AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
(File No. 2-75151)
Post-Effective Amendment No. 20
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
(File No. 811-03342)
Post-Effective Amendment No. 23
SIT GROWTH FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
4600 Norwest Center, Minneapolis, Minnesota 55402
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(612) 332-3223
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Parnell M. Kingsley, Assistant Secretary
Sit Mutual Funds
4600 Norwest Center
Minneapolis, Minnesota 55402
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
Michael J. Radmer, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
____ immediately upon filing pursuant to paragraph (b) of rule 485
____ on (specify date) pursuant to paragraph (b) of rule 485
____ 60 days after filing pursuant to paragraph (a) of rule 485
_XX_ on November 1, 1996 pursuant to paragraph (a) of rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. A Rule 24f-2 Notice for the Registrant's most recent fiscal year
was filed with the Securities and Exchange Commission on or about August 26,
1996.
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
(File No. 2-75152)
Post-Effective Amendment No. 20
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
(File No. 811-03343)
Post-Effective Amendment No. 23
SIT GROWTH & INCOME FUND, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
4600 Norwest Center, Minneapolis, Minnesota 55402
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(612) 332-3223
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Parnell M. Kingsley, Assistant Secretary
Sit Mutual Funds
4600 Norwest Center
Minneapolis, Minnesota 55402
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
Michael J. Radmer, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
____ immediately upon filing pursuant to paragraph (b) of rule 485
____ on (specify date) pursuant to paragraph (b) of rule 485
____ 60 days after filing pursuant to paragraph (a) of rule 485
_XX_ on November 1, 1996 pursuant to paragraph (a) of rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. A Rule 24f-2 Notice for the Registrant's most recent fiscal year
was filed with the Securities and Exchange Commission on or about August 26,
1996.
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 30, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
(File No. 33-42101)
Post-Effective Amendment No. 10
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
(File No. 811-6373)
Post-Effective Amendment No. 11
SIT MUTUAL FUNDS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
4600 Norwest Center, Minneapolis, Minnesota 55402
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(612) 332-3223
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Parnell M. Kingsley, Assistant Secretary
Sit Mutual Funds
4600 Norwest Center
Minneapolis, Minnesota 55402
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
Michael J. Radmer, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
____ immediately upon filing pursuant to paragraph (b) of rule 485
____ on (specify date) pursuant to paragraph (b) of rule 485
____ 60 days after filing pursuant to paragraph (a) of rule 485
_XX_ on November 1, 1996 pursuant to paragraph (a) of rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2 under the Investment Company
Act of 1940. A Rule 24f-2 Notice for the Registrant's most recent fiscal year
was filed with the Securities and Exchange Commission on or about August 26,
1996.
<TABLE>
<CAPTION>
FORM N-1A
CROSS-REFERENCE SHEET
ITEM # CAPTION PROSPECTUS CAPTION
- ------ ------- ------------------
<S> <C> <C>
1 Cover Page Inside Cover of Prospectus
2 Synopsis Prospectus Summary
3 Condensed Financial Financial Highlights
Information
4 General Description of Registrant Investment Objectives and Policies; Common Policies and
Information; Capitalization and Voting Rights; Additional
Information
5 Management of the Fund Summary of Fund Expenses; Custodian and Transfer Agent;
Management; Additional Information
6 Capital Stock and Other Dividend Reinvestment; Securities Exchanges; Capitalization
and Voting Rights; Taxes; Additional Information
7 Purchase of Securities Being How to Purchase Fund Shares; Exchanges; Retirement Accounts;
Offered Computation of Net Asset Value
8 Redemption or Repurchase Redemption of Fund Shares
9 Pending Legal Proceedings Not Applicable
ITEM NO. CAPTION STATEMENT OF ADDITIONAL
- ------- ------- INFORMATION CAPTION
-------------------
10 Cover Page Cover Page of Statment of Additional Information
11 Table of Contents Table of Contents
12 General Information and History Not Applicable
13 Investment Objectives and Policies Additional Investment Restrictions; Securities in which
the Funds May Invest
14 Management of the Fund Management; Investment Adviser
15 Control Persons and Principal Control Persons and Principal Holders
Holders of Securities
16 Investment Advisory and Other Investment Adviser
Services
17 Brokerage Allocation Brokerage
18 Capital Stock and Other Securities Capitalization and Voting Rights (in Prospectus)
19 Purchase, Redemption and Pricing Computation of Net Asset Value
of Securities Being Offered
20 Tax Status Taxes
21 Underwriters Distributor
22 Calculation of Performance Data Calculation of Performance Data
23 Financial Statements Financial Statements
</TABLE>
SIT MUTUAL FUNDS
PROSPECTUS
STOCK FUNDS
NOVEMBER 1, 1996
A FAMLY
OF 100%
NO-LOAD FUNDS
O SMALL CAP GROWTH FUND
O MID CAP GROWTH FUND
O LARGE CAP GROWTH FUND
O BALANCED FUND
O DEVELOPING MARKETS GROWTH FUND
O INTERNATIONAL GROWTH FUND
PAGE 1
SIT MUTUAL FUND GROUP
4600 Norwest Center - Minneapolis, MN 55402
612-334-5888 or 800-332-5580
(CHART)
<TABLE>
<CAPTION>
OUR FAMILY OF FUNDS
<S> <C> <C> <C>
Stability: Income: Growth & Income: Growth:
Safety of principal Increased income Long-term capital Long-term capital
and current income appreciation and appreciation
income
Funds:
Money Market U.S. Govt. Securities Balanced Mid Cap Growth
Tax-Free Income Large Cap Growth Int'l Growth
MN Tax-Free Income Small Cap Growth
Bond Dev Markets Growth
Principal Stability Growth
& Current Income Potential
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS (AND/OR IN THE
STATEMENT OF ADDITIONAL INFORMATION REFERRED TO ON THE COVER PAGE OF THIS
PROSPECTUS), AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUNDS.
NOT PART OF THE PROSPECTUS
PAGE 2
PROSPECTUS
November 1, 1996
The Funds have the following investment objectives:
SMALL CAP GROWTH FUND
The objective of the Small Cap Growth Fund is to maximize long-term capital
appreciation. The Fund pursues this objective by investing primarily in common
stocks of small companies that have a capitalization of under $500 million at
the time of purchase.
MID CAP GROWTH FUND (formerly Growth Fund)
The objective of the Mid Cap Growth Fund is to maximize long-term capital
appreciation. The Fund pursues this objective by investing primarily in the
common stocks of small and medium-size growth companies with a capitalization of
$500 million to $5 billion at the time of purchase.
LARGE CAP GROWTH FUND (formerly Growth & Income Fund)
The objective of the Large Cap Growth Fund is to achieve long-term capital
appreciation and, secondarily, current income. The Fund pursues this objective
by investing primarily in common stocks of medium to large size growth
companies with a capitalization of over $5 billion at the time of purchase.
BALANCED FUND
The objective of the Balanced Fund is to seek long-term growth of capital
consistent with the preservation of principal and to provide shareholders with
regular income. The Fund pursues this objective by investing in a diversified
portfolio of stocks, bonds and short-term instruments.
DEVELOPING MARKETS GROWTH FUND
The objective of the Developing Markets Growth Fund is to maximize long-term
capital appreciation. The Fund pursues this objective by investing primarily in
common stocks of companies deemed to be domiciled or otherwise operating in a
developing market.
INTERNATIONAL GROWTH FUND
The objective of the International Growth Fund is to achieve long-term growth of
capital. The Fund pursues this objective by investing primarily in common stocks
of issuers domiciled outside the United States.
See the "Investment Objectives and Policies" beginning on page 14, and "Common
Policies and Information" beginning on page 27 for more detailed information.
This prospectus concisely sets forth facts about the Funds that you should know
before investing and it should be retained for future reference. You should read
it to decide if any of the Funds are the right investment for you. Additional
facts about each Fund are contained in a Statement of Additional Information
(dated November 1, 1996) which has been filed with the Securities and Exchange
Commission and is incorporated herein by reference. For a free copy, call or
write the Funds.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PAGE 3
SIT SMALL CAP GROWTH FUND
SIT MID CAP GROWTH FUND, INC.
SIT LARGE CAP GROWTH FUND, INC.
SIT BALANCED FUND
SIT DEVELOPING MARKETS GROWTH FUND
SIT INTERNATIONAL GROWTH FUND
TABLE OF CONTENTS
Summary of Fund Expenses.................... 4
Financial Highlights........................ 5
Performance................................. 11
Investment Objectives and Policies
Small Cap Growth Fund..................... 14
Mid Cap Growth Fund....................... 15
Large Cap Growth Fund.................... 15
Balanced Fund............................. 16
Developing Markets Growth Fund............ 19
International Growth Fund................. 22
Risks of International Investing.......... 25
Common Policies and Information
Securities Lending........................ 27
Puts and Calls............................ 27
When-Issued and Forward Commitment Management 36
Securities......................... 27
Repurchase Agreements.................... 28
Illiquid Securities....................... 28
Investment in Sit Money Market Fund...... 28
Portfolio Turnover........................ 29
Relationship of Debt Securities &
Interest Rates.............................. 29
Temporary Defensive Investments........... 29
Ratings of Debt Securities................ 29
Other Investment Restrictions............. 30
Computation of Net Asset Value.............. 30
How to Purchase Fund Shares................. 31
Redemption of Fund Shares................... 33
Exchanges................................... 35
Dividend Reinvestment.................. 35
Retirement Accounts......................... 36
Custodian and Transfer Agent................ 36
Taxes....................................... 38
Capitalization and Voting Rights............ 39
Additional Information...................... 40
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
PAGE 4
PROSPECTUS SUMMARY
THE FUNDS
The Funds are each no-load, open-end, diversified, management investment
companies (commonly known as "mutual funds"), as defined in the Investment
Company Act of 1940 (the "1940 Act").
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives of the Funds are set forth on page 1 of this
prospectus. The investment objective of each Fund is "fundamental," which means
that it may not be changed unless approved by a vote of the "majority" of the
shareholders of such Fund (as defined in the 1940 Act). There can be no
assurance that the investment objectives of any of the Funds will be achieved.
INVESTMENT ADVISER
Sit Investment Associates, Inc. (the "Adviser") serves as the investment adviser
to each Fund and receives an annual fee based on a percentage of average daily
net assets. The percentage varies from Fund to Fund.
SUB-ADVISER
Sit/Kim International Investment Associates, Inc. (the "Sub-Adviser") serves as
Sub-Adviser for the Developing Markets Growth Fund and the International Growth
Fund. The Sub-Adviser is an international investment management firm with
offices in New York and San Francisco and is an affiliate of the Adviser.
PRICE OF FUND SHARES
Fund shares are sold at their net asset value ("NAV"). There is no sales charge
or redemption fee. The NAV is based upon the market value of the securities
owned by a Fund and is determined once daily as of the close of the New York
Stock Exchange on each day the Exchange is open for trading.
HOW TO PURCHASE SHARES
You can purchase shares of any Fund with no sales charges at the next determined
NAV by completing the application and mailing it, along with a check to the
Funds at the address as listed on the inside back cover of this prospectus or as
instructed on the application.
100% NO-LOAD
NO SALES COMMISSIONS
NO DEFERRED SALES CHARGES
NO 12B-1 FEES
$2,000 MINIMUM INITIAL PURCHASE --- $100 SUBSEQUENT PURCHASE
NO MINIMUM PURCHASE FOR IRAS OR OTHER RETIREMENT ACCOUNTS
ELECTRONIC TRANSFER OF FUNDS FOR PURCHASES AND REDEMPTIONS
AUTOMATIC MONTHLY INVESTMENT PLAN
NO CHARGE FOR EXCHANGES
PAGE 5
SUMMARY OF FUND EXPENSES
The fund expense summary was developed for use by all mutual funds. You should
consider this expense information as well as other important information in this
prospectus:
<TABLE>
<CAPTION>
Developing
Small Cap Mid Cap Large Cap Markets Int'l
Growth Growth Growth Balanced Growth Growth
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
SHAREHOLDER TRANSACTION EXPENSES
<S> <C> <C> <C> <C> <C> <C>
Sales load on purchases none none none none none none
Sales load on reinvested dividends none none none none none none
Deferred sales load none none none none none none
Redemption fees none none none none none none
Exchange fees none none none none none none
Annual Fund Operating Expenses (as a percentage of average daily net assets)
Management fees 1.50% 1.00% 1.00% 1.00% 2.00% 1.50%(1)
12b-1 fees none none none none none none
Other expenses none none none none none none
---- ---- ---- ---- ---- ----
Total fund operating expenses 1.50% 1.00%(1) 1.00% 1.00% 2.00% 1.50% (1)
===== ==== ===== ===== ===== =====
(1) Net of voluntary fee waiver
</TABLE>
Example: You would pay the following expenses on a $1,000 investment, assuming
(a) 5% annual rate of return and (b) redemption at the end of each period.
Developing
Small Cap Mid Cap Large Cap Markets Int'l
Growth Growth Growth Balanced Growth Growth
Fund Fund Fund Fund Fund Fund
---- ---- ---- ---- ---- ----
1 year $ 15 $ 10 $ 10 $ 10 $ 20 $ 15
3 years 47 32 32 32 63 47
5 years 82 55 55 55 108 82
10 years 179 122 122 122 233 179
The purpose of the above table is to assist you in understanding the various
costs and expenses that an investor in the Funds will bear directly or
indirectly. No transaction expenses are incurred by you when you buy or sell
shares of the Funds. Management fees and other expenses are reflected in each
Fund's share price and are not charged directly to individual shareholder
accounts.
The examples contained in the above table should not be considered a
representation of past or future expenses. Actual expenses may be greater or
less than those shown.
Each Fund has engaged the Adviser as its investment adviser pursuant to an
Investment Management Agreement. . Absent voluntary fee waivers by the Adviser,
Small Cap Growth Fund, Mid Cap Growth Fund, Large Cap Growth Fund, Balanced
Fund, Developing Markets Growth Fund and International Growth Fund are obligated
under the Funds' Investment Management Agreements to pay the Adviser annual
management fees of 1.50%, 1.25%, 1.00%, 1.00%, 2.00% and 1.85% per year,
respectively, of each Fund's average daily net assets; however, the Adviser is
obligated to pay all of each Fund's other expenses (other than extraordinary
expenses, interest, brokerage commissions and other transaction charges). See
"Management - Investment Adviser."
For the period January 1, 1994 through December 31, 1997, the Adviser has
voluntarily agreed to limit the management fee (and, thereby, all fund expenses,
except those not payable by the Adviser as set forth above) of the International
Growth Fund to 1.50% per year of the Fund's average daily net assets. After
December 31, 1997, this voluntary fee waiver may be discontinued by the Adviser
in its sole discretion.
For the period November 1, 1996 through June 30, 1998, the Adviser has
voluntarily agreed to limit the management fee (and, thereby, all fund expenses,
except those not payable by the Adviser as set forth above) of the Mid Cap
Growth Fund (formerly Growth Fund) to 1.00% per year of the Fund's average daily
net assets. After June 30, 1998, this voluntary fee waiver may be discontinued
by the Adviser in its sole discretion.
Prior to November 1, 1996, the Mid Cap Growth Fund's (formerly Growth Fund)
total expenses were contractually limited to 1.50% of average daily net assets
for the first $30 million in fund net assets and 1.00% of average daily net
assets for Fund net assets exceeding $30 million.
Prior to November 1, 1996 the Large Cap Growth Fund's (formerly Growth & Income
Fund) total expenses were contractually limited to 1.50% of average daily net
assets for the first $30 million in Fund net assets and 1.00% of average daily
net assets for Fund net assets exceeding $30 million. For the period October 1,
1993 through October 31, 1996 the Adviser has voluntarily agreed to absorb
expenses that were otherwise payable by the Fund which exceed 1.00% of the
Fund's average daily net assets. Absent voluntary fee waivers, the ratio of
expenses to average daily net assets would have been 1.23% for the year ended
June 30, 1996
FINANCIAL HIGHLIGHTS
The following tables show certain important financial information for evaluating
each Fund. This information has been audited by KPMG Peat Marwick LLP,
independent auditors. Additional information about the performance of the Funds
is contained in the Funds' annual report which may be obtained without charge.
Per share data for a share of capital stock outstanding during the period and
selected information for each period are as follows:
<TABLE>
<CAPTION>
SIT SMALL CAP GROWTH FUND
YEARS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
NET ASSET VALUE:
Beginning of year $ 13.49 $ 10.00
OPERATIONS:
Net investment loss (.11) (.02)
Net realized and unrealized gains
on investments 6.03 3.56
Total from operations 5.92 3.54
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains (.14) (.05)
Total distributions (.14) (.05)
NET ASSET VALUE:
End of year $ 19.27 $ 13.49
Total investment return (1) 44.13% 35.59%
Net assets at end of year (000's omitted) $ 50,846 $ 12,015
RATIOS (%):
Expenses to average daily net assets 1.50 1.50
Net investment loss to average daily net assets (0.91) (0.30)
Portfolio turnover rate (excluding short-term securities) 69.92 49.39
</TABLE>
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
SIT MID CAP GROWTH FUND
(FORMERLY SIT GROWTH FUND)
Per share amounts prior to December 10, 1993, have been restated to reflect the
4 for 1 stock split.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of year $13.00 $11.08 $11.91 $10.52 $9.35
OPERATIONS:
Net investment
income (loss) (.04) -- (.01) .03 .04
Net realized and
unrealized gains
(losses) on investments 4.07 2.96 (.51) 1.43 1.22
Total from operations 4.03 2.96 (.52) 1.46 1.26
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income -- -- (.02) (.05) (.06)
From realized gains (1.45) (1.04) (.29) (.02) (.03)
Total distributions (1.45) (1.04) (.31) (.07) (.09)
NET ASSET VALUE:
End of year $15.58 $13.00 $11.08 $11.91 $10.52
Total investment return (1) 33.00% 28.44% (4.62%) 13.88% 13.34%
Net assets at end of year
(000s omitted) $356,317 $327,879 $285,175 $341,702 $241,831
RATIOS (%) :
Expenses to average daily net assets 0.77 0.83 0.82 0.80 .83
Net investment income (loss) to
average daily net asset (0.23) 0.02 (0.08) 0.35 0.52
Portfolio turnover rate
(excluding short-term securities) 50.38 75.40 46.71 45.18 24.74
</TABLE>
WIDE TABLE CONTINUED FROM ABOVE
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of year $8.70 $7.58 $6.98 $8.38 $8.19
OPERATIONS:
Net investment
income (loss) .07 .06 .13 .04 .01
Net realized and
unrealized gains
(losses) on investments 1.05 1.51 .81 (.69) 1.15
Total from operations 1.12 1.57 .94 (.65) 1.16
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.08) (.09) (.09) (.01) (.01)
From realized gains (.39) (.36) (.25) (.74) (.96)
Total distributions (.47) (.45) (.34) (.75) (.97)
NET ASSET VALUE:
End of year $9.35 $8.70 $7.58 $6.98 $8.38
Total investment return (1) 14.13% 21.13% 14.59% (8.44%) 17.43%
Net assets at end of year
(000s omitted) $122,677 $73,532 $53,982 $48,100 $56,152
RATIOS (%) :
Expenses to average daily net asset 1.03 1.10 1.19 1.21 1.20
Net investment income (loss) to
average daily net ass 0.96 .75 1.85 0.57 0.09
Portfolio turnover rate
(excluding short-term securities) 37.01 55.32 88.39 77.82 81.25
</TABLE>
(1) Total investment return is based on the change in net asset value of a share
during the period and assumes reinvestment of distributions at net asset value.
SIT LARGE CAP GROWTH FUND
(FORMERLY SIT GROWTH & INCOME FUND)
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of year $28.38 $23.89 $25.61 $24.22 $21.89
OPERATIONS:
Net investment income .04 .11 .23 .33 .38
Net realized and unrealized
gains (losses) on investments 6.61 5.88 (.33) 1.94 2.91
Total from operations 6.65 5.99 (.10) 2.27 3.29
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.04) (.09) (.23) (.34) (.43)
From realized gains (2.24) (1.41) (1.39) (.54) (.53)
Total distributions (2.28) (1.50) (1.62) (.88) (.96)
NET ASSET VALUE:
End of year $32.75 $28.38 $23.89 $25.61 $24.22
Total investment return (1) 24.48% 26.33% (0.58%) 9.52% 15.22%
Net assets at end of year
(000s omitted) $53,017 $45,211 $34,612 $37,602 $32,040
RATIOS (%) :
Expenses to average daily net assets 1.00(2) 1.00(2) 1.10(2) 1.42 1.50
Net investment income to average
daily net assets 0.14(2) 0.42(2) .89(2) 1.31 1.92
Portfolio turnover rate
(excluding short-term securities) 49.99 67.14 73.62 47.82 73.40
</TABLE>
WIDE TABLE CONTINUED FROM ABOVE
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of year $22.64 $20.62 $18.31 $21.33 $19.43
OPERATIONS:
Net investment income .58 .59 .54 .53 .47
Net realized and unrealized
gains (losses) on investments (.01) 2.88 2.18 (1.88) 2.81
Total from operations .57 3.47 2.73 (1.35) 3.28
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.69) (.54) (.42) (.53) (.46)
From realized gains (.63) (.91) -- (1.14) (.92)
Total distributions (1.32) (1.45) (.42) (1.67) (1.38)
NET ASSET VALUE:
End of year $21.89 $22.64 $20.62 $18.31 $21.33
Total investment return (1) 3.10% 17.14% 15.30% (6.45%) 18.42%
Net assets at end of year
(000s omitted) $21,112 $17,682 $13,622 $12,245 $10,426
RATIOS (%) :
Expenses to average daily net asset 1.50 1.50 1.50 1.50 1.50
Net investment income to average
daily net assets 2.74 2.86 2.95 2.96 2.70
Portfolio turnover rate
(excluding short-term securities) 70.01 55.00 82.23 66.80 60.95
</TABLE>
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(2) Total Fund expenses are contractually limited to 1.50% of average daily
net assets for the first $30 million in Fund net assets and 1.00% of
average daily net assets for Fund net assets exceeding $30 million.
However, during the years ended June 30, 1996, 1995 and 1994, the
investment adviser voluntarily absorbed $110,099, $132,305 and $112,191,
respectively, in expenses that were otherwise payable by the Fund. Had
the Fund incurred these expenses, the ratio of expenses to average daily
net assets would have been 1.23%, 1.35% and 1.40% for the years ended
June 30, 1996, 1995 and 1994, respectively, and the ratio of net
investment income to average daily net assets would have been (0.09%),
0.07% and 0.59%, respectively.
<TABLE>
<CAPTION>
SIT BALANCED FUND
Period
12/31/93 to
YEARS ENDED JUNE 30, 6/30/94
1996 1995 1994 (1)
<S> <C> <C> <C>
NET ASSET VALUE:
Beginning of period $ 10.99 $ 9.48 $ 10.00
OPERATIONS:
Net investment income .30 .28 .13
Net realized and unrealized gains
(losses) on investments 1.57 1.50 (.59)
Total from operations 1.87 1.78 (.46)
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.29) (.27) (.06)
Total distributions (.29) (.27) (.06)
NET ASSET VALUE:
End of period $ 12.57 $ 10.99 $ 9.48
Total investment return (2) 17.26% 19.16% (4.56%)
Net assets at end of period (000's omitted) $ 4,062 $ 2,444 $ 1,296
RATIOS (%) :
Expenses to average daily net assets 1.00 1.00 1.00(3)
Net investment income to
average daily net assets 2.61 2.97 2.87(3)
Portfolio turnover rate (excluding
short-term securities) 101.37 50.61 52.53
</TABLE>
(1) Period from December 31, 1993 (commencement of operations) to June 30,
1994.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(3) Adjusted to an annual rate.
<TABLE>
<CAPTION>
SIT DEVELOPING MARKETS GROWTH FUND
YEARS ENDED
JUNE 30,
1996 1995
<S> <C> <C>
NET ASSET VALUE:
Beginning of year $ 9.41 $ 10.00
OPERATIONS:
Net realized and unrealized gains
(losses) on investments 1.55 (.54)
Total from operations 1.55 (.54)
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains (.01) (.05)
Total distributions (.01) (.05)
NET ASSET VALUE:
End of year $ 10.95 $ 9.41
Total investment return (1) 16.51% (5.44%)
Net assets at end of year (000's omitted) $ 8,646 $ 4,618
RATIOS (%) :
Expenses to average daily net assets 2.00 2.00
Net investment income to average daily net assets 0.06 0.03
Portfolio turnover rate (excluding short-term securities) 46.22 56.35
</TABLE>
(1) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
<TABLE>
<CAPTION>
SIT INTERNATIONAL GROWTH FUND
Period
YEARS ENDED 11/1/91 to
JUNE 30, 6/30/92
1996 1995 1994 1993 1992 (1)
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of period $ 15.71 $ 14.87 $ 11.99 $ 10.70 $ 10.00
OPERATIONS:
Net investment income (loss) .02 .09 (.04) (.03) .03
Net realized and unrealized gains
on investments 1.50 1.06 3.08 1.35 .67
Total from operations 1.52 1.15 3.04 1.32 .70
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income (.09) (.04) (.10) (.03) --
From realized gains (.85) (.27) (.06) -- --
Total distributions (.94) (.31) (.16) (.03) --
NET ASSET VALUE:
End of period $ 16.29 $ 15.71 $ 14.87 $ 11.99 $ 10.70
Total investment return (2) 10.21% 7.86% 25.26% 12.37% 7.00%
Net assets at end of period (000's omitted) $ 88,712 $ 68,125 $ 63,699 $ 34,549 $ 24,631
RATIOS (%) :
Expenses to average daily net assets 1.50(4) 1.50(4) 1.65(4) 1.85 1.85(3)
Net invesetment income (loss) to average
daily net assets 0.13(4) 0.62(4) (0.16)(4) (0.29) 0.67(3)
Portfolio turnover rate
(excluding short-term securities) 38.55 40.42 42.48 52.50 18.62
</TABLE>
(1) Period from November 1, 1991 (commencement of operations) to June 30,
1992.
(2) Total investment return is based on the change in net asset value of a
share during the period and assumes reinvestment of distributions at net
asset value.
(3) Adjusted to an annual rate.
(4) Total Fund expenses are contractually limited to 1.85% of average daily
net assets. However, during the years ended June 30, 1996, 1995 and
1994, the investment adviser voluntarily absorbed $269,556, $228,795 and
$111,320, respectively, in expenses that were otherwise payable by the
Fund. Had the Fund incurred these expenses, the ratio of expenses to
average daily net assets would have been 1.85% for the years ended June
30, 1996, 1995 and 1994, and the ratio of net investment income (loss)
to average daily net assets would have been (0.22%), 0.27% and (0.36%),
respectively.
PERFORMANCE
From time to time the Funds may refer to monthly, quarterly, yearly or
cumulative total return and average annual total return in advertisements or
other sales literature. All such figures are based on historical performance
data and are not intended to be indicative of future performance. The investment
return on and principal value of an investment in the Funds will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
Monthly, quarterly, yearly and CUMULATIVE TOTAL RETURNS are computed by finding
the rates of return over the indicated periods that would equate the initial
amount invested to the ending redeemable value. AVERAGE ANNUAL TOTAL RETURN is
computed by finding the average annual compounded rates of return over the
indicated periods that would equate the initial amount invested to the ending
redeemable value. In calculating ending redeemable value, all income and capital
gains distributions are assumed to be reinvested in additional Fund shares.
Because average annual returns tend to smooth out variations in a Fund's return,
you should recognize that they are not the same as actual year-by-year results.
To illustrate the components of overall performance, a Fund may separate its
cumulative and average annual returns into income results and capital gain or
loss.
In advertising and sales literature the Funds may compare performance with that
of other mutual funds, indices and other competing investment and deposit
products. The composition of these indices or products differs from that of the
Funds. The comparison of the Funds to an alternative investment should be made
with consideration of differences in features and expected performance. The
Funds may also be mentioned in newspapers, magazines, or other media from time
to time. The Funds assume no responsibility for the accuracy of such data. For
additional information on the types of indices, averages and periodicals that
might be utilized by the Funds in advertising and sales literature, see the
section "Calculation of Performance Data" in the Statement of Additional
Information.
Standard & Poor's 500 Stock Index, the Russell 2000 Index, the Lehman Aggregate
Bond Index and the NASDAQ OTC Composite Index are unmanaged lists of common
stocks or bonds frequently used as general measures of market performance. The
annual and cumulative changes for the indexes reflect reinvestment of all
distributions and changes of market prices. No adjustment has been made for a
shareholder's income tax liability on dividends, interest or capital gains and
no brokerage commissions or other fees were factored into these indices. The
Lipper mutual fund indices are equally weighted indices each composed of the 30
largest mutual funds within their respective investment objective
classifications, adjusted for the reinvestment of capital gains distributions
and income dividends. Lipper Analytical Services, Inc. is a large independent
evaluator of mutual funds. The Morgan Stanley Capital International EAFE Index
includes 1,110 companies representing the stock markets of 14 European
countries, Australia, New Zealand, Japan, Hong Kong and Singapore and Malaysia.
The Morgan Stanley Capital International Emerging Markets Free Index includes
1392 companies representing the stock markets of 22 countries. The following
tables illustrate each Fund's average annual total returns, cumulative total
returns and annual total returns for the periods shown.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AND CUMULATIVE TOTAL RETURNS ANNUAL TOTAL RETURNS
NASDAQ OTC S & P 500 NASDAQ
Year GROWTH FUND COMPOSITE INDEX INDEX Year OTC S & P
Period in Average Average Average Ended GROWTH COMPOSITE 500
Years Annual Cumulative Annual Cumulative Annual Cumulative June 30, FUND INDEX INDEX
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
13.8 years* +19.2% +1035.7% +14.6% +560.2% +17.2% +795.5% 1983 +107.4% +77.6% +45.2%
13 years +14.0 +447.6 +10.6 +271.8 +15.0 +516.7 1984 -15.5 -24.8 -4.7
12 years +16.9 +548.3 +14.3 +394.5 +16.8 +547.2 1985 +26.9 +23.6 +30.8
11 years +16.0 +410.8 +13.4 +300.1 +15.7 +394.9 1986 +42.6 +36.9 +35.7
10 years +13.6 +258.2 +11.3 +192.2 +13.8 +264.7 1987 +17.4 +4.7 +25.1
9 years +13.2 +205.0 +12.1 +179.0 +12.6 +191.5 1988 -8.4 -7.1 -6.9
8 years +16.2 +233.2 +14.7 +200.3 +15.3 +213.0 1989 +14.6 +10.3 +20.5
7 years +16.5 +190.8 +15.4 +172.2 +14.6 +159.8 1990 +21.1 +6.2 +16.5
6 years +15.7 +140.0 +17.0 +156.4 +14.3 +123.0 1991 +14.1 +3.0 +7.4
5 years +16.0 +110.3 +20.0 +149.0 +15.7 +107.6 1992 +13.3 +18.4 +13.4
4 years +16.7 +85.6 +20.4 +110.3 +16.3 +83.0 1994 -4.6 +0.3 +1.4
2 years +30.7 +70.8 +29.6 +67.9 +26.0 +58.9 1995 +28.4 +32.2 +26.1
1 year +33.0 +33.0 +27.0 +27.0 +26.0 +26.0 1996 +33.0 +27.0 +26.0
* Since Inception on 9/2/82
</TABLE>
<TABLE>
<CAPTION>
Growth Lipper
LIPPER GROWTH & S & P 500 Year & GROWTH & S & P
GROWTH & INCOME FUND INCOME FUND INDEX INDEX Ended INCOME INCOME 500
Period in Average Average Average June 30, FUND FUND INDEX
Years Annual Cumulative Annual Cumulative Annual Cumulative
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
13.8 years * +14.9% +585.9% +15.6% +641.4% +17.2% +795.5% 1983 +50.7% +46.4% +45.2%
13 years +12.4 +355.3 +13.4 +412.6 +15.0 +516.7 1984 -14.5 -6.6 -4.7
12 years +15.0 +432.6 +15.2 +447.1 +16.8 +547.2 1985 +28.9 +26.4 +30.8
11 years +13.8 +313.3 +14.0 +322.1 +15.7 +394.9 1986 +35.8 +31.3 +35.7
10 years +11.8 +204.3 +12.3 +217.6 +13.8 +264.7 1987 +18.4 +20.3 +25.1
9 years +11.1 +157.0 +11.5 +165.2 +12.6 +191.5 1988 -6.5 -2.6 -6.9
8 years +13.5 +174.7 +13.4 +173.1 +15.3 +213.0 1989 +15.3 +17.7 +20.5
7 years +13.2 +138.3 +12.7 +131.2 +14.6 +159.8 1990 +17.1 +9.1 +16.5
6 years +12.6 +103.4 +13.3 +111.9 +14.3 +123.0 1991 +3.1 +5.9 +7.4
5 years +14.6 +97.3 +14.9 +100.1 +15.7 +107.6 1992 +15.2 +14.2 +13.4
4 years +14.4 +71.2 +15.3 +76.4 +16.3 +83.0 1993 +9.5 +16.7 +13.6
3 years +16.1 +56.3 +14.9 +51.6 +17.2 +61.1 1994 -0.6 +4.1 +1.4
2 years +25.4 +57.3 +20.8 +45.9 +26.0 +58.9 1995 +26.3 +19.2 +26.1
1 year +24.5 +24.5 +22.1 +22.1 +26.0 +26.0 1996 +24.5 +22.1 +26.0
* Since Inception on 9/2/82
</TABLE>
<TABLE>
<CAPTION>
LIPPER SMALL LIPPER
SMALL CAP RUSSELL 2000 COMPANY GROWTH SMALL SMALL
GROWTH FUND INDEX FUND INDEX Year CAP RUSSELL COMPANY
Period in Average Average Average Ended GROWTH 2000 FUND
Years Annual Cumulative Annual Cumulative Annual Cumulative June 30, FUND INDEX INDEX
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 years* +39.8% +95.4% +21.8% +48.3% +28.2% +64.1% 1995 +35.6% +19.7% +26.0%
1 year +44.1 +44.1 +23.9 +23.9 +30.3 +30.3 1996 +44.1 +23.9 +30.3
* Since Inception on 7/1/94
</TABLE>
<TABLE>
<CAPTION>
S & P 500 LEHMAN AGGREGATE LEHMAN
BALANCED FUND INDEX BOND INDEX Year AGGREGATE S & P
Period in Average Average Average Ended BALANCED BOND 500
Years Annual Cumulative Annual Cumulative Annual Cumulative June 30, FUND INDEX INDEX
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2.5 years* +12.2% +33.3% +18.7% +53.5% +5.3% +13.6% 1994 -4.6% -3.9% -3.4%
2 years +18.2 +39.7 +26.0 +58.9 +8.7 +18.2 1995 +19.2 +12.6 +26.1
1 year +16.5 +16.5 +26.0 +26.0 +5.0 +5.0 1996 +16.5 +5.0 +26.0
* Since Inception on 12/31/93
</TABLE>
<TABLE>
<CAPTION>
LIPPER
INTERNATIONAL MSCI INTERNATIONAL LIPPER
GROWTH FUND EAFE INDEX FUND INDEX Year INT'L. MSCI INT'L.
Period in Average Average Average Ended GROWTH EAFE FUND
Years Annual Cumulative Annual Cumulative Annual Cumulative June 30, FUND INDEX INDEX
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4 years +13.7 +67.3 +12.8 +62.1 +11.6 +55.3 1993 +12.4 +20.3 +6.6
3 years +14.2 +48.9 +10.5 +34.7 +12.9 +43.9 1994 +25.3 +17.0 +22.1
2 years +9.0 +18.9 +7.3 +15.2 +9.0 +18.7 1995 +7.9 +1.7 +1.8
1 year +10.2 +10.2 +13.3 +13.3 +16.4 +16.4 1996 +10.2 +13.3 +16.4
* Since Inception on 11/1/91
</TABLE>
<TABLE>
<CAPTION>
MSCI LIPPER MSCI LIPPER
DEVELOPING MARKETS EMERGING MARKETS EMERGING MARKET DEVELOPING EMERGING EMERGING
GROWTH FUND FREE INDEX FUND INDEX Year MARKETS MARKETS MARKET
Period in Average Average Average Ended GROWTH FREE FUND
Years Annual Cumulative Annual Cumulative Annual Cumulative June 30, FUND INDEX INDEX
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2 years* +5.0% +10.2% +2.3% +4.6% +4.2% +8.6% 1995 -5.4% -1.6% -1.6%
1 year +16.5 +16.5 +6.3 +6.3 +10.5 +10.5 1996 +16.5 +6.3 +10.5
* Since Inception on 7/1/94
</TABLE>
In addition to the investment performance information discussed above, the Funds
also may quote a YIELD. A Fund's yield illustrates the rate of income the Fund
earns on its investments as a percentage of the Fund's share price. Yield is
calculated by dividing the net investment income per share earned during a
30-day period by the Fund's net asset value per share on the last day of the
period. The result will then be annualized using a formula which provides for
semi-annual compounding of income.
Yield information may be helpful in considering whether to invest in a Fund.
However, because yield accounting methods differ from the methods used for other
accounting purposes, a Fund's yield may not equal its distribution rate, the
income credited to your account or the income reported in the Fund's financial
statements. A Fund's yield will vary from day to day and past yields should not
be considered a representation of future yields.
For additional information regarding the calculation of total return figures see
"Calculation of Performance Data" in the Statement of Additional Information.
Additional performance information regarding each Fund is included in the Funds'
combined annual report, which will be mailed to shareholders without charge upon
request.
INVESTMENT OBJECTIVES & POLICIES
The investment objective of each Fund is set forth on page 1 of this Prospectus.
The investment objective of each Fund is "fundamental," which means that it may
not be changed unless approved by a vote of the "majority" of the shareholders
of such Fund (as defined in the 1940 Act). There can be no assurance that the
investment objective of any of the Funds will be achieved.
In seeking their investment objectives, the Funds will be subject to the
following policies and limitations. Except as indicated, these policies are not
fundamental and may be changed by the Boards of Directors without shareholder
approval.
SMALL CAP GROWTH FUND
The Fund invests primarily in common stocks of small companies with a
capitalization of under $500 million at the time of purchase. Under normal
conditions, at least 65% of the Fund's total assets will be invested in such
securities. In addition, the Fund may purchase securities convertible into
common stocks, preferred stocks and warrants. The Fund may invest in securities
not listed on a national securities exchange but generally such securities will
have an established over-the-counter market.
Most of the Fund's investments are in common stocks or securities convertible
into common stocks. Many of these securities may be speculative and may involve
substantial risk. Since the Fund may invest in small, emerging growth companies
before they become well-recognized, investors should realize that the very
nature of investing in smaller companies involves greater risk than is
customarily associated with more established companies. Smaller companies often
have limited product lines, markets or financial resources, and they may be
dependent upon one-person management. The securities of medium to small
companies may have limited marketability and may be subject to more abrupt or
erratic market movements than securities of larger companies or the market
averages in general.
The Fund may invest up to 20% of its net assets in foreign corporate equity
securities. All foreign equity securities are limited to American Depository
Receipts (ADRs), which are traded in U.S. dollars, or in stocks listed on U.S.
exchanges including NASDAQ or on the Toronto Stock Exchange. Foreign investments
are subject to certain unique risks, such as fluctuations in the value of the
currencies, potential adverse political and economic developments. For
additional information, see "Risks of International Investing" below.
MID CAP GROWTH FUND (FORMERLY GROWTH FUND)
The Fund invests primarily in common stocks of medium and small growth companies
with a capitalization of $500 million to $5 billion at the time of purchase.
Under normal conditions, at least 65% of the Fund's total assets will be
invested in such securities. The Fund may also purchase preferred stocks,
warrants and securities convertible into common stocks. The Fund may invest in
securities not listed on a national securities exchange but, generally such
securities will have an established over-the-counter market.
The Fund invests in a diversified group of rapidly growing medium to small
companies. The Fund also invests in medium-size companies which offer improved
growth possibilities because of rejuvenated management, changes in product or
some other development that might stimulate earnings growth. To qualify for
investment by the Fund, a company should be expected to possess the prospect for
outstanding earnings growth over the long-term.
Most of the Fund's investments are in common stocks or securities convertible
into common stocks. Many of these securities may be speculative and may involve
substantial risk. Since the Fund may invest in medium to small growth companies,
investors should realize that the very nature of investing in these companies
involves greater risk than is customarily associated with more established
companies. The securities of medium to small companies may have limited
marketability and may be subject to more abrupt or erratic market movements than
securities of larger companies or the market averages in general.
The Fund may invest up to 20% of its net assets in foreign corporate equity
securities. All foreign equity securities are limited to American Depository
Receipts (ADRs), which are traded in U.S. dollars, or in stocks listed on U.S.
exchanges including NASDAQ or on the Toronto Stock Exchange. Foreign investments
are subject to certain unique risks, such as fluctuations in the value of the
currencies, potential adverse political and economic developments. For
additional information see "Risks of International Investing" below.
LARGE CAP GROWTH FUND (FORMERLY GROWTH & INCOME FUND)
The Fund invests primarily in common stocks of medium to large growth companies
with a capitalization of over $5 billion at the time of purchase. Under normal
conditions, at least 65% of the Fund's total assets will be invested in such
securities. The Fund may also purchase preferred stocks, warrants and securities
convertible into common stocks.
Most of the Fund's investments are in common stocks or securities convertible
into common stocks. The Fund may invest up to 50% The Fund may invest up to 50%
of its assets in debt securities including corporate bonds, debentures and
government debt securities. The percentage of assets allocated to common stocks
and to various debt securities will vary in accordance with the judgment of the
Adviser. Currently, it is the intention of the Adviser to invest primarily in
common stocks.
The Fund may purchase debt securities which are rated at least Ba by Moody's or
BB by S&P and may purchase unrated securities which at the time of purchase are
judged by the Adviser to be of comparable quality to the rated securities in
which the Fund may invest. In acquiring debt securities, emphasis is placed on
acquiring nonspeculative issues (rated A or higher by Moody's or S&P) with
maturities of ten years or less. The Fund will not invest more than 5% of its
total assets at any time in debt securities rated lower than Baa by Moody's or
BBB by S&P (or comparable unrated securities). It is the Adviser's opinion that
if the maturity of a debt security is ten years or less, then the price
volatility in response to overall interest rate changes is generally less than
that experienced by debt securities of longer maturity.
The Fund may invest up to 20% of its assets in foreign corporate equity
securities or debt securities of foreign governments. All foreign equity
securities are limited to American Depository Receipts (ADRs), which are traded
in U.S. dollars, or in stocks listed on U.S. exchanges including NASDAQ or on
the Toronto Stock Exchange. Debt securities may include securities of the
governments of Canada, Japan and members of the European Economic Community. All
trades involving foreign debt securities will be transacted through U.S. based
brokerage firms or commercial banks. Canadian investments will be made through
the Toronto Stock Exchange member firms in U.S. dollars. Foreign investments are
subject to certain unique risks, as discussed under "Risks of International
Investing" below.
BALANCED FUND
The Fund's equity investments consist of securities which the Adviser believes
have an outstanding outlook for long-term growth of principal. The Fund balances
its growth objective by investing in income-producing debt securities and/or
common stocks selected primarily for their dividend payment potential. In order
to maximize total return, the Fund's allocation of assets will vary over time.
Under normal conditions, between 40% and 60% of the Fund's assets will be
invested in equity securities and between 40% and 60% in fixed-income
securities. At all times at least 25% of the assets of the Fund will be invested
in fixed-income senior securities.
WITH RESPECT TO THE EQUITY PORTION OF THE FUND'S PORTFOLIO, the Fund may
purchase common stocks, securities convertible into common stocks, preferred
stocks and warrants. The Fund may invest in securities not listed on a national
securities exchange, but generally such securities will have an established
over-the-counter market. The Fund invests in companies which offer growth
potential. To qualify for investment by the Fund, a company should be expected
to demonstrate long-term reasonable annual earnings growth. No assurance can be
given that expectations will be met.
The Fund may invest up to 20% of its net assets in foreign corporate equity
securities. All foreign equity securities are limited to American Depository
Receipts (ADRs), which are traded in U.S. dollars, or in stocks listed on U.S.
exchanges including NASDAQ or on the Toronto Stock Exchange. Foreign investments
are subject to certain unique risks, including foreign currency risks as
discussed under "Risks of International Investing" below.
WITH RESPECT TO THE FIXED-INCOME PORTION OF THE FUND'S PORTFOLIO, the Fund may
purchase fixed-income securities which may include obligations of the United
States government, its agencies and instrumentalities; corporate debt
securities; corporate commercial paper; mortgage and other asset-backed
securities; municipal securities; variable and floating rate debt securities;
bank certificates of deposit, fixed time deposits and bankers acceptances;
repurchase agreements; obligations of foreign governments or their subdivisions,
agencies and instrumentalities, or of international agencies or supernational
entities; and foreign currency exchange-related securities, including foreign
currency warrants. The Fund may invest in securities issued by foreign entities
and denominated in U.S. dollars or foreign currencies. See "Ratings of Debt
Securities" section below.
The Fund primarily invests in fixed-income securities with maturities of 2 to 30
years. Maturity is usually an accurate indication of the outstanding term,
however, mortgage pass-through securities which receive regular principal
payments have an average life less than the maturity. The average life of
mortgage pass-through investments will typically vary from 1 to 18 years. The
average maturity of the portfolio will generally vary between 3 and 30 years.
The Fund may invest up to 25% of the fixed-income portion of the Fund's
portfolio in debt securities that are rated below investment grade, i.e., rated
below Baa by Moody's Investors Services ("Moody's) or BBB by Standard & Poor's
Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch"), or Duff & Phelps
Credit Rating Co. ("Duff & Phelps") or comparable unrated securities. The Fund
will not invest in securities rated below B-3 by Moody's or B- by S&P, Fitch,
and Duff & Phelps, at the time of investment. The Fund will strive to maintain
an overall dollar-weighted quality average for the fixed-income portion of the
Fund's portfolio of at least A as rated by Moody's or S&P. See section on
"Ratings of Debt Securities" below and also the Appendix A of the Statement of
Additional Information.
The Fund may purchase short-term debt instruments maturing in 12 months or less
which may include commercial paper, bank obligations, short-term obligations of
the U.S. or Canadian governments, their agencies or instrumentalities,
repurchase agreements and other similar short-term instruments. The Fund will
invest in short-term securities rated at the time of purchase within the highest
rating category by a major rating service or if unrated, are of comparable
quality as determined by the Adviser. See "Ratings of Debt Securities" section
below.
U.S. GOVERNMENT SECURITIES. The Fund may invest in securities issued, guaranteed
or insured by the U.S. government, its agencies or instrumentalities whether or
not backed by the "full faith and credit" pledge of the U.S. government.
Guarantees as to the timely payment of principal and interest do not extend to
the value or yield of such securities nor do they extend to the value of the
Fund's shares. U.S. Treasury securities are bonds, notes and bills which are
issued by the U.S. government and which differ in their interest rates,
maturities and dates of issuance.
Other instrumentalities of the U.S. government which issue or guarantee
securities which the Fund may purchase include, for example, the Federal Farm
Credit Bank System, , the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association, the , Federal Home Loan Bank System,,and the
Student Loan Marketing Association. The U.S. Treasury is not obligated by law to
provide support to all U.S. government instrumentalities and agencies, and the
Fund will invest in securities which are not backed by the full faith and credit
of the U.S. Treasury issued by such instrumentalities and agencies only when the
Fund's Adviser determines that the credit risk with respect to the
instrumentality or agency issuing such securities does not make its securities
unsuitable investments for the Fund.
MORTGAGE AND OTHER ASSET-BACKED SECURITIES. The Fund may invest in mortgage
pass-through securities which are sold by various private, governmental and
government-related organizations. Pass-through securities are formed when
mortgages are pooled together and undivided interests in the pool are sold to
investors such as the Fund. The cash flow from the underlying mortgages is
"passed through" to the holders of the securities in the form of periodic
(generally monthly) payments of interest, principal and prepayments. Prepayments
occur when the holder of an individual mortgage prepays the remaining principal
and interest before the final scheduled payment month. Therefore, the Fund may
be subject to a higher rate of prepayments during periods of declining interest
rates when mortgages may be more frequently prepaid.
Mortgage pass-through securities include (1) obligations of U.S. government
agencies and instrumentalities which are secured by the full faith and credit of
the U.S. Treasury such as Government National Mortgage Association ("GNMA")
pass-through certificates; (2) obligations which are secured by the right of the
issuer to borrow from the Treasury, such as securities issued by the the Federal
Home Loan Bank System and the United States Postal Service; and (3) obligations
which have the principal and interest payments guaranteed by the government
agency or instrumentality itself (but are not backed by the full faith and
credit of the U.S. government), such as securities of the Federal National
Mortgage Association ("FNMA") and Federal Home Loan Mortgage Corporation
("FHLMC"), and (4) obligations of private corporations. See Statement of
Additional Information for further information.
In addition to mortgage-backed securities, the Fund may invest in other types of
asset-backed securities which represent other forms of consumer credit such as
automobile and credit card receivables or home equity loans. Asset-backed
securities are generally privately issued and, similar to mortgage-backed
securities, pass through cash flows to investors.
CORPORATE DEBT SECURITIES. The Fund may invest in corporate debt securities
(corporate bonds, debentures, notes and other similar corporate debt
instruments, including convertible securities) which meet the minimum ratings
criteria set forth by the Fund, or, if unrated, are in the Adviser's opinion of
comparable quality to corporate debt securities in which the Fund may invest.
FOREIGN CORPORATE DEBT SECURITIES. The Fund may invest up to 20% of its assets
in debt securities of foreign governments or foreign corporate debt securities
denominated in foreign currencies which are rated at least A by Moody's, S&P,
Fitch or Duff & Phelps or, if unrated, are in the Adviser's opinion of
comparable quality. All trades involving foreign debt securities will be
transacted through U.S. based brokerage firms or commercial banks. Foreign
investments are subject to certain unique risks, as discussed under Investment
Objectives and Policies - "Risks of International Investing" below.
FOREIGN CURRENCIES AND CURRENCY EXCHANGE TRANSACTIONS. The Fund may engage in
foreign currency exchange transactions by means of buying or selling foreign
currencies on a spot basis, entering into foreign currency forward contracts,
and buying and selling foreign currency options, foreign currency futures, and
options on foreign currency futures. Foreign currency exchange transactions may
be entered into for the purpose of hedging against foreign currency exchange
risk arising from the Fund's investment or anticipated investment in securities
denominated in foreign securities. Foreign currency exchange transactions will
be limited to the total value of securities denominated in foreign currencies.
CORPORATE COMMERCIAL PAPER. The commercial paper purchased by the Fund will
consist only of direct obligations which, at the time of purchase, are (a) rated
P-1 by Moody's or A-1 or A-1+ by S&P, or (b) if not rated, issued by companies
having an outstanding unsecured debt issue which at the time of purchase is
rated A or higher by Moody's or A or higher by S&P.
COLLATERALIZED MORTGAGE OBLIGATIONS (CMOS)
The Fund may invest in CMOs. CMOs are hybrid instruments with characteristics of
both mortgage-backed bonds and mortgage pass-through securities. Similar to a
bond, interest and prepaid principal on a CMO are paid, in most cases, monthly.
CMOs may be collateralized by whole mortgage loans, but are more typically
collateralized by portfolios of mortgage pass-through securities guaranteed by
GNMA, FHLMC, or FNMA. Since CMOs derive their return from underlying mortgages,
they are commonly referred to as derivative securities. CMOs are structured into
multiple classes, with each class bearing a different stated maturity. Monthly
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class; investors holding the longer maturity
classes receive principal only after the earlier classes have been retired. CMOs
that are issued or guaranteed by the U.S. Government or by any of its agencies
or instrumentalities will be considered U.S. Government securities by the U.S.
Government Fund, while other CMOs, even if collateralized by U.S. Government
securities, will have the same status as other privately issued securities for
purposes of applying the Funds' diversification tests. For a discussion of
prepayment risks see "Mortgage and Other Asset-Backed Securities" section above.
VARIABLE RATE NOTES. The Fund may purchase floating and variable rate notes. The
interest rate is adjusted either at predesignated periodic intervals (variable
rate) or when there is a change in the index rate on which the interest rate on
the obligation is based (floating rate). These notes normally have a demand
feature which permit the holder to demand payment of principal plus accrued
interest upon a specified number of days' notice. The issuer of floating and
variable rate demand notes normally has a corresponding right, after a given
period, to prepay at its discretion the outstanding principal amount of the note
plus accrued interest upon a specified number of days' notice to the
noteholders.
FUTURES AND OPTIONS The Fund may invest up to 10% of its assets in certain
derivative instruments, including futures, options, options on futures and enter
into swap agreements for hedging purposes or as part of its investment strategy.
Use of these instruments may involve certain costs and risks, including the risk
that the Fund may not be able to close out a futures or option position when it
might be most advantageous to do so, and the risk of an imperfect correlation
between the value of the security being hedged and the value of the particular
derivative instrument. Since such instruments derive their return from
underlying securities, they are commonly referred to as derivative securities.
FUTURES CONTRACTS. A futures contract is an agreement to purchase or deliver a
debt security in the future for a specified price on a certain date. The Fund
may buy or sell interest rate futures contracts, options on interest rate
futures contracts and options on debt securities for the purpose of hedging
against changes in the value of securities which the Fund owns or anticipates
purchasing due to anticipated changes in interest rates. See the Statement of
Additional Information for further information.
OPTIONS - PUTS AND CALLS. The Fund may buy and sell options on debt securities
for the purpose of hedging against changes in the value of securities which the
Fund owns or anticipates purchasing due to changes in interest rates. A put
option gives the purchaser of the option, in return for a premium paid, the
right to sell the underlying security at a specified price during the term of
the option. A call option gives the purchaser of the option, in return for a
premium, the right to buy the security underlying the option at a specified
exercise price at any time during the term of the option. While the Fund does
not anticipate utilizing puts and calls on a regular basis, the Fund may from
time to time write exchange-traded call options on debt securities, for which it
will receive a purchase premium from the buyer, and may purchase and sell
exchange-traded call and put options on debt securities written by others or
combinations thereof. The Fund will not write put options. The aggregate cost of
all outstanding options purchased and held by the Fund will at no time exceed 5%
of the Fund's net assets.
SWAP AGREEMENTS. Swap agreements are two party contracts entered into primarily
by institutional investors in which two parties agree to exchange the returns
(or differential rates of return) earned or realized on particular predetermined
investments or instruments. The Fund may enter into swap agreements for purposes
of attempting to obtain a particular investment return at a lower cost to the
Fund than if the Fund had invested directly in an instrument that provided that
desired return. The Fund bears the risk of default by its swap counterpart and
may not be able to terminate its obligations under the agreement when it is most
advantageous to do so. In addition, certain tax aspects of swap agreements are
not entirely clear and their use, therefore, may be limited by the requirements
relating to the qualification of a Fund as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the "Code").
ZERO COUPON SECURITIES. The Fund is permitted to invest in zero coupon
securities. Such securities are debt obligations which do not entitle the holder
to periodic interest payments prior to maturity and are issued and traded at a
discount from their face amounts. The discount varies depending on the time
remaining until maturity, prevailing interest rates, liquidity of the security
and the perceived credit quality of the issuer. The discount, in the absence of
financial difficulties of the issuer, decreases as the final maturity of the
security approaches. Zero coupon securities can be sold prior to their due date
in the secondary market at the then-prevailing market value which depends
primarily on the time remaining to maturity, prevailing levels of interest rates
and the perceived credit quality of the issuer. The market prices of zero coupon
securities are more volatile than the market prices of securities of comparable
quality and similar maturity that pay interest periodically and may respond to a
greater degree to fluctuations in interest rates than do such non-zero coupon
securities
DEVELOPING MARKETS GROWTH FUND
The Fund invests primarily in equity securities of companies deemed to be
domiciled or otherwise operating in a developing market. Equity securities
include common and preferred stock, rights and warrants to purchase equity
securities, and debt securities convertible into common stock. The Adviser
intends to invest substantially all of the Fund's assets in developing market
equity securities, to the extent that the Fund's assets are not invested in
developing market equity securities, the remaining assets may be invested in 1)
debt securities of government or corporate issuers in developing markets; 2)
equity and debt securities of issuers in developed countries; or 3) cash and
money market instruments. In normal market conditions, at least 65% of the
Fund's total assets will be invested in developing market equity securities.
The Fund may invest up to 5% of the Fund's assets in rights or warrants to
purchase equity securities. In addition to investing directly in equity
securities, the Fund may invest in sponsored and unsponsored American Depository
Receipts ("ADRs"), European Depository Receipts ("EDRs"), and Government
Depository Receipts ("GDRs"). Generally, ADRs in registered form are U.S. dollar
denominated securities designed for use in the U.S. securities markets, which
represent and may be converted into the underlying foreign security. Unsponsored
ADRs are offered by companies which are not prepared to meet either the
reporting or accounting standards of the U.S. While readily exchangeable with
stock in local markets, unsponsored ADRs may be less liquid than sponsored ADRs.
EDRs are typically issued in bearer form and are designed for use in European
securities markets.
The Fund also may invest in certain debt securities issued by the governments of
developing market countries that are or may be eligible for conversion into
investments in developing market companies under debt conversion programs
sponsored by such governments. To the extent such debt securities are
convertible to equity securities, they are considered by the Fund to be equity
derivative securities. Debt securities (defined as bonds, notes, debentures,
commercial paper, certificates of deposit, time deposits and bankers'
acceptances) may offer opportunities for long-term capital appreciation. The
Fund will only invest in debt securities rated at least C by Moody's Investors
Service, Inc. ("Moody's") or Standard & Poor's Corporation ("S&P") at the time
of purchase or, if unrated, of comparable quality as determined by the Adviser
or Sub-Adviser. The Fund will not invest more than 5% of its total assets in
debt securities rated Baa or lower by Moody's or BBB or lower by S&P at the time
of purchase or, if unrated, of comparable quality as determined by the Adviser
or Sub-Adviser. Debt securities rated Baa or BBB may have some speculative
elements. Debt securities rated C are regarded as having predominantly
speculative characteristics. As of June 30, 1995, none of the Fund's assets were
invested in securities rated below Baa. Subject to the above limitations, it is
likely that a portion of the debt securities in which the Fund will invest may
be unrated. Subsequent to their purchase, particular securities or other
investments may cease to be rated or their ratings may be reduced below the
minimum rating required for purchase by the Fund. Neither event will require the
elimination of an investment from the Fund's portfolio, but the Adviser or
Sub-Adviser will consider such an event in its determination of whether the Fund
should continue to hold the security. See Ratings of Bond Securities in the
Statement of Additional Information.
DEVELOPING MARKETS. For purposes of its investment policy, the Fund defines
"developing markets" as those countries determined by the Adviser or Sub-Adviser
to demonstrate developing or emerging markets or economies. Such countries will
generally be defined as "emerging stock markets" by the International Finance
Corporation, demonstrate low- to middle-income economies according to the
International Bank for Reconstruction and Development (the World Bank), or be
listed in World Bank publications as developing. Countries currently not
considered by the World Bank as having "developing markets" presently include:
Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland,
the United Kingdom, and the United States. The Fund will not seek to diversify
investments among geographic regions or levels of economic development in any
particular country.
Developing markets tend to be in less economically developed regions of the
world. General characteristics of developing market countries also include lower
degrees of political stability, a high demand for capital investment, a high
dependence on export markets for their major industries, a need to develop basic
economic infrastructures, and rapid economic growth. The Adviser and Sub-Adviser
believe that investments in equity securities of developing growth companies and
in international developing markets offer the opportunity for significant
long-term investment returns. However, these investments involve certain risks.
See section on "Risks of the Developing Markets Growth Fund" below.
The Adviser and Sub-Adviser consider a company domiciled or otherwise operating
in a developing market to be: i) a company whose securities are principally
traded in the capital market of a developing market country, ii) a company which
derives at least 50% of its gross revenues from goods produced or services
rendered in a developing market country, regardless of where the principal
trading market for such a company's securities is located, or iii) a company
organized under the laws of or conducting principal operations in a developing
market country.
SELECTION OF INVESTMENTS. Emphasis is placed on identifying securities of
companies believed to be undervalued in the marketplace in relation to certain
factors such as a company's revenues, earnings, assets and long-term competitive
positions which over time will enhance the equity value of the company. The Fund
will not concentrate its investments in companies of a particular asset size or
in a particular industry, but instead will select its investments based on the
characteristics of the particular developing markets and economies of the
countries in which it invests as well as the fundamentals of the underlying
securities. The Fund also will not necessarily seek to diversify investments
among geographic regions or levels of economic development in any particular
country.
In selecting portfolio investments, the Adviser or Sub-Adviser will consider:
(i) a company's growth prospects, including the potential for superior
appreciation due to growth in earnings, relative valuation of its securities,
and any risk associated with such investment; (ii) the industry in which the
company operates, with a view to identification of international developments
within industries, international investment trends, and social, economic or
political movements affecting a particular industry; (iii) the country in which
the company is based, as well as historical and anticipated foreign currency
exchange rate fluctuations; and (iv) the feasibility of gaining access to the
securities market in a country and of implementing the necessary custodial
arrangements. The investment program of the Fund has been developed in the
belief that research-based investment in a portfolio of equity securities of
companies in a number of foreign countries will give shareholders a chance to
participate on an international basis in the opportunities available in
developing markets and economies.
OPTIONS ON SECURITIES OR INDICES. The Fund may write (i.e. sell) covered put and
call options and purchase put and call options on securities or securities
indices that are traded on United States and foreign exchanges or in the
over-the-counter markets. An option on a security is a contract that permits the
purchaser of the option, in return for the premium paid, the right to buy a
specified security (in the case of a call option) or to sell a specified
security (in the case of a put option) from or to the writer of the option at a
designated price during the term of the option. An option on a securities index
permits the purchaser of the option, in return for the premium paid, the right
to receive from the seller cash equal to the difference between the closing
price of the index and the exercise price of the option. The Fund may write a
call or put option to generate income, and will do so only if the option is
"covered." This means that so long as the Fund is obligated as the writer of a
call option, it will own the underlying securities subject to the call, or hold
a call at the same or lower exericse price, for the same exercise period, and on
the same securities as the written call. A put is covered if the Fund maintains
liquid assets with value at least equal to the exercise price in a segregated
account, or holds a put on the same underlying securities at an equal or greater
exercise price. The value of the underlying securities on which options may be
written at any one time will not exceed 15% of the total assets of the Fund. The
Fund will not purchase put or call options if the aggregate premium paid for
such options would exceed 5% of its total assets at the time of purchase. See
the "Options" section in the Statement of Additional Information.
RISKS OF THE DEVELOPING MARKETS GROWTH FUND. Investors should carefully consider
the substantial risks associated with investments in securities issued by
companies and governments of foreign countries, which are in addition to the
usual risks inherent with domestic investments. These risk factors are increased
for investments in developing countries. There can be no guarantee against loss
resulting from an investment in the Fund, nor can there be any assurance that
the Fund's investment objective will be attained. The Fund should be considered
as a vehicle for allocating a portion of investor assets to foreign securities
markets and not as a complete investment program. See the discussion below on
"Risks of International Investing" and the Risk Considerations section in the
Statement of Additional Information.
INTERNATIONAL GROWTH FUND
The Fund invests primarily in international equity securities of issuers
domiciled outside the United States. International equity securities in which
the Fund may invest include common and preferred stock, rights and warrants to
purchase equity securities, and debt securities convertible into common stock.
In normal conditions, at least 90% of the Fund's total assets will be invested
in international equity securities.
The Fund may invest up to 5% of its total assets in rights or warrants to
purchase equity securities. In addition to investing directly in equity
securities, the Fund may invest in sponsored and unsponsored American Depository
Receipts ("ADRs") and European Depository Receipts ("EDRs"), and Government
Depository Receipts ("GDRs"). Generally, ADRs in registered form are U.S. dollar
denominated securities designed for use in the U.S. securities markets, which
represent and may be converted into the underlying foreign security. Unsponsored
ADRs are offered by companies which are not prepared to meet either the
reporting or accounting standards of the U.S. While readily exchangeable with
stock in local markets, unsponsored ADRs may be less liquid than sponsored ADRs.
Additionally, there generally is less publicly available information with
respect to unsponsored ADRs. EDRs are typically issued in bearer form and are
designed for use in the European securities markets.
The Fund may invest up to 50% of its total assets in equity securities of
smaller to medium sized emerging growth companies in both developed and
developing markets. For the developed markets, such investments include equity
securities with market capitalizations of over $100 million but less than $2
billion. However, market capitalizations of smaller to medium sized company
equity securities in developing markets are significantly smaller and currently
range between $25 million and $100 million.
Emerging growth companies are small- and medium-sized companies that the Adviser
or Sub-Adviser believes have a potential for earnings growth over time that is
above the growth rate of more established companies or are early in their life
cycles and have the potential to become major enterprises. With respect to the
International Growth Fund, international developing markets are countries
categorized as developing markets by the Interntional Finance Corporation, the
World Bank's private sector division. Such countries currently include but are
not limited to Malaysia, Thailand, Indonesia, the Philippines, South Korea,
Taiwan and certain Latin American countries. Such markets tend to be in the less
economically developed regions of the world. The general characteristics of
developing market countries are discussed above in "Developing Markets"section.
For liquidity purposes, the Fund may also invest up to 10% of its assets in U.S.
dollar denominated or foreign currency denominated cash or in high quality debt
securities with remaining maturities of one year or less. Such securities
include commercial paper, certificates of deposit, bankers acceptances and
securities issued by the U.S. or a foreign government, their agencies or
instrumentalities. All debt securities in which the Fund invests (other than
securities issued or guaranteed by the U.S. or a foreign government, its
agencies or instrumentalities) must be rated Aa or Prime or better by Moody's or
AA or A-1 or better by S&P, or AAA or F-1+ by Fitch, or AAA or Duff1+ by Duff &
Phelps, or be of comparable quality as determined by the Adviser or Sub-Adviser.
Emphasis is placed on identifying securities of companies believed to be
undervalued in the marketplace in relation to factors such as the company's
revenues, earnings, assets and long-term competitive positions which over time
will enhance the equity value of the company. The Fund will not concentrate its
investments in companies of a particular asset size or in a particular industry,
but instead will select its investments based on the characteristics of the
particular markets and economies of the countries in which it invests as well as
the fundamentals of the underlying securities.
In selecting portfolio investments, the Adviser or Sub-Adviser will consider: a
company's growth prospects, including the potential for superior appreciation
due to growth in earnings, relative valuation of its securities, and any risk
associated with such investment; the industry in which the company operates,
with a view to identification of international developments within industries,
international investment trends, and social, economic or political movements
affecting a particular industry; the country in which the company is based, as
well as historical and anticipated foreign currency exchange rate fluctuations;
and the feasibility of gaining access to the securities market in a country and
of implementing the necessary custodial arrangements. The investment program of
the Fund has been developed in the belief that research-based investment in a
portfolio of equity securities of companies in a number of foreign countries
will give shareholders a chance to participate on an international basis in the
opportunities available in the growing foreign securities markets.
Investment will be made in those countries where the Adviser or Sub-Adviser
believes that economic and political factors, including currency movements, are
likely to produce above average investment returns. There is no limitation on
the percentage of the Fund's assets that may be invested at any one time in
securities of companies in one or more countries, except insofar as the Fund is
limited in its ability to invest in other investment companies. However, except
during times that the Fund is in a temporary defensive posture, the Fund will
invest at least 90% of its total assets in the securities of issuers domiciled
in at least three different non-U.S. countries.
The Fund's management anticipates that, from time to time, the Fund may have
more than 25% of its assets invested in securities of companies and concerns
domiciled in the countries of Japan, the United Kingdom and/or Germany. These
are among the leading industrial economies outside the United States and the
values of their stock markets account for a significant portion of the value of
international markets. A discussion of the economies of such countries is set
forth below.
JAPAN. Japan is organized politically as a democratic, parliamentary republic
and has a population of approximately 125 million people. The Japanese economy
is heavily industrial and export oriented. Although Japan is dependent upon
foreign economies for raw materials, Japan's balance of payments in recent year
has been strong and positive.
Japan has eight stock exchanges located throughout the country, but over 80% of
all trading is conducted on the Tokyo Stock Exchange. As of June 30, 1996, the
Japanese market had a market capitalization of approximately $3.1 trillion.
Prices of stocks listed on the Japanese stock exchange are quoted continuously
during regular business hours. Trading commissions are at fixed scale rates
which vary by the type and the value of the transaction, but can be negotiable
for large transactions.
Securities in Japan are denominated and quoted in "yen." Yen are fully
convertible and transferable based on floating exchange rates into all
currencies, without administrative or legal restrictions, for both nonresidents
and residents of Japan.
UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND. The United Kingdom of
Great Britain and Northern Ireland ("U.K.") is a constitutional monarchy and
consists of England, Scotland, Wales and Northern Ireland. The population of the
U.K. is approximately 58 million people. Industry in the U.K. is predominantly
owned in the private sector.
The U.K. has a centralized screen-based trading system located in London, with
separate operating facilities located in Belfast, Birmingham, Bristol, Dublin,
Glasgow, Liverpool and Manchester. Stock exchange commission rates are
negotiable and stock exchange membership is available to limited companies and
to non-residents of the U.K. The Financial Services Act (the "FSA") created a
regulatory body known as the Securities and Investments Board (the "SIB"), which
has the power to delegate certain of its functions to various "self regulatory
organizations", of which the London Stock Exchange is one. Under the FSA
structure, the London Stock Exchange is largely self regulating.
Stock prices are continuously quoted during business hours of the London Stock
Exchange. Trading Commissions in the U.K. are negotiable. As of June 30, 1996,
the market value of the stock market in the U.K. exceeded $1.4 trillion.
Securities in the U.K. are denominated and quoted in "pounds sterling." Pounds
sterling are fully convertible and transferable based on floating exchange rates
into all currencies, without administrative or legal restrictions, for both
nonresidents and residents of the U.K.
THE FEDERAL REPUBLIC OF GERMANY. The Federal Republic of Germany ("Germany") is
a federated republic with a population of approximately 81 million people and a
democratic parliamentary form of government. The German economy is organized
primarily on the basis of private sector ownership, with the state exerting
major influence through ownership only in certain sectors, including
transportation, communication and energy. Unification of the Federal Republic of
Germany with the formerly communist controlled German Democratic Republic took
place in 1990.
Industrial activity makes the largest contribution to the German gross national
product. Although only 5% of German businesses are large scale enterprises, such
large scale businesses account for over half of industrial production and employ
over half the industrial labor force. Trading volume, therefore, tends to
concentrate on relatively few companies with both large capitalizations and
broad stock ownership. Historically the German economy has been strongly export
oriented. Privatization of formerly state owned enterprise in what was once East
Germany is in progress, but will make little difference to the predominance of
large scale businesses in overall industrial activity.
German equity securities trade predominantly on the country's eight independent
local stock exchanges, and the Frankfurt exchange accounts for 70% of turnover.
Subject to the provisions of pertinent securities law, mainly the Stock Exchange
Law of 1896, as amended, the council, management and other executive organs of
the stock exchanges constitute self administering and self regulatory bodies.
The "Working Group of German Stock Exchanes" headquartered in Frankfurt, of
which all eight stock exchanges are members, addresses all policy and
administrative questions of national and international character.
Prices for active stocks, including those for larger companies, are quoted
continuously during stock exchange hours. Less actively traded stocks are quoted
only once a day. Equity shares are normally fully paid and nonassessable. As of
June 30, 1996 the market value of the Frankfurt (German) market was
approximately $570 billion.
Orders for stocks executed for large customers on the stock exchanges are
negotiable. A federal stock exchange turnover tax, ranging up to 0.25%, is
levied on all securities transactions other than those between banks acting as
principal. Nonresidents such as the Fund are charged half these rates.
German equity securities are denominated in "deutchemarks." Deutchemarks are
fully convertible and transferable into all currencies, without administrative
or legal restrictions, for both nonresidents and residents of Germany. Since
1974, the deutchemark has traded on a floating exchange rate basis against all
currencies.
RISKS OF INTERNATIONAL INVESTING
CURRENCY CONTRACTS. The Developing Markets Growth Fund and the International
Growth Fund may enter into contracts for the purchase or sale of a specific
currency at a future date and at a price set at the time of the contract (a
"currency contract"). The Funds may enter into forward currency contracts either
with respect to specific transactions or with respect to the Funds' portfolio
positions. For example, when the Adviser or Sub-Adviser anticipates making a
purchase or sale of a security, the Fund may enter into a forward currency
contract in order to set the rate (either relative to the U.S. dollar or another
currency) at which a currency exchange transaction related to the purchase or
sale will be made. Further, when the Adviser or Sub-Adviser believes that a
particular currency may decline compared to the U.S. dollar or another currency,
the Funds may enter into a forward contract to sell the currency the Adviser or
Sub-Adviser expects to decline in the amount approximating the value of some or
all of the Funds' portfolio securities denominated in that currency or related
currencies that the Adviser or Sub-Adviser feels demonstrate a correlation in
exchange rate movements. The practice of using correlated currencies is known as
"cross-hedging". When the Adviser or Sub-Adviser believes that the U.S. dollar
may suffer a substantial decline against a foreign currency or currencies, the
Funds may enter into a forward contract to buy a foreign currency for a fixed
dollar amount. By entering into such transactions, however, the Funds may be
required to forego the benefits of advantageous changes in exchange rates.
Currency contracts are traded over-the-counter, and not on organized commodities
or securities exchanges. As a result, such contracts operate in a manner
distinct from exchange-traded instruments, and their use involves certain risks
beyond those associated with transactions in other futures contracts. The Funds
will establish a segregated account with its custodian containing cash and
liquid high grade debt obligations to cover the Funds' obligations with respect
to forward contracts it has entered into. The value of such assets will be
marked to market on a daily basis.
Although the Funds will enter into currency contracts solely for hedging
purposes, their use does involve certain risks. For example, there can be no
assurance that a liquid secondary market will exist for any currency contract
purchased or sold, and the Funds may be required to maintain a position until
exercise or expiration, which could result in losses.
Currency contracts may be entered into on United States exchanges regulated by
the SEC or the Commodity Futures Trading Commission (the "CFTC"), as well as in
the over-the-counter market and on foreign exchanges. Investors should recognize
that transactions involving foreign securities or foreign currencies, and
transactions entered into in foreign countries, may involve considerations and
risks not typically associated with investing in U.S. markets.
CURRENCY FLUCTUATIONS. The value of the Funds' portfolio securities computed in
U.S. dollars will vary with increases and decreases in the exchange rate between
the currencies in which the Funds have invested and the U.S. dollar. A decline
in the value of any particular currency against the U.S. dollar will cause a
decline in the U.S. dollar value of the Funds' holdings of securities
denominated in such currency and, therefore, will cause an overall decline in
the Funds' net asset value and net investment income and capital gains, if any,
to be distributed in U.S. dollars to shareholders by the Funds.
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the price of oil, the pace of activity in the industrial countries,
including the United States and other economic and financial conditions
affecting the world economy.
POLITICAL AND ECONOMIC RISKS. Investing in securities of non-U.S. companies may
entail additional risks due to the potential political and economic instability
of certain countries and the risks of expropriation, nationalization or
confiscatory taxation. In addition, favorable economic developments worldwide
may not continue or may be reversed by unanticipated political events which may
adversely affect the Funds. The Funds may also be adversely affected by exchange
control regulations.
CORPORATE DISCLOSURE STANDARDS AND GOVERNMENT REGULATION. Non-U.S. companies are
not generally subject to uniform accounting, auditing and financial reporting
standards or to other regulatory requirements comparable to those applicable to
U.S. companies. Thus, there may be less available information concerning
non-U.S. issuers of securities held by the Fund than is available concerning
U.S. companies.
MARKET CHARACTERISTICS. Securities of many non-U.S. companies may be less liquid
and their prices more volatile than securities of comparable U.S. companies. In
addition, securities of companies traded in many countries outside the U.S.,
particularly those of emerging countries, may be subject to further risks due to
the inexperience of financial intermediaries, the possibility of permanent or
temporary termination of trading and greater spreads between bid and ask prices
for securities in such markets. Non-U.S. stock exchanges and brokers are subject
to less governmental supervision and regulation than in the U.S. and non-U.S.
stock exchange transactions are usually subject to fixed commissions, which are
generally higher than negotiated commissions on U.S. transactions. In addition,
non-U.S. stock exchange transactions may be subject to difficulties associated
with the settlement of such transactions. Such settlement difficulties may
result in delays in reinvestment. The Adviser or Sub-Adviser will consider such
difficulties when determining the allocation of the Funds' assets, although the
Funds do not believe that such difficulties will materially adversely affect
their portfolio trading activities.
INVESTMENT AND REPATRIATION RESTRICTIONS. Several of the countries in which the
Funds may invest restrict, to varying degrees, foreign investments in their
securities markets. Governmental and private restrictions take a variety of
forms, including (i) limitations on the amount of funds that may be invested
into or repatriated from the country (including limitations on repatriation of
investment income and capital gains), (ii) prohibitions or substantial
restrictions on foreign investment in certain industries or market sectors, such
as defense, energy and transportation, (iii) restrictions (whether contained in
the charter of an individual company or mandated by the government) on the
percentage of securities of a single issuer which may be owned by a foreign
investor, (iv) limitations on the types of securities which a foreign investor
may purchase and (v) restrictions on a foreign investor's right to invest in
companies whose securities are not publicly traded. In some circumstances, these
restrictions may limit or preclude investment in certain countries and the Funds
intend to invest only through the purchase of shares of investment funds
organized under the laws of such countries.
The return on the Funds' investments in investment companies will be reduced by
the operating expenses, including investment advisory and administrative fees,
of such companies. The Funds' investment in an investment company may require
the payment of a premium above the net asset value of the investment company's
shares, and the market price of the investment company thereafter may decline
without any change in the value of the investment company's assets. The Funds,
however, will not invest in any investment company or trust unless it is
believed that the potential benefits of such investment are sufficient to
warrant the payment of any such premium.
EMERGING GROWTH COMPANIES. The Developing Markets Growth Fund and the
International Growth Fund may invest in emerging growth companies which involves
certain special risks. Emerging growth companies may have limited product lines,
markets, or financial resources, and their managements may be dependent on a
limited number of key individuals. The securities of emerging growth companies
may have limited market liquidity and may be subject to more abrupt or erratic
market movements than securities of larger, more established companies or the
market averages in general.
The risks of foreign investing are of greater concern in the case of investments
in developing markets which may exhibit greater price volatility and have less
liquidity. Furthermore, the economies of developing market countries generally
are heavily dependent upon international trade and, accordingly, have been and
may continue to be adversely affected by trade barriers, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the countries with which they trade. These developing market economies also
have been and may continue to be adversely affected by economic conditions in
the countries with which they trade.
FOREIGN TAXATION. The Funds' interest and dividend income from foreign issuers
may be subject to non-U.S. withholding taxes. The Funds also may be subject to
taxes on trading profits in some countries. In addition, many of the countries
in the Pacific Basin have a transfer or stamp duties tax on certain securities
transactions. The imposition of these taxes will increase the cost to the Fund
of investing in any country imposing such taxes. For United States tax purposes,
United States shareholders may be entitled to a credit or deduction to the
extent of any foreign income taxes paid by the Fund. See "Taxes" section below.
COMMON POLICIES & INFORMATION
SECURITIES LENDING
From time to time, each of the Funds may lend portfolio securities to brokers,
dealers and other financial institutions needing to borrow securities to
complete certain transactions. Such loans may not exceed 33-1/3% of the value of
a Fund's total net assets. In connection with such loans, the Fund will receive
collateral consisting of cash, U.S. Government securities or irrevocable letters
of credit issued by domestic financial institutions which will be maintained in
an amount equal to at least 100% of the current market value of the loaned
securities.
PUTS AND CALLS
A put option gives the purchaser the option, in return for a premium paid, the
right to sell the underlying security at a specified price during the term of
the option. A call option gives the purchaser of the option, in return for a
premium, the right to buy the security underlying the option at a specified
exercise price at any time during the term of the option. While a Fund does not
anticipate utilizing puts and calls on a regular basis, a Fund may from time to
time write exchange-traded call options on common stocks, for which it will
receive a purchase premium from the buyer, and may purchase and sell
exchange-traded call and put options on common stocks written by others or
combinations thereof. A Fund will not write unsecured put options but may write
fully covered call options. The aggregate cost of all outstanding options
purchased and held by a Fund will at no time exceed 5% of the Fund's net assets.
WHEN-ISSUED AND FORWARD COMMITMENT SECURITIES
The Funds may purchase securities on a "when-issued" basis and may purchase or
sell securities on a "forward commitment" basis. When such transactions are
negotiated, the price is fixed at the time the commitment is made, but delivery
and payment for the securities take place at a later date, which can be a month
or more after the date of the transaction. The Funds will not accrue income in
respect of a security purchased on a forward commitment basis prior to its
stated delivery date. At the time the Funds make the commitment to purchase
securities on a when-issued or forward commitment basis, they will record the
transaction and thereafter reflect the value of such securities in determining
their net asset value. At the time the Funds enter into a transaction on a
when-issued or forward commitment basis, a segregated account consisting of cash
and liquid high grade debt obligations equal to the value of the when-issued or
forward commitment securities will be established and maintained with the
custodian and will be marked to the market daily. On the delivery date, the
Funds will meet their obligations from securities that are then maturing or
sales of the securities held in the segregated asset account and/or from then
available cash flow. If the Funds dispose of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it can incur a gain or loss due to market
fluctuation.
There is always a risk that the securities may not be delivered and that the
Fund may incur a loss or will have lost the opportunity to invest the amount set
aside for such transaction in the segregated asset account. Settlements in the
ordinary course of business, which may take substantially more than five
business days for non-U.S. securities, are not treated by the Fund as
when-issued or forward commitment transactions and, accordingly, are not subject
to the foregoing limitations even though some of the risks described above may
be present in such transactions.
REPURCHASE AGREEMENTS
Each Fund is permitted to invest in repurchase agreements. A repurchase
agreement is a contract by which the Fund acquires the security ("collateral")
subject to the obligation of the seller to repurchase the security at a fixed
price and date (within seven days). A repurchase agreement may be construed as a
loan pursuant to the 1940 Act. The Funds may enter into repurchase agreements
with respect to any securities which it may acquire consistent with its
investment policies and restrictions. The Funds' custodian will hold the
securities underlying any repurchase agreement in a segregated account. In
investing in repurchase agreements, the Funds' risk is limited to the ability of
the seller to pay the agreed-upon price at the maturity of the repurchase
agreement. In the opinion of the Adviser, such risk is not material, since in
the event of default, barring extraordinary circumstances, the Funds would be
entitled to sell the underlying securities or otherwise receive adequate
protection under federal bankruptcy laws for its interest in such securities.
However, to the extent that proceeds from any sale upon a default are less than
the repurchase price, the Funds could suffer a loss. In addition, the Funds may
incur certain delays in obtaining direct ownership of the collateral. The
Adviser will continually monitor the value of the underlying securities to
ensure that their value always equals or exceeds the repurchase price. The
Adviser will submit a list of recommended issuers of repurchase agreements and
other short-term securities which it has reviewed for credit worthiness to the
Funds' directors at least quarterly for their approval.
ILLIQUID SECURITIES
Each Fund may invest up to 15% of its net assets in all forms of "illiquid
securities." An investment is generally deemed to be "illiquid" if it cannot be
disposed of within seven days in the ordinary course of business at
approximately the amount at which such securities are valued by the Fund.
Restricted securities are securities which were originally sold in private
placements and which have not been registered under the Securities Act of 1933
(the "1933 Act"). Such securities generally have been considered illiquid by the
staff of the Securities and Exchange Commission (the "SEC"), since such
securities may be resold only subject to statutory restsrictions and delays or
if registered under the 1933 Act. However, the SEC has recently acknowledged
that a market exists for certain restricted securities (for example, securities
qualifying for resale to certain "qualified institutional buyers" pursuant to
Rule 144A under the 1933 Act). Additionally, a similar market exists for
commercial paper issued pursuant to the private placement exemption of Section
4(2) of the 1933 Act. As a fundamental policy, the Funds may invest without
limitation in these forms of restricted securities if such securities are
determined by the Adviser to be liquid in accordance with standards established
by the Funds' Board of Directors. Under these standards, the Adviser must
consider (a) the frequency of trades and quotes for the security, (b) the number
of dealers willing to purchase or sell the security and the number of other
potential purchasers, (c) dealer undertakings to make a market in the security,
and (d) the nature of the security and the nature of the marketplace trades (for
example, the time needed to dispose of the secuity, the method of soliciting
offers and the mechanics of transfer).
At the present time, it is not possible to predict with accuracy how the markets
for certain restricted securities will develop. Investing in restricted
securities could have the effect of increasing the level of a Fund's illiquidity
to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities.
INVESTMENT IN SIT MONEY MARKET FUND
The Funds may invest up to the greater of 5% of their total net assets or $2.5
million in Sit Money Market Fund ("Money Market Fund"), which also is advised by
the Adviser, subject to the conditions contained in an exemptive order (the
"Exemptive Order") issued to the Funds and the Adviser by the Securities and
Exchange Commission. Such investments may be made in lieu of direct investments
in short term money market instruments if the Adviser believes that they are in
the best interest of the Funds. The Exemptive Order requires the Adviser and its
affiliates, in their capacities as service providers for the Money Market Fund,
to remit to the Funds, or waive, an amount equal to all fees otherwise due to
them under their advisory and other agreements with Money Market Fund to the
extent such fees are based upon a Fund's assets invested in shares of Money
Market Fund. This requirement is intended to prevent shareholders of the Funds
from being subjected to double management and other asset-based fees as a result
of a Fund's investments in Money Market Fund.
PORTFOLIO TURNOVER
To attain the investment goals of the Funds, the Adviser will usually hold
securities for the long-term. However, if weak or declining market values for
stocks are anticipated, the Adviser may convert any portion of these Fund assets
to cash or short-term securities as a temporary, defensive position. The
turnover rate of the Funds may be greater than other mutual funds with similar
objectives.
Generally, none of the Funds will trade in securities for short-term profits,
but if circumstances warrant, securities may be sold without regard to length of
time held. The Funds will make sector spread changes in response to changing
market conditions. Debt securities may be sold in anticipation of a market
decline (a rise in interest rates) or purchased in anticipation of a market rise
(a decline in interest rates) and later sold.
Increased turnover results in increased brokerage costs and may result in higher
transaction costs for the Funds and may affect the taxes shareholders pay. If a
security that has been held for less than the holding period set by law is sold,
any resulting gains will be taxed in the same manner as ordinary income as
opposed to long-term capital gain. Each Fund's turnover rate may vary from year
to year. For additional information, refer to the "Taxes" section below and the
"Taxes" and "Brokerage" sections in the Statement of Additional Information. The
portfolio turnover rates for each of the Funds are contained in the Condensed
Financial Information tables in this prospectus.
RELATIONSHIP OF DEBT SECURITIES AND INTEREST RATES
The value of debt securities purchased by the Funds, if any, may be affected by
changes in interest rates. There is normally an inverse relationship between the
market value of securities sensitive to prevailing interest rates and actual
changes in interest rates. When interest rates decline, the value of debt
securities generally increases and when interest rates rise, the value of debt
securities generally decreases. Therefore, changes in interest rates may affect
the Funds' net asset values. Common stocks and securities convertible into
common stocks may, under certain circumstances, be adversely impacted by rising
interest rates as well, due to the impact of those rates on stock prices in
general.
TEMPORARY DEFENSIVE INVESTMENTS
For temporary defensive purposes in periods of unusual market conditions, the
Funds may invest all or a portion of their assets in cash, short-term debt
securities including certificates of deposit, bankers' acceptances and other
bank obligations, corporate and direct U.S. obligation bonds, notes, bills,
commercial paper and repurchase agreements.
RATINGS OF DEBT SECURITIES
Investment grade debt securities are rated AAA, AA, A or BBB by Standard &
Poor's Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch"), and Duff &
Phelps Credit Rating Co. ("Duff & Phelps"); or Aaa, Aa, A or Baa by Moodys
Investors Services ("Moody's"). Investment grade municipal notes are rated MIG
1, MIG 2, MIG 3 or MIG 4 (VMIG 1, VMIG 2, VMIG 3 or VMIG 4 for notes with a
demand feature) by Moodys or SP-1 or SP-2 by S&P. Securities rated Baa, MIG 4,
VMIG 4 or BBB are medium grade, involve some speculative elements and are the
lowest investment grade available. These securities generally have less certain
protection of principal and interest payments than higher rated securities.
Securities rated Ba or BB (in which Growth & Income Fund, Balanced Fund and
Developing Markets Growth Fund may invest) are judged to have some speculative
elements with regard to capacity to pay interest and repay principal. Debt
securities rated C (in which the Developing Markets Growth Fund may invest) are
regarded as having predominantly speculative characteristic. DEBT SECURITIES
RATED BELOW INVESTMENT GRADE ARE COMMONLY KNOWN AS JUNK BONDS. See the Statement
of Additional Information for further information about ratings.
The commercial paper purchased by the Funds will consist only of direct
obligations which, at the time of purchase, are (a) rated P-1 by Moody's or A-1
by S&P, or (b) if not rated, issued by companies having an outstanding unsecured
debt issue which at the time of purchase is rated Aa or higher by Moody's or AA
or higher by S&P.
OTHER INVESTMENT RESTRICTIONS
In addition to the investment policies and restrictions referred to above, each
Fund is subject to various other investment restrictions. These restrictions,
which are set forth in more detail in the Statement of Additional Information,
include, but are not limited to, restrictions whereby the Funds may (a) not
invest more than 25% of the value of its assets in any particular industry,
except with regard to the purchase of obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities; and (b) except as part of a
merger, consolidation, acquisition, or reorganization, not invest more than 5%
of the value of its total assets in the securities of any one investment company
or more than 10% of the value of its total assets, in the aggregate, in the
securities of two or more investment companies, or acquire more than 3% of the
total outstanding voting securities of any one investment company. Since the
Adviser does not waive its fees if and to the extent a Fund invests in the
securities of one or more other investment companies (except for investments in
the Sit Money Market Fund), the Funds indirectly pay duplicate advisory fees
with respect to such investments. However, the Adviser believes that the return
and liquidity features of investment company securities may, from time to time,
be more beneficial to the Funds than alternative short-term, liquid investments,
and that the duplicate fees and expenses will have a relatively small impact on
overall Fund expenses.
COMPUTATION OF NET ASSET VALUE
Net asset value per share (the value of an individual share in a Fund) is
determined as of the close of the New York Stock Exchange (NYSE) on each day
that the exchange is open for business. Normally the NYSE closes at 3:00 p.m.
Central time. The net asset value is calculated by dividing the total value of a
Fund's investments and other assets (including accrued income), less any
liabilities, by the number of shares outstanding. The net asset value per share
of each Fund will fluctuate.
Securities which are traded on an exchange or on the NASDAQ over-the-counter
market are valued at the last quoted sale price of the day. Lacking a last sale
price, a security is generally valued at its last bid price. All other
securities for which over-the-counter market quotations are readily available
are valued at their last bid price. When market quotations are not readily
available, or when restricted securities are being valued, such securities are
valued at fair value using methods selected in good faith by the Boards of
Directors.
Debt securities may be valued on the basis of prices furnished by a pricing
service when the Adviser believes such prices accurately reflect the fair market
value of such securities. Such a pricing service utilizes electronic data
processing techniques to determine prices for normal institutional-size trading
units of debt securities without regard to sale or bid prices. When prices are
not readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities may be valued at fair value using
methods selected in good faith by the Boards of Directors. Short-term
investments in debt securities with maturities of less than 60 days when
acquired, or which subsequently are within 60 days of maturity, are valued by
using the amortized cost method of valuation. The amortized cost method of
valuation will be used only if the Boards of Directors, in good faith, determine
that the fair value of the securities shall be their amortized cost value,
unless the particular circumstances dictate otherwise.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and ask prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If neither of these
alternatives is available or both are deemed not to provide a suitable
methodology for converting a foreign currency into U.S. dollars, the Board of
Directors in good faith will establish a conversion rate for such currency.
Foreign securities trading may not take place on all days on which the New York
Stock Exchange is open. Further, trading takes place in various foreign markets
on days on which the Exchange is not open and therefore the Fund's net asset
value is not calculated. The calculation of the International Growth Fund and
Developing Markets Growth Fund's net asset value therefore may not take place
contemporaneously with the determination of the prices of securities held by
these Funds. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of the Exchange will
not be reflected in the Developing Markets Growth Fund or International Growth
Fund's net asset value unless management, under the supervision of the Board of
Directors, determines that the particular event would materially affect the net
asset value. As a result, the Developing Markets Growth Fund or International
Growth Fund's net asset value may be significantly affected by such trading on
days when the Fund is not open for shareholder purchases and redemptions.
HOW TO PURCHASE FUND SHARES
Shares of the Funds may be purchased without a sales commission at the net asset
value per share (see "Computation of Net Asset Value") next determined after
receipt of a purchase order in proper form. The minimum initial investment is
$2,000 for each Fund and additional investments must be at least $100. Accounts
may be established with a $500 minimum initial purchase if an Automatic
Investment Plan for at least $100 per month is also established. The minimum
purchase requirements do not apply to retirement accounts (see "Retirement
Accounts").
SEE THE INSIDE BACK COVER OF THIS PROSPECTUS FOR THE FUNDS' MAILING ADDRESS,
TELEPHONE NUMBERS, AND WIRE INSTRUCTIONS.
INITIAL INVESTMENT
BY MAIL. To open an account, complete and sign an application and mail it with a
check to the Funds as instructed on the application.
BY WIRE. Shares of the Funds may be purchased by wiring Federal Funds from your
bank, which may charge you a fee. Before money is wired for an initial purchase
(new account), you must call the Funds and provide the following information:
name or names of the account registration; address; social security or tax
identification number; the amount being wired; the name of the wiring bank; and
the name and telephone number of the person at your bank. The Funds will provide
you with an account number and your bank must then wire the specified amount
(minimum $2,000 if non-retirement account) to your account.
YOU MUST MAIL A COMPLETED APPLICATION TO THE FUNDS AFTER OPENING AN ACCOUNT BY
WIRE TRANSFER. IF A COMPLETED APPLICATION IS NOT RECEIVED OR YOUR SOCIAL
SECURITY OR TAX IDENTIFICATION NUMBER IS NOT CERTIFIED WITH A FORM W-9, YOUR
ACCOUNT WILL BE SUBJECT TO BACK-UP WITHHOLDING WITHIN 60 DAYS.
Wire orders will be accepted only on a day on which the Funds and the Funds'
Transfer Agent are open for business. A wire purchase will not be considered
made until the wired money is received and the purchase is accepted by the Fund.
Any delays which may occur in wiring money, including delays which may occur in
processing by the banks, are not the responsibility of the Funds or the Funds'
Transfer Agent.
WHEN ORDERS ARE EFFECTIVE
Purchases made by mail will be effective at the net asset value per share next
determined after receipt of the purchase order in proper form.
Purchases transmitted by wire to the Funds and received prior to the close of
the New York Stock Exchange (NYSE), normally 3:00 p.m. Central time, will be
invested at the net asset value per share calculated for that day. If received
after this deadline, the purchase will be made at the net asset value next
calculated. You become a shareholder after declaration of any dividend on the
day on which the order is effective. Dividends begin to accrue after you become
a shareholder.
ADDITIONAL INVESTMENTS
BY MAIL. You may make subsequent purchases (minimum $100) by mailing the
reinvestment stub attached to your account confirmation statement or a letter of
instruction (providing your account number and the name(s) on the account)
together with a check made payable to the Fund.
BY WIRE. You may purchase additional shares by wiring funds. For wire
instructions, see the inside back cover of this prospectus. After you have
initiated the wire purchase through your bank, please notify the Funds that a
wire purchase is being made to your account.
BY ACH. You may purchase shares for non-IRA accounts via electronic transfer of
funds if you have selected this option in Step 4 of the application. If you call
the Funds prior to the close of the NYSE, normally 3:00 p.m. Central time, your
purchase will be effective at the net asset value on the next business day (on
which the net asset value is calculated) after your telephone call and your bank
account will be debited within 1 to 2 business days.
BY AUTOMATIC INVESTMENT PLAN. After your initial investment of $2,000 or more,
you can make automatic monthly purchases (on any day of the month) of $100 or
more. To use this option, you must complete the Automatic Investment Plan
section of the application or if adding this option to an existing account, the
Change of Account Options form.. You can change the amount or terminate this
option by written notice to the Fund at any time.
OTHER PURCHASE INFORMATION
All purchases are subject to acceptance by authorized officers of the Funds and
are not binding until accepted. The Funds reserve the right to reject purchase
orders when, in the judgment of management, such rejection is in the best
interests of the Funds. At their discretion, the Funds may accept telephone
purchases and redemptions from a broker and/or a broker-dealer. Investors who
purchase or redeem shares through a broker and/or a broker-dealer may be charged
a transaction fee.
REDEMPTION OF FUND SHARES
You may redeem (sell) all or a portion of your shares at any time that the net
asset value is calculated. Shares will be redeemed at the net asset value per
share next determined after the request is received. A redemption may be more or
less than your cost depending on the market value of the Fund's securities. IF
YOU REQUEST A REDEMPTION AFTER A PURCHASE BY PERSONAL CHECK (E.G. NONGUARANTEED
FUNDS) THE FUND MAY DELAY SENDING YOUR REDEMPTION PROCEEDS UNTIL YOUR CHECK HAS
CLEARED (GOOD PAYMENT HAS BEEN COLLECTED), WHICH MAY TAKE UP TO TEN DAYS. YOU
MAY AVOID THIS DELAY BY PURCHASING SHARES WITH A CERTIFIED CHECK OR BANK WIRE OF
FEDERAL FUNDS.
Each Fund may suspend redemption privileges or postpone the date of payment (1)
during any period that the New York Stock Exchange is closed other than
customary weekend or holiday closings, or when trading is restricted, as
determined by the Securities and Exchange Commission, (2) during any period when
an emergency exists, as determined by the Securities and Exchange Commission, as
a result of which it is not reasonably practical for the Fund to dispose of
securities owned by it or to fairly determine the value of its assets, and (3)
for such other periods as the Securities and Exchange Commission may permit.
BY MAIL. You may request a redemption by sending a written request in "good
order" to the Funds. "Good order" means that the request for redemption must
include the following:
1. A letter of instruction specifying the name of the Fund, account number
and number of shares or dollar amount to be redeemed, signed by all
registered owners exactly as their names appear on the account.
2. Other supporting legal documents as required for estates, trusts,
guardianships, custodianships, corporations, pension and profit sharing
plans and other organizations.
Payment will generally be made within 7 days after receipt of a redemption
request in "good order". A request for redemption cannot be canceled or revoked.
A signature guarantee is required if you request a redemption to be made payable
to someone other than the registered owners and/or if you request the proceeds
to be sent to an address other than the registered address.
If you are uncertain of the requirements for redemption, write or call the Funds
at 800-332-5580 or 612-334-5888.
BY WIRE. If you desire to make a redemption by wire of Federal Funds, a written
request in "good order" must first be received by the Funds. Your request should
contain specific wire instructions including the bank to which the proceeds are
to be wired, its address and your account number. Shares will be redeemed at the
net asset value next determined after the redemption request is received in good
order. If the proceeds are wired to your account at a bank which is not a member
of the Federal Reserve System, there could be a delay in crediting the funds to
your bank account. You will be required to pay a charge for the wiring cost
(currently $8) which will be deducted from the balance of your account or from
the amount being wired if your account has been completely redeemed.
TELEPHONE REDEMPTION
You may redeem up to $50,000 per day by telephone if you have authorized this
option for your account. This limitation does not apply to omnibus accounts. For
purposes of this limitation, accounts with the same registration in different
Funds will be aggregated.
If you call the Funds prior to the close of the NYSE, normally 3:00 p.m. Central
time your redemption will be effective at the net asset value that same day. You
must complete the Telephone Redemption Authorization section of the application
to establish this option for each account for which you want this option. You
must obtain a signature guarantee(s) to add this option to an existing account.
The Fund will employ reasonable procedures to confirm that telephone
instructions are genuine, and including requiring that payments be made only to
the shareholder's address of record or the bank account designated on the
application and requiring certain means of telephonic identification. If the
Fund fails to employ such procedures, it may be liable for any losses suffered
by Fund shareholders as a result of unauthorized or fraudulent instructions.
During times of chaotic economic or market circumstances, a shareholder may have
difficulty reaching the Funds by telephone. Consequently, an exchange or
redemption by telephone may be difficult to implement at those times.
BY MAIL. Telephone redemption proceeds can be mailed to your address of record.
If you wish to change your address or bank information and you have elected the
telephone rdemption option, a signature guarantee is necessary to make these
changes.
BY WIRE. Telephone redemption proceeds can be wired to your bank. Proceeds will
be wired to your bank account the next business day after you request a
telephone redemption.
BY ACH. Electronic transfer of funds via Automated Clearing House (ACH) is
available for redemption of shares for non-IRA accounts. Your bank account will
be credited within 1-2 business days after you request a telephone redemption.
To establish this option, complete Step 4 of the application.
SYSTEMATIC WITHDRAWAL PLAN
You may establish a Systematic Withdrawal Plan to receive periodic redemptions
of at least $100 on a monthly, quarterly, semi-annual or annual basis.
Systematic withdrawals may eventually exhaust your account. Each withdrawal
constitutes a redemption and any gain or loss realized must be recognized for
federal income tax purposes.
OTHER REDEMPTION INFORMATION
At the discretion of the Board of Directors, each Fund may involuntarily redeem
accounts which have a balance less than $2,000. Such accounts may be redeemed
after giving written notice to the registered owner of the account. If the
shareholder does not increase the amount of the account above $2,000 within 30
days, the Fund may send the shareholder a check for the redemption proceeds as
determined at the next calculated net asset value.
EXCHANGES
An exchange is made by redeeming shares of one Fund and using the proceeds to
buy shares of another Sit Fund. There is no charge for this service, but the
Funds reserve the right to charge a fee in the future. An exchange results in a
sale of shares for federal income tax purposes and you may realize either a
long-term or short-term capital gain or loss on the shares redeemed. Before
making an exchange, you should read the prospectus and consider the investment
objective of the Fund to be purchased.
An exchange may be done by telephone (subject to the same procedures for
telephone identification as telephone redemption above) or by written request to
the Funds. A written request must be signed by all registered owners of the
account. There is no charge for this service, but the Fund reserves the right to
charge a fee in the future. When you establish your account, the exchange
privilege will automatically be established unless you indicate that you do not
want it. If your exchange creates a new account, the new account ownership must
be identical and you must satisfy the minimum initial purchase requirement. You
may make an exchange to a new account or an existing account. There is a limit
of four exchanges out of each Fund per year per account. Exchanges may be made
only in states where allowed by law.
In addition, each Fund reserves the right to refuse exchanges if, in the
Adviser's judgment, the Fund would be unable to invest effectively in accordance
with its investment objectives and policies, or would otherwise potentially be
adversely affected. Exchanges may be restricted or refused if a Fund receives or
anticipates simultaneous orders affecting significant portions of the Fund's
assets. Although the Fund will attempt to give prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. The
Funds reserve the right to terminate or modify the exchange privilege in the
future.
SYSTEMATIC EXCHANGE PLAN
If you wish to exchange fixed periodic amounts between Funds, you may establish
the Systematic Exchange Plan. You may exchange a predetermined amount from one
Fund to another Fund on any business day of the month. An exchange may be done
monthly, or you may choose which months you wish to have the exchange made.
Systematic exchanges are subject to the same requirements as other exchanges.
DIVIDEND REINVESTMENT
The policy of the Small Cap Growth Fund, Mid Cap Growth Fund, Large Cap Growth
Fund, Developing Markets Growth Fund, and the International Growth Fund is to
distribute an annual dividend from its net investment income. The policy of the
Balanced Fund is to distribute quarterly dividends from its net investment
income. Net investment income includes dividends on stocks and interest earned
on bonds or other debt securities less operating expenses.
When any Fund sells portfolio securities, it may realize a gain or loss,
depending on whether it sells them for more or less than its cost. Net realized
capital gain, if any, will be distributed at least once annually by each Fund.
Income dividends and capital gain distributions are automatically reinvested in
additional shares at the net asset value per share on the distribution date.
Dividends may be automatically directed from one Fund to another Fund. You may
request a cash payment of dividends and/or capital gain distributions on the
application or by separate written notice to the Funds. Shareholders will
receive a confirmation statement reflecting the payment and reinvestment of
dividends. If cash payment is requested, a check normally will be mailed within
five business days after the payable date. If you withdraw your entire account,
all dividends accrued to the time of withdrawal, including the day of
withdrawal, will be paid at that time.
RETIREMENT ACCOUNTS
Taxes on current income can be deferred by investing in Keogh plans, Individual
Retirement Accounts (IRAs), Simplified Employee Pensions (SEPs), 401(k),
pension, profit-sharing, employee benefit, deferred compensation and other
qualified retirement plans. The federal tax law governing these tax-deferred
retirement plans must be complied with to avoid adverse tax consequences.
The Funds are available for your tax-deferred retirement plan with no minimum
investment requirements for initial or additional contributions. Such retirement
plans must have a qualified plan sponsor or trustee. The Adviser sponsors
prototype 401(k), profit sharing, and money purchase plans as well as IRA,
SEP-IRA and Keogh plans. You should contact the Adviser for specific plan
documentation. You should also consult your tax adviser before investing.
CUSTODIAN AND TRANSFER AGENT
The Northern Trust Company, 50 South LaSalle Street, Chicago, IL 60675, acts as
Custodian for each Fund pursuant to the terms of a Custodian Agreement. The
Custodian holds all securities and cash, receives and pays for securities
purchased, delivers against payment for securities sold, receives and collects
income from investments and performs other administrative duties, all under the
supervision of officers of the Funds or the Adviser or Sub-Adviser. The Northern
Trust Company has engaged sub-custodian institutions in various foreign
countries in which the Developing Markets Growth Fund's and International Growth
Fund's assets are custodied. For a further discussion of foreign countries and
institutions in which Developing Markets Growth Fund or International Growth
Fund's assets are custodied, see the Statement of Additional Information.
Pursuant to the terms of a Transfer Agency and Services Agreement and the
Accounting Services Agreement with each Fund, First Data Investor Services
Group, Inc. 4400 Computer Drive, B215, Westborough, MA 01581 is the transfer
agent, dividend disbursing agent and accounting services agent for each Fund.
First Data Investor Services processes purchase orders, redemption orders and
all related shareholder accounting services.
MANAGEMENT
BOARD OF DIRECTORS
The Mid Cap Growth Fund, Large Cap Growth Fund, and the corporate issuer of the
International Growth Fund, Balanced Fund, Developing Markets Growth Fund, and
Small Cap Growth Fund have corporate officers and Boards of Directors. Pursuant
to Minnesota law, the Boards of Directors are responsible for the management of
the Funds and he establishment of the Fund policies. The officers of the Funds
manage the day-to-day operation of the Funds.
INVESTMENT ADVISER
Sit Investment Associates, Inc. (the Adviser") was incorporated in Minnesota on
July 14, 1981 and serves as the Funds' Investment Adviser pursuant to Investment
Management Agreements (the "Agreements"). In addition to the Funds, the Adviser
together with its affiliates (including the Sub-Adviser) currently manage public
and private accounts with combined assets of approximately $5.4 billion. The
address of the Adviser is 4600 Norwest Center, Minneapolis, Minnesota 55402.
Under each of Small Cap Growth Fund's, Mid Cap Growth Fund's, Large Cap Growth
Fund's, Balanced Fund's, Developing Markets Growth Fund's and International
Growth Fund's Investment Management Agreement, each Fund is obligated to pay the
Adviser a flat monthly fee based on the average daily net assets ("net assets")
on an annual basis as follows:
Small Cap Growth Fund 1.50%
Mid Cap Growth Fund 1.25%
Large Cap Growth Fund 1.00%
Balanced Fund 1.00%
Developing Markets Growth Fund 2.00%
International Growth Fund 1.85%
Under each Funds' Agreements, the Adviser has agreed to bear all of the Funds'
expenses, except for extraordinary expenses (as designated by a majority of the
Funds' disinterested directors), interest, brokerage commissions and other
transaction charges relating to the investing activities of the Fund. Investment
advisory fees in excess of .75% per year of a fund's average daily net assets
are considered to be higher than investment advisory fees paid by most other
investment companies; however, the Adviser has either agreed to pay or reimburse
each Fund for all or certain of their other operating expenses as more fully set
forth above.
For the period November 1, 1996 through June 30, 1998 the Adviser has
voluntarily agreed to limit the management fee (and thereby, all Fund expenses,
except those not payable by the Adviser as set forth above) of the Mid Cap
Growth Fund to 1.00% of the Fund's average daily net assets. After June 30,
1998, this voluntary fee waiver may be discontinued by the Adviser in its sole
discretion.
For the period January 1, 1994 through December 31, 1997, the Adviser has
voluntarily agreed to limit the management fee (and, thereby, all Fund expenses,
except those not payable by the Adviser as set forth above) of the International
Growth Fund to 1.50% of the Fund's average daily net assets. After June 30,
1997, 8this voluntary fee waiver may be discontinued by the Adviser in its sole
discretion.
Prior to November 1, 1996 the Investment Management Agreement between the
Adviser and each of Mid Cap Growth Fund and Large Cap Growth Fund provided that
the Fund was obligated to pay the Adviser a monthly fee based on average daily
net assets ("net assets") on an annual basis equal to 1.00% for the first $30
million of net assets, .75% for the next $70 million of net assets and .50% for
the excess of $100 million of net assets. The Adviser was obligated to reimburse
each of Mid Cap Growth Fund and Large Cap Growth Fund for all of the Fund's
expenses except for extraordinary expenses (as designated by a majority of each
Fund's disinterested directors), interest, brokerage commissions and other
transaction charges relating to each Fund's investing activities (which expenses
were the sole responsibility of the Fund, irrespective of amount), which exceed,
on an annual basis, an amount equal to 1.50% of the first $30 million of the
Fund's average daily net assets and 1.00% of average daily net assets in excess
of $30 million. Subject to this expense limitation, each of Mid Cap Growth Fund
and Large Cap Growth Fund was responsible for all of its expenses to the extent
not specifically assumed by the Adviser under the Agreement. For the period
October 1, 1993 through October 31, 1996, the Adviser voluntarily agreed to
absorb expenses that were otherwise payable by the Large Cap Growth Fund which
exceeded 1.00% of the Fund's average daily net assets.
PORTFOLIO MANAGEMENT
All investment decisions of all Funds are made by committee. Eugene C. Sit is
the Chief Investment Officer of the Adviser and oversees all investment
decisions for the Funds. Additionally, he is the Senior Portfolio Manager for
Small Cap Growth, Mid Cap Growth (formerly Growth Fund), Balanced, Developing
Markets Growth and International Growth Funds. Peter L. Mitchelson is the Senior
Portfolio Manager for the Balanced and Large Cap Growth Funds (formerly Growth &
Income Fund) and has held that office since the inception of the Funds.
Sit/Kim International Investment Associates, Inc. (the "Sub-Adviser") is the
sub-adviser for the Developing Markets Growth Fund and International Growth
Fund. Andrew B. Kim is President and Chief Investment Officer of the
Sub-Adviser. Eugene C. Sit is the Sub-Adviser's CEO and serves as Co-chairman of
its Investment Policy Committee.
THE SUB-ADVISER
The Sub-Adviser currently serves as sub-adviser for the Developing Markets
Growth Fund and International Growth Fund under a Sub-Advisory Agreement with
the Adviser. The Sub-Adviser was incorporated in Minnesota on February 9, 1989
and is a majority owned subsidiary of the Adviser. The Sub-Adviser is an
international investment management firm and currently manages approximately
$633 million in separate accounts. The Sub-Adviser has offices in New York and
San Francisco and has consulting relationships in Beijing, Manila, Hong Kong and
Seoul. As compensation for its services under the Sub-Advisory Agreement, absent
voluntary fee waiver, the Adviser pays the Sub-Adviser fees for the
International Growth Fund generally equal on an annual basis to .75% on the
first $100 million of the Fund's average daily net assets, .50% on the next $100
million of average daily net assets and .40% of average daily net assets in
excess of $200 million, and for the Developing Markets Growth Fund generally
equal on an annual basis to .75% on the first $100 million of the Fund's average
daily net assets, .60% on the next $100 million of average daily net assets and
.50% of average daily net assets in excess of $200 million as more fully set
forth in the Statement of Additional Information.
DISTRIBUTOR
The Funds have entered into Underwriting and Distribution Agreements with SIA
Securities Corp. ("Securities"), an affiliate of the Adviser, pursuant to which
Securities will act as the Funds' principal underwriter. Securities will market
the Funds' shares only to certain institutional investors and all other sales of
the Funds' shares will be made by each Fund. The Adviser will pay all expenses
of Securities in connection with such services and Securities is otherwise not
entitled to any other compensation under the Underwriting and Distribution
Agreement. The Funds will incur no additional fees or expenses in connection
with the Underwriting and Distribution Agreement.
TAXES
Each Fund qualified as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), during its last taxable
year and intends to continue to do so during the current taxable year in order
to be relieved of payment of federal income taxes on amounts distributed to
shareholders (both net investment income and net realized capital gains).
Dividends paid from each Fund's net investment taxable income and net short-term
capital gains will be taxable to shareholders as ordinary income, whether or not
the shareholder elects to have such dividends automatically reinvested in
additional shares. Dividends paid by Developing Markets Growth Fund and
International Growth Fund will not be eligible for the 70% reduction for
dividends received by corporations if, as expected, none of those Funds' income
consists of dividends paid by U.S. corporations.
Each Fund distributes annually any net realized capital gains. Dividends paid
from the net capital gains of each Fund and designated as capital gain dividends
will be taxable to shareholders as long-term capital dividends, regardless of
the length of time for which they have held their shares in the Fund.
Gain or loss realized upon the sale of shares in each Fund will be treated as
capital gain or loss, provided that the shares represented a capital asset in
the hands of the shareholder. Such gain or loss will be long-term gain or loss
if the shares were held for more than one year.
After every distribution from each of the Funds, the value of a share drops by
the amount of the distribution. If you purchase shares shortly before the record
date of a dividend or capital gain distribution, you will pay the full price for
the shares ("buying a dividend") and then receive some portion of the price back
as a taxable dividend or capital gain distribution. Each Fund's unrealized
appreciation on investments, undistributed net investment income and accumulated
net realized gains or losses are contained in the annual and semi-annual reports
in the Statements of Changes in Net Assets.
The Developing Markets Growth Fund and International Growth Fund may be required
to pay withholding and other taxes imposed by foreign countries, generally at
rates from 10% to 40%, which would reduce the Funds' investment income. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. If at the end of the Funds' fiscal year more than 50% of
its total assets consist of securities of foreign corporations, the Funds will
be eligible to file elections with the Internal Revenue Service pursuant to the
Funds may "pass-through" to shareholders the amount of foreign income taxes paid
by the Funds with respect to their direct holdings of stock or securities in
foreign corporations. If this election is made, shareholders of the Funds will
be required to include their respective pro rata portions of such withholding
taxes as gross income, treat such amounts as foreign taxes paid by them, and
deduct such amounts in computing their taxable incomes or, alternatively, use
them as foreign tax credits against their federal income taxes. The Funds will
make such an election only if it deems such election to be in the best interests
of its shareholders.
Pursuant to the Code, distributions of net investment income by the Funds to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, foreign corporation, or foreign
partnership (a "foreign shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate) Withholding will not apply if a dividend
paid by the Funds to a foreign shareholder is "effectively connected" with a
U.S. trade or business of such shareholder, in which case the reporting and
withholding requirements applicable to U.S. citizens or domestic corporations
will apply. Distributions of net long-term capital gains are not subject to tax
withholding but, in the case of a foreign shareholder who is a nonresident alien
individual, such distributions ordinarily will be subject to U.S. income tax at
a rate of 30% if the individual is physically present in the U.S. for more than
182 days during the taxable year. The Funds will report annually to its
shareholders the amount of any withholding.
Each Fund is required by federal law to withhold 31% of reportable payments
(which may include dividends, capital gain distributions and redemptions) paid
to certain accounts whose owners have not complied with IRS regulations. In
connection with this withholding requirement, you will be asked to certify on
your account application that the social security or taxpayer identification
number you provide is correct and that you are not subject to 31% backup
withholding for previous underreporting to the IRS.
This is a general summary of the federal tax law in effect as of the date of
this prospectus. See the Statement of Additional Information for further
details. You may also be subject to state and local taxes, depending on the laws
of your home state and locality. Information about the tax status of each year's
dividends and distributions will be mailed to shareholders annually.
CAPITALIZATION AND VOTING RIGHTS
Each of the Funds (or the corporate issuer of their shares) is organized as a
Minnesota corporation. Each of the Funds (or its corporate issuer) has only one
class of shares -- common shares. The Mid Cap Growth Fund (formerly Growth Fund)
and the Large Cap Growth Fund (formerly Growth & Income Fund), each have one
series of common shares consisting of ten billion shares with a par value of
one-tenth of one cent per share. The corporate issuer of International Growth
Fund, Balanced Fund, Developing Markets Growth Fund, and Small Cap Growth Fund,
(Sit Mutual Funds, Inc.) is organized as a series fund with one trillion shares
of common stock authorized and a par value of one tenth of one cent per share.
Ten billion of these shares have been designated by the Board of Directors for
each series: Series A Common Shares, which represent shares of International
Growth Fund; Series B Common Shares, which represent shares of Balanced Fund;
Series C Common Shares which represent shares of Developing Markets Growth Fund;
Series D Common Shares which represent shares of Small Cap Growth Fund. The
Board of Directors of Sit Mutual Funds, Inc. is empowered to issue other series
of common stock without shareholder approval.
The shares of each Fund are nonassessable, can be redeemed or transferred and
have no preemptive or conversion rights. All shares have equal, noncumulative
voting rights which means that the holders of more than 50% of the shares voting
for the election of Directors can elect all of the Directors if they choose to
do so. A shareholder is entitled to one vote for each full share (and a
fractional vote for each fractional share) then registered in his/her name on
the books of each Fund. The shares of each Fund are of equal value and each
share is entitled to a pro rata portion of the income dividends and any capital
gain distributions.
ADDITIONAL INFORMATION
Under Minnesota law, the Board of Directors of each Fund has overall
responsibility for managing the Fund, in good faith, in a manner reasonably
believed to be in the best interests of each Fund, and with the care an ordinary
prudent person would exercise in similar circumstances.
This prospectus omits certain of the information contained in the Registration
Statements filed with the Securities and Exchange Commission, Washington, D.C.
20549. Items of information which are omitted may be obtained from the
Securities and Exchange Commission upon payment of the fees prescribed by the
rules and regulations of the Commission.
In the opinion of the staff of the Securities and Exchange Commission, the use
of this combined Prospectus may possibly subject all Funds to a certain amount
of liability for any losses arising out of any statement or omission in this
prospectus regarding a particular Fund. In the opinion of the Funds' management,
however, the risk of such liability is not materially increased by the use of a
combined prospectus.
Directors:
Eugene C. Sit, CFA
Peter L. Mitchelson, CFA
William E. Frenzel
John E. Hulse
Sidney L. Jones
Donald W. Phillips
Director Emeritus:
Melvin C. Bahle
Officers:
Eugene C. Sit, CFA Chairman
Peter L. Mitchelson, CFA Vice Chairman
Mary K. Stern President
Erik S. Anderson, CFA Vice President - Investments
Ronald D. Sit, CFA Vice President - Investments
Paul E. Rasmussen Vice President & Treasurer
Michael P. Eckert Vice President - Group Manager
Michael J. Radmer Secretary
Parnell M. Kingsley Assistant Secretary
Carla J. Rose Assistant Secretary
Debra A. Sit, CFA Assistant Treasurer
ADDRESS AND TELEPHONE REFERENCE:
REGULAR MAIL EXPRESS OR CERTIFIED MAIL
Sit Mutual Funds Sit Mutual Funds
P. O. Box 9763 One American Express Plaza
Providence, RI 02940-9763 Providence, RI 02903-1135
SIT INVESTOR SERVICES
To speak with a Client Service Representative:
1-800-332-5580 or 612-334-5888
WIRE INSTRUCTIONS To wire money for a purchase:
Boston Safe Deposit and Trust
ABA #011-001234
Sit (name of Fund)
DDA #056146
Attn: Liz Martinelli
For Further Credit: (Shareholder name)
Account Number: (Shareholder account number)
NOT PART OF THE PROSPECTUS
PART B
STATEMENT OF ADDITIONAL INFORMATION
SIT SMALL CAP GROWTH FUND
SIT MID CAP GROWTH FUND, INC.
(FORMERLY SIT GROWTH FUND, INC.)
SIT LARGE CAP GROWTH FUND, INC.
(FORMERLY GROWTH & INCOME FUND, INC.)
SIT BALANCED FUND
SIT DEVELOPING MARKETS GROWTH FUND
SIT INTERNATIONAL GROWTH FUND
4600 Norwest Center, 90 S. 7th Street
Minneapolis, Minnesota 55402-4130
612-334-5888 -- 800-332-5580
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with the Funds' prospectus which may be obtained from the Funds
without charge by contacting the Funds at 4600 Norwest Center, 90 S.7th Street,
Minneapolis, Minnesota 55402-4130. Telephone: (612) 334-5888 or (800) 332-5580.
The date of this Statement of Additional Information is November 1, 1996, and it
is to be used with the Funds' prospectus dated November 1, 1996.
TABLE OF CONTENTS
Page
ADDITIONAL INVESTMENT RESTRICTIONS
Small Cap Growth Fund ............................................. 2
Mid Cap Growth Fund (formerly Growth Fund)......................... 3
Large Cap Growth Fund (formerly Growth & Income Fund).............. 3
Balanced Fund...................................................... 4
Developing Markets Growth Fund..................................... 5
International Growth Fund.......................................... 5
DIVERSIFICATION......................................................... 6
SECURITIES IN WHICH THE BALANCED FUND MIGHT INVEST...................... 7
SECURITIES IN WHICH THE DEVELOPING MARKETS GROWTH FUND MIGHT INVEST..... 8
SECURITIES IN WHICH THE INTERNATIONAL GROWTH FUND MIGHT INVEST.......... 9
INTERNATIONAL RISK CONSIDERATIONS....................................... 10
COMMON INVESTMENTS...................................................... 11
COMPUTATION OF NET ASSET VALUE.......................................... 16
CALCULATION OF PERFORMANCE DATA......................................... 17
MANAGEMENT.............................................................. 18
INVESTMENT ADVISER...................................................... 20
DISTRIBUTOR............................................................. 23
BROKERAGE............................................................... 22
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES..................... 25
TAXES ............................................................... 25
FINANCIAL STATEMENTS.................................................... 27
OTHER INFORMATION....................................................... 27
LIMITATION OF DIRECTOR LIABILITY........................................ 29
APPENDIX A - BOND AND COMMERCIAL PAPER RATINGS.......................... 31
ADDITIONAL INVESTMENT RESTRICTIONS
The investment objectives, policies and restrictions of the Funds are set forth
in the Prospectus. Certain additional investment information is set forth below.
All capitalized terms not defined herein have the same meanings as set forth in
the Prospectus. In addition to the restrictions in the prospectus, each Fund is
subject to other restrictions which are fundamental and may not be changed
without shareholder approval. Shareholder approval, as defined in the Investment
Company Act of 1940, means the lesser of the vote of (a) 67% of the shares of a
Fund at a meeting where more than 50% of the outstanding shares of the Fund are
present in person or by proxy or (b) more than 50% of the outstanding shares of
a Fund. A percentage limitation must be met at the time of investment and a
later deviation resulting from a change in values or net assets will not be a
violation.
SMALL CAP GROWTH FUND
The Fund is subject to the following fundamental investment restrictions.
The Fund will not:
1. Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. government or its agencies or instrumentalities),
if as a result, more than 5% of the Fund's net assets would be invested in
securities of that issuer. This restriction is limited to 75% of the
Fund's net assets;
2. Purchase or sell commodities or commodity futures, provided that this
restriction does not apply to financial futures contracts or options
thereon;
3. Invest in real estate (including real estate limited partnerships),
although it may invest in securities which are secured by or represent
interests in real estate;
4. Make loans except by (a) purchasing publicly distributed debt securities
such as bonds, debentures and similar securities in which the Fund may
invest consistent with its investment policies, and (b) by lending its
portfolio securities to broker-dealers, banks and other institutions in an
amount not to exceed 33-1/3% of its total net assets if such loans are
secured by collateral equal to 100% of the value of the securities lent;
5. Underwrite the securities of other issuers;
6. Borrow money, except for temporary or emergency purposes but not for the
purchase of investments, and then not in excess of 5% of the Fund's net
assets; or pledge the Fund's securities or receivables, transfer, assign
or otherwise encumber them in an amount exceeding the amount of the
borrowing secured thereby;
7. Invest in exploration or development for oil, gas or other minerals
(including mineral leases), although it may invest in the securities of
issuers which deal in or sponsor such activities; or
8. Issue senior securities as defined in the Investment Company Act of 1940.
The following investment restrictions of the Fund are not fundamental. The Fund
will not:
1. Purchase on margin or sell short except to obtain short-term credit as may
be necessary for the clearance of transactions and it may make margin
deposits in connection with futures contracts;
2. Except as part of a merger, consolidation, acquisition or reorganization,
invest more than 5% of the value of its total assets in the securities of
any one investment company or more than 10% of the value of its total
assets, in the aggregate, in the securities of two or more investment
companies, or acquire more than 3% of the total outstanding voting
securities of any one investment company;
3. Purchase or retain securities of any issuer if to the knowledge of the
Fund, officers and directors of either the Fund or its investment adviser
beneficially owning more than 0.5% of such securities together own more
than 5% of such securities;
4. Invest more than 10% of its net assets in securities of issuers which,
with their predecessors have a record of less than three years continuous
operation. Securities of such issuers will not be deemed to fall within
this limitation if they are guaranteed by an entity in continuous
operation for more than three years;
5. Invest for the purpose of exercising control or management;
6. Enter into reverse repurchase agreements;
7. Invest more than 15% of its net assets collectively in all types of
illiquid securities;
8. Invest in more than 10% of the outstanding voting securities of any one
issuer;
9. Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. All debt securities and all preferred stocks are each
considered as one class. This restriction is limited to 75% of the Fund's
net assets; or
10. Invest more than 5% of the Fund's net assets in warrants (valued at lower
of cost or market) including a maximum of 2% which are not listed on the
New York or American Stock Exchanges. For this purpose, warrants acquired
by the Fund in units or attached to other securities will be deemed to be
without value.
Additional restrictions of the Fund which are not fundamental provide that the
Fund may not engage in arbitrage transactions or write unsecured put options but
may write fully covered call options. The Fund may purchase put and call options
provided that the aggregate premiums paid for all such options do not exceed 5%
of the Fund's total assets.
MID CAP GROWTH FUND (FORMERLY GROWTH FUND) AND LARGE CAP GROWTH FUND
(FORMERLY GROWTH & INCOME FUND)
The Mid Cap Growth Fund and Large Cap Growth Fund are subject to the following
fundamental investment restrictions. The Funds will not:
1. Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. government or its agencies or instrumentalities),
if as a result, more than 5% of the Fund's net assets would be invested in
securities of that issuer. This restriction is limited to 75% of the
Fund's net assets;
2. Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. All debt securities and all preferred stocks are each
considered as one class. This restriction is limited to 75% of the Fund's
net assets;
3. Invest more than 10% of the Fund's net assets in securities of companies
which have (with their predecessors) a record of less than five years
continuous operation;
4. Make loans except by (a) purchasing publicly distributed debt securities
such as bonds, debentures and similar securities in which the Fund may
invest consistent with its investment policies, and (b) by lending its
portfolio securities to broker-dealers, banks and other institutions in an
amount not to exceed 33-1/3% of its total net assets if such loans are
secured by collateral equal to 100% of the value of the securities lent;
5. Borrow money, except for temporary or emergency purposes but not for the
purchase of investments, and then not in excess of 5% of the Fund's net
assets; or pledge the Fund's securities or receivables, transfer, assign
or otherwise encumber them in an amount exceeding the amount of the
borrowing secured thereby;
6. Invest more than 5% of the Fund's net assets in warrants (valued at lower
of cost or market) including a maximum of 2% which are not listed on the
New York or American Stock Exchanges. For this purpose, warrants acquired
by the Fund in units or attached to other securities will be deemed to be
without value;
7. Purchase on margin or sell short except to obtain short-term credit as may
be necessary for the clearance of transactions;
8. Concentrate more than 25% of its net assets in any one industry, provided
that (i) there shall be no limitation on the purchase of obligations
issued or guaranteed by the U.S. government, its agencies or
instrumentalities and (ii) utility companies will be classified according
to their services, for example, water, gas, electric and communications,
and each will be considered a separate industry;
9. Purchase or retain the securities of any issuer if, in total, the holdings
of all officers and directors of the Fund and of its investment adviser,
who individually own beneficially more than 0.5% of such securities,
together own more than 5% of such securities;
10. Invest for the purpose of controlling management of any company;
11. Invest in commodities or commodity futures contracts or in real estate,
although it may invest in securities which are secured by interests in
real estate and in securities of companies which invest or deal in real
estate;
12. Invest in exploration or development for oil, gas or other minerals,
although it may invest in the securities of issuers which deal in or
sponsor such activities;
13. Except as part of a merger, consolidation, acquisition or reorganization,
invest more than 5% of the value of its total assets in the securities of
any one investment company or more than 10% of the value of its total
assets, in the aggregate, in the securities of two or more investment
companies, or acquire more than 3% of the total outstanding voting
securities of any one investment company;
14. Underwrite the securities of other issuers;
15. Issue senior securities as defined in the Investment Company Act of 1940;
16. Invest more than 15% of its net assets collectively in all types of
illiquid securities.
Additional restrictions of the Mid Cap Growth Fund and Large Cap Growth Fund
which are not fundamental provide that the Funds may not engage in arbitrage
transactions or write unsecured put options but may write fully covered call
options. These Funds may purchase put and call options provided that the
aggregate premiums paid for all such options do not exceed 5% of each Fund's net
assets.
BALANCED FUND
The Fund is subject to the following fundamental investment restrictions. The
Fund will not:
1. Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. government or its agencies or instrumentalities),
if as a result, more than 5% of the Fund's net assets would be invested in
securities of that issuer. This restriction is limited to 75% of the
Fund's net assets;
2. Purchase or sell commodities or commodity futures, provided that this
restrictions does not apply to financial futures contracts or options
thereon;
3. Invest in real estate (including real estate limited partnerships),
although it may invest in securities which are secured by or represent
interests in real estate;
4. Make loans except by (a) purchasing publicly distributed debt securities
such as bonds, debentures and similar securities in which the Fund may
invest consistent with its investment policies, and (b) by lending its
portfolio securities to broker-dealers, banks and other institutions in an
amount not to exceed 33-1/3% of its total net assets if such loans are
secured by collateral equal to 100% of the value of the securities lent;
5. Underwrite the securities of other issuers;
6. Borrow money, except for temporary or emergency purposes but not for the
purchase of investments, and then not in excess of 5% of the Fund's net
assets; or pledge the Fund's securities or receivables, transfer, assign
or otherwise encumber them in an amount exceeding the amount of the
borrowing secured thereby;
7. Invest in exploration or development for oil, gas or other minerals
(including mineral leases), although it may invest in the securities of
issuers which deal in or sponsor such activities;
8. Issue senior securities as defined in the Investment Company Act of 1940;
and
The following investment restrictions of the Fund are not fundamental. The Fund
will not:
1. Purchase on margin or sell short except to obtain short-term credit as may
be necessary for the clearance of transactions and it may make margin
deposits in connection with futures contracts;
2. Except as part of a merger, consolidation, acquisition or reorganization,
invest more than 5% of the value of its total assets in the securities of
any one investment company or more than 10% of the value of its total
assets, in the aggregate, in the securities of two or more investment
companies, or acquire more than 3% of the total outstanding voting
securities of any one investment company;
3. Purchase or retain securities of any issuer if to the knowledge of the
Fund, officers and directors of either the Fund its investment adviser
beneficially owning more than 0.5% of such securities together own more
than 5% of such securities;
4. Invest more than 10% of its net assets in securities of issuers which,
with their predecessors have a record of less than three years continuous
operation. Securities of such issuers will not be deemed to fall within
this limitation if they are guaranteed by an entity in continuous
operation for more than three years;
5. Invest for the purpose of exercising control or management;
6. Enter into reverse repurchase agreements;
7. Invest more than 15% of its net assets collectively in all types of
illiquid securities;
8. Invest in more than 10% of the outstanding voting securities of any one
issuer; or
9. Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. All debt securities and all preferred stocks are each
considered as one class. This restriction is limited to 75% of the Fund's
net assets;
10. Invest more than 5% of the Fund's net assets in warrants (valued at lower
of cost or market) including a maximum of 2% which are not listed on the
New York or American Stock Exchanges. For this purpose, warrants acquired
by the Fund in units or attached to other securities will be deemed to be
without value.
Additional restrictions of the Fund which are not fundamental provide that the
Fund may not engage in arbitrage transactions or write unsecured put options but
may write fully covered call options. The Fund may purchase put and call options
provided that the aggregate premiums paid for all such options do not exceed 10%
of the Fund's total assets.
DEVELOPING MARKETS GROWTH FUND The Fund is subject to the following restrictions
which are fundamental. The Fund will not:
1. Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. government or its agencies or instrumentalities),
if as a result, more than 5% of the Fund's net assets would be invested in
securities of that issuer. This restriction is limited to 75% of the
Fund's net assets;
2. Purchase or sell commodities or commodity contracts, provided that this
restriction does not apply to financial futures contracts or options
thereon;
3. Invest in real estate (including real estate limited partnerships),
although it may invest in securities which are secured by or represent
interests in real estate;
4. Make loans except by (a) purchasing publicly distributed debt securities
such as bonds, debentures and similar securities in which the Fund may
invest consistent with its investment policies, and (b) by lending its
portfolio securities to broker-dealers, banks and other institutions in an
amount not to exceed 33-1/3% of its total net assets if such loans are
secured by collateral equal to 100% of the value of the securities lent;
5. Underwrite the securities of other issuers;
6. Borrow money, except for temporary or emergency purposes but not for the
purchase of investments, and then not in excess of 5% of the Fund's net
assets; or pledge the Fund's securities or receivables, transfer, assign
or otherwise encumber them in an amount of the borrowing secured thereby;
7. Invest in exploration or development for oil, gas or other minerals
(including mineral leases), although it may invest in the securities of
issuers which deal in or sponsor such activites; or
8. Issue senior securities as defined by the Investment Company Act of 1940.
The following investment restrictions of the Fund are not fundamental and
may be changed by the Board of Directors of the Fund. The Fund will not:
1. Purchase on margin or sell short except to obtain short-term credit as may
be necessary for the clearance of transactions and it may make margin
deposits in connection with futures contracts;
2. Except as part of a merger, consolidation, acquisition or reorganization,
invest more than 5% of the value of its total assets in the securities of
any one investment company or more than 10% of the value of its total
assets, in the aggregate, in the securities of two or more investment
companies, or acquire more than 3% of the total outstanding voting
securities of any one investment company;
3. Purchase or retain the securities of any issuer if, to the Fund's
knowledge, those holdings of all officers and directors of the Fund or its
affiliates, who individually own beneficially more than 0.5% of such
securities, together own more than 5% of such securities;
4. Invest more than 5% of its net assets in securities of companies which
have (with their predecessors) a record of less than three years'
continuous operation;
5. Invest for the purpose of exercising control or management;
6. Invest more than 5% of the Fund's net assets in warrants (valued at lower
of cost or market) including a maximum of 2% which are not listed on the
New York Stock Exchange, American Stock Exchange or a recognized foreign
exchange. For this purpose, warrants acquired by the Fund in units or
attached to other securities will be deemed to be without value;
7. Enter into reverse repurchase agreements;
8. Invest more than 15% of its net assets collectively in all types of
illiquid securities; or
9. Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. All debt securities and all preferred stocks are
considered as one class. This restriction is limited to 75% of the Fund's
net assets.
INTERNATIONAL GROWTH Fund The Fund is subject to the following fundamental
investment restrictions. The Fund will not:
1. Purchase securities of any issuer (other than obligations of, or
guaranteed by, the U.S. government or its agencies or instrumentalities),
if as a result, more than 5% of the Fund's net assets would be invested in
securities of that issuer. This restriction is limited to 75% of the
Fund's net assets;
2. Purchase more than 10% of any class of securities of any issuer except
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. All debt securities and all preferred stocks are each
considered as one class. This restriction is limited to 75% of the Fund's
net assets;
3. Invest more than 5% of the Fund's net assets in securities of companies
which have (with their predecessors) a record of less than three years
continuous operation;
4. Make loans except by (a) purchasing publicly distributed debt securities
such as bonds, debentures and similar securities in which the Fund may
invest consistent with its investment policies, and (b) by lending its
portfolio securities to broker-dealers, banks and other institutions in an
amount not to exceed 33-1/3% of its total net assets if such loans are
secured by collateral equal to 100% of the value of the securities lent;
5. Borrow money, except for temporary or emergency purposes but not for the
purchase of investments, and then not in excess of 5% of the Fund's net
assets; or pledge the Fund's securities or receivables, transfer, assign
or otherwise encumber them in an amount exceeding the amount of the
borrowing secured thereby;
6. Invest more than 5% of the Fund's net assets in warrants (valued at lower
of cost or market) including a maximum of 2% which are not listed on the
New York Stock Exchange, American Stock Exchange or a recognized foreign
exchange. For this purpose, warrants acquired by the Fund in units or
attached to other securities will be deemed to be without value;
7. Purchase on margin or sell short except to obtain short-term credit as may
be necessary for the clearance of transactions;
8. Concentrate more than 25% of its net assets in any one industry, provided
that there shall be no limitation on the purchase of obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities;
9. Purchase or retain the securities of any issuer if, to the Fund's
knowledge, those holdings of all officers and directors of the Fund or its
affiliates, who individually own beneficially more than 0.5% of such
securities, together own more than 5% of such securities;
10. Invest for the purpose of controlling management of any company;
11. Invest in commodities or commodity futures contracts provided; however,
that the entering into of a foreign currency contract shall not be
prohibited by this restriction;
12. Invest in real estate or limited partnerships with assets invested in real
estate, although the Fund may invest in securities which are secured by
interests in real estate and in securities of companies which invest or
deal in real estate;
13. Invest in exploration or development for oil, gas or other minerals,
although it may invest in the securities of issuers which deal in or
sponsor such activities;
14. Invest more than 15% of its net assets collectively in all types of
illiquid securities;
15. Except as part of a merger, consolidation, acquisition, or reorganization,
invest more than 5% of the value of its total assets in the securities of
any one investment company or more than 10% of the value of its total
assets, in the aggregate, in the securities of two or more investment
companies, or acquire more than 3% of the total outstanding voting
securities of any one investment company;
16. Underwrite the securities of other issuers;
17. Issue senior securities as defined in the Investment Company Act of 1940;
18. Modify the Fund's investment objective.
DIVERSIFICATION
As a fundamental policy (in addition to the fundamental policies and
restrictions set forth in the Prospectus and this Statement of Additional
Information), each Fund intends to operate as a "diversified" management
investment company, as defined in the Investment Company Act of 1940, as
amended. A "diversified" investment company means a company which meets the
following requirements: At least 75% of the value of the company's total assets
is represented by cash and cash items (including receivables), "Government
Securities", securities of other investment companies, and other securities for
the purposes of this calculation limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the total assets of such
management company and to not more than 10% of the outstanding voting securities
of such issuer. "Government Securities" means securities issued or guaranteed as
to principal or interest by the United States, or by a person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States; or
certificates of deposit for any of the foregoing. Additionally, as set forth
above, each of the Funds has adopted certain restrictions that are more
restrictive than the policies set forth in this paragraph.
SECURITIES IN WHICH THE BALANCED FUND MIGHT INVEST
MORTGAGE-BACKED SECURITIES
The mortgage-backed securities in which the Fund invests provide funds for
mortgage loans made to residential home buyers. These include securities which
represent interests in pools of mortgage loans made by lenders such as savings
and loan institutions, mortgage banks, commercial banks and insurance companies.
Pools of mortgage loans are assembled for sale to investors such as the Fund by
various private, governmental and government-related organizations.
Interests in pools of mortgage-backed securities differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates.
Mortgage-backed securities provide monthly payments which consist of both
interest and principal payments to the investor. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on their
residential mortgage loans, net of any fees paid to the issuer or guarantor of
such securities. Additional payments are caused by repayments of principal
resulting from the sale of the underlying residential property, refinancing or
foreclosure, net of fees or costs which may be incurred. Some mortgage-backed
securities, i.e., GNMA's, are described as "modified pass-through." These
securities entitle the holders to receive all interest and principal payments
owed on the mortgages in the pool, net of certain fees, regardless of whether or
not the mortgagors actually make the payments.
The principal government guarantor of mortgage-backed securities is the
Government National Mortgage Association ("GNMA"). GNMA is a wholly-owned U.S.
government corporation within the Department of Housing and Urban Development.
GNMA is authorized to issue mortgage pass-through securities and guarantee, with
the full faith and credit of the U.S. government, the timely payment of
principal and interest on loans originated by approved institutions and backed
by pools of FHA-insured or VA-guaranteed mortgages.
The Federal Home Loan Mortgage Corporation ("FHLMC")also pools mortgage loans
and issues pass-through securities. FHLMC is a corporate instrumentality of the
U.S. government and was created by Congress in 1970 for the purpose of
increasing the availability of mortgage credit for residential housing. Its
stock is owned by the twelve Federal Home Loan Banks. FHLMC issues Participation
Certificates ("PC's") which represent interest in mortgages from FHLMC's
national portfolio. FHLMC guarantees the timely payment of interest and ultimate
collection of principal, however, PC's are not backed by the full faith and
credit of the U.S. government.
The Federal Mortgage Association ("FNMA") is a government sponsored corporation
owned entirely by private stockholders. It is subject to general regulation by
the Secretary of Housing and Urban Development. FNMA purchases residential
mortgages from a list of approved seller/services which include state and
federally-chartered savings and loan associations, mutual savings banks,
commercial banks and credit unions and mortgage banks. Pass-through securities
issued by FNMA are guaranteed as to timely payment of principal and interest by
FNMA, but are not backed by the full faith and credit of the U.S. government.
The Federal Housing Administration ("FHA") was established by Congress in 1934
under the National Housing Act. A major purpose of the Act was to encourage the
flow of private capital into residential financing on a protected basis. FHA is
authorized to insure mortgage loans, primarily those related to residential
housing. FHA does not make loans and does not plan or build housing. FHA Project
Pools are pass-through securities representing undivided interests in pools of
FHA-insured multi-family project mortgage loans.
The Fund may purchase securities which are insured but not issued or guaranteed
by the U.S. government, its agencies or instrumentalities. An example of such a
security is a housing revenue bond (the interest on which is subject to federal
taxation) issued by a state and insured by an FHA mortgage loan. The Fund has
not purchased this type of security and has no current intent to do so. This
type of mortgage is insured by FHA pursuant to the provisions of Section
221(d)(4) of the National Housing Act of 1934, as amended. After a mortgagee
files a claim for insurance benefits, FHA will pay insurance benefits up to 100%
of the unpaid principal amount of the mortgage (generally 70% of the amount is
paid within six months of the claim and the remainder within the next six
months). The risks associated with this type of security are the same as other
mortgage securities --prepayment and/or redemption prior to maturity, loss of
premium (if paid) if the security is redeemed prior to maturity and fluctuation
in principal value due to an increase or decrease in interest rates.
The average life of pass-through pools varies with the maturities of the
underlying mortgage instruments. In addition, the pool's term may be shortened
by unscheduled or early payments of principal and interest on the underlying
mortgages. The occurrence of mortgage prepayment is affected by factors
including the level of interest rates, general economic conditions, the location
and age of the mortgage and other social and demographic conditions.
As prepayment rates of individual pools vary widely, it is not possible to
accurately predict the average life of a particular pool. Mortgage pass-through
securities which receive regular principal payments have an average life less
than their maturity. The average life of mortgage pass-through investments will
typically vary from 1 to 18 years.
Yields on pass-through mortgage-backed securities are typically quoted based on
the maturity of the underlying instruments and the associated average life
assumption. Actual prepayment experience may cause the yield to differ from the
assumed average life yield. The compounding effect from reinvestments of monthly
payments received by the Fund will increase the yield to shareholders.
OTHER ASSET-BACKED SECURITIES
The Fund may invest in asset-backed securities that are backed by consumer
credit such as automobile receivables, consumer credit card receivables, and
home equity loans.
MUNICIPAL SECURITIES
Municipal securities in which the Fund may invest include securities that are
issued by states, territories and possessions of the United States and the
District of Columbia and their agencies, instrumentalities and political
subdivisions. Tax-exempt municipal securities include municipal bonds, municipal
notes and municipal commercial paper. MUNICIPAL BONDS generally have maturities
at the time of issuance ranging from one to thirty years, or more. MUNICIPAL
NOTES are short-term and generally mature in three months to three years.
MUNICIPAL COMMERCIAL PAPER matures in one year or less.
The yields on municipal securities are dependent on a variety of factors,
including the general level of interest rates, the financial condition of the
issuer, general conditions of the tax-exempt securities market, the size of the
issue, the maturity of the obligation and the rating of the issue. Ratings are
general, and not absolute, standards of quality. Consequently, securities of the
same maturity, interest rate and rating may have different yields, while
securities of the same maturity and interest rate with different ratings may
have the same yield.
SECURITIES IN WHICH THE DEVELOPING MARKETS GROWTH FUND MIGHT INVEST
The Fund defines "developing markets" as those countries determined by the
Sub-Adviser (see "Investment Adviser") to have developing or emerging markets or
economies. Such countries will generally be defined as "emerging stock markets"
by the International Finance Corporation, demonstrate low- to middle-income
economies according to the International Bank for Reconstruction and Development
(the World Bank), or be listed in World Bank publications as developing.
Countries currently not considered as having "developing markets" presently
include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden,
Switzerland, the United Kingdom, and the United States.
The countries in which the Fund may seek to invest include those listed below
and, unless otherwise prohibited herein, the countries listed as potential
investments for the International Growth Fund as well. The Fund is not obligated
and may not invest in all the countries listed; moreover the Fund may invest in
countries other than those listed below, when such investments are consistent
with the Fund's investment objectives and policies. The Fund will also not seek
to diversify investments among geographic regions or levels of economic
development in any particular country.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Pacific Basin: Bangladesh China Hong Kong India + Indonesia Sousth Korea
Malaysia Pakistan Philippines Singapore Sri Lanka Taiwan
Thailand Vietnam +
Europe: Czech Rep. Greece Hungary Poland Portugal
Latin America: Argentina Barbados Belize Bolivia Brazil Chile
Colombia Costa Rica Ecuador Jamaica Mexico Panama
Paraguay Peru Trinidad & Tobago Uruguay Venezuela
Africa: Botswana Egypt Ghana+ Ivory Coast + Kenya + Mauritius +
Morocco Namibia + Nigeria South Africa Swaziland + Tunisia
Zimbabwe
Other: Bermuda Cyprus + Israel Jordan Kuwait + Russia +
Turkey
</TABLE>
+ Indicates countries in which the Fund effectively may invest primarily
through investment funds. Such investments are subject to the provisions of the
Investment Company Act of 1940 relating to the purchase of securities of
investment companies. See "Additional Investment Restrictions".
Investments in companies domiciled in developing market countries may be subject
to potentially higher risks than investments in developed countries. See
discussion of International Risks Considerations below.
SECURITIES IN WHICH THE INTERNATIONAL GROWTH FUND MIGHT INVEST
The countries in which the Fund will seek investments include those listed
below. The Fund is not obligated and may not invest in all the countries listed;
moreover the Fund may invest in countries other than those listed below, when
such investments are consistent with the Fund's investment objective and
policies.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Pacific Basin: Australia Hong Kong Indonesia Japan Malaysia New Zealand
Philippines Singapore South Korea Taiwan Thailand
Europe: Austria Belgium Denmark Finland France Germany
Greece Ireland Italy Luxembourg Netherlands Norway
Portugal Spain Sweden Switzerland United Kingdom
Other: Argentina Brazil Canada Chile Hungary India +
Mexico Turkey Venezuela Czech Republic
Peru
Poland
</TABLE>
+ Indicates countries in which the Fund effectively may invest primarily
through investment funds. Such investments are subject to the provisions of the
Investment Company Act of 1940 relating to the purchase of securities of
investment companies. See "Investment Restrictions".
Under exceptional economic or market conditions abroad, the Fund may temporarily
invest all or a major portion of its assets in United States government
obligations or high grade debt obligations of companies incorporated in or
having their principal activities in the United States.
In certain countries, governmental restrictions and other limitations on
investment may affect the maximum percentage of equity ownership in any one
company. In addition, in some instances only special classes of securities may
be purchased by foreigners, and the market prices, liquidity, and rights with
respect to those securities may vary from shares owned by nationals. The Adviser
and Sub-Adviser are not aware at this time of the existence of any investment or
exchange control regulations which might substantially impair the operations of
the Fund as described in the Prospectus and this Statement of Additional
Information. Although restrictions may in the future make it undesirable to
invest in certain countries, the Adviser and Sub-Adviser do not believe that any
current repatriation restrictions would affect its decisions to invest in the
countries eligible for investment by the Fund. It should be noted, however, that
this situation could change at any time. The Fund has no intention of making any
significant investment in any country or stock market where the political or
economic situation might be considered by the Sub-Adviser to be at risk of
substantial or total loss because of such political or economic situation.
INTERNATIONAL RISK CONSIDERATIONS
Investors should consider carefully the substantial risks involved in securities
of companies and governments of foreign nations, which are in addition to the
usual risks inherent in domestic investments. There may be less publicly
available information about foreign companies comparable to the reports and
ratings published regarding companies in the United States. Foreign companies
are not generally subject to uniform accounting, auditing and financial
reporting standards, and auditing practices and requirements may not be
comparable to those applicable to United States companies. Many foreign markets
have substantially less volume than either the established domestic securities
exchanges or the OTC markets. Securities of some foreign companies are less
liquid and more volatile than securities of comparable United States companies.
Commission rates in foreign countries, which may be fixed rather than subject to
negotiation as in the United States, are likely to be higher. In many foreign
countries there is less government supervision and regulation of securities
exchanges, brokers and listed companies than in the United States and capital
requirements for brokerage firms are generally lower. Settlement of transactions
in foreign securities may, in some instances, be subject to delays and related
administrative uncertainties.
Investments in companies domiciled in developing market countries may be subject
to potentially higher risks than investments in developed countries. These risks
include (i) volatile social, political and economic conditions; (ii) the small
current size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) the existence of national policies which may
restrict the Funds' investment opportunities, including restrictions on
investment in issuers or industries deemed sensitive to national interests; (iv)
foreign taxation; (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property; (vi) the absence, until recently in certain developing market
countries, of a capital market structure or market-oriented economy; and (vii)
the possibility that recent favorable economic developments in certain
developing market countries may be slowed or reversed by unanticipated political
or social events in such countries.
The Funds endeavor to buy and sell foreign currencies on favorable terms. Some
price spread on currency exchange (to cover service charges) may be incurred,
particularly when the Funds change investments from one country to another or
when proceeds for the sale of shares in U.S. dollars are used for the purchase
of securities in foreign countries. Also, some countries may adopt policies
which would prevent the Funds from repatriating invested capital and dividends,
withhold portions of interest and dividends at the source, or impose other
taxes, with respect to the Funds' investments in securities of issuers of that
country. There also is the possibility of expropriation, nationalization,
confiscatory or other taxation, foreign exchange controls (which may include
suspension of the ability to transfer currency from a given country), default in
foreign government securities, political or social instability, or diplomatic
developments that could adversely affect investments in securities of issuers in
those nations.
The Funds may be affected either favorably or unfavorably by fluctuations in the
relative rates of exchange between the currencies of different nations, exchange
control regulations and indigenous economic and political developments.
While transactions in forward currency contracts, options, futures contracts and
options on futures contracts (i.e., "hedging positions") may reduce certain
risks, such transactions themselves entail certain other risks. Thus, while the
Funds may benefit from the use of hedging positions, unanticipated changes in
interest rates, securities prices or currency exchange rates may result in a
poorer overall performance for the Funds than if they had not entered into any
hedging positions. In the event of an imperfect correlation between a hedging
position and portfolio position which is intended to be protected, the desired
protection may not be obtained and the Funds may be exposed to risk of financial
loss.
Perfect correlation between the Funds' hedging positions and portfolio positions
may be difficult to achieve because hedging instruments in most developing
market countries are not yet available. In addition, it is not possible to hedge
fully or perfectly against currency fluctuations affecting the value of
securities denominated in foreign currencies because the value of such
securities is likely to fluctuate as a result of independent factors not related
to currency fluctuations.
The Board of Directors of the Funds considers at least annually the likelihood
of the impositions by any foreign government of exchange control restrictions
which would affect the liquidity of the Funds' assets maintained with custodians
in foreign countries, as well as the degree of risk from political acts of
foreign governments to which such assets may be exposed. The Board also
considers the degree of risk attendant to holding portfolio securities in
domestic and foreign securities depositories. See "Other Information".
COMMON INVESTMENTS
SECURITIES LENDING
The lending of portfolio securities to broker-dealers, banks, and other
institutions may increase the average annual return to shareholders. Lending of
portfolio securities also involves certain risks to a Fund. As with other
extensions of credit, there are risks of delay in recovery of loaned securities,
or even loss of rights in collateral pledged by the borrower, should the
borrower fail financially. However, the Funds will only enter into loan
agreements with broker-dealers, banks, and other institutions which the Adviser
has determined are creditworthy. The Funds may also experience a loss if, upon
the failure of a borrower to return loaned securities, the collateral is not
sufficient in value or liquidity to cover the value of such loaned securities
(including accrued interest thereon). However, the borrower will be required to
pledge collateral which the custodian for a Fund's portfolio securities will
take into possession before any securities are loaned. Additionally, the
borrower may pledge only cash, securities issued or guaranteed by the U.S.
Government or its agencies and instrumentalities, certificate of deposit or
other high-grade, short-term obligations or interest-bearing cash equivalents as
collateral. There will be a daily procedure to ensure that the pledged
collateral is equal in value to at least 100% of the value of the securities
loaned. Under such procedure, the value of the collateral pledged by the
borrower as of any particular business day will be determined on the next
succeeding business day. If such value is less than 100% of the value of the
securities loaned, the borrower will be required to pledge additional
collateral. The risks of borrower default (and the resultant risk of loss to a
Fund) also are reduced by lending only securities for which a ready market
exists. This will reduce the risk that the borrower will not be able to return
such securities due to its inability to cover its obligation by purchasing such
securities on the open market.
To the extent that collateral is comprised of cash, a Fund will be able to
invest such collateral only in securities issued or guaranteed by the U.S.
Government or its agencies and instrumentalities and in certificates of deposit
or other high-grade, short-term obligations or interest-bearing cash
equivalents. If a Fund invests cash collateral in such securities, the Fund
could experience a loss if the value of such securities declines below the value
of the cash collateral pledged to secure the loaned securities. The amount of
such loss would be the difference between the value of the collateral pledged by
the borrower and the value of the securities in which the pledged collateral was
invested.
Although there can be no assurance that the risks described above will not
adversely affect a Fund, the Adviser believes that the potential benefits that
may accrue to a Fund as a consequence of securities lending will outweigh any
such increase in risk.
OBLIGATIONS OF, OR GUARANTEED BY, THE UNITED STATES GOVERNMENT, ITS AGENCIES OR
INSTRUMENTALITIES
Securities issued or guaranteed by the United States include a variety of
Treasury securities, which differ only in their interest rates, maturities and
dates of issuance. Treasury bills have a maturity of one year or less. Treasury
notes have maturities of one to ten years and Treasury bonds generally have
maturities of greater than ten years at the date of issuance.
Securities issued and or guaranteed by agencies of the U.S. government and
various instrumentalities which have been established or sponsored by the U.S.
government may or may not be backed by the "full faith and credit" of the United
States. In the case of securities not backed by the full faith and credit of the
United States, the investor must look principally to the agency issuing or
guaranteeing the obligation for ultimate repayment and may not be able to assert
a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment.
Some of the government agencies which issue or guarantee securities are the
Department of Housing and Urban Development, the Department of Health and Human
Services, the Government National Mortgage Association, the Farmers Home
Administration, the Department of Transportation, the Department of Defense and
the Department of Commerce. Instrumentalities which issue or guarantee
securities include the Export-Import Bank, the Federal Farm Credit System,
Federal Land Banks, the Federal Intermediate Credit Bank, the Bank for
Cooperatives, Federal Home Loan Banks, the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation.
OBLIGATIONS OF BANKS
Bank money instruments in which the Small Cap Growth Fund and the Balanced Fund
may invest include certificates of deposit, including variable rate certificates
of deposit, bankers' acceptances and time deposits. "Bank" includes commercial
banks, savings banks and savings and loan associations. Certificates of deposit
are generally short-term, interest-bearing negotiable certificates issued by
commercial banks or savings and loan associations against funds deposited in the
issuing institution. Variable rate certificates of deposit are certificates of
deposit on which the interest rate is periodically adjusted prior to their
stated maturity, usually at 30, 90 or 180 day intervals ("coupon dates"), based
upon a specified market rate, which is tied to the then prevailing certificate
of deposit rate, with some premium paid because of the longer final maturity
date of the variable rate certificate of deposit. As a result of these
adjustments, the interest rate on these obligations may be increased or
decreased periodically. Variable rate certificates of deposit normally carry a
higher interest rate than fixed rate certificates of deposit with shorter
maturities, because the bank issuing the variable rate certificate of deposit
pays the investor a premium as the bank has the use of the investor's money for
a longer period of time. Variable rate certificates of deposit can be sold in
the secondary market. In addition, frequently banks or dealers sell variable
rate certificates of deposit and simultaneously agree, either formally or
informally, to repurchase such certificates, at the option of the purchaser of
the certificate, at par on the coupon dates. In connection with the Fund's
purchase of variable rate certifies of deposit, it may enter into formal or
informal agreements with banks or dealers allowing the Fund to resell the
certificates to the bank or dealer, at the Fund's option. If the agreement to
repurchase is informal, there can be no assurance that the Fund would always be
able to resell such certificates. Before entering into any such transactions
governed by formal agreements, however, the Fund will comply with the provisions
of SEC Release 10666 which generally provides that the repurchase agreement must
be fully collateralized. With respect to variable rate certificates of deposit
maturing in 180 days or less from the time of purchase with interest rates
adjusted on a monthly cycle, the Fund uses the period remaining until the next
rate adjustment date for purposes of determining the average weighted maturity
of its portfolio. With respect to all variable rate instruments not meeting the
foregoing criteria, the Fund uses the remaining period to maturity for purposes
of determining the average weighted maturity of its portfolio until such time as
the Securities and Exchange Commission has determined otherwise.
A banker's acceptance is a time draft drawn on a commercial bank by a borrower
usually in connection with an international commercial transaction (to finance
the import, export, transfer or storage of goods). The borrower is liable for
payment as well as the bank, which unconditionally guarantees to pay the draft
at its face amount on the maturity date. Most acceptances have maturities of six
months or less and are traded in secondary markets prior to maturity.
Both domestic banks and foreign branches of domestic banks are subject to
extensive, but different, governmental regulations which may limit both the
amount and types of loans which may be made and interest rates which may be
charged. In addition, the profitability of the banking industry is largely
dependent upon the availability and cost of funds for the purpose of financing
lending operations under prevailing short-term debt conditions. General economic
conditions, as well as exposure to credit losses arising from possible financial
difficulties of borrowers, also play an important part in the operations of the
banking industry.
As a result of federal and state laws and regulations, domestic banks are, among
other things, generally required to maintain specified levels of reserves,
limited in the amount which they can loan to a single borrower, and are subject
to other regulations designed to promote financial soundness. Since the
portfolio may contain securities of foreign banks and foreign branches of
domestic banks, the Fund may be subject to additional investment risks that are
different in some respects from those incurred by a fund that invests only in
debt obligations of domestic banks.
The Fund only purchases certificates of deposit from savings and loan
institutions which are members of the Federal Home Loan Bank and are insured by
the Federal Savings and Loan Insurance Corporation. Such savings and loan
associations are subject to regulation and examination. Unlike most savings
accounts, certificates of deposit held by the Fund do not benefit materially
from insurance either from the Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation. Certificates of deposit of
foreign branches of domestic banks are not covered by such insurance and
certificates of deposit of domestic banks purchased by the Fund are generally in
denominations far in excess of the dollar limitations on insurance coverage.
INTERNATIONAL BANK OBLIGATIONS
For the purposes of the Developing Markets Growth Fund's and International
Growth Fund's investment policies with respect to bank obligations, obligations
of foreign branches of U.S. banks and of foreign banks may be obligations of the
parent bank in addition to the issuing bank, or may be limited by the terms of a
specific obligation and by government regulation. As with investment in non-U.S.
securities in general, investments in the obligations of foreign branches of
U.S. banks and of foreign banks may subject the Funds to investment risks that
are different in some respects from those of investments in obligations of
domestic issuers. Although the Funds will typically acquire obligations issued
and supported by the credit of U.S. or foreign banks having total assets at the
time of purchase in excess of $1 billion, this $1 billion figure is not a
fundamental investment policy or restriction of the Fund. For the purposes of
calculation with respect to the $1 billion figure, the assets of a bank will be
deemed to include the assets of its U.S. and non-U.S. branches.
DEPOSITORY RECEIPTS
The Developing Markets Growth Fund and International Growth Fund may hold
securities of foreign issuers in the form of American Depository Receipts
("ADRs"), European Depository Receipts ("EDRs"), Government Depository Receipts
("GDRs") and other similar global instruments available in developing markets,
or other securities convertible into securities of eligible issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. Generally, ADRs in registered form
are designed for use in United States securities markets, and EDRs and other
similar global instruments in bearer form are designed for use in European
securities markets. For purposes of the Fund's investment policies, the Fund's
investment in ADRs, EDRs, and similar instruments will be deemed to be
investments in the equity securities representing securities of foreign issuers
into which they may be converted.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Developing Markets Growth Fund and International Growth Fund may enter into
forward currency contracts to attempt to minimize the risk to the Funds from
adverse changes in the relationship between the U.S. dollar and foreign
currencies. A forward currency contract is an obligation to purchase or sell a
specific currency for an agreed upon price at a future date which is
individually negotiated and privately traded by currency traders and their
customers. The Funds may enter into a forward currency contract, for example,
when it enters into a contract for the purchase or sale of a security
denominated in a foreign currency or is expecting a dividend or interest payment
in order to "lock in" the U.S. dollar price of the security or dividend or
interest payment. In addition, when the Funds believe that a foreign currency or
currencies may suffer a substantial decline against the U.S. dollar, it may
enter into a forward currency contract to sell an amount of a foreign currency
approximating the value of some or all of the Funds' portfolio securities
denominated in such foreign currency or related currencies that the Adviser
feels demonstrate correlation in exchange rate movements (such a practice is
called "crosshedging"), or when the Funds believe that the U.S. dollar may
suffer a substantial decline against a foreign currency or currencies, it may
enter into a forward contract to buy a foreign currency for a fixed dollar
amount. In connection with the Funds' forward contract transactions, an amount
of the Funds' assets equal to the amount of the Fund's commitment will be held
aside or segregated to be used to pay for the commitment. Accordingly, the Funds
will always have cash, cash equivalents or high quality debt securities
denominated in the appropriate currency available in an amount sufficient to
cover any commitments under these contracts. Segregated assets used to cover
forward currency contracts will be marked to market on a daily basis. While
these contracts are not presently regulated by the Commodity Futures Trading
Commission ("CFTC"), the CFTC may in the future regulate forward currency
contracts. In such event, the Funds' ability to utilize forward currency
contracts in the manner set forth above may be restricted. Forward currency
contracts may limit potential gain from a positive change in the relationship
between the U.S. dollar and foreign currencies. Unanticipated changes in
currency prices may result in poorer overall performance by the Funds than if it
had not engaged in such contracts. The Funds will generally not enter into a
forward foreign currency exchange contract with a term greater than one year.
COMMERCIAL PAPER
Short-term debt instruments purchased by the Small Cap Growth Fund and the
Balanced Fund consist of commercial paper (including variable amount master
demand notes), which refers to short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Commercial paper is usually
sold on a discount basis and has a maturity at the time of issuance not
exceeding nine months. Variable amount master demand notes are demand
obligations that permit the investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the issuer and a commercial
bank acting as agent for the payees of such notes, whereby both parties have the
right to vary the amount of the outstanding indebtedness of the notes.
The Balanced Fund may invest in commercial paper obligations issued by domestic
and foreign entities which, at the time of their purchase, are rated in the
highest rating category assigned by Moody's, S&P, Duff and Phelps, Inc. or Fitch
Investors Service, Inc. or, if not rated, are issued or guaranteed by companies
with an unsecured debt issue currently outstanding rated A or better by Moody's
or S&P. The Fund may also invest in participation interests in loans extended by
banks or other financial institutions to such companies, and other domestic
corporate obligations such as publicly traded bonds, debentures and notes
(including variable amount master demand notes) rated in the highest category by
the aforementioned rating services.
FUTURES CONTRACTS, OPTIONS AND OPTIONS ON FUTURES CONTRACTS
The Balanced Fund, Developing Markets Growth Fund and International Growth Fund
may invest in interest rate futures contracts, index futures contracts and may
buy options on such contracts for the purpose of hedging its portfolio of fixed
income securities (and not for speculative purposes) against the adverse effects
of anticipated movements in interest rates. As a result of entering into futures
contracts, no more than 5% of a Fund's net assets may be committed to margin.
The Funds may also purchase exchange traded put and call options on debt
securities up to 5% of its net assets for the purpose of hedging. A put option
(sometimes called a standby commitment) gives the purchaser of the option, in
return for a premium paid, the right to sell the underlying security at a
specified price during the term of the option. The writer of the put option
receives the premium and has the obligation to buy the underlying securities
upon exercise at the exercise price during the option period. A call option
(sometimes called a reverse standby commitment) gives the purchaser of the
option, in return for a premium, the right to buy the security underlying the
option at a specified exercise price at any time during the term of the option.
The writer of the call option receives the premium and has the obligation at the
exercise of the option, to deliver the underlying security against payment of
the exercise price during the option period. A principal risk of standby
commitments is that the writer of a commitment may default on its obligation to
repurchase or deliver the securities. A futures contract is an agreement to
purchase or deliver a debt security in the future for a stated price on a
certain date. The Funds may use interest rate futures solely as a defense or
hedge against anticipated interest rate changes and not for speculation. The
Funds presently could accomplish a similar result to that which it hopes to
achieve through the use of futures contracts by selling debt securities with
long maturities and investing in debt securities with short maturities when
interest rates are expected to increase, or conversely, selling short-term debt
securities and investing in long-term debt securities when interest rates are
expected to decline. However, because of the liquidity that is often available
in the futures market, such protection is more likely to be achieved, perhaps at
a lower cost and without changing the rate of interest being earned by the
Funds, through using futures contracts.
DESCRIPTION OF FUTURES CONTRACTS. A futures contract sale creates an obligation
by a Fund, as seller, to deliver the type of financial instrument called for in
the contract at a specified future time for a stated price. A futures contract
purchase creates an obligation by the Fund, as purchaser, to take delivery of
the underlying financial instrument at a specified future time for a stated
price. The specific securities delivered or taken, respectively, at settlement
date, are not determined until at or near that date. The determination is made
in accordance with the rules of the exchange on which the futures contract sale
or purchase was made.
Although futures contracts by their terms call for actual delivery or acceptance
of securities, in most cases the contracts are closed out before the settlement
date without the making or taking of delivery. Closing out a futures contract
sale is effected by purchasing a futures contract for the same aggregate amount
of the specific type of financial instrument and the same delivery date. If the
price of the initial sale of the futures contract exceeds the price of the
offsetting purchase, the Fund is paid the difference and realizes a gain. If the
price of the offsetting purchase exceeds the price of the initial sale, the Fund
pays the difference and realizes a loss. Similarly, the closing out of a futures
contract purchase is effected by the Fund entering into a futures contract sale.
If the offsetting sale price exceeds the purchase price, the Fund realizes a
gain, and if the purchase price exceeds the offsetting sale price, the Fund
realizes a loss.
The Fund is required to maintain margin deposits with brokerage firms through
which it enters into futures contracts. Margin balances will be adjusted at
least weekly to reflect unrealized gains and losses on open contracts. In
addition, the Fund will pay a commission on each contract, including offsetting
transactions.
Futures contracts are traded only on commodity exchanges--known as "contract
markets"--approved for such trading by the Commodity Futures Trading Commission
("CFTC"), and must be executed through a futures commission merchant or
brokerage firm which is a member of the relevant contract market. The CFTC
regulates trading activity on the exchanges pursuant to the Commodity Exchange
Act. The principal exchanges are the Chicago Board of Trade, the Chicago
Mercantile Exchange and the New York Futures Exchange. Each exchange guarantees
performance under contract provisions through a clearing corporation, a
nonprofit organization managed by the exchange membership. The staff of the CFTC
has indicated that an entity such as the Fund would not be a "pool" if it traded
commodity futures contracts solely for hedging purposes and not for speculation.
Furthermore, the Fund is restricted to no more than 5% of its net assets being
committed to margin on futures contracts and premiums for options on futures
contracts, and therefore will not operate as a "pool" as that term is defined by
the CFTC.
RISKS IN FUTURES CONTRACTS. One risk in employing futures contracts to protect
against cash market price volatility is the prospect that futures prices will
correlate imperfectly with the behavior of cash prices. The ordinary spreads
between prices in the cash and futures markets, due to differences in the
natures of those markets, are subject to distortions. First, all participants in
the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort the normal
relationship between the cash and futures markets. Second, the liquidity of the
futures market depends on participants entering into offsetting transactions
rather than making or taking delivery. To the extent participants decide to make
or take delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of speculators the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
distortion, a correct forecast of general interest trends by the Adviser may
still not result in a successful transaction.
Another risk is that the Adviser would be incorrect in its expectation as to the
extent of various interest rate movements (anticipated securities prices and
foreign currency exchange rates for the Developing Markets Growth Fund and
International Growth Fund) or the time span within which the movements take
place. Closing out an interest rate futures contract purchase at a loss because
of higher interest rates will generally have one or two consequences depending
on whether, at the time of closing out, the "yield curve" is normal (long-term
rates exceeding short-term). If the yield curve is normal, it is possible that
the Fund will still be engaged in a program of buying long-term securities.
Thus, closing out the futures contract purchase at a loss will reduce the
benefit of the reduced price of the securities purchased. If the yield curve is
inverted, it is possible that the Fund will retain its investments in short-term
securities earmarked for purchase of longer term securities. Thus, closing out
of a loss will reduce the benefit of the incremental income that the Fund will
experience by virtue of the high short-term rates.
RISKS OF OPTIONS. The use of options and options on interest rate futures
contracts also involves additional risk. Compared to the purchase or sale of
futures contracts, the purchase of call or put options and options on futures
contracts involves less potential risk to a Fund because the maximum amount at
risk is the premium paid for the options (plus transaction costs).
The effective use of options strategies is dependent, among other things, upon
the Fund's ability to terminate options positions at a time when the Adviser
deems it desirable to do so. Although the Fund will enter into an option
position only if the Adviser believes that a liquid secondary market exists for
such option, there is no assurance that the Fund will be able to effect closing
transactions at any particular time or at an acceptable price. The Fund's
transactions involving options on futures contracts will be conducted only on
recognized exchanges.
Although the Funds will generally purchase only those options for which there
appears to be an active secondary market, there can be no assurance that a
liquid secondary market on an exchange will exist for any particular option, or
at any particular time. For some options no secondary market on an exchange may
exist. In such event, it might not be possible to effect closing transactions in
particular options, with the result that the Funds would have to exercise its
options in order to realize any profit and would incur transaction costs upon
the purchase or sale of underlying securities.
Secondary markets on an exchange may not exist or may not be liquid for a
variety of reasons including: (i) insufficient trading interest in certain
options; (ii) restrictions on opening transactions or closing transactions
imposed by an exchange; (iii) trading halts, suspension or other restrictions
may be imposed with respect to particular classes or series of options; (iv)
unusual or unforeseen circumstances which interrupt normal operations on an
exchange; (v) inadequate facilities of an exchange or the Options Clearing
Corporation to handle current trading volume at all times; or (vi)
discontinuance in the future by one or more exchanges for economic or other
reasons, of trading of options (or of a particular class or series of options),
in which event the secondary market on that exchange (or in that class or series
of options) would cease to exist, although outstanding options on that exchange
that had been issued by the Options Clearing Corporation as a result of trades
on that exchange would continue to be exercisable in accordance with their
terms.
PURCHASE OF PUT OPTIONS ON INTEREST RATE FUTURES CONTRACTS. The Funds may
purchase put options on interest rate futures contracts if the Adviser
anticipates a rise in interest rates. Because the value of an interest rate or
municipal bond index futures contract moves inversely in relation to changes in
interest rates, a put option on such a contract becomes more valuable as
interest rates rise. By purchasing put options on futures contracts at a time
when the Adviser expects interest rates to rise, the Fund will seek to realize a
profit to offset the loss in value of its portfolio securities.
PURCHASE OF CALL OPTIONS ON INTEREST RATE FUTURES CONTRACTS. The Funds may
purchase call options on interest rate futures contracts if the Adviser
anticipates a decline in interest rates. The purchase of a call option on an
interest rate of municipal bond index futures contract represents a means of
obtaining temporary exposure to market appreciation at limited risk. Because the
value of an interest rate or municipal bond index futures contract moves
inversely in relation to changes to interest rates, a call option on such a
contract becomes more valuable as interest rates decline. The Fund will purchase
a call option on a futures contract to hedge against a decline in interest rates
in a market advance when the Fund is holding cash. The Fund can take advantage
of the anticipated rise in the value of long-term securities without actually
buying them until the market is stabilized. At that time, the options can be
liquidated and the Fund's cash can be used to buy long-term securities.
The Funds expect that new types of securities, futures contracts, options
thereon, and put and call options on securities and indices may be developed in
the future. As new types of instruments are developed and offered to investors,
the Adviser will be permitted to invest in them provided that the Adviser
believes their quality is equivalent to the Fund's quality standards.
COMPUTATION OF NET ASSET VALUE
Net asset value is determined as of the close of the New York Stock Exchange on
each day that the exchange is open for business and on any other day on which
there is sufficient trading in a Fund's securities to materially affect the
Fund's net asset value per share. The customary national business holidays
observed by the New York Stock Exchange and on which the Funds are closed are:
New Year's Day, President's Day, Good Friday, Memorial Day, July Fourth, Labor
Day, Thanksgiving Day and Christmas Day. The net asset value per share will not
be determined on these national holidays.
On June 30, 1996, the net asset value and public offering price per share for
each Fund was calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
Small Cap Growth Fund:
net assets ($50,846,097)
shares outstanding ( 2,638,254) = net asset value ((NAV) per share = public offering price per share
($19.27)
Mid Cap Growth Fund (formerly Growth Fund):
net assets ($356,316,997)
shares outstanding (22,865,794 = NAV per share = public offering price per share ($15.58)
Large Cap Growth Fund (formerly Growth & Income Fund):
net assets ($53,016,527)
shares outstanding (1,618,610) = NAV per share = public offering price per share ($32.75)
Balanced Fund:
net assets ($ 4,061,862)
shares outstanding (323,154) = NAV per share = public offering price per share ($12.57)
Developing Markets Growth Fund:
net assets ($ 8,645,725)
shares outstanding (789,343) = NAV per share = public offering price per share ($10.95)
International Growth Fund:
net assets ($ 88,712,783)
shares outstanding ( 5,444,465) = NAV per share = public offering price per share ($16.29)
</TABLE>
CALCULATION OF PERFORMANCE DATA
Advertisements and other sales literature for the Funds may refer to cumulative
total return, average annual total return and yield.
CUMULATIVE TOTAL RETURN. Total return means cumulative total return and is
calculated by finding the cumulative compounded rate of return over the period
indicated that would equate the initial amount invested to the ending redeemable
value, according to the following formula:
CTR = (ERV-P) X 100
P
CTR = cumulative total return
ERV = ending redeemable value
at the end of the period of a hypothetical
$1,000 payment made at the
beginning of such period
P = initial payment of $1,000
This calculation assumes all dividends and capital gains distributions are
reinvested at net asset value on the appropriate reinvestment dates and includes
all recurring fees, such as investment advisory and management fees, charged to
all shareholder accounts.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return is computed by finding
the average annual compounded rates of return over the periods indicated that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the
period of a hypothetical $1,000 payment
made at the beginning
of such period.
This calculation assumes all dividends and capital gains distributions are
reinvested at net asset value on the appropriate reinvestment dates and includes
all recurring fees, such as investment advisory and management fees, charged to
all shareholder accounts.
YIELD. Yield is computed by dividing the net investment income per share (as
defined under Securities and Exchange Commission rules and regulations) earned
during the computation period by the maximum offering price per share on the
last day of the period, according to the following formula:
Yield = 2[( a - b + 1) 6 - 1]
--------
cd
a = dividends and interest earned during
the periods;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends; and
d = the maximum offering price per share on
the last day of the period.
MANAGEMENT
The Funds as a group pay each director, who is not also an officer, an annual
fee of $8,000, $2,000 for each meeting attended, and provide reimbursement for
travel and other expenses. The names, addresses, principal occupations and other
affiliations of directors and officers of the Funds are given below. Except as
noted below, the business address of each officer and director is the same as
that of the Adviser - 4600 Norwest Center, Minneapolis, Minnesota.
<TABLE>
<CAPTION>
NAME & ADDRESS POSITION WITH THE FUNDS PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- -------------- ----------------------- ----------------------------------------
<S> <C> <C>
Eugene C. Sit * Director - All Funds Chairman, CEO and CIO Sit Investment Associates, Inc. (the
Chairman - All Funds "Adviser"); Chairman and CEO of Sit/Kim International
Investment Associates, Inc. (the "Sub-Adviser"); Director and
Chairman of Sit U.S. Government Securities Fund, Inc. Sit
Mutual Funds II, Inc., Sit Money Market Fund, Inc., (the
"Sit Bond Funds") "); Director of SIA Securities Corp.
(the "Distributor")
Peter L. Mitchelson * Director - All Funds President and Director of the Adviser; Executive Vice
Vice Chairman - All Funds President and Director the of Sub-Adviser; Director and
Sr. Portfolio Manager - Vice Chairman of Sit Bond Funds; Director of the Distributor
Large Cap Growth
and Balanced Funds
William E. Frenzel * Director - All Funds Senior Visiting Scholar at The Brookings Institution; Advisory
1775 Massachusetts Ave. NW Director of the Adviser, Director of Sub-Adviser; formerly a
Washington, DC 20036 Senior member of Congress and a ranking member on the
House Ways and Means Committee and Vice Chairman of
the House Budget Committee; Director of Sit Bond Funds
John E. Hulse Director - All Funds Director, Vice Chairman and Chief Financial Officer at
4303 Quail Run Lane Pacific Telesis Group until June 1992; Trustee, Benild
Danville, CA 94506 Religious & Charitable Trust; Trustee, Pacific Gas &
Electric Nuclear Decommissioning Trust; Director of Sit
Bond Funds
Sidney L. Jones Director - All Funds Adjunct Faculty, Center for Public Policy Education, The
8505 Parliament Drive Brookings Institution; Visiting Professor, Dartmouth
Potomac, MD 20854 College and Carleton College; Former Assistant Secretary
for Economic Policy, United States Department of the
Treasury; Director of Sit Bond Funds
Donald W. Phillips Director - All Funds Executive Vice President and Director of Equity Financial
Two North Riverside Plaza and Management Company; Chairman of Equity Institutional
Chicago, IL 60606 Investors, Inc.; Chief Investment Officer of Ameritech, Inc.,
Chicago, IL until 1990; Director of Sit Bond Funds
Melvin C. Bahle Director Emeritus - Financial consultant; director and/or officer of several
#1 Muirfield Lane All Funds companies, foundations and religious organizations; Director
St. Louis, MO 63141 of Sit Bond Funds
Erik S. Anderson Vice President- Vice President - Equity Research & Portfolio Managment
Investments - All Funds of the Adviser
Michael P. Eckert Vice President - Group Vice President - Group Manager of Sit Bond Funds
Manager - All Funds
Michael C. Brilley Senior Vice President - Senior Vice President and Senior Fixed Income Officer
Balanced Fund of Adviser; Senior Vice President of Sit Bond Funds
Michael J. Radmer Secretary - All Funds Partner of the Funds' general counsel, Dorsey & Whitney
220 South Sixth Street LLP; Secretary of Sit Bond Funds
Minneapolis, MN
Paul E. Rasmussen Vice President & Treasurer Vice President, Secretary and Controller for the Adviser;
All Funds and Sub-Adviser; Vice President and Treasurer of Sit
Bond Funds; President and Treasurer of the Distributor
Ronald D. Sit Vice President-Investments Vice President - Equity Research and Portfolio
All Funds Managment of the Adviser
Mary K. Stern President - All Funds President of Sit Bond Funds; Vice President Mutual Funds
of Adviser; formerly President of Mutual Fund Group and
Executive Vice President of Society Bank, Cleveland,
Ohio - 1993; Vice President of Norwest Bank Minnesota,
N.A. until 1992.
- -------------------
</TABLE>
* Directors who are deemed to be "interested persons" of the Funds as that
term is defined by the Investment Company Act of 1940. Messrs. Sit and
Mitchelson are interested persons because they are officers of the
Adviser. Mr. Frenzel is an interested person of the International Growth
Fund and Developing Markets Growth Fund because he is a director of the
Sub-Adviser, and may be deemed to be an interested person of all Funds
because he is an advisory director of the Adviser.
Mr. Ron Sit is a son of Eugene C. Sit.
INVESTMENT ADVISER
The Adviser (or an affiliate) has served as the investment adviser for each Fund
since the inception of each Fund.
TERMS COMMON TO ALL FUNDS' INVESTMENT MANAGEMENT AGREEMENTS.
Each Fund's Investment Management Agreement provides that the Adviser will
manage the investment of the Fund's assets, subject to the applicable provisions
of the Fund's articles of incorporation, bylaws and current registration
statement (including, but not limited to, the investment objective, policies and
restrictions delineated in the Fund's current prospectus and Statement of
Additional Information), as interpreted from time to time by the Fund's Board of
Directors. Under each Agreement, the Adviser has the sole and exclusive
responsibility for the management of the Fund's investment portfolio and for
making and executing all investment decisions for the Fund. The Adviser is
obligated under each Agreement to report to the Fund's Board of Directors
regularly at such times and in such detail as the Board may from time to time
determine appropriate, in order to permit the Board to determine the adherence
of the Adviser to the Fund's investment policies. Each Agreement also provides
that the Adviser shall not be liable for any loss suffered by the Fund in
connection with the matters to which the Agreement relates, except losses
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under the Agreement.
Each Agreement provides that the Adviser shall, at its own expense, furnish all
office facilities, equipment and personnel necessary to discharge its
responsibilities and duties under the Agreement and that the Adviser will
arrange, if requested by the Fund, for officers or employees of the Adviser to
serve without compensation from the Fund as directors, officers or employees of
the Fund if duly elected to such positions by the shareholders or directors of
the Fund.
Each Investment Management Agreement provides that it will continue in effect
from year to year only as long as such continuance is specifically approved at
least annually by the applicable Fund's Board of Directors or shareholders and
by a majority of the Board of Directors who are not "interested persons" (as
defined in the 1940 Act) of the Adviser or the Fund. The Agreement is terminable
upon 60 days' written notice by the Adviser or the Fund and will terminate
automatically in the event of its "assignment" (as defined in the 1940 Act).
COMPENSATION AND ALLOCATION OF EXPENSES.
Under each of the Fund's Investment Management Agreement, the Fund is obligated
to pay the Adviser a flat monthly fee, which is equal on an annual basis to the
following percentages of the average daily net assets of the Funds:
Sit Small Cap Growth Fund 1.50%
Sit Mid Cap Growth Fund, Inc.
(formerly Sit Growth Fund, Inc.) 1.25
Sit Large Cap Growth Fund, Inc.
(formerly Sit Growth & Income Fund, Inc.) 1.00
Sit Balanced Fund 1.00
Sit Developing Markets Growth Fund 2.00
Sit International Growth Fund 1.85
However, under each such Fund's Agreement, the Adviser has agreed to bear all of
the Fund's expenses, except for extraordinary expenses (as designated by a
majority of the Fund's disinterested directors), interest, brokerage commissions
and other transaction charges relating to the investing activities of the Fund.
For the period November 1, 1996 through June 30, 1998 the Adviser has
voluntarily agreed to limit the management fee (and thereby, all Fund expenses,
except those not payable by the Adviser as set forth above) of the Mid Cap
Growth Fund to 1.00% of the Fund's average daily net assets. After June 30,
1998, this voluntary fee waiver may be discontinued by the Adviser in its sole
discretion.
For the period January 1, 1994 through December 31, 1997, the Adviser has
voluntary agreed to limit the management fee (and thereby, all Fund expenses,
except those not payable by the Adviser as set forth above) of the International
Growth Fund to 1.50% per year of the Fund's average daily net assets. After
December 31, 1997, this voluntary fee waiver may be discontinued by the Adviser
at its sole discretion.
Prior to November 1, 1996 the Investment Management Agreement between the
Adviser and each of Mid Cap Growth Fund and Large Cap Growth Fund provided that
the Fund was obligated to pay the Adviser a monthly fee based on average daily
net assets ("net assets") on an annual basis equal to 1.00% for the first $30
million of net assets, .75% for the next $70 million of net assets and .50% for
the excess of $100 million of net assets. The Adviser was obligated to reimburse
each of Mid Cap Growth Fund and Large Cap Growth Fund for all of the Fund's
expenses except for extraordinary expenses (as designated by a majority of each
Fund's disinterested directors), interest, brokerage commissions and other
transaction charges relating to each Fund's investing activities (which expenses
were the sole responsibility of the Fund, irrespective of amount), which exceed,
on an annual basis, an amount equal to 1.50% of the first $30 million of the
Fund's average daily net assets and 1.00% of average daily net assets in excess
of $30 million. Subject to this expense limitation, each of Mid Cap Growth Fund
and Large Cap Growth Fund was responsible for all of its expenses to the extent
not specifically assumed by the Adviser under the Agreement. For the period
October 1, 1993 through October 31, 1996, the Adviser voluntarily agreed to
absorb expenses that were otherwise payable by the Large Cap Growth Fund which
exceeded 1.00% of the Fund's average daily net assets.
Set forth below are the investment management fees and other expenses paid by
each of Mid Cap Growth Fund and Large Cap Growth Fund during the fiscal years
ended June 30, 1996, 1995, and 1994; the Balanced Fund during the fiscal year
ended June 30, 1996 and 1995 and the period from December 31, 1993 (inception
date) through June 30, 1994, and the Developing Markets Growth Fund and Small
Cap Growth Fund during the fiscal years ended June 30, 1996 and 1995. Fees and
expenses of the Funds waived or paid by the Adviser during such years are also
set forth below.
<TABLE>
<CAPTION>
DEVELOPING
SMALL CAP MID CAP LARGE CAP MARKETS INT'L
GROWTH GROWTH GROWTH BALANCED GROWTH GROWTH
1996 FUND FUND FUND FUND FUND FUND
- ---- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AVERAGE NET ASSETS $31,974,176 $365,970,895 $47,832,651 $3,495,052 $5,968,028 $77,186,188
Investment Advisory Fees 477,179 2,152,618 433,174 34,853 118,946 1,424,797
Other Expenses 00 682,900 154,353 00 00 00
Expenses Waived 00 00 (110,099) 00 00 (269,556)
-- -- --------- -- -- ---------
Net Fund Expenses 477,179 2,835,518 477,428 34,853 118,946 1,155,241
Ratio of expenses to average
daily net assets 1.50% 0.77% 1.00% 1.00% 2.00% 1.50%
1995
AVERAGE NET ASSETS $5,578,503 $307,708,007 $38,025,336 $1,715,183 $3,493,458 $65,382,362
Investment Advisory Fees 83,184 1,862,769 359,972 17,120 69,616 1,209,349
Other Expenses 00 687,200 152,295 00 00 00
Expenses Waived 00 00 (132,305) 00 00 (228,795)
----------- ---------- ------------- ------------ ------------ ---------
Net Fund Expenses 83,184 2,549,969 379,962 17,120 69,616 980,554
Ratio of expenses to average
daily net assets 1.50% .83% 1.00% 1.00% 2.00% 1.50%
1994
AVERAGE NET ASSETS $324,283,311 $37,063,517 $564,873 $55,370,294
Investment Advisory Fees 1,947,187 353,037 5,613 1,022,869
Other Expenses 719,900 167,679 00 00
Expenses Waived 00 (112,191) 00 00
----------- ------------- ----------- --------
Net Fund Expenses 2,667,087 408,525 5,613 1,022,869
Ratio of expenses to average
daily net assets .82% 1.10% 1.00% 1.65%
</TABLE>
THE SUB-ADVISER - DEVELOPING MARKETS GROWTH FUND AND INTERNATIONAL GROWTH FUND
The Developing Markets Growth Fund's and International Growth Fund's Investment
Management Agreement authorizes the Adviser, at its option and at its sole
expense, to appoint a sub-adviser, which may assume all or such responsibilities
and obligations of the Adviser pursuant to the Investment Management Agreement
as shall be delegated to the sub-adviser; provided, however, that any
discretionary investment decisions made by the sub-adviser shall be subject to
approval or ratification by the Adviser, and any appointment of a sub-adviser
and assumption of responsibilities and obligations of the Adviser by such
sub-adviser shall be subject to approval by the Board of Directors, and as
required by law the shareholders, of the Company; and provided, further, that
the appointment of any sub-adviser shall in no way limit or diminish the
Adviser's obligations and responsibilities under the Investment Management
Agreement. Pursuant to this authority, the Sub-Adviser serves as Developing
Markets Growth Fund's and International Growth Fund's Sub-Adviser.
The current Sub-Advisory Agreement provides that the Sub-Adviser agrees to
manage the investment of Developing Markets Growth Fund's and International
Growth Fund's assets, subject to the applicable provisions of the Funds'
articles of incorporation, bylaws and current registration statement (including,
but not limited to, the investment objective, policies and restrictions
delineated in the Fund's current prospectus and Statement of Additional
Information), as interpreted from time to time by the Fund's Board of Directors.
The Agreement also provides that any discretionary investment decisions made by
the Sub-Adviser are subject to the Adviser's review, approval or ratification at
the Adviser's discretion.
For its services under the Sub-Advisory Agreement, absent any voluntary fee
waivers, the Adviser has agreed to pay the Sub-Adviser a monthly fee equal to
the percentages set forth below of the value of the Developing Markets Growth
Fund's and International Growth Fund's average daily net assets:
<TABLE>
<CAPTION>
Developing Markets International Growth
Growth Fund Fund
<S> <C> <C>
First $100 million of average daily net assets .75% .75%
Next $100 million of average daily net assets .60% .50%
Assets in excess of $200 million .50% .40%
</TABLE>
However, until such month that the cumulative fees received by the Adviser
pursuant to the Investment Management Agreement equaled or exceeded the
cumulative out-of-pocket expenses of the Funds borne by the Adviser pursuant to
the Investment Management Agreement ("Positive Cash Flow"), the Sub-Adviser
agreed to waive any fees otherwise receivable by it from the Adviser pursuant to
the Sub-Advisory Agreement. After the Adviser achieved Positive Cash Flow, the
Adviser agreed to pay the Sub-Adviser the lesser of (i) 75% of the Adviser's
Positive Cash Flow during each applicable month, or (ii) the fee provided for
above. Pursuant to the Investment Management Agreement the Adviser paid the
Sub-Adviser fees of , $448,876, $425,433 and $501,023 for the fiscal years ended
June 30, , 1994, 1995 and 1995 respectively with respect to services provided on
behalf of the International Growth Fund; and fees of $0 and $27,000 for the
fiscal years ended June 30, 1995 and 1996 with respect to services provided on
behalf of the Developing Markets Growth Fund.
The Sub-Advisory Agreement continues in effect from year to year only as long as
such continuance is specifically approved at least annually by (i) the Board of
Directors of the Fund or by the vote of a majority of the outstanding voting
shares of the Fund, and (ii) by the vote of a majority of the directors of the
Company who are not parties to the Agreement or interested persons of the
Adviser, the Sub-Adviser, the International Growth Fund or the Developing
Markets Growth Fund. The Agreement may be terminated at any time, without the
payment of any penalty, by the Board of Directors of SIT Mutual Funds, Inc., the
issuer of the International Growth Fund and Developing Markets Growth Fund or by
the vote of a majority of the outstanding voting shares of the Fund, or by the
Sub-Adviser or the Adviser, upon 30 days' written notice to the other party.
Additionally, the Agreement automatically terminates in the event of its
assignment.
DISTRIBUTOR
Sit Mutual Funds, Inc. (the "Company") on behalf of the International Growth
Fund, Balanced Fund, Developing Markets Growth Fund, Small Cap Growth Fund; and
the Mid Cap Growth Fund, Inc.; and the Large Cap Growth Fund, Inc. have entered
into Underwriting and Distribution Agreements with SIA Securities Corp.
("Securities"), an affiliate of the Adviser, pursuant to which Securities will
act as each Fund's principal underwriter. Securities will market each Fund's
shares only to certain institutional investors and all other sales of each
Fund's shares will be made by each Fund. The Adviser will pay all expenses of
Securities in connection with such services and Securities is otherwise not
entitled to any other compensation under the Underwriting and Distribution
Agreement. Each Fund will incur no additional fees in connection with the
Underwriting and Distribution Agreement.
Pursuant to the Underwriting and Distribution Agreement, Securities has agreed
to act as the principal underwriter for each Fund in the sale and distribution
to the public of shares of each Fund, either through dealers or otherwise.
Securities has agreed to offer such shares for sale at all times when such
shares are available for sale and may lawfully be offered for sale and sold. The
Underwriting and Distribution Agreement is renewable from year to year if the
Fund's directors approve such agreement. The Fund or Securities can terminate
the Underwriting and Distribution Agreement at any time without penalty on 60
days' notice written notice to the other party. The Underwriting and
Distribution Agreement terminates automatically upon its assignment. In the
Underwriting and Distribution Agreement, Securities agrees to indemnify each
Fund against all costs of litigation and other legal proceedings and against any
liability incurred by or imposed on the Fund in any way arising out of or in
connection with the sale or distribution of each Fund's shares, except to the
extent that such liability is the result of information which was obtainable by
Securities only from persons affiliated with the Fund but not Securities.
BROKERAGE
Transactions on a stock exchange in equity securities will be executed primarily
through brokers that will receive a commission paid by the applicable Fund.
Fixed income securities, as well as equity securities traded in the
over-the-counter market, are generally traded on a "net" basis with dealers
acting as principals for their own accounts without a stated commission,
although the price of the security usually includes a profit to the dealer. In
underwritten fixed income and equity offerings, securities are purchased at a
fixed price that includes an amount of compensation to the underwriter,
generally referred to as the underwriter's selling concession or discount.
Certain of these securities may also be purchased directly from the issuer, in
which case neither commissions nor discounts are paid.
The Adviser (or Sub-Adviser, as applicable) selects and, where applicable,
negotiates commissions with the broker-dealers who execute the transactions for
one or more of the Funds. The primary criterion for the selection of a
broker-dealer is the ability of the broker-dealer, in the opinion of the Adviser
(or Sub-Adviser, as applicable) to secure prompt execution of the transactions
on favorable terms, including the best price of the security, the reasonableness
of the commission and considering the state of the market at the time. When
consistent with these objectives, business may be placed with broker-dealers who
furnish investment research or services to the Adviser or Sub-Adviser. Such
research or services include advice, both directly and in writing, as to the
value of securities, the advisability of investing in, purchasing or selling
securities, and the availability of securities, or purchasers or sellers of
securities. Such services also may include analyses and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy,
and the performance of accounts. This allows the Adviser (or Sub-Adviser, as
applicable) to supplement its own investment research activities and enables the
Adviser (or Sub-Adviser, as applicable) to obtain the views and information of
individuals and research staffs of many different securities firms prior to
making investment decisions for the Funds. To the extent portfolio transactions
are effected with broker-dealers who furnish research services to the Adviser or
Sub-Adviser, the Adviser or Sub-Adviser receives a benefit, not capable of
valuation in dollar amounts, without providing any direct monetary benefit to
the applicable Funds from these transactions. The Adviser and the Sub-Adviser
believe that most research services they receive generally benefit several or
all of the investment companies and private accounts which they manage, as
opposed to solely benefiting one specific managed fund or account. Normally,
research services obtained through managed funds or accounts investing in common
stocks would primarily benefit the managed funds or accounts which invest in
common stock; similarly, services obtained from transactions in fixed income
securities would normally be of greater benefit to the managed funds or accounts
which invest in debt securities.
Both the Adviser and the Sub-Adviser maintain an informal list of
broker-dealers, which is used from time to time as a general guide in the
placement of Fund business, in order to encourage certain broker-dealers to
provide the Adviser and the Sub-Adviser with research services which the Adviser
and the Sub-Adviser anticipate will be useful to them in managing the Funds.
Because the list is merely a general guide, which is to be used only after the
primary criterion for the selection of broker-dealers (discussed above) has been
met, substantial deviations from the list are permissible and may be expected to
occur. Each of the Adviser and the Sub-Adviser will authorize a Fund to pay an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker-dealer would have charged only if the
Adviser (or Sub-Adviser, as applicable) determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Adviser's or Sub-Adviser's overall
responsibilities with respect to the accounts as to which it exercises
investment discretion. Generally, the Fund pays commissions higher than the
lowest commission rates available. Some investment companies enter into
arrangements under which a broker-dealer agrees to pay the cost of certain
products or services (not including research services) in exchange for fund
brokerage ("brokerage/services arrangements"). Under a typical brokerage/service
arrangement, a broker agrees to pay a fund's custodian fees or transfer agent
fees and, in exchange, the fund agrees to direct a minimum amount of brokerage
to the broker. The Adviser does not intend to enter into such brokerage/service
arrangements on behalf of the Funds. Some investment companies enter into
arrangements that provide for specified or reasonably ascertainable fee
reductions in exchange for the use of fund assets ("expense offset
arrangements"). Under such expense offset agreements, expenses are reduced by
foregoing income rather than by re-characterizing them as capital items. For
example, a fund may have a "compensating balance" agreement with its custodian
under which the custodian reduces its fee if the fund maintains cash or deposits
with the custodian in non-interest bearing accounts. The Adviser does not intend
to enter into expense offset agreements involving assets of the Funds
Most all domestic (U.S.) securities trades will be executed through U.S.
brokerage firms and commercial banks. Most foreign equity securities will be
obtained in over-the-counter markets or stock exchanges located in the countries
in which the respective principal offices of the issuers of the various
securities are located, if that is the best available market. The fixed
commissions paid in connection with most such foreign stock transactions
generally are higher than negotiated commissions on United States transactions.
There generally is less government supervision and regulation of foreign stock
exchanges and brokers than in the United States. Foreign security settlements
may in some instances be subject to delays and related administrative
uncertainties.
Foreign equity securities may be held in the form of American Depository
Receipts ("ADRs"), European Depository Receipts ("EDRs"), or securities
convertible into foreign equity securities. ADRs or EDRs may be listed on stock
exchanges, or traded in the over-the-counter markets in the United States or
Europe, as the case may be. ADRs, like other securities traded in the United
States, will be subject to negotiated commission rates. The foreign and domestic
debt securities and money market instruments in which International Growth Fund
may invest are generally traded in the over-the-counter markets.
Fund management does not currently anticipate that the Fund will effect
brokerage transactions in its portfolio securities with any broker-dealer
affiliated directly or indirectly with the Funds, the Adviser or the
Sub-Adviser.
The Adviser has entered into agreements with Capital Institutional Services,
Inc. ("CIS"), and Lipper Analytical Securities Corporation ("LAS"), unaffiliated
registered broker-dealers located in Dallas and New York respectively. All
transactions placed with CIS and LAS are subject to the above criteria. CIS and
LAS provide the Adviser with a wide variety of economic, performance, and
investment research information.
Investment decisions for each Fund are made independently of those for other
clients of the Adviser, including the other Funds. When the Funds or clients
simultaneously engage in the purchase or sale of the same securities, the price
of the transactions is averaged and the amount allocated in accordance with a
formula deemed equitable to each Fund and client. In some cases, this system may
adversely affect the price paid or received by the Fund or the size of the
position obtainable. Total brokerage commissions paid by the Funds for the
fiscal years ended June 30, 1996, 1995, and 1994, include commissions as set
forth below which were paid to firms that supplied the Funds and Adviser with
statistical and research services.
<TABLE>
<CAPTION>
1996 1995 1994
Amt paid to Amt paid to Amt paid to
firms for firms for firms for
statistics & statistics & statistics &
Fund Total research Total research Total research
- ---- ---------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth $68,257 $12,060 $19,529 $1,730 n/a n/a
Growth 476,952 90,946 573,104 102,087 326,784 264,760
Growth & Income 61,284 19,625 63,079 19,164 50,554 46,413
Balanced 2,389 1,317 1,764 622 536 0
Developing Markets 52,905 1,020 32,804 0 n/a n/a
Int'l Growth 242,798 12,762 180,798 2,340 191,814 0
</TABLE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
The following persons owned of record or beneficially 5% or more of the
respective Fund's outstanding shares as of August 26, 1996:
Record Beneficially Of Record &
Person Only Only Beneficially
------ ---- ---- ------------
MID CAP GROWTH FUND
LARGE CAP GROWTH FUND
BALANCED FUND
SMALL CAP GROWTH FUND
DEVELOPING MARKETS GROWTH FUND
TAXES
The tax status of the Funds and the distributions which they may make are
summarized in the prospectus in the section entitled "Taxes." Each Fund intends
to fulfill the requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"), as a regulated investment company. If so
qualified, each Fund will not be liable for federal income taxes to the extent
it distributes its taxable income to its shareholders.
To qualify under Subchapter M for tax treatment as a regulated investment
company, each Fund must, among other things: (1) distribute to its shareholders
at least 90% of its investment company taxable income (as that term is defined
in the Code determined without regard to the deduction for dividends paid) and
90% of its net tax-exempt income; (2) 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 or securities, or other income derived
with respect to its business of investing in such stocks, securities, or
currency; (3) derive less than 30% of its annual gross income from the sale or
other disposition of stock, securities, options, futures, or forward contracts
held for less than three months; and (4) diversify its holdings so that, at the
end of each fiscal quarter of the Fund, (a) at least 50% of the market value of
the Fund's assets is represented by cash, cash items, United States Government
securities and securities of other regulated investment companies, and other
securities, with these other securities limited, with respect to any one issuer,
to an amount no greater than 5% of the Fund's total assets and no greater than
10% of the outstanding voting securities of such issuer, and (b) not more than
25% of the market value of the Fund's total assets is invested in the securities
of any one issuer (other than United States Government securities or securities
of other regulated investment companies).
Each Fund is subject to a non-deductible excise tax equal to 4% of the excess,
if any, of the amount required to be distributed for each calendar year over the
amount actually distributed. In order to avoid the imposition of this excise
tax, each Fund must declare and pay dividends representing 98% of its net
investment income for that calendar year and 98% of its capital gains (both
long-term and short-term) for the twelve-month period ending October 31 of the
calendar year.
When shares of a Fund are sold or otherwise disposed of, the Fund shareholder
will realize a capital gain or loss equal to the difference between the purchase
price and the sale price of the shares disposed of, if, as is usually the case,
the Fund shares are a capital asset in the hands of the Fund shareholder. In
addition, pursuant to a special provision in the Code, if Fund shares with
respect to which a long-term capital gain distribution has been made are held
for six months or less, any loss on the sale or other disposition of such shares
will be a long-term capital loss to the extent of such long-term capital gain
distribution.
Any loss on the sale or exchange of shares of a Fund generally will be
disallowed to the extent that a shareholder acquires or contracts to acquire
shares of the same Fund within 30 days before or after such sale or exchange.
Except for the transactions the Developing Markets Growth Fund or International
Growth Fund identifies for federal income tax purposes as hedging transactions,
the Developing Markets Growth Fund and International Growth Fund are required to
recognize as income for each taxable year their net unrealized gains and losses
on forward currency contracts as of the end of the year as well as those
actually realized during the year, if any. Except for transactions in forward
currency contracts which are classified as part of a "mixed straddle," gain or
loss recognized with respect to forward currency contracts is considered to be
60% long-term capital gain or loss and 40% short-term capital gain or loss,
without regard to the holding period of the contract. In the case of a
transaction classified as a "mixed straddle," the recognition of losses may be
deferred to a later taxable year.
Sales of forward currency contracts which are intended to hedge against a change
in the value of securities or currencies held by the Developing Markets Growth
Fund and International Growth Fund may affect the holding period of such
securities or currencies and, consequently, the nature of the gain or loss on
such securities or currencies upon disposition.
It is expected that any net gain realized from the closing out of forward
currency contracts will be considered gain from the sale of securities or
currencies and therefore be qualifying income for purposes of the 90% of gross
income from qualified sources requirement, as discussed above. In order to avoid
realizing excessive gains on securities or currencies held less than three
months, the Developing Markets Growth Fund and International Growth Fund may be
required to defer the closing out of forward currency contracts beyond the time
when it would otherwise be advantageous to do so. It is expected that unrealized
gains on forward currency contracts, which have been open for less than three
months as of the end of the Developing Markets Growth Fund's and International
Growth Fund's fiscal year and which are recognized for tax purposes, will not be
considered gains on securities or currencies held less than three months for
purposes of the 30% test, as discussed above.
Any realized gain or loss on closing out a forward currency contract such as a
forward commitment for the purchase or sale of foreign currency will generally
result in a recognized capital gain or loss for tax purposes. Under Code Section
1256, forward currency contracts held by the Developing Markets Growth Fund and
International Growth Fund at the end of each fiscal year will be required to be
"marked to market" for federal income tax purposes, that is, deemed to have been
sold at market value. Code Section 988 may also apply to forward currency
contracts. Under Section 988, each foreign currency gain or loss is generally
computed separately and treated as ordinary income or loss. In the case of
overlap between Sections 1256 and 988, special provisions determine the
character and timing of any income, gain or loss. The Developing Markets Growth
Fund and International Growth Fund will attempt to monitor Section 988
transactions to avoid an adverse tax impact.
The Developing Markets Growth Fund and International Growth Fund may purchase
the securities of certain foreign investment funds or trusts called passive
foreign investment companies. Currently, such funds are the only or primary
means by which the Funds may invest in Hungary and India. In addition to bearing
their proportionate share of the Developing Markets Growth Fund's and
International Growth Fund's expenses (management fees and operating expenses),
shareholders will also bear indirectly similar expenses of such funds. Capital
gains on the sale of such holdings will be deemed to be ordinary income
regardless of how long the Fund holds its investment. In addition, the
Developing Markets Growth Fund and International Growth Fund may be subject to
corporate income tax and an interest charge on certain dividends and capital
gains earned from these investments, regardless of whether such income and gains
are distributed to shareholders.
The foregoing relates only to federal income taxation and is a general summary
of the federal tax law in effect as of the date of this Statement of Additional
Information.
FINANCIAL STATEMENTS
The information contained in the financial statements and annual reports to
shareholders of the Funds is incorporated by reference in this Statement of
Additional Information.
OTHER INFORMATION
CUSTODIAN; SUB-CUSTODIAN; COUNSEL; ACCOUNTANTS
The Northern Trust Company, 50 South LaSalle Street, Chicago, IL 60675 acts as
custodian of the Funds' assets and portfolio securities; Dorsey & Whitney LLP,
220 South Sixth Street, Minneapolis, Minnesota 55402, is the independent General
Counsel for the Funds; and KPMG Peat Marwick LLP, 4200 Norwest Center,
Minneapolis, Minnesota 55402, acts as the Funds' independent accountants.
Pursuant to Rule 17f-5 under the 1940 Act, the Board of Directors of the
Developing Markets Growth Fund and International Growth Fund approved the use of
the following sub-custodian banks and securities depositories to maintain
foreign securities in or near the market in which they are principally traded
and to maintain cash in amounts reasonably necessary to effect foreign
securities transactions in such locations. The Board of Directors may from time
to time approve other countries and subcustodian banks pursuant to Rule 17f-5.
<TABLE>
<CAPTION>
RULE 17F-5
BASIS OF
COUNTRY BANK/DEPOSITORY ELIGIBILITY
- ------- --------------- -----------
<S> <C> <C>
Argentina First National Bank Of Boston (1)
Caja de Valores (5)
Australia Westpac Banking Corporation (2)
Austria Creditanstalt Bankverein (2)
Oesterreichische Kontrollbank AG (5)
Belgium Banque Bruxelles Lambert (2)
Caisse Interprofessionelle de Depots
et de Virement de Titres - CIK (5)
Brazil First National Bank Of Boston (1)
Bolsa de Valores de Sao Paulo - BOVESPA (5)
Canada Toronto-Dominion Bank (2)
Canadian Depository for Securities - CDS (5)
Chile Citibank (1)
Colombia Cititrust Colombia (6)
Czech Republic Ceskoslovenska Obchodni Banka (2)
Stredisko Cennych Papiru (5)
Denmark Den Danske Bank (2)
Vaerdipapercentralen - VP Center (5)
Finland Merita Bank (2)
France Credit Commercial de France (2)
Societe Interprofessionelle pour la Compensation
des Valeurs Mobilieres - SICOVAM (5)
Banque de France (5)
Germany Dresdner Bank (2)
Greece Barclays Bank (2)
Central Securities Depository (5)
Hong Kong HongKong & Shanghai Bank (2)
Hong Kong Securities Clearing Co. Ltd. (5)
Hungary Citibank Budapest (6)
The Central Depository and Clearing House (5)
India Citibank (1)
Indonesia Standard Chartered Bank (2)
Ireland Allied Irish Bank (2)
The Gilt Settlement Office (5)
Israel Bank Leumi (2)
Italy Morgan Guaranty Trust Company (1)
Monte Titoli (5)
Bank of Italy (5)
Japan Mitsubishi Bank (2)
Japan Securities Depository Center (5)
Bank of Japan (5)
Korea Bank of Seoul (2)
Korea Securities Depository Corp - KSD (5)
Malaysia Citibank Berhad (3)
Malaysian Central Depository System (5)
Mexico Banco Nacional de Mexico (2)
Instituto para el Deposito de Valores - INDEVAL (5)
Netherlands MeesPierson (2)
Nederlands Centraal Insituut voor Girall
Effectenverkeer B.V. - NECIGEF (5)
New Zealand ANZ Banking Group (New Zealand) (2)
Austraclear New Zealand System (5)
Norway Christiania Bank og Kreditkasse (2)
Verdipapirsentralen - The Norwegian Registry of
Securities (5)
Pakistan Citibank (2)
Peru Citibank (1)
Caja do Valores y Liquidaciones - CAVAL (5)
Philippines HongKong & Shanghai Bank (2)
Poland Bank Handlowy W Warszawie (2)
Bank Polska Kasa Opieki (2)
National Depository for Securities (5)
Portugal Banco Espirito Santo e Commercial (2)
Central do Valores Mobiliarios (5)
Singapore Development Bank of Singapore (2)
The Central Depository Pte Ltd. (5)
South Africa Standard Bank of South Africa (2)
Spain Banco Santander (2)
Servicio de Compensation y Liquidacion de
Valores, S.A. (5)
Sri Lanka Standard Chartered Bank (2)
Central Depository System (5)
Sweden Skandinaviska Enskilda Banken (2)
Vardepapperscentralen (5)
Switzerland Bank Leu (2)
Schweizerische Effeckten Giro - SEGA (5)
Taiwan Central Trust of China (2)
Taiwan Securities Central Depository (5)
Thailand Citibank (1)
Share Depository Center - SDC (5)
Turkey Citibank (1)
Settlement & Custody Company (5)
Central Bank of Turkey (5)
United Kingdom The Northern Trust Company (1)
First Chicago Clearing Centre (CDs only) (1)
Central Gilts Office (5)
Venezuela Citibank (1)
</TABLE>
- ----------------------
(1) Foreign branch of a United States bank, which qualifies as an eligible
domestic custodian under Section 17(f) of the Investment Company Act of
1940.
(2) A bank or trust company that has shareholders' equity in excess of $200
million (US) and is regulated as a bank or trust company by the foreign
country's government.
(3) A majority-owned direct or indirect subsidiary of a qualified U.S. Bank or
bank holding company that is incorporated or organized under the laws of a
country other than the United States and that has shareholder equity in
excess of $100 million (US)
(4) A securities depository or clearing agency which operates a trans-national
system for the central handling of securities or equivalent book entries.
(5) A central securities depository or clearing agency which operates the
central system for the handling of securities or book-entries in that
Country.
(6) SEC exemption
(7) Qualified United States bank
LIMITATION OF DIRECTOR LIABILITY
Under Minnesota law, each director of the Funds owes certain fiduciary duties to
the Funds and to their shareholders. Minnesota law provides that a director
"shall discharge the duties of the position of director in good faith, in a
manner the director reasonably believes to be in the best interest of the
corporation, and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances." Fiduciary duties of a director of a
Minnesota corporation include, therefore, both a duty of "loyalty" (to act in
good faith and act in a manner reasonably believed to be in the best interests
of the corporation) and a duty of "care" (to act with the care an ordinarily
prudent person in a like position would exercise under similar circumstances).
Minnesota law authorizes corporations to eliminate or limit the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of the fiduciary duty of "care". Minnesota law does not,
however, permit a corporation to eliminate or limit the liability of a director
(i) for any breach of the directors' duty of "loyalty" to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for authorizing a
dividend, stock repurchase or redemption or other distribution in violation of
Minnesota law or for violation of certain provisions of Minnesota securities
laws or (iv) for any transaction from which the director derived an improper
personal benefit. The Articles of Incorporation of the Company limit the
liability of directors to the fullest extent permitted by Minnesota statutes,
except to the extent that such liability cannot be limited as provided in the
Investment Company Act of 1940 (which Act prohibits any provisions which purport
to limit the liability of directors arising from such directors' willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of their role as directors).
Minnesota law does not eliminate the duty of "care" imposed upon a director. It
only authorizes a corporation to eliminate monetary liability for violations of
that duty. Minnesota law, further, does not permit elimination or limitation of
liability of "officers" to the corporation for breach of their duties as
officers (including the liability of directors who serve as officers for breach
of their duties as officers). Minnesota law does not permit elimination or
limitation of the availability of equitable relief, such as injunctive or
rescissionary relief. Further, Minnesota law does not permit elimination or
limitation of a director's liability under the Securities Act of 1933 or the
Securities Exchange Act of 1934, and it is uncertain whether and to what extent
the elimination of monetary liability would extend to violations of duties
imposed on directors by the Investment Company Act of 1940 and the rules and
regulations adopted under such Act.
The Funds are not required under Minnesota law to hold annual or periodically
scheduled meetings of shareholders. Minnesota corporation law provides for the
Board of Directors to convene shareholder meetings when it deems appropriate.
However, the Funds intend to hold meetings of shareholders annually. In
addition, if a regular meeting of shareholders has not been held during the
immediately preceding fifteen months, a shareholder or shareholders holding
three percent or more of the voting shares of the Funds may demand a regular
meeting of shareholders by written notice of demand given to the chief executive
officer or the chief financial officer of the Funds. Within ninety days after
receipt of the demand, a regular meeting of shareholders must be held at the
expense of the Funds. Irrespective of whether a regular meeting of shareholders
has been held during the immediately preceding fifteen months, in accordance
with Section 16(c) under the 1940 Act, the Board of Directors of the Funds shall
promptly call a meeting of shareholders for the purpose of voting upon the
question of removal of any director when requested in writing so to do by the
record holders of not less than 10 percent of the outstanding shares.
Additionally, the 1940 Act requires shareholder votes for all amendments to
fundamental investment policies and restrictions and for all investment advisory
contracts and amendments thereto. The Funds will assist in communications with
other shareholders as required by Section 16(c) of the 1940 Act.
APPENDIX A
BOND AND COMMERCIAL PAPER RATINGS
BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.
Aaa Judged to be the best quality, carry the smallest degree of
investment risk
Aa Judged to be of high quality by all standards
A Possess many favorable investment attributes and are to be
considered as higher medium grade obligations
Baa Medium grade obligations. Lack outstanding investment
characteristics.
Ba Judged to have speculative elements. Protection of interest
and principal payments may be very moderate.
B Generally lack characteristics of a desirable investment.
Assurance of interest and principal payments over any
long period of time may be small.
Caa May be present elements of danger with respect to principal or
interest or may be in default
Ca Represent obligations which are speculative in a high degree.
Often in default.
C Lowest class of bonds and issued regarded as having extremely
poor prospects of attaining any real investment standing.
Moody's also applies numerical indicators, 1, 2, and 3, to rating
categories Aa through Ba. The modifier 1 indicates that the security is
in the higher end of the rating category; the modifier 2 indicates a
mid-range ranking; and 3 indicates a ranking toward the lower end of the
category.
STANDARD & POOR'S CORPORATION
AAA Highest grade obligations and possess the ultimate degree of
protection as to principal and interest
AA Also qualify as high grade obligations, and in the majority of
instances differ from AAA issues only in small degree
A Regarded as upper medium grade, have considerable investment
strength but are not entirely free from adverse effects of
changes in economic and trade conditions, interest and
principal are regarded as safe
BBB Considered investment grade with adequate capacity to pay
interest and repay principal.
BB Judged to be speculative with some inadequacy to meet timely
interest and principal payments.
B Has greater vulnerability to default than other speculative
grade securities. Adverse economic conditions will likely
impair capacity or willingness to pay interest and principal.
CCC Has a vulnerability to default and is dependent upon favorable
business, financial and economic conditions to meet timely
payment of interest and repayment of principal.
CC Applied to debt subordinated to senior debt
C Applied to debt subordinated to senior debt that is assigned an
actual or implied CCC debt rating
Standard & Poor's applies indicators "+", no character, and "-" to the
above rating categories AA through BB. The indicators show relative
standing within the major rating categories.
FITCH INVESTORS SERVICE, INC.
AAA Highest credit quality with exceptional ability to pay interest
and repay principal
AA Investment grade and very high credit quality ability to pay
interest and repay principal is very strong, although not quite
as strong as AAA
A Investment grade with high credit quality. Ability to pay
interest and repay principal is strong.
BBB Investment grade and has satisfactory credit quality. Adequate
ability to pay interest and repay principal.
BB Considered speculative. Ability to pay interest and repay
principal may be affected over time by adverse economic
changes.
B Considered highly speculative. Currently meeting interest and
principal obligations, but probability of continued payment
reflects limited margin of safety.
CCC Identifiable characteristics which if not remedied may lead to
default. Ability to meet obligations requires an advantageous
business and economic environment.
CC Minimally protected bonds. Default in payment of interest
and/or principal seems probable over time.
C Imminent default in payment of interest or principal
+ and - indicators indicate the relative position within the rating
category, but are not used in AAA category.
DUFF & PHELPS CREDIT RATING CO.
AAA Highest credit quality, risk factors are negligible
AA+, AA, AA- High credit quality with moderate risk
A+, A, A- Protection factors are average but adequate, however,
risk factors are more variable and greater
in periods of economic stress
BBB+,BBB,BBB- Below average protection factors, but still considered
sufficient for prudent investment
BB+,BB,BB- Below investment grade but likely to meet obligations
when due.
B+,B,B- Below investment grade and possessing risk that
obligations will not be met when due.
CCC Well below investment grade. May be in default or
considerable uncertainty as to timely payment of
interest and/or principal.
COMMERCIAL PAPER RATINGS
MOODY'S
Commercial paper rated "Prime" carries the smallest degree of
investment risk. The modifiers 1, 2, and 3 are used to denote relative
strength within this highest classification.
STANDARD & POOR'S
The rating A-1 is the highest commercial paper rating assigned by
Standard & Poor's Corporation. The modifier "+" indicates that the
security is in the higher end of this rating category.
FITCH'S
F-1+ Exceptionally strong credit quality
DUFF & PHELPS' Category 1 (top grade):
Duff1+ Highest certainty of timely payment
Duff1 Very high certainty of timely payment
Duff1- High certainty of timely payment
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements (incorporated by reference in Part B of this
Registration Statement).
(b) Exhibits (Explanatory Note: This Registration Statement contains
the combined Part C for Sit Growth Fund, Inc., Sit Growth & Income
Fund, Inc., and Sit Mutual Funds, Inc. Only the exhibits which
relate to the Registrant, as set forth in the Exhibit Index to
this Registration Statement, are being filed herewith).
1. Articles of Incorporation
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc.
(Incorporated by reference to Post-Effective Amendment No. 3
to the Fund's Registration Statement.)
2. Bylaws
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc. (Filed herewith.)
4. Specimen Copy of Share Certificate
(a) Sit Growth Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 3
to the Fund's Registration Statement.)
(b) Sit Growth & Income Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 3
to the Fund's Registration Statement.)
(c) Sit Mutual Funds, Inc.
(Incorporated by reference to the Fund's original
Registration Statement.)
5.1 Form of Investment Management Agreement
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc.
(Incorporated by reference to Post-Effective Amendment No. 2
to the Fund's Registration Statement.)
5.2 Sub-Advisory Agreement - Sit Mutual Funds, Inc.
(Incorporated by reference to Post-Effective Amendment No. 2
to the Fund's Registration Statement.)
6. Underwriting and Distribution Agreement
(a) Sit Growth Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 17
to the Fund's Registration Statement.)
(b) Sit Growth & Income Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 17
to the Fund's Registration Statement.)
(c) Sit Mutual Funds, Inc.
(Incorporated by reference to Post-Effective Amendment No. 6
to the Fund's Registration Statement.)
8.1 Form of Custodian Agreement
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc. (Filed herewith.)
8.2 Transfer Agency and Services Agreement
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc. (Filed herewith.)
8.3 Accounting Services Agreement
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc. (Filed herewith.)
10. Opinions and Consents of Dorsey & Whitney
(a) Sit Growth Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 13
to the Fund's Registration Statement.)
(b) Sit Growth & Income Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 13
to the Fund's Registration Statement.)
(c) Sit Mutual Funds, Inc.
(Incorporated by reference to Pre-Effective Amendment
No. 1 to the Fund's original Registration Statement.)
11. Consent of KPMG Peat Marwick
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc. (Filed herewith.)
13. Letter of Investment Intent
(a) Sit Growth Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 14
to the Fund's Registration Statement.)
(b) Sit Growth & Income Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 14
to the Fund's Registration Statement.)
(c) Sit Mutual Funds, Inc.
(Incorporated by reference to Post-Effective Amendment
No. 2 to the Fund's original Registration Statement.)
16. Calculations of Performance Data
(a) Sit Growth Fund, Inc. (Filed herewith.)
(b) Sit Growth & Income Fund, Inc. (Filed herewith.)
(c) Sit Mutual Funds, Inc. (Filed herewith.)
17. Powers of Attorney
(a) Sit Growth Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 19
to the Fund's Registration
Statement.)
(b) Sit Growth & Income Fund, Inc.
(Incorporated by reference to Post-Effective Amendment No. 19
to the Fund's Registration Statement.)
(c) Sit Mutual Funds, Inc.
(Incorporated by reference to Post-Effective Amendment No. 9
to the Fund's Registration Statement.)
Item 25. Persons Controlled by or Under Common Control with Registrant
See the sections of the Prospectus entitled "Investment Adviser" and
"The Sub-Adviser."
Item 26. Number of Holders of Securities
The number of holders of shares of each Registrant as of June 30, 1996 are:
<TABLE>
<CAPTION>
Fund Title of Class Record Holders
---- -------------- --------------
<S> <C> <C>
Growth Fund Common Stock 6,585
Growth & Income Fund Common Stock 1,143
International Growth Fund Common Stock, Series A 2,376
Balanced Fund Common Stock, Series B 100
Developing Markets Growth Fund Common Stock, Series C 426
Small Cap Growth Fund Common Stock, Series D 1,458
</TABLE>
Item 27. Indemnification
Each Registrant's Articles of Incorporation and Bylaws provide that the
Registrant shall indemnify such persons, for such expenses and liabilities, in
such manner, under such circumstances, and to such extent as permitted by
Section 302A.521 of the Minnesota Statutes, as now enacted or hereafter amended;
provided, however, that no such indemnification may be made if it would be in
violation of Section 17(h) of the Investment Company Act of 1940, as now enacted
or hereinafter amended, and any rules, regulations or releases promulgated
thereunder.
Each Registrant may indemnify its officers and directors and other
"persons" acting in an "official capacity" (as such terms are defined in Section
302A.521) pursuant to a determination by the board of directors or shraeholders
of the Registrant as set forth in Section 302A.521, by special legal counsel
selected by the board or a committee thereof for the purpose of making such a
determination, or by a Minnesota court upon application of the person seeking
indemnification. If a director is seeking indemnification for conduct in the
capacity of director or officer of a Registrant, then such director generally
may not be counted for the purpose of determining either the presence of a
quorum or such director's eligibility to be indemnified.
In any case, indemnification is proper only if the eligibility determining
body decides that the person seeking indemnification:
(a) has not received indemnification for the same conduct from any
other party or organization;
(b) acted in good faith;
(c) received no improper personal benefit;
(d) in the case of criminal proceedings, had no reasonable cause to
believe the conduct was unlawful;
(e) reasonably believed that the conduct was in the best interest of a
Registrant, or in certain contexts, was not opposed to the best
interest of a Registrant; and
(f) had not otherwise engaged in conduct which precludes
indemnification under either Minnesota or Federal law (including,
but not limited to, conduct constituting willful misfeasance, bad
faith, gross negligence, or reckless disregard of duties as set
forth in Section 17(h) and (i) of the Investment Company Act of
1940).
If a person is made or threatened to be made a party to a proceeding, the
person is entitled, upon written request to a Registrant, to payment or
reimbursement by a Registrant of reasonable expenses, including attorneys' fees
and disbursements, incurred by the person in advance of the final disposition of
the proceeding, (a) upon receipt by a Registrant of a written affirmation by the
person of a good faith belief that the criteria for indemnification set forth in
Section 302A.521 have been satisfied and a written undertaking by the person to
repay all amounts so paid or reimbursed by the Registrant, if it is ultimately
determined that the criteria for indemnification have not been satisfied, and
(b) after a determination that the facts then known to those making the
determination would not preclude indemnification under Section 302A.521. The
written undertaking required by clause (a) is an unlimited general obligation of
the person making it, but need not be secured and shall be accepted without
reference to financial ability to make the repayment.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of a
Registrant pursuant to the foregoing provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by a Registrant of expenses incurred or
paid by a director, officer or controlling person of such Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless, in the opinion of its counsel, the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Each Registrant undertakes to comply with the indemnification requirements
of Investment Company Release 7221 (June 9, 1972) and Investment Company Release
11330 (September 2, 1980).
Item 28. Business and other Connections of Investment Adviser
Sit Investment Associates, Inc. (the "Adviser"), serves as the investment
adviser of each Registrant. Sit/Kim International Investment Associates, Inc.
(the "Sub-Adviser") serves as the sub-adviser of the Series A and Series C of
Sit Mutual Funds, Inc. In addition to serving as the investment adviser to the
Registrants and to various other public and private accounts, the Adviser serves
as sub-adviser to Fremont Equity Fund, Inc., an open-end fund managed by Fremont
Investment Advisers of San Francisco, CA, and receives fees therefor of .40% per
year of such fund's average daily net assets.
Below is a list of the officers and directors of the Adviser and the
Sub-Adviser and their business/employment during the past two years.
Business and Employment During Past Two Years;
Name Principal Business Address
---- --------------------------
Eugene C. Sit Chairman, CIO and Treasurer of the
Adviser; Chairman and CEO of the Sub-Adviser;
Chairman of the Board of Directors of all Sit
Funds.
Peter L. Mitchelson President and Director of the
Adviser; Director and Executive Vice President
of the Sub-Adviser; Senior Portfolio Manager of
the Sit Growth & Income Fund; Vice Chairman &
Director of all Sit Funds.
Michael C. Brilley Senior Vice President and Senior Fixed Income
Officer of the Adviser; Director and Senior
Vice President of Sit U.S. Government
Securities Fund, Inc., Sit Money Market Fund,
Inc., Sit Mutual Funds II, Inc. and Sit
Balanced Fund.
Frederick Adler Director of the Adviser; Venture Capitalist,
Managing Partner, Venad Management, Inc. 1520
S. Ocean Boulevard Palm Beach, FL 33480
Norman Bud Grossman President, Cogel Management; Director of the
Adviser 4670 Norwest Center Minneapolis MN
55402
William E. Frenzel Advisory Director of the Adviser; Director of
Sub-Adviser; Director of all Sit Funds 1775
Massachusetts Avenue N.W. Washington, D.C.
20036
Erik S. Anderson Vice President - Equity Research and Portfolio
Management of the Adviser
John K. Butler Vice President - Equity Research of the Adviser
Gary T. Dvorchak Vice President - Equity Research of the Adviser
Michael P. Eckert Vice President - Group Manager of all Sit Funds
John T. Groton, Jr. Vice President - Equity Research of the Adviser
Paul E. Rasmussen Vice President, Secretary and Controller of the
Adviser and the Sub-Adviser; Vice President and
Treasurer of all Sit Funds.
Debra A. Sit Vice President - Bond Investments of the
Adviser; Officer of all Sit Funds; Assistant
Treasurer and Assistant Secretary of the
Sub-Adviser
Ronald D. Sit Vice President - Equity Research and Portfolio
Management of the Adviser
Mary K. Stern Vice President - Mutual Funds and President of
Sit Mutual Funds
Andrew B. Kim Director, President and Chief Investment
Officer of the Sub-Adviser 1285 Avenue of the
Americas New York, NY 10019
Charles W. Battey Director and Chairman of KN Energy, Inc.;
Director of the Sub-Adviser 4200 Somerset,
Suite 200 Prairie Village, KS 66208
David L. Redo Managing Director of Fremont Investment;
Director of the Sub-Adviser 333 Market Street,
Suite 2600 San Francisco, CA 94105
Charles R. Roberts Vice President and Portfolio Manager of the
Sub-Adviser 50 Fremont Street, Suite 3500 San
Francisco, CA 94105
Jean M. Seikkula Vice President, Treasurer and Investment
Specialist of the Sub-Adviser 50 Fremont
Street, Suite 3500 San Francisco, CA 94105
Richard S. Yeung Senior Vice President and Portfolio Manager of
the Sub-Adviser 50 Fremont Street, Suite 3500
San Francisco, CA 94105
Item 29. Principal Underwriters
The Distributor for each Registrant is SIA Securities Corp., 4600 Norwest
Center, Minneapolis, MN 55402, an affiliate of the Adviser, which distributes
only shares of each Registrant.
Below is a list of the officers and directors of the Distributor and their
business/employment during the past two years:
Business and Employment During Past Two Years;
Name Principal Business Address
---- --------------------------
Eugene C. Sit Chairman, CIO and Treasurer of the Adviser;
Chairman and CEO of the Director Sub-Adviser;
Chairman of the Board of Directors of all Sit
Funds.
Peter L. Mitchelson President and Director of the Adviser; Director
and Executive Vice President of the
Sub-Adviser; Senior Portfolio Manager of the
Sit Growth & Income Fund; Vice Chairman &
Director of all Sit Funds.
Parnell M. Kingsley Assistant Secretary of all Sit Funds
Vice President &
Secretary
Paul E. Rasmussen Vice President, Secretary and Controller for
President & the Adviser and Sub-Adviser; Vice President &
Treasurer Treasurer of all Sit Funds
Item 30. Location of Accounts and Records
The Custodian for each Registrant is The Northern Trust Company, 50 South
LaSalle Street, Chicago, IL 60675. The Transfer Agent for each Registrant is
First Data Investor Services, 4400 Computer Drive, B215, Westborough, MA 01581.
Other books and records are maintained by the Adviser, which is located at 4600
Norwest Center, Minneapolis, MN 55402 and the Sub-Adviser, which is located at
the same address.
Item 31. Management Services
Not applicable
Item 32. Undertakings
(a) Not applicable
(b) Not applicable
(c) Each Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the question of removal of a director
if requested to do so by the holders of at least 10% of such
Registrant's outstanding shares and to assist in communications
with other shareholders as required by Section 16(c) of the
Investment Company Act of 1940.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunder
duly authorized, in the City of Minneapolis, State of Minnesota, on the 26th day
of August, 1996.
SIT GROWTH FUND, INC.
(Registrant)
By /s/ Eugene C. Sit
Eugene C. Sit, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signature and Title
/s/ Eugene C. Sit Dated: August 26, 1996
- -------------------------------------------------
Eugene C. Sit Chairman
(Principal Executive Officer and Director)
/s/ Paul E. Rasmussen Dated: August 26, 1996
- -------------------------------------------
Paul E. Rasmussen, Treasurer
(Principal Financial Officer and Accounting Officer)
William E. Frenzel, Director*
John E. Hulse, Director*
Sidney L. Jones, Director*
Peter L. Mitchelson, Director*
Donald W. Phillips, Director*
*By /s/ Eugene C. Sit Dated: August 26, 1996
------------------------------
Eugene C. Sit, Attorney-in-fact
(Pursuant to Powers of Attorney filed
previously with the Commission.)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunder
duly authorized, in the City of Minneapolis, State of Minnesota, on the 26th day
of August, 1996.
SIT GROWTH & INCOME FUND, INC.
(Registrant)
By /s/ Eugene C. Sit
Eugene C. Sit, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signature and Title
/s/ Eugene C. Sit Dated: August 26, 1996
- -------------------------------------------
Eugene C. Sit, Chairman
(Principal Executive Officer and Director)
/s/ Paul E. Rasmussen Dated: August 26, 1996
- -------------------------------------------
Paul E. Rasmussen, Treasurer
(Principal Financial Officer and Accounting Officer)
William E. Frenzel, Director*
John E. Hulse, Director*
Sidney L. Jones, Director*
Peter L. Mitchelson, Director*
Donald W. Phillips, Director*
*By /s/ Eugene C. Sit Dated: August 26, 1996
------------------------------
Eugene C. Sit, Attorney-in-fact
(Pursuant to Powers of Attorney filed
previously with the Commission.)
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunder
duly authorized, in the City of Minneapolis, State of Minnesota, on the 26th day
of August, 1996.
SIT MUTUAL FUNDS, INC.
(Registrant)
By /s/ Eugene C. Sit
Eugene C. Sit, Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registrant's Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signature and Title
/s/ Eugene C. Sit Dated: August 26, 1996
- -------------------------------------------
Eugene C. Sit, Chairman
(Principal Executive Officer and Director)
/s/ Paul E. Rasmussen Dated: August 26, 1996
- -------------------------------------------
Paul E. Rasmussen, Treasurer
(Principal Financial Officer and Accounting Officer)
William E. Frenzel, Director*
John E. Hulse, Director*
Sidney L. Jones, Director*
Peter L. Mitchelson, Director*
Donald W. Phillips, Director*
*By /s/ Eugene C. Sit Dated: August 26, 1996
-----------------------------
Eugene C. Sit, Attorney-in-fact
(Pursuant to Powers of Attorney filed
previously with the Commission.)
REGISTRATION STATEMENT ON FORM N-1A
EXHIBIT INDEX
EXHIBIT NO. NAME OF EXHIBIT PAGE NO.
- ----------- --------------- --------
1 Form of Amended Articles of Incorporation C-11
2 Bylaws C-21
5.1 Form of Investment Management Agreement C-52
8.1 Custodian Agreement C-57
8.2 Transfer Agency and Services Agreement C-112
8.3 Accounting Services Agreement C-165
11 Independent Auditors' Consent C-192
16 Calculations of Performance Data C-193
EXHIBIT 1
Form of Amended Articles of Incorporation
Sit Growth Fund, Inc.
CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
SIT GROWTH FUND, INC.
The undersigned, Paul E. Rasmussen and Michael J. Radmer, the duly
elected and serving Vice President/Treasurer and Secretary, respectively, of Sit
Growth Fund, Inc. (the "Corporation"), a Minnesota corporation, hereby certify
as follows:
1. The name of the Corporation, prior to the filing of this
Certificate of Amendment, is Sit Growth Fund, Inc. The name of
the Corporation is being changed upon the filing of this
Certificate of Amendment, as set forth below.
2. At meetings duly called and held (pursuant to the requirements
of the Minnesota Statutes, Chapter 302A) on July 26 and October
23, 1996, the Corporation's Board of Directors and shareholders,
respectively, adopted and approved the following Amended and
Restated Articles of Incorporation of the Corporation to replace
the Corporation's existing Amended and Restated Articles of
Incorporation in their entirety, and directed that the officers
of the Corporation file the following Amended and Restated
Articles of Incorporation in the office of the Minnesota
Secretary of State.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
SIT MID CAP GROWTH FUND, INC.
For the purpose of forming a corporation pursuant to the provisions of
Minnesota Statutes, Chapter 302A, the following Restated Articles of
Incorporation are adopted:
1. The name of the corporation (the "Corporation") is Sit Mid Cap
Growth Fund, Inc.
2. The Corporation shall have general business purposes and shall have
unlimited power to engage in and do any lawful act concerning any and all lawful
businesses for which corporations may be organized under the Minnesota Statutes,
Chapter 302A. Without limiting the generality of the foregoing, the Corporation
shall have specific power:
(a) To conduct, operate and carry on the business of a
so-called "open-end" management investment company pursuant to
applicable state and federal regulatory statutes, and exercise all the
powers necessary and appropriate to the conduct of such operations.
(b) To purchase, subscribe for, invest in or otherwise
acquire, and to own, hold, pledge, mortgage, hypothecate, sell,
possess, transfer or otherwise dispose of, or turn to account or
realize upon, and generally deal in, all forms of securities of every
kind, nature, character, type and form, and other financial instruments
which may not be deemed to be securities, including but not limited to
futures contracts and options thereon. Such securities and other
financial instruments may include but are not limited to shares,
stocks, bonds, debentures, notes, scrip, participation certificates,
rights to subscribe, warrants, options, certificates of deposit,
bankers' acceptances, repurchase agreements, commercial paper, choses
in action, evidences of indebtedness, certificates of indebtedness and
certificates of interest of any and every kind and nature whatsoever,
secured and unsecured, issued or to be issued, by any corporation,
company, partnership (limited or general), association, trust, entity
or person, public or private, whether organized under the laws of the
United States, or any state, commonwealth, territory or possession
thereof, or organized under the laws of any foreign country, or any
state, province, territory or possession thereof, or issued or to be
issued by the United States government or any agency or instrumentality
thereof, options on stock indexes, stock index and interest rate
futures contracts and options thereon, and other futures contracts and
options thereon.
(c) In the above provisions of this Article 2, purposes shall
also be construed as powers and powers shall also be construed as
purposes, and the enumeration of specific purposes or powers shall not
be construed to limit other statements of purposes or to limit purposes
or powers which the Corporation may otherwise have under applicable
law, all of the same being separate and cumulative, and all of the same
may be carried on, promoted and pursued, transacted or exercised in any
place whatsoever.
3. The Corporation shall have perpetual existence.
4. The location and post office address of the registered office in
Minnesota is 4600 Norwest Center, Minneapolis, Minnesota 55402.
5. (a) The total authorized number of shares of the Corporation is ten
billion (10,000,000,000), all of which shall be common shares of the par value
of $.001 per share (individually, a "Share" and collectively, the "Shares"). The
Corporation may issue and sell any of its Shares in fractional denominations to
the same extent as its whole Shares, and Shares and fractional denominations
shall have, in proportion to the relative fractions represented thereby, all the
rights of whole Shares, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to participate upon
liquidation of the Corporation.
(b) The Shares may be classified by the Board of Directors in
one or more classes (individually, a "Class" and, collectively,
together with any other class or classes, the "Classes") with such
relative rights and preferences as shall be stated or expressed in a
resolution or resolutions providing for the issue of any such Class or
Classes as may be adopted from time to time by the Board of Directors
of the Corporation pursuant to the authority hereby vested in the Board
of Directors and Minnesota Statutes, Section 302A.401, Subd. 3, or any
successor provision. The Shares of each Class may be subject to such
charges and expenses (including by way of example, but not by way of
limitation, front-end and deferred sales charges, expenses under Rule
12b-1 plans, administration plans, service plans, or other plans or
arrangements, however designated) as may be adopted from time to time
by the Board of Directors in accordance, to the extent applicable, with
the Investment Company Act of 1940, as amended (together with the rules
and regulations promulgated thereunder, the "1940 Act"), which charges
and expenses may differ from those applicable to another Class, and all
of the charges and expenses to which a Class is subject shall be borne
by such Class and shall be appropriately reflected (in the manner
determined or approved by the Board of Directors) in determining the
net asset value and the amounts payable with respect to dividends and
distributions on and redemptions or liquidations of, such Class.
Subject to compliance with the requirements of the 1940 Act, the Board
of Directors shall have the authority to provide that Shares of any
Class shall be convertible (automatically, optionally or otherwise)
into Shares of one or more other Classes in accordance with such
requirements and procedures as may be established by the Board of
Directors.
6. The shareholders of each Class of common shares of the Corporation:
(a) shall not have the right to cumulate votes for the
election of directors; and
(b) shall have no preemptive right to subscribe to any issue
of shares of any Class of the Corporation now or hereafter created,
designated or classified.
7. A description of the relative rights and preferences of all Classes
of Shares is as follows, unless otherwise set forth in one or more amendments to
these Articles of Incorporation or in the resolutions providing for the issue of
such Classes:
(a) On any matter submitted to a vote of shareholders of the
Corporation, all Shares of the Corporation then issued and outstanding
and entitled to vote, irrespective of Class, shall be voted in the
aggregate and not by Class, except: (i) when otherwise required by
Minnesota Statutes, Chapter 302A, in which case shares will be voted by
individual Class, as applicable; (ii) when otherwise required by the
1940 Act or the rules adopted thereunder, in which case shares shall be
voted by individual Class, as applicable; and (iii) when the matter
does not affect the interests of a particular Class thereof, in which
case only shareholders of the Class affected shall be entitled to vote
thereon and shall vote by individual Class.
(b) The Board of Directors may, to the extent permitted by
Minnesota Statutes, Chapter 302A or any successor provision thereto,
declare and pay dividends or distributions in Shares, cash or other
property on any or all Classes of Shares, the amount of such dividends
and the payment thereof being wholly in the discretion of the Board of
Directors.
(c) With the approval of a majority of the shareholders of
each of the affected Classes of Shares present in person or by proxy at
a meeting called for the following purpose (provided that a quorum of
the issued and outstanding Shares of each affected Class is present at
such meeting in person or by proxy), the Board of Directors may
transfer the assets of any Class to any other Class. Upon such a
transfer, the Corporation shall issue Shares representing interests in
the Class to which the assets were transferred in exchange for all
Shares representing interests in the Class from which the assets were
transferred. Such Shares shall be exchanged at their respective net
asset values.
8. The following additional provisions, when consistent with law, are
hereby established for the management of the business, for the conduct of the
affairs of the Corporation, and for the purpose of describing certain specific
powers of the Corporation and of its directors and shareholders.
(a) In furtherance and not in limitation of the powers
conferred by statute and pursuant to these Articles of Incorporation,
the Board of Directors is expressly authorized to do the following:
(i) to make, adopt, alter, amend and repeal
Bylaws of the Corporation unless reserved to the shareholders
by the Bylaws or by the laws of the State of Minnesota,
subject to the power of the shareholders to change or repeal
such Bylaws;
(ii) to distribute, in its discretion, for
any fiscal year (in the year or in the next fiscal year) as
ordinary dividends and as capital gains distributions,
respectively, amounts sufficient to enable the Corporation to
qualify under the Internal Revenue Code as a regulated
investment company to avoid any liability for federal income
tax in respect of such year. Any distribution or dividend paid
to shareholders from any capital source shall be accompanied
by a written statement showing the source or sources of such
payment;
(iii) to authorize, subject to such vote,
consent, or approval of shareholders and other conditions, if
any, as may be required by any applicable statute, rule or
regulation, the execution and performance by the Corporation
of any agreement or agreements with any person, corporation,
association, company, trust, partnership (limited or general)
or other organization whereby, subject to the supervision and
control of the Board of Directors, any such other person,
corporation, association, company, trust, partnership (limited
or general), or other organization shall render managerial,
investment advisory, distribution, transfer agent, accounting
and/or other services to the Corporation (including, if deemed
advisable, the management or supervision of the investment
portfolios of the Corporation) upon such terms and conditions
as may be provided in such agreement or agreements;
(iv) to authorize any agreement of the
character described in subparagraph (iii) of this paragraph
(a) with any person, corporation, association, company, trust,
partnership (limited or general) or other organization,
although one or more of the members of the Board of Directors
or officers of the Corporation may be the other party to any
such agreement or an officer, director, employee, shareholder,
or member of such other party, and no such agreement shall be
invalidated or rendered voidable by reason of the existence of
any such relationship;
(v) to allot and authorize the issuance of
the authorized but unissued Shares of any Class of the
Corporation;
(vi) to accept or reject subscriptions for
Shares of any Class made after incorporation;
(vii) to fix the terms, conditions and
provisions of and authorize the issuance of options to
purchase or subscribe for Shares of any Class including the
option price or prices at which Shares may be purchased or
subscribed for;
(viii) to take any action which might be
taken at a meeting of the Board of Directors, or any duly
constituted committee thereof, without a meeting pursuant to a
writing signed by that number of directors or committee
members that would be required to taken the same action at a
meeting of the Board of Directors or committee thereof at
which all directors or committee members were present;
provided, however, that, if such action also requires
shareholder approval, such writing must be signed by all of
the directors or committee members entitled to vote on such
matter; and
(ix) to determine what constitutes net
income and the net asset value of the Shares of each Class of
the Corporation. Any such determination made in good faith
shall be final and conclusive, and shall be binding upon the
Corporation, and all holders (past, present and future) of
Shares of each Class thereof.
(b) Except as provided in the next sentence
of this paragraph (b), Shares of any Class hereafter issued which are
redeemed, exchanged, or otherwise acquired by the Corporation shall
return to the status of authorized and unissued Shares of such Class.
Upon the redemption, exchange, or other acquisition by the Corporation
of all outstanding Shares of any Class hereafter issued, such Shares
shall return to the status of authorized and unissued Shares without
designation as to Class and all provisions of these articles of
incorporation relating to such Class (including, without limitation,
any statement establishing or fixing the rights and preferences of such
Class), shall cease to be of further effect and shall cease to be a
part of these articles. Upon the occurrence of such events, the Board
of Directors of the Corporation shall have the power, pursuant to
Minnesota Statutes Section 302A.135, Subdivision 5 or any successor
provision and without shareholder action, to cause restated articles of
incorporation of the Corporation to be prepared and filed with the
Secretary of State of the State of Minnesota which reflect such removal
from these articles of all such provisions relating to such Class
thereof.
(c) The determination as to any of the
following matters made by or pursuant to the direction of the Board of
Directors consistent with these Articles of Incorporation and in the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of duties, shall be final and conclusive and shall be binding
upon the Corporation and every holder of shares of its capital stock:
namely, the amount of the obligations, liabilities and expenses of each
Class of the Corporation; the amount of the net income of each Class of
the Corporation for any period and the amount of assets at any time
legally available for the payment of dividends in each Class; the
amount of paid-in surplus, other surplus, annual or other net profits,
or net assets in excess of capital or undivided profits of each Class;
the amount, purpose, time of creation, increase or decrease, alteration
or cancellation of any reserves or charges and the propriety thereof
(whether or not any obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged);
the market value, or any sale, bid or asked price to be applied in
determining the market value, of any security owned or held by the
Corporation; the fair value of any other asset owned by the
Corporation; the number of Shares of each Class of the Corporation
issued or issuable; any matter relating to the acquisition, holding and
disposition of securities and other assets by the Corporation; and any
question as to whether any transaction constitutes a purchase of
securities on margin, a short sale of securities, or an underwriting of
the sale of, or participation in any underwriting or selling group in
connection with the public distribution of any securities.
(d) The Board of Directors or the
shareholders of the Corporation may adopt, amend, affirm or reject
investment policies and restrictions upon investment or the use of
assets of the Corporation and may designate some such policies as
fundamental and not subject to change other than by a vote of a
majority of the outstanding voting securities, as such phrase is
defined in the 1940 Act, of the Corporation.
9. The Corporation shall indemnify such persons for such expenses and
liabilities, in such manner, under such circumstances, and to the full extent
permitted by Section 302A.521 of the Minnesota Statutes, as now enacted or
hereafter amended, provided, however, that no such indemnification may be made
if it would be in violation of Section 17(h) of the 1940 Act, as now enacted or
hereafter amended.
10. To the fullest extent permitted by the Minnesota Statutes, Chapter
302A, as the same exists or may hereafter be amended (except as prohibited by
the 1940 Act, as the same exists or may hereafter be amended), a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director.
IN WITNESS WHEREOF, the undersigned duly elected and serving Vice
President/Treasurer and Secretary of the Corporation have executed this
Certificate of Amendment on October ___, 1996.
Paul E. Rasmussen
Vice President and Treasurer
Michael J. Radmer
Secretary
EXHIBIT 1
Form of Amended Articles of Incorporation
Sit Growth & Income Fund, Inc.
CERTIFICATE OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
SIT GROWTH & INCOME FUND, INC.
The undersigned, Paul E. Rasmussen and Michael J. Radmer, the duly
elected and serving Vice President/Treasurer and Secretary, respectively, of Sit
Growth & Income Fund, Inc. (the "Corporation"), a Minnesota corporation, hereby
certify as follows:
1. The name of the Corporation, prior to the filing of this
Certificate of Amendment, is Sit Growth & Income Fund, Inc.
The name of the Corporation is being changed upon the filing
of this Certificate of Amendment, as set forth below.
2. At meetings duly called and held (pursuant to the requirements
of the Minnesota Statutes, Chapter 302A) on July 26 and
October 23, 1996, the Corporation's Board of Directors and
shareholders, respectively, adopted and approved the following
Amended and Restated Articles of Incorporation of the
Corporation to replace the Corporation's existing Amended and
Restated Articles of Incorporation in their entirety, and
directed that the officers of the Corporation file the
following Amended and Restated Articles of Incorporation in
the office of the Minnesota Secretary of State.
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
SIT LARGE CAP GROWTH FUND, INC.
For the purpose of forming a corporation pursuant to the provisions of
Minnesota Statutes, Chapter 302A, the following Restated Articles of
Incorporation are adopted:
1. The name of the corporation (the "Corporation") is Sit Large Cap
Growth Fund, Inc.
2. The Corporation shall have general business purposes and shall have
unlimited power to engage in and do any lawful act concerning any and all lawful
businesses for which corporations may be organized under the Minnesota Statutes,
Chapter 302A. Without limiting the generality of the foregoing, the Corporation
shall have specific power:
(a) To conduct, operate and carry on the business of a
so-called "open-end" management investment company pursuant to
applicable state and federal regulatory statutes, and exercise all the
powers necessary and appropriate to the conduct of such operations.
(b) To purchase, subscribe for, invest in or otherwise
acquire, and to own, hold, pledge, mortgage, hypothecate, sell,
possess, transfer or otherwise dispose of, or turn to account or
realize upon, and generally deal in, all forms of securities of every
kind, nature, character, type and form, and other financial instruments
which may not be deemed to be securities, including but not limited to
futures contracts and options thereon. Such securities and other
financial instruments may include but are not limited to shares,
stocks, bonds, debentures, notes, scrip, participation certificates,
rights to subscribe, warrants, options, certificates of deposit,
bankers' acceptances, repurchase agreements, commercial paper, choses
in action, evidences of indebtedness, certificates of indebtedness and
certificates of interest of any and every kind and nature whatsoever,
secured and unsecured, issued or to be issued, by any corporation,
company, partnership (limited or general), association, trust, entity
or person, public or private, whether organized under the laws of the
United States, or any state, commonwealth, territory or possession
thereof, or organized under the laws of any foreign country, or any
state, province, territory or possession thereof, or issued or to be
issued by the United States government or any agency or instrumentality
thereof, options on stock indexes, stock index and interest rate
futures contracts and options thereon, and other futures contracts and
options thereon.
(c) In the above provisions of this Article 2, purposes shall
also be construed as powers and powers shall also be construed as
purposes, and the enumeration of specific purposes or powers shall not
be construed to limit other statements of purposes or to limit purposes
or powers which the Corporation may otherwise have under applicable
law, all of the same being separate and cumulative, and all of the same
may be carried on, promoted and pursued, transacted or exercised in any
place whatsoever.
3. The Corporation shall have perpetual existence.
4. The location and post office address of the registered office in
Minnesota is 4600 Norwest Center, Minneapolis, Minnesota 55402.
5. (a) The total authorized number of shares of the Corporation is ten
billion (10,000,000,000), all of which shall be common shares of the par value
of $.001 per share (individually, a "Share" and collectively, the "Shares"). The
Corporation may issue and sell any of its Shares in fractional denominations to
the same extent as its whole Shares, and Shares and fractional denominations
shall have, in proportion to the relative fractions represented thereby, all the
rights of whole Shares, including, without limitation, the right to vote, the
right to receive dividends and distributions, and the right to participate upon
liquidation of the Corporation.
(b) The Shares may be classified by the Board of Directors in
one or more classes (individually, a "Class" and, collectively,
together with any other class or classes, the "Classes") with such
relative rights and preferences as shall be stated or expressed in a
resolution or resolutions providing for the issue of any such Class or
Classes as may be adopted from time to time by the Board of Directors
of the Corporation pursuant to the authority hereby vested in the Board
of Directors and Minnesota Statutes, Section 302A.401, Subd. 3, or any
successor provision. The Shares of each Class may be subject to such
charges and expenses (including by way of example, but not by way of
limitation, front-end and deferred sales charges, expenses under Rule
12b-1 plans, administration plans, service plans, or other plans or
arrangements, however designated) as may be adopted from time to time
by the Board of Directors in accordance, to the extent applicable, with
the Investment Company Act of 1940, as amended (together with the rules
and regulations promulgated thereunder, the "1940 Act"), which charges
and expenses may differ from those applicable to another Class, and all
of the charges and expenses to which a Class is subject shall be borne
by such Class and shall be appropriately reflected (in the manner
determined or approved by the Board of Directors) in determining the
net asset value and the amounts payable with respect to dividends and
distributions on and redemptions or liquidations of, such Class.
Subject to compliance with the requirements of the 1940 Act, the Board
of Directors shall have the authority to provide that Shares of any
Class shall be convertible (automatically, optionally or otherwise)
into Shares of one or more other Classes in accordance with such
requirements and procedures as may be established by the Board of
Directors.
6. The shareholders of each Class of common shares of the Corporation:
(a) shall not have the right to cumulate votes for the
election of directors; and
(b) shall have no preemptive right to subscribe to any issue
of shares of any Class of the Corporation now or hereafter created,
designated or classified.
7. A description of the relative rights and preferences of all Classes
of Shares is as follows, unless otherwise set forth in one or more amendments to
these Articles of Incorporation or in the resolutions providing for the issue of
such Classes:
(a) On any matter submitted to a vote of shareholders of the
Corporation, all Shares of the Corporation then issued and outstanding
and entitled to vote, irrespective of Class, shall be voted in the
aggregate and not by Class, except: (i) when otherwise required by
Minnesota Statutes, Chapter 302A, in which case shares will be voted by
individual Class, as applicable; (ii) when otherwise required by the
1940 Act or the rules adopted thereunder, in which case shares shall be
voted by individual Class, as applicable; and (iii) when the matter
does not affect the interests of a particular Class thereof, in which
case only shareholders of the Class affected shall be entitled to vote
thereon and shall vote by individual Class.
(b) The Board of Directors may, to the extent permitted by
Minnesota Statutes, Chapter 302A or any successor provision thereto,
declare and pay dividends or distributions in Shares, cash or other
property on any or all Classes of Shares, the amount of such dividends
and the payment thereof being wholly in the discretion of the Board of
Directors.
(c) With the approval of a majority of the shareholders of
each of the affected Classes of Shares present in person or by proxy at
a meeting called for the following purpose (provided that a quorum of
the issued and outstanding Shares of each affected Class is present at
such meeting in person or by proxy), the Board of Directors may
transfer the assets of any Class to any other Class. Upon such a
transfer, the Corporation shall issue Shares representing interests in
the Class to which the assets were transferred in exchange for all
Shares representing interests in the Class from which the assets were
transferred. Such Shares shall be exchanged at their respective net
asset values.
8. The following additional provisions, when consistent with law, are
hereby established for the management of the business, for the conduct of the
affairs of the Corporation, and for the purpose of describing certain specific
powers of the Corporation and of its directors and shareholders.
(a) In furtherance and not in limitation of the powers
conferred by statute and pursuant to these Articles of Incorporation,
the Board of Directors is expressly authorized to do the following:
(i) to make, adopt, alter, amend and repeal Bylaws of the
Corporation unless reserved to the shareholders by the Bylaws
or by the laws of the State of Minnesota, subject to the power
of the shareholders to change or repeal such Bylaws;
(ii) to distribute, in its discretion, for any fiscal year (in
the year or in the next fiscal year) as ordinary dividends and
as capital gains distributions, respectively, amounts
sufficient to enable the Corporation to qualify under the
Internal Revenue Code as a regulated investment company to
avoid any liability for federal income tax in respect of such
year. Any distribution or dividend paid to shareholders from
any capital source shall be accompanied by a written statement
showing the source or sources of such payment;
(iii) to authorize, subject to such vote, consent, or approval
of shareholders and other conditions, if any, as may be
required by any applicable statute, rule or regulation, the
execution and performance by the Corporation of any agreement
or agreements with any person, corporation, association,
company, trust, partnership (limited or general) or other
organization whereby, subject to the supervision and control
of the Board of Directors, any such other person, corporation,
association, company, trust, partnership (limited or general),
or other organization shall render managerial, investment
advisory, distribution, transfer agent, accounting and/or
other services to the Corporation (including, if deemed
advisable, the management or supervision of the investment
portfolios of the Corporation) upon such terms and conditions
as may be provided in such agreement or agreements;
(iv) to authorize any agreement of the character described in
subparagraph (iii) of this paragraph (a) with any person,
corporation, association, company, trust, partnership (limited
or general) or other organization, although one or more of the
members of the Board of Directors or officers of the
Corporation may be the other party to any such agreement or an
officer, director, employee, shareholder, or member of such
other party, and no such agreement shall be invalidated or
rendered voidable by reason of the existence of any such
relationship;
(v) to allot and authorize the issuance of the authorized but
unissued Shares of any Class of the Corporation;
(vi) to accept or reject subscriptions for Shares of any Class
made after incorporation;
(vii) to fix the terms, conditions and provisions of and
authorize the issuance of options to purchase or subscribe for
Shares of any Class including the option price or prices at
which Shares may be purchased or subscribed for;
(viii) to take any action which might be taken at a meeting of
the Board of Directors, or any duly constituted committee
thereof, without a meeting pursuant to a writing signed by
that number of directors or committee members that would be
required to taken the same action at a meeting of the Board of
Directors or committee thereof at which all directors or
committee members were present; provided, however, that, if
such action also requires shareholder approval, such writing
must be signed by all of the directors or committee members
entitled to vote on such matter; and
(ix) to determine what constitutes net income and the net
asset value of the Shares of each Class of the Corporation.
Any such determination made in good faith shall be final and
conclusive, and shall be binding upon the Corporation, and all
holders (past, present and future) of Shares of each Class
thereof.
(b) Except as provided in the next sentence of this paragraph
(b), Shares of any Class hereafter issued which are redeemed,
exchanged, or otherwise acquired by the Corporation shall return to the
status of authorized and unissued Shares of such Class. Upon the
redemption, exchange, or other acquisition by the Corporation of all
outstanding Shares of any Class hereafter issued, such Shares shall
return to the status of authorized and unissued Shares without
designation as to Class and all provisions of these articles of
incorporation relating to such Class (including, without limitation,
any statement establishing or fixing the rights and preferences of such
Class), shall cease to be of further effect and shall cease to be a
part of these articles. Upon the occurrence of such events, the Board
of Directors of the Corporation shall have the power, pursuant to
Minnesota Statutes Section 302A.135, Subdivision 5 or any successor
provision and without shareholder action, to cause restated articles of
incorporation of the Corporation to be prepared and filed with the
Secretary of State of the State of Minnesota which reflect such removal
from these articles of all such provisions relating to such Class
thereof.
(c) The determination as to any of the following matters made
by or pursuant to the direction of the Board of Directors consistent
with these Articles of Incorporation and in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of
duties, shall be final and conclusive and shall be binding upon the
Corporation and every holder of shares of its capital stock: namely,
the amount of the obligations, liabilities and expenses of each Class
of the Corporation; the amount of the net income of each Class of the
Corporation for any period and the amount of assets at any time legally
available for the payment of dividends in each Class; the amount of
paid-in surplus, other surplus, annual or other net profits, or net
assets in excess of capital or undivided profits of each Class; the
amount, purpose, time of creation, increase or decrease, alteration or
cancellation of any reserves or charges and the propriety thereof
(whether or not any obligation or liability for which such reserves or
charges shall have been created shall have been paid or discharged);
the market value, or any sale, bid or asked price to be applied in
determining the market value, of any security owned or held by the
Corporation; the fair value of any other asset owned by the
Corporation; the number of Shares of each Class of the Corporation
issued or issuable; any matter relating to the acquisition, holding and
disposition of securities and other assets by the Corporation; and any
question as to whether any transaction constitutes a purchase of
securities on margin, a short sale of securities, or an underwriting of
the sale of, or participation in any underwriting or selling group in
connection with the public distribution of any securities.
(d) The Board of Directors or the shareholders of the
Corporation may adopt, amend, affirm or reject investment policies and
restrictions upon investment or the use of assets of the Corporation
and may designate some such policies as fundamental and not subject to
change other than by a vote of a majority of the outstanding voting
securities, as such phrase is defined in the 1940 Act, of the
Corporation.
9. The Corporation shall indemnify such persons for such expenses and
liabilities, in such manner, under such circumstances, and to the full extent
permitted by Section 302A.521 of the Minnesota Statutes, as now enacted or
hereafter amended, provided, however, that no such indemnification may be made
if it would be in violation of Section 17(h) of the 1940 Act, as now enacted or
hereafter amended.
10. To the fullest extent permitted by the Minnesota Statutes, Chapter
302A, as the same exists or may hereafter be amended (except as prohibited by
the 1940 Act, as the same exists or may hereafter be amended), a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director.
IN WITNESS WHEREOF, the undersigned duly elected and serving Vice
President/Treasurer and Secretary of the Corporation have executed this
Certificate of Amendment on October___, 1996.
Paul E. Rasmussen
Vice President and Treasurer
Michael J. Radmer
Secretary
EXHIBIT 2
Bylaws
Sit Growth Fund, Inc.
BYLAWS
OF
SIT MID CAP GROWTH FUND, INC.
(AS AMENDED BY THE BOARD OF DIRECTORS
ON OCTOBER 23, 1996)
ARTICLE I
OFFICES, CORPORATE SEAL
Section 1.01. Name. The name of the corporation is "Sit Mid Cap Growth
Fund, Inc."
Section 1.02. Registered Office. The registered office of the corporation
in Minnesota shall be that set forth in the Articles of Incorporation or in the
most recent amendment of the Articles of Incorporation or resolution of the
directors filed with the Secretary of State of Minnesota changing the registered
office.
Section 1.03. Other Offices. The corporation may have such other
offices, within or without the State of Minnesota, as the directors shall, from
time to time, determine.
Section 1.04. No Corporate Seal. The corporation shall have no
corporate seal.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meeting. Except as provided otherwise by
Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at any
place, within or without the State of Minnesota, designated by the directors
and, in the absence of such designation, shall be held at the registered office
of the corporation in the State of Minnesota. The directors shall designate the
time of day for each meeting and, in the absence of such designation, every
meeting of shareholders shall be held at ten o'clock a.m.
Section 2.02. Regular Meetings. The corporation is not required to hold
annual meetings of shareholders. Regular meetings shall be held only with such
frequency and at such times and places as provided in and required by Minnesota
Statutes Section 302A.431.
Section 2.03. Special Meetings. Special meetings of the shareholders may
be held at any time and for any purpose and may be called by the Chairman of the
Board, the President, any two directors, or by one or more shareholders holding
ten percent (10%) or more of the shares entitled to vote on the matters to be
presented to the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of a majority of
the shares outstanding and entitled to vote shall constitute a quorum for the
transaction of business at any regular or special meeting. In case a quorum
shall not be present at a meeting, those present in person or by proxy shall
adjourn the meeting to such day as they shall, by majority vote, agree upon
without further notice other than by announcement at the meeting at which such
adjournment is taken. If a quorum is present, a meeting may be adjourned from
time to time without notice other than announcement at the meeting. At adjourned
meetings at which a quorum is present, any business may be transacted which
might have been transacted at the meeting as originally noticed. If a quorum is
present, the shareholders may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.05. Voting. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the Articles of Incorporation provide
otherwise, shall have one vote for each share having voting power registered in
his name on the books of the corporation. Except as otherwise specifically
provided by these Bylaws or as required by provisions of the Investment Company
Act of 1940 or other applicable laws, all questions shall be decided by a
majority vote of the number of shares entitled to vote and represented at the
meeting at the time of the vote. If the matter(s) to be presented at a regular
or special meeting relates only to particular classes or series of the
corporation, then only the shareholders of such classes or series are entitled
to vote on such matter(s).
Section 2.06. Voting - Proxies. The right to vote by proxy shall exist
only if the instrument authorizing such proxy to act shall have been executed in
writing by the shareholder himself or by his attorney thereunto duly authorized
in writing. No proxy shall be voted after eleven months from its date unless it
provides for a longer period.
Section 2.07. Closing of Books. The Board of Directors may fix a time,
not exceeding sixty (60) days preceding the date of any meeting of shareholders,
as a record date for the determination of the shareholders entitled to notice
of, and to vote at, such meeting, notwithstanding any transfer of shares on the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation against the transfer of shares during the
whole or any part of such period. If the Board of Directors fails to fix a
record date for determination of the shareholders entitled to notice of, and to
vote at, any meeting of shareholders, the record date shall be the thirtieth
(30th) day preceding the date of such meeting.
Section 2.08. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the date, time and place of each regular meeting and each special
meeting, except where the meeting is an adjourned meeting and the date, time and
place of the meeting were announced at the time of adjournment, which notice
shall be mailed within the period required by law. Every notice of any special
meeting shall state the purpose or purposes for which the meeting has been
called, pursuant to Section 2.03, and the business transacted at all special
meetings shall be confined to the purpose stated in such notice.
Section 2.09. Waiver of Notice. Notice of any regular or special meeting
may be waived either before, at or after such meeting orally or in a writing
signed by each shareholder or representative thereof entitled to vote the shares
so represented. A shareholder by his attendance at any meeting of shareholders,
shall be deemed to have waived notice of such meeting, except where the
shareholder objects at the beginning of the meeting to the transaction of
business because the item may not lawfully be considered at that meeting and
does not participate at that meeting in the consideration of the item at that
meeting.
Section 2.10. Written Action. Any action which might be taken at a
meeting of the shareholders may be taken without a meeting if done in writing
and signed by all of the shareholders entitled to vote on that action. If the
action to be taken relates to particular classes or series of the corporation,
then only shareholders of such classes or series are entitled to vote on such
action.
ARTICLE III
DIRECTORS
Section 3.01. Number, Qualification and Term of Office. The number of
directors shall be established by resolution of the shareholders (subject to the
authority of the Board of Directors to increase or decrease the number of
directors as permitted by law). In the absence of such shareholder resolution,
the number of directors shall be the number last fixed by the shareholders, the
Board of Directors or the Articles of Incorporation. Directors need not be
shareholders. Each of the directors shall hold office until the regular meeting
of shareholders next held after his election and until his successor shall have
been elected and shall qualify, or until the earlier death, resignation, removal
or disqualification of such director.
Section 3.02. Election of Directors. Except as otherwise provided in
Sections 3.11 and 3.12 hereof, the directors shall be elected at the regular
shareholders' meeting. In the event that directors are not elected at a regular
shareholders' meeting, then directors may be elected at a special shareholders'
meeting, provided that the notice of such meeting shall contain mention of such
purpose. At each shareholders' meeting for the election of directors, the
directors shall be elected by a plurality of the votes validly cast at such
election. Each holder of shares of each class or series of stock of the
corporation shall be entitled to vote for directors and shall have equal voting
power for each share of each class or series of the corporation.
Section 3.03. General Powers.
(a) Except as otherwise permitted by statute, the property, affairs and
business of the corporation shall be managed by the Board of Directors, which
may exercise all the powers of the corporation except those powers vested solely
in the shareholders of the corporation by statute, the Articles of Incorporation
or these Bylaws, as amended.
(b) All acts done by any meeting of the Directors or by any person acting
as a director, so long as his successor shall not have been duly elected or
appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the directors or such person acting as
aforesaid or that they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly elected and
were or was qualified to be directors or a director of the corporation.
Section 3.04. Power to Declare Dividends.
(a) The Board of Directors, from time to time as they may deem advisable,
may declare and pay dividends in cash or other property of the corporation, out
of any source available for dividends, to the shareholders of each class or
series of stock of the corporation according to their respective rights and
interests in the investment portfolio of the corporation issuing such class or
series of stock.
(b) The Board of Directors shall cause to be accompanied by a written
statement any dividend payment wholly or partly from any source other than
(i) the accumulated and accrued undistributed net income of
each class or series (determined in accordance with generally accepted
accounting practice and the rules and regulations of the Securities and
Exchange Commission then in effect) and not including profits or losses
realized upon the sale of securities or other properties; or
(ii) the net income of each class or series so determined for
the current or preceding fiscal year.
Such statement shall adequately disclose the source or sources of such payment
and the basis of calculation and shall be in such form as the Securities and
Exchange Commission may prescribe.
(c) Notwithstanding the above provisions of this Section 3.04, the
Board of Directors may at any time declare and distribute pro rata among the
shareholders of each class or series of stock a "stock dividend" out of the
authorized but unissued shares of stock of each class or series, including any
shares previously purchased by a class or series of the corporation.
Section 3.05. Board Meetings. Meetings of the Board of Directors may be
held from time to time at such time and place within or without the State of
Minnesota as may be designated in the notice of such meeting.
Section 3.06. Calling Meetings, Notice. A director may call a board
meeting by giving ten (10) days notice to all directors of the date, time and
place of the meeting; provided that if the day or date, time and place of a
board meeting have been announced at a previous meeting of the board, no notice
is required.
Section 3.07. Waiver of Notice. Notice of any meeting of the Board of
Directors may be waived by any director either before, at or after such meeting
orally or in a writing signed by such director. A director, by his attendance
and participation in the action taken at any meeting of the Board of Directors,
shall be deemed to have waived notice of such meeting, except where the director
objects at the beginning of the meeting to the transaction of business because
the item may not lawfully be considered at that meeting and does not participate
at that meeting in the consideration of the item at that meeting.
Section 3.08. Quorum. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting; provided however,
notwithstanding the above, if the Board of Directors is taking action pursuant
to the Investment Company Act of 1940, as now enacted or hereafter amended, a
majority of directors who are not "interested persons" (as defined by the
Investment Company Act of 1940, as now enacted or hereafter amended) of the
corporation shall constitute a quorum for taking such action.
Section 3.09. Advance Consent or Opposition. A director may give advance
written consent or opposition to a proposal to be acted on at a meeting of the
Board of Directors. If such director is not present at the meeting, consent or
opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected. This procedure
shall not be used to act on any investment advisory agreement or plan of
distribution adopted under Rule 12b-1 of the Investment Company Act of 1940, as
amended.
Section 3.10. Conference Communications. Any or all directors may
participate in any meeting of the Board of Directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, such directors
participating pursuant to this Section 3.11 shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication. This procedure shall not be used to act on any
investment advisory agreement or plan of distribution adopted under Rule 12b-1
of the Investment Company Act of 1940, as amended.
Section 3.11. Vacancies; Newly Created Directorships. Vacancies in the
Board of Directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the Board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the Board of Directors as permitted by Section
3.01 may be filled by a two-thirds (2/3) vote of the directors serving at the
time of such increase; and each person so elected shall be a director until his
successor is elected by the shareholders at their next regular or special
meeting; provided, however, that no vacancy can be filled as provided above if
prohibited by the provisions of the Investment Company Act of 1940.
Section 3.12. Removal. The entire Board of Directors or an individual
director may be removed from office, with or without cause, by a vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors. In the event that the entire Board or any one or more directors be so
removed, new directors shall be elected at the same meeting, or the remaining
directors may, to the extent vacancies are not filled at such meeting, fill any
vacancy or vacancies created by such removal. A director named by the Board of
Directors to fill a vacancy may be removed from office at any time, with or
without cause, by the affirmative vote of the remaining directors if the
shareholders have not elected directors in the interim between the time of the
appointment to fill such vacancy and the time of the removal.
Section 3.13. Committees. A resolution approved by the affirmative vote
of a majority of the Board of Directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the Board of
Directors.
A majority of the members of the committee present at a meeting is a
quorum for the transaction of business, unless a larger or smaller proportion or
number is provided in a resolution approved by the affirmative vote of a
majority of the directors present.
Section 3.14. Written Action. Except as provided in the Investment
Company Act of 1940, as amended, any action which might be taken at a meeting of
the Board of Directors, or any duly constituted committee thereof, may be taken
without a meeting if done in writing and signed by that number of directors or
committee members that would be required to take the same action at a meeting of
the board or committee thereof at which all directors or committee members were
present; provided, however, that any action which also requires shareholder
approval may be taken by written action only if such writing is signed by all of
the directors or committee members entitled to vote on such matter .
Section 3.15. Compensation. Directors shall receive such fixed sum per
meeting attended or such fixed annual sum as shall be determined, from time to
time, by resolution of the Board of Directors. All directors shall receive their
expenses, if any, of attendance at meetings of the Board of Directors or any
committee thereof. Nothing herein contained shall be construed to preclude any
director from serving this corporation in any other capacity and receiving
proper compensation therefor.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of a
Chairman of the Board (if one is elected by the Board), the President, one or
more Vice Presidents (if desired by the Board), a Secretary, a Treasurer and
such other officers and agents as may, from time to time, be elected by the
Board of Directors. Any number of offices may be held by the same person.
Section 4.02. Election, Term of Office and Qualifications. The Board of
Directors shall elect, from within or without their number, the officers
referred to in Section 4.01 of these Bylaws, each of whom shall have the powers,
rights, duties, responsibilities and terms in office provided for in these
Bylaws or a resolution of the Board not inconsistent therewith. The President
and all other officers who may be directors shall continue to hold office until
the election and qualification of their successors, notwithstanding an earlier
termination of their directorship.
Section 4.03. Resignation. Any officer may resign his office at any
time by delivering a written resignation to the corporation. Unless otherwise
specified therein, such resignation shall take effect upon delivery.
Section 4.04. Removal and Vacancies. Any officer may be removed from his
office by a majority of the Board of Directors with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
Section 4.05. Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
Board of Directors.
Section 4.06. President. The President shall have general active
management of the business of the corporation. In the absence of the Chairman of
the Board, he shall preside at all meetings of the shareholders and directors.
He shall be the chief executive officer of the corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall be ex officio a member of all standing committees. He may execute and
deliver, in the name of the corporation, any deeds, mortgages, bonds, contracts
or other instruments pertaining to the business of the corporation and, in
general, shall perform all duties usually incident to the office of the
President. He shall have such other duties as may, from time to time, be
prescribed by the Board of Directors.
Section 4.07. Vice President. Each Vice President shall have such powers
and shall perform such duties as may be specified in the Bylaws or prescribed by
the Board of Directors or by the President. In the event of absence or
disability of the President, Vice Presidents shall succeed to his power and
duties in the order designated by the Board of Directors.
Section 4.08. Secretary. The Secretary shall be secretary of, and shall
attend, all meetings of the shareholders and Board of Directors and shall record
all proceedings of such meetings in the minute book of the corporation. He shall
give proper notice of meetings of shareholders and directors. He shall keep the
seal of the corporation and shall affix the same to any instrument requiring it
and may, when necessary, attest the seal by his signature. He shall perform such
other duties as may, from time to time, be prescribed by the Board of Directors
or by the President.
Section 4.09. Treasurer. The Treasurer shall be the chief financial
officer and shall keep accurate accounts of all money of the corporation
received or disbursed. He shall deposit all moneys, drafts and checks in the
name of, and to the credit of, the corporation in such banks and depositories as
a majority of the Board of Directors shall, from time to time, designate. He
shall have power to endorse, for deposit, all notes, checks and drafts received
by the corporation. He shall disburse the funds of the corporation, as ordered
by the Board of Directors, making proper vouchers therefor. He shall render to
the President and the directors, whenever required, an account of all his
transactions as Treasurer and of the financial condition of the corporation, and
shall perform such other duties as may, from time to time, be prescribed by the
Board of Directors or by the President.
Section 4.10. Assistant Secretaries. At the request of the Secretary, or
in his absence or disability, any Assistant Secretary shall have power to
perform all the duties of the Secretary, and, when so acting, shall have all the
powers of, and be subject to all restrictions upon, the Secretary. The Assistant
Secretaries shall perform such other duties as from time to time may be assigned
to them by the Board of Directors or the President.
Section 4.11. Assistant Treasurers. At the request of the Treasurer, or
in his absence or disability, any Assistant Treasurer shall have power to
perform all the duties of the Treasurer, and when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as from time to time may be
assigned to them by the Board of Directors or the President.
Section 4.12. Compensation. The officers of this corporation shall
receive such compensation for their services as may be determined, from time to
time, by resolution of the Board of Directors.
Section 4.13. Surety Bonds. The Board of Directors may require any
officer or agent of the corporation to execute a bond (including, without
limitation, any bond required by the Investment Company Act of 1940 and the
rules and regulations of the Securities and Exchange Commission) to the
corporation in such sum and with such surety or sureties as the Board of
Directors may determine, conditioned upon the faithful performance of his duties
to the corporation, including responsibility for negligence and for the
accounting of any of the corporation's property, funds or securities that may
come into his hands. In any such case, a new bond of like character shall be
given at least every six years, so that the dates of the new bond shall not be
more than six years subsequent to the date of the bond immediately preceding.
ARTICLE V
SHARES AND THEIR TRANSFER AND REDEMPTION
Section 5.01. Certificate for Shares.
(a) The corporation may have certificated or uncertificated shares, or
both, as designated by resolution of the Board of Directors. Every owner of
certificated shares of the corporation shall be entitled to a certificate, to be
in such form as shall be prescribed by the Board of Directors, certifying the
number of shares of the corporation owned by him. Within a reasonable time after
the issuance or transfer of uncertificated shares, the corporation shall send to
the new shareholder the information required to be stated on certificates.
Certificated shares shall be numbered in the order in which they shall be issued
and shall be signed, in the name of the corporation, by the President or a Vice
President and by the Secretary or an Assistant Secretary or by such officers as
the Board of Directors may designate. Such signatures may be by facsimile if
authorized by the Board of Directors. Every certificate surrendered to the
corporation for exchange or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled, except in cases provided
for in Section 5.08.
(b) In case any officer, transfer agent or registrar who shall have
signed any such certificate, or whose facsimile signature has been placed
thereon, shall cease to be such an officer (because of death, resignation or
otherwise) before such certificate is issued, such certificate may be issued and
delivered by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 5.02. Issuance of Shares. The Board of Directors is authorized to
cause to be issued shares of the corporation up to the full amount authorized by
the Articles of Incorporation in such classes or series and in such amounts as
may be determined by the Board of Directors and as may be permitted by law. No
shares shall be allotted except in consideration of cash or other property,
tangible or intangible, received or to be received by the corporation under a
written agreement, of services rendered or to be rendered to the corporation
under a written agreement, or of an amount transferred from surplus to stated
capital upon a share dividend. At the time of such allotment of shares, the
Board of Directors making such allotments shall state, by resolution, their
determination of the fair value to the corporation in monetary terms of any
consideration other than cash for which shares are alloted. No shares of stock
issued by the corporation shall be issued, sold or exchanged by or on behalf of
the corporation for any amount less than the net asset value per share of the
shares outstanding as determined pursuant to Article X hereunder.
Section 5.03. Redemption of Shares. Upon the demand of any shareholder,
this corporation shall redeem any share of stock issued by it held and owned by
such shareholder at the net asset value thereof as determined pursuant to
Article X hereunder. The Board of Directors may suspend the right of redemption
or postpone the date of payment during any period when: (a) trading on the New
York Stock Exchange is restricted or such Exchange is closed for other than
weekends or holidays; (b) the Securities and Exchange Commission has by order
permitted such suspension; or (c) an emergency as defined by rules of the
Securities and Exchange Commission exists, making disposal of portfolio
securities or valuation of net assets of the corporation not reasonably
practicable.
If following a redemption request by any shareholder of this corporation,
the value of such shareholder's interest in the corporation falls below the
required minimum investment, as may be set from time to time by the Board of
Directors, the corporation's officers are authorized, in their discretion and on
behalf of the corporation, to redeem such shareholder's entire interest and
remit such amount, provided that such a redemption will only be effected by the
corporation following: (a) a redemption by a shareholder, which causes the value
of such shareholder's interest in the corporation to fall below the required
minimum investment; (b) the mailing by the corporation to such shareholder of a
"notice of intention to redeem"; and (c) the passage of at least sixty (60) days
from the date of such mailing, during which time the shareholder will have the
opportunity to make an additional investment in the corporation to increase the
value of such shareholder's account to at least the required minimum investment.
Section 5.04. Transfer of Shares. Transfer of shares on the books of the
corporation may be authorized only by the shareholder named in the certificate,
or the shareholder's legal representative, or the shareholder's duly authorized
attorneyin-fact, and upon surrender of the certificate or the certificates for
such shares or a duly executed assignment covering shares held in uncertificated
form. The corporation may treat, as the absolute owner of shares of the
corporation, the person or persons in whose name shares are registered on the
books of the corporation.
Section 5.05. Registered Shareholders. The corporation shall be entitled
to treat the holder of record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by the laws of Minnesota.
Section 5.06. Transfer of Agents and Registrars. The Board of Directors
may from time to time appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the corporation, and it may appoint the same
person as both transfer agent and registrar. Upon any such appointment being
made all certificates representing shares of capital stock thereafter issued
shall be countersigned by one of such transfer agents or by one of such
registrars of transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent and registrar,
only one countersignature by such person shall be required.
Section 5.07. Transfer Regulations. The shares of stock of the
corporation may be freely transferred, and the Board of Directors may from time
to time adopt rules and regulations with reference to the method of transfer of
shares of stock of the corporation.
Section 5.08. Lost, Stolen, Destroyed and Mutilated Certificates. The
holder of any stock of the corporation shall immediately notify the corporation
of any loss, theft, destruction or mutilation of any certificate therefor, and
the Board of Directors may, in its discretion, cause to be issued to him a new
certificate or certificates of stock, upon the surrender of the mutilated
certificate or in case of loss, theft or destruction of the certificate upon
satisfactory proof of such loss, theft or destruction. A new certificate or
certificates of stock will be issued to the owner of the lost, stolen or
destroyed certificate only after such owner, or his legal representatives, gives
to the corporation and to such registrar or transfer agent as may be authorized
or required to countersign such new certificate or certificates a bond, in such
sum as they may direct, and with such surety or sureties, as they may direct, as
indemnity against any claim that may be made against them or any of them on
account of or in connection with the alleged loss, theft or destruction of any
such certificate.
ARTICLE VI
DIVIDENDS
Section 6.01. The net investment income of each class or series of the
corporation will be determined, and its dividends shall be declared and made
payable at such time(s) as the Board of Directors shall determine; dividends
shall be payable to shareholders of record as of the date of declaration.
It shall be the policy of each class or series of the corporation to
qualify for and elect the tax treatment applicable to regulated investment
companies under the Internal Revenue Code, so that such class or series will not
be subjected to federal income tax on such part of its income or capital gains
as it distributes to shareholders.
ARTICLE VII
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
Section 7.01. Share Register. The Board of Directors of the corporation
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the board:
(1) a share register not more than one year old, containing the
names and addresses of the shareholders and the number and
classes or series of shares held by each shareholder; and
(2) a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. Other Books and Records. The Board of Directors shall cause
to be kept at its principal executive office, or, if its principal executive
office is not in Minnesota, shall make available at its registered office within
ten days after receipt by an officer of the corporation of a written demand for
them made by a shareholder or other person authorized by Minnesota Statutes
Section 302A.461, originals or copies of:
(1) records of all proceedings of shareholders for the last three
years;
(2) records of all proceedings of the Board of Directors for the
last three years;
(3) its articles and all amendments currently in effect;
(4) its bylaws and all amendments currently in effect;
(5) financial statements required by Minnesota Statutes Section
302A.463 and the financial statement for the most recent
interim period prepared in the course of the operation of the
corporation for distribution to the shareholders or to a
governmental agency as a matter of public record;
(6) reports made to shareholders generally within the last three
years;
(7) a statement of the names and usual business addresses of its
directors and principal officers;
(8) any shareholder voting or control agreements of which the
corporation is aware; and
(9) such other records and books of account as shall be necessary
and appropriate to the conduct of the corporate business.
Section 7.03. Audit; Accountant.
(a) The Board of Directors shall cause the records and books of
account of the corporation to be audited at least once in each fiscal year and
at such other times as it may deem necessary or appropriate.
(b) The corporation shall employ an independent public accountant or
firm of independent public accountants to examine the accounts of the
corporation and to sign and certify financial statements filed by the
corporation. The independent accountant's certificates and reports shall be
addressed both to the Board of Directors and to the shareholders.
Section 7.04. Fiscal Year. The fiscal year of the corporation shall be
determined by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF CERTAIN PERSONS
Section 8.01. The corporation shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to such
extent as permitted by Section 302A.521 of the Minnesota Statutes, as now
enacted or hereafter amended, provided, however, that no such indemnification
may be made if it would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereinafter amended.
ARTICLE IX
VOTING OF STOCK HELD
Section 9.01. Unless otherwise provided by resolution of the Board of
Directors, the President, any Vice President, the Secretary or the Treasurer,
may from time to time appoint an attorney or attorneys or agent or agents of the
corporation, in the name and on behalf of the corporation, to cast the votes
which the corporation may be entitled to cast as a stockholder or otherwise in
any other corporation or association, any of whose stock or securities may be
held by the corporation, at meetings of the holders of the stock or other
securities of any such other corporation or association, or to consent in
writing to any action by any such other corporation or association, and may
instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent, and may execute or cause to be executed on behalf
of the corporation and under its corporate seal, or otherwise, such written
proxies, consents, waivers or other instruments as it may deem necessary or
proper; or any of such officers may themselves attend any meeting of the holders
of stock or other securities of any such corporation or association and thereat
vote or exercise any or all other rights of the corporation as the holder of
such stock or other securities of such other corporation or association, or
consent in writing to any action by any such other corporation or association.
ARTICLE X
VALUATION OF NET ASSET VALUE
Section 10.01. The net asset value per share of each class or series of
stock of the corporation shall be determined in good faith by or under
supervision of the officers of the corporation as authorized by the Board of
Directors as often and on such days and at such time(s) as the Board of
Directors shall determine, or as otherwise may be required by law, rule,
regulation or order of the Securities and Exchange Commission.
ARTICLE XI
CUSTODY OF ASSETS
Section 11.01. All securities and cash owned by this corporation shall,
as hereinafter provided, be held by or deposited with a bank or trust company
having (according to its last published report) not less than Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits (the
"Custodian").
This corporation shall enter into a written contract with the custodian
regarding the powers, duties and compensation of the Custodian with respect to
the cash and securities of this corporation held by the Custodian. Said contract
and all amendments thereto shall be approved by the Board of Directors of this
corporation. In the event of the Custodian's resignation or termination, the
corporation shall use its best efforts promptly to obtain a successor Custodian
and shall require that the cash and securities owned by this corporation held by
the Custodian be delivered directly to such successor Custodian.
ARTICLE XII
AMENDMENTS
Section 12.01. These Bylaws may be amended or altered by a vote of the
majority of the Board of Directors at any meeting provided that notice of such
proposed amendment shall have been given in the notice given to the directors of
such meeting. Such authority in the Board of Directors is subject to the power
of the shareholders to change or repeal such bylaws by a majority vote of the
shareholders present or represented at any regular or special meeting of
shareholders called for such purpose, and the Board of Directors shall not make
or alter any Bylaws fixing a quorum for meetings of shareholders, prescribing
procedures for removing directors or filling vacancies in the Board of
Directors, or fixing the number of directors or their classifications,
qualifications or terms of office, except that the Board of Directors may adopt
or amend any Bylaw to increase or decrease their number.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Interpretation. When the context in which words are used
in these Bylaws indicates that such is the intent, singular words will include
the plural and vice versa, and masculine words will include the feminine and
neuter genders and vice versa.
Section 13.02. Article and Section Titles. The titles of Sections and
Articles in these Bylaws are for descriptive purposes only and will not control
or alter the meaning of any of these Bylaws as set forth in the text.
EXHIBIT 2
Bylaws
Sit Growth & Income Fund, Inc.
BYLAWS
OF
SIT LARGE CAP GROWTH FUND, INC.
(AS AMENDED BY THE BOARD OF DIRECTORS
ON OCTOBER 23, 1996)
ARTICLE I
OFFICES, CORPORATE SEAL
Section 1.01. Name. The name of the corporation is "Sit Large Cap
Growth Fund, Inc."
Section 1.02. Registered Office. The registered office of the corporation
in Minnesota shall be that set forth in the Articles of Incorporation or in the
most recent amendment of the Articles of Incorporation or resolution of the
directors filed with the Secretary of State of Minnesota changing the registered
office.
Section 1.03. Other Offices. The corporation may have such other
offices, within or without the State of Minnesota, as the directors shall, from
time to time, determine.
Section 1.04. No Corporate Seal. The corporation shall have no
corporate seal.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meeting. Except as provided otherwise by
Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at any
place, within or without the State of Minnesota, designated by the directors
and, in the absence of such designation, shall be held at the registered office
of the corporation in the State of Minnesota. The directors shall designate the
time of day for each meeting and, in the absence of such designation, every
meeting of shareholders shall be held at ten o'clock a.m.
Section 2.02. Regular Meetings. The corporation is not required to hold
annual meetings of shareholders. Regular meetings shall be held only with such
frequency and at such times and places as provided in and required by Minnesota
Statutes Section 302A.431.
Section 2.03. Special Meetings. Special meetings of the shareholders may
be held at any time and for any purpose and may be called by the Chairman of the
Board, the President, any two directors, or by one or more shareholders holding
ten percent (10%) or more of the shares entitled to vote on the matters to be
presented to the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of a majority of
the shares outstanding and entitled to vote shall constitute a quorum for the
transaction of business at any regular or special meeting. In case a quorum
shall not be present at a meeting, those present in person or by proxy shall
adjourn the meeting to such day as they shall, by majority vote, agree upon
without further notice other than by announcement at the meeting at which such
adjournment is taken. If a quorum is present, a meeting may be adjourned from
time to time without notice other than announcement at the meeting. At adjourned
meetings at which a quorum is present, any business may be transacted which
might have been transacted at the meeting as originally noticed. If a quorum is
present, the shareholders may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.05. Voting. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the Articles of Incorporation provide
otherwise, shall have one vote for each share having voting power registered in
his name on the books of the corporation. Except as otherwise specifically
provided by these Bylaws or as required by provisions of the Investment Company
Act of 1940 or other applicable laws, all questions shall be decided by a
majority vote of the number of shares entitled to vote and represented at the
meeting at the time of the vote. If the matter(s) to be presented at a regular
or special meeting relates only to particular classes or series of the
corporation, then only the shareholders of such classes or series are entitled
to vote on such matter(s).
Section 2.06. Voting - Proxies. The right to vote by proxy shall exist
only if the instrument authorizing such proxy to act shall have been executed in
writing by the shareholder himself or by his attorney thereunto duly authorized
in writing. No proxy shall be voted after eleven months from its date unless it
provides for a longer period.
Section 2.07. Closing of Books. The Board of Directors may fix a time,
not exceeding sixty (60) days preceding the date of any meeting of shareholders,
as a record date for the determination of the shareholders entitled to notice
of, and to vote at, such meeting, notwithstanding any transfer of shares on the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation against the transfer of shares during the
whole or any part of such period. If the Board of Directors fails to fix a
record date for determination of the shareholders entitled to notice of, and to
vote at, any meeting of shareholders, the record date shall be the thirtieth
(30th) day preceding the date of such meeting.
Section 2.08. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the date, time and place of each regular meeting and each special
meeting, except where the meeting is an adjourned meeting and the date, time and
place of the meeting were announced at the time of adjournment, which notice
shall be mailed within the period required by law. Every notice of any special
meeting shall state the purpose or purposes for which the meeting has been
called, pursuant to Section 2.03, and the business transacted at all special
meetings shall be confined to the purpose stated in such notice.
Section 2.09. Waiver of Notice. Notice of any regular or special meeting
may be waived either before, at or after such meeting orally or in a writing
signed by each shareholder or representative thereof entitled to vote the shares
so represented. A shareholder by his attendance at any meeting of shareholders,
shall be deemed to have waived notice of such meeting, except where the
shareholder objects at the beginning of the meeting to the transaction of
business because the item may not lawfully be considered at that meeting and
does not participate at that meeting in the consideration of the item at that
meeting.
Section 2.10. Written Action. Any action which might be taken at a
meeting of the shareholders may be taken without a meeting if done in writing
and signed by all of the shareholders entitled to vote on that action. If the
action to be taken relates to particular classes or series of the corporation,
then only shareholders of such classes or series are entitled to vote on such
action.
ARTICLE III
DIRECTORS
Section 3.01. Number, Qualification and Term of Office. The number of
directors shall be established by resolution of the shareholders (subject to the
authority of the Board of Directors to increase or decrease the number of
directors as permitted by law). In the absence of such shareholder resolution,
the number of directors shall be the number last fixed by the shareholders, the
Board of Directors or the Articles of Incorporation. Directors need not be
shareholders. Each of the directors shall hold office until the regular meeting
of shareholders next held after his election and until his successor shall have
been elected and shall qualify, or until the earlier death, resignation, removal
or disqualification of such director.
Section 3.02. Election of Directors. Except as otherwise provided in
Sections 3.11 and 3.12 hereof, the directors shall be elected at the regular
shareholders' meeting. In the event that directors are not elected at a regular
shareholders' meeting, then directors may be elected at a special shareholders'
meeting, provided that the notice of such meeting shall contain mention of such
purpose. At each shareholders' meeting for the election of directors, the
directors shall be elected by a plurality of the votes validly cast at such
election. Each holder of shares of each class or series of stock of the
corporation shall be entitled to vote for directors and shall have equal voting
power for each share of each class or series of the corporation.
Section 3.03. General Powers.
(a) Except as otherwise permitted by statute, the property, affairs
and business of the corporation shall be managed by the Board of Directors,
which may exercise all the powers of the corporation except those powers vested
solely in the shareholders of the corporation by statute, the Articles of
Incorporation or these Bylaws, as amended.
(b) All acts done by any meeting of the Directors or by any person
acting as a director, so long as his successor shall not have been duly elected
or appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the directors or such person acting as
aforesaid or that they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly elected and
were or was qualified to be directors or a director of the corporation.
Section 3.04. Power to Declare Dividends.
(a) The Board of Directors, from time to time as they may deem
advisable, may declare and pay dividends in cash or other property of the
corporation, out of any source available for dividends, to the shareholders of
each class or series of stock of the corporation according to their respective
rights and interests in the investment portfolio of the corporation issuing such
class or series of stock.
(b) The Board of Directors shall cause to be accompanied by a written
statement any dividend payment wholly or partly from any source other than
(i) the accumulated and accrued undistributed net income of each
class or series (determined in accordance with generally accepted
accounting practice and the rules and regulations of the Securities and
Exchange Commission then in effect) and not including profits or losses
realized upon the sale of securities or other properties; or
(ii) the net income of each class or series so determined for the
current or preceding fiscal year.
Such statement shall adequately disclose the source or sources of such payment
and the basis of calculation and shall be in such form as the Securities and
Exchange Commission may prescribe.
(c) Notwithstanding the above provisions of this Section 3.04, the
Board of Directors may at any time declare and distribute pro rata among the
shareholders of each class or series of stock a "stock dividend" out of the
authorized but unissued shares of stock of each class or series, including any
shares previously purchased by a class or series of the corporation.
Section 3.05. Board Meetings. Meetings of the Board of Directors may be
held from time to time at such time and place within or without the State of
Minnesota as may be designated in the notice of such meeting.
Section 3.06. Calling Meetings, Notice. A director may call a board
meeting by giving ten (10) days notice to all directors of the date, time and
place of the meeting; provided that if the day or date, time and place of a
board meeting have been announced at a previous meeting of the board, no notice
is required.
Section 3.07. Waiver of Notice. Notice of any meeting of the Board of
Directors may be waived by any director either before, at or after such meeting
orally or in a writing signed by such director. A director, by his attendance
and participation in the action taken at any meeting of the Board of Directors,
shall be deemed to have waived notice of such meeting, except where the director
objects at the beginning of the meeting to the transaction of business because
the item may not lawfully be considered at that meeting and does not participate
at that meeting in the consideration of the item at that meeting.
Section 3.08. Quorum. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting; provided however,
notwithstanding the above, if the Board of Directors is taking action pursuant
to the Investment Company Act of 1940, as now enacted or hereafter amended, a
majority of directors who are not "interested persons" (as defined by the
Investment Company Act of 1940, as now enacted or hereafter amended) of the
corporation shall constitute a quorum for taking such action.
Section 3.09. Advance Consent or Opposition. A director may give advance
written consent or opposition to a proposal to be acted on at a meeting of the
Board of Directors. If such director is not present at the meeting, consent or
opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected. This procedure
shall not be used to act on any investment advisory agreement or plan of
distribution adopted under Rule 12b-1 of the Investment Company Act of 1940, as
amended.
Section 3.10. Conference Communications. Any or all directors may
participate in any meeting of the Board of Directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, such directors
participating pursuant to this Section 3.11 shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication. This procedure shall not be used to act on any
investment advisory agreement or plan of distribution adopted under Rule 12b-1
of the Investment Company Act of 1940, as amended.
Section 3.11. Vacancies; Newly Created Directorships. Vacancies in the
Board of Directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the Board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the Board of Directors as permitted by Section
3.01 may be filled by a two-thirds (2/3) vote of the directors serving at the
time of such increase; and each person so elected shall be a director until his
successor is elected by the shareholders at their next regular or special
meeting; provided, however, that no vacancy can be filled as provided above if
prohibited by the provisions of the Investment Company Act of 1940.
Section 3.12. Removal. The entire Board of Directors or an individual
director may be removed from office, with or without cause, by a vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors. In the event that the entire Board or any one or more directors be so
removed, new directors shall be elected at the same meeting, or the remaining
directors may, to the extent vacancies are not filled at such meeting, fill any
vacancy or vacancies created by such removal. A director named by the Board of
Directors to fill a vacancy may be removed from office at any time, with or
without cause, by the affirmative vote of the remaining directors if the
shareholders have not elected directors in the interim between the time of the
appointment to fill such vacancy and the time of the removal.
Section 3.13. Committees. A resolution approved by the affirmative vote
of a majority of the Board of Directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the Board of
Directors.
A majority of the members of the committee present at a meeting is a
quorum for the transaction of business, unless a larger or smaller proportion or
number is provided in a resolution approved by the affirmative vote of a
majority of the directors present.
Section 3.14. Written Action. Except as provided in the Investment
Company Act of 1940, as amended, any action which might be taken at a meeting of
the Board of Directors, or any duly constituted committee thereof, may be taken
without a meeting if done in writing and signed by that number of directors or
committee members that would be required to take the same action at a meeting of
the board or committee thereof at which all directors or committee members were
present; provided, however, that any action which also requires shareholder
approval may be taken by written action only if such writing is signed by all of
the directors or committee members entitled to vote on such matter .
Section 3.15. Compensation. Directors shall receive such fixed sum per
meeting attended or such fixed annual sum as shall be determined, from time to
time, by resolution of the Board of Directors. All directors shall receive their
expenses, if any, of attendance at meetings of the Board of Directors or any
committee thereof. Nothing herein contained shall be construed to preclude any
director from serving this corporation in any other capacity and receiving
proper compensation therefor.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of a
Chairman of the Board (if one is elected by the Board), the President, one or
more Vice Presidents (if desired by the Board), a Secretary, a Treasurer and
such other officers and agents as may, from time to time, be elected by the
Board of Directors. Any number of offices may be held by the same person.
Section 4.02. Election, Term of Office and Qualifications. The Board of
Directors shall elect, from within or without their number, the officers
referred to in Section 4.01 of these Bylaws, each of whom shall have the powers,
rights, duties, responsibilities and terms in office provided for in these
Bylaws or a resolution of the Board not inconsistent therewith. The President
and all other officers who may be directors shall continue to hold office until
the election and qualification of their successors, notwithstanding an earlier
termination of their directorship.
Section 4.03. Resignation. Any officer may resign his office at any time
by delivering a written resignation to the corporation. Unless otherwise
specified therein, such resignation shall take effect upon delivery.
Section 4.04. Removal and Vacancies. Any officer may be removed from his
office by a majority of the Board of Directors with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
Section 4.05. Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
Board of Directors.
Section 4.06. President. The President shall have general active
management of the business of the corporation. In the absence of the Chairman of
the Board, he shall preside at all meetings of the shareholders and directors.
He shall be the chief executive officer of the corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall be ex officio a member of all standing committees. He may execute and
deliver, in the name of the corporation, any deeds, mortgages, bonds, contracts
or other instruments pertaining to the business of the corporation and, in
general, shall perform all duties usually incident to the office of the
President. He shall have such other duties as may, from time to time, be
prescribed by the Board of Directors.
Section 4.07. Vice President. Each Vice President shall have such powers
and shall perform such duties as may be specified in the Bylaws or prescribed by
the Board of Directors or by the President. In the event of absence or
disability of the President, Vice Presidents shall succeed to his power and
duties in the order designated by the Board of Directors.
Section 4.08. Secretary. The Secretary shall be secretary of, and shall
attend, all meetings of the shareholders and Board of Directors and shall record
all proceedings of such meetings in the minute book of the corporation. He shall
give proper notice of meetings of shareholders and directors. He shall keep the
seal of the corporation and shall affix the same to any instrument requiring it
and may, when necessary, attest the seal by his signature. He shall perform such
other duties as may, from time to time, be prescribed by the Board of Directors
or by the President.
Section 4.09. Treasurer. The Treasurer shall be the chief financial
officer and shall keep accurate accounts of all money of the corporation
received or disbursed. He shall deposit all moneys, drafts and checks in the
name of, and to the credit of, the corporation in such banks and depositories as
a majority of the Board of Directors shall, from time to time, designate. He
shall have power to endorse, for deposit, all notes, checks and drafts received
by the corporation. He shall disburse the funds of the corporation, as ordered
by the Board of Directors, making proper vouchers therefor. He shall render to
the President and the directors, whenever required, an account of all his
transactions as Treasurer and of the financial condition of the corporation, and
shall perform such other duties as may, from time to time, be prescribed by the
Board of Directors or by the President.
Section 4.10. Assistant Secretaries. At the request of the Secretary, or
in his absence or disability, any Assistant Secretary shall have power to
perform all the duties of the Secretary, and, when so acting, shall have all the
powers of, and be subject to all restrictions upon, the Secretary. The Assistant
Secretaries shall perform such other duties as from time to time may be assigned
to them by the Board of Directors or the President.
Section 4.11. Assistant Treasurers. At the request of the Treasurer, or
in his absence or disability, any Assistant Treasurer shall have power to
perform all the duties of the Treasurer, and when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as from time to time may be
assigned to them by the Board of Directors or the President.
Section 4.12. Compensation. The officers of this corporation shall
receive such compensation for their services as may be determined, from time to
time, by resolution of the Board of Directors.
Section 4.13. Surety Bonds. The Board of Directors may require any
officer or agent of the corporation to execute a bond (including, without
limitation, any bond required by the Investment Company Act of 1940 and the
rules and regulations of the Securities and Exchange Commission) to the
corporation in such sum and with such surety or sureties as the Board of
Directors may determine, conditioned upon the faithful performance of his duties
to the corporation, including responsibility for negligence and for the
accounting of any of the corporation's property, funds or securities that may
come into his hands. In any such case, a new bond of like character shall be
given at least every six years, so that the dates of the new bond shall not be
more than six years subsequent to the date of the bond immediately preceding.
ARTICLE V
SHARES AND THEIR TRANSFER AND REDEMPTION
Section 5.01. Certificate for Shares.
(a) The corporation may have certificated or uncertificated shares,
or both, as designated by resolution of the Board of Directors. Every owner of
certificated shares of the corporation shall be entitled to a certificate, to be
in such form as shall be prescribed by the Board of Directors, certifying the
number of shares of the corporation owned by him. Within a reasonable time after
the issuance or transfer of uncertificated shares, the corporation shall send to
the new shareholder the information required to be stated on certificates.
Certificated shares shall be numbered in the order in which they shall be issued
and shall be signed, in the name of the corporation, by the President or a Vice
President and by the Secretary or an Assistant Secretary or by such officers as
the Board of Directors may designate. Such signatures may be by facsimile if
authorized by the Board of Directors. Every certificate surrendered to the
corporation for exchange or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled, except in cases provided
for in Section 5.08.
(b) In case any officer, transfer agent or registrar who shall have
signed any such certificate, or whose facsimile signature has been placed
thereon, shall cease to be such an officer (because of death, resignation or
otherwise) before such certificate is issued, such certificate may be issued and
delivered by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 5.02. Issuance of Shares. The Board of Directors is
authorized to cause to be issued shares of the corporation up to the full amount
authorized by the Articles of Incorporation in such classes or series and in
such amounts as may be determined by the Board of Directors and as may be
permitted by law. No shares shall be allotted except in consideration of cash or
other property, tangible or intangible, received or to be received by the
corporation under a written agreement, of services rendered or to be rendered to
the corporation under a written agreement, or of an amount transferred from
surplus to stated capital upon a share dividend. At the time of such allotment
of shares, the Board of Directors making such allotments shall state, by
resolution, their determination of the fair value to the corporation in monetary
terms of any consideration other than cash for which shares are alloted. No
shares of stock issued by the corporation shall be issued, sold or exchanged by
or on behalf of the corporation for any amount less than the net asset value per
share of the shares outstanding as determined pursuant to Article X hereunder.
Section 5.03. Redemption of Shares. Upon the demand of any shareholder,
this corporation shall redeem any share of stock issued by it held and owned by
such shareholder at the net asset value thereof as determined pursuant to
Article X hereunder. The Board of Directors may suspend the right of redemption
or postpone the date of payment during any period when: (a) trading on the New
York Stock Exchange is restricted or such Exchange is closed for other than
weekends or holidays; (b) the Securities and Exchange Commission has by order
permitted such suspension; or (c) an emergency as defined by rules of the
Securities and Exchange Commission exists, making disposal of portfolio
securities or valuation of net assets of the corporation not reasonably
practicable.
If following a redemption request by any shareholder of this corporation,
the value of such shareholder's interest in the corporation falls below the
required minimum investment, as may be set from time to time by the Board of
Directors, the corporation's officers are authorized, in their discretion and on
behalf of the corporation, to redeem such shareholder's entire interest and
remit such amount, provided that such a redemption will only be effected by the
corporation following: (a) a redemption by a shareholder, which causes the value
of such shareholder's interest in the corporation to fall below the required
minimum investment; (b) the mailing by the corporation to such shareholder of a
"notice of intention to redeem"; and (c) the passage of at least sixty (60) days
from the date of such mailing, during which time the shareholder will have the
opportunity to make an additional investment in the corporation to increase the
value of such shareholder's account to at least the required minimum investment.
Section 5.04. Transfer of Shares. Transfer of shares on the books of the
corporation may be authorized only by the shareholder named in the certificate,
or the shareholder's legal representative, or the shareholder's duly authorized
attorneyin-fact, and upon surrender of the certificate or the certificates for
such shares or a duly executed assignment covering shares held in uncertificated
form. The corporation may treat, as the absolute owner of shares of the
corporation, the person or persons in whose name shares are registered on the
books of the corporation.
Section 5.05. Registered Shareholders. The corporation shall be entitled
to treat the holder of record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by the laws of Minnesota.
Section 5.06. Transfer of Agents and Registrars. The Board of Directors
may from time to time appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the corporation, and it may appoint the same
person as both transfer agent and registrar. Upon any such appointment being
made all certificates representing shares of capital stock thereafter issued
shall be countersigned by one of such transfer agents or by one of such
registrars of transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent and registrar,
only one countersignature by such person shall be required.
Section 5.07. Transfer Regulations. The shares of stock of the
corporation may be freely transferred, and the Board of Directors may from time
to time adopt rules and regulations with reference to the method of transfer of
shares of stock of the corporation.
Section 5.08. Lost, Stolen, Destroyed and Mutilated Certificates. The
holder of any stock of the corporation shall immediately notify the corporation
of any loss, theft, destruction or mutilation of any certificate therefor, and
the Board of Directors may, in its discretion, cause to be issued to him a new
certificate or certificates of stock, upon the surrender of the mutilated
certificate or in case of loss, theft or destruction of the certificate upon
satisfactory proof of such loss, theft or destruction. A new certificate or
certificates of stock will be issued to the owner of the lost, stolen or
destroyed certificate only after such owner, or his legal representatives, gives
to the corporation and to such registrar or transfer agent as may be authorized
or required to countersign such new certificate or certificates a bond, in such
sum as they may direct, and with such surety or sureties, as they may direct, as
indemnity against any claim that may be made against them or any of them on
account of or in connection with the alleged loss, theft or destruction of any
such certificate.
ARTICLE VI
DIVIDENDS
Section 6.01. The net investment income of each class or series of the
corporation will be determined, and its dividends shall be declared and made
payable at such time(s) as the Board of Directors shall determine; dividends
shall be payable to shareholders of record as of the date of declaration.
It shall be the policy of each class or series of the corporation to
qualify for and elect the tax treatment applicable to regulated investment
companies under the Internal Revenue Code, so that such class or series will not
be subjected to federal income tax on such part of its income or capital gains
as it distributes to shareholders.
ARTICLE VII
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
Section 7.01. Share Register. The Board of Directors of the corporation
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the board:
(1) a share register not more than one year old, containing the names
and addresses of the shareholders and the number and classes or
series of shares held by each shareholder; and
(2) a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. Other Books and Records. The Board of Directors shall cause
to be kept at its principal executive office, or, if its principal executive
office is not in Minnesota, shall make available at its registered office within
ten days after receipt by an officer of the corporation of a written demand for
them made by a shareholder or other person authorized by Minnesota Statutes
Section 302A.461, originals or copies of:
(1) records of all proceedings of shareholders for the last three
years;
(2) records of all proceedings of the Board of Directors for the last
three years;
(3) its articles and all amendments currently in effect;
(4) its bylaws and all amendments currently in effect;
(5) financial statements required by Minnesota Statutes Section
302A.463 and the financial statement for the most recent interim
period prepared in the course of the operation of the corporation
for distribution to the shareholders or to a governmental agency
as a matter of public record;
(6) reports made to shareholders generally within the last three
years;
(7) a statement of the names and usual business addresses of its
directors and principal officers;
(8) any shareholder voting or control agreements of which the
corporation is aware; and
(9) such other records and books of account as shall be necessary and
appropriate to the conduct of the corporate business.
Section 7.03. Audit; Accountant.
(a) The Board of Directors shall cause the records and books of
account of the corporation to be audited at least once in each fiscal year and
at such other times as it may deem necessary or appropriate.
(b) The corporation shall employ an independent public accountant or
firm of independent public accountants to examine the accounts of the
corporation and to sign and certify financial statements filed by the
corporation. The independent accountant's certificates and reports shall be
addressed both to the Board of Directors and to the shareholders.
Section 7.04. Fiscal Year. The fiscal year of the corporation shall be
determined by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF CERTAIN PERSONS
Section 8.01. The corporation shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to such
extent as permitted by Section 302A.521 of the Minnesota Statutes, as now
enacted or hereafter amended, provided, however, that no such indemnification
may be made if it would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereinafter amended.
ARTICLE IX
VOTING OF STOCK HELD
Section 9.01. Unless otherwise provided by resolution of the Board of
Directors, the President, any Vice President, the Secretary or the Treasurer,
may from time to time appoint an attorney or attorneys or agent or agents of the
corporation, in the name and on behalf of the corporation, to cast the votes
which the corporation may be entitled to cast as a stockholder or otherwise in
any other corporation or association, any of whose stock or securities may be
held by the corporation, at meetings of the holders of the stock or other
securities of any such other corporation or association, or to consent in
writing to any action by any such other corporation or association, and may
instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent, and may execute or cause to be executed on behalf
of the corporation and under its corporate seal, or otherwise, such written
proxies, consents, waivers or other instruments as it may deem necessary or
proper; or any of such officers may themselves attend any meeting of the holders
of stock or other securities of any such corporation or association and thereat
vote or exercise any or all other rights of the corporation as the holder of
such stock or other securities of such other corporation or association, or
consent in writing to any action by any such other corporation or association.
ARTICLE X
VALUATION OF NET ASSET VALUE
Section 10.01. The net asset value per share of each class or series of
stock of the corporation shall be determined in good faith by or under
supervision of the officers of the corporation as authorized by the Board of
Directors as often and on such days and at such time(s) as the Board of
Directors shall determine, or as otherwise may be required by law, rule,
regulation or order of the Securities and Exchange Commission.
ARTICLE XI
CUSTODY OF ASSETS
Section 11.01. All securities and cash owned by this corporation shall,
as hereinafter provided, be held by or deposited with a bank or trust company
having (according to its last published report) not less than Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits (the
"Custodian").
This corporation shall enter into a written contract with the custodian
regarding the powers, duties and compensation of the Custodian with respect to
the cash and securities of this corporation held by the Custodian. Said contract
and all amendments thereto shall be approved by the Board of Directors of this
corporation. In the event of the Custodian's resignation or termination, the
corporation shall use its best efforts promptly to obtain a successor Custodian
and shall require that the cash and securities owned by this corporation held by
the Custodian be delivered directly to such successor Custodian.
ARTICLE XII
AMENDMENTS
Section 12.01. These Bylaws may be amended or altered by a vote of the
majority of the Board of Directors at any meeting provided that notice of such
proposed amendment shall have been given in the notice given to the directors of
such meeting. Such authority in the Board of Directors is subject to the power
of the shareholders to change or repeal such bylaws by a majority vote of the
shareholders present or represented at any regular or special meeting of
shareholders called for such purpose, and the Board of Directors shall not make
or alter any Bylaws fixing a quorum for meetings of shareholders, prescribing
procedures for removing directors or filling vacancies in the Board of
Directors, or fixing the number of directors or their classifications,
qualifications or terms of office, except that the Board of Directors may adopt
or amend any Bylaw to increase or decrease their number.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Interpretation. When the context in which words are used
in these Bylaws indicates that such is the intent, singular words will include
the plural and vice versa, and masculine words will include the feminine and
neuter genders and vice versa.
Section 13.02. Article and Section Titles. The titles of Sections and
Articles in these Bylaws are for descriptive purposes only and will not control
or alter the meaning of any of these Bylaws as set forth in the text.
EXHIBIT 2
Bylaws
Sit Mutual Funds, Inc.
BYLAWS
OF
SIT MUTUAL FUNDS, INC.
(AS AMENDED BY THE BOARD OF DIRECTORS
ON FEBRUARY 11, 1994)
ARTICLE I
OFFICES, CORPORATE SEAL
Section 1.01. Name. The name of the corporation is "Sit Mutual Funds,
Inc." The name of the series represented by the corporation's Series A Common
Shares is "Sit International Growth Fund." The name of the series represented by
the corporation's Series B Common Shares is "Sit Balanced Fund." The name of the
series represented by the corporation's Series C Common Shares is "Sit
Developing Markets Growth Fund." The name of the series represented by the
corporation's Series D Common Shares is "Sit Small Cap Growth Fund."
Section 1.02. Registered Office. The registered office of the corporation
in Minnesota shall be that set forth in the Articles of Incorporation or in the
most recent amendment of the Articles of Incorporation or resolution of the
directors filed with the Secretary of State of Minnesota changing the registered
office.
Section 1.03. Other Offices. The corporation may have such other offices,
within or without the State of Minnesota, as the directors shall, from time to
time, determine.
Section 1.04. No Corporate Seal. The corporation shall have no corporate
seal.
ARTICLE II
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meeting. Except as provided otherwise by
Minnesota Statutes Chapter 302A, meetings of the shareholders may be held at any
place, within or without the State of Minnesota, designated by the directors
and, in the absence of such designation, shall be held at the registered office
of the corporation in the State of Minnesota. The directors shall designate the
time of day for each meeting and, in the absence of such designation, every
meeting of shareholders shall be held at ten o'clock a.m.
Section 2.02. Regular Meetings. The corporation is not required to hold
annual meetings of shareholders. Regular meetings shall be held only with such
frequency and at such times and places as provided in and required by Minnesota
Statutes Section 302A.431.
Section 2.03. Special Meetings. Special meetings of the shareholders may
be held at any time and for any purpose and may be called by the Chairman of the
Board, the President, any two directors, or by one or more shareholders holding
ten percent (10%) or more of the shares entitled to vote on the matters to be
presented to the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of ten percent
(10%) of the shares outstanding and entitled to vote shall constitute a quorum
for the transaction of business at any regular or special meeting. In case a
quorum shall not be present at a meeting, those present in person or by proxy
shall adjourn the meeting to such day as they shall, by majority vote, agree
upon without further notice other than by announcement at the meeting at which
such adjournment is taken. If a quorum is present, a meeting may be adjourned
from time to time without notice other than announcement at the meeting. At
adjourned meetings at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally noticed. If a
quorum is present, the shareholders may continue to transact business until
adjournment notwithstanding the withdrawal of enough shareholders to leave less
than a quorum.
Section 2.05. Voting. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the Articles of Incorporation provide
otherwise, shall have one vote for each share having voting power registered in
his name on the books of the corporation. Except as otherwise specifically
provided by these Bylaws or as required by provisions of the Investment Company
Act of 1940 or other applicable laws, all questions shall be decided by a
majority vote of the number of shares entitled to vote and represented at the
meeting at the time of the vote. If the matter(s) to be presented at a regular
or special meeting relates only to particular classes or series of the
corporation, then only the shareholders of such classes or series are entitled
to vote on such matter(s).
Section 2.06. Voting - Proxies. The right to vote by proxy shall exist
only if the instrument authorizing such proxy to act shall have been executed in
writing by the shareholder himself or by his attorney thereunto duly authorized
in writing. No proxy shall be voted after eleven months from its date unless it
provides for a longer period.
Section 2.07. Closing of Books. The Board of Directors may fix a time,
not exceeding sixty (60) days preceding the date of any meeting of shareholders,
as a record date for the determination of the shareholders entitled to notice
of, and to vote at, such meeting, notwithstanding any transfer of shares on the
books of the corporation after any record date so fixed. The Board of Directors
may close the books of the corporation against the transfer of shares during the
whole or any part of such period. If the Board of Directors fails to fix a
record date for determination of the shareholders entitled to notice of, and to
vote at, any meeting of shareholders, the record date shall be the thirtieth
(30th) day preceding the date of such meeting.
Section 2.08. Notice of Meetings. There shall be mailed to each
shareholder, shown by the books of the corporation to be a holder of record of
voting shares, at his address as shown by the books of the corporation, a notice
setting out the date, time and place of each regular meeting and each special
meeting, except where the meeting is an adjourned meeting and the date, time and
place of the meeting were announced at the time of adjournment, which notice
shall be mailed within the period required by law. Every notice of any special
meeting shall state the purpose or purposes for which the meeting has been
called, pursuant to Section 2.03, and the business transacted at all special
meetings shall be confined to the purpose stated in such notice.
Section 2.09. Waiver of Notice. Notice of any regular or special meeting
may be waived either before, at or after such meeting orally or in a writing
signed by each shareholder or representative thereof entitled to vote the shares
so represented. A shareholder by his attendance at any meeting of shareholders,
shall be deemed to have waived notice of such meeting, except where the
shareholder objects at the beginning of the meeting to the transaction of
business because the item may not lawfully be considered at that meeting and
does not participate at that meeting in the consideration of the item at that
meeting.
Section 2.10. Written Action. Any action which might be taken at a
meeting of the shareholders may be taken without a meeting if done in writing
and signed by all of the shareholders entitled to vote on that action. If the
action to be taken relates to particular classes or series of the corporation,
then only shareholders of such classes or series are entitled to vote on such
action.
ARTICLE III
DIRECTORS
Section 3.01. Number, Qualification and Term of Office. The number of
directors shall be established by resolution of the shareholders (subject to the
authority of the Board of Directors to increase or decrease the number of
directors as permitted by law). In the absence of such shareholder resolution,
the number of directors shall be the number last fixed by the shareholders, the
Board of Directors or the Articles of Incorporation. Directors need not be
shareholders. Each of the directors shall hold office until the regular meeting
of shareholders next held after his election and until his successor shall have
been elected and shall qualify, or until the earlier death, resignation, removal
or disqualification of such director.
Section 3.02. Election of Directors. Except as otherwise provided in
Sections 3.11 and 3.12 hereof, the directors shall be elected at the regular
shareholders' meeting. In the event that directors are not elected at a regular
shareholders' meeting, then directors may be elected at a special shareholders'
meeting, provided that the notice of such meeting shall contain mention of such
purpose. At each shareholders' meeting for the election of directors, the
directors shall be elected by a plurality of the votes validly cast at such
election. Each holder of shares of each class or series of stock of the
corporation shall be entitled to vote for directors and shall have equal voting
power for each share of each class or series of the corporation.
Section 3.03. General Powers.
(a) Except as otherwise permitted by statute, the property, affairs
and business of the corporation shall be managed by the Board of Directors,
which may exercise all the powers of the corporation except those powers vested
solely in the shareholders of the corporation by statute, the Articles of
Incorporation or these Bylaws, as amended.
(b) All acts done by any meeting of the Directors or by any person
acting as a director, so long as his successor shall not have been duly elected
or appointed, shall, notwithstanding that it be afterwards discovered that there
was some defect in the election of the directors or such person acting as
aforesaid or that they or any of them were disqualified, be as valid as if the
directors or such other person, as the case may be, had been duly elected and
were or was qualified to be directors or a director of the corporation.
Section 3.04. Power to Declare Dividends.
(a) The Board of Directors, from time to time as they may deem
advisable, may declare and pay dividends in cash or other property of the
corporation, out of any source available for dividends, to the shareholders of
each class or series of stock of the corporation according to their respective
rights and interests in the investment portfolio of the corporation issuing such
class or series of stock.
(b) The Board of Directors shall cause to be accompanied by a written
statement any dividend payment wholly or partly from any source other than
(i) the accumulated and accrued undistributed net income of each
class or series (determined in accordance with generally accepted
accounting practice and the rules and regulations of the Securities and
Exchange Commission then in effect) and not including profits or losses
realized upon the sale of securities or other properties; or
(ii) the net income of each class or series so determined for the
current or preceding fiscal year.
Such statement shall adequately disclose the source or sources of such payment
and the basis of calculation and shall be in such form as the Securities and
Exchange Commission may prescribe.
(c) Notwithstanding the above provisions of this Section 3.04, the
Board of Directors may at any time declare and distribute pro rata among the
shareholders of each class or series of stock a "stock dividend" out of the
authorized but unissued shares of stock of each class or series, including any
shares previously purchased by a class or series of the corporation.
Section 3.05. Board Meetings. Meetings of the Board of Directors may be
held from time to time at such time and place within or without the State of
Minnesota as may be designated in the notice of such meeting.
Section 3.06. Calling Meetings, Notice. A director may call a board
meeting by giving ten (10) days notice to all directors of the date, time and
place of the meeting; provided that if the day or date, time and place of a
board meeting have been announced at a previous meeting of the board, no notice
is required.
Section 3.07. Waiver of Notice. Notice of any meeting of the Board of
Directors may be waived by any director either before, at or after such meeting
orally or in a writing signed by such director. A director, by his attendance
and participation in the action taken at any meeting of the Board of Directors,
shall be deemed to have waived notice of such meeting, except where the director
objects at the beginning of the meeting to the transaction of business because
the item may not lawfully be considered at that meeting and does not participate
at that meeting in the consideration of the item at that meeting.
Section 3.08. Quorum. A majority of the directors holding office
immediately prior to a meeting of the Board of Directors shall constitute a
quorum for the transaction of business at such meeting; provided however,
notwithstanding the above, if the Board of Directors is taking action pursuant
to the Investment Company Act of 1940, as now enacted or hereafter amended, a
majority of directors who are not "interested persons" (as defined by the
Investment Company Act of 1940, as now enacted or hereafter amended) of the
corporation shall constitute a quorum for taking such action.
Section 3.09. Advance Consent or Opposition. A director may give advance
written consent or opposition to a proposal to be acted on at a meeting of the
Board of Directors. If such director is not present at the meeting, consent or
opposition to a proposal does not constitute presence for purposes of
determining the existence of a quorum, but consent or opposition shall be
counted as a vote in favor of or against the proposal and shall be entered in
the minutes or other record of action at the meeting, if the proposal acted on
at the meeting is substantially the same or has substantially the same effect as
the proposal to which the director has consented or objected. This procedure
shall not be used to act on any investment advisory agreement or plan of
distribution adopted under Rule 12b-1 of the Investment Company Act of 1940, as
amended.
Section 3.10. Conference Communications. Any or all directors may
participate in any meeting of the Board of Directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, such directors
participating pursuant to this Section 3.11 shall be deemed present in person at
the meeting, and the place of the meeting shall be the place of origination of
the conference communication. This procedure shall not be used to act on any
investment advisory agreement or plan of distribution adopted under Rule 12b-1
of the Investment Company Act of 1940, as amended.
Section 3.11. Vacancies; Newly Created Directorships. Vacancies in the
Board of Directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the Board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the Board of Directors as permitted by Section
3.01 may be filled by a two-thirds (2/3) vote of the directors serving at the
time of such increase; and each person so elected shall be a director until his
successor is elected by the shareholders at their next regular or special
meeting; provided, however, that no vacancy can be filled as provided above if
prohibited by the provisions of the Investment Company Act of 1940.
Section 3.12. Removal. The entire Board of Directors or an individual
director may be removed from office, with or without cause, by a vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors. In the event that the entire Board or any one or more directors be so
removed, new directors shall be elected at the same meeting, or the remaining
directors may, to the extent vacancies are not filled at such meeting, fill any
vacancy or vacancies created by such removal. A director named by the Board of
Directors to fill a vacancy may be removed from office at any time, with or
without cause, by the affirmative vote of the remaining directors if the
shareholders have not elected directors in the interim between the time of the
appointment to fill such vacancy and the time of the removal.
Section 3.13. Committees. A resolution approved by the affirmative vote
of a majority of the Board of Directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the Board of
Directors.
A majority of the members of the committee present at a meeting is a
quorum for the transaction of business, unless a larger or smaller proportion or
number is provided in a resolution approved by the affirmative vote of a
majority of the directors present.
Section 3.14. Written Action. Except as provided in the Investment
Company Act of 1940, as amended, any action which might be taken at a meeting of
the Board of Directors, or any duly constituted committee thereof, may be taken
without a meeting if done in writing and signed by that number of directors or
committee members that would be required to take the same action at a meeting of
the board or committee thereof at which all directors or committee members were
present; provided, however, that any action which also requires shareholder
approval may be taken by written action only if such writing is signed by all of
the directors or committee members entitled to vote on such matter .
Section 3.15. Compensation. Directors shall receive such fixed sum per
meeting attended or such fixed annual sum as shall be determined, from time to
time, by resolution of the Board of Directors. All directors shall receive their
expenses, if any, of attendance at meetings of the Board of Directors or any
committee thereof. Nothing herein contained shall be construed to preclude any
director from serving this corporation in any other capacity and receiving
proper compensation therefor.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of a
Chairman of the Board (if one is elected by the Board), the President, one or
more Vice Presidents (if desired by the Board), a Secretary, a Treasurer and
such other officers and agents as may, from time to time, be elected by the
Board of Directors. Any number of offices may be held by the same person.
Section 4.02. Election, Term of Office and Qualifications. The Board of
Directors shall elect, from within or without their number, the officers
referred to in Section 4.01 of these Bylaws, each of whom shall have the powers,
rights, duties, responsibilities and terms in office provided for in these
Bylaws or a resolution of the Board not inconsistent therewith. The President
and all other officers who may be directors shall continue to hold office until
the election and qualification of their successors, notwithstanding an earlier
termination of their directorship.
Section 4.03. Resignation. Any officer may resign his office at any time
by delivering a written resignation to the corporation. Unless otherwise
specified therein, such resignation shall take effect upon delivery.
Section 4.04. Removal and Vacancies. Any officer may be removed from his
office by a majority of the Board of Directors with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy among the officers of the corporation
by reason of death, resignation or otherwise, such vacancy shall be filled for
the unexpired term by the Board of Directors.
Section 4.05. Chairman of the Board. The Chairman of the Board, if one is
elected, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
Board of Directors.
Section 4.06. President. The President shall have general active
management of the business of the corporation. In the absence of the Chairman of
the Board, he shall preside at all meetings of the shareholders and directors.
He shall be the chief executive officer of the corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall be ex officio a member of all standing committees. He may execute and
deliver, in the name of the corporation, any deeds, mortgages, bonds, contracts
or other instruments pertaining to the business of the corporation and, in
general, shall perform all duties usually incident to the office of the
President. He shall have such other duties as may, from time to time, be
prescribed by the Board of Directors.
Section 4.07. Vice President. Each Vice President shall have such powers
and shall perform such duties as may be specified in the Bylaws or prescribed by
the Board of Directors or by the President. In the event of absence or
disability of the President, Vice Presidents shall succeed to his power and
duties in the order designated by the Board of Directors.
Section 4.08. Secretary. The Secretary shall be secretary of, and shall
attend, all meetings of the shareholders and Board of Directors and shall record
all proceedings of such meetings in the minute book of the corporation. He shall
give proper notice of meetings of shareholders and directors. He shall keep the
seal of the corporation and shall affix the same to any instrument requiring it
and may, when necessary, attest the seal by his signature. He shall perform such
other duties as may, from time to time, be prescribed by the Board of Directors
or by the President.
Section 4.09. Treasurer. The Treasurer shall be the chief financial
officer and shall keep accurate accounts of all money of the corporation
received or disbursed. He shall deposit all moneys, drafts and checks in the
name of, and to the credit of, the corporation in such banks and depositories as
a majority of the Board of Directors shall, from time to time, designate. He
shall have power to endorse, for deposit, all notes, checks and drafts received
by the corporation. He shall disburse the funds of the corporation, as ordered
by the Board of Directors, making proper vouchers therefor. He shall render to
the President and the directors, whenever required, an account of all his
transactions as Treasurer and of the financial condition of the corporation, and
shall perform such other duties as may, from time to time, be prescribed by the
Board of Directors or by the President.
Section 4.10. Assistant Secretaries. At the request of the Secretary, or
in his absence or disability, any Assistant Secretary shall have power to
perform all the duties of the Secretary, and, when so acting, shall have all the
powers of, and be subject to all restrictions upon, the Secretary. The Assistant
Secretaries shall perform such other duties as from time to time may be assigned
to them by the Board of Directors or the President.
Section 4.11. Assistant Treasurers. At the request of the Treasurer, or
in his absence or disability, any Assistant Treasurer shall have power to
perform all the duties of the Treasurer, and when so acting, shall have all the
powers of, and be subject to all the restrictions upon, the Treasurer. The
Assistant Treasurers shall perform such other duties as from time to time may be
assigned to them by the Board of Directors or the President.
Section 4.12. Compensation. The officers of this corporation shall
receive such compensation for their services as may be determined, from time to
time, by resolution of the Board of Directors.
Section 4.13. Surety Bonds. The Board of Directors may require any
officer or agent of the corporation to execute a bond (including, without
limitation, any bond required by the Investment Company Act of 1940 and the
rules and regulations of the Securities and Exchange Commission) to the
corporation in such sum and with such surety or sureties as the Board of
Directors may determine, conditioned upon the faithful performance of his duties
to the corporation, including responsibility for negligence and for the
accounting of any of the corporation's property, funds or securities that may
come into his hands. In any such case, a new bond of like character shall be
given at least every six years, so that the dates of the new bond shall not be
more than six years subsequent to the date of the bond immediately preceding.
ARTICLE V
SHARES AND THEIR TRANSFER AND REDEMPTION
Section 5.01. Certificate for Shares.
(a) The corporation may have certificated or uncertificated shares,
or both, as designated by resolution of the Board of Directors. Every owner of
certificated shares of the corporation shall be entitled to a certificate, to be
in such form as shall be prescribed by the Board of Directors, certifying the
number of shares of the corporation owned by him. Within a reasonable time after
the issuance or transfer of uncertificated shares, the corporation shall send to
the new shareholder the information required to be stated on certificates.
Certificated shares shall be numbered in the order in which they shall be issued
and shall be signed, in the name of the corporation, by the President or a Vice
President and by the Secretary or an Assistant Secretary or by such officers as
the Board of Directors may designate. Such signatures may be by facsimile if
authorized by the Board of Directors. Every certificate surrendered to the
corporation for exchange or transfer shall be cancelled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so cancelled, except in cases provided
for in Section 5.08.
(b) In case any officer, transfer agent or registrar who shall have
signed any such certificate, or whose facsimile signature has been placed
thereon, shall cease to be such an officer (because of death, resignation or
otherwise) before such certificate is issued, such certificate may be issued and
delivered by the corporation with the same effect as if he were such officer,
transfer agent or registrar at the date of issue.
Section 5.02. Issuance of Shares. The Board of Directors is authorized to
cause to be issued shares of the corporation up to the full amount authorized by
the Articles of Incorporation in such classes or series and in such amounts as
may be determined by the Board of Directors and as may be permitted by law. No
shares shall be allotted except in consideration of cash or other property,
tangible or intangible, received or to be received by the corporation under a
written agreement, of services rendered or to be rendered to the corporation
under a written agreement, or of an amount transferred from surplus to stated
capital upon a share dividend. At the time of such allotment of shares, the
Board of Directors making such allotments shall state, by resolution, their
determination of the fair value to the corporation in monetary terms of any
consideration other than cash for which shares are alloted. No shares of stock
issued by the corporation shall be issued, sold or exchanged by or on behalf of
the corporation for any amount less than the net asset value per share of the
shares outstanding as determined pursuant to Article X hereunder.
Section 5.03. Redemption of Shares. Upon the demand of any shareholder,
this corporation shall redeem any share of stock issued by it held and owned by
such shareholder at the net asset value thereof as determined pursuant to
Article X hereunder. The Board of Directors may suspend the right of redemption
or postpone the date of payment during any period when: (a) trading on the New
York Stock Exchange is restricted or such Exchange is closed for other than
weekends or holidays; (b) the Securities and Exchange Commission has by order
permitted such suspension; or (c) an emergency as defined by rules of the
Securities and Exchange Commission exists, making disposal of portfolio
securities or valuation of net assets of the corporation not reasonably
practicable.
If following a redemption request by any shareholder of this corporation,
the value of such shareholder's interest in the corporation falls below the
required minimum investment, as may be set from time to time by the Board of
Directors, the corporation's officers are authorized, in their discretion and on
behalf of the corporation, to redeem such shareholder's entire interest and
remit such amount, provided that such a redemption will only be effected by the
corporation following: (a) a redemption by a shareholder, which causes the value
of such shareholder's interest in the corporation to fall below the required
minimum investment; (b) the mailing by the corporation to such shareholder of a
"notice of intention to redeem"; and (c) the passage of at least sixty (60) days
from the date of such mailing, during which time the shareholder will have the
opportunity to make an additional investment in the corporation to increase the
value of such shareholder's account to at least the required minimum investment.
Section 5.04. Transfer of Shares. Transfer of shares on the books of the
corporation may be authorized only by the shareholder named in the certificate,
or the shareholder's legal representative, or the shareholder's duly authorized
attorney-in-fact, and upon surrender of the certificate or the certificates for
such shares or a duly executed assignment covering shares held in uncertificated
form. The corporation may treat, as the absolute owner of shares of the
corporation, the person or persons in whose name shares are registered on the
books of the corporation.
Section 5.05. Registered Shareholders. The corporation shall be entitled
to treat the holder of record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any equitable or
other claim to or interest in such share on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise expressly provided by the laws of Minnesota.
Section 5.06. Transfer of Agents and Registrars. The Board of Directors
may from time to time appoint or remove transfer agents and/or registrars of
transfers of shares of stock of the corporation, and it may appoint the same
person as both transfer agent and registrar. Upon any such appointment being
made all certificates representing shares of capital stock thereafter issued
shall be countersigned by one of such transfer agents or by one of such
registrars of transfers or by both and shall not be valid unless so
countersigned. If the same person shall be both transfer agent and registrar,
only one countersignature by such person shall be required.
Section 5.07. Transfer Regulations. The shares of stock of the
corporation may be freely transferred, and the Board of Directors may from time
to time adopt rules and regulations with reference to the method of transfer of
shares of stock of the corporation.
Section 5.08. Lost, Stolen, Destroyed and Mutilated Certificates. The
holder of any stock of the corporation shall immediately notify the corporation
of any loss, theft, destruction or mutilation of any certificate therefor, and
the Board of Directors may, in its discretion, cause to be issued to him a new
certificate or certificates of stock, upon the surrender of the mutilated
certificate or in case of loss, theft or destruction of the certificate upon
satisfactory proof of such loss, theft or destruction. A new certificate or
certificates of stock will be issued to the owner of the lost, stolen or
destroyed certificate only after such owner, or his legal representatives, gives
to the corporation and to such registrar or transfer agent as may be authorized
or required to countersign such new certificate or certificates a bond, in such
sum as they may direct, and with such surety or sureties, as they may direct, as
indemnity against any claim that may be made against them or any of them on
account of or in connection with the alleged loss, theft or destruction of any
such certificate.
ARTICLE VI
DIVIDENDS
Section 6.01. The net investment income of each class or series of the
corporation will be determined, and its dividends shall be declared and made
payable at such time(s) as the Board of Directors shall determine; dividends
shall be payable to shareholders of record as of the date of declaration.
It shall be the policy of each class or series of the corporation to
qualify for and elect the tax treatment applicable to regulated investment
companies under the Internal Revenue Code, so that such class or series will not
be subjected to federal income tax on such part of its income or capital gains
as it distributes to shareholders.
ARTICLE VII
BOOKS AND RECORDS, AUDIT, FISCAL YEAR
Section 7.01. Share Register. The Board of Directors of the corporation
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the board:
(1) a share register not more than one year old, containing the names
and addresses of the shareholders and the number and classes or
series of shares held by each shareholder; and
(2) a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. Other Books and Records. The Board of Directors shall cause
to be kept at its principal executive office, or, if its principal executive
office is not in Minnesota, shall make available at its registered office within
ten days after receipt by an officer of the corporation of a written demand for
them made by a shareholder or other person authorized by Minnesota Statutes
Section 302A.461, originals or copies of:
(1) records of all proceedings of shareholders for the last three
years;
(2) records of all proceedings of the Board of Directors for the last
three years;
(3) its articles and all amendments currently in effect;
(4) its bylaws and all amendments currently in effect;
(5) financial statements required by Minnesota Statutes Section
302A.463 and the financial statement for the most recent interim
period prepared in the course of the operation of the corporation
for distribution to the shareholders or to a governmental agency
as a matter of public record;
(6) reports made to shareholders generally within the last three
years;
(7) a statement of the names and usual business addresses of its
directors and principal officers;
(8) any shareholder voting or control agreements of which the
corporation is aware; and
(9) such other records and books of account as shall be necessary and
appropriate to the conduct of the corporate business.
Section 7.03. Audit; Accountant.
(a) The Board of Directors shall cause the records and books of
account of the corporation to be audited at least once in each fiscal year and
at such other times as it may deem necessary or appropriate.
(b) The corporation shall employ an independent public accountant or
firm of independent public accountants to examine the accounts of the
corporation and to sign and certify financial statements filed by the
corporation. The independent accountant's certificates and reports shall be
addressed both to the Board of Directors and to the shareholders.
Section 7.04. Fiscal Year. The fiscal year of the corporation shall be
determined by the Board of Directors.
ARTICLE VIII
INDEMNIFICATION OF CERTAIN PERSONS
Section 8.01. The corporation shall indemnify such persons, for such
expenses and liabilities, in such manner, under such circumstances, and to such
extent as permitted by Section 302A.521 of the Minnesota Statutes, as now
enacted or hereafter amended, provided, however, that no such indemnification
may be made if it would be in violation of Section 17(h) of the Investment
Company Act of 1940, as now enacted or hereinafter amended.
ARTICLE IX
VOTING OF STOCK HELD
Section 9.01. Unless otherwise provided by resolution of the Board of
Directors, the President, any Vice President, the Secretary or the Treasurer,
may from time to time appoint an attorney or attorneys or agent or agents of the
corporation, in the name and on behalf of the corporation, to cast the votes
which the corporation may be entitled to cast as a stockholder or otherwise in
any other corporation or association, any of whose stock or securities may be
held by the corporation, at meetings of the holders of the stock or other
securities of any such other corporation or association, or to consent in
writing to any action by any such other corporation or association, and may
instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent, and may execute or cause to be executed on behalf
of the corporation and under its corporate seal, or otherwise, such written
proxies, consents, waivers or other instruments as it may deem necessary or
proper; or any of such officers may themselves attend any meeting of the holders
of stock or other securities of any such corporation or association and thereat
vote or exercise any or all other rights of the corporation as the holder of
such stock or other securities of such other corporation or association, or
consent in writing to any action by any such other corporation or association.
ARTICLE X
VALUATION OF NET ASSET VALUE
Section 10.01. The net asset value per share of each class or series of
stock of the corporation shall be determined in good faith by or under
supervision of the officers of the corporation as authorized by the Board of
Directors as often and on such days and at such time(s) as the Board of
Directors shall determine, or as otherwise may be required by law, rule,
regulation or order of the Securities and Exchange Commission.
ARTICLE XI
CUSTODY OF ASSETS
Section 11.01. All securities and cash owned by this corporation shall,
as hereinafter provided, be held by or deposited with a bank or trust company
having (according to its last published report) not less than Two Million
Dollars ($2,000,000) aggregate capital, surplus and undivided profits (the
"Custodian").
This corporation shall enter into a written contract with the custodian
regarding the powers, duties and compensation of the Custodian with respect to
the cash and securities of this corporation held by the Custodian. Said contract
and all amendments thereto shall be approved by the Board of Directors of this
corporation. In the event of the Custodian's resignation or termination, the
corporation shall use its best efforts promptly to obtain a successor Custodian
and shall require that the cash and securities owned by this corporation held by
the Custodian be delivered directly to such successor Custodian.
ARTICLE XII
AMENDMENTS
Section 12.01. These Bylaws may be amended or altered by a vote of the
majority of the Board of Directors at any meeting provided that notice of such
proposed amendment shall have been given in the notice given to the directors of
such meeting. Such authority in the Board of Directors is subject to the power
of the shareholders to change or repeal such bylaws by a majority vote of the
shareholders present or represented at any regular or special meeting of
shareholders called for such purpose, and the Board of Directors shall not make
or alter any Bylaws fixing a quorum for meetings of shareholders, prescribing
procedures for removing directors or filling vacancies in the Board of
Directors, or fixing the number of directors or their classifications,
qualifications or terms of office, except that the Board of Directors may adopt
or amend any Bylaw to increase or decrease their number.
ARTICLE XIII
MISCELLANEOUS
Section 13.01. Interpretation. When the context in which words are used
in these Bylaws indicates that such is the intent, singular words will include
the plural and vice versa, and masculine words will include the feminine and
neuter genders and vice versa.
Section 13.02. Article and Section Titles. The titles of Sections and
Articles in these Bylaws are for descriptive purposes only and will not control
or alter the meaning of any of these Bylaws as set forth in the text.
EXHIBIT 5.1
Form Investment Management Agreement
Sit Growth Fund, Inc.
INVESTMENT MANAGEMENT AGREEMENT
This Agreement, made as of this 1st day of November 1996, by and between
Sit Mid Cap Growth Fund, Inc., a Minnesota corporation (the "Fund"), and Sit
Investment Associates, Inc., a Minnesota corporation ("SIA").
WITNESSETH:
1. INVESTMENT MANAGEMENT SERVICES.
(a) The Fund hereby engages SIA, and SIA hereby agrees to act, as
investment adviser for, and to manage the investment of the assets of, the Fund.
(b) The investment of the assets of the Fund shall at all times be
subject to the applicable provisions of the Articles of Incorporation, Bylaws,
Registration Statement and current Prospectus and the Statement of Additional
Information of the Fund and shall conform to the policies and purposes of the
Fund as set forth in such documents and as interpreted from time to time by the
Fund's Board of Directors. Within the framework of the Fund's investment
policies, and except as otherwise permitted by this Agreement, SIA shall have
the sole and exclusive responsibility for the management of the Fund's
investment portfolio and for making and executing all investment decisions for
the Fund. SIA shall report to the Fund's Board of Directors regularly at such
times and in such detail as the Board may from time to time determine
appropriate, in order to permit the Board to determine the adherence of SIA to
the Fund's investment policies.
(c) SIA shall, at its own expense, furnish all office facilities,
equipment and personnel necessary to discharge its responsibilities and duties
hereunder. SIA shall arrange, if requested by the Fund, for officers or
employees of SIA to serve without compensation from the Fund as directors,
officers, or employees of the Fund if duly elected to such positions by the
shareholders or directors of the Fund.
(d) SIA hereby acknowledges that all records pertaining to the Fund's
investments are the property of the Fund, and in the event that a transfer of
investment management services to someone other than SIA should ever occur, SIA
will promptly, and at its own cost, take all steps necessary to segregate such
records and deliver them to the Fund.
(e) SIA shall not be liable hereunder for any loss suffered by the
Fund in connection with the matters to which this Agreement relate, except
losses resulting from willful misfeasance, bad faith or gross negligence on the
part of SIA in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
2. COMPENSATION FOR SERVICES.
In payment for the investment advisory and management services to be
rendered by SIA hereunder, the Fund shall pay to SIA a fee at an annual rate of
1.25% of the Fund's average daily net assets. This fee shall be paid to SIA on a
monthly basis not later than the fifth business day of the month following the
month in which said services were rendered. This fee shall be based on the
average of the net asset values of all of the issued and outstanding shares of
the Fund as determined as at the close of each business day of the month
pursuant to the Articles of Incorporation, Bylaws, and currently effective
Prospectus and Statement of Additional Information of the Fund.
3. ALLOCATION OF EXPENSES.
Except for extraordinary expenses (as so designated by a majority of the
directors of the Fund, including a majority of said directors who are not
"interested persons" of the Fund or of SIA, as defined in the Investment Company
Act of 1940, as amended), interest, brokerage commissions and other transaction
charges relating to the Fund's investing activities, SIA shall bear all of the
Fund's expenses.
4. FREEDOM TO DEAL WITH THIRD PARTIES.
SIA shall be free to render services to others similar to those rendered
under this Agreement or of a different nature except as such services may
conflict with the services to be rendered or the duties to be assumed hereunder.
5. EFFECTIVE DATE, DURATION, TERMINATION, AMENDMENT OF AGREEMENT.
(a) The effective date of this Agreement shall be November 1, 1996.
(b) Unless sooner terminated as hereinafter provided, this Agreement
shall continue in effect for a period more than two years from the date of its
execution but only as long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund or by the vote of a majority
of the outstanding voting securities of the Fund, and (ii) by the vote of a
majority of the directors of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company Act of 1940, as
amended) of SIA or of the Fund cast in person at a meeting called for the
purpose of voting on such approval.
(c) This Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Directors of the Fund or by the vote of a
majority of the outstanding voting securities of the Fund, or by SIA, upon 60
days' written notice to the other party.
(d) This Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Investment Company Act of 1940, as amended).
(e) No amendment to this Agreement shall be effective until approved
by the vote of: (i) a majority of the directors of the Fund who are not parties
to this Agreement or "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of SIA or of the Fund cast in person at a meeting
called for the purpose of voting on such approval; and (ii) a majority of the
outstanding voting securities of the Fund.
(f) Wherever referred to in this Agreement, the vote or approval of
the holders of a majority of the outstanding voting securities or shares of the
Fund shall mean the lesser of (i) the vote of 67% or more of the voting
securities of the Fund present at a regular or special meeting of shareholders
duly called, if more than 50% of the Fund's outstanding voting securities are
present or represented by proxy, or (ii) the vote of more than 50% of the
outstanding voting securities of the Fund.
6. NOTICES.
Any notice under this Agreement shall be in writing, addressed, delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate in writing for receipt of such notice.
7. INTERPRETATION; GOVERNING LAW.
This Agreement shall be subject to and interpreted in accordance with all
applicable provisions of law including, but not limited to, the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated
thereunder. To the extent that the provisions herein contained conflict with any
such applicable provisions of law, the latter shall control. The laws of the
State of Minnesota shall otherwise govern the construction, validity and effect
of this Agreement.
IN WITNESS WHEREOF, the Fund and SIA have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
SIT MID CAP GROWTH FUND, INC.
By______________________
Its_____________________
SIT INVESTMENT ASSOCIATES, INC.
By______________________
Its_____________________
EXHIBIT 5.1
Form Investment Management Agreement
Sit Growth & Income Fund, Inc.
INVESTMENT MANAGEMENT AGREEMENT
This Agreement, made as of this 1st day of November 1996, by and between
Sit Large Cap Growth Fund, Inc., a Minnesota corporation (the "Fund"), and Sit
Investment Associates, Inc., a Minnesota corporation ("SIA").
WITNESSETH:
1. INVESTMENT MANAGEMENT SERVICES.
(a) The Fund hereby engages SIA, and SIA hereby agrees to act, as
investment adviser for, and to manage the investment of the assets of, the Fund.
(b) The investment of the assets of the Fund shall at all times be
subject to the applicable provisions of the Articles of Incorporation, Bylaws,
Registration Statement and current Prospectus and the Statement of Additional
Information of the Fund and shall conform to the policies and purposes of the
Fund as set forth in such documents and as interpreted from time to time by the
Fund's Board of Directors. Within the framework of the Fund's investment
policies, and except as otherwise permitted by this Agreement, SIA shall have
the sole and exclusive responsibility for the management of the Fund's
investment portfolio and for making and executing all investment decisions for
the Fund. SIA shall report to the Fund's Board of Directors regularly at such
times and in such detail as the Board may from time to time determine
appropriate, in order to permit the Board to determine the adherence of SIA to
the Fund's investment policies.
(c) SIA shall, at its own expense, furnish all office facilities,
equipment and personnel necessary to discharge its responsibilities and duties
hereunder. SIA shall arrange, if requested by the Fund, for officers or
employees of SIA to serve without compensation from the Fund as directors,
officers, or employees of the Fund if duly elected to such positions by the
shareholders or directors of the Fund.
(d) SIA hereby acknowledges that all records pertaining to the Fund's
investments are the property of the Fund, and in the event that a transfer of
investment management services to someone other than SIA should ever occur, SIA
will promptly, and at its own cost, take all steps necessary to segregate such
records and deliver them to the Fund.
(e) SIA shall not be liable hereunder for any loss suffered by the
Fund in connection with the matters to which this Agreement relate, except
losses resulting from willful misfeasance, bad faith or gross negligence on the
part of SIA in the performance of its obligations and duties or by reason of its
reckless disregard of its obligations and duties under this Agreement.
2. COMPENSATION FOR SERVICES.
In payment for the investment advisory and management services to be
rendered by SIA hereunder, the Fund shall pay to SIA a fee at an annual rate of
1.00% of the Fund's average daily net assets. This fee shall be paid to SIA on a
monthly basis not later than the fifth business day of the month following the
month in which said services were rendered. This fee shall be based on the
average of the net asset values of all of the issued and outstanding shares of
the Fund as determined as at the close of each business day of the month
pursuant to the Articles of Incorporation, Bylaws, and currently effective
Prospectus and Statement of Additional Information of the Fund.
3. ALLOCATION OF EXPENSES.
Except for extraordinary expenses (as so designated by a majority of the
directors of the Fund, including a majority of said directors who are not
"interested persons" of the Fund or of SIA, as defined in the Investment Company
Act of 1940, as amended), interest, brokerage commissions and other transaction
charges relating to the Fund's investing activities, SIA shall bear all of the
Fund's expenses.
4. FREEDOM TO DEAL WITH THIRD PARTIES.
SIA shall be free to render services to others similar to those rendered
under this Agreement or of a different nature except as such services may
conflict with the services to be rendered or the duties to be assumed hereunder.
5. EFFECTIVE DATE, DURATION, TERMINATION, AMENDMENT OF AGREEMENT.
(a) The effective date of this Agreement shall be November 1, 1996.
(b) Unless sooner terminated as hereinafter provided, this Agreement
shall continue in effect for a period more than two years from the date of its
execution but only as long as such continuance is specifically approved at least
annually by (i) the Board of Directors of the Fund or by the vote of a majority
of the outstanding voting securities of the Fund, and (ii) by the vote of a
majority of the directors of the Fund who are not parties to this Agreement or
"interested persons" (as defined in the Investment Company Act of 1940, as
amended) of SIA or of the Fund cast in person at a meeting called for the
purpose of voting on such approval.
(c) This Agreement may be terminated at any time, without the payment
of any penalty, by the Board of Directors of the Fund or by the vote of a
majority of the outstanding voting securities of the Fund, or by SIA, upon 60
days' written notice to the other party.
(d) This Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Investment Company Act of 1940, as amended).
(e) No amendment to this Agreement shall be effective until approved
by the vote of: (i) a majority of the directors of the Fund who are not parties
to this Agreement or "interested persons" (as defined in the Investment Company
Act of 1940, as amended) of SIA or of the Fund cast in person at a meeting
called for the purpose of voting on such approval; and (ii) a majority of the
outstanding voting securities of the Fund.
(f) Wherever referred to in this Agreement, the vote or approval of
the holders of a majority of the outstanding voting securities or shares of the
Fund shall mean the lesser of (i) the vote of 67% or more of the voting
securities of the Fund present at a regular or special meeting of shareholders
duly called, if more than 50% of the Fund's outstanding voting securities are
present or represented by proxy, or (ii) the vote of more than 50% of the
outstanding voting securities of the Fund.
6. NOTICES.
Any notice under this Agreement shall be in writing, addressed, delivered
or mailed, postage prepaid, to the other party at such address as such other
party may designate in writing for receipt of such notice.
7. INTERPRETATION; GOVERNING LAW.
This Agreement shall be subject to and interpreted in accordance with all
applicable provisions of law including, but not limited to, the Investment
Company Act of 1940, as amended, and the rules and regulations promulgated
thereunder. To the extent that the provisions herein contained conflict with any
such applicable provisions of law, the latter shall control. The laws of the
State of Minnesota shall otherwise govern the construction, validity and effect
of this Agreement.
IN WITNESS WHEREOF, the Fund and SIA have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
SIT LARGE CAP GROWTH FUND, INC.
By______________________
Its_____________________
SIT INVESTMENT ASSOCIATES, INC.
By______________________
Its_____________________
EXHIBIT 8.1
Custodian Agreement
SIT Growth Fund, Inc.
(This is a Specimen Documents DO NOT DELETE OR MODIFY)
CUSTODY AGREEMENT
AGREEMENT dated as of April 1, 1996, between SIT Growth Fund, Inc., a
corporation organized under the laws of the State of Minnesota, having its
principal office and place of business at 4600 Norwest Center, 90 South Seven
Street, Minneapolis, Minnesota 554022-4130 (the "Company"), and THE NORTHERN
TRUST COMPANY (the "Custodian"), an Illinois Company with its principal place of
business at 50 South LaSalle Street, Chicago, Illinois 60675.
WITNESSETH:
That for and in consideration of the mutual promises hereinafter set
forth, the Company and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings
(a) The "1940 Act" shall mean the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
(b) "Authorized Person" shall be deemed to include the Chairman of the
Board of Directors, the President, and any Vice President, the
Secretary, the Treasurer or any other person, whether or not any such
person is an officer or employee of the Company, duly authorized by the
Board of Directors to give Oral Instructions and Written Instructions
on behalf of the Company and listed in the certification annexed hereto
as Schedule A or such other certification as may be received by the
Custodian from time to time.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Book-Entry System" shall mean the Federal Reserve/ Treasury
book-entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(e) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Company by any two Authorized Persons or any
two officers thereof.
(f) "Articles of Incorporation and Certificate of Designation" shall
mean the Articles of Incorporation and Certificate of Designation of
the Company dated July 30, 1991, as amended.
(g) "Depository" shall mean The Depository Trust Company, a clearing
agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, as amended, its
successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make deposits. The term
"Depository" shall further mean and include any other person to be
named in a Certificate authorized to act as a depository under the 1940
Act, its successor or successors and its nominee or nominees.
(h) "Fund Accountant" shall mean the person appointed by the Company
who performs the daily calculations of the net asset values of the
Portfolios and determines the amount of cash available in each
Portfolio on a daily basis for investment. The Fund Accountant shall be
identified to the Custodian in writing.
(i) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations,
where the purchase or sale of such securities normally requires
settlement in federal funds on the same day as such purchase or sale,
and repurchase agreements with respect to any of the foregoing types of
securities.
(j) "Oral Instructions" shall mean an oral communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(k) "Portfolio" refers to the portfolios identified in the attached
Exhibit 1, or any such other separate and distinct investment portfolio
as may from time to time be created and designated by the Company in
accordance with the provisions of Articles of Incorporation and
certificate of designation and which the Company and Custodian shall
have agreed in writing shall be subject to this Agreement pursuant to
the provisions of section 5(b).
(l) "Prospectus" shall mean the Company's current prospectus and
statement of additional information relating to the registration of the
Portfolio's Shares under the Securities Act of 1933, as amended.
(m) "Shares" refers to the shares of the Portfolio.
(n) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodity interests and investments from time to time owned
by the Portfolio.
(o) "Sub-Custodian" shall mean and include (i) any branch of the
Custodian, (ii) any branch of a "qualified U.S. bank," as that term is
defined in Rule 17f-5 under the 1940 Act, (iii) any "eligible foreign
custodian," as that term is defined in Rule 17f-5 under the 1940 Act,
approved by the Board of Directors and having a contract with the
Custodian which contract has been approved by the Board of Directors,
and (iv) any securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States,
which operates the central system for handling of securities or
equivalent book-entries in that country or a transnational system for
the central handling of securities or equivalent book-entries, which
securities depository or clearing agency has been approved by the Board
of Directors; provided, that the Custodian or a SubCustodian has
entered into an agreement with such securities depository or clearing
agency.
(p) "Transfer Agent" shall mean the person which performs as the
transfer agent, dividend disbursing agent and shareholder servicing
agent for the Company.
(q) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system whereby the receiver
of such communication is able to verify through codes or otherwise with
a reasonable degree of certainty the authenticity of the sender of such
communication; however, "Written Instructions" from the Company to the
Custodian shall mean a facsimile or electronic communication
transmitted by the Company or the Fund Accountant (who has been
provided an access code by the Company) and actually received by the
Custodian. Except as otherwise provided in this Agreement, "Written
Instructions" may include instructions given on a standing basis.
2. Appointment of Custodian.
(a) The Company hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies owned by or in the
possession of the Portfolio during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
3. Appointment and Removal of Sub-Custodians.
(a) The Custodian may appoint one or more Sub-Custodians to act as
Depository or Depositories or as sub-custodian or sub-custodians of
Securities and moneys at any time owned by any Portfolio, upon terms
and conditions as are specified in this Agreement. The Custodian shall
oversee the maintenance of any Securities or moneys of any Portfolio by
any Sub-Custodian.
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors in connection with this Agreement, the Custodian wishes to
appoint other SubCustodians to hold property of the Portfolios, it will
so notify the Company and provide it with information reasonably
necessary to determine any such new SubCustodian's eligibility under
Rule 17f-5 under the 1940 Act, including a copy of the proposed
agreement with such Sub-Custodian. The Company shall at the meeting of
the Board of Directors next following receipt of such notice and
information give a written approval or disapproval of the proposed
action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) If the Custodian intends to remove any Sub-Custodian previously
approved by the Board of Directors, it shall so notify the Company and
move the property of the Portfolio(s) deposited with such Sub-Custodian
to another Sub-Custodian previously approved by the Board of Directors.
The Custodian shall promptly take such steps as may be required to
remove any Sub-Custodian that has ceased to meet the requirements of
Rule 17f-5 under the 1940 Act.
(e) The Custodian hereby warrants to the Company that in its opinion,
after due inquiry, the established procedures to be followed by each
Sub-Custodian (that is not being used as a foreign securities
depository or clearing agency) in connection with the safekeeping of
property of the Portfolio pursuant to this Agreement afford protection
for such property not materially different from that afforded by the
Custodian's established safekeeping procedures with respect to similar
property held by it (and its securities depositories) in Chicago,
Illinois.
4. Use of Sub-Custodians.
With respect to property of a Portfolio which is maintained by the
Custodian in the custody of a Sub-Custodian pursuant to Section 3:
(a) The Custodian will identify on its books as belonging to the
particular Portfolio any property held by such Sub-Custodian.
(b) In the event that a Sub-Custodian permits any of the Securities
placed in its care to be held in an eligible foreign securities
depository, such Sub-Custodian will be required by its agreement with
the Custodian to identify on its books such Securities as being held
for the account of the Custodian as a custodian for its customers.
(c) Any Securities held by a Sub-Custodian will be subject only to the
instructions of the Custodian or its agents; and any Securities held in
an eligible foreign securities depository for the account of a
Sub-Custodian will be subject only to the instructions of such
Sub-Custodian.
(d) The Custodian will only deposit property of a Portfolio in an
account with a Sub-Custodian which includes exclusively the assets held
by the Custodian for its customers, and will cause such account to be
designated by such Sub-Custodian as a special custody account for the
exclusive benefit of customers of the Custodian.
5. Compensation.
(a) The Custodian shall be entitled to compensation for its services
hereunder as set forth in a separate agreement between the Custodian
and the Fund Accountant. The Custodian will bill the Fund Accountant
directly for all such amounts.
6. Custody of Cash and Securities
(a) Receipt and Holding of Assets. The Company will deliver or cause to
be delivered to the Custodian and the Sub-Custodians all Securities and
monies owned by the Portfolio at any time during the period of this
Agreement and shall specify the Portfolio to which the Securities and
monies are to be specifically allocated. The Custodian will not be
responsible for such Securities and monies until actually received by
it or by a Sub-Custodian. The Company shall instruct the Custodian from
time to time in its sole discretion, by means of Written Instructions,
as to the manner in which and in what amounts Securities, and monies of
a Portfolio are to be deposited on behalf of such Portfolio in the
Book-Entry System or a Depository; provided, however, that prior to the
deposit of Securities of a Portfolio in the Book-Entry System or a
Depository, including a deposit in connection with the settlement of a
purchase or sale, the Custodian shall have received a Certificate
specifically approving such deposits by the Custodian or a
Sub-Custodian in the Book-Entry System or a Depository. Securities and
monies of a Portfolio deposited in the Book-Entry System or a
Depository will be deposited in accounts which include only assets held
by the Custodian for its customers.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for each Portfolio and shall credit to the
separate account all monies received by it or a Sub-Custodian for the
account of such Portfolio and shall disburse, or cause a Sub-Custodian
to disburse, the same only:
1. In payment for Securities purchased for the Portfolio, as
provided in Section 7 hereof;
2. In payment of dividends or distributions with respect to
the Shares of such Portfolio, as provided in Section 10
hereof;
3. In payment of original issue or other taxes with respect to
the Shares of such Portfolio, as provided in Section 11(c)
hereof;
4. In payment for Shares which have been redeemed by such
Portfolio, as provided in Section 11 hereof;
5. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Company, as
provided in Sections 5 and 15(h) hereof;
6. Pursuant to Written Instructions setting forth the name of
the Portfolio and the name and address of the person to whom
the payment is to be made, the amount to be paid and the
purpose for which payment is to be made.
(c) Fail Float. In the event that any payment made for a Portfolio
under this Section 6 exceeds the funds available in that Portfolio's
account, the Custodian or relevant Sub-Custodian, as the case may be,
may, in its discretion, advance the Company on behalf of that Portfolio
an amount equal to such excess and such advance shall be deemed an
overdraft from the Custodian or such Sub-Custodian to that Portfolio
payable on demand, bearing interest at the rate of interest customarily
charged by the Custodian or such Sub-Custodian on similar overdrafts.
(d) Confirmation and Statements. Promptly after the close of business
on each business day, the Custodian shall furnish the Company with
confirmations and a summary of all transfers to or from the account of
each Portfolio during said day. Such summary shall include without
limitation, as to property acquired for a Portfolio, the identity of
the entity having physical possession of such property. Where
securities purchased by a Portfolio are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of a Depository, the
Book-Entry System or a Sub-Custodian, the Custodian shall by book entry
or otherwise identify the quantity of those securities belonging to
such Portfolio. At least monthly, the Custodian shall furnish the
Company with a detailed statement of the Securities and monies held by
it and all Sub-Custodians for each Portfolio. In the absence of the
filing in writing with the Custodian by the Company of exceptions or
objections to any such statement within 60 days after the date that a
material defect is reasonably discoverable, the Company shall be deemed
to have approved such statement; and in such case or upon written
approval of the Company of any such statement the Custodian shall, to
the extent permitted by law and provided the Custodian has met the
standard of care in Section 14 hereof, be released, relieved and
discharged with respect to all matters and things set forth in such
statement as though such statement had been settled by the decree of a
court of competent jurisdiction in an action in which the Company and
all persons having any equity interest in the Company were parties.
(e) Registration of Securities and Physical Separation. All Securities
held for a Portfolio which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be
held by the Custodian or a SubCustodian in that form; all other
Securities held for a Portfolio may be registered in the name of that
Portfolio, in the name of any duly appointed registered nominee of the
Custodian or a Sub-Custodian as the Custodian or such Sub-Custodian may
from time to time determine, or in the name of the Book-Entry System or
a Depository or their successor or successors, or their nominee or
nominees. The Company reserves the right to instruct the Custodian as
to the method of registration and safekeeping of the Securities. The
Company agrees to furnish to the Custodian appropriate instruments to
enable the Custodian or any SubCustodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System or a Depository, any Securities
which the Custodian of a Sub-Custodian may hold for the account of a
Portfolio and which may from time to time be registered in the name of
a Portfolio. The Custodian shall hold all such Securities specifically
allocated to a Portfolio which are not held in the Book-Entry System or
a Depository in a separate account for such Portfolio in the name of
such Portfolio physically segregated at all times from those of any
other person or persons.
(f) Segregated Accounts. Upon receipt of a Written Instruction, the
Custodian will establish segregated accounts on behalf of a Portfolio
to hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such
Segregated Accounts only as it shall be directed by subsequent Written
Instruction.
(g) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian, by itself or through the use of the Book-Entry System or a
Depository with respect to Securities therein deposited, shall, or
shall instruct the relevant Sub-Custodian to:
1. Collect all income due or payable with respect to
Securities held for a Portfolio in accordance with this
Agreement;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired,
or otherwise become payable;
3. Surrender Securities in temporary form for derivative
Securities;
4. Execute any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or a
Depository with respect to Securities therein deposited, for
the account of each Portfolio all rights and similar
Securities issued with respect to any Securities held by the
Custodian or relevant Sub-Custodian for each Portfolio.
If the Custodian or any Sub-Custodian causes the
account of a Portfolio to be credited on the payable date for
interest, dividends or redemptions, the particular Portfolio
involved will promptly return to the Custodian any such amount
or property so credited upon oral or written notification that
neither the custodian nor the relevant Sub-Custodian can
collect such amount or property in the ordinary course of
business. The Custodian or such Sub-Custodian, as the case may
be, shall have no duty or obligation to institute legal
proceedings, file a claim or proof of claim in any insolvency
proceeding or take any other action with respect to the
collection of such amount or property beyond its ordinary
collection procedures unless it is specifically requested to
do so by the Company and indemnified to its satisfaction for
any liability, cost or expense arising therefrom.
(h) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written Instruction and not otherwise, except for subparagraphs 5, 6,
7, and 8 of this section 6(h) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the
Book-Entry System or a Depository, shall, or shall instruct the
relevant Sub-Custodian to:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written
Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Company as owner of
any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for a
Portfolio in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for a
Portfolio to any protective committee, reorganization
committee or other person in connection with the
reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement in the
separate account for each such Portfolio certificates of
deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of a
Portfolio and take such other steps as shall be stated in
Written Instructions to be for the purpose of effectuating any
duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Company;
5. Deliver Securities upon sale of such Securities for the
account of a Portfolio pursuant to Section 7;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such
Securities entered into by a Portfolio;
7. Deliver Securities owned by a Portfolio to the issuer
thereof or its agent when such Securities are called,
redeemed, retired or otherwise become payable; provided,
however, that in any such case the cash or other consideration
is to be delivered to the Custodian or Sub-Custodian, as the
case may be;
8. Deliver Securities for delivery in connection with any
loans of securities made by a Portfolio but only against
receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Company which may be in the form
of cash or obligations issued by the United States Government,
its agencies or instrumentalities;
9. Deliver Securities for delivery as security in connection
with any borrowings by a Portfolio requiring a pledge of
Portfolio assets, but only against receipt of the amounts
borrowed;
10. Deliver Securities to the Transfer Agent or to the holders
of Shares in connection with distributions in kind, as may be
described from time to in the Prospectus, in satisfaction of
requests by holders of Shares for repurchase or redemption;
11. Deliver Securities owned by any Portfolio for any purpose
expressly permitted by and in accordance with procedures
described in the Prospectus; and
12. Deliver Securities owned by any Portfolio for any other
proper business purpose, but only upon receipt of, in addition
to Written Instructions, a certified copy of a resolution of
the Board of Directors signed by an Authorized Person and
certified by the Secretary of the Company, specifying the
Securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper business purpose, and naming the person or persons
to whom delivery of such Securities shall be made.
(i) Endorsement and Collection of Checks. Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account of a
Portfolio.
7. Purchase and Sale of Investments of a Portfolio.
(a) Promptly after each purchase of Securities for a Portfolio, the
Company shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a Written
Instruction and (ii) with respect to each purchase of Money Market
Securities, either a Written Instruction or Oral Instruction, in either
case specifying with respect to each purchase: (1) the name of the
Portfolio to which such Securities are to be specifically allocated;
(2) the name of the issuer and the title of the Securities; (3) the
number of shares or the principal amount purchased and accrued
interest, if any; (4) the date of purchase and settlement; (5) the
purchase price per unit; (6) the total amount payable upon such
purchase; and 7) the name of the person from whom or the broker through
whom the purchase was made, if any. The Custodian or specified
Sub-Custodian shall receive the Securities purchased by or for a
Portfolio and upon receipt thereof shall pay to the broker or other
person designated by the Company out of the monies held for the account
of such Portfolio the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set forth in such
Written or Oral Instruction.
(b) Promptly after each sale of Securities of a Portfolio, the Company
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Written
Instruction, and (ii) with respect to each sale of Money Market
Securities, either Written Instructions or Oral Instructions, in either
case specifying with respect to such sale: (1) the name of the
Portfolio to which the Securities sold were specifically allocated; (2)
the name of the issuer and the title of the Securities; (3) the number
of shares or principal amount sold, and accrued interest, if any; (4)
the date of sale; (5) the sale price per unit; (6) the total amount
payable to the Portfolio upon such sale; and (7) the name of the broker
through whom or the person to whom the sale was made. The Custodian or
relevant Sub-Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the Company upon
receipt of the total amount payable to such Portfolio upon such sale,
provided that the same conforms to the total amount payable to such
Portfolio as set forth in such Written or Oral Instruction. Subject to
the foregoing, the Custodian or relevant Sub-Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
(c) Notwithstanding (a) and (b) above, cash in any of the Portfolios
may be invested by the Custodian for short term purposes pursuant to
standing Written Instructions from the Company.
8. Lending of Securities.
If any Portfolio is permitted by the terms of the Articles of
Incorporation and Certificate of Designation and the Prospectus to lend
Securities, then the Board of Directors may approve a separate written
agreement between the Company and the Custodian authorizing the
Custodian to lend such Securities. Such agreement may provide for the
payment of additional reasonable compensation to the Custodian.
9. Investment in Futures and Options
The Custodian shall pursuant to Written Instructions (which may be
standing instructions) from an Authorized Person (i) transfer initial
margin to a safekeeping bank or, with respect to options, broker, (ii)
pay or demand variation margin to or from a designated futures
commission merchant or other broker based on daily marking to market
calculations and in accordance with accepted industry practices, and
(iii) subject to the consent of the Custodian, enter into separate
procedural, safekeeping or other agreements with safekeeping banks,
futures commission merchants and other brokers pursuant to which such
banks and, in the case of options, brokers, will act as custodian for
initial margin deposits in transactions involving futures contracts and
options. The Custodian shall have no custodial or investment
responsibility for any assets transferred to a safekeeping bank,
futures commission merchant or broker pursuant to this paragraph.
10. Payment of Dividends or Distributions.
(a) The Company shall furnish to the Custodian the vote of the Board of
Directors or the Dividend Committee thereof, as the case may be,
certified by the Secretary of the Company (i) authorizing the
declaration of distributions with respect to a Portfolio on a specified
periodic basis and authorizing the Custodian to rely on Oral or Written
Instructions specifying the date of the declaration of such
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per Share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the payment date,
or (ii) setting forth the date of declaration of any distribution by a
Portfolio, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the Payment date.
(b) Upon the payment date specified in such vote, Oral Instructions, or
Written Instructions, as the case may be, the Custodian shall pay the
total amount payable to the Transfer Agent out of the monies
specifically allocated to and held for the account of the appropriate
Portfolio.
11. Sale and Redemption of Shares of the Company.
(a) Whenever the Company shall sell any Shares of a Portfolio, the
Company shall deliver or cause to be delivered to the Custodian a
Written Instruction duly specifying:
1. The name of the Portfolio whose Shares were sold;
2. The number of Shares sold, trade date, and price; and
3. The amount of money to be received by the Custodian for the
sale of such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares of a Portfolio and that
the information contained therein will be derived from the sales of
Shares as reported to the Company by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Portfolio
specified in (a)(1) above.
(c) Upon issuance of any Shares of a Portfolio in accordance with the
foregoing provisions of this Section 11, the Custodian shall pay all
original issue or other taxes required to be paid in connection with
such issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
(d) Except as provided hereafter, whenever any Shares of a Portfolio
are redeemed, the Company shall cause the Transfer Agent to promptly
furnish to the Custodian Written Instructions specifying:
1. The name of the Portfolio whose Shares were redeemed;
2. The number of Shares redeemed; and
3. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information
contained in such Written Instructions will be derived from the
redemption of Shares as reported to the Company by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares of a Portfolio being redeemed pursuant to valid
instructions as described in the Prospectus, the Custodian shall make
payment to the Transfer Agent out of the monies specifically allocated
to and held for the account of the Portfolio specified in (d)(l) above
of the total amount specified in a Written Instruction issued pursuant
to paragraph (d) of this Section 11.
12. Indebtedness.
(a) The Company will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Company borrows money, using
Securities as collateral, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such bank will
loan to the Company against delivery of a stated amount of collateral.
The Company shall promptly deliver to the Custodian Written
Instructions stating with respect to each such borrowing: (1) the name
of the Portfolio for which the borrowing is to be made; (2) the name of
the bank; (3) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note, duly
endorsed by the Company, or other loan agreement; (4) the time and
date, if known, on which the loan is to be entered into (the "borrowing
date"); (5) the date on which the loan becomes due and payable; (6) the
total amount payable to the Company for the separate account of the
Portfolio on the borrowing date; (7) the market value of Securities to
be delivered as collateral for such loan, including the name of the
issuer, the title and the number of shares or the principal amount of
any particular Securities; (8) whether the Custodian is to deliver such
collateral through the Book-Entry System or a Depository; and (9) a
statement that such loan is in conformance with the 1940 Act and the
Prospectus.
(b) Upon receipt of the Written Instruction referred to in paragraph
(a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set
forth in the Written Instruction. The Custodian may, at the option of
the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver as additional collateral in the manner directed by the
Company from time to time such Securities specifically allocated to
such Portfolio as may be specified in Written Instruction to
collateralize further any transaction described in this Section 12. The
Company shall cause all Securities released from collateral status to
be returned directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered to it.
In the event that the Company fails to specify in Written Instruction
all of the information required by this Section 12, the Custodian shall
not be under any obligation to deliver any Securities. Collateral
returned to the Custodian shall be held hereunder as it was prior to
being used as collateral.
13. Corporate Action
Whenever the Custodian or any Sub-Custodian (other than a foreign
securities depository or clearing agency) receives information
concerning Securities held for a Portfolio which requires discretionary
action by the beneficial owner of the Securities (other than a proxy),
such as subscription rights, bond issues, stock repurchase plans and
rights offerings, or legal notices or other material intended to be
transmitted to Securities holders ("Corporate Actions"), the Custodian
will give the Fund Accountant notice of such Corporate Actions to the
extent that the Custodian's central corporate actions department has
actual knowledge of a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action
is received which bears an expiration date, the Custodian will endeavor
to obtain Written or Oral Instructions from the Company or the Fund
Accountant, but if such Instructions are not received in time for the
Custodian to take timely action, or actual notice of such Corporate
Action was received too late to seek such Instructions, the Custodian
is authorized to sell, or cause a Sub-Custodian to sell, such rights
entitlement or fractional interest and to credit the applicable account
with the proceeds and to take any other action it deems, in good faith,
to be appropriate, in which case, provided it has met the standard of
care in Section 15 hereof, it shall be held harmless by the particular
Portfolio involved for any such action.
The Custodian will deliver proxies to the Company or its designated
agent pursuant to special arrangements which may have been agreed to in
writing between the parties hereto. Such proxies shall be executed in
the appropriate nominee name relating to Securities registered in the
name of such nominee but without indicating the manner in which such
proxies are to be voted; and where bearer Securities are involved,
proxies will be delivered in accordance with Written or Oral
Instructions from Authorized Persons.
14. Persons Having Access of the Portfolios.
(a) No Company or agent of the Company, and no officer, director,
employee or agent of the Company's investment adviser, of any
sub-investment adviser of the Company, shall have physical access to
the assets of any Portfolio held by the Custodian or any Sub-Custodian
or be authorized or permitted to withdraw any investments of a
Portfolio, nor shall the Custodian or any Sub-Custodian deliver any
assets of a Portfolio to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position with
the Company's investment adviser, with any sub-investment adviser of
the Company or with the Administrator shall have access to the assets
of any Portfolio.
(b) Nothing in this Section 14 shall prohibit any officer, employee or
agent of the Company, or any officer, director, employee or agent of
the investment adviser, of any sub investment adviser of the Company,
from giving Oral Instructions or Written Instructions to the Custodian
or executing a Certificate so long as it does not result in delivery of
or access to assets of a Portfolio prohibited by paragraph (a) of this
Section 14.
(c) The Custodian represents that it maintains a system that is
reasonably designed to prevent unauthorized persons from having access
to the assets that it holds (by any means) for its customers.
15. Concerning the Custodian.
(a) Scope of Services. The Custodian shall be obligated to perform only
such services as are set forth in this Agreement or expressly contained
in a Certificate, Written Instructions or Oral Instructions given to
the Custodian which are not contrary.
(b) Standard of Care.
1. The Custodian will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
property of the Portfolios. The Custodian shall be liable to,
and shall indemnify and hold harmless the Company from and
against any loss which shall occur as the result of the
failure of the Custodian or a Sub-Custodian (other than a
foreign securities depository or clearing agency) to exercise
reasonable care with respect to their respective obligations
under this Agreement and the safekeeping of such property. The
determination of whether the Custodian or Sub-Custodian has
exercised reasonable care in connection with the safekeeping
of Portfolio property shall be made in light of the standards
applicable to the Custodian with respect to similar property
held by it in Chicago, Illinois. The determination of whether
the Custodian or Sub-Custodian has exercised reasonable care
in connection with their other obligations under this
Agreement shall be made in light of prevailing standards
applicable to professional custodians in the jurisdiction in
which such custodial services are performed. In the event of
any loss to the Company by reason of the failure of the
Custodian or a Sub-Custodian (other than a foreign securities
depository or clearing agency) to exercise reasonable care,
the Custodian shall be liable to the Company only to the
extent of the Company's direct damages and expenses, which
damages, for purposes of property only, shall be determined
based on the market value of the property which is the subject
of the loss at the date of discovery of such loss and without
reference to any special condition or circumstances.
2. The Custodian will not be responsible for any act,
omission, default or for the solvency of any foreign
securities depository or clearing agency approved by the Board
of Directors pursuant to Section (l)(n) or Section 3 hereof.
3. The Custodian will not be responsible for any act,
omission, default or for the solvency of any broker or agent
(not referred to in paragraph (b)(2) above) which it or a
Sub-Custodian appoints and uses unless such appointment and
use is made or done negligently or in bad faith. In the event
such an appointment and use is made or done negligently or in
bad faith, the Custodian shall be liable to the Company only
for direct damages and expenses (determined in the manner
described in paragraph (b)(1) above) resulting from such
appointment and use and, in the case of any loss due to an
act, omission or default of such agent or broker, only to the
extent that such loss occurs as a result of the failure of the
agent or broker to exercise reasonable care ("reasonable care"
for this purpose to be determined in light of the prevailing
standards applicable to agents or brokers, as appropriate, in
the jurisdiction where services are performed).
4. The Custodian shall be entitled to rely, and may act upon
the advice of counsel (who may be counsel for the Company) on
all matters and shall be without liability for any action
reasonably taken or omitted in good faith and without
negligence pursuant to such advice.
5. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be
genuine and to be signed by two officers of the Company. The
Custodian shall be entitled to rely upon any Written
Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this
Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person. The Company
agrees to forward to the Custodian Written Instructions from
an Authorized Person confirming such Oral Instructions in such
manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by
the close of business on the same day that such Oral
Instructions are given to the Custodian. The Company agrees
that the fact that such confirming instructions are not
received by the Custodian shall in no way affect the validity
of the transactions or enforceability of the transactions
hereby authorized by the Company. The Company agrees that the
Custodian shall incur no liability to the Company in (i)
acting upon Oral Instructions given to the Custodian hereunder
concerning such transactions provided such instructions
reasonably appear to have been received from a duly Authorized
Person or (ii) deciding not to act solely upon Oral
Instructions, provided that the Custodian shall be required to
contact the giver of such Oral Instructions and request
written confirmation immediately following any such decision
not to act.
6. The Custodian shall supply the Fund Accountant with such
daily information regarding the cash and securities positions
and activity of each Portfolio as the Custodian and the Fund
Accountant shall from time to time agree. It is understood
that such information will not be audited by Custodian and
Custodian represents that such information will be the best
information then available to the Custodian. The Custodian
shall have no responsibility whatsoever for the pricing of
Portfolio Securities or for the failure of the Fund Accountant
to reconcile differences between the information supplied by
the Custodian and information obtained by the Fund Accountant
from other sources, including but not limited to pricing
vendors and the Company's investment adviser. Subject to the
foregoing, to the extent that any miscalculation by the Fund
Accountant of a Portfolio's net asset value is attributable to
the willful misfeasance, bad faith or negligence of the
Custodian (including any Sub-Custodian other than a foreign
securities depository or clearing agency) in supplying or
omitting to supply the Fund Accountant with information as
aforesaid, the Custodian shall be liable to the Company for
any resulting loss (subject to such de minims rule of change
in value as the Board of Directors may from time to time
adopt).
(c) Limit of Duties. Without limiting the generality of the foregoing,
the Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any Securities purchased by
any Portfolio, the legality of the purchase thereof, or the
propriety of the amount specified by the Company for payment
therefor;
2. The legality of the sale of any Securities by any Portfolio
or the propriety of the amount of consideration for which the
same are sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of any Portfolio;
6. The legality of any borrowing.
(d) The Custodian need not maintain any insurance for the exclusive
benefit of the Company, but hereby warrants that as of the date of this
Agreement it is maintaining a bankers Blanket Bond and hereby agrees to
notify the Company in the event that such bond is canceled or otherwise
lapses.
(e) Consistent with and without limiting the language contained in
Section 1 5(b), it is specifically acknowledged that the Custodian
shall have no duty or responsibility to:
1. Question Written Instructions or Oral Instructions or make
any suggestions to the Company or an Authorized Person
regarding such Instructions;
2. Supervise or make recommendations with respect to
investments or the retention of Securities:
3. Subject to Section 15(b)(3) hereof, evaluate or report to
the Company or an Authorized Person regarding the financial
condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this
Agreement: or
4. Review or reconcile trade confirmations received from
brokers.
(f) Amounts Due for Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any
amount due to any Portfolio from the Transfer Agent nor to take any
action to effect payment or distribution by the Transfer Agent of any
amount paid by the Custodian to the Transfer Agent in accordance with
this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Company and specifically allocated
to a Portfolio are such as may properly be held by the Company under
the provisions of the Articles of Incorporation and Certificate of
Designation and the Prospectus.
(h) Indemnification. The Company agrees to indemnify and hold the
Custodian harmless from all loss, cost, taxes, charges, assessments,
claims, and liabilities (including, without limitation, liabilities
arising under the Securities Act of 1933, the Securities Exchange Act
of 1934 and the 1940 Act and state or foreign securities laws) and
expenses (including reasonable attorneys fees and disbursements)
arising directly or indirectly from any action taken or omitted by the
Custodian (i) at the request or on the direction of or in reliance on
the advice of the Company or in reasonable reliance upon the Prospectus
or (ii) upon a Certificate or Oral or Written Instructions; provided,
that the aforegoing indemnity shall not apply to any loss, cost, tax,
charge, assessment, claim, liability or expense to the extent the same
is attributable to the Custodian's or any Sub-Custodian's (other than a
foreign securities depository or clearing agency) negligence, willful
misconduct, bad faith or reckless disregard of duties and obligations
under this Agreement or any other agreement relating to the custody of
Company property.
(i) The Company on behalf of the particular Portfolio involved agrees
to hold the Custodian harmless from any liability or loss resulting
from the imposition or assessment of any taxes or other governmental
charges on a Portfolio.
(j) Without limiting the foregoing, the Custodian shall not be liable
for any loss which results from:
1. the general risk of investing, or
2. subject to Section 15(b) hereof, investing or holding
property in a particular country including, but not limited
to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or
securities industry; currency restrictions, devaluations or
fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of
property held pursuant to this Agreement.
(k) No party shall be liable to the other for any loss due to forces
beyond their control including but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of
(1) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Company and by the appropriate
employees of the Securities and Exchange Commission.
(m) Accounting Control Reports. The Custodian shall provide the Company
with any report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System, each Depository, and each
Sub-Custodian and with an annual report on its own systems of internal
accounting control.
16. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter as
the parties may, mutually agree.
(b) Either of the parties hereto may terminate this Agreement with
respect to any Portfolio by giving to the other party a notice in
writing specifying the date of such termination, which, in case the
Company is the terminating party, shall be not less than 60 days after
the date of receipt of such notice or, in case the Custodian is the
terminating party, shall be not less than 90 days after the date of
receipt of such notice. In the event such notice is given by the
Company, it shall be accompanied by a certified vote of the Board of
Directors, electing to terminate this Agreement with respect to any
Portfolio and designating a successor custodian or custodians, which
shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Company shall,
on or before the termination date, deliver to the Custodian a certified
vote of the Board of Directors, designating a successor custodian or
custodians. In the absence of such designation by the Company, the
Custodian may designate a successor custodian, which shall be a person
qualified to so act under the 1940 Act. If the Company fails to
designate a successor custodian with respect to any Portfolio, the
Company shall upon the date specified in the notice of termination of
this Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System which cannot be
delivered to the Company) and monies then owned by such Portfolio, be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the Book-Entry
System which cannot be delivered to the Company.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 16, this Agreement shall terminate to the extent specified in
such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian and specifically allocated to the Portfolio or Portfolios
specified, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled with
respect to such Portfolio or Portfolios.
17. Limitation of Liability.
The Company and the Custodian agree that the obligations of the Company
under this Agreement shall not be binding upon any of the Directors,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company individually, but are binding only
upon the assets and property of the Company or of the appropriate
Portfolio(s) thereof. The execution and delivery of this Agreement have
been authorized by the Board of Directors of the Company, and signed by
an authorized officer of the Company, acting as such, and neither such
authorization by such the Board of Directors nor such execution and
delivery by such officer shall be deemed to have been made by any of
them or any shareholder of the Company individually or to impose any
liability on any of them or any shareholder of the Company personally,
but shall bind only the assets and property of the Company or of the
appropriate Portfolio(s) thereof.
18. Miscellaneous.
(a) Annexed hereto as Schedule A is a certification signed by two of
the present officers of the Company setting forth the names and the
signatures of the present Authorized Persons. The Company agrees to
furnish to the Custodian a new certification in similar form in the
event that any such present Authorized Person ceases to be such an
Authorized Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered
certification.
(b) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at
its offices at its address stated on the first page hereof or at such
other place as the Custodian may from time to time designate in
writing.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Company, shall be sufficiently
given if addressed to the Company and mailed or delivered to it at its
offices at its address shown on the first page hereof or at such other
place as the Company may from time to time designate in writing, with a
copy to:
(d) This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality
as this Agreement, (i) authorized and approved by a vote of the Board
of Directors, including a majority of the members of the Board of
Directors who are not "interested persons" of the Company (as defined
in the 1940 Act), or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Company
without the written consent of the Custodian, or by the Custodian
without the written consent of the Company authorized or approved by a
vote of the Board of Directors, and any attempted assignment without
such written consent shall be null and void.
(f) This Agreement shall be construed in accordance with the laws of
the State of Illinois.
(g) The captions of the 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 or effect.
(h) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives duly authorized as
of the day and year first above written.
SIT GROWTH FUND, INC.
By: /s/ Paul E. Rasmussen
Name: Paul E. Rasmussen
Title: V.P., Treasurer
THE NORTHERN TRUST COMPANY
By: /s/ Peggy O'Leary
Name: Peggy O'Leary
Title: Vice President
Schedule A
to
Custody Agreement
Between
SIT Growth Fund, Inc. and
The Northern Trust Company
Authorized Persons
Written Instructions Only
Erik S. Anderson Vice President - Investments
Ronald D. Sit Vice President - Investments
Debra A Sit Vice President - Investments,
Assistant Treasurer
Michael P. Eckert Vice President - Group Manager
Michael J. Radmer Secretary
Parnell M. Kingsley Assistant Secretary
Carla J. Rose Assistant Secretary
Written and Oral Instructions
Eugene C. Sit Chairman
Peter L. Mitchelson Vice President
Mary K. Stern President
Michael C. Brilley Senior Vice President
Paul E. Rasmussen Vice President & Treasurer
EXHIBIT 8.1
Custodian Agreement
SIT Growth & Income Fund, Inc.
(This is a Specimen Documents DO NOT DELETE OR MODIFY)
CUSTODY AGREEMENT
AGREEMENT dated as of April 1, 1996, between SIT Growth & Income Fund,
Inc., a corporation organized under the laws of the State of Minnesota, having
its principal office and place of business at 4600 Norwest Center, 90 South
Seven Street, Minneapolis, Minnesota 554022-4130 (the "Company"), and THE
NORTHERN TRUST COMPANY (the "Custodian"), an Illinois Company with its principal
place of business at 50 South LaSalle Street, Chicago, Illinois 60675.
WITNESSETH:
That for and in consideration of the mutual promises hereinafter set
forth, the Company and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings
(a) The "1940 Act" shall mean the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
(b) "Authorized Person" shall be deemed to include the Chairman of the
Board of Directors, the President, and any Vice President, the
Secretary, the Treasurer or any other person, whether or not any such
person is an officer or employee of the Company, duly authorized by the
Board of Directors to give Oral Instructions and Written Instructions
on behalf of the Company and listed in the certification annexed hereto
as Schedule A or such other certification as may be received by the
Custodian from time to time.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Book-Entry System" shall mean the Federal Reserve/ Treasury
book-entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(e) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Company by any two Authorized Persons or any
two officers thereof.
(f) "Articles of Incorporation and Certificate of Designation" shall
mean the Articles of Incorporation and Certificate of Designation of
the Company dated July 30, 1991, as amended.
(g) "Depository" shall mean The Depository Trust Company, a clearing
agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, as amended, its
successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make deposits. The term
"Depository" shall further mean and include any other person to be
named in a Certificate authorized to act as a depository under the 1940
Act, its successor or successors and its nominee or nominees.
(h) "Fund Accountant" shall mean the person appointed by the Company
who performs the daily calculations of the net asset values of the
Portfolios and determines the amount of cash available in each
Portfolio on a daily basis for investment. The Fund Accountant shall be
identified to the Custodian in writing.
(i) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations,
where the purchase or sale of such securities normally requires
settlement in federal funds on the same day as such purchase or sale,
and repurchase agreements with respect to any of the foregoing types of
securities.
(j) "Oral Instructions" shall mean an oral communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(k) "Portfolio" refers to the portfolios identified in the attached
Exhibit 1, or any such other separate and distinct investment portfolio
as may from time to time be created and designated by the Company in
accordance with the provisions of Articles of Incorporation and
certificate of designation and which the Company and Custodian shall
have agreed in writing shall be subject to this Agreement pursuant to
the provisions of section 5(b).
(l) "Prospectus" shall mean the Company's current prospectus and
statement of additional information relating to the registration of the
Portfolio's Shares under the Securities Act of 1933, as amended.
(m) "Shares" refers to the shares of the Portfolio.
(n) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodity interests and investments from time to time owned
by the Portfolio.
(o) "Sub-Custodian" shall mean and include (i) any branch of the
Custodian, (ii) any branch of a "qualified U.S. bank," as that term is
defined in Rule 17f-5 under the 1940 Act, (iii) any "eligible foreign
custodian," as that term is defined in Rule 17f-5 under the 1940 Act,
approved by the Board of Directors and having a contract with the
Custodian which contract has been approved by the Board of Directors,
and (iv) any securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States,
which operates the central system for handling of securities or
equivalent book-entries in that country or a transnational system for
the central handling of securities or equivalent book-entries, which
securities depository or clearing agency has been approved by the Board
of Directors; provided, that the Custodian or a SubCustodian has
entered into an agreement with such securities depository or clearing
agency.
(p) "Transfer Agent" shall mean the person which performs as the
transfer agent, dividend disbursing agent and shareholder servicing
agent for the Company.
(q) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system whereby the receiver
of such communication is able to verify through codes or otherwise with
a reasonable degree of certainty the authenticity of the sender of such
communication; however, "Written Instructions" from the Company to the
Custodian shall mean a facsimile or electronic communication
transmitted by the Company or the Fund Accountant (who has been
provided an access code by the Company) and actually received by the
Custodian. Except as otherwise provided in this Agreement, "Written
Instructions" may include instructions given on a standing basis.
2. Appointment of Custodian.
(a) The Company hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies owned by or in the
possession of the Portfolio during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
3. Appointment and Removal of Sub-Custodians.
(a) The Custodian may appoint one or more Sub-Custodians to act as
Depository or Depositories or as sub-custodian or sub-custodians of
Securities and moneys at any time owned by any Portfolio, upon terms
and conditions as are specified in this Agreement. The Custodian shall
oversee the maintenance of any Securities or moneys of any Portfolio by
any Sub-Custodian.
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors in connection with this Agreement, the Custodian wishes to
appoint other SubCustodians to hold property of the Portfolios, it will
so notify the Company and provide it with information reasonably
necessary to determine any such new SubCustodian's eligibility under
Rule 17f-5 under the 1940 Act, including a copy of the proposed
agreement with such Sub-Custodian. The Company shall at the meeting of
the Board of Directors next following receipt of such notice and
information give a written approval or disapproval of the proposed
action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) If the Custodian intends to remove any Sub-Custodian previously
approved by the Board of Directors, it shall so notify the Company and
move the property of the Portfolio(s) deposited with such Sub-Custodian
to another Sub-Custodian previously approved by the Board of Directors.
The Custodian shall promptly take such steps as may be required to
remove any Sub-Custodian that has ceased to meet the requirements of
Rule 17f-5 under the 1940 Act.
(e) The Custodian hereby warrants to the Company that in its opinion,
after due inquiry, the established procedures to be followed by each
Sub-Custodian (that is not being used as a foreign securities
depository or clearing agency) in connection with the safekeeping of
property of the Portfolio pursuant to this Agreement afford protection
for such property not materially different from that afforded by the
Custodian's established safekeeping procedures with respect to similar
property held by it (and its securities depositories) in Chicago,
Illinois.
4. Use of Sub-Custodians.
With respect to property of a Portfolio which is maintained by the
Custodian in the custody of a Sub-Custodian pursuant to Section 3:
(a) The Custodian will identify on its books as belonging to the
particular Portfolio any property held by such Sub-Custodian.
(b) In the event that a Sub-Custodian permits any of the Securities
placed in its care to be held in an eligible foreign securities
depository, such Sub-Custodian will be required by its agreement with
the Custodian to identify on its books such Securities as being held
for the account of the Custodian as a custodian for its customers.
(c) Any Securities held by a Sub-Custodian will be subject only to the
instructions of the Custodian or its agents; and any Securities held in
an eligible foreign securities depository for the account of a
Sub-Custodian will be subject only to the instructions of such
Sub-Custodian.
(d) The Custodian will only deposit property of a Portfolio in an
account with a Sub-Custodian which includes exclusively the assets held
by the Custodian for its customers, and will cause such account to be
designated by such Sub-Custodian as a special custody account for the
exclusive benefit of customers of the Custodian.
5. Compensation.
(a) The Custodian shall be entitled to compensation for its services
hereunder as set forth in a separate agreement between the Custodian
and the Fund Accountant. The Custodian will bill the Fund Accountant
directly for all such amounts.
6. Custody of Cash and Securities
(a) Receipt and Holding of Assets. The Company will deliver or cause to
be delivered to the Custodian and the Sub-Custodians all Securities and
monies owned by the Portfolio at any time during the period of this
Agreement and shall specify the Portfolio to which the Securities and
monies are to be specifically allocated. The Custodian will not be
responsible for such Securities and monies until actually received by
it or by a Sub-Custodian. The Company shall instruct the Custodian from
time to time in its sole discretion, by means of Written Instructions,
as to the manner in which and in what amounts Securities, and monies of
a Portfolio are to be deposited on behalf of such Portfolio in the
Book-Entry System or a Depository; provided, however, that prior to the
deposit of Securities of a Portfolio in the Book-Entry System or a
Depository, including a deposit in connection with the settlement of a
purchase or sale, the Custodian shall have received a Certificate
specifically approving such deposits by the Custodian or a
Sub-Custodian in the Book-Entry System or a Depository. Securities and
monies of a Portfolio deposited in the Book-Entry System or a
Depository will be deposited in accounts which include only assets held
by the Custodian for its customers.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for each Portfolio and shall credit to the
separate account all monies received by it or a Sub-Custodian for the
account of such Portfolio and shall disburse, or cause a Sub-Custodian
to disburse, the same only:
1. In payment for Securities purchased for the Portfolio, as
provided in Section 7 hereof;
2. In payment of dividends or distributions with respect to
the Shares of such Portfolio, as provided in Section 10
hereof;
3. In payment of original issue or other taxes with respect to
the Shares of such Portfolio, as provided in Section 11(c)
hereof;
4. In payment for Shares which have been redeemed by such
Portfolio, as provided in Section 11 hereof;
5. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Company, as
provided in Sections 5 and 15(h) hereof;
6. Pursuant to Written Instructions setting forth the name of
the Portfolio and the name and address of the person to whom
the payment is to be made, the amount to be paid and the
purpose for which payment is to be made.
(c) Fail Float. In the event that any payment made for a Portfolio
under this Section 6 exceeds the funds available in that Portfolio's
account, the Custodian or relevant Sub-Custodian, as the case may be,
may, in its discretion, advance the Company on behalf of that Portfolio
an amount equal to such excess and such advance shall be deemed an
overdraft from the Custodian or such Sub-Custodian to that Portfolio
payable on demand, bearing interest at the rate of interest customarily
charged by the Custodian or such Sub-Custodian on similar overdrafts.
(d) Confirmation and Statements. Promptly after the close of business
on each business day, the Custodian shall furnish the Company with
confirmations and a summary of all transfers to or from the account of
each Portfolio during said day. Such summary shall include without
limitation, as to property acquired for a Portfolio, the identity of
the entity having physical possession of such property. Where
securities purchased by a Portfolio are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of a Depository, the
Book-Entry System or a Sub-Custodian, the Custodian shall by book entry
or otherwise identify the quantity of those securities belonging to
such Portfolio. At least monthly, the Custodian shall furnish the
Company with a detailed statement of the Securities and monies held by
it and all Sub-Custodians for each Portfolio. In the absence of the
filing in writing with the Custodian by the Company of exceptions or
objections to any such statement within 60 days after the date that a
material defect is reasonably discoverable, the Company shall be deemed
to have approved such statement; and in such case or upon written
approval of the Company of any such statement the Custodian shall, to
the extent permitted by law and provided the Custodian has met the
standard of care in Section 14 hereof, be released, relieved and
discharged with respect to all matters and things set forth in such
statement as though such statement had been settled by the decree of a
court of competent jurisdiction in an action in which the Company and
all persons having any equity interest in the Company were parties.
(e) Registration of Securities and Physical Separation. All Securities
held for a Portfolio which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be
held by the Custodian or a SubCustodian in that form; all other
Securities held for a Portfolio may be registered in the name of that
Portfolio, in the name of any duly appointed registered nominee of the
Custodian or a Sub-Custodian as the Custodian or such Sub-Custodian may
from time to time determine, or in the name of the Book-Entry System or
a Depository or their successor or successors, or their nominee or
nominees. The Company reserves the right to instruct the Custodian as
to the method of registration and safekeeping of the Securities. The
Company agrees to furnish to the Custodian appropriate instruments to
enable the Custodian or any SubCustodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System or a Depository, any Securities
which the Custodian of a Sub-Custodian may hold for the account of a
Portfolio and which may from time to time be registered in the name of
a Portfolio. The Custodian shall hold all such Securities specifically
allocated to a Portfolio which are not held in the Book-Entry System or
a Depository in a separate account for such Portfolio in the name of
such Portfolio physically segregated at all times from those of any
other person or persons.
(f) Segregated Accounts. Upon receipt of a Written Instruction, the
Custodian will establish segregated accounts on behalf of a Portfolio
to hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such
Segregated Accounts only as it shall be directed by subsequent Written
Instruction.
(g) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian, by itself or through the use of the Book-Entry System or a
Depository with respect to Securities therein deposited, shall, or
shall instruct the relevant Sub-Custodian to:
1. Collect all income due or payable with respect to
Securities held for a Portfolio in accordance with this
Agreement;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired,
or otherwise become payable;
3. Surrender Securities in temporary form for derivative
Securities;
4. Execute any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or a
Depository with respect to Securities therein deposited, for
the account of each Portfolio all rights and similar
Securities issued with respect to any Securities held by the
Custodian or relevant Sub-Custodian for each Portfolio.
If the Custodian or any Sub-Custodian causes the
account of a Portfolio to be credited on the payable date for
interest, dividends or redemptions, the particular Portfolio
involved will promptly return to the Custodian any such amount
or property so credited upon oral or written notification that
neither the custodian nor the relevant Sub-Custodian can
collect such amount or property in the ordinary course of
business. The Custodian or such Sub-Custodian, as the case may
be, shall have no duty or obligation to institute legal
proceedings, file a claim or proof of claim in any insolvency
proceeding or take any other action with respect to the
collection of such amount or property beyond its ordinary
collection procedures unless it is specifically requested to
do so by the Company and indemnified to its satisfaction for
any liability, cost or expense arising therefrom.
(h) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written Instruction and not otherwise, except for subparagraphs 5, 6,
7, and 8 of this section 6(h) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the
Book-Entry System or a Depository, shall, or shall instruct the
relevant Sub-Custodian to:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written
Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Company as owner of
any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for a
Portfolio in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for a
Portfolio to any protective committee, reorganization
committee or other person in connection with the
reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement in the
separate account for each such Portfolio certificates of
deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of a
Portfolio and take such other steps as shall be stated in
Written Instructions to be for the purpose of effectuating any
duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Company;
5. Deliver Securities upon sale of such Securities for the
account of a Portfolio pursuant to Section 7;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such
Securities entered into by a Portfolio;
7. Deliver Securities owned by a Portfolio to the issuer
thereof or its agent when such Securities are called,
redeemed, retired or otherwise become payable; provided,
however, that in any such case the cash or other consideration
is to be delivered to the Custodian or Sub-Custodian, as the
case may be;
8. Deliver Securities for delivery in connection with any
loans of securities made by a Portfolio but only against
receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Company which may be in the form
of cash or obligations issued by the United States Government,
its agencies or instrumentalities;
9. Deliver Securities for delivery as security in connection
with any borrowings by a Portfolio requiring a pledge of
Portfolio assets, but only against receipt of the amounts
borrowed;
10. Deliver Securities to the Transfer Agent or to the holders
of Shares in connection with distributions in kind, as may be
described from time to in the Prospectus, in satisfaction of
requests by holders of Shares for repurchase or redemption;
11. Deliver Securities owned by any Portfolio for any purpose
expressly permitted by and in accordance with procedures
described in the Prospectus; and
12. Deliver Securities owned by any Portfolio for any other
proper business purpose, but only upon receipt of, in addition
to Written Instructions, a certified copy of a resolution of
the Board of Directors signed by an Authorized Person and
certified by the Secretary of the Company, specifying the
Securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper business purpose, and naming the person or persons
to whom delivery of such Securities shall be made.
(i) Endorsement and Collection of Checks. Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account of a
Portfolio.
7. Purchase and Sale of Investments of a Portfolio.
(a) Promptly after each purchase of Securities for a Portfolio, the
Company shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a Written
Instruction and (ii) with respect to each purchase of Money Market
Securities, either a Written Instruction or Oral Instruction, in either
case specifying with respect to each purchase: (1) the name of the
Portfolio to which such Securities are to be specifically allocated;
(2) the name of the issuer and the title of the Securities; (3) the
number of shares or the principal amount purchased and accrued
interest, if any; (4) the date of purchase and settlement; (5) the
purchase price per unit; (6) the total amount payable upon such
purchase; and 7) the name of the person from whom or the broker through
whom the purchase was made, if any. The Custodian or specified
Sub-Custodian shall receive the Securities purchased by or for a
Portfolio and upon receipt thereof shall pay to the broker or other
person designated by the Company out of the monies held for the account
of such Portfolio the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set forth in such
Written or Oral Instruction.
(b) Promptly after each sale of Securities of a Portfolio, the Company
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Written
Instruction, and (ii) with respect to each sale of Money Market
Securities, either Written Instructions or Oral Instructions, in either
case specifying with respect to such sale: (1) the name of the
Portfolio to which the Securities sold were specifically allocated; (2)
the name of the issuer and the title of the Securities; (3) the number
of shares or principal amount sold, and accrued interest, if any; (4)
the date of sale; (5) the sale price per unit; (6) the total amount
payable to the Portfolio upon such sale; and (7) the name of the broker
through whom or the person to whom the sale was made. The Custodian or
relevant Sub-Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the Company upon
receipt of the total amount payable to such Portfolio upon such sale,
provided that the same conforms to the total amount payable to such
Portfolio as set forth in such Written or Oral Instruction. Subject to
the foregoing, the Custodian or relevant Sub-Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
(c) Notwithstanding (a) and (b) above, cash in any of the Portfolios
may be invested by the Custodian for short term purposes pursuant to
standing Written Instructions from the Company.
8. Lending of Securities.
If any Portfolio is permitted by the terms of the Articles of
Incorporation and Certificate of Designation and the Prospectus to lend
Securities, then the Board of Directors may approve a separate written
agreement between the Company and the Custodian authorizing the
Custodian to lend such Securities. Such agreement may provide for the
payment of additional reasonable compensation to the Custodian.
9. Investment in Futures and Options
The Custodian shall pursuant to Written Instructions (which may be
standing instructions) from an Authorized Person (i) transfer initial
margin to a safekeeping bank or, with respect to options, broker, (ii)
pay or demand variation margin to or from a designated futures
commission merchant or other broker based on daily marking to market
calculations and in accordance with accepted industry practices, and
(iii) subject to the consent of the Custodian, enter into separate
procedural, safekeeping or other agreements with safekeeping banks,
futures commission merchants and other brokers pursuant to which such
banks and, in the case of options, brokers, will act as custodian for
initial margin deposits in transactions involving futures contracts and
options. The Custodian shall have no custodial or investment
responsibility for any assets transferred to a safekeeping bank,
futures commission merchant or broker pursuant to this paragraph.
10. Payment of Dividends or Distributions.
(a) The Company shall furnish to the Custodian the vote of the Board of
Directors or the Dividend Committee thereof, as the case may be,
certified by the Secretary of the Company (i) authorizing the
declaration of distributions with respect to a Portfolio on a specified
periodic basis and authorizing the Custodian to rely on Oral or Written
Instructions specifying the date of the declaration of such
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per Share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the payment date,
or (ii) setting forth the date of declaration of any distribution by a
Portfolio, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the Payment date.
(b) Upon the payment date specified in such vote, Oral Instructions, or
Written Instructions, as the case may be, the Custodian shall pay the
total amount payable to the Transfer Agent out of the monies
specifically allocated to and held for the account of the appropriate
Portfolio.
11. Sale and Redemption of Shares of the Company.
(a) Whenever the Company shall sell any Shares of a Portfolio, the
Company shall deliver or cause to be delivered to the Custodian a
Written Instruction duly specifying:
1. The name of the Portfolio whose Shares were sold;
2. The number of Shares sold, trade date, and price; and
3. The amount of money to be received by the Custodian for the
sale of such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares of a Portfolio and that
the information contained therein will be derived from the sales of
Shares as reported to the Company by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Portfolio
specified in (a)(1) above.
(c) Upon issuance of any Shares of a Portfolio in accordance with the
foregoing provisions of this Section 11, the Custodian shall pay all
original issue or other taxes required to be paid in connection with
such issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
(d) Except as provided hereafter, whenever any Shares of a Portfolio
are redeemed, the Company shall cause the Transfer Agent to promptly
furnish to the Custodian Written Instructions specifying:
1. The name of the Portfolio whose Shares were redeemed;
2. The number of Shares redeemed; and
3. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information
contained in such Written Instructions will be derived from the
redemption of Shares as reported to the Company by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares of a Portfolio being redeemed pursuant to valid
instructions as described in the Prospectus, the Custodian shall make
payment to the Transfer Agent out of the monies specifically allocated
to and held for the account of the Portfolio specified in (d)(l) above
of the total amount specified in a Written Instruction issued pursuant
to paragraph (d) of this Section 11.
12. Indebtedness.
(a) The Company will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Company borrows money, using
Securities as collateral, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such bank will
loan to the Company against delivery of a stated amount of collateral.
The Company shall promptly deliver to the Custodian Written
Instructions stating with respect to each such borrowing: (1) the name
of the Portfolio for which the borrowing is to be made; (2) the name of
the bank; (3) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note, duly
endorsed by the Company, or other loan agreement; (4) the time and
date, if known, on which the loan is to be entered into (the "borrowing
date"); (5) the date on which the loan becomes due and payable; (6) the
total amount payable to the Company for the separate account of the
Portfolio on the borrowing date; (7) the market value of Securities to
be delivered as collateral for such loan, including the name of the
issuer, the title and the number of shares or the principal amount of
any particular Securities; (8) whether the Custodian is to deliver such
collateral through the Book-Entry System or a Depository; and (9) a
statement that such loan is in conformance with the 1940 Act and the
Prospectus.
(b) Upon receipt of the Written Instruction referred to in paragraph
(a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set
forth in the Written Instruction. The Custodian may, at the option of
the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver as additional collateral in the manner directed by the
Company from time to time such Securities specifically allocated to
such Portfolio as may be specified in Written Instruction to
collateralize further any transaction described in this Section 12. The
Company shall cause all Securities released from collateral status to
be returned directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered to it.
In the event that the Company fails to specify in Written Instruction
all of the information required by this Section 12, the Custodian shall
not be under any obligation to deliver any Securities. Collateral
returned to the Custodian shall be held hereunder as it was prior to
being used as collateral.
13. Corporate Action
Whenever the Custodian or any Sub-Custodian (other than a foreign
securities depository or clearing agency) receives information
concerning Securities held for a Portfolio which requires discretionary
action by the beneficial owner of the Securities (other than a proxy),
such as subscription rights, bond issues, stock repurchase plans and
rights offerings, or legal notices or other material intended to be
transmitted to Securities holders ("Corporate Actions"), the Custodian
will give the Fund Accountant notice of such Corporate Actions to the
extent that the Custodian's central corporate actions department has
actual knowledge of a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action
is received which bears an expiration date, the Custodian will endeavor
to obtain Written or Oral Instructions from the Company or the Fund
Accountant, but if such Instructions are not received in time for the
Custodian to take timely action, or actual notice of such Corporate
Action was received too late to seek such Instructions, the Custodian
is authorized to sell, or cause a Sub-Custodian to sell, such rights
entitlement or fractional interest and to credit the applicable account
with the proceeds and to take any other action it deems, in good faith,
to be appropriate, in which case, provided it has met the standard of
care in Section 15 hereof, it shall be held harmless by the particular
Portfolio involved for any such action.
The Custodian will deliver proxies to the Company or its designated
agent pursuant to special arrangements which may have been agreed to in
writing between the parties hereto. Such proxies shall be executed in
the appropriate nominee name relating to Securities registered in the
name of such nominee but without indicating the manner in which such
proxies are to be voted; and where bearer Securities are involved,
proxies will be delivered in accordance with Written or Oral
Instructions from Authorized Persons.
14. Persons Having Access of the Portfolios.
(a) No Company or agent of the Company, and no officer, director,
employee or agent of the Company's investment adviser, of any
sub-investment adviser of the Company, shall have physical access to
the assets of any Portfolio held by the Custodian or any Sub-Custodian
or be authorized or permitted to withdraw any investments of a
Portfolio, nor shall the Custodian or any Sub-Custodian deliver any
assets of a Portfolio to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position with
the Company's investment adviser, with any sub-investment adviser of
the Company or with the Administrator shall have access to the assets
of any Portfolio.
(b) Nothing in this Section 14 shall prohibit any officer, employee or
agent of the Company, or any officer, director, employee or agent of
the investment adviser, of any sub investment adviser of the Company,
from giving Oral Instructions or Written Instructions to the Custodian
or executing a Certificate so long as it does not result in delivery of
or access to assets of a Portfolio prohibited by paragraph (a) of this
Section 14.
(c) The Custodian represents that it maintains a system that is
reasonably designed to prevent unauthorized persons from having access
to the assets that it holds (by any means) for its customers.
15. Concerning the Custodian.
(a) Scope of Services. The Custodian shall be obligated to perform only
such services as are set forth in this Agreement or expressly contained
in a Certificate, Written Instructions or Oral Instructions given to
the Custodian which are not contrary.
(b) Standard of Care.
1. The Custodian will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
property of the Portfolios. The Custodian shall be liable to,
and shall indemnify and hold harmless the Company from and
against any loss which shall occur as the result of the
failure of the Custodian or a Sub-Custodian (other than a
foreign securities depository or clearing agency) to exercise
reasonable care with respect to their respective obligations
under this Agreement and the safekeeping of such property. The
determination of whether the Custodian or Sub-Custodian has
exercised reasonable care in connection with the safekeeping
of Portfolio property shall be made in light of the standards
applicable to the Custodian with respect to similar property
held by it in Chicago, Illinois. The determination of whether
the Custodian or Sub-Custodian has exercised reasonable care
in connection with their other obligations under this
Agreement shall be made in light of prevailing standards
applicable to professional custodians in the jurisdiction in
which such custodial services are performed. In the event of
any loss to the Company by reason of the failure of the
Custodian or a Sub-Custodian (other than a foreign securities
depository or clearing agency) to exercise reasonable care,
the Custodian shall be liable to the Company only to the
extent of the Company's direct damages and expenses, which
damages, for purposes of property only, shall be determined
based on the market value of the property which is the subject
of the loss at the date of discovery of such loss and without
reference to any special condition or circumstances.
2. The Custodian will not be responsible for any act,
omission, default or for the solvency of any foreign
securities depository or clearing agency approved by the Board
of Directors pursuant to Section (l)(n) or Section 3 hereof.
3. The Custodian will not be responsible for any act,
omission, default or for the solvency of any broker or agent
(not referred to in paragraph (b)(2) above) which it or a
Sub-Custodian appoints and uses unless such appointment and
use is made or done negligently or in bad faith. In the event
such an appointment and use is made or done negligently or in
bad faith, the Custodian shall be liable to the Company only
for direct damages and expenses (determined in the manner
described in paragraph (b)(1) above) resulting from such
appointment and use and, in the case of any loss due to an
act, omission or default of such agent or broker, only to the
extent that such loss occurs as a result of the failure of the
agent or broker to exercise reasonable care ("reasonable care"
for this purpose to be determined in light of the prevailing
standards applicable to agents or brokers, as appropriate, in
the jurisdiction where services are performed).
4. The Custodian shall be entitled to rely, and may act upon
the advice of counsel (who may be counsel for the Company) on
all matters and shall be without liability for any action
reasonably taken or omitted in good faith and without
negligence pursuant to such advice.
5. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be
genuine and to be signed by two officers of the Company. The
Custodian shall be entitled to rely upon any Written
Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this
Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person. The Company
agrees to forward to the Custodian Written Instructions from
an Authorized Person confirming such Oral Instructions in such
manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by
the close of business on the same day that such Oral
Instructions are given to the Custodian. The Company agrees
that the fact that such confirming instructions are not
received by the Custodian shall in no way affect the validity
of the transactions or enforceability of the transactions
hereby authorized by the Company. The Company agrees that the
Custodian shall incur no liability to the Company in (i)
acting upon Oral Instructions given to the Custodian hereunder
concerning such transactions provided such instructions
reasonably appear to have been received from a duly Authorized
Person or (ii) deciding not to act solely upon Oral
Instructions, provided that the Custodian shall be required to
contact the giver of such Oral Instructions and request
written confirmation immediately following any such decision
not to act.
6. The Custodian shall supply the Fund Accountant with such
daily information regarding the cash and securities positions
and activity of each Portfolio as the Custodian and the Fund
Accountant shall from time to time agree. It is understood
that such information will not be audited by Custodian and
Custodian represents that such information will be the best
information then available to the Custodian. The Custodian
shall have no responsibility whatsoever for the pricing of
Portfolio Securities or for the failure of the Fund Accountant
to reconcile differences between the information supplied by
the Custodian and information obtained by the Fund Accountant
from other sources, including but not limited to pricing
vendors and the Company's investment adviser. Subject to the
foregoing, to the extent that any miscalculation by the Fund
Accountant of a Portfolio's net asset value is attributable to
the willful misfeasance, bad faith or negligence of the
Custodian (including any Sub-Custodian other than a foreign
securities depository or clearing agency) in supplying or
omitting to supply the Fund Accountant with information as
aforesaid, the Custodian shall be liable to the Company for
any resulting loss (subject to such de minims rule of change
in value as the Board of Directors may from time to time
adopt).
(c) Limit of Duties. Without limiting the generality of the
foregoing, the Custodian shall be under no duty or obligation to
inquire into, and shall not be liable for:
1. The validity of the issue of any Securities purchased by
any Portfolio, the legality of the purchase thereof, or the propriety
of the amount specified by the Company for payment therefor;
2. The legality of the sale of any Securities by any Portfolio
or the propriety of the amount of consideration for which the same are
sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of any Portfolio;
6. The legality of any borrowing.
(d) The Custodian need not maintain any insurance for the exclusive
benefit of the Company, but hereby warrants that as of the date of this
Agreement it is maintaining a bankers Blanket Bond and hereby agrees to
notify the Company in the event that such bond is canceled or otherwise
lapses.
(e) Consistent with and without limiting the language contained in
Section 1 5(b), it is specifically acknowledged that the Custodian
shall have no duty or responsibility to:
1. Question Written Instructions or Oral Instructions or make
any suggestions to the Company or an Authorized Person
regarding such Instructions;
2. Supervise or make recommendations with respect to
investments or the retention of Securities:
3. Subject to Section 15(b)(3) hereof, evaluate or report to
the Company or an Authorized Person regarding the financial
condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this
Agreement: or
4. Review or reconcile trade confirmations received from
brokers.
(f) Amounts Due for Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any
amount due to any Portfolio from the Transfer Agent nor to take any
action to effect payment or distribution by the Transfer Agent of any
amount paid by the Custodian to the Transfer Agent in accordance with
this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Company and specifically allocated
to a Portfolio are such as may properly be held by the Company under
the provisions of the Articles of Incorporation and Certificate of
Designation and the Prospectus.
(h) Indemnification. The Company agrees to indemnify and hold the
Custodian harmless from all loss, cost, taxes, charges, assessments,
claims, and liabilities (including, without limitation, liabilities
arising under the Securities Act of 1933, the Securities Exchange Act
of 1934 and the 1940 Act and state or foreign securities laws) and
expenses (including reasonable attorneys fees and disbursements)
arising directly or indirectly from any action taken or omitted by the
Custodian (i) at the request or on the direction of or in reliance on
the advice of the Company or in reasonable reliance upon the Prospectus
or (ii) upon a Certificate or Oral or Written Instructions; provided,
that the aforegoing indemnity shall not apply to any loss, cost, tax,
charge, assessment, claim, liability or expense to the extent the same
is attributable to the Custodian's or any Sub-Custodian's (other than a
foreign securities depository or clearing agency) negligence, willful
misconduct, bad faith or reckless disregard of duties and obligations
under this Agreement or any other agreement relating to the custody of
Company property.
(i) The Company on behalf of the particular Portfolio involved agrees
to hold the Custodian harmless from any liability or loss resulting
from the imposition or assessment of any taxes or other governmental
charges on a Portfolio.
(j) Without limiting the foregoing, the Custodian shall not be liable
for any loss which results from:
1. the general risk of investing, or
2. subject to Section 15(b) hereof, investing or holding
property in a particular country including, but not limited
to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or
securities industry; currency restrictions, devaluations or
fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of
property held pursuant to this Agreement.
(k) No party shall be liable to the other for any loss due to forces
beyond their control including but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of
(1) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Company and by the appropriate
employees of the Securities and Exchange Commission.
(m) Accounting Control Reports. The Custodian shall provide the Company
with any report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System, each Depository, and each
Sub-Custodian and with an annual report on its own systems of internal
accounting control.
16. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter as
the parties may, mutually agree.
(b) Either of the parties hereto may terminate this Agreement with
respect to any Portfolio by giving to the other party a notice in
writing specifying the date of such termination, which, in case the
Company is the terminating party, shall be not less than 60 days after
the date of receipt of such notice or, in case the Custodian is the
terminating party, shall be not less than 90 days after the date of
receipt of such notice. In the event such notice is given by the
Company, it shall be accompanied by a certified vote of the Board of
Directors, electing to terminate this Agreement with respect to any
Portfolio and designating a successor custodian or custodians, which
shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Company shall,
on or before the termination date, deliver to the Custodian a certified
vote of the Board of Directors, designating a successor custodian or
custodians. In the absence of such designation by the Company, the
Custodian may designate a successor custodian, which shall be a person
qualified to so act under the 1940 Act. If the Company fails to
designate a successor custodian with respect to any Portfolio, the
Company shall upon the date specified in the notice of termination of
this Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System which cannot be
delivered to the Company) and monies then owned by such Portfolio, be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the Book-Entry
System which cannot be delivered to the Company.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 16, this Agreement shall terminate to the extent specified in
such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian and specifically allocated to the Portfolio or Portfolios
specified, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled with
respect to such Portfolio or Portfolios.
17. Limitation of Liability.
The Company and the Custodian agree that the obligations of the Company
under this Agreement shall not be binding upon any of the Directors,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company individually, but are binding only
upon the assets and property of the Company or of the appropriate
Portfolio(s) thereof. The execution and delivery of this Agreement have
been authorized by the Board of Directors of the Company, and signed by
an authorized officer of the Company, acting as such, and neither such
authorization by such the Board of Directors nor such execution and
delivery by such officer shall be deemed to have been made by any of
them or any shareholder of the Company individually or to impose any
liability on any of them or any shareholder of the Company personally,
but shall bind only the assets and property of the Company or of the
appropriate Portfolio(s) thereof.
18. Miscellaneous.
(a) Annexed hereto as Schedule A is a certification signed by two of
the present officers of the Company setting forth the names and the
signatures of the present Authorized Persons. The Company agrees to
furnish to the Custodian a new certification in similar form in the
event that any such present Authorized Person ceases to be such an
Authorized Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered
certification.
(b) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at
its offices at its address stated on the first page hereof or at such
other place as the Custodian may from time to time designate in
writing.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Company, shall be sufficiently
given if addressed to the Company and mailed or delivered to it at its
offices at its address shown on the first page hereof or at such other
place as the Company may from time to time designate in writing, with a
copy to:
(d) This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality
as this Agreement, (i) authorized and approved by a vote of the Board
of Directors, including a majority of the members of the Board of
Directors who are not "interested persons" of the Company (as defined
in the 1940 Act), or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Company
without the written consent of the Custodian, or by the Custodian
without the written consent of the Company authorized or approved by a
vote of the Board of Directors, and any attempted assignment without
such written consent shall be null and void.
(f) This Agreement shall be construed in accordance with the laws of
the State of Illinois.
(g) The captions of the 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 or effect.
(h) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives duly authorized as
of the day and year first above written.
SIT GROWTH & INCOME FUND, INC.
By: /s/ Paul E. Rasmussen
Name: Paul E. Rasmussen
Title: V.P., Treasurer
THE NORTHERN TRUST COMPANY
By: /s/ Peggy O'Leary
Name: Peggy O'Leary
Title: Vice President
Schedule A
to
Custody Agreement
Between
SIT Growth & Income Fund, Inc. and
The Northern Trust Company
Authorized Persons
Written Instructions Only
Erik S. Anderson Vice President - Investments
Ronald D. Sit Vice President - Investments
Debra A Sit Vice President - Investments,
Assistant Treasurer
Michael P. Ecker Vice President - Group Manager
Michael J. Radmer Secretary
Parnell M. Kingsley Assistant Secretary
Carla J. Rose Assistant Secretary
Written and Oral Instructions
Eugene C. Sit Chairman
Peter L. Mitchelson Vice President
Mary K. Stern President
Michael C. Brilley Senior Vice President
Paul E. Rasmussen Vice President & Treasurer
EXHIBIT 8.1
Custodian Agreement
SIT Mutual Funds, Inc.
(This is a Specimen Documents DO NOT DELETE OR MODIFY)
CUSTODY AGREEMENT
AGREEMENT dated as of April 1, 1996, between SIT Mutual Funds, Inc., a
corporation organized under the laws of the State of Minnesota, having its
principal office and place of business at 4600 Norwest Center, 90 South Seven
Street, Minneapolis, Minnesota 554022-4130 (the "Company"), and THE NORTHERN
TRUST COMPANY (the "Custodian"), an Illinois Company with its principal place of
business at 50 South LaSalle Street, Chicago, Illinois 60675.
WITNESSETH:
That for and in consideration of the mutual promises hereinafter set
forth, the Company and the Custodian agree as follows:
1. Definitions.
Whenever used in this Agreement or in any Schedules to this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings
(a) The "1940 Act" shall mean the Investment Company Act of 1940, and
the Rules and Regulations thereunder, all as amended from time to time.
(b) "Authorized Person" shall be deemed to include the Chairman of the
Board of Directors, the President, and any Vice President, the
Secretary, the Treasurer or any other person, whether or not any such
person is an officer or employee of the Company, duly authorized by the
Board of Directors to give Oral Instructions and Written Instructions
on behalf of the Company and listed in the certification annexed hereto
as Schedule A or such other certification as may be received by the
Custodian from time to time.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Book-Entry System" shall mean the Federal Reserve/ Treasury
book-entry system for United States and federal agency Securities, its
successor or successors and its nominee or nominees.
(e) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this Agreement to be
given to the Custodian, which is actually received by the Custodian and
signed on behalf of the Company by any two Authorized Persons or any
two officers thereof.
(f) "Articles of Incorporation and Certificate of Designation" shall
mean the Articles of Incorporation and Certificate of Designation of
the Company dated July 30, 1991, as amended.
(g) "Depository" shall mean The Depository Trust Company, a clearing
agency registered with the Securities and Exchange Commission under
Section 17(a) of the Securities Exchange Act of 1934, as amended, its
successor or successors and its nominee or nominees, in which the
Custodian is hereby specifically authorized to make deposits. The term
"Depository" shall further mean and include any other person to be
named in a Certificate authorized to act as a depository under the 1940
Act, its successor or successors and its nominee or nominees.
(h) "Fund Accountant" shall mean the person appointed by the Company
who performs the daily calculations of the net asset values of the
Portfolios and determines the amount of cash available in each
Portfolio on a daily basis for investment. The Fund Accountant shall be
identified to the Custodian in writing.
(i) "Money Market Security" shall be deemed to include, without
limitation, debt obligations issued or guaranteed as to interest and
principal by the Government of the United States or agencies or
instrumentalities thereof, commercial paper, bank certificates of
deposit, bankers' acceptances and short-term corporate obligations,
where the purchase or sale of such securities normally requires
settlement in federal funds on the same day as such purchase or sale,
and repurchase agreements with respect to any of the foregoing types of
securities.
(j) "Oral Instructions" shall mean an oral communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person.
(k) "Portfolio" refers to the portfolios identified in the attached
Exhibit 1, or any such other separate and distinct investment portfolio
as may from time to time be created and designated by the Company in
accordance with the provisions of Articles of Incorporation and
certificate of designation and which the Company and Custodian shall
have agreed in writing shall be subject to this Agreement pursuant to
the provisions of section 5(b).
(l) "Prospectus" shall mean the Company's current prospectus and
statement of additional information relating to the registration of the
Portfolio's Shares under the Securities Act of 1933, as amended.
(m) "Shares" refers to the shares of the Portfolio.
(n) "Security" or "Securities" shall be deemed to include bonds,
debentures, notes, stocks, shares, evidences of indebtedness, and other
securities, commodity interests and investments from time to time owned
by the Portfolio.
(o) "Sub-Custodian" shall mean and include (i) any branch of the
Custodian, (ii) any branch of a "qualified U.S. bank," as that term is
defined in Rule 17f-5 under the 1940 Act, (iii) any "eligible foreign
custodian," as that term is defined in Rule 17f-5 under the 1940 Act,
approved by the Board of Directors and having a contract with the
Custodian which contract has been approved by the Board of Directors,
and (iv) any securities depository or clearing agency, incorporated or
organized under the laws of a country other than the United States,
which operates the central system for handling of securities or
equivalent book-entries in that country or a transnational system for
the central handling of securities or equivalent book-entries, which
securities depository or clearing agency has been approved by the Board
of Directors; provided, that the Custodian or a SubCustodian has
entered into an agreement with such securities depository or clearing
agency.
(p) "Transfer Agent" shall mean the person which performs as the
transfer agent, dividend disbursing agent and shareholder servicing
agent for the Company.
(q) "Written Instructions" shall mean a written communication actually
received by the Custodian from a person reasonably believed by the
Custodian to be an Authorized Person by any system whereby the receiver
of such communication is able to verify through codes or otherwise with
a reasonable degree of certainty the authenticity of the sender of such
communication; however, "Written Instructions" from the Company to the
Custodian shall mean a facsimile or electronic communication
transmitted by the Company or the Fund Accountant (who has been
provided an access code by the Company) and actually received by the
Custodian. Except as otherwise provided in this Agreement, "Written
Instructions" may include instructions given on a standing basis.
2. Appointment of Custodian.
(a) The Company hereby constitutes and appoints the Custodian as
custodian of all the Securities and monies owned by or in the
possession of the Portfolio during the period of this Agreement.
(b) The Custodian hereby accepts appointment as such custodian and
agrees to perform the duties thereof as hereinafter set forth.
3. Appointment and Removal of Sub-Custodians.
(a) The Custodian may appoint one or more Sub-Custodians to act as
Depository or Depositories or as sub-custodian or sub-custodians of
Securities and moneys at any time owned by any Portfolio, upon terms
and conditions as are specified in this Agreement. The Custodian shall
oversee the maintenance of any Securities or moneys of any Portfolio by
any Sub-Custodian.
(b) If, after the initial approval of Sub-Custodians by the Board of
Directors in connection with this Agreement, the Custodian wishes to
appoint other SubCustodians to hold property of the Portfolios, it will
so notify the Company and provide it with information reasonably
necessary to determine any such new SubCustodian's eligibility under
Rule 17f-5 under the 1940 Act, including a copy of the proposed
agreement with such Sub-Custodian. The Company shall at the meeting of
the Board of Directors next following receipt of such notice and
information give a written approval or disapproval of the proposed
action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) If the Custodian intends to remove any Sub-Custodian previously
approved by the Board of Directors, it shall so notify the Company and
move the property of the Portfolio(s) deposited with such Sub-Custodian
to another Sub-Custodian previously approved by the Board of Directors.
The Custodian shall promptly take such steps as may be required to
remove any Sub-Custodian that has ceased to meet the requirements of
Rule 17f-5 under the 1940 Act.
(e) The Custodian hereby warrants to the Company that in its opinion,
after due inquiry, the established procedures to be followed by each
Sub-Custodian (that is not being used as a foreign securities
depository or clearing agency) in connection with the safekeeping of
property of the Portfolio pursuant to this Agreement afford protection
for such property not materially different from that afforded by the
Custodian's established safekeeping procedures with respect to similar
property held by it (and its securities depositories) in Chicago,
Illinois.
4. Use of Sub-Custodians.
With respect to property of a Portfolio which is maintained by the
Custodian in the custody of a Sub-Custodian pursuant to Section 3:
(a) The Custodian will identify on its books as belonging to the
particular Portfolio any property held by such Sub-Custodian.
(b) In the event that a Sub-Custodian permits any of the Securities
placed in its care to be held in an eligible foreign securities
depository, such Sub-Custodian will be required by its agreement with
the Custodian to identify on its books such Securities as being held
for the account of the Custodian as a custodian for its customers.
(c) Any Securities held by a Sub-Custodian will be subject only to the
instructions of the Custodian or its agents; and any Securities held in
an eligible foreign securities depository for the account of a
Sub-Custodian will be subject only to the instructions of such
Sub-Custodian.
(d) The Custodian will only deposit property of a Portfolio in an
account with a Sub-Custodian which includes exclusively the assets held
by the Custodian for its customers, and will cause such account to be
designated by such Sub-Custodian as a special custody account for the
exclusive benefit of customers of the Custodian.
5. Compensation.
(a) The Custodian shall be entitled to compensation for its services
hereunder as set forth in a separate agreement between the Custodian
and the Fund Accountant. The Custodian will bill the Fund Accountant
directly for all such amounts.
6. Custody of Cash and Securities
(a) Receipt and Holding of Assets. The Company will deliver or cause to
be delivered to the Custodian and the Sub-Custodians all Securities and
monies owned by the Portfolio at any time during the period of this
Agreement and shall specify the Portfolio to which the Securities and
monies are to be specifically allocated. The Custodian will not be
responsible for such Securities and monies until actually received by
it or by a Sub-Custodian. The Company shall instruct the Custodian from
time to time in its sole discretion, by means of Written Instructions,
as to the manner in which and in what amounts Securities, and monies of
a Portfolio are to be deposited on behalf of such Portfolio in the
Book-Entry System or a Depository; provided, however, that prior to the
deposit of Securities of a Portfolio in the Book-Entry System or a
Depository, including a deposit in connection with the settlement of a
purchase or sale, the Custodian shall have received a Certificate
specifically approving such deposits by the Custodian or a
Sub-Custodian in the Book-Entry System or a Depository. Securities and
monies of a Portfolio deposited in the Book-Entry System or a
Depository will be deposited in accounts which include only assets held
by the Custodian for its customers.
(b) Accounts and Disbursements. The Custodian shall establish and
maintain a separate account for each Portfolio and shall credit to the
separate account all monies received by it or a Sub-Custodian for the
account of such Portfolio and shall disburse, or cause a Sub-Custodian
to disburse, the same only:
1. In payment for Securities purchased for the Portfolio, as
provided in Section 7 hereof;
2. In payment of dividends or distributions with respect to
the Shares of such Portfolio, as provided in Section 10
hereof;
3. In payment of original issue or other taxes with respect to
the Shares of such Portfolio, as provided in Section 11(c)
hereof;
4. In payment for Shares which have been redeemed by such
Portfolio, as provided in Section 11 hereof;
5. In payment of fees and in reimbursement of the expenses and
liabilities of the Custodian attributable to the Company, as
provided in Sections 5 and 15(h) hereof;
6. Pursuant to Written Instructions setting forth the name of
the Portfolio and the name and address of the person to whom
the payment is to be made, the amount to be paid and the
purpose for which payment is to be made.
(c) Fail Float. In the event that any payment made for a Portfolio
under this Section 6 exceeds the funds available in that Portfolio's
account, the Custodian or relevant Sub-Custodian, as the case may be,
may, in its discretion, advance the Company on behalf of that Portfolio
an amount equal to such excess and such advance shall be deemed an
overdraft from the Custodian or such Sub-Custodian to that Portfolio
payable on demand, bearing interest at the rate of interest customarily
charged by the Custodian or such Sub-Custodian on similar overdrafts.
(d) Confirmation and Statements. Promptly after the close of business
on each business day, the Custodian shall furnish the Company with
confirmations and a summary of all transfers to or from the account of
each Portfolio during said day. Such summary shall include without
limitation, as to property acquired for a Portfolio, the identity of
the entity having physical possession of such property. Where
securities purchased by a Portfolio are in a fungible bulk of
securities registered in the name of the Custodian (or its nominee) or
shown on the Custodian's account on the books of a Depository, the
Book-Entry System or a Sub-Custodian, the Custodian shall by book entry
or otherwise identify the quantity of those securities belonging to
such Portfolio. At least monthly, the Custodian shall furnish the
Company with a detailed statement of the Securities and monies held by
it and all Sub-Custodians for each Portfolio. In the absence of the
filing in writing with the Custodian by the Company of exceptions or
objections to any such statement within 60 days after the date that a
material defect is reasonably discoverable, the Company shall be deemed
to have approved such statement; and in such case or upon written
approval of the Company of any such statement the Custodian shall, to
the extent permitted by law and provided the Custodian has met the
standard of care in Section 14 hereof, be released, relieved and
discharged with respect to all matters and things set forth in such
statement as though such statement had been settled by the decree of a
court of competent jurisdiction in an action in which the Company and
all persons having any equity interest in the Company were parties.
(e) Registration of Securities and Physical Separation. All Securities
held for a Portfolio which are issued or issuable only in bearer form,
except such Securities as are held in the Book-Entry System, shall be
held by the Custodian or a SubCustodian in that form; all other
Securities held for a Portfolio may be registered in the name of that
Portfolio, in the name of any duly appointed registered nominee of the
Custodian or a Sub-Custodian as the Custodian or such Sub-Custodian may
from time to time determine, or in the name of the Book-Entry System or
a Depository or their successor or successors, or their nominee or
nominees. The Company reserves the right to instruct the Custodian as
to the method of registration and safekeeping of the Securities. The
Company agrees to furnish to the Custodian appropriate instruments to
enable the Custodian or any SubCustodian to hold or deliver in proper
form for transfer, or to register in the name of its registered nominee
or in the name of the Book-Entry System or a Depository, any Securities
which the Custodian of a Sub-Custodian may hold for the account of a
Portfolio and which may from time to time be registered in the name of
a Portfolio. The Custodian shall hold all such Securities specifically
allocated to a Portfolio which are not held in the Book-Entry System or
a Depository in a separate account for such Portfolio in the name of
such Portfolio physically segregated at all times from those of any
other person or persons.
(f) Segregated Accounts. Upon receipt of a Written Instruction, the
Custodian will establish segregated accounts on behalf of a Portfolio
to hold liquid or other assets as it shall be directed by a Written
Instruction and shall increase or decrease the assets in such
Segregated Accounts only as it shall be directed by subsequent Written
Instruction.
(g) Collection of Income and Other Matters Affecting Securities. Unless
otherwise instructed to the contrary by a Written Instruction, the
Custodian, by itself or through the use of the Book-Entry System or a
Depository with respect to Securities therein deposited, shall, or
shall instruct the relevant Sub-Custodian to:
1. Collect all income due or payable with respect to
Securities held for a Portfolio in accordance with this
Agreement;
2. Present for payment and collect the amount payable upon all
Securities which may mature or be called, redeemed or retired,
or otherwise become payable;
3. Surrender Securities in temporary form for derivative
Securities;
4. Execute any necessary declarations or certificates of
ownership under the federal income tax laws or the laws or
regulations of any other taxing authority now or hereafter in
effect; and
5. Hold directly, or through the Book-Entry System or a
Depository with respect to Securities therein deposited, for
the account of each Portfolio all rights and similar
Securities issued with respect to any Securities held by the
Custodian or relevant Sub-Custodian for each Portfolio.
If the Custodian or any Sub-Custodian causes the
account of a Portfolio to be credited on the payable date for
interest, dividends or redemptions, the particular Portfolio
involved will promptly return to the Custodian any such amount
or property so credited upon oral or written notification that
neither the custodian nor the relevant Sub-Custodian can
collect such amount or property in the ordinary course of
business. The Custodian or such Sub-Custodian, as the case may
be, shall have no duty or obligation to institute legal
proceedings, file a claim or proof of claim in any insolvency
proceeding or take any other action with respect to the
collection of such amount or property beyond its ordinary
collection procedures unless it is specifically requested to
do so by the Company and indemnified to its satisfaction for
any liability, cost or expense arising therefrom.
(h) Delivery of Securities and Evidence of Authority. Upon receipt of a
Written Instruction and not otherwise, except for subparagraphs 5, 6,
7, and 8 of this section 6(h) which may be effected by Oral or Written
Instructions, the Custodian, directly or through the use of the
Book-Entry System or a Depository, shall, or shall instruct the
relevant Sub-Custodian to:
1. Execute and deliver or cause to be executed and delivered
to such persons as may be designated in such Written
Instructions, proxies, consents, authorizations, and any other
instruments whereby the authority of the Company as owner of
any Securities may be exercised;
2. Deliver or cause to be delivered any Securities held for a
Portfolio in exchange for other Securities or cash issued or
paid in connection with the liquidation, reorganization,
refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
3. Deliver or cause to be delivered any Securities held for a
Portfolio to any protective committee, reorganization
committee or other person in connection with the
reorganization, refinancing, merger, consolidation or
recapitalization or sale of assets of any corporation, and
receive and hold under the terms of this Agreement in the
separate account for each such Portfolio certificates of
deposit, interim receipts or other instruments or documents as
may be issued to it to evidence such delivery;
4. Make or cause to be made such transfers or exchanges of the
assets specifically allocated to the separate account of a
Portfolio and take such other steps as shall be stated in
Written Instructions to be for the purpose of effectuating any
duly authorized plan of liquidation, reorganization, merger,
consolidation or recapitalization of the Company;
5. Deliver Securities upon sale of such Securities for the
account of a Portfolio pursuant to Section 7;
6. Deliver Securities upon the receipt of payment in
connection with any repurchase agreement related to such
Securities entered into by a Portfolio;
7. Deliver Securities owned by a Portfolio to the issuer
thereof or its agent when such Securities are called,
redeemed, retired or otherwise become payable; provided,
however, that in any such case the cash or other consideration
is to be delivered to the Custodian or Sub-Custodian, as the
case may be;
8. Deliver Securities for delivery in connection with any
loans of securities made by a Portfolio but only against
receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Company which may be in the form
of cash or obligations issued by the United States Government,
its agencies or instrumentalities;
9. Deliver Securities for delivery as security in connection
with any borrowings by a Portfolio requiring a pledge of
Portfolio assets, but only against receipt of the amounts
borrowed;
10. Deliver Securities to the Transfer Agent or to the holders
of Shares in connection with distributions in kind, as may be
described from time to in the Prospectus, in satisfaction of
requests by holders of Shares for repurchase or redemption;
11. Deliver Securities owned by any Portfolio for any purpose
expressly permitted by and in accordance with procedures
described in the Prospectus; and
12. Deliver Securities owned by any Portfolio for any other
proper business purpose, but only upon receipt of, in addition
to Written Instructions, a certified copy of a resolution of
the Board of Directors signed by an Authorized Person and
certified by the Secretary of the Company, specifying the
Securities to be delivered, setting forth the purpose for
which such delivery is to be made, declaring such purpose to
be a proper business purpose, and naming the person or persons
to whom delivery of such Securities shall be made.
(i) Endorsement and Collection of Checks. Etc. The Custodian is hereby
authorized to endorse and collect all checks, drafts or other orders
for the payment of money received by the Custodian for the account of a
Portfolio.
7. Purchase and Sale of Investments of a Portfolio.
(a) Promptly after each purchase of Securities for a Portfolio, the
Company shall deliver to the Custodian (i) with respect to each
purchase of Securities which are not Money Market Securities, a Written
Instruction and (ii) with respect to each purchase of Money Market
Securities, either a Written Instruction or Oral Instruction, in either
case specifying with respect to each purchase: (1) the name of the
Portfolio to which such Securities are to be specifically allocated;
(2) the name of the issuer and the title of the Securities; (3) the
number of shares or the principal amount purchased and accrued
interest, if any; (4) the date of purchase and settlement; (5) the
purchase price per unit; (6) the total amount payable upon such
purchase; and 7) the name of the person from whom or the broker through
whom the purchase was made, if any. The Custodian or specified
Sub-Custodian shall receive the Securities purchased by or for a
Portfolio and upon receipt thereof shall pay to the broker or other
person designated by the Company out of the monies held for the account
of such Portfolio the total amount payable upon such purchase, provided
that the same conforms to the total amount payable as set forth in such
Written or Oral Instruction.
(b) Promptly after each sale of Securities of a Portfolio, the Company
shall deliver to the Custodian (i) with respect to each sale of
Securities which are not Money Market Securities, a Written
Instruction, and (ii) with respect to each sale of Money Market
Securities, either Written Instructions or Oral Instructions, in either
case specifying with respect to such sale: (1) the name of the
Portfolio to which the Securities sold were specifically allocated; (2)
the name of the issuer and the title of the Securities; (3) the number
of shares or principal amount sold, and accrued interest, if any; (4)
the date of sale; (5) the sale price per unit; (6) the total amount
payable to the Portfolio upon such sale; and (7) the name of the broker
through whom or the person to whom the sale was made. The Custodian or
relevant Sub-Custodian shall deliver or cause to be delivered the
Securities to the broker or other person designated by the Company upon
receipt of the total amount payable to such Portfolio upon such sale,
provided that the same conforms to the total amount payable to such
Portfolio as set forth in such Written or Oral Instruction. Subject to
the foregoing, the Custodian or relevant Sub-Custodian may accept
payment in such form as shall be satisfactory to it, and may deliver
Securities and arrange for payment in accordance with the customs
prevailing among dealers in Securities.
(c) Notwithstanding (a) and (b) above, cash in any of the Portfolios
may be invested by the Custodian for short term purposes pursuant to
standing Written Instructions from the Company.
8. Lending of Securities.
If any Portfolio is permitted by the terms of the Articles of
Incorporation and Certificate of Designation and the Prospectus to lend
Securities, then the Board of Directors may approve a separate written
agreement between the Company and the Custodian authorizing the
Custodian to lend such Securities. Such agreement may provide for the
payment of additional reasonable compensation to the Custodian.
9. Investment in Futures and Options
The Custodian shall pursuant to Written Instructions (which may be
standing instructions) from an Authorized Person (i) transfer initial
margin to a safekeeping bank or, with respect to options, broker, (ii)
pay or demand variation margin to or from a designated futures
commission merchant or other broker based on daily marking to market
calculations and in accordance with accepted industry practices, and
(iii) subject to the consent of the Custodian, enter into separate
procedural, safekeeping or other agreements with safekeeping banks,
futures commission merchants and other brokers pursuant to which such
banks and, in the case of options, brokers, will act as custodian for
initial margin deposits in transactions involving futures contracts and
options. The Custodian shall have no custodial or investment
responsibility for any assets transferred to a safekeeping bank,
futures commission merchant or broker pursuant to this paragraph.
10. Payment of Dividends or Distributions.
(a) The Company shall furnish to the Custodian the vote of the Board of
Directors or the Dividend Committee thereof, as the case may be,
certified by the Secretary of the Company (i) authorizing the
declaration of distributions with respect to a Portfolio on a specified
periodic basis and authorizing the Custodian to rely on Oral or Written
Instructions specifying the date of the declaration of such
distribution, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per Share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the payment date,
or (ii) setting forth the date of declaration of any distribution by a
Portfolio, the date of payment thereof, the record date as of which
shareholders entitled to payment shall be determined, the amount
payable per share to the shareholders of record as of the record date
and the total amount payable to the Transfer Agent on the Payment date.
(b) Upon the payment date specified in such vote, Oral Instructions, or
Written Instructions, as the case may be, the Custodian shall pay the
total amount payable to the Transfer Agent out of the monies
specifically allocated to and held for the account of the appropriate
Portfolio.
11. Sale and Redemption of Shares of the Company.
(a) Whenever the Company shall sell any Shares of a Portfolio, the
Company shall deliver or cause to be delivered to the Custodian a
Written Instruction duly specifying:
1. The name of the Portfolio whose Shares were sold;
2. The number of Shares sold, trade date, and price; and
3. The amount of money to be received by the Custodian for the
sale of such Shares.
The Custodian understands and agrees that Written Instructions may be
furnished subsequent to the purchase of Shares of a Portfolio and that
the information contained therein will be derived from the sales of
Shares as reported to the Company by the Transfer Agent.
(b) Upon receipt of such money from the Transfer Agent, the Custodian
shall credit such money to the separate account of the Portfolio
specified in (a)(1) above.
(c) Upon issuance of any Shares of a Portfolio in accordance with the
foregoing provisions of this Section 11, the Custodian shall pay all
original issue or other taxes required to be paid in connection with
such issuance upon the receipt of a Written Instruction specifying the
amount to be paid.
(d) Except as provided hereafter, whenever any Shares of a Portfolio
are redeemed, the Company shall cause the Transfer Agent to promptly
furnish to the Custodian Written Instructions specifying:
1. The name of the Portfolio whose Shares were redeemed;
2. The number of Shares redeemed; and
3. The amount to be paid for the Shares redeemed.
The Custodian further understands that the information
contained in such Written Instructions will be derived from the
redemption of Shares as reported to the Company by the Transfer Agent.
(e) Upon receipt from the Transfer Agent of advice setting forth the
number of Shares of a Portfolio being redeemed pursuant to valid
instructions as described in the Prospectus, the Custodian shall make
payment to the Transfer Agent out of the monies specifically allocated
to and held for the account of the Portfolio specified in (d)(l) above
of the total amount specified in a Written Instruction issued pursuant
to paragraph (d) of this Section 11.
12. Indebtedness.
(a) The Company will cause to be delivered to the Custodian by any bank
(excluding the Custodian) from which the Company borrows money, using
Securities as collateral, a notice or undertaking in the form currently
employed by any such bank setting forth the amount which such bank will
loan to the Company against delivery of a stated amount of collateral.
The Company shall promptly deliver to the Custodian Written
Instructions stating with respect to each such borrowing: (1) the name
of the Portfolio for which the borrowing is to be made; (2) the name of
the bank; (3) the amount and terms of the borrowing, which may be set
forth by incorporating by reference an attached promissory note, duly
endorsed by the Company, or other loan agreement; (4) the time and
date, if known, on which the loan is to be entered into (the "borrowing
date"); (5) the date on which the loan becomes due and payable; (6) the
total amount payable to the Company for the separate account of the
Portfolio on the borrowing date; (7) the market value of Securities to
be delivered as collateral for such loan, including the name of the
issuer, the title and the number of shares or the principal amount of
any particular Securities; (8) whether the Custodian is to deliver such
collateral through the Book-Entry System or a Depository; and (9) a
statement that such loan is in conformance with the 1940 Act and the
Prospectus.
(b) Upon receipt of the Written Instruction referred to in paragraph
(a) above, the Custodian shall deliver on the borrowing date the
specified collateral and the executed promissory note, if any, against
delivery by the lending bank of the total amount of the loan payable,
provided that the same conforms to the total amount payable as set
forth in the Written Instruction. The Custodian may, at the option of
the lending bank, keep such collateral in its possession, but such
collateral shall be subject to all rights therein given the lending
bank by virtue of any promissory note or loan agreement. The Custodian
shall deliver as additional collateral in the manner directed by the
Company from time to time such Securities specifically allocated to
such Portfolio as may be specified in Written Instruction to
collateralize further any transaction described in this Section 12. The
Company shall cause all Securities released from collateral status to
be returned directly to the Custodian, and the Custodian shall receive
from time to time such return of collateral as may be tendered to it.
In the event that the Company fails to specify in Written Instruction
all of the information required by this Section 12, the Custodian shall
not be under any obligation to deliver any Securities. Collateral
returned to the Custodian shall be held hereunder as it was prior to
being used as collateral.
13. Corporate Action
Whenever the Custodian or any Sub-Custodian (other than a foreign
securities depository or clearing agency) receives information
concerning Securities held for a Portfolio which requires discretionary
action by the beneficial owner of the Securities (other than a proxy),
such as subscription rights, bond issues, stock repurchase plans and
rights offerings, or legal notices or other material intended to be
transmitted to Securities holders ("Corporate Actions"), the Custodian
will give the Fund Accountant notice of such Corporate Actions to the
extent that the Custodian's central corporate actions department has
actual knowledge of a Corporate Action in time to notify its customers.
When a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend, stock split or similar Corporate Action
is received which bears an expiration date, the Custodian will endeavor
to obtain Written or Oral Instructions from the Company or the Fund
Accountant, but if such Instructions are not received in time for the
Custodian to take timely action, or actual notice of such Corporate
Action was received too late to seek such Instructions, the Custodian
is authorized to sell, or cause a Sub-Custodian to sell, such rights
entitlement or fractional interest and to credit the applicable account
with the proceeds and to take any other action it deems, in good faith,
to be appropriate, in which case, provided it has met the standard of
care in Section 15 hereof, it shall be held harmless by the particular
Portfolio involved for any such action.
The Custodian will deliver proxies to the Company or its designated
agent pursuant to special arrangements which may have been agreed to in
writing between the parties hereto. Such proxies shall be executed in
the appropriate nominee name relating to Securities registered in the
name of such nominee but without indicating the manner in which such
proxies are to be voted; and where bearer Securities are involved,
proxies will be delivered in accordance with Written or Oral
Instructions from Authorized Persons.
14. Persons Having Access of the Portfolios.
(a) No Company or agent of the Company, and no officer, director,
employee or agent of the Company's investment adviser, of any
sub-investment adviser of the Company, shall have physical access to
the assets of any Portfolio held by the Custodian or any Sub-Custodian
or be authorized or permitted to withdraw any investments of a
Portfolio, nor shall the Custodian or any Sub-Custodian deliver any
assets of a Portfolio to any such person. No officer, director,
employee or agent of the Custodian who holds any similar position with
the Company's investment adviser, with any sub-investment adviser of
the Company or with the Administrator shall have access to the assets
of any Portfolio.
(b) Nothing in this Section 14 shall prohibit any officer, employee or
agent of the Company, or any officer, director, employee or agent of
the investment adviser, of any sub investment adviser of the Company,
from giving Oral Instructions or Written Instructions to the Custodian
or executing a Certificate so long as it does not result in delivery of
or access to assets of a Portfolio prohibited by paragraph (a) of this
Section 14.
(c) The Custodian represents that it maintains a system that is
reasonably designed to prevent unauthorized persons from having access
to the assets that it holds (by any means) for its customers.
15. Concerning the Custodian.
(a) Scope of Services. The Custodian shall be obligated to perform only
such services as are set forth in this Agreement or expressly contained
in a Certificate, Written Instructions or Oral Instructions given to
the Custodian which are not contrary.
(b) Standard of Care.
1. The Custodian will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of
property of the Portfolios. The Custodian shall be liable to,
and shall indemnify and hold harmless the Company from and
against any loss which shall occur as the result of the
failure of the Custodian or a Sub-Custodian (other than a
foreign securities depository or clearing agency) to exercise
reasonable care with respect to their respective obligations
under this Agreement and the safekeeping of such property. The
determination of whether the Custodian or Sub-Custodian has
exercised reasonable care in connection with the safekeeping
of Portfolio property shall be made in light of the standards
applicable to the Custodian with respect to similar property
held by it in Chicago, Illinois. The determination of whether
the Custodian or Sub-Custodian has exercised reasonable care
in connection with their other obligations under this
Agreement shall be made in light of prevailing standards
applicable to professional custodians in the jurisdiction in
which such custodial services are performed. In the event of
any loss to the Company by reason of the failure of the
Custodian or a Sub-Custodian (other than a foreign securities
depository or clearing agency) to exercise reasonable care,
the Custodian shall be liable to the Company only to the
extent of the Company's direct damages and expenses, which
damages, for purposes of property only, shall be determined
based on the market value of the property which is the subject
of the loss at the date of discovery of such loss and without
reference to any special condition or circumstances.
2. The Custodian will not be responsible for any act,
omission, default or for the solvency of any foreign
securities depository or clearing agency approved by the Board
of Directors pursuant to Section (l)(n) or Section 3 hereof.
3. The Custodian will not be responsible for any act,
omission, default or for the solvency of any broker or agent
(not referred to in paragraph (b)(2) above) which it or a
Sub-Custodian appoints and uses unless such appointment and
use is made or done negligently or in bad faith. In the event
such an appointment and use is made or done negligently or in
bad faith, the Custodian shall be liable to the Company only
for direct damages and expenses (determined in the manner
described in paragraph (b)(1) above) resulting from such
appointment and use and, in the case of any loss due to an
act, omission or default of such agent or broker, only to the
extent that such loss occurs as a result of the failure of the
agent or broker to exercise reasonable care ("reasonable care"
for this purpose to be determined in light of the prevailing
standards applicable to agents or brokers, as appropriate, in
the jurisdiction where services are performed).
4. The Custodian shall be entitled to rely, and may act upon
the advice of counsel (who may be counsel for the Company) on
all matters and shall be without liability for any action
reasonably taken or omitted in good faith and without
negligence pursuant to such advice.
5. The Custodian shall be entitled to rely upon any
Certificate, notice or other instrument in writing received by
the Custodian and reasonably believed by the Custodian to be
genuine and to be signed by two officers of the Company. The
Custodian shall be entitled to rely upon any Written
Instructions or Oral Instructions actually received by the
Custodian pursuant to the applicable Sections of this
Agreement and reasonably believed by the Custodian to be
genuine and to be given by an Authorized Person. The Company
agrees to forward to the Custodian Written Instructions from
an Authorized Person confirming such Oral Instructions in such
manner so that such Written Instructions are received by the
Custodian, whether by hand delivery, telex or otherwise, by
the close of business on the same day that such Oral
Instructions are given to the Custodian. The Company agrees
that the fact that such confirming instructions are not
received by the Custodian shall in no way affect the validity
of the transactions or enforceability of the transactions
hereby authorized by the Company. The Company agrees that the
Custodian shall incur no liability to the Company in (i)
acting upon Oral Instructions given to the Custodian hereunder
concerning such transactions provided such instructions
reasonably appear to have been received from a duly Authorized
Person or (ii) deciding not to act solely upon Oral
Instructions, provided that the Custodian shall be required to
contact the giver of such Oral Instructions and request
written confirmation immediately following any such decision
not to act.
6. The Custodian shall supply the Fund Accountant with such
daily information regarding the cash and securities positions
and activity of each Portfolio as the Custodian and the Fund
Accountant shall from time to time agree. It is understood
that such information will not be audited by Custodian and
Custodian represents that such information will be the best
information then available to the Custodian. The Custodian
shall have no responsibility whatsoever for the pricing of
Portfolio Securities or for the failure of the Fund Accountant
to reconcile differences between the information supplied by
the Custodian and information obtained by the Fund Accountant
from other sources, including but not limited to pricing
vendors and the Company's investment adviser. Subject to the
foregoing, to the extent that any miscalculation by the Fund
Accountant of a Portfolio's net asset value is attributable to
the willful misfeasance, bad faith or negligence of the
Custodian (including any Sub-Custodian other than a foreign
securities depository or clearing agency) in supplying or
omitting to supply the Fund Accountant with information as
aforesaid, the Custodian shall be liable to the Company for
any resulting loss (subject to such de minims rule of change
in value as the Board of Directors may from time to time
adopt).
(c) Limit of Duties. Without limiting the generality of the foregoing,
the Custodian shall be under no duty or obligation to inquire into, and
shall not be liable for:
1. The validity of the issue of any Securities purchased by
any Portfolio, the legality of the purchase thereof, or the propriety
of the amount specified by the Company for payment therefor;
2. The legality of the sale of any Securities by any Portfolio
or the propriety of the amount of consideration for which the same are
sold;
3. The legality of the issue or sale of any Shares, or the
sufficiency of the amount to be received therefor;
4. The legality of the redemption of any Shares, or the
propriety of the amount to be paid therefor;
5. The legality of the declaration or payment of any
distribution of any Portfolio;
6. The legality of any borrowing.
(d) The Custodian need not maintain any insurance for the exclusive
benefit of the Company, but hereby warrants that as of the date of this
Agreement it is maintaining a bankers Blanket Bond and hereby agrees to
notify the Company in the event that such bond is canceled or otherwise
lapses.
(e) Consistent with and without limiting the language contained in
Section 1 5(b), it is specifically acknowledged that the Custodian
shall have no duty or responsibility to:
1. Question Written Instructions or Oral Instructions or make
any suggestions to the Company or an Authorized Person
regarding such Instructions;
2. Supervise or make recommendations with respect to
investments or the retention of Securities:
3. Subject to Section 15(b)(3) hereof, evaluate or report to
the Company or an Authorized Person regarding the financial
condition of any broker, agent or other party to which
Securities are delivered or payments are made pursuant to this
Agreement: or
4. Review or reconcile trade confirmations received from
brokers.
(f) Amounts Due for Transfer Agent. The Custodian shall not be under
any duty or obligation to take action to effect collection of any
amount due to any Portfolio from the Transfer Agent nor to take any
action to effect payment or distribution by the Transfer Agent of any
amount paid by the Custodian to the Transfer Agent in accordance with
this Agreement.
(g) No Duty to Ascertain Authority. The Custodian shall not be under
any duty or obligation to ascertain whether any Securities at any time
delivered to or held by it for the Company and specifically allocated
to a Portfolio are such as may properly be held by the Company under
the provisions of the Articles of Incorporation and Certificate of
Designation and the Prospectus.
(h) Indemnification. The Company agrees to indemnify and hold the
Custodian harmless from all loss, cost, taxes, charges, assessments,
claims, and liabilities (including, without limitation, liabilities
arising under the Securities Act of 1933, the Securities Exchange Act
of 1934 and the 1940 Act and state or foreign securities laws) and
expenses (including reasonable attorneys fees and disbursements)
arising directly or indirectly from any action taken or omitted by the
Custodian (i) at the request or on the direction of or in reliance on
the advice of the Company or in reasonable reliance upon the Prospectus
or (ii) upon a Certificate or Oral or Written Instructions; provided,
that the aforegoing indemnity shall not apply to any loss, cost, tax,
charge, assessment, claim, liability or expense to the extent the same
is attributable to the Custodian's or any Sub-Custodian's (other than a
foreign securities depository or clearing agency) negligence, willful
misconduct, bad faith or reckless disregard of duties and obligations
under this Agreement or any other agreement relating to the custody of
Company property.
(i) The Company on behalf of the particular Portfolio involved agrees
to hold the Custodian harmless from any liability or loss resulting
from the imposition or assessment of any taxes or other governmental
charges on a Portfolio.
(j) Without limiting the foregoing, the Custodian shall not be liable
for any loss which results from:
1. the general risk of investing, or
2. subject to Section 15(b) hereof, investing or holding
property in a particular country including, but not limited
to, losses resulting from nationalization, expropriation or
other governmental actions; regulation of the banking or
securities industry; currency restrictions, devaluations or
fluctuations; and market conditions which prevent the orderly
execution of securities transactions or affect the value of
property held pursuant to this Agreement.
(k) No party shall be liable to the other for any loss due to forces
beyond their control including but not limited to strikes or work
stoppages, acts of war or terrorism, insurrection, revolution, nuclear
fusion, fission or radiation, or acts of
(1) Inspection of Books and Records. The books and records of the
Custodian shall be open to inspection and audit at reasonable times by
officers and auditors employed by the Company and by the appropriate
employees of the Securities and Exchange Commission.
(m) Accounting Control Reports. The Custodian shall provide the Company
with any report obtained by the Custodian on the system of internal
accounting control of the Book-Entry System, each Depository, and each
Sub-Custodian and with an annual report on its own systems of internal
accounting control.
16. Term and Termination.
(a) This Agreement shall become effective on the date first set forth
above (the "Effective Date") and shall continue in effect thereafter as
the parties may, mutually agree.
(b) Either of the parties hereto may terminate this Agreement with
respect to any Portfolio by giving to the other party a notice in
writing specifying the date of such termination, which, in case the
Company is the terminating party, shall be not less than 60 days after
the date of receipt of such notice or, in case the Custodian is the
terminating party, shall be not less than 90 days after the date of
receipt of such notice. In the event such notice is given by the
Company, it shall be accompanied by a certified vote of the Board of
Directors, electing to terminate this Agreement with respect to any
Portfolio and designating a successor custodian or custodians, which
shall be a person qualified to so act under the 1940 Act.
In the event such notice is given by the Custodian, the Company shall,
on or before the termination date, deliver to the Custodian a certified
vote of the Board of Directors, designating a successor custodian or
custodians. In the absence of such designation by the Company, the
Custodian may designate a successor custodian, which shall be a person
qualified to so act under the 1940 Act. If the Company fails to
designate a successor custodian with respect to any Portfolio, the
Company shall upon the date specified in the notice of termination of
this Agreement and upon the delivery by the Custodian of all Securities
(other than Securities held in the Book-Entry System which cannot be
delivered to the Company) and monies then owned by such Portfolio, be
deemed to be its own custodian and the Custodian shall thereby be
relieved of all duties and responsibilities pursuant to this Agreement,
other than the duty with respect to Securities held in the Book-Entry
System which cannot be delivered to the Company.
(c) Upon the date set forth in such notice under paragraph (b) of this
Section 16, this Agreement shall terminate to the extent specified in
such notice, and the Custodian shall upon receipt of a notice of
acceptance by the successor custodian on that date deliver directly to
the successor custodian all Securities and monies then held by the
Custodian and specifically allocated to the Portfolio or Portfolios
specified, after deducting all fees, expenses and other amounts for the
payment or reimbursement of which it shall then be entitled with
respect to such Portfolio or Portfolios.
17. Limitation of Liability.
The Company and the Custodian agree that the obligations of the Company
under this Agreement shall not be binding upon any of the Directors,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Company individually, but are binding only
upon the assets and property of the Company or of the appropriate
Portfolio(s) thereof. The execution and delivery of this Agreement have
been authorized by the Board of Directors of the Company, and signed by
an authorized officer of the Company, acting as such, and neither such
authorization by such the Board of Directors nor such execution and
delivery by such officer shall be deemed to have been made by any of
them or any shareholder of the Company individually or to impose any
liability on any of them or any shareholder of the Company personally,
but shall bind only the assets and property of the Company or of the
appropriate Portfolio(s) thereof.
18. Miscellaneous.
(a) Annexed hereto as Schedule A is a certification signed by two of
the present officers of the Company setting forth the names and the
signatures of the present Authorized Persons. The Company agrees to
furnish to the Custodian a new certification in similar form in the
event that any such present Authorized Person ceases to be such an
Authorized Person or in the event that other or additional Authorized
Persons are elected or appointed. Until such new certification shall be
received, the Custodian shall be fully protected in acting under the
provisions of this Agreement upon Oral Instructions or signatures of
the present Authorized Persons as set forth in the last delivered
certification.
(b) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Custodian, shall be sufficiently
given if addressed to the Custodian and mailed or delivered to it at
its offices at its address stated on the first page hereof or at such
other place as the Custodian may from time to time designate in
writing.
(c) Any notice or other instrument in writing, authorized or required
by this Agreement to be given to the Company, shall be sufficiently
given if addressed to the Company and mailed or delivered to it at its
offices at its address shown on the first page hereof or at such other
place as the Company may from time to time designate in writing, with a
copy to:
(d) This Agreement may not be amended or modified in any manner except
by a written agreement executed by both parties with the same formality
as this Agreement, (i) authorized and approved by a vote of the Board
of Directors, including a majority of the members of the Board of
Directors who are not "interested persons" of the Company (as defined
in the 1940 Act), or (ii) authorized and approved by such other
procedures as may be permitted or required by the 1940 Act.
(e) This Agreement shall extend to and shall be binding upon the
parties hereto, and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Company
without the written consent of the Custodian, or by the Custodian
without the written consent of the Company authorized or approved by a
vote of the Board of Directors, and any attempted assignment without
such written consent shall be null and void.
(f) This Agreement shall be construed in accordance with the laws of
the State of Illinois.
(g) The captions of the 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 or effect.
(h) This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but such counterparts
shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective representatives duly authorized as
of the day and year first above written.
SIT MUTUAL FUNDS, INC.
By: /s/ Paul E. Rasmussen
Name: Paul E. Rasmussen
Title: V.P., Treasurer
THE NORTHERN TRUST COMPANY
By: /s/ Caroline A. Lohrmann
Name: Caroline A. Lohrmann
Title: Second Vice President
SIT Mutual Funds, Inc.
Exhibit 1
SIT International Growth Fund (series A)
SIT Balanced Fund (series B)
SIT Developing Markets Growth Fund (series C)
SIT Small Cap Growth Fund (series D)
Schedule A
to
Custody Agreement
Between
SIT Mutual Funds, Inc. and
The Northern Trust Company
Authorized Persons
Written Instructions Only
Erik S. Anderson Vice President - Investments
Ronald D. Sit Vice President - Investments
Debra A Sit Vice President - Investments,
Assistant Treasurer
Michael P. Eckert Vice President - Group Manager
Michael J. Radmer Secretary
Parnell M. Kingsley Assistant Secretary
Carla J. Rose Assistant Secretary
Written and Oral Instructions
Eugene C. Sit Chairman
Peter L. Mitchelson Vice President
Mary K. Stern President
Michael C. Brilley Senior Vice President
Paul E. Rasmussen Vice President & Treasurer
EXHIBIT 8.2
Transfer Agency and Services Agreement
SIT Growth Fund, Inc.
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 31st day of December, 1995 between SIT
GROWTH FUND, INC. (the "Fund"), a Minnesota corporation, having its principal
place of business at 4600 Norwest Center, Minneapolis, Minnesota 55402 and FIRST
DATA INVESTOR SERVICES GROUP, INC. ("FDISG"), a Massachusetts corporation with
principal offices at One Exchange Place, 53 State Street, Boston, Massachusetts
02109.
WITNESSETH
WHEREAS, the Fund desires to appoint FDISG as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities
and FDISG desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and FDISG agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not such
person is an officer or employee of the Fund, duly authorized to give
Oral Instructions or Written Instructions on behalf of the Fund as
indicated in writing to FDISG from time to time.
(c) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(g) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by FDISG from a person
reasonably believed by FDISG to be an Authorized Person;
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which have become effective under the
Securities Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
the Fund as may be issued from time to time.
(k) "Shareholder" shall mean a record owner of Shares of the
Fund.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by FDISG to be an Authorized
Person and actually received by FDISG. Written Instructions shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original
or other process.
Article 2 Appointment of FDISG.
The Fund hereby appoints and constitutes FDISG as transfer agent and
dividend disbursing agent for Shares of the Fund and as shareholder servicing
agent for the Fund and FDISG hereby accepts such appointments and agrees to
perform the duties hereinafter set forth.
Article 3 Duties of FDISG.
3.1 FDISG shall be responsible for:
(a) Administering and/or performing the customary services of
a transfer agent; acting as service agent in connection with dividend
and distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares of the Fund, as more fully described in the
written schedule of Duties of FDISG annexed hereto as Schedule A and
incorporated herein, and in accordance with the terms of the Prospectus
of the Fund, applicable law and the procedures established from time to
time between FDISG and the Fund.
(b) Recording the issuance of Shares and maintaining pursuant
to Rule 17Ad-10(e) of the 1934 Act a record of the total number of
Shares of the Fund which are authorized, based upon data provided to it
by the Fund, and issued and outstanding. FDISG shall provide the Fund
on a regular basis with the total number of Shares of the Fund which
are authorized and issued and outstanding and shall have no obligation,
when recording the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the issue or sale
of such Shares, which functions shall be the sole responsibility of the
Fund.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, FDISG shall be under no duty or obligation to inquire into,
and shall not be liable for: (i) the legality of the issuance or sale
of any Shares or the sufficiency of the amount to be received therefor;
(ii) the legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor; (iii) the legality of the declaration
of any dividend by the Board of Directors, or the legality of the
issuance of any Shares in payment of any dividend; or (iv) the legality
of any recapitalization or readjustment of the Shares.
3.2 FDISG agrees that it shall perform the services set forth herein in
accordance with the written schedule of Quality Standard Levels annexed hereto
as Schedule B.
3.3 In addition, the Fund shall (i) identify to FDISG in writing those
transactions and assets to be treated as exempt from blue sky reporting for each
State and (ii) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily activity for each
State. The responsibility of FDISG for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and the reporting of such transactions to the
Fund as provided above.
3.4 In addition to the duties set forth herein, FDISG shall perform
such other duties and functions, and shall be paid such amounts therefor, as may
from time to time be agreed upon in writing between the Fund and FDISG.
Article 4 Recordkeeping and Other Information.
4.1 FDISG shall create and maintain all records required of it pursuant
to its duties hereunder and as set forth in Schedule A in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the 1940 Act. Where applicable, such records shall be maintained by
FDISG for the periods and in the places required by Rule 31a-2 under the 1940
Act.
4.2 To the extent required by Section 31 of the 1940 Act, FDISG agrees
that all such records prepared or maintained by FDISG relating to the services
to be performed by FDISG hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such section, and
will be surrendered promptly to the Fund on and in accordance with the Fund's
request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, FDISG will endeavor to notify the Fund of such
request and secure Written Instructions as to the handling of such request.
FDISG reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to comply with such request.
Article 5 Fund Instructions.
5.1 FDISG will have no liability when acting upon Written or Oral
Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. FDISG will also have no liability when processing Share certificates which
it reasonably believes to bear the proper manual or facsimile signatures of the
officers of the Fund and the proper countersignature of FDISG.
5.2 At any time, FDISG may request Written Instructions from the Fund
and may seek advice from legal counsel for the Fund, or its own legal counsel,
with respect to any matter arising in connection with this Agreement, and it
shall not be liable for any action taken or not taken or suffered by it in good
faith in accordance with such Written Instructions or in accordance with the
opinion of counsel for the Fund or for FDISG. Written Instructions requested by
FDISG will be provided by the Fund within a reasonable period of time.
5.3 FDISG, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing or
acting on behalf of the Fund only if said representative is an Authorized
Person. The Fund agrees that all Oral Instructions shall be followed within one
business day by confirming Written Instructions, and that the Fund's failure to
so confirm shall not impair in any respect FDISG's right to rely on Oral
Instructions.
Article 6 Compensation.
6.1 The Fund will compensate FDISG for the performance of its
obligations hereunder in accordance with the fees set forth in the written Fee
Schedule annexed hereto as Schedule C and incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the Fund
agrees to pay, and will be billed separately for, out-of-pocket expenses
incurred by FDISG in the performance of its duties hereunder. Out-of-pocket
expenses shall include, but shall not be limited to, the items specified in the
written schedule of out-of-pocket charges annexed hereto as Schedule D and
incorporated herein. Schedule C may be modified by written agreement between the
parties. Unspecified out-of-pocket expenses shall be limited to those
out-of-pocket expenses reasonably incurred by FDISG in the performance of its
obligations hereunder.
6.3 The Fund agrees to pay all fees and out-of-pocket expenses within
fifteen (15) days following the receipt of the respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule C, a revised Fee Schedule executed and dated by
the parties hereto.
6.5 The Fund acknowledges that the fees that FDISG charges the Fund
under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 9.3 and the limitations on
liability and exclusion of remedies in Section 11.2 and Article 12. Modifying
the allocation of risk from what is stated here would affect the fees that FDISG
charges, and in consideration of those fees, the Fund agrees to the stated
allocation of risk.
Article 7 Documents.
In connection with the appointment of FDISG, the Fund shall, on or
before the date this Agreement goes into effect, but in any case within a
reasonable period of time for FDISG to prepare to perform its duties hereunder,
deliver or caused to be delivered to FDISG the documents set forth in the
written schedule of Fund Documents annexed hereto as Schedule E.
Article 8 Transfer Agent System.
8.1 FDISG shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by FDISG in connection with the services
provided by FDISG to the Fund herein (the "FDISG System").
8.2 FDISG hereby grants to the Fund a limited license to the FDISG
System for the sole and limited purpose of having FDISG provide the services
contemplated hereunder and nothing contained in this Agreement shall be
construed or interpreted otherwise and such license shall immediately terminate
with the termination of this Agreement.
Article 9 Representations and Warranties.
9.1 FDISG represents and warrants to the Fund that:
(a) it is a corporation duly organized an existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to
authorized it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in effect
for the duration of this Agreement; and
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to FDISG that:
(a) it is duly organized and existing and in good standing
under the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Article
of Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to
authorized it to enter into this Agreement;
(d) a registration statement under the Securities Act of 1933,
as amended, and the 1940 Act on behalf of each of the Fund is currently
effective and will remain effective, and all appropriate state
securities law filings have been made and will continue to be made,
with respect to all Shares of the Fund being offered for sale;
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with
the terms of the Fund's Articles of Incorporation and its Prospectus,
such Shares shall be validly issued, fully paid and non-assessable.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTIES REGARDING QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM
OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES
PROVIDED UNDER THIS AGREEMENT. FDISG DISCLAIMS ANY WARRANTY OF TITLE OR
NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT.
Article 10 Indemnification.
10.1 FDISG shall not be responsible for and the Fund shall indemnify
and hold FDISG harmless from and against any and all claims, costs, expenses
(including reasonable attorneys' fees), losses, damages, charges, payments and
liabilities of any sort or kind which may be asserted against FDISG or for which
FDISG may be held to be liable (a "Claim") arising out of or attributable to any
of the following:
(a) Any actions of FDISG required to be taken pursuant to this
Agreement unless such Claim resulted from a negligent act or omission
to act or bad faith by FDISG in the performance of its duties
hereunder.
(b) FDISG's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by FDISG from the Fund, or any authorized third party acting
on behalf of the Fund, including but not limited the prior transfer
agent for the Fund, in the performance of FDISG's duties and
obligations hereunder.
(c) The reliance on, or the implementation of, any Written or
Oral Instructions or any other instructions or requests of the Fund.
(d) The offer or sales of shares in violation of any
requirement under the securities laws or regulations of any state that
such shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect to the
offer or sale of such shares in such state.
(e) The Fund's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the Fund's negligence
or misconduct or the breach of any representation or warranty of the
Fund made herein.
10.2 The Fund shall not be responsible for and FDISG shall indemnify
and hold the Fund harmless from and against any and all Claims made by third
parties which result from a negligent act or omission to act or bad faith by
FDISG in the performance of its duties hereunder.
10.3 In any case in which the either party (the "Indemnifying Party")
may be asked to indemnify or hold the other (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
10.4 Any claim for indemnification under this Agreement must be made
prior to one year after the applicable party becomes aware of the event for
which indemnification is claimed.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
FDISG's sole and exclusive remedy for claims or other actions or proceedings to
which the Fund's indemnification obligations pursuant to this Article 10 may
apply.
Article 11 Standard of Care.
11.1 FDISG shall at all times act in good faith and agrees to use its
best efforts within commercially reasonable limits to ensure the accuracy of all
services performed under this Agreement, but assumes no responsibility for loss
or damage to the Fund unless said errors are caused by FDISG's own negligence,
bad faith or willful misconduct or that of its employees.
11.2 Notwithstanding the foregoing Section 11.1 or anything else
contained in this Agreement to the contrary, FDISG's entire liability to the
Fund for any loss or damage, direct or indirect for any cause whatsoever
(including but not limited to those arising out of this Agreement), and
regardless of the form of action, shall be limited to the Fund's actual direct
out-of-pocket expenses which are reasonably incurred by the Fund, but shall not
under any circumstances exceed the lesser of (i) an amount equivalent to the
average of twelve month's fees paid to FDISG under this Agreement; or (ii)
one-million dollars ($1,000,000). The foregoing limitation of liability shall
not apply to damages occasioned by the intentional misconduct or gross
negligence of either party.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL FDISG, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF TORT,
CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST PROFITS,
EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES,
EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF
WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written above
and shall continue for a period of five (5) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of three (3) years
("Renewal Terms") each.
13.2 Either party may terminate this Agreement at the end of the
Initial Term or any subsequent Renewal Term upon not less than ninety (90) days
or more than one-hundred eighty (180) days prior written notice to the other
party.
13.3 Nothwithstanding the foregoing provisions in Section 13.1 and
13.2, the Fund may terminate this Agreement as follows:
(a) the Fund may terminate this Agreement after year three
upon ninety (90) days written notice to FDISG. Such notice must be
received by FDISG no earlier than ninety (90) days prior to the end of
the third year of the Agreement and no later than the end of the third
year of the Agreement, otherwise the Agreement shall continue in full
force and effect; or
(b) the Fund may terminate this Agreement after year four upon
ninety (90) days written notice to FDISG. Such notice must be received
by FDISG no earlier than ninety (90) days prior to the end of the
fourth year of the Agreement and no later than the end of the fourth
year of the Agreement, otherwise the Agreement shall continue in full
force and effect.
13.4 In the event that this Agreement is terminated pursuant to
provisions in Sections 13.3 (a) or (b) above, the Fund shall pay to FDISG its
allocable portion of the aggregate early termination fee prior to the effective
date of such termination such that the total termination fee paid by investment
companies within the SIT Mutual Fund Group (SIT Mutual Fund Group as used in
Section 13 is defined as investment companies for which SIT Investment
Associates, Inc. serves as the investment manager and sponsor and which have
entered into similar transfer agency and services agreements as this Agreement
with FDISG) equals:
(a) if termination under Section 13.3(a) - $150,000.00; or
(b) if termination under Section 13.3(b) - $100,000.00.
13.5 In the event a termination notice is given by the Fund, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Fund.
13.6 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party; provided however, that no such cure period shall be
allowed for any such material breach which occurs more than twice in any one
year period. If FDISG is the Non-Defaulting Party, its termination of this
Agreement shall not constitute a waiver of any other rights or remedies of FDISG
with respect to services performed prior to such termination or rights of FDISG
to be reimbursed for out-of-pocket expenses. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against the
Defaulting Party.
Article 14 Confidentiality.
14.1 The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The Fund
and FDISG shall exercise at least the same degree of care, but not less than
reasonable care, to safeguard the confidentiality of the Confidential
Information of the other as it would exercise to protect it's own confidential
information of a similar nature. The Fund and FDISG may use the Confidential
Information only to exercise its rights under this Agreement. The Fund and FDISG
shall not duplicate, sell or disclose to others the Confidential Information of
the other, in whole or in part, without the prior written permission of the
other party. The Fund and FDISG may, however, disclose Confidential Information
to its employees who have a need to know the Confidential Information to perform
work for the other, provided that each shall use reasonable efforts to ensure
that the Confidential Information is not duplicated or disclosed by its
employees in breach of this Agreement. The Fund and FDISG may also disclose the
Confidential Information to independent contractors, auditors, and professional
advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 14.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
FDISG disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
14.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future business activities of the Fund or FDISG,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or FDISG
a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
14.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
Article 15 Force Majeure.
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature or
other acts of God; (ii) any outbreak or escalation of hostilities, war, riots or
civil disorders in any country, (iii) any act or omission of the other party or
any governmental authority; (iv) any labor disputes (whether or not the
employees' demands are reasonable or within the party's power to satisfy); or
(v) nonperformance by a third party or any similar cause beyond the reasonable
control of such party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the non-performing
party shall be excused from any further performance and observance of the
obligations so affected only for as long as such circumstances prevail and such
party continues to use commercially reasonable efforts to recommence performance
or observance as soon as practicable.
Article 16 Amendments.
No change, termination, modification, or waiver of any term or
condition of the Agreement shall be valid unless in writing signed by each
party. A party's waiver of a breach of any term or condition in the Agreement
shall not be deemed a waiver of any subsequent breach of the same or another
term or condition.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld. FDISG may, in its sole
discretion, engage subcontractors to perform any of the obligations contained in
this Agreement to be performed by FDISG.
Article 18 Notice.
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Fund or FDISG, shall be sufficiently given if
addressed to that party and received by it at its office set forth below or at
such other place as it may from time to time designate in writing.
To the Fund:
SIT Growth Fund, Inc.
4600 Norwest Center
Minneapolis, MN 55402
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President
with a copy to FDISG's General Counsel
Article 19 Successors.
This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns, provided, however, that
this Agreement shall not be assigned to any person other than a person
controlling, controlled by or under common control with the assignor without the
written consent of the other party, which consent shall not be unreasonably
withheld.
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this agreement. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston, and FDISG
and the Fund hereby submit themselves to the exclusive jurisdiction of those
courts.
Article 21 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 22 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 Publicity.
Neither FDISG nor the Fund shall release or publish news releases,
public announcements, advertising or other publicity relating to this Agreement
or to the transactions contemplated by it without the prior review and written
approval of the other party; provided, however, that either party may make such
disclosures as are required by legal, accounting or regulatory requirements
after making reasonable efforts in the circumstances to consult in advance with
the other party.
Article 24 Relationship of Parties.
The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. A party's waiver of a
breach of any term or condition in the Agreement shall not be deemed a waiver of
any subsequent breach of the same or another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
SIT GROWTH FUND, INC.
By: /s/ Mary K. Stern
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Gerald Kokos
Title: Executive Vice President
Schedule A
DUTIES OF FDISG
1. Shareholder Information. FDISG shall maintain a record of the number
of Shares held by each Shareholder of record which shall include name, address,
taxpayer identification and which shall indicate whether such Shares are held in
certificates or uncertificated form.
2. Shareholder Services. FDISG shall respond as appropriate to all
inquiries and communications from Shareholders relating to Shareholder accounts
with respect to its duties hereunder and as may be from time to time mutually
agreed upon between FDISG and the Fund.
3. Share Certificates.
(a) At the expense of the Fund, the Fund shall supply FDISG
with an adequate supply of blank share certificates to meet FDISG requirements
therefor. Such Share certificates shall be properly signed by facsimile. The
Fund agrees that, notwithstanding the death, resignation, or removal of any
officer of the Fund whose signature appears on such certificates, FDISG or its
agent may continue to countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) FDISG shall issue replacement Share certificates in lieu
of certificates which have been lost, stolen or destroyed, upon receipt by FDISG
of properly executed affidavits and lost certificate bonds, in form satisfactory
to FDISG, with the Fund and FDISG as obligees under the bond.
(c) FDISG shall also maintain a record of each certificate
issued, the number of Shares represented thereby and the Shareholder of record.
With respect to Shares held in open accounts or uncertificated form (i.e., no
certificate being issued with respect thereto) FDISG shall maintain comparable
records of the Shareholders thereof, including their names, addresses and
taxpayer identification. FDISG shall further maintain a stop transfer record on
lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. FDISG will
address and mail to Shareholders of the Fund, all reports to Shareholders,
dividend and distribution notices and proxy material for the Fund's meetings of
Shareholders. In connection with meetings of Shareholders, FDISG will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
5. Sale of Shares
(a) FDISG shall not be required to issue any Shares of the
Fund where it has received a Written Instruction from the Fund or official
notice from any appropriate authority that the sale of the Shares of the Fund
has been suspended or discontinued. The existence of such Written Instructions
or such official notice shall be conclusive evidence of the right of FDISG to
rely on such Written Instructions or official notice.
(b) In the event that any check or other order for the payment
of money is returned unpaid for any reason, FDISG will endeavor to: (i) give
prompt notice of such return to the Fund or its designee; (ii) place a stop
transfer order against all Shares issued as a result of such check or order; and
(iii) take such actions as FDISG may from time to time deem appropriate.
6. Transfer and Repurchase
(a) FDISG shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in the
Fund's Prospectus.
(b) FDISG will transfer or repurchase Shares upon receipt of
Oral or Written Instructions or otherwise pursuant to the Prospectus and Share
certificates, if any, properly endorsed for transfer or redemption, accompanied
by such documents as FDISG reasonably may deem necessary.
(c) FDISG reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the endorsement on the instructions
is valid and genuine. FDISG also reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the requested transfer or
repurchase is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or repurchases which FDISG, in its
good judgement, deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such transfer or
repurchase.
(d) When Shares are redeemed, FDISG shall, upon receipt of the
instructions and documents in proper form, deliver to the Custodian and the Fund
or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate accounts
maintained by FDISG reflecting outstanding Shares of the Fund and Shares
attributed to individual accounts.
(e) FDISG, upon receipt of the monies paid to it by the
Custodian for the repurchase of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures described in the written
instruction received by FDISG from the Fund.
(f) FDISG shall not process or effect any repurchase with
respect to Shares of the Fund after receipt by FDISG or its agent of
notification of the suspension of the determination of the net asset value of
the Fund.
7. Dividends
(a) Upon the declaration of each dividend and each capital
gains distribution by the Board of Directors of the Fund with respect to Shares
of the Fund, the Fund shall furnish or cause to be furnished to FDISG Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record date
as of which Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date, the total
amount payable to FDISG on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution
of the Board of Directors, the Fund will pay to FDISG sufficient cash to make
payment to the Shareholders of record as of such payment date.
(c) If FDISG does not receive sufficient cash from the Fund to
make total dividend and/or distribution payments to all Shareholders of the Fund
as of the record date, FDISG will, upon notifying the Fund, withhold payment to
all Shareholders of record as of the record date until sufficient cash is
provided to FDISG.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, FDISG shall: (i) perform all the customary services of
a transfer agent, registrar, dividend disbursing agent and agent of the dividend
reinvestment and cash purchase plan as described herein consistent with those
requirements in effect as at the date of this Agreement. The detailed
definition, frequency, limitations and associated costs (if any) set out in the
attached fee schedule, include but are not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing proxies,
tabulating proxies, mailing Shareholder reports to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts where
applicable, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
Schedule B
QUALITY STANDARD LEVELS
1. TIMELINESS OF RESEARCH REQUESTS
SERVICE DESCRIPTION:
FDISG will provide a research and problem resolution service to the
Shareholders. On a daily basis, the Fund, using either the Impress CSS
system or by fax, will communicate research requests to FDISG.
FDISG'S OBJECTIVE:
FDISG's objective is to accurately respond to 98% of the research
requests within the periods set forth below.
Wire: Complete within 24 hours
Financial: Complete within 48 hours
Non-Financial: Complete within 72 hours
2. MANUAL DATA ENTRY
SERVICE DESCRIPTION:
FDISG provides a manual data entry service to the Fund for establishing
new Shareholder accounts and monitoring existing account records.
FDISG'S OBJECTIVE:
FDISG's objective is to establish new accounts with a data accuracy
rate of 98%.
3. ACCURACY AND TIMELINESS OF SHAREHOLDER STATEMENTS
SERVICE DESCRIPTION:
Based on the mail frequency of the Fund, FDISG will produce and mail
periodic statements to Shareholders. FDISG will provide the Fund with a
mailing report from its Print/Mail vendor which will indicate the date
on which all Shareholder statements were mailed.
FDISG'S OBJECTIVE:
FDISG's objective is to manage this service so that 99% of all
statements from the Fund are accurate and are mailed no later than five
(5) business days after the statement date.
4. ACCURACY AND TIMELINESS OF DAILY ADVICE MAILINGS
SERVICE DESCRIPTION:
FDISG will produce and send, deliver or distribute an advice to the
Shareholder's account, except where suppressed pursuant to instructions
received from the Fund. FDISG will provide the Fund with a mailing
report from its Print/Mail vendor which will indicate the date on which
all advises were mailed.
FDISG'S OBJECTIVES:
FDISG's objective is to manage this service so that 99% of such advices
are accurate and are mailed no later than two (2) business days
following the date of the transaction.
5. TIMELINESS OF DISTRIBUTION CHECKS AND DIVIDEND MAILINGS
SERVICE DESCRIPTION:
Periodically, FDISG will create and mail checks for Fund's respective
Shareholders. FDISG will provide the Fund with a mailing report from
its Print/ Mail vendor indicating the date on which all dividend or
distribution checks were mailed.
FDISG'S OBJECTIVE:
FDISG's objective is to manage this service so that 99% of such advices
are accurate and are mailed no later than two (2) business days
following the date of the transaction.
6. FINANCIAL CONTROL
SERVICE DESCRIPTION:
FDISG will provide daily fund settlement reports to the Fund's
accounting and custodian service providers. FDISG will reconcile the
Fund's Demand Deposit Accounts on a daily basis, including investments
and disbursements. Acceptable DDA Item Exceptions beyond five days
include:
- Client Originated Item
- Shareholder Reclaim
- Bank (Cash Manager) Error
- Shareholder Fraudulent Activity
- Fed Wire Recall
- System Data Processing Limitations
- Miscellaneous Funding Issues with Shareholder,
Cash Manager, or Custodian
FDISG'S OBJECTIVE:
FDISG's objective is to reconcile all DDA transactions within five (5)
business days of the transaction post date. Any exceptions, including
items greater than five (5) business days, will be reported to the Fund
with a general item description. Any exception must be approved by the
Fund to be considered within standard.
Schedule C
FEE SCHEDULE
SIT GROWTH FUND, INC.
<TABLE>
<CAPTION>
Annual Fees:
<S> <C>
Open Account Fees: $13.50 per open account
Closed Account Fees: $ 2.40 per closed account
Fund Minimums: $24,000 per fund per year
Conversion Costs: Free set-up fee
Value Added Services:
Cost Basis Accounting: Free set-up fee
Adhoc SQL: Free set-up fee; $1,000 per hour
AVR Solution: Free set-up fee
$.2125 per minute charge
$.0775 per minute telecom charge
$.10 per call
FundServ: Free set-up fee, $.15 per trade plus $.10 same day trades
Asset Allocation/Reallocation: Free set-up fee, $.25 per trade via NSCC
Direct Access Zip Link: Free set-up fee, $1,000 per month, $.03/record plus $.015/price record
</TABLE>
CONSOLIDATED STATEMENTS PRICE DETERMINED BY PROJECT SCOPE. CUSTOMIZED
PROGRAMMING BILLABLE AT $100/HOUR.
General:
1.1 FDISG may charge a service fee equal to the lesser of (i) one and one
half percent (1 1/2%) per month of (ii) the highest interest rate
legally permitted on any unpaid amounts, unless such amounts are
ultimately determined not due in accordance with the Payment Dispute
Procedure. The Fund shall also reimburse FDISG for all reasonable
expenses to collect delinquent amounts, including reasonable attorneys'
fees and court costs.
1.2 FDISG may adjust any annual or monthly fees once per calendar year,
upon thirty (30) days prior written notice, in an amount not to exceed
the cumulative percentage increase in the Consumer Price Index for All
Urban Consumers (CIP-U) U.S. City Average, All Items (unadjusted) -
(1982-84 = 100), published by the U.S. Department of Labor since the
last such adjustment in Client's monthly fees (or the effective Date
absent a prior such adjustment).
Schedule D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket
expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class) direct
pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication
costs, including all lease, maintenance and line costs
- Special Ad hoc reports requested by the Fund
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention, retrieval and destruction costs, including,
but not limited to exit fees charged by third party record
keeping vendors
- Third party audit reviews
- All Systems enhancements after the conversion at the rate of
$100.00 per hour
- Insurance
- Such other miscellaneous expenses reasonably incurred by FDISG
in performing its duties and responsibilities under this
Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with FDISG. In addition, the Fund will
promptly reimburse FDISG for any other unscheduled expenses incurred by FDISG
whenever the Fund and FDISG mutually agree that such expenses are not otherwise
properly borne by FDISG as part of its duties and obligations under the
Agreement.
Schedule E
FUND DOCUMENTS
- Certified copy of the Articles of Incorporation of the Fund,
as amended
- Certified copy of the By-laws of the Fund, as amended,
- Copy of the resolution of the Board of Directors authorizing
the execution and delivery of this Agreement
- Specimens of the certificates for Shares of the Fund, if
applicable, in the form approved by the Board of Directors of
the Fund, with a certificate of the Secretary of the Fund as
to such approval
- All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service
offered by the Fund
- Certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each
Shareholder, and the number of Shares of the Fund held by
each, certificate numbers and denominations (if any
certificates have been issued), lists of any accounts against
which stop transfer orders have been placed, together with the
reasons therefore, and the number of Shares redeemed by the
Fund
- All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation
or By-laws of the Fund or as required by law and shall perform
such other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
EXHIBIT 8.2
Transfer Agency and Services Agreement
SIT Growth & Income Fund, Inc.
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 31st day of December, 1995 between SIT
GROWTH FUND & INCOME FUND, INC. (the "Fund"), a Minnesota corporation, having
its principal place of business at 4600 Norwest Center, Minneapolis, Minnesota
55402 and FIRST DATA INVESTOR SERVICES GROUP, INC. ("FDISG"), a Massachusetts
corporation with principal offices at One Exchange Place, 53 State Street,
Boston, Massachusetts 02109.
WITNESSETH
WHEREAS, the Fund desires to appoint FDISG as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities
and FDISG desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and FDISG agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not such
person is an officer or employee of the Fund, duly authorized to give
Oral Instructions or Written Instructions on behalf of the Fund as
indicated in writing to FDISG from time to time.
(c) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(g) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by FDISG from a person
reasonably believed by FDISG to be an Authorized Person;
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which have become effective under the
Securities Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
the Fund as may be issued from time to time.
(k) "Shareholder" shall mean a record owner of Shares of the
Fund.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by FDISG to be an Authorized
Person and actually received by FDISG. Written Instructions shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original
or other process.
Article 2 Appointment of FDISG.
The Fund hereby appoints and constitutes FDISG as transfer agent and
dividend disbursing agent for Shares of the Fund and as shareholder servicing
agent for the Fund and FDISG hereby accepts such appointments and agrees to
perform the duties hereinafter set forth.
Article 3 Duties of FDISG.
3.1 FDISG shall be responsible for:
(a) Administering and/or performing the customary services of
a transfer agent; acting as service agent in connection with dividend
and distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares of the Fund, as more fully described in the
written schedule of Duties of FDISG annexed hereto as Schedule A and
incorporated herein, and in accordance with the terms of the Prospectus
of the Fund, applicable law and the procedures established from time to
time between FDISG and the Fund.
(b) Recording the issuance of Shares and maintaining pursuant
to Rule 17Ad-10(e) of the 1934 Act a record of the total number of
Shares of the Fund which are authorized, based upon data provided to it
by the Fund, and issued and outstanding. FDISG shall provide the Fund
on a regular basis with the total number of Shares of the Fund which
are authorized and issued and outstanding and shall have no obligation,
when recording the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the issue or sale
of such Shares, which functions shall be the sole responsibility of the
Fund.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, FDISG shall be under no duty or obligation to inquire into,
and shall not be liable for: (i) the legality of the issuance or sale
of any Shares or the sufficiency of the amount to be received therefor;
(ii) the legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor; (iii) the legality of the declaration
of any dividend by the Board of Directors, or the legality of the
issuance of any Shares in payment of any dividend; or (iv) the legality
of any recapitalization or readjustment of the Shares.
3.2 FDISG agrees that it shall perform the services set forth herein in
accordance with the written schedule of Quality Standard Levels annexed hereto
as Schedule B.
3.3 In addition, the Fund shall (i) identify to FDISG in writing those
transactions and assets to be treated as exempt from blue sky reporting for each
State and (ii) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily activity for each
State. The responsibility of FDISG for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and the reporting of such transactions to the
Fund as provided above.
3.4 In addition to the duties set forth herein, FDISG shall perform
such other duties and functions, and shall be paid such amounts therefor, as may
from time to time be agreed upon in writing between the Fund and FDISG.
Article 4 Recordkeeping and Other Information.
4.1 FDISG shall create and maintain all records required of it pursuant
to its duties hereunder and as set forth in Schedule A in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the 1940 Act. Where applicable, such records shall be maintained by
FDISG for the periods and in the places required by Rule 31a-2 under the 1940
Act.
4.2 To the extent required by Section 31 of the 1940 Act, FDISG agrees
that all such records prepared or maintained by FDISG relating to the services
to be performed by FDISG hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such section, and
will be surrendered promptly to the Fund on and in accordance with the Fund's
request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, FDISG will endeavor to notify the Fund of such
request and secure Written Instructions as to the handling of such request.
FDISG reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to comply with such request.
Article 5 Fund Instructions.
5.1 FDISG will have no liability when acting upon Written or Oral
Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. FDISG will also have no liability when processing Share certificates which
it reasonably believes to bear the proper manual or facsimile signatures of the
officers of the Fund and the proper countersignature of FDISG.
5.2 At any time, FDISG may request Written Instructions from the Fund
and may seek advice from legal counsel for the Fund, or its own legal counsel,
with respect to any matter arising in connection with this Agreement, and it
shall not be liable for any action taken or not taken or suffered by it in good
faith in accordance with such Written Instructions or in accordance with the
opinion of counsel for the Fund or for FDISG. Written Instructions requested by
FDISG will be provided by the Fund within a reasonable period of time.
5.3 FDISG, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing or
acting on behalf of the Fund only if said representative is an Authorized
Person. The Fund agrees that all Oral Instructions shall be followed within one
business day by confirming Written Instructions, and that the Fund's failure to
so confirm shall not impair in any respect FDISG's right to rely on Oral
Instructions.
Article 6 Compensation.
6.1 The Fund will compensate FDISG for the performance of its
obligations hereunder in accordance with the fees set forth in the written Fee
Schedule annexed hereto as Schedule C and incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the Fund
agrees to pay, and will be billed separately for, out-of-pocket expenses
incurred by FDISG in the performance of its duties hereunder. Out-of-pocket
expenses shall include, but shall not be limited to, the items specified in the
written schedule of out-of-pocket charges annexed hereto as Schedule D and
incorporated herein. Schedule C may be modified by written agreement between the
parties. Unspecified out-of-pocket expenses shall be limited to those
out-of-pocket expenses reasonably incurred by FDISG in the performance of its
obligations hereunder.
6.3 The Fund agrees to pay all fees and out-of-pocket expenses within
fifteen (15) days following the receipt of the respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule C, a revised Fee Schedule executed and dated by
the parties hereto.
6.5 The Fund acknowledges that the fees that FDISG charges the Fund
under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 9.3 and the limitations on
liability and exclusion of remedies in Section 11.2 and Article 12. Modifying
the allocation of risk from what is stated here would affect the fees that FDISG
charges, and in consideration of those fees, the Fund agrees to the stated
allocation of risk.
Article 7 Documents.
In connection with the appointment of FDISG, the Fund shall, on or
before the date this Agreement goes into effect, but in any case within a
reasonable period of time for FDISG to prepare to perform its duties hereunder,
deliver or caused to be delivered to FDISG the documents set forth in the
written schedule of Fund Documents annexed hereto as Schedule E.
Article 8 Transfer Agent System.
8.1 FDISG shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by FDISG in connection with the services
provided by FDISG to the Fund herein (the "FDISG System").
8.2 FDISG hereby grants to the Fund a limited license to the FDISG
System for the sole and limited purpose of having FDISG provide the services
contemplated hereunder and nothing contained in this Agreement shall be
construed or interpreted otherwise and such license shall immediately terminate
with the termination of this Agreement.
Article 9 Representations and Warranties.
9.1 FDISG represents and warrants to the Fund that:
(a) it is a corporation duly organized an existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to
authorized it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in effect
for the duration of this Agreement; and
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to FDISG that:
(a) it is duly organized and existing and in good standing
under the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Article
of Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to
authorized it to enter into this Agreement;
(d) a registration statement under the Securities Act of 1933,
as amended, and the 1940 Act on behalf of each of the Fund is currently
effective and will remain effective, and all appropriate state
securities law filings have been made and will continue to be made,
with respect to all Shares of the Fund being offered for sale;
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with
the terms of the Fund's Articles of Incorporation and its Prospectus,
such Shares shall be validly issued, fully paid and non-assessable.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTIES REGARDING QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM
OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES
PROVIDED UNDER THIS AGREEMENT. FDISG DISCLAIMS ANY WARRANTY OF TITLE OR
NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT.
Article 10 Indemnification.
10.1 FDISG shall not be responsible for and the Fund shall indemnify
and hold FDISG harmless from and against any and all claims, costs, expenses
(including reasonable attorneys' fees), losses, damages, charges, payments and
liabilities of any sort or kind which may be asserted against FDISG or for which
FDISG may be held to be liable (a "Claim") arising out of or attributable to any
of the following:
(a) Any actions of FDISG required to be taken pursuant to this
Agreement unless such Claim resulted from a negligent act or omission
to act or bad faith by FDISG in the performance of its duties
hereunder.
(b) FDISG's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by FDISG from the Fund, or any authorized third party acting
on behalf of the Fund, including but not limited the prior transfer
agent for the Fund, in the performance of FDISG's duties and
obligations hereunder.
(c) The reliance on, or the implementation of, any Written or
Oral Instructions or any other instructions or requests of the Fund.
(d) The offer or sales of shares in violation of any
requirement under the securities laws or regulations of any state that
such shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect to the
offer or sale of such shares in such state.
(e) The Fund's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the Fund's negligence
or misconduct or the breach of any representation or warranty of the
Fund made herein.
10.2 The Fund shall not be responsible for and FDISG shall indemnify
and hold the Fund harmless from and against any and all Claims made by third
parties which result from a negligent act or omission to act or bad faith by
FDISG in the performance of its duties hereunder.
10.3 In any case in which the either party (the "Indemnifying Party")
may be asked to indemnify or hold the other (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
10.4 Any claim for indemnification under this Agreement must be made
prior to one year after the applicable party becomes aware of the event for
which indemnification is claimed.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
FDISG's sole and exclusive remedy for claims or other actions or proceedings to
which the Fund's indemnification obligations pursuant to this Article 10 may
apply.
Article 11 Standard of Care.
11.1 FDISG shall at all times act in good faith and agrees to use its
best efforts within commercially reasonable limits to ensure the accuracy of all
services performed under this Agreement, but assumes no responsibility for loss
or damage to the Fund unless said errors are caused by FDISG's own negligence,
bad faith or willful misconduct or that of its employees.
11.2 Notwithstanding the foregoing Section 11.1 or anything else
contained in this Agreement to the contrary, FDISG's entire liability to the
Fund for any loss or damage, direct or indirect for any cause whatsoever
(including but not limited to those arising out of this Agreement), and
regardless of the form of action, shall be limited to the Fund's actual direct
out-of-pocket expenses which are reasonably incurred by the Fund, but shall not
under any circumstances exceed the lesser of (i) an amount equivalent to the
average of twelve month's fees paid to FDISG under this Agreement; or (ii)
one-million dollars ($1,000,000). The foregoing limitation of liability shall
not apply to damages occasioned by the intentional misconduct or gross
negligence of either party.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL FDISG, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF TORT,
CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST PROFITS,
EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES,
EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF
WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written above
and shall continue for a period of five (5) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of three (3) years
("Renewal Terms") each.
13.2 Either party may terminate this Agreement at the end of the
Initial Term or any subsequent Renewal Term upon not less than ninety (90) days
or more than one-hundred eighty (180) days prior written notice to the other
party.
13.3 Nothwithstanding the foregoing provisions in Section 13.1 and
13.2, the Fund may terminate this Agreement as follows:
(a) the Fund may terminate this Agreement after year three
upon ninety (90) days written notice to FDISG. Such notice must be
received by FDISG no earlier than ninety (90) days prior to the end of
the third year of the Agreement and no later than the end of the third
year of the Agreement, otherwise the Agreement shall continue in full
force and effect; or
(b) the Fund may terminate this Agreement after year four upon
ninety (90) days written notice to FDISG. Such notice must be received
by FDISG no earlier than ninety (90) days prior to the end of the
fourth year of the Agreement and no later than the end of the fourth
year of the Agreement, otherwise the Agreement shall continue in full
force and effect.
13.4 In the event that this Agreement is terminated pursuant to
provisions in Sections 13.3 (a) or (b) above, the Fund shall pay to FDISG its
allocable portion of the aggregate early termination fee prior to the effective
date of such termination such that the total termination fee paid by investment
companies within the SIT Mutual Fund Group (SIT Mutual Fund Group as used in
Section 13 is defined as investment companies for which SIT Investment
Associates, Inc. serves as the investment manager and sponsor and which have
entered into similar transfer agency and services agreements as this Agreement
with FDISG) equals:
(a) if termination under Section 13.3(a) - $150,000.00; or
(b) if termination under Section 13.3(b) - $100,000.00.
13.5 In the event a termination notice is given by the Fund, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Fund.
13.6 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party; provided however, that no such cure period shall be
allowed for any such material breach which occurs more than twice in any one
year period. If FDISG is the Non-Defaulting Party, its termination of this
Agreement shall not constitute a waiver of any other rights or remedies of FDISG
with respect to services performed prior to such termination or rights of FDISG
to be reimbursed for out-of-pocket expenses. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against the
Defaulting Party.
Article 14 Confidentiality.
14.1 The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The Fund
and FDISG shall exercise at least the same degree of care, but not less than
reasonable care, to safeguard the confidentiality of the Confidential
Information of the other as it would exercise to protect it's own confidential
information of a similar nature. The Fund and FDISG may use the Confidential
Information only to exercise its rights under this Agreement. The Fund and FDISG
shall not duplicate, sell or disclose to others the Confidential Information of
the other, in whole or in part, without the prior written permission of the
other party. The Fund and FDISG may, however, disclose Confidential Information
to its employees who have a need to know the Confidential Information to perform
work for the other, provided that each shall use reasonable efforts to ensure
that the Confidential Information is not duplicated or disclosed by its
employees in breach of this Agreement. The Fund and FDISG may also disclose the
Confidential Information to independent contractors, auditors, and professional
advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 14.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
FDISG disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
14.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future business activities of the Fund or FDISG,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or FDISG
a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
14.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
Article 15 Force Majeure.
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature or
other acts of God; (ii) any outbreak or escalation of hostilities, war, riots or
civil disorders in any country, (iii) any act or omission of the other party or
any governmental authority; (iv) any labor disputes (whether or not the
employees' demands are reasonable or within the party's power to satisfy); or
(v) nonperformance by a third party or any similar cause beyond the reasonable
control of such party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the non-performing
party shall be excused from any further performance and observance of the
obligations so affected only for as long as such circumstances prevail and such
party continues to use commercially reasonable efforts to recommence performance
or observance as soon as practicable.
Article 16 Amendments.
No change, termination, modification, or waiver of any term or
condition of the Agreement shall be valid unless in writing signed by each
party. A party's waiver of a breach of any term or condition in the Agreement
shall not be deemed a waiver of any subsequent breach of the same or another
term or condition.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld. FDISG may, in its sole
discretion, engage subcontractors to perform any of the obligations contained in
this Agreement to be performed by FDISG.
Article 18 Notice.
Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Fund or FDISG, shall be sufficiently given if
addressed to that party and received by it at its office set forth below or at
such other place as it may from time to time designate in writing.
To the Fund:
SIT Growth & Income Fund, Inc.
4600 Norwest Center
Minneapolis, MN 55402
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President
with a copy to FDISG's General Counsel
Article 19 Successors.
This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns, provided, however, that
this Agreement shall not be assigned to any person other than a person
controlling, controlled by or under common control with the assignor without the
written consent of the other party, which consent shall not be unreasonably
withheld.
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this agreement. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston, and FDISG
and the Fund hereby submit themselves to the exclusive jurisdiction of those
courts.
Article 21 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 22 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 Publicity.
Neither FDISG nor the Fund shall release or publish news releases,
public announcements, advertising or other publicity relating to this Agreement
or to the transactions contemplated by it without the prior review and written
approval of the other party; provided, however, that either party may make such
disclosures as are required by legal, accounting or regulatory requirements
after making reasonable efforts in the circumstances to consult in advance with
the other party.
Article 24 Relationship of Parties.
The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. A party's waiver of a
breach of any term or condition in the Agreement shall not be deemed a waiver of
any subsequent breach of the same or another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
SIT GROWTH & INCOME FUND, INC.
By: /s/ Mary K. Stern
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Gerald Kokos
Title: Executive Vice President
Schedule A
DUTIES OF FDISG
1. Shareholder Information. FDISG shall maintain a record of the number
of Shares held by each Shareholder of record which shall include name, address,
taxpayer identification and which shall indicate whether such Shares are held in
certificates or uncertificated form.
2. Shareholder Services. FDISG shall respond as appropriate to all
inquiries and communications from Shareholders relating to Shareholder accounts
with respect to its duties hereunder and as may be from time to time mutually
agreed upon between FDISG and the Fund.
3. Share Certificates.
(a) At the expense of the Fund, the Fund shall supply FDISG
with an adequate supply of blank share certificates to meet FDISG requirements
therefor. Such Share certificates shall be properly signed by facsimile. The
Fund agrees that, notwithstanding the death, resignation, or removal of any
officer of the Fund whose signature appears on such certificates, FDISG or its
agent may continue to countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) FDISG shall issue replacement Share certificates in lieu
of certificates which have been lost, stolen or destroyed, upon receipt by FDISG
of properly executed affidavits and lost certificate bonds, in form satisfactory
to FDISG, with the Fund and FDISG as obligees under the bond.
(c) FDISG shall also maintain a record of each certificate
issued, the number of Shares represented thereby and the Shareholder of record.
With respect to Shares held in open accounts or uncertificated form (i.e., no
certificate being issued with respect thereto) FDISG shall maintain comparable
records of the Shareholders thereof, including their names, addresses and
taxpayer identification. FDISG shall further maintain a stop transfer record on
lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. FDISG will
address and mail to Shareholders of the Fund, all reports to Shareholders,
dividend and distribution notices and proxy material for the Fund's meetings of
Shareholders. In connection with meetings of Shareholders, FDISG will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
5. Sale of Shares
(a) FDISG shall not be required to issue any Shares of the
Fund where it has received a Written Instruction from the Fund or official
notice from any appropriate authority that the sale of the Shares of the Fund
has been suspended or discontinued. The existence of such Written Instructions
or such official notice shall be conclusive evidence of the right of FDISG to
rely on such Written Instructions or official notice.
(b) In the event that any check or other order for the payment
of money is returned unpaid for any reason, FDISG will endeavor to: (i) give
prompt notice of such return to the Fund or its designee; (ii) place a stop
transfer order against all Shares issued as a result of such check or order; and
(iii) take such actions as FDISG may from time to time deem appropriate.
6. Transfer and Repurchase
(a) FDISG shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in the
Fund's Prospectus.
(b) FDISG will transfer or repurchase Shares upon receipt of
Oral or Written Instructions or otherwise pursuant to the Prospectus and Share
certificates, if any, properly endorsed for transfer or redemption, accompanied
by such documents as FDISG reasonably may deem necessary.
(c) FDISG reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the endorsement on the instructions
is valid and genuine. FDISG also reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the requested transfer or
repurchase is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or repurchases which FDISG, in its
good judgement, deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such transfer or
repurchase.
(d) When Shares are redeemed, FDISG shall, upon receipt of the
instructions and documents in proper form, deliver to the Custodian and the Fund
or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate accounts
maintained by FDISG reflecting outstanding Shares of the Fund and Shares
attributed to individual accounts.
(e) FDISG, upon receipt of the monies paid to it by the
Custodian for the repurchase of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures described in the written
instruction received by FDISG from the Fund.
(f) FDISG shall not process or effect any repurchase with
respect to Shares of the Fund after receipt by FDISG or its agent of
notification of the suspension of the determination of the net asset value of
the Fund.
7. Dividends
(a) Upon the declaration of each dividend and each capital
gains distribution by the Board of Directors of the Fund with respect to Shares
of the Fund, the Fund shall furnish or cause to be furnished to FDISG Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record date
as of which Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date, the total
amount payable to FDISG on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution
of the Board of Directors, the Fund will pay to FDISG sufficient cash to make
payment to the Shareholders of record as of such payment date.
(c) If FDISG does not receive sufficient cash from the Fund to
make total dividend and/or distribution payments to all Shareholders of the Fund
as of the record date, FDISG will, upon notifying the Fund, withhold payment to
all Shareholders of record as of the record date until sufficient cash is
provided to FDISG.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, FDISG shall: (i) perform all the customary services of
a transfer agent, registrar, dividend disbursing agent and agent of the dividend
reinvestment and cash purchase plan as described herein consistent with those
requirements in effect as at the date of this Agreement. The detailed
definition, frequency, limitations and associated costs (if any) set out in the
attached fee schedule, include but are not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing proxies,
tabulating proxies, mailing Shareholder reports to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts where
applicable, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
Schedule B
QUALITY STANDARD LEVELS
1. TIMELINESS OF RESEARCH REQUESTS
SERVICE DESCRIPTION:
FDISG will provide a research and problem resolution service to the
Shareholders. On a daily basis, the Fund, using either the Impress CSS
system or by fax, will communicate research requests to FDISG.
FDISG'S OBJECTIVE:
FDISG's objective is to accurately respond to 98% of the research
requests within the periods set forth below.
Wire: Complete within 24 hours
Financial: Complete within 48 hours
Non-Financial: Complete within 72 hours
2. MANUAL DATA ENTRY
SERVICE DESCRIPTION:
FDISG provides a manual data entry service to the Fund for establishing
new Shareholder accounts and monitoring existing account records.
FDISG'S OBJECTIVE:
FDISG's objective is to establish new accounts with a data accuracy
rate of 98%.
3. ACCURACY AND TIMELINESS OF SHAREHOLDER STATEMENTS
SERVICE DESCRIPTION:
Based on the mail frequency of the Fund, FDISG will produce and mail
periodic statements to Shareholders. FDISG will provide the Fund with a
mailing report from its Print/Mail vendor which will indicate the date
on which all Shareholder statements were mailed.
FDISG'S OBJECTIVE:
FDISG's objective is to manage this service so that 99% of all
statements from the Fund are accurate and are mailed no later than five
(5) business days after the statement date.
4. ACCURACY AND TIMELINESS OF DAILY ADVICE MAILINGS
SERVICE DESCRIPTION:
FDISG will produce and send, deliver or distribute an advice to the
Shareholder's account, except where suppressed pursuant to instructions
received from the Fund. FDISG will provide the Fund with a mailing
report from its Print/Mail vendor which will indicate the date on which
all advises were mailed.
FDISG'S OBJECTIVES:
FDISG's objective is to manage this service so that 99% of such advices
are accurate and are mailed no later than two (2) business days
following the date of the transaction.
5. TIMELINESS OF DISTRIBUTION CHECKS AND DIVIDEND MAILINGS
SERVICE DESCRIPTION:
Periodically, FDISG will create and mail checks for Fund's respective
Shareholders. FDISG will provide the Fund with a mailing report from
its Print/ Mail vendor indicating the date on which all dividend or
distribution checks were mailed.
FDISG'S OBJECTIVE:
FDISG's objective is to manage this service so that 99% of such advices
are accurate and are mailed no later than two (2) business days
following the date of the transaction.
6. FINANCIAL CONTROL
SERVICE DESCRIPTION:
FDISG will provide daily fund settlement reports to the Fund's
accounting and custodian service providers. FDISG will reconcile the
Fund's Demand Deposit Accounts on a daily basis, including investments
and disbursements. Acceptable DDA Item Exceptions beyond five days
include:
- Client Originated Item
- Shareholder Reclaim
- Bank (Cash Manager) Error
- Shareholder Fraudulent Activity
- Fed Wire Recall
- System Data Processing Limitations
- Miscellaneous Funding Issues with Shareholder,
Cash Manager, or Custodian
FDISG'S OBJECTIVE:
FDISG's objective is to reconcile all DDA transactions within five (5)
business days of the transaction post date. Any exceptions, including
items greater than five (5) business days, will be reported to the Fund
with a general item description. Any exception must be approved by the
Fund to be considered within standard.
Schedule C
FEE SCHEDULE
SIT GROWTH & INCOME FUND, INC.
<TABLE>
<CAPTION>
Annual Fees:
<S> <C>
Open Account Fees: $13.50 per open account
Closed Account Fees: $ 2.40 per closed account
Fund Minimums: $24,000 per fund per year
Conversion Costs: Free set-up fee
Value Added Services:
Cost Basis Accounting: Free set-up fee
Adhoc SQL: Free set-up fee; $1,000 per hour
AVR Solution: Free set-up fee
$.2125 per minute charge
$.0775 per minute telecom charge
$.10 per call
FundServ: Free set-up fee, $.15 per trade plus $.10 same day trades
Asset Allocation/Reallocation: Free set-up fee, $.25 per trade via NSCC
Direct Access Zip Link: Free set-up fee, $1,000 per month, $.03/record plus $.015/price record
</TABLE>
CONSOLIDATED STATEMENTS PRICE DETERMINED BY PROJECT SCOPE. CUSTOMIZED
PROGRAMMING BILLABLE AT $100/HOUR.
General:
1.1 FDISG may charge a service fee equal to the lesser of (i) one and one
half percent (1 1/2%) per month of (ii) the highest interest rate
legally permitted on any unpaid amounts, unless such amounts are
ultimately determined not due in accordance with the Payment Dispute
Procedure. The Fund shall also reimburse FDISG for all reasonable
expenses to collect delinquent amounts, including reasonable attorneys'
fees and court costs.
1.2 FDISG may adjust any annual or monthly fees once per calendar year,
upon thirty (30) days prior written notice, in an amount not to exceed
the cumulative percentage increase in the Consumer Price Index for All
Urban Consumers (CIP-U) U.S. City Average, All Items (unadjusted) -
(1982-84 = 100), published by the U.S. Department of Labor since the
last such adjustment in Client's monthly fees (or the effective Date
absent a prior such adjustment).
Schedule D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket
expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Special Ad hoc reports requested by the Fund
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention, retrieval and destruction costs,
including, but not limited to exit fees charged by
third party record keeping vendors
- Third party audit reviews
- All Systems enhancements after the conversion at the rate of
$100.00 per hour
- Insurance
- Such other miscellaneous expenses reasonably incurred
by FDISG in performing its duties and responsibilities under
this Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with FDISG. In addition, the Fund will
promptly reimburse FDISG for any other unscheduled expenses incurred by FDISG
whenever the Fund and FDISG mutually agree that such expenses are not otherwise
properly borne by FDISG as part of its duties and obligations under the
Agreement.
Schedule E
FUND DOCUMENTS
- Certified copy of the Articles of Incorporation of the Fund,
as amended
- Certified copy of the By-laws of the Fund, as amended,
- Copy of the resolution of the Board of Directors authorizing
the execution and delivery of this Agreement
- Specimens of the certificates for Shares of the Fund, if
applicable, in the form approved by the Board of Directors of
the Fund, with a certificate of the Secretary of the Fund as
to such approval
- All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service
offered by the Fund
- Certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each
Shareholder, and the number of Shares of the Fund held by
each, certificate numbers and denominations (if any
certificates have been issued), lists of any accounts against
which stop transfer orders have been placed, together with the
reasons therefore, and the number of Shares redeemed by the
Fund
- All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation
or By-laws of the Fund or as required by law and shall perform
such other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
EXHIBIT 8.2
Transfer Agency and Services Agreement
SIT Mutual Funds, Inc.
TRANSFER AGENCY AND SERVICES AGREEMENT
THIS AGREEMENT, dated as of this 31st day of December, 1995 between SIT
MUTUAL FUNDS, INC. (the "Fund"), a Minnesota corporation, having its principal
place of business at 4600 Norwest Center, Minneapolis, Minnesota 55402 and FIRST
DATA INVESTOR SERVICES GROUP, INC. ("FDISG"), a Massachusetts corporation with
principal offices at One Exchange Place, 53 State Street, Boston, Massachusetts
02109.
WITNESSETH
WHEREAS, the Fund desires to appoint FDISG as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities
and FDISG desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, the Fund and FDISG agree as follows:
Article 1 Definitions.
1.1 Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Articles of Incorporation" shall mean the Articles of
Incorporation, Declaration of Trust, or other similar organizational
document as the case may be, of the Fund as the same may be amended
from time to time.
(b) "Authorized Person" shall be deemed to include (i) any
authorized officer of the Fund; or (ii) any person, whether or not such
person is an officer or employee of the Fund, duly authorized to give
Oral Instructions or Written Instructions on behalf of the Fund as
indicated in writing to FDISG from time to time.
(c) "Board of Directors" shall mean the Board of Directors or
Board of Trustees of the Fund, as the case may be.
(d) "Commission" shall mean the Securities and Exchange
Commission.
(e) "Custodian" refers to any custodian or subcustodian of
securities and other property which the Fund may from time to time
deposit, or cause to be deposited or held under the name or account of
such a custodian pursuant to a Custodian Agreement.
(f) "1934 Act" shall mean the Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(g) "1940 Act" shall mean the Investment Company Act of 1940
and the rules and regulations promulgated thereunder, all as amended
from time to time.
(h) "Oral Instructions" shall mean instructions, other than
Written Instructions, actually received by FDISG from a person
reasonably believed by FDISG to be an Authorized Person;
(i) "Prospectus" shall mean the most recently dated Fund
Prospectus and Statement of Additional Information, including any
supplements thereto if any, which have become effective under the
Securities Act of 1933 and the 1940 Act.
(j) "Shares" refers collectively to such shares of capital
stock or beneficial interest, as the case may be, or class thereof, of
the Fund as may be issued from time to time.
(k) "Shareholder" shall mean a record owner of Shares of the
Fund.
(l) "Written Instructions" shall mean a written communication
signed by a person reasonably believed by FDISG to be an Authorized
Person and actually received by FDISG. Written Instructions shall
include manually executed originals and authorized electronic
transmissions, including telefacsimile of a manually executed original
or other process.
Article 2 Appointment of FDISG.
The Fund hereby appoints and constitutes FDISG as transfer agent and
dividend disbursing agent for Shares of the Fund and as shareholder servicing
agent for the Fund and FDISG hereby accepts such appointments and agrees to
perform the duties hereinafter set forth.
Article 3 Duties of FDISG.
3.1 FDISG shall be responsible for:
(a) Administering and/or performing the customary services of
a transfer agent; acting as service agent in connection with dividend
and distribution functions; and for performing shareholder account and
administrative agent functions in connection with the issuance,
transfer and redemption or repurchase (including coordination with the
Custodian) of Shares of the Fund, as more fully described in the
written schedule of Duties of FDISG annexed hereto as Schedule A and
incorporated herein, and in accordance with the terms of the Prospectus
of the Fund, applicable law and the procedures established from time to
time between FDISG and the Fund.
(b) Recording the issuance of Shares and maintaining pursuant
to Rule 17Ad-10(e) of the 1934 Act a record of the total number of
Shares of the Fund which are authorized, based upon data provided to it
by the Fund, and issued and outstanding. FDISG shall provide the Fund
on a regular basis with the total number of Shares of the Fund which
are authorized and issued and outstanding and shall have no obligation,
when recording the issuance of Shares, to monitor the issuance of such
Shares or to take cognizance of any laws relating to the issue or sale
of such Shares, which functions shall be the sole responsibility of the
Fund.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, FDISG shall be under no duty or obligation to inquire into,
and shall not be liable for: (i) the legality of the issuance or sale
of any Shares or the sufficiency of the amount to be received therefor;
(ii) the legality of the redemption of any Shares, or the propriety of
the amount to be paid therefor; (iii) the legality of the declaration
of any dividend by the Board of Directors, or the legality of the
issuance of any Shares in payment of any dividend; or (iv) the legality
of any recapitalization or readjustment of the Shares.
3.2 FDISG agrees that it shall perform the services set forth herein in
accordance with the written schedule of Quality Standard Levels annexed hereto
as Schedule B.
3.3 In addition, the Fund shall (i) identify to FDISG in writing those
transactions and assets to be treated as exempt from blue sky reporting for each
State and (ii) verify the establishment of transactions for each State on the
system prior to activation and thereafter monitor the daily activity for each
State. The responsibility of FDISG for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions subject to
blue sky compliance by the Fund and the reporting of such transactions to the
Fund as provided above.
3.4 In addition to the duties set forth herein, FDISG shall perform
such other duties and functions, and shall be paid such amounts therefor, as may
from time to time be agreed upon in writing between the Fund and FDISG.
Article 4 Recordkeeping and Other Information.
4.1 FDISG shall create and maintain all records required of it pursuant
to its duties hereunder and as set forth in Schedule A in accordance with all
applicable laws, rules and regulations, including records required by Section
31(a) of the 1940 Act. Where applicable, such records shall be maintained by
FDISG for the periods and in the places required by Rule 31a-2 under the 1940
Act.
4.2 To the extent required by Section 31 of the 1940 Act, FDISG agrees
that all such records prepared or maintained by FDISG relating to the services
to be performed by FDISG hereunder are the property of the Fund and will be
preserved, maintained and made available in accordance with such section, and
will be surrendered promptly to the Fund on and in accordance with the Fund's
request.
4.3 In case of any requests or demands for the inspection of
Shareholder records of the Fund, FDISG will endeavor to notify the Fund of such
request and secure Written Instructions as to the handling of such request.
FDISG reserves the right, however, to exhibit the Shareholder records to any
person whenever it is advised by its counsel that it may be held liable for the
failure to comply with such request.
Article 5 Fund Instructions.
5.1 FDISG will have no liability when acting upon Written or Oral
Instructions believed to have been executed or orally communicated by an
Authorized Person and will not be held to have any notice of any change of
authority of any person until receipt of a Written Instruction thereof from the
Fund. FDISG will also have no liability when processing Share certificates which
it reasonably believes to bear the proper manual or facsimile signatures of the
officers of the Fund and the proper countersignature of FDISG.
5.2 At any time, FDISG may request Written Instructions from the Fund
and may seek advice from legal counsel for the Fund, or its own legal counsel,
with respect to any matter arising in connection with this Agreement, and it
shall not be liable for any action taken or not taken or suffered by it in good
faith in accordance with such Written Instructions or in accordance with the
opinion of counsel for the Fund or for FDISG. Written Instructions requested by
FDISG will be provided by the Fund within a reasonable period of time.
5.3 FDISG, its officers, agents or employees, shall accept Oral
Instructions or Written Instructions given to them by any person representing or
acting on behalf of the Fund only if said representative is an Authorized
Person. The Fund agrees that all Oral Instructions shall be followed within one
business day by confirming Written Instructions, and that the Fund's failure to
so confirm shall not impair in any respect FDISG's right to rely on Oral
Instructions.
Article 6 Compensation.
6.1 The Fund will compensate FDISG for the performance of its
obligations hereunder in accordance with the fees set forth in the written Fee
Schedule annexed hereto as Schedule C and incorporated herein.
6.2 In addition to those fees set forth in Section 6.1 above, the Fund
agrees to pay, and will be billed separately for, out-of-pocket expenses
incurred by FDISG in the performance of its duties hereunder. Out-of-pocket
expenses shall include, but shall not be limited to, the items specified in the
written schedule of out-of-pocket charges annexed hereto as Schedule D and
incorporated herein. Schedule C may be modified by written agreement between the
parties. Unspecified out-of-pocket expenses shall be limited to those
out-of-pocket expenses reasonably incurred by FDISG in the performance of its
obligations hereunder.
6.3 The Fund agrees to pay all fees and out-of-pocket expenses within
fifteen (15) days following the receipt of the respective invoice.
6.4 Any compensation agreed to hereunder may be adjusted from time to
time by attaching to Schedule C, a revised Fee Schedule executed and dated by
the parties hereto.
6.5 The Fund acknowledges that the fees that FDISG charges the Fund
under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 9.3 and the limitations on
liability and exclusion of remedies in Section 11.2 and Article 12. Modifying
the allocation of risk from what is stated here would affect the fees that FDISG
charges, and in consideration of those fees, the Fund agrees to the stated
allocation of risk.
Article 7 Documents.
In connection with the appointment of FDISG, the Fund shall, on or
before the date this Agreement goes into effect, but in any case within a
reasonable period of time for FDISG to prepare to perform its duties hereunder,
deliver or caused to be delivered to FDISG the documents set forth in the
written schedule of Fund Documents annexed hereto as Schedule E.
Article 8 Transfer Agent System.
8.1 FDISG shall retain title to and ownership of any and all data
bases, computer programs, screen formats, report formats, interactive design
techniques, derivative works, inventions, discoveries, patentable or
copyrightable matters, concepts, expertise, patents, copyrights, trade secrets,
and other related legal rights utilized by FDISG in connection with the services
provided by FDISG to the Fund herein (the "FDISG System").
8.2 FDISG hereby grants to the Fund a limited license to the FDISG
System for the sole and limited purpose of having FDISG provide the services
contemplated hereunder and nothing contained in this Agreement shall be
construed or interpreted otherwise and such license shall immediately terminate
with the termination of this Agreement.
Article 9 Representations and Warranties.
9.1 FDISG represents and warrants to the Fund that:
(a) it is a corporation duly organized an existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) it is empowered under applicable laws and by its Articles
of Incorporation and By-Laws to enter into and perform this Agreement;
(c) all requisite corporate proceedings have been taken to
authorized it to enter into this Agreement;
(d) it is duly registered with its appropriate regulatory
agency as a transfer agent and such registration will remain in effect
for the duration of this Agreement; and
(e) it has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
9.2 The Fund represents and warrants to FDISG that:
(a) it is duly organized and existing and in good standing
under the laws of the jurisdiction in which it is organized;
(b) it is empowered under applicable laws and by its Article
of Incorporation and By-Laws to enter into this Agreement;
(c) all corporate proceedings required by said Articles of
Incorporation, By-Laws and applicable laws have been taken to
authorized it to enter into this Agreement;
(d) a registration statement under the Securities Act of 1933,
as amended, and the 1940 Act on behalf of each of the Fund is currently
effective and will remain effective, and all appropriate state
securities law filings have been made and will continue to be made,
with respect to all Shares of the Fund being offered for sale;
(e) all outstanding Shares are validly issued, fully paid and
non-assessable and when Shares are hereafter issued in accordance with
the terms of the Fund's Articles of Incorporation and its Prospectus,
such Shares shall be validly issued, fully paid and non-assessable.
9.3 THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTIES REGARDING QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM
OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES
PROVIDED UNDER THIS AGREEMENT. FDISG DISCLAIMS ANY WARRANTY OF TITLE OR
NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT.
Article 10 Indemnification.
10.1 FDISG shall not be responsible for and the Fund shall indemnify
and hold FDISG harmless from and against any and all claims, costs, expenses
(including reasonable attorneys' fees), losses, damages, charges, payments and
liabilities of any sort or kind which may be asserted against FDISG or for which
FDISG may be held to be liable (a "Claim") arising out of or attributable to any
of the following:
(a) Any actions of FDISG required to be taken pursuant to this
Agreement unless such Claim resulted from a negligent act or omission
to act or bad faith by FDISG in the performance of its duties
hereunder.
(b) FDISG's reasonable reliance on, or reasonable use of
information, data, records and documents (including but not limited to
magnetic tapes, computer printouts, hard copies and microfilm copies)
received by FDISG from the Fund, or any authorized third party acting
on behalf of the Fund, including but not limited the prior transfer
agent for the Fund, in the performance of FDISG's duties and
obligations hereunder.
(c) The reliance on, or the implementation of, any Written or
Oral Instructions or any other instructions or requests of the Fund.
(d) The offer or sales of shares in violation of any
requirement under the securities laws or regulations of any state that
such shares be registered in such state or in violation of any stop
order or other determination or ruling by any state with respect to the
offer or sale of such shares in such state.
(e) The Fund's refusal or failure to comply with the terms of
this Agreement, or any Claim which arises out of the Fund's negligence
or misconduct or the breach of any representation or warranty of the
Fund made herein.
10.2 The Fund shall not be responsible for and FDISG shall indemnify
and hold the Fund harmless from and against any and all Claims made by third
parties which result from a negligent act or omission to act or bad faith by
FDISG in the performance of its duties hereunder.
10.3 In any case in which the either party (the "Indemnifying Party")
may be asked to indemnify or hold the other (the "Indemnified Party") harmless,
the Indemnified Party will notify the Indemnifying Party promptly after
identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party although the
failure to do so shall not prevent recovery by the Indemnified Party and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any Claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the Claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such Claim. The
Indemnified Party will not confess any Claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Article 10 shall survive the termination of this
Agreement.
10.4 Any claim for indemnification under this Agreement must be made
prior to one year after the applicable party becomes aware of the event for
which indemnification is claimed.
10.5 Except for remedies that cannot be waived as a matter of law (and
injunctive or provisional relief), the provisions of this Article 10 shall be
FDISG's sole and exclusive remedy for claims or other actions or proceedings to
which the Fund's indemnification obligations pursuant to this Article 10 may
apply.
Article 11 Standard of Care.
11.1 FDISG shall at all times act in good faith and agrees to use its
best efforts within commercially reasonable limits to ensure the accuracy of all
services performed under this Agreement, but assumes no responsibility for loss
or damage to the Fund unless said errors are caused by FDISG's own negligence,
bad faith or willful misconduct or that of its employees.
11.2 Notwithstanding the foregoing Section 11.1 or anything else
contained in this Agreement to the contrary, FDISG's entire liability to the
Fund for any loss or damage, direct or indirect for any cause whatsoever
(including but not limited to those arising out of this Agreement), and
regardless of the form of action, shall be limited to the Fund's actual direct
out-of-pocket expenses which are reasonably incurred by the Fund, but shall not
under any circumstances exceed the lesser of (i) an amount equivalent to the
average of twelve month's fees paid to FDISG under this Agreement; or (ii)
one-million dollars ($1,000,000). The foregoing limitation of liability shall
not apply to damages occasioned by the intentional misconduct or gross
negligence of either party.
Article 12 Consequential Damages.
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL FDISG, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF TORT,
CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST PROFITS,
EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES,
EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS OF
WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Article 13 Term and Termination.
13.1 This Agreement shall be effective on the date first written above
and shall continue for a period of five (5) years (the "Initial Term"), unless
earlier terminated pursuant to the terms of this Agreement. Thereafter, this
Agreement shall automatically be renewed for successive terms of three (3) years
("Renewal Terms") each.
13.2 Either party may terminate this Agreement at the end of the
Initial Term or any subsequent Renewal Term upon not less than ninety (90) days
or more than one-hundred eighty (180) days prior written notice to the other
party.
13.3 Nothwithstanding the foregoing provisions in Section 13.1 and
13.2, the Fund may terminate this Agreement as follows:
(a) the Fund may terminate this Agreement after year three
upon ninety (90) days written notice to FDISG. Such notice must be
received by FDISG no earlier than ninety (90) days prior to the end of
the third year of the Agreement and no later than the end of the third
year of the Agreement, otherwise the Agreement shall continue in full
force and effect; or
(b) the Fund may terminate this Agreement after year four upon
ninety (90) days written notice to FDISG. Such notice must be received
by FDISG no earlier than ninety (90) days prior to the end of the
fourth year of the Agreement and no later than the end of the fourth
year of the Agreement, otherwise the Agreement shall continue in full
force and effect.
13.4 In the event that this Agreement is terminated pursuant to
provisions in Sections 13.3 (a) or (b) above, the Fund shall pay to FDISG its
allocable portion of the aggregate early termination fee prior to the effective
date of such termination such that the total termination fee paid by investment
companies within the SIT Mutual Fund Group (SIT Mutual Fund Group as used in
Section 13 is defined as investment companies for which SIT Investment
Associates, Inc. serves as the investment manager and sponsor and which have
entered into similar transfer agency and services agreements as this Agreement
with FDISG) equals:
(a) if termination under Section 13.3(a) - $150,000.00; or
(b) if termination under Section 13.3(b) - $100,000.00.
13.5 In the event a termination notice is given by the Fund, all
expenses associated with movement of records and materials and conversion
thereof to a successor transfer agent will be borne by the Fund.
13.6 If a party hereto is guilty of a material failure to perform its
duties and obligations hereunder (a "Defaulting Party") the other party (the
"Non-Defaulting Party") may give written notice thereof to the Defaulting Party,
and if such material breach shall not have been remedied within thirty (30) days
after such written notice is given, then the Non-Defaulting Party may terminate
this Agreement by giving thirty (30) days written notice of such termination to
the Defaulting Party; provided however, that no such cure period shall be
allowed for any such material breach which occurs more than twice in any one
year period. If FDISG is the Non-Defaulting Party, its termination of this
Agreement shall not constitute a waiver of any other rights or remedies of FDISG
with respect to services performed prior to such termination or rights of FDISG
to be reimbursed for out-of-pocket expenses. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against the
Defaulting Party.
Article 14 Confidentiality.
14.1 The parties agree that the Proprietary Information (defined below)
and the contents of this Agreement (collectively "Confidential Information") are
confidential information of the parties and their respective licensors. The Fund
and FDISG shall exercise at least the same degree of care, but not less than
reasonable care, to safeguard the confidentiality of the Confidential
Information of the other as it would exercise to protect it's own confidential
information of a similar nature. The Fund and FDISG may use the Confidential
Information only to exercise its rights under this Agreement. The Fund and FDISG
shall not duplicate, sell or disclose to others the Confidential Information of
the other, in whole or in part, without the prior written permission of the
other party. The Fund and FDISG may, however, disclose Confidential Information
to its employees who have a need to know the Confidential Information to perform
work for the other, provided that each shall use reasonable efforts to ensure
that the Confidential Information is not duplicated or disclosed by its
employees in breach of this Agreement. The Fund and FDISG may also disclose the
Confidential Information to independent contractors, auditors, and professional
advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 14.1.
Notwithstanding the previous sentence, in no event shall either the Fund or
FDISG disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
14.2 Proprietary Information means:
(a) any data or information that is competitively sensitive
material, and not generally known to the public, including, but not
limited to, information about product plans, marketing strategies,
finance, operations, customer relationships, customer profiles, sales
estimates, business plans, and internal performance results relating to
the past, present or future business activities of the Fund or FDISG,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or FDISG
a competitive advantage over its competitors; and
(c) all confidential or proprietary concepts, documentation,
reports, data, specifications, computer software, source code, object
code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
14.3 Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
Article 15 Force Majeure.
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default or delay
is caused, directly or indirectly, by (i) fire, flood, elements of nature or
other acts of God; (ii) any outbreak or escalation of hostilities, war, riots or
civil disorders in any country, (iii) any act or omission of the other party or
any governmental authority; (iv) any labor disputes (whether or not the
employees' demands are reasonable or within the party's power to satisfy); or
(v) nonperformance by a third party or any similar cause beyond the reasonable
control of such party, including without limitation, failures or fluctuations in
telecommunications or other equipment. In any such event, the non-performing
party shall be excused from any further performance and observance of the
obligations so affected only for as long as such circumstances prevail and such
party continues to use commercially reasonable efforts to recommence performance
or observance as soon as practicable.
Article 16 Amendments.
No change, termination, modification, or waiver of any term or
condition of the Agreement shall be valid unless in writing signed by each
party. A party's waiver of a breach of any term or condition in the Agreement
shall not be deemed a waiver of any subsequent breach of the same or another
term or condition.
Article 17 Assignment and Subcontracting.
This Agreement, its benefits and obligations shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned or otherwise transferred
by either party hereto, without the prior written consent of the other party,
which consent shall not be unreasonably withheld. FDISG may, in its sole
discretion, engage subcontractors to perform any of the obligations contained in
this Agreement to be performed by FDISG.
Article 18 Notice.
Any notice or other instrument authorized or required by this Agreement to be
given in writing to the Fund or FDISG, shall be sufficiently given if addressed
to that party and received by it at its office set forth below or at such other
place as it may from time to time designate in writing.
To the Fund:
SIT Mutual Funds, Inc.
4600 Norwest Center
Minneapolis, MN 55402
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
One Exchange Place
53 State Street
Boston, Massachusetts 02109
Attention: President
with a copy to FDISG's General Counsel
Article 19 Successors.
This Agreement shall extend to and shall be binding upon the parties
hereto, and their respective successors and assigns, provided, however, that
this Agreement shall not be assigned to any person other than a person
controlling, controlled by or under common control with the assignor without the
written consent of the other party, which consent shall not be unreasonably
withheld.
Article 20 Governing Law/Venue.
The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, shall govern the interpretation, validity, and enforcement of
this agreement. All actions arising from or related to this Agreement shall be
brought in the state and federal courts sitting in the City of Boston, and FDISG
and the Fund hereby submit themselves to the exclusive jurisdiction of those
courts.
Article 21 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
Article 22 Captions.
The captions of this Agreement are included for convenience of
reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Article 23 Publicity.
Neither FDISG nor the Fund shall release or publish news releases,
public announcements, advertising or other publicity relating to this Agreement
or to the transactions contemplated by it without the prior review and written
approval of the other party; provided, however, that either party may make such
disclosures as are required by legal, accounting or regulatory requirements
after making reasonable efforts in the circumstances to consult in advance with
the other party.
Article 24 Relationship of Parties.
The parties agree that they are independent contractors and not
partners or co-venturers and nothing contained herein shall be interpreted or
construed otherwise.
Article 25 Entire Agreement; Severability.
25.1 This Agreement, including Schedules, Addenda, and Exhibits hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof. No change,
termination, modification, or waiver of any term or condition of the Agreement
shall be valid unless in writing signed by each party. A party's waiver of a
breach of any term or condition in the Agreement shall not be deemed a waiver of
any subsequent breach of the same or another term or condition.
25.2 The parties intend every provision of this Agreement to be
severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers, as of the day and year first above
written.
SIT MUTUAL FUNDS, INC.
By: /s/ Mary K. Stern
Title: President
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Gerald Kokos
Title: Executive Vice President
Schedule A
DUTIES OF FDISG
1. Shareholder Information. FDISG shall maintain a record of the number
of Shares held by each Shareholder of record which shall include name, address,
taxpayer identification and which shall indicate whether such Shares are held in
certificates or uncertificated form.
2. Shareholder Services. FDISG shall respond as appropriate to all
inquiries and communications from Shareholders relating to Shareholder accounts
with respect to its duties hereunder and as may be from time to time mutually
agreed upon between FDISG and the Fund.
3. Share Certificates.
(a) At the expense of the Fund, the Fund shall supply FDISG
with an adequate supply of blank share certificates to meet FDISG requirements
therefor. Such Share certificates shall be properly signed by facsimile. The
Fund agrees that, notwithstanding the death, resignation, or removal of any
officer of the Fund whose signature appears on such certificates, FDISG or its
agent may continue to countersign certificates which bear such signatures until
otherwise directed by Written Instructions.
(b) FDISG shall issue replacement Share certificates in lieu
of certificates which have been lost, stolen or destroyed, upon receipt by FDISG
of properly executed affidavits and lost certificate bonds, in form satisfactory
to FDISG, with the Fund and FDISG as obligees under the bond.
(c) FDISG shall also maintain a record of each certificate
issued, the number of Shares represented thereby and the Shareholder of record.
With respect to Shares held in open accounts or uncertificated form (i.e., no
certificate being issued with respect thereto) FDISG shall maintain comparable
records of the Shareholders thereof, including their names, addresses and
taxpayer identification. FDISG shall further maintain a stop transfer record on
lost and/or replaced certificates.
4. Mailing Communications to Shareholders; Proxy Materials. FDISG will
address and mail to Shareholders of the Fund, all reports to Shareholders,
dividend and distribution notices and proxy material for the Fund's meetings of
Shareholders. In connection with meetings of Shareholders, FDISG will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
5. Sale of Shares
(a) FDISG shall not be required to issue any Shares of the
Fund where it has received a Written Instruction from the Fund or official
notice from any appropriate authority that the sale of the Shares of the Fund
has been suspended or discontinued. The existence of such Written Instructions
or such official notice shall be conclusive evidence of the right of FDISG to
rely on such Written Instructions or official notice.
(b) In the event that any check or other order for the payment
of money is returned unpaid for any reason, FDISG will endeavor to: (i) give
prompt notice of such return to the Fund or its designee; (ii) place a stop
transfer order against all Shares issued as a result of such check or order; and
(iii) take such actions as FDISG may from time to time deem appropriate.
6. Transfer and Repurchase
(a) FDISG shall process all requests to transfer or redeem
Shares in accordance with the transfer or repurchase procedures set forth in the
Fund's Prospectus.
(b) FDISG will transfer or repurchase Shares upon receipt of
Oral or Written Instructions or otherwise pursuant to the Prospectus and Share
certificates, if any, properly endorsed for transfer or redemption, accompanied
by such documents as FDISG reasonably may deem necessary.
(c) FDISG reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the endorsement on the instructions
is valid and genuine. FDISG also reserves the right to refuse to transfer or
repurchase Shares until it is satisfied that the requested transfer or
repurchase is legally authorized, and it shall incur no liability for the
refusal, in good faith, to make transfers or repurchases which FDISG, in its
good judgement, deems improper or unauthorized, or until it is reasonably
satisfied that there is no basis to any claims adverse to such transfer or
repurchase.
(d) When Shares are redeemed, FDISG shall, upon receipt of the
instructions and documents in proper form, deliver to the Custodian and the Fund
or its designee a notification setting forth the number of Shares to be
repurchased. Such repurchased shares shall be reflected on appropriate accounts
maintained by FDISG reflecting outstanding Shares of the Fund and Shares
attributed to individual accounts.
(e) FDISG, upon receipt of the monies paid to it by the
Custodian for the repurchase of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures described in the written
instruction received by FDISG from the Fund.
(f) FDISG shall not process or effect any repurchase with
respect to Shares of the Fund after receipt by FDISG or its agent of
notification of the suspension of the determination of the net asset value of
the Fund.
7. Dividends
(a) Upon the declaration of each dividend and each capital
gains distribution by the Board of Directors of the Fund with respect to Shares
of the Fund, the Fund shall furnish or cause to be furnished to FDISG Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record date
as of which Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date, the total
amount payable to FDISG on the payment date and whether such dividend or
distribution is to be paid in Shares at net asset value.
(b) On or before the payment date specified in such resolution
of the Board of Directors, the Fund will pay to FDISG sufficient cash to make
payment to the Shareholders of record as of such payment date.
(c) If FDISG does not receive sufficient cash from the Fund to
make total dividend and/or distribution payments to all Shareholders of the Fund
as of the record date, FDISG will, upon notifying the Fund, withhold payment to
all Shareholders of record as of the record date until sufficient cash is
provided to FDISG.
8. In addition to and neither in lieu nor in contravention of the
services set forth above, FDISG shall: (i) perform all the customary services of
a transfer agent, registrar, dividend disbursing agent and agent of the dividend
reinvestment and cash purchase plan as described herein consistent with those
requirements in effect as at the date of this Agreement. The detailed
definition, frequency, limitations and associated costs (if any) set out in the
attached fee schedule, include but are not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing proxies,
tabulating proxies, mailing Shareholder reports to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts where
applicable, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
Schedule B
QUALITY STANDARD LEVELS
1. TIMELINESS OF RESEARCH REQUESTS
SERVICE DESCRIPTION:
FDISG will provide a research and problem resolution service to the
Shareholders. On a daily basis, the Fund, using either the Impress CSS
system or by fax, will communicate research requests to FDISG.
FDISG'S OBJECTIVE:
FDISG's objective is to accurately respond to 98% of the research
requests within the periods set forth below.
Wire: Complete within 24 hours
Financial: Complete within 48 hours
Non-Financial: Complete within 72 hours
2. MANUAL DATA ENTRY
SERVICE DESCRIPTION:
FDISG provides a manual data entry service to the Fund for establishing
new Shareholder accounts and monitoring existing account records.
FDISG'S OBJECTIVE:
FDISG's objective is to establish new accounts with a data accuracy
rate of 98%.
3. ACCURACY AND TIMELINESS OF SHAREHOLDER STATEMENTS
SERVICE DESCRIPTION:
Based on the mail frequency of the Fund, FDISG will produce and mail
periodic statements to Shareholders. FDISG will provide the Fund with a
mailing report from its Print/Mail vendor which will indicate the date
on which all Shareholder statements were mailed.
FDISG'S OBJECTIVE:
FDISG's objective is to manage this service so that 99% of all
statements from the Fund are accurate and are mailed no later than five
(5) business days after the statement date.
4. ACCURACY AND TIMELINESS OF DAILY ADVICE MAILINGS
SERVICE DESCRIPTION:
FDISG will produce and send, deliver or distribute an advice to the
Shareholder's account, except where suppressed pursuant to instructions
received from the Fund. FDISG will provide the Fund with a mailing
report from its Print/Mail vendor which will indicate the date on which
all advises were mailed.
FDISG'S OBJECTIVES:
FDISG's objective is to manage this service so that 99% of such advices
are accurate and are mailed no later than two (2) business days
following the date of the transaction.
5. TIMELINESS OF DISTRIBUTION CHECKS AND DIVIDEND MAILINGS
SERVICE DESCRIPTION:
Periodically, FDISG will create and mail checks for Fund's respective
Shareholders. FDISG will provide the Fund with a mailing report from
its Print/ Mail vendor indicating the date on which all dividend or
distribution checks were mailed.
FDISG'S OBJECTIVE:
FDISG's objective is to manage this service so that 99% of such advices
are accurate and are mailed no later than two (2) business days
following the date of the transaction.
6. FINANCIAL CONTROL
SERVICE DESCRIPTION:
FDISG will provide daily fund settlement reports to the Fund's
accounting and custodian service providers. FDISG will reconcile the
Fund's Demand Deposit Accounts on a daily basis, including investments
and disbursements. Acceptable DDA Item Exceptions beyond five days
include:
- Client Originated Item
- Shareholder Reclaim
- Bank (Cash Manager) Error
- Shareholder Fraudulent Activity
- Fed Wire Recall
- System Data Processing Limitations
- Miscellaneous Funding Issues with Shareholder,
Cash Manager, or Custodian
FDISG'S OBJECTIVE:
FDISG's objective is to reconcile all DDA transactions within five (5)
business days of the transaction post date. Any exceptions, including
items greater than five (5) business days, will be reported to the Fund
with a general item description. Any exception must be approved by the
Fund to be considered within standard.
Schedule C
FEE SCHEDULE
SIT MUTUAL FUNDS, INC.
<TABLE>
<CAPTION>
Annual Fees:
<S> <C>
Open Account Fees: $13.50 per open account
Closed Account Fees: $ 2.40 per closed account
Fund Minimums: $24,000 per fund per year
Conversion Costs: Free set-up fee
Value Added Services:
Cost Basis Accounting: Free set-up fee
Adhoc SQL: Free set-up fee; $1,000 per hour
AVR Solution: Free set-up fee
$.2125 per minute charge
$.0775 per minute telecom charge
$.10 per call
FundServ: Free set-up fee, $.15 per trade plus $.10 same day trades
Asset Allocation/Reallocation: Free set-up fee, $.25 per trade via NSCC
Direct Access Zip Link: Free set-up fee, $1,000 per month, $.03/record plus $.015/price record
</TABLE>
CONSOLIDATED STATEMENTS PRICE DETERMINED BY PROJECT SCOPE. CUSTOMIZED
PROGRAMMING BILLABLE AT $100/HOUR.
General:
1.1 FDISG may charge a service fee equal to the lesser of (i) one and one
half percent (1 1/2%) per month of (ii) the highest interest rate
legally permitted on any unpaid amounts, unless such amounts are
ultimately determined not due in accordance with the Payment Dispute
Procedure. The Fund shall also reimburse FDISG for all reasonable
expenses to collect delinquent amounts, including reasonable attorneys'
fees and court costs.
1.2 FDISG may adjust any annual or monthly fees once per calendar year,
upon thirty (30) days prior written notice, in an amount not to exceed
the cumulative percentage increase in the Consumer Price Index for All
Urban Consumers (CIP-U) U.S. City Average, All Items (unadjusted) -
(1982-84 = 100), published by the U.S. Department of Labor since the
last such adjustment in Client's monthly fees (or the effective Date
absent a prior such adjustment).
Schedule D
OUT-OF-POCKET EXPENSES
The Fund shall reimburse FDISG monthly for applicable out-of-pocket
expenses, including, but not limited to the following items:
- Microfiche/microfilm production
- Magnetic media tapes and freight
- Printing costs, including certificates, envelopes, checks and
stationery
- Postage (bulk, pre-sort, ZIP+4, barcoding, first class)
direct pass through to the Fund
- Due diligence mailings
- Telephone and telecommunication costs, including all lease,
maintenance and line costs
- Special Ad hoc reports requested by the Fund
- Proxy solicitations, mailings and tabulations
- Daily & Distribution advice mailings
- Shipping, Certified and Overnight mail and insurance
- Year-end form production and mailings
- Duplicating services
- Courier services
- Incoming and outgoing wire charges
- Federal Reserve charges for check clearance
- Overtime, as approved by the Fund
- Temporary staff, as approved by the Fund
- Travel and entertainment, as approved by the Fund
- Record retention, retrieval and destruction costs,
including, but not limited to exit fees charged by
third party record keeping vendors
- Third party audit reviews
- All Systems enhancements after the conversion at the rate of
$100.00 per hour
- Insurance
- Such other miscellaneous expenses reasonably incurred by FDISG
in performing its duties and responsibilities under this
Agreement.
The Fund agrees that postage and mailing expenses will be paid on the
day of or prior to mailing as agreed with FDISG. In addition, the Fund will
promptly reimburse FDISG for any other unscheduled expenses incurred by FDISG
whenever the Fund and FDISG mutually agree that such expenses are not otherwise
properly borne by FDISG as part of its duties and obligations under the
Agreement.
Schedule E
FUND DOCUMENTS
- Certified copy of the Articles of Incorporation of the Fund,
as amended
- Certified copy of the By-laws of the Fund, as amended,
- Copy of the resolution of the Board of Directors authorizing
the execution and delivery of this Agreement
- Specimens of the certificates for Shares of the Fund, if
applicable, in the form approved by the Board of Directors of
the Fund, with a certificate of the Secretary of the Fund as
to such approval
- All account application forms and other documents relating to
Shareholder accounts or to any plan, program or service
offered by the Fund
- Certified list of Shareholders of the Fund with the name,
address and taxpayer identification number of each
Shareholder, and the number of Shares of the Fund held by
each, certificate numbers and denominations (if any
certificates have been issued), lists of any accounts against
which stop transfer orders have been placed, together with the
reasons therefore, and the number of Shares redeemed by the
Fund
- All notices issued by the Fund with respect to the Shares in
accordance with and pursuant to the Articles of Incorporation
or By-laws of the Fund or as required by law and shall perform
such other specific duties as are set forth in the Articles of
Incorporation including the giving of notice of any special or
annual meetings of shareholders and any other notices required
thereby.
EXHIBIT 8.3
Accounting Services Agreement
SIT Growth Fund, Inc.
ACCOUNTING SERVICES AGREEMENT
THIS ACCOUNTING SERVICES AGREEMENT is made as of April 1, 1996 (the
"Agreement"), by and between SIT Growth Fund, Inc., a Minnesota corporation (the
"Company"), and First Data Investor Services Group, Inc., a Massachusetts
corporation ("FDISG").
WHEREAS, the Company is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company wishes to retain FDISG to provide certain fund
accounting services with respect to each investment portfolio listed in Schedule
A hereto, as the same may be amended from time to time by the parties hereto
(collectively, the "Funds"), and FDISG is willing to furnish such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints FDISG to provide certain
fund accounting services required by the Company for each Fund for the period
and on the terms set forth in this Agreement. FDISG accepts such appointment and
agrees to furnish the services herein set forth in return for the compensation
as provided in Section 4 of this Agreement. In the event that the Company
decides to retain FDISG to act as fund accountant hereunder with respect to one
or more portfolios other than the Funds, the Company shall notify FDISG in
writing. If FDISG is willing to render such services, it shall notify the
Company in writing whereupon such portfolio shall become a Fund hereunder.
2. Delivery of Documents. The Company has furnished FDISG with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Directors authorizing
FDISG to provide certain fund accounting services to the Company and approving
this Agreement;
(b) The Company's Articles of Incorporation (the "Articles")
filed with the State of Minnesota and all amendments thereto;
(c) The Company's By-Laws and all amendments thereto (the
"By-Laws");
(d) The Investment Advisory Agreement between SIT Investment
Associates, Inc. (the "Adviser") and the Company dated as of November 1, 1992
and all amendments thereto (the "Advisory Agreement");
(e) The Custody Agreement between The Northern Trust Company (the
"Custodian") and the Company dated as of April 1, 1996 and all amendments
thereto (the "Custody Agreement");
(f) The Transfer Agency and Registrar Agreement between First
Data Investor Services Group, Inc. (the "Transfer Agent") and the Company dated
as of January 1, 1996 and all amendments thereto;
(g) The Company's Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933 and under the
Investment Company Act of 1940 (the "1940 Act") (File Nos. 2-75151 and
811-03342), as declared effective by the Securities and Exchange Commission (the
"SEC") on September 2, 1982, relating to shares of beneficial interest of the
Company (the "Shares"), and all amendments thereto; and
(h) Each Fund's most recent prospectus and statement of
additional information and all amendments and supplements thereto (collectively,
the "Prospectuses").
The Company will furnish FDISG from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any. Furthermore, the Company will provide FDISG with any other
documents that FDISG may reasonably request and will notify FDISG as soon as
possible of any matter materially affecting the performance by FDISG of its
services under this Agreement.
3. Services and Duties. Subject to the supervision and control of the
Company, FDISG undertakes to provide the following specific services:
(a) Accounting and bookkeeping services (including the
maintenance of such accounts, books and records of the Company as may be
required by Section 31(a) of the 1940 Act and the rules thereunder);
(b) Internal auditing;
(c) Valuing the assets of each Fund and calculating the net asset
value of the shares of the Fund at the close of trading on the New York Stock
Exchange ("NYSE") on each day on which the NYSE is open for trading, and at such
other times as the Board of Directors may reasonably request;
(d) Accumulating information for and, subject to approval by the
Company's Treasurer, preparing reports to the Company's shareholders of record
and the SEC including, but not necessarily limited to, Annual Reports and
Semi-Annual Reports on Form N-SAR;
(e) Assisting the Adviser, at the Adviser's request, in
monitoring and developing compliance procedures for the Company which will
include, among other matters, procedures to assist the Adviser in monitoring
compliance with each Fund's investment objective, policies, restrictions, tax
matters and applicable laws and regulations; and
(f) Preparing and furnishing the Company (at the Company's
request) with performance information (including yield and total return
information) calculated in accordance with applicable U.S. securities laws and
reporting to external databases such information as may reasonably be requested.
In performing its duties under this Agreement, FDISG: (a) will act in
accordance with the Articles, By-Laws, Prospectuses and with the instructions
and directions of the Company and will conform to and comply with the
requirements of the 1940 Act and all other applicable Federal or state laws and
regulations; and (b) will consult with legal counsel to the Company, as
necessary and appropriate. Furthermore, FDISG shall not have or be required to
have any authority to supervise the investment or reinvestment of the securities
or other properties which comprise the assets of the Company or any of its Funds
and shall not provide any investment advisory services to the Company or any of
its Funds.
4. Compensation and Allocation of Expenses.
(a) For the services to be rendered, the facilities to be
furnished and the payments to be made by FDISG, as provided for in this
Agreement, the Company, on behalf of each Fund, will pay FDISG on the first
business day of each month a fee for the previous month at the annual rate of
.055 of 1.00% of the value of the Fund's average daily net assets. Within
fifteen (15) days after FDISG has received both the monthly fee set forth herein
from the Company and the monthly bill from the Custodian, FDISG shall (pursuant
to the Client Services Agreement, dated as of April 1, 1996, between FDISG and
the Custodian (the "Client Services Agreement") and the Custody Agreement) pay
to the Custodian, with respect to each Fund, a fee which shall serve as full
payment for the Custodian's services to the Fund under the Custody Agreement and
the Client Services Agreement for the preceding month at the annual rate of .01
of 1.00% of the value of the Fund's average daily net assets (plus out-of-pocket
expenses). For the purposes of calculating the fees described herein, the Fund's
average daily net assets will be deemed to be the average daily value of the
Fund's total assets minus the sum of the Fund's liabilities (excluding the
aggregate liquidation preference on the outstanding shares of the Fund's auction
rate preferred stock and accumulated dividends, if any, thereon). Fees for the
period from the date the Registration Statement is declared effective by the SEC
to the end of the month during which the Registration Statement is declared
effective shall be prorated according to the proportion that such period bears
to the full monthly period.
(b) The Company shall compensate FDISG for its services rendered
pursuant to this Agreement in accordance with the fees set forth above. Such
fees do not include out-of-pocket disbursements of FDISG for which FDISG shall
be entitled to bill separately. Out-of-pocket disbursements shall include, but
shall not be limited to, the items specified in Schedule B annexed hereto and
incorporated herein. Schedule B may be modified by FDISG upon not less than
thirty days' prior written notice to the Company.
(c) FDISG shall not be required to pay any of the following
expenses incurred by the Company: membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses; investment
advisory expenses; costs of printing and mailing stock certificates,
prospectuses, reports and notices; interest on borrowed money; brokerage
commissions; taxes and fees payable to Federal, state and other governmental
agencies; fees of Directors of the Company who are not affiliated with FDISG;
outside auditing expenses; outside legal expenses; or other expenses not
specified in this Section 4 which may be properly payable by the Company.
(d) FDISG will bill the Company as soon as practicable after the
end of each calendar month for out-of-pocket disbursements, and said billings
will be detailed in accordance with this Section and Schedule B. The Company
will pay to FDISG the amount of such billing within 30 days of such billing.
(e) Upon any termination of this Agreement before the end of any
month, the fee for such period shall be prorated according to the proportion
which such period bears to the full month period. For purposes of determining
fees payable to FDISG, the value of each Fund's net assets shall be computed at
the time and in the manner specified in the most recent Prospectuses.
(f) The Company acknowledges that the fees that FDISG charges the
Company under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 7 and the limitations on
liability in Section 5. Modifying the allocation of risk from what is stated
here would affect the fees that FDISG charges, and in consideration of those
fees, the Company agrees to the stated allocation of risk.
(g) FDISG will from time to time employ or associate itself with
such person or persons as FDISG may believe to be particularly suited to assist
it in performing services under this Agreement. Such person or persons may be
officers and employees who are employed by both FDISG and the Company. The
compensation of such person or persons shall be paid by FDISG and no obligation
shall be incurred on behalf of the Company in such respect.
(5) Limitation of Liability
(a) FDISG, its directors, officers, employees, shareholders and
agents shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Company or a Fund in connection with the performance of
this Agreement, except a loss resulting from willful misfeasance, bad faith, or
negligence on the part of FDISG in the performance of its obligations and duties
under this Agreement.
(b) Notwithstanding any provision in this Agreement to the
contrary, FDISG's cumulative liability (to the Company) for all losses, claims,
suits, controversies, breaches, or damages for any cause whatsoever (including
but not limited to those arising out of or related to this Agreement) and
regardless of the form of action or legal theory shall not exceed the lesser of
(i) $1,000,000 or (ii) the fees received by FDISG for services provided under
this Agreement during the twelve months immediately prior to the date of such
loss or damage.
(c) Neither party may assert any cause of action against the
other party under this Agreement that accrued more than two (2) years prior to
the filing of the suit (or commencement of arbitration proceedings) alleging
such cause of action.
(d) Each party shall have the duty to mitigate damages for which
the other party may become responsible.
(e) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
IN NO EVENT SHALL FDISG, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF
TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST
PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS
OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6. Indemnification.
(a) The Company shall indemnify and hold FDISG harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against FDISG or for which FDISG may be held to be liable
in connection with this Agreement or FDISG's performance hereunder (a "Claim"),
unless such Claim resulted from a negligent act or omission to act or bad faith
by FDISG in the performance of its duties hereunder.
(b) The Company or a Fund, its officers, employees, shareholders
and agents shall not be liable for, and FDISG shall indemnify and hold the
Company and each Fund harmless from and against any and all claims, made by
third parties, including costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or kind, which
result from a negligent act or omission to act or bad faith by FDISG in the
performance of its duties hereunder.
(c) In any case in which either party (the "Indemnifying Party")
may be asked to indemnify or hold the other party (the "Indemnified Party")
harmless, the Indemnified Party will notify the Indemnifying Party promptly
after identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party, although the
failure to do so shall not prevent recovery by the Indemnified Party, and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such claim. The
Indemnified Party will not confess any claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Section 6 shall survive the termination of this
Agreement.
7. EXCLUSION OF WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF
ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT. FDISG DISCLAIMS
ANY WARRANTY OF TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT.
8. Termination of Agreement.
(a) This Agreement shall be effective on the date first written
above and shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to the terms of this Agreement. Thereafter,
this Agreement shall automatically be renewed for successive terms of three (3)
years ("Renewal Terms") each.
(b) Either party may terminate this Agreement at the end of the
Initial Term or at the end of any subsequent Renewal Term upon not than less
than ninety (90) days or more than one hundred-eighty (180) days prior written
notice to the other party.
(c) In the event a termination notice is given by the Company,
all expenses associated with movement of records and materials and conversion
thereof will be borne by the Company.
(d) If a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party") resulting in a
material loss to the other party, such other party (the "Non-Defaulting Party")
may give written notice thereof to the Defaulting Party, and if such material
breach shall not have been remedied within thirty (30) days after such written
notice is given, then the Non-Defaulting Party may terminate this Agreement by
giving thirty (30) days written notice of such termination to the Defaulting
Party. If FDISG is the Non-Defaulting Party, its termination of this Agreement
shall not constitute a waiver of any other rights or remedies of FDISG with
respect to services performed prior to such termination or rights of FDISG to be
reimbursed for out-of-pocket expenses. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against the
Defaulting Party.
9. Modifications and Waivers. No change, termination, modification, or
waiver of any term or condition of the Agreement shall be valid unless in
writing signed by each party. No such writing shall be effective as against
FDISG unless said writing is executed by a Senior Vice President, Executive Vice
President or President of FDISG. A party's waiver of a breach of any term or
condition in the Agreement shall not be deemed a waiver of any subsequent breach
of the same or another term or condition.
10. No Presumption Against Drafter. FDISG and the Company have jointly
participated in the negotiation and drafting of this Agreement. The Agreement
shall be construed as if drafted jointly by the Company and FDISG, and no
presumptions arise favoring any party by virtue of the authorship of any
provision of this Agreement.
11. Publicity. Neither FDISG nor the Company shall release or publish
news releases, public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without prior review
and written approval of the other party; provided, however, that either party
may make such disclosures as are required by legal, accounting or regulatory
requirements after making reasonable efforts in the circumstances to consult in
advance with the other party.
12. Severability. The parties intend every provision of this Agreement to
be severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
13. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Company or FDISG shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Company:
SIT Mutual Fund Group
4600 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
53 State Street BOS 425
Boston, Massachusetts 02109-2873
Attention: Patricia Bickimer, Esq.
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns and
is not intended to confer upon any other person any rights or remedies
hereunder. This Agreement may not be assigned or otherwise transferred by either
party hereto, without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, that FDISG may,
in its sole discretion, assign all its right, title and interest in this
Agreement to an affiliate, parent or subsidiary, or to the purchaser of
substantially all of its business. FDISG may, in its sole discretion, engage
subcontractors to perform any of the obligations contained in this Agreement to
be performed by FDISG.
(c) The laws of the Commonwealth of Massachusetts, excluding the
laws on conflicts of laws, shall govern the interpretation, validity, and
enforcement of this Agreement. All actions arising from or related to this
Agreement shall be brought in the state and federal courts sitting in the City
of Boston, and FDISG and the Company hereby submit themselves to the exclusive
jurisdiction of those courts.
(d) This Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of 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 or effect.
14. Confidentiality.
(a) The parties agree that the Proprietary Information (defined
below) and the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their respective
licensers. The Company and FDISG shall exercise reasonable care to safeguard the
confidentiality of the Confidential Information of the other. The Company and
FDISG may each use the Confidential Information only to exercise its rights or
perform its duties under this Agreement. The Company and FDISG shall not
duplicate, sell or disclose to others the Confidential Information of the other,
in whole or in part, without the prior written permission of the other party.
The Company and FDISG may, however, disclose Confidential Information to its
employees who have a need to know the Confidential Information to perform work
for the other, provided that each shall use reasonable efforts to ensure that
the Confidential Information is not duplicated or disclosed by its employees in
breach of this Agreement. The Company and FDISG may also disclose the
Confidential Information to independent contractors, auditors and professional
advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 14.
Notwithstanding the previous sentence, in no event shall either the Company or
FDISG disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
(b) Proprietary Information means:
(i) any data or information that is completely sensitive
material, and not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance, operations,
customer relationships, customer profiles, sales estimates, business plans, and
internal performance results relating to the past, present or future business
activities of the Company or FDISG, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them;
(ii) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or FDISG a
competitive advantage over its competitors; and
(iii) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software, source code,
object code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
(c) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
(d) The parties acknowledge that breach of the restrictions on
use, dissemination or disclosure of any Confidential Information would result in
immediate and irreparable harm, and money damages would be inadequate to
compensate the other party for that harm. The non-breaching party shall be
entitled to equitable relief, in addition to all other available remedies, to
redress any such breach.
15. Force Majeure. No party shall be liable for any default or delay in
the performance of its obligations under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire, flood,
elements of nature or other acts of God; (ii) any outbreak or escalation of
hostilities, war, riots or civil disorders in any country, (iii) any act or
omission of the other party or any governmental authority; (iv) any labor
disputes (whether or not the employees' demands are reasonable or within the
party's power to satisfy); or (v) nonperformance by a third party or any similar
cause beyond the reasonable control of such party, including without limitation,
failures or fluctuations in telecommunications or other equipment. In any such
event, the non-performing party shall be excused from any further performance
and observance of the obligations so affected only for so long as such
circumstances prevail and such party continues to use commercially reasonable
efforts to recommence performance or observance as soon as practicable.
16. Entire Agreement. This Agreement, including all Schedules hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Neil Forrest
Name: Neil Forrest
Title: Vice President
SIT GROWTH FUND, INC.
By: /s/ Mary K. Stern
Name: Mary K. Stern
Title: President
SCHEDULE A
SIT GROWTH FUND, INC.
SCHEDULE B
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
- Overnight delivery and courier service
- Telephone and telecommunications charges (including fax)
- Pricing services
- Terminals, transmitting lines and any expenses incurred in
connection with such lines
- Travel to and from Board Meetings outside the city of Boston,
Massachusetts (subject to prior approval from the Company)
- Any other unusual expenses in association with the operation of
the Company, such as excessive duplicating charges
FDISG RESERVES THE RIGHT TO RENEGOTIATE THE FEES SET FORTH ON THIS SCHEDULE B
AND IN SECTION 4 OF THE AGREEMENT SHOULD THE ACTUAL SERVICES VARY MATERIALLY
FROM THE ASSUMPTIONS PROVIDED.
EXHIBIT 8.3
Accounting Services Agreement
SIT Growth & Income Fund, Inc.
ACCOUNTING SERVICES AGREEMENT
THIS ACCOUNTING SERVICES AGREEMENT is made as of April 1, 1996 (the
"Agreement"), by and between SIT Growth & Income Fund, Inc., a Minnesota
corporation (the "Company"), and First Data Investor Services Group, Inc., a
Massachusetts corporation ("FDISG").
WHEREAS, the Company is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company wishes to retain FDISG to provide certain fund
accounting services with respect to each investment portfolio listed in Schedule
A hereto, as the same may be amended from time to time by the parties hereto
(collectively, the "Funds"), and FDISG is willing to furnish such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints FDISG to provide certain
fund accounting services required by the Company for each Fund for the period
and on the terms set forth in this Agreement. FDISG accepts such appointment and
agrees to furnish the services herein set forth in return for the compensation
as provided in Section 4 of this Agreement. In the event that the Company
decides to retain FDISG to act as fund accountant hereunder with respect to one
or more portfolios other than the Funds, the Company shall notify FDISG in
writing. If FDISG is willing to render such services, it shall notify the
Company in writing whereupon such portfolio shall become a Fund hereunder.
2. Delivery of Documents. The Company has furnished FDISG with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Directors authorizing
FDISG to provide certain fund accounting services to the Company and approving
this Agreement;
(b) The Company's Articles of Incorporation (the "Articles")
filed with the State of Minnesota and all amendments thereto;
(c) The Company's By-Laws and all amendments thereto (the
"By-Laws");
(d) The Investment Advisory Agreement between SIT Investment
Associates, Inc. (the "Adviser") and the Company dated as of November 1, 1992
and all amendments thereto (the "Advisory Agreement");
(e) The Custody Agreement between The Northern Trust Company (the
"Custodian") and the Company dated as of April 1, 1996 and all amendments
thereto (the "Custody Agreement");
(f) The Transfer Agency and Registrar Agreement between First
Data Investor Services Group, Inc. (the "Transfer Agent") and the Company dated
as of January 1, 1996 and all amendments thereto;
(g) The Company's Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933 and under the
Investment Company Act of 1940 (the "1940 Act") (File Nos. 2-75151 and
811-03342), as declared effective by the Securities and Exchange Commission (the
"SEC") on September 2, 1982, relating to shares of beneficial interest of the
Company (the "Shares"), and all amendments thereto; and
(h) Each Fund's most recent prospectus and statement of
additional information and all amendments and supplements thereto (collectively,
the "Prospectuses").
The Company will furnish FDISG from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any. Furthermore, the Company will provide FDISG with any other
documents that FDISG may reasonably request and will notify FDISG as soon as
possible of any matter materially affecting the performance by FDISG of its
services under this Agreement.
3. Services and Duties. Subject to the supervision and control of the
Company, FDISG undertakes to provide the following specific services:
(a) Accounting and bookkeeping services (including the
maintenance of such accounts, books and records of the Company as may be
required by Section 31(a) of the 1940 Act and the rules thereunder);
(b) Internal auditing;
(c) Valuing the assets of each Fund and calculating the net asset
value of the shares of the Fund at the close of trading on the New York Stock
Exchange ("NYSE") on each day on which the NYSE is open for trading, and at such
other times as the Board of Directors may reasonably request;
(d) Accumulating information for and, subject to approval by the
Company's Treasurer, preparing reports to the Company's shareholders of record
and the SEC including, but not necessarily limited to, Annual Reports and
Semi-Annual Reports on Form N-SAR;
(e) Assisting the Adviser, at the Adviser's request, in
monitoring and developing compliance procedures for the Company which will
include, among other matters, procedures to assist the Adviser in monitoring
compliance with each Fund's investment objective, policies, restrictions, tax
matters and applicable laws and regulations; and
(f) Preparing and furnishing the Company (at the Company's
request) with performance information (including yield and total return
information) calculated in accordance with applicable U.S. securities laws and
reporting to external databases such information as may reasonably be requested.
In performing its duties under this Agreement, FDISG: (a) will act in
accordance with the Articles, By-Laws, Prospectuses and with the instructions
and directions of the Company and will conform to and comply with the
requirements of the 1940 Act and all other applicable Federal or state laws and
regulations; and (b) will consult with legal counsel to the Company, as
necessary and appropriate. Furthermore, FDISG shall not have or be required to
have any authority to supervise the investment or reinvestment of the securities
or other properties which comprise the assets of the Company or any of its Funds
and shall not provide any investment advisory services to the Company or any of
its Funds.
4. Compensation and Allocation of Expenses.
(a) For the services to be rendered, the facilities to be
furnished and the payments to be made by FDISG, as provided for in this
Agreement, the Company, on behalf of each Fund, will pay FDISG on the first
business day of each month a fee for the previous month at the annual rate of
.055 of 1.00% of the value of the Fund's average daily net assets. Within
fifteen (15) days after FDISG has received both the monthly fee set forth herein
from the Company and the monthly bill from the Custodian, FDISG shall (pursuant
to the Client Services Agreement, dated as of April 1, 1996, between FDISG and
the Custodian (the "Client Services Agreement") and the Custody Agreement) pay
to the Custodian, with respect to each Fund, a fee which shall serve as full
payment for the Custodian's services to the Fund under the Custody Agreement and
the Client Services Agreement for the preceding month at the annual rate of .01
of 1.00% of the value of the Fund's average daily net assets (plus out-of-pocket
expenses). For the purposes of calculating the fees described herein, the Fund's
average daily net assets will be deemed to be the average daily value of the
Fund's total assets minus the sum of the Fund's liabilities (excluding the
aggregate liquidation preference on the outstanding shares of the Fund's auction
rate preferred stock and accumulated dividends, if any, thereon). Fees for the
period from the date the Registration Statement is declared effective by the SEC
to the end of the month during which the Registration Statement is declared
effective shall be prorated according to the proportion that such period bears
to the full monthly period.
(b) The Company shall compensate FDISG for its services rendered
pursuant to this Agreement in accordance with the fees set forth above. Such
fees do not include out-of-pocket disbursements of FDISG for which FDISG shall
be entitled to bill separately. Out-of-pocket disbursements shall include, but
shall not be limited to, the items specified in Schedule B annexed hereto and
incorporated herein. Schedule B may be modified by FDISG upon not less than
thirty days' prior written notice to the Company.
(c) FDISG shall not be required to pay any of the following
expenses incurred by the Company: membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses; investment
advisory expenses; costs of printing and mailing stock certificates,
prospectuses, reports and notices; interest on borrowed money; brokerage
commissions; taxes and fees payable to Federal, state and other governmental
agencies; fees of Directors of the Company who are not affiliated with FDISG;
outside auditing expenses; outside legal expenses; or other expenses not
specified in this Section 4 which may be properly payable by the Company.
(d) FDISG will bill the Company as soon as practicable after the
end of each calendar month for out-of-pocket disbursements, and said billings
will be detailed in accordance with this Section and Schedule B. The Company
will pay to FDISG the amount of such billing within 30 days of such billing.
(e) Upon any termination of this Agreement before the end of any
month, the fee for such period shall be prorated according to the proportion
which such period bears to the full month period. For purposes of determining
fees payable to FDISG, the value of each Fund's net assets shall be computed at
the time and in the manner specified in the most recent Prospectuses.
(f) The Company acknowledges that the fees that FDISG charges the
Company under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 7 and the limitations on
liability in Section 5. Modifying the allocation of risk from what is stated
here would affect the fees that FDISG charges, and in consideration of those
fees, the Company agrees to the stated allocation of risk.
(g) FDISG will from time to time employ or associate itself with
such person or persons as FDISG may believe to be particularly suited to assist
it in performing services under this Agreement. Such person or persons may be
officers and employees who are employed by both FDISG and the Company. The
compensation of such person or persons shall be paid by FDISG and no obligation
shall be incurred on behalf of the Company in such respect.
(5) Limitation of Liability
(a) FDISG, its directors, officers, employees, shareholders and
agents shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Company or a Fund in connection with the performance of
this Agreement, except a loss resulting from willful misfeasance, bad faith, or
negligence on the part of FDISG in the performance of its obligations and duties
under this Agreement.
(b) Notwithstanding any provision in this Agreement to the
contrary, FDISG's cumulative liability (to the Company) for all losses, claims,
suits, controversies, breaches, or damages for any cause whatsoever (including
but not limited to those arising out of or related to this Agreement) and
regardless of the form of action or legal theory shall not exceed the lesser of
(i) $1,000,000 or (ii) the fees received by FDISG for services provided under
this Agreement during the twelve months immediately prior to the date of such
loss or damage.
(c) Neither party may assert any cause of action against the
other party under this Agreement that accrued more than two (2) years prior to
the filing of the suit (or commencement of arbitration proceedings) alleging
such cause of action.
(d) Each party shall have the duty to mitigate damages for which
the other party may become responsible.
(e) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
IN NO EVENT SHALL FDISG, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF
TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST
PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS
OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6. Indemnification.
(a) The Company shall indemnify and hold FDISG harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against FDISG or for which FDISG may be held to be liable
in connection with this Agreement or FDISG's performance hereunder (a "Claim"),
unless such Claim resulted from a negligent act or omission to act or bad faith
by FDISG in the performance of its duties hereunder.
(b) The Company or a Fund, its officers, employees, shareholders
and agents shall not be liable for, and FDISG shall indemnify and hold the
Company and each Fund harmless from and against any and all claims, made by
third parties, including costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or kind, which
result from a negligent act or omission to act or bad faith by FDISG in the
performance of its duties hereunder.
(c) In any case in which either party (the "Indemnifying Party")
may be asked to indemnify or hold the other party (the "Indemnified Party")
harmless, the Indemnified Party will notify the Indemnifying Party promptly
after identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party, although the
failure to do so shall not prevent recovery by the Indemnified Party, and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such claim. The
Indemnified Party will not confess any claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Section 6 shall survive the termination of this
Agreement.
7. EXCLUSION OF WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF
ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT. FDISG DISCLAIMS
ANY WARRANTY OF TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT.
8. Termination of Agreement.
(a) This Agreement shall be effective on the date first written
above and shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to the terms of this Agreement. Thereafter,
this Agreement shall automatically be renewed for successive terms of three (3)
years ("Renewal Terms") each.
(b) Either party may terminate this Agreement at the end of the
Initial Term or at the end of any subsequent Renewal Term upon not than less
than ninety (90) days or more than one hundred-eighty (180) days prior written
notice to the other party.
(c) In the event a termination notice is given by the Company,
all expenses associated with movement of records and materials and conversion
thereof will be borne by the Company.
(d) If a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party") resulting in a
material loss to the other party, such other party (the "Non-Defaulting Party")
may give written notice thereof to the Defaulting Party, and if such material
breach shall not have been remedied within thirty (30) days after such written
notice is given, then the Non-Defaulting Party may terminate this Agreement by
giving thirty (30) days written notice of such termination to the Defaulting
Party. If FDISG is the Non-Defaulting Party, its termination of this Agreement
shall not constitute a waiver of any other rights or remedies of FDISG with
respect to services performed prior to such termination or rights of FDISG to be
reimbursed for out-of-pocket expenses. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against the
Defaulting Party.
9. Modifications and Waivers. No change, termination, modification, or
waiver of any term or condition of the Agreement shall be valid unless in
writing signed by each party. No such writing shall be effective as against
FDISG unless said writing is executed by a Senior Vice President, Executive Vice
President or President of FDISG. A party's waiver of a breach of any term or
condition in the Agreement shall not be deemed a waiver of any subsequent breach
of the same or another term or condition.
10. No Presumption Against Drafter. FDISG and the Company have jointly
participated in the negotiation and drafting of this Agreement. The Agreement
shall be construed as if drafted jointly by the Company and FDISG, and no
presumptions arise favoring any party by virtue of the authorship of any
provision of this Agreement.
11. Publicity. Neither FDISG nor the Company shall release or publish
news releases, public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without prior review
and written approval of the other party; provided, however, that either party
may make such disclosures as are required by legal, accounting or regulatory
requirements after making reasonable efforts in the circumstances to consult in
advance with the other party.
12. Severability. The parties intend every provision of this Agreement to
be severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
13. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Company or FDISG shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Company:
SIT Mutual Fund Group
4600 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
53 State Street BOS 425
Boston, Massachusetts 02109-2873
Attention: Patricia Bickimer, Esq.
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns and
is not intended to confer upon any other person any rights or remedies
hereunder. This Agreement may not be assigned or otherwise transferred by either
party hereto, without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, that FDISG may,
in its sole discretion, assign all its right, title and interest in this
Agreement to an affiliate, parent or subsidiary, or to the purchaser of
substantially all of its business. FDISG may, in its sole discretion, engage
subcontractors to perform any of the obligations contained in this Agreement to
be performed by FDISG.
(c) The laws of the Commonwealth of Massachusetts, excluding the
laws on conflicts of laws, shall govern the interpretation, validity, and
enforcement of this Agreement. All actions arising from or related to this
Agreement shall be brought in the state and federal courts sitting in the City
of Boston, and FDISG and the Company hereby submit themselves to the exclusive
jurisdiction of those courts.
(d) This Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of 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 or effect.
14. Confidentiality.
(a) The parties agree that the Proprietary Information (defined
below) and the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their respective
licensers. The Company and FDISG shall exercise reasonable care to safeguard the
confidentiality of the Confidential Information of the other. The Company and
FDISG may each use the Confidential Information only to exercise its rights or
perform its duties under this Agreement. The Company and FDISG shall not
duplicate, sell or disclose to others the Confidential Information of the other,
in whole or in part, without the prior written permission of the other party.
The Company and FDISG may, however, disclose Confidential Information to its
employees who have a need to know the Confidential Information to perform work
for the other, provided that each shall use reasonable efforts to ensure that
the Confidential Information is not duplicated or disclosed by its employees in
breach of this Agreement. The Company and FDISG may also disclose the
Confidential Information to independent contractors, auditors and professional
advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 14.
Notwithstanding the previous sentence, in no event shall either the Company or
FDISG disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
(b) Proprietary Information means:
(i) any data or information that is completely sensitive
material, and not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance, operations,
customer relationships, customer profiles, sales estimates, business plans, and
internal performance results relating to the past, present or future business
activities of the Company or FDISG, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them;
(ii) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or FDISG a
competitive advantage over its competitors; and
(iii) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software, source code,
object code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
(c) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
(d) The parties acknowledge that breach of the restrictions on
use, dissemination or disclosure of any Confidential Information would result in
immediate and irreparable harm, and money damages would be inadequate to
compensate the other party for that harm. The non-breaching party shall be
entitled to equitable relief, in addition to all other available remedies, to
redress any such breach.
15. Force Majeure. No party shall be liable for any default or delay in
the performance of its obligations under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire, flood,
elements of nature or other acts of God; (ii) any outbreak or escalation of
hostilities, war, riots or civil disorders in any country, (iii) any act or
omission of the other party or any governmental authority; (iv) any labor
disputes (whether or not the employees' demands are reasonable or within the
party's power to satisfy); or (v) nonperformance by a third party or any similar
cause beyond the reasonable control of such party, including without limitation,
failures or fluctuations in telecommunications or other equipment. In any such
event, the non-performing party shall be excused from any further performance
and observance of the obligations so affected only for so long as such
circumstances prevail and such party continues to use commercially reasonable
efforts to recommence performance or observance as soon as practicable.
16. Entire Agreement. This Agreement, including all Schedules hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Neil Forrest
Name: Neil Forrest
Title: Vice President
SIT GROWTH & INCOME FUND, INC.
By: /s/ Mary K. Stern
Name: Mary K. Stern
Title: President
SCHEDULE A
SIT GROWTH & INCOME FUND, INC.
SCHEDULE B
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
- Overnight delivery and courier service
- Telephone and telecommunications charges (including fax)
- Pricing services
- Terminals, transmitting lines and any expenses incurred in
connection with such lines
- Travel to and from Board Meetings outside the city of Boston,
Massachusetts (subject to prior approval from the Company)
- Any other unusual expenses in association with the operation of
the Company, such as excessive duplicating charges
FDISG RESERVES THE RIGHT TO RENEGOTIATE THE FEES SET FORTH ON THIS SCHEDULE B
AND IN SECTION 4 OF THE AGREEMENT SHOULD THE ACTUAL SERVICES VARY MATERIALLY
FROM THE ASSUMPTIONS PROVIDED.
EXHIBIT 8.3
Accounting Services Agreement
SIT Mutual Funds, Inc.
ACCOUNTING SERVICES AGREEMENT
THIS ACCOUNTING SERVICES AGREEMENT is made as of April 1, 1996 (the
"Agreement"), by and between SIT Mutual Funds, a Minnesota corporation (the
"Company"), and First Data Investor Services Group, Inc., a Massachusetts
corporation ("FDISG").
WHEREAS, the Company is registered as a diversified open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Company wishes to retain FDISG to provide certain fund
accounting services with respect to each investment portfolio listed in Schedule
A hereto, as the same may be amended from time to time by the parties hereto
(collectively, the "Funds"), and FDISG is willing to furnish such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints FDISG to provide certain
fund accounting services required by the Company for each Fund for the period
and on the terms set forth in this Agreement. FDISG accepts such appointment and
agrees to furnish the services herein set forth in return for the compensation
as provided in Section 4 of this Agreement. In the event that the Company
decides to retain FDISG to act as fund accountant hereunder with respect to one
or more portfolios other than the Funds, the Company shall notify FDISG in
writing. If FDISG is willing to render such services, it shall notify the
Company in writing whereupon such portfolio shall become a Fund hereunder.
2. Delivery of Documents. The Company has furnished FDISG with copies
properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Directors authorizing
FDISG to provide certain fund accounting services to the Company and approving
this Agreement;
(b) The Company's Articles of Incorporation (the "Articles")
filed with the State of Minnesota and all amendments thereto;
(c) The Company's By-Laws and all amendments thereto (the
"By-Laws");
(d) The Investment Advisory Agreement between SIT Investment
Associates, Inc. (the "Adviser") and the Company dated as of November 1, 1992
and all amendments thereto (the "Advisory Agreement");
(e) The Custody Agreement between The Northern Trust Company (the
"Custodian") and the Company dated as of April 1, 1996 and all amendments
thereto (the "Custody Agreement");
(f) The Transfer Agency and Registrar Agreement between First
Data Investor Services Group, Inc. (the "Transfer Agent") and the Company dated
as of January 1, 1996 and all amendments thereto;
(g) The Company's Registration Statement on Form N-1A (the
"Registration Statement") under the Securities Act of 1933 and under the
Investment Company Act of 1940 (the "1940 Act") (File Nos. 2-75151 and
811-03342), as declared effective by the Securities and Exchange Commission (the
"SEC") on September 2, 1982, relating to shares of beneficial interest of the
Company (the "Shares"), and all amendments thereto; and
(h) Each Fund's most recent prospectus and statement of
additional information and all amendments and supplements thereto (collectively,
the "Prospectuses").
The Company will furnish FDISG from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any. Furthermore, the Company will provide FDISG with any other
documents that FDISG may reasonably request and will notify FDISG as soon as
possible of any matter materially affecting the performance by FDISG of its
services under this Agreement.
3. Services and Duties. Subject to the supervision and control of the
Company, FDISG undertakes to provide the following specific services:
(a) Accounting and bookkeeping services (including the
maintenance of such accounts, books and records of the Company as may be
required by Section 31(a) of the 1940 Act and the rules thereunder);
(b) Internal auditing;
(c) Valuing the assets of each Fund and calculating the net asset
value of the shares of the Fund at the close of trading on the New York Stock
Exchange ("NYSE") on each day on which the NYSE is open for trading, and at such
other times as the Board of Directors may reasonably request;
(d) Accumulating information for and, subject to approval by the
Company's Treasurer, preparing reports to the Company's shareholders of record
and the SEC including, but not necessarily limited to, Annual Reports and
Semi-Annual Reports on Form N-SAR;
(e) Assisting the Adviser, at the Adviser's request, in
monitoring and developing compliance procedures for the Company which will
include, among other matters, procedures to assist the Adviser in monitoring
compliance with each Fund's investment objective, policies, restrictions, tax
matters and applicable laws and regulations; and
(f) Preparing and furnishing the Company (at the Company's
request) with performance information (including yield and total return
information) calculated in accordance with applicable U.S. securities laws and
reporting to external databases such information as may reasonably be requested.
In performing its duties under this Agreement, FDISG: (a) will act in
accordance with the Articles, By-Laws, Prospectuses and with the instructions
and directions of the Company and will conform to and comply with the
requirements of the 1940 Act and all other applicable Federal or state laws and
regulations; and (b) will consult with legal counsel to the Company, as
necessary and appropriate. Furthermore, FDISG shall not have or be required to
have any authority to supervise the investment or reinvestment of the securities
or other properties which comprise the assets of the Company or any of its Funds
and shall not provide any investment advisory services to the Company or any of
its Funds.
4. Compensation and Allocation of Expenses.
(a) For the services to be rendered, the facilities to be
furnished and the payments to be made by FDISG, as provided for in this
Agreement, the Company, on behalf of each Fund, will pay FDISG on the first
business day of each month a fee for the previous month at the annual rate of
.055 of 1.00% of the value of the Fund's average daily net assets. Within
fifteen (15) days after FDISG has received both the monthly fee set forth herein
from the Company and the monthly bill from the Custodian, FDISG shall (pursuant
to the Client Services Agreement, dated as of April 1, 1996, between FDISG and
the Custodian (the "Client Services Agreement") and the Custody Agreement) pay
to the Custodian, with respect to each Fund, a fee which shall serve as full
payment for the Custodian's services to the Fund under the Custody Agreement and
the Client Services Agreement for the preceding month at the annual rate of .01
of 1.00% of the value of the Fund's average daily net assets (plus out-of-pocket
expenses). For the purposes of calculating the fees described herein, the Fund's
average daily net assets will be deemed to be the average daily value of the
Fund's total assets minus the sum of the Fund's liabilities (excluding the
aggregate liquidation preference on the outstanding shares of the Fund's auction
rate preferred stock and accumulated dividends, if any, thereon). Fees for the
period from the date the Registration Statement is declared effective by the SEC
to the end of the month during which the Registration Statement is declared
effective shall be prorated according to the proportion that such period bears
to the full monthly period.
(b) The Company shall compensate FDISG for its services rendered
pursuant to this Agreement in accordance with the fees set forth above. Such
fees do not include out-of-pocket disbursements of FDISG for which FDISG shall
be entitled to bill separately. Out-of-pocket disbursements shall include, but
shall not be limited to, the items specified in Schedule B annexed hereto and
incorporated herein. Schedule B may be modified by FDISG upon not less than
thirty days' prior written notice to the Company.
(c) FDISG shall not be required to pay any of the following
expenses incurred by the Company: membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses; investment
advisory expenses; costs of printing and mailing stock certificates,
prospectuses, reports and notices; interest on borrowed money; brokerage
commissions; taxes and fees payable to Federal, state and other governmental
agencies; fees of Directors of the Company who are not affiliated with FDISG;
outside auditing expenses; outside legal expenses; or other expenses not
specified in this Section 4 which may be properly payable by the Company.
(d) FDISG will bill the Company as soon as practicable after the
end of each calendar month for out-of-pocket disbursements, and said billings
will be detailed in accordance with this Section and Schedule B. The Company
will pay to FDISG the amount of such billing within 30 days of such billing.
(e) Upon any termination of this Agreement before the end of any
month, the fee for such period shall be prorated according to the proportion
which such period bears to the full month period. For purposes of determining
fees payable to FDISG, the value of each Fund's net assets shall be computed at
the time and in the manner specified in the most recent Prospectuses.
(f) The Company acknowledges that the fees that FDISG charges the
Company under this Agreement reflect the allocation of risk between the parties,
including the disclaimer of warranties in Section 7 and the limitations on
liability in Section 5. Modifying the allocation of risk from what is stated
here would affect the fees that FDISG charges, and in consideration of those
fees, the Company agrees to the stated allocation of risk.
(g) FDISG will from time to time employ or associate itself with
such person or persons as FDISG may believe to be particularly suited to assist
it in performing services under this Agreement. Such person or persons may be
officers and employees who are employed by both FDISG and the Company. The
compensation of such person or persons shall be paid by FDISG and no obligation
shall be incurred on behalf of the Company in such respect.
(5) Limitation of Liability
(a) FDISG, its directors, officers, employees, shareholders and
agents shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Company or a Fund in connection with the performance of
this Agreement, except a loss resulting from willful misfeasance, bad faith, or
negligence on the part of FDISG in the performance of its obligations and duties
under this Agreement.
(b) Notwithstanding any provision in this Agreement to the
contrary, FDISG's cumulative liability (to the Company) for all losses, claims,
suits, controversies, breaches, or damages for any cause whatsoever (including
but not limited to those arising out of or related to this Agreement) and
regardless of the form of action or legal theory shall not exceed the lesser of
(i) $1,000,000 or (ii) the fees received by FDISG for services provided under
this Agreement during the twelve months immediately prior to the date of such
loss or damage.
(c) Neither party may assert any cause of action against the
other party under this Agreement that accrued more than two (2) years prior to
the filing of the suit (or commencement of arbitration proceedings) alleging
such cause of action.
(d) Each party shall have the duty to mitigate damages for which
the other party may become responsible.
(e) NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY,
IN NO EVENT SHALL FDISG, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY THEORY OF
TORT, CONTRACT, STRICT LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR LOST
PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY AGREEMENT OF THE PARTIES REGARDLESS
OF WHETHER SUCH DAMAGES WERE FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
6. Indemnification.
(a) The Company shall indemnify and hold FDISG harmless from and
against any and all claims, costs, expenses (including reasonable attorneys'
fees), losses, damages, charges, payments and liabilities of any sort or kind
which may be asserted against FDISG or for which FDISG may be held to be liable
in connection with this Agreement or FDISG's performance hereunder (a "Claim"),
unless such Claim resulted from a negligent act or omission to act or bad faith
by FDISG in the performance of its duties hereunder.
(b) The Company or a Fund, its officers, employees, shareholders
and agents shall not be liable for, and FDISG shall indemnify and hold the
Company and each Fund harmless from and against any and all claims, made by
third parties, including costs, expenses (including reasonable attorneys' fees),
losses, damages, charges, payments and liabilities of any sort or kind, which
result from a negligent act or omission to act or bad faith by FDISG in the
performance of its duties hereunder.
(c) In any case in which either party (the "Indemnifying Party")
may be asked to indemnify or hold the other party (the "Indemnified Party")
harmless, the Indemnified Party will notify the Indemnifying Party promptly
after identifying any situation which it believes presents or appears likely to
present a claim for indemnification against the Indemnifying Party, although the
failure to do so shall not prevent recovery by the Indemnified Party, and shall
keep the Indemnifying Party advised with respect to all developments concerning
such situation. The Indemnifying Party shall have the option to defend the
Indemnified Party against any claim which may be the subject of this
indemnification, and, in the event that the Indemnifying Party so elects, such
defense shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying Party
shall take over complete defense of the claim and the Indemnified Party shall
sustain no further legal or other expenses in respect of such claim. The
Indemnified Party will not confess any claim or make any compromise in any case
in which the Indemnifying Party will be asked to provide indemnification, except
with the Indemnifying Party's prior written consent. The obligations of the
parties hereto under this Section 6 shall survive the termination of this
Agreement.
7. EXCLUSION OF WARRANTIES. THIS IS A SERVICE AGREEMENT. EXCEPT AS
EXPRESSLY PROVIDED IN THIS AGREEMENT, FDISG DISCLAIMS ALL OTHER REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE FUND OR ANY OTHER PERSON,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING QUALITY, SUITABILITY,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE (IRRESPECTIVE OF
ANY COURSE OF DEALING, CUSTOM OR USAGE OF TRADE) OF ANY SERVICES OR ANY GOODS
PROVIDED INCIDENTAL TO SERVICES PROVIDED UNDER THIS AGREEMENT. FDISG DISCLAIMS
ANY WARRANTY OF TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT.
8. Termination of Agreement.
(a) This Agreement shall be effective on the date first written
above and shall continue for a period of three (3) years (the "Initial Term"),
unless earlier terminated pursuant to the terms of this Agreement. Thereafter,
this Agreement shall automatically be renewed for successive terms of three (3)
years ("Renewal Terms") each.
(b) Either party may terminate this Agreement at the end of the
Initial Term or at the end of any subsequent Renewal Term upon not than less
than ninety (90) days or more than one hundred-eighty (180) days prior written
notice to the other party.
(c) In the event a termination notice is given by the Company,
all expenses associated with movement of records and materials and conversion
thereof will be borne by the Company.
(d) If a party hereto is guilty of a material failure to perform
its duties and obligations hereunder (a "Defaulting Party") resulting in a
material loss to the other party, such other party (the "Non-Defaulting Party")
may give written notice thereof to the Defaulting Party, and if such material
breach shall not have been remedied within thirty (30) days after such written
notice is given, then the Non-Defaulting Party may terminate this Agreement by
giving thirty (30) days written notice of such termination to the Defaulting
Party. If FDISG is the Non-Defaulting Party, its termination of this Agreement
shall not constitute a waiver of any other rights or remedies of FDISG with
respect to services performed prior to such termination or rights of FDISG to be
reimbursed for out-of-pocket expenses. In all cases, termination by the
Non-Defaulting Party shall not constitute a waiver by the Non-Defaulting Party
of any other rights it might have under this Agreement or otherwise against the
Defaulting Party.
9. Modifications and Waivers. No change, termination, modification, or
waiver of any term or condition of the Agreement shall be valid unless in
writing signed by each party. No such writing shall be effective as against
FDISG unless said writing is executed by a Senior Vice President, Executive Vice
President or President of FDISG. A party's waiver of a breach of any term or
condition in the Agreement shall not be deemed a waiver of any subsequent breach
of the same or another term or condition.
10. No Presumption Against Drafter. FDISG and the Company have jointly
participated in the negotiation and drafting of this Agreement. The Agreement
shall be construed as if drafted jointly by the Company and FDISG, and no
presumptions arise favoring any party by virtue of the authorship of any
provision of this Agreement.
11. Publicity. Neither FDISG nor the Company shall release or publish
news releases, public announcements, advertising or other publicity relating to
this Agreement or to the transactions contemplated by it without prior review
and written approval of the other party; provided, however, that either party
may make such disclosures as are required by legal, accounting or regulatory
requirements after making reasonable efforts in the circumstances to consult in
advance with the other party.
12. Severability. The parties intend every provision of this Agreement to
be severable. If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or invalidity
shall not affect the validity of the remainder of this Agreement. In such case,
the parties shall in good faith modify or substitute such provision consistent
with the original intent of the parties. Without limiting the generality of this
paragraph, if a court determines that any remedy stated in this Agreement has
failed of its essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall remain
fully effective.
13. Miscellaneous.
(a) Any notice or other instrument authorized or required by this
Agreement to be given in writing to the Company or FDISG shall be sufficiently
given if addressed to that party and received by it at its office set forth
below or at such other place as it may from time to time designate in writing.
To the Company:
SIT Mutual Fund Group
4600 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Attention: President
To FDISG:
First Data Investor Services Group, Inc.
53 State Street BOS 425
Boston, Massachusetts 02109-2873
Attention: Patricia Bickimer, Esq.
(b) This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns and
is not intended to confer upon any other person any rights or remedies
hereunder. This Agreement may not be assigned or otherwise transferred by either
party hereto, without the prior written consent of the other party, which
consent shall not be unreasonably withheld; provided, however, that FDISG may,
in its sole discretion, assign all its right, title and interest in this
Agreement to an affiliate, parent or subsidiary, or to the purchaser of
substantially all of its business. FDISG may, in its sole discretion, engage
subcontractors to perform any of the obligations contained in this Agreement to
be performed by FDISG.
(c) The laws of the Commonwealth of Massachusetts, excluding the
laws on conflicts of laws, shall govern the interpretation, validity, and
enforcement of this Agreement. All actions arising from or related to this
Agreement shall be brought in the state and federal courts sitting in the City
of Boston, and FDISG and the Company hereby submit themselves to the exclusive
jurisdiction of those courts.
(d) This Agreement may be executed in any number of counterparts
each of which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
(e) The captions of 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 or effect.
14. Confidentiality.
(a) The parties agree that the Proprietary Information (defined
below) and the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their respective
licensers. The Company and FDISG shall exercise reasonable care to safeguard the
confidentiality of the Confidential Information of the other. The Company and
FDISG may each use the Confidential Information only to exercise its rights or
perform its duties under this Agreement. The Company and FDISG shall not
duplicate, sell or disclose to others the Confidential Information of the other,
in whole or in part, without the prior written permission of the other party.
The Company and FDISG may, however, disclose Confidential Information to its
employees who have a need to know the Confidential Information to perform work
for the other, provided that each shall use reasonable efforts to ensure that
the Confidential Information is not duplicated or disclosed by its employees in
breach of this Agreement. The Company and FDISG may also disclose the
Confidential Information to independent contractors, auditors and professional
advisors, provided they first agree in writing to be bound by the
confidentiality obligations substantially similar to this Section 14.
Notwithstanding the previous sentence, in no event shall either the Company or
FDISG disclose the Confidential Information to any competitor of the other
without specific, prior written consent.
(b) Proprietary Information means:
(i) any data or information that is completely sensitive
material, and not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance, operations,
customer relationships, customer profiles, sales estimates, business plans, and
internal performance results relating to the past, present or future business
activities of the Company or FDISG, their respective subsidiaries and affiliated
companies and the customers, clients and suppliers of any of them;
(ii) any scientific or technical information, design,
process, procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Company or FDISG a
competitive advantage over its competitors; and
(iii) all confidential or proprietary concepts,
documentation, reports, data, specifications, computer software, source code,
object code, flow charts, databases, inventions, know-how, show-how and trade
secrets, whether or not patentable or copyrightable.
(c) Confidential Information includes, without limitation, all
documents, inventions, substances, engineering and laboratory notebooks,
drawings, diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either party
which now exist or come into the control or possession of the other.
(d) The parties acknowledge that breach of the restrictions on
use, dissemination or disclosure of any Confidential Information would result in
immediate and irreparable harm, and money damages would be inadequate to
compensate the other party for that harm. The non-breaching party shall be
entitled to equitable relief, in addition to all other available remedies, to
redress any such breach.
15. Force Majeure. No party shall be liable for any default or delay in
the performance of its obligations under this Agreement if and to the extent
such default or delay is caused, directly or indirectly, by (i) fire, flood,
elements of nature or other acts of God; (ii) any outbreak or escalation of
hostilities, war, riots or civil disorders in any country, (iii) any act or
omission of the other party or any governmental authority; (iv) any labor
disputes (whether or not the employees' demands are reasonable or within the
party's power to satisfy); or (v) nonperformance by a third party or any similar
cause beyond the reasonable control of such party, including without limitation,
failures or fluctuations in telecommunications or other equipment. In any such
event, the non-performing party shall be excused from any further performance
and observance of the obligations so affected only for so long as such
circumstances prevail and such party continues to use commercially reasonable
efforts to recommence performance or observance as soon as practicable.
16. Entire Agreement. This Agreement, including all Schedules hereto,
constitutes the entire Agreement between the parties with respect to the subject
matter hereof and supersedes all prior and contemporaneous proposals,
agreements, contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed and delivered by their duly authorized officers as of the date
first written above.
FIRST DATA INVESTOR SERVICES GROUP, INC.
By: /s/ Neil Forrest
Name: Neil Forrest
Title: Vice President
SIT MUTUAL FUNDS, INC.
By: /s/ Mary K. Stern
Name: Mary K. Stern
Title: President
SCHEDULE A
SIT BALANCED FUND (SERIES A)
SIT BOND FUND (SERIES B)
SIT DEVELOPING MARKETS GROWTH FUND (SERIES C)
SIT SMALL CAP GROWTH FUND (SERIES D)
SCHEDULE B
OUT-OF-POCKET EXPENSES
Out-of-pocket expenses include, but are not limited to, the following:
- Overnight delivery and courier service
- Telephone and telecommunications charges (including fax)
- Pricing services
- Terminals, transmitting lines and any expenses incurred in
connection with such lines
- Travel to and from Board Meetings outside the city of Boston,
Massachusetts (subject to prior approval from the Company)
- Any other unusual expenses in association with the operation of
the Company, such as excessive duplicating charges
FDISG RESERVES THE RIGHT TO RENEGOTIATE THE FEES SET FORTH ON THIS SCHEDULE B
AND IN SECTION 4 OF THE AGREEMENT SHOULD THE ACTUAL SERVICES VARY MATERIALLY
FROM THE ASSUMPTIONS PROVIDED.
EXHIBIT 11
Independent Auditors' Consent
To Board of Directors
Sit Growth Fund, Inc.
Sit Growth & Income Fund, Inc.
Sit Mutual Funds, Inc.
We consent to the use of our report incorporated herein by reference and to the
references to our Firm under the headings "Financial Highlights" in Part A and
"Custodian; Counsel; Accountants" in Parta B of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
August 26, 1996
EXHIBIT 16
Calculations of Performance Data
Average Annual Total Return for the period ended June 30, 1996 P(1+T)^n = ERV
<TABLE>
<CAPTION>
One Year:
Growth & Int'l Small Cap Developing Mkts
Growth Income Growth Balanced Growth Growth
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
P = 1,000 1,000 1,000 1,000 1,000 1,000
n = 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000
ERV = 1,330.015 1,224.762 1,102.129 1,172.563 1,441.291 1,102.129
T = 33.001500% 24.476200% 10.212900% 17.256300% 44.129100% 10.514000
Five Years:
Growth & Int'l Small Cap Developing Mkts
Growth Income Growth Balanced Growth Growth
Fund Fund Fund Fund Fund Fund
P = 1,000 1,000 n/a n/a n/a n/a
n = 5.00000 5.00000 n/a n/a n/a n/a
ERV = 2,103.223 1,972.830 n/a n/a n/a n/a
T = 16.031807% 14.556023% n/a n/a n/a
(not in operation (not in operation (not in operation (not in operation
during period) during period) during period) during period)
Ten Years:
Growth & Int'l Small Cap Developing Mkts
Growth Income Growth Balanced Growth Growth
Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C>
P = 1,000 1,000 n/a n/a n/a n/a
n = 10.00000 10.00000 n/a n/a n/a n/a
ERV = 3,582.229 3,043.379 n/a n/a n/a n/a
T = 13.609680% 11.772664% n/a n/a n/a
(not in operation (not in operation (not in operation (not in operation
during period) during period) during period) during period)
Since Inception:
Growth & Int'l Small Cap Developing Mkts
Growth Income Growth Balanced Growth Growth
Fund Fund Fund Fund Fund Fund
P = 1,000 1,000 1,000 1,000 1,000 1,000
n = 13.83014 13.83014 4.66027 2.49315 1.99452 1.99452
ERV = 11,357.273 6,858.907 1,790.364 1,333.441 1,954.279 1,101.796
T = 19.207200% 14.938658% 13.312054% 12.234627% 39.924263% 4.980451
Incept.
Date: 9/2/82 9/2/82 11/1/91 12/31/93 7/1/94 7/1/94
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