectuses and reports for
<PAGE>
other than existing shareholders; preparation, printing and distribution of
sales literature and advertising materials and opportunity costs in incurring
the foregoing expenses (which may be calculated as a carrying charge on the
excess of the distribution expenses incurred by the Distributor, its affiliates
or other broker-dealers over distribution revenues received by them).
3. This Plan shall not take effect until it has been approved by a vote
of at least a majority of the outstanding voting securities of the Fund (as
defined in the Act).
4. This Plan shall not take effect until it has been approved, together
with any related agreements, by votes of a majority of the Board of Directors of
the Fund and of the Directors who are not "interested persons" of the Fund (as
defined in the Act) and have no direct or indirect financial interest in the
operation of this Plan or any agreements related to it (the "Rule 12b-1
Directors"), cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan and such related agreements.
5. This Plan shall continue in effect until one year from the date this
Plan takes effect, and from year to year thereafter, provided such continuance
is specifically approved at least annually in the manner provided for approval
of this Plan in paragraph 4 hereof.
6. The Distributor shall provide to the Directors of the Fund and the
Directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made. In this regard,
the Directors shall request the Distributor to specify such items of expenses as
the Directors deem appropriate. The Directors shall consider such items as they
deem relevant in making the determinations required by paragraph 5 hereof.
7. This Plan may be terminated at any time by vote of a majority of the
Rule 12b-1 Directors, or by vote of a majority of the outstanding voting
securities of the Fund. In the event of any such termination or in the event of
nonrenewal, the Fund shall have no obligation to pay expenses which have been
incurred by the Distributor, its affiliates or other broker-dealers in excess of
payments made by the Fund pursuant to this Plan. However, this shall not
preclude consideration by the Directors of the manner in which such excess
expenses shall be treated.
8. This Plan may not be amended to increase materially the amount the
Fund may spend for distribution provided in paragraph 1 hereof unless such
amendment is approved by a vote of at least a majority (as defined in the Act)
of the outstanding voting securities of the Fund, and no material amendment to
the Plan shall be made unless approved in the manner provided for approval in
2
<PAGE>
paragraph 4 hereof.
9. While this Plan is in effect, the selection and nomination of
Directors who are not interested persons (as defined in the Act) of the Fund
shall be committed to the discretion of the Directors who are not interested
persons.
10. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 6 hereof, for a period of
not less than six years from the date of this Plan, any such agreement or any
such report, as the case may be, the first two years in an easily accessible
place.
IN WITNESS WHEREOF, the Fund and the Distributor have executed this
Plan of Distribution as of the day and year set forth below in New York, New
York.
Dated: ___________________ DELTA FUNDS, INC.
By: _______________________________
Name: _______________________________
Title:_______________________________
Dated: ___________________ EUROPEAN EQUITIES PARTNERS, INC.
By: _______________________________
Name: _______________________________
Title:_______________________________
3
