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Exhibit 99(o)
FROLEY, REVY CONVERTIBLE SECURITIES FUND
FROLEY, REVY INVESTMENT GRADE CONVERTIBLE SECURITIES FUND
(THE "FUNDS")
TRAINER, WORTHAM FUNDS
(THE "TRUST")
PLAN PURSUANT TO RULE 18f-3
UNDER THE
INVESTMENT COMPANY ACT OF 1940
I. INTRODUCTION
As required by Rule 18f-3 under the Investment Company Act of 1940, as
amended ("1940 Act"), this Plan describes the multi-class system for the Funds,
including the separate class arrangements for shareholder services and/or
distribution of shares, as applicable, the method for allocating expenses to
classes and related exchange privileges applicable to the classes.
Upon the effective date of this Plan, the Trust, on behalf of the
Funds, elects to offer multiple classes of shares of the Funds, as described
herein, pursuant to Rule 18f-3 and this Plan.
II. THE MULTI-CLASS SYSTEM
The Funds shall offer two classes of shares, Class A and Class B.
Shares of each class of the Funds shall represent an equal PRO RATA interest in
each respective Fund and, generally, shall have identical voting, dividend,
liquidation, and other rights, preferences, powers, restrictions, limitations,
qualifications and terms and conditions, except that: (a) each class shall have
a different designation; (b) each class of shares shall bear any Class Expenses,
as defined in Section C, below; (c) each class shall have exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution arrangement; and (d) each class shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class. In addition, Class A and Class B
shares shall have the features described in Sections A, B, C and D, below.
A. SALES CHARGE STRUCTURE
1. CLASS A SHARES. Class A shares of the Funds shall be offered
at the then-current net asset value plus a front-end sales charge in such amount
as is disclosed in the current prospectus for the Funds, including any
prospectus supplements, and shall be subject to such reductions and waivers as
are determined or approved by the Trust's Board of Trustees. Class A
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shares shall generally not be subject to a contingent deferred sales charge
provided, however, that such a charge may be imposed in such cases as the Board
may approve and as disclosed in a future prospectus or prospectus supplement for
the Funds. Class A shares shall be distinguished from Class B shares by the
relative rates and timing of sales charges and the relative rates of fees under
the distribution plan (see below) applicable to each class.
2. CLASS B SHARES. Class B shares of the Funds shall be offered
at the then-current net asset value plus a contingent deferred sales charge in
such amount as is disclosed in the current prospectus for the Funds, including
any prospectus supplements, and shall be subject to such reductions and waivers
as are determined or approved by the Trust's Board of Trustees. Class B shares
shall generally not be subject to a front-end sales charge provided, however,
that such a charge may be imposed in such cases as the Board may approve and as
disclosed in a future prospectus or prospectus supplement for the Funds. Class B
shares shall be distinguished from Class A shares by the relative rates and
timing of sales charges and the relative rates of fees under the distribution
plan (see below) applicable to each class.
B. DISTRIBUTION PLAN
The Trust has adopted a distribution plan pursuant to Rule 12b-1 with
respect to the Funds and each class of shares, containing the following terms:
1. CLASS A SHARES. Class A shares of the Funds shall reimburse
the Distributor for costs and expenses incurred in connection with distribution
and marketing of shares of the Funds, as provided in the distribution plan,
subject to an annual limit of 0.25% of the average daily net assets of each
respective Fund attributable to its Class A shares, provided that up to 0.25% of
such average daily net assets may be designated out of such reimbursements as a
"service fee," as defined in rules and policy statements of the National
Association of Securities Dealers.
2. CLASS B SHARES. Class B shares of the Funds shall reimburse
the Distributor for costs and expenses incurred in connection with distribution
and marketing of shares of the Funds, as provided in the distribution plan,
subject to an annual limit of 0.75% of the average daily net assets of each
respective Fund attributable to its Class B shares, provided that up to 0.25% of
such average daily net assets may be designated out of such reimbursements as a
"service fee," as defined in rules and policy statements of the National
Association of Securities Dealers.
C. ALLOCATION OF INCOME AND EXPENSES
1. General
The gross income, realized and unrealized capital gains and
losses and expenses (other than Class Expenses, as defined below) of each Fund
shall be allocated to each class on the basis of its net asset value relative to
the net asset value of the Fund unless the
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Trustees determine to use another method that (a) is specifically permitted by
Rule 18f-3 or (b) is appropriate and is determined by the Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust ("Independent Trustees"), to be fair to the shareholders
of each class and to provide an annualized rate of return for each class that
generally differs from that of any other class only by the expense differentials
among the classes. Expenses to be so allocated also include expenses of the
Trust that are allocated to a Fund and are not attributable to another fund in
the Trust ("Trust Expenses") and expenses of a Fund that are not attributable to
a particular class of the Fund ("Fund Expenses"). Trust Expenses include, but
are not limited to, certain Trustees' fees, insurance costs and certain legal
fees incurred generally on behalf of the Trust. Fund Expenses include, but are
not limited to, certain registration and notice filing fees, advisory fees,
custodial fees, and other expenses relating to the management of each Fund's
assets.
2. CLASS EXPENSES
Expenses attributable to a particular class ("Class Expenses")
shall be limited to: (a) payments pursuant to the distribution plan by that
class; (b) transfer agent fees attributable to that class; (c) printing and
postage expenses related to preparing and distributing material such as
shareholder reports, prospectuses and proxy materials to current shareholders of
that class; (d) registration and notice filing fees for shares of that class;
(e) the expense of administrative personnel and services as required to support
the shareholders of that class; (f) litigation or other legal expenses relating
solely to that class; and (g) Trustees' fees incurred as a result of issues
relating to that class. Expenses described in (a) of this paragraph must be
allocated to the class for which they are incurred. All other expenses described
in this paragraph may be allocated as Class Expenses only if they are actually
incurred in a different amount by a class, or if a class receives services of a
different kind or to a different degree than another class. It is intended that
expenses will be allocated as Class Expenses only to the extent consistent with
applicable legal principles under the 1940 Act and the Internal Revenue Code of
1986, as amended.
In the event a particular expense is no longer reasonably or legally
allocable by class or to a particular class, it shall be treated as a Trust
Expense, or Fund Expense, and in the event a Trust Expense or Fund Expense
becomes allocable at a different level, including as a Class Expense, it shall
be so allocated, subject to compliance with Rule 18f-3 and to approval or
ratification by the Board of Trustees.
The initial determination of expenses that will be allocated as Class
Expenses and any subsequent changes thereto shall be reviewed by the Board of
Trustees and approved by such Board and by a majority of the Trustees who are
not "interested persons" of the Funds, as defined in the 1940 Act.
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3. WAIVERS OR REIMBURSEMENTS OF EXPENSES
Expenses may be waived or reimbursed by the Adviser, any
Sub-Adviser, the Distributor or any other provider of services to the Trust or
the Funds without the prior approval of the Board of Trustees.
D. EXCHANGE PRIVILEGES
Shareholders of the Funds may exchange shares of a particular class for
shares of the same class in such other Fund at relative net asset value,
provided the shares to be acquired in the exchange are permitted to be sold in
the shareholder's state of residence and subject to the applicable requirements
as to minimum amount.
E. BOARD REVIEW
1. INITIAL APPROVAL
The Board of Trustees, including a majority of the Independent
Trustees, at a meeting held July 18, 2000, initially approved the Plan based on
a determination that the Plan, including the expense allocation, is in the best
interests of each class and the Funds. Their determination was based on their
review of information furnished to them which they deemed reasonably necessary
and sufficient to evaluate the Plan.
2. APPROVAL OF AMENDMENTS
The Plan may not be amended materially unless the Board of
Trustees, including a majority of the Independent Trustees, have found that the
proposed amendment, including any proposed related expense allocation, is in the
best interests of each class and the Funds. Such finding shall be based on
information requested by the Board and furnished to them which the Board deems
reasonably necessary to evaluate the proposed amendment.
3. PERIODIC REVIEW
The Board shall review reports of expense allocations and such
other information as they request at such times, or pursuant to such schedule,
as they may determine consistent with applicable legal requirements.
F. CONTRACTS
Any agreement related to this multi-class system shall require the
parties thereto to furnish to the Board of Trustees, upon their request, such
information as is reasonably necessary to permit the Trustees to evaluate the
Plan or any proposed amendment.
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G. EFFECTIVE DATE
The Plan, having been reviewed and approved by the Board of Trustees
and by a majority of the Independent Trustees as indicated in Section E1 of the
Plan, shall take effect as of August 1, 2000
H. AMENDMENTS
The Plan may not be amended to modify materially its terms unless such
amendment has been approved in the manner specified in Section E2 of the Plan.
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