AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON 1/14/98
FILE NOS: 811-3176 & 2-72066
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. 28 / X /
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 28
(Check appropriate box or boxes.)
DECLARATION FUND
(Exact name of Registrant as Specified in Charter)
Suite 6160, 555 North Lane
Conshohocken, PA 19428
(Address of Principal Executive Office)
Registrant's Telephone Number, including Area Code:
(610) 832-1075
Terence P. Smith, Suite 6160
555 North Lane, Conshohocken, PA 19428
(Name and Address of Agent for Service)
Please send copy of communications to:
MARTIN V. MILLER, ESQUIRE
P.O. Box 2512
Doylestown, Pennsylvania 18901
215-345-7110
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective
(check appropriate box):
/ / immediately upon filing pursuant to paragraph (b)
/ / on _____________ pursuant to paragraph (b)
/ X / 60 days after filing pursuant to paragraph (a) (1)
/ / on _____________ pursuant to paragraph (a) (1)
/ / 75 Days after filing pursuant to paragraph (a) (2)
/ / on _____________ pursuant to paragraph (a) (2) of rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
A Rule 24f-2 Notice for the year ended December 31, 1997 was filed on ___, 1998.
<PAGE>
EXHIBIT INDEX BEGINS ON PAGE __.
FORM N-1A
CROSS REFERENCE SHEET
Form N-1A Part A - MICHIGAN HERITAGE FUND (both classes of shares)
ITEM NO. PROSPECTUS LOCATION
- --------- -------------------
1. Cover Page .................. Cover Page
2. Synopsis .................... Summary of Fees and Expenses
3. Condensed Financial
Information ................. Not Applicable
4. General Description of
Registrant .................. The Fund, Investment Objectives,
Investment Policies and Risks.
Special Factors Affecting
Investments in Michigan Companies.
5. Management of the
Fund ........................ Trustees, The Investment Advisor,
The Administrator, The Distributor
6. Capital Stock and
Other Securities ............ General Information,
Distribution and Taxes
7. Purchase of Securities
Being Offered ............... How to Purchase Shares,
Shareholder Services
Rule 12b-1 Distribution Plan
Valuing Fund Shares:
Performance Information
Shareholder Services
8. Redemption or
Repurchases ................. How to Redeem Shares
Valuing Fund Shares
9. Pending Legal
Proceedings ................. Not Applicable
<PAGE>
FORM N-1A PART B MICHIGAN HERITAGE FUND
LOCATION OF STATEMENT
ITEM NO. OF ADDITIONAL INFORMATION
- --------- -------------------------
10. Cover Page .................. Cover Page
11. Table of Contents ........... Table of Contents
12. General Information and
History ..................... General Information
13. Investment Objectives
and Policies ................ Investment Objective and Policies;
Investment Limitations;
Portfolio Transactions
14. Management of
Fund ........................ Management of the Fund;
Investment Advisory Services;
Trustees and Officers of
Declaration Fund
15. Control Persons
Principal Holders
of Securities ............... Control Persons and Principal Holders of
Securities of Cash Account
16. Investment Advisory
and Other
Services .................... Investment Advisory Services; Administrative
Services; Transfer Agency and Other
Services; and Custodian; Independent Public
Accountants
17. Brokerage Allocation ........ Brokerage
18. Capital Stock and Other
Securities .................. Not Applicable
19. Purchase, Redemption and
Pricing of Securities
Being Offered ............... Additional Information
20. Tax Status .................. Tax Status
21. Underwrites ................. Rule 12b-1 Distribution Plan;
Distribution Agreement
22. Calculation of Performance
Data ........................ Calculation of Performance Data
23. Financial Statements......... None
<PAGE>
FORM N-1A PART C
ITEM NO. LOCATION IN PART C
- --------- ------------------
24. Financial Statements......... None
25. Persons Controlled by or
Under Common Control
with Registrant ............. Persons Controlled by or Under
Common Control with Registrant
26. Number of Holders of
Securities .................. Number of Holders of Securities
27. Indemnification ............. Indemnification
28. Business and Other
Connections of Investment
Advisor ..................... Business and Other Connections
of Investment Advisor
29. Principal
Underwriters ................ Principal Underwriters
30. Location of Accounts
and Records ................. Location of Accounts and Records
31. Management Services ......... Management Services
32. Undertakings ................ Undertakings
<PAGE>
PART A: PROSPECTUS
THE MICHIGAN HERITAGE FUND
Series of The Declaration Fund
THE MICHIGAN HERITAGE FUND
301 MAC Avenue
Suite 120
East Lansing, MI 48823
1-800-___-____
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
PROSPECTUS
_______ ___, 1998
This Prospectus relates to shares of the No-Load Class issued with respect
to the Michigan Heritage Fund.
The Michigan Heritage Fund's objective is long-term growth through capital
appreciation. The Fund seeks to achieve this goal mainly by investing in a
diversified portfolio of companies that have headquarters in the State of
Michigan or companies based elsewhere that have significant operations (as
defined by the Fund's Advisor) in the State of Michigan. There can be no
guarantee the investment objective of the Fund will be achieved.
The shares of the No-Load Class are not subject to a sales charge deduction
upon issuance.
This Prospectus provides the information a prospective investor ought to
know before investing and should be retained for future reference. A Statement
of Additional Information has been filed with the Securities and Exchange
Commission (the "SEC") dated _______ ___, 1998, which is incorporated herein by
reference and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www/sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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>
SUMMARY OF FEES AND EXPENSES
The following summary is provided to assist you in understanding the
various costs and expenses a shareholder in the Fund could bear directly and
indirectly. Annual operating expenses are shown as a percentage of average daily
net assets. Because shares of the Fund were not offered prior to the date of
this prospectus, annual operating expenses of the Fund are based on estimated
expenses. Shareholder transaction expenses for the Fund are expressed as a
percentage of the public offering price, cost per transaction or as otherwise
noted. The Example should not be considered a representation of future Fund
performance or expenses, both of which may vary.
Shareholder Transaction Expenses
Maximum sales charge on purchases................................... 0%
Maximum deferred sales charge imposed on redemption ................ 0%
Maximum sales charge imposed on dividend reinvestment .............. 0%
Redemption Fees .................................................... 0%
Account Closing Fee ................................................ $10
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee ..................................................... 1.00%
12b-1 Fee .......................................................... .25%
Other Expenses,* (including Transfer Agency
and Accounting Services Fees)....................................... .50%
Total Fund Operating Expenses ...................................... 1.75%
*Other expenses are based on estimated amounts for the current fiscal year.
A $10.00 wire fee will be charged on wire purchases of less than $1,000.
HYPOTHETICAL EXAMPLE OF EFFECT ON FUND EXPENSES
You would pay the following expenses on a $1,000 investment if, for each
year for the next three years, Fund expenses are as described above and annual
return is 5%.
1 YEAR 3 YEARS
------ -------
Assuming a complete redemption at end of period $28 $65
Assuming no redemption at end of period $18 $55
THE FUND
The Michigan Heritage Fund (the "Fund") was organized as a series of
Declaration Fund (the "Trust") on February 19, 1997, and commenced operations on
July 8, 1997. This Prospectus offers shares of the No-Load Class of the Fund.
Each share represents an undivided, proportionate interest in the Fund. The
investment advisor to the Fund is Dickinson Asset Management, Inc. (the
"Advisor").
INVESTMENT OBJECTIVES
The Fund's investment objective is long-term growth through capital
appreciation. The Fund seeks to achieve this goal mainly by investing in a
diversified portfolio of companies that have headquarters in the State of
Michigan or companies based elsewhere that have significant operations in the
State of Michigan (as defined by the Fund's Advisor). There can be no guarantee
the investment objective of the Fund will be achieved. The Fund's investment
objective may not be changed without shareholder approval.
The Fund's Advisor believes that Michigan is positioned to provide
publicly-traded companies and their shareholders significant opportunities for
growth. Due to its central location among the largest markets in the U.S. and
Canada, Michigan offers businesses access to half of the population and personal
income of both countries. Michigan's own sizable consumer market of 9.3 million
had an average per capita income of approximately $22,300 in 1994. Long known as
a leader in manufacturing, Michigan's large industrial market generated a demand
for products and services of more than $170 billion in 1992. In 1994, Michigan
was ranked #2 of states having the most companies listed in the Top 20 of the
Fortune 500. While the State's economy still benefits from its strong ties to
the automobile industry, Michigan's economy continues to become more diverse.
The State has one of the most advanced telecommunications infrastructures in the
nation, at one time, having more fiber optic cable installation than any other
state. Virtually every city and town is connected through fiber optic networks.
Also, Michigan is the most Internet-connected state in the Midwest - 90% of
Michigan's population can dial the Internet via a local phone call.
International trade is assuming increasing importance in Michigan's economy.
Commercial airports, the Great Lakes and St. Lawrence Seaway give the state easy
access to world markets and the State was the nation's 4th largest exporter in
1994. Detroit was the nation's top exporting metropolitan area in 1994 and 1995.
The U.S.-Canadian Free Trade Agreement has spurred activity between Michigan and
Canada, already one of the world's largest trading relationships.
The Advisor believes that the Fund will provide a positive influence on the
Michigan economy by stimulating investor interest and awareness in Michigan
companies.
INVESTMENT POLICIES
To pursue its objective, the Fund will invest at least 65 percent of the
value of its total assets in common stocks, preferred stocks, securities
convertible into common and preferred stocks, and American Depository Receipts
(ADRs) traded on a U.S. stock exchange, issued by firms whose headquarters are
located in the State of Michigan or companies based elsewhere having significant
operations in the State of Michigan.
The Fund may also invest up to 35 percent of the value of its total assets
in other common stocks, preferred stocks, investment-grade corporate bonds and
notes, and high quality short-term debt securities such as commercial paper,
bankers' acceptances, certificates of deposit, repurchase agreements,
obligations insured or guaranteed by the United States Government or its
agencies, demand and time deposits of domestic banks and United States branches
and subsidiaries of foreign banks, and money market funds.
The Fund will not engage in direct investment in real estate. The fund may
invest in Real Estate Investment Trusts (REITS) that are traded on one of the
principal U.S. stock exchanges.
The Fund will invest in a diverse group of companies with varying degrees
of name recognition. The portfolio will include companies in a wide range of
industries, from basic consumer goods and autos to high-tech services.
Investments are based primarily on fundamental analysis. While technical factors
will be considered, the main investment criteria will focus on an evaluation of
revenues, earnings, debt, capitalization, quality of management, level of
insider ownership, changing market conditions, past performance and future
expectations. The fund will strive to invest in companies that have well defined
business plans and long-term operating strategies designed to increase
shareholder value. The Fund will not concentrate its investments in one
industry; however, it may invest up to 25% of the value of its' assets in one
industry. This concentration policy may not be changed without shareholder
approval.
When evaluating a Michigan-based company, a member of the Advisor's
portfolio management or research staff may conduct an in-person visit to the
company whenever such a visit is judged appropriate, may meet with the company's
management, and evaluate its operations. The Advisor will also attempt to
interview a cross section of the company's employees, customers, suppliers and
competitors. The Advisor believes that this "hands on" approach to investing
will give it an opportunity to spot developing trends in these Michigan
companies.
The Fund does not propose to engage in short-term trading. However, it may,
from time to time, sell a security without regard to the length of time it has
been held. The fund does not expect that its' portfolio turnover rate will
exceed 75% for its' first fiscal year. High portfolio turnover rates increase
transaction costs and the possibility of realizing taxable capital gains.
RISKS
The principal risk factor associated with an investment in the Fund is that
the market value of the portfolio's securities may decrease and result in a
decrease in the value of a shareholder's investment.
The Fund's portfolio may include smaller companies that are not nationally
recognized and companies that ordinarily pay no dividends or interest. The price
of the stocks of such companies are generally more volatile than those of larger
or more mature companies. Additionally, the securities of such companies are
generally more likely to be negatively affected by adverse economic and/or
market conditions, and are generally less liquid.
Due to the geographic limitation of 65% if the Fund's assets, such assets
may be subject to greater risk of loss from economic, political or other
developments (e.g., natural disasters) having an unfavorable impact upon
businesses located in Michigan than similar funds whose investments are
geographically more diverse (i.e. the Fund may be less diversified than other
funds with similar investment objectives but no such geographic limitation).
There can be no assurance that the economy of Michigan or the companies
headquartered or operating in Michigan will grow in the future.
SPECIAL FACTORS AFFECTING INVESTMENTS IN MICHIGAN COMPANIES
Since the Fund will be mainly investing in a diversified portfolio of
companies that have their headquarters in the State of Michigan, or companies
based elsewhere that have significant operations in Michigan, Fund investments
can be significantly affected by business trends and the economic health of
Michigan. The following is a brief description of certain factors affecting the
Michigan Heritage Fund. The summary does not purport to be complete and is based
upon information derived from publicly available documents.
Home to the "Big Three" automobile manufacturers, Michigan's automobile
industry has historically played a prominent role in the State's economy. As of
1995, 48.7% of all manufacturing in the State was auto related, 1 in 14 Michigan
employees worked for the "Big Three", and $1 in $6 paid for labor was paid by
the "Big Three". In addition, 11.2% of Michigan employees are employed by
businesses related in some manner to the automobile industry.
Due to the cyclical nature of the automobile industry, Michigan and
consequently a shareholder of The Michigan Heritage Fund, could be adversely
affected by any economic downturn or recession. Also, any negative event or news
item relating to the automobile industry, may have an adverse affect on the
value of a shareholder's investment in the Fund.
INVESTING DEFENSIVELY
On those occasions when, in the opinion of the Fund's Advisor, market
conditions warrant a temporary defensive approach, the Fund may invest more than
35 percent of its total assets in short-term obligations, including the
following: securities issued or guaranteed by the U.S. government, commercial
paper, bankers acceptances and money market funds. During intervals when the
Fund has adopted a temporary defensive position it will not be pursuing its
stated investment objective.
The Fund may, from time to time, engage in repurchase agreements which are
secured by U.S. Government obligations that are eligible investments of the
Fund. That is, a seller may sell securities to the Fund and agree to repurchase
the securities at the Fund's cost plus interest within a specified time period
(normally one day). The arrangement results in a fixed rate of return that is
not subject to market fluctuations during the period that the underlying
security is held by the Fund. Repurchase agreements involve certain risks,
including seller's default on its obligation to repurchase or seller's
bankruptcy. The Fund will only enter into repurchase agreements with the Fund's
custodian bank and will not enter into repurchase agreements of more than seven
(7) days duration.
HOW TO PURCHASE SHARES
Fund Shares of the No-Load Class are sold on a continuous basis, and you
may invest any amount you choose, as often as you wish, subject to a minimum
initial investment of $1,000 and subsequent minimum investments of $100. Shares
of the Fund are purchased at their net asset value per share next determined
after the order is received and accepted by the Fund's transfer agent.
When opening an account, it is important that you provide the transfer
agent with your correct taxpayer identification number (social security or
employer identification number).
If you are investing in this Fund for the first time, you will need to set
up an account. You may make a direct initial investment by completing and
signing the investment application which accompanies this Prospectus and mailing
it, together with a check or money order made payable to:
The Michigan Heritage Fund
Declaration Service Company
P.O. Box 844,
Conshohocken, Pennsylvania 19428-0844
BY MAIL: When making subsequent investments by mail, enclose your check
with the return remittance portion of the confirmation of your previous
investment or indicate on your check or a separate piece of paper your name,
address and account number and mail to the address set forth above. Third party
checks will not be accepted, and the Fund reserves the right to refuse to accept
second party checks.
BY WIRE: You may make your initial or subsequent investments in the Fund by
wiring funds. To do so, call the Investor Services Department at 1-800-___-____
for wiring instructions.
BY AUTOMATIC INVESTMENT PLAN: Once your account is open, you may make
investments automatically by completing the automatic investment plan form
authorizing the Fund to draw on your bank account regularly by check for as
little as $100 per month beginning within thirty (30) days after the account is
opened. You should inquire at your bank whether it will honor debits through the
Automated Clearing House ("ACH"). You may change the date or amount of your
investment any time by written instruction received by the Fund at least five
business days before the change is to become effective.
To assure proper receipt, please be sure your bank includes the Fund name
and the account number that has been assigned to you. If you are opening a new
account, please complete the Account Registration Form and mail it to the "New
Account" address above after completing your wire arrangement. Note: Federal
Funds wire purchase orders will be accepted only when the Fund and Custodian
Bank are open for business.
FUNDS CREDITED TO THE FUND'S ACCOUNT BY 4:00 PM (EASTERN TIME) WILL BE
APPLIED TO PURCHASE SHARES ON THAT DAY. There are no wire fees charged by the
Fund for purchases of $1,000 or more. A $10 wire fee will be charged by the Fund
on wire purchases of less than $1,000. Your bank may also charge wire fees for
this service.
ADDITIONAL INFORMATION ABOUT PURCHASES
PURCHASE POLICIES:
o Investments must be received and accepted in the transfer agent's
offices on a business day before 4:00 PM Eastern Time to be credited
to your account that day and to receive that day's share price.
Otherwise, your investment will be credited to your account on the
next business day and you will receive that day's share price.
o The maximum single investment permitted is $250 thousand. Any
individual order for more than $250 thousand must be pre-approved by
the Advisor prior to making the investment or it will be rejected.
o The Transfer Agent and the Fund are not responsible for any delays
that occur in wiring funds, including delays in processing by the
investor's bank.
o The Fund reserves the right to reject an investment for any reason.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. THE FUND REDEEMS SHARES
AT THE NET ASSET VALUE THEREOF NEXT DETERMINED AFTER IT HAS RECEIVED AND
ACCEPTED A REDEMPTION REQUEST; HOWEVER THE REDEMPTION PROCEEDS WILL NOT BE PAID
UNTIL SUCH TIME AS THE REDEMPTION REQUEST IS RECEIVED IN PROPER ORDER.
Redemption requests must be received prior to the time that the net asset value
per share is next determined (generally 4:00 PM Eastern Time on each day that
the New York Stock Exchange is open for trading )to obtain the date of receipt
net asset value.
BY MAIL: A written request for redemption in proper order must be sent to
Declaration Service Company, P.O. Box 844, Conshohocken, Pennsylvania
19428-0844. For express or registered mail, your request should be addressed to
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken,
Pennsylvania 19428. "Proper order" requires delivery to the Transfer Agent of:
(1) a written redemption request signed by each registered owner in
the exact names in which the account is registered, and including the
account number and the number of shares or the dollar amount to be
redeemed;
(2) a signature guarantee when required (see "Signature Guarantee"
page ____);and
(3) such additional documents required to evidence the authority of
the persons requesting redemption on behalf of corporations, or as
executors, trustees and other fiduciaries. Redemption proceeds will not be
paid until all documents, in satisfactory form, have been received by the
Transfer Agent. (See "Additional Information About Redemptions" below on
page ____.)
BY TELEPHONE: Redemptions may be made by telephone, provided you have
completed the Telephone Redemption Authorization section of the purchase
application. Upon proper authority and instruction, redemption proceeds will be
wired to the bank account set forth on the account registration or, for amounts
$5,000 or less, redemptions will be mailed to the address on the account
registration. There will be a charge for the bank wire. Neither the Fund nor the
Transfer Agent will be responsible for acting upon instructions reasonably
believed by them to be genuine. The Fund and/or its Transfer Agent will,
however, employ reasonable procedures to confirm that instructions communicated
by telephone are genuine (such as requiring some form of personal
identification, providing written confirmations, and the tape recording of
conversations). If the Fund or its Transfer Agent do not employ reasonable
procedures, they may be liable for losses due to unauthorized or fraudulent
transactions.
SPECIAL REDEMPTION ARRANGEMENTS
Special arrangements may be made by institutional investors, or on behalf
of accounts established by brokers, advisors, banks or similar institutions, to
have redemption proceeds transferred by wire to pre-established accounts upon
telephone instructions. For further information call the Fund at 1-800-___-____.
SIGNATURE GUARANTEE
A signature guarantee is required for all redemptions greater than $5,000
or where the redemption proceeds are to be paid to another person or sent to an
address other than the one of record. A signature guarantee verifies the
authenticity of your signature. The guarantor must be an eligible guarantor. In
order to be eligible, the guarantor must be a participant in a STAMP program ( a
Securities Transfer Agents Medallion Program). You may call the Transfer Agent
at 1-800-___- ____ to determine whether the entity that will guarantee the
signature is an eligible guarantor.
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL: If your redemption check is to be mailed, it will usually be
mailed to you within 48 hours of receipt of the redemption request. The Fund
reserves the right to hold redemption proceeds for up to seven days. If the
shares to be redeemed were purchased by check, the redemption proceeds will not
be mailed to you until the check has cleared. You may avoid this inconvenience
by investing by bank wire. Redemption checks may also be delayed if you have
changed your address within the last 30 days. Please notify the Fund, promptly,
in writing, of any change of address.
BY WIRE: You may authorize the Fund to transmit redemption proceeds by wire
provided you send written instructions with a signature guarantee at the time of
redemption or have completed the banking information portion of the Telephone
Redemption Authorization on the purchase application. Your redemption proceeds
will usually be sent on the first business day following redemption. However,
the Fund reserves the right to hold redemption proceeds for up to seven days. If
the shares to be redeemed were purchased by check, the redemption proceeds will
not be wired until the check has cleared, which may take up to seven days. There
is a $10 charge to cover the wire, which is deducted from redemption proceeds.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
(1) The share redemption price may be more or less than your cost of the
shares being redeemed, depending on the per share net asset value next
determined after your request is received.
(2) A request to redeem shares in an IRA or similar retirement account must
be accompanied by an IRS W4-P and must state a reason for withdrawal, as
specified by the IRS. Proceeds from the redemption of shares from a retirement
account may be subject to withholding tax.
(3) Excessive purchases and redemptions of Fund shares has an adverse
impact on effective portfolio management as well as upon Fund expenses. The Fund
has reserved the right to refuse investments from shareholders who engage in
such transactions.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses, an account closing fee of $10 will be
assessed against those shareholders who redeem all of the shares in their Fund
account and direct that redemption proceeds be directed to them by mail or wire.
This charge is payable directly to the Fund's Transfer Agent which, in turn,
will reduce its charges to the Fund by an equal amount.
The purpose of the charge is to allocate to redeeming shareholders a more
equitable portion of the Transfer Agent's fee, including the cost of tax
reporting, which is based upon the number of shareholder accounts. When a
shareholder closes an account, the Fund must continue to carry the account on
its books, maintain the account records and complete year-end tax reporting.
With no assets, the account cannot pay its own expenses and imposes an unfair
burden on remaining shareholders.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuation,
below $500 at any time during a month will be subject to a small account charge
of $5 for that month, which is deducted the first business day following the end
of each month. The charge is payable directly to the Fund's Transfer Agent
which, in turn, will reduce its charges to the Fund by an equal amount. The
purpose of the charge is to allocate the cost of maintaining shareholder
accounts more equitably among shareholders.
Active automatic investment plan, UGMA/UTMA, and retirement plan accounts
will not be subject to the small account charge.
In order to reduce expenses, the Fund may redeem all of the shares in any
shareholder account (other than an active automatic investment plan, UGMA/UTMA
and retirement plan accounts), if, for a period of more than three months, the
account has a net value of $500 or less and the reduction in its value is not
due to market action. If the Fund elects to close such accounts, it will notify
shareholders whose accounts are below the minimum of its intention to do so, and
will provide those shareholders with an opportunity to increase the value of
their accounts by investing a sufficient amount to bring the value of their
accounts up to an amount greater than $500 within ninety (90) days of the date
of the notice. No account closing fee will be charged to those investors whose
accounts are closed under the mandatory redemption provision.
SHAREHOLDER SERVICES
Declaration Service Company, P.O. Box 844, Conshohocken, PA 19428-0844,
acts as transfer, shareholder servicing, and dividend paying agent for all Fund
accounts. Simply write or call the Investor Information Department at
1-800-___-____ for prompt service on any questions about your account.
CONFIRMATION STATEMENTS
Shareholders normally will receive a confirmation statement after each
transaction showing the activity in the account, and an annual statement showing
all transactions for the calendar year just completed.
OTHER SERVICES
The Fund has available a number of plans and services to meet the special
needs of certain investors. Plans available include, but are not limited to:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, 403(b)(7), and employer-adopted,
401(k) defined benefit and defined contribution plans.
There is an annual charge for each retirement plan fund account with
respect to which a service provider acts as custodian. If this charge is not
paid separately prior to the last business day of a calendar year or prior to a
total redemption, it will be deducted from the shareholder's account.
Application forms and brochures describing these plans and services can be
obtained from the Transfer Agent by calling 1-800-___-____.
RULE 12b-1 DISTRIBUTION PLAN
A plan of distribution has been adopted under Rule 12b-1 of the Investment
Company Act of 1940 for the Fund. The plan provides the Fund may pay an annual
fee of up to 0.25% of the Fund's average net assets (1/12 of 0.25% monthly) for
certain services which are primarily intended to result in the distribution of
Fund shares. Such services include advertising, compensation of persons engaged
in the sale of Fund shares, distribution of sales materials including the cost
of preparing, printing and mailing such sales materials, sales representations
and promotions and payments to brokers and others who are engaged in the
distribution of Fund shares and who administer the accounts of shareholders. See
"12b-1 Plan of Distribution" in Statement of Additional Information.
VALUING FUND SHARES
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 PM, Eastern Time) on each day that the Exchange is open for
business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ over-the
counter market are valued at the last quoted sale price. Lacking a last sale
price, a security is valued at its last bid price except when, in the Advisor's
opinion, the last bid price does not accurately reflect the current value of the
security. All other securities for which over-the-counter market quotations are
readily available are valued at their last bid price. When market quotations are
not readily available, when the Advisor determines the last bid price does not
accurately reflect the current value and when restricted securities are being
valued, such securities are valued as determined in good faith by the Advisor,
subject to review of the Board of Trustees of the Trust.
DISTRIBUTION AND TAXES
As a shareholder you are entitled to your share of the Fund's distributed
net income and any gains realized on its investments. The Funds intends to
qualify as a "regulated investment company" for federal income tax purposes and
intends to distribute substantially all of its net investment income and net
capital gains to shareholders at least once a year or more often, if necessary,
to avoid paying corporate income and excise taxes. Dividend and capital gains
distributions will have tax consequences you should know about.
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income from dividends and interest is distributed
to you at the end of the calendar year as dividends. Short-term capital gains
(if any) are distributed at the end of the calendar year and are included in net
investment income.
Net realized long-term capital gains (if any) are distributed at the end of
the calendar year as capital gain distributions. Before they are paid or
distributed, net investment income and net long-term capital gains are included
in the value of each share. After they are paid and distributed, the value of
each share drops by the per-share amount of the distribution (If your dividends
and distributions are reinvested, the total value of your holdings will not
change).
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund, unless you request the Fund, in writing or by
phone, to pay dividends and distributions to you in cash.
The reinvestment price is the net asset value at the close of business on
the day the dividend or distribution is paid. Your statement will confirm the
amount invested and the number of shares purchased.
If you choose to receive your dividends and distributions in cash, you will
receive cash payments only for those dividends or distributions declared after
your request has been processed.
TAXES
Dividends and distributions are subject to federal income tax and also may
be subject to state and local taxes. Dividends and distributions are taxable in
the year in which the Fund pays them regardless of whether you receive them in
cash or they are reinvested in additional shares.
Each January, you will receive a tax statement showing the kind and total
amount of all dividends and distributions you received during the previous year.
You must report dividends and distributions on your tax returns, even if they
are reinvested in additional shares.
"Buying a dividend" creates a tax liability. "Buying a dividend" means
buying shares shortly before a dividend or a capital gain distribution is
declared and paid on Fund shares. The amount of the dividend or distribution
that you receive is fully taxable to you even though such dividend or
distribution is only a return of capital.
Redemptions proceeds may be subject to tax. If the redemption value of your
Fund shares is greater than their cost, the difference is a capital gain. Your
gain may be either short-term or long term.
IMPORTANT: The foregoing tax information is a brief and selective summary
of certain federal tax rules that apply to the Fund. Tax matters are highly
individual and complex, and you should consult a qualified tax advisor about
your personal situation.
MANAGEMENT OF THE FUND
TRUSTEES
The Fund is a series of the Declaration Fund (the "Trust"), an open-end,
diversified, management investment company organized as a Pennsylvania business
trust. The Trust's headquarters are at 555 North Lane, Suite 6160, Conshohocken,
Pennsylvania 17428-0844. The business and affairs of the Trust and of the
separate series (including The Michigan Heritage Fund) within the Trust are
managed by the Trust's Board of Trustees. The Trustees establish trust policies,
and have certain fiduciary duties and obligations to the Trust and the separate
series and their shareholders under the laws of the State of Pennsylvania and
the applicable federal securities laws. Currently, the Trust is offering shares
in two series: Declaration Cash Account and The Michigan Heritage Fund.
THE INVESTMENT ADVISOR
Dickinson Asset Management, Inc. (the "Advisor"), 301 MAC Avenue, Suite
120, East Lansing, Michigan 48823, under a written investment advisory agreement
with the Trust, furnishes investment advisory and management services to the
Fund. The Advisor is a Michigan corporation and has been registered as an
investment advisor with the U.S. Securities and Exchange Commission ("SEC") and
the State of Michigan since September 1996. Prior to this date, this Firm was a
sole proprietorship duly registered with the SEC and the State of Michigan in
April 1995.
Mr. C. David Dickinson, the Fund's portfolio manager, is the principal
owner of and controls the Advisor and is responsible for the day-to-day
investment management of the Fund. Mr. Dickinson has in excess of thirteen years
of experience in the financial services industry, including eight years as a
Registered Representative in the brokerage business, and two years as Principal
of a Registered Investment Advisory Firm. Shareholders should understand that
while Mr. Dickinson has extensive experience advising clients as to their
investment strategies and managing portfolios of common stock, the Fund has no
operating history and managing a mutual fund portfolio is a new position for Mr.
Dickinson. Dickinson Asset Management, Inc. has been Investment Advisor to the
Fund since inception.
The Advisor furnishes an investment program for the Fund, determines,
subject to the overall supervision and review of the Board of Trustees of the
Trust, what investments should be purchased, sold and held, and makes changes on
behalf of the Trust in the investments of the Fund. The Advisory Agreement with
the Trust provides for the Fund to pay the Advisor a monthly management fee
equal to an annual rate of 1.00% of the Fund's average daily net assets.
THE ADMINISTRATOR
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA
19428-0844 ("DSC") serves as the Fund's Administrator in addition to serving as
the Fund's transfer agent, shareholder servicing agent, and dividend disbursing
agent.
DSC is responsible for determining the daily net asset value per share and
maintaining the general accounting records of the Fund.
THE DISTRIBUTOR
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken,
PA 19428-0844 ("DDI" or "Distributor"), an affiliate of DSC, is the Fund's share
distributor. DDI acts as sales agent in states where designated agents are
required. DDI reviews and files all advertising and promotional materials, and
monitors and reports to the Board of Trustees on Fund distribution plans.
The Administration, Transfer Agent and Shareholder Services, Accounting
Services, and the Distribution agreements provide for the Fund to pay DSC and
DDI respectively annual fees, payable monthly, for providing the services called
for by the agreements.
GENERAL INFORMATION
SHAREHOLDER RIGHTS
The shares of the Fund, both of the No-Load Class and Class A, represent an
interest in the Fund's assets only and in the event of liquidation, each share
of the Fund would have its aliquot right to the distribution of Fund assets as
every other share of the Fund.
No annual or regular meeting of shareholders is required; however, the
Trustees may call meetings to take action on matters which require a shareholder
vote and other matters as to which Trustees determine a shareholder vote is
necessary or desirable. Subject to Section 16(a) of the Investment Company Act
of 1940, the Trustees may elect their own successors and may appoint Trustees to
fill vacancies, including vacancies caused by an increase in the number of
trustees by action of the Board of Trustees.
As a shareholder, you have voting rights with respect to the management and
operation of the Fund and its policies. You together with the shareholders of
the other series of Declaration Fund are also entitled to vote upon matters
which affect or concern Declaration Fund. You are also entitled to vote as a
class, exclusively, on matters which affect only your class. You are entitled to
one vote for each whole share, and fractional votes for any fractional shares
held. Shares of the Fund do not have cumulative voting rights. The Fund's shares
are fully paid and non-assessable, have no pre-emptive or subscription rights,
and are fully transferable, with no conversion rights.
The Fund issues another Class of shares which invest in the same portfolio
as the No-Load Class and such Class may have different sales charges and other
expenses which may affect performance. Investors may call 1-800-________ to
obtain more information concerning the other Class. Investors may also obtain
information concerning the other Class through their sales representative or
securities broker which is offering or making available to them the securities
offered in the prospectus.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, in terms of its
total return, to that of other mutual funds with similar investment objectives
and to stock or other indices. For example, the Fund may compare its performance
to rankings prepared by Lipper Analytical Services, Inc. ("Lipper"), a widely
recognized independent service which monitors the performance of mutual funds,
to Morningstar's Mutual Fund Values, or to the Consumer Price Index. Performance
information and rankings as reported in Changing Times, Business Week,
Institutional Investor, the Wall Street Journal, Mutual Fund Forecaster, No-Load
Investor, Money, Forbes, Fortune and Barrons may also be used in comparing
performance of the Fund. Performance comparisons shall not be considered as
representative of the future performance of the Fund.
The Fund's average annual total return is computed by determining the
average annual compounded rate of return for a specified period that, if applied
to a hypothetical $1,000 initial investment, would produce the redeemable value
of that investment at the end of the period, assuming reinvestment of all
dividends and distributions and with recognition of all recurring charges. The
Fund may also utilize a total return for differing periods computed in the same
manner but without annualizing the total return.
The standard total return results may not take into account recurring and
non-recurring charges for optional services which only certain shareholders
elect and which involve nominal fees such as a fee for small balances and
redemptions. These fees have the effect of reducing the actual return realized
by shareholders.
MICHIGAN HERITAGE FUND
INVESTMENT ADVISOR
Dickinson Asset Management, Inc.
301 MAC Avenue, Suite 120
East Lansing, Michigan 48823
ADMINISTRATOR & TRANSFER AGENT
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
DISTRIBUTOR
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
CUSTODIAN BANK
Star Bank, N.A.
425 Walnut Street
M.L. 6118
Cincinnati, Ohio 45202
INDEPENDENT ACCOUNTANTS
Sanville & Company
1514 Old York Road
Abington, PA 19001
Be sure to retain this prospectus. It contains valuable information.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or the Fund's Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Fund.
This Prospectus does not constitute an offering by the Fund in any jurisdiction
in which such offering may not lawfully be made.
<PAGE>
THE MICHIGAN HERITAGE FUND
Series of The Declaration Fund
THE MICHIGAN HERITAGE FUND
301 MAC Avenue
Suite 120
East Lansing, MI 48823
1-800-___-____
(INFORMATION, SHAREHOLDER SERVICES AND REQUESTS)
PROSPECTUS
_______ ___, 1998
This Prospectus relates to the Class A Shares issued with respect to the
Michigan Heritage Fund.
The Michigan Heritage Fund's objective is long-term growth through capital
appreciation. The Fund seeks to achieve this goal mainly by investing in a
diversified portfolio of companies that have headquarters in the State of
Michigan or companies based elsewhere that have significant operations (as
defined by the Fund's Advisor) in the State of Michigan. There can be no
guarantee the investment objective of the Fund will be achieved.
This Prospectus provides the information a prospective investor ought to
know before investing and should be retained for future reference. A Statement
of Additional Information has been filed with the Securities and Exchange
Commission (the "SEC") dated _______ ___, 1998, which is incorporated herein by
reference and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www/sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.
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>
SUMMARY OF FEES AND EXPENSES
The following summary is provided to assist you in understanding the
various costs and expenses a shareholder in the Fund could bear directly and
indirectly. Annual operating expenses are shown as a percentage of average daily
net assets. Because shares of the Fund were not offered prior to the date of
this prospectus, annual operating expenses of the Fund are based on estimated
expenses. Shareholder transaction expenses for the Fund are expressed as a
percentage of the public offering price, cost per transaction or as otherwise
noted. The Example should not be considered a representation of future Fund
performance or expenses, both of which may vary.
Shareholder Transaction Expenses
Maximum sales charge on purchases................................... 5.25%
Maximum deferred sales charge imposed on redemption ................ 0%
Maximum sales charge imposed on dividend reinvestment .............. 0%
Redemption Fees .................................................... 0%
Account Closing Fee ................................................ $10
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee ..................................................... 1.00%
12b-1 Fee .......................................................... .25%
Other Expenses,* (including Transfer Agency
and Accounting Services Fees)....................................... .50%
Total Fund Operating Expenses ...................................... 1.75%
*Other expenses are based on estimated amounts for the current fiscal year.
A $10.00 wire fee will be charged on wire purchases of less than $1,000.
HYPOTHETICAL EXAMPLE OF EFFECT ON FUND EXPENSES
You would pay the following expenses on a $1,000 investment if, for each
year for the next three years, Fund expenses are as described above and annual
return is 5%.
1 YEAR 3 YEARS
------ -------
Assuming a complete redemption at end of period
------ -------
Assuming no redemption at end of period
------ -------
THE FUND
The Michigan Heritage Fund (the "Fund") was organized as a series of
Declaration Fund (the "Trust") on February 19, 1997, and commenced operations on
July 8, 1997. This Prospectus offers Class A Shares of the Fund. Each share
represents an undivided, proportionate interest in the Fund. The investment
advisor to the Fund is Dickinson Asset Management, Inc. (the "Advisor").
INVESTMENT OBJECTIVES
The Fund's investment objective is long-term growth through capital
appreciation. The Fund seeks to achieve this goal mainly by investing in a
diversified portfolio of companies that have headquarters in the State of
Michigan or companies based elsewhere that have significant operations in the
State of Michigan (as defined by the Fund's Advisor). There can be no guarantee
the investment objective of the Fund will be achieved. The Fund's investment
objective may not be changed without shareholder approval.
The Fund's Advisor believes that Michigan is positioned to provide
publicly-traded companies and their shareholders significant opportunities for
growth. Due to its central location among the largest markets in the U.S. and
Canada, Michigan offers businesses access to half of the population and personal
income of both countries. Michigan's own sizable consumer market of 9.3 million
had an average per capita income of approximately $22,300 in 1994. Long known as
a leader in manufacturing, Michigan's large industrial market generated a demand
for products and services of more than $170 billion in 1992. In 1994, Michigan
was ranked #2 of states having the most companies listed in the Top 20 of the
Fortune 500. While the State's economy still benefits from its strong ties to
the automobile industry, Michigan's economy continues to become more diverse.
The State has one of the most advanced telecommunications infrastructures in the
nation, at one time, having more fiber optic cable installation than any other
state. Virtually every city and town is connected through fiber optic networks.
Also, Michigan is the most Internet-connected state in the Midwest - 90% of
Michigan's population can dial the Internet via a local phone call.
International trade is assuming increasing importance in Michigan's economy.
Commercial airports, the Great Lakes and St. Lawrence Seaway give the state easy
access to world markets and the State was the nation's 4th largest exporter in
1994. Detroit was the nation's top exporting metropolitan area in 1994 and 1995.
The U.S.-Canadian Free Trade Agreement has spurred activity between Michigan and
Canada, already one of the world's largest trading relationships.
The Advisor believes that the Fund will provide a positive influence on the
Michigan economy by stimulating investor interest and awareness in Michigan
companies.
INVESTMENT POLICIES
To pursue its objective, the Fund will invest at least 65 percent of the
value of its total assets in common stocks, preferred stocks, securities
convertible into common and preferred stocks, and American Depository Receipts
(ADRs) traded on a U.S. stock exchange, issued by firms whose headquarters are
located in the State of Michigan or companies based elsewhere having significant
operations in the State of Michigan.
The Fund may also invest up to 35 percent of the value of its total assets
in other common stocks, preferred stocks, investment-grade corporate bonds and
notes, and high quality short-term debt securities such as commercial paper,
bankers' acceptances, certificates of deposit, repurchase agreements,
obligations insured or guaranteed by the United States Government or its
agencies, demand and time deposits of domestic banks and United States branches
and subsidiaries of foreign banks, and money market funds.
The Fund will not engage in direct investment in real estate. The fund may
invest in Real Estate Investment Trusts (REITS) that are traded on one of the
principal U.S. stock exchanges.
The Fund will invest in a diverse group of companies with varying degrees
of name recognition. The portfolio will include companies in a wide range of
industries, from basic consumer goods and autos to high-tech services.
Investments are based primarily on fundamental analysis. While technical factors
will be considered, the main investment criteria will focus on an evaluation of
revenues, earnings, debt, capitalization, quality of management, level of
insider ownership, changing market conditions, past performance and future
expectations. The fund will strive to invest in companies that have well defined
business plans and long-term operating strategies designed to increase
shareholder value. The Fund will not concentrate its investments in one
industry; however, it may invest up to 25% of the value of its' assets in one
industry. This concentration policy may not be changed without shareholder
approval.
When evaluating a Michigan-based company, a member of the Advisor's
portfolio management or research staff may conduct an in-person visit to the
company whenever such a visit is judged appropriate, may meet with the company's
management, and evaluate its operations. The Advisor will also attempt to
interview a cross section of the company's employees, customers, suppliers and
competitors. The Advisor believes that this "hands on" approach to investing
will give it an opportunity to spot developing trends in these Michigan
companies.
The Fund does not propose to engage in short-term trading. However, it may,
from time to time, sell a security without regard to the length of time it has
been held. The fund does not expect that its' portfolio turnover rate will
exceed 75% for its' first fiscal year. High portfolio turnover rates increase
transaction costs and the possibility of realizing taxable capital gains.
RISKS
The principal risk factor associated with an investment in the Fund is that
the market value of the portfolio's securities may decrease and result in a
decrease in the value of a shareholder's investment.
The Fund's portfolio may include smaller companies that are not nationally
recognized and companies that ordinarily pay no dividends or interest. The price
of the stocks of such companies are generally more volatile than those of larger
or more mature companies. Additionally, the securities of such companies are
generally more likely to be negatively affected by adverse economic and/or
market conditions, and are generally less liquid.
Due to the geographic limitation of 65% if the Fund's assets, such assets
may be subject to greater risk of loss from economic, political or other
developments (e.g., natural disasters) having an unfavorable impact upon
businesses located in Michigan than similar funds whose investments are
geographically more diverse (i.e. the Fund may be less diversified than other
funds with similar investment objectives but no such geographic limitation).
There can be no assurance that the economy of Michigan or the companies
headquartered or operating in Michigan will grow in the future.
SPECIAL FACTORS AFFECTING INVESTMENTS IN MICHIGAN COMPANIES
Since the Fund will be mainly investing in a diversified portfolio of
companies that have their headquarters in the State of Michigan, or companies
based elsewhere that have significant operations in Michigan, Fund investments
can be significantly affected by business trends and the economic health of
Michigan. The following is a brief description of certain factors affecting the
Michigan Heritage Fund. The summary does not purport to be complete and is based
upon information derived from publicly available documents.
Home to the "Big Three" automobile manufacturers, Michigan's automobile
industry has historically played a prominent role in the State's economy. As of
1995, 48.7% of all manufacturing in the State was auto related, 1 in 14 Michigan
employees worked for the "Big Three", and $1 in $6 paid for labor was paid by
the "Big Three". In addition, 11.2% of Michigan employees are employed by
businesses related in some manner to the automobile industry.
Due to the cyclical nature of the automobile industry, Michigan and
consequently a shareholder of The Michigan Heritage Fund, could be adversely
affected by any economic downturn or recession. Also, any negative event or news
item relating to the automobile industry, may have an adverse affect on the
value of a shareholder's investment in the Fund.
INVESTING DEFENSIVELY
On those occasions when, in the opinion of the Fund's Advisor, market
conditions warrant a temporary defensive approach, the Fund may invest more than
35 percent of its total assets in short-term obligations, including the
following: securities issued or guaranteed by the U.S. government, commercial
paper, bankers acceptances and money market funds. During intervals when the
Fund has adopted a temporary defensive position it will not be pursuing its
stated investment objective.
The Fund may, from time to time, engage in repurchase agreements which are
secured by U.S. Government obligations that are eligible investments of the
Fund. That is, a seller may sell securities to the Fund and agree to repurchase
the securities at the Fund's cost plus interest within a specified time period
(normally one day). The arrangement results in a fixed rate of return that is
not subject to market fluctuations during the period that the underlying
security is held by the Fund. Repurchase agreements involve certain risks,
including seller's default on its obligation to repurchase or seller's
bankruptcy. The Fund will only enter into repurchase agreements with the Fund's
custodian bank and will not enter into repurchase agreements of more than seven
(7) days duration.
HOW TO PURCHASE SHARES
Class A Shares of the Fund are sold on a continuous basis, and you may
invest any amount you choose, as often as you wish, subject to a minimum initial
investment of $1,000 and subsequent minimum investments of $100. Shares of the
Fund are purchased at their public offering price which is their net asset value
next determined after an order is received and accepted by the transfer agent
plus a sales charge. The selling price is calculated as follows:
<TABLE>
<CAPTION>
Selling Price As
Percentage of Public Payable to
Dollar Amount Invested Offering Price Selling Institution Distributor
---------------------- -------------- ------------------- -----------
<S> <C> <C> <C>
Up to $50,000 5.25% 4.75% 0.50%
$50,000 but less than $250,000 4.00% 3.50% 0.50%
$250,000 but less than $500,000 3.00% 2.50% 0.50%
$500,000 and above 2.25% 1.75% 0.50%
</TABLE>
When opening an account, it is important that you provide the transfer
agent with your correct taxpayer identification number (social security or
employer identification number).
If you are investing in this Fund for the first time, you will need to set
up an account. You may make a direct initial investment by completing and
signing the investment application which accompanies this Prospectus and mailing
it, together with a check or money order made payable to:
The Michigan Heritage Fund
Declaration Service Company
P.O. Box 844,
Conshohocken, Pennsylvania 19428-0844
BY MAIL: When making subsequent investments by mail, enclose your check
with the return remittance portion of the confirmation of your previous
investment or indicate on your check or a separate piece of paper your name,
address and account number and mail to the address set forth above. Third party
checks will not be accepted, and the Fund reserves the right to refuse to accept
second party checks.
BY WIRE: You may make your initial or subsequent investments in the Fund by
wiring funds. To do so, call the Investor Services Department at 1-800-___-____
for wiring instructions.
BY AUTOMATIC INVESTMENT PLAN: Once your account is open, you may make
investments automatically by completing the automatic investment plan form
authorizing the Fund to draw on your bank account regularly by check for as
little as $100 per month beginning within thirty (30) days after the account is
opened. You should inquire at your bank whether it will honor debits through the
Automated Clearing House ("ACH"). You may change the date or amount of your
investment any time by written instruction received by the Fund at least five
business days before the change is to become effective.
To assure proper receipt, please be sure your bank includes the Fund name
and the account number that has been assigned to you. If you are opening a new
account, please complete the Account Registration Form and mail it to the "New
Account" address above after completing your wire arrangement. Note: Federal
Funds wire purchase orders will be accepted only when the Fund and Custodian
Bank are open for business.
FUNDS CREDITED TO THE FUND'S ACCOUNT BY 4:00 PM (EASTERN TIME) WILL BE
APPLIED TO PURCHASE SHARES ON THAT DAY. There are no wire fees charged by the
Fund for purchases of $1,000 or more. A $10 wire fee will be charged by the Fund
on wire purchases of less than $1,000. Your bank may also charge wire fees for
this service.
ADDITIONAL INFORMATION ABOUT PURCHASES
PURCHASE POLICIES:
o Investments must be received and accepted in the transfer agent's
offices on a business day before 4:00 PM Eastern Time to be credited
to your account that day and to receive that day's share price.
Otherwise, your investment will be credited to your account on the
next business day and you will receive that day's share price.
o The maximum single investment permitted is $250 thousand. Any
individual order for more than $250 thousand must be pre-approved by
the Advisor prior to making the investment or it will be rejected.
o The Transfer Agent and the Fund are not responsible for any delays
that occur in wiring funds, including delays in processing by the
investor's bank.
o The Fund reserves the right to reject an investment for any reason.
HOW TO REDEEM SHARES
You may redeem any or all of your shares at will. THE FUND REDEEMS SHARES
AT THE NET ASSET VALUE THEREOF NEXT DETERMINED AFTER IT HAS RECEIVED AND
ACCEPTED A REDEMPTION REQUEST; HOWEVER THE REDEMPTION PROCEEDS WILL NOT BE PAID
UNTIL SUCH TIME AS THE REDEMPTION REQUEST IS RECEIVED IN PROPER ORDER.
Redemption requests must be received prior to the time that the net asset value
per share is next determined (generally 4:00 PM Eastern Time on each day that
the New York Stock Exchange is open for trading )to obtain the date of receipt
net asset value.
BY MAIL: A written request for redemption in proper order must be sent to
Declaration Service Company, P.O. Box 844, Conshohocken, Pennsylvania
19428-0844. For express or registered mail, your request should be addressed to
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken,
Pennsylvania 19428. "Proper order" requires delivery to the Transfer Agent of:
(1) a written redemption request signed by each registered owner in
the exact names in which the account is registered, and including the
account number and the number of shares or the dollar amount to be
redeemed;
(2) a signature guarantee when required (see "Signature Guarantee"
page ____);and
(3) such additional documents required to evidence the authority of
the persons requesting redemption on behalf of corporations, or as
executors, trustees and other fiduciaries. Redemption proceeds will not be
paid until all documents, in satisfactory form, have been received by the
Transfer Agent. (See "Additional Information About Redemptions" below on
page ____.)
BY TELEPHONE: Redemptions may be made by telephone, provided you have
completed the Telephone Redemption Authorization section of the purchase
application. Upon proper authority and instruction, redemption proceeds will be
wired to the bank account set forth on the account registration or, for amounts
$5,000 or less, redemptions will be mailed to the address on the account
registration. There will be a charge for the bank wire. Neither the Fund nor the
Transfer Agent will be responsible for acting upon instructions reasonably
believed by them to be genuine. The Fund and/or its Transfer Agent will,
however, employ reasonable procedures to confirm that instructions communicated
by telephone are genuine (such as requiring some form of personal
identification, providing written confirmations, and the tape recording of
conversations). If the Fund or its Transfer Agent do not employ reasonable
procedures, they may be liable for losses due to unauthorized or fraudulent
transactions.
SPECIAL REDEMPTION ARRANGEMENTS
Special arrangements may be made by institutional investors, or on behalf
of accounts established by brokers, advisors, banks or similar institutions, to
have redemption proceeds transferred by wire to pre-established accounts upon
telephone instructions. For further information call the Fund at 1-800-___-____.
SIGNATURE GUARANTEE
A signature guarantee is required for all redemptions greater than $5,000
or where the redemption proceeds are to be paid to another person or sent to an
address other than the one of record. A signature guarantee verifies the
authenticity of your signature. The guarantor must be an eligible guarantor. In
order to be eligible, the guarantor must be a participant in a STAMP program ( a
Securities Transfer Agents Medallion Program). You may call the Transfer Agent
at 1-800-___- ____ to determine whether the entity that will guarantee the
signature is an eligible guarantor.
REDEMPTION PROCEEDS MAY BE SENT TO YOU:
BY MAIL: If your redemption check is to be mailed, it will usually be
mailed to you within 48 hours of receipt of the redemption request. The Fund
reserves the right to hold redemption proceeds for up to seven days. If the
shares to be redeemed were purchased by check, the redemption proceeds will not
be mailed to you until the check has cleared. You may avoid this inconvenience
by investing by bank wire. Redemption checks may also be delayed if you have
changed your address within the last 30 days. Please notify the Fund, promptly,
in writing, of any change of address.
BY WIRE: You may authorize the Fund to transmit redemption proceeds by wire
provided you send written instructions with a signature guarantee at the time of
redemption or have completed the banking information portion of the Telephone
Redemption Authorization on the purchase application. Your redemption proceeds
will usually be sent on the first business day following redemption. However,
the Fund reserves the right to hold redemption proceeds for up to seven days. If
the shares to be redeemed were purchased by check, the redemption proceeds will
not be wired until the check has cleared, which may take up to seven days. There
is a $10 charge to cover the wire, which is deducted from redemption proceeds.
ADDITIONAL INFORMATION ABOUT REDEMPTIONS
(1) The share redemption price may be more or less than your cost of the
shares being redeemed, depending on the per share net asset value next
determined after your request is received.
(2) A request to redeem shares in an IRA or similar retirement account must
be accompanied by an IRS W4-P and must state a reason for withdrawal, as
specified by the IRS. Proceeds from the redemption of shares from a retirement
account may be subject to withholding tax.
(3) Excessive purchases and redemptions of Fund shares has an adverse
impact on effective portfolio management as well as upon Fund expenses. The Fund
has reserved the right to refuse investments from shareholders who engage in
such transactions.
ACCOUNT CLOSING FEE
In order to reduce Fund expenses, an account closing fee of $10 will be
assessed against those shareholders who redeem all of the shares in their Fund
account and direct that redemption proceeds be directed to them by mail or wire.
This charge is payable directly to the Fund's Transfer Agent which, in turn,
will reduce its charges to the Fund by an equal amount.
The purpose of the charge is to allocate to redeeming shareholders a more
equitable portion of the Transfer Agent's fee, including the cost of tax
reporting, which is based upon the number of shareholder accounts. When a
shareholder closes an account, the Fund must continue to carry the account on
its books, maintain the account records and complete year-end tax reporting.
With no assets, the account cannot pay its own expenses and imposes an unfair
burden on remaining shareholders.
SMALL ACCOUNTS
Fund accounts which fall, for any reason other than market fluctuation,
below $500 at any time during a month will be subject to a small account charge
of $5 for that month, which is deducted the first business day following the end
of each month. The charge is payable directly to the Fund's Transfer Agent
which, in turn, will reduce its charges to the Fund by an equal amount. The
purpose of the charge is to allocate the cost of maintaining shareholder
accounts more equitably among shareholders.
Active automatic investment plan, UGMA/UTMA, and retirement plan accounts
will not be subject to the small account charge.
In order to reduce expenses, the Fund may redeem all of the shares in any
shareholder account (other than an active automatic investment plan, UGMA/UTMA
and retirement plan accounts), if, for a period of more than three months, the
account has a net value of $500 or less and the reduction in its value is not
due to market action. If the Fund elects to close such accounts, it will notify
shareholders whose accounts are below the minimum of its intention to do so, and
will provide those shareholders with an opportunity to increase the value of
their accounts by investing a sufficient amount to bring the value of their
accounts up to an amount greater than $500 within ninety (90) days of the date
of the notice. No account closing fee will be charged to those investors whose
accounts are closed under the mandatory redemption provision.
SHAREHOLDER SERVICES
Declaration Service Company, P.O. Box 844, Conshohocken, PA 19428-0844,
acts as transfer, shareholder servicing, and dividend paying agent for all Fund
accounts. Simply write or call the Investor Information Department at
1-800-___-____ for prompt service on any questions about your account.
CONFIRMATION STATEMENTS
Shareholders normally will receive a confirmation statement after each
transaction showing the activity in the account, and an annual statement showing
all transactions for the calendar year just completed.
OTHER SERVICES
The Fund has available a number of plans and services to meet the special
needs of certain investors. Plans available include, but are not limited to:
(1) payroll deduction plans, including military allotments;
(2) custodial accounts for minors;
(3) a flexible, systematic withdrawal plan; and
(4) various retirement plans such as IRA, 403(b)(7), and employer-adopted,
401(k) defined benefit and defined contribution plans.
There is an annual charge for each retirement plan fund account with
respect to which a service provider acts as custodian. If this charge is not
paid separately prior to the last business day of a calendar year or prior to a
total redemption, it will be deducted from the shareholder's account.
Application forms and brochures describing these plans and services can be
obtained from the Transfer Agent by calling 1-800-___-____.
RULE 12b-1 DISTRIBUTION PLAN
A plan of distribution has been adopted under Rule 12b-1 of the Investment
Company Act of 1940 for the Fund. The plan provides the Fund may pay an annual
fee of up to 0.25% of the Fund's average net assets (1/12 of 0.25% monthly) for
certain services which are primarily intended to result in the distribution of
Fund shares. Such services include advertising, compensation of persons engaged
in the sale of Fund shares, distribution of sales materials including the cost
of preparing, printing and mailing such sales materials, sales representations
and promotions and payments to brokers and others who are engaged in the
distribution of Fund shares and who administer the accounts of shareholders. See
"12b-1 Plan of Distribution" in Statement of Additional Information.
VALUING FUND SHARES
The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 PM, Eastern Time) on each day that the Exchange is open for
business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.
Securities which are traded on any exchange or on the NASDAQ over-the
counter market are valued at the last quoted sale price. Lacking a last sale
price, a security is valued at its last bid price except when, in the Advisor's
opinion, the last bid price does not accurately reflect the current value of the
security. All other securities for which over-the-counter market quotations are
readily available are valued at their last bid price. When market quotations are
not readily available, when the Advisor determines the last bid price does not
accurately reflect the current value and when restricted securities are being
valued, such securities are valued as determined in good faith by the Advisor,
subject to review of the Board of Trustees of the Trust.
DISTRIBUTION AND TAXES
As a shareholder you are entitled to your share of the Fund's distributed
net income and any gains realized on its investments. The Funds intends to
qualify as a "regulated investment company" for federal income tax purposes and
intends to distribute substantially all of its net investment income and net
capital gains to shareholders at least once a year or more ofter, if necessary,
and to avoid paying corporate income and excise taxes. Dividend and capital
gains distributions will have tax consequences you should know about.
DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income from dividends and interest is distributed
to you at the end of the calendar year as dividends. Short-term capital gains
(if any) are distributed at the end of the calendar year and are included in net
investment income.
Net realized long-term capital gains (if any) are distributed at the end of
the calendar year as capital gain distributions. Before they are paid or
distributed, net investment income and net long-term capital gains are included
in the value of each share. After they are paid and distributed, the value of
each share drops by the per-share amount of the distribution (If your dividends
and distributions are reinvested, the total value of your holdings will not
change).
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund, unless you request the Fund, in writing or by
phone, to pay dividends and distributions to you in cash.
The reinvestment price is the net asset value at the close of business on
the day the dividend or distribution is paid. Your statement will confirm the
amount invested and the number of shares purchased.
If you choose to receive your dividends and distributions in cash, you will
receive cash payments only for those dividends or distributions declared after
your request has been processed.
TAXES
Dividends and distributions are subject to federal income tax and also may
be subject to state and local taxes. Dividends and distributions are taxable in
the year in which the Fund pays them regardless of whether you receive them in
cash or they are reinvested in additional shares.
Each January, you will receive a tax statement showing the kind and total
amount of all dividends and distributions you received during the previous year.
You must report dividends and distributions on your tax returns, even if they
are reinvested in additional shares.
"Buying a dividend" creates a tax liability. "Buying a dividend" means
buying shares shortly before a dividend or a capital gain distribution is
declared and paid on Fund shares. The amount of the dividend or distribution
that you receive is fully taxable to you even though such dividend or
distribution is only a return of capital.
Redemptions proceeds may be subject to tax. If the redemption value of your
Fund shares is greater than their cost, the difference is a capital gain. Your
gain may be either short-term or long term.
IMPORTANT: The foregoing tax information is a brief and selective summary
of certain federal tax rules that apply to the Fund. Tax matters are highly
individual and complex, and you should consult a qualified tax advisor about
your personal situation.
MANAGEMENT OF THE FUND
TRUSTEES
The Fund is a series of the Declaration Fund (the "Trust"), an open-end,
diversified, management investment company organized as a Pennsylvania business
trust. The Trust's headquarters are at 555 North Lane, Suite 6160, Conshohocken,
Pennsylvania 17428-0844. The business and affairs of the Trust and of the
separate series (including The Michigan Heritage Fund) within the Trust are
managed by the Trust's Board of Trustees. The Trustees establish trust policies,
and have certain fiduciary duties and obligations to the Trust and the separate
series and their shareholders under the laws of the State of Pennsylvania and
the applicable federal securities laws. Currently, the Trust is offering shares
in two series: Declaration Cash Account and The Michigan Heritage Fund.
THE INVESTMENT ADVISOR
Dickinson Asset Management, Inc. (the "Advisor"), 301 MAC Avenue, Suite
120, East Lansing, Michigan 48823, under a written investment advisory agreement
with the Trust, furnishes investment advisory and management services to the
Fund. The Advisor is a Michigan corporation and has been registered as an
investment advisor with the U.S. Securities and Exchange Commission ("SEC") and
the State of Michigan since September 1996. Prior to this date, this Firm was a
sole proprietorship duly registered with the SEC and the State of Michigan in
April 1995.
Mr. C. David Dickinson, the Fund's portfolio manager, is the principal
owner of and controls the Advisor and is responsible for the day-to-day
investment management of the Fund. Mr. Dickinson has in excess of thirteen years
of experience in the financial services industry, including eight years as a
Registered Representative in the brokerage business, and two years as Principal
of a Registered Investment Advisory Firm. Shareholders should understand that
while Mr. Dickinson has extensive experience advising clients as to their
investment strategies and managing portfolios of common stock, the Fund has no
operating history and managing a mutual fund portfolio is a new position for Mr.
Dickinson. Dickinson Asset Management, Inc. has been Investment Advisor to the
Fund since inception.
The Advisor furnishes an investment program for the Fund, determines,
subject to the overall supervision and review of the Board of Trustees of the
Trust, what investments should be purchased, sold and held, and makes changes on
behalf of the Trust in the investments of the Fund. The Advisory Agreement with
the Trust provides for the Fund to pay the Advisor a monthly management fee
equal to an annual rate of 1.00% of the Fund's average daily net assets.
THE ADMINISTRATOR
Declaration Service Company, 555 North Lane, Suite 6160, Conshohocken, PA
19428-0844 ("DSC") serves as the Fund's Administrator in addition to serving as
the Fund's transfer agent, shareholder servicing agent, and dividend disbursing
agent.
DSC is responsible for determining the daily net asset value per share and
maintaining the general accounting records of the Fund.
THE DISTRIBUTOR
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken,
PA 19428-0844 ("DDI" or "Distributor"), an affiliate of DSC, is the Fund's share
distributor. DDI acts as sales agent in states where designated agents are
required. DDI reviews and files all advertising and promotional materials, and
monitors and reports to the Board of Trustees on Fund distribution plans.
The Administration, Transfer Agent and Shareholder Services, Accounting
Services, and the Distribution agreements provide for the Fund to pay DSC and
DDI respectively annual fees, payable monthly, for providing the services called
for by the agreements.
GENERAL INFORMATION
SHAREHOLDER RIGHTS
The shares of the Fund, both of the No-Load Class and Class A, represent an
interest in the Fund's assets only and in the event of liquidation, each share
of the Fund would have its aliquot right to the distribution of Fund assets as
every other share of the Fund.
No annual or regular meeting of shareholders is required; however, the
Trustees may call meetings to take action on matters which require a shareholder
vote and other matters as to which Trustees determine a shareholder vote is
necessary or desirable. Subject to Section 16(a) of the Investment Company Act
of 1940, the Trustees may elect their own successors and may appoint Trustees to
fill vacancies, including vacancies caused by an increase in the number of
trustees by action of the Board of Trustees.
As a shareholder, you have voting rights with respect to the management and
operation of the Fund and its policies. You together with the shareholders of
the other series of Declaration Fund are also entitled to vote upon matters
which affect or concern Declaration Fund. You are also entitled to vote as a
class, exclusively, on matters which affect only your class. You are entitled to
one vote for each whole share, and fractional votes for any fractional shares
held. Shares of the Fund do not have cumulative voting rights. The Fund's shares
are fully paid and non-assessable, have no pre-emptive or subscription rights,
and are fully transferable, with no conversion rights.
The Fund issues another Class of shares which invest in the same portfolio
as the Class A shares and such Class may have different sales charges and other
expenses which may affect performance. Investors may call 1-800-________ to
obtain more information concerning the other Class. Investors may also obtain
information concerning the other Class through their sales representative or
securities broker which is offering or making available to them the securities
offered in the prospectus.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders or
prospective shareholders, the Fund may compare its performance, in terms of its
total return, to that of other mutual funds with similar investment objectives
and to stock or other indices. For example, the Fund may compare its performance
to rankings prepared by Lipper Analytical Services, Inc. ("Lipper"), a widely
recognized independent service which monitors the performance of mutual funds,
to Morningstar's Mutual Fund Values, or to the Consumer Price Index. Performance
information and rankings as reported in Changing Times, Business Week,
Institutional Investor, the Wall Street Journal, Mutual Fund Forecaster, No-Load
Investor, Money, Forbes, Fortune and Barrons may also be used in comparing
performance of the Fund. Performance comparisons shall not be considered as
representative of the future performance of the Fund.
The Fund's average annual total return is computed by determining the
average annual compounded rate of return for a specified period that, if applied
to a hypothetical $1,000 initial investment, would produce the redeemable value
of that investment at the end of the period, assuming reinvestment of all
dividends and distributions and with recognition of all recurring charges. The
Fund may also utilize a total return for differing periods computed in the same
manner but without annualizing the total return.
The standard total return results may not take into account recurring and
non-recurring charges for optional services which only certain shareholders
elect and which involve nominal fees such as a fee for small balances and
redemptions. These fees have the effect of reducing the actual return realized
by shareholders.
MICHIGAN HERITAGE FUND
INVESTMENT ADVISOR
Dickinson Asset Management, Inc.
301 MAC Avenue, Suite 120
East Lansing, Michigan 48823
ADMINISTRATOR & TRANSFER AGENT
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19428
DISTRIBUTOR
Declaration Distributors, Inc.
555 North Lane, Suite 6160
Conshohocken, PA 19428
CUSTODIAN BANK
Star Bank, N.A.
425 Walnut Street
M.L. 6118
Cincinnati, Ohio 45202
INDEPENDENT ACCOUNTANTS
Sanville & Company
1514 Old York Road
Abington, PA 19001
Be sure to retain this prospectus. It contains valuable information.
No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or the Fund's Statement of
Additional Information incorporated herein by reference, in connection with the
offering made by this Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Fund.
This Prospectus does not constitute an offering by the Fund in any jurisdiction
in which such offering may not lawfully be made.
<PAGE>
PART B: STATEMENT OF ADDITIONAL INFORMATION
THE MICHIGAN HERITAGE FUND
A SERIES OF THE DECLARATION FUND
THE MICHIGAN HERITAGE FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a Prospectus but should be
read in conjunction with the Fund's Prospectus dated _______ ___, 1998 (the
"Prospectus") which may be obtained from Declaration Service Company ("DSC" or
the "Administrator"), P.O. Box 844, Conshohocken, Pennsylvania 19428-0844.
THE DATE OF THIS STATEMENT OF ADDITIONAL INFORMATION IS
_______ ___, 1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
GENERAL INFORMATION .................................... 3
INVESTMENT OBJECTIVES AND POLICIES ..................... 3
INVESTMENT LIMITATIONS ................................. 3
PORTFOLIO TRANSACTIONS ................................. 5
MANAGEMENT OF THE FUND ................................. 6
INVESTMENT ADVISORY SERVICES ........................... 7
ADMINISTRATOR SERVICES ................................. 8
TRANSFER AGENCY AND OTHER SERVICES ..................... 9
RULE 12b-1 DISTRIBUTION PLAN .......................... 9
ADDITIONAL INFORMATION ON REDEMPTIONS .................. 10
CALCULATION OF PERFORMANCE DATA ........................ 10
TAX STATUS ............................................. 11
CUSTODIAN .............................................. 12
INDEPENDENT ACCOUNTANTS ................................ 12
2
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GENERAL INFORMATION
The Michigan Heritage Fund ("the Fund") was organized as a series of
Declaration Fund (the "Trust") on February 10, 1997. The Trust is an open-end,
diversified, management investment company, organized as a Pennsylvania Business
Trust. The Board of Trustees of the Trust has approved the issuance of Fund
shares in two classes, the No Load Class and Class A.
Shareholder meetings will be held when required by the Investment Company
Act of 1940, as amended, (the "1940 Act").
On any matter submitted to shareholders, the holder of each share is
entitled to one vote per share (with proportionate voting for fractional
shares). Shares do not have cumulative voting rights, which means that in
situations in which shareholders elect Trustees, holders of more than 50% of the
shares voting for the election of Trustees can elect 100% of the Trust's
Trustees, and the holders of less than 50% of the shares voting for the election
of Trustees will not be able to elect any person as a Trustee.
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the investment
objectives and policies of the Fund in the Fund's Prospectus.
INVESTMENT LIMITATIONS
Fundamental Limitations. The investment limitations described below have
been adopted by the Trust with respect to the Fund and are fundamental; i.e.,
they may not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. As used in the Prospectus and this Statement of
Additional Information, the term "majority" of the outstanding shares of the
Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented at such meeting; or (2) more than 50% of
the outstanding shares of the Fund. Other investment limitations which may be
changed by the Board of Trustees without the approval of shareholders to the
extent permitted by applicable law, regulation or regulatory policy are
considered non-fundamental (See "Non-Fundamental Limitations," below).
3
<PAGE>
1. Borrowing Money. The Fund will not borrow money, except (a) from a bank,
provided that immediately after such borrowing there is an asset icoverage of
300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.
2. Senior Securities. Senior securities will not be issued with respect to
the Fund. This limitation is not applicable to activities that may be deemed to
involve the issuance or sale of a senior security by the Fund, provided that the
Fund's engagement in such activities is (a) consistent with or permitted by the
1940 Act as amended, the rules and regulations promulgated thereunder or
interpretations of the Securities and Exchange Commission ("SEC") or its staff
and (b) as described in the Prospectus and this Statement of Additional
Information.
3. Underwriting. The Fund will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.
4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).
5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.
6. Loans. The Fund will not make loans to other persons, except (a) by
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing non publicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion of an
issue of publicly distributed bonds, debentures or other securities.
4
<PAGE>
With respect to the percentages adopted by the Fund as maximum limitations
on its investment policies and limitations, an excess above the fixed percentage
will not be a violation of the policy or limitation unless the excess results
immediately and directly from the acquisition of any security or the action
taken. This paragraph does not apply to the borrowing policy set forth in
paragraph 1 above.
Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Fund, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said limitations, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.
Non-Fundamental Limitations. The following limitations have been adopted
with respect to the Fund and are Non-Fundamental.
1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described above. Margin deposits,
security interests, liens and collateral arrangements with respect to
transactions involving options, futures contracts, short sales and other
permitted investments and techniques are not deemed to be a mortgage, pledge or
hypothecation of assets for purposes of this limitation.
2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding.
3. Short Sales. The Fund will not effect short sales of securities unless
it owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short.
4. Options. The Fund will not purchase or sell puts, calls, options,
straddles or futures contracts.
5. Illiquid Investments. The Fund will not invest in securities for which
there are legal or contractual restrictions on resale or other illiquid
securities.
PORTFOLIO TRANSACTIONS
Subject to such policies as may be established, from time to time, by the
Board of Trustees of the Trust, the Advisor is responsible for portfolio
decisions concerning the Fund and placing the Fund's portfolio transactions. In
placing portfolio transactions, the Advisor seeks the best qualitative execution
for the Fund, taking into account such factors as price (including the
applicable brokerage commission or dealer spread), the execution capability,
financial responsibility and responsiveness of the broker or dealer and the
brokerage and research services provided by the broker or dealer. The Advisor
generally seeks favorable prices and commission rates that are reasonable in
relation to the benefits received.
The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services respecting the Fund and/or the
other accounts over which the Advisor exercises investment discretion and to pay
such brokers or dealers a commission in excess of the commission another broker
or dealer would charge if the Advisor determines, in good faith, that the
commission is reasonable in relation to the value of the brokerage and research
services provided. The determination may be viewed in terms of a particular
transaction or the Advisor's overall responsibilities with respect to the Fund
and to other accounts over which it exercises investment discretion.
5
<PAGE>
Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the availability
of securities or purchasers or sellers of securities and analyses of reports
concerning performance of accounts. The research services and other information
furnished by effecting securities transactions on behalf of the Fund may also be
used by the Advisor in servicing all of its accounts. Similarly, research and
information provided by brokers or dealers serving other clients may be useful
to the Advisor in connection with its services to the Fund. Although research
services and other information are useful to the Fund and the Advisor, it is not
possible to place a dollar value on the research and other information received.
It is the opinion of the Board of Trustees and the Advisor that the review and
study of the research and other information will not reduce the overall cost to
the Advisor of performing its duties to the Fund under the Agreement.
While it is not practicable and in the best interests of the Fund to
solicit competitive bids for commission rates on each portfolio transaction,
consideration is regularly given to posted commission rates as well as other
information concerning the level of commissions charged on comparable
transactions by qualified brokers.
Over-the-counter transactions will be placed either directly with principal
market makers or with broker-dealers, if the same or a better price, including
commissions and executions, is available. Fixed income securities are normally
purchased directly from the issuer, an underwriter or a market maker. Purchases
include a concession paid by the issuer to the underwriter and the purchase
price paid to a market maker may include the spread between the bid and asked
prices.
To the extent that the same security is sought on behalf of the Fund and
another of the Advisor's clients at about the same time, a securities position
as large as is desired may not be available and the Fund may have to pay a
higher price for the security. Similarly, the Advisor on behalf of the Fund may
not be able to obtain as large an execution of an order to sell or as high a
price for any particular portfolio security if the other client desires to sell
the same portfolio security at the same time. On the other hand, if the same
securities are bought or sold at the same time by more than one client, the
resulting participation in volume transactions could produce better executions
on behalf of the Fund. In the event that more than one client wants to purchase
or sell the same security on a given date, the purchases and sales will normally
be made by random client selection.
MANAGEMENT OF THE FUND
The Trustees and Officers of the Trust, and their principal occupations are
set forth below.
Authur S. Filean
Age 59
Trustee
Mr. Filean is a Trustee of Declaration Trust. Mr. Filean has served as a
Trustee of Declaration Fund during the period from December 8, 1988 to the
present. From 1983 to 1990, Mr. Filean served as a Second Vice President of
Principal Mutual Life Insurance Company. From 1976 to the present, he has served
as Secretary of the mutual funds making up the Princor Mutual Fund Group: he is
currently Vice President and Secretary of each of the Princor Funds. From
1981-1986 he served as President, Treasurer and Director of Princor Financial
Services Corporation (a principal underwriter and dealer for mutual funds).
6
<PAGE>
William F. Lee, Jr.
Age 57
Trustee
Mr. Lee is a Trustee of Declaration Trust. Mr. Lee has served as a Trustee
of Declaration Fund during the period from December 8, 1988 to the present.
Since 1960, Mr. Lee has owned and is principal of his own insurance and employee
benefit firm - William F. Lee, Jr. CLU Chartered Financial Consultant. He is a
member and past president of both the Philadelphia Estate Planning Council, and
the Philadelphia Association of Advanced Life Underwriting. He is past president
of the Swarthmore College Alumni Association and is currently a member of the
Board of Managers of Swarthmore College.
Stephen B. Tily, III
Age 60
Chairman of the Board, President and Trustee
Mr. Tily is a Trustee of Declaration Fund. Mr. Tily has served as a Trustee
of Declaration Trust during the period from September, 1988 to the present. He
served as President of Declaration Fund from December, 1988 to December, 1997.
From 1983 to December, 1988 he served as Vice President of Declaration Trust.
From 1983 to August 1997, he served as Chairman of the Board of Directors and
Secretary of Declaration Investment Advisors, Inc., (the investment manager of
Declaration Cash Account, a series of Declaration Trust) and as Chairman of the
Board of Declaration Holdings, Inc. (the then parent company of Declaration
Investment Advisors, Inc.). From 1981 to January 1, 1992, Mr. Tily served as
President, Chief Executive Officer and a Director of Delaware Charter Guarantee
& Trust Company. He became Chairman and Chief Executive officer of Delaware
Charter Guarantee & Trust Company on January 1, 1992. From 1977 to 1981 he
served as Chief Operating Officer and a Director of that Company. Effective
December 31, 1993, Mr. Tily terminated his relationship with Delaware Charter
Guarantee and Trust Company.
Thomas S. Stewart, II
Age 59
Trustee
Mr. Stewart became a Trustee of Declaration Trust in 1994. Prior to his
retirement, Mr. Steward acted as Chairman of Provident Capital Management Inc.
and Advanced Investment Management, Inc. (investment management firms) during
the period from 1986 until 1994. During the period, 1986-1989, Mr. Stewart
served as Executive Vice President of Provident National Bank, Philadelphia,
Pennsylvania and as Manager of the Bank's Trust Division. He was formerly
Chairman of both the Executive Committee and the Asset Management Committee of
the Trust and Investment Management Division of the American Bankers
Association, President of the Corporate Fiduciaries Association of Philadelphia,
and a Director of Philadelphia Financial Analysts, Inc.
Terence P. Smith
Age 51
President
Mr. Smith has served as President of Declaration Trust since December,
1997. From September, 1988 to the present, Mr. Smith has served as President,
and Chief Operating Officer of the companies of the Declaration Group. From
August, 1997 to the present, he serves as a Director of Declaration Holdings,
Inc. and of each of the constituent companies of the Declaration Group of
Companies. From September, 1987 to September, 1988 he served as Vice
President-Operations of Declaration Holdings, Inc. (the then parent company of
Declaration Fund). From 1984 to 1987 Mr. Smith was Executive Vice President of
Review Management Corp. (investment manager for the former Over-The-Counter
Securities Group, Inc. and the distributor of its shares.) From 1981 to 1984 he
served on the tax and audit staff of the Philadelphia office of Peat Marwick
Main & Co. (international accounting firm). Mr. Smith is a certified public
accountant.
* This Trustee may be deemed an "interested person" of the Trust as defined in
the Investment Company Act of 1940.
INVESTMENT ADVISORY SERVICES
Dickinson Asset Management, Inc. an investment management firm (the
"Advisor"), pursuant to a written Advisory Agreement, provides investment
advisory and management services to the Fund. It will compensate any trustees
and officers of the Trust who are also employees, officers and directors of the
Advisor or its affiliates.
7
<PAGE>
The Advisory Agreement was approved by the Board of Trustees of the Trust
(including by a majority of the non-interested Trustees) at a meeting held on
February 27, 1997 and by the Fund's sole shareholder on the same day. The
Advisory Agreement will continue in effect until February 19, 1999 and, from
year to year thereafter, as long as it is approved at least annually either (i)
by a vote of a majority of the outstanding voting securities of the Fund or by
the Board of Trustees of the Trust, including by a vote of a majority of the
Trustees who are not parties to the Advisory Agreement or interested persons of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval. The Advisory Agreement may be terminated on 60 days' written
notice by either party and will terminate automatically if it is assigned.
C. David Dickinson is the President, Secretary/Treasurer and the sole
Director of Dickinson Asset Management, Inc. He owns a majority of the Company's
outstanding voting securities. The only other person owning more than 5% of the
Company's outstanding voting securities is Lee J. Hammond, who owns 6%.
The Advisor may also act as an investment advisor or administrator to other
persons, entities and corporations, including other investment companies.
For more information, see "Management of the Fund" in the Prospectus.
ADMINISTRATOR SERVICES
Declaration Service Company ("DSC" or "Administrator") provides day-to-day
administrative services to the Fund. As described in the Fund's Prospectus, the
Administrator will provide the Fund with office space, facilities and simple
business equipment, and will generally administer the Fund's business affairs
and provide the services of executive and clerical personnel for administering
the affairs of the Fund. It will compensate any Trustees and officers of the
Trust who are also employees, officers and directors of the Administrator or its
affiliates.
The Board of Trustees of the Trust (including a majority of the
non-interested Trustees) approved the Administration Agreement, dated February
19, 1997, with DSC. The terms of the Administration Agreement provide that it
will continue initially for two years, and from year to year thereafter as long
as it is approved at least annually by a vote of a majority of the Board of
Trustees of the Trust. The Administration Agreement may be terminated on 90
days' written notice by either party prior to commencement of a renewal date and
will terminate automatically if it is assigned.
8
<PAGE>
For more information, see "Management of the Fund" in the Prospectus.
The Trust pays out of the assets of the Fund all other expenses for the
Fund's operations and activities. The expenses borne by the Fund include the
charges and expenses of any transfer agents and dividend disbursing agents,
custodian fees, legal and auditors' expenses, bookkeeping and accounting
expenses, brokerage commissions for portfolio transactions, taxes, if any, the
administrative fee, extraordinary expenses, expenses of issuing and redeeming
shares, expenses of shareholder and trustee meetings, expenses for preparing,
printing and mailing proxy statements, reports and other communications to
shareholders, expenses of registering and qualifying shares for sale,
typesetting of prospectuses and periodic reports and expenses of mailing them to
current shareholders, fidelity bond premiums, cost of maintaining the books and
records of the Fund, and any other charges and fees not specifically enumerated.
TRANSFER AGENCY AND OTHER SERVICES
In addition to the services performed for the Fund under the Administration
Agreement, DSC provides transfer agent and dividend disbursement agent services
pursuant to the Transfer Agency and Shareholder Services Agreement, as described
in the Fund's Prospectus under Management of the Fund. In addition, bookkeeping
and accounting services are also provided. The Board of Trustees approved the
Transfer Agency and Accounting Services Agreement, effective February 19, 1997,
with the same duration and termination provisions as the Administration
Agreement.
RULE 12b-1 DISTRIBUTION PLAN
As described under the caption "12b-1 Fee" in the Fund's Prospectus, on
February 19, 1997 the Trustees approved The Distribution Plan adopted pursuant
to Rule 12b-1 under the 1940 Act (the "Distribution Plan"). The Distribution
Plan allows the Fund to pay for or reimburse expenditures in connection with
sales and promotional services related to the distribution of Fund shares,
including personal services provided to prospective and existing Fund
shareholders, which includes the cost of printing and distribution of prospectus
and promotional materials; making slides and charts for presentations; assisting
shareholders and prospective investors in understanding and dealing with the
Fund; and travel and out-of-pocket expenses (e.g., copy and long distance
telephone charges) related thereto.
Expenses which the Fund incurs pursuant to the Distribution Plan are
reviewed quarterly by the Board of Trustees. On an annual basis the Distribution
Plan is reviewed by the Board of Trustees as a whole, and the Trustees who are
not interested persons as that term is defined in the 1940 Act, and who have no
direct or indirect financial interest in the operation of the Distribution Plan
("Qualified Trustees"). In their review of the Distribution Plan, the Board of
Trustees, as a whole, and the Qualified Trustees determine whether, in their
reasonable business judgment and in light of their fiduciary duties under state
law and under Section 36(a) and (b) of the 1940 Act, there is a reasonable
likelihood that the Distribution Plan will benefit the Fund and its
shareholders. The Distribution Plan may be terminated at any time by vote of a
majority of the Qualified Trustees, or by vote of a majority of the outstanding
shares of the Fund.
ALLOCATION OF EXPENSES
Those of the above described expenses which relate to the distribution of
the shares of a Class or the services provided to that Class shall be allocated
and paid by that Class; other expenses shall be allocated among different
classes in different amounts to the extent that they are incurred by one Class
in a different amount or reflect differences in the amount or kinds of services
that different Classes receive, and expenses that are not assigned or assignable
to a specific Class shall be allocated based on net assets.
DISTRIBUTION AGREEMENT
On February 19, 1997, in light of and subject to the Distribution Plan, the
Fund entered into a Distribution Agreement with Declaration Distributors, Inc.
("DDI"), an affiliate of DSC as described in the Fund's Prospectus under
Management of the Fund. The terms of the Distribution Agreement provide that it
will continue for an initial period of two years and from year to year
thereafter as long as it is approved at least annually both (i) by a vote of a
majority of the Board of Trustees of the Trust, and including a majority of the
Trustees who are not parties to the Distribution Agreement or interested persons
of any party thereto, cast in person at a meeting called for the purpose of
voting on such approval. The Distribution Agreement may be terminated on 60
days' written notice by either party and will terminate automatically if it is
assigned.
The provisions of the Plan are severable for each Class of shares. The
Trustees must make a finding for each Class that the Plan represents a
reasonable likelihood of benefit to the Fund and its shareholders. Further,
shareholder approval by the outstanding voting securities of each Class is
required when Rule 12b-1 requires approval by a majority of the outstanding
voting securities.
9
<PAGE>
ADDITIONAL INFORMATION ON REDEMPTIONS
SUSPENSION OF REDEMPTION PRIVILEGES
The Fund may suspend redemption privileges or postpone the date of payment
upon redemption for up to seven days, except during any period (1) when the New
York Stock Exchange is closed, other than for customary weekend and holiday
closing, or trading on the Exchange is restricted as determined by the
Securities and Exchange Commission ("SEC"), (2) when an emergency exists, as
defined by the SEC, which makes it not reasonably practicable to dispose of the
Fund's securities it or not reasonably practicable to fairly determine the value
of the Fund's assets, or (3) as the SEC may otherwise permit.
CALCULATION OF PERFORMANCE DATA
TOTAL RETURN
The Fund may advertise performance in terms of average annual total return
for 1, 5 and 10 year periods, or for such lesser periods as the Fund has been in
existence. Average annual total return is computed by finding the average annual
compounded rates of return over the periods that would equate the initial amount
invested to the ending redeemable value according to the following formula:
P(1 + T)n = ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (exponential number)
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10 year
periods at the end of the year or period;
The calculation assumes all charges are deducted from the initial $1,000
payment and assumes all dividends and distributions by the Fund are reinvested
at the price stated in the Prospectus on the reinvestment dates during the
period, and includes all recurring fees that are charged to all shareholder
accounts.
NONSTANDARDIZED TOTAL RETURN
The Fund may provide the above described standard total return results for
a period which ends as of not earlier than the most recent calendar quarter end
and which begins either twelve months before or at the time of commencement of
the Fund's operations. In addition, nonstandardized total return results may be
provided with respect to the Fund for differing periods, such as for the most
recent six month period. Such nonstandardized total return is computed as
otherwise described under "Total Return" except that no annualization is made.
The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.
From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to mutual funds with similar investment objectives.
10
<PAGE>
In addition, the performance of the Fund may be compared to other groups of
mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets.
For more information, see "Performance Information" in the prospectus.
TAX STATUS
TAXATION OF THE FUND
As stated in its Prospectus, it is the intention to qualify the Fund as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). Accordingly, the Fund will not be liable for
federal income taxes on its taxable net investment income and capital gain net
income that are distributed to shareholders, provided that at least 90% of the
Fund's net investment income and net short-term capital gain for the taxable
year is distributed.
To qualify as a regulated investment company, the Fund must, among other
things, (a) derive in each taxable year at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income derived with respect to its business of investing in such stock,
securities or currencies (the "90% test"); and (b) satisfy certain
diversification requirements at the close of each quarter of the Fund's taxable
year. It is anticipated that the Advisor may be required to adjust the
composition of the Fund's portfolio at the end of each quarter in order to
qualify as a regulated investment company.
The Code imposes a non-deductible 4% excise tax on a regulated investment
company that fails to distribute during each calendar year an amount equal to
the sum of (1) at least 98% of its ordinary income for the calendar year, (2) at
least 98% of its net capital gains for the twelve-month period ending on October
31 of the calendar year and (3) any portion (not taxable to the Fund) of the
respective balance from the preceding calendar year. The Fund intends to make
such distributions as are necessary to avoid imposition of this excise tax.
TAXATION OF THE SHAREHOLDER
Taxable distributions generally are included in a shareholder's gross
income for the tax year in which they are received. However, dividends declared
in October, November or December of a particular year and made payable to
shareholders of record in such a month will be deemed to have been received on
December 31, if dividend is paid during the following January. To the extent net
investment income of the Fund arises from dividends on domestic common or
preferred stock, some of the Fund's distributions may qualify for the 70%
corporate dividends-received deduction. All Shareholders will be notified
annually regarding the tax status of distributions received from the Fund.
Distributions by the Fund will result in a reduction in the net asset value
of the Fund's shares. Should a distribution reduce the net asset value below a
shareholder's cost basis, such distribution nevertheless would be taxable to the
shareholder as ordinary income or long-term capital gain, even though, from an
investment standpoint, it may constitute a partial return of capital. In
particular, investors should be careful to consider the tax implications of
buying shares of the Fund just prior to a distribution. The price of such shares
purchased at that time includes the amount of any forthcoming distribution.
Those investors purchasing the Fund's shares just prior to a distribution may
receive a return of investment upon distribution which will nevertheless be
taxable to them.
11
<PAGE>
A shareholder of the Fund should be aware that a redemption of shares is a
taxable event and, accordingly, a capital gain or loss may be recognized. If a
shareholder of the Fund receives a distribution taxable as long-term capital
gain with respect to shares of the Fund and redeems or exchanges shares before
he has held them for more than six months, any loss on the redemption or
exchange (not otherwise disallowed as attributable to an exempt-interest
dividend) will be treated as long-term capital loss to the extent of the long
term capital gain recognized.
OTHER TAX CONSIDERATIONS
Distributions to shareholders may be subject to additional state, local and
non-U.S. taxes, depending on each shareholder's particular tax situation.
Shareholders subject to tax in certain states may be exempt from state income
tax on Fund distributions to the extent such distributions are derived from
interest on direct obligations of the United States Government. Shareholders are
advised to consult their own tax advisers with respect to the particular tax
consequences to them of an investment in shares of the Fund.
CUSTODIAN
Star Bank, N.A. serves as Custodian of The Michigan Heritage Fund's assets.
The Custodian acts as the depository of the Fund's assets, safekeeps its
portfolio securities, collects all income and other payments with respect
thereto, disburses funds at the Fund's request and maintains records in
connection with its duties.
INDEPENDENT ACCOUNTANTS
Sanville & Company, 1514 Old York Road, Abington, PA 19001, has been
selected as independent accountants for Declaration Fund for the fiscal year
ending December 31, 1998. Sanville & Company performs an annual audit of the
Fund's financial statements and provides financial, tax and accounting
consulting services as requested.
12
<PAGE>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements in Prospectus of Declaration Fund/
The Michigan Heritage Fund
None
(b) Financial Statements in Statement of Additional Information
which relate to Declaration Fund/The Michigan Heritage Fund
(c) Exhibits: Exhibit No.:
(1) Copies of the Charter as now in effect;
Copy of Declaration of Trust, as amended 1(H)
(2) Copies of the existing bylaws or instruments
corresponding thereto:
Copy of Bylaws, as amended. 2(H)
(3) Copies of any voting trust agreement with none
respect to more than 5 percent of any class
of equity securities of the Registrant.
(4) Specimen of copy of each security issued by
the Registrant, including copies of all constituent
instruments, defining the rights of the holders
of such securities and copies of each security
being registered;
Copy of Share Certificate 4(A)
(5) Copies of all investment advisory contracts
relating to the management of the Assets of the
Registrant;
Copy of Investment Management Agreement 5a.1(C)
between the Registrant and Declaration Investment
Advisors, Inc. dated December 8, 1988
Amendment No. 1 to Agreement dated May 15, 1990 5a.2
Copy of Advisory Agreement between the Registrant 5b(H)
with respect to The Michigan Heritage Fund and
Dickinson Asset Management, Inc. dated
February 19, 1997.
(6) Copies of each underwriting or distribution contract
between the Registrant and a principal underwriter,
and specimens of copies of all agreements between
principal underwriters and dealers.
Copy of Agreement Pursuant to Plan of Distribution 6a
between the Registrant with respect to Delcaration
Cash Account and Declaration Distributors, Inc.
dated April 22, 1992.
Copy of Distribution Agreement between the 6b.1(H)
Registrant with respect to The Michigan
Heritage Fund and Declaration Distributors,
Inc. dated February 19, 1997.
Copy of Amendment No. 1 to Distribution Agreement 6b.2
dated December 29, 1997.
(7) Copies of all bonus, profit sharing, pension or other none
similar arrangements wholly or partly for the benefit
of directors or officers of the Registrant in their
capacity as such; any such plan that is not set forth in
a formal document, furnish a reasonably detailed
description thereof.
(8) Copies of all custodian agreements and depository
contracts under section 17(f) of the 1940 Act with
respect to securities and similar investments;
Copy of Custodian Agreement, dated February 26, 8a.1(D)
1990, between the Registrant with respect to
Declaration Cash Account and CoreStates Bank,
N.A., (formerly Philadelphia National Bank)
Form of Amendment to Custodian Agreement 8a.2(G)
Copy of Custodian Agreement, dated July 8, 8b
1997 between the Registrant with respect to The
Michigan Heritage Fund and Star Bank, N.A.
(9) Copies of all material contracts not made in the
ordinary course of business which are to be
performed in whole or in part at or after the date
of the filing of the Registration Statement;
Copy of Transfer Agency and Shareholder 9a.1(D)
Service Agreement dated January 1, 1989 between
Registrant with respect to Declaration Cash
Account and Declaration Service Company
Copy of Amendment No. 1 to Transfer Agency 9a.2(G)
Agreement dated May 15, 1990 with respect
to Declaration Cash Account.
Copy of Transfer Agency and Service 9b(I)
Agreement Dated February 19, 1997 between
the Registrant for The Michigan Heritage
Fund and Declaration Service Company.
Copy of Accounting Services Agreement 9c(I)
dated February 19, 1997 between the
Registrant with respect to The Michigan Heritage
Fund and Declaration Service Company.
Copy of Administration Agreement dated 9d(I)
February 19, 1997 between the Registrant
with respect to The Michigan Heritage Fund and
Declaration Service Company.
(10) An opinion and consent of counsel as to the
legality of the securities being registered,
indicating whether they will, when sold,
be legally issued, fully paid and non-assessable;
Copy of opinion and consent of counsel
attached as an Exhibit to Rule 24f-2 Notice
filed by Registrant on February 28, 1997 relating
to Declaration Cash Account and incorporated herein
by reference.
Copy of opinion and consent of counsel
relating to The Michigan Heritage Fund 10
(11) Copies of any other opinions, appraisals. None
(12) All financial statements omitted from Item 23. None
(13) Copies of any agreements or understandings made None
in consideration for providing the initial
capital between and among the Registrant, the
Underwriter, advisor, promoter, or initial
stockholders and written assurances from
promoters or initial stockholders that their
purchases were made for investment purposes
without any present intention of redeeming
or reselling.
(14) Copies of model plan used in the establishment of None
any retirement plan in conjunction with which
Registrant offers its securities, any instructions
thereto and any other documents making up the
model plan. Such form(s) should disclose the costs
and fees charged in connection therewith.
(15) Copies of any plan entered into by Registrant pursuant
to Rule 12b-1 under the 1940 Act, which describes all
material aspects of the financing of distribution
of Registrant's shares, and any agreements with any
person relating to implementation of such plan;
Copy of Plan of Distribution adopted by 15a.1(C)
Registrant dated December 8, 1988 relating to
Declaration Cash Account.
Copy of Amendment to Plan of Distribution dated 15a.2(F)
May 15, 1990.
Copy of Distribution Plan of The Michigan 15b.1(I)
Heritage Fund pursuant to Rule 12b-1 dated
February 27, 1997
Copy of Amendment No. 1 to Distribution Plan 15b.2
dated January ___, 1998.
(16) Schedule for compensation of each performance
quotation provided in the Registration Statement
in response to Item 22 (which need not be audited);
Computations of a $1,000 Hypothetical Investment 16a(I)
Declaration Fund - The Michigan Heritage Fund
series;
Plan of Michigan Heritage Fund for the Issuance 16b
of Shares in Classes
(A) This Exhibit formed part of Post-Effective Amendment No. 1 that was filed
with the Commission on March 3, 1982.
(C) This Exhibit formed part of Post-Effective Amendment No. 13 that was filed
with the Commission on March 20, 1989.
(D) This Exhibit formed part of Post-Effective Amendment No. 15 that was filed
with the Commission on March 1, 1990.
(F) This Exhibit formed part of Post-Effective Amendment No. 17 that was filed
with the Commission on February 15, 1991.
(G) This Exhibit formed part of Post-Effective Amendment No. 19 that was filed
with the Commission on April 30, 1992.
(H) This Exhibit formed part of Post-Effective Amendment No. 26 that was filed
with the Commission on February 29, 1997.
(I) This Exhibit formed part of Post-Effective Amendment No. 27 that was filed
with the Commission on March 11, 1997.
Item 25. Persons Controlled by or Under Common Control with Registrant
Item 26. Number of Holders of Securities
Number of Record Holders
Title of Class As of December 31, 1997
---------------- ------------------------
Common Capital Stock
The Michigan Heritage Fund Series
a) The No-Load Class ____
b) Class A None
Item 27. Trustee Liability and Indemnification
Liability to third parties for any act, omission or obligation of a
Trustee when acting in such capacity shall extend to the whole trust estate or
so much thereof as may be necessary to discharge such liability but personal
liability shall not attach to the Trustee or the beneficiaries of the Trust for
any such act, omission or liability. The provisions of Subchapter B of Chapter 5
of the Pennsylvania Business Corporation Law (relating to indemnification and
corporate directors' liability) shall be applicable to the Trustees of the
Trust.
Indemnification of Trustees and Officers and Insurance
(a) The Trust shall have the power to purchase and maintain insurance
on behalf of any person who is or was a Trustee or officer of the Trust, or is
or was serving at the request of the Trust as a director, officer, employee or
agent of a corporation, partnership, joint venture, trust or other enterprise
against any liability asserted agonist him and incurred by him in any such
capacity, or arising out of this status as such, whether or not the Trust would
have the power to indemnify him against such liability under the provisions of
this Section.
(b) No indemnification or other protection shall be made or given to
any Trustee or officer of the Trust against any liability to the Trust or to its
Shareholders (i) to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office or (ii) which would violate the provisions
of Section 17(h) or (i) of the Act as those provisions may be amended from time
to time, together with the Rules and Regulations of the Commission adopted
thereunder.
Item 28. Business and Other Connections of Investment Advisor
Dickinson Asset Management, Inc. 301 MAC Avenue, East Lansing,
Michigan 48823 serves as investment manager to The Michigan Heritage Fund and
that is its primary occupation, currently. Reference is made to page ____ of the
Statement of Additional Information for a listing of the principal officers and
directors of Dickinson Asset Management, Inc.
Item 29. Principal Underwriters
Declaration Distributors, Inc. serves as Principal Underwriter of
Delaration Fund with respect to Declaration Cash Account series and Michigan
Heritage Fund series pursuant to written Agreements dated, respectively, April
22, 1992 and February 19, 1997.
Item 30. Location of Accounts and Records
The records of Declaration Fund and those with respect to Declaration Cash
Account and those with respect to Michigan Heritage Fund are maintained at 555
North Lane, Suite 6160, Conshohocken, Pennsylvania except for those relating to
the custodianship of the assets of Declaration Cash Account which are located at
CoreStates Bank, N.A., Post Office Box 7618, Philadelphia, PA 19101-7618 and of
the assets of Michigan Heritage Fund which are located at Star Bank, N.A., 425
Walnut Street, M.L. 8118, Cincinnati, Ohio 45202.
Item 31. Management Services
Item 32. Undertakings
(a) Registrant agrees that the Trustees of Declaration Fund will
promptly call a meeting of shareholders for the purpose of acting upon the
question of removal of a trustee or trustees, when requested in writing to do so
by the record holders of not less than 10% of the outstanding shares.
(b) The Fund undertakes to furnish to each person to whom a prospectus
is delivered with a copy of the Fund's latest annual report to shareholders upon
request and without charge.
(c) The Registrant undertakes to file a post-effective amendment using
financial statements which need not be certified, within four to six months from
the effective date of registrant's 1933 Act Registration Statement respecting
The Michigan Heritage Fund.
<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
Post-Effective Amendment No. 28 to its Registration Statement under the
Investment Company Act of 1940, to be signed on its behalf of the Undersigned,
thereunto duly authorized, in Conshohocken, Pennsylvania on the 14th day of
January 1998.
DECLARATION FUND
BY:
-----------------------------
President
As required by the Securities Act of 1933, this registration statement has
been signed by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Stephen B. Tily, III
- -------------------------- Trustee January 14, 1998
Stephen B. Tily, III
/s/ Arthur S. Filean
- -------------------------- Trustee January 14, 1998
Arthur S. Filean
/s/ William F. Lee, Jr.
- -------------------------- Trustee January 14, 1998
William F. Lee, Jr.
/s/ Thomas S. Stewart
- -------------------------- Trustee January 14, 1998
Thomas S. Stewart
/s/ Terence P. Smith
- -------------------------- President January 14, 1998
Terence P. Smith
EXHIBIT - 5a.2
AMENDMENT NO. 1 TO
INVESTMENT ADVISORY AGREEMENT
BETWEEN
DECLARATION FUND
AND
DECLARATION INVESTMENT ADVISORS, INC.
Amendment No. 1 to Investment Advisory Agreement dated December 8, 1988 by
and between Declaration Fund (formerly Consolidated Asset Management Fund), a
Pennsylvania business trust, and Declaration Investment Advisors, Inc., a
Pennsylvania corporation.
Whereas, the name of Consolidated Asset Management Fund has been changed to
"Declaration Fund", and
Whereas, Declaration Fund has been converted from a single issue fund to a
series fund, and
Whereas, there has been created within Declaration Fund a series
designated Declaration Cash Account, and
Whereas, as part of the reorganization of Declaration Fund as a series
fund and the creation of the Declaration Cash Account series, the shareholders
of Declaration Fund become shareholders of Declaration Cash Account
automatically as part of such reorganization, and
Whereas, it is the intention of the parties hereto to amend the
Agreement in such ways as are necessary to reflect the changes hereinabove
described as well as changes in the expense reimbursement provisions.
Now, therefore, this Amendment No. 1,
<PAGE>
WITNESSETH:
1. Whenever and wherever the text of the Agreement refers to
"Consolidated Asset Management Fund", the text is amended to read "Declaration
Fund".
2. In Section 1. "Duties of the Advisor", references to the "fund's
portfolio" in item (i) shall mean the Declaration Cash Account portfolio.
3. The expenses payable by the Fund, as set forth in Section 2 of the
Agreement are subject to the terms and conditions respecting the bearing of
expenses and the apportioning thereof as are set forth in the Amended and
Restated Declaration of Trust dated March 14, 1990, which are incorporated by
reference in the Agreement as amended by this Amendment No. 1.
4. The text of the second paragraph under Section 3 is amended by
changing "1.5%" to "2%" and by changing "1%" to "1.5%".
5. In all other respects the Agreement is ratified and confirmed.
Dated: May 15, 1990
Attest Declaration Fund
/s/ Kathleen Mincarelli /s/ Terence P. Smith
- -------------------------- ----------------------------
Attest Declaration Investment
Advisors, Inc.
/s/ Stephen B. Tily, III /s/ Terence P. Smith
- -------------------------- ----------------------------
2
EXHIBIT - 6a
DECLARATION FUND
AGREEMENT PURSUANT
TO PLAN OF DISTRIBUTION
AGREEMENT made this 22nd day of April, 1992, by and between DECLARATION
FUND, a Pennsylvania business trust, (the "Trust"), and DECLARATION
DISTRIBUTORS, INC., a Pennsylvania corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Investment Company Act"); and
WHEREAS, the Trust is authorized to issue units of interest (the "Shares"),
in separately designated series representing separate funds with their own
investment objectives, policies and purposes (the "Funds") and has registered
the Shares of the Funds under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to a registration statement on Form N-1A (the
"Registration Statement"), including a prospectus (the "Prospectus") and a
statement of additional information (the "Statement of Additional Information");
and
WHEREAS, the Trust has adopted a Plan of Distribution pursuant to Rule
12b-1 under the Investment Company Act on behalf of each Fund (the "Distribution
Plans") and may enter into related agreements providing for the distribution of
the Shares of the Funds; and
WHEREAS, the Distributor is registered as a broker-dealer under the
<PAGE>
Securities Exchange Act of 1934, as amended (the "Exchange Act"); and
WHEREAS, the Trust wishes to engage the services of the Distributor as
distributor of the Shares of the Funds and the Distributor is willing to serve
in that capacity;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints the Distributor as distributor of the
Trust to distribute the Shares of the Funds in jurisdictions wherein the
Shares may be legally offered for sale. The Distributor shall be the
exclusive agent for the distribution of Shares of the Funds; provided,
however, that the Trust in its absolute discretion may issue Shares of the
Funds otherwise than through the Distributor in connection with (i) the
payment or reinvestment of dividends or distributions, (ii) any merger or
consolidation of the Trust or a Fund with any other investment company or
trust or any personal holding company, or the acquisition of the assets of
any such entity or another series of the Trust, or (iii) any offer of
exchange authorized by the Board of Trustees of the Trust. Notwithstanding
any other provision hereof, the Trust may terminate, suspend or withdraw
the offering of Shares of a Fund whenever, in its sole discretion, it deems
such action to be desirable.
(b) The Distributor hereby accepts such appointment as distributor of
the Shares of the Trust and agrees that it will use its best efforts to
promote the Funds and to solicit orders for the purchase of Shares. The
Distributor
2
<PAGE>
may arrange for the sale of Shares of the Funds to or through qualified dealers
or others and shall require each such dealer to conform to the provisions
hereof, the Registration Statement, the Prospectus and Statement of Additional
Information, and applicable law. Neither the Distributor nor any such dealer
shall withhold the placing of purchase orders for Shares so as to make a profit
thereby.
(c) The Distributor shall order Shares of the Funds from the Trust
only to the extent that it shall have received purchase orders therefor.
The Distributor will not make or authorize any dealers or others to make
(i) any short sales of Shares, or (ii) any sales of Shares to any director
or officer of the Trust, the Distributor or any corporation or association
furnishing investment advisory, managerial or supervisory services to the
Trust, or to any such corporation or association, unless such sales are
made in accordance with the then current Prospectus and Statement of
Additional Information.
(d) The Distributor is not authorized by the Trust to give any
information or to make any representation other than those contained in the
current Prospectus, Statement of Additional Information and shareholder
reports, or in supplementary sales materials specifically approved by the
Trust.
2. Offering Price of Shares. All Fund shares sold under this Agreement
shall be sold at the public offering price per Share in effect at the time of
the sale as described in the then current Prospectus and Statement of Additional
Information. At no time shall the Trust receive less than the full net asset
value of the Shares, determined in the manner set forth in the then current
Prospectus and
3
<PAGE>
Statement of Additional Information.
3. Distribution Plan Payments.
(a) The Distributor shall be entitled to reimbursement of its expenses
in paying commissions and account maintenance fees to qualified dealers in
respect of Fund shares sold by such dealers. Such payments to the
Distributor shall be made by the Funds pursuant to the terms of the
Distribution Plans in reimbursement of amounts paid by the Distributor in
the form of commissions and account maintenance fees.
(b) The Distributor shall prepare and deliver reports to the Board of
Trustees of the Trust on a regular basis, at least quarterly, showing the
Distributor's expenses incurred in paying commissions and account
maintenance fees to qualified dealers and the payments made by the Funds to
the Distributor pursuant to the Distribution Plans, and other amounts
expended by the Distributor in connection with its activities hereunder and
the purposes for which such expenditures were made, as well as any
supplemental reports as the Board of Trustees of the Trust may, from time
to time, reasonably request.
4. Payment of Expenses.
(a) The Distributor shall be reimbursed for its distribution expenses
incurred, for among other things, the following: (i) payments to qualified
broker-dealers and others in respect of the sale of Shares of the Funds and
account maintenance fees; (ii) compensation and expenses of employees of
the Distributor who engage in or support distribution of Fund Shares or
render shareholder support
4
<PAGE>
services not otherwise provided by the Trust's transfer and shareholder
servicing agent; (iii) formulation and implementation of marketing and
promotional activities; (iv) preparation, printing and distribution of
supplementary sales materials and the printing and distribution of
Prospectuses, Statements of Additional Information and shareholder reports
for recipients other than existing shareholders of the Funds' and (v)
obtaining such information, analyses and reports with respect to marketing
and promotional activities as the Trust may, from time to time, reasonably
request.
(b) The Trust shall pay the following expenses: (i) preparation,
printing and distribution to Fund shareholders of Prospectuses and
Statements of Additional Information; (ii) preparation, printing and
distribution of shareholder reports and other communications to
shareholders; (iii) registration of the Shares of the Funds under the
federal securities laws; (iv) qualification of the Shares of the Funds for
sale in such states as the Distributor and the Trust may approve; (v)
qualification of the Trust as a dealer or broker under state law as well as
qualification of the Trust as an entity authorized to do business in
certain states where necessary; (vi) maintaining facilities for the issue
and transfer of Shares; (vii) supplying information, prices and other data
to be furnished by the Trust under this Agreement; and (viii) taxes
applicable to the sale or delivery of the Shares of the Funds or
certificates therefor.
5. Furnishing of Information. The Trust shall furnish to the Distributor
for use in connection with the sale of Shares of the Funds such information,
financial statements and other documents as the Distributor may reasonably
request. The Trust shall also make available such number of copies of the
current Prospectus,
5
<PAGE>
Statement of Additional Information and shareholder reports as the Distributor
shall reasonably request.
6. Indemnification.
(a) The Trust agrees to indemnify and hold harmless the Distributor
against any losses, claims, damages or liabilities to which the Distributor
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto or the Prospectus (other than an omitting
prospectus prepared pursuant to Rule 482 under the securities Act
unless such omitting prospectus has been specifically approved by
the Trust) or the Statement of Additional Information or any
amendment or supplement thereto or an annual or interim report to
shareholders; or
(ii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto or the Prospectus
(other than an omitting prospectus prepared pursuant to Rule 482
under the Securities Act unless such omitting prospectus has been
specifically approved by the Trust) or the Statement of
Additional Information or any
6
<PAGE>
amendment or supplement thereto or an annual or interim report to
shareholders, a material fact required to be stated therein or
necessary to make the statements therein not misleading;
and will reimburse, as incurred, the Distributor for any legal or other expenses
reasonably incurred by the Distributor in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the Trust
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, or the Prospectus or Statement
of Additional Information or any amendment or supplement thereto or in an annual
or interim report to shareholders, in reliance upon and in conformity with
written information furnished to the Trust by the Distributor specifically for
use therein; and provided, further, that this indemnity agreement shall not
protect the Distributor or any such controlling person against any liability to
which it would otherwise be subject by reason of misfeasance, bad faith or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties hereunder. This indemnity agreement will
be in addition to any liability which the Trust may otherwise have.
(b) The Distributor shall indemnify and hold harmless the Trust, each
of the Trust's Trustees and each of the Trust's officers who signed the
Registration
7
<PAGE>
Statement against any losses, claims, damages or liabilities to which the
Trust or any such trustee or officer may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any
amendment thereto or the Prospectus or Statement of Additional
Information or any amendment or supplement thereto, or the
omission or alleged omission to state in the Registration
Statement or any amendment thereto, or the Prospectus or
Statement of Additional information or any amendment or
supplement thereto, a material fact required to be stated therein
or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to the Trust by the Distributor
specifically for use therein; or
(ii) any untrue statement or alleged untrue statement of a
material fact contained in any unauthorized supplementary sales
materials or omitting prospectus prepared pursuant to
8
<PAGE>
Rule 482 under the Securities Act, or the omission or alleged
omission to state in any such materials or prospectus, a material
fact required to be stated therein or necessary to make the
statements therein not misleading; or (iii) any act or deed of
the Distributor or its representatives which has not been
authorized by the Trust in any Prospectus or Statement of
Additional Information or by this Agreement;
and will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Trust or any such Trustee, or officer in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action;
provided, however, that this indemnity agreement shall not protect any
director or officer of the Trust against any liability to which he or she
would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the dutied involved in the
conduct of his or her office. This indemnity agreement will be in addition
to any liability which the distributor may otherwise have.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have
9
<PAGE>
to any indemnified party otherwise than under this Section 6. In case any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein and, to the extent that it may wish, to
assume the defense thereof, with counsel satisfactory to such indemnified
party; provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the indemnified
party shall have reasonably concluded that there may be one or more legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
the indemnifying party shall not have the right to direct the defense of
such action on behalf of such indemnified party, the indemnifying party
shall not have the right to direct the defense of such action on behalf of
such indemnified party or parties and such indemnified party or parties
shall have the right to select separate counsel to defend such action on
behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable
to such indemnified party under this Section 6 for any legal or other
expense, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence or (ii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such
10
<PAGE>
notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the
consent of the indemnifying party, unless such indemnifying party waived
its rights under this Section 6 in which case the indemnified party may
effect such a settlement without such consent.
7. Term and Termination.
(a) This Agreement shall become effect as of the date hereof. Unless
sooner terminated as herein provided, this Agreement shall remain in full
force and effect until April 22, 1993, and thereafter may be continued for
successive periods of one year, but only so long as each such continuance
is specifically approved at least annually (i) by the Board of Trustees of
the Trust, and (ii) by vote of a majority of the Trustees of the Trust who
are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Distribution Plans or in this
Agreement or any other agreement related to the Distribution Plans (the
"12b-1 Trustees"), cast in person at a meeting called for the purpose of
voting on such approval.
(b) This Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Trustees of the Trust including a majority
of the 12b-I Trustees, by vote of a majority of the outstanding voting
securities of the Trust, or by the distributor, on not more than 60 days'
nor less than 30 days' written notice to the other party or upon such
shorter notice as may be mutually agreed upon.
(c) This Agreement shall automatically terminate in the event of
11
<PAGE>
its assignment.
(d) The reimbursement and indemnification provisions contained in
Section 6 of this Agreement shall remain in full force and effect
regardless of any termination of this Agreement.
9. Definition of Certain Terms. For purposes of this Agreement the terms,
"assignment", "interested person", "majority of the outstanding voting
securities" and "principal underwriter" shall have their respective meanings
defined in the Investment Company Act and the rules and regulations thereunder,
subject, however, to such exemptions as may be granted to either the Distributor
or the Trust by the Securities and Exchange Commission, or such interpretative
positions as may be taken by the Commission or its Staff under the Investment
Company Act.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the day and year first above written.
DECLARATION FUND
ATTEST:
/s/ Martin M. Whalen BY: /s/ Terence P. Smith
---------------------- ---------------------------
DECLARATION DISTRIBUTORS, INC.
ATTEST:
/s/ Martin M. Whalen BY: /s/ Terence P. Smith
---------------------- ---------------------------
12
EXHIBIT - 6b.2
Michigan Heritage Fund
Amendment No. 1
to
Distribution Agreement
This Amendment No. 1 to the Distribution Agreement by and between
Declaration Fund with respect to the Michigan Heritage Fund; Dickinson Asset
Management, Inc., and Declaration Distributors, Inc. is made as of the 19th day
of December, 1997.
WHEREAS, the Shares issued with respect to the Michigan Heritage Fund
Series (the "Fund") are now to be issued in two separate classes, designated
respectively as Class A and No-Load Class, and
WHEREAS, the shares of the Fund that were formerly issued are now converted
into No-Load Class shares, and
WHEREAS, Class A shares will be offered and sold at net asset value plus a
sales charge and the No-Load Class shares will be offered and sold at net asset
value and both Classes of Shares will be subject to a Rule 12b-1 Distribution
Plan which provides for an annual deduction from the assets of the Fund of .25%
for share disbtibution expenses.
NOW, THEREFORE, this Amendment No. 1 witnesseth:
1. Section 3. Distribution Service, subsection a. is amended by the
addition of the following after the word "effect:" ... in the case of the
No-Load Class Shares and shall be the net asset value of the shares plus a sales
charge in the case of the Class A Shares determined as follows:
<TABLE>
<CAPTION>
Selling Price As
Percentage of Public Payable to
Dollar Amount Invested Offering Price Selling Institution Distributor
---------------------- -------------- ------------------- -----------
<S> <C> <C> <C>
Up to $50,000 5.25% 4.75% 0.50%
$50,000 but less than $250,000 4.00% 3.50% 0.50%
$250,000 but less than $500,000 3.00% 2.50% 0.50%
$500,000 and above 2.25% 1.75% 0.50%
</TABLE>
2. Section 3 is further amended by the addition of the following subsection
designated 8:
8. The Distributor is authorized to enter into selling agreements with
broker-dealers that are registered with the U. S. Securities and Exchange
Commission, are members of The National Association of Securities Dealers,
Inc. and are fully registered or otherwise qualified under the laws of the
jurisdiction in which such broker-dealers will be offering and selling the
Class A shares of the Fund.
3. Section 6, subsection C. shall be amended by deleting the word "Trust"
wherever the same shall appear and by substituting the word "Advisor" in its
place and stead.
4. Section 7, subsection a. is hereby amended by the addition of the words
"and out of the assets of" between the words "of" and "this" in the first line
of subsection a. and is further amended by the addition of the following at the
end of subsection a.
Those of the above described expenses which relate to the distribution of
the shares of a Class or the services provided to that Class shall be
allocated and paid by that Class; other expenses shall be allocated among
different Classes in different amounts to the extent that they are incurred
by one Class in a different amount or reflect differences in the amounts
and kinds of services that different Classes receive, and expenses that are
not assigned or assignable to a specific Class, shall be allocated based on
net assets.
5. Section 7, subsection b. is hereby amended by the addition of the
parenthetical "(with respect to Class A Shares)" after the term "broker-dealers"
in the tenth line of the text.
6. Section 8, is amended by the addition of the following at the end of the
text:
The portion of the net assets of the Fund which are attributable to the
Class A Shares is subject to a Rule 12b-1 fee in the amount of 1/4 of 1%
per annum. Broker-dealers and other institutions may be reimbursed from
this fee for providing services to existing Class A shareholders of the
Fund. Any expenses reimbursed to the Distributor shall be subject to the
allocation requirements set forth in Section 7, subsection a.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to the
Distribution Agreement dated the day and year first above written.
Declaration Fund with respect to
Michigan Heritage Fund
By: /s/ Terence P. Smith
------------------------------
Terence P. Smith, President
Declaration Distributors, Inc.
By: /s/ Terence P. Smith
------------------------------
Terence P. Smith, President
Dickinson Asset Management, Inc.
By: /s/ C. David Dickinson
------------------------------
C. David Dickinson
EXHIBIT - 8b
CUSTODY AGREEMENT
This agreement (the "Agreement") is entered into as of the 8th day of
July, 1997 by and between the Michigan Heritage Fund, (the "Fund"), an open-end
diversified investment business trust organized under the laws of Pennsylvania
and having its office at 301 MAC Avenue, Suite 120, East Lansing, Michigan 48823
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.
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
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:
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,
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.
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;
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.
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 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 Pennsylvania, 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 301 MAC Avenue, Suite 120, East Lansing, Michigan 48823 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.
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: The Michigan Heritage Fund
By: /s/ Terence P. Smith
-----------------------
Title: Secretary
--------------------
ATTEST: Star Bank, N.A.
By:
-----------------------
Title:
--------------------
<PAGE>
APPENDIX A
Authorized Persons Specimen Signatures
------------------ -------------------
President: Terence P. Smith /s/ Terence P. Smith
----------------------- --------------------------
Vice President:
----------------------- --------------------------
Secretary:
----------------------- --------------------------
Treasurer: Paul L. Giorgio /s/ Paul L. Giorgio
----------------------- --------------------------
Assistant
Secretary: Linda K. Coyne /s/ Linda K. Coyne
----------------------- --------------------------
Advisor Empolyees: C. David Dickinson /s/ C. David Dickinson
----------------------- --------------------------
Transfer Agent/Fund Accountant
Employees: David Ganley /s/ David Ganley
----------------------- --------------------------
Martin M. Whalen /s/ Martin M. Whalen
----------------------- --------------------------
----------------------- --------------------------
----------------------- --------------------------
*Authority restricted; does not include:
---------------------------------------
(1) Two signatures required to withdraw funds from custodian account.
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX B
The following agents are employed currently by Star Bank, N.A. for securities
processing and control . . .
The Depository Trust Company (New York)
7 Hanover Square
New York, NY 10004
The Federal Reserve Bank
Cincinnati and Cleveland Branches
Bankers Trust Company
16 Wall Street
New York, NY 10005
(For Foreign Securities and certain non-DTC eligible Securities)
<PAGE>
APPENDIX C
Standards of Service Guide
<PAGE>
APPENDIX D
Schedule of Compensation
EXHIBIT - 10
Declaration Fund January 9, 1998
555 North Lane, Suite 6160
Conshohocken, PA 19428
Gentlemen:
As counsel for Declaration Fund, a Pennsylvania business trust, registered
as such with the Commonwealth of Pennsylvania (the "Trust"), I have been asked
to provide this opinion to you with respect to the beneficial interest in the
Trust which shall at all times be divided into an unlimited number of
transferable shares without par value that may be issued in separate classes or
series.
On March 14, 1990, the Board of Trustees of Consolidated Asset Management
Fund ("CAM Fund") approved the reorganization of CAM Fund as a series fund
authorized to issue its shares in one or more classes or series, and change CAM
Fund's name to "Declaration Fund". The Board further authorized the creation of
a series within Declaration Fund to be designated "Declaration Cash Account, and
authorized the exchange of the whole and fractional shares of CAM Fund held by
CAM Fund shareholders for an equivalent number of whole or fractional shares of
Declaration Cash Account. CAM Fund's portfolio of assets would become
Declaration Cash Account's portfolio of assets.
On May 15, 1990, the shareholders of CAM Fund approved an amendment to CAM
Fund's trust indenture to (1) authorize the Fund to issue shares in more than
one series; (2) reclassify the Fund's outstanding shares as the Declaration Cash
Account series; and (3) change the name of the Fund to Declaration Fund. On May
16, 1990, an Amended and Restated Declaration of Trust was filed with the
Pennsylvania Department of State to reflect that the Trust existed pursuant to
Chapter 95 of Section 15 of Pennsylvania Consolidated Statutes Annotated, and
that the Trust was being amended to reflect, among other things, the above
matters approved by the Board at its March 14th meeting.
On February 12, 1992, the Board of Trustees of the Trust authorized the
creation of three additional series within Declaration Fund to be designated,
respectively, CAMCO 100% U.S. Treasury Short Term Fund, CAMCO 100% U.S. Treasury
Intermediate Term Fund, and CAMCO 100% U.S. Treasury Long Term Fund
(subsequently renamed CAMCO 100% U.S. Treasury Total Return Fund) (hereinafter
collectively the "CAMCO Funds").
On August 23, 1995, the Board of Trustees approved an amendment to the
trust indenture to authorize the termination by the Trustees of any separate
series of Declaration Fund if there are no outstanding shares of the separate
series. At that time there were no outstanding shares of any of the CAMCO Funds.
The trust indenture was accordingly amended effective October 5, 1995. The CAMCO
Funds Series were terminated.
On February 19, 1997, the Board of Trustees of the Trust authorized the
creation of an additional series within Declaration Fund to be designated The
Michigan Heritage Fund.
On December 2, 1997, and December 19, 1997, the Trustees, acting in
accordance with Section 5.1 of the Amended and Restated Declaration of Trust,
reclassified the Class of Shares of The Michigan Heritage Fund into two
sub-classes designated as Class A Shares and No-Load Shares respectively, and
all shares respecting The Michigan Heritage Fund thereafter issued and
outstanding automatically became No-Load Shares upon the issuance of the first
share of Class A. The Class A Shares and No-Load Shares shall have the same
voting rights and qualifications, restrictions and limitations provided for
except that each Class shall have sole voting rights with respect to matters
affecting only that Class.
MATTERS CONSIDERED
In connection with rendering this opinion, I have examined and am familiar
with the Amended and Restated Declaration of Trust dated March 14, 1990, and
Bylaws, as the same have been amended, and the Minutes of the Trust's
proceedings found in the official Minute Book of the Trust. In particular, I
have examined the language of the Declaration of Trust relating to Limitation on
Shareholder Liability, as set forth in Section VI of the said document, which
provides, in pertinent part, as follows:
The trustees shall have no power to bind any shareholder personally or to
call upon any shareholder for the payment of any sum of money or assessment
whatsoever other than such sums as the shareholder may agree to pay by way
of subscription to any shares or otherwise...
With respect to the good standing of the Trust I have relied upon the
absence of any evidence in the Trust's Minute Book of the Trust's adoption of a
plan of liquidation or dissolution in accordance with the provisions of
paragraph 12.4 of the Declaration Trust.
I am a member of the bar of, and authorized to practice law by the Courts
of the Commonwealth of Pennsylvania. Accordingly, my opinion is limited to the
substantive laws of that and no other jurisdiction.
OPINION
Based upon the foregoing and subject to the limitations stated herein, it
is my opinion that:
1. The Trust is a validly organized and subsisting entity under the laws of
the Commonwealth of Pennsylvania. The Trust is legally authorized to issue
shares representing units of beneficial interest in the Trust at prices
determined and in the manner prescribed by the Trusts's currently effective
prospectus and statement of additional information; provided, always, that such
shares are properly registered under all applicable federal and state securities
laws.
2. The shares of the Trust issued with respect to the Declaration Cash
Account series and The Michigan Heritage Fund series when sold, issued and
delivered in accordance with the provisions of the registration statement of the
Trust on Form N-1A, as amended and in compliance with any and all applicable
"blue sky" state law requirements, will be validly issued, fully paid and
non-assessable.
The opinion is given as of the date hereof. No opinion is given as to the
personal liability of any shareholders of the Trust solely arising by reason of
his or her having been a shareholder of the Trust.
I consent to the inclusion of this opinion as an Exhibit to Post
Effective Amendment No. 28.
Very truly yours,
/S/ MARTIN V. MILLER
--------------------------------------
Martin V. Miller
EXHIBIT - 15b.2
THE MICHIGAN HERITAGE FUND
AMENDMENT NO. 1
TO
DISTRIBUTION PLAN
This Amendment No. 1 to the Distribution Plan dated February 19, 1997 by
and between Declaration Fund with respect to Michigan Heritage Fund, Dickinson
Asset Management, Inc. and Declaration Distributors, Inc. is executed this 29th
day of December, 1997.
Whereas, the shares issued and to be issued with respect to Michigan
Heritage Fund (the "Fund) will be issued in classes designated as Class A shares
and No-Load Class shares, and
Whereas, both Classes shall be subject to the Distribution Plan, and
Whereas, the Distribution Plan of the Fund provides for Fund assets to be
used to promote the sale of the shares of the Fund, and
Whereas, it is the intention of the Trustees of Declaration Fund that the
payments made pursuant to the Plan for distribution purposes shall be chargeable
to that portion of the Fund's portfolio relating to the Class for which such
distribution expenses were incurred,
NOW, THEREFORE, this Amendment No. 1 to the Distribution Plan witnesseth:
1. The first paragraph of the Plan is amended by the addition of the
following after the word "Plan" which appears in the third line of the text:
"... which relates both the Class A shares and the No-Load Class shares ..."
2. The second paragraph of the Plan is amended by the addition of the
following at the end of the text after the words "(the 'Distributor')": "as the
same have been amended."
3. The third paragraph of the Plan is amended by the addition of the
following at the end of the second sentence of the text after the word
"shareholders" "... including the shareholders of the Class A shares and the
shareholders of the No-Load Class."
4. Paragraph 1. of the Plan is amended by the addition of the following at
the end of the present text:
Expenses which relate to the distribution of the shares of a Class or the
services provided to that Class shall be allocated and paid by that Class;
other expenses shall be allocated among different Classes in different
amounts to the extent that they are incurred by one Class in a different
amount or reflect differences in the amount or kinds of services that
different Classes receive, and expenses that are not assigned or assignable
to a specific Class shall be allocated based on net assets.
5. The Plan is amended by the addition of the following paragraph
designated 10.
The provisions of the Plan are severable for each Class of shares; the
Class A shares and the No-Load Class of shares. The Trustees must make a
finding for each Class that the Plan represents a reasonable likelihood of
benefit to the Fund and its shareholders. Further, shareholder approval by
the outstanding voting securities of each Class is required when Rule 12b-1
requires approval by a majority of the outstanding voting securities.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 to the
Distribution Plan, as hereinabove set forth.
Declaration Fund, with respect to
Michigan Heritage Fund
/s/ Terence P. Smith
------------------------------------
Terence P. Smith, President
Declaration Distributors, Inc.
/s/ Terence P. Smith
------------------------------------
Terence P. Smith, President
Dickinson Asset Management, Inc.
/S/ C. David Dickinson
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Mr. C. David Dickinson, President
EXHIBIT - 16b
DECLARATION FUND
WITH RESPECT TO
MICHIGAN HERITAGE FUND
PLAN FOR THE ISSUANCE OF SHARES IN CLASSES
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Whereas, Michigan Heritage Fund has been organized as a separate series of
Declaration Fund, and
Whereas, the shares issued with respect to Michigan Heritage Fund have been
offered and sold at net asset value without a sales charge, and
Whereas, the Amended and Restated Declaration of Trust of Declaration Fund
authorizes the Trustees to classify or reclassify any unissued trust shares into
a second class of shares and additional classes of shares setting before the
issuance thereof, their preferences, designations, conversion or other rights,
restrictions, limitations as to dividends, conditions of redemption
qualifications or other terms, and
Whereas, the Trustees shall have the power to classify or reclassify any class
of shares into one or more sub-classes by setting or changing in any one or more
respects their preferences, designations, conversion or other rights,
restrictions, limitation as to dividends, conditions of redemption and
qualifications or other terms, and
Whereas, upon the issuance of the first share of a second class of shares
classified or reclassified by the Trustees, all shares theretofore issued and
outstanding shall automatically represent shares of a separate class, and
Whereas, Rule 18f-3 under Section 18(f) of the Investment Company Act of 1940
creates a limited exemption from Section 18(f)(1) and Section 18(i) of the Act
for funds that issue multiple classes of shares with varying arrangements for
the distribution of securities and the provision of services to shareholders,
and
Whereas, the Board acting in accordance with the provisions of the Trust
Agreement has established two classes of shares designated as No-Load Class and
Class A, and
Whereas, a majority of the Trustees of Declaration Fund, including a majority of
those Trustees who are not interested persons of Declaration Fund have found
that the Plan as proposed to be adopted is in the best interests of each Class
individually and Declaration Fund as a whole, and
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Whereas, Dickinson Asset Management, Inc. has said that it will agree to pay the
costs of creating a second class of shares, and
Whereas, Michigan Heritage Fund has in effect a Rule 12b-1 Plan which authorizes
the use of Michigan Heritage Fund's assets in an amount of up to.25% per annum
for distribution purposes.
NOW, THEREFORE, the following terms and conditions of the multiple class expense
allocation plan with respect to the Michigan Heritage Fund series are hereby
adopted:
1. Class Differences Each class of shares of a Fund series shall represent
interests in the same portfolio investments of the Fund series and shall be
identical in all respects, except that each class shall differ with respect to
(i) distribution and related services and expenses as provided in Sections 2 and
3 below, (ii) such differences relating to purchase minimums, eligible investors
and exchange privileges as may be set forth in the respective prospectuses and
statements of additional information of the series, as the same may be amended
from time to time, and (iii) the designations of the several classes of shares
2. Differences in Distribution and Related Services The No-Load Class and the
Class A share of the Michigan Heritage series shall differ in the manner in
which such shares are distributed and in the related services provided to
shareholders of each class in the following ways: (i) the No-Load Class shall be
distributed at the per share net asset value, (ii) Class A shares shall be
subject to a sales charge and to a service charge (trail commission) payable to
the broker-dealers who provide liaison services to investors: all as may be set
forth from time to time in the prospectuses and statements of additional
information.
3. Allocation of Expenses
(a) Expenses relating to the distribution of shares of a Class or the
services provided to the Class shall be allocated to the Class.
(b) Other expenses shall be allocated among the Classes in different
amounts to the extent that they are incurred by one Class in a
different amount or reflect differences in the amount or kind of
services that the Classes receive.
(c) Income, realized and unrealized capital gains and losses and expenses
that are not assigned shall be allocated based upon net assets.
Notwithstanding the foregoing, the investment adviser of the Michigan
Heritage Fund series may waive or reimburse the expenses of a Class to the
extent permitted.
4. Voting Any matter required to be submitted by the provisions of the
Investment Company Act or of applicable state law, or otherwise to the holders
of the outstanding voting securities of Declaration Fund shall not be deemed to
be
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effectively acted upon unless approved by the holders of a majority of the
outstanding voting securities of the class or series affected.
5. Effectiveness This Plan shall become effective on the later of (i) the date
on which the post-effective amendment to the Registration Statement of
Declaration Fund relating to the multiple classes of shares of the Michigan
Heritage Fund becomes effective and (ii) the date upon which the public offer
and sale of the shares of the Class A shares commences.
This Plan shall be effective with respect to each additional class of
Michigan Heritage Fund established by Declaration Fund after the date hereof and
shall be subject to this Plan upon the commencement of the initial public
offering of the shares of the class; provided that the Plan, as amended to
reflect the new class, has been approved by the Board of Trustees, including by
a majority of the non-interested Trustees.
6. Amendment and Termination The Plan may be amended or terminated at any time
by a majority vote of the Board of Trustees of Declaration Fund, including by a
majority of the non-interested Trustees.
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