1933 Act Registration No. 888-03176
1940 Act Registration No. 002-72066
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20546
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [35]
and
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. [35]
DECLARATION FUND
(Exact name of registrant as specified in Charter)
555 North Lane, Suite 6160
Conshohocken, PA 19428
(Address of Principle Executive Offices and Zip Code)
610-832-1075
(Registrant's Telephone Number including Area Code)
Terence P. Smith
The Declaration Group
555 North Lane, Suite 6160
Conshohocken, PA 19428
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
[X] Immediately upon filing pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] On ___________, pursuant to paragraph (b)
[ ] On ____________, pursuant to paragraph (a)(1)
[ ] On ___________, pursuant to paragraph (a)(2) of Rule 485
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
hereby declares that an indefinite number or amount of shares are being
registered under the Securities Act of 1933. A report pursuant to Rule 24f-2 was
filed on ______________, 2000.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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THE WATER FUND
CROSS-REFERENCE SHEET
(As required by Rule 495)
<TABLE>
<CAPTION>
ITEM NO. ON FORM N-1A CAPTION OR SUBHEADING IN PROSPECTUS
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OR STATEMENT OF ADDITIONAL INFORMATION
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PART A - INFORMATION REQUIRED IN PROSPECTUS
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<S> <C>
1. Front and Back Cover Pages. Cover Page; Back Cover Page
2. Risk/Return Summary: Investments,
Risks, and Performance. Risk/Return Summary; Fees and Expenses
3. Risk/Return Summary/ Fee Table. Fees and Expenses
4. Investment Objectives, Principal Risk/Return Summary; Investment Objectives
Investment Strategies, and Related and Policies, Primary Investments of the Fund;
Risks Risk Factors
5. Management's Discussion of Not Applicable
Fund Performance
6. Management, Organization and Management of the Fund; Investment Adviser;
Capital Structure General Information
7. Shareholder Information Purchasing Shares; Redeeming Shares;
Plan of Distribution; Federal Taxes; General
Information
8. Distribution Arrangements Redeeming Shares; Plan of Distribution;
9. Financial Highlights Information Not Applicable
PART B. STATEMENT OF ADDITIONAL INFORMATION
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10. Cover Page and Table of Contents Cover Page; Table of Contents
11. Fund History Not covered in Statement of Additional
Information (covered under Item 6 of
Part A)
12. Description of the Fund and its Investment Policies and Restrictions
Investments and Risks
13. Management of the Fund. Investment Adviser; Directors and
Officers
14. Control Persons and Principal Directors and Officers; Investment Adviser
Holders of Securities.
15. Investment Advisory and other Investment Adviser; Fund Service Providers
Services.
16. Brokerage Allocation and Other
Practices Portfolio Transactions
17. Capital Stock and Other Capital Stock
Securities.
18. Purchase, Redemption and Pricing Determination of Net Asset Values
of Securities Being Offered Purchasing and Redeeming Shares
19. Taxation of the Fund. Tax Information
20. Underwriters Fund Service Providers
and Transfer Agents
21. Calculations of Performance Data. Performance Information
22. Financial Statements Not Applicable.
</TABLE>
PART C
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Information required to be included in PART C is set forth under the appropriate
Item, so numbered, in PART C of the Registration Statement.
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<PAGE>
PART A
PROSPECTUS
May 1, 2000
THE WATER FUND
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(the "Fund")
A SERIES OF THE DECLARATION FUND
(the "Trust")
555 North Lane, Suite 6160
Conshohocken, PA 19428
1-800-318-8353
AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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<PAGE>
TABLE OF CONTENTS
THE FUND
What is the Fund's Investment Objective?........................ 3
What are the Fund's Primary Investment Strategies?.............. 3
What are the Principal Risks of Investing in the Fund?.......... 4
How Has the Fund Performed in the Past?......................... 5
What are the Fund's Fees And Expenses?.......................... 6
An Example of Fund Expenses Over Time........................... 6
THE FUND'S INVESTMENT ADVISER
The Adviser..................................................... 7
The Portfolio Managers.......................................... 7
HOW TO BUY AND SELL SHARES
Investing In The Fund........................................... 7
Determining Share Prices........................................ 7
Distribution (12b-1) Fees....................................... 8
Minimum Investment Amounts...................................... 8
Opening and Adding To Your Account.............................. 8
Purchasing Shares By Mail....................................... 9
Purchasing Shares By Wire Transfer.............................. 9
Purchases through Financial Service Organizations............... 10
Purchasing Shares By Automatic Investment Plan.................. 10
Purchasing Shares By Telephone.................................. 10
Miscellaneous Purchase Information.............................. 11
How to Sell (Redeem) Your Shares................................ 11
By Mail......................................................... 11
Signature Guarantees............................................ 12
By Telephone.................................................... 12
By Wire......................................................... 12
Redemption At The Option Of The Fund............................ 12
DIVIDENDS AND DISTRIBUTIONS.............................................. 13
TAX CONSIDERATIONS....................................................... 13
GENERAL INFORMATION...................................................... 13
FOR MORE INFORMATION..................................................... 15
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THE FUND
WHAT IS THE FUND'S INVESTMENT OBJECTIVE?
The Fund's investment objective is long-term growth of capital.
WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?
The Adviser attempts to achieve the Fund's investment goals by:
o investing in common stocks without restrictions regarding market
capitalization;
o normally investing at least 85% of the Fund's total assets in US and
foreign common; and
o normally investing at least 85% of the Fund's total assets in "Water
Companies".
The Fund's Adviser defines "Water Companies" to be:
o publicly traded water utility and/or utility management companies;
o companies that produce equipment and supplies used for water
transport, cleansing, recycling, treatment and supply;
o companies that produce and/or supply quality bottled drinking water;
o companies that are primarily involved in the production,
transportation and/or serving of seafood products; and
o companies that derive a significant portion of their annual revenues
(at least 25%) from oceanic and other marine activities.
As everyone knows, fresh, clean water is essential to all life on this
planet. The Fund's Adviser believes that the continued availability of
water and recurring problems with its potability will become highly focused
issues in the 21st century. As water availability problems increase in
priority, companies whose business focus revolves around water may
experience dramatically increased growth and visibility among investors.
The Adviser believes that the Fund is the first US mutual fund to recognize
water as a principal investment opportunity.
The Fund's Adviser believes that the Fund's investment objective is best
achieved by investing in "Water Companies" that exhibit the potential for
significant growth over the long term. The Adviser defines long-term as a
time horizon of at least three years. To identify companies that have
significant growth potential, the Adviser employs a value-oriented approach
to stock selection. To choose the securities in which the Fund will invest,
the Adviser seeks to identify companies which exhibit some or all of the
following criteria:
o low price-to-earnings ratio ("P/E");
o low price-to-book value or tangible asset value;
o excellent prospects for growth;
o strong franchise;
o highly qualified management;
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o consistent free cash flow; and
o high returns on invested capital.
The Fund may invest up to 40% of its total assets in foreign "Water
Company" securities, either directly or in the form of American Depository
Receipts ("ADRs"). The Fund will only invest in ADRs that are issuer
sponsored. Sponsored ADRs typically are issued by a U.S. bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation.
Where profitable utility situations or technological developments occur in
countries without US listings or ADR opportunities, the Fund may directly
invest in such securities on foreign exchanges. The Fund will not invest
more than 25% of its total assets in foreign securities on foreign
exchanges.
The Fund will normally invest its remaining assets, if any, in cash
equivalents, such as U.S. government debt instruments, money market mutual
funds, and repurchase agreements.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?
General Risks- All investments are subject to inherent risks, and the Fund
is no exception. Accordingly, you may lose money by investing in the Fund.
When you sell your Fund shares, they may be worth more or less than what
you paid for them because the value of the Fund's investments will vary
from day-to-day, reflecting changes in market conditions, interest rates
and numerous other factors.
Stock Market Risk- The stock market tends to trade in cyclical price
patterns, with prices generally rising or falling over sustained periods of
time. The Fund invests primarily in common stocks, so the Fund will be
subject to the risks associated with common stocks, including price
volatility and the creditworthiness of the issuing company.
Small To Medium-Cap Stock Risks- The Fund may invest in companies with
small to medium market capitalizations (generally less than $6 billion).
Because these companies are relatively small compared to large-cap
companies, may be engaged in business mostly within their own geographic
region, and may be less well-known to the investment community, they can
have more volatile share prices. Also, small companies often have less
liquidity, less management depth, narrower market penetrations, less
diverse product lines, and fewer resources than larger companies. As a
result, their stock prices often react more strongly to changes in the
marketplace.
Foreign Securities Risk- Investments in foreign securities involve greater
risks compared to domestic investments for the following reasons:
o Foreign companies are not subject to the regulatory requirements of
U.S. companies, so there may be less publicly available information
about foreign issuers than U.S. companies.
o Foreign companies generally are not subject to uniform accounting,
auditing and financial reporting standards.
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o Dividends and interest on foreign securities may be subject to foreign
withholding taxes. Such taxes may reduce the net return to Fund
shareholders.
o Foreign securities are often denominated in a currency other than the
U.S. dollar. Accordingly, the Fund will be subject to the risks
associated with fluctuations in currency values.
o Although the Fund will only invest in foreign issuers that are
domiciled in nations considered to have stable and friendly
governments, there is the possibility of expropriation, confiscation,
taxation, currency blockage or political or social instability which
could negatively affect the Fund.
Focused Portfolio Risk- The Fund is classified as "non-diversified" under
the federal securities laws. This means that the Fund has the ability to
concentrate a relatively high percentage of its investments in the
securities of a small number of companies. Investing in this manner makes
the Fund more susceptible to a single economic, political or regulatory
event than a more diversified fund might be. Also, a change in the value of
a single company will have a more pronounced effect on the Fund than such a
change would have on a more diversified fund.
Furthermore, the Fund is considered to be a sector fund, which means that
it will concentrate the majority of its investments in a single industry;
in this case, the water industry. Investing in a single industry makes the
Fund more susceptible to negative impacts on that industry than a more
diversified fund might be. Also, a change in the value of a single company
within that industry might have a pronounced effect on the other companies
in that industry, with the result that there would be a more pronounced
negative effect on the Fund than such a change would have on a more
diversified fund.
Temporary Defensive Positions- Ordinarily, the Fund's portfolio will be
invested primarily in common stocks. However, the Fund is not required to
be fully invested in common stocks and, in fact, usually maintains certain
cash reserves. Under certain extraordinary market conditions, cash reserves
may be a significant percentage of the Fund's total net assets. In the
event such conditions occur, the Fund will invest its cash reserves in U.S.
Government debt instruments, money market funds and repurchase agreements.
During times when the Fund holds a significant portion of its net assets in
cash, it will not be investing according to its investment objectives, and
the Fund's performance may be negatively affected as a result.
Management Risk- Acting as investment adviser to the Fund is a new position
for the Adviser, and the Fund has no operating history.
Year 2000 Risks- As with other mutual funds, financial and business
organizations and individuals around the world, the Fund could be adversely
affected if the computer systems used by the Adviser and the Fund's other
service providers don't properly process and calculate date-related
information and data from and after January 1, 2000. This is commonly known
as the "Year 2000" or "Y2K" problem. The Adviser is taking steps to address
the Y2K problem with respect to the computer systems that it uses and to
obtain assurances that comparable steps are being taken by the Fund's other
major service providers. The Adviser will monitor the companies in which
the Fund invests for evidence of Y2K preparedness. However, there can be no
assurance that the Fund's portfolio will not be adversely affected by the
Y2K problem. Further, foreign issuers may not be as well prepared for the
Y2K problem as U.S. issuers, and this may pose additional risk to the Fund.
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HOW HAS THE FUND PERFORMED IN THE PAST?
Because this is a new Fund that does not yet have an operating history, a
performance bar chart and table describing the Fund's annual performance
and comparing that performance to appropriate indices is not yet available.
Performance information will be included in the Fund's first semi-annual
and annual reports, which will be sent to you without charge at your
request. Simply contact the Fund at 1-800-318-8353.
WHAT ARE THE FUND'S FEES AND EXPENSES?
This table describes the fees and expenses you may pay if you buy and hold
shares of the Fund.
================================================
Shareholder Fees:
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(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases NONE
Maximum Deferred Sales NONE
Charge (Load)
Maximum Sales Charge (Load) NONE
Imposed on Reinvested Dividends
And other Distributions
Redemption Fees NONE
================================================
Annual Fund Operating Expenses:
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(expenses that are deducted from Fund assets)
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Management Fees1 1.50%
Distribution (12b-1) Fees2 0.25%
Other Expenses3 0.00%
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Total Annual
Fund Operating Expenses 1.75%
================================================
1. Management fees include a fee of 1.00% for investment advisory services and
0.50% for administrative and other services. Both fees are paid to the
Fund's Adviser pursuant to separate agreements for each service.
2. Because payments under the 12b-1Plan are paid out of the Fund's assets on
an ongoing basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
3. The Fund's Adviser is responsible for paying all the Fund's expenses except
taxes, interest, litigation expenses and other extraordinary expenses.
Because the Fund believes that it will not incur any of these expenses
during its first fiscal year, no expenses are included in this category.
AN EXAMPLE OF EXPENSES OVER TIME
This example below is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time periods
indicated, reinvest all dividends and distributions, and then redeem all your
shares at the end of those periods (because the Fund does not charge redemption
fees, your costs would be the same even if you did not redeem your shares). The
Example also assumes that your investment has a 5% return each year
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and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
ONE YEAR THREE YEARS
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$178 $551
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THE FUND'S INVESTMENT ADVISER
The Adviser
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Avalon Trust Company (the "Adviser"), 125 Lincoln Avenue, Suite 100, Santa Fe,
New Mexico 87501, serves as investment adviser to the Fund. The Adviser is a
state-regulated independent trust company organized and incorporated under the
laws of the State of New Mexico.
The Adviser's principal business and occupation is to provide fiduciary trust
services, financial management services and investment advisory services to
individuals, foundations, and other institutions throughout the United States.
The Adviser has been investment adviser to the Fund since its inception. The
Adviser manages the investment portfolio and business affairs of the Fund under
an Investment Advisory Agreement with the Fund, and manages, or arranges to
manage, the daily operations of the Fund under an Operating Services Agreement.
For its investment advisory services to the Fund, the Trust pays to the Adviser,
on the last day of each month, an annualized fee equal to 1.00% of the average
net assets of the Fund, such fee to be computed daily based upon the daily
average net assets of the Fund.
The Portfolio Managers
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Mr. Roger Decort and Mr. Owen Quattlebaum are responsible for choosing the
securities in which the Fund will invest and for providing the day-to-day
investment management services for the Fund. Mr. Decort is President and Chief
Executive Officer of the Adviser. Mr. Quattlebaum is Senior Vice President and
Chief Investment Officer of the Adviser. Mr. Quattlebaum and Mr. Decort have
been executive officers of the Adviser since the firm's inception, and each has
over twenty years experience in the financial management field.
HOW TO BUY AND SELL SHARES OF THE FUND
INVESTING IN THE FUND
Determining Share Prices
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Shares of the Fund are offered at each share's net asset value ("NAV"). NAV per
share is calculated by adding the value of Fund investments, cash and other
assets, subtracting Fund liabilities, and then dividing the result by the number
of shares outstanding. The Fund generally determines the total value of its
shares by using market prices for the securities comprising its portfolio.
Securities for which quotations are not available and any other assets are
valued at fair market value as determined in good faith by the Adviser, subject
to the review and supervision of
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the Board of Trustees. The Fund's per share NAV is computed on all days on which
the New York Stock Exchange ("NYSE") is open for business at the close of
regular trading hours on the Exchange, currently 4:00 p.m. Eastern time. In the
event that the NYSE closes early, the share price will be determined as of the
time of closing.
Distribution (12b-1) Fees
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The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. The Plan provides that the Fund is authorized to pay an
annualized fee of up to 0.25% of the Fund's average daily net assets to
compensate certain parties for expenses incurred in the distribution of the
Fund's shares and the servicing and maintenance of existing shareholder
accounts.
Because payments under the 12b-1Plan are paid out of the Fund's assets on an
ongoing basis, over time these fees will increase the cost of your investment
and may cost you more than paying other types of sales charges.
Minimum Investment Amounts
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Payments for Fund shares should be in U.S. dollars, and in order to avoid fees
and delays, should be drawn on a U.S. bank. Fund management may reject any
purchase order for Fund shares and may waive the minimum investment amounts in
its sole discretion.
Your purchase of Fund shares is subject to the following minimum investment
amounts:
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
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REGULAR $2,500 $1,000
IRAs $1,000 $ 100
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AUTOMATIC INVESTMENT PLAN MEMBERS
MINIMUM MINIMUM
TYPE OF INVESTMENT SUBSEQUENT
ACCOUNT TO OPEN ACCOUNT INVESTMENTS
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REGULAR $2,500 $100 per month minimum
IRAs $1,000 $100 per month minimum
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Opening and Adding To Your Account
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You can invest in the Fund by mail, wire transfer and through participating
financial service professionals. After you have established your account and
made your first purchase, you may also make subsequent purchases by telephone.
You may also invest in the Fund through an automatic payment plan. Any questions
you may have can be answered by calling 1-800-318-8353.
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Purchasing Shares By Mail
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To make your initial investment in the Fund, simply complete the Account
Registration Form included with this Prospectus, make a check payable to The
Water Fund, and mail the Form and check to:
The Water Fund
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
To make subsequent purchases, simply make a check payable to The Water Fund and
mail the check to the above-mentioned address. Be sure to note your Fund account
number on the check.
Your purchase order, if accompanied by payment, will be processed upon receipt
by Declaration Service Company, the Fund's Transfer Agent. If the Transfer Agent
receives your order and payment by the close of regular trading on the NYSE
(currently 4:00 p.m. Eastern time), your shares will be purchased at the Fund's
NAV calculated at the close of regular trading on that day. Otherwise, your
shares will be purchased at the NAV determined as of the close of regular
trading on the next business day.
Purchasing Shares by Wire Transfer
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To make an initial purchase of shares by wire transfer, you need to take the
following steps:
1. Call 1-800-318-8353 to inform us that a wire is being sent.
2. Obtain an account number from the Transfer Agent.
3. Fill out and mail or fax an Account Application to the Transfer Agent
4. Ask your bank to wire funds to the account of:
First Union Bank, NA, ABA # 031201467
Credit: Declaration Fund, Acct. # 2000003245996
Further credit: Water Fund,
Acct # [Your Account number]
Include your name(s), address and taxpayer identification number or Social
Security number on the wire transfer instructions. The wire should state that
you are opening a new Fund account.
To make subsequent purchases by wire, ask your bank to wire funds using the
instructions listed above, and be sure to include your account number on the
wire transfer instructions.
If you purchase Fund shares by wire, you must complete and file an Account
Registration Form with the Transfer Agent before any of the shares purchased can
be redeemed. Either fill out and mail the Application Form included with this
prospectus, or call the transfer agent and they will send you an application.
You should contact your bank (which will need to be a commercial bank that is a
member of the Federal Reserve System) for information on sending funds by wire,
including any charges that your bank may make for these services.
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Purchases through Financial Service Organizations
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You may purchase shares of the Fund through participating brokers, dealers, and
other financial professionals. Simply call your investment professional to make
your purchase. If you are a client of a securities broker or other financial
organization, such organizations may charge a separate fee for administrative
services in connection with investments in Fund shares and may impose account
minimums and other requirements. These fees and requirements would be in
addition to those imposed by the Fund. If you are investing through a securities
broker or other financial organization, please refer to its program materials
for any additional special provisions or conditions that may be different from
those described in this Prospectus (for example, some or all of the services and
privileges described may not be available to you). Securities brokers and other
financial organizations have the responsibility of transmitting purchase orders
and funds, and of crediting their customers' accounts following redemptions, in
a timely manner in accordance with their customer agreements and this
Prospectus.
Purchasing Shares by Automatic Investment Plan
- ----------------------------------------------
You may purchase shares of the Fund through an Automatic Investment Plan
("Plan"). The Plan provides a convenient way for you to have money deducted
directly from your checking, savings, or other accounts for investment in shares
of the Fund. You can take advantage of the Plan by filling out the Automatic
Investment Plan application included with this Prospectus. You may only select
this option if you have an account maintained at a domestic financial
institution which is an Automatic Clearing House member for automatic
withdrawals under the Plan. The Fund may alter, modify, amend or terminate the
Plan at any time, and will notify you at least 30 days in advance if it does so.
For more information, call the Transfer Agent at 1-800-318-8353.
Purchasing Shares by Telephone
- ------------------------------
In order to be able to purchase shares by telephone, your account authorizing
such purchases must have been established prior to your call. Your initial
purchase of shares may not be made by telephone. Shares purchased by telephone
will be purchased at the per share NAV determined at the close of business on
the day that the Transfer Agent receives payment through the Automated Clearing
House, which could be as many as two days after you place your order for shares.
Call the Transfer Agent for details.
You may make purchases by telephone only if you have an account at a bank that
is a member of the Automated Clearing House. Most transfers are completed within
three business days of your call. To preserve flexibility, the Trust may revise
or eliminate the ability to purchase Fund shares by phone, or may charge a fee
for such service, although the Trust does not currently expect to charge such a
fee.
The Fund's Transfer Agent employs certain procedures designed to confirm that
instructions communicated by telephone are genuine. Such procedures may include,
but are not limited to, requiring some form of personal identification prior to
acting upon telephonic instructions, providing written confirmations of all such
transactions, and/or tape recording all telephonic instructions. Assuming
procedures such as the above have been followed, neither the Transfer Agent nor
the Fund will be liable for any loss, cost, or expense for acting upon telephone
instructions that are believed to be genuine. The Trust shall have authority, as
your agent, to redeem shares in your account to cover any such loss. As a result
of this policy, you will bear the
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<PAGE>
risk of any loss unless the Fund has failed to follow procedures such as the
above. However, if the Fund fails to follow such procedures, it may be liable
for such losses.
Miscellaneous Purchase Information
- ----------------------------------
All applications to purchase shares of the Fund may be rejected by authorized
officers of the Trust at their sole discretion. Applications will not be
accepted unless they are accompanied by payment in U.S. funds. Payment must be
made by check or money order drawn on a U.S. bank, savings and loan association
or credit union. The Fund's custodian will charge a $35.00 fee against your
account, in addition to any loss sustained by the Fund, for any payment check
returned to the custodian for insufficient funds. The Fund reserves the right to
refuse to accept applications under circumstances or in amounts considered
disadvantageous to shareholders. If you place an order for Fund shares through a
securities broker, and you place your order in proper form before 4:00 p.m.
Eastern time on any business day in accordance with their procedures, your
purchase will be processed at the NAV calculated at 4:00 p.m. on that day,
provided the securities broker transmits your order to the Transfer Agent before
5:00 p.m. Eastern time. The securities broker must send to the Transfer Agent
immediately available funds in the amount of the purchase price within three
business days for the order.
HOW TO SELL (REDEEM) YOUR SHARES
You may sell your shares at any time. You may request the sale of your shares
either by mail, by telephone or by wire.
By Mail
- -------
Sale requests should be mailed via U.S. mail or overnight courier service to:
Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
The redemption price you receive will be the Fund's per share NAV next
calculated after receipt of all required documents in good order. Payment of
redemption proceeds will be made no later than the third business day after the
valuation date unless otherwise expressly agreed by the parties at the time of
the transaction. If you purchase your shares by check and then redeem your
shares before your check has cleared, the Fund may hold your redemption proceeds
until your check clears, or for 15 days, whichever comes first.
"Good order" means that your redemption request must include:
1. Your account number.
2. The number of shares to be sold (redeemed) or the dollar value of the
amount to be redeemed.
3. The signatures of all account owners exactly as they are registered on the
account.
4. Any required signature guarantees.
5. Any supporting legal documentation that is required in the case of estates,
trusts, corporations or partnerships and certain other types of accounts.
Signature Guarantees --
- -----------------------
A signature guarantee of each owner is required to redeem shares in the
following situations, for all size transactions:
o if you change the ownership on your account;
o when you want the redemption proceeds sent to a different address than is
registered on the account;
o if the proceeds are to be made payable to someone other than the account's
owner(s);
o any redemption transmitted by federal wire transfer to your bank; and
o if a change of address request has been received by the Fund or the
Transfer Agent within 15 days previous to the request for redemption.
In addition, signature guarantees are required for all redemptions of $25,000 or
more from any Fund shareholder account. A redemption will not be processed until
the signature guarantee, if required, is received by the Transfer Agent.
Signature guarantees are designed to protect both you and the Fund from fraud.
To obtain a signature guarantee, you should visit a bank, trust company, member
of a national securities exchange, other broker-dealer, or other eligible
guarantor institution. (Notaries public cannot provide signature guarantees.)
Guarantees must be signed by an authorized person at one of these institutions
and be accompanied by the words, "Signature Guarantee."
By Telephone
- ------------
You may redeem your shares in the Fund by calling the Transfer Agent at
1-800-318-8353 if you elected to use telephone redemption on your account
application when you initially purchased shares. Redemption proceeds must be
transmitted directly to you or to your pre-designated account at a domestic
bank. You may not redeem by telephone if a change of address request has been
received by the Fund or the Transfer Agent within 15 days prior to the request
for redemption. During periods of substantial economic or market changes,
telephone redemptions may be difficult to implement. If you are unable to
contact the Transfer Agent by telephone, shares may be redeemed by delivering
your redemption request in person or by mail. In addition, interruptions in
telephone service may mean that you will be unable to effect a redemption by
telephone exactly when desired.
By Wire
- -------
You may request the redemption proceeds be wired to your designated bank if it
is a member bank or a correspondent of a member bank of the Federal Reserve
System. The Fund's Custodian and/or your bank may charge fees for processing
redemptions by wire transfer.
Redemption At The Option Of The Fund
- ------------------------------------
If the value of the shares in your account falls to less than $2000, the Fund
may notify you that, unless your account is increased to $2000 in value, it will
redeem all your shares and close the account by paying you the redemption
proceeds and any dividends and distributions declared and unpaid at the date of
redemption. You will have thirty days after notice to bring the account up to
$2000 before any action is taken. This right of redemption shall not apply if
the value of your account drops below $2000 as the result of market action or
for investments in IRA accounts. The Fund reserves this right because of the
expense to the Fund of maintaining relatively small accounts.
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<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Dividends paid by the Fund are derived from its net investment income. Net
investment income will be distributed at least annually. The Fund's net
investment income is made up of dividends received from the stocks it holds, as
well as interest accrued and paid on any other obligations that might be held in
its portfolio.
The Fund realizes capital gains when it sells a security for more than it paid
for it. The Fund may make distributions of its net realized capital gains (after
any reductions for capital loss carry forwards), generally, once a year.
Unless you elect to have your distributions paid in cash, your distributions
will be reinvested in additional shares of the Fund. You may change the manner
in which your dividends are paid at any time by writing to the Transfer Agent.
TAX CONSIDERATIONS
The Fund intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code of 1986, as amended, so as to be relieved of
federal income tax on its capital gains and net investment income currently
distributed to its shareholders.
Dividends from investment income and net short-term capital gains are generally
taxable to you as ordinary income. Distributions of long-term capital gains are
taxable as long-term capital gains regardless of the length of time shares in
the Fund have been held. Distributions are taxable, whether received in cash or
reinvested in shares of the Fund.
You will be advised annually of the source of distributions for federal income
tax purposes.
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. You should consult a tax adviser regarding the effect of
federal, state, local, and foreign taxes on an investment in the Fund.
GENERAL INFORMATION
The Fund will not issue stock certificates evidencing shares. Instead, your
account will be credited with the number of shares purchased, relieving you of
responsibility for safekeeping of certificates and the need to deliver them upon
redemption. Written confirmations are issued for all purchases of shares.
In reports or other communications to investors, or in advertising material, the
Fund may describe general economic and market conditions affecting the Fund and
may compare its performance with other mutual funds as listed in the rankings
prepared by Lipper Analytical Services, Inc. or similar nationally recognized
rating services and financial publications that monitor mutual fund performance.
The Fund may also, from time to time, compare its performance to the one or more
appropriate indices.
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<PAGE>
FOR MORE INFORMATION
Additional information about the Fund is available in the Fund's Statement of
Additional Information (SAI). The SAI contains more detailed information on all
aspects of the Fund. A current SAI, dated April 30, 1999 as amended on October
21, 1999, has been filed with the SEC and is incorporated by reference into this
prospectus.
To receive information concerning the Fund, or to request a copy of the SAI or
other documents relating to the Fund, please contact the Fund at:
The Declaration Fund
c/o Declaration Service Company
555 North Lane, Suite 6160
Conshohocken, PA 19460
1-800-318-8353
A copy of your requested document(s) will be sent to you within three days of
your request.
You may also receive information concerning the Fund, or request a copy of the
SAI or other documents relating to the Fund, by contacting the Securities and
Exchange Commission:
IN PERSON: at the SEC's Public Reference Room in Washington, D.C.
BY PHONE: 1-800-SEC-0330
BY MAIL: Public Reference Section, Securities and Exchange Commission,
Washington, D.C. 20549-6009 (duplicating fee required)
ON THE INTERNET: www.sec.gov
Investment Company Act No.
888-03176
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
May 1, 2000
Declaration Fund
555 North Lane, Suite 6160
Conshohocken, PA 19428
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus of The Water Fund, dated May 1, 2000. You may
obtain a copy of the Prospectus, free of charge, by writing to Declaration Fund,
c/o The Declaration Group, 555 North Lane, Suite 6160, Conshohocken, PA 19428,
phone number 800-318-8353.
TABLE OF CONTENTS
Investment Policies and Restrictions Custodian
Investment Adviser Transfer Agent
Trustees and Officers Administration
Performance Information Distributor
Purchasing and Redeeming Shares Independent Accountants
Tax Information Distribution Fees
Portfolio Transactions Financial Statements
Code of Ethics
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objectives and the manner in which the Fund pursues its
investment objectives are generally discussed in the prospectus. This section
provides additional information concerning the Fund's investments and its
investment restrictions.
The Fund is a non-diversified Fund, meaning that the Fund can concentrate its
investments in a smaller number of companies than a more diversified fund. The
Fund normally will invest at least 85% of total assets in the common stock of
U.S. and foreign companies, and will normally hold a focused portfolio
consisting of "Water Companies", as that term is defined in the prospectus. The
Fund may also invest in a variety of other securities. The types of securities
in which the Fund may ordinarily invest are listed below, along with any
restrictions on such investments, and, where necessary, a brief discussion of
any risks unique to the particular security.
COMMON STOCKS. The Fund will ordinarily invest at least 85% of its total assets
in U.S. and foreign common stocks or securities convertible into common stock.
The market value of common stock can fluctuate significantly, reflecting the
business performance of
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the issuing company, investor perceptions and general economic or financial
market movements. Smaller companies are especially sensitive to these factors.
Despite the risk of price volatility, however, common stocks historically have
offered the greatest potential for gain on investment, compared to other classes
of financial assets. For purposes of the Fund's 85% minimum investment in common
stocks, REITS are considered to be common stock.
FOREIGN SECURITIES. The Fund may invest up to 40% of its total net assets in the
common stock of foreign issuers. Up to 25% of the Fund's total assets may be
invested in foreign securities trading of foreign exchanges. The Fund may also
invest in foreign securities in the form of American Depository Receipts (ADRs).
The Fund will only invest in ADRs that are issuer sponsored. Sponsored ADRs
typically are issued by a U.S. bank or trust company and evidence ownership of
underlying securities issued by a foreign corporation.
Investments in foreign companies involve certain risks not typically associated
with investing in domestic companies. An investment may be affected by changes
in currency rates and in exchange control regulations. There may be less
publicly available information about a foreign company than about a domestic
company, because foreign companies are not subject to the regulatory
requirements of U.S. companies. Foreign companies generally are not subject to
uniform accounting, auditing and financial reporting standards. Dividends and
interest on foreign securities may be subject to foreign withholding taxes. Such
taxes may reduce the net return to Fund shareholders. Foreign securities are
often denominated in a currency other than the U.S. dollar. Accordingly, the
Fund will be subject to the risks associated with fluctuations in currency
values. Although the Fund will only invest in foreign issuers that are domiciled
in nations considered to have stable and friendly governments, there is the
possibility of expropriation, confiscation, taxation, currency blockage or
political or social instability which could negatively affect the Fund.
PREFERRED STOCK. The Fund may invest in preferred stock. Preferred stock
generally pays dividends at a specified rate and generally has preference over
common stock in the payments of dividends and the liquidation of the issuer's
assets. Dividends on preferred stock are generally payable at the discretion of
the issuer's board of directors. Accordingly, shareholders may suffer a loss of
value if dividends are not paid. The market prices of preferred stocks are also
sensitive to changes in interest rates and in the issuer's creditworthiness.
Accordingly, shareholders may experience a loss of value due to adverse interest
rate movements or a decline in the issuer's credit rating.
CONVERTIBLE SECURITIES. Traditional convertible securities include corporate
bonds, notes and preferred stocks that may be converted into or exchanged for
common stock, and other securities that also provide an opportunity for equity
participation. These securities are generally convertible either at a stated
price or a stated rate (that is, for a specific number of shares of common stock
or other security). As with other fixed income securities, the price of a
convertible security to some extent varies inversely with interest rates. While
providing a fixed-income stream (generally higher in yield than the income
2
<PAGE>
derivable from a common stock but lower than that afforded by a non-convertible
debt security), a convertible security also affords the investor an opportunity,
through its conversion feature, to participate in the capital appreciation of
the common stock into which it is convertible. As the market price of the
underlying common stock declines, convertible securities tend to trade
increasingly on a yield basis and so may not experience market value declines to
the same extent as the underlying common stock. When the market price of the
underlying common stock increases, the price of a convertible security tends to
rise as a reflection of the value of the underlying common stock. To obtain such
a higher yield, the Fund may be required to pay for a convertible security an
amount in excess of the value of the underlying common stock. Common stock
acquired by the Fund upon conversion of a convertible security will generally be
held for so long as the Advisor anticipates such stock will provide the Fund
with opportunities which are consistent with the Fund's investment objectives
and policies.
DEBT SECURITIES. The Fund may invest in U.S. Government debt securities. U.S.
Government securities include direct obligations of the U.S. Government and
obligations issued by U.S. Government agencies and instrumentalities. The market
value of such securities fluctuates in response to interest rates and the
creditworthiness of the issuer. In the case of securities backed by the full
faith and credit of the United States Government, shareholders are only exposed
to interest rate risk.
Credit Risk- A debt instrument's credit quality depends on the issuer's
ability to pay interest on the security and repay the debt: the lower the
credit rating, the greater the risk that the security's issuer will
default. The credit risk of a security may also depend on the credit
quality of any bank or financial institution that provides credit
enhancement for the security.
Interest Rate Risk- All debt securities face the risk that their principal
value will decline because of a change in interest rates. Generally,
investments subject to interest rate risk will decrease in value when
interest rates rise and will rise in value when interest rates decline.
Also, the longer a security has until it matures, the more pronounced will
be a change in its value when interest rates change.
MONEY MARKET MUTUAL FUNDS. The Fund may invest in securities issued by other
registered investment companies. As a shareholder of another registered
investment company, the Fund would bear its pro rata portion of that company's
advisory fees and other expenses. Such fees and expenses will be borne
indirectly by the Fund's shareholders.
REPURCHASE AGREEMENTS. The Fund may invest a portion of its assets in repurchase
agreements ("Repos") with broker-dealers, banks and other financial
institutions, provided that the Fund's custodian at all times has possession of
the securities serving as collateral for the Repos or has proper evidence of
book entry receipt of said securities. In a Repo, the Fund purchases securities
subject to the seller's simultaneous agreement to repurchase those securities
from the Fund at a specified time (usually one day) and price. The repurchase
price reflects an agreed-upon interest rate during the time of investment.
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<PAGE>
All Repos entered into by the Fund must be collateralized by U.S. Government
Securities, the market values of which equal or exceed 102% of the principal
amount of the money invested by the Fund. If an institution with whom the Fund
has entered into a Repo enters insolvency proceedings, the resulting delay, if
any, in the Fund's ability to liquidate the securities serving as collateral
could cause the Fund some loss if the securities declined in value prior to
liquidation. To minimize the risk of such loss, the Fund will enter into Repos
only with institutions and dealers considered creditworthy.
Repurchase Agreement Risk- A repurchase agreement exposes the Fund to the
risk that the party that sells the securities will default on its
obligation to repurchase those securities. If that happens the Fund can
lose money because: (i) it may not be able to sell the securities at the
agreed-upon time and price; and (ii) the securities may lose value before
they can be sold.
CASH RESERVES. The Fund may hold a significant portion of its net assets in
cash, either to maintain liquidity or for temporary defensive purposes.
RESTRICTED AND ILLIQUID SECURITIES. The Fund will not invest more than 15% of
its net assets in securities that the Adviser determines to be illiquid.
Illiquid securities are securities that may be difficult to sell promptly at an
acceptable price because of a lack of an available market and other factors. The
sale of some illiquid and other types of securities may be subject to legal
restrictions. Because illiquid and restricted securities may present a greater
risk of loss than other types of securities, the Fund will not invest in such
securities in excess of the limits set forth above.
The Fund may also invest in securities acquired in a privately negotiated
transaction from the issuer or a holder of the issuer's securities and which may
not be distributed publicly without registration under the Securities Act of
1933.
Restricted and illiquid securities are valued in such manner as the Fund's Board
of Directors ("Board" or "Directors") in good faith deems appropriate to reflect
the fair market value of such securities.
SPECIAL SITUATIONS. The Fund intends to invest in special situations from time
to time. A special situation arises when, in the opinion of Fund management, the
securities of a company will, within a reasonably estimated time period, be
accorded market recognition at an appreciated value solely by reason of a
development particularly or uniquely applicable to that company and regardless
of general business conditions or movements of the market as a whole. Such
developments and situations include, but are not limited to: liquidations,
reorganizations, recapitalizations or mergers, material litigation,
technological breakthroughs, and new management or management policies. Although
large and well-known companies may be involved, special situations often involve
much greater risk than is found in the normal course of investing. To minimize
these risks, the Fund will not invest in special situations unless the target
company has at least three years of continuous operations (including
predecessors), or unless the aggregate value of such investments is not greater
than 25% of the Fund's total net assets (valued at the time of investment).
4
<PAGE>
WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS. The Fund may purchase
securities on a when-issued basis, and it may purchase or sell securities for
delayed-delivery. These transactions occur when securities are purchased or sold
by the Fund with payment and delivery taking place at some future date. The Fund
may enter into such transactions when, in the Adviser's opinion, doing so may
secure an advantageous yield and/or price to the Fund that might otherwise be
unavailable. The Fund has not established any limit on the percentage of assets
it may commit to such transactions, but to minimize the risks of entering into
these transactions, the Fund will maintain a segregated account with its
custodian consisting of cash, or other high-grade liquid debt securities,
denominated in U.S. dollars or non-U.S. currencies, in an amount equal to the
aggregate fair market value of its commitments to such transactions.
MASTER-FEEDER OPTION. Notwithstanding its other investment policies, the Fund
may seek to achieve its investment objective by investing all of its investable
net assets in another investment company having the same investment objective
and substantially the same investment policies and restrictions as those of the
Fund. Although such an investment may be made in the sole discretion of the
Directors, the Fund's shareholders will be given 30 days prior notice of any
such investment. There is no current intent to make such an investment.
PORTFOLIO TURNOVER. The Fund has no operating history and therefore has no
annual reportable portfolio turnover. The Fund will generally purchase and sell
securities without regard to the length of time the security has been held.
Accordingly, it can be expected that the rate of portfolio turnover may be
substantial. The Fund expects that its annual portfolio turnover rate will not
exceed 100% under normal conditions. However, there can be no assurance that the
Fund will not exceed this rate, and the portfolio turnover rate may vary from
year to year.
High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs. This also could result in the payment by
shareholders of above-average amounts of taxes on realized investment gains,
although every effort will be made to minimize taxes. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
Portfolio turnover rate is calculated by dividing (1) the lesser of purchases or
sales of portfolio securities for the for the fiscal year by (2) the monthly
average of the value of portfolio securities owned during the fiscal year. A
100% turnover rate would occur if all the securities in the Fund's portfolio,
with the exception of securities whose maturities at the time of acquisition
were one year or less, were sold and either repurchased or replaced within one
year.
5
<PAGE>
INVESTMENT RESTRICTIONS
The restrictions listed below are fundamental policies and may be changed only
with the approval of a "majority of the outstanding voting securities" of the
Fund as defined in the Investment Company Act of 1940 (the "1940 Act"). As
provided in the 1940 Act, a vote of a "majority of the outstanding voting
securities" of the Fund means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of the Fund, or (2) 67% or more of the shares
of the Fund present at a meeting, if more than 50% of the shares are represented
at the meeting in person or by proxy. Except with respect to borrowing, changes
in values of the Fund's assets as a whole will not cause a violation of the
following investment restrictions so long as percentage restrictions are
observed by the Fund at the time it purchases any security.
The Fund will not:
1. Acquire securities of any one issuer that at the time of investment (a)
represent more than 10% of the voting securities of the issuer or (b) have
a value greater than 10% of the value of the outstanding securities of the
issuer;
2. Invest less than 85% of its assets (valued at time of investment) in
securities of "Water Companies", as that term is defined in the Prospectus;
3. Borrow money, except from banks for temporary or emergency purposes in
amounts not exceeding 5% of the value of the Fund's assets at the time of
borrowing;
4. Underwrite the distribution of securities of other issuers, or acquire
"restricted" securities that, in the event of a resale, might be required
to be registered under the Securities Act of 1933;
5. Make margin purchases or short sales of securities;
6. Invest in companies for the purpose of management or the exercise of
control;
7. Lend money (but this restriction shall not prevent the Fund from investing
in debt securities or repurchase agreements, or lend its portfolio
securities).
8. Acquire or retain any security issued by a company, an officer or director
of which is an officer or Trustee of the Trust or an officer, director or
other affiliated person of the Advisor.
9. Invest in oil, gas or other mineral exploration or development programs, or
invest in marketable securities of companies engaged in oil, gas or mineral
exploration;
10. Purchase or sell real estate or real estate loans or real estate limited
partnerships, or invest in marketable securities of companies that invest
in real estate or interests in real estate.
6
<PAGE>
11. Purchase warrants on securities.
12. Issue senior securities.
13. Invest in commodities, or invest in futures or options on commodities.
Restrictions 1 through 13 listed above are fundamental policies, and may be
changed only with the approval of a "majority of the outstanding voting
securities" of the Fund as defined in the Investment Company Act of 1940.
The Fund has also adopted the following restrictions that may be changed by the
Board of Trustees without shareholder approval:
The Fund may not:
a. Invest more than 15% of its assets (valued at time of investment) in
securities of issuers with less than three years' operation (including
predecessors);
b. Invest more than 15% of its net assets in securities that are not readily
marketable;
c. Acquire securities of other investment companies except (a) by purchase in
the open market, where no commission or profit to a sponsor or dealer
results from such purchase other than the customary broker's commission and
(b) where acquisition results from a dividend or merger, consolidation or
other reorganization.
d. purchase more than 3% of the voting securities of any one investment
company;
e. Pledge, mortgage or hypothecate its assets, except for temporary or
emergency purposes and then to an extent not greater than 5% of its total
assets at cost;
f. Invest more than 10% of the Fund's assets (valued at time of investment) in
initial margin deposits of options or futures contracts;
INVESTMENT ADVISER
Information concerning Avalon Trust Company, the Fund's Adviser, is contained in
the Fund's prospectus. This section contains additional information about the
contractual arrangements between the Adviser and the Trust.
The Adviser manages the investment portfolio and the general business affairs of
the Fund pursuant to an investment services agreement with the Trust dated
October 15, 1999 (the "Agreement").
The Agreement provides that the Adviser shall not be liable for any loss
suffered by the Fund or its shareholders as a consequence of any act or omission
in connection with services under the Agreement, except by reason of the
Adviser's willful misfeasance, bad faith, gross negligence, or reckless
disregard of its obligations and duties under the Advisory Agreement.
7
<PAGE>
The Agreement has a term of two years, but may be continued from year to year so
long as its continuance is approved annually (a) by the vote of a majority of
the Trustees of the Fund who are not "interested persons" of the Fund or the
adviser cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Board of Trustees as a whole or by the vote of a
majority (as defined in the 1940 Act) of the outstanding shares of the Fund. The
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
TRUSTEES AND OFFICERS
The Board of Trustees has overall responsibility for conduct of the Trust's
affairs. The day-to-day operations of the Fund are managed by the Advisor,
subject to the bylaws of the Trust and review by the Board of Trustees. The
Trustees of the Trust, including those Trustees who are also officers, are
listed below:
Position Principal Occupation For the
Name, Age, with Trust Last Five Years
- --------------------------------------------------------------------------------
George R. Stasen* Trustee Co-founder and partner of Mentor Capital
(Age 54) Partners, Ltd., a Philadelphia merchant
banking firm, since 1993. Formerly CFO
of the Rushmore Group of Bethesda, MD.
A. Louis Denton Trustee President and Chief Executive Officer of
(Age 42) Philadelphia Corporation for Investment
Services, a financial advice and
services firm. Employed by firm since
1989.
Dow W. Stewart Trustee President and CEO of Prime Capital
(Age 55) Holdings since 1997. Formerly Chief
Operating Officer and Treasurer of Stone
& McCarthy Research Associates
(1995-1996) and co-founded and served as
senior Managing partner and Chief
Financial Officer to R. J. Walls &
Company (1990- 1995).
8
<PAGE>
Terence P. Smith* President Chief Executive Officer, controlling
(Age 53) Trustee shareholder, Declaration Service
Company, Declaration Distributors, Inc.,
Declaration Investment Advisers, Inc.
(Declaration Holdings, Inc.). Officer of
the Fund and Officer and or controlling
shareholder of Declarations Holdings,
Inc. since 1987.
* Indicates an "interested person" as defined in the Investment Company Act of
1940.
Declaration Fund is an open-end, diversified, management investment company.
Originally incorporated in Pennsylvania on April 9, 1981, Declaration Fund
changed its form of organization to a business trust effective, July 9,1984. It
became registered with the Commonwealth of Pennsylvania as a Pennsylvania
Business Trust on May 16, 1990. Declaration Fund is a series fund.
The table below sets forth the compensation anticipated to be paid by the Trust
to each of the independent Trustees of the Trust during the fiscal year ending
December 31, 2000.
NAME OF TRUSTEE COMPENSATION PENSION ANNUAL TOTAL COMPENSATION
FROM TRUST BENEFITS BENEFITS PAID TO TRUSTEE
- --------------------------------------------------------------------------------
George R. Stasen 0.00 0.00 0.00
A. Louis Denton 2000.00 0.00 2000.00
Dow W. Stewart 2000.00 0.00 2000.00
Terence P. Smith 0.00 0.00 0.00
The Adviser intends to purchase substantially all of the shares the Fund prior
to the effective date of the Fund's registration and will be deemed initially to
control the Fund.
The Trust will call a meeting of shareholders for the purpose of voting upon the
question of removal of a Trustee or Trustees when requested in writing to do so
by record holders of at least 10% of the Fund's outstanding common shares. The
Trust's bylaws contain procedures for the removal of Trustees by its
stockholders. At any meeting of stockholders, duly called and at which a quorum
is present, the stockholders may by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, remove any Trustee or
Trustees from office and may elect a successor or successors to fill any
resulting vacancies for the unexpired terms of the removed Trustees.
PERFORMANCE INFORMATION
From time to time the Fund may quote total return figures. "Total Return" for a
period is the percentage change in value during the period of an investment in
Fund shares, including the value of shares acquired through reinvestment of all
dividends and capital gains distributions. "Average Annual Total Return" is the
average annual compounded rate of change in value represented by the Total
Return Percentage for the period.
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[n]
Average Annual Total Return is computed as follows: P(1+T) = ERV
Where: P = a hypothetical initial investment of $1000]
T = average annual total return
n = number of years
ERV = ending redeemable value of shares at the end of the period
Yield. The Fund may advertise performance in terms of a 30-day yield quotation.
The 30-day yield quotation is computed by dividing the net investment income per
share earned during the period by the maximum offering price per share on the
last day of the period, according to the following formula:
6
Yield = 2[(a-b/cd + 1) - 1]
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the average daily number of shares outstanding during the period
that they were entitled to receive dividends
d = the maximum offering price per share on the last day of the period
The Fund's performance is a function of conditions in the securities markets,
portfolio management, and operating expenses. Although information such as that
shown above is useful in reviewing the Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods.
In sales literature, the Fund's performance may be compared with that of market
indices and other mutual funds. In addition to the above computations, the Fund
might use comparative performance as computed in a ranking determined by Lipper
Analytical Services, Morningstar, Inc., or that of another service.
PURCHASING AND REDEEMING SHARES
Redemptions will be made at net asset value. The Fund's net asset value is
determined on days on which the New York Stock Exchange is open for trading. For
purposes of computing the net asset value of a share of the Fund, securities
traded on security exchanges, or in the over-the-counter market in which
transaction prices are reported, are valued at the last sales price at the time
of valuation or, lacking any reported sales on that day, at the most recent bid
quotations. Securities for which quotations are not available and any other
assets are valued at a fair market value as determined in good faith by the
Advisor, subject to the review and supervision of the board of Trustees. The
price per share for a purchase order or redemption request is the net asset
value next determined after receipt of the order.
10
<PAGE>
The Fund is open for business on each day that the New York Stock Exchange
("NYSE") is open. The Fund's share price or net asset value per share ("NAV") is
normally determined as of 4:00 p.m., New York time. The Fund's share price is
calculated by subtracting its liabilities from the closing fair market value of
its total assets and dividing the result by the total number of shares
outstanding on that day. Fund liabilities include accrued expenses and dividends
payable, and its total assets include the market value of the portfolio
securities as well as income accrued but not yet received. Since the Fund
generally does not charge sales or redemption fees, the NAV is the offering
price for shares of the Fund. For shares redeemed prior to being held for at
least six months, the redemption value is the NAV less a redemption fee equal to
1.00% of the NAV.
TAX INFORMATION
The Fund intends to qualify as a regulated investment company under the Internal
Revenue Code so as to be relieved of federal income tax on its capital gains and
net investment income currently distributed to its shareholders. To qualify as a
regulated investment company, the Fund must, among other things, derive 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 other income derived with respect to its business of investing in such stock
or securities.
If the Fund qualifies as a regulated investment company and distributes at least
90% of its net investment income, the Fund will not be subject to Federal income
tax on the income so distributed. However, the Fund would be subject to
corporate income tax on any undistributed income other than tax-exempt income
from municipal securities.
The Fund intends to distribute to shareholders, at least annually, substantially
all net investment income and any net capital gains realized from sales of the
Fund's portfolio securities. Dividends from net investment income and
distributions from any net realized capital gains are reinvested in additional
shares of the Fund unless the shareholder has requested in writing to have them
paid by check.
Dividends from investment income and net short-term capital gains are generally
taxable to the shareholder as ordinary income. Distributions of long-term
capital gains are taxable as long-term capital gains regardless of the length of
time shares in the Fund have been held. Distributions are taxable, whether
received in cash or reinvested in shares of the Fund.
Each shareholder is advised annually of the source of distributions for federal
income tax purposes. A shareholder who is not subject to federal income tax will
not be required to pay tax on distributions received.
If shares are purchased shortly before a record date for a distribution, the
shareholder will, in effect, receive a return of a portion of his investment,
but the distribution will be taxable to him even if the net asset value of the
shares is reduced below the shareholder's cost. However, for federal income tax
purposes the original cost would continue as the tax basis.
11
<PAGE>
If a shareholder fails to furnish his social security or other tax
identification number or to certify properly that it is correct, the Fund may be
required to withhold federal income tax at the rate of 31% (backup withholding)
from dividend, capital gain and redemption payments to him. Dividend and capital
gain payments may also be subject to backup withholding if the shareholder fails
to certify properly that he is not subject to backup withholding due to the
under-reporting of certain income.
Taxation of the Shareholder. Taxable distributions generally are included in a
shareholder's gross income for the taxable year in which they are received.
However, dividends declared in October, November and December and made payable
to shareholders of record in such month will be deemed to have been received on
December 31st if paid by the Fund during the following January.
Distributions by the Fund will result in a reduction in the fair market value of
the Fund's shares. Should a distribution reduce the fair market value below a
shareholder's cost basis, such distribution would be taxable to the shareholder
as ordinary income or as a 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
include the amount of any forthcoming distribution so that those investors may
receive a return of investment upon distribution which will, nevertheless, be
taxable to them.
A redemption of shares is a taxable event and, accordingly, a capital gain or
loss may be recognized. Each investor should consult a tax advisor regarding the
effect of federal, state, local, and foreign taxes on an investment in the Fund.
Dividends. A portion of the Fund's income may qualify for the dividends-received
deduction available to corporate shareholders to the extent that the Fund's
income is derived from qualifying dividends. Because the Fund may earn other
types of income, such as interest, income from securities loans, non-qualifying
dividends, and short-term capital gains, the percentage of dividends from the
Fund that qualifies for the deduction generally will be less than 100%. The Fund
will notify corporate shareholders annually of the percentage of Fund dividends
that qualifies for the dividend received deductions.
A portion of the Fund's dividends derived from certain U.S. Government
obligations may be exempt from state and local taxation. Short-term capital
gains are distributed as dividend income. The Fund will send each shareholder a
notice in January describing the tax status of dividends and capital gain
distributions for the prior year.
Capital Gain Distribution. Long-term capital gains earned by the Fund from the
sale of securities and distributed to shareholders are federally taxable as
long-term capital gains, regardless of the length of time shareholders have held
their shares. If a shareholder receives a long-term capital gain distribution on
shares of the Fund, and subsequently
12
<PAGE>
such shares are sold at a loss, the portion of the loss equal to the amount of
the long-term capital gain distribution may be considered a long-term loss for
tax purposes. Short-term capital gains distributed by the Fund are taxable to
shareholders as dividends, not as capital gains. Taxation issues are complex and
highly individual. You should consult with your tax advisor concerning the
effects of transactions in the Fund.
PORTFOLIO TRANSACTIONS
The Fund will generally purchase and sell securities without regard to the
length of time the security has been held. Accordingly, the rate of portfolio
turnover may be substantial. However, the Fund expects that its annual portfolio
turnover rate will not exceed 100% under normal conditions. However, there can
be no assurance that the Fund will not exceed this rate, and the portfolio
turnover rate may vary from year to year.
High portfolio turnover in any year will result in the payment by the Fund of
above-average transaction costs and could result in the payment by shareholders
of above-average amounts of taxes on realized investment gains. Distributions to
shareholders of such investment gains, to the extent they consist of short-term
capital gains, will be considered ordinary income for federal income tax
purposes.
Decisions to buy and sell securities for the Fund are made by the Adviser
subject to review by the Trust's Board of Trustees. In placing purchase and sale
orders for portfolio securities for the Fund, it is the policy of the Adviser to
seek the best execution of orders at the most favorable price. In selecting
brokers to effect portfolio transactions, the determination of what is expected
to result in the best execution at the most favorable price involves a number of
largely judgmental considerations. Among these are the Adviser's evaluations of
the broker's efficiency in executing and clearing transactions. Over-the-counter
securities are generally purchased and sold directly with principal market
makers who retain the difference in their cost in the security and its selling
price. In some instances, the Adviser feels that better prices are available
from non-principal market makers that are paid commissions directly.
CODE OF ETHICS
The Trust, the Distributor, and the Administrator adopted a strict Code of
Ethics that limits trustees and officers and/or directors, officers, investment
personnel and other employees in investing in securities for their own accounts.
The Codes comply in all material respects with the Investment Company Act of
1940. Persons subject to the Codes may purchase and sell securities for their
own account. On the other hand, the Codes prohibit trading when a Fund is or is
contemplating trading, purchasing in private placements on initial public
offerings without prior approval, taking short-term trading profits, and
engaging in other related activities which may be adverse to the interests of a
Fund. The Codes also require quarterly and annual reporting of transactions so
that personal trading activity may be monitored. The Code is available upon
request by calling or writing to Declaration Fund at 555 North Lane, Suite 6160,
Conshohocken, PA, 19428.
CUSTODIAN
First Union National Bank acts as custodian for the Fund. As such, First Union
holds all securities and cash of the Fund, delivers and receives payment for
securities sold, receives and pays for securities purchased, collects income
from investments and performs other duties, all as directed by officers of the
Trust. First Union Bank does not exercise any supervisory function over the
management of the Fund, the purchase and sale of securities or the payment of
distributions to shareholders.
TRANSFER AGENT
Declaration Service Company ("DSC") acts as transfer, dividend disbursing, and
shareholder servicing agent for the Fund pursuant to a written agreement with
the
13
<PAGE>
Advisor and Fund. Under the agreement, DSC is responsible for administering and
performing transfer agent functions, dividend distribution, shareholder
administration, and maintaining necessary records in accordance with applicable
rules and regulations.
ADMINISTRATION
DSC also provides services as Administrator to the Fund pursuant to a written
agreement with the Advisor and Fund. The Administrator supervises all aspects of
the operations of the Fund except those performed by the Adviser under the
Fund's investment advisory agreement. The Administrator is responsible for:
(a) calculating the Fund's net asset value
(b) preparing and maintaining the books and accounts specified in Rule 31a-1
and 31a-2 of the Investment Company Act of 1940
(c) preparing financial statements contained in reports to stockholders of the
Fund
(d) preparing the Fund's federal and state tax returns
(e) preparing reports and filings with the Securities and Exchange Commission
(f) preparing filings with state Blue Sky authorities
(g) maintaining the Fund's financial accounts and records
(h) dividend disbursing agent, dividend reinvestment agent, transfer agent, and
registrar services and functions (including answering inquiries related to
shareholder Portfolio accounts);
DISTRIBUTOR
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken, Pa
19428, a wholly-owned subsidiary of The Declaration Group, serves as distributor
and principal underwriter of the Fund's shares pursuant to a written agreement
with the Advisor and Fund.
INDEPENDENT ACCOUNTANTS
Sanville & Company serves as the Company's independent auditors for the fiscal
year ending December 31, 2000.
DISTRIBUTION FEES
The Fund has adopted a Plan of Distribution, or "12b-1 Plan" under which it may
finance activities primarily intended to sell shares. Under the 12b-1 Plan, the
Fund may pay a distribution fee at an annual rate of up to 0.25% of average
daily net assets of the Fund to the Adviser for services primarily intended to
sell shares and for providing certain shareholder services. These services
include, among other things, processing new shareholder account applications,
preparing and transmitting to the Fund's Transfer Agent computer processable
tapes of all transactions by customers, and serving as the primary source of
information to customers in answering questions concerning the Fund and their
transactions with the Fund.
14
<PAGE>
Payments under the 12b-1 Plan are not tied exclusively to the distribution
and/or shareholder servicing expenses actually incurred by the Adviser, and such
payments may exceed the expenses actually incurred. The Trust's Board of
Trustees evaluates the Plan on a regular basis.
You should be aware that, over time, 12b-1 fees will increase the costs of your
investment, and may eventually cost you more than other types of sales charges.
The Board of Trustees, including those Trustees that are not affiliated with the
Trust, Adviser or any of the Trust's service providers, and who have no interest
in the Plan, approved the Plan after finding, based on their reasonable business
judgement, that the Plan would likely benefit the Fund and its shareholders.
In approving the Plan, the Board determined that there is a reasonable
likelihood that the Plan would benefit the Trust, the Fund and its shareholders.
In doing so, the Board considered several factors, including that the Plan would
(i) enable investors to choose the purchasing option best suited to their
individual situations, thereby encouraging current shareholders to make
additional investments in the Fund and attracting new investors and assets to
Trust to the benefit of the Fund and its shareholders, (ii) facilitate
distribution of the Fund's shares, (iii) help maintain the competitive position
of the Trust in relation to other funds that have implemented or are seeking to
implement similar distribution arrangements; and (iv) permit possible economies
of scale through increased Fund size.
FINANCIAL STATEMENTS
Audited financial statements for the Fund for the year ended December 31, 1999
are incorporated by referring to the Annual Report to Shareholders dated
December 31, 1999. If you have not received a copy of the financial statements,
they are available from the Fund at no charge.
<PAGE>
PART C
OTHER INFORMATION
Item 23 Exhibits
- ------- --------
A. Articles of Incorporation of Registrant- Incorporated by reference from PEA
# 27, filed on February 29, 1996.
B. Bylaws of Registrant- Incorporated by reference form PEA # 27, filed on
February 29, 1996.
C. Not Applicable- See Declaration of Trust of Registrant
D. (1) Investment Advisory Agreement with Innovative Financial Partners
Exhibit 23(D), Incorporated by reference from PEA #34, filed on March
2, 1999.
(2) Investment Advisory Agreement with Avalon Trust Company. Attached as
Exhibit 23(D)(2).
E. (1) Distribution Agreement with Declaration Distributors, Inc. and
Innovative Financial Partners, Inc. Exhibit 23(E), incorporated by
reference from PEA #34, filed on March 2, 1999.
(2) Distribution Agreement with Declaration Distributors, Inc. and Avalon
Trust Company. Attached as Exhibit 23 (E) (2)
F. None [Not Applicable]
G. Custodian Agreement with First Union National Bank- Incorporated by
reference from PEA # 15, filed on March 1, 1990.
H. (1) Operating Services Agreement with Innovative Financial Partners.-
Exhibit 23(H)(1). Incorporated by reference from PEA #34, filed on
March 2, 1999.
(2) Investment Services Agreement with Declaration Service Company-
Exhibit 23(H)(2). Incorporated by reference from PEA #34, filed on
March 2, 1999.
(3) Operating Services Agreement with Avalon Trust Company. Attached as
Exhibit 23(H)(3).
(4) Investment Service Agreement with Avalon Trust Company. Attached as
Exhibit 23(H) (4).
I. (1) Opinion of Counsel- Exhibit 23(I)(1), Incorporated by reference from
PEA #34, filed on March 2, 1999.
(2) Opinion of Counsel - Attached as Exhibit 23(I)(2).
J. Consent of Independent Public Accountants
K. Not Applicable
L. Not Applicable
M. (1) Plan of Distribution with Vanderpal Protected Income and Growth Fund,
Exhibit 23(M). Incorporated by reference from PEA #34, filed on March
2, 1999.
(2) Plan of Distribution with The Water Fund. Attached as Exhibit
23(M)(2).
N. Not Applicable
O. Not Applicable
Item 24. Persons Controlled by or under Common Control with Registrant.
- -------- --------------------------------------------------------------
No person is directly or indirectly controlled by, or under common control with
the Registrant.
Item 25. Indemnification.
- -------- ----------------
The Law of Pennsylvania generally authorizes the registrant to indemnify its
directors and officers under specified circumstances. Section 7 of Article VII
of the bylaws of the Registrant (exhibit 2 to the registration statement, which
is incorporated herein by reference) provides in effect that the registrant
shall provide certain indemnification to its directors and officers. In
accordance with section 17(h) of the Investment Company Act and other applicable
federal laws, this provision of the bylaws shall not protect any person against
any liability to the registrant or its shareholders to which he or she 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 or
her office. With respect to the indemnification provisions of any agreement
entered into by the Company, to the extent that such indemnification provisions
may be inconsistent with, or unenforceable, under any federal or state
securities law, the Company shall not be liable therefore.
Item 26. Business and Other Connections of Investment Adviser.
- -------- -----------------------------------------------------
The Advisor has no other business or other connections.
Item 27. Principal Underwriters.
- -------- -----------------------
Declaration Distributors, Inc., 555 North Lane, Suite 6160, Conshohocken, PA
will be the Fund's principal underwriter. Mr. Terence P. Smith is Chief
Executive Officer of the underwriter, and serves as President and Trustee of the
Fund.
Item 28. Location of Accounts and Records.
- -------- ---------------------------------
Declaration Service Company.
555 North Lane, Suite 6160
Conshohocken, PA
Item 29. Management Services.
- -------- --------------------
Declaration Service Company.
555 North Lane, Suite 6160
Conshohocken, PA
Item 30. Undertakings.
- -------- -------------
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration to
be signed on its behalf by the undersigned, thereto duly authorized, in the City
of Conshohocken and State of Pennsylvania on the 1st day of May, 2000.
Declaration Fund
(Registrant)
By: /s/ Terence P. Smith, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Name Title Date
- ---- ----- ----
/s/ Terence P. Smith President May 1, 2000
- ---------------------
Terence P. Smith
/s/ Dow W. Stewart Trustee May 1, 2000
- ---------------------
Dow W. Stewart
/s/ George R. Stasen Trustee May 1, 2000
- ---------------------
George R. Stasen
/s/ A. Louis Denton Trustee May 1, 2000
- ---------------------
A. Louis Denton
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT 23(D)(2)- INVESTMENT ADVISORY AGREEMENT BETWEEN THE TRUST AND INNOVATIVE
FINANCIAL PARTNERS, INC.
EXHIBIT 23(E)(2)- DISTRIBUTION AGREEMENT BETWEEN THE TRUST, THE ADVISER, AND
DECLARATION DISTRIBUTORS, INC.
EXHIBIT 23(H)(3)- OPERATING SERVICES AGREEMENT BETWEEN THE TRUST AND AVALON
TRUST COMPANY.
EXHIBIT 23(H)(4)- INVESTMENT COMPANY SERVICES AGREEMENT BETWEEN THE TRUST,
AVALON TRUST COMPANY, AND DECLARATION SERVICE COMPANY.
EXHIBIT 23(I)- OPINION AND CONSENT OF COUNSEL, DAVID D. JONES, P.C.
EXHIBIT 23(I)(2)- OPINION AND CONSENT OF COUNSEL, CHARLES W. LUTTER. JR.
EXHIBIT 23(J)- CONSENT OF INDPENDENT PUBLIC ACCOUNTANTS
EXHIBIT 23(M)(2)- PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
Exhibit 23 (D)(2)
INVESTMENT ADVISORY AGREEMENT
FOR AVALON TRUST COMPANY
This Agreement is made and entered into as of the 15TH day of October,
1999, by and between Declaration Fund, an unincorporated Pennsylvania business
trust (the "Fund"), and Avalon Trust Company, a regulated trust company
operating under the laws of the State of New Mexico ("Adviser").
WHEREAS, Fund is registered as an open-end management investment to time,
and with all applicable laws and regulations. All Services to be furnished by
Adviser under this Agreement may be furnished through the medium of any
directors, officers or employees of Adviser or through such other parties as
Adviser may determine from time to time.
Adviser agrees, at its own expense or at the expense of one or more of its
affiliates, to render the Services and to provide the office space, furnishings,
equipment and personnel as may be reasonably required to perform the Services on
the terms and for the compensation provided herein. Adviser shall authorize and
permit any of its officers, directors and employees, who may be elected as
trustees or officers of Fund, to serve in the capacities in which they are
elected.
Except to the extent expressly assumed by Adviser herein and except to the
extent required by law to be paid by Adviser, Fund shall pay all costs and
expenses in connection with its operations and organization.
(b) Books and Records. All books and records prepared and maintained by
Adviser for Fund under this Agreement shall be the property of Fund and, upon
request therefor, Adviser shall surrender to Fund such of the books and records
so requested.
2. Portfolio Transactions. Adviser is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio securities for
the Portfolio and is directed to use its best efforts to obtain the best net
results as described in the Portfolio's then current prospectus and statement of
additional information. Adviser may, in its discretion, purchase and sell
portfolio securities from and to brokers and dealers who provide the Portfolio
with research, analysis, advice and similar services, and Adviser may pay to
these brokers and dealers, in return for research and analysis, a higher
commission or spread than may be charged by other brokers and dealers, provided
that Adviser determines in good faith that such commission is reasonable in
terms either of that particular transaction or of the overall responsibility of
Adviser to the Portfolio and Adviser's other clients and that the total
commission paid by the Portfolio will be reasonable in relation to the benefits
to the Portfolio over the long-term. Adviser will promptly communicate to the
officers and the trustees of Fund such information relating to portfolio
transactions as they may reasonably request.
3. Compensation of Adviser. Fund will pay to Adviser on the last day of
each month a fee at an annual rate equal to 1.00% of the daily average net asset
value of the Portfolio, such fee to be computed daily based upon the net asset
value of the Portfolio as determined by a valuation made in accordance with the
Fund's procedure for calculating Portfolio net asset value as described in the
Portfolio's then current Prospectus and/or Statement of Additional Information.
During any period when the determination of the Portfolio's net asset value is
suspended by the trustees of Fund, the net asset value of a share of the
Portfolio as of the last business day prior to such suspension shall, for the
purpose of this Paragraph 3, be deemed to be net asset value at the close of
each succeeding business day until it is again determined.
4. Status of Investment Adviser. The services of Adviser to Fund are not to
be deemed exclusive, and Adviser shall be free to render similar services to
others so long as its services to the Portfolio are not impaired thereby.
Adviser shall be deemed to be an independent contractor and shall, except as
expressly set forth in this Agreement, have no authority to act for or represent
Fund in any way or otherwise be deemed an agent of Fund. Nothing in this
Agreement shall limit or restrict the right of any director, officer or employee
of Adviser, who may also be a director, officer, or employee of Fund, to engage
in any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature.
5. Permissible Interests. Trustees, agents, and stockholders of Fund may be
affiliated with or have an interest in Adviser (or any successor thereof) as
directors, partners, officers, or stockholders, or otherwise, and directors,
partners, officers, agents, and stockholders of Adviser may be affiliated with
or have an interest in Fund as directors, stockholders or otherwise; and Adviser
(or any successor) may be affiliated with or have an interest in Fund as a
stockholder or otherwise.
6. Liability of Investment Adviser. Adviser assumes no responsibility under
this Agreement other than to render the Services called for hereunder in good
faith. Adviser shall not be liable for any error of judgment or for any loss
suffered by Fund or the Portfolio in connection with any matter to which this
Agreement relates, except;
(a) a loss resulting from a breach of fiduciary duty with respect to
receipt of compensation for services (in which case any award of damages shall
be limited to the period and the amount set forth in Section 36(b)(3) of the
Act); or
(b) a loss resulting from the reckless disregard, willful misfeasance, bad
faith or gross negligence by the Adviser in the performance of its obligations
and duties under this Agreement.
7. Term. This Agreement shall remain in effect until October 15, 2001, and
from year to year thereafter provided such continuance is approved at least
annually by (1) the vote of a majority of the Board of Trustees of Fund or (2) a
vote of a "majority" (as that term is defined in the Act) of the Portfolio's
outstanding securities, provided that in either event such continuance is also
approved by vote of a majority of the trustees of Fund who are not parties to
this Agreement or "interested persons" (as defined in the Act) of any such
party, which vote must be cast in person at meeting called for the purpose of
voting on such approval; provided, however, that;
(a) Fund may, at any time and without the payment of any penalty, terminate
this Agreement upon 60 days written notice to Adviser;
(b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder); and
(c) Adviser may terminate this Agreement at any time and without the
payment of any penalty on 60 days written notice to Fund; and
(d) the terms of paragraph 6 of this Agreement shall survive the
termination of this Agreement.
8. Notices. Except as otherwise provided in this Agreement, any notice or
other communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery ritten above.
DECLARATION FUND AVALON TRUST COMPANY
_______________________________ ______________________________
By: Terence P. Smith By: Roger Decort
President President & Chief Executive Officer
ATTEST: ATTEST:
_______________________________ ______________________________
By: ___________________________ By: __________________________
Secretary Secretary
[Corporate Seal] [Corporate Seal]
Exhibit 23(E)(2)
DISTRIBUTION AGREEMENT
FOR THE WATER FUND
THIS AGREEMENT, dated as of the 15th day of October, 1999, is made by and
between Declaration Trust ("Trust"), a Pennsylvania unincorporated business
trust operating as an open-end, management investment company registered under
the Investment Company Act of 1940, as amended (the "Act"), on behalf of the
Water Fund, a separate series of the Trust, Avalon Trust Company ("Adviser"), an
independent trust company duly organized as a corporation under the laws of the
State of New Mexico, and Declaration Service Company ("Declaration"), a
corporation duly organized under the laws of the Commonwealth of Pennsylvania
(collectively, the "Parties").
WITNESSETH THAT:
WHEREAS, Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "Act") and is
authorized to issue shares representing interests in an r withdraw the offering
of the Portfolio's Shares whenever, in its sole discretion, it deems such action
to be desirable, and Distributor shall process no further orders for Shares
after it receives notice of such termination, suspension or withdrawal.
2. Trust Documents. Trust has provided Distributor with properly certified
or authenticated copies of the following Portfolio related documents in effect
on the date hereof: the Trust 's organizational documents, including Declaration
of Trust and by-laws; the Portfolio's most current Prospectus and Statement of
Additional Information; and resolutions of Trust 's Board of Trustees
authorizing the appointment of Distributor and approving this Agreement. Trust
shall promptly provide to Distributor copies, properly certified or
authenticated, of all amendments or supplements to the foregoing. Trust shall
provide to Distributor copies of all other information which Distributor may
reasonably request for use in connection with the distribution of Shares,
including, but not limited to, a certified copy of all financial statements
prepared for the Portfolio by its independent public accountants. Trust shall
also supply Distributor with such number of copies of the Portfolio's current
Prospectus, Statement of Additional Information and shareholder reports as
Distributor shall reasonably request.
3. Distribution Services. Distributor shall sell and repurchase Shares of
the Portfolio as set forth below, subject to the registration requirements of
the 1933 Act and the rules and regulations thereunder, and the laws governing
the sale of securities in the various states ("Blue Sky Laws"):
a. Distributor, as agent for the Trust, shall sell Portfolio Shares to the
public against orders therefor at the public offering price as determined in
accordance with the Portfolio's then current Prospectus and Statement of
Additional Information.
b. The net asset value of the Portfolio's Shares shall be determined in the
manner provided in the Portfolio's then current Prospectus and Statement of
Additional Information. The net asset value of the Shares shall be calculated by
Trust or by another entity on behalf of Trust. Distributor shall have no duty to
inquire into or liability for the accuracy of the net asset value per Share as
calculated.
c. Upon receipt of purchase instructions, Distributor shall transmit such
instructions to Trust or its transfer agent for registration of the Portfolio
Shares purchased.
d. Distributor shall also have the right to take, as agent for the
Portfolio, all actions which, in the Distributor's judgment, are necessary to
effect the distribution of Portfolio Shares.
e. Nothing in this Agreement shall prevent Distributor or any "affiliated
person" from buying, selling or trading any Portfolio securities for its or
their own account or for the accounts of others for whom it or they may be
acting; provided, however, that Distributor expressly agrees that it shall not
for its own account purchase any Shares of the Portfolio except for investment
purposes and that it shall not for its own account sell any such Shares except
for redemption of such Shares by the Portfolio, and that it shall not undertake
activities which, in its judgment, would adversely affect the performance of its
obligations to the Portfolio under this Agreement.
f. Distributor, as agent for the Portfolio, shall repurchase Shares at such
prices and upon such terms and conditions as shall be specified in the
Portfolio's Prospectus.
4. Distribution Support Services. In addition to the sale and repurchase of
Portfolio Shares, Distributor shall perform the following distribution support
services: Review of sales and marketing literature and submission to the NASD;
NASD record keeping; and quarterly reports to Trust 's Board of Trustees. Such
distribution support services may also include: fulfillment services, including
telemarketing, printing, mailing and follow-up tracking of sales leads; and
licensing Adviser or Trust personnel as registered representatives of the
Distributor and related supervisory activities.
5. Reasonable Efforts. Distributor shall use all reasonable efforts in
connection with the distribution of Portfolio Shares. Distributor shall have no
obligation to sell any specific number of Portfolio Shares and shall only sell
Shares against orders received therefor. Trust shall retain the right to refuse
at any time to sell any Portfolio Shares for any reason deemed adequate by it.
6. Compliance. In furtherance of the distribution services being provided
hereunder, Distributor, Adviser and Trust agree as follows:
a. Distributor shall comply with the Rules of Conduct of the NASD and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
Shares.
b. Distributor shall require each dealer with whom Distributor has a
selling agreement to conform to the applicable provisions of the Portfolio's
most current Prospectus and Statement of Additional Information, with respect to
the public offering price of the Portfolio's Shares.
c. Trust and/or Adviser, as applicable, each agree to furnish to
Distributor sufficient copies of any agreements, plans, communications with the
public or other materials it intends to use in connection with any sales of
Portfolio Shares in a timely manner in order to allow Distributor to review,
approve and file such materials with the appropriate regulatory authorities and
obtain clearance for use. Trust and/or Adviser, as applicable, each agree not to
use any such materials until so filed and cleared for use by appropriate
authorities and Distributor.
d. Distributor, at its own expense, shall qualify as a broker or dealer, or
otherwise, under all applicable Federal or state laws required to permit the
sale of Portfolio Shares in such states as shall be mutually agreed upon by the
parties; provided, however that Distributor shall have no obligation to register
as a broker or dealer under the Blue Sky Laws of any and reports prepared for
use in connection with the offering of Shares for sale to the public;
advertising in connection with such offering, including public relations
services, sales presentations, media charges, preparation, printing and mailing
of advertising and sales literature; data processing necessary to support a
distribution effort; distribution and shareholder servicing activities of
broker-dealers and other financial institutions; filing fees required by
regulatory authorities for sales literature and advertising materials; any
additional out-of-pocket expenses incurred in connection with the foregoing and
any other costs of distribution.
8. Compensation. For the distribution and distribution support services
provided by Distributor pursuant to the terms of the Agreement, Adviser shall
pay to Distributor, on the last day of each month, an annual fee of $20,000,
such fee to be paid in equal monthly installments. Adviser shall also reimburse
Distributor for its out-of-pocket expenses related to the performance of its
duties hereunder, including, without limitation, telecommunications charges,
postage and delivery charges, record retention costs, reproduction charges and
traveling and lodging expenses incurred by officers and employees of the
Distributor. Adviser shall pay Distributor's monthly invoices for distribution
fees and out-of-pocket expenses within ten days of the respective month-end. If
this Agreement becomes effective subsequent to the first day of the month or
terminates before the last day of the month, Adviser shall pay to Distributor a
distribution fee that is prorated for that part of the month in which this
Agreement is in effect. All rights of compensation and reimbursement under this
Agreement for services performed by Distributor as of the termination date shall
survive the termination of this Agreement.
Upon receipt of an invoice therefor, Adviser agrees to pay such fees within
ten (10) calendar days. In addition, Adviser agrees to reimburse Declaration for
any out-of-pocket expenses paid by Declaration on behalf of the Portfolio within
ten (10) calendar days of Adviser's receipt of an invoice therefor. In the event
Adviser is unable to pay such invoices for services or out-of-pocket expenses,
for any reason, Trust agrees to pay Declaration the full amount(s) due within
ten (10) additional business days.
9. Use of Distributor's Name. Trust shall not use the name of the
Distributor or any of its affiliates in the Prospectus, Statement of Additional
Information, sales literature or other material relating to the Portfolio in a
manner not approved prior thereto in writing by Distributor; provided, however,
that Distributor shall approve all uses of its and its affiliates' names that
merely refer in accurate terms to their appointments or that are required by the
Securities and Exchange Commission (the "SEC") or any state securities
commission; and further provided, that in no event shall such approval be
unreasonably withheld.
10. Use of Trust's Name. Neither Distributor nor any of its affiliates
shall use the name of Trust or material relating to the Portfolio on any forms
(including any checks, bank drafts or bank statements) for other than internal
use in a manner not approved prior thereto by Trust; provided, however, that
Trust shall approve all uses of its name that merely refer in accurate terms to
the appointment of Distributor hereunder or that are required by the SEC or any
state securities commission; and further provided, that in no event shall such
approval be unreasonably withheld.
11. Liability of Distributor. The duties of Distributor shall be limited to
those expressly set forth herein, and no implied duties are assumed by or may be
asserted against Distributor hereunder. Distributor shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Portfolio in
connection with the matters to which this Agreement relates, except to the
extent of a loss resulting from willful misfeasance, bad faith or negligence, or
reckless disregard of its obligations and duties under this Agreement. As used
in this Section 11 and in Section 12 (except the second paragraph of Section
12), the term "Distributor" shall include directors, officers, employees and
other agents of the Distributor.
12. Indemnification of Distributor. Trust shall indemnify and hold harmless
Distributor against any and all liabilities, losses, damages, claims and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements and investigation expenses incident thereto) which Distributor may
incur or be required to pay hereafter, in connection with any action, suit or
other proceeding, whether civil or criminal, before any court or administrative
or legislative body, in which Distributor may be involved as a party or
otherwise or with which the Distributor may be threatened, by reason of the
offer or sale of the Portfolio's Shares prior to the effective date of this
Agreement.
Any director, officer, employee, shareholder or agent of Distributor who
may be or become an officer, director, employee or agent of Trust, shall be
deemed, when rendering services to Trust or acting on any business of the
Portfolio (other than services or business in connection with the Distributor's
duties hereunder), to be rendering such services to or acting solely for Trust
and not as a director, officer, employee, shareholder or agent, or one under the
control or direction of Distributor, even though receiving a salary from the
Distributor.
Trust agrees to indemnify and hold harmless Distributor, and each person
who controls the Distributor within the meaning of Section 15 of the 1933 Act,
or Section 20 of the Securities Exchange Act of 1934, as amended ("1934 Act"),
against any and all liabilities, losses, damages, claims and expenses, joint or
several (including, without limitation, reasonable attorneys' fees and
disbursements and investigation expenses incident thereto) to which they, or any
of them, may become subject under the 1933 Act, the 1934 Act, the 1940 Act or
other Federal or state laws or regulations, at common law or otherwise, insofar
as such liabilities, losses, damages, claims and expenses (or actions, suits or
proceedings in respect thereof) arise out of or relate to any untrue statement
or alleged untrue statement of a material fact contained in the Portfolio's
Prospectus, Statement of Additional Information, supplement thereto, sales
literature or other written information prepared by Trust and provided by Trust
to Distributor for Distributor's use hereunder, or which arise out of or relate
to any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading.
Distributor (or any person controlling the Distributor) shall not be
entitled to indemnity hereunder for any liabilities, losses, damages, claims or
expenses (or actions, suits or proceedings in respect thereof) resulting from
(i) an untrue statement or omission or alleged untrue statement or omission made
in the Portfolio's Prospectus, Statement of Additional Information, or
supplement, sales or other literature, in reliance upon and in conformity with
information furnished in writing to Trust by the Distributor specifically for
use therein or (ii) Distributor's own willful misfeasance, bad faith, negligence
or reckless disregard of its duties and obligations in the performance of this
Agreement.
Distributor agrees to indemnify and hold harmless Trust and each person who
controls Trust within the meaning of Section 15 of the 1933 Act, or Section 20
of the 1934 Act, against any and all liabilities, losses, damages, claims and
expenses, joint or several (including, without limitation reasonable attorneys'
fees and disbursements and investigation expenses incident thereto) to which
they, or any of them, may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other Federal or state laws, at common law or otherwise, insofar as
such liabilities, losses, damages, claims or expenses arise out of or relate to
any untrue statement or alleged untrue statement of a material fact contained in
the Portfolio's Prospectus or Statement of Additional Information or any
supplement thereto, or arise out of or relate to any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, if based upon
information furnished in writing to Trust by Distributor specifically for use
therein.
A party seeking indemnification hereunder (the "Indemnitee") shall give
prompt written notice to the party from whom indemnification is sought
("Indemnitor") of a written assertion or claim of any threatened or pending
legal proceeding which may be subject to indemnity under this Section; provided,
however, that failure to notify the Indemnitor of such written assertion or
claim shall not relieve the Indemnitor of any liability arising from this
Section. The Indemnitor shall be entitled, if it so elects, to assume the
defense of any suit brought to enforce a claim subject to this Indemnity and
such defense shall be conducted by counsel chosen by the Indemnitor and
satisfactory to the Indemnitee; provided, however, that if the defendants
include both the Indemnitee and the Indemnitor, and the Indemnitee shall have
reasonably concluded that there may be one or more legal defenses available to
it which are different from or additional to those available to the Indemnitor
("conflict of interest"), the Indemnitor shall not have the right to elect to
defend such claim on behalf of the Indemnitee, and the Indemnitee shall have the
right to select separate counsel to defend such claim on behalf of the
Indemnitee. In the event that the Indemnitor elects to assume the defense of any
suit pursuant to the preceding sentence and retains counsel satisfactory to the
Indemnitee, the Indemnitee shall bear the fees and expenses of additional
counsel retained by it, except for reasonable investigation costs which shall be
borne by the Indemnitor. If the Indemnitor (i) does not elect to assume the
defense of a claim, (ii) elects to assume the defense of a claim but chooses
counsel that is not satisfactory to the Indemnitee or (iii) has no right to
assume the defense of a claim because of a conflict of interest, the Indemnitor
shall advance or reimburse the Indemnitee, at the election of the Indemnitee,
reasonable fees and disbursements of any counsel retained by Indemnitee,
including reasonable investigation costs.
13. Dual Employees. Adviser and Trust each agree that only its employees
who are registered representatives of Distributor ("dual employees") shall offer
or sell Shares of the Portfolio and further agrees that the activities of any
such employees as registered representatives of Distributor shall be limited to
offering and selling Portfolio Shares. If there are dual employees, one employee
of Adviser or Trust, as applicable, shall register as a principal of Distributor
and assist Distributor in monitoring the marketing and sales activities of the
dual employees. Adviser shall maintain errors and omissions and fidelity bond
insurance policies providing reasonable coverage for its employees activities
and shall provide copies of such policies to Distributor. Adviser and Trust
shall indemnify and hold harmless Distributor against any and all liabilities,
losses, damages, claims and expenses (including reasonable attorneys' fees and
disbursements and investigation costs incident thereto) arising from or related
to Adviser's or Trust's, as applicable, employees' activities as registered
representatives of Distributor, including, without limitation, any and all such
liabilities, losses, damages, claims and expenses arising from or related to the
breach by such dual employees of any rules or regulations of the NASD or SEC.
14. Force Majeure. Distributor shall not be liable for any delays or errors
occurring by reason of circumstances not reasonably foreseeable and beyond its
control, including, but not limited, to acts of civil or military authority,
national emergencies, work stoppages, fire, flood, catastrophe, acts of God,
insurrection, war, riot or failure of communication or power supply. In the
event of equipment breakdowns which are beyond the reasonable control of
Distributor and not primarily attributable to the failure of Distributor to
reasonably maintain or provide for the maintenance of such equipment,
Distributor shall, at no additional expense to Adviser or Trust, take reasonable
steps in good faith to minimize service interruptions, but shall have no
liability with respect thereto.
15. Scope of Duties. Distributor and Trust shall regularly consult with
each other regarding Distributor's performance of its obligations and its
compensation under the foregoing provisions. In connection therewith, Trust
shall submit to Distributor at a reasonable time in advance of filing with the
SEC copies of any amended or supplemented Registration Statement of the
Portfolio (including exhibits) under the 1940 Act and the 1933 Act, and at a
reasonable time in advance of their proposed use, copies of any amended or
supplemented forms relating to any plan, program or service offered by the Trust
on behalf of the Portfolio. Any change in such materials that would require any
change in Distributor's obligations under the foregoing provisions shall be
subject to Distributor's approval. In the event that a change in such documents
or in the procedures contained therein increases the cost or burden to
Distributor of performing its obligations hereunder, Distributor shall be
entitled to receive reasonable compensation therefore.
16. Duration. This Agreement shall become effective as of the date first
above written, and shall continue in force for two years from that date and
thereafter from year to year, provided continuance is approved at least annually
by either (i) the vote of a majority of the Trustees of Trust, and (ii) the vote
of a majority of those Trustees of Trust who are not interested persons of
Trust, and who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval.
17. Termination. This Agreement shall terminate as follows:
a. This Agreement shall terminate automatically in the event of its
assignment.
b. This Agreement shall terminate upon the failure to approve the
continuance of the Agreement after the initial two year term as set forth in
Section 16 above.
c. This Agreement shall terminate at any time upon a vote of the majority
of the Trustees who are not interested persons of Trust, upon not less than 60
days prior written notice to Distributor.
d. Distributor may terminate this Agreement upon not less than 60 days
prior written notice to Trust.
Upon the termination of this Agreement, Adviser shall pay to Distributor
such compensation and out-of-pocket expenses as may be payable for the period
prior to the effective date of such termination. In the event that Trust
designates a successor to any of Distributor's obligations hereunder,
Distributor shall, at the expense and direction of Trust, transfer to such
successor all relevant books, records and other data established or maintained
by Distributor pursuant to the foregoing provisions.
Sections 7, 8, 9, 10, 11, 12, 13, 14, 15, 17, 21, 22, 24, 25 and 26 shall
survive any termination of this Agreement.
18. Amendment. The terms of this Agreement shall not be waived, altered,
modified, amended or supplemented in any manner whatsoever except by a written
instrument signed by Distributor, Adviser and Trust and shall not become
effective unless its terms have been approved by the majority of the Trustees of
Trust and by a majority of those Trustees who are not "interested persons" of
Trust or any party to this Agreement.
19. Non-Exclusive Services. The services of Distributor rendered to Trust
on behalf of the Portfolio are not exclusive. Distributor may render such
services to any other investment company.
20. Definitions. As used in this Agreement, the terms "assignment,"
"interested person" and "affiliated person" shall have the respective meanings
specified in the 1940 Act and the rules enacted thereunder as now in effect or
hereafter amended.
21. Confidentiality. Distributor shall treat confidentially and as
proprietary information of Trust all records and other information relating to
the Portfolio and prior, present or potential shareholders and shall not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except as may be required by
administrative or judicial tribunals or as requested by Trust or Adviser.
22. Notice. Any notices and other communications required or permitted
hereunder shall be in writing and shall be effective upon delivery by hand or
upon receipt if sent by certified or registered mail (postage prepaid and return
receipt requested) or by a nationally recognized overnight courier service
(appropriately marked for overnight delivery) or upon transmission if sent by
telex or facsimile (with request for immediate confirmation of receipt in a
manner customary for communications of such respective type and with physical
delivery of the communication being made by one or the other means specified in
this Section 20 as promptly as practicable thereafter). Notices shall be
addressed as follows:
<TABLE>
<CAPTION>
(a) if to Trust: (b) if to Adviser: (c) if to Distributor:
<S> <C> <C>
Declaration Trust Avalon Trust Company Declaration Distributors, Inc.
555 North Lane, Suite 6160 125 Lincoln Ave., Suite 100 555 North Lane, Suite 6160
Conshohocken, PA 19428 Santa Fe, NM 87501-2052 Conshohocken, PA 19428
Attention: Terence P. Smith Attn: Roger Decort Attn: Terence P. Smith
</TABLE>
or to such other respective addresses as the parties shall designate by like
notice, provided that notice of a change of address shall be effective only upon
receipt thereof.
23. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
24. Governing Law. This Agreement shall be administered, construed and
enforced in accordance with the laws of the Commonwealth of Pennsylvania to the
extent that such laws are not preempted by the provisions of any law of the
United States heretofore or hereafter enacted, as the same may be amended from
time to time.
25. Entire Agreement. This Agreement (including the Exhibits attached
hereto) contains the entire agreement and understanding of the parties with
respect to the subject matter hereof and supersedes all prior written or oral
agreements and understandings with respect thereto.
26. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction. This Agreement may be executed in two counterparts,
each of which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first above written.
Declaration
Declaration Trust Avalon Trust Company Distributors, Inc.
__________________ ______________________ ________________________
Terence P. Smith Roger Decort Terence P. Smith
President President and CEO Chief Executive Officer
Exhibit 23(H)(3)
OPERATING SERVICES AGREEMENT
FOR AVALON TRUST COMPANY
This Agreement is made and entered into as of the 15TH day of October,
1999, by and between Declaration Trust, a Pennsylvania business trust ("Trust"),
and Avalon Trust Company, a regulated trust company operating under the laws of
the State of New Mexico ("Manager").
WHEREAS, Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "Act") and is
authorized to issue shares representing interests in an unlimited number of
series of shares of its stock, each series known as a mutual fund; and
WHEREAS, Trust presently issues shares representing interests in, among
others, a series of Trust known as The Water Fund (the "Portfolio"); and
WHEREAS, Manager is an independent trust company operating as a corporation
under the laws of the State of New Mexico and engages in the business of asset
management and the provision of certain other administrative and recordkeeping
services in connection therewith; and
WHEREAS, Manager desires to enter into an arrangement with Trust whereby
Manger assumes responsibility for the costs of certain operational services
which are necessary for the day-to-day operations of the Portfolio for the
compensation and on the terms and conditions hereinafter set forth, and Trust
wishes to accept such an arrangement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, Trust and Manager agree as follows:
1. Obligations of Manager
(a) Services. Manager shall assume responsibility for the payment of the
contractually mandated costs and expenses incurred by entities that have entered
into servicing agreements with the Trust to provide the following services to
the Portfolio in the manner and to the extent that such services are reasonably
necessary for the operation of the Portfolio (collectively the "Services"):
(1) accounting services and functions, including costs and expenses of any
independent public accountants;
(2) dividend disbursing agent, dividend reinvestment agent, transfer agent,
and registrar services and functions (including answering inquiries related to
shareholder Portfolio accounts);
(3) custodian and depository services and functions;
(4) distribution, marketing, and/or underwriting services;
(5) independent pricing services;
(6) preparation of reports describing the operations of the Portfolio,
including the costs of providing such reports to broker-dealers, financial
institutions and other organizations which render services and assistance in
connection with the distribution of shares of the Portfolio;
(7) sub-accounting and recordkeeping services and functions (other than
those books and records required to be maintained by Manager under the
Investment Advisory Agreement between Trust and Manager dated October 15, 1999),
including maintenance of shareholder records and shareholder information
concerning the status of their Portfolio accounts by investment advisors,
broker-dealers, financial institutions, and other organizations on behalf of
Manager;
(8) shareholder and board of trustees communication services, including the
costs of preparing, printing and distributing notices of shareholders' meetings,
proxy statements, prospectuses, statements of additional information, Portfolio
reports, and other communications to Trust's Portfolio shareholders, as well as
all expenses of shareholders' and board of trustees' meetings, including the
compensation and reimbursable expenses of the trustees of Trust attributable to
the Portfolio;
(9) other day-to-day administrative services, including the costs of
designing, printing, and issuing certificates representing shares of the
Portfolio, and premiums for the fidelity bond maintained by Trust attributable
to the Portfolio pursuant to Section 17(g) of the Act and rules promulgated
thereunder (except for such premiums as may be allocated to third parties, as
insureds thereunder).
(10) the costs of registering and maintaining the registration of shares of
the Portfolio for sale in the various states and territories of the United
States ("Blue Sky Registrations"). In regard to Blue Sky Registrations, Manager
shall determine, in its sole discretion, the states and territories in which the
shares of the Portfolio shall be registered for sale.
(b) Exclusions from Service. Notwithstanding the provisions of Paragraph
1(a) above, the Services shall not include and Manager will not be responsible
for any of the following:
(1) brokers' commissions, issue and transfer taxes, and other costs
chargeable to Trust or the Portfolio in connection with securities transactions
to which Trust or the Portfolio is a party or in connection with securities
owned by Trust or the Portfolio;
(2) interest on indebtedness, if any, incurred by Trust or the Portfolio;
(3) taxes, including franchise, income, issue, transfer, business license,
and other corporate fees payable by Trust or the Portfolio to federal, state,
county, city, or other governmental agents;
(4) expenses of counsel to Trust or the Portfolio relating to litigation;
and
(5) other extraordinary expense of Trust or Portfolio.
(b) Trust and Manager have entered into an Investment Company Services
Agreement with Declaration Service Company ("DSC") and a Distribution Agreement
with Declaration Distributors, Inc. ("DDI") wherein DDI and DSC will provide the
services to the Portfolio as described above. Trust and Manager agree that the
compensation to be paid to DDI and DSC under their respective agreements is fair
and reasonable, and that Trust has the sole authority to amend, terminate, renew
or alter such agreement.
(c) Trust and Manager agree that the compensation to be paid to Manager
under this Agreement may not be sufficient to pay the costs of the Services as
described above, in which event Manager agrees to make up any shortfalls from
its own resources. Conversely, Manager and Trust agree that the compensation to
be paid to Manager under this Agreement may exceed the costs of the Services as
described above, in which event Manager shall be entitled to keep the excess.
Trust and Manager acknowledge and agree that the Portfolio is one of a
number of series of Trust currently offering shares to the public and that each
series of Trust shares responsibility for the payment of certain expenses common
to all such series according to an expense allocation plan previously adopted by
the Board of Trustees of Trust. Trust and Manager expressly warrant, covenant
and agree that the Services to be provided to the Portfolio, and the expenses to
be paid therefore by Manager, are subject to and limited by such expense
allocation plan.
2. Obligations of Trust
(a) Fee. Trust will pay to Manager on the last day of each month a fee at
an annual rate equal to 0.50% of average net asset of the Portfolio, such fee to
be computed daily based upon the net asset value of the Portfolio as determined
by a valuation made in accordance with Trust's procedure for calculating
Portfolio net asset value as described in the Portfolio's Prospectus and/or
Statement of Additional Information. During any period when the determination of
the Portfolio's net asset value is suspended by the trustees of Trust, the net
asset value of a share of the Portfolio as of the last business day prior to
such suspension shall, for the purpose of this Paragraph 2(a), be deemed to be
the net asset value at the close of each succeeding business day until it is
again determined.
(b) Information. Trust will, from time to time, furnish or otherwise make
available to Manager such information relating to the business and affairs of
the Portfolio as Manager may reasonably require in order to discharge its duties
and obligations hereunder.
3. Term. This Agreement shall remain in effect until October 15, 2001, and
from year to year thereafter provided such continuance is approved at least
annually by (1) the vote of a majority of the Board of Trustees of Trust and (2)
a vote of a majority of the trustees of Trust who are not parties to this
Agreement or "interested persons" (as defined in the Act) of any such party;
provided, however, that;
(a) Trust may, at any time and without the payment of any penalty,
terminate this Agreement upon 60 days written notice to Manager;
(b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder); and
(c) Manager may terminate this Agreement without payment of penalty on 60
days written notice to Trust.
4. Notices. Except as otherwise provided in this Agreement, any notice or
other communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
If to Trust: If to Manager:
Declaration Trust Avalon Trust Company
555 North Lane, Suite 6160 125 Lincoln Avenue, Suite 100
Conshohocken, PA 19428 Santa Fe, NM 87501-2052
Attention: Terence P. Smith Attention: Roger Decort
President President & Chief Executive Officer
5. Miscellaneous
(a) Choice of Law. This Agreement shall be construed in accordance with the
laws of the State of Pennsylvania and the applicable provisions of the Act. To
the extent the applicable law of the State of Pennsylvania or any of the
provisions of this Agreement conflict with the applicable provisions of the Act,
the provisions of the Act shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement to be effective as of the day and year first above written.
DECLARATION TRUST AVALON TRUST COMPANY
_________________________________ ______________________________
By: Terence P. Smith By: Roger Decort
President President & Chief Executive Officer
ATTEST: ATTEST:
_______________________________ ______________________________
By: ___________________________ By: __________________________
Secretary Secretary
[Corporate Seal] [Corporate Seal]
Exhibit 23(H)(4)
INVESTMENT COMPANY SERVICES AGREEMENT
FOR AVALON TRUST COMPANY
THIS AGREEMENT, dated as of the 15th day of October, 1999, is made by and
between Declaration Trust ("Trust"), a Pennsylvania unincorporated business
trust operating as an open-end, management investment company registered under
the Investment Company Act of 1940, as amended (the "Act"), on behalf of the
Water Fund, a separate series of the Trust, Avalon Trust Company ("Adviser"), an
independent trust company duly organized as a corporation under the laws of the
State of New Mexico, and Declaration Service Company ("Declaration"), a
corporation duly organized under the laws of the Commonwealth of Pennsylvania
(collectively, the "Parties").
RECITALS
WHEREAS, Trust is authorized by its Declaration of Trust and By- Laws to
issue separate series of shares representing interests in separate investment
portfolios, each of which is a mutual Trust; and
WHEREAS, Trust presently issues shares representing interests in, among
others, a series of Trust known as the Water Fund (the "Portfolio"); and
WHEREAS, the Parties desire to enter into an agreement whereby Declaration
will provide the services to the Portfolio as specified herein and set forth in
particular in Schedule "A" which is attached hereto and made a part hereof.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and in exchange for good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, the Parties hereto,
intending to be legally bound, do hereby agree as follows:
Section 1. Appointment.
Trust hereby appoints Declaration as servicing agent to the Portfolio, and
Declaration hereby accepts such appointment.
In order that Declaration may perform its duties under the terms of this
Agreement, the Board of Trustees of Trust warrant, covenant and agree that they
shall direct the officers, investment adviser, legal counsel, independent
accountants and custodian of the Portfolio to cooperate fully with Declaration
and, upon reasonable request of Declaration, to provide such information,
documents and advice relating to the Portfolio which Declaration requires to
execute its responsibilities hereunder.
In connection with its duties under this Agreement on behalf of the
Portfolio, Declaration shall be entitled to rely, and will be held harmless by
Trust when acting in reasonable reliance, upon any instruction, advice or
document relating to the Portfolio provided to Declaration by any Party to this
Agreement.
All services performed by Declaration on behalf of the Portfolio under this
Agreement will conform to the requirements of:
(a) the provisions of the Act and the Securities Act of 1933, as amended,
and any rules or regulations in force thereunder;
(b) any other applicable provision of state and federal law;
(c) the provisions of the Declaration of Trust and the by-laws of Trust, as
amended from time to time and delivered to Declaration;
(d) any policies and determinations of the Board of Trustees of Trust which
are communicated to Declaration; and
(e) the policies of the Portfolio as reflected in the Portfolio's then
current prospectus and statement of additional information as filed with the
U.S. Securities and Exchange Commission.
Nothing in this Agreement will prevent Declaration or any officer thereof
from providing the same or comparable services for or with any other person,
firm or corporation. While the services supplied to the Trust may be different
than those supplied to other persons, firms or corporations, Declaration will
provide the Trust equitable treatment in supplying services. Trust recognizes
that it will not receive preferential treatment from Declaration on behalf of
the Portfolio as compared with the treatment provided to other Declaration
clients.
Section 2. Duties and Obligations of Declaration.
Subject to the provisions of this Agreement, Declaration will provide to
the Portfolio the specific services as set forth in Schedule "A" attached
hereto.
Section 3. Definitions. For purposes of this Agreement:
"Certificate" will mean any notice, instruction, or other instrument in
writing, authorized or required by this Agreement. To be effective, such
Certificate shall be given to and received by the custodian and shall be signed
on behalf of Trust by any two of its designated officers, and the term
Certificate shall also include instructions communicated to the custodian by
Declaration.
"Custodian" will refer to that agent which provides safekeeping of the
assets of the Trust.
"Instructions" will mean communications containing instructions transmitted
by electronic or telecommunications media including, but not limited to,
Industry Standardization for Institutional Trade Communications,
computer-to-computer interface, dedicated transmission line, facsimile
transmission (which may be signed by an officer or unsigned) and tested telex.
"Oral Instruction" will mean an authorization, instruction, approval, item
or set of data, or information of any kind transmitted to Declaration in person
or by telephone, telegram, telecopy or other mechanical or documentary means
lacking original signature, by a person or persons reasonably identified to
Declaration to be a person or persons so authorized by a resolution of the Board
of Trustees of Trust to give Oral Instructions to Declaration on behalf of the
Portfolio.
"Shareholders" will mean the registered owners of the shares of the
Portfolio in accordance with the share registry records maintained by
Declaration for the Portfolio.
"Shares" will mean the issued and outstanding shares of the Portfolio.
"Signature Guarantee" will mean the guarantee of signatures by an "eligible
guarantor institution" as defined in Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Eligible guarantor institutions
include banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
Broker-dealers guaranteeing signatures must be members of a clearing corporation
or maintain net capital of at least $100,000. Signature guarantees will be
accepted from any eligible guarantor institution which participates in a
signature guarantee program.
"Written Instruction" will mean an authorization, instruction, approval,
item or set of data or information of any kind transmitted to Declaration in an
original writing containing an original signature or a copy of such document
transmitted by telecopy including transmission of such signature reasonably
identified to Declaration to be the signature of a person or persons so
authorized by a resolution of the Board of Trustees of Trust, or so identified
by Trust to give Written Instructions to Declaration on behalf of the Portfolio.
Concerning Oral and Written Instructions For all purposes under this
Agreement, Declaration is authorized to act upon receipt of the first of any
Written or Oral Instruction it receives from Trust, Portfolio or its agents. In
cases where the first instruction is an Oral Instruction that is not in the form
of a document or written record, a confirmatory Written Instruction or Oral
Instruction in the form of a document or written record shall be delivered. In
cases where Declaration receives an Instruction, whether Written or Oral, to
enter a portfolio transaction onto the Portfolio's records, Trust shall cause
the broker/dealer executing such transaction to send a written confirmation to
the Custodian.
Declaration shall be entitled to rely on the first Instruction received.
For any act or omission undertaken by Declaration in compliance therewith,
Declaration shall be free of liability and fully indemnified and held harmless
by Trust, provided however, that in the event a Written or Oral Instruction
received by Declaration is countermanded by a subsequent Written or Oral
Instruction received prior to acting upon such countermanded Instruction,
Declaration shall act upon such subsequent Written or Oral Instruction. The sole
obligation of Declaration with respect to any follow-up or confirmatory Written
Instruction or Oral Instruction in documentary or written form shall be to make
reasonable efforts to detect any such discrepancy between the original
Instruction and such confirmation and to report such discrepancy to Trust. Trust
shall be responsible and bear the expense of its taking any action, including
any reprocessing, necessary to correct any discrepancy or error. To the extent
such action requires Declaration to act, Trust shall give Declaration specific
Written Instruction as to the action required. Trust will file with Declaration
a certified copy of each resolution of the Trust's Board of Trustees authorizing
execution of Written Instructions or the transmittal of Oral Instructions as
provided above.
Section 4. Indemnification.
(a) Declaration, its directors, officers, employees, shareholders, and
agents will be liable for any loss suffered by the Portfolio resulting from the
willful misfeasance, bad faith, negligence or reckless disregard on the part of
Declaration in the performance of its obligations and duties under this
Agreement.
(b) Any director, officer, employee, shareholder or agent of Declaration,
who may be or become an officer, director, employee or agent of Trust, will be
deemed, when rendering services to the Portfolio, or acting on any business of
the Portfolio (other than services or business in connection with Declaration'
duties hereunder), to be rendering such services to or acting solely for Trust
and not as a director, officer, employee, shareholder or agent of, or under the
control or direction of Declaration even though such person may be receiving
compensation from Declaration.
(c) Trust agrees to indemnify and hold Declaration harmless, together with
its directors, officers, employees, shareholders and agents from and against any
and all claims, demands, expenses and liabilities (whether with or without basis
in fact or law) of any and every nature which Declaration may sustain or incur
or which may be asserted against Declaration by any person by reason of, or as a
result of:
(i) any action taken or omitted to be taken by Declaration on behalf of the
Portfolio except claims, demands, expenses and liabilities arising from willful
misfeasance, bad faith, negligence or reckless disregard on the part of
Declaration in the performance of its obligations and duties under this
Agreement; or
(ii) any action taken or omitted to be taken by Declaration in reliance
upon any Certificate, instrument, order or stock certificate or other document
reasonably believed by Declaration to be genuine and signed, countersigned or
executed by any duly authorized person, upon the Oral Instructions or Written
Instructions of an authorized person of the Trust, or upon the written opinion
of legal counsel for Trust or Declaration; or
(iii) the offer or sale of shares of the Portfolio to any person, natural
or otherwise, which is in violation of any state or federal law.
If a claim is made against Declaration as to which Declaration may seek
indemnity under this Section, Declaration will notify Trust promptly after
receipt of any written assertion of such claim threatening to institute an
action or proceeding with respect thereto and will notify Trust promptly of any
action commenced against Declaration within ten (10) days after Declaration has
been served with a summons or other legal process. Failure to notify Trust will
not, however, relieve Trust from any liability which it may have on account of
the indemnity under this Section so long as Trust has not been prejudiced in any
material respect by such failure.
Trust and Declaration will cooperate in the control of the defense of any
action, suit or proceeding in which Declaration is involved and for which
indemnity is being provided by Trust to Declaration. Trust may negotiate the
settlement of any action, suit or proceeding subject to Declaration's approval,
which will not be unreasonably withheld. Declaration reserves the right, but not
the obligation, to participate in the defense or settlement of a claim, action
or proceeding with its own counsel. Costs or expenses incurred by Declaration in
connection with, or as a result of such participation, will be borne solely by
the Trust if:
(i) Declaration has received an opinion of counsel from counsel to the
Trust stating that the use of counsel to Trust by Declaration would present an
impermissible conflict of interest;
(ii) the defendants in, or targets of, any such action or proceeding
include both Declaration and Trust, and legal counsel to Declaration has
reasonably concluded that there are legal defenses available to it which are
different from or additional to those available to Trust or which may be adverse
to or inconsistent with defenses available to Trust (in which case Trust will
not have the right to direct the defense of such action on behalf of
Declaration); or
(iii) Trust authorizes Declaration to employ separate counsel at the
expense of Trust.
(d) The terms of this Section will survive the termination of this
Agreement.
Section 5. Representations and Warranties.
(a) Declaration represents and warrants that:
(i) it is a corporation duly organized and existing and in good standing
under the laws of Pennsylvania;
(ii) it is empowered under applicable laws and by its Certificate of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to authorize
Declaration to enter into and perform this Agreement;
(iv) it has and will continue to have access to the facilities, personnel
and equipment required to fully perform its duties and obligations hereunder;
(v) no legal or administrative proceedings have been instituted or
threatened which would impair Declaration's ability to perform its duties and
obligations under this Agreement;
(vi) its entrance into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of Declaration or
any law or regulation applicable to it;
(vii) it is registered as a transfer agent under Section 17A(c)(2) of the
Exchange Act;
(viii) this Agreement has been duly authorized by Declaration and, when
executed and delivered, will constitute valid, legal and binding obligation of
Declaration, enforceable in accordance with its terms.
(b) Trust represents and warrants that:
(i) it is an unincorporated business trust duly organized and existing and
in good standing under the laws of the State of Pennsylvania;
(ii) it is empowered under applicable laws and by its Declaration of Trust
and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize Trust to enter
into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair Trust's ability to perform its duties and
obligations under this Agreement;
(v) Trust's entrance into this Agreement shall not cause a material breach
or be in material conflict with any other agreement or obligations of Trust, or
any law or regulation applicable to either;
(vi) the Shares are properly registered or otherwise authorized for
issuance and sale;
(vii) this Agreement has been duly authorized by Trust and, when executed
and delivered, will constitute valid, legal and binding obligation of Trust,
enforceable in accordance with its terms.
(c) Adviser represents and warrants that:
(i) it is an independent trust company duly organized and existing as a
corporation in good standing under the laws of the State of New Mexico;
(ii) it is empowered under applicable laws and by its Articles of
Incorporation and by-laws to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize Adviser to
enter into and perform this Agreement;
(iv) no legal or administrative proceedings have been instituted or
threatened which would impair Adviser's ability to perform its duties and
obligations under this Agreement;
(v) Adviser's entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or obligations of
Adviser, or any law or regulation applicable to either;
(vi) this Agreement has been duly authorized by Adviser and, when executed
and delivered, will constitute valid, legal and binding obligation of Adviser,
enforceable in accordance with its terms.
(d) Delivery of Documents
Trust will furnish or cause to be furnished to Declaration the following
documents;
(i) current Prospectus and Statement of Additional Information for the
Portfolio;
(ii) most recent Annual Report, when applicable;
(iii) most recent Semi-Annual Report for registered investment companies on
Form N-SAR, when applicable;
(iv) certified copies of resolutions of Trust's Board of Trustees
authorizing the execution of Written Instructions or the transmittal of Oral
Instructions on behalf of the Portfolio and those persons authorized to give
those Instructions.
(e) Record Keeping and Other Information
Declaration will create and maintain on behalf of the Portfolio all records
required of it pursuant to its duties as set forth in Schedule "A" in accordance
with all applicable laws, rules and regulations, including records required by
Section 31(a) of the Act. All such records will be the property of Trust and
will be available during regular business hours for inspection, copying and use
by Trust. Where applicable, such records will be maintained by Declaration for
the periods and in the places required by Rule 31a-2 under the Act. Upon
termination of this Agreement, Declaration will deliver all such records to
Trust or such person as Trust may designate.
In case of any request or demand for the inspection of the Share records of
the Portfolio, Declaration shall notify Trust and secure instructions as to
permitting or refusing such inspection. Declaration may, however, exhibit such
records to any person in any case where it is advised by its counsel that it may
be held liable for failure to do so.
Section 6. Compensation.
Adviser shall pay Declaration compensation for its services, and shall
reimburse it for expenses at the rates, times, manner and amounts as set forth
in Schedule "B" attached hereto and incorporated herein by reference and as will
be set forth in any amendments to such Schedule "B" agreed upon in writing by
the Parties.
Upon receipt of an invoice therefor, Adviser agrees to pay such fees within
ten (10) calendar days. In addition, Adviser agrees to reimburse Declaration for
any out-of-pocket expenses paid by Declaration on behalf of the Portfolio within
ten (10) calendar days of Adviser's receipt of an invoice therefor. In the event
Adviser is unable to pay such invoices for services or out-of-pocket expenses,
for any reason, Trust agrees to pay Declaration the full amount(s) due within
ten (10) additional business days.
For the purpose of determining fees payable to Declaration, the value of
the Portfolio's net assets will be computed at the times and in the manner
specified in the Portfolio's Prospectus and Statement of Additional Information
then in effect.
During the term of this Agreement, should Trust seek services or functions
on behalf of the Portfolio in addition to those outlined below or in Schedule
"A" attached hereto, a written amendment to this Agreement specifying the
additional services and corresponding compensation will be executed by the
Parties.
In the event that Adviser is more than thirty (30) days delinquent in its
payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by Trust or
Adviser), this Agreement may be terminated upon thirty (30) days' written notice
by Declaration. Adviser or Trust must notify Declaration in writing of any
contested amounts within ten (10) calendar days of receipt of a billing for such
amounts. Disputed amounts are not due and payable while they are being disputed.
Section 7. Days of Operation.
Nothing contained in this Agreement is intended to or will require
Declaration, in any capacity hereunder, to perform any functions or duties on
any holiday, day of special observance or any other day on which the New York
Stock Exchange ("NYSE") is closed. Functions or duties normally scheduled to be
performed on such days will be performed on and as of the next succeeding
business day on which the NYSE is open. Notwithstanding the foregoing,
Declaration will compute the net asset value of the Portfolio on each day
required pursuant to Rule 22c-1 promulgated under the Act.
Section 8. Acts of God, etc.
Declaration will not be liable or responsible for delays or errors caused
by acts of God or by reason of circumstances beyond its control including, acts
of civil or military authority, national emergencies, labor difficulties,
mechanical breakdown, insurrection, war, riots, or failure or unavailability of
transportation, communication or power supply, fire, flood or other catastrophe.
In the event of equipment failures beyond Declaration's control,
Declaration will, at no additional expense to the Portfolio, take reasonable
steps to minimize service interruptions but will have no liability with respect
thereto. The foregoing obligation will not extend to computer terminals located
outside of premises maintained by Declaration. Declaration has entered into and
maintains in effect agreements making reasonable provision for emergency use of
electronic data processing equipment to the extent appropriate equipment is
available.
Section 9. Inspection and Ownership of Records.
In the event of a request or demand for the inspection of the records of
the Portfolio, Declaration will use its best efforts to notify Trust and/or
Adviser and to secure instructions as to permitting or refusing such inspection.
Declaration may, however, make such records available for inspection to any
person in any case where it is advised in writing by its counsel that it may be
held liable for failure to do so after notice to Trust.
Declaration recognizes that the records it maintains for the Portfolio are
the property of Trust and will be surrendered to Trust upon written notice to
Declaration as outlined under Section 10(c) below. Adviser is responsible for
the payment in advance of any fees owed to Declaration, subject to the
provisions of Section 6 above requiring payment of fees by Trust in the event of
non-payment by Adviser. Declaration agrees to maintain the records and all other
information of the Portfolio in a confidential manner and will not use such
information for any purpose other than the performance of Declaration' duties
under this Agreement.
Section 10. Duration and Termination.
(a) The initial term of this Agreement will be for a period of two (2)
years ("Initial Term"), commencing on the date first written above (the
"Effective Date") and will continue thereafter subject to termination by either
Party as set forth in subsection (c) below.
(b) The fee schedules set forth in Schedule "B" attached hereto will be
fixed for the Initial Term commencing on the Effective Date of this Agreement
and will continue thereafter subject to their review and any adjustment.
(c) After the Initial Term of this Agreement, the Trust or Declaration, but
not Adviser, may give written notice to the other party (the day on which the
notice is received by the Party against which the notice is made shall be the
"Notice Date") of a date on which this Agreement shall be terminated
("Termination Date"). The Termination Date shall be set on a day not less than
ninety (90) days after the Notice Date. The period of time between the Notice
Date and the Termination Date is hereby identified as the "Notice Period". Any
time up to, but not later than fifteen (15) days prior to the Termination Date,
Adviser or Trust, if applicable, will pay to Declaration such compensation as
may be due as of the Termination Date and will likewise reimburse Declaration
for any out-of-pocket expenses and disbursements reasonably incurred or expected
to be incurred by Declaration up to and including the Termination Date.
(d) In connection with the termination of this Agreement, if a successor to
any of Declaration' duties or responsibilities under this Agreement is
designated by Trust or Adviser by written notice to Declaration, Declaration
will promptly, on the Termination Date and upon receipt by Declaration of any
payments owed to it as set forth in Section 10(c) above, transfer to the
successor, at Adviser's expense, all records which belong to the Portfolio and
will provide appropriate, reasonable and professional cooperation in
transferring such records to the named successor.
(e) Should Trust desire to move any of the services outlined in this
Agreement to a successor service provider prior to the Termination Date,
Declaration shall make a good faith effort to facilitate the conversion on such
prior date, however, there can be no guarantee that Declaration will be able to
facilitate a conversion of services prior to the end of the Notice Period.
Should services be converted to a successor service provider prior to the end of
the Notice Period, or if the Portfolio is liquidated or its assets merged or
purchased or the like with another entity, payment of fees to Declaration shall
be accelerated to a date prior to the conversion or termination of services and
calculated as if the services had remained at Declaration until the expiration
of the Notice Period and shall be calculated at the asset levels on the Notice
Date.
(f) Notwithstanding any other provisions of this Paragraph 10, upon the
passage of one year from the Effective Date, or at any time in the event Trust
deregisters as an Investment Company with the United States Securities and
Exchange Commission ("SEC"), this Agreement may be terminated by Trust upon
ninety (60) days written notice to Declaration. The Termination Date shall be
ninety (60) days after the receipt of such notice by Declaration. Any time up
to, but not later than fifteen (15) days prior to the Termination Date, Adviser
or Trust will pay to Declaration such compensation as may be due as of the
Termination Date and will likewise reimburse Declaration for any out-of-pocket
expenses and disbursements reasonably incurred or expected to be incurred by
Declaration up to and including the Termination Date.
(g) Notwithstanding the foregoing, this Agreement may be terminated at any
time by either Party in the event of a material breach by the other Party
involving negligence, willful misfeasance, bad faith or a reckless disregard of
its obligations and duties under this Agreement provided that such breach shall
have remained unremedied for sixty (60) days or more after receipt of written
specification thereof.
Section 11. Rights of Ownership.
All computer programs and procedures developed to perform services required
to be provided by Declaration under this Agreement are the property of
Declaration. All records and other data relating to the Portfolio except such
computer programs and procedures are the exclusive property of Trust and all
such other records and data will be furnished to Trust in appropriate form as
soon as practicable after termination of this Agreement for any reason.
Section 12. Amendments to Documents.
Trust will furnish Declaration written copies of any amendments to, or
changes in, its Declaration of Trust, by-laws, or Prospectus and Statement of
Additional Information for the Portfolio in a reasonable time prior to such
amendments or changes becoming effective. In addition, Trust agrees that no
amendments will be made to the Prospectus or Statement of Additional Information
of the Portfolio which might have the effect of changing the procedures employed
by Declaration in providing the services agreed to hereunder or which amendment
might affect the duties of Declaration hereunder unless Trust first obtains
Declaration' approval of such amendments or changes.
Section 13. Confidentiality.
The Parties hereto agree that any non-public information obtained hereunder
concerning the other Party is confidential and may not be disclosed to any other
person without the consent of the other Party, except as may be required by
applicable law or at the request of the U.S. Securities and Exchange Commission
or other governmental agency. Declaration agrees that it will not use any
non-public information for any purpose other than performance of its duties or
obligations hereunder. The obligations of the Parties under this Section will
survive the termination of this Agreement. The Parties further agree that a
breach of this Section would irreparably damage the other Party and accordingly
agree that each of them is entitled, without bond or other security, to an
injunction or injunctions to prevent breaches of this provision.
Section 14. Notices.
Except as otherwise provided in this Agreement, any notice or other
communication required by or permitted to be given in connection with this
Agreement will be in writing and will be delivered in person or sent by first
class mail, postage prepaid or by prepaid overnight delivery service to the
respective parties as follows:
<TABLE>
<CAPTION>
If to Trust: If to Adviser: If to Declaration:
<S> <C> <C>
Declaration Trust Avalon Trust Company Declaration Service Company
555 North Lane, Suite 6160 125 Lincoln Ave., Suite 100 555 North Lane, Suite 6160
Conshohocken, PA 19428 Santa FE, NM 87501-2052 Conshohocken, PA 19428
Attn: Terence P. Smith Attn: Roger Decort Attn: Terence P. Smith
President President & CEO Chief Executive Officer
</TABLE>
Section 15. Amendment.
No provision of this Agreement may be amended or modified in any manner
except by a written agreement properly authorized and executed by the Parties.
This Agreement may be amended from time to time by supplemental agreement
executed by the Parties and the compensation stated in Schedule "B" attached
hereto may be adjusted accordingly as mutually agreed upon.
Section 16. Authorization.
The Parties represent and warrant to each other that the execution and
delivery of this Agreement by the undersigned officer of each Party has been
duly and validly authorized; and when duly executed, this Agreement will
constitute a valid and legally binding enforceable obligation of each Party.
Section 17. Counterparts.
This Agreement may be executed in two or more counterparts, each of which
when so executed will be deemed to be an original, but such counterparts will
together constitute but one and the same instrument.
Section 18. Assignment.
This Agreement will extend to and be binding upon the Parties hereto and
their respective successors and assigns; provided, however, that this Agreement
will not be assignable by any of the parties without the written consent of the
other parties, which consents shall be authorized or approved by a resolution by
its respective Boards of Directors.
Section 19. Governing Law.
This Agreement will be governed by the laws of the State of Pennsylvania.
Section 20. Severability.
If any part, term or provision of this Agreement is held by any court to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions will be considered severable and not be affected and the rights and
obligations of the parties will be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid, provided that the basic agreement is not thereby materially impaired.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement, together
with Schedules "A," and "B" (attached), to be signed by their duly authorized
officers as of the day and year first above written.
Declaration Trust Declaration Service Company Avalon Trust Company
___________________ __________________ _____________________
By: Terence P. Smith By: Terence P. Smith By: Roger Decort
President Chief Executive Officer President & CEO
SCHEDULE A
Accounting Services Provided on behalf of the Portfolio by Declaration
Service Company
* Journalize Portfolio's investment, capital share and income and expense
activities.
* Verify investment buy/sell trade tickets when received from Adviser and
transmit trades to Portfolio's custodian for proper settlement.
* Maintain individual ledgers for investment securities.
* Maintain historical tax lots for each security.
* Reconcile cash and investment balances of Portfolio with the custodian,
and provide Adviser with the beginning cash balance available for investment
purposes.
* Update the cash availability throughout the day as required by Adviser.
* Post to and prepare Portfolio's Statement of Assets and Liabilities and
Statement of Operations.
* Calculate expenses payable pursuant to the Portfolio's various
contractual obligations.
* Control all disbursements from Trust on behalf of Portfolio and authorize
such disbursements upon instructions of Trust.
* Calculate capital gains and losses.
* Determine Portfolio's net income.
* At the Portfolio's expense, obtain security market prices or if such
market prices are not readily available, then obtain such prices from services
approved by Adviser, and in either case calculate the market or fair value of
Portfolio's investments.
* Where applicable, calculate the amortized cost value of debt instruments.
* Transmit or mail a copy of the portfolio valuations to Adviser.
* Compute the net asset value of Portfolio.
* Report applicable net asset value and performance data to performance
tracking organizations.
* Compute Portfolio's yields, total returns, expense ratios and portfolio
turnover rate.
* Prepare and monitor the expense accruals and notify Trust management of
any proposed adjustments.
* Prepare monthly financial statements, which will include, without
limitation, the Schedule of Investments, the Statement of Assets and
Liabilities, the Statement of Operations, the Statement of Changes in Net
Assets, the Cash Statement, and the Schedule of Capital Gains and Losses.
* Prepare monthly security transactions listings.
* Prepare monthly broker security transactions summaries.
* Supply various Trust and Portfolio statistical data as requested on an
ongoing basis.
* Assist in the preparation of support schedules necessary for completion
of Federal and state tax returns.
* Assist in the preparation and filing of the Portfolio's annual and
semiannual reports with the SEC on Form N-SAR.
* Assist in the preparation and filing of the Portfolio's annual and
semiannual reports to shareholders and proxy statements.
* Assist with the preparation of amendments to the Portfolio's Registration
Statements on From N-1A and other filings relating to the registration of
shares.
* Monitor Portfolio's status as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended from time to time
("Code").
* Determine the amount of dividends and other distributions payable to
shareholders as necessary to, among other things, maintain the qualification as
a regulated investment company of each Portfolio of the Trust under the Code.
* Provide other accounting services as may be agreed upon from time to time
in writing by Trust, Adviser and Declaration.
Administrative Services Provided by Declaration Service Company
* Provide overall day-to-day Portfolio administrative management, including
coordination of investment adviser, custodian, transfer agency, distribution and
pricing and accounting services.
* Preparation and filing of all Federal and State reports including:
o Portfolio's post-effective amendments under the Securities Act of 1933
and Investment Company Act of 1940.
o Form N-SAR - Semi-Annual report for Registered Investment Companies.
o The Portfolio's Annual and Semi-Annual Report.
o Rule 24f-2 Notice - filing regarding sale(s) of securities.
o Rule 17g-1 filing with the SEC regarding Fidelity Bond coverage.
o Ongoing monitoring and filing of State Blue Sky registrations.
* Prepare and file such reports, applications and documents as may be
necessary or desirable to register the Portfolio's shares with the Federal and
state securities authorities, and monitor the sale of Portfolio shares for
compliance with Federal and state securities laws.
* Prepare and file reports to shareholders, including the annual report to
shareholders, and coordinate mailing Prospectuses, notices, proxy statements,
proxies and other reports to shareholders.
* Assist with layout and printing of shareholder communications, including
Prospectuses and reports to shareholders.
* Administer contracts on behalf of the Portfolio with, among others, the
Portfolio's investment adviser, custodian, transfer agent/shareholder servicing
agent, distributor, and accounting services agent.
* Prepare and maintain materials for directors/management meetings
including, agendas, minutes, attendance records and minute books.
* Coordinate shareholder meetings, including assisting Trust counsel in
preparation of proxy materials, preparation of minutes and tabulation of
results.
* Monitor and pay Portfolio bills, maintain Portfolio budget and report
budget expenses and variances to Trust management.
* Monitor the Portfolio's compliance with the investment restrictions and
limitations imposed by the 1940 Act and state Blue Sky laws and applicable
regulations thereunder, the fundamental and non-fundamental investment policies
and limitations set forth in the Portfolio's Prospectuses and Statement of
Additional Information, and the investment restrictions and limitations
necessary for the Portfolio to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended, or any successor
statute.
* Prepare and distribute to appropriate parties notices announcing the
declaration of dividends and other distributions to shareholders.
* Provide administrative services as may be agreed from time to time in
writing by Declaration.
Blue Sky Administration
* Produce and mail the following required filings:
* Renewals - produce all renewal documents and mail to states, includes
follow-up to ensure all is in order to continue selling in states.
* Sales Reports - produce all the relevant sales reports for the states and
complete necessary documents to properly file sales reports with states.
* Annual Report Filings - file copies of all annual reports with states.
* Prospectus Filings - file all copies of Definitive SAI & Prospectuses
with the states.
* Post-Effective Amendment Filing - file all Post-Effective Amendments with
the states, as well as, any other required documents.
* On demand additional states - complete filing for any states that Adviser
desires to add.
* Amendments to current permits - file in a timely manner any amendment to
registered share amounts.
* Update and file hard copy of all data pertaining to individual permits.
Transfer Agent, Shareholder Servicing Agent and Dividend Disbursing Agent
Services provided by Declaration Service Company
* Examine and process new accounts, subsequent payments, liquidations,
exchanges, transfers, telephone transactions, check redemptions automatic
withdrawals, and wire order trades.
* Reinvest or pay dividends and make other distributions.
* Answer investor and dealer telephone and/or written inquiries, except as
otherwise agreed by Adviser and/or Trust.
* Process and confirm address changes.
* Process standard account record changes as required, i.e. Dividend Codes,
etc.
* Microfilm and/or store source documents for transactions, such as account
applications and correspondence.
* Perform backup withholding for those accounts in accordance with Federal
regulations.
* Solicit missing taxpayer identification numbers.
* Provide remote access inquiry to Portfolio records via Trust supplied
hardware (Adviser responsible for connection line and monthly fee).
* Maintain the following shareholder information in such a manner as
Declaration shall determine:
o Name and address, including zip code.
o Balance of Shares.
o Number of Shares, issuance date of each share outstanding and
cancellation date of each share no longer outstanding, if issued.
o Balance of dollars available for redemption.
o Dividend code (daily accrual, monthly reinvest, monthly cash or quarterly
cash).
o Type of account code.
o Establishment date indicating the date an account was opened, carrying
forward pre-conversion data as available.
o Original establishment date for accounts opened by exchange.
o W-9 withholding status and periodic reporting.
o State of residence code.
o Social security or taxpayer identification number, and indication of
certification.
o Historical transactions on the account for the most recent 18 months, or
other period as mutually agreed to from time to time.
o Indication as to whether phone transaction can be accepted for this
account. Beneficial owner code, i.e. male, female, joint tenant, etc.
* Provide the following reports and statements:
o Prepare daily journals for Portfolio reflecting all shares and dollar
activity for the previous day.
o Supply information monthly for Trust's preparation of Blue Sky reporting.
o Supply monthly purchase, redemption and liquidation information for use
in Trust's N-SAR report.
o Provide monthly average daily balance reports for the Trust.
o Prepare and mail copies of summary statements to dealers and investment
advisers.
o Mail transaction confirmation statements daily to investors.
o Address and mail four periodic financial reports (material must be
adaptable to Transfer Agent's mechanical equipment as reasonably specified by
the Transfer Agent).
o Mail periodic account statements to investors.
o Compute, prepare and furnish all necessary reports to governmental
authorities: Forms 1099R, 1099DIV, 1099B, 1042 and 1042S.
o Enclose various marketing material as designated by the Trust in
statement mailings, i.e. monthly and quarterly statements (material must be
adaptable to mechanical equipment as reasonably specified by the Transfer
Agent).
* Prepare and mail confirmation statements to dealers daily.
* Prepare certified list of stockholders for proxy mailing.
SCHEDULE B
Compensation Schedule for Services Provided on behalf of Portfolio by
Declaration Service Company
Per Portfolio
0.20% on first $25 million of average annual assets
0.15% on next $25 million of average annual assets
0.10% on next $50 million of average annual assets
0.075% in excess of $100 million of average annual assets
Transfer Agent/ Shareholder Services:
$ 12.00 per Shareholder Account
Minimum annual fees:
Year one (1) $ 60,000
Year two (2) $ 71,000
Year three (3) $ 82,000
Thereafter $ 93,000
Plus out-of-pocket expenses to include, but not limited to: wire fees,
Trust/SERV and Networking fees, bank service charges, printing, copying,
postage, courier, account statement/ confirmation (including programming costs
for specialized statements/ confirmations), portfolio price quotation service,
asset allocation charges, travel, telephone, registration fees, and other
standard miscellaneous items.
Additional classes of shares per portfolio
Each category of fee ( including annual minimums) increases by 50% for the
second class of shares per portfolio, and by 25% for each additional class of
shares per portfolio.
EXHIBIT 23(I)
THE LAW OFFICES OF DAVID D. JONES, P.C.
518 Kimberton, # 134
Phoenixville, PA 19460
(610) 718-5381 (phone)
(610) 718-5391 (facsimile)
[email protected] (e-mail)
Declaration Fund February 23, 1999
555 North Lane, Suite 6160
Conshohocken, PA 19428
Dear Sirs:
As counsel to The Declaration Fund (the "Trust"), an unincorporated business
trust organized under the laws of the State of Pennsylvania, I have been asked
to render my opinion with respect to the issuance of an indefinite number of
shares of beneficial interest of the Trust (the "Shares") representing
proportionate interests in The VanderPal Protected Income and Growth Fund (the
"Fund"). The Shares of the Fund are a series of the Trust consisting of a single
class of shares, all as more fully described in the Prospectus and Statement of
Additional Information contained in the Registration Statement on Form N-1A, to
which this opinion is an exhibit, to be filed with the Securities and Exchange
Commission.
I have examined the Company's Declaration of Trust, by-laws, the Prospectus and
Statement of Additional Information contained in the Registration Statement, and
such other documents, records and certificates as deemed necessary for the
purposes of this opinion.
Based on the foregoing, I am of the opinion that the Shares, when issued,
delivered and paid for in accordance with the terms of the Prospectus and
Statement of Additional Information, will be legally issued, fully paid, and
non-assessable by the Trust. I also give my consent for the Trust to included
this opinion as an Exhibit to the Trust's Registration Statement on Form N-1A.
Very Truly Yours,
David D. Jones
Attorney & Counselor at Law
EXHIBIT 23(I)(2)
Charles W. Lutter, Jr.
Attorney and Counselor at Law
103 Canyon Oaks
San Antonio, TX 78232-1305
(210) 495-5438
Fax (210) 496-1631
May 2, 2000
Board of Trustees
Declaration Fund
555 North Lane, Suite 6160
Conshohocken, PA 19428
RE: Declaration Fund-Legal Opinion concerning the Water Fund
Dear Sirs:
I have been asked to provide this legal opinion and consent so that
Declaration Fund (the "Trust") may have a current opinion to complete
post-effective amendment No. 35 (the "PEA") to its registration statement on
Form N-1A.
I have considered, among other things, the Trust's registration statement,
trust documents, the February 23, 1999 legal opinion of David D. Jones
previously filed as an exhibit to the Trust's registration statement and copies
of actions of the Trustees as furnished by the Trust.
Based on my review, I am of the opinion that shares of beneficial interest
in the Water Fund series of the Trust are fuly authorized and when purchased and
paid for as described in the Trust's registration statement, will be validly
issued, fully paid and non-assessable.
I am delivering this letter to the Trust and no person other than the Trust
may rely on it.
I hereby consent to the filing of this opinion of counsel as an exhibit to
the PEA.
Sincerely,
/s/ Charles W. Lutter, Jr.
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the use of our report, dated February 2, 2000, on the annual
financial statements and financial highlights of the Declaration Fund - The
Water Fund, which is included in Part A and B in Post Effective Amendment No. 35
to the Registration Statement under the Securities Act of 1933 and included in
the Prospectus and Statement of Additional Information, as specified, and to the
reference made to us under the caption "Independent Auditors" in the Statement
of Additional Information.
Abington, Pennsylvania /s/ Sanville & Company
May 3, 2000 Certified Public Accountants
EXHIBIT 23(M)(2)
PLAN OF DISTRIBUTION PURSUANT TO RULE 12B-1
WHEREAS, Declaration Fund, an unincorporated business trust organized and
existing under the laws of the Commonwealth of Pennsylvania (the "Trust"),
engages in business as an open-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended
(the"1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest (the "Shares"), in separate series representing the
interests in separate funds of securities and other assets; and
WHEREAS, the Trust offers a series of such Shares representing interests in
The Water Fund (the "Fund") of the Trust;
WHEREAS, the Trustees of the Trust as a whole, and the Trustees who are not
interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
shareholders, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with Rule
12b-1 under the 1940 Act, on the following terms and conditions:
1. Distribution and Servicing Activities. Subject to the supervision of the
Trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Shares of the Fund, which
activities may include, but are not limited to, the following: (a)payments to
the Trust's Distributor and to securities dealers and others in respect of the
sale of Shares of the Fund; (b) payment of compensation to and expenses of
personnel (including personnel of organizations with which the Trust has entered
into agreements related to this Plan) who engage in or support distribution of
Shares of the Fund or who render shareholder support services not otherwise
provided by the Trust's transfer agent, administrator, or custodian, including
but not limited to, answering inquiries regarding the Trust, processing
shareholder transactions, providing personal services and/or the ch expenditures
paid as service fees to any person who sells Shares of the Fund exceed an amount
calculated at the rate of 0.25% of the average annual net asset value of such
shares. Such payments for distribution and shareholder servicing activities may
be made directly by the Trust or to other persons with which the Trust has
entered into agreements related to this Plan.
3. Term and Termination. (a) This Plan shall become effective as of the
19th day of October 1999. Unless terminated as herein provided, this Plan shall
continue in effect for one year from the date hereof and shall continue in
effect for successive periods of one year thereafter, but only so long as each
such continuance is specifically approved by votes of a majority of both (i) the
Trustees of the Trust and (ii) the Non-Interested Trustees, cast at a meeting
called for the purpose of voting on such approval. (b) This Plan may be
terminated at any time with respect to the Fund by a vote of a majority of the
Non-Interested Trustees or by a vote of a majority of the outstanding voting
securities of the Class of the Fund as defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase materially the
maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities of the
Fund as defined in the 1940 Act with respect to which a material increase in the
amount of expenditures is proposed, and no material amendment to this Plan shall
be made unless approved in the manner provided for annual renewal of this Plan
in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of the Non-Interested Trustees of the Trust shall be
committed to the discretion of such Non-Interested Trustees.
6. Quarterly Reports. The Treasurer of the Trust shall provide to the
Trustees of the Trust and the Trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
7. Record keeping. The Trust shall preserve copies of this Plan and any
related agreement and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder shall
not be binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"Declaration Fund" means and refers to the Trustees from time to time serving
under the Agreement and Declaration of Trust of the Trust, a copy of which is on
file with the Secretary of The Commonwealth of Pennsylvania. The execution of
this Plan has been authorized by the Trustees, and this Plan has been signed on
behalf of the Trust by an authorized officer of the Trust, acting as such and
not individually, and neither such authorization by such Trustees nor such
execution by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Trust as provided in the Agreement and
Declaration of Trust.
IN WITNESS THEREOF, the parties hereto have caused this Plan to be executed
as of the date written above.
DECLARATION FUND
Attest:
By__________________________________
THE WATER FUND
Attest:
By__________________________________
